Mtr Corporation Limited (地 鐵 有 限 公 司)
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MTR Corporation Limited MTR CORPORATION LIMITED (地鐵有限公司) (Incorporated in Hong Kong with limited liability) (Stock Code: 66) ANNOUNCEMENT OF UNAUDITED RESULTS FOR SIX MONTHS ENDED 30 JUNE 2004 HIGHLIGHTS Financial • Revenue increased by 11.8% to HK$3,987 million • Operating margin before depreciation rose by 4.7% point to 55.6% • Property development profit of HK$1,153 million • Net profit attributable to shareholders increased to HK$1,175 million from HK$113 million • Gross debt / equity ratio at period end improved to 54.9% from 55.9% • Interim dividend of HK$0.14 per share Operational • Patronage increased by 12.2% to 407 million • All statutory operational targets have been met or exceeded • Good progress on retrofit of platform screen door and other asset improvement projects • Growth in property development and rental activities as market recovered • Continued to develop business opportunities in PRC and overseas • Construction of Disneyland Resort Line and Tung Chung Cable Car projects on schedule 1 MTR Corporation Limited The Directors of MTR Corporation Limited (“the Company” or “MTR”) are pleased to announce the unaudited interim results of the Company and its subsidiaries (“the Group”) for the half-year ended 30 June 2004 as follows: CONSOLIDATED PROFIT AND LOSS ACCOUNT (HK$ MILLION) Half-year ended 30 June 2004 2003 (Unaudited) (Unaudited) Fare revenue – MTR Lines 2,625 2,391 – Airport Express Line 246 176 Station commercial and other revenue 579 512 Rental and management income 537 488 Turnover 3,987 3,567 Staff costs and related expenses (772) (832) Energy and utilities (252) (258) Operational rent and rates (34) 6 Stores and spares consumed (54) (55) Repairs and maintenance (244) (215) Railway support services (36) (40) Expenses relating to station commercial and other businesses (128) (133) Property ownership and management expenses (94) (90) Project study expenses (29) (5) General and administration expenses (70) (74) Other expenses (56) (55) Operating expenses before depreciation (1,769) (1,751) Operating profit from railway and related operations before depreciation 2,218 1,816 Profit on property developments 1,153 678 Operating profit before depreciation 3,371 2,494 Depreciation (1,251) (1,193) Operating profit before interest and finance charges 2,120 1,301 Interest and finance charges (743) (824) Share of profit of non-controlled subsidiary 20 11 Profit before taxation 1,397 488 Income tax (222) (375) Profit attributable to shareholders 1,175 113 Dividend Interim dividend declared after the balance sheet date 750 734 Earnings per share: – Basic HK$0.22 HK$0.02 – Diluted HK$0.22 HK$0.02 Notes:– 1. INDEPENDENT REVIEW The interim results for the half-year ended 30 June 2004 are unaudited, but have been reviewed in accordance with Statement of Auditing Standards 700 “Engagements to review interim financial reports”, issued by the Hong Kong Society of Accountants, by KPMG, whose unmodified review report is included in the interim report to be sent to shareholders. The interim results have also been reviewed by the Group’s Audit Committee. 2 MTR Corporation Limited 2. RETAINED PROFITS The movements of the retained profits during the half-year ended 30 June 2004 and the year ended 31 December 2003 were as follows: HK$ Million (Unaudited) Balance as at 1 January 2004 15,506 Dividend paid (1,481) Profit for the period 1,175 Balance as at 30 June 2004 15,200 HK$ Million (Audited) Balance as at 1 January 2003 13,234 Dividends paid (2,178) Profit for the year 4,450 Balance as at 31 December 2003 15,506 3. INCOME TAX Income tax in the consolidated profit and loss account represents: Half-year ended 30 June HK$ Million 2004 2003 (Unaudited) (Unaudited) Current tax – overseas 1 – Deferred tax expense relating to the origination and reversal of temporary differences 219 75 Deferred tax expense resulting from increase in tax rate from 16.0% to 17.5% on deferred tax balances at 1 January – 300 220 375 Share of deferred tax of non-controlled subsidiary 2 – 222 375 No provision for current Hong Kong Profits Tax has been made in the consolidated profit and loss account in respect of the Company and its subsidiaries, as the Company and its subsidiaries either have substantial accumulated tax losses brought forward which are available for set off against current period’s assessable profits or have sustained tax losses for the period ended 30 June 2004. Taxation for overseas subsidiaries is charged at the appropriate current rates of taxation ruling in the relevant countries. 4. DIVIDEND The Board has resolved to pay an interim dividend of HK$0.14 per share. The Company proposes that a scrip dividend election will be offered to shareholders with Hong Kong addresses. The interim dividend will be distributed on or about 28 October 2004 to shareholders whose names appear on the Register of Members of the Company as at the close of business on 3 September 2004. The Company’s majority shareholder, The Financial Secretary Incorporated, has agreed to elect to receive all or part of its entitlement to dividends in the form of scrip to the extent necessary to ensure that a maximum of 50% of the total dividend paid by the Company will be in the form of cash. 5. EARNINGS PER SHARE The calculation of basic earnings per share is based on the profit for the half-year period ended 30 June 2004 attributable to shareholders of HK$1,175 million (2003: HK$113 million) and the weighted average number of ordinary shares of 5,293,223,376 in issue during the period (2003: 5,167,723,476). The calculation of diluted earnings per share is based on the profit for the half-year period ended 30 June 2004 attributable to shareholders of HK$1,175 million (2003: HK$113 million) and the weighted average number of ordinary shares of 5,299,525,136 in issue during the period (2003: 5,168,873,569) after adjusting for the number of dilutive potential ordinary shares under the employee share option schemes. 3 MTR Corporation Limited 6. SEGMENTAL INFORMATION Revenue Contribution to profit Half-year ended 30 June Half-year ended 30 June HK$ Million 2004 2003 2004 2003 (Unaudited) (Unaudited) (Unaudited) (Unaudited) Railway operations 2,871 2,567 315 70 Station commercial and other businesses 579 512 395 324 Property ownership and management 537 488 441 397 Property developments – – 1,153 678 3,987 3,567 2,304 1,469 Corporate expenses net of other income (1,129) (1,356) 1,175 113 No geographical analysis is shown as substantially all the principal activities of the Group are carried out in Hong Kong. 7. NET ASSETS The Group’s net assets as at 30 June 2004 and 31 December 2003 comprised: As at As at HK$ Million 30 June 2004 31 December 2003 (Unaudited) (Audited) Assets Fixed assets 96,121 96,921 Railway construction in progress 611 181 Property development in progress 2,334 2,309 Other assets 2,127 2,579 Cash and cash equivalents 367 376 101,560 102,366 Liabilities Creditors, accruals and other liabilities 7,971 7,988 Borrowings 31,736 32,025 Deferred income 4,075 5,061 43,782 45,074 Net assets 57,778 57,292 8. PURCHASE, SALE OR REDEMPTION OF OWN SECURITIES During the half-year ended 30 June 2004, neither the Company nor its subsidiaries purchased, sold or redeemed any of its listed securities. 9. CHARGE ON GROUP ASSETS None of the Group’s assets are charged or subject to any encumbrance. 10. CORPORATE GOVERNANCE The Company has complied throughout the half-year ended 30 June 2004 with the Code of Best Practice as set out in Appendix 14 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Exchange”), except that non-executive Directors of the Company are not appointed for a specific term but are subject (save for those appointed pursuant to Section 8 of the Mass Transit Railway Ordinance) to retirement by rotation and re-election at the Company’s annual general meetings in accordance with Articles 87 and 88 of the Company’s Articles of Association. Dr. Raymond Ch’ien Kuo-fung has been a non-executive Director since 1998. He was also appointed as non-executive Chairman of the Company for a term of three years with effect from 21 July 2003. 11. PUBLICATION OF DETAILED RESULTS ANNOUNCEMENT ON THE EXCHANGE’S WEBSITE A detailed results announcement containing all the information required by paragraphs 46(1) to 46(6) of Appendix 16 of the Rules Governing the Listing of Securities on the Exchange in force prior to 31 March 2004, which remain applicable to results announcements in respect of accounting periods commencing before 1 July 2004 under the transitional arrangements, will be published on the Exchange’s website within 14 days from the date of this announcement. 4 MTR Corporation Limited KEY STATISTICS Half-year ended 30 June 2004 2003 Total passenger boardings – MTR Lines (in million) 403.6 360.2 – Airport Express Line (in thousands) 3,835 2,894 Average number of passengers (in thousands) – MTR Lines (weekday) 2,354 2,145 – Airport Express Line (daily) 21.1 16.0 Operating profit from railway and related operations before depreciation as a percentage of turnover 55.6% 50.9% MANAGEMENT REVIEW AND OUTLOOK MTR Corporation’s results for the first six months of 2004 showed a recovery from the lows experienced in the comparable period of 2003, when the combination of a weak economy, soft property prices and the outbreak of SARS severely affected Hong Kong and impacted the Company’s core businesses.