Annual Report 2011 - Investors - Swire Properties

C M Y K SPAR Cover 1C 3 Mar 2012C M Y K SPAR Cover 1C with 97% White 3 Mar 2012

www.swireproperties.comThe Upper HouseHong Kong

Annual R

eport 2011

Stock Code: 1972

Annual Report

2011

We are a leading developer, owner and operator of mixed-use, principally commercial properties in Hong Kong and Mainland China, with a well-established record of creating long-term value by transforming urban areas.

Our business comprises three main areas:

Property Property Hotel Investment Trading Investment

1972

IncorporationofSwirePropertiesinHongKongasawholly-ownedsubsidiaryofSwirePacific.

Our Portfolios

1975

CommencementofworkonTaikooShing,theCompany’sfirstresidentialdevelopmentinHongKong.

1985

CommencementofplanningforPacificPlace.

1998

CompletionofFestivalWalk.

2001

CompanyenterstheMainlandChinamarketandbeginsacquiringsitesintop-tiercitiesfordevelopment.

2001MAINLAND CHINA

1998 FESTIVAL WALK

1985 PACIFIC PLACE

1975 ISLAND EAST

1975 RESIDENTIAL PORTFOLIO

1998FestivalWalkopensforbusinessinKowloonTong.

1985TheVictoriaBarrackssiteispurchasedatauction.

1988PacificPlaceopenstofirsttenants.

1975CommencementofworkforTaikooShing,theresidentialareaofIslandEast.

1983StagedopeningofCityplaza,thelargestshoppingandentertainmentcentreonHongKongIsland.

1991-1992CityplazaFouropensin1991;CityplazaThreeiscompletedthefollowingyear.

1978DevelopmentofBrickellKey,auniquemixed-usecommunity,locatedoffDowntownMiami.

1975RedevelopmentbeginsoftheformerTaikooDockyardsiteintooneofHongKong’sfirstmajorprivatehousingestates,TaikooShing.

Company Milestones

2006

TransformationoftheretailcentreinTungChungintoCitygateOutlets,HongKong’sfirstoutletshoppingmall.

2008

LaunchofSwireHotelsbrandtocreateandmanageintriguingurbanhotelsinHongKong,MainlandChinaandtheUnitedKingdom.

2011

EstablishmentofarepresentativeofficeinSingapore.

CommencementofplanningfortheBrickellCitiCentreproject,amixed-usedevelopmentlocatedinMiami,Florida,U.S.A.

2001CompanyenterstheMainlandChinamarketandanagreementissignedwithGuangzhouDailyGrouptodevelopTaiKooHui,Guangzhou,thefollowingyear.

2006Acquisitionof50%interestinHKRInternational’sDazhongliprojectinShanghai.

2007Companyacquires80%interesttodevelopSanlitunVillageinBeijing.

2008Formationofa50:50jointventurewithSino-OceanLandtodeveloptheINDIGOprojectinBeijing.

OpeningofSanlitunVillageSouthandTheOppositeHouse.

2011OpeningofTaiKooHui.

OpeningofINDIGO’sofficetower,ONEINDIGO.

2010OpeningofSanlitunVillageNorth.

SuccessfullandacquisitioninDaciTemplearea,Chengdu.

2006Remaining50%interestispurchasedandFestivalWalkbecomeswhollyownedbySwireProperties.

2011SaleofFestivalWalktoMapletree,aSingapore-baseddeveloper.

2004OpeningofThreePacificPlace.

2007BeginningoftheHK$2.0billionPacificPlaceContemporisationProject.

2009OpeningofTheUpperHouse,PacificPlace’sfirstsmallluxuryhotel.

2011CompletionofthePacificPlaceContemporisationProject.

1993-2003DevonHouseiscompletedin1993.Inthenextdecade,DorsetHouse,PCCWTower,CityplazaOne,LincolnHouseandOxfordHousefollow.

TheIslandEastMatrix,adedicatedfibre-opticnetwork,iscompletedin2001.CambridgeHouseiscompletedin2003.

2008CompletionofOneIslandEast,SwireProperties’largestofficetowerinHongKongtodate.

2010OpeningofEAST,HongKong,thefirstofanewgroupoflifestylebusinesshotelslaunchedbySwireHotels.

1989CompletionofTheAlbany,Mid-Levels.

1994CompletionofRobinsonPlace,Mid-Levels.

2003Completionofresidencesat3CoombeRoadonthePeak.

2009CompletionofIslandLodge,NorthPoint.

2010SaleslaunchofAZURA,Mid-Levelsand5StarStreet,WanChai.

2011NameunveiledforOPUSHONGKONG,thePeak,thefirstresidentialprojectinAsiadesignedbyPritzkerPrize-winningarchitectFrankGehry.

2 CompanyProfile3 Ten-YearFinancialSummary6 Chairman’sStatement11 FinancialHighlights12 KeyBusinessStrategies

MANAGEMENT DISCUSSION & ANALYSIS

16 ReviewofOperations46 FinancialReview53 Financing

CORPORATE GOVERNANCE & SUSTAINABILITY

64 CorporateGovernance72 DirectorsandOfficer74 Directors’Report82 SustainableDevelopment

ContentsAUDITOR’S REPORT AND ACCOUNTS

88 IndependentAuditor’sReport89 ConsolidatedIncomeStatement90 ConsolidatedStatementofComprehensiveIncome91 ConsolidatedStatementofFinancialPosition92 CompanyStatementofFinancialPosition93 ConsolidatedStatementofCashFlows94 ConsolidatedStatementofChangesinEquity95 NotestotheAccounts136 PrincipalAccountingPolicies145 PrincipalSubsidiary,JointlyControlledand AssociatedCompanies

SUPPLEMENTARY INFORMATION

148 ScheduleofPrincipalGroupProperties159 Glossary160 FinancialCalendarandInformationforInvestors

CompanyProfile

2 SwirePropertiesAnnualReport|2011

SwirePropertiesisaleadingdeveloper,ownerandoperatorofmixed-use,principallycommercialpropertiesinHongKongandMainlandChina,withawell-establishedrecordofcreatinglong-termvaluebytransformingurbanareas.Ourbusinesscomprisesthreemainareas:propertyinvestment,propertytradingandhotelinvestment.

FoundedinHongKongin1972,SwirePropertiesislistedonTheStockExchangeofHongKongLimitedand,withitssubsidiaries,employsmorethan4,000people.

InHongKong,wehavespentnearly40yearsdevelopingIslandEastfromanindustrialareaintooneofHongKong’sbestplannedandmostefficientbusinessdistricts.PacificPlace,builtontheformerVictoriaBarrackssite,isnowoneofHongKong’spremierretailandbusinessaddresses.

InMainlandChina,SwirePropertieshasfivemajormixed-useprojectseitherinoperationorunderdevelopmentinBeijing,Guangzhou,ChengduandShanghai.SimilarinscaleandvisiontoourdevelopmentsinHongKong,ourMainlandpropertiesarelocatedincommercialdistrictsneartransporthubs.

SwirePropertiescontinuestoexpanditsactivitiesintheluxuryresidentialmarketinHongKong.UnderourSwireHotelsbrand,wedevelopandmanageurbanhotelsinHongKong,MainlandChinaandtheUnitedKingdom.

TheCompanyhasasignificantpresenceinMiami,Florida,whereitcommencedbusinessin1980.ItisintheprocessofdevelopingBrickellCitiCentre,alarge-scalemixed-useprojectintheBrickellfinancialdistrictinMiami.TheCompanyhasalsosetuparepresentativeofficeinSingaporetoexploreinvestmentopportunitiesinthecity.

2002HK$M

2003HK$M

2004HK$M

2005HK$M

2006HK$M

2007HK$M

2008HK$M

2009HK$M

2010HK$M

2011HK$M

INCOME STATEMENTTurnover Propertyinvestment 4,693 4,366 4,060 4,382 4,872 5,663 6,901 7,516 7,953 8,651 Propertytrading 565 2,366 2,506 1,339 554 10 889 643 400 213 Hotel – – – – 27 148 156 172 518 717

5,258 6,732 6,566 5,721 5,453 5,821 7,946 8,331 8,871 9,581

Profit Attributable to the Company’s Shareholder Propertyinvestment 2,125 2,046 1,459 1,917 2,592 3,066 3,336 3,970 4,589 4,656 Propertytrading (269) 278 667 264 198 (43) 95 23 87 7 Hotels 23 9 80 104 126 175 73 (332) (109) (33) Changeinfairvalueof investmentproperties (5,157) (2,688) 15,224 12,365 17,221 19,530 (236) 13,596 21,478 20,496

(3,278) (355) 17,430 14,650 20,137 22,728 3,268 17,257 26,045 25,126Interimandfinaldividends fortheyear 1,025 1,254 1,141 2,303 1,532 1,652 2,966 25 2,426 11,067

Retainedprofit/(loss) (4,303) (1,609) 16,289 12,347 18,605 21,076 302 17,232 23,619 14,059

STATEMENT OF FINANCIAL POSITIONNet Assets Employed Propertyinvestment 55,502 52,731 71,247 85,965 105,658 133,454 140,510 155,411 183,092 191,273 Propertytrading 4,855 3,593 1,555 701 1,448 2,762 3,496 3,772 6,303 6,581 Hotel 631 644 717 1,037 1,429 3,624 4,037 5,523 5,797 6,421

60,988 56,968 73,519 87,703 108,535 139,840 148,043 164,706 195,192 204,275

Financed by Equityattributabletothe Company’sshareholder 41,815 40,237 56,533 70,027 88,229 109,605 110,305 129,815 157,877 176,043 Non-controllinginterests 4,682 4,927 6,193 6,185 296 801 1,068 424 479 532 Netdebt 14,491 11,804 10,793 11,491 20,010 29,434 36,670 34,467 36,836 27,700

60,988 56,968 73,519 87,703 108,535 139,840 148,043 164,706 195,192 204,275

HK$ HK$ HK$ HK$ HK$ HK$ HK$ HK$ HK$ HK$

Earnings/(loss)pershare (0.60) (0.06) 3.17 2.67 3.67 4.14 0.60 3.14 4.58 4.40Dividendspershare 0.19 0.23 0.21 0.42 0.28 0.30 0.54 – 0.43 1.94Equityattributabletoshareholder pershare 7.61 7.33 10.29 12.75 16.06 19.96 20.08 23.61 27.75 30.09

RATIOSReturnonaverageequityattributable totheCompany’sshareholder -7.5% -0.9% 36.0% 23.2% 25.4% 23.0% 3.0% 14.4% 18.1% 15.0%Gearingratio 31.17% 26.14% 17.21% 15.08% 22.60% 26.66% 32.93% 26.46% 23.26% 15.69%Interestcover–times (2.80) 2.13 20.02 23.11 32.16 33.71 4.81 17.57 21.80 18.24Dividendcover–times (3.20) (0.28) 15.28 6.36 13.14 13.76 1.10 N/A 10.74 2.27

UNDERLYINGProfit(HK$M) 2,334 2,819 2,617 2,577 3,070 3,303 3,558 3,726 4,782 12,932EquityattributabletotheCompany’s shareholder(HK$M) 43,318 41,694 58,064 71,573 90,032 111,640 113,664 133,410 161,651 180,749Returnonaverageequityattributable totheCompany’sshareholder 5.18% 6.63% 5.25% 3.98% 3.80% 3.28% 3.16% 3.02% 3.24% 7.55%Earningspershare(HK$) 0.42 0.51 0.48 0.47 0.56 0.60 0.65 0.68 0.84 2.27Equityattributabletoshareholder pershare(HK$) 7.89 7.59 10.57 13.03 16.39 20.33 20.70 24.26 28.41 30.90Gearingratio 30.16% 25.30% 16.78% 14.78% 22.15% 26.18% 31.94% 25.75% 22.71% 15.28%Interestcover–times 6.42 7.21 4.25 5.58 6.09 5.95 4.50 4.33 5.38 12.02Dividendcover–times 2.28 2.25 2.29 1.12 2.00 2.00 1.20 N/A 1.97 1.17

Notes:1.TheinformationforallyearsisshowninaccordancewiththeGroup’scurrentaccountingpoliciesanddisclosurepractices.Consequentlyfiguresforyearspriorto

2010maybedifferentfromthoseoriginallypresented.2.TheequityattributabletotheCompany’sshareholderandthereturnsbysegmentfor2011and2010areshownintheFinancialReview–InvestmentAppraisaland

PerformanceReviewonpage52.3.Underlyingprofitandequityarediscussedonpages16to18.4.Theearningspershare,dividendspershareandequitypersharefortheyearspriorto2010havebeenrecalculatedbasedontheweightedaveragenumberof

ordinaryshareswhichreflecttheCompany’ssharesinissueforthoseyearsadjustedforthe1,108,132,451sharesissuedon25thJanuary2010asconsiderationtoacquireSwirePropertiesUSInc.andSwirePropertiesOneLLC,andthebonuselementinrespectofthe3,969,615,000sharesissuedatpar,whichwasbelowmarketvalue,issuedon31stDecember2009.

5.RefertoGlossaryonpage159fordefinitionsandratios.

Ten-YearFinancialSummary


Ten-YearFinancialSummary

Property investment

Property trading

Hotel

Turnover

02 03 04 05 06 07 08 09 10 11

10,000

HK$M

8,000

6,000

4,000

2,000

0

Property investment

Property trading

Hotel

Net Assets Employed

02 03 04 05 06 07 08 09 10 11

250,000

200,000

150,000

100,000

50,000

0

HK$M

Earnings/(loss) per share

Dividends per share

Underlying earnings per share

Earnings and Dividends Per Share

02 03 04 05 06 07 08 09 10 11

4

5

3

2

1

0

-1

HK$

SwirePropertiesAnnualReport|2011 5

Propertyinvestment

Propertytrading

Total attributablepro�t

Hotels

Change in fair value of investment properties

Total underlying pro�t

Pro�t Attributable to the Company’s Shareholder

02 03 04 05 06 07 08 09 10 11

30,000

25,000

20,000

15,000

10,000

5,000

0

-10,000

-5,000

0

HK$M

Total equity

Net debt

Underlying total equity

Total Equity and Net Debt

02 03 04 05 06 07 08 09 10 11

250,000

200,000

150,000

100,000

50,000

0

HK$M

Group

Group – underlying

Returns on Average Equity

02 03 04 05 06 07 08 09 10 11

40

30

20

10

0

-10

%


Chairman’sStatement

TheconsolidatedprofitattributabletotheCompany’sshareholderfor2011wasHK$25,126million,comparedtoHK$26,045millionin2010.UnderlyingprofitattributabletotheCompany’sshareholder,whichprincipallyadjustsforchangesinthevaluationofinvestmentproperties,increasedbyHK$8,150millionfromHK$4,782millionin2010toHK$12,932millionin2011.The2011underlyingprofitincludedaprofitofHK$8,615millionondisposaloftheinvestmentpropertyknownasFestivalWalk.

DividendsTheCompanyintendstopaydividendswhichwillaverageapproximately50%oftheunderlyingprofitattributabletoShareholdersovertheeconomiccycle.Wewillreevaluateourdividendpolicyinthelightofourfinancialpositionandtheprevailingeconomicclimate.

SpecialinterimdividendsofHK$10,014millionwerepaidin2011totheCompany’sthensoleshareholder,SwirePacificLimited.TheDirectorshaveapprovedaninterimdividend(inlieuofafinaldividend)ofHK¢18persharefor2011on15thMarch2012,payableon3rdMay2012toshareholdersregisteredatthecloseofbusinessontherecorddate,beingThursday,5thApril2012.SharesoftheCompanywillbetradedex-dividendasfromMonday,2ndApril2012.

TheregisterofmemberswillbeclosedonThursday,5thApril2012,duringwhichdaynotransferofshareswillbeeffected.Inordertoqualifyforentitlementtotheinterimdividend,alltransferformsaccompaniedbytherelevantsharecertificatesmustbelodgedwiththeCompany’sshareregistrars,ComputershareHongKongInvestorServicesLimited,17thFloor,HopewellCentre,183Queen’sRoadEast,HongKong,forregistrationnotlaterthan4:30p.m.onTuesday,3rdApril2012.


ListingonTheStockExchangeofHongKongLimitedInOctober2011,aproposalwassubmittedtoTheStockExchangeofHongKongLimitedforthespin-offandseparatelistingofsharesintheCompanybywayofintroduction.ThelistingoftheCompany’sshares,whichtookeffectinJanuary2012,wasachievedbyadistributioninspeciebySwirePacificLimitedofapproximately18%oftheCompany.

ThestockexchangelistingwillenabletheCompanytoraisecapitalfromtheequitymarketinthefutureshouldtheneedariseandthusbetterpositiontheCompanyforfurthergrowth.

KeyDevelopmentsInApril2011,theGroupacquiredtwoparcelsoflandadjoiningtheexistingBrickellCitiCentresiteinMiami,U.S.A.,forHK$215million.DevelopmententitlementshavebeenapprovedbytheCityofMiamiforaspecialareaplan,whichallowsforamixed-usedevelopmentofapproximately2.9millionsquarefeet(excludingcarparkandcirculationareas),comprisingretail,office,hotelandservicedapartments,andresidentialcomponentsovertwophasesofdevelopment.

AlsoinApril2011,theGroupcompletedtheacquisitionofapropertyat23TongChongStreet(neartotheexistingTaiKooPlaceproperties),whichwillberedevelopedintoservicedapartments.

InAugust2011,theGroupsolditsentireinterestinthepropertyinHongKongknownasFestivalWalkforHK$18.8billion.AnetgainofHK$595milliononthissalewasincludedintheattributableprofitfor2011.Theunderlyingprofitonthesale,whichiscalculatedbyreferencetotheoriginalcostoftheproperty,wasHK$8,615million.

InSeptember2011,theretailspaceatTaiKooHui,a3.8millionsquarefootmixed-usedevelopmentintheTianheDistrictofGuangzhou,opened.HandoveroftheofficespacetotenantscommencedinAugust2011.Thehotelandservicedapartmentsarescheduledtoopeninthesecondhalfof2012.TheGrouphasa97%economicinterestinthisdevelopment.

InOctober2011,thecontemporisationprojectforTheMallatPacificPlacewassubstantiallycompleted.Theprojectbeganin2007andincludestheadditionofafourthhotel(TheUpperHouse),newluxuryrestaurants,newinteriordecoration,designershopfacadesandageneralreconfigurationofthemall.

InDecember2011,theofficetoweroftheINDIGOdevelopment,aretail-led,mixed-useprojectinJiangTaiintheChaoyangDistrictofBeijing,opened.TheretailcomponentstartedtoopeninMarch2012.TheGrouphasa50%economicinterestinthisdevelopment,whichhasatotalareaof1.9millionsquarefeet.

AlsoinDecember2011,followingatender,theGroupacquiredtwoadjacentresidentialsitesinCheungShaonLantauIslandinHongKong.Thesiteswillbedevelopedintoluxuryresidentialpropertiesforsale.



InJanuary2012,theGroupsecuredplanningapprovaltoexpandThreePacificPlaceinHongKongbyredevelopingtwonearbybuildings.Theexpansionwillprovideanadditionalfloorareaofabout100,000squarefeet.ItissubjecttoobtainingleasemodificationandotherGovernmentapprovals.

TheCompanyissettinguparepresentativeofficeinSingaporeinordertoexploreinvestmentopportunitiesinSouthEastAsia.

OperatingPerformanceAdjustedunderlyingprofitincreasedin2011fromHK$3,833milliontoHK$4,372million.Adjustedunderlyingprofitexcludesprofitsfromthedisposalofinvestmentpropertiesandnetimpairmentlossesfromourhotelsandtradingproperties.TheincreaseprincipallyreflectspositiverentalreversionsandstrongerturnoverrentsinHongKong,improvedrentalperformanceatSanlitunVillage,andtheopeningoftheTaiKooHuidevelopment,resultinginanincreaseof9%ingrossrentalincome.TheoperatingperformanceoftheownedandmanagedhotelsinHongKongwasmuchimproved.ThepositiveeffectofthesefavourablefactorswasoffsetinpartbythelossofrentalincomefollowingthedisposalofFestivalWalkandamovefromprofitstolossesfromthepropertytradingportfolioasaresultoflowertradingvolumeandsalesandmarketingcostsincurredinconnectionwiththeresidentialdevelopmentsinHongKong.

GrossrentalincomewasHK$8,557millionin2011comparedtoHK$7,875millionin2010.PositiverentalreversionswererecordedintheHongKongofficeportfolio,reflectingstrongdemandinthefirsthalfoftheyear.Rentalreversionsremainedpositiveinthesecondhalfoftheyear,notwithstandingaslowdowninleasingactivity.RetailsalesandthedemandforretailspaceinHongKongcontinuedtoberobustthroughout2011.

InMainlandChina,netrentalcontributionsfromSanlitunVillage,particularlyVillageSouth,improvedsignificantlyfrom2010,asaresultofactivemanagementofthetenantportfolio,costreductioninitiativesandcapitalexpendituresdesignedtoenhancefootfallandcirculation.RentalcontributionsfromVillageNorthalsoincreasedduetohigheroccupancyandcostreductioninitiatives.TheTaiKooHuidevelopment,whichwascompletedduring2011,begantocontributerentalincomeinthefourthquarterof2011.

Wemadeanoperatinglossonpropertytrading.Thisreflectedfewersales(derivedfromtheremainingresidentialunitsatIslandLodgeinHongKongandASIAinMiami)andsalesandmarketingcostsincurredinconnectionwithresidentialdevelopmentsinHongKong.Sixtyofthe126unitsatAZURAwerepre-soldin2011,bringingthetotalnumberofpre-soldunitsto98at31stDecember2011.

TheoperatinglossinthehotelportfolioreflectsimpairmentchargesatourU.K.hotelsandpre-openingexpensesatthehotelinTaiKooHui,partiallyoffsetbyimprovedperformancesfromthetwoHongKonghotels,TheUpperHouseandEAST,HongKong,andTheOppositeHouseinBeijing,asthesehotelscontinuedtobenefitfrombuoyanteconomicconditions.Thenon-managedhotelsalsoperformedstrongly.


AdministrativeexpenseswereHK$118millionabovethoseof2010duetohigherexpensesassociatedwiththelistingofthesharesoftheCompanyonTheStockExchangeofHongKongLimited.

NetfinancechargeswereHK$1,477million,a19%increasefromHK$1,237millionin2010.Theincreasereflectedanincreaseinthefairvalueofaputoptionheldbytheownerofthenon-controllinginterestatSanlitunVillage,higherfinancechargesinMainlandChina(duetohigherdebtlevelsandareduction,followingthecompletionofprojects,intheamountofinterestcapitalised)partiallyoffsetbyloweraveragedebtlevelsinHongKongfollowingthedisposalofFestivalWalk.

Onanattributablebasis,thenetinvestmentpropertyvaluationgain,beforedeferredtaxrelatingtoinvestmentpropertiesinMainlandChinain2011,wasHK$21,066million,comparedtoanetgainin2010ofHK$22,373million.

FinanceNetdebtat31stDecember2011wasHK$27,700million,comparedwithHK$36,836millionat31stDecember2010.Thedecreaseprincipallyreflectstherepaymentofinter-groupfundingfromSwirePacificoutoftheproceedsfromthedisposalofFestivalWalkandcashfromoperations,partiallyoffsetbyhigherdebtlevelsinMainlandChina.Gearingdecreasedby7.6percentagepointsfrom23.3%to15.7%.CashandundrawncommittedfacilitiestotalledHK$9,183millionasat31stDecember2011,comparedwithHK$7,435millionat31stDecember2010.Uponmaturityoftheinter-groupfundingprovidedbySwirePacific,SwirePropertieswillobtainnewfunding(asnecessary)onastand-alonebasiswithoutrecoursetoSwirePacific.

SustainableDevelopmentTheCompanyrecognisestheimportanceofactingresponsiblytowardsitsstakeholders,includingemployeesandthecommunitiesinwhichweareinvolvedandtowardsthenaturalenvironmentinwhichweoperate.InSeptember2011,weestablishedaJointResearchCentreforBuildingEnergyEfficiencyandSustainabilitywiththeBuildingEnergyResearchCentreofTsinghuaUniversity,offeringUS$1millionperyearinfundingforaninitialthreeyears.

FurtherinformationabouttheCompany’sactivitiesinthisareaisonpages82to85.

ProspectsDemandforourofficespaceinHongKongislikelytobeaffectedbyuncertainmarketconditions.Lowvacancyratesandthefactthatsupplyofnewofficespacewillbemodestshouldmitigatetheeffectonrentalincome.Theavailableofficespacewillincreasein2012withthecompletionofthe145,390squarefootbuildingat28HennessyRoadandthe81,346squarefootbuildingat8Queen’sRoadEast,expectedtotakeplaceinthesecondhalfoftheyear.Weplantostartredevelopingoneofourtechno-centres,SomersetHouse,in2013uponobtainingvacantpossession,withaviewtotakingadvantageofthedemandforhighspecificationofficebuildingsinthatarea.



ConsumerdemandandaccordinglycompetitionforretailspaceareexpectedtoremainstronginHongKongin2012.Activemonitoringofthepreferencesofconsumersandmanagementofthemixoftenantsshouldencouragehigherretailsalesinourmalls.

RetailconditionsinMainlandChinaareexpectedtoremainstrongin2012astheeconomycontinuestorebalanceandgrow.ResultsfromSanlitunVillageareexpectedtocontinuetoimprovein2012,reflectingpastandplannedinvestmentsaimedatenhancingfootfallandcirculation.TaiKooHuiandINDIGOareexpectedtocontributetohigherrentalincomein2012,withTaiKooHuiinitsfirstfullyearofoperationsandtheretailcomponentatINDIGOstartingtoopeninMarch2012.

Propertytradingisexpectedtocontributesignificantprofitsin2012,withthecompletionofandsaleofunitsintheAZURAdevelopmentinHongKong.PricesofluxuryresidentialpropertiesinHongKongareexpectedtobesteady,underpinnedbylowinterestratesandlimitedsupply.

ThehotelsinHongKongandMainlandChinaareexpectedtocontinuetoperformwellin2012,benefittingfromincreasedbusinessandleisuretravelastheeconomiesofMainlandChinaandtherestofAsiacontinuetogrow.The263-roomhotel(operatedbyMandarinOriental)attheTaiKooHuidevelopmentisscheduledtoopeninthesecondhalfof2012.EAST,Beijing,whichispartoftheINDIGOdevelopment,isalsoscheduledtoopeninthelatterpartof2012.

2012marksthe40thanniversaryofourincorporation.TheCompanyisproudofitspastachievementsandwewillusethesestrongfoundationstodevelopourbusinessfurther.Despiteuncertaintiesintheglobaleconomy,thefundamentalsoftheHongKongandMainlandChinaeconomiesareexpectedtoremainstrong.Wearewellplacedtobenefitfromthis.

OnbehalfoftheshareholdersandfellowDirectors,Iwishtoexpressourappreciationtoallouremployees,whosecommitmentandhardworkhavebeencentraltoourcontinuingsuccess.

ChristopherPratt|Chairman

Hong Kong, 15th March 2012

4,782

20102011

949107

3,835

(109)

4,343

8,560

100

12,932

(71)

Underlying pro�t by segments

Property investment

Property trading

Capital pro�ts less impairments

Hotels

14,000

HK$M

12,000

8,000

6,000

10,000

4,000

2,000

0

-2,000

FinancialHighlights

Note2011

HK$M 2010

HK$MChange

%

Turnover 9,581 8,871 +8.0

Operatingprofit 26,945 26,969 -0.1

ProfitattributabletotheCompany’sshareholder 25,126 26,045 -3.5

Cashgeneratedfromoperations 7,396 4,753 +55.6

Netcashinflow/(outflow)beforefinancing 17,418 (2,361) N/A

Totalequity(includingnon-controllinginterests) 176,575 158,356 +11.5

Netdebt 27,700 36,836 -24.8

HK$ HK$

Earningspershare (a) 4.40 4.58 -3.9

Dividendspershare

Specialinterim 1.76 – N/A

Firstinterim 0.18 – N/A

Final – 0.43 N/A

EquityattributabletotheCompany’sshareholderpershare 30.09 27.75 +8.4

Underlying Profit and Equity

HK$M HK$M

UnderlyingprofitattributabletotheCompany’sshareholder (b) 12,932 4,782 +170.4

HK$ HK$

Underlyingearningspershare (a) 2.27 0.84 +170.2

UnderlyingequityattributabletotheCompany’s shareholderpershare (b) 30.90 28.41 +8.8

Notes:

(a)Refertonote15intheaccountsfortheweightedaveragenumberofshares.

(b)AreconciliationbetweenthereportedandunderlyingprofitandequityattributabletotheCompany’sshareholderisprovidedonpages16to17.


KeyBusinessStrategies

Asaleadingdeveloper,ownerandoperatorofmixed-usecommercialpropertiesinHongKongandMainlandChina,ourstrategicobjectiveissustainablegrowthinshareholdervalueinthelongterm.Toachievethisobjective,weemployfivestrategies:

1. Continuetocreatelong-termvaluebyconceiving,designing,developing,owningandmanagingtransformationalmixed-useandotherprojectsinurbanareas

Wewillcontinuetodesignprojectswhichwebelievewillhavethenecessaryscale,mixofusesandtransportlinkstobecomekeycommercialdestinationsandtotransformtheareasinwhichtheyaresituated.

2. Maximisetheearningsandvalueofourcompletedpropertiesthroughactiveassetmanagement,includingreinforcingourassetsthroughenhancement,redevelopmentandnewadditions

Weintendtomanageourcompletedpropertiesactively(includingbyoptimisingthemixofretailtenantsandearlyrenewalnegotiationswithofficetenants)andwithaviewtothelongterm,tomaintainconsistentlyhighlevelsofserviceandtoenhanceandreinforceourassets.Bydoingso,webelievethatwewillmaximisetheoccupancyandearningspotentialofourproperties.

Tenantsincreasinglyscrutinisethesustainabledevelopmentcredentialsoflandlordsandbuildings.Weaimtobeattheforefrontofsustainabledevelopmentbydesigningenergyefficientbuildingsthroughtheinnovativeuseofdesign,materialsandnewtechnology.


3. Continuetoexpandourluxuryresidentialpropertyactivities

Weintendtobroadenourbusinessbyexpandingourluxuryresidentialpropertyactivities.Wewilllooktoacquireappropriatesitesforthedevelopmentofluxuryresidentialprojectsforbothtradingandinvestmentineachofthekeymarketsinwhichweoperate.

4. RemainfocusedprincipallyonHongKongandMainlandChina

InHongKong,wewillcontinuetofocusonreinforcingourexistinginvestmentpropertyassetsandseekingnewsitessuitablefortransformationaldevelopmentsandforresidentialprojects.

WeaimtoreplicateinMainlandChinathesuccesswhichwehaveexperiencedinHongKong.WeintendtotakeameasuredapproachtolandpurchasesinMainlandChina,however,andwillfocusondevelopmentswherewecansecuresitesthroughearlyengagementwithlocalgovernmentswhorecogniseourstrengthsindevelopinglarge-scalemixed-useprojects.

WewillseekresidentialdevelopmentopportunitiesinMainlandChina.Thesearelikelytobeancillarytoourmixed-usedevelopments;however,intherightlocationsandcitieswemayalsoconsiderstandaloneresidentialdevelopmentopportunities.Ourresidentialdevelopmentswillbeaimedatbuyersofluxuryproperties,wherewebelievewehaveacompetitiveadvantage.

WhilewewillcontinuetoconcentrateonHongKongandMainlandChina,weintendtoexpandselectively.WeareworkingtodeveloptheBrickellCitiCentreprojectinMiami,Florida,U.S.A.andwearealsoexploringopportunitiesinSingapore.

5. Manageourcapitalbaseconservatively

Weintendtomaintainastrongbalancesheetwithaviewtoinvestinginandfinancingourprojectsinadisciplinedandtargetedmanner.

Weaimtomaintainexposuretoarangeofdebtmaturitiesandarangeofdebttypesandlenders.Ourcurrentdebtprofilereflectsamixofrevolvingandtermbankloans,mediumtermnotesandperpetualsecurities.

ManagementDiscussion&Analysis

TaiKooHuiGuangzhou


2011HK$M

2010HK$M

Turnover

Gross Rental Income derived from

Offices 4,537 4,222

Retail 3,710 3,357

Residential 310 296

Other Revenue (1) 94 78

Property Investment 8,651 7,953

Property Trading 213 400

Hotels 717 518

Total Turnover 9,581 8,871

Operating Profit/(Loss) derived from

Propertyinvestment 6,743 6,561

Valuationgainsoninvestmentproperties 20,345 20,480

Propertytrading (50) 72

Hotels (93) (144)

Total Operating Profit 26,945 26,969

Share of Post-tax Profits from Jointly Controlled and Associated Companies 1,007 1,686

Attributable Profit 25,126 26,045

(1)Otherrevenueismainlyestatemanagementfees.

AdditionalinformationisprovidedonthenextpagetoreconcilereportedandunderlyingprofitandequityattributabletotheCompany’sshareholder.ThesereconcilingitemsprincipallyreversetheimpactofHKAS40oninvestmentproperties,andtheamendedHKAS12ondeferredtax.Thereisafurtheradjustmenttoremovetheeffectofthemovementinthefairvalueoftheliabilityinrespectofaputoptioninfavouroftheownerofanon-controllinginterestinSanlitunVillage.Adjustedunderlyingprofitexcludesprofitsfromthedisposalofinvestmentpropertiesandnetimpairmentlossesfromourhotelsandtradingproperties.

ReviewofOperations


Note2011

HK$M2010

HK$M

Underlying Profit

ProfitattributabletotheCompany’sshareholderperaccounts 25,126 26,045

Adjustmentsreinvestmentproperties:

Revaluationofinvestmentproperties (a) (21,066) (22,373)

Deferredtaxonrevaluationmovements (b) 526 853

RealisedprofitonsaleofFestivalWalk/otherinvestmentproperties (c) 8,020 211

DepreciationofinvestmentpropertiesoccupiedbytheGroup (d) 22 16

Non-controllinginterests’shareofrevaluationmovementslessdeferredtax 45 42

Movementinthefairvalueoftheliabilityinrespectofaputoptioninfavour oftheownerofanon-controllinginterestinSanlitunVillage (e) 259 (12)

Underlying Profit Attributable to the Company’s Shareholder 12,932 4,782

Othersignificantitems:

GainsonremeasurementandprofitonsaleofshareholdingsinPCCWTower – (342)

ProfitonsaleofFestivalWalk/otherinvestmentproperties (8,615) (576)

Netimpairmentloss/(reversal) 55 (31)

Adjusted Underlying Profit 4,372 3,833

Underlying Equity

EquityattributabletotheCompany’sshareholderperaccounts 176,043 157,877

Deferredtaxonrevaluationofinvestmentproperties 3,285 2,766

Unrecognisedvaluationgainsonhotelsheldaspartofmixed-usedevelopments (f) 912 535

RevaluationofinvestmentpropertiesoccupiedbytheGroup 476 440

CumulativedepreciationofinvestmentpropertiesoccupiedbytheGroup 33 33

Underlying Equity Attributable to the Company’s Shareholder 180,749 161,651

Underlyingnon-controllinginterests 576 517

Underlying Equity 181,325 162,168

Notes:

(a)ThisrepresentsthenetrevaluationmovementsasshownintheconsolidatedincomestatementplustheGroup’sshareofnetrevaluationmovementsofjointlycontrolledandassociatedcompanies.

(b)ThisrepresentsdeferredtaxontheGroup’snetrevaluationmovementsplustheGroup’sshareofdeferredtaxonthenetrevaluationmovementsofjointlycontrolledandassociatedcompanies.AsaresultoftheamendedHKAS12,deferredtaxisnolongerprovidedonnetrevaluationmovementsinrespectofinvestmentpropertiesinHongKong.However,deferredtaxcontinuestobeprovidedonnetrevaluationmovementsinrespectofinvestmentpropertiesinMainlandChinaatthecorporateincometaxrateof25%.

(c)PriortotheimplementationofHKAS40,changesinthefairvalueofinvestmentpropertieswererecordedintherevaluationreserveratherthantheconsolidatedincomestatement.Onsale,therevaluationgainsweretransferredfromtherevaluationreservetotheconsolidatedincomestatement.

(d)PriortotheimplementationofHKAS40,nodepreciationwaschargedoninvestmentpropertiesoccupiedbytheGroup.

(e)Thevalueoftheputoptioninfavouroftheownerofanon-controllinginterestinSanlitunVillageiscalculatedprincipallybyreferencetotheestimatedfairvalueoftheportionsoftheSanlitunVillageinvestmentpropertyinwhichtheminoritypartnerisinterested.

(f) UnderHKAS40,hotelpropertiesarestatedintheaccountsatcostlessaccumulateddepreciationandanyprovisionforimpairmentlosses,ratherthanatfairvalue.IfHKAS40didnotapply,thosewholly-ownedorjointlycontrolledhotelpropertiesheldforthelongtermaspartofmixed-usepropertydevelopmentswouldbeaccountedforasinvestmentproperties.Accordingly,anyincreaseorwrite-downintheirvaluewouldberecordedintherevaluationreserveratherthantheconsolidatedincomestatement.

Completed

Under development

Valuation of Investment Properties

02 03 04 05 06 07 08 09 10 11

200,000

160,000

120,000

80,000

40,000

0

HK$M

ManagementDiscussion&Analysis|ReviewofOperations


UnderlyingProfit

Underlyingprofitin2011increasedbyHK$8,150million,fromHK$4,782milliontoHK$12,932million.Thisprincipallyreflectedanincreaseincapitalprofitslessimpairments(capitalprofitsarisingfromthedisposalofFestivalWalk,lessimpairmentchargesatourU.K.hotelsin2011,beinghigherthancapitalprofitsarisingfromthedisposalofPeelRiseandthechangesintheownershipofPCCWTowerin2010).RecurringprofitsfrompropertyinvestmentincreasedbyHK$672million,duetohigherrentalincomeinHongKong,animprovementinperformanceatSanlitunVillageinMainlandChinaandafirsttimecontributionfromtheTaiKooHuidevelopmentinMainlandChina,partlyoffsetbylossof

rentalincomefromFestivalWalkfollowingitsdisposal.Thehotelportfoliomovedfromalossin2010toaprofitin2011,duetosignificantimprovementsintheresultsofthemanagedhotelsandgoodgrowthintheprofitsofthenon-managedhotels.Thetradingportfoliomovedfromaprofitin2010toalossin2011(excludingimpairmentadjustments),duetofewersalesandtheinitialrecordingofsalesandmarketingexpensesassociatedwiththeAZURAandARGENTAluxuryresidentialdevelopments.Theincreaseinnon-recurringexpensesprincipallyreflectsthehigherfeesincurredin2011inconnectionwiththelistingofthesharesoftheCompanyonTheStockExchangeofHongKongLimited.

Increase in capital pro�ts less impairment adjustments

Increase in recurring pro�t from property investment

Decrease in pro�t from trading properties

Increase in pro�t from hotels

Non-recurring items

Underlying pro�t 2011

Movement in Underlying Pro�t

2010 2011

HK$M

14,000

12,000

10,000

6,000

8,000

4,000

4,782

+7,611

+672 -188 +209 -154 12,932

Underlying pro�t 2010

Hong Kong of�ce

Hong Kong retail

Hong Kong residential

Mainland China

U.S.A.

Gross Rental Income

02 03 04 05 06 07 08 09 10 11

10,000

8,000

6,000

4,000

2,000

0

HK$M

Property investment

Property trading

Hotels

Sale of investment properties

UnderlyingOperating Pro�t

02 03 04 05 06 07 08 09 10 11

16,000

12,000

14,000

8,000

10,000

4,000

2,000

6,000

0

-2,000

HK$M

Hong Kong

Mainland China

U.S.A. and U.K.

Attributable CompletedInvestment Property Portfolio by Location

11 12 13 14 15 16 17 18

30,000

24,000

18,000

12,000

6,000

0

GFA (000 sq.ft.)


Retail

Of�ce

Hotels/Residential/Serviced Apartments

Attributable Completed Investment Property Portfolio by Type

11 12 13 14 15 16 17 18

30,000

24,000

18,000

12,000

6,000

0

GFA (000 sq.ft.)



PortfolioOverviewTheaggregategrossfloorarea(“GFA”)attributabletotheGroupasat31stDecember2011wasapproximately29.1millionsquarefeet.

OutoftheaggregateGFAattributabletotheGroup,approximately25.1millionsquarefeetareinvestmentproperties,comprisingcompletedinvestmentpropertiesofapproximately19.4millionsquarefeetandinvestmentpropertiesunderdevelopmentorheldforfuturedevelopmentofapproximately5.7millionsquarefeet.InHongKong,thisinvestmentpropertyportfoliocomprisesapproximately

14.4millionsquarefeetattributabletotheGroupofprimarilyGradeAofficeandretailpremises,hotels,servicedapartmentsandotherluxuryresidentialaccommodation.InMainlandChina,SwirePropertieshasinterestsinfivemajorcommercialmixed-usedevelopmentsinprimelocationsinBeijing,Shanghai,GuangzhouandChengdu.Thesedevelopmentsareexpectedtocompriseapproximately8.4millionsquarefeetofattributableGFAoncompletion.OutsideHongKongandMainlandChina,theinvestmentpropertyportfoliocomprisestheBrickellCitiCentreprojectinMiamiandinterestsinhotelsintheU.S.A.andtheU.K.

ThetablesbelowillustratetheGFAattributabletotheGroupoftheinvestmentportfolioasat31stDecember2011.

Completed Investment Properties(GFA attributable to the Group in million square feet)

Office Retail Hotels (1)

Residential/Serviced

Apartments Total

HongKong 10.5 2.4 0.7 0.6 14.2

MainlandChina 2.0 2.5 0.2 – 4.7

U.S.A.andU.K. – – 0.5 – 0.5

Total 12.5 4.9 1.4 0.6 19.4


Investment Properties under Development or Held for Future Development(expected GFA attributable to the Group in million square feet)



Apartments Total

HongKong 0.1 – – 0.1 0.2

MainlandChina 0.9 1.6 1.1 0.1 3.7

U.S.A. 1.0 0.5 0.2 0.1 1.8

Total 2.0 2.1 1.3 0.3 5.7

Total Investment Properties (GFA (or expected GFA) attributable to the Group in million square feet)



Apartments Total

Total 14.5 7.0 2.7 0.9 25.1

(1)Hotelsareaccountedforunderproperty,plantandequipmentintheaccounts.

Thetradingpropertyportfoliocomprisesland,apartmentsandofficesunderdevelopmentinHongKong,inMiamiintheU.S.A.andinMainlandChina,togetherwiththeremainingunitsforsaleat5StarStreetinHongKongandattheASIAresidentialdevelopmentinMiamiintheU.S.A.

ThetablebelowillustratestheGFA(orexpectedGFA)attributabletotheGroupofthetradingpropertyportfolioasat31stDecember2011.

Trading Properties(GFA (or expected GFA) attributable to the Group in million square feet)

Completed

UnderDevelopment

orHeldforFuture

Development Total

HongKong – 1.0 1.0

MainlandChina – 0.6 0.6

U.S.A. 0.1 2.3 2.4

Total 0.1 3.9 4.0



InvestmentProperties–HongKongOffices

OverviewThecompletedofficeportfolioinHongKongcomprisesanaggregateof10.8millionsquarefeetofspaceona100%basis.TotalattributablegrossrentalincomefromourofficepropertiesinHongKongwasHK$4,659millionin2011.Asat31stDecember2011,ourofficepropertiesinHongKongwerevaluedatHK$113,790million.Ofthisamount,SwireProperties’attributableinterestrepresentedHK$110,458million.

Hong Kong Office PortfolioGrossFloorArea

(sq.ft.)(100%Basis)

Occupancy(asatDec2011)

AttributableInterest

PacificPlace 2,186,433 99% 100%Cityplaza 1,632,930 98% 100%TaiKooPlaceOfficeTowers(1) 3,136,541 99% 50%/100%OneIslandEast 1,537,011 100% 100%TechnoCentres(2) 1,816,667 95% 100%Others(3) 461,587 98% 20%/50%

Total 10,771,169

(1) IncludingPCCWTower,ofwhichSwirePropertiesowns50%.(2) ThevaluationofSomersetHousereflectsthefactthatitistoberedeveloped.(3)OtherscompriseOneCitygate(20%ownedbySwireProperties)and625King’sRoad(50%ownedbySwireProperties).

GrossrentalincomefromtheGroup’sofficeportfoliofor2011increasedby7%over2010,toHK$4,495million,reflectingpositiverentalreversionsandstrongdemandforofficespaceintheportfoliointhefirsthalfof2011.Thestrongdemandwasdrivenbyexistingtenantswantingmorespaceaswellasnewtenants.Althoughdemandreducedinthesecondhalfoftheyearinuncertainmarketconditions,rentalreversionsremainedpositive.At31stDecember2011,theoverallofficeportfoliowas98%let.

Thechartbelowshowsthemixoftenantsoftheofficepropertiesbytheprincipalnatureoftheirbusinesses(basedoninternalclassifications)asapercentageoftheofficeareaattributabletotheGroupasat31stDecember2011.

Asat31stDecember2011,thetoptenofficetenants(basedonrentalincomeinthetwelvemonthsended31stDecember2011)togetheroccupiedapproximately21%ofthetotalofficeareainHongKong.

Banking/Finance/Securities/Investment

Professional Services (Accounting/Legal/Management Consulting/Corporate Secretarial)

Insurance

Technology/Media/Telecoms

Real Estate/Construction/Development/Architecture

Trading

Advertising and Public Relations

Others

Of�ce Area Attributable to the Group by Tenants’ Trades(As at 31st December 2011)

31.3%

8.8%

8.2%16.2%

9.4%

8.9%

2.9%14.3%


Pacific Place TheofficesatOne,TwoandThreePacificPlaceperformedstronglyin2011.Theoccupancyratewas99%at31stDecember2011.Majornewlettingsconcludedin2011includeFidelity,DaiwaandRabobank,whileBankofNewYorkandTempleChambersrenewedtheirleases.

Island EastCityplazaOne,ThreeandFourperformedsatisfactorilyin2011.Theoccupancyratewas98%at31stDecember2011.Newtenantsin2011includeJardineLloydThompsonandDeloitte,whileAmericanExpress,HSBCandFujiXeroxrenewedtheirleases.

TheTaiKooPlaceOfficeTowerscomprisefiveofficetowers(includingPCCWTower,inwhichwehavea50%interest).Theoccupancyratewas99%at31stDecember2011.Leasingactivityin2011wasmainlyrenewalsandexistingtenantstakingmorespace,withmajorrenewalsincludingLVMH,IBM,Lenovo,PhilipMorris,PCCW,BNP,BankofAmericaMerrillLynchandChinaConstructionBank.

OneIslandEast,ourlandmarkpropertyinIslandEast,hadanoccupancyrateof100%at31stDecember2011.In2011,CitibanktookmorespaceandChinaShippingreneweditsexistinglease.

ThethreeTechnoCentresrecordedmodestgrowthinrentsin2011.Leasesexpiringin2011atSomersetHouse,whichwillberedevelopedintoaGradeAofficetowerstartingin2013,werenotrenewed(andthespacewasnotre-leased).

Hong Kong Office Market OutlookWeremaincautiousabouttheoutlookfor2012.Thefinancialservicesindustryisundergoingaperiodofconsolidation.ThishasaffecteddemandforspaceinCentral.Inthesechallengingconditions,sometenantsinCentralcontinuetobeinterestedintakingspaceinIslandEast.Lowvacancyratesandthefactthatthesupplyofnewofficespacewillbemodestshouldmitigatetheeffectofthechallengingconditionsonrentalincome.

Ourofficespaceavailablewillincreasein2012withthecompletionsof28HennessyRoad(145,390squarefeet)and8Queen’sRoadEast(81,346squarefeet),bothexpectedtotakeplaceinlate2012.

ThefollowingchartshowsthepercentageofthetotalrentalincomeattributabletotheGroupfromtheofficepropertiesinHongKong,forthemonthended31stDecember2011,derivedfromleasesexpiringintheperiodsindicatedbelow.Tenanciesaccountingforapproximately13%oftherentalincomeinthemonthofDecember2011areduetoexpirein2012,withafurther23%duetoexpirein2013.

OneIslandEastHongKong



Retail

OverviewThecompletedretailportfolioinHongKongcomprisesanaggregateof2.8millionsquarefeetofspaceona100%basis,principallyatTheMallatPacificPlace,CityplazainIslandEast,andCitygateOutletsatTungChung.Themallsarewholly-ownedbySwireProperties(exceptforCitygate

Outlets,inwhichSwirePropertieshasa20%interest)andaremanagedbySwireProperties.TotalattributablegrossrentalincomefromourretailpropertiesinHongKongwasHK$3,024millionin2011.Asat31stDecember2011,ourretailpropertiesinHongKongwerevaluedatHK$45,505million.Ofthisamount,SwireProperties’attributableinterestrepresentedHK$41,032million.

Hong Kong Retail Portfolio

GrossFloorArea(sq.ft.)

(100%Basis)Occupancy

(asatDec2011)Attributable

Interest

PacificPlaceMall 711,182 100% 100%

CityplazaMall 1,105,227 100% 100%

CitygateOutlets 462,439 100% 20%

Others(1) 530,467 100% 20%/60%/100%

Total 2,809,315

(1)OtherslargelycompriseTaikooShingneighbourhoodshopsandStarCrestretailpremises(whicharewholly-owned),IslandPlaceretailpremises(60%owned)andTungChungretailpremises(20%owned).

Notwithstandinguncertaintiesintheglobaleconomicenvironment,theretailmarketinHongKongremainedrobustin2011.TouristarrivalsinHongKongreachedanewrecordof42million,morethan16%above2010.Theretailpropertiesbenefittedfromincreasedspendingaccordingly.This,combinedwithpositivelocalconsumersentimentinHongKong,resultedinhealthysalesgrowthatretailoutletsinourproperties.

GrossrentalincomefromtheGroup’sretailportfoliowasHK$2,961millionin2011,adecreaseof2%from2010,duetotheabsenceofrentalincomefromFestivalWalkfollowingitsdisposal.RentalreversionsweregenerallypositiveandwereparticularlystrongatPacificPlace,reflectingstrongdemandforretailspaceandstrongretailsalesduringtheyear.RetailsalesinSwireProperties’mallsinHongKongincreasedby18%in2011.

OccupancyattheGroup’swholly-ownedmallswaseffectively100%throughouttheyear.

Of�ce Lease Expiry Pro�le(as at 31st December 2011)

2012 2013 2014 & Beyond

60%

70%

50%

40%

30%

10%

20%

0


Asat31stDecember2011,thetoptenretailtenants(basedonrentalincomeinthetwelvemonthsended31stDecember2011)togetheroccupiedapproximately33%ofthetotalretailareainHongKong.

TheMall,PacificPlaceHongKong

The Mall, Pacific PlaceTheMallatPacificPlaceisanintegralpartofthemixed-usePacificPlacedevelopment.TheofficesandthefourhotelsatPacificPlaceprovideasecureflowofshoppersfortheMall.RetailsalesatTheMallincreasedby18%in2011.ThePacificPlacecontemporisationproject,withatotalinvestmentcostofHK$2.0billion,wassubstantiallycompletedin2011andsignificantlyrejuvenatedthe23-yearoldMall.

TheMallremainedvirtuallyfullyletduringtheyear,withtheonlyvoidperiodsresultingfromtenantchanges,themost

notableofwhichwastheintroductionoftheHarveyNicholsAsiaflagshipstore.

Significantimprovementsareplannedfor2012.TheexteriorfaçadefacingQueenswayisbeingrefurbished,whilethespacepreviouslyoccupiedbyLaneCrawfordisbeingreconfigured.Abeautygallerywillbecreatedtohouseretailersofupscalecosmeticandskincarebrands.AnadditionalarcadewilllinkupthetwosidesofTheMallinordertoimprovetheflowofpedestriantraffic.

Thechartbelowshowsthemixoftenantsoftheretailpropertiesbytheprincipalnatureoftheirbusinesses(basedoninternalclassifications)asapercentageoftheretailareaattributabletotheGroupasat31stDecember2011.

Department Stores

Food & Beverages

Jewellery & Watches

Fashion & Accessories

Cinemas

Ice Rinks

Supermarket

Others

Retail Area Attributable to the Group by Tenants’ Trades(as at 31st December 2011)

26.2%

14.7%

1.7%20.9%

5.0%1.1%

3.9%

26.5%



Cityplaza MallCityplazaisoneofthemostpopularregionalshoppingcentresinHongKongandisthebiggestsuchcentreonHongKongIsland.ItprincipallyservesHongKongresidents,buttheopeningoftheadjacentEAST,HongKonghasresultedinhigherpatronagefromvisitorsfromoutsideHongKong.Retailsalesincreasedby8%in2011.Thepropertywasvirtuallyfullyoccupiedduring2011.

Citygate OutletsSalesatCitygateOutlets,theonlyoutletmallinHongKong,increasedbymorethan36%in2011.Afurther13,670squarefeetofspacewasallocatedtooutletretailersduringtheyear.Thetenthflooroftheadjacentofficeproperty,OneCitygate,wasconvertedtoretailuse,withtradingcommencinginDecember2011.CitygateOutletsremainedvirtuallyfullyletatalltimesin2011.

Hong Kong Retail Market OutlookStrongconsumerdemand(includingfromvisitorsfromMainlandChina)isexpectedtocontinuein2012andcompetitionforretailspaceisexpectedtoremainkeen.Wewillcontinuetomonitorconsumerpreferences,brandpopularityandtenantmixinanefforttoensurethatourmallscatertothechangingneedsofconsumersandfacilitateincreasesinretailsales.

ThefollowingchartshowsthepercentageofthetotalrentalincomeattributabletotheGroupfromtheretailpropertiesinHongKong,forthemonthended31stDecember2011,derivedfromleasesexpiringintheperiodsindicatedbelow.Tenanciesaccountingforapproximately20%oftherentalincomeinthemonthofDecember2011areduetoexpirein2012,withafurther30%duetoexpirein2013.

CitygateOutletsHongKong

Retail Lease Expiry Pro�le(as at 31st December 2011)

2012 2013 2014 & Beyond

60%

70%

50%

40%

30%

10%

20%

0


ResidentialThecompletedresidentialportfoliocomprisesPacificPlaceApartmentsatPacificPlaceinHongKongandasmallnumberofluxuryhousesandapartmentsonHongKongIsland,withatotalfloorareaof483,711squarefeet.

Occupancyattheresidentialportfoliowasapproximately91%at31stDecember2011.

Demandforourresidentialpropertiesisexpectedtoremainstrongin2012.

InvestmentPropertiesUnderConstruction

28 Hennessy RoadSuperstructureworkisprogressingatthe145,390square

footofficebuildingat28HennessyRoad,withcompletionexpectedinthesecondhalfof2012.

8 Queen’s Road East8Queen’sRoadEast,a19-storeycommercialbuildingwith81,346squarefeetofspace,isbeingrefurbished,withsubstantialcompletionscheduledforlate2012.

23 Tong Chong StreetThepropertyat23TongChongStreetinQuarryBaywillberedevelopedintoservicedapartmentsandisexpectedtobecompletedby2014.Theaggregatefloorareauponcompletionwillbeapproximately75,000squarefeet.

Property Portfolio (1) – Mainland ChinaGrossFloorArea(sq.ft.)(100%Basis)

TotalInvestmentProperties

Hotels,TradingPropertiesand

OthersYearof

OpeningAttributable

Interest

CompletedSanlitunVillage,Beijing 1,465,771 1,296,308 169,463 2008 (2) 80%(3)/100%TaiKooHui,Guangzhou(RetailandOffice) 3,208,167 3,208,167 – 2011 97%INDIGO,Beijing(Office) 595,464 595,464 – 2011 50%BeaumondeRetailPodium,Guangzhou 90,847 90,847 – 2008 100%Others(4) 29,584 – 29,584 N/A 100%

Sub-total 5,389,833 5,190,786 199,047

Under DevelopmentTaiKooHui,Guangzhou(HotelandServicedApartments) 641,028 52,797 588,231 2012 97%INDIGO,Beijing(RetailandHotel) 1,297,762 939,493 358,269 2012 50%DazhongliProject,Shanghai 3,469,398 2,872,653 596,745 2016 50%DaciTempleProject,Chengdu(5) 2,689,300 1,249,135 1,440,165 2014 50%

Sub-total 8,097,488 5,114,078 2,983,410

Total 13,487,321 10,304,864 3,182,457

(1) Includingthehotelandpropertytradingcomponentsoftheseprojects.(2) VillageNorthwasopenedin2010.(3) SwirePropertiesowns80%oftheretailcomponentofSanlitunVillage.(4) IncludingLongdeBuildingandTianheXinzuoresidentialapartments,whichwereacquiredbyusin2005and2006respectively.(5) TheofficeportionoftheDaciTempleprojectisintendedtobedevelopedfortradingpurposes.

InvestmentProperties–MainlandChinaOverviewThepropertyportfolioinMainlandChinacomprisesanaggregateof13.5millionsquarefeetofspace(9.1millionsquarefeetattributabletotheGroup),ofwhich5.4millionsquarefeetarecompletedpropertieswithanother8.1millionsquarefeetunderdevelopment.TotalattributablegrossrentalincomefromourinvestmentpropertiesinMainlandChinawasHK$775millionin2011.Asat31stDecember2011,ourinvestmentportfolioinMainlandChinawasvaluedatHK$40,626million.Ofthisamount,SwireProperties’attributableinterestrepresentedHK$28,890million.



ThechartbelowillustratesthegrowthinattributableareaofthecompletedpropertyportfolioinMainlandChina.

SanlitunVillageBeijing

CompletedInvestmentProperties

Sanlitun Village, BeijingSanlitunVillage,alow-densitycomplex,comprisestwoneighbouringretailsitesandahoteltotalling1.47millionsquarefeetintheChaoyangDistrictofBeijing.SanlitunVillagehasover200shopsandrestaurants,includingflagshipstores,shopssellinglifestylebrandsandrestaurantsservingregionalandinternationalcuisine.

VillageSouthconcentratesonglobalfashionandlifestylebrandswithayouthfulappeal,includingtheworld’slargest

adidasstoreandMainlandChina’slargestApplestore.During2011,SwirePropertiesintroduced33newtenantsinVillageSouthinanefforttooptimisethemixoftenants.VillageNorthfocusesoninternationalandChinesedesignerfashionbrands,aswellasrestaurantsandcafés.

SanlitunVillagehasseenasatisfactoryincreaseingrossrentalincomein2011,reflectingincreasesinbaserentsatVillageSouthandhigheroccupancyratesatVillageNorth.Asat31stDecember2011,occupancyrateswere93%atVillageSouthand90%atVillageNorth.

Sanlitun Village, BeijingGrossFloorArea

(sq.ft.)(100%Basis)

Occupancy(asatDec2011)


Retail–VillageSouth 776,909 93% 80%Retail–VillageNorth 519,399 90% 80%Hotel–TheOppositeHouse(1) 169,463 66% 100%

Total 1,465,771

(1) Thehotelisaccountedforunderproperty,plantandequipmentintheaccounts.

Sanlitun Village, Beijing

TaiKoo Hui, Guangzhou

INDIGO, Beijing

Beaumonde Retail Podium, Guangzhou

Others

Dazhongli Project, Shanghai

Daci Temple Project, Chengdu

Attributable Area of Completed Property Portfolio in Mainland China

2011 2012 2013 2014 2015 2016 & onwards

10,000

(000 sq.ft.)

8,000

6,000

2,000

4,000

0


SanlitunVillage,withitsopenplanarchitectureinspiredbytheconceptofcourtyardsandhutongsinBeijing,hasgainedsignificantattentionintheretailmarketinBeijing.Itisseenbyyoungpeopleandthefashionconsciousasashoppingandleisuredestination.SwirePropertieswillcontinuetoinvestinimprovementworksdesignedtoenhancefootfallandcirculation,andtoreinforcetheproperty’sposition.DemandfromretailersremainsstronginBeijing,withmoreretailersofinternationalbrandsenteringthemarket.Thiscanbeexpectedtoincreaseoccupancyratesandrentsingeneral.SanlitunVillagecanbeexpectedtobenefitfromthecontinuedstrengthofconsumerdemand,furtherrefinementofthetenantmixandcostreductions.

SwirePropertiesowns80%oftheretailcomponentofSanlitunVillagewiththeremaining20%interestheldbyGatewayChinaFundI,afundmanagedbyGawCapital.Thefundhasanoptiontosellits20%interesttoSwirePropertiesbeforetheendof2013.Asat31stDecember2011,SanlitunVillage(excludingTheOppositeHouse)wasvaluedatHK$8,975million.Ofthisamount,SwireProperties’80%attributableinterestrepresentedHK$7,180million.

Beijing Retail Market OutlookTheBeijingretailmarketremainsveryactive,withnewsupplybeingtakenupbyretailers.ThereisanincreasingnumberofnewentrantstotheBeijingmarket,asmanyretailersseeMainlandChinaasasourceofgrowthinthecomingyears.Rentappreciationinprimeretailshoppingcentrescontinues.

TaiKoo Hui, GuangzhouTaiKooHuiisourlargestinvestmentpropertyinMainlandChina.Itisalarge-scaleretail-ledcomplexintheTianheCentralBusinessDistrictofGuangzhou,withatotalareaofapproximately3.85millionsquarefeet.Locatedata

transportationhub,ithasdirectaccesstothecity’smetrosystem,incorporatesaprimeshoppingmall,twoGradeAofficetowers,a5-starhotelwithservicedapartmentstobemanagedbyMandarinOrientalHotelGroupandaculturalcentre,togetherwithover800carparkingspaces,allofwhichareinterconnected.

Theshoppingmallopenedon23rdSeptember2011and,asat31stDecember2011,approximately99%ofthefloorareawasleasedand84%oftheshopswereopen.Approximately70%ofthemallistenantedbyretailerssellinginternationalbrandnames,withanumberofbrandsmakingtheirdebutsinGuangzhou.SalesofluxurybrandswereencouragingwhilesomeofthemassmarketbrandswhicharenewtoGuangzhouarequicklygainingmomentum.Tenantshavecommittedtotake(orhaveagreedtermsinrelationto)approximately68%ofthefloorareaofthetwoofficetowers.HSBC,whichisthelargesttenant,hasleased29floors,representingapproximately47%ofthetotalofficefloorarea.Theremainingvacantareaislocatedinthehighzoneofofficetower1,whichisexpectedtocommandthebesttermsamongalltheofficefloors.

Retailsalesperformancein2012isexpectedtoimproveasmoreshopsopen,moreofficetenantsmoveinandtheMandarinOrientalHotelopens.The263-roomsand24servicedapartmentsintheMandarinOrientalHotelGuangzhouareexpectedtoopeninthelatterpartof2012.

SwirePropertieshasa97%stakeinTaiKooHui,whichisajointventurewithGuangzhouDaYangPropertiesInvestmentLimited(undertheGuangzhouDailyGroup).Asat31stDecember2011,thedevelopment(excludingthehotel)wasvaluedatHK$12,014million.Ofthisamount,SwireProperties’97%attributableinterestrepresentedHK$11,653million.

TaiKoo Hui, Guangzhou




Interest

Retail 1,484,743 99% 97%

Office 1,723,424 68% 97%

Hotel(1) 588,231 N/A 97%

ServicedApartments 52,797 N/A 97%

Total 3,849,195 97%


INDIGOBeijing



Guangzhou Market OutlookIntheretailmarket,anumberofnewmallswereopenedinBaiyunDistrictandZhujiangNewTownin2011.TotalretailsalesinGuangzhougrewsteadilyduetostrongmarketdemand.

Intheofficemarket,althoughsupplyhasincreasedsignificantlyfollowingthecompletionofnewofficetowersinZhujiangNewTown,themarketremainedactive,withgrowingdemand,particularlyfromthefinanceandinsuranceindustries,inthefirsthalfof2011.However,inthefourthquarterin2011,demandforofficespacestartedtoweaken.

INDIGO, BeijingOursecondventureintheBeijingpropertymarket,INDIGO,isaretail-ledmixed-usedevelopmentinJiangTaiintheChaoyangDistrict.Itcomprisesanupmarketshoppingmall,aGradeAofficetower(ONEINDIGO)anda369-roomlifestylebusinesshotelEAST,Beijing.Inadditiontohavingmorethan

1,200carparkingspaces,INDIGOwillbeservedbytheBeijingMetroLine14,whichisnowunderconstructionandisduetoopenin2014.

Theshoppingmallandtheofficetowerarecompleted.Thehotelisunderconstruction.Theofficetowerstartedtoopeninlate2011andanumberofofficetenantshavemovedin.TheshoppingmallisbeingfittedoutandopenedgraduallyfromMarch2012.Asat31stDecember2011,committedtenants(includingthosewhohadsignedlettersofintent)accountedforapproximately77%oftheretailspaceandapproximately46%oftheofficespace.Thehotelisexpectedtoopeninthelatterpartof2012.

INDIGOisa50:50jointventurewithSino-OceanLandHoldingsLimited.Asat31stDecember2011,thedevelopment(excludingthehotel)wasvaluedatHK$4,650million.Ofthisamount,SwireProperties’50%attributableinterestrepresentedHK$2,325million.

INDIGO, Beijing




Interest

Retail 939,493 77% 50%

Office 595,464 46% 50%

Hotel(1) 358,269 N/A 50%

Total 1,893,226 50%



Beijing Office Market OutlookDemandintheBeijingofficemarketcontinuestoexceedsupply.Rentalincreasesandlimitedsupplyinthecentralbusinessdistrictarecausingtenantstorelocatetoemergingareas.

InvestmentPropertiesUnderDevelopment

Dazhongli Project, ShanghaiTheDazhongliprojectisalarge-scaleretail-ledmixed-usedevelopmentwhichwillcompriseapproximately3.47millionsquarefeet(excludingcarparkingspaces)uponcompletion.ItoccupiesaprimelocationwithsignificantfrontagetoNanjingWestRoad,oneofShanghai’smajorshoppingthoroughfares,

andhasexcellenttransportconnections,beingadjacenttoanexistingmetrolineandtwoplannedmetrostations.Theprojectcomprisesaretailmall,twoofficetowersandthreehotels,andisexpectedtobecomealandmarkdevelopmentinShanghai.

Siteclearanceandresettlementworkshavelargelybeencompleted.Foundationworkscommencedattheendof2011andthedevelopmentisexpectedtoopeninphasesfrom2016onwards.

TheDazhongliprojectisa50:50jointventurewithHKRInternationalLimited.Asat31stDecember2011,thedevelopment(excludingthehotel)wasvaluedatHK$12,442million.Ofthisamount,SwireProperties’50%attributableinterestrepresentedHK$6,221million.

Shanghai Market OutlookDemandforcommercialpropertyinShanghaiwasstrongin2011.LimitedsupplyofqualityGradeAofficespace,particularlyinthePuxiregion,shouldensurethatgrowthprospectscontinuetobegood.Theretailmarketremainsrobust,withnewentrantstoMainlandChinaoftenopeningfirstinShanghai.

Daci Temple Project, ChengduTheDaciTempleproject,locatedintheJinjiangDistrictofChengduandneartothepopularChunxiRoadshopping

Dazhongli Project, ShanghaiGrossFloorArea

(sq.ft.)(100%Basis)


Retail 1,062,719 50%Office 1,809,934 50%Hotels(1) 596,745 50%

Total 3,469,398 50%

(1) Thehotelsareaccountedforunderproperty,plantandequipmentintheaccounts.

district,willbeconvenientlyaccessiblefromafuturemetrointerchangestation.Withasiteareaof762,251squarefeet,theprojectwillformalarge-scaleurbandevelopmentcomprisingastreetstyleretailcomplex,aboutiquehotelwithabout100guestrooms,servicedapartmentsandaGradeAofficetower.

Consistingof2-3storeyretailblocksandopenspaceswithabasementconnectedtotheplannedmetro,theretailcomplexisdesignedtointegrateharmoniouslywiththeculturalheritageoftheancientDaciTempleandneighbouringhistoricbuildings.

Daci Temple Project, ChengduGrossFloorArea

(sq.ft.)(100%Basis)


Retail 1,174,465 50%Hotel(1) 156,090 50%ServicedApartments 74,670 50%Office(2) 1,284,075 50%

Total 2,689,300 50%

(1) Thehotelisaccountedforunderproperty,plantandequipmentintheaccounts.(2) TheofficeportionoftheDaciTempleprojectisintendedtobedevelopedfortradingpurposes.



Sitepreparationworkshavestarted.Thedevelopmentisexpectedtoopeninphasesfrom2014onwards.

Theofficetowerisintendedtobedevelopedfortradingpurposes.

TheDaciTempledevelopmentisa50:50jointventurewithSino-OceanLandHoldingsLimited.InJanuary2012,theGroupenteredintoanagreementwithSino-OceanLandLimited,awholly-ownedsubsidiaryofSino-OceanLandHoldingsLimitedtofundthewholeoftheremaininglandpremium(andassociatedtaxes)payableinrespectoftheDaciTempleprojectandcertainworkingcapitalrequirementsinanaggregateamountofUS$230million.PleaserefertoNote44totheaccountsforfurtherdetails.

Asat31stDecember2011,theDaciTempledevelopment(excludingthehotelandofficetradingcomponents)wasvaluedatHK$2,071million.Ofthisamount,SwireProperties’50%attributableinterestrepresentedHK$1,036million.

Chengdu Market OutlookChengdu’sretailmarkethasbeenperformingstronglyoverthelastthreeyears.Therewasstrongdemandforofficespacein2011,withtradingandleasingbothbeingactiveinthefirstthreequartersof2011.

TherewillbenomajorsupplyofnewretailspaceinthedowntownareaofChengduin2012.Demandbyretailersforadditionalspaceshouldincreaserentalratesandabsorptionofexistingspace.

TherewillbeasubstantialsupplyofnewofficespaceintheNewSouthAreaofChengduin2012.However,thesupplyalongthemajorcommercialstreetsandwithinthecitycentreisstilllimited.Theofficeleasingandtradingmarketsinthisdowntownareaareexpectedtoremainpositive.

InvestmentProperties–U.S.A.Brickell CitiCentre, MiamiBrickellCitiCentreisamixed-usedevelopmentprojectintheBrickellfinancialdistrictinMiami,Floridaandcoversapproximatelyfourcityblocks.SituatedoneblockwestofBrickellAvenueandthreeblockswestofBrickellKey,theprojecthasasiteareaof393,678squarefeet(approximately9.1acres).

Partofthesitewasacquiredin2008.ThispartisboundedonthenorthandsouthbySW7thandSW8thStreets,whichareprimaryarteriesconnectingtheBrickelldistricttotheinterstatehighway(I-95)(whichisaboutthreequartersofamilewestofthesite).Thesubsequentacquisitionoftwoadjoiningsites,the2.1acreBrickellTennisCentreandthe1.3acreEasternNationalBankbuildingpermittedtheapplicationforaspecialareaplanundertheMiamizoningcode.DevelopmententitlementshavebeenapprovedbytheCityofMiami,allowingamixed-usedevelopmentofapproximately2.9millionsquarefeet(excludingcarparkandcirculationareas).

Brickell CitiCentre, Miami


(100%Basis)Attributable

Interest

Retail 520,000 100%

Office 963,000 100%

ServicedApartments 108,000 100%

Hotel(1) 200,000 100%

Residential(1) 1,100,000 100%

Carpark/Circulation 2,538,000 100%

Total 5,429,000 100%

(1) TheresidentialportionoftheBrickellCitiCentreisintendedtobedevelopedfortradingpurposes.Thehotelandtheresidentialcomponentsarenotaccountedforasinvestmentpropertiesintheaccounts.


BrickellCitiCentreMiami

Anurban,mixed-usedevelopmentschemehasbeenplannedwhichincorporatesamulti-level,open-airshoppingcentrewithtwolevelsofbelowgroundparking.TheplanincorporatesalightrailMetromoverstation,whichrunsthroughthesite,asanintegralpartoftheproject.Thedevelopmentisscheduledtobecompletedintwophases,withPhaseIcomprisinga243-roomhotel,93servicedapartments,twoofficebuildingsandtworesidentialtowers.Subjecttomarketconditions,PhaseIIisplannedasahigh-riseofficebuildingwithcarparkingspaces.

Sitepreparation,foundationtestingandapplyingforconstructionpermitsfromgovernmentauthoritiesareunderway.ConstructionofPhaseIisexpectedtobecompletedin2015,whileconstructionofPhaseIIisexpectedtobecompletedin2018.

ThereislittleexistingorexpectedretailcompetitionintheareaofthescaleandqualityplannedforBrickellCitiCentre.Asaregionalcentre,itisbelievedthatBrickellCitiCentrewillgeneraterentalratescomparabletothoseatleadingshoppingcentresinGreaterMiami.

Asat31stDecember2011,theBrickellCitiCentredevelopment(excludingthehotelandresidentialtradingcomponents)wasvaluedatHK$391million.Thisdevelopmentiswholly-ownedbySwireProperties.

Miami Market OutlookNotwithstandingtheuncertaineconomicbackground,GreaterMiamidoesnothaveenoughshops,especiallyinthecitycentreandsellingmidtohighrangemerchandise.Theofficemarketcontinuestofavourtenants,althoughtenantconcessionpackagesaregettingsmaller.However,officevacancyratesremainatapproximately22%followingtheadditionof600,000squarefeetofofficespaceattherecentlycompletedBrickellWorldCenter.Competitionforofficetenantsremainskeenasaresult.

Intheresidentialmarket,DowntownMiamihasabsorbedthebulkofpropertiesbuiltfrom2005to2008andinsomesectorspricesarestartingtorise.ThesupplyofrentalunitsonofferintheDowntownandBrickellareasislow,withrentalratescontinuingtoincrease.



ValuationofInvestmentPropertiesTheportfolioofinvestmentpropertieswasvaluedat31stDecember2011(96%byvaluehavingbeenvaluedbyDTZDebenhamTieLeung)onthebasisofopenmarketvalue.Theamountofthisvaluation,beforeassociateddeferredtaxinMainlandChina,wasHK$187,198millioncomparedtoHK$178,815millionat31stDecember2010andHK$198,314millionat30thJune2011.

Theincreaseinthevaluationoftheinvestmentpropertyportfolioprincipallyreflectshigherrentalincome.

UnderHKAS40,hotelpropertiesarenotaccountedforasinvestmentpropertiesbutareincludedwithinproperty,plantandequipmentatcostlessaccumulateddepreciationandanyprovisionforimpairmentlosses.

Translation differences

Change in composition of Group

Capital expenditure

Other net transfers from property, plant and equipment

Other net transfers from property under development for sale

Net valuation gain in Mainland China

Net valuation gain in Hong Kong

As at 31st December 2011

Movement in Investment Properties

1st January 2011 31st December 2011

HK$ Bn

200

190

180

160

170

150

178.8 +0.8 -18.3

+4.9 +0.3 +0.4+1.5

+18.8 187.2As at 1st January 2011


Audited Financial InformationInvestment Properties

Group

Completed HK$M

Under Development

HK$MTotal

HK$M

At1stJanuary2011 161,508 17,307 178,815

Translationdifferences 374 421 795

ChangeincompositionofGroup (18,263) – (18,263)

Additions 145 4,705 4,850

Transferuponcompletion 11,142 (11,142) –

Othernettransfersfromproperty,plantandequipment 265 38 303

Othernettransfersfrompropertiesheldfordevelopment 104 249 353

Fairvaluegains 19,676 669 20,345

174,951 12,247 187,198

Add:Initialleasingcosts 290 – 290

At31stDecember2011 175,241 12,247 187,488

At1stJanuary2010 141,832 12,183 154,015

Translationdifferences 287 245 532

Costwrittenback (11) – (11)

Additions 595 3,988 4,583

Disposals (593) (57) (650)

Transfersbetweencategory 23 (23) –

Othernettransfersfromproperty,plantandequipment 770 (7) 763

Othernettransferstopropertyunderdevelopmentforsale – (897) (897)

Fairvaluegains 18,605 1,875 20,480

161,508 17,307 178,815

Add:Initialleasingcosts 170 – 170

At31stDecember2010 161,678 17,307 178,985

Geographical Analysis of Investment Properties

Group

2011HK$M

2010HK$M

HeldinHongKong:

Onmedium-termleases(10to50years) 25,151 39,310

Onlong-termleases(over50years) 140,358 122,221

165,509 161,531

HeldinMainlandChina:

Onmedium-termleases(10to50years) 21,298 17,284

HeldinU.S.A.:

Freehold 391 –

187,198 178,815



PropertyTradingThetradingportfoliocomprisessevenluxuryresidentialprojectsinHongKong(fiveonHongKongIsland,oneinKowloonandoneonLantauIsland),aresidentialcomplexunderdevelopmentinBrickellCitiCentreinMiami,anofficepropertyunderdevelopmentintheDaciTempleprojectinChengdu,andtheremainingresidentialunitsatthecompleteddevelopmentsofASIAinMiamiand5StarStreetinHongKong.ThereisalsoalandbankinMiamiandFortLauderdaleinFlorida,theU.S.A.

Property Trading Portfolio


(100%Basis)

Actual/ExpectedConstruction

CompletionDateAttributable

Interest

Completed

HongKong

–5StarStreet(remainingunsoldunits) 1,996 2010 100%

U.S.A.

–ASIA,Miami(remainingunsoldunits) 67,728 2008 100%

Under Development

HongKong

–AZURA 206,306 2012 87.5%

–ARGENTA 75,805 2013 100%

–33SeymourRoad 165,792 2014 100%

–92-102CaineRoad 195,531 2016 100%

–1-9and2-10SaiWanTerrace 151,944 2013 80%

–148ArgyleStreet 88,555 2013 50%

–CheungSha,SouthLantau 64,412 2015 100%

MainlandChina

–DaciTempleProject,Chengdu(officeportion) 1,284,075 2014 50%

U.S.A.

–BrickellCitiCentre,Miami,Florida 1,100,000 2015 100%

Held for Development

U.S.A.

–FortLauderdale,Florida 787,414 N/A 75%

–SouthBrickellKey,Miami,Florida 421,800 N/A 100%

Total 4,611,358


(1) MaximumGFAoftheCheungShadevelopment.

ThefollowingbarchartisagraphicalrepresentationoftheexpectedtimingofcompletionofourresidentialprojectsinHongKong.

Audited Financial InformationProperties Held for Development and for Sale

Group

2011HK$M

2010HK$M

PropertiesheldfordevelopmentFreeholdland 124 443

Propertiesforsale Completedproperties –developmentcosts 270 388 –freeholdland 7 9 –leaseholdland 4 4Propertiesunderdevelopment –developmentcosts 1,329 673 –freeholdland 175 – –leaseholdland 5,063 4,480

6,848 5,554

AZURA

1-9 and 2-10 Sai Wan TerraceARGENTA

148 Argyle Street

33 Seymour Road

Cheung Sha, Lantau Island (1)

92-102 Caine Road

Expected Attributable Residential GFA Completions in Hong Kong in 2012-2016

2012 2013 2014 2015 2016

300,000

GFA (sq.ft.)

250,000

200,000

150,000

50,000

100,000

0

AZURAHongKong



HongKong

Residential Developments in Mid-Levels West, Hong KongSwirePropertiesownsfoursitesinMid-LevelsWest,aresidentialdistrictonHongKongIsland.Amapshowingthelocationsofthesesitesissetoutbelow:

(a) AZURA, 2A Seymour Road SwirePropertiesholdsa87.5%interestinthisdevelopment.Thesuperstructureworksareinprogress.Thedevelopmentisexpectedtobecompletedin2012,andwillconsistofa50-storeytowerof126unitsand45carparkingspaceswitha

totalGFAof206,306squarefeet.99ofthe126residentialunitshavebeenpre-sold.Thedevelopmentisscheduledtobehandedovertobuyersinthelatterpartof2012andwillbemanagedbySwireProperties.

Mid-Levels West, Hong Kong

AZURA

ARGENTA

33 Seymour Road

92-102 Caine Road


(b) ARGENTA, 63 Seymour Road ARGENTAiswholly-ownedbytheGroup.Thesuperstructureworksareinprogress.Thedevelopmentisexpectedtobecompletedin2013,andwillconsistofa37-storeytowerof30whole-floorresidentialunitsand28carparkingspaceswithanaggregateGFAof75,805squarefeet.

(c) 33 Seymour Road 33SeymourRoadiswholly-ownedbytheGroup.Foundationworksareinprogressandthedevelopmentisexpectedtobecompletedin2014.Itwillconsistofa48-storeytowerof127residentialunitswithanaggregateGFAof165,792squarefeetuponcompletion.

(d) 92-102 Caine Road92-102CaineRoadiswholly-ownedbytheGroup.Foundationworksareinprogressandthedevelopmentisexpectedtobecompletedin2016.Thedevelopmentconsistsofa50-storeytowerof197residentialunitsand43carparkingspaceswithanaggregateGFAof195,531squarefeet.

SwirePropertiesplanstoupgradecertainpedestrianwalkways,widenanumberofpavementsandbuildapedestrianstaircasewithinthesiteat92-102CaineRoad,inordertoimprovepedestrianflowbetweenCastleRoadandCaineRoad,subjecttothenecessaryapprovals.

1-9 and 2-10 Sai Wan Terrace TheGrouphasan80%interestin1-9and2-10SaiWanTerrace,aresidentialdevelopmentinQuarryBay,HongKong.Thesubstructureworksareinprogress.Thedevelopmentisexpectedtobecompletedin2013andwillconsistoftwo21-storeytowersof92residentialunitsand69basementcarparkingspaceswithanaggregateGFAof151,944squarefeetuponcompletion.

148 Argyle Street 148ArgyleStreetisaresidentialdevelopmentinHoManTin,Kowloon.TheGrouphasa50%interestinthedevelopment.Thesubstructureworksareinprogress.Constructionworksatthedevelopmentareexpectedtobecompletedin2013andthedevelopmentwillhaveanaggregateGFAofapproximately88,555squarefeetuponcompletion.Itwillconsistofa23-storeytowerwith53residentialunitsand56carparkingspaces.

Cheung Sha, South LantauTwoadjacentresidentialsitesatthejunctionofTungChungRoadandSouthLantauRoadinCheungSha,LantauIslandwereacquiredinDecember2011andarewholly-ownedbytheGroup.Thesiteswillbedevelopedinto30houseswithanaggregateGFAof64,412squarefeet.Thedevelopmentisexpectedtobecompletedin2015.

Hong Kong Residential Market OutlookHongKonggovernmentmeasuresandpolicychangeswillcontinuetoaffectHongKong’sresidentialpropertymarket.Despitecredittightening,interestratesareexpectedtoremainlow.ThesupplyofluxuryresidentialpropertyonHongKongIslandandinKowloonwillremainlimited.Luxuryresidentialpricesareexpectedtostaysteady.

U.S.A.ASIA,locatedonthenorthernedgeofBrickellKeyinDowntownMiami,isaluxuryhigh-riseresidentialcondominiumwith123units.Theaveragesizeoftheseunitsisapproximately2,300squarefeet.ThepropertywascompletedinApril2008.99unitshavebeensold.Afurther11unitshavebeenleased.

TheresidentialportionofBrickellCitiCentreisintendedtobedevelopedfortradingpurposes.Completionofthisdevelopmentisexpectedin2015.

HongKong

OPUSHONGKONG



LeasingandManagementBusinessSwirePropertiesisresponsiblefortheredevelopmentaswellastheleasingandmanagementofapropertyownedbySwirePacificat53StubbsRoad,knownasOPUSHONGKONG.Thepropertyisaprimeresidentialdevelopmentconsistingofa12-storeyresidentialbuildingwithtenwhole-floorunitsandtwodouble-levelgardenapartmentsdesignedbyPritzkerPrize-winningarchitectFrankGehry.ConstructionwascompletedandtheoccupationpermitwasissuedinDecember2011.Marketingwillstartuponthecompletionoftheshowflatinthesecondquarterof2012.

EstateManagementThroughsubsidiaries,SwirePropertiesundertakesthemanagementof12estatesithasdeveloped,includingRobinsonPlace,TheOrchardsandTaikooShing.Theservicesincludeday-to-dayassistanceforoccupantsandcleaning,maintenanceandrenovationofcommonareasandfacilities.Weplacegreatemphasisonmaintaininggoodrelationshipswithouroccupants.WewillprovideahighqualityconciergeserviceatournewdevelopmentssuchasAZURA.

HotelsManagedHotels

OverviewSwireHotelsownsandmanageshotelsinHongKong,MainlandChinaandtheU.K.,comprisingthe“HouseCollection”,“EAST”,and“ChapterHotels”.TheHouseCollection,presentlycomprisingTheUpperHouseinHongKongandTheOppositeHouseinBeijing,isagroupofsmallanddistinctivehotelsinAsiaprovidingahighlypersonalisedexperienceforguests.TheEASTbrandcreateslifestylebusinesshotelswhilstChapterHotelsareacollectionoflocally-inspiredhotelsinregionaltownsandcitiesintheU.K.

The Upper HouseTheUpperHouse,a117-roomluxuryhotelatPacificPlace,continuedtoberecognisedforitscustomerserviceandachievedstrongmarketpenetrationandrevenuegrowthin2011,withrevenueperavailableroomincreasingby35%from2010.Itreceivedanumberofawardsincludingthe“BestOverseasBusinessHotel”awardfromCondéNastTraveller,anawardfromTheReaders’TravelAwards2011andaTripAdvisorTraveler’sChoiceAward.

TheUpperHouseHongKong


Major Hotels Portfolio (Managed by the Group)

No.ofRooms(100%Basis)


Completed

HongKong

–TheUpperHouse 117 100%

–EAST,HongKong 345 100%

–HeadlandHotel(1) 501 0%

MainlandChina

–TheOppositeHouse 99 100%

U.K.

–TheMontpellierChapter,Cheltenham (formerlycalledHotelKandinsky,Cheltenham) 61 100%

–AvonGorgeHotel,Bristol 75 100%

–TheMagdalenChapter,Exeter (formerlycalledHotelBarcelona,Exeter)(2) 59 100%

–HotelSeattle,Brighton 71 100%

Under Development

MainlandChina

–EAST,Beijing 369 50%

–DazhongliProject(Hotels),Shanghai 124 50%

–DaciTempleProject(Hotel),Chengdu 100 50%

Total 1,921

(1) HeadlandHotelisownedbyAirlineHotelLimited,awholly-ownedsubsidiaryofCathayPacificAirwaysLimited.(2) RefurbishmentofthehotelinExeterisexpectedtobecompletedin2012.

Beijing

TheOppositeHouse



EAST, Hong KongEAST,HongKong,a345-roomhotelatIslandEast,hasestablishedaloyalfollowingfromofficetenantsinCityplazaandTaiKooPlace.Occupancyandaverageroomrateswerestrongin2011,withrevenueperavailableroomincreasingby51%byfrom2010.Itsrooftopbar,Sugar,wasre-launchedin2011followingarenovationoftheoutdoordeckarea.ThehotelwasrecommendedinHotList2011ofCondéNastTraveller.

The Opposite HouseTheOppositeHouse,a99-roomluxuryhotelatSanlitunVillage,Beijing,sawsignificantimprovementsinitsaccommodation,restaurantandbarbusinessesin2011,withrevenueperavailableroomincreasingby33%from2010.ThehotelappearsintheSmartTravelAsialistoftop25leisurehotelsandresortsandCondéNastTraveller’sGoldList2011.

U.K. HotelsSwirePropertiesownsfourhotelsintheU.K.,inCheltenham,Bristol,BrightonandExeter.ThehotelinExeterwasclosedforrefurbishmentin2011.AnimpairmentchargewasrecordedagainstthehotelsinDecember2011,reflectingadifficulttradingenvironment.Despitethechallengingoperatingconditions,ourhotelsperformedsatisfactorilyduringtheyear.

Hotels Market OutlookThehotelsinHongKongareexpectedtocontinuetobenefitfromgrowthinthenumberofvisitorsfromMainlandChinaandarewellpositionedinboththebusinessandtourismsectors.

InMainlandChina,TheOppositeHouseisexpectedtoseefurthergrowthinitsaccommodation,restaurantandbarbusinesses.EAST,Beijingisscheduledtoopeninthelatterpartof2012.

ThetradingenvironmentintheU.K.remainschallenging.TheMagdalenChapterHotelinExeterisscheduledtoreopenin2012.

Non-managedHotelsSwirePropertieshasownershipinterestsin(butdoesnotmanage)hotelswith3,166roomsinaggregate,andisdevelopingtheMandarinOriental,Guangzhou,whichwillbe97%owned.TheMandarinOriental,Guangzhouisexpectedtohaveatotalof263roomsand24servicedapartments.


Profile of Capital Commitments for Investment Properties and Hotels

Expenditure Forecast Year of Expenditure Commitments

2011HK$M

2012HK$M

2013HK$M

2014HK$M

2015&beyondHK$M

At 31st Dec 2011

HK$M

HongKongprojects 3,104 1,099 571 666 4,404 6,740

MainlandChinaprojects 3,180 3,321 1,628 2,062 1,419 8,430

U.K.hotels 95 38 – – – 38

U.S.A.projects 7 491 829 1,102 50 2,472

Total 6,386 4,949 3,028 3,830 5,873 17,680*

* ThecapitalcommitmentsrepresentstheGroup’scapitalcommitmentsplustheGroup’sshareofthecapitalcommitmentsofjointlycontrolledcompanies.TheGroupiscommittedtofundingHK$1,828millionofthecapitalcommitmentsofjointlycontrolledcompanies.

Major Hotels Portfolio (Not Managed by the Group)No.ofRooms(100%Basis)


CompletedHongKong–IslandShangri-LaHongKong 565 20%–JWMarriottHotelHongKong 602 20%–ConradHongKong 513 20%–NovotelCitygateHongKong 440 20%U.S.A.–MandarinOriental,Miami 326 75%

Under DevelopmentMainlandChina–MandarinOriental,Guangzhou(1) 287 97%–DazhongliProject(Hotels),Shanghai 433 50%

Total 3,166

(1) Including24servicedapartmentsinthesamebuilding.

Thenon-managedhotelsinHongKongperformedstronglyduringtheyear.TradingconditionsalsoimprovedattheMandarinOriental,Miamiin2011.

CapitalCommitments

CapitalExpenditureandCommitmentsforInvestmentPropertiesandHotelsCapitalexpenditurein2011onHongKonginvestmentpropertiesandhotels,includingcompletedprojects,amountedtoHK$3,104million(2010:HK$3,031million).Outstandingcapitalcommitmentsat31stDecember2011wereHK$6,740million(31stDecember2010:HK$1,488million).

Capitalexpenditurein2011onMainlandChinainvestmentpropertiesandhotels,includingtheGroup’sshareofthecapitalexpenditureofjointlycontrolledcompanies,amounted

toHK$3,180million(2010:HK$2,983million).Outstandingcapitalcommitmentsat31stDecember2011wereHK$8,430million(2010:HK$9,861million),includingtheGroup’sshareofthecapitalcommitmentsofjointlycontrolledcompaniesofHK$7,101million(2010:HK$6,952million).TheGroupiscommittedtofundingHK$1,828million(31stDecember2010:HK$2,459million)ofthecapitalcommitmentsofjointlycontrolledcompaniesinMainlandChina.

Capitalexpenditurein2011ontheinvestmentpropertiesandhotelsintheU.S.A.amountedtoHK$7million(2010:HK$14million).Outstandingcapitalcommitmentsat31stDecember2011wereHK$2,472million(2010:HK$6million).

FutureDevelopments

HongKong

MainlandChina

TaiKoo HuiGuangzhou

* Mandarin Oriental Hotel588,231 sf

* Serviced Apartments

52,797 sf

* Cultural Centre

Shopping Mall1,484,743 sf

Tianhe East Road

Tianhe Road

Shipaiqiao Station

TaiKoo Hui Towers 1 & 2 1,723,424 sf

Daci Temple ProjectChengdu, Mainland China

Chunxi Road Station(under construction)

Hotel156,090 sf

Office Tower 1,284,075 sf

Shopping Mall1,174,465 sfDacisi R

oad Serviced Apartments

74,670 sf

Hongxing Road

Dongda Street

Island East

Lincoln House333,353 sf

Dorset House609,540 sf

PCCW Tower620,148 sf

Oxford House501,253 sf

One Island East1,537,011 sf

Devon House803,452 sf

Cambridge House268,795 sf

Warwick House554,934 sf

Cornwall House338,369 sf

Cityplaza (Shopping Mall)

1,105,227 sf

Cityplaza Three447,714 sf

Cityplaza Four556,431 sf

Cityplaza One628,785 sf

EAST, Hong Kong199,633 sf

Island Eastern Corridor

Tai Koo Shing Road

King’s Road

Somerset House923,364 sf

Tai Koo Station

Quarry Bay Station

Westlands Road

Note:Thesediagramsarenottoscaleandareforillustrationpurposeonly.*Underdevelopment


Sanlitun VillageBeijing

Village South776,909 sf

The Opposite House

169,463 sf

Village North519,399 sf

Sanlitu

n North

Road

INDIGOBeijing

Shopping Mall939,493 sf

* EAST, Beijing358,269 sf

ONE INDIGO595,464 sf

Jiangtailu Station(under construction)

Jiuxianqiao Road

Dazhongli ProjectShanghai, Mainland China

Hotels596,745 sf

Office Towers1,809,934 sf

Shopping Mall1,062,719 sf

West Nanjing Road Station (under construction)

Shimenyi Road

West

Nanjin

g Road

Weihai Road

CitygateNovotel Citygate

Hong Kong 236,653 sf

One Citygate160,522 sf

Citygate Outlets462,439 sf

Tung Chung Station

Tat Tung Road

North Lantau Highway

Pacific PlaceIsland Shangri-La

Hong Kong605,728 sf

Conrad Hong Kong

555,590 sf

One Pacific Place

863,266 sf

The Upper House

158,738 sfThree Pacific Place627,657 sf

* 8 Queen’s Road East 81,346 sf

* 28 Hennessy Road

145,390 sf Three Pacific

Place LinkShopping Mall

711,182 sf

Pacific Place Apartments

443,075 sf

JW Marriott

Hong Kong

525,904 sf

Queensway

Hennessy Road

Queen’sRoad East

AdmiraltyStation

TwoPacific Place

695,510 sf

Brickell CitiCentreMiami, U.S.A.

Serviced Apartments

108,000 sf

Hotel200,000 sf

SW 8th Street

Brickell Plaza

SE 7th Street

Apartments1,100,000 sf

Shopping Mall520,000 sf

SW 1st

Avenue

South Miami Avenue

SE 6th Street

Miami River

Miami River

SE 5th Street

Office221,000 sf

MetromoverEighth

Street Station

Office (Phase 2)742,000 sf

MetrorailBrickell Station

SW 9th Street


FinancialReview

FinancialResultsReviewCommentaryonmajorbalancesandyearonyearvariancesintheAccounts.Referencesareto“NotestotheAccounts”onpages95to135.

ConsolidatedIncomeStatement

2011HK$M

2010HK$M Reference

TurnoverTheincreaseinturnoverofHK$710millioncomparedto2010wasprincipallyduetohigherrentalincomefromourinvestmentpropertiesandhigherturnoverfromourownedandmanagedhoteloperations,partiallyoffsetbylowerturnoverfrompropertytrading.

RentalincomefromourinvestmentpropertiesincreasedbyHK$682million.TherewerepositiverentalreversionsandhigherturnoverrentsinHongKong,particularlyatPacificPlaceandOneIslandEast.ThiswaspartiallyoffsetbythelossofrentalincomefromFestivalWalkafteritsdisposalinAugust2011.InMainlandChina,rentalincomeincreasedatSanlitunVillage(reflectingincreasesinbaserentsandhigheroccupancy)andtheTaiKooHuiproperty,whichwascompletedin2011,begantocontributerentalincomeinthesecondhalfoftheyear.

TurnoverfromourownedandmanagedhotelsincreasedbyHK$199millionduetoacombinationofhigheroccupancy,roomratesandnon-roomrevenuesatTheUpperHouse,EAST,HongKong,TheOppositeHouseandtheU.K.hotels.

TurnoverfrompropertytradingfellbyHK$187millioncomparedto2010,largelyduetotheabsenceofacontributionfromthesaleofresidentialunitsat5StarStreetinHongKong(whichaccountedforHK$281millioninturnoverin2010).ThiswaspartiallyoffsetbyhigherturnoverfromthesaleofresidentialunitsatASIAinMiamiandIslandLodgeinHongKong.

9,581 8,871 Note4


ConsolidatedIncomeStatement(continued)

2011HK$M

2010HK$M Reference

Gross ProfitTotalgrossprofitincreasedbyHK$637millioncomparedto2010.GrossprofitfromourinvestmentpropertiesincreasedbyHK$587million,principallyduetohighergrossrentalincome.Marginsincreasedfrom81.9%to82.3%.GrossprofitfromourownedandmanagedhotelswasHK$133millioncomparedwithagrosslossofHK$25millionin2010.Theimprovementatthehotelsreflectedhigherturnover.GrossprofitfrompropertytradingfellbyHK$119million,reflectinglowerturnover.

7,247 6,610

Operating ProfitThedecreaseinoperatingprofitofHK$24millioncomparedto2010wasprincipallyduetolowergainsfromthedisposalofandchangeininterestsininvestmentproperties,impairmentlosses,lowernetrevaluationgainsoninvestmentpropertiesandhigheradministrativeexpenses,partiallyoffsetbyhighergrossprofit.

ThegainfromthedisposalofFestivalWalkinHongKongafterdeductingimpairmentlossesfromourU.K.hotelsin2011waslowerthanthegainsin2010fromthedisposalofPeelRiseinHongKongandfromthechangesinourinterestinPCCWTower.

AnetrevaluationgainoninvestmentpropertiesofHK$20,345millionwasrecordedin2011,HK$135millionlowerthanin2010.InvestmentpropertiesinHongKongrecordedanetrevaluationgainofHK$18,766million,largelyduetohigherrentsatourcompletedproperties.InvestmentpropertiesinMainlandChinarecordedanetrevaluationgainofHK$1,546million,largelyduetohigherrentsatSanlitunVillageandlowercapitalisationratesatSanlitunVillageandattheTaiKooHuiproperty.TheinvestmentpropertycomponentoftheBrickellCitiCentredevelopmentinMiami,whichwasreclassifiedfrompropertyheldfordevelopmenttoinvestmentproperties,recordedanetrevaluationgainofHK$33million.

AdministrativeexpensesincreasedbyHK$118millioncomparedto2010largelyduetotheexpensesassociatedwiththelistingofthesharesoftheCompanyontheHongKongStockExchangeincurredin2011exceedingthoseincurredin2010,partiallyoffsetbytheabsenceofone-offexpensesrelatedtotherelocationofourheadofficefromPacificPlacetoOneIslandEastincurredin2010.

26,945 26,969 Notes7and9(a)

Net Finance ChargesTheincreaseinnetfinancechargesofHK$240millioncomparedto2010islargelyduetoaHK$259millionincreaseinthefairvalueofaputoptionheldbythenon-controllinginterestatSanlitunVillage,comparedtoaHK$12milliondecreaseinthefairvalueofthatputoptionin2010.NetfinancechargeswerehigherinMainlandChinaduetohigherdebtlevelsandareductionintheamountofinterestcapitalisedfollowingthecompletionoftheofficeandretailcomponentsattheTaiKooHuiproperty.NetfinancechargeswerelowerinHongKongduetolowerdebtlevelsfollowingthedisposalofFestivalWalk.

1,477 1,237 Note11

ManagementDiscussion&Analysis|FinancialReview


ConsolidatedIncomeStatement(continued)

2011HK$M

2010HK$M Reference

Share of Profits Less Losses of Jointly Controlled CompaniesThedecreaseofHK$610millioncomparedto2010islargelyduetolowerrevaluationgainsontheDazhongliandINDIGOinvestmentpropertiesinMainlandChina.ThesegainswerepartiallyoffsetbyincreasesinrentalincomefromandahigherrevaluationgainonPCCWTowerinHongKong(followingtheincreaseinourinterestinPCCWTowerfrom20%to50%in2010),thefirstrevaluationgainonourDaciTempleinvestmentpropertyinMainlandChina,higherrentalincomeandhigherrevaluationgainsonotherinvestmentpropertiesinHongKongandthereversalofapreviousimpairmentatanindustrialsiteinWongChukHang.

851 1,461 Note9(a)

Share of Profits Less Losses of Associated CompaniesThedecreaseofHK$69millioncomparedto2010aroseprincipallyfromtheabsenceofacontributionfromPCCWTower(followingitsreclassificationasajointlycontrolledcompanyin2010).Thiswaspartiallyoffsetbyhigherprofitsfromthenon-managedhotelsatPacificPlace.

156 225 Note9(a)

TaxationThedecreaseintaxationofHK$28millioncomparedto2010isduetoloweroperatingprofit,afterexcludingthenon-assessableincome(principallyrevaluationgainsonHongKonginvestmentpropertiesandthegainfromthedisposalofFestivalWalk)andaddingbackthenon-deductibleexpensesrelatedtothelistingofthesharesoftheCompanyontheHongKongStockExchangeandthefairvaluemovementofaputoptioninrelationtothenon-controllinginterestatSanlitunVillage.

1,296 1,324 Note12

Profit Attributable to the Company’s ShareholderThedecreaseofHK$919millioncomparedto2010arosefromalowershareofprofitslesslossesfromjointlycontrolledentities,lowerrevaluationgainsfrominvestmentproperties,lowerprofitfromthedisposalofinvestmentproperties,highernetfinancechargesandhigheradministrativeexpenses,partiallyoffsetbyhighergrossprofitandlowertaxation.

25,126 26,045 Note9(a)

ConsolidatedStatementofFinancialPosition

2011HK$M

2010HK$M Reference

Property, Plant and EquipmentTheincreaseinproperty,plantandequipmentofHK$282millionwasduetocapitalexpenditureontheMandarinOrientalHotelattheTaiKooHuipropertyinMainlandChinaandonthehotelinExeterintheU.K.,andthetransferofthehotelcomponentofthelandatBrickellCitiCentrefrompropertiesheldfordevelopmenttoproperty,plantandequipment,partiallyoffsetbyimpairmentprovisionsattheU.K.hotels,andthetransferofcertainpreviouslyowner-occupiedspacetoinvestmentproperties.

6,615 6,333 Note16


ConsolidatedStatementofFinancialPosition(continued)

2011HK$M

2010HK$M Reference

Investment PropertiesTheincreaseininvestmentpropertiesofHK$8,503millionislargelyduetoarevaluationgainofHK$20,345million,additionsduringtheyearofHK$4,850million(largelyattheTaiKooHuipropertyinMainlandChinaandatinvestmentpropertiesinHongKong),aforeignexchangetranslationgainofHK$795millionfrominvestmentpropertiesinMainlandChina,thetransferofpartofthelandatBrickellCitiCentreinMiamifrompropertiesheldfordevelopmenttoinvestmentpropertiesandthetransferofcertainpreviouslyowner-occupiedspacetoinvestmentproperties,partiallyoffsetbythedisposalofFestivalWalk(whichreducedinvestmentpropertiesbyHK$18,263million).

187,488 178,985 Note17

Properties Held for DevelopmentThedecreaseofHK$319millioncomparedto2010isduetothetransferofthelandatBrickellCitiCentreinMiamitoinvestmentproperties,property,plantandequipmentandpropertiesunderdevelopment.

124 443 Note20

Investment in Jointly Controlled CompaniesTheincreaseofHK$2,060millioncomparedto2010reflectsadditionalnetinvestmentofHK$1,125million(predominantlyattheDaciTemple,DazhongliandINDIGOprojectsinMainlandChina),ourshareofprofitsofjointlycontrolledcompanies,includingrevaluationgains,andanincreaseinourshareoftheforeignexchangetranslationgainofthejointlycontrolledcompaniesinMainlandChina,partiallyoffsetbydividendsreceivedfromjointlycontrolledcompanies.

13,000 10,940 Note22

Investment in Associated CompaniesThedecreaseofHK$66millioncomparedto2010reflectsthepaymentofdividendsofHK$223millionbytheassociatedcompaniesowningthePacificPlacehotels,partiallyoffsetbyourshareofprofitslesslossesofassociatedcompanies.

639 705 Note23

Properties Under Development and for SaleTheincreaseofHK$1,294millioncomparedto2010islargelyduetoHK$656milliondevelopmentexpenditureonourtradingpropertydevelopments,principallyatMid-LevelsWestinHongKong(includingAZURAandARGENTA),theacquisitionoftwositesatCheungShaonLantauIslandinHongKong,increaseinlandpremiumsoncertaindevelopments,thetransferofthetradingcomponentofthelandatBrickellCitiCentreinMiamifrompropertiesheldfordevelopmenttopropertiesunderdevelopment,partiallyoffsetbythesaleoftheremainingresidentialunitsatASIAinMiamiandIslandLodgeinHongKong.

6,848 5,554 Note26




2011HK$M

2010HK$M Reference

Trade and Other ReceivablesTheincreaseofHK$777millioncomparedto2010comprisesaHK$80millionincreaseintradedebtors,aHK$98millionincreaseinprepaymentsandaccruedincomeandaHK$599millionincreaseinotherreceivables.TheincreaseintradedebtorswasduetohighergrossrentsattheHongKonginvestmentpropertiesandrentalreceivablesfromthenewlyopenedTaiKooHuiproperty,partiallyoffsetbytheabsenceofrentalreceivablesfromFestivalWalk.Theincreaseinprepaymentsisduetoprepaidagencyfeesonthepre-saleofresidentialunitsattheAZURAdevelopment.Theincreaseinotherreceivablesisduetoanincreaseinthestakeholder’saccountarisingfromthepre-saleofresidentialunitsattheAZURAdevelopment,adjustmentstotakeaccountofrent-freeperiodsattheTaiKooHuiproperty,receivablesfromthesaleoftheremainingresidentialunitsatIslandLodge,andanincreaseinreceivablesfromajointlycontrolledcompanyinMainlandChinainrespectofpaymentsmadebytheCompanyonitsbehalf.

1,945 1,168 Note28

Trade and Other PayablesTheincreaseofHK$2,889millioncomparedto2010largelycomprisesaHK$1,244millionincreaseintradecreditors,aHK$1,213millionincreaseinotherpayablesandaHK$259millionincreaseinthefairvalueofaputoptioninfavouroftheownerofthenon-controllinginterestinSanlitunVillage.Theincreaseintradecreditorsislargelyduetoaccrualsinrespectoflandacquisitioncosts,accrualoflandpremiumpaymentsanddevelopmentexpenditureontradingproperties.Theincreaseinotherpayablesislargelyduetothereceiptofdepositsinrelationtothepre-saleofresidentialunitsattheAZURAdevelopmentandaccrualsinrespectofexpensesassociatedwiththelistingofthesharesoftheCompanyontheHongKongStockExchange.

8,088 5,199 Note31

Long-Term Bank Loans (including the component due within one year)TheincreaseofHK$1,798millioncomparedto2010isduetoahigherlevelofborrowingsinMainlandChina(incurredtofundcapitalexpenditureattheTaiKooHuiandSanlitunVillageproperties)andhigherborrowingstofundexpenditureattheBrickellCitiCentredevelopmentinMiami.

6,483 4,685 Note32

Loans Due to a Fellow Subsidiary CompanyTheloansduetoafellowsubsidiarycompanyfellbyHK$10,828millioncomparedto2010.ThisprincipallyreflectsrepaymentofloansoutoftheproceedsfromthedisposalofFestivalWalkandcashgeneratedfromoperations,partiallyoffsetbyborrowingstofinanceexpendituresontradingandinvestmentdevelopmentsandpaymentofdividendstotheCompany’sshareholder.

21,374 32,202 Note33

Deferred Tax LiabilitiesTheincreaseofHK$346millioncomparedto2010largelyreflectsdeferredtaxonrevaluationgainsoninvestmentpropertiesinMainlandChina,partiallyoffsetbythereversalofcertaindeferredtaxliabilitiesuponthedisposalofFestivalWalk.

4,246 3,900 Note34



2011HK$M

2010HK$M Reference

Equity Attributable to the Company’s ShareholderTheincreaseinequityattributabletotheCompany’sshareholderin2011representsthetotalcomprehensiveincomefortheyearattributabletotheCompany’sshareholder(HK$26,105million),thesubscriptionforadditionalsharesintheCompanybytheCompany’sshareholder(amountingtoHK$4,500million),partiallyoffsetbydividendspaidtotheCompany’sshareholder.

176,043 157,877 Notes36and37

Non-Controlling InterestsTheincreaseinnon-controllinginterestsofHK$53millionarosefromhigherprofits(derivedfromtheTaiKooHuiandIslandPlaceproperties)andcapitalcontributionsatpropertytradingdevelopments,partiallyoffsetbydividendspaidtonon-controllinginterests.

532 479 Note38

ConsolidatedStatementofCashFlows

2011HK$M

2010HK$M Reference

Cash Generated from OperationsTheincreaseofHK$2,643millioncomparedto2010islargelyduetoaHK$3,045millionincreaseintradeandotherpayablesandanincreaseinoperatingprofitafterdeductingnon-cashitems,partiallyoffsetbyanincreaseintradereceivables.

7,396 4,753 Note43(a)

Interest PaidTheincreaseofHK$195millioncomparedto2010islargelyduetohigherborrowingsinMainlandChina,partiallyoffsetbylowerborrowingsinHongKong.

1,664 1,469

Dividends Received from Jointly Controlled and Associated Companies and Available for Sale AssetsTheincreaseofHK$367millioncomparedto2010largelyreflectsdividendsfromtheGroup’sassociatedcompaniesowningthePacificPlacehotels.

415 48

Purchase of Property, Plant and EquipmentThisincreasecomparedto2010largelyreflectscapitalexpenditureonTheMandarinOrientalHotelattheTaiKooHuipropertyandonthehotelinExeterintheU.K.

548 507 Note43(b)

Additions to Investment PropertiesTheadditionstoinvestmentpropertiesin2011reflectcapitalexpenditureonthepropertiesatTaiKooHui,TheMallatPacificPlace,28HennessyRoadand8Queen’sRoadEast,andacquisitionsofinvestmentpropertiesinHongKongforfuturedevelopment.

4,717 4,234

Loans (Net of Repayment) to Jointly Controlled CompaniesTheincreaseofHK$444millioncomparedto2010aroseprincipallyfromshareholderloanstothecompaniesundertakingtheprojectsatDaciTemple,DazhongliandINDIGOinMainlandChina,partiallyoffsetbyrepaymentofloansbythecompaniesowningtheCitygateand625King’sRoadpropertiesinHongKong.

1,125 681



ConsolidatedStatementofCashFlows(continued)

2011HK$M

2010HK$M Reference

Bank Loans Drawn and Refinancing (Net of Repayment)Loansdrawnin2011compriseborrowingsdrawntofinanceexpenditureattheTaiKooHuiandSanlitunVillagepropertiesinMainlandChinaandborrowingsdrawnintheU.S.A.tofinancetheBrickellCitiCentredevelopment.RefertoFinancingsectiononpages53to57forfurtherdetails.

1,578 1,473

(Decrease)/Increase in Loans Due to a Fellow Subsidiary CompanyThedecreasein2011principallyreflectedtherepaymentofloansoutoftheproceedsfromthedisposalofFestivalWalk,thesubscriptionforadditionalsharesintheCompanybySwirePacificLimitedandrepaymentsfromcashgeneratedfromoperations,partiallyoffsetbyborrowingstofinancetradingandinvestmentdevelopmentsandpaymentofdividendstotheCompany’sshareholder.

(10,875) 882

InvestmentAppraisalandPerformanceReview

NetAssetsEmployed CapitalCommitments*

2011HK$M

2010HK$M

2011HK$M

2010HK$M

Propertyinvestment 191,273 183,092 16,589 10,487

Propertytrading 6,581 6,303 – –

Hotels 6,421 5,797 1,091 1,005

Totalnetassetsemployed 204,275 195,192 17,680 11,492

Lessnetdebt (27,700) (36,836)

Lessnon-controllinginterests (532) (479)

EquityattributabletotheCompany’sshareholder 176,043 157,877

EquityAttributabletotheCompany’sShareholder**

ReturnonAverageEquityAttributabletothe

Company’sShareholder**

2011HK$M

2010HK$M 2011 2010

Propertyinvestment 168,892 150,818 15.7% 19.0%

Propertytrading 1,248 1,791 0.5% 5.5%

Hotels 5,903 5,268 -0.6% -2.3%

Total 176,043 157,877 15.0% 18.1%

* ThecapitalcommitmentsrepresenttheGroup’scapitalcommitmentsplustheGroup’sshareofthecapitalcommitmentsofjointlycontrolledcompanies.

**RefertoGlossaryonpage159fordefinition.


Financing

•CapitalStructure•FinancingArrangementswiththeSwirePacificGroup•ChangesinFinancing•NetBorrowings•SourcesofFinance –Loans –BankBalancesandShort-termDeposits•MaturityProfileandRefinancing•CurrencyProfile•FinanceCharges•InterestCoverandGearingRatios•CapitalManagement•AttributableNetDebt•DebtinJointlyControlledandAssociatedCompanies

CapitalStructureTheGroupaimstomaintainacapitalstructurewithaviewtoinvestinginandfinancingprojectsinadisciplinedandtargetedmanner.

TheGroup’sprimaryobjectiveswhenmanagingcapitalaretosafeguardtheGroup’sabilitytooperateasagoingconcern,sothatitcancontinuetoprovidereturnsforshareholdersandbenefitstootherstakeholders,andtosecureaccesstofinanceatareasonablecost.

TheGroupconsidersanumberoffactorsinmonitoringitscapitalstructure,whichprincipallyincludethegearingratio,cashinterestcoverandthereturncycleofitsvariousinvestments.

Audited Financial Information

On31stMarch2010,SwireProperties(Finance)Limited,theCompanyandSwireFinanceLimited(“SwireFinance”,awholly-ownedsubsidiaryofSwirePacificLimited),enteredintofiveloanagreements(“LoanAgreements”)(asamendedon31stOctober2011)torecordthetermsoftheborrowingsbytheGroupfromSwireFinance.TheLoanAgreementssubstantiallymirrorthetermsandmaturityprofile(currentlyranging,disregardingtheperpetualelementofthefinancingarrangements,uptosevenyears)oftheunderlyingborrowingsofSwireFinancefromthirdpartiesandtheseborrowingsbearinterestattheinterestratesillustratedinthesectiononFinanceChargesonpage58.Theunderlyingborrowingsareintheformoftermloans,revolvingcreditfacilities,bondsissuedunderSwirePacificgroup’sUS$3.5billionmediumtermnoteprogramme,andperpetualcapitalsecurities.NosecurityhasbeengivenbytheGroupinrespectoftheLoanAgreements.UponmaturityofthefinancingarrangementsprovidedbySwireFinance,theGroupwillobtainnewfunding(asnecessary)onastand-alonebasiswithoutrecoursetotheSwirePacificgroup.

Asat31stDecember2011,therewasaloanfacilityofUS$85millioninrespectoftheMandarinOrientalHotelinMiamiwhichisguaranteedbySwirePacificLimited.(2010:US$85million)

Asat31stDecember2011,theGroupalsomaintainedotherloanarrangementswiththeSwirePacificgroupanditsjointlycontrolledcompaniesforatotalfacilityamountofRMB380million.(2010:RMB50million)

FinancingArrangementswiththeSwirePacificGroupThereareanumberoffinancingarrangementsbetweentheGroupandtheSwirePacificgroup.

ManagementDiscussion&Analysis|Financing


ChangesinFinancingDuringtheyear,theGroupraisedHK$4,555millionofnewfacilities.Thiscomprised:•three3-yearbilateralrevolvingcreditfacilitiestotalling

HK$1,500millionwithmaturityinyear2013throughtheLoanAgreements

•four5-yearbilateralrevolvingcreditfacilitiestotallingHK$2,500millionwithmaturityinyear2015throughtheLoanAgreements

•anincreaseofRMB300millionintherefinancingofa3-yearsyndicatedloanfacilitytoRMB2,700million

•two3-yearbilateraltermloanfacilitiestotallingRMB100million

•anetincreaseofRMB50millionuponrenewalofarevolvingloanandoverdraftfacility

SignificantdebtrepaymentsundertheLoanAgreementsincludedtherepaymentoftwomedium-termnotestotallingHK$700millionuponmaturityandtherepaymentofamedium-termnoteofHK$3,882millionandfivebilateraltermloanfacilitiestotallingHK$2,900million.TheserepaymentsweremainlyfundedbyproceedsfromthesaleofFestivalWalk.Duringtheyear,tworevolvingcreditfacilitiestotallingHK$4,500millionundertheLoanAgreementsexpired.

NetBorrowingsOurborrowingsareprincipallydenominatedinHongKongdollars,RenminbiandU.S.dollars.Outstandingborrowingsasat31stDecember2011and2010areasfollows:

Audited Financial Information2011

HK$M2010

HK$M

Borrowings included in non-current liabilities

Bankborrowings–unsecured 5,819 1,582

BorrowingsfromSwireFinance–unsecured 14,431 26,974

Borrowings included in current liabilities

Bankborrowings–unsecured 1,687 4,094

BorrowingsfromSwireFinance–unsecured 6,943 5,228

Total borrowings 28,880 37,878

Less:cashandcashequivalents (1,180) (1,042)

Net borrowings 27,700 36,836


HK$M2010

HK$M

Bankloansandloansfromfellowsubsidiarycompanies

At1stJanuary 37,859 35,533

Bankloansdrawnandrefinancing 2,206 1,822

Repaymentofbankloans (628) (349)

Loans(repaidto)/drawnfromfellowsubsidiarycompanies (10,875) 882

Othernon-cashmovements 317 (29)

28,879 37,859

Overdrafts 1 19

At31stDecember 28,880 37,878


SourcesofFinanceAt31stDecember2011,committedloanfacilitiesanddebtsecuritiesamountedtoHK$35,703million,ofwhichHK$8,003million(22.4%)remainedundrawn.Inaddition,theGrouphadundrawnuncommittedfacilitiestotallingHK$1,446million.Sourcesoffundsat31stDecember2011comprisedthefollowing:

Audited Financial InformationAvailable

HK$MDrawnHK$M

UndrawnExpiring

WithinOne Year

HK$M

UndrawnExpiringBeyond

One YearHK$M

Facilities from third parties

Long-termloans 7,239 6,286 60 893

Facilities from Swire Finance

Revolvingcreditandshort-termloans 9,000 1,950 3,050 4,000

Termloans 5,000 5,000 – –

Medium-termnotes 12,135 12,135 – –

Perpetualcapitalsecurities 2,329 2,329 – –

Total Committed Facilities 35,703 27,700 3,110 4,893

Total Uncommitted Facilities 2,710 1,264 1,446 –

Total Loan Facilities 38,413 28,964 4,556 4,893

Loans

Foraccountingpurposes,theloans(includingthoseborrowedfromSwireFinanceundertheLoanAgreements)areclassifiedasfollows:

2011 2010


Drawn, Before

Unamortised Loan Fees

HK$M

Unamortised Loan Fees

HK$M

Carrying Value

HK$M

Drawn,Before

UnamortisedLoanFees

HK$M

UnamortisedLoanFees

HK$M

CarryingValue

HK$M

Group

Bankoverdraftsandshort-termloans

–unsecured 1,023 – 1,023 991 – 991

Long-termloansatamortisedcost 27,941 (84) 27,857 37,017 (130) 36,887

Less:amountduewithinoneyear includedundercurrentliabilities (7,614) 7 (7,607) (8,331) – (8,331)

20,327 (77) 20,250 28,686 (130) 28,556



BankBalancesandShort-TermDeposits

TheGrouphadbankbalancesandshort-termdepositsofHK$1,180millionat31stDecember2011,comparedtoHK$1,042millionat31stDecember2010.

MaturityProfileandRefinancingBankloansandotherborrowingsarerepayableonvariousdatesupto2018(2010:upto2019).TheweightedaveragetermandcostoftheGroup’sdebtis:

2011 2010

Weightedaveragetermofdebt 2.9 years 3.7years

Weightedaveragetermofdebt(excludingperpetuals) 2.8 years 3.5years

Weightedaveragecostofdebt 4.6% 4.1%

Weightedaveragecostofdebt(excludingperpetuals) 4.4% 3.8%

ThematurityprofileoftheGroup’savailablecommittedfacilitiesissetoutbelow:

∆ FacilitiesfromSwireFinanceundertheLoanAgreements.

* Theperpetualcapitalsecuritieshavenofixedmaturitydate.Intheabovegraphtheirmaturityhasbeenpresentedastheirfirstcalldate,13thMay2017.


IncludedundertheLoanAgreementsareperpetualcapitalsecuritiesissuedbyawholly-ownedsubsidiary(the“Issuer”)ofSwirePacificLimitedon13thMay1997,amountingtoUS$300millionandbearingcumulativeinterestat8.84%perannum.ThisissuehasnoscheduledmaturitybutisredeemableattheoptionofSwirePacificLimitedortheIssuereither(i)atanytimeonorafter13thMay2017or(ii)atanytimeuponamendmentorimpositionofcertaintaxesand,inanycase,becomesdueintheeventofSwirePacificLimited’sortheIssuer’swindingup.Theperpetualcapitalsecuritiesareunconditionallyandirrevocablyguaranteed,onasubordinatedbasis,bySwirePacificLimited.

At31stDecember2011thefairvaluewasHK$2,471million(2010:HK$2,565million).TheperpetualcapitalsecuritiesarelistedontheLuxembourgStockExchange.

12,000

HK$M

10,000

6,000

8,000

4,000

2,000

0

Long-term loans from third parties

Revolving credit and term loans∆

Medium-term notes∆

Total Available Committed Facilities by Maturity

12 13 14 15 16 17 18

Perpetual capital securities*∆


ThetablebelowsetsforththematurityprofileoftheGroup’sborrowings:


HK$M2010

HK$M

Bank borrowings: Within1year 1,687 4,094 1-2years 93 – 2-5years 5,726 1,582 Over5years – –Borrowings from Swire Finance: Within1year 6,943 5,228 1-2years 2,296 7,128 2-5years 4,638 3,800 Over5years 7,497 16,046

28,880 37,878Amountduewithinoneyearincludedundercurrentliabilities (8,630) (9,322)

20,250 28,556

CurrencyProfileAnanalysisoftheoutstandingborrowingsbycurrencyisshownbelow:

2011 2010

Audited Financial Information HK$M HK$M

CurrencyHongKongdollar 20,598 71% 31,426 83%UnitedStatesdollar 1,182 4% 926 3%Renminbi 7,040 25% 5,466 14%Others 60 0% 60 0%

Total 28,880 100% 37,878 100%

FinanceChargesAnanalysisoftheoutstandingborrowingsbyfloatingorfixedinterestratebasesisshownbelow:

2011 2010

Audited Financial Information HK$M HK$M

Fixed 19,164 66% 25,146 66%Floating 9,800 34% 12,734 34%

Sub-total 28,964 100% 37,880 100%

Interest-free – 128Unamortisedloanfee (84) (130)

Total 28,880 37,878



TheexposureoftheGroup’sborrowingstointerestratechangescanbeillustratedasfollows:

Fixed Interest Rate Maturing in:


Interest- free

HK$M

FloatingInterest Rate

HK$M

1 yearor LessHK$M

1 to 5Years

HK$M

Over 5Years

HK$MTotal

HK$M

At 31st December 2011 – 9,738 4,997 6,648 7,497 28,880

At31stDecember2010 128 12,654 2,100 6,950 16,046 37,878

Interestchargedandearnedduringtheyearwasasfollows:


HK$M2010

HK$M

Interest charged on:Bankloansandoverdrafts (418) (265)Loansfromfellowsubsidiarycompanies (1,096) (1,202)Loanfromajointlycontrolledcompany (2) –Otherfinancingcosts (104) (95)Lossonthemovementinthefairvalueoftheliabilityinrespectofaputoption infavouroftheownerofanon-controllinginterestinasubsidiary (259) –Capitalisedon: Investmentproperties 197 180 Propertiesunderdevelopmentandforsale 155 101 Hotelandotherproperties 23 17

(1,504) (1,264)

Interest Income on:Short-termdepositsandbankbalances 12 9Loantoafellowsubsidiarycompany 2 –Loanstojointlycontrolledcompanies 9 3Gainonthemovementinthefairvalueoftheliabilityinrespectofaputoption infavouroftheownerofanon-controllinginterestinasubsidiary – 12Others 4 3

27 27

Net Finance Charges (1,477) (1,237)

Thecapitalisedinterestratesonfundsbothborrowedgenerallyandusedforthedevelopmentofinvestmentproperties,hotelsandpropertiesunderdevelopmentandforsalewerebetween3.65%and6.20%perannum(2010:3.68%and5.60%perannum).

Theinterestratesperannum,attheyear-enddatewereasfollows:

2011 2010


HK$%

US$%

RMB%

Others%

HK$%

US$%

RMB%

Others%

Bankoverdraftsand short-termloans – – 3.14-7.93 – – – 4.37-4.59 –Long-termloans 0.53-5.35 1.11 5.60-7.87 2.05 0.49-5.35 1.11 4.86-5.94 1.89

Perpetualcapitalsecurities – 7.22-8.84 – – – 7.22-8.84 – –


InterestCoverandGearingRatiosThefollowinggraphsillustratetheunderlyinginterestcoverandthegearingratiosforeachofthelastfiveyears:

2011 2010

Gearingratio*

Peraccounts 15.7% 23.3%

Underlying 15.3% 22.7%

Interestcover–times*

Peraccounts 18.2 21.8

Underlying 12.0 5.4

Cashinterestcover–times*

Peraccounts 14.5 17.6

Underlying 9.2 4.3

* RefertoGlossaryonpage159fordefinition.

Underlying operating pro�t

Net �nance charges

Capitalised interest

Underlying interest cover

Underlying Interest Cover

07 08 09 10 11

12,500

15,000

10,000

7,500

5,000

2,500

0Underlying cash interest cover

HK$M

10

12

8

6

4

2

0

Times

Total equity

Net debt

Gearing ratio

Gearing Ratio

07 08 09 10 11

200,000

240,000

160,000

120,000

80,000

40,000

0

HK$M

30

36

24

18

12

6

0

Ratio (%)



CapitalManagement


TheGroup’sprimaryobjectiveswhenmanagingcapitalaretosafeguardtheGroup’sabilitytooperateasagoingconcern,sothatitcancontinuetoprovidereturnsforshareholdersandbenefitstootherstakeholders,andtosecureaccesstofinanceatareasonablecost.

TheGroupconsidersanumberoffactorsinmonitoringitscapitalstructure,whichprincipallyincludethegearingratio,cashinterestcoverandthereturncycleofitsvariousinvestments.Forthepurposeofthegearingratio,theGroupdefinesnetdebtastotalborrowingslessshort-termdepositsandbankbalances.Capitalcomprisestotalequity,asshownintheconsolidatedstatementoffinancialposition.

Inordertomaintainoradjustthegearingratio,theGroupmayadjusttheamountofdividendspaidtoshareholders,repurchaseshares,raisenewdebtfinancingorsellassetstoreducedebt.Thegearingratiosat31stDecember2011and31stDecember2010wereasfollows:

2011HK$M

2010HK$M

Totalborrowings 28,880 37,878

Less:Short-termdepositsandbankbalances (1,180) (1,042)

Netdebt 27,700 36,836

Totalequity 176,575 158,356

Gearingratio 15.7% 23.3%

Thedecreaseinthegearingratioduring2011principallyreflectsrepaymentofdebtfollowingthedisposalofFestivalWalk.

AttributableNetDebt

Thechartbelowillustrates,byentity,theGroup’sattributablenetdebt(inHK$M):

Swire Properties(267)

Swire Properties (Finance)21,374

H.K. Entities(146)

Mainland China Entities6,401

U.K. Entities4

U.S. Entities334

H.K. JCC/Asso931

Mainland China JCC/Asso

397

U.S. JCC/Asso455

Attributable Net Debt of Jointly Controlled and

Associated Companies (“JCC/Asso”)

1,783

Consolidated Net Debt27,700


DebtinJointlyControlledandAssociatedCompanies

InaccordancewithHongKongFinancialReportingStandards,thenetdebtofSwirePropertiesreportedintheconsolidatedstatementoffinancialpositiondoesnotincludethenetdebtofitsjointlycontrolledandassociatedcompanies.Thesecompanieshadthefollowingnetdebtpositionsattheendof2011and2010:

Total Net Debt/(Cash) of Jointly Controlled and Associated Companies

Portion of Net Debt/ (Cash) Attributable

to the Group

Debt Guaranteed by Swire Properties or

its Subsidiaries

2011HK$M

2010HK$M

2011HK$M

2010HK$M

2011HK$M

2010HK$M

H.K.Entities 1,618 2,026 931 906 – –

MainlandChinaEntities 794 (191) 397 (95) – –

U.S.Entities 606 628 455 471 – –

3,018 2,463 1,783 1,282 – –

IftheattributableportionofthenetdebtinjointlycontrolledandassociatedcompaniesweretobeaddedtotheGroup’snetdebt,gearingwouldriseto16.7%andunderlyinggearingwouldriseto16.3%.

CorporateGovernance&Sustainability

PacificPlaceHongKong


GovernanceCultureSwirePropertiesiscommittedtoensuringthatitsaffairsareconductedinaccordancewithhighethicalstandards.Thisreflectsitsbeliefthat,intheachievementofitslong-termobjectives,itisimperativetoactwithprobity,transparencyandaccountability.Bysoacting,SwirePropertiesbelievesthatshareholderwealthwillbemaximisedinthelongtermandthatitsemployees,itsbusinesspartnersandthecommunitiesinwhichitoperateswillallbenefit.

CorporategovernanceistheprocessbywhichtheBoardinstructsmanagementoftheGrouptoconductitsaffairswithaviewtoensuringthatitsstrategiesarefulfilled.TheBoardiscommittedtomaintaininganddevelopingrobustcorporategovernancepracticesthatareintendedtoensure:

•satisfactoryandsustainablereturnstoshareholders•thattheinterestsofstakeholdersaresafeguarded•thatoverallbusinessriskisunderstoodandmanaged

appropriately•thathighstandardsofethicsaremaintained

CorporateGovernancePracticesTheCodeonCorporateGovernancePractices(the“Code”)aspublishedbyTheStockExchangeofHongKongLimited(the“StockExchange”)setsouttheprinciplesofgoodcorporategovernance.ThesharesoftheCompanywerelistedontheStockExchangewitheffectfrom18thJanuary2012.AstheCompanywasnotalistedcompanyduringtheyearended31stDecember2011,theCodewasnotapplicabletoitduringthatperiod.TheCodewillbeapplicabletothe

Companywitheffectfromtheyearending31stDecember2012.TheCompanysupportstheprinciples-basedapproachoftheCodeandtheflexibilitythisprovidesfortheadoptionofcorporatepoliciesandprocedureswhichrecognisetheindividualityofcompanies.Corporategovernancedoesnotstandstill;itevolveswitheachbusinessanditsoperatingenvironment.TheCompanyisalwaysreadytolearnandadoptbestpractices.

BoardofDirectors

RoleoftheBoardTheCompanyisgovernedbyaBoardofDirectors,whichhasresponsibilityforthestrategicleadershipandcontroloftheGroupinitsefforttomaximiseshareholdervalue,whiletakingdueaccountofthebroadrangeofstakeholderinterests.

ResponsibilityforachievingtheCompany’sobjectivesandrunningthebusinessonaday-to-daybasisisdelegatedtomanagement.TheBoardexercisesanumberofreservedpowerswhichinclude:

•maintainingandpromotingthecultureoftheCompany•formulationoflong-termstrategy•approvingpublicannouncements,includingaccounts•committingtomajoracquisitions,divestmentsand

capitalprojects•authorisingsignificantchangestothecapitalstructureand

materialborrowings•anyissue,orbuy-back,ofequitysecuritiesunderthe

relevantgeneralmandates•approvingtreasurypolicy•settingdividendpolicy

CorporateGovernance


•approvingappointmentstotheBoard•ensuringthatappropriatemanagementdevelopmentand

successionplansareinplace•settingtheGroupremunerationpolicy•approvingannualbudgetsandforecasts•reviewingoperationalandfinancialperformance•reviewingtheeffectivenessofinternalcontrolandrisk

management,includingtheadequacyoftheresources,qualificationsandexperienceofthestaffresponsiblefortheCompany’saccountingandfinancialreporting,andtheirtrainingprogrammesandbudgets

Toassistitinfulfillingitsduties,theBoardhasestablishedtwoprimarycommittees,theAuditCommittee(seepage69)andtheRemunerationCommittee(seepage68).

ChairmanandChiefExecutiveTheCoderequiresthattherolesofChairmanandChiefExecutivebeseparateandnotperformedbythesameindividualtoensurethereisacleardivisionofresponsibilitiesbetweentherunningoftheBoardandtheexecutiveswhorunthebusiness.

TheChairmanisresponsiblefor:

•leadershipoftheBoard•settingitsagendaandtakingintoaccountanymatters

proposedbyotherDirectorsforinclusionintheagenda•facilitatingeffectivecontributionsfromanddialoguewith

allDirectorsandconstructiverelationsbetweenthem•ensuringthatallDirectorsareproperlybriefedonissues

arisingatBoardmeetingsandthattheyreceiveaccurate,timelyandclearinformation

•obtainingconsensusamongsttheDirectors•ensuring,throughtheBoard,thatgoodcorporate

governancepracticesandproceduresarefollowed

TheChiefExecutiveisresponsibleforimplementingthepoliciesandstrategiessetbytheBoardinordertoensurethesuccessfulday-to-daymanagementoftheGroup’sbusiness.

Throughouttheyear,therewasacleardivisionofresponsibilitiesbetweentheChairmanandtheChiefExecutive.

BoardCompositionTheBoardisstructuredwithaviewtoensuringitisofahighcalibreandhasabalanceofkeyskillsandknowledgesothatitworkseffectivelyasateamandindividualsorgroupsdonotdominatedecision-making.

TheBoardcomprisestheChairman,fiveotherExecutiveDirectorsandeightNon-ExecutiveDirectors.Their

biographicaldetailsaresetoutonpages72and73ofthisreportandarepostedontheCompany’swebsite.

TheNon-ExecutiveDirectorsbringindependentadvice,judgementand,throughconstructivechallenge,scrutinyofexecutivesandreviewofperformanceandrisks.TheBoardconsidersthatfiveoftheeightNon-ExecutiveDirectorsareindependentincharacterandjudgementandfulfiltheindependenceguidelinessetoutinRule3.13oftheListingRules.ConfirmationhasbeenreceivedfromallfiveIndependentNon-ExecutiveDirectorsthattheyareindependentassetoutinRule3.13oftheListingRules.

TheIndependentNon-ExecutiveDirectors:

•provideopenandobjectivechallengeofmanagementandtheBoardmembers

•raiseintelligentquestionsandchallengeconstructivelyandwithvigour

•bringoutsideknowledgeofthebusinessesandmarketsinwhichtheGroupoperates,providinginformedinsightandresponsestomanagement

ThenumberofIndependentNon-ExecutiveDirectorsrepresentedtherecommendedproportion(atleastone-third)oftheBoardofDirectors.

TheAuditandRemunerationCommitteesoftheBoardarecomprisedonlyofNon-ExecutiveDirectors.

AppointmentandRe-electionPotentialnewDirectorsareidentifiedandconsideredforappointmentbytheBoard.ADirectorappointedbytheBoardissubjecttoelectionbyshareholdersatthefirstannualgeneralmeetingafterhisorherappointment,andallDirectorsaresubjecttore-electionbyshareholderseverythreeyears.

PotentialnewBoardmembersareidentifiedonthebasisofskillsandexperiencewhich,intheopinionoftheDirectors,willenablethemtomakeapositivecontributiontotheperformanceoftheBoard.

ResponsibilitiesofDirectorsOnappointment,theDirectorsreceiveinformationabouttheGroupincluding:

•theroleoftheBoardandthemattersreservedforitsattention

•theroleandtermsofBoardCommittees•theGroup’scorporategovernancepracticesandprocedures•thepowersdelegatedtomanagementand•thelatestfinancialinformation

CorporateGovernance&Sustainability|CorporateGovernance


Directorsupdatetheirskills,knowledgeandfamiliaritywiththeGroupthroughtheirongoingparticipationatmeetingsoftheBoardanditscommitteesandthroughregularmeetingswithmanagementattheheadofficeandinthedivisions.DirectorsareregularlyupdatedbytheCompanySecretaryontheirlegalandotherdutiesasDirectorsofalistedcompany.

ThroughtheCompanySecretary,Directorsareabletoobtainappropriateprofessionaltrainingandadvice.

EachDirectorensuresthathecangivesufficienttimeandattentiontotheaffairsoftheGroup.AllDirectorsdisclosetotheBoardontheirfirstappointmenttheirinterestsasaDirectororotherwiseinothercompaniesororganisationsandsuchdeclarationsofinterestsareupdatedregularly.

DetailsofDirectors’otherappointmentsareshownintheirbiographiesonpages72to73.

BoardProcessesAllcommitteesoftheBoardfollowthesameprocessesasthefullBoard.

Thedatesofthe2011Boardmeetingsweredeterminedin2010andanyamendmentstothisschedulewerenotifiedtoDirectorsatleast14daysbeforeregularmeetings.SuitablearrangementsareinplacetoallowDirectorstoincludeitemsintheagendaforregularBoardmeetings.

AgendasandaccompanyingBoardpapersarecirculatedwithsufficienttimetoallowtheDirectorstopreparebeforemeetings.

TheChairmantakestheleadtoensurethattheBoardactsinthebestinterestsoftheCompany,thatthereiseffectivecommunicationwiththeshareholdersandthattheirviewsarecommunicatedtotheBoardasawhole.

BoarddecisionsaremadebyvoteatBoardmeetingsandsupplementedbythecirculationofwrittenresolutionsbetweenBoardmeetings.

MinutesofBoardmeetingsaretakenbytheCompanySecretaryand,togetherwithanysupportingpapers,aremadeavailabletoallDirectors.TheminutesrecordthemattersconsideredbytheBoard,thedecisionsreached,andanyconcernsraisedordissentingviewsexpressedbyDirectors.DraftandfinalversionsoftheminutesaresenttoallDirectorsfortheircommentandrecordsrespectively.

Boardmeetingsarestructuredsoastoencourageopendiscussion,frankdebateandactiveparticipationbyDirectorsinmeetings.

AtypicalBoardmeetingwouldconsistof

•areviewofareportbytheChiefExecutiveontheresultssincethelastmeetingandanexplanationofchangesinthebusinessenvironmentandtheirimpactonbudgetsandthelonger-termplan

•theraisingofnewinitiativesandideas•thepresentationofpaperstosupportdecisionsrequiring

Boardapproval•anupdateoflegalandcompliancemattersforDirectors’

consideration•anydeclarationsofinterest

TheexecutivemanagementprovidestheBoardwithsuchinformationandexplanationsasarenecessarytoenableDirectorstomakeaninformedassessmentofthefinancialandotherinformationputbeforetheBoard.QueriesraisedbyDirectorsareansweredfullyandpromptly.

Whennecessary,theIndependentNon-ExecutiveDirectorsmeetprivatelytodiscussmatterswhicharetheirspecificresponsibility.

TheChairmanmeetsatleastannuallywiththeNon-ExecutiveDirectorswithouttheExecutiveDirectorsbeingpresent.

FourmeetingsoftheBoardwereheldduringtheyearandtheattendanceofDirectorsissetoutinthetableonpage67.TheAuditCommitteeandRemunerationCommitteedidnotmeetin2011(whentheCompanywasnotyetalistedcompany)andwillholdmeetingsfrom2012onwards.

Directors’andOfficers’InsuranceTheCompanyhasarrangedappropriateinsurancecoverinrespectofpotentiallegalactionsagainstitsDirectorsandOfficers.

ConflictsofInterestIfaDirectorhasamaterialconflictofinterestinrelationtoatransactionorproposaltobeconsideredbytheBoard,theindividualisrequiredtodeclaresuchinterestandabstainfromvoting.ThematterisconsideredataBoardmeetingandvotedonbyDirectorswhohavenomaterialinterestinthetransaction.

DelegationbytheBoardResponsibilityfordeliveringtheCompany’sstrategiesandobjectives,asestablishedbytheBoard,andresponsibilityforday-to-daymanagementisdelegatedtotheChiefExecutive.TheChiefExecutivehasbeengivenclearguidelinesanddirectionsastohispowersand,inparticular,the


Meetings Attended/Held

Directors Board

Executive DirectorsC.D.Pratt 4/4M.Cubbon 4/4M.M.S.Low 4/4J.C.G.Bremridge(resignedwitheffectfrom12thSeptember2011) 2/2G.M.C.Bradley 4/4D.C.Y.Ho 4/4G.J.Ongley 3/4

Non-Executive DirectorsJ.W.J.Hughes-Hallett 3/4P.A.Kilgour 4/4M.B.Swire 2/4

Independent Non-Executive DirectorsS.E.Bradley 3/4J.C.C.Chan 4/4H.C.Cheng 4/4P.K.Etchells 4/4S.C.Liu 4/4

Averageattendance 92%

circumstancesunderwhichheshouldreportbackto,andobtainpriorapprovalfrom,theBoardbeforemakingcommitmentsonbehalfoftheCompany.

TheBoardmonitorsmanagement’sperformanceagainsttheachievementoffinancialandnon-financialmeasures,theprincipalitemsmonitoredbeing:

•detailedmonthlymanagementaccountsconsistingofincomestatementsandstatementsoffinancialpositionandcashflowscomparedtobudgetandforecast

•internalandexternalauditreports•significantcontrolbreakdowns•feedbackfromexternalpartiessuchascustomers,those

withwhomtheGroupdoesbusiness,tradeassociationsandserviceproviders

SecuritiesTransactionsTheCompanyhasadoptedacodeofconduct(the“SecuritiesCode”)regardingsecuritiestransactionsbyDirectorsandofficersontermsnolessexactingthantherequiredstandardsetoutintheModelCodeforSecuritiesTransactionsbyDirectorsofListedIssuerscontainedinAppendix10totheListingRules.TheserulesareavailableontheCompany’swebsite.

AcopyoftheSecuritiesCodehasbeensenttoeachDirectoroftheCompanyandwillbesenttoeachDirectortwiceannually,immediatelybeforethetwofinancialperiodends,withareminderthattheDirectorcannotdealinthesecuritiesandderivativesoftheCompanyduringtheblackoutperiodbeforetheGroup’sinterimandannualresultshavebeenpublished,andthatalltheirdealingsmustbeconductedinaccordancewiththeSecuritiesCode.

UndertheSecuritiesCode,DirectorsandseniorexecutivesoftheCompanyarerequiredtonotifytheChairmanandreceiveadatedwrittenacknowledgementbeforedealinginthesecuritiesandderivativesoftheCompanyand,inthecaseoftheChairmanhimself,hemustnotifytheChairmanoftheAuditCommitteeandreceiveadatedwrittenacknowledgementbeforeanydealing.

Onspecificenquiriesmade,alltheDirectorsoftheCompanyhaveconfirmedthattheyhavecompliedwiththerequiredstandardsetoutintheSecuritiesCode.

Directors’interestsasat18thJanuary2012inthesharesoftheCompanyanditsassociatedcorporations(withinthemeaningofPartXVoftheSecuritiesandFuturesOrdinance)aresetoutonpages77to79.



RemunerationCommitteeFulldetailsofDirectors’remunerationareprovidedinnote10totheaccounts.

TheRemunerationCommitteecomprisesthreeNon-ExecutiveDirectors,twoofwhomareindependent.ThetermsofreferenceoftheRemunerationCommitteehavebeenreviewedwithreferencetotheCodeandarepostedontheCompany’swebsite.

AServicesAgreementexistsbetweentheCompanyandJohnSwire&Sons(H.K.)Limited,awholly-ownedsubsidiaryofJohnSwire&SonsLimited,whichistheparentcompanyoftheSwiregroup.ThisagreementhasbeenconsideredindetailandapprovedbytheIndependentNon-ExecutiveDirectorsoftheCompany.Underthetermsoftheagreement,staffatvariouslevels,includingExecutiveDirectors,aresecondedto

theCompany.ThesestaffreporttoandtakeinstructionsfromtheBoardoftheCompanybutremainemployeesoftheSwiregroup.AsasubstantialindirectshareholderoftheCompany,itisinthebestinterestsoftheSwiregrouptoensurethatexecutivesofhighqualityaresecondedtoandretainedwithintheSwirePropertiesgroup.

Inordertobeabletoattractandretainstaffofsuitablecalibre,theSwiregroupprovidesacompetitiveremunerationpackagedesignedtobecommensurate,overall,withthoseofitspeergroup.Thistypicallycomprisessalary,housing,retirementfund,leave-passageandeducationallowancesand,afterthreeyears’service,abonusrelatedtotheoverallprofitoftheSwiregroup.

NoDirectortakespartinanydiscussionabouthisorherownremuneration.

ThefollowingfeelevelswereapprovedbytheBoard:

Fee2011HK$

2012HK$

Director’sFee 500,000 500,000

FeeforAuditCommitteeChairman 200,000 200,000

FeeforAuditCommitteeMember 150,000 150,000

FeeforRemunerationCommitteeChairman 65,000 65,000

FeeforRemunerationCommitteeMember 50,000 50,000

AccountabilityandAuditFinancialReportingTheBoardacknowledgesitsresponsibilityfor:

•theproperstewardshipoftheCompany'saffairs,toensuretheintegrityoffinancialinformation

•preparingannualandinterimaccountsandotherrelatedinformationthatgiveatrueandfairviewoftheGroup’saffairsandofitsresultsandcashflowsfortherelevantperiods,inaccordancewithHongKongFinancialReportingStandardsandtheHongKongCompaniesOrdinance

•selectingappropriateaccountingpoliciesandensuringthattheseareconsistentlyapplied

•makingjudgementsandestimatesthatareprudentandreasonable;and

•ensuringthattheapplicationofthegoingconcernassumptionisappropriate

InternalControlsTheBoardacknowledgesitsresponsibilitytoestablish,maintainandreviewtheeffectivenessoftheGroup'ssystemofinternalcontrolswithaviewtoensuringthatshareholders’investmentsandtheCompany'sassetsaresafeguarded.ThisresponsibilityisprimarilyfulfilledonitsbehalfbytheAuditCommittee.

Thefoundationofastrongsystemofinternalcontrolisdependentontheethicsandcultureoftheorganisation,thequalityandcompetenceofitspersonnel,thedirectionprovidedbytheBoard,andtheeffectivenessofmanagement.

Sinceprofitsare,inpart,therewardforsuccessfulrisktakinginbusiness,thepurposeofinternalcontrolsistohelpmanageandcontrol,ratherthaneliminate,risk.Consequently,internalcontrolscanonlyprovidereasonable,andnotabsolute,assuranceagainstmisstatementorloss.


andsegregationofduties.Controlactivitiescanbedividedintooperations,financialreportingandcompliance,althoughtheremay,onoccasion,besomeoverlapbetweenthem.Thetypicalcontrolactivitiesinclude:

•analyticalreviews:forexample,conductingreviewsofactualperformanceversusbudgets,forecasts,priorperiodsandcompetitors

•directfunctionaloractivitymanagement:reviewsofperformancereports,conductedbymanagersinchargeoffunctionsoractivities

•information-processing:performingcontrolsintendedtochecktheauthorisationoftransactionsandtheaccuracyandcompletenessoftheirreporting,forexample,exceptionreports

•physicalcontrols:ensuringequipment,inventories,securitiesandotherassetsaresafeguardedandsubjectedtoperiodicchecks

•performanceindicators:carryingoutanalysesofdifferentsetsofdata,operationalandfinancial,examiningtherelationshipsbetweenthem,andtakingcorrectiveactionwherenecessary

•segregationofduties:dividingandsegregatingdutiesamongdifferentpeople,withaviewtostrengtheningchecksandminimisingtheriskoferrorsandabuse

TheCompanyhasinplaceeffectiveprocessesandsystemsfortheidentification,captureandreportingofoperational,financialandcompliance-relatedinformationinaformandtime-frameintendedtoensurethatstaffcarryouttheirdesignatedresponsibilities.

Internal audit:Independentofmanagement,theInternalAuditdepartmentreportsdirectlytotheChairmanandperformsregularreviewsofkeyriskareasandmonitorscompliancewithGroupaccounting,financialandoperationalprocedures.TheroleofInternalAuditisdiscussedfurtheronpage70.

AuditCommitteeTheAuditCommitteeconsistsofthreeNon-ExecutiveDirectors,twoofwhomareindependent.ThetermsofreferenceoftheAuditCommitteefollowtheguidelinessetoutbytheHongKongInstituteofCertifiedPublicAccountantsandcomplywiththeCode.TheyareavailableontheCompany’swebsite.

TheAuditCommitteehasmettwicesincethesharesoftheCompanybecamelistedontheStockExchangeon

ThekeycomponentsoftheGroup’scontrolstructureareasfollows:

Culture:TheBoardbelievesthatgoodgovernancereflectsthecultureofanorganisation.Thisismoresignificantthananywrittenprocedures.

TheCompanyaimsatalltimestoactethicallyandwithintegrity,andtoinstilthisbehaviourinallitsemployeesbyexamplefromtheBoarddown.

TheCompanyiscommittedtodevelopingandmaintaininghighprofessionalandethicalstandards.Thesearereflectedintherigorousselectionprocessandcareerdevelopmentplansforallemployees.Theorganisationpridesitselfonbeingalong-termemployerwhichinstilsinindividuals,astheyprogressthroughtheGroup,athoroughunderstandingoftheCompany’sphilosophy.

Channelsofcommunicationareclearlyestablished,allowingemployeesameansofcommunicatingtheirviewsupwardswithawillingnessonthepartofmoreseniorpersonneltolisten.Employeesareawarethat,whenevertheunexpectedoccurs,attentionshouldbegivennotonlytotheeventitself,butalsotodeterminingthecause.

Risk assessment:TheBoardofDirectorsandthemanagementeachhavearesponsibilitytoidentifyandanalysetherisksunderlyingtheachievementofbusinessobjectives,andtodeterminehowsuchrisksshouldbemanagedandmitigated.

Management structure:TheGrouphasaclearorganisationalstructurethat,totheextentrequired,delegatestheday-to-dayresponsibilityforthedesign,documentationandimplementationofproceduresandongoingmonitoringofrisk.Individualsappreciatewheretheywillbeheldaccountableinthisprocess.

Acontrolself-assessmentprocessrequiresmanagementtoassess,throughtheuseofdetailedquestionnaires,theadequacyandeffectivenessofcontrolsoverthereliabilityoffinancialreporting,theeffectivenessandefficiencyofoperationsandcompliancewithapplicablelawsandregulations.ThisprocessanditsresultsarereviewedbyinternalauditorsandformpartoftheAuditCommittee’sannualassessmentofcontroleffectiveness.

Controls and review:Thecontrolenvironmentcomprisespoliciesandproceduresintendedtoensurethatrelevantmanagementdirectivesarecarriedoutandactionsthatmaybeneededtoaddressrisksaretaken.Thesemayincludeapprovalsandverifications,reviews,safeguardingofassets



18thJanuaryin2012.RegularattendersatthemeetingsweretheFinanceDirectoroftheCompanyandtheexternalauditors.Theindependentpropertyvaluersandarepresentativeoftheinternalauditalsoattendedoneofthemeetings.

TheworkoftheCommitteetodatein2012includedreviewsoftherevaluationoftheinvestmentpropertyportfolioat31stDecember2011,theinternalauditworkdonein2011andthatproposedfor2012,amemorandumbytheexternalauditorsontheauditstrategyfor2011andtheindependenceoftheexternalauditors.TheAuditCommitteehasalsoreviewed,andrecommendedtotheBoardforapproval,the2011accounts.

AssessingtheEffectivenessof InternalControlsTheAuditCommitteehastheresponsibilitytoreviewannually,onbehalfoftheBoard,theeffectivenessoftheCompany’ssystemsofinternalcontrolsdealingwithriskandfinancialaccountingandreporting,theeffectivenessandefficiencyofoperations,compliancewithlawsandregulations,andriskmanagementfunctions.Inrelationto2011(whenthesharesoftheCompanywerenotlistedonTheStockExchangeofHongKongLimited),theAuditCommitteereliedforthispurposeontheassessmentcarriedoutbytheauditcommitteeofSwirePacificLimited,insofarasitrelatedtothepropertydivision(ofwhichtheCompanywastheprincipalcomponent)ofSwirePacificLimited.Thatassessmentconsidered,inrelationtotheSwirePacificgroup:

•thescopeandqualityoftheSwirePacificLimitedmanagement'smonitoringofrisksandofthesystemsofinternalcontrol,theworkoftheSwirePacificLimitedInternalAuditDepartmentandtheassurancesprovidedbytheGroupFinanceDirectorofSwirePacificLimited

•thechangesinthenatureandextentofsignificantriskssincethepreviousreviewandtheSwirePacificgroup’sabilitytorespondtochangesinitsbusinessandtheexternalenvironment

•theextentandfrequencywithwhichtheresultsofmonitoringarecommunicated,enablingtheSwirePacificAuditCommitteetobuildupacumulativeassessmentofthestateofcontrolintheSwirePacificgroupandtheeffectivenesswithwhichriskisbeingmanaged

•theincidenceofanysignificantcontrolfailingsorweaknessesthathavebeenidentifiedatanytimeduringtheperiodandtheextenttowhichtheyhaveresultedin

unforeseenoutcomesorcontingenciesthathavehad,couldhavehad,ormayinthefuturehave,amaterialimpactonSwirePacificLimited’sfinancialperformanceorposition

•theeffectivenessoftheSwirePacificLimited’sprocessesinrelationtofinancialreportingandstatutoryandregulatorycompliance

•areasofriskidentifiedbymanagement•significantrisksreportedbytheSwirePacificLimited

InternalAuditDepartmentandgroupriskmanagementcommittee

•workprogrammesproposedbytheSwirePacificLimitedInternalAuditDepartmentandtheexternalauditorsofSwirePacificLimited

•significantissuesarisingfromSwirePacificLimited’sinternalandexternalauditreports

•theresultsofthecontrolselfassessmentexerciseundertakenbythemanagementofSwirePacificLimited.

Havingconsideredtheaboveassessment,theBoardconfirmsthattheCompany’sinternalcontrolsystemsareadequateandeffective.

InternalAuditDepartmentTheSwiregrouphashadanInternalAuditDepartment(“IA”)inplacefor16years.IAplaysacriticalroleinmonitoringthegovernanceoftheGroup.Thedepartmentisstaffedby18auditprofessionalsandconductsauditsoftheGroupandothercompaniesintheSwiregroup.The18professionalsincludeateambasedinMainlandChinawhichreportstoIAinHongKong.

IAreportsdirectlytotheChairmanoftheBoardand,withouttheneedtoconsultwithmanagement,totheChairmanoftheAuditCommitteeandviahimtotheBoard.IAhasunrestrictedaccesstoallareasoftheGroup’sbusinessunits,assets,recordsandpersonnelinthecourseofconductingitswork.

TheannualIAworkplanandresourcesarereviewedandagreedwiththeAuditCommittee.

ScopeofWorkBusinessunitauditsaredesignedtoprovideassurancethattheinternalcontrolsystemsofSwirePropertiesareimplementedproperlyandoperatingeffectively,andthattherisksassociatedwiththeachievementofbusinessobjectivesarebeingproperlyidentified,monitoredandmanaged.


ThefrequencyofeachauditisdeterminedbyIAusingitsownriskassessmentmethodology,whichisbasedontheCOSO(CommitteeofSponsoringOrganizationsoftheTreadwayCommission)internalcontrolframework,consideringsuchfactorsasrecognisedrisks,organisationalchange,overallmaterialityofeachunit,previousIAresults,externalauditors’comments,outputfromtheworkoftheSwirePacificGroupRiskManagementCommitteeandmanagement’sviews.Eachbusinessunitistypicallyauditedatleastonceeverythreeyears.Acquiredbusinesseswouldnormallybeauditedwithin12months.EightassignmentswereconductedforSwirePropertiesin2011.

IAspecificallyassiststheAuditCommitteeinassessingtheeffectivenessoftheGroup'sinternalcontrolsthroughitsreviewoftheprocessbywhichmanagementhascompletedtheannualControlSelfAssessment,andtheresultsofthisassessment.

IAconductsad-hocprojectsandinvestigativeworkasmayberequiredbymanagementortheAuditCommittee.

AuditConclusionandResponseCopiesofIAreportsaresenttotheChairmanoftheBoard,theFinanceDirectorandtheexternalauditors.TheresultsofeachreviewarealsopresentedtotheAuditCommittee.

ManagementiscalledupontopresentactionplansinresponsetoIA’srecommendations.TheseareagreedbyIA,includedinitsreportsandfollowedupwithaviewtoensuringthattheyaresatisfactorilyundertaken.

ExternalAuditorsTheAuditCommitteeactsasapointofcontact,independentfrommanagement,withtheexternalauditors(the“auditors”).TheauditorshavedirectaccesstotheChairmanoftheAuditCommittee,whomeetswiththemperiodicallywithoutmanagementpresent.

TheAuditCommittee’sdutiesinrelationtotheauditorsinclude:

•recommendingtotheBoard,forapprovalbyshareholders,theauditors’appointment

•approvaloftheauditors’termsofengagement•considerationofthelettersofrepresentationtobe

providedtotheauditorsinrespectoftheinterimandannualaccounts

•reviewofreportsandotherad-hocpapersfromtheauditors•annualappraisalofthequalityandeffectivenessof

theauditors

•assessmentoftheauditors’independenceandobjectivity,includingthemonitoringofnon-auditservicesprovided,withaviewtoensuringthattheirindependenceandobjectivityisnot,andisnotseentobe,compromised

•approvalofauditandnon-auditfees

Auditors’IndependenceIndependenceoftheauditorsisofcriticalimportancetotheAuditCommittee,theBoardandshareholders.TheauditorswriteannuallytothemembersoftheAuditCommitteeconfirmingthattheyareindependentaccountantswithinthemeaningoftheInternationalEthicsStandardsBoardforAccountantsCodeofEthicsandthattheyarenotawareofanymatterswhichmayreasonablybethoughttobearontheirindependence.TheAuditCommitteeassessestheindependenceoftheauditorsbyconsideringanddiscussingeachsuchletter(andhavingregardtothefeespayabletotheauditorsforauditandnon-auditworkandthenatureofthenon-auditwork)atameetingoftheAuditCommittee.

ProvisionofNon-auditServicesIndecidingwhethertheauditorsshouldprovidenon-auditservicesthefollowingkeyprinciplesareconsidered:

•theauditorsshouldnotaudittheirownfirm’swork•theauditorsshouldnotmakemanagementdecisions•theauditors’independenceshouldnotbeimpaired•qualityofservice

Inaddition,anyserviceswhichmaybeconsideredtobeinconflictwiththeroleoftheauditorsmustbesubmittedtotheAuditCommitteeforapprovalpriortoengagement,regardlessoftheamountsinvolved.

Feespaidtotheauditorsaredisclosedinnote8totheaccounts.

InvestorRelationsAllcommunicationsforshareholdersincludingreports,announcementsandtheresultsofpollsofshareholdersatshareholdermeetingsarepostedontheCompany’swebsite:www.swireproperties.com.Copiesoftheannualandinterimreportswillalsobemadeavailabletoshareholdersinprintedorelectronicform.Briefingsfortheinvestmentcommunitywillbeheldshortlyaftertheinterimandfinalresultsannouncements.

Keyshareholderdatesfor2012aresetoutonpage160ofthisreport.


ExecutiveDirectorsPRATT, Christopher Dale,CBE,aged55,hasbeenaDirectoroftheCompanysinceFebruary2003andChairmanoftheCompanysinceJune2009.HeisalsoChairmanofJohnSwire&Sons(H.K.)Limited,SwirePacificLimited,CathayPacificAirwaysLimitedandHongKongAircraftEngineeringCompanyLimited,andaDirectorofAirChinaLimitedandTheHongkongandShanghaiBankingCorporationLimited.HejoinedtheSwiregroupin1978andhasworkedwiththegroupinHongKong,AustraliaandPapuaNewGuinea.

CUBBON, Martin,aged54,hasbeenaDirectoroftheCompanysinceMarch2000andChiefExecutiveoftheCompanysinceJune2009.HeisalsoaDirectorofJohnSwire&Sons(H.K.)LimitedandSwirePacificLimited,withresponsibilityforgroupfinancefromSeptember1998toMarch2009.HejoinedtheSwiregroupin1986.

LOW, Mei Shuen Michelle,aged51,hasbeenaDirectoroftheCompanysinceSeptember2010whenshewasappointedHumanResourcesDirectoroftheCompany.InSeptember2011,shewasappointedDirector,Finance&HumanResourcesoftheCompanywithresponsibilityforthefinancialinterestsandhumanresourcesmanagementoftheCompany.SheisalsoaDirectorofJohnSwire&Sons(H.K.)Limited.ShejoinedtheSwiregroupin1987.

BRADLEY, Guy Martin Coutts,aged46,hasbeenaDirectoroftheCompanysinceJanuary2008.HewasappointedChiefExecutiveOfficer–MainlandChinainJune2011andis

responsiblefortheCompany’sMainlandChinabusiness.HeisalsoaDirectorofJohnSwire&Sons(China)LimitedandchiefrepresentativeofitsrepresentativeofficeinBeijing.HejoinedtheSwiregroupin1987andhasworkedwiththegroupinHongKong,PapuaNewGuinea,Japan,theU.S.A.,Vietnam,MainlandChina,TaiwanandtheMiddleEast.

HO, Cho Ying Davy,aged64,hasbeenaDirectoroftheCompanysinceApril2010.HeisresponsibleforrelationswithjointventurepartnersandgovernmentauthoritiesinHongKongandMainlandChina.HejoinedtheSwiregroupin1970andhasworkedwiththegroupinHongKong,MainlandChinaandTaiwan.

ONGLEY, Gordon James,aged58,hasbeenaDirectoroftheCompanysinceFebruary2003.HewasappointedChiefOperatingOfficer–HongKonginJune2011andisresponsiblefortheCompany’sHongKongbusiness.HejoinedtheCompanyin1995andhasworkedwiththeCompanyinHongKongandMainlandChina.

Non-ExecutiveDirectorsHUGHES-HALLETT, James Wyndham John,SBS,aged62,hasbeenaDirectoroftheCompanysinceJuly1998.HeisChairmanofJohnSwire&SonsLimitedandaDirectorofSwirePacificLimited,CathayPacificAirwaysLimited,SteamshipsTradingCompanyLimitedandHSBCHoldingsplc.HejoinedtheSwiregroupin1976andhasworkedwiththegroupinHongKong,Taiwan,Japan,AustraliaandLondon.

DirectorsandOfficer


KILGOUR, Peter Alan,aged56,hasbeenaDirectoroftheCompanysinceFebruary2001.HeisalsoFinanceDirectorofSwirePacificLimited,andaDirectorofCathayPacificAirwaysLimitedandJohnSwire&Sons(H.K.)Limited.HejoinedtheSwiregroupin1983.

SWIRE, Merlin Bingham,aged38,hasbeenaDirectoroftheCompanysinceJanuary2009.HejoinedtheSwiregroupin1997andhasworkedwiththegroupinHongKong,Australia,MainlandChinaandLondon.HeisaDirectorandshareholderofJohnSwire&SonsLimitedandSwirePacificLimited,aDirectorofCathayPacificAirwaysLimitedandHongKongAircraftEngineeringCompanyLimited,andanAlternateDirectorofSteamshipsTradingCompanyLimited.

IndependentNon-ExecutiveDirectorsBRADLEY, Stephen Edward,aged53,hasbeenaDirectoroftheCompanysinceApril2010.HeisSeniorRepresentative(China)ofGrosvenorLimited,ChairmanofCSSMobilePromotions,ViceChairman(AsiaPacific)ofICAP(HongKong)Limited,andaDirectorofHuskyEnergyInc.HeisalsoanadvisortoRioTintogroup.

Dr. CHAN, Cho Chak John, GBS, JP,aged68,hasbeenaDirectoroftheCompanysinceApril2010.HeisChairmanofRoadShowHoldingsLimitedandanIndependentNon-ExecutiveDirectorofGuangdongInvestmentLimited,HangSengBankLimitedandTransportInternationalHoldingsLimited.HeisalsoaDirectorofCommunityChestofHongKong.

CHENG, Hoi Chuen, GBS, OBE, JP,aged63,hasbeenaDirectoroftheCompanysinceApril2010.HeisAdvisertotheGroupChiefExecutiveofHSBCHoldingsplc.HeisanIndependentNon-ExecutiveDirectorofCLPHoldingsLimited,GreatEagleHoldingsLimited,HuiXianAssetManagementLimitedandMTRCorporationLimited.HeisVice-ChairmanoftheChinaBankingAssociationandHonoraryAdvisoryPresidentoftheHongKongInstituteofBankers.HeisChairmanoftheIndependentCommissiononRemunerationforMembersoftheExecutiveCouncilandtheLegislature,andOfficialsunderthePoliticalAppointmentSystemoftheHKSARGovernmentandtheCouncilofTheChineseUniversityofHongKong.Mr.ChengwasappointedasaNon-ExecutiveDirectoroftheCompanyon14thApril2010andwasre-designatedasanIndependentNon-ExecutiveDirectoroftheCompanyon16thDecember2011.

ETCHELLS, Paul Kenneth,aged61,hasbeenaDirectoroftheCompanysinceApril2010.HeisanIndependentNon-ExecutiveDirectorofSamsoniteInternationalS.A.HewasemployedbytheSwiregroupinHongKongfrom1976to1998.HewasemployedbyTheCoca-ColaCompanyfromJuly1998toJune2010,andworkedintheU.S.A.,MainlandChinaandHongKong.

LIU, Sing Cheong, JP,aged56,hasbeenaDirectoroftheCompanysinceApril2010.HeisChairmanofMyTopHome(China)HoldingsLimited,andaDirectorofPradaS.p.A.,HongKongScienceandTechnologyParksCorporationandHongKongUniversityofScienceandTechnologyRandDCorporationLimited.

SecretaryFU, Yat Hung David,aged48,hasbeenCompanySecretarysinceFebruary2010.HejoinedtheSwiregroupin1988.

Notes:1.TheAuditCommitteecomprisesP.K.Etchells(committee

chairman),J.C.C.ChanandP.A.Kilgour.2.TheRemunerationCommitteecomprisesJ.W.J.Hughes-Hallett

(committeechairmanuntil31stMarch2012),S.E.BradleyandS.C.Liu.

3.G.M.C.Bradley,M.Cubbon,J.W.J.Hughes-Hallett,P.A.Kilgour,M.M.S.Low,C.D.PrattandM.B.SwireareemployeesoftheJohnSwire&SonsLimitedgroup.


TheDirectorssubmittheirreporttogetherwiththeauditedaccountsfortheyearended31stDecember2011,whicharesetoutonpages89to147.

PrincipalActivitiesTheprincipalactivitiesofSwirePropertiesLimited(the“Company”)anditssubsidiaries(together,the“Group”)are:(i)propertyinvestment,thatisthedevelopment,leasingandmanagementofcommercial,retailandsomeresidentialproperties;(ii)propertytrading,thatisthedevelopmentandconstructionofproperties,principallyresidentialapartments,forsale;and(iii)investmentinandoperationofhotels.

TheprincipalactivitiesoftheCompany’smajorsubsidiary,jointlycontrolledandassociatedcompaniesareshownonpages145to147.AnanalysisoftheGroup’sperformancefortheyearbyreportablebusinesssegmentandgeographicalareaissetoutinnote9totheaccounts.

ListingoftheCompanyOn7thOctober2011,SwirePacificLimited(“SwirePacific”)submittedaspin-offproposaltoTheStockExchangeofHongKongLimited(the“StockExchange”)pursuanttoPracticeNote15oftheRulesGoverningtheListingofSecuritiesonTheStockExchangeofHongKongLimited(“ListingRules”)inrelationtotheproposedspin-offoftheCompany(“Spin-off”)bywayofaseparatelistingoftheordinarysharesofHK$1.00eachoftheCompany(the“SwirePropertiesShares”)ontheMainBoardoftheStockExchange.

On27thOctober2011,theCompanysubmittedalistingapplicationform(FormA1)totheStockExchangeinordertoapplyforthelistingof,andpermissiontodealin,theSwirePropertiesSharesontheMainBoardoftheStockExchange.ThelistingoftheSwirePropertiesShareswouldbebywayofintroductionachievedbyadistributioninspeciebySwirePacificofapproximately18%oftheSwirePropertiesShares.

On21stDecember2011,theboardofSwirePacificdeclaredconditionalspecialinterimdividends(“ConditionalSwirePacificDividend”)fortheyearended31stDecember2011of7SwirePropertiesSharesforevery10‘A’sharesheldinSwirePacificand7SwirePropertiesSharesforevery50‘B’sharesheldinSwirePacifictotheshareholdersonSwirePacific’sregisterofmembersasatthecloseofbusinesson6thJanuary2012.Fractionalentitlementsweredisregarded.TheConditionalSwirePacificDividendbecameunconditionaluponthelistingoftheSwirePropertiesSharesunderstockcode1972ontheMainBoardoftheStockExchangeon18thJanuary2012andwassatisfiedwhollybywayofadistributioninspecieofanaggregateof1,053,234,165SwirePropertiesShares,representingapproximately18%ofthetotalof5,850,000,000SwirePropertiesSharesinissue,on18thJanuary2012.

WitheffectfromthelistingoftheSwirePropertiessharesontheMainBoardoftheStockExchangeon18thJanuary2012,SwirePacific’sshareholdingintheCompanydecreasedfrom100%toapproximately82%.

Directors’Report


DividendsSwirePacificwasthesoleshareholderoftheCompanyuntilthelistingoftheSwirePropertiesSharesontheMainBoardoftheStockExchangeon18thJanuary2012.

Inrespectoftheyearended31stDecember2010,afinaldividendofHK$2,424,921,000waspaidtoSwirePacificon9thJune2011asrecommendedbytheDirectors.

Inrespectoftheyearended31stDecember2011,afirstspecialinterimdividendofHK$4,513,877,000waspaidtoSwirePacificon30thSeptember2011andasecondspecialinterimdividendofHK$5,500,000,000waspaidtoSwirePacificon8thNovember2011,ineachcaseasrecommendedbytheDirectors.

TheDirectorshavedeclaredafirstinterimdividendofHK¢18pershareon15thMarch2012fortheyearended31stDecember2011.Thisinterimdividendwillbeinlieuofafinaldividend.Togetherwiththefirstandsecondspecialinterimdividendspaidin2011,thisrepresentsatotaldistributionfortheyearofHK$11,067million.

Thefirstinterimdividendwillbepaidon3rdMay2012toshareholdersregisteredatthecloseofbusinessontherecorddate,beingThursday,5thApril2012.SharesoftheCompanywillbetradedex-dividendasfromMonday,2ndApril2012.

Infuture,theCompanyintendstopaytwointerimdividendsinsteadofaninterimdividendandafinaldividend.Asecondinterimdividendwillbeinlieuofafinaldividend.Thetotalamountofdividendspaidtoshareholdersforayearwillbethesamewithtwointerimdividendsasitwouldhavebeenwithaninterimdividendandafinaldividend.

ClosureofRegisterofMembersTheregisterofmemberswillbeclosedonThursday,5thApril2012,duringwhichdaynotransferofshareswillbeeffected.Inordertoqualifyforentitlementtothefirstinterimdividend,alltransferformsaccompaniedbytherelevantsharecertificatesmustbelodgedwiththeCompany’sshareregistrars,ComputershareHongKongInvestorServicesLimited,17thFloor,HopewellCentre,183Queen’sRoadEast,HongKong,forregistrationnotlaterthan4:30p.m.onTuesday,3rdApril2012.

Tofacilitatetheprocessingofproxyvotingfortheannualgeneralmeetingtobeheldon10thMay2012,theregisterofmemberswillbeclosedfrom7thMay2012to10thMay

2012,bothdaysinclusive,duringwhichperiodnotransferofshareswillbeeffected.Inordertobeentitledtoattendandvoteattheannualgeneralmeeting,alltransferformsaccompaniedbytherelevantsharecertificatesmustbelodgedwiththeCompany’sshareregistrars,ComputershareHongKongInvestorServicesLimited,17thFloor,HopewellCentre,183Queen’sRoadEast,HongKong,forregistrationnotlaterthan4:30p.m.onFriday,4thMay2012.

ReservesMovementsinthereservesoftheGroupandtheCompanyduringtheyeararesetoutinnote37totheaccounts.

ShareCapitalDuringtheyearunderreview,theGroupdidnotpurchase,sellorredeemanysharesintheCompanyandtheGrouphasnotadoptedanyshareoptionscheme.

On30thNovember2011,theCompanyallotted160,000,000ordinarysharesofHK$1.00eachoftheCompany,fullypaid,toSwirePacificforanaggregatecashconsiderationofHK$4,500,000,000.

Asat31stDecember2011,5,850,000,000shareswereinissue(31stDecember2010:5,690,000,000shares).Detailsofthemovementofsharecapitalcanbefoundinnote36totheaccounts.

AccountingPoliciesTheprincipalaccountingpoliciesoftheGrouparesetoutonpages136to144.

AuditorsPricewaterhouseCoopersretireand,beingeligible,offerthemselvesforre-appointment.Aresolutionforthere-appointmentofPricewaterhouseCoopersasauditorsoftheCompanyistobeproposedattheforthcomingAnnualGeneralMeeting.

FinancialReviewAreviewoftheconsolidatedresults,financialpositionandcashflowsisshownonpages46to52.Aten-yearfinancialsummaryoftheresultsandoftheassetsandliabilitiesoftheGroupisshownonpages3to5.

CorporateGovernance&Sustainability|Directors’Report


CorporateGovernanceAstheCompanywasnotalistedcompanyduringtheyearended31stDecember2011,theCodeonCorporateGovernancePracticessetoutinAppendix14totheListingRules(the“Code”)wasnotapplicabletoitduringthatperiod.TheCodewillbeapplicabletotheCompanywitheffectfromtheyearending31stDecember2012.DetailsoftheCompany’scorporategovernancepracticesaresetoutonpages64to71.

DonationsDuringtheyear,theGroupmadedonationsforcharitablepurposesofHK$18millionanddonationstowardsvariousscholarshipsofHK$1million.

FixedAssetsFordetailsofmovementsinfixedassetsrefertonotes16and17totheaccounts.

TheannualvaluationoftheGroup’sinvestmentpropertyportfolio,whethercompleteorinthecourseofdevelopment,wascarriedoutbyprofessionallyqualifiedvaluers(96%byvaluehavingbeenvaluedbyDTZDebenhamTieLeung)onthebasisofopenmarketvalueat31stDecember2011.ThisvaluationresultedinanincreaseofHK$20,345millioninthecarryingvalueoftheinvestmentpropertyportfolio.

AscheduleoftheprincipalpropertiesoftheGroupanditsjointlycontrolledandassociatedcompaniesisgivenonpages148to158.

BorrowingsFordetailsoftheGroup’sborrowingsrefertopages53to61.

InterestRefertopage58fordetailsoftheamountofinterestcapitalisedbytheGroup.

MajorCustomersandSuppliersDuringtheyear,lessthan30%oftheGroup’ssalesandlessthan30%oftheGroup’spurchaseswereattributabletotheGroup’sfivelargestcustomersandsuppliersrespectively.

DirectorsTheDirectorsoftheCompanyasatthedateofthisreportarelistedonpages72and73.Allofthemservedthroughoutthecalendaryear2011.Duringtheyear,J.C.G.BremridgeservedasanExecutiveDirectoruntilhisresignationwitheffectfrom12thSeptember2011.H.C.Cheng,whowasappointedasaNon-ExecutiveDirectoron14thApril2010,wasre-designatedasanIndependentNon-ExecutiveDirectoron16thDecember2011.

IndependenceConfirmation

TheCompanyhasreceivedfromallofitsIndependentNon-ExecutiveDirectorslistedonpage73confirmationoftheirindependencepursuanttoListingRule3.13andconsidersallofthemtobeindependent.TheconfirmationfromH.C.Chengreferstohisre-designationfromaNon-ExecutivedirectortoanIndependentNon-ExecutiveDirectoron16thDecember2011andhisbeingAdvisertotheGroupChiefExecutiveofHSBCHoldingsplc,whichismentionedunder“DirectorsandOfficer–IndependentNon-ExecutiveDirectors”onpage73.

TheBoardconsidersthatallofitsIndependentNon-ExecutiveDirectorsareindependentincharacterandjudgementandfulfiltheindependenceguidelinessetoutinRule3.13oftheListingRules.

H.C.ChengjoinedTheHongkongandShanghaiBankingCorporationLimited(“HSBC”)in1978andwasChairmanandaDirectorofHSBCuntil1stFebruary2010.HewasanExecutiveDirectorofHSBCHoldingsplc,theholdingcompanyofHSBC,until27thMay2011.HSBC,togetherwithBOCIAsiaLimited,GoldmanSachs(Asia)L.L.C.andMorganStanleyAsiaLimited,wereengagedbytheCompanyandSwirePacificasjointsponsorsinrespectoftheSpin-offandlistingofsharesintheCompanywhichtookplaceon18thJanuary2012.

TheBoardconsidersthatH.C.Cheng’spreviousdesignationasaNon-ExecutiveDirectoroftheCompanyandhiscurrentadvisoryroletotheGroupChiefExecutiveofHSBCHoldingsplcshouldnotaffecthisindependenceasanIndependentNon-ExecutiveDirectorsince(a)hehasneverheldanyexecutiveoffice,norhashebeeninvolvedinanyexecutivecapacity,intheCompanyandhisroleasaNon-ExecutiveDirectoroftheCompanyhasbeennodifferentfromthatofanIndependentNon-ExecutiveDirectorand(b)hehasnot,at


leastinthepast21months,beenadirector,anemployeeoraprincipalofHSBC(whichisajointsponsor,asdescribedinthepreviousparagraph)andinhiscurrentadvisoryroletotheGroupChiefExecutiveofHSBCHoldingsplc,heisnotinvolvedintheday-to-dayoperationsofHSBCHoldingsplcoritssubsidiariesand,inparticular,hehasnotbeeninvolvedinHSBC’sroleinprovidingservicestotheCompanyasajointsponsor.

TermofAppointment

Article93oftheCompany’sArticlesofAssociationprovidesforallDirectorstoretireatthethirdAnnualGeneralMeetingfollowingtheirelectionbyordinaryresolution.NoneoftheDirectorswillretirethisyear.

EachoftheDirectorshasenteredintoaletterofappointment,whichconstitutesaservicecontract,withtheCompanyforatermofuptothreeyearsuntilretirementunderArticle91orArticle93oftheArticlesofAssociationoftheCompany,whichwillberenewedforatermofthreeyearsuponeachelectionorre-election.NoDirectorhasaservicecontractwiththeCompanywhichisnotdeterminablebytheemployerwithinoneyearwithoutpaymentofcompensation(otherthanstatutorycompensation).

FeesandEmoluments

FulldetailsofDirectors’feesandemolumentsaresetoutinnote10totheaccounts.

Directors’feespaidtotheIndependentNon-ExecutiveDirectorsduringtheyeartotalledHK$2,950,000.TheyreceivednootheremolumentsfromtheGroup.

Directors’InterestsAsat31stDecember2011,therequirementunderSection352oftheSecuritiesandFuturesOrdinance(“SFO”)tomaintainaregisterofdirectors’andchiefexecutives’interestsandshortpositionswasnotapplicabletotheCompanybecausetheCompanywasnotyetalistedcorporation(withinthemeaningofPartXVoftheSFO).

On18thJanuary2012,theCompanybecamealistedcorporation.Asat18thJanuary2012,theregistermaintainedunderSection352oftheSFOshowedthatDirectorsheldthefollowinginterestsinthesharesoftheCompanyanditsassociatedcorporations(withinthemeaningofPartXVoftheSFO),JohnSwire&SonsLimited,SwirePacificLimitedandHongKongAircraftEngineeringCompanyLimited:

Capacity

BeneficialInterest

Personal FamilyTrust

InterestTotalNo.ofShares

PercentageofIssued

Capital(%) Note

Swire Properties Limited

S.E.Bradley 700 – – 700 0.00001

P.K.Etchells – 8,400 – 8,400 0.00014

D.C.Y.Ho 14,000 – – 14,000 0.00024

P.A.Kilgour 3,500 – – 3,500 0.00006

C.D.Pratt 49,700 – – 49,700 0.00085

M.B.Swire 354,961 – 551,397 906,358 0.01549 (1)



Capacity

BeneficialInterest



PercentageofIssued

Capital(%) Note

John Swire & Sons Limited

Ordinary Shares of £1

M.B.Swire 3,140,523 – 19,222,920 22,363,443 22.36 (1)

8% Cum. Preference Shares of £1

M.B.Swire 846,476 – 5,655,441 6,501,917 21.67 (1)

Capacity

BeneficialInterest



PercentageofIssued

Capital(%) Note

Swire Pacific Limited

‘A’ shares

S.E.Bradley 1,000 – – 1,000 0.0001

P.K.Etchells – 12,000 – 12,000 0.0013

P.A.Kilgour 5,000 – – 5,000 0.0006

C.D.Pratt 51,000 – – 51,000 0.0056

M.B.Swire 58,791 – – 58,791 0.0065

‘B’ shares

D.C.Y.Ho 100,000 – – 100,000 0.0033

C.D.Pratt 100,000 – – 100,000 0.0033

M.B.Swire 2,241,483 – 3,938,554 6,180,037 0.2063 (1)

Capacity

BeneficialInterest



PercentageofIssued

Capital(%) Note

Hong Kong Aircraft Engineering Company Limited

D.C.Y.Ho 6,400 – – 6,400 0.0038

Note:(1)M.B.Swireisatrusteeoftrustswhichheld425,295sharesintheCompany,10,766,080ordinarysharesand3,121,716preferencesharesin

JohnSwire&SonsLimitedand3,037,822‘B’sharesinSwirePacificLimitedincludedunder“Trustinterest”anddoesnothaveanybeneficialinterestinthoseshares.


Otherthanasstatedabove,noDirectororChiefExecutiveoftheCompanyhadanyinterestorshortposition,whetherbeneficialornon-beneficial,inthesharesorunderlyingsharesanddebenturesoftheCompanyoranyofitsassociatedcorporations(withinthemeaningofPartXVoftheSFO)on18thJanuary2012.

Neitherduringnorpriortotheyearunderreviewhasanyrightbeengrantedto,orexercisedby,anyDirectoroftheCompany,ortoorbythespouseorminorchildofanyDirector,tosubscribeforshares,warrantsordebenturesoftheCompany.

AtnotimeduringtheyeardidanyDirector,otherthanasstatedinthisreport,haveabeneficialinterest,whetherdirectlyorindirectly,inacontracttowhichtheCompanyoranyofitsassociatedcorporationswasaparty,beingacontractwhichwasofsignificanceandinwhichtheDirector’sinterestwasmaterial.

AtnotimeduringtheyearwastheCompany,oranyofitsassociatedcorporations,apartytoanyarrangementstoenabletheDirectorsoftheCompanytoacquirebenefitsbymeansoftheacquisitionofsharesinordebenturesoftheCompanyoranyotherbodycorporate.

Directors’Interestsin CompetingBusinessesNoneoftheDirectorsortheirrespectiveassociateshasanycompetinginterestswhichneedtobedisclosedpursuanttoRule8.10oftheListingRules.

SubstantialShareholders’andOtherInterestsAsat31stDecember2011,therequirementunderSection336oftheSFOtomaintainaregisterofinterestsinsharesandshortpositionswasnotapplicabletotheCompanybecausetheCompanywasnotyetalistedcorporation(withinthemeaningofPartXVoftheSFO).

TheregisterofinterestsinsharesandshortpositionsmaintainedunderSection336oftheSFOshowsthatasat18thJanuary2012theCompanyhadbeennotifiedofthefollowinginterestsinthesharesoftheCompanyheldbysubstantialshareholdersandotherpersons:

NumberofShares PercentageofIssuedCapital(%) TypeofInterest(notes)

1.SwirePacificLimited 4,796,765,835 82.00 Beneficialowner(1)

2.JohnSwire&SonsLimited 5,247,704,623 89.70 Beneficialownerandattributableinterest(2)

Notes:Asat18thJanuary2012:(1)SwirePacificLimitedwasinterestedin4,796,765,835sharesoftheCompanyasbeneficialowner;(2)JohnSwire&SonsLimitedisdeemedtobeinterestedinatotalof5,247,704,623sharesoftheCompany,comprising:

(a)1,626,412shareshelddirectly;(b)14,106,194sharesheldbyitswholly-ownedsubsidiaryTaikooLimited;(c)435,206,182sharesheldbyitswholly-ownedsubsidiaryJohnSwire&Sons(H.K.)Limited;and(d)4,796,765,835sharesinwhichSwirePacificLimitedwasinterested,byvirtueoftheJohnSwire&SonsLimitedgroup’sinterestinsharesof

SwirePacificLimitedrepresentingapproximately43.13%oftheissuedsharecapitalandapproximately58.58%ofthevotingrights.



PublicFloatListingRule8.08(1)oftheListingRulesrequiresthatatleast25%ofanissuer’stotalissuedsharecapitalmustatalltimesbeheldbythepublic.TheCompanyhasbeengrantedbytheStockExchangeawaiverfromstrictcompliancewithListingRule8.08(1)soastoallowalowerpublicfloatpercentageof10%(orsuchhigherpercentageasmaybeheldbythepublicuponcompletionoftheSpin-off).ImmediatelyuponcompletionoftheSpin-offon18thJanuary2012,thepublicfloatpercentagewasapproximately10.28%.

ContinuingConnectedTransactionsDuringtheyearended31stDecember2011,theGrouphadthefollowingcontinuingconnectedtransactions,detailsofwhicharesetoutbelow:

(a)JSSHKServicesAgreementThereisanagreementforservices(“ServicesAgreement”),inrespectofwhichJohnSwire&Sons(H.K.)Limited(“JSSHK”),awholly-ownedsubsidiaryofJohnSwire&SonsLimited(“Swire”),providedtotheCompanyanditssubsidiaryadviceandexpertiseofthedirectorsandseniorofficersoftheSwiregroup,full-orpart-timeservicesofmembersofthestaffoftheSwiregroup,otheradministrativeandsimilarservicesandsuchotherservicesasmayhavebeenagreedfromtimetotime,andprocuredfortheCompanyanditssubsidiary,jointlycontrolledandassociatedcompaniestheuseofrelevanttrademarksownedbySwire.Nofeeispayableinconsiderationofsuchprocurationobligationorsuchuse.TheprocurationobligationwouldfallawayiftheServicesAgreementwereterminatedornotrenewed.

Inreturnfortheseservices,JSSHKreceivesannualservicefeescalculatedas2.5%oftheCompany’sconsolidatedprofitbeforetaxationandnon-controllinginterestsaftercertainadjustments.Thefeesforeachyeararepayableincashinarrearintwoinstalments,aninterimpaymentbytheendofOctoberandafinalpaymentbytheendofAprilofthefollowingyear,adjustedtotakeaccountoftheinterimpayment.TheCompanyalsoreimbursestheSwiregroupatcostforalltheexpensesincurredintheprovisionoftheservices.

TheServicesAgreement,whichwasenteredintobetweenJSSHKandtheCompanyon1stDecember2004,tookeffectfrom1stJanuary2005,wasrenewedon

1stOctober2007,wasamendedandrestatedwitheffectfrom1stJanuary2010,andwasrenewedagainon1stOctober2010.ThecurrenttermoftheServicesAgreementisfrom1stJanuary2011to31stDecember2013anditisrenewableforsuccessiveperiodsofthreeyearsthereafterunlesseitherpartytoitgivestotheothernoticeofterminationofnotlessthanthreemonthsexpiringonany31stDecember.

Particularsofthefeespaidandtheexpensesreimbursedfortheyearended31stDecember2011aregiveninnote42totheaccounts.

(b)JSSHKTenancyFrameworkAgreementTheCompanyandJSSHKenteredintoatenancyframeworkagreement(the“JSSHKTenancyFrameworkAgreement”)on18thOctober2011togovernexistingandfuturetenancyagreementsbetweenmembersoftheGroupandmembersoftheJSSHKgroup(excludingtheSwirePacificgroup)foratermofsixyearsfrom1stJanuary2010to31stDecember2015.PursuanttotheJSSHKTenancyFrameworkAgreement,membersoftheGroupwillenterintotenancyagreementswithmembersoftheJSSHKgroup(excludingtheSwirePacificgroup)fromtimetotimeonnormalcommercialtermsbasedonprevailingmarketrentals.TheJSSHKTenancyFrameworkAgreementisrenewableforsuccessiveperiodsofsixyearsthereafterunlesseitherpartytoitgivestotheothernoticeofterminationofnotlessthanthreemonthsexpiringonany31stDecember.

Fortheyearended31stDecember2011,theaggregaterentalspayabletotheGroupunderthetenanciespursuanttotheJSSHKTenancyFrameworkAgreementtotalledHK$76million.

(c)SwirePacificTenancyFrameworkAgreementTheCompanyandSwirePacificenteredintoatenancyframeworkagreement(the“SwirePacificTenancyFrameworkAgreement”)on18thOctober2011togovernexistingandfuturetenancyagreementsbetweenmembersoftheGroupandmembersoftheSwirePacificgroup(excludingtheGroup)foratermofsixyearsfrom1stJanuary2010to31stDecember2015.PursuanttotheSwirePacificTenancyFrameworkAgreement,membersoftheGroupwillenterintotenancyagreementswithmembersoftheSwirePacificgroup(excludingthe


Group)fromtimetotimeonnormalcommercialtermsbasedonprevailingmarketrentals.TheSwirePacificTenancyFrameworkAgreementisrenewableforsuccessiveperiodsofsixyearsthereafterunlesseitherpartytoitgivestotheothernoticeofterminationofnotlessthanthreemonthsexpiringonany31stDecember.

Fortheyearended31stDecember2011,theaggregaterentalspayabletotheGroupunderthetenanciespursuanttotheSwirePacificTenancyFrameworkAgreementtotalledHK$60million.

Asat31stDecember2011,theSwiregroupownedapproximately42.79%oftheissuedcapitalofSwirePacificandapproximately58.45%ofvotingrightsattachedtosuchissuedsharecapitalandtheCompanywasawhollyownedsubsidiaryofSwirePacific.Asat18thJanuary2012,SwirePacificownedapproximately82.00%oftheissuedsharecapitaloftheCompany.JSSHK,asawholly-ownedsubsidiaryofSwire,andSwirePacificarethereforeconnectedpersonsoftheCompanyundertheListingRules.ThetransactionsundertheServicesAgreement,JSSHKTenancyFrameworkAgreementandSwirePacificTenancyFrameworkAgreementarecontinuingconnectedtransactions,theparticularsofwhicharesetoutinthelistingdocumentoftheCompanydated21stDecember2011.

Asdirectorsand/oremployeesoftheSwiregroup,G.M.C.Bradley,M.Cubbon,J.W.J.Hughes-Hallett,P.A.Kilgour,M.M.S.Low,C.D.Pratt,andM.B.SwireareinterestedintheServicesAgreementandtheJSSHKTenancyFrameworkAgreement.J.C.G.BremridgewasinterestedasadirectorandemployeeoftheSwiregroupuntilhisresignationwitheffectfrom12thSeptember2011.M.B.SwireisalsointerestedasashareholderofSwire.

AsdirectorsofSwirePacific,M.Cubbon,J.W.J.Hughes-Hallett,P.A.Kilgour,C.D.PrattandM.B.SwireareinterestedintheSwirePacificTenancyFrameworkAgreement.

TheIndependentNon-ExecutiveDirectorsoftheCompany,whoarenotinterestedinanyconnectedtransactionswiththeGroup,havereviewedandconfirmedthatthecontinuingconnectedtransactionsassetoutabovehavebeenenteredintobytheGroupintheordinaryandusualcourseofbusiness,onnormalcommercialterms,andinaccordancewiththerelevantagreementsgoverningthemontermsthatarefairandreasonableandintheinterestsoftheshareholdersoftheCompanyasawhole.

TheauditorsoftheCompanyhavealsoreviewedthesetransactionsandconfirmedtotheBoardthatthesetransactionshavebeenapprovedbytheBoardoftheCompanyandhavebeenenteredintoinaccordancewiththerelevantagreementsgoverningthetransactions;thattheyareinaccordancewiththepricingpoliciesoftheGroup(ifthetransactionsinvolveprovisionofgoodsorservicesbytheGroup);andthattheyhavenotexceededtherelevantannualcapsdisclosedinthelistingdocumentoftheCompanydated21stDecember2011.

OnbehalfoftheBoard

ChristopherPratt|Chairman



Webelievethatlong-termvaluecreationdependsonthesustainabledevelopmentofourbusinessandthecommunitiesinwhichweoperate.

Ourcommitmenttosustainabledevelopmentmeansthatweincorporatesocial,economicandenvironmentalrisksandbenefitsintoourbusinessdecision-making.Wetaketheseconsiderationsthroughallphasesofadevelopmentproject:frominception,design,procurement,constructionandoccupationtodemolitionorconversion.

OurapproachisreflectedinourSustainableDevelopmentPolicyandsupportedbyourEnvironment,Health&SafetypoliciesandSupplierCodeofConduct,allofwhichareavailable,togetherwithadditionalinformation,onourwebsitehttp://www.swireproperties.com/en/sustainability/commitments/pages/index.aspx.

Wewillpublishaseparate2011SustainableDevelopmentReportlaterthisyear.

SustainableDevelopment SteeringCommitteeOurSustainableDevelopmentSteeringCommitteeisresponsibleforbalancingsocial,economicandenvironmentalrisksandbenefitsinourbusinessdecision-makingprocessandformonitoringperformance.TheCommitteeisconvenedbytheGeneralManagerofTechnicalServicesandSustainabilityandincludesrepresentativesfromtheFinance&HumanResources,Marketing,Communications&e-Services,Development&Valuations,ProjectsandPortfolioManagementdepartments

andfromSwireHotels.TheHeadoftheSustainableDevelopmentOfficeofJohnSwire&Sons(H.K.)Ltd.isalsoamemberoftheCommittee,toaidthesharingofbestpracticesfromandwiththeremainderoftheSwiregroup.

EnvironmentAsaleadingpropertydeveloper,werecognisetheneedtobearolemodelfortheindustry,andtotaketheleadinreducingourenvironmentalimpactandinincorporatingsustainablepracticesinourdevelopments.

Weworktoreduceourimpactontheenvironmentbyminimisingouruseofnaturalresources,reducingorpreventingpollution,managingwasteeffectivelyandensuringenvironmentalconsiderationsareanintegralpartofourdecision-makingprocess.

Actionstakenonclimatechangeandenvironmentalprotectionin2011includethefollowing:

1. TheTaiKooHuipropertyinGuangzhou(ourmostrecentlyopeneddevelopmentinMainlandChina)incorporatedsustainabilityelementsinitsdesignandconstruction.WeaimedtoachieveLEED’s(LeadershipinEnergyandEnvironmentalDesign)Goldcertificationforthedevelopment,soweincludedfromthestartenvironmentalconsiderationsinrelationtothesitedevelopment,materials,wastemanagement,energyuse,indoorairqualityandwaterconservation.

SustainableDevelopment

Establishmentofa

JointResearchCentreforBuildingEnergyEfficiencyandSustainability

September,Beijing


approachisguidedbyourHealth&SafetyPolicyanddirectedbyourHealth&SafetyTeam.WeestablishedaSafetyManagementSystem(SMS)inHongKongin2003.ThereisaSMSSteeringCommittee,whichincludesrepresentativesfromoperatingdepartments,supportdepartmentsandourHealth&Safetyteam.TheSteeringCommitteemonitorsourhealth&safetyperformance,identifiesworkplacehazardsandunsafepracticesandaddressessafetyconcernsraisedbyouremployeesandtenantsandbythegeneralpublic.

WithourexpansioninMainlandChinaandinlightoftheincreasingdemandforcontractorsafety,wehaveimplementedasafetymonitoringschemeatourpropertiesinMainlandChina,withaviewtoraisingourcontractors’health&safetystandards.

Weverymuchregretthat,despiteourbestefforts,anemployeeofacontractorwaskilledatoneofourconstructionsitesinHongKongin2011.

CommunitiesWebelievethat,whenthecommunitiesinwhichweoperateprosper,sodowe.Weconcentrateonprojectswherewecanmakeadifference.Wesupportcommunityprojectswithmoney,ourproductsandservicesandthetimeandenergyofourstaff.

ArtsandCulture

Webelievethatculturaldevelopmentisaneffectivewaytoenrichasociety.Wearealong-standingandcommittedpatronofthearts.InHongKong,ahighlightofouractivitiesin2011was“AfterHourClassics”atArtisTree,acollaborationinMarchwiththeHongKongPhilharmonicOrchestra.FromSeptembertoOctober,wepresented“OutsidetheBox|FrankGehry”atArtisTree,bringingto

a. WeusedBuildingInformationModelling(BIM)(three-dimensional,real-timemodellingsoftware)inthedesignofTaiKooHui.Thissoftwareenablesustodetectdesignclashesinadvanceofconstruction,whichreducestheamountofbuildingwasteproduced.

b. Wetriedtosourcematerialsfromsupplierswithinaradiusof500milesduringtheconstructionofTaiKooHui,toreducetheenergyrequiredtotransportthem.

c. Weaimtosaveover140millionlitresofwaterperyear.Weuserainwaterforthecoolingtowerwatersupply.Treatedwastewaterfromtheofficesandthehotelwillbeusedfortheflushingsystemintheshoppingmallandtowashtheloadingbayfloor.

2. TogetherwiththeBuildingEnergyResearchCentreofTsinghuaUniversity,weestablishedaJointResearchCentreforBuildingEnergyEfficiencyandSustainability,providingUS$1millionperannuminfundingforaninitialthreeyearsfromSeptember2011.ThecentrewillextenditsresearchtoourprojectsinMainlandChina.A“MicroclimateAnalysis”anda“Three-StarGreenBuildingEvaluation”willbeconductedfortheDaciTempleprojectinChengdu,withaviewtoreducingcarbonemissionsandmakingtheprojectenergyefficient.Thejointresearchcentrewillundertakefurtherresearchintobuildingenergyefficiencyandwillpromotesustainabledevelopmentinthepropertyindustry.

3. Wehaveacceleratedthetimeperiodduringwhichweaimtoreduceenergyconsumptionatourinvestmentpropertyportfolioby50MkWh:thetargetdateforachievingthisgoalhasbeenbroughtforwardfrom2020to2016.Weachieved12.8MkWhenergyreductionfrom2008baselinein2011.

Health&SafetyThesafetyofouremployees,tenants,contractorsandthosewhouseourfacilitiesisahighpriorityforourbusiness.Our

“ExperiencingRhythmsAnew”atthe

BeijingMusicFestivalOctober,Beijing

FirstFrankGehryExhibitioninHongKong

September,HongKong

CorporateGovernance&Sustainability|SustainableDevelopment


HongKongthefirstexhibitionoftheworkofPritzkerPrize-winningarchitect,FrankGehry.Theexhibitiondrewlargenumbersofpeople,includingstudentsandmembersofprofessionalgroups.

InMainlandChina,wepresented“ExperiencingRhythmsAnew”,theinauguralconcertofthe“UrbanSeries”fortheBeijingMusicFestival(BMF).HeldinOctoberatTheOrangeatSanlitunVillage,theconcertfeaturedtheacclaimedJUPercussionGroupfromTaiwanandmarkedthebeginningofalong-termcollaborationbetweenSwirePropertiesandBMFintendedtopromoteartsandcultureappreciationinBeijing.

VolunteerService

SocialresponsibilityisoneofSwireProperties’corevalues.SinceweestablishedtheCommunityAmbassadorProgrammein2001,theprogrammehasgrownfrom40tomorethan1,000Ambassadors,whoworkwithanexpandingnetworkoffamilymembersandstakeholders,includingtenants,NGOsandotherbusinesspartners.

TheCommunityAmbassadorProgrammeisledbyouremployees,whodesignandorganisealloftheprogramme’sactivitiesandcontributetheirskills,professionalexpertiseandresourcestosupportthoseinneed.TheCompanysupportstheirinitiativeswithflexibleworkarrangements,specialawardschemesandaspecialday-offarrangementforstaff

whohaveaccumulatedacertainnumberofhoursofvolunteerservice.

Since2001,ourAmbassadorshavecontributedover45,000servicehoursthroughmorethan400volunteeringactivitiestobenefitmorethan50,000peopleinthecommunity.OureffortshavebeenrecognisedwiththeFourthHongKongVolunteerAward(CorporateAward),presentedbytheAgencyforVolunteerService.Thisawardacknowledgescorporations’outstandingcontributionsandaccomplishmentsinpromotingvolunteeringinHongKong.

In2011,theCommunityAmbassadorProgrammecelebrateditstenthanniversaryofcommunityservicewiththeLove’sTeamCharityBazaar,whichwasheldinIslandEastinDecember.TheeventraisedatotalofHK$1,055,007,includingadonationfromtheSwireGroupCharitableTrust.ThemoneywasdonatedtothefiveNGOswhoco-organisedtheeventwithus.

EnvironmentalandEducationalProgrammes

Ourenvironmentalandeducationalprogrammesaredesignedtopromoteeco-friendlypractices.Weactivelyencourageourtenantsandstakeholderstocollaboratewithusontheseprogrammes.In2011,weconcentratedoncollectingandrecyclingreadingmaterialsfortheneedy.


InMay,weranathree-monthbookdrive,“BooksforLove”,tocollectbookstosellattheLove’sTeamCharityBazaar.WeinvitedourstakeholdersinHongKong(includingresidentsof11residentialdevelopments,tenantsfrom19commercialpropertiesandemployeesofallSwiregroupcompaniesandtheirsubsidiaries)todonateneworsecond-handbooks.Morethan30,000bookswerecollected.

InShanghai,wedonatedmorethan900newEnglishandHongKongbookstoJing’anDistrictLibraryinJuly,offeringresidentsarichnewvarietyofreadingmaterials.AlsoinShanghai,welaunchedtheYouthforEnvironmentalSustainability(YES)programmeataprimaryschoolaffiliatedtoShanghaiNormalUniversityinSeptember.Theprogrammeusedcreativeactivitiestohelpstudentsunderstandmoreaboutenvironmentalprotection.

ValueChainOurapproachtosustainabledevelopmentencompassesoursuppliersandcustomers.Thisapproachrequiresustoaddresssuchissuesasethicalconduct,labourstandards,humanrights,productresponsibilityandenvironmentalimpacts.

WehaveaSupplyChainSustainabilityCommittee,chairedbytheGeneralManagerofTechnicalServicesandSustainabilityandincludingrepresentativesfromdepartmentsinHongKongandMainlandChina.Theserepresentativesheadanumberof

subcommittees,whichareresponsibleforvarioussupplierrelationships.

ThroughourSupplyChainSustainabilityProgramme,weseekcommitmentstosustainabledevelopmentfromoursuppliers.Weaddresssustainabilityissuesandmanageriskinoursupplychainthroughasupplierself-assessment,supportedbyourSupplierCodeofConduct.WeincludetheSupplierCodeofConductinourcontractswithourmostsignificantsuppliersinHongKongandMainlandChina.Incaseofnon-compliance,thesuppliermustsubmitacorrectiveactionplanandimplementitwithinanagreedperiod,orriskterminationofthecontract.

EmployeesSwirePropertiesemploysover4,000peopleinHongKong,MainlandChina,theU.S.andtheU.K.Asanequalopportunityemployer,wearecommittedtoprovidingequalopportunitiesinrelationtoallhumanresourcesmattersandstrivetoofferaworkplacefreefromdiscriminationandharassment.

TheCompanyprovidestraininganddevelopmentforitsemployees,includingtraineeprogrammesforfreshgraduates,externaleducationalcourses,on-the-jobtraining,internaljobrotations,mentoringandoverseassecondments.WealsoofferanEmployeeAssistanceProgrammetoassiststaffinresolvingworkandpersonalproblems.

Launchof

YESprogamme

September-December,Shanghai

CommunityAmbassadorProgramme’s10thAnniversary–

Love’sTeamCharityBazaarDecember,HongKong

FinancialContentsAUDITOR’SREPORTANDACCOUNTS

88 IndependentAuditor’sReport

89 ConsolidatedIncomeStatement

90 ConsolidatedStatementofComprehensiveIncome

91 ConsolidatedStatementofFinancialPosition

92 CompanyStatementofFinancialPosition

93 ConsolidatedStatementofCashFlows

94 ConsolidatedStatementofChangesinEquity

95 NotestotheAccounts

136 PrincipalAccountingPolicies

145 PrincipalSubsidiary,JointlyControlledandAssociatedCompanies

SUPPLEMENTARYINFORMATION

148 ScheduleofPrincipalGroupProperties

159 Glossary

160 FinancialCalendarandInformationforInvestors

OPUSHONGKONG


IndependentAuditor’sReport

TotheshareholdersofSwirePropertiesLimited(incorporatedinHongKongwithlimitedliability)

WehaveauditedtheaccountsofSwirePropertiesLimited(the“Company”)anditssubsidiaries(together,the“Group”)setoutonpages89to147,whichcomprisetheconsolidatedandcompanystatementoffinancialpositionasat31stDecember2011,andtheconsolidatedincomestatement,theconsolidatedstatementofcomprehensiveincome,theconsolidatedstatementofchangesinequityandtheconsolidatedstatementofcashflowsfortheyearthenended,andasummaryofsignificantaccountingpoliciesandotherexplanatoryinformation.

Directors’ResponsibilityfortheAccountsThedirectorsoftheCompanyareresponsibleforthepreparationofaccountsthatgiveatrueandfairviewinaccordancewithHongKongFinancialReportingStandardsissuedbytheHongKongInstituteofCertifiedPublicAccountants,andtheHongKongCompaniesOrdinance,andforsuchinternalcontrolasthedirectorsdetermineisnecessarytoenablethepreparationofaccountsthatarefreefrommaterialmisstatement,whetherduetofraudorerror.

Auditor’sResponsibilityOurresponsibilityistoexpressanopinionontheseaccountsbasedonourauditandtoreportouropinionsolelytoyou,asabody,inaccordancewithsection141oftheHongKongCompaniesOrdinanceandfornootherpurpose.Wedonotassumeresponsibilitytowardsoracceptliabilitytoanyotherpersonforthecontentsofthisreport.

WeconductedourauditinaccordancewithHongKongStandardsonAuditingissuedbytheHongKongInstituteofCertifiedPublicAccountants.Thosestandardsrequirethatwecomplywithethicalrequirementsandplanandperformtheaudittoobtainreasonableassuranceastowhethertheaccountsarefreefrommaterialmisstatement.

Anauditinvolvesperformingprocedurestoobtainauditevidenceabouttheamountsanddisclosuresintheaccounts.Theproceduresselecteddependontheauditor’sjudgement,includingtheassessmentoftherisksofmaterialmisstatementoftheaccounts,whetherduetofraudorerror.Inmakingthoseriskassessments,theauditorconsidersinternalcontrolrelevanttotheentity’spreparationofaccountsthatgiveatrueandfairviewinordertodesignauditproceduresthatareappropriateinthecircumstances,butnotforthepurposeofexpressinganopinionontheeffectivenessoftheentity’sinternalcontrol.Anauditalsoincludesevaluatingtheappropriatenessofaccountingpoliciesusedandthereasonablenessofaccountingestimatesmadebythedirectors,aswellasevaluatingtheoverallpresentationoftheaccounts.

Webelievethattheauditevidencewehaveobtainedissufficientandappropriatetoprovideabasisforourauditopinion.

OpinionInouropinion,theaccountsgiveatrueandfairviewofthestateofaffairsoftheCompanyandoftheGroupasat31stDecember2011,andoftheGroup’sprofitandcashflowsfortheyearthenendedinaccordancewithHongKongFinancialReportingStandardsandhavebeenproperlypreparedinaccordancewiththeHongKongCompaniesOrdinance.

PricewaterhouseCoopersCertifiedPublicAccountants



ConsolidatedIncomeStatementFortheyearended31stDecember2011

Note2011

HK$M2010

HK$M

Turnover 4 9,581 8,871

Costofsales 5 (2,334) (2,261)

Grossprofit 7,247 6,610

Administrativeexpenses (1,029) (911)

Otheroperatingexpenses (130) (135)

ProfitonsaleofinterestinFestivalWalk 6 595 –

Othernet(losses)/gains 7 (83) 925

Changeinfairvalueofinvestmentproperties 20,345 20,480

Operatingprofit 26,945 26,969

Financecharges (1,504) (1,264)

Financeincome 27 27

Netfinancecharges 11 (1,477) (1,237)

Shareofprofitslesslossesofjointlycontrolledcompanies 851 1,461

Shareofprofitslesslossesofassociatedcompanies 156 225

Profitbeforetaxation 26,475 27,418

Taxation 12 (1,296) (1,324)

Profitfortheyear 25,179 26,094

Profitfortheyearattributableto:

TheCompany’sshareholder 37 25,126 26,045

Non-controllinginterests 38 53 49

25,179 26,094

Dividends

Specialinterim–paid 10,014 –

Interim–paid – 1

Firstinterim–declaredon15thMarch2012 1,053 –

Final–paid – 2,425

14 11,067 2,426

HK$ HK$

EarningspershareforprofitattributabletotheCompany’sshareholder (basicanddiluted) 15 4.40 4.58

Thenotesonpages95to135andtheprincipalaccountingpoliciesonpages136to144formpartoftheseaccounts.


ConsolidatedStatementofComprehensiveIncomeFortheyearended31stDecember2011

2011HK$M

2010HK$M

Profit for the year 25,179 26,094

Other comprehensive income

RevaluationofpropertiespreviouslyoccupiedbytheGroup

–gainrecognisedduringtheyear 186 1,448

Shareofothercomprehensiveincomeofjointlycontrolledandassociatedcompanies 276 132

Nettranslationdifferencesonforeignoperations 517 441

Other comprehensive income for the year, net of tax 979 2,021

Total comprehensive income for the year 26,158 28,115

Totalcomprehensiveincomeattributableto:

TheCompany’sshareholder 26,105 28,063

Non-controllinginterests 53 52

26,158 28,115

Note:Itemsshownwithinothercomprehensiveincomehavenotaxeffect.



ConsolidatedStatementofFinancialPositionAt31stDecember2011

Note2011

HK$M2010

HK$M

ASSETS AND LIABILITIESNon-current assets Property,plantandequipment 16 6,615 6,333 Investmentproperties 17 187,488 178,985 Leaseholdlandandlanduserights 18 3 6 Intangibleassets 19 7 187 Propertiesheldfordevelopment 20 124 443 Jointlycontrolledcompanies 22 13,000 10,940 Associatedcompanies 23 639 705 Available-for-saleassets 25 9 7 Deferredtaxassets 34 57 94 Retirementbenefitassets 35 108 83

208,050 197,783Current assets Propertiesunderdevelopmentandforsale 26 6,848 5,554 Stocksandworkinprogress 27 69 59 Tradeandotherreceivables 28 1,945 1,168 Amountduefromimmediateholdingcompany–SwirePacificLimited 29 142 106 Cashandcashequivalents 30 1,180 1,042

10,184 7,929Current liabilities Tradeandotherpayables 31 8,088 5,199 Taxationpayable 445 379 Bankoverdraftsandshort-termbankloans 32 1,023 991 Long-termloansduewithinoneyear 32 664 3,103 Loansduetoafellowsubsidiarycompany–SwireFinanceLimited 33 6,943 5,228

17,163 14,900

Net current liabilities (6,979) (6,971)

Total assets less current liabilities 201,071 190,812

Non-current liabilities Long-termbankloans 32 5,819 1,582 Deferredtaxliabilities 34 4,246 3,900 Loansduetoafellowsubsidiarycompany–SwireFinanceLimited 33 14,431 26,974

24,496 32,456

NET ASSETS 176,575 158,356

EQUITYSharecapital 36 5,850 5,690Reserves 37 170,193 152,187Equity attributable to the Company’s shareholder 176,043 157,877Non-controlling interests 38 532 479

TOTAL EQUITY 176,575 158,356

Christopher D. PrattPaul K. EtchellsDirectorsHong Kong, 15th March 2012



CompanyStatementofFinancialPositionAt31stDecember2011

Note2011

HK$M2010

HK$M

ASSETS AND LIABILITIES

Non-current assets

Property,plantandequipment 16 74 88

Intangibleassets 19 7 5

Subsidiarycompanies 21 45,005 36,430

Jointlycontrolledcompanies 22 492 515

Associatedcompanies 23 179 179

Retirementbenefitassets 35 99 79

45,856 37,296

Current assets

Tradeandotherreceivables 28 92 58

Taxrecoverable 3 –

Cashandcashequivalents 30 267 285

362 343

Current liabilities

Tradeandotherpayables 31 2,992 2,691

Taxationpayable – 1

2,992 2,692

Net current liabilities (2,630) (2,349)

Total assets less current liabilities 43,226 34,947

Non-current liabilities

Deferredtaxliabilities 34 19 4

NET ASSETS 43,207 34,943

EQUITY

Equity attributable to the Company’s shareholder

Sharecapital 36 5,850 5,690

Reserves 37 37,357 29,253

TOTAL EQUITY 43,207 34,943

Christopher D. PrattPaul K. EtchellsDirectorsHong Kong, 15th March 2012



ConsolidatedStatementofCashFlowsFortheyearended31stDecember2011

Note2011

HK$M2010

HK$M

Operating activities Cashgeneratedfromoperations 43(a) 7,396 4,753 Interestpaid (1,664) (1,469) Interestreceived 38 15 Profitstaxpaid (485) (435)

5,285 2,864 Dividendsreceivedfromjointlycontrolledandassociatedcompaniesand available-for-saleassets 415 48

Net cash from operating activities 5,700 2,912

Investing activities Purchaseofproperty,plantandequipment 43(b) (548) (507) Additionstoinvestmentproperties (4,717) (4,234) Purchaseofintangibleassets (5) (3) Proceedsfromdisposalsofproperty,plantandequipment 1 – Proceedsfromdisposalsofinvestmentproperties – 1,213 ProceedsfromdisposalofFestivalWalk 43(c) 18,305 – Purchaseofsharesinsubsidiarycompanies – (189) Purchaseofsharesinjointlycontrolledcompanies – (284) Loanstojointlycontrolledcompanies (2,294) (1,032) PurchaseofsharesinPCCWTower – (1,824) Repaymentofloansbyjointlycontrolledcompanies 1,169 351 ProceedsfromdisposalofsharesinPCCWTower – 1,353 Initialleasingcostsincurred (193) (117)

Net cash generated from/(used in) investing activities 11,718 (5,273)

Net cash inflow/(outflow) before financing 17,418 (2,361)

Financing activities Bankloansdrawnandrefinancing 2,206 1,822 Repaymentofbankloans (628) (349)

1,578 1,473 Proceedsfromissuanceofordinaryshares 4,500 – Capitalcontributionfromnon-controllinginterests 38 12 11 (Decrease)/increaseinloansduetoafellowsubsidiarycompany (10,875) 882 Decreaseinamountduetoimmediateholdingcompany – (11) DividendspaidtotheCompany’sshareholder 37 (12,439) (1) Dividendspaidtonon-controllinginterests 43(d) (12) (8)

Net cash (used in)/generated from financing activities (17,236) 2,346

Increase/(decrease) in cash and cash equivalents 182 (15) Cashandcashequivalentsat1stJanuary 1,023 1,066 Currencyadjustment (26) (28)Cash and cash equivalents at 31st December 1,179 1,023

Represented by:Bankbalancesandshort-termdepositsmaturingwithinthreemonths 30 1,180 1,042Bankoverdrafts (1) (19)

1,179 1,023



ConsolidatedStatementofChangesinEquityFortheyearended31stDecember2011

Attributable to the Company’s shareholder

Note

Share capital HK$M

RevenuereserveHK$M

Otherreserves

HK$MTotal

HK$M

Non-controlling

interestsHK$M

TotalequityHK$M

At 1st January 2011 5,690 150,317 1,870 157,877 479 158,356

Profitfortheyear – 25,126 – 25,126 53 25,179

Othercomprehensiveincome – – 979 979 – 979

Total comprehensive income for the year 37, 38 – 25,126 979 26,105 53 26,158

Dividendpaid – (12,439) – (12,439) (12) (12,451)

Capitalcontribution 160 – 4,340 4,500 12 4,512

At 31st December 2011 5,850 163,004 7,189 176,043 532 176,575

AttributabletotheCompany’sshareholder

Note

SharecapitalHK$M

RevenuereserveHK$M

Otherreserves

HK$MTotal

HK$M

Non-controlling

interestsHK$M

TotalequityHK$M

At 1st January 2010 5,690 124,273 (148) 129,815 424 130,239

Profitfortheyear – 26,045 – 26,045 49 26,094

Othercomprehensiveincome – – 2,018 2,018 3 2,021

Total comprehensive income for the year 37, 38 – 26,045 2,018 28,063 52 28,115

Dividendpaid – (1) – (1) (8) (9)

Capitalcontribution – – – – 11 11

At 31st December 2010 5,690 150,317 1,870 157,877 479 158,356



NotestotheAccounts

1. ChangesinAccountingStandards(a) TheGrouphasadoptedthefollowingrelevantrevisedHongKongFinancialReportingStandards(“HKFRS”),amendmentsand

interpretationseffectivefrom1stJanuary2011:

HKFRSs(Amendments) ImprovementstoHKFRSs2010HK(IFRIC)-Int14(Amendments) PrepaymentsofaMinimumFundingRequirementHKAS24(Revised) RelatedPartyDisclosuresHKAS12(Amendment) Incometaxes*

* TheGrouphasearlyadoptedtheamendmenttoHKAS12in2010.Thenewaccountingpolicyhasbeenretrospectivelyappliedforannual periodsbeginningbefore1stJanuary2010.

TheimprovementstoHKFRSs2010consistofamendmentstoexistingstandards.IthashadnofinancialimpactontheGroup’sannualaccounts.

TheamendmenttoHK(IFRIC)-Int14permitscompanieswhichmakeanearlypaymentofcontributionstocoverminimumfundingrequirementstotreatthatpaymentasanasset.IthashadnosignificanteffectontheGroup’sresultsornetassets.

HKAS24(Revised)haschangedthedefinitionofRelatedParties.IthashadnofinancialimpactontheGroup’sannualaccounts.

(b) ThefollowingamendedHKFRSandinterpretationsareeffectivebutnotrelevanttotheGroup’soperations:

HK(IFRIC)-Int19 ExtinguishingFinancialLiabilitieswithEquityInstrumentsHKAS32(Amendments) ClassificationofRightsIssues

(c) TheGrouphasnotearlyadoptedthefollowingrelevantnewandrevisedstandardsandamendmentsthathavebeenissuedbutarenotyeteffective:

HKFRS7(Amendment) Disclosures–TransfersofFinancialAssets1

HKFRS9 FinancialInstruments3

HKFRS10 ConsolidatedFinancialStatements2

HKFRS11 JointArrangements2

HKFRS12 DisclosureofInterestsinOtherEntities2

HKFRS13 FairValueMeasurement2

HKAS1(Amendment) PresentationofFinancialStatement2

HKAS19(revised2011) EmployeeBenefits2

HKAS28(revised2011) InvestmentsinAssociatesandJointVentures2

1 TobeappliedbytheGroupfrom1stJanuary2012.2 TobeappliedbytheGroupfrom1stJanuary2013.3 TobeappliedbytheGroupfrom1stJanuary2015.

HKFRS7(Amendment)introducesnewdisclosurerequirementsontransfersoffinancialassets.Disclosureisrequiredbyclassofassetofthenature,carryingamountandadescriptionoftherisksandrewardsoffinancialassetsthathavebeentransferredtoanotherpartyyetremainontheentity’sbalancesheet.Thegainorlossonthetransferredassetsandanyretainedinterestinthoseassetsmustbegiven.Inaddition,otherdisclosuresmustenableuserstounderstandtheamountofanyassociatedliabilities,andtherelationshipbetweenthefinancialassetsandassociatedliabilities.Thedisclosuresmustbepresentedbytypeofongoinginvolvement.Forexample,theretainedexposurecouldbepresentedbytypeoffinancialinstrument(suchasguarantees,callorputoptions),orbytypeoftransfer(suchasfactoringofreceivables,securitisationsorsecuritieslending).Itisnotexpectedthatthisamendmentwillhaveasignificanteffectontheaccounts.

NotestotheAccounts


1.ChangesinAccountingStandards(continued)

HKFRS9‘FinancialInstruments’addressestheclassification,measurementandrecognitionoffinancialassetsandfinancialliabilities.HKFRS9wasissuedinNovember2009andOctober2010.ItreplacesthepartsofHKAS39thatrelatetotheclassificationandmeasurementoffinancialinstruments.HKFRS9requiresfinancialassetstobeclassifiedintotwomeasurementcategories:thosemeasuredasatfairvalueandthosemeasuredatamortisedcost.Thedeterminationismadeatinitialrecognition.Theclassificationdependsontheentity’sbusinessmodelformanagingitsfinancialinstrumentsandthecontractualcashflowcharacteristicsoftheinstrument.Forfinancialliabilities,thestandardretainsmostoftheHKAS39requirements.Themainchangeisthat,incaseswherethefairvalueoptionistakenforfinancialliabilities,thepartofafairvaluechangeduetoanentity’sowncreditriskisrecordedinothercomprehensiveincomeratherthantheincomestatement,unlessthiscreatesanaccountingmismatch.ItisnotexpectedthatthenewstandardwillhaveasignificanteffectontheGroup’sresultsandnetassets.

HKFRS10‘ConsolidatedFinancialStatements’buildsonexistingprinciplesbyidentifyingtheconceptofcontrolasthedeterminingfactorinwhetheranentityshouldbeincludedwithintheconsolidatedfinancialstatementsoftheparentcompany.Thestandardprovidesadditionalguidancetoassistinthedeterminationofcontrolwherethisisdifficulttoassess.ItisnotexpectedthatthenewstandardwillhaveasignificanteffectontheGroup’sresultsandnetassets.

HKFRS11‘JointArrangements’,whichsupersedesHKAS31InterestsinJointVentures,classifiesjointarrangementsaseitherjointoperations(combingtheexistingconceptsofjointlycontrolledassetsandjointlycontrolledoperations)orjointventures(equivalenttotheexistingconceptofajointlycontrolledentity).Thedeterminationofastowhetheritisajointoperationorajointventureisbasedontherightsandobligationsunderthearrangementratherthanitslegalform.Jointoperationsarisewhereajointoperatorhasrightstotheassetsandobligationsrelatingtothearrangementwhereasjointventuresarisewherethejointoperatorhasrightstothenetassetsofthearrangement.Thenewstandardrequirestheuseoftheequitymethodofaccountingforinterestsinjointventuresandhaseliminatedtheoptionofusingproportionateconsolidationmethod.ItisnotexpectedthatthenewstandardwillhaveasignificanteffectontheGroup’sresultsornetassets.

HKFRS12‘DisclosuresofInterestsinOtherEntities’includesthedisclosurerequirementsforallformsofinterestsinotherentities,includingjointarrangements,associates,specialpurposevehiclesandotheroffbalancesheetvehicles.ItisnotexpectedthatthenewstandardwillhaveasignificanteffectontheGroup’sresultsandnetassets.

HKFRS13‘FairValueMeasurement’aimstoimproveconsistencyandreducecomplexitybyprovidingaprecisedefinitionoffairvalueandasinglesourceoffairvaluemeasurementanddisclosurerequirementsforuseacrossHKFRSs.TherequirementsdonotextendtheuseoffairvalueaccountingbutprovideguidanceonhowitshouldbeappliedwhereitsuseisalreadyrequiredorpermittedbyotherstandardswithinHKFRSs.ItisnotexpectedthatthenewstandardwillhaveasignificanteffectontheGroup’sresultsandnetassets.

TheamendmenttoHKAS1focusesonimprovingpresentationofcomponentsofothercomprehensiveitems.TheGroupwillberequiredtogroupitemspresentedinothercomprehensiveincomeonthebasisofwhethertheyarepotentiallyreclassifiabletoprofitorlosssubsequently.

TheamendmenttoHKAS19requirestherecognitionofchangesinthedefinedbenefitobligationandinplanassetswhenthosechangesoccur.Italsoeliminatesthecorridorapproachandcalculatesthefinancecostsonanetfundingbasis.TheGroupisyettoassessthefullimpactoftheamendments.

HKAS28(revised2011)includestherequirementsforjointventures,aswellasassociates,tobeequityaccountedfollowingtheissueofHKFRS11.ItisnotexpectedthattheamendmentwillhaveasignificanteffectontheGroup’sresultsornetassets.

(d) ThefollowingrevisedstandardsandamendmentshavebeenissuedwhicharenotyeteffectiveandnotrelevanttotheGroup’soperations:

HKFRS1(Amendment) SevereHyperinflationandRemovalofFixedDatesforFirst-TimeAdoptersHKAS27(revised) SeparateFinancialStatements


2. FinancialRiskManagementFinancial risk factors

TheGroupisexposedtofinancialrisksattributabletocashflowinterestrate,creditandliquidity.Managementmanagesandmonitorstheseexposurestoensureappropriatemeasuresareimplementedonatimelyandeffectivemanner.TheGroup’soverallriskmanagementprogrammefocusesontheunpredictabilityoffinancialmarketsandseekstominimisepotentialadverseeffectsontheGroup’sfinancialperformance.

RiskmanagementiscarriedoutunderpoliciesapprovedbytheBoardofDirectorsoftheGroupinconjunctionwithpoliciesapprovedbytheBoardofDirectorsofitsimmediateholdingcompany.TheBoardofDirectorsidentifyandevaluatefinancialrisksandmaintainanddeveloptheGroup’sfinancialriskmanagementpoliciesandprocedureswhichareimplementedbytheGroup.

(i) Interestrateexposure

TheGroup’sinterestrateriskarisesmainlyfromborrowingsfrombanksandafellowsubsidiary.BorrowingsatvariableratesexposetheGrouptocashflowinterestraterisk.BorrowingsatfixedratesexposetotheGrouptofairvalueinterestraterisk.TheGroupearnsinterestincomeoncashdepositsandloansduefromjointlycontrolledcompanies.

TheGroupdidnotenterintointerestrateswapcontracts.TheGroupmanagesitsinterestrateriskbycloselymonitoringthemovementofinterestratesandtheparentcompanyoftheCompanyusesinterestrateswapstomanagethelong-terminterestrateexposureonbehalfoftheCompany.Theeffectsoftheseinterestrateswapsarereflectedintheintercompanyinterestcharged.

TheimpactontheGroup’sincomestatementandequityofa100basis-pointsincreaseordecreaseinmarketinterestratesfromtheratesapplicableat31stDecember,withallothervariablesheldconstant,wouldhavebeen:

100 basis-pointsincrease in

interest ratesHK$M

100 basis-pointsdecrease in

interest ratesHK$M

At31stDecember2011

Impactonincomestatement:(loss)/gain (86) 86

At31stDecember2010

Impactonincomestatement:(loss)/gain (131) 131

Thisanalysisisbasedonahypotheticalsituation,asinpracticemarketinterestratesrarelychangeinisolation,andshouldnotbeconsideredaprojectionoflikelyfutureprofitsorlosses.Theanalysisassumesthefollowing:

–Changesinmarketinterestratesaffecttheinterestincomeorexpenseoffloatingratefinancialinstruments–Changesinmarketinterestratesonlyaffectinterestincomeorexpenseinrelationtofixedratefinancialinstrumentsifthese arerecognisedatfairvalue–Allotherfinancialassetsandliabilitiesareheldconstant

(ii) Currencyexposure

TheGroupoperatesinternationallyandisexposedtoforeignexchangeriskarisingfromvariouscurrencyexposures,primarilywithrespecttoUSdollarsandRenminbi.Foreignexchangeriskarisesfromtheforeigncurrencydenominationofcommercialtransactions,assetsandliabilities,andnetinvestmentsinforeignoperations.TheGrouphasnosignificantdirectexposuretoforeigncurrenciesasthesearemanagedbyafellowsubsidiary.Indirectlythroughtheborrowingsfromitsfellowsubsidiary,theGroup

NotestotheAccounts


2. FinancialRiskManagement(continued)

hedgeshighlyprobabletransactionsineachmajorcurrencywheretheirvalueortimetoexecutiongivesrisetoasignificantcurrencyexposure,providedthatthecostoftheforeignexchangeforwardorderivativecontractisnotprohibitivelyexpensivehavingregardtotheunderlyingexposure.

Asat31stDecember2011,theGrouphad(throughborrowingsfromitsfellowsubsidiary)hedgeditssignificantforeigncurrencyfundingexposures.ExposurearisingfromtheGroup’sinvestmentsinoperatingsubsidiarieswithnetassetsdenominatedinforeigncurrenciesisreduced,wherepractical,byprovidingfundinginthesamecurrency.

Foreigncurrencyfundinganddepositexposurearemonitoredonacontinuousbasis.Onaquarterlybasis,sensitivitytestingisperformedbyvaryingforecastforeignexchangerates.TheinterestchargedontheGroup’sborrowingsfromitsfellowsubsidiaryreflects,amongotherthings,theGroup’sproportionateshareoftherelevantcurrencyhedgingcostsorsavings.Otherwise,currentlytheGroupdoesnotengageinhedgingactivitiesdesignedorintendedtomanagecurrencyrisk.

(iii) Creditexposure

TheGroup’screditriskismainlyattributabletotradedebtors,depositswithfinancialinstitutions,receivablesfromjointlycontrolledcompaniesandassociatedcompanies.Theexposuretothesecreditrisksiscloselymonitoredonanongoingbasisbyestablishedcreditpolicies.Forfinancialinstitutions,onlyindependentlyratedpartieswithgoodcreditratingsareaccepted.Tenantsareassessedandratedbasedontheircreditquality,takingintoaccounttheirfinancialposition,pastexperienceandotherfactors.TheGroupdoesnotgrantcredittermstoitscustomersexcepttocorporatecustomersinthehotelbusinesswherecommercialtradecredittermsaregiven.TheGroupalsoholdsrentaldepositsassecurityagainsttradedebtors.Inaddition,theGroupandtheCompanymonitortheexposuretocreditriskinrespectofthefinancialassistanceprovidedtosubsidiaries,jointlycontrolledcompaniesandassociatedcompaniesthroughexercisingcontrolorsignificantinfluenceovertheirfinancialandoperatingpolicydecisionsandreviewingtheirfinancialpositionsonaregularbasis.

(iv) Liquidityexposure

TheGrouptakesliquidityriskintoconsiderationwhendecidingitssourcesoffundsandtheirrespectivetenors.ThetablesbelowanalysethecontractualundiscountedcashflowsoftheGroup’sandtheCompany’sfinancialliabilitiesbyrelevantmaturitygroupingsbasedontheremainingperiodfromtheyear-enddatetotheearliestdatetheGroupandtheCompanycanberequiredtopay:

GroupAt 31st December 2011

Note

Carrying amount HK$M

Total contractual

undiscounted cash flow

HK$M

Within 1 year or on

demand HK$M

More than 1 year but

less than2 yearsHK$M

More than2 years but


More than5 yearsHK$M

Tradecreditors 31 1,788 1,788 1,788 – – –

Amountduetointermediateholdingcompany 31 79 79 79 – – –

Amountduetoafellowsubsidiarycompany 31 102 102 102 – – –

Amountduetoajointlycontrolledcompany 2 2 2 – – –

Interest-bearingadvancesfrom ajointlycontrolledcompany 31 225 225 225 – – –

Advancesfromnon-controllinginterests 31 234 234 234 – – –

Rentaldepositsfromtenants 31 1,780 1,908 379 380 809 340

Accruedcapitalexpenditure 1,215 1,215 1,215 – – –

Otherpayables 31 1,726 1,726 1,726 – – –

Non-controllinginterestputoption 31 937 937 937 – – –

Borrowingsfrombanks (includinginterestobligations) 32 7,506 8,437 2,084 464 5,889 –

Loansduetoafellowsubsidiarycompany (includinginterestobligations) 33 21,374 25,144 7,737 3,000 6,491 7,916

36,968 41,797 16,508 3,844 13,189 8,256


GroupAt31stDecember2010

Note

CarryingamountHK$M

Totalcontractual

undiscountedcashflow

HK$M

Within1yearoron

demandHK$M

Morethan1yearbut

lessthan2yearsHK$M

Morethan2yearsbut

lessthan5yearsHK$M

Morethan5yearsHK$M

Tradecreditors 31 544 544 544 – – –


Interest-bearingadvancefrom anassociatedcompany 31 149 149 149 – – –

Advancesfromnon-controllinginterests 31 214 214 214 – – –

Rentaldepositsfromtenants 31 1,810 1,912 441 349 842 280

Accruedcapitalexpenditure 1,192 1,192 1,192 – – –

Otherpayables 31 513 513 513 – – –

Non-controllinginterestputoption 31 678 678 678 – – –

Borrowingsfrombanks (includinginterestobligations) 32 5,676 6,026 4,310 169 1,547 –

Loansduetoafellowsubsidiarycompany (includinginterestobligations) 33 32,202 38,364 6,215 8,085 6,417 17,647

43,077 49,691 14,355 8,603 8,806 17,927

CompanyAt 31st December 2011

Note

Carrying amount HK$M

Total contractual

undiscounted cash flow

HK$M

Within 1 year or on

demand HK$M

More than 1 year but


More than2 years but


More than5 yearsHK$M


Amountsduetosubsidiarycompanies 31 2,586 2,586 2,586 – – –

Otherpayables 31 327 327 327 – – –

2,992 2,992 2,992 – – –

At31stDecember2010

Note

CarryingamountHK$M

Totalcontractual

undiscountedcashflow

HK$M

Within1yearoron

demandHK$M

Morethan1yearbut

lessthan2yearsHK$M

Morethan2yearsbut

lessthan5yearsHK$M

Morethan5yearsHK$M

Tradecreditors 31 15 15 15 – – –


Amountsduetosubsidiarycompanies 31 2,386 2,386 2,386 – – –

Interest-bearingadvancesfrom anassociatedcompany 31 149 149 149 – – –

Otherpayables 31 42 42 42 – – –

2,691 2,691 2,691 – – –

2. FinancialRiskManagement(continued)

NotestotheAccounts


3. CriticalAccountingEstimatesandJudgementsEstimatesandjudgementsusedinpreparingtheaccountsarecontinuallyevaluatedandarebasedonhistoricalexperienceandotherfactors,includingexpectationsoffutureeventsthatarebelievedtobereasonableunderthecircumstances.TheGroupmakesestimatesandassumptionsconcerningthefuture.Theresultingaccountingestimateswill,inevitably,seldombeequaltotherelatedactualresults.Theestimatesandassumptionsthathaveasignificanteffectonthecarryingamountsofassetsandliabilitiesarediscussedbelow:

(a) Estimates of fair value of investment properties

DTZDebenhamTieLeung(“DTZ”),anindependentpropertyvaluer,wasengagedtocarryoutanindependentvaluationofthemajorportionoftheGroup’sinvestmentpropertyportfolioasat31stDecember2011.ThisvaluationwascarriedoutinaccordancewiththeValuationStandardsonPropertiesissuedbytheHongKongInstituteofSurveyors,whichdefinemarketvalueas“theestimatedamountforwhichapropertyshouldexchangeonthedateofvaluationbetweenawillingbuyerandawillingsellerinanarm’slengthtransactionafterpropermarketingwhereinthepartieseachactedknowledgeably,prudentlyandwithoutcompulsion”.

DTZhasderivedthevaluationoftheGroup’scompletedinvestmentpropertyportfoliobycapitalisingtherentalincomederivedfromexistingtenancieswithdueprovisionforreversionaryincomepotentialandbymakingreferencetorecentcomparablesalestransactionsasavailableintherelevantpropertymarket.Theymakeassumptionsprincipallyinrespectofopenmarketrentsandyields.

DTZhasderivedthevaluationoftheGroup'sinvestmentpropertiesunderconstructionbymakingreferencetorecentcomparablesalestransactionsasavailableintherelevantpropertymarket(ontheassumptionithadalreadybeencompletedatthevaluationdate),andhasalsotakenintoaccounttheconstructioncostalreadyincurredaswellastheestimatedcosttobeincurredtocompletetheproject.Wherethevaluationispreparedbasedontheassumptionthattheproperty’stitlecertificatehasbeenreceivedbutthisisnotthecase,theGrouphasmadeanestimateofthefuturelandcostanddeductedfromthevaluation.

ManagementhasreviewedtheDTZvaluationandcompareditwithitsownassumptions,withreferencetocomparablesalestransactiondatawheresuchinformationisavailable,andhasconcludedthattheDTZvaluationoftheGroup’sinvestmentpropertyportfolioisreasonable.

(b) Impairment of assets

TheGrouptestsatleastannuallywhethergoodwillandotherassetsthathaveindefiniteusefulliveshavesufferedanyimpairment.Assets,includinglandandpropertiesnotheldatfairvalue,arereviewedforimpairmentwhenevereventsorchangesincircumstancesindicatethatthecarryingamountoftheassetexceedsitsrecoverableamount.Therecoverableamountisdeterminedusingfairvaluelesscoststosellorvalue-in-usecalculationsasappropriate.

(c) Income taxes

TheGroupissubjecttoincometaxesinnumerousjurisdictions.Significantjudgementisrequiredindeterminingtheworldwideprovisionforincometaxes.TherearetransactionsandcalculationsrelatingtotheGroup'sordinarybusinessactivitiesforwhichtheultimatetaxdeterminationisuncertain.TheGrouprecognisesliabilitiesforpotentialtaxexposuresbasedonestimatesofwhetheradditionaltaxeswillbedue.Wherethefinaltaxoutcomeofthesemattersaredifferentfromtheamountsthatwereinitiallyrecorded,suchdifferenceswillaffecttheincometaxanddeferredtaxprovisionsintheyearinwhichtheoutcomesbecomeknown.


4. TurnoverTheCompanyisalimitedliabilitycompanyincorporatedinHongKongandlistedonTheStockExchangeofHongKongLimited.TheprincipalactivityoftheCompanyisthatofaholdingcompany.Theprincipalactivitiesofitsmajorsubsidiary,jointlycontrolledandassociatedcompaniesareshownonpages145to147.

TurnoverrepresentssalesbytheCompanyanditssubsidiarycompaniestoexternalcustomersandcomprisesrevenuefrom:

Group

2011HK$M

2010HK$M

Grossrentalincomefrominvestmentproperties 8,557 7,875

Propertytrading 213 400

Hotels 717 518

Renderingofservices 94 78

9,581 8,871

5. CostofSalesThefollowingtableillustratesthecostofsalesfortheyear:

Group

2011HK$M

2010HK$M

Directrentaloutgoingsinrespectofinvestmentpropertiesthat

–generatedrentalincome (1,471) (1,330)

–didnotgeneraterentalincome (46) (92)

(1,517) (1,422)

Propertytrading (199) (267)

Hotels (584) (543)

Renderingofservices (34) (29)

(2,334) (2,261)

6. ProfitonSaleofInterestinFestivalWalkInJuly2011,anagreementwasenteredintowithanIndependentThirdPartyforthedisposaloftheGroup’sentireinterestinFestivalWalkforacashconsiderationofHK$18,800million,subjecttoanadjustmentbyreferencetonetcurrentassetsandliabilitiesatcompletion.TheadjustmentresultedinanadditionalreceiptofapproximatelyHK$116million.Completiontookplaceon18thAugust2011.

Theprofitonthesale,whichexcludesgainsonrevaluationofthepropertypreviouslycreditedtotheconsolidatedincomestatementupto30thJune2011(ofwhichHK$1,098millionaroseinthesixmonthsendedonthatdate),isHK$595million.

NotestotheAccounts


7. OtherNet(Losses)/Gains

Group

2011HK$M

2010HK$M

Profitonsaleofinvestmentproperties – 544Remeasurementgainsandprofitondisposalrelatingtothechangeofshareholding inPCCWTower – 342Impairment(losses)/reversalsonhotelandtradingproperties (100) 1Netforeignexchangelosses (6) (2)Provisionwrittenback 19 18Reversalofincomepreviouslyrecognisedasforfeiteddepositontradingproperties (16) –Others 20 22

(83) 925

8. ExpensesbyTypeExpensesincludedincostofsales,administrativeandotheroperatingexpensesareanalysedasfollows:

Group

2011HK$M

2010HK$M

Depreciationofproperty,plantandequipment(note16) 224 214Amortisationof –intangibleassets(note19) 3 4

–initialleasingcostsoninvestmentproperties 65 34Staffcosts 1,137 1,087Operatingleaserentals –properties 55 8Auditors’remuneration –auditservices 8 5 –taxservices 1 6 –otherservices 15 19


9. SegmentInformation(a) Informationaboutreportablesegments

Analysis of Consolidated Income Statement

External turnover

HK$M

Inter-segment turnover

HK$M

Operating profit/(loss)

after depreciation

and amortisation

HK$M

Finance chargesHK$M

Finance incomeHK$M

Share of profits less

losses of jointly

controlled companies

HK$M

Share of profits less

losses of associated companies

HK$M

Profit/(loss) before

taxationHK$M

Tax chargeHK$M

Profit/(loss) for the year

HK$M

Profit/(loss) attributable

to the Company’s

shareholderHK$M

Depreciation and

amortisation charged to operating

profitHK$M

Year ended 31st December 2011

Propertyinvestment 8,651 8 6,743 (1,464) 24 123 – 5,426 (760) 4,666 4,656 (163)

Propertytrading 213 – (50) (5) 3 59 – 7 (3) 4 7 (9)

Hotels 717 2 (93) (35) – (7) 155 20 (53) (33) (33) (120)

Changeinfairvalueof investmentproperties – – 20,345 – – 676 1 21,022 (480) 20,542 20,496 –

Inter-segmentelimination – (10) – – – – – – – – – –

9,581 – 26,945 (1,504) 27 851 156 26,475 (1,296) 25,179 25,126 (292)

Yearended 31stDecember2010

Propertyinvestment 7,953 4 6,561 (1,233) 24 19 18 5,389 (793) 4,596 4,589 (132)

Propertytrading 400 – 72 (6) 3 30 – 99 (12) 87 87 –

Hotels 518 – (144) (25) – (23) 132 (60) (49) (109) (109) (120)

Changeinfairvalueof investmentproperties – – 20,480 – – 1,435 75 21,990 (470) 21,520 21,478 –

Inter-segmentelimination – (4) – – – – – – – – – –

8,871 – 26,969 (1,264) 27 1,461 225 27,418 (1,324) 26,094 26,045 (252)

Analysis of total assets of the Group

Segment assets

HK$M

Jointly controlled companies

HK$M

Associated companies

HK$M

Bank deposits HK$M

Total assets

HK$M

Additions to non-current assets (note)

HK$M

At 31st December 2011

Propertyinvestment 190,771 11,303 55 1,003 203,132 5,117

Propertytradinganddevelopment 7,479 842 – 76 8,397 2

Hotels 5,165 855 584 101 6,705 586

203,415 13,000 639 1,180 218,234 5,705

At31stDecember2010

Propertyinvestment 182,116 9,965 53 960 193,094 4,623

Propertytradinganddevelopment 6,150 348 – 42 6,540 2

Hotels 4,759 627 652 40 6,078 236

193,025 10,940 705 1,042 205,712 4,861

Note:Inthisanalysis,additionstonon-currentassetsduringtheyearexcludefinancialinstruments(whichincludejointlycontrolledandassociatedcompaniesandavailable-for-saleassets),deferredtaxassetsandretirementbenefitassets.

NotestotheAccounts


9. SegmentInformation(continued)(a) Informationaboutreportablesegments(continued)

Analysis of total liabilities and non-controlling interests of the Group

Segment liabilities

HK$M

Current and deferred tax

liabilities HK$M

Gross borrowings

HK$M

Total liabilities

HK$M

Non- controlling

interests HK$M

At 31st December 2011

Propertyinvestment 6,184 4,672 22,852 33,708 532

Propertytradinganddevelopment 1,721 19 5,409 7,149 –

Hotels 183 – 619 802 –

8,088 4,691 28,880 41,659 532

At31stDecember2010

Propertyinvestment 4,764 4,278 32,755 41,797 479

Propertytradinganddevelopment 194 1 4,554 4,749 –

Hotels 241 – 569 810 –

5,199 4,279 37,878 47,356 479

TheSwirePropertiesGroupisorganisedonadivisionalbasis:Propertyinvestment,Propertytradinganddevelopment,andHotels.

Thereportablesegmentswithineachofthethreedivisionsareclassifiedaccordingtothenatureofthebusiness.

(b) Informationaboutgeographicalareas

TheactivitiesoftheGroupareprincipallybasedinHongKong,MainlandChina,theUnitedStatesofAmericaandtheUnitedKingdom.

Ananalysisofturnoverandnon-currentassetsoftheGroupbyprincipalmarketsisoutlinedbelow:

Turnover Non-current assets*

2011HK$M

2010HK$M

2011HK$M

2010HK$M

HongKong 8,392 8,301 169,779 166,268MainlandChina 932 446 23,378 18,693UnitedStatesofAmerica 146 50 569 446UnitedKingdom 111 74 511 547

9,581 8,871 194,237 185,954

* Inthisanalysis,thetotalofnon-currentassetsexcludesfinancialinstruments(whichincludejointlycontrolledandassociatedcompaniesandavailable-for-saleassets),deferredtaxassetsandretirementbenefitassets.


10.Directors’andExecutiveOfficers’Emoluments(a) DetailsoftheemolumentspaidandpayabletothedirectorsoftheGroupfortheyearended31stDecember2011areasfollows:

Cash Non cash

Salary/fee HK$’000

Discretionary bonus

(note (vi)) HK$’000

Allowances and benefits

HK$’000

Retirement schemes

contributions HK$’000

Discretionary bonus paid

to retirement schemes

HK$’000

Housing and other

benefits HK$’000

Total 2011

HK$’000

Total2010

HK$’000

For the year ended 31st December 2011

Executive Directors

C.D.Pratt – – – – – – – –

M.Cubbon 4,320 3,213 401 1,243 1,102 3,428 13,707 10,028

M.M.S.Low 1,860 483 580 99 – 54 3,076 777

G.M.C.Bradley 1,728 1,140 1,610 499 681 2,262 7,920 5,829

D.C.Y.Ho 3,744 646 – 12 – 111 4,513 2,665

G.J.Ongley 3,838 2,133 162 560 – 2,748 9,441 10,384

J.C.G.Bremridge(note(i)) 1,231 948 158 367 757 1,820 5,281 5,831

J.C.Culbertson(note(ii)) – 474 – – – – 474 3,132

S.G.Spurr(note(iii)) – 500 – – – – 500 2,854

K.G.Kerr(note(iv)) – – – – – – – 2,187

Non-Executive Directors

J.W.J.Hughes-Hallett – – – – – – – –

P.A.Kilgour – – – – – – – 439

M.B.Swire – – – – – – – –

P.N.L.Chen(note(v)) – – – – – – – –

Independent Non-Executive Directors

S.E.Bradley 550 – – – – – 550 395

J.C.C.Chan 650 – – – – – 650 467

H.C.Cheng 500 – – – – – 500 –

P.K.Etchells 700 – – – – – 700 502

S.C.Liu 550 – – – – – 550 395

Total 2011 19,671 9,537 2,911 2,780 2,540 10,423 47,862

Total2010 17,148 10,176 4,143 3,674 1,084 9,660 45,885

Notes:(i) J.C.G.Bremridgeresignedasanexecutivedirectoron11thSeptember2011.(ii) J.C.Culbertsonresignedasanexecutivedirectoron31stMarch2010withfinalbonuspaymentmadein2011.(iii) S.G.Spurrresignedasanexecutivedirectoron31stMarch2010withfinalbonuspaymentmadein2011.(iv) K.G.Kerrresignedasanexecutivedirectoron31stMay2009withfinalbonuspaymentmadein2010.(v) P.N.L.Chenresignedasanon-executivedirectoron13thApril2010.(vi) Thebonusesdisclosedabovearerelatedtoservicesasexecutiveandnon-executivedirectorsforthepreviousyear.

NotestotheAccounts


10.Directors’andExecutiveOfficers’Emoluments(continued)(b) Fivehighestpaidindividuals

ThefiveindividualswhoseemolumentswerethehighestintheGroupfortheyearsended31stDecember2011and2010areasfollows:

Year ended 31st December

2011 2010

Numberofindividuals

Executivedirectors(note(i)) 3 3

Executiveofficers(note(ii)) 2 2

5 5

Notes:(i) Detailsoftheemolumentspaidtothesedirectorswereincludedinthedisclosureassetoutinnote10(a)above.(ii) Detailsofemolumentspaidtotheaboveexecutiveofficersareasfollows:


2011HK$’000

2010HK$’000

Salary 3,902 5,225

Discretionarybonus* 3,150 3,696

Allowanceandbenefits 5,192 3,894

Retirementschemecontributions 406 502

12,650 13,317

* Thebonusesdisclosedabovearerelatedtoservicesforthepreviousyear.

Thenumberoftheaboveexecutiveofficersfellwithinthefollowingbandsofemoluments:


2011 2010

HK$5,000,001–HK$5,500,000 1 –

HK$5,500,001–HK$6,000,000 – –

HK$6,000,001–HK$6,500,000 – 1

HK$7,000,001–HK$7,500,000 1 1

2 2

11.NetFinanceChargesRefertopage58fordetailsoftheGroup'snetfinancecharges.


12.Taxation

Group

2011 2010

HK$M HK$M HK$M HK$M

Currenttaxation:

HongKongprofitstax (628) (651)

Overseastaxation (12) (7)

Over/(under)-provisionsinprioryears 20 (6)

(620) (664)

Deferredtaxation:(note34)

Changesinfairvalueofinvestmentproperties (386) (384)

Originationandreversaloftemporarydifferences (290) (276)

(676) (660)

(1,296) (1,324)

HongKongprofitstaxiscalculatedat16.5%(2010:16.5%)ontheestimatedassessableprofitsfortheyear.OverseastaxiscalculatedattaxratesapplicableinjurisdictionsinwhichtheGroupisassessablefortax.

ThetaxchargeontheGroup’sprofitbeforetaxationdiffersfromthetheoreticalamountthatwouldariseusingtheHongKongprofitstaxrateoftheCompanyasfollows:

2011HK$M

2010HK$M

Profitbeforetaxation 26,475 27,418

Calculatedatataxrateof16.5%(2010:16.5%) (4,368) (4,524)Shareofprofitslesslossesofjointlycontrolledandassociatedcompanies 166 278Effectofdifferenttaxratesinothercountries (77) (106)Incomenotsubjecttotax 3,199 3,158Expensesnotdeductiblefortaxpurposes (141) (31)Unusedtaxlossesnotrecognised (84) (31)Utilisationofpreviouslyunrecognisedtaxlosses 24 34Recognitionofpreviouslyunrecognisedtaxlosses 45 1Deferredtaxassetswrittenoff (62) (96)Over/(under)-provisionsinprioryears 20 (6)

Deferredtaxonretirementbenefits (15) –Others (3) (1)

Taxcharge (1,296) (1,324)

TheGroup’sshareofjointlycontrolledandassociatedcompanies'taxchargesofHK$76million(2010:HK$436million)andHK$31million(2010:HK$34million)respectivelyisincludedintheshareofprofitslesslossesofjointlycontrolledandassociatedcompaniesshownintheconsolidatedincomestatement.

NotestotheAccounts


13.ProfitAttributabletotheCompany’sShareholderOftheprofitattributabletotheCompany’sshareholder,HK$16,203million(2010:HK$2,491million)isdealtwithintheaccountsoftheCompany.

14.Dividends

Group

2011HK$M

2010HK$M

Firstspecialinterimdividendpaidon30thSeptember2011 4,514 –

Secondspecialinterimdividendpaidon8thNovember2011 5,500 –

Interimdividendpaidpriortothemerger* – 1

Firstinterimdividend(inlieuoffinaldividend)declaredon15thMarch2012ofHK¢18pershare) 1,053 –

Proposedfinaldividend – 2,425

11,067 2,426

Company

2011HK$M

2010HK$M

Firstspecialinterimdividendpaidon30thSeptember2011 4,514 –

Secondspecialinterimdividendpaidon8thNovember2011 5,500 –

Firstinterimdividend(inlieuoffinaldividend)declaredon15thMarch2012ofHK¢18pershare) 1,053 –

Proposedfinaldividend – 2,425

11,067 2,425

Thefirstinterimdividendisnotaccountedforin2011becauseithadnotbeendeclaredattheyearenddate.Theactualamountwillbeaccountedforasanappropriationoftherevenuereserveintheyearending31stDecember2012.

* ThisrelatestothedividendpaidbytheUSsubsidiarycompanypriortothemergerwiththeCompany,whichtookplaceon25thJanuary2010.Refertopage144ofthePrincipalAccountingPoliciesforfurtherdetails.

15.EarningsPerShare(BasicandDiluted)EarningspersharearecalculatedbydividingtheprofitattributabletotheCompany’sshareholderofHK$25,126million(2010:HK$26,045million,bytheweightedaveragenumberof5,704,027,397ordinarysharesinissueduring2011(2010:5,690,000,000ordinaryshares).


16.Property,PlantandEquipment

Group Company

Leasehold land held for own use

under finance lease HK$M

Land and property

HK$M

Plant and equipment

HK$MTotal

HK$M

Plant and equipment

HK$M

Cost:

At1stJanuary2011 2,378 4,011 951 7,340 225

Translationdifferences – 52 9 61 –

ChangeincompositionofGroup (20) (32) (27) (79) –

Additions – 595 90 685 15

Disposals – – (3) (3) (1)

Transferfromdeferredexpenditure – – 17 17 –

Costwritten-off – (25) (3) (28) (3)

Transferfrompropertiesheldfordevelopment – 50 – 50 –

Othernettransferstoinvestmentproperties (310) (1) – (311) –

Transferbetweencategories – 8 (8) – –

Revaluationsurplus 186 – – 186 –

At31stDecember2011 2,234 4,658 1,026 7,918 236

Accumulateddepreciationandimpairment:

At1stJanuary2011 49 413 545 1,007 137


ChangeincompositionofGroup (6) (9) (26) (41) –

Chargefortheyear(note8) 20 76 128 224 26

Provisionforimpairmentlosses(note43(a)) – 99 6 105 –

Disposals – – (2) (2) (1)

Nettransferstoinvestmentproperties (5) (3) – (8) –

Depreciationwrittenback – (1) – (1) –

Transferfromdeferredexpenditure – – 2 2 –

At31stDecember2011 58 587 658 1,303 162

Netbookvalue:

At31stDecember2011 2,176 4,071 368 6,615 74

At31stDecember2011and2010,noneoftheGroup’sproperty,plantandequipmentwaspledgedassecurityfortheGroup’slong-termloans.

PropertiesoccupiedbytheGroup(togetherwiththeassociatedleaseholdland)weretransferredtoinvestmentpropertiesfollowingtheendofoccupationbytheGroup.Thevaluationincreasefromcarryingamounttofairvaluefortheyearsended31stDecember2011wasHK$186million(2010:HK$1,448million),hasbeenrecognisedinothercomprehensiveincomeandthepropertiesrevaluationreserve.

Property,plantandequipmentisreviewedforimpairmentwherevereventsorchangesincircumstancesindicatethatthecarryingamountmaynotberecoverable.In2011theDirectorsconsideredanumberofhotelsintheUnitedKingdomtobeimpairedasaresultoftheconditionofthehotelpropertymarketintheselocations.ThecarryingamountofthesehotelshavebeenwrittendownbyHK$105milliontotheirrecoverableamount,whichisthefairvaluelesscoststosell,calculatedusingtheincomecapitalisationapproach.

NotestotheAccounts


16.Property,PlantandEquipment(continued)

Group Company

Leaseholdlandheldforownuse

underfinanceleaseHK$M

Landandproperty

HK$M

Plantandequipment

HK$MTotal

HK$M

Plantandequipment

HK$M

Cost:

At1stJanuary2010 1,791 3,871 772 6,434 256


Costwritten-off – (57) – (57) –

Additions – 269 146 415 83

Disposals – – (115) (115) (114)

Nettransferstoinvestmentproperties (861) 48 – (813) –

Transferbetweencategories – (144) 144 – –

Revaluationsurplus 1,448 – – 1,448 –

At31stDecember2010 2,378 4,011 951 7,340 225

Accumulateddepreciationandimpairment:

At1stJanuary2010 40 378 523 941 219


Chargefortheyear(note8) 17 72 125 214 22

Disposals – – (105) (105) (104)

Transferstoinvestmentproperties (8) (42) – (50) –

At31stDecember2010 49 413 545 1,007 137

Netbookvalue:

At31stDecember2010 2,329 3,598 406 6,333 88

17.InvestmentPropertiesRefertopage35fordetailsoftheGroup’sinvestmentproperties.


18.LeaseholdLandandLandUseRightsTheGroup’sinterestsinleaseholdlandandlanduserightsrepresentprepaidoperatingleasepayments,thenetbookvalueofwhichisanalysedasfollows:

Group

2011HK$M

2010HK$M

At1stJanuary 6 6

Translationdifferences (1) –

Impairmentloss(note43(a)) (2) –

At31stDecember 3 6

HeldoutsideHongKong:

Onmedium-termleases(10to50years) 3 6

3 6

19.IntangibleAssets

Group Company

Goodwill HK$M

Computer Software

HK$MTotal

HK$M

Computer Software

HK$M

Cost:

At1stJanuary2011 182 43 225 43

Additions – 5 5 5

Disposals/written-off (182) – (182) –

At31stDecember2011 – 48 48 48

Accumulatedamortisationandimpairment:

At1stJanuary2011 – 38 38 38

Amortisationfortheyear(note8) – 3 3 3


Netbookvalue:


NotestotheAccounts


19.IntangibleAssets(continued)

Group Company

GoodwillHK$M

ComputerSoftware

HK$MTotal

HK$M

ComputerSoftware

HK$M

Cost:

At1stJanuary2010 183 40 223 40

Translationdifferences (1) – (1) –

Additions – 3 3 3

At31stDecember2010 182 43 225 43

Accumulatedamortisationandimpairment:

At1stJanuary2010 – 34 34 34

Amortisationfortheyear(note8) – 4 4 4


Netbookvalue:

At31stDecember2010 182 5 187 5

AmortisationofHK$3million(2010:HK$4million)isincludedinadministrativeexpensesintheconsolidatedincomestatement.

Impairmenttestofgoodwill

GoodwillattributabletoinvestmentpropertiesinHongKongarosewherethefairvalueofnetassetsacquiredwasbelowthefairvalueofconsiderationpaidduetotherecognition,requiredforaccountingpurposes,ofdeferredtaxliabilitiesinrespectofacceleratedtaxdepreciationontheinvestmentpropertiespurchased.Consequentlytherelatedgoodwillwillonlybeimpairedshouldthefairvalueoftheinvestmentpropertyinfuturefallbelowitsfairvalueatacquisition.Therecoverableamountofgoodwillattributabletothiscash-generatingunitisthereforeassessedonapost-taxbasisusingfairvaluelesscoststosell.

20.PropertiesHeldforDevelopmentRefertopage37fordetailsoftheGroup’spropertiesheldfordevelopment.

21.SubsidiaryCompaniesCompany

2011HK$M

2010HK$M

Unlistedsharesatcostlessprovisions 504 3,234

Loansandotheramountsduefromsubsidiarycompanies

–Interest-free 44,501 33,041

–Interest-bearing(2010:HIBORplus0.24%) – 155

45,005 36,430

Theloansandamountsduefromsubsidiarycompaniesareunsecuredandhavenofixedtermsofrepayment.

TheprincipalsubsidiarycompaniesofSwirePropertiesLimitedwhichhavemateriallyaffectedtheresultsorassetsoftheGroupareshownonpages145to147.


22.JointlyControlledCompanies

Group Company

2011HK$M

2010HK$M

2011HK$M

2010HK$M

Unlistedsharesatcost – –Shareofnetassets,unlisted 3,240 2,198 –Loansduefromjointlycontrolledcompanieslessprovisions –Interest-free 9,174 8,388 492 515 –Interest-bearingat1.71%to6.56%(2010:1.71%) 586 354 – –

13,000 10,940 492 515

Theloansduefromjointlycontrolledcompaniesareunsecuredandhavenofixedtermsofrepayment.

TheGroup’sshareofassetsandliabilitiesandresultsofjointlycontrolledcompaniesissummarisedbelow:

Group

2011HK$M

2010HK$M

Non-currentassets 14,558 13,052

Currentassets 3,231 2,031

Currentliabilities (4,227) (4,176)

Non-currentliabilities (10,322) (8,709)

Net assets 3,240 2,198

Revenue 608 426

Changeinfairvalueofinvestmentproperties 719 1,819

Expenses (400) (348)

Profitbeforetaxation 927 1,897

Taxation (76) (436)

Profit for the year 851 1,461

TheprincipaljointlycontrolledcompaniesofSwirePropertiesLimitedwhichhavemateriallyaffectedtheresultsorassetsoftheGroupareshownonpages145to147.

NotestotheAccounts


23.AssociatedCompanies

Group Company

2011HK$M

2010HK$M

2011HK$M

2010HK$M

Unlistedsharesatcost – 3 3Shareofnetassets –Unlisted 463 529 –Loansduefromassociatedcompanies –Interest-free 176 176 176 176

639 705 179 179

Theloansduefromassociatedcompaniesareunsecuredandhavenofixedtermsofrepayment.

TheGroup’sshareoftheassetsandliabilitiesandresultsofassociatedcompaniesissummarisedbelow:

Group

2011HK$M

2010HK$M

Non-currentassets 689 694

Currentassets 221 349

Currentliabilities (150) (122)

Non-currentliabilities (297) (392)

Net assets 463 529

Revenue 572 539

Profitfortheyear 156 225

TheprincipalassociatedcompaniesofSwirePropertiesLimitedwhichhavemateriallyaffectedtheresultsorassetsoftheGroupareshownonpages145to147.


24.FinancialInstrumentsbyCategory

Group

At fair value through

profit or loss

HK$M

Available- for-sale HK$M

Loans and receivables

HK$M

Amortised cost

HK$M

Total carrying amount HK$M

Fair value

HK$M

Assets as per consolidated statement of financial position

At31stDecember2011

Available-for-saleassets(note25) – 9 – – 9 9

Amountduefromimmediateholdingcompany – – 142 – 142 142

Tradeandotherreceivables(note28) – – 1,823 – 1,823 1,823

Bankbalancesandshort-termdeposits(note30) – – 1,180 – 1,180 1,180

Total – 9 3,145 – 3,154 3,154

At31stDecember2010

Available-for-saleassets(note25) – 7 – – 7 7

Amountduefromimmediateholdingcompany – – 106 – 106 106

Tradeandotherreceivables(note28) – – 1,141 – 1,141 1,141

Bankbalancesandshort-termdeposits(note30) – – 1,042 – 1,042 1,042

Total – 7 2,289 – 2,296 2,296

Liabilities as per consolidated statement of financial position

At31stDecember2011

Tradeandotherpayables(note31) 937 – – 7,131 8,068 8,068

Bankoverdraftsandshort-termbankloans – – – 1,023 1,023 1,023

Long-termbankloans – – – 6,483 6,483 6,483

Total 937 – – 14,637 15,574 15,574

At31stDecember2010

Tradeandotherpayables(note31) 678 – – 4,495 5,173 5,173

Bankoverdraftsandshort-termbankloans – – – 991 991 991

Long-termbankloans – – – 4,685 4,685 4,685

Total 678 – – 10,171 10,849 10,849

NotestotheAccounts


24.FinancialInstrumentsbyCategory(continued)

Company

Loans and receivables

HK$M

Amortised cost

HK$M

Total carrying amount HK$M

Fair value

HK$M

Assets as per statement of financial position

At31stDecember2011

Tradeandotherreceivables(note28) 87 – 87 87

Short-termdepositsandbankbalances(note30) 267 – 267 267

Total 354 – 354 354

At31stDecember2010

Tradeandotherreceivables(note28) 55 – 55 55

Short-termdepositsandbankbalances(note30) 285 – 285 285

Total 340 – 340 340

Liabilities as per statement of financial position

At31stDecember2011

Tradeandotherpayables(note31) – 2,992 2,992 2,992

Total – 2,992 2,992 2,992

At31stDecember2010

Tradeandotherpayables(note31) – 2,691 2,691 2,691

Total – 2,691 2,691 2,691

Theaccountingpoliciesappliedtofinancialinstrumentsareshownbelow:

Thefairvaluesoffinancialinstrumentstradedinactivemarketsarebasedonquotedmarketpricesattheyear-enddate.ThequotedmarketpricesusedforfinancialassetsheldbytheGrouparethecurrentbidprices.

Thefairvaluesoffinancialinstrumentsthatarenottradedinactivemarketsaredeterminedbyusingvaluationtechniquessuchasestimateddiscountedcashflowswhichuseassumptionsthatarebasedonmarketconditionsexistingateachyear-enddate.

Thebookvaluesoftradeandotherreceivables,tradeandotherpayablesandprovisionsapproximatetheirfairvalues.

Thefairvaluesofshort-termandnon-currentborrowingsaredeterminedbyusingvaluationtechniquessuchasestimateddiscountedcashflowswhichuseassumptionssourcedfromtherelevantfinancialinstitutions.


24.FinancialInstrumentsbyCategory(continued)Financialinstrumentsthataremeasuredatfairvalueareincludedinthefollowingfairvaluehierarchy:

GroupLevel 2HK$M

Assets as per consolidated statement of financial position

At31stDecember2011

Available-for-saleassets(note25) 9

Total 9

At31stDecember2010

Available-for-saleassets(note25) 7

Total 7

Liabilities as per consolidated statement of financial position

At31stDecember2011

Putoptionovernon-controllinginterestinSanlitunVillage(note31) 937

Total 937

At31stDecember2010

Putoptionovernon-controllinginterestinSanlitunVillage(note31) 678

Total 678

Note:Level2–Financialinstrumentsmeasuredatfairvalueusinginputsotherthanquotedpricesbutwherethoseinputsarebasedonobservablemarketdata.

25.Available-for-saleAssets

Group

2011HK$M

2010HK$M

Unlistedinvestments 9 7

9 7

26.PropertiesunderDevelopmentandforSaleRefertopage37fordetailsoftheGroup’spropertiesunderdevelopmentandforsale.

NotestotheAccounts


27.StocksandWorkinProgress

Group

2011HK$M

2010HK$M

Tradinggoods 17 13

Storeandspareparts 44 35

Workinprogress 8 11

69 59

28.TradeandOtherReceivables

Group Company

2011HK$M

2010HK$M

2011HK$M

2010HK$M

Tradedebtors 284 204 – 13

Prepaymentsandaccruedincome 125 27 5 3Otherreceivables 1,536 937 87 42

1,945 1,168 92 58

Theanalysisoftheageoftradedebtorsatyear-end(basedontheinvoicedate)isasfollows:

Group Company

2011HK$M

2010HK$M

2011HK$M

2010HK$M

Underthreemonths 272 195 – 13Betweenthreeandsixmonths 5 3 – –Oversixmonths 7 6 – –

284 204 – 13

Thereisnoconcentrationofcreditriskwithrespecttotradereceivables,astheGrouphasalargenumberofcustomers.

TheGroupdoesnotgrantanycredittermtoitscustomers,excepttocorporatecustomersinthehotelbusinesswherecommercialtradecredittermsaregiven.At31stDecember2011,tradedebtorsofHK$284million(2010:HK$204million)werepastduebutnotimpaired.Theserelatetoanumberofindependentcustomersforwhomthereisnorecenthistoryofdefault.Theotherclasseswithintradeandreceivablesdonotcontainimpairedassets.

Themaximumexposuretocreditriskat31stDecember2011and31stDecember2010isthecarryingvalueoftradedebtorsdisclosedabove.Thevalueofrentaldepositsfromtenantsheldassecurityagainsttradedebtorsat31stDecember2011wasHK$1,780million(2010:HK$1,810million).

29.AmountDuefromImmediateHoldingCompany–SwirePacificLimitedTheamountduefromimmediateholdingcompanyisunsecured,interestfreeandrepayablewithinoneyear.


30.CashandCashEquivalentsGroup Company

2011HK$M

2010HK$M

2011HK$M

2010HK$M

Short-termdepositsmaturingwithinthreemonths 260 795 200 240Bankbalances 920 247 67 45

1,180 1,042 267 285

Theeffectiveinterestratesonshort-termdepositsoftheGrouprangedfrom0.01%to1.31%(2010:0.005%to1.17%);thesedepositshaveamaturityfrom3to8days(2010:3to90days).

Themaximumexposuretocreditriskinrespectofbankbalancesandshort-termdepositsat31stDecember2011and31stDecember2010isthecarryingvalueofthebankbalancesandshort-termdepositsdisclosedabove.

31.TradeandOtherPayablesGroup Company

2011HK$M

2010HK$M

2011HK$M

2010HK$M

Tradecreditors 1,788 544 – 15

Amountsduetointermediateholdingcompany 79 99 79 99

Amountsduetoafellowsubsidiarycompany 102 – – –

Amountsduetosubsidiarycompanies – – 2,586 2,386

Amountsduetoajointlycontrolledcompany 2 – – –

Interest-bearingadvancesfromajointlycontrolled companyat1.55% 225 – – –

Interest-bearingadvancesfromanassociated company(2010:0.54%) – 149 – 149

Advancesfromnon-controllinginterests 234 214 – –

Rentaldepositsfromtenants 1,780 1,810 – –

Putoptionovernon-controllinginterestinSanlitunVillage 937 678 – –

Accruedcapitalexpenditure 1,215 1,192 – –Otherpayables 1,726 513 327 42

8,088 5,199 2,992 2,691

Apartfromcertainamountsduetojointlycontrolledandassociatedcompanies,whichareinterest-bearingasspecifiedabove,thebalancesareinterestfree,unsecuredandhavenofixedtermofrepayment.

Theanalysisoftheageoftradecreditorsatyear-endisasfollows:

Group Company

2011HK$M

2010HK$M

2011HK$M

2010HK$M

Underthreemonths 1,529 543 – 15

Betweenthreeandsixmonths 259 1 – –

1,788 544 – 15

NotestotheAccounts


32.Borrowingsfrombanks

Group

2011HK$M

2010HK$M

Bankoverdraftsandshort-termbankloans–unsecured 1,023 991

Long-termbankloans–unsecured:

Repayablewithinoneyear 664 3,103

Repayablebetweenoneandtwoyears 93 –

Repayablebetweentwoandfiveyears 5,726 1,582

6,483 4,685

Amountduewithinoneyearincludedundercurrentliabilities (664) (3,103)

5,819 1,582

(a) Theeffectiveinterestratesperannumattheyear-enddatewereasfollows:

2011 2010

RMB %

US$ %

Others %

RMB%

US$%

Others%

Bankoverdrafts/short-termbankloans 3.14-7.93 – – 4.37-4.59 – –

Long-termbankloans 5.6-7.87 1.11 2.05 4.86-5.94 1.11 1.89

Bankloansarerepayableonvariousdatesupto2014(2010:upto2014).

(b) Thecarryingamountsoftheselong-termbankloansapproximatetotheirfairvalueandaredenominatedinthefollowingcurrencies:

2011HK$M

2010HK$M

Renminbi 6,017 4,476

Poundssterling 60 60

UnitedStatesdollar 406 149

6,483 4,685


33.LoansDuetoaFellowSubsidiaryCompany–SwireFinanceLimitedTheloansduetoafellowsubsidiarycompanyareunsecured,repayableonvariousdatesupto2018andbearinterestatacombinationoffixedandfloatingratewhicheffectivelywas4.46%perannumat31stDecember2011(2010:3.75%perannum).

Group

2011HK$M

2010HK$M

Repayablewithinoneyear 6,943 5,228

Repayablebetweenoneandtwoyears 2,296 7,128

Repayablebetweentwoandfiveyears 4,638 3,800

Repayableafterfiveyears 7,497 16,046

21,374 32,202

Loansduewithinoneyearincludedundercurrentliabilities (6,943) (5,228)

14,431 26,974

34.DeferredTaxationThemovementonthenetdeferredtaxliabilitiesaccountisasfollows:

Group Company

2011HK$M

2010HK$M

2011HK$M

2010HK$M

At1stJanuary 3,806 3,151 4 –

Translationdifferences 111 (5) – –

ChangeincompositionofGroup (404) – – –Chargedtoincomestatement(note12) 676 660 15 4

At31stDecember 4,189 3,806 19 4

Deferredtaxassetsarerecognisedinrespectoftaxlossescarriedforwardtotheextentthatrealisationoftherelatedtaxbenefitsthroughfuturetaxableprofitsisprobable.TheGrouphasunrecognisedtaxlossesofHK$1,735million(2010:HK$1,452million)tocarryforwardagainstfuturetaxableincome.Theseamountsareanalysedasfollows:-

Group

Unrecognised tax losses

2011 HK$M

2010HK$M

Noexpirydate 794 665Expiringin2012 13 12Expiringin2013 64 188Expiringin2014 244 291Expiringin2015 293 296Expiringin2016 327 –

1,735 1,452

NotestotheAccounts


34.DeferredTaxation(continued)Themovementindeferredtaxassetsandliabilities(priortooffsettingbalanceswithinthesametaxationjurisdiction)duringtheyearisasfollows:

Deferredtaxliabilities

Group

Accelerated tax depreciation

Valuation of investment properties Others Total

2011HK$M

2010HK$M

2011HK$M

2010HK$M

2011HK$M

2010HK$M

2011HK$M

2010HK$M

At1stJanuary 2,312 2,130 1,514 1,130 181 193 4,007 3,453

Translationdifferences – – 116 – (1) – 115 –

ChangeincompositionofGroup (401) – – – (3) – (404) –

Charged/(credited)toincomestatement 170 182 386 384 67 (12) 623 554

At31stDecember 2,081 2,312 2,016 1,514 244 181 4,341 4,007

Company

Accelerated tax depreciation Others Total

2011HK$M

2010HK$M

2011HK$M

2010HK$M

2011HK$M

2010HK$M

At1stJanuary 4 – – – 4 –

Charged/(credited)toincomestatement (1) 4 16 – 15 4

At31stDecember 3 4 16 – 19 4

Deferredtaxassets

Group

Tax losses Others Total

2011HK$M

2010HK$M

2011HK$M

2010HK$M

2011HK$M

2010HK$M

At1stJanuary 43 92 158 210 201 302

Translationdifferences – 5 4 – 4 5

Chargedtoincomestatement (30) (54) (23) (52) (53) (106)

At31stDecember 13 43 139 158 152 201


34.DeferredTaxation(continued)

Deferredtaxassetsandliabilitiesarenettedoffwhenthetaxesrelatetothesametaxationauthorityandwhereoffsettingislegallyenforceable.Thefollowingamounts,determinedafterappropriateoffsetting,areshownseparatelyonthestatementoffinancialposition:

Group Company

2011HK$M

2010HK$M

2011HK$M

2010HK$M

Deferredtaxassets:

–Toberecoveredaftermorethan12months (57) (94) – –

–Toberecoveredwithin12months – – – –

(57) (94) – –

Deferredtaxliabilities:

–Tobesettledaftermorethan12months 4,246 3,900 – 4

–Tobesettledwithin12months – – 19 –

4,246 3,900 19 4

4,189 3,806 19 4

35.RetirementBenefitsTheGroupoperatesvariousretirementbenefitplansprovidingresignationandretirementbenefitstostaffonbothacontributoryandnon-contributorybasis.TheassetsoftheplansareadministeredbytrusteesandaremaintainedindependentlyoftheGroup’sfinances.Themajorityoftheplansareofthedefinedbenefittypeandcontributionstosuchplansaremadeinaccordancewiththefundingratesrecommendedbyindependentqualifiedactuariestoensurethattheplanswillbeabletomeettheirliabilitiesastheybecomedue.Thefundingratesaresubjecttoannualreviewandaredeterminedbytakingintoconsiderationthedifferencebetweenthemarketvaluesoftheplans’assetsandthepresentvalueofaccruedpastserviceliabilities,onanon-goingbasis,ascomputedbyreferencetoactuarialvaluations.TheplansinHongKongarevaluedannuallybyqualifiedactuaries,TowersWatson(formerlyknownasWatsonWyattHongKongLimited),forfundingpurposesundertheprovisionofHongKong’sOccupationalRetirementSchemesOrdinance.Fortheyearended31stDecember2011,thefundinglevelwas110%(2010:107%)oftheaccruedactuarialliabilitiesonanongoingbasis.

Allnewemployeesareofferedthechoiceofjoiningtheretirementbenefitplansorthemandatoryprovidentfund(“MPF”)scheme.WherestaffelecttojointheMPFscheme,boththeCompanyandstaffarerequiredtocontribute5%oftheemployees’relevantmonthlyincome(cappedatHK$20,000).Staffmayelecttocontributemorethantheminimumasavoluntarycontribution.EmployeesengagedoutsideHongKongarecoveredbyappropriatelocalarrangements.

Totalretirementbenefitcostsrecognisedintheconsolidatedincomestatementfortheyearended31stDecember2011amountedtoHK$30million(2010:HK$31million),includingHK$5million(2010:HK$4million)inrespectofdefinedcontributionplans.

ThedefinedbenefitplanisvaluedusingtheprojectedunitcreditmethodinaccordancewithHKAS19.Fortheyearended31stDecember2011and2010,theHKAS19disclosuresarebasedonvaluationspreparedbyTowersWatsonat31stDecember2009,whichwereupdatedat31stDecember2011and2010byCannonTrusteesLimited,themainadministrationmanageroftheGroup’sdefinedbenefitplans.

NotestotheAccounts


35.RetirementBenefits(continued)

(a) Theamountsrecognisedinthestatementoffinancialpositionareasfollows:

Group Company

2011HK$M

2010HK$M

2011HK$M

2010HK$M

Presentvalueoffundedobligations 599 547 496 451

Fairvalueofplanassets (519) (594) (431) (492)

80 (47) 65 (41)

Netunrecognisedactuariallosses (188) (36) (164) (38)

Netretirementbenefitassets (108) (83) (99) (79)

Representedby:

Retirementbenefitassets (108) (83) (99) (79)

Retirementbenefitliabilities – – – –

(108) (83) (99) (79)

(b) Changesinthepresentvalueofthedefinedbenefitobligationsareasfollows:

Group Company

2011HK$M

2010HK$M

2011HK$M

2010HK$M

At1stJanuary 547 516 451 428

Servicecost 50 47 42 38

Interestcost 23 24 18 20

Actuariallosses 70 15 59 13

Benefitspaid (91) (55) (74) (48)

At31stDecember 599 547 496 451

Changesinthefairvalueofplanassetsareasfollows:

Group Company

2011HK$M

2010HK$M

2011HK$M

2010HK$M

At1stJanuary 594 532 492 442

Expectedreturn 47 44 39 37

Actuarial(losses)/gains (82) 22 (67) 19

Contributionsbyemployers 51 51 41 42

Benefitspaid (91) (55) (74) (48)

At31stDecember 519 594 431 492



(c) Netexpensesrecognisedintheconsolidatedincomestatementareasfollows:

Group

2011HK$M

2010HK$M

Currentservicecost 50 47

Interestcost 23 24

Expectedreturnonplanassets–gain (47) (44)

26 27

Theabovenetexpensesweremainlyincludedincostofsalesandadministrativeexpensesintheconsolidatedincomestatement.

TheactualreturnondefinedbenefitplanassetswasalossofHK$35million(2010:gainofHK$66million).

(d) Planassetscomprisethefollowing:

Group

2011 2010

HK$M % HK$M %

Equities 322 62 389 65

Governmentbonds 102 20 92 16

Corporatebonds 79 15 115 19

Cash/(bankoverdraft) 16 3 (2) –

519 100 594 100

(e) Amountsforthecurrentandpreviousfourperiodsareasfollows:

Group

2011 HK$M

2010HK$M

2009HK$M

2008HK$M

2007HK$M

Definedbenefitplans

–Definedbenefitobligations 599 547 516 429 487

–Planassets (519) (594) (532) (397) (579)

–Deficit/(surplus) 80 (47) (16) 32 (92)

–Experienceadjustmentsonplanliabilities 23 14 31 6 16

–Experienceadjustmentsonplanassets 82 (22) (90) 233 (64)

NotestotheAccounts



(f) Theprincipalactuarialassumptionsusedareasfollows:

Group

2011 2010

Discountrate 3.96% 4.40%

Expectedrateofreturnonplanassets 8.00% 8.00%

Expectedrateoffuturesalaryincreases 3.28%-3.61% 3.57%

Theexpectedreturnonplanassetsreflectstheportfoliomixofassets,whichitselfisdeterminedbytheGroup’scurrentinvestmentpolicy.Expectedreturnsonequitiesandbondsreflectlong-termrealratesofreturnexperiencedintherespectivemarkets.

36.ShareCapital

Company

2011HK$M

2010HK$M

Authorised:

At31stDecember2011and2010

30,000,000,000ordinarysharesofHK$1each 30,000 30,000

Issuedandfullypaid:

5,850,000,000ordinarysharesofHK$1eachat31stDecember2011 (31stDecember2010:5,690,000,000ordinarysharesofHK$1each) 5,850 5,690

On30thNovember2011,theCompanyissued160,000,000sharestoSwirePacificLimitedforatotalcashconsiderationofHK$4,500million(beingHK$28.125pershare).Followingthisshareissue,theCompanyhasatotalof5,850,000,000fullypaidsharesinissue.

Saveasdisclosedabove,therewasnopurchase,saleorredemptionbytheCompanyofitssharesduringtheyearended31stDecember2011.


37.Reserves

Revenue reserve HK$M

Share premium account

HK$M

Merger account reserve HK$M

Property revaluation

reserve HK$M

Cash flow hedge

reserveHK$M

Translation reserveHK$M

TotalHK$M

Group

At1stJanuary2010 124,273 259 (1,108) – (1) 702 124,125

Profit for the year 26,045 – – – – – 26,045


Revaluationofpropertiespreviouslyoccupied bytheGroup

–gainrecognisedduringtheyear – – – 1,448 – – 1,448

Shareofothercomprehensiveincomeof jointlycontrolledandassociatedcompanies – – – – 1 131 132

Nettranslationdifferenceson foreignoperations – – – – – 438 438

Total comprehensive income for the year 26,045 – – 1,448 1 569 28,063

2010interimdividendpaidpriortothe merger(note14) (1) – – – – – (1)

At31stDecember2010 150,317 259 (1,108) 1,448 – 1,271 152,187

At1stJanuary2011 150,317 259 (1,108) 1,448 – 1,271 152,187

Profit for the year 25,126 – – – – – 25,126


Revaluationofpropertiespreviouslyoccupied bytheGroup

–gainrecognisedduringtheyear – – – 186 – – 186

Shareofothercomprehensiveincomeof jointlycontrolledandassociatedcompanies – – – – – 276 276

Nettranslationdifferenceson foreignoperations – – – – – 517 517

Total comprehensive income for the year 25,126 – – 186 – 793 26,105

Issuanceofnewordinaryshares – 4,340 – – – – 4,340

2010finaldividend(note14) (2,425) – – – – – (2,425)

2011specialinterimdividends(note14) (10,014) – – – – – (10,014)

At31stDecember2011 163,004 4,599 (1,108) 1,634 – 2,064 170,193

NotestotheAccounts


37.Reserves(continued)

Revenue reserveHK$M

Share premium account

HK$MTotal

HK$M

Company

At1stJanuary2010 26,503 259 26,762

Profit for the year(note13) 2,491 – 2,491

At31stDecember2010 28,994 259 29,253

At1stJanuary2011 28,994 259 29,253

Profit for the year(note13) 16,203 – 16,203

Issuanceofnewordinaryshares – 4,340 4,340

2010finaldividend(note14) (2,425) – (2,425)

2011specialinterimdividends(note14) (10,014) – (10,014)

At31stDecember2011 32,758 4,599 37,357

(a) TheGrouprevenuereserveincludesretainedrevenuereservesfromjointlycontrolledcompaniesamountingtoHK$51million(2010:accumulatedlossesofHK$607million)andretainedrevenuereservesfromassociatedcompaniesamountingtoHK$369million(2010:HK$477million).

(b) TheGroupandCompanyrevenuereserveshavenotyetdeductedthefirstinterimdividendfortheyearofHK$1,053milliondeclaredafteryearenddate(2010:proposedfinaldividendofHK$2,425million)(note14).

38.Non-controllingInterests

Group

2011HK$M

2010HK$M

At1stJanuary 479 424

Shareofprofitslesslossesfortheyear 53 49

Shareoftranslationdifferencesonforeignoperations – 3

Shareoftotalcomprehensiveincome 53 52

Dividendspaidandpayable (12) (8)

Capitalcontributionfromnon-controllinginterests 12 11

At31stDecember 532 479


39.CapitalCommitments

Group

2011HK$M

2010HK$M

Outstandingcapitalcommitmentsattheyear-endinrespectof:

(a)Property,plantandequipment

Contractedfor 88 103

AuthorisedbyDirectorsbutnotcontractedfor 1,003 902

(b)Investmentproperties Contractedfor 1,428 2,017

AuthorisedbyDirectorsbutnotcontractedfor 8,060 1,513

TheGroup’sshareofcapitalcommitmentsofjointlycontrolledcompaniesattheyear-end*

Contractedfor 734 1,755

AuthorisedbyDirectorsbutnotcontractedfor 6,367 5,202

7,101 6,957

* ofwhichtheGroupiscommittedtofundingHK$1,828million(2010:HK$2,459million)

TheCompanyhadnocommitmentsinrespectoftheaboveitemsat31stDecember2011(2010:same).

At31stDecember2011,theGrouphadunprovidedcontractualobligationsforfuturerepairsandmaintenanceoninvestmentpropertiesofHK$162million(2010:HK$146million).

NotestotheAccounts


40.Contingencies

Group Company

2011HK$M

2010HK$M

2011HK$M

2010HK$M

(a) Guarantees provided in respect of bank loans and other liabilities of:

Subsidiarycompanies – – 28,914 37,820

Bankguaranteesgiveninlieuofutilitydeposits 89 101 89 101

89 101 29,003 37,921

Thedirectorshaveassessedthefairvalueoftheaboveguaranteesanddonotconsiderthemtobematerial.TheyhavethereforenotbeenrecognisedintheGroup’sstatementoffinancialposition.

(b) Contingent tax liability

Certainwholly-ownedsubsidiarycompaniesoftheCompanyhavebeenunabletofinalisetheirliabilitytoprofitstaxinrespectoftheyears1997/98to2004/05inclusiveasaconsequenceofqueriesraisedbytheHongKongInlandRevenueDepartment(“IRD”).Thesequeriesrelatetothedeductibility,intheassessmentofprofitstax,ofinterestonborrowingsofthosesubsidiarycompaniesduringtheperiodsunderreview.

AnumberofdiscussionshavetakenplacebetweenthosesubsidiarycompaniesandtheIRDtounderstandtheprecisenatureoftheIRDqueries.However,atthisstagethereisinsufficientinformationavailabletodeterminereliablytheultimateoutcomeoftheIRD’sreviewwithanacceptabledegreeofcertainty.Consequentlynoprovisionhasbeenrecognisedintheseaccountsforanyamountsthatmayfalldueinregardtothesequeries.

TheIRDhasissuedNoticesofAssessmenttotallingHK$492millioninrespectoftheirqueriesfortheyearsunderreview.Thesubsidiarycompaniesinvolvedhaveobjectedtotheseassessments.TheIRDhasagreedtoholdoverconditionallypartofthetaxindisputeinthesumofHK$16millionandoneofthesubsidiariesinvolvedhaspurchasedaTaxReserveCertificateofthesameamount.TheIRDhasagreedtoholdoverunconditionallythebalanceofthetaxindisputeinthesumofHK$476million.Inaddition,theestimatedinterestwhichwouldbepayableinrespectoftheNoticesofAssessmenttotalledHK$244millionasat31stDecember2011.Itisnotpossible,giventhelackofinformationavailable,todeterminetheultimateoutcomeoftheIRD'sreviewofthismatterandconsequentlytomakeajudgementastoitsmateriality.SwirePacifichasundertakentotheCompanythat,ifanysubsidiaryoftheCompanyreferredtointhisparagraphisrequiredtopaytotheIRDanyamountoftaxinresponseorbyreferencetoanynoticeofassessmentreferredtointhisparagraph(ortoanycorrespondingnoticeofassessmentissuedinrespectofanyyearofassessmentfromtheyearsofassessment2005/06to2010/11inclusive),SwirePacificwillpaytotheCompanyanamountequaltotheamountofsuchpayment.ThisundertakingwillexpireonthethirdanniversaryoftheListingDateoftheCompanyon18thJanuary2012exceptwhereaprovisionforarelevantpaymenthas,withtheagreementofSwirePacific,previouslybeenmadeintheaccountsofanysuchsubsidiary.


41.OperatingLeaseArrangementsTheGroupactsasbothlessorandlesseeunderoperatingleases.DetailsoftheGroup’scommitmentsundernon-cancellableoperatingleasesaresetoutasfollows:

(a) LessorTheGroupleasesoutlandandbuildingsunderoperatingleases.Theleasesforlandandbuildingstypicallyrunforperiodsofthreetosixyears.Theturnover-relatedrentalincomereceivedduringtheyearamountedtoHK$504million(2010:HK$295million).

At31stDecember,thefutureaggregateminimumleasereceiptsundernon-cancellableoperatingleasesreceivablebytheGroupandtheCompanywereasfollows:

Group

2011HK$M

2010HK$M

Landandbuildings:

Notlaterthanoneyear 6,247 6,084

Laterthanoneyearbutnotlaterthanfiveyears 13,815 12,769

Laterthanfiveyears 2,105 2,332

22,167 21,185

Assetsheldfordeploymentonoperatingleasesat31stDecemberwereasfollows:

Group

2011HK$M

2010HK$M

Investmentpropertiesatfairvalue 174,951 161,508

(b) LesseeTheGroupleaseslandandbuildingsunderoperatingleases.Theseleasestypicallyrunforaninitialperiodofonetofifteenyearswithsomeleaseshavinganoptiontorenewtheleaseafterthatdate,atwhichtimealltermsarerenegotiated.

At31stDecember,thefutureaggregateminimumleasepaymentsundernon-cancellableoperatingleasespayablebytheGroupandtheCompanywereasfollows:

Group Company

2011HK$M

2010HK$M

2011HK$M

2010HK$M

Landandbuildings:

Notlaterthanoneyear 45 10 63 44

Laterthanoneyearbutnotlaterthanfiveyears 95 27 199 130

Laterthanfiveyears 401 70 97 84

541 107 359 258

NotestotheAccounts


42.RelatedPartyTransactionsThereisanagreementforservices(“ServicesAgreement”),inrespectofwhichJohnSwire&Sons(H.K.)Limited(“JSSHK”),anintermediateholdingcompany,providesservicestotheCompanyanditssubsidiarycompaniesandunderwhichcostsarereimbursedandfeespayable.Inreturnfortheseservices,JSSHKreceivesannualfeescalculatedas2.5%oftheGroup’srelevantconsolidatedprofitsbeforetaxationandnon-controllinginterestsaftercertainadjustments.ThecurrentServicesAgreement,whichcommencedon1stJanuary2011foraperiodofthreeyears,willexpireon31stDecember2013.TheprecedingServicesAgreement,withthesametermsandconditions,wasfrom1stJanuary2008to31stDecember2010.Fortheyearended31stDecember2011,servicefeespayableamountedtoHK$130million(2010:HK$115million).ExpensesofHK$36million(2010:HK$29million)werereimbursedatcost;inaddition,HK$44million(2010:HK$30million)inrespectofsharedadministrativeserviceswasreimbursed.

Underatenancyframeworkagreement(“JSSHKTenancyFrameworkAgreement”)betweentheCompanyandJSSHKdated18thOctober2011,membersoftheGroupwillenterintotenancyagreementswithmembersoftheJSSHKgroupfromtimetotimeonnormalcommercialtermsbasedonprevailingmarketrentals.TheJSSHKTenancyFrameworkAgreementisforatermofsixyearsfrom1stJanuary2010to31stDecember2015.Fortheyearended31stDecember2011,theaggregaterentalspayabletotheGroupunderthetenanciespursuanttotheJSSHKTenancyFrameworkAgreementamountedtoHK$76million(2010:HK$59million).

Underanothertenancyframeworkagreement(“SwirePacificTenancyFrameworkAgreement”)betweentheCompanyandSwirePacificLimiteddated18thOctober2011,membersoftheGroupwillenterintotenancyagreementswithmembersoftheSwirePacificgroupfromtimetotimeonnormalcommercialtermsbasedonprevailingmarketrentals.TheSwirePacificTenancyFrameworkAgreementisforatermofsixyearsfrom1stJanuary2010to31stDecember2015.Fortheyearended31stDecember2011,theaggregaterentalspayabletotheGroupunderthetenanciespursuanttotheSwirePacificTenancyFrameworkAgreementamountedtoHK$60million(2010:HK$58million).

Inaddition,thefollowingisasummaryofsignificanttransactionsbetweentheGroupandrelatedparties(includingtransactionsundertheJSSHKTenancyFrameworkAgreementandSwirePacificTenancyFrameworkAgreement),whichwerecarriedoutinthenormalcourseoftheGroup’sbusiness,inadditiontothosetransactionsdisclosedelsewhereintheaccounts.TransactionsundertheServicesAgreement,theJSSHKTenancyFrameworkAgreementandSwirePacificTenancyFrameworkAgreementarecontinuingconnectedtransactions,inrespectofwhichtheCompanyhascompliedwiththedisclosurerequirementsinaccordancewithChapter14AoftheListingRules.


Fellow subsidiary companies

Immediate holding company

Intermediate holding company Other related parties

Notes2011

HK$M2010

HK$M2011

HK$M2010

HK$M2011

HK$M2010

HK$M2011

HK$M2010

HK$M2011

HK$M2010

HK$M

Purchasesofservices (a) – – 9 10 – – – – – –

Rentalrevenue (b) 3 – 69 64 7 7 61 46 7 15

Revenuefromhotels – – 1 – – – 1 – 3 –

Interestincome (c) 9 3 2 – – – – – – –

Interestcharges (c) 2 – 1,096 1,202 – – – – – –

Notes:(a) Purchasesofgoodsandrenderingofservicestoandfromrelatedpartieswereconductedinthenormalcourseofbusinessatpricesandontermsnoless

favourabletotheGroupthanthosechargedto/byandcontractedwithothercustomers/suppliersoftheGroup.(b) TheGrouphas,inthenormalcourseofitsbusiness,enteredintoleaseagreementswithrelatedpartiestoleasepremisesforvaryingperiodsuptosix

years.Theleaseswereenteredintoonnormalcommercialterms.(c) Loansadvancedtojointlycontrolledandassociatedcompaniesat31stDecember2011aredisclosedinnotes22and23respectively.Advancesfrom

jointlycontrolledandassociatedcompaniesaredisclosedinnote31.ThereareanumberofloanagreementsbetweentheGroupandtheSwirePacificgroup.Refertopage53to61fordetails.TheloansduetoSwireFinanceLimited,afellowsubsidiarycompany,aredisclosedinnote33.

Amountsduefromtheimmediateholdingcompanyat31stDecember2011aredisclosedinnote29.Thesebalancesariseinthenormalcourseofbusiness,arenon-interest-bearingandrepayablewithinoneyear.

Remunerationofkeymanagementisdisclosedinnote10.


43.NotestotheConsolidatedStatementofCashFlows(a) Reconciliation of operating profit to cash generated from operations

Group

2011HK$M

2010HK$M

Operatingprofit 26,945 26,969

Profitonsaleofinvestmentproperties – (544)

Remeasurementgainsandprofitondisposalrelatingtothechangeofshareholding inPCCWTower – (342)

Changeinfairvalueofinvestmentproperties (20,345) (20,480)

Depreciation 224 214

Amortisationofinitialleasingcostsoninvestmentproperties 65 34

Amortisationofintangibleassets 3 4

Impairmentlossesonhoteloperations 107 –

ProfitonsaleofinterestinFestivalWalk (595) –

Otheritems 62 (1)

Operating profit before working capital changes 6,466 5,854

(Increase)/decreaseinamountduefromimmediateholdingcompany (36) 71

Increaseinpropertiesunderdevelopmentandforsale (1,227) (1,245)

Increaseinstocksandworkinprogress (6) (2)

(Increase)/decreaseintradeandotherreceivables (828) 91

Increaseintradeandotherpayables 3,052 7

Increaseinretirementbenefitassets (25) (23)

Cash generated from operations 7,396 4,753

(b) Purchase of property, plant and equipment

Group

2011HK$M

2010HK$M

Properties 461 361

Plantandequipment 87 146

Total 548 507

Theabovefiguresdonotincludeinterestcapitalisedonproperty,plantandequipment.

NotestotheAccounts


43.NotestotheConsolidatedStatementofCashFlows(continued)

(c) Sale of interest in Festival Walk

Group

2011HK$M

Netassetsdisposed:

Investmentproperties 18,263

Property,plantandequipment 38

Stocks 4

Debtors 33

Cashatbankandinhand 495

Creditorsandprovisions (330)

Taxpayable (68)

Deferredtax (404)

Goodwillonacquisition 174

18,205

ProfitondisposalofFestivalWalk 595

18,800

Satisfiedby:

Cashreceived(netoftransactioncosts) 18,800

AnalysisofnetinflowofcashandcashequivalentsinrespectofthesaleofinterestinFestivalWalk

Netcashproceeds 18,800

Cashatbankandinhand (495)

Net inflow of cash and cash equivalents per consolidated statement of cash flows 18,305

(d) Analysis of changes in financing during the year

Group

Bank loans Non-controlling interests

2011HK$M

2010HK$M

2011HK$M

2010HK$M

At1stJanuary 5,657 4,229 479 424

Netcashinflowfromfinancing 1,578 1,473 12 11

Non-controllinginterests’shareoftotalcomprehensiveincome – – 53 49

Dividendspaidtonon-controllinginterests – – (12) (8)

Othernon-cashmovements 270 (45) – 3

At31stDecember 7,505 5,657 532 479


44.EventsaftertheReportingPeriodInJanuary2012,theGroupenteredintoanagreementwithSino-OceanLandLimitedtofundthewholeoftheremaininglandpremium(andassociatedtaxes)payableinrespectoftheDaciTempleprojectandcertainworkingcapitalrequirementsinanaggregateamountofUS$230million.Followingthistransaction,theGroup’sinterestintheprojectwasincreasedto81%,reflectingitscontributiontotheoverallfundingoftheproject.Sino-OceanLandLimitedhasacalloption,exercisableforoneyearcommencingfromtheabovedateofcompletionoftheagreement,topurchasetheGroup’sadditionalinterestintheprojectforanamountequaltoonehalfoftheaboveadditionalfundingplusinterestattherateof10%perannum.TheGrouphastheright,exercisableforoneyearcommencingoneweekbeforetheendofthecalloptionperiod,torequireSino-OceanLandLimitedtopurchasetheGroup’sadditionalinterestintheprojectforanamountequaltoonehalfoftheaboveadditionalfundingplusinterestattherateof10%perannum.Untiltherightsdescribedaboveareexercisedorlapse,theGroup’sadditionalinterestintheprojectwillbeaccountedforasasecuredloanandtheGroup’sexistinginterestwillcontinuetobeaccountedforasa50%interestinajointlycontrolledentity.

45.ImmediateandUltimateHoldingCompanyTheimmediateholdingcompanyisSwirePacificLimited,acompanyincorporatedandlistedinHongKong.

TheultimateholdingcompanyisJohnSwire&SonsLimited,acompanyincorporatedinEnglandandWales.


1. BasisofPreparationTheaccountshavebeenpreparedinaccordancewithHongKongFinancialReportingStandards(“HKFRS”).Theaccountshavebeenpreparedunderthehistoricalcostconventionasmodifiedbytherevaluationofcertaininvestmentproperties,thenon-controllinginterestputoptionandavailable-for-saleassets,whicharecarriedatfairvalue.

2. BasisofConsolidationTheconsolidatedaccountsincorporatetheaccountsofSwirePropertiesLimited,itssubsidiarycompanies(togetherreferredtoasthe“Group”)andtheGroup'sinterestsinjointlycontrolledandassociatedcompanies.

3. SubsidiaryCompaniesSubsidiarycompaniesareallentitles(includingspecialpurposeentities)overwhichtheGrouphasthepowertogovernthefinancialandoperatingpoliciesgenerallyaccompanyingashareholdingofmorethanonehalfofthevotingrights.TheexistenceandeffectofpotentialvotingrightsthatarecurrentlyexercisableorconvertibleareconsideredwhenassessingwhethertheGroupcontrolsanotherentity.SubsidiarycompaniesarefullyconsolidatedfromthedateonwhichcontrolistransferredtotheGroup.Theyaredeconsolidatedfromthedatethatcontrolceases.

TheGroupusestheacquisitionmethodofaccountingtoaccountforbusinesscombinations.Theconsiderationtransferredfortheacquisitionofasubsidiarycompanyisthefairvaluesoftheassetstransferred,theliabilitiesincurredandtheequityinterestsissuedbytheGroup.Theconsiderationtransferredincludesthefairvalueofanyassetorliabilityresultingfromacontingentconsiderationarrangement.Acquisition-relatedcostsareexpensedasincurred.Identifiableassetsacquiredandliabilitiesandcontingentliabilitiesassumedinabusinesscombinationaremeasuredinitiallyattheirfairvaluesattheacquisitiondate.Onanacquisition-by-acquisitionbasis,theGrouprecognisesanynon-controllinginterestintheacquireeeitheratfairvalueoratthenon-controllinginterest’sproportionateshareoftheacquiree’snetassets.

Investmentsinsubsidiarycompaniesareaccountedforatcostlessimpairment.Costisadjustedtoreflectchangesinconsiderationarisingfromcontingentconsiderationamendments.Costalsoincludesdirectattributablecostsofinvestment.

Theexcessoftheconsiderationtransferred,theamountofanynon-controllinginterestintheacquireeandtheacquisition-datefairvalueofanypreviousequityinterestintheacquireeoverthefairvalueoftheGroup’sshareoftheidentifiablenetassetsacquiredisrecordedasgoodwill.Ifthisislessthanthefairvalueofthenetassetsofthesubsidiarycompanyacquiredinthecaseofabargainpurchase,thedifferenceisrecogniseddirectlyinthestatementofcomprehensiveincome.

Intercompanytransactions,balancesandunrealisedgainsontransactionsbetweenGroupcompaniesareeliminatedonconsolidation.Unrealisedlossesarealsoeliminatedunlessthetransactionprovidesevidenceofanimpairmentoftheassettransferred.AccountingpoliciesofsubsidiarycompanieshavebeenchangedwherenecessarytoensureconsistencywiththepoliciesadoptedbytheGroup.

TheGrouptreatstransactionswithnon-controllinginterestsastransactionswithequityownersoftheGroup.Forpurchasesfromnon-controllinginterests,thedifferencebetweenanyconsiderationpaidandtherelevantshareacquiredofthecarryingvalueofnetassetsofthesubsidiarycompanyisrecordedinequity.Gainsorlossesondisposalstonon-controllinginterestswherecontrolisnotlostarealsorecordedinequity.

WhentheGroupceasestohavecontrolorsignificantinfluence,anyretainedinterestintheentityisremeasuredtoitsfairvalue,withthechangeincarryingamountrecognisedinprofitorloss.Thefairvalueistheinitialcarryingamountforthepurposesofsubsequentlyaccountingfortheretainedinterestasanassociatedcompany,jointlycontrolledcompanyorfinancialasset.Inaddition,anyamountspreviouslyrecognisedinothercomprehensiveincomeinrespectofthatentityareaccountedforasiftheGrouphaddirectlydisposedoftherelatedassetsorliabilities.Thismaymeanthatamountspreviouslyrecognisedinothercomprehensiveincomearereclassifiedtoprofitorloss.

WheretheGroupentersintoacontractthatcontainsanobligation(forexampleawrittenputoptionexercisablebythecontractcounterparty)toacquiresharesinapartly-ownedsubsidiarycompanyfromthenon-controllinginterest,whichisnotpartofabusinesscombination,theGrouprecordsafinancialliabilityforthepresentvalueoftheredemptionamountandeliminatesthevalueofthenon-controllinginterest.Changestothevalueofthefinancialliabilityarerecognisedintheincomestatementwithinfinanceincomeorfinancecosts.

PrincipalAccountingPolicies


3. SubsidiaryCompanies (continued)

IntheCompany’sstatementoffinancialposition,itsinvestmentsinsubsidiarycompaniesarestatedatcostlessprovisionforanyimpairmentlosses.IncomefromsubsidiarycompaniesisaccountedforbytheCompanyonthebasisofdividendsreceivedandreceivable.

Long-termloanstosubsidiarycompaniesareconsideredtobequasi-equityinnature,wheretherearenodefinedrepaymenttermsandnohistoricalrepaymentofthebalances.

4. JointlyControlledandAssociatedCompaniesJointlycontrolledcompaniesarethosecompaniesheldforthelongterm,overwhichtheGroupisinapositiontoexercisejointcontrolwithotherventurersinaccordancewithcontractualarrangements,andwherenoneoftheparticipatingpartieshasunilateralcontrolovertheeconomicactivityofthejointventure.

AssociatedcompaniesarethosecompaniesoverwhichtheGrouphassignificantinfluencebutnotcontrolorjointcontrol,overtheirmanagementincludingparticipationinthefinancialandoperatingpolicydecisions,generallyaccompanyingashareholdingofbetween20%and50%ofthevotingrights.

Investmentsinjointlycontrolledandassociatedcompaniesareaccountedforusingtheequitymethodofaccountingandareinitiallyrecognisedatcost.TheexcessofthecostofinvestmentinjointlycontrolledandassociatedcompaniesoverthefairvalueoftheGroup’sshareoftheidentifiablenetassetsacquiredrepresentsgoodwill.TheGroup’sinvestmentsinjointlycontrolledandassociatedcompaniesincludegoodwillidentifiedonacquisitions,netofanyaccumulatedimpairmentloss.

TheGroup’sshareofitsjointlycontrolledandassociatedcompanies’post-acquisitionprofitsorlossesisrecognisedintheconsolidatedincomestatement,anditsshareofpost-acquisitionmovementsinothercomprehensiveincomeisrecognisedintheconsolidatedstatementofcomprehensiveincome.Thecumulativepost-acquisitionmovementsareadjustedagainstthecarryingamountoftheinvestment.WhentheGroup’sshareoflossesequalsorexceedsitsinterestinthejointlycontrolledorassociatedcompany,includinganyotherunsecuredreceivables,theGroupdoesnotrecognisefurtherlosses,unlessithasincurredobligationsormadepaymentsonbehalfofthejointlycontrolledorassociatedcompany.

TheGrouprecognisesthedisposalofaninterestinajointlycontrolledcompanywhenitceasestohavejointcontrolandtherisksandrewardsofownershiphavepassedtotheacquirer.

Iftheownershipinterestinanassociatedcompanyisreducedbutsignificantinfluenceisretained,onlyaproportionateshareoftheamountspreviouslyrecognisedinothercomprehensiveincomearereclassifiedtoprofitorlosswhereappropriate.

UnrealisedgainsontransactionsbetweentheGroupanditsjointlycontrolledandassociatedcompaniesareeliminatedtotheextentoftheGroup’sinterestinthesecompanies.UnrealisedlossesonassetstransferredbetweentheGroupanditsjointlycontrolledandassociatedcompaniesarealsoeliminatedunlessthetransactionsprovideevidenceofimpairmentoftheassetstransferred.AccountingpoliciesofjointlycontrolledandassociatedcompanieshavebeenchangedwherenecessarytoensureconsistencywiththepoliciesadoptedbytheGroup.

Dilutiongainsandlossesarisingininvestmentsinassociatedcompaniesarerecognizedintheconsolidatedincomestatement.

IntheCompany’sstatementoffinancialposition,itsinvestmentsinjointlycontrolledandassociatedcompaniesarestatedatcostlessprovisionforanyimpairmentlosses.IncomefromjointlycontrolledandassociatedcompaniesisrecognisedbytheCompanyonthebasisofdividendsreceivedandreceivable.

Long-termloanstojointlycontrolledandassociatedcompaniesareconsideredtobequasi-equityinnature,wheretherearenodefinedrepaymenttermsandnohistoricalrepaymentofthebalances.

5. ForeignCurrencyTranslation

(a) Functional and presentation currency

ItemsincludedintheaccountsofeachoftheGroup’sentitiesaremeasuredusingthecurrencyoftheprimaryeconomicenvironmentinwhichtheentityoperates(the“functionalcurrency”).TheconsolidatedaccountsarepresentedinHongKongdollars,whichistheCompany’sfunctionalandpresentationcurrency.



5. ForeignCurrencyTranslation (continued)

(b) Transactions and balances

Foreigncurrencytransactionsaretranslatedintothefunctionalcurrencyusingtheexchangeratesprevailingatthedatesofthetransactions.Foreignexchangegainsandlossesresultingfromthesettlementofsuchtransactionsandfromthetranslationatyear-endexchangeratesofmonetaryassetsandliabilitiesdenominatedinforeigncurrenciesarerecognisedintheincomestatement,exceptwhendeferredinothercomprehensiveincomeasqualifyingcashflowhedgesorqualifyingnetinvestmenthedges.

Whenagainorlossonanon-monetaryitemisrecogniseddirectlyinothercomprehensiveincome,anyassociatedtranslationdifferenceisalsorecogniseddirectlyinothercomprehensiveincome.Whenagainorlossonanon-monetaryitemisrecognisedintheincomestatement,anyassociatedtranslationdifferenceisalsorecognisedintheincomestatement.

(c) Group companies

TheresultsandfinancialpositionofalltheGroupentities(noneofwhichhasthecurrencyofahyperinflationaryeconomy)thathaveafunctionalcurrencydifferentfromthepresentationcurrencyaretranslatedintothepresentationcurrencyasfollows:

(i) Assetsandliabilitiesforeachstatementoffinancialpositionpresentedaretranslatedattheclosingrateatthedateofthatstatementoffinancialposition;

(ii)Incomeandexpensesforeachincomestatementaretranslatedataverageexchangerates(unlessthisaverageisnotareasonableapproximationofthecumulativeeffectoftheratesprevailingonthetransactiondates,inwhichcaseincomeandexpensesaretranslatedatthedatesofthetransactions);and

(iii)Allresultingexchangedifferencesarerecognisedasaseparatecomponentofothercomprehensiveincome.

Onconsolidation,exchangedifferencesarisingfromthetranslationofthenetinvestmentinforeignoperations,andofborrowingsandothercurrencyinstrumentsdesignatedashedgesofsuchinvestments,aretakentoothercomprehensiveincome.Whenaforeignoperationispartiallydisposedoforsold,exchangedifferencesthatwererecordedinequityarerecognisedintheconsolidatedincomestatementaspartofthegainorlossonsale.

Goodwillandfairvalueadjustmentsarisingontheacquisitionofaforeignentityaretreatedasassetsandliabilitiesoftheforeignentityandtranslatedattheclosingrate.

6. InvestmentPropertiesPropertythatisheldforlong-termrentalyieldsorforcapitalappreciationorboth,andthatisnotoccupiedbytheGroup,isclassifiedasinvestmentproperty.Investmentpropertycomprisesleaseholdlandandbuildingsheldunderfinanceleases.Landheldunderoperatingorfinanceleasesisclassifiedandaccountedforasinvestmentpropertywhentherestofthedefinitionofinvestmentpropertyismet.

Investmentproperties(includingthoseunderconstruction)arecarriedatfairvalueandarevaluedatleastannually.Themajorityofinvestmentpropertiesarevaluedbyindependentvaluers.ThevaluationsareperformedinaccordancewiththeValuationStandardsonPropertiesissuedbytheHongKongInstituteofSurveyorsandareonanopenmarketbasis,relatedtoindividualproperties,andseparatevaluesarenotattributedtolandandbuildings.Landandbuildingsthatarebeingdevelopedforfutureuseasinvestmentpropertiesandinvestmentpropertiesthatarebeingredevelopedforcontinuinguseasinvestmentpropertiesaremeasuredatfairvalueandincludedasunderconstruction.Changesinfairvaluesarerecognisedintheincomestatement.

Subsequentexpenditureischargedtotheasset’scarryingamountonlywhenitisprobablethatfutureeconomicbenefitsassociatedwiththeitemwillflowtotheGroupandthecostoftheitemcanbemeasuredreliably.Allotherrepairsandmaintenancecostsareexpensedintheincomestatementduringthefinancialperiodinwhichtheyareincurred.

Ifaninvestmentpropertybecomesowner-occupied,itisreclassifiedasproperty,plantandequipment,anditsfairvalueatthedateofreclassificationbecomesitscostforaccountingpurposes.


7. Property,PlantandEquipmentProperty,plantandequipmentarecarriedatcostlessaccumulateddepreciationandaccumulatedimpairmentlosses.Costincludesexpenditurethatisdirectlyattributabletotheacquisitionoftheitems.Costmayalsoincludetransfersfromequityofanygains/lossesonqualifyingcashflowhedgesofforeigncurrencypurchasesofproperty,plantandequipment.Subsequentcostsareincludedintheasset’scarryingamountorrecognisedasaseparateasset,asappropriate,onlywhenitisprobablethatfutureeconomicbenefitsassociatedwiththeitemwillflowtotheGroupandthecostoftheitemcanbemeasuredreliably.Allotherrepairsandmaintenanceareexpensedintheincomestatementduringthefinancialperiodinwhichtheyareincurred.

Leaseholdlandcanbeclassifiedasheldunderfinanceleaseandrecordedasproperty,plantandequipmentiftheleaseeisexposedtosubstantiallyalltherisksandrewardsofownershipofthatpriceofland.Leaseholdlandisdepreciatedovertheleaseterm.

Onthetransferofowneroccupiedpropertytoinvestmentproperty,increasesinthecarryingamountarisingonrevaluationoflandandbuildingsarecreditedtoothercomprehensiveincomeandshownaspropertyrevaluationreserveinshareholders’equity.Decreasesthatoffsetpreviousincreasesofthesameassetarechargedinothercomprehensiveincomeanddebitedagainstpropertyrevaluationreservedirectlyinequity;allotherdecreasesarechargedtotheincomestatement.Eachyearthedifferencebetweendepreciationbasedontherevaluedcarryingamountoftheassetchargedtotheincomestatement,anddepreciationbasedontheasset’soriginalcostistransferredfrom‘propertyrevaluationreserve’to‘revenuereserve’.

Withtheexceptionoffreeholdland,allotherproperty,plantandequipmentaredepreciatedatratessufficienttowriteofftheiroriginalcoststoestimatedresidualvaluesusingthestraight-linemethodovertheiranticipatedusefullivesinthefollowingmanner:

Leaseholdland OvertheleasetermProperties 2%to5%perannumPlantandequipment 20%to331/3%perannum

Theassets’expectedusefullivesandresidualvaluesareregularlyreviewedandadjusted,ifappropriate,ateachperiod-enddatetotakeintoaccountoperationalexperienceandchangingcircumstances.

Ateachperiod-enddate,bothinternalandexternalsourcesofinformationareconsideredtoassesswhetherthereisanyindicationthattheassetsareimpaired.Ifanysuchindicationexists,therecoverableamountoftheassetisestimatedandwhererelevant,animpairmentlossisrecognisedtoreducetheassettoitsrecoverableamount.Suchimpairmentlossesarerecognisedintheincomestatement.

Gainsandlossesondisposalsaredeterminedbycomparingtheproceedswiththecarryingamountandarerecognisedwithin‘Othernetgains/(losses)’intheincomestatement.Whenrevaluedassetsaresold,theamountsincludedinthepropertyrevaluationreservearetransferredtorevenuereserve.

8. IntangibleAssets

(a) Goodwill

GoodwillrepresentstheexcessofthecostofacquisitionoverthefairvalueoftheGroup’sshareofthenetidentifiableassetsoftheacquiredsubsidiary,jointlycontrolledandassociatedcompaniesatthedateofacquisition.Goodwillistreatedasanassetoftheentityacquiredandwhereattributabletoaforeignentitywillbetranslatedattheclosingrate.

Goodwillonacquisitionofasubsidiarycompanyisincludedinintangibleassets.Goodwillonacquisitionsofassociatedandjointlycontrolledcompaniesisincludedininvestmentsinassociatedandjointlycontrolledcompaniesrespectively.

Goodwillisstatedatcostlessaccumulatedimpairmentlosses.Goodwillisallocatedtocash-generatingunitsforthepurposeofimpairmenttesting,whichisperformedannually.Impairmentlossesrecognisedongoodwillarenotreversed.

Gainsandlossesonthedisposalofanentityincludethecarryingamountofgoodwillrelatingtotheentitysold.



8. IntangibleAssets (continued)

(b) Computer software

Acquiredcomputersoftwarelicencesarecapitalisedonthebasisofthecostsincurredtoacquireandbringtousethespecificsoftware.Thesecostsareamortisedovertheirestimatedusefullives(threetofiveyears).

Costsassociatedwithmaintainingcomputersoftwareprogrammesarerecognisedasanexpenseasincurred.CoststhataredirectlyassociatedwiththedevelopmentofidentifiableanduniquesoftwareproductscontrolledbytheGroup,andthatwillprobablygenerateeconomicbenefitsexceedingcostsbeyondoneyear,arerecognisedasintangibleassets.Directcostsincludethesoftwaredevelopmentemployeecostsandanappropriateportionofrelevantoverheads.

Computersoftwarecostsrecognisedasassetsareamortisedovertheirestimatedusefullives.

9. ImpairmentofAssetsAssetsthathaveanindefiniteusefullifearenotsubjecttoamortisation.Theseassetsaretestedatleastannuallyforimpairmentandarereviewedforimpairmentwhenevereventsorchangesincircumstancesindicatethatthecarryingamountmaynotberecoverable.Assetsthataresubjecttoamortisationarereviewedforimpairmentwhenevereventsorchangesincircumstancesindicatethatthecarryingamountmaynotberecoverable.Animpairmentlossisrecognisedfortheamountbywhichtheasset'scarryingamountexceedsitsrecoverableamount.Therecoverableamountisthehigherofanasset'sfairvaluelesscoststosellandvalueinuse.Forthepurposesofassessingimpairment,assetsaregroupedatthelowestlevelsforwhichthereareseparatelyidentifiablecashflows(cash-generatingunits).

10.FinancialAssetsTheGroupclassifiesitsfinancialassetsinthefollowingcategories:loansandreceivables,andavailable-for-saleassets.Theclassificationdependsonthepurposeforwhichthefinancialassetswereacquired.Managementdeterminestheclassificationofitsfinancialassetsatinitialrecognitionandre-evaluatesthisdesignationateveryreportingdate.

(a) Loans and receivables

Loansandreceivablesarenon-derivativefinancialassetswithfixedordeterminablepaymentsthatarenotquotedinanactivemarket.TheyarisewhentheGroupprovidesmoney,goodsorservicesdirectlytoadebtorwithnointentionoftradingthereceivable.Theyareincludedincurrentassets,exceptformaturitiesgreaterthan12monthsaftertheperiod-enddatewheretheseareclassifiedasnon-currentassets.Seealsopolicyfortradeandotherreceivables(accountingpolicynote14).

(b) Available-for-sale assets

Available-for-saleassetsarenon-derivativeinvestmentsandotherassetsthatareeitherdesignatedinthiscategoryornotclassifiedinanyoftheothercategories.Available-for-saleinvestmentsareincludedinnon-currentassetsunlessmanagementintendstodisposeoftheinvestmentwithin12monthsoftheperiod-enddate.

Purchasesandsalesoffinancialassetsarerecognisedontheirtrade-date–thedateonwhichtheGroupcommitstopurchaseorselltheasset.Financialassetsareinitiallyrecognisedatfairvalueplustransactioncostsforallfinancialassetsnotcarriedatfairvaluethroughprofitorloss.FinancialassetsarederecognisedwhentherightstoreceivecashflowsfromtheinvestmentshaveexpiredorhavebeentransferredandtheGrouphastransferredsubstantiallyallrisksandrewardsofownership.Available-for-saleassetsaresubsequentlycarriedatfairvalue.Loansandreceivablesarecarriedatamortisedcostusingtheeffectiveinterestmethod.Unrealisedgainsandlossesarisingfromchangesinthefairvalueofavailable-for-saleassetsarerecognisedinothercomprehensiveincome.Whenavailable-for-saleassetsaresoldorimpaired,theaccumulatedfairvalueadjustmentsareincludedintheincomestatementasgainsandlossesfrominvestments.

Thefairvalueoffinancialinstrumentstradedinactivemarkets(suchasavailable-for-saleinvestments)isbasedonquotedmarketpricesattheperiod-enddate.ThequotedmarketpriceusedforfinancialassetsheldbytheGroupisthecurrentbidprice.


10.FinancialAssets (continued)

Thefairvalueoffinancialinstrumentsthatarenottradedinanactivemarket(forexample,over-the-counterderivatives)isdeterminedbyusingvaluationtechniques.Othertechniques,suchasestimateddiscountedcashflows,areusedtodeterminefairvaluefortheremainingfinancialinstruments.Thenominalvaluelessestimatedcreditadjustmentsoftradereceivablesisassumedtoapproximatetheirfairvalue.

TheGroupassessesateachperiod-enddatewhetherthereisobjectiveevidencethatafinancialassetoragroupoffinancialassetsisimpaired.Inthecaseofequityinvestmentsclassifiedasavailable-for-sale,asignificantorprolongeddeclineinthefairvalueoftheinvestmentbelowitscostisconsideredindeterminingwhethertheinvestmentsareimpaired.Ifanysuchevidenceexistsforavailable-for-saleinvestments,thecumulativeloss–measuredasthedifferencebetweentheacquisitioncostandthecurrentfairvalue,lessanyimpairmentlossonthatinvestmentpreviouslyrecognisedinprofitorloss–isremovedfromequityandrecognisedintheincomestatement.Impairmentlossesrecognisedintheincomestatementonequityinstrumentsarenotreversedthroughtheincomestatement.

11.InitialLeasingCostsExpenditureincurredinleasingtheGroup’spropertyduringconstructionisdeferredandamortisedonastraight-linebasistotheincomestatementuponoccupationofthepropertyoveraperiodnotexceedingthetermsofthelease.

12.StocksandWorkinProgressStocksandworkinprogressarestatedatthelowerofcostandnetrealisablevalue.Costrepresentsaverageunitcostandnetrealisablevalueisdeterminedonthebasisofanticipatedsalesproceedslessestimatedsellingexpenses.Thecostsoffinishedgoodsandworkinprogresscomprisedirectmaterialandlabourcostsandanappropriateproportionofproductionoverheadexpenseslessprovisionsforforeseeablelosses.

13.PropertiesUnder/HeldforDevelopmentandPropertiesforSalePropertiesunder/heldfordevelopmentandpropertiesforsalecomprisefreeholdandleaseholdland,constructioncostsandinterestcostscapitalised,lessprovisionsforpossiblelosses.PropertiesheldfordevelopmentarenotexpectedtobesoldwithintheGroup’snormaloperatingcycleandareclassifiedasnon-currentassets.PropertiesunderdevelopmentareexpectedtobesoldwithintheGroup’snormaloperatingcycleandareclassifiedascurrentassets.Propertiesforsaleareavailableforimmediatesaleandareclassifiedascurrentassets.

14.TradeandOtherReceivablesTradeandotherreceivablesarerecognisedinitiallyatfairvalueandsubsequentlymeasuredatamortisedcostusingtheeffectiveinterestmethod,lessprovisionforimpairment.AprovisionforimpairmentoftradeandotherreceivablesisestablishedwhenthereisobjectiveevidencethattheGroupwillnotbeabletocollectallamountsdueaccordingtotheoriginaltermsofreceivables.Tradeandotherreceivablesinthestatementoffinancialpositionarestatednetofsuchprovisions.

15.CashandCashEquivalentsIntheconsolidatedstatementofcashflows,cashandcashequivalentscomprisecashinhand,amountsrepayableondemandfrombanksandfinancialinstitutionsandshort-termhighlyliquidinvestmentswhichwerewithinthreemonthsofmaturitywhenacquired,lessbankoverdrafts.Intheconsolidatedstatementoffinancialposition,bankoverdraftsareshownwithinborrowingsincurrentliabilities.

16.TradePayablesTradepayablesarerecognisedinitiallyatfairvalueandsubsequentlymeasuredatamortisedcostusingtheeffectiveinterestmethod.



17.BorrowingsBorrowingsarerecognisedinitiallyatfairvalue,netoftransactioncostsincurredforthosenotheldatfairvaluethroughprofitorloss.Transactioncostsareincrementalcoststhataredirectlyattributabletotheinitiationoftheborrowings,includingfeesandcommissionpaidtoagents,advisers,brokersanddealers,leviesbyregulatoryagenciesandsecuritiesexchanges,andtransfertaxesandduties.Borrowingsaresubsequentlystatedeitheratamortisedcost,withanydifferencebetweentheproceeds(netoftransactioncosts)andtheredemptionvaluerecognisedintheincomestatementovertheperiodoftheborrowingsusingtheeffectiveinterestmethod.

BorrowingsareclassifiedascurrentliabilitiesunlesstheGrouphasanunconditionalrighttodefersettlementoftheliabilityforatleast12monthsaftertheperiod-enddate.

Fordisclosurepurposes,thefairvalueofborrowingsstatedatamortisedcostisestimatedbydiscountingthefuturecontractualcashflowsatthecurrentmarketinterestratethatisavailabletotheGroupforsimilarfinancialinstruments.

18.BorrowingCostsInterestcostsincurredarechargedtotheincomestatementexceptforthoseinterestchargesattributabletotheacquisition,constructionorproductionofqualifyingassets(i.e.assetsthatnecessarilytakeasubstantialperiodoftimetogetreadyfortheirintendeduseorsale)whicharecapitalisedaspartofthecostofthoseassets.Capitalisationofsuchborrowingcostsceaseswhentheassetsaresubstantiallyreadyfortheirintendeduseorsale.

19.LeasesLeasesinwhichasignificantportionoftherisksandrewardsofownershipareretainedbythelessorareclassifiedasoperatingleases.Receiptsorpaymentsmadeunderoperatingleases(netofanyincentivespaidtolesseesorreceivedfromthelessors)arerecognisedasincomeorexpenseintheincomestatementonastraight-linebasisovertheperiodofthelease.

20.DeferredTaxationDeferredtaxationisprovidedinfull,usingtheliabilitymethod,ontemporarydifferencesarisingbetweenthetaxbasesofassetsandliabilitiesandtheircarryingamountsintheaccounts.However,ifthedeferredtaxarisesfrominitialrecognitionofanassetorliabilityinatransactionotherthanabusinesscombinationthat,atthetimeoftherecognitionhasnoimpactontaxablenoraccountingprofitorloss,itisnotrecognised.Taxratesenactedorsubstantiallyenactedbytheperiod-enddateareusedtodeterminedeferredtaxation.

Deferredtaxassetsarerecognisedtotheextentthatitisprobablethatfuturetaxableprofitwillbeavailableagainstwhichthetemporarydifferencescanbeutilised.

Deferredtaxationisprovidedontemporarydifferencesarisingoninvestmentsinsubsidiary,jointlycontrolledandassociatedcompanies,exceptwherethetimingofthereversalofthetemporarydifferenceiscontrolledbytheGroupanditisprobablethatthetemporarydifferencewillnotreverseintheforeseeablefuture.

21.RevenueRecognitionProvidedthecollectibilityoftherelatedreceivableisreasonablyassured,revenueisrecognisedasfollows:

(a) Rentalincomeisrecognisedonastraight-linebasisovertheshorterof(i)theremainingleaseterm,(ii)theperiodtothenextrentreviewdateand(iii)theperiodfromthecommencementdateoftheleasetothefirstbreakoptiondate(ifany),exclusiveofanyturnoverrent(ifapplicable)andotherchargesandreimbursements(ifany).Wheretheleaseincludesarent-freeperiod,therentalincomeforegoneisallocatedevenlyovertheleaseterm.Turnoverrentisrecognisedwhenearned.

(b) Salesofpropertiesarerecognisedwheneffectivecontrolofownershipofthepropertiesistransferredtothebuyers.

(c) Salesofservices,includingservicesprovidedbyhoteloperations,arerecognisedwhentheservicesarerendered.

(d) Interestincomeisrecognisedonatime-proportionbasisusingtheeffectiveinterestmethod.


22.RelatedPartiesRelatedpartiesareindividualsandcompanies,includingsubsidiary,fellowsubsidiary,jointlycontrolledandassociatedcompaniesandkeymanagement(includingclosemembersoftheirfamilies),wheretheindividual,companyorGrouphastheability,directlyorindirectly,tocontroltheotherpartyorexercisesignificantinfluenceovertheotherpartyinmakingfinancialandoperatingdecisions.

23.GovernmentGrantsGrantsfromthegovernmentarerecognisedwherethereisreasonableassurancethatthegrantwillbereceivedandtheGroupwillcomplywithallattachedconditions.

Governmentgrantsrelatedtoassetsaredeductedfromthecarryingamountoftheasset.

24.RetirementBenefitsTheGroupoperatesbothdefinedbenefitanddefinedcontributionretirementbenefitschemesforitsemployees,theassetsofwhicharegenerallyheldinseparatetrustee-administeredfunds.TheschemesaregenerallyfundedbypaymentsfromtherelevantGroupcompaniesand,insomecases,employeesthemselves,takingaccountoftherecommendationsofindependentqualifiedactuaries.

Adefinedbenefitplanisaretirementplanthatdefinesanamountofbenefitthatanemployeewillreceiveonretirement,usuallydependentononeormorefactorssuchasage,yearsofserviceandcompensation.AdefinedcontributionplanisaretirementplanunderwhichtheGrouppaysfixedcontributionsintoaseparateentity.TheGrouphasnolegalorconstructiveobligationstopayfurthercontributionsifthefunddoesnotholdsufficientassetstopayallemployeesthebenefitsrelatingtoemployeeserviceinthecurrentandpriorperiods.

TheGroup’scontributionstothedefinedcontributionschemesarechargedtotheincomestatementintheperiodtowhichthecontributionsrelate.

Fordefinedbenefitschemes,retirementbenefitcostsareassessedusingtheprojectedunitcreditmethod.Underthismethod,thecostofprovidingretirementbenefitsischargedtotheincomestatementsoastospreadtheregularcostovertheservicelivesofemployees.Theretirementbenefitobligationismeasuredasthepresentvalueoftheestimatedfuturecashoutflows.Planassetsaremeasuredatfairvalue.Cumulativeunrecognisednetactuarialgainsandlossesatthepreviousfinancialyear-end,totheextentthattheamountisinexcessof10%ofthegreaterofthepresentvalueofthedefinedbenefitobligationsandthefairvalueoftheplanassets,arerecognisedovertheexpectedaverageremainingworkinglivesoftheemployeesparticipatingintheplan.Asubsidiarycompanymayadoptanysystematicmethodthatresultsinfasterrecognitionofactuarialgainsandlosses,providedthesamebasisisappliedconsistentlyfromperiodtoperiod.Pastservicecostsarerecognisedasanexpenseonastraight-linebasisovertheaverageperioduntilthebenefitsbecomevested.

25.ProvisionsProvisionsarerecognisedwhentheGrouphasapresentlegalorconstructiveobligationasaresultofpastevents;itismorelikelythannotthatanoutflowofresourceswillberequiredtosettletheobligation;andtheamounthasbeenreliablyestimated.Provisionsarenotrecognisedforfutureoperatinglosses.

Wherethereareanumberofsimilarobligations,thelikelihoodthatanoutflowwillberequiredinsettlementisdeterminedbyconsideringtheclassofobligationsasawhole.Aprovisionisrecognisedevenifthelikelihoodofanoutflowwithrespecttoanyoneitemincludedinthesameclassofobligationsmaybesmall.

26.GuaranteesFinancialguaranteesareinitiallyrecognisedintheaccountsatfairvalueonthedatetheguaranteewasgiven.Subsequenttoinitialrecognition,theliabilitiesundersuchguaranteesaremeasuredatthehigheroftheinitialmeasurement,lessamortisationcalculatedtorecogniseintheincomestatementthefeeincomeearnedonastraight-linebasisoverthelifeoftheguarantee,andthebestestimateoftheexpenditurerequiredtosettleanyfinancialobligationarisingattheperiod-enddate.Anyincreaseintheliabilityrelatingtoguaranteesistakentotheincomestatement.



27.DividendDistributionDividenddistributiontotheCompany’sshareholdersisrecognisedasaliabilityintheGroup’saccountsintheperiodinwhichthedividendsareapprovedbytheCompany’sshareholdersordirectors,whereappropriate.

28.SegmentReportingOperatingsegmentsarereportedinamannerconsistentwiththeGroup'sinternalfinancialreportingprovidedtotheboardofdirectorsformakingstrategicdecisions.Fordisclosurepurposes,areportablesegmentcompriseseitheroneormoreoperatingsegmentswhichcanbeaggregatedtogetherbecausetheysharesimilareconomiccharacteristicsorsingleoperatingsegmentswhicharedisclosableseparatelybecausetheycannotbeaggregatedorbecausetheyexceedcertainquantitativethresholds.

29.MergerAccountingforCommonControlCombinationsOn25thJanuary2010,theGroupacquiredallthesharesofSwirePropertiesUSIncandSwirePropertiesOneLLC,whichwerewholly-ownedsubsidiariesoftheimmediateholdingcompanyoftheCompany,andalltheoutstandingrelatedloannotesofSwirePropertiesUSIncfromtheimmediateholdingcompanyforatotalconsiderationofHK$1,108,132,451,whichwassatisfiedbyanissueof1,108,132,451newsharesbytheCompanyatparonthesamedate.

TheGrouphasadoptedmergeraccountingtoaccountfortheabovetransactionsinaccordancewithAccountingGuidance5,MergerAccountingforCommonControlcombinations,asissuedbytheHKICPA.Thefinancialinformationincorporatesthefinancialpositionsandresultsoftheentitiesacquiredintheaboveasiftheentitieshadbeenconsolidatedfromthedatewhentheseentitlesfirstcameunderthecontroloftheimmediateholdingcompany.

Thenetassetsoftheentitiesacquiredfromtheimmediateholdingcompanywereconsolidatedusingtheexistingbookvaluesrecordedbytheimmediateholdingcompany.NoamountwasrecognisedforgoodwillortheexcessoftheCompany’sinterestinthenetfairvalueoftheacquirees’identifiableassets,liabilitiesandcontingentliabilitiesovercostatthetimeofthecommoncontrolcombinations,totheextentofthecontinuationoftheimmediateholdingcompany’sinterest.

30.2010ComparativeThe2010comparativehasbeenrestatedfromtheCompany’s2010statutoryaccountstoreflectcertainadjustmentsmadeinpreparingtheCompany’slistingdocumentthatwasissuedon21stDecember2011.


PrincipalSubsidiary,JointlyControlledandAssociatedCompaniesShowingproportionofcapitalownedat31stDecember2011

Attributable to the Group

%

Owned directly

%

Owned by

subsidiaries % Issued share capital Principal activities

Subsidiary companies

Incorporated in Hong Kong with limited liability and operate in Hong Kong:

53StubbsRoadDevelopmentCo.Limited 100 100 – 5,000,000sharesof HK$1each

Propertydevelopment

53StubbsRoad(Management)Limited 100 100 – 1shareofHK$10 Propertymanagement

CathayLimited 100 100 – 807sharesofHK$10each Propertyinvestment

CitiluckDevelopmentLimited 100 – 100 1,000sharesofHK$1each Propertyinvestment

CityplazaHoldingsLimited 100 100 – 100sharesofHK$10each Propertyinvestment

CoventryEstatesLimited 100 – 100 4sharesofHK$10each Propertyinvestment

GoldenTentLimited 100 – 100 1shareofHK$1 Hotelinvestment

IslandDelightLimited 87.5 – 100 1shareofHK$1 Propertytrading

KeenWellHoldingsLimited 80 – 100 1shareofHK$1 Propertytrading

OneIslandEastLimited 100 100 – 2sharesofHK$1each Propertyinvestment

OneQueen’sRoadEastLimited 100 100 – 2sharesofHK$1each Propertyinvestment

OrientalLandscapesLimited 100 100 – 50,000sharesof HK$10each

Landscapingservices

PacificPlaceHoldingsLimited 100 100 – 2sharesofHK$1each Propertyinvestment

RedhillPropertiesLimited 100 100 – 250,000sharesof HK$1each

Propertyinvestment

SuperGearInvestmentLimited 100 100 – 2sharesofHK$1each Propertyinvestment

SwireProperties(Finance)Limited 100 100 – 1,000,000sharesof HK$1each

Provisionoffinancial services

SwirePropertiesManagementLimited 100 100 – 2sharesofHK$10each Propertymanagement

SwirePropertiesProjectsLimited 100 100 – 2sharesofHK$1each Projectmanagement

SwirePropertiesRealEstateAgencyLimited 100 100 – 2sharesofHK$10each Realestateagency

TaiKooPlaceHoldingsLimited 100 100 – 2sharesofHK$1each Propertyinvestment

Incorporated in Mainland China with limited liability and operate in Mainland China:

(Domestic company) BeijingTianlianRealEstateCompanyLimited(2)(4) 100 – 100 Registeredcapitalof

RMB865,000,000Holdingcompany

(Sino-foreign joint venture) TaiKooHui(Guangzhou)Development CompanyLimited(2)

97 – 97 Registeredcapitalof RMB2,650,000,000

Propertyinvestment

(Wholly foreign owned enterprises) BeijingSanlitunHotelManagement CompanyLimited(2)

100 – 100 Registeredcapitalof RMB400,000,000

Hotelinvestment

BeijingSanlitunNorthPropertyManagement CompanyLimited(2)


Propertyinvestment

BeijingSanlitunSouthPropertyManagement CompanyLimited(2)


Propertyinvestment

SunshineMelody(Guangzhou)Properties ManagementLimited

100 – 100 Registeredcapitalof RMB195,000,000

Propertyinvestment

SwireProperties(China)Investment CompanyLimited(2)

100 – 100 Registeredcapitalof US$30,000,000

Holdingcompany

Notes:(1)Thistableliststheprincipalsubsidiary,jointlycontrolledandassociatedcompaniesoftheGroupincludingthosewhich,intheopinionoftheDirectors,

materiallycontributetothenetincomeoftheGrouporholdamaterialportionoftheassetsorliabilitiesoftheGroup.Togivefulldetailsofthesecompanieswould,intheopinionoftheDirectors,resultinparticularsofexcessivelength.

(2)Translatedname.(3)Groupinterestheldthroughjointlycontrolledandassociatedcompanies.(4)CompaniesnotauditedbyPricewaterhouseCoopers.Thesecompaniesaccountforapproximately2.1%ofattributablenetassetsat31stDecember2011.

PrincipalSubsidiary,JointlyControlledandAssociatedCompaniesShowingproportionofcapitalownedat31stDecember2011



%

Owned directly

%

Owned by


Subsidiary companies (continued)

Incorporated in the United States with limited liability and operate in the United States:

BrickellCitiCentreEastLLC 100 – 100 LimitedLiabilityCompany Propertyinvestment andhotel

BrickellCitiCentreNorthLLC 100 – 100 LimitedLiabilityCompany Propertytrading andinvestment

BrickellCitiCentrePlazaLLC 100 – 100 LimitedLiabilityCompany Propertyinvestment

BrickellCitiCentreWestLLC 100 – 100 LimitedLiabilityCompany Propertytrading andinvestment

FTL/ADLtd 75 – 75 FloridaPartnership Propertytrading

SwireDevelopmentSalesLLC 100 – 100 LimitedLiabilityCompany Realestateagency

SwirePacificHoldingsAsiaLLC 100 – 100 LimitedLiabilityCompany Propertytrading

SwirePropertiesInc 100 – 100 1,000sharesofUS$0.01 each

Holdingcompany

SwirePropertiesOneLLC 100 – 100 LimitedLiabilityCompany Propertytrading

SwirePropertiesUSInc 100 – 100 1,000sharesofUS$0.01 each

Holdingcompany

SwireRealtyLLC 100 – 100 LimitedLiabilityCompany Realestateagency

Incorporated in the British Virgin Islands with limited liability and operate in Hong Kong:

BaoWeiEnterprisesLimited 100 100 – 1shareofUS$1 Propertytrading

BoomViewHoldingsLimited 100 100 – 2sharesofUS$1each Propertyinvestment

CharmingGraceLimited 100 100 – 1shareofUS$1 Propertydevelopment

EndeavourTechnologyLimited 87.5 – 87.5 1,000sharesofUS$1each Holdingcompany

ExcelFreeLtd. 100 100 – 1shareofUS$1 Propertytrading

FineGraceInternationalLimited 100 100 – 1shareofUS$1 Propertytrading

NovelRayLimited 100 100 – 1shareofUS$1 Propertyinvestment

PeragoreLimited 80 – 80 1,000sharesofUS$1each Holdingcompany

SinoFlagshipInvestmentsLimited 100 100 – 1shareofUS$1 Propertyinvestment

SwireandIslandCommunication DevelopmentsLimited

60 60 – 100sharesofHK$10each and1non–voting dividendshareofHK$10

Propertyinvestment

SwirePropertiesChinaHoldingsLimited 100 100 – 1shareofUS$1 Holdingcompany

WonderCruiseGroupLimited 100 100 – 1shareofUS$1 Propertytrading

Incorporated in the United Kingdom with limited liability and operate in the United Kingdom:

NewLightHotelsLimited 100 – 100 17,000,100sharesof GBP1each

Hoteldeveloperandoperator


Incorporated in Hong Kong with limited liabilities and operate in Hong Kong:

HaretonLimited 50 50 – 100sharesofHK$10each Propertytrading

RichlyLeaderLimited 50 – 50 1,000,000,000sharesof HK$1each

Propertyinvestment

SkyTreasureLimited 50 – 50 2sharesofHK$1each Propertyinvestment

Incorporated in the United States with limited liability and operate in the United States:

SwireBrickellKeyHotel,Ltd. 75 – 75 FloridaPartnership Hotelinvestment



%

Owned directly

%

Owned by


Jointly controlled companies (continued)

Incorporated in the British Virgin Islands with limited liability:

DazhongliPropertiesLimited(operatesin MainlandChina)

50 – 50 1,000sharesofUS$1each Holdingcompany

GreatCityChinaHoldingsLimited (operatesinMainlandChina)

50 – 50 2sharesofUS$1each Holdingcompany

IslandLandDevelopmentLimited (operatesinHongKong)

50 50 – 100sharesofHK$10each Propertyinvestment

NewfoundworldInvestmentHoldingsLimited (operatesinHongKong)

20 – 20 5sharesofUS$1each Holdingcompany

Incorporated in Mainland China with limited liability and operate in Mainland China:

(Domestic company)

BeijingLinlianRealEstateCompanyLimited(2) 50 – 50 Registeredcapitalof RMB400,000,000

Propertyinvestment

(Sino–foreign joint venture)

ChengduQianhaoRealEstateCompanyLimited 49.5 – (3) Registeredcapitalof US$329,000,000

Propertyinvestment

(Wholly foreign owned enterprises)

GuanFeng(Shanghai)RealEstateDevelopment CompanyLimited(2)

50 – (3) Registeredcapitalof US$500,000,000

Propertyinvestment

PeiFeng(Shanghai)RealEstateDevelopment CompanyLimited(2)


Propertyinvestment

YingFeng(Shanghai)RealEstateDevelopment CompanyLimited(2)


Propertyinvestment

Associated companies

Incorporated in Hong Kong with limited liability and operate in Hong Kong:

GreenrollLimited(4) 20 20 – 45,441,000sharesof HK$10each

Hotelinvestment

QueenswayHotelLimited(4) 20 – (3) 100,000sharesofHK$10 each

Hotelinvestment

Shangri–LaInternationalHotels (PacificPlace)Limited

20 20 – 5,000sharesofHK$1each and10,000,000 non-votingdeferred sharesofHK$1each

Hotelinvestment


ScheduleofPrincipalGroupPropertiesAt31stDecember2011

Gross floor areas in square feet

Hong Kong Mainland China U.S.A. U.K. Totals

Held through subsidiaries

Held through other

companiesHeld through

subsidiaries

Held through other


subsidiaries

Held through other


subsidiariesHeld through

subsidiaries

Held through subsidiaries

and other companies

Completed properties for investment

Retail 2,324,862 99,698 2,871,898 – – – – 5,196,760 5,296,458

Office 7,954,113 492,711 1,723,424 297,732 – – – 9,677,537 10,467,980

Techno-centres 1,816,667 – – – – – – 1,816,667 1,816,667

Residential 483,711 – – – – – – 483,711 483,711

Hotels 358,371 384,775 169,463 – – 258,750 195,716 723,550 1,367,075

12,937,724 977,184 4,764,785 297,732 – 258,750 195,716 17,898,225 19,431,891

Property developments for investment

Retail 12,983 – – 1,588,338 520,000 – – 532,983 2,121,321

Office 145,390 – – 904,967 963,000 – – 1,108,390 2,013,357

Hotels – – 588,231 555,552 200,000 – – 788,231 1,343,783

Residential 62,099 – 52,797 37,335 108,000 – – 222,896 260,231

220,472 – 641,028 3,086,192 1,791,000 – – 2,652,500 5,738,692

Completed properties for sale

Retail – 3,820 – – – – – – 3,820

Residential 1,996 – – – 67,728 – – 69,724 69,724

MixedUse – – – – 12,586 – – 12,586 12,586

1,996 3,820 – – 80,314 – – 82,310 86,130

Property developments for sale

Office – – – 642,038 – – – – 642,038

Industrial – 191,250 – – – – – – 191,250

Residential 859,790 44,278 – – 1,521,800 – – 2,381,590 2,425,868

MixedUse – – – – 787,414 – – 787,414 787,414

859,790 235,528 – 642,038 2,309,214 – – 3,169,004 4,046,570

14,019,982 1,216,532 5,405,813 4,025,962 4,180,528 258,750 195,716 23,802,039 29,303,283

Notes:1. Allpropertiesheldthroughsubsidiarycompaniesarewholly-ownedexceptforIslandPlace(60%owned),TaiKooHui(97%owned),SanlitunVillage

(Retail:80%owned,Hotel:100%owned),AZURA(87.5%owned),SaiWanTerrace(80%owned),RiverCourtandFortLauderdale(100%owned;75%definedprofits).Theabovesummarytableincludesthefloorareasofthesesevenpropertiesin100%.

2. “Othercompanies”comprisejointlycontrolledorassociatedcompaniesandotherinvestments.Thefloorareasofpropertiesheldthroughsuchcompaniesareshownonanattributablebasis.

3. GrossfloorareasinHongKongandMainlandChinaexcludecarparkingspaces;thereareover9,000completedcarparkingspacesinHongKongandMainlandChina,whichareheldbysubsidiariesandothercompaniesforinvestment.

4. WhenaHongKongpropertyisheldunderarenewablelease,theexpirydateoftherenewalperiodisshown.5. AllpropertiesintheUnitedStatesarefreehold.6. GrossfloorareasinU.S.A.excludecarparkingspaces;thereareabout450completedcarparkingspacesheldbyothercompaniesforinvestment.7. GrossfloorareasinU.K.excludecarparkingspaces;thereareabout50completedcarparkingspacesheldbysubsidiariesforinvestment.8. TheGroup’slistingdocumentdated21stDecember2011includedvaluationsasat30thSeptember2011ofthepropertiesheldatcostlessdepreciation

andimpairmentintheaccountant’sreport,includingtheattributableshareofthoseheldbyjointlycontrolledandassociatedcompanies.Inaggregatethevaluationsofthesepropertiesat30thSeptember2011wereHK$25,080million,representingasurplusofHK$10,171millionabovetheiraccountingcarryingvaluesatcostlessdepreciationandimpairmentat31stDecember2011.Hadthesevaluationsbeenusedastheaccountingcarryingvaluesat1stJanuary2011,thiswouldhaveresultedinanadditionaldepreciationchargeofHK$58milliontotheincomestatementin2011.


Completed properties for investment in Hong Kong Lot number

Leasehold expiry

Site area in square feet

Gross floor area in square feet

Number of car parks

Year of completion Remarks

Retail and Office

1. PacificPlace,88Queensway,Central

OnePacificPlace IL8571(part) 2135 115,066(part)

863,266 – 1988 Officebuilding

TwoPacificPlace IL8582&Ext.(part) 2047 203,223(part)

695,510 – 1990 Officebuilding

TheMallatPacificPlace

IL8571(part)IL8582&Ext.(part)

2135/2047 318,289(part)

711,182 470 1988/90 Shoppingcentrewithrestaurantsandacinema.AccesstoAdmiraltyMTRstation.PacificPlacealsocomprisesservicedapartmentsandhotels,detailsofwhicharegivenintheResidentialandHotelcategoriesbelow.

2. ThreePacificPlace,OneQueen’sRoadEast

IL47AsARPIL47AsBRPIL47AsCRPIL47BsCRPIL47ARPIL47CsAss1RPIL47CsARPIL47BsARPIL47BsBRPIL47BRPIL47AsBss2IL47AsDIL47BsDIL47CRPIL47DRPIL47DsARPIL47sAss1IL47sARPIL47sBss1&RPIL47sCss1&ss2sA& ss2RP&ss3sA&ss3RP& ss4&ss5&ss6sA&ss6RP& ss7RP&RPIL47sPIL47RPIL47sCss5Ext.IL47sCss1Ext.

2050-2852 40,236 627,657 111 2004/07 OfficebuildinglinkedtoTheMallandAdmiraltyMTRstation.

3. Cityplaza,TaikooShing

QBML2&Ext.sKss5QBML2&Ext.sRRP(part)QBML2&Ext.sRss1sA(part)QBML2&Ext.sQRP(part)QBML2&Ext.sQss7sA(part)QBML2&Ext.sQss7RP(part)QBML2&Ext.sQss2sB(part)QBML2&Ext.sQss2sAss1(part)QBML2&Ext.sQss2sARP(part)QBML2&Ext.sJRP(part)

2899 334,475(part)

1,105,227 834 1983/87/97/2000

Shoppingcentrewithrestaurants,ice-skatingrink,cinemaandaccesstoTaiKooMTRstation.

4. CityplazaOne,TaikooShing

QBML2&Ext.sRRP(part)QBML2&Ext.sRss1sA(part)QBML2&Ext.sQRP(part)QBML2&Ext.sQss7sA(part)QBML2&Ext.sQss7RP(part)QBML2&Ext.sQss2sB(part)QBML2&Ext.sQss2sAss1(part)QBML2&Ext.sQss2sARP(part)QBML2&Ext.sJRP(part)

2899 146,184(part)

628,785 – 1997 OfficebuildingoverpartofCityplazashoppingcentre.

5. CityplazaThree,TaikooShing

QBML2&Ext.sKRP(part) 2899 33,730 447,714 10 1992 OfficebuildinglinkedbyafootbridgetoCityplaza.

6. CityplazaFour,TaikooShing

QBML2&Ext.sKRP(part) 2899 41,864 556,431 – 1991 OfficebuildinglinkedbyafootbridgetoCityplaza.




Leasehold expiry



Number of car parks


Retail and Office (continued)

7. CommercialareasinStagesI-XofTaikooShing

SML1sAss1,SML1sARPSML1sB,SML2sCRPSML2sCss2SML2sD,SML2RPQBML2&Ext.sJss1QBML2&Ext.sJss3QBML2&Ext.sLQBML2&Ext.sNQBML2&Ext.sQss4&ss5QBML2&Ext.sQss2sCQBML2&Ext.sSss1QBML2&Ext.sHss1QBML2&Ext.sHss3sAQBML2&Ext.sKss3sAQBML2&Ext.sUss1QBML2&Ext.sKss3RPQBML2&Ext.sKss4sA&RPQBML2&Ext.sTss1&RPQBML2&Ext.sURPQBML2&Ext.sKss9& ss10&ss11&ss13&ss16(part)

2081/2899 – 331,079 3,826 1977-85 Neighbourhoodshops,schoolsandcarparkingspaces.

8. DevonHouse,TaiKooPlace

QBML1sEss2(part)QBML1sFss1(part)QBML1sFRP(part)ML703sN(part)

2881 70,414(part)

803,452 311 1993 OfficebuildinglinkedtoQuarryBayMTRstationbyafootbridge.

9. DorsetHouse,TaiKooPlace

QBML1sQ(part)QBML1sRRP(part)QBML1sS(part)QBML1sTss1(part)QBML1sTss2(part)QBML1sTRP(part)QBML1sU(part)QBML1sW(part)QBML1RP(part)

2881 238,582(part)

609,540 215 1994 OfficebuildinglinkedtoDevonHouse.

10.LincolnHouse,TaiKooPlace


2881 238,582(part)

333,353 164 1998 OfficebuildinglinkedtoPCCWTower.

11.OxfordHouse,TaiKooPlace

QBML1sCss4QBML1sCss7(part)QBML2&Ext.sD

2881/2899 33,434 501,253 182 1999 OfficebuildinglinkedtoSomersetHouse.

12.CambridgeHouse,TaiKooPlace

QBML1sEss2(part)QBML1sFss1(part)QBML1sFRP(part)ML703sN(part)

2881 70,414(part)

268,795 – 2003 OfficebuildinglinkedtoDevonHouse.

13.OneIslandEast,TaiKooPlace

QBML1sCss5QBML1sCss6QBML2&Ext.sFQBML2&Ext.sGQBML2&Ext.sHss6sBRPQBML2&Ext.sHRPQBML2&Ext.RPQBIL15sD

2881/2899 109,929 1,537,011 – 2008 OfficebuildinglinkedtoCornwallHouse.

14.IslandPlace,500King’sRoad,NorthPoint

IL8849(part) 2047 106,498(part)

150,223 288 1996 Floorareashownrepresentsthewholeshoppingcentrepodium,ofwhichtheGroupowns60%.

15.StarCrest,9StarStreet,Wanchai

IL8853(part) 2047 40,871(part)

13,112 83 1999 Floorareashownrepresentsthewholeoftheretailarea.



Leasehold expiry



Number of car parks


Retail and Office (continued)

16.21-29WingFungStreet,Wanchai

IL526sAss1sCIL526sAss1sBRPIL526sAss1sBss1IL526sAss2IL526sAss3

2856 2,967 14,039 – 1992/2006

Floorareashownrepresentstheexistingbuildings.

17.8Queen’sRoadEast,Wanchai(formerlycalledSincereInsuranceBuilding)

IL5250IL7948IL7950

2089/2103/2113

4,612 81,346 – 1968 Officebuildingwithgroundfloorretail.

Totalheldthroughsubsidiaries 10,278,975 6,494

18.PCCWTower,TaiKooPlace


2881 238,582(part)

620,148 217 1994 OfficebuildinglinkedtoDorsetHouse.Floorareashownrepresentsthewholedevelopment,ofwhichtheGroupowns50%.

19.625King’sRoad,NorthPoint

IL7550 2108 20,000 301,065 84 1998 Officebuilding.Floorareashownrepresentsthewholedevelopment,ofwhichtheGroupowns50%.

20.TungChungCrescent(Site1),TungChung,Lantau

TCTL1(part) 2047 331,658(part)

36,053 – 1998/1999

Floorareashownrepresentstheretailspace,ofwhichtheGroupowns20%.

21.Citygate(Site2),TungChung,Lantau


Retail:462,439

Office:160,522

1,156 1999/2000

A160,522squarefootofficetowerabovea462,439squarefootshoppingcentreofwhichtheGroupowns20%.(PartofSite1andSite2Northincludedonpages153and152respectively)

Totalheldthroughjointlycontrolledcompanies 1,580,227 1,457

– ofwhichattributabletotheGroup 592,409

Techno-centres

22.TaiKooPlace QBML1sQ(part)QBML1sRRP(part)QBML1sS(part)QBML1sTss1(part)QBML1sTss2(part)QBML1sTRP(part)QBML1sU(part)QBML1sW(part)QBML1RP(part)

2881 238,582(part)

285 Datacentres/offices/logisticswarehousing

WarwickHouse 554,934 1979

CornwallHouse 338,369 1984 FloorareaexcludestheeightfloorsownedbytheGovernment.

SomersetHouse 923,364 1988 GeneralBuildingPlanapprovalwasobtainedtoredevelopSomersetHouseintoaGradeAofficewithatotalgrossfloorareaofabout895,000squarefeet.

Totalheldthroughsubsidiaries 1,816,667 285




Leasehold expiry



Number of car parks


Residential

23.PacificPlaceApartments,88Queensway

IL8582&Ext.(part) 2047 203,223(part)

443,075 – 1990 270servicedsuiteswithintheConradHongKongHoteltower.

24.RockyBank,6DeepWaterBayRoad

RBL613RP 2099 28,197 14,768 – 1981 Sixsemi–detachedhouses.

25.HouseB,36IslandRoad,DeepWaterBay

RBL507&Ext.(part) 2097 20,733(part)

2,644 – 1980 Onedetachedhouse

26.Eredine,38MountKellettRoad

RBL587&Ext.(part) 2038 51,430(part)

23,224 7 1965 7apartmentunits

Totalheldthroughsubsidiaries 483,711 7

Hotels

1. EAST,TaikooShing QBML2&Ext.sRRP(part)QBML2&Ext.sRss1sA(part)QBML2&Ext.sQRP(part)QBML2&Ext.sQss7sA(part)QBML2&Ext.sQss7RP(part)QBML2&Ext.sQss2sB(part)QBML2&Ext.sQss2sAss1 (part)QBML2&Ext.sQss2sARP (part)QBML2&Ext.sJRP(part)

2899 146,184(part)

199,633 – 2009 345–roomhotel

2. TheUpperHouse,PacificPlace

IL8571(part) 2135 115,066(part)

158,738 – 2009 117–roomhotelabovetheJWMarriottHotel.

Totalheldthroughsubsidiaries 358,371

3. JWMarriottHotel,PacificPlace

IL8571(part) 2135 115,066(part)

525,904 – 1988 602–roomhotel,inwhichtheGroupownsa20%interest.

4. ConradHongKongHotel,PacificPlace

IL8582&Ext.(part) 2047 203,223(part)


5. IslandShangri-LaHotel,PacificPlace

IL8582&Ext.(part) 2047 203,223(part)


Totalheldthroughassociatedcompanies 1,687,222


6. NovotelCitygateHongKongHotel,Citygate(Site2North)


236,653 7 2005 440–roomhotel,inwhichtheGroupownsa20%interest.

Totalheldthroughjointlycontrolledcompanies 236,653 7



Completed properties for sale in Hong Kong Lot number

Leasehold expiry



Number of car parks


1. 5StarStreet,Wanchai

IL2837sCss1(part)IL2837sCRP(part)

2078 2,316(part)

1,996 – 2010 Floorareashownrepresentstheunsoldresidentialportion.

Totalheldthroughsubsidiaries 1,996 –

2. MTRCTungChung(Package1),Lantau

– TungChung Crescent(Site1)


– 75 1998/1999

75unsoldcarparkingspaces,ofwhichtheGroupowns20%.

Totalheldthroughjointlycontrolledcompanies – 75

–ofwhichattributabletotheGroup –

Other holdings

1 BelairMonte,Fanling

FSSTL126(part) 2047 223,674(part)

Retail:47,751

17 1998 Floorareashownrepresentsthewholeoftheretailarea,ofwhichtheGroupowns8%.

47,751 17

–Attributableholding 3,820

Completed properties for investment in Mainland China Address

Leasehold expiry



Number of car parks


Retail

1. SanlitunVillage(VillageSouth)

19SanlitunNorthRoad,ChaoyangDistrict,Beijing

2044(2054forCarpark)

566,332(part)

776,909 451 2007 Shoppingcentrewithrestaurantsandcinema.Floorareashownrepresentsthewholedevelopment,ofwhichtheGroupowns80%.

2. SanlitunVillage(VillageNorth)

11SanlitunNorthRoad,ChaoyangDistrict,Beijing


566,332(part)

519,399 410 2007 Shoppingcentrewithrestaurants.Floorareashownrepresentsthewholedevelopment,ofwhichtheGroupowns80%.

3. BeaumondeRetailPodium

75TianheEastRoad,TianheDistrict,Guangzhou

2044 174,380(part)

90,847 100 2008 Shoppingcentrewithrestaurantsandcarparkingspaces.

4. TaiKooHui NorthofTianheRoadandwestofTianheEastRoad,TianheDistrict,Guangzhou

2051 526,941(part)

1,484,743 718 2011 Shoppingcentrewithrestaurants.Floorareashownrepresentstheretailportion,ofwhichtheGroupowns97%.




Completed properties for investment in Mainland China Address

Leasehold expiry



Number of car parks


Office


2051 526,941(part)

1,723,424 – 2011 Floorareashownrepresentstheofficeportion,ofwhichtheGroupowns97%.

Totalheldthroughsubsidiaries 1,723,424 –

2. INDIGO SouthofJiangTaiRoadandeastofJiuxianqiaoRoad,ChaoyangDistrict,Beijing

2054 631,072(part)

595,464 411 2011 Phasedopeningfromthe4thquarterof2011.Floorareashownrepresentstheofficeportion,ofwhichtheGroupowns50%.



Hotel

1. TheOppositeHouse 11SanlitunNorthRoad,ChaoyangDistrict,Beijing


566,332(part)

169,463 32 2007 99-roomhotel


Completed properties for investment in the United States Address



Number of car parks


Hotel

1. MandarinOriental SouthBrickellKey,Miami,Florida 120,233 345,000 600 2000 326-roomluxuryhotelincentralMiami,inwhichtheGrouphasa75%interest.

Totalheldthroughjointlycontrolledcompany 345,000 600


Completed properties for sale in the United States Address



Number of car parks


1. ASIA 900BrickellKey,Miami,Florida 173,531 Residential:67,728

55 2008 36-storeyresidentialcondominiumtowercomprising123unitswith5-storeyparkinggarage.Asat31stDecember2011,93unitswereclosed.

2. RiverCourt FortLauderdale,Florida 21,750 Retail/Office:12,586

38 1966 DevelopmentsiteinFortLauderdaleacquiredinOctober2006,inwhichtheGrouphasa75%interest.



Property developments for investment in Hong Kong Lot number

Leasehold expiry

Site area in square feet Use

Gross floor area in

square feetNumber of car parks

Stage of completion

Expected completion

date Remarks

1. 28HennessyRoad(formerlycalledTaiSangCommercialBuilding),Wanchai

ML23IL2244RPIL2245RP

2843 9,611 Office 145,390 – Superstructureinprogress

2012 Floorareashownrepresentsaproposedofficebuilding.

2. 23TongChongStreet(formerlycalledWahYuenBuilding),QuarryBay

ML703sI 2881 8,664 ResidentialRetail

62,09912,983

75,082

–

–

Preparationofdemolitioninprogress

2014 Floorareashownrepresentsaservicedapartmentbuildingabovearetailpodium.


Property developments for sale in Hong Kong Lot number

Leasehold expiry


Gross floor area in


Stage of completion

Expected completion

date Remarks

1. 2ASeymourRoad(AZURA)MidLevelsWest

IL577sCIL577sDIL577sEIL577sFIL577sGIL577sHIL577sIIL577sJIL577sLss1IL577sLss2IL577sLss3IL577sLRPIL577sM

2857 22,957 Residential 206,306 45 Superstructureinprogress

2012 Floorareashownrepresentsthewholedevelopment,ofwhichtheGroupowns87.5%.Comprises126residentialunitsofwhich98residentialunitswerepre-soldasat31stDecember2011.

2. 63SeymourRoad(ARGENTA)MidLevelsWest

IL2300 2856 7,975 Residential 75,805 28 Superstructureinprogress

2013 Floorareashownrepresentsaproposedresidentialtowerwith31storeysabovepodium.

Completed properties for investment in the United Kingdom Site area in square feet


Number of car parks


Hotel

1. TheMontpellierChapterCheltenham(formerlycalledHotelKandinsky,Cheltenham)

34,875 36,662 24 2010(refurbishment)

61-roomfreeholdhotelinCheltenham.

2.TheMagdalenChapter,Exeter(formerlycalledHotelBarcelona,Exeter)

46,888 23,030 10 2001 59-roomfreeholdhotelinExeter.Currentlyunderrefurbishment.

3. HotelSeattle,Brighton 22,755 48,416 – 2003 71-roomhotelinBrighton.35-yearleaseholdcommencedinSeptember2002.

4. AvonGorgeHotel,Bristol 71,547 87,608 20 1855 75-roomfreeholdhotelinBristol.Floorareaincludesanexternalterrace.




Property developments for sale in Hong Kong Lot number

Leasehold expiry


Gross floor area in


Stage of completion

Expected completion

date Remarks

3. 25A,25B,27,27A,27B,29,29A,31,33,35SeymourRoad,14-16CastleRoad,MidLevelsWest

IL424sBss1RPIL424sBRPIL425s7ssAIL425s7ssBIL425s7ssCIL425s7ssDIL424sCRPIL424sDRPIL424RP

2854 20,756 Residential 165,792 – Foundationinprogressfor

partofthesite

2014 Floorareashownrepresentsaproposedresidentialtowerwith45storeys(including1refugefloor)abovepodium.

4. 92,92A,94,96,98,100,102CaineRoad,18,18A,20,20A,22,22ACastleRoad,MidLevelsWest

IL425s1RPIL425s2IL425s3IL425s4IL425s5ss1IL425s5RPIL425RP

2854 21,726 Residential 195,531 43 Foundationinprogress

2016 Floorareashownrepresentsaproposedresidentialtowerwith45storeys(including1refugefloor)abovepodium.

5. SaiWanTerrace,1-9and2-10SaiWanTerrace,TaikooShing

SIL761 2057 28,490 Residential 151,944 69 Substructureinprogress

2013 Floorareashownrepresentsthewholedevelopment,ofwhichtheGroupowns80%.Comprisestwoproposedresidentialtowerswith19storeysabovepodium.

6. ResidentialSitesinCheungSha,Lantau

Lot724andLot726inDD332

2061 161,029 Residential 64,412 – VacantSite 2015 Tendersforsalewereawardedtothecompanyon8thDecember2011.ThepurchasetransactionwascompletedinJanuary2012.FloorareashownrepresentsthetotalgrossfloorareapermittedundertheConditionsofSale.


7. 148ArgyleStreet,Kowloon

KIL3303sA 2083 17,712 Residential 88,555 56 Substructureinprogress

2013 Floorareashownrepresentsthewholedevelopment,ofwhichtheGroupowns50%.

8. 8-10WongChukHangRoad,Aberdeen

AIL338AIL339

21192120

25,500 Industrial 382,500 39 Foundationcompleted

Onhold Floorareashownrepresentsthewholedevelopment,ofwhichtheGroupowns50%.




Property developments for investment in Mainland China Address

Leasehold expiry


Gross floor area in


Stage of completion

Expected completion

date Remarks


2051 526,941(part)

HotelServiced

Apartment

588,231

52,797

641,028

–

Superstructureworks

completed.Internalfitting

outworksinprogress

2012 263-roomhoteland24servicedapartments.Aculturalcentreof629,414squarefeetistobebuiltandhandedovertotheGuangzhouGovernmentuponcompletion.Floorareasshownrepresenttheportionsofdevelopmentunderdevelopment,ofwhichtheGroupowns97%.Theretailandofficeportionswereopenedinthe3rdquarterof2011.


1.DazhongliProject SouthofWestNanjingRoadandeastofShimenyiRoad,JingánDistrict,Shanghai

2049(Retail/Hotel)2059

(Office)

676,091 RetailOfficeHotel

1,062,7191,809,934596,745

3,469,398

1,217

1,217

Pilingworksinprogress

2016 Pilingworkscommencedinthe4thquarterof2011.Floorareasshownrepresentthewholedevelopment,ofwhichtheGroupowns50%.

2. INDIGO SouthofJiangTaiRoadandeastofJiuxianqiaoRoad,ChaoyangDistrict,Beijing

2044(Officeandcarparks:2054)

631,072(part)

RetailHotel

939,493358,269

1,297,762

834

834

Internalfittingoutworksin

progress

2012 Phasedopeningfromthe4thquarterof2011.Floorareasshownrepresenttheportionsofdevelopmentunderdevelopment,ofwhichtheGroupowns50%.

3. DaciTempleProject DaciTempleArea9DongdaStreetJinjiangDistrictChengdu

2050 761,869(part)

RetailHotel

ServicedApartment

1,174,465156,090

74,670

1,405,225

1,000

1,000

Siteformationinprogress

2014 Floorareasshownrepresenttheretail,hotelandservicedapartmentportionsofthedevelopment,ofwhichtheGroupowns50%.

Totalheldthroughjointlycontrolledcompanies 6,172,385 3,051

– ofwhichattributabletotheGroup 3,086,192



Property developments for sale in Mainland China Address

Leasehold expiry


Gross floor area in


Stage of completion

Expected completion

date Remarks

1.DaciTemple DaciTempleArea9DongdaStreetJinjiangDistrictChengdu

2050 761,869(part)

Office 1,284,075 499 Siteformationinprogress

2014 Floorareashownrepresentstheofficeportionofthedevelopment,ofwhichtheGroupowns50%.

Totalheldthroughjointlycontrolledcompanies 1,284,075 499


Property developments for sale in the United States Site area in square feet Use


Number of car parks

Expected completion date Remarks

1. SouthBrickellKey,Miami,Florida

105,372 Residential 421,800 395 – DevelopmentsiteincentralMiamiacquiredinJanuary1997alongwiththeMandarinOrientalsite.Plansforcondominiumtowercurrentlyonhold.

2. DevelopmentSite,FortLauderdale,Florida

182,191 Residential/Office/Hotel

787,414 1,050 – DevelopmentsiteinFortLauderdaleacquiredinOctober2006,inwhichtheGrouphasa75%interest.

3. BrickellCitiCentreMiami,Florida

393,678(part)

PhaseI Condominium 1,100,000 1,200 2015 TworesidentialdevelopmentsitesinBrickellCiticentre,anurbanmixedusedevelopmentlocatedintheBrickellfinancialdistrict.Constructionfortheoveralldevelopmentisscheduledtocommenceinmid-2012.


Property developments for investment in the United States Site area in square feet Use


Number of car parks

Expected completion date Remarks

1. BrickellCitiCentreMiami,Florida

393,678(part)

PhaseI Retail Office Serviced Apartment Hotel

PhaseII Office

520,000221,000

108,000200,000

742,000

1,791,000

1,235285

–

380

1,241

3,141

2015

2018

BrickellCitiCentreisanurbanmixedusedevelopmentlocatedintheBrickellfinancialdistrict,comprisedofretail,offices,hotel,servicedapartmentsandresidentialcondominiums.Constructionisscheduledtocommenceinmid-2012.



Glossary

Terms

Gross borrowingsTotalofloans,bonds,overdraftsandperpetualcapitalsecurities.

Net debtGrossborrowingsnetofbankdepositsandbankbalances.

Equity attributable to the Company’s shareholderEquitybeforenon-controllinginterests.

Underlying equity attributable to the Company’s shareholderReportedequitybeforenon-controllinginterests,adjustedfortheimpactofdeferredtaxonchangesinthefairvalueofinvestmentproperties,unrecognisedvaluationgainsonhotelsheldaspartofmixed-usedevelopments,revaluationofinvestmentpropertiesoccupiedbytheGroupandcumulativedepreciationofinvestmentpropertiesoccupiedbytheGroup.

Underlying profitReportedprofitadjustedfortheimpactofchangesinthefairvalueofinvestmentpropertiesandtheassociateddeferredtax.

Net assets employedTotalequityplusnetdebt.

Ratios

Earnings/(loss)pershare

=

Profit/(loss)attributabletotheCompany’sshareholder

Weightedaveragenumberofsharesinissueduringtheyear

Returnonaverageequityattributableto

theCompany’sshareholder

=

Profit/(loss)attributabletothe

Company’sshareholder

AverageequityduringtheyearattributabletotheCompany’s

shareholder

Returnonaverageunderlyingequityattributabletothe


=

Underlyingprofit/(loss)attributableto

theCompany’sshareholder

Averageunderlyingequityduringtheyearattributabletothe


Interestcover =Operatingprofit/(loss)

Netfinancecharges

Cashinterestcover =

Operatingprofit/(loss)

Totalofnetfinancechargesandcapitalisedinterest

Dividendcover =

Profit/(loss)attributabletotheCompany’sshareholder

Dividendspaidandproposed

Gearingratio =Netdebt

Totalequity


FinancialCalendarandInformationforInvestors

RegisteredOfficeSwirePropertiesLimited33rdFloor,OnePacificPlace88QueenswayHongKong

RegistrarsComputershareHongKongInvestorServicesLimited17MFloor,HopewellCentre183Queen’sRoadEastHongKongWebsite:www.computershare.com

StockCodeHongKongStockExchange 1972

AuditorsPricewaterhouseCoopers

FinancialCalendar2012Sharestradeex-dividend 2ndAprilShareregisterclosedfor2011firstinterimdividendentitlement 5thAprilAnnualReportavailabletoshareholders 10thAprilPaymentof2011firstinterimdividend 3rdMayShareregisterclosedforattendingandvotingatAnnualGeneralMeeting 7th-10thMayAnnualGeneralMeeting 10thMayInterimresultsannouncement August20122012firstinterimdividendpayable October2012

InvestorRelationsE-mail:[email protected]

PublicAffairsE-mail: [email protected]: (852)2844-3888Fax: (852)2918-9960Website:www.swireproperties.com

RequestforFeedbackInorderthatwemayimproveourreporting,wewouldbegratefultoreceiveyourcommentsonourpublicannouncementsanddisclosuresviae-mailtoir@swireproperties.com.

DESIGN:

FORMAT LIMITED

www.format.com.hk

Printed in Hong Kong

C M Y K SPAR Cover 1C 3 Mar 2012C M Y K SPAR Cover 1C with 97% White 3 Mar 2012

www.swireproperties.comThe Upper HouseHong Kong

Annual R

eport 2011

Stock Code: 1972

Annual Report

2011

We are a leading developer, owner and operator of mixed-use, principally commercial properties in Hong Kong and Mainland China, with a well-established record of creating long-term value by transforming urban areas.

Our business comprises three main areas:

Property Property Hotel Investment Trading Investment

Annual Report 2011 - Investors - Swire Properties

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