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Harbour Centre Development Limited — Annual Report 2015
Jun 24, 2015
48902_rns_2015-06-24_aa872668-8982-4ae4-bd4f-a5dc7f4d0d6f.pdf
Annual Report
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Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.
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FAR EAST CONSORTIUM INTERNATIONAL LIMITED 遠東發展有限公司[*]
(Incorporated in the Cayman Islands with limited liability) Website: http://www.fecil.com.hk
(Stock Code: 35)
ANNOUNCEMENT OF RESULTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2015
RESULTS
The board of directors (the “Board”) of Far East Consortium International Limited (the “Company”) is pleased to announce the audited consolidated results of the Company and its subsidiaries (collectively, the “Group”) for the financial year ended 31 March 2015 (“FY2015”) as follows:
FINANCIAL HIGHLIGHTS
-
Revenue increased by 25.7% to approximately HK$5.1 billion and gross profit increased by 25.3% to approximately HK$1.9 billion. Gross profit margin was maintained at a similar level at 38.1% as compared with previous financial year.
-
Net profit attributable to shareholder amounted to approximately HK$957 million, an increase of 4.6% over the previous financial year. Adjusting for a one-time gain of approximately HK$259 million from a compulsory acquisition of a property in Singapore in the previous financial year, net profit for the FY2015 increased by 46.1%. Earnings per share amounted to HK$0.51.
-
Cumulative presales value of properties under development amounted to approximately HK$6.5 billion[(i)] as at 31 March 2015.
-
Net assets attributable to shareholders was HK$4.78 per share as at 31 March 2015. Adjusting for hotel revaluation surplus, net assets attributable to shareholders was HK$9.02 per share[(ii)] .
-
Net gearing ratio was at 29.8%[(ii)(iii)] and total cash and investment securities balances as at 31 March 2015 was at approximately HK$3.5 billion.
-
Final dividend of HK$0.13 per share was recommended for FY2015 (2014: HK$0.12 per share). The full year dividend was HK$0.16 per share (2014: HK$0.15 per share), representing a dividend payout ratio of 31.4%.
- For identification purposes only
– 1 –
Notes:
-
(i) Comprises approximately HK$4.8 billion contracted presales and approximately HK$1.7 billon registered presales of The Towers at Elizabeth Quay, Perth, Australia. A registered presale is an expression of interest for an apartment where a booking fee has been paid to reserve an apartment. No sale and purchase agreement has been entered into and there is no assurance that this expression of interest will lead to the eventual entering of a sale and purchase agreement for the reserved apartment.
-
(ii) Revaluation surplus on hotel assets of approximately HK$10,976 million was based on independent valuation carried out as at 31 March 2015 and was not recognized in the Company’s consolidated financial statements, but was adjusted for calculation of net asset value per share and net gearing ratio.
The Group is carrying out a valuation of the Group’s real estate assets and the updated valuation will be included in a circular for the privatization proposal for Dorsett Hospitality International Limited (“Dorsett”).
- (iii) Net gearing ratio is calculated by dividing total bank loans and bonds less bank and cash balances, and investment securities by the carrying amount of total equity and revaluation surplus on hotel assets.
– 2 –
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
FOR THE YEAR ENDED 31 MARCH 2015
| NOTES Revenue Cost of sales and services Depreciation and amortisation of hotel and car park assets Gross profit Other income Gain on disposal of a subsidiary Other gains and losses 4 Administrative expenses – Hotel operations and management – Others Pre-opening expenses – Hotel operations and management Selling and marketing expenses Share of results of associates Share of results of joint ventures Finance costs 5 Profit before tax Income tax expense 6 Profit for the year 7 Attributable to: Shareholders of the Company Non-controlling interests Earnings per share Basic_(HK cents) _8 Diluted_(HK cents)_ |
2015 HK$’000 5,109,780 (2,884,377) (278,985) 1,946,418 38,794 – 289,549 (402,857) (239,140) (14,080) (92,661) 16,746 9,627 (224,042) 1,328,354 (330,406) 997,948 956,539 41,409 997,948 51 51 |
2014 HK$’000 4,066,494 (2,298,312) (215,210) 1,552,972 41,176 66,652 484,767 (317,335) (221,092) (13,596) (69,714) 6,360 (2,904) (281,400) 1,245,886 (219,851) 1,026,035 914,057 111,978 1,026,035 51 51 |
|---|---|---|
– 3 –
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 MARCH 2015
| Profit for the year Other comprehensive (expense) income for the year Items that may be subsequently reclassified to profit or loss: Exchange differences arising on translation of foreign operations Revaluation increase on available-for-sale investments Fair value adjustment on cross currency swap contracts designated as cash flow hedge Reclassification to profit or loss on disposal of available-for-sale investments Reclassification of hedging reserve to profit or loss Other comprehensive expense for the year Total comprehensive income for the year Total comprehensive income attributable to: Shareholders of the Company Non-controlling interests |
2015 HK$’000 997,948 (446,089) 7 (117,029) 235 – (562,876) 435,072 481,724 (46,652) 435,072 |
2014 HK$’000 1,026,035 (162,406) 694 51,550 2,768 (27,329) (134,723) 891,312 782,291 109,021 891,312 |
|---|---|---|
– 4 –
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AT 31 MARCH 2015
| NOTES Non-current Assets Investment properties Property, plant and equipment Prepaid lease payments Goodwill Interests in associates Interests in joint ventures Investment securities Derivative financial instruments designated as hedging instruments Deposits for acquisition of property, plant and equipment Amounts due from associates Amounts due from joint ventures Amount due from an investee company Other receivables Pledged deposits Deferred tax assets Current Assets Properties for sale Completed properties Properties for/under development Other inventories Prepaid lease payments Debtors, deposits and prepayments 10 Other receivables Tax recoverable Investment securities Derivative financial instruments Pledged deposits Restricted bank deposits Deposit in a financial institution Bank balances and cash |
2015 HK$’000 3,154,315 7,491,993 541,476 68,400 326,510 40,708 692 – 130,385 70,734 27,248 119,995 25,319 2,564 30,537 12,030,876 200,730 5,251,611 8,936 15,519 809,999 121,985 14,461 1,150,244 2,058 272,982 51,158 11,303 2,273,734 10,184,720 |
2014 HK$’000 2,677,607 7,406,966 579,274 68,400 316,184 43,956 11,477 35,122 391,826 70,774 27,295 119,995 17 2,831 33,644 |
|---|---|---|
| 11,785,368 | ||
| 56,734 5,598,333 9,896 15,947 653,594 685,751 21,312 1,011,640 2,238 173,989 62,568 78,591 1,829,330 |
||
| 10,199,923 |
– 5 –
| NOTES Current Liabilities Creditors and accruals 11 Customers’ deposits received Obligations under finance leases Amounts due to related companies Amounts due to associates Amounts due to non-controlling shareholders of subsidiaries Convertible bonds Bonds Derivative financial instruments Tax payable Secured bank borrowings Net Current Assets Total Assets less Current Liabilities Non-current Liabilities Secured bank borrowings Obligations under finance leases Bonds Derivative financial instruments Deferred tax liabilities Net Assets Capital and Reserves Share capital Share premium Reserves Equity attributable to shareholders of the Company Non-controlling interests Total Equity |
2015 HK$’000 737,344 575,482 4,038 45,785 10,009 28,286 – 1,250,000 31,542 333,053 3,087,051 6,102,590 4,082,130 16,113,006 4,467,939 4,622 1,005,274 58,939 315,303 5,852,077 10,260,929 191,374 2,982,364 5,969,912 9,143,650 1,117,279 10,260,929 |
2014 HK$’000 1,137,842 515,027 3,159 45,785 11,358 29,422 32,978 – 1,841 208,502 4,252,487 |
|---|---|---|
| 6,238,401 | ||
| 3,961,522 | ||
| 15,746,890 | ||
| 3,270,918 4,001 2,252,691 – 268,450 |
||
| 5,796,060 | ||
| 9,950,830 | ||
| 184,951 2,802,276 5,762,676 |
||
| 8,749,903 1,200,927 |
||
| 9,950,830 |
– 6 –
FOR THE YEAR ENDED 31 MARCH 2015
NOTES
1. GENERAL
The Company was incorporated as an exempted company with limited liability in the Cayman Islands under the Companies Law of the Cayman Islands. The shares of the Company have been listed on the Main Board of The Stock Exchange of Hong Kong Limited (the “Stock Exchange”). The Company and its subsidiaries are together referred to as the Group.
2. APPLICATION OF NEW AND REVISED HONG KONG FINANCIAL REPORTING STANDARDS (“HKFRSs”)
The Group has applied for the first time in the current year the following amendments to HKFRSs and a new Interpretation issued by the Hong Kong Institute of Certified Public Accountants (the “HKICPA”):
| Amendments to HKFRS 10, | Investment Entities |
|---|---|
| HKFRS 12 and HKAS 27 | |
| Amendments to HKAS 32 | Offsetting Financial Assets and Financial Liabilities |
| Amendments to HKAS 36 | Recoverable Amount Disclosures for Non-Financial Assets |
| Amendments to HKAS 39 | Novation of Derivatives and Continuation of Hedge Accounting |
| HK(IFRIC) – Int 21 | Levies |
The application of the amendments to HKFRSs and the new Interpretation in the current year has had no material impact on the Group’s financial performance and positions for the current and prior years and/or the disclosures set out in these consolidated financial statements.
– 7 –
The Group has not early applied the following new and revised HKFRSs that have been issued but are not yet effective:
HKFRS 9 Financial Instruments[1] HKFRS 15 Revenue from Contracts with Customers[2] Amendments to HKAS 1 Disclosure Initiative[4] Amendments to HKAS 16 Clarification of Acceptable Methods of Depreciation and and HKAS 38 Amortisation[4] Amendments to HKAS 16 Agriculture: Bearer Plants[4] and HKAS 41 Amendments to HKAS 19 Defined Benefit Plans: Employee Contributions[3] Amendments to HKAS 27 Equity Method in Separate Financial Statements[4] Amendments to HKFRS 10 Sale or Contribution of Assets between an Investor and its and HKAS 28 Associate or Joint Venture[4] Amendments to HKFRS 10, Investment Entities: Applying the Consolidation Exception[4] HKFRS 12 and HKAS 28 Amendments to HKFRS 11 Accounting for Acquisitions of Interests in Joint Operations[4] Amendments to HKFRSs Annual Improvements to HKFRSs 2010 - 2012 Cycle[5] Amendments to HKFRSs Annual Improvements to HKFRSs 2011 - 2013 Cycle[3] Amendments to HKFRSs Annual Improvements to HKFRSs 2012 - 2014 Cycle[4]
- 1 Effective for annual periods beginning on or after 1 January 2018 2 Effective for annual periods beginning on or after 1 January 2017 3 Effective for annual periods beginning on or after 1 July 2014 4 Effective for annual periods beginning on or after 1 January 2016 5 Effective for annual periods beginning on or after 1 July 2014, with limited exceptions
3. SEGMENT INFORMATION
The Group determines its operating segments based on internal reporting about components that are regularly reviewed by the chief operating decision maker. Information reported to the Group’s chief operating decision makers, who are the executive directors of the Company, for the purposes of resource allocation and assessment of performance is mainly focused on the property development, property investment, hotel operations and management, and car park operations in each of the geographical locations as stated below, securities and financial product investments and other operations, which mainly include provision of engineering services and second mortgage loans.
– 8 –
Segment revenue and results
The following is an analysis of the Group’s revenue and results by reportable and operating segment. Segment profit (loss) represents the pre-tax earned (incurred) by each segment without allocation of central administrative costs, directors’ salaries and certain finance costs.
| Property development – Australia – Hong Kong (“HK”) – Malaysia – Other regions in People’s Republic of China excluding HK (“PRC”) – United Kingdom (“UK”) Property investment – HK – PRC – Singapore Operations of Dorsett Hospitality International Limited (“Dorsett”) and its subsidiaries, including hotel operations and management, property development and investments and securities and financial product investments – HK – Malaysia – PRC – Singapore_(note)_ – UK Car park operations – Australia – Malaysia Securities and financial product investments Other operations Segment revenue/segment profit Unallocated corporate expenses Finance costs Profit before tax Income tax expense Profit for the year |
Segment 2015 HK$’000 1,243,825 1,073,583 – 644,707 – 2,962,115 36,747 14,014 5,355 56,116 815,603 264,399 196,968 102,606 74,451 1,454,027 600,349 15,774 616,123 21,075 324 5,109,780 |
revenue 2014 HK$’000 958,509 14,573 86 615,660 – 1,588,828 33,548 13,662 12,031 59,241 733,388 310,003 169,959 572,500 – 1,785,850 595,752 16,776 612,528 19,937 110 4,066,494 |
Segment profit (loss) 2015 2014 HK$’000 HK$’000 261,025 268,444 465,545 46,112 (3,967) (2,813) 481,884 351,558 1,885 (365) 1,206,372 662,936 92,147 56,531 (26,490) (27,716) (13,068) 256,119 52,589 284,934 146,248 174,638 46,485 58,890 (37,210) (69,913) 31,256 262,647 (20,295) (11,571) 166,484 414,691 51,149 57,697 6,241 6,772 57,390 64,469 (20,618) 17,914 5,733 (5,822) 1,467,950 1,439,122 (80,035) (79,097) (59,561) (114,139) 1,328,354 1,245,886 (330,406) (219,851) 997,948 1,026,035 |
Segment profit (loss) 2015 2014 HK$’000 HK$’000 261,025 268,444 465,545 46,112 (3,967) (2,813) 481,884 351,558 1,885 (365) 1,206,372 662,936 92,147 56,531 (26,490) (27,716) (13,068) 256,119 52,589 284,934 146,248 174,638 46,485 58,890 (37,210) (69,913) 31,256 262,647 (20,295) (11,571) 166,484 414,691 51,149 57,697 6,241 6,772 57,390 64,469 (20,618) 17,914 5,733 (5,822) 1,467,950 1,439,122 (80,035) (79,097) (59,561) (114,139) 1,328,354 1,245,886 (330,406) (219,851) 997,948 1,026,035 |
Segment profit (loss) 2015 2014 HK$’000 HK$’000 261,025 268,444 465,545 46,112 (3,967) (2,813) 481,884 351,558 1,885 (365) 1,206,372 662,936 92,147 56,531 (26,490) (27,716) (13,068) 256,119 52,589 284,934 146,248 174,638 46,485 58,890 (37,210) (69,913) 31,256 262,647 (20,295) (11,571) 166,484 414,691 51,149 57,697 6,241 6,772 57,390 64,469 (20,618) 17,914 5,733 (5,822) 1,467,950 1,439,122 (80,035) (79,097) (59,561) (114,139) 1,328,354 1,245,886 (330,406) (219,851) 997,948 1,026,035 |
|---|---|---|---|---|---|
| 261,025 465,545 (3,967) 481,884 1,885 |
268,444 46,112 (2,813) 351,558 (365) |
||||
| 662,936 | |||||
| 92,147 (26,490) (13,068) |
56,531 (27,716) 256,119 |
||||
| 284,934 | |||||
| 146,248 46,485 (37,210) 31,256 (20,295) |
174,638 58,890 (69,913) 262,647 (11,571) |
||||
| 414,691 | |||||
| 51,149 6,241 |
57,697 6,772 |
||||
| 64,469 17,914 (5,822) 1,439,122 (79,097) (114,139) 1,245,886 (219,851) 1,026,035 |
None of the segments derived any revenue from transactions with other segments.
No revenue from any single customer contributed over 10% of the total revenue of the Group.
- Note: The segment revenue and segment profit (loss) of this segment for the year ended 31 March 2014 include the sales of properties in Singapore amounting to HK$498,392,000 and HK$131,506,000, respectively.
– 9 –
Segment assets
The following is an analysis of the Group’s assets by reportable segment as at the end of the reporting period. Segment assets represent assets held by each segment without allocation of corporate assets which are mainly bank balances and cash and deposits in a financial institution.
| Property development – Australia – HK – Malaysia – PRC – UK Property investment – HK – PRC – Singapore Operations of Dorsett and its subsidiaries, including hotel operations and management, property development and investments and securities and financial product investments – HK – Malaysia – PRC – Singapore – UK Car park operations – Australia – Malaysia Securities and financial product investments Other operations Segment assets Unallocated corporate assets Total assets |
2015 HK$’000 1,845,047 1,405,863 394,732 2,626,878 300,056 6,572,576 2,751,823 4,578 86,638 2,843,039 4,868,673 968,052 2,223,323 827,573 942,576 9,830,197 559,266 143,847 703,113 468,957 179,811 20,597,693 1,617,903 22,215,596 |
2014 HK$’000 |
|---|---|---|
| 2,197,602 1,632,401 383,806 2,261,219 223,138 |
||
| 6,698,166 | ||
| 2,149,237 4,657 507,150 |
||
| 2,661,044 | ||
| 5,082,139 1,071,002 2,286,087 880,293 934,554 |
||
| 10,254,075 | ||
| 683,177 149,807 |
||
| 832,984 507,243 315,136 21,268,648 716,643 21,985,291 |
– 10 –
4. OTHER GAINS AND LOSSES
| Change in fair value of investment properties Loss on disposal of available-for-sale investments Change in fair value of investments held for trading Gain arising on transfer of completed properties for sale to investment properties Change in fair value of derivative financial instruments Gain on reclassification of hedging reserve to profit or loss upon recognition of the hedged item to profit or loss Gain on compensation from relevant government authority of Singapore Gain on partial repurchase of bonds Net foreign exchange loss Allowance for bad and doubtful debts Loss on disposal of property, plant and equipment FINANCE COSTS Interest on: Bank borrowings – wholly repayable within five years – not wholly repayable within five years Other loans wholly repayable within five years Convertible bonds Finance leases Interest on bonds Less: net interest income from cross currency swap contracts Amortisation of front-end fee Others Total interest costs Less: amounts capitalised to properties under development: – investment properties – properties for owners’ occupation – properties for sale – construction-in-progress |
2015 HK$’000 271,841 (235) (10,401) 88,023 (7,903) – – – (51,094) (634) (48) 289,549 2015 HK$’000 254,610 19,632 1,017 1,128 9 136,618 (24,030) 5,257 3,576 397,817 (14,672) (28,531) (127,240) (3,332) 224,042 |
2014 HK$’000 29,994 (2,768) (35,733) 204,258 16,619 27,329 258,960 2,067 (12,418) (3,067) (474) 484,767 2014 HK$’000 274,681 29,290 2,897 2,252 15 136,978 (26,303) 17,881 2,431 440,122 (4,054) (31,354) (123,314) – 281,400 |
|---|---|---|
5. FINANCE COSTS
– 11 –
6. INCOME TAX EXPENSE
| The income tax expense comprises: Current tax: Hong Kong Profits Tax PRC Enterprise Income Tax (“PRC EIT”) PRC Land Appreciation Tax (“PRC LAT”) Australia Income Tax Malaysia Income Tax Singapore Income Tax (Over) underprovision in prior years: Hong Kong Profits Tax Australia Income Tax Malaysia Income Tax Singapore Income Tax Deferred taxation |
2015 HK$’000 74,241 95,585 33,262 69,002 6,050 95 278,235 (235) (297) 165 (1,825) (2,192) 54,363 330,406 |
2014 HK$’000 35,445 81,993 31,912 37,409 5,786 24,889 217,434 3,273 (17,516) 122 (521) (14,642) 17,059 219,851 |
|---|---|---|
Hong Kong Profits Tax is calculated at 16.5% of the estimated assessable profit for the year of each individual company comprising the Group less tax losses brought forward where applicable.
PRC EIT is calculated in accordance with the EIT Law and Implementation Regulations of the EIT Law at the rate of 25%.
PRC LAT is levied at the deemed levying rates in accordance with the relevant PRC Tax laws and regulations.
The domestic statutory tax rate of Australia, Malaysia and Singapore is 30%, 25% and 17% of the estimated assessable profit for the year.
– 12 –
7. PROFIT FOR THE YEAR
| Profit for the year has been arrived at after charging: Cost of properties sold recognised as an expense Auditor’s remuneration Depreciation – Operations of Dorsett and its subsidiaries – Car park operations – Others Amortisation of prepaid lease payments Less: amount capitalised to properties under development for owners’ occupation Amortisation of investment in a joint venture (included in share of results of joint ventures) Allowance for bad and doubtful debts Staff costs – Directors’ emolument – Other staff – Share-based payment expense Share of taxation of associates (included in share of results of associates) and after crediting: Rental income, net of outgoings of HK$23,407,000 (2014: HK$49,524,000) Dividend income from: – Investment held for trading – Available-for-sale investments Bank interest income |
2015 HK$’000 1,866,590 11,942 249,685 20,106 13,662 283,453 10,760 – 10,760 2,904 634 24,430 588,539 2,410 615,379 1,473 109,372 4,787 87 4,874 6,100 |
2014 HK$’000 1,332,282 11,400 187,003 19,878 14,164 221,045 |
|---|---|---|
| 10,632 (564) |
||
| 10,068 2,904 3,067 18,918 549,370 3,791 572,079 1,196 72,037 |
||
| 12,086 144 |
||
| 12,230 5,875 |
– 13 –
8. EARNINGS PER SHARE
The calculation of the basic and diluted earnings per share attributable to the shareholders of the Company is based on the consolidated profit for the year attributable to the shareholders of the Company of HK$956,539,000 (2014: HK$914,057,000) and the number of shares calculated as follows:
| 2015 | 2014 | ||
|---|---|---|---|
| ’000 | ’000 | ||
| Weighted average number of ordinary shares for the purpose | |||
| of basic earnings per share | 1,874,579 | 1,800,908 | |
| Effect of dilutive potential ordinary shares | |||
| – Company’s share options | 4,841 | 4,776 | |
| Weighted average number of ordinary shares for the purpose | |||
| of diluted earnings per share | 1,879,420 | 1,805,684 | |
| The computations of diluted earnings per share for both years did not assume the conversion of the | |||
| Company’s outstanding convertible bonds since their exercise would | result in an increase in earnings per | ||
| share. In addition, the computations for both years did not assume the exercise of its indirect subsidiary | |||
| Dorsett’s share options as the exercise prices of those options are higher than the average market prices of | |||
| the Dorsett’s shares for both years. |
9. DIVIDENDS
| Dividends recognised as distribution during the year: 2015 interim dividend of HK3 cents per share (2014: 2014 interim dividend of HK3 cents per share) 2014 final dividend of HK12 cents per share (2014: 2013 final dividend of HK11 cents per share) |
2015 HK$’000 57,018 222,716 279,734 |
2014 HK$’000 55,133 195,009 |
|---|---|---|
| 250,142 |
A final dividend for the year ended 31 March 2015 of HK13 cents (2014: HK12 cents) per share has been proposed by the Directors of the Company and is subject to approval by the shareholders in the forthcoming annual general meeting.
Shareholders have an option to elect cash in lieu of new shares of the Company for the dividend proposed and paid during the year.
– 14 –
10. DEBTORS, DEPOSITS AND PREPAYMENTS
Included in debtors, deposits and prepayments are trade debtors of HK$154,654,000 (2014: HK$162,886,000).
Trade debtors aged over 60 days are past due but are not impaired.
Trade debtors mainly represent receivable from renting of properties, use of hotel facilities and sales of properties. Rentals are payable on presentation of demand notes. Hotel room revenue is normally settled by cash or credit card. The Group allows an average credit period of 14 to 60 days to its corporate customers and travel agents.
Proceeds from sales of properties are settled according to the payment terms of the sale and purchase agreements. Included in trade debtors is an amount of S$12,040,000 (equivalent to HK$67,906,000) (2014: S$12,040,000 (equivalent to HK$74,169,000)) which represents the portion of the proceeds that have been settled by the buyers and are being held in escrow account. The funds were remitted to the Group upon the issuance of relevant certificate by the government authorities in Singapore, which is expected to be taken place within one year after the end of the reporting period.
In determining the recoverability of trade debtors, the Group considers the subsequent settlement and any change in the credit quality of the debtors from the date credit was initially granted up to the end of each of the reporting period. There is no concentration of credit risk due to the large and unrelated customer base. The management believes that there is no further credit provision required in excess of the allowance already made.
The following is an aged analysis of trade debtors based on the invoice date which approximated the respective revenue recognition date, at the end of the reporting period:
| 0–60 days 61–90 days Over 90 days |
2015 HK$’000 76,427 4,388 73,839 154,654 |
2014 HK$’000 77,229 3,776 81,881 |
|---|---|---|
| 162,886 |
11. CREDITORS AND ACCRUALS
Included in creditors and accruals are trade creditors of HK$276,603,000 (2014: HK$182,930,000). The following is an aged analysis of the trade creditors:
| 0–60 days 61–90 days Over 90 days |
2015 HK$’000 198,730 1,590 76,283 276,603 |
2014 HK$’000 146,821 1,832 34,277 |
|---|---|---|
| 182,930 |
– 15 –
FINAL DIVIDEND
The Board has recommended the payment of a final dividend for the year ended 31 March 2015 of HK13 cents (2014: HK12 cents) per ordinary share (the “Proposed Final Dividend”). The Proposed Final Dividend will be paid to the shareholders of the Company (the “Shareholders”) in the form of a scrip dividend with Shareholders being given an option to elect to receive cash in lieu of all or part of their scrip dividend entitlements (the “Scrip Dividend Scheme”).
The Scrip Dividend Scheme will be subject to (i) Shareholders’ approval of the Proposed Final Dividend at the Company’s forthcoming annual general meeting to be held on 27 August 2015 (the “2015 AGM”); and (ii) the Stock Exchange granting listing of and permission to deal in the new shares to be allotted thereunder. Further announcement will be made by the Company on details of the Proposed Final Dividend and the Scrip Dividend Scheme, and the period of closure of the Company’s Register of Members for determining the entitlement to the Proposed Final Dividend.
CLOSURE OF REGISTER OF MEMBERS
As set out above, the 2015 AGM is scheduled to be held on Thursday, 27 August 2015. For determining the entitlement to attend and vote at the 2015 AGM, the Register of Members of the Company will be closed from Tuesday, 25 August 2015 to Thursday, 27 August 2015, both days inclusive, during which period no transfer of shares of the Company will be registered. In order to be eligible to attend and vote at the 2015 AGM, unregistered holders of shares of the Company should ensure that all share transfer documents accompanied by the relevant share certificates must be lodged with the Company’s branch share registrar in Hong Kong, Tricor Standard Limited, at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong, for registration not later than 4:30 p.m. on Monday, 24 August 2015.
– 16 –
FINANCIAL REVIEW
1. Annual results
| Revenue Sales of properties(i) Hotel operations and management Car park operations and facilities management Leasing and others Total Revenue Gross Profit Sales of properties(i) Hotel operations and management Car park operations and facilities management Leasing and others Total Gross Profit Gross Profit Margin Sales of properties(i) Hotel operations and management Car park operations and facilities management Leasing and others Total Gross Profit Margin |
For the year ended 31 March 2015 2014 HK$ million HK$ million 2,962 2,087 1,454 1,287 616 613 78 79 5,110 4,066 1,086 729 691 652 124 129 45 43 1,946 1,553 36.7% 34.9% 47.5% 50.7% 20.1% 21.0% 57.7% 54.4% 38.1% 38.2% |
Change 41.9% 13.0% 0.5% (1.3%) 25.7% 49.0% 6.0% (3.9%) 4.7% 25.3% |
|---|---|---|
– 17 –
| Net profit attributable to shareholders One-time gain adjusted(ii) Adjusted net profit Interim dividend Final dividend Total dividend |
For the year ended 31 March 2015 2014 Change HK$ million HK$ million 957 914 – (259) 957 655 46.1% HK3 cents HK3 cents HK13 cents HK12 cents HK16 cents HK15 cents 6.7% |
|---|---|
Notes:
-
(i) Sales of properties for the financial year ended 31 March 2014 (“FY2014”) was adjusted to include sales of Dorsett Residences Singapore amounting to approximately HK$498 million and gross profit of approximately HK$147 million which were part of Dorsett’s revenue and gross profit in FY2014.
-
(ii) One-time gain of approximately HK$259 million relating to a compulsory acquisition of a property in Singapore in the previous financial year which was not repeated in FY2015.
The Company’s consolidated revenue for FY2015 was approximately HK$5.1 billion, an increase of 25.7% as compared with FY2014.
Revenue from sales of properties amounted to approximately HK$2,962 million in FY2015, an increase of 41.9% as compared with FY2014. View Pavilion in Shanghai, Sevilla Crest and Star Ruby in Hong Kong and Upper West Side, Hudson (Stage 2) in Melbourne contributed primarily to the sales of properties in FY2015.
In FY2015, revenue from hotel operations and management amounted to approximately HK$1,454 million, an increase of 13.0% compared to FY2014. The increase was mainly from increased room inventory and commencement of operations of 2 new owned hotels. Revenue from car park operations and facilities management amounted to approximately HK$616 million in FY2015, an increase of 0.5% as compared to FY2014, mainly due to increase in the Group’s car park management portfolio, which was offset by the depreciation of the Australian dollar against the Hong Kong dollar. Revenue from leasing of properties and others was largely unchanged, compared with FY2014, amounting to approximately HK$78 million.
– 18 –
Gross profit for FY2015 was approximately HK$1,946 million, an increase of 25.3% as compared with FY2014. Gross profit from sales of properties amounted to approximately HK$1,086 million in FY2015, representing an increase of 49.0% from FY2014. The gross profit margin from sales of properties increased to 36.7% in FY2015 compared to 34.9% in FY2014. The increase in gross profit margin was mainly due to the high profit margin in View Pavilion, Shanghai. Gross profit from hotel operations and management amounted to approximately HK$691 million in FY2015, representing an increase of 6.0% as compared to FY2014. The gross profit margin from hotel operations and management decreased from 50.7% in FY2014 to 47.5% in FY2015. The increase in hotel gross profit was mainly due to the contribution from additional rooms inventory of newly completed hotels within the Group. The decrease in hotel gross profit margin was mainly due to reduction in revenue per available room (“RevPar”) in Hong Kong hotel operation which is a major market for Dorsett. Assuming constant exchange rate, gross profit contribution from car park operations and facilities management increased by 12.4% for FY2015, However in Hong Kong dollar term, the gross profit contribution decreased due to the weaker Australian dollar exchange rate against the Hong Kong dollar. Gross profit from leasing and others increased by approximately HK$2 million and the segment recorded 57.7% in gross profit margin in FY2015.
Net profit attributable to shareholders of the Company for FY2015 amounted to approximately HK$957 million. In FY2014, there was a one-time gain of approximately HK$259 million from the Singapore Government’s compulsory acquisition of Pearl’s Centre, which was not repeated in FY2015. Adjusting for this one-off item, the net profit attributable to shareholders of the Company increased by 46.1% for FY2015.
Final dividend for FY2015 was HK13 cents. Total dividend for FY2015 was HK16 cents, increased by HK1 cents compared with last financial year (FY2014: HK15 cents).
– 19 –
2. Liquidity, financial resources and net gearing
The following table sets out the Group’s bank and cash balances, investment securities (which were considered as cash equivalent items due to its easily-monetizable nature), bank loans and borrowings and equity as at 31 March 2015.
| Bank loans and bonds Due within 1 year Due 1 – 2 years Due 2 – 5 years Due more than 5 years Total bank loans and bonds Investment securities Bank and cash balances Liquidity position Net debts(i) Carrying amount of the total equity Add: hotel revaluation surplus Total equity adjusting for hotel revaluation surplus Net gearing ratio (net debts to total equity) |
As at 31.3.2015 31.3.2014 HK$ million HK$ million 3,821 2,846 530 2,716 5,167 3,917 301 337 9,819 9,816 1,151 1,023 2,336 1,970 3,487 2,993 6,332 6,823 10,261 9,951 10,976 10,954 21,237 20,905 29.8% 32.6% |
As at 31.3.2015 31.3.2014 HK$ million HK$ million 3,821 2,846 530 2,716 5,167 3,917 301 337 9,819 9,816 1,151 1,023 2,336 1,970 3,487 2,993 6,332 6,823 10,261 9,951 10,976 10,954 21,237 20,905 29.8% 32.6% |
|---|---|---|
| 9,816 | ||
| 1,023 1,970 |
||
| 2,993 | ||
| 6,823 | ||
| 9,951 10,954 |
||
| 20,905 | ||
| 32.6% |
Note:
(i) Net debts represent total bank loans and bonds less bank and cash balances, and investment securities.
– 20 –
To better manage the Group’s liquidity position, the Group allocated a portion of its cash position in marketable fixed income securities. Investment securities shown on the consolidated statement of financial position represents primarily fixed income securities and investments in fixed income funds. Adjusting for the unrecognized hotel revaluation surplus of approximately HK$10,976 million as at 31 March 2015, the Group’s total consolidated equity as at 31 March 2015 was approximately HK$21,237 million. The net gearing ratio of the Group was 29.8% for FY2015.
The borrowings in the Company’s consolidated statement of financial position include an amount of approximately HK$521 million (as at 31 March 2014: HK$1,463 million) reflected as current liabilities as such sum is not repayable within one year. This sum is shown as current liabilities as the banks and/or financial institutions have discretionary rights to demand immediate repayment. There has been no demands for immediate repayment from any bank and/or financial institution.
As at 31 March 2015, the undrawn banking facilities was approximately HK$3.5 billion, of which approximately HK$2.2 billion were for construction and/or development purposes while the remaining balance of approximately HK$1.3 billion was for the Group’s general corporate use. The banking facilities together with the sales proceeds from the Group’s upcoming property development projects places the Company in a good financial position to fund not only its existing business and operations but also further expansion of its business.
To increase the financing flexibility for the Group, the Group intends to establish a Medium Term Note (“MTN”) programme in the near future. Further details will be issued upon the establishment of the MTN programme.
3. Net asset value per share
| Equity attributable to shareholders of the Company Add: Hotel revaluation surplus (adjusted for minority shareholders’ interests) Total net asset value No. of shares issued (“million”) Adjusted net asset value per share |
As at 31.3.2015 31.3.2014 HK$ million HK$ million 9,144 8,750 8,119 8,114 17,263 16,864 1,914 1,850 HK$9.02 HK$9.12 |
As at 31.3.2015 31.3.2014 HK$ million HK$ million 9,144 8,750 8,119 8,114 17,263 16,864 1,914 1,850 HK$9.02 HK$9.12 |
|---|---|---|
| 16,864 | ||
| 1,850 HK$9.12 |
Adjusting for revaluation surplus on hotel assets of approximately HK$10,976 million as at 31 March 2015 (HK$10,954 million as at 31 March 2014) and minority shareholders’ interests, net asset value per share for the Company as at 31 March 2015 was approximately HK$9.02.
– 21 –
4. Capital expenditure
The Group’s capital expenditure consists primarily of expenditure for acquisition and development of hotel properties, plant and equipment.
For FY2015, the Group’s capital expenditure amounted to approximately HK$300 million (2014: HK$1,103 million), a decrease of approximately HK$803 million, or 72.8%. These capital expenditure were funded by bank borrowings and internal resources. The capital expenditure was mainly attributable to the acquisition of office premises for the use of Cosmopolitan Hotel team and the construction and renovation works for Dorsett Regency Kuala Lumpur, Dorsett Tsuen Wan, Cosmopolitan Hotel, Hong Kong and Dorsett City, London. As the Group continues with the construction of existing development projects and seek new acquisition opportunities, the Group plans to incur approximately HK$447 million in capital expenditure over the next financial year, such capital expenditure to be funded by a combination of external borrowings and internal resources.
5. Capital commitments
| Capital expenditure contracted but not provided in the consolidated financial statements in respect of: Acquisition, development and refurbishment of hotel properties Others Capital expenditure authorised but not contracted for in respect of: Development and refurbishment of hotel properties Others |
As at 31.3.2015 31.3.2014 HK$’000 HK$’000 259,477 153,281 83,761 107,679 343,238 260,960 210,346 22,750 11,069 16,474 221,415 39,224 564,653 300,184 |
As at 31.3.2015 31.3.2014 HK$’000 HK$’000 259,477 153,281 83,761 107,679 343,238 260,960 210,346 22,750 11,069 16,474 221,415 39,224 564,653 300,184 |
|---|---|---|
| 260,960 | ||
| 22,750 16,474 |
||
| 39,224 | ||
| 300,184 |
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6. Post balance sheet event
On 27 May 2015, a joint announcement was made by the Company and Dorsett (the “Joint Announcement”) for the possible privatization of Dorsett by way of a scheme of arrangement under section 86 of the Companies Law (the “Proposal”). For details of the Proposal and the definitions of the capitalized terms hereunder, please refer to the Joint Announcement dated 27 May 2015.
Terms of the Proposal
Under the Proposal, Dorsett Scheme Shareholders will receive HK$0.72 cash and 0.28125 share of the Company in exchange for the cancellation of each Scheme Share, totaling the equivalent of HK$1.80 (based on the closing price of HK$3.84 of the share of the Company on 20 May 2015, being the Last Trading Day), representing a premium of approximately 32.4% over the closing price of HK$1.36 of Dorsett Share on the Last Trading Day. Subject to the fulfillment of a number of conditions, Dorsett will be delisted if the Proposal proceeds to completion. On the assumption that all outstanding Dorsett Options are exercised in full, the amount of cash required by the Company to implement the Proposal would be approximately HK$404 million and the number of FEC Consideration Shares which may be issued pursuant to the Scheme would be approximately 157.8 million shares.
FEC Consideration Shares and the Share Capital of the Company
If no Dorsett Options are exercised, 153,772,593 FEC Consideration Shares will be issued pursuant to the Scheme, representing approximately 7.44% of the enlarged share capital of the Company upon completion of the Proposal. The amount of cash required to implement the Proposal would be approximately HK$394 million. The Group intends to finance the cash required for implementing the Proposal from internal financial resources.
Reasons for and Expected Benefits of the Proposal
The directors of the Company are of the view that the Proposal is and will be beneficial to the Group as a whole and in the interests of shareholders of both the Company and Dorsett.
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For Dorsett
In the past two years, the share price of Dorsett has traded at a level below the listing price, with a relatively low level of liquidity. Dorsett has not raised any external equity funding since its listing and the directors of the Company are of the view that the share price does not reflect the true value and fundamental strength of Dorsett. The successful implementation of the Proposal would provide the Independent Dorsett Shareholders an opportunity to dispose their shares in Dorsett at a consideration that represents a considerable premium to the historical market price of Dorsett Shares. Through the share exchange mechanism under the Proposal, the Independent Dorsett Shareholders will be able to retain an equity exposure in the hospitality business and benefit from the broader real estate business of the Company.
For the Company
The Company is the controlling shareholder of Dorsett owning 73.97% of Dorsett Shares. The directors of the Company are of the view that the Proposal should enhance value for its shareholders through the elimination of the holding Company discount and simplification of shareholding structure if the Proposal is implemented. The Group combined as a whole would be in a better and stronger position to exploit business opportunities as existing non-compete restrictions will fall away. There will also be cost savings through the rationalization of overlapped corporate functions. In addition, the Company would be able to utilise the combined liquidity resources of the enlarged Group more effectively for the benefit of shareholders of the Company. Successful implementation of the Proposal would also broaden the shareholder base of the Company and is expected to increase trading liquidity of the Company’s shares.
Withdrawal of listing of Dorsett Shares
In accordance with Rule 6.15 of the Listing Rules, Dorsett will apply to the Stock Exchange for the withdrawal of the listing of Dorsett Shares on the Stock Exchange immediately following the date the Scheme becoming effective. A detailed timetable for the implementation of the Proposal will be included in the Scheme Document.
– 24 –
BUSINESS REVIEW
1. Property division
The Group’s property business includes property development and investment.
Property investment comprises investments in retail and office buildings located in Shanghai, Hong Kong, Singapore and Melbourne. For FY2015, the Company had a valuation gain of approximately HK$272 million from its investment properties. As at 31 March 2015, valuation of investment properties reached approximately HK$3.2 billion (31 March 2014: HK$2.7 billion). The increase in value of investment properties was mainly attributable to the completion of retail properties at Star Ruby, Hong Kong, Hudson at Upper West Side (Stage 2) in Melbourne, Australia, the shopping centre in Wuhan (held by Dorsett) and the Group’s car park in Shanghai, Mainland China.
The Group has a diversified portfolio in residential property development in Australia, Shanghai, Guangzhou, Hong Kong, London and Kuala Lumpur. To carry out property development in the different markets, the Group has strong local teams in each of these markets. The regionalization approach allows the Group to take advantage of the different property cycles in the different markets. This strategy has resulted in a relatively low land cost base for the Group’s development projects. The Group’s property developments are largely focused on mass residential market in accordance with the Company’s strategy to grow with the increasing affluence of the middle class.
Total cumulative presales value of residential properties under development amounted to approximately HK$6.5 billion as at 31 March 2015, of which contracted presales value was approximately HK$4.8 billion and registered presales value (see note below) was approximately HK$1.7 billion. All developments under presale are expected to be completed and delivered within 4 years. As revenue will only be recognized when the sales of the property developments are completed, proceeds from the presales were not reflected in the consolidated income statement. The Group expects a significant cash flow when the projects are completed.
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The following shows a breakdown of the total presales value of residential properties under development as at 31 March 2015.
| Developments Location Midtown at Upper West Side (Stage 3) Melbourne Manhattan at Upper West Side (Stage 4) Melbourne The FIFTH Melbourne View Pavilion Shanghai King’s Manor Shanghai Eivissa Crest Hong Kong Dorsett Bukit Bintang Kuala Lumpur Cumulative contracted presales value The Towers at Elizabeth Quay Perth Total presales value |
HK$ million Expected financial year of completion 688 FY2016 1,738 FY2017 1,029 FY2018 149 FY2016 176 FY2017 586 FY2016 397 FY2017 4,763 1,733(i) FY2019 6,496 |
|---|---|
Note:
- (i) The amount represents registered presales. A registered presale is an expression of interest for an apartment where a booking fee has been paid to reserve an apartment. No sale and purchase agreement has been entered into and there is no assurance that this expression of interest will lead to the eventual entering of a sale and purchase agreement for the reserved apartment.
In FY2015, the Group launched presale of 4 residential development projects, namely (i) Eivissa Crest in Hong Kong, (ii) The FIFTH in Melbourne, Australia, (iii) Dorsett Bukit Bintang in Kuala Lumpur, Malaysia, and (iv) King’s Manor, California Garden in Shanghai, Mainland China. A soft launch of The Towers at Elizabeth Quay in Perth, Australia, yielded tremendous interest of presales registration. In the first quarter of 2015, the total saleable floor area from these 5 developments was approximately 1.6 million square feet (“sq. ft.”) and total gross development value of these 5 projects is expected to be more than HK$8.3 billion.
In FY2015, the Group acquired 3 additional residential development sites, namely (i) Tai Wai site in Hong Kong, (ii) Hai Tan Street site, Sham Shui Po, Hong Kong (an urban renewal project with the Urban Renewal Authority), and (iii) Manilla Street site located adjacent to the Marsh Wall site in Canary Wharf, London. These sites further enhance the Group’s property development pipeline and the regional replenishment focus. As
– 26 –
at 31 March 2015, the Group had 20 active residential property development projects with total saleable floor area of approximately 5.8 million sq. ft. under various stages of development across its geographical markets. Details of the pipeline are shown below.
| Developments Melbourne – Midtown at Upper West Side (Stage 3) – Manhattan at Upper West Side (Stage 4) – The FIFTH – West Side Place – Phase 1 – Phase 2 – Phase 3 – Phase 4 Perth – The Towers at Elizabeth Quay London – Alpha Square Guangzhou – Royal Riverside Shanghai – View Pavilion (remaining) – King’s Manor – The Royal Crest II Hong Kong – Tan Kwai Tsuen – Eivissa Crest – Tai Wai – Sha Tau Kok – Wong Tai Sin – Sham Shui Po Kuala Lumpur – Dorsett Bukit Bintang Total Notes: |
Saleable Floor Area(i) Sq. ft. 167,000 388,000 284,000 524,000 500,000 400,000 576,000 320,000 387,000 688,000 110,000 712,000 259,000 48,000 36,000 33,000 99,000 67,000 28,000 215,000 5,841,000 |
Expected Gross Development Value(ii) Status/ Expected launch Expected financial year of completion HK$ million 688 Launched FY2016 1,738 Launched FY2017 1,223 Launched FY2018 3,027 FY2016 Planning 3,162 Planning Planning 2,530 Planning Planning 3,642 Planning Planning 2,762 Launched FY2019 4,434 FY2017/8 Planning 2,150 FY2016 FY2017 371 Launched FY2016 2,652 Launched FY2017 938 FY2016 FY2018 800 FY2016 FY2016 757 Launched FY2016 407 FY2017/8 FY2019 795 FY2017 FY2018 1,073 FY2016 FY2019 497 FY2017/8 FY2019 953 Launched FY2017 34,599 |
|---|---|---|
-
(i) The figures represent approximate saleable residential floor areas which may vary subject to finalization of development plans.
-
(ii) The amounts shown represent expected gross development value which may change subject to market conditions.
– 27 –
In addition to the development pipeline of approximately 5.8 million sq. ft. in saleable floor areas, the Group has a land bank of approximately 5 million sq. ft. of floor areas. These land bank comprised inter alia of residential land in Shanghai and Guangzhou, and a joint venture project in Fong Lok Wai, Yuen Long, Hong Kong. With a total property development pipeline of approximately 11 million sq. ft. the Group’s development is poised for continued growth in the coming years.
Australia
Upper West Side project is a high rise residential development located in the central business district of Melbourne. This development has been phased into 4 stages. Both Stage 1 and 2 consisting of more than 1,200 apartments were completed and delivered with Stage 2 (Hudson) completed in FY 2015. Stage 3 (“Midtown at Upper West Side”) and Stage 4 (“Manhattan at Upper West Side”) were launched for presale in the last 2 years and construction are now underway. As at 31 March 2015, contracted presales values of Stage 3 and Stage 4 were approximately HK$688 million and HK$1,738 million respectively. Both Stage 3 and 4 were 100% presold. Stage 3 is expected to be completed in the financial year ending 31 March 2016 and Stage 4 in the financial year ending 31 March 2017.
The FIFTH located adjacent to the Upper West Side development in Melbourne and provides 402 high rise apartments which is expected to be completed in the financial year ending 31 March 2018. As at 31 March 2015, contracted presales value of The FIFTH reached approximately HK$1,029 million, representing 84% of its total expected gross development value.
Located next to the Upper West Side development, 250 Spencer Street (“West Side Place”) is a mixed-use residential development which is expected to provide approximately 2,500 residential apartments divided into 4 towers which will include an approximately 240 rooms 5-star Ritz-Carlton hotel, upmarket retail shopping outlets and facilities. Launch of the presale of the first residential tower (consisting of approximately 600 apartments) is expected in the second half of the financial year ending 31 March 2016. Estimated gross development value of the first residential tower will be approximately HK$3.0 billion.
The Upper West Side, The FIFTH and The West Side Place will collectively provide approximately 6,000 apartments in central Melbourne and will be the biggest mixed-use developments with residential focus in Melbourne’s central business district.
– 28 –
In June 2014, the Group was the successful bidder of a prestigious residential and hotel project in Elizabeth Quay, Perth. The mixed-use development comprising a residential units of approximately 320,000 sq. ft. in saleable floor area, a 5-star Ritz Carlton hotel with more than 200 rooms, approximately 20,000 sq. ft. commercial or retail area as well as other ancillary facilities is part of the Western Australia Government’s initiative to promote and rejuvenate the waterfront areas in Perth. Soft launched in the beginning of 2015, the registered presales value for the project reached approximately HK$1.7 billion as at 31 March 2015. This development is expected to be completed in the financial year ending 31 March 2019.
In line with the Group’s strategic plan to expand its development pipeline and increase its recurring income base, the Group signed a consortium bid agreement with Chow Tai Fook Enterprises Limited (“CTF”) and Echo Entertainment Group Limited (“Echo”) to jointly bid for the development of an entertainment precinct and integrated resort at the Queen’s Wharf, Brisbane, Australia. The 9.4 hectare integrated resort will comprise residential towers, 4 world class hotels, high end food and commercial outlets and a casino in Brisbane’s prime waterfront district.
Under the terms of collaboration, the Group and CTF will each have 25% interest in the integrated resort (excluding residential towers) and Echo will have 50% interest and will be appointed as the casino operator, if the consortium’s bid is successful. The residential development will be undertaken by the Group and CTF on 50:50 basis if the bid is successful. The result of the tender is expected shortly.
Mainland China
The Group has been developing California Garden, a premier township in Shanghai over a number of years. The project, comprising a diversified portfolio of the Group’s established brand of town houses, high and low rise apartments, provides a steady flow of revenue for the Group.
View Pavilion consists of 306 high rise apartments. Approximately 200 apartments were completed in FY2015 and the remaining is expected to be completed in the financial year ending 31 March 2016. Presales value as at 31 March 2015 was approximately HK$149 million.
Currently, 2 phases of the residential development project (namely King’s Manor and The Royal Crest II) are under construction. Both developments will produce approximately 800 residential apartments and town houses with total saleable floor area of approximately 1 million sq. ft..
– 29 –
King’s Manor consists of 479 apartments and 90 town houses. This development was launched for presale in March 2015. Presales value as at 31 March 2015 was approximately HK$176 million, amounting to 7% of the total presales value of the development. Completion of this phase is expected in the financial year ending 31 March 2017.
The Royal Crest II consists of 180 apartments and 42 town houses. It is expected to launch for presale in the second half of FY2016. The Royal Crest II is expected to be completed in the financial year ending 31 March 2018.
In Guangzhou, Royal Riverside, a 5 residential towers development producing approximately 600 high rise apartments of total saleable floor area of approximately 688,000 sq. ft. will be launched for presale in the second half of the financial year ending 31 March 2016. The development is expected to be completed in the financial year ending 31 March 2017.
Hong Kong
The Group has been actively building up its development pipeline in Hong Kong. The Group continues to increase its land bank through acquisition of redevelopment sites, by participating in government tender and bidding for projects with Urban Renewal Authority (“URA”).
Following the acquisition of a residential redevelopment site in Wong Tai Sin and a residential development site in Sha Tau Kok through government tender in the last financial year, the Group further acquired a residential development site at Tai Wai and won a development project in Sham Shui Po with URA.
The Tai Wai site comprises a residential component of approximately 33,000 sq. ft. in saleable floor area and a commercial component of approximately 5,800 sq. ft. in gross floor area. It is expected that approximately 118 apartments consisting mainly 1-bedroom and 2-bedroom apartments will be built. Completion of the project is expected in the financial year ending 31 March 2019.
The Sham Shui Po residential site will comprises approximately 72 apartments (mainly 1-bedroom apartment) with approximately 28,000 sq. ft. in saleable floor area. Completion is expected in the financial year ending 31 March 2019.
The Sha Tau Kok site will comprise approximately 263 apartments of approximately 99,000 sq. ft. in saleable floor area. Presales launch is expected in FY2017 and completion is expected in the financial year ending 31 March 2018.
– 30 –
During FY2015, the residential developments namely Star Ruby and Sevilla Crest were completed. Revenue from these two projects were approximately HK$613 million and HK$441 million respectively.
Eivissa Crest on Hill Road, Hong Kong is a project currently being presold, consisting of 106 residential apartments with approximately 36,000 sq. ft. in saleable floor area. The presales value reached approximately HK$586 million as at 31 March 2015, representing 77% of the total expected gross development value. Completion is expected to take place in the financial year ending 31 March 2016.
In the coming financial year ending 31 March 2016, the Group plans to to launch presale of 2 projects, namely the Wong Tai Sin residential development and the Tan Kwai Tsuen development. The Wong Tai Sin residential development is a redevelopment project which is located at 68–86 Wan Fung Street, Wong Tai Sin with 234 apartments and completion is expected in the financial year ending 31 March 2019. The Tan Kwai Tsuen development is a residential development with 24 town houses located in Tan Kwai Tsuen Road, Hung Shui Kiu, Yuen Long with completion in the financial year ending 31 March 2016.
The joint venture project in Fung Lok Wai, Yuen Long is a residential development where planning approval has been obtained. This residential development consists total floor area of approximately 1.6 million sq. ft.. The Group has 25.33% interest in the development.
Malaysia
Dorsett Bukit Bintang is a residential development adjacent to Dorsett Regency Kuala Lumpur. This development consists of 252 high rise apartments of approximately 215,000 sq. ft. in saleable floor area. As at 31 March 2015, presales value reached approximately HK$397 million, representing 42% of the total expected gross development value. Completion is expected to take place in the financial year ending 31 March 2017.
London, United Kingdom
A residential development site in Marsh Wall, Canary Wharf was acquired in January 2014 at the price of GBP16.7 million. In June 2014, the Group acquired another site at Manilla Street adjacent to the Marsh Wall site at the price of GBP6.5 million. The Group intends to combine the 2 sites and, subject to planning approval, will develop a mixed-use development consisting of residences of approximately 387,000 sq. ft. in saleable floor area, a hotel of approximately 300 rooms with some retail outlets.
– 31 –
2. Hotel operations and management – Dorsett Hospitality International Limited
The Group owns 73.97% of Dorsett Hospitality International Limited. The key indicators of Dorsett’s owned hotel operations for FY2015 are as follows:
| For the year ended | For the year ended | ||
|---|---|---|---|
| 31 March | |||
| 2015 | 2014 | ||
| Hong Kong | |||
| Occupancy rate | 92.7% | 93.9% | |
| Average room rate_(HK$)_ | 856 | 942 | |
| RevPAR_(HK$)_ | 794 | 885 | |
| Malaysia | |||
| Occupancy rate | 64.7% | 68.8% | |
| Average room rate_(HK$)_ | 491 | 519 | |
| RevPAR_(HK$)_ | 318 | 357 | |
| Mainland China | |||
| Occupancy rate | 47.4% | 54.3% | |
| Average room rate_(HK$)_ | 545 | 573 | |
| RevPAR_(HK$)_ | 258 | 311 | |
| Singapore | |||
| Occupancy rate | 77.3% | 67.2% | |
| Average room rate_(HK$)_ | 1,188 | 1,275 | |
| RevPAR_(HK$)_ | 918 | 857 | |
| United Kingdom | |||
| Occupancy rate | 61.1% | – | |
| Average room rate_(HK$)_ | 1,185 | – | |
| RevPAR_(HK$)_ | 724 | – | |
| Group Total | |||
| Occupancy rate | 73.6% | 76.7% | |
| Average room rate_(HK$)_ | 762 | 786 | |
| RevPAR_(HK$)_ | 561 | 603 |
– 32 –
In FY2015, the Group’s hotel operations increased its total revenue by approximately 13.0% to HK$1,454 million compared with FY2014, mainly attributed by increased room inventory and commencement of operations of newly completed hotels. In FY2015, 2 hotels owned by Dorsett commenced operations, namely Lushan Resort, Mainland China and Dorsett Shepherds Bush, London. The Silka Hotel, Cheras, Malaysia came under the management of Dorsett.
RevPAR for the Group came in at HK$561, a decrease of 7.0%, mainly due to the downturn of tourism in Hong Kong.
The Group opened its first hotel in London, Dorsett Shepherds Bush in the first quarter of FY2015. Dorsett Shepherds Bush is a 317 rooms hotel located in the heart of West London.
Lushan Resort, located within the vicinity of the famous Lushan National Park in Jiujiang, which is a 297 rooms hotel opened in June 2014.
As at 31 March 2015, Dorsett operated 20 owned hotels (9 in Hong Kong, 5 in Malaysia, 4 in Mainland China, 1 in Singapore and 1 in London) with approximately 6,000 rooms and had 5 owned hotels in the development pipeline (1 in Hong Kong, 2 in Mainland China, 2 in United Kingdom). When all the pipeline hotels become operational, Dorsett would operate 25 owned hotels with more than 7,000 rooms. Dorsett continues to expand its hotel portfolio and its network coverage.
3. Car park operations and facilities management
The Group’s car park and facilities management business includes car park operations and property management services.
The car park business extends to both third party owned car parks and self-owned car parks. The car park operations achieved steady growth in FY2015. The Group acquired 2 car parks with 487 car parking bays in New Zealand in FY2015. As at 31 March 2015, the Group’s carpark portfolio comprised 335 car parks with approximately 65,300 car parking bays. Of these, 23 were self-owned car parks (19 in Australia, 2 in New Zealand and 2 in Kuala Lumpur) comprising approximately 6,200 car parking bays. The remaining car park portfolio consists of approximately 59,100 car parking bays in Australia and New Zealand, which are under management contracts entered into with third party car park owners. Third party owners include local governments, shopping malls, retailers, universities, airports, hotels, hospitals, government departments and commercial and office buildings.
This division expanded its operation to include property management services in Australia (mainly in Brisbane, Melbourne and Adelaide) and Johor Bahru, Malaysia. It is expected that the car park operations and facilities management business will grow steadily. As at 31 March 2015, the Group had 35 contracts in relation to facility management services.
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PROSPECTS
Looking ahead, the property market in Australia is expected to remain buoyant due to the current low interest rate environment and expected further interest rate cuts in the coming months, which is likely to drive demand for real estates domestically and internationally. In Mainland China, the Central Government has pushed forward reform of its economy into a sustainable “new normal” model, with stepped up efforts on growth stabilization and economic restructuring. Measures include scaling up investments in infrastructure, stabilization of real estate market, increasing domestic consumption, enhancement of urban planning and construction standards and formation and implementation of city cluster planning. By adhering to sector-based guiding instruction and implementing policies according to domestic conditions, the Government looks to cater for domestic needs of home purchase and upgrade and aiding the stable and healthy development of real estate market. In Hong Kong, until the United States begins to enter into an upward interest rate cycle, Hong Kong’s low interest rate environment and strong domestic underlying demand should continue to support the residential market. In the United Kingdom, it is expected that the overall macro-economic environment will continue to be positive with the residential market remaining attractive to local and foreign buyers.
Although market conditions is expected to remain difficult in the short term, the Group expects that its hotel operations will weather the current challenging market conditions in Hong Kong. Cautiously optimistic, the Group believes that in the longer term future, the expansion of Hong Kong Disneyland Theme Park and the completion of significant infrastructure projects, such as the Hong Kong-Zhuhai-Macau Bridge and the inclusion of Hong Kong in the high-speed railway network in Mainland China, will be factors which will boost tourism in Hong Kong. The Group will also continue to grow its hotel portfolio in Asia and the United Kingdom and actively pursue suitable opportunities in new markets.
The Group’s car park operations and facilities management business is expected to continue to generate steady recurring income. The Group will actively explore opportunities to grow its car operations park and facilities management business.
In the medium term, the Group’s development pipeline of approximately HK$35 billion of gross development value will provide the Group with a stable revenue stream. The Company will maintain its regionalization strategy and continue to diversify its earnings stream to achieve sustainable growth. If successful in the bidding process, the Queen’s Wharf Project in Brisbane will transform the Group with additional recurring income source from the gaming industry. Leveraging on its solid project portfolio, the Company is well-positioned to continue to create long term value for its shareholders through regular dividend distributions and enhancement in net asset value of the Group.
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EMPLOYEES AND REMUNERATION POLICIES
As at 31 March 2015, the Group had approximately 3,400 employees. The Group provides its employees with comprehensive benefits including medical benefits, internal and external trainings and career development opportunities.
CORPORATE GOVERNANCE
Throughout the year ended 31 March 2015, the Company has complied with the code provisions (the “Code Provisions”) set out in the Corporate Governance Code (the “CG Code”) contained in Appendix 14 to the Rules Governing the Listing of Securities on the Stock Exchange, except for the deviation from Code Provisions A.2.1 described below.
Pursuant to Code Provision A.2.1 of the CG Code, the roles of Chairman and Chief Executive Officer should be separate and should not be performed by the same individual. Currently Tan Sri Dato’ David CHIU assumes the roles of both the Chairman and Chief Executive Officer of the Company. The Board believes that this structure provides the Group with strong and consistent leadership and allows for more effective and efficient business planning and decisions as well as execution of long term business strategies. As such, it is beneficial to the business prospects of the Group.
AUDIT COMMITTEE
The Audit Committee, comprising all of the Company’s three independent non-executive directors, namely Mr. Kwok Wai CHAN, Mr. Peter Man Kong WONG and Mr. Kwong Siu LAM, has reviewed the audited consolidated results of the Group for the financial year ended 31 March 2015.
SCOPE OF WORK OF MESSRS. DELOITTE TOUCHE TOHMATSU
The figures in respect of the Group’s consolidated statement of financial position as at 31 March 2015, the consolidated statement of profit or loss, consolidated statement of profit or loss and other comprehensive income and the related notes thereto for the year then ended as set out in the preliminary announcement have been agreed by the Group’s auditor, Messrs. Deloitte Touche Tohmatsu, to the amounts set out in the Group’s audited consolidated financial statements for the year. The work performed by Messrs. Deloitte Touche Tohmatsu in this respect did not constitute an assurance engagement in accordance with Hong Kong Standards on Auditing, Hong Kong Standards on Review Engagements or Hong Kong Standards on Assurance Engagement issued by the Hong Kong Institute of Certified Public Accountants and consequently no assurance has been expressed by Messrs. Deloitte Touche Tohmatsu on the preliminary announcement.
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PURCHASE, SALE OR REDEMPTION OF LISTED SECURITIES
During the financial year ended 31 March 2015, neither the Company nor any of its subsidiaries has purchased, sold or redeemed any of the Company’s listed securities.
PUBLICATION OF THE RESULTS AND ANNUAL REPORT
This results announcement is published on the website of the Stock Exchange at www.hkexnews.hk and on the website of the Company at www.fecil.com.hk. The Annual Report of the Company for the financial year ended 31 March 2015 and the notice of 2015 AGM will be despatched to the Shareholders and will also be available for viewing at each of the websites of the Stock Exchange and the Company in due course.
By order of the Board of Far East Consortium International Limited Boswell Wai Hung CHEUNG Chief Financial Officer and Company Secretary
Hong Kong, 24 June 2015
As at the date of this announcement, the Board comprises five executive directors, namely Tan Sri Dato’ David CHIU, Mr. Cheong Thard HOONG, Mr. Chi Hing CHAN, Mr. Dennis CHIU and Mr. Craig Grenfell WILLIAMS and three independent non-executive directors, namely Mr. Kwok Wai CHAN, Mr. Peter Man Kong WONG and Mr. Kwong Siu LAM.
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