CAI Corp — Interim / Quarterly Report 2012

Aug 15, 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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(Incorporated in Hong Kong with limited liability) Stock Code: 51

Interim Results Announcement for the six months ended 30 June 2012

HIGHLIGHTS

• Realization of the China property portfolio generated rapid growth, as Shareholders were advised in the Company’s 2011 Annual Report.

• The completion of Xiyuan in Shanghai on plan enabled the segment to report HK$4 billion of turnover and HK$1.6 billion of operating profit.

• In turn, Group turnover and operating profit increased more than 10-fold, while core earnings 8-fold to HK$1.1 billion.

• The attributable landbank as at 30 June 2012 totaled 2.3 million square metres, representing 70% of the Group’s business assets in value.

• The net order book as at 30 June 2012 was RMB5.3 billion for 485,000 square metres of properties to be completed in stages.

• Core businesses in Hong Kong also reported significant growth during the period.

• The Board has declared a special non-recurrent interim dividend of HK$0.36 (2011: Nil) per share, in addition to an interim dividend of HK$0.12 per share. Total dividend distributions for the six-month period will amount to HK$0.48 (2011: HK$0.06) per share.

GROUP RESULTS

The unaudited Group profit attributable to equity shareholders for the six months ended 30 June 2012 amounted to HK$1,698.6 million, for an increase of 349% as compared with the corresponding period last year (2011: HK$378.4 million). Earnings per share were HK$2.40 (2011: HK$0.53) based on 708.8 million issued shares.

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Harbour Centre – Interim Results Announcement (15 August 2012)

The Group’s profit included an investment property revaluation surplus of HK$586.0 million (2011: HK$255.0 million). Excluding this, profit for the period under review was HK$1,112.6 million (2011: HK$123.4 million) for an increase of 802%, attributable mainly to the completion of the Xiyuan project in Shanghai.

INTERIM/SPECIAL DIVIDEND

The Board has declared an interim dividend of HK$0.12 (2011: HK$0.06) per share, absorbing a total amount of HK$85.1 million (2011: HK$42.5 million). Furthermore, in light of the record profit reported for the six-month period under review, the Board has also declared, in addition to that regular interim dividend, a special non-recurrent interim dividend of HK$0.36 (2011: Nil) per share. Both such dividends will be payable on 27 September 2012 to Shareholders on record as at 20 September 2012. Total dividend distributions for the six-month period under review will amount to HK$0.48 (2011: HK$0.06) per share, absorbing a total amount of HK$340.2 million (2011: HK$42.5 million).

BUSINESS REVIEW

China Properties

Shareholders were advised in the Company’s 2011 Annual Report to expect the pace of realization of the China property business to accelearate and generate rapid growth. In accordance with plan, completion of Xiyuan in Shanghai in the first half of 2012 enabled the segment to report turnover of HK$4,079 million and operating profit of HK$1,621 million (for a gross margin of 40%).

The wealth creation momentum continued to generate demand for quality urban living. The Group’s projects are able to benefit from Wharf’s trusted brand in the development of quality and well-located residences.

As at 30 June 2012, the Group had an attributable land bank of 2.3 million square metres, which represented 70% of the Group’s business assets at a book value of HK$11 billion.

Sales

During the period under review, a total of 166,700 square metres of properties were sold for RMB2.1 billion.

As at the end of June 2012, the net order book was RMB5.3 billion for 485,000 square metres of properties.

Suzhou Times City released additional phases for pre-sale during the period. 90,000 square metres were presold at an average price of RMB10,900 per square metre for proceeds of RMB977 million. Cumulative GFA presold represents 19% of the project total.

Initial phases of retail units and additional phases of residential units of The U World in Chongqing were launched for pre-sale during the period. On an attributable basis, 13,000 square metres were presold at an average price of RMB22,400 per square metre for the residential towers and RMB48,300 per square metre for the retail units for total proceeds of RMB393 million. Cumulative GFA presold represents 26% of the project total.

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Harbour Centre – Interim Results Announcement (15 August 2012)

Shanghai Xiyuan sold a further 8,700 square metres at an average price of RMB43,200 per square metre for proceeds of RMB375 million. Cumulative GFA sold represents 83% of the project total, with 75% of the project total recognized in the first half of 2012.

Changzhou Times Palace launched additional phases (繁華里) for pre-sale during the period and sold 55,000 square metres at an average selling price of RMB6,200 per square metre for proceeds of RMB351 million. Cumulative GFA presold represents 34% of the project total.

Development progress

Changzhou Times Palace comprises residential towers, semi-detached houses and villas, a 31-suite State Guest House, a five-star hotel with 271 rooms and 137 serviced apartments with a total GFA of 800,000 square metres. Construction is underway, with full completion scheduled for 2014. The State Guest House, the five-star hotel and serviced apartments will be completed in 2013.

Chongqing U World, a joint development with China Overseas Land & Investment with the Group owning 55%, offers an attributable GFA of 235,000 square metres to the Group with most of the residences enjoying a panoramic river view from different angles. The development is located in the new Jiangbei CBD near the Grand Theatre, Science Museum and Chongqing Central Park providing a pleasant living environment. Construction is underway, with full completion scheduled by 2015.

In Suzhou, the Group has two projects being developed through a joint venture owned 80:20 respectively by the Group and Genway Housing Development.

Suzhou IFC (International Finance Centre), intended to be held mainly for investment, is a 450-metre skyscraper landmark development in the new CBD of Suzhou Industrial Park overlooking Jinji Lake. It will be directly connected to a future metro station and is designed by the internationally renowned architect, Kohn Pedersen Fox. With a total GFA of 351,000 square metres, it consists of international Grade A office, luxurious apartments plus a premium sky hotel with full scenery of Suzhou. Construction is underway, with full completion scheduled for 2016 for a total project cost of over RMB5 billion.

The other project Suzhou Times City, located along the main east-west thoroughfare of Xiandai Da Dao near a future metro station, offers a GFA of 907,000 square metres. Construction for the initial phases is underway. Full completion of the project is scheduled for 2018.

Hotel

Marco Polo Hongkong Hotel (“MPHK Hotel”) posted a favourable performance during the period, spurred by thriving inbound tourism and strong hotel room demand. The segment’s revenue and operating profit increased by 22% and 39% respectively during the period. Average room rate increased by 11% while average occupancy climbed by 12 percentage points to 88.5%. 2011’s occupancy (77%) had been affected by the phased renovation of MPHK Hotel, which was completed by the end of 2011.

Property Investment

The Property Investment segment was propelled by solid consumption demand in Hong Kong, with a 40% increase in turnover and a 43% increase in operation profit. The Group’s property investment portfolio, comprising the office and retail areas of MPHK Hotel and Star House

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retail units, were revalued by an independent valuer as at 30 June 2012. Net revaluation surplus during the period was HK$586 million.

FINANCIAL REVIEW

(I) Review of 2012 Interim Results

With development projects in the Mainland accelerating in 2012 in line with plan, the Property Development segment helped the Group to records in both revenue and profits.

Turnover

Group turnover increased to a record high of HK$4,554.9 million (2011: HK$370.7 million), primarily attributable to the recognition of property sales.

Property Development recognised property sales of HK$4,078.5 million (2011: Nil) mainly from Shanghai Xiyuan project, which was completed in June 2012. During the first half of 2012, the Group recorded total contracted sales of RMB2,096.3 million to bring its net order book to RMB5,307.5 million, which is available for recognition by completion method in the future.

Hotel segment also performed well and revenue increased by 22% to HK$292.5 million (2011: HK$239.6 million).

Property Investment revenue increased by 40% to HK$121.4 million (2011: HK$86.9 million) resulting from higher average rental particularly from the retail areas after having improved the tenant mix.

Investment and other income including interest and dividend from the Group’s surplus cash and investments increased by 41% to HK$62.5 million (2011: HK$44.2 million).

Operating Profit

Group operating profit increased by HK$1,667.4 million to a record high of HK$1,832.1 million (2011: HK$164.7 million).

Property Development’s profit increased to HK$1,620.7 million (2011: loss of HK$10.3 million) for an operating margin of 40%, mainly due to profit recognition on completion of Shanghai Xiyuan.

Hotel profit increased by 39% to HK$99.4 million (2011: HK$71.7 million), Property Investment profit increased by 43% to HK$107.7 million (2011: HK$75.2 million) and profit from investment and others increased by 41% to HK$62.5 million (2011: HK$44.2 million).

Increase in Fair Value of Investment Properties

The Group’s completed investment properties were stated at the valuations carried out by an independent valuer as at 30 June 2012 resulting in a valuation gain of HK$586.0 million (2011: HK$255.0 million). In accordance with the prevailing accounting standard, the Group’s investment property under development is carried at cost and will

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not be carried at fair value until the earlier of its fair value first becoming reliably measurable and the date of completion.

Other Net Income

Other net income for the period mainly included foreign exchange gain of HK$35.2 million (2011: loss of HK$12.5 million) and loss on sales of investment of HK$6.8 million (2011: loss of HK$0.6 million).

Finance Costs

Net finance costs for the period was HK$11.3 million (2011: HK$4.6 million). The charge was after capitalisation of HK$15.4 million (2011: HK$6.4 million) for the Group’s Mainland China projects.

Share of Results after Tax of Jointly Controlled Entities

Share of loss of jointly controlled entities after tax was HK$10.4 million (2011: HK$4.5 million), mainly representing the initial expenses for development projects.

Income Tax

The taxation charge for the period increased to HK$734.9 million (2011: HK$21.7 million) as a result of increase in taxable profit.

Profit Attributable to Equity Shareholders

Group profit attributable to equity shareholders for the period ended 30 June 2012 amounted to HK$1,698.6 million (2011: HK$378.4 million), representing an increase of HK$1,320.2 million or 349%. Earnings per share were HK$2.40 (2011: HK$0.53) based on issued shares of 708.8 million.

Excluding the investment property revaluation surplus of HK$586.0 million (2011: HK$255.0 million), core profit attributable to shareholders for the period was HK$1,112.6 million (2011: HK$123.4 million), representing an increase of 802%. Core earnings per share were HK$1.57 (2011: HK$0.17) based on issued shares of 708.8 million.

(II) Liquidity, Financial Resources and Commitments

Shareholders’ and Total Equity

As at 30 June 2012, the Group’s shareholders’ equity increased by 15% to HK$13,222.5 million (31/12/2011: HK$11,462.9 million), equivalent to HK$18.65 per share (31/12/2011: HK$16.17 per share). Including the non-controlling interests, the Group’s total equity stood at HK$14,025.1 million (31/12/2011: HK$12,278.7 million).

MPHK Hotel is stated at cost less accumulated depreciation according to the prevailing Hong Kong Financial Reporting Standards. Restating the hotel property based on the valuation as at 30 June 2012 carried out by an independent valuer would give rise to an additional revaluation surplus of HK$3,765.8 million and increase the Group’s shareholders’ equity as at 30 June 2012 to HK$16,988.3 million, equivalent to HK$23.97 per share.

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Total Assets

The Group’s total assets decreased by 3% to HK$22,358.5 million (31/12/2011: HK$23,054.5 million), including HK$15,179.1 million of business assets, HK$5,885.8 million of bank deposits and cash, as well as HK$1,257.0 million of available-for-sale investments.

The Group’s major business assets included properties for sale of HK$7,609.2 million, interest held through jointly controlled entities of HK$1,748.8 million and investment properties of HK$4,867.7 million. Geographically, HK$10,681.0 million or 70% of the Group’s total business assets were located in Mainland China.

Debt and Gearing

As at 30 June 2012, the Group had net cash of HK$3,450.4 million (31/12/2011: 2,700.3 million), which was made up of HK$5,885.8 million cash and HK$2,435.4 million bank borrowings.

Finance and Availability of Facilities and Funds

As at 30 June 2012, the Group’s available loan facilities amounted to HK$4,608.7 million, of which HK$2,435.4 million was drawn. Certain banking facilities of the Group were secured by mortgages mainly over the Group’s hotel and investment properties and properties under development for sale with total carrying value of HK$4,781.1 million (31/12/2011: HK$4,200.4 million).

The Group’s debts were denominated in HKD, USD and RMB. Further RMB borrowings will be sourced to finance the development cost of the Mainland projects.

The use of derivative financial instruments was strictly controlled. The majority of the derivative financial instruments entered into by the Group were primarily used for management of the Group’s interest rate and currency exposures.

The Group maintained a reasonable level of surplus cash, which was denominated principally in HKD and RMB, to facilitate the Group’s business and investment activities. As at 30 June 2012, the Group also maintained a portfolio of investments primarily consisting of blue chip securities, with an aggregate market value of HK$1,257.0 million (31/12/2011: HK$1,119.1 million), which is available for liquidation to meet the Group’s commitment if necessary. The performance of the portfolio was largely in line with the general stock market.

Net Cash Flows for Operating and Investing Activities

For the period under review, the Group generated HK$778.1 million of net cash inflow from operating activities (2011: HK$1,491.2 million), primarily from the pre-sale and the payment of construction cost of the Group’s Mainland development projects. For investing activities, the Group had net cash inflow of HK127.3 million (2011: HK$69.8 million), mainly representing the proceeds from sale of available-for-sale investments.

Commitments

As at 30 June 2012, the Group’s total contracted commitments amounted to HK$2.7 billion which was substantially related to Mainland development projects. Apart from that, the Group plans to invest HK$15.7 billion mainly on construction costs to complete the Group’s China development projects, which will be carried out by stages

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in the forthcoming years and funded by internal financial resources, proceeds from property pre-sales and bank loans.

(III)

Human Resources

The Group had approximately 680 employees as at 30 June 2012. Employees are remunerated according to their job responsibilities and the market pay trend with a discretionary annual performance bonus as variable pay for rewarding individual performance and contributions to the Group’s achievement and results.

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CONSOLIDATED INCOME STATEMENT For the Six Months Ended 30 June 2012 - Unaudited

Note Turnover 2 Direct costs and operating expenses Selling and marketing expenses Administrative and corporate expenses Operating profit before depreciation, interest and tax Depreciation Operating profit 3 Increase in fair value of investment properties Other net income / (loss) 4 Finance costs 5 Share of results after tax of jointly controlled entities Profit before taxation Income tax 6(a) Profit for the period Profit attributable to: Equity shareholders Non-controlling interests Earnings per share 7 Basic Diluted	Six months ended 30 June 2012 2011 HK$ Million HK$Million 4,554.9 370.7 (2,520.4) (146.0) (155.7) (25.0) (27.0) (17.4) 1,851.8 182.3 (19.7) (17.6) 1,832.1 164.7 586.0 255.0 28.4 (13.1) 2,446.5 406.6 (11.3) (4.6) (10.4) (4.5) 2,424.8 397.5 (734.9) (21.7) 1,689.9 375.8 1,698.6 378.4 (8.7) (2.6) 1,689.9 375.8 HK$2.40 HK$0.53 HK$2.40 HK$0.53	Six months ended 30 June 2012 2011 HK$ Million HK$Million 4,554.9 370.7 (2,520.4) (146.0) (155.7) (25.0) (27.0) (17.4) 1,851.8 182.3 (19.7) (17.6) 1,832.1 164.7 586.0 255.0 28.4 (13.1) 2,446.5 406.6 (11.3) (4.6) (10.4) (4.5) 2,424.8 397.5 (734.9) (21.7) 1,689.9 375.8 1,698.6 378.4 (8.7) (2.6) 1,689.9 375.8 HK$2.40 HK$0.53 HK$2.40 HK$0.53
		370.7 (146.0) (25.0) (17.4)
		182.3 (17.6)
		164.7 255.0 (13.1)
		406.6 (4.6) (4.5)
		397.5 (21.7)
		375.8
		378.4 (2.6)
		375.8
		HK$0.53 HK$0.53

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CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME For the Six Months Ended 30 June 2012 - Unaudited

Profit for the period Other comprehensive income Exchange difference on translation of: Financial statements of overseas subsidiaries Financial statements of jointly controlled entity Net revaluation reserves of available-for-sale investments: Surplus / (deficit) on revaluation Transferred to consolidated income statement on disposal Other comprehensive income for the period Total comprehensive income for the period Total comprehensive income attributable to: Equity shareholders Non-controlling interests	Six months ended 30 June 2012 2011 HK$ Million HK$Million 1,689.9 375.8 (54.2) 215.4 (44.7) 176.1 (9.5) 39.3 238.3 (33.7) 216.0 (35.5) 22.3 1.8 184.1 181.7 1,874.0 557.5 1,887.2 542.3 (13.2) 15.2 1,874.0 557.5	Six months ended 30 June 2012 2011 HK$ Million HK$Million 1,689.9 375.8 (54.2) 215.4 (44.7) 176.1 (9.5) 39.3 238.3 (33.7) 216.0 (35.5) 22.3 1.8 184.1 181.7 1,874.0 557.5 1,887.2 542.3 (13.2) 15.2 1,874.0 557.5
		375.8
		215.4
		176.1 39.3
		(33.7)
		(35.5) 1.8
		181.7
		557.5
		542.3 15.2
		557.5

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CONSOLIDATED STATEMENT OF FINANCIAL POSITION As at 30 June 2012 - Unaudited

Note Non-current assets Fixed assets Investment properties Leasehold land Other properties, plant and equipment Total fixed assets Interest in an associate Interest in jointly controlled entities Available-for-sale investments Employee retirement benefit assets Deferred tax assets Current assets Properties for sale Inventories Trade and other receivables 9 Prepaid tax Derivative financial assets Bank deposits and cash Current liabilities Trade and other payables 10 Pre-sale deposits and proceeds Derivative financial liabilities Bank loans Taxation payable Net current assets Total assets less current liabilities Non-current liabilities Derivative financial liabilities Bank loans Deferred tax liabilities NET ASSETS Capital and reserves Share capital 11 Reserves Shareholders’ equity Non-controlling interests TOTAL EQUITY	30 June 2012 HK$ Million 4,867.7 54.1 388.7 5,310.5 0.1 1,748.8 1,257.0 10.3 11.5 8,338.2 7,609.2 2.6 401.0 96.6 25.1 5,885.8 14,020.3 (1,406.7) (3,848.8) (6.0) (1,595.3) (567.3) (7,424.1) 6,596.2 14,934.4 - (840.1) (69.2) (909.3) 14,025.1 354.4 12,868.1 13,222.5 802.6 14,025.1	31 December 2011 HK$Million
		4,289.7 54.2 305.2
		4,649.1 0.1 1,768.7 1,119.1 10.7 21.8
		7,569.5 8,716.5 2.9 690.2 228.7 5.2 5,841.5
		15,485.0
		(933.9) (6,561.7) (31.2) (300.0) (78.5)
		(7,905.3)
		7,579.7
		15,149.2
		(4.3) (2,841.2) (25.0)
		(2,870.5)
		12,278.7
		354.4 11,108.5
		11,462.9 815.8
		12,278.7

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NOTES TO THE FINANCIAL STATEMENTS

1. PRINCIPAL ACCOUNTING POLICIES AND BASIS OF PREPARATION

These unaudited interim consolidated financial statements have been prepared in accordance with Hong Kong Accounting Standards (“HKAS”) 34 “Interim Financial Reporting” (“HKAS 34”) issued by the Hong Kong Institute of Certified Public Accountants and the applicable disclosure provisions of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited.

The preparation of the interim financial statements in conformity with HKAS 34 requires management to make judgments, estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, income and expenses on a year to date basis. Actual results may differ from these estimates.

The accounting policies and methods of computation used in the preparation of the interim financial statements are consistent with those used in the annual financial statements for the year ended 31 December 2011 except the changes mentioned below.

With effect from 1 January 2012, the Group has adopted the below amendment to Hong Kong Financial Reporting Standards (“HKFRSs”), which is relevant to the Group’s financial statements:

Amendment to HKFRS 7 Financial instruments: Disclosures – Transfers of financial assets

The Group has assessed the impact of the adoption of this amendment and considered that there was no significant impact on the Group’s results and financial position or any substantial changes in the Group’s accounting policies.

2. SEGMENT INFORMATION

The Group managed its diversified businesses according to the nature of services and products provided. Management has determined three reportable operating segments for measuring performance and allocating resources. The segments are property development, hotel and property investment. No operating segment has been aggregated to form the following reportable segments.

Property development segment encompasses activities relating to the acquisition, design, development, marketing and sale of trading properties primarily in Mainland China.

Hotel segment represents the operations of the Marco Polo Hongkong Hotel. Some of the Group’s development projects in Mainland China include hotel properties.

Property investment segment primarily represents the property leasing of the Group’s investment properties in Hong Kong. Some of the Group’s development projects in Mainland China include properties which are intended to be held for investment purposes on completion.

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Management evaluates performance based on operating profit as well as the equity share of results of associate and jointly controlled entity of each segment.

Segment business assets principally comprise all tangible assets, intangible assets and current assets directly attributable to each segment with the exception of bank deposits and cash, available-for-sale investments, derivative financial instruments and deferred tax assets.

Revenue and expenses are allocated with reference to sales generated by those segments and expenses incurred by those segments or which arise from the depreciation of assets attributable to those segments.

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Analysis of segment revenue and results

			Increase
			in fair	Other
		Operating	value of	net		Jointly	Profit
		profit	investment	income/	Finance	controlled	before
	Turnover	/(loss)	properties	(loss)	costs	entities	taxation
Six months ended	HK$ Million	HK$ Million	HK$ Million	HK$ Million	HK$ Million	HK$ Million	HK$ Million
30 June 2012
Property development	4,078.5	1,620.7	-	(0.5)	-	(10.4)	1,609.8
Hotel	292.5	99.4	-	0.7	(5.4)	-	94.7
Propertyinvestment	121.4	107.7	586.0	-	-	-	693.7
Segment total	4,492.4	1,827.8	586.0	0.2	(5.4)	(10.4)	2,398.2
Investment and others	62.5	62.5	-	28.2	(5.9)	-	84.8
Corporate expenses	-	(58.2)	-	-	-	-	(58.2)
Grouptotal	4,554.9	1,832.1	586.0	28.4	(11.3)	(10.4)	2,424.8
30 June 2011
Property development	-	(10.3)	-	(0.1)	-	(4.5)	(14.9)
Hotel	239.6	71.7	-	-	(3.8)	-	67.9
Propertyinvestment	86.9	75.2	255.0	-	-	-	330.2
Segment total	326.5	136.6	255.0	(0.1)	(3.8)	(4.5)	383.2
Investment and others	44.2	44.2	-	(13.0)	(0.8)	-	30.4
Corporate expenses	-	(16.1)	-	-	-	-	(16.1)
Grouptotal	370.7	164.7	255.0	(13.1)	(4.6)	(4.5)	397.5

(i) Substantially all depreciation was attributable to the Hotel Segment.

(ii) No inter-segment revenue has been recorded during the current and prior periods.

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3. OPERATING PROFIT Operating profit is arrived at:

OPERATING PROFIT Operating profit is arrived at:
After charging/(crediting): Depreciation Staff costs (Note i) Auditors’ remuneration Cost of trading properties sold during the period Rental charges under operating leases Rental income less direct outgoings (Note ii) Interest income on bank deposits Dividend income from listed investments	Six months ended 30 June 2012 2011 HK$ Million HK$Million 19.7 17.6 90.1 69.1 0.5 0.5 2,355.0 - 5.0 5.2 (111.1) (78.4) (40.3) (19.9) (22.2) (24.3)
		17.6 69.1 0.5 - 5.2 (78.4) (19.9) (24.3)

Notes:

• (i) Staff costs included defined contribution pension schemes costs HK$3.7 million (2011: HK$3.3 million).

• (ii) Rental income included contingent rentals of HK$44.4 million (2011: HK$38.2 million).

4. OTHER NET INCOME / (LOSS)

OTHER NET INCOME / (LOSS)
	Six months ended 30 June
	2012	2011
	HK$ Million	HK$Million
Loss on disposal of available-for-sale investments
- including HK$22.3 million (2011: HK$1.8 million)
reclassified from the investments revaluation reserve	(6.8)	(0.6)
Net foreign exchange gain / (loss)	35.2	(12.5)
	28.4	(13.1)

5. FINANCE COSTS

Interest charged on : Bank loans wholly repayable within five years Other finance costs Less: Amount capitalised Fair value cost cross currency interest rate swaps	Six months ended 30 June 2012 2011 HK$ Million HK$Million 17.4 8.3 3.9 2.5 21.3 10.8 (15.4) (6.4) 5.9 4.4 5.4 0.2 11.3 4.6	Six months ended 30 June 2012 2011 HK$ Million HK$Million 17.4 8.3 3.9 2.5 21.3 10.8 (15.4) (6.4) 5.9 4.4 5.4 0.2 11.3 4.6
		8.3 2.5
		10.8 (6.4)
		4.4 0.2
		4.6

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6. INCOME TAX

• (a) Taxation charged to the consolidated income statement represents:

	Six months ended 30 June	Six months ended 30 June
	2012	2011
	HK$ Million	HK$Million
Current income tax
Hong Kong
- Provision for the period	31.8	21.9
Mainland China
- Provision for the period	373.6	-
	**405.4 **	21.9
Land appreciation tax (“LAT”) in China	275.3	-
Deferred tax
Origination and reversal of temporary differences	54.2	(0.2)
Total tax charge	734.9	21.7

• (b) The provision for Hong Kong profits tax is at the rate of 16.5% (2011: 16.5%) of the estimated assessable profits for the period.

• (c) Income tax on assessable profit in Mainland China are China corporate income tax calculated at a rate of 25% and China withholding income tax at a rate of up to 10%.

• (d) Under the Provisional Regulations on LAT, all gains arising from transfer of real estate property in Mainland China are subject to LAT at progressive rates ranging from 30% to 60% on the appreciation of land value, being the proceeds of sales of properties less deductible expenditures including cost of land use rights, borrowings costs and all property development expenditures.

• (e) No tax attributable to associate or jointly controlled entities for the period (2011: HK$Nil) is included in the share of results of associate or jointly controlled entities.

7. EARNINGS PER SHARE

The calculation of earnings per share is based on the profit for the period attributable to equity shareholders of HK$1,698.6 million (2011: HK$378.4 million) and 708.8 million ordinary shares (2011: 708.8 million).

There were no potential dilutive ordinary shares in existence during the periods ended 30 June 2012 and 2011.

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8. DIVIDENDS ATTRIBUTABLE TO EQUITY SHAREHOLDERS

	Six months ended 30 June	Six months ended 30 June
	2012	2011
	HK$ Million	HK$Million
Dividends declared after the end of the reporting period:
Interim dividend of 12.0 cents (2011: 6.0 cents) per share	85.1	42.5
Special interim dividend of 36.0 cents (2011: Nil) per
share	255.1	-
	340.2	42.5

• (a) The interim dividend and special interim dividend declared after the end of the reporting period have not been recognised as liabilities at the end of the reporting period.

• (b) The second interim dividend of HK$127.6 million for 2011 was approved and paid in 2012.

9. TRADE AND OTHER RECEIVABLES

Included in this item are trade receivables (net of allowance for doubtful debts) with an ageing analysis based on invoice date as at 30 June 2012 as follows:

Trade receivables 0 - 30 days 31 - 60 days 61 - 90 days Over 90 days Prepayments Other receivables Amounts due from fellow subsidiaries	30 June 2012 HK$ Million 20.7 1.5 0.1 - 22.3 225.5 128.5 24.7 401.0	31 December 2011 HK$Million
		105.3 7.2 1.5 0.2
		114.2 458.7 105.8 11.5
		690.2

The Group has defined credit policies for each of its core business. The general credit terms allowed range from 0 to 60 days, except for sale of properties the proceeds from which are receivable pursuant to the terms of the agreements. All the receivables are expected to be virtually recoverable within one year.

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Harbour Centre – Interim Results Announcement (15 August 2012)

10. TRADE AND OTHER PAYABLES

Included in this item are trade creditors with an ageing analysis as at 30 June 2012 as follows:

Trade creditors 0 - 30 days 31 - 60 days 61 - 90 days Over 90 days Other payables and provisions Construction costs payable Amounts due to fellow subsidiaries Amounts due to an associate Amounts due to jointly controlled entities	30 June 2012 HK$ Million 8.2 - - 0.4 8.6 167.8 843.1 42.2 1.3 343.7 1,406.7	31 December 2011 HK$Million
		12.2 6.0 0.5 0.1
		18.8 144.3 529.4 30.2 1.3 209.9
		933.9

11. COMPARATIVE FIGURES

Certain comparative figures have been reclassified to conform to the current period’s presentation.

12. REVIEW OF UNAUDITED INTERIM FINANCIAL STATEMENTS

The unaudited interim financial statements for the six months ended 30 June 2012 have been reviewed with no disagreement by the Audit Committee of the Company.

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Harbour Centre – Interim Results Announcement (15 August 2012)

CORPORATE GOVERNANCE PRACTICES

During the first three-month period, from 1 January to 31 March 2012, in the financial period under review, all the applicable code provisions in the Code on Corporate Governance Practices (which were effective during that three-month period), as set out in Appendix 14 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Listing Rules”) then in force, were met by the Company, except in respect of one code provision (viz. Code Provision A.2.1) providing for the roles of the chairman and chief executive officer (or chief executive) to be performed by different individuals (the “First Deviation”). The deviation is deemed appropriate as it is considered to be more efficient to have one single person to be the Chairman of the Company as well as to discharge the executive functions of a chief executive. The Board of Directors believes that the balance of power and authority is adequately ensured by the operations of the Board which comprises experienced and high calibre individuals, with half of them being Independent Non-executive Directors (“INEDs”).

During the remaining three-month period, from 1 April to 30 June 2012, in the financial period under review, all the code provisions in the Corporate Governance Code (which is set out in the current version of Appendix 14 of the Listing Rules) were met by the Company, with the exception of two deviations, namely, (i) the First Deviation (with details etc. as mentioned above); and (ii) code provision A.6.7 (the “Second Deviation”) providing for INEDs and other Non-executive Directors (“NEDs”) of the Company to, inter alia , attend general meetings. Regarding the Second Deviation, a few NEDs of the Company were absent from the last Annual General Meeting of the Company held in May 2012 due to their other important engagements at the relevant time.

PURCHASE, SALE OR REDEMPTION OF SHARES

Neither the Company nor any of its subsidiaries has purchased, sold or redeemed any listed securities of the Company during the financial period under review.

BOOK CLOSURE

The Register of Members will be closed from Tuesday, 18 September 2012 to Thursday, 20 September 2012, both days inclusive, during which period no transfer of shares of the Company can be registered. In order to qualify for the abovementioned interim dividend and special interim dividend, all transfers, accompanied by the relevant share certificates, must be lodged with the Company’s Registrars, Tricor Tengis Limited, at 26th Floor, Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong, not later than 4:30 p.m. on Monday, 17 September 2012.

By Order of the Board Wilson W. S. Chan Company Secretary

Hong Kong, 15 August 2012

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Harbour Centre – Interim Results Announcement (15 August 2012)

As at the date of this announcement, the Board of Directors of the Company comprises Mr. Stephen T. H. Ng, Ms. Y. T. Leng, Mr. T. Y. Ng, Mr. Paul Y. C. Tsui and Mr. Frankie C. M. Yick, together with five Independent Non-executive Directors, namely, Dr. Joseph M. K. Chow, Mr. H. M. V. de Lacy Staunton, Hon. Andrew K. Y. Leung, Mr. Michael T. P. Sze and Mr. Brian S. K. Tang.

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Harbour Centre – Interim Results Announcement (15 August 2012)