2007 Interim Report |
CONTENTS
Statement from the Chairman
Statement from the Chief Executive Officer
Management’s Discussion and Analysis
Financial Information
General Information
Investor Relations
2
4
7
15
35
44
2 PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED INTERIM REPORT 2007
statement from
the CHAIRMAN
I am confident that PCPD’s premium image
will assist us as we continue to create other
premium developments in the region.
3INTERIM REPORT 2007 PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED
The Hong Kong economy continued to enjoy robust growth in
the first half of 2007, with 5.6% year-on-year GDP growth in
the first quarter and unemployment rate falling to 4.3% in May.
In addition, Hong Kong has remained as a preferred destination
for foreign direct investment, ranking 6th in the world, with
consistently strong inflow of capital over recent years.
Other positive factors include the Hong Kong stock market
continuing to be a venue for raising funds for mainland Chinese
companies, a 10.3% year-on-year growth in total exports for the
first five months of 2007 as well as a booming tourism industry.
All these factors have helped to provide sustained growth in the
local economy.
In the local property market, our Bel-Air development continues
to shine as a beacon for innovation and excellence in luxury
residences. I am confident that the premium image of PCPD
will assist us as we continue to create other premium developments
in the region. Work is well under way on a significant project in
Asia, where PCPD is exploring a vast and promising market.
As we develop our business at home and in other parts of the
Asia-Pacific region, I would like to express my sincere thanks to
our directors, as well as our management team and workforce,
for the positive roles they have played in PCPD’s continuing
success story. I would also like to thank our shareholders and
partners for their support.
Richard Li
Chairman
August 29, 2007
4 PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED INTERIM REPORT 2007
Statement From the
Chief Executive Officer
Our staff and management demonstrate the
skills, experience and vision that will keep
PCPD in the vanguard of the premium
property development business.
5INTERIM REPORT 2007 PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED
Pacific Century Premium Developments Limited (“PCPD”)
recorded a consolidated turnover of approximately HK$2,100
million for the six months ended June 30, 2007, compared with
HK$5,276 million for the corresponding period in 2006.
Net profit for the period was approximately HK$606 million,
compared with the previous year’s HK$703 million, while
earnings per share for the six months were 25.19 Hong Kong
cents compared with 29.23 Hong Kong cents for the same period
last year.
The Board of Directors has recommended an interim dividend
of 1.5 Hong Kong cents per ordinary share for the six months
ended June 30, 2007.
Sustained economic growth and growing wealth from rising
salaries and a stock market boom saw residential property sales
climb 36% during the first half of 2007, reaching about 65% of
the figure for the whole of 2006. Overall capital values in the
luxury residential sector rose 9.8% during the period under review
compared with full-year growth of 2.9% in 2005 and 3.2% in
2006.
Sentiment in the residential market continues to be buoyant,
thanks in part to incentives contained in the government’s budget
and competitive mortgage rates offered by banks. Of particular
importance to PCPD’s prospects is the fact that limited availability
of land in Hong Kong’s traditional luxury residential areas is
expected to boost high-end residential capital values continuously
over the next 12 months. Demand in this sector will enhance the
value of Bel-Air, which is widely regarded as the pinnacle of luxury
accommodation in Hong Kong.
As an illustration of Bel-Air’s huge appeal to the high-end
residential accommodation and luxurious lifestyle market, around
500 units of the development were sold within a few weeks during
the first half of 2007, generating some HK$8.8 billion in revenue.
This sterling performance bodes well for units in the last two
towers, expected to go on sale over the next 6 months, while the
29 Villa Bel-Air houses are expected to enter the market gradually
over the next 2 to 3 years.
Moving forward, I am confident that the formidable power of
the Bel-Air brand will benefit all our property projects in Hong
Kong and throughout the Asia-Pacific region.
6 PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED INTERIM REPORT 2007
Statement From the Chief Executive Officer
Meanwhile in mainland China, ground work has begun on an
exciting luxury residential development project in Beijing’s
Chaoyang district on a site adjacent to our premium-grade
investment property, Pacific Century Place. Development plans
are currently awaiting government approval, with overall
completion scheduled for 2009.
Back in Hong Kong, solid progress has been made on our first
telephone exchange redevelopment project, with an expectation
that some of the 150 high-quality boutique apartments west of
Central will enter the market by the end of 2007 or early 2008.
The Group’s property and facilities management division has
accumulated substantial experience in the luxury residential
accommodation sector, thanks to extensive responsibilities at the
Bel-Air development. This complements a solid foundation in
the management of office, retail, industrial and mission-critical
telecommunications properties and strengthens the division’s
ability to earn a steady stream of revenue.
In their handling of projects and day-to-day operations, our staff
and management have continued to demonstrate the skills,
experience and vision that will keep PCPD in the vanguard of
the premium property development business. This positions us
well in our ongoing mission to seek out opportunities in Hong
Kong, mainland China and throughout the Asia-Pacific region.
Robert Lee
Chief Executive Officer
August 29, 2007
7INTERIM REPORT 2007 PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED
management’s
discussion and analysis
A management’s discussion and analysis of the unaudited
consolidated financial results and operations relating to the
business of Pacific Century Premium Developments Limited (the
“Company”) and its subsidiaries (the “Group”) for the six months
ended June 30, 2007 follows below:
BUSINESS REVIEW
Property development
The luxury residential market demonstrated a strong growth in
the first half of 2007. This can be attributed to confidence among
high net worth individuals encouraged by positive stock market
performance, robust economic momentum, low unemployment
and high demand for luxury residential accommodation.
The primary luxury market did exceptionally well, as was
evidenced by the Group’s sales success following the launch of
Bel-Air No.8. Increasing recognition of the Bel-Air brand
continues to impress buyers in terms of architectural design,
development facilities and service quality. The brand also
represents a unique experience in luxury lifestyles that will serve
to raise the profile of the high-end property projects in Hong
Kong and overseas.
The Group recognised approximately HK$2,100 million in
revenue for the six months ended June 30, 2007. Profit before
taxation during the six months ended June 30, 2007 was
approximately HK$617 million, compared with approximately
HK$838 million for the corresponding period in 2006.
In June 2007, the seventh batch of net surplus proceeds for the
Cyberport project, totalling HK$2,799 million, was allocated
between the Government of the Hong Kong Special
Administrative Region (“HKSAR”) and the Group. The
Government of the HKSAR received an aggregate amount of
approximately HK$1,806 million, in accordance with the
Cyberport Project Agreement, while the Group retained
approximately HK$993 million for the six months ended June
30, 2007.
The Group’s telephone exchange redevelopment project in Hong
Kong continues to make progress. Located in Wo Fung Street,
west of Central, the site will be redeveloped into approximately
150 boutique apartments. Work is currently on schedule and pre-
sales are expected by the end of 2007 or early 2008, with
completion targeted for 2009.
8 PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED INTERIM REPORT 2007
management’s discussion and analysis
In mainland China, development work on the Group’s prestigious
residential project located at No.4 Gong Ti Bei Lu, Chaoyang
District, Beijing, has commenced. With a total development gross
floor area of approximately 46,300 square metres, the project is
expected to reach completion in 2009. Project quality standards
are expected to surpass those currently prevalent in Beijing and
valuable synergies will be created with the Group’s adjacent
property, Pacific Century Place.
Property investment
The Group owns a premium-grade investment building, Pacific
Century Place, in Beijing city centre. With a gross floor area of
more than 169,900 square metres, this multiple-use complex is
currently home to many multinational corporations, world-class
retailers and residential tenants. Demand for office and retail space
is expected to increase, given mainland China’s booming economy
and the accelerating pace of corporate expansion. Pacific Century
Place enjoyed an average occupancy rate of 91 per cent for the six
months ended June 30, 2007 and a number of value enhancement
works are scheduled for completion by 2009.
The Group’s gross rental income for the six months ended June
30, 2007 amounted to approximately HK$115 million, compared
with approximately HK$111 million for the same period in 2006.
Other businesses
Other businesses within the Group include the property
management division, which provides property and facilities
management, corporate services and asset management services.
Revenue from the property management division for the six
months ended June 30, 2007 amounted to approximately HK$45
million, compared with approximately HK$40 million for the
corresponding period in 2006.
9INTERIM REPORT 2007 PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED
FINANCIAL REVIEW
Review of results
The Group recorded a consolidated turnover of approximately
HK$2,100 million for the six months ended June 30, 2007,
representing a decrease of 60.2 per cent compared with
approximately HK$5,276 million for the corresponding period
in 2006. The decrease in turnover was mainly due to less revenue
being recognised as no major completion of Bel-Air development
occurred during the current period.
The Group’s consolidated gross profit for the six months ended
June 30, 2007 was approximately HK$688 million, representing
a decrease of 19.2 per cent from a gross profit of approximately
HK$852 million for the same period in 2006. The decrease
resulted mainly from the decrease in turnover.
The Group recorded consolidated net profit of approximately
HK$606 million for the six months ended June 30, 2007,
representing a decrease of 13.8 per cent compared with
approximately HK$703 million for the same period in 2006.
The decrease was attributable to a decrease in turnover and lower
interest income generated. Basic earnings per share during the
period were 25.19 Hong Kong cents compared with 29.23 Hong
Kong cents for the corresponding period in 2006.
In accordance with applicable Hong Kong Financial Reporting
Standards issued by the Hong Kong Institute of Certified Public
Accountants, revenue and profits from the sale of property
development are recognised upon the completion of the
development and when significant risks and rewards of ownership
have been transferred.
Current assets and liabilities
As at June 30, 2007, the Group held current assets of
approximately HK$13,517 million (December 31, 2006:
HK$8,940 million), mainly comprising properties under
development/held for sale, cash and bank balances, sales proceeds
held in stakeholders’ accounts and restricted cash. The increase
in current assets was attributable to an increase in properties under
development/held for sale. Properties under development/held
for sale in current assets were increased from approximately
HK$1,521 million as at December 31, 2006 to approximately
HK$6,893 million as at June 30, 2007. Cash and bank balances
10 PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED INTERIM REPORT 2007
management’s discussion and analysis
amounted to approximately HK$2,150 million as at June 30,
2007 (December 31, 2006: HK$2,618 million). Sales proceeds
held in stakeholders’ accounts remain stable at HK$3,472 million
on both December 31, 2006 and June 30, 2007. Restricted cash
declined from HK$826 million as at December 31, 2006 to
approximately HK$435 million as at June 30, 2007 after
distribution in June 2007.
Total current liabilities as at June 30, 2007 amounted to
approximately HK$4,266 million, compared with HK$4,878
million as at December 31, 2006. The reduction was mainly from
net surplus proceeds distribution from the Cyberport project,
which reduced the amount due to the ultimate holding company.
Capital structure, liquidity and financial resources
As at June 30, 2007, total borrowings of the Group amounted to
approximately HK$2,774 million, representing a decrease of
HK$969 million compared with total borrowings of HK$3,743
million as at December 31, 2006. As at June 30, 2007, all the
Group’s long-term borrowings were from PCCW group. A portion
of the borrowings, comprising approximately HK$202 million
is interest free and is expected to be repaid from surplus proceeds
distributed from the Cyberport project, while the tranche B
convertible notes with principal amount of HK$2,420 million
carries a fixed interest rate of one per cent per annum and is
repayable at 120 per cent of the outstanding principal amount at
maturity in 2014. Gearing ratio is not provided, as all borrowings
are from the Company’s majority shareholder, PCCW.
As at June 30, 2007, the Group held a banking facility of
approximately HK$20 million for the purpose of providing a
guarantee to the Government of the HKSAR in relation to the
Cyberport project (December 31, 2006: HK$20 million).
11INTERIM REPORT 2007 PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED
The majority of the Group’s business transactions, assets and
liabilities were denominated in Hong Kong dollars. Transactions,
assets and liabilities relating to Pacific Century Place and the
acquired residential site in Beijing, the People Republic of China
(“PRC”), were denominated in Renminbi. Renminbi
denominated revenue represented approximately 5.4 per cent of
the Group’s total turnover, while PRC assets represented
approximately 26.4 per cent of the Group’s total assets.
All the Group’s borrowings were denominated in Hong Kong
dollars. Cash and bank balances were held mainly in Hong Kong
dollars, with the balance in Renminbi and US dollars. The Group
has no significant exposure to foreign exchange fluctuation and
has not adopted any material hedging measures.
Cash used in operating activities for the six months ended June
30, 2007 was approximately HK$361 million while cash used in
operating activities for the same period in 2006 was approximately
HK$406 million.
Income tax
Income tax for the six months ended June 30, 2007 was
approximately HK$11 million compared with approximately
HK$135 million for the same period in 2006. The reduction of
income tax is mainly due to the reversal of deferred income tax
liabilities.
Contingent liabilities
As at June 30, 2007, the Group had an outstanding performance
guarantee of approximately HK$1 million granted to the
Government of the HKSAR for certain entrustment works in
relation to the Cyberport project (December 31, 2006: HK$1
million).
12 PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED INTERIM REPORT 2007
management’s discussion and analysis
EMPLOYEES AND REMUNERATION
POLICIES
As at June 30, 2007, the Group employed approximately 405
personnel, most of whom were based in Hong Kong. The Group’s
remuneration policies, which are in line with prevailing industry
practices, have been formulated on the basis of performance and
experience and are reviewed regularly. Bonuses are paid on a
discretionary basis, according to individual performance and the
Group’s overall performance. The Group also provides
comprehensive benefits including medical insurance, choice of
provident fund or mandatory provident fund and training
programmes.
The Company’s share option scheme adopted on March 17, 2003
was terminated on May 13, 2005 and replaced by a new share
option scheme, which was approved by shareholders on the same
date. The new share option scheme was adopted on May 23,
2005 following approval from PCCW’s shareholders. The new
share option scheme is valid and effective for a period of 10 years
from the date of adoption.
Interim dividend
The board of directors of the Company has declared an interim
dividend of 1.5 Hong Kong cents per ordinary share for the six
months ended June 30, 2007 (2006: 1.5 Hong Kong cents per
ordinary share) or an aggregate amount of approximately HK$36
million (2006: HK$36 million) to shareholders whose names
appear on the register of members of the Company on September
13, 2007. The interim dividend will be paid on or around
September 25, 2007.
CLOSURE OF REGISTER OF MEMBERS
The Company’s register of members will be closed from September
14, 2007 to September 18, 2007, both days inclusive, during
which period no transfer of shares will be effected. In order to
qualify for the interim dividend of 1.5 Hong Kong cents per
ordinary share, all transfers, accompanied by the relevant share
certificates, should be lodged with the branch share registrar of
the Company, Computershare Hong Kong Investor Services
Limited, at Shops 1712-1716, 17th Floor, Hopewell Centre, 183
Queen’s Road East, Wanchai, Hong Kong, for registration not
later than 4:30p.m. on September 13, 2007.
13INTERIM REPORT 2007 PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED
OUTLOOK
The Group believes the luxury residential market will continue
to flourish on the back of sustained economic prosperity, growing
wealth stemming from a buoyant stock market, tightening supply
and a relatively stable interest rate environment. Higher prices
may materialise for properties in prominent locations. In the first
half of 2007, the market continued to see strong demand for
luxury residential development sites, highlighting optimism
among locals and global investors in the Hong Kong residential
market. Demand for rental properties increasing as a result of an
influx of professionals in support of Hong Kong’s economic
growth implies sustainable rental growth. The Group therefore
maintains an optimistic view of the property market for the
coming years.
The Group will continue to explore opportunities in selected
locations to develop premium quality property projects. Other
opportunities to enhance the Group’s income in Hong Kong are
being explored by carrying out feasibility studies on the
development of PCCW-owned telephone exchange buildings.
Redevelopment of telephone exchanges represents a potential
source of prime residential and commercial projects in coming
years. The first telephone exchange redevelopment project is
located at Wo Fung Street, west of Central. Completion is targeted
for 2009.
The PRC Government had continued to launch a series of
macroeconomic control measures to prevent mainland China’s
property market from overheating. These tightening measures
are expected to result in healthier growth trends in the property
sector. In addition, the Beijing 2008 Olympics are expected to
bring about significant growth in property prices in the near-to-
medium term. Improvement of city infrastructure and completion
of metro lines should improve the traffic in Beijing, and most
importantly, raise standards and values of residential projects
located in the vicinity. Increasing business opportunities in
mainland China will continue to impact positively on the Group’s
prospects.
14 PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED INTERIM REPORT 2007
management’s discussion and analysis
Meanwhile, the Group’s alliance with China Network
Communications Group Corporation, formed to redevelop a
number of telephone exchange properties, will continue to
identify a number of attractive sites in mainland China for
redevelopment in prime locations. This alliance is expected to
offer vast opportunities to broaden the Group’s development
portfolio in mainland China’s thriving property market.
While continuing to apply its expertise in the pursuit of
operational excellence and in further reinforcing the Bel-Air
brand name, the Group is also actively exploring development
opportunities in other parts of the Asia-Pacific region to grow its
core business and create value for the Group’s shareholders.
Financial
Information
Condensed Consolidated
Income Statement
Condensed Consolidated Statement of
Changes in Equity
Condensed Consolidated
Balance Sheet
Condensed Consolidated
Cash Flow Statement
Notes to the Unaudited Condensed
Consolidated Financial Information
16
17
19
21
22
16 PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED INTERIM REPORT 2007
CONDENSED CONSOLIDATED
INCOME STATEMENT
For the six months ended June 30, 2007
2007 2006
HK$ million Note(s) (Unaudited) (Unaudited)
Turnov er 2 2,100 5,276
Cost of sales (1,412) (4,424)
Gross profit 688 852
General and administrative expenses (177) (158)
Other revenue 21 7
Finance costs (65) (61)
Interest income 150 198
Profit before taxation 2,3 617 838
Income tax 4 (11) (135)
Profit attributable to equity holders of the Company 606 703
Dividend
Interim dividend declared 5 36 36
Earnings per share (expressed in Hong Kong cents per share)
Basic 6 25.19 cents 29.23 cents
Diluted 6 21.73 cents 24.84 cents
Dividend per share (expressed in Hong Kong cents per share) 5 1.5 cents 1.5 cents
The notes on pages 22 to 34 form part of these unaudited condensed consolidated financial information.
17INTERIM REPORT 2007 PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED
CONDENSED CONSOLIDATED
STATEMENT OF CHANGES IN EQUITY
For the six months ended June 30, 2007
2007
(Unaudited)
Employee
Capital Currency Convertible share-based
Issued reserve translation notes compensation Retained
HK$ million equity (note a) reserve reserve reserve earnings Total
Balance at January 1, 2007 4,309 (565) 199 769 17 1,954 6,683
Exchange differences — — 130 — — — 130
Net income recognised directly in equity — — 130 — — — 130
Profit for the period ———— 6060
Total recognised income for the period — — 130 — — 606 736
Issue of new shares for exercise of
share options (note 11) 12—————12
2006 final dividend paid —————(132) (132)
Balance at June 30, 2007 4,321 (565) 329 769 17 2,428 7,299
18 PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED INTERIM REPORT 2007
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the six months ended June 30, 2007
2006
(Unaudited)
Employee
Capital Currency Convertible share-based
Issued reserve translation notes compensation Retained
HK$ million equity (note a) reserve reserve reserve earnings Total
Balance at January 1, 2006 4,631 (565) 72 769 15 835 5,757
Exchange differences ——34 ———34
Net income recognised directly in equity ——34 ———34
Profit for the period —————703 703
Total recognised income for the period ——34 ——703 737
Share premium reduction (note 11(c)) (322) ————322 —
Value of employee services under employee share
option scheme ———— 2 — 2
2005 final dividend paid —————(132) (132)
Balance at June 30, 2006 4,309 (565) 106 769 17 1,728 6,364
a. Capital reserve of the Group represents the difference between the carrying amounts of the net assets of Ipswich Holdings Limited, a then subsidiary
of PCCW Limited (“PCCW”), and its subsidiaries (together the “Property Group”) and certain assets held by another subsidiary of PCCW and the
stated value of the shares issued by Ipswich Holdings Limited in 2004 in exchange for the entire equity interests in the Property Group.
The notes on pages 22 to 34 form part of these unaudited condensed consolidated financial information.
19INTERIM REPORT 2007 PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED
CONDENSED CONSOLIDATED
BALANCE SHEET
As at June 30, 2007
June 30, December 31,
2007 2006
HK$ million Note (Unaudited) (Audited)
ASSETS AND LIABILITIES
Non-current assets
Investment properties 3,984 3,861
Property, plant and equipment 41 43
Properties under development 747 1,979
Interest in leasehold land 7 — 502
Goodwill 81 81
Other receivables 16 15
Deferred income tax assets — 1
4,869 6,482
Current assets
Properties under development/held for sale 6,893 1,521
Sales proceeds held in stakeholders’ accounts 3,472 3,472
Restricted cash 435 826
Trade receivable, net 8 434 438
Prepayments, deposits and other current assets 120 55
Amounts due from fellow subsidiaries 10 5
Amounts due from related companies 3 5
Short-term deposits — 173
Cash and cash equivalents 2,150 2,445
13,517 8,940
20 PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED INTERIM REPORT 2007
CONDENSED CONSOLIDATED BALANCE SHEET
As at June 30, 2007
June 30, December 31,
2007 2006
HK$ million Note (Unaudited) (Audited)
Current liabilities
Current portion of long-term borrowings 24 24
Trade payable 9 78 93
Accruals, other payables and deferred income 1,256 1,451
Deposits received on sales of properties 1,083 98
Gross amounts due to customers for contract works — 7
Amounts due to fellow subsidiaries 16 17
Amount due to ultimate holding company 202 1,195
Provisions 10 1,463 1,914
Current income tax liabilities 144 79
4,266 4,878
Net current assets 9,251 4,062
Total assets less current liabilities 14,120 10,544
Non-current liabilities
Long-term borrowings 1,933 1,880
Provisions 10 4,581 1,591
Deferred income tax liabilities 293 375
Other long-term liabilities 14 15
6,821 3,861
Net assets 7,299 6,683
REPRESENTING:
Issued equity 11 4,321 4,309
Reserves 2,978 2,374
7,299 6,683
The notes on pages 22 to 34 form part of these unaudited condensed consolidated financial information.
21INTERIM REPORT 2007 PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED
CONDENSED CONSOLIDATED
CASH FLOW STATEMENT
For the six months ended June 30, 2007
2007 2006
HK$ million (Unaudited) (Unaudited)
Net cash used in operating activities (361) (406)
Investing activities
Decrease in bank deposits with maturity more than three months 173 655
Purchase of property, plant and equipment (4) (13)
Instalments received from the disposal of unconsolidated subsidiaries 10 10
Net cash generated from investing activities 179 652
Financing activities
Proceeds from shares issued under share option scheme 12 —
Dividend paid (132) (132)
Net cash used in financing activities (120) (132)
(Decrease)/increase in cash and cash equivalents (302) 114
Exchange realignment 7 2
Cash and cash equivalents
Balance at January 1, 2,445 2,699
Balance at June 30, 2,150 2,815
Analysis of cash and cash equivalents
Cash and bank balances 2,585 5,915
Less: Restricted cash (435) (3,100)
Cash and cash equivalents at June 30, 2,150 2,815
The notes on pages 22 to 34 form part of these unaudited condensed consolidated financial information.
22 PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED INTERIM REPORT 2007
NOTES TO THE UNAUDITED
CONDENSED CONSOLIDATED
FINANCIAL INFORMATION
For the six months ended June 30, 2007
1. BASIS OF PREPARATION AND ACCOUNTING POLICIES
The unaudited condensed consolidated financial information of Pacific Century Premium Developments Limited (the “Company”) and its subsidiaries (the
“Group”) have been prepared in accordance with Hong Kong Accounting Standard (“HKAS”) 34 “Interim Financial Reporting” issued by the Hong Kong
Institute of Certified Public Accountants (“HKICPA”). The unaudited condensed consolidated financial information should be read in conjunction with the
annual financial statements for the year ended December 31, 2006.
The unaudited condensed consolidated financial information have been reviewed by the Company’s Audit Committee, and the Company’s external auditor in
accordance with Hong Kong Standard on Review Engagements 2410 “Review of Interim Financial Information Performed by the Independent Auditor of the
Entity” issued by the HKICPA.
The preparation of the unaudited condensed consolidated financial information in conformity with HKAS 34 requires management to make judgments,
estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses on a year to date basis.
Actual results may differ from these estimates.
The accounting policies and methods of computation used in the preparation of these unaudited condensed consolidated financial information are consistent
with those used in preparing the Group’s annual financial statements for the year ended December 31, 2006 except for the adoption of the following new and
revised Hong Kong Financial Reporting Standards, HKASs and interpretations (“new HKFRS”) which are effective for annual periods beginning on or after
January 1, 2007:
HKAS 1 Amendment Presentation of Financial Statements – Capital Disclosures
HKFRS 7 Financial Instruments: Disclosures
HK(IFRIC)-Int 7 Applying the Restatement Approach under HKAS 29 Financial Reporting in Hyperinflationary Economies
HK(IFRIC)-Int 8 Scope of HKFRS 2
HK(IFRIC)-Int 9 Reassessment of Embedded Derivatives
HK(IFRIC)-Int 10 Interim Financial Reporting and Impairment
The adoption of these new HKFRS has no material impact to the Group’s financial statements for the current or prior periods.
23INTERIM REPORT 2007 PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED
2. TURNOVER AND SEGMENT INFORMATION
An analysis of turnover and contribution to the Group’s results and capital expenditure by business segment for the six months ended June 30, is set out below:
Property Property Other
development investment businesses Elimination Consolidated
HK$ million 2007 2006 2007 2006 2007 2006 2007 2006 2007 2006
REVENUE
External revenue 1,940 5,125 115 111 45 40 — — 2,100 5,276
Inter-segment revenue — — — — 29 18 (29) (18) — —
Total revenue 1,940 5,125 115 111 74 58 (29) (18) 2,100 5,276
RESULT
Segment results 458 655 75 71 21 6 — — 554 732
Unallocated corporate expenses (22) (31)
Finance costs (65) (61)
Interest income 150 198
Profit before taxation 617 838
Income tax (11) (135)
Profit attributable to equity
holders of the Company 606 703
Capital expenditure incurred
during the period — 9 3 3 1 1 — — 4 13
24 PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED INTERIM REPORT 2007
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL INFORMATION
For the six months ended June 30, 2007
3. PROFIT BEFORE TAXATION
Profit before taxation is stated after crediting and charging the following:
Six months ended June 30,
HK$ million 2007 2006
Crediting:
Gross rental income from investment properties 115 111
Other rental income 1 —
Less: outgoings (10) (7)
Charging:
Cost of properties sold 1,366 4,383
Depreciation 7 6
Amortisation of leasehold land 2 1
Staff costs, included in:
- cost of sales 23 23
- general and administrative expenses 63 46
Contributions to defined contribution retirement scheme, included in:
- cost of sales 1 1
- general and administrative expenses — 3
Value of employee services under employee share option scheme — 2
Net foreign exchange loss — 2
25INTERIM REPORT 2007 PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED
4. INCOME TAX
Hong Kong profits tax has been provided at the rate of 17.5 per cent on the estimated assessable profits for the period.
Mainland China income tax has been calculated on the estimated assessable profits for the period at the rates prevailing in the respective jurisdiction.
Six months ended June 30,
HK$ million 2007 2006
Current income tax
- Hong Kong profits tax 84 115
- Mainland China income tax 20 —
Deferred income tax (note a) (93) 20
11 135
a. On 16 March 2007, the National People’s Congress approved the Corporate Income Tax Law of The People’s Republic of China (the “new CIT Law”).
The new CIT Law reduces the corporate income tax rate applicable to the Group’s operations in mainland China from 33 per cent to 25 per cent with
effect from January 1, 2008. Accordingly, the deferred income tax liabilities for the Group’s operations in mainland China as at June 30, 2007 is provided
at the rate of 25 per cent on the temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the tax
bases. The effect on the change in corporate income tax rate applicable to the Group’s operations in mainland China was recognised in the income
statement for the current period.
26 PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED INTERIM REPORT 2007
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL INFORMATION
For the six months ended June 30, 2007
5. DIVIDEND
Six months ended June 30,
HK$ million 2007 2006
Interim dividend declared of 1.5 Hong Kong cents per ordinary share
(2006: 1.5 Hong Kong cents per ordinary share) 36 36
The interim dividend declared after the balance sheet date has not been recognised as a liability as at the balance sheet date.
Final dividend of HK$132 million for 2006, which comprises 5.5 Hong Kong cents per ordinary share was paid by the Company on May 23, 2007.
6. EARNINGS PER SHARE
The calculations of basic and diluted earnings per share based on the share capital of the Company are as follows:
Six months ended June 30,
2007 2006
Earnings (HK$ million)
Earnings for the purpose of calculating the basic earnings per share 606 703
Finance costs on convertible notes 65 61
Earnings for the purpose of calculating the diluted earnings per share 671 764
Number of shares
Weighted average number of ordinary shares for the purpose of calculating the basic earnings per share 2,403,702,967 2,402,459,873
Effect of dilutive potential ordinary shares on conversion of convertible notes and the employee
share options 680,979,128 672,222,222
Weighted average number of ordinary shares for the purpose of calculating the diluted earnings per share 3,084,682,095 3,074,682,095
27INTERIM REPORT 2007 PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED
7. INTEREST IN LEASEHOLD LAND
During the six months ended June 30, 2007, the Group’s interest in leasehold land was transferred to properties under development.
8. TRADE RECEIVABLE, NET
An aging analysis of trade receivable is set out below:
June 30, December 31,
HK$ million 2007 2006
Current 431 418
One to three months 1 —
More than three months 2 20
434 438
Trade receivable in respect of properties sold are payable by the purchasers pursuant to the terms of the sales contracts. Other trade receivable has a normal
credit period ranges up to 30 days from the date of the invoice unless there is separate mutual agreement on extension of the credit period.
9. TRADE PAYABLE
An aging analysis of trade payable is set out below:
June 30, December 31,
HK$ million 2007 2006
Current 77 80
One to three months 1 5
More than three months — 8
78 93
28 PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED INTERIM REPORT 2007
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL INFORMATION
For the six months ended June 30, 2007
10. PROVISIONS
2007
Payment to the
Government
HK$ million (note a) Others Total
Balance at January 1, 2007 3,480 25 3,505
Additional provisions included in properties under development 4,346 — 4,346
Additional provisions made — 24 24
Provisions settled (1,806) (25) (1,831)
Balance at June 30, 2007 6,020 24 6,044
Less: Amount classified as current liabilities (1,439) (24) (1,463)
4,581 — 4,581
2006
Payment to the
Government
HK$ million (note a) Others Total
Balance at January 1, 2006 6,705 29 6,734
Additional provisions included in properties under development 90 — 90
Additional provisions made — 15 15
Provisions settled (1,162) (17) (1,179)
Balance at June 30, 2006 5,633 27 5,660
Less: Amount classified as current liabilities (4,910) (27) (4,937)
723 — 723
29INTERIM REPORT 2007 PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED
10. PROVISIONS – Continued
a. Pursuant to the Cyberport Project Agreement, the Government of the Hong Kong Special Administration Region (“HKSAR”) shall be entitled to receive
payments of approximately 65 per cent from the surplus cash flow arising from the sales of the residential portion of the Cyberport project, net of certain
allowable costs incurred on the project, as stipulated under certain terms and conditions of the Cyberport Project Agreement. Provision for payment to
the Government of the HKSAR is included in properties under development as the amount is considered as a part of the development costs for the
Cyberport project. The provision is based on estimated sales proceeds of the residential portion of the project and the estimated development costs of the
Cyberport project. The estimated amount to be paid to the Government of the HKSAR during the forthcoming year is classified as current liabilities.
11. ISSUED EQUITY
The Group
Number of shares Issued equity
HK$ million
(note a) (note a)
Ordinary shares of HK$0.10 each at January 1, 2007 2,402,459,873 4,309
Issue of new shares from exercise of share options (note d) 5,000,000 12
Ordinary shares of HK$0.10 each at June 30, 2007 2,407,459,873 4,321
30 PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED INTERIM REPORT 2007
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL INFORMATION
For the six months ended June 30, 2007
11. ISSUED EQUITY – Continued
a. Due to the use of reverse acquisition basis of accounting (as stated in note 2(d) to the 2004 Financial Statements), the amount of issued equity, which
includes share capital and share premium in the consolidated balance sheet, represents the amount of issued equity of the legal subsidiary, Ipswich
Holdings Limited, at the date of completion of the reverse acquisition plus equity changes attributable to the Group after the reverse acquisition. The
equity structure (i.e. the number and type of shares) reflects the equity structure of the legal parent, Pacific Century Premium Developments Limited for
all accounting periods presented.
b. The following is the movement in the share capital of the Company:
The Company
Number of shares Issued equity
HK$ million
Authorised:
Ordinary shares of HK$0.10 each at June 30, 2007 and December 31, 2006 10,000,000,000 1,000
Issued and fully paid:
Ordinary shares of HK$0.10 each at December 31, 2006 2,402,459,873 240
Issue of new shares from exercise of share options (note d) 5,000,000 1
Ordinary shares of HK$0.10 each at June 30, 2007 2,407,459,873 241
c. On May 16, 2006, a special resolution was passed at the Company’s Annual General Meeting approving the reduction of share premium by cancelling a
sum of approximately HK$322 million standing to the credit of the Company’s share premium account against the accumulated losses of the Company
of same amount.
d. During the period, 5,000,000 share options were exercised by an eligible option holder at HK$2.375 for a total cash consideration of HK$11,875,000
resulting in the issue of 5,000,000 new ordinary shares of HK$0.10 each.
31INTERIM REPORT 2007 PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED
12. CAPITAL COMMITMENTS
June 30, December 31,
HK$ million 2007 2006
Authorised and contracted for 1,962 1,739
Authorised but not contracted for 885 659
2,847 2,398
13. CONTINGENT LIABILITIES
The contingent liabilities of the Group not provided for in the unaudited condensed consolidated financial information are set out as follows:
June 30, December 31,
HK$ million 2007 2006
Performance guarantee 1 1
14. BANKING FACILITY
An indirect wholly-owned subsidiary of the Company had been granted a banking facility amounting to approximately HK$20 million from a bank for the
purpose of providing guarantee to the Government of the HKSAR. Such facility is to be secured by a bank deposit placed by the subsidiary from time to time
to secure the amount of guarantee issued by the bank. No guarantee was issued by the bank under this banking facility as at June 30, 2007 and December 31,
2006.
32 PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED INTERIM REPORT 2007
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL INFORMATION
For the six months ended June 30, 2007
15. MATERIAL RELATED PARTY TRANSACTIONS
The Group is controlled by PCCW, a company incorporated in Hong Kong, which owns 61.53 per cent (December 31, 2006: 61.66 per cent) of the
Company’s shares. The remaining 38.47 per cent (December 31, 2006: 38.34 per cent) of the shares are widely held. PCCW is also regarded as the ultimate
holding company of the Group.
The following transactions were carried out with related parties:
a. During the period, the Group had the following significant transactions with related companies:
Six months ended June 30,
HK$ million 2007 2006
Sales of services:
- Fellow subsidiaries
Facility management services 25 21
Office leases rental 6 5
- Related companies
Facility management services 12 11
Office leases rental 1 —
Purchases of services:
- Fellow subsidiaries
Corporate services 2 3
Office sub-licences 4 4
Information technology and other logistic services 5 3
- Related company
Corporate services 1 —
The above transactions were carried out after negotiations between the Group and the related parties in the ordinary course of business and on the basis of
estimated market value as determined by the directors. In respect of transactions for which the price or volume has not yet been agreed with the relevant related
parties, the directors have determined the relevant amounts based on their best estimation.
The related party transactions in respect of items above also constitute connected transactions or continuing connected transactions as defined in Chapter 14A
of
33INTERIM REPORT 2007 PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED
15. MATERIAL RELATED PARTY TRANSACTIONS – Continued
b. Details of key management compensation
Six months ended June 30,
HK$ million 2007 2006
Salaries and other short-term employee benefits 9 9
Bonuses 21 7
Directors’ fees — —
Post-employment benefits 1 1
31 17
Share-based compensation accounting adjustment (note (i)) — 1
31 18
(i) Share-based compensation accounting adjustment involves calculation of the fair value of share options granted to certain directors under PCCW’s
share option scheme using trinomial option pricing model. The figures shown in the above table do not represent realisable gains which are affected
by a combination of a number of factors, including, performance of PCCW’s share price, vesting period and timing of exercise.
(ii) The remuneration of executive directors employed by PCCW, the ultimate holding company of the Group, is borne by PCCW.
c. Period-end balances arising from sales/purchases of services and loan interest
June 30, December 31,
HK$ million 2007 2006
Receivables from related parties:
- Fellow subsidiaries 10 5
- Related companies 3 5
13 10
Payables to related parties:
- Fellow subsidiaries 16 17
34 PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED INTERIM REPORT 2007
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL INFORMATION
For the six months ended June 30, 2007
15. MATERIAL RELATED PARTY TRANSACTIONS – Continued
d. Loans from/amounts due to related parties
(i) The movement of the amount due to ultimate holding company of HK$202 million as at June 30, 2007 (December 31, 2006: HK$1,195 million)
is as follows:
Six months ended June 30,
HK$ million 2007 2006
Loan from/amount due to ultimate holding company:
Balance at January 1, 1,195 3,180
Repayment (993) (638)
Balance at June 30, 202 2,542
The balance due to ultimate holding company as at June 30, 2007 is interest free and is recorded under the current liabilities in the condensed
consolidated balance sheet.
(ii) The loan from a fellow subsidiary represents the convertible notes (tranche B note due 2014) with face value of HK$2,420 million. The movements
of the loan from a fellow subsidiary of HK$2,572 million as at June 30, 2007 (December 31, 2006: HK$2,548 million) are as follows:
Six months ended June 30,
HK$ million 2007 2006
Loan from a fellow subsidiary:
Balance at January 1, 2,548 2,499
Interest expenses 12 12
Interest amount payable included in amounts due to fellow subsidiaries (12) (12)
Provision for redemption premium 24 24
Balance at June 30, 2,572 2,523
35INTERIM REPORT 2007 PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED
General
information
DIRECTORS’ AND CHIEF EXECUTIVE’S INTERESTS AND SHORT POSITIONS IN SHARES,
UNDERLYING SHARES AND DEBENTURES
As at June 30, 2007, the directors and the chief executive of the Company and their associates had the following interests and short positions in the shares,
underlying shares and debentures of the Company or its associated corporation (within the meaning of Part XV of the Securities and Futures Ordinance (the
“SFO”)) which (a) were required to be notified to the Company and The Stock Exchange of Hong Kong Limited (the “Stock Exchange”) pursuant to Divisions
7 and 8 of Part XV of the SFO (including interests and short positions which they are taken or deemed to have under such provisions of the SFO); or (b) were
recorded in the register required to be kept under Section 352 of the SFO; or (c) were required to be notified to the Company and the Stock Exchange pursuant
to the Model Code for Securities Transactions by Directors of Listed Issuers (the “Model Code”) of the Rules Governing the Listing of Securities on the Stock
Exchange (the “Listing Rules”):
1. The Company
As at June 30, 2007, the Company had not been notified of any interests or short positions in the shares or underlying shares or debentures of the
Company held by the directors or the chief executive of the Company or their associates.
2. Associated Corporation of the Company
A. Interests in PCCW Limited (“PCCW”)
The table below sets out the aggregate long positions of the directors and the chief executive of the Company in the shares and underlying shares of
PCCW, the ultimate holding company of the Company, as at June 30, 2007.
Number of
underlying
Number of ordinary shares shares held Percentage
Name of director/ Personal Family Corporate Other under equity of issued
chief executive interests interests interests interests derivatives Total share capital
Li Tzar Kai, Richard ——250,109,824 1,650,518,335 — 1,900,628,159 28.06%
(Note I(a)) (Note I(b))
Alexander Anthony Arena 760,000 ———15,800,200 16,560,200 0.24%
(Note II)
Lee Chi Hong, Robert 992,600 511 ——6,000,000 6,993,111 0.10%
(Note IV(a)) (Note IV(b)) (Note III)
James Chan ————210,000 210,000 0.003%
(Note III)
Gan Kim See, Wendy ————420,000 420,000 0.006%
(Note III)
36 PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED INTERIM REPORT 2007
General information
DIRECTORS’ AND CHIEF EXECUTIVE’S INTERESTS AND SHORT POSITIONS IN SHARES,
UNDERLYING SHARES AND DEBENTURES – continued
2. Associated Corporation of the Company - Continued
A. Interests in PCCW Limited (“PCCW”) - Continued
Notes:
I. (a) Of these shares of PCCW, Pacific Century Diversified Limited (“PCD”), a wholly-owned subsidiary of Chiltonlink Limited, held 216,362,824 shares
and Eisner Investments Limited held 33,747,000 shares. Li Tzar Kai, Richard owns 100% of Chiltonlink Limited and Eisner Investments Limited.
(b) These interests represented:
(i) a deemed interest in 36,726,857 shares of PCCW held by Yue Shun Limited, a subsidiary of Hutchison Whampoa Limited (“HWL”). Cheung
Kong (Holdings) Limited (“Cheung Kong”) through certain subsidiaries held more than one-third of the issued share capital of HWL. Li Tzar
Kai, Richard was a discretionary beneficiary of certain discretionary trusts which held units in unit trusts which in turn held interests in certain
shares of Cheung Kong and HWL. Li Tzar Kai, Richard was also interested in one-third of the issued share capital of two companies, which owned
all the shares in the trustee companies which acted as trustees of such discretionary trusts and unit trusts. Accordingly, Li Tzar Kai, Richard was
deemed, under the SFO, to have an interest in the 36,726,857 shares of PCCW held by Yue Shun Limited;
(ii) a deemed interest in 87,018,177 shares of PCCW held by Pacific Century Group Holdings Limited (“PCGH”). Li Tzar Kai, Richard was the
founder of certain trusts which held 100% interests in PCGH. Accordingly, Li Tzar Kai, Richard was deemed, under the SFO, to have an interest
in the 87,018,177 shares of PCCW held by PCGH; and
(iii) a deemed interest in 1,526,773,301 shares of PCCW held by Pacific Century Regional Developments Limited (“PCRD”), a company in which
PCGH had, through wholly-owned subsidiaries Anglang Investments Limited, Pacific Century Group (Cayman Islands) Limited, Pacific Century
International Limited and Borsington Limited, an aggregate of 75.33% interest. Li Tzar Kai, Richard was the founder of certain trusts which held
100% interests in PCGH. Accordingly, Li Tzar Kai, Richard was deemed, under the SFO, to have an interest in the 1,526,773,301 shares of
PCCW held by PCRD.
II. These interests represented Alexander Anthony Arena’s beneficial interest in: (a) 200 underlying shares held in the form of 20 American Depositary Receipts
which constituted listed equity derivatives; and (b) 15,800,000 underlying shares in respect of share options granted by PCCW to Alexander Anthony Arena
as beneficial owner, details of which are set out in Note III below.
37INTERIM REPORT 2007 PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED
DIRECTORS’ AND CHIEF EXECUTIVE’S INTERESTS AND SHORT POSITIONS IN SHARES,
UNDERLYING SHARES AND DEBENTURES – continued
2. Associated Corporation of the Company - Continued
A. Interests in PCCW Limited (“PCCW”) - Continued
Notes: - Continued
III. These interests represented the interests in underlying shares in respect of share options granted by PCCW to the directors and the chief executive of the
Company as beneficial owners as at June 30, 2007, details of which are set out as follows (all dates are shown month/day/year):
Number of options
Name of director/ Exercisable Exercise price Outstanding at Outstanding at
chief executive Date of grant Vesting period period HK$ 01.01.2007 06.30.2007
Alexander Anthony Arena 08.28.1999 08.17.2000 to 08.17.2000 to 11.780 3,200,000 3,200,000
08.17.2004 08.17.2009
08.26.2000 08.26.2001 to 08.26.2001 to 60.120 1,600,000 1,600,000
08.26.2005 08.26.2010
02.20.2001 08.26.2001 to 08.26.2001 to 16.840 1,600,000 1,600,000
08.26.2005 01.22.2011
07.25.2003 07.25.2004 to 07.25.2004 to 4.350 6,400,000 6,400,000
07.25.2006 07.23.2013
02.08.2005 02.08.2006 to 02.08.2006 to 4.475 3,000,000 3,000,000
02.08.2007 02.07.2009
Lee Chi Hong, Robert 07.25.2003 07.25.2004 to 07.25.2004 to 4.350 5,000,000 5,000,000
07.25.2006 07.23.2013
02.08.2005 02.08.2006 to 02.08.2006 to 4.475 1,000,000 1,000,000
02.08.2007 02.07.2009
James Chan 07.25.2003 07.25.2004 to 07.25.2004 to 4.350 210,000 210,000
07.25.2006 07.23.2013
Gan Kim See, Wendy 01.22.2001 01.22.2002 to 01.22.2002 to 16.840 180,000 180,000
01.22.2004 01.22.2011
07.25.2003 07.25.2004 to 07.25.2004 to 4.350 240,000 240,000
07.25.2006 07.23.2013
38 PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED INTERIM REPORT 2007
General information
DIRECTORS’ AND CHIEF EXECUTIVE’S INTERESTS AND SHORT POSITIONS IN SHARES,
UNDERLYING SHARES AND DEBENTURES – continued
2. Associated Corporation of the Company - Continued
A. Interests in PCCW Limited (“PCCW”) - Continued
Notes: - Continued
IV. (a) These shares were held jointly by Lee Chi Hong, Robert and his spouse.
(b) These shares were held by the spouse of Lee Chi Hong, Robert.
B. Short Positions in the Shares and Underlying Shares of PCCW
As at June 30, 2007, the Company had not been notified of any short positions in the shares or underlying shares or debentures of PCCW held by
the directors or the chief executive of the Company or their associates.
39INTERIM REPORT 2007 PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED
SHARE OPTIONS SCHEMES
In order to align the terms of the share option scheme of the Company with those of PCCW and in view of the limited number of shares capable of being issued
relative to the current capital base of the Company, under the 2003 share option scheme, which was approved and adopted on March 17, 2003 and was valid
for 10 years after the date of adoption, the shareholders of the Company approved the termination of the 2003 share option scheme and adoption of a new share
option scheme (the “2005 Scheme”) at the Company’s annual general meeting held on May 13, 2005. The 2005 Scheme became effective on May 23, 2005
following its approval by the shareholders of PCCW. No further share options will be granted under the 2003 share option scheme following its termination,
but the provisions of such scheme will remain in full force and effect with respect to the options granted prior to its termination.
Under the 2005 Scheme, the board of directors of the Company may, at its discretion, grant share options to any eligible person to subscribe for shares in the
Company subject to the terms and conditions stipulated in the 2005 Scheme. The exercise price of the options under the 2005 Scheme is determined by the
board of directors of the Company in its absolute discretion but in any event shall not be less than the highest of (i) the closing price of the shares of the
Company as stated in the daily quotations sheet of the Stock Exchange on the date of grant; (ii) the average closing price of the shares of the Company as stated
in the daily quotations sheet of the Stock Exchange for the five days last preceding the date of grant on which days it has been possible to trade shares on the
Stock Exchange; and (iii) the nominal value of the share of the Company on the date of grant. The overall limit on the number of shares which may be issued
upon exercise of all outstanding options granted and yet to be exercised under the 2005 Scheme and any other share option schemes of the Company must not
exceed 30 per cent of the shares in issue from time to time. In addition, the maximum number of shares in respect of which options may be granted under the
2005 Scheme shall not (when aggregated with any shares subject to any grants made after May 23, 2005 pursuant to any other share option schemes of the
Company) exceed 10 per cent of the issued share capital of the Company on May 23, 2005 (or some other date if renewal of this limit is approved by
shareholders). No share options have been granted under the 2005 Scheme since its adoption.
40 PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED INTERIM REPORT 2007
General information
SHARE OPTIONS SCHEMES – continued
Details of the options which have been granted and outstanding under the 2003 share option scheme during the six months ended June 30, 2007 are as follows:
1. Outstanding options at January 1, 2007 and at June 30, 2007
Number of options
Exercisable Exercise price Outstanding at Outstanding at
Category of participant Date of grant Vesting period period HK$ 01.01.2007 06.30.2007
Directors of the 12.20.2004 Fully vested on 12.20.2004 to 2.375 10,000,000 5,000,000
Company’s subsidiary 12.20.2004 12.19.2014
Note: All dates are shown month/day/year
2. Options granted during the six months ended June 30, 2007
During the period under review, no share options were granted.
3. Options exercised during the six months ended June 30, 2007
Closing price
of the shares
immediately
Number of before the
shares date on which
acquired the options
Exercisable Exercise price on exercise was exercised
Category of participant Date of grant Vesting period period HK$ of options HK$
Director of the 12.20.2004 Fully vested on 12.20.2004 to 2.375 5,000,000 2.460
Company’s subsidiary 12.20.2004 12.19.2014
Save as disclosed above, during the period under review, no share options were exercised.
4. Options cancelled or lapsed during the six months ended June 30, 2007
During the period under review, no share options were cancelled or lapsed.
At no time during the period under review was the Company or any of its subsidiaries a party to any arrangement to enable the directors of the Company to
acquire benefits by means of the acquisition of shares in, or debentures of, the Company or any other body corporate.
41INTERIM REPORT 2007 PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED
INTERESTS AND SHORT POSITIONS IN SHARES OF SUBSTANTIAL SHAREHOLDERS
1. Interests in the Company
As at June 30, 2007, the following persons (other than directors or the chief executive of the Company) had interests in the shares and underlying shares
of the Company as recorded in the register required to be kept under Section 336 of the SFO:
Number of shares/ Percentage of
Name of shareholder Capacity underlying shares held issued share capital
PCCW Beneficial owner 2,153,555,555(Note I) 89.45%
Desmarais Paul G. Investment manager 146,441,000(Note II) 6.08%
Nodex Inc. Investment manager 146,441,000(Note II) 6.08%
Gelco Enterprises Ltd. Investment manager 146,441,000(Note II) 6.08%
Power Corporation of Canada Investment manager 146,441,000(Note II) 6.08%
Power Financial Corporation Investment manager 146,441,000(Note II) 6.08%
IGM Financial Inc. Investment manager 146,441,000(Note II) 6.08%
Peter Cundill & Associates (Bermuda) Ltd. Investment manager 124,952,000 5.19%
OZ Management, L.L.C. Investment manager 120,498,000 5.01%
ZFIC, Inc. Investment manager 120,309,000(Note III) 5.00%
Artisan Partners Limited Partnership Investment manager 120,309,000(Note III) 5.00%
Notes:
I. These interests represented (a) an interest in 1,481,333,333 shares in the Company held by Asian Motion Limited, a wholly-owned subsidiary of PCCW; and (b) an
interest in respect of 672,222,222 underlying shares in the Company held by PCCW-HKT Partners Limited, a wholly-owned subsidiary of PCCW, arising as a result
of the holding of the HK$2,420 million guaranteed convertible note issued by PCPD Wealth Limited, a wholly-owned subsidiary of the Company, on December 29,
2006.
II. Each of the entities and the individual has direct or indirect control over an investment manager Mackenzie Cundill Investment Management Ltd. and is therefore
deemed to be interested in the 146,441,000 shares of the Company held by Mackenzie Cundill Investment Management Ltd.
III. ZFIC, Inc. owns 100% of Artisan Partners Limited Partnership and is therefore deemed to be interested in 120,309,000 shares of the Company held by Artisan
Partners Limited Partnership.
42 PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED INTERIM REPORT 2007
General information
INTERESTS AND SHORT POSITIONS IN SHARES OF SUBSTANTIAL SHAREHOLDERS –
continued
2. Short Positions in the Shares and Underlying Shares of the Company
As at June 30, 2007, the Company had not been notified of any other person who had short positions in the shares or underlying shares of the Company
to be recorded in the register required to be kept by the Company pursuant to Section 336 of the SFO.
Save as disclosed above, as at June 30, 2007, the Company had not been notified of any other person who had interests or short positions in the shares and
underlying shares of the Company to be recorded in the register required to be kept by the Company pursuant to Section 336 of the SFO.
PURCHASE, SALE OR REDEMPTION OF LISTED SECURITIES
During the six months ended June 30, 2007, there was no purchase, sale or redemption by the Company or any of its subsidiaries of the listed securities of the
Company.
AUDIT COMMITTEE
The Company’s Audit Committee has reviewed the unaudited condensed consolidated financial information of the Group for the six months ended June 30,
2007 and has held two meetings during the period under review.
CODE ON CORPORATE GOVERNANCE PRACTICES
The Company has applied the principles and complied with all the applicable code provisions contained in the Code on Corporate Governance Practices (the
“Code”) set out in Appendix 14 to the Listing Rules for the six months ended June 30, 2007, except that the Chairman of the Board was unable to attend the
Company’s annual general meeting held on May 16, 2007 (which was required under the code provision E.1.2) as he had another engagement that was
important to the Company’s business.
43INTERIM REPORT 2007 PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED
MODEL CODE SET OUT IN APPENDIX 10 to THE LISTING RULES
The Company has adopted its own code of conduct regarding securities transactions by directors and senior management, namely the PCPD Code of Conduct
for Securities Transactions by Directors and Senior Management (“PCPD Code”), on terms not less exacting than the required standard under the Model Code
set out in Appendix 10 to the Listing Rules.
The Company has made specific enquiry of all directors of the Company, who have confirmed that they have complied with the required standard set out in the
PCPD Code for the six months ended June 30, 2007.
44 PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED INTERIM REPORT 2007
investor relations
LISTING
The Company’s ordinary shares are listed on the Main Board of The Stock
Exchange of Hong Kong Limited and the stock code is 0432.
Any enquiries regarding the Company should be addressed to Investor
Relations at the address provided on this page.
BOARD OF DIRECTORS
Executive Directors
Li Tzar Kai, Richard (Chairman)
Alexander Anthony Arena (Deputy Chairman)
Lee Chi Hong, Robert (Chief Executive Officer)
James Chan
Gan Kim See, Wendy
Independent Non-Executive Directors
Cheung Kin Piu, Valiant
Tsang Link Carl, Brian
Prof Wong Yue Chim, Richard, SBS, JP
Dr Allan Zeman, GBS, JP
COMPANY SECRETARY
Chan Ya Lai, Alice
REGISTERED OFFICE
Clarendon House
2 Church Street
Hamilton HM 11
Bermuda
PRINCIPAL PLACE OF BUSINESS IN HONG KONG
Units 701-705, Level 7
Cyberport 3
100 Cyberport Road
Hong Kong
Telephone: +852 2514 3990
Fax: +852 2514 3945
PRINCIPAL SHARE REGISTRAR AND
TRANSFER AGENT
Butterfield Fund Services (Bermuda) Limited
Rosebank Centre
11 Bermudiana Road
Pembroke HM08
Bermuda
HONG KONG BRANCH SHARE REGISTRAR
AND TRANSFER OFFICE
Computershare Hong Kong Investor Services Limited
46th Floor, Hopewell Centre
183 Queen’s Road East
Wanchai
Hong Kong
Telephone: +852 2862 8628
Fax: +852 2529 6087
Email: hkinfo@computershare.com.hk
INVESTOR RELATIONS
David Woo
Pacific Century Premium Developments Limited
Units 701-705, Level 7
Cyberport 3
100 Cyberport Road
Hong Kong
Telephone: +852 2883 6130
Fax: +852 2514 1757
Email: david.kw.woo@pcpd.com
WEBSITE
www.pcpd.com
