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MarketScreener Homepage  >  Equities  >  Hong Kong Stock Exchange  >  SITC International Holdings Company Limited    1308   KYG8187G1055

SITC INTERNATIONAL HOLDINGS COMPANY LIMITED

(1308)
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SITC International : ANNOUNCEMENT OF UNAUDITED ANNUAL RESULTS FOR THE YEAR ENDED 31 DECEMBER 2019

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03/12/2020 | 11:24pm EDT

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

SITC International Holdings Company Limited

海 豐 國 際 控 股 有 限 公 司

(Incorporated in the Cayman Islands with limited liability )

(Stock Code: 1308)

ANNOUNCEMENT OF UNAUDITED ANNUAL RESULTS

FOR THE YEAR ENDED 31 DECEMBER 2019

Financial Highlights

  • Revenue for the year ended 31 December 2019 was approximately US$1,553.7 million, increased by approximately 7.2% as compared to approximately US$1,449.1 million for the year ended 31 December 2018.
  • Gross profit for the year ended 31 December 2019 increased by approximately 18.1% from approximately US$252.6 million for the year ended 31 December 2018 to approximately US$298.2 million for the year ended 31 December 2019. Gross profit margin increased to approximately 19.2% for the year ended 31 December 2019 as compared to approximately 17.4% for the year ended 31 December 2018.
  • Profit for the year ended 31 December 2019 increased by approximately 11.3% to approximately US$221.5 million from approximately US$199.1 million for the year ended 31 December 2018.
  • Basic earnings per share for the year ended 31 December 2019 amounted to US8.29 cents (2018: US7.44 cents).
  • A final dividend of HK27 cents (equivalent to US3.47 cents) per share were declared for the year ended 31 December 2019.

- 1 -

The board (the "Board") of directors (the "Directors") of SITC International Holdings Company Limited ("SITC" or the "Company", together with its subsidiaries, the "Group") is pleased to announce the unaudited consolidated results of the Group for the year ended 31 December 2019, together with the comparative figures for the year ended 31 December 2018, which have been prepared in accordance with the Hong Kong Financial Reporting Standards ("HKFRSs") as below. For the reasons explained in the paragraph headed "Review of Unaudited Annual Results" in this announcement, the auditing process for the annual results of the Group for the year ended 31 December 2019 has not been completed.

UNAUDITED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

Year ended 31 December 2019

Notes

2019

2018

US$'000

US$'000

(Unaudited)

(Audited)

REVENUE

4

1,553,718

1,449,088

Cost of sales

(1,255,566)

(1,196,489)

Gross profit

298,152

252,599

Other income and gains, net

22,406

31,210

Administrative expenses

(80,246)

(76,449)

Other expenses, net

(4,344)

(428)

Finance costs

5

(14,482)

(9,368)

Share of profits and losses of:

Joint ventures

8,585

9,961

Associates

442

171

PROFIT BEFORE TAX

6

230,513

207,696

Income tax

7

(8,998)

(8,599)

PROFIT FOR THE YEAR

221,515

199,097

- 2 -

Year ended 31 December 2019

Note

2019

2018

US$'000

US$'000

(Unaudited)

(Audited)

OTHER COMPREHENSIVE INCOME/

(LOSS)

Other comprehensive income/(loss) that

may be reclassified to profit or loss in

subsequent periods:

Debt investments at fair value through other

comprehensive income:

Changes in fair value

1,015

(1,701)

Reclassification adjustments for losses on

disposal included in profit or loss

6

143

41

1,158

(1,660)

Cash flow hedges:

Effective portion of changes in fair value

of hedging instruments arising during the

year

(2,368)

(3,064)

Reclassification adjustments for losses/

(gains) included in profit or loss

6

4,111

(658)

1,743

(3,722)

Exchange differences on translation of foreign

operations

(783)

(4,893)

Share of other comprehensive loss of joint

ventures

(311)

(1,665)

Share of other comprehensive loss of

associates

(110)

(539)

- 3 -

Note

2019

2018

US$'000

US$'000

(Unaudited)

(Audited)

Net other comprehensive income/(loss) that

may be reclassified to profit or loss in

subsequent periods

1,697

(12,479)

OTHER COMPREHENSIVE INCOME/

(LOSS) FOR THE YEAR, NET OF

INCOME TAX

1,697

(12,479)

TOTAL COMPREHENSIVE INCOME FOR

THE YEAR

223,212

186,618

Profit for the year attributable to:

Shareholders of the Company

219,977

197,514

Non-controlling interests

1,538

1,583

221,515

199,097

Total comprehensive income for the year

attributable to:

Shareholders of the Company

221,530

185,481

Non-controlling interests

1,682

1,137

223,212

186,618

EARNINGS PER SHARE ATTRIBUTABLE

TO SHAREHOLDERS OF THE

COMPANY

9

Basic (US cents per share)

8.29

7.44

Diluted (US cents per share)

8.22

7.39

- 4 -

UNAUDITED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

31 December 2019

Note

2019

2018

US$'000

US$'000

(Unaudited)

(Audited)

NON-CURRENT ASSETS

Property, plant and equipment

969,957

927,514

Right-of-use assets

164,308

-

Prepaid land lease payments

-

17,196

Advance payments for acquisition of vessels

49,954

46,376

Goodwill

1,016

1,029

Other intangible assets

1,579

1,579

Investments in joint ventures

34,467

35,777

Investments in associates

9,703

9,431

Debt investments at fair value through other

comprehensive income

-

9,430

Derivative financial instruments

14

155

Total non-current assets

1,230,998

1,048,487

CURRENT ASSETS

Prepaid land lease payments

-

468

Bunkers

22,067

22,962

Trade receivables

10

70,551

65,877

Prepayments, deposits and other receivables

18,903

16,625

Derivative financial instruments

252

105

Principal-protected investment deposits at fair

value through profit or loss

7,410

16,665

Cash and bank balances

399,363

380,702

Total current assets

518,546

503,404

- 5 -

Note

2019

2018

US$'000

US$'000

(Unaudited)

(Audited)

CURRENT LIABILITIES

Trade payables

11

137,862

138,767

Other payables and accruals

60,315

52,471

Derivative financial instruments

-

18

Bank borrowings

55,416

77,718

Lease liabilities

38,498

-

Dividend payables

102,615

-

Income tax payables

1,610

1,271

Total current liabilities

396,316

270,245

NET CURRENT ASSETS

122,230

233,159

TOTAL ASSETS LESS CURRENT

LIABILITIES

1,353,228

1,281,646

NON-CURRENT LIABILITIES

Bank borrowings

226,596

235,947

Lease liabilities

104,656

-

Provision for reinstatement costs

2,406

-

Total non-current liabilities

333,658

235,947

Net assets

1,019,570

1,045,699

EQUITY

Equity attributable to shareholders of the

Company

Issued capital

34,513

34,393

Reserves

975,730

1,002,639

1,010,243

1,037,032

Non-controlling interests

9,327

8,667

Total equity

1,019,570

1,045,699

- 6 -

1 BASIS OF PREPARATION

These financial statements have been prepared in accordance with Hong Kong Financial Reporting Standards ("HKFRSs") (which include all Hong Kong Financial Reporting Standards, Hong Kong Accounting Standards ("HKASs") and Interpretations) issued by the Hong Kong Institute of Certified Public Accountants (the "HKICPA"), accounting principles generally accepted in Hong Kong and the disclosure requirements of the Hong Kong Companies Ordinance. They have been prepared under the historical cost convention, except for derivative financial instruments, debt and equity investments, which have been measured at fair value. These financial statements are presented in the United States dollar (the "US$") and all values are rounded to the nearest thousand except when otherwise indicated.

Basis of consolidation

The consolidated financial statements include the financial statements of the Company and its subsidiaries (collectively referred to as the "Group") for the year ended 31 December 2019. A subsidiary is an entity (including a structured entity), directly or indirectly, controlled by the Company. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee (i.e., existing rights that give the Group the current ability to direct the relevant activities of the investee).

When the Company has, directly or indirectly, less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including:

  1. the contractual arrangement with the other vote holders of the investee;
  2. rights arising from other contractual arrangements; and
  3. the Group's voting rights and potential voting rights.

The financial statements of the subsidiaries are prepared for the same reporting period as the Company. The results of subsidiaries are consolidated from the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases. Adjustments are made to bring into line any dissimilar accounting policies that may exist.

Profit or loss and each component of other comprehensive income are attributed to shareholders of the Company and to the non-controlling interests, even if this results in the non-controlling interests having a deficit balance. All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation.

The Group reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control described above. A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction.

- 7 -

If the Group loses control over a subsidiary, it derecognises (i) the assets (including goodwill) and liabilities of the subsidiary, (ii) the carrying amount of any non-controlling interest and (iii) the cumulative translation differences recorded in equity; and recognises (i) the fair value of the consideration received, (ii) the fair value of any investment retained and (iii) any resulting surplus or deficit in profit or loss. The Group's share of components previously recognised in other comprehensive income is reclassified to profit or loss or retained profits, as appropriate, on the same basis as would be required if the Group had directly disposed of the related assets or liabilities.

2 CHANGES IN ACCOUNTING POLICIES AND DISCLOSURES

The Group has adopted the following new and revised HKFRSs for the first time for the current year's financial statements:

Amendments to HKFRS 9

Prepayment Features with Negative Compensation

HKFRS 16

Leases

Amendments to HKAS 19

Plan Amendment, Curtailment or Settlement

Amendments to HKAS 28

Long-term Interests in Associates and Joint Ventures

HK(IFRIC)-Int 23

Uncertainty over Income Tax Treatments

Annual Improvements to HKFRSs

Amendments to HKFRS 3, HKFRS 11, HKAS 12 and

2015-2017 Cycle

HKAS 23

Except for the amendments to HKFRS 9 and HKAS 19, and Annual Improvements to HKFRSs 2015-2017 Cycle, which are not relevant to the preparation of the Group's financial statements, the nature and the impact of the new and revised HKFRSs are described below:

  1. HKFRS 16 replaces HKAS 17 Leases, HK(IFRIC)-Int 4 Determining whether an Arrangement contains a Lease, HK(SIC)-Int 15 Operating Leases - Incentives and HK(SIC)- Int 27 Evaluating the Substance of Transactions Involving the Legal Form of a Lease. The standard sets out the principles for the recognition, measurement, presentation and disclosure of leases and requires lessees to account for all leases under a single on-balance sheet model to recognise and measure right-of-use assets and lease liabilities, except for certain recognition exemptions. Lessor accounting under HKFRS 16 is substantially unchanged from HKAS 17. Lessors will continue to classify leases as either operating or finance leases using similar principles as in HKAS 17.
    The Group has adopted HKFRS 16 using the modified retrospective method with the date of initial application of 1 January 2019. Under this method, the standard has been applied retrospectively with the cumulative effect of initial adoption recognised as an adjustment to the opening balance of retained profits at 1 January 2019, and the comparative information for 2018 was not restated and continued to be reported under HKAS 17 and related interpretations.

- 8 -

New definition of a lease

Under HKFRS 16, a contract is, or contains, a lease if the contract conveys a right to control the use of an identified asset for a period of time in exchange for consideration. Control is conveyed where the customer has both the right to obtain substantially all of the economic benefits from use of the identified asset and the right to direct the use of the identified asset. The Group elected to use the transition practical expedient allowing the standard to be applied only to contracts that were previously identified as leases applying HKAS 17 and HK(IFRIC)-Int 4 at the date of initial application. Contracts that were not identified as leases under HKAS 17 and HK(IFRIC)-Int 4 were not reassessed. Therefore, the definition of a lease under HKFRS 16 has been applied only to contracts entered into or changed on or after 1 January 2019.

As a lessee - Leases previously classified as operating leases

Nature of the effect of adoption of HKFRS 16

The Group has lease contracts for various items of land, offices, containers and vessels. As a lessee, the Group previously classified leases as either finance leases or operating leases based on the assessment of whether the lease transferred substantially all the rewards and risks of ownership of assets to the Group. Under HKFRS 16, the Group applies a single approach to recognise and measure right-of-use assets and lease liabilities for all leases, except for two elective exemptions for leases of low-value assets (elected on a lease-by-lease basis) and leases with a lease term of 12 months or less ("short-term leases") (elected by class of underlying asset). Instead of recognising rental expenses under operating leases on a straight- line basis over the lease term commencing from 1 January 2019, the Group recognises depreciation (and impairment, if any) of the right-of-use assets and interest accrued on the outstanding lease liabilities (as finance costs).

Impact on transition

Lease liabilities at 1 January 2019 were recognised based on the present value of the remaining lease payments, discounted using the incremental borrowing rate at 1 January 2019. The right-of-use assets were measured at the amount of the lease liability, adjusted by the amount of any prepaid or accrued lease payments relating to the lease recognised in the statement of financial position immediately before 1 January 2019.

All these assets were assessed for any impairment based on HKAS 36 on that date. The Group elected to present the right-of-use assets separately in the statement of financial position. This includes a vessel recognised previously under a finance lease of US$5,275,000 that were reclassified from property, plant and equipment and upfront payments for land lease of US$17,664,000 that were reclassified from prepaid land lease payments.

- 9 -

The Group has used the following elective practical expedients when applying HKFRS 16 at

1 January 2019:

  • Applying the short-term lease exemptions to leases with a lease term that ends within 12 months from the date of initial application
  • Using hindsight in determining the lease term where the contract contains options to extend/terminate the lease

As a lessee - Leases previously classified as finance leases

The Group did not change the initial carrying amounts of recognised assets and liabilities at the date of initial application for leases previously classified as finance leases. Accordingly, the carrying amounts of the right-of-use assets and the lease liabilities at 1 January 2019 were the carrying amounts of the recognised assets and liabilities measured under HKAS 17.

Lease liabilities were not recognised on the finance lease of vessel at 1 January 2019 as the finance lease payable was fully settled in prior years.

Financial impact at 1 January 2019

The impact arising from the adoption of HKFRS 16 at 1 January 2019 was as follows:

Increase/(decrease)

US$'000

(Unaudited)

Assets

Decrease in property, plant and equipment

(5,275)

Increase in right-of-use assets

134,342

Decrease in prepaid land lease payments

(17,664)

Decrease in prepayments, deposits and other receivables

(208)

Increase in total assets

111,195

Liabilities

Increase in lease liabilities and total liabilities

111,195

- 10 -

The lease liabilities as at 1 January 2019 reconciled to the operating lease commitments as at

31 December 2018 is as follows:

US$'000

(Unaudited)

Operating lease commitments as at 31 December 2018

160,025

Less: Commitments relating to short-term leases and those leases with

  a remaining lease term ending on or before 31 December 2019

(24,122)

135,903

Weighted average incremental borrowing rate as at 1 January 2019

4.5%

Lease liabilities as at 1 January 2019

111,195

  1. Amendments to HKAS 28 clarify that the scope exclusion of HKFRS 9 only includes interests in an associate or joint venture to which the equity method is applied and does not include long-term interests that in substance form part of the net investment in the associate or joint venture, to which the equity method has not been applied. Therefore, an entity applies HKFRS 9, rather than HKAS 28, including the impairment requirements under HKFRS 9, in accounting for such long-term interests. HKAS 28 is then applied to the net investment, which includes the long-term interests, only in the context of recognising losses of an associate or joint venture and impairment of the net investment in the associate or joint venture. The Group did not have any long-term interests in associates and joint ventures as at 1 January 2019 and accordingly, the amendments did not have any impact on the financial position or performance of the Group.
  2. HK(IFRIC)-Int23 addresses the accounting for income taxes (current and deferred) when tax treatments involve uncertainty that affects the application of HKAS 12 (often referred to as "uncertain tax positions"). The interpretation does not apply to taxes or levies outside the scope of HKAS 12, nor does it specifically include requirements relating to interest and penalties associated with uncertain tax treatments. The interpretation specifically addresses (i) whether an entity considers uncertain tax treatments separately; (ii) the assumptions an entity makes about the examination of tax treatments by taxation authorities; (iii) how an entity determines taxable profits or tax losses, tax bases, unused tax losses, unused tax credits and tax rates; and (iv) how an entity considers changes in facts and circumstances. Upon adoption of the interpretation, the Group considered whether it has any uncertain tax positions arising from (i) the transfer pricing on its intergroup sales and (ii) the offshore position on its sales. Based on the Group's tax compliance and transfer pricing study, the Group determined that it is probable that its transfer pricing policy and offshore position will be accepted by the tax authorities. Accordingly, the interpretation did not have any impact on the financial position or performance of the Group.

- 11 -

3. OPERATING SEGMENT INFORMATION

For management purposes, the Group is organised into business units based on their services and has two reportable operating segments as follows:

  1. the container shipping and logistics segment, which is engaged in the provision of integrated logistics services, including provision of container transport, freight forwarding, shipping agency, depot and warehousing services; and
  2. the dry bulk and others segment, which is engaged in the provision of dry bulk vessel leasing, air-freight forwarding, land leasing and other services.

Segment assets exclude cash and bank balances, derivative financial instruments and other unallocated corporate assets as these assets are managed on a group basis.

Segment liabilities exclude bank borrowings, derivative financial instruments, income tax payables and other unallocated corporate liabilities as these liabilities are managed on a group basis.

Year ended 31 December 2019

Container

shipping and

Dry bulk

logistics

and others

Total

US$'000

US$'000

US$'000

(Unaudited)

(Unaudited)

(Unaudited)

Segment revenue (note 4)

Sales to external customers

1,527,346

26,372

1,553,718

Segment results

222,459

8,367

230,826

Reconciliation:

Bank interest income

13,358

Interest income of debt investments at

fair value through other comprehensive

income

492

Investment income of principal-protected

investment deposits at fair value through

profit or loss

319

Finance costs

(14,482)

Profit before tax

230,513

- 12 -

Container

shipping and

Dry bulk

logistics

and others

Total

US$'000

US$'000

US$'000

(Unaudited)

(Unaudited)

(Unaudited)

At 31 December 2019

Segment assets

1,014,505

145,184

1,159,689

Reconciliation:

Corporate and other unallocated assets

589,855

Total assets

1,749,544

Segment liabilities

431,302

479

431,781

Reconciliation:

Corporate and other unallocated liabilities

298,193

Total liabilities

729,974

Other segment information:

Share of profits and losses of:

Joint ventures

8,975

(390)

8,585

Associates

442

-

442

Depreciation of property, plant and

equipment

58,825

7,931

66,756

Depreciation of right-of-use assets

35,995

455

36,450

Gain on disposal of items of property, plant

and equipment, net

151

-

151

Impairment of trade receivables, net

76

-

76

Investments in joint ventures

33,897

570

34,467

Investments in associates

9,703

-

9,703

Capital expenditure*

115,222

868

116,090

  • Capital expenditure consists of additions to property, plant and equipment and advance payments for the acquisition of vessels.

- 13 -

Year ended 31 December 2018

Container

shipping and

Dry bulk

logistics

and others

Total

US$'000

US$'000

US$'000

(Audited)

(Audited)

(Audited)

Segment revenue (note 4)

Sales to external customers

1,425,219

23,869

1,449,088

Segment results

188,146

14,841

202,987

Reconciliation:

Bank interest income

12,101

Interest income of debt investments at

fair value through other comprehensive

income

1,197

Dividend income of equity investments at

fair value through profit or loss

31

Investment income of principal-protected

investment deposits at fair value through

profit or loss

231

Fair value gains of equity investments at

fair value through profit or loss

517

Finance costs

(9,368)

Profit before tax

207,696

- 14 -

Container

shipping

Dry bulk

and logistics

and others

Total

US$'000

US$'000

US$'000

(Audited)

(Audited)

(Audited)

At 31 December 2018

Segment assets

977,788

153,224

1,131,012

Reconciliation:

Corporate and other unallocated assets

420,879

Total assets

1,551,891

Segment liabilities

176,491

4,005

180,496

Reconciliation:

Corporate and other unallocated liabilities

325,696

Total liabilities

506,192

Other segment information:

Share of profits and losses of:

Joint ventures

10,140

(179)

9,961

Associates

171

-

171

Depreciation

53,283

6,572

59,855

Amortisation of prepaid land lease

payments

-

475

475

Reversal of impairment of items of

property, plant and equipment

-

5,864

5,864

Gain on disposal of items of property, plant

and equipment, net

4,388

-

4,388

Impairment of trade receivables, net

224

-

224

Recovery of write-off of trade receivables

886

-

886

Investments in joint ventures

34,820

957

35,777

Investments in associates

9,431

-

9,431

Capital expenditure*

121,840

2,488

124,328

  • Capital expenditure consists of additions to property, plant and equipment and advance payments for the acquisition of vessels.

- 15 -

Geographical information

The Group's non-current assets are primarily dominated by its vessels. The directors of the Company consider that the nature of the Group's business and the way in which costs are allocated preclude a meaningful allocation of vessels, their operating profits and related capital expenditure to specific geographical areas as defined under HKFRS 8 Operating Segments issued by the HKICPA. These vessels are primarily utilised across the geographical markets for shipment of cargoes throughout Asia. Accordingly, geographical information is only presented for revenue.

The following revenue information by geographical area is based on the locations of customers:

2019

2018

US$'000

US$'000

(Unaudited)

(Audited)

Greater China*

592,566

579,924

Japan

406,557

378,283

Southeast Asia

465,022

422,392

Others

89,573

68,489

1,553,718

1,449,088

  • Greater China includes Mainland China, Hong Kong and Taiwan.

Major customer information disclosure

During the year, there was no single customer which contributed 10% or more of the Group's revenue (2018: Nil).

4. REVENUE

An analysis of the Group's revenue is as follows:

2019

2018

US$'000

US$'000

(Unaudited)

(Audited)

Revenue from contracts with customers

1,527,346

1,425,219

Revenue from other sources:

Time charter income

24,885

22,352

Other rental income

1,487

1,517

26,372

23,869

1,553,718

1,449,088

- 16 -

Notes:

  1. Disaggregated revenue information
    Year ended 31 December 2019

Container

shipping

Dry bulk

and logistics

and others

Total

US$'000

US$'000

US$'000

Segments

(Unaudited)

(Unaudited)

(Unaudited)

Type of services

Container shipping and supporting

logistic income

1,390,352

-

1,390,352

Other container logistic income*

136,994

-

136,994

Total revenue from contracts with

customers

1,527,346

-

1,527,346

Revenue from other sources

-

26,372

26,372

Total revenue

1,527,346

26,372

1,553,718

Geographical markets

Greater China#

590,797

-

590,797

Japan

406,557

-

406,557

Southeast Asia

463,762

-

463,762

Others

66,230

-

66,230

Total revenue from contracts with

customers

1,527,346

-

1,527,346

Revenue from other sources

-

26,372

26,372

Total revenue

1,527,346

26,372

1,553,718

Timing of revenue recognition

Total revenue from contracts with

customers -

Services transferred over time

1,527,346

-

1,527,346

Revenue from other sources

-

26,372

26,372

Total revenue

1,527,346

26,372

1,553,718

- 17 -

Year ended 31 December 2018

Container

shipping

Dry bulk

and logistics

and others

Total

US$'000

US$'000

US$'000

Segments

(Audited)

(Audited)

(Audited)

Type of services

Container shipping and supporting

logistic income

1,306,225

-

1,306,225

Other container logistic income*

118,994

-

118,994

Total revenue from contracts with

customers

1,425,219

-

1,425,219

Revenue from other sources

-

23,869

23,869

Total revenue

1,425,219

23,869

1,449,088

Geographical markets

Greater China#

556,055

-

556,055

Japan

378,283

-

378,283

Southeast Asia

422,392

-

422,392

Others

68,489

-

68,489

Total revenue from contracts with

customers

1,425,219

-

1,425,219

Revenue from other sources

-

23,869

23,869

Total revenue

1,425,219

23,869

1,449,088

Timing of revenue recognition

Total revenue from contracts with

customers -

Services transferred over time

1,425,219

-

1,425,219

Revenue from other sources

-

23,869

23,869

Total revenue

1,425,219

23,869

1,449,088

  • Other container logistic income includes freight forwarding income, shipping agency income and depot and warehousing income.
  • Greater China includes Mainland China, Hong Kong and Taiwan.

- 18 -

  1. Performance obligations
    Information about the Group's performance obligations in contracts with customers is summarised below:
    Container shipping and supporting logistic income
    The performance obligation relates to provision of container marine transportation and is satisfied over time as services are rendered and payment is generally due within 15 days upon the completion of the voyage, except for individual customers, where payment term can be extended up to 3 months.
    Other container logistic income
    The performance obligation is satisfied when the services of integrated freight forwarding, shipping agency, etc. are rendered and payment is generally due within 15 days from the date of billing.
    The amounts of transaction prices allocated to the remaining performance obligations (unsatisfied or partially unsatisfied) as at 31 December 2019 amounted to US$25,886,000 (2018: US$18,196,000), which is expected to be recognised within one year from the end of the reporting period.

5. FINANCE COSTS

2019

2018

US$'000

US$'000

(Unaudited)

(Audited)

Interest on bank borrowings

9,188

9,368

Interest on lease liabilities

5,209

-

Increase in discounted amounts of provision for reinstatement

costs arising from the passage of time

85

-

Total finance costs

14,482

9,368

- 19 -

6. PROFIT BEFORE TAX

The Group's profit before tax is arrived at after charging/(crediting):

2019

2018

US$'000

US$'000

(Unaudited)

(Audited)

Cost of services provided:

207,885

Cost of bunkers consumed

201,705

Others

1,047,681

994,784

1,255,566

1,196,489

Depreciation of property, plant and equipment

66,756

59,855

Less: Included in cost of services provided

(65,751)

(56,043)

1,005

3,812

Depreciation of right-of-use assets

36,450

-

Less: Included in cost of services provided

(33,897)

-

2,553

-

Amortisation of prepaid land lease payments

-

475

Minimum lease payments under operating leases

-

143,795

Less: Included in cost of services provided

-

(138,360)

-

5,819

Lease payments not included in the measurement of

97,652

lease liabilities

-

Less: Included in cost of services provided

(91,659)

-

5,993

-

Auditor's remuneration

393

384

Employee benefit expense (including directors'

remuneration):

84,486

Wages and salaries

76,635

Share award expense

5,413

3,249

Pension scheme contributions

8,795

(defined contribution schemes)

9,274

98,694

89,158

Less: Included in cost of services provided

(42,187)

(43,858)

56,507

45,300

Impairment of trade receivables, net

76*

224*

Fair value losses/(gains), net:

4,111*

Cash flow hedges (transfer from equity)

(658)**

Debt investments at fair value through other

comprehensive income (transfer from equity on

143*

disposal)

41*

- 20 -

  • These items are included in "Other expenses, net" on the face of the consolidated statement of profit or loss and other comprehensive income.
  • This item is included in "Other income and gains, net" on the face of the consolidated statement of profit or loss and other comprehensive income.

7. INCOME TAX

An analysis of the Group's income tax is as follows:

2019

2018

US$'000

US$'000

(Unaudited)

(Audited)

Current:

Hong Kong

379

338

Under/(over)-provision in prior years - Hong Kong

44

(250)

Mainland China

1,262

1,393

Elsewhere

7,313

7,118

Total tax expense for the year

8,998

8,599

Note: Hong Kong profits tax has been provided at the rate of 16.5% (2018: 16.5%) on the estimated assessable profits arising in Hong Kong during the year, except for one subsidiary of the Group which is a qualifying entity under the two-tiered profits tax rates regime effective from the year of assessment 2018/2019. The first HK$2,000,000 (2018: Nil) of assessable profits of this subsidiary is taxed at 8.25% and the remaining assessable profits are taxed at 16.5%. Taxes on profits assessable in Mainland China and elsewhere have been calculated at the rates of tax prevailing in the jurisdictions in which the Group operates.

- 21 -

8.

DIVIDENDS

2019

2018

HK$'000

US$'000

HK$'000

US$'000

Equivalent

Equivalent

(Unaudited)

(Unaudited)

(Audited)

(Audited)

Interim - HK18 cents (equivalent

to approximately US2.30 cents)

(2018: HK15 cents, equivalent

to approximately US1.91 cents)

per ordinary share

481,064

61,331

400,006

50,965

Special - HK30 cents (equivalent

to approximately US3.83 cents

(2018: Nil) per ordinary share

803,246

102,615

-

-

Proposed final - HK27 cents

(equivalent to approximately

US3.47 cents) (2018:

HK26 cents, equivalent to

approximately US3.32 cents)

per ordinary share

723,067

92,862

693,708

88,558

2,007,377

256,808

1,093,714

139,523

The proposed final dividend for the year ended 31 December 2019 is subject to the condition that the audited annual results of the Group for the year upon completion of the auditing process will be consistent in all material respects with the unaudited annual results set out herein. In addition, the proposed final dividend for the year is subject to the approval of the Company's shareholders at the forthcoming annual general meeting.

9. EARNINGS PER SHARE ATTRIBUTABLE TO SHAREHOLDERS OF THE COMPANY

The calculation of the basic earnings per share is based on the unaudited profit for the year attributable to shareholders of the Company, and the weighted average number of ordinary shares in issue during the year less shares held under the share award scheme of the Company.

The calculation of the diluted earnings per share is based on the unaudited profit for the year attributable to shareholders of the Company; and the weighted average number of ordinary shares used in the calculation is the total of (i) weighted average number of ordinary shares in issue during the year as used in the basic earnings per share calculation; (ii) the weighted average of ordinary shares assumed to have been issued at no consideration on the deemed exercise of all outstanding share options into ordinary shares; and (iii) the weighted average number of ordinary shares assumed to have been awarded at no consideration on the deemed exercise of all rights of shares held under the share award scheme of the Company.

- 22 -

The calculations of basic and diluted earnings per share amounts are based on:

2019

2018

US$'000

US$'000

(Unaudited)

(Audited)

Earnings

Profit attributable to shareholders of the Company, used in

the basic and diluted earnings per share calculation

219,977

197,514

Number of shares

2019

2018

(Unaudited)

(Audited)

Shares

Weighted average number of ordinary shares in issue during

the year less shares held under the share award scheme,

used in the basic earnings per share calculation

2,654,606,606

2,654,721,221

Effect of dilution - weighted average

number of ordinary shares:

Share options

5,442,581

9,223,768

Shares held under the share award scheme

16,677,638

8,776,229

Weighted average number of ordinary shares during the year,

used in the diluted earnings per share calculation

2,676,726,825

2,672,721,218

10. TRADE RECEIVABLES

An ageing analysis of the trade receivables as at the end of the reporting period, based on the invoice date and net of loss allowance, is as follows:

2019

2018

US$'000

US$'000

(Unaudited)

(Audited)

Within 1 month

60,916

55,990

1 to 2 months

7,529

7,436

2 to 3 months

1,046

1,374

Over 3 months

1,060

1,077

70,551

65,877

- 23 -

11. TRADE PAYABLES

An ageing analysis of the trade payables as at the end of the reporting period, based on the invoice date, is as follows:

2019

2018

US$'000

US$'000

(Unaudited)

(Audited)

Within 1 month

104,582

100,218

1 to 2 months

22,706

26,881

2 to 3 months

5,099

4,263

Over 3 months

5,475

7,405

137,862

138,767

- 24 -

MANAGEMENT DISCUSSION AND ANALYSIS

Overview

SITC is one of Asia's leading shipping logistics companies that provides integrated transportation and logistics solutions.

The Company has two business segments, including (i) "container shipping and logistics" segment; and (ii) "dry bulk and others" segment.

Business Review

  1. Container shipping and logistics business
    During the year ended 31 December 2019, the Group's container shipping and logistics business continued to provide container transportation and integrated logistics services that focused exclusively on the intra-Asia market, as the Group believes that the intra- Asia market will continue to experience stable and healthy growth.
    As of 31 December 2019, the Group operated 68 trade lanes, including 9 trade lanes through joint services and 26 trade lanes through container slot exchange arrangements. These trade lanes and land-based integrated logistics business network covered 69 major ports and cities in the Mainland China, Japan, Korea, Taiwan, Hong Kong, Vietnam, Thailand, the Philippines, Cambodia, Indonesia, Singapore, Malaysia and Brunei. As of 31 December 2019, the Group operated a fleet of 82 vessels with a total capacity of 117,578 TEU, comprised of 57 self- owned (76,705 TEU) and 25 chartered vessels (40,873 TEU), with an average age of 10.0 years. In addition, the Group also operated (including through joint ventures) approximately 1,169,142 m2 of depot and 91,700 m2 of warehousing space.
    Revenue generated by the Group's container shipping and logistics business for the year ended 31 December 2019 increased by approximately 7.2% from US$1,425.2 million for the year ended 31 December 2018 to US$1,527.3 million for the year ended 31 December 2019. The increase was a result of a combined effect, from container shipping and supporting logistics business, where (i) container shipping volume achieved an increase of 3.5% growth from 2,399,169 TEUs in 2018 to 2,483,278 TEUs in 2019 and (ii) average freight rate (excluding slot exchange fee income) increased by approximately 2.8% from US$522.1/TEU in 2018 to US$536.6/TEU in 2019.

- 25 -

  1. Dry bulk and others business
    During the year ended 31 December 2019, the Group's dry bulk and others business focused on the provision of dry bulk vessel leasing, land leasing and air freight forwarding services. As at 31 December 2019, the Group has 6 dry bulk vessels with a total tonnage of 438,595 tons and an average age of 7.1 years. Revenue generated from dry bulk and others business increased by approximately 10.5% from US$23.9 million for the year ended 31 December 2018 to US$26.4 million for the year ended 31 December 2019. The increase was mainly a result of the increase in the daily charter rate of dry bulk vessels.
    With continuous business expansion, the Group will continue to optimize its unique business model and expand its intra-Asia service network. At the same time, the Group will optimize its own fleet structure by capturing vessel price dynamics, so as to keep pace with the development of the business and secure a long-termcost-competitive position. With the continuous enhancement on the Group's organization process, information technology systems and operational efficiency, the Company will strive for the goal in becoming a world-class integrated logistics service solutions provider.

Market Review

The year ended 31 December 2019 witnessed the slowdown in world economic growth, China-US trade disputes, fluctuations in the global container shipping and logistics market, and the intensified competition in the industry, all of which posed an impact on the improvement of demand and supply dynamics in the Asian region. In addition, the change in costs, such as bunkers and vessel charter, also caused material impact on the profitability of the industry. Through effective management of shipping capacity and stabilization of freight rates, the Company adopted a strategy of efficient operation and low-cost expansion and continued to deliver steady growth in its results.

Looking ahead, in view of the world's weak economic growth, mounting uncertainties and the shift of supply chain and trade landscapes towards regionalisation, Clarkson predicts that the cargo transportation demand along Asian lanes will increase by 3.4%. As affected by vessel replacement and subject to the sulphur cap imposed by the International Maritime Organisation, the number of vessels to be dismantled will also increase. Therefore, this will help improve the supply and demand dynamics in the shipping and logistics market in Asia. Meanwhile, the Company will pay close attention to and evaluates the impact of the recent outbreak of COVID-19 on the business environment. With the successive work resumption of factories in the countries/regions affected by the outbreak, inventories will need to be replenished, and economic activities are expected to pick up quickly following the downturn. The Company will continue to implement its expansion plan prudently when opportunities arise.

- 26 -

Financial Overview

Year ended 31 December

2019

2018

2019

2018

2019

2018

Container shipping and

logistics

Dry bulk and others

Total

US$'000

US$'000

US$'000

US$'000

US$'000

US$'000

(Unaudited)

(Audited)

(Unaudited)

(Audited)

(Unaudited)

(Audited)

Revenue

1,527,346

1,425,219

26,372

23,869

1,553,718

1,449,088

Cost of sales

(1,238,096)

(1,180,516)

(17,470)

(15,973)

(1,255,566)

(1,196,489)

Gross profit

289,250

244,703

8,902

7,896

298,152

252,599

Other income and gains (excluding bank

interest income and other investment

income)

8,237

10,465

-

7,248

8,237

17,713

Administrative expenses

(80,101)

(76,328)

(145)

(121)

(80,246)

(76,449)

Share of profits and losses of:

Joint ventures

8,975

10,140

(390)

(179)

8,585

9,961

Associates

442

171

-

-

442

171

Other expenses and losses

(4,344)

(1,005)

-

(3)

(4,344)

(1,008)

Segment results

222,459

188,146

8,367

14,841

230,826

202,987

Finance costs

(14,482)

(9,368)

Bank interest income and other

investment income

14,169

14,077

Profit before tax

230,513

207,696

Income tax

(8,998)

(8,599)

Profit for the year

221,515

199,097

Profit attributable to:

Owners of the parents

219,977

197,514

Non-controlling interests

1,538

1,583

221,515

199,097

- 27 -

Revenue

The Group's total revenue increased by approximately 7.2% from approximately US$1,449.1 million for the year ended 31 December 2018 to approximately US$1,553.7 million for the year ended 31 December 2019. The increase was primarily attributable to the increase from container shipping and supporting logistics business in both average freight rate and container shipping volume.

Cost of Sales

The Group's cost of sales increased by approximately 4.9% from approximately US$1,196.5 million for the year ended 31 December 2018 to approximately US$1,255.6 million for the year ended 31 December 2019. The increase was primarily attributable to the increase from container shipping and supporting logistics business in equipment and cargos transportation costs and voyage costs, due to growth in container shipping volume.

Gross Profit and Gross Profit Margin

As a result of the foregoing, gross profit increased from approximately US$252.6 million for the year ended 31 December 2018 to approximately US$298.2 million for the year ended 31 December 2019. The Group's gross profit margin increased from approximately 17.4% for the year ended 31 December 2018 to approximately 19.2% for the year ended 31 December 2019.

Other Income and Gains (excluding bank interest income and other investment income)

For the year ended 31 December 2019, other income and gains (excluding bank interest income and other investment income) decreased by approximately US$9.5 million from approximately US$17.7 million for the year ended 31 December 2018 to US$8.2 million for the year ended 31 December 2019. The decrease was mainly attributable to (i) a reversal of impairment losses for dry bulk vessels in prior years of approximately US$5.9 million in 2018 (2019: Nil); and (ii) a year-on-year decrease of approximately US$4.2 million for gains on disposal of fixed assets, including containers and others.

Administrative Expenses

The Group's administrative expenses increased from approximately US$76.4 million for the year ended 31 December 2018 to approximately US$80.2 million for the year ended 31 December 2019, representing an increase of approximately 5.0%. The increase was primarily attributable to the overall increase in staff cost.

- 28 -

Share of profits and losses of joint ventures

The Group's share of profits and losses of joint ventures decreased by approximately 14.0% from approximately US$10.0 million in 2018 to approximately US$8.6 million in 2019. The decrease was mainly attributable to the decline in the profits from part of the jointly controlled depots.

Share of profits and losses of associates

The Group's share of profits and losses of associates was approximately US$0.4 million and US$0.2 million for 2019 and 2018, respectively. There was no material change in the amount.

Other Expenses and Losses

The Group's other expenses and losses were approximately US$4.3 million and US$1.0 million for the year ended 31 December 2019 and 2018, respectively. The increase was mainly attributable to a year-on-year increase of approximately US$3.5 million in the hedging losses arising from realization of Japanese Yen.

Finance Costs

The Group's finance costs increased from approximately US$9.4 million for the year ended 31 December 2018 to US$14.5 million for the year ended 31 December 2019. The increase was mainly attributable to the increase in interest on the lease liabilities due to the implementation of Hong Kong Financial Reporting Standard 16 (Leases) ("HKFRS 16") for the first time.

Bank Interest Income and Other Investment Income

The Group's amount of bank interest income and other investment income was approximately US$14.2 million and US$14.1 million for the year ended 31 December 2019 and 2018, respectively. There was no material change in the amount.

Profit before Tax

As a result of the foregoing, the Group's profit before tax increased from approximately US$207.7 million for the year ended 31 December 2018 to approximately US$230.5 million for the year ended 31 December 2019.

Income Tax Expenses

The Group's income tax expense was approximately US$9.0 million and US$8.6 million for the year ended 31 December 2019 and 2018, respectively. The increase was primarily attributable to the increase in taxable profit of the Group.

- 29 -

Profit for the Year

The Group's profit for the year ended 31 December 2019 was approximately US$221.5 million, representing an increase of approximately 11.3% as compared to the profit of approximately US$199.1 million for the year ended 31 December 2018.

Container Shipping and Logistics

The following table sets forth selected income statement data for the Group's container shipping and logistics segment for the periods indicated:

Year ended 31 December

2019

2018

% of

% of

Amount

segment

Amount

segment

(US$'000)

revenue

(US$'000)

revenue

(Unaudited)

(Audited)

Income Statement Data

Segment revenue

1,527,346

100%

1,425,219

100%

Container shipping and

supporting logistics income

1,390,352

91.0%

1,306,225

91.7%

Other container logistics

income

136,994

9.0%

118,994

8.3%

Cost of Sales

(1,238,096)

(81.1%)

(1,180,516)

(82.8%)

Equipment and cargos

transportation costs

(680,825)

(44.6%)

(648,409)

(45.5%)

Voyage costs

(275,558)

(18.0%)

(263,455)

(18.5%)

Container shipping vessels cost

(166,093)

(10.9%)

(168,251)

(11.8%)

Other container logistics costs

(115,620)

(7.6%)

(100,401)

(7.0%)

Gross Profit

289,250

18.9%

244,703

17.2%

Other income and gains

(excluding bank interest

income and other investment

income)

8,237

0.5%

10,465

0.7%

Administrative expenses

(80,101)

(5.2%)

(76,328)

(5.4%)

Other expenses and losses

(4,344)

(0.3%)

(1,005)

(0.1%)

Share of profits and losses of:

Joint ventures

8,975

0.6%

10,140

0.7%

Associates

442

0.1%

171

0.1%

Segment results

222,459

14.6%

188,146

13.2%

- 30 -

Segment results

The following table sets forth the average freight rate for the years ended 31 December 2018 and 2019, and the number of trade lanes and port calls per week of the Group as at

31 December 2018 and 2019:

Year ended 31 December

As of 31 December

2019

2018

2019

2018

2019

2018

Average freight rate

Number of trade lanes

Port calls per week

(US$ per TEU, excluding

slot exchange fee rate)

536.6

522.1

68

64

408

385

Revenue

Revenue of the Group's container shipping and logistics segment increased by approximately 7.2% from approximately US$1,425.2 million for the year ended 31 December 2018 to approximately US$1,527.3 million for the year ended 31 December 2019. The increase was a result of a combined effect, from container shipping and supporting logistics business, where (i) container shipping volume achieved an increase of 3.5% growth from 2,399,169 TEUs in 2018 to 2,483,278 TEUs in 2019 and (ii) average freight rate (excluding slot exchange fee income) increased by approximately 2.8% from US$522.1/TEU in 2018 to US$536.6/TEU in 2019.

Cost of Sales

The cost of sales of the Group's container shipping and logistics business increased by approximately 4.9% from approximately US$1,180.5 million for the year ended 31 December 2018 to approximately US$1,238.1 million for year ended 31 December 2019. The increase was primarily attributable to the increase from container shipping and supporting logistics business in equipment and cargos transportation costs and voyage costs, due to growth in container shipping volume.

Gross Profit and Gross Profit Margin

As a result of the foregoing, the Company recorded gross profit of approximately US$289.3 million in its container shipping and logistics business for the year ended 31 December 2019, representing an increase of approximately 18.2% as compared to approximately US$244.7 million for the year ended 31 December 2018. The gross profit margin of the Group's container shipping and logistics business was approximately 18.9% and 17.2% for the year ended 31 December 2019 and 2018, respectively.

- 31 -

Other Income and Gains (excluding bank interest income and other investment income)

For the year ended 31 December 2019, other income and gains (excluding bank interest income and other investment income) decreased to approximately US$8.2 million from approximately US$10.5 million for the year ended 31 December 2018. The decrease was mainly attributable to a year-on-year decrease of approximately US$4.2 million for gains on disposal of fixed assets, including containers and others.

Administrative Expenses

Administrative expenses of the Group's container shipping and logistics business increased by approximately 5.0% from approximately US$76.3 million for the year ended 31 December 2018 to approximately US$80.1 million for the year ended 31 December 2019. The increase in administrative expenses was mainly attributable to the overall increase in staff cost.

Other Expenses and Losses

Other expenses and losses for the Group's container shipping and logistics business increased from approximately US$1.0 million for the year ended 31 December 2018 to approximately US$4.3 million for the year ended 31 December 2019. It was mainly attributable to a year-on-year increase of approximately US$3.5 million in the hedging losses arising from realization of Japanese Yen.

Share of Profits and Losses of Joint Ventures

The Group's container shipping and logistics business's share of profits and losses of joint ventures decreased by approximately 10.9% from approximately US$10.1 million in 2018 to approximately US$9.0 million in 2019. The decrease was mainly attributable to the decline in the profits from part of the jointly controlled depots.

Share of Profits and Losses of Associates

The Group's container shipping and logistics business's share of profits and losses of associates was approximately US$0.4 million and US$0.2 million for 2019 and 2018, respectively. There was no material change in the amount.

Segment Results

As a result of the foregoing, the segment results of the Group's container shipping and logistics business increased by approximately US$34.4 million from approximately US$188.1 million for the year ended 31 December 2018 to approximately US$222.5 million for the year ended 31 December 2019.

- 32 -

Dry Bulk and Others

The following table sets forth selected income statement data for the Group's dry bulk and others segment for the periods indicated:

Year ended 31 December

2019

2018

% of

% of

Amount

segment

Amount

segment

(US$'000)

revenue

(US$'000)

revenue

(Unaudited)

(Audited)

Income Statement Data

Segment revenue

26,372

100%

23,869

100%

Dry bulk business

24,885

94.4%

22,352

93.6%

Other business

1,487

5.6%

1,517

6.4%

Cost of Sales

(17,470)

(66.3%)

(15,973)

(66.9%)

Dry bulk business

(16,738)

(63.5%)

(15,243)

(63.9%)

Other business

(732)

(2.8%)

(730)

(3.0%)

Gross Profit

8,902

33.7%

7,896

33.1%

Other income and gains

(excluding bank interest

income and other investment

income)

-

-

7,248

30.4%

Administrative expenses

(145)

(0.5%)

(121)

(0.5%)

Other expenses and losses

-

-

(3)

(0.1%)

Share of profit and losses of:

Joint ventures

(390)

(1.5%)

(179)

(0.7%)

Segment results

8,367

31.7%

14,841

62.2%

Revenue

The revenue of the Group's dry bulk and others business increased by approximately 10.5% from approximately US$23.9 million for the year ended 31 December 2018 to approximately US$26.4 million for year ended 31 December 2019. This increase was mainly attributable to the following:

  • Dry bulk business. Revenue of the Group's dry bulk business increased by approximately 11.2% from approximately US$22.4 million for the year ended 31 December 2018 to approximately US$24.9 million for the year ended 31 December 2019, which primarily reflected the increase in the daily charter rate of dry bulk vessels.
    • 33 -

Cost of Sales

The cost of sales of the Group's dry bulk and others business increased by approximately 9.4% from approximately US$16.0 million for the year ended 31 December 2018 to approximately US$17.5 million for the year ended 31 December 2019. The increase was mainly attribute to the following:

  • Dry bulk business. Cost of sales for the dry bulk business increased by approximately 9.9% from approximately US$15.2 million for the year ended 31 December 2018 to approximately US$16.7 million for year ended 31 December 2019, primarily reflecting an increase in dry-dock costs.

Gross Profit and Gross Profit Margin

As a result of the foregoing, the gross profit of the Group's dry bulk and others business increased by approximately 12.7% from approximately US$7.9 million for the year ended 31 December 2018 to approximately US$8.9 million for the year ended 31 December 2019. The gross profit margin of the Group's dry bulk and others business increased from approximately 33.1% for the year ended 31 December 2018 to approximately 33.8% for the year ended 31 December 2019.

Other Income and Gains (excluding bank interest income and other investment income)

There was no other income and gains (excluding bank interest income and other investment income) of the Group's dry bulk and others business occurred for the year ended 31 December 2019 (2018: US$7.2 million). The decrease was mainly attributable to a reversal of impairment losses for dry bulk vessels in prior years of approximately US$5.9 million in 2018 (2019: Nil).

- 34 -

Administrative Expenses

Administrative expenses of the Group's dry bulk and others business were approximately US$0.1 million for both the years ended 31 December 2019 and 2018. There was no fluctuation in the amount.

Share of Losses of Joint Ventures

The Group's share of losses of joint ventures for the dry bulk and others business was approximately US$0.4 million and US$0.2 million for the year ended 31 December 2019 and 2018, respectively. There was no material fluctuation in the amount.

Segment Results

As a result of the foregoing, the segment results of the Group's dry bulk logistics and others business decreased by approximately 43.2% from US$14.8 million for the year ended 31 December 2018 to approximately US$8.4 million for the year ended 31 December 2019.

LIQUIDITY, FINANCIAL AND CAPITAL RESOURCES

Total assets of the Group increased by approximately 12.7% from approximately US$1,551.9 million as at 31 December 2018 to approximately US$1,749.5 million as at 31 December 2019. As at 31 December 2019, the Group had cash and cash equivalents amounting to approximately US$399.4 million, mainly denominated in US dollar, Renminbi, Japanese Yen and other currencies.

Total liabilities of the Group increased by approximately 44.2% from approximately US$506.2 million as at 31 December 2018 to approximately US$730.0 million as at 31 December 2019. At 31 December 2019, the Group had secured interest-bearing bank loans of approximately US$282.0 million. The maturity profile is spread over a period, with approximately US$55.4 million repayable within one year or on demand, approximately US$47.9 million within the second year, approximately US$105.4 million within third to fifth years and approximately US$73.3 million beyond five years.

- 35 -

Further, the Group has transactional currency exposures. Such exposures arise from sales or purchases by operating units in currencies other than the units' functional currencies. As at 31 December 2019, the Group hedged approximately 11.0% (31 December 2018: 17.1%) of its foreign currency sales for which firm commitments existed at the end of the reporting period.

As at 31 December 2019, the Group had current ratio (being the current assets divided by the current liabilities) of approximately 1.3 compared to that of 1.9 as at 31 December 2018. The Group monitors capital using a gearing ratio, which is net debt divided by the adjusted capital plus net debt. The Group's policy is to maintain a healthy gearing ratio. Net debt includes interest-bearing bank borrowings, lease liabilities, trade and other payables, accruals, amounts due to related companies, less cash and cash equivalents. Adjusted capital includes equity attributable to owners of the parent less the hedging reserve. The Group's gearing ratio was 11% as at 31 December 2018 before adoption of HKFRS 16. Upon adoption of HKFRS 16 with an increase in lease liabilities, the Group's gearing ratio was 18% as at 1 January 2019 and 31 December 2019.

CONTINGENT LIABILITIES

As at 31 December 2019, the Group had no significant contingent liabilities.

CHARGE ON ASSETS

As at 31 December 2019, the Group's bank loans were secured by mortgages over the Group's container vessels and dry-bulk vessels which had an aggregate carrying value at the end of the reporting period of approximately US$489.2 million (31 December 2018: US$565.1 million).

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EMPLOYEE AND REMUNERATION POLICIES

As at 31 December 2019, the Group had an aggregate of 1,491 full-time employees (excluding crew member), (31 December 2018: 1,468). The related employees' costs for the period (including directors' emoluments) amounted to approximately US$98.7 million (31 December 2018: US$89.2 million). The Group recruited and promoted individual persons according to their strength and development potential. The Group determined the remuneration packages of all employees (including the directors) with reference to corporate performance, individual performance and current market salary scale. Further, the Group has in place the pre-IPO share option scheme and post-IPO share option scheme and adopted a share award scheme on 13 September 2017. Further information of the share option schemes and share award scheme will be available in the annual report of the Company for the year ended 31 December 2019.

SIGNIFICANT INVESTMENTS

For the year ended 31 December 2019, a total of 5 new container vessels were delivered. Save as otherwise, the Group did not have other significant investments.

MATERIAL ACQUISITIONS AND DISPOSALS

For the year ended 31 December 2019, the Group did not have any material acquisitions and disposals of its subsidiaries and associated companies.

FUTURE PLANS FOR MATERIAL INVESTMENTS OR CAPITAL ASSETS

The Company will continue to purchase container vessels, dry bulk vessels, containers and invest in logistics projects, as and when appropriate. The Company expected that the internal financial resources and bank borrowings will be sufficient to meet the necessary funding requirements. Save as disclosed, the Company does not have any future plans for significant investments or capital assets as at the date of this announcement.

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FINAL DIVIDEND

At the Board meeting held on 13 March 2020, it was proposed that a final dividend of HK27 cents (equivalent to US3.47 cents) per ordinary share would be paid on 20 May 2020 to the shareholders of the Company whose names appear on the Company's register of members at the close of business at 4:30 p.m. on 11 May 2020 (Monday). The proposed final dividend is subject to approval by the shareholders at the annual general meeting of the Company to be held on 29 April 2020 (the "Annual General Meeting"). In addition, the proposed final dividend for the year ended 31 December 2019 is also subject to the condition that the audited annual results of the Group for the year upon completion of the auditing process will be consistent in all material respects with the unaudited annual results set out herein.

There is no arrangement that a shareholder of the Company has waived or agreed to waive any dividends.

OTHER INFORMATION

Annual General Meeting

The Annual General Meeting will be held on Wednesday, 29 April 2020. A notice convening the Annual General Meeting will be published and despatched to the shareholders of the Company in the manner required by the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the "Listing Rules") in due course.

Closure of Register of Members

For determining the entitlement to attend and vote at the Annual General Meeting, the register of members of the Company will be closed from 24 April 2020 (Friday) to 29 April 2020 (Wednesday), both days inclusive, during which period no transfer of shares will be registered. In order to be eligible to attend and vote at the Annual General Meeting, all transfers of shares documents, accompanied by the relevant share certificates, must be lodged with the Company's branch share registrars in Hong Kong, Computershare Hong Kong Investor Services Limited, located at Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen's Road East, Wanchai, Hong Kong, for registration no later than 4:30 p.m. on 23 April 2020 (Thursday).

- 38 -

For determining the entitlement to the proposed final dividend, the register of members of the Company will be closed from 7 May 2020 (Thursday) to 11 May 2020 (Monday), both days inclusive, during which period no transfer of shares will be registered. In order to qualify for the proposed final dividend, all transfers of shares documents, accompanied by the relevant share certificates, must be lodged with the Company's branch share registrars in Hong Kong, Computershare Hong Kong Investor Services Limited, located at Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen's Road East, Wanchai, Hong Kong, for registration no later than 4:30 p.m. on 6 May 2020 (Wednesday).

Purchase, Sale and Redemption of Shares

During the year ended 31 December 2019, neither the Company nor any of its subsidiaries purchased, redeemed or sold any of the Company's listed securities.

Corporate Governance

The Company is committed to maintaining a stringent corporate governance practices and procedures with a view to enhancing investor confidence and the Company's accountability and transparency. For the year ended 31 December 2019, the Board is of the view that the Company has complied with the code provisions set out in the Corporate Governance Code (the "CG Code") contained in Appendix 14 to the Listing Rules and there has been no deviation from the code provisions set out in the CG Code for the year ended 31 December 2019.

Model Code for Securities Transactions by Directors

The Board has adopted the Model Code for Securities Transactions by Directors of Listed Issuers (the "Model Code") as set out in Appendix 10 to the Listing Rules (the "Appendix 10") and devised its own code of conduct regarding directors' dealings in the Company's securities (the "Company Code") on terms no less exacting than the Model Code as set out in Appendix 10. Having made specific enquiries with all Directors, they have confirmed that they complied with the required standards set out in the Model Code and the Company Code throughout the year ended 31 December 2019.

- 39 -

Audit Committee

The audit committee of the Company (the "Audit Committee") consists of Mr. Tsui Yung Kwok, Dr. Lo Wing Yan, William and Dr. Ngai Wai Fung, all of whom are the Company's independent non-executive directors. The chairman of the Audit Committee is Mr. Tsui Yung Kwok.

REVIEW OF UNAUDITED ANNUAL RESULTS

The auditing process for the annual results for the year ended 31 December 2019 has not been completed due to the COVID-19 coronavirus outbreak. The unaudited annual results contained herein have not been agreed with the Company's auditors as required under Rule 13.49(2) of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited. An announcement relating to the audited results will be made when the auditing process has been completed in accordance with Hong Kong Standards on Auditing issued by Hong Kong Institute of Certified Public Accountants.

The unaudited annual results contained herein have been reviewed by the audit committee of the Company.

FURTHER ANNOUNCEMENT(S)

Following the completion of the auditing process, the Company will issue further announcement(s) in relation to the audited results for the year ended 31 December 2019 as agreed by the Company's auditors and the material differences (if any) as compared with the unaudited annual results contained herein. In addition, the Company will issue further announcement as and when necessary if there are other material development in the completion of the auditing process. The Company expects the auditing process will be completed on or before 23 March 2020 and in any event not later than 31 March 2020.

Auditor

The Company appointed Ernst & Young as its auditor for the year ended 31 December 2019. The Company will submit a resolution in the coming Annual General Meeting to re-appoint Ernst & Young as the auditor of the Company.

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Publication of Annual Report

This unaudited annual results announcement is published on the websites of The Stock Exchange of Hong Kong Limited (http://www.hkex.com.hk) and the Company (http:// www.sitc.com). The annual report of the Company for the year ended 31 December 2019 containing all the information as required by the Listing Rules will be despatched to the shareholders of the Company and made available for review on the same websites in due course.

The financial information contained herein in respect of the annual results of the Group have not been audited and have not been agreed with the auditors. Shareholders and potential investors of the Company are advised to exercise caution when dealing in the securities of the Company.

By Order of the Board

SITC International Holdings Company Limited

Yang Shaopeng

Chairman

Hong Kong, 13 March 2020

As at the date of this announcement, the executive directors of the Company are Mr. Yang Shaopeng, Mr. Yang Xianxiang, Mr. Liu Kecheng, Mr. Xue Peng, Mr. Xue Mingyuan and Mr. Lai Zhiyong; and the independent non-executive directors of the Company are Mr. Tsui Yung Kwok, Mr. Yeung Kwok On, Dr. Lo Wing Yan, William and Dr. Ngai Wai Fung.

- 41 -

Disclaimer

SITC International Holdings Co. Ltd. published this content on 13 March 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 13 March 2020 04:22:07 UTC


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Financials (USD)
Sales 2020 1 661 M - -
Net income 2020 255 M - -
Net cash 2020 68,0 M - -
P/E ratio 2020 16,1x
Yield 2020 4,52%
Capitalization 4 158 M 4 157 M -
EV / Sales 2020 2,46x
EV / Sales 2021 2,18x
Nbr of Employees 1 589
Free-Float 47,0%
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Average target price 1,63 $
Last Close Price 1,55 $
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NameTitle
Xian Xiang Yang Vice Chairman & Chief Executive Officer
Shao Peng Yang Chairman
Elaine Xu Manager-Operations & Management Centre
Ke Cheng Liu Chief Financial Officer & Executive Director
Peng Xue Secretary & Director