CAI Corp — Interim / Quarterly Report 2004

Aug 10, 2004

HARBOUR CENTRE DEVELOPMENT LIMITED

Interim Results Announcement

for the half-year period ended 30th June, 2004

GROUP RESULTS

The unaudited Group profit attributable to Shareholders for the six months ended 30th June, 2004 amounted to HK$133.6 million, an increase of 130.3% as compared with HK$58.0 million reported for the corresponding period last year. Earnings per share were 42 cents.

The interim results of last year were severely affected by SARS. For the first half of 2003 which was affected by the impact of SARS, the Hotel and restaurants segment recorded a loss of HK$4.5 million, as compared to a profit of HK$48.5 million for the period under review and to a profit of HK$39.0 million achieved in the first half of 2002.

INTERIM DIVIDEND

The Board has declared an interim dividend in respect of the half-year period ended 30th June, 2004 of 5.0 cents (2003: 5.0 cents) per share, payable on Thursday, 7th October, 2004 to Shareholders on record as at 30th September, 2004.

CONSOLIDATED PROFIT AND LOSS ACCOUNT

FOR THE SIX MONTHS ENDED 30TH JUNE, 2004

				Unaudited 30/6/2004		Unaudited 30/6/2003
				HK$		HK$
		Note		Million		Million
Turnover		(1)		209.9		115.5
Direct costs and operating expenses				(92.6)		(77.7)
Selling and marketing expenses				(8.5)		(10.0)
Depreciation				(6.1)		(5.9)
Administrative and corporate expenses				(2.1)		(2.6)
Operating profit		(1)		100.6		19.3
Non-operating items		(2)		7.5		20.4
Share of profits less losses of associates				47.1		19.8
Profit before taxation				155.2		59.5
Taxation		(3)		(21.6)		(1.5)
Profit attributable to shareholders				133.6		58.0
Proposed interim dividends				15.8		15.8
Earnings per share		(4)		HK$0.42		HK$0.18
Proposed interim dividends per share				HK$0.05		HK$0.05

NOTES TO THE ACCOUNTS

1. Revenue and operating profit

(a) Segment information

Analysis of the Group’s segment revenue and segment result by business segments and geographical segments for the six months ended 30th June is as follows:

1. Business segments

	Hotel and restaurants				Property				Investments				Total
	30/6/2004		30/6/2003		30/6/2004		30/6/2003		30/6/2004		30/6/2003		30/6/2004		30/6/2003
	HK$		HK$		HK$		HK$		HK$		HK$		HK$		HK$
	Million		Million		Million		Million		Million		Million		Million		Million
Segment revenue	154.7		83.1		35.6		12.9		19.6		19.5		209.9		115.5
Segment results	48.5		(4.5)		31.0		4.3		21.1		19.5		100.6		19.3
Non-operating items	-		-		-		-		7.5		20.4		7.5		20.4
Share of profits less
losses of associates	-		-		47.1		19.4		-		0.4		47.1		19.8
Profit before taxation													155.2		59.5
Taxation													(21.6)		(1.5)
Profit attributable to
shareholders													133.6		58.0
Depreciation for the
period	6.1		5.9		-		-		-		-		6.1		5.9

1. Geographical segments

	Segment revenue				Segment results
	30/6/2004		30/6/2003		30/6/2004		30/6/2003
	HK$		HK$		HK$		HK$
	Million		Million		Million		Million
Hong Kong	198.8		104.4		89.5		8.2
Singapore	11.1		11.1		11.1		11.1
	209.9		115.5		100.6		19.3

No inter-segment revenue was recorded during the period.

1. Operating profit is arrived at after charging:

	30/6/2004		30/6/2003
	HK$		HK$
	Million		Million
Cost of inventories sold	13.2		9.2

1. Non-operating items

	30/6/2004		30/6/2003
	HK$		HK$
	Million		Million
Release of deferred income	17.3		20.4
Loss on disposal of investment securities	(9.8)		-
	7.5		20.4

1. Taxation

Hong Kong profits tax has been provided at the rate of 17.5% (2003: 17.5%) on the estimated assessable profit for the period.

	30/6/2004		30/6/2003
	HK$		HK$
	Million		Million
Current tax – provision for Hong Kong profits tax
Tax for the period	15.7		3.5
Overprovision in respect of prior years	-		(4.1)
	15.7		(0.6)
Deferred tax
Origination and reversal of temporary differences	0.2		1.2
Effect of increase in tax rate on deferred tax balances at 1st January	-		0.9
	0.2		2.1
Share of associates’ Hong Kong profits tax for the period	5.7		-
Total tax charge	21.6		1.5

1. Earnings per share

The calculation of earnings per share is based on the profit for the period of HK$133.6 million (2003: HK$58.0 million) and on 315.0 million (2003: 315.0 million) ordinary shares in issue during the period. For the period under review and the preceding comparative period, there is no difference between the basic and diluted earnings per share.

1. The unaudited interim accounts for the six months ended 30th June, 2004 have been reviewed by the audit committee of the Company.

COMMENTARY ON INTERIM RESULTS

(I) Review of 2004 Interim Results and Segmental Performance

The unaudited Group profit attributable to shareholders for the six months ended 30th June, 2004 amounted to HK$133.6 million against HK$58.0 million for the corresponding period last year. Earnings per share were HK$0.42 (2003: HK$0.18).

The sharp improvement in 2004 interim results was mainly attributable to the increase in profit contribution from both the Hotel Segment and Property Segment which had attained strong recovery in businesses subsequent to the SARS period last year.

The Group’s turnover for the period under review was HK$209.9 million, an increase by 82% from HK$115.5 million earned in six months in 2003. Operating profit jumped to HK$100.6 million from HK$19.3 million reported in the comparative period last year.

The Marco Polo Hongkong Hotel recorded higher occupancy levels and average room rates for the period under review. Total revenue and operating profit increased to HK$154.7 million and HK$48.5 million in 2004 from HK$83.1 million and a loss of HK$4.5 million in the first half of 2003, respectively. Mainly due to the low results base caused by SARS last year, the hotel’s operating profit increased by HK$53 million during the six-month period.

After the completion of the upgrading project for the retail podium within The Marco Polo Hongkong Hotel in mid-2003, the occupancy has gradually returned to a steady level. Consequently, the Property Segment rental revenue and operating profit increased to HK$35.6 million and HK$31.0 million in 2004 from HK$12.9 million and HK$4.3 million in 2003, respectively.

Profit before taxation for the period under review included deferred interest income of HK$17.3 million, which was earned from a loan advanced to an associate for the Sorrento development and recognised as in previous years on the basis of the sale progress of the development. It also covered a net loss of HK$9.8 million on disposal of certain investment securities during the period.

Share of profits of associates in the first half of 2004 was HK$47.1 million, largely contributed from sale of Sorrento units held through an associate, compared to the HK$19.8 million recorded in the corresponding period last year.

Taxation charge for the period under review was HK$21.6 million, compared to HK$1.5 million recorded in the same period last year. The increase is mainly due to increase in operating profit.

(II) Liquidity and Financial Resources

At 30th June, 2004, the Group’s shareholders’ funds was HK$4,749.5 million or HK$15.08 per share, grew from HK$4,686.6 million or HK$14.88 per share at 31stDecember, 2003, respectively.

As at 30th June, 2004, the Group had net cash of HK$1,670.4 million, against HK$1,277.4 million as at 31st December, 2003. The increase was mainly generated from the Group’s operating income and the distribution of cash by the associate undertaking the Sorrento development. Most of the cash surpluses were placed on deposit. In addition, the Group maintained a portfolio of listed investments with market value aggregating HK$524.1 million at the period end. The investment revaluation surplus decreased by HK$32.9 million following a decline in market value of the portfolio, resulting in a deficit of HK$23.7 million at 30th June, 2004. The performance of the portfolio is generally in line with the trend of the stock markets.

At the period end, the Group had no significant exposure to foreign exchange rate fluctuations.

(III) Employees

The Group has approximately 448 employees working at the Group’s hotel. Employees are remunerated according to nature of the job and market trends, with a built-in merit component incorporated in the annual increment to reward and motivate individual performance. Total staff costs for six months ended 30th June, 2004 amounted to HK$42.8 million.

BOOK CLOSURE

The Register of Members will be closed from Friday, 24th September, 2004 to Thursday, 30th September, 2004, both days inclusive, during which period no transfer of shares of the Company can be registered. In order to qualify for the abovementioned interim dividend, all transfers, accompanied by the relevant share certificates, must be lodged with the Company’s Registrars, Tengis Limited, at Ground Floor, Bank of East Asia Harbour View Centre, 56 Gloucester Road, Wanchai, Hong Kong, not later than 4:30 p.m. on Thursday, 23rd September, 2004.

PUBLICATION OF FURTHER INFORMATION ON THE STOCK EXCHANGE’S WEBSITE

All the financial and other related information of the Company required by paragraphs 46(1) to 46(6) of Appendix 16 of the Listing Rules in force prior to 31st March, 2004, which remain applicable to results announcement in respect of accounting periods commencing before 1st July, 2004 under the transitional arrangements, will be published on the Stock Exchange’s website in due course.

By Order of the Board

Wilson W. S. Chan

Secretary

Hong Kong, 10th August, 2004

As at the date of this announcement, the Board of Directors of the Company comprises Mr. Gonzaga W. J. Li, Mr. Brian S. Forsgate, Mr. C. C. Haung, Mr. T. Y. Ng, Mr. H. M. V. de Lacy Staunton and Mr. Paul Y. C. Tsui.

“Please also refer to the published version of this announcement in the South China Morning Post and Hong Kong Economic Journal as of 11th August, 2004.”