Corporate Information

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3 2 Hong Kong Ferry (Holdings) Co. Ltd. Corporate Information BOARD OF DIRECTORS * Mr. Colin K. Y. Lam (Chairman) Sir Kenneth P. F. Fung Mr. Norman H. C. Ho Mr. Michael Y. L. Kan Mr. Edmond T. C. Lau Mr. Eddie Y. C. Lau Dr. Lee Shau Kee Mr. Leung Hay Man * Mr. Li Ning Mr. Peter M. K. Wong Dr. Alex S. C. Wu COMPANY SECRETARY Mr. Richard C. W. Law AUDITORS KPMG PRINCIPAL BANKERS Dao Heng Bank Limited Jardine Fleming Bank Limited Standard Chartered Bank The Fuji Bank, Limited The Hongkong and Shanghai Banking Corporation Limited The Sanwa Bank Limited The Sumitomo Bank, Limited REGISTERED OFFICE 98 Tam Kon Shan Road Ngau Kok Wan North Tsing Yi New Territories Hong Kong REGISTRARS Standard Registrars Limited 5/F, Wing On Centre 111 Connaught Road Central Hong Kong * Executive Director

4 Hong Kong Ferry (Holdings) Co. Ltd. 3 Directors & Senior Management s Profile DIRECTORS The current Directors of the Company are as follows : Mr. Colin K. Y. Lam (Chairman) Sir Kenneth P. F. Fung Mr. Norman H. C. Ho Mr. Michael Y. L. Kan Mr. Edmond T. C. Lau Mr. Eddie Y. C. Lau Dr. Lee Shau Kee Mr. Leung Hay Man Mr. Li Ning Mr. Peter M. K. Wong Dr. Alex S. C. Wu DIRECTORS PROFILE The details of the Directors are as follows : Mr. Lam Ko Yin, Colin (Chairman) Mr. Lam Ko Yin, Colin, BSc(Hon), ACIB, MBIM, FCIT, aged 48, appointed on 1 July 1986, is the Chairman of the Company. Mr. Lam has over 26 years experience in banking and property development. He is also the Vice- Chairman of Henderson Land Development Company Limited ( Henderson Land ) and Henderson Investment Limited ( Henderson Investment ), an Executive Director of Henderson China Holdings Limited as well as a Director of The Hong Kong and China Gas Company Limited, Miramar Hotel and Investment Company, Limited, Wiselin Investment Limited ( Wiselin ), Max-mercan Investment Limited ( Max-mercan ), Henderson Development Limited ( Henderson Development ), Hopkins (Cayman) Limited ( Hopkins ) and Rimmer (Cayman) Limited ( Rimmer ). Henderson Land, Henderson Investment, Wiselin, Max-mercan, Henderson Development, Hopkins and Rimmer have discloseable interests under the provisions of Part II of the Securities (Disclosure of Interests) Ordinance in the Company.

5 4 Hong Kong Ferry (Holdings) Co. Ltd. Directors & Senior Management s Profile Sir Fung Ping Fan, Kenneth Sir Fung Ping Fan, Kenneth, CBE, JP, LLD, DSocSc, KStJ, aged 88, appointed on 12 April 1975, is an Independent Non-Executive Director of the Company. Sir Kenneth Fung has been appointed by the State as a Senior Consultant for External Economy of People s Government of Chongqing, Sichuan Province in China since Sir Kenneth Fung is the Chairman of Dransfield Holdings Limited and Vice-Chairman of Wong s International (Holdings) Limited. He is the brother-in-law of Mr. Kan Yuet Loong, Michael, a Director of the Company. Sir, Kenneth Fung resigned as a director of the Company with effect from 17 March Mr. Ho Hau Chong, Norman Mr. Ho Hau Chong, Norman, BA, ACA, FHKSA, aged 44, appointed on 28 March 1995, is an Independent Non-Executive Director of the Company. Mr. Ho is an Executive Director of Honorway Investments Limited and Tak Hung (Holdings) Company Limited and has over 18 years of experience in management and property development. He is also a Director of Lee Hing Development Company Limited, CITIC Pacific Limited and a few other listed companies. Mr. Kan Yuet Loong, Michael Mr. Kan Yuet Loong, Michael, JP, BSc, MBA, aged 65, appointed on 6 April 1974, is an Independent Non-Executive Director of the Company. He has over 33 years experience in banking and investment. Mr. Kan is the brotherin-law of Mr. Lau Ting Chung, Edmond and Sir Fung Ping Fan, Kenneth, both are Directors of the Company.

6 Hong Kong Ferry (Holdings) Co. Ltd. 5 Directors & Senior Management s Profile Mr. Lau Ting Chung, Edmond Mr. Lau Ting Chung, Edmond, JP, BA, MBA, FCIT, ARINA, aged 60, appointed on 5 April 1972, is now a Non-Executive Director of the Company. Mr. Lau has worked over 32 years with the Company. He is the brother-in-law of Mr. Kan Yuet Loong, Michael, a Director of the Company. He was appointed as a Hong Kong Affairs Advisor to the State in He is also a Director of the Kowloon-Canton Railway Corporation. Mr. Lau Yum Chuen, Eddie Mr. Lau Yum Chuen, Eddie, aged 53, appointed on 5 May 1988, is a Non- Executive Director of the Company. He has over 30 years of experience in banking, finance and investment. He is an Executive Director of Henderson Land Development Company Limited ( Henderson Land ) and Henderson Investment Limited ( Henderson Investment ) and a Director of Miramar Hotel and Investment Company, Limited. Both Henderson Land and Henderson Investment have discloseable interests under the provisions of Part II of the Securities (Disclosure of Interests) Ordinance in the Company. Dr. Lee Shau Kee Dr. Lee Shau Kee, DBA(Hon), DSocSc(Hon), LLD(Hon), aged 72, appointed on 15 December 1981, is a Non-Executive Director of the Company. He has been engaged in property development in Hong Kong for more than 40 years. He is the founder, Chairman and Managing Director of Henderson Land Development Company Limited ( Henderson Land ) and Henderson Investment Limited ( Henderson Investment ). He is also Chairman of Henderson China Holdings Limited and The Hong Kong and China Gas Company Limited, Vice-Chairman of Sun Hung Kai Properties Limited, a Director of Miramar Hotel and Investment Company, Limited, The Bank of East Asia, Limited, Pataca Enterprises Limited ( Pataca ), Wiselin Investment Limited ( Wiselin ), Max-mercan Investment Limited ( Max-mercan ), Kingslee S.A. ( Kingslee ), Henderson Development Limited ( Henderson Development ). Henderson Land, Henderson Investment, Pataca, Wiselin, Max-mercan, Kingslee and Henderson Development have discloseable interests under the provisions of Part II of the Securities (Disclosure of Interests) Ordinance in the Company. Dr. Lee is the father-in-law of Mr. Li Ning, a Director of the Company.

7 6 Hong Kong Ferry (Holdings) Co. Ltd. Directors & Senior Management s Profile Mr. Leung Hay Man Mr. Leung Hay Man, FRICS, FHKIS, FCIArb., MCIT, aged 65, appointed on 15 December 1981, is now a Non-Executive Director of the Company. Mr. Leung is also a Director of Henderson Land Development Company Limited ( Henderson Land ), Henderson Investment Limited ( Henderson Investment ) and The Hong Kong and China Gas Company Limited. Both Henderson Land and Henderson Investment have discloseable interests under the provisions of Part II of the Securities (Disclosure of Interests) Ordinance in the Company. Mr. Li Ning Mr. Li Ning, BSc, MBA, aged 43, appointed on 20 October 1989, is now an Executive Director of the Company. He is also an Executive Director of Henderson Land Development Company Limited ( Henderson Land ) and Henderson Investment Limited ( Henderson Investment ). Both Henderson Land and Henderson Investment have discloseable interests under the provisions of Part II of the Securities (Disclosure of Interests) Ordinance in the Company. Mr. Li is the son-in-law of Dr. Lee Shau Kee, a Director of the Company. Mr. Wong Man Kong, Peter Mr. Wong Man Kong, Peter, JP, BSc, FCIT, MRINA, aged 51, Director of the Company from 9 March Mr. Wong was President & Chief Executive Officer of the Company from 1 January 1992 to 31 December Mr. Wong has over 28 years of industrial, commercial and public service experience, having served as Managing Director of Chung Wah Shipbuilding & Engineering (Holdings) Company Limited, Director of First Pacific Bank and Kowloon-Canton Railway Corporation and member in Hong Kong Government s Transport Advisory Board, Industry Development Board and Trade Advisory Board. He is currently serving as a deputy to the State s 9th National People s Congress, a Member of the Hong Kong Special Administrative Region Preparatory Committee, a member in Estate Agents Authority and the Task Force on Unemployment in the HKSAR Government. Currently he holds Directorship of Glorious Sun Enterprises Limited and China Travel International Investment H.K. Ltd.

8 Hong Kong Ferry (Holdings) Co. Ltd. 7 Directors & Senior Management s Profile Dr. Wu Shu Chih, Alex Dr. Wu Shu Chih, Alex, CBE, LLD, JP, aged 79, appointed on 24 April 1976, is an Independent Non-Executive Director of the Company. He was a member of the Legislative Council, the Vice-Chairman of the Hong Kong Stock Exchange and a member of the Advisory Committee of the Securities and Futures Commission. He is now the Chairman of Fidelity Management Limited, Vice-Chairman of Dai Nippon Printing Company (Hong Kong) Limited, and Non-Executive Director of a number of listed companies including Hong Kong Aircraft Engineering Company Limited, National Electronics (Holdings) Limited, Parliburg Holdings Limited and Hung Hing Printing Group Limited. He is also the Life Honorary President of Hong Kong Printers Association. Dr. Wu was appointed a Hong Kong Affairs Adviser in April 1995 and a member of The Selection Committee for the First Government of the Hong Kong Special Administrative Region in November SENIOR MANAGEMENT The Senior Management of the Company is as follows : Mr. Ho Chi Shing, David Group General Manager and General Manager - Ferry Operations Mr. Lai Yu Hung, Francis General Manager - Travel Mr. Lau Mo Kaye, Francis General Manager - Property Mr. Law Cho Wa, Richard Company Secretary and Group Accounting Manager Ms. Leung Chui Ying, Nancy General Manager - Trading Mr. Leung Shu Keung, Brian Internal Audit Manager Mr. Ling Chen Shen, Peter General Manager - Shipyard and General Manager - Planning & Marketing Mr. Tam Kam Mau, Edward Corporate Administration & Information Officer Mr. Tse Chuen Chi, Pollux Chief Financial Officer Mr. Wong Kam On, Frandie General Manager - Hotel Mr. Yu Chung Ki Group Safety Auditor & Legal Advisor

9 8 Hong Kong Ferry (Holdings) Co. Ltd. Directors & Senior Management s Profile SENIOR MANAGEMENT S PROFILE Mr. Ho Chi Shing, David, MA, MBA, FCIT, MRAPI, MIHT, MCIArb, aged 43, joined the Company in 1981 and has been the Group General Manager since He has over 19 years of experience in ferry operations. Mr. Ho was appointed as a member of the Provisional Local Vessel Advisory Committee in 1991, representing the ferry industry. He was also Chairman of the Chartered Institute of Transport in Hong Kong for and Mr. Ho is a member of the Hong Kong Port Operations Committee. Besides, he is a member of the Safety Committee of Hong Kong Outward Bound School and a member of the Transport and Physical Distribution Training Board of The Vocational Training Council. Mr. Lai Yu Hung, Francis, aged 41, joined the Company in 1977 and has been the General Manager of the Travel Division since He has more than 23 years of experience in travel business. Mr. Lai was a Chairman of the Hong Kong Association of Registered Tour Co-ordinators and is a Honorary Secretary of Hong Kong Outbound Tour Operators Association Limited. He is also an Executive Committee member of the International Chinese Tourist Association, Hong Kong Association of Travel Agents Limited and The Federation of Hong Kong Chinese Travel Agents Limited and a Membership Committee member of the Travel Industry Council of Hong Kong. Mr. Lau Mo Kaye, Francis, MBA, CPA(Aust.), FHKSA, ACIArb, aged 57, joined the Company in 1989 and has been the General Manager and Director of the Property Division since Mr. Lau has over 20 years of working experience in the property and construction industries. He was the General Manager of a listed company before he joined the Company. Mr. Lau is an unofficial member of the Interdepartment Working Group of the Hong Kong Government for setting up the Building Management Resources Centres in Hong Kong and a serving Panel Member of the Assessment Review Board - Clearance of Kowloon Walled City of the Hong Kong Housing Authority. He is an Executive Accountant Ambassador and a member of the Communication Committee and the Public Sector Committee of Hong Kong Society of Accountants. He is also a council member of the Hong Kong Association of Property Management Companies and a member of the Course and Examining Committee of Property Management of the City University of Hong Kong. Mr. Law Cho Wa, Richard, MBA, FCCA, FHKSA, ACS, ACIS, aged 35, has been the Secretary of the Company since He joined the Company in 1992 and has over 12 years of experience in accounting, auditing, corporate advisory services and company secretarial practice. He is also the Group Accounting Manager of the Company. Ms. Leung Chui Ying, Nancy, PgD(BA), DMS, aged 39, joined the Company in 1997 as the Corporate Communications Manager. She is currently the General Manager of the Trading Division. She has over 21 years of extensive experience in marketing, administration, general management and interactive communications.

10 Hong Kong Ferry (Holdings) Co. Ltd. 9 Directors & Senior Management s Profile Mr. Leung Shu Keung, Brian, BA, CFE, aged 38, is the Internal Audit Manager of the Company. He joined the Company in Mr. Ling Chen Shen, Peter, BSc, ACIB, MSNAME, aged 49, joined the Company in He has been the General Manager of the Planning & Marketing Department, and the Director and General Manager of the Shipyard Division since He has over 26 years of experience in banking, finance, China trade, ship repairs and maintenance and general management. Mr. Tam Kam Mau, Edward, MBA, MSc, MBCS, CEng, aged 41, is the Corporate Administration & Information Officer of the Company. He re-joined the Company in Before joining the Company, he worked in the computer and management fields for 16 years. Previously, he had also served in this Company for more than 10 years as EDP Manager and Assistant General Manager of Ferry Operations Division. Mr. Tse Chuen Chi, Pollux, MBA, aged 46, has been the Chief Financial Officer of the Company since He has over 19 years of experience in accounting, corporate finance and corporate development in Hong Kong and overseas. Mr. Wong Kam On, Frandie, CHA, CRDE, MBIM, MIMGT, MHCIMA, aged 46, joined the Company in He has been the General Manager of the Hotel Operation since He has over 27 years of extensive experience in hotel management. Mr. Yu Chung Ki, MIOSH, MASSE, MIIRSM, MBIM, aged 64, is the Group Safety Auditor and Legal Advisor of the Company. He joined the Company in 1992 and has over 33 years of experience in personnel, administration, industrial safety and general management work. Mr. Yu is a serving member of the Maritime Services Training Board of The Vocational Training Council.

11 10 Hong Kong Ferry (Holdings) Co. Ltd. Financial Highlights Variance Turnover $M % Profit/(loss) attributable to shareholders $M 121 (275) 144% Dividends $M Shareholders funds $M 3,899* 4,362* -10.6% Basic earnings/(loss) per share Cents 34.0 (77.2) 144% Dividend per share Cents Dividend cover Times 1.2 Return/(loss) on equity % 3.1* (6.3)* 149.2% Net assets per share $ 11.0* 12.2* -9.8% * These items have been affected by property revaluation. Year Year Group Profit/(Loss) After Taxation 121 (275)

12 Hong Kong Ferry (Holdings) Co. Ltd. 11 Chairman s Statement I have pleasure to present to the shareholders my report on the operations of the Group. PROFIT The Group's consolidated profit after taxation for the year ended 31 December 1999 amounted to HK$121.1 million, representing an increase of 4.2% from the consolidated profit after taxation (excluding the exceptional loss) of HK$116.2 million in The profit per share was 34.0 cents for the year. DIVIDENDS The Board of Directors recommended a final dividend of 20 cents per share. This dividend, together with the interim dividend of 8 cents per share already paid, will make a total distribution of 28 cents for the full year. BUSINESS REVIEW There were two important new developments in the Group's businesses during the year. Firstly, the Group accepted the Government's proposed land premium in respect of the 201 Tai Kok Tsui Road redevelopment ("the Redevelopment") and paid an amount of HK$2.038 billion. Subsequently, the Group disposed of its entitlement to 50% of the sales proceeds of the domestic portion of the Redevelopment to subsidiaries of Henderson Land Development Company Limited for a total consideration of HK$1.5 billion. Secondly, the Group entered into agreements with New World First Ferry Services Company Limited ("NWFF") for the sale of certain vessels and the transfer of the licences to operate all eight passenger ferry routes to NWFF with effect from 15 January Ferry Operations During the year, the loss from local ferry services for the first 3 months operated under the ferry franchise was HK$7.8 million. However, local ferry services operated under the new ferry licences, which commenced on 1 April 1999, recorded a profit of HK$11.1 million. The other ferry operations including the Macau and China ferry services showed a loss of HK$3.4 million for the year. On 15 January 2000, the local passenger ferry services were handed over to NWFF smoothly and the majority of the crew were also recruited by NWFF. On the local ferry operation, the Group retains the dangerous goods vehicular ferry services. Property Operations A profit of HK$64 million was booked for the year out of the first instalment received of HK$202.5 million in respect of the disposal of the entitlement to 50% of the sales proceeds of the domestic portion of the 201 Tai Kok Tsui Road mentioned above.

13 12 Hong Kong Ferry (Holdings) Co. Ltd. Chairman s Statement BUSINESS REVIEW Property Operations The HYFCO Industrial Buildings were vacated by the end of the year to make way for the redevelopment. Gross rental income from investment properties of the Group was HK$57.3 million for the year. Other Businesses Shipyard Operations The Shipyard Operations recorded an operating loss of HK$1.6 million for the year while a profit of HK$9.1 million was recorded in This was mainly due to the decrease in turnover and the heavy cost incurred in restructuring the work force. Travel and Hotel Operations The operating profit of the Travel Division increased by 43% to HK$4.3 million from HK$3.0 million in The operating loss of the Silvermine Beach Hotel was HK$1.0 million for the year. Trading Operations Due to the price war among the major supermarkets during the year, operating profit of the Trading Division decreased by 73% to HK$2.0 million from HK$7.5 million in Interest Income Net interest income on bank deposits was HK$43.3 million for the year. YEAR 2000 COMPLIANCE The modification works on Year 2000 computer compliance program were completed in December There have been no reported Year 2000 non-compliance incidents during the transition period up to and including 29 February The Group has spent about HK$5 million on the project, the majority of which being staff costs charged to the financial periods in which they were incurred. There was no further financial commitment as at the year end date for the project. PROSPECTS The Group is in possession of a number of valuable sites and property development will provide the Group with the main source of income. The Tai Kok Tsui Road redevelopment comprises two phases. Foundation work of Phase I is in progress and the demolition of the HYFCO Industrial Buildings of Phase II is expected to be completed in second half of The staff quarters located at 222 Tai Kok Tsui Road will also be redeveloped into a commercial/ residential complex. Application for the land exchange has already been made. It is anticipated that the development with a site area of about 36,000 sq. ft. shall amount to a gross floor area of 324,000 sq. ft.

14 Hong Kong Ferry (Holdings) Co. Ltd. 13 Chairman s Statement PROSPECTS The Town Planning Board has recently agreed to rezone the Kingsford Industrial Centre at Yau Tong to Residential (Group E) Zone. Upon the rezoning, the site, with an area of about 25,000 sq. ft., can be developed into a commercial/residential building subject to Section 16 planning approval under the Town Planning Ordinance and payment of land premium. ACKNOWLEDGEMENT On behalf of the shareholders and the Board, I would like to take this opportunity to express appreciation to all our staff for their dedication and hard work during the past year. Colin K. Y. Lam Chairman Hong Kong, 17 March 2000

15 14 Hong Kong Ferry (Holdings) Co. Ltd. Commentary on Financial Results The following comments should be read in conjunction with the Audited Consolidated Financial Statements of Hong Kong Ferry (Holdings) Company Limited and the related notes on the accounts. RESULTS OF OPERATIONS Total turnover of the Group amounted to HK$889.2 million, showing a decrease of 7.7% as compared to that recorded in the previous year. The decrease in turnover of the ferry operations and related businesses of HK$243.5 million was partly offset by the increase in turnover of the property development and investment businesses of HK$176 million. Profit after taxation amounted to HK$121.1 million, representing an increase of 144% as compared to that recorded in the previous year. If the write-off of assets relating to the Central Pier development project and expiry of ferry franchise were excluded from the results in 1998, it represented an increase of 4.2% as compared to HK$116.2 million recorded in the previous year. The result was mainly attributed to the profit realised out of the first instalment of HK$202.5 million received from the disposal of 50% of the sales proceeds of the domestic portion of the 201 Tai Kok Tsui Road Redevelopment (the Disposal ), rental income from investment properties and interest income from bank deposits. The change-over from franchised to licenced ferry services helped to improve the results of the Ferry Operations. The reduction in the number of routes operated led to a drop in local ferry patronage by 32% from 22.6 million in 1998 to 15.3 million in this year. Rental income from industrial buildings dropped by over 30% as a result of the redevelopment of the Tai Kok Tsui site and a decrease in the occupancy rate prior to redevelopment. The operating profit of the Travel Operations increased by 43% while the loss of the Silvermine Beach Hotel was reduced by 44% as compared to that recorded in the previous year. The Shipyard Operations recorded a loss for the year while the Trading Operations showed a decrease in operating profit of 73% as compared to that recorded in the previous year. LIQUIDITY AND FINANCIAL RESOURCES As of 31 December 1999, shareholders funds of the Group showed a decrease of 10.6% from that recorded in 1998 and amounted to HK$3,899 million which was attributed primarily to the diminution in value of the properties under development of the Group. Funding for the Group s activities in the year under review was mainly generated from rental on investment properties, interest income on deposits, proceeds received from the Disposal. Payment of the land premium for 201 Tai Kok Tsui Road Redevelopment during the year was funded by the Group s internal resources and bank borrowings, which as at 31 December 1999 stood at HK$800 million.

16 Hong Kong Ferry (Holdings) Co. Ltd. 15 Commentary on Financial Results LIQUIDITY AND FINANCIAL RESOURCES Current assets of the Group were recorded at HK$231 million as compared to the Group s current liabilities of HK$460 million as of 31 December Current ratio of the Group depleted from 3.2 as of 31 December 1998 to 0.5 as of 31 December The current portion of the bank loan of HK$200 million included in current liabilities will be met by the second instalment from the Disposal of HK$397.5 million to be received in the year 2000.

17 16 Hong Kong Ferry (Holdings) Co. Ltd. Report of the Directors The directors have pleasure in submitting their report and audited accounts for the year ended 31 December PRINCIPAL ACTIVITIES The principal activities of the Group were ferry operations and related businesses, property development and investment, trading and services, travel business and hotel operations. The turnover and contribution to profit from operations after finance cost of the principal activities of the Group are as follows: Contribution to profit from operations after Group turnover finance cost HK$ million HK$ million HK$ million HK$ million Ferry operations and related businesses (2.1) (12.5) Property development and investment Trading and services Travel and others (5.0) (9.5) Net interest income No geographical analysis is shown as less than 10% of the Group s turnover and profit from operations after finance cost are derived from activities outside Hong Kong. MAJOR SUPPLIERS AND CUSTOMERS No analysis in respect of the Group s major suppliers and customers is shown as the percentages of turnover attributable to the Group s five largest customers and purchases attributable to the Group s five largest suppliers are less than 30%. SUBSIDIARIES Details of the principal subsidiaries at 31 December 1999 are set out in note 14 on the accounts. ACCOUNTS AND DIVIDENDS The results of the Group for the year ended 31 December 1999, the state of affairs of the Company and of the Group at that date and the related notes are set out in the accounts on pages 23 to 57.

18 Hong Kong Ferry (Holdings) Co. Ltd. 17 Report of the Directors ACCOUNTS AND DIVIDENDS An interim dividend of 8 cents per share was paid on 12 October The directors now recommend a final dividend of 20 cents per share to shareholders whose names appear in the Register of Members on 28 April CHARITABLE DONATIONS The Group s charitable donations paid during the year amounted to HK$23,380 (1998: HK$63,760). FIXED ASSETS Movements in fixed assets are set out in note 11 on the accounts. SUBSTANTIAL SHAREHOLDERS At 31 December 1999, the following interests in shares in the Company were recorded in the register required to be kept under Section 16(1) of the Securities (Disclosure of Interests) Ordinance ( SDI Ordinance ): Name of company No. of shares in which interested Henderson Investment Limited (Note 1) 108,588,090 Pataca Enterprises Limited (Note 1) 70,200,000 Wiselin Investment Limited (Note 2) 38,388,090 Max-mercan Investment Limited (Note 2) 38,388,090 Henderson Development Limited (Note 3) 108,588,090 Henderson Land Development Company Limited (Note 3) 108,588,090 Kingslee S.A. (Note 3) 108,588,090 Hopkins (Cayman) Limited (Note 4) 108,588,090 Rimmer (Cayman) Limited (Note 4) 108,588,090 Notes: The interests in 108,588,090 shares described below relate to the same parcel of shares. 1 The 108,588,090 shares are beneficially owned by some of the subsidiaries of Henderson Investment Limited ( HI ). Some of the subsidiaries of Pataca Enterprises Limited (a subsidiary of HI) beneficially own 70,200,000 shares out of 108,588,090 shares. 2 Wiselin Investment Limited, a subsidiary of Max-mercan Investment Limited which is a subsidiary of HI, beneficially owns 38,388,090 shares out of 108,588,090 shares. 3 These 108,588,090 shares are duplicated in the interests described in Notes 1 and 2. Henderson Development Limited ( HD ) beneficially owns more than one third of the issued share capital in Henderson Land Development Company Limited ( HL ) which is the holding company of Kingslee S.A.. Kingslee S.A. has a controlling interest in HI.

19 18 Hong Kong Ferry (Holdings) Co. Ltd. Report of the Directors SUBSTANTIAL SHAREHOLDERS 4 These 108,588,090 shares are duplicated in the interests described in Notes 1, 2 and 3. Rimmer (Cayman) Limited as trustee of a discretionary trust holds a majority of units in a unit trust ( Unit Trust ). Hopkins (Cayman) Limited as trustee of the Unit Trust owns all the issued ordinary shares which carry the voting rights in the share capital of HD. 5 Dr. Lee Shau Kee beneficially owns all the issued share capital of Rimmer (Cayman) Limited and Hopkins (Cayman) Limited. By virtue of the SDI Ordinance, Dr. Lee Shau Kee is taken to be interested in these 108,588,090 shares which include the shares described in Notes 1, 2, 3 and 4. DIRECTORS The directors during the financial year and up to the date of this Report were: Executive directors Mr. Colin K. Y. Lam (Chairman) Mr. Li Ning Non-executive directors Mr. Lau Chan Kwok (retired on 5 May 1999) Mr. Edmond T. C. Lau Mr. Eddie Y. C. Lau Dr. Lee Shau Kee Mr. Leung Hay Man Mr. Peter M. K. Wong Independent non-executive directors Sir Kenneth P. F. Fung (resigned on 17 March 2000) Mr. Norman H. C. Ho Mr. Michael Y. L. Kan Dr. Alex S. C. Wu In accordance with Article 103(A) of the Company s Articles of Association, Mr. Colin K.Y. Lam, Dr. Lee Shau Kee, Mr. Leung Hay Man and Dr. Alex S.C. Wu retire by rotation and are eligible for re-election. The non-executive directors have not been appointed for specific terms and they are subject to retirement by rotation and re-election at the Annual General Meeting of the Company in accordance with the Company s Articles of Association.

20 Hong Kong Ferry (Holdings) Co. Ltd. 19 Report of the Directors DIRECTORS INTERESTS IN SECURITIES At 31 December 1999, the interests of the directors in securities of the Company as recorded in the register maintained under section 29 of the SDI Ordinance were as follows: Personal interests Number of shares Corporate interests Number of shares Mr. Colin K.Y. Lam 150,000 Sir Kenneth P.F. Fung 3,950 Mr. Norman H.C. Ho 3,313,950 Mr. Michael Y.L. Kan 22,965 Mr. Edmond T.C. Lau 1,000 Mr. Eddie Y.C. Lau Dr. Lee Shau Kee 7,799, ,588,090 Mr. Leung Hay Man 2,250 Mr. Li Ning Mr. Peter M.K. Wong 1,151,000 Dr. Alex S.C. Wu 186,030 Other than as stated above, no director or chief executive held any interest, whether beneficial or non-beneficial, in the share capital of the Company or any of its associated corporations (within the meaning of the SDI Ordinance). INTERESTS IN CONTRACTS Except for the connected transactions as disclosed in this Report, no other contract of significance, to which the Company or any of its subsidiaries was a party and in which a director of the Company had a material interest, subsisted at the end of the year or at any time during the year. None of the directors proposed for re-election at the forthcoming Annual General Meeting has a service contract with the Company which is not determinable by the Company or any of its subsidiaries within one year without payment other than statutory compensation. RESERVES Movements in reserves of the Company and of the Group during the year are set out in note 22 on the accounts. PURCHASE, SALE OR REDEMPTION OF THE COMPANY S LISTED SECURITIES During the year, neither the Company nor any of its subsidiaries has purchased, sold or redeemed any of the Company s listed securities.

21 20 Hong Kong Ferry (Holdings) Co. Ltd. Report of the Directors ARRANGEMENT TO PURCHASE SHARES, WARRANTS, OPTIONS OR DEBENTURES At no time during the year was the Company or any of its subsidiaries a party to any arrangement to enable the directors or chief executive or any of their spouses or children under eighteen years of age to acquire benefits by means of acquisition of shares, options, debentures or warrants of the Company or any other body corporate. BANK LOANS AND OVERDRAFT The Group s bank loans and overdraft as at 31 December 1999 are shown in note 19 on the accounts. FINANCIAL SUMMARIES The five years summary of assets and liabilities and ten years financial summary of the Group are set out on pages 58 to 60. GROUP PROPERTIES A summary of the Group s properties is set out on page 61. USE OF PROCEEDS The remaining proceeds from the rights issue in October 1994 have been fully utilised for the payment of land premium for the redevelopment of 201 Tai Kok Tsui Road. CONNECTED TRANSACTION During the year under review, the Group has entered into the transactions and arrangements as described in note 27 on the accounts with persons who are connected persons for the purposes of the Rules Governing the Listing of Securities (the Listing Rules ) on The Stock Exchange of Hong Kong Limited. COMPLIANCE WITH THE CODE OF BEST PRACTICE The Company has complied throughout the year with the Code of Best Practice as set out by The Stock Exchange of Hong Kong Limited in Appendix 14 to the Listing Rules, except that the independent non-executive directors have not been appointed for specific terms and are subject to retirement by rotation and re-election at Annual General Meetings in accordance with the Company s Articles of Association.

22 Hong Kong Ferry (Holdings) Co. Ltd. 21 Report of the Directors AUDITORS KPMG retire and, being eligible, offer themselves for re-appointment. A resolution for the reappointment of KPMG as auditors of the Company is to be proposed at the forthcoming Annual General Meeting. On behalf of the board Colin K.Y. Lam Chairman Li Ning Director Hong Kong, 17 March 2000

23 22 Hong Kong Ferry (Holdings) Co. Ltd. Report of the Auditors Auditors report to the shareholders of Hong Kong Ferry (Holdings) Company Limited (Incorporated in Hong Kong with limited liability) We have audited the accounts on pages 23 to 57 which have been prepared in accordance with accounting principles generally accepted in Hong Kong. RESPECTIVE RESPONSIBILITIES OF DIRECTORS AND AUDITORS The Hong Kong Companies Ordinance requires the directors to prepare accounts which give a true and fair view. In preparing accounts which give a true and fair view it is fundamental that appropriate accounting policies are selected and applied consistently, that judgements and estimates are made which are prudent and reasonable and that the reasons for any significant departure from applicable accounting standards are stated. It is our responsibility to form an independent opinion, based on our audit, on those accounts and to report our opinion to you. BASIS OF OPINION We conducted our audit in accordance with Statements of Auditing Standards issued by the Hong Kong Society of Accountants. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the accounts. It also includes an assessment of the significant estimates and judgements made by the directors in the preparation of the accounts, and of whether the accounting policies are appropriate to the Company s and the Group s circumstances, consistently applied and adequately disclosed. We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance as to whether the accounts are free from material misstatement. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the accounts. We believe that our audit provides a reasonable basis for our opinion. OPINION In our opinion, the accounts give a true and fair view, in all material respects, of the state of the Company s and the Group s affairs as at 31 December 1999 and of the Group s profit and cash flows for the year then ended and have been properly prepared in accordance with the Hong Kong Companies Ordinance. KPMG Certified Public Accountants Hong Kong, 17 March 2000

24 Hong Kong Ferry (Holdings) Co. Ltd. 23 Consolidated Profit and Loss Account For the year ended 31 December 1999 Note HK$ 000 HK$ 000 Turnover 2 889, ,593 Cost of sales (665,896) (722,222) 223, ,371 Other revenue 3 48, ,513 Other net income 3 24,682 18,490 Distribution costs (4,945) (3,575) Administrative expenses (109,544) (157,031) Other operating expenses (49,805) (55,341) Profit from operations 131, ,427 Finance cost 4 (6,972) (24,750) Write-off of costs relating to Central pier development project (257,298) Write-down in value of assets and costs relating to the expiry of ferry franchise (134,062) Profit/(loss) from ordinary activities before taxation 4 124,813 (257,683) Taxation 7(a) (3,673) (17,457) Profit/(loss) attributable to shareholders 8 121,140 (275,140) Retained profits at 1 January 341, , , ,420 Dividends 9 (99,757) (99,757) Retained profits at 31 December , ,663 Basic earnings/(loss) per share (cents) (77.2) The notes on pages 32 to 57 form part of these accounts.

25 24 Hong Kong Ferry (Holdings) Co. Ltd. Consolidated Statement of Recognised Gains and Losses For the year ended 31 December HK$ 000 HK$ 000 Diminution in value of properties prior to transfer to properties under development (434,295) Surplus/(deficit) on revaluation of properties 1,000 (1,364,608) Surplus on revaluation of securities 6,924 Net losses not recognised in the profit and loss account (426,371) (1,364,608) Net profit/(loss) for the year as reported in the profit and loss account 121,140 (275,140) Less: Net transfer to the profit and loss account from reserves (57,870) (7,669) Total recognised gains and losses (363,101) (1,647,417) The notes on pages 32 to 57 form part of these accounts.

26 Hong Kong Ferry (Holdings) Co. Ltd. 25 Consolidated Balance Sheet As at 31 December 1999 Non-current assets Note HK$ 000 HK$ 000 HK$ 000 HK$ 000 Fixed assets Investment properties 188,000 1,276,000 Properties held for development 1,331,000 Property, plant and equipment 611, , ,691 3,239,531 Properties under development 12 3,868,511 Other non-current financial assets 15 85,783 73,580 Current assets 4,753,985 3,313,111 Inventories 16 33,281 39,733 Debtors and prepayments 17 69,637 82,439 Tax recoverable 7(c) 37,372 27,753 Cash and cash equivalents 18 90,778 1,413,380 Current liabilities 231,068 1,563, Bank overdraft 19 2,266 1,464 Creditors and accrued charges 184, ,893 Short term bank loans ,000 Current portion of long term bank loans ,000 Taxation 7(b) 1,525 4,563 Proposed final dividend 9 71,254 71, , ,

27 26 Hong Kong Ferry (Holdings) Co. Ltd. Consolidated Balance Sheet As at 31 December 1999 Note HK$ 000 HK$ 000 HK$ 000 HK$ 000 Net current (liabilities)/assets (228,601) 1,070,131 Total assets less current liabilities 4,525,384 4,383,242 Non-current liabilities Bank loans ,000 Deferred taxation 20 26,500 21, ,500 21,500 NET ASSETS 3,898,884 4,361,742 CAPITAL AND RESERVES Share capital , ,274 Reserves 22 3,542,610 4,005,468 3,898,884 4,361,742 The notes on pages 32 to 57 form part of these accounts. Approved by the board of directors on 17 March Colin K.Y. Lam Chairman Li Ning Director

28 Hong Kong Ferry (Holdings) Co. Ltd. 27 Balance Sheet As at 31 December 1999 Note HK$ 000 HK$ 000 HK$ 000 HK$ 000 Non-current assets Fixed assets Property, plant and equipment , ,344 Properties pending transfer to subsidiaries 13 2,420,000 Interest in subsidiaries 14 4,460, ,476 Other non-current financial assets 15 7,297 7,396 4,902,742 3,708,216 Current assets Debtors and prepayments 17 21,114 46,030 Tax recoverable 7(c) 34,120 21,886 Cash and cash equivalents 18 1,772 1,230,914 Current liabilities 57,006 1,298, Creditors and accrued charges 22,343 53,980 Short term bank loans ,000 Proposed final dividend 9 71,254 71,254 93, , Net current (liabilities)/assets (36,591) 973,596 Total assets less current liabilities 4,866,151 4,681,812 Non-current liabilities Deferred taxation 20 26,000 21,000 NET ASSETS 4,840,151 4,660,812

29 28 Hong Kong Ferry (Holdings) Co. Ltd. Balance Sheet As at 31 December 1999 Note HK$ 000 HK$ 000 HK$ 000 HK$ 000 CAPITAL AND RESERVES Share capital , ,274 Reserves 22 4,483,877 4,304,538 4,840,151 4,660,812 The notes on pages 32 to 57 form part of these accounts. Approved by the board of directors on 17 March Colin K.Y. Lam Chairman Li Ning Director

30 Hong Kong Ferry (Holdings) Co. Ltd. 29 Consolidated Cash Flow Statement For the year ended 31 December 1999 Note HK$ 000 HK$ 000 HK$ 000 HK$ 000 Net cash (outflow)/inflow from operating activities (a) (1,792,850) 180,364 Returns on investments and servicing of finance Interest received 56, ,734 Interest paid (6,942) (25,624) Dividends received 1,728 2,458 Dividends paid (99,757) (131,822) Net cash outflow from returns on investments and servicing of finance (48,559) (37,254) Taxation Profits tax paid (21,232) (13,429) Profits tax refunded 9,902 Tax paid (11,330) (13,429) Investing activities Acquisition of unlisted investments (27) Payments for purchase of fixed assets (27,676) (23,511) Payments for Central pier development costs (1,062) Decrease in advances to investee companies 98 8,729 Receipts from sale of fixed assets 6,913 2,274 Receipts from sale of listed investments 35,499 Net cash (outflow)/inflow from investing activities (20,665) 21,902 Net cash (outflow)/inflow before financing (1,873,404) 151,583

31 30 Hong Kong Ferry (Holdings) Co. Ltd. Consolidated Cash Flow Statement For the year ended 31 December 1999 Note HK$ 000 HK$ 000 HK$ 000 HK$ 000 Financing New bank loans (b) 800,000 Net cash inflow from financing 800,000 (Decrease)/increase in cash and cash equivalents (1,073,404) 151,583 Cash and cash equivalents at 1 January 1,161,916 1,010,333 Cash and cash equivalents at 31 December 88,512 1,161,916 Analysis of the balances of cash and cash equivalents Cash at bank and in hand 18,778 23,754 Short term deposits 72,000 1,389,626 Bank overdraft and loans repayable within three months (2,266) (251,464) 88,512 1,161,916

32 Hong Kong Ferry (Holdings) Co. Ltd. 31 Notes to the Consolidated Cash Flow Statement For the year ended 31 December 1999 (a) Reconciliation of the operating profit to net cash (outflow)/inflow from operating activities HK$ 000 HK$ 000 Profit from operations 131, ,427 Depreciation 48, ,111 (Profit)/loss on sale of fixed assets (6,650) 1,336 Provision for diminution in value of listed investments 5,377 Write back of provision for diminution in value of listed investments (5,377) Deficit on revaluation of investment properties 7,193 Interest income (50,445) (121,967) Dividend income (1,728) (2,458) Realisation of inter-company profits (511) (1,445) Profit on sale of listed investments (3,493) Increase in properties under development (1,947,358) Decrease in inventories 6,452 9,785 Decrease in debtors and prepayments 6,835 50,191 Increase/(decrease) in creditors and accrued charges 18,701 (38,500) Net cash (outflow)/inflow from operating activities (1,792,850) 180,364 (b) Analysis of changes in financing during the year Long term bank loans HK$ 000 At 1 January 1999 Cash flows from financing 800,000 At 31 December ,000

33 32 Hong Kong Ferry (Holdings) Co. Ltd. Notes on the Accounts 1. PRINCIPAL ACCOUNTING POLICIES (a) Statement of compliance These accounts have been prepared in accordance with all applicable Statements of Standard Accounting Practice and Interpretations issued by the Hong Kong Society of Accountants, accounting principles generally accepted in Hong Kong and the requirements of the Hong Kong Companies Ordinance. A summary of the significant accounting policies adopted by the Group is set out below. (b) Basis of preparation of the accounts The measurement basis used in the preparation of the accounts is historical cost modified by the revaluation of certain properties and the marking to market of investments in non-trading securities as explained in the accounting policies set out below. (c) Basis of consolidation The consolidated accounts include the accounts of the Company and all its subsidiaries made up to 31 December each year. All material inter-company transactions and balances are eliminated on consolidation. Goodwill arising on consolidation, representing the excess of the cost of investments in subsidiaries over the Group s share of the fair value of the separable net assets of the subsidiaries at the respective acquisition dates, is written off directly to capital reserves in the year in which it arises. The excess of the Group s share of the fair value of the separable net assets of subsidiaries acquired over the cost of investments in subsidiaries is credited to capital reserves. (d) Investments in subsidiaries A subsidiary is a company in which the group, directly or indirectly, holds more than half of the issued share capital, or controls more than half of the voting power, or controls the composition of the board of directors. Investments in subsidiaries in the company s balance sheet are stated at cost less any provisions for diminution in value which is other than temporary as determined by the directors for each subsidiary individually. Any such provisions are recognised as an expense in the profit and loss account. (e) Revenue recognition (i) Ferry operations and related services Revenue relating to the ferry operations is recognised when the relevant ferry services are provided.

34 Hong Kong Ferry (Holdings) Co. Ltd. 33 Notes on the Accounts 1. PRINCIPAL ACCOUNTING POLICIES (e) Revenue recognition (ii) Sale of goods Revenue is recognised when goods are delivered to customers. This is taken to be the point in time when the customers have accepted the goods and the related risks and rewards of ownership. (iii) Rental income Rental in respect of properties is recognised on an accrual basis evenly over the periods of the respective tenancies. (iv) Travel business Revenue arising from the travel business is recognised on the completion date of the tours or when the relevant services are provided. (v) Interest income Interest income from bank deposits is accrued on a time-apportioned basis on the principal outstanding and at the rate applicable. (vi) Dividends Dividend income from listed investments is recognised when the share price goes exdividend. (f) Investment properties Investment properties are stated in the balance sheet at their open market value which is assessed annually by qualified valuers. Surpluses arising on revaluation are credited to the investment property revaluation reserve; deficits arising on revaluation are firstly set off against any previous revaluation surpluses and thereafter taken to the profit and loss account. The related portion of surpluses or deficits previously taken to the investment property revaluation reserve is dealt with in the profit and loss account on disposal. When an investment property is substantially ready for redevelopment, it is reclassified as properties under development and any revaluation surplus relating thereto transferred to other property revaluation reserve. No depreciation is provided in respect of investment properties with an unexpired lease term of over 20 years since the valuation takes into account the state of each property at the date of valuation.

35 34 Hong Kong Ferry (Holdings) Co. Ltd. Notes on the Accounts 1. PRINCIPAL ACCOUNTING POLICIES (g) Properties held for development Properties held for development are carried at professional valuation. Surpluses arising on revaluation are credited to other property revaluation reserve ; deficits arising on revaluation are firstly set off against any previous revaluation surpluses and thereafter taken to the profit and loss account. These properties are reclassified as properties under development when they are substantially ready for development. (h) Hotel properties In accordance with normal practice in the hotel industry, no depreciation is provided on hotel properties held on leases with more than 20 years to run at the balance sheet date. It is the Group s policy to maintain the hotel properties in such condition that their value is not diminished by the passage of time so that any element of depreciation would be immaterial. Routine maintenance expenditure is charged to the profit and loss account in the year in which it is incurred. In addition, an annual provision based on the projected maintenance cost for the next five years under the planned maintenance scheme is charged to the profit and loss account. (i) Properties under development Properties under development for investment purposes are stated at carrying value less provision for diminution in value. Properties under development for sale are stated at the lower of carrying value and net realisable value. Carrying value includes amounts transferred from properties held for development and investment properties, premium paid for land and other development costs, including any related borrowing costs. When properties under development for investment purposes are completed, they will be transferred to investment properties and the revaluation surplus relating thereto will be transferred to the investment property revaluation reserve. When properties under development for sale are completed, they will be transferred to completed properties for sale; the revaluation surplus relating thereto will be credited to the profit and loss account upon sale of the properties. When properties under development for sale are sold, revenue and the related costs are recognised after taking into account the outstanding risks and obligations of the Group under the relevant sales agreement.

36 Hong Kong Ferry (Holdings) Co. Ltd. 35 Notes on the Accounts 1. PRINCIPAL ACCOUNTING POLICIES (j) Fixed assets and depreciation (i) Fixed assets other than investment properties, properties held for development and hotel properties are stated in the balance sheet at cost less accumulated depreciation. (ii) The carrying amount of fixed assets carried at depreciated cost is reviewed periodically to determine whether they are in excess of their recoverable amounts. If the carrying amount exceeds the recoverable amount, the asset is written down to the recoverable amount. In assessing the recoverable amount, the expected cash flows generated by the fixed assets are not discounted to their present value. (iii) Depreciation is provided at rates calculated to write off the cost of fixed assets, other than investment properties, properties held for development and hotel properties, over their estimated useful lives on a straight line basis as follows: Land Buildings Ferry vessels and other crafts Over the unexpired terms of the leases 40 years or over the unexpired terms of the leases, if shorter 8 to 15 years Machinery, furniture and other fixed assets - Dry dock 40 years - Others 4 to 10 years (k) Inventories Inventories principally include trading stocks, and spare parts and consumables. (i) Trading stocks are stated at the lower of cost and net realisable value. Cost includes the cost of materials computed using the weighted average method. Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs necessary to make the sale. (ii) Spare parts and consumables are stated at cost, computed using the weighted average method, less provision for obsolescence.

37 36 Hong Kong Ferry (Holdings) Co. Ltd. Notes on the Accounts 1. PRINCIPAL ACCOUNTING POLICIES (l) Other investments in securities (i) Non-trading securities are stated in the balance sheet at fair value. Changes in fair value are recognised in the securities revaluation reserve until the security is sold, collected, or otherwise disposed of, or until there is objective evidence that the security is impaired, at which time the relevant cumulative gain or loss is transferred from the securities revaluation reserve to the profit and loss account. (ii) Transfers from the securities revaluation reserve to the profit and loss account as a result of impairments are reversed when the circumstances and events that led to the impairment cease to exist and there is persuasive evidence that the new circumstances and events will persist for the foreseeable future. (iii) Profits or losses on disposal of investments in securities are accounted for in the profit and loss account as they arise. In the case of non-trading securities, the profit or loss includes any amount previously held in the securities revaluation reserve in respect of that security. (m) Translation of foreign currencies Foreign currency transactions during the year are translated into Hong Kong dollars at the exchange rates ruling at the transaction dates. Monetary assets and liabilities in foreign currencies are translated into Hong Kong dollars at the exchange rates ruling at the balance sheet date. Exchange gains and losses on foreign currency translation are dealt with in the profit and loss account. (n) Deferred taxation Deferred taxation is calculated under the liability method in respect of the taxation effect arising from all material timing differences between the accounting and tax treatment of income and expenditure, which are expected with reasonable probability to crystallise in the foreseeable future. Future deferred tax benefits are not recognised unless their realisation is assured beyond reasonable doubt. (o) Operating leases Payments under operating leases are charged to the profit and loss account on a straight line basis over the periods of the respective leases.

38 Hong Kong Ferry (Holdings) Co. Ltd. 37 Notes on the Accounts 1. PRINCIPAL ACCOUNTING POLICIES (p) Borrowing costs Borrowing costs are expensed in the profit and loss account in the period in which they are incurred, except to the extent that they are capitalised as being directly attributable to the acquisition, construction or production of an asset which necessarily takes a substantial period of time to get ready for its intended use or sale. (q) Related parties For the purposes of these accounts, parties are considered to be related to the Group if the Group has the ability, directly or indirectly, to control the party or exercise significant influence over the party in making financial and operating decisions, or vice versa, or where the Group and the party are subject to common control or common significant influence. Related parties may be individuals or entities. (r) Cash equivalents Cash equivalents are short-term, highly liquid investments which are readily convertible into known amounts of cash without notice and which were within three months of maturity when acquired. For the purposes of the cash flow statement, cash equivalents would also include advances from banks repayable within three months from the date of the advance. 2. TURNOVER Group turnover represents gross income from sales and services provided to third parties, analysed as follows: HK$ 000 HK$ 000 Ferry operations and related businesses 357, ,967 Property development and investment 259,820 83,825 Trading and services 143, ,796 Travel and others 128, , , ,593

39 38 Hong Kong Ferry (Holdings) Co. Ltd. Notes on the Accounts 3. INCOME HK$ 000 HK$ 000 Other revenue Dividend income from unlisted securities 8 Management fee income 2,197 3,090 Other interest income 44, ,162 Rental receivable from operating leases, other than those relating to investment properties 1,197 1,253 48, ,513 Other net income Profit on sale of listed investments 3,493 Profit/(loss) on sale of fixed assets 6,650 (1,336) Other ferry income 1,543 6,616 Write-back of provision for diminution in value of listed investments 5,377 Sundry income 11,112 9,717 24,682 18,490

40 Hong Kong Ferry (Holdings) Co. Ltd. 39 Notes on the Accounts 4. PROFIT /(LOSS) FROM ORDINARY ACTIVITIES BEFORE TAXATION Profit/(loss) from ordinary activities before taxation is arrived at after charging/(crediting): (a) Finance cost: HK$ 000 HK$ 000 Interest on bank advances and other borrowings repayable within five years 34,562 24,750 Other borrowing costs 1,000 35,562 24,750 Less: Borrowing costs capitalised into properties under development (28,590) 6,972 24,750 The borrowing costs have been capitalised at a rate of 7.65% - 8.5% per annum in respect of properties under development HK$ 000 HK$ 000 (b) Other items: Cost of inventories 183, ,200 Staff costs including retirement costs of HK$11,688,000 (1998: HK$17,128,000) 252, ,855 Auditors remuneration 1,521 1,794 Depreciation 48, ,111 Operating lease charges in respect of - premises 2,381 2,649 - vessels 19,297 19,284 Provision for diminution in value of listed investments 5,377 Rental receivable from investment properties net of outgoings of HK$12,805,000 (1998: HK$13,801,000) (43,171) (64,747) Interest income (50,445) (121,967) Rental receivable from operating leases, other than those relating to investment properties, net of outgoings (13,013) (25,414) Dividend income from listed investments (1,728) (2,401)

41 40 Hong Kong Ferry (Holdings) Co. Ltd. Notes on the Accounts 5. DIRECTORS REMUNERATION Directors remuneration disclosed pursuant to section 161 of the Hong Kong Companies Ordinance is as follows: HK$ 000 HK$ 000 Fees Executive directors Independent non-executive directors Other non-executive directors Other emoluments The remuneration of each of the eleven (1998: twelve) directors falls within the band of below HK$1,000, INDIVIDUALS WITH HIGHEST EMOLUMENTS Of the five individuals with the highest emoluments, none of them is a director of the Company. The emoluments of the five highest paid employees are as follows: HK$ 000 HK$ 000 Salaries and other emoluments 7,042 7,126 Retirement scheme contributions 707 1,024 7,749 8,150 The emoluments of the five individuals with the highest emoluments are within the following bands: Number of Number of HK$ individuals individuals 1,000,001-1,500, ,000,001-2,500,

42 Hong Kong Ferry (Holdings) Co. Ltd. 41 Notes on the Accounts 7. TAXATION (a) Taxation in the consolidated profit and loss account represents: HK$ 000 HK$ 000 Provision for Hong Kong profits tax for the year 2,490 7,689 Under provision in respect of prior years 51 3,532 Tax refund relating to a prior year (3,868) (1,327) 11,221 Overseas taxation 236 Deferred taxation (Note 20(a)) 5,000 6,000 3,673 17,457 The provision for Hong Kong profits tax is based on an estimate of the assessable profits for the year ended 31 December 1999 less relief for available tax loss where applicable at 16% (1998: 16%). (b) Tax payable in the consolidated balance sheet represents: HK$ 000 HK$ 000 Provision for Hong Kong profits tax for the year 1,961 5,589 Provisional profits tax paid (712) (1,261) 1,249 4,328 Balance of profits tax provision relating to a prior year 43 Provision for overseas tax ,525 4,563

43 42 Hong Kong Ferry (Holdings) Co. Ltd. Notes on the Accounts 7. TAXATION (c) Tax recoverable in the balance sheets represents: Group Company HK$ 000 HK$ 000 HK$ 000 HK$ 000 Provision for Hong Kong profits tax for the year 529 2,100 Provisional profits tax paid (3,028) (1,975) (2,499) 125 Balance of profits tax recoverable relating to prior years (34,873) (27,878) (34,120) (21,886) (37,372) (27,753) (34,120) (21,886) 8. PROFIT/(LOSS) ATTRIBUTABLE TO SHAREHOLDERS The Group s profit/(loss) attributable to shareholders includes a profit of HK$2,546,996,000 (1998: a loss of HK$254,201,000) which has been dealt with in the accounts of the Company. 9. DIVIDENDS HK$ 000 HK$ 000 Interim dividend paid of 8 cents per share (1998: 8 cents) 28,503 28,503 Proposed final dividend of 20 cents per share (1998: 20 cents) 71,254 71,254 99,757 99, BASIC EARNINGS/(LOSS) PER SHARE The calculation of basic earnings/(loss) per share is based on a profit of HK$121,140,000 (1998: a loss of HK$275,140,000) and the weighted average of 356,273,883 (1998: 356,273,883) ordinary shares in issue during the year.

44 Hong Kong Ferry (Holdings) Co. Ltd. 43 Notes on the Accounts 11. FIXED ASSETS Group Property, plant and equipment Cost or valuation: Machinery, Leasehold Ferry vessels furniture Properties Hotel land and and other and other Investment held for properties buildings crafts fixed assets Sub-total properties development Total HK$ 000 HK$ 000 HK$ 000 HK$ 000 HK$ 000 HK$ 000 HK$ 000 HK$ 000 At 1 January , , , ,378 1,626,330 1,276,000 1,331,000 4,233,330 Additions ,064 3,852 27,676 27,676 Disposals (7,556) (112,427) (2,910) (122,893) (122,893) Transfer to properties under development (1,089,000) (1,331,000) (2,420,000) Revaluation surplus 1,000 1,000 At 31 December , , , ,320 1,531, ,000 1,719, Representing: Cost 63, , , ,320 1,531,113 1,531, valuation 188, ,000 63, , , ,320 1,531, ,000 1,719,113 Aggregate depreciation: At 1 January , , , , ,799 Charge for the year 7,916 21,725 18,612 48,253 48,253 Written back on disposal (7,395) (112,357) (2,878) (122,630) (122,630) At 31 December , , , , , Net book value: At 31 December , , , , , , ,691 At 31 December , , , , ,531 1,276,000 1,331,000 3,239,531

45 44 Hong Kong Ferry (Holdings) Co. Ltd. Notes on the Accounts 11. FIXED ASSETS Company Property, plant and equipment Cost: Machinery, Leasehold Ferry vessels furniture land and and other and other buildings crafts fixed assets Total HK$ 000 HK$ 000 HK$ 000 HK$ 000 At 1 January , , ,491 1,076,976 Additions Disposals (71,787) (71,787) Transfer to subsidiaries (1,742) (219) (1,961) At 31 December , , ,272 1,003, Aggregate depreciation: At 1 January , ,278 40, ,632 Charge for the year 4,664 14,584 10,073 29,321 Written back on disposal (71,785) (71,785) Transfer to subsidiaries (1,742) (40) (1,782) At 31 December , ,335 50, , Net book value: At 31 December ,445 93, , ,872 At 31 December , , , ,344 (a) Investment properties held by the Group have been revalued by DTZ Debenham Tie Leung Limited at HK$188 million as at 31 December 1999 on an open market value basis, having regard to net rental income and reversionary income potential.

46 Hong Kong Ferry (Holdings) Co. Ltd. 45 Notes on the Accounts 11. FIXED ASSETS (b) The analysis of the net book value of leasehold properties, which are all held in Hong Kong, is as follows: Group Company HK$ 000 HK$ 000 HK$ 000 HK$ 000 Medium term lease 457,071 2,882, , ,109 Short term lease 30,980 32, ,051 2,914, , , PROPERTIES UNDER DEVELOPMENT HK$ 000 HK$ 000 Transfer from investment properties 893,567 Transfer from properties held for development 1,092,138 Additions 2,085,306 Disposals (202,500) At 31 December 3,868, PROPERTIES PENDING TRANSFER TO SUBSIDIARIES These properties were transferred to subsidiaries of the Company during 1999.

47 46 Hong Kong Ferry (Holdings) Co. Ltd. Notes on the Accounts 14. INTEREST IN SUBSIDIARIES Company HK$ 000 HK$ 000 Unlisted shares, at cost 167, ,278 Amounts due from subsidiaries 4,667,718 1,963,638 Provision for diminution in value (373,734) (373,734) 4,461,262 1,757,182 Amounts due to subsidiaries (689) (706) Deposits received from subsidiaries in respect of properties pending transfer (940,000) 4,460, ,476 Details of principal subsidiaries, which materially affect the results or assets of the Group, are as follows: Ordinary share capital % held % held by the by a Principal Issued Company subsidiary activities (HK$) HYFCO Development 12,000, Property Company Limited investment The Hong Kong Shipyard Limited 17,000, Shipbuilding and repairs HYFCO Trading and Trading Investments Company Limited HYFCO Estate 25,000, Property Management & Agency Limited management HYFCO Properties Limited 21,700, Hotel investment

48 Hong Kong Ferry (Holdings) Co. Ltd. 47 Notes on the Accounts 14. INTEREST IN SUBSIDIARIES Ordinary share capital % held % held by the by a Principal Issued Company subsidiary activities (HK$) HYFCO Travel Agency Limited 3,500, Travel business The Hongkong and 100,000, Ferry Yaumati Ferry Company Limited operations Fine Time Development Limited Property investment Galaxy Hotel Management 1,350, Hotel Company Limited management and floating restaurant business World Fame Shipping Limited Ship management Genius Star Development Limited Godown business Hong Kong Ferry Finance Group Company Limited financing Pico International Limited 6,000, Investment holding Thommen Limited Investment holding Lenfield Limited Property development HKF Property Investment Limited Property development All the above subsidiaries are incorporated and operate in Hong Kong.

49 48 Hong Kong Ferry (Holdings) Co. Ltd. Notes on the Accounts 15. OTHER NON-CURRENT FINANCIAL ASSETS Group Company Non-trading securities HK$ 000 HK$ 000 HK$ 000 HK$ 000 Unlisted shares, at cost 16,261 16,261 16,256 16,256 Less: Provision for diminution in value (16,140) (16,140) (16,140) (16,140) Advances to investee companies less provision 7,682 7,780 7,181 7,280 7,803 7,901 7,297 7, Listed shares - in Hong Kong 77,627 69,752 - outside Hong Kong 353 1,304 77,980 71,056 Less: Provision for diminution in value (5,377) 77,980 65, Total investments 85,783 73,580 7,297 7,396 Market value of listed shares at 31 December 77,980 49,545 Included in unlisted investments are interests in two companies, namely, Authian Estates Limited and Celelight Company Limited, both incorporated in Hong Kong, in which the Group respectively holds 50% and 33 1 /3 % of equity interest. The equity method of accounting for these companies is not adopted as the results and net assets of these companies are not material to the Group.

50 Hong Kong Ferry (Holdings) Co. Ltd. 49 Notes on the Accounts 16. INVENTORIES Group Company HK$ 000 HK$ 000 HK$ 000 HK$ 000 Trading stocks 11,016 17,641 Spare parts and consumables 17,920 20,838 Work in progress 4,345 1,254 33,281 39,733 The amount of spare parts and consumables carried at cost less provision is HK$4,476,000 (1998: HK$5,808,000). 17. DEBTORS AND PREPAYMENTS Group Company HK$ 000 HK$ 000 HK$ 000 HK$ 000 Debtors and prepayments 69,637 82,439 3,999 10,630 Dividends receivable from subsidiaries 17,115 35,400 69,637 82,439 21,114 46, CASH AND CASH EQUIVALENTS Group Company HK$ 000 HK$ 000 HK$ 000 HK$ 000 Deposits with banks and other financial institutions 72,000 1,389,626 1,226,637 Cash at bank and in hand 18,778 23,754 1,772 4,277 90,778 1,413,380 1,772 1,230,914

51 50 Hong Kong Ferry (Holdings) Co. Ltd. Notes on the Accounts 19. BANK LOANS AND OVERDRAFT At 31 December 1999, the bank loans and overdraft were repayable as follows: Group Company HK$ 000 HK$ 000 HK$ 000 HK$ 000 Within 1 year or on demand 202, , ,000 After 1 year but within 2 years 600, , , ,000 These were analysed as follows: Unsecured bank overdraft 2,266 1,464 Unsecured short term bank loans 250, ,000 Long term bank loans (secured) 800, , , ,000 The banking facilities are secured by pledging the shares in the subsidiaries which hold the properties under development with an aggregate carrying value of HK$3,868,511,000 (1998: HK$Nil). 20. DEFERRED TAXATION (a) Movement on deferred taxation is as follows: Group Company HK$ 000 HK$ 000 HK$ 000 HK$ 000 Balance at 1 January 21,500 15,500 21,000 15,500 Transfer from the profit and loss account 5,000 6,000 5,000 5,500 Balance at 31 December 26,500 21,500 26,000 21,000

52 Hong Kong Ferry (Holdings) Co. Ltd. 51 Notes on the Accounts 20. DEFERRED TAXATION (b) Major components of deferred tax of the Group and the Company are set out below: Group Potential Potential liabilities liabilities Provided unprovided Provided unprovided HK$ 000 HK$ 000 HK$ 000 HK$ 000 Depreciation allowances in excess of related depreciation 26,500 6,806 25,526 32,715 Future benefit of tax losses (50,983) (4,026) (42,354) 26,500 (44,177) 21,500 (9,639) Company Potential Potential liabilities liabilities Provided unprovided Provided unprovided HK$ 000 HK$ 000 HK$ 000 HK$ 000 Depreciation allowances in excess of related depreciation 26,000 4,106 25,026 31,725 Future benefit of tax losses (825) (4,026) 26,000 3,281 21,000 31,725

53 52 Hong Kong Ferry (Holdings) Co. Ltd. Notes on the Accounts 21. SHARE CAPITAL Authorised: Number of shares Nominal value HK$ 000 HK$ 000 Ordinary shares of HK$1 each 550,000, ,000, , ,000 Issued and fully paid: Ordinary shares of HK$1 each 356,273, ,273, , ,274 During the year, there was no movement in share capital.

54 Hong Kong Ferry (Holdings) Co. Ltd. 53 Notes on the Accounts 22. RESERVES Group Investment Other property property Securities Other Share revaluation revaluation revaluation capital Retained premium reserve reserve reserve reserves profits Total HK$ 000 HK$ 000 HK$ 000 HK$ 000 HK$ 000 HK$ 000 HK$ 000 At 1 January ,398,527 1,590,325 2,031,094 16, ,560 5,752,642 Revaluation deficit (627,500) (737,108) (1,364,608) Realisation of inter-company profits (7,669) (7,669) Loss for the year (275,140) (275,140) Dividends (99,757) (99,757) At 31 December ,398, ,825 1,293,986 8, ,663 4,005,468 At 1 January ,398, ,825 1,293,986 8, ,663 4,005,468 Diminution in value prior to transfer to properties under development (195,433) (238,862) (434,295) Reclassification (775,585) 775,585 Revaluation surplus 1,000 6,924 7,924 Net deficit on revaluation charged to the profit and loss account 7,193 7,193 Realisation of revaluation reserve (64,552) (64,552) Realisation of inter-company profits (511) (511) Profit for the year 121, ,140 Dividends (99,757) (99,757) At 31 December ,398,527 1,766,157 6,924 7, ,046 3,542,610 Company At 1 January ,398,527 1,569,518 2,031, ,069 5,991,208 Revaluation deficit (598,500) (734,212) (1,332,712) Reclassification (971,018) 971,018 Loss for the year (254,201) (254,201) Dividends (99,757) (99,757) At 31 December ,398,527 2,267, ,111 4,304,538 At 1 January ,398,527 2,267, ,111 4,304,538 Realisation of revaluation reserve (2,267,900) (2,267,900) Profit for the year 2,546,996 2,546,996 Dividends (99,757) (99,757) At 31 December ,398,527 3,085,350 4,483,877 The distributable reserves of the Company at 31 December 1999 amounted to HK$566,223,000 (1998: HK$638,111,000), representing part of its retained profits at that date. The Company s other reserves are not distributable.

55 54 Hong Kong Ferry (Holdings) Co. Ltd. Notes on the Accounts 23. CAPITAL AND OTHER COMMITMENTS (a) Capital commitments outstanding at 31 December 1999 not provided for in the accounts were as follows: Group HK$ 000 HK$ 000 Contracted for 37,884 12,375 Authorised but not contracted for 293,622 7,500 (b) At 31 December 1999, the Group had future development expenditure relating to properties under development for sale amounting to HK$1,041,615,000 (1998:HK$40,223,000). (c) At 31 December 1999, the Group had commitments under operating leases to make payments in the next year were as follows: Group Properties Vessels Properties Vessels HK$ 000 HK$ 000 HK$ 000 HK$ 000 Leases expiring within 1 year Leases expiring after 1 year but within 5 years 1, ,006 2, ,566 16, RETIREMENT SCHEMES The Group operates defined benefit schemes covering substantially all permanent staff. The schemes are administered by independent trustees with assets held separately from those of the Group. The schemes operated by the Group are Outdoor Staff Retirement Fund, Office Staff Retirement Fund and Group Staff Retirement Fund. Contributions to the defined benefit schemes are made in accordance with recommendations of independent actuaries who value the schemes at regular intervals, and are charged to the profit and loss account. Retirement costs for the year were HK$11,688,000 (1998: HK$17,128,000).

56 Hong Kong Ferry (Holdings) Co. Ltd. 55 Notes on the Accounts 24. RETIREMENT SCHEMES The latest actuarial valuation on the Outdoor Staff Retirement Fund was as at 31 December The market value of its assets was HK$96.2 million, representing 108% of the scheme s vested liabilities at that date. The latest actuarial valuation on the Office Staff Retirement Fund was as at 31 December The market value of its assets was HK$58.1 million, representing 131% of the scheme s vested liabilities at that date. The latest actuarial valuation on the Group Staff Retirement Fund was as at 30 September The market value of its assets was HK$14.8 million, representing 244% of the scheme s vested liabilities at that date. There was no significant difference between the aggregate past service liabilities and the market value of assets of the above schemes as at the above valuation dates. The above actuarial valuations were prepared by qualified staff of Watson Wyatt Hong Kong Limited, who are members of recognised actuarial bodies, using the Attained Age Method. The actuarial bases used included investment yield, salary escalation, expected retirement age, withdrawal rates and mortality rates. 25. CONTINGENT LIABILITIES At 31 December 1999, there were contingent liabilities in respect of the following: (a) A statement of claim was filed at the High Court of Hong Kong by the Secretary for Justice against The Hongkong and Yaumati Ferry Company Limited ( HYF ), a wholly-owned subsidiary of the Company, and the Company in November 1999 for the sum of approximately HK$55 million and other extra expenses in respect of a dispute over the reimbursement of certain costs incurred by the Hong Kong Government on the implementation of certain piling design to cater for the proposed redevelopment of the re-provided ferry piers in Central into new commercial and residential premises, which proposed redevelopment was not pursued due to high premium requested by the Lands Department. It is the Company s present intention based on legal advice to contest this claim. The directors are of the opinion that there are grounds for HYF and the Company to resist the claim. In addition, HYF and the Company are counterclaiming the Government for the sum of approximately HK$18 million, being costs relating to the redevelopment of the Central piers. Therefore, no provision for the claim or related legal cost has been made in the accounts. (b) Guarantees given to banks by the Company in respect of banking facilities extended to certain subsidiaries amounting to HK$801,285,000 (1998: HK$51,218,000).

57 56 Hong Kong Ferry (Holdings) Co. Ltd. Notes on the Accounts 26. CHANGE IN ACCOUNTING POLICY In prior years, long term investments (reclassified as non-trading securities in 1999) were stated at cost less provision for permanent diminution in value estimated by the directors. With effect from 1 January 1999, the Group adopted an accounting policy for stating non-trading securities at fair value as set out in note 1 (l) in order to comply with Statement of Standard Accounting Practice ( SSAP ) 24 issued by the Hong Kong Society of Accountants. No prior period adjustment has been made as the effect of this change in policy on the Group s profit and net assets is immaterial. 27. MATERIAL RELATED PARTY AND CONNECTED TRANSACTIONS During the year, the Group entered into a Development Agreement ( the Agreement ) with Henderson Land Development Company Limited ( HL ) and two wholly-owned subsidiaries of HL ( HL Sub ), whereby HL Sub acquired 50% of the sales proceeds that may be derived from such part of the redevelopment intended for domestic use in respect of Kowloon Inland Lot No ( the Property ) to which the Group is entitled. The total consideration amounting to HK$1,500 million was based on a professional valuation performed by an independent valuer on 12 November At 31 December 1999, the Group had received HK$202.5 million. The remaining balance of HK$1,297.5 million will be received upon the fulfilment by the Group of conditions as set out in the Agreement. As part of the Agreement, HL Sub agreed to reimburse the Group 50% of its development expenditures relating to the domestic portion of the Property including those incurred prior to the Agreement. HL Sub s share thereof amounting to HK$18,450,000 which remained unpaid at 31 December 1999 has been included in debtors and prepayments. In connection with the redevelopment of the Property, the Group has engaged a wholly-owned subsidiary of HL as the main contractor for a fee of 5% on all works relating to the redevelopment. As at 31 December 1999, no fee had been charged to the Group. The Agreement also provided that, if requested by the Group, HL shall advance or procure one or more of its subsidiaries to advance to the Group an amount of not exceeding HK$1,100 million in total, to enable the Group to discharge its obligations to pay 50% of the development expenditures in respect of the redevelopment of the domestic portion of the Property. HL through its subsidiaries beneficially owns approximately 64.28% of the entire issued share capital of Henderson Investment Limited, a substantial shareholder (as defined in the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited) of the Company.

58 Hong Kong Ferry (Holdings) Co. Ltd. 57 Notes on the Accounts 28. POST BALANCE SHEET EVENT On 2 November 1999 and 14 January 2000, the Group entered into sales and purchase agreements with an independent third party for the transfer of its passenger ferry operation licence and the disposal of its ferry vessels and other related assets for a cash consideration of HK$167 million. A non-refundable deposit of HK$77.5 million had been received by the Group prior to 31 December The transactions were completed on 15 January 2000 and will be reflected in the Group s accounts for the year ending 31 December The assets and turnover of the subject passenger ferry operation constitute approximately 3.2% and 20.9% of the consolidated assets and turnover respectively for the year ended 31 December COMPARATIVE FIGURES The presentation and classification of items in the accounts have been changed due to the adoption of the requirements of SSAP 1 (revised) Presentation of financial statements. As a result, additional line items have been included on the face of the consolidated profit and loss account and the balance sheets as required by SSAP 1 (revised), such as cost of sales, other revenue, finance cost, analysis of expenses, and analyses of current assets and liabilities. Comparative figures have been reclassified to conform with the current year s presentation.

59 58 Hong Kong Ferry (Holdings) Co. Ltd. Summary of Assets and Liabilities of the Group Year $Million $Million $Million $Million $Million Fixed assets *3,685 *4,693 *4,810 *3,240 *799 Properties under development *3,869 Central pier & other development costs Investments Current assets 1,704 1,546 1,409 1, Total assets 5,624 6,497 6,597 4,877 4,985 Liabilities ,086 Net assets employed 4,761 5,864 6,109 4,362 3,899 * These items have been affected by property revaluation.

60 Hong Kong Ferry (Holdings) Co. Ltd. 59 Ten Years Financial Summary Year Turnover $M ,035 1,125 1,173 1,280 1, Profit/(loss) attributable to shareholders $M # # (275) 121 Dividends $M Shareholders funds $M *1,258 *1,352 *1,593 *1,992 *5,333 *4,761 *5,864 *6,109 *4,362 *3,899 Basic earnings /(loss) per (Adjusted) Cents # # (77.2) 34.0 Dividend per (Adjusted) Cents Dividend cover Times # N/A 1.2 Return/(loss) on equity % *8.1 *9.9 *5.5 *5.0 *2.4 # *7.5 *2.6 *2.5 #*(6.3) *3.1 Net assets per (Adjusted) $ *5.2 *5.6 *6.6 *8.3 *15.0 *13.4 *16.5 *17.1 *12.2 *11.0 * These items have been affected by property revaluation. # These items have been affected by exceptional These items have been adjusted for the rights issue of shares in 1994.

61 60 Hong Kong Ferry (Holdings) Co. Ltd. Ten Years Financial Summary Year Year Year ,992 1,593 1,352 1,258 3,899 4,362 6,109 5,864 4,761 5, ,000 2,000 3,000 4,000 5,000 6,000 7,000 Year

62 Hong Kong Ferry (Holdings) Co. Ltd. 61 Group Properties Floor Site Lease area area Location Lot No. expiry (sq.m.) (sq.m.) Equity Description Kowloon 222 Tai Kok Tsui KIL ,730 3, % Staff Road quarters 201 Tai Kok Tsui KIL ** 21, % Properties Road under development Cho Yuen Street, Yau Tong Inland ,967 2, % Industrial Yau Tong Lot No.38 * buildings 71 Hing Wah Street West Kowloon 2000 # 2,862 4, % Emergency West Reclamation Area, repair depot Lai Chi Kok Lot No.S.S.P. Misc.58(KX1850) New Territories 20 Tin Dai Yan Road, Lot Nos.3039A, ,912 3, % Godown Chung Uk Tsuen, 3039RP & 3042 Hung Shui Kiu in DD124 Hung Shui Kiu Ngau Kok Wan Tsing Yi Town ,619 19, % Shipyard North Tsing Yi Lot No.102 Lantau Island Cheung Sha DD , % 10 villa Lot No.695 * houses Mui Wo DD ,467 7, % Hotel Lot No.648 Mui Wo DD ,617 50% Agricultural Lot Nos , land 569 and * The Cheung Sha and Yau Tong properties are held for investment purposes. # The property was disposed of to a third party after the year end. ** The development will provide a total gross floor area of approximately 191,135 sq. m.. It comprises two phases, Phase I and II, which are expected to be completed in late 2002 and early 2004 respectively. Foundation work is in progress. Pursuant to the Agreement as mentioned in note 27 on the accounts, 50% of the sales proceeds that may be derived from the domestic portion of the development has been disposed of to a related party.

63 62 Hong Kong Ferry (Holdings) Co. Ltd. Notice of Annual General Meeting NOTICE IS HEREBY GIVEN that the Annual General Meeting of the members of the Company will be held on board the vessel, Harbour Cruise - Bauhinia, at the new Wan Chai Pier, Wan Chai, Hong Kong on Thursday, 4 May 2000 at 12:00 noon for the following purposes:- (1) To receive and consider the audited accounts and reports of the Directors and Auditors for the year ended 31 December (2) To declare a final dividend. (3) To re-elect Directors. (4) To re-appoint KPMG as Auditors and to authorize the Directors to fix their remuneration. As special business, to consider and, if thought fit, pass with or without amendments, the following resolutions as ordinary resolutions:- (5) THAT:- (a) subject to paragraph (c) and pursuant to section 57B of the Companies Ordinance (Chapter 32 of the Laws of Hong Kong), the exercise by the Directors of the Company during the Relevant Period of all the powers of the Company to allot, issue and deal with additional shares of HK$1 each in the capital of the Company and to make or grant offers, agreements and options which would or might require the exercise of such powers be and is hereby generally and unconditionally approved; (b) the approval in paragraph (a) shall authorize the Directors of the Company during the Relevant Period to make or grant offers, agreements and options which might require the exercise of such powers after the end of the Relevant Period; (c) the aggregate nominal amount of share capital allotted or agreed conditionally or unconditionally to be allotted (whether pursuant to an option or otherwise) by the Directors of the Company pursuant to the approval in paragraph (a), otherwise than pursuant to (i) a Rights Issue, or (ii) an issue of shares in the Company upon the exercise of the subscription rights under any securities which are convertible into shares of the Company, or (iii) any scrip dividend or similar arrangement providing for the allotment of shares in lieu of the whole or part of a dividend on shares of the Company in accordance with the Articles of Association of the Company, shall not exceed 20% of the aggregate nominal amount of the share capital of the Company in issue at the date of passing this Resolution and the said approval shall be limited accordingly; and

64 Hong Kong Ferry (Holdings) Co. Ltd. 63 Notice of Annual General Meeting (d) for the purposes of this Resolution:- Relevant Period means the period from the passing of the Resolution until whichever is the earliest of:- (i) the conclusion of the next Annual General Meeting of the Company; (ii) the expiration of the period within which the next Annual General Meeting of the Company is required by the Companies Ordinance (Chapter 32 of the Laws of Hong Kong) to be held; and (iii) the date upon which the authority set out in this Resolution is revoked or varied by way of ordinary resolution in any general meeting of the Company; and Rights Issue means an offer of shares in the capital of the Company open for a period fixed by the Directors of the Company to holders of shares of the Company whose names appear on the register of members of the Company on a fixed record date in proportion to their then holdings of such shares as at that date (subject to such exclusions or other arrangements as the Directors of the Company may deem necessary or expedient in relation to fractional entitlements or having regard to any restrictions or obligations under the laws of, or the requirements of any recognised regulatory body or any stock exchange in any territory outside Hong Kong). (6) THAT:- (a) subject to paragraph (b) below, the exercise by the Directors of the Company during the Relevant Period of all the powers of the Company to purchase its own securities subject to the conditions set out in the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited, be and is hereby approved generally and unconditionally; (b) the aggregate nominal amount of share capital which may be purchased by the Directors of the Company pursuant to the approval in paragraph (a) shall not exceed 10% of the aggregate nominal amount of the issued share capital of the Company at the date of passing this Resolution and the said approval shall be limited accordingly; and

65 64 Hong Kong Ferry (Holdings) Co. Ltd. Notice of Annual General Meeting (c) for the purposes of this Resolution:- Relevant Period means the period from the passing of the Resolution until whichever is the earliest of: (i) the conclusion of the next Annual General Meeting of the Company; (ii) the expiration of the period within which the next Annual General Meeting of the Company is required by the Companies Ordinance (Chapter 32 of the Laws of Hong Kong) to be held; and (iii) the date upon which the authority set out in this Resolution is revoked or varied by way of ordinary resolution in any general meeting of the Company. (7) THAT conditional upon the passing of Ordinary Resolutions numbered (5) and (6) as set out in the notice of this meeting of which this Resolution forms part, the aggregate nominal amount of the share capital of the Company which shall have been purchased by the Company after the date hereof pursuant to and in accordance with the said Ordinary Resolution numbered (6) shall be added to the aggregate nominal amount of share capital that may be allotted or agreed conditionally or unconditionally to be allotted by the Directors of the Company pursuant to the general mandate to allot, issue and deal with additional shares granted to the Directors of the Company by the said Ordinary Resolution numbered (5). By Order of the Board Richard C.W. Law Company Secretary Hong Kong, 17 March 2000

66 Hong Kong Ferry (Holdings) Co. Ltd. 65 Notice of Annual General Meeting Notes:- 1. The register of members will be closed from Tuesday, 25 April 2000 to Friday, 28 April 2000, both days inclusive during which period no transfer of shares will be registered. In order to qualify for the final dividend, all transfers accompanied by the relevant share certificates and transfer forms must be lodged with the Company s Registrars, Standard Registrars Limited at 5th Floor, Wing On Centre, 111 Connaught Road Central, Hong Kong not later that 4:00 p.m. on Thursday, 20 April A member entitled to attend and vote at the meeting is entitled to appoint proxies to attend and, on a poll, vote for him. A proxy need not be a member of the Company. Proxy forms together with the power of attorney (if any) or other authority (if any) under which it is signed or a notarially certified copy of that power of attorney or authority must be deposited with the Company s Registrars, Standard Registrars Limited at 5th Floor, Wing On Centre, 111 Connaught Road Central, Hong Kong not less than 48 hours before the time appointed for holding the meeting or any adjournment thereof. 3. With respect to items (5) and (6) above, the Directors wish to state that they have no immediate plans to issue any new shares of the Company or to repurchase any existing shares of the Company. 4. An explanatory statement containing further details regarding items (5) to (7) above will be sent to members together with the 1999 Annual Report.

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