interim report 2008 · chun wo development holdings limited 2008 interim report highlight group...

(Incorporated in Bermuda with limited liability)Stock Code : 711Warrant Code : 654

Interim Report 2008

Chun Wo Development Holdings Limited 2008InterimReport �

CORPORATE INFORMATION

BOARD OF DIRECTORSExecutive DirectorsPangKamChun(Chairman)KwokYukChiu,Clement (Managing Director)LiWaiHang,Christina

Independent Non-executive DirectorsAuSonYiuChanChiuYingLeeShingSeeHuiChiuChung

AUDIT COMMITTEEChanChiuYing(Chairman)AuSonYiuHuiChiuChung

EXECUTIVE COMMITTEEKwokYukChiu,Clement(Chairman)PangYatTing,DominicPangYatBond,DerrickLiuChunMing,Robin

MANAGEMENT COMMITTEEPangKamChun(Chairman)KwokYukChiu,ClementLiWaiHang,Christina

NOMINATION COMMITTEELeeShingSee(Chairman)AuSonYiuKwokYukChiu,Clement

REMUNERATION COMMITTEEAuSonYiu(Chairman)ChanChiuYingKwokYukChiu,Clement

SECRETARYChanSauMui,Juanna

QUALIFIED ACCOUNTANTLiuChunMing,Robin

AUDITORSDeloitteToucheTohmatsu

LEGAL ADVISORSConyersDill&PearmanJSM

PRINCIPAL BANKERSDBSBank(HongKong)LimitedTheHongkongandShanghai BankingCorporationLimitedHangSengBankLimitedBankofChina(HongKong)LimitedFubonBank(HongKong)Limited

REGISTERED OFFICEClarendonHouseChurchStreetHamiltonHM11Bermuda

HEAD OFFICE AND PRINCIPAL PLACE OF BUSINESSC2,5thFloorHongKongSpinnersIndustrialBuilding601–603TaiNanWestStreetCheungShaWanKowloonHongKong

PRINCIPAL SHARE REGISTRARSButterfieldFundServices(Bermuda)LimitedRosebankCentre11BermudianaRoadPembrokeBermuda

HONG KONG BRANCH SHARE REGISTRARSTricorSecretariesLimited26thFloor,TesburyCentre28Queen’sRoadEastWanchaiHongKong

WEBSITEhttp://www.chunwo.com

SHARE LISTINGTheStockExchangeofHongKongLimitedStockCode:711WarrantCode:654

Chun Wo Development Holdings Limited 2008InterimReport�

HIGHLIGHT

➤ Groupturnoverdown57%toHK$590.5million(2007:HK$1,359.5million).

➤ ConstructionWork:Saleswasdownmainly resulting fromkeencompetition

in tender price; a fewnewconstructions projects available for tender; and

inflatedmaterialandlabourcosts.TheGroupwillbenefit fromneweconomy

policies of the Hong KongSARgovernment to invest in the infrastructure

projectsandconstructionworkinordertostimulatetheeconomy.

➤ Property Development: Sales was down as the sales ofmajor property

developmentprojects inChinahadnotbeen recognizedduring theperiod

under review.Propertydevelopmentprojectswereprogressingwell as

planned.Maintained prudent and focus strategies in landacquisition

and property development in order todeliver steady growth with strong

performanceinfuture.EnteredintonewpropertydevelopmentprojectsinAbu

Dhabi,UnitedArabEmirates.

➤ Property Investment: Rental income was stable andgenerated recurrent

positivecashflowtotheGroup.

➤ ProfessionalServices:Profitattributabletosecurityandpropertymanagement

wasup22% toHK$3.9million (2007:HK$3.2million).Provided thesecurity

guardservicesforthe2008OlympicEquestrianEventsheldinHongKong.

➤ ProfitattributabletoshareholderHK$6.2million(2007:HK$31.3million).

➤ EquitypershareHK$1.65(31March2008:HK$1.65).


INTERIM DIVIDENDTheBoardofDirectors (the“Board”or the“Directors”)ofChunWoDevelopment

HoldingsLimited(the“Company”)doesnotrecommendthepaymentofaninterim

dividend for the six months ended 30September 2008 (2007: HK1.0 cent per

share).

BUSINESS REVIEWInterim ResultsFor thesixmonthsended30September2008, theCompanyand itssubsidiaries

(collectively the “Group”) reported turnover approximatelyofHK$590.5million

(2007:HK$1,359.5million),adecreaseof57%ascomparedtothecorresponding

period last year. Profit attributable to shareholderswasapproximatelyHK$6.2

million(2007:HK$31.3million),representingadecreaseof80%yearonyear.

Thedecrease in turnover andprofitwasdue to a reduction inwork in theconstructionbusinessbecauseofmarketconditionsandthefact thatnorevenuewas recognized in respect ofproperty sales. Fewerconstructionprojectswereavailablefortenderintheperiodunderreviewandtenderswerehighlycompetitive.Withcontinued increases inmaterial and labourcostsduring theperiodunderreview, theGroupwas selectiveonprojects to avoidunnecessary risksdue tocost escalation. Construction ofpre-sold units inChina has continued but theacquisitionofnew landhasbeenputonholduntilconditions improveandassetpricesstabilize.

ConstructionAsat30September2008,theestimatedvalueofcontractstheGrouphadonhandamountedtoapproximatelyHK$5.2billion,withaboutHK$2.8billionoutstanding.

TheGroup’sconstructionstrategyistofocusonhighermarginprojectsthatrequireadvanced technical expertise and experience and topenetrate the market forrenovationandmaintenanceof existing infrastructure.Given the limitednumberofinfrastructureprojectsinHongKong,thishasledtoadeclineinturnoverintheshorttermwhichtheGroupbelieveswillbereversedasplannedprojectscomeonstream.

The maintenanceand minorworksdivisionhas maintainedgoodprogressonprojectsfortheWaterServicesDepartment,theArchitecturalServicesDepartmentandaprivatesectordeveloper.


BUSINESS REVIEW (Continued)Construction (Continued)

Ourcapability in theareaofmaintenanceof undergroundpipeshasbeen

strengthened byestablishing a subsidiary for the survey, rehabilitation and

replacement of underground utilities using “trenchless, no-dig” technology such

asadvancedmulti-sensorroboticsandpipe-bursting,pipe-jackingandpipe-lining

equipment. The subsidiarywonaprojectworth approximatelyHK$13million in

Singaporeintheperiodunderreview.

Thefittingoutbusinessprogressedthreeprojectsduringtheperiod:ahotelinterior

decorationinToKwaWan,thefittingoutandrenovationworksforWindsorHouse

inCausewayBayandtherenovationof theLokFuShoppingComplex(Phase2)

forTheLinkManagementLimited.

Thebuilding division’s workatUpperWongTaiSinPhase3 for theHongKong

HousingAuthorityand theconstructionofaprivatedevelopmentabove theMTR

stationinHuangSha,Guangzhouhavebeenprogressingsatisfactorily.

ThefoundationsubsidiaryhasbeenworkingonprojectsatTPTLNo.188,PakShek

Kok,TaiPoandTKOTLNo.70,Area86,SiteE,TseungKwanO.

Theelectrical andmechanical (“E&M”) subsidiary completedcontracts for three

hospitals andprogressedcontracts forwork in schools,markets, shopping

centres,theEasternHarbourTunnelandalongtermmaintenancecontractforThe

LinkManagementLimited.TherenovationatWindsorHousewasprogressingon

schedule.TheenergysavingbusinesshastargetedHongKong-ownedfactoriesin

SouthernChinatoreducetheirenergyconsumption.

In theperiod under review, theGroupwasawardedaconsultancy contract in

Thailand involving track doubling, signaling installation and a telecommunication

systemonthelinefromChachoengsaotoLaemChabang(Bangkok).


BUSINESS REVIEW (Continued)Property Development and Property InvestmentChina

In linewith therestof themarket,saleshavebeenslow inChinabecauseof the

austeritymeasuresand thecredit crisis. TheGroup soldapproximately 6,000

square metre of residential and commercial properties at anaverage price of

aroundRMB6,100per squaremetre. TheGroupacquireda38%stake in a

residential and commercialproject of about 70,000 squaremetres inShanwei,

GuangdongProvinceinMay2008andisexpectingtocompleteanacquisitionof

adistressedpropertyinShengyang,LiaoningProvince.TheGrouphasnotmade

anyothermajoracquisitions inChinaandhasnooutstanding landpremium, tax

or levy to pay relating to land acquisition. Itwill consider furtherdevelopment

and construction of existing projects when it sees an improvement in the

macroeconomics.

Hong Kong

TheGroup’sinvestmentproperties,“GrandeurTerrace”inTinShuiWaiand“Infinity

8”inChoiHung,continuedtogeneratestableincomefortheGroup.

Overseas

TheGroupobtained thenecessaryapproval inAbuDhabi,UnitedArabEmirates

tolaunchthesaleofresidentialprojectin“ReemDiamond”.Theresidentialproject

in “LeCube” will be ready for salebyearly 2009. In the long term, theGroup

believesthattheAbuDhabimarketwillcontinuetoattractinvestmentasthelocal

government,withthebackingoflargeforeignreserves,isdeterminedtomaintaina

strategyofdiversificationawayfromoildependentrevenue.

Professional ServicesThe Group’s security subsidiaryprovided services for 2008 Olympic Equestrian

Eventsheld inHongKongandcontinued toprovide security andproperty

management services for theMTRCorporation, Swire Properties Limited, Sun

HungKaiPropertiesLimitedandHKRInternationalLimitedaswellastotheGroup

inHongKongandChina.


BUSINESS REVIEW (Continued)Awards and RecognitionTheGroupcontinuedtowinenvironmental,qualityandsafetyawardsintheperiod

underthereviewincludingthe“OutstandingGreenProjectAwardofHSBCLiving

BusinessAward2008”,twoawardsintheHongKongHousingAuthority’s“Quality

PublicHousingConstruction&MaintenanceAwards2008”,eightawardsfromthe

HongKongOccupationalSafetyandHealthAwards2008andnineawards from

theConstructionSafetyForum.

Corporate Social ResponsibilityTheGrouphasa strongbelief in caring for thecommunity andhasput its

resources,experienceandexpertisetogooduse inhelpingtheneedyaswayof

takingup its corporate social responsibilities. TheHong Kong Council of Social

ServicehasawardedtheGroupstatusasaCaringCompanyforthreeconsecutive

years.OurvolunteerteamhasdevelopedapartnershipwiththeTungWahGroup

ofHospitalstocarefortheelderlyandundertakevoluntarymaintenanceworks.

OUTLOOK AND PROSPECTSTheGrouphasnotbeenundulyaffectedby thedifficultcreditmarketsgiven the

longtermconstructioncontractsithasalthoughausteritymeasuresintheproperty

marketinChinahavereducedpropertysalesintheshortterm.

Giventhefinancialturmoilinthelastquarterof2008,theGroupbelievesthatthere

willbeareductioningrowthinHongKongandChinawhichwillhaveanegative

impactonpropertydevelopmentingeneral.However,theeffortsbygovernments

to stimulate their economies, inparticular investments in infrastructure and the

accelerationofminorworksinHongKongwill leadtoanincreaseinconstruction

opportunitieswhichweexpectwill provide theGroupwith a stablepipelineof

futurebusiness.


OUTLOOK AND PROSPECTS (Continued)ConstructionTheGroup is well positioned towinmajor projectsgiven its track recordand

technical expertise inHongKong. Designs for themajority of the10 “mega”

infrastructure projects announced in the Chief Executive’s Policy Address have

commenced.Overthenextdecade100kilometersofrailwaywillbebuilt,including

theExpressRail Link toShenzhenandGuangzhou, theWest IslandLine, the

South IslandLine, theKwun Tong Line extension and theShaTinCentral Link.

Major road infrastructure projects include theHong Kong-Zhuhai-Macau Bridge

and improvements to Tuen Mun Road and Tolo Highway, TuenMun toChek

LapKokandWanChaiBypass.Social infrastructureprojects include theWest

KowloonCulturalDistrictproject,theredevelopmentofKaiTakandplanstocreate

promenadesoneachsideofVictoriaHarbour.

In addition to the capital works program, the Hong Kong SAR government has

announced more than 160projects such asbuilding maintenanceand slope

repairs to start within the current legislative year, providing over 52,000 jobs. In

addition to speeding upminor works, theHong Kong SAR government is also

devotingmoreattentionto“green”buildingsinHongKong,allofwhichwillcreate

demandat a timewhenmaterial and labour costs havebegun todeclineand

resources,particularlyskilledpeople,aremoreavailablefollowingthereductionin

activityinMacau.

Inoverseasmarkets,theGroupsubmittedatendertotheStateRailwayofThailand

as part of a joint venture for “TheRedLine”whichwasawarded inDecember

2008.The foundationsubsidiarywillbecapitalizingon theongoing investment in

infrastructure andconstruction inAbuDhabi, United Arab Emirates as the local

governmentcreateslongtermnon-oilrevenue.


OUTLOOK AND PROSPECTS (Continued)Property DevelopmentUntil the macroeconomics becomes clearer, the Group has taken acautious

approach to further land acquisitions. TheGroup has sufficient landbank for

propertydevelopmentforthenextfewyearsandwillseekhigherreturnsandlower

riskbeforecommitting toadditional landpurchases. TheGroup isconfident that

thefundamentalsaresoundinChinaandwillgeneraterevenueinthelongterm.

TheChinapropertymarket isunstableat themomentdue to the interactionofa

numberof conflicting forces.On theonehand, there is negative sentiment due

to theausteritymeasuresand the financial turmoil.However,underlyingdemand

fromtheemergingmiddleclassandinstitutionalinvestors,andtherecentstimulus

package introduced by theChinese government exert upward pressure on the

market.Whiletheshorttermoutlookisdifficult,theseconditionsinfactofferseveral

prospects for theGroup toacquireassetsandmake investmentsat significantly

lowercosts.

It is likely thatprojects in theMiddleEastwill alsobeaffectedas thenumberof

investorseitherwillingtoorabletoinvestindevelopments“offtheplan”reduces.

However, there is a clear, long term plan inAbu Dhabi which isbacked by

considerablecapitalassetsindicatingthemarketwillremainreasonablybuoyant.


LIQUIDITY AND FINANCIAL RESOURCESTheGroupmainlyreliesuponinternallygeneratedfundsaswellasbankandother

borrowings to finance its operationsandexpansion,which is supplementedby

equityfundingwhenitisrequired.

At30September2008,thetotalnetdebtsoftheGroupamountedtoapproximately

HK$830.0 million, representing total debts of approximately HK$1,285.5 million

lessbankbalancesandcashofapproximatelyHK$455.5million.Thedebtmaturity

profileoftheGroupat30September2008isanalysedasfollows:

As at Asat

30 September 31March

2008 2008

HK$ million HK$million

Borrowingsrepayable:

Withinoneyearorondemand 762.2 420.7

Afteroneyear,butwithintwoyears 191.7 368.5

Aftertwoyears,butwithinfiveyears 26.0 26.0

Overfiveyears 70.8 75.1

1,050.7 890.3

Convertiblebondsdue2012 234.8 212.8

Totalborrowings 1,285.5 1,103.1

At30September2008,thegearingratiooftheGroup,beingtheproportionofnet

interestbearingdebtstoshareholders’equitywas0.58(at31March2008:0.34).

To minimise exposure on foreign exchange fluctuations, theGroup’s borrowings

and cash balances are primarily denominated inHong Kong dollars. The Group

hasno significant exposure to foreign exchange rate fluctuations. Furthermore,

theGroup’s borrowings have notbeen hedged byany interest rate financial

instruments.

Chun Wo Development Holdings Limited 2008InterimReport�0

LIQUIDITY AND FINANCIAL RESOURCES (Continued)TheGroup’sfinancialposition issoundandstrong.Withavailablebankbalances

andcashat30September2008andavailablebankcreditfacilities,theGrouphas

sufficientliquiditytosatisfyitsfundingrequirements.

EMPLOYEE AND REMUNERATION POLICIESTheGrouphadapproximately1,950employeesat 30September2008. Total

remunerationofemployeesforthesixmonthsended30September2008amounted

to approximately HK$214.4 million. Employees are remuneratedaccording to

natureof the jobandmarket trend,withbuilt-inmeritcomponent incorporated in

theannual increment to rewardandmotivate individual performance. Employee

bonusisdistributablebasedontheperformanceoftherespectivecompaniesand

theemployeesconcerned.TheGroupalsoprovidesin-houseandexternaltraining

programmeswhicharecomplementarytocertainjobfunctions.

Chun Wo Development Holdings Limited 2008InterimReport ��

CONDENSED CONSOLIDATED INCOME STATEMENTforthesixmonthsended30September2008

Unaudited six months ended 30 September 2008 2007 Notes HK$’000 HK$’000

Turnover 2 590,492 1,359,538Costofsales (523,450 ) (1,213,344)

Grossprofit 67,042 146,194Otherincome 737 9,784Sellingexpenses (1,483 ) (15,611)Generalandadministrativeexpenses (79,770 ) (73,498)Fairvaluechangesonembedded derivativesofconvertiblebonds 52,000 –Shareofprofitofjointlycontrolled entities 2,081 111Financecosts 3 (34,878 ) (28,198)

Profitbeforetax 4 5,729 38,782Incometaxexpense 5 504 (7,496)

Profitfortheperiod 6,233 31,286

Attributableto: Equityholdersoftheparent 6,233 31,278 Minorityinterests – 8

6,233 31,286

Declareddividend 6 – 8,574

Earnings(loss)pershare – basic 7 0.7 cents 4.0cents

– diluted 7 (2.3 cents ) 3.8cents

Chun Wo Development Holdings Limited 2008InterimReport��

CONDENSED CONSOLIDATED BALANCE SHEETasat30September2008and31March2008

Unaudited Audited

30 September 31March

2008 2008

Notes HK$’000 HK$’000

Non-current assets

Investmentproperties 618,480 618,480

Property,plantandequipment 8 125,141 132,879

Prepaidleasepayments 26,936 27,277

Interestsinassociates 14(iii) 65,783 42,783

Interestsinjointlycontrolledentities 46,225 48,892

Amountsduefromassociates 103,352 103,232

985,917 973,543

Current assets

Amountsduefromcustomers

forcontractwork 545,781 506,762

Debtors,depositsandprepayments 9 393,182 396,450

Prepaidleasepayments 683 683

Propertiesunderdevelopment 1,153,817 890,456

Depositspaidforproperties

underdevelopment 83,653 78,678

Propertiesheldforsale 53,219 23,861

Investmentsheldfortrading 14,943 16,488

Amountsduefromassociates 1,232 1,222

Amountsduefromjointly

controlledentities 26,769 37,482

Taxrecoverable 46,194 30,630

Pledgedbankdeposits 41,818 10,171

Bankbalancesandcash 413,687 611,324

2,774,978 2,604,207


CONDENSED CONSOLIDATED BALANCE SHEET (Continued)asat30September2008and31March2008

Unaudited Audited 30 September 31March 2008 2008 Notes HK$’000 HK$’000

Current liabilitiesAmountsduetocustomers forcontractwork 61,500 36,999Creditors,depositsand accruedcharges 10 271,069 334,803Depositsreceivedfrom pre-salesofproperties underdevelopment 523,760 437,522Amountsduetojointlycontrolled entities 37,405 48,864Amountduetoanassociate 9,338 9,338Taxpayable 17,029 17,757Dividendpayable 15,030 –Obligationsunderfinanceleases –duewithinoneyear 991 1,073Borrowings–duewithinoneyear 761,164 419,639Derivativefinancialinstruments 58,000 110,000

1,755,286 1,415,995

Net current assets 1,019,692 1,188,212

Total assets less current liabilities 2,005,609 2,161,755

Non-current liabilitiesObligationsunderfinanceleases –dueafteroneyear 75 555Borrowings–dueafteroneyear 288,444 469,006Convertiblebonds 234,820 212,820Deferredtaxliabilities 63,024 66,413

586,363 748,794

Net assets 1,419,246 1,412,961

Capital and reservesSharecapital 11 85,884 85,882Reserves 1,333,012 1,326,729

Equityattributabletoequityholders oftheparent 1,418,896 1,412,611Minorityinterests 350 350

Total equity 1,419,246 1,412,961


CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITYforthesixmonthsended30September2008–unaudited

Attributable to equity holders of the parent Share Share Share Special options Capital Translation Retained Minority capital premium reserve reserve reserve reserve profits Total interests Total HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000

At 1 April 2008 85,882 337,128 (7,340 ) 4,483 8,531 63,685 920,242 1,412,611 350 1,412,961

Exchange differences arising on translation of foreign operations recognised directly in equity – – – – – 15,067 – 15,067 – 15,067

Profit for the period – – – – – – 6,233 6,233 – 6,233

Total recognised income and expense for the period – – – – – 15,067 6,233 21,300 – 21,300

Exercise of warrants 2 13 – – – – – 15 – 15

2007/2008 final dividend – – – – – – (15,030 ) (15,030 ) – (15,030 )

At 30 September 2008 85,884 337,141 (7,340 ) 4,483 8,531 78,752 911,445 1,418,896 350 1,419,246

At1April2007 74,705 252,056 (7,340) – 8,531 23,572 899,521 1,251,045 343 1,251,388

Exchangedifferences arisingontranslation offoreignoperations recogniseddirectly inequity – – – – – 9,362 – 9,362 – 9,362

Profitfortheperiod – – – – – – 31,278 31,278 8 31,286

Totalrecognisedincomeand expensefortheperiod – – – – – 9,362 31,278 40,640 8 40,648

Exerciseofwarrants 9,715 72,861 – – – – – 82,576 – 82,576

Exerciseofshareoptions 1,153 9,741 – – – – – 10,894 – 10,894

Recognitionofequity-settled share-basedpayments – – – 4,483 – – – 4,483 – 4,483

2006/2007finaldividend – – – – – – (51,239) (51,239) – (51,239)

At30September2007 85,573 334,658 (7,340) 4,483 8,531 32,934 879,560 1,338,399 351 1,338,750


CONDENSED CONSOLIDATED CASH FLOW STATEMENTforthesixmonthsended30September2008

Unaudited

six months ended

30 September

2008 2007

HK$’000 HK$’000

Net cash used in operating activities (296,161 ) (159,155)

Net cash used in investing activities (50,625 ) (81,240)

Net cash from financing activities 137,488 190,742

Net decrease in cash and cash equivalents (209,298 ) (49,653)

Cash and cash equivalents at beginning

of the period 611,324 300,457

Effect of foreign exchange rate changes 11,661 2,503

Cash and cash equivalents at end

of the period 413,687 253,307


Notes:

1 BASIS OF PREPARATION AND PRINCIPAL ACCOUNTING POLICIESThecondensedconsolidatedfinancialstatementshavebeenprepared inaccordancewiththeapplicabledisclosurerequirementsofAppendix16totheRulesGoverningtheListingofSecurities(the“ListingRules”)onTheStockExchangeofHongKongLimited(the“StockExchange”)andwithHongKongAccountingStandard(“HKAS”)34“InterimFinancialReporting”issuedbytheHongKongInstituteofCertifiedPublicAccountants(the“HKICPA”).

Thecondensedconsolidatedfinancialstatementshavebeenpreparedonthehistoricalcostbasisexceptforinvestmentpropertiesandcertainfinancialinstrumentswhicharemeasuredatfairvalues.

Theaccountingpoliciesused in thecondensedconsolidated financial statementsare consistentwith those followed in thepreparationof the Group’s annual financialstatements for the year ended 31 March 2008. In the current interimperiod, theGrouphasapplied, for the first time, a numberof new interpretations issuedby theHKICPA, which are effective for the Group’s financial period beginning 1April 2008.The application of these new interpretations has had no material effect on how theresultsforthecurrentorprioraccountingperiodshavebeenpreparedandpresented.Accordingly,nopriorperiodadjustmenthasbeenrequired.

TheGrouphasnotearlyadoptedthefollowingnewandrevisedstandards,amendmentsor interpretations thathavebeen issuedbutarenotyeteffective.TheDirectorsare intheprocessofassessingthepotentialimpactandsofarconcludedthattheapplicationof these application of these standards, amendments or interpretations will have nomaterialimpactontheresultsandthefinancialpositionoftheGroup.

HKAS1(Revised) PresentationofFinancialStatements1

HKAS23(Revised) BorrowingCosts1

HKAS27(Revised) ConsolidatedandSeparateFinancialStatements2

HKAS32&HKAS1 PuttableFinancialInstrumentsandObligationsArising (Amendments) onLiquidation1

HKAS39(Amendment) EligibleHedgedItems2

HKFRS1&HKAS27 CostofanInvestmentinaSubsidiary, (Amendments) JointlyControlledEntityorAssociate1

HKFRS2(Amendment) VestingConditionsandCancellations1

HKFRS3(Revised) BusinessCombinations2

HKFRS8 OperatingSegments1

HK(IFRIC)–INT13 CustomerLoyaltyProgrammes3

HK(IFRIC)–INT15 AgreementsfortheConstructionofRealEstate1

HK(IFRIC)–INT16 HedgesofaNetInvestmentinaForeignOperation4

HKFRSs(Amendments) ImprovementstoHKFRSs5


1 BASIS OF PREPARATION AND PRINCIPAL ACCOUNTING POLICIES (Continued) 1 Effectiveforannualperiodsbeginningonorafter1January20092 Effectiveforannualperiodsbeginningonorafter1July20093 Effectiveforannualperiodsbeginningonorafter1July20084 Effectiveforannualperiodsbeginningonorafter1October20085 Effective for annualperiodsbeginningonor after 1 January2009 except the

amendmentstoHKFRS5,effectiveforannualperiodsbeginningonorafter1July2009

2 SEGMENT INFORMATION

Business segments

Formanagementpurposes,theGroup’soperationisorganisedintoconstructionwork,propertydevelopment,propertyinvestment,professionalservices(includingofsecurityandpropertymanagementservices)andotheractivities.ThesedivisionsarethebasisonwhichtheGroupreportsitsprimarysegmentinformation.

Segmentinformationaboutthesebusinessesispresentedbelow:

For the six months ended 30 September 2008

Construction Property Property Professional Other

work development investment services activities Consolidated

HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000

TURNOVERExternalsales 497,262 23,628 14,107 55,495 – 590,492

RESULTSegmentresult (24,033 ) 916 13,751 3,909 (3,441 ) (8,898 )

Interestincome 1,635

Unallocatedcorporateexpenses (6,211 )

Fairvaluechangesonembedded derivativesofconvertiblebonds 52,000

Shareofprofitofjointly controlledentities 2,081 – – – – 2,081

Financecosts (34,878 )

Profitbeforetax 5,729

Incometaxexpense 504

Profitfortheperiod 6,233


2 SEGMENT INFORMATION (Continued) Business segments (Continued) For the six months ended 30 September 2007

Construction Property Property Professional Other work development investment services activities Consolidated HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000

TURNOVERExternalsales 1,126,714 160,854 14,696 57,274 – 1,359,538

RESULTSegmentresult 10,829 42,046 14,323 3,157 5,302 75,657

Interestincome 1,375Unallocatedcorporateexpenses (10,163)Shareofprofitofjointly controlledentities 111 – – – – 111Financecosts (28,198)

Profitbeforetax 38,782Incometaxexpense (7,496)

Profitfortheperiod 31,286

3 FINANCE COSTS

Six months ended

30 September

2008 2007 HK$’000 HK$’000

Interestpayableon: Bankborrowingsandfinanceleases 18,088 35,576 Imputedinterestexpenseon convertiblebonds 22,000 –

40,088 35,576 Less:Amountattributabletocontractwork (529 ) (4,272) Amountattributabletoproperties underdevelopment (4,681 ) (3,106)

34,878 28,198


4 PROFIT BEFORE TAX

Six months ended

30 September

2008 2007 HK$’000 HK$’000

Profitbeforetaxhasbeenarrivedat aftercharging(crediting):

Depreciationandamortisation 10,242 11,900 Less:Amountattributabletocontractwork (8,548 ) (10,081)

1,694 1,819

Fairvaluechangesonembeddedderivatives ofconvertiblebonds(Note) (52,000 ) –

Note: The Group engagedan independent valuer to assess the fair value of theembedded derivatives of convertible bonds, which were calculated using theBinomialModel.Details of theconvertiblesbondsare set out in theGroup’sannualfinancialstatementsfortheyearended31March2008.


5 INCOME TAX EXPENSE

Six months ended

30 September

2008 2007 HK$’000 HK$’000

Thechargecomprises:

Currenttaxation –HongKongProfitsTax 839 2,790 –Otherjurisdictions 1,998 – –EnterpriseIncomeTaxinthe People’sRepublicofChina(the“PRC”) 48 52

2,885 2,842

Deferredtax –Current 406 4,654 –Attributabletochangeintaxrate (3,795 ) –

(3,389 ) 4,654

(504 ) 7,496

On26 June 2008, the Hong Kong Legislative Council passed the Revenue Bill 2008whichincludesthereductionincorporateprofittaxrateby1%to16.5%effectivefromtheyearofassessment2008-2009.Theeffectofsuchdecreasehasbeenreflectedinmeasuringthecurrentanddeferredtaxforthesixmonthsended30September2008.Theestimatedaverageannualtaxrateusedis16.5%(2007:17.5%)forthesixmonthsended30September2008.EnterpriseIncomeTaxinthePRCiscalculatedattheratesprevailinginthePRC.

The income taxexpense is recognisedbasedonmanagement’sbestestimateof theweightedaverageannualincometaxrateexpectedforthefullfinancialyear.


6 DIVIDENDS

Six months ended

30 September

2008 2007 HK$’000 HK$’000

Finaldividend Finaldividendinrespectof2008of HK1.75cents(2007:HK2.75cents) pershare 15,030 23,485 Specialfinaldividendinrespectof2007of HK3.25centspershare – 27,754

15,030 51,239

TheBoarddoesnotrecommendthepaymentofaninterimdividendforthesixmonthsended30September2008.


7 EARNINGS (LOSS) PER SHAREThecalculationofthebasicanddilutedearningspershareattributabletotheordinaryequityholdersoftheCompanyisbasedonthefollowingdata:

Six months ended 30 September 2008 2007 HK$’000 HK$’000

Earningsforthepurposesofbasicand dilutedearningspershare: –Profitattributabletotheequityholders oftheparent 6,233 31,278

Effectofdilutivepotentialordinaryshares fromconvertiblebonds: –Imputedinterestexpense 22,000 – –Fairvaluechangesonembedded derivatives (52,000 ) –

(Loss)earningsforthepurposesofdiluted (loss)earningspershare (23,767 ) 31,278

Number of shares

Weightedaveragenumberofsharesfor thepurposeofbasicearningspershare 858,838,328 782,680,971

Effectofdilutivepotentialshares inrespectof: –Convertiblebonds 170,779,817 – –Shareoptions – 7,940,551 –Warrants – 43,436,953

Weightedaveragenumberofsharesforthe purposeofdiluted(loss)earningspershare 1,029,618,145 834,058,475

Note: Thecomputationofdilutedearningsper share for2008doesnotassume theexerciseoftheoutstandingshareoptionsandwarrantsastheexercisepricesoftheCompany’soutstandingshareoptionswerehigherthantheaveragemarketpriceforthesharesforthesixmonthsperiodended30September2008.


8 PROPERTY, PLANT AND EQUIPMENT

During the period, the Group spent approximately HK$4.9million (sixmonthsended30 September2007:HK$5.6million) onproperty,plant andequipment. In addition,the Group has disposed ofproperty, plant and equipment with carrying amount ofapproximatelyHK$2.4million(sixmonthsended30September2007:HK$0.4million).

9 DEBTORS, DEPOSITS AND PREPAYMENTS

Interim applications for progress payments onconstruction contracts are normallysubmittedonamonthlybasisandaresettledwithinonemonth.TheageinganalysisoftradedebtorsofapproximatelyHK$144,723,000(at31March2008:HK$127,351,000),whichareincludedintheGroup’sdebtors,depositsandprepayments,isasfollows:

At At 30 September 31March 2008 2008 HK$’000 HK$’000

Notyetdue 121,754 114,1980to30days 13,660 8,94031to90days 3,717 59791to180days 1,895 172Over180days 3,697 3,444

144,723 127,351


10 CREDITORS, DEPOSITS AND ACCRUED CHARGES

TheageinganalysisoftradecreditorsofapproximatelyHK$107,251,000(at31March2008: HK$99,343,000), which are included in the Group’s creditors, deposits andaccruedcharges,isasfollows:


Notyetdue 64,450 58,7150to30days 16,536 16,24031to90days 6,087 10,65791to180days 18,461 4,587Over180days 1,717 9,144

107,251 99,343

11 SHARE CAPITAL

Number of shares Amount

HK$’000

SharesofHK$0.1each

Authorised: At1April2008and 30September2008 1,500,000,000 150,000

Issuedandfullypaid: At1April2008 858,821,018 85,882 Exerciseofwarrants 17,310 2

At30September2008 858,838,328 85,884


12 CONTINGENT LIABILITIES AND PERFORMANCE GUARANTEE


Indemnitiesissuedtofinancialinstitutions forperformancebondsinrespectof constructioncontractsundertakenby: –subsidiaries 223,383 221,639 –anassociate 4,400 4,400 –ajointlycontrolledentity 5,850 5,850

233,633 231,889

Extentofguaranteeissuedtoafinancial institutiontosecureacreditfacility grantedtoanassociate 48,000 48,000

Extentofguaranteeissuedtoacustomerto indemnifycontractworkofasubsidiary 115,900 115,900

Extentofguaranteeprovidedforaproperty developmentprojecttobankswhich grantedfacilitiestopurchasersof theGroup’spre-saleproperties 156,811 129,013


13 PLEDGE OF ASSETS

At thebalancesheetdate, thefollowingassetswerepledgedbytheGrouptosecurebankingfacilitiesgrantedtotheGroup:


Investmentproperties 568,000 568,000Leaseholdbuildingsandrelated prepaidleasepayments – 9,547Propertiesunderdevelopment 357,158 371,565Propertiesheldforsale 9,198 16,723Bankdeposits 41,818 10,171

976,174 976,006

14 RELATED PARTY TRANSACTIONS

Associates Jointly controlled entities

Six months ended Six months ended

30 September 30 September

2008 2007 2008 2007 HK$’000 HK$’000 HK$’000 HK$’000

(i) Transactionsduringtheperiod: Contractrevenuerecognised – – 3,104 29,059

Projectmanagementfee received – – 116 358

Securityguardservices incomereceived – – 536 457


14 RELATED PARTY TRANSACTIONS (Continued)

Jointly

Associates controlled entities At 30 At31 At 30 At31 September March September March 2008 2008 2008 2008 HK$’000 HK$’000 HK$’000 HK$’000

(ii) Indemnitiesissuedtofinancial institutionsforperformance bondsinrespectof constructioncontracts undertakenbyrelatedparties 4,400 4,400 5,850 5,850

Extentofguaranteeissuedto afinancialinstitutiontosecure acreditfacilitygrantedto anassociate 48,000 48,000 – –

(iii) On20May2008, theGroupand theGroup’sdirector,Mr.PangKamChun(the“Vendor”),hadenteredintoanagreement,pursuanttowhichtheVendoragreedtosellandtheGroupagreedtoacquire(i)38%ofthetotalissuedsharecapitaloftheMandarinGroupLimited(“MGL”);and(ii)38%oftheshareholder’sloansdueandowingbyMGL to theVendorasatcompletionataconsiderationofHK$23million.MGLisprincipallyengagedininvestmentholdingandtheprincipalassetofwhich is the100%equity interest in汕尾市紅海大酒店ShanweiCityHongHaiHotel Limited (“Shanwei City Hong Hai”). ShanweiCityHongHai is apropertydevelopmentcompanyandtheprincipalassetofwhichisapropertydevelopmentsitelocatedinShanwei,GuangdongProvince,thePRC.

15 EVENTS AFTER THE BALANCE SHEET DATE

Subsequent to the balance sheet date, the conversion price of the zero couponconvertible bondsdue 2012 (shown in the balance sheet) hasbeen adjusted fromHK$2.18 to HK$1.74with effect from6December2008pursuant to the subscriptionagreementdated26November2007.DetailsoftheadjustmentoftheconversionpricearesetoutinanannouncementoftheCompanydated5December2008.


SHARE OPTION SCHEMES(a) TheCompanyhadadoptedanewshareoptionscheme(the“Scheme”)on28

August2002toenable theDirectors tograntoptions toeligibleparticipants,includingexecutivedirectors, of theCompanyand its subsidiaries tosubscribeforsharesintheCompany.

Details of themovements in shareoptionsgrantedduring theperiodunderreviewareasfollows:

Number of share options

Cancelled/

Exercise Outstanding Granted Exercised lapsed Outstanding

Eligible Date of price Exercise at during during during at

participants grant per option period 1/4/2008 the period the period the period 30/9/2008

HK$

Directors

Mr.PangKamChun 13/8/2004 0.904 21/8/2004to 732,000 – – – 732,000 12/8/2014 2/4/2007 1.010 10/4/2007to 747,000 – – – 747,000 1/4/2017

Mr.KwokYukChiu, 13/8/2004 0.904 21/8/2004to 3,326,000 – – – 3,326,000 Clement 12/8/2014

MadamLiWaiHang 2/4/2007 1.010 10/4/2007to 747,000 – – – 747,000 1/4/2017

Employees 13/8/2004 0.904 21/8/2004to 6,326,000 – – – 6,326,000 12/8/2014 3/9/2004 0.950 4/10/2004to 1,298,000 – – – 1,298,000 30/9/2009 2/5/2007 1.010 2/5/2007to 5,104,000 – – – 5,104,000 1/5/2010 9/8/2007 1.950 9/8/2007to 800,000 – – – 800,000 8/8/2010


SHARE OPTION SCHEMES (Continued) Number of share options

Cancelled/

Exercise Outstanding Granted Exercised lapsed Outstanding

Eligible Date of price Exercise at during during during at

participants grant per option period 1/4/2008 the period the period the period 30/9/2008

HK$

Consultants 3/9/2004 0.950 4/10/2004to 400,000 – – – 400,000

30/9/2009

2/5/2007 1.010 2/5/2007to 1,868,000 – – – 1,868,000

1/5/2010

25/5/2007 1.420 25/5/2007to 3,737,000 – – – 3,737,000

24/5/2010

31/7/2007 2.396 31/1/2008to 62,604 – – – 62,604

30/7/2008

8/8/2007 2.010 25/9/2007to 3,737,000 – – – 3,737,000

24/5/2010

31/1/2008 0.968 31/7/2008to 154,956 – – – 154,956

30/1/2011

31/7/2008 0.684 31/1/2009to – 219,294 – – 219,294

30/7/2011

Others (Note 1) 13/8/2004 0.904 21/8/2004to 732,000 – – – 732,000

12/8/2014

29,771,560 219,294 – – 29,990,854


SHARE OPTION SCHEMES (Continued)Notes:

1. Theseoutstandingshareoptionswereheldbya former IndependentNon-executiveDirector.TheBoardhasapprovedthattheseoutstandingshareoptionscanbeexercisedonorbefore12August2014.

2. Alloptionsreferredtotheabovetablearenotsubjecttoanyvestingperiodsaveastheoptionsgrantedon31July2007,8August2007,31January2008and31July2008, thevestingdatesare31January2008,25September2007,31July2008and31January2009respectively.

3. Theclosingpriceof the sharesof theCompany immediatelybefore theoptionsgrantedon31July2008wasHK$0.66.

4. Noshareoptionswereexercised,cancelledor lapsedundertheSchemeduringtheperiodunderreview.

(b) Pursuant to the shareoption schemeofChunWoFoundationsLimited

(“CWFL”),anindirectwholly-ownedsubsidiaryoftheCompany,approvedby

theCompanyon28August2002,theboardofdirectorsofCWFLmay,attheir

discretion,grantoptionstoeligibleparticipantsofCWFL,theCompanyorany

oftheirsubsidiariestosubscribeforsharesinCWFL.

NooptionhasbeengrantedundertheshareoptionschemeofCWFLsinceits

adoption.

Save as disclosed above at no time during theperiod under review was the

Company or anyof its subsidiaries aparty to anyarrangement to enable the

Directorsandchief executiveof theCompany to acquirebenefitsbymeansof

theacquisitionof shares in, or debenturesof, theCompanyor anyotherbody

corporate. Inaddition,noneof theDirectorsandchiefexecutiveof theCompany

ortheirspousesorchildrenundertheageof18hadanyrighttosubscribeforthe

securitiesoftheCompanyorhadexercisedanysuchrightduringtheperiodunder

review.


DIRECTORS’ AND CHIEF EXECUTIVE’S INTERESTS AND SHORT POSITIONS IN SHARES, UNDERLYING SHARES AND DEBENTURESAsat30September2008,theinterestsoftheDirectorsandchiefexecutiveofthe

Company in the shares, underlying sharesand debenturesof theCompanyor

anyofitsassociatedcorporations(withinthemeaningofPartXVoftheSecurities

and Futures Ordinance (the “SFO”)), as recorded in the register required tobe

keptbytheCompanyunderSection352oftheSFO,orasotherwisenotifiedtothe

CompanyandTheStockExchangeofHongKongLimited(the“StockExchange”)

pursuant to the ModelCode for SecuritiesTransactionsbyDirectorsof Listed

CompaniescontainedinAppendix10(the“ModelCode”)totheRulesGoverning

the Listingof Securitieson theStockExchange (the “ListingRules”),wereas

follows:

(a) Interests of the Directors in the ordinary shares of the Company (Long Positions) Total interests

as % of the

Company’s

Personal Family Corporate Total issued

Name of Director interest interest interest interests share capital

Mr.PangKamChun 290,508,340 10,148,875 129,348,294 430,005,509 50.07% (“Mr.Pang”) (Note 1) (Note 2)MadamLiWaiHang, 10,148,875 419,856,634 – 430,005,509 50.07% Christina (Note 1)Mr.KwokYukChiu,Clement 1,000,000 – – 1,000,000 0.12%Mr.AuSonYiu 301,816 – – 301,816 0.04%

Notes:

1. MadamLiWaiHang,ChristinaisthespouseofMr.Pangandisdeemedtohaveinterest inthosesharesof theCompanyheldbyMr.Pang.Similarly,Mr.PangisalsodeemedtohaveinterestinthosesharesoftheCompanyheldbyMadamLiWaiHang,Christina.

2. GTWinnersLimitediswhollyownedbyMr.Pang.UnderPartXVoftheSFO,Mr.PangisdeemedtohaveinterestinthesharesoftheCompanyheldbyGTWinnersLimited.


DIRECTORS’ AND CHIEF EXECUTIVE’S INTERESTS AND SHORT POSITIONS IN SHARES, UNDERLYING SHARES AND DEBENTURES (Continued)(b) Interests of the Directors in the underlying shares of the Company

(Long Positions) Total interests as % of the Company’s Personal Family Corporate Total issuedName of Director interest interest interest interests share capital

Mr.Pang 1,479,000 2,776,775 16,269,658 20,525,433 2.39% (Note 1) (Note 2) (Note 3)MadamLiWaiHang,Christina 2,776,775 17,748,658 – 20,525,433 2.39% (Note 4) (Note 2)Mr.KwokYukChiu,Clement 3,326,000 – – 3,326,000 0.39% (Note 5)Mr.AuSonYiu 360,000 – – 360,000 0.04% (Note 6)

Notes:

1. Theserepresent the interest in theunderlyingsharesof theCompany inrespectof1,479,000unitsofshareoptionsgrantedbytheCompany,detailsofwhicharestatedundertheheading“ShareOptionSchemes”above.

2. MadamLiWaiHang,Christinaisdeemedtohaveinterestintheunderlyingsharesof the Company held byMr.Pang. Similarly, Mr.Pang is also deemed to haveinterest in theunderlying sharesof theCompanyheldbyMadamLiWai Hang,Christina.

3. GT Winners Limited iswholly owned byMr. Pang. Under Part XVof the SFO,Mr.PangisdeemedtohaveinterestinthewarrantsoftheCompanyheldbyGTWinnersLimited.

4. Theserepresent the interest in theunderlyingsharesof theCompany inrespectof(i)747,000unitsofshareoptionsgrantedbytheCompany,detailsofwhicharestatedundertheheading“ShareOptionSchemes”aboveand(ii)2,029,775unitsofwarrantsoftheCompany.

5. Theserepresent the interest in theunderlyingsharesof theCompany inrespectof3,326,000unitsofshareoptionsgrantedbytheCompany,detailsofwhicharestatedundertheheading“ShareOptionSchemes”above.

6. TheserepresenttheinterestintheunderlyingsharesoftheCompanyinrespectof360,000unitsofwarrantsoftheCompany.


DIRECTORS’ AND CHIEF EXECUTIVE’S INTERESTS AND SHORT POSITIONS IN SHARES, UNDERLYING SHARES AND DEBENTURES (Continued)In addition, Mr. Pang and Madam LiWai Hang, Christina hold 8,347,500 and

90,000 non-voting deferred shares respectively inChun WoConstruction and

EngineeringCompanyLimited,whicharesubjecttoanoptiongrantedtoChunWo

HongKongLimited,awholly-ownedsubsidiaryof theCompany, topurchase the

saidnon-votingdeferredshares.

Saveasdisclosedaboveandotherthancertainnomineesharesinthesubsidiaries

held byDirectors in trust for theGroup, asat 30September2008, noneof the

DirectorsandchiefexecutiveoftheCompanyhadanyinterestsorshortpositions

in the shares, underlying sharesordebenturesof theCompanyor anyof its

associatedcorporations(withinthemeaningofPartXVoftheSFO).

INTERESTS AND SHORT POSITIONS OF SUBSTANTIAL SHAREHOLDERS DISCLOSEABLE UNDER THE SFOSo far as are known to theDirectors, asat 30September2008, the following

parties(otherthanDirectors’andchiefexecutiveoftheCompany)wererecorded

in the register keptby theCompanyunderSection336of theSFO (“Register of

SubstantialShareholders”)asbeinginterestedinordeemedtobeinterestedin5%

ormoreoftheissuedsharecapitaloftheCompany:

Interest in

Interest in underlying

underlying shares of equity

shares of equity derivatives of Total interests

derivatives of the Company as % of the

the Company pursuant to Company’s

Name of Interest in pursuant to the convertible issued

Shareholder Capacity shares the warrants bonds share capital

GTWinnersLimited BeneficialOwner 129,348,294 16,269,658 – 16.96% (Note 1)

StarkInvestments BeneficialOwner 91,743,119 – – 10.68% (HongKong)Limited


INTERESTS AND SHORT POSITIONS OF SUBSTANTIAL SHAREHOLDERS DISCLOSEABLE UNDER THE SFO (Continued) Interest in

Interest in underlying

underlying shares of equity

shares of equity derivatives of Total interests

derivatives of the Company as % of the

the Company pursuant to Company’s

Name of Interest in pursuant to the convertible issued

Shareholder Capacity shares the warrants bonds share capital

DKRSoundShoreOasis BeneficialOwner – – 81,330,275 9.47% HoldingFundLimited (Note 2)

DKROasisManagement Interestofacontrolled – – 81,330,275 9.47% Co.LP corporation (Note 2)

DKRCapitalPartnersLP Interestofacontrolled – – 81,330,275 9.47% corporation (Note 2)

OasisManagement Interestofacontrolled – – 81,330,275 9.47% HoldingsLLC corporation (Note 2)

DKRManagementCo.Inc. Interestofacontrolled – – 81,330,275 9.47% corporation (Note 2)

DKRCapitalInc. Interestofacontrolled – – 81,330,275 9.47% corporation (Note 2)

HSBCBankplc BeneficialOwner – – 64,220,183 7.48% (Note 3)

HSBCHoldingsplc Interestofacontrolled – – 64,220,183 7.48% corporation (Note 3)

StarkMasterFund,Ltd BeneficialOwner 46,854,521 – – 5.46%


INTERESTS AND SHORT POSITIONS OF SUBSTANTIAL SHAREHOLDERS DISCLOSEABLE UNDER THE SFO (Continued)Notes:

1. GTWinnersLimitediswhollyownedbyMr.PangunderPartXVoftheSFO,MrPangisdeemedtohaveinterestinthesharesoftheCompanyheldbyGTWinnersLimited.

2. The interest in the convertiblebonds in the aggregate principal sumofHK$177.3million beingconvertible into shares at the conversion price ofHK$2.18 per sharewhichisinturnheldbyDKRSoundShoreOasisHoldingsLLC(“DKRSoundShore”)asbeneficial owner. DKR SoundShore iswholly owned byDKR Oasis Management Co.LP,which in turn51%ownedbyDKRCapitalPartnersLPand49%ownedbyOasisManagement Holdings LLC respectively. DKR Capital Partners LP is 50% owned byDKRManagementCo.Inc.,awholly-ownedsubsidiaryofDKRCapital Inc.whichalsoholds50%ofDKRCapitalPartnersLP.ThesecompaniesaredeemedtohaveinterestinthesharesoftheCompanyheldbyDKRSoundShore.

3. TheinterestintheconvertiblebondsintheaggregateprincipalsumofHK$140millionbeingconvertibleintosharesattheconversionpriceofHK$2.18persharewhichisinturnheldbyHSBCBankplcasbeneficialowner.HSBCBankplc iswhollyownedbyHSBCHoldingsplcwhichisdeemedtohaveinterestinthesharesoftheCompany.

Save asdisclosedabove, asat 30September2008, theRegister ofSubstantial

Shareholdersdisclosesnootherparty (other thanDirectorsor chief executiveof

theCompany)asbeinginterestedordeemedtobeinterestedin5%ormoreofthe

issuedsharecapitaloftheCompany.

PURCHASE, SALE OR REDEMPTION OF THE COMPANY’S LISTED SECURITIESNeithertheCompanynoranyofitssubsidiarieshadpurchased,redeemedorsold

anyoftheCompany’slistedsecuritiesduringtheperiodunderreview.

CORPORATE GOVERNANCE PRACTICESThe Companyhascomplied with thecode provisions in effect andcertain

recommended best practices set out in the Code onCorporate Governance

Practices (the “Code”) contained inAppendix14of theListingRules throughout

theperiodunder reviewexcept for thedeviations from theprovisionA.4.2of the

Code.


CORPORATE GOVERNANCE PRACTICES (Continued)Pursuant to provision A.4.2of theCode, everyDirector should be subject to

retirementbyrotationatleastonceeverythreeyears.Relevantamendmenttothe

Bye-lawsoftheCompanyhadbeenproposedandwasapprovedbyshareholders

of theCompanyat theannualgeneralmeetingof theCompanyheld on21

September2006inordertocomplywithprovisionA.4.2oftheCode,saveasthe

ChairmanandtheManagingDirectorshallnotbesubjecttoretirementbyrotation.

TheBoardconsidersthattheChairmanandtheManagingDirectorarenotsubject

toretirementbyrotationinordertomaintainthestabilityandcontinuity.

COMPLIANCE WITH THE MODEL CODEThe Company has adopted the Model Code as its code of conduct regarding

securities transactionsby theDirectors.AllDirectorshaveconfirmed, followinga

specificenquiryby theCompany, that theyhave fullycompliedwith therequired

standardsetoutintheModelCodethroughouttheperiodunderreview.

AUDIT COMMITTEE REVIEWThe Audit Committee of the Company (the “Audit Committee”) comprises three

members,namelyMr.AuSonYiu,Mr.ChanChiuYingandMr.HuiChiuChung,all

are Independent Non-executive Directors of theCompany. TheAudit Committee

has reviewedwith themanagement the accounting principlesandpractices

adoptedby theGroupanddiscussed internal control and financial reporting

matters including the review of theunaudited interim financial statementsof the

Groupforthesixmonthsended30September2008.

APPRECIATIONOnbehalf of the Board, I thank all our customers, suppliers and contractors for

workingwithusandourshareholdersfortheircontinuedconfidenceinChunWo.I

wouldalsolikeexpressmyappreciationtoourstaffandourBoardofDirectorsfor

theireffortanddedicationtotheGroup.

ByOrderoftheBoard

Pang Kam Chun

Chairman

HongKong,18December2008

interim report 2008 · chun wo development holdings limited 2008 interim report highlight group...

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