5th Sep 2007 07:00
Asian Growth Properties Limited05 September 2007 5th September, 2007 Asian Growth Properties Limited Results for the six months ended 30th June, 2007 Asian Growth Properties Limited (the "Company") (AIM Stock Code: AGP), the HongKong based China property development and investment company, announces itsunaudited consolidated results for the six months ended 30th June, 2007 (the"Period") as follows. Highlights • Total operating revenue of HK$379.0 million (£24.1 million) (2006: HK$0.9 million (£0.1 million)) • Fair value changes on investment properties of HK$178.6 million (£ 11.4 million) (2006: Nil) • Total profit before taxation of HK$157.5 million (£10.0 million) (2006: HK$5.0 million (£0.3 million)) • Profit attributable to the Company's shareholders of HK$107.3 million (£6.8 million) (2006: HK$4.4 million (£0.3 million)) • Equity attributable to the Company's shareholders as at 30th June, 2007 of HK$6,201.1 million (£394.5 million) (31st December 2006: HK$6,069.1 million (£386.1 million)) • Earnings per share of HK$0.12 (0.8 pence) (2006: HK$0.02 (0.1 pence)) • Net asset value per share as at 30th June, 2007 of HK$7.00 (44.5 pence per share) (31st December 2006: HK$6.85 (43.6 pence)) Remark: An exchange rate of GBP1.0 = HK$15.72 is used in this announcement. Miscellaneous The results included in this announcement are extracted from the unauditedconsolidated financial statements of the Company for the Period, which have beenapproved by the Board of Directors on 4th September, 2007. The 2007 Interim Report is expected to be posted to shareholders and holders ofdepositary interests in mid September 2007. For further information, please contact: Chan Ka Wing TEL: +852 2828 6345 Executive Director Asian Growth Properties Limited Richard Gray TEL: +44 207 459 3600 Andrew Potts Panmure Gordon & Co (Nominated Advisors) CHAIRMAN'S REVIEW I am pleased to report on the operations of Asian Growth Properties Limited("AGP" or the "Company") for the first six months of 2007. Following theacquisition in the second half of 2006 of six investment and developmentproperties from S E A Holdings Limited, the majority shareholder of the Company,AGP's size and revenue generating potential have been significantly increased.Accordingly, figures for the first half of 2006 are not comparable and are shownfor information purposes only. Figures in Pounds Sterling are converted fromHong Kong dollars based upon exchange rates prevailing on the last business dayof the respective accounting periods. Results AGP reports profit attributable to the Company's shareholders of HK$107.3million (£6.8 million) for the six months ended 30 June 2007 while profit forthe corresponding period in 2006 was HK$4.4 million (£0.3 million). As at 30 June 2007, the Group's equity attributable to the Company'sshareholders amounted to HK$6,201.1 million (£394.5 million), an increase of HK$132.0 million (£8.4 million) over the comparable figure as at 31 December 2006of HK$6,069.1 million (£397.7 million). The net asset value per share as at 30June 2007 was HK$7.00 (44.5 pence) as compared with HK$6.85 (44.9 pence) as at31 December 2006. Operations During the period, the Group has continued the development of various projectsin Hong Kong and mainland China. In Hong Kong, pre-sales of The Morrisondevelopment were launched in March 2007 with satisfactory responses receivedfrom buyers while pre-sales of The Forest Hills project in Diamond Hill arescheduled to commence in the fourth quarter of 2007. Sales of the remainingunits of the Royal Green project continue. The Group's rental income from DahSing Financial Centre has also benefited from the increased demand resulting inhigher average rentals. The development of the Group's projects in mainlandChina continues to progress. Outlook The Board of AGP has resolved to concentrate its efforts for expansionprincipally in mainland China. The Company believes that with the experience ofthe Board, AGP continues to be well positioned to take advantage of theopportunities available in both the mainland China and Hong Kong propertymarkets. Dividend The Board does not propose the payment of an interim dividend for the periodended 30 June 2007 and will retain all earnings to finance further growth. Acknowledgements As announced on 30 May 2007, Mr. Donald Ian Fletcher has stepped down as theChief Executive Officer of the Company and been re-designated from an ExecutiveDirector to a Non-Executive Director of the Company with effect from 1 July2007. The role and responsibilities of the Chief Executive Officer has beentaken up by the Executive Directors of the Company. The Board would like toexpress its appreciation for Mr. Fletcher's contributions to the development ofAGP and look forward to his continued contribution to the Company as aNon-Executive Director. David Mathewson Non-Executive Chairman Hong Kong, 4 September 2007 EXECUTIVE DIRECTORS' REVIEW FINANCIAL SUMMARY Following the acquisition in the second half of 2006 of six investment anddevelopment properties from S E A Holdings Limited, the majority shareholder ofthe Company, the Company's size and revenue generating potential have beensignificantly increased. Turnover for the six months ended 30 June 2007 amounted to HK$379.0 million(2006: HK$0.9 million) mainly attributable to the recognition of the sales ofresidential units and carparks of Royal Green and the rental contribution fromDah Sing Financial Centre. Profit attributable to the Company's shareholders for the period amounted to HK$107.3 million (2006: HK$4.4 million) which included the surplus of HK$178.6 million arising from the revaluation of the investment properties, namely the DahSing Financial Centre, 28/F, 9 Queen's Road Central, Excelsior Plaza Shop andPlaza Central. Earnings per share for the period was HK$0.12 (2006: HK$0.02). As at 30 June 2007, the Group's equity attributable to the Company'sshareholders amounted to HK$6,201.1 million, an increase of HK$132.0 millionover the comparable figure as at 31 December 2006 of HK$6,069.1 million. The netasset value per share to the Company's shareholders was HK$7.00 (31 December2006: HK$6.85). The increase was mainly attributable to the surplus arising fromthe revaluation of the Group's investment properties. BUSINESS REVIEW Property Investments and Developments All of the Group's property development and investment projects are located inHong Kong and mainland China and are as listed below: Hong Kong 1. Dah Sing Financial Centre, Gloucester Road, Wanchai The Dah Sing Financial Centre comprises a 39-storey commercial buildingincluding offices and shops (total gross floor area of approximately 37,171square metres) and with ancillary facilities and 164 car-parking spaces. Grossrental income generated for the six months ended 30 June 2007 was HK$53.4million. Occupancy rate slightly reduced from 88.1% as of 1 January 2007 to85.5% as of 30 June 2007. The average rent per month during the period increasedfrom HK$21.20 to HK$30.29 per square foot, an increase of about 43% owing to thestrong demand for office spaces in this quality building. As at 31August 2007,the total lettable area available for lease was 6.9% of that of Dah SingFinancial Centre. 2. Royal Green, Sheung Shui Royal Green is a private residential development comprising 922 residentialunits contained in three 40-storey residential towers with ancillaryrecreational and car-parking facilities. The Group has a 55.0% interest in thedevelopment. Turnover recognized for the period was HK$304.2 million and a netloss of HK$10.5 million was incurred due to additional expenses required for themarketing of unsold units. As at 30 June 2007, over three-quarters of the residential units were sold andmarketing campaign for the sale of the remaining units is continuing. Demand forunits in Royal Green improved in the period under review, which we believe to beprincipally due to the better Hong Kong economy and buoyant stock market. 3. The Morrison, Wanchai The property is being developed into a 30-storey residential and commercialbuilding, with a total gross floor area of approximately 5,837 square metres,comprising 104 residential units above a club-house floor and a 3-storeycommercial podium. Superstructure construction works are in good progress. Thedevelopment is expected to be completed in the fourth quarter of 2007. Pre-sales of the residential units in The Morrison were launched in March 2007.As at 30 June 2007, over two-thirds of the units were sold and the sale proceedswill be recognised upon completion of the development. Marketing for theremaining unsold residential units is continuing and leasing activities for thecommercial podium have commenced. 4. Po Kong Village Road, Diamond Hill The project now known as "The Forest Hills" is being developed into a 48-storeyresidential and commercial composite building, with a total gross floor area ofapproximately 18,825 square metres, comprising 304 residential units above a 7-storey commercial podium comprising retail space, a clubhouse and car parks. The pre-sale consent for the development has been obtained and pre-sales of theresidential units are expected to commence in the fourth quarter of 2007.Superstructure construction works are progressing well and the project isexpected to be completed by the first quarter of 2008. 5. Leighton Road, Causeway Bay The property is being developed into a 30-storey hotel comprising 285 guestrooms (gross floor area of approximately 14,945 square metres) with ancillaryfacilities. The whole project is scheduled to be completed in the first half of2009. Superstructure construction works have commenced. The Group is havingdiscussions with certain international hospitality companies for the purpose ofappointing one of them to manage the operation of the hotel. 6. Fo Tan, Sha Tin The property with a site area of about 20,092 square metres is currently leasedout as a logistic centre. Rezoning applications with several master layout plans and design schemes havebeen submitted to the Town Planning Board and relevant parties forconsideration. The proposed development will comprise, amongst other facilities,residential units, car parks, educational facilities and a bus terminus. 7. 28/F., 9 Queen's Road Central, Central The property is the entire floor of a 35-storey Grade A commercial building inCentral with a gross floor area of approximately 1,279 square metres. It iscurrently fully let to a tenant at increased rentals as from May 2006 until midMay 2009. 8. Excelsior Plaza Shop, Causeway Bay The shop with a gross floor area of approximately 39 square metres is let to aretail tenant for a term of two years which commenced in July 2006. China 9. Westmin Plaza Phase II, Guangzhou The Westmin Plaza Phase II project, which has a total construction floor area ofabout 118,567 square metres, will comprise four residential blocks and an officeblock erected on a six-storey commercial/car-parking podium. Sales proceeds of601 pre-sold residential units will be recognized in 2007 upon completion of thedevelopment expected to be in the fourth quarter of 2007. The remaining 45residential units are expected to be sold after such completion. A leasing agenthas been appointed for marketing the commercial portion, including the officespace of the development, which is expected to be held by the Group forinvestment purpose. 10. Plaza Central, Chengdu Plaza Central comprises two 30-storey office blocks erected on a common podiumhaving six commercial/retail floors and two car-parking floors at basementlevel. Leasing for the office space with a total construction floor area ofapproximately 50,467 square metres is progressing slowly as the Group hasadopted a policy to select quality tenants. All the retail space with a totalconstruction floor area of approximately 28,573 square metres has been leasedwith its majority being leased to a tenant in department store business. Working Capital and Loan Facilities As at 30 June 2007, the Group's cash balance was HK$313.8 million (31 December2006: HK$106.3 million) and unutilized facilities were HK$1,304.3 million (31December 2006: HK$869.5 million). The gearing ratio as at 30 June 2007, calculated on the basis of net interestbearing debt minus cash and restricted and pledged deposits as a percentage oftotal property assets, was 18.5% (31 December 2006: 16.7%). As at 30 June 2007, maturities of the Group's outstanding borrowings were asfollows: ------------------- --------------- ---------------- 30 June 2007 31 December 2006 HK$' million HK$' million------------------- --------------- ----------------Due------------------- --------------- ----------------Within 1 year 1,872.9 1,252.51-2 years 46.0 43.03-5 years 635.2 639.3Over 5 years 63.6 81.3------------------- --------------- ---------------- 2,617.7 2,016.1------------------- --------------- ---------------- Pledge of Assets For the Company's subsidiaries operating in Hong Kong and mainland China, thetotal bank loans drawn as at 30 June 2007 amounted to HK$2,617.7 million (31December 2006: HK$2,016.1 million), which were secured by properties valued atHK$7,392.4 million (31 December 2006: HK$6,437.2 million). Treasury Policies The Group adheres to prudent treasury policies. As at 30 June 2007, all of theGroup's borrowings were raised through its wholly-owned or substantiallycontrolled subsidiaries on a non-recourse basis. Currently, borrowings areprimarily denominated in Hong Kong dollars and mainly based on floating rateterms. There were no derivative financial instruments employed during theperiod. International Financial Reporting Standards ("IFRS") The Group has adopted IFRS and the unaudited condensed consolidated financialstatements included in this report have been prepared in accordance with IFRS. Outlook Despite the implementation of a series of macro-economic measures to regulatethe overheated property market by the Chinese government including the recentregulations restricting foreign investment in the property sector, the Companybelieves that the mainland China property market will become more healthy andsustainable in the long run. Acquisition costs for property sites in majorcities in mainland China have surged in recent months but the Group is stilloptimistic about the prospects of the mainland China property market in view ofthe continued economic expansion, increasing household income and rising demandfor better quality housing. The Hong Kong economy is expected to perform well in the second half of 2007which should benefit the sales of the Company's development projects. Given thelimited supply of good quality office premises, the Group expects that itsrental income from Dah Sing Financial Centre will continue to improve in thesecond half of the year as a result of higher occupancy. The Group will focus on the planned completion in the second half of the year ofthree existing development projects, namely The Morrison, The Forest Hills andWestmin Plaza Phase II. At the same time, the Group will continue to devote itsefforts to marketing the sale of the remaining residential units of Royal Green. The sub-prime mortgage problems originating from the United States have causedfluctuations in the global financial markets but we believe that the economiesof mainland China and Hong Kong will remain healthy. Going forward, the Groupwill continue to actively look for development and investment opportunities inmainland China and Hong Kong in order to create value for our shareholders. On behalf of the Executive Directors Lu Wing Chi Executive Director Hong Kong, 4 September 2007 CONDENSED CONSOLIDATED INCOME STATEMENT FOR THE SIX MONTHS ENDED 30 JUNE 2007 Six months ended 30 June NOTES 2007 2006 ------- --------- --------- HK$'000 HK$'000 (unaudited) (unaudited) Revenue 379,047 909Other income 25,029 18,037Operating costs:Property and related costs 5 (240,896) -Staff costs (10,832) (2,586)Depreciation (265) -Other expenses 6 (139,244) (10,908) (391,237) (13,494) _______ _______Profit from operations before fair value changeson investment properties 12,839 5,452Fair value changes on investment properties 178,570 - _______ _______Profit from operations after fair value changeson investment properties 191,409 5,452Finance costs 7 (33,905) (490) _______ _______Profit before taxation 8 157,504 4,962Income tax expense 9 (56,236) (548) _______ _______Profit for the period 101,268 4,414 _______ _______ _______ _______Attributable to:Company's shareholders 107,314 4,414Minority interest (6,046) - _______ _______ 101,268 4,414 _______ _______ _______ _______ HK$ HK$Earnings per share 11Basic 0.12 0.02 _______ _______ _______ _______ CONDENSED CONSOLIDATED BALANCE SHEET AT 30 JUNE 2007 NOTES 30.6.2007 31.12.2006 ------- ----------- ------------ HK$'000 HK$'000 (unaudited) (audited)Non-current AssetsInvestment properties 12 4,794,775 4,584,860Property, plant and equipment 12 102,079 62,431Prepaid lease payments 12 613,914 615,515Other loans receivable 123,887 126,536 _________ _________ 5,634,655 5,389,342 _________ _________Current AssetsProperties held for sale 641,962 892,491Properties under development held for 2,510,289 2,348,451salePrepaid lease payments 12 16,818 16,742Other loans receivable 973 973Receivables, deposits and prepayments 13 231,864 149,882Income tax recoverable 15,808 14,923Amount due from a minority shareholder 14 109,581 -Pledged bank deposits 382,788 153,487Restricted bank balances and deposits 15 316,012 332,404Bank balances and deposits 313,761 106,327 _________ _________ 4,539,856 4,015,680 _________ _________Current LiabilitiesPayables, deposits received and accruedcharges 16 236,062 320,556Sales deposits on properties held forsale 555,195 449,094receivedProvisions 15,343 14,881Income tax payable 55,992 31,379Secured bank borrowings - due within one 17 1,872,905 1,252,499yearAmount due to a minority shareholder - 36,209 _________ _________ 2,735,497 2,104,618 _________ _________Net Current Assets 1,804,359 1,911,062 _________ _________ 7,439,014 7,300,404 =========== =========== NOTES 30.6.2007 31.12.2006 ------- ----------- ------------ HK$'000 HK$'000 (unaudited) (audited) Capital and Reserves Share capital 18 345,204 345,204 Share premium and reserves 5,855,857 5,723,928 _________ _________ Equity attributable to the Company's shareholders 6,201,061 6,069,132 Minority interest 402,932 408,978 _________ _________ Total Equity 6,603,993 6,478,110 _________ _________ Non-current Liabilities Secured bank borrowings - due after one 17 744,804 763,576 year Deferred taxation 90,217 58,718 _________ _________ 835,021 822,294 _________ _________ 7,439,014 7,300,404 _________ _________ _________ _________ CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE SIX MONTHS ENDED 30 JUNE 2007 Attributable to the Company's shareholders ----------------------------- Share Share Other Translation Retained Minority capital premium reserve reserve profits Total interest Total --------- --------- --------- --------- --------- ------- ---------- ------- HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 At 1 January2006 84,429 1,461,924 - - 24,441 1,570,794 - 1,570,794(audited)Profit forthe periodandtotalrecognisedincomefor the - - - - 4,414 4,414 - 4,414period _______ _________ _______ _______ _______ _________ _______ _________At 30 June2006(unaudited) 84,429 1,461,924 - - 28,855 1,575,208 - 1,575,208 _______ _________ _______ _______ _______ _________ _______ _________Exchangemovementduringthe periodrecogniseddirectlyin equity - - - 10,164 - 10,164 - 10,164Profit forthe - - - - 76,308 76,308 (63,961) 12,347period _______ _________ _______ _______ _______ _________ _______ _________Totalrecognisedincomefor the - - - 10,164 76,308 86,472 (63,961) 22,511period _______ _________ _______ _______ _______ _________ _______ _________Issue of 260,775 3,374,301 294,736 - - 3,929,812 - 3,929,812sharesAcquisitionof assetsandliabilitiesthroughacquisitionof - - 477,640 - - 477,640 482,380 960,020subsidiariesAcquisitionofadditionalinterest ina - - - - - - (9,441) (9,441)subsidiary _______ _________ _______ _______ _______ _________ _______ _________At 31December 345,204 4,836,225 772,376 10,164 105,163 6,069,132 408,978 6,478,1102006(audited) _______ _________ _______ _______ _______ _________ _______ _________Exchangemovementduringthe periodrecogniseddirectlyin equity - - - 24,615 - 24,615 - 24,615Profit forthe - - - - 107,314 107,314 (6,046) 101,268period _______ _________ _______ _______ _______ _________ _______ _________Totalrecognisedincome forthe period - - - 24,615 107,314 131,929 (6,046) 125,883 _______ _________ _______ _______ _______ _________ _______ _________At 30 June2007(unaudited) 345,204 4,836,225 772,376 34,779 212,477 6,201,061 402,932 6,603,993 _______ _________ _______ _______ _______ _________ _______ _________ _______ _________ _______ _______ _______ _________ _______ _________ CONDENSED CONSOLIDATED CASH FLOW STATEMENT FOR THE SIX MONTHS ENDED 30 JUNE 2007 Six months ended 30 June NOTES 2007 2006 ------- ------ ------ HK$'000 HK$'000 (unaudited) (unaudited) NET CASH USED IN OPERATING ACTIVITIES (1,973) (116,023) _______ _________INVESTING ACTIVITIESAdditions of other loans receivable (7,922) -Repayment of other loans receivable 14,246 -Increase in pledged bank deposits (229,301) -Decrease in restricted bank balances and deposits 15 26,396 -Acquisition of investment properties (3,486) -Acquisition of property, plant and equipment (30,800) -Acquisition of a leasehold land throughacquisitionof subsidiaries 21(a) (7,000) -Others 30 - _______ _________NET CASH USED IN INVESTING ACTIVITIES (237,837) - _______ _________FINANCING ACTIVITIESProceeds from secured bank borrowings 593,984 95,000Repayment of secured bank borrowings (4,730) (600)Repayment to advance from a minority shareholder (36,209) -Advance to a minority shareholder (109,581) -Interest paid (554) - _______ _________NET CASH FROM FINANCING ACTIVITIES 442,910 94,400 _______ _________NET INCREASE (DECREASE) IN CASH ANDCASH EQUIVALENTS 203,100 (21,623) CASH AND CASH EQUIVALENTS AT BEGINNINGOF PERIOD 106,327 619,958 Effect of foreign exchange rate changes 4,334 - _______ _________CASH AND CASH EQUIVALENTS AT ENDOF PERIOD, represented by bank balances and 313,761 598,335deposits _______ _________ _______ _________ NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 30 JUNE 2007 1. GENERAL The Company is a public limited company incorporated in the British VirginIslands. The shares of the Company are listed on the AIM Market operated byLondon Stock Exchange plc. The Company is an investment holding company. The principal subsidiaries of theCompany are engaged in property investment and development. 2. BASIS OF PREPARATION The condensed consolidated financial statements have been prepared usingaccounting policies consistent with International Financing Reporting Standardsand in accordance with International Accounting Standard ("IAS") 34 "InterimFinancial Reporting". 3. PRINCIPAL ACCOUNTING POLICIES The condensed consolidated financial statements have been prepared on thehistorical cost basis except for investment properties, which are measured atfair values. The accounting policies used in the condensed consolidated financial statementsare consistent with those followed in the preparation of the Group's annualconsolidated financial statements for the year ended 31 December 2006. In the current interim period, the Group has applied, for the first time, thefollowing new standard, amendment and interpretations issued by theInternational Accounting Standards Board and the International FinancialReporting Interpretations Committee, which are effective for the Group'sfinancial year beginning 1 January 2007. IAS 1 (Amendment) Capital Disclosures(1)IFRS 7 Financial Instruments: Disclosures(1)IFRIC 7 Applying the Restatement Approach under IAS 29 Financial Reporting in Hyperinflationary Economies(2)IFRIC 8 Scope of IFRS 2(3)IFRIC 9 Reassessment of Embedded Derivatives(4)IFRIC 10 Interim Financial Reporting and Impairment(5) 1 Effective for annual periods beginning on or after 1 January 2007 2 Effective for annual periods beginning on or after 1 March 2006 3 Effective for annual periods beginning on or after 1 May 2006 4 Effective for annual periods beginning on or after 1 June 2006 5 Effective for annual periods beginning on or after 1 November 2006 3. PRINCIPAL ACCOUNTING POLICIES - continued The adoption of these new standard, amendment and interpretations had nomaterial effect on the results or financial position of the Group for thecurrent or prior accounting periods. Accordingly, no prior period adjustment hasbeen required. The Group has not early applied the new and revised standards or interpretationsthat have been issued but are not yet effective. IAS 23 (Revised) Borrowing Costs(1)IFRS 8 Operating Segments(1)IFRIC 11 IFRS 2 - Group and Treasury Share Transactions(2)IFRIC 12 Service Concession Arrangements(4)IFRIC 13 Customer Loyalty Programmes(3)IFRIC 14 IAS 19 - The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction(4) 1 Effective for annual periods beginning on or after 1 January 2009 2 Effective for annual periods beginning on or after 1 March 2007 3 Effective for annual periods beginning on or after 1 July 2008 4 Effective for annual periods beginning on or after 1 January 2008 The directors of the Company anticipate that the application of these standardsor interpretations will have no material impact on the results and the financialposition of the Group. 4. SEGMENT INFORMATION Geographical Segments During the six months ended 30 June 2006, the Group operated in Hong Kong onlyand the Group's primary segment information was reported in two divisions, whichare property development and property investment. Due to the acquisition ofassets and liabilities through acquisitions of subsidiaries (the "Acquisition")in October 2006, the size of the Group's property portfolio has increasedsignificantly. In particular, the Group has made an entry into the propertymarket of mainland China other than Hong Kong (The People's Republic of China,the "PRC") due to the Acquisition. Since then, the Group reorganised itsbusiness activities by geographical segments. The operations of the Group are currently located in Hong Kong and the PRC. Thecorresponding geographical locations of the Group's assets are the basis onwhich the Group reports its primary segment information. Comparative figureshave been restated to confirm with current period's presentation. 4. SEGMENT INFORMATION - continued Six months ended 30 June 2007 Hong Kong PRC Consolidated HK$'000 HK$'000 HK$'000REVENUEExternal 360,354 18,693 379,047 _______ _______ _______ _______ _______ _______ SEGMENT PROFIT (LOSS) 196,199 (6,583) 189,616 _______ _______ _______ _______Interest income 12,080Unallocated corporate expenses (10,287)Finance costs (33,905) _______Profit before taxation 157,504Income tax expense (56,236) _______PROFIT FOR THE PERIOD 101,268 Six months ended 30 June 2006 Hong Kong PRC Consolidated ----------- ----- -------------- HK$'000 HK$'000 HK$'000REVENUEExternal 909 - 909 _______ _______ _______ _______ _______ _______ SEGMENT PROFIT 7,287 - 7,287 _______ _______ _______ _______Interest income 11,557Unallocated corporate expenses (13,392)Finance costs (490) _______Profit before taxation 4,962Income tax expense (548) _______PROFIT FOR THE PERIOD 4,414 ======= 4. SEGMENT INFORMATION - continued Business Segments The Group is currently organised into two operating divisions - propertydevelopment and property investment. Principal activities are as follows: Property investment - rental of properties Property development - development of properties Six months ended 30 June 2007 Property Property development investment Eliminations Consolidated ------------- ------------ -------------- -------------- HK$'000 HK$'000 HK$'000 HK$'000REVENUEExternal 304,181 74,866 - 379,047Inter-segment sales* - 3,925 (3,925) - _______ _______ _______ _______ Total 304,181 78,791 (3,925) 379,047 ====== ====== ====== ====== * Inter-segment sales are charged at prevailing market rates. SEGMENT (LOSS) PROFIT (21,151) 210,767 - 189,616 ====== ====== ====== ====== Interest income 12,080Unallocated corporate expenses (10,287)Finance costs (33,905) _______Profit before taxation 157,504Income tax expense (56,236) _______PROFIT FOR THE PERIOD 101,268 ====== 4. SEGMENT INFORMATION - continued Six months ended 30 June 2006 Property Property development investment Eliminations Consolidated ------------- ------------ -------------- -------------- HK$'000 HK$'000 HK$'000 HK$'000 REVENUEExternal - 909 - 909Inter-segment sales - - - - _______ _______ _______ _______ Total - 909 - 909 _______ _______ _______ _______ _______ _______ _______ _______ * Inter-segment sales are charged at prevailing market rate SEGMENT PROFIT 6,597 690 - 7,287 ====== ====== ====== Interest income 11,557Unallocated corporate expenses (13,392)Finance costs (490) _______Profit before taxation 4,962Income tax expense (548) _______PROFIT FOR THE PERIOD 4,414 _______ _______ 5. PROPERTY AND RELATED COSTS Six months ended 30 June 2007 2006 HK$'000 HK$'000 Changes in properties held for sale/properties under development held for sale (88,691) 120,977 Costs incurred on properties held for sale/properties under development held for sale (152,205) (120,977) _______ _______ (240,896) - ======= ======= 6. OTHER EXPENSES Six months ended 30 June 2007 2006 ------------- ----------- HK$'000 HK$'000 Management fee paid to a related company 68,197 5,140 Less: capitalised in properties under development held for (20,657) (5,140) sale _______ _______ 47,540 - Selling and marketing expenses 70,389 - Others 21,315 10,908 _______ _______ 139,244 10,908 ====== ====== 7. FINANCE COSTS Six months ended 30 June 2007 2006 HK$'000 HK$'000 Interest on: Bank borrowings wholly repayable within 5 years 46,619 9,000 Bank borrowings not wholly repayable within 5 2,671 - years _______ _______ 49,290 9,000 Less: Amounts capitalised to property under development/ properties under development held for sale (17,409) (8,510) _______ _______ 31,881 490 Facilities charges 2,024 - _______ _______ 33,905 490 ====== ====== 8. PROFIT BEFORE TAXATION Six months ended 30 June 2007 2006 ------------ ------------ HK$'000 HK$'000 Profit before taxation has been arrived at after crediting: Interest earned on bank deposits 8,405 11,557 Other interest income 3,675 - _______ _______ 12,080 11,557 ====== ====== 9. INCOME TAX EXPENSE Six months ended 30 June 2007 2006 ---------------- ---------------- HK$'000 HK$'000 Hong Kong Profits Tax 24,810 548Deferred taxation 31,426 - _______ _______ 56,236 548 ====== ====== Hong Kong Profits Tax is recognised based on management's best estimate of theweighted average annual income tax rate expected for the full year. Theestimated average annual tax rate used is 17.5% (2006: 17.5%) for the six monthsended 30 June 2007. On 16 March 2007, the PRC promulgated the Law of the People's Republic of Chinaon Enterprise Income Tax by Order No. 63 ("the Promulgation"), which will changethe tax rate from 33% to 25% for certain subsidiaries from 1 January 2008. Thedirectors of the Company anticipate that the application of the Promulgationwill have no material impact on the results and the financial position of theGroup. 10. DIVIDENDS No dividend was paid or proposed during the two periods ended 30 June 2007, norhas any dividend been proposed since the balance sheet date. 11. EARNINGS PER SHARE The calculation of the earnings per share attributable to the Company'sshareholders is based on the following data: Six months ended 30 June 2007 2006 ------ ------ HK$'000 HK$'000 Earnings for the purpose of earnings per share 107,314 4,414 ====== ====== Number of shares------------------ Weighted average number of ordinary shares for thepurpose of earnings per share 886,347,812 217,693,995 ========= ========= 12. MOVEMENTS IN INVESTMENT PROPERTIES, PROPERTY, PLANT ANDEQUIPMENT AND PREPAID LEASE PAYMENTS During the period, additions of investment properties amounted to HK$3.5million. In addition, there was an exchange realignment of HK$27.8 million whichcontributed to an increase in the carrying value of investment propertiesbrought forward from 1 January 2007. The Group's investment properties were revalued by independent professionalvaluers, Savills Valuation and Professional Services Limited, at 30 June 2007.The resulting increase in fair value of investment properties amounting toHK$178.6 million has been recognised directly in the condensed consolidatedincome statement. During the period, the Group acquired property, plant and equipment at a cost ofHK$31.4 million and capitalised amortisation of prepaid lease payments with acarrying value of HK$8.6 million to property under development included inproperty, plant and equipment. 13. RECEIVABLES, DEPOSITS AND PREPAYMENTS 30.6.2007 31.12.2006 ----------- ------------ HK$'000 HK$'000 Trade receivables 24,174 14,190Other receivables, deposits paid and prepayments 207,690 135,692 _______ _______ 231,864 149,882 ====== ====== 14. AMOUNT DUE FROM A MINORITY SHAREHOLDER The amount is unsecured, interest free and repayable on demand. 15. RESTRICTED BANK BALANCES AND DEPOSITS Bank deposits of HK$316.0 million, being proceeds received on behalf of theGroup upon the pre-sale of certain units of a property under development heldfor sale, were placed in several banks and would be used solely for tax paymentand settlement of the construction cost of the related property. During the sixmonths ended 30 June 2007, the Group paid the construction cost of the relatedproperty of HK$31.4 million. In addition, there was an exchange realignment ofHK$10.0 million which contributed to an increase in carrying value of restrictedbank balances and deposits brought forward from 1 January 2007. Furthermore, the Group placed a new bank deposit of HK$5.0 million in a bank forissuing a letter of guarantee for payment to an agent for a potentialdevelopment project. 16. PAYABLES, DEPOSITS RECEIVED AND ACCRUED CHARGES 30.6.2007 31.12.2006 ----------- ------------ HK$'000 HK$'000 Trade payables 31,551 31,560Other payables, deposits received and accrued charges 204,511 288,996 _______ _______ 236,062 320,556 ====== ====== 17. BORROWINGS During the period, the Group repaid bank loans amounting to HK$4.7 million andobtained new bank loans in the amount of HK$593.9 million. In addition, therewas an exchange realignment of HK$12.4 million which contributed to an increasein carrying value of borrowings brought forward from 1 January 2007. The newloans bear interest at 0.5% to 0.8% over Hong Kong Interbank Offered Rate and10.0% discount on the lending rate of People's Bank of China and are repayablewithin one year from the balance sheet date. The proceeds were used to financethe construction costs of properties under development and for working capitalpurpose. 18. SHARE CAPITAL Number Nominal of shares value ----------- ------- US$'000Ordinary share of US$0.05 each Authorised: At 31 December 2006 and 30 June 2007 1,300,000,000 65,000 ========== ===== Issued and fully paid: At 1 January 2007 and 30 June 2007 886,347,812 44,317 ========= ===== HK$'000 Shown in the condensed consolidated financialstatements as 345,204 ====== 19. CAPITAL COMMITMENTS At the reporting date, the Group had capital commitments not provided for in thecondensed consolidated financial statements as follows: 30.6.2007 31.12.2006 ----------------------- HK$'000 HK$'000 (a) Expenditure to be incurred on properties underdevelopment included in property, plant andequipment in Hong Kong Authorised but not contracted for 113,554 349,634 ====== ====== Contracted for but not provided for in the condensedconsolidated financial statements 257,162 21,041 ====== ===== (b) Acquisition of equipment in the PRC Contracted for but not provided for in the condensedconsolidated financial statements - 998 ====== ====== 20. PLEDGE OF ASSETS At the reporting date, the Group had the following mortgages and/or pledge overits assets to secure banking facilities granted to the Group: (a) Fixed and floating charges on investment properties with an aggregatecarrying value of HK$4,794,775,000 (31.12.2006: HK$4,584,860,000). (b) Fixed and floating charges in properties under development held for salewith an aggregate carrying value of HK$1,925,147,000 (31.12.2006:HK$1,210,706,000). (c) Fixed and floating charges on properties under development included inproperty, plant and equipment with an aggregate carrying value of HK$98,966,000(31.12.2006: HK$60,442,000). (d) Prepaid lease payments with an aggregate carrying value of HK$573,439,000(31.12.2006: HK$581,172,000). (e) Bank deposits of HK$382,788,000 (31.12.2006: HK$153,487,000). (f) Unlisted shares of certain subsidiaries with assets principally comprised ofinvestment properties, properties under development held for sale, propertiesunder development and prepaid lease payments included in (a), (b), (c) and (d)above. 21. RELATED PARTY BALANCE AND TRANSACTIONS (a) Other than the balance with a minority shareholder, which holds 45% equityinterest in a subsidiary of the Group, as disclosed in the balance sheet andnote 14, the Group had the following transactions with a wholly owned subsidiaryof S E A Holdings Limited ("SEA"), an intermediate holding company of theCompany, during the six months ended 30 June 2007: (i) Rental income received of HK$3,455,000 (1.1.2006 to 30.6.2006: Nil); (ii) Management fees paid/payable of HK$68,197,000 (1.1.2006 to 30.6.2006:HK$5,140,000) in respect of investment property and development projectmanagement services of the Group's property portfolio provided by this relatedcompany; and (iii) the Group acquired a piece of leasehold land in Hong Kong for propertydevelopment at a consideration of HK$7,000,000 from SEA by way of acquisition ofthe entire issued share capital of certain subsidiaries of SEA. (b) Compensation of key management personnel The director's fees and remuneration paid/payable amounted to HK$6,335,000(1.1.2006 to 30.6.2006: HK$2,577,000). This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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