CMB_2001 — Page 35

Notes on The Accounts (Continued)

18. RESERVES (Continued)

The directors consider that $43,785,000 (2000: $43,785,000) of the company's retained profits are not distributable since such profits arose from an intra group sale of property which was disposed of to a wholly-owned subsidiary during the year ended 30th June, 1994 and which was subsequently sold during the year ended 30th June, 1995 to a jointly controlled entity in which the group has a 50% shareholding.

The directors consider that all of the general reserve and $732,187,000 (2000: $761,010,000) of the retained profits of the company, totalling $972,187,000 (2000: $991,010,000), are distributable.

The application of the capital redemption reserve is governed by section 49 of the Hong Kong Companies Ordinance. The investment properties revaluation reserve is not available for distribution to shareholders because it does not constitute realised profits within the meaning of section 79B(2) of the Hong Kong Companies Ordinance.

Note:

The group treats its investment properties on a portfolio basis.

The group's investment properties have been valued in accordance with Statement of Standard Accounting Practice 13 at open market value. A revaluation deficit of $14 million has arisen and this has been debited to an investment properties revaluation reserve.

The value of the group's other investment properties held by jointly controlled entities have been reviewed. The group's share of the deficits which amounts in total to $64 million has been dealt with in the investment properties revaluation reserve.

19. DEFERRED PROFITS

The group

2001

The company

2000

2001

2000

$000's

$000's

$000's $000's

Balance brought forward and carried forward

451,198

451,198

237,225 237,225

20. CONTINGENCY RESERVES

Third party claims

At 1st July

Payments during the year

Provision written back for the year

At 30th June

Group and company

2001

2000

$000's

$000's

71,400

82,700

(13,172)

(7,463)

(1,128)

(3,837)

57,100

71,400

21. CONTINGENT LIABILITIES

At 30th June, 2001, there were potential contingent liabilities in respect of third party claims amounting to approximately $57 million (2000: $71 million) for which a full provision of $57 million (2000: $71 million) has been included in contingency reserves. In the opinion of the directors, based on an independent actuarial valuation, the amount provided is sufficient to cover any liabilities which may subsequently arise in respect of these claims.

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