1999 ANNUAL RESULTS
(For the year ended 31st December, 1999)
Turnover was HK$1,328,513,000
|-||In 1999, China experienced stable economic development with GDP growth of 7.1%. The urban per capita income also rose by 9.3%.|
|-||Guangzhou City achieved steady economic growth of 13% in 1999, topping the major cities in China.|
|-||Proactive measures were put forward by the municipal governments, including regulation of land supply, acceleration of infrastructure construction, favourable mortgage policy, reduction of taxes and charges, revitalization of secondary market and so on.|
|-||The consistently low interest rates and government's imposition of tariff on saving deposits also encouraged home purchase.|
|-||In 1999, Guangzhou commodity property market recorded growth in transacted floor areas of 10.65% but reduction in the approved pre-sale floor areas of 25.19%, a reflection of improved absorption rate of commodity property space and diminishing market supply.|
REVIEW OF OPERATIONS
|-||In 1999, the Group completed 79 residential blocks containing approximately 3,210 residential units. The total gross floor area ("GFA") completed amounted to approximately 550,000 sq.m. With just about 14 months' time, the Group had superstructures of over 110 residential blocks topped out.|
|-||During the period under review, the Group sold approximately 2,500 residential units with total GFA of approximately 265,000 sq.m.|
|-||The proportion of individual purchasers buying the Group's residential units was increased to 85%, implying a smooth transition for the Group to cope with change in housing reform policy.|
|-||Three of the Group's projects were included into the list of top ten "best-selling" property development projects in Guangzhou. In addition, Gallopade Park was also elected as the first place of the "most popular" project in the city.|
|-||The Group has replenished its landbank with strategically located quality sites over 2.6 million sq.m. GFA, doubling the Group's existing landbank.|
|-||Starting from the year 2000, the new housing policy has been in full swing with individual becoming dominant buying force, thereby accelerating the degree of marketization.|
|-||China's prospective entrance to WTO will have enormous effect on the nation's economic system and the property market as well.|
|-||"Working in city, living in suburb" will become more popular for homebuyers to select their living spaces. The Group has already planned ahead to meet the needs.|
|-||As Guangzhou housing reform propelling at full speed and the economy continues to grow, the Group expects that mid-range properties to be in keen demand.|
|-||The Group will strategically move to area with high growth potential and its low cost landbank will be sufficient for continued business growth.|
|-||Three new projects, namely Pleasant View Garden, Riverside New City and Huanan New City, will contribute significantly to Hopson's sales revenue in the years to come.|
The Board of Directors of Hopson Development Holdings Limited (the "Company") is pleased to announce the audited consolidated results of the Company and its subsidiaries (collectively the "Group") for the year ended 31st December, 1999 with comparative figures for the previous year as set out below:
1999 1998 Notes HK$'000 HK$'000 Turnover (1) 1,328,513 1,303,332 Cost of sales (768,515) (738,224) --------- --------- Gross profit 559,998 565,108 Other revenue 2,757 2,474 Distribution costs (74,268) (70,468) General and administrative expenses (28,533) (24,711) --------- --------- Profit from operations 459,954 472,403 Finance income, net 15,378 12,793 --------- --------- Profit before taxation 475,332 485,196 Taxation (2) (162,857) (158,138) --------- --------- Profit after taxation 312,475 327,058 Minority interests (23,564) (16,380) --------- --------- Profit attributable to shareholders 288,911 310,678 ========= ========= Earnings per share (3) - Basic 29 cents 35 cents - Diluted 28 cents 34 cents
Turnover comprised (1) 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 have progressed to a stage when the ultimate realisation of profit can be reasonably determined. Business taxes are levied at 5% of gross turnover and the turnover figure shown above is presented net of business taxes. 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; (2) sale of completed properties held for sale which is recognised upon completion of sale and purchase agreement. The profit recognised is restricted to the amount of instalments received; (3) rental income which is recognised when rental is received or receivable; and (4) property management income which is recognised when services are rendered.
Taxation comprised (i) provisions for Hong Kong profits tax at the rate of 16% (1998 - 16%) 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; (ii) provisions for deferred taxation at the current tax rate, in respect of significant timing differences arising from the use of different bases recognition of revenues and expenses for financial reporting and tax purposes; and (iii) land appreciation tax is levied at progressive rates ranging from 30% to 60% on the balance of the proceeds received on transfer of real properties after deducting certain deductible items including consideration paid for acquisition of land use rights, land development costs incurred, construction costs spent for new buildings and facilities on the land or the assessed value of old buildings and facilities on the land and taxes paid in relation to the transfer of real properties. In December, 1999, the National Tax Bureau granted a tax ruling to the Group to extend the land appreciation tax exemption period up to 31st December, 2000 regarding development projects registered before 1st January, 1994.
(3) Earnings per share
The calculation of earnings per share was based on the consolidated profit attributable to shareholders of approximately $288,911,000 (1998 - $310,678,000) and the weighted average number of 1,000,000,000 shares (1998 - 895,833,333 shares) in issue during the year.
The calculation of diluted earnings per share was based on the consolidated profit attributable to shareholders of approximately $288,911,000 (1998 - $310,678,000), and the diluted weighted average number of approximately 1,003,416,667 (1998 - 896,750,000) shares in issue during the year. It has been calculated after taking into account of outstanding share options as of 31st December, 1999. The effect of the dilutive potential ordinary shares resulting from the outstanding share options on the weighted average number of shares in issue during the year was 3,416,667 (1998 - 916,667) shares, which were deemed to be issued at no consideration if all outstanding share options have been exercised, on the date when the options were granted.
The Board of Directors has recommended the payment of a final dividend of HK$0.05 per share in respect of the year ended 31st December, 1999 to be approved at the forthcoming annual general meeting to be held on Monday, 12th June, 2000. This final dividend, if approved, will be paid on 30th June, 2000 in cash to shareholders whose names appear on the register of members on 12th June, 2000.
CLOSURE OF REGISTER OF MEMBERS
The register of members of the Company will be closed from Monday, 5th June, 2000 to Monday, 12th June, 2000, both days inclusive, during which period no transfer of shares will be registered. In order to qualify for the final dividend, all transfers of shares accompanied by the relevant share certificates and transfer forms must be lodged with the Company's Share Registrar in Hong Kong, Central Registration Hong Kong Limited, Shops 1712-1716, Hopewell Centre, 183 Queen's Road East, Hong Kong not later than 4:00 p.m. on Friday, 2nd June, 2000.
The Company has set up an Audit Committee. Members of the Committee are Mr. Yuen Pak Yiu, Philip, Mr. Lee Tsung Hei, David and Mr. Wong Shing Kay, Oliver. The principal duties of the Audit Committee include the review and supervision of the Company's financial reporting process and internal controls. During the year, the Committee met twice and provided advice and comments to the Board of Directors.
YEAR 2000 COMPLIANCE
The Group's Year 2000 Compliance programme and progress updates were disclosed in the 1998 annual report and the 1999 interim announcement. All plans relating to the Year 2000 issue were completed on schedule with all critical systems of the Group being Year 2000 compliant. The performance of these systems, whilst functioned properly, was closely monitored. No business disruption has been encountered by the Group before, during and after the turn of the century.
CODE OF BEST PRACTICE
In the opinion of the Directors, the Company had complied with 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 throughout the accounting year, except that the independent non-executive Directors of the Company are not appointed for specific terms. All Directors except for the Chairman, Deputy Chairman and Managing Director are subject to retirement by rotation at Annual General Meetings of the Company in accordance with the Company's Bye-laws.
PURCHASE, REDEMPTION AND SALE OF THE COMPANY'S LISTED SECURITIES
Neither the Company nor any of its subsidiaries has purchased, redeemed or sold any of the Company's listed securities during the year.
By Order of the Board
Chu Mang Yee
8th May, 2000, Hong Kong
|Sales Breakdown by Projects
The breakdown of property sales for the period under review is as follows:
Contracted Sales Sales/pre-sale GFA (RMB million) ('000 sq.m.) Gallopade Park 726 145 Fairview Garden 312 58 Huajing New City 236 44 Regal Court 119 12 Grandview Place 96 5 Jinan Garden 3 1 Total 1,492 265
Additional Interest Estimated Estimated attributable Attributable Project Location Site Area Total GFA to the Group GFA (sq.m.) (sq.m.) (sq.m.) Gallopade Tianhe Park District 179,667 563,345 95%* 140,836* Riverside Haizhu New City District 654,107 1,969,727 40%** 443,188* Pleasant Haizhu View Garden District 342,727+ 685,454 52% 246,416 Huanan Panyu 2,015,614 3,023,421 60% 1,814,053 New City Total 2,644,493
Total GPA attributable to the Group : 4,552,551 sq.m.
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