OPERATIONS REVIEW
THE principal operations of the Group have all performed well during 1985. The return of confidence to the territory, coupled with an improvement in the property market, has helped to create an environment conducive to the further growth and expansion of the Group's operations.
PROPERTY DIVISION
The property group achieved a good result and contributed profit before extraordinary items of HK$311 million (1984 · HK$292 million). Extraordinary items contributed a further HK$93 million (1984 HK$110 million).
Gross recurring rentals from investment properties have grown to HK$266 million (1984 — HK$247 million).
Development property - Whampoa Garden
Development of this large project, which provides for 11,200 residential flats and 1.7 million sq.ft of commercial space, is progressing according to schedule. The occupation permit of Site 1, comprising 600 flats and associated commercial and carparking spaces, was issued in December, 1985. All flats in this site have now been handed over to the owners and renting of the commercial area is progressing well. All 2,160 flats in Site 2 have already been sold and construction of the majority of the blocks on the site will be completed during the second half of 1986 and early 1987.
The contract for the superstructure for Site 3, which will comprise 960 flats, was awarded in January, 1986 and most of these flats have already been sold. It is anticipated that some of the blocks will be completed prior to the end of 1986.
Plans for Sites 4, 5, 6 and 8 are already at an advanced stage and the necessary demolition work has now been carried out. It is hoped to market part of Sites 4 and 5 before the end of the year. Work on Sites 6 and 8 will commence this year.
Investment property
Warehouses
Both the Whampoa Terminal Warehouse and the 50% owned Kowloon Bay Cargo Centre are fully occupied.
Hutchison House
Full occupancy of this building has been maintained. Major renovations were completed during the year and the quality of the building compares favourably with other prime office properties in Central.
China Building
This prestigious office building, which was recently acquired, is expected to make a significant contribution to annual rental income and profitability. The building is fully occupied.
Provident Centre
Leasing of the commercial area is progressing slowly with 76% of the available space let at the end of 1985. This leaves a total of 46,300 sq.ft still to be leased.
Aberdeen Centre
The commercial space in the Centre is leased at reasonable rentals generating HK$43 million annually.
Watson's Estate
During the year, 89,530 sq.ft of space were sold for HK$37 million. The remaining unsold areas are fully let at satisfactory rentals.
6M Bowen Road/Horne Mansion
The property has been sold to a subsidiary of Cheung Kong (Holdings) Limited for HK$78 million subject to existing tenancies. The gain on the sale of this property will be reflected in the 1986 accounts.
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HUTCHISON WHAMPOA LIMITED
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