NOTES TO THE FINANCIAL STATEMENTS...Goodwill Goodwill represents the excess of the purchase consideration over the fair value ascribed to the Group’s share of the net assets at the

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NOTES TO THE FINANCIAL STATEMENTS (Continued)

For the year ended 30th June, 1999

1. GENERAL

The Company is a listed public limited liability company incorporated in the Hong Kong SpecialAdministrative Region of the People’s Republic of China (“Hong Kong”). Its ultimate holding companyis Tsim Sha Tsui Properties Limited, a public limited company incorporated and listed in HongKong.

2. ADOPTION OF NEW STATEMENTS OF STANDARD ACCOUNTING PRACTICE

In the current year, the Group has adopted the following new Statements of Standard AccountingPractice (SSAPs) issued by the Hong Kong Society of Accountants.

SSAP 5 (Revised) Earnings Per ShareSSAP 20 Related Party DisclosuresSSAP 22 Inventories

The adoption of SSAP 5 (Revised) has resulted in some modifications to the basis of calculationof earnings per share and to the disclosures presented for earnings per share (See note 12). Amountspresented for the prior year have been restated to reflect the requirement of SSAP 5 (Revised).

SSAP 20 requires the disclosure of details of transactions with specified related parties (See note29).

SSAP 22 specifies the accounting treatment to be adopted for inventories. The adoption of thisstandard has resulted in some changes in terminology and presentation, but does not have anyeffect on the profit for the current or prior accounting periods. Accordingly, no prior periodadjustment is required.

3. SIGNIFICANT ACCOUNTING POLICIES

The principal accounting policies which have been adopted in preparing these financial statementsand which conform with accounting principles generally accepted in Hong Kong are as follows:

Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Company andits subsidiaries made up to 30th June each year.

The results of subsidiaries acquired or disposed of during the year are included in the consolidatedprofit and loss account from the effective date of acquisition or up to the effective date of disposalas appropriate.

All significant intercompany transactions and balances within the Group have been eliminatedon consolidation.

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3. SIGNIFICANT ACCOUNTING POLICIES (Continued)

Goodwill

Goodwill represents the excess of the purchase consideration over the fair value ascribed to theGroup’s share of the net assets at the date of acquisition of a subsidiary and is written off to reservesimmediately on acquisition. Negative goodwill, which represents the excess of the fair value ascribedto the Group’s share of the separable net assets at the date of acquisition of a subsidiary overthe purchase consideration, is credited to reserves.

Any premium or discount arising on the acquisition of an interest in an associated company,representing the excess or shortfall respectively of the purchase consideration over the fair valueascribed to the Group’s share of the separable net assets of the associated company at the dateof acquisition, is dealt with in the same manner as that described above for goodwill.

On disposal of investments in subsidiaries and associated companies, the attributable amount ofgoodwill previously eliminated against or credited to reserves is included in the determinationof the profit or loss on disposal of the subsidiary or associated company.

Investments in subsidiaries

A subsidiary is an enterprise in which the Company, directly or indirectly, holds more than halfof the issued capital, controls more than half of the voting power, or where the Company controlsthe composition of its board of directors or equivalent governing body.

Investments in subsidiaries are included in the Company’s balance sheet at valuation or at costless provisions, if necessary, for any permanent diminution in value.

The results of subsidiaries are accounted for by the Company on the basis of dividends receivedand receivable during the year.

Interests in associated companies

An associated company is an enterprise, other than a subsidiary, in which the Group has a long-term equity interest and over which the Group is in a position to exercise significant influence,including participation in financial and operating policy decisions.

The consolidated profit and loss account includes the Group’s share of the post-acquisition resultsof its associated companies for the year. In the consolidated balance sheet, investments in associatedcompanies are stated at the Group’s share of their net assets.

The results of associated companies are accounted for by the Company on the basis of dividendsreceived and receivable during the year. In the Company’s balance sheet, investments in associatedcompanies are stated at cost less provisions, if necessary, for any permanent diminution in value.

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Interests in associated companies (Continued)

When the Group transacts with its associated companies, unrealised profits and losses are eliminatedto the extent of the Group’s interest in the relevant associated company, except where unrealisedlosses provide evidence of an impairment of the asset transferred.

Where the accounting dates of the associated companies are different from the Group’s accountingdate, their results accounted for in the Group’s financial statements are based on their latest auditedfinancial statements and/or management accounts made up to 30th June in each year.

Revenue recognition

Sale of properties is recognised when the significant risks and rewards of ownership have beentransferred to the buyer, provided that the Group retains neither continuing managerial involvementto the degree usually associated with ownership nor effective control over the properties sold.

When properties are developed for sale, income is recognised only when a building or any portionof it contracted for sale is 100% completed and the relevant occupation permit is granted by theBuilding Authority and the sale and purchase transaction is completed. Payments received fromthe purchasers prior to this stage are recorded as deposits received on sales of properties andpresented as current liabilities.

Sale of listed investments is recognised when the title to the investment is transferred and thebuyer takes legal possession of the investment.

Rental income under operating leases is recognised on a straight-line basis over the respectivelease terms.

Service fee income is recognised on an appropriate basis over the relevant period in which theservices are rendered.

Interest income is accrued on a time basis, by reference to the principal outstanding and at theapplicable interest rate.

Dividend income from investments is recognised when the shareholders’ rights to receive paymenthave been established.

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Investment properties

Investment properties are completed properties which are held for their investment potential, anyrental income being negotiated at arm’s length.

Investment properties are stated at their open market value based on independent professionalvaluer at the balance sheet date. Any surplus or deficit arising on the revaluation of investmentproperties is credited or charged to the investment property revaluation reserve unless the balanceon this reserve is insufficient to cover a deficit on a portfolio basis, in which case the excess ofthe deficit over the balance on the investment property revaluation reserve is charged to the profitand loss account. Where a deficit has previously been charged to the profit and loss account anda revaluation surplus subsequently arises, this surplus is credited to the profit and loss accountto the extent of the deficit previously charged.

On disposal of an investment property, the balance on the investment property revaluation reserveattributable to that property is credited to the profit and loss account.

No depreciation is provided on investment properties except where the unexpired term of therelevant lease is 20 years or less.

Properties under development

Properties under development which are developed for sale are included under current assets.They are stated at the lower of cost or carrying value and estimated net realisable value. Net realisablevalue is determined by reference to estimated sale proceeds less selling expenses.

The cost of properties under development includes land cost, construction cost, borrowing costscapitalised in accordance with the Group’s accounting policy and other attributable developmentexpenditure.

Fixed assets and depreciation

Fixed assets other than investment properties and properties under development are stated at costless accumulated depreciation. The cost of an asset comprises its purchase price and any directlyattributable costs of bringing the asset to its present working condition and location for its intendeduse. Expenditure incurred after the fixed assets have been put into operation, such as repairs andmaintenance and overhaul costs, is normally charged to the profit and loss account in the periodin which it is incurred. In situations where it can be clearly demonstrated that the expenditurehas resulted in an increase in the future economic benefits expected to be obtained from the useof the fixed assets, the expenditure is capitalised as an additional cost of the fixed assets.

The gain or loss arising from disposal or retirement of an asset is determined as the differencebetween the sales proceeds and the carrying amount of the asset and is recognised in the profitand loss account.

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Fixed assets and depreciation (Continued)

Where the recoverable amount of an asset has declined below its carrying amount, the carryingamount is reduced to reflect the decline in value. In determining the recoverable amount of assets,expected future cash flows are not discounted to their present values.

Depreciation is provided to write off their cost over their estimated useful lives and after takinginto account their estimated residual value, using the straight-line method, at the following ratesper annum:

Type of fixed assets Rate per annum

Plant and machinery, equipment, furniture and fixtures 10% – 20%Motor vehicles 20%Leasehold improvements 20%

Other investments

Other investments are long-term investments in companies which are neither subsidiaries norassociated companies. Such investments are stated at cost less provisions, if necessary, for anypermanent diminution in value.

Stocks of unsold properties

Stocks of unsold properties are stated at the lower of cost and estimated net realisable value. Costis determined by apportionment of the total land and development costs attributable to the unsoldproperties. Net realisable value is determined by reference to estimated sale proceeds less sellingexpenses, or by management estimates based on prevailing market conditions.

Listed investments

Listed investments held for short-term trading purposes are stated at the lower of cost, calculatedon a weighted average basis, and market value on a portfolio basis.

Foreign currencies

Transactions in foreign currencies are translated at the rates ruling on the dates of the transactionsor at the contracted settlement rate. Monetary assets and liabilities denominated in foreign currenciesare re-translated at the rates ruling on the balance sheet date. Profits and losses arising on translationare dealt with in the profit and loss account.

On consolidation, the financial statements of overseas subsidiaries which are denominated incurrencies other than Hong Kong dollars are translated at rates ruling on the balance sheet date.All exchange differences arising on consolidation are dealt with in reserves.

65




Taxation

The charge for taxation is based on the results for the year as adjusted for items which are non-assessable or disallowed. Timing differences arise from the recognition for tax purposes of certainitems of income and expense in a different accounting period from that in which they are recognisedin the financial statements. The tax effect of timing differences, computed using the liability method,is recognised as deferred taxation in the financial statements to the extent that it is probable thata liability or asset will crystallise in the foreseeable future.

Capitalisation of borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifyingassets, that is, assets that necessarily take a substantial period of time to get ready for their intendeduse or sale, are capitalised as part of the cost of those assets. Capitalisation of such borrowingcosts ceases when the assets are substantially ready for their intended use or sale. Investmentincome earned on the temporary investment of specific borrowings pending their expenditure onqualifying assets is deducted from the borrowing costs capitalised.

All other borrowing costs are recognised as an expense in the period in which they are incurred.

Retirement benefit scheme

The Group operates a funded defined benefit scheme, the assets of which are held in separatetrustee administered funds.

The expected costs of providing pension, as calculated periodically by professionally qualifiedactuary, are charged to the profit and loss account so as to spread the costs over the service livesof employees in the schemes operated by the Group in such a way that the cost is a substantiallylevel percentage of current and expected future pensionable payroll.

Convertible bonds

Convertible bonds are separately disclosed and regarded as liabilities unless conversion actuallyoccurs. The finance cost, including the premium payable upon the final redemption of the convertiblebonds, recognised in the profit and loss account in respect of the convertible bonds is calculatedso as to produce a constant periodic rate of charge on the remaining balances of the convertiblebonds for each accounting period.

Cash equivalents

Cash equivalents represent short-term highly liquid investments which are readily convertible intoknown amounts of cash and which were within three months of maturity when acquired; lessadvances from banks repayable within three months from the date of advance.

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4. TURNOVER

1999 1998HK$ HK$

Gross rental income from properties 699,087,477 784,203,838Interest income 442,335,622 812,104,384Sale of properties 310,496,632 3,837,072,514Service fee income 307,575,610 298,644,445Dividend income from unlisted investments 25,111,450 16,863,260Dividend income from listed investments 10,820,375 75,511,932Sale of listed investments 38,949 720,749,117

1,795,466,115 6,545,149,490

5. OPERATING PROFIT

1999 1998HK$ HK$

Operating profit has been arrived at after charging:

Interest on:Bank loans and overdrafts wholly repayable

– within five years 273,208,874 372,795,172– over five years 5,936,344 98,428

Other loans wholly repayable within five years 359,416,538 481,068,099Floating rate notes and convertible bonds 128,184,277 183,559,231

766,746,033 1,037,520,930Less: Interest capitalised (155,471,817) (174,410,929)

611,274,216 863,110,001Provision for premium on redemption of

convertible bonds 96,441,444 105,841,317Auditors’ remuneration 1,191,456 1,297,718Depreciation 5,220,756 5,984,471Net exchange loss — 15,432,628

and after crediting:

Gross rental income from properties 699,087,477 784,203,838Less: Outgoings (98,531,543) (112,278,404)

Net rental income from properties 600,555,934 671,925,434

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9. TAXATION (Continued)

Profits tax rebates represent 10% refund of the final tax charge for the year of assessment 1997/1998.

A deferred tax asset has not been recognised in the financial statements in respect of tax lossesavailable to offset future profits as it is not certain that the tax losses will be utilised in the foreseeablefuture.

At the balance sheet date, the major components of unprovided deferred tax debits were:

THE COMPANY THE GROUP1999 1998 1999 1998HK$ HK$ HK$ HK$

Effect of difference of taxallowances and depreciation — — (1,704,376) 2,415,397

Tax losses not yet utilised 167,529,615 — 231,446,058 35,171,297Others — — (7,468,396) —

Deferred tax debits 167,529,615 — 222,273,286 37,586,694

The amount of the unprovided deferred tax for the year was as follows:


Tax effect of timing differencesbecause of:

(Excess) reversal of tax allowancesover depreciation — — (4,119,773) 2,642,697

Tax losses 167,529,615 — 196,274,761 11,951,364Others — — (7,468,396) —

167,529,615 — 184,686,592 14,594,061

Deferred tax has not been provided on the revaluation surplus of investment properties as profitsarising on the disposal of these assets would not be subject to taxation. Accordingly, the revaluationsurplus does not constitute a timing difference for tax purposes.

10. NET PROFIT ATTRIBUTABLE TO SHAREHOLDERS

Of the Group’s net profit attributable to shareholders for the year of HK$1,454,096,923 (1998:HK$908,685,620), a profit of HK$3,599,669,387 (1998: HK$5,785,801,286) has been dealt within the financial statements of the Company.

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11. DIVIDENDS

1999 1998HK$ HK$

Interim dividend paid at HK5 cents(1998: HK10 cents) per share 156,547,028 307,293,217

Proposed final dividend at HK5 cents(1998: HK3 cents) per share 174,553,913 93,378,668

Over-provision for previous year’s finaldividend due to shares repurchasedand cancelled — (3,693,288)

331,100,941 396,978,597

12. EARNINGS PER SHARE

The calculation of the basic and diluted earnings per share is based on the following data:

1999 1998HK$ HK$

Earnings for the purposes of basic earnings per share 1,454,096,923 908,685,620Effect of dilutive potential ordinary shares:

Interest on convertible bonds 1,260,998 1,260,998

Earnings for the purposes of diluted earnings per share 1,455,357,921 909,946,618

Weighted average number of ordinary shares forthe purposes of basic earnings per share 3,190,157,508 3,057,466,262

Effect of dilutive potential ordinary shares:Convertible bonds 5,267,325 5,267,325Warrants — 4,038

Weighted average number of ordinary shares forthe purposes of diluted earnings per share 3,195,424,833 3,062,737,625

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13. FIXED ASSETS

InvestmentInvestment propertiesproperties in Hong Kong

in Hong Kong held underheld under medium-term Otherlong lease lease fixed assets Total

HK$ HK$ HK$ HK$

THE GROUP

COST OR VALUATIONAt 1st July, 1998 2,860,500,000 10,820,998,960 37,747,355 13,719,246,315Additions — 62,386,676 4,698,094 67,084,770Disposal/write-off (461,381,139) (624,247,134) (536,141) (1,086,164,414)Deficits on revaluation (442,518,861) (978,323,382) — (1,420,842,243)

At 30th June, 1999 1,956,600,000 9,280,815,120 41,909,308 11,279,324,428

Comprising:At cost — — 41,909,308 41,909,308At 30th June, 1999

professionalvaluation 1,956,600,000 9,280,815,120 — 11,237,415,120

1,956,600,000 9,280,815,120 41,909,308 11,279,324,428

DEPRECIATIONAt 1st July, 1998 — — 23,089,733 23,089,733Charge for the year — — 5,220,756 5,220,756Written back on

disposal/write-off — — (534,951) (534,951)

At 30th June, 1999 — — 27,775,538 27,775,538

NET BOOK VALUESAt 30th June, 1999 1,956,600,000 9,280,815,120 14,133,770 11,251,548,890

At 30th June, 1998 2,860,500,000 10,820,998,960 14,657,622 13,696,156,582

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13. FIXED ASSETS (Continued)

The investment properties of the Group are stated at independent professional valuations on anopen market value basis at 30th June, 1999 given by Chesterton Petty Limited, independentprofessional valuer and the deficits on revaluation of investment properties have been debitedto the investment property revaluation reserve.

The gross rental income derived from the Group’s investment properties for the year amountedto HK$665,870,852 (1998: HK$745,815,820).

14. INTERESTS IN SUBSIDIARIES

THE COMPANY1999 1998HK$ HK$

Unlisted shares, at cost less provisions 48,634,865 48,634,865Surplus on revaluation 2,776,664,894 2,776,664,894

2,825,299,759 2,825,299,759Advances to subsidiaries 24,523,908,173 16,873,737,565

27,349,207,932 19,699,037,324Advances from subsidiaries (526,294,980) (195,523,361)

26,822,912,952 19,503,513,963

Particulars of the Company’s principal subsidiaries as at 30th June, 1999 are set out in note 30.

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15. INTERESTS IN ASSOCIATED COMPANIES


Unlisted investments, at cost 538,371,230 538,371,230 1,744,432,082 1,744,431,654Share of post-acquisition reserves:

Retained profits — — 898,718,347 450,024,661Property revaluation reserve — — 87,691,796 240,144,530Investment property revaluation

reserve 739,108,987 739,108,987 3,516,222,397 4,703,238,080Premium on acquisition written

off to retained profits — — (185,889,768) (185,889,768)

1,277,480,217 1,277,480,217 6,061,174,854 6,951,949,157Advances to associated

companies, less provisions 9,540,000 2,356,298,868 6,494,625,054 6,886,285,903

1,287,020,217 3,633,779,085 12,555,799,908 13,838,235,060Advances from associated

companies (2,466,390) (1,324,340) (496,275,822) (575,992,362)

1,284,553,827 3,632,454,745 12,059,524,086 13,262,242,698

The Group’s interests in associated companies comprise:Share of net assets 6,061,174,854 6,951,949,157

The properties under redevelopment and investment properties of the Group’s principal associatedcompanies were valued based on independent professional valuations on an open market valuebasis at 30th June, 1999 given by Chesterton Petty Limited, independent professional valuer. Thecarrying value shown above includes the Group’s attributable share of the revaluation reserve.

Particulars of the Company’s principal associated companies as at 30th June, 1999 are set out innote 31.

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16. OTHER INVESTMENTS AND ADVANCES


Unlisted investments, at cost 19,949,305 19,949,305 89,819,632 76,260,887Advances — 204,941,940 106,510,912 381,301,007

19,949,305 224,891,245 196,330,544 457,561,894

Advances received — — (520,034) (400,034)

19,949,305 224,891,245 195,810,510 457,161,860Listed investments, at cost

Hong Kong 400,846,364 437,383,432 458,202,894 509,481,623Overseas 140,632,893 140,183,954 163,204,007 162,621,938

Club debenture, at cost 300,000 300,000 300,000 300,000

561,728,562 802,758,631 817,517,411 1,129,565,421

Market value of listed investmentsHong Kong 373,482,008 237,112,373 427,466,883 274,847,085Overseas 201,741,278 142,217,188 214,543,518 151,216,270

17. LONG-TERM LOANS RECEIVABLE

THE GROUP1999 1998HK$ HK$

Total loans receivable, secured 187,007,235 202,913,928Less: Current portion receivable within one year

(Note 18) (5,695,965) (7,623,888)

181,311,270 195,290,040

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18. CURRENT ASSETS


Properties under development — — 4,561,944,814 4,453,521,450Stocks of unsold properties 1,356,914 1,356,914 1,508,696,197 403,430,152Listed investments

Hong Kong 3,207,380 1,475,598 3,207,380 1,475,598Overseas 25,542 44,820 25,542 44,820

Amounts due from associatedcompanies — — 2,073,366,098 2,589,977,072

Debtors, deposits andprepayments 39,251,731 47,374,709 849,571,422 976,589,586

Deposits on acquisition of land — — 60,000,000 —Sale proceeds held in

stakeholders’ account — — 2,919,178 23,404,000Current portion of long-term

loans receivable (Note 17) — — 5,695,965 7,623,888Time deposits, bank balances

and cash 630,386 985,681 3,013,378,285 1,039,330,716

44,471,953 51,237,722 12,078,804,881 9,495,397,282

Market value of listed investments:Hong Kong 3,210,331 1,478,073 3,210,331 1,478,073Overseas 33,721 44,820 33,721 44,820

The cost of stocks of unsold properties recognised as an expense during the year amounted toHK$181,162,407 (1998: HK$1,396,657,835).

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19. CURRENT LIABILITIES


Current portion of long-termbank loans, secured (Note 22) — — 130,800,000 122,250,000

Bank loans and overdrafts– secured — — 822,899,778 751,547,231– unsecured 38,581,387 38,547,879 38,671,348 38,548,664

Other loans, secured 150,880,075 121,881,254 466,247,862 130,233,673Floating rate notes, due 1999 — 15,000,000 — 15,000,000Amounts due to associated

companies — — 511,794,825 214,487,330Creditors and accruals 37,944,734 48,218,619 1,154,272,156 1,034,985,963Provision for premium on

redemption of convertiblebonds 202,282,761 105,841,317 202,282,761 105,841,317

Provision for taxation — — 186,371,351 312,521,609Proposed dividend 174,553,913 93,378,668 174,553,913 93,378,668

604,242,870 422,867,737 3,687,893,994 2,818,794,455

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20. SHARE CAPITAL

THE COMPANY AND THE GROUPNumber of

ordinary shares Nominalof HK$1.00 each value

HK$

Authorised:At 1st July, 1998 and at 30th June, 1999 4,000,000,000 4,000,000,000

Issued and fully paid:At 1st July, 1998 3,125,186,259 3,125,186,259Private placement 334,773,000 334,773,000Issued in lieu of cash dividend 43,682,997 43,682,997Cancellation upon repurchase of own shares (12,564,000) (12,564,000)

At 30th June, 1999 3,491,078,256 3,491,078,256

During the year, the Company repurchased on The Stock Exchange of Hong Kong Limited a totalof 12,564,000 ordinary shares of HK$1.00 each of the Company at an aggregate considerationof HK$27,291,750 before expenses, all of which shares were subsequently cancelled. The nominalvalue of the cancelled shares was credited to the capital redemption reserve and the aggregateconsideration was paid out of the retained profits.

On 22nd April, 1999, the Company arranged for a top-up placing and subscription transactionwhereby Tsim Sha Tsui Properties Limited (“TST Properties”) agreed to place 305,600,000 existingshares of HK$1.00 each of the Company to independent investors at a price of HK$4.63 per share(the “Placing”) and to subscribe for 334,773,000 new shares of the Company at the same priceof HK$4.63 per share (the “Subscription”). The placing and subscription price represented a discountof approximately 2.3% to the 5-day average closing price for the period from 15th April, 1999to 21st April, 1999 as quoted on the Stock Exchange and a discount of about 11% to the closingmarket price of the Company’s shares on 22nd April, 1999. The proceeds of the Subscription wereapplied as future working capital. These new shares were issued under the general mandate grantedto the Directors at the Annual General Meeting of the Company held on 18th November, 1998and rank pari passu in all respects with other shares in issue.

On 21st December, 1998 and 24th May, 1999 respectively, the Company issued and allotted atotal of 18,318,299 shares and 25,364,698 shares at HK$3.81 and HK$4.665 each of the Companyin lieu of cash for the 1998 final and 1999 interim dividends pursuant to the scrip dividend schemeadopted by the Company on 21st December, 1998 and 24th May, 1999 respectively. These sharesrank pari passu in all respects with other shares in issue.

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21. RESERVESInvestment

Property property CapitalShare revaluation revaluation redemption Retained

premium reserve reserve reserve profits TotalHK$ HK$ HK$ HK$ HK$ HK$

THE COMPANYAt 1st July, 1998 6,725,873,830 86,600,000 3,429,173,881 74,596,000 7,287,335,354 17,603,579,065Premium on issue of shares

upon scrip dividend 144,436,038 — — — — 144,436,038Premium on issue of shares

upon private placement 1,215,225,990 — — — — 1,215,225,990Share issue expenses (30,530,766) — — — — (30,530,766)Cancellation upon repurchase

of own shares — — — 12,564,000 (27,399,855) (14,835,855)Profit for the year — — — — 3,599,669,387 3,599,669,387Dividend paid and proposed — — — — (331,100,941) (331,100,941)

At 30th June, 1999 8,055,005,092 86,600,000 3,429,173,881 87,160,000 10,528,503,945 22,186,442,918

THE GROUPAt 1st July, 1998 6,725,873,830 240,144,530 11,368,013,823 74,596,000 4,902,860,088 23,311,488,271Premium on issue of shares

upon scrip dividend 144,436,038 — — — — 144,436,038Premium on issue of shares

upon private placement 1,215,225,990 — — — — 1,215,225,990Share issue expenses (30,530,766) — — — — (30,530,766)Cancellation upon repurchase

of own shares — — — 12,564,000 (27,399,855) (14,835,855)Deficits on revaluation — — (1,420,842,243) — — (1,420,842,243)Revaluation reserves realised

on disposal — — (629,828,958) — — (629,828,958)Share of deficits on revaluation

of property interests byminority shareholders — — 8,078,010 — — 8,078,010

Share of deficits on revaluationof property interests ofassociated companies — (152,452,734) (1,107,190,891) — — (1,259,643,625)

Share of revaluation reservesrealised on disposal ofproperty interests ofassociated companies — — (79,824,792) — — (79,824,792)

Share of exchange adjustmentsof associated companies — — — — (18,807,197) (18,807,197)

Profit for the year — — — — 1,454,096,923 1,454,096,923Dividend paid and proposed — — — — (331,100,941) (331,100,941)

At 30th June, 1999 8,055,005,092 87,691,796 8,138,404,949 87,160,000 5,979,649,018 22,347,910,855

Including retained reserves ofassociated companies — 87,691,796 3,516,222,397 — 898,718,347 4,502,632,540

Notes:

(1) The profit for the year retained by associated companies amounted to HK$467,500,883 (1998: excessof appropriations over profit of HK$440,227,758).

(2) Retained profits in the sum of HK$55,020,538 (1998: HK$282,545,165) of certain associated companiesattributable to the Group are distributable by way of dividend subject to the prior consent of theirbankers.

(3) The reserve available for distribution by the Company to the shareholders, as at the balance sheetdate was HK$10,528,503,945 (1998: HK$7,287,335,354).

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22. LONG-TERM LIABILITIES


Secured bank loans — — 1,959,469,500 2,229,640,293Other loans

– Secured — — 2,342,889,000 218,000,000– Unsecured — — — 3,095,400,000

Floating rate notes — 290,193,750 — 290,193,750Convertible bonds 2,431,903,250 2,548,138,250 2,431,903,250 2,548,138,250Less: Amounts due within

one year (Note 19) — — (130,800,000) (122,250,000)

2,431,903,250 2,838,332,000 6,603,461,750 8,259,122,293

The borrowings are repayablewithin a period of:

Secured bank loans– within one year — — 130,800,000 122,250,000– more than one year but not exceeding two years — — 686,600,000 586,550,293

– more than two years but not exceeding five years — — 959,727,500 1,484,600,000

– over five years — — 182,342,000 36,240,000Less: Amounts due within

one year (Note 19) — — (130,800,000) (122,250,000)

Other secured loans– more than one year but not exceeding two years — — — 218,000,000

– more than two years but not exceeding five years — — 2,342,889,000 —

Other unsecured loans– more than one year but not exceeding two years — — — 3,095,400,000

Floating rate notes– due 2000 — 290,193,750 — 290,193,750

Convertible bonds (Note 23) 2,431,903,250 2,548,138,250 2,431,903,250 2,548,138,250

2,431,903,250 2,838,332,000 6,603,461,750 8,259,122,293

80



23. CONVERTIBLE BONDS

THE COMPANY AND THE GROUPDue date

October February AprilTotal 2000 2001 2002HK$ HK$ HK$ HK$

Principal amount:

At 1st July, 1998 2,548,138,250 30,023,750 1,509,969,600 1,008,144,900Repurchased and cancelled

during the year (116,235,000) — — (116,235,000)

At 30th June, 1999 2,431,903,250 30,023,750 1,509,969,600 891,909,900

Conversion price per share(subject to adjustment) HK$5.70 HK$9.55 HK$8.50

In October 1993, the Company issued US$200,000,000 5% convertible bonds due October 2000(“2000 Bonds”). The 2000 Bonds carry a right to convert at any time from 1st December, 1993to 14th October, 2000 into ordinary shares of the Company at an initial conversion price of HK$6.86per share (subject to adjustment) with a fixed exchange rate on conversion of HK$7.73808 =US$1.00. The bonds are redeemable at a premium which ranges from 4% of their face value onor after 21st October, 1996 to 1% according to the dates of redemption, such premium beingsuccessively reduced by 1% by every 12 months up to the maturity of bonds.

In February 1996, the Company issued US$200,000,000 5% convertible bonds due February 2001(“2001 Bonds”). The 2001 Bonds carry a right to convert at any time from 16th April, 1996 to19th February, 2001 into ordinary shares of the Company at an initial conversion price of HK$9.55per share (subject to adjustment) with a fixed exchange rate on conversion of HK$7.7355 = US$1.00.The bonds are redeemable at a premium of 1%, 2% or 10% of their face value according to thedate of redemption.

In April 1997, the Company issued US$145,000,000 4% convertible bonds due April 2002 (“2002Bonds”). The 2002 Bonds carry a right to convert at any time from 18th June, 1997 to 11th April,2002 into ordinary shares of the Company at an initial conversion price of HK$8.50 per share(subject to adjustment) with a fixed exchange rate on conversion of HK$7.749 = US$1.00. Thebonds are redeemable at a premium accruing on a straight-line basis over the terms of the bondsup to a maximum of 31% of their face value.

81



23. CONVERTIBLE BONDS (Continued)

During the year, the Company repurchased and cancelled certain amount of its convertible bondsas follows:

Price expressed as apercentage of the principal

Nominal value of amount of the 2002 Bonds AggregateMonth of repurchases 2002 Bonds Highest Lowest price paid

US$ US$

September 1998 and October 1998 15,000,000 48% 45% 7,110,000

The aggregate price paid (before expenses) for the repurchases amounted to HK$55,095,390.

During the year, no bond was converted into ordinary shares of the Company.

24. RECONCILIATION OF OPERATING PROFIT TO NET CASH INFLOW FROM OPERATINGACTIVITIES

1999 1998HK$ HK$

Operating profit 874,542,140 1,885,586,135Interest expenses 611,274,216 863,110,001Depreciation 5,220,756 5,984,471(Profit) loss on disposal of fixed assets (22,676) 725Profit on disposal of investment properties (463,509,194) (6,632,957)Provision for premium on redemption of

convertible bonds 96,441,444 105,841,317Loss on disposal of long-term listed

investments 28,281,585 562,968,878Profit arising from the repurchase and subsequent

cancellation of convertible bonds (61,139,610) (50,331,943)Decrease in amount due to holding company — (4,707,256)Increase in properties under development (1,239,379,999) (96,896,583)Decrease in stocks of unsold properties 181,162,407 544,909,116(Increase) decrease in listed investments (1,712,504) 965,046,911Decrease (increase) in debtors, deposits and

prepayments 127,018,164 (213,932,256)Deposits paid on acquisition of land (60,000,000) —Decrease in sale proceeds held in

stakeholders’ account 20,484,822 21,495,118Increase in creditors and accruals 119,693,873 188,772,149

Net cash inflow from operating activities 238,355,424 4,771,213,826

82



25. MAJOR NON-CASH TRANSACTIONS

During the year, properties under development amounting to HK$1,286,428,452 were transferredto stocks of unsold properties.

On 21st December, 1998 and 24th May, 1999 respectively, the Company issued and allotted atotal of 18,318,299 shares and 25,364,698 shares at HK$3.81 and HK$4.665 each of the Companyin lieu of cash for the 1998 final and 1999 interim dividends pursuant to the scrip dividend schemeadopted by the Company.

26. ANALYSIS OF CHANGES IN FINANCING DURING THE YEAR

Share capital, Bank loans,share premium other loans

and capital and otherredemption long-term Convertible Minority

reserve liabilities bonds interestsHK$ HK$ HK$ HK$

At 1st July, 1998 9,925,656,089 6,720,457,716 2,548,138,250 264,060,745Net cash inflow (outflow)

from financing 1,519,468,224 (1,130,239,478) (55,095,390) 29,307,451Shares issued in lieu of

cash dividend 188,119,035 — — —Profit arising from the repurchase

and subsequent cancellationof convertible bonds — — (61,139,610) —

Acquisition of additional interestin a subsidiary — — — (18,094,439)

Minority shareholders’ share of– profits — — — 3,985,936– investment property

revaluation deficits — — — (8,078,010)Dividend paid to minority

shareholders — — — (12,820,000)

At 30th June, 1999 11,633,243,348 5,590,218,238 2,431,903,250 258,361,683

27. PLEDGE OF ASSETS

At the balance sheet date, the aggregate facilities of bank loans, overdrafts and other loans amountingto HK$6,784,062,519 (1998: HK$5,078,854,685) were secured by certain of the Group’s listedinvestments, properties, time deposits and bank balances. At that date, these facilities were utilisedto the extent of HK$5,591,506,140 (1998: HK$3,329,421,197).

83



28. COMMITMENTS AND CONTINGENT LIABILITIES

At the balance sheet date, the Company and the Group had the following commitments andcontingent liabilities not provided for in the financial statements:


(a) Capital commitments for:Authorised but not

contracted for– Property development expenditure — — 207,010,621 233,742,717

Contracted but notprovided for– Property development expenditure — — 919,934,213 1,209,364,553

– Acquisition of fixedassets — — — 500,000

– Acquisition of land — — 658,000,000 —

— — 1,784,944,834 1,443,607,270

(b) Guarantees in respect ofbanking facilities andother liabilities of:Subsidiaries

– Utilised 2,991,564,503 3,207,539,943 — —– Not utilised 1,123,505,245 1,529,019,291 — —

4,115,069,748 4,736,559,234 — —

Associated companies– Utilised 5,556,299,474 7,802,225,000 5,556,299,474 7,802,225,000– Not utilised 1,694,810,000 2,677,535,000 1,694,810,000 2,677,535,000

7,251,109,474 10,479,760,000 7,251,109,474 10,479,760,000

11,366,179,222 15,216,319,234 7,251,109,474 10,479,760,000

84



28. COMMITMENTS AND CONTINGENT LIABILITIES (Continued)

(c) Specific performance obligations on controlling shareholders

Pursuant to paragraph 3.7.1 of Practice Note 19 (“PN 19”) of the Rules Governing the Listingof Securities on The Stock Exchange of Hong Kong Limited (“Listing Rules”), the Companydiscloses the following details on loan covenants which impose specific performance obligationson the controlling shareholders of the Company.

(i) In March 1997, a wholly-owned subsidiary of the Company was granted a facility ofHK$300,000,000 for a term of approximately 31/2 years. It will be an event of defaultunder the facility if there is a change in majority shareholders, or management or control,of the Company.

(ii) In May 1998, another wholly-owned subsidiary of the Company was granted a facilityof HK$426,000,000 for a term of approximately 60 months. It will be an event of defaultunder the facility if Mr. Ng Teng Fong and his associates cease to collectively maintaina controlling interest in the Company.

(d) Financial assistance and guarantees to affiliated companies (Note)

The Company has obtained a waiver from The Stock Exchange of Hong Kong Limitedunder Paragraph 3.10 of PN 19 of the Listing Rules from disclosing a proforma combinedbalance sheet of affiliated companies as defined therein. Instead, in accordance with PN19 of the Listing Rules, the Company discloses the following alternative information in relationto the affiliated companies as at the end of the most recent financial period reported on bythe affiliated companies. This information has been extracted from the relevant audited accountsor management accounts of the affiliated companies.

As at30th June, 1999

HK$

The Group’s share of total indebtedness of its affiliated companies:Bank loans 647,109,474Other loans 5,441,021,821

6,088,131,295Advances from the Group 8,567,991,152

14,656,122,447

The Group’s share of contingent liabilities of its affiliated companies —

The Group’s share of capital commitments of its affiliated companies:Authorised but not contracted for 39,280,000Contracted but not provided for 2,072,923,139

2,112,203,139

Note: “Affiliated companies” mentioned above refers to associated companies of the Group

85



28. COMMITMENTS AND CONTINGENT LIABILITIES (Continued)

(e) On 30th June, 1998, the Company and its wholly-owned subsidiary, Mariner InternationalHotels Limited (“Mariner”) terminated a sale and purchase agreement (the “Agreement”) enteredinto by the Company and Mariner on 19th December, 1996 with Hang Lung DevelopmentCompany Limited (“Hang Lung”) and Atlas Limited (“Atlas”), which is now the subject of alitigation between the parties. The Agreement is in relation to the acquisition of a companywhich owns a property in Yau Kom Tau, Tsuen Wan, New Territories which was developedinto a hotel. The total consideration payable by Mariner for the purchase is HK$1,070 million,in respect of which a deposit and part payments in the total sum of HK$321 million werepaid by Mariner.

Immediately following the termination of the Agreement by Mariner and the Company, Marinerissued a writ against Hang Lung and Atlas claiming, inter alia, the return of the deposit paidand part payments made in the total sum of HK$321 million and damages for breach ofcontract. Mariner continues to pursue its claims vigorously.

In the meantime, legal proceedings have also been commenced by Atlas against Marinerand the Company by way of counter claim seeking, inter alia, damages in respect of thetermination of the Agreement and forfeiture of the above deposit and part payments madeby Mariner under the Agreement. As both parties are defending their positions strenuously,the Directors are of the opinion that any provision for contingency made in respect of thislitigation would prejudice the outcome of the case. Accordingly, no such provision has beenmade in the financial statements.

86



29. RELATED PARTY AND CONNECTED TRANSACTIONS

In the ordinary course of business, the Group had the following transactions with its related parties:

1999 1998HK$ HK$

(a) Sino Hotels (Holdings) Limited and its subsidiaries

Management fee received therefrom 3,123,144 4,174,436Rental income received therefrom 596,804 2,548,926

(b) Bestown Limited

Management fee received therefrom 2,346,672 2,634,008Rental income received therefrom — 14,000

(c) Associated companies

Interest received therefrom 322,184,426 685,027,504Interest paid thereto (56,761,962) (56,998,263)

Mr. Robert Ng Chee Siong, Director of the Company, was interested in these transactions as adirector of the above mentioned related companies. The above transactions were carried out atcost plus a profit margin basis.

On 2nd July, 1998, Vasilon Pte Ltd (“Vasilon”), a wholly-owned subsidiary of the Company, enteredinto a conditional agreement (“Agreement”) with Jelco Properties Pte Ltd (“Jelco”), a wholly-ownedsubsidiary of Orchard Parade Holdings Limited (“Orchard Parade”), for the purchase from Jelcoof 4 million shares (“Shares”) representing the remaining 20% share interest in Precious TreasurePte Ltd (“Precious Treasure”), the owner and developer of a project to re-develop Fullerton Buildingat Fullerton Square in Singapore (“Fullerton Square Redevelopment Project”). Precious Treasurewas already a 80% owned subsidiary of the Company before the acquisition of the 20% interest.

A total cash consideration of S$3,994,587 was paid for the acquisition of the Shares upon completion.In addition, Vasilon reimbursed Jelco a sum of approximately S$13,048,530 representingshareholder’s advances (“Advances”) made by Jelco to Precious Treasure, together with all amountswhich were owed by Precious Treasure to Jelco as at completion, and accrued interest payablethereon and on the Advances. The acquisition of the 20% interest in Precious Treasure enabledthe Company to have complete control over the Fullerton Square Redevelopment Project. Thetransaction was completed on 2nd November, 1998.

Mr. Ng Teng Fong is the substantial shareholder of the Company through his substantial interestin the Company’s holding company, Tsim Sha Tsui Properties Limited, and is also a substantialshareholder of Orchard Parade. As such, the acquisition of interest in the Fullerton SquareRedevelopment Project mentioned above constituted a connected transaction under the ListingRules.

87



30. PRINCIPAL SUBSIDIARIES

The Directors are of the opinion that a complete list of the particulars of all subsidiaries will beof excessive length and therefore the following list contains only the particulars of the subsidiarieswhich materially affect the results or assets of the Group. All subsidiaries are unlisted, incorporatedand operating in Hong Kong except where stated.

A complete list of all the subsidiaries will be annexed to the Company’s next annual return.

Percentageof equity

Issued attributableName share capital to the Group Principal activities

%

Direct:

Best Result Cleaning Services HK$2 100 Cleaning servicesLimited

Fu King Investment Limited HK$1,000,000 100 Investment holding

Glorypark Limited HK$1,000 100 Property investment

King Chance Development Limited HK$2 100 Investment holding

Landscape Investment Limited HK$2 100 Property development

Serenity Park Building HK$10 60 Building managementManagement Limited

Sharp Rise Company Limited HK$2 100 Property trading

Silver Pool Limited HK$500,000 100 Property trading

Sing-Ho Finance Company Limited HK$30,000,000 100 Financing

Sing-Ho Security Services Limited HK$2 100 Security services

Sino Administration Services HK$3 100 AdministrationLimited services

Sino Estates Management HK$2 100 Building managementLimited

Sino Estates Services Limited HK$20 100 Building management

88



30. PRINCIPAL SUBSIDIARIES (Continued)

Percentageof equity


%

Indirect:

Ackerley Estates Limited HK$20,000,000 100 Property investment

Alfaso Investment Limited HK$20,000 100 Property investment

Allways Success Development HK$100,000 60 Property trading andLimited investment

Allways Success Finance Limited HK$10 60 Financing

Apex Speed Limited HK$2 100 Property development

Beauty Plaza Limited HK$20,000 100 Property investment

Best Origin Limited HK$2 100 Property development

Better Sino Limited HK$2 100 Property development

Century Profit Limited HK$2 100 Property trading

Cheer Result Limited HK$2 100 Property trading andinvestment

Dragon View (HK) Limited HK$2 100 Property development

Elegant Lane Limited HK$2 100 Property development

Enterpreneurs United Land HK$14,000,000 100 Property investmentand Property DevelopmentLimited

Entertainment City Limited HK$4,500,000 100 Property investment

Ever Champion Development HK$2 100 Property tradingLimited

89




Percentageof equity


%

Indirect (Continued):

Famous General Limited HK$2 100 Property investment

Famous Palace Properties HK$20,000 100 Property investmentLimited

Firm Wise Investment Limited HK$10 70 Property development

Forlink Limited HK$2 100 Property trading

Fortune Garden Inc. US$1 100 Share investment(Incorporated in the Republicof Liberia and operating inHong Kong)

Free Champion Limited HK$2 100 Property investment

Full Speed Development (CI) US$1 100 Property investmentLimited(Incorporated in the CaymanIslands and operating inHong Kong)

Glenery Limited US$1 100 Share investment(Incorporated in the BritishVirgin Islands and operatingin Hong Kong)

Global Honest Finance Limited HK$2 100 Financing

Golden Leaf Investment Limited HK$20,000 100 Property investment

Grand Idea Investment (CI) US$1 100 Property investmentLimited(Incorporated in the CaymanIslands and operating inHong Kong)

90




Percentageof equity


%


Grandeal Limited HK$2 100 Property development

Handsome Lift Investment (CI) US$1 100 Property investmentLimited(Incorporated in the CaymanIslands and operating inHong Kong)

Harvestrade Investment Limited HK$20,000 100 Property trading andinvestment

Hickson Limited HK$20 100 Property investment

High Elite Finance Limited HK$2 100 Financing

High Elite Limited HK$2 100 Property trading andinvestment

Jade Pine Limited HK$20,000 100 Property investment

Jade Queen Properties Limited HK$2 100 Property trading andinvestment

Lancey Trading Limited US$1 100 Share investment(Incorporated in the Republicof Liberia and operating inHong Kong)

Land Success Development HK$2 100 Property trading andLimited investment

Lucky Fortress Inc. US$1 100 Share investment(Incorporated in the Republicof Liberia and operating inHong Kong)

91




Percentageof equity


%


Mackey Limited HK$100 100 Property development

Mass Success Limited HK$1,000 55 Property trading

Multipurpose Investment Limited HK$20,000 100 Property trading andinvestment

Octerworth Enterprises Limited HK$20,000 100 Property investment

Peace Success Development HK$2 100 Property tradingLimited

Precious Treasure Pte Ltd * S$20,000,000 100 Property development(Incorporated and operatingin Singapore)

Pridegate (CI) Limited US$1 100 Property investment(Incorporated in the CaymanIslands and operating inHong Kong)

Primewin Properties Limited HK$2 100 Property development

Rankchief Company Limited HK$200 100 Property trading

Real Maker Development HK$200,000 90 Property investmentLimited

Regent Profit Investment Limited HK$2 100 Property development

Rich Tact International (CI) US$1 100 Property investmentLimited(Incorporated in the CaymanIslands and operating inHong Kong)

92




Percentageof equity


%


Saky Investment (CI) Limited US$1 100 Property investment(Incorporated in the CaymanIslands and operating inHong Kong)

Salia Limited HK$2 100 Property development

Sidak Investment Limited HK$20,000 100 Property trading andinvestment

Silver Palm Limited HK$2 100 Property trading andinvestment

Sino Land Finance Limited HK$2 100 Deposit placing

Sino Land Investment US$6,000,000 100 Investment holding(Holdings) Ltd.(Incorporated in the CaymanIslands and operating inHong Kong)

Sino Land Treasury Limited HK$10,000 100 Financing

Standard Rise Limited HK$2 100 Share investment

Standard Union Investment HK$2 100 Share investmentLimited

Success One Investment Limited HK$2 100 Property investment

Sunair Investment Company HK$2 100 Property developmentLimited

Sunny Force Limited HK$2 100 Property investment

93




Percentageof equity


%


Sunrise Investment Limited HK$2 100 Property development

Super One Investment Limited HK$2 100 Property investment

Ten Treasure Limited HK$2 100 Property development

Thousand Growth Development HK$20,000 100 Property investmentLimited

Timeshare Development (CI) US$1 100 Property investmentLimited(Incorporated in the CaymanIslands and operating inHong Kong)

Top Scorer Limited US$1 100 Share investment(Incorporated in the Republicof Liberia and operating inHong Kong)

Trans China Investment Limited HK$2 100 Property investment

Triple Reach International (CI) US$1 100 Property investmentLimited(Incorporated in the CaymanIslands and operating inHong Kong)

Vasilon Pte Ltd * S$2 100 Investment holding(Incorporated and operatingin Singapore)

Wendia Limited HK$20 100 Property investment

Wicorp Development Limited HK$2 100 Property trading

94




Percentageof equity


%


Will Glory Company (CI) Limited US$1 100 Property investment(Incorporated in the CaymanIslands and operating inHong Kong)

World Empire Investment (CI) US$1 100 Property investmentLimited(Incorporated in the CaymanIslands and operating inHong Kong)

World Empire Investment HK$2 100 Property tradingLimited

* The financial statements are not audited by Messrs. Deloitte Touche Tohmatsu

None of the subsidiaries had any loan capital outstanding at the end of the year.

95



31. PRINCIPAL ASSOCIATED COMPANIES

The Directors are of the opinion that a complete list of the particulars of all associated companieswill be of excessive length and therefore the following list contains only the particulars of associatedcompanies which materially affect the results or assets of the Group. Unless otherwise stated, allassociated companies are incorporated and operating in Hong Kong and are unlisted.

A complete list of all the associated companies will be annexed to the Company’s next annualreturn.

Issued Percentage of equity heldName share capital Directly Indirectly Total Principal activities

% % %

Astoria Estate Management HK$100 — 50 50 Building managementCompany Limited

Benefit Bright Limited HK$2 — 42.5 42.5 Property development

Better Chief Limited HK$100 50 — 50 Property investment

Beverhill Limited HK$1,000 — 20 20 Property investment

Boatswain Enterprises HK$10,000 — 20 20 Property investmentLimited

Cheer City Properties HK$100 — 20 20 Property investmentLimited

C.H.K.C. Building HK$2 — 25 25 Building managementManagement Limited

Cosmos Door Limited * HK$4 — 50 50 Property investment

Credit World Limited HK$10 — 20 20 Property trading

Dramstar Company Limited HK$1,000 — 22 22 Property trading

Empire Funds Limited HK$2 — 50 50 Property trading

Energy Plaza Management HK$1,000 15 29.5 44.5 Building managementCompany Limited *

Eternal Honest Finance HK$2 — 50 50 FinancingCompany Limited

96



31. PRINCIPAL ASSOCIATED COMPANIES (Continued)


% % %

Famous Empire Finance HK$10 — 40 40 FinancingLimited

Famous Empire Properties HK$10,000 — 40 40 Property trading andLimited investment

Finedale Industries Limited * HK$9,999 — 33.3 33.3 Property investment

Gloryland Limited HK$900 — 33.3 33.3 Property investment

Grand Palisades Finance HK$10 — 20 20 FinancingCompany Limited

Great Land (HK) Limited HK$1,000,000 — 50 50 Property trading andinvestment

Greenroll Limited * HK$20,000 — 30 30 Property investment

Harvest Sun Limited HK$2 — 30 30 Property development

Jumbo Funds Limited HK$2 — 50 50 Property investment

Kotachi Limited HK$2 50 — 50 Property investment

Lead Bright Finance Limited HK$10 — 20 20 Financing

Lead Bright Limited HK$10,000 — 20 20 Property trading

Lead Talent Investment HK$1,000,000 — 50 50 Property trading andLimited investment

Million Success Limited HK$10,000 — 25 25 Property investment

More Treasure Company HK$10,000 — 25 25 Property investmentLimited

Murdoch Investments Inc. US$2 — 45 45 Property investment(Incorporated in theRepublic of Panama andoperating in Hong Kong)

97





% % %

Olympian City 1 HK$2 — 30 30 Project Management(Project Management)Limited

Olympian City 2 HK$2 — 42.5 42.5 Project Management(Project Management)Limited

Pacific Palisades Funding US$2 — 20 20 FinancingLimited(Incorporated in theCayman Islands andoperating in Hong Kong)

Pariv Limited HK$2 — 50 50 Property trading andinvestment

Prestige Development HK$2 — 50 50 Property trading andLimited investment

Pui Hay Enterprises Limited HK$100,000 — 50 50 Property trading

Rich Century Investment HK$1,000,000 50 — 50 Property developmentLimited

Sea Lord Trading Company HK$2,000,000 15 29.5 44.5 Property investmentLimited *

Silver Link Investment HK$20 — 40 40 Property developmentLimited

Sino Parking Services HK$500,000 50 — 50 Carpark operationLimited

Sino Real Estate Agency HK$100,000 50 — 50 Real estate agencyLimited

Tat Lee Construction HK$1,000,000 — 25 25 Building constructionCompany Limited

98





% % %

Victory World Finance HK$10 — 50 50 FinancingLimited

Victory World Limited HK$10,000 — 50 50 Property trading andinvestment

Wide Harvest Investment HK$2 — 25 25 Property investmentLimited

Will Rise Limited HK$2 50 — 50 Property investment

Win Chanford Enterprises HK$1,000,000 5 45 50 Property investmentLimited

* The financial statements are not audited by Messrs. Deloitte Touche Tohmatsu

None of the associated companies had any loan capital outstanding at the end of the year.

99



32. EXTRACT FROM THE AUDITED FINANCIAL STATEMENTS OF PRINCIPAL ASSOCIATEDCOMPANIES

The following details have been extracted from the audited financial statements of the Group’ssignificant associated companies including Million Success Limited, Jumbo Funds Limited, CheerCity Properties Limited, Great Land (HK) Limited, Victory World Limited, Greenroll Limited, LeadBright Limited and Lead Talent Investment Ltd.

Operating results for the year ended 30th June, 1999

HK$

Turnover 14,104,926,142

Profit before taxation 1,008,280,253

Depreciation 1,563,403

Profit before taxation attributable to the Group 413,039,190

Financial position at 30th June, 1999

HK$

Total assets 22,404,931,074Total liabilities (7,872,209,478)

Net assets 14,532,721,596

Net assets attributable to the Group 4,207,470,977

Documents

NOTES TO THE FINANCIAL STATEMENTS...Goodwill Goodwill represents the excess of the purchase consideration over the fair value ascribed to the Group’s share of the net assets at the