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PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED ANNUAL REPORT 2003/042
3PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED ANNUAL REPORT 2003/04
On May 10, 2004, property interests held by the PCCW Infrastructure division of
PCCW Limited (“PCCW”, SEHK: 0008) were transferred to Dong Fang Gas Holdings
Limited, an investment holding company listed on The Stock Exchange of Hong Kong
Limited. The company was subsequently renamed Pacific Century Premium
Developments Limited (“PCPD”, SEHK: 0432).
PCPD is now principally engaged in the development and management of property and
infrastructure and owns an investment portfolio of premium-grade buildings including
PCCW Tower in Hong Kong and Pacific Century Place in Beijing.
Majority-owned by PCCW, PCPD Group holds the development rights for the
Cyberport project, which is owned by the Government of the Hong Kong Special
Administrative Region and includes the Bel-Air complex of prestige accommodation.
PCPD also holds certain rights to join with PCCW to redevelop telephone exchange
buildings belonging to PCCW Group. These properties are currently being considered as
a source of residential and commercial re-development projects.
In addition, PCPD contains a division specializing in property management, facilities
management, asset management and corporate services in Hong Kong and beyond.
Subsidiaries in the PCPD Group hold interests in a building materials business and
natural gas projects, which were the main businesses of the Company prior to the
acquisition of property interests from PCCW.
CORPORATE PROFILE
Collections of Bel-Air clubhouse:
Diamond Cut Crystal Vase
by M.Benito
PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED ANNUAL REPORT 2003/044
CHAIRMAN’S
STATEMENT
Transferring PCCW ’s property and
infrastructure interests into a separately-
listed entity created the Group’s property
flagship, which is now ready to seize full
advantage of current positive conditions,
whilst permitting PCCW to focus on its core
telecommunications and related businesses .
5PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED ANNUAL REPORT 2003/04
Dear Fellow Shareholders
Hong Kong’s property market has been
refreshed by a new air of confidence, which
is attracting the attention of investors on an
international scale.
The major economies of the world appear
to have entered an inflationary period, with
many Asian nations at a turning point in
their fortunes. Particularly important for
Hong Kong is the successful way mainland
China seems to be managing a ‘soft landing’
for an economy that was feared to be rising
out of control.
Improved market sentiment, an economy
forecast to grow at 6 percent and a
continued influx of funds sets the scene for
Pacific Century Premium Developments to
make its mark in the property industry.
Transferring PCCW’s property and
infrastructure interests into a separately-
listed entity created the Group’s property
flagship, which is now ready to seize full
advantage of current positive conditions in
the property market, whilst permitting
PCCW to focus on its core
telecommunications and related businesses.
In Hong Kong, the limited supply of high-
end residential property bodes well for
PCPD, as our sales professionals apply their
premium-development approach to
transforming luxury apartments at Bel-Air
and other new projects into revenues and to
unlocking potential value via the
redevelopment of PCCW’s telephone
exchanges. In addition, our investment
portfolio of premium-grade properties and
facilities management expertise is expected
to benefit from the improving economy and
will continue to provide a stable source of
income.
Lastly, as Chairman of the new Company,
I am focused on the Group’s continuing
strategy of managing our businesses to
produce significant and positive impact on
shareholder value.
Sincerely,
Richard Li
Chairman
July 22, 2004
PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED ANNUAL REPORT 2003/046
STATEMENT from THE
chief e xecutive officer
We were able to celebrate PCPD’s birth at an
auspicious time – a time of economic upswing
and rene wed confidence in Hong Kong’s
property market.
7PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED ANNUAL REPORT 2003/04
Results for PCPD for the year ended
March 31, 2004 reflect the financial
performance of Dong Fang Gas Holdings
Limited prior to the acquisition of PCCW’s
property interests which was completed on
May 10, 2004.
Dong Fang Gas Holdings Limited was
subsequently renamed Pacific Century
Premium Developments Limited, which is
majority-owned by PCCW Limited.
Consolidated turnover for the year relating
to the Group’s businesses in building
materials, securities trading and gas
operations was approximately HK$149.2
million compared with HK$136.2 million
for the previous year.
Net loss for the year was approximately
HK$142.4 million compared with the
previous year’s net loss of HK$113.2
million, while loss per share was HK$0.12
compared with HK$0.18 the year before.
The current management team is critically
reviewing the strategic roles played by these
businesses as the Company changes its focus
following the acquisition of PCCW’s
property interests.
PCPD is now principally engaged in the
development and management of property
and infrastructure and owns an investment
portfolio that includes premium-grade
buildings in Hong Kong and Beijing.
In our home market, we hold the
development rights for the Cyberport
project, which is owned by the Government
of the Hong Kong Special Administrative
Region and includes the Bel-Air complex of
luxury apartments and houses.
Our Bel-Air development will be the main
source of revenue for PCPD stretching into
2008, as successive phases of this deluxe,
residential complex are launched. The sales
performance at Bel-Air, prior to the transfer
of PCCW’s property interests, is illustrative
of the proven capability that now forms a
foundation on which to build this new
company. For example, the Bel-Air team
had sold all apartments in the first two
PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED ANNUAL REPORT 2003/048
S TAT E M E N T f r om t h e c h i e f e x e c u t i v e of f ic e r
phases amounting to more than 1.9 million
square feet of real estate by early 2004,
despite very difficult market conditions.
Proceeds from the sale of 1,204 units in the
first two phases, launched in 2003, have
enabled the entire project to become self-
funding, with no additional cash injections
needed. To date, we have sold more than
1,460 Bel-Air apartments, generating some
HK$14 billion (approximately US$1.8
billion) in revenue.
With this successful track record, PCPD was
formed at an auspicious time - a time of
general economic upswing and heightened
investor interest in a market buoyed by high
liquidity and a marked rise in prices in the
prestige accommodation sector.
A limited supply of premium residential real
estate coupled with renewed investor
confidence sets the scene for a period of
solid growth in the property market.
With PCCW’s property interests channelled
into a separately-listed company, PCPD is
able to focus sharply on the property
industry, leaving PCCW to concentrate on
Information Technology (IT) and
telecommunications.
Our move provides the investment
community, analysts and rating agencies
with enhanced clarity and transparency of
performance, while attracting greater
interest from investors concerned more with
property than telecoms.
9PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED ANNUAL REPORT 2003/04
the people of PCPD hold the right mix of
skills , talent and experience to ensure our
new company takes full advantage of a
revitalized property market in the region,
especially in Hong Kong.
Turning to our plans for the future, PCPD
is actively considering proposals to
redevelop a number of PCCW Group-
owned telephone exchange buildings which,
subject to government approvals being
obtained, will provide a potential source of
prime residential and commercial projects
over the coming years.
Meanwhile, our investment portfolio of
premium-grade properties enjoys occupancy
rates of well over 90 percent and is expected
to provide significant and regular income
into the future.
In addition, the division responsible for
PCPD’s provision of property management,
facilities management, corporate services
and asset management serves PCCW Group
and other commercial clients, and will be
managing luxury apartments and houses at
Bel-Air. The division also provides property
management and corporate services to
PCPD’s Pacific Century Place complex in
Beijing city center.
PCPD is led by a dedicated and experienced
management team, which will continue to
pursue premium property development and
management opportunities in Hong Kong
and beyond.
In conclusion, I believe the people of Pacific
Century Premium Developments hold the
right mix of skills, talent and experience to
ensure our new company takes full
advantage of a revitalized property market in
the region, especially in Hong Kong.
Robert Lee
Chief Executive Officer
July 22, 2004
PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED ANNUAL REPORT 2003/0410
Our New Business
The highest-profile part within the pcpd Group
is the cyberport project. Cyberport has been
developed by the e xpertise absorbed into our
new company and is now winning international
acclaim as hong kong’s It flagship and for
setting a new standard in prestige
accommodation.
11PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED ANNUAL REPORT 2003/04
PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED ANNUAL REPORT 2003/0412
Collections of Bel-Air clubhouse:
The Kiss by Marie-Madeleine Gautier
O U R N E W b u s i n e s s
The highest-profile part of the PCCW
property interests transferred to Dong Fang
Gas Holdings Limited before it became
Pacific Century Premium Developments
Limited was the Cyberport project.
Comprising a million square feet of modern
“intelligent” office space, some 4.5 million
square feet of prime residential premises,
300,000 square feet of exciting retail
facilities and the 173-room Le Meridien
Hotel on the southern shores of Hong Kong
Island, Cyberport has been developed by the
expertise absorbed into our new company
and is now winning international acclaim as
Hong Kong’s IT flagship and for setting a
new standard in prestige accommodation.
13PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED ANNUAL REPORT 2003/04
The residential portion, known as Bel-Air,
will complete in phases between 2004-07.
The complete sell-out of 1,204 apartments
in the first two phases of Bel-Air in a matter
of months against the backdrop of a
subdued property market is strong
testimony to the quality of this
development.
That impressive sales performance also
means that all construction costs for
remaining phases of the Bel-Air
development will be met without the need
of additional funding from PCPD or the
Hong Kong SAR Government, which owns
the Cyberport.
Surplus proceeds from the sale of units at
Bel-Air will be shared between PCPD and
the Hong Kong SAR Government according
to their respective contributions to the
Cyberport Project. Sales proceeds from
future phases of Bel-Air will be the main
source of revenue for PCPD stretching into
2008, as successive phases of this deluxe,
residential enclave are launched.
The commercial Cyberport portion
was officially completed on June 28,
2004 and has already won a crop of
accolades.
The commercial Cyberport portion was
officially completed on June 28, 2004 and
has already won a crop of accolades. These
include a Merit Award of Excellence from
the American Institute of Architects, as well
as the internationally-acclaimed Intelligent
Building of the Year Award presented in
New York City by the Intelligent
Community Forum, which is part of the
World Teleport Association.
PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED ANNUAL REPORT 2003/0414
O U R N E W b u s i n e s s
Collections of Bel-Air clubhouse:
Three Quarter Pot by Graham Ambrose
With the experience of developing
Cyberport and Bel-Air under its belt, PCPD
is poised to embark on a plan to redevelop a
number of telephone exchange buildings
jointly with PCCW, subject to government
approvals and satisfactory redevelopment
terms.
Rapid evolution of technology over recent
years means telecoms plant has shrunk in
size. Transforming such buildings into useful
residential, retail and office accommodation
would amount to better utilization of Hong
Kong’s property resource, as well as
economical stewardship of PCCW’s assets
and potential development opportunities for
PCPD.
Another major part of PCPD’s business is its
investment portfolio of premium-grade
buildings, such as the Pacific Century Place
city-center complex in Beijing and the 42-
storey PCCW Tower in Hong Kong. The
portfolio has been producing steady
earnings, with occupancy rates of over 90
percent, and faces the positive prospect of
growth in office accommodation rentals
over the next two years.
Pacific Century Place in Beijing comprises
approximately 2 million square feet of space
occupied by diplomatic, residential, retail
and office tenants, while PCCW Tower in
Hong Kong’s Quarry Bay covers
approximately 620,000 square feet. Both
properties house a number of multinational
corporations.
These buildings are two of a number of
premises handled by the PCPD division that
provides property management, facilities
management, corporate services and asset
management. A particular strength of this
part of our business is the facilities
management of mission-critical operations.
Clients currently include PCCW, the
REACH wholesale telecoms carrier and
Hong Kong CSL Limited.
15PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED ANNUAL REPORT 2003/04
Pacific Century Place in Beijing
comprises approximately 2 million square
feet of space occupied by diplomatic,
residential, retail and office tenants.
This PCPD division is currently preparing
to take on the management of the deluxe
apartments and houses at Bel-Air in phases
commencing September 2004. The move
will mean our sphere of experience in the
property and facilities management business
will include commercial, industrial and
residential properties in Hong Kong and
beyond.
PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED ANNUAL REPORT 2003/0416
A management’s discussion and analysis of
the financial results and operations relating
to the Group’s businesses of building
materials, securities trading and gas
operations for the year ended March 31,
2004 prior to completion of the transfer of
property interests from PCCW to the
Company on May 10, 2004 follows below:
Review of Financial
Results and Operations
The Group has a consolidated turnover of
approximately HK$149.2 million for the
year ended March 31, 2004, representing an
increase of 9.6 percent compared with a
consolidated turnover of approximately
HK$136.2 million for the year ended
March 31, 2003. The increment in the
Group’s consolidated turnover was mainly
due to the Group’s best and decent efforts in
monitoring the performance in the trading
of building materials business. Such business
in the United States continued to progress
well. Sales in the market in the United States
grew significantly by 17.2 percent from
approximately HK$49.9 million the
previous year to approximately HK$58.5
million for the current year. The Group has
also taken an active role in exploring new
markets. For the current year, the Group has
successfully expanded into the market in
Australia, which has contributed
approximately HK$2.5 million to the
Group’s total sales.
In order to capture opportunities emerging
from the energy-related sector in mainland
China, the Group entered into a conditional
acquisition agreement for certain interests in
Beijing Continental Gas Co. Ltd. (“Beijing
Continental Gas”). The transaction was
completed on July 30, 2003 and the details
of which are set out in the section headed
“Material Acquisitions and Disposal”.
During the year, the natural gas business has
made a contribution to the Group’s
consolidated turnover of approximately
HK$3.6 million.
The Group’s gross profit margin has shown
a significant improvement, which has
increased from 6.7 percent last year to 15.4
percent for the current year. This is a result
of the Group’s implementation of cost
control measures to enhance operational
efficiency so as to maintain its
competitiveness in the respective markets of
its various businesses.
The Group recorded a consolidated net loss
of approximately HK$142.4 million for the
year ended March 31, 2004, a deterioration
of 25.8 percent compared with the Group’s
consolidated net loss of approximately
HK$113.2 million for the year ended
March 31, 2003. The loss from operations
increased by approximately HK$51.5
million. This was mainly due to the loss of
approximately HK$45.8 million on the
trading of securities and financial
instruments, an increase in allowance for
bad and doubtful debts of approximately
HK$17.4 million and an allowance for
loans receivable of approximately HK$31.0
million. For the current year, the Group has
also written back the provision of HK$23.4
million made in prior year for an onerous
contract.
Capital Structure,
Liquidity and Financial
Resources
As at March 31, 2004, total borrowings of
the Group amounted to approximately
HK$237.1 million, representing an increase
of HK$10.8 million compared with total
borrowings of HK$226.3 million as at
March 31, 2003. All these borrowings are
repayable within one year of which
approximately HK$92.3 million carried a
fixed interest rate of 9.8 percent per annum
and approximately HK$144.8 million
carried floating interest rates.
Gearing ratio – which is expressed as a ratio
of total liabilities and minority interests to
shareholders’ funds – was approximately
11.2 as at March 31, 2004, representing an
increase of 348 percent compared with a
gearing ratio of 2.5 as at March 31, 2003.
Most of the Group’s business transactions,
assets and liabilities were denominated in
Hong Kong dollars and Renminbi.
MANAGEMENT ’S DISCUSSION
AND ANALYSIS
17PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED ANNUAL REPORT 2003/04
November 13, 2002 and December 4, 2002
respectively, China Crystal Investment Ltd.
(“China Crystal”), an indirect wholly-owned
subsidiary of the Company, entered into an
agreement (“Nanning Acquisition
Agreement”) on November 8, 2002 to
acquire 30.87 percent of attributable interest
in Nanning City Gas (“Nanning
Acquisition”).
The Company further announced on
January 2, 2003 that certain disputes have
existed between the vendor and China
Crystal relating to the satisfaction of the
conditions of the Nanning Acquisition
Agreement. Not all of the conditions were
satisfied and accordingly the Nanning
Acquisition has not taken place. Under the
terms of the Nanning Acquisition
Agreement, if any of the conditions are not
fulfilled (or waived by China Crystal) on or
before December 31, 2002, the rights and
obligations of the parties to the Nanning
Acquisition Agreement shall lapse and be of
no further effect.
On January 19, 2004, China Crystal
entered into an agreement with an
independent third party (the “third party”)
whereby, with the consent of the vendor, the
third party agreed to acquire and China
Crystal agreed to transfer the right to claim
against the vendor for the refund of the
deposit of HK$10.0 million in full under
the terms of the Nanning Acquisition
Agreement at the consideration of HK$7.0
million. China Crystal has received HK$7.0
million from the third party and thereby
Borrowings were denominated mainly in
Renminbi, US dollars and Hong Kong
dollars. Cash and cash equivalents were held
mainly in Hong Kong dollars. Given the
exchange rates of these currencies were fairly
stable, the Group has not adopted any
material hedging measures because
exchange-rate fluctuations had no
significant impact on the Group during the
year under review.
Material Acquisitions and
Disposal
Acquisition of Beijing Continental Gas
As disclosed in the announcement and
circular dated June 5, 2003 and June 26,
2003 respectively, Dong Fang Gas (China)
Limited, an indirect wholly-owned
subsidiary of the Company, entered into a
conditional agreement dated June 1, 2003
for the acquisition of 73 percent of the
entire issued share capital of Top Power
Holdings Limited, which in turn, owns 70
percent equity interest in Beijing
Continental Gas, at a consideration of
HK$80.0 million. The transaction was
completed on July 30, 2003. The Group
holds 51.1 percent of attributable interest in
Beijing Continental Gas which has been
engaged in the business of natural gas
supply, storage and related services.
Acquisition of Nanning City Gas Co.
Ltd. (“Nanning City Gas”)
As disclosed in the Company’s
announcement and circular dated
could avoid all costs, expenses and
uncertainties to be incurred in any legal
proceedings against the vendor.
Disposal of Skynet (International
Group) Holdings Limited
As disclosed in the annual report of the
Company for the year ended March 31,
2003, BCD (Holdings) Limited (now
known as Mandarin Technology (Holdings)
Limited) (“Newco”), Skynet (International
Group) Holdings Limited (“Skynet”), in
which the Group currently holds about 22.6
percent, and Monetary Success Investments
Limited (“Subscriber”) entered into a
conditional subscription agreement dated
March 5, 2003 (“Subscription Agreement”)
whereby the parties thereto agreed to the
implementation of a scheme of arrangement
(“Scheme”), under section 99 of the
Companies Act 1981 of Bermuda, between
Skynet and its shareholders. The Subscriber
agreed, among other things, to subscribe for
and acquire a total of 4,000,000,000 shares
in the capital of Newco (“Newco Shares”) or
such number of Newco Shares as shall
represent not less than 97 percent of the
enlarged issued share capital of Newco (after
taking into account the number of Newco
Shares to be issued and allotted to
shareholders of Skynet pursuant to the
Scheme, and the Newco Shares to be issued
and allotted to the Subscriber pursuant to
the Subscription Agreement (but before
conversion of certain convertible loan notes
to be issued by Newco) upon completion of,
inter alia, the Scheme and the subscription).
PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED ANNUAL REPORT 2003/0418
m a n a g e m e n t ’s d i s c u s s io n a n d a n a ly s i s
Supplemental agreements were entered into
between parties involved in the Subscription
Agreement for extension of the long stop
date of the conditions of the Subscription
Agreement from June 30, 2003 to
September 22, 2003, then eventually to
December 31, 2003. The Subscription
Agreement has lapsed.
In the joint announcement (“Skynet
Announcement”) made by Skynet, Paul Y. -
ITC Construction Holdings Limited (“Paul
Y”) and ITC Corporation Limited dated
June 4, 2004, it was disclosed that Skynet
would be involved in a conditional
restructuring proposal (“Restructuring
Proposal”) involving a capital reorganization
(“Capital Reorganization”), an open offer
(“Open Offer”) of Skynet’s shares to its
qualifying shareholders (including the
Group), a conditional acquisition by Skynet
of certain companies to be satisfied by
Skynet issuing to Paul Y its new shares after
the Capital Reorganization becoming
effective (“Skynet Consolidated Shares”),
and the issue of a convertible note (“Note”)
by Skynet entitling the holder to convert the
principal amount into Skynet Consolidated
Shares. The Skynet Announcement also
stated that the Company’s shareholding
interest in Skynet will be approximately 0.7
percent upon completion of the
Restructuring Proposal (assuming the
Group does not take up its entitlement
under the Open Offer and no other changes
in the shareholding structure of Skynet since
the date of the Skynet Announcement), but
before the conversion of the Note.
Pledge of Assets
As at March 31, 2004, the Group had
pledged certain property, plant and
equipment with an aggregate carrying value
of approximately HK$83.2 million (March
31, 2003: HK$96.7 million) and bank
deposits of approximately HK$27.3 million
(March 31, 2003: HK$26.6 million) to
secure banking and other borrowing
facilities granted to the Group.
The Group also pledged certain trade
receivables with an aggregate carrying value
of approximately HK$13.3 million (March
31, 2003: HK$14.3 million) to secure
banking facilities granted to the Group.
Besides, certain investments in securities of
the Group with a market value of
approximately HK$10.2 million (March 31,
2003: HK$16.5 million) which were
pledged to secure margin loan payable
included in other payable and accruals were
used to set off the amount of margin loan
payable of approximately HK$15.9 million
(March 31, 2003: HK$21.5 million).
As at March 31, 2003, the Group also
pledged property held for sale with a carrying
value of HK$6.5 million to secure bank and
other banking facilities granted to the Group.
Contingent Liabilities
As at March 31, 2004, the Group had not
granted corporate guarantees to any parties. As
at March 31, 2003, the Group’s contingent
liabilities were approximately HK$10.3
million, representing a corporate guarantee
given to bankers in respect of banking facilities
utilized by an associate of the Group.
Employees and
Remuneration Policies
As at March 31, 2004, the Group employed
approximately 400 staff. The Group’s
remuneration policies are in line with
prevailing industry practices, are formulated
on the basis of performance and experience
and will be reviewed regularly. The Group
also provided employees with
comprehensive benefits including medical
insurance and training programs.
The share option scheme of the Company
adopted pursuant to a resolution passed on
October 13, 1998 and becoming effective on
December 24, 1999 was terminated on
March 17, 2003 and replaced by a new share
option scheme being approved and adopted
on the same date. The new share option
scheme is valid and effective for a period of
ten years from the date of adoption.
19PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED ANNUAL REPORT 2003/04
LI Tzar Kai, Richard
Chairman
BOARD OF DIRECTORS
YUEN Tin Fan, Francis
Deputy Chairman
LEE Chi Hong, Robert
Executive Director and
Chief Executive Officer
Alexander Anthony ARENA
Executive Director
Hubert CHAK
Executive Director
PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED ANNUAL REPORT 2003/0420
B OA R D OF DI R E C TORS
Executive Directors
LI Tzar Kai, Richard
Chairman
Aged 37, is chairman of Pacific Century
Premium Developments Limited (PCPD) and
chairman of PCPD’s Executive Committee. He is
also chairman of PCCW Limited, chairman and
chief executive of the Pacific Century Group and
chairman of Singapore-based Pacific Century
Regional Developments Limited.
Mr Li is a governor of the World Economic
Forum for Information Technologies and
Telecommunications, and a member of the
Center for Strategic and International Studies’
International Councillors’ Group in Washington,
DC.
In addition, Mr Li is also a member of the
United Nations Information and
Communication Technology Advisory Group.
YUEN Tin Fan, Francis
Deputy Chairman
Aged 51, is deputy chairman of PCPD and
deputy chairman of PCPD’s Executive
Committee. He joined the Pacific Century
Group in 1996 as deputy chairman and is
currently a deputy chairman of PCCW Limited.
He is also a member of PCCW’s Executive
Committee and chairman of Pacific Century
Insurance Holdings Limited.
From 1988 to 1991, Mr Yuen was chief executive
of The Stock Exchange of Hong Kong Limited.
He was also a founding director of Hong Kong
Securities Clearing Company Limited. He served
from 1992 to 1994 as a member of NASDAQ’s
International Markets Advisory Board in the
United States.
Mr Yuen served as managing director of Citicorp
Scrimgeour Vickers Hong Kong Limited in
October 1986 and was appointed to the firm’s
main board in London in 1987. He worked for
Wardley, a merchant bank, from 1977 to 1985.
Mr Yuen is chairman of the Board of Trustees of
the Hong Kong Centre for Economic Research, a
member of the Shanghai People’s Political
Consultative Committee and a member of the
Board of Trustees of Shanghai’s Fudan University.
He received a Bachelor of Arts degree in
economics at the University of Chicago and is
currently a member of its Board of Trustees.
LEE Chi Hong, Robert
Executive Director and Chief Executive Officer
Aged 53, is an executive director and chief
executive officer of PCPD and a member of
PCPD’s Executive Committee. He joined
PCCW Limited on August 19, 2002, and is an
executive director of PCCW and a member of
PCCW’s Executive Committee.
Mr Lee was previously an executive director of
Sino Land Company Limited, where his
responsibilities included sales, finance,
acquisitions, investor relations, marketing and
property management.
Prior to joining Sino Land, Mr Lee was a senior
partner at Deacons in Hong Kong, where he
specialized in banking, property development,
corporate finance and dispute resolution in Hong
Kong and mainland China. Before that, Mr Lee
was a solicitor with the London firm of Pritchard
Englefield & Tobin. He was enrolled as a solicitor
in the UK in 1979 and was admitted as a
solicitor in Hong Kong in 1980. Mr Lee became
a Notary Public in Hong Kong in 1991.
Mr Lee served as a member of the panel of
arbitrators at the China International Economic
and Trade Arbitration Commission of the China
Council for the Promotion of International Trade
in Beijing.
Mr Lee graduated from Cornell University in
1975 with a bachelor’s degree in Political Science.
Alexander Anthony ARENA
Executive Director
Aged 53, is an executive director of PCPD and a
member of PCPD’s Executive Committee. He is
also an executive director of PCCW Limited,
deputy chairman of PCCW’s Executive
Committee, group chief financial officer of
PCCW, a director of Pacific Century Regional
Developments Limited and a director of Pacific
Century Insurance Holdings Limited.
21PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED ANNUAL REPORT 2003/04
Prior to joining the Pacific Century Group in
1998, Mr Arena was a Special Policy Adviser to
the Government from 1997. From 1993 to 1997,
he was director-general of telecommunications at
the Office of the Telecommunications Authority
of Hong Kong, as well as a member of the
Broadcasting Authority.
Before becoming director-general, Mr Arena was
recruited to plan a reform program for the
liberalization of Hong Kong’s
telecommunications sector. Prior to his
appointment to the Government, he was an
inaugural member of the Australian
Telecommunications Authority, which he served
for four years.
Mr Arena has had an extensive career in public
administration, specializing in high technology
and infrastructure industries. From radio/
communications engineer to public policy maker,
his experience spans such diverse areas as the
commercialization of government-owned
business enterprises and deregulation in the
aviation, transport, telecommunications and
postal industries.
Mr Arena graduated at the University of New
South Wales, Australia, with a bachelor’s degree
in electrical engineering. His Master of Business
Administration degree was completed at
Australia’s Melbourne University and he is a
Fellow of the Hong Kong Institution of
Engineers.
Hubert CHAK
Executive Director
Aged 43, is an executive director of PCPD and a
member of PCPD’s Executive Committee.
He joined PCCW Limited in October 1999 and
is currently PCCW’s company secretary and
director of mergers and acquisitions. Mr Chak
has extensive experience in corporate finance
transactions and previously worked for a number
of international investment banks, as well as a
well-known CPA firm in Hong Kong.
Mr Chak graduated at Cardiff University in the
United Kingdom and holds a Master of Business
Administration degree and a Bachelor of Science
degree in Mechanical Engineering.
Non-Executive Directors
Ronald James BLAKE, O B E , J P , aged 70, is
an independent non-executive director of PCPD.
He was a senior director with the Kowloon-
Canton Railway Corporation (“KCRC”) until
January 2004, and was responsible for
supervising KCRC’s HK$75 billion railway
expansion programs.
Before joining KCRC in 1997, he was secretary
for works for the Hong Kong Government
between 1991 and 1995, overseeing the
implementation of the Airport Core Programme
and the harbor wing extension of the Hong Kong
Conference and Exhibition Centre. Before that,
he served with Paul Y. Construction Limited and
was engaged in civil engineering and building
contracting.
Mr Blake began his career in the United
Kingdom as a civil/structural engineer with
Boulton and Paul, and later joined Scott Wilson
Kirkpatrick & Partners in 1965.
Mr Blake qualified as a Chartered Engineer in
1960 and was awarded the Institution of Civil
Engineers Gold Medal in 1997. He was President
of the Hong Kong Institution of Engineers
between 1991 and 1992 and later became
President of the Federation of Engineering
Institutions of South East Asia and the Pacific
(FEISEAP), which he served as a member of the
Executive for three years.
TSANG Link Carl, Brian, aged 40, is an
independent non-executive director of PCPD.
He is a practising solicitor in Hong Kong and a
partner of the Hong Kong law firm of Iu, Lai &
Li. He graduated from King’s College, London
with a LLB degree in 1985. Mr Tsang has also
been admitted to practise law in England and
Wales, as well as in Singapore, New South Wales,
Queensland and the Australian Capital
Territories. He is a non-executive director of
several other companies listed on the Main
Board, and the GEM Board, of The Stock
Exchange of Hong Kong Limited.
PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED ANNUAL REPORT 2003/0422
Prof WONG Yue Chim Richard, S B S , J P ,
aged 52, is an independent non-executive
director of PCPD and chairman of the Audit
Committee of PCPD.
Prof Wong graduated from the University of
Chicago with Bachelor’s and Master’s Degrees
and a Doctorate in Economics. He is Dean of the
Faculty of Business and Economics, and Chair of
Economics, at The University of Hong Kong.
Prof Wong has been active in advancing
economic research on policy issues in Hong
Kong and other parts of China through his work
as founding Director of both the Hong Kong
Centre for Economic Research and the Hong
Kong Institute of Economics and Business
Strategy. He was awarded the Silver Bauhinia Star
in 1999 by the Government of the Hong Kong
Special Administrative Region for his
contribution to education, housing, industry and
technology development. He was appointed
Justice of the Peace in July 2000.
Prof Wong is an independent non-executive
director of Pacific Century Insurance Holdings
Limited and a member of the Managing Board of
the Kowloon-Canton Railway Corporation. He is
also an independent non-executive director of
Great Eagle Holdings Limited, Industrial and
Commercial Bank of China (Asia) Limited, CK
Life Sciences Int'l., (Holdings) Inc. and Orient
Overseas (International) Limited.
Dr Allan ZEMAN, G B S , J P , aged 56, is a
non-executive director of PCPD.
After spending more than 34 years in Hong
Kong, he has established business interests here
and overseas that include property development,
entertainment and public relations. This is in
addition to his interests in Li & Fung Limited, a
listed company in Hong Kong.
Dr Zeman is chairman of Ocean Park, a major
theme park in Hong Kong. He is also chairman
of Lan Kwai Fong Holdings Limited, the major
property owner and developer in Lan Kwai Fong,
which is one of Hong Kong’s most popular
tourist attractions.
Dr Zeman is a member of the Economic and
Employment Council in Hong Kong. He serves
as a board member on a number of public bodies
in Hong Kong, including the Tourism Strategy
Group for the Hong Kong Tourism Commission,
the Cultural and Heritage Commission and the
Urban Renewal Authority. He is currently a
director of Wynn Resorts, Limited, a listed
company in the United States; and a director of
Algo Group Inc., a listed company in Canada.
B OA R D OF DI R E C TORS
23PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED ANNUAL REPORT 2003/04
CORPORATE GOVERNANCE
The corporate governance practices of the
PCPD Group meet the standards set out by
The Stock Exchange of Hong Kong
Limited. The Board of Directors and
Committees overseeing and supervising the
management of the business and affairs of
the Group meet on a regular basis to ensure
that the interests of the Group, as well as its
stakeholders, are well protected.
Board of Directors
The Board is responsible for the
management of the Company. Key
responsibilities include formulation of the
PCPD Group’s overall strategies, the setting
of management targets and supervision of
management performance. The Board
confines itself to making broad policy
decisions, delegating responsibility for more
detailed considerations to the Executive
Committee under the leadership of the
Chairman.
All directors have full and timely access to
all relevant information, including regular
reports from each of the Board committees
and briefings on significant legal, regulatory
or accounting issues affecting the Group.
Biographies of all the directors are set out on
pages 19 to 22 of this annual report.
Executive Committee
The Executive Committee of the Board
meets regularly and operates as a general
management committee with overall
delegated authority from the Board. The
Executive Committee determines group
strategy, reviews trading performance,
ensures adequate funding, examines major
investments and monitors management
performance. The Executive Committee
reports through the Chairman to the Board.
Members of the Executive Committee are:
� Li Tzar Kai, Richard
(Chairman)
� Yuen Tin Fan, Francis
(Deputy Chairman)
� Lee Chi Hong, Robert
(Chief Executive Officer)
� Alexander Anthony Arena
� Hubert Chak
� Wayne Michael Verge
Audit Committee
Subsequent to May 10, 2004, new terms of
reference for the Audit Committee were
adopted and new members of the Audit
Committee appointed.
The Audit Committee of the Board is
responsible for ensuring objectivity and
credibility of financial reporting, and that
the directors have exercised the care,
diligence and skills prescribed by law when
presenting results to the shareholders. The
Audit Committee’s authority and duties are
set out in written terms of reference,
consistent with those recommended by the
Hong Kong Society of Accountants.
The Audit Committee meets regularly with
management and external auditors, and
reviews their reports.
Members of the Audit Committee are:
� Prof Wong Yue Chim, Richard
(Chairman)
� Ronald James Blake
� Tsang Link Carl, Brian
Each member of the Audit Committee is an
independent non-executive director.
The Audit Committee reviews our financial
statements and internal financial reporting,
plus compliance processes and internal
controls, as well as the work program and
activities of our Group Internal Audit unit.
PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED ANNUAL REPORT 2003/0424
Cor p or at e G ov e r n a n c e
Internal Controls
The directors are responsible for internal
control in PCPD and for reviewing its
effectiveness. Procedures have been designed
to safeguard assets against unauthorised use
or disposition, for maintaining proper
accounting records and ensuring the
reliability of financial information used
within the business or for publication. Such
procedures are designed to manage, rather
than eliminate, the risk of failure to achieve
business objectives. These procedures can
only provide reasonable, and not absolute,
assurance against material errors, losses or
fraud.
Group Internal Audit
Group Internal Audit was established to
provide independent assurance to the Board
and executive management on the adequacy
and effectiveness of internal controls for the
PCPD Group. The Group Internal Audit
reports directly to the Audit Committee, the
Chief Executive Officer and the Chief
Financial Officer.
Group Internal Audit adopts a risk and
control-based audit approach. The annual
work plan of Group Internal Audit covers
major activities and processes of the Group’s
business and service units. All audit reports
are communicated to the Audit Committee
and key members of executive and senior
management. Audit issues are tracked and
followed up for proper implementation,
with progress reported to the Audit
Committee on a quarterly basis.
Investor Relations
The Company encourages two-way
communication with both its institutional
and private investors. Extensive information
on the Group’s activities is provided in the
annual and interim reports, which are sent
to shareholders. Regular dialogue takes place
with institutional investors. Enquiries from
individuals on matters relating to their
shareholdings, and the business of the
Group, are welcomed and dealt with in an
informative and timely manner. Relevant
contact information is provided on page 96
of this report.
In order to promote effective
communication, financial and other
information relating to the Group and its
business activities is disclosed on the
Company’s website (www.pcpd.com).
25PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED ANNUAL REPORT 2003/04
CONSOLIDATED
Balance STATEMENTFINANCIAL
INFORMATION26 Report of the Directors
37 Auditors’ Report
38 Consolidated Income Statement
39 Consolidated Balance Sheet
41 Balance Sheet
42 Consolidated Statement of Changes in Equity
43 Consolidated Cash Flow Statement
45 Notes to the Financial Statements
94 Five Years Financial Summary
25PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED ANNUAL REPORT 2003/04
PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED ANNUAL REPORT 2003/0426
REPORT OF
THE DIRECTORS
The directors hereby present to the shareholders the annual report and the audited consolidated financial statements
of the Company and its subsidiaries (hereinafter collectively referred to as the “Group”) for the year ended March 31,
2004.
Change of Company Name and Adoption of Chinese Name
A special resolution was passed by the shareholders of the Company at the special general meeting of the Company
held on April 28, 2004 to approve the change of the Company’s name from Dong Fang Gas Holdings Limited to
Pacific Century Premium Developments Limited, which took effect on May 10, 2004.
The Company has adopted “盈科大衍地產發展有限公司 ” as its Chinese name for the purpose of identification
with effect from May 24, 2004.
Principal Activities
The Company is an investment holding company. The activities of its principal subsidiaries and associates are set out
in notes 16 and 17 to the financial statements respectively.
Major Transactions
On March 5, 2004, PCCW Limited (“PCCW”, a Hong Kong company whose shares are listed on The Stock
Exchange of Hong Kong Limited (the “Stock Exchange”)) and the Company jointly announced that the Company
has conditionally agreed to purchase:
(i) the entire issued share capital of Ipswich Holdings Limited and its subsidiaries (the “Property Group”), being
the group of companies holding Pacific Century Place Beijing located in the People’s Republic of China (the
“PRC”), PCCW Tower located in Hong Kong, other investment properties and related property and facilities
management companies of PCCW and its subsidiaries (“PCCW Group”) and includes Cyber-Port Limited (the
developer of the Cyberport Project); and
(ii) the property situated at Ko Shing Street and Wo Fung Street, Western, Hong Kong and approximately
HK$3,529 million in aggregate of interest-bearing loans owing by the relevant members of the Property Group
to PCCW.
27PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED ANNUAL REPORT 2003/04
The aggregate consideration of approximately HK$6,557 million was satisfied:
(i) as to HK$2,967 million, by the allotment and issue of approximately 1,648 million new shares of par value of
HK$0.10 each by the Company, immediately following the capital reorganisation (including a 10:1 share
consolidation) becoming unconditional and effective, to PCCW (or as it may direct) credited as fully paid at an
issue price of HK$1.80 per new share; and
(ii) as to the remaining HK$3,590 million, by the issue of the convertible notes by the Company to PCCW (or as
it may direct).
The Company also carried out the following capital reorganisation:
(i) every issued share of HK$0.40 was reduced in value by cancelling HK$0.39 per share and the cancellation of
each unissued share (“Capital Reduction”);
(ii) every 10 shares of HK$0.01 each of the Company were consolidated into one share of HK$0.10 each;
(iii) an amount of approximately HK$47.14 million standing to the credit of the share premium account of the
Company was cancelled (“Share Premium Cancellation”);
(iv) the aggregate amount of the credit balance of the share premium account of the Company and the credit
arising from the Capital Reduction and the Share Premium Cancellation in the amount of approximately
HK$500.03 million, was transferred to the contributed surplus account of the Company. That credit was used
to set off against the accumulated losses of the Company; and
(v) increased the authorised share capital from HK$11,612,654 to HK$1,000,000,000 by the creation of an
additional 9,883,873,460 shares of HK$0.10 each.
The above purchase was completed on May 10, 2004. Details of these are set out in the Company’s circular dated
April 2, 2004.
Subsidiaries
During the year, Dong Fang Gas (China) Limited, an indirect wholly-owned subsidiary of the Company, entered
into an agreement for the acquisition of 73 percent equity interest in Top Power Holdings Limited (“Top Power”) at
a consideration of HK$80,000,000. Top Power is an investment holding company incorporated in the British Virgin
Islands and owns a 70 percent equity interest in Beijing Continental Gas Co. Ltd. (“Beijing Continental Gas”).
Beijing Continental Gas is a sino-foreign equity joint venture engaged in the business of natural gas supply, storage
and related services.
PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED ANNUAL REPORT 2003/0428
r e p ort of t h e di r e c tors
Results
The results of the Group for the year ended March 31, 2004 are set out in the accompanying consolidated income
statement on page 38.
The directors do not recommend the payment of a final dividend for the year.
Reserves
Movements during the year in the reserves of the Group and the Company are set out in the consolidated statement
of changes in equity on page 42 and note 33 to the financial statements respectively.
Financial Summary
A summary of the consolidated results and of the assets and liabilities of the Group for the last five financial years is
set out on page 94.
Property, Plant and Equipment
During the year, the Group incurred expenditures of approximately HK$1,988,000 on property, plant and
equipment. In addition, property, plant and equipment with an aggregate net book value of approximately
HK$5,216,000 were acquired as a result of acquisition of subsidiaries.
Details of movements in the property, plant and equipment of the Group during the year are set out in note 14 to the
financial statements.
Share Capital
There were no movements in the Company’s share capital during the year. Details of these are set out in note 31 to
the financial statements.
Major Customers and Suppliers
During the year, aggregate sales attributable to the Group’s five largest customers were approximately 70 percent of
the Group’s total sales, while sales attributable to the Group’s largest customer were approximately 39 percent of the
Group’s total sales. The aggregate purchase attributable to the Group’s five largest suppliers was approximately 51
percent of the Group’s total purchases, while the purchases attributable to the Group’s largest supplier were
approximately 41 percent of the Group’s total purchases.
29PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED ANNUAL REPORT 2003/04
At no time during the year have the directors, their associates or any shareholders, who, to the knowledge of the
directors, owned more than 5 percent of the Company’s issued share capital, had any interests in the Group’s five
largest customers or suppliers.
Directors
The directors who held office during the year, and up to the date of this report, were:
Executive Directors
Li Tzar Kai, Richard (Chairman) (appointed on May 10, 2004)
Yuen Tin Fan, Francis (Deputy Chairman) (appointed on May 10, 2004)
Lee Chi Hong, Robert (Chief Executive Officer) (appointed on May 10, 2004)
Alexander Anthony Arena (appointed on May 10, 2004)
Hubert Chak (appointed on May 10, 2004)
Dr Chan Kwok Keung, Charles (resigned on May 10, 2004)
Dr Yap, Allan (resigned on May 10, 2004)
Chan Kwok Hung (resigned on May 10, 2004)
Zhang Shi Chen (appointed on October 16, 2003 and resigned on May 10, 2004)
Non-Executive Director
Dr Allan Zeman, G B S , J P (appointed on June 7, 2004)
Independent Non-Executive Directors
Ronald James Blake, O B E , J P (appointed on May 10, 2004)
Tsang Link Carl, Brian
Prof Wong Yue Chim, Richard, S B S , J P (appointed on July 9, 2004)
Zhao Wenfu (appointed on October 15, 2003 and resigned on May 10, 2004)
Ng Wai Hung (resigned on October 15, 2003)
In accordance with Bye-law 86(2) of the Company’s Bye-laws, Yuen Tin Fan, Francis, Lee Chi Hong, Robert,
Alexander Anthony Arena, Hubert Chak, Ronald James Blake, Prof Wong Yue Chim, Richard and Dr Allan
Zeman, shall retire and, being eligible, offer themselves for re-election at the forthcoming annual general meeting.
PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED ANNUAL REPORT 2003/0430
Directors’ Service Contracts
Lee Chi Hong, Robert entered into a service contract with a wholly-owned subsidiary of the Company which may be
terminated, by either party, on six months’ notice.
The term of office for the non-executive directors is the period up to their retirement by rotation in accordance with
the Company’s Bye-laws.
Save as disclosed above, no director proposed for re-election at the forthcoming annual general meeting has an
unexpired service contract with the Group which is not determinable by the Group within one year without payment
of compensation (other than statutory compensation).
Directors’ Interests in Shares, Underlying Shares and Debentures
As at March 31, 2004, the directors of the Company and their associates had the following interests and short
positions in the shares, underlying shares and debentures of the Company and its associated corporations (within the
meaning of Part XV of the Securities and Futures Ordinance (“SFO”)) as recorded in the register required to be kept
under section 352 of the SFO or as otherwise notified to the Company and the Stock Exchange pursuant to the
Model Code for Securities Transactions by Directors of Listed Companies (“Model Code”):
r e p ort of t h e di r e c tors
Long position/ Number of Approximate Percentage
Name of director short position Nature of Interest Shares Held (Note) of issued share capital
Dr Chan Kwok Keung, Charles Long position Personal interest 2,520,900 0.22%
NOTE: Shares of HK$0.40 each in the share capital of the Company.
Save as disclosed above, as at March 31, 2004, none of the directors or their associates had any interests or short
positions in any shares, underlying shares and debentures of the Company or any of its associated corporations
(within the meaning of Part XV of the SFO) as recorded in the register required to be kept under section 352 of the
SFO or as otherwise notified to the Company and the Stock Exchange pursuant to the Model Code.
Share options and Directors’ Rights to Acquire Shares orDebentures
Particulars of the Company’s share option schemes are set out in note 32 to the financial statements. No share options
were outstanding as at March 31, 2004.
31PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED ANNUAL REPORT 2003/04
No options were granted to, or exercised by, the directors during the year, and no share options were held by the
directors as at March 31, 2004.
At no time during the year 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.
Directors’ Interests in Contracts of Significance
No contracts of significance to which the Company or any of its subsidiaries was a party and in which a director of
the Company had a material interest, whether directly or indirectly, subsisted at the end of the year or at any time
during the year.
Directors’ Interests in Competing Business
The interests of the directors of the Company in competing business as at March 31, 2004 required to be disclosed
pursuant to Rule 8.10 of the Rules Governing the Listing of Securities on the Stock Exchange (“Listing Rules”) were
as follows:
Name of company/ Nature of
Name of director partnership/sole proprietorship competing business Nature of interest
Dr Chan Kwok Keung, Charles ITC Corporation Limited Trading of building materials Substantial shareholder and
(“ITC”) and its subsidiaries chairman of ITC
Hanny Holdings Limited (“Hanny”) Securities investment and trading Chairman of Hanny
Dr Yap, Allan Hanny Securities investment and trading Managing director of Hanny
Chan Kwok Hung ITC and its subsidiaries Trading of building materials Executive director of ITC
Hanny Securities investment and trading Executive director of Hanny
Other than as disclosed above, as at March 31, 2004, none of the directors is interested in any business apart from
the Group’s businesses, which competes or is likely to compete, either directly or indirectly, with the Group’s
businesses.
PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED ANNUAL REPORT 2003/0432
Interests and Short Positions of Substantial Shareholders
As at March 31, 2004, the following persons were substantial shareholders of the Company (as defined in the Listing
Rules) and had interests or short positions in the shares and underlying shares of the Company as recorded in the
register required to be kept under section 336 of the SFO:
Long Position/ Number of Approximate Percentage of
Name of shareholder short Position Capacity shares held issued share capital
China Strategic Holdings Limited
(“China Strategic”) Long position Held by controlled corporation* 500,000,000 43.06%
China Strategic (B.V.I.) Limited Long position Held by controlled corporation* 500,000,000 43.06%
Great Joint Profits Limited Long position Beneficial owner* 500,000,000 43.06%
r e p ort of t h e di r e c torsr e p ort of t h e di r e c tors
*Note: The shares were held by Great Joint Profits Limited, a wholly-owned subsidiary of China Strategic (B.V.I.) Limited, which in turn
is wholly-owned by China Strategic.
Save as disclosed above, the Company had not been notified of any other person (other than directors or the chief
executive of the Company) who had an interest or short position in the shares and underlying shares of the Company
as recorded in the register required to be kept by the Company under section 336 of the SFO.
Convertible Loan
As disclosed in the annual report of the Company for the year ended March 31, 2003 (“Annual Report 2003”), an
unsecured convertible loan of US$12 million (“Convertible Loan”) which is repayable on demand and carries interest at
the rate of 9.8 percent per annum compounded annually for a term of six years was advanced by Simonson International
Development Limited (“Simonson”), a wholly-owned subsidiary of ING Beijing Investment Company Limited (“ING”)
and an independent third party, to Companion-China Limited, a wholly-owned subsidiary of the Company, in 1997.
The Convertible Loan and the accrued interest thereon will, at the option of the convertible noteholder, be convertible
into fully paid ordinary shares of the Company at a conversion price calculated at 90 percent of the average closing price
of the shares of the Company quoted on the Stock Exchange for the 20 trading days immediately preceding the date of
the notice under the terms and conditions of the convertible loan deed, details of which are set out in the circulars to the
shareholders of the Company dated May 13, 1997 and December 20, 2000.
By an assignment executed on February 18, 2002, Simonson has assigned to Perfect Master Limited (“PML”), a
wholly-owned subsidiary of ING and an independent third party, the Convertible Loan and all related rights and
interest. On the same date, the entire issued share capital of PML and the Convertible Loan were then sold to Galaxy
Time Limited, a company held by New World Enterprise Holdings Limited. Details are set out in the announcement
of the Company dated February 18, 2002.
33PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED ANNUAL REPORT 2003/04
As disclosed in the Annual Report 2003 and the interim report of the Company for the six months ended September
30, 2003, the Group failed to repay a certain part of the Convertible Loan, resulting in the whole outstanding
principal sum of US$11.9 million becoming repayable on demand. The conversion option to convert the
Convertible Loan and the accrued interest into fully paid ordinary shares of the Company lapsed on June 25, 2003
but all other rights attached to the Convertible Loan subsisted.
Management Contracts
No contract concerning the management and administration of the whole, or any substantial part of the business of
the Company, was entered into or existed during the year.
Retirement Benefits Schemes
Details of the Group’s retirement benefits schemes are set out in note 41 to the financial statements.
Code of Best Practice
The Company has complied with the Code of Best Practice as set out in Appendix 14 to the Listing Rules
throughout the year ended March 31, 2004, except that the non-executive directors are not appointed for a specific
term as they are subject to retirement by rotation and re-election at the annual general meeting in accordance with
the Bye-laws of the Company.
Purchase, Sale or Redemption of Listed Securities
During the year, there was no purchase, sale or redemption by the Company, or any of its subsidiaries, of the listed
securities of the Company.
Pre-emptive Rights
There are no provisions for pre-emptive rights under the Company’s Bye-laws, although no restrictions against such
rights exist under the laws in Bermuda.
Post Balance Sheet Events
Details of significant post-balance sheet events are set out in note 43 to the financial statements.
PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED ANNUAL REPORT 2003/0434
Connected Transactions
In the period since the publication of the Annual Report 2003, the following members of the Group (which became
members of the Group upon completion of the purchase mentioned in the paragraphs under the heading “Major
Transactions”) entered into (or continued to be party to) certain transactions which were “connected transactions” as defined
by the Listing Rules and which are subject to disclosure obligations under Chapter 14A of the Listing Rules. Details of such
transactions are as follow:
1. On November 29, 2002, PCCW-HKT Limited (“HKT”), a wholly-owned subsidiary of PCCW, entered into a
HKT General Shared Services (Variation) Agreement (“Shared Services Agreement”) with Reach Networks Hong
Kong Limited (“Reach”), a wholly-owned subsidiary of Reach Ltd., a 50:50 joint venture between PCCW and Telstra
Corporation Limited. HKT is an investment holding company, the principal activities of its subsidiaries are provision
of information technology solutions to business organisations. Reach is principally engaging in the provision of public
telecommunication services, including international public telephone services and leased circuits for international
telephone, telegraph data and facsimile services. Pursuant to the Shared Services Agreement, the parties agreed to
replace Schedule 14 of the HKT General Shared Services Agreement the parties entered into on October 13, 2000.
The terms upon which these services were to be rendered were due to expire on September 30, 2003. PCCW
confirmed that PCCW Facilities Management Limited (“PCCW FM”), a wholly-owned subsidiary of the Company
which was established for the purposes of providing facilities management, project management and other special
property/asset related services to which PCCW and its subsidiaries (“PCCW Group”) transferred its relevant
personnel, became fully operational in December, 2002. The building operations and maintenance and other support
services which had been provided by the PCCW Group to Reach since November 29, 2002 was also transferred to
PCCW FM pursuant to a verbal agreement between HKT and PCCW FM on that date. In anticipation of the
expiration of the Shared Services Agreement on September 30, 2003, Reach has indicated to HKT that it requires the
continuation of services. In view of the proposed renewal of services between HKT and Reach under the Shared
Services Agreement from October 1, 2003, HKT and PCCW FM verbally agreed on September 1, 2003 (the
“Subsidiary Services Agreement”) the basis upon which PCCW FM should on behalf of HKT provide a range of
services to Reach under the Shared Services Agreement (as amended from time to time). This Subsidiary Services
Agreement was for a term expiring on December 31, 2006, subject to termination by either party giving not less than
10 days’ written notice to the other. With effect from October 1, 2003, in addition to building operations and
maintenance and other support services originally provided, facilities management, project management and other
special services were also provided by PCCW FM to Reach under the Subsidiary Services Agreement. By March 4,
2004, HKT and Reach have finalised the terms of the services to be provided under Schedule 14 of the Shared
Services Agreement to be provided by HKT to Reach and entered into a verbal agreement (“Renewed Agreement”),
pursuant to which the services be provided for a term of 39 months commencing from October 1, 2003 and ending
on December 31, 2006. The terms of the Subsidiary Services Agreement are not affected by the Renewed Agreement.
The remainder of the term for which PCCW FM has to provide the services under the Subsidiary Services Agreement
will be less than three years.
r e p ort of t h e di r e c tors
35PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED ANNUAL REPORT 2003/04
Pursuant to the Renewed Agreement, the service fee payable by Reach to PCCW FM for the current periodfrom March 1, 2004 to December 31, 2004 is approximately HK$3.0 million; for the period from January 1,
2005 to December 31, 2005 is approximately HK$3.7 million and for the period from January 1, 2006 to
December 31, 2006 is approximately HK$3.9 million. PCCW confirmed that the yearly service fee is arrived atbased on the estimated staff cost to be incurred for the whole year plus a manager remuneration to PCCW FM,
which is determined after considering factors such as market rate for similar services, estimated overhead of
PCCW FM and market conditions. If any third party service provider costs are incurred, Reach would becharged without mark up. The service fee has to be settled by cash payment on a monthly pro-rata basis.
2. PCCW Properties (HK) Limited, a wholly-owned subsidiary of the Company, and PCCW FM (together
“Service Providers”) have been respectively providing asset, property and facilities management services to
PCCW Services Limited (“PCCW Services”), a wholly-owned subsidiary of PCCW and Gate Land Limited, an
associate of Li Tzar Kai, Richard, the controlling shareholder of PCCW pursuant to verbal agreements on
October 1, 2003 and October 1, 2002. PCCW confirmed that the service fees are charged on either time
apportionment basis or head count basis, which has to be settled by cash payment on a monthly pro-rata basis.
The service fees charged by the Service Providers for their provision of the above services for the 12 months
ending December 31, 2004 (being the expiry date of the services arrangements) would not exceed HK$50.7
million. PCCW Services is principally engaged in the provision of management services to the PCCW Group.
Gate Land Limited is a project company for property development.
3. Partner Link Investments Limited (“Partner Link”), a wholly-owned subsidiary of the Company, entered into a
verbal agreement with PCCW Services on January 1, 2003 (“Lease Arrangement”). Pursuant to the Lease
Arrangement, PCCW Services leases 10 whole floors and part of the 20th floor and the 32nd floor of PCCW
Tower of the total gross floor area of around 179,843 square feet for terms all commencing in 2003 and all
expiring on December 31, 2005 at an aggregate monthly rental of approximately HK$3,184,000 (exclusive of
Government rates, air-conditioning and management charges which are to be borne by the tenant). The
monthly rental, which reflects prevailing market rates as at the commencement date of the lease, has to be
settled in advance on the first day of each month by PCCW Services.
4. Pursuant to the agreement dated April 30, 2002, PCCW Services sub-license level 8 of Cyberport 2, Phase C1,
Telegraph Bay, Pokfulam, Hong Kong to PCCW Properties (HK) Limited for office use for the period from
April 2, 2002 to April 1, 2007. A supplemental agreement was entered into between the two parties on July 2,
2003 to sub-license additional area on certain units on level 7 of Cyberport 3, Phase C1, Telegraph Bay,
Pokfulam, Hong Kong to PCCW Properties (HK) Limited for term commencing September 2, 2003 to April
1, 2007. The aggregate monthly rental (inclusive of management fees and rates; direct reimbursable amounts
such as security, electricity, cleaning, repair and maintenance and other support services) for the total gross floor
area of around 21,402 square feet is approximately HK$0.5 million. The monthly rental which reflects
prevailing market rates as at the commencement date of the lease has to be paid by PCCW Properties (HK)
Limited in advance on the first day of each month.
PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED ANNUAL REPORT 2003/0436
Disclosure under Rule 13.21 of the Listing Rules
The Group is in breach of a covenant in respect of certain banking facilities and the amount of such banking facilities
utilised was approximately HK$103,330,000 as at March 31, 2004. As in the event of default repayment, certain
amount has become technically repayable on demand. The Group also failed to repay the Convertible Loan (as
defined in the paragraph under the heading “Convertible Loan”) with the outstanding principal sum of
approximately US$11.9 million and accordingly, the Convertible Loan has become technically repayable on demand.
Auditors
The financial statements for the year ended March 31, 2004 have been audited by Deloitte Touche Tohmatsu whowill retire upon conclusion of the forthcoming annual general meeting and will not offer themselves for re-appointment. A resolution will be submitted at the forthcoming annual general meeting to appointPricewaterhouseCoopers as the new auditors of the Company.
On behalf of the Board
YUEN Tin Fan, FrancisDeputy Chairman
Hong Kong, July 22, 2004
r e p ort of t h e di r e c tors
37PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED ANNUAL REPORT 2003/04
AUDITORS’ REPORT
TO THE MEMBERS OF PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED
(FORMERLY KNOWN AS DONG FANG GAS HOLDINGS LIMITED)
(Incorporated in Bermuda with limited liability)
We have audited the financial statements on pages 38 to 93 which have been prepared in accordance with accounting principles generally accepted in
Hong Kong.
Respective responsibilities of directors and auditors
The Company’s directors are responsible for the preparation of financial statements which give a true and fair view. In preparing financial statements
which give a true and fair view it is fundamental that appropriate accounting policies are selected and applied consistently.
It is our responsibility to form an independent opinion, based on our audit, on those statements and to report our opinion solely to you, as a body, in
accordance with Section 90 of the Bermuda Companies Act, and for no other purpose. We do not assume responsibility towards or accept liability to
any other person for the contents of this report.
Basis of opinion
We conducted our audit in accordance with Statements of Auditing Standards issued by the Hong Kong Society of Accountants. An audit includes
examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements. It also includes an assessment of the
significant estimates and judgments made by the directors in the preparation of the financial statements, and of whether the accounting policies are
appropriate to the circumstances of the Company and the Group, consistently applied and adequately disclosed.
We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with
sufficient evidence to give reasonable assurance as to whether the financial statements are free from material misstatement. In forming our opinion we
also evaluated the overall adequacy of the presentation of information in the financial statements. We believe that our audit provides a reasonable basis
for our opinion.
Opinion
In our opinion the financial statements give a true and fair view of the state of affairs of the Company and the Group as at 31 March 2004 and of the
loss and cash flows of the Group for the year then ended and have been properly prepared in accordance with the disclosure requirements of the Hong
Kong Companies Ordinance.
Deloitte Touche Tohmatsu
Certified Public Accountants
Hong Kong
22 July 2004
38 PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED ANNUAL REPORT 2003/04
CONSOLIDATED
INCOME STATEMENT
Notes 2004 2003
For the year ended 31 March 2004 HK$’000 HK$’000
Turnover 4 149,242 136,196
Cost of sales (126,240) (127,105)
23,002 9,091
Other operating income 5 8,723 15,163
Distribution cost (14,439) (13,932)
Administrative expenses (41,020) (44,368)
Other operating expenses 6 (115,056) (53,206)
Loss from operations 7 (138,790) (87,252)
Finance cost 8 (24,906) (29,429)
Allowance for deposit paid for acquisition of an associate (3,000) —
Write back of provision for an onerous contract 9 23,400 —
Loss on disposal of subsidiaries — (6,554)
Loss on disposal of associates — (691)
Share of loss of associates — (2,129)
Loss before taxation (143,296) (126,055)
Taxation 12 (1,649) (161)
Loss before minority interests (144,945) (126,216)
Minority interests 2,544 13,002
Net loss for the year (142,401) (113,214)
Loss per share 13 (HK$0.12) (HK$0.18)
39PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED ANNUAL REPORT 2003/04
CONSOLIDATED
BALANCE SHEET
Notes 2004 2003
At 31 March 2004 HK$’000 HK$’000
Non-Current Assets
Property, plant and equipment 14 114,296 126,447
Goodwill 15 105,133 —
Interests in associates 17 — —
Deposit paid for acquisition of an associate 18 — 10,000
Investments in securities 19 467 467
219,896 136,914
Current Assets
Inventories 20 21,618 24,714
Properties held for sale 21 — 6,500
Trading securities 19 14 14
Trade receivables 22 46,330 49,142
Other receivables, deposits and prepayments 5,358 16,736
Loans receivable 23 — —
Amounts due from associates 24 — —
Amounts due from minority shareholders 25 — —
Amount due from a related company 26 137 —
Pledged bank deposits 27,329 26,593
Bank balances and cash 193,479 378,364
294,265 502,063
40 PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED ANNUAL REPORT 2003/04
Consolidated Balance Sheet
Notes 2004 2003
At 31 March 2004 HK$’000 HK$’000
Current Liabilities
Trade payables 27 45,126 41,754
Bills payable and import loans 2,894 17,147
Other payables and accruals 155,332 112,570
Rentals and sales deposits received 10,000 10,000
Provision 9 — 23,400
Taxation payable 1,854 92
Amounts due to minority shareholders 25 6,199 6,599
Amounts due to related companies 28 550 1,065
Bank borrowings - due within one year 29 103,330 91,697
Other borrowings 30 133,816 134,629
459,101 438,953
Net Current (Liabilities) Assets (164,836) 63,110
55,060 200,024
Capital and Reserves
Share capital 31 464,506 464,506
Reserves (422,283) (279,863)
42,223 184,643
Minority Interests 12,837 15,381
55,060 200,024
The financial statements on pages 38 to 93 were approved and authorised for issue by the Board of Directors on 22 July 2004 and are signed on its
behalf by:
Yuen Tin Fan, Francis Lee Chi Hong, Robert
DIRECTOR DIRECTOR
41PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED ANNUAL REPORT 2003/04
BALANCE
SHEET
Notes 2004 2003
At 31 March 2004 HK$’000 HK$’000
Non-Current Assets
Property, plant and equipment 14 5 8
Investments in subsidiaries 16 — —
Amounts due from subsidiaries - due after one year 16 — 120,356
5 120,364
Current Assets
Amounts due from subsidiaries - due within one year 16 211,761 240,080
Deposits and prepayments 55 928
Bank balances 69,508 20,055
281,324 261,063
Current Liabilities
Payables and accruals 16,551 11,988
Provision 9 — 23,400
Amounts due to subsidiaries 16 7,466 246
24,017 35,634
Net Current Assets 257,307 225,429
257,312 345,793
Capital and Reserves
Share capital 31 464,506 464,506
Reserves 33 (207,194) (118,713)
257,312 345,793
Yuen Tin Fan, Francis Lee Chi Hong, Robert
DIRECTOR DIRECTOR
42 PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED ANNUAL REPORT 2003/04
CONSOLIDATED STATEMENT
OF CHANGES IN EQUITY
Capital Capital Enterprises
Share reserve on Share Special redemption expansion Revenue Exchange Contributed Accumulated
capital consolidation premium reserve reserve reserve reserve reserves surplus losses Total
For the year ended 31 March 2004 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000
At 1 April 2002 14,506 27,382 47,140 694,583 572 199 199 (682) 130,555 (1,062,591) (148,137)
Exchange adjustment — — — — — — — (3,996) — — (3,996)
Realised on disposal of
interests in subsidiaries — (10) — — — — — — — — (10)
Loss not recognised in the
consolidated income statement — (10) — — — — — (3,996) — — (4,006)
Issue of shares 450,000 — — — — — — — — — 450,000
Net loss for the year — — — — — — — — — (113,214) (113,214)
At 31 March 2003 464,506 27,372 47,140 694,583 572 199 199 (4,678) 130,555 (1,175,805) 184,643
Exchange adjustment not
recognised in the consolidated
income statement — — — — — — — (19) — — (19)
Net loss for the year — — — — — — — — — (142,401) (142,401)
At 31 March 2004 464,506 27,372 47,140 694,583 572 199 199 (4,697) 130,555 (1,318,206) 42,223
Included in capital reserve on consolidation as at 31 March 2004 is negative goodwill of HK$31,587,000 (2003: HK$31,587,000) arising
from acquisition of subsidiaries.
Included in capital reserve on consolidation as at 31 March 2004 is goodwill of HK$4,215,000 (2003: HK$4,215,000) arising from
acquisition of subsidiaries.
The special reserve of the Group represents the difference between share capital, share premium and capital redemption reserve of
Companion Building Material (Holdings) Limited and the nominal amount of share capital issued by the Company pursuant to the
scheme of arrangement on 24 December 1999.
43PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED ANNUAL REPORT 2003/04
CONSOLIDATED CASH
FLOW STATEMENT
2004 2003
For the year ended 31 March 2004 HK$’000 HK$’000
Operating Activities
Loss from operations (138,790) (87,252)
Adjustments for:
Allowance for bad and doubtful debts 40,568 23,179
Allowance for inventories 46 3,550
Allowance for loans receivable 31,047 —
Amortisation of goodwill arising from acquisition of subsidiaries 3,588 —
Allowance for amounts due from associates written (back) made (6,260) 28,363
Allowance for amount due from a minority shareholder 278 1,664
Depreciation 18,105 23,866
Gain on disposal of other securities — (50)
Gain on disposal of property, plant and equipment — (3,807)
Interest income (5,198) (7,091)
Write back of other borrowings (1,696) —
Write back of unclaimed dividend — (273)
Operating cash outflows before movements in working capital (58,312) (17,851)
Decrease in inventories 3,050 13,455
Increase in trading securities — (7)
Increase in trade and other receivables, deposits and prepayments (18,733) (44,344)
Decrease in loans receivable — 222
Decrease in bills payable and import loans (14,253) (9,232)
Increase in rental and sales deposits received — 88
Increase in trade payables and other payables and accruals 12,804 10,610
Increase in amount due from a related company (137) —
Net cash used in operations (75,581) (47,059)
Hong Kong Profits Tax refunded 113 131
Net Cash used in Operating Activities (75,468) (46,928)
44 PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED ANNUAL REPORT 2003/04
Consolidated cash flow Statement
Notes 2004 2003
For the year ended 31 March 2004 HK$’000 HK$’000
Investing activitiesProceeds from disposal of subsidiaries
(net of cash and cash equivalents disposed of ) 34 — 28,184Purchase of subsidiaries (net of cash and cash equivalents acquired) 35 (78,517) —Purchase of property, plant and equipment (1,988) (3,187)Increase in pledged bank deposits (736) (26,593)(Increase) decrease in amounts due from minority shareholders (278) 260Refund of deposit paid for acquisition of an associate 7,000 —Decrease (increase) in amounts due from associates 6,260 (15,587)Interest received 564 7,091Advances of loans receivable (288,814) —Repayments from loans receivable 262,401 —Purchase of other securities — (30,000)Deposit paid for acquisition of an associate — (10,000)Proceeds from disposal of property, plant and equipment — 22,287Proceeds from disposal of associates — 1,100Proceeds from disposal of other securities — 30,050
Net cash (used in) from investing activities (94,108) 3,605
Financing activitiesRepayment of bank loans (60,188) (62,459)Repayment of amounts due to related companies (30,307) —Repayment of other borrowings (3,146) (65,509)Interest paid (2,222) (1,048)Repayment of amounts due to minority shareholders (400) —New bank loans raised 35,735 72,921Advances from related companies 29,792 1,065New other borrowings raised 4,029 751Issue of shares — 450,000Advances from minority shareholders — 964
Net cash (used in) from financing activities (26,707) 396,685
Net (decrease) increase in cash and cash equivalents (196,283) 353,362Cash and cash equivalents at beginning of the year 369,198 15,072Effect of foreign exchange rate changes 1,231 764
Cash and cash equivalents at end of the year 174,146 369,198
Analysis of the balances of cash and cash equivalentsBank balances and cash 193,479 378,364Bank overdrafts (19,333) (9,166)
174,146 369,198
45PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED ANNUAL REPORT 2003/04
NOTES TO the
financial statementsFor the year ended 31 March 2004
1. GENERAL AND BASIS OF PREPARATION OF FINANCIAL STATEMENTS
The Company is incorporated in Bermuda as an exempted company with limited liability and its securities are listed on
The Stock Exchange of Hong Kong Limited (the “Stock Exchange”).
The Company is an investment holding company. The activities of its principal subsidiaries and associates as at 31 March
2004 are set out in notes 16 and 17 respectively.
In March 2004, the Company entered into a conditional agreement with PCCW Limited (“PCCW”, a company
incorporated in Hong Kong with its shares listed on the Stock Exchange), among others, to acquire various property
interests of PCCW and to propose a capital reorganisation. On 10 May 2004, the Company completed the acquisition of
the property interests and the capital reorganisation. Details of these are set out in note 43.
As a result of the above transactions, PCCW became the Company’s controlled shareholder and ultimate holding company.
The financial statements have been prepared on a going concern basis because the Company’s immediate holding company,
which is a subsidiary of PCCW, has agreed to provide adequate funds to the Group to enable it to meet in full its financial
obligations as they fall due for the foreseeable future.
2. ADOPTION OF HONG KONG FINANCIAL REPORTING STANDARDS
In the current year, the Group has adopted for the first time, Statement of Standard Accounting Practice (“SSAP”) 12
(Revised) “Income Taxes” issued by the Hong Kong Society of Accountants (“HKSA”). The principal effect of the
implementation of SSAP 12 (Revised) is in relation to deferred tax. SSAP 12 (Revised) requires the adoption of a balance
sheet liability method, whereby deferred tax is recognised in respect of all temporary differences between the carrying
amount of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of
taxable profit, with limited exceptions. The adoption of these standards had no significant effect on the results for the
current or prior accounting periods. Accordingly, no prior period adjustment was required.
46 PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED ANNUAL REPORT 2003/04
Notes to the financial statements
For the year ended 31 March 2004
3. SIGNIFICANT ACCOUNTING POLICIES
The financial statements have been prepared under the historical cost convention, as modified for the revaluation of
investments in securities, and in accordance with accounting principles generally accepted in Hong Kong. The principal
accounting policies adopted are as follows:
Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and its subsidiaries made up to
31 March each year.
The results of subsidiaries acquired or disposed of during the year are included in the consolidated income statement from
the effective date of acquisition or up to the effective date of disposal, as appropriate.
Goodwill
Goodwill arising on consolidation represents the excess of the cost of acquisition over the Group’s interest in the fair value
of the identifiable assets and liabilities of a subsidiary or an associate at the date of acquisition.
Goodwill arising on acquisition prior to 1 April 2001 continues to be held in reserves, and will be charged to the income
statement at the time of disposal of the relevant subsidiary or associate or at such time as the goodwill is determined to be
impaired.
Goodwill arising on acquisition since 1 April 2001 is capitalised and amortised on a straight-line basis over its useful
economic life. Goodwill arising on the acquisition of an associate is included within the carrying amount of the associate.
Goodwill arising on the acquisition of subsidiaries is presented separately in the balance sheet.
On disposal of a subsidiary or an associate, the attributable amount of unamortised goodwill or goodwill previously
eliminated against reserves is included in the determination of the profit or loss on disposal.
Negative goodwill
Negative goodwill represents the excess of the Group’s interest in the fair value of the identifiable assets and liabilities of a
subsidiary or an associate at the date of acquisition over the cost of acquisition.
Negative goodwill arising on acquisition prior to 1 April 2001 continues to be held in reserves and will be credited to
income at the time of disposal of the relevant subsidiary or associate.
Negative goodwill arising on acquisition since 1 April 2001 is presented as a deduction from assets and will be released to
income based on an analysis of the circumstances from which the balance resulted.
47PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED ANNUAL REPORT 2003/04
Notes to the financial statements
For the year ended 31 March 2004
3. SIGNIFICANT ACCOUNTING POLICIES - continued
Negative goodwill - continued
To the extent that the negative goodwill is attributable to losses or expenses anticipated at the date of acquisition, it is
released to income in the period in which those losses or expenses arise. The remaining negative goodwill is recognised as
income on a straight-line basis over the remaining average useful life of the identifiable acquired depreciable assets. To the
extent that such negative goodwill exceeds the aggregate fair value of the acquired identifiable non-monetary assets, it is
recognised in income immediately.
Negative goodwill arising on the acquisition of an associate is deducted from the carrying value of that associate. Negative
goodwill arising on the acquisition of subsidiaries is presented separately in the balance sheet as a deduction from assets.
Investments in subsidiaries
Investments in subsidiaries are included in the Company’s balance sheet at cost less any identified impairment loss.
Interests in associates
The consolidated income statement includes the Group’s share of the post-acquisition results of its associates for the year. In
the consolidated balance sheet, interest in associates is stated at the Group’s share of the net assets of the associates less any
identified impairment loss.
Revenue recognition
Sales of goods are recognised when goods are delivered and title has passed.
Interest income is accrued on a time basis, by reference to the principal outstanding and at the interest rate applicable.
Sale proceeds on dealing of listed trading securities are recognised on trade date.
Rental income under operating leases is recognised on a straight-line basis over the term of the relevant lease.
Revenue from household gas connection contract is recognised upon completion of contract.
Sales of gas appliances are recognised when goods are delivered and title has passed.
Service income is recognised at the time when services are rendered.
48 PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED ANNUAL REPORT 2003/04
Notes to the financial statements
For the year ended 31 March 2004
3. SIGNIFICANT ACCOUNTING POLICIES - continued
Property, plant and equipment
Property, plant and equipment are stated at cost less depreciation and any accumulated impairment losses.
Depreciation is provided to write off the cost of property, plant and equipment over their estimated useful lives and after
taking into account their estimated residual values, using the straight-line method, at the following rates per annum:
Land Over the remainder of lease terms
Buildings
- Long lease in Hong Kong and the
People’s Republic of China (the “PRC”) 2%
- Medium-term lease in the PRC 4.5%
Plant and machinery 9% - 15%
Leasehold improvements
- Owned premises 15%
- Leased premises Over the unexpired term of the lease
Furniture, fixtures and equipment 15% - 20%
Motor vehicles 18% - 30%
Computer software 15% - 33.33%
The gain or loss arising from disposal or retirement of an asset is determined as the difference between the sale proceeds and
the carrying amount of the asset and is recognised in the income statement.
Impairment
At each balance sheet date, the Group reviews the carrying amounts of its assets to determine whether there is any
indication that those assets have suffered an impairment loss. If the recoverable amount of an asset is estimated to be less
than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. Impairment loss is
recognised as an expense immediately.
Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its
recoverable amount, but such that the increased carrying amount does not exceed the carrying amount that would have
been determined had no impairment loss been recognised for the asset in prior years. A reversal of an impairment loss is
recognised as income immediately.
49PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED ANNUAL REPORT 2003/04
Notes to the financial statements
For the year ended 31 March 2004
3. SIGNIFICANT ACCOUNTING POLICIES - continued
Investments in securities
Investments in securities are recognised on a trade-date basis and are initially measured at cost.
At subsequent reporting dates, investments in securities are measured at fair value. Where securities are held for trading
purposes, unrealised gains and losses are included in net profit or loss for the period. For other securities, unrealised gains
and losses are dealt with in equity, until the security is disposed of or is determined to be impaired, at which time the
cumulative gain or loss is included in net profit or loss for the period.
Inventories
Inventories are stated at the lower of cost and net realisable value. Cost is calculated using the weighted average method.
Properties held for sale
Properties held for sale are stated at the lower of cost and net realisable value. Net realisable value is calculated at the actual
or estimated selling price less related costs of marketing and selling.
Convertible loans
Convertible loans are separately disclosed and regarded as liabilities until conversion actually occurs. The finance cost,
including the premium payable upon the final redemption of the convertible loans, recognised in the income statement in
respect of the convertible loans is calculated so as to produce a constant periodic rate of charge on the remaining balances of
the convertible loans for each accounting period.
Operating leases
Rentals payable under operating leases are charged to the income statement on a straight-line basis over the term of the
relevant lease.
Retirement benefit schemes
The retirement benefit costs charged in the income statement represent the contributions payable in respect of the current
year to the Group’s defined contribution schemes or Mandatory Provident Fund Scheme in Hong Kong and the Central
Pension Scheme in the PRC.
50 PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED ANNUAL REPORT 2003/04
Notes to the financial statements
For the year ended 31 March 2004
3. SIGNIFICANT ACCOUNTING POLICIES - continued
Taxation
Income tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the
income statement because it excludes items of income or expense that are taxable or deductible in other years and it further
excludes items that are never taxable or deductible. The Group’s liability for current tax is calculated using tax rates that
have been enacted or substantively enacted by the balance sheet date.
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amount of assets and
liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is
accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable
temporary differences, and deferred tax assets are recognised to the extent that it is probable that taxable profits will be
available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the
temporary difference arises from goodwill (or negative goodwill) or from the initial recognition (other than in a business
combination) of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and associates,
and interests in joint ventures, except where the Group is able to control the reversal of the temporary difference and it is
probable that the temporary difference will not reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no
longer probable that sufficient taxable profit will be available to allow all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is
realised. Deferred tax is charged or credited in the income statement, except when it relates to items charged or credited
directly to equity, in which case the deferred tax is also dealt with in equity.
Foreign currencies
Transactions in foreign currencies are translated at the rates ruling on the dates of the transactions. Monetary assets and
liabilities denominated in foreign currencies are re-translated at the rates ruling on the balance sheet date. Profits and losses
arising on exchange are dealt with in the income statement.
On consolidation, the assets and liabilities of the Group’s operation outside Hong Kong are translated at the exchange rates
prevailing on the balance sheet date. Income and expense items are translated at the average exchange rate for the year.
Exchange differences arising, if any, are classified as equity and transferred to the Group’s translation reserve. Such
translation differences are recognised as income or expenses in the year in which the operation is disposed of.
51PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED ANNUAL REPORT 2003/04
Notes to the financial statements
For the year ended 31 March 2004
4. TURNOVER AND SEGMENT INFORMATION
Turnover represents the net amounts received and receivable for building materials and gas appliances sold by the Group
less discounts allowed and goods returned, gas connection, supply and storage and sale proceeds of marketable securities
during the year.
2004 2003
HK$’000 HK$’000
Trading of building materials 138,574 134,400
Trading of marketable securities 7,076 1,796
Natural gas connection, supply, storage and sales of gas appliances 3,592 —
149,242 136,196
Business segments
For management purposes, the Group is organised into the following three major operating divisions. These divisions are
the basis on which the Group reports its primary segment information.
Building materials – Manufacturing and trading of building materials
Securities trading – Trading of marketable securities and financial instruments
Gas operations – Natural gas connection, supply, storage and sale of gas appliances
52 PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED ANNUAL REPORT 2003/04
Notes to the financial statements
For the year ended 31 March 2004
4. TURNOVER AND SEGMENT INFORMATION - continued
Business segments - continued
For the year ended 31 March 2004
Building Securities Gas
materials trading operations Consolidated
HK$’000 HK$’000 HK$’000 HK$’000
(Note)
Turnover
External sales 138,574 7,076 3,592 149,242
Result
Segment results (40,276) (47,477) (11,903) (99,656)
Other operating income 8,723
Allowance for loans receivable (31,047)
Unallocated corporate expenses (16,810)
Loss from operations (138,790)
Finance cost (24,906)
Write back of provision for an onerous contract 23,400
Allowance for deposit paid for acquisition of an associate (3,000)
Loss before taxation (143,296)
Taxation (1,649)
Loss before minority interests (144,945)
Minority interests 2,544
Net loss for the year (142,401)
53PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED ANNUAL REPORT 2003/04
Notes to the financial statements
For the year ended 31 March 2004
4. TURNOVER AND SEGMENT INFORMATION - continued
Business segments - continued
Balance sheet as at 31 March 2004
Building Securities Gas
materials trading operations Consolidated
HK$’000 HK$’000 HK$’000 HK$’000
Assets
Segment assets 318,761 481 18,159 337,401
Unallocated corporate assets 176,760
Consolidated total assets 514,161
Liabilities
Segment liabilities 125,493 — 20,142 145,635
Unallocated corporate liabilities 313,466
Consolidated total liabilities 459,101
54 PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED ANNUAL REPORT 2003/04
Notes to the financial statements
For the year ended 31 March 2004
4. TURNOVER AND SEGMENT INFORMATION - continued
Business segments - continued
Other information for the year ended 31 March 2004
Building Securities Gas
materials trading operations Others Consolidated
HK$’000 HK$’000 HK$’000 HK$’000 HK$’000
Additions of property, plant and equipment 1,773 — 215 — 1,988
Additions of property, plant and equipment arising from
acquisition of subsidiaries — — 5,216 — 5,216
Depreciation of property, plant and equipment 17,595 — 510 — 18,105
Allowance for bad and doubtful debts 40,568 — — — 40,568
Allowance for loans receivables — — — 31,047 31,047
Allowance for deposit paid for acquisition of an associate — — — 3,000 3,000
Allowance for amount due from a minority shareholder 278 — — — 278
Allowance for inventories 46 — — — 46
Note:
During the year, the Group acquired a 51.1% effective equity interest in Beijing Continental Gas Co. Ltd. (“Beijing Continental Gas”),
which is engaged in the business of gas operations and regarded as a new business segment for the year ended 31 March 2004.
55PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED ANNUAL REPORT 2003/04
Notes to the financial statements
For the year ended 31 March 2004
4. TURNOVER AND SEGMENT INFORMATION - continued
Business segments - continued
For the year ended 31 March 2003
Building Securities
materials trading Consolidated
HK$’000 HK$’000 HK$’000
TURNOVER
External sales 134,400 1,796 136,196
RESULT
Segment results (96,040) (6) (96,046)
Other operating income 15,163
Unallocated corporate expenses (6,369)
Loss from operations (87,252)
Finance costs (29,429)
Loss on disposal of subsidiaries (6,554) — (6,554)
Loss on disposal of associates (691) — (691)
Share of loss of associates (2,129) — (2,129)
Loss before taxation (126,055)
Taxation (161)
Loss before minority interests (126,216)
Minority interests 13,002
Net loss for the year (113,214)
56 PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED ANNUAL REPORT 2003/04
Notes to the financial statements
For the year ended 31 March 2004
4. TURNOVER AND SEGMENT INFORMATION - continued
Business segments - continued
Balance sheet as at 31 March 2003
Building Securities
materials trading Consolidated
HK$’000 HK$’000 HK$’000
Assets
Segment assets 115,674 481 116,155
Unallocated corporate assets 522,822
Consolidated total assets 638,977
Liabilities
Segment liabilities 163,633 — 163,633
Unallocated corporate liabilities 275,320
Consolidated total liabilities 438,953
Other information for the year ended 31 March 2003
Building Securities
materials trading Consolidated
HK$’000 HK$’000 HK$’000
Additions of property, plant and equipment 1,137 2,050 3,187
Depreciation of property, plant and equipment 23,649 217 23,866
Allowance for bad and doubtful debts 23,179 — 23,179
Allowance for amounts due from associates 28,363 — 28,363
Allowance for amounts due from a minority shareholder 1,664 — 1,664
Allowance for inventories 3,550 — 3,550
57PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED ANNUAL REPORT 2003/04
Notes to the financial statements
For the year ended 31 March 2004
4. TURNOVER AND SEGMENT INFORMATION - continued
Geographical segments
The following table provides an analysis of the Group’s sales by geographic markets, irrespective of the origin of the goods/
services:
Turnover
2004 2003
HK$’000 HK$’000
Hong Kong 14,333 4,977
Other regions of the PRC 74,006 81,361
USA 58,450 49,858
Australia 2,453 —
149,242 136,196
The following is an analysis of the carrying amount of segment assets and additions to property, plant and equipment and
goodwill analysed by the geographical area in which the assets are located:
Additions to property, plant
Carrying amount and equipment and goodwill
of segment assets At 31 March For the year ended 31 March
2004 2003 2004 2003
HK$’000 HK$’000 HK$’000 HK$’000
Hong Kong 319,471 299,609 78 10
Other regions of the PRC 194,690 339,368 115,847 3,177
514,161 638,977 115,925 3,187
58 PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED ANNUAL REPORT 2003/04
Notes to the financial statements
For the year ended 31 March 2004
5. OTHER OPERATING INCOME
2004 2003
HK$’000 HK$’000
Interest income 5,198 7,091
Write back of other borrowings 1,696 —
Gain on disposal of property, plant and equipment — 3,807
Rental income — 380
Write back of unclaimed dividends — 273
Gain on disposal of other securities — 50
Sundry income 1,829 3,562
8,723 15,163
6. OTHER OPERATING EXPENSES
2004 2003
HK$’000 HK$’000
Allowance for bad and doubtful debts (40,568) (23,179)
Allowance for loans receivable (31,047) —
Allowance for amounts due from associates written back (made) 6,260 (28,363)
Allowance for amount due from a minority shareholder (278) (1,664)
Amortisation of goodwill arising on acquisition of subsidiaries (3,588) —
Loss on securities trading and financial instruments (45,835) —
(115,056) (53,206)
59PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED ANNUAL REPORT 2003/04
Notes to the financial statements
For the year ended 31 March 2004
7. LOSS FROM OPERATIONS
2004 2003
HK$’000 HK$’000
Loss from operations has been arrived at after charging:
Staff costs
- Directors’ fee (note 10) — —
- Directors’ other emoluments (note 10) 137 370
- Retirement benefits schemes contribution, net of
forfeiture of HK$191,000 (2003: HK$73,000) 121 589
- Others 8,279 12,929
8,537 13,888
Allowance for inventories 46 3,550
Auditors’ remuneration:
Current year 755 794
Underprovision in prior years — 180
Depreciation 18,105 23,866
Net foreign exchange loss 1,285 1,412
and after crediting:
Rental income, net of outgoings of HK$Nil (2003: HK$2,000) — 378
60 PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED ANNUAL REPORT 2003/04
Notes to the financial statements
For the year ended 31 March 2004
8. FINANCE COST
2004 2003
HK$’000 HK$’000
Interest on:
Bank and other borrowings wholly repayable within five years 9,586 14,150
Convertible loan 15,320 15,279
24,906 29,429
9. WRITE BACK OF PROVISION FOR AN ONEROUS CONTRACT
The Company entered into an agreement dated 20 April 2000 with a third party (“Purchaser”) pursuant to which the
Company granted to the Purchaser an option to require the Company to purchase certain shares of Skynet Limited
(“Shares of Skynet”) for a consideration of US$3,000,000 during the period from 15 May 2000 to 15 May 2003.
During the year ended 31 March 2002, a provision of HK$23,400,000, representing the full amount of the exercise price
was made for the put option granted to the Purchaser in 2000 to require the Company to purchase the Shares of Skynet.
The put option was not exercised during the year ended 31 March 2004 and lapsed on 15 May 2003. The provision of
HK$23,400,000 was written back during the year upon the lapse of the option.
61PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED ANNUAL REPORT 2003/04
Notes to the financial statements
For the year ended 31 March 2004
10. DIRECTORS’ EMOLUMENTS
2004 2003
HK$’000 HK$’000
Directors’ fees:
Executive — —
Independent non-executive — —
— —
Other emoluments - Executive:
Salaries and other benefits 110 354
Retirement benefits scheme contribution 27 16
137 370
During the year, no emoluments were paid by the Group to the directors as an inducement to join or upon joining the
Group. None of the directors has waived any emoluments during the year.
62 PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED ANNUAL REPORT 2003/04
Notes to the financial statements
For the year ended 31 March 2004
11. EMPLOYEES’ EMOLUMENTS
Of the five individuals with the highest emoluments in the Group, none of the Company’s directors (2003: one) whose
emoluments are included in the disclosures in note 10 above. The emoluments of the five (2003: remaining four)
individuals were as follows:
2004 2003
HK$’000 HK$’000
Salaries and other benefits 2,290 2,134
Retirement benefits scheme contributions 111 108
2,401 2,242
Their emoluments were within the following bands:
2004 2003
Number Number
of employees of employees
HK$Nil to HK$1,000,000 5 4
63PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED ANNUAL REPORT 2003/04
Notes to the financial statements
For the year ended 31 March 2004
12. TAXATION
2004 2003
HK$’000 HK$’000
The charge comprises:
Taxation in other jurisdictions
Current year (1,630) (161)
Hong Kong Profits Tax
Underprovision in prior years (19) —
Taxation attributable to the Company and its subsidiaries (1,649) (161)
No provision for Hong Kong Profits Tax has been made in the financial statements as the Company and its subsidiaries had
no assessable profit in either year. Taxation in other jurisdictions is calculated at the rates prevailing in the respective
jurisdictions.
Hong Kong Profits Tax is calculated at 17.5% (2003: 16%) of the estimated assessable profit for the year. Hong Kong
Profits Tax rate was changed from 16% to 17.5% with effect from the 2003/2004 year of assessment.
Taxation arising in other jurisdictions is calculated at the rates prevailing in the relevant jurisdictions. Pursuant to the
relevant laws and regulations in the PRC, certain PRC subsidiaries of the Company are eligible for certain tax holidays and
concessions and the income tax for the PRC subsidiaries were calculated on the basis of concessionary rate.
64 PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED ANNUAL REPORT 2003/04
Notes to the financial statements
For the year ended 31 March 2004
12. TAXATION - continued
The tax charge for the year can be reconciled to the loss before taxation as per the consolidated income statement as follows:
2004 2003
HK$’000 HK$’000
Loss before taxation (143,296) (126,055)
Taxation at Hong Kong Profits Tax Rate of 17.5% (2003: 16%) (25,077) (20,169)
Tax effect of income not taxable in determining taxable profit (2,925) (8,802)
Tax effect of expenses not deductible for tax purpose 25,118 24,433
Underprovision in respect of prior year 19 —
Tax effect of tax losses not recognised 7,830 9,754
Effect of tax on concessionary rate (1,629) (145)
Effect of different tax rates of subsidiaries operating in other
jurisdictions (1,687) (4,900)
Others — (10)
Tax expense for the year 1,649 161
As at 31 March 2004, the Group had unused tax losses of approximately HK$309,084,000 (2003: HK$264,342,000)
available for offset against future profits. No deferred tax asset has been recognised in respect of unused tax losses due to the
unpredictability of future profits streams. Included in unrecognised tax losses is HK$19,828,000 (2003: HK$9,338,000)
that will be expired in the five years.
At the balance sheet date, the Group and the Company had no other significant unrecognised deferred taxation.
13. LOSS PER SHARE
The calculation of the basic loss per share is based on the net loss for the year of HK$142,401,000 (2003:
HK$113,214,000) and on the 1,161,265,406 (2003: adjusted weighted average of 631,128,400) ordinary shares in issue
during the year.
No diluted loss per share for the year ended 31 March 2004 was presented because the Company had no dilutive potential
ordinary share outstanding at 31 March 2004. No diluted loss per share for the year ended 31 March 2003 was presented as
the exercise of the potential ordinary shares under the convertible loan would result in a reduction in loss per share.
65PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED ANNUAL REPORT 2003/04
Notes to the financial statements
For the year ended 31 March 2004
14. PROPERTY, PLANT AND EQUIPMENT
Furniture,Land and Plant and Leasehold fixtures and Motor Computerbuildings machinery improvements equipment vehicles software TotalHK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000
THE GROUPCOSTAt 1 April 2003 52,565 184,097 1,167 8,829 6,044 46 252,748Additions 423 509 109 379 520 48 1,988Acquired on acquisition
of subsidiaries — 5,135 — 42 39 — 5,216Exchange adjustment — (962 ) — — — — (962)
At 31 March 2004 52,988 188,779 1,276 9,250 6,603 94 258,990
DEPRECIATION ANDIMPAIRMENT
At 1 April 2003 16,449 95,763 96 8,267 5,720 6 126,301Provided for the year 2,419 14,672 260 457 272 25 18,105Exchange adjustment — 288 — — — — 288
At 31 March 2004 18,868 110,723 356 8,724 5,992 31 144,694
NET BOOK VALUEAt 31 March 2004 34,120 78,056 920 526 611 63 114,296
At 31 March 2003 36,116 88,334 1,071 562 324 40 126,447
THE COMPANYCOSTAt 1 April 2003 and
31 March 2004 — — — — — 10 10
DEPRECIATIONAt 1 April 2003 — — — — — 2 2Provided for the year — — — — — 3 3
At 31 March 2004 — — — — — 5 5
NET BOOK VALUEAt 31 March 2004 — — — — — 5 5
At 31 March 2003 — — — — — 8 8
66 PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED ANNUAL REPORT 2003/04
Notes to the financial statements
For the year ended 31 March 2004
14. PROPERTY, PLANT AND EQUIPMENT - continued
The net book value of properties shown above comprises:
THE GROUP
2004 2003
HK$’000 HK$’000
Land in PRC:
Long lease 2,901 2,658
Medium-term lease 31,219 33,458
34,120 36,116
15. GOODWILL
THE GROUP
HK’000
COST
Arising on acquisition of subsidiaries and at 31 March 2004 108,721
AMORTISATION
Provided for the period and at 31 March 2004 3,588
CARRYING AMOUNT
At 31 March 2004 105,133
The amount represented the goodwill arising on acquisition of a 51.1% effective equity interest in Beijing Continental Gas
during the year. It is amortised over 20 years.
Beijing Continental Gas is a sino-foreign equity joint venture engaged in the business of natural gas supply, storage and
related services. Beijing Continental Gas’ ongoing operations in 液化氣供氣站 (Liquefied Petroleum Gas Supply Station)
projects in 北京門頭溝濱河小區 (Beijing Mentougou Binhe Xiaoqu) and 北京順義區半南壁店小區 (Beijing Shunyiqu
Nanbanbidian Xiaoqu) have been approved by 北京市發展計劃委員會 (Beijing City Development Planning Committee)
with a business scope to engage in natural gas business.
67PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED ANNUAL REPORT 2003/04
Notes to the financial statements
For the year ended 31 March 2004
16. INVESTMENTS IN SUBSIDIARIES
THE COMPANY
2004 & 2003
HK$’000
Investments in subsidiaries
Unlisted shares, at cost 286,876
Impairment loss recognised (286,876)
—
Amounts due from subsidiaries - due after one year
The amounts were unsecured, non-interest bearing and had no fixed terms of repayment. The amounts were unlikely to be
repaid within one year from the balance sheet date and were therefore shown as non-current.
Amounts due from (to) subsidiaries - due within one year
The amounts are unsecured, non-interest bearing and repayable on demand.
68 PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED ANNUAL REPORT 2003/04
Notes to the financial statements
For the year ended 31 March 2004
16. INVESTMENTS IN SUBSIDIARIES - continued
Details of the principal subsidiaries of the Company as at 31 March 2004 are as follows:
Proportion of
Place/ Paid up issued/ nominal value of
country of registered issued capital/
incorporation/ Class of ordinary registered capital
Name of subsidiary registration shares held share capital by the Company Principal activities
Directly Indirectly
% %
Operate in Hong Kong:
Apex Landmark Limited British Virgin Ordinary US$1 — 100 Investment holding
Islands (“BVI”)
Companion Building Material Hong Kong Ordinary HK$490,385,924 — 100 Investment holding
(Holdings) Limited
友聯建築材料(集團)有限公司
Companion-China Limited Hong Kong Ordinary HK$137,839,000 — 100 Investment holding and
友聯中國有限公司 trading of ceramic tiles
Companion-China (Supplies) Hong Kong Ordinary HK$2 — 100 Investment holding
Limited
友聯中國(建材供應)有限公司
Dong Fang Gas Limited Hong Kong Ordinary HK$2 — 100 Investment holding
東方燃氣有限公司
Dong Fang Gas (B.V.I.) Limited BVI Ordinary US$1 100 — Investment holding
Dong Fang Gas Hong Kong Ordinary HK$2 — 100 Investment holding and
Management Limited provision of management
東方燃氣管理有限公司 services to group
companies
Easy Reach Investments Limited BVI Ordinary US$1 — 100 Trading of securities and
financial instruments
King Unity Investments Limited Hong Kong Ordinary HK$20,000 — 80 Investment holding
興盟投資有限公司
69PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED ANNUAL REPORT 2003/04
Notes to the financial statements
For the year ended 31 March 2004
16. INVESTMENTS IN SUBSIDIARIES - continued
Proportion of
Place/ Paid up issued/ nominal value of
country of registered issued capital/
incorporation/ Class of ordinary registered capital
Name of subsidiary registration shares held share capital by the Company Principal activities
Directly Indirectly
% %
Saint Galerie Tiles Limited Hong Kong Ordinary HK$13,750,000 — 100 Manufacturing and trading
新嘉利瓷磚有限公司 of ceramic tiles
Operate in the PRC:
Beijing Continental Gas Co. Ltd. PRC Registered RMB10,000,000 — 51.1 Natural gas connection,
北京大陸燃氣有限公司 capital (Note b) supply, storage and sales
of gas appliances
Chongqing Golden Unity PRC Registered RMB46,750,000 — 56 Manufacturing and
Ceramics Co., Ltd. capital (Notes a trading of ceramic tiles
(“Golden Unity”) and b)
重慶金聯陶瓷有限公司
Wenzhou Xishan United PRC Registered RMB46,360,148 — 73.5 Manufacturing and trading
Ceramics Company Limited capital (Note b) of ceramic tiles
溫州西山聯合陶瓷有限公司
江門市新會友聯專業 PRC Registered RMB14,280,640 — 100 Polishing of ceramic tiles
陶瓷有限公司 capital (Note c)
Notes:
(a) The subsidiary was an equity joint venture company established by the Group and an independent third party in the PRC. Under
the management agreements with the Chinese party, the Group is responsible for all of the assets and liabilities of the equity joint
venture company and is entitled to all of the net profits or losses of the operation (after payment of fixed amount as management
fee to the Chinese party) each year during the term of the management agreement.
(b) This is a PRC sino-foreign equity joint venture.
(c) This is a PRC subsidiary established as wholly foreign owned enterprise.
70 PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED ANNUAL REPORT 2003/04
Notes to the financial statements
For the year ended 31 March 2004
16. INVESTMENTS IN SUBSIDIARIES - continued
The above table lists the subsidiaries of the Company at 31 March 2004 which, in the opinion of the directors, principally
affected the results or assets of the Group. To give details of other subsidiaries would, in the opinion of the directors, result
in particulars of excessive length.
None of the subsidiaries had any debt securities outstanding during the year and at the end of the year.
17. INTERESTS IN ASSOCIATES
THE GROUP
2004 & 2003
HK$’000
Share of net assets —
Details of the principal associates of the Group as at 31 March 2004 are as follows:
Proportion of
nominal value of
Form of Place/ Principal issued capital/
business country of place of Class of registered capital
Name of associate structure registration operation shares held by the Company Nature of business
Directly Indirectly
% %
Asean Fortune Corporation Incorporated BVI Hong Kong Ordinary — 50 Investment holding
Yixing United Ceramics Incorporated PRC PRC Capital — 47.56 Manufacturing of
Co., Ltd. ceramic tiles
宜興聯合陶瓷有限公司
The above table lists the associates of the Group at 31 March 2004 which, in the opinion of the directors, principally
affected the results or assets of the Group. To give details of other associates would in the opinion of directors, result in
particulars of excessive length.
71PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED ANNUAL REPORT 2003/04
Notes to the financial statements
For the year ended 31 March 2004
18. DEPOSIT PAID FOR ACQUISITION OF AN ASSOCIATE
During the year ended 31 March 2003, China Crystal Investment Limited (“China Crystal”), an indirect wholly-owned
subsidiary of the Company, entered into an agreement (“Acquisition Agreement”) with a third party (“Vendor”) to acquire
63% of the entire issued share capital of WIT International Group Limited (“WIT”) at a consideration of
HK$120,000,000. WIT shall hold a 49% equity interest in Nanning City Gas Co. Ltd., which is mainly engaged in the
business of the construction and operation of the gas pipelines in Nanning, the PRC, and the provision of the related
equipment, apparatus and other ancillary services. Deposit of HK$10,000,000 (“Deposit”) was made by the Group in
connection with the Acquisition Agreement.
On 2 January 2003, the Company announced that there had been certain disputes between the Vendor and China Crystal
relating to the satisfaction of the conditions of the Acquisition Agreement and the Company received a notice dated 20
December 2002 from the solicitors acting for the Vendor purporting to rescind the Acquisition Agreement and forfeit the
Deposit paid by the Group upon signing of the Acquisition Agreement on 8 November 2002. China Crystal, through its
solicitors, issued a written reply denying any breach of the Acquisition Agreement on the part of China Crystal and
reiterated the right of China Crystal to receive the refund of the Deposit in full under the terms of the Acquisition
Agreement. Details of these are set out in the Company’s announcement dated on 2 January 2003.
During the year ended 31 March 2004, the Group entered into a settlement agreement with the Vendor and assigned all
the rights and obligations including the claims of the Deposit to an independent third party for a consideration of
HK$7,000,000 to resolve the disputes and therefore the remaining balance of HK$3,000,000 was fully written off during
the year .
19. INVESTMENTS IN SECURITIES
THE GROUP
2004 2003
HK$’000 HK$’000
Trading securities:
Equity securities listed in Hong Kong, at market price 14 14
Club debenture 467 467
72 PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED ANNUAL REPORT 2003/04
Notes to the financial statements
For the year ended 31 March 2004
20. INVENTORIES
THE GROUP
2004 2003
HK$’000 HK$’000
Raw materials 9,443 10,154
Work in progress 278 240
Finished goods 11,897 14,320
21,618 24,714
Included above are finished goods of HK$10,636,000 (2003: HK$14,137,000) which were carried at net realisable value.
21. PROPERTIES HELD FOR SALE
THE GROUP
2004 2003
HK$’000 HK$’000
At 1 April 6,500 6,500
Disposal (6,500) —
At 31 March — 6,500
As at 31 March 2003, the properties held for sale were situated in Hong Kong under medium-term leases.
73PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED ANNUAL REPORT 2003/04
Notes to the financial statements
For the year ended 31 March 2004
22. TRADE RECEIVABLES
The Group does not have a fixed credit policy.
The following is an aged analysis of trade receivables at the balance sheet date:
THE GROUP
2004 2003
HK$’000 HK$’000
Within 60 days 14,073 15,469
61 - 90 days 4,913 8,179
Over 90 days 27,344 25,494
46,330 49,142
23. LOANS RECEIVABLE
THE GROUP
2004 2003
HK$’000 HK$’000
Unsecured 31,047 —
Less: Allowance (31,047) —
— —
Loans receivable bear interest at prevailing market rate and are repayable on demand.
74 PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED ANNUAL REPORT 2003/04
Notes to the financial statements
For the year ended 31 March 2004
24. AMOUNTS DUE FROM ASSOCIATES
THE GROUP
2004 2003
HK$’000 HK$’000
Amounts due from associates 82,103 88,363
Less: Allowance (82,103) (88,363)
— —
The amounts are unsecured, non-interest bearing and are repayable on demand.
25. AMOUNTS DUE FROM (TO) MINORITY SHAREHOLDERS
THE GROUP
2004 2003
HK$’000 HK$’000
Amounts due from minority shareholders 1,942 1,664
Less: Allowance (1,942) (1,664)
— —
Amounts due to minority shareholders (6,199) (6,599)
The amounts are unsecured, non-interest bearing and repayable on demand.
26. AMOUNT DUE FROM A RELATED COMPANY
The amount represents trading balance with Hong Kong Wing On Travel Services Limited, with credit terms of 30 days,
which is a wholly-owned subsidiary of an associate of China Strategic Holdings Limited (“CSH”), which is listed on the
Stock Exchange and was a substantial shareholder of the Company as at 31 March 2004.
75PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED ANNUAL REPORT 2003/04
Notes to the financial statements
For the year ended 31 March 2004
27. TRADE PAYABLES
The following is an aged analysis of trade payables at the balance sheet date:
THE GROUP
2004 2003
HK$’000 HK$’000
Within 60 days 5,646 4,433
61 - 90 days 828 1,280
Over 90 days 38,652 36,041
45,126 41,754
28. AMOUNTS DUE TO RELATED COMPANIES
Details of the amounts due to related companies are as follows:
THE GROUP
2004 2003
Notes HK$’000 HK$’000
北京市液化石油氣公司(「北京市液化」) (i) 377 —
Cycle Company Limited and Gunnell Properties Limited (ii) 173 —
Hanny Magnetics Limited (ii) — 244
Paul Y. - Building Management Limited (ii) — 18
Paul Y. - ITC Management Limited (ii) — 1
Hong Kong Wing On Travel Services Limited (iii) — 36
Mass Success International Limited (“Mass Success”) (iv) — 766
550 1,065
All amounts are unsecured, non-interest bearing and are repayable on demand.
76 PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED ANNUAL REPORT 2003/04
Notes to the financial statements
For the year ended 31 March 2004
28. AMOUNTS DUE TO RELATED COMPANIES - continued
Notes:
(i) 北京市液化 is the shareholder of a subsidiary’s minority shareholder.
(ii) The companies are wholly-owned subsidiaries of a substantial shareholder of CSH as at 31 March 2004.
(iii) The company is a wholly-owned subsidiary of an associate of CSH as at 31 March 2004.
(iv) As at 31 March 2004, a director of the Company was also a director of Mass Success.
29. BANK BORROWINGS
THE GROUP
2004 2003
HK$’000 HK$’000
Bank overdrafts 19,333 9,166
Bank loans 83,997 82,531
103,330 91,697
Secured 92,315 74,417
Unsecured 11,015 17,280
103,330 91,697
The Group was in breach of a covenant in respect of the banking facilities. As events of defaults had arisen under the loan
agreements, certain amounts of the loans became repayable on demand and are classified under current liabilities.
77PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED ANNUAL REPORT 2003/04
Notes to the financial statements
For the year ended 31 March 2004
30. OTHER BORROWINGS
THE GROUP
2004 2003
Notes HK$’000 HK$’000
Convertible loan - unsecured (i) 92,302 92,302
Loan from a financial institution in the PRC (ii) 29,889 34,729
Loans from employees (iii) 7,097 3,738
Other short-term loans (iv) 4,528 3,860
133,816 134,629
Secured 29,889 34,729
Unsecured 103,927 99,900
133,816 134,629
All amounts are repayable within one year or repayable on demand.
Notes:
(i) In 1997, an unsecured convertible loan of US$12,000,000 (“Loan”) which carries interest at the rate of 9.8% per annum
compounded annually for a term of six years was advanced by Simonson International Development Limited (“Simonson”), a
wholly-owned subsidiary of ING Beijing Investment Company Limited (“ING”), an independent third party, to Companion-
China Limited, a wholly-owned subsidiary of the Company. The Loan and the accrued interest thereon will, at the option of the
convertible noteholder, be convertible into fully paid ordinary shares of the Company at a conversion price calculated at 90% of
the average closing price of the shares of the Company quoted on the Stock Exchange for the twenty trading days immediately
preceding the date of the notice under the terms and conditions of the convertible loan deed, details of which are set out in the
circulars dated 13 May 1997 and 20 December 2000 to the shareholders of the Company.
By an assignment executed on 18 February 2002, Simonson assigned to Perfect Master Limited (“PML”), a wholly-owned
subsidiary of ING, the Loan and all related rights and interest. On the same date, the entire issued share capital of PML and the
Loan were sold to Galaxy Time Limited, a company held by New World Enterprise Holdings Limited. Details of these are set out
in the announcement of the Company dated 18 February 2002.
The Loan bears interest at 9.8% per annum. The Group failed to repay certain part of the Loan and the accrued interest thereon,
resulting in whole outstanding principal sum of US$11.9 million and accrued interest being technically repayable on demand. The
conversion option to convert the Loan and the accrued interest into fully paid ordinary shares of the Company lapsed on 25 June
2003 but all other rights attaching to the Loan continue to subsist.
78 PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED ANNUAL REPORT 2003/04
Notes to the financial statements
For the year ended 31 March 2004
30. OTHER BORROWINGS - continued
(ii) The amounts are secured, interest bearing at 10.8% per annum and repayable on demand.
(iii) The amounts are unsecured, interest bearing at 0.8% per month and repayable on demand.
(iv) The amounts are unsecured, interest bearing at 2% plus prime rate per annum and repayable on demand.
31. SHARE CAPITAL
Number
of shares Value
HK$’000
Authorised:
Ordinary shares of HK$0.01 each at 1 April 2002 30,000,000,000 300,000
Additions 30,000,000,000 300,000
Share consolidation (58,500,000,000) —
Ordinary shares of HK$0.40 each at 31 March 2003 and
31 March 2004 1,500,000,000 600,000
Issued and fully paid:
Ordinary shares of HK$0.01 each at 1 April 2002 1,450,612,577 14,506
Issue of shares 45,000,000,000 450,000
Exercise of warrants 3,658 —
Exercise of share options 5 —
Share consolidation (45,289,350,834) —
Ordinary shares of HK$0.40 each at 31 March 2003 and
31 March 2004 1,161,265,406 464,506
79PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED ANNUAL REPORT 2003/04
Notes to the financial statements
For the year ended 31 March 2004
32. SHARE OPTIONS
1998 Scheme
The Company’s share option scheme (“1998 Scheme”) was adopted pursuant to a resolution passed on 13 October 1998
and became effective on 24 December 1999 for the primary purpose of providing incentives to directors and eligible
employees, and shall expire on 27 August 2003. The 1998 Scheme was terminated on 17 March 2003. Under the 1998
Scheme, the board of directors of the Company may grant options to eligible employees, including directors of the
Company and its subsidiaries, to subscribe for shares in the Company.
The total number of shares of the Company in respect of which options may be granted under the 1998 Scheme is not
permitted to exceed 10% in nominal amount of the issued share capital of the Company from time to time less: (i) the
aggregate number of shares of the Company which have been duly allotted and issued pursuant to the 1998 Scheme; (ii)
the number of shares of the Company which would be issued on the exercise in full of the options granted but not exercised
on that date pursuant to the 1998 Scheme; and (iii) the number of shares of Companion Building Material (Holdings)
Limited (“CBM”) which have been duly allotted and issued pursuant to the share option scheme of CBM. The shares of
CBM were previously listed on the Stock Exchange. Pursuant to a scheme of arrangement between CBM and its
shareholders, CBM became an indirectly wholly owned subsidiary of the Company and its shares were withdrawn from
listing on the Stock Exchange and the shares of the Company are listed on the Stock Exchange with effect from 24
December 1999. The number of shares of the Company in respect of which options may be granted under the 1998
Scheme to any eligible employee (together with (i) the number of shares of the Company issued in respect of options of the
Company which have been exercised by that eligible employee; (ii) any shares of the Company which would be issued upon
the exercise of outstanding options of the Company granted to that eligible employee; and (iii) the number of shares of
CBM issued in respect of options of CBM which have been exercised by that eligible employee), is not permitted to exceed
25% of the maximum aggregate number of shares of the Company subject to the 1998 Scheme at the time it is proposed to
grant the relevant option to such eligible employee.
Consideration to be paid on each grant of option is HK$10 and an offer for an option must be accepted by the eligible
employee not later than 28 days after the offer date of option. Options granted may be exercised at any time from the date
of grant of the share option to the third anniversary of the date of grant. The exercise price is determined by the directors of
the Company, and shall not be less than the greater of (i) 80% of the average closing price of the Company’s shares for the
five trading days immediately preceding the offer date of the option; and (ii) the nominal value of the Company’s share.
No options were granted under 1998 Scheme during the year and no options were outstanding as at 31 March 2004 and
31 March 2003.
No options under 1998 Scheme were outstanding as at 31 March 2004 and 31 March 2003.
80 PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED ANNUAL REPORT 2003/04
Notes to the financial statements
For the year ended 31 March 2004
32. SHARE OPTIONS - continued
1998 Scheme - continued
A summary of movement of share options under the 1998 Scheme for the year ended 31 March 2003 was as follows:
Employees Number of share under option
Exercise price* Outstanding at Granted Exercised Outstanding at
Date of grant Exercisable period HK$ 1.4.2002 during the year during the year 31.3.2003
14.2.2003 14.2.2003 - 13.8.2003 0.012 — 5 (5) —
The closing price of the shares of the Company on 13 February 2003 immediately before the date on which the options
were granted was HK$0.01. The closing price of the shares of the Company on the date of exercise was HK$0.01.
Total consideration received during the year ended 31 March 2003 from the employee for taking up the options granted
was HK$10. No charge is recognised in the income statement in respect of the value of options granted during the year
ended 31 March 2003.
* As the options were granted and exercised before the share consolidation of the Company becoming effective during the year ended
31 March 2003, no adjustment were required to be made on the exercise price.
2003 Scheme
A new share option scheme (“2003 Scheme”) was approved and adopted on 17 March 2003. The 2003 Scheme is valid and
effective for a period of 10 years after the date of adoption.
The purpose of the 2003 Scheme is to enable the Company to grant options to any directors (including executive directors,
non-executive directors and independent non-executive directors) of the Group and full-time or part-time employees
(including executives or officers) of the Group and any advisors and consultants providing advisory, consultancy or other
services to the Group, distributors, contractors, suppliers, agents, customers, business partners, joint venture business
partners, promoters, service providers of any member of the Group and those staff under secondment to the Group who
the Board considers, in its sole discretion, have contributed or will contribute to the Group (“Participant”) as incentives or
rewards for their contribution to the Group and to encourage Participants to work towards enhancing the value of the
Company and its shares for the benefit of the Company and its shareholders as a whole.
81PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED ANNUAL REPORT 2003/04
Notes to the financial statements
For the year ended 31 March 2004
32. SHARE OPTIONS - continued
2003 Scheme - continued
The maximum number of shares of the Company in respect of which options may be granted under the 2003 Scheme and
other share option schemes of the Company is not permitted to exceed 30% in nominal amount of the issued share capital
of the Company from time to time. The maximum number of shares in respect of which options may be granted to a
specifically identified single grantee under the 2003 Scheme shall not (when aggregated with any shares subject to any other
share option scheme(s) of the Company) in any 12 month period exceed 1 per cent. of the shares in issue.
Where any grant of options to a substantial shareholder or an independent non-executive director of the Company, or any
of their respective associates, would result in the shares issued and to be issued upon exercise of all options already granted
and to be granted (including options exercised, cancelled or outstanding) to such person in the 12 month period up to and
including the date of grant:
(i) representing in aggregate over 0.1 per cent. of the shares in issued; and
(ii) having an aggregate value, based on the closing price of the shares as stated in the daily quotations sheets issued by
the Stock Exchange on the date of grant, in excess of HK$5 million,
such grant of options shall be subject to prior approval by resolution of the shareholders who are not connected persons of
the Company pursuant to the Rules Governing the Listing of Securities on the Stock Exchange (“Listing Rules”).
Consideration to be paid on each grant of option is HK$1 and an offer remains open for acceptance by Participant
concerned for a period of 28 days from date of grant or otherwise stated in the offer letter. The option period is a period to
be notified by the Board to each grantee at the time of making an offer which shall not expire later than ten years from the
date of grant. The exercise price is determined by the directors of the Company, and shall not be less than the greatest of (i)
the closing price of the shares as stated in the daily quotations sheets issued by the Stock Exchange on the date of grant; (ii)
the average closing price of the shares of Company for the five business days immediately preceding the date of grant; and
(iii) the nominal value of the share of Company.
No share options were granted or exercised pursuant to the 2003 Scheme since its adoption.
82 PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED ANNUAL REPORT 2003/04
Notes to the financial statements
For the year ended 31 March 2004
33. RESERVES
Capital
Share redemption Contributed Accumulated
premium reserve surplus losses Total
HK$’000 HK$’000 HK$’000 HK$’000 HK$’000
THE COMPANY
At 1 April 2002 47,140 572 392,912 (480,692) (40,068)
Net loss for the year — — — (78,645) (78,645)
At 31 March 2003 47,140 572 392,912 (559,337) (118,713)
Net loss for the year — — — (88,481) (88,481)
At 31 March 2004 47,140 572 392,912 (647,818) (207,194)
The contributed surplus of the Company represents the difference between the fair value of the share capital of Companion
Building Material (Holdings) Limited whose shares were exchanged for the Company’s shares and the nominal amount of
the share capital issued by the Company pursuant to the scheme of arrangement on 24 December 1999.
Under the Bermuda Companies Act, the contributed surplus account of the Company is available for distribution.
However, the Company cannot declare or pay a dividend, or make a distribution out of contributed surplus if:
(a) it is, or would after the payment be, unable to pay its liabilities as they become due; or
(b) the realisable value of its assets would thereby be less than the aggregate of its liabilities and its issued share capital
and share premium accounts.
At the balance sheet, the Company had no reserves available for distribution to shareholders.
83PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED ANNUAL REPORT 2003/04
Notes to the financial statements
For the year ended 31 March 2004
34. DISPOSAL OF SUBSIDIARIES
2004 2003
HK$’000 HK$’000
Net assets disposed of:
Property, plant and equipment — 3,109
Properties under development held for sale — 13,380
Trade receivables, other receivables, deposits and prepayments — 22,467
Amounts due from customers for contract work — 246
Bank balances and cash — 256
Rental deposits received — (580)
Trade payables, other payables and accruals — (2,549)
Amounts due to customers for contract work — (562)
Taxation payable — (20)
Bank borrowings — (740)
Deferred taxation — (3)
— 35,004
Loss on disposal — (6,554)
Release of capital reserve on consolidation — (10)
— 28,440
Satisfied by:
Cash — 28,440
84 PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED ANNUAL REPORT 2003/04
Notes to the financial statements
For the year ended 31 March 2004
34. DISPOSAL OF SUBSIDIARIES - continued
Net cash inflow arising on disposal of subsidiaries:
2004 2003HK$’000 HK$’000
Cash consideration — 28,440
Bank balances and cash disposed of — (256)
— 28,184
The subsidiaries disposed of did not make a significant contribution to the net cash flows or the results of the Group for theyear ended 31 March 2003.
35. PURCHASE OF SUBSIDIARIES
During the year, the Group acquired 73% equity interest in Top Power Holdings Limited, which holds 70% equity interestin Beijing Continental Gas, for a consideration of HK$80,000,000. The acquisition has been accounted for by theacquisition method of accounting.
2004 2003
HK$’000 HK$’000
Net assets acquired:Property, plant and equipment 5,216 —Other receivables, deposits and prepayments 1,145 —Bank balances and cash 1,483 —Trade payables (2,543) —Other payables and accruals (8,103) —Bank borrowings (25,919) —
(28,721) —Goodwill arising on acquisition 108,721 —
80,000 —
Satisfied by:
Cash 80,000 —
85PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED ANNUAL REPORT 2003/04
Notes to the financial statements
For the year ended 31 March 2004
35. PURCHASE OF SUBSIDIARIES - continued
An analysis of the net outflow of cash and cash equivalents in connection with the purchase of subsidiaries is as follows:
2004 2003
HK$’000 HK$’000
Cash consideration paid (80,000) —
Bank balances and cash acquired 1,483 —
(78,517) —
The subsidiaries acquired during the year contributed approximately HK$3,592,000 to the Group’s turnover and
HK$11,903,000 to the Group’s loss from operations.
36. MAJOR NON-CASH TRANSACTION
At 31 March 2004, the proceeds of HK$6,500,000 on disposal of properties held for sale during the year was not received
by the Company and had been included in other receivables.
86 PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED ANNUAL REPORT 2003/04
Notes to the financial statements
For the year ended 31 March 2004
37. RELATED PARTY TRANSACTIONS
During the year, the Group had transactions with the related parties as follows:
Company Nature of transactions Notes 2004 2003
HK$’000 HK$’000
Yixing United Ceramics Co., Ltd. Sale of ceramic tiles by the Group (i) 235 4,332
Disposal of plant and machinery by the Group (i) — 6,552
Purchase of ceramic tiles by the Group (i) 53,805 41,582
Cycle Company Limited and Rent deposits paid by the Group (ii) 247 247
Gunnell Properties Limited Rent expenses paid by the Group (ii) 751 288
Management fee paid by the Group (ii) 271 106
Hong Kong Wing On Travel Air ticket and travel service expenses (iii) 163 51
Service Limited paid by the Group
Paul Y. - ITC Management Limited Sundry expenses paid by the Group (ii) 6 5
Paul Y. - Building Management Renovation work for fire service (ii) — 18
Limited system paid by the Group
Paul Y. - ITC General Sale of ceramics by the Group (ii) — 259
Contractors Limited
Hanny Magnetics Limited Loan interest income received by the Group (ii) — 201
中國重慶第六棉紡織廠 Management fee paid and payable (iv) — 2,367
by the Group
Rent expenses paid and payable by the Group (iv) 113 113
Mass Success Consultancy fee paid by the Group (v) 3,187 961
Management fee paid by the Group (v) 2,400 —
Great Joint Profits Limited Interest expense paid by the Group (vi) 608 —
87PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED ANNUAL REPORT 2003/04
Notes to the financial statements
For the year ended 31 March 2004
37. RELATED PARTY TRANSACTIONS - continued
Notes:
(i) Yixing United Ceramics Co., Ltd. is an associate of the Group.
(ii) Paul Y. - ITC Management Limited, Paul Y. - Building Management Limited, Paul Y. - ITC General Contractors Limited, Hanny
Magnetics Limited, Cycle Company Limited and Gunnell Properties Limited are wholly-owned subsidiaries of the substantial
shareholders of CSH, during the year.
(iii) Hong Kong Wing On Travel Service Limited is a wholly-owned subsidiary of an associate of CSH, during the year.
(iv) 中國重慶第六棉紡織廠 is a minority shareholder of the Chongqing Golden Unity Ceramics Co., Ltd., a non wholly-owned
subsidiary of the Company.
(v) A director of the Company was also a director of Mass Success during the year.
(vi) Great Joint Profits Limited is a wholly-owned subsidiary of CSH.
During the year, CSH advanced approximately HK$25,693,000 to the Group. The amount was unsecured, interest bearing
at prevailing market rate and fully settled during the year.
In the opinion of the directors, the above transactions were undertaken at the terms mutually agreed between the Group
and the related parties with reference to the market price.
Details of balances with related parties at the balance sheet date are set out in notes 24, 25, 26 and 28.
38. CONTINGENT LIABILITIES
At balance sheet date, the contingent liabilities of the Group and the Company not provided for in the financial statements
are set out as follows:
THE GROUP THE COMPANY
2004 2003 2004 2003
HK$’000 HK$’000 HK$’000 HK$’000
Corporate guarantee given to bankers in
respect of banking facilities utilised by
- an associate — 10,268 — —
- subsidiaries — — 92,302 92,302
88 PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED ANNUAL REPORT 2003/04
Notes to the financial statements
For the year ended 31 March 2004
39. COMMITMENTS
(i) Lease commitments
The Group as lessee
The Group made approximately HK$1,422,000 (2003: HK$2,115,000) minimum lease payments under operating lease
during the year in respect of premises and warehouse.
At balance sheet date, the Group had commitments for future minimum lease payments under non-cancellable operating
leases in respect of rented premises which fall due as follows:
THE GROUP
2004 2003
HK$’000 HK$’000
Within one year 1,891 1,551
In the second to fifth year 1,527 646
3,418 2,197
Operating lease payments represent rentals payable by the Group for its office premises and warehouse. Leases are mainly
negotiated for an average term of three years and rentals are fixed for an average term of three years.
The Group as lessor
No property rental income was earned during the year (2003: HK$380,000). The properties had no committed tenants.
89PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED ANNUAL REPORT 2003/04
Notes to the financial statements
For the year ended 31 March 2004
39. COMMITMENTS - continued
(ii) Capital commitments
THE GROUP
2004 2003
HK$’000 HK$’000
Capital expenditure contracted for but not provided
in the financial statements relating to the acquisition
of property, plant and equipment 85 —
The Company had no capital commitment at the balance sheet date.
40. PLEDGE OF ASSETS
At the balance sheet date, the Group had pledged the following assets to secure bank and other borrowings facilities granted
to the Group:
2004 2003
Notes HK$’000 HK$’000
Properties held for sale (i) — 6,500
Property, plant and equipment (i) 83,262 96,744
Trade receivables (ii) 13,329 14,292
Bank deposits (ii) 27,329 26,593
123,920 144,129
Notes:
(i) The assets were pledged to secure the banking facilities and other borrowings of the Group.
(ii) The trade receivables and bank deposits were pledged to a bank to secure the banking facilities granted to the Group.
(iii) The investment in securities with market value of HK$10,188,000 (2003: HK$16,457,000) which were pledged to secure margin
loan payable included in other payable and accruals were used to set off the amount of margin loan payables of HK$15,875,000
(2003: HK$21,482,000).
90 PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED ANNUAL REPORT 2003/04
Notes to the financial statements
For the year ended 31 March 2004
41. RETIREMENT BENEFITS SCHEMES
(a) The Group has two defined contribution provident fund schemes for its Hong Kong employees. The scheme assets of
the one scheme are being held under a provident fund operated by The Prudential Assurance Company Limited with
BOCI-Prudential Trustee Limited as Trustees (the “Old ORSO Scheme”). The other one is operated by CMG Asia
Pensions and Retirement Limited with Butterfield Trust (Hong Kong) Limited as Trustees (the “New ORSO
Scheme”).
The Group is required to make contributions to the above schemes calculated at 5% of the employees’ basic salaries
and commissions on a monthly basis. The Old ORSO Scheme was granted an exemption from the Mandatory
Provident Fund Schemes Authority on 20 July 2000. Under the Old ORSO Scheme, the employees are entitled to
100% of the employers’ contributions and the accrued interest after 12 years of completed service, or at a vesting
scale of between 30% and 100% after completion of 5 to 12 years’ service. With effect from 1 October 2000, the
Group participates in the New ORSO Scheme, which was granted an exemption from the Mandatory Provident
Fund Schemes Authority on 22 June 2001. Under the New ORSO Scheme, the employees are entitled to 100% of
the employers’ contributions and the accrued interest after 10 years of completed service, or at a vesting scale of
between 30% to 100% after completion of 3 to 10 years’ service. The forfeited contributions and related accrued
interest can be used to reduce the employers’ contributions. The principal deed and the rules of the above provident
fund schemes were amended accordingly to comply with the rules of the Mandatory Provident Fund Schemes
Ordinance.
The employees entitled to the defined contribution provident fund schemes before 1 December 2000 were allowed
an option between joining the mandatory provident fund or continuing to making contributions to the New ORSO
Scheme. All newly employed employees are required to join the mandatory provident fund scheme or the New
ORSO Scheme. The Group is required to make contributions to either of the two schemes according to the
employees’ options.
With effect from 1 December 2000, the Group also participates in a mandatory provident fund scheme. The scheme
assets are held under a mandatory provident fund operated by CMG Asia Pensions and Retirement Limited. Under
the scheme, the Group is required to make contributions to the scheme calculated at 5% of the employees’ relevant
income (as defined in the Mandatory Provident Fund Schemes Ordinance) on a monthly basis.
Certain employees in Hong Kong joined another mandatory provident fund scheme, in which the assets of the MPF
Scheme are held separately from those of the Group, with funds under the control of trustees. The Group contributes
5% of relevant payroll costs to the scheme, which contribution is matched by employees.
91PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED ANNUAL REPORT 2003/04
Notes to the financial statements
For the year ended 31 March 2004
41. RETIREMENT BENEFITS SCHEMES - continued
At both balance sheet dates, there were no forfeited contributions available to offset future employers’ contributions
to the schemes.
(b) Employees in subsidiaries in the PRC are members of the Central Pension Scheme operated by the PRC government.
These subsidiaries are required to contribute a certain percentage of their payroll to the Central Pension Scheme to
fund the benefits. The only obligation of the Group with respect to the Central Pension Scheme is the required
contribution under the Central Pension Scheme.
42. LITIGATION
(a) Companion-China Limited (“Companion-China”), a wholly-owned subsidiary of the Company, entered into a
supply contract with a raw tiles manufacturer in Shenzhen on 17 May 1997. The contract was finally terminated due
to the sub-standard raw tiles. On 2 June 1999, legal action was instituted by the manufacturers in the High Court of
Hong Kong against Companion-China demanding the payment of outstanding contract sum of HK$2,349,000. On
7 August 1999, Companion-China made a counterclaim against the manufacturer for loss and damages as a result of
the sub-standard raw tiles.
On 20 December 1999, summary judgment was entered against Companion-China for the payment of outstanding
contract sum of approximately HK$1,860,000 and interests thereon. Companion-China lodged an appeal against
such summary judgment and an unconditional leave was granted to Companion-China on 3 March 2000 to defend
the action. If final judgment is entered against Companion-China, Companion-China may be obliged to pay the
manufacturer a sum of approximately HK$1,860,000 plus interests and costs. At the date of this report, there has
been no further progress in respect of such action. As the outstanding contract sum of approximately HK$1,860,000
was provided for in prior year, the directors are of the opinion that there is unlikely to be any material adverse
financial impact on the Group in the event that the final judgement is not in favour of Companion-China.
(b) On 22 January 2002, Companion Finance Limited (“Companion Finance”), a wholly-owned subsidiary of the
Company, issued a writ against Pang Siu Chung (“Mr. Pang”) and Kwok Mun Nei, Candy and Leung Wai Hon (as
guarantors) claiming payment of a sum of HK$322,097 and further interest on the sum of HK$300,000 at the daily
rate of HK$78 from 29 November 2001 to the date of payment, being the unpaid amount due from Mr. Pang to
Companion Finance pursuant to a loan agreement dated 16 February 2001 made between Companion Finance and
Mr. Pang, plus cost. At the date of this report, there has been no further progress in respect of such action. As the
total amount including interest due from Mr. Pang has already been written off, the directors are of the opinion that
there is unlikely to be any material adverse financial impact on the Group in the event that the final judgment is not
in favour of Companion Finance.
92 PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED ANNUAL REPORT 2003/04
Notes to the financial statements
For the year ended 31 March 2004
42. LITIGATION - continued
(c) On 3 June 2002, a legal action was instituted against Wenzhou Xishan United Ceramics Company Limited(溫州
西山聯合陶瓷有限公司)(“Wenzhou Xishan”) and Chongqing Golden Unity Ceramics Co., Ltd.(重慶金聯陶
瓷有限公司)(“Chongqing Golden”) as guarantor (both are subsidiaries of the Company) by China Huarong Asset
Management Corporation, Hangzhou Office(中國華融資產管理公司杭州辦事處)(“China Huarong”)
claiming payment of a sum of RMB12,049,781, being the outstanding principal sum and interest of a loan due from
Wenzhou Xishan to Industrial and Commercial Bank of China, Wenzhou Branch, Lucheng Sub-branch(中國工商
銀行溫州市分行鹿城支行), who assigned the said loan to China Huarong. On 8 August 2002, the Intermediate
People’s Court in the Wenzhou Municipality (“the Court”) ruled against Wenzhou Xishan and Chongqing Golden
under which a sum of RMB5,000,000 plus interests and costs shall be paid to China Huarong. On 5 December
2002, the Court gave a final judgement against Wenzhou Xishan and Chongqing Golden under which a sum of
RMB5,000,000 plus interests and costs of RMB1,581,311 shall be paid to China Huarong. At the date of this
report, such amounts had not been paid and no demand for payment had been received by the Group so far. A
provision of RMB6,581,311 (approximately HK$6,234,000) has been included in the Group’s financial statements
in respect of the sums claimed. The directors are of the opinion that there will not be any additional material adverse
financial impact on the Group.
43. POST BALANCE SHEET EVENTS
On 5 March 2004, PCCW and the Company jointly announced that the Company has conditionally agreed, among
others, to purchase:
(i) the entire issued share capital of Ipswich Holdings Limited and its subsidiaries (the “Property Group”), being the
group of companies holding Pacific Century Place Beijing located in the PRC, PCCW Tower located in Hong Kong,
other investment properties and related property and facilities management companies of PCCW and its subsidiaries
(“PCCW Group”) and includes Cyber-Port Limited (the developer of the Cyberport Project in Hong Kong);
(ii) the property situated at Ko Shing Street and Wo Fung Street, Western, Hong Kong and the approximately
HK$3,529 million in aggregate of interest-bearing loans owing by the relevant members of the Property Group to
PCCW.
93PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED ANNUAL REPORT 2003/04
Notes to the financial statements
For the year ended 31 March 2004
43. POST BALANCE SHEET EVENTS - continued
The aggregate consideration was approximately HK$6,557 million which was satisfied:
(i) as to HK$2,967 million, by the allotment and issue of approximately 1,648 million new shares of par value of
HK$0.10 each by the Company, immediately following the capital reorganisation (including a 10:1 share
consolidation) becoming unconditional and effective, to PCCW (or as it may direct) credited as fully paid at an issue
price of HK$1.80 per new share; and
(ii) as to the remaining HK$3,590 million, by the issue of the convertible notes by the Company to PCCW (or as it may
direct).
The Company also carried out the following capital reorganisation:
(i) every issued share of HK$0.40 was reduced in value by cancelling HK$0.39 per share and the cancellation of each
unissued share (“Capital Reduction”);
(ii) every 10 shares of HK$0.01 each of the Company were consolidated into one share of HK$0.10 each;
(iii) an amount of approximately HK$47.14 million standing to the credit of the share premium account of the
Company was cancelled (“Share Premium Cancellation”);
(iv) the aggregate amount of the credit balance of the share premium account of the Company and the credit arising from
the Capital Reduction and the Share Premium Cancellation, in the amount of approximately HK$500.03 million,
will be transferred to the contributed surplus account of the Company. That credit was be used to set off against the
accumulated losses of the Company; and
(v) increased the authorised share capital from HK$11,612,654 to HK$1,000,000,000 by the creation of an additional
9,883,873,460 shares of HK$0.10 each.
The above purchase completed on 10 May 2004. Further details of these are set out in the Company’s circular dated 2 April
2004.
94 PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED ANNUAL REPORT 2003/04
F ive years
financial summary
1. RESULTS
For the year ended 31 March
2000 2001 2002 2003 2004
HK$’000 HK$’000 HK$’000 HK$’000 HK$’000
Turnover 838,971 524,334 258,265 136,196 149,242
(Loss) profit before taxation 16,380 (757,826) (489,311) (126,055) (143,296)
Taxation (charge) (8,935) (5,036) 9,854 (161) (1,649)
(Loss) profit before minority interests 7,445 (762,862) (479,457) (126,216) (144,945)
Minority interests (6,815) (3,142) 20,463 13,002 2,544
(Loss) profit attributable to shareholders 630 (766,004) (458,994) (113,214) (142,401)
2. ASSETS AND LIABILITIES
As at 31 March
2000 2001 2002 2003 2004
HK$’000 HK$’000 HK$’000 HK$’000 HK$’000
Total assets 1,445,486 811,699 341,222 638,977 514,161
Total liabilities and minority interests 499,934 493,997 489,359 454,334 471,938
(Deficiency) balance of shareholders’ funds 945,552 317,702 (148,137) 184,643 42,223
95PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED ANNUAL REPORT 2003/04
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 the next page.
Company Secretary
Chu Mee Lai, Helen
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: 2514 3990 Fax: 2514 3945
Principal Share Registrar and Transfer Agent
Butterfield Fund Services (Bermuda) Limited
Rosebank Centre
11 Bermudiana Road
Pembroke HM08
Bermuda
96 PACIFIC CENTURY PREMIUM DEVELOPMENTS LIMITED ANNUAL REPORT 2003/04
Hong Kong Branch Share Registrar and Transfer Office
Computershare Hong Kong Investor Services Limited
Rooms 1901-5, 19th Floor
Hopewell Centre
183 Queen’s Road East
Wanchai
Hong Kong
Telephone: 2862 8628 Fax: 2529 6087
Email: hkinfo@computershare.com.hk
Investor Relations
Ernest Chan
Pacific Century Premium Developments Limited
8th Floor
Cyberport 2
100 Cyberport Road
Hong Kong
Telephone: 2514 3910 Fax: 2514 3945
Email: ernest.hw.chan@pcpd.com
Website
www.pcpd.com
I n v e s tor R e l at ion s
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