3SBio Inc. — Interim / Quarterly Report 2012

Aug 16, 2012

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

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HONGKONG CHINESE LIMITED 香港華人有限公司[*]

(Incorporated in Bermuda with limited liability)

(Stock code: 655)

INTERIM RESULTS FOR THE SIX MONTHS ENDED 30TH JUNE, 2012

INTERIM RESULTS

The Directors of Hongkong Chinese Limited (the “Company”) announce the unaudited consolidated interim results of the Company and its subsidiaries (collectively, the “Group”) for the six months ended 30th June, 2012 together with the comparative figures for the corresponding period in 2011 as follows:

CONDENSED CONSOLIDATED INCOME STATEMENT

For the six months ended 30th June, 2012

Note Revenue 2 Cost of sales Gross profit Administrative expenses Other operating expenses Gain on disposal of available-for-sale financial assets Net fair value loss on financial assets at fair value through profit or loss Finance costs Share of results of associates 4 Share of results of jointly controlled entities Profit/(Loss) before tax 5 Income tax 6 Profit/(Loss) for the period	Unaudited six months ended 30th June, 2012 2011 HK$’000 HK$’000 (Restated) 50,807 53,405 (7,160) (10,793) 43,647 42,612 (52,136) (52,004) (30,227) (4,813) — 3,415 (2,111) (225) (1,728) (3,931) (69,049) 1,138,937 (394) (76) (111,998) 1,123,915 (616) 149 (112,614) 1,124,064

– 1 –

Note Attributable to: Equity holders of the Company Non-controlling interests Earnings/(Loss) per share attributable to equity holders of the Company 7 Basic Diluted	Unaudited six months ended 30th June, 2012 2011 HK$’000 HK$’000 (Restated) (112,264) 1,125,334 (350) (1,270) (112,614) 1,124,064 HK cents HK cents (Restated) (5.6) 60.0 (5.6) 59.5

Details of the interim distribution are disclosed in Note 8 to the interim results.

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CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME For the six months ended 30th June, 2012

	Unaudited	Unaudited
	six months ended	30th June,
	2012	2011
	HK$’000	HK$’000
		(Restated)
Profit/(Loss) for the period	(112,614)	1,124,064
Other comprehensive income/(loss)
Available-for-sale financial assets:
Changes in fair value	3,100	1,914
Reclassification adjustments for disposal	—	85
Income tax effect	(1,360)	(227)
	1,740	1,772
Surplus on revaluation of leasehold land and buildings	8,885	—
Income tax effect	(1,066)	—
	7,819	—
Share of other comprehensive income/(loss) of associates:
Share of changes in fair value of available-for-sale
financial assets	5,068	11,148
Share of effective portion of changes in fair value of
cash flow hedges of an associate	(96)	(345)
Share of exchange differences on translation of
foreign operations	130,547	362,465
	135,519	373,268
Exchange differences on translation of foreign operations	16,460	43,019
Other comprehensive income for the period, net of tax	161,538	418,059
Total comprehensive income for the period	48,924	1,542,123
Attributable to:
Equity holders of the Company	49,431	1,539,612
Non-controlling interests	(507)	2,511
	48,924	1,542,123

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CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION As at 30th June, 2012

Note Non-current assets Goodwill Fixed assets Investment properties Interests in associates 4 Interests in jointly controlled entities Available-for-sale financial assets Held-to-maturity financial assets Loans and advances Current assets Properties held for sale Properties under development Financial assets at fair value through profit or loss Loans and advances Debtors, prepayments and deposits 9 Client trust bank balances Restricted cash Treasury bills Cash and bank balances Current liabilities Bank and other borrowings Creditors, accruals and deposits received 10 Current, fixed, savings and other deposits of customers Tax payable Net current assets Total assets less current liabilities	30th June, 31st December, 2012 2011 HK$’000 HK$’000 (Unaudited) (Restated) 71,485 71,485 134,094 137,169 182,612 171,408 8,640,929 8,381,354 66,157 185,613 60,378 46,304 27,822 27,265 46,715 41,541 9,230,192 9,062,139 8,531 8,545 1,677,532 1,347,459 83,618 92,442 219,187 199,578 266,227 117,323 440,842 550,716 585,935 466,295 7,760 — 743,542 406,508 4,033,174 3,188,866 508,327 67,349 2,076,445 1,313,919 192,796 120,225 1,706 1,821 2,779,274 1,503,314 1,253,900 1,685,552 10,484,092 10,747,691	30th June, 31st December, 2012 2011 HK$’000 HK$’000 (Unaudited) (Restated) 71,485 71,485 134,094 137,169 182,612 171,408 8,640,929 8,381,354 66,157 185,613 60,378 46,304 27,822 27,265 46,715 41,541 9,230,192 9,062,139 8,531 8,545 1,677,532 1,347,459 83,618 92,442 219,187 199,578 266,227 117,323 440,842 550,716 585,935 466,295 7,760 — 743,542 406,508 4,033,174 3,188,866 508,327 67,349 2,076,445 1,313,919 192,796 120,225 1,706 1,821 2,779,274 1,503,314 1,253,900 1,685,552 10,484,092 10,747,691
		9,062,139
		8,545 1,347,459 92,442 199,578 117,323 550,716 466,295 — 406,508
		3,188,866
		67,349 1,313,919 120,225 1,821
		1,503,314
		1,685,552
		10,747,691

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	30th June,31st December,	30th June,31st December,
	2012	2011
	HK$’000	HK$’000
	(Unaudited)	(Restated)
Non-current liabilities
Bank and other borrowings	268,269	699,057
Deferred tax liabilities	38,175	35,808
	306,444	734,865
Net assets	10,177,648	10,012,826
Equity
Equity attributable to equity holders of the Company
Issued capital	1,998,457	2,003,215
Reserves	8,090,545	7,920,458
	10,089,002	9,923,673
Non-controlling interests	88,646	89,153
	10,177,648	10,012,826

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Note:

1. PRINCIPAL ACCOUNTING POLICIES

The interim results are unaudited, condensed and have been prepared in accordance with Hong Kong Accounting Standard (“HKAS”) 34 Interim Financial Reporting issued by the Hong Kong Institute of Certified Public Accountants. The interim results have been reviewed by the audit committee of the Company.

The accounting policies and basis of preparation adopted in the preparation of these interim results are consistent with those used in the Group’s audited financial statements for the year ended 31st December, 2011, except as described below.

The Group has adopted the following new and revised Hong Kong Financial Reporting Standards (“HKFRS”), HKASs and Interpretations (hereinafter collectively referred to as the “new and revised HKFRSs”), which have become effective for accounting periods beginning on or after 1st January, 2012, for the first time for the current period’s interim results:

HKFRS 1 Amendments	Amendments to HKFRS 1_First-time Adoption of Hong Kong_
	Financial Reporting Standards — Severe Hyperinflation
	and Removal of Fixed Dates for First-time Adopters
HKFRS 7 Amendments	Amendments to HKFRS 7_Financial Instruments:_
	Disclosures — Transfers of Financial Assets
HKAS 12 Amendments	Amendments to HKAS 12_Income Taxes —_
	Deferred Tax: Recovery of Underlying Assets

Other than as further explained below regarding the impact of HKAS 12 Amendments, the adoption of the above new and revised HKFRSs has had no material impact on the accounting policies of the Group and the methods of computation in the Group’s interim results.

HKAS 12 Amendments clarify the determination of deferred tax for investment property measured at fair value. The amendments introduce a rebuttable presumption that deferred tax on investment property measured at fair value should be determined on the basis that its carrying amount will be recovered through sale. Furthermore, the amendments incorporate the requirement previously in HK(SIC)-Int 21 Income Taxes — Recovery of Revalued Non-Depreciable Assets that deferred tax on non-depreciable assets, measured using the revaluation model in HKAS 16, should always be measured on a sale basis.

In prior years, deferred tax was provided on the basis that the carrying amounts of investment properties will be recovered through use. Upon adoption of HKAS 12 Amendments, deferred tax is provided on the basis that the carrying amounts of the investment properties will be recovered through sale except that the basis of recovery through use will continue to apply to those investment properties which are depreciable and are held with an objective to consume substantially all of the economic benefits embodied in the investment properties over time, rather than through sale. This change in accounting policy has been applied retrospectively and the effects are summarised below:

	Six months ended	30th June,
	2012	2011
	HK$’000	HK$’000
Increase in share of results of associates	—	148,577
Increase in share of other comprehensive income of associates	17,528	51,705
Increase in basic earnings per share (HK cents)	—	7.9
Increase in diluted earnings per share (HK cents)	—	7.8

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	30th June, 31st December,	30th June, 31st December,
	2012	2011
	HK$’000	HK$’000
Increase in interests in associates	840,349	791,860
Increase in exchange equalisation reserve	52,838	35,310
Increase in distributable reserves	787,511	756,550

In addition, the Group has changed voluntarily its accounting policy regarding the current/non-current assets classification for properties under development intended for sale. In prior years, the Group classified the properties under development intended for sale as properties under development in non-current assets in the statement of financial position which would be transferred to properties under development in current assets when the construction was expected to be completed within one year from the end of the reporting period. Under the revised accounting policy, properties under development intended for sale are classified as current assets. In the opinion of the directors, the financial statements according to the revised policy will provide more relevant information to the users of the financial statements and bring the Group in line with the treatment adopted by other entities in the real estate industry. This change in policy has been applied retrospectively and comparative amounts have been restated.

The above change has had no effect on the condensed consolidated income statement. The effect on the condensed consolidated statement of financial position is summarised as follows:

	30th June, 31st December,	30th June, 31st December,
	2012	2011
	HK$’000	HK$’000
Non-current Assets
Decrease in properties under development	1,677,532	1,347,459
Current Assets
Increase in properties under development	1,677,532	1,347,459
There was no impact on the net assets of the Group.

2. REVENUE

Revenue, which is also the Group’s turnover, represents the aggregate of gross rental income, gross proceeds from sales of properties, gross income on treasury investment which includes interest income on bank deposits and debt securities, income from securities investment which includes gain/(loss) on sales of securities investment, dividend income and related interest income, gross income from underwriting and securities broking, gross interest income, commissions, dealing income and other revenues from a banking subsidiary, gross income from project management, and interest and other income from money lending and other businesses.

– 7 –

An analysis of the revenue of the Group by principal activity is as follows:

Property investment Treasury investment Securities investment Corporate finance and securities broking Banking business Project management Other	Six months ended 30th June, 2012 2011 HK$’000 HK$’000 5,968 5,523 3,586 1,072 9,909 10,037 16,523 24,566 5,928 6,433 5,895 3,408 2,998 2,366 50,807 53,405	Six months ended 30th June, 2012 2011 HK$’000 HK$’000 5,968 5,523 3,586 1,072 9,909 10,037 16,523 24,566 5,928 6,433 5,895 3,408 2,998 2,366 50,807 53,405
		53,405

Revenue attributable to banking business represents revenue generated from The Macau Chinese Bank Limited, a licensed credit institution under the Financial System Act of the Macao Special Administrative Region of the People’s Republic of China. Revenue attributable to banking business is analysed as follows:

Interest income Commission income Other revenues	Six months ended 30th June, 2012 2011 HK$’000 HK$’000 4,910 4,501 1,018 1,418 — 514 5,928 6,433	Six months ended 30th June, 2012 2011 HK$’000 HK$’000 4,910 4,501 1,018 1,418 — 514 5,928 6,433
		6,433

3. SEGMENT INFORMATION

For management purposes, the Group is organised into business units based on their products and services, and has reportable operating segments as follows:

• (a) the property investment segment includes letting and resale of properties;

• (b) the property development segment includes development and sale of properties;

• (c) the treasury investment segment includes investments in cash and bond markets;

• (d) the securities investment segment includes dealings in securities and disposals of investments;

• (e) the corporate finance and securities broking segment provides securities and futures brokerage, investment banking, underwriting and other related advisory services;

• (f) the banking business segment engages in the provision of commercial and retail banking services;

• (g) the project management segment engages in the provision of project management, marketing, sales and administrative and other related services; and

• (h) the “other” segment comprises principally the development of computer hardware and software, money lending and the provision of fund management and investment advisory services.

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Management monitors the results of its operating segments separately for the purpose of making decisions about resources allocation and performance assessment. Segment performance is evaluated based on reportable segment profit/(loss), which is a measure of adjusted profit/(loss) before tax. The adjusted profit/ (loss) before tax is measured consistently with the Group’s profit/(loss) before tax except that finance costs as well as head office and corporate expenses are excluded from such measurement.

Inter-segment transactions are on arm’s length basis in a manner similar to transactions with third parties.

Six months ended 30th June, 2012

Revenue External Inter-segment Total Segment results Unallocated corporate expenses Finance costs Share of results of associates Share of results of jointly controlled entities Loss before tax	Property investment Property development HK$’000 HK$’000 5,968 — — — 5,968 — 1,949 (6,524) (120,417) 51,368 — (394)	Treasury investment HK$’000 3,586 — 3,586 3,376 — —	Securities investment Corporate finance and securities broking HK$’000 HK$’000 9,909 16,523 — — 9,909 16,523 5,555 (9,195) — — — —	Banking business Project management HK$’000 HK$’000 5,928 5,895 — 296 5,928 6,191 63 (1,074) — — — —	Other Inter- segment elimination Consolidated HK$’000 HK$’000 HK$’000 2,998 — 50,807 1,319 (1,615) — 4,317 (1,615) 50,807 1,653 (1,615) (5,812) (35,015) (1,728) — — (69,049) — — (394) (111,998)	Other Inter- segment elimination Consolidated HK$’000 HK$’000 HK$’000 2,998 — 50,807 1,319 (1,615) — 4,317 (1,615) 50,807 1,653 (1,615) (5,812) (35,015) (1,728) — — (69,049) — — (394) (111,998)
						50,807
						(5,812) (35,015) (1,728) (69,049) (394)
						(111,998)

Six months ended 30th June, 2011 (restated)

Revenue External Inter-segment Total Segment results Unallocated corporate expenses Finance costs Share of results of associates Share of results of jointly controlled entities Profit before tax	Property investment Property development HK$’000 HK$’000 5,523 — — — 5,523 — 3,266 (3,054) 875,065 263,872 — (76)	Treasury investment HK$’000 1,072 — 1,072 968 — —	Securities investment HK$’000 10,037 — 10,037 10,979 — —	Corporate finance and securities broking HK$’000 24,566 — 24,566 (1,879) — —	Banking business Project management HK$’000 HK$’000 6,433 3,408 — 3,297 6,433 6,705 137 (3,913) — — — —	Other HK$’000 2,366 1,290 3,656 1,634 — —	Inter- segment elimination Consolidated HK$’000 HK$’000 — 53,405 (4,587) — (4,587) 53,405 (4,587) 3,551 (14,566) (3,931) — 1,138,937 — (76) 1,123,915	Inter- segment elimination Consolidated HK$’000 HK$’000 — 53,405 (4,587) — (4,587) 53,405 (4,587) 3,551 (14,566) (3,931) — 1,138,937 — (76) 1,123,915
								53,405
								3,551 (14,566) (3,931) 1,138,937 (76)
								1,123,915

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4. SHARE OF RESULTS OF ASSOCIATES/INTERESTS IN ASSOCIATES

Share of results of associates included the Group’s share of loss in Lippo ASM Asia Property LP (“LAAP”) of approximately HK$120,417,000 (2011 — share of profit of HK$875,065,000, restated) and share of profit from Lippo Marina Collection Pte. Ltd. (“Lippo Marina”) of approximately HK$51,368,000 (2011 — HK$263,872,000). LAAP, a fund which carries the objective of investing in real estate and hospitality service businesses in Asia, invested in Overseas Union Enterprise Limited (“OUE”), a listed company in Singapore which is principally engaged in property investment and development and hotel operations. The decrease in share of results was mainly attributable to absence of fair value gains on investment properties of OUE as compared with the corresponding period of last year. Lippo Marina was set up for the purpose of a property development project in Singapore, namely Marina Collection. The share of profit in 2011 was arising from the profit recognition of the sold units upon completion in April 2011. The profit in 2012 represented the share of profit from the sale of additional units during the period.

Interests in associates mainly included the Group’s interest in LAAP of approximately HK$8,034,612,000 (31st December, 2011 — HK$7,837,681,000, restated). Certain shares of OUE held under LAAP had been pledged to secure banking facilities made available to the subsidiaries of LAAP. Due to the share buy-back of OUE during the period, LAAP’s controlling interest in OUE increased from approximately 65.6 per cent. as at 31st December, 2011 to approximately 68.0 per cent. as at 30th June, 2012.

5. PROFIT/(LOSS) BEFORE TAX

Profit/(Loss) before tax is arrived at after crediting/(charging):

	Six months ended	30th June,
	2012	2011
	HK$’000	HK$’000
Interest income:
Unlisted financial assets at fair value through profit or loss	51	204
Listed available-for-sale financial assets	915	743
Listed held-to-maturity financial assets	1,030	748
Loans and advances	869	488
Banking business	4,910	4,501
Other	3,586	1,072
Dividend income:
Listed investments	656	520
Unlisted investments	1,485	80
Gain on disposal of:
Listed financial assets at fair value through profit or loss	3,660	5,268
Unlisted financial assets at fair value through profit or loss	2,112	2,474
Unlisted available-for-sale financial assets	—	3,415
Net fair value gain/(loss) on financial assets at fair value
through profit or loss:
Listed	(5,921)	(3,029)
Unlisted	3,810	2,804
Provision for impairment losses on unlisted available-for-sale
financial assets	(90)	—
Write-back of allowance/(Allowance) for bad and doubtful debts	(233)	267
Interest expense attributable to banking business	(786)	(288)
Depreciation	(4,703)	(4,661)
Foreign exchange gains/(losses) — net	(11)	11,376

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6. INCOME TAX

Hong Kong: Charge for the period Overseas: Charge for the period Overprovision in prior periods Total charge/(credit) for the period	Six months ended 30th June, 2012 2011 HK$’000 HK$’000 40 — 576 104 — (253) 576 (149) 616 (149)	Six months ended 30th June, 2012 2011 HK$’000 HK$’000 40 — 576 104 — (253) 576 (149) 616 (149)
		104 (253)
		(149)
		(149)

Hong Kong profits tax has been provided at the rate of 16.5 per cent. (2011 — 16.5 per cent.) on the estimated assessable profits arising in Hong Kong during the period. Taxes on profits assessable elsewhere have been calculated at the rates of tax prevailing in the countries/jurisdictions in which the Group operates.

7. EARNINGS/(LOSS) PER SHARE ATTRIBUTABLE TO EQUITY HOLDERS OF THE COMPANY

(a) Basic earnings/(loss) per share

Basic earnings/(loss) per share is calculated based on (i) the consolidated profit/(loss) for the period attributable to equity holders of the Company; and (ii) the weighted average number of 2,001,226,833 ordinary shares (2011 — 1,875,987,000 ordinary shares) in issue during the period.

(b) Diluted earnings/(loss) per share

Diluted earnings/(loss) per share is calculated based on (i) the consolidated profit/(loss) for the period attributable to equity holders of the Company; and (ii) the weighted average number of 2,002,203,240 ordinary shares (2011 — 1,890,601,000 ordinary shares), calculated as follows:

Weighted average number of ordinary shares in issue during the period used in the basic earnings/(loss) per share calculation Effect of dilution — weighted average number of ordinary shares: Share options Warrants	Number of shares 2012 2011 2,001,226,833 1,875,987,000 976,407 4,767,000 — 9,847,000 2,002,203,240 1,890,601,000	Number of shares 2012 2011 2,001,226,833 1,875,987,000 976,407 4,767,000 — 9,847,000 2,002,203,240 1,890,601,000
		1,890,601,000

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8. INTERIM DISTRIBUTION

		Six months ended	30th June,
		2012	2011
		HK$’000	HK$’000
Interim distribution, declared — Nil (2011	— Nil)	—	—

9. DEBTORS, PREPAYMENTS AND DEPOSITS

Included in the balances are trade debtors with an aged analysis as follows:

Outstanding balances with ages: Repayable on demand Within 30 days Between 31 and 60 days Between 61 and 90 days Between 91 and 180 days Over 180 days	30th June, 2012 HK$’000 32,500 5,383 99 5 — — 37,987	31st December, 2011 HK$’000 50,076 5,649 — — 125 9
		55,859

Trading terms with customers are either on a cash basis or credit. For those customers who trade on credit, a credit period is allowed according to relevant business practice. Credit limits are set for customers. The Group seeks to maintain tight control over its outstanding receivables in order to minimise credit risk. Overdue balances are regularly reviewed by senior management.

Except for receivables from certain securities brokers which are interest-bearing, the balances of trade debtors are non-interest-bearing.

10. CREDITORS, ACCRUALS AND DEPOSITS RECEIVED

Creditors, accruals and deposits received mainly comprised of pre-sale proceeds received from the property development projects of the Group of HK$1,364,669,000 (31st December, 2011 — HK$676,081,000), and trade payables relating to cash balances held on trust for the customers in respect of the Group’s securities broking operation of HK$464,499,000 (31st December, 2011 — HK$593,250,000). As at 30th June, 2012, total client trust bank balances amounted to HK$440,842,000 (31st December, 2011 — HK$550,716,000).

An aged analysis of trade creditors are as follows:

	30th June,	31st December,
	2012	2011
	HK$’000	HK$’000
Outstanding balances with ages:
Repayable on demand	458,329	435,334
Within 30 days	6,170	169,644
	464,499	604,978

Except for certain trade payables relating to cash balances held on trust for the customers in respect of the Group’s securities broking operation which are interest-bearing, the balances of trade creditors are noninterest-bearing.

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MANAGEMENT DISCUSSION AND ANALYSIS

The global economic environment is still very challenging in the first half of 2012. The European financial crisis remains unresolved and is even deepening. High unemployment rate in the United States not only hinders the recovery of US economy, but also adds weights to the investor sentiment. Major emerging markets, including China and Brazil have lowered down the growth forecast.

For the six months ended 30th June, 2012, the Group reported a loss attributable to shareholders of HK$112 million as compared to the profit of HK$1,125 million (restated) for the corresponding period in 2011. The profit recorded in 2011 was mainly attributable to the then substantial fair value gains of the investment properties of the Group’s associates recognised upon completion of redevelopment and the higher profit shared from the sold units upon the completion of a property development project in Singapore during the first half of last year.

Results for the period

Turnover for the six months ended 30th June, 2012 totalled HK$51 million (2011 — HK$53 million).

Property investment

The revenue of the property investment business amounted to HK$6 million for the period (2011 — HK$6 million). The segment registered a profit of HK$2 million (2011 — HK$3 million).

The Group has invested in a fund, Lippo ASM Asia Property LP (together with its subsidiaries, the “LAAP Group”), which has indirect interests in Overseas Union Enterprise Limited (“OUE”), a listed company in Singapore principally engaged in property investment and development and hotel operations. The hotels managed by OUE, including Mandarin Orchard Singapore and the Crowne Plaza Changi Airport Hotel acquired in July 2011, are strategically located in various well known tourist destinations of Singapore, Malaysia and mainland China. The investment property portfolio in Singapore, which includes OUE Bayfront, Mandarin Gallery and DBS Building Towers One and Two, provided a recurring source of revenue to OUE. OUE also holds interests in One Raffles Place which is located at the central financial and business district of Singapore. One Raffles Place Tower Two, a 38-storey Grade A office building adjoining One Raffles Place Tower One, has commenced leasing operations in the first quarter of 2012 and provides additional source of income. Currently, OUE plans to redevelop the podium of DBS Building Towers One and Two into a retail mall and plans to revamp the retail podium at One Raffles Place into a modern retail hub to maximise the value of these properties. Pre-sale of a residential property development project, named as Twin Peaks, at 33 Leonie Hill Road in Singapore has been started. The Group registered a share of loss of HK$120 million from the investment during the period (2011 — profit of HK$875 million (restated), which included a then substantial fair value gain over the construction costs incurred on OUE Bayfront recognised upon the issuance of temporary occupation permit in January 2011). As a result of the share buy-back by OUE during the period, LAAP’s controlling stake in OUE increased from approximately 65.6 per cent. as at 31st December, 2011 to approximately 68.0 per cent. as at 30th June, 2012 and recorded a net increase of share of equity interest of HK$182 million directly in the reserves of the LAAP Group.

– 13 –

Property development

The Group has participated in a number of well-located property development projects in mainland China, Macau, Singapore and other areas of the Asia Pacific region.

In Singapore, the Group has interests in Marina Collection, a joint venture development project in Sentosa Cove. The project was completed in April 2011 and contributed a share of profit of HK$264 million during the first half of 2011 from the sold units. During the first half of 2012, a further share of profit of HK$51 million was recorded from the project, mainly arising from the sale of properties. All the units of Centennia Suites, another joint venture property development project at Kim Seng Road, have been sold out during the pre-sale in 2010. Centennia Suites is scheduled to be completed in 2013, profit arising therefrom will be recognised upon completion of the development.

In mainland China, construction of an integrated residential, commercial and retail complex at the Beijing Economic-Technological Development Area is progressing well. Pre-sale permit was obtained in July 2011 and pre-sale was launched. This project is expected to be completed in 2013.

Superstructure works of M Residences, a property development project in Macau, will be commenced in the second half of 2012. Pre-sale has been launched since November 2011 and has received satisfactory response. M Residences is expected to be completed in 2014.

Treasury and securities investments

The investment markets are challenging and full of uncertainties. Foreseeing that the global investment markets will continue to be volatile, the Group cautiously managed its investment portfolio. In the first six months of 2012, treasury and securities investments business recorded a revenue of HK$13 million (2011 — HK$11 million), with a profit of HK$9 million (2011 — HK$12 million).

Corporate finance and securities broking

The sentiments in the investment markets were affected by uncertainties resulting from unresolved Eurozone financial crisis and threat of China economic slowdown. Investors are watchful and vigilant in the highly volatile markets. Fund raising activities in Hong Kong also reduced as compared to the same period of last year. The Group’s corporate finance and securities broking business was adversely affected. It registered a turnover of HK$17 million in the first half of 2012 (2011 — HK$25 million) and a loss of HK$9 million was derived from this segment (2011 — HK$2 million).

Banking business

The Macau Chinese Bank Limited, a licensed bank in Macau, is a wholly-owned subsidiary of the Company. Macau’s economic growth rate has slowed down since the last quarter of 2011. The operating environment is tough because of the strong competition, high operating costs and subdued global economic activities. Nevertheless, the management remains positive to the development and growth in the region, manages to maintain the quality of its client and loan portfolio and will seek opportunities to expand the products and customers base.

– 14 –

Financial position

As at 30th June, 2012, the Group’s total assets increased to HK$13.3 billion (31st December, 2011 — HK$12.3 billion, restated). Property-related assets increased to HK$11.8 billion (31st December, 2011 — HK$10.8 billion, restated), representing 89 per cent. (31st December, 2011 — 88 per cent., restated) of the total assets. Total liabilities increased to HK$3.1 billion (31st December, 2011 — HK$2.2 billion). The Group’s financial position remained healthy.

As at 30th June, 2012, the bank and other borrowings of the Group (other than those attributable to banking business) increased to HK$776 million (31st December, 2011 — HK$766 million). The bank loans amounted to HK$719 million (31st December, 2011 — HK$709 million), comprising secured bank loans of HK$709 million (31st December, 2011 — HK$709 million) and an unsecured bank loan of HK$10 million (31st December, 2011 — Nil). The bank loans were secured by first legal mortgages over certain properties and certain bank deposits of the Group. The bank loans carried interest at floating rates and were denominated in Hong Kong dollars and Renminbi. Approximately 71 per cent. (31st December, 2011 — 10 per cent.) of the bank loans were repayable within one year. The Group’s other borrowings as at 30th June, 2012 comprised of unsecured loans advanced from Lippo Limited of HK$57 million (31st December, 2011 — HK$57 million). Such advance would be repayable on or before 31st December, 2013. At the end of the period, gearing ratio (measured as total borrowings, net of non-controlling interests, to shareholders’ funds) was 6.7 per cent. (31st December, 2011 — 6.9 per cent., restated).

During the period, the Company repurchased a total of 4,758,000 shares of HK$1.00 each in the Company at a total consideration of approximately HK$5.9 million.

The net asset value of the Group remained strong and increased to HK$10.1 billion (31st December, 2011 — HK$10.0 billion, restated). This was equivalent to HK$5.1 per share (31st December, 2011 — HK$5.0 per share, restated).

The Group monitors the relative foreign exchange position of its assets and liabilities to minimise foreign currency risk. When appropriate, hedging instruments including forward contracts, swap and currency loans would be used to manage the foreign exchange exposure.

Apart from the abovementioned, there were no charges on the Group’s assets at the end of the period (31st December, 2011 — Nil). Aside from those arising from the normal course of the Group’s banking operation, the Group had no material contingent liabilities outstanding (31st December, 2011 — Nil).

As at 30th June, 2012, the Group’s total capital commitment amounted to HK$642 million (31st December, 2011 — HK$715 million), mainly arising from the property development projects in Macau and Beijing. The investments or capital assets will be financed by the Group’s internal resources and/or external bank financing, as appropriate.

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Staff and remuneration

The Group had approximately 226 employees as at 30th June, 2012 (2011 — 203 employees). Staff costs (including directors’ emoluments) charged to the income statement during the period amounted to HK$35 million (2011 — HK$34 million). The Group ensures that its employees are offered competitive remuneration packages. Certain employees of the Group were granted options under the share option scheme of the Company.

Outlook

The business environment continues to be challenging. The world economy will remain unstable, unless the European debt problems can be resolved. Despite of the weakening global outlook, the Group remains prudently optimistic about the prospects of the Asia Pacific region over the medium term and will continue to focus on business development in the region. The Group will respond to the fast changing market conditions, refine its existing businesses and prudently seek new investment opportunities with long-term growth potential.

BUSINESS REVIEW

In the first half of 2012, the world economy continued to be dominated by the Euro zone financial crisis, which saw sovereign debt problems spreading to a wider number of European countries. Consumer and investor confidence and job markets remained weak in the US. Except for Japan, which recorded almost no growth, the other major economies in the Asia region have been able to hold on to their economic growth, which has contributed to a more stable economic environment in Asia. However, prospects for the global economy is for little growth overall in the coming year.

China continued to be the Asia’s leading economic performer. But recent statistics show that the pace of China’s economic growth has slowed down, expectedly in response to the weakening global market as well as the various credit tightening and austerity measures taken by the Central Government in 2011. The potential for an overheated economy has been averted and inflation brought down to a modest level. The Chinese Government is looking at ways to measuredly reflate its economy. The continuing strong economic performance in the South East Asian countries has also contributed to the overall economic growth holding on well in Asia.

However, within the overall economic picture in Asia, growth in the property sector has moderated, largely a response to various measures taken by local and national authorities in the key property markets to address local community concerns about high and rising property prices.

As the Group’s operations and investments are substantially within the Asia region, its performance is largely unaffected, and if so only marginally and indirectly, by the wider global economic happenings outside Asia. Despite the Asia region maintaining steady growth overall, the Group’s performance has been hindered by the weak property sector in the key markets. As a result, the Group has recorded a consolidated loss attributable to shareholders of approximately HK$112 million for the six months ended 30th June, 2012, as compared to a profit of HK$1,125 million (restated) recorded for the corresponding period in 2011. The loss was mainly attributable to absence of fair value gains of investment properties of the Group’s associates and reduction of profit arising from sale of properties by an associate of the Group in the period under review, as compared to the corresponding period in 2011.

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In Singapore, the strong tourist arrivals, and its continuing role as one of the major financial centres in Asia have contributed to the country’s continued economic growth in the first half of 2012.

“Marina Collection”, in which the Group has a 50 per cent. interest, is located at Sentosa Cove, Sentosa Island, Singapore. This property development project was completed in 2011 and provides 124 high-end luxury waterfront residential units with a total saleable area of approximately 29,808 square metres of which 60 units have been sold and some of the units have been leased out. 15 units were sold during the first half of 2012 and profits arising therefrom have been recognised in the 2012 interim results of the Group. With the presence of the integrated casino/recreational resorts on the Sentosa Island, the Group is confident about the prospects of “Marina Collection”.

The Group also has a 50 per cent. interest in “Centennia Suites” located at 100 Kim Seng Road, Singapore. “Centennia Suites”, with a site area of approximately 5,611 square metres, will be redeveloped into a residential development with a saleable area of approximately 16,182 square metres. Construction work has been progressing well and it is expected that completion will take place in 2013. All the 97 residential units in this project have been presold.

Lippo ASM Asia Property LP (“LAAP”, together with its subsidiaries, the “LAAP Group”), of which a wholly-owned subsidiary of the Company is the limited partner, was set up with the objective of investing in real estate and hospitality service businesses in the Asia region. As at 30th June, 2012, the LAAP Group held a majority stake of approximately 68 per cent. in Overseas Union Enterprise Limited (“OUE”), a listed company in Singapore, principally engaged in property investment and development and hotel operations. OUE has interests in prime office buildings in the Central Business District in Singapore like One Raffles Place, OUE Bayfront and DBS Building Towers One and Two as well as hotels in the Asia region, including the famous Mandarin Orchard Singapore and Crowne Plaza Changi Airport Hotel in Singapore. The Mandarin Gallery at the Mandarin Orchard Singapore, a premier luxury retail mall with retail space of around 11,639 square metres, is enjoying nearly full occupancy. This bespoke portfolio of well diversified and high quality properties will help to generate substantial and stable recurrent income for OUE.

The Group also participated in property projects in mainland China, including Lippo Tower in Chengdu and the development project at a prime site located in 北京經濟技術開發區 (Beijing Economic-Technological Development Area) in Beijing (the “BDA Project”). With a total site area of approximately 51,209 square metres, the BDA Project, in which the Group has an 80 per cent. interest, will be developed into an integrated residential, commercial and retail complex with a total gross floor area of about 275,000 square metres, including basements. Superstructure works are substantially completed and completion of the whole project is expected to be in 2013. Pre-sale was launched in the second half of 2011 and the response has been satisfactory. As at 30th June, 2012, about 52 per cent. of the total saleable area has been sold.

The Group will develop the site situated at 83 Estrada de Cacilhas, Macau, with a site area of approximately 3,398 square metres, into a residential development now named as “M Residences”. The Group has a 100 per cent. interest in this project which will be developed into 311 residential units with a total saleable area of approximately 26,025 square metres. Foundation works have been completed. With completion expected to be in 2014, pre-sale had been launched and as at 30th June, 2012, about 90 per cent. of the total saleable area has been sold.

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The Macau Chinese Bank Limited (“MCB”), a wholly-owned subsidiary of the Company, maintained a steady performance in the first half of 2012 amidst the strong performance of the Macau economy. Recognising that MCB’s future performance will be largely dependent on the growth of the Macau economy, the Group will continue to seek new business opportunities for MCB and enhance its competitiveness in the Macau banking sector.

The local stock market remained sluggish and inactive in the first half of 2012 with low initial public offering activities. Participation from retail investors remained cautious given the present market conditions. This has affected the performance and profitability of Lippo Securities Holdings Limited, a wholly-owned subsidiary of the Company, and its subsidiaries, which are principally engaged in underwriting, securities brokerage, corporate finance, investment advisory and other related financial services. The outlook for the local stock market will be dependent on the market conditions in China and economic developments globally, especially in Europe and the US.

The Group will continue to be watchful of market developments and will manage its portfolio with a view to further improving overall asset quality.

PROSPECTS

Prospects for Asia remains positive but the growth momentum could be hindered by the continuing economic uncertainty in the US and Europe. The continuing weak US economy and sovereign debt crisis in Europe suggest that global economic recovery would be slow. Hopefully, with signs that the threat of inflation has been brought under control, the continuing low interest rate environment in Asia should help to promote stronger investor confidence and create new business opportunities.

The Group will continue to focus on property investment and property development businesses in Asia Pacific region for its long term growth. Management is however watchful of the economic challenges ahead and will accordingly continue to take a cautious and prudent approach in the management of the Group’s property portfolio and businesses and in its assessment of new investment opportunities.

INTERIM DISTRIBUTION

The Directors do not recommend the payment of an interim distribution for the six months ended 30th June, 2012 (2011 — Nil).

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PURCHASE, SALE OR REDEMPTION OF THE COMPANY’S LISTED SECURITIES

During the six months ended 30th June, 2012, the Company had repurchased a total of 4,758,000 shares of HK$1.00 each in the Company on The Stock Exchange of Hong Kong Limited, all of which were subsequently cancelled. Particulars of the aforesaid repurchases are as follows:

2012 January April May June Total	Number of shares of HK$1.00 each repurchased Highest price paid per share Lowest price paid per share HK$ HK$ 1,514,000 1.33 1.31 482,000 1.25 1.23 1,414,000 1.25 1.16 1,348,000 1.23 1.16 4,758,000 Expenses incurred for shares repurchased	Total price paid HK$ 1,997,820 598,040 1,701,100 1,621,520 5,918,480 27,482 5,945,962

The above repurchases were effected by the Directors with a view to benefiting the shareholders as a whole in enhancing the net asset value per share of the Company.

Save as disclosed herein, there was no purchase, sale or redemption of the Company’s listed securities by the Company or any of its subsidiaries during the six months ended 30th June, 2012.

AUDIT COMMITTEE

The Company has established an audit committee (the “Committee”). The existing members of the Committee comprise three independent non-executive Directors, namely Mr. Tsui King Fai (Chairman), Mr. Albert Saychuan Cheok and Mr. Victor Yung Ha Kuk and one nonexecutive Director, Mr. Leon Chan Nim Leung. The Committee has reviewed with the management of the Company the accounting principles and practices adopted by the Group and financial reporting matters including the review of the unaudited consolidated interim financial statements of the Company for the six months ended 30th June, 2012.

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CORPORATE GOVERNANCE

The Company is committed to ensuring high standards of corporate governance practices. The Company’s Board of Directors (the “Board”) believes that good corporate governance practices are increasingly important for maintaining and promoting investor confidence. Corporate governance requirements keep changing, therefore the Board reviews its corporate governance practices from time to time to ensure they meet public and shareholders’ expectation, comply with legal and professional standards and reflect the latest local and international developments. The Board will continue to commit itself to achieving a high quality of corporate governance.

To the best knowledge and belief of the Directors, the Directors consider that, save as disclosed below, the Company has complied with the code provisions of the Code on Corporate Governance Practices for the period from 1st January, 2012 to 31st March, 2012 and the Corporate Governance Code (the “CG Code”) for the period from 1st April, 2012 to 30th June, 2012 as set out in Appendix 14 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited. The CG Code is the new edition of the Code on Corporate Governance Practices and is applicable to financial reports covering a period after 1st April, 2012. Under the code provision A.6.7 of the CG Code, independent non-executive directors and other non-executive directors should also attend general meetings. One of the non-executive Directors of the Company was unable to attend the annual general meeting of the Company held on 5th June, 2012 as he was stranded in overseas due to an unexpected yacht sunken incident.

By Order of the Board Hongkong Chinese Limited John Lee Luen Wai Chief Executive Officer

Hong Kong, 16th August, 2012

As at the date of this announcement, the executive Directors of the Company are Messrs. Stephen Riady (Chairman), John Lee Luen Wai (Chief Executive Officer) and Kor Kee Yee; the non-executive Director of the Company is Mr. Leon Chan Nim Leung; and the independent non-executive Directors of the Company are Messrs. Albert Saychuan Cheok, Victor Yung Ha Kuk and Tsui King Fai.

• For identification purpose only

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