Basis of preparation

The interim accounts have been prepared in accordance with the principal accounting policies set out in the 1995 annual report.

On 10th June 1996, Cathay Pacific Airways placed with CITIC Pacific 572,902,308 new shares, representing 20% of Cathay Pacific Airways existing capital, at a price of HK$11.00 per share. As a consequence of the placement, Swire Pacific's effective holding in Cathay Pacific Airways was diluted from 52.6% to 43.9% and therefore Cathay Pacific Airways and Hong Kong Aircraft Engineering Company are no longer subsidiaries of Swire Pacific. The consolidated results of Swire Pacific for the six months ended 30th June 1996 incorporate the results of Cathay Pacific Airways and Hong Kong Aircraft Engineering Company as subsidiaries for the period to 9th June 1996 and as associated companies thereafter. The unrealised gain reflecting the increase in the attributable interest of the Group in the net assets of Cathay Pacific Airways as a result of the issue of new shares has been transferred to the revenue reserves of the Group as disclosed in note 6. Proforma profit and loss accounts are set out in note 7 to assist in the assessment of the impact of no longer consolidating Cathay Pacific Airways and Hong Kong Aircraft Engineering Company on the Swire Pacific Group results.

Earnings per share

Earnings per share are calculated by dividing the profit attributable to shareholders for the period ended 30th June 1996 of HK$3,055 million (1995: HK$2,893 million) by the weighted average number of 970,009,385 'A' shares and 3,076,706,271 'B' shares in issue during the period (1995: 970,132,103 'A' shares and 3,079,455,277 'B' shares).

Earnings per share excluding share of associates' exceptional profit are calculated in the same way, except that the profit attributable to shareholders for the period ended 30th June 1996 has been adjusted to exclude the Group's share of associates' exceptional profit of HK$468 million. The earnings per share excluding share of associates' exceptional profit have been calculated in addition to the earnings per share required by Hong Kong Statement of Standard Accounting Practice No. 5 as, in the opinion of the directors, this additional disclosure will assist in the assessment and on-going comparison of the operating results of the Group.