Guangdong Investment Limited
Annual Report 1997

The Group's turnover in the consolidated financial statements for 1997 amounted to HK$7,145 million (1996: HK$6,472 million) which represents an increase of 10.4% from the previous year. Net profit attributable to shareholders amounted to HK$750 million (1996: HK$604 million) which represents an increase of 24.2% from the previous year. This represents an earnings per share of 31.9 cents (1996: 28.0 cents) which is an increase of 13.9% from that of the previous year.


Business Prospects

One clear objective of the Group for the immediate future is to be more focused in its business development. This effectively means that as a future direction, the Group will be emphasizing its role as the window company for the Guangdong Provincial Government. Our business activities will therefore be focused principally in the Guangdong Province. Given that Guangdong Province's economic growth is likely to be in two major areas, namely, infrastructural development within the Province and the residential property market in the major cities within the Province, the Group will be concentrating its business development in these two areas for the foreseeable future.


Dividends

An interim dividend of 4.0 Hong Kong cents per ordinary share of HK$0.50 each ("Share") was paid on 3 November 1997. The Directors recommend the payment of a final dividend of 5.0 Hong Kong cents per Share, in respect of the year ended 31 December 1997, to shareholders on the register of ordinary shareholders on 25 June 1998.


Consolidated Profit and Loss Account
Year ended 31st December 1997
 
1997
HK$'000		 1996
HK$'000
TURNOVER 7,145,183 6,471,842
OPERATING PROFIT BEFORE EXCEPTIONAL ITEMS 636,597 730,410
Exceptional items 336,858 83,850
OPERATING PROFIT AFTER EXCEPTIONAL ITEMS 973,455 814,260
Share of profit of a jointly controlled entity 7,980 _-
OPERATING PROFIT 981,435 814,260
Share of profits less losses of associated companies (3,028) 18,798
PROFIT BEFORE TAXATION 978,407 833,058
Taxation (81,418) (69,499)
PROFIT BEFORE MINORITY INTERESTS 896,989 763,559
Minority interests (146,703) (159,265)
NET PROFIT ATTRIBUTABLE TO SHAREHOLDERS 750,286 604,294
Retained profits at beginning of year 1,244,743 906,627
1,995,029 1,510,921
Dividends (220,331) (205,893)
1,774,698 1,305,028
Transfer from a reserve
185,325
-
Transfer to reserves (366,221) (60,285)
RETAINED PROFITS AT END OF YEAR 1,593,802 1,244,743
EARNINGS PER SHARE 31.9 cents 28.0 cents


Consolidated Balance Sheet
31 December 1997
 
1997
HK$'000		 1996
HK$'000
FIXED ASSETS 7,967,964 7,411,125
PROPERTIES UNDER DEVELOPMENT 748,306 646,660
INVESTMENT PROPERTIES 5,124,731 3,305,360
INTEREST IN A JOINTLY CONTROLLED ENTITY
1,054,344
-
INTERESTS IN ASSOCIATED COMPANIES 543,609 406,631
CONTRACTUAL JOINT VENTURES 498,765 279,738
LONG TERM INVESTMENTS 870,519 491,410
LONG TERM PORTION OF LOANS AND
ADVANCES TO CUSTOMERS
194,792
-
OTHER LONG TERM ASSETS 212,469 122,392
17,215,499 12,663,316
CURRENT ASSETS 6,373,696 5,258,877
CURRENT LIABILITIES (6,257,931) (4,179,872)
NET CURRENT ASSETS 115,765 1,079,005
TOTAL ASSETS LESS CURRENT LIABILITIES 17,331,264 13,742,321
LONG TERM LOANS (3,887,790) (2,386,140)
LONG TERM PORTION OF LEASE PAYABLES (1,952) (2,241)
LONG TERM PORTION OF AMOUNTS DUE TO 
MINORITY SHAREHOLDERS OF SUBSIDIARIES		 (181,939) (32,414)
CONVERTIBLE BONDS (1,043,728) -
FLOATING RATE NOTES (1,160,100) (1,160,550)
DEFERRED TAXATION (2,739) (2,737)
MINORITY INTERESTS (2,531,718) (1,975,065)
8,521,298 8,183,174
SHARE CAPITAL 1,213,178 1,164,048
RESERVES 5,714,318 5,774,383
RETAINED PROFITS 1,593,802 1,244,743
8,521,298 8,183,174


Consolidated Cash Flow Statement
Year ended 31 December 1997
 
1997
  HK$'000
1996
  HK$'000
NET CASH INFLOW FROM OPERATING ACTIVITIES
1,323,806
602,962
RETURNS ON INVESTMENTS AND SERVICING OF FINANCE
Interest received
125,710
81,492
Interest paid
(424,593)
(333,292)
Interest element of finance lease payments
(1,105)
(3,586)
Dividends from associated companies
1,334
-
Dividends paid to minority interests
(170,279)
(116,648)
Dividends paid
(217,073)
(196,401)
NET Cash outflow from returns on investments and servicing of finance
(686,006)
(568,435)
TAXATION
Hong Kong profits tax paid
(23,044)
(28,176)
Mainland China tax paid
(31,825)
(29,737)
Overseas tax paid
(4,524)
(8,223)
Taxes paid
(59,393)
(66,136)
INVESTING ACTIVITIES
Purchases of fixed assets
(1,176,985)
(1,537,636)
Acquisition of subsidiaries
(682,586)
(119,600)
Acquisitions of additional shareholdings in subsidiaries
(274,493)
-
Additions to properties under development
(174,983)
(158,587)
Purchases of short term investments
(96,701)
(93,672)
Purchases of investment properties
(733,972)
(362,857)
Acquisition of a jointly controlled entity
(643,746)
-
Investment in a contractual joint venture
(237,305)
-
Purchases of long term investments
(514,375)
(8,176)
Additions to other long term assets
(58,634)
(53,418)
(Increase)/decrease in bank deposits
(475,089)
36,256
Acquisitions of and capital injections to associated companies
(50,299)
(61,907)
Proceeds from the disposal of the operations and ownership of a hotel
500,000
-
Proceeds from the sale of fixed assets
48,904
40,861
Proceeds from the sale of properties under development
1,645
-
Proceeds from the sale of investment properties
44,015
3,200
Proceeds from disposal of associated companies
-
97,131
Proceeds from the sale of short term investments
115,557
35,917
Proceeds from the sale of long term investments
132,310
4,345
Net cash outflow from investing activities  (4,276,737)
 (2,178,143)
NET CASH OUTFLOW BEFORE FINANCING  (3,698,330)  (2,209,752)
FINANCING
Issue of share capital
183,650
444,889
Share issue expenses
(2,448)
(19,949)
Proceeds from shares issued on initial public offering of a subsidiary
630,000
113,300
Expenses on initial public offering of a subsidiary
(28,419)
(12,654)
Interest income derived from share application monies received 
during the initial public offering of a subsidiary
6,022
14,062
Repayment of loan from a previous shareholder of a subsidiary
(22,333)
-
Capital contributed by minority interests
45,933
93
Net proceeds from placing of share capital and exercise of share 
options of subsidiaries
155,897
-
New bank loans
3,552,414
2,390,913
New other loans
23,306
-
Proceeds from the issue of convertible bonds
1,005,420
-
Convertible bonds issue expenses
(25,162)
-
Proceeds from the issue of floating rate notes
-
773,700
Floating rate notes issue expenses
-
(9,561)
Repayment of bank loans
(2,521,320)
 (929,531)
Repayment of other loans
(6,973)
(87,052)
Redemption of convertible bonds
-
(38)
Capital element of finance lease payments
(13,778)
(15,140)
Net cash inflow from financing
2,982,209
2,663,032
INCREASE/(DECREASE) IN CASH AND 
CASH EQUIVALENTS
(716,121)
453,280
Cash and cash equivalents at beginning of year 
1,423,671
967,934
Effect of foreign exchange rate changes, net
36
2,457
CASH AND CASH EQUIVALENTS AT END OF YEAR
707,586
1,423,671
ANALYSIS OF BALANCES OF CASH AND CASH EQUIVALENTS
Cash and bank balances
1,448,978
1,683,608
Bank loans and overdrafts
(741,392)
(259,937)
707,586
1,423,671