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SWIRE PACIFIC LIMITED
(Incorporated in Hong Kong with limited liability)
(Stock Codes: 00019 and 00087)
2011 Interim Results
For further information, please contact:
Ms. Cindy Cheung, Tel: +852 2840 8091 (office) / +852 9038 8495 (mobile)
Notes:
(a) The comparative figures for the six months ended 30th June 2010 have been restated as a result of the early adoption at 31st December 2010 of amended HKAS 12 "Income taxes".
(b) Refer to note 11 in the interim accounts for the weighted average number of shares.
(c) Refer to the glossary on page 59 for the definition of equity and underlying equity attributable to the Company's shareholders per share.
(d) A reconciliation between the reported and underlying profit and equity attributable to the Company's shareholders is provided on page 25.
Chairman's Statement
CONSOLIDATED RESULTS
The profit attributable to shareholders for the first half of 2011 was HK$23,951 million, HK$9,321 million higher than for the first half of 2010. Underlying profit attributable to shareholders, which principally adjusts for changes in the valuation of investment properties, decreased by HK$4,307 million to HK$4,602 million. Excluding the effect of non-recurring items, adjusted underlying profit decreased by HK$542 million to HK$4,378 million.
This decrease in adjusted underlying profit reflects lower profits from the Cathay Pacific group and from the Marine Services and Trading & Industrial Divisions. However, there was continued growth in profits from the Property Division, an improved performance at Hong Kong Aircraft Engineering Company Limited ("HAECO") and modest growth in profits from the Beverages Division.
KEY DEVELOPMENTS
In the first half of 2011, the Group acquired an additional 1% interest in Cathay Pacific for a total cost of HK$721 million, increasing its interest to 43.97%.
In March, Cathay Pacific announced orders for a further 27 new aircraft - two Airbus A350-900s (which had been ordered in December 2010), 15 Airbus A330-300s and 10 Boeing 777-300ERs. In August, Cathay Pacific announced a further acquisition of four Boeing 777-300ERs and eight Boeing 777-200F freighters. These new aircraft are expected to be delivered between 2013 and 2016.
In May, the phased opening of TaiKoo Hui, a 3.8 million square foot mixed-use development in the Tianhe district of Guangzhou, began with the opening of the retail mall, which is 100% leased or committed. The office space will be handed over to tenants from the third quarter of 2011 and the 263-room hotel operated by Mandarin Oriental is scheduled to open in 2012.
During the first half of 2011, Swire Pacific Offshore ("SPO") committed to purchase an additional 27 vessels for delivery between 2011 and 2015.
HALF-YEAR OPERATING PERFORMANCE
Excluding the underlying profit of HK$577 million arising in connection with the disposal of investment properties in the first half of 2010, underlying profit in the Property Division increased by HK$357 million to HK$2,243 million. Gross rental income rose by 7% to HK$4,174 million. This principally reflected robust demand for office space at Pacific Place and Island East in Hong Kong. The retail portfolio benefited from high retail sales, reflecting strong consumer demand. The hotel business improved strongly, particularly the Group's owned and managed hotels in Hong Kong and Mainland China.
On an attributable basis, the Property Division's net investment property valuation gain, before deferred tax in Mainland China, in the first half of 2011 was HK$18,083 million, compared to a net gain in the first half of 2010 of HK$6,079 million.
The core business of the Cathay Pacific group remained generally robust in the first half of 2011. However, operating profit was adversely affected by increased jet fuel prices. The group contributed a profit of HK$1,221 million, a decrease of HK$861 million compared with the first half of 2010. The passenger businesses of Cathay Pacific and Dragonair performed well, with strong demand for premium class travel despite uncertainty in some of the world's major economies. The cargo business performed reasonably in the first quarter of the year but was appreciably weaker in the second quarter. Cathay Pacific benefited from the profits earned by its associated company, Air China, which increased by 21% compared to the first half of 2010.
The HAECO group's business improved in the first half of 2011. Demand for HAECO's services in Hong Kong remained strong and there was an improvement in Taikoo (Xiamen) Aircraft Engineering Company Limited ("TAECO")'s performance in Mainland China, reflecting recovering demand for airframe heavy maintenance services. Hong Kong Aero Engine Services Limited ("HAESL") and Singapore Aero Engine Services Pte. Limited("SAESL") contributed to the increase in profits. HAECO's new joint ventures in Mainland China continued to sustain losses as a result of weak demand.
The Beverages Division recorded a 3% increase in attributable profit in the first half of 2011 to HK$275 million. This principally reflected an improved performance in Mainland China. Overall sales volume grew by 10% to 468 million unit cases in the first half of 2011. Profits improved in Mainland China. In other markets, results were adversely affected by rising costs, which were not fully offset by price increases and improvements in the sales mix.
The Marine Services Division reported an 8% decrease in attributable profit in the first half of 2011. The offshore energy industry began to recover from the difficult conditions experienced during 2010. This was reflected in an improvement in SPO's overall fleet utilisation. However, average charter hire rates were lower than in the first half of 2010 and operating costs were higher.
Excluding the gain of HK$148 million on disposal of the Group's interest in PUMA in January 2011, the Trading & Industrial Division recorded a profit of HK$149 million in the first half of 2011, a 24% decrease compared to the first half of 2010. The decrease principally reflects the absence of a contribution from CROWN Beverage Cans group, which was sold in the second half of 2010. Swire Resources and Akzo Nobel Swire Paints recorded increases in profits. The profits of the Taikoo Motors group and of Taikoo Sugar were lower.
For more information, please visit http://doc.irasia.com/listco/hk/swire/interim/2011/intpress.pdf.
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