1998-99 - Morningstar, Inc

SUN HUNG KAI PROPERTIES LIMITED

1 9 9 8 - 9 9Brought to you by Global Reports

Cover

1. Leighton Hill development in Causeway Bay

2. Le Sommet, North Point

3. One International Finance Centre, above Hong Kong

Station on the Airport Railway

4. SmarTone Telecommunications

5. Route 3 (Country Park Section)

6. Hong Kong Business Aviation Centre

Photos

1

2

34

5

6

Brought to you by Global Reports

AnnualReport1998-99


Web site : http://www.shkp.com.hk


C o n t e n t s

4 Corporate Information

5 Shareholders’ Information

6 Financial Highlights

8 Corporate Structure

10 Chairman’s Statement

24 Directors’ Report

Review of Operations 34

Land Bank 36

Property Development 39

Property Investment 53

Related Business Activities 64

Infrastructure and Transportation 71

Other Investment Holdings 80

Mainland China Business 81

Group Finance 85

Investor Relations 86

Customer Service 87

Environmental Protection and Promotion 90

Staff Relations and Training 92

The Group and The Community 94

96 Management Discussion and Analysis

107 Group Financial Summary

109 Directors and Organisation

A1 Report of the Auditors

A3 Principal Accounting Policies

A15 Consolidated Profit and Loss Account

A16 Consolidated Balance Sheet

A17 Parent Company Balance Sheet

A18 Consolidated Cash Flow Statement

A19 Notes to the Financial Statements

A35 Principal Subsidiaries

A45 Principal Jointly Controlled Entities

A48 Principal Associated Companies


4

Corporate Information

3045

(852) 2827 8111(852) 2827 2862

http://[email protected]

18317 1712-6

DirectorsKWOK Ping-sheung, Walter Chairman & Chief Executive

LEE Shau-kee Vice Chairman

KWOK Ping-kwong, Thomas Vice Chairman & Managing Director

KWOK Ping-luen, Raymond Vice Chairman & Managing Director

HO Tim Independent Non-Executive Director

WOO Po-shing Independent Non-Executive Director

FUNG Kwok-king, Victor Independent Non-Executive Director

KWAN Cheuk-yin, William Independent Non-Executive Director

LO Chiu-chun, Clement Non-Executive Director

LAW King-wan Executive Director

CHAN Kai-ming Executive Director

CHAN Kui-yuen, Thomas Executive Director

KWONG Chun Executive Director

WONG Yick-kam, Michael Executive Director

WONG Chik-wing, Mike Executive Director

SecretaryLAI Ho-kai, Ernest

Registered Office45th Floor, Sun Hung Kai Centre,30 Harbour Road, Wanchai, Hong Kong.Telephone: (852) 2827 8111Facsimile: (852) 2827 2862Internet: http://www.shkp.com.hkE-mail: [email protected]

AuditorsDeloitte Touche Tohmatsu

RegistrarsCentral Registration Hong Kong LimitedShops 1712-6, 17th Floor, Hopewell Centre,183 Queen’s Road East, Hong Kong.

Principal BankersThe Hongkong & Shanghai Banking Corporation LimitedBank of ChinaHang Seng Bank LimitedStandard Chartered BankThe Bank of Tokyo – Mitsubishi LimitedThe Sanwa Bank LimitedThe Sumitomo Bank, LimitedThe Chase Manhattan BankBanque Nationale de ParisABN Amro Bank

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


5

Shareholders’ Information

Shareholders’ Calendar

Close for Register of Members 25/11/1999 - 2/12/1999

(both days inclusive)

Annual General Meeting 2/12/1999

Dividends

Interim (per share) HK$0.50 Paid on 15/4/1999

Final (per share) HK$1.05

Payable on 3/12/1999

Security Code

Stock code 16

American Depositary Receipt

CUSIP number 86676H302

Trading symbol SUHJY

Ordinary share to ADR ratio 1:1

Listing

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)


6

Financial Highlights

For the year ended 30th June

Turnover (HK$ million)

Profit attributable to shareholders (HK$ million)

• excluding exceptional items

• including exceptional items

Earnings per share (HK$)

• excluding exceptional items

• including exceptional items

Dividends per share (HK$)

Shareholders’ funds per share (HK$)

Gross rental income (HK$ million)

Net rental income (HK$ million)

* Net recurrent earnings before interest and tax* (HK$ million)

Net debt to shareholders’ funds ratio (%)

Land bank (million square feet)

*

* Including contributions from jointly controlled entities and associated companies


7

Financial Highlights (cont’d)

1999 1998 % Change

23,680 23,222 +2%

8,683 11,960 -27%

9,278 7,260 +28%

3.62 5.00 -28%

3.87 3.04 +27%

1.55 1.20 +29%

44.40 47.55 -7%

5,510 5,650 -2%

4,203 4,443 -5%

5,803 6,189 -6%

12.0 17.8 -33%

50.6 50.6

Turnover

0

5,000

10,000

15,000

20,000

25,000

30,000HK$ Million

Year

19,845

22,619

28,960

23,222 23,680

Earnings and Dividends Per Share

0

1

2

3

4

5

6

4.464.69

5.93

3.04

1.75 1.86

2.35

1.20

3.87

1.55

HK$

Year1995 1996 1997 1998 1999

1995 1996 1997 1998 1999

Net Asset Value Per Share*

0

10

20

30

40

50

60

Year

41.4045.10

56.38

47.5544.40

1995 1996 1997 1998 1999

HK$


Corporate Structure

8*

33% 26%

50%

100%

33%

28.5%

50%

65%

35%

20%


9

Corporate Structure (cont’d)

MainlandChina

Sun Hung KaiProperties*

Hong Kong

PropertyDevelopment

21 millionsq.ft. of agricultural

land(site area)

PropertyInvestment

Infrastructure&

Transportation

PropertyDevelopment& Investment

PropertyRelated

Business

4.2 millionsq.ft. under

development


development

18.5 millionsq.ft. completed

investmentproperties

Franchised Bus(KMB*)

Mobile PhoneOperation

(SmarTone*)

1.7 millionsq.ft. completed

investmentproperties

Insurance

Hotels

Construction

PropertyManagement

TransportInfrastructureManagement

(Wilson Group)

FinancialServices

Mid-StreamOperation

ContainerTerminal (CT9)

River TradeTerminal

Landfill & WasteManagement

Airport FreightForwarding

Centre

Toll Road(Route 3 CPS)

BusinessAviation Centre


development

* Listed in Hong Kong

33%

50%

100%

65%

33%

28.5%

50%

26%

35%

20%


10

Chairman’s Statement

I am pleased to present my report to the shareholders:

ResultsThe Group’s profit after taxation and minority interests for the

year ended 30th June 1999 was HK$9,278 million, an increase of

28 per cent compared with last year’s profit of HK$7,260 million.

Earnings per share for the year was HK$3.87, representing an

increase of 27 per cent compared with HK$3.04 for the previous

year.

DividendsThe Directors have recommended the payment of a final dividend

for the year ended 30th June 1999 of HK$1.05 per share. Together

with the interim dividend of HK$0.50 per share, the total

dividend for the full year is HK$1.55 per share, representing an

increase of 29 per cent when compared with the previous year.

Le Sommet (left) in North Point and TheBelcher’s (bottom) in Mid-Levels West bothsold extremely well when they were launched.


11

Chairman’s Statement (cont’d)

Review

Sales

During the year ended 30th June 1999, total property sales

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

to HK$21,904 million, compared with last year’s sales of

HK$25,916 million. Major projects marketed during the period

included Scenic View in Ngau Chi Wan, Grand Horizon in Tsing

Yi, Castello in Shatin, Le Sommet in North Point, Chelsea

Heights Phase 2 in Tuen Mun and The Belcher’s Phase 1 in Mid-

Levels West.

During the year under review, the Group completed the following

twelve projects, with an attributable gross floor area of about 5

million square feet:

Group’s Attributable

Project Location Usage Interest Gross Floor Area

(%) (square feet)

100 1,328,500

Symphony Bay Sai Sha Road, Residential

Sai Kung

100 1,050,000

Grand Pacific Views Castle Peak Road, Residential/

& Grand Pacific Heights Tuen Mun Shops

1 20 192,800

Tung Chung Crescent Tung Chung Town Residential

(Blocks 1 - 6) Lot 1

1 5 100 165,900

Waterfront South 1 - 5 Yue Wok Street, Residential/

Aberdeen Shops

8 22.5 158,000

Villa Esplanada 8 Nga Ying Chau Street, Residential

Phase 2 Tsing Yi


12


Group’s Attributable

Project Location Usage Interest Gross Floor Area

(%) (square feet)

1 100 144,000

Chateau Royale 1 Yung Yi Road, Residential

Tai Po

100 144,000

Hillview Court Pak Shek Wo, Residential

Sai Kung

8 100 100,700

Le Palais 8 Pak Pat Shan Road, Residential

Tai Tam

3 8 92,400

Belair Monte 3 Ma Sik Road, Fanling Residential/

Shopping Centre

1 7 22,200

Greenfields 1 Fung Kam Street, Residential

Yuen Long

* 388 100 1,230,000

Millennium City 388 Kwun Tong Road, Office

Phase 1* Kowloon East

* 1 47.5 373,000

One International 1 Harbour View Street, Office

Finance Centre* Central

Total 5,001,500

*

* Retained for investment, except 300,000 square feet of Millennium City Phase 1, which was sold to an end-user.


13


Approximately 95 per cent of the residential units completed and

marketed during the year have been sold.

Land Bank

During the year, the Group added a total of 3.8 million square feet

of attributable gross floor area to its land bank through land use

conversion and other means:

Attributable

Group’s Attributable Gross Floor

Project Usage Interest Site Area Area

(%) (square feet) (square feet)

504 100 314,000 1,743,000

Yuen Long Town Lot 504 Residential/

Commercial

736,000

Ma Wan (additional plot ratio) Residential Joint Venture N/A

399 100 125,000 375,000

Tuen Mun Town Lot 399 Residential

1 31,600 158,000

1 Ho Man Tin Hill Road Residential Joint Venture

100 123,600 152,000

To Fung Shan Residential

Phases 3 & 4, Shatin

6328 35.44 72,000 590,000

NKIL 6328, Cheung Sha Wan Residential/

Commercial/

Hotel

Total 666,200 3,754,000


14


In addition, the Group recently acquired two other sites, 418A

Kwun Tong Road and AIL 129 in Ap Lei Chau. The Group owns

100 per cent of the Kwun Tong site, which has a developable

gross floor area of 133,000 square feet for office use. The Group

has a 35 per cent interest in the Ap Lei Chau site, which has an

attributable gross floor area of 316,000 square feet that it plans to

change to residential use.

At the end of the year under review, the Group owned a land bank

of 50.6 million square feet in Hong Kong, in terms of attributable

gross floor area. This consisted of 18.5 million square feet of

completed investment properties and 32.1 million square feet of

properties under development. The Group also owns 21 million

square feet of agricultural land in the New Territories, the

majority of which is in the process of land use conversion.

Property Development

Following the economic downturn in 1998, Hong Kong’s economy

started to register positive growth in the second quarter of 1999.

Total exports started to rebound and the number of visitors grew

continually. At the same time, consumer sentiment began to

strengthen, the unemployment rate moderated and liquidity

improved with stable interest rates.

After the significant drop in 1998, property prices have stabilized

and are now within reach for the majority of families. This,

coupled with the pronounced reduction in mortgage rates, means

that affordability is at its highest in eight years. The residential

property market is now healthier, driven by end-user demand,

with virtually no speculative activity. Banks are enthusiastic about

residential mortgage financing, offering competitive, attractive

terms to homebuyers. The Government also continued to encourage

home ownership by providing subsidized loans to first-time

buyers. All this, together with improved economic prospects and

stabilized interest rates, has had a positive influence on the

housing market.

418 A 129


15


The Group will continue to focus its property business in Hong

Kong, with an emphasis on large-scale projects containing small

and medium sized residential units to meet market demand. The

Group will also incorporate new technologies in its developments,

while constantly improving its quality and comprehensive facilities

for residents. The Group will continue to increase the volume of

its residential completions in the next few years, while stringently

controlling costs to enhance development returns. In the next

financial year, the Group expects to complete properties with an

attributable gross floor area of 4.4 million square feet as follows:

The Group will continue to increase its land bank through various

means. Some industrial sites will be converted into other uses, such

as residential, service apartments and offices. Conversion of

agricultural land to residential use will continue to be the major

source of land for new developments, and the Group is now actively

negotiating with the Government on land conversion and land

premiums. Most of these properties are located near future railway

stations, and with the construction of various large-scale infrastructure

projects, the New Territories has great development potential.

Residential Shopping Centre Office Total million square feet

For Sale 4.1 4.1

For Investment 0.1 0.2 0.3

Total 4.1 0.1 0.2 4.4

The Group will develop a large-scale project in TseungKwan O, providing about 4,000 small to medium sizedresidential units.


16


Property Investment

As the Group adheres to its flexible approach to leasing, its

investment property portfolio is 95 per cent let. Despite the rental

market adjustments over the past one and a half years, gross

rental income for the year, including the Group’s share in jointly

controlled entities, saw only a one per cent decline from the

previous year to HK$5,801 million. The minimal decline was due

to an additional 1.3 million square feet of newly-completed

investment properties, along with the relative resilience of the

Group’s shopping centres, as the majority are in the new towns,

primarily offering daily necessities to nearby residents.

The Group has a 47.5 per cent interest in One International

Finance Centre, strategically located above Hong Kong Station

on the Airport Railway, on the waterfront in the core of Central.

The three-storey, 131,000 square-foot shopping centre is

open and over 90 per cent let, and the intelligent 38-storey

office tower, with 784,000 square feet of high-quality space, is 80

per cent let.

Millennium City Phase 1 in Kowloon East was completed late last

year, and its 930,000 square feet of office space is now fully let.

In view of the encouraging response, the Group recently began

leasing Phase 2, which is scheduled for completion in the fourth

quarter of 1999. The Group has a 50 per cent interest in Phase 2,

The office space in Millennium City Phase 1in Kowloon East is fully let.


17


which will provide 267,000 square feet of offices. The Group’s

annual rental income from Millennium City Phases 1 and 2 is

estimated to exceed HK$170 million.

The downside of retail rents should be limited because of

improving retail sales and higher tourist arrivals. Rents in the

luxury residential market have also shown signs of stability, while

in the office market, prime space offering advanced technological

features and state-of-the-art facilities is expected to continue to be

in demand.

The Group aims to maintain an optimal rental portfolio by

developing quality projects for rent and disposing of some non-

core investment properties.

Hotel Business

Hotel occupancy improved during the year on the back of a

continual increase in tourist arrivals, and average room rates

stabilized after a significant decline last year. In the long run,

with Hong Kong as an international business and tourist hub,

hotel prospects should be promising.

Despite the difficult operating environment over the year, the

performance of the Group’s three hotels was encouraging, with

improved occupancy rates. The Royal Garden Hotel in Tsim Sha

Tsui, Royal Park Hotel in Shatin and Royal Plaza Hotel in

Mongkok achieved average occupancy rates of 85, 86 and 80 per

cent respectively.

Infrastructure and Transportation

SmarTone reported a decline in net prof it for the 1998-99

financial year. Despite keen competition, SmarTone secured its

market position through continuous efforts to provide premium

customer service, quality network coverage and comprehensive

value added service. With British Telecommunications plc

becoming a strategic shareholder in May 1999, SmarTone is in an

even better position to get access to advanced technology, with

broader opportunities to expand in Asia. In addition to mobile

voice services, SmarTone will continue to focus on business


18


expansion, including IDD, the Internet and wireless data

applications. The company will also look for investment

opportunities in the region. The Group is confident of SmarTone’s

future prospects, and it will continue to hold its interest in the

company as a strategic long-term investment.

The Kowloon Motor Bus Holdings Limited recorded satisfactory

results for the year. The company expanded its business through

the operation of new routes linking the urban areas to the new

airport and Tung Chung, and it has increased its non-franchised

bus operations to cope with growing market demand. The

company aims to stay competitive with the continued provision of

high-quality service and improvements in eff iciency, and is

expected to provide steady recurrent income to the Group.

The Route 3 (Country Park Section) provides a quick and direct

link between the northwest New Territories and major urban

areas, as well as the new airport. There has been a continuous

improvement in traffic volume since its opening in May 1998.

The Airport Freight Forwarding Centre comprises 1.3 million

square feet of cargo handling space and 175,000 square feet of

office space. It commenced operations in July 1998. The Hong

Kong Business Aviation Centre officially opened in September

1999, providing premium ground services for corporate and

private aircraft.

Construction of the River Trade Terminal in Tuen Mun is

progressing smoothly. The first phase operating area began

business in October 1998, and completion of the entire project is

scheduled for the end of 1999.

The Hong Kong Business Aviation Centre officially openedin September this year.


19


The Group has a 28.5 per cent interest in Asia Container

Terminals Limited, which is engaged in the development of two

berths in Container Terminal 9. The terminal is now being

designed and construction is expected to begin in early 2000.

Upon completion, the berths will be exchanged for two existing

berths in Container Terminal 8.

All of the Group’s infrastructure projects are in Hong Kong. They

are low risk in nature and provide the Group with growing

recurrent income over the long term.

Mainland China Business

The Group will continue with its prudent and selective policy

towards investing in mainland China. It will focus on property

projects in Beijing, Shanghai and Guangzhou, adopting a long-

term view and retaining most developments for rental purposes.

Sun Dong An Plaza in Beijing contains 1.3 million square feet of

retail space and 430,000 square feet of office space. Since

renovations to Wangfujing Street have finished, there has been a

significant increase in the flow of pedestrians to the shopping

mall, bringing more business to the tenants. Leasing of the office

tower has been satisfactory, with occupancy at 80 per cent.

Since renovations to WangfujingStreet finished, there has been asignificant increase in the flow ofpedestrians to the Sun Dong AnPlaza shopping mall in Beijing.


20


Shanghai Central Plaza, with 455,000 square feet of office space

and 133,000 square feet of retail space, was finished in early

1999. It has become a showcase for quality development in

Shanghai. The shopping centre is already 90 per cent let and

leasing of the offices is progressing well. Phase 1 of Arcadia

Shanghai, with 369 luxury residential units, was finished in the

second quarter of 1999, and leasing is now under way.

Nearly all of the units marketed in Glorious City Garden Phase 2

in Guangzhou have been sold, and the project is scheduled for

completion in the first half of 2000.

Corporate Finance

The Group will adhere to its conservative policy of maintaining a

low gearing and high liquidity. It further strengthened its financial

position over the year, and as of 30th June 1999, its ratio of net

debt to shareholders’ funds was 12 per cent. The Group’s solid

recurrent income base, together with proceeds from pre-sales of

new residential properties, will continue to sustain a strong cash

flow.

The Group has substantial undrawn facilities on a committed basis

on standby for future business expansion, and as virtually all of its

borrowings are denominated in Hong Kong dollars, its foreign

exchange exposure is negligible. All the Group’s bank facilities are

unsecured. The Group has been able to maintain its foreign

currency credit ratings on a par with Hong Kong’s sovereign

ceiling, with “A3” from Moody’s and “A” from Standard & Poor’s.

The Group will continue to diversify its funding base and lengthen

its debt maturity profile with the objective of spreading debt

maturity in future years.

Since launching its Euro Medium Term Note programme in early

1999, the Group has raised the equivalent of approximately US$400

million through several Hong Kong dollar bonds and a floating rate

US dollar note. The proceeds were used mainly to repay short-term

loans. In light of the good market response, the Group decided to

triple the authorized programme size to US$1.5 billion in September.

The programme offers the Group flexibility in tapping funds from the

international capital markets and enables it to issue notes efficiently.

A3

A


21


Customer Service

The Group is committed to raising the overall quality of its

property developments in terms of design, materials and

construction, and it will continue to set new standards in these

areas. The Group will also capitalize on the opportunities

presented by new technology to meet the increasing demand for a

more active digital lifestyle by making broadband access available

in its property developments.

Providing the highest levels of service is one of the Group’s top

priorities, and its property management subsidiaries, Hong Yip

and Kai Shing, are committed to providing residents with the

f inest care to enhance their lives for the modern age. With

continual training they will embody the spirit of “customer first”.

As evidence of this dedication, both companies received various

territory-wide management awards during the year.

The SHKP Club has seen a significant increase in members

during the year, to about 95,000. The Club will continue to

enhance the quality of its service to members and promote two-

way communication, and the up-grading of the co-branded

Citibank SHKP Club VISA Card to a multifunctional smart card

with the latest technology will offer more convenience and added

value to members.

Mr Raymond Kwok, the Group’s ViceChairman, announced the upgrade of theCitibank SHKP Club VISA Card to amultifunctional smart card.


22


ProspectsWith the People’s Republic of China’s 50th anniversary this year,

its society is stable and prosperous. China’s open door policy and

economic reforms will continue, and it is expected to gain access

to the WTO in the near future. Prospects for the mainland

economy remain positive. In this advantageous environment, the

Group has full confidence in the long-term prospects for Hong

Kong. Japan and the rest of Asia have seen continued economic

improvement. A signif icant drop in rents and downward

adjustments to labour costs have made Hong Kong more

competitive. These, together with low interest rates and the

construction of new infrastructure, should underpin Hong Kong’s

current economic recovery. The Government’s efforts to lead the

territory in technology development and other areas should add

new strength and variety to economic prospects.

The Group will continue to focus on Hong Kong property

development and investment, with the objective of sustaining long-

term profit growth by increasing its land bank and residential

completions, as well as adopting effective cost control measures.

The Group also puts great emphasis on its people, providing staff

training to achieve higher productivity, greater efficiency and more

competitiveness. As we move forward into the new millennium, the

Group will take full advantage of new technology, both in its

properties and operations. It will further enhance its brand name

with added commitments to incorporating the latest technology in its

premium products and providing high-quality services. The Group

will also consider investing in selective technology projects to

capitalize on the benefits of the information age.

The Group pioneered the use ofinnovative high technology in itsnew residential properties, keepingpace with the information age.


23


The Group is optimistic about the long-term prospects for the

Hong Kong property market. With its solid financial position and

low gearing ratio, the Group is well positioned to take advantage

of opportunities for expanding its business in Hong Kong, to

maximize the benefits to shareholders. Forthcoming pre-sales in

the next several months will include Royal Peninsula in Hung

Hom, Phases 1 of both Ocean Shores and Clearwater Bay

Peninsula in Tseung Kwan O and the Leighton Hill development

in Causeway Bay. These pre-sales are expected to further

strengthen the Group’s cash flows. Over 90 per cent of the

residential units to be completed in the coming financial year

have been pre-sold. Barring unforeseen circumstances, the Group’s

results for the next year will show satisfactory growth.

Dr Victor Fung and Mr William Kwan were appointed as

Independent Non-Executive Directors of the Company in May

and July of this year respectively. Their wealth of experience in

the commercial sector will benefit the Group’s further business

development.

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, WalterChairman & Chief Executive

Hong Kong, 7th October 1999

Royal Peninsula in Hung Hom waslaunched for sale at the end of October thisyear.


24

Directors’ Report

A35 A44

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

1999:

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.

Ancillary and supporting businesses, which are described under

subsidiaries on pages A35 to A44, are integrated into the main

business of the Group. Turnover and contribution to operating

profit from overseas activities are immaterial. A segmented

analysis of turnover and contribution to operating profit of the

Group (excluding jointly controlled entities and associated

companies) is set out below:

Profit before interest expenses,

Turnover tax and minority interests

1999 1998 1999 1998

HK$ million HK$ million HK$ million HK$ million

Property sales 14,991 15,304 4,960 8,939

Rental income 5,510 5,650 4,203 4,443

Hotel operation 542 545 134 132

Interest income 543 435 543 434

Other income 2,094 1,288 767 435

Total 23,680 23,222 10,607 14,383


25

Directors’ Report (cont’d)

1998

1998

1998

1998

1998

19

Group ProfitsProf it after taxation, including shares of profits of jointly

controlled entities and associated companies, amounted to

HK$9,282 million (HK$7,509 million in 1998). After deducting

minority interests, profit attributable to shareholders was HK$9,278

million (HK$7,260 million in 1998).

DividendsAn interim dividend of HK$0.50 per share (1998: HK$0.6) was

paid on 15th April 1999. The directors recommend a f inal

dividend of HK$1.05 per share (1998: HK$0.60), making a total

of HK$1.55 per share for the full year ended 30th June 1999

(1998: HK$1.20).

Purchase, Sale or Redemption of SharesThe Company did not redeem any of its ordinary shares during

the year. Neither the Company nor any of its subsidiaries

purchased or sold any of the Company’s ordinary shares during

the year.

Share Premium and ReservesMovements in the share premium and reserves of the Company

and the Group during the year are shown in note 19 to the

financial statements.

Mr Walter Kwok (middle), Chairman and ChiefExecutive, together with Mr Thomas Kwok (right) andMr Raymond Kwok (left), Vice Chairmen andManaging Directors, at the Annual General Meeting.


26


11

107 108

58 61

4

109 113

95

104(A)

29

Fixed AssetsMovements of fixed assets during the year are shown in note 11

to the financial statements.

Group Financial SummaryThe results, assets and liabilities of the Group for the last five

years are summarised on pages 107 to 108.

PropertiesParticulars of major investment properties held by the Group are

set out on pages 58 to 61.

DirectorsThe list of directors is set out on page 4 of the report and their

particulars are set out on pages 109 to 113. All directors other

than Messrs. Victor Fung Kwok-king and William Kwan Cheuk-

yin (together, “New Directors”) who were appointed as Independent

Non-Executive Directors on 10th May 1999 and 2nd July 1999

respectively, held office for the whole year. In accordance with

Article 95 of the Company’s Articles of Association, the New

Directors will retire at the forthcoming Annual General Meeting

and, being eligible, will offer themselves for re-election. In

accordance with Article 104(A) of the Company’s Articles of

Association, Messrs. Lee Shau-kee, Woo Po-shing, Walter Kwok

Ping-sheung and Thomas Chan Kui-yuen will retire by rotation at

the forthcoming Annual General Meeting and, being eligible, will

offer themselves for re-election. None of the directors proposed

for re-election has a service agreement with the Company or any

of its subsidiaries which is not determinable within one year

without payment of compensation.

Disclosure of InterestsAs at 30th June 1999, the interests of the directors and the chief

executive of the Company in the equity securities of the Company

as recorded in the register required to be kept under Section 29 of

the Securities (Disclosure of Interests) Ordinance (the “Ordinance”)

were as follows:


27


1

1,046,897,347

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 interested in the number of shares in the Company shown opposite

their names respectively. Of these numbers of shares, 1,046,897,347

shares represent the same interests and are therefore duplicated

amongst these three directors.

0.5No. of Shares of HK$0.50 each of the Company in which the Directors were interested

Categories of Interest

Personal Family Corporate OtherName of Director Interest Interest Interest Interest Total

Kwok Ping-sheung, Walter – 3,000 – 1,068,881,522 1,068,884,5221 (Note 1)

Lee Shau-kee 486,340 – – 800,000 1,286,340

Kwok Ping-kwong, Thomas 2,041,281 304,065 – 1,066,931,214 1,069,276,5601 (Note 1)

Kwok Ping-luen, Raymond – 1,000 – 1,070,074,895 1,070,075,8951 (Note 1)

Ho Tim 423,941 – – – 423,941

Woo Po-shing – – – – –

Fung Kwok-king, Victor – – – – –

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

Law King-wan 20,000 100,267 – – 120,267

Chan Kai-ming 33,000 – – – 33,000

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

Kwong Chun 732,722 339,358 – – 1,072,080

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

Wong Chik-wing, Mike 120,999 – – – 120,999


28


29

(i)

Other Associated CorporationsAs at 30th June 1999, the interests of the directors and the chief

executive of the Company in the equity securities of any

associated corporation (within the meaning of the Ordinance) as

recorded in the register required to be kept under section 29 of the

Ordinance were as follows:

(i) Each of Messrs. Walter Kwok Ping-sheung, Thomas Kwok

Ping-kwong and Raymond Kwok Ping-luen had the following

interests in the equity securities of the following associated

corporations:

Associated Corporation No. and Class of Securities Category of Interest

10

Superindo Company Limited 10 ordinary shares Personal

10

Super Fly Company Limited 10 ordinary shares Personal

Splendid Kai Limited 2,500

Splendid Kai Limited 2,500 ordinary shares Corporate

Hung Carom Company Limited 25

Hung Carom Company Limited 25 ordinary shares Corporate

Tinyau Company Limited 1

Tinyau Company Limited 1 ordinary share Corporate

8

Open Step Limited 8 ordinary shares Corporate

Globe Image Company Limited 100

Globe Image Company Limited 100 ordinary shares Corporate

(ii)

61,522 393,350

(ii) Messrs. Walter Kwok Ping-sheung and Raymond Kwok

Ping-luen had personal interests of 61,522 ordinary shares

and 393,350 ordinary shares respectively in the equity

security of The Kowloon Motor Bus Holdings Limited.


29


(iii)

258,000 690,000

(iv)

(iii) Messrs. Thomas Kwok Ping-kwong and Raymond Kwok

Ping-luen had personal interests of 258,000 ordinary shares

and 690,000 ordinary shares respectively in the equity

security of SmarTone Telecommunications Holdings Limited.

(iv) Mr. Lee Shau-kee had other interests in the equity securities

of the following associated corporations:

Associated Corporation No. and Class of Securities

Mightypattern Limited 2 200

Mightypattern Limited (Note 2) 200 ordinary shares

2 1

Star Play Development Limited (Note 2) 1 ordinary share

Central Waterfront Property Holdings Limited 2 47.5%

Central Waterfront Property Holdings Limited (Note 2) 47.5% of issued share capital

Newfoundworld Holdings Limited 2 40,000

Newfoundworld Holdings Limited (Note 2) 40,000 ordinary shares

2 1

Topcycle Development Limited (Note 2) 1 ordinary share

2 4,918

Teamfield Property Limited (Note 2) 4,918 ordinary shares

2 Mightypattern Limited

Central Waterfront Property Holdings

Limited

Newfoundworld Holdings Limited

Note 2 These 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 company in 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 and 15 per cent respectively.

These shares in Newfoundworld Holdings Limited and Topcycle

Development Limited were beneficially owned by HL.

These shares in Teamfield Property Limited were held by a company in

which HL had a 50 per cent interest.


30


Mr. 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 the voting

rights in the capital of Henderson Development Limited (“HD”). HD

was the holding company of HL which was the holding company of HI.

By virtue of the provisions of the Ordinance and the matters aforesaid,

Mr. Lee Shau-kee is taken to be interested in the shares and interests as

mentioned hereinabove.

(v) Mr. Victor Fung Kwok-king had corporate interests of 70

ordinary shares in the equity security of Fun Fun World

Investment Limited.

(vi) None of the directors had any interests in any debt securities

issued by the Company or any jointly controlled entities and

associated corporation.

(vii) As at 30th June 1999, no rights to subscribe for equity or

debt securities of the Company had been granted to any

director or the chief executive of the Company or to the

spouse or children under 18 years of age of any such

director or the chief executive.

Substantial ShareholdersAs at 30th June 1999, the interests of every person, other than a

director or the chief executive of the Company, in the equity

securities of the Company as recorded in the register required to

be kept under Section 16(1) of the Ordinance were as follows:

Hopkins (Cayman)

Limited Hopkins

(Cayman) Limited

(v) Fun Fun World

Investment Limited

70

(vi)

(vii)

16(1)

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

HSBC Holdings plc 1,115,632,780

HSBC Finance (Netherlands) 1,114,414,980

HSBC Holdings B.V. 1,114,414,980

HSBC Investment Bank Holdings B.V. 1,091,642,257

HSBC International Trustee Limited 3 (Note 3) 1,065,463,639


31


3 HSBC International Trustee Limited

HSBC Investment Bank Holdings

B.V. HSBC

Investment Bank Holdings B.V.

HSBC Holdings B.V.

HSBC Holdings B.V.

HSBC Finance (Netherlands)

HSBC Finance

(Netherlands) HSBC

Holdings plc

HSBC International Trustee Limited

1,046,897,347 1

A26 A29

17 20

1998

1998

Note 3 The shares in which HSBC International Trustee Limited was interested

formed part of the shares in which HSBC Investment Bank Holdings

B.V. was interested; the shares in which HSBC Investment Bank

Holdings B.V. was interested formed part of the shares in which HSBC

Holdings B.V. was interested; the shares in which HSBC Holdings B.V.

was interested were the shares in which HSBC Finance (Netherlands)

was interested and the shares in 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, 1,046,897,347 shares were part of the

shares referred to in Note 1 above.

Bank BorrowingsDetails of bank borrowings are set out in notes 17 and 20 to the

financial statements on pages A26 and A29.

Interest CapitalisedInterest capitalised during the year amounted to HK$194 million

(1998: HK$630 million).

Charitable DonationsHK$17 million was donated during the year (1998: HK$10.6

million).

Interest in ContractsNo contracts of significance to which the Company or any of its

subsidiaries was a party and in which a director had a material

interest subsisted at the end of the year or at any time during the

year.

Arrangement to Purchase Shares or DebenturesAt no time during the year was the Company or any of its

subsidiaries a party to any arrangement to enable the directors of

the Company to acquire benefits by means of the acquisition of

shares in or debentures of the Company or of any other body

corporate.


32


Major Customers and SuppliersDuring the year, less than 30 per cent of the Group’s sales and less

than 30 per cent of the Group’s purchases were attributable to the

Group’s f ive largest customers and f ive largest suppliers

respectively.

AuditorsThe retiring auditors, Messrs. Deloitte Touche Tohmatsu, have

signified their willingness to continue in office. A resolution will

be proposed at the Annual General Meeting to re-appoint them

and to authorise the directors to fix their remuneration.

Year 2000 Compliance

The Group has long recognised the importance of the Year 2000

issue (Y2K). As previously reported, the Group established a Year

2000 Compliance Programme under the guidance of a Y2K

committee to ensure that its business will continue to function

properly through and beyond the Year 2000. The Year 2000

conformity requirements issued by the British Standards Institution

were adopted as the benchmark for compliance. The Company and

its subsidiaries are already fully compliant.

Detailed risk assessments and impact studies on all of the

Group’s cr i t ical operat ions have been sat isfactor i ly

conducted, and the results were used to develop mitigation

and contingent measures to minimise the potential impact

of Y2K. All contingency plans have been formulated and

wil l cont inue to be tested, reviewed and ref ined as

necessary.

The Group has been actively assessing the Y2K compliance of

various business counterparts, to ensure that the Group is not

unnecessarily exposed to risk due to any third party’s lack of

readiness. However, despite its efforts to identify the Y2K issue

and to implement appropriate measures, there can be no assurance

that equipment or services used by third parties on which the

Group does or will rely, will be Y2K compliant, and the failure of

such equipment or services may affect the Group’s business

operations.


33


14

The total cost incurred to-date for the programme is within the

budget of HK$10 million. Any further cost to be incurred in

relation to contingency plans will be immaterial.

Costs relating to major system changes which are indirectly

related to the Year 2000 are not included above. Costs related to

conversion and modification are expended as a revenue item as

and when incurred, while costs of new software and replacement

of certain systems and equipment will be capitalised and

amortised over the useful life of the assets.

Audit CommitteePursuant to the requirements of the Rules Governing the Listing

of Securities of the Stock Exchange of Hong Kong Limited, an

Audit Committee of the Company was established during the year

with reference to “A Guide for the Formation of an Audit

Committee” issued by the Hong Kong Society of Accountants.

The members of the Audit Committee are Mr. William Kwan

Cheuk-yin (Chairman), Mr. Ho Tim and Mr. Clement Lo Chiu-

chun, all of whom are non-executive Directors. Subsequent to its

formation, the Committee met once in 1999.

The Audit Committee is answerable to the Board and the

principal duties of the Committee include the review and

supervision of the Company’s financial reporting process and

internal controls.

Code of Best PracticeThe Company has complied with the Code of Best Practice as set

out in Appendix 14 of the Listing Rules of The Stock Exchange

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, 7th October 1999


34


Grand Pacific Views on Castle Peak Road


35

Directors’ Report (cont’d)R e v i e w o f O p e r a t i o n sR e v i e w o f O p e r a t i o n s

The superb quality and comprehensive facilities of the Group’s properties, supplemented bycaring customer service, have won high acclaim in the market. The Group will build on thisfoundation, continuing to concentrate on large-scale residential properties with small tomedium sized units and high-tech features, to improve residents’ quality of life.


36

Review of OperationsReview of Operations

Agricultural Land Reserves

0

5

10

15

20

25

1995 1996 1997 1998

1817

1819

21

1999

Million Square Feet

Year

Site Area

Land Bank in Hong Kong

0

10

20

30

40

50

60

70

1995

14.1

41.3

15.0

44.6

17.3

50.9

17.6

50.6

18.5

50.6

1996 1997 1998 1999

Million Square Feet

Year

Not including agricultural land reserves

**

* *

Gross Floor Area

Land Bank

The Group owns a low-cost, well-diversified land bank in Hong

Kong. As at the end of the year under review, it consisted of 50.6

million square feet in terms of attributable gross floor area,

located throughout Hong Kong Island, Kowloon and various new

towns in the New Territories. In addition, the Group has 21

million square feet of agricultural land in terms of site area,

located in various parts of the New Territories. The majority of

this is in the process of land use conversion, principally for

residential development.

The Group had 32.1 million square feet of properties under

development. About 27.9 million square feet of the properties

under development will be sold, while upon completion, the

remaining 4.2 million square feet will be added to the Group’s

completed investment property portfolio, which now stands at

18.5 million square feet.

Of the properties under development, about 75 per cent are

residential projects, and most are large-scale estates of small to

medium sized units. The Group will continue to develop premium-

quality properties, not only in terms of construction and materials,

but also employing the most up-to-date technologies in the facilities

and management of its residential and commercial properties. For

example, the Group introduced a broad band fibre optic system in

Royal Peninsula, Hung Hom. The system enables high-speed


37

�� !�� Land Bank (cont’d)�� !�� Land Bank (cont’d)

�� !"#$%&'()*+,-

�� !"#$%&

�� !"#$%&'()*+,-.

�� !"#$%&'()*+,-.

�� !"#$%&'()*+, -

�� !NP�� !"#$%&'()

�� !"#$"%&'()*UP��

�� !�"

digital information transmission for the residents, making life much

more convenient. Similar broad band facilities will be integrated in

other properties under development by the Group.

The current land bank is sufficient for development needs over

the next five years, and the Group will continue to replenish its

land bank on a selective basis. Details of new sites added during

the year are given in the Chairman’s Statement on page 13. The

Group’s land bank in mainland China is described under

Mainland China Business on page 83.

* Industrial/Office properties include industrial properties and godowns.G �� !"#$%�#&'()*+


Land Bank (cont’d)

38

Land Bank (cont’d)

Hong Kong NewStatus and Location Island Kowloon Territories Total

million square feet

Development for sale 2.8 3.7 21.4 27.9

Development for investment 0.1 2.0 2.1 4.2

Completed investment property 4.7 5.1 8.7 18.5

Total 7.6 10.8 32.2 50.6

Shopping Industrial/Status and Usage Residential Centre Office Hotel Office Total

million square feet

Development for sale 24.0 – 0.6 – 3.3 27.9

Development for investment – 1.4 0.8 2.0 – 4.2

Completed investment property 1.1 7.4 5.7 0.9 3.4 18.5

Total 25.1 8.8 7.1 2.9 6.7 50.6

The Group’s land bank in Hong Kong, by attributable gross floor

area, is analysed by status and location as follows:

The Group’s land bank in Hong Kong, by attributable gross floor

area, is analysed by status and usage as follows:


39

Land Bank (cont’d)Land Bank (cont’d)

The Group will continue to increase the volume ofits residential completions in the next few years,while stringently controlling costs to enhancedevelopment returns.

Mount Haven in Tsing Yi

P r o p e r t y D e v e l o p m e n tP r o p e r t y D e v e l o p m e n t


40


11

12

Property Development

Property SalesThe Group’s property sales for the year ended 30th June 1999

were $21,904 million, as compared to HK$25,916 million for the

previous year. This f igure includes projects in which the

Group is both principal and agent and its attributable shares

of 22.5 per cent in Villa Esplanada Phase 2, 29 per cent in

The Belcher’s Phase 1 and 20 per cent in Tung Chung

Crescent.

Residential Shopping Centre Office Total million square feet

For sale 3.4 ** 0.3 3.7

For investment – ** 1.3 1.3

Total 3.4 ** 1.6 5.0

**

** less than 0.1 million square feet

Projects completed in 1998/99

The Group completed 12 projects in the year ended 30th June

1999, with an aggregate attributable gross floor area of 5 million

square feet. These projects are described in the Chairman’s

Statement on pages 11 to 12.

Le Palais in Tai Tam shows the prime quality of theGroup’s luxury properties.


41

Property Development (cont’d)Property Development (cont’d)

About 95 per cent of the residential properties completed and

marketed during the year have been sold, along with 300,000

square feet in Millennium City Phase 1. The remaining floor area

in Millennium City Phase 1 and One International Finance Centre

will be retained as a long term investment.

Projects to be completed in 1999/2000

The Group expects to complete eight projects in the coming

financial year, with an aggregate attributable gross floor area of

4.4 million square feet. The breakdown is as follows:

Residential Shopping Centre Office Total

million square feet

For sale 4.1 – – 4.1

For investment – 0.1 0.2 0.3

Total 4.1 0.1 0.2 4.4

Towering over Central, OneInternational Finance Centre offerscomprehensive high-tech facilities.


42


Location Project Name

Fung Shing Street, Ngau Chi Wan Scenic View

124 Tsing Yi Town Lot 124 Grand Horizon

Liu To, Tsing Yi Mount Haven

Chung On Terrace, North Point Le Sommet

Ming Yuen Western Street, North Point Villa Claire

Siu Lek Yuen, Shatin Castello

Airport Railway Tung Chung Station Tung Chung Crescent

Development Package One Phase 2

378 378 Kwun Tong Road Millennium City Phase 2

Year Total

Properties Under Development

Projects to be Completed in FY1999/20001999/2000

Scenic View in Ngau Chi Wan is scheduled for completionby the end of this year.


43


Attributable Gross Floor Area in Square Feet

Group’s Interest Residential Shopping Centre Office Total

100% 704,000 – – 704,000

85% 701,000 – – 701,000

100% 653,000 – – 653,000

100% 390,000 – – 390,000

100% 44,000 – – 44,000

100% 1,447,000 11,000 – 1,458,000

20% 166,200 99,000 32,000 297,200

50% – – 133,000 133,000

4,105,200 110,000 165,000 4,380,200

Le Sommet in North Point sets a new level for luxury in anurban area.


44


Projects to be Completed in FY2000/012000/01

Location Project Name

11084 Kowloon Inland Lot 11084 Royal Peninsula

394 – Sha Tin Town Lot 394 –

Hong Kong Oxygen Plant Redevelopment Clearwater Bay Peninsula

Phase 1

– Shui Pin Wai, Yuen Long –

843 – Shaukeiwan Inland Lot 843, Aldrich Bay –

Ha Yau Tin Phase 2, Yuen Long Villa Premiere

Nga Ying Chau Street, Tsing Yi Villa Esplanada Phase 3

71 – 71 Mount Kellett Road –

Shiu Wing Steel Mill Redevelopment Ocean Shores Phase 1

396 Tuen Mun Town Lot 396 Chelsea Heights Phase 2

89 89 Pok Fu Lam Road The Belcher’s Phase 1

401-407 – 401-407 Chatham Road –

– Airport Railway Tung Chung Station –

Development Package One (Hotel Portion)

Year Total

The Aldrich Bayresidential developmentin Shaukeiwan isscheduled for completionin 2001.

Villa Premiere inYuen Long willprovide 320residential units.


45



Group’s Interest Residential Shopping Centre Office Hotel Total

50% 739,000 – – – 739,000

100% 511,000 – – – 511,000

447,000 – – – 447,000

Joint venture

100% 439,500 – – – 439,500

30% 222,000 – – – 222,000

100% 217,000 – – – 217,000

22.5% 193,000 – – – 193,000

100% 14,000 – – – 14,000

49% 667,000 5,500 – – 672,500

100% 551,000 116,000 – – 667,000

29% 323,500 62,500 – – 386,000

100% 23,700 5,900 – – 29,600

20% – – – 47,500 47,500

4,347,700 189,900 – 47,500 4,585,100

Royal Peninsula will be the firstresidential development in HongKong to have the broad band fibreoptic network.

Chelsea Heights Phase 1in Tuen Mun, is alreadyoccupied, and Phase 2 isnow under construction.


46


Location Group’s Interest

Ma Wan Development

Joint venture

504 Yuen Long Town Lot 504 100%

Shiu Wing Steel Mill Redevelopment 49%

Ocean Shores Phases 2 & 3

57 66 Tseung Kwan O Town Lots 57 & 66 57.52% / 25%

374 Tuen Mun Town Lot 374 25%

503 Yuen Long Town Lot 503 (formerly Yau Tin East Road) 100%

Hong Kong Oxygen Plant Redevelopment

Clearwater Bay Peninsula Phase 2 Joint venture

8882 IL 8882, Leighton Hill 100%

506 Yuen Long Town Lot 506 66.7%

To Fung Shan Phases 2, 3 and 4, Shatin 100%

Kwu Tung Phases 2 & 3, Sheung Shui 100%

89 89 Pok Fu Lam Road 29%

The Belcher’s Phase 2

Ngau Tam Mei, Yuen Long 100%

399 Tuen Mun Town Lot 399 100%

1 1 Ho Man Tin Hill Road

Joint venture

6328 NKIL 6328, Cheung Sha Wan 35.44%

Airport Railway Tung Chung Station Development Package One 20%

(Remaining Phases)

418 418 Kwun Tong Road 100%

Olympic Station Development Package Three 100%

Total

Major Projects to be Completed in FY2001/02 to FY2003/042001/02 2003/04


47



Residential Shopping Centre Office Hotel Total

3,663,800 86,100 – – 3,749,900

1,366,000 377,000 – – 1,743,000

1,290,000 10,500 – – 1,300,500

1,397,500 195,500 – – 1,593,000

306,500 5,500 – – 312,000

1,162,500 – – – 1,162,500

1,004,000 – – – 1,004,000

898,000 – – – 898,000

664,000 – – – 664,000

744,000 – – – 744,000

405,000 – – – 405,000

386,000 – – – 386,000

383,000 – – – 383,000

375,000 – – – 375,000

158,000 – – – 158,000

414,000 14,000 – 162,000 590,000

203,000 5,500 – – 208,500

– 405,000 678,000 – 1,083,000

– – – 695,400 695,400

14,820,300 1,099,100 678,000 857,400 17,454,800


48


1839

17

16

15

KCRC-East Rail

Major Existing Highways

Airport Railway

Mass Transit Railway

MTR Tseung Kwan O Extension (completion 2002)

KCRC-West Rail (completion 2003)

1.2.3. 57 664.5.6. 3947.8.9.10. 50611. 50312. 50413.14.15. 39916.17. 37418.19.20.21.22. 632823.24.25.26.27. 888228.29. 843

1. Clearwater Bay Peninsula2. Ocean Shores3. TKOTLs 57 & 664. Scenic View5. Castello6. STTL 3947. To Fung Shan Phase 2, 3 and 48. Shek Wu Wai9. Ngau Tam Mei10. YLTL 50611. YLTL 50312. YLTL 50413. Villa Premiere14. Shui Pin Wai15. TMTL 39916. Chelsea Heights Phase 217. TMTL 37418. Tung Chung Crescent19. Ma Wan Development20. Villa Esplanada Phase 321. Grand Horizon22. NKIL 6328, Cheung Sha Wan23. 1 Ho Man Tin Hill Road24. Yunnan Lane, Yau Ma Tei25. Royal Peninsula26. The Belcher's27. IL 8882, Leighton Hill28. Le Sommet29. SIL 843, Aldrich Bay

Residential

Shopping Centre

Office

Industrial / Office

Hotel

2.3. 57 665.12. 50416.17. 37418

19.22. 632826.30. 418

18.

30. 41831.32. 129

33. 20-2234. 12-2335. 51-5336. 7737. 39938. 50

22. 632839.

40.

41. 77 89

2. Ocean Shores3. TKOTLs 57 & 665. Castello12. YLTL 50416. Cheslsea Heights Phase 217. TMTL 37418. Airport Railway Tung Chung Station

Development Package 119. Ma Wan Development22. NKIL 6328, Cheung Sha Wan26. The Belcher’s30. 418 Kwun Tong Road

18. Airport Railway Tung Chung StationDevelopment Package 1

30. 418 Kwun Tong Road31. Millennium City Phase 232. 129 Hoi Bun Road, Kwun Tong

33. 20-22 Siu Lek Yuen Road34. 12-23 Wang Wo Tsai Road35. 51-53 Kwai Cheong Road36. 77 Wing Hong Street37. 399 Chai Wan Road38. 50 Wong Chuk Hang Road

22. NKIL 6328, Cheung Sha Wan39. Airport Railway Tung Chung Station

Development Package 140. Airport Railway Olympic Station

Development Package 341. TWTLs 77 & 89


49


38

27

28 29

37

12

33031

32

25

23

24

40

4

22

36

35

3441

21

20

33 5

67

19

1213 11

1410

9

8

26

Major Properties Under Development


50


100%

11084 ( 50%)

iHON

49%

Progress of major projects under developmentCastello

Siu Lek Yuen, Shatin (100% owned)

Castello in Shatin consists of seven residential towers containing

1,744 medium sized units with a total gross floor area of over 1.4

million square feet. About 90 per cent of the units have already

been sold. The development will be ready for occupation by the

end of this year.

Royal Peninsula

Kowloon Inland Lot 11084 (50% owned)

Royal Peninsula, with its prime location in urban Kowloon, offers

1,669 luxury residential units and service apartments. It has a

total gross floor area of close to 1.5 million square feet, which is

expected to be completed in the second half of 2000. The

development features the latest information technology with the

innovative iHON system, setting new standards for modern

digital life. It was launched for sale in October this year.

Ocean Shores

Shiu Wing Steel Mill Redevelopment (49% owned)

The development has over 5,000 units with a total gross floor area

of 4 million square feet, and should be finished in three phases

between 2000 and 2002. Construction of the first phase has been

progressing according to schedule and should be completed by

the end of 2000. There are five residential towers in the first

phase containing 1,920 units.

Ocean Shores in Tseung Kwan O has aspectacular harbour view.


51


8882 100%

Clearwater Bay Peninsula

Hong Kong Oxygen Plant Redevelopment (Joint venture)

The development is in two phases; the first comprises three

residential towers with a total gross floor area of 447,000 square

feet, providing 424 quality units. It is expected to be completed in

the first half of 2001. The second phase will have approximately

1,500 small to medium sized units, with total gross floor area

exceeding 1 million square feet. It is scheduled for completion in

2002.

Inland Lot 8882, Leighton Hill (100% owned)

This site is strategically located in a well-known prestigious

residential area, close to the prime commercial district on Hong

Kong Island. The development will contain 898,000 square feet of

residential space, providing 558 top-quality luxury units.

Construction is expected to finish in the second half of 2001.

Clearwater Bay Peninsula will provideabout 2,000 quality residential units.

The Leighton Hill development in Causeway Baywill be a top grade luxury property.


52


57 57.52% 66

25%

504 100%

Ma Wan (Joint venture)

The Group has obtained government approval for an additional

736,000 square feet of floor area, bringing the gross floor area to

over 3.7 million square feet. The project’s residential and leisure

developments cover almost the entire island. The first phase of

the residential development, comprising about 1,700 units, is

expected to be completed in 2002.

Tseung Kwan O Town Lots 57 (57.52% owned) & 66 (25%

owned)

These two sites will be jointly developed as a large-scale project

with nine residential towers and a shopping centre, with a

combined gross floor area of 2.9 million square feet. Conveniently

located next to a station on the future Tseung Kwan O extension

of the MTR, the project will provide about 4,000 small to

medium sized residential units, to be completed in phases over the

next three to four years.

Yuen Long Town Lot 504 (100% owned)

This development has a gross floor area of 1.7 million square

feet. The Group plans to build over 2,000 small to medium sized

units and a retail podium. Construction will take place in three

phases and the whole project is expected to be completed in about

four to five years’ time.

In addition to a large-scale residentialdevelopment, the Ma Wan project willalso contain a wide variety of leisurefacilities.


53

Property Development (cont’d)Property Development (cont’d)P r o p e r t y I n v e s t m e n tP r o p e r t y I n v e s t m e n tP r o p e r t y I n v e s t m e n t

As the Group maintains its flexible approach to leasing, its investment property portfolio is95 per cent let. Gross rental income was slightly affected by the economic downturn. TheGroup aims to maintain an optimal rental portfolio by developing quality projects for lease.

P r o p e r t y I n v e s t m e n tP r o p e r t y I n v e s t m e n t

New Town Plaza in Shatin


54


Property Investment

Despite another difficult year for the leasing market, performance

of the Group’s rental portfolio remained highly satisfactory.

Occupancy of the 18.5 million square-foot investment portfolio in

Hong Kong remains at 95 per cent. In the year ahead, continuing

pressure on rents is anticipated. The Group will monitor the

prevailing market and the requirements of its valued tenants

closely, to ensure that high occupancy is maintained. The Group

will remain flexible towards renewals and new lettings in order to

deal with changing market conditions.

In view of the ever-changing market needs, the Group continuously

reviews the tenant profile of its shopping centres in order to

achieve an optimal mix. It also develops interactive office

buildings to meet the advanced communications requirements of

modern businesses. The Group’s Millennium City Phase 1, with its

advanced facilities, has attracted many communications, computer

and service companies as tenants.

Excluding contributions from jointly controlled entities, gross

rental income declined by a marginal 2.5 per cent to HK$5,510

million. Net rental income also registered a slight decline of 5.4

per cent to HK$4,203 million. If the Group’s share of rental

income from jointly controlled entities was included, total gross

rental income would have declined by only one per cent to

HK$5,801 million for the year. Net rental income decreased 6.5

per cent to HK$4,284 million. The slight decline was mainly due

to fresh contributions from Millennium City Phase 1 and One


55

Property Investment (cont’d)Property Investment (cont’d)

International Finance Centre, as well as the resilience of the

Group’s shopping centres.

While there have been some indications of a gradual economic

recovery of late, a full recovery is not yet apparent. Full-year

contributions from Millennium City Phase 1 and One International

Finance Centre, together with new contributions from Millennium

City Phase 2, will help to hold rental income at a satisfactory

level in the forthcoming financial year.

The Group’s strategy is to constantly review the mix of its

investment portfolio. Investments and divestments are made on a

selective basis in order to maintain a well-balanced portfolio and

to provide a solid base for long term growth. A major divestment

made during the year was the disposal of Lodge on the Park, a

luxury residential property consisting of 56 units, located in Mid-

Levels.

The Group’s investment property portfolio in Hong Kong,

including its attributable share of jointly controlled entities, is as

follows:

Shopping Industrial/Status and Usage Residential Centre Office Hotel Office Total

million square feet

Completed 1.1 7.4 5.7 0.9 3.4 18.5

Under Development – 1.4 0.8 2.0 – 4.2

Total 1.1 8.8 6.5 2.9 3.4 22.7

Completed Investment PropertiesShopping CentresThe Group owns the largest network of regional shopping centres

in Hong Kong, with an attributable gross floor area of 7.4 million

square feet. The majority of these shopping centres are in new

towns, providing daily necessities to nearby residents. Due to

their prime locations, occupancies and rents remain relatively

resilient to the economic downturn.


56


Despite weakness of the overall retail market, occupancy of the

Group’s retail rental portfolio exceeded 95 per cent. Leasing of

New Town Plaza, one of the Group’s flagship developments, was

highly satisfactory with almost full occupancy. Leasing of the

Group’s other large shopping centres is also very encouraging.

East Point City, Metroplaza and Grand Century Place are

virtually fully let.

The Group carries out renovations regularly to further improve layout

and design, underscoring its commitment to enhancing the rental

value of its shopping centres. Promotions and other initiatives are also

staged in the Group’s major shopping centres from time to time, to

further boost pedestrian flows. During the year under review, New

Town Plaza and the shopping centre at Tai Po Centre were renovated.

The latter was renamed the Tai Po Mega Mall as the Group introduced

a completely new and inviting “garden feel” food court to the mall.

Offices

The Group has an investment portfolio of 5.7 million square feet of

prime office space. Over the past two years, the overall office rental

market has been affected by over-supply and the territory’s weakened

economic situation. However, as the majority of the Group’s office

developments are located in prime districts along the main transportation

systems, the Group has been able to sustain 94 per cent occupancy.

Offices at Grand Central Plaza and Grand Century Place are

now virtually fully let, while occupancy of the Sun Hung Kai

Centre and Central Plaza, is about 96 per cent.

Substantial progress was made on leasing of the newly-completed

One International Finance Centre, with 80 per cent of the

office space let. The Group is confident that the building’s take-

up rate will continue to rise given its prestigious location in

Central and advanced technical facilities.

Residential Properties

The Group holds 1.1 million square feet of residential property for

investment, a large proportion of which is luxury residences such

as Dynasty Court, Pacific View and Hillsborough Court. These

deluxe properties provide a comprehensive range of recreational

and club house facilities and their occupancy has remained high.


57


Car Parks

The Group currently owns 23,000 parking bays. Rental income

from these car parks amounted to HK$476 million during the

year. More car parks will be built in the Group’s new investment

properties.

Others

The Group owns 25 cinemas. These cinemas, located in the

Group’s various shopping centres, help to attract visitors and

bring business to tenants.

A number of industrial and godown properties were also kept for

rental purposes, and the Group is actively exploring opportunities

to convert some of these sites to residential, service apartment or

office use.

Investment properties under developmentTo achieve an optimal mix in its investment property portfolio

and further strengthen its recurrent income base, the Group will

continue to seek further opportunities for developing prime

investment properties in strategic locations. About 4.2 million

square feet of new investment properties are under development.

With the success in leasing Millennium City Phase 1, which is

now fully let, the Group has recently launched Millennium City

Phase 2 for lease. The Group has a 50 per cent interest in this

267,000 square-foot office development.

Major investment properties under development include:

Shopping Centres

• Shopping centre at the Airport Railway Tung Chung Station

Development Package One

• Shopping centre at Chelsea Heights Phase 2

• Shopping centre at 418 Kwun Tong Road (Millennium City)

• Shopping centre at Yuen Long Town Lot 504

Offices

• Millennium City Phase 2

• Off ices at the Airport Railway Tung Chung Station

Development Package One

• Offices at 418 Kwun Tong Road (Millennium City)

418

504

418


Property Investment (cont’d)

58


Property Name Location

Hong Kong Island

30 Sun Hung Kai Centre 30 Harbour Road, Wanchai

280 World Trade Centre 280 Gloucester Road, Causeway Bay

1 One International Finance Centre 1 Harbour View Street, Central

25 Harbour Centre 25 Harbour Road, Wanchai

18 Central Plaza 18 Harbour Road, Wanchai

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

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

4 18 Hillsborough Court (Block 4) 18 Old Peak Road

Kowloon

193 Grand Century Place 193 Prince Edward Road West, Mongkok

388 Millennium City Phase 1 388 Kwun Tong Road

28 The Sun Arcade 28 Canton Road, Tsim Sha Tsui

193 Royal Plaza Hotel 193 Prince Edward Road West, Mongkok

69 Royal Garden Hotel 69 Mody Road, Tsim Sha Tsui

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

34 New Tech Plaza 34 Tai Yau Street, San Po Kong

49 APEC Plaza 49 Hoi Yuen Road, Kwun Tong

538 Peninsula Tower 538 Castle Peak Road, Cheung Sha Wan

82-84 Hing Wah Centre 82-84 To Kwa Wan Road

Major Completed Investment Properties

Most of the tenants ofCentral Plaza in Wanchai,are multinationalcompanies.



59


Lease Expiry Group’s Interest Residential Shopping Centre Office Hotel Industrial/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% 341,300 – – – – 341,300

2047 100% 316,700 – – – – 316,700

2884 100% 159,500 – – – – 159,500

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

2047 100% – – 930,000 – – 930,000

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

International FinanceCentre’s high-tech designhas attracted manyinternational financialinstitutions.



60


Property Name Location

New Territories

18 New Town Plaza I 18 Shatin Centre Street, Shatin

9 Tai Po Mega Mall (formerly Tai 9 On Pong Road, Tai Po

Po Centre Shopping Arcade)

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

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

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

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

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

9 Uptown Plaza Shopping Arcade 9 Nam Wan Road, Tai Po

1 223 Metroplaza Tower I & Shopping Centre 223 Hing Fong Road, Kwai Chung

138 Grand Central Plaza 138 Shatin Rural Committee Road, Shatin

39 Landmark North 39 Lung Sum Avenue, Sheung Shui

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

8 Royal Park Hotel 8 Pak Hok Ting Street, Shatin

8 Sunhing Hung Kai Godown (Shatin) 8 Wong Chuk Yeung Street, Shatin

2 Advanced Technology Centre 2 Choi Fat Street, Sheung Shui

New Town Plaza in Shatin is always bustlingwith shoppers.

Grand Century Place in Mongkok has attracted a largepedestrian flow since opening.



61


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

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 100% – – – 258,000 – 258,000

2047 100% – – – – 500,000 500,000

2047 100% – – – – 142,000 142,000

Various events are held at East Point City shoppingcentre, which attract a large number of visitors.

Metroplaza is the most popular shopping centre inKwai Fong.



62


19

KCRC-East Rail

Major Existing Highways

Airport Railway

Mass Transit Railway

MTR Tseung Kwan O Extension (completion 2002)

KCRC-West Rail (completion 2003)

1. Dynasty Court2. Hillsborough Court3. The Harbourview4. 3 Repulse Bay Road5. 63 Deep Water Bay Road6. 51 & 55 Deep Water Bay Road7. Pacific View

Shopping Centre

Residential

1.2.3.4. 35. 636. 51 557.

Office

Industrial / Office

Hotel

8.9.10.11.12.13.1415.16.17.18.19.20.21.22.23.24.25.26.27.28.29.30.31.32.33.

8.9.14.16.17.2122.24.25.27.28.29.30.34.35.

36.37.38.39.40.41.42.43.

44.45.46.

8. New Town Plaza9. Grand Central Plaza

10. Shatin City One Shopping Arcade11. East Point City12. Uptown Plaza13. Tai Po Mega Mall14. Landmark North15. Sun Yuen Long Centre16. Yuen Long Landmark17. Transport Plaza18. Yuen Long Plaza19. Chi Lok Fa Yuen20. Tsuen Wan Plaza21. Grand City Plaza22. Metroplaza23. New Kowloon Plaza24. Grand Century Place25. Hollywood Plaza26. The Sun Arcade27. World Trade Centre28. Sun Hung Kai Centre29. Harbour Centre30. One International Finance Centre31 Chi Fu Landmark32. Port Centre33. New Jade Garden

8. New Town Tower9. Grand Central Plaza

14. Landmark North16. Yuen Long Landmark17. Transport Plaza21. Grand City Plaza22. Metroplaza24. Grand Century Place25. Hollywood Plaza27. World Trade Centre28. Sun Hung Kai Centre29. Harbour Centre30. One International Finance Centre34. Central Plaza35. Millenium City Phase 1

36. APEC Plaza37. Infotech Centre38. Hing Wah Centre39. New Tech Plaza40. Advanced Technology Centre41. Peninsula Tower42. Kerry Hung Kai Godown43. Sunhing Hung Kai Godown (Shatin)

44. Royal Garden Hotel45. Royal Park Hotel46. Royal Plaza Hotel



63

65 7

4

312

32

31

34 29 2827

4426

30

36 1135

37

38

3925

24

4623

42

41

22

20

21

1089 45

43

1213

1440

1516

17

18

33

Major Completed Investment Properties


64


Related Business Activities

HotelsAs the economic downturn in most of Asia appears to have been

over, occupancy of the Group’s three hotels improved during the

year under review, while average room rate stabilized in recent

months after a significant decline. With signs of a recovery on the

way, tourist arrivals are growing and prospects for the hotel

industry are improving.

The Royal Garden Hotel focused on improving efficiency and

reducing costs during the year under review, resulting in a leaner,

more streamlined operation. Occupancy averaged 85 per cent for

the year, up over the previous year and in line with the planned

target. For the future, planned renovations to guest rooms and

public areas, along with an aggressive promotion programmes,

will further enhance the Royal Garden’s prospects, carrying it

through the coming year with renewed confidence.

The Royal Park Hotel registered an average occupancy of 86 per

cent during the year. This encouraging result demonstrates that

the Royal Park has a strong foundation and a steadily growing

client base. With the advantages of easy access to Hong Kong’s

new International Airport and a prime location near the railway

station, the Royal Park offers unrivalled convenience, and the

hotel is confident of maintaining high occupancy rates.

Occupancy in the Royal Plaza Hotel has increased steadily since

its opening in 1997. Despite the negative economic climate in the

The Royal Plaza Hotel’s occupancy rate grewsteadily since its opening.


Related Business Activities (cont’d)Related Business Activities (cont’d)

65

latter part of 1998 and the beginning of 1999, the Royal Plaza

achieved an average occupancy rate of 80 per cent during the

year. With increasing signs of an economic revival in Southeast

Asia and the advent of the next millennium, the business outlook

will further improve.

ConstructionThe total turnover of the construction division more than doubled

in the year under review from last year’s HK$5.2 billion to

HK$13 billion, of which HK$1.3 billion was derived from joint

venture companies. Over the year, 11 million square feet of

covered floor area was completed, of which one million square

feet was completed by a joint venture company.

Major projects completed during the year include Symphony Bay

in Sai Kung, Le Palais in Tai Tam, Grand Pacific Views & Grand

Pacif ic Heights on Castle Peak Road, Waterfront South in

Aberdeen, Festival Walk in Kowloon Tong, the Airport Freight

Forwarding Centre and Millennium City Phase 1 in East

Kowloon. One International Finance Centre was the only project

completed by a joint venture company in the year.

Symphony Bay in Sai Kung (left) and Grand PacificHeights on Castle Peak Road (above) were both completedin the year under review.


Related Business Activities (cont’d)

66


Projects currently under construction include Ocean Shores in

Tseung Kwan O, Grand Horizon in Tsing Yi, Castello in Shatin,

Le Sommet in North Point, Scenic View in Ngau Chi Wan, Villa

Premiere in Yuen Long and Chelsea Heights Phase 2 in Tuen

Mun. Projects under development by joint venture companies

include Royal Peninsula in Hung Hom and The Belcher’s in Mid-

Levels West.

With the difficult economic climate in the year under review, the

division adopted new construction methods to increase efficiency,

while implementing numerous improvements to interior finishing

procedures to ensure continued high quality. To further raise its

competitive advantage, the division is enhancing and integrating

its various information systems to provide effective decision

support and cost control information, thereby strengthening the

construction division’s operations.

The Belcher's incorporates the finest design andmaterials, and is equipped with high-tech facilities,winning market acclaim.



67

The following wholly owned subsidiaries and associates provide

fire prevention, electrical engineering, machinery leasing and

ready-mixed concrete, complementing the construction division’s

activities:

Everlight Engineering Company Limited provides electrical

and fire prevention systems, including installation and system

maintenance, for in-house and external projects. Turnover for the

year under review was HK$415 million, including HK$122

million from external projects, an increase of 74 per cent over the

previous year.

Aegis Engineering Company Limited provides plant and

machinery leasing, and site office equipment to the Group.

Turnover for the year under review was HK$48 million.

Glorious Concrete (HK) Limited is an associate of the division,

supplying ready-mixed concrete to the Group and many external

contractors. The company’s results for the year were good.

The construction division strivesto improve the quality of itsprojects, in order to ensure thatthe Group’s properties are of thehighest standard.



68


Financial ServicesHung Kai Finance Company Limited, Honour Securities

Company Limited, Honour Finance Company Limited and

Honour Futures Limited, make up the f inancial services

division, providing home mortgages, share margin financing,

stock and futures broking, consumer loans and deposit-taking.

The economic downturn following the Asian financial turmoil

continued to affect Hong Kong’s economy during the year under

review. In light of this, the operating environment was difficult

and the overall profitability of the financial services division

recorded a year-on-year decline. The division’s principal objective

was to maintain a prudent and conservative lending policy

together with effective credit control in mortgage financing and

consumer loans.

Having seen stabilised interest rates and signs of improving

domestic consumption, the division believes Hong Kong’s

economic position will return to more normal levels, and looks

forward to satisfactory growth in the year ahead.

InsuranceSun Hung Kai Properties Insurance Limited had a business

turnover of HK$167 million, and recorded a pre-tax profit of

HK$40.5 million for the year under review. Since its establishment,

the company has provided quality products and services to its

clients. It recently launched a new line of personal insurance

products for direct and Internet sale to meet growing customer

needs.

Property ManagementThe Group’s property management division aims to better the

quality of life for residents of the Group’s properties, with

premium quality service and innovative concepts for care-free

living. In addition to maintaining the highest professional

standards, the Group’s property management subsidiaries are

cost-efficient, ensuring that their services provide value for



69

money. The subsidiaries’ core businesses include property

management, sales and leasing, cleaning and security services

and club management. The property management division now

manages 95 million square feet of residential premises, 17 million

square feet of commercial space and 29 million square feet of

industrial space.

Hong Yip Service Company Limited is one of the largest

property management companies in Hong Kong. Committed to

quality service and customer satisfaction, Hong Yip has established

a solid reputation in the territory, which is best evidenced by its

winning the “Hong Kong Housing Authority Best Property

Management Agent Award” for six consecutive years, and

management contracts from other developers and Owners’

Incorporations.

1999 was another fruitful year for Hong Yip. It won a number of

honors for its outstanding performance in cleaning, environmental

protection and fire prevention. A number of the company’s front-

line security guards also won commendations from the Hong

Kong Police. To further improve residents’ quality of life, Hong

Yip introduced Privilege Home Services much to residents’

appreciation. As part of the services offered, Hong Yip was the

first property management company in Hong Kong to secure a

franchise to sell stamps. Other value-added services included

more than 80 activities organized this summer.

Hong Yip believes in the importance of quality staff. The

company participates in the Government’s Employee Training

Programme. In-house training programmes were also organized

for all levels of staff. The “Service Excellence” training program

and the “Fire Safety Ambassador” training program co-organized

with the Fire Services Department, were the focus for 1999, with

full participation.

Hong Yip is the first Hong Kong property management company

to use remote building services monitoring systems. To keep pace

with technological development over the coming year, Hong Yip

will be upgrading its systems using the internet technology. It will

be one of the major tasks in the coming year.



70


Kai Shing Management Services Limited has made continuous

up-grading its prime objective and is the f irst Hong Kong

property management company awarded ISO9002 and ISO14001

certification. In March 1999 Kai Shing broadened its operations

to offer household services and private club management in

addition to managing residential, commercial and institutional

properties. The company has installed state-of-the-art information

management and security systems to enhance efficiency. Kai

Shing’s core business remains property management, including

sales and leasing, cleaning, security and club management.

Kai Shing expanded its property management operations in

mainland China in 1999, through its subsidiary Shanghai Kai

Shing Property Management Services, which began managing the

retail and office space of Shanghai Central Plaza, and Arcadia

Shanghai with two blocks of service apartments.

In the year under review, Kai Shing won a number of honours for

its quality management. The company won the Gold Medal and a

prize for the greatest improvement in a territory-wide cleaning

competition held by the Housing Authority.

Kai Shing also won awards for security, including commendations

from the Sau Mau Ping and Islands West District police for the

outstanding performance of a number of its security guards.

ISO9002 ISO14001

Hong Yip and Kai Shing won several grand prizesin a territory-wide cleaning competition.



71SmarTone Telecommunications

I n f r a s t r u c t u r e a n d T r a n s p o r t a t i o nI n f r a s t r u c t u r e a n d T r a n s p o r t a t i o n

The Group's investments in telecommunications and other infrastructure projects are all inHong Kong. They are low risk in nature and provide the Group with growing recurrentincome over the long term.


72


1

1

26

34 5

TelecommunicationsSmarTone Telecommunications Holdings Limited forged a

strategic alliance in May 1999 with British Telecommunications

plc (BT). Following the purchase of a 20 per cent interest of the

company’s enlarged share capital for approximately HK$3 billion,

BT became the second largest shareholder in SmarTone. The

Group remains SmarTone’s largest shareholder with an equity

holding of about 26 per cent.

The alliance has enhanced SmarTone’s competitiveness and

contributed to the company’s long-term growth and prosperity.

SmarTone has been further strengthened, in terms of technological

Infrastructure and Transportation

Projects In Operation

1

2

3

4

5

Projects Under Construction/Planning

1

2

6

2


73

Infrastructure and Transportation (cont’d)Infrastructure and Transportation (cont’d)

capabilities and its financial position, especially for regional

expansion and diversif ication into related f ields in the

telecommunications industry.

In line with its long-term business plan, SmarTone carried out a

series of corporate initiatives to expand its business and transform

the company into a diversified communications company. In the

first half of 1999, SmarTone introduced its competitive Internet

service, iSm@rt, and IDD service, Anytime 1638. These services

have been very well received by customers.

For the year ended 30th June 1999, SmarTone reported an after-

tax profit of HK$604 million, a decrease of 41 per cent from the

previous year. During the period under review, the company

continued to expand its customer base to around 618,000

compared to 523,000 in June 1998.

The introduction of Mobile Number Portability in March 1999

fuelled the already fierce competition in the cellular sector.

Operators gave heavy handset subsidies and aggressive tariff

plans to get market share, which had a negative impact on profit

margins for the whole industry.

The year under review saw SmarTone continue with its front-

running role in the industry, particularly in the areas of value-

added services and technological advancement. In February 1999,

SmarTone became the first mobile operator in Hong Kong to

launch a mobile securities trading service, SmarTrade. In April

1999, the Group and SmarTone teamed up to offer “Smart

Living” to SHKP residents, the first mobile phone property

information service in Hong Kong.

In collaboration with its long-term business partner Ericsson,

SmarTone was also the first in Greater China to conduct field

trials for “Wideband Code Division Multiple Access” (WCDMA),

a third generation mobile communications system currently under

iSm@rt

Anytime1638


74


development. SmarTone and Ericsson subsequently broke new

ground in unveiling the various possibilities of WCDMA in July

1999 by demonstrating on-the-move video conferencing, image

transmission and web-browsing.

SmarTone looks to the future with much enthusiasm and

confidence. The convergence of mobile communications and the

Internet, and the introduction of new technology will offer

significant growth potential. The strong commitment from the

Group and other major shareholders will continue to benefit the

company in its pursuit of new technology and business development

opportunities in the region.

Franchised Bus OperationThe Kowloon Motor Bus Holdings Limited, in which the Group

has a 33 per cent interest, is a publicly-listed company in Hong

Kong. As the largest passenger carrier in Hong Kong, its main

business is providing franchised bus services covering Kowloon

and the New Territories. The company reported a net profit of

HK$585 million for the year ended 31st December 1998, an

increase of 6.3 per cent compared to the previous year. For the six

months ended 30th June 1999, the company reported a net profit

of HK$301 million, 4.6 per cent higher than last year. The

company will continue to improve its services by adopting new

technology and replacing older buses with new air-conditioned

ones. The company has successfully diversified into the non-

franchised bus business through Sun Bus Limited which had

become profitable during the year.

Toll RoadThe Group holds a 50 per cent interest in the Route 3 (Country

Park Section) which is a 10.1-kilometre dual three-lane expressway

running from Ting Kau in the south to Au Tau, in Yuen Long, in

the north. It consists of the 3.8-kilometre Tai Lam Tunnel and the

6.3-kilometre Yuen Long Approach Road.

Since Route 3 (Country Park Section) opened to the public in

May 1998, it has provided a quick and direct link between the

northern New Territories and major urban areas as well as the


75


new airport. It has alleviated 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 terminal in Kwai Chung. The

flow of traff ic has been increasing steadily since Route 3

(Country Park Section) opened.

Transport Infrastructure ManagementThe Wilson Group was established in July 1998 to oversee a

variety of transport related businesses. Wilson Parking (Hong

Kong) Limited, a subsidiary of the group, is the largest car park

operator in Hong Kong. Together with Mack & Company Carpark

Management Limited, which it acquired in October 1997, it

provides high-quality management for 220 car parks containing

over 57,000 parking bays.

The Wilson Group owns China Tollways Limited, which has been

successfully managing and maintaining the Shing Mun and

Tseung Kwan O tunnels under government contract since April

1996. Wilson has a 66.67 per cent stake in Tsing Ma Management

Limited, which has been operating and maintaining the Tsing Ma

Control Area, including the Tsing Ma Bridge, since 1997, and it

Traffic on the Route 3 (Country Park Section) has increased steadily since the toll road opened.


76


Parking

Systems Limited

SkiData AG

SkiData Parking Systems Limited

SkiData

ISO

owns Wilson Tunnel Management, which operates and maintains

the Route 3 (Country Park Section) since its opening in May

1998.

Hong Kong Parking Limited is 50 per cent owned by the Wilson

Group. It won the government contract to manage and maintain

all 17,000 parking meters in Hong Kong, beginning in September

1997. The company was also awarded the contract to convert all

mechanical parking meters to smart card operated electronic ones

by early 1999.

The Wilson Group owns 25 per cent of Autotoll Limited, a joint-

venture electronic toll collector and central clearing house for all

ten toll tunnels and expressways in Hong Kong. Autotoll began

operations in October 1998.

Other companies owned by the Wilson Group include Parking

Systems Limited, which sells and services parking-related

equipment, and SkiData Parking Systems Limited, a joint-venture

with SkiData AG of Austria, which is the exclusive distributor of

SkiData parking equipment in Hong Kong, mainland China,

Australia, New Zealand and Singapore.

The Wilson Group has a 30 per cent interest in the Hong Kong

School of Motoring. The school has been operating successfully

for the past 16 years as the only provider of off-street driver

training in Hong Kong. It currently has three centres, in Shatin,

Wong Chuk Hang and Yuen Long.

The operations of Wilson Parking, China Tollways, Tsing Ma

Management, Hong Kong Parking and the Hong Kong School of

Motoring have all been given ISO certif ication. The Wilson

Group employs about 4,000 staff, and all of its companies

maintained a satisfactory level of profit during the year under

review.


77


Port BusinessThe Group owns 33 per cent of the River Trade Terminal, which

occupies a 65-hectare site in Tuen Mun. It provides a full range of

containerized and breakbulk cargo handling and storage services

for river trade and related vessels. The first phase operating area

opened in October 1998, and construction of the entire project is

expected to be completed by the end of 1999. On completion, the

terminal will be the largest and most modernized river trade

terminal in Hong Kong with 3,000 metres of quayfront and 60

berths.

Asia Container Terminals Limited, in which the Group has a

28.5 per cent interest, participates in the development of 6 berths

at Container Terminal 9 on Tsing Yi Island jointly with two other

developers. Upon completion, it will exchange its two berths at

Container Terminal 9 for two existing berths at Container

Terminal 8. The joint developers signed the Land Grant with the

Government in December 1998. Construction design and project

financing are progressing smoothly. Construction of the project is

scheduled to begin in early 2000 and is expected to be completed

in 2004.

The Group also holds a 50 per cent interests in both Hoi Kong

Container Services Company Limited and Faith & Safe

Transportation Company Limited, two of the major market

leaders in the mid-stream industry in Hong Kong. Business

during the year was satisfactory.

Construction of the entire River Trade Terminal projectwill be completed by the end of 1999.


78


Airport Freight Forwarding CentreAirport Freight Forwarding Centre Company Limited (AFFC)

is a consortium in which the Group holds a 65 per cent interest.

The AFFC comprises 1.3 million square feet of cargo handling

space and 175,000 square feet of office space. The AFFC’s

primary business is air cargo storage and handling, but it has

expanded its services to the air freight industry through a wholly-

owned subsidiary, Airport Cargo Logistics Services Limited. It

provides customized logistics services at affordable rates, using

sophisticated facilities, the latest technology and a skilled work

force. Services include trucking, storage, consolidation,

palletization and logistics management. Logistics is the fastest-

growing sector of the transportation business, and Airport Cargo

Logistics Services is continuously investing more resources in its

supply chain management system to meet the growing needs of

the market.

Hong Kong Business Aviation CentreHong Kong Business Aviation Centre Limited is 35 per cent

owned by the Group. Its major facilities include an executive

terminal, hangar, aircraft and avionics service bays, refuelling

equipment, a maintenance base, weather and flight briefing room

and a business centre for travellers, making it the first of its kind

in the region. The opening of the new airport’s second runway is

expected to substantially increase the number of business aircraft

visiting Hong Kong. The Hong Kong Business Aviation Centre

Airport Freight Forwarding Centre


79


747 SP

has handled all types of aircraft, from eight-seaters to a converted

Boeing 747 SP. The centre was formally opened in September

1999.

Landfill and Refuse Transfer StationThe Group has a 20 per cent interest in Green Valley Landfill

Limited, South China WMI Transfer Limited and Pearl Delta

WMI Limited.

Green Valley Landfill was awarded a government contract for

the design, construction, operation and long term aftercare of the

South East New Territories (SENT) landfill, in August 1993, and

the company has been in operation since September 1994. Its

operational life is 15 years and the aftercare period is 30 years

from its closure.

The SENT landfill occupies a 100-hectare site in Tseung Kwan

O. It has a capacity of 40 million cubic metres and can handle

10,000 tonnes of refuse each day. The landfill processes municipal,

construction and chemical waste.

South China WMI Transfer was awarded a government contract

for the design, construction and operation of the West Kowloon

Transfer Station (WKTS) in December 1995, and has been in

operation since May 1997.

The transfer station is in the West Kowloon reclamation area on a

two-hectare site. Its catchment area is West Kowloon, Tsuen Wan,

Tsing Yi and Kwai Chung. WKTS is Hong Kong’s largest refuse

transfer station, with a handling capacity of 2,875 tonnes per day.

Pearl Delta WMI handles waste at the Hong Kong International

Airport at Chek Lap Kok, and has been in operation since July

1998.


80


Other Investment Holdings

Thomas Cook Hung Kai Currency Exchange Limited, the

Group’s 25 per cent joint venture with the Thomas Cook Group, is

the exclusive operator of twelve foreign exchange outlets at the

Hong Kong International Airport at Chek Lap Kok. The company

deals in more than thirty two major and minor foreign currencies.

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

joint venture between the Group and Alliance Capital Management

LP. Established in 1997, the company provides a broad range of

asset management services to both individual and institutional

clients in Hong Kong. During the period under review, New-

Alliance further widened its product range, strengthened its

distribution network and enhanced its market position. Going

forward, the company will continue to capitalize on the solid

foundations established over the past two years and the strengths

of its shareholders, to expand its business in the asset management

industry of Hong Kong.

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

telecommunications. The company registered a net loss of

HK$78.1 million for the year ended 31st December 1998, after

exceptional losses of HK$141.4 million. The majority of the

exceptional loss was attributed to provisions for its property

projects under development. For the first six months of 1999, the

company recorded a profit of HK$7.6 million, compared to

HK$18.0 million for the previous year.

A l l i a n c e C a p i t a l

Management LP


81


Sun Dong An Plazain Beijing

M a i n l a n d C h i n a B u s i n e s sM a i n l a n d C h i n a B u s i n e s s

The Group will continue with its prudent and selective policy towards investing in mainlandChina. It will focus on property projects in Beijing, Shanghai and Guangzhou, taking a long-term view and retaining most developments for rent.


82

�� !Review of Operations

�� !Review of Operations

�� !"#$%&'()*+,-

�� !"#$%&'()*+,-

�� !"#$%&'()*+,-

�� !"#$%&'()*+,-

�� !"#$%&'"()*+,-

�� !"#$%&'()*+,-

�� !"#$%&'()*+,-

The Group continues its prudent policy and focused approach to

investing in mainland China. Investments in the mainland

concentrate on property development and investment, and will be

limited to less than 10 per cent of the Group’s total assets. The

Group’s current commitments in the mainland are approximately

two per cent of its assets.

The majority of the Group’s developments are in prime locations

in Beijing, Shanghai and Guangzhou. The Group currently holds

� � ! Mainland China Business

��

Beijing

��

Shanghai

��

Guangzhou


83

Mainland China Business (cont’d)Mainland China Business (cont’d)

2.3 million square feet of properties in the mainland, 74 per cent

of which is completed properties held as a long-term investment.

The Group’s land bank in mainland China, by attributable gross

floor area, is summarized as follows:

The Shanghai Central Plazashopping centre opened in Augustthis year and is now 90 per cent let.

Residential Shopping Centre Office Total

million square feet


Shanghai 0.1 – – 0.1

Guangzhou 0.5 ** – 0.5

Subtotal 0.6 ** – 0.6

Completed Investment Properties

Beijing – 0.8 0.2 1.0

Shanghai 0.4 0.1 0.2 0.7

Subtotal 0.4 0.9 0.4 1.7

Total 1.0 0.9 0.4 2.3

**

** Less than 0.1 million square feet


84

Mainland China Business (cont’d)Mainland China Business (cont’d)

88 66.5%

858 30%

Completed Investment Properties

Sun Dong An Plaza in Beijing is 50 per cent owned by the Group.

The redevelopment programme for Wangfujing Street was recently

completed, further boosting pedestrian flow to the 1.3 million

square-foot shopping centre. Leasing of the 430,000 square feet

of office space is encouraging with 80 per cent of the lettable area

already let.

During the year under review, the Group completed Shanghai

Central Plaza and the first phase of Arcadia Shanghai. Leasing of

both properties has begun. The shopping centre at Shanghai

Central Plaza opened in August this year is now 90 per cent let.


Major projects under development are as follows:

ShanghaiArcadia Shanghai

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

The first phase of the development was completed during the year

under review, and construction of the second phase is underway. It

has a gross floor area of 136,000 square feet, providing 132

residential units.

GuangzhouGlorious City Garden

858 Dongfeng Road East (30% owned)

The development consists of three phases. The first phase was

completed and sold in 1997. The second phase of the 1.2 million

square-foot residential project is expected to be completed in the

current financial year. The five residential towers will provide

892 quality units. More than 600 units have already been put on

the market, and almost all of them have been pre-sold. Planning

for the third phase is still underway.


85


Group Finance

The Group has always adhered to its conservative operating andfinancial management policies. It has expanded its network ofrelationship banks. All of its borrowings are unsecured. TheGroup has substantial undrawn committed facilities, more thansufficient to meet its funding requirements.

In line with its policy of diversifying its sources of funding andlengthening its debt maturity profile, the Group has issued severalnotes during the year both domestically and in the internationalcapital market. The Group will continue with its conservativemanagement of foreign exchange and interest rate risks. The vastmajority of its borrowings were in Hong Kong dollars and noderivative products were taken.

In February 1999 the Group established a Euro Medium TermNote programme (EMTN), as a quick and efficient mechanismfor raising debt financing in the domestic and internationalcapital markets. This was the f irst for a Hong Kong listedcompany. The programme has a credit rating identical to theGroup’s foreign currency rating and the Hong Kong Government’ssovereign debt rating.

Credit Ratings Foreign currency Local currency

Moody’s A3 A2Standard & Poor’s A A+

Since the beginning of 1999, the Group has issued HK$3.4 billionworth of two to five years fixed rate Hong Kong dollar notes, anda US$90 million seven years floating rate note. The Hong Kongdollar funds were used to repay the Group’s ¥32 billion SamuraiBond due in June 1999 and to repay short-term loans, while theUS dollar proceeds went to refinance US dollar loans for projectsin the mainland.

It has always been the Group’s strategy to maintain a low gearingand high interest coverage position. As at 30th June 1999, theGroup’s ratio of net debt to shareholders’ fund was 12.0 per cent(1998: 17.8 per cent), and for the year under review, its profitbefore interest, tax and exceptional items was able to cover grossinterest expenses 5.4 times (1998: 5.6 times).


86


Investor Relations

Investor relations is one of the Group’s top priorities, demonstrating

its commitment to transparency, openness and an investor-friendly

environment. The Group employs a variety of channels to

disseminate corporate information, including presentations, press

releases, regular publications and the Internet.

The Group organizes individual meetings with investors and

analysts to discuss corporate strategy and investor concerns

including small group discussions after result announcements. In

the year under review, the Group had numerous meetings with

investors and participated in various conferences and presentations,

including the Credit Suisse First Boston Asian Investment

Conference and the Credit Lyonnais Investors’ Forum. Senior

management went on a road show to meet equity investors in the

US and Europe during November 1998, and visited fixed-income

investors in Europe with the launch of the Group’s Euro Medium

Term Note programme in February 1999.

Publications such as annual reports, quarterly magazines and

newsletters are distributed to local and overseas investors,

analysts, banks and the news media. Important corporate events

are publicized through press releases. All of these information

and the newest corporate developments are also available on the

Group’s Internet web site at http://www.shkp.com.hk.

The Group has been acclaimed by a number of international

financial magazines. It was recently voted Number One among

Asiamoney’s Best Managed Companies of the Decade, and

named one of Asia’s Most Admired Companies by Asian

Business. These awards demonstrate the quality of the Group’s

management, its corporate strategy and its relations with the

investment community.

h t t p : / /

www.shkp.com.hk

Asiamoney

Asian Business


C u s t o m e r S e r v i c eC u s t o m e r S e r v i c e

Providing the highest level of service is one of the Group's top priorities, and its propertymanagement subsidiaries use constant training to fulfil their commitment to offeringresidents the finest care.

Estate Management



88

Customer Service

The Group strives to offer customers the best after-sales service

and support as part of its commitment to building quality

properties and providing a new standard of customer care. It will

continue to monitor changes in the market through different

channels, with an emphasis on two-way communication with

customers, to supply the best service.

Membership in the SHKP Club has grown significantly to

95,000, and in September 1999, the Club upgraded the Citibank

SHKP Club VISA Card with the most advanced technology. It is

now the world’s first commercial multifunction Smart Card using

the Visa Open Platform to incorporate four functions in one card,

including privileges in SHKP shopping malls, multiple residential

services, SHKP Club members’ privileges and banking services.

The new Card has opened up a new era in modern electronic

living. Enthusiastic response was received.

The Group’s Internet web site has been totally redesigned, with a

more streamlined structure and layout, faster download time and

more interactive functions. There is now Home.net and an on-line

Chinese Almanac, and the Group also joined with Quamnet to

provide free real-time stock price quotations. One of the original

features, the Forum, is unique for a local developer’s web site. It

meets the great demand for a channel of free expression, as

shown by the rapidly growing volume of incoming messages.

To further enhance the quality of customer service in its shopping

malls, the Group established Customer Care Centres staffed by

Customer Care Ambassadors in several malls during the year

under review. To deliver the best service, Ambassadors do more

than simply answering customer enquiries, they take an active

role communicating with customers to service to their needs.

There are now Customer Care Centres and Customer Service

Ambassadors in East Point City, Grand Century Place, New Town

Plaza, Metroplaza and the World Trade Centre. Since the idea is

so popular, the Group is planning to extend this service to more

of its shopping centres.

VISA

Visa Open Platform

Home.net

Quamnet


89

Customer Service (cont’d)Customer Service (cont’d)

The Group pioneered the use of multi-purpose Smart Card

Systems, Internet booking of club house facilities and Home.net,

all of which are popular with residents. In the year under review,

The Belcher’s unveiled the interactive communication system

“Smart Living” and Royal Peninsula introduced the first iHON

(intelligent Home Optical-fibre Network) in Hong Kong, carrying

a diverse range of information into residents’ homes.

In addition to the usual services one would expect from a

management company, such as security, general cleaning and

maintenance, the Group’s management subsidiaries introduced

Privilege Home Services catering the needs of residents in the

year under review. Residents appreciate the service highly, so it

has been expanded, with Home Service Ambassadors to help

residents take advantage of all the services on offer. The

management companies also organize inter-estate social events to

promote a sense of community, and the work of the Property

Liaison Team in facilitating the handover of units and providing

quality after-sales service has been widely praised by owners.

The Group’s residential properties and shoppingcentres always provide the best customer service.


90


Environmental Protection and Promotion

The Group is concerned about the environment, and it strives to

promote green management in its estates to increase people’s

awareness of environmental issues. The Group also implements

environmental protection measures in its commercial and industrial

properties to provide more pleasant work places. This excellence

in promoting environmental protection won the Group a number

of awards during the year under review.

Residential properties developed by the Group in recent years

include large outdoor green spaces with landscaping designed by

gardening specialists, and seasonal flowers and trees are planted,

providing a pleasant, natural environment for residents. Meanwhile,

strict environmental protection measures are implemented in the

construction sites in order to minimize the possibility of pollution.

There are plant nurseries and family gardens in several estates,

giving residents more chance to enjoy a green lifestyle. Palm

Springs for example, features an organic farm where residents can

grow chemical-free organic vegetables, which is good for both the

environment and residents’ health.

Kai Shing and Hong Yip, the Group’s property management

subsidiaries, actively promote environmental protection, carefully

implementing the Group’s green management policies. The two

companies also organize various green events, including poster

design, slogan and household waste recycling contests, Garden

Farm visits, waste-to-handicraft classes, and an annual inter-estate

green carnival. All these activities help to increase residents’

awareness of the need to protect the environment, and so the

management companies’ green initiatives gain residents’ support.

Kai Shing and Hong Yip took part in a territory-wide cleaning

competition held by the Housing Authority during the year under

review, and both achieved outstanding results, winners of the gold

medal, badges of merit and the prize for greatest improvement.


Environmental Protection and Promotion (cont’d)Environmental Protection and Promotion (cont’d)

91

The Group’s estates also won a number of prizes in the Waste

Paper and Aluminium Can Recycling Competition held by the

Environmental Protection Committee. Wonderland Villa won four

major prizes in the second phase, including the Five Star Green

Estate prize, Champions of the waste paper section and the waste

paper section for private estates, first runner-up in the aluminium

can section. Another property, Uptown Plaza, was the second

runner-up in the waste paper section.

The Group has also achieved remarkable results in improving the

environment of its commercial properties. In the year under

review, the Group’s headquarters, the Sun Hung Kai Centre, was

given a Certificate of Assessment rated Excellent by the Centre of

Environmental Technology (CET). To date, there are only six

completed properties in Hong Kong that have qualified for the

Excellent rating, and the CET praised the Sun Hung Kai Centre

for setting a high standard for others to follow.

Following the Hong Kong Building Environmental Assessment

Method devised by the Real Estate Developers Association, CET

gave awards for superior environmental protection in the design,

operation and maintenance of buildings. The Sun Hung Kai

Centre received 42 best practice credits out of a possible 56, and

was rated Excellent. To help create a cleaner Hong Kong, the

Group will continue to promote environmental protection in its

other commercial properties as well.

The Centre of Environmental Technology gave theSun Hung Kai Centre a Certificate of Assessmentrated Excellent during the year.



92

Staff Relations and Training

The Group and its subsidiaries, excluding associated companies,

employ more than 16,000 people. The Group has always

recognised the importance of two-way communication between

management and staff, as well as among departments. The Group

uses a variety of communication channels, including the Intranet,

staff newsletter, poster, various activities and internal meetings, to

enhance the flow of information and understanding of the Group’s

mission.

The Group regards staff training and development as one of the

most important management objectives. In the year under review,

the Group organized over 150 staff training classes with spaces

for 3,000 attendees. With a well-defined training plan, the Group

provides all-rounded training to meet the staff’s training needs on

personal development, management skills, business knowledge,

technology update and applications, customer service, language

and communication, interpersonal skills and administrative

management.

To well prepare the staff to seize the business opportunities in the

advent of the information technology era, the Group put much

emphasis on the technology training and update. Series of

seminars, workshops, presentations, visits and other activities

were organized for all staff to keep them abreast of the latest

technology development. Other than classroom training, the

Group also offers over 100 self-learning programmes in different

subjects for the staff to learn at their own pace. Staff can choose

their preferred learning media such as printed materials, video,

cassette, audio and video compact disc, computer disc or on-line

in the intranet.

Supporting the frontline staff to provide quality service to the

customers, the Group started a large scaled customer service

training programme in the early of 1999 for all the property

management staff. The programme covers over 5,000 frontline

staff and is followed by systematic service checking and

measurement.


Staff Relations and Training (cont’d)Staff Relations and Training (cont’d)

93

In addition to attending in-house training programmes, staff arealso encouraged to take courses organized by external institutions.The Group has set up an external training sponsorship scheme forall levels of staff to apply. All the job required programmesranging from short seminars to full degree courses will besponsored when they are endorsed as relevant to the applicants’duties.

In January 1999, the Staff Training Award Scheme was launchedto recognize staff who were active in attending training and hadoutstanding job performance. There were 11 staff presented withthe award in the 1999 presentation ceremony held in March. Thisannual award scheme further demonstrates that the Grouptreasures staff as the most important assets, and is committed toproviding a satisfying and learning working environment forthem.

To strengthen team spirit and sense of belonging, the Group helda wide range of staff activities to further consolidate its finetradition of togetherness. Diversified activities suit all interests,such as sports, outings, interest classes, and lectures.

The Group also encourages its staff to get involved in thecommunity and charitable events. In the year under review, staffmembers took part in the Community Chest’s Dress Casual Day,Corporate Challenge Marathon, Walk for Millions in Kai TakAirport and Sports Development Board’s Sport Dress Day. Otherevents were Flag Day and Blood Donation Day. Staff membersalso supported Social Welfare Department’s volunteer service.

The Group organized over 150 staff training classesduring the year.



94

The Group and The Community

The Group is committed to bettering society and it has a long-

standing practice of assisting social welfare and educational

organizations. During the year under review, it contributed over

HK$17 million to various charitable organizations.

The Group traditionally supports the Community Chest. Over the

year, it donated HK$1 million to the Chest’s Corporate Challenge

Marathon, once again making it one of the largest contributors for

the event, and it donated over HK$850,000 to the Chest’s

Corporate and Employee Contributions Programme, receiving

another Platinum Award.

As a committed supporter of education, the Group continued its

sponsorship of MBA students at the Chinese University of Hong

Kong (CUHK), and assisted an initial group of top students from

the mainland in their pursuit of undergraduate degrees at CUHK.

Another HK$ 1 million went to the “Training Scheme for New

Territories West Schools”. The Group also assisted in building a

secondary school in Tuen Mun and donated HK$600,000 to the

school to improve its teaching environment. The Group continued

its funding for the Hong Kong Sports Development Board for top

student athletes as well.

Tsinghua University in Beijing is highly appreciative of the award

scheme for young professors the Group established at the school.

The Group injected another HK$1 million to the scheme during

the year under review, rewarding more outstanding young

professors.

The Group helped the Hong Kong School for the Deaf hold its

first art exhibition by underwriting all the costs and providing

free exhibition space. Over 100 pieces were sold for charity and

the sale raised about HK$100,000 to purchase teaching aids for

the school. This was the third year that the Group was the sole

sponsor of Rehab Power’s charity walk, and the Group also

donated HK$100,000 to the Samaritans to support their suicide

prevention hotline.


The Group and The Community (cont’d)The Group and The Community (cont’d)

95

CyberIncubator-SHKP.Tech Centre

And the Group continued to provide rent-free office space for

Project ORBIS by extending their lease for two more years, with

an expected saving of over HK$2 million for the charity.

Since it was established, the SHKP Fund for the Elderly has

helped to improve the quality of life for more than 10,000 seniors.

During the year under review, the Group contributed another

HK$500,000 to the fund, to benefit more elderly people. The

Group takes advantage of its prime shopping mall locations,

providing charities free space in the malls for fund raising events.

To keep up with the high-tech age, the Group was particularly

active in helping IT specialists during the year under review. To

nurture local technology development, the Group sponsored two

high-tech projects in the second half of 1999. It contributed

HK$1 million to the “Information Technology Entrepreneur

Programme”, launched by the Government and several local

universities to provide young IT specialists with initial business

start-up funds, and the Group established Hong Kong’s first

CyberIncubator-SHKP.Tech Centre, offering 14,000 square feet of

off ice space in Kodak House, rent-free for new high-tech

companies.

The Group was the sole sponsor of RehabPower’s charity walk. Mr Kwong Chun (fifthfrom left), Exective Director, officiated at theopening ceremony.


Management Discussion and Analysis

96

Financial Review

Review of ResultsThe Group’s results are summarised as follows:

Turnover Increase/ Operating Increase/

(Decrease) Profit (Decrease)

1999 1998 1999 1998

HK$ million HK$ million HK$ million HK$ million HK$ million HK$ million

Property sales 14,991 15,304 (313) 4,960 8,939 (3,979)

Rental income 5,510 5,650 (140) 4,203 4,443 (240)

Hotel operation 542 545 (3) 134 132 2

Interest income 543 435 108 543 434 109

Other income 2,094 1,288 806 767 435 332

23,680 23,222 458 10,607 14,383 (3,776)

Interest expenses (1,932) (2,180) (248)

Exceptional items 595 (4,700) 5,295

Infrastructure, transportation

& telecommunications 272 593 (321)

Net rental profit 62 141 (79)

Property sales 512 547 (35)

Others 33 27 6

Share of profits from associated companies

and jointly controlled entities 879 1,308 (429)

Taxation (867) (1,302) (435)

Minority interests (4) (249) (245)

Profit attributable to shareholders 9,278 7,260 2,018


Management Discussion and Analysis (cont’d)

97

TurnoverThe Group’s turnover increased by two per cent to HK$23,680

million. Growth was recorded in revenue from interest and other

income derived from building management, car parking, transport

infrastructure management and construction. This growth was

offset by a modest decline in revenue from property sales and

gross rental income, each by two per cent compared to the

previous year. Through more completions and sales of residential

properties to mitigate lower property prices, the Group managed

to achieve property sales revenue of HK$14,991 million for the

year.

Operating profitThe Group’s operating profit amounted to HK$10,607 million, a

26 per cent decrease compared to the previous year.

Property Sales

Affected by the drop in residential property prices, operating

profit from property sales declined by a 45 per cent on a year-on-

year basis to HK$4,960 million. The Group disposed of some

non-core investment properties during the year, including Lodge

on the Park and Royal Court, generating a profit of about

HK$440 million. As a result of the market downturn, the

operating margin from property sales reduced to 33 per cent from

58 per cent a year ago.

Rental Income

Given the resilient nature of the rental portfolio, the Group’s

overall occupancy remained relatively high at 95 per cent

throughout the year. Gross and net rental income for the year

amounted to HK$5,510 million and HK$4,203 million, a decline

of two per cent and five per cent respectively compared to last

year. The full year rental contributions from Grand Century Place

in Mongkok, and East Point City shopping centre in Tseung

Kwan O helped to compensate for lower rents upon renewal and

new leases. The disposal of some residential properties and car



98

parks over the past two years also affected rental income, though

to a lesser extent than in the previous year. Millennium City

Phase 1 was completed in September 1998 and was fully let by

the year end. This development will generate a full year rental

contribution in the coming year.

Hotel Operations

Profit contributions from hotel operations increased by 1.5 per

cent year-on-year to HK$134 million. Although average room

rates were under pressure, average occupancy continued to

improve over the year with operating margins maintained at 25

per cent. Despite the tough environment, the Group continued its

efforts on improving operating efficiency and controlling costs.

Interest Income

Interest income increased by 25 per cent over the previous year to

HK$543 million. The Group’s average cash and cash equivalent

balance increased during the year as a result of strong net

operating cash inflow and low capital expenditure on land

acquisition.

Other Income

Profit from other income surged 76 per cent year-on-year to

HK$767 million. The increase in profit was mainly derived from

better performance in the main operations including property

management, car parking and transport infrastructure management,

financial investments and construction activities, and in particular,

the gain from the disposal of some long term investments,

amounting to HK$192 million.

Interest ExpensesGross interest expenses before capitalization dropped by 24 per

cent to HK$2,126 million compared to HK$2,810 million in the

previous year. During the year, the Group’s gross debt was

reduced by HK$10 billion. Interest rates have also stabilized at a

lower level during the year. Interest expenses after capitalization

amounted to HK$1,932 million, down 11 per cent from last year.



99

Exceptional ItemsThe dilution of holdings in SmarTone, from 33 per cent to about

26 per cent as a result of a new share issue to another shareholder

during the year, gave rise to a capital gain of HK$595 million. A

total provision of HK$4.7 billion was made for the diminution in

value of property development projects and long term investments

in the previous year. No such provision was required in the year

under review.

Share of Profits from Associated Companies andJointly Controlled Entities

The profit decline was mainly due to a reduced contribution from

SmarTone, which was down from HK$378 million last year to

HK$212 million this year. The loss incurred by Route 3 (Country

Park Section) in its first year of operation was mainly due to

initial low traffic volume during the start-up period. However,

there has been a steady growth in traffic flow since the opening.

Net rental profit from jointly controlled entities also declined by

HK$79 million compared to the previous year. The decline was

caused by interest and operating expenses of certain newly

completed investment properties in mainland China, where

leasing only started late in the year. The rental contribution from

One International Finance Centre, in which the Group has a 47.5

per cent interest, is not significant during the year, owing to rent-

free periods, promotional and pre-operating expenses, but is

expected to be significant in the coming year as over 90 per cent

of the retail space and 80 per cent of the office space has already

been let.



100

TaxationThe decrease in taxation reflects the lower operating profit as well

as the blanket refund of 10 per cent of profits tax paid for the

1997/98 year of assessment by the Govenment and the write-back

of tax over-provided for in prior years.

Minority InterestsMinority interests in the Group’s property development projects

completed this year are less than in the previous year, and as a

result, the share of profits to minority shareholders has declined.

Review of Financial Position

Summary of Assets

Increase/

1999 1998 (Decrease)

HK$ million HK$ million HK$ million

Fixed assets 77,915 91,210 (13,295)

Associated companies 4,552 3,743 809

Jointly controlled entities 17,744 10,576 7,168

Long term investments 1,333 1,974 (641)

Secured loans 2,482 1,880 602

Land pending development 27,665 30,233 (2,568)

Net current assets 8,517 8,237 280

140,208 147,853 (7,645)



101

57 66

Fixed Assets

The decline in fixed assets was due to the diminution in value of

the Group’s completed investment property and hotel portfolios

by the amounts of HK$11,839 million and HK$298 million

respectively, as a result of the property market downturn.

Associated Companies

The increase in associated companies was mainly attributable to a

HK$595 million increase in the Group’s share of net assets in

SmarTone, arising from the dilution of shareholding as a result of

a new share issue at a premium during the year. In addition, there

were some profits retained in associated companies and investments

made to finance the operations of associated companies.

Jointly Controlled Entities

The increase in jointly controlled entities was primarily due to a

rise in loans advanced to jointly controlled entities for property

development and investment activities, including the Airport

Railway Tung Chung Station Development (Package One), One

International Finance Centre, Royal Peninsula in Hung Hom,

Ocean Shores in Tseung Kwan O, Millennium City Phase 2 in

Kowloon East, TKOTLs 57 & 66 in Tseung Kwan O and the

Aldrich Bay site. Further loans were also advanced for

infrastructure projects including the River Trade Terminal in Tuen

Mun and Container Terminal 9, as well as for refinancing project

loans for certain property projects in mainland China.



102

Long Term Investments

Long term investments fell HK$641 million to HK$1,333

million, mainly due to the disposal of certain investments.

Secured Loans

Secured loans increased by HK$602 million to HK$2,482

million. The increase was due to the provision of home mortgage

financing for purchasers of the Group’s residential properties.

Land Pending Development

Land pending development dropped by HK$2,568 million to

HK$27,665 million, mainly due to the transfer of land on which

construction commenced during the year to current assets. The

decrease was partially offset by expenditure on land acquisition.

Net Current Assets

Net current assets amounted to HK$8,517 million, a three per

cent increase over the previous year. Stock increased by HK$2,175

million, mainly due to unsold units in Grand Pacific Views &

Grand Pacif ic Heights, which were completed but not yet

launched during the year. The bulk of the units were sold after the

financial year end. Cash and cash equivalent balance at the year

end decreased by HK$2,543 million due to the utilization of cash

to repay bank and other borrowings. Short term borrowings,

including the portion of long term borrowings scheduled for

repayment within a year, decreased by HK$2,178 million over the

previous year to HK$4,781 million. The decline was partially

offset by an increase in the proposed final dividend of HK$1,086

million.



103

Shareholders’ Funds

Shareholders’ funds decreased from HK$113,702 million to

HK$106,613 million, mainly due to the decline in property

revaluation reserves as a result of downward adjustment in the

value of completed investment properties, which more than offset

the year’s retained profit.

Long Term Liabilities

The reduction in long term liabilities was due to the repayment of

bank loans and the redemption of Eurobonds and Samurai bonds

at maturity during the year.

Minority Interests

The increase in minority interests was mainly due to the advances

received from minority shareholders. The increase was partially

offset by a diminution in the value of completed investment

properties and dividends paid to minority shareholders.

Summary of Liabilities and Equity

Increase/

1999 1998 (Decrease)

HK$ million HK$ million HK$ million

Share capital 1,201 1,196 5

Share premium and reserves 105,412 112,506 (7,094)

Shareholders’ funds 106,613 113,702 (7,089)

Long term liabilities 16,253 24,127 (7,874)

Minority interests 967 880 87

Deferred items 16,375 9,144 7,231

Total 140,208 147,853 (7,645)



104

Deferred Items

Deferred items increased by HK$7,231 million to HK$16,375

million, reflecting the increased proceeds from the pre-sale of

residential properties. Sales deposits received in the year were

mainly from Castello, Le Sommet, Scenic View, Mount Haven,

Grand Horizon and Chelsea Heights Phase 2.

Recurrent IncomeThe Group has a solid recurrent income base. Including its share

of profits less losses from jointly controlled entities and associated

companies, the Group’s recurrent profit before interest and tax for

the year amounted to HK$5,803 million, representing

approximately 50 per cent of total. The substantial percentage

increase in the proportion of recurrent income was mainly due to

the decline of residential property prices which led to lower

development profits.

Recurrent Earnings by Source Recurrent Profit as a Percentage of Total Earnings*

0

10

20

30

40

50

60

1995 1996 1997 1998

40.6 41.7

34.4

39.4

50.5

1999

Per Cent

Profit before interest, tax and exceptional items, including share of profits less losses of associated companies and jointly controlled entities

*

*



105

Capital Structure, Liquidity and Debt MaturityProfileThe Group has a strong capital base and a low debt leverage. Its

shareholders’ funds totalled HK$106,613 million as at 30th June

1999. The Group’s gross borrowings as at 30th June 1999

amounted to HK$21,034 million, reduced by HK$10,052 million

over the previous year. Net debt (gross borrowings less cash and

cash equivalent) at the year end was HK$12,786 million (1998:

HK$20,295 million). It is the Group’s policy to maintain a high

interest cover and low financial gearing. Interest cover for the

year ended 30 June 1999 was 5.4 times (1998: 5.6 times), based

on gross interest expenses before capitalization and profit before

interest and tax. Net debt to shareholders’ funds, was 12.0 per

cent at the year end (1998: 17.8 per cent).

5.4 5.6

0

5,000

10,000

15,000

20,000

25,000

30,000

1995 1996 1997 1998 1999

HK$ Million

Year

Net Debt

20

0

5

10

15

25

19.817.8

12.0

8.2

9.6

1995 1996 1997 1998 1999

Per Cent

Year

Net Debt to Shareholders’ Funds Ratio

9,276 8,829

26,671

20,295

12,786



106

Debt Maturity Profile

Approximately 12 per cent of the Group’s gross borrowings were

on a fixed rate basis and 88 per cent were on a floating rate basis

at the balance sheet date. Interest rate swaps were employed to

manage the Group’s exposure to interest rate fluctuations. It is the

Group’s policy not to enter into derivative transactions for

speculative purposes. At the year end, approximately 97 per cent

of the Group’s gross borrowings were denominated in Hong Kong

dollars. The remaining three per cent were in US dollars, and

therefore, the Group had negligible foreign exchange exposure.

The maturity profile of the Group’s borrowings as at 30th June

1999 was spread over a period of eight years, with approximately

23 per cent repayable within one year, 16 per cent repayable

between one and two years, 55 per cent repayable between two

and five years and six per cent repayable beyond five years.

Capital expenditure incurred by the Group for the year was

HK$1,300 million, which was mostly financed from internal cash

resources. Net cash inflow generated from operating activities

during the year amounted to HK$20,333 million, providing strong

support for the Group’s investment activities and f inancing

requirements. The Group’s cash and cash equivalents as at 30th

June 1999 totalled HK$8,248 million. In addition, the Group has

in place substantial undrawn banking facilities on a committed

basis, which are more than adequate for its future capital

expenditure and its on-going working capital requirements.


Group Financial Summary

107

1995 1996 1997 1998 1999

For the year ended 30th June HK$ HK$ HK$ HK$ HK$

Earnings per share 4.46 4.69 5.93 3.04 3.87

Dividends per share 1.75 1.86 2.35 1.20 1.55

Special cash bonus

per share 0.38 0.38 0.38 – –

Shareholders’ funds at

book value per share 41.40 45.10 56.38 47.55 44.40

Financial ratios:

Net debt to shareholders’

funds

Net debt 9.6% 8.2% 19.8% 17.8% 12.0%

Shareholders’ funds

Interest coverProfit before interest

and tax 8.7 9.3 10.4 5.6 5.4

Gross interest expensesbefore capitalisation

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

Turnover 19,845 22,619 28,960 23,222 23,680

Operating profit 12,515 12,635 17,006 14,383 10,607

Profit attributable

to shareholders 10,363 11,039 14,160 7,260 9,278


Group Financial Summary (cont’d)

108

Balance Sheet

1995 1996 1997 1998 1999

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

Fixed assets 76,374 81,839 111,547 91,210 77,915

Investments and loans 10,251 14,691 23,652 18,173 26,111

Land pending

development 20,685 22,042 28,901 30,233 27,665

Net current assets 7,029 5,423 6,566 8,237 8,517

114,339 123,995 170,666 147,853 140,208

Share capital 1,162 1,195 1,195 1,196 1,201

Share premium

and reserves 95,041 106,559 133,514 112,506 105,412

Shareholders’ funds 96,203 107,754 134,709 113,702 106,613

Long term liabilities 14,440 13,392 33,763 24,127 16,253

Minority interests 2,288 2,031 948 880 967

Deferred items 1,408 818 1,246 9,144 16,375

114,339 123,995 170,666 147,853 140,208


Directors and Organisation

109

48

71

47

Directors and Senior Management

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

Chairman & Chief Executive (Age: 48)

Mr Kwok has been with the Group for 24 years. He holds a

Master of Science degree in Civil Engineering from Imperial

College, University of London, and is a member of the Institute

of Civil Engineers. He is a director of The Kowloon Motor Bus

Holdings Ltd., USI Holdings Ltd., Wilson Parking (HK) Ltd. and

Hung Cheong Import & Export Co., Ltd.

He is also a director of The Real Estate Developers Association of

Hong Kong and Honorary Treasurer of the Federation of Hong

Kong Hotel Owners. On the community front, he is a member of

the National Committee of the Chinese People’s Political

Consultative Conference, Vice Chairman of the All China

Federation of Industry and Commerce and Chairman of the

Former Directors Committee of the Hong Kong Community

Chest.

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

Non-Executive Director (Age: 71)

Vice Chairman

Dr Lee has been a non-executive director of the Company for the

last 27 years. He is the founder and Chairman and Managing

Director of Henderson Land Development Co. Ltd. and Henderson

Investment Ltd. He has been engaged in property development in

Hong Kong for more than 40 years. He is also Chairman of

Henderson China Holdings Ltd. and The Hong Kong and China

Gas Company Ltd. as well as a director of The Hong Kong Ferry

(Holdings) Company Ltd., The Bank of East Asia, Ltd. and The

Miramar Hotel and Investment Co., Ltd.

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

Vice Chairman & Managing Director (Age: 47)


Master’s degree in Business Administration from the London

Graduate School of Business Studies and a Bachelor’s degree in

Civil Engineering from Imperial College, University of London.

He is a director of USI Holdings Ltd.


Directors and Organisation (cont’d)

110

He is currently Executive Vice President of The Real Estate

Developers Association of Hong Kong, a council member of the

Hong Kong Construction Association and a board member of The

Community Chest of Hong Kong.

KWOK Ping-luen, RaymondMA (Cantab), MBA

Vice Chairman & Managing Director (Age: 46)


Master of Arts degree in Law from Cambridge University and a

Master’s degree in Business Administration from Harvard

University. He is Chairman of SmarTone Telecommunications

Holdings Ltd., Vice Chairman of The Kowloon Motor Bus

Holdings Ltd. and a director of Route 3 (CPS) Co. Ltd., Airport

Freight Forwarding Centre Company Ltd, Information Technology

Entrepreneurs Association Limited and Versitech Limited.

With respect to his civic activities, he is a non-executive director

of the Securities and Futures Commission, a member of the Hong

Kong Port and Maritime Board, Vice-Chairman of the Council of

The Chinese University of Hong Kong and Chairman of the

Management Committees of the Police Children’s Education

Trust and the Police Education and Welfare Trust.

Dr HO TimChev Leg d’Hon, DSSc (Hon), DBA (Hon), LLD (Hon), JP


Dr Ho has been a non-executive director of the Company since

1972. Dr Ho is Chairman of Miramar Hotel and Investment Co.,

Ltd. and a director of Hang Seng Bank Ltd., New World

Development Co., Ltd., and King Fook Holdings Ltd. He is a

permanent member of the Board of Trustees of the United

College of The Chinese University of Hong Kong, a council

member of the same university and a board member of the Hang

Seng School of Commerce. Dr Ho is a committee member of the

Tang Shiu Kin and Ho Tim Charitable Fund and is the Permanent

President of Ho’s Clansmen Association Ltd. He holds the

Honorary Presidencies of the Pun U District Association of Hong

Kong and The Chinese Gold & Silver Exchange Society.

46

Information Technology Entrepreneurs

Association Limited Versitech Limited

90



111

70

53

Prudential Asia

1991

1996

1995

25

1998

Sir WOO Po-shingHon. LLD, FCIArb, F.I. Mgt., FInstD


Sir Woo Po-shing has been a non-executive director of the

Company since 1972. He is a solicitor and a consultant of Woo,

Kwan, Lee & Lo, Solicitors & Notaries, and a director of

Henderson Development Ltd., Henderson Land Development Co.

Ltd. and Henderson Investment Ltd. He was awarded an Hon.

LLD. by the City University of Hong Kong and is a fellow of

King’s College of London as well as Honorary Professor of

Nankai University of Tianjin. He is also the founder of the Woo

Po Shing Medal in Law and the Woo Po Shing Overseas Summer

School Travelling Scholarship, both at the University of Hong

Kong, and the Woo Po Shing Professor (Chair) of Chinese and

Comparative Law at City University.

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


Dr Victor Fung was appointed as one of the Group’s Independent

Non-Executive Directors in May 1999.

Dr Fung holds Bachelor’s and Master’s Degrees in Electrical

Engineering from the Massachusetts Institute of Technology and a

Doctorate in Business Economics from Harvard University.

Dr Fung is Chairman of Prudential Asia, the Li & Fung Group

and the Hong Kong Airport Authority, and has been the Chairman

of the Hong Kong Trade Development Council since 1991. He

was the Hong Kong Representative on the APEC Business

Advisory Council in 1996, and is a member of the Hong Kong

Government Judicial Officers Recommendation Committee.

Dr Fung was voted Businessman of the Year under the Hong

Kong Business Awards Scheme in 1995 and one of the Top 25

Managers in Business Week magazine’s poll in the same year. He

was also named Leader of the Year by Sing Tao Daily/Hong Kong

Standard in 1998.



112

65

’94 ’97

69

62

67

KWAN Cheuk-yin, WilliamLLB


Mr William Kwan was appointed as one of the Group’s

Independent Non-Executive Directors in July 1999.

As a Senior Partner with the Solicitors firm of Woo, Kwan, Lee

& Lo, Mr Kwan has 37 years of experience in legal practice. He

is a former Director and Adviser of the Tung Wah Group of

Hospitals, a past Member of the Stamp Advisory Committee,

Vice Chairman of the Hong Kong Scout Foundation, Chairman of

the Hong Kong Branch of the King’s College London Association,

President of the Hong Kong Philatelic Society and a Member of

the Executive Committee of the Federation of Inter-Asia Philately.

Mr Kwan was Commissioner General and Vice Chairman of the

Hong Kong ’94 and ’97 Organizing Committees, and has been a

Member of the Hong Kong Golf Club General Committee since

1998. He graduated from King’s College, London University and

is a Fellow of both King’s College and the Institute of Arbitrators.

LO Chiu-chun, ClementNon-Executive Director (Age: 69)

Mr Lo was an executive director of the Company and Company

Secretary for 28 years before he resigned from both positions in

early 1998. Mr Lo has been in the property development industry

since the 1960s.

LAW King-wanExecutive Director (Age: 62)

Mr Law has been with the Company for 30 years and heads the

Sales Department. He is a member of the Standing Committee of

Guangdong Provincial Committee of the Chinese People’s Political

Consultative Conference, a Standing Committee member of the

Chinese General Chamber of Commerce, Permanent President of

the Hong Kong Institute of Real Estate Administration and

President of the Shun Tak Fraternal Association.

CHAN Kai-mingCEng, FIStructE, MICE

Executive Director (Age: 67)

Mr Chan has been an executive director since 1981. He is a non-

executive director of a publicly-listed company, ACME Landis

Holdings Ltd., Mr Chan also served as an appointed member of

the District Board of Shatin for three years from 1985.



113

52

69

47

43

CHAN Kui-yuen, ThomasB Comm


Mr Chan graduated from the United College, The Chinese

University of Hong Kong. He joined the Group in 1973 and is

now responsible for land acquisitions and project planning

matters as well as all of the Group’s projects in Beijing.

KWONG Chun


Mr Kwong graduated from Zhong Nan Finance & Economics

College of Wuhan in China. He worked for the Guangzhou office

of the People’s Bank of China before coming to Hong Kong in

1962 and working 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 company and he has worked

for it ever since. He was appointed as an executive director in

1992.

WONG Yick-kam, Michael

BBA, MBA


Mr Wong has been with the Group for 18 years. He obtained his

Bachelor’s and Master’s degrees in Business Administration from

The Chinese University of Hong Kong. He was appointed an

executive director in January 1996 and is responsible for the

Group’s strategic planning, infrastructure projects, f inancial

investments, and relations with the investment community.

WONG Chik-wing, Mike

FHKIS, RPS


Mr Wong graduated from the Hong Kong Polytechnic with

distinction. He is a fellow of the Hong Kong Institute of

Surveyors and a Registered Professional Surveyor. He joined the

Group in 1981 and is currently responsible for project management

of the Group’s developments.


114


(1)

(2) (9) (10) (11) (13) (14)(12)

(3)

(4)

(5)

(5a)

(6)

(7)

(8)

(15)

(16)

(17)

(18)

(19)

(20)

(21)

(22)

(23)

(24)

(25)



115

(1)

(1a)

(1b)

(2)

(3)

(4)

(5)

(5a)

(6)

(7)

(8)a.

b.

(9)a.

b.c.d.

(10)

(11)

(12)

(13)

(14)

(15)

(16)

(17)

(18)

(19)

(20)

(21)

(22)

(23)

(24)

(25)


116


ORGANISATION CHART AND SENIOR EXECUTIVES

Chairman &Chief Executive

Walter P.S. Kwok (1)

Vice Chairman &Managing Director

Thomas P.K. Kwok

Vice Chairman &Managing Director

Raymond P.L. Kwok

Corporate Planning& Investments

Executive DirectorMichael Y.K. Wong (14)

LeasingExecutive Director

K.M. Chan (9)

Project PlanningExecutive Director

Thomas K.Y. Chan (10)

SalesExecutive Director

K.W. Law (11)China(12)

Building ManagementExecutive DirectorKwong Chun (13)

Project ManagementExecutive Director

Mike C.W. Wong (2)

Hotel(8)

Valuation(7)

ProjectMonitoring

(6)

Mechanical& Electrical

Installation (5a)

Construction(5)

Special Projects(4)

Architectural &Eng.(3)

Internal Audit(25)

Accounts(24)

Internal Affairs(23)

CompanySecretarial &

Legal (22)

TransportInfrastructure

Management (21)

EstateManagement

(20)

Insurance(19)

CorporateFinance

(18)

FinancialServices

(17)

StrategicDevelopment

(16)

BusinessDevelopment

(15)



117

(1) Executive Committee

Kwok Ping-sheung, WalterMSc(Lond), DIC, MICE, JPChairman and Chief Executive

Kwok Ping-kwong, ThomasMSc(Bus Adm), BSc(Eng), AMICE, JPVice Chairman and Managing Director

Kwok Ping-luen, RaymondMA(Cantab), MBAVice Chairman and Managing Director

Law King-wanExecutive Director (Sales)

Chan Kai-mingCEng, FIStructE, MICEExecutive Director (Leasing)

Chan Kui-yuen, ThomasB CommExecutive Director (Project Planning)

Kwong ChunExecutive Director (BuildingManagement)

Wong Yick-kam, MichaelBBA, MBAExecutive Director (Corporate Planning& Investments)

Wong Chik-wing, MikeFHKIS, RPSAuthorized PersonExecutive Director (Project Management)

(1a) Management Consultant

Yung Wing-chung

Leung Kui-king, DonaldBSc

(1b) Chairman’s Office

Kwok Tai-wai, David

(2) Project Management

Wong Chik-wing, MikeFHKIS, RPSAuthorized PersonExecutive Director

Tam Tin-fong, MartinBArch, RIBA, Architect HKIARegistered ArchitectAuthorized PersonManager

Tung Chi-ho, EricBA(AS)Hons, BArch, RIBA, HKIARegistered ArchitectAuthorized PersonManager

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

Au Ho-cheung, DavidBSc(Arch), MArch, HKIARegistered ArchitectAuthorized PersonDeputy Manager

Chu Kwok-kit, RingoBA(AS), BArch, RIBA, HKIA, ARAIARegistered ArchitectAuthorized PersonDeputy Manager

Lu Chee-yuen, SpencerBEng, MEng, CEng, MIStructE, MHKIEAuthorized Person - EngineerAssistant Manager

Wong Kim-wing, BallBA(AS), BArch, HKIARegistered ArchitectAuthorized PersonAssistant Manager

Woo Yan-fan, StellaBA(AS), MArch, MBA, HKIARegistered ArchitectAuthorized PersonAssistant Manager

Chiu Hon-hang, ElvinBES, BEDS, BArch, HKIA, RIBA,ARAIARegistered ArchitectAuthorized PersonAssistant Manager

Ng Chak-kin, ClarenceBA(AS), BArch, HKIA, RAIA, RIBARegistered ArchitectAuthorized PersonAssistant Manager

Chan Hong-ki, RobertBSc, ARICS, AHKISRegistered Professional SurveyorAuthorized PersonAssistant Manager

Chui Ching-sai, AlexBSc, MBAAssistant Manager

(3) Architectural and Engineering

Sitt Nam-hoiBA(Hons), BArch(Distinction), HKIARegistered ArchitectAuthorized PersonChief Architect

Yu Chung-yeungCEng, FIStructE, FHKIE, MICE, RSE,RPEPrincipal Engineer

Li Kwong-hingBSc(Eng), MSc, DIC, CEng, MIMechE,MCIBSE, MHKIEChief Building Services Engineer

Ip Wing-kokCEng, MIStructE, MHKIE, RSE, RPEChief Structural Engineer

Yau Hin-chung, WilliamBA(AS)Deputy Manager

Ng Chuek-tingBSc(Eng)Senior Structural Engineer

Li Chun-kouBSc(Eng)Senior Structural Engineer

Choi Siu-chuenDeputy Chief Building Services Engineer

Ng Tze-kwan, JeffBFA, BArch, MAIBC, MRAIC, HKIARegistered ArchitectAuthorized PersonArchitect

Lau Kay-shuiMSc, CEng, MIStructE, MHKIE, RPESenior Structural Engineer

Lau Man-kwan, JuliaBArch, HKIARegistered ArchitectAuthorized PersonArchitect

Chiu Wai-kuen, StephenBSc(Eng)Senior Structural Engineer

Leung Yuen-dick, DickBA(AS), BArch, MA Arbitration, HKIARegistered ArchitectAuthorized PersonArchitect

Chiu Tai-shing, JosephBAScSenior Structural Engineer

Li Ka WingAssistant Manager

(4) Special Projects

Trevor FarnworthFRICS, FHKIS, RPSProperty Advisor

Chu Chung-kai, SamsonBSc (Hons), ARICS, AHKISManager

Pih Kam-shen, PhilipMHKIE, MASHRAE, MRSES,MHIREA, RPEDeputy Manager (Building Services &Maintenance)

Chiu Ching-shi, IrisB CommDeputy Manager (Leasing &Management)

Lau Lai-ching, EllijahDip.BS(M), MHIREA, MCIH, MHKIHDeputy Manager (Leasing &Management)

Kwan Yu-kuen, RickyAssistant Manager (Building Services& Maintenance)

Andrew BlissFRICS, FHKISChartered Valuation SurveyorAssistant Manager (Technical)



118

Ho Chi-hong, KurtMCIH, MIMBMAssistant Manager (Leasing of Shanghai)

(5) Construction

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

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

Lee Bing-shuManager

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

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

Mo Kon-fei, KennethMSc(Eng), MBA, CEng, MHKIE, MICE,MIStructEAuthorized PersonRegistered Structural EngineerDeputy Manager

Chan Hon-yeeACMA, AHKSADeputy Manager (Accounts,Administration and Contract Subletting)

Wong Leung Kit-wah, LindaDeputy Manager (Purchasing)

Sun Tien-yen, StephenDip. Civil EngDeputy Manager (ConstructionManagement)

Tsoi Yuk-man, DesmondMA, FCIArb, ARICS, AHKIS, MCIOBDeputy Manager (Contracts)

Lee Kwok-wa, ChrisAssistant Manager (ProjectAdministration)

Lau Wai-keung, DennisARICS, AHKISAssistant Manager (Contract Subletting)

Chan Ying-kuen, DavidAssistant Manager (Cost Accounts)

Fung Chi-on, RickyAssistant Manager (Purchasing)

Mak Kwok-leungBSc, CEng, MIMechE, MHKIE, RPEAssistant Manager (Plant & Machinery)

Fong Yuet-chiu, KennethBSc(Eng), CEng, MCIBSE, MIEE,MIE.Aust.Assistant Manager (Mechanical &Electrical)

Lai Siu-ki, PeleAssistant Manager (Administration)

Loo Wing-lam, WilliamDMS, MIFPO, MIAAI, MHKISA, CPMAssistant Manager (Safety)

Chan Kin-wah, JonathanTechRICSAssistant Manager (Contract Subletting)

Lai Wai-ching, PhoebeMSc, ACCA, AHKSAAssistant Manager (Accounting)

Chan Wai-leung, EricAssistant Manager (Contracts)

Construction Projects’ Team:

Cheung Kam-fanAssistant Manager (ConstructionManagement)

Tse Kam-hon, SidneyAssistant Manager (ConstructionManagement)

Lam Fuk-wingBSc (Civil Eng)Assistant Manager (ConstructionManagement)

(5a) Mechanical & Electrical Installation

Yu Yiu-wingManager

Sin Hung-faiAssistant Manager (Fire Services)

Ng Chung-mingAssistant Manager

Chan Chor-tat, GilbertAssistant Manager

Tam Ping-ipAssistant Manager (Electrical Services)

Pang Ki-kaiAIIMAssistant Manager

(6) Project Monitoring

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

Wong Wai-tungFCIOB, ACIArb, MHKIEDeputy Manager

Tsang Wai-keung, SavioMBA, MCIOB, ACIArbAssistant Manager

(7) Valuation

Fung Chu-hee, AndrewARICS, AHKIS, RPSChartered Valuation SurveyorManager

Siu Man-waiBSc(Hons), ARICS, AHKISChartered Valuation SurveyorDeputy Manager

(8) Hotel

a. Royal Garden Hotels InternationalCorporation

Chow Yum-chong, FrancisFCCA, FHKSAVice President (Finance)

The Royal GardenChan Tin-yau, KevenCHSPGeneral Manager

Cheung Kin-man, RickyBMgt(Hons), B Comm, ASAFinancial Controller

Cheah Hock-wah, JohnExecutive Assistant Manager

b. New Town Management CompanyLimited

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

Royal Park Hotel

Tam Kam-ming, AndrewFinancial Controller

Cheung Cheuk-man, CarmanHotel Manager

Royal Plaza Hotel

Wong Hoi-jen, RebeccaGeneral Manager

Lee Chi-keung, MarveyFinancial Controller

(9) Leasing

a. Chan Kai-mingCEng, FIStructE, MICEExecutive Director

Yeung Siu-mei, JoannaDeputy Manager

Lam Ka-keung, HenryBSc(Hons)Assistant Manager

b. Trevor FarnworthFRICS, FHKIS, RPS

c. Kwong Chun

d. Au Yeung Hau-cheong

(10) Project Planning

Chan Kui-yuen, ThomasB CommExecutive Director



119

Au Shiu-tung, PatrickFHKIS, RPS, FRICSRegistered Professional SurveyorAuthorized PersonProject Planning Advisor

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

Roger NissimFRICS, FHKIS, RPSManager

Au Yeung Hau-cheongManager

Yiu Wai-ha, ConnieARICS, AHKISDeputy Manager

Wong Shui-ping, KallyAssistant Manager

Law Yee-wah, AliceBEcAssistant Manager

(11) Sales

Law King-wanExecutive Director

So Chung-keung, AlfredBSc, MScManager

Tung Yiu-kwan, StephenBSc, MScManager

Yim Dao-kitDeputy Manager

Kong KitDeputy Manager

(12) China

Chan Kui-yuen, ThomasB CommExecutive Director

Tam Tin-fong, MartinBArch, RIBA, Architect HKIARegistered ArchitectAuthorized PersonManager (Design and Construction)

Leung Yu-kai, DavidFCCA, FHKSAManager (Finance and Administration)

Lam Yuet-wah, JosephBBus, AHKSA, ASADeputy Manager

Fok Yau-kitFCEA, DMS, MBIMAssistant Manager

O Nam-yuenAssistant Manager

(13) Building Management

Kwong ChunExecutive Director

Mok Chi-hungFCIH, FHKIH, MHIREAManager

Lam Chak-hin, IvanSSCE, Foreign Assoc. ASLADeputy Manager (Hong Chui Landscape)

Kwok Chan-faiMCIH, MHKIHDeputy Manager (Hong Yip)

Tung Siu-lunBSc(Eng), CEng, MIEEDeputy Manager (Lik Kai)

Wong Kei-onBA, MHKIH, MCIHAssistant Manager (Hong Yip)

Chan Wah-kayB CommAssistant Manager (Personnel)

Lee Tze-leung, AdrianBBA, MBA, FCCA, AHKSAAssistant Manager (Accounting)

Leung Nai-yin, ArthurACIB, FHKSA, FCCA, AHKIB, CGA,B.Bus, CPAAssistant Manager (Internal Audit)

Ho Yun-kuen, JohnARICS, AHKIS, PQSAssistant Manager (Contracts)

Chau Chung-yiu, DominicMBA, ARICS, AHKISAssistant Manager (Technical)

Chan Cheng-san, SamB CommAssistant Manager (Nixon & Nicole)

(14) Corporate Planning and Investments

Wong Yick-kam, MichaelBBA, MBAExecutive Director

Ma Sau-hon, ChrisBSc, MSc, MBA, DIC, MISE, FHKIE,FICE, RPE, CEngManager (Project)

Lau Mei-mui, MayManager (Corporate Communications)

Wong Pak-ho, LawrenceBEng, MBA, CEng, CDipAF,PEng(S’pore), MICE, MHKIEManager (Infrastructure)

Mak Nak-keungB.Soc.Sc, MPhilDeputy Manager (Economic Research)

Lau Shung-oi, SusannaBA, ACADeputy Manager (Financial Analysis)

Hong Pak-cheung, WilliamBScDeputy Manager

Chan How-kwan, IreneAssistant Manager

Ramsay, Robert GuyBA(Hons), PhDAssistant Manager

Cheong Suk-ying, LindaB.Soc.Sc, MBAAssistant Manager

Tsui Kwan-ying, ConnieBScAssistant Manager

(15) Business Development

Lui Ting, VictorBBAManager (Property Investment)

Tsim Tak-po, PaulBSc(Hons), ACA, AHKSAManager (Business Development)

Pang Yat-shan, DanielBSc(MIT), MArch(Princeton), RA, AIA,ASCE, NCARBManager (Business Development)

Chew Guat-leng, LindaBEcon(Hons), MBA(Harvard)Deputy Manager (Business Development)

Lam Kin-ningBArch, BA(AS)Hons, MSc(UrbanPlanning), HKIASenior Architect (Property Investment)

Leung Tat-ming, RaymondMBADeputy Manager (Business Development)

Chau Sai-yim, StephenDeputy Manager (Business Development)

Chui Yu-wing, RingoBScAssistant Manager (Business Development)

Chan Sau-yin, Anita TeresaARICS, AHKISAssistant Manager (Property Investment)

Ip Pui-tung, PaulBA(AS), BArch, HKIA, RIBARegistered ArchitectAuthorized PersonAssistant Manager (Property Investment)

Ng Kwok-keungBScAssistant Manager (Property Investment)

(16) Strategic Development

Chan Kai-lung, PatrickBEc(Hons), MEcManager

(17) Financial Services

Au Mo-cheung, AlexManager



120

Chan Kwok-yan, VincentBADeputy Manager

Chung Wah-sang, WelsonMA, ACISDeputy Manager

Tam Kim-hung, JosephMBA, FCIS, ACIBDeputy Manager

Chan Pang-chiAssistant Manager

(18) Corporate Finance

Au Man-toLLB, FCIS, ACIBManager

Kwok Yue-yee, AmyB CommDeputy Manager

Ho Ka-wai, JosephineMBAAssistant Manager

(19) Insurance

Chow Ka-yinManager

Wong Kwai-chuen, AndrewBBA, ACIIDeputy Manager

Ng Man-tong, AnthonyACII, AIICDeputy Manager

Yim Ka-yan, AmyAAIIAssistant Manager

(20) Estate Management

Wong Chin-wah, JimmyBSc (Est Mgt) Cert Ed, MSISV, AHKIS,MAPFM, MHIREAManager

Chan Kam-faiMCIHDeputy Manager

Lam Man-pak, PatrickBA(Hons), MCIHDeputy Manager

Leung Chung-kong, JohnnyDeputy Manager

Lee Cheung-yiu, GordonBSc(Hons), ARICS, MCIOB, AHKIS,ACIArb, RPSDeputy Manager

Mak Hung-cheung, JamesBA(Hons), MBA, MBIM, MHKMA,FARMDeputy Manager

Fung Sau-yim, MaureenBSc(Hons)Est. Mgt., MBA, FIIM,MHIREADeputy Manager

Sham Sik-shing, SimonBTech(Hons), MCIHAssistant Manager

Chan Shing-waiDip.BA, MCIHAssistant Manager

Choy Chi-keung, IanBA, MHousManAssistant Manager

Lau Wai-han, LorettaBSc, BBA, AICPA, AHKSAAssistant Manager

Hon Shuk-ching, IreneAssistant Manager

Shiu Wai-ching, TeresaAssistant Manager

Sham Wai-man, RaymondMHKIH, MCIHAssistant Manager

(21) Transport Infrastructure Management

Wilson Group

Paul A. SimpsonChief Executive Officer

Sham Yat-wah, SamuelDirector & General Manager

Carpark Division

Paul E. CornishDevelopment Director

Transport & Infrastructure Division

Ngan Yau-chung, EdwardManaging Director of Tsing MaManagement Limited

Luk Kam-hon, GaryGeneral Manager of Route 3 (CPS)Company Limited

(22) Company Secretarial and Legal

Lai Ho-kai, ErnestFCISCompany Secretary

Tam Sai-ming, WilliamLLM, MSc, MBA, FCIS, MHKSIManager

Yung Sheung-tat, SandyBA(Law)HonsManager

Kwok Lau Po-chi, HelenLLB(London)HonsLegal Advisor

Cheng Chung-ho, JeremyBSc(Hons), LLB, MEd, PCE, PCLL,DTMAssistant Manager

Tse Kar-lun, FrankieLLB(Hons)Assistant Manager

(23) Internal Affairs

Wu Tze-cheung, PhilipBA(Hons), FCCA, FHKSAManager

Ho Lick-tinDeputy Manager (Corporate Affairs)

Chan Suk-kuen, DoraBScAssistant Manager

Chan Choi-yin, ClaraMIHRM(HK)Assistant Manager (Personnel)

Wong Ho-keung, JimmyAssistant Manager (Office Management)

Fung Yick-lam, CrisAssistant Manager (Corporate Affairs)

(24) Accounts

Pun Wing-mou, BernardFCA, FHKSAChief Accountant

Zhou Yimin, AndrewMBA, CMgrManager

Li Ching-kam, FrederickFCCA, AHKSADeputy Chief Accountant

Fok Yat-cheong, EdwardMSc(Eng)Deputy Manager (EDP)

Lee Hung-chak, MauriceBBA(Hons), FCCA, AHKSADeputy Manager

Chow Cheuk-wing, EricFCCA, FHKSASenior Accountant

Ko Ping-yin, AlbertChief Cashier

Leung Cheuk-ming, EricMScAssistant Manager (EDP)

Tsui Chi-wai, JackAssistant Manager (EDP)

Cheung Wai-wahBBAAssistant Manager (EDP)

(25) Internal Audit

Chiu Yue-ming, DanielMAcc, FCCA, FHKSA, FCIS, ACMA,FCPAManager

Ho Kui-yuen, KennethBSoc.Sc, MBA, DTMAssistant Manager (Training)

Wong Chung-wai, BarryBA(Hons), ACCA, AHKSAAssistant Manager (Audit)


�� !"#Report of the Auditors

A1

�� !"#$%&'()

�� !"#$%&'()*+

�� !

�� !"#$%�&'(^P��

^QU�� !"#$%&'()*+

�� !"#

� � ! " # $ % &

�� !"#$%&'()*+,-

�� !"#$%&'()*!"#

�� !"#$%&'()*+,-

��

�� !"#$%&'(�)*"+

�� !"#$%&'()*+,�

�� !"#$

� � ! "

�� !"#$%&'()'*+,

�� !"#$�%&'$�()*

�� !"#!$%&'()*+,

�� !"#$%&'()*+,-

�� !"#$%&'()*+,-

�� !"#$%&'()*!+,

�� !�� !"

�� !"#$%&'()*+,-

�� !"#

TO THE SHAREHOLDERS OF


(incorporated in Hong Kong with limited liability)

We have audited the financial statements on pages A3 to A48 which

have been prepared in accordance with accounting principles

generally accepted in Hong Kong.

Respective responsibilities of directors and auditorsThe Companies Ordinance requires the directors to prepare financial

statements which give a true and fair view. In preparing financial

statements which give a true and fair view it is fundamental that

appropriate accounting policies are selected and applied consistently.

It is our responsibility to form an independent opinion, based on our

audit, on those statements and to report our opinion to you.

Basis of opinionWe 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 financial statements, and of

whether the accounting policies are appropriate to the Company’s

and the Group’s circumstances, consistently applied and adequately

disclosed.


Report of the Auditors (cont’d)

A2

We planned and performed our audit so as to obtain all the

information and explanations which we considered necessary in

order to provide us with sufficient evidence to give reasonable

assurance as to whether the financial statements are free from

material misstatement. In forming our opinion we also evaluated the

overall adequacy of the presentation of information in the financial

statements. We believe that our audit provides a reasonable basis for

our opinion.

OpinionIn our opinion, the financial statements give a true and fair view of

the state of affairs of the Company and the Group as at 30 June,

1999 and of the profit and cash flows of the Group for the year then

ended and have been properly prepared in accordance with the

Companies Ordinance.

Deloitte Touche Tohmatsu

Certified Public Accountants, Hong Kong

Hong Kong, 7th October, 1999


Principal Accounting Policies

A3

1. Basis of consolidationThe consolidated financial statements of the Group incorporate

the financial statements of the Company and all its subsidiaries

made up to 30th June each year and include the Group’s

interests in associated companies and jointly controlled entities

on the basis set out in note 5 and note 6 below respectively. The

financial statements of the associated companies and jointly

controlled entities used for this purpose are either co-terminus

with the financial statements of the Company or cover a year

ended not more than six months before the Company’s year-

end. The results of subsidiaries, associated companies and

jointly controlled entities acquired or disposed of during the

year are included in the consolidated profit and loss account

from the effective dates of acquisition or to the effective dates

of disposal. All material intra-group transactions and balances

are eliminated on consolidation.

Goodwill or capital reserve arising on acquisition of a subsidiary,

an associated company or a jointly controlled entity, representing

the excess or shortfall of the value of purchase consideration

paid over the Group’s share of the fair value ascribed to

separable net assets of the subsidiary, associated company or

jointly controlled entity acquired at the date of acquisition, is

eliminated against or credited to reserves immediately on

acquisition. Upon disposal of a subsidiary, an associated

company or a jointly controlled entity, the attributable amount

of goodwill or capital reserve previously taken to reserves is

transferred to profit and loss account 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 parties

outside the Group in the results and net assets of subsidiary

companies.

1.


Principal Accounting Policies (cont’d)

A4

2. TurnoverTurnover comprises proceeds from sale of properties (excluding

proceeds on development properties sold prior to their completion

which are included in deferred items), gross rental income from

properties letting under operating leases, revenue from hotel

operation, interest income earned, income from shares and

other securities investments and revenue derived from other

activities including property management, car parking and

transport infrastructure management, construction, insurance

and stock broking businesses. It does not include the turnover

of associated companies and jointly controlled entities.

3. Revenue recognitionRevenue of a transaction is recognised when it is probable that

the economic benefits associated with the transaction will flow

to the Group which will result in increases in equity and these

benefits can be measured reliably, on the following basis:

(a) Property sales

Revenue and profit from sale of completed properties is

recognised upon execution of the sale agreements.

When a development property is sold in advance of

completion, revenue and profit is only recognised upon

completion of the development. Deposits and instalments

received from purchasers prior to this stage are included in

deferred items.

Where properties are sold under deferred terms with part

of the sales proceeds being receivable after an interest-free

period, that portions of the differences between the sale

prices with and without such terms representing finance

income are treated as deferred income and is allocated to

the prof it and loss account on a basis that takes into

account the effective yields on the amounts of the sales

proceeds receivable over the interest-free period.

2.

3.

(a)



A5

3. Revenue recognition (cont’d)

(b) Rental income

Rental income from properties letting under operating

leases is recognised on a straight line basis over the lease

terms.

(c) Hotel operation

Revenue from hotel operation is recognised upon provision

of services.

(d) Interest income

Interest income is accrued on a time proportion basis that

takes into account the effective yields on the carrying

amount of assets.

(e) Construction

Revenue in respect of building construction job is

recognised on the percentage of completion method

measured by reference to the proportion that costs

incurred to date bear to estimated total costs for the

contract. Previously, revenue and profit in respect of

building construction job was recognised only upon

completion. The change in accounting policy has no

material impact on the assets or profits of the Group for

the current year and prior years.

(f) Investment income

Income from share and other investments is recognised

when the right to receive payment is established.

(g) Other income

Property management service fee, car parking management

fee, insurance premium and stock brokerage are recognised

when the services are rendered.

3.

(b)

(c)

(d)

(e)

(f)

(g)



A6

4. SubsidiariesA subsidiary is a company in which the Group, directly or

indirectly holds more than half of the issued share capital, or

controls more than half of the voting power, or controls the

composition of the board of directors. Investments in subsidiaries

are carried in the balance sheet of the Company at cost less

provision for any permanent diminution in value.

5. Associated companiesAssociated companies are those in which the Group has a long

term equity interest of not less than 20% and not more than

50% and 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 associated companies are incorporated in the

consolidated profit and loss account to the extent of the Group’s

share of post-acquisition profits less losses whereas accounted

for in the profit and loss account of the Company only to the

extent of dividend income.

Interests in associated companies are carried in the consolidated

balance sheet at the Group’s share of their net assets whereas in

the balance sheet of the Company at cost less provision for

permanent diminution in value.

6. Joint venturesA joint venture is a contractual arrangement whereby the Group

and other parties undertake an economic activity which is

subject to joint control and over which none of the parties has

unilateral control.

4.

5.

6.



A7

6. Joint ventures (cont’d)

The Group has adopted the accounting policy for joint ventures

in accordance with the statement of Standard Accounting

Practice No. 21 “Accounting for interests in Joint Ventures”

issued by the Hong Kong Society of Accountants which

becomes effective from 1st January, 1998. Adoption of this

accounting policy has no effect on the Group’s profit attributable

to shareholders or reserves and only results in separate

disclosures and reclassif ication of items in the f inancial

statements. Comparative figures for the last year have been

restated accordingly to conform with the current year’s

presentation.

(a) Jointly controlled entities

Jointly controlled entities involve the establishment of a

separate entity in which the Group has a long term interest

and over which the Group is in a position to exercise joint

control with other venturers in accordance with contractual

arrangements.

Results of jointly controlled entities are incorporated in

the consolidated profit and loss account to the extent of

the Group’s share of post-acquisition profits less losses

whereas accounted for in the profit and loss account of the

Company only to the extent of dividend income.

Interests in jointly controlled entities in the consolidated

balance sheet are initially recorded at cost and adjusted

thereafter for post acquisition change in the Group’s share

of their net assets whereas in the balance sheet of the

Company are stated at cost less provision for permanent

diminution in value.

6.

(a)



A8

6. Joint ventures (cont’d)

(b) Jointly controlled assets

Jointly controlled assets are assets of a joint venture over

which the Group has joint control with other venturers in

accordance with contractual arrangements and through the

joint control of which the Group has control over its share

of future economic benefits earned from the assets.

The Group’s share of jointly controlled assets and any

liabilities incurred jointly with other venturers are

recognised in the balance sheets and classified according

to their nature. Liabilities and expenses incurred directly

in respect of its interests in jointly controlled assets are

accounted for on an accrual basis. Income from the sale or

use of the Group’s share of the output of the jointly

controlled assets, together with its share of any expenses

incurred by the joint ventures, are recognised in the profit

and loss account when it is probable that the economic

benefits associated the transactions will flow to or from

the Group.

7. Long term investmentsLong term investments are stated at cost less provision for

permanent diminution in value. Results of long term investments are

accounted for to the extent of dividends income.

6.

(b)

7.



A9

8. Properties

(a) Land pending development

Land pending development, which is stated at cost less

provision for diminution in value made by the directors, is

a suspense account that embraces all land acquired

pending any positive 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 fixed assets and land to be

developed for sale as current assets.

(b) Investment properties

Investment properties are completed properties which are

income producing and held for their investment potential

on a long term basis. Investment properties are included in

fixed assets at open market value on the basis of an annual

professional valuation related to properties on the basis

that increases in valuations are credited to the investment

property revaluation reserve and decreases in valuations

are first set off against increases on earlier valuations on a

portfolio basis and thereafter charged to operating profit.

Upon disposal of an investment property, the revaluation

surplus realised is transferred to operating profit in

calculating the profit or loss on disposal.

(c) Hotel properties

Hotel properties and their integral fixed plant used in the

operation of hotel are included in fixed assets at open

market value on the basis of an annual professional

valuation related to individual hotel properties.

8.

(a)

(b)

(c)



A10

8. Properties (cont’d)

(d) Properties under development

Properties under development for long term retention are

classified under fixed assets and are stated at cost less

provision for diminution in value. These properties are

reclassified as investment properties or other properties as

the case may be upon completion of the development.

Properties under development for sale are included in

stocks at the lower of cost and net realisable value. Net

realisable value takes into account the price ultimately

expected to be realised and the anticipated costs to

completion.

Cost of property in the course of development comprises

land cost and development costs during the development

period.

(e) Stock of completed properties

Completed properties remaining unsold at year end are

stated at the lower of cost and net realisable value.

Cost is determined by apportionment of the total land and

development costs attributable to the unsold properties.

Net realisable value is determined by reference to sale

proceeds of properties sold in the ordinary course of

business less all estimated selling expenses after the

balance sheet date, or by management estimates based on

prevailing market conditions.

8.

(d)

(e)



A11

8.

(f)

9.

(a)

(b)

(c)

8. Properties (cont’d)

(f) Other properties

Other properties are properties held for production or

administrative purposes and are included in fixed assets at

cost less accumulated depreciation.

9. Depreciation

(a) Investment properties

No depreciation is provided on investment property except

where the unexpired term of the lease of the investment

property is 20 years or less, in which case the then

carrying amount is amortised on a straight line basis over

the remaining unexpired term of the lease.

(b) Hotel properties

No depreciation is provided on hotel property or on its

integral fixed plant. It is the Group’s policy to maintain

these assets in a continual state of sound repair and

maintenance and to extend and make improvements

thereto from time to time, and accordingly the directors

consider that given the estimated lives of these assets and

their high residual values, any depreciation would be

insignif icant. The related repair and maintenance

expenditure is charged to the profit and loss account in the

year in which they are incurred. The costs of significant

improvements are capitalised.

(c) Properties under development

No depreciation is provided on properties under

development.



A12

9.

(d)

(e)

10.

11.

(a)

(b)

9. Depreciation (cont’d)

(d) Other properties

The cost of leasehold land and construction cost of

buildings thereon are depreciated on a straight line basis

over the term of the lease.

(e) Other fixed assets

Other fixed assets including equipment, furniture, fixtures

and vehicles are stated at cost less depreciation calculated

on a straight line method to write off the assets over their

estimated useful lives at rates ranging from 10% to 33.3%

per annum.

10. Capitalisation of borrowing costsBorrowing costs are expensed as incurred, except to the extent

that they are capitalised as being directly attributable to the

construction or production of assets which necessarily take a

substantial period time to get ready for their intended use or

sale. Capitalisation of such borrowing costs begins when

construction or production activities commence and ceases

when the assets are substantially ready for their intended use or

sale.

11. Materials and work-in-progress

(a) Materials comprising mainly building materials and hotel

stock are valued at cost, calculated on a weighted average

cost basis, less provisions, if any.

(b) Work-in-progress in respect of building construction

jobs is stated at cost plus attributable prof its

recognised less provision for foreseeable losses and

progress payments received and receivable. Cost

includes direct materials, direct labour and attributable

overheads.



A13

12. Current assets and current liabilities

(a) Current assets

That portion of long term debtors which falls due within

one year from the balance sheet date is included in current

debtors. Marketable securities represent that part of liquid

assets temporarily invested in shares and other investments

and are stated at the lower of cost and market value.

(b) Current liabilities

That portion of long term liabilities which is repayable

within one year from the balance sheet date is included in

short term borrowings.

13. Translation of foreign currenciesForeign currency transactions during the year are converted into

Hong Kong dollars at the market rates of exchange ruling at the

transaction dates. Monetary assets and liabilities denominated

in foreign currencies and financial statements of overseas

subsidiaries, associated companies and jointly controlled entities

expressed in foreign currencies are translated into Hong Kong

dollars at the market rates of exchange ruling at the date of the

balance sheet. Exchange differences arising from the translation

of the financial statements of overseas subsidiaries, associated

companies and jointly controlled entities are taken directly to

reserves. All other exchange differences are dealt with in the

profit and loss account.

14. Deferred taxationDeferred taxation is provided, using the liability method, on all

material timing differences other than those which are not

expected to crystallise in the foreseeable future. Deferred tax

asset is not recognised unless its realisation is certain.

12.

(a)

(b)

13.

14.



A14

15. Related partiesParties are considered to be related to the Group if the Group

has the ability, directly or indirectly, to control the other parties

or exercise significant influence over the other parties in

making financial and operating decisions, or vice versa, or

where the Group and the parties are subject to common control

or common significant influence.

16. Financial instruments and derivatives

Interest rate swaps are used to manage the Group’s exposure to

interest rate fluctuation. It is the Group’s policy not to enter

into derivative transactions for speculative purposes. The

notional amounts of interest rate swaps are recorded off balance

sheet. Interest flows arising on the swaps are accounted for on

an accrual basis.

15.

16.


Consolidated Profit and Loss Account

A15

Fo r t h e y e a r e n d e d 3 0 t h Ju n e 1 9 9 9 ( E x p r e s s e d i n m i l l i o n s o f H o n g Ko n g d o l l a r s )

Note 1999 1998

Turnover 1 23,680 23,222

Operating profit 1 10,607 14,383

Interest expenses 2 (1,932) (2,180)

Net operating profit excluding

exceptional items 8,675 12,203

Exceptional items 3 595 (4,700)

Share of profits less losses of

associated companies 447 598

Share of profits less losses of

jointly controlled entities 432 710

Profit before taxation 4 10,149 8,811

Taxation 7 (867) (1,302)

Profit after taxation 9,282 7,509

Minority interests (4) (249)

Profit attributable to shareholders 8 9,278 7,260

Dividends 9 (3,721) (2,869)

Profit for the year retained 5,557 4,391

Profit for the year retained by:

Company and subsidiaries 5,302 3,667

Associated companies 136 291

Jointly controlled entities 119 433

5,557 4,391

(Expressed in Hong Kong dollars)

Earnings per share 10 $3.87 $3.04


Consolidated Balance Sheet

A s a t 3 0 t h Ju n e 1 9 9 9 ( E x p re s s e d i n m i l l i o n s o f H o n g Ko n g d o l l a r s )

A16

Note 1999 1998

Fixed assets 11 77,915 91,210

Associated companies 13 4,552 3,743

Jointly controlled entities 14 17,744 10,576

Long term investments 15 1,333 1,974

Secured loans 2,482 1,880

Land pending development 27,665 30,233

131,691 139,616

Current assets 16 28,137 28,620

Current liabilities 17 (19,620) (20,383)

Net current assets 8,517 8,237

140,208 147,853

Financed by:

Share capital 18 1,201 1,196

Share premium and reserves 19 105,412 112,506

Shareholders’ funds 106,613 113,702

Long term liabilities 20 16,253 24,127

Minority interests 21 967 880

Deferred items 22 16,375 9,144

140,208 147,853

Directors:

Walter P.S. Kwok

Raymond P.L. Kwok


Parent Company Balance Sheet

A17

A s a t 3 0 t h Ju n e 1 9 9 9 ( E x p r e s s e d i n m i l l i o n s o f H o n g Ko n g d o l l a r s )

Note 1999 1998

Subsidiaries 12 30,579 31,293

Jointly controlled entities 14 (265) (302)

Long term investments 15 (3) (1)

30,311 30,990

Current assets 16 72,298 60,405

Current liabilities 17 (31,536) (26,342)

Net current assets 40,762 34,063

71,073 65,053

Financed by :

Share capital 18 1,201 1,196

Share premium and reserves 19 69,872 63,857

Shareholders’ funds 71,073 65,053

Directors:

Walter P.S. Kwok

Raymond P.L. Kwok


Consolidated Cash Flow Statement

Fo r t h e y e a r e n d e d 3 0 t h Ju n e 1 9 9 9 ( E x p r e s s e d i n m i l l i o n s o f H o n g Ko n g d o l l a r s )

A18

Note 1999 1998

Net cash inflow from operating activities 23a 20,333 20,919

Returns on investments and servicingof financeInterest received 548 415Interest paid (2,110) (2,737)Dividends received from listed investments 12 23Dividends received from unlisted investments 1 46Dividends received from associated companies

and jointly controlled entities 485 406Dividends and special cash bonus paid

to shareholders (2,105) (6,193)Dividends paid to minority shareholders (59) (385)

Net cash outflow from returns oninvestments and servicing of finance (3,228) (8,425)

TaxationHong Kong profits tax paid (1,396) (714)Hong Kong profits tax refund 102 –

(1,294) (714)

Investing activitiesPurchase of subsidiaries 23b – (316)Purchase of associated companies, jointly

controlled entities and long term investments (157) (1,722)Repayment from/(Advances to) associated

companies, jointly controlled entities andinvestee companies (7,408) 3,817

Acquisition of land pending development (2,268) (7,473)Additions to fixed assets (940) (2,656)Proceeds on disposal of investment properties 1,080 2,557Proceeds on disposal of associated companies,

jointly controlled entities andlong term investment 968 121

Proceeds on disposal of other fixed assets 7 4Proceeds on disposal of land

pending development 127 –Loans and advances made (598) (295)

Net cash outflow from investing activities (9,189) (5,963)

Net cash inflow before financing 6,622 5,817

Financing

Bank loans 2,554 125Other loans 3,173 –Repayment of bank and other loans (15,777) (3,760)Customers’ deposits and bills payable 685 529Fundings from minority shareholders 202 30

Net cash outflow from financing 23c (9,163) (3,076)

Increase/(Decrease) in cash and cash equivalents (2,541) 2,741Cash and cash equivalents

at beginning of year 10,734 7,993

Cash and cash equivalents at end of year 23d 8,193 10,734


Notes to the Financial Statements

A19

( E x p re s s e d i n m i l l i o n s o f H o n g Ko n g d o l l a r s )

1.

2.

3.

33.2726.43

1. Turnover and contribution to operating profit

An analysis of the Group’s turnover and contribution to operating profit before interestexpenses, tax and minority interests by principal activities are as follows:

Turnover Operating Profit

1999 1998 1999 1998

Property sales 14,991 15,304 4,960 8,939Rental income 5,510 5,650 4,203 4,443Hotel operation 542 545 134 132Interest income 543 435 543 434Other income 2,094 1,288 767 435

Total 23,680 23,222 10,607 14,383

Other income comprises revenue and profit derived from other activities includingproperty management, car parking and transport infrastructure management, construction,securities investments, insurance and stock broking.

2. Interest expenses

1999 1998

Interest onBank loans and overdrafts 1,191 1,730Other loans wholly repayable within 5 years 935 1,080

2,126 2,810Less: Portion capitalised 194 630

1,932 2,180

3. Exceptional items

1999 1998

Profit on deemed disposal of investment inan associated company 595 –

Provision for diminution in value of interest inproperty development projects – (4,300)

Provision for diminution in value of long term investments – (400)

595 (4,700)

Profit on deemed disposal of investment in an associated company represents the increasein the Group’s share of the net assets in Smartone Telecommunications Holdings Limitedarising from the Group’s reduction in its shareholdings from 33.27% to 26.43% as a resultof its new share issues during the year.


Notes to the Financial Statements (cont’d)

A20


4.

5.

1998

19981998

4. Profit before taxation

1999 1998

Profit before taxation is arrived at

after charging:Depreciation 228 83Auditors’ remuneration 5 5Directors’ emoluments 33 45

and crediting:Dividend income from: listed investments 12 23

unlisted investments 1 46Profit on disposal of long term investment 192 62

5. Directors’ emoluments and five highest paid individuals

1999 1998

Directors’ emoluments:Fees 1 1Salaries, allowances and benefits in kind 15 15Bonuses 16 28Provident fund contributions 1 1

33 45

Fees paid to independent non-executive directors amounted to $210,000 (1998: $170,000).There were no other emoluments paid to non-executive directors.

Number of directors whose emoluments fell within:

Emoluments Band Number Number

HK$M HK$M0 – 1.0 7 6

1.0 – 1.5 – 11.5 – 2.0 3 22.0 – 2.5 – 13.0 – 3.5 – –3.5 – 4.0 1 –4.5 – 5.0 – 15.0 – 5.5 1 –6.0 – 6.5 – 26.5 – 7.0 1 –

10.5 – 11.0 1 –19.5 – 20.0 – 1

14 14

The above analysis includes four (1998: four) individuals whose emoluments were amongthe five highest in the Group. Details of the emoluments paid to the other one (1998: one)individual are:

1999 1998

Salaries, allowances and benefits in kind 7 4Bonuses 1 1Provident fund contributions – –

8 5



A21


6.

1998

1998

1998

7.

(a)16% 1998 16%

10%

(b)

(c)

8.

1998

6. Staff retirement schemes

The Group operates a number of defined contribution schemes for all qualified employees.The assets of these schemes are held separately from those of the Group in independentlyadministered funds. Contributions to these schemes are made by both the employers andemployees at rates ranging from 5% to 10% on the employees’ salary.

Contributions to the retirement schemes made by the Group during the year amounted to$90 million (1998: $81 million) of which $51 million (1998: $47 million) was charged tothe profit and loss account. Forfeited contributions for the year of $13 million (1998: $10million) were used to reduce the existing level of contributions.

7. Taxation

1999 1998

Hong KongCompany and subsidiaries 728 1,131Associated companies 44 46Jointly controlled entities 91 107

863 1,284Outside Hong Kong

Jointly controlled entities 4 18

867 1,302

(a) Hong Kong profits tax is provided at the rate of 16% (1998: 16%) based on theestimated assessable profits for the year and included a 10% rebate of profit tax in theamount of $102 million for the year of assessment 1997/98. Tax outside Hong Kong iscalculated at rate applicable in the relevant jurisdiction.

(b) No provision for deferred taxation has been made as the aggregate effect of all timingdifferences is immaterial.

(c) The surplus arising on revaluation of investment properties and hotel properties held bythe Group and its jointly controlled entities does not constitute a timing difference asprofit arising on the disposal of these assets would not be subjected to taxation.Accordingly, no deferred taxation has been provided.

8. Profit attributable to shareholders

Profit attributable to shareholders dealt with in the profit and loss account of the Companyamounts to $9,211 million (1998: $11,576 million).



A22


9.

1998

1998

10.

1998

1998

9. Dividends

1999 1998

Interim dividend of $0.50 per share based on2,401 million shares

(1998: $0.60 per share based on2,389 million shares) paid 1,200 1,434

Proposed final dividend of $1.05 per share based on2,401 million shares(1998: $0.6 per share based on 2,391 million shares) 2,521 1,435

3,721 2,869

10.Earnings per share

The calculation of earnings per share is based on $9,278 million (1998: $7,260 million)being profit attributable to shareholders and on weighted average number of 2,397 millionshares (1998: 2,390 million shares) in issue during the year.



A23


11.

(a)

(b)

(c)

11.Fixed assets

PropertiesInvestment Hotel under Other Other

The Group properties properties development properties fixed assets Total

(a) Movement during yearCost or valuationAt beginning of year 80,433 4,200 6,345 – 570 91,548Additions 96 1 978 – 59 1,134Transfer in 3,357 – 154 1,303 601 5,415Disposals (1,396 ) – (1,501 ) – (17 ) (2,914 )Transfer out (36 ) (353 ) (4,126 ) – – (4,515 )Revaluation deficit (11,899 ) (298 ) – – – (12,197 )

At end of year 70,555 3,550 1,850 1,303 1,213 78,471

Accumulated depreciationAt beginning of year – – – – 338 338Charge for the year – – – 76 152 228Disposals – – – – (10 ) (10 )

At end of year – – – 76 480 556

Net book value at30/6/1999 70,555 3,550 1,850 1,227 733 77,915

Net book value at30/6/1998 80,433 4,200 6,345 – 232 91,210

(b) Basis of book value1999 professional valuation 70,555 3,550 – – – 74,105Cost – – 1,850 1,303 1,213 4,366

70,555 3,550 1,850 1,303 1,213 78,471

(c) Net book value of properties shown above comprises:

1999 1998

Land in Hong Kong held underLong Lease (not less than 50 years)

Investment properties 17,577 23,311Hotel properties 1,120 1,360Properties under development 190 477Other properties 16 –

18,903 25,148

Medium-term lease (less than 50 years butnot less than 10 years)Investment properties 52,311 57,122Hotel properties 2,430 2,840Properties under development 1,563 5,868Other properties 1,211 –

57,515 65,830

Land outside Hong Kong held underLong Lease (not less than 50 years)Investment properties 667 –Properties under development 97 –

764 –

77,182 90,978



A24


11.

(d)

(e)

1998

1998

(f)

1998

12.

A35A44

13.

A48

11.Fixed assets (cont’d)

(d) Investment properties and hotel properties revaluation

The Group’s investment properties and hotel properties have been revalued as at 30thJune, 1999 by Messrs. Knight Frank, Chartered Surveyors on an open market valuebasis in their existing state by reference to comparable market transactions and whereappropriate on the basis of capitalisation of the net income allowing for reversionaryincome potential.

(e) Gross rental receivable from and profit on disposal of the Group’s investmentproperties during the year amounted to HK$5,114 million (1998: HK$5,221 million)and HK$439 million (1998: HK$2,054 million) respectively.

(f) The carrying amount of properties under development as at 30th June 1999 includedinterest capitalised in the amount of HK$639 million (1998: HK$674 million).

12.Subsidiaries

1999 1998

The CompanyUnlisted shares, at cost 30,579 31,293

Particulars regarding principal subsidiaries are set out on pages A35 to A44.

13.Associated companies

1999 1998

The The The TheGroup Company Group Company

Unlisted shares, at costless provision 169 – 191 –

Hong Kong listed shares, at cost 628 – 620 –Share of post-acquisition reserves 1,995 – 1,277 –

2,792 – 2,088 –Goodwill on acquisition of

associated companieseliminated (107) – (107) –

Share of net assets 2,685 – 1,981 –Amount due from

associated companies 1,890 – 1,781 –Amount due to

associated companies (23) – (19) –

4,552 – 3,743 –

Market value of Hong Konglisted shares 6,528 4,668

Particulars regarding principal associated companies are set out on page A48.



A25


14.

A45 A47

15.

16.

14.Jointly controlled entities

1999 1998

The The The TheGroup Company Group Company

Unlisted shares, at cost lessprovision 1,727 4 1,655 4

Share of post-acquisition reserves 2,844 – 3,003 –

4,571 4 4,658 4Goodwill on acqusition of

jointly controlled entitieseliminated (122) – (122) –

Share of net assets 4,449 4 4,536 4Amount due from jointly

controlled entities 14,500 1 6,881 –Amount due to jointly

controlled entities (1,205) (270) (841) (306)

17,744 (265) 10,576 (302)

Particulars regarding principal jointly controlled entities are set out on pages A45 to A47.

15.Long term investments

1999 1998

Note The The The The Group Company Group Company

Unlisted shares, at cost lessprovision 353 – 275 –

Hong Kong listed shares,at cost less provision 926 – 1,693 –

1,279 – 1,968 –Amount due from investee

companies 89 – 44 –Amount due to investee

companies (35) (3) (38) (1)

1,333 (3) 1,974 (1)

Market value of Hong Konglisted shares 1,527 – 2,095 –

16.Current assets

Stocks 16(a) 16,144 – 13,969 –Debtors 16(b) 3,458 72,294 3,621 60,405Marketable securities 16(c) 287 – 239 –Short term bank deposits 8,082 – 10,658 –Bank balances and cash 166 4 133 –

28,137 72,298 28,620 60,405



A26


16.

(16a)

1998

(16b)

(16c)

17.

16.Current assets (cont’d)

1999 1998


(16a) Stocks

Properties underdevelopment 11,570 – 11,266 –

Stock of completedproperties for sale 4,466 – 2,593 –

Work-in-progress lessreceipts on account 52 – 29 –

Materials 56 – 81 –

16,144 – 13,969 –

The carrying amount of the above stocks that are stated at net realisable valueamounted to $765 million (1998: $310 million).

(16b) Debtors

Debtors, deposits andprepayments 3,094 261 3,253 266

Short term loans 364 – 368 –Amounts due from

subsidiaries lessprovision – 72,033 – 60,139

3,458 72,294 3,621 60,405

(16c) Marketable securities

Hong Kong listed sharesand investments 96 – 139 –

Overseas shares andinvestments 191 – 100 –

287 – 239 –

Market valueHong Kong listed shares

and investments 167 – 187 –Overseas shares and

investments 216 – 100 –

383 – 287 –

17.Current liabilities

1999 1998


Short term borrowings 17(a) 4,781 – 6,959 9Customers’ deposits and

bills payable 2,658 – 1,973 –Creditors 17(b) 6,379 29,015 6,169 24,898Taxation 3,281 – 3,847 –Proposed final dividend 2,521 2,521 1,435 1,435

19,620 31,536 20,383 26,342



A27


17.

(17a)

(17b)

18.

17.Current liabilities (cont’d)

1999 1998


(17a) Short term borrowings

Unsecured bank loansand overdrafts 95 – 72 9

Long term liabilitiesdue within1 year 20 4,686 – 6,887 –

4,781 – 6,959 9

(17b) Creditors

Creditors andaccrued expenses 6,379 213 6,169 179

Amounts due tosubsidiaries – 28,802 – 24,719

6,379 29,015 6,169 24,898

18.Share capital

Numberof shares

in millions Amount

Authorised:Ordinary shares of $0.50 eachAt beginning and end of year 2,900 1,450

Issued and fully paid:Ordinary shares of $0.50 eachAt beginning of year 2,391 1,196Shares issued in lieu of cash dividends 10 5

At end of year 2,401 1,201

On 15th December, 1998, 9,517,496 shares were issued as fully paid shares in lieu of finaldividends for the year ended 30th June, 1998, at a value of $55.65. An amount of $5 millionstanding to the credit of the share premium account was applied in paying up the shares.



A28


19.

1998

19.Share premium and reserves

1999

The TheGroup Company

Share premiumAt beginning of year 17,005 17,005Amount applied in paying up shares

issued in lieu of cash dividends (5) (5)

At end of year 17,000 17,000

Capital reserveAt beginning and end of year 727 5,281

Property revaluation reservesAt beginning of year 55,351 –

Deficit on revaluation of propertiesheld by subsidiaries attributable to the Group- Investment properties (11,839) –- Hotel properties (298) –

Surplus realised on disposal of investmentproperties held by

–Subsidiaries (755) ––Jointly controlled entities (26) –

Share of deficit on revaluation of investmentproperties held by jointly controlled entities (239) –

At end of year 42,194 –

Building reserve at beginning and end of year 830 830

Dividend equalization reserve at beginningand end of year 350 350

General reserve at beginning and end of year 5 –

Exchange reserveAt beginning of year (2) –Exchange difference arising on translation

of financial statements of–Subsidiaries 7 ––Associated companies (1) ––Jointly controlled entities (13) –

At end of year (9) –

Retained profitsAt beginning of year 38,240 40,391Goodwill adjustment on acquisition of a subsidiary by

an associated company in prior year (12) –Arising on shares issued in lieu of cash dividends 530 530Profit for the year retained 5,557 5,490

At end of year 44,315 46,411

Total share premium and reserves 105,412 69,872

Distributable reserves of the Company as at 30th June, 1999 amounted to $47,591 million(1998: $41,571 million).



A29


19.

20.

(a)

(b)1998

19.Share premium and reserves (cont’d)

1999 1998

The Company Associated Jointly The Company Associated Jointlyand subsidiaries companies controlled entities and subsidiaries companies controlled entities

Share premium and reserves of the Groupretained by:

Share premium 17,000 – – 17,005 – –Capital reserve 704 23 – 704 23 –Investment property

revaluation reserve 39,940 – 1,721 52,534 – 1,986Hotel property revaluation

reserve 533 – – 831 – –Building reserve 830 – – 830 – –Dividend equalisation

reserve 350 – – 350 – –General reserve – 5 – – 5 –Exchange reserve 5 (1 ) (13 ) (2 ) – –Retained profits 42,198 982 1,135 36,366 857 1,017

101,560 1,009 2,843 108,618 885 3,003

20.Long term liabilities

Note 1999 1998

The Group

Unsecured bank loans repayable

Within 1 year 1,664 1,667After 1 year, but within 2 years 894 2,286After 2 years, but within 5 years 11,003 15,538After 5 years 533 2,628

14,094 22,119

Other unsecured loans repayable

Within 1 year 3,022 5,220After 1 year but within 2 years 2,450 3,022After 2 years, but within 5 years 675 653After 5 years 698 –

6,845 8,895

20,939 31,014Less : Amount due within 1 year included

in short term borrowings 17(a) (4,686) (6,887)

16,253 24,127

(a) The above other unsecured loans are repayable on various dates up to 30th June, 2006at commercial market rates.

(b) Bank loans shown above that are not wholly repayable within 5 years amounted to$1,100 million (1998: $9,543 million).



A30


21.

22.

23.

(a)

21.Minority interests

1999 1998

The GroupShare of equity and reserves in subsidiaries 107 222Amount due to minority shareholders 874 674Amount due from minority shareholders (14) (16)

967 880

22.Deferred items

The GroupDeposits received on sale of properties 16,271 9,038Deferred income 104 106

16,375 9,144

23.Notes to consolidated cash flow statement

(a) Reconciliation of operating profit to net cash inflowfrom operating activities

Operating profit 10,607 14,383Depreciation 228 83Profit on disposal of investment properties (439) (2,054)Loss on disposal of fixed assets – 4Profit on disposal of long term investment (192) (62)Profit on disposal of land pending development (50) –Dividends received from investments (13) (69)Provision for diminution of associated company 22 –Interest income (543) (435)Decrease/(Increase) in stocks 3,219 (370)Decrease in debtors 117 1,743Decrease/(Increase) in marketable securities (48) 225Increase/(Decrease) in creditors 194 (427)Increase in deferred items 7,231 7,898

Net cash inflow from operating activities 20,333 20,919



A31


23.

(b)

(c)

23.Notes to consolidated cash flow statement (cont’d)

1999 1998

(b)Purchase of subsidiaries

Net assets acquired:Fixed assets – 42Land pending development – 404Bank balance and cash – 84Debtors – 75Creditors – (128)Taxation – (1)Minority interests – (47)Goodwill on acquisition – 30

– 459

Consideration satisfied by:Cash paid – 400Interest in jointly controlled entities – 59

– 459

Analysis of net cash outflow of cash and cash equivalentsin respect of the purchase of subsidiaries:

Cash consideration paid – 400Bank balances and cash acquired – (84)

– 316

(c) Analysis of changes in financing during the year

Long termShare liabilities Customers’

capital and depositsand share short term Minority and billspremium borrowings interests payable Total

At beginning of year 18,201 31,029 880 1,973 52,083Net cash inflow/

(outflow) fromfinancing – (10,050) 202 685 (9,163)

Minority interests in– profits – – 4 – 4– investment property

revaluation reserve – – (60) – (60)Dividends paid to

minority shareholders – – (59) – (59)

At end of year 18,201 20,979 967 2,658 42,805



A32


23.

(d)

24.

25.

13 14

23.Notes to consolidated cash flow statement (cont’d)

(d) Analysis of the balances of cash and cash equivalents at end of year

1999 1998

Short term bank deposits 8,082 10,658Cash and bank balances 166 133Bank overdrafts (55) (57)

8,193 10,734

24.Jointly controlled assets

At the date of the balance sheet, the aggregate amounts of assets and liabilites recognisedin the financial statements relating to the Group’s interests in jointly controlled assets areas follows:

1999 1998

The The The The Group Company Group Company

Investment properties 5,540 – 6,773 –Land pending development 70 – 71 –Stock of completed properties

for sale 58 – 58 –

5,668 – 6,902 –

Creditors and accrued expenses 97 – 110 –

25.Related party transactions

During the year, the Group undertook various transactions with related parties forprovision of finance, lease of premises, purchasing of goods and rendering of certainservices related to property construction, management and marketing activities. Thefollowing is a summary of significant transactions between the Group and related parties,which were carried out in the ordinary course of the Group’s business and on normalcommercial terms:

Associated Jointlycompanies controlled entities

Interest income 152 305Rental income 69 3Other revenue for services rendered 184 223Purchase of goods and services – 355

No comparative information for prior year is available as Statement of StandardAccounting Practice 20 “Related Party Disclosure” is first adopted in preparing theseaccounts.

The outstanding balances with associated companies and jointly controlled entities at thebalance sheet date were disclosed in Notes (13) and (14).



A33


26.Contingent liabilities and commitments

The Group

At the date of the balance sheet, the Group had contingent liabilities and commitments, sofar as not provided for in the consolidated financial statements, as follows:

1999 1998

(a) Capital commitments contracted forin respect of fixed assets 1,454 1,056

(b) Capital commitments for invetmentsin joint ventures:Contracted but not provided for 304 –

(c) Group’s share of capital commitments ofjoint ventures:Contracted but not provided for 326 1,303Authorised but not contracted for 1,151 –

(d) Guarantees given to banks and financial institutions in respect of facilities drawn by anassociated company and jointly controlled entities amounting to approximately $1,632million (1998: $1,546 million) and $5,488 million (1998: $7,443 million) respectively.

The Company

At the date of the balance sheet, the Company had contingent liabilities, not included inthe Company’s financial statements, in respect of guarantees for bank and otherborrowings drawn by:

1999 1998

Subsidiaries 21,000 31,086Associated company 1,632 1,546Jointly controlled entities 5,488 7,443

28,120 40,075

26.

(a)

(b)

(c)

(d)

19981998



A34


27.Financial instruments

From time to time the Group enters into interest rate swaps to adjust interest rateexposures on its debt portfolio. The Group does not undertake speculative trading in theseinstruments. At the balance sheet date, the Group has a net interest rate swap position ofreceive fixed and the gross notional principal of interest rate swaps was HK$2,575 million.Details of the Group’s outstanding interest rate swaps at balance sheet date were asfollows:

Net notionalprincipal Net Carrying

amount fair value valueInterest rate swaps

– Less than one year (100) (5) –– One to five years 2,475 108 6

2,375 103 6

Counterparties to swap transactions are reputable international financial institutions withstrong credit ratings. The Group has established treasury policies and control procedures toassess and monitor the counterparty limits and exposure. The Group does not consider thatit has any significant exposure to any individual counterparty, nor does it anticipate non-performance by any of its counterparties.

28.Comparative figures

Certain comparative f igures have been reclassified to conform with current year’spresentation.

29.Approval of financial statements

The financial statements set out on pages A3 to A48 were approved by the board ofdirectors on 7th October, 1999.

27.

28.

29.

A3 A48


Principal Subsidiaries

A35

The directors are of the opinion that a complete list of the particulars

of all subsidiaries will be of excessive length and therefore the list

following contains only the particulars of subsidiaries which principally

affect the profit and loss account or assets of the Group. A complete

list of all the subsidiaries will be annexed to the Company’s 1999

annual return.

Unless otherwise stated, all principal subsidiaries are incorporated

and operating in Hong Kong and unlisted.

Percentage of issuedordinary share capital held

Name Note The Company The Group Activities Issued Capital

(HK$)

Sun Hung Kai Real Estate 100 100 General 1,000,000Agency Limited management

& agency

New Town (N.T.) Properties 11.7 100 Investment 2,287,659,338Limited holding

Hung Kai Finance Company 100 100 Registered 100,000,200Limited deposit-taking

company

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 100 Share broking 6,000,000Limited

Sun Hung Kai Engineering 100 100 Architectural & 350,000Company Limited engineering

Sanfield Building Contractors 100 100 Building 2,500,000Limited construction


Principal Subsidiaries (cont’d)

A36



(HK$)

Everlight Engineering Company 100 Fire prevention 50,000Limited & mechanical

engineering

Aegis Engineering Company 100 Plant and 100,000Limited machine hire

Hong Yip Service Company 100 100 Property 100,000Limited management

Kai Shing Management Services 100 100 Property 10,000Limited management

Mantegna Investment Mantegna Investment Company 1 100 Hotel ownership 10,000,000Company Limited Limited

New Town Serviced Apartment 100 Furnished apartment 200Management Company Limited management

Royaltelle International Limited 100 Hotel management 2

Additech Ltd. Additech Ltd. 1 100 Property investment US$1

Addpower Properties Addpower Properties Limited 1 100 Property investment US$lLimited

Airport Freight Forwarding Centre 65 Freight forwarding 100Company Limited centre

Amglo Master Ltd. Amglo Master Ltd. 1 100 Property investment US$1

Antanpark Limited Antanpark Limited 1 100 Property investment US$1

Antinio Investments Antinio Investments Limited 1 100 Property investment US$1Limited

Ao Ta Development Company 50 100 Property investment 200Limited

Artsland Properties Artsland Properties Investment 1 100 Property investment US$1Investment Ltd. Ltd.

Barnard Enterprises Barnard Enterprises Limited 1 75 Property investment US$100Limited

Beauty Marble Beauty Marble Investment 100 Property investment 2Investment Limited Limited



A37



(HK$)

Biliboss Limited Biliboss Limited 1 100 Property investment US$1

Biliwide Limited 100 Property development 20

Billion Mix Limited Billion Mix Limited 100 Property investment 2

Borracho Company Borracho Company Limited 100 Property investment 200Limited

Branhall Investments Branhall Investments Limited 1 100 Property investment 40,000,000Limited

Cheerwide Properties Cheerwide Properties Limited 1 100 Property development US$1Limited

Cherry Land Cherry Land Company Limited 100 Property development 1,500,000Company Limited and investment

Country Well (Hong Kong) 1 100 Property investment 2Limited

Deluxe Plan Enterprises Limited 100 Property investment 2

Deporte Ltd. Deporte Ltd. 1 100 Property investment US$1

Deveaux Investments Deveaux Investments Limited 1 100 Property investment 270,000,000Limited and share dealing

Dictado Company Dictado Company Limited 100 Property investment 200Limited

Dipende Limited Dipende Limited 1 100 Property investment US$1

Donora Company Donora Company Limited 50 100 Property development, 2Limited share investment

and dealing

Earning Mode Limited 100 Property development 2

Eastlight Limited Eastlight Limited 1 100 Property development US$l

Entero Company Entero Company Limited 50 100 Property investment 200Limited

Ever Channel Limited Ever Channel Limited 100 Property investment 2



A38



(HK$)

Far Fortune Investment Limited 100 Property investment 2

Firstmax Limited Firstmax Limited 100 Property investment 2

Forever Glory Forever Glory Investments 1 100 Property investment US$1Investments Limited Limited

Fortune Honor Limited 100 Property investment 2

Fortune Yield Fortune Yield Investment Limited 100 Property investment 2Investment Limited

Fronta Limited Fronta Limited 100 Property investment 3

Full Market Limited Full Market Limited 100 Property investment 2

Garudia Limited 100 Property investment 2

Getherich Ltd. Getherich Ltd. 1 100 Property investment US$1

Gleamland Limited Gleamland Limited 1 100 Property investment US$1

Golden Square Golden Square Properties 1 100 Property investment 1,000,000Properties Enterprises LimitedEnterprises Limited

Goldland Limited Goldland Limited 1 100 Property investment US$l

Goodfaith Limited Goodfaith Limited 1 100 Property development US$1

Goodteam Limited 100 Property investment 2

Gracious Reputation Gracious Reputation Limited 100 Property investment 20Limited

Grand Kosky Ltd. Grand Kosky Ltd. 1 100 Property investment US$1

Groupland Ltd. Groupland Ltd. 1 100 Property investment US$1

Grumete Company Grumete Company Limited 50 100 Property development 200Limited

Harsco Limited 100 Property development 2

Henca Limited Henca Limited 1 100 Property investment US$1

Hitch Gato Company Hitch Gato Company Limited 100 Property development 2Limited and investment



A39



(HK$)

Honenberg Limited Honenberg Limited 100 Property investment 2

Honfair Properties Honfair Properties Limited 1 100 Property development US$1Limited

Honour Futures Limited 100 Commodities dealing 7,000,000

Hopley International Hopley International Limited 1 100 Property investment US$1Limited

Hong Kong Business Hong Kong Business 4 35 35 Business Aviation 1,000,000Aviation Centre Aviation Centre CentreLimited Limited

Hung Kai Finance Investment 100 Property investment 200Holding Limited

Jenreal Investments Limited 100 Property development 2

Jugada Company Jugada Company Limited 100 Property investment 2Limited

Kamchatka Company Kamchatka Company Limited 100 Property investment 200Limited

Kartasun Limited Kartasun Limited 100 Property investment 2

Kimrose Investments Kimrose Investments Ltd. 1 100 Property investment US$1Ltd.

King Star Estate Limited 99.9 Property development 10,000

Laboster Company Limited 50 100 Property investment 2

Lee Bit Kai Investment Company 100 100 Property investment 1,000Limited

Light Time Investments Limited 100 Property development 2and investment

Little Jewel Limited Little Jewel Limited 1 100 Property development US$1

Long Tesak Company Long Tesak Company Limited 100 Property investment 100,000Limited

Lonsale Company Lonsale Company Limited 100 Property investment 2Limited



A40



(HK$)

Lorient Holdings Ltd. Lorient Holdings Ltd. 1 100 Property investment US$1

Lunalite Company Lunalite Company Limited 100 Property development 2Limited and investment

Luxsky Ltd. Luxsky Ltd. 1 100 Property investment US$1

Main Global Limited Main Global Limited 100 Property investment 2

Manceton Limited Manceton Limited 100 Property investment 2

Manmouth Limited 100 Property development 2

Meloworld Limited 100 Investment holding 2and propertyinvestment

Merit Success Merit Success Company Limited 100 Property investment 2Company Limited

Mindano Limited Mindano Limited 100 Property investment 10,000

Morifund Ltd. Morifund Ltd. 1 100 Property investment US$1

Moscova Company Moscova Company Limited 50 100 Property investment 200Limited

Moristrong Limited Moristrong Limited 1 100 Property investment US$1

Navipol Company Navipol Company Limited 100 Property investment 200Limited

Nixon Cleaning Company Limited 100 Cleaning service 100,000

Obvio Yip Company Obvio Yip Company Limited 50 100 Property development 200Limited and investment

Open Step Limited 60 Property investment 10

Oriental Eagle Oriental Eagle 100 Property investment 2Enterprises Limited Enterprises Limited

Pacotilla Company Pacotilla Company Limited 100 Property investment 200Limited



A41



(HK$)

Pako Shun Limited Pako Shun Limited 100 Property investment 2

Parico Fortune Ltd. Parico Fortune Ltd. 1 100 Property investment US$1

Peach Blossom Peach Blossom 1 100 Property investment US$1Company Limited Company Limited

Perry Holdings Perry Holdings Limited 1 100 Property investment 500,000,000Limited

Pogarlic Company Pogarlic Company Limited 66.7 100 Property investment 3Limited

Ponente Company Ponente Company Limited 100 Property investment 200Limited

Prelong Limited 100 Property development 2and investment

Profit Richness Limited Profit Richness Limited 1 100 Property investment US$1

Protasan Limited Protasan Limited 100 Property investment 100

Rainforce Limited 100 Property development 2

SHK (N.T.) Shopping SHK (N.T.) Shopping Limited 100 Property investment 2Limited

SHK Sheung Shui SHK Sheung Shui Landmark 100 Property investment 200Landmark Investment LimitedInvestment Limited

Shubbery Company Shubbery Company Limited 100 Property investment 200Limited

Speed Fellow Limited 100 Property investment 2

Speed Wise Limited Speed Wise Limited 100 Property investment 2

Splendid Kent Limited Splendid Kent Limited 100 Property development 4

Standard Top Limited Standard Top Limited 100 Property investment 2

Startrack Company Startrack Company Limited 100 Property investment 200Limited



A42



(HK$)

Sun Carol Company Sun Carol Company Limited 100 Property investment 200Limited

Sun Hung Kai China Trading 100 Property investment 2Limited

Sun Hung Kai Properties Sun Hung Kai Properties 100 Property investment 2Consultants Limited Consultants Limited

Sun Hung Kai Properties Sun Hung Kai Properties 100 Property investment 2Pacific Limited Pacific Limited

Sun Hung Kai Real Sun Hung Kai Real Estate 100 Property investment 2Estate Consultants Consultants LimitedLimited

Sun Hung Kai Secretarial Services 50 100 Secretarial services 200Limited

Sun Technology Services 100 Satellite television 2Limited services

Sun Yuen Long Centre Management 87.5 Property investment 50,000Company Limited and management

Sunfez Company Sunfez Company Limited 100 Property investment 200Limited

Sunrit Enterprises Limited 100 Property investment 4,000,000

Super Bold Limited 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 Tainam Holdings Limited 1 100 Property investment US$1

Ten Choice Development Limited 100 Property investment 2

Tinosan Limited Tinosan Limited 100 Property investment 2

Tipro Development Tipro Development Limited 99.2 Property investment 1,000,000Limited



A43



(HK$)

Tonthai Investment Tonthai Investment Enterprises 1 100 Property investment US$1Enterprises Limited Limited

Town Descant Town Descant Company Limited 100 Property investment 200Company Limited

Town Fierce Town Fierce Company Limited 100 Property investment 10,000Company Limited

Tsi Mai Company Tsi Mai Company Limited 100 Property investment 200Limited

Tsing Ma Management Limited 66.7 Road management 70,000,000

Tyranny Company Tyranny Company Limited 75 100 Property development 400Limited and investment

Uniland Investment Uniland Investment Enterprises 1 100 Property investment US$1Enterprises Limited Limited

Upper Hill Company Upper Hill Company Limited 1 100 Property investment US$1Limited

Vergoda Company Vergoda Company Limited 66.7 100 Property development 3Limited and investment

Victory Force Limited Victory Force Limited 100 Property investment 2

Victory Winner Limited 100 Property investment 2

Vimson Limited Vimson Limited 1 100 Property investment US$1

Virile Investment Virile Investment Enterprises 1 100 Property investment US$1Enterprises Limited Limited

Wai Hung Development Company 85.7 100 Investment holding 70,000Limited and property

investment

Warrior Company Warrior Company Limited 100 Property investment 300Limited

Weelek Company Limited 100 Property investment 200



A44

1.

2.

3.

4.

Notes:

1. Incorporated in British Virgin Islands.

2. Incorporated in Liberia.

3. Incorporated in Panama.

4. Indirectly held by the Company and the Group.



(HK$)

Well Logic Properties Well Logic Properties 1 100 Property investment US$1Investment Limited Investment Limited

Well Logic (Formerly Well Logic InvestmentInvestment Enterprises Limited)Enterprises Limited

Wellden Limited Wellden Limited 100 Property investment 2

Wilson Parking (Hong Kong) 100 Car park operation 100,000Limited

Wisearn Properties Wisearn Properties Investment 1 100 Property investment US$1Investment Limited Limited

World Trade Tower World Trade Tower Limited 100 Property investment 100,000Limited

WTC (Club) Limited WTC (Club) Limited 100 Club management 200

Wylproud Company Wylproud Company Limited 50 100 Property investment 2Limited

Wymount Limited Wymount Limited 100 Property investment 2

Yancon Limited 100 Property investment 2

Yiu Kon Limited 100 Property development 2

Zarabanda Company Zarabanda Company Limited 100 Property investment 2Limited

Zindemar Investments Zindemar Investments Corp. 3 100 100 Property development US$2Corp.


Principal Jointly Controlled Entities

A45


of all jointly controlled entities will be of excessive length and

therefore the list following contains only the particulars of jointly

controlled entities which principally affect the profit and loss account

or assets of the Group. A complete list of all jointly controlled

entities will be annexed to the Company’s 1999 annual return.

Unless otherwise stated, all principal jointly controlled entities are

incorporated and operating in Hong Kong and unlisted.


Name Note The Company The Group Activities

Altomatic Limited Altomatic Limited 50 Property investment

Anbok Limited 25 Property development

Arrowtown Assets Arrowtown Assets Limited 1 49 Property developmentLimited

Asia Container Asia Container Terminals Limited 28.5 Container terminalsTerminals Ltd. development

# Beijing New Dong An 50 Property investmentCompany Limited

Central Waterfront Central Waterfront Property 1 47.5 Property developmentProperty Development Development LimitedLimited

# Direct Profit Development Direct Profit Development 8 Property developmentLimited Limited

#+ Faith & Safe Transportation 50 Mid stream operatorLimited

Glorious Concrete (H.K.) 50 Manufacturers ofLimited ready mixed

concrete

# Goodwill Financial Services 30 Financial services(Holding) Limited

#+ Green Valley Landfill Limited 20 Landfill waste disposalfacility


Principal Jointly Controlled Entities (cont’d)

A46

#+ Hoi Kong Container Services 50 Mid stream operatorCompany Limited

#+ Hong Kong Parking Limited 50 Parking metersoperator

# Kerry Hung Kai Godown 50 Godown operationLimited

+ Mightypattern Limited Mightypattern Limited 25 25 Investment holding

# Moricrown Limited Moricrown Limited 7 Property development

+ New-Alliance Asset 50 InvestmentManagement (Asia) Limited management

services

+ Newfoundworld Newfoundworld Holdings 20 Property developmentHoldings Limited Limited and investment

#+ Pearl Delta WMI Limited 20 Solid waste managementand environmental services

# Route 3 (CPS) Company 50 Toll road operationLimited

Senica International Senica International Limited 22.5 Investment holdingLimited

#+ South China WMI Transfer 20 Solid wasteLimited management and

environmentalservices

Splendid Shing Limited Splendid Shing Limited 50 Property investment

+ Star Play Development 33.3 Property investmentLimited

River Trade Terminal River Trade Terminal Co. 1 33 River trade terminalCo. Ltd. Ltd.

Tinyau Company Tinyau Company Limited 50 Property investmentLimited




Principal Jointly Controlled Entities (cont’d)

A47

+ Topcycle Development Limited 50 Property investment

+ Uttoxeter Limited Uttoxeter Limited 30 Property development

# Wolver Hollow Wolver Hollow Company 50 Property investmentCompany Limited Limited

Xipho Development Company 33.3 33.3 Property developmentLimited

+

1998

1998

#

1.

2.

+ The financial statements of these companies have been audited by firms other

than Deloitte Touche Tohmatsu. The aggregate net assets and profits after

taxation of these jointly controlled entities attributable to the Group amounted to

HK$2,055 million (1998: HK$1,827 million) and HK$40 million (1998: HK$83

million) respectively.

# Companies with year ends not co-terminous with that of Sun Hung Kai

Properties Limited.

Notes:

1. Incorporated in British Virgin Islands.

2. Incorporated in Bermuda.




Principal Associated Companies

A48


of all associated companies will be of excessive length and therefore

the list following contains only the particulars of associated companies

which principally affect the profit and loss account or assets of the

Group. A complete list of all associated companies will be annexed

to the Company’s 1999 annual return.

Unless otherwise stated, all principal associated companies are

incorporated and operating in Hong Kong and unlisted.



#+ Autotoll Limited 25 Tollway systemmanagement

#+ The Kowloon Motor Bus 1 33.15 Public transportationHoldings Limited(listed in Hong Kong)

#+ Ranex Investments Limited 29 Property development

+ SmarTone Telecommunications 1 26.43 Mobile telephoneHoldings Limited system operation(listed in Hong Kong)

#+ The Hong Kong School of 30 Driving schoolMotoring Limited

# Thomas Cook Hung Kai Thomas Cook Hung Kai 25 Money exchangeAirport Currency Airport Currency servicesExchange Limited Exchange Limited

+

1998

1998

#

1.

+ The financial statements of these companies have been audited by firms other

than Deloitte Touche Tohmatsu. The aggregate net assets and profits after

taxation of these associated companies attributable to the Group amounted to

HK$2,685 million (1998: HK$1,923 million) and HK$403 million (1998:

HK$553 million) respectively.

# Companies with year ends not co-terminous with that of Sun Hung Kai

Properties Limited.

Notes:

1. Incorporated in Bermuda.


Documents

1998-99 - Morningstar, Inc