上海 Shanghai 廣州 Guangzhou 香港 Hong Kong 澳門 Macau Annual Report 2005 二零零五年年報 Annual Report 2005 二零零五年年報 1 FINANCIAL YEAR 2005 was a successful year that we achieved a 169% growth in earnings. It was an achievement of the long- term strategies, which we formulated three years ago. We confidently believe it is just the beginning of our long-term growth with more years ahead. Annual Report 2005 Far East Consortium Inter national Limited Corporate Information 2 PLACE OF INCORPORATION PRINCIPAL BANKERS Cayman Islands Hong Kong Bank of China (Hong Kong) Limited EXECUTIVE DIRECTORS Citic Ka Wah Bank Limited Deacon Te Ken CHIU, J.P. (Chairman) Hang Seng Bank Limited David CHIU, Dato’, B.Sc. (Deputy Chairman Liu Chong Hing Bank Limited and Chief Executive Officer) Nanyang Commercial Bank Limited Craig Grenfell WILLIAMS, B. ENG. (CIVIL) The Hongkong and Shanghai Banking Corporation Limited Dennis CHIU, B.A. Wing Hang Bank Limited NON-EXECUTIVE DIRECTORS Malaysia Ching Lan JU CHIU, J.P. Alliance Bank Malaysia Berhad Dick Tat Sang CHIU, M.A. Southern Bank Berhad Daniel Tat Jung CHIU Singapore INDEPENDENT NON-EXECUTIVE The Hongkong and Shanghai Banking DIRECTORS Corporation Limited Kee Leong CHEE, Datuk David Kwok Kwei LO Australia Jian Yin JIANG Australia and New Zealand Banking Group Limited Commonwealth Bank of Australia CHIEF OPERATING OFFICER Denny Chi Hing CHAN China Construction Bank of China QUALIFIED ACCOUNTANT Industrial and Commercial Bank of China Bill Kwai Pui MOK, M.B.A., A.I.C.P.A., C.P.A. REGISTERED OFFICE COMPANY SECRETARY P.O. Box 1043, Ground Floor, Byron Ting Sau LEE, L.L.M., M.B.A., C.P.A. Caledonian House, Mary Street, George Town, Grand Cayman, AUTHORIZED REPRESENTATIVE Cayman Islands, British West Indies. Deacon Te Ken CHIU PRINCIPAL OFFICE David CHIU 16/F., Far East Consortium Building, 121 Des Voeux Road Central, Hong Kong. SOLICITORS Hong Kong SHARE REGISTRARS Annual Report 2005 Woo, Kwan, Lee & Lo Standard Registrars Limited David Lo & Partners G/F, BEA Harbour View Centre, 56 Gloucester Road, Malaysia Wanchai, Hong Kong. Shearn Delamore & Co. LISTING INFORMATION national Limited Australia Ordinary Shares (Code: 035) Freehills Zero Coupon Convertible Bonds 2009 (Code: 2576 & 2508) AUDITORS The Stock Exchange of Hong Kong Limited Deloitte Touche Tohmatsu WEBSITE Certified Public Accountants http://www.fareastconsortium.com.hk Hong Kong Far East Consortium Inter Contents 3 Page Chairman’s Statement 4 Deputy Chairman & Chief Executive Officer’s Report 6 Profile of Directors and Senior Management 8 Five-Year Financial Summary 14 Financial and Operating Review 15 Directors’ Report 22 Auditors’ Report 29 Consolidated Income Statement 30 Balance Sheets 31 Consolidated Statement of Changes in Equity 33 Consolidated Cash Flow Statement 34 Notes to the Financial Statements 36 List of Major Properties Held by the Group 94 Annual Report 2005 The English text of this Annual Report shall prevail over the Chinese text. Far East Consortium Inter national Limited Chairman’s Statement 4 e are pleased to see the recovery of Hong W Kong economy contributed by the dynamic economic growth in the Mainland and the Central Government’s supportive policies which include the implementation of Closer Economic Participation Arrangement and the relaxation of travel arrangement of individual mainland tourists. Apart from the increasing tourist arrivals from the Mainland, these positive developments have led to both increase in local consumption and enhance economic growth. While the Hong Kong economy experiences steady growth, certain sectors of the economy namely property, hotel, retail and finance industries are the prime beneficiaries on the initial recovery. The Group has adjusted its operating strategy and optimized its asset structure to capture the opportunity of increasing demand in hotel accommodation. Hotel Business As of today, our hotel portfolio increased to five with the introduction of three new hotels, namely the Cosmopolitan Hotel, Central Park Hotel and Dorsett Olympic Hotel. With the opening of Disneyland in September 2005, Hong Kong is expected to become a popular tourist destination. Foreseeing the coming year, the Group will continue to increase our hotel investment in Hong Kong and Macau. These developments will set down a solid foundation for the Group to achieve a sustainable Annual Report 2005 growth in the near future. After the gaming industry restructure, Macau will become a Las Vegas style gaming, convention and national Limited family oriented holiday destination. The Group plans to develop and operate hotels in Cotai, Far East Consortium Inter Chairman’s Statement 5 Macau, with Venetian Group from Las Vegas. The Group is expected to be benefited from the booming tourism in the region. In the forthcoming years, the hotel division will become a significant contributor in revenue and profit to our Group. Property Development Division With the rise in property values in Hong Kong and the Mainland, the property development division will continue to provide steady revenue to the Group. In the Mainland, the Central Government has introduced austerity measures to curtail speculation activities in property market. However, these measures will benefit the property market in achieving steady and continued development in long term. The Group will primarily adopt a selective and prudent approach to investment in the Mainland by focusing on prime developments in the major cities. The Group is constantly monitoring the market conditions and evaluating various investment opportunities in Hong Kong and the Mainland. Finally, I would take this opportunity to express my sincere gratitude to all directors, senior management and staff for their contributions and hard work Annual Report 2005 during the year and our shareholders for their invaluable support to our Group. Far East Consortium Inter Deacon Te Ken Chiu Chairman 13th July 2005 national Limited Deputy Chairman & Chief Executive Officer’s Report 6 inancial year 2005 was a successful year F that we achieved a 169% growth in earnings. It was an achievement of the long-term strategies, which we formulated three years ago. We confidently believe it is just the beginning of our long-term growth with more years ahead. We are determined to build our future growth based on two principal strategies. The first one is to develop affordable quality townhouses and low- rise condominiums in major cities in the Mainland with the growing middle class as our primary target customers. Our second strategy is to develop and operate 3-4 star hotels in Hong Kong, Macau and Greater China so as to capitalize on the increasing number of the Mainland’s travelers and business travelers in the region. In the Mainland, the Central Government recently imposes austerity measures, which reaffirmed last year’s announcement and her commitments, to prevent the property market from overheating. Although the austerity measures create uncertainties over the property market, we believe such measures can enhance the healthy growth of the market in the long run. Given the growth of the middle class in the Mainland, their demand for residential housing will continue to increase so long as the property prices are within their reach. Hence, we are optimistic about the future sales of our townhouses and condominiums, which are not only affordable but also with improving quality. Furthermore, we will look for new property development projects in the Annual Report 2005 Mainland despite the short-term weakened market sentiment. With our continuous assessment of the market and review of our operations, we fine-tuned our hotel national Limited strategy by adding more 4-star hotels to our portfolio. This change in our hotel mix is justified by the increasing number of business travelers, especially from the small to medium sized overseas companies. Far East Consortium Inter Deputy Chairman & Chief Executive Officer’s Report 7 Shortly after the close of the financial year 2005, The finalization of our agreement with Venetian we opened our second 4-star hotel, Central Park Group is under way and our development plan is in Hotel, and another 3-star hotel, Dorsett Olympic the final stage of refinement. Subject to the final Hotel, in Hong Kong. Over the next six months, approval of the Macau government, our present three additional hotels, namely Cosmo Hotel, Lan development plan will have a total of five hotels Kwai Fong Hotel and Dorsett Tsuen Wan Hotel, will with more than 3,000 rooms, a shopping and also commence operations. After the opening of entertainment complex, a residential development these three hotels, we will have close to 2,000 and a casino/showroom shell which we will lease hotel rooms in operations. This hotel portfolio will to Venetian Group. We expect the construction provide a steady recurring income stream to the work to commence around September this year. Company. Phase I of our development is scheduled to open in the second half of 2007. It has been getting more and more difficult to find new hotel projects with a double-digit return in In order to put our resources in a more effective Hong Kong after the announcement of the Closer and efficient use, we will continue to streamline our Economic Participation Arrangement. However, with businesses by disposing non-core businesses and our committed effort and hard work, we successfully overseas assets. acquired two office buildings for hotel conversion, namely Central Park Hotel and Cosmo Hotel, during the year. Further, we agreed to purchase an industrial site for hotel development in early June. This site has obtained the Town Planning Board’s approval for hotel conversion. We will proactively seek for hotel investment opportunities to expand our recurring income base and to enhance David Chiu shareholder’s value. Deputy Chairman & Chief Executive Officer Since we announced our Macau project in late 13th July 2005 2003, Macau has become a popular place for investors. It is our view that Macau will become a Annual Report 2005 Las Vegas type of gaming and entertainment center in Asia with substantial growth potential.