Expanding Horizons New Perspectives
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Stock Code: 12 Expanding Horizons New Perspectives Annual Report 2007 Henderson Land creates high quality new homes and commercial developments that enhance, as well as integrate with, their surrounding natural and built environments. We strive to build visually stimulating, innovative properties that sustain comfortable and friendly communities for our customers to live and work in. Contents inside front Corporate Profi le 2 Awards & Accolades 4 Group Structure 5 Financial Highlights 8 Chairman’s Statement Review of Operations Business in Hong Kong 28 Land Bank 30 Property Development 37 Property Investment 44 Property Related Businesses 46 Marketing 51 Subsidiary and Associated Companies Business in Mainland China and Macau 61 Land Bank 67 Progress of Major Development Projects 75 Major Investment Properties 78 Human Resources 81 Corporate Social Responsibility 84 Financial Review 90 Five Year Financial Summary 92 Corporate Governance Report 99 Report of the Directors 116 Biographical Details of Directors and Senior Management 122 Report of the Independent Auditor 123 Financial Statements 188 Corporate Information 194 Notice of Annual General Meeting 196 Financial Calendar Review of Operations – Business in Hong Kong Awards & Accolades The Group’s operational strengths and commitment to its These accolades recognise the many facets of the Group’s stakeholders are refl ected in the wide range of awards and day-to-day operations, and were awarded for achievements in commendations it received during the course of the year. areas ranging from corporate development and technological innovation to marketing excellence and long-term commitment to corporate social responsibility. 1 3 2 9 4 1 2005/2006 Annual Reports Awards Henderson Investment 3 Prime Awards for Brand Excellence 2007 MerComm, Inc. 2006/07 International Galaxy Awards Prime Communications Ltd Henderson Land – Silver Award (Annual Report) Henderson Land 2006/07 International Mercury Awards 2006/07 International ARC Awards – Brand Excellence - Luxurious Residential Property – Grand Award (Best of Annual Report - HK) – Bronze Award (Overall Annual Report) (The Beverly Hills) – Gold Award (Annual Report - Overall Presentation) 2 The 13th Annual Most Popular 4 HKIS Property Marketing Awards 2006 2006/07 International Astrid Awards TV Commercial Awards The Hong Kong Institute of Surveyors – Silver Award (Photography) Asia Television Ltd Henderson Land 2006/07 International ARC Awards Henderson Land – Top Ten Property Sales Brochure 2006 – Silver Award (Cover Photo/Design) – The Most Popular TVC Actress 2007 – Top Ten Property Marketing Projects 2006 – Honors Award (Overall Annual Report) (The Beverly Hills - Miss Universe) – Top Ten Flat Layouts 2006 (Royal Green & CentreStage) Annual Report 2007 2 Henderson Land Development Company Limited Review of Operations – Business in Hong Kong Awards & Accolades 6 7 8 5 4 5 “Building Information Modeling – The New 7 Caring Company 2006/07 9 Hong Kong Outstanding Enterprises Parade 2006 Chapter of Building Industry” Award Hong Kong Council of Social Services Economic Digest Autodesk Henderson Land, Hong Kong & China Gas, Hong Henderson Land Henderson Land Kong Ferry, Miramar, Hang Yick, Wellborn & Goodwill – Hong Kong Outstanding Enterprises (Blue Chip) 6 Corporate Partnership Recognition 8 TVB Most Popular TV Commercial Awards 2007 Tung Wah Group of Hospitals Television Broadcasts Limited Henderson Land Henderson Land – The Property Commercial Award – The Grand Award (Grand Promenade) Annual Report 2007 Henderson Land Development Company Limited 3 Review of Operations – Business in Hong Kong Group Structure Henderson Land Group Structure Market Capitalization as at 17 September 2007 Henderson Land Development Company Limited: HK$119 billion Six listed companies of the Group: HK$285 billion Henderson Land Development Company Limited Investment holding, property development and investment in Hong Kong and mainland China, hotel operation, project and property management, construction and financial services 31.36% 67.94% 44.21% Hong Kong Ferry (Holdings) Henderson Investment Miramar Hotel and Investment Company Limited Limited Company, Limited Property development Investment holding Property investment, hotel and investment and infrastructure operation and travel business 39.06% The Hong Kong and China Gas Company Limited Production and distribution of gas in Hong Kong and mainland China 43.81% Towngas China Company Limited Sale and distribution of LP gas and natural gas in mainland China Note: All percentage shareholdings shown above were figures as of 17 September 2007 Annual Report 2007 4 Henderson Land Development Company Limited Financial Highlights 2007 2006 Change Note HK$ million HK$ million % Profi t for the year 1 9,817.7 13,548.7 -27.5 Underlying profi t for the year 1&2 5,882.8 5,268.2 +11.7 Net asset value 1 92,219.1 77,964.1 +18.3 Adjusted net asset value 1&3 98,969.5 83,720.7 +18.2 Net debt 4 8,750.1 13,035.4 -32.9 Net debt to net asset value 1 9.49% 16.72% -7.23 pp (note 5) Net debt to adjusted net asset value 1&3 8.84% 15.57% -6.73 pp (note 5) HK$ HK$ % Earnings per share 1 5.19 7.47 -30.5 Underlying earnings per share 1&2 3.11 2.90 +7.2 Dividends per share 1 1.10 1.05 +4.8 Net asset value per share 1 47.47 42.96 +10.5 Adjusted net asset value per share 1&3 50.94 46.13 +10.4 Notes: 1 The profi ts, earnings, dividends and net asset values shown or referred to above were all attributable to equity shareholders of the Company. 2 The effect of the increase in fair value of investment properties (net of deferred taxation and minority interests) was excluded in the calculation of the underlying profi t for the year and of the underlying earnings per share. 3 As there is no capital gains tax in Hong Kong, total deferred tax liabilities arising from the revaluation of the Group’s investment properties in the amount of HK$6,750.4 million (2006: HK$5,756.6 million), equivalent to HK$3.47 per share (2006: HK$3.17 per share), as provided and included in the Group’s consolidated balance sheet would not be payable if the Group’s investment properties were to be sold at the revalued amounts under the current tax regime. Accordingly, such deferred tax as provided under HKAS-INT 21 has been excluded for the above calculation in order to provide a better understanding of the net asset value attributable to equity shareholders of the Company. 4 Net debt represents the total of bank loans and overdrafts, guaranteed convertible notes (if any) and other loans minus cash and bank balances. 5 pp stands for percentage points. Annual Report 2007 Henderson Land Development Company Limited 5 World Financial Centre, Beijing A Sustainable Vision for the Future Sustainability may still be considered a choice for some, but unless we all reconsider our actions the choice will be made for us. Modern architecture should be beautiful, but it must also be environmentally responsible and respectful of its surroundings. Cesar Pelli Pelli Clarke Pelli Architects Dr The Honourable Lee Shau Kee, GBM Chairman and Managing Director Our approach as a Group is based on strong economic, social and environmental principles. We strive to create high quality, visually stimulating, innovative new homes and commercial developments that enhance, as well as integrate with, their surrounding natural and built environments. Chairman’s Statement Dear Shareholders, Included in the results for the year was total non-recurrent income of HK$938.0 million made up of the excess, amounting to On behalf of your Board, I am pleased to present my report on the HK$352.4 million, of the fair values of net assets comprised in the operations of the Group for the year ended 30 June 2007. companies acquired from Henderson Investment Limited during the year over the consideration paid, and the Group’s share of Overview gain of HK$585.6 million arising from the disposal of 10 piped-city Our approach as a Group is based on strong economic, social and gas projects by an associate. (Similarly, net non-recurrent income environmental principles. We strive to create high quality, visually of HK$1,395.5 million was recorded in the previous year made up stimulating, innovative new homes and commercial developments of a net gain of HK$650.7 million resulting from the privatisation that enhance, as well as integrate with, their surrounding natural of two listed subsidiaries, a deemed profi t of HK$829.6 million on and built environments. placement of Henderson Investment Limited shares, and project tender cost written off amounting to HK$84.8 million.) After Sustainability lies at the heart of this approach, we build effi cient, excluding such non-recurrent income, the adjusted underlying modern properties, but we also try to play our part in establishing profit for the year was HK$4,944.8 million, representing an or contributing to comfortable and friendly communities for our increase of HK$1,072.1 million or 27.7% over that for the previous customers to live and work in. Large-scale projects such as Grand year. Based on the adjusted underlying profi t, the earnings per Promenade, Grand Waterfront and the IFC complex have shown share were HK$2.61 (2006: HK$2.13), or an increase of 22.5%. The that our customers appreciate this approach and welcome the encouraging improvement in adjusted underlying profi t was the resultant quality of life that our properties afford them. result of signifi cantly higher profi t contributions from property Following the successful privatisation of Henderson China development, associates and jointly controlled entities, as well as Holdings Limited, the Group has injected substantial resources the steady increase in rental income from investment properties. in expanding its property development business in mainland At 30 June 2007, the net asset value attributable to equity China.