HOPSON DEVELOPMENT HOLDINGS LIMITED
(Incorporated in Bermuda with limited liability)

1998 INTERIM RESULTS ANNOUNCEMENT

FINANCIAL HIGHLIGHTS Six months ended 30th June, 1998 Turnover increased 136% to HK$621,843,000 Profit attributable to shareholders increased 97% to HK$143,372,000 Earnings per share were HK$0.18

BUSINESS REVIEW

• In the first half of 1998, pre-sale floor areas and transaction value of commodity properties in Guangzhou City recorded a marked increase of 58.69% and 42.65% respectively over the same period of 1997.

• The Group outperformed the market by achieving property sales of approximately 174,000 sq. m., or approximately 1,570 units, in the first half of this year.

• With 6% market share, the Group has established itself as one of the top-selling developers in Guangzhou City.

• During the period under review, the Group completed four high-rise blocks of Phase 5B of Huajing New City. Phase 2 of Jinan Garden was also in the final stage of completion.

• The total gross floor area ("GFA") currently under construction amounts to approximately 755,000 sq. m., which will be fully completed in one to three years' time.

• In May 1998, the Company successfully launched an initial public offering of its shares on The Stock Exchange of Hong Kong Limited, which has laid an important milestone for the future development of the Group.

PROSPECTS

• As announced by Premier Zhu Rongji in March, 1998, housing development will be the new growth area and driving force of the nation's economy. Private home ownership will also be actively promoted.

• Guangdong Province has targeted housing reforms to be completed by 1st January, 2001 with orderly implementation of corresponding policies and measures.

• The Group should be benefited in the wake of housing reforms because of its dominant position and reputation in the local marketplace.

• Notwithstanding the impact of the recent Asian economic uncertainties, the demand for quality residential properties in Guangzhou City remains substantial. The Group's continued addition of quality and low-cost landbank in the most popular and fastest growing districts should help capture such opportunity.

INTERIM RESULTS

The Board of Directors of Hopson Development Holdings Limited (the "Company") is pleased to announce the unaudited consolidated results of the Company and its subsidiaries (collectively the "Group") for the six months ended 30th June, 1998 as set out below:

Notes:

(1) Turnover

Turnover comprised (i) sale/pre-sale of properties under development for sale, which is recognised over the entire period of construction in respect of properties under development for sale, the pre-sale activities and construction work of which has progressed to a stage when the ultimate realisation of profit can be reasonably determined. The total estimated profit is apportioned over the entire period of construction to reflect the progress of the development. On this basis, profit recognised on the pre-sold portion of the properties is calculated by reference to the proportion of construction costs incurred at the end of the period to the estimated total construction costs on completion with due allowance for contingencies. The profit so recognised is restricted to the amount of instalments received and (ii) sale of property held for investment which is recognised upon completion of sale and purchase agreement.

(2) Taxation

Taxation comprised (i) provisions for Hong Kong profits tax at the rate of 16% (1997: 16.5%) and overseas taxation at the applicable rates prevailing in the countries of operations on the profits of companies within the Group for financial reporting purposes, adjusted for income and expenses items which are not assessable or deductible for taxation purposes and (ii) provisions for deferred taxation, at the current tax rate, in respect of significant timing differences arising from the use of different bases of recognition of revenues and expenses for financial reporting and tax purposes.

(3) Earnings per share

The calculation of earnings per share is based on the unaudited consolidated profit attributable to shareholders for the six months ended 30th June, 1998 of HK$143,372,000 (six months ended 30th June, 1997: HK$72,773,000) and the weighted average of 791,666,667 shares (1997: 750,000,000 deemed shares) in issue during the period.

INTERIM DIVIDEND

The Board of Directors has resolved not to declare any interim dividend in respect of the six months ended 30th June, 1998.

The Group's Sales Performance The breakdown of property sales for the period under review is as follows:

Landbank Replenishment The Group has recently signed up agreements to develop the following two projects:

USE OF PROCEEDS OF SHARE OFFER

The Company issued 250,000,000 new shares in May 1998. The shares commenced trading on The Stock Exchange of Hong Kong Limited (the "Stock Exchange") on 27th May, 1998.

As detailed in the Prospectus for its Placing and New Issue, the proceeds of the issue (after deducting expenses) amounted to approximately HK$643 million, of which HK$202 million have been used to develop property development projects and to repay bank and other short-term borrowings.

AUDIT COMMITTEE

The Stock Exchange has recently revised the Code of Best Practice as set out in Appendix 14 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the "Code of Best Practice") requiring listed companies to establish an audit committee with written terms of reference which deal clearly with its authority and duties. Amongst the committee's principal duties will be to review and supervise the listed company's financial reporting process and internal controls. The Company is currently in the process of setting up the Audit Committee and preparing its written terms of reference in accordance with the requirements of the Stock Exchange.

YEAR 2000 COMPLIANCE

The Company is fully aware of the need to be Year 2000 compliant and has examined the potential impact of the issue. Being Year 2000 compliant is to ensure that no disruption will occur in the Group's operations during the turn of the Year 1999 to the Year 2000. The Company considers that there will not be any material adverse effect on the Group's operations at and after the turn of millennium. However, appropriate corrective measures will be made to ensure that the Group's operating systems will be Year 2000 compliant by the second quarter of 1999.

The Company does not expect the costs in achieving Year 2000 compliance to be material and is aiming at making detailed disclosure in the annual report for the year ending 31st December, 1998 on the progress of this programme.

CODE OF BEST PRACTICE

In the opinion of the Directors, the Company has, and has throughout the period under review, complied with the Code of Best Practice except that the non-executive directors were not appointed for a specific term. However, the non-executive directors are subject to retirement by rotation at Annual General Meetings of the Company in accordance with the Company's Bye-laws.

PURCHASE, SALE OR REDEMPTION OF THE COMPANY'S LISTED SECURITIES

During the period under review, neither the Company nor any of its subsidiaries purchased, sold or redeemed any of the Company's listed securities.

By Order of the Board
Chu Mang Yee
Chairman

16th September, 1998, Hong Kong

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