CTF Services Limited — Earnings Release 2001

Oct 11, 2001

ANNOUNCEMENT OF FINAL RESULTS

FOR THE YEAR ENDED 30TH JUNE 2001

Results

The board of directors (the "Directors") of Pacific Ports Company Limited (the "Company") announces the audited consolidated results of the Company and its subsidiaries (the "Group") for the year ended 30th June 2001 (the "year") together with comparative figures for the 18-month period from 1st January 1999 to 30th June 2000, as follows:

Period from

Year ended 1.1.1999 to

30.6.2001 30.6.2000

Note HK$'000 HK$'000

Turnover 1 135,861 149,668

Other revenues 6,421 8,988

Staff costs (48,676 ) (53,169 )

Depreciation (43,558 ) (55,764 )

Other operating expenses (net) (99,690 ) (104,700 )

Operating loss 2 (49,642 ) (54,977 )

Finance costs (4,592 ) (6,989 )

Share of results of

Jointly controlled entities 151,044 47,262

Associated companies 244,042 83,190

Profit before taxation 340,852 68,486

Taxation 3 (75,080 ) (18,012 )

Profit after taxation 265,772 50,474

Minority interests 4 10,366 15,319

Profit attributable to shareholders 276,138 65,793

Transfer to other reserves 415 -

Dividend 5 133,878 38,351

Earnings per share 6

Basic HK6.91 cents HK2.58 cents

Diluted HK5.26 cents HK2.58 cents

Notes:

1. Turnover

The Group is principally engaged in the investment in and the development, operation and management of terminals in seaports and riverports and related business. Turnover represents income from cargo and container handling and storage, and road freight services, net of business tax. An analysis of the Group's turnover and contribution to operating profit/(loss) by principal activities for the year/period is as follows:

Turnover Operating profit/(loss)

Period from Period from

Year ended 1.1.1999 Year ended 1.1.1999

30.6.2001 to 30.6.2000 30.6.2001 to 30.6.2000

HK$'000 HK$'000 HK$'000 HK$'000

Principal activities:

Cargo handling and storage 57,648 74,322 (15,150 ) (28,637 )

Container handling and storage 71,063 67,443 11,067 11,387

Road freight services 7,150 7,903 (2,382 ) (2,240 )

Other overheads - - (43,177 ) (35,487 )

135,861 149,668 (49,642 ) (54,977 )

The principal market of the Group is located in the People's Republic of China (the "PRC").

2. Operating loss

Operating loss is stated after charging cost of services rendered of HK$103,662,000 (Period from 1.1.1999 to 30.6.2000: HK$129,216,000).

3. Taxation

No provision for Hong Kong profits tax has been made as the Group has no estimated assessable profit for the year (Period from 1.1.1999 to 30.6.2000: HK$Nil). Taxation on profits outside Hong Kong has been calculated on the estimated assessable profit for the year/period at the rates of taxation prevailing in the countries in which the Group operates. Certain subsidiaries operating in the PRC are entitled to a 100% tax relief from corporate income tax for the year/period, accordingly no corporate income tax has been made for the estimated assessable profit of those subsidiaries for the year/period.

Period from

Year ended 1.1.1999

30.6.2001 to 30.6.2000

HK$'000 HK$'000

Company and subsidiaries

PRC taxation 157 -

Share of taxation attributable to:

Jointly controlled entities

Hong Kong profits tax 22,899 6,100

Associated companies

Hong Kong profits tax 51,887 11,912

PRC taxation 137 -

75,080 18,012

There was no material unprovided deferred tax charge for the year (Period from 1.1.1999 to 30.6.2000: HK$Nil).

4. Minority interests

The minority interests' share of losses less profits of the Group's non-wholly owned subsidiaries amounted to HK$10,366,000 for the year ended 30th June 2001 (Period from 1.1.1999 to 30.6.2000: HK$15,319,000).

5. Dividend

Period from

Year ended 1.1.1999

30.6.2001 to 30.6.2000

HK$'000 HK$'000

4% cumulative convertible redeemable preference shares 133,878 38,351

6. Earnings per share

The calculation of basic earnings per share is based on the Group's profit attributable to shareholders of HK$276,138,000 (Period from 1.1.1999 to 30.6.2000: HK$65,793,000) less preference share dividend of HK$133,878,000 (Period from 1.1.1999 to 30.6.2000: HK$38,351,000) and the weighted average of 2,059,968,000 (2000: 1,064,388,230) ordinary shares in issue during the year/period.

The diluted earnings per share for the year ended 30th June 2001 is based on the Group's profit attributable to shareholders of HK$276,138,000 and 5,253,622,306 ordinary shares which is the weighted average number of 2,059,968,000 of ordinary shares in issue during the year plus the weighted average of 3,193,654,306 ordinary shares deemed to be issued on the conversion of all preference shares. The conversion of share options is not dilutive as the exercise price of the Company's outstanding options is higher than the fair value per ordinary share for the current year.

The diluted earnings per share for the period from 1st January 1999 to 30th June 2000 is based on the Group's profit attributable to shareholders of HK$65,793,000 less preference share dividend of HK$38,351,000 and 1,064,575,810 ordinary shares which is the weighted average number of 1,064,388,230 of ordinary shares in issue during the prior period and 187,580 ordinary shares deemed to be issued at no consideration if all outstanding share options have been exercised. The conversion of preference shares is anti-dilutive in the prior period.

FINAL DIVIDEND

The Directors have resolved not to recommend the payment of a final dividend to the ordinary shareholders for the year ended 30th June 2001 (Period from 1.1.1999 to 30.6.2000: HK$Nil).

FINANCIAL REVIEW

This is the second set of final financial results since the change of the year-end reporting date from 31st December to 30th June. The audited financial results for the last period covered the 18-month period from 1st January 1999 to 30th June 2000 (the "2000 period"). In addition, the unaudited results for the 12 months ended 30th June 2000 ("FY2000") is presented for comparison purposes.

The net profit attributable to shareholders of the Group rose to HK$276.1 million for the year, a significant improvement over a net profit attributable to shareholders of HK$65.8 million for the 2000 period and HK$81.7 million for FY2000. There were two major reasons for the improvement: the significant improved contribution from Xiamen projects and the full-year contribution of the share of net profit attributable to the port and port-related assets acquired from New World Infrastructure Limited ("NWI") in March 2000.

Earnings per share reached HK$0.0691 for the year, significantly improved over the earnings per share of HK$0.0258 for the 2000 period.

Segment Analysis

The Group's turnover increased to HK$135.9 million for the year, a 33% increase over FY2000.

The major contributor to the increase in turnover was Xiamen container handling operations, which reported a turnover of HK$71.1 million for the year, a 46% increase over FY2000.

Turnover attributable to Nanjing's bulk-cargo handling operations reached HK$57.6 million, some 21% higher than in FY2000.

Road freight operations grew satisfactorily with turnover increasing by 22% over FY2000.

The profitability of various business segments was mixed. Container handling and storage contributed around 51% of the net profit, warehousing contributed 53% while bulk-cargo handling and storage suffered a loss equivalent to 3% of the net profit. The road freight segment reported a loss, but the amount was insignificant.

Project Performance

Hong Kong

Hong Kong remains the Group's main source of Attributable Operating Profit ("AOP"). CSX World Terminals Hong Kong Limited ("CSXWT", formerly Sea-Land Orient Terminals Limited) and ATL Logistics Centre Hong Kong Limited ("ATL", formerly Asia Terminals Limited) contributed a combined AOP of HK$309.3 million, compared to an AOP of HK$108.9 million for FY2000. The significant increase of AOP was mainly due to full-year contributions from these two projects. Growth in real terms arising from the accession of China to World Trade Organisation ("WTO") is expected in the years to come.

Xiamen

Xiamen Xiang Yu Quay Co., Ltd. reported an AOP of HK$19.6 million for the year. An increase of 100% compared to an AOP of HK$9.8 million for FY2000. The significant increase of AOP was mainly due to higher throughput achieved as a larger customer base was established after over three years of operations since commencement.

Xiamen Xiangyu Free Trade Zone Huijian Quay Co., Ltd. reported an Attributable Operating Loss ("AOL") of HK$4.3 million, representing pre-operating expenses incurred for the year. With commercial operations to commence in the near future, the contribution to turnover of the container handling operations will become more significant.

Xiamen Xinyuan Container Terminal Co., Ltd. reported an AOP of HK$1.3 million for the year, a turnaround from AOL of HK$0.3 million in FY2000. The improvement in the operating results was mainly due to the implementation of new management policy during the course of year.

Xiamen New World Xiangyu Warehouse & Processing Zone Limited ("WPZ") reported an AOL of HK$5.2 million for the year, compared to an AOL of HK$5.1 million in FY2000. Similar to FY2000, the AOL was primarily due to the amortisation charge of the land use rights. While WPZ was loss making, it yielded positive cash flow.

Tianjin

Sea-Land Orient (Tianjin) Container Terminals Co., Limited ("SLOTT") contributed an AOP to the Group of HK$15.2 million for the year. The significant increase of AOP compared to FY2000 was mainly due to full-year contributions in this year. Given Tianjin's rank as the fourth largest container port in China, its AOP contribution is expected to rise further.

Nanjing

Nanjing Huining Wharfs Co., Ltd. reported an AOL of HK$10.6 million for the year, compared to HK$14.4 million in FY2000. The improvement in performance was mainly due to the handling of more high-yield minerals such as copper and phosphate with high tariffs during the year.

Suzhou

The road freight business of Suzhou Huisu International Container Freight Wharfs Co., Ltd. reported an AOL of HK$1.6 million for the year. The AOL was HK$1.0 million for FY2000, but performance is expected to improve with the commencement of inland river transportation by first quarter of 2002.

OUTLOOK for 2002

After three years of restructuring and two years of growing profitability, the Group is in a position to expand on a solid business foundation. The smooth integration of NWI port assets into the Company fold allows the Group to increase its pace of growth and leverage off substantial Hong Kong-China synergies in the development of regional and global business.

The Company is the Greater China flagship of its main shareholders - NWI and The Asian Infrastructure Fund - in terms of port development, cargo handling and trucking. While the Group has aspirations in global markets, its focus is to capture an increasing share of Greater China trade flows. With WTO on the horizon the China port sector is prepared for an era of substantial expansion. Given the low containerisation rate of Mainland China's cargo handling market, the opportunity for world-class port operators and cargo handlers is impressive.

Nonetheless, the repercussions of the September 11 Incident in New York are yet to be fully understood on global trade flows. While a slow-down in export volumes is already noticeable as the global recession begins to take its toll, the Group takes comfort in the fact that China continues to grow on the basis of internal expansion. Overall, it is the ongoing prosperity of China and the nation's past record in weathering the Asian Crisis that bodes well for port activity. In addition, during this slower period, the Group makes an effort to modernise its operations and build its technology base in order to improve efficiency and productivity.

The container handling and storage segment is expected to remain a key AOP driver due to the growth of containerisation in the PRC. Hong Kong will remain a major AOP contributor as the gateway to China and due to the strong presence of CSXWT and ATL. Meanwhile, improved relations with Taiwan and the introduction of the Three Links Policy is an important factor for the growth of Xiamen Port operations. With better AOP performance from SLOTT and increased activity in Xiamen, the Group is prepared to meet the challenge.

FINANCIAL RESOURCES

The total shareholders' funds of the Group at 30th June 2001 reached HK$3.5 billion, an increase of 4% over 30th June 2000. The Group is essentially debt-free with a Debt to Equity Ratio of 0.1%, as compared to 0.4% at 30th June 2000. The cash flow surplus is expected to continue over next year.

EMPLOYEES

As at 30th June 2001, the Group employed around 1,600 employees in Hong Kong and the PRC. Remuneration policies are reviewed yearly and remuneration packages are structured to take into account the level and composition of pay and the general market conditions in the respective cities and business in which the Group operates. Apart from pension funds, employees are awarded annual bonuses and share options based on individual performance and market practice. Structured programs are offered for staff training and development.

PURCHASE, SALE OR REDEMPTION OF THE COMPANY'S LISTED SECURITIES

The Company has not redeemed any of its shares during the year. Neither the Company, nor any of its subsidiaries has purchased or sold any of the Company's listed securities during the year.

PUBLICATION OF DETAILED ANNUAL RESULTS ON THE STOCK EXCHANGE'S WEBSITE

All the information of the annual results of the Group for the year ended 30th June 2001 required by paragraphs 45(1) to 45(3) of Appendix 16 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the "Stock Exchange") will be published on the Stock Exchange's website in due course.

Dr. Cheng Kar-Shun, Henry

Chairman

Hong Kong, 10th October 2001

NOTICE OF ANNUAL GENERAL MEETING

NOTICE IS HEREBY GIVEN that the Annual General Meeting of shareholders of Pacific Ports Company Limited (the "Company") will be held at Meeting Room 406, Level 4, Hong Kong Convention and Exhibition Centre Phase I, 1 Expo Drive, Wanchai, Hong Kong on Thursday, 6th December 2001 at 10:30 a.m. for the following purposes:

As Ordinary Business:

1. To receive and consider the audited Financial Statements and the Reports of the Directors and the Auditors for the year ended 30th June 2001.

2. To re-elect retiring Directors and to authorise the Board of Directors to fix the Directors' remuneration.

3. To appoint auditors and to authorise the Board of Directors to fix their remuneration.

As Special Business:

1. To consider and, if thought fit, to pass with or without amendments, the following resolution as Ordinary Resolution No. I:

"THAT conditional on the granting by the Listing Committee of The Stock Exchange of Hong Kong Limited of approval of the share option scheme (the "2001 Share Option Scheme", a copy of which has been as circulated to shareholders and now tabled before the meeting and marked "A" and signed by the Chairman for the purpose of identification), the subsequent granting of options under the 2001 Share Option Scheme and the listing of and permission to deal in any shares of the Company which may be issued pursuant to the exercise of the options granted under the 2001 Share Option Scheme, the approval of the 2001 Share Option Scheme by the shareholders at the respective annual general meetings of New World Infrastructure Limited, the Company's immediate holding company and New World Development Company Limited, the Company's ultimate holding company, the 2001 Share Option Scheme be and is hereby approved and adopted and that the Directors of the Company be and are hereby authorised to implement the same and to issue and allot shares to any director and/or employee of the Company and/or its subsidiaries pursuant thereto."

1. To consider and, if thought fit, to pass with or without amendments, the following resolution as Ordinary Resolution No. II:

"THAT:

(a) subject to paragraph (c) of this Resolution, the exercise by the Directors during the Relevant Period (as hereinafter defined) of all the powers of the Company to allot, issue and deal with additional shares in the capital of the Company or securities convertible into such shares or options, warrants, or similar rights to subscribe for any shares or convertible securities and to make or grant offers, agreements and options which would or might require the exercise of such powers be and is hereby generally and unconditionally approved;

(b) the approval in paragraph (a) of this Resolution shall authorise the Directors of the Company during the Relevant Period to make or grant offers, agreements and options which might require the exercise of such power after the end of the Relevant Period;

(c) the aggregate nominal value of share capital allotted or agreed conditionally or unconditionally to be allotted (whether pursuant to an option or otherwise) and issued by the Directors of the Company pursuant to the approval granted in paragraph (a) of this Resolution, otherwise than pursuant to (i) a Right Issue (as hereinafter defined); (ii) the exercise of any conversion rights attaching to any securities which are convertible into shares of the Company; (iii) the exercise of the rights under any option scheme or similar arrangement for the time being adopted for the grant or issue to directors and/or employees of the Company and/or any of its subsidiaries of options to subscribe for, or rights to acquire, shares of the Company; or (iv) any issue of shares as scrip dividends or similar arrangement providing for the allotment of shares in lieu of the whole or part of a dividend on shares of the Company in accordance with the Bye-laws of the Company; shall not exceed 20% of the aggregate nominal amount of the share capital of the Company in issue as at the date of passing of this Resolution and the approval granted in paragraph (a) shall be limited accordingly; and

(d) for the purpose of this Resolution:

"Relevant Period" means the period from the passing of this Resolution until whichever is the earlier of:-

(i) the conclusion of the next annual general meeting of the Company;

(ii) the expiration of the period within which the next annual general meeting of the Company is required by the Bye-laws of the Company or any applicable laws to be held; and

(iii) the revocation or variation of the authority given under this Resolution by an ordinary resolution of the shareholders of the Company in general meeting.

"Right Issue" means an offer of shares in the Company open for a period fixed by the Directors to holders of shares on the register on a fixed record date in proportion to their then holdings of such shares (subject to such exclusions or other arrangements as the Directors may deem necessary or expedient in relation to fractional entitlements or having regard to any restrictions or obligations under the laws of, or the requirements of any recognised regulatory body or any stock exchange, in any territory outside Hong Kong)."

1. To consider and, if thought fit, to pass with or without amendments, the following resolution as Ordinary Resolution No. III:

"THAT:

(a) subject to paragraph (b) of this Resolution, the exercise by the Directors during the Relevant Period (as hereinafter defined) of all the powers of the Company to repurchase its own shares on The Stock Exchange of Hong Kong Limited (the "Stock Exchange") or on any other stock exchange on which the shares of the Company may be listed and recognised by the Securities and Futures Commission and the Stock Exchange for this purpose, subject to and in accordance with all applicable laws and the requirements of the Rules Governing the Listing of Securities on the Stock Exchange or that of any other stock exchange as amended from time to time, be and is hereby generally and unconditionally approved;

(b) the aggregate nominal amount of shares which may be repurchased by the Company pursuant to the approval in paragraph (a) of this Resolution shall not exceed 10% of the aggregate nominal amount of the share capital of the Company in issue as at the date of the passing of this Resolution and the authority granted pursuant to paragraph (a) of this Resolution shall be limited accordingly; and

(c) for the purpose of this Resolution:

"Relevant Period" means the period from the passing of this Resolution until whichever is the earlier of:

(i) the conclusion of the next annual general meeting of the Company;

(ii) the expiration of the period within which the next annual general meeting of the Company is required by the Bye-laws of the Company or any applicable laws to be held; and

(iii) the revocation or variation of the authority given under this Resolution by an ordinary resolution of the shareholders of the Company in general meeting."

1. To consider and, if thought fit, to pass with or without amendments, the following resolution as Ordinary Resolution No. IV:

"THAT conditional upon the Ordinary Resolution Nos. II and III being passed, the general mandate granted to the Directors pursuant to Ordinary Resolution No. II be and is hereby extended by the addition to the aggregate nominal amount of the share capital of the Company which may be allotted by the Directors pursuant to such general mandate, an amount representing the aggregate nominal amount of the shares repurchased by the Company under the authority granted pursuant to Ordinary Resolution No. III provided that such amount shall not exceed 10% of the aggregate nominal amount of the share capital of the Company in issue as at the date of the passing of this Resolution."

By Order of the Board

Wong Wing-Lun, Alan

Company Secretary

Hong Kong, 10th October 2001

Principal Place of Business in Hong Kong:

21/F, New World Tower 2

18 Queen's Road Central

Hong Kong

Notes:

1. Any member of the Company entitled to attend and vote at the meeting is entitled to appoint one or more proxies to attend and vote in his stead. A proxy need not be a member of the Company.

2. In order to be valid, the instrument appointing a proxy, together with the power of attorney or other authority, if any, under which it is signed or a notarially certified copy thereof, must be deposited at the Company's branch registrars in Hong Kong, Standard Registrars Limited at 5/F, Wing On Centre, 111 Connaught Road Central, Hong Kong not less than 48 hours before the appointed time for holding the meeting or any adjournment thereof.

3. An explanatory statement containing further details in respect of Ordinary Resolution Nos. I and III will be despatched to the shareholders of the Company together with the 2001 Annual Report.

"Please also refer to the published version of this announcement in the South China Morning Post"