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1 FINANCIAL HIGHLIGHTS

2 CORPORATE AND SHAREHOLDERS’INFORMATION

3 CORPORATE STRUCTURE

4 CHAIRMAN’S STATEMENT

14 REVIEW OF OPERATIONS

66 FINANCIAL REVIEW

70 GROUP FINANCIAL SUMMARY

71 DIRECTORS’ REPORT

79 DIRECTORS AND ORGANIZATION

89 REPORT OF THE AUDITORS

90 FINANCIAL STATEMENTS

CONTENTS

With a focus on maintaining its leading position

in the present challenging business environment,

the Sun Hung Kai Properties Group will continue

to develop premium products and provide quality

service, making its properties customers’ first

choice. To further enhance competitiveness, the

Group will work to strengthen its brand name

and control costs, but without compromising

on quality.

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2

3

4

5

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Cover photos:1. To build ideal homes for customers is always the Group’s aim.2. Park Central, Tseung Kwan O3. Park Island, Ma Wan4. International Finance Centre, Central5. New Town Plaza III, Shatin6. SUNeVision7. Kowloon Motor Bus

SUN HUNG KAI PROPERTIES LIMITED ANNUAL REPORT 2000/01

For the year ended 30th June 2001 2000 Change (%)

Turnover (HK$ million) 17,701 25,826 -31

Profit attributable to shareholders (HK$ million)

including one-off gain1 8,330 10,822 -23

excluding one-off gain1 8,330 8,134 +2

Earnings per share (HK$)

including one-off gain1 3.47 4.51 -23

excluding one-off gain1 3.47 3.39 +2

Dividends per share (HK$) 1.55 1.75 -11

Shareholders’ funds per share (HK$) 52.48 50.36 +4

Gross rental income (HK$ million) 5,392 5,292 +2

Net rental income (HK$ million) 4,073 4,059 –

Net debt to shareholders’ funds ratio (%) 15.8 14.9 +0.92

Land bank (million square feet) 54.1 52.1 +4

1 One-off gain arising from the spin-off of SUNeVision in March 20002 Change in percentage point

FINANCIAL HIGHLIGHTS

1997 1998 1999 2000 2001

Turnover

HK$

Earnings per share

Dividends per share (excluding special cash bonus)

* Except for completed investment properties, hotels and marketable securities which are stated at market value, all assets are at historical cost.

1997 1998 1999 2000 2001

Earnings andDividends per Share

1997 1998 1999 2000 2001

Net Asset Value per Share*

HK$HK$ million

5,000

10,000

15,000

20,000

25,000

30,000

22,890 23,404

25,826

17,701

28,425

10

20

30

40

50

60

47.5544.40

50.3652.48

56.38

1

2

3

4

5

6

3.04

3.87

4.51

1.201.55

1.75

2.35

3.47

1.55

5.93

1


CORPORATE AND SHAREHOLDERS’ INFORMATION

DIRECTORS

Kwok Ping-sheung, WalterChairman & Chief Executive

# Lee Shau-keeVice Chairman

Kwok Ping-kwong, ThomasVice Chairman & Managing Director

Kwok Ping-luen, RaymondVice Chairman & Managing Director

* Chung Sze-yuen

* Woo Po-shing

* Fung Kwok-king, Victor

* Kwan Cheuk-yin, William# Lo Chiu-chun, Clement# Law King-wan

Chan Kai-ming

Chan Kui-yuen, Thomas

Kwong Chun

Wong Yick-kam, Michael

Wong Chik-wing, Mike

# Non-Executive Director

* Independent Non-Executive Director

COMPANY SECRETARY

Lai Ho-kai, Ernest

REGISTERED OFFICE

45th Floor, Sun Hung Kai Centre30 Harbour Road, WanchaiHong KongTelephone: (852) 2827 8111Facsimile: (852) 2827 2862Web site: www.shkp.com.hkE-mail: [email protected]

AUDITORS

Deloitte Touche Tohmatsu

REGISTRARS

Central Registration Hong Kong LimitedRooms 1712-6, Hopewell Centre183 Queen’s Road EastHong Kong

PRINCIPAL BANKERS

The Hongkong & Shanghai BankingCorporation Limited

Bank of China

Hang Seng Bank Limited

Sumitomo Mitsui Banking Corporation

Standard Chartered Bank

The Bank of Tokyo – Mitsubishi, Ltd

Mizuho Financial Group

The Sanwa Bank Limited

Industr ia l and Commercial Bankof China

BNP Paribas

SOLICITORS

Woo, Kwan, Lee & LoJohnson, Stokes & MasterWinston Chu & Company

SHAREHOLDERS’ CALENDAR

Register of ShareholdersClose of Register (both days inclusive) 22nd November 2001 – 29th November 2001

Annual General Meeting 29th November 2001

DividendsInterim (per share) HK$0.55Paid on 12th April 2001Proposed final (per share) HK$1.00Payable on 3rd December 2001

LISTING INFORMATION

Stock Code 16

American Depositary ReceiptCUSIP number 86676H302Trading symbol SUHJYOrdinary share to ADR ratio 1:1Listing Level One (OTC)Depositary bank Citibank, N. A.

ADR Department, 20th Floor,111 Wall Street, New York, N.Y.10043

Toll-free telephone number 1-877-CITI-ADR (1-877-248-4237)

2


Sun Hung Kai Properties*

PropertyDevelopment

• 26.6 million sq.ft. under development

• 19.3 million sq.ft. completedinvestment properties

HotelsKMB*34%

Franchised Bus

• 22 million sq.ft. of agricultural land (site area)


Route 3 CPS50%

Toll Road

RoadShow*27.1%

Wilson Group100%

Transport Infrastructure Management

River Trade Terminal

33%

PropertyInvestment

Property Related

Businesses

Information Technology &

Telecoms

Property Development &

Investment

Transportation,Infrastructure

& Logistics

SUNeVision* 84.3%

SmarTone* 28.2%

Construction

Property Management

FinancialServices

Insurance

Mainland ChinaHong Kong


• 1.8 million sq.ft. completed investment properties

Mid-StreamOperation

50%

Container Terminal 9 28.5%

Business AviationCentre

35%

Airport FreightForwarding Centre

100%

Logistics

WasteManagement

CORPORATE STRUCTURE

As at 30th June 2001

* Listed in Hong Kong

3


The Leighton Hill in Happy Valley receivedan overwhelming response from the marketon its launch in November 2000.

CHAIRMAN’S STATEMENT4

I am pleased to present my report to the shareholders:

RESULTS

The Group’s profit after taxation and minority interests for the year ended 30th June 2001 was HK$8,330 million,

compared with last year’s profit of HK$10,822 million. Earnings per share for the year was HK$3.47, compared with

HK$4.51 for the corresponding period last year. A one-off gain of HK$2,688 million arising from the spin-off of

SUNeVision Holdings Limited was included in last year’s results. Excluding that gain, profit for the year under review

shows a year-on-year growth of 2.4 per cent.

DIVIDENDS

The Directors have recommended the payment of a final dividend of HK$1.00 per share for the year ended 30th

June 2001. Together with the interim dividend of HK$0.55 per share, the total dividend for the year is HK$1.55 per

share, compared with HK$1.75 per share for the previous year.

REVIEW

Sales

During the year ended 30th June 2001, total property

sales generated by the Group, both as principal and agent,

amounted to HK$19,641 million, an increase of 102 per

cent over the previous year. Major projects sold during

the period included The Leighton Hill in Happy Valley,

Oscar by the Sea in Tseung Kwan O, The Parcville in

Yuen Long, Royal Peninsula in Kowloon, The Belcher’s

Phase 2 in western Mid-Levels and Villa Esplanada Phase

3 in Tsing Yi.

CHAIRMAN’S STATEMENT

5


During the year under review, the Group completed the following 11 projects, with an attributable gross floor area

of about 4.1 million square feet:

Group’s AttributableProject Location Usage Interest Gross Floor Area

% square feet

Royal Peninsula 3 Hung Lai Road, Kowloon Residential 50 739,000

Oscar by the Sea Phase 1 Tseung Kwan O Town Lot 51 Residential Joint venture 447,000

Le Sommet 28 Fortress Hill Road, North Point Residential 100 390,000

Villa Premiere 99 Fung Cheung Road, Yuen Long Residential 100 217,000

Villa Esplanada Phase 3 8 Nga Ying Chau Street, Tsing Yi Residential 22.5 193,000

Ocean Shores Phase 1 88 O King Road, Tseung Kwan O Residential/Shopping Centre 49 672,000

Chelsea Heights Phase 2 1 Shek Pai Tau Path, Tuen Mun Residential/Shopping Centre 100 667,000

The Belcher’s Phase 1 89 Pok Fu Lam Road, western Mid-Levels Residential/Shopping Centre 29 386,000

Grand Villa 401 Chatham Road, Hung Hom Residential/Shops 100 30,000

Shouson Place 16E Shouson Hill Road, Island South Shopping Centre 100 17,000

MEGA-iAdvantage 399 Chai Wan Road Data Centre 84.3 293,000

Total 4,051,000

More than 85 per cent of the residential units completed during the year have been sold. The shopping centres in

Chelsea Heights, The Belcher’s and Ocean Shores, as well as Shouson Place and MEGA-iAdvantage, are being

retained as long-term investments.

Land Bank

During the year, the Group added a total of 5.3 million square feet of attributable gross floor area to its land bank

through various means including public auction and tender :

Group’s Attributable AttributableProject Usage Interest Site Area Gross Floor Area

% square feet square feet

Airport Railway Kowloon Station Office/Shopping Centre/Residential/Development Packages 5, 6 & 7 Serviced Apartment/ Hotel Joint venture 790,000 4,698,000

Kowloon Inland Lot 11145, Farm Road Residential/Shopping Centre 100 30,000 268,000

New Kowloon Marine Lot 3, Lai Chi Kok Residential/Shopping Centre 34 43,000 376,000

Total 863,000 5,342,000

The Group currently owns a land bank of 54.1 million square feet in Hong Kong, in terms of attributable gross floor

area. It consists of 19.3 million square feet of completed investment properties and 34.8 million square feet of

proper ties under development. The Group also owns 22 million square feet of agricultural land in the New

Territories, primarily along existing or planned railway lines, the majority of which is in the process of land use

conversion.


6


Property Development

Transaction volume in Hong Kong’s residential market was

affected by the recent terrorist attacks in the United States, after

a modest improvement in the first eight months of 2001. Market

sentiment has been weak, affected by the economic slowdown,

rising unemployment rate and the significant decline in the Hong

Kong stock market in the past two months. However, recent

positive Government measures for the housing market and eight

consecutive interest rate cuts totalling 3.5 per cent this year have

helped to strengthen market fundamentals.

Affordability for home buyers is now the most favourable in the

last 13 years, with residential prices currently at early 1992 levels. In addition, attractive financing packages offered by

banks, the lowest mortgage rates on record and a significant increase in the number of Government-subsidized

housing loans have underpinned market demand. Higher rental yields relative to mortgage interest rates have

resulted in more people opting to buy flats instead of renting accommodation. It is expected that as confidence in

the economy improves, the demand for housing will increase accordingly.

The Group’s strategy is to increase the completion of residential units for sale over time in order to meet market

demand, with a focus on developing large-scale, premium-quality projects with comprehensive facilities. It will continue

to offer home buyers a wide range of flat sizes, with an emphasis on small-to-medium units. To meet the objective

of raising production volume and enhancing value for shareholders, the Group will add to its land bank through

various means when appropriate. Conversion of agricultural land into the Group’s development land bank is continuing.

The Group’s aim has always been to build ideal homes for its customers. As home buyers have become more

selective, the Group is raising standards even higher in order to enhance its brand name for quality and strengthen

its market-leading position. A variety of measures adopted during the year will allow the Group to surpass its

achievements in areas such as project quality, customer care and management service. Reinforcement of the Group’s

brand name and stringent controls over construction costs should help to improve project returns.

In the coming financial year, the Group expects to complete 4.6 million square feet of gross floor area in attributable

terms:

Oscar by the Sea in Tseung Kwan O offers homebuyers a wide range of unit sizes.

Attributable gross floor area in million square feet

Residential Shopping Centre Office Total

For sale 4.5 – * 4.5

For investment – * 0.1 0.1

Total 4.5 * 0.1 4.6

* less than 0.1 million square feet


7


Property Investment

The Group’s property investment portfolio generally performed well during the year, although leasing demand for

commercial properties has softened since early 2001. Overall occupancy of investment properties owned by the

Group remained high at 95 per cent. Gross rental income during the year under review, including the Group’s share

of jointly controlled entities, increased by 3.7 per cent over the previous year to HK$5,877 million.

To bolster recurrent income, the Group is actively developing a number of new, superior-quality investment property

projects. At the same time, it will also review its rental portfolio constantly, with the intention of disposing of some

non-core properties to maintain an optimal investment portfolio.

Following the success of One International Finance Centre (IFC), which is fully let, construction of Two IFC is under

way. It consists of a 1.95 million square-foot, state-of-the-art office building, 500,000 square feet of prime shopping

space, a 1.1 million square-foot six-star hotel complex and 140,000 square feet of landscaped garden. IFC is strategically

located on the Central waterfront, right above the Airport Railway Hong Kong Station, with spectacular views of

Victoria Harbour. The hotel complex will include one 400-room tower and another 600-room tower for long-

staying guests, and it will be managed by Four Seasons Hotels and Resorts, a leading international luxury hotel

operator. This will be the first Four Seasons-branded property in Hong Kong. With its ultra-modern office towers

designed with interactive technology, IFC

will serve as a truly international business

and financial hub. The office tower in Two

IFC will be completed by the end of 2003,

and the shopping centre is expected to

open in the first half of 2003. The entire

IFC complex will be completed in phases

by 2004. The Group has a 47.5 per cent

interest in the project.

Kowloon Station Development Packages

5, 6 and 7 are situated right above Kowloon

Station on the Airport Express Railway, at

the heart of the future commercial and

cultural hub of Hong Kong. With 4.7 million

square feet attributable to the Group, the

entire project comprises office, hotel,

residential and serviced apartments, as well

as retail space. Foundation work has already

begun, and the whole project is scheduled

for completion in phases between 2005

Top: Walter Kwok, theGroup’s Chairman (fifth left)and Raymond Kwok, ViceChairman (third left) at theIFC–Four Seasons Hotelsuperstructurecommencement ceremony.

Left: Airport RailwayKowloon StationDevelopment Packages 5, 6and 7 will have top-qualityoffices, residential andserviced apartments, hoteland shopping centre.


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and 2007. Airport Railway Kowloon Station Development Packages 3, 5 and 6 will provide a total of two million

square feet of residential property available for pre-sale in about two years’ time.

Given its prime location in the centre of Kowloon East, Millennium City has become one of the major commercial

developments in Hong Kong. With the success of Phases 1 and 2, which are both fully let, Phase 3 is under

construction, with occupation scheduled for the second half of 2002.

With Hong Kong serving as an international hub for business, finance, trade and tourism, and China’s entry to the

WTO, the demand for top-quality office space is expected to remain solid. At the same time, the Group is taking

various steps to enhance rental values in its shopping centres. In addition to regular renovations and refurbishment,

promotional programmes are also staged in the shopping centres, particularly during weekends and public holidays,

to boost pedestrian flows and consumer spending.

Information Technology and Telecommunications

SUNeVision

SUNeVision’s business has been progressing well since the listing in March 2000. The company generated total

revenue of approximately HK$198 million during the financial year ended 30th June 2001, and achieved a positive

gross margin in the second quarter of 2001. This performance primarily reflects a growth in revenue from the

Internet infrastructure business and the company’s success in carefully controlling costs in a tough operating

environment. Leasing of iAdvantage’s data centres in Hong Kong has been satisfactory, and other business units have

made steady progress during the year.

The company is reviewing its business strategy and will focus on operations with growth potential. At the same

time, it will prudently manage its balance sheet and tightly control operating costs and capital expenditure. SUNeVision

has cash and marketable bonds totalling HK$1,870 million. With the full support of its parent company and

commitment of its experienced management, SUNeVision will become more competitive by operating more efficiently

and cost-effectively, and it is well positioned to pursue new investment opportunities when appropriate.

SmarTone

The telecommunications market remained highly competitive, and SmarTone reported a loss for the year, mainly

due to the start-up investment required for its broadband business and other provisions. SmarTone expanded its

customer base to 980,000 during the year, laying the foundation for future growth. Mr. Douglas Li rejoined the

company as CEO in July 2001, and he will lead SmarTone forward in its commitment to offering superior service to

its customers. Through effective execution, the company will deliver a total service offering, achieving operational

efficiencies and controlling costs. SmarTone Macau was launched in August 2001, offering a high-quality network and

superior customer service.


9


SmarTone was provisionally awarded a 3G licence in Hong Kong in September 2001 at the reserve price of five per

cent royalty rate. This will allow the company to provide its customers with wireless broadband and personalized

services, with multi-media contents. SmarTone conducted the first successful 3G trial in the greater China region in

1999, giving it a head start in the industry.

With its leading market position, solid customer base and strong cash reserves of HK$3,478 million, the company

will be able to leverage its strengths in any opportunities for consolidation that may arise. The Group is confident in

SmarTone’s future growth and prospects, and is committed to holding the company as a long-term strategic investment.

Transportation and Infrastructure

Kowloon Motor Bus

Kowloon Motor Bus (KMB) had a good year in 2000, with net profit increasing 15.7 per cent. Operating efficiency

continued to show improvement, and there were increases in new bus routes and passenger volume. The company

aims to maintain its market-leading position by providing a high standard of user-friendly bus services, ensuring total

customer satisfaction. The relocation of KMB’s Lai Chi Kok bus depot to the West Kowloon reclamation will further

enhance the efficiency and reliability of the fleet. The new depot will be purpose-built to provide advanced support

service for KMB’s modern fleet, and it is scheduled for completion by the end of 2001. KMB will continue to look for

ways to diversify business in the bus transportation industry in Hong Kong and on the Mainland.

RoadShow Holdings Limited, a 73.3 per cent owned subsidiary of KMB, is a leading out-of-home media sales

company in Hong Kong. The company provides multi-media on-board services to a captive transit vehicle audience

base. It also engages in transit network media sales and merchandizing. RoadShow was listed on the main board of

the Hong Kong Stock Exchange on 28th June 2001, raising net proceeds of HK$534 million.

Other Infrastructure Business

Route 3 (Countr y Park Section)

performed well this year. The toll for

the Tai Lam Tunnel was increased in

Apr i l 2001, and traf fic volume

remained satisfactory despite slower

economic growth. It is expected that

the development of new towns in the

nor thwest New Terr itor ies and

increasing trade between the Mainland

and Hong Kong will result in growing

traffic on the toll road.RoadShow was listed on the main board of the Hong Kong Stock Exchangeon 28th June 2001, raising net proceeds of HK$534 million.


10


The volume of cargo handled at the River Trade Terminal has been expanding since it commenced operation, and

the Airport Freight Forwarding Centre continued to operate smoothly.

Through its 28.5 per cent interest in Asia Container Terminals Limited, the Group is participating in the development

of two berths in Container Terminal 9. The project financing is already in place. Completion is scheduled in phases

during 2003 and 2004.

All of the Group’s infrastructure projects are in Hong Kong, and will provide quality cash flows and recurrent income

over the long term.

Hotel Business

With increased incoming tourists, overall occupancy in Hong Kong’s hotel sector remained at relatively high levels

during the year. Performance of the Group’s three hotels was encouraging. The average occupancy rate for the

hotels not only registered a high of 85 per cent, room rates also increased during the year.

The Group is now developing six-star hotel facilities at both Hong Kong and Kowloon stations on the Airport

Express Railway. With Hong Kong being a regional hub for tourists, the Government’s initiatives to boost tourism,

an anticipated increase in business travellers amid China’s entry to the WTO and Beijing’s successful bid to host the

Olympic Games in 2008, the Group’s hotel portfolio is well positioned to take full advantage of forthcoming

business opportunities.

Mainland China Business

With robust economic growth on the Mainland, performance of the

Group’s property investment portfolio in Beijing and Shanghai was

satisfactory during the year. Sun Dong An Plaza in Beijing recorded

95 per cent overall occupancy, and Central Plaza in Shanghai was 93

per cent let.

China will continue to offer enormous business and investment

opportunities to local and overseas investors, particularly after its entry

to the WTO. With the success of ongoing housing reform in China, the

Group will take advantage of the opportunities presented by investing

selectively in the China property market in Beijing, Shanghai, Guangzhou

and Shenzhen.

Performance of the Group’s property investmentsin Mainland China was satisfactory during the year.Sun Dong An Plaza in Beijing was 95 per cent let.


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Corporate Finance

The Group’s financial position remains strong, with low gearing and high interest coverage. Its net debt to shareholders’

funds ratio as at 30th June 2001 was 15.8 per cent, and it has abundant undrawn banking facilities on a committed

basis to finance future business expansion. All the Group’s credit facilities are unsecured. Exposure to foreign

currency risk is negligible, given that the vast majority of its borrowings are denominated in Hong Kong dollars.

In line with the Group’s policy of lengthening its loan maturity profile, it successfully arranged two seven-year

syndicated loans with a number of leading local and international banks in 2001. The market response was

overwhelming, and an aggregate HK$15,300 million revolving credit and term loan facility was established to refinance

short-term debt and for use as general working capital. The Group also broadened its funding base through issues

of fixed and floating rate notes under its EMTN programme amounting to HK$2,150 million since July 2000, with

tenors ranging from three to eight years.

During the year, the Group’s credit rating outlook from Moody’s was upgraded from stable to positive, in line with

that of the Hong Kong Government’s sovereign ceiling. The Group will adhere to its conservative financial management

policies by maintaining low gearing and high liquidity.

Customer Service

Customer care is a top priority for the Group, and it is constantly looking for new ways to improve the quality of its

products and services. The Group’s Service Excellence Programme provides extensive and ongoing training to

front-line staff in order to raise the quality of customer service.

The Group’s property management subsidiaries Hong Yip and Kai Shing consistently receive accolades for their

management service, and the companies won over 30 awards from a variety of organizations during the year. Both

companies continue to extend the use of information technology in property management and building services,

monitoring facilities via the Internet. They are also environmentally conscious, encouraging recycling and conservation

to reduce the amount of waste produced by the properties they manage.

Membership in the SHKP Club continues to

grow, and it now exceeds 140,000. The Club

offers members complete service and a wide

range of leisure and property-related activities.

Building on the success of initiatives such as

the Show Flat Preview Loyalty Scheme, the

Club introduced various new benefits and

services for members during the year, including

a Buyer Reward Programme. The Club will

continue to attract new members and promote

two-way communication with the public

through various means.The Group strives to increase staff consciousness of the importance ofquality, to reinforce its status as a premium-quality developer.


12


PROSPECTS

China continues to show impressive growth, with ongoing economic reforms. Its anticipated accession to the WTO

will add further momentum to its economic progress. Beijing’s successful bid to host the Olympic Games will not

only translate into greater economic expansion during the run-up to 2008, it will also strengthen both domestic and

international confidence in China. All these favourable developments on the Mainland should benefit Hong Kong’s

economy and property market over time, as the territory serves as a gateway to China.

The September attack in the United States has undoubtedly shocked global financial markets and the world economy,

but the negative impact is likely to be short term. Given persistently low interest rates and continued growth on the

Mainland, Hong Kong is well equipped to deal with the current challenges.

Despite challenging economic conditions, home buyers’ confidence should improve following the suspension of

HOS sales until June of next year and the current review of the institutional framework for public housing. These

factors, along with the desire to own property, very favourable affordability for home buyers and relaxed mortgage

financing, are expected to bolster the demand for residential property. New supply in the pre-sale market is likely to

remain steady next year, and there is a high likelihood that it will fall in the medium term. In light of all these, the

residential market should become active once the shock of recent events in America subsides.

The Group has witnessed various major economic ups and downs over the past few decades, and each of these

downturns invariably brought the Group considerable investment opportunities. With its experienced management

team and strong financial position, the Group believes that the current residential market will provide opportunities

for business expansion and long-term growth. We are confident that the Group will be an even stronger property

company with the advent of a recovery in the market.

The Group will continue efforts to strengthen its

property business in Hong Kong. It will build more

residential developments for sale in the next few

years to meet expected demand. It will also develop

a number of landmark investment properties to

increase recurrent income. Concurrently, the Group

will dispose of some non-core investment properties

in order to maintain an optimal mix in its rental

portfolio and improve the return on assets.

With a focus on maintaining its leading position in

the present challenging business environment, the

Group will continue to develop premium products

The Group will build more premium-quality residentialdevelopments, including Park Central in Tseung Kwan O,for sale in the next few years to meet the expected demand.


13


and provide quality service, making its properties customers’ first choice. To further enhance competitiveness, the

Group will take steps to strengthen its brand name and control costs, but without compromising on quality. The aim

is to increase returns and enhance shareholder value.

Given the promising outlook for China’s economy, the Group is actively seeking business opportunities in the

Mainland property market to take advantage of growing prospects in that sector over the long term. The Group will

bring its strong brand name and successful Hong Kong experience to Mainland China, and it is confident that it will

further develop the market there.

Proceeds from upcoming pre-sales and substantial recurrent rental income will further enhance the Group’s cash

flow. The Group will continue to launch new projects for pre-sale according to schedule, and major projects to be

marketed in the next nine months include Park Central in Tseung Kwan O, Villa by the Park in Yuen Long, 71 Mount

Kellett Road on the Peak and Park Island on Ma Wan.

Approximately 75 per cent of the residential properties to be completed in the coming financial year have been pre-

sold, and barring unforeseen circumstances, the Group’s results for the coming year will show satisfactory growth.

APPRECIATION

Sir Sze-yuen Chung was appointed as an Independent Non-Executive Director of the Company in March this year.

His broad experience and knowledge of business and public affairs will benefit the Group’s future business development.

Independent Non-Executive Director Dr. Ho Tim retired from the board in March this year after more than 28

years of service. Throughout this time, he has made a considerable contribution to the Group’s growth, and on

behalf of the board, I would like to thank Dr. Ho for his valuable efforts and dedication.

Executive Director Mr. Law King-wan will soon retire after over 30 years of service, staying on as a Non-Executive

Director. I wish to thank Mr. Law for his substantial contribution to the Group’s development, and for his commitment

and loyalty.

I would also like to take this opportunity to express my gratitude to my fellow directors for their guidance, and to

all the staff for their dedication and hard work.

Kwok Ping-sheung, Walter

Chairman & Chief Executive

Hong Kong, 27th September 2001

REVIEW

16

18

30

40

44

LAND BANK

PROPERTY DEVELOPMENT

PROPERTY INVESTMENT

PROPERTY RELATED BUSINESSES

INFORMATION TECHNOLOGY ANDTELECOMMUNICATIONS

OF OPERATIONS

Club house at Oscar by the Sea, Tseung Kwan O

58

62

63

64

CUSTOMER SERVICE

ENVIRONMENTAL PROTECTIONAND PROMOTION

STAFF RELATIONS AND TRAINING

THE GROUP AND THE COMMUNITY

TRANSPORTATION,INFRASTRUCTURE AND LOGISTICS

OTHER INVESTMENT HOLDINGS

MAINLAND CHINA BUSINESS

CORPORATE FINANCE

INVESTOR RELATIONS

46

51

52

56

57

The Group has a land bank of 54.1 million square feet, in terms of attributable

gross floor area, following the addition of three prime sites during the year

under review. Details of the new sites are given in the Chairman’s Statement

on page 5.

The Group’s land bank is well diversified both in terms of usage and location.

About 49 per cent of the projects are on Hong Kong Island and in Kowloon,

while the remaining 51 per cent are spread throughout various new towns

in the New Territories. In addition, the Group has 22 million square feet of

agricultural land, in terms of site area, primarily located along existing or

planned railway lines in the New Territories. The majority of this is in the

process of land use conversion, principally for residential development.

REVIEW OF OPERATIONS LAND BANK

10

20

30

40

50

60

50.6 50.6 52.1

1997 1998 1999 2000 2001

Land Bank in Hong KongAttributable gross floor area

54.150.9

million square feet

30%Office

40%Shopping Centre

5%Residential

20%Industrial/

Office

5%Hotel4%

Hotel

68%Residential

8%Industrial/Office

15%Office

5%ShoppingCentre

BY LOCATION

BY USAGE BY USAGE

47%New

Territories27%Kowloon

26%Hong KongIsland

35%Kowloon

53%NewTerritories

36%Completed InvestmentProperties19.3 million sq.ft.

64%Properties Under

Development34.8 million sq.ft.

Composition of Land Bank in Hong KongAttributable gross floor area: 54.1 million square feet

12%Hong Kong

Island

BY LOCATION

54.1 millionsquare feet

16


The Group has 34.8 million square feet of properties

under development. Of this, 26.6 million square feet

will be for sale, while the remaining 8.2 million square

feet will be added to the Group’s completed investment

property portfolio, which now stands at 19.3 million

square feet.

About 68 per cent of the properties under development

is residential, mostly large-scale estates with small to

medium sized units for sale. The Group will continue

to develop commercial and residential properties of

premium quality, employing the most up-to-date

technology in facilities and management. The Group’s

recognized brand name and commitment to excellence

add to the value of its developments in the current

competitive market.

REVIEW OF OPERATIONS Land Bank

Status and UsageAttributable gross floor area in million square feet

Shopping Industrial/Residential Centre Office Hotel Office* Total

Development for sale 23.7 – 0.2 – 2.7 26.6

Development for investment – 1.7 4.9 1.6 – 8.2

Completed investment properties 1.0 7.7 5.8 0.9 3.9 19.3

Total 24.7 9.4 10.9 2.5 6.6 54.1

* Industrial/office properties include data centres, godowns and industrial properties.

Status and LocationAttributable gross floor area in million square feet

Hong Kong NewIsland Kowloon Territories Total

Development for sale 2.7 6.3 17.6 26.6

Development for investment 1.5 6.0 0.7 8.2

Completed investment properties 5.0 5.2 9.1 19.3

Total 9.2 17.5 27.4 54.1

17

The current land bank is sufficient for development

needs over the next five years. In line with its strategy

to increase the production volume of residential projects

for sale over time, the Group will take advantage of the

current downturn to replenish its land bank as

appropriate. The Group’s land bank in Mainland China

is described on page 54.

The Group’s land bank in Hong Kong, in attributable

gross floor area, is analyzed by status, usage and location

as follows:


The Group’s aim has always been to build ideal

homes for its customers, and it is raising standards

even higher in order to enhance its brand name for

quality and strengthen its market-leading position.

Royal Peninsula, Kowloon

REVIEW OF OPERATIONS

PROPERTY SALES

Properties sold by the Group during the year ended

30th June 2001, as principal and agent, amounted to

HK$19,641 million, an increase of 102 per cent from

the previous year. This figure includes the Group’s

49 per cent interest in Ocean Shores Phase 2 in Tseung

Kwan O, 50 per cent interest in Royal Peninsula in

Kowloon and 29 per cent interest in The Belcher’s in

western Mid-Levels.

PROJECTS COMPLETED IN FY2000/01

In the year ended 30th June 2001, the Group completed

11 projects with an aggregate attributable gross floor

area of 4.1 million square feet. Projects completed

during the year are listed in the Chairman’s Statement

on page 5.


Projects to be Completed in FY2001/02

Location

Tseung Kwan O Town Lot 51

Inland Lot 8882, Happy Valley

Yuen Long Town Lot 506


Sha Tin Town Lot 394

89 Pok Fu Lam Road, western Mid-Levels

Shaukeiwan Inland Lot 843, Aldrich Bay

71 Mount Kellett Road, the Peak

1-7 Lion Rock Road, Kowloon

Airport Railway Tung Chung StationDevelopment, Tung Chung Town Lot 3 Phase 1

54-58 Kwai Cheong Road, Kwai Chung

7-9 Minden Avenue, Kowloon

Total for FY2001/02

Both The Belcher’s in western Mid-Levels(top) and Ocean Shores in Tseung KwanO, received high acclaim from owners fortheir superb quality.

20


REVIEW OF OPERATIONS Property Development21


REVIEW OF OPERATIONS Property Development

Over 85 per cent of the residential proper ties

completed during the year have been sold, while the

shopping centres at Chelsea Heights in Tuen Mun, The

Belcher’s in western Mid-Levels, Ocean Shores in Tseung

Kwan O and Shouson Place in Island South have been

kept for long-term rental. The MEGA-iAdvantage data

centre in Chai Wan is also being retained as an

investment.

Attributable gross floor area in square feet

ShoppingProject Name Group’s Interest (%) Residential Centre Office Total

Oscar by the Sea Phase 2 Joint venture 1,004,000 – – 1,004,000

The Leighton Hill 100 898,000 – – 898,000

The Parcville 66.67 664,000 – – 664,000

Ocean Shores Phase 2 49 574,000 – – 574,000

Prima Villa 100 511,000 – – 511,000

The Belcher’s Phase 2 29 386,000 – – 386,000

Les Saisons 30 222,000 – – 222,000

– 100 14,000 – – 14,000

– 100 22,700 2,900 – 25,600

– 20 177,000 5,500 – 182,500

– 100 – – 80,000 80,000

– 100 – – 29,000 29,000

4,472,700 8,400 109,000 4,590,100

PROJECTS TO BE COMPLETED INFY2001/02

The Group expects to complete 12 projects in the

coming financial year, with an aggregate attributable

gross floor area of 4.6 million square feet.

Projects Completed in FY2000/01Attributable gross floor area in million square feet

Shopping DataResidential Centre Centre Total

For sale 3.6 – – 3.6

For investment – 0.2 0.3 0.5

Total 3.6 0.2 0.3 4.1

Projects to be Completed in FY2001/02Attributable gross floor area in million square feet

ShoppingResidential Centre Office Total

For sale 4.5 – * 4.5

For investment – * 0.1 0.1

Total 4.5 * 0.1 4.6

* Less than 0.1 million square feet



Projects to be Completed in FY2002/03

Location

Ma Wan Development

Tseung Kwan O Town Lots 57 & 66


Tuen Mun Town Lot 374

Shui Pin Wai, Yuen Long

1 Ho Man Tin Hill Road, Kowloon

1 & 3 Po Shan Road, Mid-Levels

Airport Railway Tung Chung Station Development,Tung Chung Town Lot 3 Phase 2

Airport Railway Hong Kong Station Development Phase 2

370 Kwun Tong Road

Total for FY2002/03

Major Projects to be Completed from FY2003/04 to FY2005/06

Location

Ma Wan Development – Park Island (remaining phases)


Tsuen Wan Town Lots 77 & 89

Airport Railway Olympic Station Development Package 3

Airport Railway Kowloon Station Development Package 3

To Fung Shan Phases 2, 3 & 4, Shatin

Kwu Tung Phases 2 & 3, Sheung Shui

Tuen Mun Town Lot 399

Ngau Tam Mei, Yuen Long

Yunnan Lane, Yau Ma Tei

Ap Lei Chau Inland Lot 129


New Kowloon Inland Lot 6275, Cheung Sha Wan

Ap Lei Chau Inland Lot 128

New Kowloon Marine Lot 3, Lai Chi Kok

New Kowloon Inland Lot 6328, Cheung Sha Wan

Kowloon Inland Lot 11145, Farm Road

Airport Railway Kowloon Station Development Packages 5, 6 & 7

Airport Railway Hong Kong Station Development Phase 2 –Two International Finance Centre (remaining portion)

418 Kwun Tong Road – Millennium City Phase 5

392 Kwun Tong Road – Millennium City Phase 6

Total

Top: 90 per cent of units in Villa by the Park in Yuen Longenjoy green views.

Bottom: The shopping mall at Two International FinanceCentre in Central is scheduled to open in the first halfof 2003.




ShoppingProject Name Group’s Interest (%) Residential Centre Office Total

Park Island Phase 1 Joint venture 1,698,000 86,100 – 1,784,100

Park Central 57.52/25 1,397,500 195,500 – 1,593,000

Ocean Shores Phase 3 49 716,000 10,500 – 726,500

– 25 306,500 5,500 – 312,000

Villa by the Park 100 439,500 – – 439,500

– Joint venture 158,000 – – 158,000

– 60 72,000 – – 72,000

– 20 60,500 – – 60,500

Two International FinanceCentre (initial portion) 47.5 – 242,000 309,000 551,000

Millennium City Phase 3 70 – – 108,000 108,000

4,848,000 539,600 417,000 5,804,600


ShoppingGroup’s Interest (%) Residential Centre Office Hotel Total

Joint venture 1,966,000 – – – 1,966,000

100 1,180,000 – – – 1,180,000

100 1,113,000 – – – 1,113,000

Joint venture 1,110,000 – – – 1,110,000

Joint venture 1,076,000 – – – 1,076,000

100 744,000 – – – 744,000

100 603,500 – – – 603,500

100 375,000 – – – 375,000

100 383,000 – – – 383,000

Joint venture 312,000 – – – 312,000

35 316,000 – – – 316,000

100 1,454,000 249,000 – – 1,703,000

50 648,000 65,000 – – 713,000

100 454,000 16,000 – – 470,000

34 358,000 18,000 – – 376,000

35.44 541,000 21,000 – – 562,000

100 223,000 45,000 – – 268,000

Joint venture 1,009,000 171,000 2,495,000 1,023,000 4,698,000

47.5 – – 618,000 523,000 1,141,000

100 – 573,000 710,000 – 1,283,000

100 – – 360,000 – 360,000

13,865,500 1,158,000 4,183,000 1,546,000 20,752,500



14

15

13

LANTAU ISLAND

• • • • • 1 Oscar by the Sea Phase 2 •2 Ocean Shores Phases 2 & 3 • •3 Park Central • •4 Prima Villa •5 To Fung Shan Phases 2, 3 & 4 •6 Kwu Tung •7 Shek Wu Wai •8 Ngau Tam Mei •9 The Parcville •10 Yuen Long Town Lot 503 •11 Yuen Long Town Lot 504 • •12 Villa by the Park •13 Tuen Mun Town Lot 399 •14 Tuen Mun Town Lot 374 • •15 Airport Railway Tung Chung

Station Development • • •16 Park Island • •17 Tsuen Wan Town Lots 77 & 89 •18 New Kowloon Marine Lot 3 • •19 New Kowloon Inland Lot 6328 • •20 New Kowloon Inland Lot 6275 • •21 Airport Railway Olympic Station

Development Package 3 •22 1 Ho Man Tin Hill Road •23 Kowloon Inland Lot 11145,

Farm Road • •24 Yunnan Lane, Yau Ma Tei •25 Airport Railway Kowloon Station

Development Package 3 •26 Airport Railway Kowloon Station

Development Packages 5, 6 & 7 • • • •27 The Belcher’s Phase 2 •28 The Leighton Hill •29 Les Saisons •30 Ap Lei Chau Inland Lot 128 • •31 Ap Lei Chau Inland Lot 129 •32 Two International Finance Centre • • •33 Millennium City Phase 5 • •34 Millennium City Phases 3 & 6 •35 20-22 Siu Lek Yuen Road •36 12-23 Wang Wo Tsai Street •37 51-53 Kwai Cheong Road •38 77 Wing Hong Street •39 50 Wong Chuk Hang Road •

Resid

entia

lSh

oppin

g Cen

treO

ffice

Indus

trial/

Offic

eHot

el

Major Properties Under Development

Existing

Railways

Major Highways

Planned (completion by 2008)

Railways

Major Highways

Under Construction

Railways

Major Highways

Railway Interchange

West Rail (completion in 2003)

Ma On Shan Rail (completion in 2004)

Tseung Kwan O Extension (completion in 2002)

2

18

23

1920

33

30

11

16

3

32

26 1

34

45

6

7

8

9

10

17

2122

35

36

37

38

39

24

25

27

28

31

29

12

HONG KONGISLAND

NEW TERRITORIES

SHENZHEN

KOWLOON




MAJOR PROJECTS UNDERDEVELOPMENT

Ocean Shores

Tseung Kwan O Town Lot 55 (49% owned)

This development, covering an area of 540,000 square

feet, has over 5,000 units with a total gross floor area of

four million square feet. The 1,920 units in the first

phase were completed during the year. The second

phase has 1,536 units, which were launched for sale in

March this year to a satisfactory response. Another

2,200 units will be built in Phase 3, which is now under

construction for completion in financial year 2003.

Oscar by the Sea

Tseung Kwan O Town Lot 51 (Joint venture)

The property has a site area of 182,500 square feet,

with 424 first phase units completed during the year.

The second phase will provide over 1,500 small to

medium sized units, with total gross floor area exceeding

one million square feet. It is scheduled for completion

in the first half of 2002 and about 80 per cent of the

units have already been sold.

The Leighton Hill

Inland Lot 8882, Happy Valley (100% owned)

The Leighton Hill is one of the largest luxur y

developments on Hong Kong Island in the past decade.

Just a few minutes’ walk from the Causeway Bay MTR

station, it offers convenient access to all districts.

Featuring the finest materials and excellent architecture,

The Leighton Hill sets the standard for luxury in the

new millennium. Over 540 units with a gross floor area

of 898,000 square feet are being built on this 464,000

square-foot site. The project was put up for sale in

November 2000 to an overwhelming response, and all

units were sold within a few weeks. Construction will

finish by mid 2002.

Above: Ocean Shores is one of the largestresidential estates in Tseung Kwan O andfeatures comprehensive facilities.

Left: With the finest materials and architecture,The Leighton Hill in Happy Valley epitomizesluxury property in the millennium.



Park Island

Ma Wan Development (Joint venture)

Park Island has a total gross floor area of over 3.7 million

square feet, offering over 5,000 units in a wide range of

sizes and types on a 1.4 million square-foot site. With a

large theme park next door, the residential development

on Ma Wan is designed as a modern and pollution-free

living environment. The first phase of the project, with

a gross floor area of about 1.7 million square feet, will

be finished in the third quarter of 2002, and the whole

project will be completed by phases in three to four

years’ time.

Park Central

Tseung Kwan O Town Lots 57 & 66

(57.52% & 25% owned)

These two sites, with a combined area of 360,000 square

feet, will be jointly developed as a large-scale project

containing a total gross floor area of 2.9 million square

feet, including over 4,000 small to medium sized units

and a 360,000 square-foot shopping mall. The project

is conveniently located next to Tseung Kwan O Station

on the new MTR extension scheduled for completion

by late 2002. The first batch of units will be marketed

soon, and the whole development will be completed in

2003.

Top: Residents of Park Island on Ma Wan will live in amodern, pollution-free environment.

Bottom: Park Central is adjacent to Tseung Kwan OStation on the new MTR extension for residents’ totalconvenience.



Two International Finance Centre

Airport Railway Hong Kong Station Development Phase 2

(47.5% owned)

Occupying a 430,000 square-foot site, International

Finance Centre is the largest commercial development

in the Central core. Phase 2 consists of almost two

million square feet of offices, 500,000 square feet of

shopping mall and 1.1 million square feet of hotel space.

The intelligent office tower will be completed by the

end of 2003. This state-of-the-art office building features

an interactive technological design and facilities to meet

the needs of modern businesses. The development’s

shopping mall is scheduled to open in the first half of

2003. The hotel complex, to be managed by the

renowned Four Seasons Hotels and Resorts, will be

completed in 2004.

Airport Railway Kowloon Station

Development Package 3

(Joint venture)

Situated above Kowloon Station on the Airport Railway,

in an area now being transformed into a major

commercial, cultural and transportation hub, the project

International Finance Centre is thelargest commercial development inthe Central core.

has a site area of 172,000 square feet. It will be

developed into over one million square feet of luxury

residential property with about 1,000 units in a wide

range of sizes. Completion is scheduled for 2004.

Airport Railway Kowloon Station

Development Packages 5, 6 and 7

(Joint venture)

The Group won the tender for this landmark project in

September 2000. With a site area of approximately

790,000 square feet, the development consists of 2.5

million square feet of top-quality offices, one million

square feet of residential and serviced apartments,

another million square feet of hotel space and 900,000

square feet of shopping centre. Of the total 5.4 million

square feet, 4.7 million square feet is attributable to the

Group. Situated above Kowloon Station on the Airport

Railway and at the heart of a key future commercial

and cultural district of Hong Kong, the project will feature

the most modern design and intelligent facilities.

Foundation work for the project has begun, and

construction will be finished in phases between 2005

and 2007.



Millennium City Phase 5

418 Kwun Tong Road (100% owned)

This property is the single largest phase of Millennium

City in Kowloon East, which has become one of the

major commercial hubs in Hong Kong. Combined with

the adjoining site at 418A Kwun Tong Road, Phase 5

now covers 107,000 square feet. The development

has a gross floor area of about 1.3 million square feet

including a regional shopping mall of 600,000 square

feet. Foundation work is now under way and

construction will be completed by 2004.


(100% owned)

This development has a total gross floor area of 1.2

million square feet on a 236,000 square-foot site. It is

conveniently located in Yuen Long town centre, just a

few minutes’ walk from a future West Rail station

scheduled to open in late 2003. The Group plans to

build about 2,000 small to medium sized units with

completion scheduled for 2004.

Tsuen Wan Town Lots 77 & 89

(100% owned)

The Group plans to develop about 1,700 serviced

apartments with a total gross floor area of 1.1 million

square feet on this 112,000 square-foot site. Details of

the project are being finalized.

Airport Railway Olympic Station

Development Package 3

(Joint venture)

Over one million square feet of residential property

will be developed on this 185,000 square-foot site next

to Olympic Station. The Group plans to build about

1,500 small to medium sized units.

Airport Railway Olympic Station Development Package 3will provide about 1,500 small to medium sized units.

The Group will continue to develop

premium commercial properties incorporating

the latest technology and sophisticated facilities to

meet the needs of tenants.

Multi-media showcase for International Finance Centre, Central

PROPERTY INVESTMENT

The Group witnessed an active start to leasing in the second half of 2000,

but the overall leasing market slowed since the beginning of 2001. This is

attributed primarily to the softening of the US economy, which resulted in

lower economic growth in Hong Kong and hence a slow leasing market.

Despite this, the Group’s rental portfolio maintained a satisfactory level of

performance. Average occupancy of the Group’s investment properties in

Hong Kong remained high at 95 per cent.

Excluding contributions from jointly controlled entities, gross rental income

for the year under review rose marginally by 1.9 per cent to HK$5,392

million, while net rental income remained steady at HK$4,073 million. If the

Group’s share of rental income from jointly controlled entities was included,

total gross rental income would have increased by 3.7 per cent to

HK$5,877 million for the year. Net rental income rose a modest 1.7 per

cent to HK$4,401 million.

PROPERTY INVESTMENTREVIEW OF OPERATIONS32

1997 1998 1999 2000 2001

Gross Rental Income*

* Including contributions from jointly controlled entities

1,000

2,000

3,000

4,000

5,000

6,000 5,857 5,801 5,6705,877

5,130

HK$ million

Gross Rental Income by Sector*

53%Shopping Centre

9%Car Park

8%Residential

5%Industrial/Office

25%Office


REVIEW OF OPERATIONS Property Investment33


Given a slowing Hong Kong economy amid the

American economic downturn and recent terrorist

attack in the US, the retail rental market is likely to remain

challenging in the coming year. The demand for office

leasing is also expected to remain soft in the short term.

Over the medium to longer term, the demand for top

quality office space is expected to increase as a result

of China’s imminent entry to the WTO and Hong Kong

being an international finance and business centre.

The Group adds value to its investment portfolio by

incorporating the latest technology and modern facilities

in its properties and regular renovations. In addition,

the Group constantly reviews its mix of investment

properties with a view to divesting some non-core

proper ties while developing quality new rental

properties in order to provide a solid base for long-

term growth. The Group expects rental income to

remain at a satisfactory level in the coming year.

The Group’s current investment portfolio in Hong Kong,

including its attributable share of jointly controlled

entities, is as follows:

Status and UsageAttributable gross floor area in million square feet

Shopping Industrial/Residential Centre Office Hotel Office Total

Completed 1.0 7.7 5.8 0.9 3.9 19.3

Under Development – 1.7 4.9 1.6 – 8.2

Total 1.0 9.4 10.7 2.5 3.9 27.5

COMPLETED INVESTMENTPROPERTIES

Shopping Centres

The Group’s shopping centre network extends over

the whole territory, and remains the largest in Hong

Kong with an attributable gross floor area of 7.7 million

square feet. The majority of these malls are located in

new towns, occupied by a carefully-planned mix of

retailers, providing daily necessities to the nearby

residents and are thus more resilient to the economic

slowdown. With their prime and convenient locations,

occupancy rates are consistently high and rents largely

remain steady in the face of economic fluctuations.

Occupancy of the Group’s major retail rental properties

remained high at 96 per cent. The Group’s flagship

mall, New Town Plaza in Shatin, was fully occupied. The

Group’s other prominent shopping centres such as East

Point City in Tseung Kwan O, Grand Century Place in

Mongkok, Metroplaza in Kwai Chung and Tai Po Mega

Mall were also virtually fully leased.



The Group continued to renovate and improve the

layouts and designs of its shopping malls during the year.

New themes were also introduced to the shopping

centres. To highlight some, a lush ‘garden feel’ was added

to New Town Plaza III, while Yuen Long Plaza recently

took on a colourful subtropical flavour.

To meet changing customer demands, the Group

continues to review the tenant profile in its shopping

centres to ensure a good mix. Furthermore, the Group

will continue to organize innovative promotions in its

malls to keep pedestrian flows high.

Offices

The Group’s investment portfolio includes 5.8 million

square feet of prime office space. Despite a softer office

rental market, the Group’s office portfolio is 96 per

cent let. To highlight some, One International Finance

Centre in Central and Millennium City Phases 1 and 2 in

Kowloon East are fully let, and Grand Central Plaza in

Shatin and Metroplaza in Kwai Chung are virtually full.

To match the requirements of increasingly demanding

office tenants, the Group will continue to incorporate

the latest technology and sophisticated facilities in its

projects.

Residential

The Group holds a total of one million square feet of

residential proper ties for investment, a substantial

proportion of which are luxury developments with

comprehensive club house facilities such as Dynasty

Court and Hillsborough Court in Mid-Levels and Pacific

View in Island South. These properties are almost fully

let, contributing satisfactory rental income to the Group.

Car Parks

The Group currently owns 24,000 parking bays, and

rental income from these amounted to HK$497 million

during the year, up 4.5 per cent from the previous year.

Car parks attached to commercial complexes will

continue to be built so as to enhance the value of the

Group’s investment property portfolio.New Town Plaza III in Shatin completedrenovations during the year.



Other Properties

The Group owns 30 cinemas in its various shopping

centres, which help to attract visitors and bring business

to tenants. A number of industr ial and godown

properties including data centres, are also kept for rent,

and the Group is actively exploring opportunities to

convert some of these sites to other uses such as offices.

INVESTMENT PROPERTIES UNDERDEVELOPMENT

In order to achieve an optimal mix in its investment

proper ty portfolio, the Group intends to dispose of

some non-core properties while adding quality new

rental properties. In keeping with this aim, some 8.2

million square feet of new investment properties in

attributable terms is under development.

Among the investment properties under development,

retail space will account for 1.7 million square feet, which

will be spread across the territory, while another 1.6

million square feet is designated for the development

of top quality hotels and suites. Grade-A offices will

account for 4.9 million square feet of the Group’s new

investment properties.

The majority of the investment proper ties under

development are landmark projects, including Two

International Finance Centre in Central, the Airport

Railway Kowloon Station Development Packages 5, 6

and 7 and Millennium City in Kowloon East. Details

of these projects are included in the Proper ty

Development section on pages 28 and 29.

Major investment properties under

development include:

Shopping Centres

• Two International Finance Centre

• Shopping centre at Park Central

• Millennium City Phase 5 (418 Kwun Tong Road)

• Shopping centre in Airport Railway Kowloon Station


Offices


• Two International Finance Centre



• Offices in Airpor t Railway Kowloon Station


Millennium City Phase 3 in Kowloon East will beready for occupation in the second half of 2002.



Major Completed Investment Properties

Name Location

Hong Kong Island

Sun Hung Kai Centre 30 Harbour Road, Wanchai

World Trade Centre 280 Gloucester Road, Causeway Bay

One International Finance Centre 1 Harbour View Street, Central

Harbour Centre 25 Harbour Road, Wanchai

Central Plaza 18 Harbour Road, Wanchai

Dynasty Court (Blocks 2 & 3) 23 Old Peak Road

Pacific View (Blocks 2 & 3) 38 Tai Tam Road

Hillsborough Court (Block 4) 18 Old Peak Road

Kowloon

Grand Century Place 193 Prince Edward Road West, Mongkok

Millennium City Phase 1* 388 Kwun Tong Road

Millennium City Phase 2 378 Kwun Tong Road

The Sun Arcade 28 Canton Road, Tsim Sha Tsui

Royal Plaza Hotel 193 Prince Edward Road West, Mongkok

Royal Garden Hotel 69 Mody Road, Tsim Sha Tsui

Kerry Hung Kai Godown 3 Fat Tseung Street, Cheung Sha Wan

New Tech Plaza 34 Tai Yau Street, San Po Kong

APEC Plaza 49 Hoi Yuen Road, Kwun Tong

Peninsula Tower 538 Castle Peak Road, Cheung Sha Wan

Hing Wah Centre 82-84 To Kwa Wan Road

New Territories

New Town Plaza I 18 Shatin Centre Street, Shatin

Tai Po Mega Mall 9 On Pong Road, Tai Po

Tsuen Wan Plaza 5-21 Pak Tin Par Street, Tsuen Wan

East Point City Shopping Centre 8 Chung Wa Road, Tseung Kwan O

New Town Plaza III 2-8 Shatin Centre Street, Shatin

Sun Yuen Long Centre Shopping Centre 8 Long Yat Road, Yuen Long

Yuen Long Plaza Shopping Arcade 249-251 Castle Peak Road, Yuen Long

Uptown Plaza Shopping Arcade 9 Nam Wan Road, Tai Po

Metroplaza Tower I & Shopping Centre 223 Hing Fong Road, Kwai Chung

Grand Central Plaza 138 Shatin Rural Committee Road, Shatin

Landmark North 39 Lung Sum Avenue, Sheung Shui

Grand City Plaza 1-17 Sai Lau Kok Road, Tsuen Wan

Citygate Tung Chung Town Lot 2

Royal Park Hotel 8 Pak Hok Ting Street, Shatin

Sunhing Hungkai Godown 8 Wong Chuk Yeung Street, Shatin

Advanced Technology Centre 2 Choi Fat Street, Sheung Shui

* Including the attributable share in areas held by SUNeVision, in which the Group has an 84.3 per cent interest.

Top: Landmark North is one of the busiestcommercial complexes in Sheung Shui.

Bottom: The office space at Metroplaza inKwai Chung is virtually full.




Lease Group’s Shopping Industrial/Expiry Interest (%) Residential Centre Office Hotel Office Total

2127 100 – 53,400 850,600 – – 904,000

2842 100 – 162,000 350,000 – – 512,000

2047 47.5 – 62,000 373,000 – – 435,000

2128 33.3 – 20,500 80,000 – – 100,500

2047 50 – – 700,000 – – 700,000

2886 100 341,000 – – – – 341,000

2047 100 316,700 – – – – 316,700

2884 100 159,500 – – – – 159,500

2047 100 – 725,000 475,000 – – 1,200,000

2047 100 – 27,000 890,000 – – 917,000

2047 50 – – 133,000 – – 133,000

2047 100 – 204,800 – – – 204,800

2047 100 – – – 400,000 – 400,000

2127 100 – – – 295,000 – 295,000

2047 50 – – – – 285,000 285,000

2047 100 – – – – 268,800 268,800

2047 100 – – – – 240,000 240,000

2047 100 – – – – 202,000 202,000

2099 100 – – – – 182,700 182,700

2047 100 – 1,300,000 – – – 1,300,000

2047 100 – 588,800 – – – 588,800

2047 100 – 583,000 – – – 583,000

2047 100 – 415,000 – – – 415,000

2047 100 – 350,000 – – – 350,000

2047 87.5 – 245,000 – – – 245,000

2047 100 – 145,000 – – – 145,000

2047 100 – 120,000 – – – 120,000

2047 100 – 600,000 569,000 – – 1,169,000

2047 100 – 236,000 505,000 – – 741,000

2047 100 – 181,500 375,500 – – 557,000

2047 100 – 35,100 137,200 – – 172,300

2047 20 – 99,000 32,000 – – 131,000

2047 100 – – – 258,000 – 258,000

2047 100 – – – – 500,000 500,000

2047 100 – – – – 142,000 142,000



13

28

LANTAU ISLAND

• • • • • 1 Dynasty Court •2 Hillsborough Court •3 63 Deep Water Bay Road •4 51 & 55 Deep Water Bay Road •5 Pacific View •6 New Town Plaza/New Town Tower • •7 Grand Central Plaza • •8 Uptown Plaza •9 Tai Po Mega Mall •10 Landmark North • •11 Sun Yuen Long Centre •12 Yuen Long Plaza •13 Chelsea Heights •14 Tsuen Wan Plaza •15 Grand City Plaza • •16 Metroplaza • •17 New Kowloon Plaza •18 Grand Century Place • •19 Hollywood Plaza • •20 The Sun Arcade •21 East Point City •22 World Trade Centre • •23 Sun Hung Kai Centre • •24 Harbour Centre • •25 One International Finance Centre • •26 Chi Fu Landmark •27 New Jade Shopping Arcade •28 Citygate • •29 Central Plaza •30 Millennium City Phases 1 & 2 • •31 APEC Plaza •32 Infotech Centre •33 Hing Wah Centre •34 New Tech Plaza •35 Advanced Technology Centre •36 Peninsula Tower •37 Kerry Hung Kai Godown •38 Sunhing Hungkai Godown (Shatin) •39 Royal Garden Hotel •40 Royal Plaza Hotel •41 Royal Park Hotel •

Resid

entia

lSh

oppin

g Cen

treO

ffice

Indus

trial/

Offic

eHot

el

Major Completed Investment Properties

Existing

Railways

Major Highways

Planned (completion by 2008)

Railways

Major Highways

Under Construction

Railways

Major Highways

Railway Interchange

West Rail (completion in 2003)

Ma On Shan Rail (completion in 2004)

Tseung Kwan O Extension (completion in 2002)

7

10

6

15

16

18

19

22

30

2324

25

1

8

14

29

32

31

34

33

36

38

35

41

39

4037

26

27

17

20

9

1112

3

5

4

2

21

HONG KONGISLAND

NEW TERRITORIES

KOWLOON

SHENZHEN


HOTELS

For the year under review, the performance of the Group’s three hotels

was satisfactory. Occupancy of the hotels remained high and room rates

increased satisfactorily.

Guest room renovations at the Royal Garden Hotel in Tsim Sha Tsui

continued on schedule and within budget throughout 2000 and 2001, and

a new lobby bar ‘Martini’ opened in June 2000 to wide acclaim. New

banquet rooms also opened in the same month and have generated

satisfactory business. The hotel finished the year with an average occupancy

of 86 per cent; an increase of four percentage points over last year. The

average room rate also rose 13 per cent during the year. The latest

renovations scheduled for completion by the end of 2001 should further

enhance the quality and image of the hotel.

During the year under review, the Royal Park Hotel in Shatin achieved

an average occupancy of 84 per cent, with a slight growth in both average

room rate and revenue. Situated along the railway, the hotel benefited

from the rapid growth of China’s economy last year. The continuous

development of Shatin should continue to underpin the hotel’s business.

The Royal Plaza Hotel in Mongkok recorded an eight per cent growth

in average room rate and an average occupancy of 85 per cent for the

period under review. To cope with travellers’ demands, the hotel introduced

several new amenities including a solarium and massage centre. The Royal

Plaza Hotel will meet the challenging year ahead with a flexible strategy.

PROPERTY RELATED BUSINESSESREVIEW OF OPERATIONS

Renovations at the Royal Garden Hotel further enhanced its image.

40


REVIEW OF OPERATIONS Property Related Businesses41


The Group is developing six-star hotel facilities above

both the Hong Kong and Kowloon stations on the

Airport Railway. The hotel complex in International

Finance Centre over Hong Kong Station includes 400

first-class hotel rooms and 600 suites for long-term

guests, to be managed by Four Seasons Hotels and

Resorts. This will be the first Four Seasons-branded

hotel in Hong Kong upon its completion in 2004. The

Group’s Kowloon Station development will include one

million square feet of premium-quality hotel and suite

spaces.

With China’s impending entry to the WTO, Beijing’s

successful bid for the 2008 Olympic Games and recent

Government initiatives to boost tourism, the Group is

confident in the long-term prospects for its hotel

operations.

CONSTRUCTION

The construction division completed a total of 6.5 million

square feet of gross floor area in the year. Major projects

include Le Sommet, Chelsea Heights Phase 2, Oscar by

the Sea Phase 1 and two joint venture projects, namely

Royal Peninsula and The Belcher’s Phase 1. Construction

turnover for the year doubled to HK$6,500 million, of

which HK$1,600 million was derived from joint venture

companies.

Major projects in progress, including those being

constructed by joint venture companies, are Park Island,

The Parcville, The Leighton Hill, Oscar by the Sea Phase

2, Park Central, Prima Villa, Villa by the Park, Ap Lei

Chau Inland Lot 128, Ocean Shores Phases 2 and 3,

Two International Finance Centre, The Belcher’s Phase

2 and Tuen Mun Town Lot 374.

The division continues to make improvements in quality,

customer ser vice , training, safety, methods of

construction and the application of information

technology, all of which contribute to higher efficiency

and better products.

To further improve its competitive edge, the division

has undertaken an organizational reform to streamline

processes, encourage new ideas, enhance accountability

and better control costs.

The hotel complex in International Finance Centre will be the firstFour Seasons-branded hotel in Hong Kong.



The following subsidiaries and associate companies

provide complementary services in fire prevention

systems, electrical installations, machinery leasing and

concrete supply:

Everlight Engineering Company Limited and

two other subsidiaries install and service electrical and

fire prevention systems. Total turnover for the year was

HK$425 million.

Aegis Engineering Company Limited is in plant

and machinery leasing. Turnover for the year amounted

to HK$75 million.

Glorious Concrete (HK) Limited is an associate

company and one of the significant ready-mixed

concrete suppliers in Hong Kong. Its results for the year

were satisfactory.

PROPERTY MANAGEMENT

The Group’s two property management subsidiaries,

Hong Yip Service Company Limited and Kai

Shing Management Services Limited, aim to

provide the finest service to residents. With highly-

trained professional staff and the latest technology, the

companies are fully committed to excellence in all that

they do. During the year, they won over 30 awards

from a variety of organizations including the Hong Kong

Housing Authority.

Together, Hong Yip and Kai Shing now manage 118

million square feet of residential premises, 17 million

square feet of commercial space and 29 million square

feet of industrial space. Their core businesses are

property management, sales and leasing, cleaning and

security service and club management.

Hong Yip showed substantial growth last year. The

number of housing units under its management

increased from 80,000 to 99,000, a rise of 24 per cent,

and the total area managed increased from 70 to 83

million square feet, representing an 18 per cent growth.

In addition to managing the Group’s properties, Hong

Yip is an agent for various outside owners’ corporations,

and it manages a number of Government developments.

To cope with this growth, Hong Yip has put great effort

into training, particularly in customer service. The results

have been significant, and Hong Yip won an Award for

Excellence in Training 2001 with merit from the Hong

Kong Management Association.

Top: Hong Yip has been named Best PropertyManagement Agent by the Hong Kong HousingAuthority for eight consecutive years.

Left: Super-eManagement enhances operationalefficiency in property management.



With its management and technical professionals, Hong

Yip has helped owners’ corporations to carry out major

renovations, enhancing the value of older buildings under

management. The company also focuses on adding value

for residents with initiatives like Privilege Home Services,

providing hotel-style service.

This year, as in the last eight, Hong Yip won the Best

Property Management Agent Award. It also got several

Best HOS Estates awards and a number of

environmentally-friendly management awards, all from

the Hong Kong Housing Authority. Hong Yip also won

a 2000 HKRMA Certificate of Merit in Customer Service

from the Hong Kong Retail Management Association

and several merit awards from the Environmental

Protection Depar tment. In December 2000, the

company received ISO 9001: 2000 quality certification

and OHSAS 18001 certification for occupational safety

management.

Kai Shing is using information technology to improve

property management. After initiating the use of Palm

Pilots in building management, Kai Shing introduced the

first web-enabled proper ty management system –

Super-eManagement – in May 2001. The system covers

all aspects of property management service and greatly

enhances operational efficiency and communications

between the company and its customers.

Kai Shing pays close attention to monitoring and training

staff. In November 2000, Kai Shing opened its Super-

eManagement Centre in Landmark North. The centre

provides 24-hour security surveillance of all properties

managed by Kai Shing and also includes facilities for

professional training.

Kai Shing continues to win industry awards. In the year

under review it won the 2000 Hong Kong Eco-Business

Grand Award (Green Property Management) presented

by the Environmental Protection Depar tment and

awards from the Hong Kong Housing Authority and

the Occupational Safety and Health Council.

FINANCIAL SERVICES

The financial services division is made up of Hung Kai

Finance Company Limited, Honour Securities

Company Limited, Honour Futures Limited and

Honour Finance Company Limited. Principal

services include home mortgages, share margin financing,

stock and futures broking, consumer loans and deposit-

taking.

A reduction in trading on the Hong Kong Stock

Exchange has affected the stock and futures broking

business while the mortgage market has also become

increasingly competitive. Despite the challenging

environment, the division maintained a profitable

position during the year.

INSURANCE

Sun Hung Kai Properties Insurance Limited

recorded a business turnover of HK$198 million for

the year. Despite a difficult operating environment and

unfavourable results in the liability insurance business,

pre-tax profit rose to HK$45 million compared to

HK$15 million for the previous financial year. The

company provides quality products and services to its

clients. It also transacts insurance products through its

web site. The company has a credit rating of ‘A-minus’

by both Standard & Poor’s and A.M. Best reflecting its

sound financial performance and management systems.

INFORMATION TECHNOLOGY AND TELECOMMUNICATIONSREVIEW OF OPERATIONS

INFORMATION TECHNOLOGY

The year under review was a challenging one for SUNeVision Holdings

Limited. Despite the generally unfavourable global and local business

climate, particularly in the technology sector, SUNeVision maintained its

position as a leading Internet infrastructure and enabling solutions provider

in Asia. The company was able to report healthy double-digit growth for

each quar ter during the year, largely due to a prudent management

approach to ensuring cost efficiency and high productivity. Revenue for the

year under review was HK$198 million, an increase of 194 per cent

compared with the previous year.

The year was also notable in that gross margins turned positive in the

second quarter of 2001 for the first time since the company’s IPO in March

2000. Operating expenditures have continued to fall as a result of tight

cost controls. Losses for the year under review were HK$171 million,

largely due to heavy startup costs and one-off charges. The company is

financially strong with net cash and marketable bonds of HK$1,870 million.

In February 2001, the 350,000 square-foot MEGA-iAdvantage in Chai Wan

officially began operations, providing first class co-location facilities to telecom

and other operators. With the recent closure of a major client in Hong

Kong, iAdvantage has already made efforts to lease the space vacated by

that company, and has had some initial success in retaining some of its

former clients. Leasing at the other data centres was satisfactory. In addition,

iAdvantage further strengthened its competitive position in the industry

by forming strategic alliances with leading international solution providers.

SUNeVision’s Super e-Technology, Super e-Network, Super-Office,

SuperHome, SuperStreets, Red-Dots and venture capital unit made steady

progress throughout the year.

Looking forward, SUNeVision will continue to manage its operating and

capital expenditures tightly while seeking to improve operating efficiencies.

The company recognizes the need to review its business operations on an

ongoing basis to ensure that it has a sustainable business model over the

longer term. The information technology shakeout is by no means over,

and the company will continue to face challenges in the near term. However,

the Group is confident in the long-term prospects for SUNeVision and the

industry. Sound business sense on the part of an excellent management

team will continue to shape strategy at SUNeVision. The Group owned

about 84.3 per cent of SUNeVision as at 30th June 2001.

MEGA-iAdvantage in Chai Wan commencedoperation in February 2001.

44


REVIEW OF OPERATIONS Information Technology and Telecommunications

TELECOMMUNICATIONS

SmarTone Telecommunications Holdings

Limited continued to compete in a challenging market

environment during the year, as the company set out

to build a critical mass of customers and fur ther

strengthen its position in the market. SmarTone

broadened its customer base to 980,000, representing

an increase of 13 per cent as compared to 867,000 in

June 2000. The company’s loss attr ibutable to

shareholders for the year ended 30th June 2001 was

HK$284 million, representing a decrease in loss of 22

per cent as compared to the previous year.

As the highly competitive mobile communications

market continues to evolve in the new millennium,

SmarTone appointed Douglas Li as CEO in July 2001.

Mr. Li was SmarTone’s founding CEO at its inception in

1992 and served until 1996. Mr. Li will lead SmarTone

forward in its commitment to offering superior service

to its customers, and to realize its long-term vision of

being a leading wireless player in Hong Kong.

During the period under review, SmarTone launched a

number of consumer-oriented services, providing its

customers with mobile applications that combine broad

appeal and user convenience. In November 2000,

SmarTone teamed up with Standard Chartered Bank

to launch mobile banking services and it fur ther

extended the service to a broader customer base by

partnering with HSBC and Hang Seng Bank. In February

2001, SmarTone launched a mobile betting service

which offers a comprehensive range of bets with an

easy-to-use application so customers can place bets any

time, anywhere.

In August 2001, SmarTone also introduced its General

Packet Radio Service (2.5G), allowing customers to

enjoy mobile data service with data speeds reaching

over 50kbps.

Following the successful acquisition of a licence to

operate a GSM network in Macau in October 2000,

SmarTone rapidly built up its network and launched its

service in August 2001. A flagship store was opened in

the central shopping area of Macau, providing a one-

stop service to Macau’s residents, as well as SmarTone’s

Hong Kong customers visiting Macau.

SmarTone participated in the 3G auction that took place

in September 2001 and was provisionally awarded a

3G licence in Hong Kong. This enhances SmarTone’s

position as a major wireless player in Hong Kong. The

company foresees that 3G has attractive business

potential and it is committed to providing the people

of Hong Kong a world class 3G mobile broadband

multimedia service. SmarTone firmly believes that 3G

will take the company to a new level of success, as

creating long-term value for its customers and

shareholders.

SmarTone enjoys a strong balance sheet and is well

positioned to take advantage of opportunities that may

arise. The Group remains confident in the long-term

prospects for SmarTone and is fully supportive of its

vision. The Group will continue to hold its stake in

SmarTone, 28.2 per cent as at 30th June 2001, as a

long-term strategic investment.

45

SmarTone’s positionstrengthened furtherduring the year, with itscustomer base growingto 980,000.


TRANSPORTATION, INFRASTRUCTURE AND LOGISTICSREVIEW OF OPERATIONS

FRANCHISED BUS OPERATION

The Kowloon Motor Bus Holdings Limited

(KMB), in which the Group has a 34 per cent interest,

is publicly listed in Hong Kong. Its main business is to

provide franchised bus services covering Kowloon and

the New Territories. The company reported a net profit

of HK$855 million for the year ended 31st December

2000, an increase of 15.7 per cent compared to the

previous year. For the six months ended 30th June

2001, the company reported a net profit of HK$885

million, 143 per cent higher than last year. The strong

results were due to continued growth of its core

business, and a deemed profit arising from the spin-off of a subsidiary,

amounting to HK$320 million. During the year, KMB continued to upgrade

its fleet and install environmental protection facilities. The company also

put emphasis on developing co-operative arrangements with other

transport operators to provide more flexible services and wider coverage.

The company aims to maintain its market-leading position in the franchised

bus business in Hong Kong while seeking business diversification

opportunities in the bus transportation industry in Hong Kong and Mainland

China. RoadShow Holdings Limited, a 73.3 per cent subsidiary of the

company, was successfully listed on The Hong Kong Stock Exchange in

June 2001 raising HK$534 million. RoadShow is engaged in on-board multi-

media, transit network media sales and merchandizing.

KMB had a good year in 2000, with net profitincreasing 15.7 per cent.

46

Route 3 (Country Park Section)River Trade

Terminal

Airport Freight Forwarding Centre

Business Aviation Centre

Waste Transfer Station

Mid-stream Operation

Container Terminal(Under construction)

Landfill

The Group’s transportation, infrastructure and logistics businesses in Hong Kong


REVIEW OF OPERATIONS Transportation, Infrastructure and Logistics47


TOLL ROAD

The Route 3 (Country Park Section) Company

Limited built and now operates the north-south road

link between Yuen Long and Ting Kau. The company is

50 per cent owned by the Group. The 10.1-kilometre

route consists of the 3.8-kilometre Tai Lam Tunnel and

the 6.3-kilometre Yuen Long Approach Road.

Since it opened to the public in May 1998, Route 3

(CPS) has provided a quick and direct link between the

northern New Territories and major urban areas, as

well as the new airport. This has helped alleviate traffic

congestion along the Tuen Mun and Tolo highways and

improved cross-border traffic by offering the most

efficient route for goods vehicles travelling from the

border to the container terminals in Kwai Chung. The

toll from the Tai Lam Tunnel was increased in April 2001

while traffic volume remained stable. Toll revenue from

Route 3 (CPS) has been increasing since it began

operations and the toll road is already generating positive

cash flows.

TRANSPORT INFRASTRUCTUREMANAGEMENT

The Wilson Group, a wholly owned subsidiary of the

Group, oversees parking, tunnel, bridge, tollway and

other transpor t-related management businesses.

It was established in July 1998 following Wilson Parking’s

diversification into these business areas. The Wilson

Group employs a total of around 4,000 staff.

The Wilson Group, through its wholly-owned

subsidiaries, Wilson Parking (Hong Kong) Limited and

Mack & Co. Carpark Management, manages more than

240 car parks with over 67,000 parking bays. Wilson

Parking is the largest parking operator in Hong Kong

and is ISO-9002-certified. It is re-equipping its access

control systems to link car parks to an operations

support centre in order to turn its operations cashierless

in two years’ time.

Top: Toll revenue fromRoute 3 (CPS) has beenincreasing since it beganoperations in 1998.

Left: Wilson Parking isthe largest parkingoperator in Hong Kong.



Through a wholly-owned subsidiary, the Wilson Group

has been managing and maintaining the Shing Mun and

Tseung Kwan O tunnels under a six-year contract which

commenced in June 2000. In addition, its 66.67 per cent

owned Tsing Ma Management Limited renewed its

management-operation-maintenance contract for the

Tsing Ma Control Area for six years with effect from

May 2001. Wilson Tunnel Management Limited, another

wholly-owned subsidiary of the Wilson Group, manages

the Route 3 (CPS).

In September 2001, the Wilson Group began managing

public transport interchange facilities at the Olympic

and Kowloon stations on the Tung Chung Line through

a wholly-owned subsidiary.

In October 2000, the Wilson Group acquired an

additional 25 per cent share in Autotoll Limited, making

it a 50 per cent shareholder in the only electronic toll

collection operator for all ten tolled tunnels and

expressways in Hong Kong.

The Wilson Group has a 30 per cent interest in the

Hong Kong School of Motoring Limited. The school

has been operating successfully for the past 18 years.

As the major provider of off-street driver training facilities

in Hong Kong, it currently operates three centres in

Shatin, Wong Chuk Hang and Yuen Long.

PORT BUSINESS

Asia Container Terminals Limited is 28.5 per cent

owned by the Group. It participates in the development

of two berths at Container Terminal 9 on Tsing Yi Island.

Construction of the berths began in mid 2000 and will

be completed in stages, with the first stage to commence

operation in August 2003. Upon completion, it will

exchange its two berths there for two existing berths

at Container Terminal 8. Project financing is already in

place.

The Group has a 33 per cent interest in the River

Trade Terminal, which occupies a 65-hectare site in

Tuen Mun with 3,000 metres of quayfront and 60 berths,

providing a unique range of containerized and breakbulk

cargo handling and storage services for river trade

between the Pearl River Delta and Hong Kong. Business

has been growing gradually since operations began.

The Group holds a 50 per cent interest in both Hoi

Kong Container Services Company Limited and

Faith & Safe Transportation Company Limited,

two market leaders in the mid-stream industry in Hong

Kong. Business during the year was satisfactory for the

companies.



AFFC’s facilities and services allow tenantsto meet the needs of global trade.

AIR TRANSPORT

The Airport Freight Forwarding Centre

Company Limited (AFFC) became a wholly-owned

subsidiary of the Group during the year under review.

AFFC operates the only premium freight forwarding

and logistics centre at the Hong Kong International

Airport. Its strategic airport location and accessibility

to the Pearl River Delta region with the Hong Kong

International Airport Marine Cargo Terminal and Route

3 have made it an important transport hub for out-

bound air cargo from southern China.

AFFC has been in operation since 1998. It comprises

1.3 million square feet of cargo handling space and

175,000 square feet of premium quality office space,

offering flexible leasing terms and competitive rates for

its airport location. Tenants include logistics companies,

freight forwarders and other businesses requiring

superior access to the Hong Kong airport’s various

cargo, maintenance, commercial, passenger and support

services. AFFC’s advanced facilities and supply-chain

management capabilities enable tenants to cope with

all the demands of global trade in the information age.

The Group’s Hong Kong Business Aviation

Centre Limited is a franchise at the Hong Kong

International Airport that serves all business aircraft flying

in and out of Hong Kong. The facilities, located in the

southwest corner of the Chek Lap Kok reclamation,

include a dedicated apron for aircraft parking, an

executive terminal and a 23,800 square-foot hangar, all

built to the highest international standards.

Since commencing business in 1998, there has been a

steady growth in the number of aircraft movements.

The franchise is now in its third year of operation,

generating positive cash flows, and profitability is

anticipated in the near future. The Group owns 35 per

cent of the franchise.



LOGISTICS BUSINESS

Capitalizing on its expertise in real estate development

and management, transport infrastructure, information

technology and air freight-related businesses, the Group

has been exploring wide-ranging oppor tunities in

logistics. Through Sun Hung Kai Super Logistics

Limited and its subsidiaries, as well as a 50 per cent

interest in Sun Logistics Company Limited, it is

now offering customers a full range of third party logistics

services, from warehouse management, distribution and

fulfilment, to value-added services including assembly,

bundling, labelling and repackaging.

The Group is seeking logistics business opportunities in

Mainland China. Investments will concentrate primarily

on major cities, with a focus on air freight logistics. It

plans to work with joint venture par tners on the

Mainland and other allies worldwide to create a

comprehensive logistics network, positioning itself as

the partner of choice for logistics in the Asia Pacific

region.

WASTE MANAGEMENT

Through 20 per cent ownership of Green Valley

Landfill Limited, South China Transfer Limited

and Pearl Delta Limited, the Group works closely

with PWM Environmental Services – a member

company of the French-based multinational Onyx – for

a better environment for Hong Kong.

The companies are engaged in various environmental

protection and waste management projects. Green

Valley built and operates a 100-hectare landfill site in

Tseung Kwan O with the capacity to handle 43 million

cubic metres of waste. South China Transfer built and

operates the largest refuse transfer station in Hong Kong.

Located on Stonecutters Island, the station can process

2,875 tons of waste a day. Pearl Delta has been

collecting and managing waste at the Hong Kong

International Airport at Chek Lap Kok since it opened

in July 1998.

The Group’s logistics arm offers a full range ofthird party logistics services.

OTHER INVESTMENT HOLDINGSREVIEW OF OPERATIONS

Thomas Cook Hung Kai Currency Exchange Limited is a joint

venture between the Group and Thomas Cook in which the Group holds

a 25 per cent interest. As the sole money changer at Hong Kong’s

international airport, the company’s major businesses are foreign exchange

and the sale of various travel-related products. Revenue has been growing

steadily with the increase in passengers travelling through the airport.

New-Alliance Asset Management (Asia) Limited is a 50/50 joint

venture between the Group and Alliance Capital Management LP. Since

its incorporation in 1997, the company has been engaged in investment

management and unit trust and mutual fund distribution in Hong Kong,

providing a broad range of services to pension funds of publicly-listed

companies and institutional and individual clients. Through the distribution

of unit trusts and mutual funds via major financial intermediaries, including

some of the world’s top ten banks, the company’s market share in the fund

distribution industry is rising.

USI Holdings Limited, a publicly-listed company in which the Group

owns a 19 per cent interest, is engaged in garment manufacturing and

trading, property development and technology investments. 2000 was a

challenging year for the company which registered a net loss of HK$68.9

million. USI aims to consolidate its investments and strengthen its financial

position in 2001. The company recorded a net profit of HK$8.1 million in

the first half of this year.

51


With China’s entry to the WTO, continued economic

reform and Beijing’s successful bid to host the

2008 Olympic Games, the Group will capitalize on this

favourable environment to expand its investments

on the Mainland.

Sun Dong An Plaza, Beijing


Land Bank in Mainland ChinaAttributable gross floor area in million square feet

ShoppingResidential Centre Office Total

Properties underdevelopment

Shanghai 0.1 – – 0.1

Guangzhou andPearl River Delta 0.4 0.1 – 0.5

Subtotal 0.5 0.1 – 0.6

Completed InvestmentProperties

Beijing – 0.8 0.2 1.0

Shanghai 0.4 0.1 0.3 0.8

Subtotal 0.4 0.9 0.5 1.8

Total 0.9 1.0 0.5 2.4

REVIEW OF OPERATIONS

With Beijing’s successful bid to host the 2008 Olympic Games, China’s

entry to the WTO and continued economic reform, the Chinese economy

will continue to prosper. While maintaining a focused approach, the Group

will capitalize on this favourable environment to expand its investments on

the Mainland gradually over time, concentrating on the property business.

Taking advantage of experience gained through the development of various

landmark projects over past years, the Group will continue to identify new

opportunities, primarily in major cities including Beijing, Shanghai, Guangzhou

and Shenzhen.

The Group holds 1.8 million square feet of completed investment properties

on the Mainland, consisting mainly of offices and shopping centres in prime

locations. Another 0.6 million square feet of proper ties are under

development, most of which are residential projects. The Group’s land

bank in Mainland China, is summarized as follows:

54

Land Bank in Mainland ChinaAttributable gross floor area: 2.4 million square feet

21%Office

42%Shopping Centre

37%Residential

37%Shanghai

42%Beijing

21%Guangzhou

and PearlRiver Delta

BY USAGE

BY LOCATION


REVIEW OF OPERATIONS Mainland China Business

MAJOR PROJECTS IN MAINLANDCHINA

Beijing

Sun Dong An Plaza

138 Wangfujing Dajie (50% owned)

Sun Dong An Plaza recorded encouraging leasing results

during the year and is now 95 per cent let. It comprises

1.3 million square feet of retail space and 430,000 square

feet of offices. It is held under a 50-year lease that runs

to 2043. As an established landmark, it was named

one of the Top Ten Beijing Construction Projects of the

90s in a poll of Beijing citizens.

Shanghai

Central Plaza

381 Huaihai Zhong Road (75% owned)

Central Plaza in Shanghai has become a focal point for

the city since its completion in 1999. It consists of

455,000 square feet of offices and a 133,000 square-

foot shopping centre. The property is held under a

50-year lease that runs to 2044. Leasing performance

has been satisfactory with an overall occupancy rate of

93 per cent.

Arcadia Shanghai

88 Guang Yuan Xi Road, Xu Hui (66.5% owned)

The first phase of about 500,000 square feet of

residential units and serviced apartments was completed

in 1999. The first batch of residential units is being

launched for sale and leasing of the remaining units is

satisfactory. Planning of the second phase is being

finalized. The property is held under a 70-year lease

that expires in 2064.

Guangzhou and Pearl River Delta

Guangzhou Glorious City Garden

858 Dongfeng Road East (30% owned)

The first two phases of 1.7 million square feet of

residential property are complete and virtually fully sold.

Details of the third phase of the development are being

planned.

Zhongshan Residential Project

Zhongshan 5 Road (Joint venture)

This project is planned for development into a large-

scale residential estate in phases. The first phase of the

project will have approximately 400 units. Preparation

work is in progress.

Arcadia Shanghai is located in Xu Hui District,a traditional deluxe residential area of Shanghai.

55


Maintaining a low gearing, high liquidity, long debt maturities, abundant

committed standby banking facilities, a diverse funding base and minimum

refinancing risk have always been elements of the Group’s prudent financial

policy. The Group will also continue its conservative management of foreign

exchange and interest rate risks, avoiding speculative derivatives. Nearly all

of its borrowings are in Hong Kong dollars and exposure to foreign currency

risk is negligible.

In March 2001, the Group procured a seven-year HK$7.8 billion syndicated

loan facility at competitive pricing, and after the overwhelming response

from banks, it arranged another seven-year syndicated loan at more

favourable terms with 17 leading financial institutions, subscribing for a

total of HK$7.5 billion. From July 2000 to September 2001, the Group

issued fixed and floating rate notes amounting to HK$2,150 million, with

terms of up to eight years under its Euro Medium Term Note Programme.

Part of the loan and note proceeds were used to retire the Group’s HK$8

billion syndicated term loan due in January 2002. The remaining funds

were used to refinance other short-term debts and provide general working

capital.

The Group’s strong financial position is reflected by the up-grade of its

rating outlook from stable to positive by Moody’s, on a par with the Hong

Kong Government’s sovereign ceiling for foreign debt.

CORPORATE FINANCEREVIEW OF OPERATIONS

Credit RatingsForeign Currency Local Currency

Moody’s A3 A2

Standard & Poor’s A A

56


Believing that it is important to maintain interactive communications with

investors about its corporate strategy and developments, the Group will

continue its transparent and open approach to investor relations.

The Group strives to disseminate market-sensitive information on a timely

basis through various channels. It holds press conferences and analysts’

meetings immediately after results are announced, with directors and senior

management available to answer questions, and it distributes regular press

releases and publications such as the SHKP Quar terly in addition

to annual and interim reports. All this information is also available on the

Group’s Internet site www.shkp.com.hk. In January 2001, the Group

introduced an Investor Relations Contact section in its web site to encourage

more effective communications with investors via e-mail.

During the year, the Group organized property visits for analysts and

investors to various developments, including exclusive previews of The

Leighton Hill show flats and the Two International Finance Centre multi-

media showcase. The Group received highly-positive comments from the

investment community on its commitments to developing premium-quality

projects and providing customer-oriented service. As part of its corporate

culture, the Group emphasizes two-way communication, and during the

year it took part in a number of conferences and presentations, both in

Hong Kong and overseas. Senior management gave numerous investor

interviews, and also went on road shows to the US, Europe and Singapore

to update investors about the Hong Kong property market and the Group’s

latest developments.

The Group has consistently been placed highly in Asiamoney magazine’s

Best Managed Company rankings over the years, and its Internet site has

been praised by independent surveys. The Group will continue to enrich

and update the contents of its web site frequently with the latest financial

and corporate information, employing all available channels to reach out

to the investment community.

INVESTOR RELATIONSREVIEW OF OPERATIONS57


Customer care is a top priority for the Group.

During the year under review, its property

management companies Hong Yip and

Kai Shing won over 30 awards from a variety of

organizations for superb management service.

CUSTOMER SERVICE

CUSTOMER SERVICEREVIEW OF OPERATIONS

Customer care is a top priority for the Group, and it is constantly looking

for new ways to improve the quality of products and services for all its

customers.

All the Group’s front-line staff undergo extensive training in customer service,

including attitude, manners and dress. The training is on-going and supported

by systematic evaluation.

The Group and its property management subsidiaries Hong Yip and Kai

Shing do everything possible to offer residents a comfortable and convenient

lifestyle, as well as a harmonious community. As a result, the management

companies consistently receive accolades for their service. In the year under

review, the two companies won over 30 prizes from a variety of

organizations, including trade associations, Government departments and

the news media.

During the year under review, Kai Shing extended the use of information

technology in property management, monitoring facilities via the Internet

and allowing residents to check services or the progress of repairs on-line

in some of the Group’s estates with Super e-Management. As part of the

quest to continually improve service quality, the system will be extended

to cover more than 100 estates.

For buyers of new residential properties, a special inter-departmental team

was formed in 1996 to assess the quality of each newly-completed unit

and assist owners with handover procedures. This service has further

improved during the year under review. Owners now receive one-stop

service, with one staff member assigned to look after the handover and

any repair work for each owner.

To serve consumers in the Group’s shopping centres better, Customer

Service Centres were established in more malls over the year. The centres

are staffed by courteous, well-dressed Customer Service Ambassadors to

assist visitors.

60


REVIEW OF OPERATIONS Customer Service

In an effort to improve communications with the general

public, the Group founded the SHKP Club. Membership

in the Club continues to grow, now standing at over

140,000. Building on the success of initiatives such as

the Show Flat Preview Loyalty Scheme, the Club

introduced various new benefits and services for

members during the year under review, such as its

Member-Property Buyers Reward Programme. With a

wide range of leisure and property-related activities,

the Club offers members total service.

The Citibank SHKP Club VISA Card launched in 1999 is

the world’s first four-in-one smart card. With the card,

residents enjoy exclusive shopping, residential and

banking services, as well as all the privileges of Club

membership and special offers in eight of the Group’s

major shopping centres.

The Club will continue to attract new members and

promote two-way communication with the public

through various means, including property previews and

related activities, leisure events and the Internet.

In recognition of the Group’s efforts at customer service

and two-way communication, its Internet site was named

Best Property Developer’s web site in all of Asia in a

survey.

Top: Show flat previews are well received by the SHKP Club’s140,000 members.

Bottom: New owners get one-stop service when they takepossession, with help in completing documentation andfollow-up on repairs.

61


ENVIRONMENTAL PROTECTION AND PROMOTIONREVIEW OF OPERATIONS

The Group’s dedication to environmental protection has won

recognition and praise from various environmental organizations.

Green living space is an essential element of the Group’s property

designs. New properties make extensive use of environmentally-

friendly building materials and include energy-saving facilities. While

construction is under way, workers follow strict environmental

protection guidelines in order to minimize pollution.

During the year under review, both The Parcville and Villa by the

Park in Yuen Long received Excellent ratings from the Business

Environment Council, under its Hong Kong Building Environmental

Assessment Method. The Parcville was the first private residential estate in

Hong Kong to have received this honour, while Villa by the Park received

the highest rating.

Promoting community awareness of environmental protection, the Group’s

two property management companies, Kai Shing and Hong Yip, staged a

number of green activities in their estates with good results. Hong Yip was

named ‘Most Environmentally-friendly Property Management Agent’ this

year by the Hong Kong Housing Authority, and Kai Shing took three prizes

in the 2000 Hong Kong Eco-Business Awards. Kai Shing also won first prize

in the ‘Outstanding Green Project Awards 2000’ in the Landscape

Management category, for its achievements in Palm Springs and Royal Palms

in Yuen Long with the ‘Friendly Neighbour of Mai Po’ environmental

landscape management plan.

Always looking for new ways to safeguard the environment, the Group’s

wholly-owned subsidiary Nixon Cleaning was the first in Hong Kong to

use patented technology from Nor th America to produce Totally

Degradable Plastics (TDP). TDP can be used to manufacture a full range

of environmentally-friendly plastic products, making a major contribution

to solving the problem of plastic waste. Many TDP products are now being

used in the Group’s developments.

The Group also promotes environmental awareness through community

activities. The Group’s Metroplaza in Kwai Chung staged an event in which

57 local Girl Guides tried to create the world’s largest aluminum-can

mosaic and the attempt has been submitted to the Guinness Book of

World Records.

Kai Shing won first prize in theOutstanding Green Project Awards 2000.

62


STAFF RELATIONS AND TRAININGREVIEW OF OPERATIONS

Knowing that staff training and career development are essential to sustaining

a company’s growth, the Group organized more than 350 classes for over

10,000 attendees during the period under review. The Group’s 18,000

employees (not counting those employed by associated companies) had

the opportunity to benefit from a variety of programmes. Training courses

are designed to support diverse business needs, focusing on key areas

such as customer service, management techniques, business and technology,

language and communication, interpersonal and technical skills and personal

as well as quality management.

To support the Group’s core objective of providing premium products

and service, an ongoing Service Excellence Programme began in 1999,

producing visible results. In the year under review, 7,000 service staff went

through this tailor-made programme followed up with comprehensive on-

the-job coaching and measurement. To further improve the quality of new

developments, a Performance Excellence Programme was also introduced

in 1999 for all construction staff. The first batch of 100 staff completed the

one-year course in stages during 2000, emerging with greater technical

and management competence. The programme continues, with more

staff taking part each year.

Staff at all levels can apply for sponsorship to take courses offered by

external institutions. Programmes ranging from short seminars to full degree

courses are eligible for substantial

sponsorship.

Self-learning is also promoted within

the Group. A training library with a

ful l collection of self- learning

materials has been in existence since

2000. Staff are also encouraged to

use the Group’s corporate intranet

and the Internet to search for

information and enhance their

knowledge and skills.

The Group organized over 350 coursesfor more than 10,000 attendeesduring the year.

63


THE GROUP AND THE COMMUNITYREVIEW OF OPERATIONS

As part of its commitment to being a good corporate citizen, the Group

offers ongoing support for quality education and the less fortunate in society.

During the year under review, the Group donated a total of HK$47 million

to charitable causes.

Promoting education is one of the Group’s primary goals, and it gives

money and assistance through various channels to boost education and

encourage talent in both Hong Kong and Mainland China. The Group is

also concerned about how young people cope with the changing society,

and it donated HK$2 million to the Boys’ and Girls’ Clubs Association of

Hong Kong during the year, so they could set up hotlines for children and

a counselling centre to help young people.

To support the development of quality education, the Group began the

Northwest New Territories Elite Students Programme some years ago,

giving 12 Yuen Long and Tuen Mun primary and secondary schools added

funds to offer extra-curricular courses and raise standards. This year, for

the first time, the Group sponsored two top students from the northwest

New Territories to attend the US ‘Presidential Classroom’ in Washington

DC. In addition, the Group continued its sponsorship of six MBA students

at The Chinese University of Hong Kong.

Furthering higher education in Mainland China, the Group established a

funding programme at Tsinghua University in Beijing to encourage

distinguished professors. This is the fifth consecutive year that the Group

has injected HK$1 million to the fund, enabling more outstanding scholars

to benefit. The Group also donated money to encourage excellence among

management and administrative staff at Tsinghua University, as well as to a

programme helping disadvantaged students with serious illnesses in

Guangzhou complete their studies.

In addition to supporting educational institutions in Mainland China, the

Group donated HK$1 million to set up the ‘Sun Hung Kai Properties Group

Scholarships’ at The Chinese University of Hong Kong, helping young people

from the Mainland to do undergraduate studies there.

64


REVIEW OF OPERATIONS The Group and the Community

The Community Chest is one organization that the

Group has supported for many years. During the year

under review, the Group donated HK$1 million to the

Community Chest as sole sponsor of the annual Hong

Kong Walk for Millions and an additional HK$1 million

in suppor t of the Chest’s Corporate Challenge

Marathon. Many staff members took par t in those

events with the Group’s encouragement.

The Group continues its support for the SHKP Fund

for the Elderly, helping improve quality of life for needy

seniors. The Group also supports charities in other

ways. For many years, the Group has provided office

space to Project ORBIS in Hong Kong for a token rent,

and this year ORBIS presented the Group with its Crystal

Award. The Group also supported a blood donation

drive organized by the Hong Kong Red Cross this year.

About 150 staff members joined in, and the Group’s

residential estates and shopping malls also held successful

blood donation campaigns. In recognition of the Group’s

efforts, the Hong Kong Red Cross presented it with a

Special Merit Award.

Above: The Northwest New Territories Elite Students Programmeis part of the Group’s support for quality education.

Top right: The Group was the sole sponsor of the annual HongKong Walk for Millions organized by the Community Chest.

Bottom right: The Group’s support has helped train distinguishedscholars at Tsinghua University in Beijing for a number of years.

65


FINANCIAL REVIEW66

REVIEW OF RESULTS

The Group’s profit attributable to shareholders for the year ended 30th June 2001 was HK$8,330 million, lower by23 per cent compared to HK$10,822 million achieved in the previous year. The profit for the previous year includedan exceptional gain of HK$2,688 million arising from the spin off of SUNeVision. Excluding this non-recurring item,the profit for the current year would show an increase of 2.4 per cent.

Property Sales

Property sales revenue for the year was HK$8,218 million (2000: HK$16,957 million). Profit generated from propertysales was HK$3,625 million (2000: HK$4,078 million). The decline in sales revenue and profit reported at the Grouplevel was mainly due to the fact that almost half of the volume of property developments completed for sale wasengaged through joint venture companies whereby the sales were recognized under the share of results from jointlycontrolled entities and associates. Including the Group’s share of the jointly controlled entities and associates, propertysale turnover was HK$14,359 million, down by 17 per cent whereas profit from property sales was HK$4,861million, up by 18 per cent over the previous year. The improvement in profitability was mainly attributable to thetwo major development profit contributors, Le Sommet and Chelsea Heights Phase 2, both of which achieved ahigh margin primarily due to the low land cost.

Rental Income

Performance of the Group’s rental portfolio was satisfactory. Average occupancy levels stayed high throughout theyear. Gross rental income increased marginally by almost 2 per cent to HK$5,392 million. Net rental income wasHK$4,073 million compared to HK$4,059 million last year. These figures have not included the rental contributionsfrom joint venture companies. Including the Group’s share of rental income from jointly controlled entities, totalgross and net rental income was HK$5,877 million and HK$4,401 million, up by 3.7 per cent and 1.7 per centrespectively over the previous year. The growth was mainly due to the full-year rental contribution from OneInternational Finance Centre, Millennium City Phase 1 and Phase 2 as well as the increased rental income frominvestment properties in China, namely Sun Dong An Plaza in Beijing and Central Plaza in Shanghai, following thecontinuous improvement on the occupancy levels.

Property Management

Profit contribution from property management business grew steadily by 7.7 per cent to HK$252 million with thegradual expansion of the Group’s property management portfolio.

Hotel Operations

Both average occupancy rates and room rates of the Group’s three hotels continued to improve during the yearresulting in higher operating efficiency and greater profit margin. Operating profit from hotel operations increasedsubstantially by 30 per cent to HK$195 million.


FINANCIAL REVIEW

67


Other Business Activities

Profits generated from other business activities reported a decline by HK$141 million to HK$122 million, mainly dueto the operating loss incurred by its subsidiary, SUNeVision.

Other Revenue

Other revenue, which comprised mainly income from investments in securities and interest income from advancesto joint venture companies, increased to HK$547 million (2000: HK$42 million), due to increase in investmentactivities during the year.

Finance Costs

Net finance costs for the year increased by HK$21 million to HK$1,158 million after capitalization of HK$593 million(2000: HK$114 million). The increase in net finance costs was the result of an increase in average net debt. Moreinterest was capitalized for the year than last year owing to higher capital expenditures incurred on investmentproperties under development.

Profit on Disposal of Investments

The Group recorded a profit of HK$445 million (2000: HK$1,236 million) from disposal of investments, comprisingmainly listed shares originally held for long-term investment.

Share of Profits Less Losses of Associates and Jointly Controlled Entities

Share of profits before taxation from associates and jointly controlled entities increased by HK$1,204 million toHK$1,582 million. The increase was mainly due to profits from property sales in the total amount of HK$1,236million generated from joint venture property development projects including The Belcher’s Phase 1, Royal Peninsula,Ocean Shores Phase 1 and Villa Esplanada Phase 3. Share of pre-tax profit from KMB increased by seven per cent toHK$304 million while share of loss from SmarTone reduced to HK$81 million from HK$96 million.

FINANCIAL RESOURCES AND LIQUIDITY

The Group’s financial position remains strong, with a large capital base and a low debt leverage. The Group’s totalshareholders’ funds increased to HK$126,007 million as at 30th June 2001 compared to HK$120,904 million at theprevious year end, mainly due to the upward revaluation of the Group’s investment property portfolio and profitsretained for the year.

FINANCIAL REVIEW

68


At 30th June 2001, the Group’s total borrowings amounted to HK$28,992 million. Net debt (after deducting cashand bank deposits of HK$9,061 million) amounted to HK$19,931 million. All of the Group’s borrowings areunsecured and arranged on a committed, medium to long term basis with a maturity profile analyzed as follows :

2001 2000HK$M HK$M

Repayable:Within one year 4,997 4,584After one year but within two years 6,680 12,868After two years but within five years 10,473 9,522After five years 6,842 1,415

Total borrowings 28,992 28,389

Cash and bank deposits 9,061 10,414

Net debt 19,931 17,975

The Group’s net debt was up by HK$1,956 million during the year. The increase in net debt level was primarily dueto increased expenditure for land acquisitions, including the land premium for the Airport Railway Kowloon StationDevelopment Packages 5, 6 and 7. Gearing ratio at the year end, measured by net debt to shareholders’ funds,stood at 15.8 per cent (2000: 14.9 per cent). Interest coverage for the year, measured by the ratio of profit fromoperations to interest expenses before capitalization, remained strong at 4.8 times (2000: 6.7 times).

Apart from refinancing short term debts with long term borrowings, the Group has also secured substantial undrawnfacilities on a committed basis from its relationship banks, which helps the Group minimize refinancing risk of its debtand provides the Group with strong financing flexibility.

5

10

15

20

25

17.8

12.0

14.9

1997 1998 1999 2000 2001

Net Debt to Shareholders’ Funds Ratio

15.8

19.8

Percentage

5,000

10,000

15,000

20,000

25,000

30,000

20,295

12,786

17,975

1997 1998 1999 2000 2001

Net Debt

19,931

26,671

HK$ million

Debt Maturity ProfileAs at 30th June 2001

24%Over 5 years

23%1-2 years

17%Within 1 year

36%2-5 years

FINANCIAL REVIEW

69


All the Group’s financing and treasury activities are centrally managed and controlled at the corporate level. As at30th June 2001, 96 per cent of the Group’s borrowings were raised through its wholly-owned finance subsidiariesand the remaining 4 per cent through operating subsidiaries.

The Group adopts a conservative policy in financial risk management, having little exposure to foreign exchange andinterest rate risks. Approximately 95 per cent of the Group’s borrowings were denominated in Hong Kong dollars,with the balance in US dollars and Renminbi to fund property projects in the Mainland. The Group’s borrowings aremostly arranged on a floating rate basis. For the fixed rate notes issued under the Euro Medium Term NoteProgramme, interest rate swaps have been utilized to convert the rates into floating rate basis. When appropriate,hedging instruments including interest rate and currency swaps are used to assist the Group to manage its exposureto interest rate and foreign currency exchange fluctuations in connection with its borrowings. The Group will notenter into derivative transactions for speculative purposes.

Expenditures incurred on acquisitions of land for the year amounted to HK$7,400 million, which were financedprimarily by internally generated funds from operations and, to the extent required, by debt financing. With substantialcommitted banking facilities in place, continuous cash inflow from property sales and a solid base of recurrentincome, the Group is in a strong liquidity position and has sufficient financial resources to satisfy its capital commitmentsand ongoing working capital requirements.

GROUP FINANCIAL SUMMARY

1997 1998 1999 2000 2001For the year ended 30th June HK$ HK$ HK$ HK$ HK$

Earnings per share 5.93 3.04 3.87 4.51 3.47Dividends per share 2.35 1.20 1.55 1.75 1.55Special cash bonus per share 0.38 – – – –Shareholders’ funds at book value per share 56.38 47.55 44.40 50.36 52.48Financial ratios:Net debt to shareholders’ funds

Net debt19.8% 17.8% 12.0% 14.9% 15.8%

Shareholders’ fundsInterest cover

Profit from operations12.9 5.4 5.4 6.7 4.8

Net interest expenses before capitalization

HK$M HK$M HK$M HK$M HK$M

Turnover 28,425 22,890 23,404 25,826 17,701Profit from operations 15,942 14,128 10,159 8,340 8,329Profit attributable to shareholders 14,160 7,260 9,278 10,822 8,330

Balance Sheet1997 1998 1999 2000 2001

As at 30th June HK$M HK$M HK$M HK$M HK$M

Fixed assets 111,547 91,210 77,915 86,291 94,698Investments and loans 23,652 18,173 26,111 27,708 28,786Land pending development 21,052 22,658 15,137 18,908 17,324Net current assets 13,169 6,668 4,670 13,413 10,804Long term liabilities (33,763) (24,127) (16,253) (23,805) (23,995)Minority interests (948) (880) (967) (1,611) (1,610)

134,709 113,702 106,613 120,904 126,007

Share capital 1,195 1,196 1,201 1,201 1,201Share premium and reserves 133,514 112,506 105,412 119,703 124,806

Shareholders’ funds 134,709 113,702 106,613 120,904 126,007

70


71


DIRECTORS’ REPORT

The directors present their report for the year ended 30th June 2001:

PRINCIPAL ACTIVITIES

The principal activity of the Company continues to be holding investments in various subsidiaries.

The principal activities of the Group continue to be the development of and investment in properties for sale and rent. Ancillaryand supporting businesses, which are described under subsidiaries on pages 116 to 120, are integrated with the main businessof the Group. Turnover and contributions to operating profit from overseas activities are immaterial. A segmented analysis ofturnover and contributions to operating profit for the Group (excluding jointly controlled entities and associates) is set outbelow:

GROUP PROFITS

Profit after taxation, including shares of profit from jointly controlled entities and associates, amounted to HK$8,340 million(2000: HK$10,809 million). After taking minority interests into account, profit attributable to shareholders was HK$8,330million (2000: HK$10,822 million).

DIVIDENDS

An interim dividend of HK$0.55 per share (2000: HK$0.55) was paid on 12th April 2001. The directors recommend a finaldividend of HK$1.00 per share (2000: HK$1.20), making a total dividend of HK$1.55 per share for the full year ended 30th June2001 (2000: HK$1.75).

PURCHASE, SALE OR REDEMPTION OF SHARES

The Company did not redeem any of its ordinary shares during the year. Neither the Company nor any of its subsidiariespurchased or sold any of the Company’s ordinary shares during the year.

SHARE PREMIUM AND RESERVES

Movements in the share premium and reserves of the Company and the Group during the year are shown in note 26 to thefinancial statements.

FIXED ASSETS

Movements of fixed assets during the year are shown in note 11 to the financial statements.

Profit from OperationsTurnover before Finance Cost

2001 2000 2001 2000HK$M HK$M HK$M HK$M

Property sales 8,218 16,957 3,625 4,078Rental income 5,392 5,292 4,073 4,059Property management 860 817 252 234Hotel operation 590 542 195 150Other business activities 2,641 2,218 122 263

17,701 25,826 8,267 8,784

Other revenue 547 42Unallocated administrative expenses (485) (486)

Profit from operations 8,329 8,340

DIRECTORS’ REPORT

72


GROUP FINANCIAL SUMMARY

The results, assets and liabilities of the Group for the last five years are summarized on page 70.

PROPERTIES

Particulars of major investment properties held by the Group are set out on pages 36 to 37.

DIRECTORS

The list of directors is set out on page 2 of the report and their particulars are set out on pages 79 to 82. All directors, otherthan Dr. Ho Tim who retired on 20th March 2001 and Sir Sze-yuen Chung who has been appointed as independent non-executive director on 30th March 2001, held office for the whole year. In accordance with Article 95 of the Company’s Articlesof Association, the new director, Sir Sze-yuen Chung, will retire at the forthcoming Annual General Meeting and, being eligible,will offer himself for re-election. In accordance with Article 104(A) of the Company’s Articles of Association, Dr. Victor FungKwok-king, Messrs. Kwong Chun, Michael Wong Yick-kam and Mike Wong Chik-wing will retire by rotation at the forthcomingAnnual General Meeting and, being eligible, will offer themselves for re-election. None of the directors proposed for re-electionhas a service agreement with the Company or any of its subsidiaries which is not determinable within one year without paymentof compensation, other than statutory compensation. Mr. Law King-wan, executive director, will retire on 1st October 2001 butwill continue to act as non-executive director.

DISCLOSURE OF INTERESTS

Directors’ Interests in the Company

As at 30th June 2001, the interests of the directors and the chief executive of the Company in the equity securities of theCompany, as recorded in the register required to be kept under Section 29 of the Securities (Disclosure of Interests) Ordinance(the “Ordinance”), were as follows:

No. of shares in which the Directors were interested

Category of Interest

Personal Family Corporate OtherName of Director Interest Interest Interest Interest Total

Kwok Ping-sheung, Walter – – – 1,073,792,522 1,073,792,522(Note 1)

Lee Shau-kee 486,340 – – 343,000 829,340

Kwok Ping-kwong, Thomas 1,901,281 304,065 – 1,071,842,214 1,074,047,560(Note 1)

Kwok Ping-luen, Raymond – 1,000 – 1,074,985,895 1,074,986,895(Note 1)

Kwan Cheuk-yin, William 123,780 – – – 123,780

Lo Chiu-chun, Clement 137,273 62,117 – – 199,390

Law King-wan 20,000 70,267 – – 90,267

Chan Kai-ming 41,186 – – – 41,186

Chan Kui-yuen, Thomas 126,500 66,000 – – 192,500

Kwong Chun 702,722 339,358 – – 1,042,080

Wong Yick-kam, Michael 50,904 – – – 50,904

Wong Chik-wing, Mike 150,999 – – – 150,999

Note 1 Messrs. Walter Kwok Ping-sheung, Thomas Kwok Ping-kwong and Raymond Kwok Ping-luen were deemed (by virtue of the Ordinance) to be interestedin the number of shares in the Company shown opposite their names respectively. Of those shares, 1,051,808,347 shares represented the sameinterests and were therefore duplicated among those three directors.

DIRECTORS’ REPORT

73


Directors’ Interests in Other Associated Corporations

As at 30th June 2001, the interests of the directors and the chief executive of the Company in the equity securities of anyassociated corporation (within the meaning of the Ordinance), as recorded in the register required to be kept under section 29of the Ordinance, were as follows:

(i) The following directors had the following interests in the equity securities of SUNeVision Holdings Limited:

No. of shares in which the Directors were interested

Category of Interest

Personal Family Corporate OtherName of Director Interest Interest Interest Interest Total

Kwok Ping-sheung, Walter – – – 1,070,000 1,070,000(Note 2)

Kwok Ping-kwong, Thomas – – – 1,070,000 1,070,000(Note 2)

Kwok Ping-luen, Raymond 672,500 – – 1,070,000 1,742,500(Note 2)

Fung Kwok-king, Victor – – – 8,000 8,000

Kwan Cheuk-yin, William 884 – – – 884

Lo Chiu-chun, Clement 2,771 – – – 2,771

Chan Kai-ming 115,000 – – – 115,000

Kwong Chun 300,000 – – – 300,000

Wong Chik-wing, Mike 109,000 – – – 109,000

Note 2 Messrs. Walter Kwok Ping-sheung, Thomas Kwok Ping-kwong and Raymond Kwok Ping-luen were deemed (by virtue of the Ordinance) to be interestedin the number of shares shown opposite their names respectively. Of those shares 1,070,000 shares represented the same interests and weretherefore duplicated among those three directors.

(ii) Each of Messrs. Walter Kwok Ping-sheung, Thomas Kwok Ping-kwong and Raymond Kwok Ping-luen had the followinginterests in the equity securities of the following associated corporations:

Associated Corporation No. and Class of Securities Category of Interest

Superindo Company Limited 10 shares Personal

Super Fly Company Limited 10 shares Personal

Splendid Kai Limited 2,500 shares Corporate

Hung Carom Company Limited 25 shares Corporate

Tinyau Company Limited 1 share Corporate

Open Step Limited 8 shares Corporate

(iii) Mr. Walter Kwok Ping-sheung, Mr. Raymond Kwok Ping-luen and Sir Sze-yuen Chung had personal interests of 61,522shares, 393,350 shares and 18,821 shares respectively in the equity securities of The Kowloon Motor Bus Holdings Limited.

(iv) Mr. Raymond Kwok Ping-luen had a personal interest of 692,846 shares in the equity securities of SmarToneTelecommunications Holdings Limited.

DIRECTORS’ REPORT

74


(v) Dr. Lee Shau-kee has other interests in the equity securities of the following associated corporations:

Associated Corporation (Note 3) No. and Class of Securities

Mightypattern Limited 200 shares

Star Play Development Limited 1 share

Central Waterfront Property Holdings Limited 47.5% of issued share capital

Newfoundworld Holdings Limited 40,000 shares

Topcycle Development Limited 1 share

Anbok Limited 2 shares

Teamfield Property Limited 4,918 shares

SmarTone Telecommunications Holdings Limited 179,500 shares

Note 3 The shares in Mightypattern Limited and Star Play Development Limited were beneficially owned by Henderson Investment Limited (“HI”).

The respective interests of Henderson Land Development Company Limited (“HL”) and The Hong Kong and China Gas Company Limited (a companyin which the subsidiaries of HI owned more than one-third of its issued shares) in Central Waterfront Property Holdings Limited were 32.5 per cent and15 per cent respectively.

The shares in Newfoundworld Holdings Limited and Topcycle Development Limited were beneficially owned by HL.

The shares in Anbok Limited and in Teamfield Property Limited were held by a company in which HL had a 50 per cent interest.

The shares in SmarTone Telecommunications Holdings Limited were beneficially owned by a subsidiary of the Hong Kong and China Gas CompanyLimited.

Dr. Lee Shau-kee beneficially owned all the issued capital of Hopkins (Cayman) Limited. Hopkins (Cayman) Limited, as the trustee of a unit trust,owned all the issued ordinary shares which carried voting rights in the capital of Henderson Development Limited (“HD”). HD was the holdingcompany of HL, which was the holding company of HI.

By virtue of the provisions of the Ordinance and the matters aforesaid, Dr. Lee Shau-kee was taken to be interested in the shares and interests asmentioned above.

(vi) Dr. Victor Fung Kwok-king had corporate interests of 70 shares in the equity securities of Fun Fun World InvestmentLimited.

(vii) None of the directors had any interests in any debt securities issued by the Company or any jointly controlled entities andassociated corporation.

SHARE OPTION SCHEME

Share option scheme of the Company

The following directors were granted options at HK$1.00 per option in respect of shares of the Company under its share optionscheme during the period ended 30th June 2001 as follows:

Exercise Option Exercised Balance OutstandingName of Director Date of Grant Price (HK$) No. of Shares During the Year at 30/6/2001

Chan Kui-yuen, Thomas 15/2/2000 70.00 150,000 – 150,000

Wong Yick-kam, Michael 15/2/2000 70.00 150,000 – 150,000

Wong Chik-wing, Mike 15/2/2000 70.00 150,000 – 150,000

The above mentioned options can be exercised in accordance with the following terms:(i) other than in the circumstances set out in the scheme, the options are not exercisable during the first year of the option

period running from 15th February 2000; and(ii) the option holder can exercise up to one third of the option during the second year of the option period, up to two thirds

of the option during the third year of the option period and all or part of the option any time three years after 15thFebruary 2000.

DIRECTORS’ REPORT

75


The above mentioned options at the exercise price of HK$10.38 per share may be exercised in accordance with the followingterms:(i) one third of the options within three years commencing on 31st December 2000;(ii) a further one third of the options within three years commencing on 31st December 2001; and(iii) the remaining one third of the options within three years commencing on 31st December 2002.

The above mentioned options at the exercise price of HK$2.34 per share may be exercised in accordance with the followingterms:(i) one third of the options within three years commencing on 20th March 2002;(ii) a further one third of the options within three years commencing on 20th March 2003; and(iii) the remaining one third of the options within three years commencing on 20th March 2004.

Other Share Option Schemes

Two more share option schemes were approved for two subsidiaries of the Company, iAdvantage Limited and SUNeVisionRed-Dots Limited, allowing their respective boards of directors the right to grant to their full-time employees and executivedirectors the chance to subscribe for their shares, which in aggregate represent up to 10 per cent of the issued capital of therespective companies from time to time. No such options were granted to any director of the Company during the year.

ARRANGEMENT TO PURCHASE SHARES OR DEBENTURES

Other than the share option schemes as mentioned above, at no time during the year was the Company or any of its subsidiariesa party to any arrangement to enable the directors of the Company to acquire benefits by means of the acquisition of shares inor debentures of the Company or of any other body corporate.

Exercise Option Exercised Balance OutstandingName of Director Date of Grant Price (HK$) No. of Shares During the Year at 30/6/2001

Kwok Ping-sheung, Walter 28/3/2000 10.38 415,000 –7/4/2001 2.34 180,000 – 595,000

Kwok Ping-Kwong, Thomas 28/3/2000 10.38 415,000 –7/4/2001 2.34 180,000 – 595,000

Kwok Ping-luen, Raymond 28/3/2000 10.38 755,000 –7/4/2001 2.34 350,000 – 1,105,000

Chan Kui-yuen, Thomas 28/3/2000 10.38 510,000 –7/4/2001 2.34 180,000 – 690,000

Wong Yick-kam, Michael 28/3/2000 10.38 360,000 –7/4/2001 2.34 180,000 – 540,000

Share option scheme of SUNeVision Holdings Limited

The following directors were granted options at HK$1.00 per option in respect of shares of SUNeVision Holdings Limited underits share option scheme during the period ended 30th June 2001 as follows:

DIRECTORS’ REPORT

76


SUBSTANTIAL SHAREHOLDERS

As at 30th June 2001, the interests of every person, other than a director or the chief executive of the Company, being 10 percent or more in the equity securities of the Company, as recorded in the register required to be kept under Section 16(1) of theOrdinance, were as follows:

BANK BORROWINGS

Details of bank borrowings are set out in notes 20 and 22 to the financial statements on pages 108 and 109.

INTEREST CAPITALIZED

Interest capitalized during the year amounted to HK$593 million (2000: HK$114 million).

CHARITABLE DONATIONS

HK$47 million was donated during the year (2000: HK$25 million).

DIRECTORS’ INTERESTS IN COMPETING BUSINESSES

The interests of directors of the Company in competing businesses as at 30th June 2001 required to be disclosed pursuant toRule 8.10 of the Listing Rules were as follows:

Messrs. Kwok Ping-sheung, Walter, Kwok Ping-kwong, Thomas and Kwok Ping-luen, Raymond are brothers (collectively “theKwok Brothers”) within a family whose businesses consist of property development and investment in Hong Kong throughcompanies in which they have maintained certain personal and deemed interests. As such, they are regarded as being interestedin such competing businesses (“Excluded Businesses”) with the Company and its subsidiaries (“the Group”). However, whencompared with the dominance and size of operations of the Group, such Excluded Businesses are immaterial. Since the Groupdoes not have property developments and investments in locations other than in Hong Kong and Mainland China and the Kwokfamily does not have such businesses in the Mainland, the Kwok Brothers are therefore not regarded to be interested in suchExcluded Businesses of the Group in the Mainland.

Name of Shareholder No. of Shares in which the Shareholder was interested

HSBC Holdings plc 1,123,601,108

HSBC Finance (Netherlands) 1,123,031,659

HSBC Holdings B.V. 1,123,031,659

HSBC Investment Bank Holdings B.V. 1,081,551,594

HSBC International Trustee Limited (Note 4) 1,080,582,744

Note 4 The shares in which HSBC International Trustee Limited was interested formed part of the shares in which HSBC Investment Bank Holdings B.V. wasinterested; the shares in which HSBC Investment Bank Holdings B.V. was interested formed part of the shares in which HSBC Holdings B.V. wasinterested; the shares in which HSBC Holdings B.V. was interested were the shares in which HSBC Finance (Netherlands) was interested and the sharesin which HSBC Finance (Netherlands) was interested formed part of the shares in which HSBC Holdings plc was interested.

Of the above shares in the Company in which HSBC International Trustee Limited was interested, 1,051,808,347 shares were part of the sharesreferred to in Note 1 above.

DIRECTORS’ REPORT

77


Messrs. Kwok Ping-sheung, Walter and Kwok Ping-luen, Raymond are directors of The Kowloon Motor Bus Holdings Limited inwhich the Group has a substantial interest, which businesses consist of property development and investment. In this regard,each of them is regarded to be interested in such Excluded Businesses with the Group.

Mr. Kwok Ping-luen, Raymond is the Chairman of SmarTone Telecommunications Holdings Limited in which the Group has asubstantial interest, which businesses consist of Internet services. In this respect, he is regarded to be interested in such ExcludedBusinesses with SUNeVision Holdings Limited, the technology arm of the Group.

Dr. Lee Shau-kee is the Chairman and Managing Director of Henderson Land Development Co. Limited and HendersonInvestment Limited. He is also Chairman of Henderson China Holdings Limited, a director of The Miramar Hotel and InvestmentCo. Limited, The Hong Kong and China Gas Company Limited and certain subsidiaries of the aforementioned listed companies.In addition to his being a director, Dr. Lee has maintained certain personal and deemed interests in some of these companies,which businesses consist of property development and investment, property management, infrastructure, Internet andtelecommunication services, which constitute Excluded Businesses of the Group. Dr. Lee is a non-executive director of theCompany, who is not involved in the daily management of the Group.

The Kwok Brothers are directors of USI Holdings Limited and Mr. Wong Yick-kam, Michael is an alternate director to them. TheGroup has a substantial interest in the company, which businesses consist of property development and investment, andtherefore each of them is regarded to be interested in such Excluded Businesses with the Group.

Other than the family businesses of the Kwok Brothers, the above-mentioned Excluded Businesses are managed by separatepublicly listed companies with independent management and administration. In this respect, coupled with the diligence of itsindependent non-executive directors and the Audit Committee, the Group is capable of carrying on its businesses independentof, and at arms length from, the Excluded Businesses mentioned above.

INTEREST IN CONTRACTS

No contracts of significance to which the Company or any of its subsidiaries was a party and in which a director had a materialinterest subsisted at any time during the year.

MAJOR CUSTOMERS AND SUPPLIERS

During the year, less than 30 per cent of the Group’s sales and less than 30 per cent of the Group’s purchases were attributableto the Group’s five largest customers and five largest suppliers respectively.

AUDITORS

The retiring auditors, Messrs. Deloitte Touche Tohmatsu, have signified their willingness to continue in office. A resolution will beproposed at the Annual General Meeting to re-appoint them and to authorize the directors to fix their remuneration.

DIRECTORS’ REPORT

78


AUDIT COMMITTEE

The Audit Committee, which was established pursuant to the requirements of the Rules Governing the Listing of Securities ofThe Stock Exchange of Hong Kong Limited, comprising Mr. William Kwan Cheuk-yin (Chairman), Sir Sze-yuen Chung (appointedon 9th July 2001 in replacement of Dr. Ho Tim) and Mr. Clement Lo Chiu-chun, met twice in the year.

During the meetings, the Committee reviewed and made recommendations on the improvement of the Company’s financialreporting process and internal controls.

CODE OF BEST PRACTICE

The Company has complied with the Code of Best Practice as set out in Appendix 14 to the Listing Rules of The StockExchange of Hong Kong Limited during the accounting period covered by this annual report.

This report is made in accordance with a resolution of the Board of Directors and is signed for and on behalf of the Board.

Kwok Ping-sheung, WalterChairman & Chief Executive

Hong Kong, 27th September 2001

79


DIRECTORS AND ORGANIZATION

KWOK Ping-sheung, WalterMsc(Lond), DIC, MICE, JP

Chairman & Chief Executive (Age: 50)

Mr. Kwok has been with the Group for 27 years. He holds aMaster of Science degree in Civil Engineering from ImperialCollege, University of London, and is a member of the Instituteof Civil Engineers. He is an executive director of SUNeVisionHoldings Limited, and a director of The Kowloon Motor BusHoldings Ltd., USI Holdings Ltd., Wilson Parking (HK) Ltd. andHung Cheong Import & Export Co., Ltd.

He is also a director of The Real Estate Developers Associationof Hong Kong and Tsimshatsui East Property Developers’Association Ltd. and Honorary Treasurer of the Federation ofHong Kong Hotel Owners. On the community front, he isthe Chairman of the Former Directors Committee of the HongKong Community Chest, board member of the Lord WilsonHeritage Trust, a member of the Young Presidents’ Organization(China Chapter) and a member of the Hong Kong & ChinaCommittee of the Pacific Basin Economic Council.

Mr. Kwok is an Honorary Citizen of Beijing & Guangzhou, amember of the National Committee of the Chinese People’sPolitical Consultative Conference and Vice Chairman of theAll-China Federation of Industry and Commerce.

Mr. Kwok is the elder brother of Mr. Thomas Kwok Ping-kwong and Mr. Raymond Kwok Ping-luen.

Dr. LEE Shau-keeDBA(Hon), DSSc(Hon), LLD(Hon)

Non-Executive Director (Age: 73)

Vice Chairman

Dr. Lee has been a non-executive director of the Companyfor the last 29 years. He is the founder and Chairman andManaging Director of Henderson Land DevelopmentCompany Ltd. and Henderson Investment Ltd. He has beenengaged in property development in Hong Kong for morethan 45 years. He is also Chairman of Henderson Cyber Ltd.and The Hong Kong and China Gas Company Ltd. as well asa director of Henderson China Holdings Ltd., The Hong KongFerry (Holdings) Company Ltd., The Bank of East Asia, Ltd.and Miramar Hotel and Investment Company Ltd.

KWOK Ping-kwong, ThomasMSc (Bus Adm), BSc (Eng), FCPA, JP

Vice Chairman & Managing Director (Age: 49)

Mr. Kwok is Vice Chairman & Managing Director of Sun HungKai Properties Limited, and has been with the Group for 24years. He is also Chairman of Route 3 (CPS) Company Limited,Joint Chairman of IFC Development Limited, an executivedirector of SUNeVision Holdings Limited and a non-executivedirector of USI Holdings Limited and The Bank of EastAsia, Limited.

Mr. Kwok holds a Master’s degree in Business Administrationfrom The London Business School, University of London anda Bachelor’s degree in Civil Engineering from Imperial College,University of London.

He is Executive Vice President of The Real Estate DevelopersAssociation of Hong Kong, a committee member of the LandSub-Committee & Planning Sub-Committee of the Land &Building Advisory Committee. He also serves as a Governmentappointed member of the Business Advisory Group.

In the past he has served as a member of the Social WelfarePolicies & Services Committee, the Land & Building AdvisoryCommittee, the Registered Contractors’ Disciplinary Board,the Council of The Open University of Hong Kong and theGeneral Chamber of Commerce Industrial Affairs Committee.He was also Chairman of the Proper ty ManagementCommittee of the Building Contractors’ Association, CouncilMember of the Hong Kong Construction Association and aboard member of the Community Chest of Hong Kong.

Mr. Kwok is an Honorary Citizen of Guangzhou and a memberof the Ninth Chinese People‘s Political Consultative ConferenceShanghai Committee.

Mr. Kwok is the younger brother of Mr. Walter KwokPing-sheung and the elder brother of Mr. Raymond KwokPing-luen.

DIRECTORS AND SENIOR MANAGEMENT


80


KWOK Ping-luen, RaymondMA (Cantab), MBA, Hon DBA

Vice Chairman & Managing Director (Age: 48)

Mr. Kwok has been with the Group for 23 years. He holds aMaster of Arts degree in Law from Cambridge University, aMaster’s degree in Business Administration from HarvardUniversity and an Honorar y Doctorate in BusinessAdministration from The Open University of Hong Kong.He is Chairman and Chief Executive Officer of SUNeVisionHoldings Limited, Chairman of SmarTone TelecommunicationsHoldings Limited and a director of The Kowloon Motor BusHoldings Limited, Route 3 (CPS) Company Limited and AirportFreight Forwarding Centre Company Limited.

In civic activities, Mr. Kwok is a non-executive director of theSecurities and Futures Commission, a director of The RealEstate Developers Association of Hong Kong, a member ofthe General Committee of The Hong Kong General Chamberof Commerce, a member of the Hong Kong Port and MaritimeBoard and Vice-Chairman of the Council of The ChineseUniversity of Hong Kong. He is also a member of the AdvisoryCouncil of One Country Two Systems Research InstituteLimited and Chairman of the Management Committees ofthe Police Children’s Education Trust and the Police Educationand Welfare Trust. Mr. Kwok is also a member of the NinthChinese People’s Political Consultative Conference BeijingCommittee.

Mr. Kwok is the younger brother of Mr. Walter Kwok Ping-sheung and Mr. Thomas Kwok Ping-kwong.

The Hon Sir Sze-yuen CHUNGGBM, GBE, PhD, FREng, JP


Sir Sze-yuen Chung is Chairman and Non-Executive Directorof The Kowloon Motor Bus Holdings Limited. He is alsoDirector of CLP Holdings Limited and Wheelock & CompanyLimited; and Pro-Chancellor of Hong Kong University ofScience & Technology. He has contributed significantly in HongKong’s political, industrial and tertiary education fields for overfour decades. He was Senior Member of Hong Kong LegislativeCouncil (1974-78), Executive Council (1980-88), and againConvenor of HKSAR Executive Council (1997-99). He wasChairman of Federation of Hong Kong Industries (1966-70),and Hong Kong Productivity Council (1974-78); and Presidentof Engineering Society of Hong Kong (1960-61) and HongKong Academy of Engineering Sciences (1994-97). Heestablished Hong Kong Polytechnic in 1972, City Polytechnicin 1984, Hong Kong University of Science & Technology in1991 and Hospital Authority in 1990. He was deeply involvedin the Sino-British Negotiation of Hong Kong’s future (1982-85) and the establishment of the Hong Kong SpecialAdministrative Region (1994-97).

Sir Po-shing WOOHon. LLD., FCIArb, F.I. Mgt., FInstD


Sir Po-shing Woo has been a non-executive director of theCompany since 1972. He is a solicitor and a consultant ofWoo, Kwan, Lee & Lo, Solicitors & Notaries, a director ofHenderson Development Ltd., Henderson Land DevelopmentCo., Ltd. and Henderson Investment Ltd. He was admitted topractice as solicitor in England and Hong Kong and is also afellow of The Hong Kong Management Association, TheChartered Institute of Arbitrators, The Institute of Managementand The Institute of Directors of England. He was awarded anHon. LLD. by the City University of Hong Kong and is a Fellowof King’s College of London as well as Honorary Professor ofNankai University of Tianjin. He is also the founder of theWoo Po Shing Medal in Law and the Woo Po Shing OverseasSummer School Travelling Scholarship, both at the Universityof Hong Kong, and the Woo Po Shing Professor (Chair) ofChinese and Comparative Law at City University.


81


Dr. FUNG Kwok-king, VictorBSc, MSc, PhD


Dr. Victor Fung was appointed as one of the Group’sindependent non-executive directors in May 1999.

Dr. Fung is Chairman of the Li & Fung Group and PrudentialAsia Investments Ltd., a non-executive director of PacificCentury CyberWorks Ltd., Hysan Development Company Ltd.,Kerry Properties Ltd., Orient Overseas (International) Ltd.,Dao Heng Bank Group Ltd., Bank of China (Hong Kong) Ltd.and DBS Kwong On Bank Ltd. and director of a number ofother companies. He was appointed by the Hong KongGovernment as Chairman of the Airport Authority in 1999and as Chairman of the Hong Kong University Council in 2001.From 1991 to September 2000, Dr. Fung was Chairman ofthe Hong Kong Trade Development Council. He holds aBachelor and a Master Degree from the Massachusetts Instituteof Technology, and a Doctorate from Harvard University.

KWAN Cheuk-yin, WilliamLLB


Mr. William Kwan was appointed as one of the Group’sindependent non-executive directors in July 1999.

As a Senior Partner with the Solicitors firm of Woo, Kwan,Lee & Lo, Mr. Kwan has 39 years of experience in legal practice.He is a former director and adviser and currently a votingmember of the Tung Wah Group of Hospitals, a past memberof the Stamp Advisory Committee, Vice Chairman of the HongKong Scout Foundation, Chairman of the Hong Kong Branchof the King’s College London Association, President of theHong Kong Philatelic Society, Vice Chairman of the Federationof Inter-Asia Philately, a permanent advisor of Wah Yan (HongKong) Past Students Association and an honorary legal advisorto the Hong Kong Society for Reproductive Society.

Mr. Kwan was Commissioner General and Vice Chairman ofthe Organizing Committees of the Hong Kong ’94, ’97 and2001 Stamp Exhibitions. He served on the Hong Kong GolfClub General Committee on several occasions in variouscapacities. He graduated from King’s College, LondonUniversity and is a fellow of both King’s College and the Instituteof Arbitrators.

LO Chiu-chun, Clement


Mr. Lo was an executive director of the Company andCompany Secretary of the Group for 28 years before heresigned from both positions in early 1998. Mr. Lo has beenin the property development industry since 1960s.

LAW King-wan


Mr. Law was an executive director of the Company. He headedthe Sales Department of the Group for 32 years before heretired at end of September 2001. He is a member of theStanding Committee of the Guangdong Provincial Committeeof the Chinese People’s Political Consultative Conference, astanding committee member of the Chinese General Chamberof Commerce, Founding President of the Hong Kong Instituteof Real Estate Administration and President of the Shun TakFraternal Association.

CHAN Kai-mingCEng, FIStructE, MICE

Executive Director (Age: 69)

Mr. Chan has been an executive director since 1981. Mr. Chanalso served as an appointed member of the District Board ofShatin for three years from 1985.

CHAN Kui-yuen, ThomasB Comm


Mr. Chan graduated from the United College, The ChineseUniversity of Hong Kong. He joined the Group in 1973 and isnow responsible for land acquisitions and project planningmatters as well as all of the Group’s projects in China. Mr.Chan is also an executive director of SUNeVision HoldingsLimited.


82


KWONG Chun


Mr. Kwong graduated from the Zhong Nan Finance &Economics College of Wuhan in China. He worked for theGuangzhou office of the People’s Bank of China before comingto Hong Kong in 1962 to work for Eternal Enterprises Ltd.He was transferred to Sun Hung Kai Enterprises Ltd. in 1963.In 1972, Sun Hung Kai Properties Ltd. became a listed companyand he has worked for it ever since. He was appointed anexecutive director in 1992.

WONG Yick-kam, MichaelBBA, MBA


Mr. Wong has been with the Group for 20 years. He obtainedhis Bachelor’s and Master’s degrees in Business Administrationfrom The Chinese University of Hong Kong. He was appointedan executive director in 1996 and is currently responsible forthe Group’s strategic and corporate planning, infrastructureprojects, financial investments, and relations with the investmentcommunity. Mr. Wong is also an executive directorof SUNeVision Holdings Limited and a non-executivedirector of RoadShow Holdings Limited and SmarToneTelecommunications Holdings Limited.

WONG Chik-wing, MikeFHKIS, Registered Professional Surveyor (BS)


Mr. Wong graduated from the Hong Kong Polytechnic withdistinction. He is a Fellow of the Hong Kong Institute ofSurveyors and a Registered Professional Surveyor. He joinedthe Group in 1981 and is currently responsible for projectmanagement matters of the Group’s development projects.


83


Chairman & Chief ExecutiveWalter P.S. Kwok

(1)

Vice Chairman & Managing Director

Raymond P.L. Kwok

Organization Chart and Senior Executives

Vice Chairman & Managing Director

Thomas P.K. Kwok

Project Management

Executive DirectorMike C.W. Wong

(3)

Special Projects(5)

Mechanical &Electrical

Installation(6a)

Valuation(8)

Architectural &Engineering

Executive DirectorK. M. Chan

(2)

Leasing(10)

Kowloon StationProject Office

(4)

Construction(6)

ProjectMonitoring

(7)

Hotel (9)

Sales (12)

Project PlanningExecutive DirectorThomas K.Y. Chan

(11)

China(13)

Building Management

Executive DirectorKwong Chun

(14)

StrategicDevelopment

(17)

TransportInfrastructureManagement

(19)

FinancialServices

(21)

EstateManagement

(23)

CompanySecretarial &

Legal(25)

Accounts(27)

Corporate Planning &

InvestmentsExecutive DirectorMichael Y.K. Wong

(15)

BusinessDevelopment

(16)

SUNeVision(18)

LogisticsServices

(20)

Insurance(22)

CorporateFinance

(24)

Internal Affairs(26)

Internal Audit(28)


84


(1) EXECUTIVE COMMITTEE

Kwok Ping-sheung, WalterMSc(Lond), DIC, MICE, JP

Chairman and Chief Executive

Kwok Ping-kwong, ThomasMSc(Bus Adm), BSc(Eng), FCPA, JP

Vice Chairman and Managing Director

Kwok Ping-luen, RaymondMA(Cantab), MBA, Hon DBA

Vice Chairman and Managing Director

Chan Kai-mingCEng, FIStructE, MICE

Executive Director (Architectural &Engineering)

Chan Kui-yuen, ThomasB Comm

Executive Director (Project Planning)

Kwong ChunExecutive Director (Building Management)

Wong Yick-kam, MichaelBBA, MBA

Executive Director (Corporate Planning &Investments)

Wong Chik-wing, MikeFHKIS, RPS (BS)

Authorized PersonExecutive Director (Project Management)

(1a) MANAGEMENTCONSULTANT

Yung Wing-chung

Leung Kui-king, DonaldBSc

(1b) CHAIRMAN’S OFFICE

So Sing-tak, AndrewBA, MBA

(2) ARCHITECTURAL ANDENGINEERING


Executive Director

Sitt Nam-hoiBA(Hons), BArch(Distinction), HKIA

Registered ArchitectAuthorized PersonChief Architect

Yu Chung-yeungCEng, FIStructE, FHKIE, MICE, RSE, RPE

Principal Engineer

Li Kwong-hingBSc(Eng), MSc, DIC, CEng, MIMechE, MCIBSE, MHKIE

Chief Building Services Engineer

Ng Tze-kwan, JeffBArch, MAIBC, MRAIC, HKIA

Registered ArchitectAuthorized PersonDeputy Chief Architect

Yau Hin-chung, WilliamBA(AS)

Deputy Manager

Ng Chuek-tingBSc(Eng)

Senior Structural Engineer

Li Chun-kouBSc(Eng)


Choi Siu-chuenMHKIE

Deputy Chief Building Services Engineer

Leung Yuen-dick, DickBA(AS), BArch, MA Arbitration, HKIA

Registered ArchitectAuthorized PersonSenior Architect

Lau Kay-shuiMSc, CEng, MIStructE, MHKIE, RPE, RSE


Chiu Wai-kuen, StephenBSc(Eng)


Chiu Tai-shing, JosephBASc


Li Ka-wingAssistant Manager

(3) PROJECT MANAGEMENT

Wong Chik-wing, MikeFHKIS, RPS(BS)

Authorized PersonExecutive Director

Tung Chi-ho, EricBA(AS)Hons, BArch, RIBA, HKIA

Registered ArchitectAuthorized PersonManager

Tam Tin-fong, MartinBArch, RIBA, FHKIA

Registered ArchitectAuthorized PersonManager

Au Yeung Shiu-keungBSc(Eng), CEng, FHKIE, FCIBSE, FIEE, FIEAust

Manager

Lam Kin-ningBArch, BA(AS)Hons, MSc(Urban Planning), HKIA

Authorized PersonDeputy Manager

Au Ho-cheung, DavidBSc(Arch), MArch, HKIA

Registered ArchitectAuthorized PersonDeputy Manager

Chu Kwok-kit, RingoBA(AS), BArch, RIBA, HKIA, ARAIA


Lu Chee-yuen, SpencerBEng, MEng, CEng, MIStructE, MHKIE, RPE


Wong Kim-wing, BallBA(AS), BArch, HKIA


Tung Siu-lunBSc(Eng), CEng, MIEE

Deputy Manager

Ng Chak-kin, ClarenceBA(AS), BArch, RIBA, HKIA, ARAIA

Registered ArchitectAuthorized PersonAssistant Manager

Woo Yan-fan, StellaBA(AS), MArch, MBA, HKIA


Chiu Hon-hang, ElvinBES, BEDS, BArch, RIBA, HKIA, ARAIA


Chan Hong-ki, RobertBSc, MRICS, AHKIS, RPS(BS)

Authorized PersonAssistant Manager

Chui Ching-sai, AlexBSc, MBA

Assistant Manager

Ip Pui-tung, PaulBA(AS), BArch, HKIA, RIBA


Cheung Chin-hungBEng(Hons), CEng, MHKIE, MICE, MGSHK, EUR.ING,RPE

Assistant Manager


85


(4) KOWLOON STATIONPROJECT OFFICE


Executive Director &Consultant



Sitt Nam-hoiBA(Hons), BArch(Distinction), HKIA

Registered ArchitectAuthorized PersonProject Director

Chu Kwok-kit, RingoBA(AS), BArch, RIBA, HKIA, ARAIA

Registered ArchitectAuthorized PersonDeputy Project Director

Cheung Kai-wah, GabrielMConstMgt, FHKIS, FRICS, FCIOB, MCIArb,MACostE, MHKICM, RPS(QS)

Senior Project Manager(Quantity Surveying)

Lau Man-kwan, JuliaBArch, HKIA

Registered ArchitectAuthorized PersonProject Manager (Architectural)

(5) SPECIAL PROJECTS

Chu Chung-kai, SamsonBSc(Hons), MRICS, AHKIS

Manager

Pih Kam-shen, PhilipMHKIE, MASHRAE, MRSES, MHIREA, RPE

Deputy Manager (Building Services &Maintenance)

Chiu Ching-shi, IrisB Comm

Deputy Manager(Leasing & Management)

Lau Lai-ching, EllijahDip.BS(Mktg), MHIREA, MCIH, MHKIH

Deputy Manager(Leasing & Management)

(6) CONSTRUCTION



Chien Chung-kwong, PhilipBSc, MEng

Consultant

Kwok Leung Kit-kan, IngridMSc(Bus Adm), BSc(Hons), CEng, MBCS, MHKIE

Manager

Tsoi Siu-ho, RobertBSc, MSc, FHKSA, ACMA, ARCS, DIC

Manager (Central Function)

Lee Bing-shuManager (Central Function)

Mo Kon-fei, KennethMSc(Eng), MBA, CEng, MHKIE, MICE, RSE

Authorized PersonDeputy Manager(Construction Management)

Lu Chee-yuen, SpencerBEng, MEng, CEng, MIStructE, MHKIE, RPE

Authorized PersonDeputy Manager(Construction Management)

Chan Hon-yeeACMA, AHKSA

Deputy Manager(Construction Management)

Tsoi Yuk-man, DesmondMA, FCIArb, MRICS, AHKIS, MCIOB


Hui Lin-sing, RogerBSc(Eng), CEng, MICE, MIStructE, MHKIE, RSE, RPE


Wong Leung Kit-wah, LindaDeputy Manager (Purchasing)

Lam Fuk-wingBSc (Civil Eng)

Assistant Manager(Construction Management)

Lee Kwok-wa, ChrisAssistant Manager(Construction Management)

Cheung Kam-fanAssistant Manager(Construction Management)

Tse Kam-hon, SidneyAssistant Manager(Construction Management)

Ng Kwok-cheung, BarryBCSc (Hons)

Assistant Manager(Information Technology)

Lau Wai-keung, DennisARICS, AHKIS

Assistant Manager (Contract Subletting)

Chan Kin-wah, JonathanTechRICS

Assistant Manager (Contract Subletting)

Lai Wai-ching, PhoebeMSc, FCCA, AHKSA

Assistant Manager (Accounting)

Chan Ying-kuen, DavidAssistant Manager (Accounting)

Fung Siu-kei, CeciliaAssistant Manager (Accounting)

Chan Wai-leung, EricMRICS, AHKIS, AAIQS

Assistant Manager (Contracts)

Loo Wing-lam, WilliamDMS, MIFPO, MIAAI, MHKISA, MIMgt, MIIRSM, CPM

Assistant Manager (Safety and Security)

Lai Siu-ki, PeleMIHRM (HK)

Assistant Manager (Personnel &Administration)

Fung Chi-on, RickyAssistant Manager (Purchasing)

Mak Kwok-leungBSc, CEng, MIMechE, MHKIE, RPE

Assistant Manager (Plant & Machinery)

(6a) MECHANICAL &ELECTRICALINSTALLATION

Yu Yiu-wingManager

Sin Hung-faiAssistant Manager (Fire Services)

Ng Chung-mingAssistant Manager (Fire Services)

Chan Chor-tat, GilbertAssistant Manager (Fire Services)

Tam Ping-ipDMS, MIEEE

Assistant Manager (Electrical Services)

Pang Ki-kaiAIIM


Lam Chung-mo, MosesBEng(Hons), CEng, MIEE, MHKIE, RPE


(7) PROJECT MONITORING

Luk Wang-kwong, JohnBSc(Eng), LLB, MSc(Eng), MBA, PDCE, PhD, CEng,FICE, FIStructE, FHKIE, FCIArb

Project Advisor

Wong Wai-tungFHKIE, FCIOB, MCIArb, RPE

Deputy Manager

Tsang Wai-keung, SavioMBA, MCIOB, MCIArb, MASI

Assistant Manager


86


(8) VALUATION

Fung Chu-hee, AndrewMRICS, AHKIS, RPS

Chartered Valuation SurveyorManager

Siu Man-waiBSc(Hons), MRICS, AHKIS, RPS

Chartered Valuation SurveyorDeputy Manager

(9) HOTEL

a. Royal Garden HotelsInternational Corporation

Chow Yum-chong, FrancisFCCA, FHKSA

Vice President (Finance)

The Royal Garden

Chan Tin-yau, KevenCHSP

General Manager

Cheung Kin-man, RickyBMgt(Hons), B Comm, ASA

Financial Controller

b. New Town Management CompanyLimited

Wong Hoi-jen, RebeccaVice President (Operations & Planning)

Royal Park Hotel

Wong Hoi-jen, RebeccaGeneral Manager

Tang Cheuk-wai, WillyExecutive Assistant Manager (Marketing)

Tam Kam-ming, AndrewFinancial Controller

Royal Plaza Hotel

Wong Hoi-jen, RebeccaGeneral Manager

Kwok Kam-moon, SunnyExecutive Assistant Manager (Operation)

Lee Chi-keung, MarveyFinancial Controller

(10) LEASING

a. Chan Kai-mingCEng, FIStructE, MICE

Executive Director

Wu Po-ong, LawrenceBA(Hons)

Manager

Yeung Siu-mei, JoannaDeputy Manager

Lam Ka-keung, HenryBSc(Hons), MSc(Const & Real Est)

Assistant Manager

Wong, AnnAssistant Manager

b. Kwong Chun

c. Au Yeung Hau-cheong

d. Chu Chung-kai, SamsonBSc(Hons), MRICS, AHKIS

(11) PROJECT PLANNING


Executive Director

Au Shiu-tung, PatrickFRICS, FHKIS, RPS

Authorized PersonProject Planning Advisor

Chien Yuan-hwei, GeorgeBSc(Eng), MSc, DIC, CEng, PEng, FICE, MITE

Transportation Advisor

Roger NissimFRICS, FHKIS, RPS

Manager

Au Yeung Hau-cheongManager

Lui Wai-tat, AndyManager

Yiu Wai-ha, ConnieMRICS, AHKIS, RPS

Deputy Manager

Law Yee-wah, AliceBEc

Deputy Manager

Lam Kam-wing, StafenMCIM, MSc

Assistant Manager

(12) SALES

Chow Kwok-yin, EricManager

Yim Dao-kitDeputy Manager

Kong KitDeputy Manager

Lam Po-tung, JosephineBA

Deputy Manager

(13) CHINA


Executive Director

Kwong ChunExecutive Director

Tam Tin-fong, MartinBArch, RIBA, FHKIA

Registered ArchitectAuthorized PersonManager (Design and Construction)

Leung Yu-kai, DavidFCCA, FHKSA

Manager (Finance and Administration)

Lam Yuet-wah, JosephMBA, BBus, AHKSA, ASA

Deputy Manager

O Nam-yuenDeputy Manager

Chau Sai-yim, StephenDeputy Manager

Fok Yau-kitFCEA, DMS, MBIM

Assistant Manager

(14) BUILDING MANAGEMENT

Kwong ChunExecutive Director

Mok Chi-hungFCIH, FHKIH, MHIREA, RPHM

Manager

Kwong Ching-wai, AlkinBSc(Eng), PgDIT, MIStructE, MHKIE, RPE, RSE


Lam Chak-hin, IvanSSCE, Foreign Assoc. ASLA

Deputy Manager (Hong Chui)

Kwok Chan-faiMCIH, MHKIH, RPHM

Deputy Manager (Hong Yip)

Wong Kei-onBA, MHKIH, MCIH, RPHM

Assistant Manager (Hong Yip)

Chan Wah-kayB Comm

Assistant Manager (Personnel)

Lee Tze-leung, AdrianBBA, MBA, FCCA, AHKSA

Assistant Manager (Accounting)

Leung Nai-yin, ArthurBBus, FCCA, FHKSA, ACIB, AHKIB, CGA, CPA(Aust)

Assistant Manager (Internal Audit)


87


Ho Yun-kuen, JohnMRICS, AHKIS, PQS, F.PFM

Assistant Manager (Contracts)

Chau Chung-yiu, DominicMBA, MRICS, AHKIS

Assistant Manager (Technical)

Chan Cheng-san, SamB Comm

Assistant Manager (Nixon & Nicole)

Kwan Yu-kuen, RickyAssistant Manager (SHK Real EstateManagement)

(15) CORPORATE PLANNINGAND INVESTMENTS

Wong Yick-kam, MichaelBBA, MBA

Executive Director

Ma Sau-hon, ChrisBSc, MSc, MBA, DIC, MISE, FHKIE, FICE, RPE, CEng

Manager (Project)

Lau Mei-mui, MayManager (Corporate Communications)

Wong Pak-ho, LawrenceBEng, MBA, CEng, CDipAF, PEng(S’pore), MICE,FHKIE

Manager (Infrastructure)

Lau Shung-oi, SusannaBA, ACA

Manager (Corporate Planning)

Mak Nak-keungBSoc.Sc, MPhil

Deputy Manager (Economic Research)

Hong Pak-cheung, WilliamBSc

Deputy Manager

Chan How-kwan, IreneAssistant Manager

Ramsay, Robert GuyBA(Hons), PhD

Assistant Manager

Cheong Suk-ying, LindaBSoc.Sc, MBA

Assistant Manager

Tse Man-kuen, WinnieAssistant Manager

Poon Chun-wing, JohnnyBSoc.Sc, MBA, CFA, ACCA

Assistant Manager

Sung Lai-ha, LouisaBEc, MTax

Assistant Manager

(16) BUSINESS DEVELOPMENT

Lui Ting, VictorBBA

Manager (Property Investment)

Tsim Tak-po, PaulBSc(Hons), ACA, AHKSA

Manager (Business Development)

Chan Sau-yin, Anita TeresaMRICS, AHKIS, RPS

Deputy Manager (Property Investment)

Ng Kwok-keungBSc

Assistant Manager (Property Investment)

Ly Nhut-quang, PaulBSc, MBA, MAF

Assistant Manager (BusinessDevelopment)

(17) STRATEGICDEVELOPMENT

Chan Kai-lung, PatrickBEc(Hons), MEc

Manager

(18) SUNEVISION

SUNeVision Holdings Limited

Yen Shiao-hua, SheridanBSc(Eng)

Managing Director

(19) TRANSPORTINFRASTRUCTUREMANAGEMENT

Wilson Group

Paul A. SimpsonChief Executive Officer

Sham Yat-wah, SamuelDirector & General Manager

Luk Kam-hon, GaryGeneral ManagerRoute 3 (CPS) Company Limited &Tsing Ma Management Limited

Fong Ping, VincentGeneral ManagerChina Tollways Limited

Wu Tung-chai, PeterGeneral ManagerParking Systems Limited

Cheng Siu-hung, PaulGeneral ManagerAutotoll Limited

Wong Yuk-lan, Nancy Financial Controller

(20) LOGISTICS SERVICES

Yu Ngai-cheung, AlmonBBA

Chief Executive OfficerSun Hung Kai Super Logistics

Wong Pak-ho, LawrenceBEng, MBA, CEng, CDipAF, PEng(S’pore), MICE,FHKIE

Managing DirectorSHK Logistics – China

Leung Lai-chi, MichelleMMgt, MIHRM

DirectorSHK Super Logistics Management

Yiu Kwong-yick, ChristopherBA

Commercial DirectorSHK Logistics – China

Leung Yiu-wah, PhilipBSc(Hons), MBA, MRICS, AHKIS, RPS

General ManagerAirport Freight Forwarding Centre

Cheang lat-meng, SimonBBA

Chief Technology OfficerE-Supply Chain Management

Hui Chi-ming, RaymondBBus, MCIT

Chief Logistics OfficerE-Supply Chain Management

(21) FINANCIAL SERVICES

Au Mo-cheung, AlexManager

Chan Kwok-yan, VincentBA

Deputy Manager

Chung Wah-sang, WelsonMA, ACIS, MHKSI

Deputy Manager

Tam Kim-hung, JosephMBA, FCIS, ACIB

Deputy Manager

Chan Pang-chiAssistant Manager

(22) INSURANCE

Chow Ka-yinManager


88


Wong Kwai-chuen, AndrewBBA, ACII

Deputy Manager

Ng Man-tong, AnthonyACII, AIIC

Deputy Manager

Yim Ka-yan, AmyAAII

Deputy Manager

(23) ESTATE MANAGEMENT

Wong Chin-wah, JimmyBSc (Est Mgt) Cert Ed, MSISV, AHKIS, MAPFM,MHIREA, RPS

Manager

Chan Kam-faiMCIH

Deputy Manager

Lam Man-pak, PatrickBA(Hons), MCIH

Deputy Manager

Leung Chung-kong, JohnnyDeputy Manager

Lee Cheung-yiu, GordonBSc(Hons), MRICS, MCIOB, AHKIS, ACIArb

Deputy Manager

Mak Hung-cheung, JamesDeputy Manager

Fung Sau-yim, MaureenBSc(Hons)Est. Mgt., MHousMan(Distinction), MBA,FIIM, MHIREA

Deputy Manager

Sham Sik-shing, SimonBTech(Hons), MCIH

Assistant Manager

Chan Shing-waiDip.BA, MCIH

Assistant Manager

Hon Shuk-ching, IreneAssistant Manager

Shiu Wai-ching, TeresaAssistant Manager

Sham Wai-man, RaymondMHKIH, MCIH, MHIREA

Assistant Manager

(24) CORPORATE FINANCE

Au Man-toLLB, FCIS, ACIB

Manager

Kwok Yue-yee, AmyB Comm

Deputy Manager

Ho Ka-wai, JosephineMBA

Assistant Manager

(25) COMPANY SECRETARIALAND LEGAL

Lai Ho-kai, ErnestFCIS

Company Secretary

Tam Sai-ming, WilliamLLM, MSc, MBA, FCIS, MHKSI

Manager

Yung Sheung-tat, SandyBA(Law)Hons

Manager

Kwok Po-chi, HelenLLB(London)Hons

Legal Advisor

Tse Kar-lun, FrankieLLB(Hons)

Assistant Manager

Yeung Ming-yip, JasonLLB(Hons)

Assistant Manager

(26) INTERNAL AFFAIRS

Wu Tze-cheung, PhilipBA(Hons), FCCA, FHKSA, MIHRM (HK)

Manager

Ho Lick-tinDeputy Manager (Marketing of RetailLeasing)

Chan Choi-yin, ClaraMIHRM(HK)

Deputy Manager (Personnel)

Chan Suk-kuen, DoraBSc

Assistant Manager

Wong Ho-keung, JimmyAssistant Manager (Office Management)

Fung Yick-lam, CrisAssistant Manager (Corporate Affairs)

(27) ACCOUNTS

Pun Wing-mou, BernardFCA, FHKSA

Chief Accountant

Zhou Yimin, AndrewMBA, CMgr

Manager

Li Ching-kam, FrederickFCCA, AHKSA

Deputy Chief Accountant

Fok Yat-cheong, EdwardMSc(Eng)

Deputy Manager (EDP)

Lee Hung-chak, MauriceBBA(Hons), FCCA, AHKSA

Deputy Manager

Chow Cheuk-wing, EricFCCA, FHKSA

Senior Accountant

Ho Chi-hong, KurtMCIH, MIMBM

Assistant Manager

Ko Ping-yin, AlbertChief Cashier

Cheung Wai-wahBBA

Assistant Manager (EDP)

Yuen Chork, CharlesAssistant Manager

Leung Cheuk-ming, EricMSc

Assistant Manager (EDP)

(28) INTERNAL AUDIT

Chiu Yue-ming, DanielMAcc, FCCA, FHKSA, FCIS, ACMA, FCPA

Manager

Ho Kui-yuen, KennethBSoc.Sc, MBA, DTM

Deputy Manager (Training)

Wong Chung-wai, BarryBA(Hons), MBA, FCCA, AHKSA

Assistant Manager (Audit)

Hui Sui-tak, AndrewMBA, FCCA, AHKSA

Assistant Manager (Audit)

89


REPORT OF THE AUDITORS

TO THE SHAREHOLDERS OF SUN HUNG KAI PROPERTIES LIMITED

(incorporated in Hong Kong with limited liability)

We have audited the financial statements on pages 90 to 123 which have been prepared in accordance with accountingprinciples generally accepted in Hong Kong.

RESPECTIVE RESPONSIBILITIES OF DIRECTORS AND AUDITORS

The Companies Ordinance requires the directors to prepare financial statements which give a true and fair view. In preparingfinancial statements which give a true and fair view it is fundamental that appropriate accounting policies are selected and appliedconsistently.

It is our responsibility to form an independent opinion, based on our audit, on those statements and to report our opinionto 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 financial statements.It also includes an assessment of the significant estimates and judgments made by the directors in the preparation of the financialstatements, and of whether the accounting policies are appropriate to the Company’s and the Group’s circumstances, consistentlyapplied and adequately disclosed.

We planned and performed our audit so as to obtain all the information and explanations which we considered necessary inorder to provide us with sufficient evidence to give reasonable assurance as to whether the financial statements are free frommaterial misstatement. In forming our opinion we also evaluated the overall adequacy of the presentation of information in thefinancial statements. We believe that our audit provides a reasonable basis for our opinion.

OPINION

In our opinion the financial statements give a true and fair view of the state of affairs of the Company and the Group as at 30thJune, 2001 and of the profit and cash flows of the Group for the year then ended and have been properly prepared inaccordance with the Companies Ordinance.

Deloitte Touche Tohmatsu

Certified Public Accountants, Hong Kong

Hong Kong, 27th September, 2001

Certified Public Accountants26/F, Wing On Centre111 Connaught Road CentralHong Kong

90


CONSOLIDATED PROFIT AND LOSS ACCOUNT

For the year ended 30th June 2001 (Expressed in millions of Hong Kong dollars)

Note 2001 2000

Turnover 2 17,701 25,826Cost of sales (8,440) (15,990)

Gross profit 9,261 9,836Other revenue 547 42Selling and marketing expenses (366) (535)Administrative expenses (1,113) (1,003)

Profit from operations 2 8,329 8,340Finance cost (1,622) (1,709)Finance income 464 572Net finance cost 3 (1,158) (1,137)Profit on disposal of investments 445 1,236Profit on partial disposal of interest in a subsidiary - 2,688Share of profits less losses of associates 573 208Share of profits less losses of jointly controlled entities 1,009 170

Profit before taxation 4 9,198 11,505Taxation 7 (858) (696)

Profit after taxation 8,340 10,809Minority interests (10) 13

Profit attributable to shareholders 8 8,330 10,822Dividends 9 (3,722) (4,202)

Profit for the year retained 4,608 6,620

Profit for the year retained by:Company and subsidiaries 4,897 7,384Associates 138 (92)Jointly controlled entities (427) (672)

4,608 6,620

(Expressed in Hong Kong dollars)

Note 2001 2000

Earnings per share 10Basic $3.47 $4.51Diluted $3.47 N/A

91


CONSOLIDATED BALANCE SHEET

As at 30th June 2001 (Expressed in millions of Hong Kong dollars)

Note 2001 2000

Non-current assetsFixed assets 11 94,698 86,291Associates 13 5,043 4,592Jointly controlled entities 14 20,029 19,280Investments 15 2,192 1,992Loans receivable 1,522 1,844Land pending development 17,324 18,908

140,808 132,907

Current assetsStocks 16 25,334 22,972Trade and other receivables 17 3,340 3,417Marketable securities 18 399 1,111Bank balances and deposits 19 9,061 10,414

38,134 37,914

Current liabilitiesBank and other borrowings 20 (4,997) (4,584)Trade and other payables 21 (9,345) (9,884)Deposits received on sale of properties (8,013) (4,669)Taxation (2,574) (2,483)Proposed final dividend (2,401) (2,881)

(27,330) (24,501)

Net current assets 10,804 13,413

Total assets less current liabilities 151,612 146,320

Non-current liabilitiesBank and other borrowings 22 (23,995) (23,805)

Minority interests 23 (1,610) (1,611)

NET ASSETS 126,007 120,904

CAPITAL AND RESERVESShare capital 24 1,201 1,201Share premium and reserves 26 124,806 119,703

SHAREHOLDERS’ FUNDS 126,007 120,904

DirectorsWalter P.S. KwokRaymond P.L. Kwok

92


PARENT COMPANY BALANCE SHEET

As at 30th June 2001 (Expressed in millions of Hong Kong dollars)

Note 2001 2000

Non-current assetsSubsidiaries 12 30,076 30,079Jointly controlled entities 14 (64) (16)Investments 15 (3) (1)

30,009 30,062

Current assetsTrade and other receivables 17 240 284Amounts due from subsidiaries less provision 84,054 74,809

84,294 75,093

Current liabilitiesBank and other borrowings 20 (11) -Trade and other payables 21 (214) (213)Amounts due to subsidiaries (31,817) (26,898)Proposed final dividend (2,401) (2,881)

(34,443) (29,992)

Net current assets 49,851 45,101

NET ASSETS 79,860 75,163

CAPITAL AND RESERVESShare capital 24 1,201 1,201Share premium and reserves 26 78,659 73,962

SHAREHOLDERS’ FUNDS 79,860 75,163

DirectorsWalter P.S. KwokRaymond P.L. Kwok

93


CONSOLIDATED CASH FLOW STATEMENT


Note 2001 2000

Net cash inflow from operating activities 27a 12,183 4,421

Returns on investments and servicing of financeInterest received 518 575Interest paid (2,413) (1,830)Dividends received from listed investments 74 15Dividends received from unlisted investments 3 10Dividends received from associates and jointly controlled entities 369 1,046Dividends paid to shareholders (4,202) (3,842)Dividends paid to minority shareholders (48) (56)

Net cash outflow from returns on investments and servicing of finance (5,699) (4,082)

TaxationHong Kong profits tax paid (650) (1,398)

Investing activitiesPurchase of subsidiaries 27b (58) (41)Purchase of additional interest in subsidiaries (80) (113)Purchase of associates (147) (52)Purchase of jointly controlled entities (19) (120)Purchase of investments (1,019) (1,448)Advances to associates, jointly controlled entities and investee companies (221) (2,093)Acquisition of land pending development (1,844) (5,719)Additions to fixed assets (5,839) (813)Proceeds from disposal of investment properties 361 179Net proceeds from partial disposal of interest in a subsidiary - 3,382Proceeds from disposal of jointly controlled entities - 19Proceeds from disposal of investments 1,303 2,038Proceeds from disposal of other fixed assets 10 27Proceeds from disposal of land pending development - 52Loans and advances repaid 375 549

Net cash outflow from investing activities (7,178) (4,153)

Net cash outflow before financing (1,344) (5,212)

FinancingBank borrowings 12,205 12,455Other borrowings 2,050 1,438Repayment of bank and other borrowings (14,109) (6,543)Capital injection by minority shareholders of a subsidiary 7 -Fundings from/(to) minority shareholders (155) 23

Net cash inflow/(outflow) from financing 27c (2) 7,373

Increase/(decrease) in cash and cash equivalents (1,346) 2,161Cash and cash equivalents at beginning of year 10,354 8,193

Cash and cash equivalents at end of year 27d 9,008 10,354

94


CONSOLIDATED STATEMENT OF RECOGNIZED GAINS AND LOSSES


Note 2001 2000

Increase in property valuation arising during the year 26 805 7,933

Exchange differences on translation of the financial statements of foreign entities 26 11 5

Net gains not recognized in the consolidatedprofit and loss account 816 7,938

Profit attributable to shareholders for the year 8,330 10,822

Realized surplus on disposal of investment properties transferred to operating profits 26 (278) (172)

Total recognized gains and losses 8,868 18,588

Net goodwill arising on consolidation 26 (43) (95)

8,825 18,493

95


1. PRINCIPAL ACCOUNTING POLICIES

a. Basis of Preparation

The financial statements have been prepared in accordance with all applicable Statements of Standard Accounting Practiceand Interpretations issued by the Hong Kong Society of Accountants, generally accepted accounting principles in HongKong and the requirements of the Hong Kong Companies Ordinance. The financial statements are prepared under thehistorical cost convention as modified for the revaluation of certain properties and investments in securities.

b. Basis of Consolidation

The consolidated financial statements of the Group incorporate the financial statements of the Company and all itssubsidiaries made up to 30th June each year and include the Group’s interests in associates and jointly controlled entitieson the basis set out in note 1(f) and note 1(g) below respectively. The financial statements of the associates and jointlycontrolled entities used for this purpose are either co-terminus with the financial statements of the Company or cover ayear ended not more than six months before the Company’s year-end. The results of subsidiaries, associates and jointlycontrolled entities acquired or disposed of during the year are included in the consolidated profit and loss account fromthe effective dates of acquisition or to the effective dates of disposal. All material intra-group transactions and balances areeliminated on consolidation.

Goodwill or capital reserve arising on acquisition of a subsidiary, an associate or a jointly controlled entity, representing theexcess or shortfall of the value of purchase consideration paid over the Group’s share of the fair value ascribed toseparable net assets of the subsidiary, associate or jointly controlled entity acquired at the date of acquisition, is eliminatedagainst or credited to reserves immediately on acquisition. Upon disposal of a subsidiary, an associate or a jointly controlledentity, the attributable amount of goodwill or capital reserve previously taken to reserves is transferred to profit and lossaccount in calculating the profit or loss on disposal.

Minority interests in the consolidated profit and loss account and balance sheet represents the interests of third partiesoutside the Group in the results and net assets of subsidiaries.

c. Turnover

Turnover derived from the Group’s principal activities comprises proceeds from sale of properties (excluding proceeds ondevelopment properties sold prior to their completion which are included in deposits received on sale of properties undercurrent liabilities), gross rental income from properties letting under operating leases, income from property management,revenue from hotel operation and revenue derived from other business activities including car parking and transportinfrastructure management, logistics business, construction, financial services, insurance, stock broking and IT infrastructureand e-commerce businesses. It does not include the turnover of associates and jointly controlled entities.

d. Revenue Recognition

Revenue of a transaction is recognized when it is probable that the economic benefits associated with the transaction willflow to the Group which will result in increases in equity and these benefits can be measured reliably, on the following basis:

NOTES TO THE FINANCIAL STATEMENTS

96



1. PRINCIPAL ACCOUNTING POLICIES (Continued)

d. Revenue Recognition (Continued)

(i) Property sales

Revenue and profit from sale of completed properties is recognized upon execution of the sale agreements.

When a development property is sold in advance of completion, revenue and profit is only recognized upon completionof the development. Deposits and instalments received from purchasers prior to this stage are included in currentliabilities.

Where properties are sold under deferred terms with part of the sales proceeds being receivable after an interest-freeperiod, that portions of the differences between the sale prices with and without such terms representing financeincome are allocated to the profit and loss account on a basis that takes into account the effective yields on theamounts of the sales proceeds receivable over the interest-free period.

(ii) Rental income

Rental income from properties letting under operating leases is recognized on straight line basis over the lease terms.

(iii) Hotel operation

Revenue from hotel operation is recognized upon provision of services.

(iv) Interest income

Interest income is accrued on a time proportion basis that takes into account the effective yields on the carryingamount of assets.

(v) Construction

Revenue in respect of building construction job is recognized on the percentage of completion method measured byreference to the proportion that costs incurred to date bear to estimated total costs for the contract.

(vi) Investment income

Income from securities and other investments is recognized when the right to receive payment is established.

(vii) Use of internet services centre facilities

Revenue from customer use of internet services centre facilities is recognized ratably over the term of the agreement.

(viii) Other income

Property management service fee, car parking management fee, insurance income and stock brokerage are recognizedwhen the services are rendered.

e. Subsidiaries

A subsidiary is a company in which the Group, directly or indirectly, holds more than half of the issued share capital, orcontrols more than half of the voting power, or controls the composition of the board of directors. Investments insubsidiaries are carried in the balance sheet of the Company at cost less provision for impairment in value.

97




f. Associates

Associates are those in which the Group is in a position to exercise significant influence, but not control or joint control,over the management, including participation in the financial and operating policy decisions.

Results of associates are incorporated in the consolidated profit and loss account to the extent of the Group’s share ofpost-acquisition profits less losses whereas accounted for in the profit and loss account of the Company only to the extentof dividend income.

Interests in associates are accounted for in the consolidated balance sheet under the equity method and are initiallyrecorded at cost and adjusted for goodwill arising on consolidation at date of acquisition and thereafter for post acquisitionchange in the Group’s share of their net assets whereas in the balance sheet of the Company are stated at cost lessprovision for impairment in value.

g. Joint Ventures

A joint venture is a contractual arrangement whereby the Group and other parties undertake an economic activity whichis subject to joint control and over which none of the parties has unilateral control.

(i) Jointly controlled entities

Jointly controlled entities involve the establishment of a separate entity in which the Group has a long term interest andover which the Group is in a position to exercise joint control with other venturers in accordance with contractualarrangements.

Results of jointly controlled entities are incorporated in the consolidated profit and loss account to the extent of theGroup’s share of post-acquisition profits less losses whereas accounted for in the profit and loss account of theCompany only to the extent of dividend income.

Interests in jointly controlled entities are accounted for in the consolidated balance sheet under the equity method andare initially recorded at cost and adjusted for goodwill arising on consolidation at date of acquisition and thereafter forpost acquisition change in the Group’s share of their net assets whereas in the balance sheet of the Company arestated at cost less provision for impairment in value.

(ii) Jointly controlled assets

Jointly controlled assets are assets of a joint venture over which the Group has joint control with other venturers inaccordance with contractual arrangements and through the joint control of which the Group has control over its shareof future economic benefits earned from the assets.

The Group’s share of jointly controlled assets and any liabilities incurred jointly with other venturers are recognized inthe balance sheets and classified according to their nature. Liabilities and expenses incurred directly in respect of itsinterests in jointly controlled assets are accounted for on an accrual basis. Income from the sale or use of the Group’sshare of the output of the jointly controlled assets, together with its share of any expenses incurred by the jointventures, are recognized in the profit and loss account when it is probable that the economic benefits associated withthe transactions will flow to or from the Group.

98




h. Investments in Securities

(i) Investments

Investments in debt and equity securities held for an identified long-term or strategic purpose are stated at cost lessprovision for impairment in value. Results of investments are accounted for to the extent of dividend and interestincome.

Investments in debt securities which are intended to be held to maturity are measured at amortized cost, less anyimpairment losses recognized, if necessary, in the balance sheet. The amortization of any discount or premium arisingon acquisition is aggregated with other investment income receivable over the period from the date of acquisition tothe date of maturity so as to give a constant yield on the investment.

(ii) Marketable securities

Marketable securities, which are that part of liquid assets temporarily invested in debt and equity securities, are statedat fair value, with unrealized gains and losses included in net profit or loss for the year.

i. Properties

(i) Land pending development

Land pending development, which is stated at cost less provision for impairment in value made by the directors,embraces all land acquired pending any definite intention whether to develop it for long term retention or for sale.When the intention is clear and action initiated, land to be developed for long term retention is reclassified as fixedassets whereas land to be developed for sale and expected to be realized in the normal course of the Group’sproperty development cycle is reclassified as stocks under current assets.

(ii) Investment properties

Investment properties are completed properties which are income producing and held for their investment potentialon a long term basis. Investment properties are included in fixed assets at open market value on the basis of an annualprofessional valuation related to properties on the basis that increases in valuations are credited to the investmentproperty revaluation reserve and decreases in valuations are first set off against increases on earlier valuations on aportfolio basis and thereafter charged to operating profit. Upon disposal of an investment property, the revaluationsurplus/deficit realized is transferred to operating profit in calculating the profit or loss on disposal.

(iii) Hotel properties

Hotel properties and their integral fixed plant used in the operation of hotel are included in fixed assets at open marketvalue on the basis of an annual professional valuation related to individual hotel properties.

(iv) Properties under development

Properties under development for long term retention are classified under fixed assets and are stated at cost lessprovision for impairment in value. These properties are reclassified as investment properties or other properties as thecase may be upon completion of the development.

Properties under development for sale are included in stocks at the lower of cost and net realizable value. Netrealizable value takes into account the price ultimately expected to be realized and the anticipated costs to completion.

Cost of property in the course of development comprises land cost and development costs during the developmentperiod.

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i. Properties (Continued)

(v) Stocks of completed properties

Completed properties remaining unsold at year end are stated at the lower of cost and net realizable value.

Cost is determined by apportionment of the total land and development costs attributable to the unsold properties.

Net realizable value is determined by reference to sale proceeds of properties sold in the ordinary course of businessless all estimated selling expenses after the balance sheet date, or by management estimates based on prevailingmarket conditions.

(vi) Other properties

Other properties are properties held for production or administrative purposes and are included in fixed assets at costless accumulated depreciation.

j. Depreciation

(i) Investment properties

No depreciation is provided on investment property except where the unexpired term of the lease of the investmentproperty is 20 years or less, in which case the then carrying amount is amortized on a straight line basis over theremaining unexpired term of the lease.

(ii) Hotel properties

No depreciation is provided on hotel property or on its integral fixed plant. It is the Group’s policy to maintain theseassets in a continual state of sound repair and maintenance and to extend and make improvements thereto from timeto time, and accordingly the directors consider that given the estimated lives of these assets and their high residualvalues, any depreciation would be insignificant. The related repair and maintenance expenditure is charged to the profitand loss account in the year in which they are incurred. The costs of significant improvements are capitalized.

(iii) Properties under development

No depreciation is provided on properties under development.

(iv) Other properties

The cost of leasehold land and construction cost of buildings thereon are depreciated on a straight line basis over theterm of the lease.

(v) Other fixed assets

Other fixed assets including equipment, furniture, fixtures and vehicles are stated at cost less depreciation calculated ona straight line method to write off the assets over their estimated useful lives at rates ranging from 10 per cent to33.3 per cent per annum.

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k. Capitalization of Borrowing Costs

Borrowing costs are expensed as incurred, except to the extent that they are capitalized as being directly attributable tothe construction or production of assets which necessarily take a substantial period of time to get ready for their intendeduse or sale. Capitalization of such borrowing costs begins when construction or production activities commence andceases when the assets are substantially ready for their intended use or sale.

l. Materials

Materials comprising mainly building materials and hotel stocks are valued at cost, calculated on a weighted average costbasis, less provisions, if any.

m. Translation of Foreign Currencies

Foreign currency transactions during the year are converted into Hong Kong dollars at the market rates of exchange rulingat the transaction dates. Monetary assets and liabilities denominated in foreign currencies and financial statements ofoverseas subsidiaries, associates and jointly controlled entities expressed in foreign currencies are translated into HongKong dollars at the market rates of exchange ruling at the date of the balance sheet. Exchange differences arising from thetranslation of the financial statements of overseas subsidiaries, associates and jointly controlled entities are taken directly toreserves. All other exchange differences are dealt with in the profit and loss account.

n. Deferred Taxation

Deferred taxation is provided, using the liability method, on all material timing differences other than those which are notexpected to crystallize in the foreseeable future. Deferred tax asset is not recognized unless its realization is certain.

o. Financial Instruments and Derivatives

Interest rate and currency swaps are used to manage the Group’s exposure to interest rate and foreign exchange ratefluctuation. It is the Group’s policy not to enter into derivative transactions for speculative purposes. The notional amountsof interest rate and currency swaps are recorded off balance sheet. Interest flows arising on the interest rate swaps areaccounted for on an accrual basis.

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2. TURNOVER AND PROFIT FROM OPERATIONSThe Group’s turnover and contribution to profit from operations before finance cost by principal activities are analyzed asfollows:

Profit from operationsTurnover before finance cost

2001 2000 2001 2000

Property sales 8,218 16,957 3,625 4,078Rental income 5,392 5,292 4,073 4,059Property management 860 817 252 234Hotel operation 590 542 195 150Other business activities 2,641 2,218 122 263

17,701 25,826 8,267 8,784

Other revenue 547 42Unallocated administrative expenses (485) (486)

Profit from operations 8,329 8,340

Other business activities comprise revenue and profit derived from other activities including car parking and transportinfrastructure management, logistics business, construction financial services, insurance, stock broking, IT infrastructure ande-commerce businesses.

Turnover and contribution to profit from operations outside Hong Kong are insignificant.

3. NET FINANCE COST2001 2000

Interest expense onBank loans and overdrafts 1,551 1,077Other loans wholly repayable within 5 years 568 691Other loans wholly repayable after 5 years 96 55

2,215 1,823Less: Portion capitalized (593) (114)

1,622 1,709Interest income on bank deposits (464) (572)

1,158 1,137

Interest is capitalized at an average annual rate of approximately 6.3 per cent (2000: 6.9 per cent).

(Expressed in millions of Hong Kong dollars)

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4. PROFIT BEFORE TAXATION2001 2000

Profit before taxation is arrived at

after charging:Cost of properties sold 4,119 12,000Depreciation 223 242Staff costs (including the directors’ emoluments and

retirement schemes contributions) 1,865 1,607Auditors’ remuneration 7 6

and crediting:Dividend income from: listed investments 74 15

unlisted investments 3 10Interest income from: listed investments 11 14Profit on disposal of marketable securities 104 14Net holding gain on marketable securities 42 155

5. DIRECTORS’ EMOLUMENTS AND FIVE HIGHEST PAID INDIVIDUALS2001 2000

Directors’ emoluments: -Fees 1 1Salaries, allowances and benefits in kind 17 16Bonuses 28 11Provident fund contributions 1 1

47 29

Fees paid to independent non-executive directors amounted to HK$200,000 (2000: HK$250,000). They receivedHK$700,000 (2000: nil) as other emoluments.

Number of directors whose emoluments fell within: -

2001 2000Emoluments Band Number Number

HK$M HK$M0 - 1.0 8 7

1.5 - 2.0 4 43.5 - 4.0 - 14.0 - 4.5 2 -4.5 - 5.0 1 -5.0 - 5.5 - 26.5 - 7.0 - 1

25.5 - 26.0 1 -

16 15

The above analysis included two (2000: four) individuals whose emoluments were among the five highest in the Group.Details of the emoluments paid to the other three (2000: one) individuals are:

2001 2000

Salaries, allowances and benefits in kind 10 9Bonuses 10 1

20 10

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5. DIRECTORS’ EMOLUMENTS AND FIVE HIGHEST PAID INDIVIDUALS (Continued)Number of employees whose emoluments fell within: -

2001 2000Emoluments Band Number Number

HK$M HK$M5.0 - 5.5 1 -6.0 - 6.5 1 -8.0 - 8.5 1 -9.5 - 10.0 - 1

3 1

6. STAFF RETIREMENT SCHEMESThe Group operates a number of defined contribution schemes for all qualified employees. The assets of these schemesare held separately from those of the Group in independently administered funds. Contributions to these schemes aremade by both the employers and employees at rates ranging from 5 per cent to 10 per cent on the employees’ salary.

With effect from 1st December 2000, the Group sets up an employer sponsored scheme (“MPF Scheme”) for otheremployees. The MPF Scheme is registered with the Mandatory Provident Fund Schemes Authority under the MandatoryProvident Fund Schemes Ordinance. The assets of the MPF Scheme are held separately from those of the Group inindependently administered funds. Pursuant to the rules of the MPF Scheme, the Group and its employees are eachrequired to make contributions to the scheme at specific rates. Contributions of the Group to the MPF Scheme arecharged to profit and loss account as incurred.

Total contributions to the retirement schemes made by the Group during the year amounted to HK$91 million (2000:HK$60 million). Forfeited contributions for the year of HK$9 million (2000: HK$13 million) were used to reduce theexisting level of contributions.

7. TAXATION2001 2000

Hong KongCompany and subsidiaries 722 609Under/(over) provision in prior year 19 (9)

741 600Associates 59 52Jointly controlled entities 58 28

858 680Outside Hong Kong

Jointly controlled entities - 16

858 696

(a) Hong Kong profits tax is provided at the rate of 16 per cent (2000: 16 per cent) based on the estimated assessableprofits for the year. Tax outside Hong Kong is calculated at rate applicable in the relevant jurisdiction.

(b) No provision for deferred taxation has been made as the aggregate effect of all timing differences is insignificant.

8. PROFIT ATTRIBUTABLE TO SHAREHOLDERSProfit attributable to shareholders dealt with in the profit and loss account of the Company amounts to HK$8,419 million(2000: HK$8,292 million).


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9. DIVIDENDS2001 2000

Interim dividend of HK$0.55 per share based on 2,401 million shares(2000: HK$0.55 per share based on 2,401 million shares) paid 1,321 1,321

Proposed final dividend of HK$1.00 per share based on 2,401 million shares(2000: HK$1.20 per share based on 2,401 million shares) 2,401 2,881

3,722 4,202

10. EARNINGS PER SHAREThe calculation of basic earnings per share is based on HK$8,330 million (2000: HK$10,822 million) being profit attributableto shareholders and on 2,400,907,362 shares (2000: 2,400,907,362 shares) in issue during the year.

The calculation of diluted earnings per share for the year is based on HK$8,330 million being profit attributable to shareholdersand on the weighted average number of 2,400,935,185 shares after adjusting for the dilutive effects of all potential ordinaryshares. No diluted earnings per share is presented for the year ended 30th June 2000 as the exercise of the share optionsoutstanding during that year have no dilutive effect on the earnings per share.

2001 2000

Number of ordinary shares used in calculating basicearnings per share 2,400,907,362 2,400,907,362

Number of ordinary shares deemed to be issued fornominal consideration for share options 27,823 -

Weighted average number of shares used in calculatingdiluted earnings per share 2,400,935,185 2,400,907,362

11. FIXED ASSETSProperties

Investment Hotel under Other OtherThe Group properties properties development properties fixed assets Total

(a) Movement during yearCost or valuationAt beginning of year 77,611 3,950 2,120 1,884 1,513 87,078Additions 1,306 27 5,641 - 566 7,540Transfer in 424 - 137 664 22 1,247Disposals (350) - - - (54) (404)Transfer out (47) - (358) - (306) (711)Revaluation surplus 684 233 - - - 917

At end of year 79,628 4,210 7,540 2,548 1,741 95,667

Accumulated depreciationAt beginning of year - - - 175 612 787Charge for the year - - - 68 155 223Transfer in - - - 46 - 46Disposals - - - - (41) (41)Transfer out - - - - (46) (46)

At end of year - - - 289 680 969

Net book value at30/6/2001 79,628 4,210 7,540 2,259 1,061 94,698

Net book value at30/6/2000 77,611 3,950 2,120 1,709 901 86,291


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11. FIXED ASSETS (Continued)Properties

Investment Hotel under Other OtherThe Group properties properties development properties fixed assets Total

(b) Basis of book value2001 professional valuation 79,628 4,210 - - - 83,838Cost - - 7,540 2,548 1,741 11,829

79,628 4,210 7,540 2,548 1,741 95,667

(c) Net book value of properties shown above comprises:2001 2000

Land in Hong Kong held underLong Lease (not less than 50 years)

Investment properties 18,363 18,752Hotel properties 1,400 1,250Properties under development - 283Other properties 541 178

20,304 20,463

Medium-term lease (less than 50 years but not less than 10 years)Investment properties 59,409 58,173Hotel properties 2,810 2,700Properties under development 7,448 1,736Other properties 1,718 1,531

71,385 64,140

Land outside Hong Kong held underLong Lease (not less than 50 years)

Investment properties 686 686Properties under development 92 101

778 787

Medium-term lease (less than 50 years but not less than 10 years)Investment properties 1,170 -

1,170 -

93,637 85,390

(d) Investment properties and hotel properties revaluation

The Group’s investment properties and hotel properties have been revalued as at 30th June, 2001 by Messrs. Knight Frank,Chartered Surveyors on an open market value basis in their existing state by reference to comparable market transactionsand where appropriate on the basis of capitalization of the net income allowing for reversionary income potential.

(e) Gross rental receivable from and profit on disposal of the Group’s investment properties during the year amounted toHK$5,008 million (2000: HK$4,920 million) and HK$289 million (2000: HK$113 million) respectively.

(f) The carrying amount of properties under development as at 30th June 2001 included interest capitalized in theamount of HK$707 million (2000: HK$415 million).

12. SUBSIDIARIES

The Company

2001 2000

Unlisted shares, at cost 30,076 30,079

Particulars regarding principal subsidiaries are set out on pages 116 to 120.


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13. ASSOCIATES

The Group

2001 2000

Unlisted shares, at cost 156 169Hong Kong listed shares, at cost 806 680Share of post-acquisition reserves 2,041 1,905

3,003 2,754Goodwill on acquisition of associates eliminated (149) (113)

Share of net assets 2,854 2,641Amounts due from associates 2,221 1,974Amounts due to associates (32) (23)

5,043 4,592

Market value of Hong Kong listed shares 4,887 4,951

Particulars regarding principal associates are set out on page 123.

14. JOINTLY CONTROLLED ENTITIES2001 2000

The Group The Company The Group The Company

Unlisted shares, at cost 1,072 4 1,156 4Share of post-acquisition reserves 1,997 - 2,509 -

3,069 4 3,665 4Goodwill on acquisition of jointly controlled

entities eliminated (91) (91)

Share of net assets 2,978 3,574Amounts due from jointly controlled entities 17,798 1 15,992 1Amounts due to jointly controlled entities (747) (69) (286) (21)

20,029 (64) 19,280 (16)

Particulars regarding principal jointly controlled entities are set out on pages 121 to 122.

15. INVESTMENTS2001 2000


Listed held-to-maturity debt securities, overseas 532 - - -Unlisted held-to-maturity debt securities 61 - - -Listed equity securities, Hong Kong 525 - 1,354 -Unlisted equity securities 1,004 - 585 -

2,122 - 1,939 -Amounts due from investee companies 98 - 88 -Amounts due to investee companies (28) (3) (35) (1)

2,192 (3) 1,992 (1)

Market valueListed overseas 544 - - -Listed in Hong Kong 580 - 1,827 -

1,124 - 1,827 -


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16. STOCKS

The Group

2001 2000

Properties under development 22,496 19,651Stock of completed properties for sale 2,785 3,265Materials 53 56

25,334 22,972

The amount of the above stocks that are carried at net realizable value was HK$1,259 million (2000: HK$854 million).

17. TRADE AND OTHER RECEIVABLES2001 2000

Note The Group The Company The Group The Company

Debtors, deposits and prepayments 2,864 240 2,926 284Amounts due from customers for contract work 17a 76 - 38 -Short term loans 400 - 453 -

3,340 240 3,417 284

Consideration in respect of sold properties are payable by the purchasers pursuant to the terms of the sale and purchaseagreements. Monthly rent in respect of leased properties are payable in advance by the tenants. Other trade debtors settletheir accounts according to the payment terms as stated in contracts.

Included in trade and other receivables are trade debtors of HK$1,373 million (2000: HK$1,186 million), of which 80 percent aged less than 60 days, 4 per cent between 61 to 90 days and 16 per cent more than 90 days (2000: 74 per cent,7 per cent and 19 per cent respectively).

17a. Amounts due from/(to) customers for contract works

The Group

Note 2001 2000

Contract costs incurred plus recognizedprofits less recognized losses 196 2,304

Less: Progress billings (135) (2,444)

61 (140)

Represented by:Due from customers included in current assets 17 76 38Due to customers included in current liabilities 21 (15) (178)

61 (140)


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18. MARKETABLE SECURITIES

The Group

2001 2000

Equity securities, at market value

Listed in Hong Kong 318 278Listed overseas 31 201

Debt securities, at market valueListed overseas 50 632

399 1,111

19. BANK BALANCES AND DEPOSITS

The Group

2001 2000

Short term bank deposits 8,736 10,205Bank balances and cash 325 209

9,061 10,414

20. BANK AND OTHER BORROWINGS2001 2000


Unsecured bank overdrafts 53 11 60 -Non-current liabilities due within 1 year 22 4,944 - 4,524 -

4,997 11 4,584 -

21. TRADE AND OTHER PAYABLES2001 2000


Creditors and accrued expenses 9,330 214 9,706 213Amounts due to customers for contract work 17a 15 - 178 -

9,345 214 9,884 213

Included in trade and other payables are trade creditors of HK$458 million (2000: HK$511 million), of which 86 per centaged less than 60 days, 1 per cent between 61 to 90 days and 13 per cent more than 90 days (2000: 75 per cent, 1 per centand 24 per cent respectively).


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22. BANK AND OTHER BORROWINGS

The Group

Note 2001 2000

Unsecured bank loans repayableWithin 1 year 4,269 2,074After 1 year, but within 2 years 6,380 12,193After 2 years, but within 5 years 8,171 8,422After 5 years 5,258 379

24,078 23,068

Other unsecured loans repayableWithin 1 year 675 2,450After 1 year, but within 2 years 300 675After 2 years, but within 5 years 2,302 1,100After 5 years 1,584 1,036

4,861 5,261

28,939 28,329Less: Amount due within 1 year included under current liabilities 20 (4,944) (4,524)

23,995 23,805

(a) The above other unsecured loans are repayable on various dates up to 30th June 2010 at commercial market rates.

(b) Bank loans shown above that are not wholly repayable within 5 years amounted to HK$7,208 million (2000:HK$1,023 million).

23. MINORITY INTERESTS

The Group

2001 2000

Share of equity and reserves in subsidiaries 729 728Amounts due to minority shareholders 923 943Amounts due from minority shareholders (42) (60)

1,610 1,611

24. SHARE CAPITAL2001 2000

Number Numberof shares of shares

in million Amount in million Amount

Authorized:Ordinary shares of $0.50 eachAt beginning and end of year 2,900 1,450 2,900 1,450

Issued and fully paid:Ordinary shares of $0.50 eachAt beginning and end of year 2,401 1,201 2,401 1,201


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25. SHARE OPTION SCHEMES

(a) The Company’s share option scheme

In accordance with the Company’s share option scheme for employees, the Board of directors of the Company may grantoptions to eligible employees, including executive directors of the Company or any subsidiary of the Company, to subscribefor shares in the Company. The subscription price is set at not less than the higher of the nominal value of the share and 80per cent of the average of the closing prices on the five trading days immediately preceding the date of offer of the option.The maximum number of shares over which options may be outstanding may not exceed 1 per cent of the issued sharecapital of the Company from time to time.

As at 30th June 2001, there were 810,000 share options outstanding, granted at HK$1 per lot to a number of Directorsand senior employees of the Company, which were exercisable, inter alia, between 15th February 2001 and 14th February2005 at an exercise price of HK$70 per share and at the maximum of one-third per annum during the first three years. Nooptions were exercised and expired during the year.

(b)Subsidiary’s share option scheme

The Company’s subsidiary, SUNeVision Holdings Limited (“SUNeVision”) operates a share option scheme pursuant to whichSUNeVision may grant, for a consideration of HK$1 for each lot, options to any full time employees, including executivedirectors of SUNeVision or its subsidiaries to subscribe for shares in SUNeVision. The subscription price is the highest of theclosing price of SUNeVision’s share on the date of the offer; the average closing price on the five trading days immediatelypreceding the date of offer; and the nominal value of SUNeVision’s share. The maximum number of shares over which optionsmay be granted shall not exceed 10 per cent of the issued share capital of SUNeVision from time to time.

Movements in share options to subscribe for ordinary shares in SUNeVision during the year are as follows:

Number of share options

Exercise Exercisable At beginning Granted during Lapsed duringDate of grant price period of year the year the year At end of year

28th March 2000 HK$10.380 31.12.2000 9,920,000 - (1,685,000) 8,235,000to

30.12.2005

30th November 2000 HK$3.885 15.11.2001 - 4,115,500 (240,000) 3,875,500to

14.11.2006

7th April 2001 HK$2.340 20.3.2002 - 4,925,000 - 4,925,000to

19.3.2007

9,920,000 9,040,500 (1,925,000) 17,035,500

26. SHARE PREMIUM AND RESERVES2001 2000


Share premiumAt beginning of year and end of year 17,000 17,000 17,000 17,000

Capital reserveAt beginning of year 664 5,281 727 5,281Goodwill on purchase of additional interest

in subsidiaries (94) - (88) -Net reserve on acquisition of subsidiaries 93 - - -Goodwill on acquisition of associates (36) - (6) -Reserve on acquisition of jointly controlled entities - - 31 -

At end of year 627 5,281 664 5,281


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26. SHARE PREMIUM AND RESERVES (Continued)2001 2000


Property revaluation reservesAt beginning of year 49,955 - 42,194 -Surplus on revaluation of properties held

by subsidiaries attributable to the Group- Investment properties 668 - 7,181 -- Hotel properties 233 - 356 -

Surplus realized on disposal of investmentproperties held by- Subsidiaries (278) - (117) -- Jointly controlled entities - - (55) -

Share of surplus/(deficit) on revaluation of investmentproperties held by jointly controlled entities (96) - 396 -

At end of year 50,482 - 49,955 -

Building reserveAt beginning of year - - 830 830Transfer to retained profits - - (830) (830)

At end of year - - - -

Dividend equalization reserveAt beginning of year - - 350 350Transfer to retained profits - - (350) (350)


General reserveAt beginning of year - - 5 -Transfer to retained profits - - (5) -


Exchange reserveAt beginning of year (4) - (9) -Exchange difference arising on translation of

financial statements of- Subsidiaries 6 - 1 -- Associates 1 - - -- Jointly controlled entities 4 - 4 -

At end of year 7 - (4) -

Retained profitsAt beginning of year 52,088 51,681 44,315 46,411Transfer from building reserve - - 830 830Transfer from dividend equalization reserve - - 350 350Transfer from general reserve - - 5 -Goodwill adjustment on acquisition of a subsidiary

by a jointly controlled entity - - (32) -Goodwill adjustment on acquisition of a subsidiary

by an associate (6) - - -Profit for the year retained 4,608 4,697 6,620 4,090

At end of year 56,690 56,378 52,088 51,681

Total share premium and reserves 124,806 78,659 119,703 73,962

Distributable reserves of the Company as at 30th June 2001 amounted to HK$56,378 million (2000: HK$51,681 million).


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26. SHARE PREMIUM AND RESERVES (Continued)2001 2000

Share premium The Company Jointly The Company Jointlyand reserves of the and controlled and controlledGroup retained by: subsidiaries Associates entities subsidiaries Associates entities

Share premium 17,000 - - 17,000 - -Capital reserve 604 23 - 641 23 -Investment property

revaluation reserve 47,441 - 1,919 47,004 - 2,062Hotel property revaluation reserve 1,122 - - 889 - -Exchange reserve 12 - (5) 6 (1) (9)Retained profits 55,577 1,030 83 50,740 894 454

121,756 1,053 1,997 116,280 916 2,507

27. NOTES TO CONSOLIDATED CASH FLOW STATEMENT

(a) Reconciliation of profit from operations to net cash inflow from operating activities

2001 2000

Profit from operations 8,329 8,340Depreciation 223 242Profit on disposal of investment properties (289) (113)Loss on disposal of other fixed assets 3 -Loss on disposal of land pending development - 7Dividends received from investments (77) (25)Interest income (242) (14)Provision for diminution in value of a jointly controlled entity - 223Provision for diminution in value of a long term investment 9 -Loss on disposal of a jointly controlled entity - 8Decrease in stocks 520 7,649Decrease in trade and other receivables 225 193Decrease/(increase) in marketable securities 712 (824)Increase/(decrease) in trade and other payables (574) 337Increase/(decrease) in deposits received on sale of properties 3,344 (11,602)

Net cash inflow from operating activities 12,183 4,421

(b)Purchase of subsidiaries

2001 2000

Net assets acquired:Fixed assets 1,105 -Associates 3 -Jointly controlled entities 45 -Land pending development - 434Trade and other receivables 13 -Bank balances and deposits 57 -Trade and other payables (291) (393)Bank borrowings (464) -Minority interests (155) -

313 41Less:

Associates (2) -Jointly controlled entities (103) -

208 41Net reserve on acquisition (93) -

115 41


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27. NOTES TO CONSOLIDATED CASH FLOW STATEMENT (Continued)

(b)Purchase of subsidiaries (Continued)

2001 2000

Satisfied by:Cash paid 115 41

Analysis of net cash outflow of cash and cash equivalentsin respect of the purchase of subsidiaries:Cash consideration paid 115 41Bank balances and deposits acquired (57) -

58 41

(c) Analysis of changes in financing during the yearShare capital Bank and

and share other Minoritypremium borrowings interests Total

At 1st July 1999 18,201 20,979 967 40,147Net cash inflow from financing - 7,350 23 7,373Minority interests in- losses - - (13) (13)- investment property revaluation reserve - - 18 18- exchange reserve - - 3 3

Dividends paid to minority shareholders - - (56) (56)Partial disposal of interest in a subsidiary - - 694 694Effect of purchase of additional interest in a subsidiary - - (25) (25)

At 30th June 2000 and 1st July 2000 18,201 28,329 1,611 48,141Net cash inflow/(outflow) from financing - 146 (148) (2)Arising on purchase of subsidiaries - 464 155 619Minority interests in- profits - - 10 10- investment property revaluation reserve - - 16 16

Dividends paid to minority shareholders - - (48) (48)Effect of purchase of additional interest in subsidiaries - - 14 14

At 30th June 2001 18,201 28,939 1,610 48,750

(d)Analysis of the balances of cash and cash equivalents at end of year

2001 2000

Short term bank deposits 8,736 10,205Bank balances and cash 325 209Bank overdrafts (53) (60)

9,008 10,354


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28. JOINTLY CONTROLLED ASSETSAt the date of the balance sheet, the aggregate amounts of assets and liabilities recognized in the financial statementsrelating to the Group’s interests in jointly controlled assets are as follows:

2001 2000

Investment properties 5,980 5,980Land pending development 71 70Land under development 1,889 -Stocks of completed properties for sale 58 58

7,998 6,108

Creditors and accrued expenses 93 94

29. RELATED PARTY TRANSACTIONSDuring the year, the Group undertook various transactions with related parties for provision of finance, lease of premises,purchasing of goods and rendering of certain services related to property construction, management and marketingactivities. The following is a summary of significant transactions between the Group and related parties, which were carriedout at similar terms to other customers or suppliers and at market prices:

Associates Jointly controlled entities

2001 2000 2001 2000

Interest income 131 140 357 48Rental income 76 48 4 4Other revenue from services rendered 63 966 1,051 929Purchase of goods and services - - 442 276

The outstanding balances with associates and jointly controlled entities at the balance sheet date were disclosed in Notes(13) and (14).

30. CONTINGENT LIABILITIES AND COMMITMENTS

The Group

At the date of the balance sheet, the Group had contingent liabilities and commitments, so far as not provided for in theconsolidated financial statements, as follows:

2001 2000

(a) Capital commitments in respect of fixed assetsContracted but not provided for 1,685 1,713Authorized but not contracted for 363 -

(b) Group’s share of capital commitments of joint ventures:Contracted but not provided for 3,629 858Authorized but not contracted for 156 209

(c) Guarantees given to banks and financial institutions in respect of facilities drawn by an associate and jointly controlledentities amounting to approximately HK$1,046 million (2000: HK$1,463 million) and HK$6,652 million (2000:HK$4,651 million) respectively.


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30. CONTINGENT LIABILITIES AND COMMITMENTS (Continued)

The Company

At the date of the balance sheet, the Company had contingent liabilities, not included in the Company’s financial statements,in respect of guarantees for bank and other borrowings drawn by:

2001 2000

Subsidiaries 28,849 27,922Associate 1,046 1,463Jointly controlled entities 6,575 4,651

36,470 34,036

31. FINANCIAL INSTRUMENTSDetails of the Group’s outstanding interest rate swaps and currency swaps at balance sheet date are as follows:

Net notionalprincipal amount

2001 2000

Interest rate swaps- Less than 1 year 675 1,800- 1 to 5 years 1,700 1,775- After 5 years 1,250 100

3,625 3,675

Currency swaps- After 5 years 234 234

234 234

Counterparties to swap transactions are reputable international financial institutions with strong credit ratings. The Grouphas established treasury policies and control procedures to assess and monitor the counterparty limits and exposure. TheGroup does not consider that it has any significant exposure to any individual counterparty, nor does it anticipate non-performance by any of its counterparties.

32. APPROVAL OF FINANCIAL STATEMENTSThe financial statements set out on pages 90 to 123 were approved by the board of directors on 27th September, 2001.


116


The directors are of the opinion that a complete list of the particulars of all subsidiaries will be of excessive length and thereforethe list following contains only the particulars of subsidiaries which principally affect the profit and loss account or assets of theGroup. A complete list of all the subsidiaries will be annexed to the Company’s 2001 annual return.

Unless otherwise stated, all principal subsidiaries are incorporated and operating in Hong Kong and unlisted.

Percentage of issuedordinary share capital held Issued Capital

Name Note The Company The Group Activities (HK$)

SUNeVision Holdings Limited 2 - 84.34 IT Infrastructure & 203,347,900(Listed in Hong Kong) Internet Services

Investment

Sun Hung Kai Real Estate 100 100 General management 1,000,000Agency Limited & agency

New Town (N.T.) Properties Limited 11.89 100 Investment holding 2,287,659,338

Hung Kai Finance Company Limited 100 100 Registered deposit-taking 100,000,200company

Fidelity Finance Company Limited 100 100 Finance 200

Honour Finance Company Limited 100 100 Finance 500,000

Sun Hung Kai Properties 100 100 Finance 100,000(Financial Services) Limited

Sun Hung Kai Properties 100 100 General insurance 75,000,000Insurance Limited

Honour Securities Company Limited - 100 Share broking 6,000,000

Sun Hung Kai Engineering 100 100 Architectural & engineering 350,000Company Limited

Sanfield Building Contractors Limited 100 100 Building construction 2,500,000

Everlight Engineering Company Limited - 100 Fire prevention & 50,000mechanical engineering

Aegis Engineering Company Limited - 100 Plant and machine hire 100,000

Hong Yip Service Company Limited - 100 Property management 100,000

Kai Shing Management Services Limited 100 100 Property management 10,000

Mantegna Investment Company Limited 1 - 100 Hotel ownership 10,000,000

New Town Serviced Apartment - 100 Furnished apartment 200Management Company Limited management

Royaltelle International Limited - 100 Hotel management 2

Additech Ltd. 1 - 100 Property investment US$1

Addpower Properties Limited 1 - 100 Property investment US$1

Airport Freight Forwarding Centre - 100 Freight forwarding centre 100Company Limited

Amglo Master Ltd. 1 - 100 Property investment US$1

Antanpark Limited 1 - 100 Property investment US$1

Antinio Investments Limited 1 - 100 Property investment US$1

Ao Ta Development Company Limited 50 100 Property investment 200

Artsland Properties Investment Ltd. 1 - 100 Property investment US$1

Barnard Enterprises Limited 1 - 75 Property investment US$100

Beauty Marble Investment Limited - 100 Property investment 2

PRINCIPAL SUBSIDIARIES

117





Biliboss Limited 1 - 100 Property investment US$1

Biliwide Limited - 100 Property development 20

Billion Mix Limited - 100 Property investment 2

Borracho Company Limited - 100 Property investment 200

Branhall Investments Limited 1 - 100 Property investment 40,000,000

Campsie Enterprise Limited 1 - 100 Property investment US$1

Caranko Limited - 100 Property investment 2

Cherry Land Company Limited - 100 Property investment 1,500,000

Coundon Enterprise Limited 1 - 100 Property investment US$1

Country Well (H.K.) Limited - 100 Property investment 2

Crownsnest Enterprise Limited 1 - 100 Property investment US$1

Darlinghurst Enterprise Limited 1 - 100 Property investment US$1

Deluxe Plan Enterprises Limited - 100 Property investment 2

Deporte Limited 1 - 100 Property investment US$1

Dictado Company Limited - 100 Property investment 200

Dipende Limited 1 - 100 Property investment US$1

Donora Company Limited 50 100 Property development, 2share investmentand dealing

Durbanham Enterprise Limited 1 - 100 Property investment US$1

Entero Company Limited 50 100 Property investment 200

Ever Channel Limited - 100 Property investment 2

Excellent Chance Limited 1 - 100 Property investment US$1

Far Fortune Investment Limited - 100 Property investment 2

Firstmax Limited - 100 Property investment 2

Forever Glory Investments Limited 1 - 100 Property investment US$1

Fortune Honor Limited - 100 Property investment 2

Fortune Yield Investment Limited - 100 Property investment 2

Full Market Limited - 100 Property investment 2

Garudia Limited - 100 Property investment 2

Getherich Ltd. 1 - 100 Property investment US$1

Gleamland Limited 1 - 100 Property investment US$1

Golden Square Properties 1 - 100 Property investment 1,000,000Enterprises Limited

Goldland Limited 1 - 100 Property investment US$1

Grand Kosky Ltd. 1 - 100 Property investment US$1

Groupland Ltd. 1 - 100 Property investment US$1

Grumete Company Limited 100 100 Property development 200

Harsco Limited - 100 Property development 2

Henca Limited 1 - 100 Property investment US$1

Hintline Investments Limited - 100 Property development 5,000

118





Honenberg Limited - 100 Property investment 2

Hong Kong Business Aviation 4 - 35 Business Aviation Centre 1,000,000Centre Limited

Honour Futures Limited - 100 Commodities dealing 7,000,000

Hopley International Limited 1 - 100 Property investment US$1

Horway Limited 1 - 100 Property development US$1

Hung Kai Finance Investment - 100 Property investment 200Holding Limited

Jugada Company Limited - 100 Property investment 2

Kamchatka Company Limited - 100 Property investment 200

Kartasun Limited - 100 Property investment 2

Kimrose Investments Ltd. 1 - 100 Property investment US$1

King Star Estate Limited - 99.9 Property development 10,000

Kingsgrove Enterprise Limited 1 - 100 Property investment US$1

Laboster Company Limited 50 100 Property investment 2

Lee Bit Kai Investment 100 100 Property investment 1,000Company Limited

Light Time Investments Limited - 100 Property development 2and investment

Little Jewel Limited 1 - 100 Property development US$1

Long Tesak Company Limited - 100 Property investment 100,000

Lonsale Company Limited - 100 Property investment 2

Lorient Holdings Ltd. 1 - 100 Property investment US$1

Lunalite Company Limited - 100 Property development 2and investment

Luxsky Ltd. 1 - 100 Property investment US$1

Main Global Limited - 100 Property investment 2

Manceton Limited - 100 Property investment 2

Manmouth Limited - 100 Property development 2and investment

Merit Success Company Limited - 100 Property investment 2

Mindano Limited - 100 Property investment 10,000

Morifunn Ltd. (Formerly Morifund Ltd.) 1 - 100 Property investment US$1

Moristrong Limited 1 - 100 Property investment US$1

Moscova Company Limited 50 100 Property investment 200

Nixon Cleaning Company Limited - 100 Cleaning service 100,000

Open Step Limited - 60 Property investment 10

Oriental Eagle Enterprises Limited - 100 Property investment 2

Pacotilla Company Limited - 100 Property investment 200

Pako Shun Limited - 100 Property investment 2

Parico Fortune Ltd. 1 - 100 Property investment US$1

119





Peach Blossom Company Limited 1 - 100 Property investment US$1

Perfect Smart Enterprises Ltd. 1 - 100 Property investment US$1

Ponente Company Limited - 100 Property investment 200

Prelong Limited - 100 Property development 2and investment

Profit Richness Limited 1 - 100 Property investment US$1

Protasan Limited - 100 Property investment 100

Rainforce Limited - 100 Property development 2

SHK (N.T.) Shopping Limited - 100 Property investment 2

SHK Sheung Shui Landmark 50 100 Property investment 200Investment Limited

Shubbery Company Limited - 100 Property investment 200

Speed Cheer Ltd. - 75 Property development 10,000

Speed Wise Limited - 100 Property investment 2

Splendid Kent Limited - 100 Property development 4

Standard Top Limited - 100 Property investment 2

Startrack Company Limited - 100 Property investment 200

Sun Carol Company Limited - 100 Property investment 200

Sun Hung Kai China Trading Limited - 100 Property investment 2

Sun Hung Kai Properties - 100 Property investment 2Consultants Limited

Sun Hung Kai Properties Pacific Limited - 100 Property investment 2

Sun Hung Kai Real Estate - 100 Property investment 2Consultants Limited

Sun Hung Kai Secretarial 50 100 Secretarial services 200Services Limited

Sun Yuen Long Centre Management - 87.5 Property investment 50,000Company Limited and management

Sunfez Company Limited - 100 Property investment 200

Sunrit Enterprises Limited - 100 Property investment 4,000,000

Super Bold Limited - 100 Property investment 10,000

Super Sun Limited - 100 Property development 2

Supreme Ford Limited - 100 Property development 2

Tainam Holdings Limited 1 - 100 Property investment US$1

Ten Choice Development Limited - 100 Property investment 2

Tipro Development Limited - 99.2 Property investment 1,000,000

Tobright Ltd. 1 - 100 Property development US$1

Tonthai Investment Enterprises Limited 1 - 100 Property investment US$1

Town Descant Company Limited - 100 Property investment 200and development

Town Fierce Company Limited - 100 Property investment 10,000

120





Truebright Investments Limited - 100 Property development 2and Investment

Tsi Mai Company Limited - 100 Property investment 200

Tsing Ma Management Limited - 66.7 Road management 70,000,000

Tyranny Company Limited 75 100 Property development 400and investment

Uniland Investment 1 - 100 Property investment US$1Enterprises Limited

Upper Hill Company Limited 1 - 100 Property investment US$1

Victory Force Limited - 100 Property investment 2

Victory Winner Limited - 100 Property investment 2

Vimson Limited 1 - 100 Property investment US$1

Virile Investment Enterprises Limited 1 - 100 Property investment US$1

Wai Hung Development 85.7 100 Investment holding and 70,000Company Limited property investment

Warrior Company Limited - 100 Property investment 300

Well Logic Properties 1 - 100 Property investment US$1Investment Limited

Wellden Limited - 100 Property investment 2

Wilson Parking (Holdings) Limited - 100 Investment holding and 1,000car parks operation

Wisearn Properties Investment Limited 1 - 100 Property investment US$1

Wiselink Investments 1 - 100 Property development US$1Enterprises Limited

WTC (Club) Limited - 100 Club management 200

Wylproud Company Limited 50 100 Property investment 2

Yancon Limited - 100 Property investment 2

Zarabanda Company Limited - 100 Property investment 2

Zindemar Investments Corp. 3 100 100 Property development US$2

Notes1. Incorporated in the British Virgin Islands.2. Incorporated in the Cayman Islands.3. Incorporated in Panama.4. Indirectly held by the Company and the Group.

121


The directors are of the opinion that a complete list of the particulars of all jointly controlled entities will be of excessive lengthand therefore the list following contains only the particulars of jointly controlled entities which principally affect the profit andloss account or assets of the Group. A complete list of all jointly controlled entities will be annexed to the Company’s 2001annual return.

Unless otherwise stated, all principal jointly controlled entities are incorporated and operating in Hong Kong and unlisted.

Percentage of issuedordinary share capital held

Name Note The Company The Group Activities

Altomatic Limited - 50 Property investment#+ Anbok Limited - 25 Property development

Arrowtown Assets Limited 1 - 49 Property development#+ Asia Container Terminals Limited - 28.5 Container terminals development

# Beijing Sun Dong An Co. Ltd. 2 - 50 Property investment

IFC Development Limited 1 - 47.5 Property development(Formerly Central WaterfrontProperty Development Limited

# Dragon Beauty International Limited - 50 Property development#+ Faith & Safe Transportation Limited - 50 Mid stream operator

Glorious Concrete (H.K.) Limited - 50 Manufacturers of ready mixed concrete#+ Green Valley Landfill Limited - 20 Landfill waste disposal facility#+ Hoi Kong Container Services - 50 Mid stream operator

Company Limited#+ Hong Kong Parking Limited - 50 Parking meters operator

Jade Land Resources Limited - 25 Property development# Kerry Hung Kai Warehouse - 50 Godown operation

(Cheung Sha Wan) Limited

Krimark Investments Limited - 30 Property development+ Mightypattern Limited 25 25 Investment holding+ New-Alliance Asset Investment - 50 Investment management services

Management (Asia) Limited+ Newfoundworld Holdings Limited - 20 Property development and investment

#+ Pearl Delta Limited (Formerly - 20 Solid waste management andPearl Delta WMI Limited) environmental services

#+ Primecredit (Asia) Limited - 46.5 Provision of money lending services#+ Primecredit Limited - 46.5 Deposit-taking company

Ranny Limited - 50 Property investment#+ River Trade Terminal Co. Ltd. 1 - 33 River trade terminal

# Route 3 (CPS) Company Limited - 50 Toll road operation# Senica International Limited - 22.5 Investment holding

#+ South China Transfer Limited (Formerly - 20 Solid waste management andSouth China WMI Transfer Limited) environmental services

Splendid Shing Limited - 50 Property investment+ Star Play Development Limited - 33.3 Property investment+ Tinyau Company Limited - 50 Property investment

PRINCIPAL JOINTLY CONTROLLED ENTITIES

122

PRINCIPAL JOINTLY CONTROLLED ENTITIES




+ Topcycle Development Limited - 50 Property development #+ Uttoxeter Limited - 30 Property development#+ Waldorf Realty Limited - 25 Property investment

# Wisdom Choice Investment Limited - 40 Property development# Wolver Hollow Company Limited - 50 Property investment

Xipho Development Company Limited 33.3 33.3 Property development

+ The financial statements of these companies have been audited by firms other than Deloitte Touche Tohmatsu. The aggregate net assets and profits aftertaxation of these jointly controlled entities attributable to the Group amounted to HK$959 million (2000: HK$1,033 million) and HK$487 million (2000:HK$125 million) respectively.

# Companies with year ends not co-terminous with that of Sun Hung Kai Properties Limited.

Note1. Incorporated in the British Virgin Islands.2. Incorporated in The People’s Republic of China.

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The directors are of the opinion that a complete list of the particulars of all associates will be of excessive length and thereforethe list following contains only the particulars of associates which principally affect the profit and loss account or assets of theGroup. A complete list of all associates will be annexed to the Company’s 2001 annual return.

Unless otherwise stated, all principal associates are incorporated and operating in Hong Kong and unlisted.



#+ The Kowloon Motor Bus 1 - 33.99 Public transportationHoldings Limited(listed in Hong Kong)

#+ Ranex Investments Limited - 29 Property development+ SmarTone Telecommunications 1 - 28.21 Mobile telephone system operation

Holdings Limited(listed in Hong Kong)

#+ The Hong Kong School of - 30 Driving SchoolMotoring Limited

#+ Thomas Cook Hung Kai Airport - 25 Money exchange servicesCurrency Exchange Limited

+ The financial statements of these companies have been audited by firms other than Deloitte Touche Tohmatsu. The aggregate net assets and profits aftertaxation of these associates attributable to the Group amounted to HK$2,844 million (2000: HK$2,642 million) and HK$522 million (2000: HK$158million) respectively.

# Companies with year ends not co-terminous with that of Sun Hung Kai Properties Limited.

Note1. Incorporated in Bermuda.

PRINCIPAL ASSOCIATES

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