Sun Hung Kai Properties Limited - MarketScreener.com · Airport Freight Forwarding Centre 100%...
Transcript of Sun Hung Kai Properties Limited - MarketScreener.com · Airport Freight Forwarding Centre 100%...
1 FINANCIAL HIGHLIGHTS
2 CORPORATE AND SHAREHOLDERS’INFORMATION
3 CORPORATE STRUCTURE
4 CHAIRMAN’S STATEMENT
14 REVIEW OF OPERATIONS
66 FINANCIAL REVIEW
70 GROUP FINANCIAL SUMMARY
71 DIRECTORS’ REPORT
79 DIRECTORS AND ORGANIZATION
89 REPORT OF THE AUDITORS
90 FINANCIAL STATEMENTS
CONTENTS
With a focus on maintaining its leading position
in the present challenging business environment,
the Sun Hung Kai Properties Group will continue
to develop premium products and provide quality
service, making its properties customers’ first
choice. To further enhance competitiveness, the
Group will work to strengthen its brand name
and control costs, but without compromising
on quality.
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Cover photos:1. To build ideal homes for customers is always the Group’s aim.2. Park Central, Tseung Kwan O3. Park Island, Ma Wan4. International Finance Centre, Central5. New Town Plaza III, Shatin6. SUNeVision7. Kowloon Motor Bus
SUN HUNG KAI PROPERTIES LIMITED ANNUAL REPORT 2000/01
For the year ended 30th June 2001 2000 Change (%)
Turnover (HK$ million) 17,701 25,826 -31
Profit attributable to shareholders (HK$ million)
including one-off gain1 8,330 10,822 -23
excluding one-off gain1 8,330 8,134 +2
Earnings per share (HK$)
including one-off gain1 3.47 4.51 -23
excluding one-off gain1 3.47 3.39 +2
Dividends per share (HK$) 1.55 1.75 -11
Shareholders’ funds per share (HK$) 52.48 50.36 +4
Gross rental income (HK$ million) 5,392 5,292 +2
Net rental income (HK$ million) 4,073 4,059 –
Net debt to shareholders’ funds ratio (%) 15.8 14.9 +0.92
Land bank (million square feet) 54.1 52.1 +4
1 One-off gain arising from the spin-off of SUNeVision in March 20002 Change in percentage point
FINANCIAL HIGHLIGHTS
1997 1998 1999 2000 2001
Turnover
HK$
Earnings per share
Dividends per share (excluding special cash bonus)
* Except for completed investment properties, hotels and marketable securities which are stated at market value, all assets are at historical cost.
1997 1998 1999 2000 2001
Earnings andDividends per Share
1997 1998 1999 2000 2001
Net Asset Value per Share*
HK$HK$ million
5,000
10,000
15,000
20,000
25,000
30,000
22,890 23,404
25,826
17,701
28,425
10
20
30
40
50
60
47.5544.40
50.3652.48
56.38
1
2
3
4
5
6
3.04
3.87
4.51
1.201.55
1.75
2.35
3.47
1.55
5.93
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SUN HUNG KAI PROPERTIES LIMITED ANNUAL REPORT 2000/01
CORPORATE AND SHAREHOLDERS’ INFORMATION
DIRECTORS
Kwok Ping-sheung, WalterChairman & Chief Executive
# Lee Shau-keeVice Chairman
Kwok Ping-kwong, ThomasVice Chairman & Managing Director
Kwok Ping-luen, RaymondVice Chairman & Managing Director
* Chung Sze-yuen
* Woo Po-shing
* Fung Kwok-king, Victor
* Kwan Cheuk-yin, William# Lo Chiu-chun, Clement# Law King-wan
Chan Kai-ming
Chan Kui-yuen, Thomas
Kwong Chun
Wong Yick-kam, Michael
Wong Chik-wing, Mike
# Non-Executive Director
* Independent Non-Executive Director
COMPANY SECRETARY
Lai Ho-kai, Ernest
REGISTERED OFFICE
45th Floor, Sun Hung Kai Centre30 Harbour Road, WanchaiHong KongTelephone: (852) 2827 8111Facsimile: (852) 2827 2862Web site: www.shkp.com.hkE-mail: [email protected]
AUDITORS
Deloitte Touche Tohmatsu
REGISTRARS
Central Registration Hong Kong LimitedRooms 1712-6, Hopewell Centre183 Queen’s Road EastHong Kong
PRINCIPAL BANKERS
The Hongkong & Shanghai BankingCorporation Limited
Bank of China
Hang Seng Bank Limited
Sumitomo Mitsui Banking Corporation
Standard Chartered Bank
The Bank of Tokyo – Mitsubishi, Ltd
Mizuho Financial Group
The Sanwa Bank Limited
Industr ia l and Commercial Bankof China
BNP Paribas
SOLICITORS
Woo, Kwan, Lee & LoJohnson, Stokes & MasterWinston Chu & Company
SHAREHOLDERS’ CALENDAR
Register of ShareholdersClose of Register (both days inclusive) 22nd November 2001 – 29th November 2001
Annual General Meeting 29th November 2001
DividendsInterim (per share) HK$0.55Paid on 12th April 2001Proposed final (per share) HK$1.00Payable on 3rd December 2001
LISTING INFORMATION
Stock Code 16
American Depositary ReceiptCUSIP number 86676H302Trading symbol SUHJYOrdinary share to ADR ratio 1:1Listing Level One (OTC)Depositary bank Citibank, N. A.
ADR Department, 20th Floor,111 Wall Street, New York, N.Y.10043
Toll-free telephone number 1-877-CITI-ADR (1-877-248-4237)
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SUN HUNG KAI PROPERTIES LIMITED ANNUAL REPORT 2000/01
Sun Hung Kai Properties*
PropertyDevelopment
• 26.6 million sq.ft. under development
• 19.3 million sq.ft. completedinvestment properties
HotelsKMB*34%
Franchised Bus
• 22 million sq.ft. of agricultural land (site area)
• 8.2 million sq.ft. under development
Route 3 CPS50%
Toll Road
RoadShow*27.1%
Wilson Group100%
Transport Infrastructure Management
River Trade Terminal
33%
PropertyInvestment
Property Related
Businesses
Information Technology &
Telecoms
Property Development &
Investment
Transportation,Infrastructure
& Logistics
SUNeVision* 84.3%
SmarTone* 28.2%
Construction
Property Management
FinancialServices
Insurance
Mainland ChinaHong Kong
• 0.6 million sq.ft. under development
• 1.8 million sq.ft. completed investment properties
Mid-StreamOperation
50%
Container Terminal 9 28.5%
Business AviationCentre
35%
Airport FreightForwarding Centre
100%
Logistics
WasteManagement
CORPORATE STRUCTURE
As at 30th June 2001
* Listed in Hong Kong
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SUN HUNG KAI PROPERTIES LIMITED ANNUAL REPORT 2000/01
The Leighton Hill in Happy Valley receivedan overwhelming response from the marketon its launch in November 2000.
CHAIRMAN’S STATEMENT4
I am pleased to present my report to the shareholders:
RESULTS
The Group’s profit after taxation and minority interests for the year ended 30th June 2001 was HK$8,330 million,
compared with last year’s profit of HK$10,822 million. Earnings per share for the year was HK$3.47, compared with
HK$4.51 for the corresponding period last year. A one-off gain of HK$2,688 million arising from the spin-off of
SUNeVision Holdings Limited was included in last year’s results. Excluding that gain, profit for the year under review
shows a year-on-year growth of 2.4 per cent.
DIVIDENDS
The Directors have recommended the payment of a final dividend of HK$1.00 per share for the year ended 30th
June 2001. Together with the interim dividend of HK$0.55 per share, the total dividend for the year is HK$1.55 per
share, compared with HK$1.75 per share for the previous year.
REVIEW
Sales
During the year ended 30th June 2001, total property
sales generated by the Group, both as principal and agent,
amounted to HK$19,641 million, an increase of 102 per
cent over the previous year. Major projects sold during
the period included The Leighton Hill in Happy Valley,
Oscar by the Sea in Tseung Kwan O, The Parcville in
Yuen Long, Royal Peninsula in Kowloon, The Belcher’s
Phase 2 in western Mid-Levels and Villa Esplanada Phase
3 in Tsing Yi.
CHAIRMAN’S STATEMENT
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SUN HUNG KAI PROPERTIES LIMITED ANNUAL REPORT 2000/01
During the year under review, the Group completed the following 11 projects, with an attributable gross floor area
of about 4.1 million square feet:
Group’s AttributableProject Location Usage Interest Gross Floor Area
% square feet
Royal Peninsula 3 Hung Lai Road, Kowloon Residential 50 739,000
Oscar by the Sea Phase 1 Tseung Kwan O Town Lot 51 Residential Joint venture 447,000
Le Sommet 28 Fortress Hill Road, North Point Residential 100 390,000
Villa Premiere 99 Fung Cheung Road, Yuen Long Residential 100 217,000
Villa Esplanada Phase 3 8 Nga Ying Chau Street, Tsing Yi Residential 22.5 193,000
Ocean Shores Phase 1 88 O King Road, Tseung Kwan O Residential/Shopping Centre 49 672,000
Chelsea Heights Phase 2 1 Shek Pai Tau Path, Tuen Mun Residential/Shopping Centre 100 667,000
The Belcher’s Phase 1 89 Pok Fu Lam Road, western Mid-Levels Residential/Shopping Centre 29 386,000
Grand Villa 401 Chatham Road, Hung Hom Residential/Shops 100 30,000
Shouson Place 16E Shouson Hill Road, Island South Shopping Centre 100 17,000
MEGA-iAdvantage 399 Chai Wan Road Data Centre 84.3 293,000
Total 4,051,000
More than 85 per cent of the residential units completed during the year have been sold. The shopping centres in
Chelsea Heights, The Belcher’s and Ocean Shores, as well as Shouson Place and MEGA-iAdvantage, are being
retained as long-term investments.
Land Bank
During the year, the Group added a total of 5.3 million square feet of attributable gross floor area to its land bank
through various means including public auction and tender :
Group’s Attributable AttributableProject Usage Interest Site Area Gross Floor Area
% square feet square feet
Airport Railway Kowloon Station Office/Shopping Centre/Residential/Development Packages 5, 6 & 7 Serviced Apartment/ Hotel Joint venture 790,000 4,698,000
Kowloon Inland Lot 11145, Farm Road Residential/Shopping Centre 100 30,000 268,000
New Kowloon Marine Lot 3, Lai Chi Kok Residential/Shopping Centre 34 43,000 376,000
Total 863,000 5,342,000
The Group currently owns a land bank of 54.1 million square feet in Hong Kong, in terms of attributable gross floor
area. It consists of 19.3 million square feet of completed investment properties and 34.8 million square feet of
proper ties under development. The Group also owns 22 million square feet of agricultural land in the New
Territories, primarily along existing or planned railway lines, the majority of which is in the process of land use
conversion.
CHAIRMAN’S STATEMENT
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SUN HUNG KAI PROPERTIES LIMITED ANNUAL REPORT 2000/01
Property Development
Transaction volume in Hong Kong’s residential market was
affected by the recent terrorist attacks in the United States, after
a modest improvement in the first eight months of 2001. Market
sentiment has been weak, affected by the economic slowdown,
rising unemployment rate and the significant decline in the Hong
Kong stock market in the past two months. However, recent
positive Government measures for the housing market and eight
consecutive interest rate cuts totalling 3.5 per cent this year have
helped to strengthen market fundamentals.
Affordability for home buyers is now the most favourable in the
last 13 years, with residential prices currently at early 1992 levels. In addition, attractive financing packages offered by
banks, the lowest mortgage rates on record and a significant increase in the number of Government-subsidized
housing loans have underpinned market demand. Higher rental yields relative to mortgage interest rates have
resulted in more people opting to buy flats instead of renting accommodation. It is expected that as confidence in
the economy improves, the demand for housing will increase accordingly.
The Group’s strategy is to increase the completion of residential units for sale over time in order to meet market
demand, with a focus on developing large-scale, premium-quality projects with comprehensive facilities. It will continue
to offer home buyers a wide range of flat sizes, with an emphasis on small-to-medium units. To meet the objective
of raising production volume and enhancing value for shareholders, the Group will add to its land bank through
various means when appropriate. Conversion of agricultural land into the Group’s development land bank is continuing.
The Group’s aim has always been to build ideal homes for its customers. As home buyers have become more
selective, the Group is raising standards even higher in order to enhance its brand name for quality and strengthen
its market-leading position. A variety of measures adopted during the year will allow the Group to surpass its
achievements in areas such as project quality, customer care and management service. Reinforcement of the Group’s
brand name and stringent controls over construction costs should help to improve project returns.
In the coming financial year, the Group expects to complete 4.6 million square feet of gross floor area in attributable
terms:
Oscar by the Sea in Tseung Kwan O offers homebuyers a wide range of unit sizes.
Attributable gross floor area in million square feet
Residential Shopping Centre Office Total
For sale 4.5 – * 4.5
For investment – * 0.1 0.1
Total 4.5 * 0.1 4.6
* less than 0.1 million square feet
CHAIRMAN’S STATEMENT
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SUN HUNG KAI PROPERTIES LIMITED ANNUAL REPORT 2000/01
Property Investment
The Group’s property investment portfolio generally performed well during the year, although leasing demand for
commercial properties has softened since early 2001. Overall occupancy of investment properties owned by the
Group remained high at 95 per cent. Gross rental income during the year under review, including the Group’s share
of jointly controlled entities, increased by 3.7 per cent over the previous year to HK$5,877 million.
To bolster recurrent income, the Group is actively developing a number of new, superior-quality investment property
projects. At the same time, it will also review its rental portfolio constantly, with the intention of disposing of some
non-core properties to maintain an optimal investment portfolio.
Following the success of One International Finance Centre (IFC), which is fully let, construction of Two IFC is under
way. It consists of a 1.95 million square-foot, state-of-the-art office building, 500,000 square feet of prime shopping
space, a 1.1 million square-foot six-star hotel complex and 140,000 square feet of landscaped garden. IFC is strategically
located on the Central waterfront, right above the Airport Railway Hong Kong Station, with spectacular views of
Victoria Harbour. The hotel complex will include one 400-room tower and another 600-room tower for long-
staying guests, and it will be managed by Four Seasons Hotels and Resorts, a leading international luxury hotel
operator. This will be the first Four Seasons-branded property in Hong Kong. With its ultra-modern office towers
designed with interactive technology, IFC
will serve as a truly international business
and financial hub. The office tower in Two
IFC will be completed by the end of 2003,
and the shopping centre is expected to
open in the first half of 2003. The entire
IFC complex will be completed in phases
by 2004. The Group has a 47.5 per cent
interest in the project.
Kowloon Station Development Packages
5, 6 and 7 are situated right above Kowloon
Station on the Airport Express Railway, at
the heart of the future commercial and
cultural hub of Hong Kong. With 4.7 million
square feet attributable to the Group, the
entire project comprises office, hotel,
residential and serviced apartments, as well
as retail space. Foundation work has already
begun, and the whole project is scheduled
for completion in phases between 2005
Top: Walter Kwok, theGroup’s Chairman (fifth left)and Raymond Kwok, ViceChairman (third left) at theIFC–Four Seasons Hotelsuperstructurecommencement ceremony.
Left: Airport RailwayKowloon StationDevelopment Packages 5, 6and 7 will have top-qualityoffices, residential andserviced apartments, hoteland shopping centre.
CHAIRMAN’S STATEMENT
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SUN HUNG KAI PROPERTIES LIMITED ANNUAL REPORT 2000/01
and 2007. Airport Railway Kowloon Station Development Packages 3, 5 and 6 will provide a total of two million
square feet of residential property available for pre-sale in about two years’ time.
Given its prime location in the centre of Kowloon East, Millennium City has become one of the major commercial
developments in Hong Kong. With the success of Phases 1 and 2, which are both fully let, Phase 3 is under
construction, with occupation scheduled for the second half of 2002.
With Hong Kong serving as an international hub for business, finance, trade and tourism, and China’s entry to the
WTO, the demand for top-quality office space is expected to remain solid. At the same time, the Group is taking
various steps to enhance rental values in its shopping centres. In addition to regular renovations and refurbishment,
promotional programmes are also staged in the shopping centres, particularly during weekends and public holidays,
to boost pedestrian flows and consumer spending.
Information Technology and Telecommunications
SUNeVision
SUNeVision’s business has been progressing well since the listing in March 2000. The company generated total
revenue of approximately HK$198 million during the financial year ended 30th June 2001, and achieved a positive
gross margin in the second quarter of 2001. This performance primarily reflects a growth in revenue from the
Internet infrastructure business and the company’s success in carefully controlling costs in a tough operating
environment. Leasing of iAdvantage’s data centres in Hong Kong has been satisfactory, and other business units have
made steady progress during the year.
The company is reviewing its business strategy and will focus on operations with growth potential. At the same
time, it will prudently manage its balance sheet and tightly control operating costs and capital expenditure. SUNeVision
has cash and marketable bonds totalling HK$1,870 million. With the full support of its parent company and
commitment of its experienced management, SUNeVision will become more competitive by operating more efficiently
and cost-effectively, and it is well positioned to pursue new investment opportunities when appropriate.
SmarTone
The telecommunications market remained highly competitive, and SmarTone reported a loss for the year, mainly
due to the start-up investment required for its broadband business and other provisions. SmarTone expanded its
customer base to 980,000 during the year, laying the foundation for future growth. Mr. Douglas Li rejoined the
company as CEO in July 2001, and he will lead SmarTone forward in its commitment to offering superior service to
its customers. Through effective execution, the company will deliver a total service offering, achieving operational
efficiencies and controlling costs. SmarTone Macau was launched in August 2001, offering a high-quality network and
superior customer service.
CHAIRMAN’S STATEMENT
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SUN HUNG KAI PROPERTIES LIMITED ANNUAL REPORT 2000/01
SmarTone was provisionally awarded a 3G licence in Hong Kong in September 2001 at the reserve price of five per
cent royalty rate. This will allow the company to provide its customers with wireless broadband and personalized
services, with multi-media contents. SmarTone conducted the first successful 3G trial in the greater China region in
1999, giving it a head start in the industry.
With its leading market position, solid customer base and strong cash reserves of HK$3,478 million, the company
will be able to leverage its strengths in any opportunities for consolidation that may arise. The Group is confident in
SmarTone’s future growth and prospects, and is committed to holding the company as a long-term strategic investment.
Transportation and Infrastructure
Kowloon Motor Bus
Kowloon Motor Bus (KMB) had a good year in 2000, with net profit increasing 15.7 per cent. Operating efficiency
continued to show improvement, and there were increases in new bus routes and passenger volume. The company
aims to maintain its market-leading position by providing a high standard of user-friendly bus services, ensuring total
customer satisfaction. The relocation of KMB’s Lai Chi Kok bus depot to the West Kowloon reclamation will further
enhance the efficiency and reliability of the fleet. The new depot will be purpose-built to provide advanced support
service for KMB’s modern fleet, and it is scheduled for completion by the end of 2001. KMB will continue to look for
ways to diversify business in the bus transportation industry in Hong Kong and on the Mainland.
RoadShow Holdings Limited, a 73.3 per cent owned subsidiary of KMB, is a leading out-of-home media sales
company in Hong Kong. The company provides multi-media on-board services to a captive transit vehicle audience
base. It also engages in transit network media sales and merchandizing. RoadShow was listed on the main board of
the Hong Kong Stock Exchange on 28th June 2001, raising net proceeds of HK$534 million.
Other Infrastructure Business
Route 3 (Countr y Park Section)
performed well this year. The toll for
the Tai Lam Tunnel was increased in
Apr i l 2001, and traf fic volume
remained satisfactory despite slower
economic growth. It is expected that
the development of new towns in the
nor thwest New Terr itor ies and
increasing trade between the Mainland
and Hong Kong will result in growing
traffic on the toll road.RoadShow was listed on the main board of the Hong Kong Stock Exchangeon 28th June 2001, raising net proceeds of HK$534 million.
CHAIRMAN’S STATEMENT
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SUN HUNG KAI PROPERTIES LIMITED ANNUAL REPORT 2000/01
The volume of cargo handled at the River Trade Terminal has been expanding since it commenced operation, and
the Airport Freight Forwarding Centre continued to operate smoothly.
Through its 28.5 per cent interest in Asia Container Terminals Limited, the Group is participating in the development
of two berths in Container Terminal 9. The project financing is already in place. Completion is scheduled in phases
during 2003 and 2004.
All of the Group’s infrastructure projects are in Hong Kong, and will provide quality cash flows and recurrent income
over the long term.
Hotel Business
With increased incoming tourists, overall occupancy in Hong Kong’s hotel sector remained at relatively high levels
during the year. Performance of the Group’s three hotels was encouraging. The average occupancy rate for the
hotels not only registered a high of 85 per cent, room rates also increased during the year.
The Group is now developing six-star hotel facilities at both Hong Kong and Kowloon stations on the Airport
Express Railway. With Hong Kong being a regional hub for tourists, the Government’s initiatives to boost tourism,
an anticipated increase in business travellers amid China’s entry to the WTO and Beijing’s successful bid to host the
Olympic Games in 2008, the Group’s hotel portfolio is well positioned to take full advantage of forthcoming
business opportunities.
Mainland China Business
With robust economic growth on the Mainland, performance of the
Group’s property investment portfolio in Beijing and Shanghai was
satisfactory during the year. Sun Dong An Plaza in Beijing recorded
95 per cent overall occupancy, and Central Plaza in Shanghai was 93
per cent let.
China will continue to offer enormous business and investment
opportunities to local and overseas investors, particularly after its entry
to the WTO. With the success of ongoing housing reform in China, the
Group will take advantage of the opportunities presented by investing
selectively in the China property market in Beijing, Shanghai, Guangzhou
and Shenzhen.
Performance of the Group’s property investmentsin Mainland China was satisfactory during the year.Sun Dong An Plaza in Beijing was 95 per cent let.
CHAIRMAN’S STATEMENT
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SUN HUNG KAI PROPERTIES LIMITED ANNUAL REPORT 2000/01
Corporate Finance
The Group’s financial position remains strong, with low gearing and high interest coverage. Its net debt to shareholders’
funds ratio as at 30th June 2001 was 15.8 per cent, and it has abundant undrawn banking facilities on a committed
basis to finance future business expansion. All the Group’s credit facilities are unsecured. Exposure to foreign
currency risk is negligible, given that the vast majority of its borrowings are denominated in Hong Kong dollars.
In line with the Group’s policy of lengthening its loan maturity profile, it successfully arranged two seven-year
syndicated loans with a number of leading local and international banks in 2001. The market response was
overwhelming, and an aggregate HK$15,300 million revolving credit and term loan facility was established to refinance
short-term debt and for use as general working capital. The Group also broadened its funding base through issues
of fixed and floating rate notes under its EMTN programme amounting to HK$2,150 million since July 2000, with
tenors ranging from three to eight years.
During the year, the Group’s credit rating outlook from Moody’s was upgraded from stable to positive, in line with
that of the Hong Kong Government’s sovereign ceiling. The Group will adhere to its conservative financial management
policies by maintaining low gearing and high liquidity.
Customer Service
Customer care is a top priority for the Group, and it is constantly looking for new ways to improve the quality of its
products and services. The Group’s Service Excellence Programme provides extensive and ongoing training to
front-line staff in order to raise the quality of customer service.
The Group’s property management subsidiaries Hong Yip and Kai Shing consistently receive accolades for their
management service, and the companies won over 30 awards from a variety of organizations during the year. Both
companies continue to extend the use of information technology in property management and building services,
monitoring facilities via the Internet. They are also environmentally conscious, encouraging recycling and conservation
to reduce the amount of waste produced by the properties they manage.
Membership in the SHKP Club continues to
grow, and it now exceeds 140,000. The Club
offers members complete service and a wide
range of leisure and property-related activities.
Building on the success of initiatives such as
the Show Flat Preview Loyalty Scheme, the
Club introduced various new benefits and
services for members during the year, including
a Buyer Reward Programme. The Club will
continue to attract new members and promote
two-way communication with the public
through various means.The Group strives to increase staff consciousness of the importance ofquality, to reinforce its status as a premium-quality developer.
CHAIRMAN’S STATEMENT
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SUN HUNG KAI PROPERTIES LIMITED ANNUAL REPORT 2000/01
PROSPECTS
China continues to show impressive growth, with ongoing economic reforms. Its anticipated accession to the WTO
will add further momentum to its economic progress. Beijing’s successful bid to host the Olympic Games will not
only translate into greater economic expansion during the run-up to 2008, it will also strengthen both domestic and
international confidence in China. All these favourable developments on the Mainland should benefit Hong Kong’s
economy and property market over time, as the territory serves as a gateway to China.
The September attack in the United States has undoubtedly shocked global financial markets and the world economy,
but the negative impact is likely to be short term. Given persistently low interest rates and continued growth on the
Mainland, Hong Kong is well equipped to deal with the current challenges.
Despite challenging economic conditions, home buyers’ confidence should improve following the suspension of
HOS sales until June of next year and the current review of the institutional framework for public housing. These
factors, along with the desire to own property, very favourable affordability for home buyers and relaxed mortgage
financing, are expected to bolster the demand for residential property. New supply in the pre-sale market is likely to
remain steady next year, and there is a high likelihood that it will fall in the medium term. In light of all these, the
residential market should become active once the shock of recent events in America subsides.
The Group has witnessed various major economic ups and downs over the past few decades, and each of these
downturns invariably brought the Group considerable investment opportunities. With its experienced management
team and strong financial position, the Group believes that the current residential market will provide opportunities
for business expansion and long-term growth. We are confident that the Group will be an even stronger property
company with the advent of a recovery in the market.
The Group will continue efforts to strengthen its
property business in Hong Kong. It will build more
residential developments for sale in the next few
years to meet expected demand. It will also develop
a number of landmark investment properties to
increase recurrent income. Concurrently, the Group
will dispose of some non-core investment properties
in order to maintain an optimal mix in its rental
portfolio and improve the return on assets.
With a focus on maintaining its leading position in
the present challenging business environment, the
Group will continue to develop premium products
The Group will build more premium-quality residentialdevelopments, including Park Central in Tseung Kwan O,for sale in the next few years to meet the expected demand.
CHAIRMAN’S STATEMENT
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SUN HUNG KAI PROPERTIES LIMITED ANNUAL REPORT 2000/01
and provide quality service, making its properties customers’ first choice. To further enhance competitiveness, the
Group will take steps to strengthen its brand name and control costs, but without compromising on quality. The aim
is to increase returns and enhance shareholder value.
Given the promising outlook for China’s economy, the Group is actively seeking business opportunities in the
Mainland property market to take advantage of growing prospects in that sector over the long term. The Group will
bring its strong brand name and successful Hong Kong experience to Mainland China, and it is confident that it will
further develop the market there.
Proceeds from upcoming pre-sales and substantial recurrent rental income will further enhance the Group’s cash
flow. The Group will continue to launch new projects for pre-sale according to schedule, and major projects to be
marketed in the next nine months include Park Central in Tseung Kwan O, Villa by the Park in Yuen Long, 71 Mount
Kellett Road on the Peak and Park Island on Ma Wan.
Approximately 75 per cent of the residential properties to be completed in the coming financial year have been pre-
sold, and barring unforeseen circumstances, the Group’s results for the coming year will show satisfactory growth.
APPRECIATION
Sir Sze-yuen Chung was appointed as an Independent Non-Executive Director of the Company in March this year.
His broad experience and knowledge of business and public affairs will benefit the Group’s future business development.
Independent Non-Executive Director Dr. Ho Tim retired from the board in March this year after more than 28
years of service. Throughout this time, he has made a considerable contribution to the Group’s growth, and on
behalf of the board, I would like to thank Dr. Ho for his valuable efforts and dedication.
Executive Director Mr. Law King-wan will soon retire after over 30 years of service, staying on as a Non-Executive
Director. I wish to thank Mr. Law for his substantial contribution to the Group’s development, and for his commitment
and loyalty.
I would also like to take this opportunity to express my gratitude to my fellow directors for their guidance, and to
all the staff for their dedication and hard work.
Kwok Ping-sheung, Walter
Chairman & Chief Executive
Hong Kong, 27th September 2001
REVIEW
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LAND BANK
PROPERTY DEVELOPMENT
PROPERTY INVESTMENT
PROPERTY RELATED BUSINESSES
INFORMATION TECHNOLOGY ANDTELECOMMUNICATIONS
OF OPERATIONS
Club house at Oscar by the Sea, Tseung Kwan O
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CUSTOMER SERVICE
ENVIRONMENTAL PROTECTIONAND PROMOTION
STAFF RELATIONS AND TRAINING
THE GROUP AND THE COMMUNITY
TRANSPORTATION,INFRASTRUCTURE AND LOGISTICS
OTHER INVESTMENT HOLDINGS
MAINLAND CHINA BUSINESS
CORPORATE FINANCE
INVESTOR RELATIONS
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51
52
56
57
The Group has a land bank of 54.1 million square feet, in terms of attributable
gross floor area, following the addition of three prime sites during the year
under review. Details of the new sites are given in the Chairman’s Statement
on page 5.
The Group’s land bank is well diversified both in terms of usage and location.
About 49 per cent of the projects are on Hong Kong Island and in Kowloon,
while the remaining 51 per cent are spread throughout various new towns
in the New Territories. In addition, the Group has 22 million square feet of
agricultural land, in terms of site area, primarily located along existing or
planned railway lines in the New Territories. The majority of this is in the
process of land use conversion, principally for residential development.
REVIEW OF OPERATIONS LAND BANK
10
20
30
40
50
60
50.6 50.6 52.1
1997 1998 1999 2000 2001
Land Bank in Hong KongAttributable gross floor area
54.150.9
million square feet
30%Office
40%Shopping Centre
5%Residential
20%Industrial/
Office
5%Hotel4%
Hotel
68%Residential
8%Industrial/Office
15%Office
5%ShoppingCentre
BY LOCATION
BY USAGE BY USAGE
47%New
Territories27%Kowloon
26%Hong KongIsland
35%Kowloon
53%NewTerritories
36%Completed InvestmentProperties19.3 million sq.ft.
64%Properties Under
Development34.8 million sq.ft.
Composition of Land Bank in Hong KongAttributable gross floor area: 54.1 million square feet
12%Hong Kong
Island
BY LOCATION
54.1 millionsquare feet
16
SUN HUNG KAI PROPERTIES LIMITED ANNUAL REPORT 2000/01
The Group has 34.8 million square feet of properties
under development. Of this, 26.6 million square feet
will be for sale, while the remaining 8.2 million square
feet will be added to the Group’s completed investment
property portfolio, which now stands at 19.3 million
square feet.
About 68 per cent of the properties under development
is residential, mostly large-scale estates with small to
medium sized units for sale. The Group will continue
to develop commercial and residential properties of
premium quality, employing the most up-to-date
technology in facilities and management. The Group’s
recognized brand name and commitment to excellence
add to the value of its developments in the current
competitive market.
REVIEW OF OPERATIONS Land Bank
Status and UsageAttributable gross floor area in million square feet
Shopping Industrial/Residential Centre Office Hotel Office* Total
Development for sale 23.7 – 0.2 – 2.7 26.6
Development for investment – 1.7 4.9 1.6 – 8.2
Completed investment properties 1.0 7.7 5.8 0.9 3.9 19.3
Total 24.7 9.4 10.9 2.5 6.6 54.1
* Industrial/office properties include data centres, godowns and industrial properties.
Status and LocationAttributable gross floor area in million square feet
Hong Kong NewIsland Kowloon Territories Total
Development for sale 2.7 6.3 17.6 26.6
Development for investment 1.5 6.0 0.7 8.2
Completed investment properties 5.0 5.2 9.1 19.3
Total 9.2 17.5 27.4 54.1
17
The current land bank is sufficient for development
needs over the next five years. In line with its strategy
to increase the production volume of residential projects
for sale over time, the Group will take advantage of the
current downturn to replenish its land bank as
appropriate. The Group’s land bank in Mainland China
is described on page 54.
The Group’s land bank in Hong Kong, in attributable
gross floor area, is analyzed by status, usage and location
as follows:
SUN HUNG KAI PROPERTIES LIMITED ANNUAL REPORT 2000/01
The Group’s aim has always been to build ideal
homes for its customers, and it is raising standards
even higher in order to enhance its brand name for
quality and strengthen its market-leading position.
Royal Peninsula, Kowloon
PROPERTY DEVELOPMENT
REVIEW OF OPERATIONS
PROPERTY SALES
Properties sold by the Group during the year ended
30th June 2001, as principal and agent, amounted to
HK$19,641 million, an increase of 102 per cent from
the previous year. This figure includes the Group’s
49 per cent interest in Ocean Shores Phase 2 in Tseung
Kwan O, 50 per cent interest in Royal Peninsula in
Kowloon and 29 per cent interest in The Belcher’s in
western Mid-Levels.
PROJECTS COMPLETED IN FY2000/01
In the year ended 30th June 2001, the Group completed
11 projects with an aggregate attributable gross floor
area of 4.1 million square feet. Projects completed
during the year are listed in the Chairman’s Statement
on page 5.
PROPERTY DEVELOPMENT
Projects to be Completed in FY2001/02
Location
Tseung Kwan O Town Lot 51
Inland Lot 8882, Happy Valley
Yuen Long Town Lot 506
Tseung Kwan O Town Lot 55
Sha Tin Town Lot 394
89 Pok Fu Lam Road, western Mid-Levels
Shaukeiwan Inland Lot 843, Aldrich Bay
71 Mount Kellett Road, the Peak
1-7 Lion Rock Road, Kowloon
Airport Railway Tung Chung StationDevelopment, Tung Chung Town Lot 3 Phase 1
54-58 Kwai Cheong Road, Kwai Chung
7-9 Minden Avenue, Kowloon
Total for FY2001/02
Both The Belcher’s in western Mid-Levels(top) and Ocean Shores in Tseung KwanO, received high acclaim from owners fortheir superb quality.
20
SUN HUNG KAI PROPERTIES LIMITED ANNUAL REPORT 2000/01
REVIEW OF OPERATIONS Property Development21
SUN HUNG KAI PROPERTIES LIMITED ANNUAL REPORT 2000/01
REVIEW OF OPERATIONS Property Development
Over 85 per cent of the residential proper ties
completed during the year have been sold, while the
shopping centres at Chelsea Heights in Tuen Mun, The
Belcher’s in western Mid-Levels, Ocean Shores in Tseung
Kwan O and Shouson Place in Island South have been
kept for long-term rental. The MEGA-iAdvantage data
centre in Chai Wan is also being retained as an
investment.
Attributable gross floor area in square feet
ShoppingProject Name Group’s Interest (%) Residential Centre Office Total
Oscar by the Sea Phase 2 Joint venture 1,004,000 – – 1,004,000
The Leighton Hill 100 898,000 – – 898,000
The Parcville 66.67 664,000 – – 664,000
Ocean Shores Phase 2 49 574,000 – – 574,000
Prima Villa 100 511,000 – – 511,000
The Belcher’s Phase 2 29 386,000 – – 386,000
Les Saisons 30 222,000 – – 222,000
– 100 14,000 – – 14,000
– 100 22,700 2,900 – 25,600
– 20 177,000 5,500 – 182,500
– 100 – – 80,000 80,000
– 100 – – 29,000 29,000
4,472,700 8,400 109,000 4,590,100
PROJECTS TO BE COMPLETED INFY2001/02
The Group expects to complete 12 projects in the
coming financial year, with an aggregate attributable
gross floor area of 4.6 million square feet.
Projects Completed in FY2000/01Attributable gross floor area in million square feet
Shopping DataResidential Centre Centre Total
For sale 3.6 – – 3.6
For investment – 0.2 0.3 0.5
Total 3.6 0.2 0.3 4.1
Projects to be Completed in FY2001/02Attributable gross floor area in million square feet
ShoppingResidential Centre Office Total
For sale 4.5 – * 4.5
For investment – * 0.1 0.1
Total 4.5 * 0.1 4.6
* Less than 0.1 million square feet
REVIEW OF OPERATIONS Property Development22
SUN HUNG KAI PROPERTIES LIMITED ANNUAL REPORT 2000/01
Projects to be Completed in FY2002/03
Location
Ma Wan Development
Tseung Kwan O Town Lots 57 & 66
Tseung Kwan O Town Lot 55
Tuen Mun Town Lot 374
Shui Pin Wai, Yuen Long
1 Ho Man Tin Hill Road, Kowloon
1 & 3 Po Shan Road, Mid-Levels
Airport Railway Tung Chung Station Development,Tung Chung Town Lot 3 Phase 2
Airport Railway Hong Kong Station Development Phase 2
370 Kwun Tong Road
Total for FY2002/03
Major Projects to be Completed from FY2003/04 to FY2005/06
Location
Ma Wan Development – Park Island (remaining phases)
Yuen Long Town Lot 503
Tsuen Wan Town Lots 77 & 89
Airport Railway Olympic Station Development Package 3
Airport Railway Kowloon Station Development Package 3
To Fung Shan Phases 2, 3 & 4, Shatin
Kwu Tung Phases 2 & 3, Sheung Shui
Tuen Mun Town Lot 399
Ngau Tam Mei, Yuen Long
Yunnan Lane, Yau Ma Tei
Ap Lei Chau Inland Lot 129
Yuen Long Town Lot 504
New Kowloon Inland Lot 6275, Cheung Sha Wan
Ap Lei Chau Inland Lot 128
New Kowloon Marine Lot 3, Lai Chi Kok
New Kowloon Inland Lot 6328, Cheung Sha Wan
Kowloon Inland Lot 11145, Farm Road
Airport Railway Kowloon Station Development Packages 5, 6 & 7
Airport Railway Hong Kong Station Development Phase 2 –Two International Finance Centre (remaining portion)
418 Kwun Tong Road – Millennium City Phase 5
392 Kwun Tong Road – Millennium City Phase 6
Total
Top: 90 per cent of units in Villa by the Park in Yuen Longenjoy green views.
Bottom: The shopping mall at Two International FinanceCentre in Central is scheduled to open in the first halfof 2003.
REVIEW OF OPERATIONS Property Development23
SUN HUNG KAI PROPERTIES LIMITED ANNUAL REPORT 2000/01
Attributable gross floor area in square feet
ShoppingProject Name Group’s Interest (%) Residential Centre Office Total
Park Island Phase 1 Joint venture 1,698,000 86,100 – 1,784,100
Park Central 57.52/25 1,397,500 195,500 – 1,593,000
Ocean Shores Phase 3 49 716,000 10,500 – 726,500
– 25 306,500 5,500 – 312,000
Villa by the Park 100 439,500 – – 439,500
– Joint venture 158,000 – – 158,000
– 60 72,000 – – 72,000
– 20 60,500 – – 60,500
Two International FinanceCentre (initial portion) 47.5 – 242,000 309,000 551,000
Millennium City Phase 3 70 – – 108,000 108,000
4,848,000 539,600 417,000 5,804,600
Attributable gross floor area in square feet
ShoppingGroup’s Interest (%) Residential Centre Office Hotel Total
Joint venture 1,966,000 – – – 1,966,000
100 1,180,000 – – – 1,180,000
100 1,113,000 – – – 1,113,000
Joint venture 1,110,000 – – – 1,110,000
Joint venture 1,076,000 – – – 1,076,000
100 744,000 – – – 744,000
100 603,500 – – – 603,500
100 375,000 – – – 375,000
100 383,000 – – – 383,000
Joint venture 312,000 – – – 312,000
35 316,000 – – – 316,000
100 1,454,000 249,000 – – 1,703,000
50 648,000 65,000 – – 713,000
100 454,000 16,000 – – 470,000
34 358,000 18,000 – – 376,000
35.44 541,000 21,000 – – 562,000
100 223,000 45,000 – – 268,000
Joint venture 1,009,000 171,000 2,495,000 1,023,000 4,698,000
47.5 – – 618,000 523,000 1,141,000
100 – 573,000 710,000 – 1,283,000
100 – – 360,000 – 360,000
13,865,500 1,158,000 4,183,000 1,546,000 20,752,500
REVIEW OF OPERATIONS Property Development24
SUN HUNG KAI PROPERTIES LIMITED ANNUAL REPORT 2000/01
14
15
13
LANTAU ISLAND
• • • • • 1 Oscar by the Sea Phase 2 •2 Ocean Shores Phases 2 & 3 • •3 Park Central • •4 Prima Villa •5 To Fung Shan Phases 2, 3 & 4 •6 Kwu Tung •7 Shek Wu Wai •8 Ngau Tam Mei •9 The Parcville •10 Yuen Long Town Lot 503 •11 Yuen Long Town Lot 504 • •12 Villa by the Park •13 Tuen Mun Town Lot 399 •14 Tuen Mun Town Lot 374 • •15 Airport Railway Tung Chung
Station Development • • •16 Park Island • •17 Tsuen Wan Town Lots 77 & 89 •18 New Kowloon Marine Lot 3 • •19 New Kowloon Inland Lot 6328 • •20 New Kowloon Inland Lot 6275 • •21 Airport Railway Olympic Station
Development Package 3 •22 1 Ho Man Tin Hill Road •23 Kowloon Inland Lot 11145,
Farm Road • •24 Yunnan Lane, Yau Ma Tei •25 Airport Railway Kowloon Station
Development Package 3 •26 Airport Railway Kowloon Station
Development Packages 5, 6 & 7 • • • •27 The Belcher’s Phase 2 •28 The Leighton Hill •29 Les Saisons •30 Ap Lei Chau Inland Lot 128 • •31 Ap Lei Chau Inland Lot 129 •32 Two International Finance Centre • • •33 Millennium City Phase 5 • •34 Millennium City Phases 3 & 6 •35 20-22 Siu Lek Yuen Road •36 12-23 Wang Wo Tsai Street •37 51-53 Kwai Cheong Road •38 77 Wing Hong Street •39 50 Wong Chuk Hang Road •
Resid
entia
lSh
oppin
g Cen
treO
ffice
Indus
trial/
Offic
eHot
el
Major Properties Under Development
Existing
Railways
Major Highways
Planned (completion by 2008)
Railways
Major Highways
Under Construction
Railways
Major Highways
Railway Interchange
West Rail (completion in 2003)
Ma On Shan Rail (completion in 2004)
Tseung Kwan O Extension (completion in 2002)
2
18
23
1920
33
30
11
16
3
32
26 1
34
45
6
7
8
9
10
17
2122
35
36
37
38
39
24
25
27
28
31
29
12
HONG KONGISLAND
NEW TERRITORIES
SHENZHEN
KOWLOON
SUN HUNG KAI PROPERTIES LIMITED ANNUAL REPORT 2000/01
REVIEW OF OPERATIONS Property Development26
SUN HUNG KAI PROPERTIES LIMITED ANNUAL REPORT 2000/01
MAJOR PROJECTS UNDERDEVELOPMENT
Ocean Shores
Tseung Kwan O Town Lot 55 (49% owned)
This development, covering an area of 540,000 square
feet, has over 5,000 units with a total gross floor area of
four million square feet. The 1,920 units in the first
phase were completed during the year. The second
phase has 1,536 units, which were launched for sale in
March this year to a satisfactory response. Another
2,200 units will be built in Phase 3, which is now under
construction for completion in financial year 2003.
Oscar by the Sea
Tseung Kwan O Town Lot 51 (Joint venture)
The property has a site area of 182,500 square feet,
with 424 first phase units completed during the year.
The second phase will provide over 1,500 small to
medium sized units, with total gross floor area exceeding
one million square feet. It is scheduled for completion
in the first half of 2002 and about 80 per cent of the
units have already been sold.
The Leighton Hill
Inland Lot 8882, Happy Valley (100% owned)
The Leighton Hill is one of the largest luxur y
developments on Hong Kong Island in the past decade.
Just a few minutes’ walk from the Causeway Bay MTR
station, it offers convenient access to all districts.
Featuring the finest materials and excellent architecture,
The Leighton Hill sets the standard for luxury in the
new millennium. Over 540 units with a gross floor area
of 898,000 square feet are being built on this 464,000
square-foot site. The project was put up for sale in
November 2000 to an overwhelming response, and all
units were sold within a few weeks. Construction will
finish by mid 2002.
Above: Ocean Shores is one of the largestresidential estates in Tseung Kwan O andfeatures comprehensive facilities.
Left: With the finest materials and architecture,The Leighton Hill in Happy Valley epitomizesluxury property in the millennium.
REVIEW OF OPERATIONS Property Development27
SUN HUNG KAI PROPERTIES LIMITED ANNUAL REPORT 2000/01
Park Island
Ma Wan Development (Joint venture)
Park Island has a total gross floor area of over 3.7 million
square feet, offering over 5,000 units in a wide range of
sizes and types on a 1.4 million square-foot site. With a
large theme park next door, the residential development
on Ma Wan is designed as a modern and pollution-free
living environment. The first phase of the project, with
a gross floor area of about 1.7 million square feet, will
be finished in the third quarter of 2002, and the whole
project will be completed by phases in three to four
years’ time.
Park Central
Tseung Kwan O Town Lots 57 & 66
(57.52% & 25% owned)
These two sites, with a combined area of 360,000 square
feet, will be jointly developed as a large-scale project
containing a total gross floor area of 2.9 million square
feet, including over 4,000 small to medium sized units
and a 360,000 square-foot shopping mall. The project
is conveniently located next to Tseung Kwan O Station
on the new MTR extension scheduled for completion
by late 2002. The first batch of units will be marketed
soon, and the whole development will be completed in
2003.
Top: Residents of Park Island on Ma Wan will live in amodern, pollution-free environment.
Bottom: Park Central is adjacent to Tseung Kwan OStation on the new MTR extension for residents’ totalconvenience.
REVIEW OF OPERATIONS Property Development28
SUN HUNG KAI PROPERTIES LIMITED ANNUAL REPORT 2000/01
Two International Finance Centre
Airport Railway Hong Kong Station Development Phase 2
(47.5% owned)
Occupying a 430,000 square-foot site, International
Finance Centre is the largest commercial development
in the Central core. Phase 2 consists of almost two
million square feet of offices, 500,000 square feet of
shopping mall and 1.1 million square feet of hotel space.
The intelligent office tower will be completed by the
end of 2003. This state-of-the-art office building features
an interactive technological design and facilities to meet
the needs of modern businesses. The development’s
shopping mall is scheduled to open in the first half of
2003. The hotel complex, to be managed by the
renowned Four Seasons Hotels and Resorts, will be
completed in 2004.
Airport Railway Kowloon Station
Development Package 3
(Joint venture)
Situated above Kowloon Station on the Airport Railway,
in an area now being transformed into a major
commercial, cultural and transportation hub, the project
International Finance Centre is thelargest commercial development inthe Central core.
has a site area of 172,000 square feet. It will be
developed into over one million square feet of luxury
residential property with about 1,000 units in a wide
range of sizes. Completion is scheduled for 2004.
Airport Railway Kowloon Station
Development Packages 5, 6 and 7
(Joint venture)
The Group won the tender for this landmark project in
September 2000. With a site area of approximately
790,000 square feet, the development consists of 2.5
million square feet of top-quality offices, one million
square feet of residential and serviced apartments,
another million square feet of hotel space and 900,000
square feet of shopping centre. Of the total 5.4 million
square feet, 4.7 million square feet is attributable to the
Group. Situated above Kowloon Station on the Airport
Railway and at the heart of a key future commercial
and cultural district of Hong Kong, the project will feature
the most modern design and intelligent facilities.
Foundation work for the project has begun, and
construction will be finished in phases between 2005
and 2007.
REVIEW OF OPERATIONS Property Development29
SUN HUNG KAI PROPERTIES LIMITED ANNUAL REPORT 2000/01
Millennium City Phase 5
418 Kwun Tong Road (100% owned)
This property is the single largest phase of Millennium
City in Kowloon East, which has become one of the
major commercial hubs in Hong Kong. Combined with
the adjoining site at 418A Kwun Tong Road, Phase 5
now covers 107,000 square feet. The development
has a gross floor area of about 1.3 million square feet
including a regional shopping mall of 600,000 square
feet. Foundation work is now under way and
construction will be completed by 2004.
Yuen Long Town Lot 503
(100% owned)
This development has a total gross floor area of 1.2
million square feet on a 236,000 square-foot site. It is
conveniently located in Yuen Long town centre, just a
few minutes’ walk from a future West Rail station
scheduled to open in late 2003. The Group plans to
build about 2,000 small to medium sized units with
completion scheduled for 2004.
Tsuen Wan Town Lots 77 & 89
(100% owned)
The Group plans to develop about 1,700 serviced
apartments with a total gross floor area of 1.1 million
square feet on this 112,000 square-foot site. Details of
the project are being finalized.
Airport Railway Olympic Station
Development Package 3
(Joint venture)
Over one million square feet of residential property
will be developed on this 185,000 square-foot site next
to Olympic Station. The Group plans to build about
1,500 small to medium sized units.
Airport Railway Olympic Station Development Package 3will provide about 1,500 small to medium sized units.
The Group will continue to develop
premium commercial properties incorporating
the latest technology and sophisticated facilities to
meet the needs of tenants.
Multi-media showcase for International Finance Centre, Central
PROPERTY INVESTMENT
The Group witnessed an active start to leasing in the second half of 2000,
but the overall leasing market slowed since the beginning of 2001. This is
attributed primarily to the softening of the US economy, which resulted in
lower economic growth in Hong Kong and hence a slow leasing market.
Despite this, the Group’s rental portfolio maintained a satisfactory level of
performance. Average occupancy of the Group’s investment properties in
Hong Kong remained high at 95 per cent.
Excluding contributions from jointly controlled entities, gross rental income
for the year under review rose marginally by 1.9 per cent to HK$5,392
million, while net rental income remained steady at HK$4,073 million. If the
Group’s share of rental income from jointly controlled entities was included,
total gross rental income would have increased by 3.7 per cent to
HK$5,877 million for the year. Net rental income rose a modest 1.7 per
cent to HK$4,401 million.
PROPERTY INVESTMENTREVIEW OF OPERATIONS32
1997 1998 1999 2000 2001
Gross Rental Income*
* Including contributions from jointly controlled entities
1,000
2,000
3,000
4,000
5,000
6,000 5,857 5,801 5,6705,877
5,130
HK$ million
Gross Rental Income by Sector*
53%Shopping Centre
9%Car Park
8%Residential
5%Industrial/Office
25%Office
SUN HUNG KAI PROPERTIES LIMITED ANNUAL REPORT 2000/01
REVIEW OF OPERATIONS Property Investment33
SUN HUNG KAI PROPERTIES LIMITED ANNUAL REPORT 2000/01
Given a slowing Hong Kong economy amid the
American economic downturn and recent terrorist
attack in the US, the retail rental market is likely to remain
challenging in the coming year. The demand for office
leasing is also expected to remain soft in the short term.
Over the medium to longer term, the demand for top
quality office space is expected to increase as a result
of China’s imminent entry to the WTO and Hong Kong
being an international finance and business centre.
The Group adds value to its investment portfolio by
incorporating the latest technology and modern facilities
in its properties and regular renovations. In addition,
the Group constantly reviews its mix of investment
properties with a view to divesting some non-core
proper ties while developing quality new rental
properties in order to provide a solid base for long-
term growth. The Group expects rental income to
remain at a satisfactory level in the coming year.
The Group’s current investment portfolio in Hong Kong,
including its attributable share of jointly controlled
entities, is as follows:
Status and UsageAttributable gross floor area in million square feet
Shopping Industrial/Residential Centre Office Hotel Office Total
Completed 1.0 7.7 5.8 0.9 3.9 19.3
Under Development – 1.7 4.9 1.6 – 8.2
Total 1.0 9.4 10.7 2.5 3.9 27.5
COMPLETED INVESTMENTPROPERTIES
Shopping Centres
The Group’s shopping centre network extends over
the whole territory, and remains the largest in Hong
Kong with an attributable gross floor area of 7.7 million
square feet. The majority of these malls are located in
new towns, occupied by a carefully-planned mix of
retailers, providing daily necessities to the nearby
residents and are thus more resilient to the economic
slowdown. With their prime and convenient locations,
occupancy rates are consistently high and rents largely
remain steady in the face of economic fluctuations.
Occupancy of the Group’s major retail rental properties
remained high at 96 per cent. The Group’s flagship
mall, New Town Plaza in Shatin, was fully occupied. The
Group’s other prominent shopping centres such as East
Point City in Tseung Kwan O, Grand Century Place in
Mongkok, Metroplaza in Kwai Chung and Tai Po Mega
Mall were also virtually fully leased.
REVIEW OF OPERATIONS Property Investment34
SUN HUNG KAI PROPERTIES LIMITED ANNUAL REPORT 2000/01
The Group continued to renovate and improve the
layouts and designs of its shopping malls during the year.
New themes were also introduced to the shopping
centres. To highlight some, a lush ‘garden feel’ was added
to New Town Plaza III, while Yuen Long Plaza recently
took on a colourful subtropical flavour.
To meet changing customer demands, the Group
continues to review the tenant profile in its shopping
centres to ensure a good mix. Furthermore, the Group
will continue to organize innovative promotions in its
malls to keep pedestrian flows high.
Offices
The Group’s investment portfolio includes 5.8 million
square feet of prime office space. Despite a softer office
rental market, the Group’s office portfolio is 96 per
cent let. To highlight some, One International Finance
Centre in Central and Millennium City Phases 1 and 2 in
Kowloon East are fully let, and Grand Central Plaza in
Shatin and Metroplaza in Kwai Chung are virtually full.
To match the requirements of increasingly demanding
office tenants, the Group will continue to incorporate
the latest technology and sophisticated facilities in its
projects.
Residential
The Group holds a total of one million square feet of
residential proper ties for investment, a substantial
proportion of which are luxury developments with
comprehensive club house facilities such as Dynasty
Court and Hillsborough Court in Mid-Levels and Pacific
View in Island South. These properties are almost fully
let, contributing satisfactory rental income to the Group.
Car Parks
The Group currently owns 24,000 parking bays, and
rental income from these amounted to HK$497 million
during the year, up 4.5 per cent from the previous year.
Car parks attached to commercial complexes will
continue to be built so as to enhance the value of the
Group’s investment property portfolio.New Town Plaza III in Shatin completedrenovations during the year.
REVIEW OF OPERATIONS Property Investment35
SUN HUNG KAI PROPERTIES LIMITED ANNUAL REPORT 2000/01
Other Properties
The Group owns 30 cinemas in its various shopping
centres, which help to attract visitors and bring business
to tenants. A number of industr ial and godown
properties including data centres, are also kept for rent,
and the Group is actively exploring opportunities to
convert some of these sites to other uses such as offices.
INVESTMENT PROPERTIES UNDERDEVELOPMENT
In order to achieve an optimal mix in its investment
proper ty portfolio, the Group intends to dispose of
some non-core properties while adding quality new
rental properties. In keeping with this aim, some 8.2
million square feet of new investment properties in
attributable terms is under development.
Among the investment properties under development,
retail space will account for 1.7 million square feet, which
will be spread across the territory, while another 1.6
million square feet is designated for the development
of top quality hotels and suites. Grade-A offices will
account for 4.9 million square feet of the Group’s new
investment properties.
The majority of the investment proper ties under
development are landmark projects, including Two
International Finance Centre in Central, the Airport
Railway Kowloon Station Development Packages 5, 6
and 7 and Millennium City in Kowloon East. Details
of these projects are included in the Proper ty
Development section on pages 28 and 29.
Major investment properties under
development include:
Shopping Centres
• Two International Finance Centre
• Shopping centre at Park Central
• Millennium City Phase 5 (418 Kwun Tong Road)
• Shopping centre in Airport Railway Kowloon Station
Development Packages 5, 6 and 7
Offices
• Millennium City Phase 3 (370 Kwun Tong Road)
• Two International Finance Centre
• Millennium City Phase 5 (418 Kwun Tong Road)
• Millennium City Phase 6 (392 Kwun Tong Road)
• Offices in Airpor t Railway Kowloon Station
Development Packages 5, 6 and 7
Millennium City Phase 3 in Kowloon East will beready for occupation in the second half of 2002.
REVIEW OF OPERATIONS Property Investment36
SUN HUNG KAI PROPERTIES LIMITED ANNUAL REPORT 2000/01
Major Completed Investment Properties
Name Location
Hong Kong Island
Sun Hung Kai Centre 30 Harbour Road, Wanchai
World Trade Centre 280 Gloucester Road, Causeway Bay
One International Finance Centre 1 Harbour View Street, Central
Harbour Centre 25 Harbour Road, Wanchai
Central Plaza 18 Harbour Road, Wanchai
Dynasty Court (Blocks 2 & 3) 23 Old Peak Road
Pacific View (Blocks 2 & 3) 38 Tai Tam Road
Hillsborough Court (Block 4) 18 Old Peak Road
Kowloon
Grand Century Place 193 Prince Edward Road West, Mongkok
Millennium City Phase 1* 388 Kwun Tong Road
Millennium City Phase 2 378 Kwun Tong Road
The Sun Arcade 28 Canton Road, Tsim Sha Tsui
Royal Plaza Hotel 193 Prince Edward Road West, Mongkok
Royal Garden Hotel 69 Mody Road, Tsim Sha Tsui
Kerry Hung Kai Godown 3 Fat Tseung Street, Cheung Sha Wan
New Tech Plaza 34 Tai Yau Street, San Po Kong
APEC Plaza 49 Hoi Yuen Road, Kwun Tong
Peninsula Tower 538 Castle Peak Road, Cheung Sha Wan
Hing Wah Centre 82-84 To Kwa Wan Road
New Territories
New Town Plaza I 18 Shatin Centre Street, Shatin
Tai Po Mega Mall 9 On Pong Road, Tai Po
Tsuen Wan Plaza 5-21 Pak Tin Par Street, Tsuen Wan
East Point City Shopping Centre 8 Chung Wa Road, Tseung Kwan O
New Town Plaza III 2-8 Shatin Centre Street, Shatin
Sun Yuen Long Centre Shopping Centre 8 Long Yat Road, Yuen Long
Yuen Long Plaza Shopping Arcade 249-251 Castle Peak Road, Yuen Long
Uptown Plaza Shopping Arcade 9 Nam Wan Road, Tai Po
Metroplaza Tower I & Shopping Centre 223 Hing Fong Road, Kwai Chung
Grand Central Plaza 138 Shatin Rural Committee Road, Shatin
Landmark North 39 Lung Sum Avenue, Sheung Shui
Grand City Plaza 1-17 Sai Lau Kok Road, Tsuen Wan
Citygate Tung Chung Town Lot 2
Royal Park Hotel 8 Pak Hok Ting Street, Shatin
Sunhing Hungkai Godown 8 Wong Chuk Yeung Street, Shatin
Advanced Technology Centre 2 Choi Fat Street, Sheung Shui
* Including the attributable share in areas held by SUNeVision, in which the Group has an 84.3 per cent interest.
Top: Landmark North is one of the busiestcommercial complexes in Sheung Shui.
Bottom: The office space at Metroplaza inKwai Chung is virtually full.
REVIEW OF OPERATIONS Property Investment37
SUN HUNG KAI PROPERTIES LIMITED ANNUAL REPORT 2000/01
Attributable gross floor area in square feet
Lease Group’s Shopping Industrial/Expiry Interest (%) Residential Centre Office Hotel Office Total
2127 100 – 53,400 850,600 – – 904,000
2842 100 – 162,000 350,000 – – 512,000
2047 47.5 – 62,000 373,000 – – 435,000
2128 33.3 – 20,500 80,000 – – 100,500
2047 50 – – 700,000 – – 700,000
2886 100 341,000 – – – – 341,000
2047 100 316,700 – – – – 316,700
2884 100 159,500 – – – – 159,500
2047 100 – 725,000 475,000 – – 1,200,000
2047 100 – 27,000 890,000 – – 917,000
2047 50 – – 133,000 – – 133,000
2047 100 – 204,800 – – – 204,800
2047 100 – – – 400,000 – 400,000
2127 100 – – – 295,000 – 295,000
2047 50 – – – – 285,000 285,000
2047 100 – – – – 268,800 268,800
2047 100 – – – – 240,000 240,000
2047 100 – – – – 202,000 202,000
2099 100 – – – – 182,700 182,700
2047 100 – 1,300,000 – – – 1,300,000
2047 100 – 588,800 – – – 588,800
2047 100 – 583,000 – – – 583,000
2047 100 – 415,000 – – – 415,000
2047 100 – 350,000 – – – 350,000
2047 87.5 – 245,000 – – – 245,000
2047 100 – 145,000 – – – 145,000
2047 100 – 120,000 – – – 120,000
2047 100 – 600,000 569,000 – – 1,169,000
2047 100 – 236,000 505,000 – – 741,000
2047 100 – 181,500 375,500 – – 557,000
2047 100 – 35,100 137,200 – – 172,300
2047 20 – 99,000 32,000 – – 131,000
2047 100 – – – 258,000 – 258,000
2047 100 – – – – 500,000 500,000
2047 100 – – – – 142,000 142,000
REVIEW OF OPERATIONS Property Investment38
SUN HUNG KAI PROPERTIES LIMITED ANNUAL REPORT 2000/01
13
28
LANTAU ISLAND
• • • • • 1 Dynasty Court •2 Hillsborough Court •3 63 Deep Water Bay Road •4 51 & 55 Deep Water Bay Road •5 Pacific View •6 New Town Plaza/New Town Tower • •7 Grand Central Plaza • •8 Uptown Plaza •9 Tai Po Mega Mall •10 Landmark North • •11 Sun Yuen Long Centre •12 Yuen Long Plaza •13 Chelsea Heights •14 Tsuen Wan Plaza •15 Grand City Plaza • •16 Metroplaza • •17 New Kowloon Plaza •18 Grand Century Place • •19 Hollywood Plaza • •20 The Sun Arcade •21 East Point City •22 World Trade Centre • •23 Sun Hung Kai Centre • •24 Harbour Centre • •25 One International Finance Centre • •26 Chi Fu Landmark •27 New Jade Shopping Arcade •28 Citygate • •29 Central Plaza •30 Millennium City Phases 1 & 2 • •31 APEC Plaza •32 Infotech Centre •33 Hing Wah Centre •34 New Tech Plaza •35 Advanced Technology Centre •36 Peninsula Tower •37 Kerry Hung Kai Godown •38 Sunhing Hungkai Godown (Shatin) •39 Royal Garden Hotel •40 Royal Plaza Hotel •41 Royal Park Hotel •
Resid
entia
lSh
oppin
g Cen
treO
ffice
Indus
trial/
Offic
eHot
el
Major Completed Investment Properties
Existing
Railways
Major Highways
Planned (completion by 2008)
Railways
Major Highways
Under Construction
Railways
Major Highways
Railway Interchange
West Rail (completion in 2003)
Ma On Shan Rail (completion in 2004)
Tseung Kwan O Extension (completion in 2002)
7
10
6
15
16
18
19
22
30
2324
25
1
8
14
29
32
31
34
33
36
38
35
41
39
4037
26
27
17
20
9
1112
3
5
4
2
21
HONG KONGISLAND
NEW TERRITORIES
KOWLOON
SHENZHEN
SUN HUNG KAI PROPERTIES LIMITED ANNUAL REPORT 2000/01
HOTELS
For the year under review, the performance of the Group’s three hotels
was satisfactory. Occupancy of the hotels remained high and room rates
increased satisfactorily.
Guest room renovations at the Royal Garden Hotel in Tsim Sha Tsui
continued on schedule and within budget throughout 2000 and 2001, and
a new lobby bar ‘Martini’ opened in June 2000 to wide acclaim. New
banquet rooms also opened in the same month and have generated
satisfactory business. The hotel finished the year with an average occupancy
of 86 per cent; an increase of four percentage points over last year. The
average room rate also rose 13 per cent during the year. The latest
renovations scheduled for completion by the end of 2001 should further
enhance the quality and image of the hotel.
During the year under review, the Royal Park Hotel in Shatin achieved
an average occupancy of 84 per cent, with a slight growth in both average
room rate and revenue. Situated along the railway, the hotel benefited
from the rapid growth of China’s economy last year. The continuous
development of Shatin should continue to underpin the hotel’s business.
The Royal Plaza Hotel in Mongkok recorded an eight per cent growth
in average room rate and an average occupancy of 85 per cent for the
period under review. To cope with travellers’ demands, the hotel introduced
several new amenities including a solarium and massage centre. The Royal
Plaza Hotel will meet the challenging year ahead with a flexible strategy.
PROPERTY RELATED BUSINESSESREVIEW OF OPERATIONS
Renovations at the Royal Garden Hotel further enhanced its image.
40
SUN HUNG KAI PROPERTIES LIMITED ANNUAL REPORT 2000/01
REVIEW OF OPERATIONS Property Related Businesses41
SUN HUNG KAI PROPERTIES LIMITED ANNUAL REPORT 2000/01
The Group is developing six-star hotel facilities above
both the Hong Kong and Kowloon stations on the
Airport Railway. The hotel complex in International
Finance Centre over Hong Kong Station includes 400
first-class hotel rooms and 600 suites for long-term
guests, to be managed by Four Seasons Hotels and
Resorts. This will be the first Four Seasons-branded
hotel in Hong Kong upon its completion in 2004. The
Group’s Kowloon Station development will include one
million square feet of premium-quality hotel and suite
spaces.
With China’s impending entry to the WTO, Beijing’s
successful bid for the 2008 Olympic Games and recent
Government initiatives to boost tourism, the Group is
confident in the long-term prospects for its hotel
operations.
CONSTRUCTION
The construction division completed a total of 6.5 million
square feet of gross floor area in the year. Major projects
include Le Sommet, Chelsea Heights Phase 2, Oscar by
the Sea Phase 1 and two joint venture projects, namely
Royal Peninsula and The Belcher’s Phase 1. Construction
turnover for the year doubled to HK$6,500 million, of
which HK$1,600 million was derived from joint venture
companies.
Major projects in progress, including those being
constructed by joint venture companies, are Park Island,
The Parcville, The Leighton Hill, Oscar by the Sea Phase
2, Park Central, Prima Villa, Villa by the Park, Ap Lei
Chau Inland Lot 128, Ocean Shores Phases 2 and 3,
Two International Finance Centre, The Belcher’s Phase
2 and Tuen Mun Town Lot 374.
The division continues to make improvements in quality,
customer ser vice , training, safety, methods of
construction and the application of information
technology, all of which contribute to higher efficiency
and better products.
To further improve its competitive edge, the division
has undertaken an organizational reform to streamline
processes, encourage new ideas, enhance accountability
and better control costs.
The hotel complex in International Finance Centre will be the firstFour Seasons-branded hotel in Hong Kong.
REVIEW OF OPERATIONS Property Related Businesses42
SUN HUNG KAI PROPERTIES LIMITED ANNUAL REPORT 2000/01
The following subsidiaries and associate companies
provide complementary services in fire prevention
systems, electrical installations, machinery leasing and
concrete supply:
Everlight Engineering Company Limited and
two other subsidiaries install and service electrical and
fire prevention systems. Total turnover for the year was
HK$425 million.
Aegis Engineering Company Limited is in plant
and machinery leasing. Turnover for the year amounted
to HK$75 million.
Glorious Concrete (HK) Limited is an associate
company and one of the significant ready-mixed
concrete suppliers in Hong Kong. Its results for the year
were satisfactory.
PROPERTY MANAGEMENT
The Group’s two property management subsidiaries,
Hong Yip Service Company Limited and Kai
Shing Management Services Limited, aim to
provide the finest service to residents. With highly-
trained professional staff and the latest technology, the
companies are fully committed to excellence in all that
they do. During the year, they won over 30 awards
from a variety of organizations including the Hong Kong
Housing Authority.
Together, Hong Yip and Kai Shing now manage 118
million square feet of residential premises, 17 million
square feet of commercial space and 29 million square
feet of industrial space. Their core businesses are
property management, sales and leasing, cleaning and
security service and club management.
Hong Yip showed substantial growth last year. The
number of housing units under its management
increased from 80,000 to 99,000, a rise of 24 per cent,
and the total area managed increased from 70 to 83
million square feet, representing an 18 per cent growth.
In addition to managing the Group’s properties, Hong
Yip is an agent for various outside owners’ corporations,
and it manages a number of Government developments.
To cope with this growth, Hong Yip has put great effort
into training, particularly in customer service. The results
have been significant, and Hong Yip won an Award for
Excellence in Training 2001 with merit from the Hong
Kong Management Association.
Top: Hong Yip has been named Best PropertyManagement Agent by the Hong Kong HousingAuthority for eight consecutive years.
Left: Super-eManagement enhances operationalefficiency in property management.
REVIEW OF OPERATIONS Property Related Businesses43
SUN HUNG KAI PROPERTIES LIMITED ANNUAL REPORT 2000/01
With its management and technical professionals, Hong
Yip has helped owners’ corporations to carry out major
renovations, enhancing the value of older buildings under
management. The company also focuses on adding value
for residents with initiatives like Privilege Home Services,
providing hotel-style service.
This year, as in the last eight, Hong Yip won the Best
Property Management Agent Award. It also got several
Best HOS Estates awards and a number of
environmentally-friendly management awards, all from
the Hong Kong Housing Authority. Hong Yip also won
a 2000 HKRMA Certificate of Merit in Customer Service
from the Hong Kong Retail Management Association
and several merit awards from the Environmental
Protection Depar tment. In December 2000, the
company received ISO 9001: 2000 quality certification
and OHSAS 18001 certification for occupational safety
management.
Kai Shing is using information technology to improve
property management. After initiating the use of Palm
Pilots in building management, Kai Shing introduced the
first web-enabled proper ty management system –
Super-eManagement – in May 2001. The system covers
all aspects of property management service and greatly
enhances operational efficiency and communications
between the company and its customers.
Kai Shing pays close attention to monitoring and training
staff. In November 2000, Kai Shing opened its Super-
eManagement Centre in Landmark North. The centre
provides 24-hour security surveillance of all properties
managed by Kai Shing and also includes facilities for
professional training.
Kai Shing continues to win industry awards. In the year
under review it won the 2000 Hong Kong Eco-Business
Grand Award (Green Property Management) presented
by the Environmental Protection Depar tment and
awards from the Hong Kong Housing Authority and
the Occupational Safety and Health Council.
FINANCIAL SERVICES
The financial services division is made up of Hung Kai
Finance Company Limited, Honour Securities
Company Limited, Honour Futures Limited and
Honour Finance Company Limited. Principal
services include home mortgages, share margin financing,
stock and futures broking, consumer loans and deposit-
taking.
A reduction in trading on the Hong Kong Stock
Exchange has affected the stock and futures broking
business while the mortgage market has also become
increasingly competitive. Despite the challenging
environment, the division maintained a profitable
position during the year.
INSURANCE
Sun Hung Kai Properties Insurance Limited
recorded a business turnover of HK$198 million for
the year. Despite a difficult operating environment and
unfavourable results in the liability insurance business,
pre-tax profit rose to HK$45 million compared to
HK$15 million for the previous financial year. The
company provides quality products and services to its
clients. It also transacts insurance products through its
web site. The company has a credit rating of ‘A-minus’
by both Standard & Poor’s and A.M. Best reflecting its
sound financial performance and management systems.
INFORMATION TECHNOLOGY AND TELECOMMUNICATIONSREVIEW OF OPERATIONS
INFORMATION TECHNOLOGY
The year under review was a challenging one for SUNeVision Holdings
Limited. Despite the generally unfavourable global and local business
climate, particularly in the technology sector, SUNeVision maintained its
position as a leading Internet infrastructure and enabling solutions provider
in Asia. The company was able to report healthy double-digit growth for
each quar ter during the year, largely due to a prudent management
approach to ensuring cost efficiency and high productivity. Revenue for the
year under review was HK$198 million, an increase of 194 per cent
compared with the previous year.
The year was also notable in that gross margins turned positive in the
second quarter of 2001 for the first time since the company’s IPO in March
2000. Operating expenditures have continued to fall as a result of tight
cost controls. Losses for the year under review were HK$171 million,
largely due to heavy startup costs and one-off charges. The company is
financially strong with net cash and marketable bonds of HK$1,870 million.
In February 2001, the 350,000 square-foot MEGA-iAdvantage in Chai Wan
officially began operations, providing first class co-location facilities to telecom
and other operators. With the recent closure of a major client in Hong
Kong, iAdvantage has already made efforts to lease the space vacated by
that company, and has had some initial success in retaining some of its
former clients. Leasing at the other data centres was satisfactory. In addition,
iAdvantage further strengthened its competitive position in the industry
by forming strategic alliances with leading international solution providers.
SUNeVision’s Super e-Technology, Super e-Network, Super-Office,
SuperHome, SuperStreets, Red-Dots and venture capital unit made steady
progress throughout the year.
Looking forward, SUNeVision will continue to manage its operating and
capital expenditures tightly while seeking to improve operating efficiencies.
The company recognizes the need to review its business operations on an
ongoing basis to ensure that it has a sustainable business model over the
longer term. The information technology shakeout is by no means over,
and the company will continue to face challenges in the near term. However,
the Group is confident in the long-term prospects for SUNeVision and the
industry. Sound business sense on the part of an excellent management
team will continue to shape strategy at SUNeVision. The Group owned
about 84.3 per cent of SUNeVision as at 30th June 2001.
MEGA-iAdvantage in Chai Wan commencedoperation in February 2001.
44
SUN HUNG KAI PROPERTIES LIMITED ANNUAL REPORT 2000/01
REVIEW OF OPERATIONS Information Technology and Telecommunications
TELECOMMUNICATIONS
SmarTone Telecommunications Holdings
Limited continued to compete in a challenging market
environment during the year, as the company set out
to build a critical mass of customers and fur ther
strengthen its position in the market. SmarTone
broadened its customer base to 980,000, representing
an increase of 13 per cent as compared to 867,000 in
June 2000. The company’s loss attr ibutable to
shareholders for the year ended 30th June 2001 was
HK$284 million, representing a decrease in loss of 22
per cent as compared to the previous year.
As the highly competitive mobile communications
market continues to evolve in the new millennium,
SmarTone appointed Douglas Li as CEO in July 2001.
Mr. Li was SmarTone’s founding CEO at its inception in
1992 and served until 1996. Mr. Li will lead SmarTone
forward in its commitment to offering superior service
to its customers, and to realize its long-term vision of
being a leading wireless player in Hong Kong.
During the period under review, SmarTone launched a
number of consumer-oriented services, providing its
customers with mobile applications that combine broad
appeal and user convenience. In November 2000,
SmarTone teamed up with Standard Chartered Bank
to launch mobile banking services and it fur ther
extended the service to a broader customer base by
partnering with HSBC and Hang Seng Bank. In February
2001, SmarTone launched a mobile betting service
which offers a comprehensive range of bets with an
easy-to-use application so customers can place bets any
time, anywhere.
In August 2001, SmarTone also introduced its General
Packet Radio Service (2.5G), allowing customers to
enjoy mobile data service with data speeds reaching
over 50kbps.
Following the successful acquisition of a licence to
operate a GSM network in Macau in October 2000,
SmarTone rapidly built up its network and launched its
service in August 2001. A flagship store was opened in
the central shopping area of Macau, providing a one-
stop service to Macau’s residents, as well as SmarTone’s
Hong Kong customers visiting Macau.
SmarTone participated in the 3G auction that took place
in September 2001 and was provisionally awarded a
3G licence in Hong Kong. This enhances SmarTone’s
position as a major wireless player in Hong Kong. The
company foresees that 3G has attractive business
potential and it is committed to providing the people
of Hong Kong a world class 3G mobile broadband
multimedia service. SmarTone firmly believes that 3G
will take the company to a new level of success, as
creating long-term value for its customers and
shareholders.
SmarTone enjoys a strong balance sheet and is well
positioned to take advantage of opportunities that may
arise. The Group remains confident in the long-term
prospects for SmarTone and is fully supportive of its
vision. The Group will continue to hold its stake in
SmarTone, 28.2 per cent as at 30th June 2001, as a
long-term strategic investment.
45
SmarTone’s positionstrengthened furtherduring the year, with itscustomer base growingto 980,000.
SUN HUNG KAI PROPERTIES LIMITED ANNUAL REPORT 2000/01
TRANSPORTATION, INFRASTRUCTURE AND LOGISTICSREVIEW OF OPERATIONS
FRANCHISED BUS OPERATION
The Kowloon Motor Bus Holdings Limited
(KMB), in which the Group has a 34 per cent interest,
is publicly listed in Hong Kong. Its main business is to
provide franchised bus services covering Kowloon and
the New Territories. The company reported a net profit
of HK$855 million for the year ended 31st December
2000, an increase of 15.7 per cent compared to the
previous year. For the six months ended 30th June
2001, the company reported a net profit of HK$885
million, 143 per cent higher than last year. The strong
results were due to continued growth of its core
business, and a deemed profit arising from the spin-off of a subsidiary,
amounting to HK$320 million. During the year, KMB continued to upgrade
its fleet and install environmental protection facilities. The company also
put emphasis on developing co-operative arrangements with other
transport operators to provide more flexible services and wider coverage.
The company aims to maintain its market-leading position in the franchised
bus business in Hong Kong while seeking business diversification
opportunities in the bus transportation industry in Hong Kong and Mainland
China. RoadShow Holdings Limited, a 73.3 per cent subsidiary of the
company, was successfully listed on The Hong Kong Stock Exchange in
June 2001 raising HK$534 million. RoadShow is engaged in on-board multi-
media, transit network media sales and merchandizing.
KMB had a good year in 2000, with net profitincreasing 15.7 per cent.
46
Route 3 (Country Park Section)River Trade
Terminal
Airport Freight Forwarding Centre
Business Aviation Centre
Waste Transfer Station
Mid-stream Operation
Container Terminal(Under construction)
Landfill
The Group’s transportation, infrastructure and logistics businesses in Hong Kong
SUN HUNG KAI PROPERTIES LIMITED ANNUAL REPORT 2000/01
REVIEW OF OPERATIONS Transportation, Infrastructure and Logistics47
SUN HUNG KAI PROPERTIES LIMITED ANNUAL REPORT 2000/01
TOLL ROAD
The Route 3 (Country Park Section) Company
Limited built and now operates the north-south road
link between Yuen Long and Ting Kau. The company is
50 per cent owned by the Group. The 10.1-kilometre
route consists of the 3.8-kilometre Tai Lam Tunnel and
the 6.3-kilometre Yuen Long Approach Road.
Since it opened to the public in May 1998, Route 3
(CPS) has provided a quick and direct link between the
northern New Territories and major urban areas, as
well as the new airport. This has helped alleviate traffic
congestion along the Tuen Mun and Tolo highways and
improved cross-border traffic by offering the most
efficient route for goods vehicles travelling from the
border to the container terminals in Kwai Chung. The
toll from the Tai Lam Tunnel was increased in April 2001
while traffic volume remained stable. Toll revenue from
Route 3 (CPS) has been increasing since it began
operations and the toll road is already generating positive
cash flows.
TRANSPORT INFRASTRUCTUREMANAGEMENT
The Wilson Group, a wholly owned subsidiary of the
Group, oversees parking, tunnel, bridge, tollway and
other transpor t-related management businesses.
It was established in July 1998 following Wilson Parking’s
diversification into these business areas. The Wilson
Group employs a total of around 4,000 staff.
The Wilson Group, through its wholly-owned
subsidiaries, Wilson Parking (Hong Kong) Limited and
Mack & Co. Carpark Management, manages more than
240 car parks with over 67,000 parking bays. Wilson
Parking is the largest parking operator in Hong Kong
and is ISO-9002-certified. It is re-equipping its access
control systems to link car parks to an operations
support centre in order to turn its operations cashierless
in two years’ time.
Top: Toll revenue fromRoute 3 (CPS) has beenincreasing since it beganoperations in 1998.
Left: Wilson Parking isthe largest parkingoperator in Hong Kong.
REVIEW OF OPERATIONS Transportation, Infrastructure and Logistics48
SUN HUNG KAI PROPERTIES LIMITED ANNUAL REPORT 2000/01
Through a wholly-owned subsidiary, the Wilson Group
has been managing and maintaining the Shing Mun and
Tseung Kwan O tunnels under a six-year contract which
commenced in June 2000. In addition, its 66.67 per cent
owned Tsing Ma Management Limited renewed its
management-operation-maintenance contract for the
Tsing Ma Control Area for six years with effect from
May 2001. Wilson Tunnel Management Limited, another
wholly-owned subsidiary of the Wilson Group, manages
the Route 3 (CPS).
In September 2001, the Wilson Group began managing
public transport interchange facilities at the Olympic
and Kowloon stations on the Tung Chung Line through
a wholly-owned subsidiary.
In October 2000, the Wilson Group acquired an
additional 25 per cent share in Autotoll Limited, making
it a 50 per cent shareholder in the only electronic toll
collection operator for all ten tolled tunnels and
expressways in Hong Kong.
The Wilson Group has a 30 per cent interest in the
Hong Kong School of Motoring Limited. The school
has been operating successfully for the past 18 years.
As the major provider of off-street driver training facilities
in Hong Kong, it currently operates three centres in
Shatin, Wong Chuk Hang and Yuen Long.
PORT BUSINESS
Asia Container Terminals Limited is 28.5 per cent
owned by the Group. It participates in the development
of two berths at Container Terminal 9 on Tsing Yi Island.
Construction of the berths began in mid 2000 and will
be completed in stages, with the first stage to commence
operation in August 2003. Upon completion, it will
exchange its two berths there for two existing berths
at Container Terminal 8. Project financing is already in
place.
The Group has a 33 per cent interest in the River
Trade Terminal, which occupies a 65-hectare site in
Tuen Mun with 3,000 metres of quayfront and 60 berths,
providing a unique range of containerized and breakbulk
cargo handling and storage services for river trade
between the Pearl River Delta and Hong Kong. Business
has been growing gradually since operations began.
The Group holds a 50 per cent interest in both Hoi
Kong Container Services Company Limited and
Faith & Safe Transportation Company Limited,
two market leaders in the mid-stream industry in Hong
Kong. Business during the year was satisfactory for the
companies.
REVIEW OF OPERATIONS Transportation, Infrastructure and Logistics49
SUN HUNG KAI PROPERTIES LIMITED ANNUAL REPORT 2000/01
AFFC’s facilities and services allow tenantsto meet the needs of global trade.
AIR TRANSPORT
The Airport Freight Forwarding Centre
Company Limited (AFFC) became a wholly-owned
subsidiary of the Group during the year under review.
AFFC operates the only premium freight forwarding
and logistics centre at the Hong Kong International
Airport. Its strategic airport location and accessibility
to the Pearl River Delta region with the Hong Kong
International Airport Marine Cargo Terminal and Route
3 have made it an important transport hub for out-
bound air cargo from southern China.
AFFC has been in operation since 1998. It comprises
1.3 million square feet of cargo handling space and
175,000 square feet of premium quality office space,
offering flexible leasing terms and competitive rates for
its airport location. Tenants include logistics companies,
freight forwarders and other businesses requiring
superior access to the Hong Kong airport’s various
cargo, maintenance, commercial, passenger and support
services. AFFC’s advanced facilities and supply-chain
management capabilities enable tenants to cope with
all the demands of global trade in the information age.
The Group’s Hong Kong Business Aviation
Centre Limited is a franchise at the Hong Kong
International Airport that serves all business aircraft flying
in and out of Hong Kong. The facilities, located in the
southwest corner of the Chek Lap Kok reclamation,
include a dedicated apron for aircraft parking, an
executive terminal and a 23,800 square-foot hangar, all
built to the highest international standards.
Since commencing business in 1998, there has been a
steady growth in the number of aircraft movements.
The franchise is now in its third year of operation,
generating positive cash flows, and profitability is
anticipated in the near future. The Group owns 35 per
cent of the franchise.
REVIEW OF OPERATIONS Transportation, Infrastructure and Logistics50
SUN HUNG KAI PROPERTIES LIMITED ANNUAL REPORT 2000/01
LOGISTICS BUSINESS
Capitalizing on its expertise in real estate development
and management, transport infrastructure, information
technology and air freight-related businesses, the Group
has been exploring wide-ranging oppor tunities in
logistics. Through Sun Hung Kai Super Logistics
Limited and its subsidiaries, as well as a 50 per cent
interest in Sun Logistics Company Limited, it is
now offering customers a full range of third party logistics
services, from warehouse management, distribution and
fulfilment, to value-added services including assembly,
bundling, labelling and repackaging.
The Group is seeking logistics business opportunities in
Mainland China. Investments will concentrate primarily
on major cities, with a focus on air freight logistics. It
plans to work with joint venture par tners on the
Mainland and other allies worldwide to create a
comprehensive logistics network, positioning itself as
the partner of choice for logistics in the Asia Pacific
region.
WASTE MANAGEMENT
Through 20 per cent ownership of Green Valley
Landfill Limited, South China Transfer Limited
and Pearl Delta Limited, the Group works closely
with PWM Environmental Services – a member
company of the French-based multinational Onyx – for
a better environment for Hong Kong.
The companies are engaged in various environmental
protection and waste management projects. Green
Valley built and operates a 100-hectare landfill site in
Tseung Kwan O with the capacity to handle 43 million
cubic metres of waste. South China Transfer built and
operates the largest refuse transfer station in Hong Kong.
Located on Stonecutters Island, the station can process
2,875 tons of waste a day. Pearl Delta has been
collecting and managing waste at the Hong Kong
International Airport at Chek Lap Kok since it opened
in July 1998.
The Group’s logistics arm offers a full range ofthird party logistics services.
OTHER INVESTMENT HOLDINGSREVIEW OF OPERATIONS
Thomas Cook Hung Kai Currency Exchange Limited is a joint
venture between the Group and Thomas Cook in which the Group holds
a 25 per cent interest. As the sole money changer at Hong Kong’s
international airport, the company’s major businesses are foreign exchange
and the sale of various travel-related products. Revenue has been growing
steadily with the increase in passengers travelling through the airport.
New-Alliance Asset Management (Asia) Limited is a 50/50 joint
venture between the Group and Alliance Capital Management LP. Since
its incorporation in 1997, the company has been engaged in investment
management and unit trust and mutual fund distribution in Hong Kong,
providing a broad range of services to pension funds of publicly-listed
companies and institutional and individual clients. Through the distribution
of unit trusts and mutual funds via major financial intermediaries, including
some of the world’s top ten banks, the company’s market share in the fund
distribution industry is rising.
USI Holdings Limited, a publicly-listed company in which the Group
owns a 19 per cent interest, is engaged in garment manufacturing and
trading, property development and technology investments. 2000 was a
challenging year for the company which registered a net loss of HK$68.9
million. USI aims to consolidate its investments and strengthen its financial
position in 2001. The company recorded a net profit of HK$8.1 million in
the first half of this year.
51
SUN HUNG KAI PROPERTIES LIMITED ANNUAL REPORT 2000/01
With China’s entry to the WTO, continued economic
reform and Beijing’s successful bid to host the
2008 Olympic Games, the Group will capitalize on this
favourable environment to expand its investments
on the Mainland.
Sun Dong An Plaza, Beijing
MAINLAND CHINA BUSINESS
MAINLAND CHINA BUSINESS
Land Bank in Mainland ChinaAttributable gross floor area in million square feet
ShoppingResidential Centre Office Total
Properties underdevelopment
Shanghai 0.1 – – 0.1
Guangzhou andPearl River Delta 0.4 0.1 – 0.5
Subtotal 0.5 0.1 – 0.6
Completed InvestmentProperties
Beijing – 0.8 0.2 1.0
Shanghai 0.4 0.1 0.3 0.8
Subtotal 0.4 0.9 0.5 1.8
Total 0.9 1.0 0.5 2.4
REVIEW OF OPERATIONS
With Beijing’s successful bid to host the 2008 Olympic Games, China’s
entry to the WTO and continued economic reform, the Chinese economy
will continue to prosper. While maintaining a focused approach, the Group
will capitalize on this favourable environment to expand its investments on
the Mainland gradually over time, concentrating on the property business.
Taking advantage of experience gained through the development of various
landmark projects over past years, the Group will continue to identify new
opportunities, primarily in major cities including Beijing, Shanghai, Guangzhou
and Shenzhen.
The Group holds 1.8 million square feet of completed investment properties
on the Mainland, consisting mainly of offices and shopping centres in prime
locations. Another 0.6 million square feet of proper ties are under
development, most of which are residential projects. The Group’s land
bank in Mainland China, is summarized as follows:
54
Land Bank in Mainland ChinaAttributable gross floor area: 2.4 million square feet
21%Office
42%Shopping Centre
37%Residential
37%Shanghai
42%Beijing
21%Guangzhou
and PearlRiver Delta
BY USAGE
BY LOCATION
SUN HUNG KAI PROPERTIES LIMITED ANNUAL REPORT 2000/01
REVIEW OF OPERATIONS Mainland China Business
MAJOR PROJECTS IN MAINLANDCHINA
Beijing
Sun Dong An Plaza
138 Wangfujing Dajie (50% owned)
Sun Dong An Plaza recorded encouraging leasing results
during the year and is now 95 per cent let. It comprises
1.3 million square feet of retail space and 430,000 square
feet of offices. It is held under a 50-year lease that runs
to 2043. As an established landmark, it was named
one of the Top Ten Beijing Construction Projects of the
90s in a poll of Beijing citizens.
Shanghai
Central Plaza
381 Huaihai Zhong Road (75% owned)
Central Plaza in Shanghai has become a focal point for
the city since its completion in 1999. It consists of
455,000 square feet of offices and a 133,000 square-
foot shopping centre. The property is held under a
50-year lease that runs to 2044. Leasing performance
has been satisfactory with an overall occupancy rate of
93 per cent.
Arcadia Shanghai
88 Guang Yuan Xi Road, Xu Hui (66.5% owned)
The first phase of about 500,000 square feet of
residential units and serviced apartments was completed
in 1999. The first batch of residential units is being
launched for sale and leasing of the remaining units is
satisfactory. Planning of the second phase is being
finalized. The property is held under a 70-year lease
that expires in 2064.
Guangzhou and Pearl River Delta
Guangzhou Glorious City Garden
858 Dongfeng Road East (30% owned)
The first two phases of 1.7 million square feet of
residential property are complete and virtually fully sold.
Details of the third phase of the development are being
planned.
Zhongshan Residential Project
Zhongshan 5 Road (Joint venture)
This project is planned for development into a large-
scale residential estate in phases. The first phase of the
project will have approximately 400 units. Preparation
work is in progress.
Arcadia Shanghai is located in Xu Hui District,a traditional deluxe residential area of Shanghai.
55
SUN HUNG KAI PROPERTIES LIMITED ANNUAL REPORT 2000/01
Maintaining a low gearing, high liquidity, long debt maturities, abundant
committed standby banking facilities, a diverse funding base and minimum
refinancing risk have always been elements of the Group’s prudent financial
policy. The Group will also continue its conservative management of foreign
exchange and interest rate risks, avoiding speculative derivatives. Nearly all
of its borrowings are in Hong Kong dollars and exposure to foreign currency
risk is negligible.
In March 2001, the Group procured a seven-year HK$7.8 billion syndicated
loan facility at competitive pricing, and after the overwhelming response
from banks, it arranged another seven-year syndicated loan at more
favourable terms with 17 leading financial institutions, subscribing for a
total of HK$7.5 billion. From July 2000 to September 2001, the Group
issued fixed and floating rate notes amounting to HK$2,150 million, with
terms of up to eight years under its Euro Medium Term Note Programme.
Part of the loan and note proceeds were used to retire the Group’s HK$8
billion syndicated term loan due in January 2002. The remaining funds
were used to refinance other short-term debts and provide general working
capital.
The Group’s strong financial position is reflected by the up-grade of its
rating outlook from stable to positive by Moody’s, on a par with the Hong
Kong Government’s sovereign ceiling for foreign debt.
CORPORATE FINANCEREVIEW OF OPERATIONS
Credit RatingsForeign Currency Local Currency
Moody’s A3 A2
Standard & Poor’s A A
56
SUN HUNG KAI PROPERTIES LIMITED ANNUAL REPORT 2000/01
Believing that it is important to maintain interactive communications with
investors about its corporate strategy and developments, the Group will
continue its transparent and open approach to investor relations.
The Group strives to disseminate market-sensitive information on a timely
basis through various channels. It holds press conferences and analysts’
meetings immediately after results are announced, with directors and senior
management available to answer questions, and it distributes regular press
releases and publications such as the SHKP Quar terly in addition
to annual and interim reports. All this information is also available on the
Group’s Internet site www.shkp.com.hk. In January 2001, the Group
introduced an Investor Relations Contact section in its web site to encourage
more effective communications with investors via e-mail.
During the year, the Group organized property visits for analysts and
investors to various developments, including exclusive previews of The
Leighton Hill show flats and the Two International Finance Centre multi-
media showcase. The Group received highly-positive comments from the
investment community on its commitments to developing premium-quality
projects and providing customer-oriented service. As part of its corporate
culture, the Group emphasizes two-way communication, and during the
year it took part in a number of conferences and presentations, both in
Hong Kong and overseas. Senior management gave numerous investor
interviews, and also went on road shows to the US, Europe and Singapore
to update investors about the Hong Kong property market and the Group’s
latest developments.
The Group has consistently been placed highly in Asiamoney magazine’s
Best Managed Company rankings over the years, and its Internet site has
been praised by independent surveys. The Group will continue to enrich
and update the contents of its web site frequently with the latest financial
and corporate information, employing all available channels to reach out
to the investment community.
INVESTOR RELATIONSREVIEW OF OPERATIONS57
SUN HUNG KAI PROPERTIES LIMITED ANNUAL REPORT 2000/01
Customer care is a top priority for the Group.
During the year under review, its property
management companies Hong Yip and
Kai Shing won over 30 awards from a variety of
organizations for superb management service.
CUSTOMER SERVICE
CUSTOMER SERVICEREVIEW OF OPERATIONS
Customer care is a top priority for the Group, and it is constantly looking
for new ways to improve the quality of products and services for all its
customers.
All the Group’s front-line staff undergo extensive training in customer service,
including attitude, manners and dress. The training is on-going and supported
by systematic evaluation.
The Group and its property management subsidiaries Hong Yip and Kai
Shing do everything possible to offer residents a comfortable and convenient
lifestyle, as well as a harmonious community. As a result, the management
companies consistently receive accolades for their service. In the year under
review, the two companies won over 30 prizes from a variety of
organizations, including trade associations, Government departments and
the news media.
During the year under review, Kai Shing extended the use of information
technology in property management, monitoring facilities via the Internet
and allowing residents to check services or the progress of repairs on-line
in some of the Group’s estates with Super e-Management. As part of the
quest to continually improve service quality, the system will be extended
to cover more than 100 estates.
For buyers of new residential properties, a special inter-departmental team
was formed in 1996 to assess the quality of each newly-completed unit
and assist owners with handover procedures. This service has further
improved during the year under review. Owners now receive one-stop
service, with one staff member assigned to look after the handover and
any repair work for each owner.
To serve consumers in the Group’s shopping centres better, Customer
Service Centres were established in more malls over the year. The centres
are staffed by courteous, well-dressed Customer Service Ambassadors to
assist visitors.
60
SUN HUNG KAI PROPERTIES LIMITED ANNUAL REPORT 2000/01
REVIEW OF OPERATIONS Customer Service
In an effort to improve communications with the general
public, the Group founded the SHKP Club. Membership
in the Club continues to grow, now standing at over
140,000. Building on the success of initiatives such as
the Show Flat Preview Loyalty Scheme, the Club
introduced various new benefits and services for
members during the year under review, such as its
Member-Property Buyers Reward Programme. With a
wide range of leisure and property-related activities,
the Club offers members total service.
The Citibank SHKP Club VISA Card launched in 1999 is
the world’s first four-in-one smart card. With the card,
residents enjoy exclusive shopping, residential and
banking services, as well as all the privileges of Club
membership and special offers in eight of the Group’s
major shopping centres.
The Club will continue to attract new members and
promote two-way communication with the public
through various means, including property previews and
related activities, leisure events and the Internet.
In recognition of the Group’s efforts at customer service
and two-way communication, its Internet site was named
Best Property Developer’s web site in all of Asia in a
survey.
Top: Show flat previews are well received by the SHKP Club’s140,000 members.
Bottom: New owners get one-stop service when they takepossession, with help in completing documentation andfollow-up on repairs.
61
SUN HUNG KAI PROPERTIES LIMITED ANNUAL REPORT 2000/01
ENVIRONMENTAL PROTECTION AND PROMOTIONREVIEW OF OPERATIONS
The Group’s dedication to environmental protection has won
recognition and praise from various environmental organizations.
Green living space is an essential element of the Group’s property
designs. New properties make extensive use of environmentally-
friendly building materials and include energy-saving facilities. While
construction is under way, workers follow strict environmental
protection guidelines in order to minimize pollution.
During the year under review, both The Parcville and Villa by the
Park in Yuen Long received Excellent ratings from the Business
Environment Council, under its Hong Kong Building Environmental
Assessment Method. The Parcville was the first private residential estate in
Hong Kong to have received this honour, while Villa by the Park received
the highest rating.
Promoting community awareness of environmental protection, the Group’s
two property management companies, Kai Shing and Hong Yip, staged a
number of green activities in their estates with good results. Hong Yip was
named ‘Most Environmentally-friendly Property Management Agent’ this
year by the Hong Kong Housing Authority, and Kai Shing took three prizes
in the 2000 Hong Kong Eco-Business Awards. Kai Shing also won first prize
in the ‘Outstanding Green Project Awards 2000’ in the Landscape
Management category, for its achievements in Palm Springs and Royal Palms
in Yuen Long with the ‘Friendly Neighbour of Mai Po’ environmental
landscape management plan.
Always looking for new ways to safeguard the environment, the Group’s
wholly-owned subsidiary Nixon Cleaning was the first in Hong Kong to
use patented technology from Nor th America to produce Totally
Degradable Plastics (TDP). TDP can be used to manufacture a full range
of environmentally-friendly plastic products, making a major contribution
to solving the problem of plastic waste. Many TDP products are now being
used in the Group’s developments.
The Group also promotes environmental awareness through community
activities. The Group’s Metroplaza in Kwai Chung staged an event in which
57 local Girl Guides tried to create the world’s largest aluminum-can
mosaic and the attempt has been submitted to the Guinness Book of
World Records.
Kai Shing won first prize in theOutstanding Green Project Awards 2000.
62
SUN HUNG KAI PROPERTIES LIMITED ANNUAL REPORT 2000/01
STAFF RELATIONS AND TRAININGREVIEW OF OPERATIONS
Knowing that staff training and career development are essential to sustaining
a company’s growth, the Group organized more than 350 classes for over
10,000 attendees during the period under review. The Group’s 18,000
employees (not counting those employed by associated companies) had
the opportunity to benefit from a variety of programmes. Training courses
are designed to support diverse business needs, focusing on key areas
such as customer service, management techniques, business and technology,
language and communication, interpersonal and technical skills and personal
as well as quality management.
To support the Group’s core objective of providing premium products
and service, an ongoing Service Excellence Programme began in 1999,
producing visible results. In the year under review, 7,000 service staff went
through this tailor-made programme followed up with comprehensive on-
the-job coaching and measurement. To further improve the quality of new
developments, a Performance Excellence Programme was also introduced
in 1999 for all construction staff. The first batch of 100 staff completed the
one-year course in stages during 2000, emerging with greater technical
and management competence. The programme continues, with more
staff taking part each year.
Staff at all levels can apply for sponsorship to take courses offered by
external institutions. Programmes ranging from short seminars to full degree
courses are eligible for substantial
sponsorship.
Self-learning is also promoted within
the Group. A training library with a
ful l collection of self- learning
materials has been in existence since
2000. Staff are also encouraged to
use the Group’s corporate intranet
and the Internet to search for
information and enhance their
knowledge and skills.
The Group organized over 350 coursesfor more than 10,000 attendeesduring the year.
63
SUN HUNG KAI PROPERTIES LIMITED ANNUAL REPORT 2000/01
THE GROUP AND THE COMMUNITYREVIEW OF OPERATIONS
As part of its commitment to being a good corporate citizen, the Group
offers ongoing support for quality education and the less fortunate in society.
During the year under review, the Group donated a total of HK$47 million
to charitable causes.
Promoting education is one of the Group’s primary goals, and it gives
money and assistance through various channels to boost education and
encourage talent in both Hong Kong and Mainland China. The Group is
also concerned about how young people cope with the changing society,
and it donated HK$2 million to the Boys’ and Girls’ Clubs Association of
Hong Kong during the year, so they could set up hotlines for children and
a counselling centre to help young people.
To support the development of quality education, the Group began the
Northwest New Territories Elite Students Programme some years ago,
giving 12 Yuen Long and Tuen Mun primary and secondary schools added
funds to offer extra-curricular courses and raise standards. This year, for
the first time, the Group sponsored two top students from the northwest
New Territories to attend the US ‘Presidential Classroom’ in Washington
DC. In addition, the Group continued its sponsorship of six MBA students
at The Chinese University of Hong Kong.
Furthering higher education in Mainland China, the Group established a
funding programme at Tsinghua University in Beijing to encourage
distinguished professors. This is the fifth consecutive year that the Group
has injected HK$1 million to the fund, enabling more outstanding scholars
to benefit. The Group also donated money to encourage excellence among
management and administrative staff at Tsinghua University, as well as to a
programme helping disadvantaged students with serious illnesses in
Guangzhou complete their studies.
In addition to supporting educational institutions in Mainland China, the
Group donated HK$1 million to set up the ‘Sun Hung Kai Properties Group
Scholarships’ at The Chinese University of Hong Kong, helping young people
from the Mainland to do undergraduate studies there.
64
SUN HUNG KAI PROPERTIES LIMITED ANNUAL REPORT 2000/01
REVIEW OF OPERATIONS The Group and the Community
The Community Chest is one organization that the
Group has supported for many years. During the year
under review, the Group donated HK$1 million to the
Community Chest as sole sponsor of the annual Hong
Kong Walk for Millions and an additional HK$1 million
in suppor t of the Chest’s Corporate Challenge
Marathon. Many staff members took par t in those
events with the Group’s encouragement.
The Group continues its support for the SHKP Fund
for the Elderly, helping improve quality of life for needy
seniors. The Group also supports charities in other
ways. For many years, the Group has provided office
space to Project ORBIS in Hong Kong for a token rent,
and this year ORBIS presented the Group with its Crystal
Award. The Group also supported a blood donation
drive organized by the Hong Kong Red Cross this year.
About 150 staff members joined in, and the Group’s
residential estates and shopping malls also held successful
blood donation campaigns. In recognition of the Group’s
efforts, the Hong Kong Red Cross presented it with a
Special Merit Award.
Above: The Northwest New Territories Elite Students Programmeis part of the Group’s support for quality education.
Top right: The Group was the sole sponsor of the annual HongKong Walk for Millions organized by the Community Chest.
Bottom right: The Group’s support has helped train distinguishedscholars at Tsinghua University in Beijing for a number of years.
65
SUN HUNG KAI PROPERTIES LIMITED ANNUAL REPORT 2000/01
FINANCIAL REVIEW66
REVIEW OF RESULTS
The Group’s profit attributable to shareholders for the year ended 30th June 2001 was HK$8,330 million, lower by23 per cent compared to HK$10,822 million achieved in the previous year. The profit for the previous year includedan exceptional gain of HK$2,688 million arising from the spin off of SUNeVision. Excluding this non-recurring item,the profit for the current year would show an increase of 2.4 per cent.
Property Sales
Property sales revenue for the year was HK$8,218 million (2000: HK$16,957 million). Profit generated from propertysales was HK$3,625 million (2000: HK$4,078 million). The decline in sales revenue and profit reported at the Grouplevel was mainly due to the fact that almost half of the volume of property developments completed for sale wasengaged through joint venture companies whereby the sales were recognized under the share of results from jointlycontrolled entities and associates. Including the Group’s share of the jointly controlled entities and associates, propertysale turnover was HK$14,359 million, down by 17 per cent whereas profit from property sales was HK$4,861million, up by 18 per cent over the previous year. The improvement in profitability was mainly attributable to thetwo major development profit contributors, Le Sommet and Chelsea Heights Phase 2, both of which achieved ahigh margin primarily due to the low land cost.
Rental Income
Performance of the Group’s rental portfolio was satisfactory. Average occupancy levels stayed high throughout theyear. Gross rental income increased marginally by almost 2 per cent to HK$5,392 million. Net rental income wasHK$4,073 million compared to HK$4,059 million last year. These figures have not included the rental contributionsfrom joint venture companies. Including the Group’s share of rental income from jointly controlled entities, totalgross and net rental income was HK$5,877 million and HK$4,401 million, up by 3.7 per cent and 1.7 per centrespectively over the previous year. The growth was mainly due to the full-year rental contribution from OneInternational Finance Centre, Millennium City Phase 1 and Phase 2 as well as the increased rental income frominvestment properties in China, namely Sun Dong An Plaza in Beijing and Central Plaza in Shanghai, following thecontinuous improvement on the occupancy levels.
Property Management
Profit contribution from property management business grew steadily by 7.7 per cent to HK$252 million with thegradual expansion of the Group’s property management portfolio.
Hotel Operations
Both average occupancy rates and room rates of the Group’s three hotels continued to improve during the yearresulting in higher operating efficiency and greater profit margin. Operating profit from hotel operations increasedsubstantially by 30 per cent to HK$195 million.
SUN HUNG KAI PROPERTIES LIMITED ANNUAL REPORT 2000/01
FINANCIAL REVIEW
67
SUN HUNG KAI PROPERTIES LIMITED ANNUAL REPORT 2000/01
Other Business Activities
Profits generated from other business activities reported a decline by HK$141 million to HK$122 million, mainly dueto the operating loss incurred by its subsidiary, SUNeVision.
Other Revenue
Other revenue, which comprised mainly income from investments in securities and interest income from advancesto joint venture companies, increased to HK$547 million (2000: HK$42 million), due to increase in investmentactivities during the year.
Finance Costs
Net finance costs for the year increased by HK$21 million to HK$1,158 million after capitalization of HK$593 million(2000: HK$114 million). The increase in net finance costs was the result of an increase in average net debt. Moreinterest was capitalized for the year than last year owing to higher capital expenditures incurred on investmentproperties under development.
Profit on Disposal of Investments
The Group recorded a profit of HK$445 million (2000: HK$1,236 million) from disposal of investments, comprisingmainly listed shares originally held for long-term investment.
Share of Profits Less Losses of Associates and Jointly Controlled Entities
Share of profits before taxation from associates and jointly controlled entities increased by HK$1,204 million toHK$1,582 million. The increase was mainly due to profits from property sales in the total amount of HK$1,236million generated from joint venture property development projects including The Belcher’s Phase 1, Royal Peninsula,Ocean Shores Phase 1 and Villa Esplanada Phase 3. Share of pre-tax profit from KMB increased by seven per cent toHK$304 million while share of loss from SmarTone reduced to HK$81 million from HK$96 million.
FINANCIAL RESOURCES AND LIQUIDITY
The Group’s financial position remains strong, with a large capital base and a low debt leverage. The Group’s totalshareholders’ funds increased to HK$126,007 million as at 30th June 2001 compared to HK$120,904 million at theprevious year end, mainly due to the upward revaluation of the Group’s investment property portfolio and profitsretained for the year.
FINANCIAL REVIEW
68
SUN HUNG KAI PROPERTIES LIMITED ANNUAL REPORT 2000/01
At 30th June 2001, the Group’s total borrowings amounted to HK$28,992 million. Net debt (after deducting cashand bank deposits of HK$9,061 million) amounted to HK$19,931 million. All of the Group’s borrowings areunsecured and arranged on a committed, medium to long term basis with a maturity profile analyzed as follows :
2001 2000HK$M HK$M
Repayable:Within one year 4,997 4,584After one year but within two years 6,680 12,868After two years but within five years 10,473 9,522After five years 6,842 1,415
Total borrowings 28,992 28,389
Cash and bank deposits 9,061 10,414
Net debt 19,931 17,975
The Group’s net debt was up by HK$1,956 million during the year. The increase in net debt level was primarily dueto increased expenditure for land acquisitions, including the land premium for the Airport Railway Kowloon StationDevelopment Packages 5, 6 and 7. Gearing ratio at the year end, measured by net debt to shareholders’ funds,stood at 15.8 per cent (2000: 14.9 per cent). Interest coverage for the year, measured by the ratio of profit fromoperations to interest expenses before capitalization, remained strong at 4.8 times (2000: 6.7 times).
Apart from refinancing short term debts with long term borrowings, the Group has also secured substantial undrawnfacilities on a committed basis from its relationship banks, which helps the Group minimize refinancing risk of its debtand provides the Group with strong financing flexibility.
5
10
15
20
25
17.8
12.0
14.9
1997 1998 1999 2000 2001
Net Debt to Shareholders’ Funds Ratio
15.8
19.8
Percentage
5,000
10,000
15,000
20,000
25,000
30,000
20,295
12,786
17,975
1997 1998 1999 2000 2001
Net Debt
19,931
26,671
HK$ million
Debt Maturity ProfileAs at 30th June 2001
24%Over 5 years
23%1-2 years
17%Within 1 year
36%2-5 years
FINANCIAL REVIEW
69
SUN HUNG KAI PROPERTIES LIMITED ANNUAL REPORT 2000/01
All the Group’s financing and treasury activities are centrally managed and controlled at the corporate level. As at30th June 2001, 96 per cent of the Group’s borrowings were raised through its wholly-owned finance subsidiariesand the remaining 4 per cent through operating subsidiaries.
The Group adopts a conservative policy in financial risk management, having little exposure to foreign exchange andinterest rate risks. Approximately 95 per cent of the Group’s borrowings were denominated in Hong Kong dollars,with the balance in US dollars and Renminbi to fund property projects in the Mainland. The Group’s borrowings aremostly arranged on a floating rate basis. For the fixed rate notes issued under the Euro Medium Term NoteProgramme, interest rate swaps have been utilized to convert the rates into floating rate basis. When appropriate,hedging instruments including interest rate and currency swaps are used to assist the Group to manage its exposureto interest rate and foreign currency exchange fluctuations in connection with its borrowings. The Group will notenter into derivative transactions for speculative purposes.
Expenditures incurred on acquisitions of land for the year amounted to HK$7,400 million, which were financedprimarily by internally generated funds from operations and, to the extent required, by debt financing. With substantialcommitted banking facilities in place, continuous cash inflow from property sales and a solid base of recurrentincome, the Group is in a strong liquidity position and has sufficient financial resources to satisfy its capital commitmentsand ongoing working capital requirements.
GROUP FINANCIAL SUMMARY
1997 1998 1999 2000 2001For the year ended 30th June HK$ HK$ HK$ HK$ HK$
Earnings per share 5.93 3.04 3.87 4.51 3.47Dividends per share 2.35 1.20 1.55 1.75 1.55Special cash bonus per share 0.38 – – – –Shareholders’ funds at book value per share 56.38 47.55 44.40 50.36 52.48Financial ratios:Net debt to shareholders’ funds
Net debt19.8% 17.8% 12.0% 14.9% 15.8%
Shareholders’ fundsInterest cover
Profit from operations12.9 5.4 5.4 6.7 4.8
Net interest expenses before capitalization
HK$M HK$M HK$M HK$M HK$M
Turnover 28,425 22,890 23,404 25,826 17,701Profit from operations 15,942 14,128 10,159 8,340 8,329Profit attributable to shareholders 14,160 7,260 9,278 10,822 8,330
Balance Sheet1997 1998 1999 2000 2001
As at 30th June HK$M HK$M HK$M HK$M HK$M
Fixed assets 111,547 91,210 77,915 86,291 94,698Investments and loans 23,652 18,173 26,111 27,708 28,786Land pending development 21,052 22,658 15,137 18,908 17,324Net current assets 13,169 6,668 4,670 13,413 10,804Long term liabilities (33,763) (24,127) (16,253) (23,805) (23,995)Minority interests (948) (880) (967) (1,611) (1,610)
134,709 113,702 106,613 120,904 126,007
Share capital 1,195 1,196 1,201 1,201 1,201Share premium and reserves 133,514 112,506 105,412 119,703 124,806
Shareholders’ funds 134,709 113,702 106,613 120,904 126,007
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SUN HUNG KAI PROPERTIES LIMITED ANNUAL REPORT 2000/01
71
SUN HUNG KAI PROPERTIES LIMITED ANNUAL REPORT 2000/01
DIRECTORS’ REPORT
The directors present their report for the year ended 30th June 2001:
PRINCIPAL ACTIVITIES
The principal activity of the Company continues to be holding investments in various subsidiaries.
The principal activities of the Group continue to be the development of and investment in properties for sale and rent. Ancillaryand supporting businesses, which are described under subsidiaries on pages 116 to 120, are integrated with the main businessof the Group. Turnover and contributions to operating profit from overseas activities are immaterial. A segmented analysis ofturnover and contributions to operating profit for the Group (excluding jointly controlled entities and associates) is set outbelow:
GROUP PROFITS
Profit after taxation, including shares of profit from jointly controlled entities and associates, amounted to HK$8,340 million(2000: HK$10,809 million). After taking minority interests into account, profit attributable to shareholders was HK$8,330million (2000: HK$10,822 million).
DIVIDENDS
An interim dividend of HK$0.55 per share (2000: HK$0.55) was paid on 12th April 2001. The directors recommend a finaldividend of HK$1.00 per share (2000: HK$1.20), making a total dividend of HK$1.55 per share for the full year ended 30th June2001 (2000: HK$1.75).
PURCHASE, SALE OR REDEMPTION OF SHARES
The Company did not redeem any of its ordinary shares during the year. Neither the Company nor any of its subsidiariespurchased or sold any of the Company’s ordinary shares during the year.
SHARE PREMIUM AND RESERVES
Movements in the share premium and reserves of the Company and the Group during the year are shown in note 26 to thefinancial statements.
FIXED ASSETS
Movements of fixed assets during the year are shown in note 11 to the financial statements.
Profit from OperationsTurnover before Finance Cost
2001 2000 2001 2000HK$M HK$M HK$M HK$M
Property sales 8,218 16,957 3,625 4,078Rental income 5,392 5,292 4,073 4,059Property management 860 817 252 234Hotel operation 590 542 195 150Other business activities 2,641 2,218 122 263
17,701 25,826 8,267 8,784
Other revenue 547 42Unallocated administrative expenses (485) (486)
Profit from operations 8,329 8,340
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SUN HUNG KAI PROPERTIES LIMITED ANNUAL REPORT 2000/01
GROUP FINANCIAL SUMMARY
The results, assets and liabilities of the Group for the last five years are summarized on page 70.
PROPERTIES
Particulars of major investment properties held by the Group are set out on pages 36 to 37.
DIRECTORS
The list of directors is set out on page 2 of the report and their particulars are set out on pages 79 to 82. All directors, otherthan Dr. Ho Tim who retired on 20th March 2001 and Sir Sze-yuen Chung who has been appointed as independent non-executive director on 30th March 2001, held office for the whole year. In accordance with Article 95 of the Company’s Articlesof Association, the new director, Sir Sze-yuen Chung, will retire at the forthcoming Annual General Meeting and, being eligible,will offer himself for re-election. In accordance with Article 104(A) of the Company’s Articles of Association, Dr. Victor FungKwok-king, Messrs. Kwong Chun, Michael Wong Yick-kam and Mike Wong Chik-wing will retire by rotation at the forthcomingAnnual General Meeting and, being eligible, will offer themselves for re-election. None of the directors proposed for re-electionhas a service agreement with the Company or any of its subsidiaries which is not determinable within one year without paymentof compensation, other than statutory compensation. Mr. Law King-wan, executive director, will retire on 1st October 2001 butwill continue to act as non-executive director.
DISCLOSURE OF INTERESTS
Directors’ Interests in the Company
As at 30th June 2001, the interests of the directors and the chief executive of the Company in the equity securities of theCompany, as recorded in the register required to be kept under Section 29 of the Securities (Disclosure of Interests) Ordinance(the “Ordinance”), were as follows:
No. of shares in which the Directors were interested
Category of Interest
Personal Family Corporate OtherName of Director Interest Interest Interest Interest Total
Kwok Ping-sheung, Walter – – – 1,073,792,522 1,073,792,522(Note 1)
Lee Shau-kee 486,340 – – 343,000 829,340
Kwok Ping-kwong, Thomas 1,901,281 304,065 – 1,071,842,214 1,074,047,560(Note 1)
Kwok Ping-luen, Raymond – 1,000 – 1,074,985,895 1,074,986,895(Note 1)
Kwan Cheuk-yin, William 123,780 – – – 123,780
Lo Chiu-chun, Clement 137,273 62,117 – – 199,390
Law King-wan 20,000 70,267 – – 90,267
Chan Kai-ming 41,186 – – – 41,186
Chan Kui-yuen, Thomas 126,500 66,000 – – 192,500
Kwong Chun 702,722 339,358 – – 1,042,080
Wong Yick-kam, Michael 50,904 – – – 50,904
Wong Chik-wing, Mike 150,999 – – – 150,999
Note 1 Messrs. Walter Kwok Ping-sheung, Thomas Kwok Ping-kwong and Raymond Kwok Ping-luen were deemed (by virtue of the Ordinance) to be interestedin the number of shares in the Company shown opposite their names respectively. Of those shares, 1,051,808,347 shares represented the sameinterests and were therefore duplicated among those three directors.
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SUN HUNG KAI PROPERTIES LIMITED ANNUAL REPORT 2000/01
Directors’ Interests in Other Associated Corporations
As at 30th June 2001, the interests of the directors and the chief executive of the Company in the equity securities of anyassociated corporation (within the meaning of the Ordinance), as recorded in the register required to be kept under section 29of the Ordinance, were as follows:
(i) The following directors had the following interests in the equity securities of SUNeVision Holdings Limited:
No. of shares in which the Directors were interested
Category of Interest
Personal Family Corporate OtherName of Director Interest Interest Interest Interest Total
Kwok Ping-sheung, Walter – – – 1,070,000 1,070,000(Note 2)
Kwok Ping-kwong, Thomas – – – 1,070,000 1,070,000(Note 2)
Kwok Ping-luen, Raymond 672,500 – – 1,070,000 1,742,500(Note 2)
Fung Kwok-king, Victor – – – 8,000 8,000
Kwan Cheuk-yin, William 884 – – – 884
Lo Chiu-chun, Clement 2,771 – – – 2,771
Chan Kai-ming 115,000 – – – 115,000
Kwong Chun 300,000 – – – 300,000
Wong Chik-wing, Mike 109,000 – – – 109,000
Note 2 Messrs. Walter Kwok Ping-sheung, Thomas Kwok Ping-kwong and Raymond Kwok Ping-luen were deemed (by virtue of the Ordinance) to be interestedin the number of shares shown opposite their names respectively. Of those shares 1,070,000 shares represented the same interests and weretherefore duplicated among those three directors.
(ii) Each of Messrs. Walter Kwok Ping-sheung, Thomas Kwok Ping-kwong and Raymond Kwok Ping-luen had the followinginterests in the equity securities of the following associated corporations:
Associated Corporation No. and Class of Securities Category of Interest
Superindo Company Limited 10 shares Personal
Super Fly Company Limited 10 shares Personal
Splendid Kai Limited 2,500 shares Corporate
Hung Carom Company Limited 25 shares Corporate
Tinyau Company Limited 1 share Corporate
Open Step Limited 8 shares Corporate
(iii) Mr. Walter Kwok Ping-sheung, Mr. Raymond Kwok Ping-luen and Sir Sze-yuen Chung had personal interests of 61,522shares, 393,350 shares and 18,821 shares respectively in the equity securities of The Kowloon Motor Bus Holdings Limited.
(iv) Mr. Raymond Kwok Ping-luen had a personal interest of 692,846 shares in the equity securities of SmarToneTelecommunications Holdings Limited.
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SUN HUNG KAI PROPERTIES LIMITED ANNUAL REPORT 2000/01
(v) Dr. Lee Shau-kee has other interests in the equity securities of the following associated corporations:
Associated Corporation (Note 3) No. and Class of Securities
Mightypattern Limited 200 shares
Star Play Development Limited 1 share
Central Waterfront Property Holdings Limited 47.5% of issued share capital
Newfoundworld Holdings Limited 40,000 shares
Topcycle Development Limited 1 share
Anbok Limited 2 shares
Teamfield Property Limited 4,918 shares
SmarTone Telecommunications Holdings Limited 179,500 shares
Note 3 The shares in Mightypattern Limited and Star Play Development Limited were beneficially owned by Henderson Investment Limited (“HI”).
The respective interests of Henderson Land Development Company Limited (“HL”) and The Hong Kong and China Gas Company Limited (a companyin which the subsidiaries of HI owned more than one-third of its issued shares) in Central Waterfront Property Holdings Limited were 32.5 per cent and15 per cent respectively.
The shares in Newfoundworld Holdings Limited and Topcycle Development Limited were beneficially owned by HL.
The shares in Anbok Limited and in Teamfield Property Limited were held by a company in which HL had a 50 per cent interest.
The shares in SmarTone Telecommunications Holdings Limited were beneficially owned by a subsidiary of the Hong Kong and China Gas CompanyLimited.
Dr. Lee Shau-kee beneficially owned all the issued capital of Hopkins (Cayman) Limited. Hopkins (Cayman) Limited, as the trustee of a unit trust,owned all the issued ordinary shares which carried voting rights in the capital of Henderson Development Limited (“HD”). HD was the holdingcompany of HL, which was the holding company of HI.
By virtue of the provisions of the Ordinance and the matters aforesaid, Dr. Lee Shau-kee was taken to be interested in the shares and interests asmentioned above.
(vi) Dr. Victor Fung Kwok-king had corporate interests of 70 shares in the equity securities of Fun Fun World InvestmentLimited.
(vii) None of the directors had any interests in any debt securities issued by the Company or any jointly controlled entities andassociated corporation.
SHARE OPTION SCHEME
Share option scheme of the Company
The following directors were granted options at HK$1.00 per option in respect of shares of the Company under its share optionscheme during the period ended 30th June 2001 as follows:
Exercise Option Exercised Balance OutstandingName of Director Date of Grant Price (HK$) No. of Shares During the Year at 30/6/2001
Chan Kui-yuen, Thomas 15/2/2000 70.00 150,000 – 150,000
Wong Yick-kam, Michael 15/2/2000 70.00 150,000 – 150,000
Wong Chik-wing, Mike 15/2/2000 70.00 150,000 – 150,000
The above mentioned options can be exercised in accordance with the following terms:(i) other than in the circumstances set out in the scheme, the options are not exercisable during the first year of the option
period running from 15th February 2000; and(ii) the option holder can exercise up to one third of the option during the second year of the option period, up to two thirds
of the option during the third year of the option period and all or part of the option any time three years after 15thFebruary 2000.
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SUN HUNG KAI PROPERTIES LIMITED ANNUAL REPORT 2000/01
The above mentioned options at the exercise price of HK$10.38 per share may be exercised in accordance with the followingterms:(i) one third of the options within three years commencing on 31st December 2000;(ii) a further one third of the options within three years commencing on 31st December 2001; and(iii) the remaining one third of the options within three years commencing on 31st December 2002.
The above mentioned options at the exercise price of HK$2.34 per share may be exercised in accordance with the followingterms:(i) one third of the options within three years commencing on 20th March 2002;(ii) a further one third of the options within three years commencing on 20th March 2003; and(iii) the remaining one third of the options within three years commencing on 20th March 2004.
Other Share Option Schemes
Two more share option schemes were approved for two subsidiaries of the Company, iAdvantage Limited and SUNeVisionRed-Dots Limited, allowing their respective boards of directors the right to grant to their full-time employees and executivedirectors the chance to subscribe for their shares, which in aggregate represent up to 10 per cent of the issued capital of therespective companies from time to time. No such options were granted to any director of the Company during the year.
ARRANGEMENT TO PURCHASE SHARES OR DEBENTURES
Other than the share option schemes as mentioned above, at no time during the year was the Company or any of its subsidiariesa party to any arrangement to enable the directors of the Company to acquire benefits by means of the acquisition of shares inor debentures of the Company or of any other body corporate.
Exercise Option Exercised Balance OutstandingName of Director Date of Grant Price (HK$) No. of Shares During the Year at 30/6/2001
Kwok Ping-sheung, Walter 28/3/2000 10.38 415,000 –7/4/2001 2.34 180,000 – 595,000
Kwok Ping-Kwong, Thomas 28/3/2000 10.38 415,000 –7/4/2001 2.34 180,000 – 595,000
Kwok Ping-luen, Raymond 28/3/2000 10.38 755,000 –7/4/2001 2.34 350,000 – 1,105,000
Chan Kui-yuen, Thomas 28/3/2000 10.38 510,000 –7/4/2001 2.34 180,000 – 690,000
Wong Yick-kam, Michael 28/3/2000 10.38 360,000 –7/4/2001 2.34 180,000 – 540,000
Share option scheme of SUNeVision Holdings Limited
The following directors were granted options at HK$1.00 per option in respect of shares of SUNeVision Holdings Limited underits share option scheme during the period ended 30th June 2001 as follows:
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SUN HUNG KAI PROPERTIES LIMITED ANNUAL REPORT 2000/01
SUBSTANTIAL SHAREHOLDERS
As at 30th June 2001, the interests of every person, other than a director or the chief executive of the Company, being 10 percent or more in the equity securities of the Company, as recorded in the register required to be kept under Section 16(1) of theOrdinance, were as follows:
BANK BORROWINGS
Details of bank borrowings are set out in notes 20 and 22 to the financial statements on pages 108 and 109.
INTEREST CAPITALIZED
Interest capitalized during the year amounted to HK$593 million (2000: HK$114 million).
CHARITABLE DONATIONS
HK$47 million was donated during the year (2000: HK$25 million).
DIRECTORS’ INTERESTS IN COMPETING BUSINESSES
The interests of directors of the Company in competing businesses as at 30th June 2001 required to be disclosed pursuant toRule 8.10 of the Listing Rules were as follows:
Messrs. Kwok Ping-sheung, Walter, Kwok Ping-kwong, Thomas and Kwok Ping-luen, Raymond are brothers (collectively “theKwok Brothers”) within a family whose businesses consist of property development and investment in Hong Kong throughcompanies in which they have maintained certain personal and deemed interests. As such, they are regarded as being interestedin such competing businesses (“Excluded Businesses”) with the Company and its subsidiaries (“the Group”). However, whencompared with the dominance and size of operations of the Group, such Excluded Businesses are immaterial. Since the Groupdoes not have property developments and investments in locations other than in Hong Kong and Mainland China and the Kwokfamily does not have such businesses in the Mainland, the Kwok Brothers are therefore not regarded to be interested in suchExcluded Businesses of the Group in the Mainland.
Name of Shareholder No. of Shares in which the Shareholder was interested
HSBC Holdings plc 1,123,601,108
HSBC Finance (Netherlands) 1,123,031,659
HSBC Holdings B.V. 1,123,031,659
HSBC Investment Bank Holdings B.V. 1,081,551,594
HSBC International Trustee Limited (Note 4) 1,080,582,744
Note 4 The shares in which HSBC International Trustee Limited was interested formed part of the shares in which HSBC Investment Bank Holdings B.V. wasinterested; the shares in which HSBC Investment Bank Holdings B.V. was interested formed part of the shares in which HSBC Holdings B.V. wasinterested; the shares in which HSBC Holdings B.V. was interested were the shares in which HSBC Finance (Netherlands) was interested and the sharesin which HSBC Finance (Netherlands) was interested formed part of the shares in which HSBC Holdings plc was interested.
Of the above shares in the Company in which HSBC International Trustee Limited was interested, 1,051,808,347 shares were part of the sharesreferred to in Note 1 above.
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SUN HUNG KAI PROPERTIES LIMITED ANNUAL REPORT 2000/01
Messrs. Kwok Ping-sheung, Walter and Kwok Ping-luen, Raymond are directors of The Kowloon Motor Bus Holdings Limited inwhich the Group has a substantial interest, which businesses consist of property development and investment. In this regard,each of them is regarded to be interested in such Excluded Businesses with the Group.
Mr. Kwok Ping-luen, Raymond is the Chairman of SmarTone Telecommunications Holdings Limited in which the Group has asubstantial interest, which businesses consist of Internet services. In this respect, he is regarded to be interested in such ExcludedBusinesses with SUNeVision Holdings Limited, the technology arm of the Group.
Dr. Lee Shau-kee is the Chairman and Managing Director of Henderson Land Development Co. Limited and HendersonInvestment Limited. He is also Chairman of Henderson China Holdings Limited, a director of The Miramar Hotel and InvestmentCo. Limited, The Hong Kong and China Gas Company Limited and certain subsidiaries of the aforementioned listed companies.In addition to his being a director, Dr. Lee has maintained certain personal and deemed interests in some of these companies,which businesses consist of property development and investment, property management, infrastructure, Internet andtelecommunication services, which constitute Excluded Businesses of the Group. Dr. Lee is a non-executive director of theCompany, who is not involved in the daily management of the Group.
The Kwok Brothers are directors of USI Holdings Limited and Mr. Wong Yick-kam, Michael is an alternate director to them. TheGroup has a substantial interest in the company, which businesses consist of property development and investment, andtherefore each of them is regarded to be interested in such Excluded Businesses with the Group.
Other than the family businesses of the Kwok Brothers, the above-mentioned Excluded Businesses are managed by separatepublicly listed companies with independent management and administration. In this respect, coupled with the diligence of itsindependent non-executive directors and the Audit Committee, the Group is capable of carrying on its businesses independentof, and at arms length from, the Excluded Businesses mentioned above.
INTEREST IN CONTRACTS
No contracts of significance to which the Company or any of its subsidiaries was a party and in which a director had a materialinterest subsisted at any time during the year.
MAJOR CUSTOMERS AND SUPPLIERS
During the year, less than 30 per cent of the Group’s sales and less than 30 per cent of the Group’s purchases were attributableto the Group’s five largest customers and five largest suppliers respectively.
AUDITORS
The retiring auditors, Messrs. Deloitte Touche Tohmatsu, have signified their willingness to continue in office. A resolution will beproposed at the Annual General Meeting to re-appoint them and to authorize the directors to fix their remuneration.
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SUN HUNG KAI PROPERTIES LIMITED ANNUAL REPORT 2000/01
AUDIT COMMITTEE
The Audit Committee, which was established pursuant to the requirements of the Rules Governing the Listing of Securities ofThe Stock Exchange of Hong Kong Limited, comprising Mr. William Kwan Cheuk-yin (Chairman), Sir Sze-yuen Chung (appointedon 9th July 2001 in replacement of Dr. Ho Tim) and Mr. Clement Lo Chiu-chun, met twice in the year.
During the meetings, the Committee reviewed and made recommendations on the improvement of the Company’s financialreporting process and internal controls.
CODE OF BEST PRACTICE
The Company has complied with the Code of Best Practice as set out in Appendix 14 to the Listing Rules of The StockExchange of Hong Kong Limited during the accounting period covered by this annual report.
This report is made in accordance with a resolution of the Board of Directors and is signed for and on behalf of the Board.
Kwok Ping-sheung, WalterChairman & Chief Executive
Hong Kong, 27th September 2001
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SUN HUNG KAI PROPERTIES LIMITED ANNUAL REPORT 2000/01
DIRECTORS AND ORGANIZATION
KWOK Ping-sheung, WalterMsc(Lond), DIC, MICE, JP
Chairman & Chief Executive (Age: 50)
Mr. Kwok has been with the Group for 27 years. He holds aMaster of Science degree in Civil Engineering from ImperialCollege, University of London, and is a member of the Instituteof Civil Engineers. He is an executive director of SUNeVisionHoldings Limited, and a director of The Kowloon Motor BusHoldings Ltd., USI Holdings Ltd., Wilson Parking (HK) Ltd. andHung Cheong Import & Export Co., Ltd.
He is also a director of The Real Estate Developers Associationof Hong Kong and Tsimshatsui East Property Developers’Association Ltd. and Honorary Treasurer of the Federation ofHong Kong Hotel Owners. On the community front, he isthe Chairman of the Former Directors Committee of the HongKong Community Chest, board member of the Lord WilsonHeritage Trust, a member of the Young Presidents’ Organization(China Chapter) and a member of the Hong Kong & ChinaCommittee of the Pacific Basin Economic Council.
Mr. Kwok is an Honorary Citizen of Beijing & Guangzhou, amember of the National Committee of the Chinese People’sPolitical Consultative Conference and Vice Chairman of theAll-China Federation of Industry and Commerce.
Mr. Kwok is the elder brother of Mr. Thomas Kwok Ping-kwong and Mr. Raymond Kwok Ping-luen.
Dr. LEE Shau-keeDBA(Hon), DSSc(Hon), LLD(Hon)
Non-Executive Director (Age: 73)
Vice Chairman
Dr. Lee has been a non-executive director of the Companyfor the last 29 years. He is the founder and Chairman andManaging Director of Henderson Land DevelopmentCompany Ltd. and Henderson Investment Ltd. He has beenengaged in property development in Hong Kong for morethan 45 years. He is also Chairman of Henderson Cyber Ltd.and The Hong Kong and China Gas Company Ltd. as well asa director of Henderson China Holdings Ltd., The Hong KongFerry (Holdings) Company Ltd., The Bank of East Asia, Ltd.and Miramar Hotel and Investment Company Ltd.
KWOK Ping-kwong, ThomasMSc (Bus Adm), BSc (Eng), FCPA, JP
Vice Chairman & Managing Director (Age: 49)
Mr. Kwok is Vice Chairman & Managing Director of Sun HungKai Properties Limited, and has been with the Group for 24years. He is also Chairman of Route 3 (CPS) Company Limited,Joint Chairman of IFC Development Limited, an executivedirector of SUNeVision Holdings Limited and a non-executivedirector of USI Holdings Limited and The Bank of EastAsia, Limited.
Mr. Kwok holds a Master’s degree in Business Administrationfrom The London Business School, University of London anda Bachelor’s degree in Civil Engineering from Imperial College,University of London.
He is Executive Vice President of The Real Estate DevelopersAssociation of Hong Kong, a committee member of the LandSub-Committee & Planning Sub-Committee of the Land &Building Advisory Committee. He also serves as a Governmentappointed member of the Business Advisory Group.
In the past he has served as a member of the Social WelfarePolicies & Services Committee, the Land & Building AdvisoryCommittee, the Registered Contractors’ Disciplinary Board,the Council of The Open University of Hong Kong and theGeneral Chamber of Commerce Industrial Affairs Committee.He was also Chairman of the Proper ty ManagementCommittee of the Building Contractors’ Association, CouncilMember of the Hong Kong Construction Association and aboard member of the Community Chest of Hong Kong.
Mr. Kwok is an Honorary Citizen of Guangzhou and a memberof the Ninth Chinese People‘s Political Consultative ConferenceShanghai Committee.
Mr. Kwok is the younger brother of Mr. Walter KwokPing-sheung and the elder brother of Mr. Raymond KwokPing-luen.
DIRECTORS AND SENIOR MANAGEMENT
DIRECTORS AND ORGANIZATION
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SUN HUNG KAI PROPERTIES LIMITED ANNUAL REPORT 2000/01
KWOK Ping-luen, RaymondMA (Cantab), MBA, Hon DBA
Vice Chairman & Managing Director (Age: 48)
Mr. Kwok has been with the Group for 23 years. He holds aMaster of Arts degree in Law from Cambridge University, aMaster’s degree in Business Administration from HarvardUniversity and an Honorar y Doctorate in BusinessAdministration from The Open University of Hong Kong.He is Chairman and Chief Executive Officer of SUNeVisionHoldings Limited, Chairman of SmarTone TelecommunicationsHoldings Limited and a director of The Kowloon Motor BusHoldings Limited, Route 3 (CPS) Company Limited and AirportFreight Forwarding Centre Company Limited.
In civic activities, Mr. Kwok is a non-executive director of theSecurities and Futures Commission, a director of The RealEstate Developers Association of Hong Kong, a member ofthe General Committee of The Hong Kong General Chamberof Commerce, a member of the Hong Kong Port and MaritimeBoard and Vice-Chairman of the Council of The ChineseUniversity of Hong Kong. He is also a member of the AdvisoryCouncil of One Country Two Systems Research InstituteLimited and Chairman of the Management Committees ofthe Police Children’s Education Trust and the Police Educationand Welfare Trust. Mr. Kwok is also a member of the NinthChinese People’s Political Consultative Conference BeijingCommittee.
Mr. Kwok is the younger brother of Mr. Walter Kwok Ping-sheung and Mr. Thomas Kwok Ping-kwong.
The Hon Sir Sze-yuen CHUNGGBM, GBE, PhD, FREng, JP
Non-Executive Director (Age: 83)
Sir Sze-yuen Chung is Chairman and Non-Executive Directorof The Kowloon Motor Bus Holdings Limited. He is alsoDirector of CLP Holdings Limited and Wheelock & CompanyLimited; and Pro-Chancellor of Hong Kong University ofScience & Technology. He has contributed significantly in HongKong’s political, industrial and tertiary education fields for overfour decades. He was Senior Member of Hong Kong LegislativeCouncil (1974-78), Executive Council (1980-88), and againConvenor of HKSAR Executive Council (1997-99). He wasChairman of Federation of Hong Kong Industries (1966-70),and Hong Kong Productivity Council (1974-78); and Presidentof Engineering Society of Hong Kong (1960-61) and HongKong Academy of Engineering Sciences (1994-97). Heestablished Hong Kong Polytechnic in 1972, City Polytechnicin 1984, Hong Kong University of Science & Technology in1991 and Hospital Authority in 1990. He was deeply involvedin the Sino-British Negotiation of Hong Kong’s future (1982-85) and the establishment of the Hong Kong SpecialAdministrative Region (1994-97).
Sir Po-shing WOOHon. LLD., FCIArb, F.I. Mgt., FInstD
Non-Executive Director (Age: 72)
Sir Po-shing Woo has been a non-executive director of theCompany since 1972. He is a solicitor and a consultant ofWoo, Kwan, Lee & Lo, Solicitors & Notaries, a director ofHenderson Development Ltd., Henderson Land DevelopmentCo., Ltd. and Henderson Investment Ltd. He was admitted topractice as solicitor in England and Hong Kong and is also afellow of The Hong Kong Management Association, TheChartered Institute of Arbitrators, The Institute of Managementand The Institute of Directors of England. He was awarded anHon. LLD. by the City University of Hong Kong and is a Fellowof King’s College of London as well as Honorary Professor ofNankai University of Tianjin. He is also the founder of theWoo Po Shing Medal in Law and the Woo Po Shing OverseasSummer School Travelling Scholarship, both at the Universityof Hong Kong, and the Woo Po Shing Professor (Chair) ofChinese and Comparative Law at City University.
DIRECTORS AND ORGANIZATION
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SUN HUNG KAI PROPERTIES LIMITED ANNUAL REPORT 2000/01
Dr. FUNG Kwok-king, VictorBSc, MSc, PhD
Non-Executive Director (Age: 56)
Dr. Victor Fung was appointed as one of the Group’sindependent non-executive directors in May 1999.
Dr. Fung is Chairman of the Li & Fung Group and PrudentialAsia Investments Ltd., a non-executive director of PacificCentury CyberWorks Ltd., Hysan Development Company Ltd.,Kerry Properties Ltd., Orient Overseas (International) Ltd.,Dao Heng Bank Group Ltd., Bank of China (Hong Kong) Ltd.and DBS Kwong On Bank Ltd. and director of a number ofother companies. He was appointed by the Hong KongGovernment as Chairman of the Airport Authority in 1999and as Chairman of the Hong Kong University Council in 2001.From 1991 to September 2000, Dr. Fung was Chairman ofthe Hong Kong Trade Development Council. He holds aBachelor and a Master Degree from the Massachusetts Instituteof Technology, and a Doctorate from Harvard University.
KWAN Cheuk-yin, WilliamLLB
Non-Executive Director (Age: 67)
Mr. William Kwan was appointed as one of the Group’sindependent non-executive directors in July 1999.
As a Senior Partner with the Solicitors firm of Woo, Kwan,Lee & Lo, Mr. Kwan has 39 years of experience in legal practice.He is a former director and adviser and currently a votingmember of the Tung Wah Group of Hospitals, a past memberof the Stamp Advisory Committee, Vice Chairman of the HongKong Scout Foundation, Chairman of the Hong Kong Branchof the King’s College London Association, President of theHong Kong Philatelic Society, Vice Chairman of the Federationof Inter-Asia Philately, a permanent advisor of Wah Yan (HongKong) Past Students Association and an honorary legal advisorto the Hong Kong Society for Reproductive Society.
Mr. Kwan was Commissioner General and Vice Chairman ofthe Organizing Committees of the Hong Kong ’94, ’97 and2001 Stamp Exhibitions. He served on the Hong Kong GolfClub General Committee on several occasions in variouscapacities. He graduated from King’s College, LondonUniversity and is a fellow of both King’s College and the Instituteof Arbitrators.
LO Chiu-chun, Clement
Non-Executive Director (Age: 71)
Mr. Lo was an executive director of the Company andCompany Secretary of the Group for 28 years before heresigned from both positions in early 1998. Mr. Lo has beenin the property development industry since 1960s.
LAW King-wan
Non-Executive Director (Age: 65)
Mr. Law was an executive director of the Company. He headedthe Sales Department of the Group for 32 years before heretired at end of September 2001. He is a member of theStanding Committee of the Guangdong Provincial Committeeof the Chinese People’s Political Consultative Conference, astanding committee member of the Chinese General Chamberof Commerce, Founding President of the Hong Kong Instituteof Real Estate Administration and President of the Shun TakFraternal Association.
CHAN Kai-mingCEng, FIStructE, MICE
Executive Director (Age: 69)
Mr. Chan has been an executive director since 1981. Mr. Chanalso served as an appointed member of the District Board ofShatin for three years from 1985.
CHAN Kui-yuen, ThomasB Comm
Executive Director (Age: 55)
Mr. Chan graduated from the United College, The ChineseUniversity of Hong Kong. He joined the Group in 1973 and isnow responsible for land acquisitions and project planningmatters as well as all of the Group’s projects in China. Mr.Chan is also an executive director of SUNeVision HoldingsLimited.
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SUN HUNG KAI PROPERTIES LIMITED ANNUAL REPORT 2000/01
KWONG Chun
Executive Director (Age: 72)
Mr. Kwong graduated from the Zhong Nan Finance &Economics College of Wuhan in China. He worked for theGuangzhou office of the People’s Bank of China before comingto Hong Kong in 1962 to work for Eternal Enterprises Ltd.He was transferred to Sun Hung Kai Enterprises Ltd. in 1963.In 1972, Sun Hung Kai Properties Ltd. became a listed companyand he has worked for it ever since. He was appointed anexecutive director in 1992.
WONG Yick-kam, MichaelBBA, MBA
Executive Director (Age: 49)
Mr. Wong has been with the Group for 20 years. He obtainedhis Bachelor’s and Master’s degrees in Business Administrationfrom The Chinese University of Hong Kong. He was appointedan executive director in 1996 and is currently responsible forthe Group’s strategic and corporate planning, infrastructureprojects, financial investments, and relations with the investmentcommunity. Mr. Wong is also an executive directorof SUNeVision Holdings Limited and a non-executivedirector of RoadShow Holdings Limited and SmarToneTelecommunications Holdings Limited.
WONG Chik-wing, MikeFHKIS, Registered Professional Surveyor (BS)
Executive Director (Age: 45)
Mr. Wong graduated from the Hong Kong Polytechnic withdistinction. He is a Fellow of the Hong Kong Institute ofSurveyors and a Registered Professional Surveyor. He joinedthe Group in 1981 and is currently responsible for projectmanagement matters of the Group’s development projects.
DIRECTORS AND ORGANIZATION
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SUN HUNG KAI PROPERTIES LIMITED ANNUAL REPORT 2000/01
Chairman & Chief ExecutiveWalter P.S. Kwok
(1)
Vice Chairman & Managing Director
Raymond P.L. Kwok
Organization Chart and Senior Executives
Vice Chairman & Managing Director
Thomas P.K. Kwok
Project Management
Executive DirectorMike C.W. Wong
(3)
Special Projects(5)
Mechanical &Electrical
Installation(6a)
Valuation(8)
Architectural &Engineering
Executive DirectorK. M. Chan
(2)
Leasing(10)
Kowloon StationProject Office
(4)
Construction(6)
ProjectMonitoring
(7)
Hotel (9)
Sales (12)
Project PlanningExecutive DirectorThomas K.Y. Chan
(11)
China(13)
Building Management
Executive DirectorKwong Chun
(14)
StrategicDevelopment
(17)
TransportInfrastructureManagement
(19)
FinancialServices
(21)
EstateManagement
(23)
CompanySecretarial &
Legal(25)
Accounts(27)
Corporate Planning &
InvestmentsExecutive DirectorMichael Y.K. Wong
(15)
BusinessDevelopment
(16)
SUNeVision(18)
LogisticsServices
(20)
Insurance(22)
CorporateFinance
(24)
Internal Affairs(26)
Internal Audit(28)
DIRECTORS AND ORGANIZATION
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SUN HUNG KAI PROPERTIES LIMITED ANNUAL REPORT 2000/01
(1) EXECUTIVE COMMITTEE
Kwok Ping-sheung, WalterMSc(Lond), DIC, MICE, JP
Chairman and Chief Executive
Kwok Ping-kwong, ThomasMSc(Bus Adm), BSc(Eng), FCPA, JP
Vice Chairman and Managing Director
Kwok Ping-luen, RaymondMA(Cantab), MBA, Hon DBA
Vice Chairman and Managing Director
Chan Kai-mingCEng, FIStructE, MICE
Executive Director (Architectural &Engineering)
Chan Kui-yuen, ThomasB Comm
Executive Director (Project Planning)
Kwong ChunExecutive Director (Building Management)
Wong Yick-kam, MichaelBBA, MBA
Executive Director (Corporate Planning &Investments)
Wong Chik-wing, MikeFHKIS, RPS (BS)
Authorized PersonExecutive Director (Project Management)
(1a) MANAGEMENTCONSULTANT
Yung Wing-chung
Leung Kui-king, DonaldBSc
(1b) CHAIRMAN’S OFFICE
So Sing-tak, AndrewBA, MBA
(2) ARCHITECTURAL ANDENGINEERING
Chan Kai-mingCEng, FIStructE, MICE
Executive Director
Sitt Nam-hoiBA(Hons), BArch(Distinction), HKIA
Registered ArchitectAuthorized PersonChief Architect
Yu Chung-yeungCEng, FIStructE, FHKIE, MICE, RSE, RPE
Principal Engineer
Li Kwong-hingBSc(Eng), MSc, DIC, CEng, MIMechE, MCIBSE, MHKIE
Chief Building Services Engineer
Ng Tze-kwan, JeffBArch, MAIBC, MRAIC, HKIA
Registered ArchitectAuthorized PersonDeputy Chief Architect
Yau Hin-chung, WilliamBA(AS)
Deputy Manager
Ng Chuek-tingBSc(Eng)
Senior Structural Engineer
Li Chun-kouBSc(Eng)
Senior Structural Engineer
Choi Siu-chuenMHKIE
Deputy Chief Building Services Engineer
Leung Yuen-dick, DickBA(AS), BArch, MA Arbitration, HKIA
Registered ArchitectAuthorized PersonSenior Architect
Lau Kay-shuiMSc, CEng, MIStructE, MHKIE, RPE, RSE
Senior Structural Engineer
Chiu Wai-kuen, StephenBSc(Eng)
Senior Structural Engineer
Chiu Tai-shing, JosephBASc
Senior Structural Engineer
Li Ka-wingAssistant Manager
(3) PROJECT MANAGEMENT
Wong Chik-wing, MikeFHKIS, RPS(BS)
Authorized PersonExecutive Director
Tung Chi-ho, EricBA(AS)Hons, BArch, RIBA, HKIA
Registered ArchitectAuthorized PersonManager
Tam Tin-fong, MartinBArch, RIBA, FHKIA
Registered ArchitectAuthorized PersonManager
Au Yeung Shiu-keungBSc(Eng), CEng, FHKIE, FCIBSE, FIEE, FIEAust
Manager
Lam Kin-ningBArch, BA(AS)Hons, MSc(Urban Planning), HKIA
Authorized PersonDeputy Manager
Au Ho-cheung, DavidBSc(Arch), MArch, HKIA
Registered ArchitectAuthorized PersonDeputy Manager
Chu Kwok-kit, RingoBA(AS), BArch, RIBA, HKIA, ARAIA
Registered ArchitectAuthorized PersonDeputy Manager
Lu Chee-yuen, SpencerBEng, MEng, CEng, MIStructE, MHKIE, RPE
Authorized PersonDeputy Manager
Wong Kim-wing, BallBA(AS), BArch, HKIA
Registered ArchitectAuthorized PersonDeputy Manager
Tung Siu-lunBSc(Eng), CEng, MIEE
Deputy Manager
Ng Chak-kin, ClarenceBA(AS), BArch, RIBA, HKIA, ARAIA
Registered ArchitectAuthorized PersonAssistant Manager
Woo Yan-fan, StellaBA(AS), MArch, MBA, HKIA
Registered ArchitectAuthorized PersonAssistant Manager
Chiu Hon-hang, ElvinBES, BEDS, BArch, RIBA, HKIA, ARAIA
Registered ArchitectAuthorized PersonAssistant Manager
Chan Hong-ki, RobertBSc, MRICS, AHKIS, RPS(BS)
Authorized PersonAssistant Manager
Chui Ching-sai, AlexBSc, MBA
Assistant Manager
Ip Pui-tung, PaulBA(AS), BArch, HKIA, RIBA
Registered ArchitectAuthorized PersonAssistant Manager
Cheung Chin-hungBEng(Hons), CEng, MHKIE, MICE, MGSHK, EUR.ING,RPE
Assistant Manager
DIRECTORS AND ORGANIZATION
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SUN HUNG KAI PROPERTIES LIMITED ANNUAL REPORT 2000/01
(4) KOWLOON STATIONPROJECT OFFICE
Chan Kai-mingCEng, FIStructE, MICE
Executive Director &Consultant
Wong Chik-wing, MikeFHKIS, RPS(BS)
Authorized PersonExecutive Director
Sitt Nam-hoiBA(Hons), BArch(Distinction), HKIA
Registered ArchitectAuthorized PersonProject Director
Chu Kwok-kit, RingoBA(AS), BArch, RIBA, HKIA, ARAIA
Registered ArchitectAuthorized PersonDeputy Project Director
Cheung Kai-wah, GabrielMConstMgt, FHKIS, FRICS, FCIOB, MCIArb,MACostE, MHKICM, RPS(QS)
Senior Project Manager(Quantity Surveying)
Lau Man-kwan, JuliaBArch, HKIA
Registered ArchitectAuthorized PersonProject Manager (Architectural)
(5) SPECIAL PROJECTS
Chu Chung-kai, SamsonBSc(Hons), MRICS, AHKIS
Manager
Pih Kam-shen, PhilipMHKIE, MASHRAE, MRSES, MHIREA, RPE
Deputy Manager (Building Services &Maintenance)
Chiu Ching-shi, IrisB Comm
Deputy Manager(Leasing & Management)
Lau Lai-ching, EllijahDip.BS(Mktg), MHIREA, MCIH, MHKIH
Deputy Manager(Leasing & Management)
(6) CONSTRUCTION
Wong Chik-wing, MikeFHKIS, RPS(BS)
Authorized PersonExecutive Director
Chien Chung-kwong, PhilipBSc, MEng
Consultant
Kwok Leung Kit-kan, IngridMSc(Bus Adm), BSc(Hons), CEng, MBCS, MHKIE
Manager
Tsoi Siu-ho, RobertBSc, MSc, FHKSA, ACMA, ARCS, DIC
Manager (Central Function)
Lee Bing-shuManager (Central Function)
Mo Kon-fei, KennethMSc(Eng), MBA, CEng, MHKIE, MICE, RSE
Authorized PersonDeputy Manager(Construction Management)
Lu Chee-yuen, SpencerBEng, MEng, CEng, MIStructE, MHKIE, RPE
Authorized PersonDeputy Manager(Construction Management)
Chan Hon-yeeACMA, AHKSA
Deputy Manager(Construction Management)
Tsoi Yuk-man, DesmondMA, FCIArb, MRICS, AHKIS, MCIOB
Deputy Manager(Construction Management)
Hui Lin-sing, RogerBSc(Eng), CEng, MICE, MIStructE, MHKIE, RSE, RPE
Deputy Manager(Construction Management)
Wong Leung Kit-wah, LindaDeputy Manager (Purchasing)
Lam Fuk-wingBSc (Civil Eng)
Assistant Manager(Construction Management)
Lee Kwok-wa, ChrisAssistant Manager(Construction Management)
Cheung Kam-fanAssistant Manager(Construction Management)
Tse Kam-hon, SidneyAssistant Manager(Construction Management)
Ng Kwok-cheung, BarryBCSc (Hons)
Assistant Manager(Information Technology)
Lau Wai-keung, DennisARICS, AHKIS
Assistant Manager (Contract Subletting)
Chan Kin-wah, JonathanTechRICS
Assistant Manager (Contract Subletting)
Lai Wai-ching, PhoebeMSc, FCCA, AHKSA
Assistant Manager (Accounting)
Chan Ying-kuen, DavidAssistant Manager (Accounting)
Fung Siu-kei, CeciliaAssistant Manager (Accounting)
Chan Wai-leung, EricMRICS, AHKIS, AAIQS
Assistant Manager (Contracts)
Loo Wing-lam, WilliamDMS, MIFPO, MIAAI, MHKISA, MIMgt, MIIRSM, CPM
Assistant Manager (Safety and Security)
Lai Siu-ki, PeleMIHRM (HK)
Assistant Manager (Personnel &Administration)
Fung Chi-on, RickyAssistant Manager (Purchasing)
Mak Kwok-leungBSc, CEng, MIMechE, MHKIE, RPE
Assistant Manager (Plant & Machinery)
(6a) MECHANICAL &ELECTRICALINSTALLATION
Yu Yiu-wingManager
Sin Hung-faiAssistant Manager (Fire Services)
Ng Chung-mingAssistant Manager (Fire Services)
Chan Chor-tat, GilbertAssistant Manager (Fire Services)
Tam Ping-ipDMS, MIEEE
Assistant Manager (Electrical Services)
Pang Ki-kaiAIIM
Assistant Manager (Electrical Services)
Lam Chung-mo, MosesBEng(Hons), CEng, MIEE, MHKIE, RPE
Assistant Manager (Electrical Services)
(7) PROJECT MONITORING
Luk Wang-kwong, JohnBSc(Eng), LLB, MSc(Eng), MBA, PDCE, PhD, CEng,FICE, FIStructE, FHKIE, FCIArb
Project Advisor
Wong Wai-tungFHKIE, FCIOB, MCIArb, RPE
Deputy Manager
Tsang Wai-keung, SavioMBA, MCIOB, MCIArb, MASI
Assistant Manager
DIRECTORS AND ORGANIZATION
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SUN HUNG KAI PROPERTIES LIMITED ANNUAL REPORT 2000/01
(8) VALUATION
Fung Chu-hee, AndrewMRICS, AHKIS, RPS
Chartered Valuation SurveyorManager
Siu Man-waiBSc(Hons), MRICS, AHKIS, RPS
Chartered Valuation SurveyorDeputy Manager
(9) HOTEL
a. Royal Garden HotelsInternational Corporation
Chow Yum-chong, FrancisFCCA, FHKSA
Vice President (Finance)
The Royal Garden
Chan Tin-yau, KevenCHSP
General Manager
Cheung Kin-man, RickyBMgt(Hons), B Comm, ASA
Financial Controller
b. New Town Management CompanyLimited
Wong Hoi-jen, RebeccaVice President (Operations & Planning)
Royal Park Hotel
Wong Hoi-jen, RebeccaGeneral Manager
Tang Cheuk-wai, WillyExecutive Assistant Manager (Marketing)
Tam Kam-ming, AndrewFinancial Controller
Royal Plaza Hotel
Wong Hoi-jen, RebeccaGeneral Manager
Kwok Kam-moon, SunnyExecutive Assistant Manager (Operation)
Lee Chi-keung, MarveyFinancial Controller
(10) LEASING
a. Chan Kai-mingCEng, FIStructE, MICE
Executive Director
Wu Po-ong, LawrenceBA(Hons)
Manager
Yeung Siu-mei, JoannaDeputy Manager
Lam Ka-keung, HenryBSc(Hons), MSc(Const & Real Est)
Assistant Manager
Wong, AnnAssistant Manager
b. Kwong Chun
c. Au Yeung Hau-cheong
d. Chu Chung-kai, SamsonBSc(Hons), MRICS, AHKIS
(11) PROJECT PLANNING
Chan Kui-yuen, ThomasB Comm
Executive Director
Au Shiu-tung, PatrickFRICS, FHKIS, RPS
Authorized PersonProject Planning Advisor
Chien Yuan-hwei, GeorgeBSc(Eng), MSc, DIC, CEng, PEng, FICE, MITE
Transportation Advisor
Roger NissimFRICS, FHKIS, RPS
Manager
Au Yeung Hau-cheongManager
Lui Wai-tat, AndyManager
Yiu Wai-ha, ConnieMRICS, AHKIS, RPS
Deputy Manager
Law Yee-wah, AliceBEc
Deputy Manager
Lam Kam-wing, StafenMCIM, MSc
Assistant Manager
(12) SALES
Chow Kwok-yin, EricManager
Yim Dao-kitDeputy Manager
Kong KitDeputy Manager
Lam Po-tung, JosephineBA
Deputy Manager
(13) CHINA
Chan Kui-yuen, ThomasB Comm
Executive Director
Kwong ChunExecutive Director
Tam Tin-fong, MartinBArch, RIBA, FHKIA
Registered ArchitectAuthorized PersonManager (Design and Construction)
Leung Yu-kai, DavidFCCA, FHKSA
Manager (Finance and Administration)
Lam Yuet-wah, JosephMBA, BBus, AHKSA, ASA
Deputy Manager
O Nam-yuenDeputy Manager
Chau Sai-yim, StephenDeputy Manager
Fok Yau-kitFCEA, DMS, MBIM
Assistant Manager
(14) BUILDING MANAGEMENT
Kwong ChunExecutive Director
Mok Chi-hungFCIH, FHKIH, MHIREA, RPHM
Manager
Kwong Ching-wai, AlkinBSc(Eng), PgDIT, MIStructE, MHKIE, RPE, RSE
Authorized PersonDeputy Manager
Lam Chak-hin, IvanSSCE, Foreign Assoc. ASLA
Deputy Manager (Hong Chui)
Kwok Chan-faiMCIH, MHKIH, RPHM
Deputy Manager (Hong Yip)
Wong Kei-onBA, MHKIH, MCIH, RPHM
Assistant Manager (Hong Yip)
Chan Wah-kayB Comm
Assistant Manager (Personnel)
Lee Tze-leung, AdrianBBA, MBA, FCCA, AHKSA
Assistant Manager (Accounting)
Leung Nai-yin, ArthurBBus, FCCA, FHKSA, ACIB, AHKIB, CGA, CPA(Aust)
Assistant Manager (Internal Audit)
DIRECTORS AND ORGANIZATION
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SUN HUNG KAI PROPERTIES LIMITED ANNUAL REPORT 2000/01
Ho Yun-kuen, JohnMRICS, AHKIS, PQS, F.PFM
Assistant Manager (Contracts)
Chau Chung-yiu, DominicMBA, MRICS, AHKIS
Assistant Manager (Technical)
Chan Cheng-san, SamB Comm
Assistant Manager (Nixon & Nicole)
Kwan Yu-kuen, RickyAssistant Manager (SHK Real EstateManagement)
(15) CORPORATE PLANNINGAND INVESTMENTS
Wong Yick-kam, MichaelBBA, MBA
Executive Director
Ma Sau-hon, ChrisBSc, MSc, MBA, DIC, MISE, FHKIE, FICE, RPE, CEng
Manager (Project)
Lau Mei-mui, MayManager (Corporate Communications)
Wong Pak-ho, LawrenceBEng, MBA, CEng, CDipAF, PEng(S’pore), MICE,FHKIE
Manager (Infrastructure)
Lau Shung-oi, SusannaBA, ACA
Manager (Corporate Planning)
Mak Nak-keungBSoc.Sc, MPhil
Deputy Manager (Economic Research)
Hong Pak-cheung, WilliamBSc
Deputy Manager
Chan How-kwan, IreneAssistant Manager
Ramsay, Robert GuyBA(Hons), PhD
Assistant Manager
Cheong Suk-ying, LindaBSoc.Sc, MBA
Assistant Manager
Tse Man-kuen, WinnieAssistant Manager
Poon Chun-wing, JohnnyBSoc.Sc, MBA, CFA, ACCA
Assistant Manager
Sung Lai-ha, LouisaBEc, MTax
Assistant Manager
(16) BUSINESS DEVELOPMENT
Lui Ting, VictorBBA
Manager (Property Investment)
Tsim Tak-po, PaulBSc(Hons), ACA, AHKSA
Manager (Business Development)
Chan Sau-yin, Anita TeresaMRICS, AHKIS, RPS
Deputy Manager (Property Investment)
Ng Kwok-keungBSc
Assistant Manager (Property Investment)
Ly Nhut-quang, PaulBSc, MBA, MAF
Assistant Manager (BusinessDevelopment)
(17) STRATEGICDEVELOPMENT
Chan Kai-lung, PatrickBEc(Hons), MEc
Manager
(18) SUNEVISION
SUNeVision Holdings Limited
Yen Shiao-hua, SheridanBSc(Eng)
Managing Director
(19) TRANSPORTINFRASTRUCTUREMANAGEMENT
Wilson Group
Paul A. SimpsonChief Executive Officer
Sham Yat-wah, SamuelDirector & General Manager
Luk Kam-hon, GaryGeneral ManagerRoute 3 (CPS) Company Limited &Tsing Ma Management Limited
Fong Ping, VincentGeneral ManagerChina Tollways Limited
Wu Tung-chai, PeterGeneral ManagerParking Systems Limited
Cheng Siu-hung, PaulGeneral ManagerAutotoll Limited
Wong Yuk-lan, Nancy Financial Controller
(20) LOGISTICS SERVICES
Yu Ngai-cheung, AlmonBBA
Chief Executive OfficerSun Hung Kai Super Logistics
Wong Pak-ho, LawrenceBEng, MBA, CEng, CDipAF, PEng(S’pore), MICE,FHKIE
Managing DirectorSHK Logistics – China
Leung Lai-chi, MichelleMMgt, MIHRM
DirectorSHK Super Logistics Management
Yiu Kwong-yick, ChristopherBA
Commercial DirectorSHK Logistics – China
Leung Yiu-wah, PhilipBSc(Hons), MBA, MRICS, AHKIS, RPS
General ManagerAirport Freight Forwarding Centre
Cheang lat-meng, SimonBBA
Chief Technology OfficerE-Supply Chain Management
Hui Chi-ming, RaymondBBus, MCIT
Chief Logistics OfficerE-Supply Chain Management
(21) FINANCIAL SERVICES
Au Mo-cheung, AlexManager
Chan Kwok-yan, VincentBA
Deputy Manager
Chung Wah-sang, WelsonMA, ACIS, MHKSI
Deputy Manager
Tam Kim-hung, JosephMBA, FCIS, ACIB
Deputy Manager
Chan Pang-chiAssistant Manager
(22) INSURANCE
Chow Ka-yinManager
DIRECTORS AND ORGANIZATION
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SUN HUNG KAI PROPERTIES LIMITED ANNUAL REPORT 2000/01
Wong Kwai-chuen, AndrewBBA, ACII
Deputy Manager
Ng Man-tong, AnthonyACII, AIIC
Deputy Manager
Yim Ka-yan, AmyAAII
Deputy Manager
(23) ESTATE MANAGEMENT
Wong Chin-wah, JimmyBSc (Est Mgt) Cert Ed, MSISV, AHKIS, MAPFM,MHIREA, RPS
Manager
Chan Kam-faiMCIH
Deputy Manager
Lam Man-pak, PatrickBA(Hons), MCIH
Deputy Manager
Leung Chung-kong, JohnnyDeputy Manager
Lee Cheung-yiu, GordonBSc(Hons), MRICS, MCIOB, AHKIS, ACIArb
Deputy Manager
Mak Hung-cheung, JamesDeputy Manager
Fung Sau-yim, MaureenBSc(Hons)Est. Mgt., MHousMan(Distinction), MBA,FIIM, MHIREA
Deputy Manager
Sham Sik-shing, SimonBTech(Hons), MCIH
Assistant Manager
Chan Shing-waiDip.BA, MCIH
Assistant Manager
Hon Shuk-ching, IreneAssistant Manager
Shiu Wai-ching, TeresaAssistant Manager
Sham Wai-man, RaymondMHKIH, MCIH, MHIREA
Assistant Manager
(24) CORPORATE FINANCE
Au Man-toLLB, FCIS, ACIB
Manager
Kwok Yue-yee, AmyB Comm
Deputy Manager
Ho Ka-wai, JosephineMBA
Assistant Manager
(25) COMPANY SECRETARIALAND LEGAL
Lai Ho-kai, ErnestFCIS
Company Secretary
Tam Sai-ming, WilliamLLM, MSc, MBA, FCIS, MHKSI
Manager
Yung Sheung-tat, SandyBA(Law)Hons
Manager
Kwok Po-chi, HelenLLB(London)Hons
Legal Advisor
Tse Kar-lun, FrankieLLB(Hons)
Assistant Manager
Yeung Ming-yip, JasonLLB(Hons)
Assistant Manager
(26) INTERNAL AFFAIRS
Wu Tze-cheung, PhilipBA(Hons), FCCA, FHKSA, MIHRM (HK)
Manager
Ho Lick-tinDeputy Manager (Marketing of RetailLeasing)
Chan Choi-yin, ClaraMIHRM(HK)
Deputy Manager (Personnel)
Chan Suk-kuen, DoraBSc
Assistant Manager
Wong Ho-keung, JimmyAssistant Manager (Office Management)
Fung Yick-lam, CrisAssistant Manager (Corporate Affairs)
(27) ACCOUNTS
Pun Wing-mou, BernardFCA, FHKSA
Chief Accountant
Zhou Yimin, AndrewMBA, CMgr
Manager
Li Ching-kam, FrederickFCCA, AHKSA
Deputy Chief Accountant
Fok Yat-cheong, EdwardMSc(Eng)
Deputy Manager (EDP)
Lee Hung-chak, MauriceBBA(Hons), FCCA, AHKSA
Deputy Manager
Chow Cheuk-wing, EricFCCA, FHKSA
Senior Accountant
Ho Chi-hong, KurtMCIH, MIMBM
Assistant Manager
Ko Ping-yin, AlbertChief Cashier
Cheung Wai-wahBBA
Assistant Manager (EDP)
Yuen Chork, CharlesAssistant Manager
Leung Cheuk-ming, EricMSc
Assistant Manager (EDP)
(28) INTERNAL AUDIT
Chiu Yue-ming, DanielMAcc, FCCA, FHKSA, FCIS, ACMA, FCPA
Manager
Ho Kui-yuen, KennethBSoc.Sc, MBA, DTM
Deputy Manager (Training)
Wong Chung-wai, BarryBA(Hons), MBA, FCCA, AHKSA
Assistant Manager (Audit)
Hui Sui-tak, AndrewMBA, FCCA, AHKSA
Assistant Manager (Audit)
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SUN HUNG KAI PROPERTIES LIMITED ANNUAL REPORT 2000/01
REPORT OF THE AUDITORS
TO THE SHAREHOLDERS OF SUN HUNG KAI PROPERTIES LIMITED
(incorporated in Hong Kong with limited liability)
We have audited the financial statements on pages 90 to 123 which have been prepared in accordance with accountingprinciples generally accepted in Hong Kong.
RESPECTIVE RESPONSIBILITIES OF DIRECTORS AND AUDITORS
The Companies Ordinance requires the directors to prepare financial statements which give a true and fair view. In preparingfinancial statements which give a true and fair view it is fundamental that appropriate accounting policies are selected and appliedconsistently.
It is our responsibility to form an independent opinion, based on our audit, on those statements and to report our opinionto you.
BASIS OF OPINION
We conducted our audit in accordance with Statements of Auditing Standards issued by the Hong Kong Society of Accountants.An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements.It also includes an assessment of the significant estimates and judgments made by the directors in the preparation of the financialstatements, and of whether the accounting policies are appropriate to the Company’s and the Group’s circumstances, consistentlyapplied and adequately disclosed.
We planned and performed our audit so as to obtain all the information and explanations which we considered necessary inorder to provide us with sufficient evidence to give reasonable assurance as to whether the financial statements are free frommaterial misstatement. In forming our opinion we also evaluated the overall adequacy of the presentation of information in thefinancial statements. We believe that our audit provides a reasonable basis for our opinion.
OPINION
In our opinion the financial statements give a true and fair view of the state of affairs of the Company and the Group as at 30thJune, 2001 and of the profit and cash flows of the Group for the year then ended and have been properly prepared inaccordance with the Companies Ordinance.
Deloitte Touche Tohmatsu
Certified Public Accountants, Hong Kong
Hong Kong, 27th September, 2001
Certified Public Accountants26/F, Wing On Centre111 Connaught Road CentralHong Kong
90
SUN HUNG KAI PROPERTIES LIMITED ANNUAL REPORT 2000/01
CONSOLIDATED PROFIT AND LOSS ACCOUNT
For the year ended 30th June 2001 (Expressed in millions of Hong Kong dollars)
Note 2001 2000
Turnover 2 17,701 25,826Cost of sales (8,440) (15,990)
Gross profit 9,261 9,836Other revenue 547 42Selling and marketing expenses (366) (535)Administrative expenses (1,113) (1,003)
Profit from operations 2 8,329 8,340Finance cost (1,622) (1,709)Finance income 464 572Net finance cost 3 (1,158) (1,137)Profit on disposal of investments 445 1,236Profit on partial disposal of interest in a subsidiary - 2,688Share of profits less losses of associates 573 208Share of profits less losses of jointly controlled entities 1,009 170
Profit before taxation 4 9,198 11,505Taxation 7 (858) (696)
Profit after taxation 8,340 10,809Minority interests (10) 13
Profit attributable to shareholders 8 8,330 10,822Dividends 9 (3,722) (4,202)
Profit for the year retained 4,608 6,620
Profit for the year retained by:Company and subsidiaries 4,897 7,384Associates 138 (92)Jointly controlled entities (427) (672)
4,608 6,620
(Expressed in Hong Kong dollars)
Note 2001 2000
Earnings per share 10Basic $3.47 $4.51Diluted $3.47 N/A
91
SUN HUNG KAI PROPERTIES LIMITED ANNUAL REPORT 2000/01
CONSOLIDATED BALANCE SHEET
As at 30th June 2001 (Expressed in millions of Hong Kong dollars)
Note 2001 2000
Non-current assetsFixed assets 11 94,698 86,291Associates 13 5,043 4,592Jointly controlled entities 14 20,029 19,280Investments 15 2,192 1,992Loans receivable 1,522 1,844Land pending development 17,324 18,908
140,808 132,907
Current assetsStocks 16 25,334 22,972Trade and other receivables 17 3,340 3,417Marketable securities 18 399 1,111Bank balances and deposits 19 9,061 10,414
38,134 37,914
Current liabilitiesBank and other borrowings 20 (4,997) (4,584)Trade and other payables 21 (9,345) (9,884)Deposits received on sale of properties (8,013) (4,669)Taxation (2,574) (2,483)Proposed final dividend (2,401) (2,881)
(27,330) (24,501)
Net current assets 10,804 13,413
Total assets less current liabilities 151,612 146,320
Non-current liabilitiesBank and other borrowings 22 (23,995) (23,805)
Minority interests 23 (1,610) (1,611)
NET ASSETS 126,007 120,904
CAPITAL AND RESERVESShare capital 24 1,201 1,201Share premium and reserves 26 124,806 119,703
SHAREHOLDERS’ FUNDS 126,007 120,904
DirectorsWalter P.S. KwokRaymond P.L. Kwok
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SUN HUNG KAI PROPERTIES LIMITED ANNUAL REPORT 2000/01
PARENT COMPANY BALANCE SHEET
As at 30th June 2001 (Expressed in millions of Hong Kong dollars)
Note 2001 2000
Non-current assetsSubsidiaries 12 30,076 30,079Jointly controlled entities 14 (64) (16)Investments 15 (3) (1)
30,009 30,062
Current assetsTrade and other receivables 17 240 284Amounts due from subsidiaries less provision 84,054 74,809
84,294 75,093
Current liabilitiesBank and other borrowings 20 (11) -Trade and other payables 21 (214) (213)Amounts due to subsidiaries (31,817) (26,898)Proposed final dividend (2,401) (2,881)
(34,443) (29,992)
Net current assets 49,851 45,101
NET ASSETS 79,860 75,163
CAPITAL AND RESERVESShare capital 24 1,201 1,201Share premium and reserves 26 78,659 73,962
SHAREHOLDERS’ FUNDS 79,860 75,163
DirectorsWalter P.S. KwokRaymond P.L. Kwok
93
SUN HUNG KAI PROPERTIES LIMITED ANNUAL REPORT 2000/01
CONSOLIDATED CASH FLOW STATEMENT
For the year ended 30th June 2001 (Expressed in millions of Hong Kong dollars)
Note 2001 2000
Net cash inflow from operating activities 27a 12,183 4,421
Returns on investments and servicing of financeInterest received 518 575Interest paid (2,413) (1,830)Dividends received from listed investments 74 15Dividends received from unlisted investments 3 10Dividends received from associates and jointly controlled entities 369 1,046Dividends paid to shareholders (4,202) (3,842)Dividends paid to minority shareholders (48) (56)
Net cash outflow from returns on investments and servicing of finance (5,699) (4,082)
TaxationHong Kong profits tax paid (650) (1,398)
Investing activitiesPurchase of subsidiaries 27b (58) (41)Purchase of additional interest in subsidiaries (80) (113)Purchase of associates (147) (52)Purchase of jointly controlled entities (19) (120)Purchase of investments (1,019) (1,448)Advances to associates, jointly controlled entities and investee companies (221) (2,093)Acquisition of land pending development (1,844) (5,719)Additions to fixed assets (5,839) (813)Proceeds from disposal of investment properties 361 179Net proceeds from partial disposal of interest in a subsidiary - 3,382Proceeds from disposal of jointly controlled entities - 19Proceeds from disposal of investments 1,303 2,038Proceeds from disposal of other fixed assets 10 27Proceeds from disposal of land pending development - 52Loans and advances repaid 375 549
Net cash outflow from investing activities (7,178) (4,153)
Net cash outflow before financing (1,344) (5,212)
FinancingBank borrowings 12,205 12,455Other borrowings 2,050 1,438Repayment of bank and other borrowings (14,109) (6,543)Capital injection by minority shareholders of a subsidiary 7 -Fundings from/(to) minority shareholders (155) 23
Net cash inflow/(outflow) from financing 27c (2) 7,373
Increase/(decrease) in cash and cash equivalents (1,346) 2,161Cash and cash equivalents at beginning of year 10,354 8,193
Cash and cash equivalents at end of year 27d 9,008 10,354
94
SUN HUNG KAI PROPERTIES LIMITED ANNUAL REPORT 2000/01
CONSOLIDATED STATEMENT OF RECOGNIZED GAINS AND LOSSES
For the year ended 30th June 2001 (Expressed in millions of Hong Kong dollars)
Note 2001 2000
Increase in property valuation arising during the year 26 805 7,933
Exchange differences on translation of the financial statements of foreign entities 26 11 5
Net gains not recognized in the consolidatedprofit and loss account 816 7,938
Profit attributable to shareholders for the year 8,330 10,822
Realized surplus on disposal of investment properties transferred to operating profits 26 (278) (172)
Total recognized gains and losses 8,868 18,588
Net goodwill arising on consolidation 26 (43) (95)
8,825 18,493
95
SUN HUNG KAI PROPERTIES LIMITED ANNUAL REPORT 2000/01
1. PRINCIPAL ACCOUNTING POLICIES
a. Basis of Preparation
The financial statements have been prepared in accordance with all applicable Statements of Standard Accounting Practiceand Interpretations issued by the Hong Kong Society of Accountants, generally accepted accounting principles in HongKong and the requirements of the Hong Kong Companies Ordinance. The financial statements are prepared under thehistorical cost convention as modified for the revaluation of certain properties and investments in securities.
b. Basis of Consolidation
The consolidated financial statements of the Group incorporate the financial statements of the Company and all itssubsidiaries made up to 30th June each year and include the Group’s interests in associates and jointly controlled entitieson the basis set out in note 1(f) and note 1(g) below respectively. The financial statements of the associates and jointlycontrolled entities used for this purpose are either co-terminus with the financial statements of the Company or cover ayear ended not more than six months before the Company’s year-end. The results of subsidiaries, associates and jointlycontrolled entities acquired or disposed of during the year are included in the consolidated profit and loss account fromthe effective dates of acquisition or to the effective dates of disposal. All material intra-group transactions and balances areeliminated on consolidation.
Goodwill or capital reserve arising on acquisition of a subsidiary, an associate or a jointly controlled entity, representing theexcess or shortfall of the value of purchase consideration paid over the Group’s share of the fair value ascribed toseparable net assets of the subsidiary, associate or jointly controlled entity acquired at the date of acquisition, is eliminatedagainst or credited to reserves immediately on acquisition. Upon disposal of a subsidiary, an associate or a jointly controlledentity, the attributable amount of goodwill or capital reserve previously taken to reserves is transferred to profit and lossaccount in calculating the profit or loss on disposal.
Minority interests in the consolidated profit and loss account and balance sheet represents the interests of third partiesoutside the Group in the results and net assets of subsidiaries.
c. Turnover
Turnover derived from the Group’s principal activities comprises proceeds from sale of properties (excluding proceeds ondevelopment properties sold prior to their completion which are included in deposits received on sale of properties undercurrent liabilities), gross rental income from properties letting under operating leases, income from property management,revenue from hotel operation and revenue derived from other business activities including car parking and transportinfrastructure management, logistics business, construction, financial services, insurance, stock broking and IT infrastructureand e-commerce businesses. It does not include the turnover of associates and jointly controlled entities.
d. Revenue Recognition
Revenue of a transaction is recognized when it is probable that the economic benefits associated with the transaction willflow to the Group which will result in increases in equity and these benefits can be measured reliably, on the following basis:
NOTES TO THE FINANCIAL STATEMENTS
96
NOTES TO THE FINANCIAL STATEMENTS
SUN HUNG KAI PROPERTIES LIMITED ANNUAL REPORT 2000/01
1. PRINCIPAL ACCOUNTING POLICIES (Continued)
d. Revenue Recognition (Continued)
(i) Property sales
Revenue and profit from sale of completed properties is recognized upon execution of the sale agreements.
When a development property is sold in advance of completion, revenue and profit is only recognized upon completionof the development. Deposits and instalments received from purchasers prior to this stage are included in currentliabilities.
Where properties are sold under deferred terms with part of the sales proceeds being receivable after an interest-freeperiod, that portions of the differences between the sale prices with and without such terms representing financeincome are allocated to the profit and loss account on a basis that takes into account the effective yields on theamounts of the sales proceeds receivable over the interest-free period.
(ii) Rental income
Rental income from properties letting under operating leases is recognized on straight line basis over the lease terms.
(iii) Hotel operation
Revenue from hotel operation is recognized upon provision of services.
(iv) Interest income
Interest income is accrued on a time proportion basis that takes into account the effective yields on the carryingamount of assets.
(v) Construction
Revenue in respect of building construction job is recognized on the percentage of completion method measured byreference to the proportion that costs incurred to date bear to estimated total costs for the contract.
(vi) Investment income
Income from securities and other investments is recognized when the right to receive payment is established.
(vii) Use of internet services centre facilities
Revenue from customer use of internet services centre facilities is recognized ratably over the term of the agreement.
(viii) Other income
Property management service fee, car parking management fee, insurance income and stock brokerage are recognizedwhen the services are rendered.
e. Subsidiaries
A subsidiary is a company in which the Group, directly or indirectly, holds more than half of the issued share capital, orcontrols more than half of the voting power, or controls the composition of the board of directors. Investments insubsidiaries are carried in the balance sheet of the Company at cost less provision for impairment in value.
97
NOTES TO THE FINANCIAL STATEMENTS
SUN HUNG KAI PROPERTIES LIMITED ANNUAL REPORT 2000/01
1. PRINCIPAL ACCOUNTING POLICIES (Continued)
f. Associates
Associates are those in which the Group is in a position to exercise significant influence, but not control or joint control,over the management, including participation in the financial and operating policy decisions.
Results of associates are incorporated in the consolidated profit and loss account to the extent of the Group’s share ofpost-acquisition profits less losses whereas accounted for in the profit and loss account of the Company only to the extentof dividend income.
Interests in associates are accounted for in the consolidated balance sheet under the equity method and are initiallyrecorded at cost and adjusted for goodwill arising on consolidation at date of acquisition and thereafter for post acquisitionchange in the Group’s share of their net assets whereas in the balance sheet of the Company are stated at cost lessprovision for impairment in value.
g. Joint Ventures
A joint venture is a contractual arrangement whereby the Group and other parties undertake an economic activity whichis subject to joint control and over which none of the parties has unilateral control.
(i) Jointly controlled entities
Jointly controlled entities involve the establishment of a separate entity in which the Group has a long term interest andover which the Group is in a position to exercise joint control with other venturers in accordance with contractualarrangements.
Results of jointly controlled entities are incorporated in the consolidated profit and loss account to the extent of theGroup’s share of post-acquisition profits less losses whereas accounted for in the profit and loss account of theCompany only to the extent of dividend income.
Interests in jointly controlled entities are accounted for in the consolidated balance sheet under the equity method andare initially recorded at cost and adjusted for goodwill arising on consolidation at date of acquisition and thereafter forpost acquisition change in the Group’s share of their net assets whereas in the balance sheet of the Company arestated at cost less provision for impairment in value.
(ii) Jointly controlled assets
Jointly controlled assets are assets of a joint venture over which the Group has joint control with other venturers inaccordance with contractual arrangements and through the joint control of which the Group has control over its shareof future economic benefits earned from the assets.
The Group’s share of jointly controlled assets and any liabilities incurred jointly with other venturers are recognized inthe balance sheets and classified according to their nature. Liabilities and expenses incurred directly in respect of itsinterests in jointly controlled assets are accounted for on an accrual basis. Income from the sale or use of the Group’sshare of the output of the jointly controlled assets, together with its share of any expenses incurred by the jointventures, are recognized in the profit and loss account when it is probable that the economic benefits associated withthe transactions will flow to or from the Group.
98
NOTES TO THE FINANCIAL STATEMENTS
SUN HUNG KAI PROPERTIES LIMITED ANNUAL REPORT 2000/01
1. PRINCIPAL ACCOUNTING POLICIES (Continued)
h. Investments in Securities
(i) Investments
Investments in debt and equity securities held for an identified long-term or strategic purpose are stated at cost lessprovision for impairment in value. Results of investments are accounted for to the extent of dividend and interestincome.
Investments in debt securities which are intended to be held to maturity are measured at amortized cost, less anyimpairment losses recognized, if necessary, in the balance sheet. The amortization of any discount or premium arisingon acquisition is aggregated with other investment income receivable over the period from the date of acquisition tothe date of maturity so as to give a constant yield on the investment.
(ii) Marketable securities
Marketable securities, which are that part of liquid assets temporarily invested in debt and equity securities, are statedat fair value, with unrealized gains and losses included in net profit or loss for the year.
i. Properties
(i) Land pending development
Land pending development, which is stated at cost less provision for impairment in value made by the directors,embraces all land acquired pending any definite intention whether to develop it for long term retention or for sale.When the intention is clear and action initiated, land to be developed for long term retention is reclassified as fixedassets whereas land to be developed for sale and expected to be realized in the normal course of the Group’sproperty development cycle is reclassified as stocks under current assets.
(ii) Investment properties
Investment properties are completed properties which are income producing and held for their investment potentialon a long term basis. Investment properties are included in fixed assets at open market value on the basis of an annualprofessional valuation related to properties on the basis that increases in valuations are credited to the investmentproperty revaluation reserve and decreases in valuations are first set off against increases on earlier valuations on aportfolio basis and thereafter charged to operating profit. Upon disposal of an investment property, the revaluationsurplus/deficit realized is transferred to operating profit in calculating the profit or loss on disposal.
(iii) Hotel properties
Hotel properties and their integral fixed plant used in the operation of hotel are included in fixed assets at open marketvalue on the basis of an annual professional valuation related to individual hotel properties.
(iv) Properties under development
Properties under development for long term retention are classified under fixed assets and are stated at cost lessprovision for impairment in value. These properties are reclassified as investment properties or other properties as thecase may be upon completion of the development.
Properties under development for sale are included in stocks at the lower of cost and net realizable value. Netrealizable value takes into account the price ultimately expected to be realized and the anticipated costs to completion.
Cost of property in the course of development comprises land cost and development costs during the developmentperiod.
99
NOTES TO THE FINANCIAL STATEMENTS
SUN HUNG KAI PROPERTIES LIMITED ANNUAL REPORT 2000/01
1. PRINCIPAL ACCOUNTING POLICIES (Continued)
i. Properties (Continued)
(v) Stocks of completed properties
Completed properties remaining unsold at year end are stated at the lower of cost and net realizable value.
Cost is determined by apportionment of the total land and development costs attributable to the unsold properties.
Net realizable value is determined by reference to sale proceeds of properties sold in the ordinary course of businessless all estimated selling expenses after the balance sheet date, or by management estimates based on prevailingmarket conditions.
(vi) Other properties
Other properties are properties held for production or administrative purposes and are included in fixed assets at costless accumulated depreciation.
j. Depreciation
(i) Investment properties
No depreciation is provided on investment property except where the unexpired term of the lease of the investmentproperty is 20 years or less, in which case the then carrying amount is amortized on a straight line basis over theremaining unexpired term of the lease.
(ii) Hotel properties
No depreciation is provided on hotel property or on its integral fixed plant. It is the Group’s policy to maintain theseassets in a continual state of sound repair and maintenance and to extend and make improvements thereto from timeto time, and accordingly the directors consider that given the estimated lives of these assets and their high residualvalues, any depreciation would be insignificant. The related repair and maintenance expenditure is charged to the profitand loss account in the year in which they are incurred. The costs of significant improvements are capitalized.
(iii) Properties under development
No depreciation is provided on properties under development.
(iv) Other properties
The cost of leasehold land and construction cost of buildings thereon are depreciated on a straight line basis over theterm of the lease.
(v) Other fixed assets
Other fixed assets including equipment, furniture, fixtures and vehicles are stated at cost less depreciation calculated ona straight line method to write off the assets over their estimated useful lives at rates ranging from 10 per cent to33.3 per cent per annum.
100
NOTES TO THE FINANCIAL STATEMENTS
SUN HUNG KAI PROPERTIES LIMITED ANNUAL REPORT 2000/01
1. PRINCIPAL ACCOUNTING POLICIES (Continued)
k. Capitalization of Borrowing Costs
Borrowing costs are expensed as incurred, except to the extent that they are capitalized as being directly attributable tothe construction or production of assets which necessarily take a substantial period of time to get ready for their intendeduse or sale. Capitalization of such borrowing costs begins when construction or production activities commence andceases when the assets are substantially ready for their intended use or sale.
l. Materials
Materials comprising mainly building materials and hotel stocks are valued at cost, calculated on a weighted average costbasis, less provisions, if any.
m. Translation of Foreign Currencies
Foreign currency transactions during the year are converted into Hong Kong dollars at the market rates of exchange rulingat the transaction dates. Monetary assets and liabilities denominated in foreign currencies and financial statements ofoverseas subsidiaries, associates and jointly controlled entities expressed in foreign currencies are translated into HongKong dollars at the market rates of exchange ruling at the date of the balance sheet. Exchange differences arising from thetranslation of the financial statements of overseas subsidiaries, associates and jointly controlled entities are taken directly toreserves. All other exchange differences are dealt with in the profit and loss account.
n. Deferred Taxation
Deferred taxation is provided, using the liability method, on all material timing differences other than those which are notexpected to crystallize in the foreseeable future. Deferred tax asset is not recognized unless its realization is certain.
o. Financial Instruments and Derivatives
Interest rate and currency swaps are used to manage the Group’s exposure to interest rate and foreign exchange ratefluctuation. It is the Group’s policy not to enter into derivative transactions for speculative purposes. The notional amountsof interest rate and currency swaps are recorded off balance sheet. Interest flows arising on the interest rate swaps areaccounted for on an accrual basis.
101
NOTES TO THE FINANCIAL STATEMENTS
SUN HUNG KAI PROPERTIES LIMITED ANNUAL REPORT 2000/01
2. TURNOVER AND PROFIT FROM OPERATIONSThe Group’s turnover and contribution to profit from operations before finance cost by principal activities are analyzed asfollows:
Profit from operationsTurnover before finance cost
2001 2000 2001 2000
Property sales 8,218 16,957 3,625 4,078Rental income 5,392 5,292 4,073 4,059Property management 860 817 252 234Hotel operation 590 542 195 150Other business activities 2,641 2,218 122 263
17,701 25,826 8,267 8,784
Other revenue 547 42Unallocated administrative expenses (485) (486)
Profit from operations 8,329 8,340
Other business activities comprise revenue and profit derived from other activities including car parking and transportinfrastructure management, logistics business, construction financial services, insurance, stock broking, IT infrastructure ande-commerce businesses.
Turnover and contribution to profit from operations outside Hong Kong are insignificant.
3. NET FINANCE COST2001 2000
Interest expense onBank loans and overdrafts 1,551 1,077Other loans wholly repayable within 5 years 568 691Other loans wholly repayable after 5 years 96 55
2,215 1,823Less: Portion capitalized (593) (114)
1,622 1,709Interest income on bank deposits (464) (572)
1,158 1,137
Interest is capitalized at an average annual rate of approximately 6.3 per cent (2000: 6.9 per cent).
(Expressed in millions of Hong Kong dollars)
102
NOTES TO THE FINANCIAL STATEMENTS
SUN HUNG KAI PROPERTIES LIMITED ANNUAL REPORT 2000/01
(Expressed in millions of Hong Kong dollars)
4. PROFIT BEFORE TAXATION2001 2000
Profit before taxation is arrived at
after charging:Cost of properties sold 4,119 12,000Depreciation 223 242Staff costs (including the directors’ emoluments and
retirement schemes contributions) 1,865 1,607Auditors’ remuneration 7 6
and crediting:Dividend income from: listed investments 74 15
unlisted investments 3 10Interest income from: listed investments 11 14Profit on disposal of marketable securities 104 14Net holding gain on marketable securities 42 155
5. DIRECTORS’ EMOLUMENTS AND FIVE HIGHEST PAID INDIVIDUALS2001 2000
Directors’ emoluments: -Fees 1 1Salaries, allowances and benefits in kind 17 16Bonuses 28 11Provident fund contributions 1 1
47 29
Fees paid to independent non-executive directors amounted to HK$200,000 (2000: HK$250,000). They receivedHK$700,000 (2000: nil) as other emoluments.
Number of directors whose emoluments fell within: -
2001 2000Emoluments Band Number Number
HK$M HK$M0 - 1.0 8 7
1.5 - 2.0 4 43.5 - 4.0 - 14.0 - 4.5 2 -4.5 - 5.0 1 -5.0 - 5.5 - 26.5 - 7.0 - 1
25.5 - 26.0 1 -
16 15
The above analysis included two (2000: four) individuals whose emoluments were among the five highest in the Group.Details of the emoluments paid to the other three (2000: one) individuals are:
2001 2000
Salaries, allowances and benefits in kind 10 9Bonuses 10 1
20 10
103
NOTES TO THE FINANCIAL STATEMENTS
SUN HUNG KAI PROPERTIES LIMITED ANNUAL REPORT 2000/01
5. DIRECTORS’ EMOLUMENTS AND FIVE HIGHEST PAID INDIVIDUALS (Continued)Number of employees whose emoluments fell within: -
2001 2000Emoluments Band Number Number
HK$M HK$M5.0 - 5.5 1 -6.0 - 6.5 1 -8.0 - 8.5 1 -9.5 - 10.0 - 1
3 1
6. STAFF RETIREMENT SCHEMESThe Group operates a number of defined contribution schemes for all qualified employees. The assets of these schemesare held separately from those of the Group in independently administered funds. Contributions to these schemes aremade by both the employers and employees at rates ranging from 5 per cent to 10 per cent on the employees’ salary.
With effect from 1st December 2000, the Group sets up an employer sponsored scheme (“MPF Scheme”) for otheremployees. The MPF Scheme is registered with the Mandatory Provident Fund Schemes Authority under the MandatoryProvident Fund Schemes Ordinance. The assets of the MPF Scheme are held separately from those of the Group inindependently administered funds. Pursuant to the rules of the MPF Scheme, the Group and its employees are eachrequired to make contributions to the scheme at specific rates. Contributions of the Group to the MPF Scheme arecharged to profit and loss account as incurred.
Total contributions to the retirement schemes made by the Group during the year amounted to HK$91 million (2000:HK$60 million). Forfeited contributions for the year of HK$9 million (2000: HK$13 million) were used to reduce theexisting level of contributions.
7. TAXATION2001 2000
Hong KongCompany and subsidiaries 722 609Under/(over) provision in prior year 19 (9)
741 600Associates 59 52Jointly controlled entities 58 28
858 680Outside Hong Kong
Jointly controlled entities - 16
858 696
(a) Hong Kong profits tax is provided at the rate of 16 per cent (2000: 16 per cent) based on the estimated assessableprofits for the year. Tax outside Hong Kong is calculated at rate applicable in the relevant jurisdiction.
(b) No provision for deferred taxation has been made as the aggregate effect of all timing differences is insignificant.
8. PROFIT ATTRIBUTABLE TO SHAREHOLDERSProfit attributable to shareholders dealt with in the profit and loss account of the Company amounts to HK$8,419 million(2000: HK$8,292 million).
(Expressed in millions of Hong Kong dollars)
104
NOTES TO THE FINANCIAL STATEMENTS
SUN HUNG KAI PROPERTIES LIMITED ANNUAL REPORT 2000/01
9. DIVIDENDS2001 2000
Interim dividend of HK$0.55 per share based on 2,401 million shares(2000: HK$0.55 per share based on 2,401 million shares) paid 1,321 1,321
Proposed final dividend of HK$1.00 per share based on 2,401 million shares(2000: HK$1.20 per share based on 2,401 million shares) 2,401 2,881
3,722 4,202
10. EARNINGS PER SHAREThe calculation of basic earnings per share is based on HK$8,330 million (2000: HK$10,822 million) being profit attributableto shareholders and on 2,400,907,362 shares (2000: 2,400,907,362 shares) in issue during the year.
The calculation of diluted earnings per share for the year is based on HK$8,330 million being profit attributable to shareholdersand on the weighted average number of 2,400,935,185 shares after adjusting for the dilutive effects of all potential ordinaryshares. No diluted earnings per share is presented for the year ended 30th June 2000 as the exercise of the share optionsoutstanding during that year have no dilutive effect on the earnings per share.
2001 2000
Number of ordinary shares used in calculating basicearnings per share 2,400,907,362 2,400,907,362
Number of ordinary shares deemed to be issued fornominal consideration for share options 27,823 -
Weighted average number of shares used in calculatingdiluted earnings per share 2,400,935,185 2,400,907,362
11. FIXED ASSETSProperties
Investment Hotel under Other OtherThe Group properties properties development properties fixed assets Total
(a) Movement during yearCost or valuationAt beginning of year 77,611 3,950 2,120 1,884 1,513 87,078Additions 1,306 27 5,641 - 566 7,540Transfer in 424 - 137 664 22 1,247Disposals (350) - - - (54) (404)Transfer out (47) - (358) - (306) (711)Revaluation surplus 684 233 - - - 917
At end of year 79,628 4,210 7,540 2,548 1,741 95,667
Accumulated depreciationAt beginning of year - - - 175 612 787Charge for the year - - - 68 155 223Transfer in - - - 46 - 46Disposals - - - - (41) (41)Transfer out - - - - (46) (46)
At end of year - - - 289 680 969
Net book value at30/6/2001 79,628 4,210 7,540 2,259 1,061 94,698
Net book value at30/6/2000 77,611 3,950 2,120 1,709 901 86,291
(Expressed in millions of Hong Kong dollars)
105
NOTES TO THE FINANCIAL STATEMENTS
SUN HUNG KAI PROPERTIES LIMITED ANNUAL REPORT 2000/01
11. FIXED ASSETS (Continued)Properties
Investment Hotel under Other OtherThe Group properties properties development properties fixed assets Total
(b) Basis of book value2001 professional valuation 79,628 4,210 - - - 83,838Cost - - 7,540 2,548 1,741 11,829
79,628 4,210 7,540 2,548 1,741 95,667
(c) Net book value of properties shown above comprises:2001 2000
Land in Hong Kong held underLong Lease (not less than 50 years)
Investment properties 18,363 18,752Hotel properties 1,400 1,250Properties under development - 283Other properties 541 178
20,304 20,463
Medium-term lease (less than 50 years but not less than 10 years)Investment properties 59,409 58,173Hotel properties 2,810 2,700Properties under development 7,448 1,736Other properties 1,718 1,531
71,385 64,140
Land outside Hong Kong held underLong Lease (not less than 50 years)
Investment properties 686 686Properties under development 92 101
778 787
Medium-term lease (less than 50 years but not less than 10 years)Investment properties 1,170 -
1,170 -
93,637 85,390
(d) Investment properties and hotel properties revaluation
The Group’s investment properties and hotel properties have been revalued as at 30th June, 2001 by Messrs. Knight Frank,Chartered Surveyors on an open market value basis in their existing state by reference to comparable market transactionsand where appropriate on the basis of capitalization of the net income allowing for reversionary income potential.
(e) Gross rental receivable from and profit on disposal of the Group’s investment properties during the year amounted toHK$5,008 million (2000: HK$4,920 million) and HK$289 million (2000: HK$113 million) respectively.
(f) The carrying amount of properties under development as at 30th June 2001 included interest capitalized in theamount of HK$707 million (2000: HK$415 million).
12. SUBSIDIARIES
The Company
2001 2000
Unlisted shares, at cost 30,076 30,079
Particulars regarding principal subsidiaries are set out on pages 116 to 120.
(Expressed in millions of Hong Kong dollars)
106
NOTES TO THE FINANCIAL STATEMENTS
SUN HUNG KAI PROPERTIES LIMITED ANNUAL REPORT 2000/01
13. ASSOCIATES
The Group
2001 2000
Unlisted shares, at cost 156 169Hong Kong listed shares, at cost 806 680Share of post-acquisition reserves 2,041 1,905
3,003 2,754Goodwill on acquisition of associates eliminated (149) (113)
Share of net assets 2,854 2,641Amounts due from associates 2,221 1,974Amounts due to associates (32) (23)
5,043 4,592
Market value of Hong Kong listed shares 4,887 4,951
Particulars regarding principal associates are set out on page 123.
14. JOINTLY CONTROLLED ENTITIES2001 2000
The Group The Company The Group The Company
Unlisted shares, at cost 1,072 4 1,156 4Share of post-acquisition reserves 1,997 - 2,509 -
3,069 4 3,665 4Goodwill on acquisition of jointly controlled
entities eliminated (91) (91)
Share of net assets 2,978 3,574Amounts due from jointly controlled entities 17,798 1 15,992 1Amounts due to jointly controlled entities (747) (69) (286) (21)
20,029 (64) 19,280 (16)
Particulars regarding principal jointly controlled entities are set out on pages 121 to 122.
15. INVESTMENTS2001 2000
The Group The Company The Group The Company
Listed held-to-maturity debt securities, overseas 532 - - -Unlisted held-to-maturity debt securities 61 - - -Listed equity securities, Hong Kong 525 - 1,354 -Unlisted equity securities 1,004 - 585 -
2,122 - 1,939 -Amounts due from investee companies 98 - 88 -Amounts due to investee companies (28) (3) (35) (1)
2,192 (3) 1,992 (1)
Market valueListed overseas 544 - - -Listed in Hong Kong 580 - 1,827 -
1,124 - 1,827 -
(Expressed in millions of Hong Kong dollars)
107
NOTES TO THE FINANCIAL STATEMENTS
SUN HUNG KAI PROPERTIES LIMITED ANNUAL REPORT 2000/01
16. STOCKS
The Group
2001 2000
Properties under development 22,496 19,651Stock of completed properties for sale 2,785 3,265Materials 53 56
25,334 22,972
The amount of the above stocks that are carried at net realizable value was HK$1,259 million (2000: HK$854 million).
17. TRADE AND OTHER RECEIVABLES2001 2000
Note The Group The Company The Group The Company
Debtors, deposits and prepayments 2,864 240 2,926 284Amounts due from customers for contract work 17a 76 - 38 -Short term loans 400 - 453 -
3,340 240 3,417 284
Consideration in respect of sold properties are payable by the purchasers pursuant to the terms of the sale and purchaseagreements. Monthly rent in respect of leased properties are payable in advance by the tenants. Other trade debtors settletheir accounts according to the payment terms as stated in contracts.
Included in trade and other receivables are trade debtors of HK$1,373 million (2000: HK$1,186 million), of which 80 percent aged less than 60 days, 4 per cent between 61 to 90 days and 16 per cent more than 90 days (2000: 74 per cent,7 per cent and 19 per cent respectively).
17a. Amounts due from/(to) customers for contract works
The Group
Note 2001 2000
Contract costs incurred plus recognizedprofits less recognized losses 196 2,304
Less: Progress billings (135) (2,444)
61 (140)
Represented by:Due from customers included in current assets 17 76 38Due to customers included in current liabilities 21 (15) (178)
61 (140)
(Expressed in millions of Hong Kong dollars)
108
NOTES TO THE FINANCIAL STATEMENTS
SUN HUNG KAI PROPERTIES LIMITED ANNUAL REPORT 2000/01
18. MARKETABLE SECURITIES
The Group
2001 2000
Equity securities, at market value
Listed in Hong Kong 318 278Listed overseas 31 201
Debt securities, at market valueListed overseas 50 632
399 1,111
19. BANK BALANCES AND DEPOSITS
The Group
2001 2000
Short term bank deposits 8,736 10,205Bank balances and cash 325 209
9,061 10,414
20. BANK AND OTHER BORROWINGS2001 2000
Note The Group The Company The Group The Company
Unsecured bank overdrafts 53 11 60 -Non-current liabilities due within 1 year 22 4,944 - 4,524 -
4,997 11 4,584 -
21. TRADE AND OTHER PAYABLES2001 2000
Note The Group The Company The Group The Company
Creditors and accrued expenses 9,330 214 9,706 213Amounts due to customers for contract work 17a 15 - 178 -
9,345 214 9,884 213
Included in trade and other payables are trade creditors of HK$458 million (2000: HK$511 million), of which 86 per centaged less than 60 days, 1 per cent between 61 to 90 days and 13 per cent more than 90 days (2000: 75 per cent, 1 per centand 24 per cent respectively).
(Expressed in millions of Hong Kong dollars)
109
NOTES TO THE FINANCIAL STATEMENTS
SUN HUNG KAI PROPERTIES LIMITED ANNUAL REPORT 2000/01
22. BANK AND OTHER BORROWINGS
The Group
Note 2001 2000
Unsecured bank loans repayableWithin 1 year 4,269 2,074After 1 year, but within 2 years 6,380 12,193After 2 years, but within 5 years 8,171 8,422After 5 years 5,258 379
24,078 23,068
Other unsecured loans repayableWithin 1 year 675 2,450After 1 year, but within 2 years 300 675After 2 years, but within 5 years 2,302 1,100After 5 years 1,584 1,036
4,861 5,261
28,939 28,329Less: Amount due within 1 year included under current liabilities 20 (4,944) (4,524)
23,995 23,805
(a) The above other unsecured loans are repayable on various dates up to 30th June 2010 at commercial market rates.
(b) Bank loans shown above that are not wholly repayable within 5 years amounted to HK$7,208 million (2000:HK$1,023 million).
23. MINORITY INTERESTS
The Group
2001 2000
Share of equity and reserves in subsidiaries 729 728Amounts due to minority shareholders 923 943Amounts due from minority shareholders (42) (60)
1,610 1,611
24. SHARE CAPITAL2001 2000
Number Numberof shares of shares
in million Amount in million Amount
Authorized:Ordinary shares of $0.50 eachAt beginning and end of year 2,900 1,450 2,900 1,450
Issued and fully paid:Ordinary shares of $0.50 eachAt beginning and end of year 2,401 1,201 2,401 1,201
(Expressed in millions of Hong Kong dollars)
110
NOTES TO THE FINANCIAL STATEMENTS
SUN HUNG KAI PROPERTIES LIMITED ANNUAL REPORT 2000/01
25. SHARE OPTION SCHEMES
(a) The Company’s share option scheme
In accordance with the Company’s share option scheme for employees, the Board of directors of the Company may grantoptions to eligible employees, including executive directors of the Company or any subsidiary of the Company, to subscribefor shares in the Company. The subscription price is set at not less than the higher of the nominal value of the share and 80per cent of the average of the closing prices on the five trading days immediately preceding the date of offer of the option.The maximum number of shares over which options may be outstanding may not exceed 1 per cent of the issued sharecapital of the Company from time to time.
As at 30th June 2001, there were 810,000 share options outstanding, granted at HK$1 per lot to a number of Directorsand senior employees of the Company, which were exercisable, inter alia, between 15th February 2001 and 14th February2005 at an exercise price of HK$70 per share and at the maximum of one-third per annum during the first three years. Nooptions were exercised and expired during the year.
(b)Subsidiary’s share option scheme
The Company’s subsidiary, SUNeVision Holdings Limited (“SUNeVision”) operates a share option scheme pursuant to whichSUNeVision may grant, for a consideration of HK$1 for each lot, options to any full time employees, including executivedirectors of SUNeVision or its subsidiaries to subscribe for shares in SUNeVision. The subscription price is the highest of theclosing price of SUNeVision’s share on the date of the offer; the average closing price on the five trading days immediatelypreceding the date of offer; and the nominal value of SUNeVision’s share. The maximum number of shares over which optionsmay be granted shall not exceed 10 per cent of the issued share capital of SUNeVision from time to time.
Movements in share options to subscribe for ordinary shares in SUNeVision during the year are as follows:
Number of share options
Exercise Exercisable At beginning Granted during Lapsed duringDate of grant price period of year the year the year At end of year
28th March 2000 HK$10.380 31.12.2000 9,920,000 - (1,685,000) 8,235,000to
30.12.2005
30th November 2000 HK$3.885 15.11.2001 - 4,115,500 (240,000) 3,875,500to
14.11.2006
7th April 2001 HK$2.340 20.3.2002 - 4,925,000 - 4,925,000to
19.3.2007
9,920,000 9,040,500 (1,925,000) 17,035,500
26. SHARE PREMIUM AND RESERVES2001 2000
The Group The Company The Group The Company
Share premiumAt beginning of year and end of year 17,000 17,000 17,000 17,000
Capital reserveAt beginning of year 664 5,281 727 5,281Goodwill on purchase of additional interest
in subsidiaries (94) - (88) -Net reserve on acquisition of subsidiaries 93 - - -Goodwill on acquisition of associates (36) - (6) -Reserve on acquisition of jointly controlled entities - - 31 -
At end of year 627 5,281 664 5,281
(Expressed in millions of Hong Kong dollars)
111
NOTES TO THE FINANCIAL STATEMENTS
SUN HUNG KAI PROPERTIES LIMITED ANNUAL REPORT 2000/01
26. SHARE PREMIUM AND RESERVES (Continued)2001 2000
The Group The Company The Group The Company
Property revaluation reservesAt beginning of year 49,955 - 42,194 -Surplus on revaluation of properties held
by subsidiaries attributable to the Group- Investment properties 668 - 7,181 -- Hotel properties 233 - 356 -
Surplus realized on disposal of investmentproperties held by- Subsidiaries (278) - (117) -- Jointly controlled entities - - (55) -
Share of surplus/(deficit) on revaluation of investmentproperties held by jointly controlled entities (96) - 396 -
At end of year 50,482 - 49,955 -
Building reserveAt beginning of year - - 830 830Transfer to retained profits - - (830) (830)
At end of year - - - -
Dividend equalization reserveAt beginning of year - - 350 350Transfer to retained profits - - (350) (350)
At end of year - - - -
General reserveAt beginning of year - - 5 -Transfer to retained profits - - (5) -
At end of year - - - -
Exchange reserveAt beginning of year (4) - (9) -Exchange difference arising on translation of
financial statements of- Subsidiaries 6 - 1 -- Associates 1 - - -- Jointly controlled entities 4 - 4 -
At end of year 7 - (4) -
Retained profitsAt beginning of year 52,088 51,681 44,315 46,411Transfer from building reserve - - 830 830Transfer from dividend equalization reserve - - 350 350Transfer from general reserve - - 5 -Goodwill adjustment on acquisition of a subsidiary
by a jointly controlled entity - - (32) -Goodwill adjustment on acquisition of a subsidiary
by an associate (6) - - -Profit for the year retained 4,608 4,697 6,620 4,090
At end of year 56,690 56,378 52,088 51,681
Total share premium and reserves 124,806 78,659 119,703 73,962
Distributable reserves of the Company as at 30th June 2001 amounted to HK$56,378 million (2000: HK$51,681 million).
(Expressed in millions of Hong Kong dollars)
112
NOTES TO THE FINANCIAL STATEMENTS
SUN HUNG KAI PROPERTIES LIMITED ANNUAL REPORT 2000/01
26. SHARE PREMIUM AND RESERVES (Continued)2001 2000
Share premium The Company Jointly The Company Jointlyand reserves of the and controlled and controlledGroup retained by: subsidiaries Associates entities subsidiaries Associates entities
Share premium 17,000 - - 17,000 - -Capital reserve 604 23 - 641 23 -Investment property
revaluation reserve 47,441 - 1,919 47,004 - 2,062Hotel property revaluation reserve 1,122 - - 889 - -Exchange reserve 12 - (5) 6 (1) (9)Retained profits 55,577 1,030 83 50,740 894 454
121,756 1,053 1,997 116,280 916 2,507
27. NOTES TO CONSOLIDATED CASH FLOW STATEMENT
(a) Reconciliation of profit from operations to net cash inflow from operating activities
2001 2000
Profit from operations 8,329 8,340Depreciation 223 242Profit on disposal of investment properties (289) (113)Loss on disposal of other fixed assets 3 -Loss on disposal of land pending development - 7Dividends received from investments (77) (25)Interest income (242) (14)Provision for diminution in value of a jointly controlled entity - 223Provision for diminution in value of a long term investment 9 -Loss on disposal of a jointly controlled entity - 8Decrease in stocks 520 7,649Decrease in trade and other receivables 225 193Decrease/(increase) in marketable securities 712 (824)Increase/(decrease) in trade and other payables (574) 337Increase/(decrease) in deposits received on sale of properties 3,344 (11,602)
Net cash inflow from operating activities 12,183 4,421
(b)Purchase of subsidiaries
2001 2000
Net assets acquired:Fixed assets 1,105 -Associates 3 -Jointly controlled entities 45 -Land pending development - 434Trade and other receivables 13 -Bank balances and deposits 57 -Trade and other payables (291) (393)Bank borrowings (464) -Minority interests (155) -
313 41Less:
Associates (2) -Jointly controlled entities (103) -
208 41Net reserve on acquisition (93) -
115 41
(Expressed in millions of Hong Kong dollars)
113
NOTES TO THE FINANCIAL STATEMENTS
SUN HUNG KAI PROPERTIES LIMITED ANNUAL REPORT 2000/01
27. NOTES TO CONSOLIDATED CASH FLOW STATEMENT (Continued)
(b)Purchase of subsidiaries (Continued)
2001 2000
Satisfied by:Cash paid 115 41
Analysis of net cash outflow of cash and cash equivalentsin respect of the purchase of subsidiaries:Cash consideration paid 115 41Bank balances and deposits acquired (57) -
58 41
(c) Analysis of changes in financing during the yearShare capital Bank and
and share other Minoritypremium borrowings interests Total
At 1st July 1999 18,201 20,979 967 40,147Net cash inflow from financing - 7,350 23 7,373Minority interests in- losses - - (13) (13)- investment property revaluation reserve - - 18 18- exchange reserve - - 3 3
Dividends paid to minority shareholders - - (56) (56)Partial disposal of interest in a subsidiary - - 694 694Effect of purchase of additional interest in a subsidiary - - (25) (25)
At 30th June 2000 and 1st July 2000 18,201 28,329 1,611 48,141Net cash inflow/(outflow) from financing - 146 (148) (2)Arising on purchase of subsidiaries - 464 155 619Minority interests in- profits - - 10 10- investment property revaluation reserve - - 16 16
Dividends paid to minority shareholders - - (48) (48)Effect of purchase of additional interest in subsidiaries - - 14 14
At 30th June 2001 18,201 28,939 1,610 48,750
(d)Analysis of the balances of cash and cash equivalents at end of year
2001 2000
Short term bank deposits 8,736 10,205Bank balances and cash 325 209Bank overdrafts (53) (60)
9,008 10,354
(Expressed in millions of Hong Kong dollars)
114
NOTES TO THE FINANCIAL STATEMENTS
SUN HUNG KAI PROPERTIES LIMITED ANNUAL REPORT 2000/01
28. JOINTLY CONTROLLED ASSETSAt the date of the balance sheet, the aggregate amounts of assets and liabilities recognized in the financial statementsrelating to the Group’s interests in jointly controlled assets are as follows:
2001 2000
Investment properties 5,980 5,980Land pending development 71 70Land under development 1,889 -Stocks of completed properties for sale 58 58
7,998 6,108
Creditors and accrued expenses 93 94
29. RELATED PARTY TRANSACTIONSDuring the year, the Group undertook various transactions with related parties for provision of finance, lease of premises,purchasing of goods and rendering of certain services related to property construction, management and marketingactivities. The following is a summary of significant transactions between the Group and related parties, which were carriedout at similar terms to other customers or suppliers and at market prices:
Associates Jointly controlled entities
2001 2000 2001 2000
Interest income 131 140 357 48Rental income 76 48 4 4Other revenue from services rendered 63 966 1,051 929Purchase of goods and services - - 442 276
The outstanding balances with associates and jointly controlled entities at the balance sheet date were disclosed in Notes(13) and (14).
30. CONTINGENT LIABILITIES AND COMMITMENTS
The Group
At the date of the balance sheet, the Group had contingent liabilities and commitments, so far as not provided for in theconsolidated financial statements, as follows:
2001 2000
(a) Capital commitments in respect of fixed assetsContracted but not provided for 1,685 1,713Authorized but not contracted for 363 -
(b) Group’s share of capital commitments of joint ventures:Contracted but not provided for 3,629 858Authorized but not contracted for 156 209
(c) Guarantees given to banks and financial institutions in respect of facilities drawn by an associate and jointly controlledentities amounting to approximately HK$1,046 million (2000: HK$1,463 million) and HK$6,652 million (2000:HK$4,651 million) respectively.
(Expressed in millions of Hong Kong dollars)
115
NOTES TO THE FINANCIAL STATEMENTS
SUN HUNG KAI PROPERTIES LIMITED ANNUAL REPORT 2000/01
30. CONTINGENT LIABILITIES AND COMMITMENTS (Continued)
The Company
At the date of the balance sheet, the Company had contingent liabilities, not included in the Company’s financial statements,in respect of guarantees for bank and other borrowings drawn by:
2001 2000
Subsidiaries 28,849 27,922Associate 1,046 1,463Jointly controlled entities 6,575 4,651
36,470 34,036
31. FINANCIAL INSTRUMENTSDetails of the Group’s outstanding interest rate swaps and currency swaps at balance sheet date are as follows:
Net notionalprincipal amount
2001 2000
Interest rate swaps- Less than 1 year 675 1,800- 1 to 5 years 1,700 1,775- After 5 years 1,250 100
3,625 3,675
Currency swaps- After 5 years 234 234
234 234
Counterparties to swap transactions are reputable international financial institutions with strong credit ratings. The Grouphas established treasury policies and control procedures to assess and monitor the counterparty limits and exposure. TheGroup does not consider that it has any significant exposure to any individual counterparty, nor does it anticipate non-performance by any of its counterparties.
32. APPROVAL OF FINANCIAL STATEMENTSThe financial statements set out on pages 90 to 123 were approved by the board of directors on 27th September, 2001.
(Expressed in millions of Hong Kong dollars)
116
SUN HUNG KAI PROPERTIES LIMITED ANNUAL REPORT 2000/01
The directors are of the opinion that a complete list of the particulars of all subsidiaries will be of excessive length and thereforethe list following contains only the particulars of subsidiaries which principally affect the profit and loss account or assets of theGroup. A complete list of all the subsidiaries will be annexed to the Company’s 2001 annual return.
Unless otherwise stated, all principal subsidiaries are incorporated and operating in Hong Kong and unlisted.
Percentage of issuedordinary share capital held Issued Capital
Name Note The Company The Group Activities (HK$)
SUNeVision Holdings Limited 2 - 84.34 IT Infrastructure & 203,347,900(Listed in Hong Kong) Internet Services
Investment
Sun Hung Kai Real Estate 100 100 General management 1,000,000Agency Limited & agency
New Town (N.T.) Properties Limited 11.89 100 Investment holding 2,287,659,338
Hung Kai Finance Company Limited 100 100 Registered deposit-taking 100,000,200company
Fidelity Finance Company Limited 100 100 Finance 200
Honour Finance Company Limited 100 100 Finance 500,000
Sun Hung Kai Properties 100 100 Finance 100,000(Financial Services) Limited
Sun Hung Kai Properties 100 100 General insurance 75,000,000Insurance Limited
Honour Securities Company Limited - 100 Share broking 6,000,000
Sun Hung Kai Engineering 100 100 Architectural & engineering 350,000Company Limited
Sanfield Building Contractors Limited 100 100 Building construction 2,500,000
Everlight Engineering Company Limited - 100 Fire prevention & 50,000mechanical engineering
Aegis Engineering Company Limited - 100 Plant and machine hire 100,000
Hong Yip Service Company Limited - 100 Property management 100,000
Kai Shing Management Services Limited 100 100 Property management 10,000
Mantegna Investment Company Limited 1 - 100 Hotel ownership 10,000,000
New Town Serviced Apartment - 100 Furnished apartment 200Management Company Limited management
Royaltelle International Limited - 100 Hotel management 2
Additech Ltd. 1 - 100 Property investment US$1
Addpower Properties Limited 1 - 100 Property investment US$1
Airport Freight Forwarding Centre - 100 Freight forwarding centre 100Company Limited
Amglo Master Ltd. 1 - 100 Property investment US$1
Antanpark Limited 1 - 100 Property investment US$1
Antinio Investments Limited 1 - 100 Property investment US$1
Ao Ta Development Company Limited 50 100 Property investment 200
Artsland Properties Investment Ltd. 1 - 100 Property investment US$1
Barnard Enterprises Limited 1 - 75 Property investment US$100
Beauty Marble Investment Limited - 100 Property investment 2
PRINCIPAL SUBSIDIARIES
117
PRINCIPAL SUBSIDIARIES
SUN HUNG KAI PROPERTIES LIMITED ANNUAL REPORT 2000/01
Percentage of issuedordinary share capital held Issued Capital
Name Note The Company The Group Activities (HK$)
Biliboss Limited 1 - 100 Property investment US$1
Biliwide Limited - 100 Property development 20
Billion Mix Limited - 100 Property investment 2
Borracho Company Limited - 100 Property investment 200
Branhall Investments Limited 1 - 100 Property investment 40,000,000
Campsie Enterprise Limited 1 - 100 Property investment US$1
Caranko Limited - 100 Property investment 2
Cherry Land Company Limited - 100 Property investment 1,500,000
Coundon Enterprise Limited 1 - 100 Property investment US$1
Country Well (H.K.) Limited - 100 Property investment 2
Crownsnest Enterprise Limited 1 - 100 Property investment US$1
Darlinghurst Enterprise Limited 1 - 100 Property investment US$1
Deluxe Plan Enterprises Limited - 100 Property investment 2
Deporte Limited 1 - 100 Property investment US$1
Dictado Company Limited - 100 Property investment 200
Dipende Limited 1 - 100 Property investment US$1
Donora Company Limited 50 100 Property development, 2share investmentand dealing
Durbanham Enterprise Limited 1 - 100 Property investment US$1
Entero Company Limited 50 100 Property investment 200
Ever Channel Limited - 100 Property investment 2
Excellent Chance Limited 1 - 100 Property investment US$1
Far Fortune Investment Limited - 100 Property investment 2
Firstmax Limited - 100 Property investment 2
Forever Glory Investments Limited 1 - 100 Property investment US$1
Fortune Honor Limited - 100 Property investment 2
Fortune Yield Investment Limited - 100 Property investment 2
Full Market Limited - 100 Property investment 2
Garudia Limited - 100 Property investment 2
Getherich Ltd. 1 - 100 Property investment US$1
Gleamland Limited 1 - 100 Property investment US$1
Golden Square Properties 1 - 100 Property investment 1,000,000Enterprises Limited
Goldland Limited 1 - 100 Property investment US$1
Grand Kosky Ltd. 1 - 100 Property investment US$1
Groupland Ltd. 1 - 100 Property investment US$1
Grumete Company Limited 100 100 Property development 200
Harsco Limited - 100 Property development 2
Henca Limited 1 - 100 Property investment US$1
Hintline Investments Limited - 100 Property development 5,000
118
PRINCIPAL SUBSIDIARIES
SUN HUNG KAI PROPERTIES LIMITED ANNUAL REPORT 2000/01
Percentage of issuedordinary share capital held Issued Capital
Name Note The Company The Group Activities (HK$)
Honenberg Limited - 100 Property investment 2
Hong Kong Business Aviation 4 - 35 Business Aviation Centre 1,000,000Centre Limited
Honour Futures Limited - 100 Commodities dealing 7,000,000
Hopley International Limited 1 - 100 Property investment US$1
Horway Limited 1 - 100 Property development US$1
Hung Kai Finance Investment - 100 Property investment 200Holding Limited
Jugada Company Limited - 100 Property investment 2
Kamchatka Company Limited - 100 Property investment 200
Kartasun Limited - 100 Property investment 2
Kimrose Investments Ltd. 1 - 100 Property investment US$1
King Star Estate Limited - 99.9 Property development 10,000
Kingsgrove Enterprise Limited 1 - 100 Property investment US$1
Laboster Company Limited 50 100 Property investment 2
Lee Bit Kai Investment 100 100 Property investment 1,000Company Limited
Light Time Investments Limited - 100 Property development 2and investment
Little Jewel Limited 1 - 100 Property development US$1
Long Tesak Company Limited - 100 Property investment 100,000
Lonsale Company Limited - 100 Property investment 2
Lorient Holdings Ltd. 1 - 100 Property investment US$1
Lunalite Company Limited - 100 Property development 2and investment
Luxsky Ltd. 1 - 100 Property investment US$1
Main Global Limited - 100 Property investment 2
Manceton Limited - 100 Property investment 2
Manmouth Limited - 100 Property development 2and investment
Merit Success Company Limited - 100 Property investment 2
Mindano Limited - 100 Property investment 10,000
Morifunn Ltd. (Formerly Morifund Ltd.) 1 - 100 Property investment US$1
Moristrong Limited 1 - 100 Property investment US$1
Moscova Company Limited 50 100 Property investment 200
Nixon Cleaning Company Limited - 100 Cleaning service 100,000
Open Step Limited - 60 Property investment 10
Oriental Eagle Enterprises Limited - 100 Property investment 2
Pacotilla Company Limited - 100 Property investment 200
Pako Shun Limited - 100 Property investment 2
Parico Fortune Ltd. 1 - 100 Property investment US$1
119
PRINCIPAL SUBSIDIARIES
SUN HUNG KAI PROPERTIES LIMITED ANNUAL REPORT 2000/01
Percentage of issuedordinary share capital held Issued Capital
Name Note The Company The Group Activities (HK$)
Peach Blossom Company Limited 1 - 100 Property investment US$1
Perfect Smart Enterprises Ltd. 1 - 100 Property investment US$1
Ponente Company Limited - 100 Property investment 200
Prelong Limited - 100 Property development 2and investment
Profit Richness Limited 1 - 100 Property investment US$1
Protasan Limited - 100 Property investment 100
Rainforce Limited - 100 Property development 2
SHK (N.T.) Shopping Limited - 100 Property investment 2
SHK Sheung Shui Landmark 50 100 Property investment 200Investment Limited
Shubbery Company Limited - 100 Property investment 200
Speed Cheer Ltd. - 75 Property development 10,000
Speed Wise Limited - 100 Property investment 2
Splendid Kent Limited - 100 Property development 4
Standard Top Limited - 100 Property investment 2
Startrack Company Limited - 100 Property investment 200
Sun Carol Company Limited - 100 Property investment 200
Sun Hung Kai China Trading Limited - 100 Property investment 2
Sun Hung Kai Properties - 100 Property investment 2Consultants Limited
Sun Hung Kai Properties Pacific Limited - 100 Property investment 2
Sun Hung Kai Real Estate - 100 Property investment 2Consultants Limited
Sun Hung Kai Secretarial 50 100 Secretarial services 200Services Limited
Sun Yuen Long Centre Management - 87.5 Property investment 50,000Company Limited and management
Sunfez Company Limited - 100 Property investment 200
Sunrit Enterprises Limited - 100 Property investment 4,000,000
Super Bold Limited - 100 Property investment 10,000
Super Sun Limited - 100 Property development 2
Supreme Ford Limited - 100 Property development 2
Tainam Holdings Limited 1 - 100 Property investment US$1
Ten Choice Development Limited - 100 Property investment 2
Tipro Development Limited - 99.2 Property investment 1,000,000
Tobright Ltd. 1 - 100 Property development US$1
Tonthai Investment Enterprises Limited 1 - 100 Property investment US$1
Town Descant Company Limited - 100 Property investment 200and development
Town Fierce Company Limited - 100 Property investment 10,000
120
PRINCIPAL SUBSIDIARIES
SUN HUNG KAI PROPERTIES LIMITED ANNUAL REPORT 2000/01
Percentage of issuedordinary share capital held Issued Capital
Name Note The Company The Group Activities (HK$)
Truebright Investments Limited - 100 Property development 2and Investment
Tsi Mai Company Limited - 100 Property investment 200
Tsing Ma Management Limited - 66.7 Road management 70,000,000
Tyranny Company Limited 75 100 Property development 400and investment
Uniland Investment 1 - 100 Property investment US$1Enterprises Limited
Upper Hill Company Limited 1 - 100 Property investment US$1
Victory Force Limited - 100 Property investment 2
Victory Winner Limited - 100 Property investment 2
Vimson Limited 1 - 100 Property investment US$1
Virile Investment Enterprises Limited 1 - 100 Property investment US$1
Wai Hung Development 85.7 100 Investment holding and 70,000Company Limited property investment
Warrior Company Limited - 100 Property investment 300
Well Logic Properties 1 - 100 Property investment US$1Investment Limited
Wellden Limited - 100 Property investment 2
Wilson Parking (Holdings) Limited - 100 Investment holding and 1,000car parks operation
Wisearn Properties Investment Limited 1 - 100 Property investment US$1
Wiselink Investments 1 - 100 Property development US$1Enterprises Limited
WTC (Club) Limited - 100 Club management 200
Wylproud Company Limited 50 100 Property investment 2
Yancon Limited - 100 Property investment 2
Zarabanda Company Limited - 100 Property investment 2
Zindemar Investments Corp. 3 100 100 Property development US$2
Notes1. Incorporated in the British Virgin Islands.2. Incorporated in the Cayman Islands.3. Incorporated in Panama.4. Indirectly held by the Company and the Group.
121
SUN HUNG KAI PROPERTIES LIMITED ANNUAL REPORT 2000/01
The directors are of the opinion that a complete list of the particulars of all jointly controlled entities will be of excessive lengthand therefore the list following contains only the particulars of jointly controlled entities which principally affect the profit andloss account or assets of the Group. A complete list of all jointly controlled entities will be annexed to the Company’s 2001annual return.
Unless otherwise stated, all principal jointly controlled entities are incorporated and operating in Hong Kong and unlisted.
Percentage of issuedordinary share capital held
Name Note The Company The Group Activities
Altomatic Limited - 50 Property investment#+ Anbok Limited - 25 Property development
Arrowtown Assets Limited 1 - 49 Property development#+ Asia Container Terminals Limited - 28.5 Container terminals development
# Beijing Sun Dong An Co. Ltd. 2 - 50 Property investment
IFC Development Limited 1 - 47.5 Property development(Formerly Central WaterfrontProperty Development Limited
# Dragon Beauty International Limited - 50 Property development#+ Faith & Safe Transportation Limited - 50 Mid stream operator
Glorious Concrete (H.K.) Limited - 50 Manufacturers of ready mixed concrete#+ Green Valley Landfill Limited - 20 Landfill waste disposal facility#+ Hoi Kong Container Services - 50 Mid stream operator
Company Limited#+ Hong Kong Parking Limited - 50 Parking meters operator
Jade Land Resources Limited - 25 Property development# Kerry Hung Kai Warehouse - 50 Godown operation
(Cheung Sha Wan) Limited
Krimark Investments Limited - 30 Property development+ Mightypattern Limited 25 25 Investment holding+ New-Alliance Asset Investment - 50 Investment management services
Management (Asia) Limited+ Newfoundworld Holdings Limited - 20 Property development and investment
#+ Pearl Delta Limited (Formerly - 20 Solid waste management andPearl Delta WMI Limited) environmental services
#+ Primecredit (Asia) Limited - 46.5 Provision of money lending services#+ Primecredit Limited - 46.5 Deposit-taking company
Ranny Limited - 50 Property investment#+ River Trade Terminal Co. Ltd. 1 - 33 River trade terminal
# Route 3 (CPS) Company Limited - 50 Toll road operation# Senica International Limited - 22.5 Investment holding
#+ South China Transfer Limited (Formerly - 20 Solid waste management andSouth China WMI Transfer Limited) environmental services
Splendid Shing Limited - 50 Property investment+ Star Play Development Limited - 33.3 Property investment+ Tinyau Company Limited - 50 Property investment
PRINCIPAL JOINTLY CONTROLLED ENTITIES
122
PRINCIPAL JOINTLY CONTROLLED ENTITIES
SUN HUNG KAI PROPERTIES LIMITED ANNUAL REPORT 2000/01
Percentage of issuedordinary share capital held
Name Note The Company The Group Activities
+ Topcycle Development Limited - 50 Property development #+ Uttoxeter Limited - 30 Property development#+ Waldorf Realty Limited - 25 Property investment
# Wisdom Choice Investment Limited - 40 Property development# Wolver Hollow Company Limited - 50 Property investment
Xipho Development Company Limited 33.3 33.3 Property development
+ The financial statements of these companies have been audited by firms other than Deloitte Touche Tohmatsu. The aggregate net assets and profits aftertaxation of these jointly controlled entities attributable to the Group amounted to HK$959 million (2000: HK$1,033 million) and HK$487 million (2000:HK$125 million) respectively.
# Companies with year ends not co-terminous with that of Sun Hung Kai Properties Limited.
Note1. Incorporated in the British Virgin Islands.2. Incorporated in The People’s Republic of China.
123
SUN HUNG KAI PROPERTIES LIMITED ANNUAL REPORT 2000/01
The directors are of the opinion that a complete list of the particulars of all associates will be of excessive length and thereforethe list following contains only the particulars of associates which principally affect the profit and loss account or assets of theGroup. A complete list of all associates will be annexed to the Company’s 2001 annual return.
Unless otherwise stated, all principal associates are incorporated and operating in Hong Kong and unlisted.
Percentage of issuedordinary share capital held
Name Note The Company The Group Activities
#+ The Kowloon Motor Bus 1 - 33.99 Public transportationHoldings Limited(listed in Hong Kong)
#+ Ranex Investments Limited - 29 Property development+ SmarTone Telecommunications 1 - 28.21 Mobile telephone system operation
Holdings Limited(listed in Hong Kong)
#+ The Hong Kong School of - 30 Driving SchoolMotoring Limited
#+ Thomas Cook Hung Kai Airport - 25 Money exchange servicesCurrency Exchange Limited
+ The financial statements of these companies have been audited by firms other than Deloitte Touche Tohmatsu. The aggregate net assets and profits aftertaxation of these associates attributable to the Group amounted to HK$2,844 million (2000: HK$2,642 million) and HK$522 million (2000: HK$158million) respectively.
# Companies with year ends not co-terminous with that of Sun Hung Kai Properties Limited.
Note1. Incorporated in Bermuda.
PRINCIPAL ASSOCIATES
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