1 2004 annual results announcement “solid foundation, record results” 28 february 2005
TRANSCRIPT
1
2004 Annual Results Announcement
“Solid Foundation, Record Results”
28 February 2005
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Key Market StatisticsMarket Performance
2004 2003 Change Total turnover (Main Board & GEM)
HK$3,974 bil
HK$2,584 bil
+54%
Average daily turnover (Main Board & GEM)
HK$16.0 bil
HK$10.4 bil
+54%
Total number of derivatives contracts traded on the Futures Exchange
14,017,860
10,325,575
+36% Average daily number of derivatives contracts traded on the Futures Exchange
56,752
41,889
+36% Total number of stock options contracts traded on the Stock Exchange
5,611,832
4,220,638
+33%
Average daily number of stock options contracts traded on the Stock Exchange
22,720
17,122
+33% No. of new listings (equity) 70 73 -4%
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2004 Outperformed 2003 onBoth Income and Costs 2004 2003 Change HK$ Mil HK$ Mil RESULTS Income 2,394 2,020 +19% Operating expenses 1,156 1,224 -6% Operating profit 1,238 796 +55% Share of profits less losses of associates 13 9 +49%
Profit before taxation 1,251 805 +55% Taxation (194) (112) +73% Profit attributable to shareholders 1,057 693 +53%
Earnings per share $1.00 $0.66 +52%
Interim dividend declared per share $0.43 $0.18 +139% Final dividend per share $0.47 $0.42 +12%
$0.90 $0.60 +50%
Dividend payout ratio 90% 91% Special dividend declared per share - $1.68
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Solid Foundation Leading to Record Profit Since Merger
2004 2003 2002 2001 2000HK$ Mil HK$ Mil HK$ Mil HK$ Mil HK$ Mil
Income 2,394 2,020 1,808 1,998 2,312
Operating expenses 1,156 1,224 1,165 1,179 1,331
Operating profit 1,238 796 643 819 981
Share of profits less losses of associates 13 9 5 - -
Profit before taxation 1,251 805 648 819 981
Taxation (194) (112) (59) (85) (98)
Profit attributable to shareholders 1,057 693 589 734 883
Cost to income ratio 48% 60% 64% 59% 58%
Return on equity* 26% 12% 11% 14% 18%
* = based on total shareholders' funds at year-end
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• Income Surged in line with Market Activity
Breakdown of Income 2004 2003 Change
HK$ Mil HK$ Mil Trading fees and trading tariff 682 485 +41% Stock Exchange listing fees 378 334 +13% Clearing and settlement fees 356 255 +40% Depository, custody and nominee services fees
252
212
+19%
Income from sale of information 308 264 +16% Investment income 229 297 -23% Other income 189 173 +9%
TOTAL 2,394 2,020 +19%
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• 2004 Investment Income
Corporate Funds
Margin Funds
Clearing House Funds
HKEx GroupTotal
HK$Mil HK$Mil HK$Mil HK$Mil
Supervised by Finance Department:Investment income (A) 123 69 11 203 Average amount of funds 3,998 8,921 1,491 14,410
Annualised yield 3.08% 0.78% 0.70% 1.41%
Investment in Singapore Exchange Limited (B) 26
Total investment income (A+B) 229
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• Cost Control Reaping BenefitsBreakdown of Expenses 2004 2003 Change HK$ Mil HK$ Mil Staff costs and related expenses 546 528 +3% IT and computer maintenance expenses 222 247 -10% Premises expenses 79 84 -7% Product marketing and promotion expenses
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+43% Legal and professional fees 11 29 -62% Depreciation 183 182 +1% Payment to SFC under dual filing regime 20 15 +33%
Other operating expenses 84 131 -35% TOTAL 1,156 1,224 -6%
Less: impact of new accounting standards (13) (1)
Additional payment to SFC (5) - 1,138 1,223 -7%
Less: one-off restructuring costs - (52) 1,138 1,171 -3%
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• Effect of Changes in Accounting Policies Following Adoption of New Accounting Standards
Increase/(decrease) 2004 2003 HK$ Mil HK$ Mil Income Investment income (5) (14) Other income 8 14 Increase in income 3 - Costs Staff costs and related expenses 14 3 Depreciation (2) (2)
Other operating expenses 1 - Increase in costs 13 1 Increase in share of profits less losses of associates
associates - 1 Decrease in taxation (2) (1) (Decrease)/Increase in profit (8) 1
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• Second Half Vs First Half H2 2004 H1 2004 Change
HK$ Mil HK$ Mil
RESULTS
Income 1,230 1,164 +6%
Operating expenses 585 571 +2%
Operating profit 645 593 +9%
Share of profits less losses of associates 7 6 +10%
Profit before taxation 652 599 +9%
Taxation (93) (101) -9%
Profit attributable to shareholders 559 498 +13%
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2005 Key Initiatives – Becoming a Mainland Partner Strengthen relationships with the Mainland
Continue to reinforce Hong Kong as the premier international capital formation centre for the Mainland;
Work with our Mainland counterparts to establish a framework for the simultaneous listing of A and H shares;
Develop and promote existing and new Mainland-related products
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2005 Key Initiatives – Building a Quality Market Strengthen market infrastructure
Consolidate the networks for major market systems;
Upgrade the host capacity of major market systems and conduct a comprehensive review of the AMS/3 satellite applications;
Support the Government’s drive to develop a scripless market model in Hong Kong
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2005 Key Initiatives – Building a Quality MarketImprove market liquidity and efficiency
Narrow the minimum trading spreads
Discuss with SFC to introduce measures that permit higher flexi
bility on position limits in trading derivatives
Refurbish the Trading Hall
Amend Main Board Listing Rules to require Main Board issuers
to publish a short notification announcement in newspapers
instead of the full announcement
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2005 Key Initiatives – Building a Quality MarketStrengthen market regulation
Review the listing decision-making structure; Review the operation and regulatory policy of GEM; Support the establishment of statutory listing
requirements and a more regulatory framework for the accounting industry;
Improve the efficiency of listing applications and IPO vetting processes;
Further efforts to improve corporate governance and effective quality management after listing
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Thank you