Annual Report - QuamIR

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Management Discussion and Analysis Financial Review During the twelve months under review, turnover for the year ended 31 December 2011 amounted to HK$695.5 million, an increase of 39.4% over turnover of HK$499.1 million for 2010. Meanwhile, gross profit for the year of HK$315.2 million also represented an increase of 107.6% over gross profit of HK$151.8 million the previous year. The Group achieved an operating profit of HK$380.0 million in 2011, compared with an operating loss of HK$282.3 million in 2010. Net profit attributable to equity holders of the Group amounted to HK$241.3 million for the year under review, whereas net loss in 2010 was HK$293.8 million. Basic profit per share amounted to HK2.3 cents, compared with basic loss per share in 2010 of HK2.8 cents. 695,500,000 499,100,000 39.4%315,200,000 151,800,000 107.6% 380,000,000 282,300,000 241,300,000 293,800,000 2.3 2.8 The significant increase in gross profit in 2011 and the turnaround in operating results from a net operating loss in 2010 to a substantial operating profit in 2011 was mainly attributable to the gains from the sale of units in Nanxun International Building Materials City and the sale of its non core assets: Jingguang Centre in Shenzhen, an office building in Shanghai, a commercial project in Shenyang, and the entire interest in Peninsula Beijing Hotel. The improvement in operating results was also due to the effective control in operating expenses of the Group, despite the new expenses associated with the development of additional property projects in 2011. The Group was also sucessful in managing finance costs and finance income during the year, contributing to the higher profit attributable to the equity shareholders for the year. Liquidity and Financial Resources As at 31 December 2011, the Group’s total borrowings amounted to HK$3,730.9 million, representing an increase of 1.3% when compared with the equivalent figure of HK$3,682.4 million as at 31 December 2010. Total borrowings as at 31 December 2011 included Hong Kong Dollar borrowings of HK$253.4 million (2010: HK$56.6 million) and Renminbi borrowings equivalent to HK$3,477.5 million (2010: HK$3,625.8 million). 3,730,900,000 3,682,400,000 1.3% 253,400,000 56,600,0003,477,500,000 3,625,800,000 The maturity dates for most of the Group’s outstanding borrowings are spread over the next five years, with HK$740.0 million repayable within one year or on demand, HK$1,257.2 million repayable within two to five years, and HK$1,733.7 million repayable after five years. 740,000,000 1,257,200,000 1,733,700,000 All of the Group’s outstanding borrowings take the form of interest-bearing loans, with interest rates at the market prices. 8 HKC (Holdings) Limited • <strong>Annual</strong> <strong>Report</strong> 2011
Management Discussion and Analysis (Continued) As at 31 December 2011, the Group had restricted deposits of HK$273.5 million (2010: HK$320.6 million) and unrestricted cash and cash equivalents amounting to HK$3,115.0 million (2010: HK$1,903.3 million). 273,500,000320,600,000 3,115,000,000 1,903,300,000 The Group did not use financial instruments for financial hedging purposes during the year under review. Most of the Group’s assets are in China, and use Renminbi (“RMB”) as its functional currency. Therefore, the Group is exposed to changes in the value of RMB. The Group will continue its efforts to create an optimum financial structure that best reflects the long-term interests of its shareholders, and will actively consider a variety of alternative sources of funding to finance future investments. Details of Charges in Group Assets For the year ended 31 December, 2011, the Group and certain of its subsidiaries had charged certain properties worth HK$4,506.1 million (2010: HK$4,799.8 million) as security for bank and other loans. Gearing Ratio The Group’s gearing ratio (total debt/total equity) as at 31 December 2011 was 26.1%, compared with 27.0% as at 31 December 2010. This ratio represents total borrowings divided by total equity. The Group’s net debt ratio for the same period was 2.4%. This ratio represents total borrowing minus cash divided by total equity. Contingent Liabilities The Group had contingent liabilities in respect of a housing facility fund for a property held in the PRC. Details are set out in Note 41 to the consolidated financial statements. Business Risks As a China property developer, the Group is subject to China government property policies, development, marketing, and other execution risks. Environment Policies The Group aspires to be a leading sustainable Group, and has therefore invested in the renewable energy sector, and uses sustainable technologies in some of its property developments, such as solar panels and heat pump technology. The Group has received LEED certification on some of its residential units. 4,506,100,000 4,799,800,000 26.1% 27.0% 2.4% 41 LEED • 9
Page 1 and 2: HKC (HOLDINGS) LIMITED (incorporat
Page 3 and 4: Contents 2 Corporate Information
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Page 7 and 8: Chairman’s Statement (Continued)
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Page 13 and 14: Management Discussion and Analysis
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Page 17 and 18: Corporate Governance Report (Contin
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Report of the Directors (Continued)
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Independent Auditor’s Report (Con
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Consolidated Statement of Comprehen
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Consolidated Balance Sheet (Continu
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Consolidated Statement of Changes i
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Consolidated Statement of Changes i
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Notes to the Consolidated Financial
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Principal Subsidiaries, Associated
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Five-Year Financial Summary 2011 2
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Schedule of Principal Properties (C
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HKC (HOLDINGS) LIMITED 9/F., Tower
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Annual Report - QuamIR

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