(Hong Kong, 31 August 2011) Shui On Construction and Materials Limited ("SOCAM" or the "Company", stock code: 983), today announced results of the Company and its subsidiaries (the "Group") for the six months ended 30 June 2011. Financial highlights are as follows:
The Board of Directors declared an interim dividend of HK$0.25 per share to shareholders, compared with HK$0.20 for the same period last year.
During the first six months of 2011, the Group achieved solid results due to the substantial growth in the property operations as a result of the continued strategic transformation into a specialised property developer in the Chinese Mainland. Core profit increased considerably to HK$438 million, by 3.2 times over the same period last year (2010: HK$104 million). While cement operations reported disappointing performance due largely to over-capacities in South West China and the upsurge in fuel costs, the construction operations posted an increase in profit in the face of rising building material and labour costs.
"As the Central Government has put visionary macroeconomic policies in place to achieve a healthy, sustainable growth in the Chinese economy and property market, we are on a firmer footing in the long run. With SOCAM's expertise in acquisitions, financial restructuring, construction, project management as well as sales and marketing, our strategic realignment to a company which focuses on property development in specialised market areas in the Mainland has gathered momentum." said Mr. Philip Wong, Chief Executive Officer of SOCAM.
Property Business seeing substantial growth
During the first half of 2011, special situation projects contributed to a substantial growth in the property business. Together with the development of knowledge communities, the well-blended business model offers the Group cash flows and profits on quick asset turnover as well as sustainable growth in earnings in the long term.
Timely Sales of Special Situation Properties in Quick Asset Turnover Model
The whole of the Qianxinian Building in Chongqing as well as part of the residential units of Shenyang Project Phase I were disposed of. Almost 100% of the residential apartments and over 80% of the office units of the Chongqing Creative Concepts Center were sold. In June, the Group also disposed of its 49% equity interest in the Chengdu Orient Home project which generated good profits for the Group.
At 30 June 2011, the Group had nine properties at various stages of development in Beijing, Shanghai, Chongqing, Chengdu, Guangzhou, Guizhou and Shenyang with a total developable GFA of 2.3 million square metres, of which 1.9 million square metres are attributable to the Group. These projects are expected to provide a steady stream of profits and cash flows over the next few years.
Strategic Investment Fund formed to Expand Special Situation Projects
The SoTan China Real Estate I, LP, a private equity vehicle with international investors was formed to invest in special situation projects in the Mainland on a 50-50 basis with SOCAM with a total equity value of approximately US$400 million, when invested fully.
Development of Knowledge Communities in Action
The Company's leading knowledge community project, Dalian Tiandi, progressed well in both construction and leasing. Certain major tenants, including IBM, Chinasoft, the Chinese leading software company, Ambow, a high tech training school listed in the United States, as well as the Singapore-based education entity, Etonhouse, have moved into a substantial part of their leased areas of 135,000 square metres up to August. The community is now close to achieving a critical mass. For the Greenville Phase I, the townhouses and mid-to-high-rise apartments were well received in the market.