Profits rebounded sharply in fiscal year 2017. Led by property sales in Shanghai and Melbourne, far East Development's revenue in fiscal 2017 (which ended in March) increased by 25.5% to HK $5.005 billion, while revenue growth changed from negative to positive (revenue growth in fiscal year 2016 was-21.8%). Net profit rose sharply by 52.3% to HK $1.118 billion. Gross profit margin fell 2.9 percentage points to 39.8%. The decline in gross margin was mainly affected by an increase in the share of sales in Australia (FY2017:58.9%; FY2016:36%) and a decline in the share of sales in mainland China (FY2017:41%;FY2016:62%). Due to the increase in non-operating income, the decrease in marketing expenses and the reduction in financial expenses, the net profit margin has significantly improved and the net profit has reached an all-time high. The company paid a dividend of HK18.5 cents per share for the whole year, an increase of 15.6% over the same period last year, and the dividend payout ratio was about 36.3%.
Has high-quality projects in many overseas markets. Development projects in the far East cover markets such as Australia, mainland China, Hong Kong, the United Kingdom, Singapore and Malaysia. In fiscal year 2017, 47 per cent of revenue came from Australia and New Zealand, 29 per cent from mainland China and 15 per cent from Hong Kong. At the end of fiscal year 2017, 41 per cent of the company's total assets were located in Hong Kong (mainly hotel assets), while assets in other regions accounted for 6 per cent and 14 per cent. In order to carry out property development in different regional markets, far East Development adopts a regional strategy of setting up local teams in various markets to recruit local talents. The zoning strategy also enables the company to have a better performance in land cost and sales. Although the devaluation of foreign currencies will adversely affect the company, management believes it will be a good opportunity for overseas expansion. By the end of May 2017, the total value of the company's projects was about HK $47.2 billion.
The hotel business is still recovering. The company's hotel business revenue for fiscal year 2017 was HK $1.31 billion, an increase of 1.9%, accounting for 26% of total revenue. At present, 21 hotels are in operation and 14 hotels are in the stage of development and construction. Hong Kong remains the largest source of revenue for the company's hotel business, accounting for 50 per cent of hotel revenue. The overall hotel occupancy rate in fiscal year 2017 was 77.6%, an increase of 4.9% over the previous fiscal year. The average revenue per room remained at a similar level in fiscal year 2016, at HK $485.
There are good growth prospects for the fiscal year 2018. In April 2017, far East Development signed an agreement with Manchester City Hall to develop the Northern Gateway project. The project covers an area of more than 350mu of land, equivalent to 15 million square feet, indicating that the company is rapidly expanding the UK market. In May 2017, the company completed the sale of its Silk Hotel in West Kowloon, which is expected to record an attributable income of HK $316 million, which will help increase the company's profit for fiscal year 2018. In fiscal year 2018, the company expects to complete the construction of five property projects, which achieved a pre-sale of about HK $3.34 billion by the end of March 2017, higher than the property sales revenue in fiscal year 2017.
