Overview
Profit attributable to ordinary shareholders
Profit attributable to ordinary shareholders for 2014 was HK$39,834 million, a decrease of HK$8,596 million,or 18% from 2013. Excluding a non-cash impairment charge related to the Sino Iron Project in Australia, profit for the year increased 10%.
The financial services segment recorded a profit attributable to ordinary shareholders of HK$41,267 million, an increase of HK$5,044 million or 14% from 2013. All businesses within the segment achieved growth for the year, with the exception of the trust business, which recorded a slight reduction in profit. For the non-financial segments, the real estate and infrastructure business was the largest contributor, with profit attributable to ordinary shareholders of HK$7,891 million, an increase of HK$839 million, or 12% from the previous year. This was primarily due to the bookings of the units that were completed and delivered from the Discovery Bay Project and the sale of the DCH Commercial Centre in Hong Kong, along with an increase in profit from the infrastructure business. As a result of more special steel and aluminium products sold, the manufacturing business recorded attributable profit of HK$2,921 million, a rise of HK$775 million, or 36%. The resources and energy business recorded a loss which was HK$12,170 million more than the loss in 2013,mainly due to an impairment charge of HK$13,650 million (after tax) on the Sino Iron Project, as a result of a significant decline in the price of iron ore.
Earnings per share and dividends
Earnings per share of profit attributable to ordinary shareholders was HK$1.60, a decrease of 18% from HK$1.94 (restated) in 2013. As at 31 December 2014, the number of ordinary shares outstanding was 24,903,323,630.
At the forthcoming annual general meeting, the Board will recommend a final dividend of HK$0.20 per share to ordinary shareholders. Together with the interim dividend of HK$0.015 per share paid in September 2014, the total ordinary dividend will be HK$0.215 per share (2013: HK$0.35 per share). This equates to an aggregate cash distribution of HK$5,355 million.
Profit/(loss) and assets by business
| Profit/(loss) | Assets as at 31 December | Return on assets (note) | ||||
| In HK$ million | 2014 | 2013 (restated) | 2014 | 2013 (restated) | 2014 | 2013 (restated) |
| Financial services | 59,016 | 55,023 | 5,322,510 | 4,691,048 | 1% | 1% |
| Resources and energy | (13,613) | (1,025) | 147,903 | 165,106 | (9%) | (1%) |
| Manufacturing | 3,354 | 2,450 | 108,501 | 100,003 | 3% | 2% |
| Engineering contracting | 2,384 | 2,268 | 44,020 | 43,329 | 5% | 5% |
| Real estate and infrastructure | 8,448 | 8,050 | 239,930 | 249,860 | 3% | 3% |
| Others | 1,193 | 3,430 | 72,538 | 65,590 | 2% | 5% |
| Underlying business operations | 60,782 | 70,196 | 5,935,402 | 5,314,936 | ||
| Operation management | (2,504) | 251 | ||||
| Elimination | 1,522 | 12 | ||||
| Profit attributable to non-controlling interests and holders of perpetual capital securities | 19,966 | 22,029 | ||||
| Profit attributable to ordinary shareholders | 39,834 | 48,430 | ||||
| Note: Total earnings of the business divided by average total assets of the business; return on assets for 2013 eguals profit/floss) for the year divided by assets as at the end of the year. | ||||||
Profit/(loss) attributable to ordinary shareholders by business
This segment remains a major contributor to the Group’s profit. Despite the narrowed interest margin for banks and an increase in the impairment provision on loans, profit attributable to ordinary shareholders grew steadily to HK$41,267 million.
Resources and energyThe resources and energy segment recorded a loss attributable to ordinary shareholders of HK$13,013 million. This was primarily due to an impairment charge of HK$13,650 million (after tax) related to the Sino Iron Project as a result of a sharp decline in the price of iron ore in the second half of 2014.
The Group’s other resources and energy interests were also affected to varying degrees by declining demand for commodities, including crude oil, which was primarily reflected in the drop of Brent crude oil prices to around US$60 a barrel in the fourth quarter of 2014, a level last seen in early 2009 during the financial crisis.
Against this backdrop, Sino Iron is exporting quality iron ore concentrate, and construction of the remaining production lines continued throughout the year. The Group’s crude oil production also achieved a record high in 2014, primarily reflected by the full operation of Yuedong Oilfield from the end of 2013.
ManufacturingThis business recorded attributable profit of HK$2,921 million, a rise of HK$775 million or 36%.
Special steel increased sales and further optimised its product mix to achieve a higher profit margin. Aluminium wheels and castings also continued to grow. Heavy machinery experienced a slight decrease in profit, due to increased competition.
Engineering contractingProfit attributable to ordinary shareholders grew steadily to HK$2,381 million, an increase of HK$114 million,or 5% from 2013, mainly due to the improved gross profit margin of the housing projects in Angola and Venezuela undertaken by CITIC Construction Company Limited.
Real estate and infrastructureProfit attributable to ordinary shareholders increased HK$839 million, or 12% from the previous year, to HK$7,891 million. The rise was mainly due to the bookings of the units that were completed and delivered from the Discovery Bay Project and the sale of the DCH Commercial Centre in Hong Kong, along with an increase in profit from the infrastructure business. The average occupancy rate for investment properties was approximately 95%.
OthersDah Chong Hong and CITIC Telecom were the main contributors to an attributable profit of HK$499 million in 2014, a 77% decrease on the previous year. This reduction was due to a combination of an impairment related to accounts receivables for the logistics business in 2014, and a one-off gain from the acquisition of Companhia de Telecomunicações de Macau, S.A.R.L. (“CTM”) in 2013.