The Board of Directors of Sun Hung Kai Properties Limited announces the following audited consolidated figures for the Group for the year ended 30th June, 2003 with comparative figures for 2002:-

Note :

1. Segment Results

(a) The Company and its subsidiaries

The Group's turnover and contribution to profit from operations before finance cost by business segments are analysed as follows:

Other business activities comprise revenue and profit derived from other activities including property management, car parking and transport infrastructure management, logistics business, construction, financial services, telecommunications, internet infrastructure and enabling services.

Less than ten per cent of the operations of the Group in terms of turnover and operating results were carried on outside Hong Kong.

(b) Associates and jointly controlled entities

The Group's share of profits less losses of associates and jointly controlled entities by business segments is analysed as follows:

(c) Combined results of the Group and its share of results of associates and jointly controlled entities by business segments

2. Impairment of properties

The impairment represents provision for diminution in value of interest in property development projects of the Group and jointly controlled entities in the aggregate sum of HK$1,106 million (2002: nil) and an impairment of HK$123 million (2002: nil) made by SUNeVision Holdings Limited, the Group's subsidiary for revaluation deficit on its properties operating as internet data centres.

3. Net finance cost

Interest is capitalized at an average annual rate of approximately 2.1 per cent (2002: 2.9 per cent).

4. Impairment of investments

During the year, SUNeVision Holdings Limited, the Group's subsidiary made a HK$252 million (2002: HK$356 million) provision for impairment losses of its equity technology investments.

5. Taxation

(a) Hong Kong profits tax is provided at the rate of 17.5 per cent (2002: 16 per cent) based on the estimated assessable profits for the year.

(b) No provision for deferred taxation has been made as the aggregate effect of all timing differences is insignificant.

6. Earnings per share

The calculation of basic earnings per share is based on HK$6,584 million (2002: HK$8,519 million) being profit attributable to shareholders and on 2,400,907,362 shares in issue throughout both 2003 and 2002.

No diluted earnings per share is presented for the year ended 30th June 2003 and 30th June 2002 as there are no potential dilutive ordinary shares.

FINANCIAL REVIEW

Review of results

The Group's profit attributable to shareholders for the year ended 30th June 2003 was HK$6,584 million, a decrease of HK$1,935 million compared to HK$8,519 million achieved in the previous year. The results for the year under review included a provision of HK$1,106 million for diminution in value of the Group's interest in certain property development projects and impairment provisions, made by its subsidiary, SUNeVision, of HK$252 million for its equity technology investments and HK$123 million for revaluation deficit on its properties operating as internet data centres.

The Group's turnover for the year was HK$22,945 million, down by HK$2,428 million over the previous year. The decline was mostly due to decrease of HK$3,621 million in property sales turnover.

Profit generated from property sales, including share of property sales from joint ventures, was HK$3,694 million, a decrease of HK$1,143 million compared to the previous year. While sales at Park Central Phases 1 & 2 had made a substantial contribution to the Group's property development profit, the segment results was dragged by a lack of profit contribution from the sales at Park Island Phase 1. In light of the downward adjustments of property prices during the year, the Group had made an aggregate provision of HK$1,106 million for impairment in value of certain property development projects, mainly the remaining phases of Park Island and Ocean Shores.

Gross rental income amounted to HK$5,628 million, a decrease of HK$216 million compared to the previous year. Net rental income, including share of rental income from joint ventures amounted to HK$4,100 million, down by HK$332 million over the previous year. The decline was mostly attributed to the weak office rental market with both occupancies and achieved rents below the previous year. The results was also affected by the loss of rental income as a result of disposal of two non-core investment properties during the year. The Group's retail segment, which accounted for about 57% of the total rental income, showed a steady performance over the previous year.

Operating profit from hotel operation was HK$154 million, a decrease of HK$35 million compared to the previous year. The results were adversely affected by the SARS outbreak during the last three months of the financial year, which had caused a sharp fall in occupancy rates. Since the containment of the SARS and lifting of related travel warnings, occupancies have rebounded strongly and performance is expected to improve in the coming year.

Operating profit generated from the Group's other business activities increased by HK$252 million to HK$650 million. The increase was partly due to the consolidation of the pre-tax operating profit of HK$120 million from SmarTone since it became a subsidiary of the Group in January 2003. In addition, results from property management, SUNeVision and logistics business continued to improve over the previous year.

Other revenue, comprising mainly income from investment in securities and interest income from advances to joint venture companies, amounted to HK$339 million (2002 : HK$394 million). The decline was mainly due to reduced gains on disposal of marketable securities compared to the previous year.

Net finance cost for the year reduced significantly to HK$225 million from HK$566 million incurred in the previous year. This was a result of reduction in the Group's average borrowing level and the low interest rate environment.

During the year, the Group disposed of its 25% equity interests in two non-core commercial complexes in the New Territories generating a capital profit of HK$305 million. It also made a profit of HK$43 million (2002 : HK$48 million) from disposal of certain listed investments originally held for long-term investment purposes.

Share of pre-tax profit from associates and jointly controlled entities totalled HK$1,587 million (2002 : HK$1,717 million), of which HK$565 million (2002 : HK$782 million) was contributed from non-property related business. The major non-property associate is KMB which contributed a pre-tax profit of HK$398 million (2002 : HK$599 million). The Group had recognized, under equity accounting, its 30% attributable share of pre-tax profit of HK$84 million (2002: HK$35 million) from SmarTone up to January 2003. Since then, the results of SmarTone was fully consolidated in the Group's profit and loss account.

Financial Resources and Liquidity

(a) Net debt and gearing

As at 30th June 2003, the Group's total shareholders' funds totalled HK$121,721 million against HK$128,598 million at the previous year end. The decrease was mainly caused by the downward revaluation of HK$7,931 million of the Group's investment property portfolio.

The Group's financial position remains strong with a lower debt leverage and higher interest cover compared to the previous year. Gearing ratio at 30th June 2003, calculated on the basis of net debt to shareholders' funds, reduced to 10.9% from 15.6% at 30th June 2002. Interest cover, measured by the ratio of profit from operations to total net interest expenses including those capitalized, increased significantly to 13.2 times from 9.8 times for the previous year.

At 30th June 2003, the Group's gross borrowings totalled HK$22,127 million. Net debt, after deducting cash and bank deposits of HK$8,891 million, amounted to HK$13,236 million. The maturity profile of the Group's gross borrowings is set out as follows :

In addition, the Group has secured substantial committed and undrawn banking facilities, all of which are unsecured and mostly arranged on a medium to long term basis, which helps minimize the refinancing risk of its debts and provides the Group with strong financing flexibility.

With substantial committed banking facilities in place, continuous cash inflow from property sales and a solid base of recurrent income, the Group is in a strong liquidity position and has sufficient financial resources to satisfy its capital commitments and ongoing working capital requirements.

(b) Treasury policies

All the Group's financing and treasury activities are centrally managed and controlled at the corporate level. As at 30th June 2003, about 98% of the Group's borrowings were raised through its wholly-owned finance subsidiaries and the remaining 2% through operating subsidiaries.

The Group adopts a conservative policy on foreign exchange risk management. As at 30th June 2003, about 94% of the Group's borrowings were denominated in Hong Kong dollars, with the balance in US dollars mainly for the purpose of funding property projects in the Mainland. With its assets, liabilities and operational cash flows primarily denominated in Hong Kong dollars, the Group has no significant exposure to foreign exchange rate fluctuations.

The Group's borrowings are principally arranged on a floating rate basis in view of the present low interest rate environment. For the fixed rate notes issued by the Group, interest rate swaps have been used to convert them into floating rate debts. The use of financial derivative instruments is strictly controlled and solely for management of the Group's interest rate and foreign currency exchange rate exposures in connection with its borrowings. It is the Group's policy not to enter into derivative transactions for speculative purposes.

As at 30th June 2003, the Group had total outstanding interest rate swaps (to swap into floating rate debt) in the amount of HK$3,050 million and currency swaps (to hedge principal repayment of USD debt) in the amount of HK$234 million.

Acquisition of subsidiaries

In January 2003, the Group acquired an additional 21% interest in SmarTone at HK$8.5 per share, as a result of a Mandatory General Offer triggered by the Group electing to receive SmarTone's scrip dividend. A total sum of HK$1,051 million was paid by the Group for the general offer, raising its total interest in SmarTone to 51%. The Group has fully consolidated the results of SmarTone since it became the Group's subsidiary in January 2003. Profit contribution from SmarTone from January 2003 to 30th June 2003 consolidated in the Group's profit and loss account is analysed as follows:-

Charge of assets

As at 30th June 2003, certain bank deposits of Group's subsidiary, SmarTone, with the aggregate amount of HK$392 million were pledged for securing performance bonds related to 3G licence and some other guarantees issued by the banks.

Contingent liabilities

As at 30th June 2003, the Group had contingent liabilities in respect of guarantees for bank borrowings of joint venture companies and other guarantees in the aggregate amount of HK$4,021 million (2002 : HK$3,789 million).

DIVIDEND

The Directors have decided to recommend the payment of a final dividend of HK$1.00 per share in respect of the year ended 30th June, 2003. The proposed final dividend together with the interim dividend of HK$0.60 per share paid on 8th April, 2003, will make a total distribution of HK$1.60 per share for the year. The proposed final dividend, if approved at the forthcoming Annual General Meeting, will be payable in cash on 19th November, 2003 to the shareholders on the Register of Members as at 18th November, 2003.

CLOSING OF REGISTER OF MEMBERS

The Register of Members will be closed from 11th November, 2003 to 18th November, 2003 (both days inclusive). In order to establish entitlements to the proposed final dividend, all transfers accompanied by the relevant share certificates must be lodged with the Company's Share Registrars, Computershare Hong Kong Investor Services Limited, 17th Floor, Hopewell Centre, 183 Queen's Road East, Wanchai, Hong Kong not later than 4:00 p.m. on 10th November, 2003.

EMPLOYEES

As of 30th June 2003, the Group had about 20,000 employees. The Group provides competitive remuneration packages to employees relative to the sector in which it operates and individual qualifications. Incentive schemes such as discretionary bonuses and other merit payments reward employees based on performance. The Group provides a comprehensive benefit package and career development opportunities, including retirement schemes, medical benefits, and both in-house and external training programmes for all staff.

PUBLICATION OF FURTHER INFORMATION ON THE STOCK EXCHANGE'S WEBSITE

All the financial and other related information of the Company required by paragraphs 45(1) to 45(3) of Appendix 16 of the Listing Rules of The Stock Exchange of Hong Kong Limited will be published on the Exchange's website.

By Order of the Board
Lai Ho-kai, Ernest
Company Secretary

Hong Kong, 25th September, 2003

© Copyright 1996-2012 irasia.com Ltd. All rights reserved.

DISCLAIMER: irasia.com Ltd makes no guarantee as to the accuracy or completeness of any information provided on this website. Under no circumstances shall irasia.com Ltd be liable for damages resulting from the use of the information provided on this website. TRADEMARK & COPYRIGHT: All intellectual property rights subsisting in the contents of this website belong to irasia.com Ltd or have been lawfully licensed to irasia.com Ltd for use on this website. All rights under applicable laws are hereby reserved. Reproduction of this website in whole or in part without the express written permission of irasia.com Ltd is strictly prohibited. TERMS OF USE: Please read the Terms of Use governing the use of our website.