Cheung Kong Property : ANNOUNCEMENT – INTERIM RESULTS FOR 2017

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Six months ended 30 June

Note: Revenue includes the Group's revenue of HK$28,931 million and the Group's share of revenue of joint ventures of HK$932 million.

The Group's unaudited profit attributable to shareholders for the six months ended 30 June 2017 amounted to HK$14,410 million. Earnings per share were HK$3.82.

The Directors have declared an interim dividend for 2017 of HK$0.42 per share (HK$0.38 per share in 2016) to shareholders whose names appear on the Register of Members of the Company at the close of business on Tuesday, 5 September 2017. The interim dividend will be paid on Thursday, 14 September 2017.

Having gone through a highly volatile year in 2016, the global political and economic landscape has shown signs of stabilisation in the first half of 2017, with some improvement in business confidence and investor sentiment. However, certain market uncertainties and challenges have continued.

The Group is progressing on track in meeting its operating targets and executing its development strategy. Several significant investments have been made since late 2016. These investments present to the Group opportunities to further diversify its businesses globally, and enhance its earnings base with a higher proportion of stable recurring revenue and resulting in stronger cash flows on a medium to long term basis. For the six months ended 30 June 2017, the Group's unaudited profit attributable to shareholders was HK$14,410 million, 67% higher than the same period last year. Profit before investment property revaluation was HK$9,480 million, an increase of 14% over the corresponding period in 2016. An increase in fair value of investment properties of HK$4,930 million after tax was recorded, largely due to the rising market value of prime office buildings in Central. Our newly acquired businesses in the energy and infrastructure sector, together with aircraft leasing, have contributed profits to the Group during the period.

The Group's property business delivered a sound performance in the interim period:

The Hong Kong residential market recorded active trading in the first six months of 2017, with increases in both property prices and transactions. On the Mainland, although growth in property prices showed signs of slowing in major cities, market conditions remained largely stable and overall sentiment continued to be positive. Steady performance was achieved by the Group in property sales in Hong Kong, the Mainland and Singapore and total sales exceeded HK$40 billion during the period under review. We will continue to adopt a cautious and disciplined approach in operating the property development business.

While local retail sales have stabilised since March 2017, growth in per capita tourist spending has yet to resume, and the continued downturn of the retail sector has impacted the Group's retail leasing business. The Group is nevertheless optimistic about the outlook of the retail market. Our retail property portfolio is set to become a stronger platform for rental generation following the completion of a new commercial project. An increase in occupancy rates and rentals was reported for the Group's premium commercial properties as global investor confidence continued to strengthen. As a whole, contribution from property rental improved for the period. The Group will seize suitable opportunities to strengthen its investment property portfolio in order to boost growth in stable returns.

Inbound tourism has improved with visitor arrivals gradually increasing. The average hotel room occupancy rate has shown a small improvement, while the year-on-year decline in average achieved hotel room rate has stabilised and started to turn around. The Group's hotel business continued to operate in a challenging market while the serviced suite operation remained resilient. During the period under review, the Group transferred its interests in two hotels in Chongqing and Chengdu to Hui Xian Real Estate Investment Trust. An increase in overall operating contribution was recorded in the first half of 2017. Our hotel business will be further enhanced with the addition of a total of approximately 1,200 rooms from two hotel projects in Hong Kong.

The property and project management business continued to generate steady recurrent income for the Group. An increase in turnover and contribution was recorded as compared to the corresponding period last year. We expect further expansion of the total floor area of properties under the Group's property management following the completion of upcoming developments.

The Group has made several significant investments since late 2016 to broaden its business scope and market coverage, with a view to optimising its asset portfolio mix and diversifying recurring income sources to offer stable returns for shareholders. Some of these investments have provided profit contribution during the period under review.

On 27 July 2017, the Group agreed to acquire 100% of ista Luxemburg GmbH ("ista") at the consideration of approximately EUR4,500 million (equivalent to approximately HK$41,400 million). ista is one of the world's leading fully integrated energy management services providers with strong market positions in Europe including Germany, Denmark, the Netherlands, France, Italy and Spain. Subject to obtaining the respective independent shareholders' approval and the necessary regulatory clearances, this investment will be held by a consortium comprising the Group (65%) and CK Infrastructure Holdings Limited ("CKI") (35%).

In mid-July 2017, the Group completed the acquisition of the building equipment services business (the "Business") which provides water heaters and related services under the consumer brand, "Reliance Home Comfort", in Canada, at the adjusted consideration of approximately C$2,800 million (equivalent to approximately HK$17,160 million). Also in mid-July, the Group entered into an agreement with CKI to dispose of 25% equity interest in the Business to CKI, which will be appointed as the manager of the Business given its experience in owning and operating infrastructure business. The disposal is subject to the approval of the independent shareholders of the Company. The Business provides stable revenue and cash flows.

In May 2017, a consortium which is held as to 40%, 40% and 20% respectively by the Group, CKI and Power Assets Holdings Limited completed the acquisition of all the stapled securities in issue of the DUET Group at the adjusted total consideration of approximately AUD7,410 million (equivalent to approximately HK$42,690 million). The DUET Group is an owner and operator of energy utility assets in Australia, the United States, the United Kingdom and Europe, and represents an attractive investment opportunity with good growth potential.

In December 2016, the Group purchased from CK Hutchison Holdings Limited the equity interests in CK Capital Limited and Harrier Global Limited, companies engaged in the aircraft leasing business. The acquisition was completed at the adjusted total consideration of approximately US$988 million (equivalent to approximately HK$7,690 million). During the period, this aircraft portfolio has been integrated into the aircraft leasing business already owned by the Group. We will continue to strengthen our management platform and expand our asset base pursuant to our predefined return criteria.