| For immediate release | 10 February 2006 |
| GUOCO ACHIEVED A RECORD INTERIM PROFIT OF HK$3.75 BILLION |
Guoco Group (Guoco Group Limited, Stock Code: 53) announced today its interim results for the six months ended 31 December 2005.
FINANCIAL HIGHLIGHTS
Full interim results announcement can be accessed at Guoco Group's website: http://www.guoco.com.
HIGHLIGHTS OF OPERATIONS
FINANCIAL RESULTS
The unaudited consolidated profit attributable to shareholders of the Company for the six months ended 31 December 2005 is HK$3,752.2 million, which represents an increase of approximately 140.1% over the corresponding period last year. Basic earnings per share increased by approximately 140.6% to HK$11.43.
INTERIM DIVIDEND
The Directors have declared an interim dividend of HK$1.00 per share amounting to approximately HK$329.1 million (2004/2005 interim dividend: HK$0.80 per share amounting to approximately HK$263.2 million) for the financial year ending 30 June 2006 which will be payable on 6 March 2006 to the shareholders whose names appear on the Register of Members on 3 March 2006.
REVIEW OF OPERATIONS
Corporate Event
Mandatory Cash Offer for BIL International Limited ("BIL")
Consequent to the acquisition of additional interests in BIL by the Group in July 2005, the Group was required under the Singapore Code on Takeover and Mergers to make a conditional mandatory general offer on BIL. The price for the mandatory cash offer was revised from S$1.20 per share to S$1.25 per share. The offer was successful with the Group acquiring a controlling interest of 50.5% in BIL.
Treasury, Fund and Investment Management
Our treasury and investment teams have continued to perform well for the period. Supported by a resilient world economy, abundant liquidity and strong earnings growth, global equity markets continued to exhibit an upward trend in the past few months. The Group has increased its equity exposures given a more positive assessment on markets and was able to capitalize on these market trends with favourable results. We maintain active currency management as part of our investment risk control to contain currency exposure.
The Group's treasury and investment management operations contributed approximately HK$3,378.5 million to the operating profit before finance cost for the period under review. The major contributions to the operating profit arose from the following:
- realised and unrealised gains on investments of HK$3,147.1 million;
- total interest income of HK$303.3 million; and
- dividend income of HK$116.5 million.
The decision to increase our equity exposures has generated creditable gains. However, this would subject our earnings to greater volatility in specific periodic reporting due to mark-to-market/fair value accounting practices.
To cope with our expanding investment activities, more resources have been devoted to provide a better infrastructure, such as installing a new portfolio management system which will enhance our investment management capabilities. At the same time, we continue to recruit portfolio managers to deepen the talent pool as well as young professionals for the longer-term development of the investment team.
GuocoLand Limited ("GLL") - 63.9% subsidiary
For the half year ended 31 December 2005, the GLL Group reported a profit of S$44.1 million compared to S$42.3 million in the previous corresponding period.
The GLL Group's revenue increased by 5% to S$224.5 million for the half year ended 31 December 2005. The increase was mainly due to higher revenue recognised from the GLL Group's property development projects in Singapore and from Corporate Square in Beijing offset by lower revenue from Central Park in Shanghai. For the half year ended 31 December 2005, 52% of the revenue was from Singapore and the balance from China.
The GLL Group's cost of sales increased by 11% to S$193.5 million for the half year ended 31 December 2005. The increase was mainly due to higher cost of sales recognised from the GLL Group's property development projects in Singapore and from Corporate Square. The increase was offset by lower cost of sales from Central Park and a higher writeback of allowance for foreseeable losses on the GLL Group's residential properties in Singapore and China, in particular from Paterson Residence in Singapore. Paterson Residence was launched in December 2005 and received favourable response with 54% sold as at 31 December 2005.
The profit after tax contribution from the GLL Group's associates increased by 42% to S$7.4 million due to higher profit contribution from the GLL Group's 40% associates, Razgrad Pte Ltd (which owns The Ladyhill) and Crawforn Pte Ltd (which owns The Boulevard Residence).
The GLL Group's net asset value per ordinary share increased from S$1.67 as at 30 June 2005 to S$1.72 as at 31 December 2005.
The GLL Group currently has eight launched developments on the market in Singapore. As at 9 February 2006, the GLL Group has achieved sales of 67% in Sanctuary Green, 99% in The Gardens at Bishan, 96% in Bishan Point, 47% in Le Crescendo, 87% in Leonie Studio, 56% in Paterson Residence, 76% in The Ladyhill and 78% in The Boulevard Residence. The GLL Group's landbank in Singapore, in terms of saleable area, is approximately 144,000 square metres.
Singapore's economy is expected to maintain its growth momentum with economists forecasting that full-year GDP growth will exceed the official estimated forecast of between 3 to 5 per cent. With continued positive sentiments over the economic prospects of Singapore and a renewed confidence amongst homebuyers that the local property market is on the path to a firm and broad-based recovery, sales of the GLL Group's property development projects in Singapore should continue to benefit from the up cycle.
In Beijing, the GLL Group has completed the sale of the remaining area in Corporate Square in Beijing for a consideration of approximately US$48.6 million (S$80.8 million) in December 2005. The GLL Group expects to officially launch West End Point, a 814-unit residential development within the Second Ring Road in Feng Sheng, Xicheng District of Beijing after obtaining the sale permit.
The GLL Group has acquired a site situated in the Changfeng area of the Putuo District in Shanghai with a saleable area of approximately 360,000 square metres. This site can be developed into a modern integrated SOHO, commercial, hotel and retail development.
Resettlement is currently in progress on the Gujiaying site in Xuanwu District in Nanjing and the project is expected to be launched in the second half of 2006. In January 2006, the GLL Group acquired a site situated in the Maqun area of the Qixia District in Nanjing City with a saleable area of approximately 180,000 square metres.
With the two recent acquisitions in Shanghai and Nanjing, the GLL Group's landbank in China, in terms of saleable area, is now approximately 1 million square metres.
GDP growth for China averaged 9.4% in the first three quarters of 2005 and growth for 2006 is expected to remain strong. Underpinned by strong income growth and rapid urbanisation, the GLL Group expects demand for quality but reasonably priced residential housing to remain sustainable in the medium and long term. The GLL Group now has a growing landbank in the major cities of Shanghai, Beijing and Nanjing and is well positioned to benefit from the strong housing demand in these cities.
In December 2005, the GLL Group entered into a conditional agreement with Vietnam Singapore Industrial Park JV Co. Ltd. to acquire a land parcel of approximately 174,935 square metres forming part of the Vietnam Singapore Industrial Park in Thuan An district of Binh Duong Province, about 17 kilometres north of Ho Chi Minh City. The GLL Group intends to build an integrated residential, commercial, hotel and retail development on this site.
In Malaysia, the GLL Group has increased its interest in GuocoLand (Malaysia) Berhad to 45.59%.
BIL International Limited ("BIL") - 50.5% subsidiary
The Group consolidated the results of BIL from the date of its acquisition in October 2005. BIL recorded a profit of US$30.7 million for the six months period compared to a profit of US$32.5 million for the corresponding period last year. The July London bombings had a negative effect on the operating results of the Thistle Hotels Group.
The Gambling Commission of Great Britain ("Gambling Commission") on 2 February 2006 informed BIL Gaming Operations UK Ltd ("BIL Gaming"), a wholly-owned subsidiary of BIL, that it has been approved to be a licensed operator of casinos under The Gaming Act 1968. Additionally, the Gambling Commission has approved Certificates of Consent for 16 specific casino license applications. As a result of these approvals, BIL Gaming will work towards fulfilling all necessary regulatory requirements including making formal applications to the relevant licensing jurisdictions for each of these 16 casino locations.
Camerlin Group Berhad ("CGB") - 69.4% subsidiary
CGB recorded a profit before tax of RM56.5 million for the twelve months ended 31 December 2005 as compared with that of RM53.0 million for the corresponding period last year. The increase in profit before tax is mainly due to higher profit contribution from its 22.3% owned associate, BIL International Limited, which is CGB's only investment.
Hong Leong Credit Berhad ("HLCB") - 25.7% associated company
HLCB continued its two-pronged approach towards becoming an integrated financial services group: business co-operation and product bundling through "Integrated Sales Organisation (ISO)" forum and business and operational integration through "Centres of Excellence" concept.
Through working together in the HLCB Group's ISO forums, HLCB's key operating franchises, namely, banking, insurance, asset management and stockbroking have been building on each other's unique expertise and strengths towards providing personalised financial solutions in order to better meet customers' needs and requirements.
HLCB is embarking on the consolidation of certain operations such as IT and Data Centres as well as Building Management and has set up regional teams in the areas of Treasury, Investment Banking and Private Banking.
HLCB will publish its results for the interim period ended 31 December 2005 subsequent to the Group's own interim announcement. The Group has incorporated the consolidated results of HLCB based on their unaudited management accounts which are subject to changes and approval from Bank Negara Malaysia.
OUTLOOK
Looking ahead, we remain cautiously optimistic on global markets. Headline inflation rates are being contained in most major economies and the extent of Fed tightening is likely to be moderated in the early part of 2006. Global economic growth is likely to remain firm. However, possible increases in resources utilisation as well as elevated energy prices have the potential to add to inflation pressures. Equity prices globally are now not at low levels and some of these positive factors are already reflected in prices. As such, the Group will be vigilant for any new market development and continue to manage our investment risks.
Guoco Group Limited is an investment holding company listed on the Hong Kong Stock Exchange (Stock Code: 53). The principal activities of its subsidiaries and associated companies include investment and treasury management, property development and investment, stock and commodity broking, investment advisory, banking and finance, insurance, fund management as well as hotel investment and management, operating principally in Hong Kong, Singapore, Malaysia, the PRC and the United Kingdom etc.
Contacts :
Ms. Stella Lo
Group Company Secretary
Tel: ( 852 ) 2283 8710
Fax: ( 852 ) 2285 3210
E-mail: stella.lo@guoco.com
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