Unaudited Financial Information for the three months ended 31 March ...

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Apr 28, 2016 - for the three months ended 31 March 2016 (the “Period”) together with ... additional returns from the
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.

(Incorporated in Hong Kong with limited liability) (Stock Code: 0270)

UNAUDITED FINANCIAL INFORMATION FOR THE THREE MONTHS ENDED 31 MARCH 2016 The board of directors (the “Board”) of Guangdong Investment Limited (the “Company”) is pleased to announce the unaudited financial information of the Company and its subsidiaries (the “Group”) for the three months ended 31 March 2016 (the “Period”) together with the comparative figures.

Unaudited financial highlights For the three months ended 31 March 2016 (Unaudited)

2015 (Unaudited)

Changes

HK$’000

HK$’000

%

Revenue

2,681,865

2,358,576

+13.7

Profit before tax

1,690,797

1,488,590

+13.6

Profit attributable to owners of the Company

1,198,656

1,058,086

+13.3

31 March 2016 (Unaudited)

31 December 2015 (Audited)

Changes

HK$’000

HK$’000

%

Total Assets

55,133,654

54,109,990

+1.9

Owners’ Equity

32,827,601

31,472,144

+4.3

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Guangdong Investment Limited

Notes: (1) The financial information has not been audited or reviewed by the Company’s auditor. (2) The financial information relating to the year ended 31 December 2015 included in this announcement as comparative information does not constitute the statutory annual consolidated financial statements of the Company for that year but is derived from those consolidated financial statements. Further information relating to these statutory financial statements required to be disclosed in accordance with section 436 of the Hong Kong Companies Ordinance is as follows: The Company will deliver the consolidated financial statements for the year ended 31 December 2015 to the Registrar of Companies as required by section 662(3) of, and Part 3 of Schedule 6 to, the Hong Kong Companies Ordinance in due course. The Company’s auditor has reported on those consolidated financial statements. The auditor’s report was unqualified; did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying its reports; and did not contain a statement under sections 406(2), 407(2) or (3) of the Hong Kong Companies Ordinance. (3) This announcement is made by the Company on a voluntary basis in order to further enhance the Company’s level of corporate governance and transparency. The Company will continue to publish financial information quarterly in subsequent financial years.

PERFORMANCE HIGHLIGHTS The unaudited consolidated revenue of the Group for the Period was HK$2,682 million (2015: HK$2,359 million), an increase of 13.7% as compared with the same period last year. In addition, the unaudited consolidated profit attributable to owners of the Company for the Period increased by 13.3% to HK$1,199 million (2015: HK$1,058 million) and the profit before tax increased by 13.6% or HK$202 million to HK$1,691 million (2015: HK$1,489 million) for the Period. The growth in revenue, profit before tax and profit attributable to owners of the Company was mainly attributable to a better performance in both water resources and electric power generation businesses, and additional returns from the toll road business and certain water resources projects acquired during the last quarter of 2015. Nevertheless, the increase was partially offset by the unsatisfactory performance in department store operation as well as the hotel operation and management businesses. The gain arising from fair value adjustment of investment properties of HK$36 million (2015: HK$5 million) was recorded during the Period. Net exchange gain during the Period was HK$40 million (2015: net exchange loss HK$20 million). A summary of the performance of the Group’s major businesses during the Period is set out as follows: Water Resources Dongshen Water Supply Total water supply to Hong Kong, Shenzhen and Dongguan during the Period was 504 million tons (2015: 524 million tons), decreased by 3.8%, which generated a revenue of HK$1,528,098,000 (2015: HK$1,462,986,000), an increase of 4.5% over the same period last year. The revenue from water sales to Hong Kong for the Period increased by 6.3% to HK$1,225 million (2015: HK$1,152 million). The revenue from water sales to Shenzhen and Dongguan areas for the Period decreased by 2.6% to HK$303 million (2015: HK$311 million). The profit before tax of the Dongshen Water Supply Project for the Period was HK$1,110,157,000 (2015: HK$990,718,000), 12.1% higher than that in the same period last year.

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Guangdong Investment Limited

Water Group HK Guangdong Water Group (H.K.) Limited (“Water Group HK”), a wholly-owned subsidiary of the Company, holds a number of subsidiaries and associates which are principally engaged in water distribution, sewage treatment operation and waterworks construction in the People’s Republic of China. The water supply capacity of each of the subsidiaries of Water Group HK, namely, 東莞市清溪粤 海水務有限公司 (Dongguan Qingxi Guangdong Water Co., Ltd.*), 梅州粤海水務有限公司 (Meizhou Guangdong Water Co., Ltd.*), 儀征港儀供水有限公司 (Yizheng Gangyi Gongshui Company Limited*), 高郵港郵供水有限公司 (Gaoyou Gangyou Gongshui Company Limited*), 寶應粤海水務有限公司 (Baoying Yuehai Shuiwu Company Limited*), 海南儋州自来水有限公 司 (Hainan Danzhou Tap Water Company Limited*), 梧州粤海江河水務有限公司 (Wuzhou Yuehai Jianghe Shuiwu Company Limited*) and 肇慶高新區粤海水務有限公司 (Zhaoqing HZ GDH Water Co., Ltd.*) is 290,000 tons, 190,000 tons, 150,000 tons, 145,000 tons, 130,000 tons, 100,000 tons, 355,000 tons and 90,000 tons per day, respectively, totaling 1,450,000 tons per day. The waste water processing capacity of the sewage treatment plants operated by each of the subsidiaries of Water Group HK, namely, 梅州粤海水務有限公司 (Meizhou Guangdong Water Co., Ltd.*), 梧州粤海環保發展有限公司 (Wuzhou Yuehai Huanbao Fazhan Company Limited *), 東莞市常平金勝水務有限公司 (Dongguan Changping Jinsheng Water Co., Ltd.*), 開平粤海水務 有限公司 (Kaiping Guangdong Water Co., Ltd.*), 五華粤海環保有限公司 (Wuhua Yuehai Huanbao Co., Ltd.*) and 東莞市道滘鴻發污水處理有限公司 (Dongguan Daojiao Hongfa Sewage Treatment Co., Ltd.*) is 100,000 tons, 90,000 tons, 70,000 tons, 50,000 tons, 40,000 tons and 40,000 tons per day, respectively, totaling 390,000 tons per day. The water supply capacity of 江河港武水務(常州)有限公司 (Jianghe Gangwu Shuiwu (Changzhou) Company Limited*) and 廣州南沙粤海水務有限公司 (Guangzhou Nansha GDH Water Co., Ltd.*), being associates of Water Group HK, is 520,000 tons and 200,000 tons per day, respectively, totaling 720,000 tons per day. Revenue of Water Group HK and its subsidiaries for the Period in aggregate amounted to HK$177,040,000 (2015: HK$68,087,000). Profit before tax of Water Group HK, its subsidiaries and associates for the Period in aggregate amounted to HK$32,233,000 (2015: HK$8,633,000). The growth was mainly attributable to additional returns from those water resources projects acquired during the last quarter of 2015.

Property Investment Mainland China Teem Plaza As at 31 March 2016, the Group held an effective equity interest of 76.13% in 廣東天河城(集團) 股份有限公司 (Guangdong Teem (Holdings) Limited*) (“GD Teem”), the property owner of Teem Plaza. Teem Plaza comprises a shopping mall, an office building and a hotel. The shopping mall and the office building are held for investment purposes by the Group. The shopping mall, known as Teemall, had an average occupancy rate of nearly 99% during the Period (2015: 99%). The mall is successful in retaining existing brand-name tenants and attracting new ones. 3

Guangdong Investment Limited

Revenue of Teem Plaza comprises rental income from both the shopping mall (including rentals from the department stores operated by the Group) and the office building. During the Period, due to negative impact from exchange rate fluctuation, revenue of Teem Plaza decreased by 2.8% to HK$290,216,000 (2015: HK$298,465,000). Had the currency translation impact been excluded, the revenue of Teem Plaza achieved a steady growth of 3% as compared with the same period last year. The profit before tax for the Period, excluding changes in fair value of investment properties and net interest income, decreased by 3.7% to HK$205,531,000 (2015: HK$213,339,000). The office building, known as Teem Tower (粤海天河城大廈), with an average occupancy rate of 97.3% (2015: 98.8%) during the Period, had a total revenue for the Period of HK$52,822,000 (2015: HK$54,982,000), decreased by 3.9%. Excluding the currency translation impact, the revenue had an increase of 1.8% as compared with the same period last year. The profit before tax for the Period, excluding changes in fair value of investment properties, decreased by 5.5% to HK$44,984,000 (2015: HK$47,579,000). Tianjin Teem Shopping Mall The Group owns a parcel of land in Tianjin for developing into a large-scale modern shopping mall with a total gross floor area above ground and underground of approximately 137,100 square meters and 56,000 square meters, respectively. A total sum of approximately HK$2,103 million had been invested as at 31 March 2016. Panyu Wanbo CBD Project The Group’s effective interest in 廣 州 市 萬 亞 投 資 管 理 有 限 公 司 (Guangzhou City Wanye Investment Management Company Limited*) (“Wanye”) is 31.06%. 廣州天河城投資有限公司 (Guangzhou Tianhecheng Investment Co., Ltd.*) (“Tianhecheng Investco”), a 60%-owned subsidiary of GD Teem, directly holds 68% interest in Wanye. Wanye owns a parcel of land in 番禺萬博中央商務區 (Panyu Wanbo Central Business District), which is designated to be a new commercial area in Guangzhou. This parcel of land is being developed into a large-scale integrated commercial project with a gross floor area of approximately 260,000 square meters. A total sum of approximately HK$1,483 million had been invested by Tianhecheng Investco into Wanye in accordance with the cooperation agreement as at 31 March 2016. Hong Kong Guangdong Investment Tower The average occupancy rate of Guangdong Investment Tower for the Period was 100% (2015: 100%). As a result of the increase in average rental, the total revenue for the Period was up by 5.3% to HK$13,224,000 (2015: HK$12,557,000).

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Guangdong Investment Limited

Department Store Operation The Group operated nine stores with a total leased area of approximately 184,000 square meters (31 December 2015: 184,000 square meters) as at 31 March 2016. Confronted with keen competition of the retail market in Guangzhou during the Period, the total revenue decreased by 27.1% to HK$204,924,000 (2015: HK$281,261,000). The profit before tax for the Period decreased by 46.9% to HK$83,448,000 (2015: HK$157,262,000). The revenue of the nine stores operated by the Group for the three months ended 31 March 2016 was as follows:

Leased area sq.m. Teemall Store Wan Bo Store Ming Sheng Store Dong Pu Store Ao Ti Store Baiyun New Town Store Dongguan Store Nanhai Store Yuehaiyangzhong Hui Store

Revenue for the three months ended 31 March 2016 2015 HK$’000 HK$’000

Changes %

40,000 19,600 13,000 28,000 21,500 15,700 9,800 28,400 8,000 _______

130,096 25,099 16,383 13,271 10,594 6,922 836 942 781 _______

196,238 27,782 20,851 15,558 12,169 7,533 1,130 _______-

-33.7 -9.7 -21.4 -14.7 -12.9 -8.1 -26.0 ______-

184,000 _______ _______

204,924 _______ _______

281,261 _______ _______

-27.1 ______ ______

The Group’s effective interest in 廣東永旺天河城商業有限公司 (Guangdong Aeon Teem Co., Ltd.*) (“GD Aeon Teem”) is 26.65%. Due to the keen competition, the Group’s share of profit in GD Aeon Teem amounted to HK$5,118,000 (2015: HK$6,709,000) during the Period, decreased by 23.7%.

Hotel Operation and Management As at 31 March 2016, the Group’s hotel management team managed a total of 40 hotels (31 December 2015: 40 hotels). Among the seven hotels owned or lease-owned by the Group, five are star-rated hotels and two are budget hotels. During the Period, the average room rate of Sheraton Guangzhou Hotel was HK$1,183 (2015: HK$1,212) whereas the average room rate of the remaining four star-rated hotels and the two budget hotels were HK$723 (2015: HK$752) and HK$215 (2015: HK$231), respectively. The average occupancy rate of Sheraton Guangzhou Hotel was 87.3% (2015: 86.6%) and that of the other four star-rated hotels was 71.3% (2015: 79.3%) during the Period. Due to the decline in the number of overnight visitors from Mainland China and the adverse effect of interior renovation works, the average room rate and the occupancy rate of hotels in Hong Kong dropped. The revenue of hotel operation and management business for the Period decreased by 9.4% to HK$145,341,000 (2015: HK$160,401,000). The profit before tax for the Period decreased by 44.4% to HK$16,966,000 (2015: HK$30,495,000).

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Guangdong Investment Limited

Other Infrastructure Projects Zhongshan Power Plant 中山火力發電有限公司 (Zhongshan Thermal Power Co., Ltd.*) (“ZTP”) has one power generation unit with an installed capacity of 300 MW (2015: 110 MW). Sales of electricity during the Period amounted to 336 million kwh (2015: 118 million kwh), increased by 184.7%. As a result of the increase in electricity sales, revenue for the Period increased by 104.1% to HK$152,390,000 (2015: HK$74,667,000). The profit before tax for the Period was HK$68,250,000 (2015: HK$23,343,000), an increase of 192.4%. Pursuant to the agreements entered into by Zhongshan Power (Hong Kong) Limited (“ZPHK”) and 中山興中集團有限公司 (Zhongshan Xingzhong Group Co., Ltd.*) (“Xing Zhong”) on 22 July 2009, ZPHK and Xing Zhong agreed to make additional capital contribution to ZTP for the construction of two 300 MW heat and electricity supply plants. A total sum of approximately HK$2,457 million had been invested as at 31 March 2016. The construction of two new 300 MW heat and electricity supply plants was completed. One of the new 300 MW supply plants commenced its operation to replace the two power generation units with a total installed capacity of 110 MW in February 2016. Another new 300 MW supply plant was expected to commence its operation in June 2016.

廣東粤電靖海發電有限公司 (Guangdong Yudean Jinghai Power Generation Co., Ltd.*)(“Yudean Jinghai Power”) The Group’s effective interest in Yudean Jinghai Power is 25%. As at 31 March 2016, Yudean Jinghai Power had four power generation units with a total installed capacity of 3,200 MW. Sales of electricity for the Period amounted to 1,986 million kwh (2015: 2,782 million kwh), a decrease of 28.6%. As a result of the soften demand and drop in electricity tariff, revenue for the Period declined by 39.6% to HK$911,472,000 (2015: HK$1,508,802,000). The profit before tax of Yudean Jinghai Power for the Period decreased by 61.0% to HK$113,618,000 (2015: HK$290,985,000). The Group’s share of profit in Yudean Jinghai Power amounted to HK$19,768,000 (2015: HK$52,933,000) during the Period, decreased by 62.7%. Xingliu Expressway On 9 October 2015, the acquisition of Rosy Canton Limited and its subsidiaries (the “Rosy Canton Group”), principally engaged in the operation of the Xingliu Expressway, was completed for an aggregate amount of approximately HK$2,588 million. The Xingliu Expressway comprises a main line which is 99.6 km in length and three connection lines (in Xingye, Guigang and Hengxian) with an aggregate length of 52.7 km. The average daily traffic flow of the Xingliu Expressway was 21,579 vehicle trips during the Period. The revenue and profit before tax of the Rosy Canton Group during the Period amounted to HK$166,686,000 and HK$90,297,000, respectively.

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Guangdong Investment Limited

PROSPECTS Faced with complex external economic conditions and volatilities in foreign exchange and interest rate markets, the Group will steadfastly maintain its stable growth strategy while strengthening its risk management so as to create long-term value for its stakeholders. The Group will continue to explore business opportunities in the areas of water resources management, property and infrastructure development in an effort to expand its core businesses. The Group will also closely monitor opportunities involving public-private-partnership projects in order to grasp market investment opportunities to increase investment portfolio that generate stable income and further enhance the Company’s financial performance.

REVIEW OF UNAUDITED FINANCIAL INFORMATION The unaudited financial information of the Group for the three months ended 31 March 2016 has been reviewed by the Audit Committee of the Company.

CAUTION STATEMENT Shareholders of the Company and potential investors should note that all the information contained in this announcement has not been audited. Accordingly, any information contained in this announcement should in no way be regarded as to provide any indication or assurance on the financial results of the Group for the three months ended 31 March 2016. Shareholders of the Company and potential investors are urged to exercise caution in dealing in the securities of the Company and are recommended to consult their own professional advisers if they are in doubt as to their investment positions.

By Order of the Board HUANG Xiaofeng Chairman Hong Kong, 28 April 2016 * The English names are translations of their Chinese names, and are included herein for identification purposes only. In the event of any inconsistency, the Chinese names shall prevail.

As at the date of this announcement, the Board of the Company comprises four Executive Directors, namely, Mr. HUANG Xiaofeng, Mr. WEN Yinheng, Mrs. HO LAM Lai Ping, Theresa and Mr. TSANG Hon Nam; five Non-Executive Directors, namely, Mr. WU Jianguo, Mr. ZHANG Hui, Ms. ZHAO Chunxiao, Mr. LAN Runing and Mr. LI Wai Keung; and five Independent Non-Executive Directors, namely, Dr. CHAN Cho Chak, John, Dr. the Honourable LI Kwok Po, David, Mr. FUNG, Daniel R., Dr. CHENG Mo Chi, Moses and Mr. WU Ting Yuk, Anthony.

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Guangdong Investment Limited