Incorporated in Bermuda with limited liability (Stock Code: 41) STRATEGIC VISION GROWING NETWORK 2015 ANNUAL REPORT GROUP PROFILE The Great Eagle Group is one of Hong Kong’s leading property companies; the Group also owns and manages an extensive international hotel portfolio branded under The “Langham” and its affiliate brands. Headquartered in Hong Kong, the Group develops, invests in and manages high quality residential, office, retail and hotel properties in Asia, North America, Australasia and Europe. The Group’s principal holdings include a 62.7% interest (as at 31 December 2015) in Champion Real Estate Investment Trust, and a 60.7% interest (as at 31 December 2015) in Langham Hospitality Investments and Langham Hospitality Investments Limited (LHI). Champion Real Estate Investment Trust owns 1.64 million square feet of Grade-A commercial office space in Citibank Plaza in the central business district of Hong Kong, as well as the office tower and shopping mall of Langham Place comprising a total floor area of 1.29 million square feet in the prime shopping district of Mongkok, Kowloon. As for LHI, it owns three high quality hotels in the heart of Kowloon, the 498-room The Langham hotel in the prime shopping district of Tsimshatsui, the 664-room Cordis hotel (rebranded from Langham Place hotel) in the prime shopping area of Mongkok and connected to the Langham Place Office and Mall, and the 465-room Eaton hotel located on the busy arterial Nathan Road. The Group’s development projects include a luxury residential development project in Pak Shek Kok, Tai Po, Hong Kong, two development projects in San Francisco, U.S., and a hotel development project in Tokyo, Japan. The Group also owns a 49.6% equity stake in the U.S. Real Estate Fund, which invests in office properties and residential developments in the U.S. The Group’s share of net asset value in the U.S. Real Estate Fund amounted to HK$1,614 million as at the end of December 2015. In addition, the Group is the asset manager of the U.S. Real Estate Fund with an 80% stake in the asset management company of the Fund. The Group is also active in property management and maintenance services as well as building materials trading. The Group’s extensive international hotel portfolio currently comprises twenty luxury properties with more than 8,000 rooms, including seventeen luxury hotels branded under The Langham, Langham Place and Cordis brands in the gateway cities of Hong Kong, London, New York, Chicago, Boston, Los Angeles, Sydney, Melbourne, Auckland, Shanghai, Beijing, Shenzhen, Guangzhou, Haining, Ningbo and Xiamen; two Eaton hotels in Washington D.C. and Hong Kong; and the Chelsea hotel in Toronto. All the hotels are managed by Langham Hotels International Limited, which is a wholly-owned subsidiary of Great Eagle. The Group was founded in 1963 with The Great Eagle Company, Limited as its holding company, shares of which were listed on the Hong Kong Stock Exchange in 1972. The Group underwent a re-organisation in 1990 and Great Eagle Holdings Limited, a Bermuda registered company, became the listed company of the Group in place of The Great Eagle Company, Limited. The Group had a core profit after tax of approximately HK$1,780 million in the financial year 2015 and a net asset value (based on share of net assets of Champion Real Estate Investment Trust and LHI) of approximately HK$63 billion as of 31 December 2015. CONTENTS Corporate Information 2 Dividend Notice 3 Financial Highlights and Financial Calendar 4 Chairman’s Statement 7 Overview Business Review Financial Review Outlook Corporate Social Responsibility 26 Biographical Details of Directors and Senior Management 47 Corporate Governance Report 55 Report of the Directors 79 Independent Auditor’s Report 97 Consolidated Income Statement 99 Consolidated Statement of Comprehensive Income 100 Consolidated Statement of Financial Position 101 Consolidated Statement of Changes in Equity 103 Consolidated Statement of Cash Flows 105 Notes to the Consolidated Financial Statements 108 Appendix I – List of Major Properties 213 Appendix II – Five Years’ Financial Summary 218 Glossary of Terms 219 2 Annual Report 2015 GREAT EAGLE HOLDINGS LIMITED CORPORATE INFORMATION DIRECTORS LEGAL ADVISORS LO Ka Shui (Chairman and Managing Director) Appleby LO Kai Shui (Deputy Managing Director) Clifford Chance LO TO Lee Kwan# Dentons US LLP CHENG Hoi Chuen, Vincent* Mayer Brown JSM WONG Yue Chim, Richard* Shartsis Friese LLP LEE Pui Ling, Angelina* LEE Siu Kwong, Ambrose* PRINCIPAL BANKERS POON Ka Yeung*^ Bank of China (Hong Kong) Limited LO Hong Sui, Antony Citibank, N.A. LAW Wai Duen Hang Seng Bank Limited LO Hong Sui, Vincent# The Hongkong and Shanghai LO Ying Sui# Banking Corporation Limited LO Chun Him, Alexander KAN Tak Kwong (General Manager) REGISTERED OFFICE CHU Shik Pui Canon’s Court, 22 Victoria Street # Non-executive Directors Hamilton HM12 * Independent Non-executive Directors ^ has been appointed with effect from 18 March 2016 Bermuda AUDIT COMMITTEE PRINCIPAL PLACE OF BUSINESS IN HONG KONG CHENG Hoi Chuen, Vincent (Chairman) WONG Yue Chim, Richard 33rd Floor, Great Eagle Centre LEE Pui Ling, Angelina 23 Harbour Road LEE Siu Kwong, Ambrose Wanchai, Hong Kong Tel: (852) 2827 3668 REMUNERATION COMMITTEE Fax: (852) 2827 5799 LEE Pui Ling, Angelina (Chairman) PRINCIPAL SHARE REGISTRAR CHENG Hoi Chuen, Vincent WONG Yue Chim, Richard MUFG Fund Services (Bermuda) Limited LEE Siu Kwong, Ambrose The Belvedere Building 69 Pitts Bay Road NOMINATION COMMITTEE Pembroke HM08 Bermuda WONG Yue Chim, Richard (Chairman) CHENG Hoi Chuen, Vincent BRANCH SHARE REGISTRAR IN LEE Pui Ling, Angelina HONG KONG LEE Siu Kwong, Ambrose Computershare Hong Kong Investor Services Limited FINANCE COMMITTEE Shops 1712-1716 17th Floor, Hopewell Centre LO Ka Shui (Chairman) 183 Queen’s Road East LO Kai Shui Wanchai, Hong Kong KAN Tak Kwong Email: [email protected] COMPANY SECRETARY WEBSITE WONG Mei Ling, Marina www.GreatEagle.com.hk AUDITOR STOCK CODE Deloitte Touche Tohmatsu 41 Annual Report 2015 GREAT EAGLE HOLDINGS LIMITED Annual Report 2015 GREAT EAGLE HOLDINGS LIMITED 3 DIVIDEND NOTICE FINAL DIVIDENDS CLOSURE OF REGISTERS OF MEMBERS The Board of Directors recommended the payment The Registers of Members of the Company will of a final dividend of HK47 cents per share (2014: be closed during the following periods and HK47 cents per share) and a special final dividend during these periods, no transfer of shares will be of HK$2.00 per share (2014: Nil) for the year ended registered: 31 December 2015 to the Shareholders whose names appear on the Registers of Members on (i) To attend and vote at the 2016 Friday, 20 May 2016 subject to the approval of Annual General Meeting the Shareholders at the forthcoming 2016 Annual For the purpose of ascertaining the General Meeting. Shareholders’ entitlement to attend and vote at the 2016 Annual General Meeting, the Taken together with the interim dividend of HK27 Registers of Members of the Company will cents per share paid on 16 October 2015, the be closed from Wednesday, 4 May 2016 to total dividend for the year 2015 is HK$2.74 per Tuesday, 10 May 2016, both days inclusive. share (2014 total dividend: HK74 cents per share, comprising an interim dividend of HK27 cents and a In order to be eligible to attend and vote final dividend of HK47 cents). at the 2016 Annual General Meeting, all properly completed transfer forms Shareholders will be given the option to receive the accompanied by the relevant share proposed 2015 final dividend of HK47 cents per certificates must be lodged with the branch share in new shares in lieu of cash and the special share registrar of the Company in Hong Kong final dividend of HK$2.00 per share will be paid for registration not later than 4:30 p.m. on in form of cash. The scrip dividend arrangement Tuesday, 3 May 2016. is subject to: (1) the approval of proposed 2015 final dividend and special final dividend at the (ii) To qualify for the proposed 2015 final 2016 Annual General Meeting; and (2) the Stock dividend and special final dividend Exchange granting the listing of and permission For the purpose of ascertaining the to deal in the new shares to be issued pursuant Shareholders’ entitlement to the proposed thereto. 2015 final dividend and special final dividend, the Registers of Members of the Company A circular containing details of the scrip dividend will be closed from Tuesday, 17 May 2016 to arrangement will be despatched to the Shareholders Friday, 20 May 2016, both days inclusive. together with the form of election for scrip dividend in May 2016. Dividend warrants and share In order to qualify for the proposed certificates in respect of the proposed 2015 final 2015 final dividend and special final dividend and special final dividend are expected dividend, all properly completed transfer to be despatched to the Shareholders on 22 June forms accompanied by the relevant share 2016. certificates must be lodged with the branch share registrar of the Company in Hong Kong for registration not later than 4:30 p.m. on Monday, 16 May 2016. 4 Annual Report 2015 GREAT EAGLE HOLDINGS LIMITED FINANCIAL HIGHLIGHTS AND FINANCIAL CALENDAR Year ended 31 December 2015 2014 Key Financials on Income Statement HK$ million HK$ million Change Based on core business1 Revenue based on core business 5,622.6 5,594.5 0.5% Core profit after tax attributable to equity holders 1,780.1 1,919.2 -7.2% Core profit after tax attributable to equity holders (per share) HK$2.68 HK$2.93 Based on statutory accounting principles2 Revenue based on statutory accounting principles 8,270.9 8,127.4 1.8% Statutory Profit attributable to equity holders 3,312.3 2,115.1 56.6% Interim Dividend (per share) HK$0.27 HK$0.27 Final Dividend (per share) HK$0.47 HK$0.47 Special Final Dividend (per share) HK$2.00 – Total Dividend (per share) HK$2.74 HK$0.74 1 On the basis of core business, figures excluded fair value changes relating to the Group’s investment properties and financial assets, and were based on attributable distribution income from Champion REIT, Langham Hospitality Investments and Langham Hospitality Investments Limited (LHI) and the U.S.