Sun Hung Kai : Announcement of 2015 Final Results

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(Incorporated in Hong Kong with limited liability)

(Stock Code: 86)

ANNOUNCEMENT OF 2015 FINAL RESULTS

LETTER FROM THE CHAIRMAN

2015 was an important milestone for the Group as we achieved a record profit attributable to shareholders. On 2 June 2015 we completed the sale of 70% equity interest in Sun Hung Kai Financial Group Limited to Everbright Securities Financial Holdings Limited ("Everbright Securities") for a total consideration of HK$4,095 million resulting in a gain of HK$3,033.5 million for the Group. Not only did we crystallise the embedded value of the market leading independent wealth management and brokerage platform in Hong Kong, more importantly, we have set the stage for greater growth prospects for this business with its improved market access to Mainland China. We continue to be committed to the wealth management sector through our 30% equity interest.

As a consequence, Sun Hung Kai & Co. Limited (the "Company", with its subsidiaries, "the Group") recorded a profit attributable to shareholders of HK$3,896.5 million for 2015 (2014: HK$1,328.4 million). Based on continuing operations, the profit attributable to shareholders was HK$667.7 million (2014: HK$939.6 million). Earnings per share was HK173.8 cents (2014: HK61.7 cents). The Board of Directors has declared a second interim dividend of HK14 cents. Including the first interim dividend, the total dividend per share was HK26 cents for the year (2014: HK26 cents). In addition, in August 2015, the Board announced a plan to allocate up to HK$1 billion to repurchase the Company's shares on market. For the year and up to this date, a total of 31.9 million shares of the Company were repurchased and cancelled for a consideration of HK$167.7 million. The net asset value per share was HK$8.1 at the end of 2015, an increase of 23% over 2014.

Since the Group's foundation in 1969, we have owned and operated market leading financial services businesses and produced long term capital appreciation for our shareholders. The past year was one where we crystallised a significant release of value from one of our businesses. At the same time, it is also an opportunity for us to reposition ourselves for future growth.

Principal Investments has become a more significant part of the Group's strategy and the benefit is twofold. Firstly, we can seek to generate enhanced returns through investments that allow us to utilise our experience, expertise and relationships from the businesses that we operate. Secondly, the growth plans of our operating businesses can be facilitated through these new investments. Changes are taking place rapidly especially relating to the fintech arena. This is both a threat and an opportunity for our Consumer Finance business and we need to stay at the forefront of any developments. The Principal Investments segment achieved a satisfactory return overall in the volatile environment, with pre-tax profit contribution of HK$469.9 million representing a 10.6% return on the average assets employed. In addition, we have made new investments in the financial sector as well as the healthcare and pharmaceutical sectors through direct investment or partner funds. We remain positive about the continued development and growth of China in the medium term, particularly the continued liberalisation of the financial markets, the disruptive growth in online business models, the rise of the middle class and increased domestic consumption. The Group's investment portfolio is aligned with these macro themes.

From our portfolio of finance businesses, we aim to generate steady returns on capital. At the end of 2015, total loans outstanding amounted to HK$12 billion, generating gross interest income of over HK$4 billion. Through our Structured Finance and Consumer Finance businesses, we provide financing solutions to corporates, small businesses and individuals where their needs are not met by traditional banking channels. In October 2015, Sun Hung Kai Credit Limited ("SHK Credit"), a new subsidiary, was established to focus on the mortgage loan business in Hong Kong, a niche market with solid growth prospects. With a solid balance sheet, household brand recognition, and deep operating experience, the Group is well positioned to capture a significant share of the market. During the year, we have also established a Shanghai based car finance leasing venture. Our Chinese partners possess strong distribution and financial expertise. The venture, LSS Financial Leasing (Shanghai), in which the Group owns a 30% interest, commenced operations in January 2016. Looking ahead, we shall continue to seek growth and diversification opportunities that complement the existing businesses.

This year however, was not without challenges. The Group's Consumer Finance business conducted through United Asia Finance Limited ("UAF") delivered solid results with increased market share in Hong Kong. However, with the slowing economic growth in Mainland China, UAF's business there was confronted with significant challenges amidst an industry wide rationalisation in the difficult credit environment. In particular, small businesses, which had been an important growth driver of UAF's loan portfolio in Mainland China, were adversely affected impacting loan credit quality and our profitability. Management has since revised our operational and credit strategies to reduce overall risk and to realign our cost structure to the current economic environment. However, we have not changed our long term view on the Mainland Chinese consumer finance market. We have continued to invest and improve our infrastructure. UAF China has also become one of the first micro loan companies in Mainland

China to be granted direct access to the nationwide credit database hosted by The People's Bank of China allowing us to greatly enhance our credit approval process. We also established several partnerships with online portals such as Rong360（融 360：北京融世紀信息技術有限公 司）to utilise their customer profiling data to cultivate the demand for loan products. Though still at the pilot phase, the business volume is encouraging.

Looking ahead, the year 2016 will be another challenging and volatile one for the global economy and financial markets. Nevertheless, given our solid financial position and diversified investment and loan portfolios, we are confident that we will be able to navigate through the near term uncertainties.

On behalf of the Board, I would like to thank our customers, shareholders and business partners for their support and trust. I would also like to express my gratitude to our management team and dedicated staff for their diligence and professionalism. I hope that many more new record years will be set for the Group in the coming years.

GROUP RESULTS

The Board is pleased to announce the audited consolidated results of the Group for the year ended 31 December 2015 as set out below:

CONSOLIdATEd STATEMENT OF PROFIT OR LOSS

For the year ended 31 December 2015

2015 2014

Restated

Continuing operations Revenue	Notes	HK$ Million 4,174.1	HK$ Million 4,177.9
Other income	4	71.6	56.7
Total income	4,245.7	4,234.6
Brokerage and commission expenses	(55.9)	(46.3)
Advertising and promotion expenses	(106.2)	(123.5)
Direct cost and operating expenses	(58.1)	(27.7)
Administrative expenses	(1,354.0)	(1,245.0)
Net gain on financial assets and liabilities	5	1,005.6	112.1
Net exchange gain	7.5	11.9
Bad and doubtful debts	6	(1,570.9)	(787.2)
Finance costs	(478.8)	(442.1)
Other expenses	(702.5)	(12.7)
932.4	1,674.1
Share of results of associates	2.4	5.6
Share of results of joint ventures	38.4	33.0
Profit before taxation	7	973.2	1,712.7
Taxation	8	(83.7)	(303.3)
Profit for the year from continuing operations	889.5	1,409.4
discontinued operations
Profit for the year from discontinued operations	9	3,228.8	388.8
4,118.3	1,798.2
Profit attributable to: - Owners of the Company	3,896.5	1,328.4
- Non-controlling interests	221.8	469.8
4,118.3	1,798.2
Earnings per share	11
From continuing and discontinued operations - Basic (HK cents)	173.8	61.7
- Diluted (HK cents)	173.8	61.7

From continuing operations

• Basic (HK cents) 29.8 43.6

• Diluted (HK cents) 29.8 43.6