| For immediate release | 23 March 2007 |
Guoco Group (Guoco Group Limited, Stock Code: 53) announced today its interim results for the six months ended 31 December 2006.
FINANCIAL RESULTS
The unaudited consolidated profit attributable to shareholders of the Company for the six months ended 31 December 2006 amounted to HK$1,593 million. Basic earnings per share were HK$4.90.
The major profit contributions (before finance cost and taxation) were:
- total realised and unrealised gains on investments of HK$742 million;
- total interest income of HK$695 million;
- total net exchange gain (including FX contracts) of HK$60 million;
- dividend income of HK$32 million;
- property development and investment income of HK$58 million;
- hospitality and leisure business of HK$252 million; and
- associates and jointly controlled entities of HK$188 million.
The Group's investment portfolio has been scaled down from HK$26.8 billion as at 31 December 2005 to HK$7.2 billion as at 31 December 2006 since the Group had adopted a more prudent approach amidst the rising market uncertainty and demanding valuations during the period. Net profit after tax attributable to shareholders of the Company decreased by HK$2,159 million or 57.5% compared to the previous corresponding period. This was substantially in line with the reduced risk profile adopted and conversely, interest income increased by 124% from HK$310 million to HK$695 million mainly due to increases in both the weighted average deposit balance and deposit interest rates.
Overall turnover increased by HK$2.6 billion or 41% to HK$8.8 billion due mainly to the increase of HK$1.8 billion from proprietary asset management. The turnover for hotel and gaming operations also increased by HK$0.9 billion as the turnover for the six months ended 31 December 2005 only included the figures of BIL International Limited since the acquisition in October 2005.
INTERIM DIVIDEND
The Directors have declared an interim dividend of HK$1.00 per share for the financial year ending 30 June 2007.
REVIEW OF OPERATIONS
Proprietary Asset Management
During the period, the Group's investment team continued to focus on stock selection and search for appropriate investment opportunities in global markets. However, equity prices generally were at high levels with stretched valuations. As a value investor, it had become increasingly more challenging to find attractively priced investments in the past few months. As a result, the Group adopted a more defensive stance in managing the portfolio and reduced the size of its investment that was trading oriented and spent more effort in identifying stocks with longer term growth potential that were reasonably valued.
Property Development and Investment
- GuocoLand Limited ("GLL", 63.9% controlled by the Company)
GLL is Guoco's property arm listed in Singapore. For the half year ended 31 December 2006, the GLL Group reported a net profit of S$52.7 million, an increase of 21% compared to the previous corresponding period.
GLL's revenue and cost of sales decreased by 16% and 12% respectively as compared to the previous corresponding period mainly due to lower revenue and cost of sales recognised for its property development projects in China offset by higher revenue and cost of sales recognised for its property development projects in Singapore.
Hospitality and Leisure
- BIL International Limited ("BIL", 53.8% controlled by the Company)
BIL is Guoco's subsidiary in hospitality and leisure business with primary listing in Singapore and secondary listings in London and New Zealand. BIL recorded a profit before tax for the period ended 31 December 2006 of US$10.1 million compared to US$14.3 million in the previous period ended 31 December 2005. Profit after tax for the period under review decreased by US$22.2 million to US$8.5 million because in the half year to December 2005, BIL benefited from the reversal of US$17.8 million of tax provisions made in the previous financial year.
The revenue increased by 25% compared with the corresponding period last year, contributed mainly by BIL's hotels segment, Thistle Hotels. Last year's result was adversely impacted by the July 2005 London bombings. Occupancy and average room rate of Thistle Hotels' owned, leased or managed hotels have now both enjoyed growth.
Financial Services
- Hong Leong Financial Group Berhad ("HLFG", 25.7 % owned by the Company)
HLFG is an integrated financial services group listed in Malaysia. HLFG achieved a profit before tax of RM443.9 million in the half year ended 31 December 2006 as compared to RM353.5 million in the previous corresponding period, an increase of RM90.4 million or 25.6%. This healthy increase reflected well on the efforts of HLFG's operating subsidiaries.
The banking division recorded a profit before tax of RM410.8 million for the half year ended 31 December 2006 as compared to RM333.6 million in the previous corresponding period, an increase of RM77.2 million or 23.1%. Whilst the business performances were generally better all round, the increase in profit was driven by strong assets growth from mortgages (growth of 24%) and credit cards (growth of 51%), as well as higher income from the treasury business.
The insurance division registered a profit before tax of RM34.2 million as compared to RM25.6 million in the previous corresponding period representing a 34% increase. This was mainly due to higher gross general direct premiums particularly from marine cargo and health insurance classes.
The stockbroking and asset management divisions registered a 47% increase in profit before tax of RM12.0 million for the six months ended 31 December 2006 compared to the previous corresponding period. The increase was achieved with the higher Bursa Malaysia trading volumes.
Outlook
Given the increasing market risk and uncertainty, Guoco will continue to adopt a judicious stance to manage its investment activities to optimise returns balanced against the risk exposure. Other three core businesses of the Group, properties development and investment, hospitality and leisure business, and financial services, are progressing satisfactorily. Barring unforeseeable circumstances, Guoco expects to see growth in contributions from these core businesses to its overall performance and create sustainable long-term value.
Please visit www.guoco.com or www.hkex.com.hk for Guoco's full interim results announcement.
Guoco Group Limited ("Guoco") (Stock Code: 53), listed on The Stock Exchange of Hong Kong Limited, is an investment holding and investment management company with the vision of achieving long term sustainable returns for its shareholders and creating prime capital value. Guoco's operating subsidiary companies and investment activities are principally located in Hong Kong, China, Singapore, Malaysia and the United Kingdom. Guoco has four core businesses, namely, Proprietary Asset Management; Property Development and Investment; Hospitality and Leisure Business; and Financial Services.
Contacts :
Ms. Stella Lo
Group Company Secretary
Tel: ( 852 ) 2283 8710
Fax: ( 852 ) 2285 3210
E-mail: stella.lo@guoco.com
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