Annual Report
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Stock Code: 00688 A Trusted Brand Growing Through Diligence And Care ANNUAL REPORT 2009 A TRUSTED BRAND GROWING THROUGH DILIGENCE AND CARE The Group has sustained a strong performance for seven consecutive years amid the global fi nancial crisis and effects of Chinese government policies. The Group's sound operational and fi nancial management helped it to weather the downturn in 2008 and to capture opportunities in 2009. The Group has the capability to ride out a potentially volatile 2010. China Overseas Property is a leading brand name in the mainland China property sector. Through diligence and care, the Group will further promote this trusted brand name to deepen and broaden its recognition. Brand building will consolidate the Group's competitiveness and help to boost its scale and profi t. Contents 02 Board of Directors, 71 Investor Relations Honourable Chairman and Committees 72 Corporate Governance Report 03 Corporate and Shareholders’ Information 80 Accolades & Awards 2009 04 Corporate Structure 82 Financial Information 05 Financial Highlights 83 Group Financial Summary 06 Chairman’s Statement 85 Report of Directors Connected, Continuing Connected and 14 Management Discussion and Analysis 96 Related Party Transactions Overall Performance for Year 2009 16 Independent Auditor’s Report Land Reserves 117 18 Consolidated Statement of Property Development 119 22 Comprehensive Income 38 Property Investment 120 Consolidated Statement of Financial Position 42 Property-Related Business 122 Company Statement of Financial Position 46 Group Finance 123 Consolidated Statement of Changes in Equity 50 Customer Service and Relationships 124 Consolidated Statement of Cash Flows 52 Directors and Organization 126 Notes to the Financial Statements Corporate Citizenship 64 207 Five Year Financial Summary 209 Major Properties and Property Interests Board of Directors, Honourable Chairman and Committees Chairman Audit Committee Kong Qingping Li Kwok Po, David* Lam Kwong Siu Wong Ying Ho, Kennedy Honourable Chairman Fan Hsu Lai Tai, Rita Sun Wen Jie# Remuneration Committee Executive Directors Wong Ying Ho, Kennedy* Hao Jian Min Vice Chairman and Hao Jian Min Chief Executive Officer Li Kwok Po, David Xiao Xiao Vice Chairman Lam Kwong Siu Chen Bin Fan Hsu Lai Tai, Rita Dong Daping Nip Yun Wing Luo Liang Nomination Committee Lin Xiaofeng Fan Hsu Lai Tai, Rita* Kong Qingping Dong Daping Non-Executive Director Li Kwok Po, David Wu Jianbin Vice Chairman Lam Kwong Siu Wong Ying Ho, Kennedy # not a director of the Company Independent Non-Executive * Committee Chairman Directors Li Kwok Po, David Lam Kwong Siu Wong Ying Ho, Kennedy Fan Hsu Lai Tai, Rita Authorized Representatives Kong Qingping Hao Jian Min Xiao Xiao (Alternate authorized representative to Hao Jian Min) Nip Yun Wing (Alternate authorized representative to Kong Qingping) 02 Corporate and Shareholders’ Information Corporate Information Shareholders’ Information Registered Office Share Listing 10/F., Three Pacific Place The Company’s shares and bonds are listed on The Stock 1 Queen’s Road East, Hong Kong Exchange of Hong Kong Limited (“SEHK”). Telephone : (852) 2823 7888 Facsimile : (852) 2865 5939 Website : www.coli.com.hk Stock Code Shares SEHK : 688 Company Secretary Bloomberg : 688HK Keith Cheung, Solicitor Reuters : 0688.HK Bond Registrar SEHK : China OVS N1207 Tricor Standard Limited Code : 2521 26/F., Tesbury Centre Bloomberg : EF0142101 28 Queen’s Road East, Hong Kong Reuters : KY022045903 CINS-G2155ZAA2 Telephone : (852) 2980 1333 Facsimile : (852) 2810 8185 E-mail : [email protected] Investor Relations For any enquiries, please contact: Mr. Michael Jiang, Corporate Communications Department Legal Advisor Telephone : (852) 2823 7978 JSM Facsimile : (852) 2865 5939 E-mail : [email protected] Auditors Deloitte Touche Tohmatsu Public Relations For any enquiries, please contact: Certified Public Accountants Ms. Doris Chung, Corporate Communications Department Telephone : (852) 2823 7333 Facsimile : (852) 2865 5939 Principal Bankers (In Alphabetical Order) E-mail : [email protected] Agricultural Bank of China Bank of China Limited Bank of China (Hong Kong) Limited Bank of Communications Co., Ltd. Hong Kong Branch Financial Calendar for 2008/09 The Bank of East Asia, Limited Interim results announcement : 17 August 2009 China Construction Bank Corporation Interim dividend paid : 28 September 2009 China Merchants Bank Co., Ltd. Final results announcement : 18 March 2010 CITIC Ka Wah Bank Limited Share register closed : 8 June 2010 to DBS Bank Ltd., Hong Kong Branch 9 June 2010 Hang Seng Bank Limited (both days inclusive) The Hongkong and Shanghai Banking Corporation Limited Annual general meeting : 9 June 2010 Industrial and Commercial Bank of China Ltd. Final dividend payable : 18 June 2010 Industrial and Commercial Bank of China (Asia) Ltd. China Overseas Land & Investment Ltd. Annual Report 2009 03 Corporate Structure Design Mainland China, Property Development* Hong Kong, Macau, Canada, Mainland China, Hong Kong and Japan and others Macau Property Management Mainland China, Hong Kong and Macau Property Investment Mainland China and Hong Kong * Property development in 20 major cities in mainland China, (Beijing, Shenzhen, Nanjing, Changchun, Xi’an, Suzhou, Chengdu, Foshan, Zhongshan, Shanghai, Guangzhou, Ningbo, Chongqing, Hangzhou, Zhuhai, Tianjin, Dalian, Shenyang, Qingdao, Jinan), as well as in Hong Kong and Macau. 04 Financial Highlights For the year ended 31 December 2009 2008 Change (%) Financial Highlights (HK$ billion) Turnover 37.3 18.9 +98 Profit attributable to equity holders of the Company 7.47 5.05 +48 Proceeds from sales of properties 47.8 26.6 +80 Financial Ratios Net debt to shareholders’ funds (%) 22 47 -25* Interest cover (times) 16 7 +9** Dividend payout (%) 22 21 +1* Financial Information per Share (HK$) Earnings 0.92 0.64 +43 Dividends 0.20 0.13 +54 — Interim dividend 0.07 0.06 +17 — Final dividend 0.13 0.07 +86 Equity attributable to equity holders 5.15 4.23 +22 Land Reserves (million sq m) Development land bank 30.55 24.84 +23 Notes: * Change in percentage points ** Change in number of times China Overseas Land & Investment Ltd. Annual Report 2009 05 Chairman’s Statement The audited consolidated profit after taxation and minority interests of the Group for the year ended 31 December 2009 increased by 48% to HK$7.47 billion. Earnings per share were HK91.6 cents, an increase of 43%. Total shareholders’ funds increased by 27% to HK$42.1 billion. Net assets per share were HK$5.15, an increase of 22% on 2008, and average return on shareholders’ funds reached 19.3%. The Board recommends the payment of a final dividend of HK13 cents per share for year 2009. Kong Qingping Chairman 06 I have pleasure to report to the shareholders that: In 2009, the Group adhered to its operational watchword: Sharpening Capabilities for Sustained Growth. Turnover increased by 98% to HK$37.3 billion, and consolidated net profit increased by 48% to HK$7.47 billion. The consolidated net profit of the Group has sustained a compound increase of about 47.4% in the past five years. This comprises annual increases of over 20%, fulfilling the Group’s commitments to its shareholders and investors. Business Review Taking advantage of the release of pent-up demand and As a result of the 2008 global financial crisis, economic the V-shaped rebound, the Group expedited its stock sales development in many countries was adversely affected to in the first half of 2009. Meeting strong market demand varied extent. Major developed countries in Europe, as well and also as a result of targeted and innovative sales and as the United States and Japan, have gradually stumbled marketing measures, the Group achieved an excellent out of recession but a full global economic recovery is result in both the price and transaction volume of its sales yet to be seen. Under the central government’s proactive in the second half of the year. The turnover of the Group’s fiscal policies and moderately loose monetary policies, and China property development business increased by 110% coupled with the implementation of a basket of stimulus to HK$36.1 billion, the gross profit margin was satisfactory measures, the economic downturn in China was effectively at 31.1%, and the operating profit increased by 62% to staved off. In 2009, China still achieved strong GDP growth HK$10.3 billion. Through timely adoption of greater sales of 8.7%. Improved economic development in both Hong flexibility, the stock of the two projects in Hong Kong and Kong and Macau was also seen. the La Cité project in Macau were cleared at good prices, generating turnover of HK$280 million; the gross profit In 2009, the Group adhered to its operational watchword: margin was 60%. Hong Kong and Macau operations Sharpening Capabilities for Sustained Growth. By brought in an operating profit of HK$156 million. mastering such fluctuating market conditions, the Group achieved a substantial jump in its sales and profit. Property Development Turnover increased by about 98% to HK$37.3 billion, and During the year, the China real estate market has evidently consolidated net profit increased by 48% to HK$7.5 billion. improved. The Group achieved another sales record of The consolidated net profit of the Group has sustained a HK$47.8 billion in 2009 (including its share of sales in compound increase of more than 47.4% in the past five syndicated projects), an increase of 80% on 2008. The years (2005-2009). This comprises annual increases of total area of properties sold was 4.8 million sq m, an over 20% in each of the past seven years (2003-2009), increase of 76% on 2008. Pre-sales amounted to about fulfilling the Group’s commitments to its shareholders and HK$20.0 billion as at the end of 2009 (of which HK$17.5 investors. billion has been received), an increase of 41%. The Group adhered firmly to its direction and target for Total sales of properties in China remained robust, its China real estate operation.