CMB_2001 — Page 36

Notes on The Accounts (Continued)

22. CAPITAL COMMITMENTS

The group's share of the capital commitments of the jointly controlled entities at 30th June, 2001 not provided for in the accounts were as follows:-

Contracted for

Authorised but not contracted for

The group

The company

2001

2000

2001

2000

$000's

$000's

$000's

$000's

163,227

26,813

23. OPERATING LEASES

(a) Significant leasing arrangements

The group leases out investment properties in Hong Kong and United Kingdom under operating leases. The leases for investment properties in Hong Kong typically run for an initial period of two to three years. The leases for investment properties in United Kingdom run for an initial period of fifteen to twenty-five years. Lease payments are subject to upward only rent review for every 5 years for investment properties in United Kingdom. One of the leases in United Kingdom is with mutual option to break on 25th October, 2004. None of the leases includes contingent rentals. Further details of the carrying value of the investment properties are contained in note 9.

During the current year $67,627,000 (2000: $52,287,000) was recognised as rental income in the consolidated profit and loss account in respect of operating leases.

(b) Future operating lease income

The total future minimum lease payments under non-cancellable operating leases are receivable as follows:

Within one year

After one but within five years After five years

2001

$000's

69,111

176,653

501,815

747,579

24. MATERIAL RELATED PARTY TRANSACTIONS

Loans to the jointly controlled entities at 30th June, 2001 are disclosed in note 11. The loans are unsecured, interest-free and have no fixed terms of repayment.

A sale and purchase agreement was signed on 7th February, 2001 between a wholly-owned subsidiary of the company and Madam Ngan Kit-ling, a substantial shareholder and a director of the company. Pursuant to the sale and purchase agreement, the subsidiary purchased the remaining portion of Kowloon Inland Lot No. 1300 (No. 3 Jordan Road, Kowloon) for a purchase price of HK$68,000,000 for redevelopment. No balances were outstanding at the balance sheet date. The directors, including the independent non-executive directors, consider that the terms of the sale and purchase agreement are normal commercial terms and are fair and reasonable.

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