Tsim Sha Tsui Properties Limited - Proxy Solicitation & Information Statement 2004

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this circular, makes no representation as to its accuracy or completeness and expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this circular.

If you are in any doubt as to any aspect of this circular or as to the action to be taken, you should consult your licensed securities dealer, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your shares in Tsim Sha Tsui Properties Limited (the “Company”), you should at once hand this circular to the purchaser or the transferee, or to the bank, licensed securities dealer or other agent through whom the sale or the transfer was effected for transmission to the purchaser or the transferee.

(Stock Code: 247)

POSSIBLE VERY SUBSTANTIAL DISPOSAL: POSSIBLE DEEMED DISPOSAL OF INTEREST IN SINO LAND COMPANY LIMITED

A notice convening the extraordinary general meeting of the Company to be held at The Imperial Rooms, Mezzanine Floor, Towers Wing, The Royal Pacific Hotel and Towers, 33 Canton Road, Tsim Sha Tsui, Kowloon at 9:30 a.m. on Monday, 22 November 2004 is set out on page 179 of this circular. Whether or not you are able to attend the aforesaid extraordinary general meeting, please complete the enclosed form of proxy in accordance with the instructions printed thereon and return it to the registered office of the Company at 12th Floor, Tsim Sha Tsui Centre, Salisbury Road, Tsim Sha Tsui, Kowloon, Hong Kong as soon as possible and in any event, not less than 48 hours before the time appointed for holding the aforesaid extraordinary general meeting or any adjourned meeting (as the case may be). Completion and return of the form of proxy will not preclude you from attending and voting in person at the aforesaid extraordinary general meeting or any adjourned meeting (as the case may be) should you so wish.

5 November 2004

CONTENTS

	Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
Subscription Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
– Conditions of the Subscription Agreement . . . . . . . . . . . . . . . . . . . . . . .	6
– Undertaking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
– Principal Terms of the Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
– Conversion Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	10
– Use of the Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	10
– Reasons for and Benefits of the Issue of Bonds . . . . . . . . . . . . . . . . . . .	10
– Possible Very Substantial Disposal for the Company . . . . . . . . . . . . . . .	10
– Financial Implications. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	11
The EGM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	11
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	12
Additional Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	12
Appendix I – Financial Information of the Group . . . . . . . . . . . . . . . . . . .	13
Appendix II – Financial Information of the Sino Group. . . . . . . . . . . . . . .	87
Appendix III – Pro Forma Financial Information. . . . . . . . . . . . . . . . . . . . .	149
Appendix IV – General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	167
Appendix V – Procedures for Voting by Poll at General Meeting . . . . . . .	178
Notice of Extraordinary General Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	179

−i −

DEFINITIONS

In this circular, the following expressions shall have the meanings set out below unless the context requires otherwise:

“%”	per cent.
“Announcement”	the joint announcement of the Company and Sino Land
	dated 20 October 2004 in respect of the Subscription
	Agreement and the Deemed Disposal
“Articles”	the articles of association of the Company as amended,
	supplemented or modified from time to time
“associates”	shall have the meaning ascribed thereto in the Listing
	Rules
“Board”	the board of Directors
“Bondholders”	holders of the Bonds from time to time
“Bonds”	HK$2,000,000,000 1.625% guaranteed convertible bonds
	due 2009 to be issued by the Issuer and guaranteed by
	Sino Land under the terms of the Subscription Agreement
	and where the context requires or permits, includes the
	Optional Bonds
“Change of Control”	occurs when,

(i) any person or persons (as defined in the Terms and Conditions) acting together, acquires control of Sino Land if such person or persons does not or do not have, and would not be deemed to have, control of Sino Land on the Closing Date; or
(ii) Sino Land consolidates with or merges into or sells or transfers all or substantially all of Sino Land’s assets to any other person (as defined in the Terms and Conditions), unless the consolidation, merger, sale or transfer will not result in the other person or persons acquiring control over Sino Land or the successor entity; or
(iii) one or more other persons (as defined in the Terms and Conditions) acquires the legal or beneficial ownership of all or substantially all of Sino Land’s issued share capital

−1 −

DEFINITIONS

“Closing Date”	30 November 2004 (or such other time or date on or
	before 30 November 2004 as the Issuer, Sino Land and
	the Manager may agree)
“Company”	Tsim Sha Tsui Properties Limited, a company
	incorporated in Hong Kong with limited liability, the
	shares of which are listed on the main board of the Stock
	Exchange
“Conversion Price”	the conversion price of the Bonds, initially being
	HK$9.225 per Sino Share, which is subject to adjustment
	in accordance with the Terms and Conditions
“Conversion Shares”	the Sino Shares to be issued upon conversion of the
	Bonds
“Deemed Disposal”	the deemed disposal referred to under the section headed
	“Possible Very Substantial Disposal for the Company” in
	the “Letter from the Board” of this circular
“Directors”	directors of the Company
“EGM”	the extraordinary general meeting of the Company to be
	held at The Imperial Rooms, Mezzanine Floor, Towers
	Wing, The Royal Pacific Hotel and Towers, 33 Canton
	Road, Tsim Sha Tsui, Kowloon at 9:30 a.m. on Monday,
	22 November 2004 to consider and, if thought
	appropriate, to approve the transactions contemplated
	under the Subscription Agreement and the Deemed
	Disposal
“Group”	the Company and its subsidiaries
“HK$”	Hong Kong dollars, the legal currency of Hong Kong
“Hong Kong”	the Hong Kong Special Administrative Region of the
	People’s Republic of China
“International Investment	any present or future indebtedness in the form of, or
Securities”	represented by, bonds, debentures, notes or other
	investment securities (but excluding for the avoidance of
	doubt, instruments commonly referred to as transferable
	loan certificates) which are for the time being, or are
	intended to be or capable of being, quoted, listed,
	ordinarily dealt in or traded on any stock exchange or
	over-the-counter or other securities market

−2 −

DEFINITIONS

“Issuer”	Getsmart Finance Limited, a wholly-owned subsidiary of
	Sino Land incorporated under the laws of the British
	Virgin Islands and an indirect subsidiary of the Company
“Latest Practicable Date”	29 October 2004, being the latest practicable date prior to
	the printing of this circular for ascertaining certain
	information contained in this circular
“Listing Rules”	the Rules Governing the Listing of Securities on the
	Stock Exchange
“Manager”	J.P. Morgan Securities Ltd.
“Maturity Date”	30 November 2009, being the date on which the Issuer
	will redeem the Bonds, unless the Bonds are previously
	redeemed, converted or purchased and cancelled as
	provided in the Terms and Conditions
“Ng Family”	Ng Teng Fong and companies controlled by him, being
	the controlling shareholders of the Company holding
	approximately 71.73% of the issued share capital of the
	Company, as at the Latest Practicable Date
“Notice of EGM”	the notice to convene the EGM dated 5 November 2004
	set out on page 179 of this circular
“Option”	the over-allotment option granted by the Issuer to the
	Manager, which can be exercised, in whole or in part on
	one occasion only, at any time not more than 30 days
	from the Closing Date to require the Issuer to issue up to
	a further HK$500 million principal amount of bonds on
	the same terms as, and ranking pari passu with, the Bonds
“Optional Bonds”	the additional Bonds issued on exercise, in whole or in
	part, of the Option by the Manager
“Relevant Shares”	the 2,159,734,113 Sino Shares held directly by or
	indirectly through the subsidiaries and nominees of the
	Company, as at 19 October 2004, being the date of the
	Subscription Agreement
“SFO”	Securities and Futures Ordinance, Chapter 571 of the
	laws of Hong Kong
“Share(s)”	ordinary share(s) of HK$0.20 each in the share capital of
	the Company
“Shareholder(s)”	holder(s) of the Shares

−3 −

DEFINITIONS

“Sino Directors” the directors of Sino Land “Sino Group” Sino Land and its subsidiaries “Sino Land” Sino Land Company Limited, a company incorporated in Hong Kong with limited liability, the shares of which are listed on the main board of the Stock Exchange and a subsidiary of the Company
“Sino Share(s)” ordinary share(s) of HK$1.00 each in the share capital of Sino Land
“Stock Exchange” The Stock Exchange of Hong Kong Limited “Subscription Agreement” the Subscription Agreement dated 19 October 2004 entered into between Sino Land, the Issuer and the Manager in connection with the issue of the Bonds
“Terms and Conditions” the terms and conditions of the Bonds, a draft of which is scheduled to the Subscription Agreement
“Trust Deed” the trust deed to be entered into between the Issuer, Sino Land and the trustee to be appointed
“US Person(s)” any US person as defined in Regulation S under the United States Securities Act of 1933, as amended

−4 −

LETTER FROM THE BOARD

(Stock Code: 247)

Board of Directors: Registered Office: Robert NG Chee Siong (Chairman) 12th Floor, Tsim Sha Tsui Centre Ronald Joseph ARCULLI, GBS, OBE, JP Salisbury Road Paul CHENG Ming Fun, JP Tsim Sha Tsui Allan ZEMAN, GBS, JP* Kowloon Raymond TONG Kwok Tung Hong Kong

(* Independent Non-executive Directors)

5 November 2004

To the Shareholders

Dear Sir or Madam,

POSSIBLE VERY SUBSTANTIAL DISPOSAL: POSSIBLE DEEMED DISPOSAL OF INTEREST IN SINO LAND COMPANY LIMITED

INTRODUCTION

Possible Very Substantial Disposal: Possible Deemed Disposal of Interest in Sino Land Company Limited

Reference is made to the Announcement. It was jointly announced by the Company and Sino Land that on 19 October 2004, Sino Land, the Issuer and the Manager entered into the Subscription Agreement pursuant to which the Manager has agreed to subscribe and pay for, or to procure subscribers to subscribe and pay for, the Bonds in an aggregate principal amount of HK$2.0 billion plus an Option of HK$500 million. The Bonds are convertible into ordinary shares of HK$1.00 each in the share capital of Sino Land at an initial Conversion Price of HK$9.225 per Sino Share (subject to adjustment), and the payment obligations of the Issuer will be guaranteed by Sino Land. The Issuer has made an application for the listing of the Bonds on the Stock Exchange.

The Issuer is a wholly-owned subsidiary of Sino Land and an indirect subsidiary of the Company. As at the Latest Practicable Date, Sino Land is owned and controlled as to approximately 50.39% by the Group and is accordingly a subsidiary of the Company.

−5 −

LETTER FROM THE BOARD

Assuming full conversion of the Bonds (including the Optional Bonds to be issued upon the exercise of the Option in full), and based on an initial Conversion Price of HK$9.225 per Sino Share, the aggregate shareholding of the Company in Sino Land will be diluted from approximately 50.39% to approximately 47.40%. Under Rule 14.29 of the Listing Rules, the allotment of Sino Shares upon conversion of the Bonds will be regarded as a deemed disposal of Sino Land by the Company whereupon Sino Land will cease to be a subsidiary of the Company. Accordingly, it will be a very substantial disposal for the Company and the approval of shareholders of the Company in general meeting will be required.

The purpose of this circular is to provide Shareholders with further details of the Subscription Agreement and the transactions contemplated therein and the Deemed Disposal.

SUBSCRIPTION AGREEMENT

Date: 19 October 2004 Parties: Issuer The Manager Sino Land as guarantor

The Manager is the sole bookrunner and lead manager in respect of the subscription of the Bonds.

Subject to the fulfilment of the conditions in the Subscription Agreement, the Manager has agreed to subscribe and pay for, or to procure subscribers to subscribe and pay for, the Bonds.

The Issuer has granted to the Manager an Option which can be exercised, in whole or in part and on one occasion only, at any time not more than 30 days from the Closing Date, to require the Issuer to issue up to a further HK$500 million in principal amount of the Optional Bonds, on the same terms as, and ranking pari passu with, the Bonds. If the Option is exercised in full, the aggregate principal amount of the Bonds will be HK$2.5 billion.

None of the Bonds is being offered to the public in Hong Kong and none of the Bonds will be placed to any connected persons (as defined in the Listing Rules) of Sino Land or the Company or the Ng Family or any of their respective associates.

Conditions of the Subscription Agreement

Completion of the Subscription Agreement is conditional upon, amongst other things:

the Stock Exchange granting listing of, and permission to deal in, the Bonds and the Sino Shares to be issued on exercise of the conversion rights attaching to the Bonds; and
the approval of the shareholders of the Company in general meeting of the transaction contemplated under the Subscription Agreement which may constitute a very substantial disposal arising upon conversion of the Bonds into Sino Shares.

−6 −

LETTER FROM THE BOARD

The Manager may waive the condition in item 1 above at its discretion. Subject to the foregoing and completion of all the conditions precedent in the Subscription Agreement, completion of the subscription of the Bonds shall take place on the Closing Date.

Undertaking

Sino Land has undertaken with the Manager under the Subscription Agreement that it and its subsidiaries will not issue any new securities until 90 days after the Closing Date without the prior written consent of the Manager (such consent not to be unreasonably withheld).

Principal Terms of the Bonds

The principal terms of the Bonds, which will be constituted by the Trust Deed, are summarised as follows:

Issuer	Getsmart Finance Limited
Guarantor	Sino Land
Manager	J.P. Morgan Securities Ltd.
Principal Amount	HK$2.0 billion, or up to HK$2.5 billion if the Option is
	exercised in full.
Maturity Date	30 November 2009, being the date on which the Issuer
	will redeem the Bonds, unless the Bonds are previously
	redeemed, converted or purchased and cancelled as
	provided in the Terms and Conditions.
Issue price	100 per cent. of the principal amount of the Bonds.
Interest	The Bonds will bear interest from (and including) the
	Closing Date at 1.625 per cent. per annum on the
	principal amount of the Bonds, payable semi-annually in
	arrear on 30 November and 30 May in each year.
Conversion rights	Bondholders have the right at any time on and after 30
	December 2004 up to the close of business on 30 October
	2009 to convert the Bonds into Sino Shares. The number
	of Sino Shares issued on conversion will be determined
	by dividing the principal amount of the Bond to be
	converted by the Conversion Price in effect on the date of
	conversion.

−7 −

LETTER FROM THE BOARD

Conversion price

The initial conversion price at which a Sino Share will be issued on conversion will be HK$9.225 per Sino Share. The conversion price will be subject to adjustment as provided in the Terms and Conditions.

Redemption at maturity

Unless previously redeemed, converted or purchased and cancelled in the circumstances referred to in the Terms and Conditions, the Bonds will be redeemed at their principal amount, plus accrued interest, on the Maturity Date.

Redemption at the option of the Issuer

The Issuer may, on or at any time prior to the Maturity Date, redeem the Bonds in whole but not in part at their principal amount plus interest accrued to the date of redemption if at least 90 per cent. in principal amount of the Bonds has already been redeemed, converted or purchased and cancelled.

Forced Conversion at the option of the Issuer

On or at any time after 30 November 2007 but not less than seven business days prior to the Maturity Date, the Issuer may force conversion of the Bonds, provided that no such forced conversion may be made unless the closing price of the Sino Shares for each of the 15 consecutive trading days ending on a date which is no more than 3 business days immediately prior to the date upon which notice of such conversion is given, was at least 130 per cent. of the Conversion Price.

Redemption at the option of the Bondholders

The Bonds may be redeemed by the Issuer on 30 November 2007 in whole or in part, at the option of the Bondholders at their principal amount plus interest accrued to the date of redemption subject to the delivery of a written notice in accordance with the Terms and Conditions.

Redemption for Taxation Reasons

The Issuer may redeem all, and not some only of the Bonds at their principal amount together with accrued interest in the event of changes in, or amendment to, the laws or regulations regarding taxation of the British Virgin Islands or Hong Kong or any political subdivision or any authority thereof or therein having power to tax or any change in the general application or official interpretation of such laws or regulations, which change or amendment becomes effective on or after 19 October 2004.

−8 −

LETTER FROM THE BOARD

Redemption for Delisting or Change of Control

Each Bondholder shall have the right, at such Bondholder’s option, to require the Issuer to redeem all but not some only of such Bondholder’s Bonds at their principal amount together with accrued interest upon (i) the Sino Shares ceasing to be listed or admitted to trading on the Stock Exchange or, if applicable, the alternative stock exchange; or (ii) the occurrence of a Change of Control with respect to Sino Land.

Form

The Bonds will be in registered form only and in denominations of HK$10,000 each. The Bonds will be represented by a single global certificate in registered form without coupons attached which will be deposited on or about the Closing Date with a common depositary for Euroclear Bank S.A./N.V. as operator of the Euroclear System and Clearstream Banking, socie´te´ anonyme.

Guarantee

The due payment of all sums expressed to be payable by the Issuer under the Trust Deed and the Bonds will be unconditionally and irrevocably guaranteed by Sino Land.

Status

The Bonds will constitute direct, senior, unsubordinated, unconditional and unsecured obligations of the Issuer (subject to the negative pledge described below) and will rank at all times pari passu and without any preference or priority among themselves. The payment obligations of the Issuer in respect of the Bonds and Sino Land under the Guarantee (as defined above), respectively, shall, save for such exemption as may be provided by applicable legislation and subject to the negative pledge described below, rank at all times at least equally with all their other respective present and future direct, senior, unsubordinated, unconditional and unsecured obligations.

Negative pledge

The Issuer and Sino Land will each give a negative pledge in relation to its (and Sino Land’s subsidiaries, as defined in the Terms and Conditions) International Investment Securities.

Listing

Application has been made by the Issuer for the listing of the Bonds on the Stock Exchange. Sino Land has applied to the Stock Exchange for the listing of, and permission to deal in, the Sino Shares to be issued upon conversion of the Bonds.

−9 −

LETTER FROM THE BOARD

Conversion Shares

Based on the initial Conversion Price of HK$9.225 per Sino Share (representing a premium of 33 per cent. to a volume weighted average price of the Sino Shares on 19 October 2004 of HK$6.936):

the aggregate principal amount of the Bonds of HK$2.0 billion are convertible into approximately 216.8 million new Sino Shares representing approximately 5.03 per cent. of the existing issued share capital of Sino Land and approximately 4.79 per cent. of the issued share capital of Sino Land as enlarged by the issue of the Conversion Shares; and
if the Option is exercised in full, the aggregate principal amount of the Bonds of HK$2.5 billion are convertible into approximately 271.0 million new Sino Shares representing approximately 6.29 per cent. of the existing issued share capital of Sino Land and approximately 5.92 per cent. of the issued share capital of Sino Land as enlarged by the issue of the Conversion Shares.

The Conversion Shares will be issued pursuant to the general mandate given to the Sino Directors at the annual general meeting of Sino Land held on 18 November 2003.

Use of the Proceeds

The estimated net proceeds from the issue of the Bonds amount to approximately HK$1.96 billion (assuming the Option is not exercised). The proceeds from the issue of the Bonds are currently intended to be used for general corporate purposes of the Sino Group.

Reasons for and Benefits of the Issue of Bonds

The issue of the Bonds will, upon completion, raise immediate net funds for Sino Land of approximately HK$1.96 billion (assuming the Option is not exercised). These funds can be used by the Sino Group for general corporate purposes. This will enhance the financing flexibility of the Sino Group, which the Sino Directors consider to be beneficial to the Sino Group and the shareholders of Sino Land taken as a whole.

Possible Very Substantial Disposal for the Company

Assuming full conversion of the Bonds (including the Optional Bonds issued upon the exercise of the Option in full), and based on the initial Conversion Price of HK$9.225 per Sino Share, the aggregate shareholding of the Company in Sino Land will be diluted from approximately 50.39% to approximately 47.40%. Under Rule 14.29 of the Listing Rules, the allotment of Sino Shares upon conversion of the Bonds will be regarded as a deemed disposal of Sino Land by the Company whereupon Sino Land will cease to be a subsidiary of the Company. Accordingly, it will be a very substantial disposal for the Company and the approval of shareholders of the Company in general meeting will be required. No Shareholder is required to abstain from voting at the EGM. The Directors do not have any present intention to dispose of the remaining Sino Shares held by the Company.

−10 −

LETTER FROM THE BOARD

Financial Implications

Assuming full conversion of the Bonds (excluding the Optional Bonds issued under the exercise of the Option in full), there will be a profit on such deemed disposal of Sino Shares by the Company of HK$428,324,510 based on the audited net asset value of Sino Land as at 30 June 2004. On the other hand, assuming full conversion of the Bonds (including the Optional Bonds to be issued upon the exercise of the Option in full), there will be a profit on such deemed disposal of Sino Shares by the Company of HK$529,065,434 based on the audited net asset value of Sino Land as at 30 June 2004, in each case, on the basis and assumption that such full conversion is completed on 30 June 2004.

Save as aforesaid, the full conversion of the Bonds (whether including or excluding the Optional Bonds to be issued upon the exercise of the Option in full) does not have any material effect or financial implication on the earning, assets or liabilities of the Group.

Neither the Company nor Sino Land has carried out any fund raising activity (other than bank financing) in the last 12 months.

The financial information regarding the Group and the Sino Group for the three years ended 30 June 2004 have been set out in Appendix I and Appendix II respectively to this circular.

For further information regarding the financial implication of the Deemed Disposal on the Group, please refer to the pro forma financial information prepared pursuant to and in compliance with Rule 4.29 of the Listing Rules set out in Appendix III to this circular.

THE EGM

A notice convening the EGM to be held at The Imperial Rooms, Mezzanine Floor, Towers Wing, The Royal Pacific Hotel and Towers, 33 Canton Road, Tsim Sha Tsui, Kowloon at 9:30 a.m. on Monday, 22 November 2004 is set out on page 179 of this circular for the purpose of considering and, if thought fit, passing the ordinary resolution in relation to the Subscription Agreement and the transactions contemplated thereunder (including the issue of the Bonds) and the Deemed Disposal. Voting at the EGM will be taken on a poll.

A form of proxy for the EGM is enclosed. Whether or not you intend to be present at the EGM, you are requested to complete the form of proxy in accordance with the instructions printed thereon and return the same to the registered office of the Company at 12th Floor, Tsim Sha Tsui Centre, Salisbury Road, Tsim Sha Tsui, Kowloon, Hong Kong as soon as possible and in any event not less than 48 hours before the time appointed for holding of the EGM or any adjournment thereof (as the case may be). Completion and return of the form of proxy will not preclude you from attending and voting in person at the EGM or any adjournment thereof (as the case may be) should you so wish. In accordance with the Listing Rules, the polling procedures are set out in Appendix V to this circular.

−11 −

LETTER FROM THE BOARD

Under the Listing Rules, any Shareholder and his associates with a material interest in the Subscription Agreement and the Deemed Disposal will abstain from voting on the relevant resolution. No Shareholder is required to abstain from voting at the EGM.

The Ng Family has undertaken to vote in favour of the resolution in relation to the Subscription Agreement and the Deemed Disposal at the EGM.

The Directors are of the opinion that the terms of the Subscription Agreement and the Deemed Disposal are fair and reasonable and in the interests of the Company and the Shareholders as a whole. Accordingly, the Directors recommend the Shareholders to vote in favour of the ordinary resolution to be put forward at the EGM.

GENERAL

The Company is the holding company of Sino Land. The Company and Sino Land are investment holding companies and the principal businesses of their subsidiaries and associated companies include property development and investment, shares investment and dealing, financing and management services.

ADDITIONAL INFORMATION

Your attention is drawn to the further information contained in the appendices to this circular and the Notice of EGM.

By Order of the Board Robert Ng Chee Siong Chairman

−12 −

APPENDIX I FINANCIAL INFORMATION OF THE GROUP

1. AUDITED FINANCIAL STATEMENTS OF THE GROUP FOR THE THREE YEARS ENDED 30 JUNE 2002, 2003 AND 2004

The following is the text of a report, prepared for the sole purpose of inclusion in this circular received from the independent reporting accountants, Deloitte Touche Tohmatsu, Hong Kong.

==> picture [64 x 48] intentionally omitted <==

==> picture [78 x 33] intentionally omitted <==

5 November 2004

The Directors Tsim Sha Tsui Properties Limited

Dear Sirs,

We set out below our report on the financial information regarding Tsim Sha Tsui Properties Limited (the “Company”) and its subsidiaries (hereinafter collectively referred to as the “Group”) for each of the three years ended 30 June 2004 (the “Relevant Periods”), for inclusion in the circular of the Company dated 5 November 2004 in connection with a possible very substantial disposal resulting from possible deemed disposal of interest in Sino Land Company Limited (“Sino Land”) so that it becomes an associate (the “Circular”).

The Company is a listed public limited liability company incorporated in Hong Kong on 20 June 1972 and is engaged in investment holding. As at the date of this report, the Company had interests in the principal subsidiaries as follows:

				Proportion of
				nominal value
				of issued share
	Place of			capital held by
	incorporation/	Class of	Issued	the Company
Name of subsidiary	operation	shares held	share capital	Directly Indirectly		Principal activities
				%	%
Acclaim Investment	Hong Kong	Ordinary	HK$2	100	–	Share investment
Limited
Accomplishment	Hong Kong	Ordinary	HK$2	100	–	Share investment
Investment Limited
Ackerley Estates	Hong Kong	Ordinary	HK$20,000,000	–	100	Property investment
Limited

−13 −

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

				Proportion of
				nominal value
				of issued share
	Place of			capital held by
	incorporation/	Class of	Issued	the Company
Name of subsidiary	operation	shares held	share capital	Directly Indirectly		Principal activities
				%	%
Active Success	Hong Kong	Ordinary	HK$2	–	100	Property development
Development
Limited
Advance Profit Limited	Hong Kong	Ordinary	HK$2	–	100	Property development
Alfaso Investment	Hong Kong	Ordinary	HK$20,000	–	100	Property investment
Limited
Allbright Global	Republic of	Bearer	US$200	100	–	Share investment
Investments, S.A.	Panama/
Limited	Hong Kong
Allways Success	Hong Kong	Ordinary	HK$10	–	100	Mortgage loan financing
Finance Limited
Apex Speed Limited	Hong Kong	Ordinary	HK$2	–	100	Property trading and
						investment
Beauty Plaza Limited	Hong Kong	Ordinary	HK$20,000	–	100	Property investment
Bestone Limited	Hong Kong	Ordinary	HK$2	–	100	Property development
Best General Limited	Hong Kong	Ordinary	HK$2	100	–	Provision of financial
						services
Best Origin Limited	Hong Kong	Ordinary	HK$2	–	100	Property investment
Best Result Cleaning	Hong Kong	Ordinary	HK$2	–	100	Cleaning services
Services Limited
Better Sino Limited	Hong Kong/	Ordinary	HK$2	–	100	Property development
	The People’s
	Republic of
	China (“PRC”)
Brighter Investment	Hong Kong	Ordinary	HK$400,000	100	–	Share investment
Company Limited
Century Profit Limited	Hong Kong	Ordinary	HK$2	–	100	Property investment
Cheer Result Limited	Hong Kong	Ordinary	HK$2	–	100	Property trading and
						investment

−14 −

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

				Proportion of
				nominal value
				of issued share
	Place of			capital held by
	incorporation/	Class of	Issued	the Company
Name of subsidiary	operation	shares held	share capital	Directly Indirectly		Principal activities
				%	%
Crenshaw Investment	Hong Kong	Ordinary	HK$2	100	–	Share investment
Limited
Dragon (Hong Kong)	Hong Kong	Ordinary	HK$2	–	100	Property development
Limited
e.Sino Company	Hong Kong	Ordinary	HK$2	–	100	Investment holding
Limited
Elegant Lane Limited	Hong Kong	Ordinary	HK$2	–	100	Property investment
Entertainment City	Hong Kong	Ordinary	HK$4,500,000	–	100	Property investment
Limited
Ever Champion	Hong Kong	Ordinary	HK$2	–	100	Property trading
Development
Limited
Falcon City Limited	Hong Kong	Ordinary	HK$2	–	100	Property development
Famous General	Hong Kong	Ordinary	HK$2	–	100	Property investment
Limited
Famous Palace	Hong Kong	Ordinary	HK$20,000	–	100	Property investment
Properties Limited
Firm Wise Investment	Hong Kong	Ordinary	HK$10	–	70	Property investment
Limited
Fo Tan Construction	Hong Kong	Ordinary	HK$2	–	100	Project management
Consultant Limited
Forlink Limited	Hong Kong	Ordinary	HK$2	–	100	Property investment
Fortune Garden Inc.	Republic of	Registered/	US$1	–	100	Share investment
	Liberia/	Bearer
	Hong Kong
Free Champion Limited	Hong Kong	Ordinary	HK$2	–	100	Property investment
Fu King Investment	Hong Kong	Ordinary	HK$1,000,000	–	100	Investment holding
Limited
Full Fair Limited	Hong Kong	Ordinary	HK$2	–	100	Property development

−15 −

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

				Proportion of
				nominal value
				of issued share
	Place of			capital held by
	incorporation/	Class of	Issued	the Company
Name of subsidiary	operation	shares held	share capital	Directly Indirectly		Principal activities
				%	%
Fung Yuen	Hong Kong	Ordinary	HK$1,000,000	–	100	Building construction
Construction
Company Limited
Glenery Limited	British Virgin	Ordinary	US$1	–	100	Share investment
	Islands/
	Hong Kong
Globaland	Hong Kong	Ordinary	HK$2	–	100	Property trading and
Development						investment
Limited
Global Honest Finance	Hong Kong	Ordinary	HK$2	–	100	Mortgage loan financing
Limited
Glorypark Limited	Hong Kong	Ordinary	HK$1,000	–	100	Property investment
Golden Century	Hong Kong	Ordinary	HK$2	100	–	Financing
Limited
Golden Leaf	Hong Kong	Ordinary	HK$20,000	–	100	Property investment
Investment Limited
Golden Million Finance	British Virgin	Ordinary	US$1	–	100	Financing
Corporation	Islands/
	Hong Kong
Grand Creator	British Virgin	Ordinary	US$10	–	60	Investment holding
Investment (BVI)	Islands/
Limited	Hong Kong
Grand Creator	Hong Kong	Ordinary	HK$2	–	60	Property development
Investment Limited
Grand Idea Investment	Cayman Islands/	Ordinary	US$1	–	100	Property investment
(CI) Limited	Hong Kong
Grandeal Limited	Hong Kong/PRC	Ordinary	HK$2	–	100	Property development
Great Land (HK)	Hong Kong	Ordinary	HK$1,000,000	–	100	Property trading and
Limited						investment

−16 −

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

				Proportion of
				nominal value
				of issued share
	Place of			capital held by
	incorporation/	Class of	Issued	the Company
Name of subsidiary	operation	shares held	share capital	Directly Indirectly		Principal activities
				%	%
Handsome Lift	Cayman Islands/	Ordinary	US$1	–	100	Property investment
Investment (CI)	Hong Kong
Limited
Hang Hau Station	Hong Kong	Ordinary	HK$2	–	60	Project management
(Project
Management)
Limited
Hang Hau Station	Hong Kong	Ordinary	HK$2	–	60	Building construction
Construction Limited
Harvestrade Investment	Hong Kong	Ordinary	HK$20,000	–	100	Property trading and
Limited						investment
Hickson Limited	Hong Kong	Ordinary	HK$20	–	100	Property investment
High Elite Finance	Hong Kong	Ordinary	HK$2	–	100	Mortgage loan financing
Limited
High Elite Limited	Hong Kong	Ordinary	HK$2	–	100	Property investment
Jade Bird Development	Hong Kong	Ordinary	HK$100,000	–	100	Property trading and
Limited						investment
Jade Mate Limited	Hong Kong	Ordinary	HK$2	–	100	Property investment
Jade Pine Limited	Hong Kong	Ordinary	HK$20,000	–	100	Property investment
Jade Queen Properties	Hong Kong	Ordinary	HK$2	–	100	Property investment
Limited
Ka Fai Land	Hong Kong	Ordinary	HK$500,000	100	–	Share investment
Investment Limited
King Chance	Hong Kong	Ordinary	HK$2	–	100	Investment holding
Development
Limited
Kingdom Investment	Hong Kong	Ordinary	HK$2	–	100	Property trading and
Limited						investment

−17 −

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

				Proportion of
				nominal value
				of issued share
	Place of			capital held by
	incorporation/	Class of	Issued	the Company
Name of subsidiary	operation	shares held	share capital	Directly Indirectly		Principal activities
				%	%
Land Success	Hong Kong	Ordinary	HK$2	–	100	Property trading and
Development						investment
Limited
Landscape Investment	Hong Kong	Ordinary	HK$2	–	100	Property development
Limited
Lucky Fortress Inc.	Republic of	Registered/	US$1	–	100	Share investment
	Liberia/	Bearer
	Hong Kong
Mackey Limited	Hong Kong	Ordinary	HK$100	–	100	Property development
Mailcoach Investment	Hong Kong	Ordinary	HK$2	100	–	Share investment
Limited
Main Earn Limited	Hong Kong	Ordinary	HK$2	100	–	Financing
Mander Investment	British Virgin	Ordinary	US$1	–	100	Share investment
Limited	Islands/
	Hong Kong
Mass Success Limited	Hong Kong	Ordinary	HK$1,000	–	100	Property trading
Morbest Profits	British Virgin	Ordinary	US$1	–	100	Share investment
Limited	Islands/
	Hong Kong
Multipurpose	Hong Kong	Ordinary	HK$20,000	–	100	Property trading and
Investment Limited						investment
Nam Lung (Singapore)	Singapore	Ordinary	S$2	100	–	Share dealing
Pte. Limited
Ocean Treasure (Hong	Hong Kong	Ordinary	HK$2	–	100	Property development
Kong) Limited
Octerworth Enterprises	Hong Kong	Ordinary	HK$20,000	–	100	Property investment
Limited
Orchard Centre	Singapore	Ordinary	S$8,400,000	–	95	Property trading and
Holdings (Pte.)						share dealing
Limited

−18 −

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

				Proportion of
				nominal value
				of issued share
	Place of			capital held by
	incorporation/	Class of	Issued	the Company
Name of subsidiary	operation	shares held	share capital	Directly Indirectly		Principal activities
				%	%
Orchard Place (Pte.)	Singapore	Ordinary	S$1,000,000	–	95	Property trading
Limited
Pacific Elite Limited	Hong Kong	Ordinary	HK$2	–	100	Financing
Parason Limited	British Virgin	Ordinary	US$1	–	100	Share investment
	Islands/
	Hong Kong
Peace Success	Hong Kong	Ordinary	HK$2	–	100	Property trading
Development
Limited
Perfect Sun Properties	Hong Kong	Ordinary	HK$2	–	100	Property trading and
Limited						investment
Pioneer Parking	Hong Kong	Ordinary	HK$2	–	100	Carpark operation
Limited
port88 Limited	Hong Kong	Ordinary	HK$2	–	100	Internet services provider
Precious Land Pte.	Singapore	Ordinary	S$2	–	100	Property investment
Limited
Precious Treasure Pte.	Singapore	Ordinary	S$20,000,000	–	100	Hotel operation and
Ltd						property investment
Pridegate (CI) Limited	Cayman Islands/	Ordinary	US$1	–	100	Property investment
	Hong Kong
Prime Harvest	Hong Kong	Ordinary	HK$2	–	100	Consultant services
(Administration						provider
Services) Limited
Prime Harvest	Hong Kong	Ordinary	HK$2	–	100	Property development
Development
Limited
Primewin Properties	Hong Kong	Ordinary	HK$2	–	100	Property investment
Limited
Prime Reward Finance	Hong Kong	Ordinary	HK$2	–	100	Financing
Limited

−19 −

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

				Proportion of
				nominal value
				of issued share
	Place of			capital held by
	incorporation/	Class of	Issued	the Company
Name of subsidiary	operation	shares held	share capital	Directly Indirectly		Principal activities
				%	%
Pui Chee Enterprises	Hong Kong	Ordinary	HK$1,000,000	100	–	Share investment
Limited
Ramage Investment	Hong Kong	Ordinary	HK$2	100	–	Share investment
Limited
Rankchief Company	Hong Kong	Ordinary	HK$200	–	100	Property trading
Limited
Real Maker	Hong Kong	Ordinary	HK$200,000	–	90	Property investment
Development
Limited
Regent Profit	Hong Kong	Ordinary	HK$2	–	100	Property trading and
Investment Limited						investment
Region One Investment	Hong Kong	Ordinary	HK$2	–	100	Property investment
Limited
Residence Oasis	Hong Kong	Ordinary	HK$2	–	60	Mortgage loan financing
Finance Company
Limited
Rich Tact International	Cayman Islands/	Ordinary	US$1	–	100	Property investment
(CI) Limited	Hong Kong
Richtune Investment	British Virgin	Ordinary	US$1	–	100	Share investment
Limited	Islands/
	Hong Kong
Saky Investment (CI)	Cayman Islands/	Ordinary	US$1	–	100	Property investment
Limited	Hong Kong
Salia Limited	Hong Kong/PRC	Ordinary	HK$2	–	100	Property development
Santander Investment	Hong Kong	Ordinary	HK$2	100	–	Share investment
Limited
Serenity Park Building	Hong Kong	Ordinary	HK$10	–	100	Building management
Management Limited
Sharp Rise Company	Hong Kong	Ordinary	HK$2	–	100	Property trading
Limited

−20 −

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

					Proportion of	Proportion of
					nominal value
					of issued share
	Place of				capital held by
	incorporation/	Class of		Issued	the Company
Name of subsidiary	operation	shares held		share capital	Directly	Indirectly	Principal activities
					%	%
Sidak Investment	Hong Kong	Ordinary		HK$20,000	–	100	Property trading and
Limited							investment
Silver Palm Limited	Hong Kong	Ordinary		HK$2	–	100	Property trading and
							investment
Sing-Ho Finance	Hong Kong	Ordinary		HK$30,000,000	–	100	Financing
Company Limited
Sino Security Services	Hong Kong	Ordinary		HK$2	–	100	Security services
Limited
Sino Administration	Hong Kong	Ordinary		HK$3	–	100	Administration services
Services Limited
Sino Broadband	Hong Kong	Ordinary		HK$2	–	100	Broadband infrastructure
Technology Limited
Sino Estates	Hong Kong	Ordinary		HK$2	–	100	Building management
Management Limited
Sino Estates	Hong Kong/PRC	Ordinary		HK$2	–	100	Building management
Management (China)
Limited
Sino Estates Services	Hong Kong	Ordinary		HK$20	–	100	Building management
Limited
Sino Land Company	Hong Kong	Ordinary	HK$4,306,022,975		24.32	26.07	Investment holding
Limited (Listed in
Hong Kong)
Sino Land Finance	Hong Kong	Ordinary		HK$2	–	100	Deposit placing
Limited
Sino Land	PRC	Registered		US$480,034	–	100	Property development
(Guangzhou)
Company Limited
Sino Land Investment	Cayman Islands/	Ordinary		US$6,000,000	–	100	Investment holding
(Holdings) Ltd.	Hong Kong
Sino Technology	Hong Kong	Ordinary		HK$2	–	100	High technology business
Corporation Limited

−21 −

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

				Proportion of
				nominal value
				of issued share
	Place of			capital held by
	incorporation/	Class of	Issued	the Company
Name of subsidiary	operation	shares held	share capital	Directly Indirectly		Principal activities
				%	%
Spangle Investment	Hong Kong	Ordinary	HK$2	100	–	Share investment
Limited
Sparkling Investment	Hong Kong	Ordinary	HK$200	100	–	Share investment
Company Limited
Standard Union	Hong Kong	Ordinary	HK$2	–	100	Share investment
Investment Limited
Success One	Hong Kong	Ordinary	HK$2	–	100	Property investment
Investment Limited
Sunny Force Limited	Hong Kong	Ordinary	HK$2	–	100	Property investment
Super One Investment	Hong Kong	Ordinary	HK$2	–	100	Property investment
Limited
Sunrise Investment	Hong Kong	Ordinary	HK$2	–	100	Property trading and
Limited						investment
Ten Treasure Limited	Hong Kong/PRC	Ordinary	HK$2	–	100	Property development
Thousand Growth	Hong Kong	Ordinary	HK$20,000	–	100	Property investment
Development
Limited
Timeshare	Cayman Islands/	Ordinary	US$1	–	100	Property investment
Development (CI)	Hong Kong
Limited
Trans China Investment	Hong Kong	Ordinary	HK$2	–	100	Property investment
Limited
Triple Reach	Cayman Islands/	Ordinary	US$1	–	100	Property investment
International (CI)	Hong Kong
Limited
Union Development	Hong Kong	Ordinary	HK$2	–	100	Property development
Limited
Vasilon Pte. Ltd	Singapore	Ordinary	S$2	–	100	Investment holding
Weiland Development	Hong Kong	Ordinary	HK$33,140,000	–	100	Property investment
Company Limited
Wendia Limited	Hong Kong	Ordinary	HK$20	–	100	Property investment

−22 −

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

				Proportion of
				nominal value
				of issued share
	Place of			capital held by
	incorporation/	Class of	Issued	the Company
Name of subsidiary	operation	shares held	share capital	Directly Indirectly		Principal activities
				%	%
Wicorp Development	Hong Kong/PRC	Ordinary	HK$2	–	100	Property trading
Limited
Will Glory Company	Cayman Islands/	Ordinary	US$1	–	100	Property investment
(CI) Limited	Hong Kong
Wise Century Limited	Hong Kong	Ordinary	HK$2	–	100	Property development
Wise Mate Limited	Hong Kong	Ordinary	HK$2	–	100	Property development
World Empire	Cayman	Ordinary	US$1	–	100	Property investment
Investment (CI)	Islands/Hong
Limited	Kong

We have acted as auditors of the Group for the Relevant Periods.

We have audited the financial statements of the Company and the Group for each of the three years ended 30 June 2004 in accordance with Statements of Auditing Standards issued by the Hong Kong Institute of Certified Public Accountants (“HKICPA”), issued on 24 September 2002, 23 September 2003 and 22 September 2004, respectively (the “Relevant Audited Financial Statements”). We have examined the Relevant Audited Financial Statements in accordance with the Auditing Guideline 3.340 “Prospectuses and the Reporting Accountant” as recommended by the HKICPA.

The consolidated results, statements of changes in equity and cash flows of the Group for the Relevant Periods and of the consolidated balance sheets of the Group and the balance sheets of the Company as at 30 June 2002, 2003 and 2004 together with the notes thereon set out in this report (collectively the “Financial Information”) have been prepared based on the Relevant Audited Financial Statements.

The Relevant Audited Financial Statements are the responsibility of the Directors of the Company who approved their issue. It is our responsibility to compile the Financial Information set out in this report from the Relevant Audited Financial Statements, to form an independent opinion on the Financial Information and to report our opinion to you.

In our opinion, the Financial Information prepared on the basis as explained above gives, for the purpose of this report, a true and fair view of the consolidated results and cash flows of the Group for each of the periods then ended and of the consolidated balance sheets of the Group and the balance sheets at the Company as at 30 June 2002, 2003 and 2004.

−23 −

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

I. FINANCIAL INFORMATION

Consolidated Income Statements

The following is the consolidated results of the Group for the Relevant Periods.

2002 HK$ 2,765,435,617 (762,108,334) (480,343,436)	2003 HK$ 4,237,394,557 (2,230,536,990) (643,819,006)	2004 HK$ 4,277,645,604 (2,036,525,457) (731,879,384) 1,509,240,763 34,817,086 36,225,055 276,889,956 (17,621,750) – (356,367,796) 1,483,183,314 82,688,725 (233,321,404) (150,632,679) 510,139,155 – (7,558,625) (191,786,591) 1,643,344,574 (236,453,428) 1,406,891,146 (683,496,803) 723,394,343 68,395,291 52.85 cents 50.15 cents
1,522,983,847 62,288,800 21,921,860 (276,725,457) (103,107,616) (129,255,068) (396,713,021) 701,393,345 125,584,425 (629,741,426) (504,157,001) (108,750,786) 12,712,419 69,611,638 – 170,809,615 (94,779,612) 76,030,003 (114,517,207)	1,363,038,561 55,074,507 33,843,104 (281,778,373) (252,397,016) – (406,609,962) 511,170,821 97,788,765 (636,100,522) (538,311,757) (78,330,825) – 30,528,060 – (74,943,701) (89,486,729) (164,430,430) (11,564,059)	1,509,240,763 34,817,086 36,225,055 276,889,956 (17,621,750) – (356,367,796) 1,483,183,314
		82,688,725 (233,321,404)
		(150,632,679) 510,139,155 – (7,558,625) (191,786,591) 1,643,344,574 (236,453,428) 1,406,891,146 (683,496,803)
(38,487,204) 13,657,432 (2.82 cents) N/A	(175,994,489) – (12.87 cents) N/A

−24 −

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Consolidated Balance Sheets

The following is the consolidated balance sheets of the Group as at the respective balance sheet dates.

2002 HK$ 14,448,546,536 1,154,228,706 80,399,042 (611,701,913) 11,787,698,932 951,755,137 78,651,026 615,000 692,615,355	2003 HK$ 13,292,907,150 1,178,578,081 71,914,904 (847,735,637) 11,081,215,157 1,090,111,329 23,327,729 615,000 573,584,330	2004 HK$ 16,875,663,820 1,179,346,094 62,672,484 (821,270,021) 10,500,498,037 1,520,076,492 20,281,519 615,000 571,690,106 29,909,573,531 8,665,188,659 492,480,449 20,955,153 1,088,224,951 1,629,526,939 1,098,503,202 – 126,700,514 182,619,261 238,393,749 2,769,490,984 16,312,083,861
28,582,807,821 5,880,322,201 363,056,317 21,946,321 1,088,565,285 2,174,700,180 748,533,613 20,000,000 25,558,437 16,273,646 525,153,593 2,208,238,617 13,072,348,210	26,464,518,043 8,845,310,945 677,118,767 21,044,865 806,145,256 1,494,397,245 1,051,271,858 – 22,097,946 31,436,908 6,854,166 1,085,940,842 14,041,618,798	29,909,573,531
		8,665,188,659 492,480,449 20,955,153 1,088,224,951 1,629,526,939 1,098,503,202 – 126,700,514 182,619,261 238,393,749 2,769,490,984
		16,312,083,861

−25 −

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

2002 HK$ 4,803,780,071 230,728,920 50,509,860 31,198,800 302,664,400 – 1,089,520,647 – 1,252,943,703 203,213,218	2003 HK$ 3,521,140,118 358,676,369 106,226,695 13,100,640 337,753,200 300,000,000 969,135,817 233,940,000 1,186,849,556 115,895,699	2004 HK$ 5,138,837,940 226,948,675 117,545,628 13,102,740 212,000,000 – 2,078,848,832 218,379,000 790,357,594 118,101,366
7,964,559,619 5,107,788,591 33,690,596,412 273,581,165 8,248,462,130 8,522,043,295 12,395,157,234 10,845,607,804 28,295,934 1,704,050,548 1,293,767 194,147,830 12,773,395,883 33,690,596,412	7,142,718,094 6,898,900,704 33,363,418,747 273,581,165 7,344,134,366 7,617,715,531 11,301,746,765 11,922,453,579 32,244,483 1,966,649,850 10,375,165 512,233,374 14,443,956,451 33,363,418,747	8,914,121,775
		7,397,962,086
		37,307,535,617

		274,998,434 10,221,702,576
		10,496,701,010
		15,839,108,365
		8,621,829,209 40,123,952 1,941,668,613 – 368,104,468
		10,971,726,242
		37,307,535,617

−26 −

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Balance Sheets

The following is the balance sheets of the Company as at the respective balance sheet dates.

2002 HK$ 138,808 5,035,862,916	2003 HK$ 65,881 5,300,591,441	2004 HK$ 13,347 5,043,872,206 5,043,885,553 454,139 54,234 120,700 629,073 1,381,482 180,000,000 14,412,416 195,793,898 (195,164,825) 4,848,720,728 274,998,434 2,841,346,590 3,116,345,024 942,123,732 790,251,972 1,732,375,704 4,848,720,728
5,036,001,724 475,297 374,097 81,823 931,217 1,073,646 30,000,000 129,678,184 160,751,830 (159,820,613)	5,300,657,322 318,575 74,627 62,457 455,659 1,140,883 130,000,000 123,481,523 254,622,406 (254,166,747)	5,043,885,553
		454,139 54,234 120,700
		629,073
		1,381,482 180,000,000 14,412,416
		195,793,898
		(195,164,825
4,876,181,111	5,046,490,575
273,581,165 2,746,012,999 3,019,594,164 1,173,294,136 683,292,811 1,856,586,947	273,581,165 2,774,611,666 3,048,192,831 1,337,931,300 660,366,444 1,998,297,744	274,998,434 2,841,346,590
		3,116,345,024
		942,123,732 790,251,972
		1,732,375,704
4,876,181,111	5,046,490,575

−27 −

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Consolidated Statements of Changes in Equity

The following is the consolidated statements of changes in equity of the Group for the Relevant Periods.

The Group

Share capital HK$ 273,148,630	Share premium HK$ 2,438,803,366	Capital redemption reserve HK$ 224,000	Investment property revaluation reserve HK$ 3,305,576,141	Other security revaluation reserve HK$ (219,629,016)	Exchange reserve HK$ 12,561,669	Retained profits HK$ 3,857,980,999	Total HK$ 9,668,665,789
– – – – – 432,535 – – – – – – – – – 273,581,165	– – – – – – 12,846,299 (12,897) – – – – – – – 2,451,636,768	– – – – – – – – – – – – – – – 224,000	(1,390,214,183) 692,872,319 (165,072,166) – (862,414,030) – – – (12,712,419) (445,216,262) (35,581,488) 221,491,402 – – – 2,171,143,344	(79,199,954) 22,310,849 – – (56,889,105) – – – – 76,055,952 – (36,786,818) 53,236,422 – – (184,012,565)	– – – (8,927,449) (8,927,449) – – – – – – – – – – 3,634,220	– – – – – – – – – – – – – (38,487,204) (13,657,432) 3,805,836,363	(1,469,414,137) 715,183,168 (165,072,166) (8,927,449)
							(928,230,584)
							432,535 12,846,299 (12,897) (12,712,419) (369,160,310) (35,581,488) 184,704,584 53,236,422 (38,487,204) (13,657,432)
							8,522,043,295

−28 −

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

Share capital HK$ – – – –	Share premium HK$ – – – –	Capital redemption reserve HK$ – – – –	Investment property revaluation reserve HK$ (1,231,115,559) 604,339,928 (179,511,433) –	Other security revaluation reserve HK$ (35,878,511) 2,736,114 – –	Exchange reserve HK$ – – – (2,885,764)	Retained profits HK$ – – – –	Total HK$ (1,266,994,070) 607,076,042 (179,511,433) (2,885,764)
–	– – – – – – 2,451,636,768 – – – – –	– – – – – – 224,000 – – – – –	(806,287,064) (8,139,842) (16,280,645) 3,798,856 – – 1,344,234,649 3,448,271,547 (1,735,539,500) 453,910,576 – 2,166,642,623	(33,142,397) – – – 134,603,581 – (82,551,381) 327,281,605 (150,734,665) – – 176,546,940	(2,885,764) – – – – – 748,456 – – – (5,042,867) (5,042,867)	– – – – – (175,994,489) 3,629,841,874 – – – – –	(842,315,225)
– – – – –							(8,139,842) (16,280,645) 3,798,856 134,603,581 (175,994,489)
273,581,165							7,617,715,531
– – – –							3,775,553,152 (1,886,274,165) 453,910,576 (5,042,867)
–							2,338,146,696

−29 −

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

Shares issued in lieu of cash dividend Premium on issue of shares upon scrip dividend Shares issue expenses Reserves released on deemed disposal of partial interest in a listed subsidiary Revaluation reserves released on disposal Revaluation reserves released on disposal attributable to minority shareholders Impairment loss charged to consolidated income statement less minority interests Net profit for the year Interim dividend – 2004 At 30 June 2004	Share capital HK$ 1,417,269 – – – – – – – –	Share premium HK$ – 65,265,246 (30,000) – – – – – –	Capital redemption reserve HK$ – – – – – – – – –	Investment property revaluation reserve HK$ – – – (172,684,183) 1,447,740 (723,405) – – –	Other security revaluation reserve HK$ – – – (10,426,110) 38,978 (19,476) 1,307,947 – –	Exchange reserve HK$ – – – 245,725 – – – – –	Retained profits HK$ – – – – – – – 723,394,343 (68,395,291)	Total HK$ 1,417,269 65,265,246 (30,000) (182,864,568) 1,486,718 (742,881) 1,307,947 723,394,343 (68,395,291)
	274,998,434	2,516,872,014	224,000	3,338,917,424	84,896,898	(4,048,686)	4,284,840,926	10,496,701,010

Notes:

(i) At 30 June 2002, 2003 and 2004, retained profits in the sum of HK$8,763,836, HK$18,272,216 and HK$20,999,745, respectively, of certain associates attributable to the Group are distributable by way of dividend subject to the prior consent of their bankers.
(ii) At 30 June 2002, 2003 and 2004, the retained profits of the Group included accumulated losses of HK$500,858,170, HK$739,922,052 and HK$692,365,884, respectively, attributable to the associates of the Group.

−30 −

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Consolidated Cash Flow Statements

The following is the consolidated cash flow statements of the Group for the Relevant Periods.

2002 HK$ 701,393,345 276,725,457 129,255,068 103,107,616 18,288,045 67,954 (419,515,734) (21,921,860)	2003 HK$ 511,170,821 281,778,373 – 252,397,016 16,775,597 31,352 17,927,321 (33,843,104)	2004 HK$ 1,483,183,314 (276,889,956) (20,136) 17,621,750 14,673,117 1,495,281 4,152,457 (36,225,055) 1,207,990,772 (1,805,847,613) 2,083,710,701 89,712 (5,189,739) (47,231,344) 1,599,452,135 (266,857,388) 2,766,117,236 (257,450,699) 6,398,823 2,515,065,360
787,399,891 (2,722,275,273) 11,415,266 (2,115,691) 2,144,928 (19,943,105) 4,055,998,830 697,664,344 2,810,289,190 (67,698,260) (4,839,250) 2,737,751,680	1,046,237,376 (5,588,708,013) 2,296,094,826 901,456 641,656 (301,749,996) (1,264,306,962) 808,250,384 (3,002,639,273) (19,572,693) (2,321,936) (3,024,533,902)	1,207,990,772 (1,805,847,613 2,083,710,701 89,712 (5,189,739 (47,231,344 1,599,452,135 (266,857,388
		2,766,117,236 (257,450,699 6,398,823
		2,515,065,360

−31 −

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes INVESTING ACTIVITIES (Advances to) repayments from associates (Increase) decrease in long-term loans receivable (Increase) decrease in restricted bank deposits Acquisition of an unsecured loan from a former fellow subsidiary of a subsidiary Acquisition of additional interest in a listed subsidiary Repurchase of its own shares by a listed subsidiary Purchase of investment properties Purchase of property, plant and equipment Purchase of investments in other securities Acquisition of associates Additions of hotel property Deposit paid for purchase of land Dividends received from associates Proceeds from disposal of investment properties Interest received Proceeds from disposal of associates Proceeds from disposal of investments in other securities Proceeds from disposal of subsidiaries (net of cash and cash equivalents disposed of) 35 Repayments from investee companies Acquisition of a subsidiary (net of cash and cash equivalents acquired) 36 Proceeds from disposal of property, plant and equipment NET CASH (USED IN) FROM INVESTING ACTIVITIES	2002 HK$ (1,790,391,120) (638,760,791) (145,554,821) (96,558,776) (76,683,486) (57,599,045) (51,224,049) (50,808,296) (44,834,948) (34,633,380) (21,293,305) (20,000,000) 697,991,424 656,127,000 125,584,425 110,303,146 64,756,014 43,054,537 2,871,273 1,658,544 313,974	2002 HK$ (1,790,391,120) (638,760,791) (145,554,821) (96,558,776) (76,683,486) (57,599,045) (51,224,049) (50,808,296) (44,834,948) (34,633,380) (21,293,305) (20,000,000) 697,991,424 656,127,000 125,584,425 110,303,146 64,756,014 43,054,537 2,871,273 1,658,544 313,974	2003 HK$ 148,785,153 122,491,516 518,299,427 (92,765,410) (97,002,343) (90,262,382) (16,797,214) (8,521,429) (174,234,703) – (24,349,375) – 88,502,500 92,233,000 97,788,765 31,201,966 – – 55,323,297 122,321 198,618	2004 HK$ 1,495,130,119 (102,708,344) (231,539,583) – (233,797,918) – (3,375,364) (6,946,929) (129,175,673) (18,876,552) (768,013) – 397,010,000 19,727,900 82,688,725 – 11,543,695 – 3,046,210 – 20,951
	(1,325,681,680	)	651,013,707	1,281,979,224

−32 −

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

FINANCING ACTIVITIES New bank and other loans Issue of convertible notes Advances from (repayments to) associates Advances from (repayments to) minority shareholders Advances from (repayments to) investee companies Repayments of bank and other loans Redemption of convertible bonds Interest paid Dividends paid to minority shareholders Issue costs of convertible notes paid Loan arrangement fees paid Commitment fees paid Dividends paid Shares issue expenses paid Finance costs paid upon early repayment of loans Capital contribution from a minority shareholder NET CASH FROM (USED IN) FINANCING ACTIVITIES NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS BROUGHT FORWARD EFFECT OF FOREIGN EXCHANGE RATE CHANGES CASH AND CASH EQUIVALENTS CARRIED FORWARD ANALYSIS OF THE BALANCES OF CASH AND CASH EQUIVALENTS Time deposits, bank balances and cash Bank overdrafts	2002 HK$ 4,222,919,799 1,500,000,000 1,161,149,791 9,621,415 1,220,126 (4,380,402,310) (1,168,401,969) (606,120,978) (45,802,085) (37,565,291) (10,837,264) (5,325,399) (378,598) (12,897) – –	2003 HK$ 3,740,738,657 – 262,599,302 372,156,099 9,081,398 (2,515,963,868) – (538,116,800) (34,465,016) – (9,621,667) (6,427,590) – – (107,999,777) 30	2004 HK$ 2,419,227,444 – (24,981,237) (175,002,326) (10,375,165) (4,035,593,376) – (228,927,390) (78,434,533) – (4,312,966) (22,510,296) (1,712,776) (30,000) – –
	640,064,340 2,052,134,340 136,617,573 8,918,057 2,197,669,970 2,208,238,617 (10,568,647) 2,197,669,970	1,171,980,768 (1,201,539,427) 2,197,669,970 (1,388,851) 994,741,692 1,085,940,842 (91,199,150) 994,741,692	(2,162,652,621) 1,634,391,963 994,741,692 6,453,097 2,635,586,752 2,769,490,984 (133,904,232) 2,635,586,752

−33 −

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to the Financial Information

1. SIGNIFICANT ACCOUNTING POLICIES

The financial statements have been prepared under the historical cost convention as modified for the revaluation of investment properties and investments in securities.

The financial statements have been prepared in accordance with accounting principles generally accepted in Hong Kong. The principal accounting policies adopted are as follows:

Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Company and its subsidiaries made up to 30 June 2002, 2003 and 2004.

The results of subsidiaries acquired or disposed of during the Relevant Periods are included in the consolidated income statement from the effective date of acquisition or up to the effective date of disposal as appropriate.

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

Goodwill

Goodwill arising on consolidation represents the excess of the cost of acquisition over the Group’s interest in the fair value of the identifiable assets and liabilities of an associate at the date of acquisition. Goodwill arising on the acquisition of an associate is included within the carrying amount of the associate and amortised on a straight line basis over its useful economic life.

Negative goodwill

Negative goodwill represents the excess of the Group’s interest in the fair value of the identifiable assets and liabilities of a subsidiary or an associate at the date of acquisition over the cost of acquisition. Negative goodwill is presented as a deduction from assets and is released to income based on an analysis of the circumstances from which the balance resulted.

To the extent that the negative goodwill is attributable to losses or expenses anticipated at the date of acquisition, it is released to income in the period in which those losses or expenses arise. The remaining negative goodwill is recognised as income on a straight line basis over the remaining average useful life of the identifiable acquired depreciable assets. To the extent that such negative goodwill exceeds the aggregate fair value of the acquired identifiable non-monetary assets, it is recognised in income immediately.

Negative goodwill arising on the acquisition of an associate is deducted from the carrying value of that associate. Negative goodwill arising on the acquisition of subsidiaries is presented separately in the balance sheet as a deduction from assets.

Investments in subsidiaries

Investments in subsidiaries are included in the Company’s balance sheet at cost less any identified impairment loss.

Interests in associates

The consolidated income statement includes the Group’s share of the post-acquisition results of its associates during the Relevant Periods. In the consolidated balance sheet, interests in associates are stated at the Group’s share of the net assets of the associates plus the premium paid and less any discount on acquisition in so far as it has not already been amortised or released to income, less any identified impairment loss.

Where the accounting dates of the associates are different from the Group’s accounting date, their results accounted for in the Group’s financial statements are based on their latest audited financial statements and/or management accounts made up to 30 June 2002, 2003 and 2004.

−34 −

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Investments in securities

Investments in securities are recognised on a trade date basis and are initially measured at cost.

All securities other than held-to-maturity debt securities are measured at subsequent reporting dates at fair value.

Where securities are held for trading purposes, unrealised gains and losses are included in the profit or loss during the Relevant Periods. For other securities, unrealised gains and losses are dealt with in equity, until the security is disposed of or is determined to be impaired, at which time the cumulative gain or loss previously recognised in equity is included in the net profit or loss for that period.

Investment properties

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

Investment properties are stated at their open market value based on independent professional valuations at the balance sheet date. Any surplus or deficit arising on the revaluation of investment properties is credited or charged to the investment property revaluation reserve unless the balance of this reserve is insufficient to cover a deficit, in which case the excess of the revaluation deficit over the balance on the investment property revaluation reserve is charged to the income statement. Where a deficit has previously been charged to the income statement and a revaluation surplus subsequently arises, this surplus is credited to the income statement to the extent of the deficit previously charged.

On disposal of an investment property, the balance of the investment property revaluation reserve attributable to that property is transferred to the income statement.

No depreciation is provided on investment properties except where the unexpired term of the relevant lease, including the renewable period, is twenty years or less.

Hotel property

Hotel property is stated at cost and no depreciation is provided on hotel property held on leases of more than twenty years. It is the Group’s practice to maintain the properties in a continual state of sound repair and maintenance, and accordingly, the Directors consider that depreciation is not necessary due to their high residual value. The related maintenance expenditure is dealt with in the income statement in the year of expenditure.

Property, plant and equipment

Property, plant and equipment are stated at cost less depreciation and accumulated impairment losses.

Depreciation is provided to write off the cost of items of property, plant and equipment over their estimated useful lives, using the straight line method, at the following rates per annum:

Computer system	20%
Furniture, fixtures and equipment	10%–20%
Leasehold improvements	20%
Motor vehicles	20%
Plant and machinery	10%–20%

The gain or loss arising on the disposal or retirement of an asset is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in the income statement.

Impairment

At each balance sheet date, the Group and the Company review the carrying amounts of its assets to determine whether there is any indication that those assets have suffered an impairment loss. If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. Impairment losses are recognised as an expense immediately.

−35 −

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in prior years. A reversal of an impairment loss is recognised as income immediately.

Properties under development

Properties under development which are developed for sale are included in current assets at the lower of cost and estimated net realisable value.

Stocks of unsold properties

Stocks of unsold properties are stated at the lower of cost and net realisable value. Cost is determined by apportionment of the total land and development costs attributable to the unsold properties.

Hotel inventories

Hotel inventories are stated at the lower of cost and net realisable value. Cost is calculated using weighted average cost method.

Other non-current assets

Other non-current assets represent club memberships and are stated at cost less any identified impairment loss.

Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets are capitalised as part of the cost of those assets. Capitalisation of such borrowing costs ceases when the assets are substantially ready for their intended use or sale. Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs capitalised.

All other borrowing costs are recognised as expenses in the year in which they are incurred.

Deferred loan arrangement fees

Deferred loan arrangement fees are deferred and amortised to the income statement over the repayment term of the loan on a straight line basis to provide a constant periodic rate of charge.

Convertible bonds/notes

Convertible bonds/notes are stated at the aggregate of the net proceeds from the issue plus finance costs provided.

The net proceeds represent the amount received on the issue of the convertible bonds/notes after deduction of direct issue costs. Direct issue costs are amortised to the income statement on a straight line basis over the period from the date of issue to the date on which the bondholders/noteholders can exercise their redemption option (the “bondholders’/noteholders’ redemption date”). If any of the convertible bonds/notes are purchased and cancelled, redeemed or converted prior to the bondholders’/noteholders’ redemption date, any remaining unamortised costs attributable to the convertible bonds/notes purchased will be written off immediately to the income statement.

Finance costs represent the premium that is to be paid to the bondholders/noteholders upon redemption on or before the bondholders’/noteholders’ redemption date. The estimated premium is provided for at a constant rate over the period when the bondholders’/noteholders’ redemption option is outstanding and is charged to the income statement. If any of the convertible bonds/notes are purchased and cancelled prior to the bondholders’/noteholders’ redemption date, any provision of such redemption premium in previous years in respect of the convertible bonds/notes purchased or converted will be taken to the income statement.

The gain or loss on purchase of convertible bonds/notes, representing the difference between the consideration paid and the nominal value of the convertible bonds/notes purchased, is recognised in the income statement.

−36 −

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Revenue and profit recognition

(a) Revenue and profit on the sales of properties are recognised upon completion of the sales agreements or transfer of risk and reward of ownership, whichever is earlier.
(b) Income from properties developed for sale is recognised on the execution of a binding sale agreement or when the relevant occupation permit is issued by the respective building authority, whichever is later. Payments received from the purchasers prior to this stage are recorded as deposits received on sales of properties and presented as current liabilities.
(c) Sales of listed investments are recognised when the title of the investment is transferred and the buyer takes legal possession of the investment.
(d) Rental income under operating leases is recognised on a straight line basis over the term of the relevant lease.
(e) Building management and service fee income is recognised on an appropriate basis over the Relevant Periods in which the services are rendered.
(f) Interest income is accrued on a time basis by reference to the principal outstanding and at the interest rate applicable.
(g) Where properties are sold under deferred terms, the difference between the sales prices with and without such terms is treated as deferred interest income and is released to the income statement on a straight line basis over the repayment period commencing from the completion of the relevant sales agreements.
(h) Dividend income from investments is recognised when the Group’s rights to receive payment have been established.
(i) Hotel income is recognised when services are provided.

Taxation

Income tax expense represents the sum of the tax currently payable and deferred tax.

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes income statement items that are never taxable or deductible.

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences, and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill (or negative goodwill) or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.

Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and associates, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the asset to be recovered.

Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited to the income statement, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity.

−37 −

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Foreign currencies

Transactions in foreign currencies are initially recorded at the rates of exchange prevailing on the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies are re-translated at the rates prevailing on the balance sheet date. Profits and losses arising on exchange are included in the net profit or loss for the Relevant Peiods.

On consolidation, the assets and liabilities of the Group’s operations outside Hong Kong are translated at exchange rates prevailing on the balance sheet date. Income and expense items are translated at the average exchange rates for the period. Exchange differences arising, if any, are classified as equity and transferred to the Group’s exchange reserve. Such translation differences are recognised as income or as expenses in the period in which the operation is disposed of.

Retirement benefits costs

Payments to retirement benefits schemes are charged as an expense as they fall due.

2. TURNOVER

Sales of properties held for sale Gross rental income from properties Building management and service fee income Hotel operations Interest income from loans receivable Sales of investment properties Dividend income Listed investments Unlisted investments Sales of investments in trading securities	2002 HK$ 587,750,561 857,062,710 385,110,443 201,616,565 5,800,847 656,127,000 49,938,568 11,279,034 10,749,889 2,765,435,617	2003 HK$ 2,523,490,191 857,342,234 392,981,569 196,670,559 102,321,162 92,233,000 58,427,125 10,529,661 3,399,056 4,237,394,557	2004 HK$ 2,592,400,047 856,311,539 421,210,100 253,072,006 54,277,759 19,727,900 70,815,078 9,282,031 549,144
			4,277,645,604

−38 −

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

3. BUSINESS AND GEOGRAPHICAL SEGMENTS

Business segments

For management purposes, the Group is currently organised into five operating divisions – property, security, financing, hotel and building management and services. These operating divisions are the basis on which the Group reports its primary segment information as follows:

INCOME STATEMENT

For the year ended 30 June 2002

Property HK$ 857,062,710 1,243,877,561 – 49,886,540 – –	Security HK$ – – – – 71,967,491 –	Financing HK$ – – – – – 5,800,847	Hotel HK$ – – 201,616,565 – – –	Building management and services HK$ – – – 335,223,903 – –	Elimination HK$ – – – – – –	Consolidated HK$ 857,062,710 1,243,877,561 201,616,565 385,110,443 71,967,491 5,800,847
2,150,826,811 23,846,900 –	71,967,491 8,840,063 –	5,800,847 489,884 –	201,616,565 2,268,699 –	335,223,903 26,843,254 20,656,524	– – (20,656,524)	2,765,435,617 62,288,800 –
2,174,673,711 1,242,483,322 (135,195,945)	80,807,554 (439,664,566) (2,679,732)	6,290,731 6,290,731 (483,968)	203,885,264 97,393,504 32,801,882	382,723,681 169,681,515 (3,193,023)	(20,656,524) –	2,827,724,417

						1,076,184,506
					–	21,921,860 (396,713,021
						701,393,345 (504,157,001 (108,750,786 12,712,419 69,611,638
						170,809,615 (94,779,612
						76,030,003 (114,517,207
						(38,487,204

* Inter-segment sales were charged at cost plus margin basis as agreed between both parties.

−39 −

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

BALANCE SHEET

At 30 June 2002

Property Security Financing Hotel Building management and services HK$ HK$ HK$ HK$ HK$ ASSETS Segment assets 24,294,240,451 2,153,203,483 1,459,558,713 1,310,025,379 1,245,857,340 Interests in associates 11,102,453,591 (1,500,652) (1,210,607) 725,353,308 (37,396,708) Negative goodwill Unallocated corporate assets Consolidated total assets LIABILITIES Segment liabilities 6,458,462,279 23,491,168 74,909,237 276,384,585 100,753,867 Borrowings Convertible bonds Unallocated corporate liabilities Consolidated total liabilities	Consolidated HK$ 30,462,885,366 11,787,698,932 (611,701,913 16,273,646
	41,655,156,031

	6,934,001,136 12,259,992,917 1,465,155,655 78,805,794
	20,737,955,502

OTHER INFORMATION

For the year ended 30 June 2002

					Building
					management
	Property	Security	Financing	Hotel	and services	Consolidated
	HK$	HK$	HK$	HK$	HK$	HK$
Amortisation of goodwill	308,611	–	–	12,645,817	–	12,954,428
Capital additions	393,734	–	–	44,172,750	6,241,812	50,808,296
Depreciation	263,366	1,123,561	–	9,277,978	7,623,140	18,288,045
Hotel property additions	–	–	–	21,293,305	–	21,293,305
Impairment losses on
investments in other
securities	–	103,107,616	–	–	–	103,107,616
Investment property additions	148,224,049	–	–	–	–	148,224,049
Unrealised holding loss on
investments in trading
securities	–	276,725,457	–	–	–	276,725,457

−40 −

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

INCOME STATEMENT

For the year ended 30 June 2003

Property HK$ 857,342,234 2,615,723,191 – 61,551,606 – –	Security HK$ – – – – 72,355,842 –	Financing HK$ – – – – – 102,321,162	Hotel HK$ – – 196,670,559 – – –	Building management and services HK$ – – – 331,429,963 – –	Elimination HK$ – – – – – –	Consolidated HK$ 857,342,234 2,615,723,191 196,670,559 392,981,569 72,355,842 102,321,162
3,534,617,031 22,509,300 –	72,355,842 1,770,617 –	102,321,162 273,909 –	196,670,559 – –	331,429,963 30,520,681 23,919,078	– – (23,919,078)	4,237,394,557 55,074,507 –
3,557,126,331 989,158,310 (104,642,853) 30,528,060	74,126,459 (462,198,617) 69,209 –	102,595,071 102,595,071 (1,434,347) –	196,670,559 77,064,213 22,389,580 –	385,869,722 177,318,702 5,287,586 –	(23,919,078) –	4,292,469,064

						883,937,679
					– –	33,843,104 (406,609,962
						511,170,821 (538,311,757 (78,330,825 30,528,060
						(74,943,701 (89,486,729
						(164,430,430 (11,564,059
						(175,994,489

* Inter-segment sales were charged at cost plus margin as agreed between both parties.

−41 −

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

BALANCE SHEET

At 30 June 2003

Property Security Financing Hotel Building management and services HK$ HK$ HK$ HK$ HK$ ASSETS Segment assets 24,663,663,755 2,015,363,876 1,048,918,082 1,680,301,405 832,973,295 Interests in associates 10,347,546,727 36,862,631 (2,644,980) 740,810,525 (41,359,746) Negative goodwill Unallocated corporate assets Consolidated total assets LIABILITIES Segment liabilities 5,550,272,792 31,718,632 402,007,720 264,186,275 120,889,457 Borrowings Convertible notes Unallocated corporate liabilities Consolidated total liabilities	Consolidated HK$ 30,241,220,413 11,081,215,157 (847,735,637 31,436,908
	40,506,136,841

	6,369,074,876 13,589,749,777 1,489,378,714 138,471,178
	21,586,674,545

OTHER INFORMATION

For the year ended 30 June 2003

					Building
					management
	Property	Security	Financing	Hotel	and services	Consolidated
	HK$	HK$	HK$	HK$	HK$	HK$
Amortisation of goodwill	308,611	–	–	12,645,817	–	12,954,428
Capital additions	794,428	5,095	–	2,282,809	5,439,097	8,521,429
Depreciation	414,895	970,170	–	7,968,960	7,421,572	16,775,597
Hotel property additions	–	–	–	24,349,375	–	24,349,375
Impairment loss on
investments in other
securities	–	252,397,016	–	–	–	252,397,016
Investment property additions	27,797,214	–	–	–	–	27,797,214
Unrealised holding loss on
investments in trading
securities	–	281,778,373	–	–	–	281,778,373

−42 −

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

INCOME STATEMENT

For the year ended 30 June 2004

Property HK$ 856,311,539 2,612,127,947 – 66,054,225 – –	Security HK$ – – – – 80,646,253 –	Financing HK$ – – – – – 54,277,759	Hotel HK$ – – 253,072,006 – – –	Building management and services HK$ – – – 355,155,875 – –	Elimination HK$ – – – – – –	Consolidated HK$ 856,311,539 2,612,127,947 253,072,006 421,210,100 80,646,253 54,277,759
3,534,493,711 12,278,730 –	80,646,253 4,655,028 –	54,277,759 481,324 –	253,072,006 – –	355,155,875 17,402,004 24,693,618	– – (24,693,618)	4,277,645,604 34,817,086 –
3,546,772,441 1,140,256,310 465,822,625 –	85,301,281 343,804,855 (22,195) –	54,759,083 54,759,083 (1,151,350) –	253,072,006 120,590,142 43,365,281 –	397,251,497 143,915,665 2,124,794 (7,558,625)	(24,693,618) –	4,312,462,690

						1,803,326,055
					– –	36,225,055 (356,367,796
						1,483,183,314 (150,632,679 510,139,155 (7,558,625 (191,786,591
						1,643,344,574 (236,453,428
						1,406,891,146 (683,496,803
						723,394,343

* Inter-segment sales were charged at cost plus margin basis as agreed between both parties.

−43 −

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

BALANCE SHEET

At 30 June 2004

Property Security Financing Hotel Building management and services HK$ HK$ HK$ HK$ HK$ ASSETS Segment assets 29,457,891,299 2,765,720,063 1,106,466,770 1,653,660,691 1,376,071,292 Interests in associates 9,735,247,727 36,884,119 (3,840,887) 775,240,936 (43,033,858) Negative goodwill Unallocated corporate assets Consolidated total assets LIABILITIES Segment liabilities 7,241,176,280 37,078,883 52,810,654 271,554,117 72,939,762 Borrowings Unallocated corporate liabilities Consolidated total liabilities	Consolidated HK$ 36,359,810,115 10,500,498,037 (821,270,021 182,619,261
	46,221,657,392

	7,675,559,696 12,052,618,741 157,669,580
	19,885,848,017

OTHER INFORMATION

For the year ended 30 June 2004

					Building
					management
	Property	Security	Financing	Hotel	and services	Consolidated
	HK$	HK$	HK$	HK$	HK$	HK$
Amortisation of goodwill	308,611	–	–	12,645,817	–	12,954,428
Capital additions	867,430	–	–	763,328	5,316,171	6,946,929
Depreciation	471,593	915,336	–	6,379,174	6,907,014	14,673,117
Hotel property additions	–	–	–	768,013	–	768,013
Impairment loss on
investments in other
securities	–	17,621,750	–	–	–	17,621,750
Investment property additions	3,375,364	–	–	–	–	3,375,364

Geographical segments

Most of the activities of the Group are based in Hong Kong and more than 90% of the Group’s turnover, (loss) profit before taxation, assets and liabilities are derived from activities in Hong Kong.

−44 −

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

4. PROFIT FROM OPERATIONS

5.

Profit from operations has been arrived at after charging (crediting): Staff costs including Directors’ remuneration Retirement benefits scheme contributions Total staff costs Auditors’ remuneration Cost of hotel inventories recognised Depreciation (Profit) loss on disposal of investment properties Loss on disposal of property, plant and equipment Net exchange loss (gain) Profit on disposal of investments in other securities FINANCE INCOME Interest income on: Advances to associates Advances to investee companies Bank deposits	2002 HK$ 411,812,718 20,924,363 432,737,081 2,040,896 24,307,804 18,288,045 (419,515,734) 67,954 7,442,605 – 2002 HK$ 84,176,147 7,016,695 34,391,583 125,584,425	2003 HK$ 407,778,679 20,078,446 427,857,125 2,413,106 19,909,539 16,775,597 17,927,321 31,352 3,715,771 – 2003 HK$ 63,939,858 6,972,510 26,876,397 97,788,765	2004 HK$ 433,161,515 20,074,613 453,236,128 2,233,206 43,146,687 14,673,117 4,152,457 1,495,281 (284,558) (20,136) 2004 HK$ 61,243,187 6,861,545 14,583,993 82,688,725

−45 −

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

6. FINANCE COSTS

Interest on: Bank loans and overdrafts wholly repayable within five years Other loans wholly repayable within five years Convertible bonds/notes Provision for premium on redemption of convertible bonds/notes Write-back of premium on redemption of convertible notes upon conversion Amortisation of issue costs of convertible bonds/notes Write-off of unamortised issue costs of convertible notes upon conversion Amortisation of loan arrangement fees Write-off of deferred loan arrangement fees upon early repayment of loans Commitment fees Finance costs upon early repayment of loans Less: Amounts capitalised to properties under development	2002 HK$ 215,413,503 339,877,529 35,139,814 47,927,392 – 5,565,066 – 22,031,730 – 5,325,399 –	2003 HK$ 186,441,466 273,747,183 56,250,000 16,710,000 – 7,513,059 – 20,094,129 7,590,415 6,427,590 107,999,777	2004 HK$ 128,543,985 96,910,343 21,718,750 8,423,671 (27,010,685) 3,787,405 25,420,895 9,081,698 1,240,556 22,510,296 – 290,626,914 (57,305,510) 233,321,404
	671,280,433 (41,539,007)	682,773,619 (46,673,097)	290,626,914 (57,305,510
	629,741,426	636,100,522

7. RESULTS ATTRIBUTABLE TO ASSOCIATES

Results attributable to associates comprises: Share of (losses) profits of associates Amortisation of goodwill arising on acquisition of associates Release of negative goodwill arising on acquisition of an associate	2002 HK$ (98,360,557) (12,954,428) 2,564,199 (108,750,786)	2003 HK$ (70,504,794) (12,954,428) 5,128,397 (78,330,825)	2004 HK$ 517,965,185 (12,954,428) 5,128,398 510,139,155

−46 −

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

8. DIRECTORS’ REMUNERATION

Directors’ fees: Executive Directors Independent Non-executive Directors Other emoluments: Executive Directors Salaries and other benefits Retirement benefits scheme contributions	2002 HK$ 170,000 240,000 410,000 10,110,502 34,000 10,554,502	2003 HK$ 130,000 240,000 370,000 5,183,800 24,000 5,577,800	2004 HK$ 130,000 720,000
			850,000 5,083,864 24,000
			5,957,864

Note: Each Independent Non-executive Director received a director’s fee of HK$60,000 from each of the Company and Sino Land for acting as an Independent Non-executive Director of the Companies during the Relevant Periods and an additional fee of HK$120,000 from each of the Companies for acting as a member of their respective Audit Committees during the year ended 30 June 2004.

The remuneration of the Directors was within the following bands:

				Directors
HK$			2002	2003	2004
Nil	–	1,000,000	2	2	2
1,000,001	–	1,500,000	1	1	1
3,500,001	–	4,000,000	–	–	1
4,000,001	–	4,500,000	2	1	–

9. EMPLOYEES’ EMOLUMENTS

Of the five individuals with the highest emoluments in the Group, two for the year ended 30 June 2002 and one for each of the two years ended 30 June 2004 are Executive Directors of the Company whose emoluments are included in note 8 above. The emoluments of the remaining individuals disclosed pursuant to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (“Listing Rules”) are as follows:

Salaries and other emoluments (including basic salaries, housing allowances, other allowances and benefits in kind) Retirement benefits scheme contributions	2002 HK$ 9,275,100 48,000 9,323,100	2003 HK$ 11,640,359 54,000 11,694,359	2004 HK$ 9,858,245 72,000
			9,930,245

−47 −

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

The emoluments were within the following bands:

			Number	individuals
HK$			2002	2003	2004
2,000,001	–	2,500,000	–	1	2
2,500,001	–	3,000,000	–	2	2
3,000,001	–	3,500,000	–	1	–
3,500,001	–	4,000,000	1	–	–
4,000,001	–	4,500,000	1	–	–
4,500,001	–	5,000,000	1	–	–

During the Relevant Periods, no emoluments were paid by the Group to these five highest paid individuals, including Directors, as an inducement to join or upon joining the Group or as compensation for loss of office. In addition, no Director waived any emoluments.

10. INCOME TAX EXPENSE

2002 HK$ 73,229,538 (105,468)	2003 HK$ 60,056,282 1,862,356	2004 HK$ 97,462,186 (327,497
73,124,070 – 39,617 39,617 2,768,549 16,651,633 2,195,743 18,847,376	61,918,638 617,320 (87,756) 529,564 3,948,549 14,816,469 8,273,509 23,089,978	97,134,689
		13,984,217 69,550
		14,053,767
		7,770,860
		109,842,267 7,651,845
		117,494,112
94,779,612	89,486,729	236,453,428

Hong Kong Profits Tax is calculated at 16% for the year ended 30 June 2002 and 17.5% for each of the two years ended 30 June 2004 of the estimated assessable profit for the respective years. The Hong Kong Profits Tax rate was increased from 16% to 17.5% with effect from the 2003/2004 year of assessment. The effect of this increase has been reflected in the calculation of current and deferred tax balances at the respective balance sheet dates. Taxation in other jurisdictions is provided for in accordance with the respective local requirements.

−48 −

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

The tax charge for the Relevant Periods can be reconciled to the profit (loss) per the income statement as follows:

2002 HK$ 170,809,615	2003 HK$ (74,943,701)	2004 HK$ 1,643,344,574

27,329,538 36,247,502 60,220,938 (92,346,880) (65,851) 98,893,714 25,399,667 (42,959,266) (18,415,570) 475,820 –	(13,115,148) 36,797,873 60,024,147 (33,379,190) 1,774,600 72,317,415 18,984,129 (40,755,160) (15,859,569) 44,888 2,652,744	287,585,301 28,219,760 107,300,374 (20,423,828 (257,947 66,064,203 277,608 (203,047,742 (31,551,231 2,286,930 –
94,779,612	89,486,729	236,453,428

Details of deferred taxation are set out in note 30.

The Inland Revenue Department (“IRD”) initiated tax inquiries for the years of assessment 1995/96, 1996/97 and 1997/98, respectively, on Sing-Ho Finance Company Limited (“Sing-Ho Finance”), a wholly-owned subsidiary of Sino Land. Notices of assessment for additional tax in an aggregate sum of approximately HK$165,514,000 were issued to Sing-Ho Finance for the years under review and objections were properly lodged with the IRD by Sing-Ho Finance. IRD also initiated a tax inquiry for the years of assessment 1998/99 to 2001/02 on City Empire Limited (“City Empire”), a wholly-owned subsidiary of Sino Land. Notices of assessment for additional tax of approximately HK$263,438,000 was issued to City Empire for the years under review and objections were properly lodged with the IRD by City Empire. In the opinion of the Directors, in view of the tax inquiries are still at the stage of collation of evidence, the ultimate outcome of these tax inquiries cannot presently be determined with an acceptable degree of reliability, and accordingly, no provision for any liabilities that may result has been made.

11. DIVIDENDS

Final dividend paid for the year ended 30 June 2001: HK1 cent per share, 30 June 2002: Nil and 30 June 2003: Nil Interim dividend paid for the year ended 30 June 2002: Nil, 30 June 2003: Nil and 30 June 2004: HK5 cents per share	2002 HK$ 13,657,432 – 13,657,432	2003 HK$ – – –	2004 HK$ – 68,395,291
			68,395,291

−49 −

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

During the Relevant Periods, scrip dividends were offered in respect of the 2001 final and 2004 interim dividends. These scrip alternatives were accepted by the majority of shareholders, as follows:

Dividends: Cash Scrip alternative	2001 Final HK$ 378,598 13,278,834 13,657,432	2004 Interim HK$ 1,712,776 66,682,515
		68,395,291

A final dividend of HK7 cents per share for the year ended 30 June 2004 has been proposed by the Directors and is subject to approval by the shareholders in the forthcoming annual general meeting.

12. (LOSS) EARNINGS PER SHARE

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

(Loss) earnings for the purpose of basic (loss) earnings per share Adjustment to the share of results of a subsidiary, based on dilution of its earnings per share Earnings for the purpose of diluted earnings per share Weighted average number of ordinary shares for the purposes of basic and diluted (loss) earnings per share	2002 HK$ (38,487,204) 2002 Number of shares 1,366,892,628	2003 HK$ (175,994,489)	2004 HK$ 723,394,343
			(37,017,800
		2003 Number of shares 1,367,905,827	686,376,543

			2004 Number of shares 1,368,738,376

No diluted loss per share has been compiled and presented for each of the two years ended 30 June 2003 as there was no dilutive effect on the assumed conversion of dilutive potential ordinary shares of a subsidiary.

−50 −

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

13. INVESTMENT PROPERTIES

THE GROUP

VALUATION At 1 July 2001 Exchange realignment Transfer from properties under development Acquisition of a subsidiary Additions Disposal of subsidiaries Disposals Deficit on revaluation At 30 June 2002 Exchange realignment Transfer from properties under development Acquisition of a subsidiary Additions Disposals Deficit on revaluation At 30 June 2003 Exchange realignment Transfer from properties under development Additions Disposals Surplus (deficit) on revaluation At 30 June 2004	Investment properties in Hong Kong held under long leases Investment properties in Hong Kong held under medium- term leases HK$ HK$ 1,801,000,000 13,747,158,040 – – – 493,574,677 – 97,000,000 – 42,769,986 – (28,000,000) (473,000,000) (208,827,528) (318,000,000) (1,052,057,455)	Investment property in Singapore held under a long lease Total HK$ HK$ 349,020,278 15,897,178,318 9,611,203 9,611,203 – 493,574,677 – 97,000,000 8,454,063 51,224,049 – (28,000,000) – (681,827,528) (20,156,728) (1,390,214,183) 346,928,816 14,448,546,536 1,744,032 1,744,032 – 164,235,090 – 11,000,000 6,867,772 16,797,214 – (118,300,163) (20,448,970) (1,231,115,559) 335,091,650 13,292,907,150 9,339,350 9,339,350 72,862,859 144,203,026 207,858 3,375,364 – (22,432,617) (34,978,017) 3,448,271,547 382,523,700 16,875,663,820
	1,010,000,000 13,091,617,720 – – – 164,235,090 – 11,000,000 – 9,929,442 – (118,300,163) (127,000,000) (1,083,666,589) 883,000,000 12,074,815,500 – – – 71,340,167 – 3,167,506 – (22,432,617) 124,000,000 3,359,249,564	346,928,816 14,448,546,536 1,744,032 1,744,032 – 164,235,090 – 11,000,000 6,867,772 16,797,214 – (118,300,163 (20,448,970) (1,231,115,559 335,091,650 13,292,907,150 9,339,350 9,339,350 72,862,859 144,203,026 207,858 3,375,364 – (22,432,617 (34,978,017) 3,448,271,547
	1,007,000,000 15,486,140,120

The investment properties of the Group located in Hong Kong and in Singapore are stated at independent professional valuations on an open market value basis at the respective balance sheet dates conducted by Chesterton Petty Limited and Knight Frank Pte. Ltd., Chartered Surveyors, respectively. The net deficit or surplus on revaluation has been charged or credited to the investment property revaluation reserve, respectively, during the Relevant Periods.

−51 −

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

14. HOTEL PROPERTY

THE GROUP

COST At 1 July 2001 Additions At 30 June 2002 Additions At 30 June 2003 Additions At 30 June 2004	Hotel property in Singapore held under a long lease HK$ 1,132,935,401 21,293,305
	1,154,228,706 24,349,375
	1,178,578,081 768,013
	1,179,346,094

−52 −

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

15. PROPERTY, PLANT AND EQUIPMENT

THE GROUP

Computer systems HK$ 25,991,118 10,361,551 (61,227)	Furniture, fixtures and equipment HK$ 32,387,896 36,590,559 (345,522)	Leasehold improvements HK$ 18,451,712 194,012 (55,655)	Motor vehicles HK$ 14,406,350 2,899,674 (120,548)	Plant and machinery HK$ 9,342,043 762,500 (111,516)	Total HK$ 100,579,119 50,808,296 (694,468)
36,291,442 2,118,485 (4,440) 38,405,487 1,618,907 (8,681,828) 31,342,566 12,623,778 6,900,519 (11,988) 19,512,309 6,005,648 (2,738) 25,515,219 3,755,064 (7,260,275) 22,010,008	68,632,933 3,538,142 (252,318) 71,918,757 2,210,901 (402,537) 73,727,121 5,939,113 7,618,198 (139,395) 13,417,916 7,424,547 (80,023) 20,762,440 7,656,345 (310,063) 28,108,722	18,590,069 199,201 – 18,789,270 678,237 – 19,467,507 13,389,880 1,491,572 (18,965) 14,862,487 1,294,206 – 16,156,693 1,428,178 – 17,584,871	17,185,476 1,462,311 (923,251) 17,724,536 1,747,648 (1,537,012) 17,935,172 12,557,579 1,475,881 (120,548) 13,912,912 1,176,912 (923,250) 14,166,574 784,005 (1,537,012) 13,413,567	9,993,027 1,203,290 (814,564) 10,381,753 691,236 (18,700) 11,054,289 7,808,050 801,875 (21,644) 8,588,281 874,284 (758,592) 8,703,973 1,049,525 (16,495) 9,737,003	150,692,947 8,521,429 (1,994,573)
					157,219,803 6,946,929 (10,640,077)
					153,526,655
					52,318,400 18,288,045 (312,540)
					70,293,905 16,775,597 (1,764,603)
					85,304,899 14,673,117 (9,123,845)
					90,854,171
16,779,133 12,890,268 9,332,558	55,215,017 51,156,317 45,618,399	3,727,582 2,632,577 1,882,636	3,272,564 3,557,962 4,521,605	1,404,746 1,677,780 1,317,286	80,399,042

					71,914,904

					62,672,484

−53 −

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

THE COMPANY

COST At 1 July 2001 and 30 June 2002 Disposals At 30 June 2003 and 30 June 2004 DEPRECIATION At 1 July 2001 Provided for the year At 30 June 2002 Provided for the year Eliminated on disposals At 30 June 2003 Provided for the year At 30 June 2004 NET BOOK VALUES At 30 June 2002 At 30 June 2003 At 30 June 2004	Motor vehicles HK$ 5,048,626 (409,603) 4,639,023 4,700,211 209,607 4,909,818 72,927 (409,603) 4,573,142 52,534 4,625,676 138,808 65,881 13,347

−54 −

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

16. NEGATIVE GOODWILL

GROSS AMOUNT
At 1 July 2001
Arising on acquisition of additional interest in Sino Land
At 30 June 2002
Arising on acquisition of additional interest in Sino Land
At 30 June 2003
Arising on acquisition of additional interest in Sino Land
Released on deemed disposal of partial interest in Sino Land
At 30 June 2004
RELEASED TO INCOME
At 1 July 2001
Released for the year
At 30 June 2002
Released for the year
At 30 June 2003
Released for the year
Released on deemed disposal of partial interest in Sino Land
At 30 June 2004
CARRYING AMOUNTS
At 30 June 2002
At 30 June 2003
At 30 June 2004

THE GROUP
HK$
538,951,860
184,074,576
723,026,436
269,876,828
992,903,264
83,168,683
(85,979,962)
990,091,985
89,402,663
21,921,860
111,324,523
33,843,104
145,167,627
36,225,055
(12,570,718)
168,821,964
611,701,913
847,735,637
821,270,021

The negative goodwill is released to income on a straight line basis of twenty years.

−55 −

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

17. INTERESTS IN SUBSIDIARIES

Unlisted shares, at cost less impairment losses recognised Shares listed in Hong Kong, at cost Advances to subsidiaries, less allowances Market value of Hong Kong listed investments	THE COMPANY 2002 2003 HK$ HK$ 3,640,386 3,640,370 2,620,158,545 2,659,718,527 2,623,798,931 2,663,358,897 2,412,063,985 2,637,232,544 5,035,862,916 5,300,591,441 3,016,070,504 2,520,231,439	2004 HK$ 3,640,368 2,714,996,501
		2,718,636,869 2,325,235,337
		5,043,872,206

		4,554,867,052

The advances to subsidiaries are unsecured, interest-free and have no fixed repayment terms. In the opinion of the Directors, the Company will not demand for repayment within twelve months from the respective balance sheet dates and the advances are therefore shown as non-current.

The carrying amount of the investments in subsidiaries is reduced to their recoverable amount which are determined by reference to the carrying value of the underlying assets of the respective subsidiaries.

18. INTERESTS IN ASSOCIATES

Share of net assets Goodwill (Note) Negative goodwill (Note) Advances to associates, less allowances	2002 HK$ 2,486,454,761 181,362,000 (100,003,741)	THE GROUP 2003 HK$ 1,628,741,265 168,407,572 (94,875,344)	2004 HK$ 2,550,980,294 155,453,144 (89,746,946)
	2,567,813,020 9,219,885,912	1,702,273,493 9,378,941,664	2,616,686,492 7,883,811,545
	11,787,698,932	11,081,215,157	10,500,498,037

−56 −

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Note:

GROSS AMOUNTS At 1 July 2001 Arising from issue of shares by the associate At 30 June 2002, 30 June 2003 and 30 June 2004 AMORTISATION At 1 July 2001 Charged for the year Released for the year At 30 June 2002 Charged for the year Released for the year At 30 June 2003 Charged for the year Released for the year At 30 June 2004 CARRYING AMOUNTS At 30 June 2002 At 30 June 2003 At 30 June 2004	THE GROUP Goodwill Negative goodwill HK$ HK$ 259,088,568 – – (102,567,940) 259,088,568 (102,567,940) 64,772,140 – 12,954,428 – – (2,564,199) 77,726,568 (2,564,199) 12,954,428 – – (5,128,397) 90,680,996 (7,692,596) 12,954,428 – – (5,128,398) 103,635,424 (12,820,994) 181,362,000 (100,003,741) 168,407,572 (94,875,344) 155,453,144 (89,746,946)	THE GROUP Goodwill Negative goodwill HK$ HK$ 259,088,568 – – (102,567,940) 259,088,568 (102,567,940) 64,772,140 – 12,954,428 – – (2,564,199) 77,726,568 (2,564,199) 12,954,428 – – (5,128,397) 90,680,996 (7,692,596) 12,954,428 – – (5,128,398) 103,635,424 (12,820,994) 181,362,000 (100,003,741) 168,407,572 (94,875,344) 155,453,144 (89,746,946)
	259,088,568 64,772,140 12,954,428 – 77,726,568 12,954,428 – 90,680,996 12,954,428 – 103,635,424	(102,567,940
		– – (2,564,199
		(2,564,199 – (5,128,397
		(7,692,596 – (5,128,398
		(12,820,994
	181,362,000 168,407,572 155,453,144

The amortisation period adopted for goodwill and negative goodwill is twenty years.

The investment properties of the Group’s principal associates are stated at independent professional valuations on an open market value basis at 30 June 2002 conducted by Chesterton Petty Limited, Chartered Surveyors and at 30 June 2003 and 30 June 2004 conducted by Chesterton Petty Limited and Debenham Tie Leung, Chartered Surveyors. The carrying value of the interests in associates shown above includes the Group’s attributable share of the revaluation reserve.

The advances to associates of the Group are unsecured and have no fixed repayment terms. At 30 June 2002, 2003 and 2004, of the advances, HK$1,659,828,988, HK$1,924,961,754 and HK$1,787,233,502, respectively, bear interest at prevailing market rates and the remaining balances are interest-free. In the opinion of the Directors, the Group will not demand for repayment within twelve months from the respective balance sheet dates and the advances are therefore shown as non-current.

The amounts due from associates of the Group grouped under current assets are unsecured and due within one year. At 30 June 2002, 2003 and 2004, of the amounts, HK$861,662,376, HK$795,542,954 and HK$451,511,280, respectively, bear interest at prevailing market rates and the remaining balances are interest-free.

The amounts due to associates of the Group grouped under current liabilities are unsecured and due within one year. At 30 June 2002 and 2003, the amounts are interest-free. At 30 June 2004, of the amount, HK$204,500,000 bears interest at prevailing market rates and the remaining balance is interest-free.

−57 −

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Particulars of the principal associates at 30 June 2004 are set out in note 44.

Information in respect of the operating results and financial position of the Group’s significant associates, which have been extracted from the audited consolidated financial statements of Million Success Limited and the audited financial statements of Greenroll Limited and Grace Sign Limited which have been adjusted to conform with the Group’s accounting policies, are summarised as follows:

Mill 2002 HK$ 229,543,271	ion Success Lim 2003 HK$ 209,303,037	ited 2004 HK$ 195,263,792	G 2002 HK$ 425,228,000	reenroll Limite 2003 HK$ 370,144,000	d 2004 HK$ 480,127,000	G 2002 HK$ –	race Sign Limit 2003 HK$ –	ed 2004 HK$ 4,599,470,380

256,554,765	87,264,694	106,273,741	142,945,000	99,690,000	169,609,000

32,772,498	11,462,894	13,932,142	21,911,882	15,714,065	26,682,226

11,615,399,768	10,938,919,541	10,962,243,344	3,370,582,000	3,380,422,000	3,375,862,000	–	–	–
5,872,762,651	5,270,011,277	5,353,523,509	2,156,054,000	2,237,634,120	2,377,460,220	(180,444) (256,444) 1,389,532,279 (27,950) (41,029) 208,563,654

758,054,735	702,625,571	669,620,059	333,963,494	357,999,083	356,847,982

The IRD initiated tax inquiries for the years of assessment 1994/95 to 2002/03 on a wholly-owned subsidiary, Wide Harvest Investment Limited (“WHI”), of the Group’s associate, Million Success Limited (“MSL”) and for the years of assessment 1994/95 to 1997/98 on a wholly-owned subsidiary, Murdoch Investments Inc. (“MII”), of the Group’s associate, Erleigh Investment Limited. Notices of assessment for additional tax in the aggregate amounts of approximately HK$400,000,000 and HK$37,759,000 were issued to WHI and MII for the years under review, respectively, and objections were properly lodged with the IRD by WHI and MII. The effective share of the amount attributable to the Group as at 30 June 2004 is estimated to be approximately HK$50,032,000 and HK$8,501,000, respectively. In view of the tax inquiries are still at the stage of collation of evidence, the management of WHI and of MII are of the opinion that the ultimate outcome of the tax inquiries, cannot presently be determined with an acceptable degree of reliability, and accordingly, no provision for any liabilities that may result has been made in the financial statements of WHI and MII.

The Directors of the Company have taken note of the above matters and have made due inquiries. Nothing has come to the attention of the Board of Directors of the Company which indicates that there has been material subsequent development or change in status in respect of the above matters.

−58 −

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

19. INVESTMENTS IN SECURITIES

THE GROUP

Trading securiti 2002 2003 HK$ HK$ 1,088,565,285 806,145,256 – – 1,088,565,285 806,145,256	Trading securiti 2002 2003 HK$ HK$ 1,088,565,285 806,145,256 – – 1,088,565,285 806,145,256	es 2004 HK$ 1,088,224,951 –	2002 HK$ 852,210,002 99,545,135	Other securitie 2003 HK$ 1,023,192,860 66,918,469	s 2004 HK$ 1,479,412,874 40,663,618	2002 HK$ 1,940,775,287 99,545,135	Total 2003 HK$ 1,829,338,116 66,918,469	2004 HK$ 2,567,637,825 40,663,618
1,088,565,285	806,145,256	1,088,224,951	951,755,137	1,090,111,329	1,520,076,492	2,040,320,422	1,896,256,585	2,608,301,443

943,962,318 144,602,967 –	683,580,290 122,564,966 –	925,612,758 162,612,193 –	583,201,705 269,008,297 99,545,135	658,249,307 364,943,553 66,918,469	1,035,586,914 443,825,960 40,663,618	1,527,164,023 413,611,264 99,545,135	1,341,829,597 487,508,519 66,918,469	1,961,199,672 606,438,153 40,663,618
1,088,565,285	806,145,256	1,088,224,951	951,755,137	1,090,111,329	1,520,076,492	2,040,320,422	1,896,256,585	2,608,301,443

1,088,565,285	806,145,256	1,088,224,951	852,210,002	1,023,192,860	1,479,412,874	1,940,775,287	1,829,338,116	2,567,637,825

1,088,565,285 –	806,145,256 –	1,088,224,951 –	– 951,755,137	– 1,090,111,329	– 1,520,076,492	1,088,565,285 951,755,137	806,145,256 1,090,111,329	1,088,224,951 1,520,076,492
1,088,565,285	806,145,256	1,088,224,951	951,755,137	1,090,111,329	1,520,076,492	2,040,320,422	1,896,256,585	2,608,301,443

THE COMPANY

Equity securities: Listed in Hong Kong at market value Carrying value analysed for reporting purposes as: Current	Trading securiti 2002 2003 HK$ HK$ 475,297 318,575 475,297 318,575	Trading securiti 2002 2003 HK$ HK$ 475,297 318,575 475,297 318,575	es 2004 HK$ 454,139	2002 HK$ –	Other securitie 2003 HK$ –	s 2004 HK$ –	2002 HK$ 475,297	Total 2003 HK$ 318,575	2004 HK$ 454,139

	475,297	318,575	454,139	–	–	–	475,297	318,575	454,139

−59 −

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

20. ADVANCES TO INVESTEE COMPANIES

The advances to investee companies of the Group are unsecured and have no fixed repayment terms. At 30 June 2002, 2003 and 2004, of the advances, HK$18,209,914, HK$22,175,697 and HK$19,592,325, respectively, bear interest at prevailing market rates and the remaining balances are interest-free. In the opinion of the Directors, the Group will not demand for repayment within twelve months from the respective balance sheet dates and the advances are therefore shown as non-current.

21. LONG-TERM LOANS RECEIVABLE

Total loans receivable Less: Current portion shown under current assets	2002 HK$ 718,173,792 (25,558,437) 692,615,355	THE GROUP 2003 HK$ 595,682,276 (22,097,946) 573,584,330	2004 HK$ 698,390,620 (126,700,514)
			571,690,106

The Group offers loans to buyers of properties sold by the Group and the repayment of the loans is specified in the respective loan agreements.

22. STOCKS OF UNSOLD PROPERTIES

At 30 June 2002, 2003 and 2004, the amount of stocks of unsold properties of the Group carried at net realisable value are HK$51,914,313, HK$263,338,168 and HK$156,108,032, respectively.

23. ACCOUNTS AND OTHER RECEIVABLES

At 30 June 2002, 2003 and 2004, included in accounts and other receivables of the Group are trade receivables of HK$110,910,467, HK$405,071,031 and HK$98,129,329, respectively, mainly comprising sales proceeds receivables and rental receivables which are billed in advance and settlements are expected upon receipt of billings.

The following is an aged analysis of trade receivables at the respective balance sheet dates:

0 – 30 days 31 – 60 days 61 – 90 days Over 90 days	2002 HK$ 51,258,529 5,236,417 4,104,956 50,310,565 110,910,467	THE GROUP 2003 HK$ 343,724,049 10,720,029 8,555,179 42,071,774 405,071,031	2004 HK$ 47,107,606 5,639,849 5,564,708 39,817,166
			98,129,329

Trade receivables over 90 days are sufficiently covered by rental deposits received from the respective tenants and no allowance is required for these receivables under the Group’s allowance policy.

−60 −

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

24. ACCOUNTS AND OTHER PAYABLES

At 30 June 2002, 2003 and 2004, included in accounts and other payables of the Group are trade payables of HK$102,672,456, HK$100,730,647 and HK$55,986,780, respectively.

The following is an aged analysis of trade payables at the respective balance sheet dates:

0 – 30 days 31 – 60 days 61 – 90 days Over 90 days	2002 HK$ 56,882,751 27,070,575 2,311,995 16,407,135 102,672,456	THE GROUP 2003 HK$ 36,608,482 9,701,886 1,217,255 53,203,024 100,730,647	2004 HK$ 49,987,656 1,464,324 368,850 4,165,950
			55,986,780

−61 −

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

25. LONG-TERM BORROWINGS

2002 HK$ 31,198,800 187,192,800 –	THE GROUP 2003 HK$ 13,100,640 13,100,640 82,970,720	2004 HK$ 13,102,740 82,984,020 –	THE COMPANY 2002 2003 HK$ HK$ – – – – – –	THE COMPANY 2002 2003 HK$ HK$ – – – – – –	2004 HK$ – – –
218,391,600 (31,198,800) 187,192,800 302,664,400 515,164,400 2,984,531,565 3,802,360,365 (302,664,400) 3,499,695,965 – 2,718,916,652 1,000,000,000 3,718,916,652 – 3,718,916,652 37,536,850 1,973,868,600 2,011,405,450 9,417,210,867 (36,758,718) 9,380,452,149 1,465,155,655	109,172,000 (13,100,640) 96,071,360 337,753,200 2,125,547,765 4,088,906,300 6,552,207,265 (337,753,200) 6,214,454,065 300,000,000 3,204,836,681 750,000,000 4,254,836,681 (300,000,000) 3,954,836,681 – 186,408,600 186,408,600 10,451,770,706 (18,695,841) 10,433,074,865 1,489,378,714	96,086,760 (13,102,740) 82,984,020 212,000,000 2,082,705,500 2,588,307,765 4,883,013,265 (212,000,000) 4,671,013,265 – 3,188,914,477 500,000,000 3,688,914,477 – 3,688,914,477 – 191,604,000 191,604,000 8,634,515,762 (12,686,553) 8,621,829,209 –	– – – – – – – – – – 1,173,294,136 – 1,173,294,136 – 1,173,294,136 – – – 1,173,294,136 – 1,173,294,136 –	– – – – – – – – – – 1,337,931,300 – 1,337,931,300 – 1,337,931,300 – – – 1,337,931,300 – 1,337,931,300 –	– –
					–
					– – –
					– –
					–
					– 942,123,732 –
					942,123,732 –
					942,123,732
					– –
					–
					942,123,732 –
					942,123,732 –
10,845,607,804	11,922,453,579	8,621,829,209	1,173,294,136	1,337,931,300	942,123,732

−62 −

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

At 30 June 2002, 2003 and 2004, the secured and unsecured other loans of the Group are amounts of HK$3,011,405,450, HK$1,536,408,600 and HK$691,604,000, respectively, bear interest at prevailing market rates and the remaining balances are interest-free.

26. DEFERRED LOAN ARRANGEMENT FEES

COST At 1 July Additions Write-off upon early repayment of loans At 30 June AMORTISATION At 1 July Provided for the year Eliminated upon early repayment of loans At 30 June Deferred loan arrangement fees at 30 June	2002 HK$ 79,474,348 10,837,264 – 90,311,612 31,521,164 22,031,730 – 53,552,894 36,758,718	THE GROUP 2003 HK$ 90,311,612 9,621,667 (42,232,017) 57,701,262 53,552,894 20,094,129 (34,641,602) 39,005,421 18,695,841	2004 HK$ 57,701,262 4,312,966 (16,275,000) 45,739,228 39,005,421 9,081,698 (15,034,444) 33,052,675 12,686,553

−63 −

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

27. CONVERTIBLE BONDS/NOTES

2002 HK$ 891,909,900 1,500,000,000 (891,909,900) –	THE GROUP 2003 HK$ 1,500,000,000 – – –	2004 HK$ 1,500,000,000 – – (1,500,000,000) – 18,587,014 8,423,671 (27,010,685) – – 29,208,300 – (3,787,405) (25,420,895) – –
1,500,000,000 230,441,691 47,927,392 – (276,492,069) 1,877,014 4,721,134 37,565,291 (5,565,066) – 36,721,359	1,500,000,000 1,877,014 16,710,000 – – 18,587,014 36,721,359 – (7,513,059) – 29,208,300	–
		18,587,014 8,423,671 (27,010,685 –
		–
		29,208,300 – (3,787,405 (25,420,895
		–
1,465,155,655	1,489,378,714

In April 1997, Sino Land issued US$145,000,000 4% convertible bonds due in April 2002 (“2002 Bonds”). The 2002 Bonds carried a right to convert at any time from 18 June 1997 to 11 April 2002 into ordinary shares of Sino Land at an initial conversion price of HK$8.50 per share (subject to adjustment) with a fixed exchange rate on conversion of HK$7.749 = US$1.00. The bonds were redeemable at a premium accruing on a straight line basis over the terms of the bonds up to a maximum of 31% of their face value. During the year ended 30 June 2002, the remaining of the 2002 Bonds in amount of US$115,000,000 were redeemed on maturity.

In June 2002, Golden Million Finance Corporation (“Golden Million”), a wholly-owned subsidiary of Sino Land, issued HK$1,500,000,000 3.75% guaranteed convertible notes due in May 2007 (“2007 Notes”). The 2007 Notes carried a right to convert at any time from 20 June 2002 to 14 May 2007 into ordinary shares of Sino Land at an initial conversion price of HK$4.00 per share (subject to adjustment). All or some of the 2007 Notes were redeemable at the option of the relevant holder at a premium of 3.184% of their outstanding principal amount on 21 May 2005. Golden Million could redeem all or some of the 2007 Notes at any time during the period from 21 May 2004 to 21 May 2007, both dates inclusive, upon satisfying certain requirements. The 2007 Notes were redeemable at a premium of 5.57% of their outstanding principal amount on 21 May 2007. All of the 2007 Notes were converted into ordinary shares of Sino Land by the noteholders during the year ended 30 June 2004.

−64 −

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

28. SHARE CAPITAL

Ordinary shares of HK$0.20 each Authorised: At 1 July 2001, 30 June 2002, 30 June 2003 and 30 June 2004 Issued and fully paid: At 1 July 2001 Issued in lieu of cash dividend At 30 June 2002 and 30 June 2003 Issued in lieu of cash dividend At 30 June 2004	Number of shares 2,500,000,000	Nominal value HK$ 500,000,000

	1,365,743,151 2,162,676 1,367,905,827 7,086,345	273,148,630 432,535
		273,581,165 1,417,269
	1,374,992,172	274,998,434

On 18 December 2001 and 19 May 2004, the Company issued and allotted a total of 2,162,676 ordinary shares and 7,086,345 ordinary shares of HK$0.20 each in the Company at an issue price of HK$6.14 and HK$9.41 each, respectively, in lieu of cash for 2001 final and 2004 interim dividends. These shares rank pari passu in all respects with the then existing shares.

29. SHARE PREMIUM AND RESERVES

THE COMPANY

Share premium HK$ 2,438,803,366 12,846,299 (12,897) – –	Capital redemption reserve HK$ 224,000 – – – –	Retained profits HK$ 222,764,753 – – 85,044,910 (13,657,432)	Total HK$ 2,661,792,119 12,846,299 (12,897 85,044,910 (13,657,432
2,451,636,768 – 2,451,636,768 65,265,246 (30,000) – –	224,000 – 224,000 – – – –	294,152,231 28,598,667 322,750,898 – – 69,894,969 (68,395,291)	2,746,012,999 28,598,667
			2,774,611,666 65,265,246 (30,000 69,894,969 (68,395,291
2,516,872,014	224,000	324,250,576	2,841,346,590

Note: The reserve available for distribution by the Company to the shareholders at 30 June 2002 is HK$294,152,231, 30 June 2003 is HK$322,750,898 and 30 June 2004 is HK$324,250,576.

−65 −

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

30. DEFERRED TAXATION

The following are the major deferred tax liabilities and assets recognised and movements thereon during the current and prior reporting periods:

Accelerated tax depreciation HK$ 33,988,342 (2,591,858)	Tax losses HK$ (16,239,643) (20,957,246)	Others HK$ 7,778,686 26,317,653	Total HK$ 25,527,385 2,768,549
31,396,484 3,797,470 2,942,619 38,136,573 – 13,127,095 –	(37,196,889) 15,494,341 (773,396) (22,475,944) – (15,629,416) 331,677	34,096,339 (17,996,006) 483,521 16,583,854 108,609 10,273,181 (331,677)	28,295,934 1,295,805 2,652,744
			32,244,483 108,609 7,770,860 –
51,263,668	(37,773,683)	26,633,967	40,123,952

For the purpose of balance sheet presentation, certain deferred tax assets and liabilities have been offset.

At 30 June 2002, 2003 and 2004, the Group had unused tax losses of approximately HK$3,453,605,000, HK$3,556,870,000 and HK$2,894,257,000, respectively, available for offset against future profits. A deferred tax asset has been recognised in respect of approximately HK$183,153,000, HK$109,050,000 and HK$196,627,000 of such losses for the respective years. No deferred tax asset has been recognised in respect of the remaining HK$3,270,452,000, HK$3,447,820,000 and HK$2,697,630,000 due to the unpredictability of future profit streams. The losses may be carried forward indefinitely.

At 30 June 2002, 2003 and 2004, the Group had deductible temporary differences of approximately HK$453,488,000, HK$471,343,000 and HK$453,488,000, respectively. No deferred tax asset has been recognised in relation to such deductible temporary difference as it is not probable that taxable profit will be available against which the deductible temporary differences can be utilised.

31. ADVANCES FROM SUBSIDIARIES

The advances from subsidiaries of the Company are unsecured and have no fixed repayment terms. At 30 June 2002, 2003 and 2004, of the advances, HK$653,780,408, HK$630,854,000 and HK$760,739,568, respectively, bear interest at prevailing rates mutually agreed between both parties and the remaining balances are interest-free. The advances will not be repayable within twelve months from the respective balance sheet dates and the advances are therefore shown as non-current.

32. ADVANCES FROM ASSOCIATES

The advances from associates of the Group are unsecured and have no fixed repayment terms. At 30 June 2002, 2003 and 2004, of the advances, HK$244,909,786, HK$383,086,114 and HK$368,749,611, respectively, bear interest at prevailing market rates and the remaining balances are interest-free. The advances will not be repayable within twelve months from the respective balance sheet dates and the advances are therefore shown as non-current.

33. ADVANCES FROM INVESTEE COMPANIES

The advances from investee companies of the Group were unsecured and interest-free. At 30 June 2002 and 30 June 2003, the advances will not be repayable within twelve months from the respective balance sheet dates and the advances were therefore shown as non-current. The advances were fully repaid during the year ended 30 June 2004.

−66 −

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

34. ADVANCES FROM MINORITY SHAREHOLDERS

The advances from minority shareholders of the Group are unsecured, bear interest at cost of funds plus a margin and have no fixed repayment terms. The advances will not be repayable within twelve months from the respective balance sheet dates and the advances are therefore shown as non-current.

35. DISPOSAL OF SUBSIDIARIES

2002 HK$ 28,000,000 32,599,728 656,446 2,346,640 (9,377,809) (296,839) (8,526,989)	2003 HK$ – – – – – – –	2004 HK$ – – – – – – –
45,401,177 (12,712,419) 12,712,419	– – –	– – –
45,401,177 45,401,177	– –	–

		–

45,401,177 (2,346,640)	– –	– –
43,054,537	–	–

The subsidiaries disposed of during the year ended 30 June 2002 did not contribute significantly to the turnover, operating results or cash flows of the Group for that year.

36. ACQUISITION OF A SUBSIDIARY

On 25 June 2002 and 26 June 2003, the Group acquired the entire equity interest in Mass Fame Investment Limited and Jade Bird Development Limited at a consideration of HK$1 and HK$100,000, respectively.

−67 −

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

The acquisition had been accounted for using the acquisition method and particulars of the acquisition were:

2002 HK$ 97,000,000 – 1,669,892 1,658,545 (3,769,660) (96,558,776) 1 1	2003 HK$ 11,000,000 84,000,000 988,249 222,321 (3,345,160) (92,765,410) 100,000 100,000	2004 HK$ – – – – – –
		–

		–

(1) 1,658,545	(100,000) 222,321	– –
1,658,544	122,321	–

The subsidiary acquired during the year ended 30 June 2002 and 30 June 2003 did not contribute significantly to the turnover, operating results or cash flows of the Group for that year.

37. MAJOR NON-CASH TRANSACTIONS

On 18 December 2001 and 19 May 2004, the Company issued and allotted a total of 2,162,676 ordinary shares and 7,086,345 ordinary shares of HK$0.20 each in the Company at HK$6.14 and HK$9.41 per share, respectively, to the shareholders in lieu of cash for 2001 final and 2004 interim dividends.

On 17 December 2001 and 21 May 2002, Sino Land had issued and allotted a total of 21,303,378 ordinary shares and 16,625,241 ordinary shares of HK$1.00 each of Sino Land at HK$2.515 and HK$3.380 each, respectively, to Sino Land’s shareholders in lieu of cash for Sino Land’s 2001 final and 2002 interim dividends.

On 16 December 2002 and 20 May 2003, Sino Land had issued and allotted a total of 20,592,195 ordinary shares and 30,956,255 ordinary shares of HK$1.00 each of Sino Land at HK$2.725 and HK$2.070 per share, respectively, to Sino Land’s shareholders in lieu of cash for Sino Land’s 2002 final and 2003 interim dividends.

On 17 December 2003 and 18 May 2004, Sino Land had issued and allotted a total of 16,649,187 ordinary shares and 28,039,508 ordinary shares of HK$1.00 each of Sino Land at HK$3.99 and HK$5.045 per share, respectively, to Sino Land’s shareholders in lieu of cash for Sino Land’s 2003 final and 2004 interim dividends.

During each of the three years ended 30 June 2004, properties under development of HK$493,574,677, HK$164,235,090 and HK$144,203,026 and Nil, HK$2,526,157,276 and HK$1,899,072,383 were transferred to investment properties and stocks of unsold properties, respectively.

During the year ended 30 June 2004, a total of HK$1,500,000,000 of convertible notes of the Group were converted into 375,000,000 ordinary shares of HK$1.00 each of Sino Land at an initial conversion price of HK$4.00 per share.

−68 −

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

38. PLEDGE OF ASSETS

(a) At 30 June 2002, 2003 and 2004, the aggregate facilities of bank loans, overdrafts and other loans amounting to HK$10,078,233,065, HK$14,675,879,838 and HK$14,162,769,691, respectively, were secured by certain of the Group’s listed investments, properties, bank deposits, bank balances and shares of Sino Land. At the respective balance sheet dates, the facilities were utilised to the extent of HK$8,156,230,165, HK$8,794,601,238 and HK$7,943,823,691.
(b) At 30 June 2002, 2003 and 2004, investments and the benefits in the advances to certain associates were pledged or assigned to secure loan facilities made available by banks or financial institutions to such associates. The Group’s attributable portion of these facilities amounted to HK$3,246,286,070, HK$3,952,733,333 and HK$2,699,860,049, of which HK$2,290,321,403, HK$2,894,146,090 and HK$2,537,624,606, respectively, was utilised by the associates and was guaranteed by Sino Land.
(c) At 30 June 2002, 2003 and 2004, the Company and certain subsidiaries’ bank and other loans facilities at the aggregate amount of HK$588,823,200, HK$574,416,511 and HK$615,189,916, respectively, were secured by certain Sino Land’s shares held by the Company. At the respective balance sheet dates, the facilities were utilised to the extent of HK$584,300,295, HK$574,416,511 and HK$615,189,916.

39. COMMITMENTS AND CONTINGENT LIABILITIES

At the relevant balance sheet dates, the Company and the Group had commitments and contingent liabilities as follows:

2002 HK$ 101,831,530 2,582,818,009 2,684,649,539	THE GROUP 2003 HK$ 1,184,813,547 973,447,137 2,158,260,684	2004 HK$ 46,056,752 2,760,051,382 2,806,108,134	THE COMPANY 2002 2003 2004 HK$ HK$ HK$ – – – – – – – – –	THE COMPANY 2002 2003 2004 HK$ HK$ HK$ – – – – – – – – –	THE COMPANY 2002 2003 2004 HK$ HK$ HK$ – – – – – – – – –
					–

– – – 2,293,486,403 955,964,667 3,249,451,070	– – – 2,894,146,090 1,061,092,243 3,955,238,333	– – – 2,537,624,606 164,740,443 2,702,365,049	844,284,750 70,000,000 914,284,750 – – –	797,040,000 70,000,000 867,040,000 – – –	970,777,500 150,000,000
					1,120,777,500
					– –
					–
3,249,451,070	3,955,238,333	2,702,365,049	914,284,750	867,040,000	1,120,777,500

−69 −

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

(c) On 19 December 1996, Sino Land and its wholly-owned subsidiary, Mariner International Hotels Limited (collectively referred to as “Mariner”), entered into an agreement (the “Agreement”) with Hang Lung Development Company Limited and its subsidiary, Atlas Limited (collectively referred to as “Hang Lung”) to acquire a company which owned a property in Yau Kom Tau, Tsuen Wan, New Territories, which was to be developed into a hotel. The total consideration payable by Mariner for the purchase was HK$1,070,000,000, in respect of which a deposit and part payments in the total sum of HK$321,000,000 were paid by Mariner to Hang Lung pursuant to the Agreement. On 30 June 1998, Mariner terminated the Agreement. This termination gave rise to litigation between Mariner and Hang Lung. There has been a trial of the issue of which party repudiated the Agreement. On this issue the trial judge gave judgment for Hang Lung on 2 August 2004.

Mariner appealed against the judgment on legal advice on 30 September 2004. The Directors have been advised that the appeal will not be heard until some time in the year of 2005 at the earliest. On the basis of the uncertainty of the outcome of the intended appeal, the Directors are of the opinion that no provision in respect of the deposit and other liabilities contingent upon the outcome of the appeal should be made for the year ended 30 June 2004.

40. OPERATING LEASE ARRANGEMENTS

The Group as lessor

Property rental income earned during the years ended 30 June 2002, 2003 and 2004, net of outgoings of HK$109,025,303, HK$107,459,139 and HK$113,240,243 were HK$748,037,407, HK$749,883,095 and HK$743,071,296, respectively. Most of the properties held have committed tenants with rental fixed for an average term of two years.

At the respective balance sheet dates, the Group had contracted with tenants for the following future minimum lease payments, which fall due:

Within one year In the second to fifth year inclusive After five years	2002 HK$ 600,033,039 746,524,242 21,655,730 1,368,213,011	2003 HK$ 605,883,274 586,654,547 60,000 1,192,597,821	2004 HK$ 606,602,808 492,942,344 2,672,936
			1,102,218,088

The Company did not have any significant operating lease commitment at the respective balance sheet

dates.

41. RETIREMENT BENEFITS SCHEMES

The Group operates a Mandatory Provident Fund Scheme (“MPF Scheme”) for all qualifying employees in Hong Kong. The MPF Scheme is registered with the Mandatory Provident Fund Scheme Authority under the Mandatory Provident Fund Schemes Ordinance. The assets of the MPF Scheme are held separately from those of the Group in funds under the control of an independent trustee. Under the rules of the MPF Scheme, the employer and its employees are each required to make contributions to the scheme at rates specified in the rules. The only obligation of the Group with respect to MPF Scheme is to make the required contributions under the scheme. No forfeited contribution is available to reduce the contribution payable in the future years.

The Group is also required to make contributions to state pension scheme, the Central Provident Fund, based on certain percentages of the monthly salaries of the employees of the Group’s subsidiaries operating in Singapore. The Group has no other obligations under this state pension scheme other than the contribution payments.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

42. RELATED PARTY TRANSACTIONS

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

(a) Related companies

	2002	2003	2004
	HK$	HK$	HK$
Service fees received therefrom (Note 1)	48,786,505	45,006,588	46,037,604
Management fees received therefrom
(Note 1)	698,630	640,914	630,265
Rental paid thereto (Note 2)	18,800,000	18,200,000	19,400,000

Mr. Robert Ng Chee Siong, Director of the Company, was interested in these transactions as a director of the related companies.

(b) Associates

	2002	2003	2004
	HK$	HK$	HK$
Service fees paid thereto (Note 1)	12,541,549	11,431,592	11,129,240
Management fees received therefrom
(Note 1)	15,128,093	17,679,215	12,009,900
Management fees paid thereto (Note 1)	9,451,249	7,488,675	813,000
Interest income received therefrom
(Note 3)	84,176,147	63,939,858	61,243,187
Interest expenses paid thereto (Note 3)	27,788,136	7,068,668	3,964,958

(c) Acquisition of shares and taking up of loans

(i) On 15 November 2001, Sino Land (Shanghai) Company Limited (“SL-Shanghai”), a whollyowned subsidiary of Sino Land, entered into agreements with Shanghai Square Pte Ltd (“Shanghai Square”) for acquiring 20% of the issued shares in Hua Qing Holdings Pte Ltd (“Hua Qing”), at a consideration of S$200,000 (or HK$0.9 million) and for taking up the assignment of the shareholder’s loans of S$0.06 million (or HK$0.3 million) and US$29.4 million (or HK$228.4 million) (together with accrued interest thereon) due from Hua Qing to Shanghai Square at a consideration of US$20.9 million (or HK$162.5 million). Shanghai Square is a wholly-owned subsidiary of Orchard Parade Holdings Limited (“Orchard Parade”) in which Mr. Ng Teng Fong is a common substantial shareholder of the Company and Orchard Parade.
(ii) On 25 June 2002, Sino Land’s wholly-owned subsidiaries, King Chance Development Limited (“King Chance”) and Sing-Ho Finance Company Limited (“Sing-Ho Finance”) entered into an agreement with Millwood Limited (“Millwood”) and Cliveden Finance Company Limited (“Cliveden Finance”). Pursuant to such agreement, inter alia, (a) King Chance agreed to acquire 100% of the issued shares of Mass Fame Investment Limited (“Mass Fame”), which holds 100% interest in an industrial building, Sunley Centre, from Millwood at a consideration of HK$1; and (b) Sing-Ho Finance agreed to take up the assignment from Cliveden Finance of a loan in the amount of HK$98,815,848 due by Mass Fame to Cliveden Finance at a consideration of HK$96,558,776. Millwood and Cliveden Finance are both indirect wholly-owned subsidiaries of Boswell Holdings Limited (“Boswell”), in which Mr. Robert Ng Chee Siong, being the Chairman and Executive Director of the Company, has a 50% interest.

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APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

(iii) On 26 June 2003, King Chance and Sing-Ho Finance, entered into respective agreements with Millwood and Cliveden Finance. Pursuant to such agreements, inter alia, (a) King Chance agreed to acquire 100% of the issued shares of Jade Bird Development Limited (“Jade Bird”) which holds 100% interest in Cambridge Plaza, an industrial building, from Millwood at a consideration of HK$100,000; and (b) Sing-Ho Finance agreed to take up the assignment from Cliveden Finance of a loan in the amount of HK$104,817,784 due by Jade Bird to Cliveden Finance at a consideration of HK$92,568,458.

(d) Disposal of shares and loans

(i) On 25 June 2002, Sino Land and Sing-Ho Finance entered into an agreement with Gornik Securities Limited (“Gornik”) and Seaview Finance Company Limited (“Seaview Finance”). Pursuant to such agreement, inter alia, (a) Sino Land agreed to sell 100% of the issued shares in Maba Trading S.A. (“Maba”), which holds a 50% interest in the carparking spaces and a few unsold residential units of Miami Beach Towers Phase I and carparking spaces of Miami Beach Towers Phase II, to Gornik at a consideration of HK$32,610,693; (b) Sing-Ho Finance agreed to assign to Seaview Finance a loan in the amount of HK$9,521,342 due by Prestige Development Limited to Sing-Ho Finance on a dollar for dollar basis; and (c) Sing-Ho Finance agreed to assign to Seaview Finance a loan in the amount of HK$8,878,650 due by Pariv Limited to Sing-Ho Finance on a dollar for dollar basis.

On the same day, King Chance and Sing-Ho Finance entered into an agreement with Osborne Investments Ltd. (“Osborne”) and Seaview Finance whereby: (a) King Chance agreed to sell 50% of the issued shares in Lead Talent Investment Limited (“Lead Talent”), which holds certain carparking spaces of Villa Oceania, to Osborne at a consideration of HK$7,120,032; and (b) Sing-Ho Finance agreed to assign to Seaview Finance a loan of HK$13,740,449 due by Lead Talent to Sing-Ho Finance on a dollar for dollar basis.

On the same day, King Chance and Sing-Ho Finance entered into an agreement with Osborne and Seaview Finance whereby: (a) King Chance agreed to sell 60% of the issued shares in Allways Success Development Limited (“Allways Success”), which holds the interest in certain carparking spaces of Serenity Park Phase I, to Osborne at a consideration of HK$12,790,484; and (b) Sing-Ho Finance agreed to assign to Seaview Finance a loan in the amount of HK$5,108,686 due by Allways Success to Sing-Ho Finance on a dollar for dollar basis.

Gornik, Seaview Finance and Osborne are all indirect wholly-owned subsidiaries of Boswell.

(ii) Share Disposal and Loan Assignment

On 26 June 2003, Sino Land and Sing-Ho Finance entered into respective agreements with Erleigh Property Limited (“Erleigh”) and Seaview Finance. Pursuant to such agreements, inter alia, (a) Sino Land agreed to sell 50% of the issued shares of Kotachi Limited (“Kotachi”), which holds 100% interest in Pacific Trade Centre, an industrial building, to Erleigh at a consideration of HK$30,755,779; and (b) Sing-Ho Finance agreed to assign to Seaview Finance a loan in the amount of HK$61,921,021 due by Kotachi to Sing-Ho Finance on a dollar-for-dollar basis.

Seaview Finance and Erleigh are both indirect wholly-owned subsidiaries of Boswell.

(e) Awarding of construction contracts

During the year ended 30 June 2004, a construction contract was awarded by an associate to a wholly-owned subsidiary of Sino Land. The contract was awarded, after a highly competitive tendering process, on 22 August 2003 at the same price as the lowest tender on a back-to-back basis. The construction contract was for the interior fitting-out works for tenancy areas at NKIL5846, 12 Kai Shun Road, Kowloon Bay, Kowloon and the contract sum was approximately HK$58.3 million.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

(f) Advances to non wholly-owned subsidiaries

(i) During the year ended 30 June 2003, Sino Land made advances totalling HK$529,761,006 to Grand Creator Investment (BVI) Limited (“Grand Creator”), a 60% owned subsidiary of Sino Land, to finance the loan on-lent to Grand Creator’s wholly-owned subsidiary, Grand Creator Investment Limited. The loan is to finance the development cost of MTR Hang Hau Station development. The advances are unsecured, bear interest at cost of funds plus a margin and have no fixed repayment terms. The advances made are proportional to the shareholding interest of Sino Land in Grand Creator, the remaining share interests in which are held by an independent third party which is connected to Sino Land only through its substantial shareholding in Grand Creator.
(ii) During each of the three years ended 30 June 2004, Sino Land made advances totalling HK$23,000,302, HK$40,329,706 and HK$17,185,240, respectively, to Firm Wise Investment Limited (“Firm Wise”), a 70% owned subsidiary of Sino Land, to finance the development and operating cost of the property, the Centrium. The advances are unsecured, bear interest at cost of funds plus a margin and have no fixed repayment terms. The advances made are proportional to the shareholding interest of Sino Land in Firm Wise, the remaining share interests in which are held by an independent third party which is connected to Sino Land only through its substantial shareholding in Firm Wise.

Details of the balances with associates at the respective balance sheet dates are set out in the balance sheets and in notes 18 and 32.

Notes:

(1) Service and management fees were charged on a cost-plus-profit margin basis or at a fee with reference to the size and type of the buildings as agreed between the Group and the related party.
(2) Rental expenses were charged on normal commercial terms with reference to the prevailing market rental value of the particular premises.
(3) Interest income and expenses were charged at cost of funds plus margin basis.

43. SUBSEQUENT EVENTS

Subsequent to 30 June 2004, Sino Land and J.P. Morgan Securities Ltd. (the “Manager”) entered into a subscription agreement (the “Subscription Agreement”) pursuant to which the Manager has agreed to subscribe for, and procure subscribers for, convertible bonds in an aggregate principal amount of HK$2.0 billion, or up to HK$2.5 billion if the over-allotment option granted to the Manager is exercised in full. Completion of the Subscription Agreement is conditional upon satisfying certain requirements, amongst other things, the approval of the shareholders of the Company in general meeting of the transaction.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

44. PRINCIPAL ASSOCIATES

The Directors are of the opinion that a complete list of the particulars of all associates will be of excessive length and therefore the following list contains only the particulars of associates at 30 June 2004, which materially affect the results of the Relevant Periods or form a substantial portion of the net assets of the Group.

			Proportion of
			nominal value
			of issued share
	Place of		capital held
	incorporation/	Class of	indirectly by	Principal
Name of associate	operation	shares held	the Company	activities
			%
Asian Success Investments	Hong Kong	Ordinary	33.3	Property
Limited				development
Astoria Estate Management	Hong Kong	Ordinary	50	Building
Company Limited				management
Benefit Bright Limited	Hong Kong	Ordinary	42.5	Property
				trading and
				investment
Better Chief Limited	Hong Kong	Ordinary	50	Property
				investment
Beverhill Limited	Hong Kong	Ordinary	20	Property
				investment
Boatswain Enterprises Limited	Hong Kong	Ordinary	20	Property
				investment
Brisbane Trading Company	Hong Kong	Ordinary and	50	Property
Limited		non-voting		trading
		deferred
Cheer City Properties Limited	Hong Kong	Ordinary	20	Property
				investment
C.H.K.C. Building	Hong Kong	Ordinary	25	Building
Management Limited				management
Cosmos Door Limited	Hong Kong	Ordinary	50	Property
				investment
Credit World Limited	Hong Kong	Ordinary	20	Property
				trading
Direct Win Development	Hong Kong	Ordinary	33.3	Property
Limited				development
Dramstar Company Limited	Hong Kong	Ordinary	22	Property
				trading
Empire Funds Limited	Hong Kong	Ordinary	50	Property
				trading
Eternal Honest Finance	Hong Kong	Ordinary	50	Mortgage loan
Company Limited				financing

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

			Proportion of
			nominal value
			of issued share
	Place of		capital held
	incorporation/	Class of	indirectly by	Principal
Name of associate	operation	shares held	the Company	activities
			%
Famous Empire Finance	Hong Kong	Ordinary	40	Mortgage loan
Limited				financing
Famous Empire Properties	Hong Kong	Ordinary	40	Property
Limited				trading and
				investment
Finedale Industries Limited	Hong Kong	Ordinary	33.3	Property
				investment
Gloryland Limited	Hong Kong	Ordinary	33.3	Property
				investment
Golden Famous International	Hong Kong	Ordinary	25	Property
Limited				development
Grace Sign Limited	Hong Kong	Ordinary	30	Property
				trading
Grand Palisades Finance	Hong Kong	Ordinary	20	Mortgage loan
Company Limited				financing
Greenroll Limited	Hong Kong	Ordinary	30	Hotel operation
Harvest Sun Limited	Hong Kong	Ordinary	30	Property
				trading and
				investment
Hua Qing Holdings Pte. Ltd	Singapore	Ordinary	20	Investment
				holding
Island Resort Estate	Hong Kong	Ordinary	40	Building
Management Company				management
Limited
Lead Bright Finance Limited	Hong Kong	Ordinary	20	Mortgage loan
				financing
Lead Bright Limited	Hong Kong	Ordinary	20	Property
				trading
Million Success Limited	Hong Kong	Ordinary	25	Property
				investment
More Treasure Company	Hong Kong	Ordinary	25	Property
Limited				investment
Murdoch Investments Inc.	Republic of	Ordinary	45	Property
	Panama/			investment
	Hong Kong
Olympian City 1 (Project	Hong Kong	Ordinary	30	Project
Management) Limited				management

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

				Proportion of
				nominal value
				of issued share
		Place of		capital held
		incorporation/	Class of	indirectly by	Principal
Name of associate		operation	shares held	the Company	activities
				%
Olympian City 2 Finance		Hong Kong	Ordinary	50	Mortgage loan
Company Limited					financing
Olympian City 2 (Project		Hong Kong	Ordinary	42.5	Project
Management) Limited					management
Prime Force Limited		Hong Kong	Ordinary	50	Property
					development
Pui Hay	Enterprises Limited	Hong Kong	Ordinary	50	Property
					trading
Rich Century Investment		Hong Kong	Ordinary	50	Property
Limited					investment
Silver Link Investment		Hong Kong	Ordinary	40	Property
Limited					trading and
					investment
Sino Parking Services Limited		Hong Kong	Ordinary	50	Carpark
					operation
Sino Real Estate Agency		Hong Kong	Ordinary	50	Real estate
Limited					agency
Tat Lee	Construction	Hong Kong	Ordinary	25	Building
Company Limited					construction
Victory World Finance		Hong Kong	Ordinary	50	Mortgage loan
Limited					financing
Victory World Limited		Hong Kong	Ordinary	50	Property
					trading and
					investment
Wide Harvest Investment		Hong Kong	Ordinary	25	Property
Limited					investment
Win Chanford Enterprises		Hong Kong	Ordinary	50	Property
Limited		PRC	Registered	50	investment Property
		PRC	Registered	20	development Property development

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

II. SUBSEQUENT FINANCIAL STATEMENTS

No audited financial statements of the Company or any of its subsidiaries have been prepared in respect of any period subsequent to 30 June 2004.

Yours faithfully, Deloitte Touche Tohmatsu

Certified Public Accountants Hong Kong

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

2. MANAGEMENT DISCUSSION AND ANALYSIS

As Regards the Group other than the Sino Group

The Deemed Disposal may result in a profit accrued to the Group, details of which are contained in the pro-forma financial information set out in Appendix III to this circular.

Save as aforesaid, the Deemed Disposal will not have any material effect or financial implication on the earnings, assets, liabilities or prospects of the Group. The business and operation of the Group remain as the investment holding company of the Sino Group and include share investment and dealing.

Finance

As at 30 June 2004, the Group’s gearing ratio was at approximately 26.1%, expressed as a percentage of total borrowings to the total assets. Of the total borrowings, 29% was repayable within one year, 44% repayable between one and two years and 27% repayable between two and five years. The Group had cash resources of approximately HK$10,555 million, comprising cash on hand of approximately HK$3,609 million together with committed undrawn facilities of approximately HK$6,946 million.

REVIEW OF OPERATIONS

The operations under the Sino Group represent a substantial portion of the operations of the Group as a whole. As at the Latest Practicable Date, the Company had a 50.39% interest in Sino Land. Therefore, for discussion purpose, this circular focuses on the operations of the Sino Group.

As Regards the Sino Group

Land Bank

As at 30 June 2004, the Sino Group had a total of approximately 21.3 million square feet of attributable gross floor area, an increase of 2.5 million square feet compared to the previous year. The land bank covers a broad spectrum of properties: 50% residential; 28% commercial; 12% industrial; 7% car parks and 3% hotels. During the second half of the financial year 2003/2004, the Sino Group acquired four plots of land mainly for residential and commercial development – 53 Conduit Road (the remaining portion of Inland Lot No. 2138 and Inland Lot No. 2613), Yeung Uk Road, Tsuen Wan (TW394), a site in Honey Lake, Shenzhen, PRC and Chengdu, Sichuan, PRC. These projects are expected to be completed over the next 4-5 years. Upon completion, they will yield a total gross floor area of approximately 3.8 million square feet.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Review of Operations

The Sino Group completed four residential and two commercial developments during the financial year 2003/2004. These four residential projects were Ocean View in Ma On Shan, Parc Palais in King’s Park, Imperial Villas Phase I and II in Yuen Long and The Cliveden in mid-levels of Tai Mo Shan with a total attributable gross floor area of approximately 1.2 million square feet. The commercial developments, which have been classified as completed investment properties, were Skyline Tower in Kowloon Bay and Raffles City Shanghai in PRC which provide a total of approximately 0.6 million square feet of gross floor area. In the coming financial year, the Sino Group expects to complete seven residential developments namely Residence Oasis over the MTR Hang Hau Station, Oceania Heights in Tuen Mun, The Cairnhill in mid-levels of Tai Mo Shan, Anglers’ Bay in Sham Tseng, Caldecott Hill in Piper’s Hill, The Royal Oaks and St Andrews Place, both in Sheung Shui with an aggregate attributable gross floor area of approximately 1.8 million square feet. Subsequent to the financial year end, the Sino Group acquired four additional plots of land, namely (a) obtained a joint development contract from Urban Renewal Authority to develop a site at Fuk Wing Street/Fuk Wa Street, Sham Shui Po, Kowloon; (b) entered into a sale and purchase agreement for a site located at Castle Peak Road, Cheung Sha Wan, Kowloon; (c) entered into a sale and purchase agreement for an agricultural land in Ma Wo, Tai Po, New Territories; and (d) acquired a site at 256 Hennessy Road, Wanchai for commercial development. It is anticipated that approximately 134,044, 58,037, 114,487 and 71,865 square feet of gross floor area, respectively, including residential and retail areas, will be developed for the projects in Fuk Wing Street/Fuk Wa Street, Castle Peak Road, Ma Wo and Hennessy Road. With these new acquisitions of land, the Sino Group’s total land bank has increased to a total of approximately 21.7 million square feet of gross floor area.

Property Sales

Property sales turnover of the Sino Group at subsidiary level was HK$2,612 million for the financial year ended 30 June 2004 compared to HK$2,616 million last year. Revenue from property sales for the financial year 2003/2004 was mainly derived from the sale of residential units from two new developments namely Ocean View and Imperial Villa Phase I and II. In total, about 98% of the units in these projects have been sold. Property sales at associate level recorded an improvement mainly due to the sale of two residential projects, namely The Cliveden and Parc Palais, where about 80% of the total units have been sold.

Throughout the financial year 2003/2004, Hong Kong economy recorded an encouraging recovery with improving GDP, better employment prospects and an end to deflationary pressures. Better economic fundamentals, low deposit rates and favourable mortgage terms provided the necessary impetus for the property market between the fourth quarter of 2003 and the first quarter of 2004.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Property market sentiment was further boosted by PRC Government’s open door policy on tourism and the signing of the Closer Economic Partnership Arrangement (“CEPA”). In general, property prices experienced a double-digit growth compared with that of financial year 2002/2003. Leveraging on the market upturn, the Group marketed several projects. Oceania Heights in Tuen Mun was launched in July 2003 and Residence Oasis over MTR Hang Hau Station in November 2003. The projects were well received by the market, and a total of 95% and 76% of the units of the respective projects have already been sold.

Chinese New Year 2004 saw the launch of Phase II of The Cairnhill, comprising 360 units and all the units were sold shortly after coming onto the market. Anglers’ Bay located in Sham Tseng, in which the Sino Group has 50% interest, was marketed during the year. Approximately 86% of these units had been sold by June 2004. Caldecott Hill in Piper’s Hill was also launched during the second half of the financial year 2003/2004 with approximately 57% of the units sold.

Leasing Operations

As at 30 June 2004, the Sino Group had 9.2 million square feet of attributable gross floor area of completed investment properties, an increase of 0.6 million square feet over the 8.6 million square feet held in the previous financial year. This increase was mainly attributable to the completion of Skyline Tower, an office building located in Kowloon Bay and Raffles City Shanghai, an office and retail building in the PRC. These diversified properties comprise 50% commercial developments; 24% industrial developments; 17% car parks; 7% hotels; and the balance of 2% being residential.

The retail sector has been boosted by enhanced consumer confidence as a result of improving economic conditions during the period of review. The “Individual Travel Scheme” implemented by 30 cities in the PRC since middle of 2003 has benefited our shopping malls, in particular China Hong Kong City where the China Ferry Terminal is located, Tuen Mun Town Plaza and Olympian City 1 and 2.

The Sino Group has continued its policy of implementing thematic and creative promotional activities in its shopping malls, with the result that the tenants have enjoyed increased customer traffic and an upsurge in their businesses. The Sino Group’s promotional activities are geared to enhance the shopping experience for the customers, make shopping an enjoyable family event and fostering customer loyalty. Demand for retail shops has been strong with rent rates achieving double digit growth.

The Sino Group has embarked on a series of asset enhancement programme for its investment properties during the year. Phase I renovation work for the retail area of China Hong Kong City has already been completed. Now renovated, with an attractive colour scheme, the shopping mall and the new food court “Gourmet Express” attract discerning customers.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Other malls are to be refurbished and reconfigured, to ensure greater visibility of the shops. Particular care has been paid to tenant mix to cater for the needs of the changing visitor profile and new trends in consumer demand. The completion and opening of KCR East Tsim Sha Tsui station under the Tsim Sha Tsui Extension project in the fourth quarter of 2004 has linked up Tsim Sha Tsui East, New World Centre, Hanoi Road, Mody Road and Chatham Road, creating a transport and shopping hub in the area. The air-conditioned subway has greatly facilitated pedestrian flow in the entire Tsim Sha Tsui East area. The Tsim Sha Tsui Promenade Beautification project scheduled for completion in 2006 will also give a facelift to the waterfront of Tsim Sha Tsui East. To capitalize on these projects and the anticipated increase in pedestrian flow in the area, the Sino Group will refurbish the Tsim Sha Tsui Centre thereby revitalizing this valuable asset and securing better rental for the Sino Group.

The gross rental revenue of the Sino Group, increased to HK$1,133 million from HK$1,110 million in the previous financial year with satisfactory overall occupancy. Their highly diversified nature and favourable locations continue to prove to be significant contributing factors in ensuring stable recurrent earnings.

Finance

As the share price of Sino Land has been consistently well above the exercise price (HK$4 per share) of the Convertible Notes arranged by Sino Land in May 2002, Noteholders have opted for conversion of the HK$1.5 billion Convertible Notes into shares. By 21 May 2004, all the Notes have been converted into Sino Land’s shares.

There was no material change in foreign currency borrowings and the capital structure of the Sino Group for the financial year ended 30 June 2004. Foreign exchange exposure has been prudently kept at a minimal level. All the Sino Group’s borrowings are subject to floating interest rates.

On 2 August 2004, the court handed down a judgment on the litigation regarding the acceptance of repudiation on the part of Hang Lung Group Limited (formerly known as Hang Lung Development Company Limited) and its subsidiary, Atlas Limited (collectively referred to as “Hang Lung”) of the Agreement (as defined in this circular) entered into between Sino Land and its subsidiary, Mariner International Hotels Limited (collectively referred to as “Mariner”) and Hang Lung on 19 December 1996. The judgment was in favour of Hang Lung. Mariner lodged an appeal against the judgment on 30 September 2004 on legal advice. The Directors have been advised that the appeal will not be heard until some time in the year of 2005 at the earliest. On the basis of the uncertainty of the outcome of the intended appeal, the Directors are of the opinion that no provision in respect of the deposit and other liabilities contingent upon the outcome of the appeal should be made for the year ended 30 June 2004.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Future Developments

Property development and investments are the foremost business focus of the Sino Group with the land bank being continuously and selectively replenished to optimise future earning prospects. During the financial year 2003/2004, new sites with a total attributable gross floor area of about 3.8 million square feet were acquired. The Sino Group is committed to building quality properties with value-added product features and services. Environmentally friendly concepts and features will also be incorporated in building design, estate management and office administration. During 2004, Sino Land together with two renowned property developers (“Consortium”), submitted a proposal to the HK Government indicating our interest in developing the West Kowloon Cultural District (“District”) into an arts and cultural area. The proposal involves the design and building of a unique development comprising inter alia four museums, each with its own specific theme, three theatres, a performance venue, a concert hall and a canopy to be constructed and operated. This proposal, if accepted, will result in a total of approximately 4 million square feet of arts and cultural facilities being built. The Consortium believes that this is a project devoted to the community of Hong Kong, and one which would make Hong Kong truly a “World Class City”, and would provide for the cultural needs of this and future generations. The project design preserves the landscape of the waterfront and adopts environmentally friendly principles in the District. Not only does the Consortium plan to build a world class arts and cultural hub along the waterfront of the Victoria Harbour but also to establish a new lifestyle for Hong Kong people where they can appreciate and enjoy arts and cultural activities. The Project will also assist in the development of home grown artists and designers who will in turn benefit the society and the economy as a whole. Other than the above mentioned, there was no material change from the information published in the report and accounts for the financial year ended 30 June 2003.

Sino Land was bestowed the “Caring Company 2003-2004” by Hong Kong Council of Social Service in February 2004. This award sees the recognition gained by Sino Land in its contribution to the Hong Kong society at large. Its active pursuits in community care will continue to thrive.

Sino Land’s wholly-owned property management arm, Sino Estates Management Limited (“SEML”), was awarded “Caring Company 2003-2004” by The Hong Kong Council of Social Service during the financial year 2003/2004. SEML was also awarded the “Top 10 High Service Hour Award (2002) (Private Organisation)” by the Social Welfare Department in recognition of its contributions to society. The Sino Volunteer Team set up in 2002 by SEML has organised donation campaigns in the properties that SEML manages for Hong Kong Community Chest and Hong Kong Council of Early Childhood Education & Services. Members of the Team have reached out and visited over 400 elderly people living in Caritas Hong Kong – Services for Elderly. SEML has also carried out “Old Books Recycling Programmes” in over 50 estates for World Vision for the second time and “Old Clothes Recycling Programme” for Salvation Army and Friends

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APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

of the Earth. SEML has received a number of awards which confirm its efforts and commitments to environmental protection and quality management. 64 projects have been awarded the “Fresh Water Plumbing Quality Maintenance Recognition Scheme Certificate” so far to acknowledge its sterling work. It has also won the champion, 1st runner-up, 2nd runner-up and a Merit Prize in the “Kwun Tong Cleaning Competition – Private Building (Industrial)” for Futura Plaza, Westin Centre, Remington Centre and Seaview Centre respectively. Ville de Cascade where SEML serves as property manager was awarded a Merit Prize in the “Quality Estate Management Competition for Shatin District” by the Shatin District Council. With regard to air quality control, SEML was granted the “Indoor Air Quality Certificate” by Hong Kong Productivity Council for its achievement in maintaining good quality of the air in Haddon Court. It also achieved the “Gold Wastewi$e Logo” granted by the Environmental Protection Department as an acknowledgment of its efforts in providing high quality refuses management services in Dynasty Heights and “Wastewi$e Logo” for 11 projects.

Employee Programmes

As at 30 June 2004, the Sino Group employed approximately 5,600 staff. During the financial year ended 30 June 2004, the Sino Group held various internal and external training programmes for its employees. These programmes for the Sino Group’s employees are designed, amongst other things, to strengthen their language proficiency, professional knowledge and management know-how as well as to enhance their productivity. Course contents covered language skills; customer relations and customer service; information technology; self-enhancement initiatives and environmental conservation in respect of office administration, property management and project management. New courses will continually be developed to meet corporate and specific career planning needs.

As the economic and social ties between the Mainland and Hong Kong strengthen, the Sino Group continues its efforts in promoting the use of Putonghua amongst staff by providing courses for various levels on a regular basis. It is the Sino Group’s policy that all staff, in particular those in front-line positions, must uphold meticulous standards in customer service.

Furthermore, the Sino Group has always laid particular emphasis on promoting good team-work as an essential element in the efficient and effective use of human resources, internal procedures and systems. Teamwork serves to focus individual achievement upon the objectives of the Sino Group, which results in better quality of products and services. During the year ended 30 June 2004, several workshops and seminars on team-building and leadership were organised in order to promote the spirit and skills of teamwork.

−83 −

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

As Regards the Group (including the Sino Group)

The Group attaches great importance to corporate integrity, business ethics and good governance while acknowledging its corporate responsibilities to society. The Group believes that the long-term interests of shareholders can best be served by conducting our business in a socially responsible manner, and by adopting where possible, environmentally friendly practices in our daily operations and business development.

The Group has a strong commitment to corporate citizenship. Part of its efforts in delivering its duties as a corporate citizen has been the set-up of a “Community Care Committee” to join hands with charity, non-profit and green organizations as well as relevant government authorities to promote and organise community services and charity events for meaningful causes. The Group’s recent works include some fund-raising activities for Hong Kong Red Cross and Hong Kong Community Chest, a “Plant Mangrove for the Earth 2004” activity jointly organised with Friends of the Earth to safeguard the coastal environment in Sai Kung, and a “Clean up Marine Park 2004” event co-organised with Green Power to preserve a clean coastline for Sha Chau and Lung Kwu Chau Marine Park where many of the precious Pink Dolphins in Hong Kong reside.

Prospects

The Hong Kong economy has shown encouraging signs of a strong recovery since mid 2003, with GDP growth of 6.8% recorded in the fourth quarter of 2003, which rose by a further 12.1% in the second quarter of 2004 with full-year forecast of 7.5%. The high unemployment rate of 8.6% recorded in the quarter between May and July 2003 had fallen to 6.8% by the third quarter of 2004 with the deflationary spiral over. Better economic and employment prospects coupled with low interest rates provided the necessary impetus to cause a resurgence of homebuyer confidence in the property market. Against this backdrop, the demand for private residential housing has been strong. Due to a combination of strong liquidity in the banking sector and the favourable mortgage interest rates offered by banks, property prices have experienced double-digit growth since the second quarter of 2003.

In July 2004, the Hong Kong Mortgage Corporation launched a New Mortgage Insurance Programme which enables home buyers to obtain mortgage financing of up to 95% of the value of a property. This Programme will further facilitate home purchase in the private housing sector.

Retail sales and tourism and hotel industries also recorded encouraging growth as a result of better market sentiments and the implementation of the “Individual Travel Scheme” by 30 cities in Mainland China. Visitor arrivals to Hong Kong have risen from its low level of slightly over 720,000 per month in June 2003 to an average of 1.6 million per month between July 2003 and June 2004. It is expected that visitor arrivals will reach 20 million for the full year of 2004 compared with 16.5 million and 15.5 million in 2002

−84 −

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

and 2003 respectively. As a result, Sino Group’s shopping malls such as China Hong Kong City, Olympian City 1 and 2 and Tuen Mun Town Plaza (which account for the substantial portion of total gross rental income), have experienced a substantial increase in shopper traffic.

A total of approximately 600,000 square feet of retail space, following the completion of five major projects in Tsuen Wan Town Centre Redevelopment site, Yeung Uk Road (Tsuen Wan) site, West Kowloon Reclamation site, Ho Tung Lau site and Oceania Heights (Tuen Mun) in the next three financial years will add to our already substantial rental portfolio, enhancing future rental income. Given the strong economic fundamentals, healthy sustainable growth in the property market and our development land bank of 11.5 million square feet mainly acquired between 2000 and the first half of 2004 (not including our completed investment properties and properties held for sale), we are confident that the Group stands poised for yet further growth in the coming years.

3. INDEBTEDNESS

At the close of business on 30 September 2004, being the latest practicable date for the purpose of ascertaining certain information relating to this indebtedness statement prior to the printing of this circular, the Group had outstanding borrowings of approximately HK$12,790 million, comprising secured bank and other loans of approximately HK$8,799 million, unsecured bank and other loans of approximately HK$3,858 million and secured bank overdrafts of approximately HK$133 million. The secured bank and other loans and overdrafts were secured by listed investments, properties, time deposits, bank balances and Sino Shares. In addition to the outstanding borrowings of approximately HK$12,790 million, the Group had other unsecured outstanding borrowings from its associates of approximately HK$2,167 million and loan from minority shareholders of subsidiaries of approximately HK$431 million as at 30 September 2004.

As at 30 September 2004, being the latest practicable date for the purpose of ascertaining certain information relating to this indebtedness statement prior to the printing of this circular, the Group had the following contingent liabilities:

Guarantees in respect of banking facilities utilized and not utilized by its associates of approximately HK$2,437 million and HK$238 million respectively.
On 19 December 1996, Mariner entered into an agreement (the “Agreement”) with Hang Lung to acquire a company which owned a property in Yau Kom Tau, Tsuen Wan, New Territories, which was to be developed into a hotel. The total consideration payable by Mariner for the purchase was HK$1,070,000,000, in respect of which a deposit and part payments in the total sum of HK$321,000,000 were paid by Mariner to Hang Lung pursuant to the Agreement. On 30 June 1998, Mariner terminated the Agreement. This termination gave rise to litigation between Mariner and Hang Lung. There has been a trial of the issue as to which party repudiated the Agreement. On this issue the trial judge gave judgment for Hang Lung on 2 August 2004.

−85 −

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Mariner appealed against the judgment on legal advice on 30 September 2004. The Directors have been advised that the appeal will not be heard until some time in the year 2005 at the earliest. On the basis of the uncertainty of the outcome of the intended appeal, the Directors are of the opinion that no provision in respect of the deposit and other liabilities contingent upon the outcome of the appeal should be made for the year ended 30 June 2004.

Save as aforesaid or otherwise disclosed herein and apart from intra-group liabilities, the Group did not have outstanding, at the close of business on 30 September 2004, any loan capital issued and outstanding or agreed to be issued, bank overdrafts, loans or other similar indebtedness, liabilities under acceptances or acceptance credits, debentures, mortgages, charges, obligations under hire purchases contracts or finance leases, guarantees, or other material contingent liabilities.

For the purpose of the above indebtedness statement, foreign currency amounts have been translated into Hong Kong dollars at the rates of exchange prevailing at the close of business on 30 September 2004.

4. MATERIAL ADVERSE CHANGES

As at the Latest Practicable Date, the Directors are not aware of any material adverse change in the financial and trading position of the Group since 30 June 2004, the date to which the latest audited financial statements of the Group were made up.

5. WORKING CAPITAL

The Directors are of the opinion that after taking into account the present available banking facilities and internal resources of the Group (excluding the Sino Group), the Group (excluding the Sino Group) will have sufficient working capital for its present requirements in the absence of unforeseen circumstances.

−86 −

APPENDIX II FINANCIAL INFORMATION OF THE SINO GROUP

AUDITED FINANCIAL STATEMENTS OF THE SINO GROUP FOR THE THREE YEARS ENDED 30 JUNE 2002, 2003 AND 2004

The following is the text of a report, prepared for the sole purpose of inclusion in this circular received from the independent reporting accountants, Deloitte Touche Tohmatsu, Hong Kong.

==> picture [64 x 48] intentionally omitted <==

==> picture [78 x 33] intentionally omitted <==

5 November 2004

The Directors Tsim Sha Tsui Properties Limited

Dear Sirs,

We set out below our report on the financial information regarding Sino Land Company Limited (the “Company”) and its subsidiaries (hereinafter collectively referred to as the “Group”) for each of the three years ended 30 June 2004 (the “Relevant Periods”) for inclusion in the circular of the Company dated 5 November 2004 in connection with a possible very substantial disposal resulting from possible deemed disposal of interest in the Company so that it becomes an associate company of Tsim Sha Tsui Properties Limited (the “Circular”).

The Company is a listed public limited liability company incorporated in Hong Kong on 5 January 1971 and is engaged in investment holding. As at the date of this report, the Company had interests in the principal subsidiaries as follows:

				Proportion of
				nominal value
				of issued share
	Place of			capital held by
	incorporation/	Class of	Issued	the Company
Name of subsidiary	operation	shares held	share capital	Directly Indirectly		Principal activities
				%	%
Ackerley Estates	Hong Kong	Ordinary	HK$20,000,000	–	100	Property investment
Limited
Active Success	Hong Kong	Ordinary	HK$2	–	100	Property development
Development
Limited
Advance Profit Limited	Hong Kong	Ordinary	HK$2	–	100	Property development

−87 −

APPENDIX II FINANCIAL INFORMATION OF THE SINO GROUP

				Proportion of
				nominal value
				of issued share
	Place of			capital held by
	incorporation/	Class of	Issued	the Company
Name of subsidiary	operation	shares held	share capital	Directly Indirectly		Principal activities
				%	%
Alfaso Investment	Hong Kong	Ordinary	HK$20,000	–	100	Property investment
Limited
Allways Success	Hong Kong	Ordinary	HK$10	–	100	Mortgage loan financing
Finance Limited
Apex Speed Limited	Hong Kong	Ordinary	HK$2	–	100	Property trading and
						investment
Beauty Plaza Limited	Hong Kong	Ordinary	HK$20,000	–	100	Property investment
Bestone Limited	Hong Kong	Ordinary	HK$2	–	100	Property development
Best Origin Limited	Hong Kong	Ordinary	HK$2	–	100	Property investment
Best Result Cleaning	Hong Kong	Ordinary	HK$2	100	–	Cleaning services
Services Limited
Better Sino Limited	Hong Kong/	Ordinary	HK$2	–	100	Property development
	The People’s
	Republic of
	China (“PRC”)
Century Profit Limited	Hong Kong	Ordinary	HK$2	–	100	Property investment
Cheer Result Limited	Hong Kong	Ordinary	HK$2	–	100	Property trading and
						investment
Dragon (Hong Kong)	Hong Kong	Ordinary	HK$2	–	100	Property development
Limited
e.Sino Company	Hong Kong	Ordinary	HK$2	–	100	Investment holding
Limited
Elegant Lane Limited	Hong Kong	Ordinary	HK$2	–	100	Property investment
Entertainment City	Hong Kong	Ordinary	HK$4,500,000	–	100	Property investment
Limited
Ever Champion	Hong Kong	Ordinary	HK$2	–	100	Property trading
Development
Limited
Falcon City Limited	Hong Kong	Ordinary	HK$2	–	100	Property development
Famous General	Hong Kong	Ordinary	HK$2	–	100	Property investment
Limited

−88 −

APPENDIX II FINANCIAL INFORMATION OF THE SINO GROUP

					Proportion of
					nominal value
					of issued share
	Place of				capital held by
	incorporation/	Class of		Issued	the Company
Name of subsidiary	operation	shares held	share capital		Directly Indirectly		Principal activities
					%	%
Famous Palace	Hong Kong	Ordinary		HK$20,000	–	100	Property investment
Properties Limited
Firm Wise Investment	Hong Kong	Ordinary		HK$10	–	70	Property investment
Limited
Fo Tan Construction	Hong Kong	Ordinary		HK$2	–	100	Project management
Consultant Limited
Forlink Limited	Hong Kong	Ordinary		HK$2	–	100	Property investment
Fortune Garden Inc.	Republic of	Registered/Bearer		US$1	–	100	Share investment
	Liberia/
	Hong Kong
Free Champion Limited	Hong Kong	Ordinary		HK$2	–	100	Property investment
Fu King Investment	Hong Kong	Ordinary	HK$1,000,000		100	–	Investment holding
Limited
Full Fair Limited	Hong Kong	Ordinary		HK$2	–	100	Property development
Fung Yuen	Hong Kong	Ordinary	HK$1,000,000		–	100	Building construction
Construction
Company Limited
Glenery Limited	British Virgin	Ordinary		US$1	–	100	Share investment
	Islands/
	Hong Kong
Globaland	Hong Kong	Ordinary		HK$2	–	100	Property trading and
Development							investment
Limited
Global Honest Finance	Hong Kong	Ordinary		HK$2	–	100	Mortgage loan financing
Limited
Glorypark Limited	Hong Kong	Ordinary		HK$1,000	100	–	Property investment
Golden Leaf	Hong Kong	Ordinary		HK$20,000	–	100	Property investment
Investment Limited
Golden Million Finance	British Virgin	Ordinary		US$1	100	–	Financing
Corporation	Islands/
	Hong Kong

−89 −

APPENDIX II FINANCIAL INFORMATION OF THE SINO GROUP

				Proportion of
				nominal value
				of issued share
	Place of			capital held by
	incorporation/	Class of	Issued	the Company
Name of subsidiary	operation	shares held	share capital	Directly Indirectly		Principal activities
				%	%
Grand Creator	British Virgin	Ordinary	US$10	–	60	Investment holding
Investment (BVI)	Islands/
Limited	Hong Kong
Grand Creator	Hong Kong	Ordinary	HK$2	–	60	Property development
Investment Limited
Grand Idea Investment	Cayman Islands/	Ordinary	US$1	–	100	Property investment
(CI) Limited	Hong Kong
Grandeal Limited	Hong Kong/PRC	Ordinary	HK$2	–	100	Property development
Great Land (HK)	Hong Kong	Ordinary	HK$1,000,000	–	100	Property trading and
Limited						investment
Handsome Lift	Cayman Islands/	Ordinary	US$1	–	100	Property investment
Investment (CI)	Hong Kong
Limited
Hang Hau Station	Hong Kong	Ordinary	HK$2	–	60	Project management
(Project
Management)
Limited
Hang Hau Station	Hong Kong	Ordinary	HK$2	–	60	Building construction
Construction Limited
Harvestrade Investment	Hong Kong	Ordinary	HK$20,000	–	100	Property trading and
Limited						investment
Hickson Limited	Hong Kong	Ordinary	HK$20	–	100	Property investment
High Elite Finance	Hong Kong	Ordinary	HK$2	–	100	Mortgage loan financing
Limited
High Elite Limited	Hong Kong	Ordinary	HK$2	–	100	Property investment
Jade Bird Development	Hong Kong	Ordinary	HK$100,000	–	100	Property trading and
Limited						investment
Jade Mate Limited	Hong Kong	Ordinary	HK$2	–	100	Property investment
Jade Pine Limited	Hong Kong	Ordinary	HK$20,000	–	100	Property investment
Jade Queen Properties	Hong Kong	Ordinary	HK$2	–	100	Property investment
Limited

−90 −

APPENDIX II FINANCIAL INFORMATION OF THE SINO GROUP

					Proportion of
					nominal value
					of issued share
	Place of				capital held by
	incorporation/	Class of		Issued	the Company
Name of subsidiary	operation	shares held	share capital		Directly Indirectly		Principal activities
					%	%
King Chance	Hong Kong	Ordinary		HK$2	100	–	Investment holding
Development
Limited
Kingdom Investment	Hong Kong	Ordinary		HK$2	–	100	Property trading and
Limited							investment
Land Success	Hong Kong	Ordinary		HK$2	–	100	Property trading and
Development							investment
Limited
Landscape Investment	Hong Kong	Ordinary		HK$2	100	–	Property development
Limited
Lucky Fortress Inc.	Republic of	Registered/Bearer		US$1	–	100	Share investment
	Liberia/
	Hong Kong
Mackey Limited	Hong Kong	Ordinary		HK$100	–	100	Property development
Mander Investment	British Virgin	Ordinary		US$1	–	100	Share investment
Limited	Islands/
	Hong Kong
Mass Success Limited	Hong Kong	Ordinary		HK$1,000	–	100	Property trading
Morbest Profits	British Virgin	Ordinary		US$1	–	100	Share investment
Limited	Islands/
	Hong Kong
Multipurpose	Hong Kong	Ordinary		HK$20,000	–	100	Property trading and
Investment Limited							investment
Ocean Treasure (Hong	Hong Kong	Ordinary		HK$2	–	100	Property development
Kong) Limited

−91 −

APPENDIX II FINANCIAL INFORMATION OF THE SINO GROUP

				Proportion of
				nominal value
				of issued share
	Place of			capital held by
	incorporation/	Class of	Issued	the Company
Name of subsidiary	operation	shares held	share capital	Directly Indirectly		Principal activities
				%	%
Octerworth Enterprises	Hong Kong	Ordinary	HK$20,000	–	100	Property investment
Limited
Pacific Elite Limited	Hong Kong	Ordinary	HK$2	–	100	Financing
Parason Limited	British Virgin	Ordinary	US$1	–	100	Share investment
	Islands/
	Hong Kong
Peace Success	Hong Kong	Ordinary	HK$2	–	100	Property trading
Development
Limited
Perfect Sun Properties	Hong Kong	Ordinary	HK$2	–	100	Property trading and
Limited						investment
Pioneer Parking	Hong Kong	Ordinary	HK$2	–	100	Carpark operation
Limited
port88 Limited	Hong Kong	Ordinary	HK$2	–	100	Internet services provider
Precious Land Pte.	Singapore	Ordinary	S$2	–	100	Property investment
Limited
Precious Treasure Pte.	Singapore	Ordinary	S$20,000,000	–	100	Hotel operation and
Ltd						property investment
Pridegate (CI) Limited	Cayman Islands/	Ordinary	US$1	–	100	Property investment
	Hong Kong
Prime Harvest	Hong Kong	Ordinary	HK$2	–	100	Consultant services
(Administration						provider
Services) Limited
Prime Harvest	Hong Kong	Ordinary	HK$2	–	100	Property development
Development
Limited
Primewin Properties	Hong Kong	Ordinary	HK$2	–	100	Property investment
Limited
Prime Reward Finance	Hong Kong	Ordinary	HK$2	100	–	Financing
Limited

−92 −

APPENDIX II FINANCIAL INFORMATION OF THE SINO GROUP

				Proportion of
				nominal value
				of issued share
	Place of			capital held by
	incorporation/	Class of	Issued	the Company
Name of subsidiary	operation	shares held	share capital	Directly Indirectly		Principal activities
				%	%
Rankchief Company	Hong Kong	Ordinary	HK$200	–	100	Property trading
Limited
Real Maker	Hong Kong	Ordinary	HK$200,000	–	90	Property investment
Development
Limited
Regent Profit	Hong Kong	Ordinary	HK$2	–	100	Property trading and
Investment Limited						investment
Region One Investment	Hong Kong	Ordinary	HK$2	–	100	Property investment
Limited
Residence Oasis	Hong Kong	Ordinary	HK$2	–	60	Mortgage loan financing
Finance Company
Limited
Rich Tact International	Cayman Islands/	Ordinary	US$1	–	100	Property investment
(CI) Limited	Hong Kong
Richtune Investment	British Virgin	Ordinary	US$1	–	100	Share investment
Limited	Islands/
	Hong Kong
Saky Investment (CI)	Cayman Islands/	Ordinary	US$1	–	100	Property investment
Limited	Hong Kong
Salia Limited	Hong Kong/PRC	Ordinary	HK$2	–	100	Property development
Serenity Park Building	Hong Kong	Ordinary	HK$10	100	–	Building management
Management Limited
Sharp Rise Company	Hong Kong	Ordinary	HK$2	100	–	Property trading
Limited
Sidak Investment	Hong Kong	Ordinary	HK$20,000	–	100	Property trading and
Limited						investment
Silver Palm Limited	Hong Kong	Ordinary	HK$2	–	100	Property trading and
						investment
Sing-Ho Finance	Hong Kong	Ordinary	HK$30,000,000	100	–	Financing
Company Limited

−93 −

APPENDIX II FINANCIAL INFORMATION OF THE SINO GROUP

				Proportion of
				nominal value
				of issued share
	Place of			capital held by
	incorporation/	Class of	Issued	the Company
Name of subsidiary	operation	shares held	share capital	Directly Indirectly		Principal activities
				%	%
Sino Security Services	Hong Kong	Ordinary	HK$2	100	–	Security services
Limited
Sino Administration	Hong Kong	Ordinary	HK$3	100	–	Administration services
Services Limited
Sino Broadband	Hong Kong	Ordinary	HK$2	–	100	Broadband infrastructure
Technology Limited
Sino Estates	Hong Kong	Ordinary	HK$2	100	–	Building management
Management Limited
Sino Estates	Hong Kong/PRC	Ordinary	HK$2	–	100	Building management
Management
(China) Limited
Sino Estates Services	Hong Kong	Ordinary	HK$20	100	–	Building management
Limited
Sino Land Finance	Hong Kong	Ordinary	HK$2	–	100	Deposit placing
Limited
Sino Land	PRC	Registered	US$480,034	–	100	Property development
(Guangzhou)
Company Limited
Sino Land Investment	Cayman Islands/	Ordinary	US$6,000,000	–	100	Investment holding
(Holdings) Ltd.	Hong Kong
Sino Technology	Hong Kong	Ordinary	HK$2	–	100	High technology business
Corporation Limited
Standard Union	Hong Kong	Ordinary	HK$2	–	100	Share investment
Investment Limited
Success One	Hong Kong	Ordinary	HK$2	–	100	Property investment
Investment Limited
Sunny Force Limited	Hong Kong	Ordinary	HK$2	–	100	Property investment
Super One Investment	Hong Kong	Ordinary	HK$2	–	100	Property investment
Limited

−94 −

APPENDIX II FINANCIAL INFORMATION OF THE SINO GROUP

				Proportion of
				nominal value
				of issued share
	Place of			capital held by
	incorporation/	Class of	Issued	the Company
Name of subsidiary	operation	shares held	share capital	Directly Indirectly		Principal activities
				%	%
Sunrise Investment	Hong Kong	Ordinary	HK$2	–	100	Property trading and
Limited						investment
Ten Treasure Limited	Hong Kong/PRC	Ordinary	HK$2	–	100	Property development
Thousand Growth	Hong Kong	Ordinary	HK$20,000	–	100	Property investment
Development
Limited
Timeshare	Cayman Islands/	Ordinary	US$1	–	100	Property investment
Development	Hong Kong
(CI) Limited
Trans China Investment	Hong Kong	Ordinary	HK$2	–	100	Property investment
Limited
Triple Reach	Cayman Islands/	Ordinary	US$1	–	100	Property investment
International	Hong Kong
(CI) Limited
Union Development	Hong Kong	Ordinary	HK$2	–	100	Property development
Limited
Vasilon Pte. Ltd	Singapore	Ordinary	S$2	–	100	Investment holding
Weiland Development	Hong Kong	Ordinary	HK$33,140,000	–	100	Property investment
Company Limited
Wendia Limited	Hong Kong	Ordinary	HK$20	–	100	Property investment
Wicorp Development	Hong Kong/PRC	Ordinary	HK$2	–	100	Property trading
Limited
Will Glory Company	Cayman Islands/	Ordinary	US$1	–	100	Property investment
(CI) Limited	Hong Kong
Wise Century Limited	Hong Kong	Ordinary	HK$2	–	100	Property development
Wise Mate Limited	Hong Kong	Ordinary	HK$2	–	100	Property development
World Empire	Cayman Islands/	Ordinary	US$1	–	100	Property investment
Investment (CI)	Hong Kong
Limited

−95 −

APPENDIX II FINANCIAL INFORMATION OF THE SINO GROUP

We have acted as auditors of the Group for the Relevant Periods.

We have audited the financial statements of the Company and the Group for each of the three years ended 30 June 2004, in accordance with Statements of Auditing Standards issued by the Hong Kong Institute of Certified Public Accountants (“HKICPA”), issued on 24 September 2002, 23 September 2003 and 22 September 2004, respectively (the “Relevant Audited Financial Statements”). We have examined the Relevant Audited Financial Statements in accordance with the Auditing Guideline 3.340 “Prospectuses and the Reporting Accountant” as recommended by the HKICPA.

The Relevant Audited Financial Statements are the responsibility of the Directors of the Company who approved their issue. The Directors of Tsim Sha Tsui Properties Limited are responsible for the contents of the Circular in which this report is included. It is our responsibility to compile the Financial Information set out in this report from the Relevant Audited Financial Statements, to form an independent opinion on the Financial Information and to report our opinion to you.

−96 −

APPENDIX II FINANCIAL INFORMATION OF THE SINO GROUP

I. FINANCIAL INFORMATION

Consolidated Income Statements

The following is the consolidated results of the Group for the Relevant Periods.

2002 HK$ 2,713,424,196 (757,448,223) (471,559,745)	2003 HK$ 4,183,474,770 (2,228,658,458) (636,704,875)	2004 HK$ 4,230,240,789 (2,035,979,697) (723,201,592) 1,471,059,500 35,696,383 79,455,206 (17,621,750) – (344,679,005) 1,223,910,334 82,629,643 (157,255,760) (74,626,117) 510,139,155 – (7,558,625) 1,651,864,747 (235,781,904) 1,416,082,843 (7,256,218) 1,408,826,625 286,180,109 35.32 cents 33.55 cents
1,484,416,228 61,262,686 (180,228,233) (103,107,616) (129,255,068) (385,057,299) 748,030,698 125,470,873 (505,914,014) (380,443,141) (108,750,786) 12,712,419 69,611,638 341,160,828 (94,739,995) 246,420,833 7,711,998	1,318,111,437 55,696,382 (124,091,924) (252,397,016) – (394,326,211) 602,992,668 97,671,957 (530,517,532) (432,845,575) (78,330,825) – 30,528,060 122,344,328 (88,957,165) 33,387,163 1,650,987	1,471,059,500 35,696,383 79,455,206 (17,621,750) – (344,679,005) 1,223,910,334
		82,629,643 (157,255,760)
		(74,626,117) 510,139,155 – (7,558,625) 1,651,864,747 (235,781,904) 1,416,082,843 (7,256,218)
254,132,831 153,973,396 6.59 cents N/A	35,038,150 154,658,197 0.90 cents N/A

−97 −

APPENDIX II FINANCIAL INFORMATION OF THE SINO GROUP

Consolidated Balance Sheets

The following is the consolidated balance sheets of the Group as at the respective balance sheet dates.

2002 HK$ 14,448,546,536 1,154,228,706 80,221,262 11,754,687,062 835,204,231 78,651,026 300,000 692,615,355	2003 HK$ 13,292,907,150 1,178,578,081 71,828,784 11,048,203,287 1,003,414,144 23,327,729 300,000 573,584,330	2004 HK$ 16,875,663,820 1,179,346,094 62,646,286 10,467,487,485 1,407,632,220 20,281,519 300,000 571,690,106
29,044,454,178 5,880,322,201 291,156,405 21,946,321 485,726,879 2,174,700,180 726,740,336 20,000,000 25,558,437 8,747,697 525,153,593 2,207,629,294 12,367,681,343	27,192,143,505 8,845,310,945 604,867,506 21,044,865 361,634,955 1,494,397,245 1,036,427,959 – 22,097,946 21,620,306 6,854,166 1,084,955,668 13,499,211,561	30,585,047,530
		8,665,188,659 418,271,442 20,955,153 441,090,161 1,629,526,939 1,089,835,394 – 126,700,514 180,398,723 238,393,749 2,769,019,851
		15,579,380,585

−98 −

APPENDIX II FINANCIAL INFORMATION OF THE SINO GROUP

2002 HK$ 4,787,555,900 230,728,920 50,391,217 31,198,800 237,664,400 – 315,564,000 – 289,480,785	2003 HK$ 3,504,670,983 358,676,369 105,609,771 13,100,640 277,753,200 300,000,000 528,664,000 233,940,000 284,899,106	2004 HK$ 5,124,777,152 226,948,675 117,542,200 13,102,740 212,000,000 – 1,212,708,600 218,379,000 87,729,220
5,942,584,022 6,425,097,321 35,469,551,499 3,874,211,830 21,757,468,251 25,631,680,081 2,408,637 7,907,674,702 28,295,934 1,704,050,548 1,293,767 194,147,830 9,835,462,781 35,469,551,499	5,607,314,069 7,891,897,492 35,084,040,997 3,886,334,280 20,346,747,312 24,233,081,592 (1,011,765) 8,330,468,298 32,244,483 1,966,649,850 10,375,165 512,233,374 10,851,971,170 35,084,040,997	7,213,187,587
		8,366,192,998
		38,951,240,528

		4,306,022,975 27,387,755,066
		31,693,778,041
		232,222
		4,907,333,232 40,123,952 1,941,668,613 – 368,104,468
		7,257,230,265
		38,951,240,528

−99 −

APPENDIX II FINANCIAL INFORMATION OF THE SINO GROUP

Balance Sheets

The following is the balance sheets of the Company as at the respective balance sheet dates.

2002 HK$ 21,812,147,103 591,401,221 614,627,935 300,000	2003 HK$ 22,207,583,002 593,208,157 689,936,569 300,000	2004 HK$ 23,774,143,590 519,527,714 877,875,616 300,000
23,018,476,259 1,356,914 483,776,879 350,742,779 5,908,281 250,638 842,035,491 2,334,481 – 5,564,000 259,782,635 267,681,116 574,354,375	23,491,027,728 1,356,914 360,227,955 51,218,061 5,940,606 230,038 418,973,574 1,724,329 2,717,081 4,564,000 262,319,078 271,324,488 147,649,086	25,171,846,920
		1,356,914 439,365,162 62,524,185 8,630,749 533,885
		512,410,895
		1,902,763 2,747,133 4,564,000 –
		9,213,896
		503,196,999
23,592,830,634	23,638,676,814	25,675,043,919

3,874,211,830 19,713,990,756 23,588,202,586 1,678,746 2,949,302 4,628,048	3,886,334,280 19,750,670,388 23,637,004,668 1,672,146 – 1,672,146	4,306,022,975 21,368,665,244
		25,674,688,219
		355,700 –
		355,700
23,592,830,634	23,638,676,814	25,675,043,919

−100 −

APPENDIX II FINANCIAL INFORMATION OF THE SINO GROUP

Consolidated Statements of Changes in Equity

The following is the consolidated statements of changes in equity of the Group for the Relevant Periods.

Share capital HK$ 3,860,583,211	Share premium HK$ 9,211,395,816	Capital redemption reserve HK$ 100,520,000	Investment property revaluation reserve HK$ 7,427,620,342	Other security revaluation reserve HK$ (499,538,422)	Exchange reserve HK$ 10,215,468	Retained profits HK$ 7,440,140,235	Total HK$ 27,550,936,650
– – – – – 37,928,619 – – (24,300,000) – – – – – – – 3,874,211,830	– – – – – – 71,842,692 (60,100) – – – – – – – – 9,283,178,408	– – – – – – – – 24,300,000 – – – – – – – 124,820,000	(1,390,214,183) (319,709,648) 39,611,429 – (1,670,312,402) – – – – (12,712,419) (445,216,262) (68,913,770) – – – – 5,230,465,489	(46,127,198) – – – (46,127,198) – – – – – 76,055,952 – 103,107,616 – – – (366,502,052)	– – – (7,409,687) (7,409,687) – – – – – – – – – – – 2,805,781	– – – – – – – – (57,599,045) – – – – 254,132,831 (76,821,664) (77,151,732) 7,482,700,625	(1,436,341,381) (319,709,648) 39,611,429 (7,409,687)
							(1,723,849,287)
							37,928,619 71,842,692 (60,100) (57,599,045) (12,712,419) (369,160,310) (68,913,770) 103,107,616 254,132,831 (76,821,664) (77,151,732)
							25,631,680,081

−101 −

APPENDIX II FINANCIAL INFORMATION OF THE SINO GROUP

Share capital HK$ – – – –	Share capital HK$ – – – –	Share premium HK$ – – – –	Capital redemption reserve HK$ – – – –	Investment property revaluation reserve HK$ (1,231,115,559) (336,604,345) 55,840,000 –	Other security revaluation reserve HK$ (5,862,695) – – –	Exchange reserve HK$ – – – (4,635,656)	Retained profits HK$ – – – –	Total HK$ (1,236,978,254) (336,604,345) 55,840,000 (4,635,656)
–	)	– – 68,644,731 (260,100) – – – – – – – 9,351,563,039 – – – – –	– – – – 39,426,000 – – – – – – 164,246,000 – – – – –	(1,511,879,904) – – – – (8,139,842) (30,528,060) – – – – 3,679,917,683 3,448,271,547 907,238,705 (25,005,189) – 4,330,505,063	(5,862,695) – – – – – – 252,397,016 – – – (119,967,731) 301,662,998 – – – 301,662,998	(4,635,656) – – – – – – – – – – (1,829,875) – – – (5,626,572) (5,626,572)	– – – – (90,262,382) – – – 35,038,150 (77,288,637) (77,369,560) 7,272,818,196 – – – – –	(1,522,378,255)
51,548,450 – – (39,426,000 – – – – – –								51,548,450 68,644,731 (260,100) (90,262,382) (8,139,842) (30,528,060) 252,397,016 35,038,150 (77,288,637) (77,369,560)
3,886,334,280								24,233,081,592
– – – –								3,749,934,545 907,238,705 (25,005,189) (5,626,572)
–								4,626,541,489

−102 −

APPENDIX II

FINANCIAL INFORMATION OF THE SINO GROUP

Shares issued in lieu of cash dividends Shares issued upon conversion of convertible notes Premium on issue of shares upon scrip dividends Premium on issue of shares upon conversion of convertible notes Shares issue expenses Revaluation reserves released on disposal Impairment loss charged to consolidated income statement Net profit for the year Final dividend – 2003 Interim dividend – 2004 At 30 June 2004	Share capital HK$ 44,688,695 375,000,000 – – – – – – – –	Share premium HK$ – – 163,200,881 1,125,000,000 (482,065) – – – – –	Capital redemption reserve HK$ – – – – – – – – – –	Investment property revaluation reserve HK$ – – – – – 1,447,740 – – – –	Other security revaluation reserve HK$ – – – – – 38,978 2,614,215 – – –	Exchange reserve HK$ – – – – – – – – – –	Retained profits HK$ – – – – – – – 1,408,826,625 (77,726,686) (208,453,423)	Total HK$ 44,688,695 375,000,000 163,200,881 1,125,000,000 (482,065) 1,486,718 2,614,215 1,408,826,625 (77,726,686) (208,453,423)
	4,306,022,975 10,639,281,855		164,246,000	8,011,870,486	184,348,460	(7,456,447)	8,395,464,712	31,693,778,041

Notes:

(i) At 30 June 2002, 2003 and 2004, retained profits in the sum of HK$16,973,686, HK$34,262,482 and HK$41,972,544 of certain associates attributable to the Group are distributable by way of dividend subject to the prior consent of their bankers, respectively.
(ii) At 30 June 2002, 2003 and 2004, retained profits of the Group included accumulated losses of HK$970,055,663, HK$1,387,437,960 and HK$1,383,843,341, respectively, attributable to the associates of the Group.

−103 −

APPENDIX II FINANCIAL INFORMATION OF THE SINO GROUP

Consolidated Cash Flow Statements

The following is the consolidated cash flow statements of the Group for the Relevant Periods.

2002 HK$ 748,030,698 180,228,233 129,255,068 103,107,616 18,053,567 67,954 (419,515,734)	2003 HK$ 602,992,668 124,091,924 – 252,397,016 16,678,842 31,353 17,927,321	2004 HK$ 1,223,910,334 (79,455,206) (20,136) 17,621,750 14,613,195 1,495,281 4,152,457 1,182,317,675 (1,805,847,613) 2,085,668,447 89,712 (53,407,435) – 1,620,106,169 (266,857,388) 2,762,069,567 (257,362,920) 2,504,706,647
759,227,402 (2,722,275,273) 13,300,958 (2,115,691) (28,303,748) (1,792,087) 4,061,854,746 697,664,344 2,777,560,651 (67,202,247) 2,710,358,404	1,014,119,124 (5,588,708,013) 2,296,446,175 901,456 (308,699,374) – (1,292,920,690) 808,250,384 (3,070,610,938) (19,572,693) (3,090,183,631)	1,182,317,675 (1,805,847,613 2,085,668,447 89,712 (53,407,435 – 1,620,106,169 (266,857,388
		2,762,069,567 (257,362,920
		2,504,706,647

−104 −

APPENDIX II FINANCIAL INFORMATION OF THE SINO GROUP

Notes INVESTING ACTIVITIES (Advance to) repayments from associates (Increase) decrease in long-term loans receivable (Increase) decrease in restricted bank deposits Acquisition of an unsecured loan from a former fellow subsidiary of a subsidiary Purchase of investment properties Purchase of property, plant and equipment Purchase of investments in securities Acquisition of associates Additions of hotel property Deposit paid for purchase of land Dividends received from associates Proceeds from disposal of investment properties Interest received Proceeds from disposal of an associate Proceeds from disposal of investments in other securities Proceeds from disposal of subsidiaries (net of cash and cash equivalents disposal of) 34 Repayment from (advance to) investee companies Acquisition of a subsidiary (net of cash and cash equivalents acquired) 35 Proceeds from disposal of property, plant and equipment Purchase of investments in other securities NET CASH (USED IN) FROM INVESTING ACTIVITIES	2002 HK$ (1,790,391,120) (638,760,791) (145,554,821) (96,558,776) (51,224,049) (50,808,296) (44,773,608) (34,633,380) (21,293,305) (20,000,000) 697,875,000 656,127,000 125,470,873 110,303,146 64,756,014 43,054,537 2,871,273 1,658,544 313,974 –	2002 HK$ (1,790,391,120) (638,760,791) (145,554,821) (96,558,776) (51,224,049) (50,808,296) (44,773,608) (34,633,380) (21,293,305) (20,000,000) 697,875,000 656,127,000 125,470,873 110,303,146 64,756,014 43,054,537 2,871,273 1,658,544 313,974 –	2003 HK$ 148,785,153 122,491,516 518,299,427 (92,765,410) (16,797,214) (8,516,334) – – (24,349,375) – 88,502,500 92,233,000 97,671,957 31,201,966 – – 64,404,695 122,321 198,617 (174,072,608)	2004 HK$ 1,495,128,801 (102,708,344) (231,539,583) – (3,375,364) (6,946,929) – (18,876,552) (768,013) – 397,010,000 19,727,900 82,629,643 – 11,543,695 – (7,328,955) – 20,951 (129,047,194)
	(1,191,567,785	)	847,410,211	1,505,470,056

−105 −

APPENDIX II FINANCIAL INFORMATION OF THE SINO GROUP

FINANCING ACTIVITIES New bank and other loans Issue of convertible notes Advances from (repayments to) associates Advances from (repayments to) minority shareholders Advances from investee companies Repayments of bank and other loans Redemption of convertible bonds Interest paid Repurchase of own shares Dividends paid Issue costs of convertible notes paid Loan arrangement fees paid Commitment fees paid Dividends paid to minority shareholders Shares issue expenses paid Capital contribution from a minority shareholder Finance costs paid upon early repayment of loans NET CASH FROM (USED IN) FINANCING ACTIVITIES NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS BROUGHT FORWARD EFFECT OF FOREIGN EXCHANGE RATE CHANGES CASH AND CASH EQUIVALENTS CARRIED FORWARD ANALYSIS OF THE BALANCES OF CASH AND CASH EQUIVALENTS Time deposits, bank balances and cash Bank overdrafts	2002 HK$ 2,584,530,587 1,500,000,000 1,161,240,598 9,621,415 1,220,126 (3,019,296,631) (1,168,401,969) (482,630,322) (57,599,045) (44,202,085) (37,565,291) (10,837,264) (3,040,601) (1,600,000) (60,100) – –	2003 HK$ 3,407,305,787 – 262,599,302 372,156,099 – (2,264,986,766) – (406,078,322) (90,262,382) (34,465,016) – (9,621,667) (4,514,314) – (260,100) 30 (107,999,777)	2004 HK$ 1,244,520,109 – (24,981,237) (175,002,326) – (3,096,586,335) – (174,002,265) – (78,290,533) – (4,312,966) (19,615,465) (144,000) (482,065) – –
	431,379,418 1,950,170,037 249,742,346 2,152,911 2,202,065,294 2,207,629,294 (5,564,000) 2,202,065,294	1,123,872,874 (1,118,900,546) 2,202,065,294 (2,773,080) 1,080,391,668 1,084,955,668 (4,564,000) 1,080,391,668	(2,328,897,083) 1,681,279,620 1,080,391,668 2,784,563 2,764,455,851 2,769,019,851 (4,564,000) 2,764,455,851

−106 −

APPENDIX II FINANCIAL INFORMATION OF THE SINO GROUP

Notes to the Financial Information

1. SIGNIFICANT ACCOUNTING POLICIES

The financial statements have been prepared under the historical cost convention as modified for the revaluation of investment properties and investments in securities.

The financial statements have been prepared in accordance with accounting principles generally accepted in Hong Kong. The principal accounting policies adopted are as follows:

Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Company and its subsidiaries made up to 30th June 2002, 2003 and 2004.

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

Goodwill

Negative goodwill

Negative goodwill represents the excess of the Group’s interest in the fair value of the identifiable assets and liabilities of an associate at the date of acquisition over the cost of acquisition.

Negative goodwill arising on the acquisition of an associate is deducted from the carrying value of that associate and is released to income based on an analysis of the circumstances from which the balance resulted.

Investments in subsidiaries

Investments in subsidiaries are included in the Company’s balance sheet at cost less any identified impairment loss.

Interests in associates

In the Company’s balance sheet, investments in associates are stated at cost, less any identified impairment loss.

−107 −

APPENDIX II FINANCIAL INFORMATION OF THE SINO GROUP

Investments in securities

Investments in securities are recognised on a trade date basis and are initially measured at cost.

All securities other than held-to-maturity debt securities are measured at subsequent reporting dates at fair value.

Investment properties

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

Investment properties are stated at their open market value based on independent professional valuations at the balance sheet date. Any surplus or deficit arising on the revaluation of investment properties is credited or charged to the investment property revaluation reserve unless the balance of this reserve is insufficient to cover a deficit, in which case the excess of the revaluation deficit over the balance of the investment property revaluation reserve is charged to the income statement. Where a deficit has previously been charged to the income statement and a revaluation surplus subsequently arises, this surplus is credited to the income statement to the extent of the deficit previously charged.

On disposal of an investment property, the balance of the investment property revaluation reserve attributable to that property is transferred to the income statement.

No depreciation is provided on investment properties except where the unexpired term of the relevant lease, including the renewable period, is twenty years or less.

Hotel property

Property, plant and equipment

Property, plant and equipment are stated at cost less depreciation and accumulated impairment losses.

Depreciation is provided to write off the cost of items of property, plant and equipment over their estimated useful lives, using the straight line method, at the following rates per annum:

Computer system	20%
Furniture, fixtures and equipment	10%–20%
Leasehold improvements	20%
Motor vehicles	20%
Plant and machinery	10%–20%

Impairment

At each balance sheet date, the Group and the Company reviews the carrying amounts of its assets to determine whether there is any indication that those assets have suffered an impairment loss. If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. Impairment losses are recognised as an expense immediately.

−108 −

APPENDIX II FINANCIAL INFORMATION OF THE SINO GROUP

Properties under development

Properties under development which are developed for sale are included in current assets at the lower of cost and estimated net realisable value.

Stocks of unsold properties

Hotel inventories

Hotel inventories are stated at the lower of cost and net realisable value. Cost is calculated using weighted average cost method.

Other non-current assets

Other non-current assets represent club memberships and are stated at cost less any identified impairment loss.

Borrowing costs

All other borrowing costs are recognised as expenses in the year in which they are incurred.

Deferred loan arrangement fees

Deferred loan arrangement fees are deferred and amortised to the income statement over the repayment term of the loan on a straight line basis to provide a constant periodic rate of charge.

Convertible bonds/notes

Convertible bonds/notes are stated at the aggregate of the net proceeds from the issue plus finance costs provided.

The gain or loss on purchase of convertible notes, representing the difference between the consideration paid and the nominal value of the convertible bonds/notes purchased, is recognised in the income statement.

−109 −

APPENDIX II FINANCIAL INFORMATION OF THE SINO GROUP

Revenue and profit recognition

(a) Revenue and profit on the sales of properties are recognised upon completion of the sales agreements or transfer of risk and reward of ownership, whichever is earlier.
(b) Income from properties developed for sale is recognised on the execution of a binding sale agreement or when the relevant occupation permit is issued by the respective building authority, whichever is later. Payments received from the purchasers prior to this stage are recorded as deposits received on sales of properties and presented as current liabilities.
(c) Sales of listed investments are recognised on a trade date basis.
(d) Rental income under operating leases is recognised on a straight line basis over the term of the relevant lease.
(e) Building management and service fee income is recognised on an appropriate basis over the Relevant Periods in which the services are rendered.
(f) Interest income is accrued on a time basis by reference to the principal outstanding and at the interest rate applicable.
(g) Where properties are sold under deferred terms, the difference between the sales prices with and without such terms is treated as deferred interest income and is released to the income statement on a straight line basis over the repayment period commencing from the completion of the relevant sales agreements.
(h) Dividend income from investments is recognised when the Group’s rights to receive payment have been established.
(i) Hotel income is recognised when services are provided.

Taxation

Income tax expense represents the sum of the tax currently payable and deferred tax.

Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the income statement, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity.

Foreign currencies

−110 −

APPENDIX II FINANCIAL INFORMATION OF THE SINO GROUP

Retirement benefits costs

Payments to the retirement benefits schemes are charged as an expense as they fall due.

2. TURNOVER

Sales of properties held for sale Gross rental income from properties Building management and service fee income Hotel operations Interest income from loans receivable Sales of investment properties Dividend income Listed investments Unlisted investments Sales of investments in trading securities	2002 HK$ 587,750,561 831,481,466 385,110,443 201,616,565 5,800,847 656,127,000 27,534,104 11,279,034 6,724,176 2,713,424,196	2003 HK$ 2,523,490,191 830,293,109 392,981,569 196,670,559 102,321,162 92,233,000 34,955,519 10,529,661 – 4,183,474,770	2004 HK$ 2,592,400,047 830,446,466 421,210,100 253,072,006 54,277,759 19,727,900 49,824,480 9,282,031 –
			4,230,240,789

−111 −

APPENDIX II FINANCIAL INFORMATION OF THE SINO GROUP

3. BUSINESS AND GEOGRAPHICAL SEGMENTS

Business segments

INCOME STATEMENT

For the year ended 30 June 2002

Property HK$ 831,481,466 1,243,877,561 – 49,886,540 – –	Security HK$ – – – – 45,537,314 –	Financing HK$ – – – – – 5,800,847	Hotel HK$ – – 201,616,565 – – –	Building management and services HK$ – – – 335,223,903 – –	Elimination HK$ – – – – – –	Consolidated HK$ 831,481,466 1,243,877,561 201,616,565 385,110,443 45,537,314 5,800,847
2,125,245,567 23,846,900 –	45,537,314 7,813,949 –	5,800,847 489,884 –	201,616,565 2,268,699 –	335,223,903 26,843,254 20,656,524	– – (20,656,524)	2,713,424,196 61,262,686 –
2,149,092,467 1,225,463,779 (135,195,945)	53,351,263 (365,741,532) (2,679,732)	6,290,731 6,290,731 (483,968)	203,885,264 97,393,504 32,801,882	382,723,681 169,681,515 (3,193,023)	(20,656,524) –	2,774,686,882

						1,133,087,997
					–	(385,057,299
						748,030,698 (380,443,141 (108,750,786 12,712,419 69,611,638
						341,160,828 (94,739,995
						246,420,833 7,711,998
						254,132,831

Inter-segment sales were charged at cost plus margin basis as agreed between both parties.

−112 −

APPENDIX II FINANCIAL INFORMATION OF THE SINO GROUP

BALANCE SHEET

At 30 June 2002

Property Security Financing Hotel Building management and services HK$ HK$ HK$ HK$ HK$ ASSETS Segment assets 24,222,340,539 1,410,918,791 1,459,558,713 1,310,025,379 1,245,857,340 Interests in associates 11,069,443,039 (1,500,652) (1,210,607) 725,353,308 (37,398,026) Unallocated corporate assets Consolidated total assets LIABILITIES Segment liabilities 6,458,462,279 7,266,997 74,909,237 276,384,585 100,753,867 Borrowings Convertible bonds Unallocated corporate liabilities Consolidated total liabilities OTHER INFORMATION For the year ended 30 June 2002	Consolidated HK$ 29,648,700,762 11,754,687,062 8,747,697
	41,412,135,521

	6,917,776,965 7,316,427,032 1,465,155,655 78,687,151
	15,778,046,803

					Building
					management
	Property	Security	Financing	Hotel	and services	Consolidated
	HK$	HK$	HK$	HK$	HK$	HK$
Amortisation of goodwill	308,611	–	–	12,645,817	–	12,954,428
Capital additions	393,734	–	–	44,172,750	6,241,812	50,808,296
Depreciation	263,366	889,083	–	9,277,978	7,623,140	18,053,567
Hotel property additions	–	–	–	21,293,305	–	21,293,305
Impairment loss on
investments in other
securities	–	103,107,616	–	–	–	103,107,616
Investment property additions	148,224,049	–	–	–	–	148,224,049
Unrealised holding loss on
investments in trading
securities	–	180,228,233	–	–	–	180,228,233

−113 −

APPENDIX II FINANCIAL INFORMATION OF THE SINO GROUP

INCOME STATEMENT

For the year ended 30 June 2003

REVENUE Turnover Property rental Property sales Hotel operations Management services Share investment and dealing Financing Other operating income Inter-segment sales* Total revenue SEGMENT RESULT Unallocated corporate expenses Profit from operations Net finance costs Results attributable to associates Profit on disposal of an associate Profit before taxation Income tax expense Profit before minority interests Minority interests Net profit for the year	Property HK$ 830,293,109 2,615,723,191 – 61,551,606 – – 3,507,567,906 22,509,300 – 3,530,077,206 969,201,285 (104,642,853) 30,528,060	Security HK$ – – – – 45,485,180 – 45,485,180 753,799 – 46,238,979 (330,499,085) 69,209 –	Financing HK$ – – – – – 102,321,162 102,321,162 273,909 – 102,595,071 102,595,071 (1,434,347) –	Hotel HK$ – – 196,670,559 – – – 196,670,559 – – 196,670,559 77,064,213 22,389,580 –	Building management and services HK$ – – – 331,429,963 – – 331,429,963 32,159,374 23,919,078 387,508,415 178,957,395 5,287,586 –	Elimination HK$ – – – – – – – – (23,919,078) (23,919,078) –	Consolidated HK$ 830,293,109 2,615,723,191 196,670,559 392,981,569 45,485,180 102,321,162
							4,183,474,770 55,696,382 –
							4,239,171,152

							997,318,879
						– –	(394,326,211)
							602,992,668 (432,845,575) (78,330,825) 30,528,060
							122,344,328 (88,957,165)
							33,387,163 1,650,987
							35,038,150

Inter-segment sales were charged at cost plus margin basis as agreed between both parties.

−114 −

APPENDIX II FINANCIAL INFORMATION OF THE SINO GROUP

BALANCE SHEET

At 30 June 2003

Property Security Financing Hotel Building management and services HK$ HK$ HK$ HK$ HK$ ASSETS Segment assets 24,663,663,755 1,395,674,936 1,048,918,082 1,680,301,405 832,973,295 Interests in associates 10,347,546,727 3,850,761 (2,644,980) 740,810,525 (41,359,746) Unallocated corporate assets Consolidated total assets LIABILITIES Segment liabilities 5,550,272,792 15,249,497 402,007,720 264,186,275 120,889,457 Borrowings Convertible notes Unallocated corporate liabilities Consolidated total liabilities	Consolidated HK$ 29,621,531,473 11,048,203,287 21,620,306
	40,691,355,066

	6,352,605,741 8,479,446,530 1,489,378,714 137,854,254
	16,459,285,239

OTHER INFORMATION

For the year ended 30 June 2003

					Building
					management
	Property	Security	Financing	Hotel	and services	Consolidated
	HK$	HK$	HK$	HK$	HK$	HK$
Amortisation of goodwill	308,611	–	–	12,645,817	–	12,954,428
Capital additions	794,428	–	–	2,282,809	5,439,097	8,516,334
Depreciation	414,895	873,415	–	7,968,960	7,421,572	16,678,842
Hotel property additions	–	–	–	24,349,375	–	24,349,375
Impairment loss on
investments in other
securities	–	252,397,016	–	–	–	252,397,016
Investment property additions	27,797,214	–	–	–	–	27,797,214
Unrealised holding loss on
investments in trading
securities	–	124,091,924	–	–	–	124,091,924

−115 −

APPENDIX II FINANCIAL INFORMATION OF THE SINO GROUP

INCOME STATEMENT

For the year ended 30 June 2004

REVENUE Turnover Property rental Property sales Hotel operations Management services Share investment and dealing Financing Other operating income Inter-segment sales* Total revenue SEGMENT RESULT Unallocated corporate expenses Profit from operations Net finance costs Results attributable to associates Loss on disposal of associates Profit before taxation Income tax expense Profit before minority interests Minority interests Net profit for the year	Property HK$ 830,446,466 2,612,127,947 – 66,054,225 – – 3,508,628,638 12,278,730 – 3,520,907,368 1,123,056,933 465,822,625 –	Security HK$ – – – – 59,106,511 – 59,106,511 3,768,818 – 62,875,329 124,502,009 (22,195) –	Financing HK$ – – – – – 54,277,759 54,277,759 481,324 – 54,759,083 54,759,083 (1,151,350) –	Hotel HK$ – – 253,072,006 – – – 253,072,006 – – 253,072,006 120,590,142 43,365,281 –	Building management and services HK$ – – – 355,155,875 – – 355,155,875 19,167,511 24,693,618 399,017,004 145,681,172 2,124,794 (7,558,625)	Elimination HK$ – – – – – – – – (24,693,618) (24,693,618) –	Consolidated HK$ 830,446,466 2,612,127,947 253,072,006 421,210,100 59,106,511 54,277,759
							4,230,240,789 35,696,383 –
							4,265,937,172

							1,568,589,339
						– –	(344,679,005)
							1,223,910,334 (74,626,117) 510,139,155 (7,558,625)
							1,651,864,747 (235,781,904)
							1,416,082,843 (7,256,218)
							1,408,826,625

Inter-segment sales were charged at cost plus margin basis as agreed between both parties.

−116 −

APPENDIX II FINANCIAL INFORMATION OF THE SINO GROUP

BALANCE SHEET

At 30 June 2004

Property Security Financing Hotel Building management and services HK$ HK$ HK$ HK$ HK$ ASSETS Segment assets 29,457,891,299 1,922,451,855 1,106,466,770 1,653,660,691 1,376,071,292 Interests in associates 9,735,247,727 3,873,567 (3,840,887) 775,240,936 (43,033,858) Unallocated corporate assets Consolidated total assets LIABILITIES Segment liabilities 7,241,176,280 23,018,095 52,810,654 271,554,117 72,939,762 Borrowings Unallocated corporate liabilities Consolidated total liabilities	Consolidated HK$ 35,516,541,907 10,467,487,485 180,398,723
	46,164,428,115

	7,661,498,908 6,651,252,792 157,666,152
	14,470,417,852

OTHER INFORMATION

For the year ended 30 June 2004

					Building
					management
	Property	Security	Financing	Hotel	and services	Consolidated
	HK$	HK$	HK$	HK$	HK$	HK$
Amortisation of goodwill	308,611	–	–	12,645,817	–	12,954,428
Capital additions	867,430	–	–	763,328	5,316,171	6,946,929
Depreciation	471,566	855,441	–	6,379,174	6,907,014	14,613,195
Hotel property additions	–	–	–	768,013	–	768,013
Impairment loss on
investments in other
securities	–	17,621,750	–	–	–	17,621,750
Investment property additions	3,375,364	–	–	–	–	3,375,364

Geographical segments

Most of the activities of the Group are based in Hong Kong and more than 90% of the Group’s turnover, profit before taxation, assets and liabilities are derived from activities in Hong Kong.

−117 −

APPENDIX II FINANCIAL INFORMATION OF THE SINO GROUP

4. PROFIT FROM OPERATIONS

Profit from operations has been arrived at after charging (crediting): Staff costs including Directors’ remuneration Retirement benefits scheme contributions Total staff costs Auditors’ remuneration Cost of hotel inventories recognised Depreciation (Profit) loss on disposal of investment properties Loss on disposal of property, plant and equipment Net exchange loss (gain) Profit on disposal of investments in other securities FINANCE INCOME Interest income on: Advances to associates Advances to investee companies Bank deposits	2002 HK$ 411,692,718 20,924,363 432,617,081 1,575,611 24,307,804 18,053,567 (419,515,734) 67,954 7,300,968 – 2002 HK$ 84,176,147 7,016,695 34,278,031 125,470,873	2003 HK$ 407,718,679 20,078,446 427,797,125 1,946,193 19,909,539 16,678,842 17,927,321 31,353 3,715,761 – 2003 HK$ 63,939,858 6,972,510 26,759,589 97,671,957	2004 HK$ 432,861,515 20,074,613 452,936,128 1,815,454 43,146,687 14,613,195 4,152,457 1,495,281 (296,621) (20,136) 2004 HK$ 61,243,187 6,861,545 14,524,911 82,629,643

−118 −

FINANCIAL INFORMATION OF THE SINO GROUP

APPENDIX II

6. FINANCE COSTS

Interest on: Bank loans and overdrafts wholly repayable within five years Other loans wholly repayable within five years Convertible bonds/notes Provision for premium on redemption of convertible bonds/notes Write-back of premium on redemption of convertible notes upon conversion Amortisation of issue costs of convertible bonds/notes Write-off of unamortised issue costs of convertible notes upon conversion Amortisation of loan arrangement fees Write-off of deferred loan arrangement fees upon early repayment of loans Commitment fees Finance costs upon early repayment of loans Less: Amounts capitalised to properties under development	2002 HK$ 179,926,518 253,821,900 35,139,814 47,927,392 – 5,565,066 – 22,031,730 – 3,040,601 –	2003 HK$ 158,012,092 198,506,843 56,250,000 16,710,000 – 7,513,059 – 20,094,129 7,590,415 4,514,314 107,999,777	2004 HK$ 105,429,514 46,854,001 21,718,750 8,423,671 (27,010,685) 3,787,405 25,420,895 9,081,698 1,240,556 19,615,465 – 214,561,270 (57,305,510) 157,255,760
	547,453,021 (41,539,007)	577,190,629 (46,673,097)	214,561,270 (57,305,510
	505,914,014	530,517,532

7. RESULTS ATTRIBUTABLE TO ASSOCIATES

Results attributable to associates comprises: Share of (losses) profits of associates Amortisation of goodwill arising on acquisition of associates Release of negative goodwill arising on acquisition of an associate	2002 HK$ (98,360,557) (12,954,428) 2,564,199 (108,750,786)	2003 HK$ (70,504,794) (12,954,428) 5,128,397 (78,330,825)	2004 HK$ 517,965,185 (12,954,428) 5,128,398 510,139,155

−119 −

APPENDIX II FINANCIAL INFORMATION OF THE SINO GROUP

8. DIRECTORS’ REMUNERATION

Directors’ fees: Executive Directors Independent Non-executive Directors Other emoluments: Executive Directors Salaries and other benefits Retirement benefits scheme contributions	2002 HK$ 170,000 120,000	2003 HK$ 190,000 120,000	2004 HK$ 130,000 360,000
	290,000 25,645,602 118,000	310,000 14,320,948 112,500	490,000 12,427,473 115,500
	26,053,602	14,743,448	13,032,973

Note: During the Relevant Periods, each Independent Non-executive Director received a director’s fee of HK$60,000. An additional fee of HK$120,000 for acting as a member of the Audit Committee was paid to each of the Independent Non-executive Director for the year ended 30 June 2004.

The remuneration of the Directors was within the following bands:

				Directors
HK$			2002	2003	2004
Nil	–	1,000,000	2	5	3
1,000,001	–	1,500,000	1	2	1
2,000,001	–	2,500,000	–	1	2
2,500,001	–	3,000,000	1	–	1
3,000,001	–	3,500,000	–	1	–
3,500,001	–	4,000,000	1	–	1
4,000,001	–	4,500,000	3	1	–
5,000,001	–	5,500,000	1	–	–

9. EMPLOYEES’ EMOLUMENTS

Of the five individuals with the highest emoluments in the Group, five for the year ended 30 June 2002, two for the year ended 30 June 2003 and three for the year ended 30 June 2004 are Executive Directors of the Company whose emoluments are included in note 8 above. The emoluments of the remaining individuals disclosed pursuant to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (“Listing Rules”) are as follows:

Salaries and other emoluments (including basic salaries, housing allowances, other allowances and benefits in kind) Retirement benefits scheme contributions	2002 HK$ – – –	2003 HK$ 8,286,889 36,000 8,322,889	2004 HK$ 5,113,060 18,000
			5,131,060

−120 −

APPENDIX II FINANCIAL INFORMATION OF THE SINO GROUP

The emoluments were within the following bands:

			Number	individuals
HK$			2002	2003	2004
2,000,001	–	2,500,000	–	1	1
2,500,001	–	3,000,000	–	2	1

10. INCOME TAX EXPENSE

2002 HK$ 73,229,538 (105,468)	2003 HK$ 60,056,282 1,862,356	2004 HK$ 97,458,759 (415,276
73,124,070 – 2,768,549 16,651,633 2,195,743 18,847,376	61,918,638 – 3,948,549 14,816,469 8,273,509 23,089,978	97,043,483
		13,473,449
		7,770,860
		109,842,267 7,651,845
		117,494,112
94,739,995	88,957,165	235,781,904

−121 −

APPENDIX II

FINANCIAL INFORMATION OF THE SINO GROUP

The tax charge for the Relevant Periods can be reconciled to the profit per the income statement as follows:

2002 HK$ 341,160,828	2003 HK$ 122,344,328	2004 HK$ 1,651,864,747

54,585,732 36,247,502 41,025,129 (92,987,890) (105,468) 67,096,640 25,399,667 (30,348,940) (6,648,197) 475,820 –	21,410,257 36,797,873 49,480,462 (14,944,952) 1,862,356 48,498,618 18,984,129 (59,961,361) (15,867,849) 44,888 2,652,744	289,076,331 28,219,760 6,679,380 (11,874,177 (415,276 65,771,859 272,624 (112,644,917 (31,551,231 2,247,551 –
94,739,995	88,957,165	235,781,904

Details of deferred taxation are set out in note 29.

The Inland Revenue Department (“IRD”) initiated tax inquiries for the years of assessment 1995/96, 1996/97 and 1997/98, respectively, on a wholly-owned subsidiary Sing-Ho Finance Company Limited (“Sing-Ho Finance”). Notices of assessment for additional tax in an aggregate sum of approximately HK$165,514,000 were issued to Sing-Ho Finance for the years under review and objections were properly lodged with the IRD by Sing-Ho Finance. IRD also initiated a tax inquiry for the years of assessment 1998/99 to 2001/02 on a wholly-owned subsidiary, City Empire Limited (“City Empire”). Notices of assessment for additional tax of approximately HK$263,438,000 was issued to City Empire for the years under review and objections were properly lodged with the IRD by City Empire. In the opinion of the Directors, in view of the tax inquiries are still at the stage of collation of evidence, the ultimate outcome of these tax inquiries cannot presently be determined with an acceptable degree of reliability, and accordingly, no provision for any liabilities that may result has been made.

11. DIVIDENDS

Final dividend paid for the year ended 30 June 2001: HK2 cents, 30 June 2002: HK2 cents and 30 June 2003: HK2 cents per share Interim dividend paid for the year ended 30 June 2002: HK2 cents, 30 June 2003: HK2 cents and 30 June 2004: HK5 cents per share	2002 HK$ 76,821,664 77,151,732 153,973,396	2003 HK$ 77,288,637 77,369,560 154,658,197	2004 HK$ 77,726,686 208,453,423
			286,180,109

−122 −

APPENDIX II FINANCIAL INFORMATION OF THE SINO GROUP

During the Relevant Periods, scrip dividends were offered in respect of the 2001 final, 2002 interim and final, 2003 interim and final and 2004 interim dividends. These scrip alternatives were accepted by the majority of shareholders, as follows:

Dividends: Cash Scrip alternatives	2001 Final HK$ 23,243,668 53,577,996 76,821,664	2002 Interim HK$ 20,958,417 56,193,315 77,151,732	2002 Final HK$ 21,174,905 56,113,732 77,288,637	2003 Interim HK$ 13,290,111 64,079,449 77,369,560	2003 Final HK$ 11,296,429 66,430,257 77,726,686	2004 Interim HK$ 66,994,104 141,459,319
						208,453,423

A final dividend of HK7 cents per share for the year ended 30 June 2004 has been proposed by the Directors and is subject to approval by the shareholders in the forthcoming annual general meeting.

12. EARNINGS PER SHARE

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

Earnings for the purposes of basic earnings per share Effect of dilutive potential ordinary shares: Reduction of finance costs, net of tax Earnings for the purposes of diluted earnings per share Weighted average number of ordinary shares for the purposes of basic earnings per share Effect of dilutive potential ordinary shares: Convertible bonds/notes Weighted average number of ordinary shares for the purposes of diluted earnings per share	2002 HK$ 254,132,831 2002 Number of shares 3,857,495,004	2003 HK$ 35,038,150	2004 HK$ 1,408,826,625
			24,867,498
		2003 Number of shares 3,871,889,199	1,433,694,123

			2004 Number of shares 3,988,279,742
			285,386,856
			4,273,666,598

No diluted earnings per share had been compiled and presented for the years ended 30 June 2002 and 30 June 2003 as the effect of the assumed conversion of the Group’s outstanding convertible bonds/notes resulted in an increase in earnings per share.

−123 −

APPENDIX II FINANCIAL INFORMATION OF THE SINO GROUP

13. INVESTMENT PROPERTIES

THE GROUP

VALUATION At 1 July 2001 Exchange realignment Transfer from properties under development Acquisition of a subsidiary Additions Disposal of subsidiaries Disposals Deficit on revaluation At 30 June 2002 Exchange realignment Transfer from properties under development Acquisition of a subsidiary Additions Disposals Deficit on revaluation At 30 June 2003 Exchange realignment Transfer from properties under development Additions Disposals Surplus (deficit) on revaluation At 30 June 2004	Investment properties in Hong Kong held under long leases Investment properties in Hong Kong held under medium- term leases HK$ HK$ 1,801,000,000 13,747,158,040 – – – 493,574,677 – 97,000,000 – 42,769,986 – (28,000,000) (473,000,000) (208,827,528) (318,000,000) (1,052,057,455)	Investment property in Singapore held under a long lease Total HK$ HK$ 349,020,278 15,897,178,318 9,611,203 9,611,203 – 493,574,677 – 97,000,000 8,454,063 51,224,049 – (28,000,000) – (681,827,528) (20,156,728) (1,390,214,183) 346,928,816 14,448,546,536 1,744,032 1,744,032 – 164,235,090 – 11,000,000 6,867,772 16,797,214 – (118,300,163) (20,448,970) (1,231,115,559) 335,091,650 13,292,907,150 9,339,350 9,339,350 72,862,859 144,203,026 207,858 3,375,364 – (22,432,617) (34,978,017) 3,448,271,547 382,523,700 16,875,663,820
	1,010,000,000 13,091,617,720 – – – 164,235,090 – 11,000,000 – 9,929,442 – (118,300,163) (127,000,000) (1,083,666,589) 883,000,000 12,074,815,500 – – – 71,340,167 – 3,167,506 – (22,432,617) 124,000,000 3,359,249,564	346,928,816 14,448,546,536 1,744,032 1,744,032 – 164,235,090 – 11,000,000 6,867,772 16,797,214 – (118,300,163 (20,448,970) (1,231,115,559 335,091,650 13,292,907,150 9,339,350 9,339,350 72,862,859 144,203,026 207,858 3,375,364 – (22,432,617 (34,978,017) 3,448,271,547
	1,007,000,000 15,486,140,120

−124 −

APPENDIX II FINANCIAL INFORMATION OF THE SINO GROUP

14. HOTEL PROPERTY

THE GROUP

COST At 1 July 2001 Additions At 30 June, 2002 Additions At 30 June 2003 Additions At 30 June 2004	Hotel property in Singapore held under a long lease HK$ 1,132,935,401 21,293,305
	1,154,228,706 24,349,375
	1,178,578,081 768,013
	1,179,346,094

−125 −

APPENDIX II FINANCIAL INFORMATION OF THE SINO GROUP

15. PROPERTY, PLANT AND EQUIPMENT

THE GROUP

Computer systems HK$ 25,991,118 10,361,551 (61,227)	Furniture, fixtures and equipment HK$ 32,387,896 36,590,559 (345,522)	Leasehold improvements HK$ 18,451,712 194,012 (55,655)	Motor vehicles HK$ 9,357,725 2,899,674 (120,548)	Plant and machinery HK$ 5,347,724 762,500 (111,516)	Total HK$ 91,536,175 50,808,296 (694,468)
36,291,442 2,118,485 (4,440) 38,405,487 1,618,907 (8,681,828) 31,342,566 12,623,778 6,900,519 (11,988) 19,512,309 6,005,648 (2,738) 25,515,219 3,755,064 (7,260,275) 22,010,008	68,632,933 3,533,047 (252,318) 71,913,662 2,210,901 (402,537) 73,722,026 5,939,113 7,618,198 (139,395) 13,417,916 7,423,952 (80,023) 20,761,845 7,655,426 (310,063) 28,107,208	18,590,069 199,201 – 18,789,270 678,237 – 19,467,507 13,389,880 1,491,572 (18,965) 14,862,487 1,294,206 – 16,156,693 1,428,178 – 17,584,871	12,136,851 1,462,311 (513,648) 13,085,514 1,747,648 (1,537,012) 13,296,150 7,857,369 1,266,274 (120,548) 9,003,095 1,103,985 (513,647) 9,593,433 731,471 (1,537,012) 8,787,892	5,998,708 1,203,290 (814,564) 6,387,434 691,236 (18,700) 7,059,970 3,877,574 777,004 (21,644) 4,632,934 851,051 (758,592) 4,725,393 1,043,056 (16,495) 5,751,954	141,650,003 8,516,334 (1,584,970)
					148,581,367 6,946,929 (10,640,077)
					144,888,219
					43,687,714 18,053,567 (312,540)
					61,428,741 16,678,842 (1,355,000)
					76,752,583 14,613,195 (9,123,845)
					82,241,933
16,779,133 12,890,268 9,332,558	55,215,017 51,151,817 45,614,818	3,727,582 2,632,577 1,882,636	3,133,756 3,492,081 4,508,258	1,365,774 1,662,041 1,308,016	80,221,262

					71,828,784

					62,646,286

−126 −

APPENDIX II FINANCIAL INFORMATION OF THE SINO GROUP

16. INTERESTS IN SUBSIDIARIES

At cost, less impairment losses recognised Advances to subsidiaries, less allowances	THE COMPANY 2002 2003 HK$ HK$ 41,698,663 90,612,522 21,770,448,440 22,116,970,480 21,812,147,103 22,207,583,002	2004 HK$ 80,137,850 23,694,005,740
		23,774,143,590

The advances to subsidiaries are unsecured and have no fixed repayment terms. At 30 June 2002, 2003 and 2004, of the Company’s advances, HK$10,455,597,001, HK$12,426,176,217 and HK$15,530,371,016, respectively, bear interest at prevailing market rates and the remaining balances are interest-free. In the opinion of the Directors, the Company will not demand for repayment within twelve months from the respective balance sheet dates and the advances are therefore shown as non-current.

The carrying amount of the investments in subsidiaries is reduced to their recoverable amounts which are determined by reference to the carrying value of the underlying assets of the respective subsidiaries.

17. INTERESTS IN ASSOCIATES

Unlisted shares, at cost Share of net assets Goodwill (Note) Negative goodwill (Note) Advances to associates, less allowances	2002 HK$ – 2,453,444,209 181,362,000 (100,003,741)	THE GROUP 2003 HK$ – 1,595,730,713 168,407,572 (94,875,344)	2004 HK$ – 2,517,969,742 155,453,144 (89,746,946)	THE COMPANY 2002 2003 HK$ HK$ 516,687,715 516,687,714 – – – – – –	THE COMPANY 2002 2003 HK$ HK$ 516,687,715 516,687,714 – – – – – –	2004 HK$ 516,687,714 – – –
	2,534,802,468 9,219,884,594	1,669,262,941 9,378,940,346	2,583,675,940 7,883,811,545	516,687,715 74,713,506	516,687,714 76,520,443	516,687,714 2,840,000
	11,754,687,062	11,048,203,287	10,467,487,485	591,401,221	593,208,157	519,527,714

−127 −

FINANCIAL INFORMATION OF THE SINO GROUP

APPENDIX II

Note:

GROSS AMOUNTS At 1 July 2001 Arising from issue of shares by the associate At 30 June 2002, 30 June 2003 and 30 June 2004 AMORTISATION At 1 July 2001 Charged for the year Released for the year At 30 June 2002 Charged for the year Released for the year At 30 June 2003 Charged for the year Released for the year At 30 June 2004 CARRYING AMOUNTS At 30 June 2002 At 30 June 2003 At 30 June 2004	THE GROUP Goodwill Negative goodwill HK$ HK$ 259,088,568 – – (102,567,940) 259,088,568 (102,567,940) 64,772,140 – 12,954,428 – – (2,564,199) 77,726,568 (2,564,199) 12,954,428 – – (5,128,397) 90,680,996 (7,692,596) 12,954,428 – – (5,128,398) 103,635,424 (12,820,994) 181,362,000 (100,003,741) 168,407,572 (94,875,344) 155,453,144 (89,746,946)	THE GROUP Goodwill Negative goodwill HK$ HK$ 259,088,568 – – (102,567,940) 259,088,568 (102,567,940) 64,772,140 – 12,954,428 – – (2,564,199) 77,726,568 (2,564,199) 12,954,428 – – (5,128,397) 90,680,996 (7,692,596) 12,954,428 – – (5,128,398) 103,635,424 (12,820,994) 181,362,000 (100,003,741) 168,407,572 (94,875,344) 155,453,144 (89,746,946)
	259,088,568 64,772,140 12,954,428 – 77,726,568 12,954,428 – 90,680,996 12,954,428 – 103,635,424	(102,567,940
		– – (2,564,199
		(2,564,199 – (5,128,397
		(7,692,596 – (5,128,398
		(12,820,994
	181,362,000 168,407,572 155,453,144

The amortisation period adopted for goodwill and negative goodwill is twenty years.

The investment properties of the Group’s principal associates are stated at independent professional valuations on an open market value basis at 30 June 2002 conducted by Chesterton Petty Limited, Chartered Surveyors and at 30 June 2003 and 2004 conducted by Chesterton Petty Limited and Debenham Tie Leung, Chartered Surveyors. The carrying value of the interests in associates shown above includes the Group’s attributable share of the revaluation reserve.

The advances to associates of the Group are unsecured and have no fixed repayment terms. At 30 June 2002, 2003 and 2004, of the Group’s advances, HK$1,659,828,988, HK$1,924,961,754 and HK$1,787,233,502, respectively, bear interest at prevailing market rates and the remaining balances are interest-free. In the opinion of the Directors, the Group will not demand for repayment within twelve months from the respective balance sheet dates and the advances are therefore shown as non-current.

The amounts due from associates of the Group grouped under current assets are unsecured and due within one year. At 30 June 2002, 2003 and 2004, of the amounts HK$861,662,376, HK$795,542,954 and HK$451,511,280, respectively, bear interest at prevailing market rates and the remaining balances are interest-free.

The amounts due to associates of the Group grouped under current liabilities are unsecured and due within one year. At 30 June 2002 and 2003, the amounts are interest free. At 30 June 2004, of the amounts HK$204,500,000 bears interest at prevailing market rates and the remaining balance is interest-free.

−128 −

APPENDIX II FINANCIAL INFORMATION OF THE SINO GROUP

Particulars of the principal associates at 30 June 2004 are set out in note 43.

Mill 2002 HK$ 229,543,271	ion Success Lim 2003 HK$ 209,303,037	ited 2004 HK$ 195,263,792	G 2002 HK$ 425,228,000	reenroll Limite 2003 HK$ 370,144,000	d 2004 HK$ 480,127,000	G 2002 HK$ –	race Sign Limit 2003 HK$ –	ed 2004 HK$ 4,599,470,380

256,554,765	87,264,694	106,273,741	142,945,000	99,690,000	169,609,000

64,138,691	21,816,174	26,568,435	42,883,500	29,907,000	50,882,700

11,615,399,768	10,938,919,541	10,962,243,344	3,370,582,000	3,380,422,000	3,375,862,000	–	–	–
5,872,762,651	5,270,011,277	5,353,523,509	2,156,054,000	2,237,634,120	2,377,460,220	(180,444) (256,444) 1,389,532,279 (54,133) (76,933) 416,859,684

1,468,190,663	1,317,502,819	1,338,380,877	646,816,200	671,290,236	713,238,066

The IRD initiated tax inquiries for the years of assessment 1994/95 to 2002/03 on a wholly-owned subsidiary, Wide Harvest Investment Limited (“WHI”), of the Group’s associate, Million Success Limited (“MSL”) and for the years of assessment 1994/95 to 1997/98 on a wholly-owned subsidiary, Murdoch Investments Inc. (“MII”), of the Group’s associate, Erleigh Investment Limited. Notices of assessment for additional tax in the aggregate amounts of approximately HK$396,088,000 and HK$37,759,000 were issued to WHI and MII for the years under review, respectively, and objections were properly lodged with the IRD by WHI and MII. The effective share of the amount attributable to the Group as at 30 June 2004 is estimated to be approximately HK$99,022,000 and HK$16,992,000, respectively. In view of the tax inquiries are still at the stage of collation of evidence, the management of WHI and of MII are of the opinion that the ultimate outcome of the tax inquiries cannot presently be determined with an acceptable degree of reliability, and accordingly, no provision for any liabilities that may result has been made in the financial statements of WHI and MII.

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APPENDIX II FINANCIAL INFORMATION OF THE SINO GROUP

18. INVESTMENTS IN SECURITIES

THE GROUP

Trading securitie 2002 2003 HK$ HK$ 485,726,879 361,634,955 – – 485,726,879 361,634,955 485,704,214 361,612,485 22,665 22,470 – – 485,726,879 361,634,955 485,726,879 361,634,955 485,726,879 361,634,955 – – 485,726,879 361,634,955	Trading securitie 2002 2003 HK$ HK$ 485,726,879 361,634,955 – – 485,726,879 361,634,955 485,704,214 361,612,485 22,665 22,470 – – 485,726,879 361,634,955 485,726,879 361,634,955 485,726,879 361,634,955 – – 485,726,879 361,634,955	s 2004 HK$ 441,090,161 –	2002 HK$ 735,659,096 99,545,135	Other securities 2003 HK$ 936,495,675 66,918,469	2004 HK$ 1,366,968,602 40,663,618	2002 HK$ 1,221,385,975 99,545,135	Total 2003 HK$ 1,298,130,630 66,918,469	2004 HK$ 1,808,058,763 40,663,618
485,726,879	361,634,955	441,090,161	835,204,231	1,003,414,144	1,407,632,220	1,320,931,110	1,365,049,099	1,848,722,381

485,704,214 22,665 –	361,612,485 22,470 –	441,048,176 41,985 –	466,650,799 269,008,297 99,545,135	571,552,122 364,943,553 66,918,469	923,142,642 443,825,960 40,663,618	952,355,013 269,030,962 99,545,135	933,164,607 364,966,023 66,918,469	1,364,190,818 443,867,945 40,663,618
485,726,879	361,634,955	441,090,161	835,204,231	1,003,414,144	1,407,632,220	1,320,931,110	1,365,049,099	1,848,722,381

485,726,879	361,634,955	441,090,161	735,659,096	936,495,675	1,366,968,602	1,221,385,975	1,298,130,630	1,808,058,763

485,726,879 –	361,634,955 –	441,090,161 –	– 835,204,231	– 1,003,414,144	– 1,407,632,220	485,726,879 835,204,231	361,634,955 1,003,414,144	441,090,161 1,407,632,220
485,726,879	361,634,955	441,090,161	835,204,231	1,003,414,144	1,407,632,220	1,320,931,110	1,365,049,099	1,848,722,381

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APPENDIX II FINANCIAL INFORMATION OF THE SINO GROUP

THE COMPANY

Trading securitie 2002 2003 HK$ HK$ 483,776,879 360,227,955 – – 483,776,879 360,227,955	Trading securitie 2002 2003 HK$ HK$ 483,776,879 360,227,955 – – 483,776,879 360,227,955	s 2004 HK$ 439,365,162 –	2002 HK$ 594,678,630 19,949,305	Other securities 2003 HK$ 669,987,264 19,949,305	2004 HK$ 857,926,311 19,949,305	2002 HK$ 1,078,455,509 19,949,305	Total 2003 HK$ 1,030,215,219 19,949,305	2004 HK$ 1,297,291,473 19,949,305
483,776,879	360,227,955	439,365,162	614,627,935	689,936,569	877,875,616	1,098,404,814	1,050,164,524	1,317,240,778

483,754,214 22,665 –	360,205,485 22,470 –	439,323,176 41,986 –	378,371,637 216,306,993 19,949,305	366,050,980 303,936,284 19,949,305	499,563,742 358,362,569 19,949,305	862,125,851 216,329,658 19,949,305	726,256,465 303,958,754 19,949,305	938,886,918 358,404,555 19,949,305
483,776,879	360,227,955	439,365,162	614,627,935	689,936,569	877,875,616	1,098,404,814	1,050,164,524	1,317,240,778

483,776,879	360,227,955	439,365,162	594,678,630	669,987,264	857,926,311	1,078,455,509	1,030,215,219	1,297,291,473

483,776,879 –	360,227,955 –	439,365,162 –	– 614,627,935	– 689,936,569	– 877,875,616	483,776,879 614,627,935	360,227,955 689,936,569	439,365,162 877,875,616
483,776,879	360,227,955	439,365,162	614,627,935	689,936,569	877,875,616	1,098,404,814	1,050,164,524	1,317,240,778

19. ADVANCES TO INVESTEE COMPANIES

20. LONG-TERM LOANS RECEIVABLE

Total loans receivable Less: Current portion shown under current assets	2002 HK$ 718,173,792 (25,558,437) 692,615,355	THE GROUP 2003 HK$ 595,682,276 (22,097,946) 573,584,330	2004 HK$ 698,390,620 (126,700,514
			571,690,106

The Group offers loans to buyers of properties sold by the Group and the repayment of the loans is specified in the respective loan agreements.

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APPENDIX II FINANCIAL INFORMATION OF THE SINO GROUP

21. STOCKS OF UNSOLD PROPERTIES

At 30 June 2002, 2003 and 2004, the amount of stocks of unsold properties of the Group carried at net realisable value are HK$51,914,313, HK$263,338,168 and HK$156,108,032, respectively.

22. ACCOUNTS AND OTHER RECEIVABLES

At 30 June 2002, 2003 and 2004, included in accounts and other receivables of the Group are trade receivables of HK$110,246,363, HK$404,488,915 and HK$97,659,576, respectively, mainly comprising sales proceeds receivables and rental receivables which are billed in advance and settlements are expected upon receipt of billings.

The following is an aged analysis of trade receivables at the respective balance sheet dates:

0 – 30 days 31 – 60 days 61 – 90 days Over 90 days	2002 HK$ 51,044,761 5,175,369 4,053,142 49,973,091 110,246,363	THE GROUP 2003 HK$ 343,569,680 10,672,402 8,474,451 41,772,382 404,488,915	2004 HK$ 46,899,315 5,607,267 5,531,392 39,621,602
			97,659,576

23. ACCOUNTS AND OTHER PAYABLES

At 30 June 2002, 2003 and 2004, included in accounts and other payables of the Group are trade payables of HK$102,519,775, HK$97,654,470 and HK$54,121,726, respectively.

The following is an aged analysis of trade payables at the respective balance sheet dates:

0 – 30 days 31 – 60 days 61 – 90 days Over 90 days	2002 HK$ 56,781,885 27,050,075 2,287,755 16,400,060 102,519,775	THE GROUP 2003 HK$ 35,316,475 9,028,714 799,531 52,509,750 97,654,470	2004 HK$ 48,246,869 1,419,455 336,045 4,119,357
			54,121,726

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APPENDIX II FINANCIAL INFORMATION OF THE SINO GROUP

24. LONG-TERM BORROWINGS

2002 HK$ 31,198,800 187,192,800 –	THE GROUP 2003 HK$ 13,100,640 13,100,640 82,970,720	2004 HK$ 13,102,740 82,984,020 – 96,086,760 (13,102,740) 82,984,020 212,000,000 1,848,728,000 2,488,307,765 4,549,035,765 (212,000,000) 4,337,035,765 – – 500,000,000 500,000,000 – 500,000,000 – 4,920,019,785 (12,686,553) 4,907,333,232 – 4,907,333,232
218,391,600 (31,198,800) 187,192,800 237,664,400 492,664,400 2,984,531,565 3,714,860,365 (237,664,400) 3,477,195,965 – – 1,000,000,000 1,000,000,000 – 1,000,000,000 1,814,889,000 6,479,277,765 (36,758,718) 6,442,519,047 1,465,155,655	109,172,000 (13,100,640) 96,071,360 277,753,200 1,858,747,765 3,854,966,300 5,991,467,265 (277,753,200) 5,713,714,065 300,000,000 300,000,000 750,000,000 1,350,000,000 (300,000,000) 1,050,000,000 – 6,859,785,425 (18,695,841) 6,841,089,584 1,489,378,714	96,086,760 (13,102,740
		82,984,020
		212,000,000 1,848,728,000 2,488,307,765
		4,549,035,765 (212,000,000
		4,337,035,765
		– – 500,000,000
		500,000,000 –
		500,000,000
		–
		4,920,019,785 (12,686,553
		4,907,333,232 –
7,907,674,702	8,330,468,298

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APPENDIX II FINANCIAL INFORMATION OF THE SINO GROUP

The Company does not have any long-term borrowings at the balance sheet date.

At 30 June 2002, 2003 and 2004, unsecured other loan of the Group are amounts of H$K1,000,000,000, HK$1,350,000,000 and HK$500,000,000, respectively, bear interest at prevailing market rates.

25. DEFERRED LOAN ARRANGEMENT FEES

COST At 1 July Additions Write-off upon early repayment of loans At 30 June AMORTISATION At 1 July Provided for the year Eliminated upon early repayment of loans At 30 June Deferred loan arrangement fees at 30 June	2002 HK$ 79,474,348 10,837,264 – 90,311,612 31,521,164 22,031,730 – 53,552,894 36,758,718	THE GROUP 2003 HK$ 90,311,612 9,621,667 (42,232,017) 57,701,262 53,552,894 20,094,129 (34,641,602) 39,005,421 18,695,841	2004 HK$ 57,701,262 4,312,966 (16,275,000) 45,739,228 39,005,421 9,081,698 (15,034,444) 33,052,675 12,686,553

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APPENDIX II FINANCIAL INFORMATION OF THE SINO GROUP

26. CONVERTIBLE BONDS/NOTES

2002 HK$ 891,909,900 1,500,000,000 (891,909,900) –	THE GROUP 2003 HK$ 1,500,000,000 – – –	2004 HK$ 1,500,000,000 – – (1,500,000,000) – 18,587,014 8,423,671 (27,010,685) – – 29,208,300 – (3,787,405) (25,420,895) – –
1,500,000,000 230,441,691 47,927,392 – (276,492,069) 1,877,014 4,721,134 37,565,291 (5,565,066) – 36,721,359	1,500,000,000 1,877,014 16,710,000 – – 18,587,014 36,721,359 – (7,513,059) – 29,208,300	–
		18,587,014 8,423,671 (27,010,685 –
		–
		29,208,300 – (3,787,405 (25,420,895
		–
1,465,155,655	1,489,378,714

In April 1997, the Company issued US$145,000,000 4% convertible bonds due in April 2002 (“2002 Bonds”). The 2002 Bonds carried a right to convert at any time from 18 June 1997 to 11 April 2002 into ordinary shares of the Company at an initial conversion price of HK$8.50 per share (subject to adjustment) with a fixed exchange rate on conversion of HK$7.749 = US$1.00. The bonds were redeemable at a premium accruing on a straight line basis over the terms of the bonds up to a maximum of 31% of their face value. During the year ended 30 June 2002, the remaining of the 2002 Bonds in amount of US$115,000,000 were redeemed on maturity.

In June 2002, a wholly-owned subsidiary of the Company, Golden Million Finance Corporation (“Golden Million”), issued HK$1,500,000,000 3.75% guaranteed convertible notes due in May 2007 (“2007 Notes”). The 2007 Notes carried a right to convert at any time from 20 June 2002 to 14 May 2007 into ordinary shares of the Company at an initial conversion price of HK$4.00 per share (subject to adjustment). All or some of the 2007 Notes were redeemable at the option of the relevant holder at a premium of 3.184% of their outstanding principal amount on 21 May 2005. Golden Million could redeem all or some of the 2007 Notes at any time during the period from 21 May 2004 to 21 May 2007, both dates inclusive, upon satisfying certain requirements. The 2007 Notes were redeemable at a premium of 5.57% of their outstanding principal amount on 21 May 2007. All of the 2007 Notes were converted into ordinary shares of the Company by the noteholders during the year ended 30 June 2004.

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FINANCIAL INFORMATION OF THE SINO GROUP

APPENDIX II

27. SHARE CAPITAL

2002 Number of ordinary shares of HK$1.00 each Nominal value HK$ 6,000,000,000 6,000,000,000	2002 Number of ordinary shares of HK$1.00 each Nominal value HK$ 6,000,000,000 6,000,000,000	2003 Number of ordinary shares of HK$1.00 each Nominal value HK$ 6,000,000,000 6,000,000,000	2003 Number of ordinary shares of HK$1.00 each Nominal value HK$ 6,000,000,000 6,000,000,000	2004 Number of ordinary shares of HK$1.00 each Nominal value HK$ 6,000,000,000 6,000,000,000	2004 Number of ordinary shares of HK$1.00 each Nominal value HK$ 6,000,000,000 6,000,000,000

3,860,583,211 37,928,619 – (24,300,000)	3,860,583,211 37,928,619 – (24,300,000)	3,874,211,830 51,548,450 – (39,426,000)	3,874,211,830 51,548,450 – (39,426,000)	3,886,334,280 44,688,695 375,000,000 –	3,886,334,280 44,688,695 375,000,000 –
3,874,211,830	3,874,211,830	3,886,334,280	3,886,334,280	4,306,022,975	4,306,022,975

During the year ended 30 June 2002, the Company repurchased on The Stock Exchange of Hong Kong Limited a total of 24,300,000 ordinary shares of HK$1.00 each of the Company at an aggregate consideration of HK$57,599,045, all of these shares were subsequently cancelled. The nominal value of the cancelled shares was credited to the capital redemption reserve and the aggregate consideration was paid out of the retained profits.

During the year ended 30 June 2003, the Company repurchased on The Stock Exchange of Hong Kong Limited a total of 39,426,000 ordinary shares of HK$1.00 each of the Company at an aggregate consideration of HK$90,262,382, all of these shares were subsequently cancelled. The nominal value of the cancelled shares was credited to the capital redemption reserve and the aggregate consideration was paid out of the retained profits.

During the year ended 30 June 2004, a total of HK$1,500,000,000 of convertible notes of the Group were converted into 375,000,000 ordinary shares of HK$1.00 each of the Company at an initial conversion price of HK$4.00 per share.

On 17 December 2001 and 21 May 2002, the Company issued and allotted a total of 21,303,378 shares and 16,625,241 shares of HK$2.515 and HK$3.380 each, respectively, in the Company in lieu of cash for the 2001 final and 2002 interim dividends. These shares rank pari passu in all respects with the existing shares.

On 16 December 2002 and 20 May 2003, the Company issued and allotted a total of 20,592,195 shares and 30,956,255 shares of HK$1.00 each at an issue price of HK$2.725 and HK$2.07 each, respectively, in lieu of cash for the 2002 final and 2003 interim dividends. These shares rank pari passu in all respects with the existing shares.

On 17 December 2003 and 18 May 2004, the Company issued and allotted a total of 16,649,187 ordinary shares and 28,039,508 ordinary shares of HK$1.00 each at an issue price of HK$3.99 and HK$5.045 each, respectively, in lieu of cash for the 2003 final and 2004 interim dividends. These shares rank pari passu in all respects with the existing shares.

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APPENDIX II FINANCIAL INFORMATION OF THE SINO GROUP

28. SHARE PREMIUM AND RESERVES

THE COMPANY

Share premium HK$ 9,211,395,816 71,842,692 (60,100) – – – – –	Other security revaluation reserve HK$ (54,178,664) – – – 19,469,449 – – –	Capital redemption reserve HK$ 100,520,000 – – 24,300,000 – – – –	Retained profits HK$ 10,409,418,204 – – (57,599,045) – 142,855,800 (76,821,664) (77,151,732)	Total HK$ 19,667,155,356 71,842,692 (60,100) (33,299,045) 19,469,449 142,855,800 (76,821,664) (77,151,732)
9,283,178,408 68,644,731 (260,100) – – – – – – 9,351,563,039 163,200,881 1,125,000,000 (482,065) – – – –	(34,709,215) – – – 13,500,000 62,883,155 – – – 41,673,940 – – – 173,681,583 – – –	124,820,000 – – 39,426,000 – – – – – 164,246,000 – – – – – – –	10,340,701,563 – – (90,262,382) – – 97,406,425 (77,288,637) (77,369,560) 10,193,187,409 – – – – 442,774,566 (77,726,686) (208,453,423)	19,713,990,756 68,644,731 (260,100) (50,836,382) 13,500,000 62,883,155 97,406,425 (77,288,637) (77,369,560)
				19,750,670,388 163,200,881 1,125,000,000 (482,065) 173,681,583 442,774,566 (77,726,686) (208,453,423)
10,639,281,855	215,355,523	164,246,000	10,349,781,866	21,368,665,244

Note: The reserve available for distribution by the Company to the shareholders at 30 June 2002 is HK$10,340,701,563, 30 June 2003 is HK$10,193,187,409 and 30 June 2004 is HK$10,349,781,866.

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APPENDIX II FINANCIAL INFORMATION OF THE SINO GROUP

29. DEFERRED TAXATION

The following are the major deferred tax liabilities and assets recognised and movements thereon during the current and prior reporting periods:

Accelerated tax depreciation HK$ 33,952,107 (2,564,174)	Tax losses HK$ (16,203,408) 7,953,852	Others HK$ 7,778,686 (2,621,129)	Total HK$ 25,527,385 2,768,549
31,387,933 3,804,949 2,942,619 38,135,501 – 13,128,167	(8,249,556) 3,131,934 (773,396) (5,891,018) – (4,970,835)	5,157,557 (5,641,078) 483,521 – 108,609 (386,472)	28,295,934 1,295,805 2,652,744
			32,244,483 108,609 7,770,860
51,263,668	(10,861,853)	(277,863)	40,123,952

At 30 June 2002, 2003 and 2004, the Group had unused tax losses of approximately HK$2,621,056,000, HK$2,537,658,000 and HK$2,298,217,000, respectively, available for offset against future profits. A deferred tax asset has been recognised in respect of approximately HK$51,560,000, HK$33,663,000 and HK$62,068,000 of such losses for the respective years. No deferred tax asset has been recognised in respect of the remaining HK$2,569,496,000, HK$2,503,995,000 and HK$2,236,149,000 due to the unpredictability of future profit streams. The losses may be carried forward indefinitely.

At 30 June 2002, 2003 and 2004, the Group had deductible temporary differences of approximately HK$453,536,000, HK$471,343,000 and HK$292,609,000, respectively. No deferred tax asset has been recognised in relation to such deductible temporary difference as it is not probable that taxable profit will be available against which the deductible temporary differences can be utilised.

30. ADVANCES FROM SUBSIDIARIES

The advances from subsidiaries of the Company are unsecured, interest-free and have no fixed repayment terms. The advances will not be repayable within twelve months from the respective balance sheet dates and the advances are therefore shown as non-current.

31. ADVANCES FROM ASSOCIATES

The advances from associates of the Company are unsecured, interest free and have no fixed repayment terms.

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APPENDIX II FINANCIAL INFORMATION OF THE SINO GROUP

32. ADVANCES FROM INVESTEE COMPANIES

33. ADVANCES FROM MINORITY SHAREHOLDERS

34. DISPOSAL OF SUBSIDIARIES

2002 HK$ 28,000,000 32,599,728 656,446 2,346,640 (9,377,809) (296,839) (8,526,989)	2003 HK$ – – – – – – –	2004 HK$ – – – – – – –
45,401,177 (12,712,419) 12,712,419	– – –	– – –
45,401,177 45,401,177	– –	–

		–

45,401,177 (2,346,640)	– –	– –
43,054,537	–	–

The subsidiaries disposed of during the year ended 30 June 2002 did not contribute significantly to the turnover, operating results or cash flows of the Group for that year.

35. ACQUISITION OF A SUBSIDIARY

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APPENDIX II FINANCIAL INFORMATION OF THE SINO GROUP

The acquisition had been accounted for using the acquisition method and particulars of the acquisition were:

2002 HK$ 97,000,000 – 1,669,892 1,658,545 (3,769,660) (96,558,776) 1 1	2003 HK$ 11,000,000 84,000,000 988,249 222,321 (3,345,160) (92,765,410) 100,000 100,000	2004 HK$ – – – – – –
		–

		–

(1) 1,658,545	(100,000) 222,321	– –
1,658,544	122,321	–

The subsidiary acquired during the year ended 30 June 2002 and 30 June 2003 did not contribute significantly to the turnover, operating results or cash flows of the Group for that year.

36. MAJOR NON-CASH TRANSACTIONS

On 17 December 2001 and 21 May 2002, the Company issued and allotted a total of 21,303,378 ordinary shares and 16,625,241 ordinary shares of HK$2.515 and HK$3.380 each, respectively, in the Company in lieu of cash for the 2001 final and 2002 interim dividends.

On 16 December 2002 and 20 May 2003, the Company issued and allotted a total of 20,592,195 ordinary shares and 30,956,255 ordinary shares of HK$1.00 each at an issue price of HK$2.725 and HK$2.070 each, respectively, in lieu of cash for the 2002 final and 2003 interim dividends.

On 17 December 2003 and 18 May 2004, the Company issued and allotted a total of 16,649,187 ordinary shares and 28,039,508 ordinary shares of HK$1.00 at HK$3.99 and HK$5.045 each, respectively, in the Company in lieu of cash for the 2003 final and 2004 interim dividends.

During the year ended 30 June 2003, a total of HK$1,500,000,000 of convertible notes of the Group were converted into 375,000,000 ordinary shares of HK$1.00 each of the Company at an initial conversion price of HK$4.00 per share.

37. PLEDGE OF ASSETS

(a) At 30 June 2002, 2003 and 2004, the aggregate facilities of bank loans, overdrafts and other loans amounting to HK$7,986,797,050, HK$12,616,308,971 and HK$11,918,419,585, respectively, were secured by certain of the Group’s listed investments, properties, bank deposits and bank balances. At the respective balance sheet dates, the facilities were utilised to the extent of H$K6,134,794,150, HK$6,805,030,371 and HK$5,849,473,585.

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APPENDIX II FINANCIAL INFORMATION OF THE SINO GROUP

(b) At 30 June 2002, 2003 and 2004, investments and the benefits in the advances to certain associates were pledged or assigned to secure loan facilities made available by banks or financial institutions to such associates. The Group’s attributable portion of these facilities amounted to HK$3,246,286,070, HK$3,952,733,333 and HK$2,699,860,049, of which HK$2,290,321,403, HK$2,894,146,090 and HK$2,537,624,606, respectively, were utilised by the associates and was guaranteed by the Company.

38. COMMITMENTS AND CONTINGENT LIABILITIES

At the relevant balance sheet dates, the Company and the Group had commitments and contingent liabilities as follows:

2002 HK$ 101,831,529 2,582,818,009 2,684,649,538	THE GROUP 2003 HK$ 1,184,813,547 973,447,137 2,158,260,684	2004 HK$ 46,056,752 2,760,051,382 2,806,108,134	THE COMPANY 2002 2003 2004 HK$ HK$ HK$ – – – – – – – – –	THE COMPANY 2002 2003 2004 HK$ HK$ HK$ – – – – – – – – –	THE COMPANY 2002 2003 2004 HK$ HK$ HK$ – – – – – – – – –
					–

– – – 2,293,486,403 955,964,667 3,249,451,070	– – – 2,894,146,090 1,061,092,243 3,955,238,333	– – – 2,537,624,606 164,740,443 2,702,365,049	6,628,977,786 2,374,365,100 9,003,342,886 2,293,486,403 955,964,667 3,249,451,070	9,572,286,964 6,299,842,600 15,872,129,564 2,894,146,090 1,061,092,243 3,955,238,333	6,514,053,016 6,603,510,000
					13,117,563,016
					2,537,624,606 164,740,443
					2,702,365,049
3,249,451,070	3,955,238,333	2,702,365,049	12,252,793,956	19,827,367,897	15,819,928,065

(c) On 19 December 1996, the Company and its wholly-owned subsidiary, Mariner International Hotels Limited (collectively referred to as “Mariner”), entered into an agreement (the “Agreement”) with Hang Lung Development Company Limited and its subsidiary, Atlas Limited (collectively referred to as “Hang Lung”) to acquire a company which owned a property in Yau Kom Tau, Tsuen Wan, New Territories, which was to be developed into a hotel. The total consideration payable by Mariner for the purchase was HK$1,070,000,000, in respect of which a deposit and part payments in the total sum of HK$321,000,000 were paid by Mariner to Hang Lung pursuant to the Agreement. On 30 June 1998, Mariner terminated the Agreement. This termination gave rise to litigation between Mariner and Hang Lung. There has been a trial of the issue of which party repudiated the Agreement. On this issue the trial judge gave judgment for Hang Lung on 2 August 2004.

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APPENDIX II FINANCIAL INFORMATION OF THE SINO GROUP

39. OPERATING LEASE ARRANGEMENTS

The Group as lessor

Property rental income earned during the years ended 30 June 2002, 2003 and 2004, net of outgoings of HK$100,463,602, HK$103,670,039 and 104,574,547, were HK$731,017,864, HK$729,926,070 and HK$725,871,919, respectively. Most of the properties held have committed tenants with rental fixed for an average term of two years.

At the respective balance sheet dates, the Group had contracted with tenants for the following future minimum lease payments, which fall due:

Within one year In the second to fifth year inclusive After five years	2002 HK$ 578,491,531 739,804,481 21,655,730 1,339,951,742	2003 HK$ 583,954,180 576,630,421 60,000 1,160,644,601	2004 HK$ 586,523,233 484,163,674 2,672,936
			1,073,359,843

The Company did not have any significant operating lease commitment at the respective balance sheet dates.

40. RETIREMENT BENEFITS SCHEMES

41. RELATED PARTY TRANSACTIONS

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

(a) Related companies

	2002	2003	2004
	HK$	HK$	HK$
Service fees received therefrom (Note 1)	48,786,505	45,006,588	46,037,604
Management fees received therefrom
(Note 1)	698,630	640,914	630,265
Rental paid thereto (Note 2)	18,800,000	18,200,000	19,400,000

Mr. Robert Ng Chee Siong, Director of the Company, was interested in these transactions as a director of the related companies.

−142 −

APPENDIX II FINANCIAL INFORMATION OF THE SINO GROUP

(b) Associates

	2002	2003	2004
	HK$	HK$	HK$
Service fees paid thereto (Note 1)	12,541,549	11,431,592	11,129,240
Management fees received therefrom
(Note 1)	15,128,093	17,679,215	12,009,900
Management fees paid thereto (Note 1)	9,451,249	7,488,675	813,000
Interest income received therefrom
(Note 3)	84,176,147	63,939,858	61,243,187
Interest expenses paid thereto (Note 3)	27,788,136	7,068,668	3,964,958

(c) Acquisition of shares and taking up of loans

(i) On 15 November 2001, Sino Land (Shanghai) Company Limited (“SL-Shanghai”), a whollyowned subsidiary of the Company, entered into agreements with Shanghai Square Pte Ltd (“Shanghai Square”) for acquiring 20% of the issued shares in Hua Qing Holdings Pte Ltd (“Hua Qing”), at a consideration of S$200,000 (or HK$0.9 million) and for taking up the assignment of the shareholder’s loans of S$0.06 million (or HK$0.3 million) and US$29.4 million (or HK$228.4 million) (together with accrued interest thereon) due from Hua Qing to Shanghai Square at a consideration of US$20.9 million (or HK$162.5 million). Shanghai Square is a wholly-owned subsidiary of Orchard Parade Holdings Limited (“Orchard Parade”) in which Mr. Ng Teng Fong is a common substantial shareholder of the Company and Orchard Parade.
(ii) On 25 June 2002, the Company’s wholly-owned subsidiaries, King Chance Development Limited (“King Chance”) and Sing-Ho Finance Company Limited (“Sing-Ho Finance”) entered into an agreement with Millwood Limited (“Millwood”) and Cliveden Finance Company Limited (“Cliveden Finance”). Pursuant to such agreement, inter alia, (a) King Chance agreed to acquire 100% of the issued shares of Mass Fame Investment Limited (“Mass Fame”), which holds 100% interest in an industrial building, Sunley Centre, from Millwood at a consideration of HK$1; and (b) Sing-Ho Finance agreed to take up the assignment from Cliveden Finance of a loan in the amount of HK$98,815,848 due by Mass Fame to Cliveden Finance at a consideration of HK$96,558,776. Millwood and Cliveden Finance are both indirect wholly-owned subsidiaries of Boswell Holdings Limited (“Boswell”), in which Mr. Robert Ng Chee Siong, being the Chairman and Executive Director of the Company, has a 50% interest.
(iii) On 26 June 2003, King Chance and Sing-Ho Finance, entered into respective agreements with Millwood and Cliveden Finance. Pursuant to such agreements, inter alia, (a) King Chance agreed to acquire 100% of the issued shares of Jade Bird Development Limited (“Jade Bird”) which holds 100% interest in Cambridge Plaza, an industrial building, from Millwood at a consideration of HK$100,000; and (b) Sing-Ho Finance agreed to take up the assignment from Cliveden Finance of a loan in the amount of HK$104,817,784 due by Jade Bird to Cliveden Finance at a consideration of HK$92,568,458.

(d) Disposal of shares and loans

(i) On 25 June 2002, the Company and Sing-Ho Finance entered into an agreement with Gornik Securities Limited (“Gornik”) and Seaview Finance Company Limited (“Seaview Finance”). Pursuant to such agreement, inter alia, (a) the Company agreed to sell 100% of the issued shares in Maba Trading S.A. (“Maba”), which holds a 50% interest in the carparking spaces and a few unsold residential units of Miami Beach Towers Phase I and carparking spaces of Miami Beach Towers Phase II, to Gornik at a consideration of HK$32,610,693; (b) Sing-Ho Finance agreed to assign to Seaview Finance a loan in the amount of HK$9,521,342 due by Prestige Development Limited to Sing-Ho Finance on a dollar for dollar basis; and (c) Sing-Ho Finance agreed to assign to Seaview Finance a loan in the amount of HK$8,878,650 due by Pariv Limited to Sing-Ho Finance on a dollar for dollar basis.

−143 −

APPENDIX II FINANCIAL INFORMATION OF THE SINO GROUP

Gornik, Seaview Finance and Osborne are all indirect wholly-owned subsidiaries of Boswell.

(ii) Share Disposal and Loan Assignment

On 26 June 2003, the Company and Sing-Ho Finance entered into respective agreements with Erleigh Property Limited (“Erleigh”) and Seaview Finance. Pursuant to such agreements, inter alia, (a) the Company agreed to sell 50% of the issued shares of Kotachi Limited (“Kotachi”), which holds 100% interest in Pacific Trade Centre, an industrial building, to Erleigh at a consideration of HK$30,755,779; and (b) Sing-Ho Finance agreed to assign to Seaview Finance a loan in the amount of HK$61,921,021 due by Kotachi to Sing-Ho Finance on a dollar-for-dollar basis.

Seaview Finance and Erleigh are both indirect wholly-owned subsidiaries of Boswell.

(e) Awarding of construction contract

During the year ended 30 June 2004, a construction contract was awarded by an associate to a wholly-owned subsidiary of the Company. The contract was awarded, after a highly competitive tendering process, on 22 August 2003 at the same price as the lowest tender on a back-to-back basis. The construction contract was for the interior fitting-out works for tenancy areas at NKIL5846, 12 Kai Shun Road, Kowloon Bay, Kowloon and the contract sum was approximately HK$58.3 million.

(f) Advances to a non wholly-owned subsidiary

(i) During the year ended 30 June 2003, the Group made advances totalling HK$529,761,006 to Grand Creator Investment (BVI) Limited (“Grand Creator”), a 60% owned subsidiary of the Company, to finance the loan on-lent to Grand Creator’s wholly-owned subsidiary, Grand Creator Investment Limited. The loan is to finance the development cost of MTR Hang Hau Station development. The advances are unsecured, bear interest at cost of funds plus a margin and have no fixed repayment terms. The advances made are proportional to the shareholding interest of the Group in Grand Creator, the remaining share interests in which are held by an independent third party which is connected to the Group only through its substantial shareholding in Grand Creator.
(ii) During each of the three years ended 30 June 2004, the Group made advances totalling HK$23,000,302, HK$40,329,706 and HK$17,185,240, respectively, to Firm Wise Investment Limited (“Firm Wise”), a 70% owned subsidiary of the Company, to finance the development and operating cost of the property, the Centrium. The advances are unsecured, bear interest at cost of funds plus a margin and have no fixed repayment terms. The advances made are proportional to the shareholding interest of the Group in Firm Wise, the remaining share interests in which are held by an independent third party which is connected to the Group only through its substantial shareholding in Firm Wise.

Details of the balances with associates at the respective balance sheet dates are set out in the balance sheets and in notes 17 and 31.

−144 −

APPENDIX II FINANCIAL INFORMATION OF THE SINO GROUP

Notes:

(1) Service and management fees were charged on a cost-plus-profit margin basis or at a fee with reference to the size and type of the buildings as agreed between the Group and the related party.
(2) Rental expenses were charged on normal commercial terms with reference to the prevailing market rental value of the particular premises.
(3) Interest income and expenses were charged at cost of funds plus margin basis.

42. SUBSEQUENT EVENTS

Subsequent to 30 June 2004, the Company and J.P. Morgan Securities Ltd. (the “Manager”) entered into a subscription agreement (the “Subscription Agreement”) pursuant to which the Manager has agreed to subscribe for, and procure subscribers for, convertible bonds in an aggregate principal amount of HK$2.0 billion, or up to HK$2.5 billion if the over-allotment option granted to the Manager is exercised in full. Completion of the Subscription Agreement is conditional upon satisfying certain requirements, amongst other things, the approval of the shareholders of the Company in general meeting of the transaction.

43. PRINCIPAL ASSOCIATES

	Place of incorporation/	Class of	Percentage of equity	Percentage of equity	held	Principal
Name of associate	operation	shares held	Directly	Indirectly	Total	activities
			%	%	%
Asian Success Investments	Hong Kong	Ordinary	–	33.3	33.3	Property
Limited						development
Astoria Estate Management	Hong Kong	Ordinary	–	50	50	Building
Company Limited						management
Benefit Bright Limited	Hong Kong	Ordinary	–	42.5	42.5	Property trading
						and investment
Better Chief Limited	Hong Kong	Ordinary	50	–	50	Property
						investment
Beverhill Limited	Hong Kong	Ordinary	–	20	20	Property
						investment
Boatswain Enterprises	Hong Kong	Ordinary	–	20	20	Property
Limited						investment
Brisbane Trading Company	Hong Kong	Ordinary and	–	50	50	Property trading
Limited		non-voting
		deferred
Cheer City Properties	Hong Kong	Ordinary	–	20	20	Property
Limited						investment
C.H.K.C. Building	Hong Kong	Ordinary	–	25	25	Building
Management Limited						management
Cosmos Door Limited	Hong Kong	Ordinary	–	50	50	Property
						investment
Credit World Limited	Hong Kong	Ordinary	–	20	20	Property trading

−145 −

APPENDIX II FINANCIAL INFORMATION OF THE SINO GROUP

	Place of incorporation/	Class of	Percentage of equity	Percentage of equity	held	Principal
Name of associate	operation	shares held	Directly	Indirectly	Total	activities
			%	%	%
Direct Win Development	Hong Kong	Ordinary	–	33.3	33.3	Property
Limited						development
Dramstar Company Limited	Hong Kong	Ordinary	–	22	22	Property trading
Empire Funds Limited	Hong Kong	Ordinary	–	50	50	Property trading
Eternal Honest Finance	Hong Kong	Ordinary	–	50	50	Mortgage loan
Company Limited						financing
Famous Empire Finance	Hong Kong	Ordinary	–	40	40	Mortgage loan
Limited						financing
Famous Empire Properties	Hong Kong	Ordinary	–	40	40	Property trading
Limited						and investment
Finedale Industries Limited	Hong Kong	Ordinary	–	33.3	33.3	Property
						investment
Gloryland Limited	Hong Kong	Ordinary	–	33.3	33.3	Property
						investment
Golden Famous International	Hong Kong	Ordinary	–	25	25	Property
Limited						development
Grace Sign Limited	Hong Kong	Ordinary	–	30	30	Property trading
Grand Palisades Finance	Hong Kong	Ordinary	–	20	20	Mortgage loan
Company Limited						financing
Greenroll Limited	Hong Kong	Ordinary	–	30	30	Hotel operation
Harvest Sun Limited	Hong Kong	Ordinary	–	30	30	Property trading
						and investment
Hua Qing Holdings Pte. Ltd	Singapore	Ordinary	–	20	20	Investment
						holding
Island Resort Estate	Hong Kong	Ordinary	–	40	40	Building
Management Company						management
Limited
Lead Bright Finance Limited	Hong Kong	Ordinary	–	20	20	Mortgage loan
						financing
Lead Bright Limited	Hong Kong	Ordinary	–	20	20	Property trading
Million Success Limited	Hong Kong	Ordinary	–	25	25	Property
						investment
More Treasure Company	Hong Kong	Ordinary	–	25	25	Property
Limited						investment
Murdoch Investments Inc.	Republic of	Ordinary	–	45	45	Property
	Panama/Hong					investment
	Kong

−146 −

APPENDIX II FINANCIAL INFORMATION OF THE SINO GROUP

		Place of incorporation/	Class of	Percentage of equity	Percentage of equity	held	Principal
Name of associate		operation	shares held	Directly	Indirectly	Total	activities
				%	%	%
Olympian	City 1 (Project	Hong Kong	Ordinary	–	30	30	Project
Management) Limited							management
Olympian	City 2 Finance	Hong Kong	Ordinary	–	50	50	Mortgage loan
Company Limited							financing
Olympian	City 2 (Project	Hong Kong	Ordinary	–	42.5	42.5	Project
Management) Limited							management
Prime Force Limited		Hong Kong	Ordinary	–	50	50	Property
							development
Pui Hay Enterprises Limited		Hong Kong	Ordinary	–	50	50	Property trading
Rich Century Investment		Hong Kong	Ordinary	50	–	50	Property
Limited							investment
Silver Link Investment		Hong Kong	Ordinary	–	40	40	Property trading
Limited							and investment
Sino Parking Services		Hong Kong	Ordinary	50	–	50	Carpark
Limited							operation
Sino Real	Estate Agency	Hong Kong	Ordinary	50	–	50	Real estate
Limited							agency
Tat Lee Construction		Hong Kong	Ordinary	25	–	25	Building
Company Limited							construction
Victory World Finance		Hong Kong	Ordinary	–	50	50	Mortgage loan
Limited							financing
Victory World Limited		Hong Kong	Ordinary	–	50	50	Property trading
							and investment
Wide Harvest Investment		Hong Kong	Ordinary	–	25	25	Property
Limited							investment
Win Chanford Enterprises		Hong Kong	Ordinary	5	45	50	Property
Limited							investment
		PRC	Registered	–	50	50	Property
							development
		PRC	Registered	–	20	20	Property
							development

−147 −

APPENDIX II FINANCIAL INFORMATION OF THE SINO GROUP

II. SUBSEQUENT FINANCIAL STATEMENTS

No audited financial statements of the Company or any of its subsidiaries have been prepared in respect of any period subsequent to 30 June 2004.

Yours faithfully, Deloitte Touche Tohmatsu

Certified Public Accountants Hong Kong

−148 −

PRO FORMA FINANCIAL INFORMATION

APPENDIX III

A. PRO FORMA FINANCIAL INFORMATION ASSUMING THE OPTION IS EXERCISED IN FULL

I. Pro Forma Consolidated Balance Sheet

The following is the pro forma consolidated balance sheet of the Group assuming that the maximum amount of the Bonds (including the Optional Bonds to be issued upon the exercise of the Option in full) had been issued and fully converted on 30 June 2004 at the initial Conversion Price of HK$9.225 per Sino Share. The pro forma consolidated balance sheet was prepared based on the audited consolidated balance sheet of the Group as at 30 June 2004 as set out in the accountants’ report on the Group in Appendix I to this circular.

This pro forma consolidated balance sheet was prepared for illustrative purposes only and because of its nature, it may not give a true picture of the financial position of the Group at 30 June 2004 or any future date.

Non-current assets Investment properties Hotel property Property, plant and equipment Negative goodwill Interests in associates Investments in securities Advances to investee companies Other non-current assets Long-term loans receivable Current assets Properties under development Stocks of unsold properties Hotel inventories Investments in securities Amounts due from associates Accounts and other receivables Current portion of long-term loans receivable Taxation recoverable Restricted bank deposits Time deposits, bank balances and cash	As at 30 June 2004 Pro forma adjustments HK$ HK$ Notes 16,875,663,820 (16,875,663,820) 1 1,179,346,094 (1,179,346,094) 1 62,672,484 (62,646,286) 1 (821,270,021) 48,626,863 2 10,500,498,037 5,627,443,663 1 & 3 1,520,076,492 (1,407,632,220) 1 20,281,519 (20,281,519) 1 615,000 (300,000) 1 571,690,106 (571,690,106) 1	Adjusted balances HK$ – – 26,198 (772,643,158) 16,127,941,700 112,444,272 – 315,000 – 15,468,084,012 – 74,209,007 – 647,134,790 – 8,667,808 – 2,220,538 – 471,133 732,703,276
	29,909,573,531 8,665,188,659 (8,665,188,659) 1 492,480,449 (418,271,442) 1 20,955,153 (20,955,153) 1 1,088,224,951 (441,090,161) 1 1,629,526,939 (1,629,526,939) 1 1,098,503,202 (1,089,835,394) 1 126,700,514 (126,700,514) 1 182,619,261 (180,398,723) 1 238,393,749 (238,393,749) 1 2,769,490,984 (2,769,019,851) 1 16,312,083,861	15,468,084,012
		– 74,209,007 – 647,134,790 – 8,667,808 – 2,220,538 – 471,133
		732,703,276

−149 −

PRO FORMA FINANCIAL INFORMATION

APPENDIX III

Current liabilities Accounts and other payables Amounts due to associates Taxation payable Current portion of long-term unsecured bank loans Current portion of long-term secured bank loans Bank loans and overdrafts – secured – unsecured Other loans – secured – unsecured Net current assets (liabilities) Capital and reserves Share capital Share premium and reserves Minority interests Non-current liabilities Long-term borrowings – due after one year Deferred taxation Advances from associates Advances from minority shareholders	As at 30 June 2004 Pro forma adjustments HK$ HK$ Notes 5,138,837,940 (5,124,777,152) 1 226,948,675 (226,948,675) 1 117,545,628 (117,542,200) 1 13,102,740 (13,102,740) 1 212,000,000 (212,000,000) 1 2,078,848,832 (1,212,708,600) 1 218,379,000 (218,379,000) 1 790,357,594 (87,729,220) 1 118,101,366	Adjusted balances HK$ 14,060,788 – 3,428 – – 866,140,232 – 702,628,374 118,101,366
	8,914,121,775 7,397,962,086 37,307,535,617 274,998,434 10,221,702,576 286,483,977 4 10,496,701,010 15,839,108,365 (15,836,936,229) 1 8,621,829,209 (4,907,333,232) 1 40,123,952 (40,123,952) 1 1,941,668,613 (1,941,668,613) 1 368,104,468 (368,104,468) 1 10,971,726,242 37,307,535,617	1,700,934,188 (968,230,912) 14,499,853,100 274,998,434 10,508,186,553 10,783,184,987 2,172,136 3,714,495,977 – – – 3,714,495,977 14,499,853,100

−150 −

PRO FORMA FINANCIAL INFORMATION

APPENDIX III

II. Pro Forma Consolidated Income Statement

The following is the pro forma consolidated income statement of the Group assuming that the maximum amount of the Bonds (including the Optional Bonds to be issued upon the exercise of the Option in full) had been issued and fully converted on 1 July 2003 at the initial Conversion Price of HK$9.225 per Sino Share. The pro forma consolidated income statement was prepared based on the audited consolidated income statement of the Group for the year ended 30 June 2004 as set out in the accountants’ report on the Group in Appendix I to this circular.

This pro forma consolidated income statement was prepared for illustrative purposes only and because of its nature, it may not give a true picture of the results of the Group for the year ended 30 June 2004 or any future period.

Turnover Cost of sales Direct expenses Other operating income Release of negative goodwill arising on acquisition of a listed subsidiary Profit on deemed disposal of partial interest in a listed subsidiary resulted in de- consolidation of the subsidiary Loss on deemed disposal of partial interest in a listed associate Unrealised holding gain on investments in trading securities Impairment loss on investments in other securities Administrative expenses	Year ended 30 June 2004 Pro forma adjustments HK$ HK$ Notes 4,277,645,604 (4,230,240,789) 1 (2,036,525,457) 2,035,979,697 1 (731,879,384) 723,201,592 1	Adjusted balances HK$ 47,404,815 (545,760) (8,677,792) 38,181,263 886,210 35,110,833 581,131,825 (226,939,050) 197,434,750 – (13,454,298)
	1,509,240,763 34,817,086 (33,930,876) 1 36,225,055 (1,114,222) 1 – 581,131,825 5 – (226,939,050) 5 276,889,956 (79,455,206) 1 (17,621,750) 17,621,750 1 (356,367,796) 342,913,498 1	38,181,263 886,210 35,110,833 581,131,825 (226,939,050 197,434,750 – (13,454,298

−151 −

PRO FORMA FINANCIAL INFORMATION

APPENDIX III

Profit from operations Finance income Finance costs Net finance costs Results attributable to associates Loss on disposal of associates Loss on deemed disposal of partial interest in a listed subsidiary Profit before taxation Income tax expense Profit before minority interests Minority interests Net profit for the year	Year ended 30 June 2004 Pro forma adjustments HK$ HK$ Notes 1,483,183,314 82,688,725 (82,629,643) 1 (233,321,404) 157,255,760 1 (150,632,679) 510,139,155 297,399,814 1 (7,558,625) 7,558,625 1 (191,786,591) 191,786,591 5	Adjusted balances HK$ 612,351,533 59,082 (76,065,644) (76,006,562) 807,538,969 – –
	1,643,344,574 (236,453,428) 120,007,802 1 1,406,891,146 (683,496,803) 677,312,475 1 723,394,343	1,343,883,940 (116,445,626) 1,227,438,314 (6,184,328) 1,221,253,986

−152 −

PRO FORMA FINANCIAL INFORMATION

APPENDIX III

III. Pro Forma Consolidated Cash Flow Statement

The following is the pro forma consolidated cash flow statement of the Group assuming that the maximum amount of the Bonds (including the Optional Bonds to be issued upon the exercise of the Option in full) had been issued and fully converted on 1 July 2003 at the initial Conversion Price of HK$9.225 per Sino Share. The pro forma consolidated cash flow statement was prepared based on the audited consolidated cash flow statement of the Group for the year ended 30 June 2004 as set out in the accountants’ report on the Group in Appendix I to this circular.

This pro forma consolidated cash flow statement was prepared for illustrative purposes only and because of its nature, it may not give a true picture of the cash flows of the Group for the year ended 30 June 2004 or any future period.

	Year ended	Pro forma		Adjusted
	30 June 2004	adjustments		balances
	HK$	HK$	Notes	HK$
OPERATING ACTIVITIES
Profit from operations	1,483,183,314	(870,831,781)	1	612,351,533
Adjustments for:
Impairment loss on
investments in other
securities	17,621,750	(17,621,750)	1	–
Depreciation	14,673,117	(14,613,195)	1	59,922
Loss on disposal of
investment properties	4,152,457	(4,152,457)	1	–
Loss on disposal of
property, plant and
equipment	1,495,281	(1,495,281)	1	–
Unrealised holding gain on
investments in trading
securities	(276,889,956)	79,455,206	1	(197,434,750)
Release of negative
goodwill arising on
acquisition of a listed
subsidiary	(36,225,055)	1,114,222	1	(35,110,833)
Profit on deemed disposal
of partial interest in a
listed subsidiary resulted
in de-consolidation of the
subsidiary	–	(581,131,825)	5	(581,131,825)
Loss on deemed disposal of
partial interest in a listed
associate	–	226,939,050	5	226,939,050
Profit on disposal of
investments in other
securities	(20,136)	20,136	1	–

−153 −

APPENDIX III

PRO FORMA FINANCIAL INFORMATION

Operating cash flows before movements in working capital Increase in properties under development Decrease in stocks of unsold properties Decrease in hotel inventories Increase in investments in securities (Increase) decrease in accounts and other receivables Increase (decrease) in accounts and other payables Net change in current accounts with associates Cash generated from operations Hong Kong Profits Tax paid Taxation in other jurisdictions refunded NET CASH FROM OPERATING ACTIVITIES	Year ended 30 June 2004 Pro forma adjustments HK$ HK$ Notes 1,207,990,772 (1,805,847,613) 1,805,847,613 1 2,083,710,701 (2,083,710,701) 1 89,712 (89,712) 1 (5,189,739) (47,231,344) 53,407,435 1 1,599,452,135 (1,620,106,169) 1 (266,857,388) 266,857,388 1	Year ended 30 June 2004 Pro forma adjustments HK$ HK$ Notes 1,207,990,772 (1,805,847,613) 1,805,847,613 1 2,083,710,701 (2,083,710,701) 1 89,712 (89,712) 1 (5,189,739) (47,231,344) 53,407,435 1 1,599,452,135 (1,620,106,169) 1 (266,857,388) 266,857,388 1	Adjusted balances HK$ 25,673,097 – – – (5,189,739) 6,176,091 (20,654,034) –
	2,766,117,236 (257,450,699 6,398,823	) 257,362,920 1	6,005,415 (87,779) 6,398,823 12,316,459
	2,515,065,360

−154 −

APPENDIX III

PRO FORMA FINANCIAL INFORMATION

INVESTING ACTIVITIES Repayments from associates Dividends received from associates Interest received Proceeds from disposal of investment properties Proceeds from disposal of investments in other securities Repayments from investee companies Proceeds from disposal of property, plant and equipment Acquisition of additional interest in a listed subsidiary Acquisition of additional interest in a listed associate Increase in restricted bank deposits Purchase of investments in other securities Increase in long-term loans receivable Acquisition of associates Purchase of property, plant and equipment Purchase of investment properties Additions of hotel property NET CASH FROM (USED IN) INVESTING ACTIVITIES	Year ended 30 June 2004 Pro forma adjustments HK$ HK$ Notes 1,495,130,119 (1,495,128,801) 1 397,010,000 (397,010,000) 1 82,688,725 (82,629,643) 1 19,727,900 (19,727,900) 1 11,543,695 (11,543,695) 1 3,046,210 (3,046,210) 1 20,951 (20,951) 1 (233,797,918) 233,797,918 1 – (233,797,918) 1 (231,539,583) 231,539,583 1 (129,175,673) 129,047,194 1 (102,708,344) 102,708,344 1 (18,876,552) 18,876,552 1 (6,946,929) 6,946,929 1 (3,375,364) 3,375,364 1 (768,013) 768,013 1	Year ended 30 June 2004 Pro forma adjustments HK$ HK$ Notes 1,495,130,119 (1,495,128,801) 1 397,010,000 (397,010,000) 1 82,688,725 (82,629,643) 1 19,727,900 (19,727,900) 1 11,543,695 (11,543,695) 1 3,046,210 (3,046,210) 1 20,951 (20,951) 1 (233,797,918) 233,797,918 1 – (233,797,918) 1 (231,539,583) 231,539,583 1 (129,175,673) 129,047,194 1 (102,708,344) 102,708,344 1 (18,876,552) 18,876,552 1 (6,946,929) 6,946,929 1 (3,375,364) 3,375,364 1 (768,013) 768,013 1	Adjusted balances HK$ 1,318 – 59,082 – – – – – (233,797,918) – (128,479) – – – – –
	1,281,979,224		(233,865,997)

−155 −

PRO FORMA FINANCIAL INFORMATION

APPENDIX III

FINANCING ACTIVITIES Repayments of bank and other loans Interest paid Repayments to minority shareholders Dividends paid to minority shareholders Repayments to associates Commitments fees paid Repayments to investee companies Loan arrangement fees paid Dividends paid Shares issue expenses paid New bank and other loans NET CASH (USED IN) FROM FINANCING ACTIVITIES NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS BROUGHT FORWARD EFFECT OF FOREIGN EXCHANGE RATE CHANGES CASH AND CASH EQUIVALENTS CARRIED FORWARD ANALYSIS OF THE BALANCES OF CASH AND CASH EQUIVALENTS Time deposits, bank balances and cash Bank overdrafts	Year ended 30 June 2004 Pro forma adjustments HK$ HK$ Notes (4,035,593,376) 3,096,586,335 1 (228,927,390) 174,002,265 1 (175,002,326) 175,002,326 1 (78,434,533) 78,434,533 1 (24,981,237) 24,981,237 1 (22,510,296) 19,615,465 1 (10,375,165) 10,375,165 1 (4,312,966) 4,312,966 1 (1,712,776) (30,000) 2,419,227,444 (1,244,520,109) 1	Adjusted balances HK$ (939,007,041) (54,925,125) – – – (2,894,831) – – (1,712,776) (30,000) 1,174,707,335
	(2,162,652,621) 1,634,391,963 994,741,692 (1,080,391,668) 1 6,453,097 (4,260,244) 1 2,635,586,752 2,769,490,984 (2,769,019,851) 1 (133,904,232) 4,564,000 1 2,635,586,752	176,137,562 (45,411,976) (85,649,976) 2,192,853 (128,869,099) 471,133 (129,340,232) (128,869,099)

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PRO FORMA FINANCIAL INFORMATION

APPENDIX III

B. PRO FORMA FINANCIAL INFORMATION ASSUMING THE OPTION IS NOT EXERCISED

I. Pro Forma Consolidated Balance Sheet

The following is the pro forma consolidated balance sheet of the Group assuming that the Bonds (but assuming that the Option is not exercised) had been issued and fully converted on 30 June 2004 at the initial Conversion Price of HK$9.225 per Sino Share. The pro forma consolidated balance sheet was prepared based on the audited consolidated balance sheet of the Group as at 30 June 2004 as set out in the accountants’ report on the Group in Appendix I to this circular.

Non-current assets Investment properties Hotel property Property, plant and equipment Negative goodwill Interests in associates Investments in securities Advances to investee companies Other non-current assets Long-term loans receivable Current assets Properties under development Stocks of unsold properties Hotel inventories Investments in securities Amounts due from associates Accounts and other receivable Current portion of long-term loans receivables Taxation recoverable Restricted bank deposits Time deposits, bank balances and cash	As at 30 June 2004 Pro forma adjustments HK$ HK$ Notes 16,875,663,820 (16,875,663,820) 1 1,179,346,094 (1,179,346,094) 1 62,672,484 (62,646,286) 1 (821,270,021) 39,367,677 2 10,500,498,037 5,582,152,583 1 & 3 1,520,076,492 (1,407,632,220) 1 20,281,519 (20,281,519) 1 615,000 (300,000) 1 571,690,106 (571,690,106) 1	Adjusted balances HK$ – – 26,198 (781,902,344) 16,082,650,620 112,444,272 – 315,000 – 15,413,533,746 – 74,209,007 – 647,134,790 – 8,667,808 – 2,220,538 – 471,133 732,703,276
	29,909,573,531 8,665,188,659 (8,665,188,659) 1 492,480,449 (418,271,442) 1 20,955,153 (20,955,153) 1 1,088,224,951 (441,090,161) 1 1,629,526,939 (1,629,526,939) 1 1,098,503,202 (1,089,835,394) 1 126,700,514 (126,700,514) 1 182,619,261 (180,398,723) 1 238,393,749 (238,393,749) 1 2,769,490,984 (2,769,019,851) 1 16,312,083,861	15,413,533,746
		– 74,209,007 – 647,134,790 – 8,667,808 – 2,220,538 – 471,133
		732,703,276

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PRO FORMA FINANCIAL INFORMATION

APPENDIX III

Current liabilities Accounts and other payables Amounts due to associates Taxation payable Current portion of long-term unsecured bank loans Current portion of long-term secured bank loans Bank loans and overdrafts – secured – unsecured Other loans – secured – unsecured Net current assets (liabilities) Capital and reserves Share capital Share premium and reserves Minority interests Non-current liabilities Long-term borrowings – due after one year Deferred taxation Advances from associates Advances from minority shareholders	As at 30 June 2004 Pro forma adjustments HK$ HK$ Notes 5,138,837,940 (5,124,777,152) 1 226,948,675 (226,948,675) 1 117,545,628 (117,542,200) 1 13,102,740 (13,102,740) 1 212,000,000 (212,000,000) 1 2,078,848,832 (1,212,708,600) 1 218,379,000 (218,379,000) 1 790,357,594 (87,729,220) 1 118,101,366	Adjusted balances HK$ 14,060,788 – 3,428 – – 866,140,232 – 702,628,374 118,101,366
	8,914,121,775 7,397,962,086 37,307,535,617 274,998,434 10,221,702,576 231,933,710 4 10,496,701,010 15,839,108,365 (15,836,936,228) 1 8,621,829,209 (4,907,333,232) 1 40,123,952 (40,123,952) 1 1,941,668,613 (1,941,668,613) 1 368,104,468 (368,104,468) 1 10,971,726,242 37,307,535,617	1,700,934,188 (968,230,912) 14,445,302,834 274,998,434 10,453,636,286 10,728,634,720 2,172,137 3,714,495,977 – – – 3,714,495,977 14,445,302,834

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PRO FORMA FINANCIAL INFORMATION

APPENDIX III

II. Pro Forma Consolidated Income Statement

The following is the pro forma consolidated income statement of the Group assuming that the Bonds (but assuming that the Option is not exercised) had been issued and fully converted on 1 July 2003 at the initial Conversion Price of HK$9.225 per Sino Share. The pro forma consolidated income statement was prepared based on the audited consolidated income statement of the Group for the year ended 30 June 2004 as set out in the accountants’ report on the Group in Appendix I to this circular.

Turnover Cost of sales Direct expenses Other operating income Release of negative goodwill arising on acquisition of a listed subsidiary Loss on deemed disposal of partial interest in a listed subsidiary resulted in de- consolidation of the subsidiary Profit on deemed disposal of partial interest in a listed subsidiary Unrealised holding gain on investments in trading securities Impairment loss on investments in other securities Administrative expenses	Year ended 30 June 2004 Pro forma adjustments HK$ HK$ Notes 4,277,645,604 (833,847,472) 1 (2,036,525,457) 99,972,501 1 (731,879,384) 261,296,172 1	Adjusted balances HK$ 3,443,798,132 (1,936,552,956) (470,583,212) 1,036,661,964 18,143,264 34,738,524 (220,861,077) 472,445,043 305,288,711 (11,997,295) (185,256,023)
	1,509,240,763 34,817,086 (16,673,822) 1 36,225,055 (1,486,531) 1 – (220,861,077) 6 – 472,445,043 6 276,889,956 28,398,755 1 (17,621,750) 5,624,455 1 (356,367,796) 171,111,773 1	1,036,661,964 18,143,264 34,738,524 (220,861,077 472,445,043 305,288,711 (11,997,295 (185,256,023

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PRO FORMA FINANCIAL INFORMATION

APPENDIX III

Profit from operations Finance income Finance costs Net finance costs Results attributable to associates Loss on disposal of associates Loss on deemed disposal of partial interest in a listed subsidiary Profit before taxation Income tax expense Profit before minority interests Minority interests Net profit for the year	Year ended 30 June 2004 Pro forma adjustments HK$ HK$ Notes 1,483,183,314 82,688,725 (35,506,724) 1 (233,321,404) 46,280,876 1 (150,632,679) 510,139,155 (220,601,303) 1 (7,558,625) 7,558,625 1	Adjusted balances HK$ 1,449,163,111 47,182,001 (187,040,528) (139,858,527) 289,537,852 –
	(191,786,591) 191,786,591 6 1,643,344,574 (236,453,428) 74,389,035 1 1,406,891,146 (683,496,803) 373,891,667 1 723,394,343	– 1,598,842,436 (162,064,393) 1,436,778,043 (309,605,136) 1,127,172,907

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PRO FORMA FINANCIAL INFORMATION

APPENDIX III

III. Pro Forma Consolidated Cash Flow Statement

The following is the pro forma consolidated cash flow statement of the Group assuming that the Bonds (but assuming that the Option is not exercised) had been issued and fully converted on 1 July 2003 at the initial Conversion Price of HK$9.225 per Sino Share. The pro forma consolidated cash flow statement was prepared based on the audited consolidated cash flow statement of the Group for the year ended 30 June 2004 as set out in the accountants’ report on the Group in Appendix I to this circular.

OPERATING ACTIVITIES Profit from operations Adjustments for: Impairment loss on investments in other securities Depreciation Loss on disposal of investment properties Loss on disposal of property, plant and equipment Unrealised holding gain on investments in trading securities Release of negative goodwill arising on acquisition of a listed subsidiary Loss on deemed disposal of partial interest in a listed subsidiary resulted in de- consolidation of the subsidiary Profit on deemed disposal of partial interest in a listed subsidiary (Profit) loss on disposal of investments in other securities Operating cash flows before movements in working capital Increase in properties under development Decrease in stocks of unsold properties Decrease (increase) in hotel inventories	Year ended 30 June 2004 Pro forma adjustments HK$ HK$ Notes 1,483,183,314 (34,020,203) 1 17,621,750 (5,624,455) 1 14,673,117 (6,589,805) 1 4,152,457 3,312,222 1 1,495,281 (73,728) 1 (276,889,956) (28,398,755) 1 (36,225,055) 1,486,531 1 – 220,861,077 6 – (472,445,043) 6 (20,136) 34,921 1 1,207,990,772 (1,805,847,613) 1,150,842,838 1 2,083,710,701 (8,994,349) 1 89,712 (556,926) 1	Adjusted balances HK$ 1,449,163,111 11,997,295 8,083,312 7,464,679 1,421,553 (305,288,711) (34,738,524) 220,861,077 (472,445,043) 14,785 886,533,534 (655,004,775) 2,074,716,352 (467,214)

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PRO FORMA FINANCIAL INFORMATION

APPENDIX III

Year ended 30 June 2004 Pro forma adjustments HK$ HK$ Notes (5,189,739) (47,231,344) 225,789,697 1 1,599,452,135 (2,576,339,139) 1 (266,857,388) 7,129,170 1	Year ended 30 June 2004 Pro forma adjustments HK$ HK$ Notes (5,189,739) (47,231,344) 225,789,697 1 1,599,452,135 (2,576,339,139) 1 (266,857,388) 7,129,170 1	Adjusted balances HK$ (5,189,739) 178,558,353 (976,887,004) (259,728,218)
2,766,117,236 (257,450,699 6,398,823	) 25,974,771 1 (839,894,818) 1 (35,506,724) 1 (4,952,800) 1 (34,920) 1 (3,046,210) 1 1,660,001 1 ) ) (2,993,651) 1 ) 27,269,002 1 ) (65,379,965) 1 ) 18,875,352 1 ) 2,608,164 1 ) (823,351) 1 ) 768,013 1	1,242,531,289 (231,475,928) 6,398,823 1,017,454,184 655,235,301 397,010,000 47,182,001 14,775,100 11,508,775 – 1,680,952 (233,797,918) (234,533,234) (101,906,671) (168,088,309) (1,200) (4,338,765) (4,198,715) – 380,527,317
2,515,065,360
1,495,130,119 397,010,000 82,688,725 19,727,900 11,543,695 3,046,210 20,951 (233,797,918 (231,539,583 (129,175,673 (102,708,344 (18,876,552 (6,946,929 (3,375,364 (768,013
1,281,979,224

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PRO FORMA FINANCIAL INFORMATION

APPENDIX III

FINANCING ACTIVITIES Repayments of bank and other loans Interest paid (Repayments to) advances from minority shareholders Dividends paid to minority shareholders Repayments to associates Commitments fees paid Repayments to investee companies Loan arrangement fees paid Dividends paid Shares issue expenses paid New bank and other loans NET CASH USED IN FINANCING ACTIVITIES NET INCREASE IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS BROUGHT FORWARD EFFECT OF FOREIGN EXCHANGE RATE CHANGES CASH AND CASH EQUIVALENTS CARRIED FORWARD ANALYSIS OF THE BALANCES OF CASH AND CASH EQUIVALENTS Time deposits, bank balances and cash Bank overdrafts	Year ended 30 June 2004 Pro forma adjustments HK$ HK$ Notes (4,035,593,376) 1,256,170,510 1 (228,927,390) 71,119,320 1 (175,002,326) 226,939,231 1 (78,434,533) 67,138,105 1 (24,981,237) (1,540,217) 1 (22,510,296) 11,456,003 1 (10,375,165) (4,312,966) 4,312,966 1 (1,712,776) (30,000) 2,419,227,444 (52,562,171) 1	Adjusted balances HK$ (2,779,422,866) (157,808,070) 51,936,905 (11,296,428) (26,521,454) (11,054,293) (10,375,165) – (1,712,776) (30,000) 2,366,665,273
	(2,162,652,621) 1,634,391,963 994,741,692 (1,952,045,238) 1 6,453,097 3,618,723 1 2,635,586,752 2,769,490,984 (2,769,019,851) 1 (133,904,232) 4,564,000 1 2,635,586,752	(579,618,874) 818,362,627 (957,303,546) 10,071,820 (128,869,099) 471,133 (129,340,232) (128,869,099)

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PRO FORMA FINANCIAL INFORMATION

APPENDIX III

NOTES TO THE PRO FORMA FINANCIAL INFORMATION SET OUT IN SECTIONS A AND B ABOVE

The adjustments reflect the de-consolidation effect consequent upon Sino Land ceasing to be a subsidiary of the Company.
The adjustment reflects the release of negative goodwill upon deemed disposal of partial interest in Sino Land.
The adjustment reflects the share of results and net assets value of Sino Land using equity method of accounting upon Sino Land becoming an associate of Company.
The adjustment reflects the release of the relevant reserves upon deemed disposal of partial interest in Sino Land.
The adjustment reflects the profit on deemed disposal of a partial interest in Sino Land so that it becomes an associate assuming that the maximum amount of the Bonds (including the Optional Bonds to be issued upon the exercise of the Option in full) had been issued and fully converted on 1 July 2003 at the initial Conversion Price of HK$9.225 per Sino Share and the reclassification of the adjusted effects of deemed disposal of interest in Sino Land as an associate during the year to profit from operations as the Group became an investment holding company.
The adjustment reflects the profit on deemed disposal of a partial interest in Sino Land as a subsidiary of the Company assuming that the Bonds (but assuming that the Option is not exercised) had been issued and fully converted on 1 July 2003 at the initial Conversion Price of HK$9.225 per Sino Share and the reclassification of the adjusted effects of deemed disposals of interest in Sino Land during the year so that it becomes an associate to profit from operations as the Group became an investment holding company.
No adjustment has been made to recognise any income that might have been generated from the Bonds issued by Sino Land.

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PRO FORMA FINANCIAL INFORMATION

APPENDIX III

C. LETTER FROM DELOITTE TOUCHE TOHMATSU

The following is the text of a report, prepared for the sole purpose of inclusion in this circular received from the independent reporting accountants, Deloitte Touche Tohmatsu, Hong Kong.

==> picture [64 x 49] intentionally omitted <==

==> picture [78 x 34] intentionally omitted <==

5 November 2004

The Directors

Tsim Sha Tsui Properties Limited

Dear Sirs,

We report on the pro forma financial information of Tsim Sha Tsui Properties Limited (the “Company”) and its subsidiaries (collectively referred to as the “Group”) (“Pro Forma Financial Information”) set out in Section A and Section B of Appendix III to the circular dated 5 November 2004 issued by the Company in connection with a possible very substantial disposal resulting from a possible deemed disposal of interest in Sino Land Company Limited so that it becomes an associate of the Company (the “Circular”), which has been prepared for illustrative purposes only, to provide information about how the possible deemed disposal might have affected the financial information presented.

Responsibilities

It is the responsibility solely of the directors of the Company to prepare the Pro Forma Financial Information in accordance with Rule 4.29 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Listing Rules”).

It is our responsibility to form an opinion on the Pro Forma Financial Information, as required by the Listing Rules, and to report our opinion to you. We do not accept any responsibility for any reports previously given by us on any financial information used in the compilation of the Pro Forma Financial Information beyond that owed to those to whom those reports were addressed by us at the dates of their issue.

−165 −

PRO FORMA FINANCIAL INFORMATION

APPENDIX III

Basis of opinion

We conducted our work with reference to the Statements of Investment Circular Reporting Standards and Bulletin 1998/8 “Reporting on pro forma financial information pursuant to the listing rules” issued by the Auditing Practice Board in the United Kingdom, where applicable. Our work, which involved no independent examination of any of the underlying financial information, consisted primarily of comparing the unadjusted financial information with the source documents, considering the evidence supporting the adjustments and discussing the Pro Forma Financial Information with the management of the Company.

Because of the above work does not constitute an audit or a review performed in accordance with Statements of Auditing Standards issued by the Hong Kong Institute of Certified Public Accountants, we do not express any such assurance on the Pro Forma Financial Information.

The Pro Forma Financial Information has been prepared in accordance with the basis set out in Section A and Section B of Appendix III to the Circular for illustrative purpose only and, because of its nature, it may not give an indicative financial position of the Group as at 30 June 2004 or at any future date or the results and cash flows of the Group for the year then ended or for any future period.

Opinion

In our opinion:

a. the Pro Forma Financial Information has been properly compiled on the basis stated;
b. such basis is consistent with the accounting policies of the Group; and
c. the adjustments are appropriate for the purposes of the Pro Forma Financial Information as disclosed pursuant to Rule 4.29 (1) of the Listing Rules.

Yours faithfully, Deloitte Touche Tohmatsu Certified Public Accountants Hong Kong

−166 −

GENERAL INFORMATION

APPENDIX IV

1. RESPONSIBILITY STATEMENT

This circular includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Group. The Directors collectively and individually accept full responsibility for the accuracy of the information contained in this circular and confirm, having made all reasonable enquiries, that to the best of their knowledge and belief there are no other facts the omission of which would make any statement herein misleading.

2. DIRECTORS’ AND CHIEF EXECUTIVE’S INTERESTS AND SHORT POSITIONS IN THE SHARES, UNDERLYING SHARES AND DEBENTURES OF THE COMPANY

So far as the Directors are aware, as at the Latest Practicable Date, the interests and short positions of the Directors and chief executive of the Company (including those interests and short positions which they were taken or deemed to have under the provisions of the SFO) in the shares, underlying shares and debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) as recorded in the register required to be kept by the Company pursuant to Section 352 of the SFO, or as otherwise notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers, were as follows:

Interests in Shares

(A) The Company

The interest of the Directors and their associates in the shares, underlying shares or debt securities of the Company and its associated corporations (within the meaning of Part XV of the Securities and Futures Ordinance (“SFO”)) as recorded in the register required to be kept under section 352 of the SFO as at the Latest Practicable Date, are set out below:

Long Positions in Shares

	Number of		% of Issued
	Ordinary	Capacity and	Share
Name of Directors	Shares	Nature of Interest	Capital
Mr. Robert Ng Chee Siong	527,508	Beneficial owner	0.03%
Mr. Ronald Joseph Arculli,	60,000	Beneficial owner	�0%
GBS, OBE, JP
Mr. Paul Cheng Ming Fun, JP	–	–	–
Dr. Allan Zeman, GBS, JP	–	–	–
Mr. Raymond Tong Kwok Tung	–	–	–

−167 −

GENERAL INFORMATION

APPENDIX IV

(B) Associated Corporations

(i) Subsidiary Company

Sino Land

				% of
	Number of			Issued
	Ordinary	Capacity and		Share
Name of Directors	Shares	Nature of Interest		Capital
Mr. Robert Ng Chee Siong	2,621,698	Beneficial owner of		0.06%
			117,062 shares
			and spouse
			interest in
			2,504,636 shares
Mr. Ronald Joseph Arculli,	1,044,095	Beneficial owner		0.02%
GBS, OBE, JP
Mr. Paul Cheng Ming Fun, JP	61,085	Beneficial owner		�0%
Dr. Allan Zeman, GBS, JP	–	–		–
Mr. Raymond Tong Kwok Tung	–	–		–

(ii) Associated Companies

Mr. Robert Ng Chee Siong was deemed to be interested in shares of the following companies through corporations controlled by him:

	Number of	% of Issued
Name of Associated Companies	Ordinary Shares	Share Capital
Better Chief Limited	50 (Notes 1 & 2)	50%
Brighton Land Investment Limited	1,000,002 (Notes 1 & 3)	100%
Dramstar Company Limited	440 (Notes 1 & 4)	44%
Empire Funds Limited	1 (Notes 1 & 5)	50%
Erleigh Investment Limited	110 (Notes 1 & 5)	55%
Eternal Honest Finance Company Limited	1 (Notes 1 & 5)	50%
Famous Empire Finance Limited	5 (Notes 1 & 6)	50%
Famous Empire Properties Limited	5,000 (Notes 1 & 6)	50%
Island Resort Estate Management	10 (Notes 1 & 5)	50%
Company Limited
Jade Result Limited	500,000 (Notes 1 & 5)	50%
Jumbo Funds Limited	1 (Notes 1 & 7)	50%
Murdoch Investments Inc.	2 (Notes 1 & 3)	100%
Perfect Finance Limited	1 (Notes 1 & 5)	50%
Real Maker Development Limited	20,000 (Notes 1 & 8)	10%

−168 −

GENERAL INFORMATION

APPENDIX IV

	Number of	% of Issued
Name of Associated Companies	Ordinary Shares	Share Capital
Rich Century Investment Limited	500,000 (Notes 1 & 5)	50%
Silver Link Investment Limited	10 (Notes 1 & 5)	50%
Sino Club Limited	2 (Note 9)	100%
Sino Parking Services Limited	450,000 (Note 10)	50%
Sino Real Estate Agency Limited	50,000 (Note 10)	50%

Notes:

Osborne Investments Ltd. (“Osborne”) was a wholly-owned subsidiary of Seaview Assets Limited which was in turn 100% owned by Boswell Holdings Limited in which Mr. Robert Ng Chee Siong had a 50% control.
The shares were held by Devlin Limited, a wholly-owned subsidiary of Osborne.
The shares were held by Erleigh Investment Limited, a company 55% controlled by Osborne.
The shares were held by Jade Result Limited, a company 50% controlled by Osborne.
The share(s) was(were) held by Osborne.
The shares were held by Standard City Limited, a wholly-owned subsidiary of Osborne.
The shares were held by Pure Win Company Limited, a wholly-owned subsidiary of Osborne.
The shares were held by Goegan Godown Limited, a wholly-owned subsidiary of Osborne.
The shares were held by Sino Real Estate Agency Limited, a company 50% controlled by Deansky Investments Limited in which Mr. Robert Ng Chee Siong had a 100% control.
The shares were held by Deansky Investments Limited.

Save as otherwise disclosed above, so far as the Directors are aware, as at the Latest Practicable Date, none of the Directors or chief executive of the Company had, or were deemed under the SFO to have, any interests or short positions in the shares, underlying shares or debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) which were required to be recorded in the register kept by the Company under Section 352 of the SFO, or as otherwise notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers.

−169 −

GENERAL INFORMATION

APPENDIX IV

3. INTERESTS AND SHORT POSITIONS IN THE SHARES AND UNDERLYING SHARES OF THE COMPANY OF SUBSTANTIAL SHAREHOLDERS AND OTHER SHAREHOLDERS

So far as the Directors are aware, as at the Latest Practicable Date, the interests of every person, other than the Directors or chief executive of the Company, in the Shares as recorded in the register required to be kept under section 336 of the SFO, are set out below:

(A) Interests in Shares

(a) Long Positions in Shares of the Company

	Number of
	Ordinary	Capacity and	% of Issued
Name of Substantial Shareholders	Shares	Nature of Interest	Share Capital
Mr. Ng Teng Fong	986,222,856	Beneficial owner of	71.73%
	(Notes 1 & 2)	78,086,892
		shares, spouse
		interest in 61,080
		shares and
		interest of
		controlled
		corporations in
		908,074,884
		shares
Strathallan Investment Limited	250,848,217	Beneficial owner	18.24%
	(Note 2)
Tamworth Investment Limited	374,332,151	Beneficial owner	27.22%
	(Note 2)
	Number of
	Ordinary	Capacity and	% of Issued
Name of Other Shareholders	Shares	Nature of Interest	Share Capital
Fanlight Investment Limited	94,108,009	Beneficial owner	6.84%
	(Note 2)
Nippomo Limited	127,541,971	Beneficial owner	9.27%
	(Note 2)
Solid Capital Holdings Limited	136,352,510	Security interest in	9.92%
		136,293,249
		shares and
		beneficial owner
		of 59,261 shares

−170 −

GENERAL INFORMATION

APPENDIX IV

Notes:

908,074,884 shares were held through companies which were 100% controlled by Mr. Ng Teng Fong – 94,108,009 shares by Fanlight Investment Limited, 127,541,971 shares by Nippomo Limited, 2,992,211 shares by Orient Creation Limited, 250,848,217 shares by Strathallan Investment Limited, 374,332,151 shares by Tamworth Investment Limited and 58,252,325 shares by Transpire Investment Limited.
The interests of Strathallan Investment Limited, Tamworth Investment Limited, Fanlight Investment Limited and Nippomo Limited were duplicated in the interests of Mr. Ng Teng Fong.

(b) Long Positions in Underlying Shares Short Positions in Shares and Underlying Shares

There were no long positions in the underlying shares or any short positions in the shares and underlying shares of the Company, which were recorded in the register as required to be kept under Section 336 of Part XV of the SFO.

(B) Interest in other members of the Group

So far as the Directors are aware, as at the Latest Practicable Date, the interest of person, other than the Directors or chief executive of the Company, who was directly or indirectly interested in 10% or more of the issued share capital carrying rights to vote in all circumstances at general meetings of any other member of the Group, are set out below:

(a) Long Positions in Shares and Underlying Shares of Sino Land

	Number of	Capacity and	of Issued
Name of	Ordinary	Nature of	Share
Substantial Shareholder	Shares	Interest	Capital
Mr. Ng Teng Fong	2,243,099,702	Beneficial owner	52.09%
	(Notes 1 & 2)	of 24,744,502
		shares, spouse
		interest in
		3,295,204
		shares and
		interest of
		controlled
		corporations
		in 2,215,059,996
		shares

−171 −

GENERAL INFORMATION

APPENDIX IV

Notes:

As regards 2,215,059,996 shares held by controlled corporations:
- (a) 1,047,095,874 shares were held by the Company which was 71.73% controlled by Mr. Ng Teng Fong;
- (b) (i) 32,105,260 shares were held by Orchard Centre Holdings (Pte) Limited, in which Nam Lung Properties Development Company Limited, a wholly-owned subsidiary of the Company, had a 95.23% control; and
  - (ii) 1,076,722,979 shares were held through the wholly-owned subsidiaries of the Company (including 237,785,967 shares held by Spangle Investment Limited (Note 2)); and
- (c) 59,135,883 shares were held through companies which were 100% controlled by Mr. Ng Teng Fong – 869 shares by Fanlight Investment Limited, 24,872,431 shares by Karaganda Investments Inc., 1,094,306 shares by Orient Creation Limited, 5,191,924 shares by Strathallan Investment Limited, 15,648,533 shares by Strong Investments Limited, 12,058,745 shares by Tamworth Investment Limited and 269,075 shares by Transpire Investment Limited.
237,785,967 shares were held by Spangle Investment Limited, a wholly-owned subsidiary of the Company and were duplicated in the interests of Mr. Ng Teng Fong and the Company.
(b) Long Positions in Shares and Underlying Shares of Other Subsidiaries of the Company

		% of Issued
Name of Shareholder holding		Share
10% or more of the issued		Capital held
share capital of the Other	Name of Other Subsidiaries	by that
Subsidiaries of the Company	of the Company	Shareholder
Drakeford Investment Limited	Donoghue Investment Limited	15%
Eastand Investments Limited	Firm Wise Investment Limited	30%
Cashel Assets Limited (Note 1)	Grand Creator Investment	40%
	(BVI) Limited
Cashel Assets Limited (Note 1)	Grand Creator Investment	40%
	Limited (Note 3)
Cashel Assets Limited (Note 1)	Hang Hau Station Construction	40%
	Limited (Note 3)
Cashel Assets Limited (Note 1)	Hang Hau Station (Project	40%
	Management) Limited (Note 3)
Drakeford Investment Limited	Julian Investment Limited	15%
Ice Rink Resources Limited	Profit Palace Limited	20%
Geogan Godown Limited	Real Maker Development	10%
(Note 2)	Limited
Cashel Assets Limited (Note 1)	Reca Limited (Note 3)	40%
Cashel Assets Limited (Note 1)	Residence Oasis Finance	40%
	Company Limited (Note 3)

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GENERAL INFORMATION

APPENDIX IV

Notes:

This company was a wholly-owned subsidiary of Kerry Properties Limited.
This company was a wholly-owned subsidiary of Osborne, which was in turn 50% controlled by Mr. Robert Ng Chee Siong.
These companies were wholly-owned subsidiaries of Grand Creator Investment (BVI) Limited.

Save as disclosed above, so far as the Directors are aware, as at the Latest Practicable Date, there was no person (other than the Directors or chief executive of the Company) who had an interest or short position in the Shares and underlying Shares of the Company as recorded in the register required to be kept under Section 336 of the SFO and/or who was directly or indirectly interested in 10% or more of the issued share capital carrying rights to vote in all circumstances at general meetings of any other member of the Group.

4. BIOGRAPHICAL DATA OF DIRECTORS

(I) Executive Directors

Mr. Robert Ng Chee Siong , aged 52, an Executive Director since 1978 and Chairman of the Group since 1991, was called to the Bar in 1975. He has been actively engaged in property investment and development in Hong Kong during the last 28 years and is also the director of a number of subsidiaries and associated companies of the Company. Mr. Ng is the Chairman of Sino Land, the subsidiary company of the Company, and the Chairman of Sino Hotels (Holdings) Limited (“Sino Hotels”). In addition, he is a director of Yeo Hiap Seng Limited and a non-executive director of The Hongkong and Shanghai Hotels, Limited and SCMP Group Limited.

Mr. Raymond Tong Kwok Tung , aged 62, an Executive Director of the Company since 1997, was admitted as a solicitor in Hong Kong in 1970 and in the United Kingdom in 1979. He is also an executive director of Sino Land and the director of a number of subsidiaries and associated companies of the Company.

(II) Independent Non-executive Directors

Mr. Ronald Joseph Arculli , GBS, OBE, JP, aged 65, has been an Independent Nonexecutive Director of the Company since 1994. He is also an Independent Non-executive Director of Sino Land and Sino Hotels. Mr. Arculli became a Member of the Legislative Council in 1988, representing the Real Estate and Construction functional constituency from 1991 to the end of June 2000. He is the Chairman of The International Awards Association of The Duke of Edinburgh’s Award International Foundation, a Board member of The Hong Kong Mortgage Corporation Limited and Chairman and a Steward of The Hong Kong Jockey Club. He has a distinguished record of public service on numerous government committees and advisory bodies. Mr. Arculli is also a Managing Partner of a firm of solicitors in Hong Kong.

Mr. Arculli is also an independent non-executive director of Hang Lung Properties Limited, HKR International Limited and SCMP Group Limited and a non-executive director of Hongkong Electric Holdings Ltd. and Hutchison Harbour Ring Limited.

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GENERAL INFORMATION

APPENDIX IV

Mr. Paul Cheng Ming Fun , JP, aged 67, has been an Independent Non-executive Director of the Company since 1997. He is also an independent non-executive director of Sino Land and Sino Hotels. Mr. Cheng was a former member of the Hong Kong Legislative Council as well as Chairman of Inchcape Pacific Ltd., N M Rothschild & Sons (Hong Kong) Ltd., the Hong Kong General Chamber of Commerce, and the American Chamber of Commerce in Hong Kong. He is currently a Steward of the Hong Kong Jockey Club. Mr. Cheng is an Adjunct Professor of Management of Organisations of the Hong Kong University of Science and Technology and is a member of the Council of the Chinese University of Hong Kong.

Mr. Cheng is also an Independent Non-executive Director of Esprit Holdings Limited, Hutchison Harbour Ring Limited, Kingboard Chemical Holdings Limited, New World Mobile Holdings Limited and The Wharf (Holdings) Limited. He was previously director of Sa Sa International Holdings Limited (resigned on 29 August 2002), Chevalier International Holdings Limited (resigned on 3 September 2003) and Spirent plc (listed on the London Stock Exchange) (resigned on 31 December 2003).

Dr. Allan Zeman , GBS, JP, aged 56, an Independent Non-executive Director of the Company since 30 September 2004, is the holder of Honorary Doctor of Laws Degree from The University of Western Ontario, Canada. He has also been appointed an independent non-executive director of Sino Land on 30 September 2004. After spending more than 34 years in Hong Kong, Dr. Zeman has established many business interests in Hong Kong and overseas, ranging from property development, entertainment to public relations, in addition to having an interest in Li & Fung Limited, a listed company in Hong Kong. Dr. Zeman is the chairman of Ocean Park, a major theme park in Hong Kong, and also the chairman of Lan Kwai Fong Holdings Limited, the major ultimate property owner and developer in Lan Kwai Fong, one of Hong Kong’s most popular tourist destinations. Dr. Zeman is a member of Economic and Employment Council in Hong Kong, the Economic and Employment Council Subgroup on Business Facilitation and the Design, Marketing and Licensing Services Advisory Committee of the Hong Kong Trade Development Council. Dr. Zeman serves as a board member on a number of public bodies in Hong Kong, including the Tourism Strategy Group for the Hong Kong Tourism Commission and Urban Renewal Authority. Dr. Zeman is currently a non-executive director of Pacific Century Premium Developments Limited, a company listed on The Stock Exchange of Hong Kong Limited, and is also a director of Wynn Resorts, Limited, a listed company in USA and Algo Group Inc., a listed company in Canada.

5. MATERIAL CONTRACT

The Company has undertaken with the Manager under a lock-up agreement dated 25 October 2004 that it and its subsidiaries and nominees will not dispose of any Relevant Shares from 19 October 2004 until 90 days after the Closing Date except with the prior written consent of the Manager (such consent not to be unreasonably withheld). Save as aforesaid, there were no contracts which have been entered into by members of the Group (other than those relating to the Sino Group) within the two years preceding the Latest Practicable Date, which were not entered into in the ordinary course of business and which are or may be material.

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GENERAL INFORMATION

APPENDIX IV

6. COMPETING INTEREST

Mr. Robert Ng Chee Siong, the chairman of the Board, and his associates held interests and/or directorships in companies engaged in businesses of property investment, development and management in Hong Kong and hotels which operate in Hong Kong.

As the Board is independent of the boards of the aforesaid companies and maintain three independent non-executive directors, the Group operates its business independently of, and at arm’s length from, the businesses of these companies.

7. DIRECTORS’ INTEREST IN SERVICE CONTRACTS

So far as the Directors are aware, as at the Latest Practicable Date, none of the Directors has entered or is proposing to enter into a service contract with any member of the Group (excluding contracts expiring or which may be terminated by the relevant member of the Group within one year without payment of any compensation (other than statutory compensation)).

8. LITIGATION

Save as the litigation with Hang Lung disclosed in the sections headed “Management Discussion and Analysis – Finance” and “Indebtedness” set out in Appendix I to this circular, so far as the Directors are aware, as at the Latest Practicable Date, no member of the Group was engaged in any litigation or claim of material importance and no litigation or claim of material importance was pending or threatened against any member of the Group.

9. OTHER INTERESTS

Save as disclosed above and as disclosed in the joint announcement of the Company and Sino Land dated 2 November 2004, so far as the Directors are aware, as at the Latest Practicable Date:

(a) none of the Directors and Deloitte Touche Tohmatsu had any direct or indirect interest in any assets which have been, since the date to which the latest published audited accounts of the Group were made up, acquired or disposed of by, or leased to any member of the Group, or are proposed to be acquired or disposed of by, or leased to, any member of the Group; and
(b) none of the Directors was materially interested in any contract or arrangement which is subsisting as at the date of this circular and which is significant in relation to the business of the Group (including any company which will become a subsidiary of the Company by reason of an acquisition which has been agreed or proposed since the date to which the latest published accounts of the Group have been made up).

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GENERAL INFORMATION

APPENDIX IV

10. EXPERT AND CONSENT

The following is the qualification of the expert who has given opinion or advice which is contained in this circular:

Name

Qualification

Deloitte Touche Tohmatsu Certified Public Accountants

Deloitte Touche Tohmatsu is not beneficially interested in the share capital of any member of the Group nor has any right, whether legally enforceable or not, to subscribe for or to nominate persons to subscribe for securities in any member of the Group.

Deloitte Touche Tohmatsu has given and has not withdrawn its written consent to the issue of this circular with the inclusion of its letter and reports and references to its name in the form and context in which they respectively appear.

11. MISCELLANEOUS

(a) The company secretary of the Company is Mr. Eric Ip Sai Kwong, who is a fellow member of The Institute of Chartered Secretaries and Administrators and The Hong Kong Institute of Company Secretaries.
(b) The qualified accountant of the Company is Mr. Thomas Tang Wing Yung, who is an associate member of The Institute of Chartered Accountants in England and Wales and a fellow member of The Hong Kong Institute of Certified Public Accountants (Practising).
(c) The share registrar and transfer office of the Company is Friendly Registrars Limited at G/F., Bank of East Asia Harbour View Centre, 56 Gloucester Road, Wanchai, Hong Kong.
(d) The English text of this circular shall prevail over the Chinese text in the case of any inconsistency.

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GENERAL INFORMATION

APPENDIX IV

12. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection at the registered office of the Company at 12th Floor, Tsim Sha Tsui Centre, Salisbury Road, Tsim Sha Tsui, Kowloon, Hong Kong during normal business hours on any weekday, except public holidays, from the date of this circular up to and including the date of the EGM:

(a) the memorandum and articles of association of the Company;
(b) the audited consolidated financial statements of the Group for each of the two years ended 30 June 2003 and 30 June 2004 respectively;
(c) the accountants’ report of the Group set out in Appendix I to this circular;
(d) the accountants’ report of the Sino Group set out in Appendix II to this circular;
(e) the letter from Deloitte Touche Tohmatsu in respect of the pro forma financial information set out in Appendix III to this circular;
(f) the lock-up agreement referred to in the paragraph headed “Material Contract” in this Appendix;
(g) the written consent referred to in the paragraph headed “Expert and consent” in this Appendix;
(h) the circular of the Company dated 16 August 2004 in relation to certain connected transactions; and
(i) the Subscription Agreement.

−177 −

PROCEDURES FOR VOTING BY POLL AT GENERAL MEETING

APPENDIX V

According to Article 74 of the articles of association of the Company, at any general meeting a resolution put to the vote of the meeting shall be decided on a show of hands unless a poll is (before or on the declaration of the result of the show of hands or on the withdrawal of any other demand for a poll) demanded:

(i) by the Chairman of the meeting; or
(ii) by at least three members present in person or by proxy for the time being entitled to vote at the meeting; or
(iii) by any member or members present in person or by proxy and representing not less than one-tenth of the total voting rights of all the members having the right to vote at the meeting; or
(iv) by a member or members present in person or by proxy and holding shares in the Company conferring a right to vote at the meeting being shares on which an aggregate sum has been paid up equal to not less than one-tenth of the total sum paid up on all shares conferring that right.

In accordance with the requirements under Chapter 13 of the Listing Rules, the Company will publish an announcement in newspapers of the results of any voting by poll at the EGM on the business day following the EGM.

This circular (in both English and Chinese versions) (“Circular”) has been posted on the Company’s website at http://www.sino-land.com. Shareholders who have chosen to rely on copies of the Company’s Corporate Communication (including but not limited to Annual Report, Interim Report, notice of meeting, listing document, circular and proxy form) posted on the Company’s website in lieu of the printed copies thereof may request the printed copy of the Circular. Shareholders who have chosen to receive the Corporate Communication using electronic means through the Company’s website and who for any reason have difficulty in receiving or gaining access to the Circular posted on the Company’s website will promptly upon request be sent the Circular in printed form free of charge. Shareholders may at any time choose to change your choice as to the means of receipt (i.e. in printed form or by electronic means through the Company’s website) and/or the language of the Company’s Corporate Communication by notice in writing to the Company’s Share Registrars, Friendly Registrars Limited, G/F., Bank of East Asia Harbour View Centre, 56 Gloucester Road, Wanchai, Hong Kong.

−178 −

NOTICE OF EXTRAORDINARY GENERAL MEETING

(Stock Code: 247)

NOTICE IS HEREBY GIVEN that the extraordinary general meeting (the “EGM”) of Tsim Sha Tsui Properties Limited (the “Company”) will be held at The Imperial Rooms, Mezzanine Floor, Towers Wing, The Royal Pacific Hotel and Towers, 33 Canton Road, Tsim Sha Tsui, Kowloon at 9:30 a.m. on Monday, 22 November 2004 for the purpose of considering and, if thought fit, passing the following resolution as an ordinary resolution of the Company:

ORDINARY RESOLUTION

“ THAT :
(a) the deemed disposal of interests in Sino Land Company Limited (“Sino Land”) upon the conversion of the convertible bonds in an aggregate principal amount of up to HK$2.5 billion to be issued by Getsmart Finance Limited, a wholly-owned subsidiary of Sino Land and an indirect subsidiary of the Company, pursuant to the subscription agreement dated 19 October 2004 entered into between Sino Land, Getsmart Finance Limited and J.P. Morgan Securities Ltd. (the “Subscription Agreement”) (a copy of which has been tabled at the meeting and marked “A” and initialed by the chairman of the meeting for identification purpose) be and is hereby approved; and
(b) the directors of the Company be and are hereby authorised to do all such further acts and things, take all steps and execute all such further documents which in their opinion may be necessary, desirable or expedient to give effect to and/or to implement the transactions contemplated under the Subscription Agreement.”

By Order of the Board Eric Ip Sai Kwong Secretary

Hong Kong, 5 November 2004

Notes:

(a) Any member entitled to attend and vote at the above meeting may appoint one or more proxies to attend and on a poll vote instead of him. A proxy need not be a member of the Company.

(b) In order to be valid, the instrument appointing a proxy and the power of attorney or other authority, if any, under which it is signed or a notarially certified copy of that power or authority, must be lodged at the registered office of the Company at 12th Floor, Tsim Sha Tsui Centre, Salisbury Road, Tsim Sha Tsui, Kowloon, Hong Kong not less than 48 hours before the time appointed for holding the meeting.

−179 −

AI assistant

Tsim Sha Tsui Properties Limited — Proxy Solicitation & Information Statement 2004

49066_rns_2004-11-05_766a4728-0550-454c-888c-17c6d5bface8.pdf

POSSIBLE VERY SUBSTANTIAL DISPOSAL: POSSIBLE DEEMED DISPOSAL OF INTEREST IN SINO LAND COMPANY LIMITED

DEFINITIONS

DEFINITIONS

DEFINITIONS

(Stock Code: 247)

POSSIBLE VERY SUBSTANTIAL DISPOSAL: POSSIBLE DEEMED DISPOSAL OF INTEREST IN SINO LAND COMPANY LIMITED

INTRODUCTION

Possible Very Substantial Disposal: Possible Deemed Disposal of Interest in Sino Land Company Limited

LETTER FROM THE BOARD

SUBSCRIPTION AGREEMENT

Conditions of the Subscription Agreement

Undertaking

Principal Terms of the Bonds

LETTER FROM THE BOARD

Conversion price

Redemption at maturity

LETTER FROM THE BOARD

Redemption for Delisting or Change of Control

Form

Guarantee

Status

Negative pledge

Listing

Conversion Shares

Use of the Proceeds

Reasons for and Benefits of the Issue of Bonds

Possible Very Substantial Disposal for the Company

Financial Implications

THE EGM

GENERAL

ADDITIONAL INFORMATION

1. AUDITED FINANCIAL STATEMENTS OF THE GROUP FOR THE THREE YEARS ENDED 30 JUNE 2002, 2003 AND 2004

5 November 2004

I. FINANCIAL INFORMATION

Consolidated Income Statements

Consolidated Balance Sheets

Balance Sheets

Consolidated Statements of Changes in Equity

The Group

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

Consolidated Cash Flow Statements

Notes to the Financial Information

1. SIGNIFICANT ACCOUNTING POLICIES

Basis of consolidation

Goodwill

Negative goodwill

Investments in subsidiaries

Interests in associates

Investments in securities

Investment properties

Hotel property

Property, plant and equipment

Impairment

Properties under development

Stocks of unsold properties

Hotel inventories

Other non-current assets

Borrowing costs

Deferred loan arrangement fees

Convertible bonds/notes

Revenue and profit recognition

Taxation

Foreign currencies

Retirement benefits costs

2. TURNOVER

3. BUSINESS AND GEOGRAPHICAL SEGMENTS

Business segments

INCOME STATEMENT

BALANCE SHEET

OTHER INFORMATION

INCOME STATEMENT

BALANCE SHEET

OTHER INFORMATION

INCOME STATEMENT

Tsim Sha Tsui Properties Limited Proxy Solicitation & Information Statement 2004