2018E — Page 16

The directors have pleasure in submitting their Annual Report together with the audited financial statements for the year ended 31 December 2018.

PRINCIPAL PLACE OF BUSINESS

Hong Kong Ferry (Holdings) Company Limited (the "Company") is a company incorporated and domiciled in Hong Kong and has its registered office and principal place of business at 98 Tam Kon Shan Road, TYTL 102, Ngau Kok Wan, North Tsing Yi, New Territories, Hong Kong.

PRINCIPAL ACTIVITIES

The principal activity of the Company is investment holding and the principal activities of its subsidiaries are property development, property investment, ferry, shipyard and related businesses and securities investment.

The analysis of the principal activities of the Company and its subsidiaries (the "Group") during the financial year are set out in note 3 to the financial statements.

BUSINESS REVIEW

A review of the business of the Group during the year is provided in Management Discussion and Analysis on page 13 and Chairman's Statement on pages 10 to 12 of this Annual Report. A discussion on the Group's future business development is provided in the Chairman's Statement on pages 10 to 12 of this Annual Report. Description of the principal risks and uncertainties that the Group may be facing can be found in the Chairman's Statement on pages 10 to 12 and the section of Risk Management and Internal Controls on pages 35 to 38 of Corporate Governance Report of this Annual Report. Financial risk management of the Group can be found in note 24 to the financial statements on pages 153 to 156 of this Annual Report. An analysis of the Group's performance during the year using financial key performance indicators is provided in the Financial Highlights on page 8 and Five Years' Financial Summary on pages 168 to 170 of this Annual Report respectively.

Discussions on the Group's environmental policies and performance, relationships with its key stakeholders which have a significant impact on the Group are contained in Environmental, Social and Governance Report on pages 42 to 72 of this Annual Report. These discussions form part of this Report of the Directors.

Discussion on Environmental Policies and Performance

The Hong Kong Ferry Group is devoted to integrating sustainable practices in its operations to contribute to a better future. We constantly search for opportunities to enhance our resource conservation and to minimise negative impacts on the environment. Since 2011, our two fuel-intensive subsidiaries have undergone carbon audits conducted under the Energy and Carbon Management Programme. At our Principal Office, we commission environmental consultants to monitor our energy usage and explore energy savings solutions. Our property development and investment businesses incorporate sustainability features from the beginning of our projects in the design and construction phases, and conduct energy-simulation modelling studies to identify the most optimal energy-saving approaches.

The Group has made great strides in maintaining air quality within the harbour and the shared community around it. After the completion of our self-initiated and voluntary vessel engine and generator replacement programme, we set our sights on improving roadside air quality by upgrading one of our road vehicles to the new EURO VI emission standard

this year. To augment our water conservation efforts we installed automated water faucets and water-saving aerators within our Principal Office and Harbour Cruise - Bauhinia operations. To magnify the success of our first rainwater harvester, we have installed a second harvester in the shipyard area to further reduce our freshwater consumption. We have made considerable efforts to ensure waste materials and other useful resources are reused, recovered and recycled whenever possible, before the consideration of landfill disposal.

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Hong Kong Ferry (Holdings) Company Limited Annual Report 2018