Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement. 2017 FINAL RESULTS ANNOUNCEMENT CHAIRMAN’S STATEMENT PROFIT ATTRIBUTABLE TO SHAREHOLDERS The Group’s reported profit attributable to equity shareholders for the year ended 31 December 2017 amounted to HK$30,433 million, representing an increase of HK$8,517 million or 39% over HK$21,916 million for the previous year. Reported earnings per share were HK$7.61 (2016: HK$5.48 as adjusted for the bonus issue in 2017). Excluding the fair value change (net of non-controlling interests and tax) of investment properties and investment properties under development, the Group’s underlying profit attributable to equity shareholders for the year ended 31 December 2017 was HK$19,557 million, representing an increase of HK$5,388 million or 38% over HK$14,169 million for the previous year. Underlying earnings per share were HK$4.89 (2016: HK$3.54 as adjusted for the bonus issue in 2017). DIVIDENDS  The Board recommends the payment of a final dividend of HK$1.23 per share to shareholders whose names appear on the Register of Members of the Company on Monday, 11 June 2018, and such final dividend will not be subject to any withholding tax in Hong Kong. Including the interim dividend of HK$0.48 per share already paid, the total dividend for the year ended 31 December 2017 will amount to HK$1.71 per share (2016: HK$1.55 per share). The proposed final dividend will be payable in cash and is expected to be distributed to shareholders on Thursday, 21 June 2018. ISSUE OF BONUS SHARES The Board proposes to make a bonus issue of one new share for every ten shares held (2016: one bonus share for every ten shares held) to shareholders whose names appear on the Register of Members of the Company on Monday, 11 June 2018. The relevant resolution will be proposed at the forthcoming annual general meeting, and if passed and upon the Listing Committee of The Stock Exchange of Hong Kong Limited granting the listing of and permission to deal in such new shares, share certificates for the bonus shares will be posted on Thursday, 21 June 2018. 1 BUSINESS REVIEW Driven by good property sales in Hong Kong, the Group’s underlying profit attributable to equity shareholders for the year ended 31 December 2017 surged by 38% to HK$19,557 million. Included therein, the attributable pre-tax underlying profit contribution from property sales (including the attributable contribution from subsidiaries, associates and joint ventures) increased by 44% from HK$4,115 million last year to HK$5,908 million, whilst the attributable pre-tax net rental income (including the attributable contribution from subsidiaries, associates and joint ventures) also increased by 3% to HK$6,649 million even with the disposal of certain rental properties during the year under review. Besides, there was a total attributable post-tax underlying profit contribution of HK$7,485 million arising from the disposal of various hotel properties, non-core investment properties and development sites in Hong Kong and mainland China. Hong Kong Property Sale In 2017, the U.S. Federal Reserve raised interest rates three times. However, Hong Kong’s economy remained solid and funds kept flowing in. Mortgage interest rates remained relatively low as a result. Together with the resilient housing demand from end-users, the property market in Hong Kong stayed strong. Record prices were repeatedly seen in both the land and housing markets. The Group released for sales four residential developments during the year under review, namely, “Eden Manor” adjacent to the Hong Kong Golf Club in Fanling, “NOVUM WEST” in Sai Ying Pun, “NOVUM EAST” in Quarry Bay and “PARK REACH” in Yuen Long. It also released two office developments (through industrial building revitalization measures), namely, “Mega Cube” in Kowloon Bay and “The Globe” in Cheung Sha Wan. All of them were well received by buyers. “PARK REACH” in Yuen Long, for instance, was launched in late 2017 and all its residential units sold out on the first day of its release. Unsold units of existing projects such as “39 Conduit Road” in Mid-Levels, “Double Cove” (Phases 1-5) in Ma On Shan as well as the urban redevelopment boutique residences, “The H Collection”, also sold well. A penthouse unit at “39 Conduit Road” in Mid-Levels, in terms of saleable area, was sold at an average price of over HK$100,000 per square foot, a record high for that location. For the year ended 31 December 2017, the Group sold an attributable total amount of HK$12,600 million of Hong Kong residences and offices. In addition, the Group transferred the equity interests in the companies holding two hotel properties, namely, “Newton Place Hotel” in Kwun Tong and “Newton Inn” in North Point, for the respective consideration of HK$2,248 million and HK$1,000 million. Agreement was entered into to transfer equity interests in the company holding a residential development project at Kwun Chui Road, Tuen Mun, which was planned for a total developable gross floor area of about 785,000 square feet, for a consideration of HK$6,600 million. Together with the disposal of certain shop units at “Fairview Height” in Mid-Levels, “The Zutten” in Ma Tau Kok and “PARKER33” in Shau Kei Wan, as well as some other industrial and commercial properties and carparks, attributable proceeds arising from these disposals totalled HK$11,572 million. Including the aforesaid residential and office sales revenue, the Group sold HK$24,172 million worth of Hong Kong properties in attributable terms during the year under review, a record high and an increase of 62% as compared with HK$14,893 million for the previous year. After the end of the financial year under review, equity interests in the company holding a waterfront Grade-A office tower at 18 King Wah Road, North Point, which boasts a total gross floor area of about 330,000 square feet, was transferred in January 2018 for a consideration of HK$9,950 million. 2 Property Development In May 2017, a prestigious commercial site at Murray Road, Central was acquired through public tender at a consideration of HK$23,280 million. The site has easy access to MTR stations and sprawling open views of the adjacent Chater Garden, The Court of Final Appeal and Statue Square. It will be developed into a 35-storey Grade-A office development, providing a total gross floor area of about 465,000 square feet. Designed by the renowned Zaha Hadid Architects, upon its scheduled completion in 2022 it is poised to feature as another iconic landmark in the Central Business District of Hong Kong akin to the International Financial Centre. For the two separate land lots in Fanling North and Kwu Tung New Development Areas, the amounts of land-use conversion premium were agreed with the Government in December 2017 at about HK$2,532 million and HK$1,235 million respectively. These two sites are expected to provide attributable gross floor areas of approximately 610,000 square feet and 270,000 square feet respectively, against their respective site areas of approximately 174,000 square feet and 56,000 square feet. After the end of the financial year under review, in February 2018 the Group acquired interests in two residential lots adjacent to each other in Kai Tak Development Area at the total consideration of approximately HK$15,959 million. They are planned to be developed into stylish and luxury residences with an aggregate gross floor area of over 1.0 million square feet. In addition, the number of urban redevelopment projects with 80% to 100% of their ownerships acquired increased to 51, representing about 4.2 million square feet in total attributable gross floor area. The Group has made use of multiple channels to expand its development land bank in Hong Kong. With the exception of a few projects earmarked for rental purposes, there will be abundant supply of saleable areas for the Group’s property sales in the coming years with details being as follows: 3 Below is a summary of properties under development and major completed stock: Attributable saleable/gross floor area No. of (million sq. ft.) projects (Note 1) Note (A) Area available for sale in 2018: 1. Unsold units from major (Table 1) 24 1.1 development projects offered for sale 2. Projects pending sale in (Table 2) 6 0.6 2018 Sub-total: 1.7 Of which an attributable floor area of about 840,000 sq. ft. was sourced from urban redevelopment projects (B) Projects in Urban Areas: 3. Existing urban (Table 3) 4 1.1 Dates of sales launch redevelopment projects are not yet fixed and one of them is pending finalization of land premium with the Government 4. Newly-acquired Urban (Table 4) 26 2.3 Most of them are Redevelopment Projects expected to be – with ownership fully available for sale or consolidated leasing in 2019-2020 5. Newly-acquired Urban (Table 5) 25 1.9 Most of them are Redevelopment Projects expected to be – with 80% or above available for sale in ownership secured 2020-2022 6. Newly-acquired Urban (Table 6) 31 0.8 Redevelopments of Redevelopment Projects these projects are – with over 20% but less subject to successful than 80% ownership consolidation of their secured ownerships 7. 15 Middle Road 1 0.3 To be held for rental Tsim Sha Tsui purposes upon (acquired through public completion of tender) development 8. Murray Road, Central 1 0.5 To be held for rental (acquired through public purposes upon tender) completion of development 9. Kai Tak Development Area 2 1.1 (acquired after the financial year end) Sub-total: 8.0 Total for the above categories (A) and (B) development projects: 9.7 4 (C) Major development projects in the New Territories: – Fanling North 3.5 (Note 2) – Wo Shang Wai 0.9 (Note 2) – Fanling Sheung Shui Town Lot No. 262, Fanling North 0.6 – Fanling Sheung Shui Town Lot No. 263, Kwu Tung 0.3 – Others 0.3 Sub-total: 5.6 Total for categories (A) to (C): 15.3 Note 1: Gross floor area is calculated on the basis of the Buildings Department’s approved plans or the Government’s latest town planning parameters, as well as the Company’s development plans. For certain projects, it may be subject to change depending on the actual needs in future. Note 2: Developable area is subject to finalisation of land premium. 5 (Table 1) Unsold units from the major development projects offered for sale There are 24 major development projects available for sale: At 31 December 2017 No. of Saleable Gross residential area Site floor Group’s units remaining area area Type of interest remaining unsold Project name and location (sq. ft.) (sq. ft.) development (%) unsold (sq. ft.) 1. Eden Manor 154,280 555,399 Residential 100.00 395 401,095 88 Castle Peak Road Kwu Tung 2. Double Cove – Phases 1-5 1,042,397 2,950,640 Commercial/ 59.00 116 211,263 8 Wu Kai Sha Road Residential Ma On Shan 3. NOVUM EAST 17,720 177,817 Commercial/ 100.00 409 116,757* 856 King’s Road Residential Quarry Bay 4. NOVUM WEST 28,027 272,439 Commercial/ 100.00 350 113,045* 460 Queen’s Road West Residential Sai Ying Pun 5. Wellesley 31,380 156,900 Residential 50.00 28 47,195* 23 Robinson Road (Note 1) Mid-Levels 6. High Park Grand 6,750 60,750 Commercial/ 100.00 21 23,173* 68 Boundary Street Residential Mong Kok 7. Seven Victory Avenue 9,865 83,245 Commercial/ 100.00 56 19,087* 7 Victory Avenue Residential Ho Man Tin 8. Park One 8,559 77,029 Commercial/ 100.00 41 18,295* 1,3 Nam Cheong Street and Residential 180 Tung Chau Street Cheung Sha Wan 9. Hill Paramount 95,175 358,048 Residential 100.00 4 11,742 18 Hin Tai Street Shatin 10. The Reach 371,358 1,299,744 Residential 79.03 9 10,923 11 Shap Pat Heung Road Yuen Long 11. Green Lodge 78,781 78,781 Residential 100.00 2 6,617 23 Ma Fung Ling Road Tong Yan San Tsuen 12. H‧Bonaire 7,953 65,761 Commercial/ 100.00 5 3,062* 68 Main Street Residential Ap Lei Chau 6 13. Green Code 95,800 538,723 Commercial/ 33.41 2 2,403 1 Ma Sik Road Residential Fanling 14. PARKER33 7,513 80,090 Commercial/ 100.00 4 2,269* 33 Shing On Street Residential Shau Kei Wan 15. Eltanin˙Square Mile 19,600 176,353 Commercial/ 100.00 3 1,626* 11 Li Tak Street Residential Mong Kok 16. High One Grand 7,350 62,858 Commercial/ 100.00 2 1,615* 188 Fuk Wing Street Residential Cheung Sha Wan 17. High One 7,560 63,788 Commercial/ 100.00 3 1,491* 571 Fuk Wa Street Residential Cheung Sha Wan 18. Jones Hive 6,529 65,267 Residential 79.762 4 1,332* 8 Jones Street Causeway Bay 19. Harbour Park 6,528 55,077 Commercial/ 33.41 4 1,113* 208 Tung Chau Street Residential Cheung Sha Wan 20. High Point 8,324 70,340 Commercial/ 100.00 2 1,095* 188 Tai Po Road Residential Cheung Sha Wan 21. Global Gateway Tower 28,004 336,052 Industrial 100.00 Not 88,981* 61A-61E and applicable (Note 2) 63 Wing Hong Street Cheung Sha Wan 22. The Globe 14,343 172,113 Office 100.00 Not 67,039 79 Wing Hong Street applicable (Note 2) Cheung Sha Wan 23. E-Trade Plaza 11,590 173,850 Office 100.00 Not 60,359 24 Lee Chung Street applicable (Note 2) Chai Wan 24. Mega Cube 21,528 171,194 Office 100.00 Not 52,835 8 Wang Kwong Road applicable (Note 2) Kowloon Bay Sub-total: 1,460 1,264,412 Area attributable to the Group: 1,149,295 Note 1: Representing the Group’s interest after the allocation of the relevant residential units to each of the involved developers separately on a proportional basis under the “Deed of Mutual Grant and Covenant and Management Agreement”. Note 2: Representing the office, industrial or shop area. * Urban redevelopment projects totalling approximately 420,000 square feet of remaining area attributable to the Group. 7 (Table 2) Projects pending sale in 2018 In the absence of unforeseen delays, the following 6 projects will be available for sale in 2018: Gross Residential Site floor Group’s No. of gross area area Type of interest residential floor area Project name and location (sq. ft.) (sq. ft.) development (%) units (sq. ft.) 1. South Walk‧Aura 4,060 37,550 Commercial/ 100.00 142 35,025* 12 Tin Wan Street Residential Aberdeen 2. 8-30A Ka Shin Street 19,610 176,315 Commercial/ 100.00 514 155,174* Tai Kok Tsui Residential 3. Lot No. 1752 in DD No. 122 27,864 27,864 Residential 100.00 16 27,864 Tong Yan San Tsuen Yuen Long (Note 1) 4. Yuen Long Town Lot No. 524 48,933 171,266 Residential 79.03 504 171,266 (Note 1) 5. 57-69 Ma Tau Wai Road, 23,031 207,256 Commercial/ 100.00 551 172,722* 2-20 Bailey Street and Residential 18A-30 Sung Chi Street To Kwa Wan 6. 342-354 Un Chau Street 8,013 67,847 Commercial/ 100.00 176 59,757* Cheung Sha Wan Residential Total: 1,903 621,808 Area attributable to the Group: 585,894 Note 1: Pending the issue of pre-sale consent. * Urban redevelopment projects totalling approximately 420,000 square feet of area attributable to the Group. 8 (Table 3) Existing urban redevelopment projects The Group has a total of 4 existing projects under planning for redevelopment or land-use conversion and the dates of their sales launch are not yet fixed. As outlined below, they are expected to provide about 1.1 million square feet in attributable gross floor area in the urban areas based on the Buildings Department’s approved plans or the Government’s latest town planning: Expected Expected gross attributable gross floor area upon Group’s floor area upon Site area redevelopment interest redevelopment Project name and location (sq. ft.) (sq. ft.) (%) (sq. ft.) 1. 45 Pottinger Street 9,067 135,995 19.10 25,975 Central, Hong Kong (Note 1) 2. 218 Electric Road 9,600 143,997 100.00 143,997 North Point, Hong Kong (Note 1) 3. 29A Lugard Road 23,649 11,824 100.00 11,824 The Peak, Hong Kong 4. Yau Tong Bay 810,454 3,991,981 22.80 910,172 Kowloon (Note 2) Total: 852,770 4,283,797 1,091,968 Note 1: Investment property. Note 2: The modified master layout plan was approved in February 2015 and it is pending finalisation of land premium with the Government. 9 (Table 4) Newly-acquired Urban Redevelopment Projects – Ownership Fully Consolidated There are 26 newly-acquired urban redevelopment projects with ownership fully consolidated. In the absence of unforeseen delays, most of these projects are expected to be available for sale or leasing in 2019-2020 and their expected attributable gross floor areas, based on the Buildings Department’s approved plans or the Government’s latest town planning, are as follows: Expected attributable gross floor area upon Site area redevelopment Project name and location (sq. ft.) (sq. ft.) Hong Kong 1. 1-19 Chung Ching Street and 7,858 90,048 21 Ki Ling Lane, Sheung Wan 2. 1-4 Ladder Street Terrace, Sheung Wan 2,860 14,300 3. 206-212 Johnston Road, Wanchai 4,339 65,083 (Note 1) 4. 17 Wood Road, Wanchai 2,015 17,128 (a) 5. 85-95 Shek Pai Wan Road, Aberdeen 4,950 47,025 (b) 6. 62C Robinson Road and 3,855 33,760 6 Seymour Terrace, Mid-Levels 7. 4A-4P Seymour Road, Mid-Levels 52,466 306,921 (65% stake held by the Group) 8. 73-73E Caine Road, Mid-Levels 6,781 60,659 9. 98-100 Robinson Road, Mid-Levels 5,594 23,576 (c) 10. 2 Tai Cheong Street, Sai Wan Ho 13,713 123,417 11. 65-71 Main Street, Ap Lei Chau 4,800 40,800 Sub-total: 109,231 822,717 Kowloon 12. 2A-2F Tak Shing Street, Jordan 10,614 89,229 13. 25-29 Kok Cheung Street, Tai Kok Tsui 26,953 227,411 14. 35-47 Li Tak Street, 2-16 Kok Cheung Street and 20,114 181,025 32-44 Fuk Chak Street, Tai Kok Tsui 15. 11-19 Wing Lung Street, Cheung Sha Wan 6,510 58,300 (Note 2) 16. 456-466 Sai Yeung Choi Street North and 22,966 194,397 (Note 2) 50-56 Wong Chuk Street, Sham Shui Po 17. 1-15 Berwick Street and 20,288 162,304 (d) 202-220 Nam Cheong Street, Shek Kip Mei 18. 3-8 Yiu Tung Street, Shek Kip Mei 7,313 58,504 (d) 19. 15-17A Whampoa Street, Hung Hom 4,000 36,000 (e) 20. 31-33 Whampoa Street, Hung Hom 3,000 27,000 (f) 10