Harbour Centre Development Limited - Annual Report 2017

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 2017

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 2017 (“FY2017”) as follows:

FINANCIAL AND BUSINESS HIGHLIGHTS

Revenue and net profit attributable to shareholders of the Company for FY2017 increased by 25.3% and 52.3% respectively to approximately HK$5,005 million and HK$1,118 million respectively as compared to the financial year ended 31 March 2016 (“FY2016”) primarily due to strong recorded sales in residential developments in Shanghai and Melbourne and improved performance in recurring income business (including the hotel division and car park division). Adjusted cash profit[(i)] amounted to HK$1,157 million (FY2016: HK$853 million).
As at 31 March 2017, cumulative pre-sales value of properties under development amounted to approximately HK$10.7 billion (HK$7.5 billion as at 31 March 2016) following the successful launch of West Side Place Towers 1 and 2 in Melbourne.
During FY2017, HK$6.8 billion pre-sale of residential developments was achieved (FY2016: HK$4.6 billion), an increase of approximately 47.8%, as compared to FY2016.

For identification purposes only

– 1 –

Bank and cash balances and investment securities of the Group increased to approximately HK$5.6 billion as at 31 March 2017 (HK$3.8 billion as at 31 March 2016).
Net gearing ratio[(ii)(iii)] was 31.5% as at 31 March 2017 (37.7% as at 31 March 2016).
Basic earnings per share amounted to HK$0.51 (FY2016: HK$0.37 per share). Final dividend increased to HK$0.15 per share (FY2016: HK$0.13 per share). Including HK$0.035 of interim dividend paid, total full year dividend will amount to HK$0.185 per share (FY2016: HK$0.16 per share), representing a dividend payout ratio of 36.3%, reflecting confidence in the financial position of the Group.
Net asset value per share[(iii)] as at 31 March 2017 increased by HK$1 during FY2017 and reached approximately HK$10.79 per share (HK$9.79 as at 31 March 2016).
For the FY2017, the Group was honoured with several international awards in relation to company management, investor relations, corporate governance and corporate social responsibility including the prestigious “Best Managed Company in Asia in the Real Estate Category” award from Euromoney .
Post year end, disposal of Silka West Kowloon Hotel in Hong Kong was completed with an estimated net profit of approximately HK$316 million.
The Group also signed an agreement with the Manchester City Council to deliver the “Northern Gateway” development, arguably the largest residential project in Manchester delivering in excess of 10,000 new homes over the next decade.

Notes:

(i) Adjusted cash profit is calculated by adding depreciation and amortization charges to, and subtracting fair value gain in investment properties from, net profit attributable to shareholders. The amounts are adjusted for minority interests.
(ii) Net gearing ratio represents total bank loans, notes and bonds less investment securities, bank and cash balances divided by carrying amount of total equity and hotel revaluation surplus.
(iii) Revaluation surplus on hotel assets of approximately HK$13,354 million was based on independent valuation carried out as at 31 March 2017 (HK$10,732 million as at 31 March 2016) and was not recognized in the Company’s consolidated financial statements, but was adjusted for the calculations of net asset value per share and net gearing ratio.

– 2 –

CONSOLIDATED STATEMENT OF PROFIT OR LOSS

FOR THE YEAR ENDED 31 MARCH 2017

NOTES Revenue Cost of sales and services Depreciation and amortisation of hotel and car park assets Gross profit Other income Other gains and losses 4 Administrative expenses – Hotel operations and management – Others Pre-operating 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)_	2017 *HK$’000* 5,005,309 (2,709,013) (306,701) 1,989,595 25,099 368,458 (372,063) (212,230) (8,116) (46,435) (4,520) 86 (173,235) 1,566,639 (433,780) 1,132,859 1,117,688 15,171 1,132,859 51 51	2016 HK$’000 3,995,090 (1,989,973) (298,784) 1,706,333 23,259 181,416 (375,716) (222,492) (1,204) (105,385) 4,546 (3,114) (228,334) 979,309 (221,347) 757,962 734,427 23,535 757,962 37 36

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CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 MARCH 2017

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 Fair value adjustment on cross currency swap contracts designated as cash flow hedge Reclassification from hedging reserve to profit or loss Other comprehensive expense for the year Total comprehensive income for the year Total comprehensive income (expense) attributable to: Shareholders of the Company Non-controlling interests	2017 *HK$’000* 1,132,859 (391,262) (42,640) – (433,902) 698,957 684,017 14,940 698,957	2016 HK$’000 757,962 (187,559) (32,575) 43,732 (176,402) 581,560 589,988 (8,428) 581,560

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CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AT 31 MARCH 2017

NOTES Non-current Assets Investment properties Property, plant and equipment Prepaid lease payments Goodwill Interests in associates Interests in joint ventures Investment securities Deposits for acquisition of property, plant and equipment Amounts due from associates Amount due from a joint venture 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 Deposits receivable from stakeholders Other receivables Loan to a joint venture Amounts due from joint ventures Amount due from an associate Tax recoverable Investment securities Derivative financial instruments Pledged deposits Restricted bank deposits Deposit in a financial institution Bank balances and cash Assets classified as held for sale	2017 *HK$’000* 3,001,786 7,481,570 486,491 68,400 667,416 353,742 692 117,601 70,724 25,372 119,995 79,936 3,723 31,233 12,508,681 280,341 8,889,843 8,137 14,466 375,190 252,109 11,688 77,313 51,204 32,748 136,267 1,466,188 67 25,234 267,983 11,331 3,881,894 15,782,003 109,277 15,891,280	2016 HK$’000 3,304,213 7,720,482 522,412 68,400 342,407 41,052 692 124,756 70,734 26,467 119,995 80,426 2,494 35,512
		12,460,042
		583,706 8,056,484 9,414 15,181 527,404 586,880 12,605 – 50,018 22,328 62,611 1,218,063 – 24,607 161,621 11,331 2,358,326
		13,700,579
		–
		13,700,579

– 5 –

NOTES Current Liabilities Creditors and accruals 11 Customers’ deposits received Obligations under finance leases Amount due to a related company Amounts due to associates Amounts due to shareholders of non-wholly owned subsidiaries Derivative financial instruments Tax payable Bank borrowings Liabilities associated with assets classified as held for sale Net Current Assets Total Assets less Current Liabilities Non-current Liabilities Obligations under finance leases Amount due to a shareholder of a non-wholly owned subsidiary Derivative financial instruments Notes and bonds Bank borrowings 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	2017 *HK$’000* 889,406 2,109,874 3,775 16,815 7,186 26,907 9,176 358,917 2,755,293 6,177,349 3,600 6,180,949 9,710,331 22,219,012 7,594 246,740 119,314 3,130,542 7,376,392 394,715 11,275,297 10,943,715 223,837 4,033,779 6,534,186 10,791,802 151,913 10,943,715	2016 HK$’000 828,763 2,460,113 3,468 17,856 8,836 27,799 8,904 182,621 2,932,693
		6,471,053
		–
		6,471,053
		7,229,526
		19,689,568
		4,845 246,778 76,680 868,283 7,863,277 362,450
		9,422,313
		10,267,255
		213,171 3,730,625 6,196,336
		10,140,132 127,123
		10,267,255

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NOTES

FOR THE YEAR ENDED 31 MARCH 2017

1. GENERAL

The Company was incorporated as an exempted company with limited liability in the Cayman Islands. The shares of the Company are 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 AMENDMENTS TO HONG KONG FINANCIAL REPORTING STANDARDS (“HKFRSs”)

The Group has applied the following amendments to HKFRSs issued by the Hong Kong Institute of Certified Public Accountants (the “HKICPA”) for the first time in the current year:

Amendments to HKFRSs	Annual Improvements to HKFRSs 2012–2014 Cycle
Amendments to HKFRS 10,	Investment Entities: Applying the Consolidation Exception
HKFRS 12 and HKAS 28
Amendments to HKFRS 11	Accounting for Acquisitions of Interests in Joint Operations
Amendments to HKAS 1	Disclosure Initiative
Amendments to HKAS 16 and	Clarification of Acceptable Methods of Depreciation and
HKAS 38	Amortisation
Amendments to HKAS 16 and	Agriculture: Bearer Plants
HKAS 41

The application of the amendments to HKFRSs in the current year has had no material effect on the Group’s financial performance and positions for the current year and prior period and/or on the disclosures set out in these consolidated financial statements.

The Group has not early applied the following new and amendments to HKFRSs and Interpretation that have been issued but are not yet effective:

HKFRS 9	Financial Instruments1
HKFRS 15	Revenue from Contracts with Customers and the related
	Amendments1
HKFRS 16	Leases2
HK (IFRIC)-Int 22	Foreign Currency Transactions and Advance Consideration1
Amendments to HKFRS 2	Classification and Measurement of Share-based Payment
	Transactions1
Amendments to HKFRS 4	Applying HKFRS 9 Financial Instruments with HKFRS 4
	Insurance Contracts1
Amendments to HKFRS 10 and	Sale or Contribution of Assets between an Investor and its
HKAS 28	Associate or Joint Venture3
Amendments to HKAS 7	Disclosure Initiative4
Amendments to HKAS 12	Recognition of Deferred Tax Assets for Unrealised Losses4
Amendments to HKAS 40	Transfer of Investment Property1
Amendments to HKFRSs	Annual Improvements to HKFRSs 2014–2016 Cycle5

1 Effective for annual periods beginning on or after 1 January 2018

2 Effective for annual periods beginning on or after 1 January 2019

3 Effective for annual periods beginning on or after a date to be determined

4 Effective for annual periods beginning on or after 1 January 2017

5 Effective for annual periods beginning on or after 1 January 2017 or 1 January 2018, as appropriate.

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, operations of Dorsett Hospitality International Limited (“Dorsett”) and its subsidiaries (including hotel operations and management, property investment, securities and financial product investments), car park operations and facilities management 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.

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Segment revenue and results

The following is an analysis of the Group’s revenue and results by reportable and operating segment.

Segment 2017 *HK$’000*	revenue 2016 HK$’000 712,987 34,671 – 1,219,607 – 3,565 1,970,830 7,771 36,831 14,450 59,052 650,496 215,547 197,935 100,849 119,778 1,284,605 608,672 14,001 – 622,673 56,822 1,108 3,995,090	Segment profit (loss) 2017 2016 *HK$’000* HK$’000	Segment profit (loss) 2017 2016 *HK$’000* HK$’000
1,724,234 – – 1,212,454 – 13	712,987 34,671 – 1,219,607 – 3,565	513,444 (21,906) (538) 749,779 (7,579) (1,066)	186,528 (49,397) (24,586) 786,538 (7,684) 2,731
2,936,701		1,232,134	894,130
5,418 36,243 12,922	7,771 36,831 14,450	2,390 194,131 (19,289)	7,197 117,290 (29,026)
54,583		177,232	95,461
665,300 209,320 218,845 93,534 121,955	650,496 215,547 197,935 100,849 119,778	159,125 16,378 (8,985) 28,896 7,551	156,104 18,723 6,801 28,021 11,792
1,308,954		202,965	221,441
628,452 9,408 3,581	608,672 14,001 –	51,385 5,613 2,790	48,636 6,635 –
641,441 62,478 1,152 5,005,309		59,788 112,104 9,990 1,794,213 (54,339) (173,235) 1,566,639 (433,780) 1,132,859	55,271 9,224 3,741 1,279,268 (71,625) (228,334) 979,309 (221,347) 757,962

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.

– 8 –

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 deposit in a financial institution.

Property development – Australia – HK – Malaysia – PRC – Singapore – UK Property investment – Australia – HK – PRC Operations of Dorsett and its subsidiaries – HK – Malaysia – PRC – Singapore – UK Car park operations and facilities management – Australia – Malaysia – UK Securities and financial product investments Other operations Segment assets Unallocated corporate assets Total assets	2017 *HK$’000* 3,309,546 2,179,248 641,353 2,559,895 2,369,356 327,605 11,387,003 161,296 2,242,535 4,821 2,408,652 3,627,380 819,955 1,887,490 608,915 1,068,067 8,011,807 759,231 137,101 139,708 1,036,040 1,442,422 220,812 24,506,736 3,893,225 28,399,961	2016 HK$’000
		2,461,054 1,943,039 490,424 2,788,467 2,390,450 348,355
		10,421,789
		106,414 2,744,140 4,222
		2,854,776
		3,574,531 885,849 2,078,333 675,385 999,932
		8,214,030
		699,048 140,759 –
		839,807 1,207,219 253,343 23,790,964 2,369,657 26,160,621

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4. OTHER GAINS AND LOSSES

Change in fair value of investment properties Change in fair value of financial assets at fair value through profit or loss Gain arising on transfer of completed properties for sale to investment properties Change in fair value of derivative financial instruments Net foreign exchange gains Reversal on impairment loss (impairment loss) recognised on trade debtors Impairment loss recognised in respect of interest in an associate Reversal on impairment loss recognised on interest in a joint venture Gain on disposal of property, plant and equipment 5. FINANCE COSTS Interest on: Bank borrowings Other loans Finance leases Interest on notes and 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	2017 *HK$’000* 248,742 52,527 31,043 10,421 45,806 1,252 (25,000) 3,667 – 368,458 2017 *HK$’000* 269,277 159 – 102,286 (4,620) 9,709 3,975 380,786 – (32,510) (175,041) – 173,235	2016 HK$’000 191,612 (54,832) 735 9,833 24,279 (1,432) – 11,061 160 181,416 2016 HK$’000 254,182 329 9 124,348 (19,656) 6,106 10,640 375,958 (1,883) (21,152) (122,239) (2,350) 228,334

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6. INCOME TAX EXPENSE

The income tax expense comprises: Current tax: HK Profits Tax PRC Enterprise Income Tax (“PRC EIT”) PRC Land Appreciation Tax (“PRC LAT”) Australia Income Tax Malaysia Income Tax Singapore Income Tax UK Income Tax (Over) underprovision in prior years: Hong Kong Profits Tax PRC EIT Australia Income Tax Malaysia Income Tax Singapore Income Tax Deferred taxation	2017 *HK$’000* 14,721 185,004 63,180 118,368 1,821 13,454 456 397,004 (3,402) – – 70 1,211 (2,121) 38,897 433,780	2016 HK$’000 4,463 169,723 63,515 22,475 2,502 4,352 – 267,030 (53,628) (33,481) 605 (48) (1,338) (87,890) 42,207 221,347

HK Profits Tax is calculated at 16.5% of the estimated assessable profits for both years 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, Singapore and UK is 30%, 24% (2016: 25%), 17% and 20% of the estimated assessable profits for both years, respectively.

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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 Amortisation of investment in a joint venture (included in share of results of joint ventures) (Reversal of impairment loss) impairment loss recognised on trade debtors Staff costs (included HK$351,686,000 (2016: HK$330,104,000) in cost of sales and services) – Directors’ emoluments – Other staff – Share-based payment expenses to staff Share of taxation of associates (included in share of results of associates) and after crediting: Rental income, net of outgoings of HK$14,503,000 (2016: HK$12,794,000) Bank interest income	2017 *HK$’000* 1,664,570 12,754 273,800 24,020 15,640 313,460 10,631 2,904 (1,252) 23,298 612,237 615 636,150 1,417 104,895 15,084	2016 HK$’000 974,579 10,108 268,612 21,059 15,377
		305,048
		11,131 2,904 1,432 25,911 589,741 1,180
		616,832
		1,567
		113,878 5,853

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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$1,117,688,000 (2016: HK$734,427,000) and the number of shares calculated as follows:

Weighted average number of ordinary shares for the purpose of basic earnings per share Effect of dilutive potential ordinary shares – Company’s share options Weighted average number of ordinary shares for the purpose of diluted earnings per share	2017 *’000* 2,173,825 2,178 2,176,003	2016 ’000 2,010,450 2,608
		2,013,058

The computation of diluted earnings per share in prior year did not assume the exercise of its indirect subsidiary Dorsetts’ share options as the exercise prices of those options are higher than the average market prices of the Dorsett’s shares.

9. DIVIDENDS

Dividends recognised as distribution during the year: 2017 interim dividend of HK3.5 cents per share (2016: 2016 interim dividend of HK3 cents per share) 2016 final dividend of HK13 cents per share (2016: 2015 final dividend of HK13 cents per share)	2017 *HK$’000* 77,627 277,122 354,749	2016 HK$’000 64,452 269,276
		333,728

The 2017 interim dividend and 2016 final dividend was declared in form of a scrip dividend to shareholders who were given an option to elect to receive cash in lieu of all or part of their scrip dividend at a share price of HK$3.254 and HK$2.878 per share respectively. These new shares rank pari passu to the existing shares of the Company.

A final dividend for the year ended 31 March 2017 of HK15 cents (2016: HK13 cents) per share, total amount of HK$335,756,000 has been proposed by the Directors of the Company and is subject to approval by the shareholders in the forthcoming annual general meeting.

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10. DEBTORS, DEPOSITS AND PREPAYMENTS

Included in debtors, deposits and prepayments are trade debtors, net of allowance of doubtful debt, of HK$97,869,000 (2016: HK$89,851,000).

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.

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 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 Group does not hold any collateral over these balances.

The following is an aged analysis of trade debtors, net of allowance of doubtful debt, based on the invoice date at the end of the reporting period, which approximated the respective revenue recognition date:

0–60 days 61–90 days Over 90 days	2017 *HK$’000* 80,050 3,966 13,853 97,869	2016 HK$’000 70,545 6,924 12,382
		89,851

11. CREDITORS AND ACCRUALS

Included in creditors and accruals are trade creditors of HK$420,514,000 (2016: HK$370,299,000). The following is an aged analysis of the trade creditors, based on the invoice date:

0–60 days 61–90 days Over 90 days	2017 *HK$’000* 406,662 2,442 11,410 420,514	2016 HK$’000 347,097 2,851 20,351
		370,299

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FINAL DIVIDEND

The Board has recommended the payment of a final dividend for the year ended 31 March 2017 of HK15 cents (2016: HK13 cents) per ordinary share (the “Proposed Final Dividend”). The Proposed Final Dividend will be paid to the shareholders of the Company (the “Shareholders”) whose names appear on the Company’s Register of Members on 30 August 2017. The Proposed Final Dividend will be paid 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 21 August 2017 (the “2017 AGM”); and (ii) the Stock Exchange granting listing of and permission to deal in the new shares to be allotted thereunder. For the purpose of determining the number of new shares to be allotted, the market value of new shares will be calculated as the average of the closing prices of the existing shares of the Company on the Stock Exchange for the 5 trading days prior to and including 30 August 2017. Full details of the Scrip Dividend Scheme will be set out in a circular which is expected to be sent to the Shareholders together with a form of election on or around 6 September 2017. Dividend warrants and/or new share certificates will be posted on or around 9 October 2017.

CLOSURE OF REGISTER OF MEMBERS

Details of the periods of closure of the Company’s Register of Members are as follows:

(a) For determining the entitlement to attend and vote at the 2017 AGM

As set out above, the 2017 AGM is scheduled to be held on Monday, 21 August 2017. For determining the entitlement to attend and vote at the 2017 AGM, the Register of Members of the Company will be closed from Wednesday, 16 August 2017 to Monday, 21 August 2017, 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 2017 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 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 Tuesday, 15 August 2017.

(b) For determining the entitlement to the Proposed Final Dividend

As stated above, the Proposed Final Dividend is subject to the approval of Shareholders at the 2017 AGM. For determining the entitlement of the Proposed Final Dividend, the Register of Members of the Company will also be closed from Monday, 28 August 2017 to Wednesday, 30 August 2017, both days inclusive, during which period no transfer of shares of the Company will be registered. In order to qualify for entitlement to the Proposed Final Dividend, 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 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 Friday, 25 August 2017.

– 15 –

FINANCIAL REVIEW

1. Revenue analysis

The Company’s consolidated revenue for FY2017 was approximately HK$5,005,000,000, an increase of 25.3% as compared with FY2016. A breakdown of revenue is shown below:

Major business Sales of properties Hotel operations and management Car park operations and facilities management Leasing of properties and others Total revenue	FY2017 *HK$ million* 2,937 1,309 641 118 5,005	FY2016 HK$ million 1,971 1,285 623 116 3,995	Change 49.0% 1.9% 2.9% 1.7%
			25.3%

Revenue from sales of properties amounted to approximately HK$2,937 million in FY2017, a robust increase of 49.0% as compared with FY2016, primarily due to increase in recognition of sales from completion of residential developments. In FY2017, projects completed included Manhattan at Upper West Side (Stage 4) in Melbourne and King’s Manor in Shanghai.

Revenue from hotel operations and management amounted to approximately HK$1,309 million during FY2017, an increase of 1.9% as compared to FY2016, primarily due to the recovery of the performance of the hotels in Hong Kong (which is the major hotel revenue contributor) in the second half of FY2017 and the contribution from Silka Tsuen Wan which opened in February 2017.

For FY2017, revenue from car park operations and facilities management amounted to approximately HK$641 million, an increase of 2.9% as compared to FY2016, and approximately 3,500 car parking bays were added to the Group’s car park management portfolio.

Revenue relating to leasing of properties and others amounted to approximately HK$118 million for FY2017, an increase of 1.7% as compared to FY2016.

– 16 –

2. Analysis of gross profit

For FY2017 Revenue Gross profit Depreciation Adjusted gross profit Adjusted gross profit margin For FY2016 Revenue Gross profit Depreciation Adjusted gross profit Adjusted gross profit margin	Property development HK$’000 2,936,701 1,271,897 – 1,271,897 43.3% 1,970,830 1,002,272 – 1,002,272 50.9%	Hotel operations and management HK$’000 1,308,954 517,713 283,240 800,953 61.2% 1,284,605 541,203 278,549 819,752 63.8%	Car park operations and facilities management HK$’000 641,441 113,616 23,461 137,077 21.4% 622,673 116,781 20,235 137,016 22.0%	Others HK$’000 118,213 86,369 – 86,369 73.1% 116,982 46,077 – 46,077 39.4%	Total HK$’000 5,005,309 1,989,595 306,701 2,296,296 45.9%
					3,995,090 1,706,333 298,784 2,005,117 50.2%

Gross profit for FY2017 was approximately HK$1,990 million, an increase of 16.6% as compared with FY2016. Gross profit from sales of properties amounted to approximately HK$1,272 million in FY2017, representing an increase of 26.9% from FY2016. Gross profit margin from sales of properties was 43.3% in FY2017 (FY2016: 50.9%), lower than that in FY2016 as there was more recognition of sales from Australia which has a lower margin as compared to Mainland China.

Adjusted gross profit and adjusted gross profit margin from hotel operations and management amounted to approximately HK$801 million and 61.2% in FY2017. The performance reflects an improvement in the hotel business in Hong Kong in the second half of FY2017 versus the first half as well as the same period in FY2016.

Adjusted gross profit contribution from car park operations and facilities management was approximately HK$137 million for FY2017 due to a reduction in contribution from revenue from fines and penalties. The adjusted gross profit margin in this segment diluted slightly to 21.4% mainly due to a slight change in sales mix skewed towards third party car parks management contracts.

Gross profit from leasing and others was approximately HK$86 million for FY2017 and the segment’s gross profit margin was 73.1% in FY2017.

– 17 –

Net profit attributable to shareholders of the Company for FY2017 amounted to approximately HK$1,118 million, representing an increase of 52.3%, compared with FY2016. Contributions from the Group’s non-Hong Kong operations were affected by the movement of foreign currencies against Hong Kong dollar. The table below sets forth the exchange rates of Hong Kong dollar against the local currency of countries where the Group has significant operations:

	As at	As at
	31 March	31 March
Rate as at	2017	2016	Change
HK$/AUD	5.93	5.93	–
HK$/RMB	1.13	1.20	(5.8%)
HK$/MYR	1.75	1.97	(11.2%)
HK$/GBP	9.67	11.12	(13.0%)
HK$/SGD	5.56	5.74	(3.1%)
Average rates for	FY2017	FY2016	Change
HK$/AUD	5.93	5.93	–
HK$/RMB	1.17	1.23	(4.9%)
HK$/MYR	1.86	2.03	(8.4%)
HK$/GBP	10.40	11.29	(7.9%)
HK$/SGD	5.65	5.69	(0.7%)

Impact of such currency movement to the Group’s net profit attributable to shareholders for FY2017 is analysed below:

	HK$’ million
Profit attributable for FY2017
Impact from:
RMB	21.2
MYR	1.0
GBP	0.1
Total impact(i)	22.3

Note (i) assuming that the exchange rates do not change between FY2017 and FY2016.

– 18 –

3. Liquidity, financial resources and net gearing

The following table sets out the Group’s bank and cash balances, investment securities (which are considered as cash equivalent items due to their easily-monetizable nature), bank loans and borrowings and equity as at 31 March 2017.

Bank loans, notes and bonds Due within 1 year Due 1–2 years Due 2–5 years Due more than 5 years Total bank loans, notes and bonds Investment securities Bank and cash balances Liquidity position Net debts(i) Carrying amount of the total equity Add: hotel revaluation surplus Total adjusted equity Net gearing ratio (net debts to total adjusted equity)	As at 31 March 2017 *HK$ million* 1,431 4,482 6,547 814 13,274 1,467 4,161 5,628 7,646 10,944 13,354 24,298 31.5%	As at 31 March 2016 HK$ million 1,864 1,691 7,198 920 11,673 1,219 2,531 3,750 7,923 10,267 10,732 20,999 37.7%

Note (i) Net debts represent total bank loans, notes and bonds less investment securities, bank and cash balances.

To better manage the Group’s liquidity position, the Group allocated a portion of its cash position in marketable investment securities. Investment securities shown on the consolidated statement of financial position represented primarily fixed income securities and investments in fixed income funds.

– 19 –

The liquidity position of the Group as at 31 March 2017 was approximately HK$5.6 billion, representing an increase of 50.1% from the balance as at 31 March 2016, primarily due to the collection of sales proceeds upon completion of the Group’s residential developments during FY2017 namely Manhattan at Upper West Side (Stage 4) in Melbourne and King’s Manor in Shanghai, stable cash inflow from the Group’s recurring income business as well as proceeds from the issuance of the medium term notes, which were offset by repayment of bank borrowings, equity requirement on some property-related projects and certain capital expenditure.

In August 2016, the Company successfully established a US$1,000 million medium term note programme (the “Medium Term Note Programme”) which is listed on the Stock Exchange, under which the Company has the flexibility to issue multi-currency notes in the international capital market as and when funding is needed. In September 2016, the Company issued US$300 million 3.75 percent 5-year notes (the “Issue”) due on 8 September 2021 under the Medium Term Note Programme. The Issue represented a highly successful fundraising by the Group in the international capital markets, and helped to extend the debt maturity profile of the Group. The proceeds from the Issue will be used for the Group’s business development and general corporate purposes.

During FY2017, notwithstanding the Issue, the Group’s net debts reduced by approximately HK$277 million to HK$7.6 billion. The Group will continue to repay development construction loans when the relevant projects are completed and to repay loans with shorter maturity and higher cost of funding, with an aim of locking in longer dated funding. The Group’s average cost of borrowing was approximately 2.68% for FY2017 (3.16% for FY2016).

The table below shows the Group’s debts profile.

The Company’s notes Dorsett bonds Unsecured bank loans Secured bank loans – Property development and investment – Hotel operations and management – Car park operations and facilities management – Others Total bank loans, notes and bonds	As at 31 March 2017 *HK$ million* 2,311 820 1,744 3,418 4,572 398 11 13,274	As at 31 March 2016 HK$ million – 868 1,741 3,907 4,821 327 9 11,673

The carrying amounts of the total bank loans, notes and bonds in the Company’s consolidated statement of financial position as at 31 March 2017 include an amount of approximately HK$1,329 million (as at 31 March 2016: HK$1,073 million) which is reflected as current liabilities even though such sum is not repayable within one year, as the relevant banks and/or financial institutions have discretionary rights to demand immediate repayment.

– 20 –

As at 31 March 2017, the Group’s undrawn banking facilities were approximately HK$4.3 billion which were all committed banking facilities, of which approximately HK$2.4 billion was in relation to construction development while the balance of approximately HK$1.9 billion was for the Group’s general corporate use. The banking facilities together with sale proceeds to be generated from the Group’s upcoming property development projects place the Group in a solid financial position to fund not only its existing business and operations but also to further expand its business.

In addition, upon completion of the disposal of Silka West Kowloon Hotel, a total of 8 hotel assets within the Group remain unencumbered. The capital value of these 8 hotels amounted to HK$4.4 billion based on independent valuation assessed as at 31 March 2017. These assets can be used as collateral for further bank borrowings which can provide further liquidity for the Group, should this be necessary.

Adjusting for the unrecognized hotel revaluation surplus of approximately HK$13,354 million, based on independent valuation assessed as at 31 March 2017 (HK$10,732 million as at 31 March 2016), the Group’s total consolidated equity as at 31 March 2017 was approximately HK$24,298 million. The net gearing ratio of the Group was at 31.5%.

4. Net asset value per share

Equity attributable to shareholders of the Company Add: Hotel revaluation surplus Total net asset value Number of shares issued (million) Net asset value per share	As at 31 March 2017 *HK$ million* 10,792 13,354 24,146 2,238 HK$10.79	As at 31 March 2016 HK$ million 10,140 10,732 20,872 2,132 HK$9.79

Total net asset value of the Group reached approximately HK$24,146 million after adjusting for revaluation surplus on hotel assets of approximately HK$13,354 million, based on independent valuation assessed as at 31 March 2017 (HK$10,732 million as at 31 March 2016). Net asset value per share for the Company as at 31 March 2017 increased by HK$1 within the financial year and reached approximately HK$10.79.

– 21 –

5. Capital expenditure

The Group’s capital expenditure consists of expenditure for acquisition, development and refurbishment of hotel properties, plant and equipment.

During FY2017, the Group’s capital expenditure amounted to approximately HK$458 million primarily attributable to the construction works on the Group’s hotel properties, namely Silka Tsuen Wan in Hong Kong (opened in February 2017) and Dorsett City in London (to be opened in July 2017), as well as the renovation works in Dorsett Wanchai (formerly known as Cosmopolitan Hotel) in Hong Kong and Dorsett Kuala Lumpur. The capital expenditure was funded through a combination of borrowings and internal resources.

6. Capital commitments

Capital expenditure contracted but not provided in the consolidated financial statements in respect of: Acquisition, development and refurbishment of hotel properties Others	As at 31 March 2017 *HK$ million* 1,175 6 1,181	As at 31 March 2016 HK$ million 319 34 353

7. Post balance sheet events

Northern Gateway Partnership

In April 2017, the Group signed an agreement with the Manchester City Council, UK to deliver the “Northern Gateway” project which spans across an area of more than 350 acres (equivalent to 15 million sq. ft.), sweeping north from Victoria Station and taking in the neighbourhoods of New Cross, the Lower Irk Valley and Collyhurst. This is the latest and arguably the largest residential opportunity for transformational change ever undertaken in Manchester. This investment partnership is expected to deliver in excess of 10,000 new homes over the next decade. It will allow the city centre to expand and provide the optimal mix of high quality housing in well-planned new areas. The overarching vision of this project is essentially to create a series of distinct yet clearly connected communities that make the most of the area’s natural resources. This is an addition to the Angel Meadow scheme under which the Group plans to build 756 new homes around the historic Angel Meadow Park located at the periphery of the Northern Gateway development.

– 22 –

The Group is currently developing a masterplan of the development within which the Group will identify infrastructure and building programmes, as well as a land acquisition strategy. The project is expected to provide the Group with a significant and long-term pipeline within the UK and signals the fact that the Group is accelerating its expansion into the UK market.

Development of Perth City Link Sites in Australia

In May 2017, the Group was selected as the preferred proponent to develop Lots 3B, 6 and 7 of the Perth City Link in Western Australia. These three lots will be home to a range of apartments and an integrated complex. The Perth City Link is a major project being undertaken by the Western Australian Government to reconnect the Perth CBD and the entertainment district (Northbridge). The Western Australian Government has invested more than A$1.4 billion in the project to deliver world class transport infrastructure and create one of Australia’s most unique transit oriented developments.

In late 2016, the Group was selected to develop Lots 2 and 3A at the Perth City Link, a development comprising a 270-room hotel under Dorsett’s operation and 350 residential apartments. Altogether, the Perth City Link project will provide the Group with a good pipeline in Perth CBD for the years to come.

Sale of Silka West Kowloon

In May 2017, the Group, through the disposal of Double Advance Group Limited (“DAGL”), its wholly owned subsidiary, completed the sale of Silka West Kowloon at a consideration of HK$450 million. Dorsett Hospitality International Services Limited, the Company’s wholly owned subsidiary, concurrently entered into a hotel management agreement with DAGL as a manager providing hotel management services in relation to the management and operation of the hotel for a term of 6 years.

The Group is expected to record a gain of approximately HK$316 million attributable to the Group, net of the estimated expenses and taxes in relation to the sale.

This transaction provided a good opportunity for the Group to realise the profits made and to reflect the value of the hotel. With the Group remaining as the manager of the hotel under the brand of “Silka” and “絲麗”, this allows the Group to continue its expansion into the hotel management business. The sale proceeds would provide additional cash flow to the Group to enable it to redeploy its resources to other investment opportunities.

For more details, please refer to the Company’s announcements dated 3 March 2017 and 12 May 2017.

– 23 –

BUSINESS REVIEW

1. Property division

The Group’s property division includes property investment and property development.

Property investment comprises investments in retail and office buildings located in Shanghai, Hong Kong, Singapore and Melbourne. For FY2017, a fair value gain of investment properties of approximately HK$280 million was recognized, primarily due to an increase in fair value of the investment properties in Shanghai, Hong Kong and Melbourne (following completion of Upper West Side). As at 31 March 2017, valuation of investment properties reached approximately HK$3.0 billion (31 March 2016: HK$3.3 billion), a decrease of approximately HK$300 million mainly because of the disposal of Eivissa Crest in April 2016.

Eivissa Crest is a residential project with 106 residential apartments totalling approximately 36,000 square feet (“sq. ft.”). in saleable floor area (“SFA”). The site was previously acquired for the purpose of generating recurring income. However, having considered the market conditions, the Group subsequently decided to change the site to residential property development for sale, and accordingly, the site was treated as an investment property according to HKAS 40 “Investment Properties”. Upon the delivery of these residential units in FY2017, the difference between the net disposal proceeds and the carrying amount of these units was recognized as gain on disposal of investment properties held for sale.

The Group has a diversified portfolio in residential property development in Australia, Mainland China, Hong Kong, the United Kingdom, Singapore and Malaysia. To carry out property development in the various markets, the Group has established strong local teams in each of these markets which, coupled with the regionalization approach, allows the Group to take advantage of the different property cycles in 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 where the Group can benefit from the growing affluence of the middle class.

– 24 –

In FY2017, presale of HK$6.8 billion was achieved and its breakdown is shown below. This compared to the total presales of HK$4.6 billion achieved in FY2016, reflects an increase of HK$2.2 billion or 47.8%.

Aspen Crest Hong Kong The Towers at Elizabeth Quay Perth Royal Riverside (Towers 1, 2 and 4) Guangzhou The Royal Crest II Shanghai West Side Place (Towers 1 and 2) Melbourne Others	Presale value achieved in FY2017 HK$ million 162 354 834 820 4,571 64 6,805

Total cumulative presales value of the Group’s residential properties under development amounted to approximately HK$10.7 billion as at 31 March 2017. As revenue will only be recognized when the sales of the property developments are completed, value of the presales was not reflected in the Group’s consolidated income statement. The Group expects a significant cash inflow when the projects are completed.

The following shows a breakdown of the Group’s total cumulative presales value of residential properties under development as at 31 March 2017.

Developments Location Aspen Crest Hong Kong The FIFTH Melbourne West Side Place (Towers 1 and 2) Melbourne The Towers at Elizabeth Quay Perth King’s Manor (remaining) Shanghai The Royal Crest II Shanghai Dorsett Bukit Bintang Kuala Lumpur Royal Riverside (Towers 1, 2 and 4) Guangzhou Cumulative contracted presales value	*HK$ million* Expected financial year of completion 1,044 FY2019 1,225 FY2018 4,571 FY2021 1,765 FY2020 114 FY2018 820 FY2018 297 FY2018 887 FY2018 10,723

Cumulative contracted presales value

Currently the Group has 24 active residential property development projects with expected attributable saleable floor area of approximately 8.7 million sq. ft. under various stages of development across the regions. Details of the Group’s pipeline as at 31 March 2017 are shown below.

– 25 –

	Attributable	Expected	Status/	Expected
	saleable floor	attributable	expected	financial year
Developments	area(i)	GDV(ii)	launch	of completion
	Sq. ft.	HK$ million
Melbourne
West Side Place
– Towers 1 and 2	1,072,000	5,601	Launched	FY2021
– Tower 3	667,000	3,239	Planning	Planning
– Tower 4	834,000	4,263	FY2018	FY2022/23
The FIFTH	284,000	1,225	Launched	FY2018
Perth
Perth City Link (Lot 2)	190,000	916	Planning	Planning
The Towers at Elizabeth Quay	320,000	2,733	Launched	FY2020
Brisbane
Queen’s Wharf Brisbane(iii)
– Tower 4	259,000	1,104	FY2019	Planning
– Tower 5	224,000	1,119	Planning	Planning
– Tower 6	439,000	2,198	Planning	Planning
Shanghai
King’s Manor (Townhouse)	77,000	463	Launched	FY2018
The Royal Crest II	259,000	1,316	Launched	FY2018
Guangzhou
Royal Riverside
– Towers 1, 2 and 4	390,000	1,138	Launched	FY2018
– Towers 3 and 5	293,000	873	FY2018	FY2019
Hong Kong
Aspen Crest	64,000	1,065	Launched	FY2019
Tan Kwai Tsuen	51,000	714	FY2018/19	FY2019
Marin Point	103,000	1,075	FY2018	FY2019
Sham Shui Po	28,000	560	FY2018	FY2019/20
Tai Wai	33,000	627	FY2019	FY2019/20
Shatin Heights	70,000	1,200	Planning	Planning
Kuala Lumpur
Dorsett Bukit Bintang	215,000	755	Launched	FY2018
London
Alpha Square	377,000	4,014	FY2018/19	Planning
Hornsey Townhall	102,000	839	FY2018/19	Planning

– 26 –

Developments Manchester Angel Meadow at NOMA Singapore Artra(iv) Total development pipeline as at 31 March 2017 Acquired post 31 March 2017 Manchester Northern Gateway(v) Total development pipeline post 31 March 2017	Attributable saleable floor area(i) Sq. ft. 551,000 290,000 7,192,000 1,500,000(v) 8,692,000	Expected attributable GDV(ii) Status/ expected launch Expected financial year of completion HK$ million 2,142 FY2018 FY2020/21 2,624 FY2018 FY2021 41,803 5,400(v) Developing master plan 47,203

Notes:

(i) The figures represent approximate saleable residential floor area which may vary subject to finalization of development plans.
(ii) The amounts represent expected gross development value (“GDV”) attributable to the Group, which may change subject to market conditions.
(iii) This residential development consists of a total floor area of approximately 1,800,000 sq. ft.. The Group has 50% interest in the development.
(iv) Total saleable floor area of this development is approximately 410,000 sq. ft.. The Group has 70% interest in the development.
(v) The saleable floor area and GDV figure is estimated based on land already acquired and expected number of units to be built. Further land acquisitions are expected and will increase both saleable floor area and GDV for the Northern Gateway development. Expected saleable floor area is subject to planning approval.

– 27 –

In addition to the above, the Group has entered into memoranda of understanding with the partners of Destination Brisbane Consortium to develop The Star’s casino sites in Gold Coast and Sydney. Subject to the planning approval, the development of the casino site in Gold Coast will be staged and residential apartments’ and hotels will be integrated into a broader development and upgrade of the site being undertake by the Star Entertainment Group. Planning approval for stage 1 of the Gold Coast site consisting of 406 apartments and a 300-room hotel has been obtained while the remaining stages are under planning. The development of the casino site in Sydney is still at the master planning stage. These projects are expected to contribute to the residential pipeline of the Group.

Post year end, the Group was also selected as the preferred bidder for Lots 3B, 6 and 7 of the Perth City Link project. For further details, please see below.

Australia

Melbourne

West Side Place is a mixed-use residential development located in CBD of Melbourne. This development is expected to have a residential saleable floor area of approximately 2.2 million sq. ft. from 4 towers with approximately 2,800 apartments. A hotel which will be operated by Ritz Carlton with approximately 263 hotel rooms will be located at the top of Tower 1. Presales of Towers 1 and 2 were launched in June 2016 and presale value of HK$4.6 billion was achieved representing 82.1% of the total expected GDV of HK$5.6 billion for these 2 towers as at 31 March 2017. Construction of Towers 1 and 2 is expected to begin in 2017 with completion expected in the financial year ending 31 March 2021. Presale of Tower 4 is expected to be launched in June 2017. Total GDV of the whole development of West Side Place is expected to be more than HK$13 billion. This development is expected to generate significant earnings in the coming few years.

The FIFTH is located next to West Side Place and provides 402 apartments. This development with a total GDV of approximately HK$1.2 billion has been completely presold. It is expected to be completed in the second half of the financial year ending 31 March 2018.

Manhattan at Upper West Side (Stage 4) was completed in late July 2016. It consists of 641 apartments with GDV of approximately HK$1.7 billion. Approximately 5.6% (or 36 apartments) of the pre-sales were not completed as at 31 March 2017 with 30 units subsequently sold.

Perth

The Towers at Elizabeth Quay is a mixed-use development comprising residential apartments of approximately 320,000 sq. ft. in saleable floor area, a luxury hotel with 204 rooms to be operated by Ritz-Carlton, approximately 20,000 sq. ft. of commercial or retail area as well as other ancillary facilities. As at 31 March 2017, its pre-sales value reached approximately HK$1.8 billion, representing 66.7% of the expected GDV. Construction is currently underway and development is expected to be completed in the financial year ending 31 March 2020.

– 28 –

In late August 2016, the Group signed a contract to purchase Lots 2 and 3A of the Perth City Link project which is a mixed use development located adjacent to the Perth Arena. This project is expected to deliver more than 300 residential apartments and approximately 270 hotel rooms to be operated by Dorsett. Subsequently in May 2017, the Group was selected as the preferred proponent to develop Lots 3B, 6 and 7 of the Perth City Link project. These three lots will be home to a range of boutique apartments and an integrated retail, entertainment and hospitality complex.

The Perth City Link is a major project being undertaken by the Western Australian Government to reconnect the Perth CBD and the entertainment district. Altogether, these 5 lots of the Perth City Link project will provide the Group with a good pipeline in Perth CBD for the coming years.

Brisbane

The residential component of the Queen’s Wharf Project consists of 3 residential towers with SFA of approximately 1,800,000 sq. ft. The first tower is expected to be launched in FY2019. This residential component is 50% owned by the Group with the remaining 50% owned by Chow Tai Fook Enterprises Limited (“CTF”).

Preliminary construction work of Queen’s Wharf, Brisbane including the Integrated Resort (of which the Group owns 25%) started in early 2017 after the land was handed over by the government. The project encompasses a total area of approximately 9.4 hectares and envisages three residential towers, five world-class hotels, high-end food and commercial outlets and a casino in Brisbane’s prime waterfront district. The total core development gross floor area of the project is expected to be 544,600 square meters (“sq. m.”) of which approximately 167,000 sq. m. relates to the residential component.

The Integrated Resort component is expected to commence operation in stages in or before 2022. The project brings together the Group’s experience in international hospitality operation and mixed-use development, CTF’s extensive VIP customer base in Mainland China and Asian markets, as well as The Star’s operational experience in integrated resorts.

In October 2016, the new casino license was granted by the Queensland Government, Australia. Operation of the casino is permitted to commence upon completion of the integrated resort component of the development. This casino license will deliver the key operating terms for successful delivery of the integrated resort which includes a casino license term and an integrated resort precinct lease term of 99 years, a 25-year casino exclusivity period within 60 kilometres from the Brisbane CBD from commencement of operations of the integrated resort, maximum approved electronic gaming machines of 2,500, and unlimited gaming tables (including electronic derivations).

The project is expected to contribute significantly to the Group’s recurring cash flow stream as well as residential development pipeline.

– 29 –

Mainland China

The Group has been developing California Garden, a premier township development in Shanghai over a number of years. The development comprises a diversified portfolio of residences including low-rise apartments, high-rise apartments and town houses. Currently, 2 residential phases, namely King’s Manor and The Royal Crest II, are under various stages of completion.

King’s Manor consists of 479 apartments and 90 town houses, of which 476 apartments and 54 town houses had been delivered up to 31 March 2017. The remaining portion with an expected GDV of HK$463 million is expected to be delivered and recognized as revenue in the financial year ending 31 March 2018.

The Royal Crest II consists of 180 apartments and 42 town houses. The expected GDV is approximately HK$1,316 million. As at 31 March 2017, all of the apartments amounting to HK$745 million were completely presold. Presale for town houses commenced in September 2016. Total presale value of the whole development reached HK$820 million, representing 62.3% of its total GDV. The Royal Crest II is expected to be completed in the financial year ending 31 March 2018.

In Guangzhou, Royal Riverside is a 5-tower residential development producing 607 apartments with a total saleable floor area of approximately 683,000 sq. ft. and a total expected GDV of approximately HK$2 billion. Towers 1, 2 and 4 started to show its strong momentum since the second half of FY2017 with the cumulative pre-sales value reaching HK$887 million as at 31 March 2017. Presale of Tower 3 is expected to be launched in FY2018 and completion of the two stages of the development is expected in the financial years ending 31 March 2018 and 2019 respectively.

Hong Kong

The Group continues to seek development opportunities in Hong Kong through participation in government tenders and bidding for projects with the Urban Renewal Authority (“URA”).

Currently the Group has 6 residential projects in the pipeline in Hong Kong.

Aspen Crest is a redevelopment project and consists of 234 apartments with approximately 64,000 sq. ft. in saleable floor area and approximately 16,000 sq. ft. of commercial component. As at 31 March 2017, its presales value reached over HK$1 billion, representing 98.0% of the total expected GDV. Its completion is expected to take place in the financial year ending 31 March 2019.

A residential development site at Tan Kwai Tsuen consisting of 24 town houses with approximately 51,000 sq. ft. in saleable floor area is expected to be launched for presale in the second half of the financial year 2018. Completion is expected to be in the financial year ending 31 March 2019.

– 30 –

Marin Point, located at Sha Tau Kok comprises 261 low-rise apartments with approximately 103,000 sq. ft. in saleable floor area. Total expected GDV is HK$1.1 billion. Its presale was launched in May 2017 with a satisfactory presale performance. Completion is expected in the financial year ending 31 March 2019.

A residential development site at Hai Tan Street, Sham Shui Po was acquired through URA. This residential development will comprise 72 apartments (mainly 1-bedroom apartments) with approximately 28,000 sq. ft. in saleable floor area. Expected GDV is HK$560 million. Presale is expected to commence in FY2018 with completion anticipated to be in the financial year ending 31 March 2019/2020.

A development site at Mei Tin Road, Tai Wai, 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. Total expected GDV is HK$627 million. Completion is expected to be in the financial year ending 31 March 2019/2020.

Another residential development site at Tai Po Road Shatin Heights comprises more than 60 apartments and 4 houses. The project has a gross floor area of approximately 88,000 sq. ft. and is currently under planning stage.

Malaysia

Dorsett Bukit Bintang is a residential development adjacent to Dorsett Regency Kuala Lumpur. This development consists of 252 high-rise apartments with approximately 215,000 sq. ft. in saleable floor area. As at 31 March 2017, presales value reached approximately HK$297 million, representing 39.3% of the total expected GDV. Completion is expected to take place in the financial year ending 31 March 2018. The Group is considering allocating a portion of the development to be operated as serviced apartments.

United Kingdom

London

Alpha Square is a residential development site in Marsh Wall, Canary Wharf, London. The development will feature a mixed-use complex including residences of approximately 377,000 sq. ft. in saleable floor area, a hotel of approximately 231 rooms and commercial facilities. The Group is reviewing an opportunity to combine this site with an adjacent site for joint development.

Hornsey Town Hall, located in North London, is a redevelopment project which will be converted into a mixed-use development featuring a residential component, a hotel/serviced apartment tower and a town hall with communal areas. The residential component will provide approximately 120 apartments with saleable floor area of approximately 102,000 sq. ft. The hotel/serviced apartment and communal areas will provide recurring income to the Group. The development is under planning stage.

– 31 –

Manchester

In August 2016, the Group was appointed by Manchester Place and The Co-operative Group as the developer for the Angel Meadow site at NOMA, one of the major residential growth areas for Manchester, the United Kingdom. The plan is to build more than 756 apartments with approximately 551,000 sq. ft. saleable floor area around the historic Angel Meadow Park, which is at the periphery of the Northern Gateway development. Presale is expected to be launched in the financial year ending 31 March 2018.

As mentioned under “Post Balance Sheet Events” above, the Group signed an agreement to deliver the “Northern Gateway” project in Manchester. The project, subject to further land acquisitions, represents a significant addition of over 10,000 new homes over the next decade to the Group’s development pipeline. The Group is currently developing a master plan for the project.

Singapore

Artra is a residential project located next to the Redhill MRT station in Singapore. The development consists of 400 apartments with approximately 410,000 sq. ft. in saleable floor area and a commercial component of approximately 20,000 sq ft. This development is owned by a joint venture in which the Group has a 70% interest. The Group launched the presale in April 2017.

2. Hotel operations and management

The following summarises the regional operating performance of Dorsett’s owned hotels for FY2017 and FY2016 in local currency (“LC”).

	Occupancy	Rate	Average	room rate	RevPar		Revenue	Revenue
			(LC)	(LC)	(LC)	(LC)	(LC’ 000)	(LC’ 000)
For the year ended 31 March	2017	2016	2017	2016	2017	2016	2017	2016
Hong Kong_(HK$)_	90.1%	86.0%	695	731	626	629	665,300	650,496
Malaysia_(MYR)_	66.8%	65.8%	190	189	127	124	112,236	106,181
Mainland China_(RMB)_	61.2%	50.9%	411	414	251	211	188,011	161,712
Singapore (SGD)	80.2%	82.0%	181	192	145	157	16,480	17,727
United Kingdom_(GBP)_	88.0%	79.3%	99	98	87	78	11,700	10,583
			(HK$)	(HK$)	(HK$)	_(HK$) _	_(HK$’000) _	(HK$’000)
Group Total	77.6%	72.7%	625	666	485	484	1,308,566	1,284,606

– 32 –

The Group’s hotel operations for FY2017 recorded a total revenue of approximately HK$1.3 billion, representing an increase of 1.9% from that in FY2016. Overall occupancy rate increased approximately 4.9 percentage points. Affected by adverse currency movements, overall average room rate decreased 6.2% to HK$625 per night. As a result, revenue per available room (“RevPAR”) was maintained at a similar level to that of FY2016 at HK$485 for FY2017.

Hong Kong remained the main contributor to the Group’s hotel operations which accounted for approximately 50% of the hotel revenue. The occupancy rate (“OCC”) increased approximately 4.1 percentage points and average room rate (“ARR”) decreased by 4.9% to HK$695 as compared to last year, resulting in a slight decrease in the RevPAR for Hong Kong to HK$626 per night. In February 2017, Silka Tsuen Wan opened contributing 409 rooms to the Group’s operating portfolio. Overall improvement in performance in the second half of FY2017 as shown below and the addition of the hotel rooms helped to increase revenue in Hong Kong to HK$665 million for FY2017.

	FY2017		FY2016
Hong Kong	2H	1H	2H	1H
Occupancy rate	92.8%	87.2%	86.3%	85.7%
Average room rate_(HK$)_	751	632	783	679
RevPar_(HK$)_	697	551	676	582

OCC and ARR for Hong Kong in the second half of FY2017 were recorded at 92.8% and HK$751 respectively while RevPar was HK$697. In FY2017, the Group was able to capture the improving market by adopting a new sales and marketing strategy to attract a wider base of more diverse international visitors. The improved performance in Hong Kong is expected to extend into the near future. With the renovated rooms of Dorsett Wanchai (rebranded from Cosmopolitan Hotel) and Silka Far East as well as the addition of rooms contributed by the newly-opened Silka Tsuen Wan, the Group remains optimistic in further maximizing its revenue and enhancing its market competitiveness.

In Malaysia, revenue from hotel operations and management for FY2017 increased by 5.7% to approximately MYR112 million as compared to FY2016. OCC and ARR were maintained at similar levels to those of FY2016. RevPar had a slight increase to MYR 127 per night. As shown from the 2 years’ operating data below, the operating performance of hotels in Malaysia is stabilizing and steadily improving.

	FY2017		FY2016
Malaysia	2H	1H	2H	1H
Occupancy rate	65.4%	68.3%	65.4%	66.2%
Average room rate_(MYR)_	194	187	188	190
RevPar_(MYR)_	126	128	123	126

– 33 –

In Singapore, Dorsett Singapore recorded revenue of approximately SGD16 million for FY2017, similar to the level of FY2016. For FY2017, OCC was 80.2% and ARR was SGD181 per night. RevPAR was recorded at SGD145 per night. Further details of the 2 years’ operating data of the performance in Singapore are provided in the following.

	FY2017		FY2016
Singapore	2H	1H	2H	1H
Occupancy rate	80.8%	79.5%	83.1%	80.9%
Average room rate_(SGD)_	176	187	192	191
RevPar_(SGD)_	142	149	160	155

In Mainland China, OCC in FY2017 increased by 10.3 percentage points compared with the last financial year while ARR kept at a similar level at RMB411. As a result, RevPAR increased by 19.0% to RMB251 as compared to FY2016. Revenue increased by 16.3% to approximately RMB188 million for FY2017 mainly due to the significant improved performance of Dorsett Grand Chengdu and Dorsett Shanghai. OCC of Dorsett Grand Chengdu rose by 21.7 percentage points to 59.3% while RevPar soared by 51.4% to RMB202. Dorsett Shanghai benefitted from a more diversified customer mix and higher proportion of corporate and exhibition customers which resulted in its OCC’s incline of 8.5 percentage points to 85.3% and RevPar at RMB581 for FY2017, an increase of 17.4%, as compared to FY2016. It is expected that the operational performance of hotels in Mainland China will continue to grow as illustrated by the 2 years’ operating data below.

	FY2017		FY2016
Mainland China	2H	1H	2H	1H
Occupancy rate	62.7%	59.7%	50.8%	51.1%
Average room rate_(RMB)_	408	414	408	429
RevPar_(RMB)_	256	247	207	219

In the United Kingdom, Dorsett Shepherds Bush recorded revenue of approximately GBP12 million for FY2017, an increase of approximately 10.6% as compared to FY2016. In the second half of 2017, the depreciation of Sterling Pound improved UK’s tourism business including performance of the hotels in London. OCC improved by 8.6 percentage points to 88% and RevPAR rose by 11.9% to GBP87 per night. Dorsett Shepherds Bush’ recent operating data below show that its performance for FY2017 was stable and is expected to continue to grow.

	FY2017		FY2016
United Kingdom	2H	1H	2H	1H
Occupancy rate	86.4%	89.4%	68.7%	90.0%
Average room rate_(GBP)_	97	102	99	97
RevPar_(GBP)_	84	91	68	88

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On 6 February 2017, together with The Star Entertainment Group Limited and CTF, the Group completed the acquisition of the Sheraton Grand Mirage Resort at Gold Coast, Australia. The Group owns a 25% interest in the joint venture. The Sheraton Grand Mirage Resort is an iconic property and Gold Coast’s only 5-star beachfront resort. Property facilities include 295 rooms and suites, a swimming pool, fitness centre, spa facilities and surrounding beach. This was a tremendous opportunity as the Sheraton Grand Mirage Resort is a unique hotel property that offers not only existing cash flow stream but also potential development opportunity. The beachfront property is highly complementary to the Queen’s Wharf Brisbane project and will immediately add operating capacity to the Group’s current portfolio of hotels. Furthermore, the hotel site includes surplus land which provides room for expansion, subject to planning in the future.

On 12 May, 2017, the Group’s wholly owned subsidiary which owns Silka West Kowloon Hotel was sold for HK$450 million with the Group continuing to manage the hotel for a term of 6 years. Please refer to the “Post Balance Sheet Events” above and the Company’s announcements dated 3 March 2017 and 12 May 2017 for more details.

Dorsett City hotel in London is expected to open in the first half of the financial year ending 31 March 2018. This 13-storey hotel will add 267 rooms to the Group’s current operating portfolio. With its location right next to the Aldgate Station, it is in a perfect spot for both business and leisure travelers.

Currently, the Group operates 21 owned hotels (9 in Hong Kong, 5 in Malaysia, 4 in Mainland China, 1 in Singapore, 1 in London and 1 in Gold Coast) with approximately 6,600 rooms. The Group has 14 hotels in the development pipeline, of which two are Ritz Carlton hotels, one each in Melbourne and Perth, and four world-class hotels in the integrated resort of Queen’s Wharf Brisbane in which the Group has a 25% interest, with the remaining expected to be operated by Dorsett. With the disposal of Silka West Kowloon Hotel in May 2017 and when all the hotels in the pipeline become operational, the Group will own 35 hotels operating approximately 10,100 rooms. The Group also manages 3 other hotels (1 in Hong Kong and 2 in Malaysia) with approximately 700 rooms.

3. Car park operations and facilities management

In FY2017, the Group’s car park business completed a program to upgrade its central monitoring system, enabling the management team of this business to have a better control on the day-to-day operations of the business and providing a strong foundation for acquisition and growth. The Group’s car park division is currently actively evaluating a number of acquisition opportunities.

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In December 2016, the Group acquired a car park in the vicinity of Manchester Airport in UK at a consideration of GBP13.4 million. This car park will continue to be operated under the brand of FSS Manchester Airport Car Park. With a capacity of approximately 1,500 car parking bays, it is expected to enhance the source of steady cash flow to the Group. This car park is jointly owned on a 50/50 basis by the Company and Care Park and is the first acquisition in UK for both companies marking an important and meaningful milestone of the partners’ overseas expansion.

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 and generates a stable recurring income for the Group. This business sector has been achieving steady growth over the years, with the Group’s portfolio under management growing into 390 car parks with approximately 74,500 car parking bays as at 31 March 2017, having added approximately 3,500 car parking bays during FY2017. Of the Group’s 390 car parks, 29 were self-owned car parks (23 in Australia, 3 in New Zealand, 2 in Kuala Lumpur and 1 in Manchester) comprising approximately 9,200 car parking bays, with the remaining 65,300 car parking bays in Australia, New Zealand and Malaysia under management contracts entered into with third party car park owners, which include local governments, shopping malls, retailers, universities, airports, hotels, hospitals, government departments and commercial and office buildings.

With this division further expanding its operation to include property management services in Australia (mainly in Brisbane, Melbourne and Adelaide) and Johor Bahru, Malaysia, where the Group had 64 contracts in relation to facilities management services as at 31 March 2017 as well as its entry into the UK market, it is expected that the car park operations and facilities management business will continue its steady growth.

OUTLOOK

Market conditions for the property sector in major cities in which the Group is operating will remain challenging. Following a period of monetary easing, the central banks in some of the major economies, in particular the United States, have stopped quantitative easing and have started to increase interest rates. A number of economists have also raised concerns that uncertainty brought by “Brexit” may have an impact on the British economy which may delay house buying by consumers. In addition, the government of a number of countries has imposed tightening measures such as higher stamp duty on property purchases and more stringent borrowing requirements for property buyers. Some of these measures are aimed to reduce potential overheating in the residential market and may have an impact on the operating environment for the Group in relation to property sales.

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Despite the above, the Group is confident that it has a strong balance sheet to weather through any potential volatility in the property market. Over the last several years, the Group has strengthened its balance sheet with strong retained earnings. It has also accumulated significant revaluation surplus within its hotel portfolio. With an updated valuation on its hotel portfolio, the Group’s net gearing was reduced to a comfortable level of 31.5% as at 31 March 2017, taking into account the revaluation surplus. In fact, the Group is well positioned to continue to expand its three core businesses. With a total cash and investment securities position totalling HK$5.6 billion and total undrawn credit facilities of HK$4.3 billion, the Group has ample capacity to seek further growth opportunities by enhancing its development pipeline for both residential and hotel development as well as through selective land acquisitions.

On the residential development business, the Group will continue to focus on the cities with good population growth potential. We will continue to strengthen the operating team and to selectively replenish our land bank. We will maintain resilience through economic cycles and will seek to grow further by taking advantage of short-term market instabilities. We will also seek to de-risk development projects through earlier presales of properties, even before construction. With the signing of the Northern Gateway deal, the Group has secured a significant pipeline in UK. This, combined with cumulative presales reaching over HK$10 billion as at 31 March 2017 and the recent strengthening of the development pipeline, the visibility of contribution from the residential development is good in the mid- to long-term horizon.

On the hotel front, the Group currently has 21 operating own hotels (approximately 6,600 rooms) and has a healthy pipeline of additional 14 hotels and approximately 3,500 rooms planned. We continue to experience growth in UK market and have seen recovery in a number of other core Asian markets. This, together with the new hotel additions, will likely drive the growth in the business. The Group will continue to adopt a “Chinese Wallet” strategy and pursue opportunities arising from the anticipated increase in the outbound tourist numbers from Asia.

In respect of the car park business, the Group will continue to leverage on the technology and management platform it has built to expand into other markets. With the recent acquisition of the 1,500 car parking bays near the Manchester Airport, the Group intends to further expand into the market with more acquisitions. It will continue to adopt the model of managing and operating self-owned car parks and third party car parks. The Group believes that car parks are a unique asset class that not only provide good operating cash flow but also offer property development potential.

Preliminary construction work has commenced on the Queen’s Wharf Brisbane project. When completed, this will bring a new strong cashflow stream for the Group.

The Group will continue to reward its shareholders with strong dividends whilst retaining some earnings to facilitate growth. With a strong development pipeline and a growing recurring cashflow business, we are confident that the Group can continue to deliver long term value to the shareholders.

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EMPLOYEES AND REMUNERATION POLICIES

As at 31 March 2017, the Group had approximately 3,600 employees. The Group provides its employees with comprehensive benefit packages and career development opportunities, including medical benefits, both internal and external training appropriate for various level of staff roles and functions.

COMPLIANCE WITH CORPORATE GOVERNANCE CODE

Throughout the year ended 31 March 2017, 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 deviations from Code Provisions A.2.1 and E.1.2 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.

Pursuant to Code Provision E.1.2 of the CG Code, the Chairman should attend the annual general meeting of the Company. Due to unavoidable business engagement, the Chairman was unable to attend the annual general meeting of the Company held on 26 August 2016. The Chairman had arranged for other directors and management, who are well-versed in the Company’s business and affairs, to attend the meeting and communicate with Shareholders.

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 accounting principles, standard and practices adopted by the Company, and discussed matters relating to auditing, risk management and internal control and financial reporting, including the review of the audited consolidated results of the Group for year ended 31 March 2017.

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SCOPE OF WORK OF MESSRS. DELOITTE TOUCHE TOHMATSU

The figures in respect of the Group’s consolidated statement of profit or loss and other comprehensive income, consolidated statement of financial position and the related notes thereto for the year ended 31 March 2017 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 Engagements 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.

PURCHASE, SALE OR REDEMPTION OF LISTED SECURITIES

Neither the Company nor any of its subsidiaries has purchased, sold or redeemed any of the Company’s listed securities during the year.

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 2017 and the notice of 2017 AGM will be despatched to the Shareholders and published on the websites of the Stock Exchange and the Company in due course.

By order of the Board of Far East Consortium International Limited Tak Shing CHOI Company Secretary

Hong Kong, 13 June 2017

As at the date of this announcement, the Board comprises four executive directors, namely Tan Sri Dato’ David CHIU, Mr. Cheong Thard HOONG, Mr. Dennis CHIU and Mr. Craig Grenfell WILLIAMS; one non-executive director, Mr. Chi Hing CHAN; 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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