Group Profile
Hong Kong Ferry (Holdings) Company Limited
Property Hotel Ferry Investment and Shipyard Trading Travel Management Management Operations
HYFCO Galaxy Hotel The Hongkong Fine Time The Hong Kong Trading and Management and Yaumati HYFCO Travel Development Shipyard Investments Company Ferry Company Agency Limited Limited Limited Company Limited Limited Limited
HYFCO Development Company Limited
HYFCO Properties Limited
Genius Star Development Limited
HYFCO Estate Management & Agency Limited
HONG KONG FERRY 2 Corporate Information
Board of Directors Mr. Lau Chan Kwok (Honorary Chairman) * 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 Banque Nationale de Paris The Dai-Ichi Kangyo Bank, Limited Dao Heng Bank Limited The Fuji Bank, Limited The Hongkong and Shanghai Banking Corporation Limited ING Bank, N.V. The Sanwa Bank Limited The Sumitomo Bank, Limited Registered Office Low Block Unit D, 2/F HYFCO Industrial Building III 22 Fuk Lee Street Tai Kok Tsui Kowloon Hong Kong Registrars Standard Registrars Limited 5/F, Wing On Centre 111 Connaught Road Central Hong Kong
* Executive Director
3 HONG KONG FERRY Directors’ & Senior Management’s Profile
Directors The current Directors of the Company are as follows : -
Mr. Lau Chan Kwok (Honorary Chairman) 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
The details of the Directors are as follows : -
Directors’ Profile
Mr. Lau Chan Kwok (Honorary Chairman) Mr. Lau Chan Kwok, OBE, JP, aged 88, appointed on 11 April 1953, is now Honorary Chairman and a Non-Executive Director of the Company. Mr. Lau has served the Company for over 52 years and is the father of Mr. Lau Ting Chung, Edmond, and father-in-law of Mr. Kan Yuet Loong, Michael, both are Directors of the Company.
Mr. Lam Ko Yin, Colin (Chairman) Mr. Lam Ko Yin, Colin, BSc(Hon), ACIB, MBIM, FCIT, aged 47, appointed on 1 July 1986, is the Chairman of the Company. Mr. Lam has over 25 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. HONG KONG FERRY 4 Directors’ & Senior Management’s Profile
Sir Fung Ping Fan, Kenneth Sir Fung Ping Fan, Kenneth, CBE, JP, LLD, DSocSc, KStJ, aged 87, 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 1985. 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.
Mr. Ho Hau Chong, Norman Mr. Ho Hau Chong, Norman, BA, ACA, FHKSA, aged 43, 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 17 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 64, appointed on 6 April 1974, is an Independent Non-Executive Director of the Company. He has over 32 years’ experience in banking and investment. Mr. Kan is the son-in-law of Mr. Lau Chan Kwok, Honorary Chairman and Director of the Company and brother-in- law of Mr. Lau Ting Chung, Edmond and Sir Fung Ping Fan, Kenneth, both are Directors of the Company.
5 HONG KONG FERRY Directors’ & Senior Management’s Profile
Mr. Lau Ting Chung, Edmond Mr. Lau Ting Chung, Edmond, JP, BA, MBA, FCIT, ARINA, aged 59, appointed on 5 April 1972, is now a Non-Executive Director of the Company. Mr. Lau has worked over 32 years with the Company and is the son of Mr. Lau Chan Kwok, Honorary Chairman and Director of the Company and 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 1993. He is also a Director of the Kowloon-Canton Railway Corporation.
Mr. Lau Yum Chuen, Eddie Mr. Lau Yum Chuen, Eddie, aged 52, appointed on 5 May 1988, is a Non-Executive Director of the Company. He has over 27 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 71, 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.
HONG KONG FERRY 6 Directors’ & Senior Management’s Profile
Mr. Leung Hay Man Mr. Leung Hay Man, FRICS, FHKIS, FCIArb., MCIT, aged 64, 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 42, 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 50, Director of the Company from 9 March 1992. Mr. Wong was President & Chief Executive Officer of the Company from 1 January 1992 to 31 December 1995. Mr. Wong has over 25 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 Provisional Urban Council Estate Agents Authority and Task Force on Employment in the HK SAR Government. Currently he holds Directorship of Glorious Sun Enterprises Limited and China Travel International Investment H.K. Ltd.
7 HONG KONG FERRY Directors’ & Senior Management’s Profile
Dr. Wu Shu Chih, Alex Dr. Wu Shu Chih, Alex, CBE, LLD, JP, aged 78, appointed on 24 April 1976, is an Independent Non-Executive Director of the Company. He is a former member of the Legislative Council, and formerly the Vice-Chairman of the Hong Kong Stock Exchange. He is now the Chairman of Fidelity Management Limited and Vice- Chairman of Dai Nippon Printing Company (Hong Kong) Limited. Dr. Wu is a 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 Life Honorary President of Hong Kong Printers Association and a member of the Advisory Committee of The Securities and Futures Commission. 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 1996.
HONG KONG FERRY 8 Directors’ & Senior Management’s Profile
Senior Management The Senior Management of the Company is as follows :–
Mr. Ho Chi Shing, David Group General Manager and General Manager - Ferry Operations Ms. Ho Yin Shan, Brenda General Manager - Trading 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 Mr. Law Fuk Chuen, Ford Internal Audit Manager Ms. Leung Chui Ying, Nancy Corporate Communications 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
Senior Management’s Profile Mr. Ho Chi Shing, David, MBA, FCIT, MRAPI, MIHT, ACIArb, aged 42, joined the Company in 1981 and has been the Group General Manager since 1996. He has over 18 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 1995 - 1996 and 1996 - 1997. 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.
Ms. Ho Yin Shan, Brenda, MAQAB, PDBS, aged 33, joined the Company in 1989 and has been the General Manager of the Trading Division since 1996. She has over 10 years of experience in trading, wholesaling and retailing businesses.
Mr. Lai Yu Hung, Francis, aged 40, joined the Company in 1977 and has been the General Manager of the Travel Division since 1993. He has more than 22 years of experience in travel business. Mr. Lai is an immediate past Chairman of the Hong Kong Association of Registered Tour Co-ordinators and 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 56, joined the Company in 1989 and has been the General Manager and Director of the Property Division since 1990. 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
9 HONG KONG FERRY Directors’ & Senior Management’s Profile
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, a member of the Organising Committee for the 2002 World Congress of Accountants 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 34, has been the Secretary of the Company since 1997. He joined the Company in 1992 and has over 11 years of experience in accounting, auditing, corporate advisory services and company secretarial practice. He is also the Group Accounting Manager of the Company.
Mr. Law Fuk Chuen, Ford, FCCA, FHKSA, aged 38, is the Internal Audit Manager of the Company. He joined the Company in 1989.
Ms. Leung Chui Ying, Nancy, PgD(BA), DMS, aged 38, has been the Corporate Communications Manager of the Company since 1997. She had over 20 years of extensive experience in marketing, administration, general management and interactive communications.
Mr. Ling Chen Shen, Peter, BSc, ACIB, aged 48, joined the Company in 1995. He has been the General Manager of the Planning & Marketing Department, and the Director and General Manager of the Shipyard Division since 1996. He has over 25 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 40, is the Corporate Administration & Information Officer of the Company. He re-joined the Company in 1995. 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 45, has been the Chief Financial Officer of the Company since 1992. He has over 18 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 45, joined the Company in 1993. He has been the General Manager of the Hotel Operation since 1996. He has over 26 years of extensive experience in hotel management.
Mr. Yu Chung Ki, MIOSH, MASSE, MIIRSM, MBIM, aged 63, is the Group Safety Auditor and Legal Advisor of the Company. He joined the Company in 1992 and has over 32 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.
HONG KONG FERRY 10 Financial Highlights
1998 1997 Variance
Turnover $M 964 1,094 -11.9% (Loss)/profit attributable to shareholders $M (275) 152 -280.9% Dividends $M 100 132 -24.3% Shareholders’ funds $M 4,362* 6,109* -28.6% Basic (loss)/earnings per share Cents (77.2) 42.7 -280.9% Dividend per share Cents 28.0 37.0 -24.3% Dividend cover Times — 1.2 — (Loss)/return on equity % (6.3)* 2.5* -352.0% Net assets per share $ 12.2* 17.1* -28.6%
* These items have been affected by property revaluation.
Group (Loss)/Profit Group Turnover Group (Loss)/Profit Group Turnover After Taxation Year Year
1998 964 1998 (275)
1997 1,094 1997 152
1996 1,280 1996 151
1995 1,173 1995 356
1994 1,125 1994 130
1993 1,035 1993 100
0 200 400 600 800 1000 1200 1400 -300 -200 -100 0 100 200 300 400 $Million $Million
11 HONG KONG FERRY 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$963.6 million, showing a decrease of 11.9% as compared to that recorded in the previous year, which was mainly due to the shrinkage of the ferry business. Operating profit amounted to HK$133.7 million, representing a decrease of 29.7% as compared to that recorded in the previous year. Net loss of the Group, after taking into account exceptional items and taxation, amounted to HK$275.2 million in this year, representing a decrease of 281% as compared to that recorded in the previous year. The exceptional loss of HK$391.4 million represented the write-off of expenditures incurred in relation to the proposed Central Ferry Piers Development and assets written-off and provision for expenditures as a result of the termination of the ferry franchise.
Improved land transport further took away passengers from the ferry services. A number of economically not viable franchised and licensed ferry routes were suspended during the year. Patronage of local ferry services decreased by 22.6% from 29.2 million in 1997 to 22.6 million in this year. As a result, fare and freight revenue for the year decreased by 14.5% to HK$60.7 million as compared to that of last year. Charter hire income dropped substantially by 29.1% to HK$68.9 million as a result of the cessation of the charter hire service from the Airport Authority upon completion of the New Airport. Following the failure to reach an agreement with Government on the terms of the proposed Central Ferry Piers Development due mainly to the disagreement on the premium payable, negotiation on the renewal of the ferry franchise stopped and Government gazetted in September and October 1998 to invite application for ferry licenses to operate ferry services under the existing ferry franchise. The Group had applied for ferry licenses to operate 12 ferry routes under the tender exercises and was awarded licenses to operate 8 ferry routes.
The shrinkage of the core ferry operations has brought about corresponding decrease in the turnover of related businesses, such as the shipyard operation and fuel oil business of the Trading Division. As a result operating profits of the Shipyard Operation and the Trading Division decreased by 75% and 46% respectively as compared to that recorded in the previous year. On the other hand, the decline in the number of incoming tourists and the weakened local consumer spending led to a decrease in the operating profit of the Travel Operation by 12% as compared to that of previous year, and also caused the Hotel Operation to record a loss of HK$1.8 million. In addition, rental income from the industrial buildings in Tai Kok Tsui recorded a decrease of 24% from that recorded in last year due to the proposed redevelopment of the site and a decrease in tenant occupancy.
HONG KONG FERRY 12 Commentary on Financial Results
Liquidity and Financial Resources
As of 31 December 1998, shareholders’ funds of the Group showed a decrease of 28.6% from that recorded in 1997 and amounted to HK$4,362 million which was attributed primarily to the exceptional loss and deficit arising from the revaluation of the properties of the Group.
Funding for the Group’s activities in the year under review was mainly generated from rental income on investment properties, and interest income on deposits which stood at HK$1,390 million as at 31 December 1998. Short term unsecured bank borrowings as at 31 December 1998 stood at HK$251 million.
Current assets of the Group were recorded at HK$1,563 million as compared to the Group’s current liabilities of HK$493 million as of 31 December 1998. Current ratio of the Group showed a slight improvement from 3.0 as of 31 December 1997 to 3.2 as of 31 December 1998.
13 HONG KONG FERRY Chairman’s Statement
I present to the shareholders my report on the operations of the Group.
Profit The Group’s consolidated operating profit for the year ended 31 December 1998 amounted to HK$133.7 million, a decrease of 30% when compared to last year, but, after taken into account an exceptional loss of HK$391.4 million and taxation, the consolidated net loss after taxation amounted to HK$275.2 million. The loss per share was 77.2 cents for the year while earnings per share were 42.7 cents in the previous 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 As anticipated, the local economy had undergone a recession in the year 1998. The difficult business environment led to a reduction in the Group’s operating profit. In addition, as a result of the major write-off during the period under review (see Exceptional Items below), a net loss was recorded.
Ferry Operations During the period under review, the franchised ferry services recorded an operating loss of HK$75.8 million, whereas non-franchised ferry services recorded an operating profit of HK$63.0 million. Operating loss of the overall ferry operations, before taken into account of the exceptional items, decreased from HK$44.2 million in 1997 to HK$12.8 million, mainly due to the suspension of the loss-making franchised ferry routes such as Central - Jordan Road passenger ferry service in February 1998 and Central - Tsuen Wan/Tsing Yi passenger ferry service in September 1998.
The opening of the Lantau Link and Route 3 has brought about a decline in the patronage of Central - Mui Wo ferry route and Central - Tuen Mun ferry route to the extent of over 30% and 45% respectively when compared with last year. Total patronage decreased by 22% from 30.2 million in 1997 to 23.6 million. On the other hand, as a result of the reduction in the number of staff and vessels employed, and other cost-saving measures, total expenses decreased by 22%.
Expiry of the Ferry Franchise and the Award of New Ferry Services Licenses Government gazetted in September and October 1998 to invite application for ferry licenses to operate ferry services after the existing ferry franchise of the Company expires on 31 March 1999. The Group was awarded the licenses to operate the following two packages of the outlying islands ferry routes and one package of the inner harbour ferry routes:–
Package 1 of the Outlying Islands Ferry Routes Central - Cheung Chau Kowloon (Tsimshatsui) - Cheung Chau Inter-Islands (Peng Chau - Mui Wo - Chi Ma Wan - Cheung Chau)
HONG KONG FERRY 14 Chairman’s Statement
Business Review (continued)
Expiry of the Ferry Franchise and the Award of New Ferry Services Licenses (continued) Package 2 of the Outlying Islands Ferry Routes Central - Mui Wo Central - Peng Chau Kowloon (Tsimshatsui) - Mui Wo
Package E of the Inner Harbour Ferry Routes North Point - Hung Hom North Point - Kowloon City
The above three packages of ferry routes had generated operating profits for the Group in previous years and it has been the Group’s strategy to forgo loss-making routes but retain economically viable ones.
The new ferry services licenses, which will last for 3 years, will commence on 1 April 1999. To meet with the new challenges, the Company has been implementing plans to acquire two high- speed catamarans, scrap a number of old vessels, improve pier facilities, strengthen staff training and renew the Company’s image.
Property Investment The downturn of the local economy has brought about adverse effects on the property market. In addition, due to the possible redevelopment of the industrial buildings in Tai Kok Tsui, the Group could only grant short-term tenancies. As a result, gross rental income decreased by 21% from HK$106.1 million in 1997 to HK$83.8 million for the year.
Shipyard Operation Operating profit of the Shipyard Operation decreased by 75% to HK$9.1 million from HK$35.9 million in 1997, mainly due to the decrease in turnover.
Other Businesses
Travel Operation Despite the decline in tourists visiting Hong Kong and the weakened local consumer spending, the Travel Division had successfully launched several strategic promotional campaigns. Turnover increased by 15% to HK$88.8 million, but the tightened margin resulted in a decrease in operating profit of 12% from HK$3.4 million in 1997 to HK$3.0 million.
Hotel Operation Turnover of the Silvermine Beach Hotel decreased by 23% from HK$19.5 million in 1997 to HK$15.0 million. Operating loss for the year was HK$1.8 million, as compared to the operating profit of HK$0.4 million in 1997.
15 HONG KONG FERRY Chairman’s Statement
Business Review (continued)
Trading Operation Due to the decrease in turnover of the Trading Division, operating profit slumped by 46% to HK$7.5 million from HK$13.9 million in 1997.
Interest Income Net interest income on bank deposits was HK$96.6 million during the year under review.
Exceptional Items In August 1998, the Company failed to reach an agreement with Government on the terms of the Central Ferry Piers Development. The major reason, inter alia, was the substantial difference in the assessable premium which in turn was mainly attributed to the especially high construction cost involved due to the great number of site constraints. The entire amount of HK$257.3 million spent on the piling foundation of the piers and other expenditures was fully written off this year as a result of the abortion of the proposed development. The Company had proposed to Government that in the event of a future tender or auction being carried out on the Development site, the successful bidder should be required to reimburse the Company on the piling expenditure already incurred. Up to today, Government’s concurrence has not yet been forthcoming.
On the other hand, since certain ferry routes will be terminated upon the expiry of the ferry franchise, write-off was also made to a number of ferry vessels and related assets. Taking into account the provisions for severance and other expenditures in relation to the termination of the ferry franchise, a total of HK$134.1 million was written off.
Redevelopment of Tai Kok Tsui Property (201 Tai Kok Tsui Road) In January 1999, the Company received a land premium offer in the sum of approximately HK$3.2 billion from the Lands Department. Since the offer was considered unfairly high as compared to the market price, the Company has declined the offer and appealed for a reassessment. It is hoped that some progress on the issue can be achieved soon.
Year 2000 Problem The Year 2000 Problem is the result of computer programs using 2 digits rather 4 digits to represent the year of a date. When “00” is being stored to present “2000”, computers may consider that it is “1900” and operations may be affected. As defined by The British Standards Institution committee BDD/1/-/3 in the definition PD2000-1, “Year 2000 conformity shall mean that neither performance nor functionality is affected by dates prior to, during and after the year 2000.”
The Company was aware of the Year 2000 Problem in 1996. An impact analysis indicated that about 30% of the computer programs and hardware currently used by the Company needed to be modified or replaced. Modification work is making satisfactory progress and 75% of the rectification works have been completed. Suppliers of equipment were also being contacted to ensure that the equipment is Year 2000 compliant.
HONG KONG FERRY 16 Chairman’s Statement
Year 2000 Problem (continued) The Company anticipates that most rectification works will be completed by the end of June 1999. The total costs for the project are estimated to be HK$5 million. Labour costs will be charged to the financial year in which they are incurred and the amount charged in the financial year under review was immaterial. There are no commitments at the year end for the Year 2000 compliance project. While we do not anticipate any major interruptions to our business arising from Year 2000 Problem, contingency plans are being prepared so as to maintain business continuity.
Prospects Upon the expiry of the ferry franchise at the end of this month, the Group will continue to operate a new combination of viable ferry routes on a smaller scale and place its main financial resources on the redevelopment of the Tai Kok Tsui Property.
The local economy is still adversely affected by the high unemployment rate and the poor confidence in consumption. It is anticipated that the businesses of the Group will continue to regress in 1999. However, the Group has abundant financial resources to meet with the current difficult business conditions.
Acknowledgement On behalf of the shareholders and the Board, I would like to take this opportunity to express my thanks and appreciation to all our staff for their dedication and hard work during the past year.
Colin K.Y. Lam Chairman
Hong Kong, 18 March 1999
17 HONG KONG FERRY Report of the Directors
The directors have pleasure in submitting their report and audited accounts for the year ended 31 December 1998.
Principal Activities The principal activities of the Group are ferry operations and related businesses, property investment, trading and services, travel business and hotel operations. The turnover and contribution to operating profit of the principal activities of the Group are as follows:–
Contribution to Group turnover operating profit
1998 1997 1998 1997 HK$ million HK$ million HK$ million HK$ million
Ferry operations and related businesses 601.0 737.5 (12.5) (6.4) Property investment 83.8 106.1 54.9 85.4 Trading and services 151.8 138.6 4.2 14.2 Travel and others 127.0 111.5 (9.5) 18.6 Net interest income — — 96.6 78.5
963.6 1,093.7 133.7 190.3
No geographical analysis is shown as less than 10% of the Group’s turnover and operating profit 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 subsidiary companies at 31 December 1998 are set out in note 13 on the accounts.
Accounts and Dividends The results of the Group for the year ended 31 December 1998, 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 24 to 48.
An interim dividend of 8 cents per share was paid on 13 October 1998. The directors now recommend a final dividend of 20 cents per share to shareholders whose names appear in the Register of Members on 20 April 1999.
HONG KONG FERRY 18 Report of the Directors
Charitable Donations The Group’s charitable donations paid during the year amounted to HK$63,760 (1997: HK$72,590).
Fixed Assets Movements in fixed assets are set out in note 10 on the accounts.
Substantial Shareholders At 31 December 1998, 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”):–
No. of shares Name of company 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 of 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.
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.
19 HONG KONG FERRY Report of the Directors
Directors The directors during the financial year were:–
Mr. Lau Chan Kwok (Honorary Chairman) 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
In accordance with Article 103(A) of the Company’s Articles of Association, Mr. Lau Chan Kwok, Sir Kenneth P.F. Fung, Mr. Michael Y.L. Kan and Mr. Eddie Y.C. Lau retire by rotation and are eligible for re-election. However, Mr. Lau Chan Kwok declines to seek re-election at the forthcoming Annual General Meeting.
The non-executive directors have not been appointed for a specific term 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.
Directors’ Interests in Shares At 31 December 1998, 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 Corporate interests Number of shares Number of shares
Mr. Lau Chan Kwok 20,000 — 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 7,799,220 108,588,090 Mr. Leung Hay Man 2,250 — Mr. Li Ning — — Mr. Peter M.K. Wong 1,151,000 — Dr. Alex S.C. Wu 186,030 —
HONG KONG FERRY 20 Report of the Directors
Directors’ Interests in Shares (continued) 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 transaction 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 19 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.
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 Overdrafts The Group’s bank loans and overdrafts as at 31 December 1998 are shown in note 16 on the accounts. There was no interest capitalised by the Group during the year.
Financial Summaries The five years’ summary of assets and liabilities and ten years’ financial summary of the Group are set out on pages 49 and 50.
Group Properties A summary of the Group’s properties is set out on page 52.
Use of Proceeds The Group continued to place the remaining proceeds from the rights issue in October 1994 of HK$970 million on short term bank deposits. Following the abortion of the proposed Central Ferry Piers Development, the Group will utilise the balance towards expanding the investment property portfolio of the Group and/or financing other potential property development projects as stated in the rights issue document.
21 HONG KONG FERRY Report of the Directors
Connected Transaction It was announced on 22 July 1998 that two wholly-owned subsidiaries of the Company entered into a project management agreement with a subsidiary of HL, Henderson Real Estate Agency Limited (“HREAL”), a connected person under the Listing Rules, to appoint HREAL as the project manager of the proposed redevelopment of the Tai Kok Tsui Property. Details of the transaction were set out in a circular of 12 August 1998 already sent to shareholders. No fees have been paid by the Group to HREAL during the year. Dr. Lee Shau Kee, a director of the Company, is taken to be interested in HL, as more fully described in “Substantial Shareholders” of this Report, and in the above agreement.
Compliance with the Code of Best Practice The Company has complied throughout the year with paragraphs 1 to 13 of the Code of Best Practice as set out by the Stock Exchange of Hong Kong Limited in Appendix 14 to the Listing Rules.
Auditors On 19 November 1998 our auditors changed the name under which they practise to KPMG and, accordingly, have signed their report in their new name. A resolution for the re-appointment 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 Li Ning Chairman Director
Hong Kong, 18 March 1999
HONG KONG FERRY 22 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 24 to 48 which have been prepared in accordance with accounting principles generally accepted in Hong Kong.
Respective Responsibilities of Directors and Auditors The 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 1998 and of the Group’s loss and cash flows for the year then ended and have been properly prepared in accordance with the Companies Ordinance.
KPMG Certified Public Accountants
Hong Kong, 18 March 1999
23 HONG KONG FERRY Consolidated Profit and Loss Account For the year ended 31 December 1998
Note 1998 1997 HK$’000 HK$’000
Turnover 2 963,593 1,093,698
Operating profit 3 133,677 190,254
Exceptional items 4 (391,360) —
(Loss)/profit from ordinary activities before taxation (257,683) 190,254
Taxation 6(a) (17,457) (37,957)
(Loss)/profit after taxation 7 (275,140) 152,297
Retained profits at 1 January 716,560 696,085
441,420 848,382
Dividends 8 (99,757) (131,822)
Retained profits at 31 December 19 341,663 716,560
Basic (loss)/earnings per share (cents) 9 (77.2) 42.7
The notes on pages 28 to 48 form part of these accounts.
HONG KONG FERRY 24 Balance Sheets At 31 December 1998
Group Company
Note 1998 1997 1998 1997 HK$’000 HK$’000 HK$’000 HK$’000
Assets employed:-
Fixed assets 10 3,239,531 4,810,012 464,344 4,336,032
Properties pending transfer to subsidiaries 11 — — 2,420,000 —
Central pier and other development costs 12 — 257,838 — —
Interest in subsidiaries 13 — — 816,476 1,078,954
Investments 14 73,580 119,665 7,396 14,867
3,313,111 5,187,515 3,708,216 5,429,853
Current assets 15 1,563,305 1,408,500 1,298,830 1,077,398
Current liabilities 16 (493,174) (471,599) (325,234) (144,269)
Net current assets 1,070,131 936,901 973,596 933,129
Deferred taxation 17 (21,500) (15,500) (21,000) (15,500)
4,361,742 6,108,916 4,660,812 6,347,482
Financed by:-
Share capital 18 356,274 356,274 356,274 356,274
Reserves 19 4,005,468 5,752,642 4,304,538 5,991,208
Shareholders’ funds 4,361,742 6,108,916 4,660,812 6,347,482
The notes on pages 28 to 48 form part of these accounts.
Approved by the board of directors on 18 March 1999.
Colin K.Y.Lam Li Ning Chairman Director
25 HONG KONG FERRY Consolidated Cash Flow Statement For the year ended 31 December 1998
Note 1998 1997 HK$’000 HK$’000 HK$’000 HK$’000
Net cash inflow from operating activities (a) 180,364 177,915
Returns on investments and servicing of finance
Interest received 117,734 104,654 Interest paid (25,624) (24,021) Dividends received 2,458 346 Dividends paid (131,822) (131,822)
Net cash outflow from returns on investments and servicing of finance (37,254) (50,843)
Taxation
Profits tax paid (13,429) (51,419)
Investing activities
Acquisition of unlisted investments (27) — Purchase of listed investments — (125,640) Payments for purchase of fixed assets (23,511) (15,126) Payments for Central pier development costs (1,062) (8,008) Decrease/(increase) in advances to investee companies 8,729 (8,719) Receipts from sale of fixed assets 2,274 81 Receipts from sale of listed investments 35,499 25,056
Net cash inflow/(outflow) from investing activities 21,902 (132,356)
Increase/(decrease) in cash and cash equivalents 151,583 (56,703)
Cash and cash equivalents at 1 January 1,010,333 1,067,036
Cash and cash equivalents at 31 December 1,161,916 1,010,333
HONG KONG FERRY 26 Consolidated Cash Flow Statement For the year ended 31 December 1998
1998 1997 HK$’000 HK$’000
Analysis of the balances of cash and cash equivalents
Cash at bank and in hand 23,754 23,153 Short term deposits 1,389,626 1,176,076 Bank overdrafts and loans repayable within three months (251,464) (188,896)
1,161,916 1,010,333
Note:–
(a) Reconciliation of the operating profit to net cash inflow from operating activities
1998 1997 HK$’000 HK$’000
Operating profit 133,677 190,254 Depreciation 123,111 122,972 Loss on sale of fixed assets 1,859 753 Profit on sale of fixed assets (523) — Provision for diminution in value of listed investments 5,377 — Interest income (121,967) (102,888) Interest expense 24,750 23,699 Dividend income (2,458) (346) Realisation of inter-company profits (1,445) (1,480) Profit on sale of listed investments (3,493) (2,478) Write-off of other development costs — 207 Decrease in inventories 9,785 11,759 Decrease/(increase) in debtors and prepayments 50,191 (10,697) Decrease in creditors and accrued charges (38,500) (53,840)
Net cash inflow from operating activities 180,364 177,915
27 HONG KONG FERRY Notes on the Accounts
1 Principal Accounting Policies
These accounts have been prepared in accordance with Statements of Standard Accounting Practice 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.
(a) Basis of consolidation The consolidated accounts include the accounts of the Company and of 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 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 these companies is credited to capital reserves.
(b) Revenue recognition
(i) Ferry operations and related services Revenue relating to the ferry operations is recognised when the relevant ferry services are provided.
(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 ex- dividend.
HONG KONG FERRY 28 Notes on the Accounts
1 Principal Accounting Policies (continued)
(c) 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.
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.
(d) Properties held for development Properties held for development for investment purposes 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 investment properties on the granting of an occupation permit and any revaluation surplus relating thereto transferred to the investment property revaluation reserve.
(e) 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.
(f) 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 amounts of fixed assets carried at depreciated cost are 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.
29 HONG KONG FERRY Notes on the Accounts
1 Principal Accounting Policies (continued)
(f) Fixed assets and depreciation (continued) (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 Over the unexpired terms of the leases Buildings 40 years or over the unexpired terms of the leases, if shorter Ferry vessels and other crafts (Note 10(f)) 8 to 15 years Machinery, furniture and other fixed assets - Dry dock 40 years - Others 4 to 10 years
(g) 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.
(h) Investments Investments held on a long-term basis are stated at cost, less provision for permanent diminution in value estimated by the directors.
(i) 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.
(j) 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.
HONG KONG FERRY 30 Notes on the Accounts
1 Principal Accounting Policies (continued)
(k) 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.
(l) 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.
2 Turnover
Group turnover represents gross income from sales and services provided to third parties, analysed as follows:–
1998 1997 HK$’000 HK$’000
Ferry operations and related businesses 600,967 737,537 Property investment 83,825 106,111 Trading and services 151,796 138,598 Travel and others 127,005 111,452
963,593 1,093,698
31 HONG KONG FERRY Notes on the Accounts
3 Operating Profit
Group
1998 1997 HK$’000 HK$’000 This is arrived at after charging:–
Interest on bank loans and overdrafts and other loans repayable within 5 years 24,750 23,699 Depreciation 123,111 122,972 Auditors’ remuneration 1,794 1,763 Loss on sale of fixed assets 1,859 753 Operating lease charges in respect of - premises 2,649 5,399 - vessels 19,284 2,995 Provision for diminution in value of listed investments 5,377 — Cost of inventories 209,200 239,775
and after crediting:–
Interest income 121,967 102,888 Rental receivable from investment properties net of outgoings of HK$13,801,000 (1997: HK$14,483,000) 64,747 88,985 Other rental income less outgoings 25,414 21,852 Profit on sale of listed investments 3,493 2,478 Dividend income from listed investments 2,401 346 Profit on sale of fixed assets 523 — Dividend income from unlisted investment 57 —
HONG KONG FERRY 32 Notes on the Accounts
4 Exceptional Items
Following the failure to proceed with the Central pier development project as stated in note 12, the negotiation with the Government of the Hong Kong Special Administrative Region (“the Government”) on the Group’s existing ferry franchise expiring on 31 March 1999 ceased. The Government then invited interested parties to submit tenders to operate various routes by licence. Subsequently, the Group has been granted the licence to operate certain of its existing routes. The directors have evaluated the impact of the new arrangement on the estimated useful lives and the recoverable amounts of its ferry vessels and other related assets, and on other costs that will be incurred as a result of the reduction in scale of its ferry operations.
The resulting loss from the above events are treated as exceptional items, analysed as follows:–
1998 HK$’000
Write-off of costs relating to Central pier development project 257,298 Write-down in value of vessels and other related assets, and associated costs relating to the expiry of ferry franchise 134,062
391,360
5 Remuneration
(a) Directors Directors’ remuneration disclosed pursuant to section 161 of the Companies Ordinance is as follows:–
1998 1997 HK$’000 HK$’000 Fees:– - Executive directors 150 150 - Independent non-executive directors 200 200 - Other non-executive directors 350 350
Other emoluments:– Salaries, allowances and benefits in kind - Executive directors — — - Independent non-executive directors — — - Other non-executive directors — 850
700 1,550
The remuneration of each of the twelve directors falls within the band of below HK$1,000,000.
33 HONG KONG FERRY Notes on the Accounts
5 Remuneration (continued)
(b) Five highest paid employees Of the five highest paid employees, none of them is a director of the Company. The emoluments of the five highest paid employees are as follows:–
1998 1997 HK$’000 HK$’000
Salaries, allowances and benefits in kind 7,126 6,700 Contributions to retirement schemes 1,024 1,159
8,150 7,859
Emoluments of the five highest paid employees fall within the following bands:–
1998 1997 Number of Number of HK$ HK$ employees employees
1,000,001 — 1,500,000 4 4 2,000,001 — 2,500,000 1 1
6 Taxation
(a) Taxation in the consolidated profit and loss account represents:–
1998 1997 HK$’000 HK$’000
Provision for Hong Kong profits tax for the year 7,689 35,485 Under/(over) provision in respect of prior years 3,532 (8,749)
11,221 26,736 Overseas taxation 236 — Deferred taxation (Note 17(a)) 6,000 11,221
17,457 37,957
The provision for Hong Kong profits tax is based on an estimate of the assessable profits for the year ended 31 December 1998 less relief for available tax loss where applicable at 16% (1997: 16.5%).
HONG KONG FERRY 34 Notes on the Accounts
6 Taxation (continued)
(b) Tax payable in the consolidated balance sheet represents:–
1998 1997 HK$’000 HK$’000
Provision for Hong Kong profits tax for the year 5,589 3,026 Provisional profits tax paid (1,261) (691)
4,328 2,335 Provision for overseas tax 235 —
4,563 2,335
(c) Tax recoverable in the balance sheets represents:–
Group Company
1998 1997 1998 1997 HK$’000 HK$’000 HK$’000 HK$’000
Provision for Hong Kong profits tax for the year 2,100 32,459 — 25,909 Provisional profits tax paid (1,975) (25,652) — (20,359)
125 6,807 — 5,550 Balance of profits tax recoverable relating to prior year (27,878) (30,360) (21,886) (22,650)
(27,753) (23,553) (21,886) (17,100)
7 (Loss)/Profit after Taxation
The Group’s (loss)/profit after taxation includes a loss of HK$254,201,000 (1997: a profit of HK$188,423,000) which has been dealt with in the accounts of the Company.
35 HONG KONG FERRY Notes on the Accounts
8 Dividends
1998 1997 HK$’000 HK$’000
Interim dividend paid of 8 cents per share (1997: 8 cents) 28,503 28,503 Proposed final dividend of 20 cents per share (1997: 29 cents) 71,254 103,319
99,757 131,822
9 Basic (Loss)/Earnings per Share
The calculation of basic (loss)/earnings per share is based on a loss of HK$275,140,000 (1997: a profit of HK$152,297,000) and the weighted average of 356,273,883 (1997: 356,273,883) ordinary shares in issue during the year.
HONG KONG FERRY 36 Notes on the Accounts
10 Fixed Assets
Machinery, Properties Leasehold Ferry furniture Investment held for Hotel land and vessels and and other properties development properties buildings other crafts fixed assets Total HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000
Group
Cost or valuation:– At 1 January 1998 1,903,500 2,062,500 63,761 301,780 956,799 307,619 5,595,959 Additions — 5,608 — 3,724 8,411 5,768 23,511 Disposals — — — (287 ) (18,236 ) (3,009 ) (21,532 ) Revaluation deficits (627,500 ) (737,108 ) ————(1,364,608 )
At 31 December 1998 1,276,000 1,331,000 63,761 305,217 946,974 310,378 4,233,330
Representing:– Cost — — 63,761 305,217 946,974 310,378 1,626,330 1998 valuation 1,276,000 1,331,000 ————2,607,000
1,276,000 1,331,000 63,761 305,217 946,974 310,378 4,233,330
Aggregate depreciation:– At 1 January 1998 — — — 46,660 646,646 92,641 785,947 Charge for the year — — — 15,069 172,019 38,686 225,774 Written back on disposal — — — (119 ) (15,805 ) (1,998 ) (17,922 )
At 31 December 1998 — — — 61,610 802,860 129,329 993,799
Net book value:– At 31 December 1998 1,276,000 1,331,000 63,761 243,607 144,114 181,049 3,239,531
At 31 December 1997 1,903,500 2,062,500 63,761 255,120 310,153 214,978 4,810,012
37 HONG KONG FERRY Notes on the Accounts
10 Fixed Assets (continued)
Machinery, Properties Leasehold Ferry furniture Investment held for land and vessels and and other properties development buildings other crafts fixed assets Total HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000
Company
Cost or valuation:– At 1 January 1998 1,687,500 2,062,500 221,721 667,299 198,267 4,837,287 Additions — 2,712 — — 227 2,939 Disposals — — — (10,535 ) (3 ) (10,538 ) Revaluation deficits (598,500 ) (734,212 ) — — — (1,332,712 ) Transfer to properties pending transfer to subsidiaries (1,089,000 ) (1,331,000 ) — — — (2,420,000 )
At 31 December 1998 — — 221,721 656,764 198,491 1,076,976
Representing:– Cost — — 221,721 656,764 198,491 1,076,976 1998 valuation ——————
— — 221,721 656,764 198,491 1,076,976
Aggregate depreciation:– At 1 January 1998 — — 18,824 452,843 29,588 501,255 Charge for the year — — 4,788 105,408 11,154 121,350 Written back on disposal — — — (9,973 ) — (9,973 )
At 31 December 1998 — — 23,612 548,278 40,742 612,632
Net book value:– At 31 December 1998 — — 198,109 108,486 157,749 464,344
At 31 December 1997 1,687,500 2,062,500 202,897 214,456 168,679 4,336,032
HONG KONG FERRY 38 Notes on the Accounts
10 Fixed Assets (continued)
(a) Investment properties and properties held for development of the Group, at Tai Kok Tsui, have been revalued by C.Y. Leung & Company Limited at HK$2,420 million as at 31 December 1998, on the basis of redevelopment of the two portions of the property as a single and combined site. The apportioned values do not represent the open market value of either portion of the property if each portion was developed or disposed of on its own separately and independently. The redevelopment plan will not be finalised until the land premium is agreed with the Government.
(b) Other investment properties held by the Group have been revalued by C.Y. Leung & Company Limited at HK$187 million as at 31 December 1998 on an open market value basis, having regard to net rental income and reversionary income potential.
(c) The carrying amount of properties held for development by the Group would have amounted to HK$37,014,000 had the assets been carried at cost.
(d) The cumulative revaluation surplus arising on the valuation of investment and other properties is not subject to deferred taxation as the disposal of these assets at their carrying value would result in capital gains which are not subject to any tax liability.
(e) The analysis of the net book value of leasehold properties, which are all held in Hong Kong, is as follows:–
Group Company
1998 1997 1998 1997 HK$’000 HK$’000 HK$’000 HK$’000
Medium term lease 2,882,254 4,252,955 198,109 3,952,897 Short term lease 32,114 31,926 — —
2,914,368 4,284,881 198,109 3,952,897
(f) The depreciation charge of the Group and the Company for the year includes the exceptional write-down in value of $102,663,000 and $58,515,000 respectively, which resulted from the event as referred to in note 4.
11 Properties Pending Transfer to Subsidiaries
These represent properties to be transferred to subsidiaries of the Company subject to the fulfilment of certain conditions and are stated at the same value as attributable to the Group in note 10(a).
39 HONG KONG FERRY Notes on the Accounts
12 Central Pier and Other Development Costs
Group
1998 1997 HK$’000 HK$’000
At 1 January 257,838 250,037 Additions 1,062 8,008
258,900 258,045 Write-off (Note) (258,900) (207)
At 31 December — 257,838
Represented by:–
Central pier development costs (Note) — 256,246 Others — 1,592
— 257,838
Note:–
Central pier development costs represented costs reimbursed to the Government for additional works carried out and the associated professional fees on the Central Reclamation at the request of the Group to cater for the commercial and residential property development above the re-provided ferry piers in anticipation of the satisfactory outcome of negotiations with the Government.
However, in August 1998, the Group failed to reach an agreement with the Government on the land premium and other terms of the proposed project. Accordingly, all the costs incurred, amounting to HK$257,298,000 were written off in the consolidated profit and loss account during the year and disclosed as an exceptional item in note 4.
Following the termination of the project and pursuant to various agreements with the Government in connection with the project, the Government lodged a claim against the Group in respect of certain outstanding work to be carried out at the related piers. The cost of such outstanding work is estimated by the Group to be in the region of HK$100 million. However, after seeking external legal advice, it is the Group’s view that the liability under these agreements, if any, would be minimal. Accordingly, no provision has been made in the accounts in this regard.
HONG KONG FERRY 40 Notes on the Accounts
13 Interest in Subsidiaries
Company
1998 1997 HK$’000 HK$’000
Unlisted shares, at cost 167,278 166,778 Amounts due from subsidiaries 1,963,638 1,095,738 Provision for diminution in value (373,734) (40,000)
1,757,182 1,222,516 Amounts due to subsidiaries (706) (143,562) Deposits received from subsidiaries in respect of properties pending transfer (940,000) —
816,476 1,078,954
Details of principal subsidiaries, which materially affect the results or assets of the Group, are as follows:–
Ordinary share capital % held % held Issued by the by a Principal (HK$) Company subsidiary activities
HYFCO Development 12,000,030 100 — Property Company Limited investment
The Hong Kong Shipyard 17,000,000 100 — Shipbuilding Limited and repairs
HYFCO Trading and 2 100 — Trading Investments Company Limited
HYFCO Estate 25,000,000 100 — Property Management & Agency management Limited
HYFCO Properties 21,700,000 100 — Hotel Limited investment
HYFCO Travel Agency 3,500,000 100 — Travel Limited business
41 HONG KONG FERRY Notes on the Accounts
13 Interest in Subsidiaries (continued)
Ordinary share capital % held % held Issued by the by a Principal (HK$) Company subsidiary activities
The Hongkong and 100,000,000 100 — Ferry Yaumati Ferry Company operations Limited
Fine Time Development Limited 2 100 — Property investment
Galaxy Hotel Management 1,350,000 — 100 Hotel Company Limited management
World Fame Shipping Limited 2 100 — Ship management
Genius Star Development Limited 2 100 — Godown business
Hong Kong Ferry 2 100 — Group Finance Company Limited financing
Pico International Limited 6,000,000 100 — Investment holding
Thommen Limited 20 100 — Investment holding
Lenfield Limited 2 100 — Property development
HKF Property Investment 2 100 — Property Limited development
All the above subsidiaries are incorporated and operate in Hong Kong.
HONG KONG FERRY 42 Notes on the Accounts
14 Investments
Group Company
1998 1997 1998 1997 HK$’000 HK$’000 HK$’000 HK$’000
Unlisted investments, at cost 16,261 16,234 16,256 16,229 Advances to investee companies 18,289 27,018 17,789 25,287
34,550 43,252 34,045 41,516 Provision for diminution in value (26,649) (26,649) (26,649) (26,649)
7,901 16,603 7,396 14,867
Listed shares - in Hong Kong 69,752 101,758 — — - outside Hong Kong 1,304 1,304 — —
71,056 103,062 — — Provision for diminution in value (5,377) — — —
65,679 103,062 — —
Total investments 73,580 119,665 7,396 14,867
Market value of listed shares at 31 December 49,545 89,859 — —
Included in unlisted investments are interests in two companies, namely, Authian Estates Limited and Celelight Company Limited, both incorporated in Hong Kong, in which the Group 1 respectively holds 50% and 33 /3 % of equity interest. The equity method of accounting for these companies is not adopted as the results and net assets of these companies are not material to the Group.
43 HONG KONG FERRY Notes on the Accounts
15 Current Assets
Group Company
1998 1997 1998 1997 HK$’000 HK$’000 HK$’000 HK$’000
Inventories - Trading stocks 17,641 12,972 — — - Spare parts and consumables (Note) 20,838 36,343 — — - Work in progress 1,254 8,006 — — Tax recoverable (Note 6(c)) 27,753 23,553 21,886 17,100 Debtors and prepayments 82,439 128,397 10,630 13,718 Dividends receivable from subsidiaries — — 35,400 41,510 Short term deposits 1,389,626 1,176,076 1,226,637 996,076 Cash at bank and in hand 23,754 23,153 4,277 8,994
1,563,305 1,408,500 1,298,830 1,077,398
Note: The amount of spare parts and consumables carried at cost less provision is HK$5,808,000 (1997: HK$21,411,000).
16 Current Liabilities
Group Company
1998 1997 1998 1997 HK$’000 HK$’000 HK$’000 HK$’000
Unsecured bank loans and overdrafts 251,464 188,896 200,000 — Creditors and accrued charges 165,893 177,049 53,980 40,950 Tax payable (Note 6(b)) 4,563 2,335 — — Proposed final dividend 71,254 103,319 71,254 103,319
493,174 471,599 325,234 144,269
HONG KONG FERRY 44 Notes on the Accounts
17 Deferred Taxation
(a) Movement on deferred taxation is as follows:–
Group Company
1998 1997 1998 1997 HK$’000 HK$’000 HK$’000 HK$’000
Balance at 1 January 15,500 4,279 15,500 — Transfer from the profit and loss account 6,000 11,221 5,500 15,500
Balance at 31 December 21,500 15,500 21,000 15,500
(b) Major components of deferred tax of the Group and the Company are set out below:–
Group
1998 1997
Potential Potential liabilities liabilities Provided unprovided Provided unprovided HK$’000 HK$’000 HK$’000 HK$’000
Depreciation allowances in excess of related depreciation 25,526 32,715 15,500 78,782 Future benefit of tax losses (4,026) (42,354) — (43,247)
21,500 (9,639) 15,500 35,535
45 HONG KONG FERRY Notes on the Accounts
17 Deferred Taxation (continued)
(b) Major components of deferred tax of the Group and the Company are set out below: – (continued)
Company
1998 1997
Potential Potential liabilities liabilities Provided unprovided Provided unprovided HK$’000 HK$’000 HK$’000 HK$’000
Depreciation allowances in excess of related depreciation 25,026 31,725 15,500 64,610 Future benefit of tax losses (4,026) — ——
21,000 31,725 15,500 64,610
18 Share Capital
Number of shares Nominal value
1998 1997 1998 1997 HK$’000 HK$’000
Authorised: Ordinary shares of HK$1 each 550,000,000 550,000,000 550,000 550,000
Issued and fully paid: Ordinary shares of HK$1 each 356,273,883 356,273,883 356,274 356,274
During the year, there was no movement in share capital.
HONG KONG FERRY 46 Notes on the Accounts
19 Reserves
Investment Other property property Other Share revaluation revaluation capital Retained premium reserve reserve reserves profits Total HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000
Group
At 1 January 1998 1,398,527 1,590,325 2,031,094 16,136 716,560 5,752,642 Revaluation deficits — (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 1998 1,398,527 962,825 1,293,986 8,467 341,663 4,005,468
Company
At 1 January 1998 1,398,527 1,569,518 2,031,094 — 992,069 5,991,208 Revaluation deficits — (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 1998 1,398,527 — 2,267,900 — 638,111 4,304,538
The distributable reserves of the Company at 31 December 1998 amounted to HK$638,111,000 (1997: HK$992,069,000), representing its retained profits at that date. The Company’s other reserves are not distributable.
20 Capital and Other Commitments
(a) Capital commitments outstanding at 31 December 1998 not provided for in the accounts were as follows:–
Group
1998 1997 HK$’000 HK$’000
Contracted for 52,598 6,538 Authorised but not contracted for 7,500 10,502
47 HONG KONG FERRY Notes on the Accounts
20 Capital and Other Commitments (continued)
(b) At the year end the Group had commitments under operating leases to make payments in the next year as follows:–
Group
1998 1997
Properties Vessels Properties Vessels HK$’000 HK$’000 HK$’000 HK$’000
Leases expiring within 1 year 618 480 1,927 — Leases expiring after 1 year but within 5 years 948 16,006 1,661 15,833
1,566 16,486 3,588 15,833
21 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 principal schemes operated by the Group are Outdoor Staff Retirement Fund and Office 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$14,682,000 (1997: HK$15,590,000).
The latest actuarial valuation on the Outdoor Staff Retirement Fund was as at 31 December 1998. 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 1997. The market value of its assets was HK$58.1 million, representing 131% of the scheme’s vested liabilities at that date.
There was no significant difference between the aggregate past service liabilities and the market value of assets of the above schemes as at the above valuation dates.
Both actuarial valuations were prepared by qualified staff of Watson Wyatt Hong Kong Limited, who are members of recognised actuarial bodies, using the Attained Age Method. The actuarial bases used included investment yield, salary escalation, expected retirement age, withdrawal rates and mortality rates.
HONG KONG FERRY 48 Summary of Assets and Liabilities of the Group
Year 1994 1995 1996 1997 1998 HK$Million HK$Million HK$Million HK$Million HK$Million
Fixed assets 4,035* 3,685* 4,693* 4,810* 3,240*
Central pier & other development costs 138 235 250 258 —
Investments 13 — 8 120 74
Current assets 1,549 1,704 1,546 1,409 1,563
Total assets 5,735 5,624 6,497 6,597 4,877
Liabilities 402 863 633 488 515
Net assets employed 5,333 4,761 5,864 6,109 4,362
* These items have been affected by property revaluation.
49 HONG KONG FERRY Ten Years’ Financial Summary
Year 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
Turnover $M 730 830 891 920 1,035 1,125 1,173 1,280 1,094 964
Profit/(loss) attributable to shareholders $M 71# 102 134 88 100 130 356# 151 152 ( 275 )#
Dividends $M 51 55 62 75 81 122 132 132 132 100
Shareholders’ funds $M 1,183* 1,258* 1,352* 1,593* 1,992* 5,333* 4,761* 5,864* 6,109* 4,362 *
Basic earnings/ (loss) per share @ (Adjusted) Cents 29.3# 42.1 55.3 36.5 41.2 47.2 99.9# 42.3 42.7 ( 77.2 )#
Dividend per share @ (Adjusted) Cents 21.2 22.7 25.7 30.9 31.8 37.0 37.0 37.0 37.0 28.0
Dividend cover Times 1.4# 1.9 2.1 1.2 1.2 1.1 2.7# 1.1 1.2 —
Return/(loss) on equity % 6.0# * 8.1* 9.9* 5.5* 5.0* 2.4* 7.5#* 2.6* 2.5* ( 6.3 )#*
Net assets per share @ (Adjusted) $ 7.6* 5.2* 5.6* 6.6* 8.3* 15.0* 13.4* 16.5* 17.1* 12.2 *
* These items have been affected by property revaluation.
# These items have been affected by exceptional item.
@ These items have been adjusted for the rights issue of shares in 1994.
HONG KONG FERRY 50 Ten Years’ Financial Summary
Dividends
Year 1998 100
1997 132
1996 132
1995 132
1994 122
1993 81
1992 75
1991 62
1990 55
1989 51
0 20 40 60 80 100 120 140 $Million Dividend Per Share (Adjusted)
Year 1998 28.0
1997 37.0
1996 37.0
1995 37.0
1994 37.0
1993 31.8
1992 30.9
1991 25.7
1990 22.7
1989 21.2
0 5 10 15 20 2530 35 40 Cent
Shareholders’ Funds
Year 1998 4,362
1997 6,109
1996 5,864
1995 4,761
1994 5,333
1993 1,992
1992 1,593
1991 1,352
1990 1,258
1989 1,183
0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 $Million Net Assets Per Share (Adjusted)
Year 1998 12.2
1997 17.1
1996 16.5
1995 13.4
1994 15.0
1993 8.3
1992 6.6
1991 5.6
1990 5.2
1989 7.6
0 2184 6 8 10 12 14 16 Dollar
51 HONG KONG FERRY Group Properties
Lease Floor area Site area Location Lot No. expiry (sq. m.) (sq. m.) Equity Description
Kowloon
222 Tai Kok Tsui KIL 6698 2033 14,730 3,250 100% Staff Road quarters
Fuk Lee Street, KIL 11109 * 2047 98,260 21,237 100% Industrial Tai Kok Tsui buildings
Cho Yuen Street, Yau Tong Inland 2047 22,967 2,330 100% Industrial Yau Tong Lot No.38 * buildings
71 Hing Wah West Kowloon 1999# 2,862 4,730 100% Emergency Street West Reclamation Area, repair depot Lai Chi Kok Lot No.S.S.P. Misc.58 (KX1850)
New Territories
20 Tin Dai Yan Road, Lot Nos.3039A, 2047 1,912 3,059 100% Godown Chung Uk Tsuen, 3039RP & 3042 Hung Shui Kiu in DD124 Hung Shui Kiu
Ngau Kok Wan Tsing Yi Town 2047 5,619 19,740 100% Shipyard North Tsing Yi Lot No.102
Lantau Island
Cheung Sha DD332 2047 1,320 — 100% 10 villa Lot No.695 * houses
Mui Wo DD2 2047 5,467 7,544 100% Hotel Lot No.648
Mui Wo DD2 2047 — 28,617 50% Agricultural Lot Nos.431-487, land 569 and 635-637
* The Cheung Sha, Yau Tong and Block I, II, III and IV of the Fuk Lee Street properties are held for investment purposes.
# An application for the extension of this tenancy has been lodged by the Company.
HONG KONG FERRY 52 Ferry Operations’ Results
Year 1994 1995 1996 1997 1998 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000
Franchised Ferry Services Loss before exceptional items and taxation (35,085) (93,392) (102,419) (118,957) (75,832) Exceptional items — 19,683 — — (413,904)
(35,085) (73,709) (102,419) (118,957) (489,736) Non-franchised Ferry Services (Loss)/profit before taxation (19,430) (26,220) 29,215 74,773 63,056
Loss before taxation (54,515) (99,929) (73,204) (44,184) (426,680)
Less : Taxation —————
Loss after taxation (54,515) (99,929) (73,204) (44,184) (426,680)
Average net assets employed 516,311 560,794 553,424 466,206 308,831
Return on average net assets employed -10.56% -17.82% -13.23% -9.48% -138.16%
Franchised Ferry Services Non-franchised Ferry Services Loss Before Taxation Profit/(Loss) Before Taxation Year Year
1998 -489.7 1998 63.1
1997 -119.0 1997 74.8
1996 -102.4 1996 29.2
1995 -73.7 1995 -26.2
1994 -35.1 1994 -19.4
-500 -400 -300 -200 -100 0 100 -40 -20 0 20 4060 80 $Million $Million
53 HONG KONG FERRY 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 Bauhinia at the New Wanchai Pier, Wanchai, Hong Kong on Wednesday, 5 May 1999 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 1998.
(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$1.00 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
HONG KONG FERRY 54 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 paragraphs (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
55 HONG KONG FERRY 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, 18 March 1999
HONG KONG FERRY 56 Notice of Annual General Meeting
Notes: –
1. The register of members will be closed from Thursday, 15 April 1999 to Tuesday, 20 April 1999, 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 Wednesday, 14 April 1999.
2. 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 1998 Annual Report.
57 HONG KONG FERRY