HKR International makes $1.4b provision amid land value slide

PUBLISHED : Saturday, 18 July, 1998, 12:00am
UPDATED : Saturday, 18 July, 1998, 12:00am

HKR International has made a $1.4 billion provision against its development properties - largely relating to its interest in a Tung Chung development.

This drove attributable profit down 35.41 per cent in the year to March 31 to $736.2 million, compared with $1.13 billion in the previous 12 months.

Of the provision, $1.2 billion came from the group's 30 per cent stake in the Tung Chung Station package-two development, $20 million from its Tai Po residential project and the balance from its mainland properties.

Executive director Loretta Ho Pak-ching said the provision was made in view of the property downturn and the need to reflect on the present value of its development properties.

The $1.2 billion provision made for the Tung Chung project was based on its 600,000 square foot attributable floor area at a land cost of $2,000 per square foot, she said.

'Our prudent business strategy has effectively protected us from the direct impact of the Asian financial turmoil which began last year.' Vickers Ballas Hong Kong analyst Herbert Lau estimated the land cost for the Tung Chung site at $3,000 per square foot.

Ms Ho said negotiations with the Government for land premium payable on its 2.3 million sq ft development at Discovery Bay was still under way.

She said almost all flat buyers at the Discovery Park phase two in Tsuen Wan, a 50-50 joint venture with New World Development, had decided not to default on the purchase, as it had achieved a 99 per cent completion of assignment rate.

Second mortgages would be provided for Discovery Park phase three flat-buyers who had difficulty obtaining bank mortgages, she said.

The company has booked $2 billion in sales revenue generated from Discovery Park this year. including a majority of cash returns from phase two and 50 per cent of revenues fetched for phase-three units, she said.

As at March 31, the company had cash reserves of $2.9 billion.

Turnover jumped 72.85 per cent to $6.75 billion from $3.91 billion a year ago, while operating profit rose 64.86 per cent to $2.41 billion.

Earnings per share was 64 cents, down 35.35 per cent from 99 cents a year earlier.

Fully diluted earnings per share declined 32.58 per cent to 60 cents against 89 cents the previous year.

A final dividend of 16 cents per share was recommended, making a total payout of 25 cents for the year.

HKR's parent, Mingly Corp, saw attributable profit drop 23.95 per cent to $605.6 million for the year to March.

A final dividend of 2.5 cents was declared, making an unchanged total of five cents for the year. Earnings per share were 29 cents, down 19.44 per cent from 36 cents a year ago.