Corporate Information

Corporate Information

Board of Directors

Mr. G. W. J. Li (Chairman)

Mr. S. T. H. Ng (Vice Chairman)

Mr. J. T. Hung, SBS, JP (Managing Director)

Mr. K. H. Leung (Finance Director)

Mr. B. M. Chang

Sir S. Y. Chung, JP

Mr. Q. Y. K. Law

Ms. D. Y. F. Lee

Mr. W. W. Y. Lee

Mr. T. Y. Ng

Mr. P. Y. C. Tsui

Mr. H. S. S. Wong

secretary

Mr. W. W. S. Chan, FCIS

Registrars

Tengis Limited

4th Floor, Hutchison House

10 Harcourt Road

Central, Hong Kong

Registered Office

23rd Floor, Wheelock House

20 Pedder Street

Hong Kong

Website : www.wheelockcompany.com

Principal Banker

The Hongkong and Shanghai Banking

Corporation Limited

Auditors

PricewaterhouseCoopers

FINANCIAL HIGHLIGHTS

Results

Turnover

3,761.5

4,551.0

Operating profit

132.3

720.1

Group profit attributable to shareholders

516.6

864.4

Earnings per share

25.4¢

42.6¢

Dividends per share

7.5¢

7.5¢

Financial Position

Total assets

58,415.0

57,300.5

Net debts

15,664.5

16,081.7

Shareholders’ funds

28,260.3

27,242.4

Net assets per share

HK$13.92

HK$13.41

Net debts to total assets (excluding cash)

27.4%

28.8%

Group profit/(loss) Earnings

attributable to Shareholders’ /(loss) Dividends Distribution

Financial Year shareholders funds per share per share cover

HK$ Million HK$ Million HK¢ HK¢ Times

1991/1992

976.5

18,522.8

47.7

24.5

1.95

1992/1993

1,468.3

24,100.8

71.6

28.5

2.51

1993/1994

2,204.6

40,638.4

108.3

36.0

3.01

1994/1995

2,306.0

42,332.9

114.3

37.0

3.09

1995/1996

2,459.2

39,170.2

122.0

41.0

2.98

1996/1997

2,535.5

45,820.0

125.5

43.5

2.87

1997/1998

(958.0)

39,920.8

(47.3)

28.0

N/A

1998/1999

657.4

27,548.2

32.4

7.5

4.32

1999/2000

864.4

27,242.4

42.6

7.5

5.68

2000/2001

516.6

28,260.3

25.4

7.5

3.39

Turnover (HK$ Million)

Operating Profit before Borrowing Costs

and Provision for Properties (HK$ Million)

Retailing and trading

1,865.7

Sale of property

1,294.1

Property rental

282.3

Treasury management,

investment and others

319.4

Total

3,761.5

Retailing and trading

56.8

Sale of property

553.5

Property rental

224.9

Treasury management,

6

Gonzaga W. J. Li

Chairman

heelock and Company Limited’s

consolidated profit attributable to

shareholders for the year ended 31 March 2001 was

HK$516.6 million, compared to HK$864.4 million

for the previous year.

Earnings per share were 25.4 cents,

compared to 42.6 cents for the previous year.

Wheelock’s investment properties were

revalued at 31 March 2001, those

owned by its associates were revalued at the

respective year end dates. In accordance with the

current established accounting standards,

Wheelock’s investments in listed securities were

also stated at market value. On these bases,

the consolidated net asset value of the Company

as at 31 March 2001 was HK$13.92 per share,

compared to HK$13.41 per share a year earlier.

An interim dividend of 2.5 cents per share was paid

CHAIRMAN’S STATEMENT

GROUP FOCUS

Wheelock and Company Limited and its

subsidiaries/associates are engaged in property

development/sales and quality retailing in

Hong Kong, China Mainland, Singapore and

Taiwan. Through its substantial associate

Wharf Holdings, Wheelock is also

engaged in core investment businesses

in property, CME (communications,

media and entertainment) and logistics

(container and air cargo terminals).

ECONOMIC REVIEW

The perceived downturn of the US economy since

the beginning of 2001 has slowed down Hong

Kong’s impressive economic recovery. Despite the

strong momentum from last year’s double digit

GDP growth and a series of interest rate cuts, the

major leading indicators of Hong Kong’s economy

such as GDP growth, unemployment rate,

deflationary pressure and limited property

8

Stephen T. H. Ng

CHAIRMAN’S STATEMENT

Main Board Executives

T. Y. Ng

Nevertheless, we remain cautiously optimistic that

the Hong Kong economy should improve within the

next six to 12 months on the expectation of a US

economic recovery and the effect of the interest rate

cuts filtering through the real economy. Further, the

stimulus of China’s impending entry into the WTO

continues to bring some optimism based

on reports that since July 2000, at least

one overseas company per week has set

up a regional office in Hong Kong

aggregating in more than 3,000 regional

offices in Hong Kong – the highest in Asian cities.

China trade is also estimated to double within the

five years following its entry into the WTO. Hong

Kong has traditionally serviced close to 40 per cent

of China trade and this speaks well for Hong Kong’s

macro economic prospects.

PROPERTY

Despite a slowdown of transaction activities, rental

sentiments have improved and this augurs well for

rental earnings improvements related to

Wheelock’s large investment property

portfolio, particularly when all the

excessive supply of offices has now been

largely absorbed. The success of Wharf’s

Harbour City and Times Square projects offers great

comfort to the Group as a whole, and the passage of

time should only bring further improvements. The

Gateway project within Harbour City is particularly

Harry S. S. Wong

John T. Hung

CHAIRMAN’S STATEMENT

successful in that all three sectors of retail, offices and

luxury serviced apartments have leased extremely well.

As a major property owner and developer, the

Wheelock group of companies through Wharf, New

Asia Realty (“NART”) and Realty Development

(“RDC”) holds some 7.5 million square

feet GFA in developable properties in

its portfolio. The Wheelock Group

conducts its own property development

and manages its own properties as well

as its subsidiaries as co-investor.

Wheelock has seen further progress in construction of

two focus projects, namely, the 2.3-million-square-foot

GFA MTRC Kowloon Station Two development

“Sorrento”, and the 2.8-million-square-foot GFA Sham

Tseng project “Bellagio”. Both these developments are

making good progress in construction and in time

should yield high revenue potential. Wharf is also

close to the launching of three attractive projects on

The Peak, namely, Mountain Court,

Chelsea Court and the substantial

construction at Plantation Road where

returns should be enhanced by the scarce

supply in the top-end luxury market.

Wheelock has a robust and successful presence in

Singapore through Marco Polo Developments

Limited (“MPDL”), a publicly listed Singapore

K. H. Leung

10

CHAIRMAN’S STATEMENT

vehicle held through NART. MPDL is a leading

luxury residential developer in Singapore and

recognized to be one of the best managed. It is also

one of the largest Hong Kong-owned property

companies in the Island Republic. With the successful

Ardmore Park development generating approximately

S$1 billion profit before tax and the

current redevelopment of the now

demolished Marco Polo Hotel, MPDL

is now cash rich and on the lookout for

good investment opportunities.

RETAIL

Wheelock’s retail initiatives are led by the well-known

Lane Crawford brand which has performed with

noticeable improvements in merchandizing and

consumer attraction. Acquired last year, Joyce Boutique

is focusing on consolidating its businesses and

strengthening its core. These two, with the high-end

supermarket and lifestyle brand of City’Super, bring

together a meaningful retail presence of the Wheelock

Group with a geographical coverage of Hong Kong,

China Mainland, Taiwan and Singapore on a scale that

is unmatched in the region, with a high level of trust

established with their customers.

Despite difficulties in the economic climate caused

by relatively inactive financial and property markets,

Lane Crawford continues to sustain its turnover and

positive operating profit. However, the continuing

deflationary syndrome has imposed restrictions for

pricing flexibility resulting in margins being put

under pressure. The company’s efforts

in customer-oriented promotion

strategies, relationship marketing, and

effective cost rationalization systems

have brought stability to its operations,

and the Board is pleased to see Lane Crawford

maintaining its lead position in the market with a

strong and loyal customer base.

Lane Crawford’s joint venture associate Maison

Mode in Shanghai is now generating reasonable

profits, and Lane Crawford has opened a store in

Shanghai Times Square as a critical step towards

Greater China retail coverage which will include

Taipei towards the end of 2001.

WHARF

The Wharf group’s corporate structure is anchored

by property investment with Kowloon Point

12

CHAIRMAN’S STATEMENT

representing half of its assets. Other properties take up

25 per cent. The other core investments are completed

by two other principal arms, namely, CME and logistics.

This portfolio offers significant revenue growth and

value creation through brands in the coming years.

PROPERTY

With the recovery of the Hong Kong’s

economy last year, and the absorption

of the previous over-supply, the rental

market in commercial space has

significantly improved and gathering momentum.

Canton Road is substantially revitalized and will be

further enhanced with time. Street front major

deluxe retailers have added greatly to the look of the

Canton Road promenade. Substantial premises

improvements are being planned by adding value to

Ocean Terminal and the revamping of The Marco

Polo Hongkong Hotel arcade, including active

planning to enhance the quality and look of the

Ocean Terminal roof top as well as the praya from

Ocean Terminal to the concourse of the “Star” Ferry.

Kowloon Point dominates Tsimshatsui as the centre

of gravity for commercial and leisure activities with

transport links to all parts of the territory. The

Government’s “Dragon” theme Beautification Project

along the Tsimshatsui promenade currently

promoted by the Hong Kong Tourism Board will

further enhance the value of Harbour City.

The new retail extension underneath the

Gateway II Towers completed in 1998

has strengthened the prominent position

of Harbour City, which enjoys heavy

traffic flow and the presence of high

brand name stores. Substantial asset value has

therefore been added.

Times Square Hong Kong is another major property

asset under active management. With a strong brand

recognition, Times Square is one of the top ten tourist

attractions nominated by the Hong Kong Tourism

Board. Being a retail focus in the Causeway Bay hub,

it is the most-sought-after exhibition venue for

consumer products in Hong Kong.

The branding initiatives of China Times Squares are

underway with Beijing and Shanghai successfully

marketed, and Chongqing under construction.

CHAIRMAN’S STATEMENT

CME

The year 2000 was a milestone growth year for

Wharf ’s CME businesses. This division is growing

strongly despite keen competition arising from what

is a regulatory-driven business. The tough entry

barrier has been overcome and its high operating

leverage will offer attractive incremental

profit margin growth from the increase

of revenue.

i-CABLE

CABLE TV reported a healthy net profit in the

second half of the year, at least a year earlier than

expected. The Multimedia division launched a

Broadband Internet access service in March 2000

and started to report a positive EBITDA before the

end of the year. The bundling services to customers

through the “Triple Play” strategy will bring three

potentially high earnings streams from video,

data and voice. Delivery of voice service is being

successfully tested using the voice-over-IP technology.

than its competitors. On consolidation, a net profit

of HK$20 million was reported for the year,

representing a huge improvement of HK$257

million over the previous year of 1999.

NEW T&T

New T&T has rapidly transformed its core

business from IDD to high value fixed lines

where entry barriers are higher. In doing

so, New T&T has consolidated its position

as the fastest growing and most successful

competitor to the former monopoly in fixed telecom

network services. Where fixed lines represented only

10 per cent of total revenue in 1998, it grew to 27 per

cent in 1999 and 50 per cent in 2000.

2000 revenue was 25 per cent higher than 1999. By

managing costs at below the 1999 level, New T&T

reported an improvement in EBITDA of over

HK$200 million, and came close to breaking even

at the bottom line.

14

CHAIRMAN’S STATEMENT

As suggested in my Economic Review, China trade

is estimated to double within the five years following

its entry into the WTO, and Hong Kong has

traditionally serviced close to 40 per cent of China

trade and this will directly improve the potential at

Modern Terminals, now a 55 per cent subsidiary of

Wharf with stable growth in earnings.

Container Terminal No. 9 will generate

extra capacity from 3.4 million TEUs to

4.5 million TEUs, and the aggregate

terminals within this company will occupy some

9.5 million square feet of land.

Modern Terminals is conservatively leveraged and

all financing is non-recourse to the shareholders. This

solid financial position will enable Modern Terminals

to also expand into other areas particularly at the

Western Shenzhen ports in Southern China.

PROSPECTS AND OUTLOOK

The Wheelock Group will continue to build assets

and value, and we have achieved visible improvements.

The completed property projects are now reaping

returns. Wharf ’s investment in i-CABLE is now in

profit and New T&T is on positive EBITDA. The

retail brands of Lane Crawford, Joyce and City’Super

are all doing reasonably well within a highly

competitive market, and this improvement of our retail

platform is encouraging.

The Group refinanced the majority of its

secured debts by unsecured loan facilities

with longer maturity periods and

substantial reduction in interest charges.

With the gradual reduction of interest

rates, borrowing cost could further reduce in the future.

Looking forward, we shall continue to build on the

success. Encouraged by the imminence of China’s

entry into the WTO, we look at the future with a

good degree of confidence.

On behalf of Shareholders and Directors, I wish

to record my heartfelt thanks to the Group’s

management and staff for their contribution.

Gonzaga W. J. Li, Chairman

16

Gateway, Hong Kong

B

USINESS

R

EVIEW

Being an actively-managed

conglomerate with a

well-diversified portfolio of

businesses in the areas

of property development,

property investment, quality retail,

C M E ( c o m m u n i c a t i o n s , m e d i a a n d

entertainment) and logistics, the Wheelock

Group has explicitly demonstrated the resilient

character of its operations against the wild

fluctuations of the global economy and financial

markets in the past 12 months.

KEY TO

SUCCESS

18

BUSINESS REVIEW – WHEELOCK PROPERTIES

HONG KONG

In December 2000, Wheelock Proper ties

launched with good market response the

Rose Street project, known as The

Primrose. Out of the 16 completed

residential units, over half were sold

after the launch at over HK$7,000

per square foot. Apart from The

Primrose, the Group also maintained its

programme of property sales for the remaining

units in various other developments including

The Astrid, Forest Hill and My Loft.

During the year under review, the Group took an

interest of 20 per cent through Realty Development

in a joint venture with New World Development,

Sino Land, Chinese Estates and Manhattan

Garments to bid for and successfully secured the

King’s Park development. This residential site located

in Homantin will be developed into eight towers

consisting of 700 units with a total GFA of 904,200

square feet. Demolition was completed recently in

accordance with the work schedule.

Bellagio, the Sham Tseng site, is a joint

venture development equally owned by

Wheelock, New Asia Realty, and the

Wharf group. Approval has been received from the

Government to increase the total residential area from

2.5 million to 2.8 million square feet, a 12 per cent

gain arising from the decking over of the canals

adjacent to the site. The number of residential units

to be built has accordingly been increased from 2,756

to 3,354. Foundation works for the whole

development and pile caps works for Towers 1 to 9

were completed. Superstructure works are now in

progress. Pre-sale for Phases I and II consisting of

1,704 units is targeted to take place in early 2002.

BUSINESS REVIEW – WHEELOCK PROPERTIES

Completion of Phases I and II of the development is

scheduled for 2003.

Sorrento, the MTRC Kowloon Station

Package Two development, is equally

owned by a five-member consortium

comprising Wheelock, New Asia Realty,

Realty Development and two Wharf

group companies. Superstructure works are now in

progress and that for Phase I covering 1.2 million

square feet GFA commenced in May 2000. Pre-sale

for Phase I consisting of 1,272 units is planned to

take place in the second half of 2001. Completion

of Phase I of the development is now scheduled for

the first quarter of 2003.

With the falling interest rates leading to rising

disposable income, improving affordability, and

attractive rental yield, a potential catalyst such

as China’s entry into the WTO is likely to be able

to revive the residential property market in

Hong Kong. Given the Group’s sizable property

portfolio, mainly represented by

its interest in the Sham Tseng site,

the Kowloon Station Package Two

development and the King’s Park

Homantin project, the Group is

well-positioned to take advantage of the gradual recovery

of the economy in the next several years.

SINGAPORE

In Singapore, the residential market is expected to

stay soft for the rest of 2001. The outlook for office

rental market remains stable with limited supply of

prime office space in the near future. While many

companies are imposing tighter cost-control

measures in anticipation of an economic slowdown,

Marco Polo Developments Limited, the Wheelock

20

Wheelock Place, Singapore

BUSINESS REVIEW – WHEELOCK PROPERTIES

Group’s Singapore property arm, will focus on

retaining tenants of good standing and continue to

uphold a high standard of maintenance for

Wheelock Place.

The topping-out ceremony of Ardmore

Park was held on 5 May 2000 with

the construction of this luxur y

condominium project being ahead of schedule. Out

of the total 330 units, 316 have been sold. Staged

billings representing 85 per cent of the total sale price

of these units sold have been billed and a substantial

percentage of those have been collected. The

Temporary Occupation Permit for the whole

development was obtained in May 2001.

The average occupancy level of Ardmore View is

currently at 97 per cent with duration of leases

ranging from 12 to 24 months. Provisional

planning permission for the redevelopment of

this property to 110,200 square feet GFA was

obtained in February 2000. This redevelopment

will only proceed when market

conditions improve.

Plans are underway to redevelop

the former Marco Polo Hotel into

a freehold, luxur y high-rise condominium

complex with 467,600 square feet in GFA, known

as “Grange Residences”. Foundation works for the

new development are progressing according to

schedule.

The office tower, levels 3, 4 and 5 of the Wheelock

Place podium in Singapore are currently 96

per cent let to quality tenants of multinational

stature such as Philip Morris, Boeing, Cisco and

Colgate-Palmolive.

22

REGIONAL

EXPANSION

With its remarkably sizable landbank in Hong Kong,

China Mainland and Singapore, the Wheelock Group

remains a committed participant in the long-term growth

of the property markets in Asia.

On the retail front, following the opening of the first Lane

Crawford store in China at the

new Shanghai Times Square

with resounding success in

June 2000, the presence of

the brand will be extended

to Taipei at the end of 2001,

marking another milestone in

24

BUSINESS REVIEW – RETAIL

LANE CRAWFORD

INTERNATIONAL

Despite the economic climate of Hong Kong being

difficult and dragged by the weak financial and

property markets, Lane Crawford continued to

report a turnover growth and most significantly a

positive operating profit. However, the

prolonged deflationary scenario has

restricted the room for pricing flexibility.

Together with the rising cost associated

with merchandise sourcing and rent, the

profit margin has been under pressure. Overall, it

was an extremely challenging year for retailers as

consumer spending remained cautious and operating

environment became increasingly competitive.

The company’s persistent performance has been mainly

attributable to its customer-oriented promotion strategies,

relationship marketing efforts, effective cost-control

systems and enhancement in productivity of selling

floors. The strategy to attract and retain customer through

Privilege Card Frequent Purchase Programme proved to

be successful in Hong Kong and the China Mainland.

With its focused commitment and marketing strategies,

Lane Crawford has maintained a leading position in the

market with a strong and loyal customer base.

With respect to merchandise planning

and management, the strategy is to

strengthen the management over

existing brands as well as to exploit new

quality brands and merchandise which match

the company’s image and market position. “On

Pedder” has been a successful story established both

in Hong Kong and Singapore. The fourth On Pedder

boutique in Hong Kong was opened in April 2001.

The company will continue to focus on maintaining

and extending this brand across the region.

BUSINESS REVIEW – RETAIL

leading position in Shanghai by maintaining an upscale

image and balanced brand mix. With the high growth

in disposable income and living standard in gateway

cities such as Shanghai, exceptional performance is

achieved. Continued promoting effort has been put

into various VIP programmes, bonus plans and VIP

special promotional activities to stimulate

sales while operating expenses and office

overhead were under strict control

resulting in cost savings.

During the year under review, Lane Crawford

Shanghai located in the Shanghai Times Square

shopping complex started operating with favourable

feedback received from numerous valuable customers.

The newly-opened store has definitely attracted all

high-end shoppers’ attention in Shanghai.

With principal objectives to broaden customer base,

enlarge market share, and exploit potential business

opportunities in the region as well as to capitalize the

Lane Crawford brands, the Group’s retail arm is

better-positioned to deliver fairly decent growth in the longer

term through both local and regional expansion. The

next upcoming exciting event is the opening of Lane

Crawford Taipei targeted at the end of 2001.

JOYCE

The Joyce group had managed to turn

around and reported a small profit for the

first time after the Asian financial crisis.

This was attributable partly to higher turnover achieved

and partly to the successful cost rationalization

programmes, which led to an improvement in operating

margin in the 15-month period to 31 March 2001.

The rebuilding and fine-tuning of the group’s business

platform continued. During the period, the group

opened its first free-standing Joyce Beauty store, four

new Ad Hoc stores and three Hugo Boss outlets. The

group is also looking for other expansion opportunities.

26

Cable TV Tower, Hong Kong

STEERING

AHEAD

Driven by strong recurrent

earnings and value creation

opportunities originating

from its investment

flagship proper ty at

Kowloon Point, Wharf

Holdings, Wheelock’s principal

associate, is supported by major investments in CME

(communications, media and entertainment) and logistics.

This portfolio is set to offer significant revenue growth

and value creation through brands in the coming years.

28

BUSINESS REVIEW – WHARF HOLDINGS

Wharf is a group driven by strong recurrent earnings

and value creation opportunities originating from its

investment flagship property at Kowloon Point.

Further supported by other major investments in

communications, media and entertainment, and

logistics businesses, the group is strategically focused

on Hong Kong and China Mainland.

Wharf reported a profit attributable to

shareholders of HK$2,480 million for the

year ended 31 December 2000. Its profit

before exceptionals grew by 10 per cent when

compared to the 1999 figure.

PROPERTY

Prime properties including Harbour City and Times

Square which are virtually “freehold” with 999-year

leases, altogether maintained an average occupancy

of over 90 per cent in year 2000.

With typical clientele at Harbour City being mostly

China business operators such as trading firms,

importers, exporters and manufacturers, the

investment property portfolio benefited largely from

an influx of fresh foreign capital and the expansion of

existing local operators, both eyeing on the

soon-to-open China domestic market because of the potential

WTO agreement. Tower 6 of Gateway II comprising

780,000 square feet of office space has

been released to the market. The great

response received is totally unanticipated

by many under the recent lacklustre

market conditions.

The two towers of Gateway Apartments provide about

500 serviced apartments. More than 50 per cent of

the tenants are multinational corporate tenants and

over half of the committed tenancies are for periods

of 12 months or more. Comments from the occupants

on quality and service have been excellent.

Because of limited availability, shops in Harbour City

are under keen demand. Following the opening of the

14,000-square-foot Louis Vuitton shop at Ocean Centre,

BUSINESS REVIEW – WHARF HOLDINGS

Gucci has also leased a 9,200-square-foot ground floor

shop at Canton Road as its flagship store in Kowloon.

Since the inception of Wharf ’s programmes on

the Mainland’s property investment, capital

expenditure has been controlled, with around

HK$3.7 billion being invested so far.

The group aims to roll out the

successful brand of “Times Square” in

various key cities. Both Beijing Capital

Times Square and Shanghai Times

Square started operating in 2000 and average

occupancy improved consistently from 30 odd per

cent at the beginning to as high as 70 per cent by

the year end. The commencement of the

Chongqing Times Square project coincided nicely

with the announcement of the Beijing Central

Government’s “Go West” master plan. This project

is a mixed development of retail, office and

residential with a GFA of 1.6 million square feet,

located at the city’s prime shopping area, the

of Zou Rong Road and Min Zu Road, the two

major pedestrian-only streets in Chongqing.

COMMUNICATIONS, MEDIA

AND ENTERTAINMENT

(“CME”)

Due to visionary investments in brand

position, subscriber base, network

and servicing infrastructure and

content development, together with

management’s dedicated efforts over

the last seven years, Wharf now owns a remarkably

sizable and respectable portfolio of CME

businesses in Hong Kong.

Following its successful listing at the end of 1999,

i-CABLE started to report a net profit for fiscal year

2000, one year ahead of market expectations. Having

become the first local television operator other than

the dominant broadcaster to report a profit in

Hong Kong’s television history, the company would

30

BUSINESS REVIEW – WHARF HOLDINGS

Broadband Internet, and Telephony to take advantage

of its bundling capability whenever possible.

In 2000, the Pay TV subscriber base grew by 15 per

cent to 520,000, representing a 29 per cent penetration

of total homes passed. ARPU went up by five per cent

to HK$250 whereas churn rate remained

low at 1.5 per cent per month on average.

Being the preferred partner for most

programmers and content providers, the

company managed to conclude a number

of renewals and also brand new carriage agreements

with major players including HBO, Cinemax, CNN,

AXN and Sun TV.

Although several new licenses were awarded in late

2000, the company is confident that its first mover

advantage would continue to enable its services to

prevail over the competition. In fact, the competitive

environment of the sector has changed drastically in

the past six months. After the withdrawal of both Star

TV and HK Network TV due to various commercial

considerations, Galaxy is reported to be still searching

for investor funding and was late in meeting the

performance bond obligation under its license.

Backed by the company’s early mover advantage and

its highly recognized brandname, Broadband

Internet access subscribers grew from a

standing start in late March 2000 to

over 50,000 before the end of the year.

This represented an approximate 25 per

cent share of the residential market.

Due to the high operating leverage structure,

EBITDA breakeven was rapidly achieved within the

first nine months of operation on an incremental

basis. By year end of 2000, over 900,000 homes in

about 4,600 buildings throughout Hong Kong,

Kowloon and the New Territories had been covered.

The milestone of 1,000,000 was reached two

months later, doubling the license commitment to

the Government. This represents one of the fastest,

if not the fastest, rollouts of Cable Broadband

services in any major city in the world.

BUSINESS REVIEW – WHARF HOLDINGS

The company commenced its commercial trial for VoIP

(Voice-Over-Internet-Protocol) telephony in December,

and plans to launch commercial service sometime in

2002 to generate a third major recurring revenue stream.

The company’s distribution infrastructure will make it

one of the only two operators with city-wide coverage.

Being the most competitive and fastest

growing fixed line operator in Hong Kong,

New T&T had quite an eventful year

during 2000. It accomplished significant

growth in the areas of network coverage, number of

customers, number of fixed lines, IDD volume and

financial performance, as well as improvement in the

company’s position along the value chain.

Having expanded significantly, the company’s

advanced network now covers almost the entire North

Shore of Hong Kong Island, Kowloon Peninsula, and

key data & voice locations in the New Territories. For

the company’s international bandwidth capacity, New

interconnect with all three licensed Mainland

operators namely China Telecom, China Unicom, and

China Netcom. Together with its earlier investment

in the submarine cable linking Japan-US and

the alliance with FLAG Telecom and Level-3,

New T&T is now well-positioned to become a

leading international bandwidth and

IP backbone player in the market. New

cable landing stations were also

interconnected with New T&T’s fibre

network to provide backhaul services.

Apart from the remarkable 38 per cent growth in

total business customers, New T&T also became an

important player in providing service for the

e-commerce market place. At 31 December 2000, the

number of total installed fixed lines reached 140,000,

representing the second consecutive year with an 80

per cent plus growth rate. Total IDD volume

increased by 140 per cent to over 650 million minutes.

By managing various cost items below the 1999 level,

32

BUSINESS REVIEW – WHARF HOLDINGS

EBITDA and came close to breaking even on the

EBIT level. Moreover, contribution from fixed lines,

as a percentage of the total revenue, had jumped

from 1998’s 10 per cent to end of 2000’s 50 per

cent. This underlined the rapid and successful

transformation of the company’s business in only

two years from low value IDD to high

value fixed lines, where the entry

barriers are much higher and customers

are much more loyal, but discerning.

LOGISTICS

Wharf’s interest in Modern Terminals was raised from

50.8 per cent to 55.3 per cent in early 2001. Propelled

by strong export growth during 2000, South China

throughput grew by 2.2 million TEUs, of which Hong

Kong’s terminals absorbed 55 per cent and Shenzhen

45 per cent. Modern Terminals handled in total

3,073,436 TEUs last year, representing an 18.4 per cent

growth against 1999. The company’s growth compared

favourably with the overall growth in Kwai Chung of

12.5 per cent and South China of 17.4 per cent.

In anticipation of the potential opportunities brought

by WTO, the company continued to invest in various

projects in order to solidify its leading position in

the sector under the rapidly changing business

environment. ModernPorts.com, aimed to improve

the overall operating efficiency of both customers

and Modern Terminals, was introduced

towards the end of 2000. Phase 2 has

just been launched recently to enhance

the number of performable functions

provided by this portal. With its eight

per cent effective investment in Kaifeng Container

Terminals in Western Shenzhen already making a

positive contribution to the company’s bottomline,

a new berth which increases handling capacity by

about 400,000 TEUs, became operational in late

2000. While continuing with its involvement in the

operational management of Shekou Container

Terminal 1, the company obtained in-principle

approval in early 2001 from the Central Government

in Beijing to hold a 20 per cent interest in Shekou

Container Terminal 2.

Disclosure of Further Corporate Information

Set out below is information disclosed pursuant to the Rules Governing the Listing of Securities (the “Listing Rules”) of The Stock Exchange of Hong Kong Limited (the “Stock Exchange”):

(A) COMMENTARY ON ANNUAL RESULTS (I) Review of 2000/2001 Results

Group profit attributable to Shareholders for the year under review was HK$516.6 million, a decrease of 40.2 per cent from HK$864.4 million. Earnings per share were 25.4 cents compared to 42.6 cents for the previous year.

The Group’s turnover for the year was HK$3,761.5 million, compared to HK$4,551.0 million for 1999/2000, a decrease of 17.3 per cent, which was principally due to lower property sales revenue recognised by Marco Polo Developments g roup (“MPDL”) in respect of its sales of Ardmore Park units in Singapore. On retailing and trading side, turnover increased by 34.4 per cent to HK$1,865.7 million resulting from an increase in turnover of Lane Crawford and the acquisition of Joyce Boutique Holdings Limited, a non wholly-owned listed subsidiary, in mid-August 2000.

The Group’s operating profit before borrowing costs decreased by 81.6 per cent to HK$132.3 million from HK$720.1 million achieved in the previous year, mainly as a result of lower contribution derived from MPDL and the increase in provision for impairment in value of properties.

MPDL’s profit was mainly derived from recognition of a proportion of the pre-sale profit of Ardmore Park of which 15 per cent was recognised in 2000/2001 against 25 per cent for the previous year. As at 31 March 2001, stage billings representing 60 per cent of the total sales price of all the units sold have been billed and fully collected. Temporary Occupation Permit for the whole development of Ardmore Park was obtained in May 2001 and to-date stage billings representing 85 per cent of the total sales price of the 316 units sold have been billed and substantially collected.

Despite the difficult retailing environment in Hong Kong, Lane Crawford managed to maintain a satisfactory positive operating profit while the newly acquired Joyce Boutique Holdings Limited turned around from loss and reported a net profit of HK$7.2 million.

Provision for impairment in value of properties of HK$1,221.2 million in 2000/2001 included provision of HK$338.7 million made by Realty Development group (“RDC”) for its residential development project in Tuen Mun, industrial/office development project in Kwai Chung and cer tain land reserved for development. The remaining provision is mainly related to the development project in Sham Tseng. Provision for 1999/2000 is mainly related to property development projects in China Mainland and certain projects in Hong Kong.

Disclosure of Further Corporate Information

34

Borrowing costs charged to the consolidated profit and loss account for the year were HK$897.7 million, a decrease of 3.8 per cent as compared with HK$933.5 million for 1999/2000.

The share of profits in associates of HK$1,580.4 million decreased by 16.0 per cent from HK$1,882.2 million for 1999/2000, mainly as a result of the decrease in profit contribution from The Wharf (Holdings) Limited (“Wharf”). Wharf reported a profit attributable to shareholders of H K$2,480.0 million for its financial year ended 31 December 2000, compared to HK$3,511.0 million achieved in 1999. Wharf’s profit for 1999 included a non-recurring gain of HK$3,762.0 million arising from the spin off of i-CABLE Communications Limited and provisions made for contingencies from litigation case of HK$1,000.0 million and also for certain properties under development of H K$1,508.0 million.

Taxation charge for 2000/2001 was HK$253.2 million, against HK$467.0 million in 1999/2000. Lower taxation charge was recorded mainly due to decreased sales revenue recognised by MPDL, and included in 1999/2000 ta xation was an additional tax provision of H K$157.4 million made by RDC.

The profits shared by minority interests for the year were HK$45.2 million, a decrease of 86.6 per cent from HK$337.4 million in 1999/2000. The decrease was mainly due to decrease in profits of the Group’s non-wholly owned subsidiaries.

(II) Liquidity and Financial Resources

a) At 31 March 2001, the ratio of the Group’s net debt to total assets was 27.4 per cent, compared to 28.8 per cent at 31 March 2000. At 31 March 2001, the Group’s net debt amounted to HK$15,664.5 million, made up of H K$16,963.6 million in debts and HK$1,299.1 million in deposits and cash, a decrease of 2.6 per cent as compared with H K$16,081.7 million at 31 March 2000.

The debt maturity profile of the Group at 31 March 2001 is analysed as follows:

2001 2000

HK$ Million HK$ Million

Repayable within 1 year 4,564.7 4,806.8

Repayable after 1 year, but within 2 years 7,580.9 5,615.0 Repayable after 2 years, but within 5 years 4,818.0 7,089.9

Disclosure of Further Corporate Information

2001 2000

HK$ Million HK$ Million

Fixed assets 3,859.6 4,176.1

Long-term investments 363.2 1,712.7

Properties under development 6,009.7 10,769.1

10,232.5 16,657.9

c) To minimise exposure on foreign exchange fluctuations, the Group’s borrowings are primarily denominated in Hong Kong dollars except that the borrowings for financing Singapore assets are denominated in Singapore dollars. The Group has no significant exposure to foreign exchange fluctuation. d) At 3 1 March 2001, the Group maintained a portfolio of long-term listed investments with market value

of H K$3,324.0 million (2000: HK$3,600.9 million) which primarily comprised blue chip securities. (II I) Finance

During the financial year, the Group secured and renewed committed banking facilities at lower margins in a total amount of approximately HK$11 billion, of which HK$3.4 billion relates to the refinancing of the MTRC Kowloon Station P ackage Two development project at favourable terms to replace a previous facility of HK$2.2 billion. In addition, various short-term banking facilities were also secured or renewed. Grace Sign Limited, in which RDC has a 20 per cent interest, has also completed a project finance facility of HK$2.5 billion to finance the development of KIL 11118 King’s Park site.

(IV) Acquisition of Subsidiaries and Associates

During the financial year, the Group acquired a controlling interest of 52 per cent in Joyce Boutique Holdings Limited and a 39 per cent interest in City Super Limited. Besides, RDC has participated in a joint venture of which RDC owns 20 per cent to acquire the King’s Park site at HK$2,508.0 million.

(V) Employee

The Group had approximately 2,300 employees as at 31 March 2001. Employees are remunerated according to nature of the job and market trend, with built-in merit component incorporated in the annual increment to reward and motivate individual performance. The Group also sponsors external training prog rammes that are complementary to certain job functions. Total staff costs for the year ended 31 March 2001 was HK$370.1 million.

Disclosure of Further Corporate Information

36

(B) BIOGRAPHICAL DETAILS OF DIRECTORS AND SENIOR MANAGERS (I) Directors

Mr. Gonzaga W. J. Li, Chairman (Age: 72)

Mr. Li has been a Director of the Company since 1969. He became Chairman of the Company in 1996. He is also the chairman of The Wharf (Holdings) Limited (“Wharf”), Harbour Centre Development Limited (“HCDL”), i- CABLE Communications Limited (“i-CABLE”), New Asia Realty and Trust Company, Limited (“NART”), Realty Development Corporation Limited (“RDC”) and Marco Polo Developments Limited (“MPDL”) in Singapore and a director of Joyce Boutique Holdings Limited (“Joyce”).

Mr. Stephen T. H. Ng, Vice Chairman (Age: 48)

Mr. Ng has been a Director of the Company since 1988. He became Vice Chairman of the Company in 1995. He is also the deputy chairman and managing director of Wharf, the deputy chairman, president and chief executive officer of i-CABLE, the chairman, president and chief executive officer of both Hong Kong Cable Television Limited (“HKC”) and New T&T Hong Kong Limited (“New T&T”). He led the successful bid for and subsequent implementation of Hong Kong’s first cable TV licence. Mr. Ng is also a director of Joyce and he serves as a member of the Hong Kong – United States Business Council.

Mr. John T. Hung, SBS, JP, Manag ing Director (Age: 62)

Mr. Hung was appointed Executive Director of the Company in 1993. He became the Managing Director of the Company in 1995. He is also an executive director of Wharf, the vice chairman of H KC, a director of i-CABLE, Joyce and MPDL. He serves as the Government appointed chairman of the Hong Kong Sports Development Board.

Mr. K. H. Leung, Finance Director (Age: 56)

Mr. Leung was appointed the Finance Director of the Company in 1992. He is also a director of Whar f and NART.

Mr. B. M. Chang, Director (Age: 72)

Mr. Chang became a Director of the Company in 1969. He is also a director of World-Wide Shipping Agency Limited.

Sir S. Y. Chung, JP, Director (Age: 83)

Sir Sze-Yuen Chung became a Director of the Company in 1982. He is also the chairman of The Kowloon Motor Bus Holdings Limited. On 1 July 1997, he was awarded the Grand Bauhinia Medal (“GBM”) of the Government of the Hong Kong Special Administration Region.

Mr. Quinn Y. K. Law, Director (Age: 48)

Disclosure of Further Corporate Information

Ms. Doreen Y. F. Lee, Director (Age: 45)

Ms. Lee became a Director of the Company in 1998. She is also a director and the general manager of Harriman Leasing Limited, the managing director of Wharf Estates Management Company Limited, an executive director of Wharf Properties Limited and a director of Harriman Realty Company, Limited.

Mr. William W. Y. Lee, Director (Age: 74)

Mr. Lee became a Director of the Company in 1993.

Mr. T. Y. Ng, Director (Age: 53)

Mr. Ng became a Director of the Company in 1992. He is also a director of Wharf, HCDL, Joyce, NART, RDC and MPDL.

Mr. Paul Y. C. Tsui, Director (Age: 54)

Mr. Tsui became a Director of the Company in 1998. He is also the senior deputy managing director of Wheelock Properties Limited, the senior managing director of Harriman Realty Company, Limited, an executive director of Wharf, a director of HCDL, i-CABLE, Joyce and MPDL, as well as the group financial controller of the Company and Wharf.

Mr. Harry S. S. Wong, Director (Age: 45)

Mr. Wong became a Director of the Company in 1998. He is also the manag ing director of Wharf China Limited.

Note: Mr. William W. Y. Lee is a brother of Mr. Gonzaga W. J. Li.

(II) Senior Managers

Various businesses of the Group are respectively under the direct responsibility of the two Directors holding executive offices of the Company as named under (B)(I) above. Only those two Directors are regarded as members of the Group’s senior management.

(C) PENSION SCH EMES

The Group operates a number of pension schemes. Set out below are certain particulars regarding the principal pension scheme (the “Scheme”) operated by the Group:

(I) Nature of the Scheme

The Scheme is a defined contribution scheme. The assets of the Scheme are held separately by an independently administered fund.

Disclosure of Further Corporate Information

38

(II) Funding of the Scheme

The Scheme is funded by contributions from employees and employers. The employees and employers contribute respectively to the Scheme sums which represent percentages of their salaries as defined under the relevant trust deed. Forfeited employers’ contributions can be used to reduce the existing level of contributions.

(II I) Cost of the Scheme

The employers’ cost charged to profit and loss account during the year ended 31 March 2001 in respect of the Scheme amounted to HK$11.8 million. During the year, no forfeiture of employers’ contributions was used to reduce current year’s contribution.

NOTE: The total employers’ pension cost in respect of all pension schemes of the Group, including the cost related to the Mandatory Provident Fund which is not operated by the Group, charged to profit and loss account during the year ended 31 March 2001 amounted to H K$18.5 million.

(D) MAJOR CUSTOM ERS & SUPPLIERS For the financial year ended 31 March 2001:

a) the aggregate amount of purchases (not including the purchases of items which are of a capital nature) attributable to the Group’s five largest suppliers represented 48 per cent of the Group’s total purchases;

b) the largest supplier accounted for 23 per cent of the Group’s total purchases;

c) none of the Directors of the Company or their associates holds, nor does any shareholder owning (to the knowledge of the Directors) more than 5 per cent of the Company’s equity capital hold, any interests in any of the Group’s five largest suppliers; and

d) the aggregate amount of turnover attributable to the Group’s five largest customers represented less than 30 per cent of the Group’s total turnover.

(E) COMPLIANCE WITH CODE OF B EST PRACTICE

The Company has complied throughout the year with the Code of Best Practice as set out in Appendix 14 of the Listing Rules on the Stock Exchange.

Disclosure of Further Corporate Information

During the financial year, the Company and/or its subsidiaries (other than such subsidiaries of the Company as are themselves publicly-listed in Hong Kong or their subsidiaries) did not enter into any transaction which was regarded as connected transaction discloseable by the Company under the Listing Rules. Transactions constituting connected transaction(s) for those publicly-listed subsidiaries, which were not subject to any public disclosure by the Company itself, were duly disclosed by the relevant subsidiaries under the Listing Rules.

Furthermore, with regard to the Related Party Transactions as disclosed under Note 28 to the Accounts on page 77, none of those transactions constitute connected transactions discloseable by the Company under the Listing Rules.

Report of the Directors

40

The Directors have pleasure in submitting their Report and the Audited Statement of Accounts for the financial year ended 31 March 2001.

P RINCI PAL ACTIVITIES AND TRADING OPERATIONS

The principal activity of the Company is investment holding and those of its principal subsidiaries are set out on pages 78 and 79.

An analysis of the principal activities and geog raphical locations of trading operations of the Company and its subsidiaries during the financial year is set out in Note 2 to the Accounts on page 60.

SU BSIDIARIES

Particulars of the Company’s principal subsidiaries at 31 March 2001 are set out on pages 78 and 79. R ESU LTS, APPROPR IATIONS AND RESERVES

The results of the Group and appropriations of profits for the financial year ended 31 March 2001 are set out in the Consolidated Profit and Loss Account on page 45.

Movements in reserves during the financial year are set out in Note 23 to the Accounts on pages 72 to 74. DIVI DENDS

An interim dividend of 2.5 cents per share was paid on 18 January 2001. The Directors now recommend the payment of a final dividend of 5.0 cents per share in respect of the financial year ended 31 March 2001, payable on 21 September 2001 to Shareholders on record as at 31 August 2001. This recommendation has been incorporated in the Accounts.

SHARE CAPITAL

During the year, as a result of exercises by certain g rantees of options granted under the Company’s Executive Share Incentive Scheme, the Company allotted and issued a total of 96,000 ordinary shares of HK$0.50 each, of which 56,000 shares were issued at a price of HK$5.50 per share and 40,000 shares at HK$5.20 per share.

F IXED ASSETS

Movements in fixed assets during the financial year are set out in Note 12 to the Accounts on pages 66 and 67. BANK LOANS, OVERDR AFTS AND OTH ER BORROWINGS

Particulars of all bank loans, overdrafts and/or other borrowings of the Company and of the Group as at 31 March 2001 repayable on demand or within a period not exceeding one year are set out in Note 20 to the Accounts on page 70. Those which would fall due for repayment after a period of one year are set out in Note 24 to the Accounts on page 74.

Report of the Directors

Set out below is information regarding certain borrowings of the Group outstanding as at 31 March 2001 in the form of debt securities issued by a wholly-owned subsidiary of and guaranteed by the Company:

Description of Debt Outstanding Name of Subsidiary/Borrower Securities Issued Principal Amount

Lawley International Limited 8.75 per cent unsecured HK$500 Million Guaranteed Notes due

December 2001 I NTEREST CAPITALISED

The amount of interest capitalised by the Group during the financial year is set out in Note 5 to the Accounts on page 61.

DONATIONS

The Group made donations during the financial year totalling H K$3.4 million. DI RECTORS

The Directors of the Company during the financial year were Mr. B. M. Chang, Sir S. Y. Chung, Mr. J. T. Hung, Mr. Q. Y. K. Law, Ms. D. Y. F. Lee, Mr. W. W. Y. Lee, Mr. K. H. Leung, Mr. G. W. J. Li, Mr. S. T. H. Ng, Mr. T. Y. Ng, Mr. P. Y. C. Tsui and Mr. H. S. S. Wong.

Ms. D. Y. F. Lee, Mr. P. Y. C. Tsui and Mr. H. S. S. Wong are due to retire from the Board by rotation in accordance with Article 103(A) of the Company’s Articles of Association at the forthcoming Annual General Meeting. Being eligible, they offer themselves for re-election.

With the exception of the Chairman and those Directors holding executive offices of the Company (who are all not subject to retirement by rotation under the provisions of the Company’s Ar ticles of Association) together with Ms. D. Y. F. Lee, Mr. P. Y. C. Tsui and Mr. H. S. S. Wong (who are due to retire from the Board at the forthcoming Annual General Meeting as mentioned above), all the present Directors were respectively re-elected at Annual General Meetings held in the past three years, upon their retirement thereat in accordance with the provisions of the Company’s Articles of Association, to continue to serve on the Board for a further term of approximately three years, until they respectively become due to retire from the Board again by rotation in accordance with Article 103(A) of the Company’s Ar ticles of Association.

None of the Directors has a service contract with the Company or any of its subsidiaries which is not determinable by the employer within one year without payment of compensation.

Report of the Directors

42

DI RECTORS’ INTERESTS IN SHARES

As at 31 March 2001, Directors of the Company had the following beneficial interests in the share capitals of the Company, of an associate of the Company, namely, The Whar f (Holdings) Limited (“Whar f”), and of a subsidiary of the Company, namely, New Asia Realty and Trust Company, Limited (“NART”):

No. of Ordinary Shares Nature of Interest The Company

Mr. B. M. Chang 8,629,575 Corporate Interest (See note below)

Mr. J. T. Hung 10,000 Personal Interest

Mr. G. W. J. Li 1,486,491 Personal Interest

Mr. S. T. H. Ng 100,000 Personal Interest

Mr. T. Y. Ng 70,000 Personal Interest

Whar f

Sir S. Y. Chung 348,238 Personal Interest in 189,427 shares

and Corporate Interest in 158,811 shares (See note below)

Mr. G. W. J. Li 686,549 Personal Interest

Mr. S. T. H. Ng 230,057 Personal Interest

Mr. T. Y. Ng 128,016 Personal Interest

NART

Sir S. Y. Chung 94,710 Family Interest

Mr. G. W. J. Li 2,900 Personal Interest

Note: The shareholdings classified as “Corporate Interest” in which the Directors concerned were taken to be interested as stated above were interests of corporations at respective general meetings of which the relevant Directors were respectively entitled to either exercise (or taken under the Securities (Disclosure of Interests) Ordinance (the “SDI Ordinance”) to be able to exercise) or control the exercise of one-third or more of the voting power in general meetings of such corporations.

Report of the Directors

As at 31 March 2001, Directors of the Company had the following personal interests in options to subscribe for ordinary shares of the Company g ranted under the Executive Share Incentive Scheme of the Company:

Price

per share Consideration

Number of Period during which to be paid paid for the

ordinary rights exercisable on exercise options

Name of Directors shares Dat e granted (Day/Month/Year) of options granted

Mr. J. T. Hung 100,000 7 Oct. 1993 30/9/1997 to 29/9/2003 HK$10.60 HK$1 Mr. S. T. H. Ng 200,000 13 Aug. 1991 13/8/1994 to 12/8/2001 HK$5.20 HK$1 Mr. H. S. S. Wong 250,000 14 Apr. 1992 13/4/1995 to 12/4/2002 HK$5.50 HK$1

Save as disclosed above, as recorded in the register kept by the Company under section 29 of the SDI Ordinance or otherwise notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Companies:

(i) there were no interests held as at 31 March 2001 by any Directors and Chief Executive of the Company in securities of the Company and its associated corporations (within the meaning of the SDI Ordinance), and (ii) during the financial year, there existed no rights to subscribe for equity or debt securities of the Company

which were held by any Directors or Chief Executive of the Company or any of their spouses or children under 18 years of age nor had there been any exercises of any such rights by any of them.

SU BSTANTIAL SHAREHOLDERS’ INTERESTS

As at 31 March 2001, Bermuda Trust (Guernsey) Limited was taken under the SDI Ordinance to be interested in 1,241,458,820 shares of the Company, representing 61.13 per cent of its entire issued share capital as at that date. Apart from this, no interest in 10 per cent or more of the nominal value of any class of share capital of the Company was held (or taken under the SDI Ordinance to be held) by any person as at 31 March 2001 according to the record in the register kept by the Company under section 16(1) of the SDI Ordinance.

I NTERESTS IN CONTRACTS

No contract of significance in relation to the Company’s business to which the Company or any of its subsidiaries was a par ty and in which a Director had a material interest, whether directly or indirectly, subsisted at the end of the financial year or at any time during the financial year.

MANAGEMENT CONTRACTS

Report of the Directors

44

ARR ANGEMENTS TO PURCHASE SHARES OR DEBENTUR ES

At no time during the financial year was the Company or any of its subsidiaries a party to any arrangements to enable the Directors of the Company to acquire benefits by means of acquisition of shares in or debentures of the Company or any other body corporate, with the exception of the options to subscribe for ordinary shares of the Company previously g ranted under the Company’s Executive Share Incentive Scheme (the “Scheme”) to, inter alia, certain executives of the Group, some of whom were Directors of the Company during the financial year.

Under the Scheme, shares of the Company are to be issued at such prices, not being less than 90 per cent of the average closing price on the Stock Exchange for the five trading days immediately preceding the date of offer of the options, and the relevant options are exercisable during such periods, not being beyond the expiration of ten years from the date of g rant, as determined by the Board of Directors of the Company. During the financial year, no share of the Company was issued to any Director of the Company under the Scheme.

P URCHASE, SALE OR REDEMPTION OF SHARES

Neither the Company nor any of its subsidiaries purchased, sold or redeemed any listed securities of the Company during the financial year.

AU DITORS

The Accounts now presented have been audited by PricewaterhouseCoopers, Certified Public Accountants, who retire and being eligible, offer themselves for re-appointment. PricewaterhouseCoopers replaced Price Waterhouse in October 1998 following their merger with Coopers & Lybrand.

By Order of the Board

Wilson W. S. Chan

Secretary

Consolidated Profit and Loss Account

2001 Restated 2000 Note H K$ Million HK$ Million

Turnover 2 3,761.5 4,551.0

Other net income 3 442.2 327.6

4,203.7 4,878.6

Direct costs and operating expenses (2,201.2) (2,546.7)

Selling and marketing expenses (404.9) (379.7)

Administrative expenses (244.1) (233.3)

Provision for impairment in value of properties (1,221.2) (998.8)

Operating profit 4 132.3 720.1

Borrowing costs 5 (897.7) (933.5)

Share of profits less losses of associates 1,580.4 1,882.2

Profit before taxation 815.0 1,668.8

Taxation 7 (253.2) (467.0)

Profit after taxation 561.8 1,201.8

Minority interests (45.2) (337.4)

Group profit attributable to shareholders 8 516.6 864.4

Dividends 9 (152.3) (152.3)

Transferred to revenue reserves 364.3 712.1

Earnings per share 10 25.4 cents 42.6 cents The notes on pages 55 to 79 form part of these accounts.

Consolidated Statement of Recognised Gains and Losses

46

2001 Restated 2000

H K$ Million HK$ Million

Company and subsidiaries

Surplus on revaluation of non-trading securities 7.4 503.6

Deficit on revaluation of investment properties – (2.2)

Provision for other properties written back 36.9 –

Exchange difference on translation of financial

statements of foreign entities (123.0) 29.5

Others 1.2 10.0

Associates

Surplus/(deficit) on revaluation of investment properties 1,009.1 (995.0)

Surplus on revaluation of hotel and club properties 56.3 –

Provision for impairment of other properties – (540.2)

Surplus on revaluation of non-trading securities 50.5 460.6

Others (12.8) 9.1

Net gains/(losses) not recognised in the consolidated

profit and loss account 1,025.6 (524.6)

Group profit attributable to shareholders 516.6 864.4

Reserves transferred to profit and loss account on disposal of:

Non-trading securities (110.4) (16.6)

Associates – (145.5)

Net provision for non-trading securities 21.7 –

Reserves transferred to profit and loss account on

disposal of non-trading securities by associates (364.6) 189.6

Total recognised gains 1,088.9 367.3

Reserves arising on consolidation 80.8 313.7

1,169.7 681.0

Cumulative effects of changes in accounting policy

to reserves at 31 March 2000 (706.8)

Consolidated Balance Sheet

2001 Restated 2000

Note H K$ Million HK$ Million

Non-current assets Fixed assets 12 5,351.5 5,764.9 Associates 14 24,671.9 23,570.9 Long-term investments 15 3,335.5 3,613.1 Deferred debtors 16 57.4 91.0 33,416.3 33,039.9 Current assets

Proper ties under development 17 22,322.9 21,334.1

Proper ties held for sale 615.8 538.8

Inventories 18 350.0 208.8

Debtors and prepayments 19 410.9 745.4

Bank balances and deposits 1,299.1 1,430.0

Tax recoverable – 3.5

24,998.7 24,260.6

---Current liabilities

Short-term loans and overdrafts 20 4,564.7 4,806.8

Creditors and accruals 21 1,229.2 1,147.6

Deposits from sale of properties 4,503.8 3,505.0

Taxation 32.9 391.5

Proposed final dividend 9 101.5 101.5

10,432.1 9,952.4

---Net current assets 14,566.6 14,308.2

Total assets less current liabilities 47,982.9 47,348.1

Financed by: Shareholders’ funds Share capital 22 1,015.4 1,015.4 Reserves 23 27,244.9 26,227.0 28,260.3 27,242.4 Minority interests 6,114.0 6,217.6 Non-current liabilities Long-term loans 24 12,398.9 12,704.9 Deferred ta xation 25 790.8 734.9 Deferred profits 418.9 448.3 13,608.6 13,888.1 47,982.9 47,348.1

Company Balance Sheet

48

2001 2000 Note H K$ Million HK$ Million

Non-current assets

Subsidiaries 13 14,707.2 16,398.6

Current assets

Debtors and prepayments 0.3 0.3

Bank balances and deposits 0.1 0.1

0.4 0.4

---Current liabilities

Short-term loans and overdrafts 20 3,764.9 1,479.2

Creditors and accruals 18.0 12.8

Proposed final dividend 9 101.5 101.5

3,884.4 1,593.5

---Net current liabilities (3,884.0) (1,593.1)

Total assets less current liabilities 10,823.2 14,805.5

Financed by: Shareholders’ funds Share capital 22 1,015.4 1,015.4 Reserves 23 3,482.8 3,465.1 4,498.2 4,480.5 Non-current liabilities Long-term loans 24 6,325.0 10,325.0 10,823.2 14,805.5

The notes on pages 55 to 79 form part of these accounts.

Gonzaga W.J. Li John T. Hung