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Group Result Highlights 2

Business Review 3

Wharf’s Business-in-Community 10

Financial Review 14

Financial Information 22

Other Information 42

Contents

2 The Wharf (Holdings) Limited Interim Report 2011

Solid cash flow consistent with plan

HIGHLIGHTS

• RobustretailsalesandtighteningofprimeofficesupplyadvancedHarbourCityandTimesSquaretoarecordperformance.Hotelsalsoreportedasolidperformance.

• Onanattributablebasis,ChinapropertysalestrackedtheGroup’splanandincreasedby271%toRMB6.3billion.Completionsduringtheperiodtotalled160,000squaremetres.NetorderbookincreasedtoRMB14.9billionfor945,000squaremetres.

• ModernTerminals’throughputgrowthinSouthChinaslowed;margindeclinedduetoone-offitemsandrisingoperatingcosts.HongKongAirCargoTerminals’throughputslipped.

• Allsegmentsreportedhigherturnoverand(exceptforLogistics)operatingprofit.

• Non-recurrentitemsaccountedforHK$1.2billionofnetprofitin2010.Excludingnon-recurrentitems,underlyingprofitincreasedby11%toHK$3.3billion.Attributableprofitincreasedby31%toHK$14.3billion.

• EPS(beforeinvestmentpropertyrevaluation)declinedby26%toHK$1.11.DPSismaintainedat36centsontheenlargedsharecapitaltogiveadividendcoverat3.1times.

• NewinvestmentsduringtheperiodexceededHK$20billion,primarilyforChinaproperties.Chinalandbankincreasedto12.4millionsquaremetres.

• ThiswasfundedbyHK$10billionofnewequityandHK$10billionofadditionaldebt.

• BookNAVincreasedby14%toHK$187billion(HK$61.59pershare).

GROUP RESULTS

UnauditedGroupprofitattributabletoequityshareholdersamountedtoHK$14,302million(2010:HK$10,892millionasrestated).BasicearningspersharewereHK$4.84(2010:HK$3.85asrestated).

Excludingthenetinvestmentpropertyrevaluationsurplusandone-offexceptionalgainsrecordedin2010,theGroup’sunderlyingprofitattributabletoequityshareholdersincreasedby11%toHK$3,283million(2010:HK$2,958million).

INTERIM DIVIDEND

AninterimdividendofHK$0.36(2010:HK$0.36)pershareontheexpandedsharecapitalwillbepaidon30September2011toShareholdersonrecordasat22September2011,absorbingatotalamountofHK$1,091million(2010:HK$991million).

3The Wharf (Holdings) Limited Interim Report 2011

BUSINESS REVIEW

HONG KONG PROPERTY INVESTMENT

Harbour City and Times Square, representing 47% of the Group’s business assets and 64% of operating profit, continued to perform strongly. Retail sales conducted within these two core assets during the period accounted for an unmatched 8.3% share of Hong Kong’s total retail sales, up from 7.9% a year earlier.

Harbour City

Turnover(excludinghotels)increasedby13%toHK$2,655millionandoperatingprofitby13%toHK$2,313million.

RetailAsthelargestmallintown,HarbourCity’sretailsalesperformancecontinuedtooutpacethemarket.Atayear-on-yeargrowthof33%,itrepresentedninepercentagepointsmorethanthemarketaverageandcommanded6.2%shareofHongKong’sretailsales,auniquelevelandanenvyofothershoppingmallsinHongKong.

TurnoverfromHarbourCity’sretailsectorincreasedby20%toHK$1,723million.

HarbourCitycontinuestoprovideacaptivating“shoppertainment”experiencetoshoppersthroughafinelycalibratedtrademixandinnovativemarketingcampaigns.Duringtheperiod,internationallabelsincludingChloeandTomFordopenedtheirstoresatHarbourCity.Theworld-renownedchef,MichaelWhite,openedhisfirstHongKongrestaurantatOceanTerminal.LCXalsounderwentatenant-mixrevampandrecruitedthefirstAmericanEagleOutfitters,afavouritebrandforyoungsters,inAsia.

OfficeTurnoverincreasedby2%toHK$787million.Reflectingthebuoyantbusinessactivities,occupancyandrentalratesfornewcommitmentstrendedupstronglyduringtheperiod.

Occupancystoodat95%attheendofJune,andleaserenewalretentionrateheldupwellat73%,includingrenewalwithanchortenantssuchasDuPont,EstéeLauder,HasbroandMattel,whilePrudentialexpandeditsleasedspaceatTheGateway.

Serviced ApartmentsTurnoverincreasedby10%toHK$145million.OccupancyatGatewayApartmentsroseto94%attheendofJunewithfavourablerentalgrowth.


Times Square

Turnoverincreasedby10%toHK$815millionandoperatingprofitby11%toHK$727million.

RetailTimesSquareremainsthemostsuccessfulverticalshoppingmallinHongKong.Retailrevenuegrewby15%toHK$587millionwithfulloccupancyduringtheperiod.

Touplifttheshoppingambiance,tenantmixonthevariousatriumfloorswasfurtherfine-tunedwithnewrecruitmentsincludingLacosteandShanghaiTang,aswellasrelocationofsomeexistingtenantstoenhancetheshoppingexperience.ElegantWatch&Jewelleryhascommittedtoexpandingitswatchandjewelleryoffering,whileManzo,apremiumItaliansteakhouse,openedduringtheperiod.

OfficeTurnoverincreasedmarginallytoHK$228million,withoccupancyclimbingto96%attheendofJuneand strong growth in spot rents.

Alibaba,ane-commerceoperator,hasleased26,000squarefeetofofficespaceatTimesSquareforconsolidationandrelocationfromWanchai,andEQCorporate,anassetmanagementcompany,hasleased19,400squarefeetforitsrelocationfromCentral.Leaserenewalretentionratestoodat28%assometenantsmovedtofringelocations,althoughanynon-renewedspacewasrapidlyabsorbedbynewtenants.

Other Hong Kong Properties

LeasingforthePeak’sportfolioremainedactivewithaverageoccupancymaintainedatover90%andstrong rental growth.

PlazaHollywoodposteda7%growthinturnovertoHK$186millionwithfavourablerentalgrowth.Averageoccupancystoodat99%.

MountNicholsonisbeingdevelopedthrougha50:50jointventurewithNanFung.Thedevelopmentoffersexclusivelyluxuriousresidenceswithultimateprivacy,withanattributableGFAof162,000squarefeet.Themasterlayoutplanandgeneralbuildingplanhavebeensubmittedforapproval.

OneMidtown(formerlyidentifiedasCableTVTowerSouthProject)inTsuenWanisbeingdevelopedintoahigh-riseindustrial/loftbuilding,withatotalGFAof644,000squarefeet.Thedevelopmentisscheduledforcompletioninthesecondhalfof2012.

KowloonGodowninKowloonBayhasbeengivenapprovalforaresidentialandcommercialdevelopmentwithaGFAof829,000squarefeet.Themasterlayoutplanhasbeenapprovedandleasemodificationapplicationisunderway.

YauTongGodownwasgivenapprovalforaresidentialandcommercialdevelopmentwithaGFAof256,000squarefeet.Negotiationonleasemodificationpremiumisunderway.

ThemasterlayoutplanfortheYauTongjointventureproject,inwhichtheGroupownsa15%interest,hasbeensubmittedtotheTownPlanningBoardforconsideration.


CHINA PROPERTIES

The Group is on course with its strategy to increase Mainland assets to 50% of the Group’s business assets, with 39% of business assets in China at the end of June.

Duringthefirsthalfof2011,theGroupacquired10sitesinthecitiesofChangsha,Foshan,HangzhouandSuzhoufordevelopmentofeightprojectswithanattributableGFAof2.0millionsquaremetresforRMB13billion.TheGroup’slandbankincreasedby17%to12.4millionsquaremetresattheendofJune,spanningacross13cities,andisontracktothenextmilestoneof15millionsquaremetres.TheRMBrequiredforalloutstandinglandpaymentshasbeenfullycovered.

TurnoverfromChinapropertydevelopmentincreasedby31%toHK$1,343millionwithoperatingprofitatHK$568million.ProfitsrecognisedduringtheperiodincludedcontributionsfromTianFuTimesSquareandCrystalParkinChengdu.

Duringtheperiod,fournewprojectswerelaunchedforsales.Togetherwithfurthersalesfromprojectspreviouslylaunched,atotalof437,000squaremetresofpropertiesweresoldtogenerateattributablesalesproceedsofRMB6.3billion,271%higherthan2010.NetorderbookincreasedtoRMB14.9billionattheendofJune.

ForChinapropertyinvestment,turnoverandoperatingprofitincreasedasaresultofcontributionfromWheelockSquareinShanghai,notwithstandingtheclosureofChongqingTimesSquareforrenovation.WheelockSquareisleasingupwellanditsperformancewillfurtherimproveinthesecondhalf.ThecompletedinvestmentpropertieswerevaluedatHK$13billionattheendofJune.

Property Development – Eastern China

SalesSuzhouTimesCity(formerlyidentifiedasSuzhouIndustrialParkXiandaiDaDaoProject)waslaunchedinMay,with83%oftheunitsofferedsoldby30JuneatanaveragepriceofRMB13,900persquaremetreofGFAforproceedsofRMB410million.

Forprojectspreviouslylaunched,ShanghaiXiyuansoldmoreunitsduringtheperiodatanaveragesellingpriceofoverRMB52,000persquaremetreofGFAtogenerateproceedsofRMB890million.ChangzhouTimesPalacealsosoldmoreunitstogenerateproceedsofRMB696million.

InSuzhou,AmbassadorVillasoldadditionalvillasatanaveragesellingpriceofRMB51,100persquaremetreofGFAtogenerateproceedsofRMB337million.OtherprojectsincludingTimesCityandGloryofTimeinWuxi,GolfLandmarkinHangzhouandNo.1XinHuaRoadinShanghaialsomadefurthersaleswithfavourableresponse.

InJuly,theGrouplaunchedanothernewproject,WuxiXiyuan(formerlyidentifiedasWuxiOldCanalNo.71Project),withthevillassoldatanaveragesellingpriceofoverRMB23,000persquaremetreofGFAtogenerateproceedsofRMB113million.


AcquisitionsInJanuaryandMarch,theGroupacquiredtworesidentialsitesinHangzhou.ThefirstsiteislocatedinFuyangDistrictwithattractiveriverandmountainviewsandthesecondsiteisinYuhangDistrictinthenewQianjiangDevelopmentAreanearthetouristyChaoshanScenicDistrict.Thesitesaredevelopableinto129,000squaremetresofGFAand220,000squaremetresofGFArespectively.

InSuzhou,theGroupacquiredtwositesinJanuarynexttoYinShanLakeinWuzhongDistrict,afocaldevelopmentareaaccordingtotheSuzhougovernment.Thiswillbeahigh-endresidentialdevelopmentwithaGFAof385,000squaremetreswitheasyaccesstoafuturemetrostationnearby.

Development ProgressThefirstphaseofresidentialunitsofChangzhouTimesPalaceisscheduledforcompletioninthesecondhalfof2011.TheStateGuestHouse,afive-starhotelandtheservicedapartmentswillbecompletedin2012.

ThefirstphasesofAmbassadorVillainSuzhouandGloryofTimeinWuxiarescheduledforcompletioninlate2011.

SuperstructureworkofShanghaiXiyuanisunderwaywithscheduledcompletionin2012.TheShanghaimetroline10stationadjacenttothedevelopmentisalreadyinoperationtoprovideeasyaccesstothecitycentre.

OtherdevelopmentsinEasternChinaareprogressingonschedule.

Property Development – Western China

SalesTheUWorldinChongqing(formerlyidentifiedasChongqingJiangbeiCityZoneBProject)waslaunchedinApril,withnearly90%oftheunitsofferedsoldby30JuneatanaveragepriceofRMB22,100persquaremetreofGFA.Anotherphaseofhigh-riseresidentialunitslaunchedinlateJunehasalsometwithstrongdemand.CumulativeattributableproceedsgeneratedhavereachedRMB715million.

InternationalCommunityinChongqingreleasedmoreunitstomeetwiththestronglocaldemandtogenerateattributableproceedsofRMB494million.Thedevelopmentsetarecordwithsaleofover1,000residentialunitsinonesingleday.

InChengdu,TianFuTimesSquarereleaseditssecondtowerofTimesRiversideandadditionalofficeunitsatTimes8togenerateproceedsofRMB752million.CrystalParkmademoresalestogenerateproceedsofRMB352million.

Development ProgressThefinalthreeresidentialtowersofTianFuTimesSquarewerecompletedinJune,whilethetwoofficetowersarescheduledforcompletionin2012and2013.CrystalParkcompletedfouradditionalresidentialtowersinJune;theremainingresidentialtowersandoneofficetowerwillbecompletedinphasesby2013.OtherdevelopmentsinChengduareprogressingasplanned.


InChongqing,anotherphaseofInternationalCommunitywascompletedduringtheperiod.ConstructionofTheUWorldisunderwaywithscheduledcompletioninphasesby2015.ExcavationworkoftheZoneCresidentialsiteisinprogress.

Property Development – Other Regions

SalesPeacelandCoveinTianjinwaslaunchedinFebruary,with81%oftheunitsofferedsoldby30JuneatanaveragepriceofRMB13,100persquaremetreofGFAforattributableproceedsofRMB494million.

MagnificentinTianjin(formerlyidentifiedasTianjinJinjiangRoadProject)waslaunchedinMay,with83%oftheunitsofferedsoldby30JuneatanaveragepriceofRMB14,300persquaremetreofGFAforattributableproceedsofRMB402million.

AcquisitionsInJune,theGroupacquiredthe50%sharesinthejointventuresoffourresidentialprojectsinFoshan,GuangdongfromWheelockandCompanyLimitedforaconsiderationofHK$3,388million,basedonapropertyvaluationofHK$5,138million.Theseprojectsaredevelopedthrough50:50jointventureswithChinaMerchantsProperty.

EvianTownislocatedinXinchengDistrict,overlookingDongPingRiver.Thedevelopmentcomprisestownhouses,low-riseandhigh-riseresidences.TheattributableuncompletedGFAacquiredbytheGroupamountedto186,000squaremetres.Thedevelopmentwillbecompletedin2013.

EvianUptownislocatedinChanchengDistrict,atthejunctionofKuiqiRoadandGuilanRoad.TheattributableuncompletedGFAacquiredbytheGrouptotalled111,000squaremetres.Thedevelopmentwillbecompletedinphasesby2014.

ShishanTownProjectislocatedinthecentreofShishanTown.ThisupscaleresidentialdevelopmentoffersanattributableGFAof155,000squaremetres.Foundationworkisunderwaywithfullcompletionscheduledin2015.

TheNanhaiGuichengProjectconsistsoftwositeslocatedatthewesternsideofNanhaiDistrict.ThesitesofferacombinedattributableGFAof112,200squaremetres.Constructionhascommencedwithfullcompletionscheduledin2015.

Property Investment

LeasingactivitiesofWheelockSquareinShanghaihavecontinuedtogainpace.Over70%oftheofficeareahasalreadybeencommittedwiththelatestmonthlyrentalratesatoverRMB400persquaremetre.Higherfloorswillbereleasedtofetchhigherrates.Thispremier-gradedevelopmentcontinuestoattract multinationals and major corporations.

ChongqingTimesSquarecompleteditspremisestransformationintoamodernandstylishshoppingmall.Asoftre-openingtookplaceinearlyJulywithvariousinternationalbrandspoisedtoopentheirstoresduringAugustandSeptember.


DalianTimesSquarecontinuedtodeliverremarkableperformancewitha38%growthinretailsalespersquaremetreandfulloccupancy.Tofortifyitsleadingposition,reconfigurationworkwillcommenceinearly2012toaccommodatetheopeningofChanelandotherbrandre-positioningexercises.

ShanghaiTimesSquarecontinuedtoperformsatisfactorilyduringtheperiodwith93%retailand96%officeoccupancy.

International Finance Centres (“IFCs”)InJanuary,theGroupacquiredaprimesiteinthecitycentreofChangshaforthedevelopmentofChangshaIFC.Theprojectwillcomprisethreetowers(withtwooftheminexcessof300metresinheight)atopa250,000squaremetresretailpodium,offeringupscaleretail,GradeAoffices,afive-starhotelandluxuryapartmentswithatotalGFAof700,000squaremetres.Constructionwillstartinlate2011forfullcompletionin2016.

ChengduIFCistheGroup’snextflagshipinvestmentpropertybeingrolledoutinthebusiestpedestrianshoppingareaofChengdu.Constructionofphaseone,whichincludesaretailcomplexandanofficetower,isunderwaywithscheduledcompletionin2013.

ConstructionofChongqingIFC,a50:50jointventuredevelopmentwithChinaOverseasLand&InvestmentinJiangbeiCity,thenewCBDofChongqing,isunderwaywithfullcompletionscheduledin2015.

DevelopmentofWuxiIFCandSuzhouIFCisprogressingasplanned.

MARCO POLO HOTELS

Poweredbystronginboundtourismandvibrantbusinesstravel,revenuefromtheMarcoPolohotelsandclubgrewby11%toHK$593millionduringtheperiod.

ConsolidatedoccupancyofthethreeMarcoPolohotelsinHongKongwas81%,witha21%increaseinaverageroomrates.OtherMarcoPolohotelsperformedrobustlyintheirrespectivelocations,withMarcoPoloWuhan,theGroup’sflagshipontheWuhanBundoverlookingtheYangtzeRiver,postinga16%growthinaverageroomrates.

TheMarcoPoloLingnanTiandiinFoshanmanagedbytheGroupwillopenin2011.From2012onwards,ahostofnewMarcoPolohotelsinChangsha,Changzhou,Chengdu,Chongqing,Guiyang,Manila,SuzhouandWuxiwillcomeonstream.


MODERN TERMINALS

Followingthesharpreboundin2010,globaltradegrowthsloweddownduringthefirsthalfof2011.ContainerthroughputinSouthChinapostedagrowthrateofunder3%.

ModernTerminals’consolidatedrevenueincreasedby6%toHK$1,620millionduringtheperiod.However,operatingprofitdecreasedby15%toHK$675millionpartlyduetoone-offitemsbutalsoasaresultofrisingoperatingcosts.ThroughputinHongKonggrewmodestlyto2.7millionTEUs.

InChina,throughputatTaicangInternationalGatewayinSuzhougrewby9%to685,000TEUs,whileDaChanBayTerminalOneinShenzhenhandled343,000TEUsduringtheperiod,19%higherthanlastyear.ThroughputgrowthwasalsoreportedatShekouContainerTerminalsandChiwanContainerTerminal,bothinShenzhen,inwhichModernTerminalsholdsstrategicstakes.

OTHER BUSINESSES

i-CABLE

i-CABLE’seffortstorebuildrevenueandprofitabilityhavestartedtopayoff.Turnoverincreasedby9%toHK$1,051millionwhilethenetlossofHK$55millionrepresenteda62%improvement.ItsfinancialpositionremainssolidwithanetcashofHK$369million.

i-CABLEcontinuestoinvestinpremiercontentthatattractshigherviewershiptoreinforceandexpandmarketshareunderitswell-testedstrategy.Broadbandserviceandnetworkupgradescontinuednotwithstandingthechallengingandcompetitiveenvironment.

Wharf T&T

TheICTindustrybenefitedfromtherallyofITandtelecomspendingtocopewithbusinessdemandduringtheperiod.Databusinessstoodtogainfromtheinvigoratingbandwidthconsumption.Newprojectsandinfrastructureinvestmentintheenterprisesectorboostedchaindemandonserver,storageandrouter/switchingequipment,fibreconnectivity,securityandsystemintegrationsavoir-faire.WharfT&T’srevenueroseby6%toHK$879millionandnetprofitby8%toHK$103millionwithstablenetcashinflow.

Hong Kong Air Cargo Terminals

HongKongAirCargoTerminals,a20.8%associateoftheGroup,reportedathroughputdropof4.6%duringtheperiod.ThesupplychaindisruptionarisingfromtheearthquakeandtsunamiinJapan,labourshortageinPearlRiverDeltaandtheinwardmigrationofmanufacturersinChina,haveaffectedaircargovolumeinHongKong.


WHARF’S BUSINESS-IN-COMMUNITY

2011marksthe125thanniversaryforTheWharf(Holdings)LimitedinHongKong.Adistinguishedtrackrecordculminatednotjustinfinancialperformancebutalsocorporatecitizenship.Withitslong-establishedmissionof“BuildingforTomorrow”,theGroupstrivestofulfillitscorporatesocialresponsibilitysurroundingthefourkeyareasnamelySocial,Environment,WorkplacePracticesandCorporateGovernance.Underthe“Business-in-Community”(BIC)banner,theGroupworkscloselywithdifferentconstituenciesandstakeholderswithclearobjectivesofbalancingthecorporate,socialandeconomicresponsibilities,instigatingfundamentaldignityandvalueofallcitizens,andbuildingabetterHongKong.

Inthefirsthalfof2011,theGrouphasbeenactivelysupportinganumberofcharitableorganisationsrangingfromTheCommunityChest,ChildrenCancerFoundation,HongKongChristianServices,HongKongRedCross,MTRHongKongRaceWalking,TheHongKongPhilharmonicOrchestra,TheSocietyforthePromotionofHospiceCare,UNICEF,toBusinessEnvironmentCouncil,FriendsoftheEarth,TheConservancyAssociationandWWF.TheGroupinjectednewfundsandspearheadedahostofBICinitiativeswithstrongsupportfromseniormanagement,associatesfromacrossvariousbusinessesofpropertydevelopment,logistics,hotels,communications,mediaandentertainmenttopublictransportation.

TheGrouplaunchedProjectWeCan,apioneer360oschoolimprovementprogrammeinMaywhere10secondaryschoolshavebeenselectedtoreceivesupport,benefitingmorethan10,000studentsinHongKongwhomaybewithfeweropportunitiesyetgreatpotential.

Besidesfinancialsupport,staffvolunteeringisanimportantpartoftheprogramme.Wharf’s10participatingbusinessunitsandfellowbusinesseswilleachconnectwithoneschoolfortheentiresix-yearperiodwherebyrespectivebusinessunitswillprovidesupportfortheschoolsasneeded,assistinawidespectrumofactivitiesrangingfromteaching,academiclearning,extra-curriculardevelopment,conductandbehaviour,life-goalplanning,tolearningenvironmentandsupport,careandcounselingaswellasparent-teachercollaboration.WiththeframeworkestablishedandtheProjectupandrunning,Wharfwelcomesothermembersofthesocietywhoarepassionateaboutyoungpeopleandeducationtojoinforcebysponsoringmoreschoolsandenablemorestudentstobenefit.

ApartfromProjectWeCan,theGrouphassupportedawiderangeofeducationrelatedprojectsinthepastsixmonthsmakingavailablemoreopportunitiesforpeopleofdifferentbackgroundsandages.ThroughtheMarcoPoloHotelarm,internshipspaceswereofferedtostudentsofCCCKungLeeCollegeforreallifeexperienceworkinginhospitalityfield;HarbourCityandPacificClubsupportedtheChildWelfareSchemefortheirProjectSharebyprovidinginternshipopportunitiesforstudentsfromlessprivilegedfamilies.

In2011,anArchitecturalDesignInternshipProgrammehasbeenestablishedthroughTheWharfArchDesignResourceTrust.Theprogrammeaimsatfosteringexcellenceinarchitectureandgroomingfuturestararchitectsbyprovidingstudentswithplacementopportunitiesininternationaldesignpracticesthatareattheinnovativeedgeofarchitecturaldesign.Selectedgraduateswilltakeonanoverseasinternshipforaperiodof12monthsinaninternationally-renownedarchitecturefirm.Suchaplacementopportunitywillcertainlybroadenparticipatingstudents’horizonandexposuretoworkingalongsidedistinguisheddesignersinanateliersetting,andallowthemahands-onunderstandingofarchitecturalpracticeandurbandesigninforeigncountries.InJune,twoarchitecturestudentsfromTheChineseUniversityofHongKonghavebeenawardedforthe2011programmeandtheywillsoontakeon an internship with their dream architecture firms.


“Through our “Business-in-Community” initiative, Wharf is committed to making a difference by promoting staff volunteerism, building a better Hong Kong and fostering sustainability of the community.”

HongKongManagementAssociation(HKMA)hasbeenintheforefrontprovidingwell-organisedlife-longlearningopportunitiesforpeople.In2011,theGrouphaspledgedsupportforHKMA’s2011scholarshipschemefortheirprofessionaldiplomas/bachelordegrees,encouragingworkingadultstopursue further studies.

InMay,theGroupsponsoredtheFutureStarsBeijingStudyTourorganisedbyWenWeiPoandCommunicationsUniversityofChinawhereby100universitystudentsfromthedisciplineofCommunicationsinHongKongattendedaneight-daytour.ItprovidedstudentswithanoverviewofChina’scultureandhistory,socialandpoliticalscenesandchallengesahead.Studentsdemonstratedtheirgreatinterestandweremostproactiveinexchangingviewswithvariousagenciesandgovernmentofficialsvisited.

TheGroupsponsoredWuZhiQiao(BridgetoChina)CharitableFoundationforbuildingacentenarybridgeinSanChuenZhenginLijiang,Yunnan.StudentsfromTheUniversityofHongKongandTsinghuaUniversityinBeijingspearheadedthedesignandplanning.NotonlydidtheprojectenableinteractionandculturalexchangeamongstudentsbutitfosteredgreaterunderstandingofourmotherlandamongstudentsinHongKong.InadditiontoprovisionofWharf’sfinancialsponsorship,anumberofcolleaguesfromWharfChinaparticipatedasvolunteerstohelpbuildthebridge.Itisofparticularsignificanceas2011alsomarksWharf’s125thanniversaryandthe100thanniversaryofTheUniversityofHongKongandTsinghuaUniversity.

TheGroupsparesnoeffortinsupportingthevulnerable.Toenableanall-rounddevelopmentforournextgeneration,PlazaHollywoodsponsoredtheChangingYoungLivesFoundationfortheset-upofcomputertrainingfacilitiesaswellasacquiringmusicalinstrumentssuchthatrelatedclassescanbeprovidedforchildrenoflessprivilege.

TheStarFerryandthePacificClubhostedserviceusersofFuHongSociety,HongChiSocietyandHongKongSocietyfortheDeafattheirfacilitiesinthepastfewmonths.

Tofosteraharmonioussocietyandpromoteahelpingspirit,TimesSquareissponsoringtheproductionofacommunitycareandeducationseriesnamelyMaking-a-DifferencetobebroadcastedonCABLETV’snewschannel.Thesegmentisaimedatfeaturingmeaningfulcausesandstoriesundertakenbytheaveragepeopleinthesocietyyetmakingabigdifferencetothepeopleinneed.

Apartfromfinancialsupport,staffvolunteeringisanimportantpartinrealisingBIC.Employeesfromalllevelsaswellastheirfamilymembersandfriendsareencouragedtosupportorganisationsandinitiativesthatcultivatemeaningfulopportunitiesforcivicengagement.MajorityofthebusinessunitsunderWharfhaveformedavolunteerteamandareallsettogiveahelpinghand.

Amongall,ModernTerminalshastakenastepfurtherandpartneredwiththeChineseYMCAofHongKongtoprovidetrainingtotheirvolunteerstoenhancetheirserviceskills.WharfT&TlauncheditsfirstVolunteerRecognitionProgrammetohonourstaffwhohasmadecontinuouscontributionstovolunteerservice,fourcolleagueswererecognisedastheOutstandingVolunteeroftheYearasaresult.


We Care We Can


Let’s Do It


FINANCIAL REVIEW

(I) REVIEW OF 2011 INTERIM RESULTS

TheGroupcontinuedtodeliverrobustperformance,withconsolidatedturnoverandoperatingprofitbothachievingdouble-digitgrowth.Inclusiveofthesurplusarisingontherevaluationofinvestmentproperties,Groupprofitincreasedby31%toHK$14,302million(2010:HK$10,892million).Exclusiveoftherevaluationsurplus,andtheexceptionalgainsin2010comprisingaone-offtaxwritebackandasurplusfromrevaluationoftheinterestinanassociatetotallingHK$1,246million,underlyingprofitincreasedby11%toHK$3,283million(2010:HK$2,958million).

Turnover

Groupturnoverincreasedby13%toHK$9,745million(2010:HK$8,622million),withallbusinesssegments reporting an increase.

PropertyInvestmentrevenuefromHongKongincreasedby12%toHK$3,856million,underpinnedbytheoutstandingsalesachievedbytheretailtenantsandrecoveryofofficerents.RevenuefromtheMainlandincreasedby34%toHK$317millionduetothenewlycompletedShanghaiWheelockSquareandfavourablerentalreversionforotherproperties.Hotelrevenueincreasedby11%toHK$593million.Inaggregate,thesegmentreportedanincreaseinrevenueof13%toHK$4,766million.

PropertyDevelopmentreporteda31%increaseinturnovertoHK$1,343million,withcompletionsatChengduCrystalParkandChengduTianFuTimesSquare.Inclusiveofjointventuresonanattributablebasis,newsalesandpresalesofHK$7,610millionwerecontracted(2010:HK$1,957million)toincreasecumulativepresalespendingrecognitiontoHK$17,960million.

Logisticsrevenuereportedanincreaseof5%toHK$1,673million.ModernTerminals’revenueimprovedby6%mainlyduetohigherthroughputhandledinbothHongKongandtheMainland.

CMErevenueincreasedby8%toHK$1,930million,resultingfroma9%increasereportedbyi-CABLEanda6%increasereportedbyWharfT&T.

Operating Profit

Groupoperatingprofitincreasedby10%toHK$4,980millionwithallsegmentsreportinganincreaseexceptforLogistics.

PropertyInvestmentremainedthelargestcontributorwitha14%increasetoHK$3,712million.ContributionsfromHarbourCity(excludinghotels)andTimesSquareincreasedby13%and11%,respectively.OperatingprofitfromtheMainlandincreasedby39%,mainlyduetoShanghaiWheelockSquare.


Hotelscontributionincreasedby30%toHK$187millionduetoimprovedroomrates.

PropertyDevelopment’soperatingprofitincreasedbyonly1%toHK$568million,asaresultoftheproject completion schedule.

Logistics’contributiondroppedby16%toHK$682million,mainlyduetohigheroperatingexpensesthatexceededtheincreasedrevenueofModernTerminals.

CMEturnedaroundfromanoperatinglosstoaprofitofHK$50million.WharfT&T’soperatingprofitincreasedby8%toHK$103million,whilei-CABLE’soperatinglossreducedbyhalftoHK$53million.

ContributionfromInvestmentandOthersincreasedby90%toHK$171million,mainlyduetoincreaseininterestincomeanddividendincome.

Increase in Fair Value of Investment Properties

ThebookvalueoftheGroup’sinvestmentpropertyportfolioasat30June2011totalledHK$169.1billion,withHK$154.8billionthereofstatedatfairvaluebasedonanindependentvaluationasatthatdate.ThatresultedinarevaluationsurplusofHK$11,614million(2010:HK$7,447million),reflectingthecontinuousstrongperformanceoftheGroup’sinvestmentproperties.TheattributablenetrevaluationsurplusofHK$11,019million(2010:HK$6,688millionasrestated),afterdeductingrelateddeferredtaxandnon-controllinginterests,wascreditedtotheconsolidatedincome statement.

InvestmentpropertiesintheamountofHK$14.3billionwhichhadnotbeenrevaluedwereallunderdevelopmentandwillnotbecarriedatfairvalueuntiltheearlieroftheirfairvaluesfirstbecomingreliablymeasurableorthedatesofcompletion.

Other Net Income

Othernetincomedecreasedby77%toHK$122millionmainlyduetotheabsenceofaone-offsurplusfromrevaluationoftheinterestsinHongKongAirCargoTerminalsLimited(“Hactl”)in2010onitsbecameanassociate.

Finance Costs

FinancecostschargedtotheconsolidatedincomestatementwereHK$775million(2010:HK$544million).Thatincludedanunrealisedmark-to-marketlossofHK$369million(2010:HK$319million)onthecrosscurrency/interestrateswapsinaccordancewithprevailingaccountingstandard.

Excludingthesaidunrealisedmark-to-marketloss,financecostaftercapitalisationwasHK$406million(2010:HK$225million),representinganincreaseofHK$181millionmainlyasaresultoftheincreaseingrossborrowings.

FinancecostwasstatedaftercapitalisationofHK$175million(2010:HK$145million)inrespectoftheGroup’srelatedassets.


Share of Results (after tax) of Associates and Jointly Controlled Entities

Theshareofprofitofassociatesincreasedby88%toHK$188million,mainlyduetocontributionfromHactl,whichbecameanassociateinMay2010.ShareofresultsofjointlycontrolledentitiesreportedanetlossofHK$9million(2010:profitofHK$7million)intheabsenceofanymajorpropertycompletionintheMainland.

Income Tax

TaxationchargefortheperiodwasHK$1,511million(2010:HK$889millionasrestated),whichincludeddeferredtaxationofHK$518million(2010:HK$692millionasrestated)providedforthecurrentperiod’srevaluationgainattributabletoinvestmentpropertiesintheMainland.

Excludingtheabovedeferredtax,thetaxchargewasHK$993million(2010:HK$197million).Thetaxchargein2010wasexceptionallylowermainlyduetotheinclusionofataxwritebackofHK$809millionuponreachingasettlementonvariousprolongedtaxdisagreementswiththeInlandRevenueDepartment.

Non-controlling Interests

Profitattributabletonon-controllinginterestsincreasedbyHK$40milliontoHK$307million.

Profit Attributable to Equity Shareholders

Groupprofitattributabletoequityshareholdersfortheperiodended30June2011amountedtoHK$14,302million(2010:HK$10,892millionasrestated),representinganincreaseof31%.BasicearningspersharewereHK$4.84,basedonweightedaverageof2,952millionsharesaftertakingtheeffectoftheRightsIssue(2010:HK$3.85basedon2,829millionsharesasrestatedfortheRightsIssue).

ExcludingthenetinvestmentpropertyrevaluationsurplusofHK$11,019million(2010:HK$6,688millionasrestated),GroupunderlyingprofitattributabletoshareholdersfortheperiodwasHK$3,283million(2010:HK$4,204million),representingadecreaseof22%,asaresultoftheexceptionalincomein2010amountingtoHK$1,246millionontaxwritebackandsurplusfromrevaluationofHactl.Beforetheexceptionals,theunderlyingprofitroseby11%.UnderlyingearningspersharewereHK$1.11.


(II) LIQUIDITY, FINANCIAL RESOURCES AND CAPITAL COMMITMENTS

Shareholders’ and Total Equity

Asat30June2011,theGroup’sshareholders’equityincreasedby14%orHK$23,465milliontoHK$186,554million,equivalenttoHK$61.59persharebasedon3,029millionissuedsharesaftertherightsissuecompletedinMarch2011(31December2010:HK$59.22persharebasedon2,754millionissuedshares).

Includingthenon-controllinginterests,theGroup’stotalequityincreasedby14%toHK$193,961million(31December2010:HK$170,649million).

Rights Issue

InMarch2011,theCompanystrengtheneditsequitybasebycompletionofanissueof275millionnewordinarysharesatHK$36.5eachbywayofrightswithnetproceedsofHK$10.0billionreceived.

Total Assets

TheGroup’stotalassetsincreasedby16%toHK$281.8billion(31December2010:HK$242.2billion).Totalbusinessassets,excludingbankdepositandcash,available-for-saleinvestments,deferredtaxassetsandotherderivativefinancialassets,increasedby17%toHK$257.1billion(31December2010:HK$220.2billion).

IncludedintheGroup’stotalassetsistheinvestmentpropertyportfolioofHK$169.1billion,representing66%oftotalbusinessassets.ThecoreassetsinthisportfolioareHarbourCityandTimesSquareinHongKong,whicharevaluedatHK$87.1billion(excludingthe3hotels)andHK$32.0billion,respectively.Together,theyrepresent70%ofthetotalvalueoftheportfolio.

OthermajorbusinessassetsincludedotherpropertiesandfixedassetsofHK$18.5billion,interestsinjointlycontrolledentitiesandassociates(mainlyforMainlandpropertyandportprojects)ofHK$25.9billionandpropertiesunderdevelopmentandheldforsale(mainlyintheMainland)ofHK$40.3billion.

Geographically,theGroup’sbusinessassetsintheMainland,mainlypropertiesandterminals,increasedtoHK$100.1billion(31December2010:HK$74.8billion),representing39%oftheGroup’stotalbusinessassets.


Debts and Gearing

PrincipallyduetotheincreaseininvestmentsinChinaproperties,theGroup’snetdebtincreasedbyHK$9.8billiontoHK$42.5billionasat30June2011(31December2010:HK$32.7billion),whichwasmadeupofHK$62.4billionindebtsandHK$19.9billioninbankdepositsandcash.IncludedintheGroup’snetdebtwereHK$9.0billion(31December2010:HK$9.3billion)attributabletoModernTerminals,HarbourCentreDevelopmentLimited(“HCDL”)andothersubsidiaries,whicharewithoutrecoursetotheCompanyanditsothersubsidiaries.Excludingthesenon-recoursedebts,theGroup’snetdebtwasHK$33.5billion(31December2010:HK$23.4billion).Analysisofthenetdebtisasbelow:

30 June 31December 2011 2010Net debt/(cash) HK$ Million HK$ Million

Wharf(excludingbelowsubsidiaries) 33,503 23,376ModernTerminals 11,054 9,932HCDL (1,694) (172)i-CABLE (369) (447)

42,494 32,689

Asat30June2011,theratioofnetdebttototalequitywas21.9%(31December2010:19.2%).

Finance and Availability of Facilities

TheGroup’stotalavailableloanfacilitiesanddebtsecuritiesasat30June2011amountingtoHK$85.3billion,ofwhichHK$62.4billionweredrawn,areanalysedasbelow:

30 June 2011

Available Total Undrawn Facility Debts Facility HK$ Billion HK$ Billion HK$ Billion

Company/wholly-owned subsidiariesCommittedfacilities 62.2 44.4 17.8Uncommittedfacilities 0.4 – 0.4

62.6 44.4 18.2Non-wholly-owned subsidiariesCommitted and uncommitted–ModernTerminals 14.4 11.6 2.8–HCDL 4.6 3.0 1.6–i-CABLE 0.3 – 0.3–Others 3.4 3.4 –

85.3 62.4 22.9


Oftheabovedebts,HK$19,324million(31December2010:HK$18,137million)wassecuredbymortgageovercertainpropertiesunderdevelopment,fixedassetsandshareswithtotalcarryingvalueofHK$19,918million(31December2010:HK$18,360million).

InJune2011,theGroupissuedguaranteedconvertiblebondswithatermof3yearsforanaggregateprincipalamountofHK$6,220million.TheinitialconversionpriceofthebondsisHK$90pershareandfullconversionofthebondswillincreasetheGroup’sissuedcapitalby69.11millionsharesor2.28%.

TheGroup’sdebtswereprimarilydenominatedinHongKongdollar(“HKD”),UnitedStatesdollar(“USD”)andRenminbi(“RMB”).RMBborrowingswereusedtofundtheGroup’spropertydevelopmentandportinvestmentsintheMainland.

Theuseofderivativefinancialinstrumentswasstrictlymonitoredandcontrolled.ThemajorityofthederivativefinancialinstrumentsenteredintobytheGroupwereprimarilyusedformanagementoftheGroup’sinterestrateandforeigncurrencyexposures.

TheGroupcontinuedtomaintainastrongfinancialpositionwithamplesurpluscashdenominatedprincipallyinHKDandRMBandundrawncommittedfacilitiestofacilitatetheGroup’sexpandingbusinessandinvestmentactivities.Asat30June2011,theGroupalsomaintainedaportfolioofavailable-for-saleinvestmentswithanaggregatemarketvalueofHK$3.2billion(31December2010:HK$3.4billion),whichisimmediatelyavailableforliquidationfortheGroup’suse.

Cash Flows for the Group’s Operating and Investing Activities

Fortheperiodunderreview,theGrouprecordednetcashinflowbeforechangeinworkingcapitalofHK$5.4billion(2010:HK$5.0billion).ThechangesinworkingcapitalresultedinnetcashoutflowofHK$3.2billion(2010:inflowofHK$0.5billion),chieflyduetothepaymentsforlandandconstructioncostfortradingpropertiesunderdevelopmentwhichwaspartlycompensatedbytheincreaseindepositsreceivedfromsaleofpropertiesintheMainland.Forinvestingactivities,theGrouprecordedanetcashoutflowofHK$14.3billion(2010:inflowofHK$2.3billion),mainlyforadditionstoinvestmentpropertiesandinvestmentsinassociatesandjointlycontrolledentitiesinvolvedinpropertydevelopmentprojectsintheMainland.


Major Expenditure and Commitments

ThemajorexpenditureincurredbytheGroup’scorebusinessesduringtheperiodandrelatedcommitmentsat30June2011areanalysedasfollows:

Commitments as at 30 June 2011

Authorised Authorised Expenditure and but not for 1-6/2011 Contracted for Contracted forBusiness Unit/Company HK$ Million HK$ Million HK$ Million

a. Capital expenditurePropertyInvestments 8,918 10,444 23,415WharfT&T 226 222 158i-CABLE(73.8%-owned) 88 36 132ModernTerminals(67.6%-owned) 92 598 1,172

9,324 11,300 24,877

b. Trading properties under developmentSubsidiaries 10,518 8,122 40,428Jointlycontrolledentities/associates 5,606 3,571 17,845

16,124 11,693 58,273

c. Programming and others 35 1,448 109

ForthePropertyInvestmentsegment,thecapitalexpenditureincurredduringtheperiodunderreviewwasmainlyforthelandcostofChangshaIFCandconstructioncostofChengduIFC.Fori-CABLEandWharfT&T,thecapitalexpenditureswereincurredsubstantiallyforprocurementofproductionandbroadcastingequipment,networkrolloutandinternetserviceequipmentwhilethoseforModernTerminalsweremainlyfortheconstructionoftheDachanBayprojectintheMainlandandadditionofotherfixedassets.i-CABLEandModernTerminals,respectively73.8%and67.6%ownedbytheGroup,independentlyfundedtheirowncapitalexpenditureprogrammes.

Inadditiontothecapitalexpenditure,theGroupalsoincurredHK$16.1billionofexpendituresforthedevelopmentofitstradingpropertiesintheMainland,eitherwholly-ownedorundertakenthroughassociatesorjointlycontrolledentities.ThisincludedtheamountofHK$3,388millionpaidforthe50%interestsinthefourFoshanpropertyjointventuresacquiredfromWheelock.


Asat30June2011,theGroup’sauthorisedandcontractedcommitmentsweremainlyfordevelopmentpropertiesforinvestmentofHK$11.3billionandfortradingofHK$11.7billion,respectively,amongtheseincludingattributablelandcostofHK$8.5billionpayablebyinstallmentfrom2011to2013.Apartfromthat,theGroupintendstoinvestHK$24.9billionforinvestmentpropertiesandHK$58.3billionfortradingproperties,mainlyonconstructioncosttocompletetheGroup’sChinaandHongKongdevelopmentprojects,whichwillbecarriedoutbystagesintheforthcomingyears.

TheabovecommitmentswillbefundedbyGroup’sinternalfinancialresourcesincludingitssurpluscashofHK$19.9billion,cashflowfromoperation,aswellasbankandotherfinancingswiththeconstructioncostsself-financedmainlybypre-saleproceedsandprojectloans.Otheravailableresourcesincludeavailable-for-saleinvestments.

(III) HUMAN RESOURCES

TheGrouphadapproximately13,300employeesasat30June2011,includingabout2,200employedbymanagedoperations.Employeesareremuneratedaccordingtotheirjobresponsibilitiesandthemarketpaytrendwithadiscretionaryannualperformancebonusasvariablepayforrewardingindividualperformanceandcontributionstotherespectivegroup’sachievementand results.


CONSOLIDATED INCOME STATEMENTForthesixmonthsended30June2011–Unaudited

Six months ended 30 June 2011 2010 Note HK$ Million HK$ Million (restated)

Turnover 2 9,745 8,622Directcostsandoperatingexpenses (3,162) (2,622)Sellingandmarketingexpenses (404) (385)Administrativeandcorporateexpenses (537) (450)

Operatingprofitbeforedepreciation, amortisation,interestandtax 5,642 5,165Depreciationandamortisation (662) (649)

Operating profit 2&3 4,980 4,516Increaseinfairvalueofinvestmentproperties 11,614 7,447Othernetincome 4 122 522

16,716 12,485Financecosts 5 (775) (544)Shareofresultsaftertaxof:Associates 188 100Jointlycontrolledentities (9) 7

Profitbeforetaxation 16,120 12,048Incometax 6 (1,511) (889)

Profit for the period 14,609 11,159

Profit attributable to:Equityshareholders 14,302 10,892Non-controllinginterests 307 267

14,609 11,159

Earnings per shareBasic 7 HK$4.84 HK$3.85

Diluted 7 HK$4.83 HK$3.85


CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOMEForthesixmonthsended30June2011–Unaudited

Six months ended 30 June 2011 2010 HK$ Million HK$ Million (restated)

Profit for the period 14,609 11,159

Other comprehensive income

Exchangegainontranslationofforeignoperations 1,194 290

Netrevaluationreservesofavailable-for-saleinvestments: (315) (28)(Deficit)/Surplusonrevaluation (316) 9Transferred to consolidated income statement on disposal 1 (37)

Shareofothercomprehensiveincomeofassociates/ jointlycontrolledentities 245 67

Others 1 (23)

Other comprehensive income for the period 1,125 306

Total comprehensive income for the period 15,734 11,465

Total comprehensive income attributable to:Equityshareholders 15,318 11,197Non-controllinginterests 416 268

15,734 11,465


CONSOLIDATED STATEMENT OF FINANCIAL POSITIONAsat30June2011–Unaudited

30 June 31December 2011 2010 Note HK$ Million HK$ Million

Non-current assetsInvestmentproperties 169,115 148,241Otherproperty,plantandequipment 14,722 14,679Leaseholdland 3,731 3,718

Totalfixedassets 187,568 166,638Goodwillandotherintangibleassets 297 297Interestinassociates 8,106 4,967Interestinjointlycontrolledentities 17,777 15,350Available-for-saleinvestments 3,162 3,362Longtermreceivables 4 4Programminglibrary 110 113Employeeretirementbenefitassets 17 17Deferredtaxassets 425 463Derivativefinancialassets 284 587

217,750 191,798

Current assetsProperties for sale 40,347 29,732Inventories 119 113Tradeandotherreceivables 9 3,520 3,518Derivativefinancialassets 209 164Bankdepositsandcash 19,890 16,900

64,085 50,427

Current liabilitiesTradeandotherpayables 10 (5,765) (6,539)Depositsfromsaleofproperties (10,414) (6,855)Derivativefinancialliabilities (214) (244)Taxationpayable (1,347) (1,242)Bankloansandotherborrowings 11 (6,908) (7,829)

(24,648) (22,709)

Net current assets 39,437 27,718

Total assets less current liabilities 257,187 219,516


30 June 31December 2011 2010 Note HK$ Million HK$ Million

Non-current liabilitiesBankloansandotherborrowings 11 (55,476) (41,760)Deferredtaxliabilities (5,887) (5,237)Otherdeferredliabilities (279) (283)Derivativefinancialliabilities (1,584) (1,587)

(63,226) (48,867)

NET ASSETS 193,961 170,649

Capital and reservesSharecapital 12 3,029 2,754Reserves 183,525 160,335

Shareholders’ equity 186,554 163,089

Non-controlling interests 7,407 7,560

TOTAL EQUITY 193,961 170,649


CONSOLIDATED STATEMENT OF CHANGES IN EQUITYForthesixmonthsended30June2011–Unaudited

Shareholders’ equity

Capital Investments Exchange Total Non- Share Share redemption revaluation and other Revenue shareholders’ controlling Total capital premium reserves reserves reserves reserves equity interests equity HK$ Million HK$ Million HK$ Million HK$ Million HK$ Million HK$ Million HK$ Million HK$ Million HK$ Million

At1January2011 2,754 16,566 7 677 2,887 140,198 163,089 7,560 170,649

Changesinequityfor theperiod:Profit – – – – – 14,302 14,302 307 14,609Othercomprehensiveincome – – – (305) 1,321 – 1,016 109 1,125

Totalcomprehensiveincome – – – (305) 1,321 14,302 15,318 416 15,734

RightsIssue 275 9,712 – – – – 9,987 – 9,987Sharesissuedbysubsidiaries – – – – – – – 12 12Issuanceofconvertiblebonds – – – – 99 – 99 – 99Finaldividendspaidfor2010 (Note8b) – – – – – (1,939) (1,939) – (1,939)Dividendspaidtonon-controlling interests – – – – – – – (581) (581)

At 30 June 2011 3,029 26,278 7 372 4,307 152,561 186,554 7,407 193,961

At1January2010 2,754 16,566 7 496 1,542 107,181 128,546 7,042 135,588

Changesinequityfor theperiod:Profit(restated) – – – – – 10,892 10,892 267 11,159Othercomprehensiveincome – – – (18) 323 – 305 1 306

Totalcomprehensiveincome – – – (18) 323 10,892 11,197 268 11,465

Sharesissuedbysubsidiaries – – – – – – – 11 11Finaldividendspaidfor2009 (Note8b) – – – – – (1,763) (1,763) – (1,763)Dividendspaidtonon-controlling interests – – – – – – – (220) (220)

At30June2010 2,754 16,566 7 478 1,865 116,310 137,980 7,101 145,081


CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWSForthesixmonthsended30June2011–Unaudited

Six months ended 30 June 2011 2010 HK$ Million HK$ Million

Netcash(usedin)/generatedfromoperatingactivities (3,196) 476

Netcash(usedin)/generatedfrominvestingactivities (14,284) 2,349

Netcashgeneratedfrom/(usedin)financingactivities 20,180 (980)

Increaseincashandcashequivalents 2,700 1,845

Cashandcashequivalentsat1January 16,900 15,712

Effectofexchangeratechanges 290 56

Cashandcashequivalentsat30June 19,890 17,613

Analysisofthebalanceofcashandcashequivalents Bankdepositsandcash 19,890 17,613


NOTES TO THE FINANCIAL STATEMENTS

1. Principal Accounting Policies and Basis of Preparation

TheseunauditedinterimconsolidatedfinancialstatementshavebeenpreparedinaccordancewithHongKongAccountingStandard(“HKAS”)34“InterimFinancialReporting”(“HKAS34”)issuedbytheHongKongInstituteofCertifiedPublicAccountantsandtheapplicabledisclosureprovisionsoftheRulesGoverningtheListingofSecuritiesonTheStockExchangeofHongKongLimited.

ThepreparationoftheinterimfinancialstatementsinconformitywithHKAS34requiresmanagementtomakejudgments,estimatesandassumptionsthataffecttheapplicationofpoliciesandreportedamountsofassets,liabilities,incomeandexpensesonayeartodatebasis.Actualresultsmaydifferfromtheseestimates.

Duringtheyearended31December2010,theGroupearlyadoptedtheamendmentstoHKAS12“IncomeTaxes”,inrespectoftherecognitionofdeferredtaxoninvestmentpropertiescarriedatfairvalueunderHKAS40“InvestmentProperty”.TheGroupappliedHKAS12retrospectivelyandthecomparativeamountswererestated,whereappropriate.Asaresult,theGroup’sprofitandprofitattributabletoequityshareholdersforthesixmonthsended30June2010wasincreasedbyHK$1,013millionandHK$1,004millionrespectively,whereastheprofitattributabletonon-controllinginterestsforthesixmonthsended30June2010wasincreasedbyHK$9million.

The accounting policies and methods of computation used in the preparation of the interim financialstatementsareconsistentwiththoseusedintheannualfinancialstatementsfortheyearended31December2010exceptthechangesmentionedbelow.

Witheffectfrom1January2011,theGrouphasadoptedthebelowrevisedandamendmenttoHKFRSs,whicharerelevanttotheGroup’sfinancialstatements:

RevisedHKAS24 RelatedpartydisclosuresImprovementstoHKFRSs2010

TheimprovementstoHKFRSs2010consistsofamendmentstoexistingstandards,includinganamendmenttoHKAS34,Interimfinancialreporting.HKAS34(amendment)providesforfurtherdisclosuresininterimfinancialreport.IthashadnofinancialimpactontheGroup’sinterimfinancialreport.

TheotherdevelopmentsrelatedprimarilytoclarificationofcertaindisclosurerequirementsapplicabletotheGroup’sfinancialstatements.Thesedevelopmentshavehadnomaterialimpactonthe contents of this interim financial report.


2. Segment Information

TheGroupmanagesitsdiversifiedbusinessesaccordingtothenatureofservicesandproductsprovided.Managementhasdeterminedfourreportableoperatingsegmentsformeasuringperformanceandallocatingresources.Thesegmentsarepropertyinvestment,propertydevelopment,logistics,andcommunications,mediaandentertainment(“CME”).Nooperatingsegmentshavebeenaggregatedtoformthefollowingreportablesegments.

Propertyinvestmentsegmentprimarilyincludespropertyleasingandhoteloperations.Currently,theGroup’spropertiesportfolio,whichconsistsofretail,office,serviceapartmentsandhotels,isprimarilylocatedinHongKongandMainlandChina.

Propertydevelopmentsegmentencompassesactivitiesrelatingtotheacquisition,development,design,construction,saleandmarketingoftheGroup’stradingpropertiesprimarilyinHongKongandMainlandChina.

LogisticssegmentmainlyincludesthecontainerterminaloperationsofModernTerminalsLimited(“ModernTerminals”),HongKongAirCargoTerminalsLimitedandotherpublictransportoperations.

CMEsegmentcomprisespaytelevision,internetandmultimediaandotherbusinessesoperatedbytheGroup’snon-wholly-ownedsubsidiary,i-CABLECommunicationsLimited(“i-CABLE”).ItalsoincludesthetelecommunicationbusinessesoperatedbyWharfT&TLimited.

Managementevaluatesperformanceprimarilybasedonoperatingprofitaswellastheequityshareofresultsofassociatesandjointlycontrolledentitiesofeachsegment.Inter-segmentpricingisgenerallydeterminedatarm’slengthbasis.

Segmentbusinessassetsprincipallycomprisealltangibleassets,intangibleassetsandcurrentassetsdirectlyattributabletoeachsegmentwiththeexceptionofbankdepositsandcash,financialinvestments,deferredtaxassetsandotherderivativefinancialassets.

Revenueandexpensesareallocatedwithreferencetosalesgeneratedbythosesegmentsandexpensesincurredbythosesegmentsorwhicharisefromthedepreciationofassetsattributabletothose segments.


a. Analysis of segment revenue and results

Increase in fair value of Jointly Profit Operating investment Other net Finance controlled before Turnover profit properties income costs Associates entities taxationSix months ended HK$ Million HK$ Million HK$ Million HK$ Million HK$ Million HK$ Million HK$ Million HK$ Million

30 June 2011Propertyinvestment 4,766 3,712 11,614 – (288) – – 15,038 HongKong 3,856 3,332 10,685 – (196) – – 13,821 MainlandChina 317 193 929 – (88) – – 1,034 Hotels 593 187 – – (4) – – 183Propertydevelopment 1,343 568 – 36 (35) (1) (30) 538 HongKong – – – – – 5 – 5 MainlandChina 1,343 568 – 36 (35) (6) (30) 533Logistics 1,673 682 – 97 (124) 189 21 865 Terminals 1,620 675 – 108 (124) 97 21 777 Others 53 7 – (11) – 92 – 88CME 1,930 50 – 2 – – – 52 i-CABLE 1,051 (53) – 2 – – – (51) Telecommunications 879 103 – – – – – 103 Others – – – – – – – –Inter-segmentrevenue (174) – – – – – – –

Segment total 9,538 5,012 11,614 135 (447) 188 (9) 16,493Investmentandothers 207 171 – (13) (328) – – (170)Corporateexpenses – (203) – – – – – (203)

Grouptotal 9,745 4,980 11,614 122 (775) 188 (9) 16,120

30June2010Propertyinvestment 4,218 3,258 7,447 – (182) – – 10,523 HongKong 3,449 2,975 5,989 – (144) – – 8,820 MainlandChina 236 139 1,458 – (35) – – 1,562 Hotels 533 144 – – (3) – – 141Propertydevelopment 1,025 561 – 20 (43) 9 (10) 537 HongKong 1 1 – – – 10 – 11 MainlandChina 1,024 560 – 20 (43) (1) (10) 526Logistics 1,596 811 – 438 (139) 130 17 1,257 Terminals 1,533 793 – 1 (139) 111 17 783 Others 63 18 – 437 – 19 – 474CME 1,795 (15) – – – (39) – (54) i-CABLE 962 (107) – – – (39) – (146) Telecommunications 833 95 – – – – – 95 Others – (3) – – – – – (3)

Inter-segmentrevenue (150) – – – – – – –

Segment total 8,484 4,615 7,447 458 (364) 100 7 12,263Investmentandothers 138 90 – 64 (180) – – (26)Corporateexpenses – (189) – – – – – (189)

Grouptotal 8,622 4,516 7,447 522 (544) 100 7 12,048


b. Analysis of inter-segment revenue

2011 2010 Inter- Inter- Total segment Group Total segment GroupSix months Revenue revenue Revenue Revenue revenue Revenueended 30 June HK$ Million HK$ Million HK$ Million HK$ Million HK$ Million HK$ Million

Propertyinvestment 4,766 (72) 4,694 4,218 (74) 4,144Propertydevelopment 1,343 – 1,343 1,025 – 1,025Logistics 1,673 – 1,673 1,596 – 1,596CME 1,930 (95) 1,835 1,795 (76) 1,719Investmentandothers 207 (7) 200 138 – 138

9,919 (174) 9,745 8,772 (150) 8,622

c. Geographical information

Revenue Operating profit 2011 2010 2011 2010Six months ended 30 June HK$ Million HK$ Million HK$ Million HK$ Million

HongKong 7,700 7,061 4,348 3,964MainlandChina 2,024 1,540 612 531Singapore 21 21 20 21

Grouptotal 9,745 8,622 4,980 4,516


3. Operating Profit

Operating profit is arrived at:


After charging/(crediting):Depreciationandamortisationon–assetsheldforuseunderoperatingleases 65 57–otherfixedassets 512 503–leaseholdland 46 46–programminglibrary 39 43

Total depreciation and amortisation 662 649

Staffcosts(Notea) 1,333 1,284Cost of trading properties sold during the period 680 435Rentalincomelessdirectoutgoings(Noteb) (3,527) (3,174)Interestincome (112) (76)Dividendincomefromlistedinvestments (45) (24)Dividendincomefromunlistedinvestments (3) (16)Loss/(profit)ondisposaloffixedassets 3 (7)

Notes:

(a) StaffcostsincludedretirementschemecostsHK$65million(2010:HK$52million).

(b) RentalincomeincludedcontingentrentalsofHK$777million(2010:HK$550million).

4. Other Net Income

OthernetincomefortheperiodamountedtoHK$122million(2010:HK$522million)mainlyincludesnetforeignexchangegainofHK$133million(2010:lossofHK$30million)whichincludedtheimpactofforwardforeignexchangecontracts.Aone-offsurplusofHK$437milliononrevaluationoftheinterestsinHactlonitsbecomingtheGroup’sassociatewasincludedintheperiodended30June2010.


5. Finance Costs


Interestchargedon:Bankloansandoverdrafts–repayablewithinfiveyears 290 185–repayableafterfiveyears 153 64Otherborrowings–repayablewithinfiveyears 7 ––repayableafterfiveyears 70 30

Total interest charge 520 279Otherfinancecosts 61 91Less:Amountcapitalised (175) (145)

406 225Fairvalue(gain)/cost:Crosscurrencyinterestrateswaps (41) 29Interestrateswaps 410 290

775 544

a. TheGroup’saverageeffectiveborrowingratefortheperiodwas2.1%p.a.(2010:2.0%p.a.).

b. Theaboveinterestchargehastakenintoaccounttheinterestpaid/receiptsinrespectofinterestrateswapsandcrosscurrencyinterestrateswaps.


6. Income Tax

Taxationchargedtotheconsolidatedincomestatementrepresents:


Current income taxHongKong–provisionfortheperiod 631 593–overprovisioninrespectofprioryears (6) (809)OutsideHongKong–provisionfortheperiod 97 140–underprovisioninrespectofprioryears – 21

722 (55)

Land appreciation tax (“LAT”) in China 175 167

Deferred taxChangeinfairvalueofinvestmentproperties 518 692Originationandreversaloftemporarydifferences 96 85

614 777

1,511 889

a. TheprovisionforHongKongprofitstaxisbasedontheprofitfortheperiodasadjustedfortaxpurposesattherateof16.5%(2010:16.5%).

b. IncometaxonprofitsassessableoutsideHongKongismainlyChinacorporateincometaxcalculatedatarateof25%andChinawithholdingincometaxatarateofupto10%.

c. UndertheProvisionalRegulationsonLAT,allgainsarisingfromtransferofrealestatepropertyinMainlandChinaaresubjecttoLATatprogressiveratesrangingfrom30%to60%ontheappreciationoflandvalue,beingtheproceedsofsalesofpropertieslessdeductibleexpendituresincludingcostoflanduserights,borrowingscostsandallpropertydevelopmentexpenditures.

d. Taxattributabletoassociatesandjointlycontrolledentitiesforthesixmonthsended30June2011ofHK$43million(2010:HK$39million)isincludedintheshareofresultsofassociatesandjointlycontrolledentities.


7. Earnings per Share

a. Basic earnings per share

ThecalculationofbasicearningspershareisbasedontheprofitattributabletoordinaryequityshareholdersfortheperiodofHK$14,302million(30/06/2010:HK$10,892millionasrestated)andtheweightedaverageof2,952millionordinarysharesinissueduringtheperiod(30/06/2010:2,829millionordinarysharesafteradjustingfortherightsissuecompletedinMarch2011),calculatedasfollows:

Weightedaveragenumberofordinaryshares

30 June 30June 2011 2010 No. of shares No. of shares Million Million

Issuedordinaryshares1January 2,754 2,754Effectofrightsissue 198 75

Weightedaveragenumberofordinaryshares 2,952 2,829

b. Diluted earnings per share

ThecalculationofdilutedearningspershareisbasedontheprofitattributabletoordinaryequityshareholdersfortheperiodofHK$14,312million(30/06/2010:HK$10,892millionasrestated)andtheweightedaverageof2,963millionordinarysharesinissueduringtheperiod(30/06/2010:2,829millionordinarysharesafteradjustingfortherightsissuecompletedinMarch2011),calculatedasfollows:

(i) Profitattributabletoordinaryequityshareholders(diluted)


Profitattributabletoordinaryequityshareholders 14,302 10,892Aftertaxeffectofeffectiveinterestontheliability componentofconvertiblebonds 10 –

14,312 10,892


(ii) Weightedaveragenumberofordinaryshares(diluted)

30 June 30June 2011 2010 No. of shares No. of shares Million Million

Weightedaveragenumberofordinaryshares at30June 2,952 2,829Effectofconversionofconvertiblebonds 11 –

2,963 2,829

8. Dividends

a. Thebelowinterimdividendswereproposedaftertheperiodenddateswhichhavenotbeenrecognisedasliabilitiesattheperiodenddates:


Interimdividendof36cents(2010:36cents) proposed after the period end date per share 1,091 991

b. Dividendsrecognisedasdistributionduringtheperiod:


2010Finaldividendpaidof64centspershare 1,939 –2009Finaldividendpaidof64centspershare – 1,763

1,939 1,763


9. Trade and Other Receivables

Includedinthisitemaretradereceivables(netofallowanceforbadanddoubtfuldebts)withanageinganalysisbasedoninvoicedateasat30June2011asfollows:

30 June 31December 2011 2010 HK$ Million HK$ Million

Tradereceivables0–30days 617 58331–60days 78 10861–90days 84 52Over90days 85 50

864 793Otherreceivables 2,656 2,725

3,520 3,518

TheGrouphasestablishedcreditpoliciesforeachofitscorebusinesses.Thegeneralcredittermsallowedrangefrom0to60days,exceptforsaleofpropertiestheproceedsfromwhicharereceivablepursuanttothetermsoftheagreements.Allthereceivablesareexpectedtobevirtuallyrecoverablewithinoneyear.

10. Trade and Other Payables

Includedinthisitemaretradepayableswithanageinganalysisasat30June2011asfollows:


Tradepayables0–30days 196 24231–60days 169 13361–90days 35 44Over90days 89 146

489 565Rentalandcustomerdeposits 1,926 1,790Constructioncostspayable 1,092 1,746Otherpayables 2,258 2,438

5,765 6,539


11. Bank Loans and Other Borrowings


Bondsandnotes(unsecured) 6,063 6,170Convertiblebonds(unsecured) 6,159 –Bankloans(secured) 19,324 18,137Bankloans(unsecured) 30,838 25,282

Total bank loans and other borrowings 62,384 49,589

Analysis of maturities of the above borrowings:Current borrowingsDuewithin1year 6,908 7,829

Non-current borrowingsDueaftermorethan1yearbutnotexceeding5years 45,705 31,537Dueaftermorethan5years 9,771 10,223

55,476 41,760

Total bank loans and other borrowings 62,384 49,589

Theconvertiblebondsaredueon7June2014andguaranteedbytheCompanyastorepayments,andareconvertibleintoordinarysharesofHK$1pershareintheCompanyataninitialconversionpriceofHK$90pershare.

12. Share Capital

30 June 31December 2011 2010 30 June 31December No. of shares No. of shares 2011 2010 Million Million HK$ Million HK$ Million

AuthorisedOrdinarysharesofHK$1each 10,000 3,600 10,000 3,600

IssuedandfullypaidOrdinarysharesofHK$1eachAt1January 2,754 2,754 2,754 2,754Rightsissue 275 – 275 –

At30June,31December 3,029 2,754 3,029 2,754


a. InMarch2011,theCompanycompleteditsRightsIssuefor275millionnewordinarysharesatHK$36.5each.

b. Byanordinaryresolutionpassedattheannualgeneralmeetingheldon7June2011,theCompany’sauthorisedordinarysharecapitalwasincreasedtoHK$10,000millionbythecreationofanadditional6,400millionordinarysharesofHK$1each,rankingparipassuwiththeexistingordinarysharesoftheCompanyinallrespects.

13. Material Related Party Transaction

TheGroupandtheCompanyhavenotbeenapartytoanymaterialrelatedpartytransactionduringtheperiodended30June2011exceptthefollowings:

a. Inrespectoftheperiodended30June2011,theGroupearnedrentalincometotallingHK$287million(2010:HK$253million)fromvarioustenantswhicharewholly-ownedby,orarenonwholly-ownedsubsidiariesof,companieswhichinturnarewholly-ownedbythefamilyinterestsof,orbyatrustthesettlorofwhichis,theChairmanoftheCompany.SuchtransactionsareconsideredtoberelatedpartytransactionsandalsoconstituteconnectedtransactionsasdefinedundertheListingRules.

b. Duringtheperiod,theGroupacquiredthe50%interestsinthefourFoshanpropertyjointventuresfromasubsidiaryoftheultimateholdingcompanyforaconsiderationofHK$3,388million.SuchtransactionsareconsideredtoberelatedpartytransactionsandalsoconstituteconnectedtransactionsasdefinedundertheListingRules.

14. Contingent Liabilities

Asat30June2011,therewerecontingentliabilitiesinrespectofguaranteesgivenbytheCompanyonbehalfofsubsidiariesrelatingtooverdrafts,shorttermloansandcreditfacilities,bondsandnotesofuptoHK$66,580million(31/12/2010:HK$50,705million).TherewerealsocontingentliabilitiesinrespectofguaranteesgivenbytheCompanyonbehalfofjointlycontrolledentitiesofHK$4,538million(31/12/2010:HK$3,600million)ofwhichHK$3,258million(31/12/2010:HK$2,607million)hadbeendrawn.TheCompanyhasnotrecognisedanydeferredincomefortheguaranteesgiveninrespectofborrowingsandotherbankingfacilitiesforsubsidiariesandjointlycontrolledentitiesastheirfairvaluecannotbereliablymeasuredandinteralia without transaction price for the guarantees.

Asattheendofthereportingdate,theDirectorsdonotconsideritisprobablethataclaimwillbemadeagainsttheCompanyunderanyoftheguarantees.


15. Commitments

TheGroup’soutstandingcommitmentsonexpendituresasat30June2011includedbelow:

30 June 2011 31December2010 Hong Mainland Hong Mainland Kong China Total Kong China Total HK$ Million HK$ Million HK$ Million HK$ Million HK$ Million HK$ Million

a. Capital expenditure (includinginvestmentproperties) Authorisedandcontractedfor 1,200 10,100 11,300 937 5,853 6,790 Authorisedbutnotcontractedfor 667 24,210 24,877 739 16,242 16,981

1,867 34,310 36,177 1,676 22,095 23,771

b. Programming and others Authorisedandcontractedfor 1,448 – 1,448 1,761 – 1,761 Authorisedbutnotcontractedfor 109 – 109 142 – 142

1,557 – 1,557 1,903 – 1,903

c. Properties under development (otherthaninvestmentproperties) Authorisedandcontractedfor 10 8,112 8,122 7 10,973 10,980 Authorisedbutnotcontractedfor – 40,428 40,428 – 37,060 37,060

10 48,540 48,550 7 48,033 48,040

d. Properties under development undertaken by jointly controlled entities and associates attributable to the Group Authorisedandcontractedfor 31 3,540 3,571 41 4,550 4,591 Authorisedbutnotcontractedfor 848 16,997 17,845 853 16,149 17,002

879 20,537 21,416 894 20,699 21,593

e. Expenditure for operating leases Withinoneyear 22 – 22 24 – 24 Afteroneyearbutwithinfiveyears 43 – 43 33 – 33 Overfiveyears 57 – 57 59 – 59

122 – 122 116 – 116


(i) CommitmentsforpropertiesunderdevelopmentbytheGroup’ssubsidiariesorthroughjointlycontrolledentitiesincludedoutstandinglandcostattributabletotheGroupofHK$8.5billion.Othercommitmentsunderthecategoriesaremainlyconstructioncostfortheforthcomingyears.

(ii) CommitmentsforcapitalexpenditureinMainlandChinaaremainlyrelatedtolandandconstructioncostforinvestmentpropertyunderdevelopmentandModernTerminal’sportexpenditurefortheDachanBayproject.

(iii) TheGroupleasesanumberofpropertiesandtelecommunicationnetworkfacilitiesunderoperatingleases.Theleasestypicallyrunforaninitialperiodoftwotofifteenyears,withanoptiontorenewtheleasewhenalltermsarerenegotiated.Leasepaymentsareusuallyincreasedannuallytoreflectmarketrentals.Noneoftheleasesincludescontingentrentals.

16. Comparative Figures

AsaresultoftheadoptionoftheamendmentstoHKAS12,Incometaxes,forthefinancialyearended31December,2010,certaincomparativefigureshavebeenadjustedtoreflectthereductionindeferredtaxliabilitiesrelatedtoinvestmentpropertiescarriedatfairvalue.FurtherdetailsofthesedevelopmentsaredisclosedinNote1.

17. Review of Unaudited Interim Financial Statements

Theunauditedinterimfinancialstatementsforthesixmonthsended30June2011havebeenreviewedwithnodisagreementbytheAuditCommitteeoftheCompany.


CODE ON CORPORATE GOVERNANCE PRACTICES

Duringthefinancialperiodunderreview,allthecodeprovisionssetoutintheCodeonCorporateGovernancePracticescontainedinAppendix14oftheRulesGoverningtheListingofSecurities(the“ListingRules”)onTheStockExchangeofHongKongLimited(the“StockExchange”)weremetbytheCompany,exceptinrespectofonecodeprovisionprovidingfortherolesofchairmanandchiefexecutiveofficertobeperformedbydifferentindividuals.ThedeviationisdeemedappropriateasitisconsideredtobemoreefficienttohaveonesinglepersontobetheChairmanoftheCompanyaswellastodischargetheexecutivefunctionsofachiefexecutiveofficer.TheBoardofDirectorsbelievesthatthebalanceofpowerandauthorityisadequatelyensuredbytheoperationsoftheBoardwhichcomprisesexperiencedandhighcalibreindividuals,asubstantialproportionthereofbeingIndependentNon-executiveDirectors.

MODEL CODE FOR DIRECTORS’ DEALING IN SECURITIES

TheCompanyhasadoptedacodeofconductregardingdirectors’securitiestransactionsontermsnolessexactingthantherequiredstandardsetoutintheModelCodeforSecuritiesTransactionsbyDirectorsofListedIssuers(the“ModelCode”)inAppendix10oftheListingRules.TheCompanyhasmadespecificenquiryofallDirectorsandalltheDirectorshavecompliedwiththerequiredstandardsetoutintheModelCodeandthecodeofconductadoptedbytheCompanyregardingdirectors’securitiestransactionsduringtheperiodunderreview.


DIRECTORS’ INTERESTS IN SHARES

At30June2011,DirectorsoftheCompanyhadthefollowingbeneficialinterests,allbeinglongpositions,inthesharecapitalsoftheCompany,WheelockandCompanyLimited(“Wheelock”)(whichistheCompany’sparentcompany)andtwosubsidiariesoftheCompany,namely,i-CABLECommunicationsLimited(“i-CABLE”)andModernTerminalsLimited(“ModernTerminals”),andthepercentageswhichtherelevantsharesrepresentedtotheissuedsharecapitalsofthefourcompaniesrespectivelyarealsosetoutbelow:

No. of Ordinary Shares (percentage of issued capital) Nature of Interest

The Company

StephenTHNg 804,445(0.0266%) PersonalInterestTYNg 220,294(0.0073%) PersonalInterest

Wheelock

PeterKCWoo 1,204,934,330(59.3023%) PersonalInterestin 8,847,510shares, CorporateInterestin 200,865,142shares andOtherInterestin 995,221,678sharesStephenTHNg 300,000(0.0148%) PersonalInterestTYNg 70,000(0.0034%) PersonalInterest

i-CABLE

StephenTHNg 1,265,005(0.0629%) PersonalInterestTYNg 17,801(0.0009%) PersonalInterest

Modern Terminals

HansMichaelJebsen 3,787(5.40%) CorporateInterest

Notes: (1) The 995,221,678 shares of Wheelock stated above as “Other Interest” against the name of Mr Peter K C Woo represented an interest comprised in certain trust properties in which Mr Woo was taken, under certain provisions in Part XV of the Securities and Futures Ordinance (the “SFO”) which are applicable to a director or chief executive of a listed company, to be interested.

(2) The shareholdings classified as “Corporate Interest” in which the Directors concerned were taken to be interested as stated above were interests of corporations at respective general meetings of which the relevant Directors were respectively either entitled to exercise (or taken under Part XV of the SFO to be able to exercise) or control the exercise of one-third or more of the voting power in general meetings of such corporations.


Exceptasdisclosedabove,asrecordedintheregisterkeptbytheCompanyundersection352oftheSFOinrespectofinformationrequiredtobenotifiedtotheCompanyandtheStockExchangebytheDirectorsand/orChiefExecutiveoftheCompanypursuanttotheSFOortotheModelCode,therewerenointerests,bothlongandshortpositions,heldasat30June2011byanyDirectorsorChiefExecutiveoftheCompanyinshares,underlyingsharesordebenturesoftheCompanyanditsassociatedcorporations(withinthemeaningofPartXVoftheSFO),norhadtherebeenanyrightstosubscribeforanyshares,underlyingsharesordebenturesoftheCompanyheldbyanyofthematanytimeduringthe financial period.

SUBSTANTIAL SHAREHOLDERS’ INTERESTS

Givenbelowarethenamesofallpartieswhichwere,directlyorindirectly,interestedin5%ormoreofthenominalvalueofanyclassofsharecapitaloftheCompanyasat30June2011,therespectiverelevantnumbersofsharesinwhichtheywere,and/orweredeemedtobe,interestedasatthatdateasrecordedintheregisterkeptbytheCompanyundersection336oftheSFO(the“Register”)andthepercentageswhichthesharesrepresentedtotheissuedsharecapitaloftheCompany:

No. of Ordinary Shares Names (percentage of issued capital)

(i) LynchpinLimited 213,267,072 (7.04%)(ii) StarAttractionLimited 213,267,072 (7.04%)(iii) WheelockPropertiesLimited 213,267,072 (7.04%)(iv) MyersInvestmentsLimited 213,267,072 (7.04%)(v) WheelockCorporateServicesLimited 213,267,072 (7.04%)(vi) WFInvestmentPartnersLimited 1,302,017,536 (42.98%)(vii) WheelockandCompanyLimited 1,515,284,608 (50.02%)(viii) HSBCTrustee(Guernsey)Limited 1,515,284,608 (50.02%)(ix) JPMorganChase&Co. 151,845,280 (5.01%)

Note: For the avoidance of doubt and double counting, it should be noted that duplication occurs in respect of the shareholdings stated against parties (i) to (viii) above to the extent that the shareholding stated against party (i) above was entirely duplicated or included in that against party (ii) above, with the same duplication of the shareholdings in respect of (ii) in (iii), (iii) in (iv), (iv) in (v), (v) in (vii), (vi) in (vii) and (vii) in (viii).

Alltheinterestsstatedaboverepresentedlongpositions.Asat30June2011,JPMorganChase&Co.hadashortpositionin2,431,555shares(0.08%)andalendingpoolof86,299,807shares(2.85%)withregardtotheissuedsharecapitaloftheCompanyaccordingtotherecordintheRegister.


CHANGES OF INFORMATION OF DIRECTORS

Givenbelowisthelatestinformationregardingannualemoluments,exclusiveofanyandallamountswhichwouldbebornebyWheelockand/oritswholly-ownedsubsidiary(ies)andcalculatedonanannualisedbasisfortheyear2011,ofallthoseDirectorsoftheCompanyforwhomtherehavebeenchangesofamountsofemolumentssincethepublicationofthelastannualreportoftheCompany(or,regardinganyDirector(s)appointedsubsequentthereto,sincethedateofappointmentasDirector(s)oftheCompany):

##Discretionary annual #Salary and various allowances bonus in cashDirectors HK$’000 HK$’000

MrPeterKCWoo 11,434 (2010: 11,069) 11,000 (2010: 10,000)

MrStephenTHNg 5,064 (2010: 4,646) 10,000 (2010: 9,000)

MsDoreenYFLee 4,334 (2010: 3,746) 6,000 (2010: 5,000)

MrTYNg 3,681 (2010: 2,909) 4,000 (2010: 3,200)

MrPaulYCTsui 2,394 (2010: 2,226) 3,375 (2010: 2,625)

# Not including the Chairman’s fee of HK$100,000 per annum to Mr Peter K C Woo and the Director’s fee of HK$60,000 per annum to each of the other Directors of the Company payable by the Company.

## Paid during the six-month period ended 30 June 2011, with the amounts of such discretionary annual bonuses fixed/decided unilaterally by the employers.

PURCHASE, SALE OR REDEMPTION OF SHARES

NeithertheCompanynoranyofitssubsidiarieshaspurchased,soldorredeemedanylistedsecuritiesoftheCompanyduringthefinancialperiodunderreview.


BOOK CLOSURE

TheRegisterofMemberswillbeclosedfromTuesday,20September2011toThursday,22September2011,bothdaysinclusive,forthepurposeofdeterminingshareholders’entitlementstotheabovementionedinterimdividend.

Inordertoqualifyfortheabovementionedinterimdividend,alltransfers,accompaniedbytherelevantsharecertificates,mustbelodgedwiththeCompany’sRegistrars,TricorTengisLimited,at26thFloor,TesburyCentre,28Queen’sRoadEast,Wanchai,HongKong,notlaterthan4:30p.m.onMonday,19September2011.

ByOrderoftheBoardWilson W S ChanCompany Secretary

HongKong,25August2011

As at the date of this interim report, the Board of Directors of the Company comprises Mr Peter K C Woo, Mr Stephen T H Ng, Mr Andrew O K Chow, Ms Doreen Y F Lee, Mr T Y Ng and Mr Paul Y C Tsui, together with six Independent Non-executive Directors, namely, Hon Paul M P Chan, Professor Edward K Y Chen, Dr Raymond K F Ch’ien, Hon Vincent K Fang, Mr Hans Michael Jebsen and Mr James E Thompson.

Notwithstanding any choice of language or means for the receipt of corporate communications (viz. annual report, interim report, etc.) previously made by Shareholder(s) and communicated to the Company, Shareholder(s) is/are given the option (which may be exercised at any time by giving reasonable prior notice to the Company) of changing his/her/their choice of printed language version(s) to English only, Chinese only or both English and Chinese for receiving future corporate communications, or changing the choice of receiving future corporate communications to using electronic means instead of in printed version (or vice versa). Such notice of change of choice should contain the full name(s) in English, address and contact telephone number of the relevant Shareholder(s), together with the relevant words regarding the request for the change of choice, and should be sent to the Company, c/o the Company’s Registrars, Tricor Tengis Limited, at 26th Floor, Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong, by post or by hand delivery, or via email to [email protected].

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