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					    THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION


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

If you have sold or transferred all your shares in Hongkong Chinese Limited, you should
at once hand this circular to the purchaser or transferee or to the bank, licensed securities
dealer or other agent through whom the sale or transfer was effected for transmission to
the purchaser or transferee.

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.




             HONGKONG CHINESE LIMITED
                                  香港華人有限公司*
                                      (Incorporated in Bermuda with limited liability)
                                                  (Stock Code: 655)




                                      MAJOR TRANSACTION
                            DISPOSAL OF STRATA INTEREST IN
                             79 ANSON ROAD IN SINGAPORE

                                                         AND


                         DISCLOSEABLE TRANSACTION
                   ACQUISITION OF A PROPERTY IN SINGAPORE




*   For identification purpose only



                                                                                         9th July, 2007
                                                                CONTENTS


                                                                                                                                                    Page

Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      1

Letter from the Board

          Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       6

          The Disposal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         7

          The Acquisition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         11

          Information on Lippo, LCR and the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                        14

          Listing Rules implications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                 14

          Further information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            15

Appendix I                  – Financial information of the Group . . . . . . . . . . . . . . . . . . . . . . . . . .                                 16

Appendix II                 – Valuation of the Anson Road Properties . . . . . . . . . . . . . . . . . . . . . .                                     85

Appendix III                – General information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  90
                                  DEFINITIONS


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

“Acceptance Date”                 20th June, 2007, being the date on which Lippo Project
                                  was accepted as the nominee to purchase the Aura
                                  Park Property pursuant to the Conditions of Tender;

“Acquisition”                     the acquisition of the Aura Park Property;

“Anson Road Agreement”            the sale and purchase agreement dated 15th June, 2007
                                  between (1) Harvest Day and UPM, as the Anson Road
                                  Vendors, and (2) Maximilian Realty Pte Ltd, as the
                                  Anson Road Purchaser, in respect of the Disposal;

“Anson Road Building”             the building located at 79 Anson Road, Singapore;

“Anson Road Completion”           completion of the Disposal;

“Anson Road Completion Date”      28th June, 2007;

“Anson Road Properties”           a total of twenty two strata lots located on levels 1,
                                  5 to 15 of the Anson Road Building owned by the
                                  Subsidiaries;

“Anson Road Purchaser”            Maximilian Realty Pte Ltd, a company incorporated
                                  in Singapore;

“Anson Road Vendors”              together, Harvest Day and UPM;

“Argyle”                          Argyle Street Management Limited;

“ASM”                             ASM Asia Recovery (Master) Fund;

“associates”                      has the meaning ascribed to it under the Listing Rules;

“Aura Park Completion Date”       the date which is three months immediately after the
                                  Acceptance Date, or the Aura Park Sale Approval,
                                  whichever is later;

“Aura Park Project”               the residential development project on the Aura Park
                                  Property;

“Aura Park Property”              the units in No. 53 Holland Road, Aura Park,
                                  Singapore, the common property in Strata Title Plan
                                  No. 1321, and the land thereon being Lot 2326X,
                                  Mukim 2, located in Singapore with a site area of
                                  approximately 3,318.9 square metres;


                                        •1•
                             DEFINITIONS


“Aura Park Purchase Price”   an amount of S$55,500,000 (equivalent to
                             approximately HK$283,383,000), being the
                             consideration payable for the Aura Park Property in
                             accordance with the Conditions of Tender;

“Aura Park Sale Approval”    the later of (a) three months after an order has been
                             made by the Strata Titles Board for the sale of the
                             Aura Park Property pursuant to the Land Titles (Strata)
                             Act (if required), or (b) in the event the Aura Park
                             Vendors’ solicitors confirm in writing that an order of
                             the Strata Titles Board is no longer required, three
                             months from the date of receipt by Lippo Project of
                             such confirmation;

“Aura Park Vendors”          the registered proprietors of not less than 80 per cent.
                             of the units who have agreed in writing to sell their
                             units, and in the event that an order for the sale of the
                             Aura Park Property is made by the Strata Titles Board,
                             “Aura Park Vendors” shall mean all the registered
                             proprietors of all units after such order has been made;

“Board”                      the board of directors of the Company;

“Business Day”               a day (other than a Saturday, Sunday or gazetted
                             public holiday) on which commercial banks are open
                             for business in Singapore;

“Company”                    Hongkong Chinese Limited (香 港 華 人 有 限 公 司 * ), a
                             company incorporated in Bermuda with limited
                             liability, the shares of which are listed on the Stock
                             Exchange and an approximate 72.26 per cent.
                             subsidiary of LCR;

“Conditions of Tender”       the conditions of tender and sale issued by the Aura
                             Park Vendors in connection with the offer for sale of
                             the Aura Park Property;

“connected persons”          has the meaning ascribed to it under the Listing Rules;

“Director(s)”                director(s) of the Company;

“Disposal”                   the disposal of the entire issued and paid up share
                             capital of GHL pursuant to the Anson Road Agreement
                             together with the novation of the Shareholders’ Loans
                             to the Anson Road Purchaser;




                                   •2•
                             DEFINITIONS


“GHL”                        Grandbury Holdings Limited, a company incorporated
                             in the British Virgin Islands with limited liability and
                             its voting share capital was held as to 90.5 per cent.
                             by UPM and 9.5 per cent. by Harvest Day before the
                             Anson Road Completion;

“Group”                      the Company and its subsidiaries;

“Harvest Day”                Harvest Day Group Limited, a company incorporated
                             in the British Virgin Islands with limited liability and
                             a subsidiary of ASM;

“HKC Property”               HKC Property Investment Holdings Limited, a
                             company incorporated in the British Virgin Islands
                             with limited liability and a wholly-owned subsidiary
                             of the Company;

“HKCL Holdings”              HKCL Holdings Limited, a wholly-owned subsidiary
                             of LCR and the immediate holding company of the
                             Company, holding approximately 59.89 per cent., being
                             806,656,440 Shares, of the Company’s issued share
                             capital;

“Hong Kong”                  the Hong Kong Special Administrative Region of the
                             PRC;

“Land Titles (Strata) Act”   the Land Titles (Strata) Act (Cap. 158) of the laws of
                             Singapore;

“Latest Practicable Date”    5th July, 2007, being the latest practicable date prior
                             to the printing of this circular for ascertaining certain
                             information contained herein;

“LCR”                        Lippo China Resources Limited 力 寶 華 潤 有 限 公 司 , a
                             company incorporated in Hong Kong with limited
                             liability whose shares are listed on the Stock Exchange
                             and an approximate 71.13 per cent. subsidiary of
                             Lippo;

“LCR Directors”              directors of LCR;

“LCR Shareholders”           shareholders of LCR;

“Lippo”                      Lippo Limited 力寶有限公司, a company incorporated
                             in Hong Kong with limited liability whose shares are
                             listed on the Stock Exchange;




                                   •3•
                        DEFINITIONS


“Lippo Directors”       directors of Lippo;

“Lippo Project”         Lippo Project Pte. Limited, a company incorporated
                        in Singapore with limited liability and an indirect
                        wholly-owned subsidiary of the Company;

“Lippo Shareholders”    shareholders of Lippo;

“Listing Rules”         the Rules Governing the Listing of Securities on the
                        Stock Exchange;

“Memorandum”            the legally binding memorandum of understanding
                        dated 27th January, 2006 entered into between HKC
                        Property and ASM;

“Model Code”            the Model Code for Securities Transactions by Directors
                        of Listed Issuers under the Listing Rules;

“PRC”                   the People’s Republic of China;

“SFO”                   the Securities and Futures Ordinance (Chapter 571 of
                        the Laws of Hong Kong);

“Shareholders”          the holders of the Shares;

“Shareholders’ Loans”   the two shareholders’ loans in the aggregate sum of
                        a p p ro x i m a t e l y S $ 3 5 , 6 0 9 , 0 0 0 ( e q u i v a l e n t t o
                        approximately HK$181,285,000) comprising loans
                        amount of approximately S$28,495,000 (equivalent to
                        approximately HK$145,068,000) and S$7,114,000
                        (equivalent to approximately HK$36,217,000) advanced
                        by UPM and Harvest Day to GHL respectively;

“Shares”                ordinary shares of HK$1.00 each in the capital of the
                        Company;

“Singapore”             the Republic of Singapore;

“Stock Exchange”        The Stock Exchange of Hong Kong Limited;

“Strata Titles Board”   a strata titles board constituted under the Building
                        Maintenance and Strata Management Act 2004 (Act 47
                        of 2004) of Singapore;

“Subsidiaries”          a total of eleven wholly-owned subsidiaries of GHL,
                        being the owners of the Anson Road Properties;




                                •4•
                                            DEFINITIONS


“Tender”                                     the tender offer submitted by the Group for the en-bloc
                                             purchase of the Aura Park Property;

“Tender Fee”                                 S$350,000 (equivalent to approximately HK$1,787,000);

“UPM”                                        UPM Ltd., a company incorporated in the British
                                             Virgin Islands with limited liability and a wholly-
                                             owned subsidiary of HKC Property;

“HK$”                                        Hong Kong dollar, the lawful currency of Hong Kong;

“MOP”                                        Macau pataca, the lawful currency of the Macao Special
                                             Administrative Region of the PRC;

“S$”                                         Singapore dollar, the lawful currency of Singapore;
                                             and

“US$”                                        United States dollar, the lawful currency of the United
                                             States of America.

Note:

(i)     For use in this circular in respect of the Disposal and for illustration purposes only, conversion of
        S$ into HK$ is based on the approximate exchange rate of HK$5.091 to S$1 as at 14th June, 2007. No
        representation or assurance is made or given that any amount in HK$ or S$ could be converted at such
        rate or any other rates.

(ii)    For use in this circular in respect of the Acquisition and for illustration purposes only, conversion of
        S$ into HK$ is based on the approximate exchange rate of HK$5.106 to S$1 as at 20th June, 2007. No
        representation or assurance is made or given that any amount in HK$ or S$ could be converted at such
        rate or any other rates.




                                                     •5•
                                      LETTER FROM THE BOARD




             HONGKONG CHINESE LIMITED
                                  香港華人有限公司*
                                      (Incorporated in Bermuda with limited liability)
                                                  (Stock Code: 655)

Non-executive Directors:                                                                 Registered Office:
Dr. Mochtar Riady (Chairman)                                                             Clarendon House
Mr. Leon Nim Leung Chan                                                                  Church Street
                                                                                         Hamilton HM 11
Executive Directors:                                                                     Bermuda
Mr. Stephen Riady (Chief Executive Officer)
Mr. John Luen Wai Lee, J.P.                                                              Principal Place of Business:
Mr. Kee Yee Kor                                                                          24th Floor
                                                                                         Tower One
Independent Non-executive Directors:                                                     Lippo Centre
Mr. Albert Saychuan Cheok                                                                89 Queensway
Mr. Victor Ha Kuk Yung                                                                   Hong Kong
Mr. King Fai Tsui

                                                                                         9th July, 2007

To the Shareholders

Dear Sir or Madam,

                                       MAJOR TRANSACTION
                               DISPOSAL OF STRATA INTEREST IN
                                79 ANSON ROAD IN SINGAPORE

                                                          AND

                              DISCLOSEABLE TRANSACTION
                      ACQUISITION OF A PROPERTY IN SINGAPORE

INTRODUCTION

      Reference is made to the joint announcement of Lippo, LCR and the Company dated
15th June, 2007 announcing that on that date, UPM and Harvest Day, as the Anson Road
Vendors, entered into a sale and purchase agreement with Maximilian Realty Pte Ltd, as
the Anson Road Purchaser, in relation to the sale by the Anson Road Vendors to the
Anson Road Purchaser, of their entire equity interests in the joint venture company, GHL,
together with the novation, to the Anson Road Purchaser, of all amounts outstanding
under the Shareholders’ Loans made by the Anson Road Vendors to GHL.

*   For identification purpose only



                                                          •6•
                           LETTER FROM THE BOARD


      Reference is also made to the joint announcement of Lippo, LCR and the Company
dated 21st June, 2007 announcing that the Tender for the collective sale of the Aura Park
Property for S$55,500,000 (equivalent to approximately HK$283,383,000) was formally
accepted by the Aura Park Vendors. Lippo Project, an indirect wholly-owned subsidiary
of the Company, was nominated as the purchaser of the Aura Park Property on 20th June,
2007 pursuant to the Conditions of Tender.

      The purpose of this circular is to provide you with further information in relation to
the Disposal and the Acquisition.

THE DISPOSAL

      On 15th June, 2007, UPM and Harvest Day, as the Anson Road Vendors, entered
into a sale and purchase agreement with Maximilian Realty Pte Ltd, as the Anson Road
Purchaser, in relation to the sale by the Anson Road Vendors to the Anson Road Purchaser,
of their entire equity interests in the joint venture company, GHL, together with the
novation, to the Anson Road Purchaser, of all amounts outstanding under the Shareholders’
Loans made by the Anson Road Vendors to GHL.

       UPM is wholly owned by HKC Property which in turn is a wholly-owned subsidiary
of the Company and Harvest Day is a subsidiary of ASM. GHL was a joint venture company
established by HKC Property and ASM for the purposes of being the holding company of
the Subsidiaries. The voting share capital of GHL was held as to 90.5 per cent. and 9.5 per
cent. by UPM and Harvest Day respectively prior to the Anson Road Completion. Harvest
Day was also holder of all the issued preference shares in GHL which did not carry any
voting rights in GHL. The Subsidiaries are the owners of twenty two strata lots in the
Anson Road Building. The aggregate consideration for the Disposal was S$149,000,000
(equivalent to approximately HK$758,559,000).

       Reference is made to the joint announcement of Lippo, LCR and the Company dated
10th February, 2006 pursuant to which it was announced that on 18th January, 2006, the
Subsidiaries entered into a total of twenty two sale and purchase agreements with the
respective twenty two vendors of the Anson Road Properties. It was further announced
that on 27th January, 2006, HKC Property and ASM entered into the Memorandum in
relation to (i) the setting up of GHL and the Subsidiaries and (ii) certain rights between
the parties as shareholders of GHL being the joint venture company. Upon the Anson
Road Completion, the Memorandum automatically terminated.

       Further terms and conditions of the Anson Road Agreement are stated in the section
of this circular headed “Terms of the Anson Road Agreement “ below.

      Details of the Anson Road Building and the Anson Road Properties

           The Anson Road Building is a freehold commercial office building situated
      within the Central Business District of Singapore with a total strata area of
      approximately 19,415 square metres. The Anson Road Properties owned by the
      Subsidiaries comprises a total strata area of approximately 10,909 square metres and


                                           •7•
                     LETTER FROM THE BOARD


a current total lettable area of approximately 10,291 square metres based on the
current leasing configuration. The Anson Road Properties represent approximately
56.19 per cent. .of the total strata area of the Anson Road Building.

      The sale price for the Disposal was agreed at after arm’s length negotiation
between the parties and by reference to market information such as recent transaction
records of comparable properties in the vicinity, information from market
practitioners and analysts obtained by the Company on an informal basis.

Terms of the Anson Road Agreement

Date:             15th June, 2007

Parties:          (1) the Anson Road Vendors and (2) the Anson Road Purchaser

Transaction:      Harvest Day and UPM, as the Anson Road Vendors, shall sell as
                  legal and beneficial owners, to the Anson Road Purchaser, the
                  entire issued and paid up share capital of GHL, together with the
                  novation, to the Anson Road Purchaser, of all amounts outstanding
                  under the Shareholders’ Loans

Consideration:    The consideration paid by the Anson Road Purchaser for the entire
                  equity interest in GHL and the Shareholders’ Loans was
                  S$149,000,000 (equivalent to approximately HK$758,559,000), of
                  which S$14,800,000 (equivalent to approximately HK$75,347,000)
                  was paid by the Anson Road Purchaser on the third Business Day
                  after the signing of the Anson Road Agreement, as a refundable
                  deposit (save as a result of any wilful default on the part of the
                  Anson Road Purchaser), to the Anson Road Vendors and was held
                  by the Anson Road Vendors’ solicitors as stakeholders. Such
                  deposit had been used to offset against the consideration on Anson
                  Road Completion.

                  The balance amount of S$134,200,000 (equivalent to approximately
                  HK$683,212,000) was paid on the Anson Road Completion.

                  The consideration was determined after arm’s length negotiation
                  between the parties. The Directors, the LCR Directors and the Lippo
                  Directors, consider that the Anson Road Agreement was on normal
                  commercial terms and that the consideration price was fair and
                  reasonable so far as the Shareholders, the LCR Shareholders and
                  the Lippo Shareholders were concerned.




                                    •8•
                     LETTER FROM THE BOARD


Conditions:   Completion of the Anson Road Agreement was conditional upon
              satisfaction or waiver in writing of the following conditions on or
              prior to the Anson Road Completion Date:

              (i)     the conduct of a property survey on the Anson Road
                      Properties and the results of such property survey being
                      reasonably satisfactory to the Anson Road Purchaser,
                      provided always that any insignificant encroachment onto
                      neighboring areas or onto the Anson Road Properties by
                      neighboring areas did not render the results of such property
                      survey unsatisfactory to the Anson Road Purchaser. Whether
                      an encroachment was insignificant or not was discussed and
                      mutually agreed upon by the parties;

              (ii)    save as disclosed, title to the Anson Road Properties were
                      free from all encumbrances;

              (iii)   receipt of satisfactory replies to the usual legal requisitions
                      from the relevant authorities with respect to the Anson Road
                      Properties;

              (iv)    there being no compulsory acquisition or notice of intended
                      acquisition by the government or any relevant authority
                      affecting any or any part of the Anson Road Properties;

              (v)     there being no breach of any of the warranties and the
                      warranties remaining true and not misleading in any material
                      respect;

              (vi)    none of the following having occurred (i) resolution passed
                      or court order made for the winding up of GHL, any of the
                      Subsidiaries, or the Anson Road Vendors, (ii) the
                      appointment of a liquidator, receiver or judicial manager in
                      respect of GHL or the Anson Road Vendors or all or any
                      assets of GHL or the Anson Road Vendors, (iii) the entry by
                      GHL or the Anson Road Vendors into any arrangement or
                      composition for the benefit of its creditors, (iv) GHL or the
                      Anson Road Vendors being unable to pay its debts as and
                      when they fall due, (v) cessation of business by GHL or the
                      Anson Road Vendors, or (vi) any distress, attachment or other
                      legal process levied, enforced or sued out on or against the
                      Anson Road Properties;




                                   •9•
                    LETTER FROM THE BOARD


                 (vii) the Anson Road Vendors having received all corporate
                       approvals and authorisation necessary for the entry into and
                       the performance of its obligations under the Anson Road
                       Agreement and the transactions contemplated thereunder;
                       and

                 (viii) the absence of the occurrence any event which had a material
                        adverse effect on the business, affairs, assets, liabilities,
                        results of operations, condition or prospects of GHL and the
                        Subsidiaries.

      The sale proceeds have been applied towards the repayment of a bank loan in
the amount of S$66,500,000 (equivalent to approximately HK$338,552,000) secured
by the Anson Road Properties and the remaining proceeds received by UPM will be
used as working capital. The Group shall continue to seek for opportunities in long
term property projects in the region. Income has been generated by the Anson Road
Properties since the acquisition of the Anson Road Properties in April 2006. The
audited consolidated net profit before and after tax of GHL for the period ended
31st December, 2006 was S$31,989,000 (equivalent to approximately HK$162,856,000)
and S$26,027,000 (equivalent to approximately HK$132,503,000), respectively. By
reference to the consolidated financial statements of GHL for the period ended 31st
December, 2006, it is estimated that the Disposal would result in a net gain after
minority interests of approximately HK$84 million for the Group. The audited book
value of GHL was S$26,029,000 (equivalent to approximately HK$132,514,000) as at
31st December, 2006. Upon the Anson Road Completion, GHL ceased to be a
subsidiary of the Group.

Information on the Anson Road Vendors and the Anson Road Purchaser

      GHL’s principal business is investment holding and its voting share capital
was owned as to 90.5 per cent. and 9.5 per cent. by UPM and Harvest Day respectively
prior to the Anson Road Completion. Harvest Day was also holder of all the issued
preference shares in GHL but such preference shares did not carry any voting rights
in GHL. UPM is a wholly-owned subsidiary of HKC Property. Harvest Day is a
subsidiary of ASM which is a fund incorporated in February 2003 for the principal
purpose of investing in Asian distressed assets (ex-Japan) and is managed by Argyle.
The Group currently has less than 0.5 per cent. interest in ASM, while ASM and
another fund managed by Argyle, have an interest of approximately 6.94 per cent.,
0.65 per cent. and 0.84 per cent. in Lippo, LCR and the Company respectively. Save
as aforesaid, ASM, Argyle and its ultimate beneficial owners are third parties
independent of and not connected with Lippo, LCR, the Company and their
connected persons.




                                   • 10 •
                           LETTER FROM THE BOARD


            The principal business activity of the Anson Road Purchaser is property
      investment and to act as the new holding company of GHL upon completion of the
      Disposal. To the best of the knowledge, information and belief of the Directors and
      having made reasonable enquiry, the Anson Road Purchaser and its ultimate
      beneficial owners are third parties independent of and not connected with the
      Company and its connected persons.

      Reasons for and benefits of the Disposal

            The original intention of the Group’s investment in the Anson Road Properties
      was for long term investment purposes. However, the Lippo Directors , the LCR
      Directors and the Directors consider that given the increase in Singapore property
      values, the Disposal would enable the Group to capture the opportunity to realize
      its gain from investment in the Anson Road Properties. The sale proceeds would
      provide additional working capital to the Group.

             Accordingly, the Directors are of the view that the terms of the Disposal are
      fair and reasonable, are on arms length basis and are in the interest of the Company
      and the Shareholders as a whole. Accordingly, the Directors recommend the
      Shareholders to vote in favour of the Disposal.

      Financial effects of the Disposal

            It is estimated that the Disposal would result in a net profit after minority
      interest of approximately HK$84 million for the Group and such net profit would be
      accounted for in the books of the Group for the financial year ending 31st December,
      2007. The non-current assets, current liabilities and non-current liabilities of the
      Group would decrease by approximately HK$667 million, HK$10 million and HK$369
      million, respectively and the current assets of the Group would increase by
      approximately HK$311 million as a consequence of the Disposal.

THE ACQUISITION

      The Tender for the collective sale of the Aura Park Property for S$55,500,000
(equivalent to approximately HK$283,383,000) was formally accepted by the Aura Park
Vendors. Lippo Project, an indirect wholly-owned subsidiary of the Company, was
nominated as the purchaser of the Aura Park Property on 20th June, 2007 pursuant to the
Conditions of Tender. The Tender consideration was arrived at after taking into
consideration the potential development value, location of the Aura Park Property and
the recent transacted prices for properties in the vicinity. The Tender process was open to
the public.




                                          • 11 •
                       LETTER FROM THE BOARD


The Tender and the Acquisition

     The Aura Park Property comprises a development known as No.53 Holland
Road, Aura Park, Singapore with a site area of approximately 3,318.9 square metres.
The Tender is subject to the Conditions of Tender.

     Pursuant to the Conditions of Tender, details of the Tender, the Aura Park
Property and the Acquisition thereof are as follows:

Effective date:   the Acceptance Date

Subject matter:   the development known as No.53 Holland Road, Aura Park,
                  Singapore, the common property in Strata Title Plan No.1321 and
                  the land thereon being Lot 2326X, Mukim 2, with a site area of
                  approximately 3,318.9 square metres

Aura Park        S$55,500,000 (equivalent to approximately HK$283,383,000)
 Purchase Price:

Payment:          The entire amount of the Aura Park Purchase Price is required to
                  be paid by cashier ’s order or banker ’s draft drawn on a bank in
                  Singapore in accordance with the following timetable:

                  1.    the Tender Fee paid on submission of the Tender;

                  2.    10 per cent. of the Aura Park Purchase Price (less the Tender
                        Fee) which was paid within one week of the Acceptance Date;
                        and

                  3.    90 per cent. of the Aura Park Purchase Price to be paid
                        within three months of the Acceptance Date, or the Aura
                        Park Sale Approval, whichever is the later.

                  It is currently intended that the Aura Park Purchase Price will be
                  funded partly by internal resources and partly by external
                  financings including bank borrowings. The terms of such bank
                  borrowings have not yet been finalised, and these terms will be
                  finalised as soon as practicable.

Use of the        residential purposes
 Aura Park
 Property:

Tenure:           estate in fee simple




                                    • 12 •
                     LETTER FROM THE BOARD


Information on the Aura Park Property and the Aura Park Project

      The Aura Park Property comprises the units in No.53 Holland Road, Aura
Park, Singapore, the common property in Strata Title Plan No.1321 and the land
thereon being Lot 2326X, Mukim 2, with a site area of approximately 3,318.9 square
metres. The permitted use of the site is for residential purposes. The site currently
has a maximum gross plot ratio of 1.4.

      It is currently intended that the Aura Park Property will be redeveloped into
high class residential apartments comprising approximately 24 units.

      The Tender is subject to the Conditions of Tender, which provide that the
Acquisition is conditional upon an order for the sale of the Aura Park Property
being granted by the Strata Titles Board within 12 months from the date of application
for such order by the Aura Park Vendors in the event there are minority owners
who object to the collective sale. The Acquisition is also conditional on Lippo Project
obtaining the approval of the relevant authorities in Singapore for the purchase of
the Aura Park Property on or before the Aura Park Completion Date.

       To the best of the knowledge, information and belief of the Directors and
having made reasonable enquiry, each of the Aura Park Vendors are individual
owners of their respective units in the Aura Park Property and, each of the Aura
Park Vendors together with any ultimate beneficial owners of the Aura Park Property
(if any) are third parties independent of the Company and its connected persons.

Reasons for and benefits of the Acquisition

      The Lippo Directors, the LCR Directors and the Directors are optimistic about
the residential property market in Singapore. To enhance its asset portfolio, the
Group wishes to acquire appropriate property interests in Singapore as the Singapore
market, in particular, has been performing well in the past years.

      As the principal activities of the Group include, inter alia, property investment
and development, the Acquisition is a furtherance of the principal businesses of the
Group. As such, it is expected that the Acquisition will contribute positively to the
future development of the Group.

      Accordingly, the Directors are of the view that the terms of the Acquisition
are fair and reasonable, are on an arm’s length basis and are in the interests of the
Company and its Shareholders as a whole.

Financial Effects of the Acquisition

      The non-current assets of the Group will increase by approximately HK$283
million while the current assets of the Group will decrease by the same amount as a
consequence of the Acquisition.




                                     • 13 •
                            LETTER FROM THE BOARD


            The Directors believe that the Acquisition will contribute positively to the
      earnings base of the Group but the quantitative effect will depend on the progress
      of the development of the Aura Park Project.

      Information on Lippo Project

           Lippo Project is a company incorporated and existing under the laws of
      Singapore with limited liability and is an indirect wholly-owned subsidiary of the
      Company. Its principal business activity will be property investment and
      development.

INFORMATION ON LIPPO, LCR AND THE COMPANY

      The principal business activity of each of Lippo and LCR is investment holding.
LCR is one of Lippo ‘s principal subsidiaries. The principal activities of the subsidiaries of
Lippo and LCR include investment holding, property investment and development,
operation of department stores, fund management, underwriting, corporate finance,
securities broking, securities investment, treasury investment, money lending, banking
and other related financial services.

      The principal activity of the Company and HKC Property is investment holding.
The principal activities of the Company and its subsidiaries are investment holding,
property investment and development, fund management, underwriting, corporate finance,
securities broking, securities investment, treasury investment, money lending, banking
and other related financial services.

LISTING RULES IMPLICATIONS

The Disposal

      The Subsidiaries are wholly owned by GHL. The voting share capital of GHL was
owned as to 90.5 per cent. and 9.5 per cent. by UPM and Harvest Day respectively. UPM
is a wholly-owned subsidiary of HKC Property which in turn is a wholly-owned subsidiary
of the Company.

     Lippo is interested in approximately 71.13 per cent. of the issued share capital of
LCR, and accordingly, LCR is a subsidiary of Lippo. LCR, through its indirect wholly-
owned subsidiary, HKCL Holdings, holds approximately 59.89 per cent. interest in the
Company. In addition, LCR directly holds approximately 12.37 per cent. interest in the
Company. Accordingly, the Company is a subsidiary of LCR.

      The Disposal exceeds 25 per cent. but does not exceed 75 per cent. of one or more of
the applicable percentage ratios (as defined in the Listing Rules) of the Company and
therefore constitutes a major transaction for the Company under Chapter 14 of the Listing
Rules. HKCL Holdings being the immediate holding company of the Company holding
806,656,440 ordinary shares of HK$1.00 each in, representing approximately 59.89 per
cent. of, the issued share capital of the Company, had given its written consent to the
Company for the entering to of the Anson Road Agreement.

                                           • 14 •
                          LETTER FROM THE BOARD


      No Shareholder ’s interest in the Disposal was different from any other Shareholders
of the Company and no Shareholders had any material interest in the Disposal. Since no
Shareholder was required to abstain from voting on the resolution to approve the Anson
Road Agreement, the Company was not required to convene a shareholders’ meeting to
approve the Anson Road Agreement and the Disposal contemplated therein pursuant to
Rule 14.44 of the Listing Rules.

The Acquisition

      As the Acquisition exceeds 5 per cent. but does not exceed 25 per cent. of one or
more of the applicable percentage ratios (as defined in the Listing Rules) of the Company,
it constitutes a discloseable transaction for the Company under Chapter 14 of the Listing
Rules.

FURTHER INFORMATION

       Your attention is drawn to the additional information set out in the Appendices to
this circular.




                                                          Yours faithfully,
                                                       By Order of the Board
                                                   HONGKONG CHINESE LIMITED
                                                        John Luen Wai Lee
                                                             Director




                                         • 15 •
     APPENDIX I                  FINANCIAL INFORMATION OF THE GROUP


1.     FINANCIAL SUMMARY

       Set out below is a summary of the audited consolidated profit and loss account and
       consolidated balance sheet of the Group for each of the three years ended 31st
       December, 2006, extracted from the relevant annual reports of the Company:

(a)    Consolidated Profit and Loss Account

                                                             Years ended 31st December,
                                                           2006            2005          2004
                                                        HK$’000        HK$’000        HK$’000
                                                       (audited)      (audited)      (audited)

       Revenue                                         1,099,028      1,147,457       1,325,136
       Cost of sales                                    (934,659)      (954,226)     (1,170,412)

       Gross profit                                      164,369        193,231        154,724
       Administrative expenses                          (114,516)       (74,224)       (70,531)
       Other operating expenses                          (36,313)       (45,497)       (35,833)
       Fair value gains on investment
         properties                                     207,276          74,784               –
       Write-back of allowance/(Allowance)
         for bad and doubtful debts relating to:
            Banking operation                                  4          2,140             666
            Non-banking operations                         1,267        (33,036)         (1,203)
       Provisions for impairment losses on:
         Associates                                            –         (5,859)       (16,603)
         Available-for-sale financial assets              (5,797)       (53,757)             –
         Goodwill                                              –           (412)             –
         Investment securities                                 –              –         (2,776)
       Gain on disposal of available-for-sale
         financial assets                                86,238           8,347               –
       Net fair value gain on financial assets
         at fair value through profit or loss           216,728          70,370               –
       Net unrealised holding loss on other
         investments in securities                             –              –        (72,097)
       Net unrealised loss on transfer of investment
         securities and held-to-maturity securities
         to other investments in securities                    –              –          (7,856)




                                              • 16 •
APPENDIX I                     FINANCIAL INFORMATION OF THE GROUP


                                                    Years ended 31st December,
                                                  2006            2005          2004
                                               HK$’000        HK$’000        HK$’000
                                              (audited)      (audited)      (audited)

  Finance costs                                 (49,064)        (7,363)        (4,873)
  Share of results of associates                 (4,014)        (2,548)        (6,517)
  Share of results of jointly
    controlled entities                          (2,644)          (423)             –


  Profit/(Loss) before tax                     463,534         125,753        (62,899)
  Tax                                          (46,975)        (15,033)        (3,535)


  Profit/(Loss) for the year                   416,559         110,720        (66,434)


  Attributable to:
    Equity holders of the Company              391,472         111,761        (64,957)
    Minority interests                          25,087          (1,041)        (1,477)


                                               416,559         110,720        (66,434)




                                     • 17 •
 APPENDIX I                        FINANCIAL INFORMATION OF THE GROUP


(b)   Consolidated balance sheet

                                                                      As at 31st December,
                                                              2006                2005         2004
                                                           HK$’000            HK$’000       HK$’000
                                                          (audited)          (audited)     (audited)

      NON-CURRENT ASSETS
      Goodwill                                               57,285            57,285         56,553
      Fixed assets                                           47,443            49,593         36,976
      Investment properties                               1,136,256           421,523         96,144
      Properties under development                          160,115           105,096         99,767
      Interests in associates                             1,961,964           175,235         27,166
      Interests in jointly controlled entities               49,299            12,615          7,313
      Available-for-sale financial assets                   102,869           175,048              –
      Investment securities                                       –                 –        365,658
      Held-to-maturity financial assets                       9,582             9,604          9,643
      Financial assets at fair value through
         profit or loss                                           –           268,753              –
      Loans and advances                                     27,066            29,975         45,890


                                                          3,551,879         1,304,727        745,110


      CURRENT ASSETS
      Property held for sale                                 19,223            12,441         10,140
      Available-for-sale financial assets                         –           213,896              –
      Financial assets at fair value through
         profit or loss                                    821,025            617,913              –
      Other investments in securities                            –                  –      1,133,217
      Loans and advances                                   273,324            240,498        277,639
      Debtors, prepayments and deposits                    179,171            181,328        171,692
      Client trust bank balances                           582,905            444,460        389,123
      Treasury bills                                       194,970             15,520         23,765
      Cash and cash balances                               363,487            621,740        858,120

                                                          2,434,105         2,347,796      2,863,696




                                                 • 18 •
APPENDIX I                   FINANCIAL INFORMATION OF THE GROUP


                                                               As at 31st December,
                                                       2006                2005         2004
                                                    HK$’000            HK$’000       HK$’000
                                                   (audited)          (audited)     (audited)

  CURRENT LIABILITIES
  Bank and other borrowings                         942,205             25,000        208,761
  Creditors, accruals and deposits received         832,729            629,584        541,737
  Current, fixed, savings and other
    deposits of customers                           305,521            116,743        117,641
  Tax payable                                         8,265              4,112          4,129


                                                   2,088,720           775,439        872,268


  NET CURRENT ASSETS                                345,385          1,572,357      1,991,428


  TOTAL ASSETS LESS CURRENT
   LIABILITIES                                     3,897,264         2,877,084      2,736,538

  NON-CURRENT LIABILITIES
  Bank and other borrowings                         547,368                  –              –
  Deferred tax liabilities                           58,207             15,989          1,234


                                                    605,575             15,989          1,234


  NET ASSETS                                       3,291,689         2,861,095      2,735,304


  EQUITY
  Equity attributable to equity holders
    of the Company
  Share capital                                    1,346,829         1,346,829      1,346,829
  Reserves                                         1,845,575         1,482,187      1,358,271

                                                   3,192,404         2,829,016      2,705,100

  Minority interests                                 99,285             32,079         30,204


                                                   3,291,689         2,861,095      2,735,304




                                          • 19 •
     APPENDIX I                  FINANCIAL INFORMATION OF THE GROUP


2.     AUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED
       31ST DECEMBER, 2006

       The audited consolidated financial statements of the Group for the year ended 31st
       December, 2006 set out below is not subject to any qualified opinion.

       CONSOLIDATED PROFIT AND LOSS ACCOUNT
       For the year ended 31st December, 2006

                                                                      2006         2005
                                                          Note     HK$’000      HK$’000

       Revenue                                              5      1,099,028    1,147,457
       Cost of sales                                                (934,659)    (954,226)

       Gross profit                                                 164,369      193,231

       Administrative expenses                                      (114,516)     (74,224)
       Other operating expenses                                      (36,313)     (45,497)
       Write-back of allowance/(Allowance) for
         bad and doubtful debts relating to:
            Banking operation                                              4        2,140
            Non-banking operations                          6          1,267      (33,036)
       Provisions for impairment losses on:
         Associates                                                        –       (5,859)
         Available-for-sale financial assets                          (5,797)     (53,757)
         Goodwill                                                          –         (412)
       Gain on disposal of available-for-sale
         financial assets                                            86,238         8,347
       Net fair value gain on financial assets at
         fair value through profit or loss                          216,728       70,370
       Fair value gains on investment properties                    207,276       74,784
       Finance costs                                       11       (49,064)      (7,363)
       Share of results of associates                                (4,014)      (2,548)
       Share of results of jointly controlled entities               (2,644)        (423)

       Profit before tax                                   7        463,534      125,753
       Tax                                                 12       (46,975)     (15,033)

       Profit for the year                                          416,559       110,720

       Attributable to:
         Equity holders of the Company                   13 & 32    391,472       111,761
         Minority interests                                          25,087        (1,041)

                                                                    416,559       110,720




                                             • 20 •
APPENDIX I               FINANCIAL INFORMATION OF THE GROUP


                                                      2006       2005
                                                   HK cents   HK cents

  Earnings per share attributable to equity
    holders of the Company                    14
      Basic                                            29.1        8.3

      Diluted                                         N/A        N/A

                                                   HK$’000    HK$’000

  Distributions                               15
   Interim, declared and paid                        20,202     20,202
   Final, proposed/paid after the balance
      sheet date                                     67,341     40,405

                                                     87,543     60,607




                                     • 21 •
APPENDIX I                  FINANCIAL INFORMATION OF THE GROUP


  CONSOLIDATED BALANCE SHEET
  As at 31st December, 2006

                                                             2006        2005
                                                   Note   HK$’000     HK$’000

  Non-current assets
  Goodwill                                         16        57,285     57,285
  Fixed assets                                     17        47,443     49,593
  Investment properties                            18     1,136,256    421,523
  Properties under development                     19       160,115    105,096
  Interests in associates                          20     1,961,964    175,235
  Interests in jointly controlled entities         21        49,299     12,615
  Available-for-sale financial assets              22       102,869    175,048
  Held-to-maturity financial assets                23         9,582      9,604
  Financial assets at fair value through
    profit or loss                                 24            –     268,753
  Loans and advances                               25       27,066      29,975


                                                          3,551,879   1,304,727


  Current assets
  Property held for sale                                    19,223      12,441
  Available-for-sale financial assets              22            –     213,896
  Financial assets at fair value through
    profit or loss                                 24      821,025     617,913
  Loans and advances                               25      273,324     240,498
  Debtors, prepayments and deposits                26      179,171     181,328
  Client trust bank balances                               582,905     444,460
  Treasury bills                                           194,970      15,520
  Cash and bank balances                                   363,487     621,740

                                                          2,434,105   2,347,796


  Current liabilities
  Bank and other borrowings                        27      942,205      25,000
  Creditors, accruals and deposits received        28      832,729     629,584
  Current, fixed, savings and other deposits
    of customers                                   29      305,521     116,743
  Tax payable                                                8,265       4,112


                                                          2,088,720    775,439


  Net current assets                                       345,385    1,572,357


  Total assets less current liabilities                   3,897,264   2,877,084


                                          • 22 •
APPENDIX I                FINANCIAL INFORMATION OF THE GROUP


                                                         2006        2005
                                               Note   HK$’000     HK$’000

  Non-current liabilities
  Bank and other borrowings                    27      547,368           –
  Deferred tax liabilities                     30       58,207      15,989


                                                       605,575      15,989


  Net assets                                          3,291,689   2,861,095


  Equity
  Equity attributable to equity holders
    of the Company
  Share capital                                31     1,346,829   1,346,829
  Reserves                                     32     1,845,575   1,482,187

                                                      3,192,404   2,829,016
  Minority interests                           32        99,285      32,079


                                                      3,291,689   2,861,095




                                      • 23 •
APPENDIX I                 FINANCIAL INFORMATION OF THE GROUP


  CONSOLIDATED SUMMARY STATEMENT OF CHANGES IN EQUITY
  For the year ended 31st December, 2006

                                                               2006         2005
                                                   Note     HK$’000      HK$’000

  Total equity at 1st January                               2,861,095    2,731,386

  Changes in equity during the year:
  Exchange differences on translation of
    foreign operations                                        23,986        (5,152)
  Net fair value gain on available-for-sale
    financial assets                                          26,672       85,636
  Deferred tax arising from net fair value
    gain on available-for-sale financial assets     32         (2,921)      (3,670)
  Derecognition of available-for-sale
    financial assets                                32        (87,288)           –
  Share of reserves of associates and jointly
    controlled entities                             32        72,968             –

  Net income recognised directly in equity                    33,417       76,814
  Profit for the year                                        416,559      110,720

  Total recognised income and expense
    for the year                                             449,976      187,534
  Issue of shares by subsidiaries to minority
    shareholders                                    32           402        6,128
  Acquisition of shares in a subsidiary from
    a minority shareholder                          32          (258)            –
  Advances from minority shareholders
    of subsidiaries                                  32        41,384          870
  Changes in interests in subsidiaries               32          (303)      (4,216)
  2004 final distribution, declared                  32             –      (40,405)
  2005 interim distribution, declared                32             –      (20,202)
  2005 final distribution, declared               15 & 32     (40,405)           –
  2006 interim distribution, declared             15 & 32     (20,202)           –

                                                             430,594      129,709

  Total equity at 31st December                             3,291,689    2,861,095


  Total recognised income and expense for
    the year attributable to:
      Equity holders of the Company                          423,995      188,441
      Minority interests                                      25,981         (907)

                                                             449,976      187,534




                                       • 24 •
APPENDIX I                 FINANCIAL INFORMATION OF THE GROUP


  BALANCE SHEET
  As at 31st December, 2006

                                                             2006        2005
                                                   Note   HK$’000     HK$’000

  Non-current assets
  Fixed assets                                     17         3,970       2,689
  Interests in subsidiaries                        33     3,411,944   2,257,540
  Available-for-sale financial assets              22         3,165      51,935


                                                          3,419,079   2,312,164


  Current assets
  Financial assets at fair value through
    profit or loss                                 24       18,445     108,148
  Debtors, prepayments and deposits                          1,773       4,808
  Cash and bank balances                                    62,092     208,557


                                                            82,310     321,513


  Current liabilities
  Bank and other borrowings                        27      885,495           –
  Creditors, accruals and deposits received                 35,508      11,404


                                                           921,003      11,404


  Net current assets/(liabilities)                        (838,693)    310,109


  Total assets less current liabilities                   2,580,386   2,622,273


  Non-current liability
  Bank and other borrowings                        27       60,000           –


  Net assets                                              2,520,386   2,622,273


  Equity
  Share capital                                    31     1,346,829   1,346,829
  Reserves                                         32     1,173,557   1,275,444


                                                          2,520,386   2,622,273




                                          • 25 •
APPENDIX I                FINANCIAL INFORMATION OF THE GROUP


  CONSOLIDATED CASH FLOW STATEMENT
  For the year ended 31st December, 2006

                                                             2006         2005
                                                 Note     HK$’000      HK$’000

  Cash flows from operating activities
  Cash generated from operations                 34(a)     297,546     349,319
  Interest received                                         49,997      51,295
  Dividend received from listed and unlisted
    investments                                              3,074      21,618
  Dividend received from associates                          3,431       1,736
  Taxes paid:
    Hong Kong                                                  (426)        (55)
    Overseas                                                 (4,212)     (6,804)


  Net cash inflow from operating activities                349,410     417,109


  Cash flows from investing activities
  Proceeds from disposal of available-for-sale
    financial assets                                       313,923      39,371
  Payments to acquire:
    Items of fixed assets                                   (5,617)     (17,809)
    Available-for-sale financial assets                     (8,088)     (21,879)
  Additions to properties under development                (47,384)      (9,514)
  Additions to investment properties                      (473,643)    (250,172)
  Increase in interests in jointly controlled
    entities                                                   (197)     (5,721)
  Increase in interests in associates                    (1,292,187)   (157,934)
  Advances to associates                                   (271,389)     (2,293)
  Advances to jointly controlled entities                   (39,415)         (4)
  Disposal of subsidiaries, net of cash and
    bank balances disposed of                    34(b)       1,026       11,098
  Acquisition of shares in a subsidiary from
    a minority shareholder                                    (258)           –


  Net cash outflow from investing activities             (1,823,229)   (414,857)




                                      • 26 •
APPENDIX I                      FINANCIAL INFORMATION OF THE GROUP


                                                                              2006               2005
                                                           Note            HK$’000            HK$’000

  Cash flows from financing activities
  Interest paid                                                              (34,589)           (8,770)
  Distributions paid                                                         (60,607)          (60,607)
  Drawdown of bank and other borrowings
    (Note)                                                                 1,470,960            24,500
  Repayment of bank and other borrowings
    (Note)                                                                   (25,000)         (208,261)
  Issue of shares by subsidiaries to minority
    shareholders                                                                 402             6,128
  Advances from minority shareholders of
    subsidiaries                                                              41,384                870


  Net cash inflow/(outflow) from financing
   activities                                                              1,392,550          (246,140)

  Net decrease in cash and cash equivalents                                  (81,269)         (243,888)

  Cash and cash equivalents at beginning
    of year                                                                  637,260           881,885
  Exchange realignments                                                        2,466              (737)


  Cash and cash equivalents at end of year                                   558,457           637,260


  Analysis of balances of cash and cash
   equivalents:
     Cash and bank balances                                                  363,487           621,740
     Treasury bills                                                          194,970            15,520


                                                                             558,457           637,260


  Note:   The amounts exclude bank borrowings drawn down by the Group for lending to its margin
          clients in respect of the initial public offerings. All such bank borrowings were fully repaid
          during the year.




                                              • 27 •
APPENDIX I                     FINANCIAL INFORMATION OF THE GROUP


  NOTES TO THE FINANCIAL STATEMENTS

  1.    CORPORATE INFORMATION

        Hongkong Chinese Limited is a limited liability company incorporated in Bermuda. The principal
        place of business of the Company is located at 24th Floor, Tower One, Lippo Centre, 89
        Queensway, Hong Kong.

        The principal activity of the Company is investment holding. Its subsidiaries, associates and
        jointly controlled entities are principally engaged in investment holding, property investment
        and development, fund management, underwriting, corporate finance, securities broking,
        securities investment, treasury investment, money lending, banking and other related financial
        services.

        The immediate holding company of the Company is HKCL Holdings Limited which is
        incorporated in the Cayman Islands. In the opinion of the Directors, the ultimate holding company
        of the Company is Lippo Cayman Limited which is incorporated in the Cayman Islands.

  2.    BASIS OF PREPARATION

        These financial statements have been prepared in accordance with Hong Kong Financial Reporting
        Standards (“HKFRSs”) (which also include Hong Kong Accounting Standards (“HKASs”) and
        Interpretations) issued by the Hong Kong Institute of Certified Public Accountants, accounting
        principles generally accepted in Hong Kong and the disclosure requirements of the Hong Kong
        Companies Ordinance. They have been prepared under the historical cost convention, except for
        investment properties and certain financial assets, which have been measured at fair value.
        These financial statements are presented in Hong Kong dollars (“HK$”) and all values are rounded
        to the nearest thousand (HK$’000) except when otherwise indicated.

        Basis of consolidation

        The consolidated financial statements incorporate the financial statements of the Company and
        its subsidiaries for the year ended 31st December, 2006. Adjustments are made to bring into line
        any dissimilar accounting policies that may exist. The results of subsidiaries are consolidated
        from the date of acquisition, being the date on which the Group obtains control, and continue to
        be consolidated until the date that such control ceases. All significant intercompany transactions
        and balances within the Group are eliminated on consolidation.

        Minority interests shown in the consolidated profit and loss account and the consolidated balance
        sheet represent the interests of outsider shareholders not held by the Group in the results and
        net assets of the Company’s subsidiaries, respectively. Acquisitions of minority interests are
        accounted for using the parent entity extension method whereby the difference between the
        consideration and the book value of the share of the net assets acquired is recognised as goodwill.

  2.1   IMPACT OF NEW AND REVISED HONG KONG FINANCIAL REPORTING STANDARDS

        The Group has adopted the following new and revised HKFRSs for the first time for the current
        year ’s financial statements. Except for in certain cases, giving rise to new and revised accounting
        policies and additional disclosures, the adoption of these new and revised standards and
        interpretation has had no material effect on these financial statements.

        HKAS 21 Amendment                             Net Investment in a Foreign Operation
        HKAS 39 & HKFRS 4 Amendments                  Financial Guarantee Contracts
        HKAS 39 Amendment                             Cash Flow Hedge Accounting of Forecast Intragroup
                                                        Transactions
        HKAS 39 Amendment                             The Fair Value Option
        HK(IFRIC)-Int 4                               Determining whether an Arrangement contains a
                                                        Lease




                                              • 28 •
APPENDIX I                   FINANCIAL INFORMATION OF THE GROUP


      The principal changes in accounting policies are as follows:

      (a)    HKAS 21 The Effects of Changes in Foreign Exchange Rates

             Upon the adoption of the HKAS 21 Amendment regarding a net investment in a foreign
             operation, all exchange differences arising from a monetary item that forms part of the
             Group’s net investment in a foreign operation are recognised in a separate component of
             equity in the consolidated financial statements irrespective of the currency in which the
             monetary item is denominated. This change has had no material impact on these financial
             statements as at 31st December, 2006 or 31st December, 2005.

      (b)    HKAS 39 Financial Instruments: Recognition and Measurement

             (i)     Amendment for financial guarantee contracts

                     This amendment has revised the scope of HKAS 39 to require financial guarantee
                     contracts issued that are not considered insurance contracts, to be recognised
                     initially at fair value and to be remeasured at the higher of the amount determined
                     in accordance with HKAS 37 Provisions, Contingent Liabilities and Contingent
                     Assets and the amount initially recognised less, when appropriate, cumulative
                     amortisation recognised in accordance with HKAS 18 Revenue. The adoption of
                     this amendment has had no material impact on these financial statements.

             (ii)    Amendment for the fair value option

                     This amendment has changed the definition of a financial instrument classified as
                     fair value through profit or loss and has restricted the use of the option to designate
                     any financial asset or any financial liability to be measured at fair value through
                     the profit and loss account. The adoption of this amendment has had no material
                     effect on these financial statements.

             (iii)   Amendment for cash flow hedge accounting of forecast intragroup transactions

                     This amendment has revised HKAS 39 to permit the foreign currency risk of a
                     highly probable intragroup forecast transaction to qualify as a hedged item in a
                     cash flow hedge, provided that the transaction is denominated in a currency other
                     than the functional currency of the entity entering into that transaction and that
                     the foreign currency risk will affect the consolidated profit and loss account. As
                     the Group currently has no such transactions, the amendment has had no material
                     effect on these financial statements.

      (c)    HK(IFRIC)-Int 4 Determining whether an Arrangement contains a Lease

             The Group has adopted this interpretation as of 1st January, 2006, which provides guidance
             in determining whether arrangements contain a lease to which lease accounting must be
             applied. This interpretation has had no material impact on these financial statements.




                                            • 29 •
APPENDIX I                      FINANCIAL INFORMATION OF THE GROUP


  2.2   IMPACT OF ISSUED BUT NOT YET EFFECTIVE HONG KONG FINANCIAL REPORTING
        STANDARDS

        The Group has not applied the following new/revised HKFRSs, that have been issued but are
        not yet effective, in these financial statements.

        HKAS 1 Amendment                     Capital Disclosures
        HKFRS 7                              Financial Instruments: Disclosures
        HKFRS 8                              Operating Segments
        HK(IFRIC)-Int 7                      Applying the Restatement Approach under HKAS 29
                                               Financial Reporting in Hyperinflationary Economies
        HK(IFRIC)-Int   8                    Scope of HKFRS 2
        HK(IFRIC)-Int   9                    Reassessment of Embedded Derivatives
        HK(IFRIC)-Int   10                   Interim Financial Reporting and Impairment
        HK(IFRIC)-Int   11                   HKFRS 2 – Group and Treasury Share Transactions
        HK(IFRIC)-Int   12                   Service Concession Arrangements

        The HKAS 1 Amendment shall be applied for annual periods beginning on or after 1st January,
        2007. The revised standard will affect the disclosures about qualitative information about the
        Group’s objective, policies and processes for managing capital; quantitative data about what the
        Group regards as capital; and compliance with any capital requirements and the consequences
        of any non-compliance.

        HKFRS 7 shall be applied for annual periods beginning on or after 1st January, 2007. The standard
        requires disclosures that enable users of the financial statements to evaluate the significance of
        the Group’s financial instruments and the nature and extent of risks arising from those financial
        instruments and also incorporates many of the disclosure requirements of HKAS 32.

        HKFRS 8 shall be applied for annual periods beginning on or after 1st January, 2009. The standard
        requires the disclosure of information about the operating segments of the Group, the products
        and services provided by the segments, the geographical areas in which the Group operates, and
        revenues from the Group’s major customers. This standard will supersede HKAS 14 “Segment
        Reporting”.

        HK(IFRIC)-Int 7, HK(IFRIC)-Int 8, HK(IFRIC)-Int 9, HK(IFRIC)-Int 10, HK(IFRIC)-Int 11 and
        HK(IFRIC)-Int 12 shall be applied for annual periods beginning on or after 1st March, 2006, 1st
        May, 2006, 1st June, 2006, 1st November, 2006, 1st March, 2007 and 1st January 2008, respectively.

        The Group is in the process of making an assessment of the impact of these new and revised
        HKFRSs upon initial application. So far, it has concluded that while the adoption of the HKAS 1
        Amendment, HKFRS 7 and HKFRS 8 may result in new or amended disclosures. The Group has
        already commenced an assessment of the impact of the other new and revised HKFRSs but is not
        yet in a position to state whether these new and revised HKFRSs would have a significant
        impact on the results of operations and financial position.

  2.3   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

        (a)    Subsidiaries

               A subsidiary is an entity whose financial and operating policies the Company controls,
               directly or indirectly, so as to obtain benefits from its activities.

               The results of subsidiaries are included in the Company’s profit and loss account to the
               extent of dividends received and receivable. Interests in subsidiaries are stated in the
               Company’s balance sheet at cost less any impairment losses.

        (b)    Joint ventures

               A joint venture is an entity set up by contractual arrangement, whereby the Group and
               other parties undertake an economic activity. The joint venture operates as a separate
               entity in which the Group and the other parties have an interest.

                                             • 30 •
APPENDIX I                   FINANCIAL INFORMATION OF THE GROUP


             The joint venture agreement between the venturers stipulates the capital contributions of
             the joint venture parties, the duration of the joint venture entity and the basis on which
             the assets are to be realised upon its dissolution. The profits and losses from the joint
             venture’s operations and any distributions of surplus assets are shared by the venturers,
             either in proportion to their respective capital contributions, or in accordance with the
             terms of the joint venture agreement.

             A joint venture is treated as:

             (i)     a subsidiary, if the Group has unilateral control, directly or indirectly, over the
                     joint venture;

             (ii)    a jointly controlled entity, if the Group does not have unilateral control, but has
                     joint control, directly or indirectly, over the joint venture;

             (iii)   an associate, if the Group does not have unilateral or joint control, but holds,
                     directly or indirectly, generally not less than 20 per cent. of the joint venture’s
                     registered capital and is in a position to exercise significant influence over the
                     joint venture; or

             (iv)    an equity investment accounted for in accordance with HKAS 39, if the Group
                     holds, directly or indirectly, less than 20 per cent. of the joint venture’s registered
                     capital and has neither joint control of, nor is in a position to exercise significant
                     influence over, the joint venture.

      (c)    Jointly controlled entities

             A jointly controlled entity is a joint venture that is subject to joint control, resulting in
             none of the participating parties having unilateral control over the economic activity of
             the jointly controlled entity.

             The Group’s share of the post-acquisition results and reserves of jointly controlled entities
             is included in the consolidated profit and loss account and consolidated reserves,
             respectively. The Group’s interests in jointly controlled entities are stated in the
             consolidated balance sheet at the Group’s share of net assets under the equity method of
             accounting, less any impairment losses. Goodwill arising from the acquisition of jointly
             controlled entities is included as part of the Group’s interests in jointly controlled entities.
             Adjustments are made to bring into line any dissimilar accounting policies that may
             exist.

             The results of jointly controlled entities are included in the Company’s profit and loss
             account to the extent of dividends received and receivable. The Company’s interests in
             jointly controlled entities are treated as non-current assets and are stated at cost less any
             impairment losses.

      (d)    Associates

             An associate is an entity, not being a subsidiary or a jointly controlled entity, in which
             the Group has a long term interest of generally not less than 20 per cent. of the equity
             voting rights and over which it is in a position to exercise significant influence.

             The Group’s share of the post-acquisition results and reserves of associates is included in
             the consolidated profit and loss account and consolidated reserves, respectively. The
             Group’s interests in associates are stated in the consolidated balance sheet at the Group’s
             share of net assets under the equity method of accounting, less any impairment losses.
             Goodwill arising from the acquisition of associates is included as part of the Group’s
             interests in associates. Adjustments are made to bring into line any dissimilar accounting
             policies that may exist.




                                              • 31 •
APPENDIX I                   FINANCIAL INFORMATION OF THE GROUP


             The results of associates are included in the Company’s profit and loss account to the
             extent of dividends received and receivable. The Company’s interests in associates are
             treated as non-current assets and are stated at cost less any impairment losses.

      (e)    Goodwill

             Goodwill arising on the acquisition of subsidiaries, associates, and jointly controlled
             entities represents the excess of the cost of the business combination over the Group’s
             interest in the net fair value of the acquirees’ identifiable assets acquired, and liabilities
             and contingent liabilities assumed as at the date of acquisition.

             Goodwill on acquisitions for which the agreement date is on or after 1st January, 2005

             Goodwill arising on acquisition is initially recognised in the consolidated balance sheet
             as an asset at cost and is subsequently measured at cost less any accumulated impairment
             losses. In the case of associates and jointly controlled entities, goodwill is included in the
             carrying amount thereof, rather than as a separately identified asset on the consolidated
             balance sheet.

             The carrying amount of goodwill is reviewed for impairment annually or more frequently
             if events or changes in circumstances indicate that the carrying value may be impaired.

             For the purpose of impairment testing, goodwill acquired in a business combination is,
             from the acquisition date, allocated to each of the Group’s cash-generating units, or
             groups of cash-generating units, that are expected to benefit from the synergies of the
             combination, irrespective of whether other assets or liabilities of the Group are assigned
             to those units or groups of units. Each unit or group of units to which the goodwill is so
             allocated:

             (i)     represents the lowest level within the Group at which the goodwill is monitored
                     for internal management purposes; and

             (ii)    is not larger than a segment based on either the Group’s primary or the Group’s
                     secondary reporting format determined in accordance with HKAS 14 Segment
                     Reporting.

             Impairment is determined by assessing the recoverable amount of the cash-generating
             unit (group of cash-generating units) to which the goodwill relates. Where the recoverable
             amount of the cash-generating unit (group of cash-generating units) is less than the
             carrying amount, an impairment loss is recognised.

             Where goodwill forms part of a cash-generating unit (group of cash-generating units)
             and part of the operation within that unit is disposed of, the goodwill associated with the
             operation disposed of is included in the carrying amount of the operation when
             determining the gain or loss on disposal of the operation. Goodwill disposed of in this
             circumstance is measured based on the relative values of the operation disposed of and
             the portion of the cash-generating unit retained.

             An impairment loss recognised for goodwill is not reversed in a subsequent period.

             Goodwill previously eliminated against consolidated reserves

             Prior to the adoption of the HKICPA’s Statement of Standard Accounting Practice 30
             “Business Combinations” (“SSAP 30”) in 2001, goodwill arising on acquisition was
             eliminated against consolidated distributable reserves in the year of acquisition. On the
             adoption of HKFRS 3, such goodwill remains eliminated against consolidated distributable
             reserves and is not recognised in the consolidated profit and loss account when all or
             part of the business to which the goodwill relates is disposed of or when a cash-generating
             unit to which the goodwill relates becomes impaired.




                                             • 32 •
APPENDIX I                   FINANCIAL INFORMATION OF THE GROUP


             Excess over the cost of business combinations

             Any excess of the Group’s interest in the net fair value of the acquirees’ identifiable
             assets, liabilities and contingent liabilities over the cost of acquisition of subsidiaries,
             associates and jointly controlled entities (previously referred to as negative goodwill),
             after reassessment, is recognised immediately in the consolidated profit and loss account.

             The excess for associates and jointly controlled entities is included in the Group’s share
             of the associates’ and jointly controlled entities’ profit or loss in the period in which the
             investments are acquired.

      (f)    Impairment of non-financial assets other than goodwill

             Where an indication of impairment exists, or when annual impairment testing for an
             asset is required (other than financial assets, investment properties, property held for
             sale and goodwill), the asset’s recoverable amount is estimated. An asset’s recoverable
             amount is calculated as the higher of the asset’s or cash generating unit’s value in use
             and its fair value less costs to sell, and is determined for an individual asset, unless the
             asset does not generate cash inflows that are largely independent of those from other
             assets or groups of assets, in which case, the recoverable amount is determined for the
             cash generating unit to which the asset belongs.

             An impairment loss is recognised only if the carrying amount of an asset exceeds its
             recoverable amount. In assessing value in use, the estimated future cash flows are
             discounted to their present value using a pre-tax discount rate that reflects current market
             assessments of the time value of money and the risk specific to the asset. An impairment
             loss is charged to the profit and loss account in the period in which it arises in those
             expense categories consistent with the function of the impaired asset, unless the asset is
             carried at a revalued amount, in which case the impairment loss is accounted for in
             accordance with the relevant accounting policy for that revalued asset.

             An assessment is made at each reporting date as to whether there is any indication that
             previously recognised impairment losses may no longer exist or may have decreased. If
             such indication exists, the recoverable amount is estimated. A previously recognised
             impairment loss of an asset other than goodwill and certain financial assets is reversed
             only if there has been a change in the estimates used to determine the recoverable amount
             of that asset, however not to an amount higher than the carrying amount that would
             have been determined (net of any depreciation/amortisation), had no impairment loss
             been recognised for the asset in prior years. A reversal of such impairment loss is credited
             to the profit and loss account in the period in which it arises, unless the asset is carried at
             a revalued amount, in which case the reversal of the impairment loss is accounted for in
             accordance with the relevant accounting policy for that revalued asset.

      (g)    Fixed assets and depreciation

             Fixed assets are stated at cost less accumulated depreciation and any impairment losses.
             The cost of an item of fixed assets comprises its purchase price and any directly attributable
             costs of bringing the asset to its working condition and location for its intended use.
             Expenditure incurred after items of fixed assets have been put into operation, such as
             repairs and maintenance, is normally charged to the profit and loss account in the period
             in which it is incurred. In situations where it can be clearly demonstrated that the
             expenditure has resulted in an increase in the future economic benefits expected to be
             obtained from the use of an item of fixed assets and the cost of the item can be measured
             reliably, the expenditure is capitalised as an additional cost of that asset or as a
             replacement.




                                            • 33 •
APPENDIX I                   FINANCIAL INFORMATION OF THE GROUP


             Depreciation is calculated on the straight-line basis to write off the cost of each item of
             fixed assets to its residual value over its estimated useful life. The principal annual rates
             used for this purpose are as follows:

             Leasehold land and buildings           1 per cent.
             Leasehold improvements                 Over the remaining lease terms
             Furniture, fixtures and equipment      10 per cent. to 33 1/ 3 per cent.
             Motor vehicles                         20 per cent. to 25 per cent.

             Where parts of an item of fixed assets have different useful lives, the cost of that item is
             allocated on a reasonable basis among the parts and each part is depreciated separately.

             Residual values, useful lives and depreciation method are reviewed, and adjusted if
             appropriate, at each balance sheet date.

             An item of fixed assets is derecognised upon disposal or when no future economic benefits
             are expected from its use or disposal. Any gain or loss on disposal or retirement recognised
             in the profit and loss account in the year the asset is derecognised is the difference
             between the net sales proceeds and the carrying amount of the relevant asset.

      (h)    Investment properties

             Investment properties are interests in land and buildings (including the leasehold interest
             under an operating lease for property which would otherwise meet the definition of an
             investment property) held to earn rental income and/or for capital appreciation, rather
             than for use in the production or supply of goods or services or for administrative
             purposes; or for sale in the ordinary course of business. Such properties are measured
             initially at cost, including transaction costs. Subsequent to initial recognition, investment
             properties are stated at fair value, which reflects market conditions at the balance sheet
             date.

             Gains or losses arising from changes in the fair values of investment properties are
             included in the profit and loss account in the year in which they arise.

             Any gains or losses on the retirement or disposal of investment properties are recognised
             in the profit and loss account in the year of the retirement or disposal.

      (i)    Properties under development

             Properties under development intended for sale are stated at the lower of cost and net
             realisable value, which is determined by reference to prevailing market prices, on an
             individual property basis. Other properties under development are stated at cost less any
             impairment losses. Costs comprise the cost of land, development expenditure, other
             attributable costs and borrowing costs capitalised.

      (j)    Investments and other financial assets

             Financial assets in the scope of HKAS 39 are classified as financial assets at fair value
             through profit or loss, held-to-maturity financial assets, loans and receivables and
             available-for-sale financial assets, as appropriate. When financial assets are recognised
             initially, they are measured at fair value, plus, in the case of investments not at fair value
             through profit or loss, directly attributable transaction costs. The Group considers whether
             a contract contains an embedded derivative when the Group first becomes a party to it.
             The embedded derivatives are separated from the host contract which is not measured at
             fair value through profit or loss when the analysis shows that the economic characteristics
             and risks of embedded derivatives are not closely related to those of the host contract.

             The Group determines the classification of its financial assets after initial recognition
             and, where allowed and appropriate, re-evaluates this designation at the balance sheet
             date.



                                            • 34 •
APPENDIX I                    FINANCIAL INFORMATION OF THE GROUP


             Financial assets at fair value through profit or loss

             Financial assets at fair value through profit or loss include financial assets held for trading
             and financial assets designated upon initial recognition as at fair value through profit or
             loss. Financial assets are classified as held for trading if they are acquired for the purpose
             of sale in the near term. Derivatives, including separated embedded derivatives, are also
             classified as held for trading unless they are designated as effective hedging instruments
             or financial guarantee contracts. Gains or losses on investments held for trading or these
             financial assets are recognised in the profit and loss account.

             Financial assets may be designated upon initial recognition as at fair value through profit
             or loss if the following criteria are met: (i) the designation eliminates or significantly
             reduces the inconsistent treatment that would otherwise arise from measuring the assets
             or recognising gains or losses on them on a different basis; (ii) the assets are part of a
             group of financial assets which are managed and their performance evaluated on a fair
             value basis, in accordance with a documented risk management strategy; or (iii) the
             financial asset contains an embedded derivative that would need to be separately recorded.

             The Group’s financial assets at fair value through profit or loss which are under regular
             way of purchases or sales are recognised on the trade date, that is, the date the Group
             commits to purchase or sell the asset. Regular way purchases or sales are purchases or
             sales of financial assets that require delivery of assets within the period generally
             established by regulation or convention in the marketplace.

             Held-to-maturity financial assets

             Non-derivative financial assets with fixed or determinable payments and fixed maturity
             are classified as held to maturity when the Group has the positive intention and ability to
             hold to maturity. Financial assets intended to be held for an undefined period are not
             included in this classification. Held-to-maturity financial assets are subsequently measured
             at amortised cost. Amortised cost is computed as the amount initially recognised minus
             principal repayments, plus or minus the cumulative amortisation using the effective
             interest method of any difference between the initially recognised amount and the maturity
             amount. This calculation includes all fees and points paid or received between parties to
             the contract that are an integral part of the effective interest rate, transaction costs and all
             other premiums and discounts. Gains and losses are recognised in the profit and loss
             account when the financial assets are derecognised or impaired, as well as through the
             amortisation process.

             All regular way purchases or sales of held-to-maturity financial assets are recognised on
             the settlement date, that is, the date the asset is received or delivered by the Group.

             Loans and receivables

             Loans and receivables are non-derivative financial assets with fixed or determinable
             payments that are not quoted in an active market. Such assets are subsequently carried at
             amortised cost using the effective interest method. Gains and losses are recognised in the
             profit and loss account when the loans and receivables are derecognised or impaired, as
             well as through the amortisation process.

             All regular way purchases or sales of loans and receivables are recognised on the settlement
             date, that is, the date the asset is received or delivered by the Group.




                                              • 35 •
APPENDIX I                    FINANCIAL INFORMATION OF THE GROUP


             Available-for-sale financial assets

             Available-for-sale financial assets are non-derivative financial assets in listed and unlisted
             equity securities, debt securities, and investment funds that are designated as available
             for sale or are not classified in any of the other three categories. After initial recognition,
             available-for-sale financial assets are measured at fair value with gains or losses being
             recognised as a separate component of equity until the financial assets are derecognised
             or until the financial assets are determined to be impaired at which time the cumulative
             gain or loss previously reported in equity is included in the profit and loss account.

             When the fair value of unlisted equity securities and debt securities cannot be reliably
             measured because (a) the variability in the range of reasonable fair value estimates is
             significant for that financial asset, or (b) the probabilities of the various estimates within
             the range cannot be reasonably assessed and used in estimating fair value, such securities
             are stated at cost less any impairment losses.

             All regular way purchases or sales of available-for-sale financial assets are recognised on
             the settlement date, that is, the date the asset is received or delivered by the Group.

             Fair value

             The fair value of financial assets that are actively traded in organised financial markets is
             determined by reference to quoted market bid prices at the close of business at the
             balance sheet date. For financial assets where there is no active market, fair value is
             determined using valuation techniques. Such techniques include using recent arm’s length
             market transactions; reference to the current market value of another instrument, which
             is substantially the same; a discounted cash flow analysis and other valuation models.

      (k)    Impairment of financial assets

             The Group assesses at each balance sheet date whether there is any objective evidence
             that a financial asset or a group of financial assets is impaired.

             Assets carried at amortised cost

             If there is objective evidence that an impairment loss on loans and receivables or held-to-
             maturity financial assets carried at amortised cost has been incurred, the amount of the
             loss is measured as the difference between the asset’s carrying amount and the present
             value of estimated future cash flows (excluding future credit losses that have not been
             incurred) discounted at the financial asset’s original effective interest rate (i.e., the effective
             interest rate computed at initial recognition). The carrying amount of the asset is reduced
             either directly or through the use of an allowance account. The amount of the impairment
             loss is recognised in the profit and loss account.

             The Group first assesses whether objective evidence of impairment exists individually
             for financial asset that are individually significant, and individually or collectively for
             financial assets that are not individually significant. If it is determined that no objective
             evidence of impairment exists for an individually assessed financial asset, whether
             significant or not, the asset is included in a group of financial assets with similar credit
             risk characteristics and that group is collectively assessed for impairment. Assets that are
             individually assessed for impairment and for which an impairment loss is or continues
             to be recognised are not included in a collective assessment of impairment.

             If, in a subsequent period, the amount of the impairment loss decreases and the decrease
             can be related objectively to an event occurring after the impairment was recognised, the
             previously recognised impairment loss is reversed. Any subsequent reversal of an
             impairment loss is recognised in the profit and loss account, to the extent that the carrying
             value of the asset does not exceed its amortised cost at the reversal date.




                                                • 36 •
APPENDIX I                    FINANCIAL INFORMATION OF THE GROUP


             In relation to trade receivables, a provision for impairment is made when there is objective
             evidence (such as the probability of insolvency or significant financial difficulties of the
             debtor) that the Group will not be able to collect all of the amounts due under the
             original terms of an invoice. The carrying amount of the receivables is reduced through
             the use of an allowance account. Impaired debts are derecognised when they are assessed
             as uncollectible.

             Assets carried at cost

             If there is objective evidence that an impairment loss on an unquoted equity instrument
             that is not carried at fair value because its fair value cannot be reliably measured has
             been incurred, the amount of the loss is measured as the difference between the asset’s
             carrying amount and the present value of estimated future cash flows discounted at the
             current market rate of return for a similar financial asset. Impairment losses on these
             assets are not reversed.

             Available-for-sale financial assets

             If an available-for-sale financial asset is impaired, an amount comprising the difference
             between its cost (net of any principal payment and amortisation) and its current fair
             value, less any impairment loss previously recognised in the profit and loss account, is
             transferred from equity to the profit and loss account. Impairment losses on equity
             instruments classified as available for sale are not reversed through the profit and loss
             account.

             Impairment losses on debt instruments are reversed through the profit and loss account,
             if the increase in fair value of the instrument can be objectively related to an event
             occurring after the impairment loss was recognised in the profit and loss account.

      (l)    Derecognition of financial assets

             A financial asset (or, where applicable, a part of a financial asset or part of a group of
             similar financial assets) is derecognised where:

             (i)     the rights to receive cash flows from the asset have expired;

             (ii)    the Group retains the rights to receive cash flows from the asset, but has assumed
                     an obligation to pay them in full without material delay to a third party under a
                     “pass-through” arrangement; or

             (iii)   the Group has transferred its rights to receive cash flows from the asset and either
                     (a) has transferred substantially all the risks and rewards of the asset, or (b) has
                     neither transferred nor retained substantially all the risks and rewards of the
                     asset, but has transferred control of the asset.

             Where the Group has transferred its rights to receive cash flows from an asset and has
             neither transferred nor retained substantially all the risks and rewards of the asset nor
             transferred control of the asset, the asset is recognised to the extent of the Group’s
             continuing involvement in the asset. Continuing involvement that takes the form of a
             guarantee over the transferred asset is measured at the lower of the original carrying
             amount of the asset and the maximum amount of consideration that the Group could be
             required to repay.

             Where continuing involvement takes the form of a written and/or purchase option
             (including a cash-settled option or similar provision) on the transferred asset, the extent
             of the Group’s continuing involvement is the amount of the transferred asset that the
             Group may repurchase, except in the case of a written put option (including a cash-
             settled option or similar provision) on an asset measured at fair value, where the extent
             of the Group’s continuing involvement is limited to the lower of the fair value of the
             transferred asset and the option exercise price.



                                              • 37 •
APPENDIX I                   FINANCIAL INFORMATION OF THE GROUP


      (m)    Financial liabilities at amortised cost (including interest-bearing loans and borrowings)

             Financial liabilities, including trade and other payables and interest-bearing loans and
             borrowings, are initially stated at fair value less directly attributable transaction costs
             and are subsequently measured at amortised cost, using the effective interest method
             unless the effect of discounting would be immaterial, in which case they are stated at
             cost.

             Gains and losses are recognised in the profit and loss account when the liabilities are
             derecognised as well as through the amortisation process.

      (n)    Financial guarantee contracts

             Financial guarantee contracts in the scope of HKAS 39 are accounted for as financial
             liabilities. A financial guarantee contract is recognised initially at its fair value plus
             transaction costs that are directly attributable to the acquisition or issue of the financial
             guarantee contract, except when such contract is recognised at fair value through profit
             or loss. Subsequent to initial recognition, the Group measures the financial guarantee
             contract at the higher of: (i) the amount determined in accordance with HKAS 37
             Provisions, Contingent Liabilities and Contingent Assets; and (ii) the amount initially
             recognised less, when appropriate, cumulative amortisation recognised in accordance
             with HKAS 18 Revenue.

      (o)    Derecognition of financial liabilities

             A financial liability is derecognised when the obligation under the liability is discharged
             or cancelled or expires.

             When an existing financial liability is replaced by another from the same lender on
             substantially different terms, or the terms of an existing liability are substantially modified,
             such an exchange or modification is treated as a derecognition of the original liability
             and a recognition of a new liability, and the difference between the respective carrying
             amounts is recognised in the profit and loss account.

      (p)    Property held for sale

             Property held for sale is stated at the lower of cost and net realisable value which is
             determined by reference to prevailing market prices, on an individual property basis.

      (q)    Revenue recognition

             Revenue is recognised when it is probable that the economic benefits will flow to the
             Group and when the revenue can be measured reliably, on the following bases:

             (i)     rental income, in the period in which the properties are let and on the straight-
                     line basis over the lease terms;

             (ii)    dealings in securities and sale of investments, on the transaction dates when the
                     relevant contract notes are exchanged or the settlement dates when the securities
                     are delivered;

             (iii)   interest income, on an accrual basis using the effective interest method by applying
                     the rate that discounts the estimated future cash receipts through the expected
                     life of the financial instruments to the net carrying amount of the financial assets;

             (iv)    dividend income, when the shareholders’ right to receive payment has been
                     established;




                                            • 38 •
APPENDIX I                   FINANCIAL INFORMATION OF THE GROUP


             (v)    commission income, in the period when receivable, unless it is charged to cover
                    the costs of a continuing service to, or risk borne for, customers, or is interest
                    income in nature. In this case, commission income is recognised on a pro rata
                    basis over the relevant period; and

             (vi)   investment advisory, management and service fee income, when the services have
                    been rendered.

      (r)    Income tax

             Income tax comprises current and deferred tax. Income tax is recognised in the profit and
             loss account or in equity if it relates to items that are recognised in the same or a different
             period directly in equity.

             Current tax assets and liabilities for the current and prior years are measured at the
             amount expected to be recovered from or paid to the taxation authorities.

             Deferred tax is provided, using the liability method, on all temporary differences at the
             balance sheet date between the tax bases of assets and liabilities and their carrying amounts
             for financial reporting purposes.

             Deferred tax liabilities are recognised for all taxable temporary differences, except:

             (i)    where the deferred tax liability arise from goodwill or the initial recognition of an
                    asset or liability in transaction that is not a business combination and, at the time
                    of the transaction, affects neither accounting profit nor taxable profit or loss; and

             (ii)   in respect of taxable temporary differences associated with investments in
                    subsidiaries, associates and interests in joint ventures, where the timing of the
                    reversal of the temporary differences can be controlled and it is probable that the
                    temporary differences will not reverse in the foreseeable future.

             Deferred tax assets are recognised for all deductible temporary differences, carryforward
             of unused tax credits and unused tax losses, to the extent that it is probable that taxable
             profit will be available against which the deductible temporary differences, and the
             carryforward of unused tax credits and unused tax losses can be utilised. In respect of
             deductible temporary differences associated with investments in subsidiaries, associates
             and interests in joint ventures, deferred tax assets are only recognised to the extent that it
             is probable that the temporary differences will reverse in the foreseeable future and
             taxable profit will be available against which the temporary differences can be utilised.

             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 deferred tax asset to be utilised. Conversely, previously
             unrecognised deferred tax assets are reassessed at each balance sheet date and are
             recognised to the extent that it is probable that sufficient taxable profit will be available
             to allow all or part of the deferred tax asset to be utilised.

             Deferred tax assets and liabilities are measured at the tax rates that are expected to apply
             to the period when the asset is realised or the liability is settled, based on tax rates (and
             tax laws) that have been enacted or substantively enacted at the balance sheet date.

             Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right
             exists to set off current assets against current tax liabilities and the deferred taxes relate
             to the same taxable entity and the same taxation authority.




                                            • 39 •
APPENDIX I                   FINANCIAL INFORMATION OF THE GROUP


      (s)    Provisions

             A provision is recognised when a present obligation (legal or constructive) has arisen as
             a result of a past event and it is probable that a future outflow of resources will be
             required to settle the obligation, provided that a reliable estimate can be made of the
             amount of the obligation.

             When the effect of discounting is material, the amount recognised for a provision is the
             present value at the balance sheet date of the future expenditures expected to be required
             to settle the obligation. The increase in the discounted present value amount arising from
             the passage of time is included in finance costs in the profit and loss account.

      (t)    Employee benefits

             Paid leave entitlement

             The Group provides paid annual leave to its employees under their employment contracts
             on a calendar year basis. Under certain circumstances, such leave which remains untaken
             as at the balance sheet date is permitted to be carried forward and utilised by the respective
             employees in the following year. An accrual is made at the balance sheet date for the
             expected future cost of such paid leave earned during the year by the employees and
             carried forward at the balance sheet date.

             Retirement benefits costs

             Employer ’s contributions made by the Group to the Mandatory Provident Funds operated
             for the benefits of employees of the Group as required under the Hong Kong Mandatory
             Provident Fund Schemes Ordinance are charged to the profit and loss account when
             incurred. The assets of the schemes are held separately from those of the Group in
             independently administrated funds.

      (u)    Borrowing costs

             Borrowing costs directly attributable to the acquisition, construction or production of
             qualifying assets, i.e., assets that necessarily take a substantial period of time to get
             ready for their intended use or sale, are capitalised as part of the cost of those assets. The
             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.

      (v)    Operating leases

             Leases where substantially all the rewards and risks of ownership of assets remain with
             the lessor are accounted for as operating leases. Where the Group is the lessor, assets
             leased by the Group under operating leases are included in non-current assets and rentals
             receivable under the operating leases are credited to the profit and loss account on the
             straight-line basis over the lease terms. Where the Group is the lessee, rentals payable
             under the operating leases are charged to the profit and loss account on the straight-line
             basis over the lease terms.

      (w)    Cash and cash equivalents

             For the purpose of the consolidated cash flow statement, cash and cash equivalents
             represent cash on hand, cash at banks, demand deposits, treasury bills and short term
             highly liquid investments which are readily convertible into known amounts of cash and
             which are subject to an insignificant risk of changes in value, and have a short maturity
             of generally within three months when acquired, less bank overdrafts which are repayable
             on demand and form an integral part of the Group’s cash management.

             For the purpose of the balance sheets, cash and cash equivalents comprise cash on hand,
             cash at banks, demand deposits and treasury bills which are not restricted as to use.




                                            • 40 •
APPENDIX I                  FINANCIAL INFORMATION OF THE GROUP


      (x)    Foreign currencies

             The financial statements are presented in Hong Kong dollars, which is the Company’s
             functional and presentation currency. Each entity in the Group determines its own
             functional currency and items included in the financial statements of each entity are
             measured using that functional currency. Foreign currency transactions are initially
             recorded using the functional currency rates ruling at the date of the transactions.
             Monetary assets and liabilities denominated in foreign currencies are re-translated at the
             functional currency rates of exchange ruling at the balance sheet date. All differences are
             taken to the profit and loss account. Non-monetary items that are measured in terms of
             historical cost in a foreign currency are translated using the exchange rates at the dates
             of the initial transactions. Non-monetary items measured at fair value in a foreign currency
             are translated using the exchange rates at the date when the fair value was determined.

             The functional currencies of certain overseas subsidiaries, jointly controlled entities and
             associates are currencies other than the Hong Kong dollar. As at the balance sheet date,
             the assets and liabilities of these entities are translated into the presentation currency of
             the Company at exchange rates ruling at the balance sheet date, and their profit and loss
             accounts are translated into Hong Kong dollars at the weighted average exchange rates
             for the year. The resulting exchange differences are included in the exchange equalisation
             reserve. On disposal of a foreign entity, the deferred cumulative amount recognised in
             the exchange equalisation reserve relating to that particular foreign operation is recognised
             in the profit and loss account.

             For the purpose of the consolidated cash flow statement, the cash flows of overseas
             subsidiaries are translated into Hong Kong dollars at the exchange rates ruling at the
             dates of the cash flows or at an approximation thereto, the weighted average exchange
             rates for the year. Frequently recurring cash flows of overseas subsidiaries which arise
             throughout the year are translated into Hong Kong dollars at the weighted average
             exchange rates for the year.

      (y)    Related parties

             A party is considered to be related to the Group if:

             (a)    the party, directly or indirectly through one or more intermediaries, (i) controls,
                    is controlled by, or is under the common control with, the Group; (ii) has an
                    interest in the Group that gives it significant influence over the Group; or (iii) has
                    joint control over the Group;

             (b)    the party is an associate;

             (c)    the party is a jointly controlled entity;

             (d)    the party is a member of the key management personnel of the Group or its
                    parent;

             (e)    the party is a close member of the family of any individual referred to in (a) to
                    (d);

             (f)    the party is an entity that is controlled, jointly controlled or significantly influenced
                    by or for which significant voting power in such entity resides with, directly or
                    indirectly, any individual referred to in (d) or (e); or

             (g)    the party is a post-employment benefit plan for the benefit of employees of the
                    Group, or of any entity that is a related party of the Group.




                                            • 41 •
APPENDIX I                   FINANCIAL INFORMATION OF THE GROUP


       (z)   Dividends and distributions

             Final dividends and distributions proposed by the Directors are classified as a separate
             allocation of distributable reserves within the equity section of the balance sheet, until
             they have been approved by the shareholders in a general meeting. When these dividends
             and distributions have been approved by the shareholders and declared, they are
             recognised as a liability.

             Interim dividends and distributions are simultaneously proposed and declared because
             the Company’s memorandum of association and bye-laws grant the Directors the authority
             to declare interim dividends and distributions. Consequently, interim dividends and
             distributions are recognised immediately as a liability when they are proposed and
             declared.

  3.   SIGNIFICANT ACCOUNTING JUDGEMENTS AND ESTIMATES

       (a)   Judgements

             In the process of applying the Group’s accounting policies, management has made the
             following judgements, apart from those involving estimations, which have the most
             significant effect on the amounts recognised in the financial statements:

             Operating lease commitments – Group as lessor

             The Group has entered into commercial property leases on its investment property
             portfolio. The Group has determined that it retains all the significant risks and rewards
             of ownership of these properties which are leased out on operating leases.

             Classification between investment properties and owner-occupied properties

             The Group determines whether a property qualifies as an investment property, and has
             developed criteria in making that judgement. Investment property is a property held to
             earn rentals or for capital appreciation or both. Therefore, the Group considers whether a
             property generates cash flows largely independently of the other assets held by the Group.

             Some properties comprise a portion that is held to earn rentals or for capital appreciation
             and another portion that is held for use in the production or supply of goods or services
             or for administrative purposes. If these portions could be sold separately (or leased out
             separately under a finance lease), the Group accounts for the portions separately. If the
             portions could not be sold separately, the property is an investment property only if an
             insignificant portion is held for use in the production or supply of goods or services or
             for administrative purposes.

             Judgement is made on an individual property basis to determine whether ancillary services
             are so significant that a property does not qualify as an investment property.

       (b)   Estimation uncertainly

             The key assumptions concerning the future and other key sources of estimation uncertainty
             at the balance sheet date, that have a significant risk of causing a material adjustment to
             the carrying amounts of assets and liabilities within the next financial year, are discussed
             below.

             Impairment of goodwill

             The Group determines whether goodwill is impaired at least on an annual basis. This
             requires an estimation of the value in use of the cash-generating units to which the
             goodwill is allocated. Estimating the value in use requires the Group to make an estimate
             of the expected future cash flows from the cash-generating unit and also to choose a
             suitable discount rate in order to calculate the present value of those cash flows. The
             carrying amount of goodwill at 31st December, 2006 was HK$57,285,000 (2005 –
             HK$57,285,000). Further details are given in Note 16.




                                            • 42 •
APPENDIX I                    FINANCIAL INFORMATION OF THE GROUP


              Estimation of the fair value of investment properties

              The best evidence of fair value is the current prices in an active market for similar lease
              terms and other contracts. In the absence of such information, the Group considers
              information from a variety of sources, including (i) by reference to independent valuations;
              (ii) the current prices in an active market for properties of a different nature, condition
              and location (or subject to different leases or other contracts), adjusted to reflect those
              differences; (iii) the recent prices of similar properties in less active markets, with
              adjustments to reflect any changes in economic conditions since the date of transactions
              that occurred at those prices; and (iv) discounted cash flow projections, based on reliable
              estimates of future cash flows, derived from the terms of any existing lease and other
              contracts, and (where possible) from external evidence such as current market rates for
              similar properties in the same location and condition, and using discount rates that
              reflect current market assessments of the uncertainty in the amount and timing of the
              cash flows.

  4.   SEGMENT INFORMATION

       Segment information is presented by way of business segment as the primary segment reporting
       format and geographical segment as the secondary segment reporting format.

       The Group’s operating businesses are structured and managed separately, according to the nature
       of their operations. The Group’s business segments represent different strategic business units
       which are subject to risks and returns that are different from those of the other business segments.
       In respect of geographical segment reporting, revenue is based on the location of customers, and
       assets and capital expenditure are based on the location of the assets. Descriptions of the business
       segments are as follows:

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

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

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

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

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

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




                                              • 43 •
APPENDIX I                            FINANCIAL INFORMATION OF THE GROUP


      An analysis of the Group’s segment information by business segment is set out as follows:

      Group

                                        Property                                  Corporate
                                     investment                                 finance and                                  Inter-
                                            and        Treasury    Securities     securities   Banking                    segment
      2006                          development      investment   investment        broking    business    Other       elimination Consolidated
                                        HK$’000         HK$’000      HK$’000        HK$’000     HK$’000   HK$’000          HK$’000     HK$’000

      Revenue
        External                          35,734         15,825       903,504        95,614      28,965    19,386                –     1,099,028
        Inter-segment                          –          1,003             –         1,065           –     6,924           (8,992 )           –


      Total                               35,734         16,828      903,504         96,679      28,965    26,310           (8,992 )   1,099,028


      Segment results                    218,622         16,095       324,780        17,616       7,271     4,817           (7,414 )    581,787


      Unallocated corporate
        expenses                                                                                                                         (76,122 )
      Finance costs                                                                                                                      (35,473 )
      Share of results of
        associates                       (17,702 )            –            –              –           –    13,688                –        (4,014 )
      Share of results of jointly
        controlled entities                 (572 )            –            –              –           –     (2,072 )             –        (2,644 )


      Profit before tax                                                                                                                 463,534
      Tax                                                                                                                               (46,975 )


      Profit for the year                                                                                                               416,559




                                                            • 44 •
APPENDIX I                                 FINANCIAL INFORMATION OF THE GROUP


      Group

                                             Property                                    Corporate
                                          investment                                   finance and                                    Inter-
                                                 and        Treasury    Securities       securities    Banking                     segment
      2006                               development      investment   investment          broking     business      Other      elimination Consolidated
                                             HK$’000         HK$’000      HK$’000          HK$’000      HK$’000     HK$’000         HK$’000     HK$’000

      Segment assets                        1,424,556        262,469       933,694         786,732      541,361      13,318              –      3,962,130
      Interests in associates               1,835,329              –             –             814            –     125,821              –      1,961,964
      Interests in jointly
        controlled entities                    45,642              –             –               –            –       3,657              –        49,299
      Unallocated assets                                                                                                                          12,591


      Total assets                                                                                                                              5,985,984


      Segment liabilities                      16,405              –        46,968         767,974      308,875       2,966              –      1,143,188
      Unallocated liabilities                                                                                                                   1,551,107


      Total liabilities                                                                                                                         2,694,295


      Other segment information:
        Capital expenditure                       845              –             –             460          334         353              –          1,992
        Depreciation                             (935 )            –          (388 )          (432 )     (1,901 )      (916 )            –         (4,572 )
      Write-back of allowance/
        (Allowance) for bad and
        doubtful debts
        relating to:
           Banking operation                        –              –             –               –            4           –              –             4
           Non-banking operations                   –              –             –           1,850            –        (583 )            –         1,267
      Provisions for impairment
        losses on available-for-sale
        financial assets                            –              –        (5,797 )             –            –           –              –         (5,797 )
      Net fair value gain on
        financial assets at fair value
        through profit or loss                      –              –       216,728               –            –           –              –       216,728
      Fair value gains on
        investment properties                 207,276              –             –               –            –           –              –       207,276
      Unallocated:
        Capital expenditure                                                                                                                         3,625
        Depreciation                                                                                                                               (2,416 )




                                                                 • 45 •
APPENDIX I                            FINANCIAL INFORMATION OF THE GROUP


      Group

                                        Property                                    Corporate
                                     investment                                   finance and                                    Inter-
                                            and        Treasury    Securities       securities     Banking                    segment
      2005                          development      investment   investment          broking      business    Other       elimination Consolidated
                                        HK$’000         HK$’000      HK$’000          HK$’000       HK$’000   HK$’000          HK$’000     HK$’000

      Revenue
        External                           9,845         16,810     1,037,180          59,740        18,076      5,806               –     1,147,457
        Inter-segment                          –            970             –             650             –      2,898          (4,518 )           –


      Total                                9,845         17,780     1,037,180          60,390        18,076      8,704          (4,518 )   1,147,457


      Segment results                     76,838         17,084       127,801          (25,646 )      6,638    (12,593 )        (2,939 )    187,183


      Unallocated corporate
       expenses                                                                                                                              (58,459 )

      Share of results of
        associates                        (6,723 )            –           (32 )              –            –      4,207               –        (2,548 )

      Share of results of jointly
        controlled entities                 (313 )            –             –                –            –       (110 )             –          (423 )


      Profit before tax                                                                                                                     125,753
      Tax                                                                                                                                   (15,033 )

      Profit for the year                                                                                                                   110,720




                                                            • 46 •
APPENDIX I                                 FINANCIAL INFORMATION OF THE GROUP


      Group

                                             Property                                    Corporate
                                          investment                                   finance and                                     Inter–
                                                 and        Treasury    Securities       securities     Banking                      segment
      2005                               development      investment   investment          broking      business      Other       elimination Consolidated
                                             HK$’000         HK$’000      HK$’000          HK$’000       HK$’000     HK$’000          HK$’000     HK$’000

      Segment assets                          570,842        548,513     1,270,414         663,002       372,452      24,094               –      3,449,317
      Interests in associates                 151,071              –             –             814             –      23,350               –        175,235
      Interests in jointly
        controlled entities                     7,000              –             –                –            –       5,615               –        12,615
      Unallocated assets                                                                                                                            15,356


      Total assets                                                                                                                                3,652,523


      Segment liabilities                       3,513              –         1,351         625,899       120,071       9,398               –       760,232
      Unallocated liabilities                                                                                                                       31,196


      Total liabilities                                                                                                                            791,428


      Other segment information:
      Capital expenditure                       1,536              –             –              801        8,123       1,136               –        11,596
      Depreciation                               (978 )            –          (390 )           (633 )       (890 )      (629 )             –        (3,520 )
      Write-back of allowance/
        (Allowance) for bad and
        doubtful debts relating to:
           Banking operation                        –              –             –                –        2,140            –              –          2,140
           Non-banking operations                 (94 )            –             –          (30,272 )          –       (2,670 )            –        (33,036 )
      Provisions for impairment
        losses on:
           Associates                               –              –             –                –            –       (5,859 )            –         (5,859 )
           Available-for-sale
             financial assets                       –              –       (53,757 )              –            –           –               –        (53,757 )
           Goodwill                                 –              –             –                –            –        (412 )             –           (412 )
      Net fair value gain on financial
        assets at fair value through
        profit or loss                              –              –        70,370                –            –            –              –        70,370
      Fair value gains on
        investment properties                  74,784              –             –                –            –            –              –        74,784
      Unallocated:
        Capital expenditure                                                                                                                           6,213
        Depreciation                                                                                                                                 (1,093 )




                                                                 • 47 •
APPENDIX I                        FINANCIAL INFORMATION OF THE GROUP


       An analysis of the Group’s segment information by geographical segment is set out as follows:

       Group

                                                         Republic of
       2006                      Hong Kong      Macau     Singapore      Japan   Ireland    Other Consolidated
                                   HK$’000     HK$’000      HK$’000    HK$’000   HK$’000   HK$’000    HK$’000

       Revenue                      641,854     28,965       198,525    58,504         –   171,180    1,099,028


       Segment assets              1,206,879   895,717     1,512,158    62,845         –   297,122    3,974,721
       Interests in associates        27,450         –     1,835,329         –         –    99,185    1,961,964
       Interests in jointly
         controlled entities               –         –        35,568         –         –    13,731       49,299


       Total assets                                                                                   5,985,984


       Capital expenditure            3,125        350         1,317         –         –      825         5,617


                                                         Republic of
       2005                      Hong Kong      Macau     Singapore      Japan   Ireland    Other Consolidated
                                   HK$’000     HK$’000      HK$’000    HK$’000   HK$’000   HK$’000    HK$’000

       Revenue                      216,978     18,076       336,375   264,860   176,168   135,000    1,147,457


       Segment assets              1,546,310   645,969       548,913   148,779         –   574,702    3,464,673
       Interests in associates        20,533         –       151,211         –         –     3,491      175,235
       Interests in jointly
         controlled entities              –          –             –         –         –    12,615       12,615


       Total assets                                                                                   3,652,523


       Capital expenditure            2,173      8,123         6,941         –         –      572        17,809


  5.   REVENUE

       Revenue, which is also the Group’s turnover, representing the aggregate of gross rental income,
       gross income on treasury investment which includes interest income on bank deposits and debt
       securities, gross income from securities investment which includes proceeds from sales of
       investments, dividend income and related interest income, gross income from underwriting and
       securities broking, interest and other income from money lending and other businesses, and
       gross interest income, commissions, dealing income and other revenues from a banking subsidiary,
       after eliminations of all significant intra-group transactions.




                                                 • 48 •
APPENDIX I                   FINANCIAL INFORMATION OF THE GROUP


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

                                                                                         Group
                                                                                2006                2005
                                                                             HK$’000             HK$’000

       Property investment and development                                     35,734                9,845
       Treasury investment                                                     15,825               16,810
       Securities investment                                                  903,504            1,037,180
       Corporate finance and securities broking                                95,614               59,740
       Banking business                                                        28,965               18,076
       Other                                                                   19,386                5,806

                                                                             1,099,028           1,147,457


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

                                                                                         Group
                                                                                2006                2005
                                                                             HK$’000             HK$’000

       Interest income                                                          23,916             15,722
       Commission income                                                         3,915              2,180
       Other revenues                                                            1,134                174


                                                                                28,965             18,076


  6.   ALLOWANCE FOR BAD AND DOUBTFUL DEBTS RELATING TO NON-BANKING
       OPERATIONS

       The allowance for the year ended 31st December, 2005 included an individual provision of
       HK$29,883,000 made for a loan advanced to a margin client, which had been secured by certain
       shares of a listed company and a guarantee provided by a director of the client. Both the client
       and the listed company were under provisional liquidation and in the opinion of Directors, the
       probability for recovery of the loan was uncertain.




                                            • 49 •
APPENDIX I                    FINANCIAL INFORMATION OF THE GROUP


  7.   PROFIT BEFORE TAX

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

                                                                                     Group
                                                                            2006                2005
                                                                         HK$’000             HK$’000

       Gross rental income                                                22,667                9,845
       Less: Outgoings                                                    (6,230)              (2,328)


       Net rental income                                                  16,437               7,517


       Employee benefits expense (Note):
        Wages and salaries                                                (88,288)            (53,211)


         Retirement benefits costs                                         (2,746)             (2,803)
         Less: Forfeited contributions                                          –                 369


         Net retirement benefit costs                                      (2,746)             (2,434)


       Total staff costs                                                  (91,034)            (55,645)


       Interest income:
         Listed investments                                                6,534              18,112
         Unlisted investments                                                758               2,028
         Banking operation                                                23,916              15,722
         Other                                                            16,918              16,810
       Dividend income:
         Listed investments                                                   771             20,165
         Unlisted investments                                               2,291              1,465
       Gain/(Loss) on disposal of financial assets at fair value
         through profit or loss:
            Listed                                                        11,217              68,978
            Unlisted                                                      10,322              (1,117)
       Gain/(Loss) on disposal of available-for-sale financial assets:
         Listed                                                          112,923               1,006
         Unlisted                                                        (26,685)              7,341
       Net fair value gain/(loss) on financial assets at fair value
         through profit or loss:
            Listed                                                        25,188              (2,621)
            Unlisted                                                     191,540              72,991
       Other unlisted investment income                                      664                 681
       Provisions for impairment losses on unlisted available-for-sale
         financial assets                                                 (5,797)             (53,757)
       Depreciation                                                       (6,988)              (4,613)
       Loss on disposal of fixed assets                                      (67)                 (48)
       Foreign exchange gains/(losses) – net                               1,371               (6,006)
       Fair value gains on investment properties                         207,276               74,784
       Auditors’ remuneration                                             (2,025)              (1,626)
       Minimum lease payments under operating lease rentals
         in respect of land and buildings                                 (13,940)            (12,158)


       Note:   The amounts include the Directors’ emoluments disclosed in Note 8 to the financial
               statements.




                                              • 50 •
APPENDIX I                        FINANCIAL INFORMATION OF THE GROUP


  8.   DIRECTORS’ EMOLUMENTS

       Directors’ emoluments for the year, disclosed pursuant to the Rules Governing the Listing of
       Securities on The Stock Exchange of Hong Kong Limited and Section 161 of the Hong Kong
       Companies Ordinance, are as follows:

                                                                                               Group
                                                                                       2006               2005
                                                                                    HK$’000            HK$’000

       Directors’ fees                                                                   627               517
       Basic salaries, housing and other allowances and benefits in kind               3,680             4,784
       Discretionary bonuses paid and payable                                          3,000                 –
       Retirement benefits costs                                                          24                29


                                                                                       7,331             5,330


       The emoluments paid to each of the individual directors during the year are as follows:

                                                      Basic salaries,
                                                            housing
                                                          and other
                                                         allowances     Discretionary
                                                       and benefits     bonuses paid   Retirement
       2006                                      Fees        in kind     and payable benefits costs       Total
                                              HK$’000       HK$’000          HK$’000      HK$’000       HK$’000

       Executive directors:
         Mr. Stephen Riady                          –               –              –              –           –
         Mr. John Lee Luen Wai                     29           1,954          3,000             12       4,995
         Mr. Kor Kee Yee                            –           1,726              –             12       1,738


                                                   29           3,680          3,000             24       6,733


       Non-executive directors:
        Dr. Mochtar Riady                         120               –              –              –         120
        Mr. Leon Chan Nim Leung                   149               –              –              –         149


                                                  269               –              –              –         269


       Independent non-executive directors:
         Mr. Albert Saychuan Cheok                139               –              –              –         139
         Mr. Victor Yung Ha Kuk                   100               –              –              –         100
         Mr. Tsui King Fai                         90               –              –              –          90


                                                  329               –              –              –         329


                                                  627           3,680          3,000             24       7,331




                                              • 51 •
APPENDIX I                     FINANCIAL INFORMATION OF THE GROUP


                                                         Basic salaries,
                                                          housing and
                                                      other allowances
                                                          and benefits       Retirement
       2005                                      Fees           in kind    benefits costs              Total
                                              HK$’000          HK$’000          HK$’000              HK$’000

       Executive directors:
         Mr. Stephen Riady                          –                  –               –                    –
         Mr. John Lee Luen Wai                     29              1,742              12                1,783
         Mr. Kor Kee Yee                            –              1,731              12                1,743
         Mr. Jesse Leung Nai Chau                  19              1,311               5                1,335

                                                   48              4,784              29                4,861


       Non-executive directors:
        Dr. Mochtar Riady                           –                 –                  –                 –
        Mr. Leon Chan Nim Leung                   169                 –                  –               169


                                                  169                 –                  –               169


       Independent non-executive directors:
         Mr. Albert Saychuan Cheok                140                 –                  –               140
         Mr. Victor Yung Ha Kuk                    80                 –                  –                80
         Mr. Tsui King Fai                         80                 –                  –                80


                                                  300                 –                  –               300


                                                  517              4,784              29                5,330


       There were no arrangements under which a director waived or agreed to waive any emoluments
       during the years.

  9.   FIVE HIGHEST PAID EMPLOYEES’ EMOLUMENTS

       The five highest paid employees during the year included two directors (2005 – two), details of
       whose emoluments are set out in Note 8 to the financial statements. Details of the emoluments
       of the remaining three (2005 – three) non-director, highest paid employees for the year are as
       follows:

                                                                                             Group
                                                                                 2006                   2005
                                                                              HK$’000                HK$’000

       Basic salaries, housing and other allowances and benefits in kind         3,282                 3,912
       Bonuses paid and payable                                                 31,860                 7,142
       Retirement benefits costs                                                    81                    81


                                                                                35,223                11,135




                                              • 52 •
APPENDIX I                    FINANCIAL INFORMATION OF THE GROUP


        The number of non-director, highest paid employees whose emoluments fell within the following
        bands is as follows:

                                                                                         Group
                                                                               2006                  2005
                                                                           Number of             Number of
        Emoluments bands (HK$):                                            employees             employees

        1,500,001 – 2,000,000                                                       –                    1
        3,000,001 – 3,500,000                                                       –                    1
        5,000,001 – 5,500,000                                                       1                    –
        6,000,001 – 6,500,000                                                       –                    1
        11,000,001 – 11,500,000                                                     1                    –
        19,000,001 – 19,500,000                                                     1                    –


                                                                                    3                    3


  10.   RETIREMENT BENEFITS COSTS

        The Group previously operated several defined contribution schemes pursuant to the Occupational
        Retirement Schemes Ordinance which were replaced by the Mandatory Provident Fund schemes
        (the “MPF schemes”) in December 2000 when the Mandatory Provident Fund Schemes Ordinance
        became effective. The assets of the schemes are held separately from those of the Group in
        independently administered funds.

        Contributions made to the MPF schemes are based on a percentage of the employees’ relevant
        income and are charged to the profit and loss account as they become payable in accordance
        with the rules of the schemes. The Group’s employer contributions vest fully with the employees
        when contributed into the schemes except for the Group’s employer voluntary contributions
        forfeited when the employees leave employment prior to fully vesting in such contributions,
        which can be used to reduce the amount of future employer contributions or to offset against
        future administration expenses, in accordance with the rules of the schemes.

        During the year, there were no forfeited employer contributions under the MPF schemes utilised
        to reduce the amount of employer contributions or for payments of administrative expenses
        (2005 – HK$369,000). The amounts of forfeited voluntary contributions available to offset future
        employer contributions against the above schemes were not material at the year end. The
        retirement benefits scheme costs charged to the consolidated profit and loss account represent
        employer contributions paid and payable by the Group to the schemes and amounted to
        HK$2,746,000 (2005 – HK$2,434,000).

  11.   FINANCE COSTS

                                                                                         Group
                                                                                2006                 2005
                                                                             HK$’000              HK$’000

        Interest on bank and other borrowings wholly repayable
          within five years                                                    53,486                7,363
        Less: Interest capitalised                                             (4,422)                   –


                                                                               49,064                7,363


        The amount excludes interest expense incurred by a banking subsidiary of the Group.




                                            • 53 •
APPENDIX I                      FINANCIAL INFORMATION OF THE GROUP


  12.   TAX

                                                                                               Group
                                                                                      2006                2005
                                                                                   HK$’000             HK$’000

        Hong Kong:
         Charge for the year                                                          1,435                 639
         Underprovision/(Overprovision) in prior years                                2,269                 (11)
         Deferred (Note 30)                                                           1,179               2,137


                                                                                      4,883               2,765


        Overseas:
         Charge for the year                                                          4,207               6,446
         Underprovision/(Overprovision) in prior years                                  919                (232)
         Deferred (Note 30)                                                          36,966               6,054

                                                                                     42,092              12,268


        Total charge for the year                                                    46,975              15,033


        Hong Kong profits tax has been provided at the rate of 17.5 per cent. (2005 – 17.5 per cent.) on
        the estimated assessable profits arising in Hong Kong during the year. Taxes on profits assessable
        elsewhere have been calculated on the estimated assessable profits for the year at the tax rates
        prevailing in the countries/jurisdictions in which the Group operates based on existing legislation,
        interpretations and practices in respect thereof.

        A reconciliation of the tax charge applicable to profit before tax using the statutory rates for the
        countries/jurisdictions in which the Company and the majority of its subsidiaries are domiciled
        to the tax charge is as follows:

                                                                                               Group
                                                                                      2006                2005
                                                                                   HK$’000             HK$’000

        Profit before tax                                                           463,534             125,753


        Tax at the statutory tax rate of 17.5 per cent.
          (2005 – 17.5 per cent.)                                                    81,118              22,007
        Effect of different tax rates in other jurisdictions                        (20,037)             (5,694)
        Adjustments in respect of current tax of previous years                       3,188                (243)
        Profits and losses attributable to jointly controlled entities
          and associates                                                              1,165                 520
        Income not subject to tax                                                   (16,489)            (16,585)
        Expenses not deductible for tax                                               2,257               5,335
        Tax losses utilised from previous years                                     (17,183)                  –
        Tax losses not recognised                                                    12,956               9,693


        Tax charge at the Group’s effective rate of 10 per cent.
          (2005 – 12 per cent.)                                                      46,975              15,033


        For the companies operated in Republic of Singapore and Macau, corporate taxes have been
        calculated on the estimated assessable profits for the year at the rate of 20 per cent. and 12 per cent.
        (2005 – 20 per cent. and 12 per cent.), respectively.

        The share of tax credit attributable to associates amounting to HK$19,159,000 (2005 – tax charge
        of HK$1,037,000) is included in “Share of results of associates” on the face of the consolidated
        profit and loss account.

                                               • 54 •
APPENDIX I                    FINANCIAL INFORMATION OF THE GROUP


  13.   PROFIT ATTRIBUTABLE TO EQUITY HOLDERS OF THE COMPANY

        The consolidated profit attributable to equity holders of the Company for the year included a
        loss of HK$34,676,000 (2005 – profit of HK$4,715,000) which has been dealt with in the financial
        statements of the Company as set out in Note 32 to the financial statements.

  14.   EARNINGS PER SHARE ATTRIBUTABLE TO EQUITY HOLDERS OF THE COMPANY

        (a)    Basic earnings per share

               Basic earnings per share is calculated based on (i) the consolidated profit for the year
               attributable to equity holders of the Company of HK$391,472,000 (2005 – HK$111,761,000);
               and (ii) the weighted average number of 1,346,829,000 ordinary shares (2005 – 1,346,829,000
               ordinary shares) in issue during the year.

        (b)    Diluted earnings per share

               No diluted earnings per share is presented for the years ended 31st December, 2006 and
               2005 as there were no dilutive potential ordinary shares during these years.

  15.   DISTRIBUTIONS

                                                                                Group and Company
                                                                                 2006           2005
                                                                              HK$’000        HK$’000

        Interim, declared and paid, of HK1.5 cents (2005 – HK1.5 cents)
          per ordinary share                                                    20,202             20,202

        Final, proposed, of HK5 cents (2005 – HK3 cents, paid) per
          ordinary share                                                        67,341             40,405

                                                                                87,543             60,607


        The proposed final distribution for the year is subject to the approval of the Company’s
        shareholders at the forthcoming annual general meeting.




                                             • 55 •
APPENDIX I                     FINANCIAL INFORMATION OF THE GROUP


  16.   GOODWILL

        Group

                                                                                                   HK$’000

        At 1st January, 2005:
          Cost                                                                                       61,027
          Accumulated impairment                                                                     (3,330)

          Net carrying amount                                                                        57,697


        Cost at 1st January, 2005, net of accumulated impairment                                     57,697
        Impairment during the year                                                                     (412)


        At 31st December, 2005                                                                       57,285


        At 1st January, 2006 and 31st December, 2006:
          Cost                                                                                       61,027
          Accumulated impairment                                                                     (3,742)


          Net carrying amount                                                                        57,285


        Impairment testing of goodwill

        Goodwill acquired through business combination has been allocated to the banking business
        cash-generating unit, which is a reportable segment, for impairment testing.

        The recoverable amount of the banking business cash-generating unit is determined based on a
        value in use calculation using cash flow projections based on financial budgets approved by
        senior management covering a five-year period. The discount rate applied to the cash flow
        projection is 5 per cent. (2005 – 4.4 per cent.). The growth rate used to extrapolate the cash flows
        of the banking business beyond the five-year period is assumed to be nil.

        The carrying amount of goodwill allocated to the banking business cash-generating unit is as
        follows:

                                                                                   2006               2005
                                                                                HK$’000            HK$’000

        Carrying amount of goodwill                                               57,285             57,285




                                              • 56 •
APPENDIX I                   FINANCIAL INFORMATION OF THE GROUP


  17.   FIXED ASSETS

        Group

                                                                    Leasehold
                                                                improvements,
                                                                     furniture,
                                                                      fixtures,
                                                   Leasehold       equipment
                                                    land and        and motor
        2006                                       buildings           vehicles         Total
                                                     HK$’000           HK$’000        HK$’000

        Cost:
          At 1st January, 2006                         25,047           75,024         100,071
          Additions during the year                         –            5,617           5,617
          Disposals during the year                         –             (236)           (236)
          Disposal of subsidiaries                          –           (1,772)         (1,772)
          Exchange adjustments                              –              944             944

          At 31st December, 2006                       25,047           79,577         104,624


        Accumulated depreciation:
         At 1st January, 2006                             522            49,956         50,478
         Provided for the year                            250             6,738          6,988
         Disposals during the year                          –              (169)          (169)
         Disposal of subsidiaries                           –              (540)          (540)
         Exchange adjustments                               –               424            424


          At 31st December, 2006                          772            56,409         57,181


        Net book value:
         At 31st December, 2006                        24,275           23,168          47,443


        2005

        Cost:
          At 1st January, 2005                         25,047            57,952         82,999
          Additions during the year                         –            17,809         17,809
          Disposals during the year                         –               (48)           (48)
          Exchange adjustments                              –              (689)          (689)


          At 31st December, 2005                       25,047           75,024         100,071


        Accumulated depreciation:
         At 1st January, 2005                             271            45,752         46,023
         Provided for the year                            251             4,362          4,613
         Exchange adjustments                               –              (158)          (158)


          At 31st December, 2005                          522            49,956         50,478


        Net book value:
         At 31st December, 2005                        24,525           25,068          49,593


        The leasehold land and buildings situated outside Hong Kong are held under medium term
        leases.




                                         • 57 •
APPENDIX I                 FINANCIAL INFORMATION OF THE GROUP


      Company

                                                    Furniture, fixtures,
                                                            equipment
                                                    and motor vehicles
      2006                                                     HK$’000

      Cost:
        At 1st January, 2006                                      4,571
        Additions during the year                                 2,544


        At 31st December, 2006                                    7,115


      Accumulated depreciation:
       At 1st January, 2006                                       1,882
       Provided for the year                                      1,263

        At 31st December, 2006                                    3,145


      Net book value:
       At 31st December, 2006                                     3,970


      2005

      Cost:
        At 1st January, 2005                                      3,300
        Additions during the year                                 1,271


        At 31st December, 2005                                    4,571


      Accumulated depreciation:
       At 1st January, 2005                                       1,165
       Provided for the year                                        717


        At 31st December, 2005                                    1,882


      Net book value:
       At 31st December, 2005                                     2,689




                                    • 58 •
APPENDIX I                    FINANCIAL INFORMATION OF THE GROUP


  18.   INVESTMENT PROPERTIES

                                                                                       Group
                                                                               2006               2005
                                                                            HK$’000            HK$’000

        Medium term leasehold land and buildings situated in
         Hong Kong:
           Balance at beginning of year                                       16,800            14,800
           Fair value adjustments                                                370             2,000


          Balance at end of year                                              17,170            16,800


        Long term leasehold land and buildings situated in Hong Kong:
          Balance at beginning of year                                        84,118            73,843
          Fair value adjustments                                               6,405            10,275

          Balance at end of year                                              90,523             84,118


        Medium term leasehold land and buildings situated outside
         Hong Kong:
           Balance at beginning of year                                      312,000                 –
           Additions during the year                                           4,422           250,172
           Fair value adjustments                                             37,578            61,828

            Balance at end of year                                           354,000           312,000


        Freehold land and buildings situated outside Hong Kong:
          Balance at beginning of year                                         8,605              7,501
          Additions during the year                                          469,221                  –
          Fair value adjustments                                             162,923                681
          Exchange adjustments                                                33,814                423


          Balance at end of year                                             674,563              8,605


        Total                                                              1,136,256           421,523


        Based on professional valuations as at 31st December, 2006 made by Mr. Jonathan Miles Foxall, a
        chartered surveyor and a director of certain subsidiaries of the Company, the investment
        properties in Hong Kong were revalued on an open market, existing use basis at HK$107,693,000
        (2005 – HK$100,918,000).

        Based on professional valuations as at 31st December, 2006 made by Professional Asset Valuers,
        Incorporated, Savills (Macau) Limited and Savills (Singapore) Pte Limited, the investment
        properties situated outside Hong Kong were revalued on an open market, existing use basis at
        HK$1,028,563,000 (2005 – HK$320,605,000).

        Certain investment properties have been mortgaged to secure banking facilities made available
        to the Group as set out in note 27 to the financial statements.




                                            • 59 •
APPENDIX I                    FINANCIAL INFORMATION OF THE GROUP


  19.   PROPERTIES UNDER DEVELOPMENT

                                                                                           Group
                                                                                 2006                 2005
                                                                              HK$’000              HK$’000

        Land and buildings situated outside Hong Kong, at cost:
          Balance at beginning of year                                         105,096              99,767
          Additions during the year                                             47,384               9,514
          Exchange adjustments                                                   7,635              (4,185)


          Balance at end of year                                               160,115             105,096


        Land and buildings held under the following lease terms:
          Leasehold (Note)                                                      98,121              69,795
          Freehold                                                              61,994              35,301

                                                                               160,115             105,096


        Note:   The lease terms of the properties under development situated outside Hong Kong are 99
                years.

  20.   INTERESTS IN ASSOCIATES

                                                                                           Group
                                                                                 2006                 2005
                                                                              HK$’000              HK$’000

        Share of net assets in unlisted investments                          1,700,144             184,804
        Goodwill on acquisition less impairment                                  1,759               1,759
        Due from associates                                                    298,624               5,060
        Due to associates                                                      (22,175)                  –


                                                                             1,978,352             191,623
        Provisions for impairment losses                                       (16,388)            (16,388)

                                                                             1,961,964             175,235


        The amount of goodwill arising from the acquisition of associates is as follows:

        Cost:
          Balance at beginning of year and at end of year                        9,195               9,195


        Accumulated impairment:
         Balance at beginning of year                                            7,436               6,890
         Impairment provided for the year                                            –                 546


          Balance at end of year                                                 7,436               7,436


        Net carrying amount at end of year                                       1,759               1,759


        The balance as at 31st December, 2006 included the Group’s interest in Lippo ASM Asia Property
        LP (“LAAP”), a property fund which carries the objective of investing in real estates in the East
        Asia region, of approximately HK$1,639 million (2005 – HK$151 million). In May 2006, LAAP
        participated in a joint venture to invest in Overseas Union Enterprise Limited, a listed company
        in Singapore principally engaged in property investments and hotel operations.




                                             • 60 •
APPENDIX I                     FINANCIAL INFORMATION OF THE GROUP


        The balances with the associates are unsecured, interest-free and have no fixed terms of repayment.
        The carrying amounts of the balances are approximate to their fair values.

        The following table illustrates the summarised financial information of the Group’s associates
        extracted from their management accounts:

                                                                                           Group
                                                                                  2006                2005
                                                                               HK$’000             HK$’000

        Assets                                                               11,495,246            308,190
        Liabilities                                                          (5,603,360)           (74,972)
        Revenues                                                              1,222,846            251,846
        Profit/(Loss)                                                           165,614             (1,676)


  21.   INTERESTS IN JOINTLY CONTROLLED ENTITIES

                                                                                          Group
                                                                                  2006                2005
                                                                               HK$’000             HK$’000

        Share of net assets in unlisted investments                               1,243              3,974
        Goodwill on acquisition                                                   1,324              1,324
        Due from jointly controlled entities                                     46,732              7,317

                                                                                 49,299             12,615


        As at 31st December, 2006, the balances with the jointly controlled entities included a loan of
        HK$3,988,000, which is secured by certain shares of a jointly controlled entity, bears interest at
        US dollar prime rate plus 2 per cent. per annum and has no fixed terms of repayment. The
        remaining balances with the jointly controlled entities are unsecured, interest-free and have no
        fixed terms of repayment. As at 31st December, 2005, the balances with the jointly controlled
        entities were unsecured, interest-free and had no fixed terms of repayment. The carrying amounts
        of the balances are approximate to their fair values.




                                              • 61 •
APPENDIX I                      FINANCIAL INFORMATION OF THE GROUP


        The following table illustrates the summarised financial information of the Group’s jointly
        controlled entities extracted from their management accounts:

                                                                                                  Group
                                                                                           2006              2005
                                                                                        HK$’000           HK$’000

        Share of the jointly controlled entities’ assets and liabilities:
          Current assets                                                                  9,671              5,043
          Non-current assets                                                             47,330              8,654
          Current liabilities                                                            (9,522)            (1,111)
          Non-current liabilities                                                             –             (1,936)

          Net assets                                                                     47,479            10,650


        Share of the jointly controlled entities’ results:
          Turnover                                                                           912                –
          Total expenses                                                                  (3,556)            (423)


          Loss after tax                                                                  (2,644)            (423)


        Share of the jointly controlled entities’ capital commitments                   307,713             2,042


  22.   AVAILABLE-FOR-SALE FINANCIAL ASSETS

                                                                     Group                       Company
                                                          2006              2005              2006       2005
                                                       HK$’000           HK$’000           HK$’000    HK$’000

        Financial assets stated at fair value:
          Equity securities listed in Hong Kong                 –            262,666                –      48,770
          Unlisted equity securities                            –             43,854                –           –

                                                               –             306,520                –      48,770
          Unlisted investment funds                       94,442              74,036                –           –


                                                          94,442             380,556                –      48,770


        Financial assets stated at cost:
          Unlisted equity securities                      79,166              74,004              –             –
          Unlisted debt securities                        11,536              10,862          3,165         3,165
          Provision for impairment losses                (82,275)            (76,478)             –             –


                                                             8,427             8,388          3,165         3,165


                                                         102,869             388,944          3,165        51,935
        Less: Amount classified under
               current portion                                  –        (213,896)                  –            –


        Non-current portion                              102,869             175,048          3,165        51,935




                                                • 62 •
APPENDIX I                   FINANCIAL INFORMATION OF THE GROUP


      The debt securities have effective interest rates ranging from nil to 8 per cent. (2005 – nil to 8 per
      cent.) per annum.

                                                               Group                     Company
                                                       2006           2005            2006       2005
                                                    HK$’000        HK$’000         HK$’000    HK$’000

      An analysis of the issuers of available-
       for-sale financial assets is as follows:
          Equity securities:
            Corporate entities                        79,166           380,524             –         48,770


          Debt securities:
           Club debenture                              3,165             3,165         3,165          3,165
           Corporate entities                          8,371             7,697             –              –


                                                      11,536            10,862         3,165          3,165


      During the year, the gross gain of the Group’s available-for-sale financial assets recognised
      directly in equity amounted to HK$26,672,000 (2005 – HK$85,636,000), of which HK$87,288,000
      (2005 – Nil) was removed from equity and recognised in the consolidated profit and loss account
      during the year.

      The above financial assets consist of investments in equity securities and investment funds
      which were designated as available-for-sale financial assets and have no fixed maturity date or
      coupon rate.

      The fair values of listed equity securities are based on quoted market prices. The fair values of
      certain unlisted available-for-sale financial assets have been estimated using a valuation technique
      based on assumptions that are not supported by observable market prices or rates. The Directors
      believe that the estimated fair values resulting from the valuation technique, which are recorded
      in the consolidated balance sheet, and the related changes in fair values, which are recorded in
      the investment revaluation reserve, are reasonable, and that they are the most appropriate values
      at the balance sheet date.

      Apart from the above, certain unlisted equity securities and debt securities issued by private
      entities are measured at cost less impairment at each balance sheet date. The Directors consider
      that information to be applied in the valuation techniques cannot be reliably obtained on a
      continuous basis. The fair values of these unlisted equity securities and debt securities cannot be
      reliably measured.

      During the year, the Directors reviewed the carrying amount of certain unlisted available-for-
      sale financial assets with reference to their business performances and the profit projections
      prepared by the investees’ management. An impairment loss of HK$5,797,000 (2005 –
      HK$53,757,000) has been charged to the consolidated profit and loss accounts.




                                             • 63 •
APPENDIX I                     FINANCIAL INFORMATION OF THE GROUP


  23.   HELD-TO-MATURITY FINANCIAL ASSETS

                                                                                                Group
                                                                                         2006              2005
                                                                                      HK$’000           HK$’000

        Debt securities, at amortised cost:
         Listed overseas                                                                9,582              9,604


        Market value of listed debt securities                                         10,444             11,019


        The debt securities have effective interest rates of 9 per cent. (2005 – 9 per cent.) per annum.

        An analysis of the issuers of held-to-maturity financial
         assets is as follows:
            Banks and other financial institutions                                      9,582              9,604


  24.   FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS

                                                                    Group                      Company
                                                         2006              2005             2006       2005
                                                      HK$’000           HK$’000          HK$’000    HK$’000

        Held for trading:
         Equity securities:
            Listed in Hong Kong                            56,293            64,425       14,200         38,605
            Listed overseas                                 6,731            68,275        4,245          6,523


                                                           63,024           132,700       18,445         45,128


          Debt securities:
           Listed in Hong Kong                                  –             1,967              –            –
           Listed overseas                                  9,056           162,143              –        4,454
           Unlisted                                             –            84,808              –       54,308


                                                            9,056           248,918              –       58,762


          Investment funds:
            Listed in Hong Kong                                 –                25              –             –
            Listed overseas                                46,030            50,913              –         4,258
            Unlisted                                      230,731           131,708              –             –


                                                          276,761           182,646              –         4,258


          Other:
            Unlisted                                        5,813            53,649              –             –


                                                          354,654           617,913       18,445        108,148
        Designated as financial assets at fair
         value through profit or loss (Note):
            Unlisted investment funds                     466,371           268,753              –             –


                                                          821,025           886,666       18,445        108,148
        Less: Amount classified under current
               portion                                (821,025)         (617,913)         (18,445)      (108,148)


        Non-current portion                                     –           268,753              –             –



                                                 • 64 •
APPENDIX I                   FINANCIAL INFORMATION OF THE GROUP


      Note:   The designation eliminates or significantly reduces a measurement or recognition
              inconsistency that would otherwise arise from measuring the assets or recognising the
              gains or losses on different bases.

      The debt securities have effective interest rates ranging from 6.5 per cent. to 8 per cent. (2005 –
      4.3 per cent. to 14.8 per cent.) per annum.

                                                              Group                    Company
                                                     2006            2005           2006       2005
                                                  HK$’000         HK$’000        HK$’000    HK$’000

      An analysis of the issuers of financial
       assets at fair value through profit
       or loss is as follows:
          Equity securities:
            Banks and other financial
              institutions                                –            13,266           –              –
            Corporate entities                       63,024           119,434      18,445         45,128


                                                     63,024           132,700      18,445         45,128


          Debt securities:
           Central governments and
              central banks                               –             9,289           –              –
           Public sector entities                         –             4,397           –              –
           Banks and other financial
              institutions                                –            93,431           –         22,504
           Corporate entities                         9,056           141,801           –         36,258


                                                      9,056           248,918           –         58,762




                                            • 65 •
APPENDIX I                       FINANCIAL INFORMATION OF THE GROUP


  25.   LOANS AND ADVANCES

        The loans and advances to customers of the Group have effective interest rates ranging from 3
        per cent. to 18 per cent. (2005 – 3.5 per cent. to 18 per cent.) per annum. The carrying amounts of
        loans and advances are approximate to their fair values.

        Movements of allowance for bad and doubtful debts relating to banking operation during the
        year are as follows:

                                                                                           Group
                                                                                   2006               2005
                                                                                HK$’000            HK$’000

        Balance at beginning of year                                               3,000              5,140
        Allowance for bad and doubtful debts                                          85              2,910
        Impairment allowance released                                                (89)            (5,050)


        Balance at end of year                                                     2,996              3,000


  26.   DEBTORS, PREPAYMENTS AND DEPOSITS

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

                                                                                           Group
                                                                                   2006               2005
                                                                                HK$’000            HK$’000

        Outstanding balances with ages:
         Repayable on demand                                                      45,809             55,282
         Within 30 days                                                           39,602             78,903
         Between 31 and 60 days                                                      969                295
         Between 61 and 90 days                                                      184                157

                                                                                  86,564            134,637


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

        Except for receivables from certain securities brokers which are interest-bearing, the balances of
        trade debtors are non-interest-bearing. The carrying amounts of debtors and deposits are
        approximate to their fair values.




                                              • 66 •
APPENDIX I                       FINANCIAL INFORMATION OF THE GROUP


  27.   BANK AND OTHER BORROWINGS

                                                                  Group                    Company
                                                         2006            2005           2006       2005
                                                      HK$’000         HK$’000        HK$’000    HK$’000

        Bank loans:
          Secured (Note (a))                            594,078           25,000       60,000               –
          Unsecured                                      10,000                –            –               –

                                                        604,078           25,000       60,000               –
        Other borrowings:
          Unsecured (Note (b))                          885,495                 –     885,495               –


                                                     1,489,573            25,000      945,495               –
        Less: Amount classified under
               current portion                        (942,205)           (25,000)   (885,495)              –

        Non-current portion                             547,368                 –      60,000               –


        Bank loans and other borrowings
          by currency:
            Hong Kong dollar                         1,105,495            25,000      945,495               –
            Singapore dollar                           337,368                 –            –               –
            United States dollar                        46,710                 –            –               –


                                                     1,489,573            25,000      945,495               –


        Bank loans repayable:
          Within one year                                56,710           25,000            –               –
          In the second year                            220,965                –       60,000               –
          In the third to fifth years, inclusive        326,403                –            –               –


                                                        604,078           25,000       60,000               –


        Other borrowings repayable:
          Within one year                               885,495                 –     885,495               –


        The carrying amounts of the Group’s bank and other borrowings are approximate to their fair
        values and bear interest at floating rates ranging from 4.7 per cent. to 6.1 per cent. (2005 – 5.3 per
        cent. to 5.5 per cent.) per annum.

        Note:

        (a)     The bank loans as at 31st December, 2006 were secured by first legal mortgages over
                certain investment properties and certain securities of the Group with carrying amounts
                of HK$1,109,112,000 and HK$46,710,000, respectively. The bank loans as at 31st December,
                2005 were secured by certain securities owned by the margin clients of the Group.

        (b)     The Group’s other borrowings comprise of loans advanced from Lippo Limited and Lippo
                China Resources Limited, intermediate holding companies of the Company, of
                HK$248,126,000 and HK$637,369,000 respectively, which are repayable on or before 31st
                December, 2007.




                                               • 67 •
APPENDIX I                     FINANCIAL INFORMATION OF THE GROUP


  28.   CREDITORS, ACCRUALS AND DEPOSITS RECEIVED

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

                                                                                            Group
                                                                                    2006                2005
                                                                                 HK$’000             HK$’000

        Outstanding balances with ages:
         Repayable on demand                                                      637,860             495,639
         Within 30 days                                                           108,336              91,427


                                                                                  746,196             587,066


        The outstanding balances that are repayable on demand include client payables relating to cash
        balances held on trust for the customers in respect of the Group’s securities broking business. As
        at 31st December, 2006, total client trust bank balances amounted to HK$582,905,000 (2005 –
        HK$444,460,000).

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

  29.   CURRENT, FIXED, SAVINGS AND OTHER DEPOSITS OF CUSTOMERS

        The current, fixed, savings and other deposits of customers attributable to banking operation
        have effective interest rates ranging from 2.5 per cent. to 5.2 per cent. (2005 – 0.3 per cent. to 4.2
        per cent.) per annum.




                                               • 68 •
APPENDIX I                     FINANCIAL INFORMATION OF THE GROUP


  30.   DEFERRED TAX

        The movements in deferred tax liabilities during the year are as follows:

        Deferred tax liabilities

        Group

                                               Depreciation                  Fair value
                                               allowance in                    gains on
                                                   excess of              available-for-
                                                     related Revaluation sale financial
        2006                                   depreciation of properties         assets            Total
                                                    HK$’000      HK$’000        HK$’000           HK$’000

        At 1st January, 2006                             193          10,770          5,026         15,989
        Deferred tax charged/(credited)
          to the profit and loss account
          during the year (Note 12)                       (10)        38,155              –         38,145
        Deferred tax debited to equity
          during the year (Note 32)                         –              –          2,921          2,921
        Exchange adjustments                                5          1,137             10          1,152

        At 31st December, 2006                           188          50,062          7,957         58,207


        2005

        At 1st January, 2005                                –          1,234          2,898          4,132
        Deferred tax charged/(credited)
          to the profit and loss account
          during the year (Note 12)                      193           9,536         (1,538)         8,191
        Deferred tax debited to equity
          during the year (Note 32)                         –              –          3,670          3,670
        Exchange adjustments                                –              –             (4)            (4)


        At 31st December, 2005                           193          10,770          5,026         15,989


        At 31st December, 2006, there were no significant unrecognised deferred tax liabilities (2005 –
        Nil) for taxes that would be payable on the unremitted earnings of certain of the Group’s
        subsidiaries, jointly controlled entities or associates as the Group had no liability to additional
        tax should such amounts be remitted.




                                              • 69 •
APPENDIX I                    FINANCIAL INFORMATION OF THE GROUP


        Deferred tax assets

        The Group has tax losses arising in Hong Kong of HK$128,619,000 (2005 – HK$178,468,000) that
        are available indefinitely for offsetting against future taxable profits of the companies in which
        the losses arose. Deferred tax assets have not been recognised in respect of these losses at the
        balance sheet date due to the unpredictability of future profit streams.

        There are no income tax consequences attaching to the payment of dividends by the Company to
        its shareholders.

  31.   SHARE CAPITAL

                                                                               Group and Company
                                                                                 2006           2005
                                                                              HK$’000        HK$’000

        Authorised:
         2,000,000,000 (2005 – 2,000,000,000) ordinary shares
           of HK$1.00 each                                                    2,000,000         2,000,000


        Issued and fully paid:
          1,346,829,094 (2005 – 1,346,829,094) ordinary shares
            of HK$1.00 each                                                   1,346,829         1,346,829




                                             • 70 •
APPENDIX I                                      FINANCIAL INFORMATION OF THE GROUP


  32.   RESERVES

        Group

                                                           Capital
                                               Share   redemption          Legal    Regulatory     Investment Distributable   Exchange
                                            premium         reserve      reserve        reserve    revaluation     reserves equalisation                    Minority
                                             account      (Note (c))   (Note (d))     (Note (e))       reserve    (Note (b))     reserve        Total       interests
                                             HK$’000       HK$’000      HK$’000        HK$’000        HK$’000      HK$’000      HK$’000       HK$’000        HK$’000

        At 1st January, 2005                  50,988         11,760        2,053              –              –     1,299,809      (10,257 )   1,354,353       30,204
        Net fair value gain on
          available-for-sale
          financial assets                         –              –            –              –        85,546              –            –       85,546             90
        Deferred tax arising from net
          fair value gain on
          available-for-sale
          financial assets (Note 30)               –              –            –              –         (3,670 )           –            –        (3,670 )           –
        Transfer of reserves                       –              –          981          1,169              –        (2,150 )          –             –             –
        Exchange realignments                      –              –            –              –              –             –       (5,196 )      (5,196 )          44
        Issue of shares by subsidiaries
          to minority shareholders                 –              –            –              –              –             –            –             –         6,128
        Advances from minority
          shareholders of a subsidiary             –              –            –              –              –             –            –             –          870
        Changes in interests in
          subsidiaries                             –              –            –              –              –             –            –             –        (4,216 )
        Profit/(Loss) for the year                 –              –            –              –              –       111,761            –       111,761        (1,041 )
        2004 final distribution,
          declared and paid                        –              –            –              –              –       (40,405 )          –       (40,405 )           –
        2005 interim distribution,
          declared and paid                        –              –            –              –              –       (20,202 )          –       (20,202 )           –

        At 31st December, 2005
          and 1st January, 2006               50,988         11,760        3,034          1,169        81,876      1,348,813      (15,453 )   1,482,187       32,079
        Net fair value gain on
          available-for-sale financial
          assets                                   –              –            –              –        26,669              –            –       26,669              3
        Deferred tax arising from net
          fair value gain on available-
          for-sale financial assets
          (Note 30)                                –              –            –              –         (2,921 )           –            –        (2,921 )           –
        Derecognition of available-
          for-sale financial assets                –              –            –              –        (87,288 )           –            –       (87,288 )           –
        Share of reserves of associates
          and jointly controlled entities          –              –            –              –        18,624              –      54,344        72,968             –
        Transfer of reserves                       –              –          926             95             –         (1,021 )         –             –             –
        Exchange realignments                      –              –            –              –             –              –      23,095        23,095           891
        Issue of shares by subsidiaries
          to minority shareholders                 –              –            –              –              –             –            –             –          402
        Advances from minority
          shareholders of subsidiaries             –              –            –              –              –             –            –             –       41,384
        Acquisition of shares in a
          subsidiary from a minority
          shareholder                              –              –            –              –              –             –            –             –         (258 )
        Changes in interests in
          subsidiaries                             –              –            –              –              –            –             –            –          (303 )
        Profit for the year                        –              –            –              –              –      391,472             –      391,472        25,087
        2005 final distribution,
          declared and paid                        –              –            –              –              –       (40,405 )          –       (40,405 )           –
        2006 interim distribution,
          declared and paid                        –              –            –              –              –       (20,202 )          –       (20,202 )           –

        At 31st December, 2006                50,988         11,760        3,960          1,264        36,960      1,678,657      61,986      1,845,575       99,285




                                                                       • 71 •
APPENDIX I                     FINANCIAL INFORMATION OF THE GROUP


      Company

                                                           Capital
                                               Share   redemption      Investment Distributable
                                            premium         reserve    revaluation     reserves
                                             account      (Note (c))       reserve    (Note (b))      Total
                                             HK$’000       HK$’000        HK$’000      HK$’000      HK$’000

      At 1st January, 2005                    50,988         11,760              –     1,261,984    1,324,732
      Net fair value gain on available-
        for-sale financial assets                  –              –          6,604             –       6,604
      Profit for the year (Note 13)                –              –              –         4,715       4,715
      2004 final distribution,
        declared and paid                          –              –              –       (40,405)     (40,405)
      2005 interim distribution,
        declared and paid                          –              –              –       (20,202)     (20,202)


      At 31st December, 2005 and
        1st January 2006                      50,988         11,760          6,604     1,206,092    1,275,444
      Derecognition of available-for-sale
        financial assets                           –              –         (6,604)            –       (6,604)
      Loss for the year (Note 13)                  –              –              –       (34,676)     (34,676)
      2005 final distribution,
        declared and paid                          –              –              –       (40,405)     (40,405)
      2006 interim distribution,
        declared and paid                          –              –              –       (20,202)     (20,202)

      At 31st December, 2006                  50,988         11,760              –     1,110,809    1,173,557


      Note:

      (a)     Cancellation of the share premium account and transfer to distributable reserves:

              Pursuant to a special resolution passed at a special general meeting of the Company on
              2nd December, 1997, the entire amount standing to the credit of the share premium
              account of HK$3,630,765,000 was cancelled (the “Cancellation”). The credit arising from
              the Cancellation was transferred to distributable reserves. The balance of the reserves
              arising from the Cancellation could be applied towards any capitalisation issues of the
              Company in future, or for making distributions to shareholders of the Company.

      (b)     Distributable reserves of the Group at 31st December, 2006 comprise retained profits of
              HK$432,599,000 (2005 – HK$42,148,000) and the remaining balance arising from the
              Cancellation of HK$1,246,058,000 (2005 – HK$1,306,665,000). Included in the distributable
              reserves of the Group at 31st December, 2006 was an amount of proposed final distribution
              for the year then ended of HK$67,341,000 (2005 – HK$40,405,000) declared after the
              balance sheet date.

              Distributable reserves of the Company at 31st December, 2006 comprise contributed
              surplus of HK$134,329,000 (2005 – HK$134,329,000), accumulated losses of HK$269,578,000
              (2005 – HK$234,902,000) and the remaining balance arising from the Cancellation of
              HK$1,246,058,000 (2005 – HK$1,306,665,000). Included in the distributable reserves of the
              Company at 31st December, 2006 was an amount of proposed final distribution for the
              year then ended of HK$67,341,000 (2005 – HK$40,405,000) declared after the balance
              sheet date.




                                              • 72 •
APPENDIX I                     FINANCIAL INFORMATION OF THE GROUP


        (c)    The capital redemption reserve is not available for distribution to shareholders.

        (d)    The legal reserve represents the part of reserve generated by a banking subsidiary of the
               Company which may only be distributable in accordance with certain limited
               circumstances prescribed by the statute of the country in which the subsidiary operates.

        (e)    The regulatory reserve made under HKAS 30 represents the part of reserve generated by
               a banking subsidiary of the Company arising from the difference between the impairment
               allowance made under HKAS 39 and for regulatory purpose.

  33.   INTERESTS IN SUBSIDIARIES

                                                                                     Company
                                                                                  2006          2005
                                                                               HK$’000       HK$’000

        Unlisted shares, at cost                                                 44,953               44,953
        Due from subsidiaries                                                 3,756,546            2,497,693
        Due to subsidiaries                                                    (285,986)            (181,537)

                                                                              3,515,513            2,361,109
        Provisions for impairment losses                                       (103,569)            (103,569)


                                                                              3,411,944            2,257,540


        The balances with subsidiaries are unsecured, have no fixed terms of repayment and are
        approximate to their fair values. Certain balances bear interest at rates reflecting the respective
        costs of funds within the Group.




                                              • 73 •
APPENDIX I                    FINANCIAL INFORMATION OF THE GROUP


  34.   NOTES TO THE CONSOLIDATED CASH FLOW STATEMENT

        (a)   Reconciliation of profit before tax to cash generated from operations

                                                                                      Group
                                                                             2006                2005
                                                                   Note   HK$’000             HK$’000

              Profit before tax                                            463,534            125,753
              Adjustments for:
                Share of results of associates                                4,014              2,548
                Share of results of jointly controlled entities               2,644                423
                Loss/(Gain) on disposal of:
                  Items of fixed assets                             7            67                 48
                  Available-for-sale financial assets                       (86,238)            (8,347)
                  Subsidiaries                                                 (848)               295
                Gain on changes in interests in subsidiaries                   (303)            (4,216)
                Allowance/(Write-back of allowance) for
                  bad and doubtful debts                                     (1,271)           30,896
                Provisions for impairment losses on:
                  Available-for-sale financial assets               7         5,797            53,757
                  Associates                                                      –             5,859
                  Goodwill                                                        –               412
                Net fair value gain on financial assets at
                  fair value through profit or loss                        (216,728)           (70,370)
                Fair value gains on investment properties                  (207,276)           (74,784)
                Interest expenses                                   11       49,064              7,363
                Interest income                                             (48,126)           (52,672)
                Dividend income                                              (3,062)           (21,630)
                Depreciation                                        7         6,988              4,613

                                                                            (31,744)               (52)

              Decrease in financial assets at fair value through
                profit or loss                                             282,656            314,974
              Decrease in held-to-maturity financial assets                     22                 39
              Increase in property held for sale                            (6,782)            (2,301)
              Decrease/(Increase) in loans and advances                    (28,419)            22,643
              Decrease/(Increase) in debtors, prepayments
                and deposits                                                  1,056            (19,003)
              Increase in creditors, accruals and deposits
                received                                                    30,424             89,254
              Increase/(Decrease) in current, fixed, savings
                and other deposits of customers                             188,778               (898)
              Increase in client trust bank balances                       (138,445)           (55,337)

              Cash generated from operations                               297,546            349,319




                                             • 74 •
APPENDIX I                  FINANCIAL INFORMATION OF THE GROUP


      (b)    Disposal of subsidiaries

                                                                                   Group
                                                                          2006                2005
                                                                       HK$’000             HK$’000

             Net assets disposed of:
              Fixed assets                                                1,232                  –
              Cash and bank balances                                     54,634                  –
              Debtors, prepayments and deposits                             349             11,393
              Creditors and accruals                                     (1,077)                 –
              Tax payable                                                   (39)                 –

                                                                         55,099             11,393
             Gain/(Loss) on disposal of subsidiaries                        848               (295)


                                                                         55,947             11,098


             Satisfied by:
               Cash                                                      55,660             11,098
               Financial assets at fair value through profit or loss        287                  –


                                                                         55,947             11,098


             An analysis of net inflow of cash and cash equivalents in respect of the disposal of
             subsidiaries is as follow:

               Cash consideration                                         55,660            11,098
               Cash and bank balances disposed of                        (54,634)                –

             Net inflow of cash and cash equivalents in respect
              of the disposal of subsidiaries                              1,026            11,098




                                           • 75 •
APPENDIX I                           FINANCIAL INFORMATION OF THE GROUP


  35.   MATURITY PROFILE OF ASSETS AND LIABILITIES

        An analysis of the maturity profile of assets and liabilities of the Group analysed by the remaining
        period at the balance sheet date to the contractual maturity date is as follows:

                                                                            1 year    5 years
                                                                           or less    or less
                                                 Repayable   3 months     but over   but over      After
                                                on demand      or less   3 months      1 year    5 years   Undated      Total
                                                   HK$’000    HK$’000     HK$’000    HK$’000    HK$’000    HK$’000    HK$’000

        At 31st December, 2006
        Assets
        Debt securities:
          Held-to-maturity financial assets              –           –           –          –      9,582          –      9,582
          Available-for-sale financial assets            –           –           –      8,371          –      3,165     11,536
          Financial assets at fair value
            through profit or loss                       –           –           –          –        976      8,080      9,056
        Loans and advances                         110,599     116,151      46,574     10,740     16,326          –    300,390
        Client trust bank balances                  52,417     530,488           –          –          –          –    582,905
        Treasury bills                                   –     194,970           –          –          –          –    194,970
        Cash and bank balances                     126,173     237,314           –          –          –          –    363,487


                                                   289,189   1,078,923      46,574     19,111     26,884     11,245   1,471,926


        Liabilities
        Bank and other borrowings                        –      56,710     885,495    547,368          –         –    1,489,573
        Current, fixed, savings and other
          deposits of customers                    107,747     194,458       3,316          –          –         –     305,521


                                                   107,747     251,168     888,811    547,368          –         –    1,795,094


        At 31st December, 2005

        Assets
        Debt securities:
          Held-to-maturity financial assets              –           –           –          –      9,604          –      9,604
          Available-for-sale financial assets            –           –           –      7,697          –      3,165     10,862
          Financial assets at fair value
            through profit or loss                       –           –      10,177    159,103     71,496      8,142    248,918
        Loans and advances                         133,983      62,255      44,260     12,642     17,333          –    270,473
        Client trust bank balances                  21,150     423,310           –          –          –          –    444,460
        Treasury bills                                   –      15,520           –          –          –          –     15,520
        Cash and bank balances                      98,303     523,437           –          –          –          –    621,740


                                                   253,436   1,024,522      54,437    179,442     98,433     11,307   1,621,577


        Liabilities
        Bank and other borrowings                        –      25,000           –          –          –         –      25,000
        Current, fixed, savings and
          other deposits of customers               43,601      71,643       1,499          –          –         –     116,743


                                                    43,601      96,643       1,499          –          –         –     141,743




                                                        • 76 •
APPENDIX I                      FINANCIAL INFORMATION OF THE GROUP


  36.   CONTINGENT LIABILITIES

        Group

        As at 31st December, 2006, the Group had contingent liabilities relating to its banking subsidiary
        of HK$29,564,000 (2005 – HK$29,953,000) comprising guarantees and other endorsements of
        HK$17,172,000 (2005 – HK$11,785,000) and liabilities under letters of credit on behalf of customers
        of HK$12,392,000 (2005 – HK$18,168,000).

        Company

        As at 31st December, 2006, guarantees provided by the Company in respect of banking facilities
        granted to its subsidiaries amounted to HK$727,394,000 (2005 – HK$257,500,000), which were
        utilised to an extent of HK$429,894,000 (2005 – HK$25,000,000).

  37.   OPERATING LEASE ARRANGEMENTS

        (a)     As lessor

                The Group leases its investment properties under operating lease arrangements with
                leases negotiated for terms of one to three years. The terms of the leases generally also
                require the tenants to pay security deposits and provide for periodic rent adjustments
                according to the prevailing market condition. At 31st December, 2006, the Group had
                total future minimum lease receivables under non-cancellable operating leases with its
                tenants falling due as follows:

                                                                                              Group
                                                                                       2006              2005
                                                                                    HK$’000           HK$’000

                Within one year                                                      26,225             7,058
                In the second to fifth years, inclusive                              24,100             2,868

                                                                                     50,325             9,926


        (b)     As lessee

                The Group leases certain properties under lease agreements which are non-cancellable.
                The leases expire on various dates until 30th November, 2008 and the leases for properties
                contain provision for rental adjustments. As at 31st December, 2006, the Group had total
                future minimum lease payments under non-cancellable operating leases in respect of
                land and buildings falling due as follows:

                                                                   Group                     Company
                                                         2006             2005            2006       2005
                                                      HK$’000          HK$’000         HK$’000    HK$’000

                Within one year                            9,261           12,258        1,961          1,016
                In the second to fifth years,
                  inclusive                                3,914            6,172        1,389              –


                                                          13,175           18,430        3,350          1,016




                                                • 77 •
APPENDIX I                     FINANCIAL INFORMATION OF THE GROUP


  38.   CAPITAL COMMITMENTS

        The Group had the following commitments at the balance sheet date:

                                                                                          Group
                                                                                 2006                2005
                                                                              HK$’000             HK$’000

        Capital commitments in respect of property, plant and equipment:
          Contracted, but not provided for                                       41,623             59,988
        Other capital commitments:
          Contracted, but not provided for (Note)                              527,024            1,471,472

                                                                               568,647            1,531,460


        Note:   The balance as at 31st December, 2006 included the Group’s capital commitments in
                respect of the formation of joint ventures for certain property projects in Republic of
                Singapore and the People’s Republic of China (“PRC”) of approximately HK$390 million
                (2005 – HK$149 million).

                The balance as at 31st December, 2005 included the Group’s capital commitments in a
                property fund of approximately HK$1,292 million, which had been paid during the year.
                Details of the property fund are described in Note 20 to the financial statements.

        The Company did not have any material commitments at the balance sheet date (2005 – Nil).

  39.   RELATED PARTY TRANSACTIONS

        Listed below are related party transactions disclosed in accordance with the HKAS 24 “Related
        party disclosures”.

        (a)     During the year, Lippo Securities Holdings Limited (“LSHL”), being a wholly-owned
                subsidiary of the Company, paid rental expenses of HK$3,163,000 (2005 – HK$3,005,000)
                to Prime Power Investment Limited, being a fellow subsidiary of the Company, in respect
                of office premises occupied by LSHL, and the Company paid rental expenses of
                HK$1,588,000 (2005 – HK$1,434,000) to Porbandar Limited, being a fellow subsidiary of
                the Company, in respect of office premises occupied by the Company. The above rentals
                were determined by reference to open market rentals.

        (b)     During the year, LSHL and its subsidiaries (the “LSHL Group”) received commission
                income for dealing in listed securities in the market from Lippo China Resources Limited,
                being an indirect controlling shareholder of the Company, for itself and its subsidiaries,
                amounted to HK$27,000 (2005 – HK$181,000), Lippo Limited, being an indirect controlling
                shareholder of the Company, for itself and its subsidiaries, amounted to Nil (2005 –
                HK$4,000) and Lippo Cayman Limited, being an indirect controlling shareholder of the
                Company, for itself and its subsidiaries, amounted to Nil (2005 – HK$14,000). The
                commissions were in line with those offered by the LSHL Group to its customers.

        (c)     During the year, Impac Asset Management (HK) Limited, being a wholly-owned subsidiary
                of the Company, received investment advisory income from Lippo ASM Investment
                Management Limited, being an associate of the Group, amounting to HK$11,287,000 (2005
                – HK$4,112,000).

        (d)     During the year, the Company paid finance costs to Lippo Limited and Lippo China
                Resources Limited of HK$8,348,000 (2005 – Nil) and HK$13,872,000 (2005 – Nil),
                respectively, in respect of the loans advanced to the Company. The balances of which are
                set out in Note 27 to the financial statements.




                                             • 78 •
APPENDIX I                      FINANCIAL INFORMATION OF THE GROUP


        (e)    During the year, a wholly-owned subsidiary of the Company acquired certain financial
               assets at fair value through profit or loss from LAAP, being an associate of the Group,
               amounting to HK$277,695,000 (2005 – Nil). The acquisition price was determined by
               reference to fair market value.

        (f)    As at 31st December, 2006, the Group had balances with its associates and jointly controlled
               entities as set out in Note 20 and Note 21, respectively, to the financial statements.

        The transactions in respect of items (a) & (b) above are continuing connected transactions as
        defined in Chapter 14A of the Rules Governing the Listing of Securities on The Stock Exchange
        of Hong Kong Limited.

  40.   FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

        The Group had established policies and procedures for risk management which were reviewed
        regularly by the Executive Directors and senior management of the Group to ensure the proper
        monitoring and control of all major risks arising from the Group’s activities at all times. The risk
        management function was carried out by individual business units and regularly overseen by
        the Group’s senior management with all the risk limits approved by the Directors of the Group.

        (a)    Credit risk

               Credit risk arose from the possibility that the counterparty in a transaction may default.
               It arose from lending, treasury, investment and other activities undertaken by the Group.

               The credit policies for banking and margin lending businesses set out in details the credit
               approval and monitoring mechanism, the loan classification criteria and provision policy.
               Credit approval was conducted in accordance with the credit policies, taking into account
               the type and tenor of loans, creditworthiness and repayment ability of prospective
               borrowers, collateral available and the resultant risk concentration in the context of the
               Group’s total assets. Day-to-day credit management was performed by management of
               individual business units.

               The Group had established guidelines to ensure that all new debt investments were
               properly made, taking into account the credit rating requirements, the maximum exposure
               limit to a single corporate or issuer; etc. All relevant departments within the Group were
               involved to ensure that appropriate processes, systems and controls were set in place
               before and after the investments were acquired.

        (b)    Liquidity risk

               The Group managed the liquidity structure of its assets, liabilities and commitments in
               view of market conditions and its business needs, as well as to ensure that its operations
               met with the statutory requirement on minimum liquidity ratio whenever applicable.

               Management comprising Executive Directors and senior managers monitored the liquidity
               position of the Group on an on-going basis to ensure the availability of sufficient liquid
               funds to meet all obligations as they fell due and to make the most efficient use of the
               Group’s financial resources.




                                              • 79 •
APPENDIX I                   FINANCIAL INFORMATION OF THE GROUP


      (c)    Interest rate risk

             Interest rate risk primarily resulted from timing differences in the repricing of interest
             bearing assets, liabilities and commitments. The Group’s interest rate positions arose
             mainly from treasury, banking and other investment activities undertaken.

             The Group monitors its interest-sensitive products and investments and net repricing
             gap and limits interest rate exposure through management of maturity profile, currency
             mix and choice of fixed or floating interest rates. The interest rate risk was managed and
             monitored regularly by senior managers of the Group.

      (d)    Foreign exchange risk

             Foreign exchange risk was the risk to earnings or capital arising from movements of
             foreign exchange rates. The Group’s foreign exchange risk primarily arose from currency
             exposures originating from its banking activities, foreign exchange dealings and other
             investment activities.

             The Group monitors the relative foreign exchange positions of its assets and liabilities
             and allocates accordingly to minimise foreign exchange risk. When appropriate hedging
             instruments including forward contracts, swap and currency loans would be used to
             manage the foreign exchange exposure. The foreign exchange risk was managed and
             monitored on an on-going basis by senior managers of the Group.

      (e)    Market risk

             Market risk was the risk that changes in interest rates, foreign exchange rates, equity or
             commodity prices would affect the prices of financial instruments taken or held by the
             Group. Financial instruments included foreign exchange contracts, interest rate contracts,
             equity and fixed income securities.

             Market risk limits were approved by the Directors of the Group. Actual positions were
             compared with approved limits and monitored regularly by the Executive Directors and
             senior managers of the Group. Exposures were measured and monitored on the basis of
             principal and notional amounts, outstanding balances and pre-determined stop-loss limits.
             All market risk trading positions were subject to periodic mark-to-market valuation,
             which was monitored and managed by senior managers of the Group. With respect to the
             investment accounts, the Group had established evaluation procedures for the selection
             of investments and fund managers and the Executive Directors and senior managers of
             the Group perform regular reviews of the operation and performance of these investment
             accounts and ensure compliance with the market risk limits and guidelines adopted by
             the Group.




                                          • 80 •
APPENDIX I                    FINANCIAL INFORMATION OF THE GROUP


  41.   POST BALANCE SHEET EVENTS

        (a)    On 8th February, 2007, the Group gave notice to Ferrell Asset Management Limited
               (“Ferrell Management”), a discretionary investment manager of the Group in respect of a
               real estate fund, to terminate the discretionary management arrangement made between
               Ferrell Management and the Group. Due to the termination, Ferrell Management effected
               the redemption of the real estate fund. In March 2007, net proceed of the redemption of
               approximately HK$470 million was returned to the Group.

        (b)    On 17th March, 2006 and 27th March, 2006, the Group entered into a subscription
               agreement and a shareholders’ agreement, respectively, in respect of an investment in
               and formation of a joint venture (the “Joint Venture”). Pursuant to the subscription
               agreement, the Group had subscribed for 45 per cent. of the issued share capital of the
               Joint Venture for a consideration of US$4,500. Pursuant to the shareholders’ agreement,
               the Joint Venture would acquire and hold an 86.25 per cent. equity interest in Tongren
               Healthcare Management Group Co., Ltd. and its subsidiaries, which are engaged in medical
               and healthcare related business in the PRC. The funding for acquisition would be met by
               shareholders’ loans in proportion to the respective equity interests of the shareholders in
               the Joint Venture.

               As certain conditions as set out in the shareholders’ agreement were not fulfilled nor
               waived by the shareholders, notices were served by the Group on 20th March, 2007 to the
               Joint Venture that the shareholders’ agreement was terminated and to demand repayment
               of the shareholder ’s loan. Up to the date of the notice, a shareholder ’s loan of HK$99
               million has been made by the Group to the Joint Venture.

  42.   COMPARATIVE AMOUNTS

        Certain comparative amounts have been reclassified to conform with current year ’s presentation.
        The reclassifications had no impact on the Group’s earnings for the year ended 31st December,
        2005.

  43.   APPROVAL OF THE FINANCIAL STATEMENTS

        The financial statements were approved and authorised for issue by the Board of Directors on
        23rd April, 2007.




                                             • 81 •
     APPENDIX I                FINANCIAL INFORMATION OF THE GROUP


3.     INDEBTEDNESS

       As at 31st May, 2007, being the latest practicable date for the purpose of this
       indebtedness statement prior to the printing of this circular, the Group (other than
       The Macau Chinese Bank Limited (“MCB”), a banking subsidiary of the Company)
       had outstanding indebtedness of approximately HK$1,281 million, comprising
       secured bank loans of approximately HK$717 million and unsecured other loans of
       approximately HK$564 million.

       The bank loans were secured by first legal mortgages over certain investment
       properties and certain securities of the Group and certain securities owned by margin
       client of the Group.

       Save as aforesaid and apart from intra-group liabilities, the Group (other than MCB)
       did not, as at 31st May, 2007, have any outstanding debt securities, whether issued
       and outstanding, authorised or otherwise created but unissued, term loans, whether
       guaranteed, unguaranteed, secured (whether the security is provided by the issuer
       or by third parties) or unsecured, other borrowings or indebtedness in the nature of
       borrowing including bank overdrafts and liabilities under acceptances (other than
       normal trade bills) or acceptance credits or hire purchase commitments, whether
       guaranteed, unguaranteed, secured or unsecured borrowings or debt, mortgages,
       charges, guarantees or other material contingent liabilities.

       As at 31st May, 2007, MCB accepts deposits from customers, banks and other financial
       institutions of approximately HK$155 million in the normal course of their banking
       business. MCB also had contingent liabilities of approximately HK$23 million,
       comprising guarantees and other endorsements of approximately HK$18 million
       and liabilities under letters of credit on behalf of customers of approximately HK$5
       million, as at 31st May, 2007.

       Save as aforesaid, MCB did not, as at 31st May, 2007, have any outstanding debt
       securities, whether issued and outstanding, authorised or otherwise created but
       unissued, term loans, whether guaranteed, unguaranteed, secured (whether the
       security is provided by the issuer or by third parties) or unsecured, other borrowings
       or indebtedness in the nature of borrowing including bank overdrafts and liabilities
       under acceptances (other than normal trade bills) or acceptance credits or hire
       purchase commitments, whether guaranteed, unguaranteed, secured or unsecured
       borrowings or debt, mortgages, charges, guarantees or other material contingent
       liabilities.

       The Directors confirm that, save as disclosed above, there are no material changes in
       the indebtedness and contingent liabilities of the Group since 31st May, 2007.




                                           • 82 •
     APPENDIX I                 FINANCIAL INFORMATION OF THE GROUP


4.     WORKING CAPITAL

       The Directors (including the independent non-executive Directors) are of the opinion
       that taking into account of cash balances of the Group, its expected internally
       generated funds and the present available banking facilities of the Group, the Group
       has sufficient working capital for its present requirements (for at least the next
       twelve months from the date of this Circular).

5.     MATERIAL CHANGE

       The Directors confirm that, as at the Latest Practicable Date, there are no material
       adverse changes in the financial or trading position or prospect of the Group since
       31st December, 2006, the date to which the latest published audited financial
       statements of the Group were made up.

6.     FINANCIAL AND TRADING PROSPECTS

       The global economy went through a sustainable economic growth in 2006, especially
       in the Asia region. In the year 2006, the Group continued to strengthen its core
       businesses and explore overseas investment markets. Property investment and
       development sector continued to perform well and sustained impressive returns to
       the Group. For the year ended 31st December, 2006, the Group’s profit attributable
       to shareholders increased markedly to HK$391 million (2005 – HK$112 million).

       The Group’s investment property portfolio and its recurrent earnings base continued
       to expand during the year with the addition of a quality commercial property in
       Singapore. In April 2006, the Group acquired a freehold commercial property with
       total strata area of approximately 10,909 square metres within the central business
       district of Singapore for an aggregate consideration of approximately HK$448 million.
       The property started to generate recurrent rental income to the Group in the current
       year. On the other hand, the investment properties in Hong Kong continued to
       provide stable rental income to the Group during the year. With a positive outlook
       in both regional and local property markets, the Group recorded a total revaluation
       gain on investment properties of HK$207 million during the year.

       In 2005, the Group entered into an agreement under which it would be committed
       to invest in a property fund (the “Property Fund”), carrying the objective of investing
       in real estates in the East Asia region. During the year, the Group has contributed
       HK$1.3 billion to the Property Fund. In May 2006, the Property Fund participated in
       a joint venture to invest in Overseas Union Enterprise Limited (“OUE”), a listed
       company in Singapore principally engaged in hotel operations and property
       investments. Currently, OUE has six prestigious hotels, carries the “Mandarin” and
       “Meritus” brand, which are strategically located in various famous tourist districts
       of Singapore, Malaysia and China. OUE also holds a number of prime office buildings
       in the central financial and business districts of Singapore. Meanwhile, certain
       property redevelopment plans will be commenced to capture the robust prime office




                                            • 83 •
APPENDIX I                FINANCIAL INFORMATION OF THE GROUP


  demand. Amidst the backup of a sustained pick up in the economy with a limited
  supply of prime office buildings and hotels in Singapore, it is expected that these
  assets have strong value appreciation potential.

  Additionally, the Group has participated in various well-located development projects
  in Macau, Singapore, Thailand and Japan.

  The global economy is expected to grow steadily in 2007. The growth prospects will
  continue to be centered on developments in the Asia Pacific Region. The operating
  environment of the Group remains challenging. While striving to continue to improve
  internal operational efficiencies, the Group will keep on refining its existing core
  businesses and seeking new investment opportunities with long-term growth
  potential. Given its own strong financial position, the Group is confident that it
  would be able to take advantage of new business opportunities in its pursuit of
  enhancing shareholders’ value.




                                      • 84 •
     APPENDIX II        VALUATION OF THE ANSON ROAD PROPERTIES




2 May 2007                                                      Savills (Singapore) Pte Ltd
                                                                             DL: 6536 8600
The Board of Directors                                                         F: 6536 8611
Hongkong Chinese Limited
24th Floor, Tower One                                                  No. 2 Shenton Way
Lippo Centre                                                        #17 – 01 SGX Centre 1
89 Queensway                                                  Singapore 068804, Singapore
Hong Kong
                                                                     REG NO.: 198703410D
                                                                         T: (65) 6536 5022
                                                                               savills.com

Dear Sirs,

                             DESKTOP REVALUATION OF
                        22 STRATA LOTS AT 79 ANSON ROAD,
                        SINGAPORE 079906 (THE “PROPERTY”)

1.     Instructions

      Savills (Singapore) Pte Ltd (“Savills”) has been instructed by Dr Clement Wang of
Lippo Realty (Singapore) Pte Ltd on behalf of Hongkong Chinese Limited (the “Clients”)
to prepare a desktop revaluation on 22 Strata Lots (as listed in paragraph 3) at 79 ANSON
ROAD for inclusion in a circular to shareholders. We are to provide our opinion of the
current Open Market Value of the Property, subject to the existing tenancies.

       As instructed, this revaluation is carried out without the benefit of site inspection
and is based on information stated in our previous valuation report dated 27 March 2006
(our ref: MKT/2006/C-LIPP/JC/0093) which had been prepared in accordance with “HKIS
Valuation Standards on Properties (First Edition 2005)” published by The Hong Kong
Institute of Surveyors and in compliance with all the requirements contained in Chapter 5
of the Rules Governing the Listing of Securities (the “Listing Rules”) issued by The Stock
Exchange of Hong Kong Limited.

2.     Brief Description of 79 ANSON ROAD (the whole development)

      79 ANSON ROAD is located at the junction of Anson Road and Palmer Road, within
the Central Business District (“CBD”) of Singapore.

      Completed in 1992, the 23-storey freehold commercial development has a total strata
floor area of 19,415 sq metres (approximately 208,981 sq feet). The typical floor plate is
octagonal in shape and it accommodates two strata retail lots on the 1st level with


                                          • 85 •
     APPENDIX II             VALUATION OF THE ANSON ROAD PROPERTIES


individual entrances from street front and two strata office lots per level from the 6th
level to the 23rd level with the 5th level consisting one strata office lot with direct access
to the landscaped roof garden. A fully-automated car park system with a total of 145 lots
occupy the 2nd to 4th levels.

3.     Brief Description of the Property

       The Property comprises 22 freehold# strata lots with an aggregate strata area of
10,909.0 sq metres (117,423 sq feet) held by the Client for investment purposes. Due to
internal subdivision according to leasing requirements, the total net lettable area (“NLA”)
is 10,290.2 sq metres (110,763 sq feet) reflecting an efficiency of 94.3%. The breakdown of
strata and net lettable areas is as follows:

                                                  All of Town Subdivision 23                                 Net
       S/No      Unit No                        Strata Lot No      Strata Area                    Lettable Area
                                                                    (sq metres)                       (sq metres)

       1         #01-02                                 U3167N                      620.0                   310.0
       2         #01-02/03                              U3168X                      308.0                   308.0
       3         #06-01/02                              U3169L                      441.0                   993.8
       4         #06-03 to 05                           U3187C                      559.0
       5         #07-01/02                              U3170N                      441.0                   954.9
       6         #07-03 to 05                           U3188M                      559.0
       7         #08-01/02                              U3171X                      441.0                   955.0
       8         #08-03 to 05                           U3189W                      559.0
       9         #09-01/02                              U3172L                      441.0                   982.9
       10        #09-03 to 05                           U3190C                      559.0
       11        #10-01/02                              U3173C                      441.0                   967.0
       12        #10-03 to 05                           U3191M                      559.0
       13        #11-01/02                              U3174M                      441.0                   941.0
       14        #11-03 to 05                           U3192W                      559.0
       15        #12-01/02                              U3175W                      441.0                  1,000.0
       16        #12-03 to 05                           U3193V                      559.0
       17        #13-01/02                              U3176V                      441.0                   950.0
       18        #13-03 to 05                           U3194P                      559.0
       19        #14-01 to 04                           U3177P                      441.0                  1,000.0
       20        #14-05/06                              U3195T                      559.0
       21        #15-01 to 04                           U3178T                      559.0                   927.6
       22        #15-05/06                              U3196A                      422.0

                                                         TOTAL               10,909.0                  10,290.2
                                                                    (117,423 sq feet)*        (110,763 sq feet)*

       Source:   Strata Certificates of Title, Owner

       #
                 No ground rent is payable for the Property.

       *         1 sq metre = 10.7639 sq feet approximately (small differences may arise from rounding).



                                                       • 86 •
     APPENDIX II             VALUATION OF THE ANSON ROAD PROPERTIES


4.      Occupancy Status

      According to the latest tenancy schedule provided, the occupancy rate as at the date
of valuation stands at 98.4% and the total passing gross rent (taking into account new
rents already committed) is S$467,183/- per month reflecting an overall monthly average
of S$4.29 per sq foot.

      We have not sighted the tenancy agreement/s and have therefore assumed that
there are no repair obligations or material obligations/factors set out therein.

5.      Basis of Valuation

       We have been instructed to provide our opinion of the current Open Market Value
of the Property, subject to the existing tenancies and assuming it is free from encumbrances
and can be freely disposed of in the open market as at the date of valuation.

      In arriving at our opinion of market value, we have adopted the Income Capitalisation
Approach, Discounted Cash Flow Analysis and the Market Comparison Method and have
considered the relevant general and economic factors as well as investigated recent sales
and transactions of comparable properties.

6.      Valuation

      We are of the opinion that the current Open Market Value of the Property, subject to
the existing tenancies as at 2 May 2007 is S$148,500,000/- (SINGAPORE DOLLARS ONE
HUNDRED AND FORTY-EIGHT MILLION AND FIVE HUNDRED THOUSAND ONLY).

                                                                      Yours faithfully,
                                                                Savills (Singapore) Pte Ltd
                                                                         Jessie Yeo
                                                                 BSc (Estate Management), MSISV
                                                       Appraiser ’s Licence No: AD041-2002061K
                                                          Director, Valuation and Consultancy

Date: 2 May 2007

Note:   Ms Jessie Yeo is a Licensed Appraiser and a member of the Singapore Institute of Surveyors and Valuers
        (SISV) with more than 20 years of valuation experience in Singapore.




                                                   • 87 •
 APPENDIX II              VALUATION OF THE ANSON ROAD PROPERTIES


                          Savills (Singapore) Pte Ltd
                                LIMITING CONDITIONS

Liability of The Valuer

      The Valuer shall only be responsible to the Client to whom this Report is addressed.
He is not liable to any other party except the client in connection with this Valuation as
the advice contained herein is limited to the scope of the instruction received. He is not
required to give testimony to appear in court by reason of this Report unless prior
arrangement has been made therefore.

     Neither the whole nor any part of this Valuation and Report or any reference to it
may be included in any published document, circular to statement nor publishing in any
way without the Valuer’s prior written approval of the form and context in which it may
appear.

Valuation

      The opinion expressed in this report applies strictly on the terms of and for the
purpose expressed in this Valuation. Hence, the value shall never be quoted out of context
in connection with any other assessment.

     The Valuer accepts no liability if his opinion is quoted without regard to the full
background of the reason why this Report is written.

       No allowance has been made in our Valuation for any mortgages, charges or amounts
owing on the property or for any taxation or other expenses, which would be incurred in
effecting a sale.

     As we have not had an opportunity of inspecting the Title Deeds of the property,
our Valuation assumes that there are no adversely restrictive covenants, easements, rights
of way or other factors of which we have not been informed.

Valuation Data

      Where it is stated in the Report that information or data has been made known to
the Valuer by another party, this information is believed to be reliable and he disclaims all
responsibility if this should later prove not to be so.

       Where information is given without reference to another party in this Report, it
shall be taken that this information has been obtained or gathered through our best efforts
and to our best knowledge.

      Processed date inferences therefrom shall be taken as the Valuer’s opinion and shall
not be freely quoted without acknowledgement.



                                           • 88 •
 APPENDIX II             VALUATION OF THE ANSON ROAD PROPERTIES


Structural Defects

      While due care is exercised in the course of inspection to note building defects, no
structural survey is carried out and no guarantee shall be given in respect of termite or
pest infestation, rot and/or any other hidden defects, unless specific instructions are given
to the Valuer to include a thorough structural survey of the property.

       We do not normally carry out investigations on site in order to ascertain the suitability
of the ground conditions, and the services, for any new development. Unless we are
otherwise informed, our valuations are on the basis that these aspects are satisfactory and
that, where development is proposed, no extraordinary expenses or delays will be incurred
during the construction period.




                                            • 89 •
     APPENDIX III                                                   GENERAL INFORMATION


1.     RESPONSIBILITY STATEMENT

      This circular includes particulars given in compliance with the Listing Rules for the
purpose of giving information with regard to the Company. 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 in this circular misleading.

2.     DISCLOSURE OF INTERESTS

      As at the Latest Practicable Date, the interests or short positions of the Directors and
chief executive of the Company 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)
which were notified to the Company and the Stock Exchange pursuant to Divisions 7 and
8 of Part XV of the SFO (including interests and short positions which they were taken or
deemed to have under such provisions of the SFO), or which were required, pursuant to
Section 352 of the SFO, to be entered in the register referred to therein, or which were
required, pursuant to the Model Code, to be notified to the Company and the Stock
Exchange, were as follows:

       Directors’ and Chief Executive’s interests and short positions in shares and
       underlying shares of the Company and associated corporations

       (a)   Interests in shares of the Company and associated corporations

                                                                                                  Approximate
                                          Personal                                                  percentage
                                          interests       Family                                       of total
                                           (held as     interests                                  interests in
                                         beneficial     (interest          Other          Total     the issued
             Name of Director               owner)    of spouse)        interests     interests   share capital


             Number of ordinary Shares
              in the Company

             Mochtar Riady                        –             –     973,240,440   973,240,440           72.26
                                                                         (Note 1)
             Stephen Riady                        –             –     973,240,440   973,240,440           72.26
                                                                         (Note 1)
             John Luen Wai Lee                 200            200               –          400             0.00
             King Fai Tsui                       –         50,000               –       50,000             0.00




                                                  • 90 •
APPENDIX III                                                    GENERAL INFORMATION


                                                                                                 Approximate
                                    Personal                                                       percentage
                                    interests         Family                                          of total
                                     (held as       interests                                     interests in
                                   beneficial       (interest           Other            Total     the issued
      Name of Director                owner)      of spouse)         interests       interests   share capital


      Number of ordinary shares
       of HK$0.10 each in Lippo

      Mochtar Riady                         –              –      248,697,776     248,697,776            57.34
                                                                 (Notes 1 & 2)
      Stephen Riady                         –              –      248,697,776     248,697,776            57.34
                                                                 (Notes 1 & 2)
      John Luen Wai Lee               825,000              –                 –        825,000             0.19

      Number of ordinary shares
       of HK$0.10 each in LCR

      Mochtar Riady                         –              –  6,544,696,389      6,544,696,389           71.13
                                                            (Notes 1, 2 & 3)
      Stephen Riady                         –              – 6,544,696,389       6,544,696,389           71.13
                                                            (Notes 1, 2 & 3)

      Note:

      1.      As at the Latest Practicable Date, Lippo Cayman Limited (“Lippo Cayman”), an associated
              corporation (within the meaning of Part XV of the SFO) of the Company, was indirectly
              interested in 973,240,440 ordinary Shares in, representing approximately 72.26 per cent.
              of, the issued share capital of the Company. Lanius Limited (“Lanius”), an associated
              corporation (within the meaning of Part XV of the SFO) of the Company, was the registered
              shareholder of 10,000,000 ordinary shares of US$1.00 each in, representing 100 per cent.
              of, the issued share capital of Lippo Cayman. Lanius was the trustee of a discretionary
              trust, of which Dr. Mochtar Riady is the founder and in accordance with whose instructions
              Lanius was accustomed to act. Dr. Mochtar Riady did not have any interests in the share
              capital of Lanius. The beneficiaries of the trust include Dr. Mochtar Riady, Mr. Stephen
              Riady and their respective family members including, inter alia, the minor child of Mr.
              Stephen Riady. Dr. Mochtar Riady as the founder and beneficiary of the trust and Mr.
              Stephen Riady (together with his minor child) as beneficiaries of the trust were taken to
              be interested in Lippo Cayman under the SFO.

      2.      As at the Latest Practicable Date, Lippo Cayman, and through its wholly-owned
              subsidiaries, Lippo Capital Limited, J & S Company Limited and Huge Returns Limited,
              was directly and indirectly interested in an aggregate of 248,697,776 ordinary shares of
              HK$0.10 each in, representing approximately 57.34 per cent. of, the issued share capital
              of Lippo.

      3.      As at the Latest Practicable Date, Lippo was indirectly interested in 6,544,696,389 ordinary
              shares of HK$0.10 each in, representing approximately 71.13 per cent. of, the issued share
              capital of LCR.




                                            • 91 •
APPENDIX III                                              GENERAL INFORMATION


        As at the Latest Practicable Date, Dr. Mochtar Riady, as founder and beneficiary
  of the aforesaid discretionary trust, and Mr. Stephen Riady (together with his minor
  child), as beneficiaries of the aforesaid discretionary trust, through their interests in
  Lippo Cayman as mentioned in Note 1 above, were also taken to be interested in the
  share capital of the following associated corporations (within the meaning of Part
  XV of the SFO) of the Company:

                                                                                      Approximate
                                                                                      percentage of
                                                                      Number of             interest
        Name of associated                                                 shares     in the issued
        corporation                     Class of shares                interested      share capital


        Abital Trading Pte. Limited     Ordinary shares                           2             100
        AcrossAsia Limited              Ordinary shares              3,669,576,788            72.45
                                                                           (Note a)
        Actfield Limited                Ordinary shares                           1             100
        Boudry Limited                  Ordinary shares                      1,000              100
        Congrad Holdings Limited        Ordinary shares                           1             100
        CRC China Limited               Ordinary shares                           1             100
        Cyport Limited                  Ordinary shares                           1             100
        East Winds Food Pte Ltd.        Ordinary shares                    400,000            88.88
                                                                           (Note b)
        First Bond Holdings Limited     Ordinary shares                           1             100
        First Tower Corporation         Ordinary shares                           1             100
                                                                           (Note c)
        Glory Power Worldwide Limited   Ordinary shares                           1             100
        Grand Peak Investment Limited   Ordinary shares                           2             100
        Grandform Limited               Ordinary shares                           1             100
        Grandhill Asia Limited          Ordinary shares                           1             100
        Greenroot Limited               Ordinary shares                           1             100
                                                                          (Note d)
        HKCL Holdings                   Ordinary shares                     50,000              100
                                                                           (Note e)
        Honix Holdings Limited          Ordinary shares                           1             100
        Huge Returns Limited            Ordinary shares                           1             100
        J & S Company Limited           Ordinary shares                           1             100
        Lippo Assets (International)    Ordinary shares                  1,000,000              100
          Limited                       Non-voting deferred shares      15,000,000              100
        Lippo Capital Limited           Ordinary shares                705,690,000              100
        Lippo Energy Company N.V.       Ordinary shares                      6,000              100
        Lippo Energy Holding Limited    Ordinary shares                           1             100
        Lippo Finance Limited           Ordinary shares                  6,176,470            82.35
        Lippo Holding America Inc.      Ordinary shares                           1             100
        Lippo Holding Company           Ordinary shares                  2,500,000              100
          Limited                       Non-voting deferred shares       7,500,000              100
        Lippo Investments Limited       Ordinary shares                           2             100


                                        • 92 •
APPENDIX III                                                  GENERAL INFORMATION


                                                                                          Approximate
                                                                                          percentage of
                                                                           Number of            interest
        Name of associated                                                      shares    in the issued
        corporation                         Class of shares                 interested     share capital


        Lippo Realty Limited                 Ordinary shares                         2                100
        Mancefield Limited                   Ordinary shares                         1                100
        Multi-World Builders &               Ordinary shares                     4,080                 51
          Development Corporation
        Nelton Limited                       Ordinary shares                    10,000                100
        Pointbest Limited                    Ordinary shares                         1                100
        Rightstar Limited                    Ordinary shares                         1                100
        SCR Ltd.                             Ordinary shares                         1                100
        Sinotrend Global Holdings Limited    Ordinary shares                         1                100
        Skyscraper Realty Limited            Ordinary shares                        10                100
                                                                               (Note f)
        The HCB General Investment           Ordinary shares                    70,000                 70
          (Singapore) Pte Ltd.
          (“HCB General”)
        Valencia Development                 Ordinary shares                  800,000                 100
          Limited                            Non-voting deferred shares       200,000                 100
        Welux Limited                        Ordinary shares                        1                 100

        Note:

        a.      The interests included 219,600,000 ordinary shares held by Mideast Pacific Strategic
                Holdings Limited in which Lippo Cayman controlled a 30 per cent. interest.

        b.      The interests were held by HCB General, a 70 per cent. owned subsidiary of Lippo
                Cayman.

        c.      The interest was held by Lippo, a 57.34 per cent. owned subsidiary of Lippo Cayman.

        d.      The interest was held by LCR, a 71.13 per cent. owned subsidiary of Lippo which in turn
                was a 57.34 per cent. owned subsidiary of Lippo Cayman.

        e.      The interests were held through LCR, a 71.13 per cent. owned subsidiary of Lippo which
                in turn was a 57.34 per cent. owned subsidiary of Lippo Cayman.

        f.      The interests were held through Lippo, a 57.34 per cent. owned subsidiary of Lippo
                Cayman.


        As at the Latest Practicable Date, Mr. Stephen Riady, as beneficial owner and
  through his nominee, was interested in 5 ordinary shares of HK$1.00 each in,
  representing 25 per cent. of, the issued share capital of Lanius which was the
  registered shareholder of 10,000,000 ordinary shares of US$1.00 each in, representing
  100 per cent. of, the issued share capital of Lippo Cayman. Lanius was the trustee of
  a discretionary trust, of which Dr. Mochtar Riady is the founder and beneficiary.
  The beneficiaries of the trust also include, inter alia, Mr. Stephen Riady and his
  minor child. Dr. Mochtar Riady did not have any interests in the share capital of
  Lanius but the shareholders of Lanius were accustomed to act in accordance with
  his instructions.

                                            • 93 •
 APPENDIX III                                          GENERAL INFORMATION


            As at the Latest Practicable Date, Mr. John Luen Wai Lee, as beneficial owner,
      was also interested in 230,000 ordinary shares of HK$0.10 each in, representing
      approximately 0.0045 per cent. of, the issued share capital of AcrossAsia Limited, an
      associated corporation (within the meaning of Part XV of the SFO) of the Company.

            As at the Latest Practicable Date, Mr. Kee Yee Kor, through the interest of his
      spouse, was taken to be interested in 2,444,000 ordinary shares of HK$1.00 each in,
      representing approximately 9.29 per cent. of, the issued share capital of TechnoSolve
      Limited, an associated corporation (within the meaning of Part XV of the SFO) of
      the Company.

      (b)   Interests in underlying shares of the Company’s associated corporation

            As at the Latest Practicable Date, none of the Directors or chief executive of
      the Company had any interests in the underlying shares in respect of cash settled or
      other equity derivatives of the Company or any of its associated corporations (within
      the meaning of Part XV of the SFO).

       All the interests stated above represent long positions. Save as disclosed herein, as
at the Latest Practicable Date, to the knowledge of the Company:

      (1)   none of the Directors or chief executive of the Company had or was deemed
            to have any interests or short positions 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) (a) which were required to be notified to the
            Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of
            the SFO (including interests and short positions which the Directors and the
            chief executive of the Company were taken or deemed to have under such
            provisions of the SFO); or (b) which were required to be entered in the register
            kept by the Company under Section 352 of the SFO; or (c) which were required
            to be notified to the Company and the Stock Exchange pursuant to the Model
            Code; and

      (2)   none of the Directors or chief executive of the Company nor their spouses or
            minor children (natural or adopted) were granted or had exercised any rights
            to subscribe for any equity or debt securities of the Company or any of its
            associated corporations (within the meaning of Part XV of the SFO).

       Dr. Mochtar Riady is also a director of Lippo Cayman and LCR. Mr. Stephen Riady
is also a director of Lanius, Lippo Cayman, Lippo, LCR and HKCL Holdings. Save as
disclosed herein, none of the Directors holds any directorship or employment in a company
which has an interest or short position in the Shares and underlying Shares which would
fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV
of the SFO.




                                          • 94 •
     APPENDIX III                                                GENERAL INFORMATION


3.     INTERESTS AND SHORT POSITIONS OF SHAREHOLDERS

       So far as is known to the Directors or chief executive of the Company, as at the
Latest Practicable Date, the persons (other than the Directors or chief executive of the
Company) who had interests or short positions in the Shares and underlying Shares which
would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of
Part XV of the SFO or who were, directly or indirectly, interested in 10 per cent. or more
of the nominal value of any class of share capital carrying rights to vote in all circumstances
at general meetings of any other member of the Group are as follows:

       (i)   The Company

                                                                                             Approximate
             Name                                    No. of ordinary Shares                   percentage

             HKCL Holdings                                          806,656,440                        59.89
             LCR                                                    973,240,440                        72.26
             Lippo                                                  973,240,440                        72.26
             Lippo Cayman                                           973,240,440                        72.26
             Lanius                                                 973,240,440                        72.26
             Madam Lidya Suryawaty                                  973,240,440                        72.26

             Note:

             1.      HKCL Holdings, the immediate holding company of the Company, as beneficial owner,
                     held 806,656,440 ordinary Shares in the Company.

             2.      LCR’s interests in the Shares of the Company included the interest of HKCL Holdings
                     which was held by LCR through Greenroot Limited, a wholly-owned subsidiary of LCR.
                     LCR, as beneficial owner, directly held 166,584,000 ordinary Shares in, representing
                     approximately 12.37 per cent. of, the issued share capital of the Company.

             3.      Lippo was an intermediate holding company of LCR which was held by Skyscraper
                     Realty Limited as to approximately 71.13 per cent., which in turn was wholly owned by
                     First Tower Corporation, a wholly-owned subsidiary of Lippo.

             4.      Lippo Cayman was the holding company of Lippo through direct holding and through
                     wholly-owned subsidiaries, one of which was Lippo Capital Limited which controlled an
                     approximate 50.47 per cent. interest in Lippo.

             5.      Lanius was the registered shareholder of the entire issued share capital of Lippo Cayman
                     and was the trustee of a discretionary trust, of which Dr. Mochtar Riady is the founder
                     and in accordance with whose instructions Lanius was accustomed to act. The beneficiaries
                     of the trust include Dr. Mochtar Riady and his family members. Madam Lidya Suryawaty
                     is the spouse of Dr. Mochtar Riady. Dr. Mochtar Riady was not the registered holder of
                     any shares in the issued share capital of Lanius.

             6.      LCR’s interests in the shares of the Company were recorded as the interests of Lippo,
                     Lippo Cayman, Lanius and Madam Lidya Suryawaty. The above 973,240,440 ordinary
                     Shares in the Company related to the same block of shares that Dr. Mochtar Riady and
                     Mr. Stephen Riady were interested, details of which are disclosed in the above section
                     headed “Directors’ and chief executive’s interests and short positions in shares and
                     underlying shares of the Company and associated corporations”.




                                                  • 95 •
APPENDIX III                                                 GENERAL INFORMATION


  (ii)    Four Prosperity Holdings Limited

                                                  No. of ordinary shares
          Name                                           of US$1.00 each                   Percentage

          Tiger Square Ltd.                             10,408 “A” shares                             51
            (“Tiger Square”)                            10,408 “B” shares                             51

          Note:   Tiger Square is a wholly-owned subsidiary of the Company. See also (i) above in respect
                  of the substantial shareholders of the Company.


  (iii)   Goldfix Pacific Ltd.

                                                  No. of ordinary shares                Approximate
          Name                                           of US$0.01 each                 percentage

          Sinopro Limited (“Sinopro”)                                600,000                      80.89

          Note:   Sinopro is a wholly-owned subsidiary of the Company. See also (i) above in respect of
                  the substantial shareholders of the Company.


  (iv)    Rossinis Restaurant Pte. Ltd.

                                                  No. of ordinary shares
          Name                                            of S$1.00 each                   Percentage

          Brilliant Leader Limited                                   399,999                  99.99975
            (“Brilliant Leader”)

          Note:   Brilliant Leader is a wholly-owned subsidiary of the Company. See also (i) above in
                  respect of the substantial shareholders of the Company.


  (v)     TechnoSolve Limited

                                                  No. of ordinary shares                Approximate
          Name                                          of HK$1.00 each                  percentage

          HKCL Investments Limited                               18,053,500                       68.65
           (“HKCL Investments”)

          Note:   HKCL Investments is a wholly-owned subsidiary of the Company. See also (i) above in
                  respect of the substantial shareholders of the Company.




                                              • 96 •
     APPENDIX III                                               GENERAL INFORMATION


       (vi)   The Macau Chinese Bank Limited

                                                     No. of ordinary shares
              Name                                         of MOP100 each                    Percentage

              Winwise Holdings Limited                                1,530,000                         85
               (“Winwise”)
              Wong Kon Kei                                              270,000                         15

              Note:   Winwise is a wholly-owned subsidiary of the Company. See also (i) above in respect of
                      the substantial shareholders of the Company.


      All the interests stated above represent long positions. Save as disclosed herein, as
at the Latest Practicable Date, none of the substantial shareholders (as defined under the
Listing Rules) or other persons (other than the Directors or chief executive of the Company)
had any interests or short positions in the Shares and underlying Shares as recorded in the
register required to be kept by the Company under Section 336 of the SFO.

      Save as disclosed above, as at the Latest Practicable Date, so far as was known to
the Directors or chief executive of the Company, there was no person, other than a Director
or chief executive of the Company, who had an interest or short position in the Shares and
underlying Shares which would fall to be disclosed to the Company under the provisions
of Divisions 2 and 3 of Part XV of the SFO, or who were, directly or indirectly, interested
in 10 per cent. or more of the nominal value of any class of share capital carrying rights to
vote in all circumstances at general meetings of any other member of the Group.

4.     DIRECTORS’ SERVICE CONTRACTS

      As at the Latest Practicable Date, none of the Directors had entered or was proposing
to enter into any service contract with the Company or any other member of the Group
(excluding contracts expiring or determinable by the employer within one year without
payment of compensation (other than statutory compensation)).

5.     COMPETING INTERESTS OF DIRECTORS AND ASSOCIATES

      As at the Latest Practicable Date, none of the Directors and their respective associates
were considered to have interest in any business which competes or is likely to compete,
either directly or indirectly, with the business of the Group or have or may have any other
conflicts of interest with the Group pursuant to the Listing Rules.

6.     DIRECTORS’ INTERESTS IN ASSETS/CONTRACTS AND OTHER INTERESTS

       None of the Directors is materially interested in any contract or arrangement entered
into by any member of the Group subsisting at the Latest Practicable Date which is
significant in relation to the business of the Group.




                                                  • 97 •
 APPENDIX III                                           GENERAL INFORMATION


      As at the Latest Practicable Date, the following were particulars of assets acquired
or disposed of by, or leased to, members of the Group since 31st December, 2006, being
the date to which the latest published audited consolidated financial statements of the
Group were made up, in which any Director had a direct or indirect interest:

      (a)   It was announced on 10th January, 2005 that a tenancy agreement dated 10th
            January, 2005 was entered into between Lippo Securities Holdings Limited
            (“LSHL”), a wholly-owned subsidiary of the Company, and Prime Power
            Investment Limited (“Prime Power”), a fellow subsidiary of the Company,
            pursuant to which Prime Power agreed to let to LSHL of Rooms 2302-2306,
            23rd Floor, Tower One, Lippo Centre, 89 Queensway, Hong Kong with a gross
            floor area of approximately 12,038 square feet for a term of two years from
            18th January, 2005 to 17th January, 2007, both days inclusive, at a monthly
            rental of HK$263,600, exclusive of rates, service charges and all other outgoings.
            Such transaction constituted a continuing connected transaction of the Group
            under the Listing Rules. Such tenancy agreement has expired on 17th January,
            2007.

      (b)   It was announced on 18th September, 2006 that a tenancy agreement dated
            18th September, 2006 was entered into between the Company and Porbandar
            Limited (“Porbandar”), a fellow subsidiary of the Company, pursuant to which
            Porbandar agreed to let to the Company of Room 4301, 43rd Floor, Tower
            One, Lippo Centre, 89 Queensway, Hong Kong with a gross floor area of
            approximately 4,879 square feet for a term of two years from 16th September,
            2006 to 15th September, 2008, both days inclusive, at a monthly rental of
            HK$163,446.50, exclusive of rates, service charges and all other outgoings.
            Such transaction constituted a continuing connected transaction of the Group
            under the Listing Rules.

      (c)   It was announced on 29th January, 2007 that a tenancy agreement dated 29th
            January, 2007 was entered into between LSHL and Prime Power, pursuant to
            which Prime Power agreed to let to LSHL of Rooms 2302-2306, 23rd Floor,
            Tower One, Lippo Centre, 89 Queensway, Hong Kong with a gross floor area
            of approximately 12,038 square feet for a term of two years from 18th January,
            2007 to 17th January, 2009, both days inclusive, at a monthly rental of
            HK$385,216, exclusive of rates, service charges and all other outgoings. Such
            transaction constituted a continuing connected transaction of the Group under
            the Listing Rules.

       Save as disclosed above, as at the Latest Practicable Date, none of the Directors had
any direct or indirect interest in any assets which had been acquired or disposed of by or
leased to any member of the Group or were proposed to be acquired or disposed of by or
leased to any member of the Group since 31st December, 2006, being the date to which the
latest published audited consolidated financial statements of the Group were made up.




                                           • 98 •
     APPENDIX III                                         GENERAL INFORMATION


7.     EXPERT

       (a)   The qualification of the expert who has given opinion or advice which is
             contained in this circular are as follows:

             Name                               Qualification

             Savills (Singapore) Pte Ltd        Licensed Valuers and Estate Agents

       (b)   As at the Latest Practicable Date, Savills (Singapore) Pte Ltd did not have any
             shareholding in the Group or any right (whether legally enforceable or not) to
             subscribe for or to nominate persons to subscribe for securities in any member
             of the Group, nor did it have any interest, direct or indirect, in any assets
             which had, since 31st December, 2006, being the date to which the latest
             published audited consolidated financial statements of the Group were made
             up, been acquired or disposed of by or leased to any member of the Group, or
             were proposed to be acquired or disposal of by or leased to any member of
             the Group.

       (c)   Savills (Singapore) Pte Ltd has given and has not withdrawn its written consent
             to the issue of this circular with the inclusion herein of its letter and references
             to its name in the form and context in which they appear.

8.     LITIGATION

     As at the Latest Practicable Date, there was no litigation or claim of material
importance pending or threatened against any member of the Group.

9.     MATERIAL CONTRACTS

     The following contracts (not being contracts entered into in the ordinary course of
business) have been entered into by the Company or its subsidiaries within two years
preceding the date of this circular and which are or may be material:

       (a)   (i)    a conditional legally binding term sheet dated 6th June, 2005 was agreed
                    between LAAP General Partner Limited (“LAAP General Partner”) and
                    Pacific Landmark Holdings Limited (“Pacific Landmark”), an indirect
                    wholly-owned subsidiary of the Company, in respect of the investment
                    in Lippo ASM Asia Property LP (“LAAP”), a limited partnership, for an
                    amount of up to HK$1,450 million;

             (ii)   an amended and restated limited partnership agreement dated 22nd
                    August, 2005 of LAAP entered into between Pacific Landmark as the
                    limited partner and LAAP General Partner as the general partner (the
                    “General Partner”) which governs the relationship between Pacific
                    Landmark and the General Partner and provides for the manner of
                    operation and management of LAAP; and


                                             • 99 •
APPENDIX III                                        GENERAL INFORMATION


        (iii)   a subscription agreement dated 22nd August, 2005 entered into between
                Pacific Landmark with LAAP, pursuant to which Pacific Landmark
                invested an amount of up to HK$1,450 million in LAAP by way of
                subscription of interests in LAAP;

  (b)   twenty two sale and purchase agreements dated 18th January, 2006 entered
        into between each of eleven subsidiaries of the Company (the “Subsidiaries”)
        and the respective twenty two vendors in relation to the acquisition by the
        Subsidiaries of a total of twenty two strata lots in the building located at 79
        Anson Road, Singapore for an aggregate consideration of S$95,000,000
        (equivalent to approximately HK$448,020,000). Subsequently, on 27th January,
        2006, HKC Property Investment Holdings Limited, a wholly-owned subsidiary
        of the Company, entered into a memorandum of understanding with ASM
        Asia Recovery (Master) Fund in relation to, inter alia, the setting up and
        funding of a joint venture company to become the holding company of the
        Subsidiaries and certain rights amongst the parties as the shareholders of
        such joint venture company;

  (c)   a subscription agreement dated 17th March, 2006 entered into among Lifepower
        Limited (“Lifepower”), a wholly-owned subsidiary of the Company, Luck
        Healthy Group Limited (“Luck Healthy”), Kingscott Limited (“Kingscott”) and
        Grosswin Limited (“Grosswin”) whereby Lifepower agreed to subscribe for
        45 per cent. equity interest in Grosswin at a total consideration of US$4,500
        (equivalent to approximately HK$35,000). A shareholders’ agreement dated
        27th March, 2006 (the “Shareholders’ Agreement”) was entered into among
        Lifepower, Luck Healthy, Kingscott (the “Shareholders”) and Grosswin to
        regulate their respective shareholders’ rights in Grosswin. Grosswin will
        acquire and hold 86.25 per cent. equity interest in 同 仁 醫 療 管 理 集 團 有 限 公 司
        (Tongren Healthcare Management Group Co., Ltd.). As certain conditions
        precedent as set out in the Shareholders’ Agreement were not fulfilled or
        waived by the Shareholders, notices were served by Lifepower on 20th March,
        2007 to Grosswin stating that the Shareholders’ Agreement has terminated;

  (d)   (i)     a framework agreement dated 22nd May, 2006 entered into between
                北 京 經 濟 技 術 投 資 開 發 總 公 司 (Beijing Economic & Technological
                Investment Development Corp.) (“BETIDC”), Uchida Limited (“Uchida”,
                a wholly-owned subsidiary of the Company), and 北 京 世 紀 創 新 房 地 產
                有 限 公 司 (INNOSTAR Real Estate Development Ltd.) (“Innostar”)
                whereby BETIDC agreed to, after the establishment of a joint venture
                company (the “JV Co.”) for the land Lot No. 4C1 development project
                (the “Beijing Project”) in 北 京 經 濟 技 術 開 發 區 (Beijing Economic-
                Technological Development Area), list its 20 per cent. interest in the JV
                Co. for sale on 北 京 產 權 交 易 所 (China Beijing Equity Exchange) and
                Uchida (or a party introduced by it) agreed to submit an intention
                memorandum for the purchase of such 20 per cent. interest;




                                       • 100 •
APPENDIX III                                         GENERAL INFORMATION


        (ii)    a new Chinese-foreign cooperative joint venture contract, a new
                framework agreement and the new articles of association entered into
                on 31st January, 2007 among BETIDC, Uchida and Wealtop Limited
                (“Wealtop”) in relation to the Beijing Project and the JV Co., whereby
                Wealtop agreed to participate in the Beijing Project in place of Innostar;
                and

        (iii)                                          《
                a supplemental articles of association ( 中 外 合 作 經 營 北 京 力 寶 世 紀 置
                                  補
                業 有 限 公 司 章 程》 充 協 議 ), an amended and restated articles of the JV
                Co. (北 京 力 寶 世 紀 置 業 有 限 公 司 章 程 ), a supplemental Sino-foreign
                                                     《
                cooperative joint venture contract ( 北 京 力 寶 世 紀 置 業 有 限 公 司 中 外 合
                作 經 營 合 同 》補 充 合 同 ), an amended and restated Sino-foreign
                cooperative joint venture contract (中 外 合 作 經 營 合 同 ) and a
                supplemental framework agreement, all dated 8th May, 2007, entered
                into among BETIDC, Uchida and Wealtop in relation to the Beijing Project
                and the JV Co., as a result of the prevailing PRC laws and regulations
                requiring the JV Co. to increase the proportion of its registered capital
                to total investment to 50 per cent.;

  (e)   a shareholders’ agreement dated 30th October, 2006 entered into between
        Winrider Limited, a wholly-owned subsidiary of the Company, Golden
        Rainbow International Limited, SUTL Realty Pte Ltd, OCBC eVenture Fund II
        Pte Ltd, Royall Dazzle Corporation (“RDC”) and Greenix Limited (“Greenix”)
        governing the relationship among the shareholders of Greenix. The tender
        submitted by Lippo Global Assets Limited, a wholly-owned subsidiary of
        Greenix, to purchase the land parcels C10 and C11 located at Sentosa Cove,
        Sentosa Island, Singapore (the “Sentosa Property”) with site areas of
        approximately 12,035.6 square metres and 10,186.6 square metres respectively
        for S$234,701,103 (equivalent to approximately HK$1,169,398,000) was formally
        accepted by Sentosa Development Corporation on 6th October, 2006. A project
        undertaking dated 3rd January, 2007 was entered into by the Company,
        Raiffeisen Zentralbank Österreich Aktiengesellschaft, SUTL Investment Pte.
        Ltd. and RDC (collectively, the “Undertaking Shareholders”) together with
        Lippo Marina Collection Pte. Ltd. (“Lippo Marina”), a wholly-owned subsidiary
        of Greenix, in favour of Oversea-Chinese Banking Corporation Limited
        pursuant to which the Undertaking Shareholders severally, based on their
        respective shareholding proportion, undertake to complete and cause the
        various stages of the development of the Sentosa Property by Lippo Marina
        (the “Sentosa Project”) to be completed in accordance with the construction
        contracts and loan facility agreement in relation to the Sentosa Project (the
        “Loan Agreement”) and to pay all cost overruns for completion of the Sentosa
        Project to the extent Lippo Marina fails to pay such costs and to cover all
        interest servicing obligations/cash flow deficiency of Lippo Marina and to
        procure and grant all necessary assistance to Lippo Marina in order to maintain
        its loan to collateral ratio in relation to the Loan Agreement;




                                        • 101 •
 APPENDIX III                                         GENERAL INFORMATION


      (f)   a shareholders agreement dated 24th November, 2006 entered into between
            Pacific Bond Limited (“Pacific Bond”), a wholly-owned subsidiary of the
            Company, Kusu Island Limited and Sunning Asia Limited (“Sunning Asia”
            which is 50 per cent. owned by Pacific Bond) governing the relationship among
            the shareholders of Sunning Asia. A tender submitted by Lippo Real Estate
            Pte. Limited, a wholly-owned subsidiary of Sunning Asia, for the collective
            sale of the units in No. 100, Kim Seng Road, Kim Seng Plaza in Singapore at a
            consideration of S$132,020,000 (equivalent to approximately HK$660,496,000)
            was formally accepted on 15th November, 2006;

      (g)   a sale and purchase agreement dated 25th May, 2007 entered into between
            Winus Holdings Limited, an indirect wholly-owned subsidiary of the Company,
            as seller and Convoy Inc. as purchaser in relation to the sale and purchase of
            2,480,089 shares of US$0.01 each in the issued share capital of Advance All
            Enterprises Limited (“AAEL”), representing approximately 34.34 per cent. of
            the entire issued share capital of AAEL for a consideration of HK$85,000,000;

      (h)   the Anson Road Agreement; and

      (i)   the Tender.

10.   MISCELLANEOUS

      (a)   The Secretary of the Company is Mr. Andrew Tat Kwong Hau, a fellow member
            of both the Institute of Chartered Secretaries and Administrators and the Hong
            Kong Institute of Chartered Secretaries.

      (b)   The qualified accountant of the Company is Mr. David Tai Chiu Ng, a fellow
            member of each of the Hong Kong Institute of Certified Public Accountants,
            the Association of Chartered Certified Accountants and the Institute of
            Chartered Secretaries and Administrators.

      (c)   The registered office of the Company is situated at Clarendon House, Church
            Street, Hamilton HM 11, Bermuda and the principal place of business of the
            Company is situated at 24th Floor, Tower One, Lippo Centre, 89 Queensway,
            Hong Kong.

      (d)   The principal transfer office of the Company is situated at the office of its
            principal share registrars, Butterfield Fund Services (Bermuda) Limited at
            Rosebank Centre, 11 Bermudiana Road, Hamilton, Bermuda and the Hong
            Kong branch transfer office of the Company is situated at the office of its
            Hong Kong branch share registrars, Tengis Limited, at 26th Floor, Tesbury
            Centre, 28 Queen’s Road East, Wanchai, Hong Kong.




                                         • 102 •
  APPENDIX III                                                  GENERAL INFORMATION


11.     MATERIAL ADVERSE CHANGE

      The Directors confirm that, as at the Latest Practicable Date, there were no material
adverse changes in the financial or trading positions of the Company since 31st December,
2006, being the date to which the latest published audited consolidated financial statements
of the Group were made up.

12.     DOCUMENTS AVAILABLE FOR INSPECTION

      Copies of the following documents will be available for inspection during normal
business hours at the principal place of business of the Company which is situated at 24th
Floor, Tower One, Lippo Centre, 89 Queensway, Hong Kong, for a period of 14 days from
the date of this circular:

        (a)   this circular;

        (b)   the Memorandum of Association and Bye-laws of the Company;

        (c)   the published audited consolidated financial statements of the Company for
              each of the two financial years ended 31st December, 2006;

        (d)   the circulars issued by the Company pursuant to the requirements set out in
              Chapter 14 of the Listing Rules since 31st December, 2006, being the date to
              which the latest published audited consolidated financial statements of the
              Group were made up; and

        (e)   the valuation report issued by Savills (Singapore) Pte Ltd in respect of the
              Anson Road Properties set out in Appendix II to this circular;

        (f)   the written consent from Savills (Singapore) Pte Ltd as referred to in the
              section headed “Expert” in this Appendix; and

        (g)   the contracts referred to in this circular including the material contracts referred
              to in the section headed “Material Contracts” in this Appendix.

13.     LANGUAGE

     In the event of inconsistency, the English text of this circular will prevail over the
Chinese text.

Note:   Certain English translations of Chinese names or words used in this Appendix are included for
        information purpose only and should not be relied upon as the official translation of such Chinese
        names or words.




                                                 • 103 •

				
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