Annual Report 年報 2019

ANNUAL REPORT 年報 2019 Stock Code 股份代號: 34 Kowloon Development Company Limited 九龍建業有限公司 Kowloon Development Company Limited (Stock Code: 34) has been engaged in property investment and investment holding with the operation of its business mainly in Hong Kong since its establishment. It has substantially broadened the areas of its business activity since the Polytec group gained the control of it in 2002. The Group is principally engaged in investment holding, property development, property investment and property management in Hong Kong, Mainland China and Macau, with the exposure to property development in Macau through the Company’s 70.8%-owned listed subsidiary, Polytec Asset Holdings Limited (Stock Code: 208). The Group is determinedly committed to enhancing its competitive position, with its landbank amounting to approximately 3.5 million sq m of attributable gross floor area in Hong Kong and Mainland China as of 31 December 2019. 九龍建業有限公司（股份代號：34）自成立以來一直從事物業投資及投資控股業務，其業務主要於香港營運。本公司自保利達集團於二零零二年入主起便大幅擴濶其業務範圍，集團主要於香港、中國大陸及澳門從事投資控股、物業發展、物業投資及物業管理業務，並通過本公司擁有70.8%權益之上市附屬公司保利達資產控股有限公司（股份代號：208）投資於澳門地產發展業務。集團致力提升本身之競爭優勢，截至二零一九年十二月三十一日，其於香港及中國大陸土地儲備之應佔樓面面積約3,500,000平方米。 One East Coast (Hong Kong) 海傲灣（香港） Contents 2 Corporate Information 4 Group’s Business Structure 5 Highlights 6 Five-Year Financial Summary 8 Chairman’s Statement 12 Review of Operations 26 Financial Review 28 Profile of Directors 30 Corporate Governance Report 49 Report of the Directors 57 Independent Auditor’s Report 64 Consolidated Income Statement 65 Consolidated Statement of Comprehensive Income 66 Consolidated Statement of Financial Position 68 Consolidated Statement of Changes in Equity 70 Consolidated Cash Flow Statement 71 Notes to the Financial Statements 144 Particulars of Properties One East Coast (Hong Kong) KOWLOON DEVELOPMENT COMPANY LIMITED ANNUAL REPORT 2019 Corporate Information Board of Directors and Committees Audit Committee Mr Li Kwok Sing, Aubrey (Chairman) Board of Directors Mr Lok Kung Chin, Hardy Executive Directors Mr Seto Gin Chung, John Mr Or Wai Sheun (Chairman) Mr Yeung Kwok Kwong Mr Lai Ka Fai Mr Or Pui Kwan Nomination Committee Mr Lam Yung Hei Mr Or Wai Sheun (Chairman) Mr Lok Kung Chin, Hardy Non-executive Directors Mr David John Shaw Ms Ng Chi Man Mr Yeung Kwok Kwong Remuneration Committee Mr Seto Gin Chung, John (Chairman) Independent Non-executive Directors Mr Lai Ka Fai Mr Li Kwok Sing, Aubrey Mr Li Kwok Sing, Aubrey Mr Lok Kung Chin, Hardy Mr Lok Kung Chin, Hardy Mr Seto Gin Chung, John Mr David John Shaw Corporate and Shareholders’ Information Committees Executive Committee Company Secretary Mr Or Wai Sheun (Chairman) Mr Lee Kuen Chiu Mr Lai Ka Fai Mr Or Pui Kwan Independent Auditor Mr Lam Yung Hei KPMG Mr Yeung Kwok Kwong Public Interest Entity Auditor registered in accordance with the Financial Reporting Council Ordinance Phase 1A (completed) Phase 1B (completed) Artist’s Impression of a panoramic view of the whole development of Le Cove Garden (Huizhou) 2 KOWLOON DEVELOPMENT COMPANY LIMITED ANNUAL REPORT 2019 Corporate Information Authorised Representatives Principal Bankers Mr Lai Ka Fai Bank of China Mr Lee Kuen Chiu Bank of Communications Bank of East Asia Legal Adviser China Construction Bank (Asia) Sidley Austin Chong Hing Bank Hang Seng Bank Share Registrar Industrial and Commercial Bank of China Computershare Hong Kong Investor Services Limited Shanghai Rural Commercial Bank Rooms 1712-1716, 17th Floor, Hopewell Centre, Standard Chartered Bank 183 Queen’s Road East, Wanchai, Hong Kong United Overseas Bank Registered Office Financial Calendar 23rd Floor, Pioneer Centre, 750 Nathan Road, Interim results announcement 21 August 2019 Kowloon, Hong Kong Interim dividend paid 11 December 2019 Telephone : (852) 2396 2112 Annual results announcement 25 March 2020 Facsimile : (852) 2789 1370 2020 Annual General Meeting 10 June 2020 Website : www.kdc.com.hk Ex-dividend date for final dividend 15 June 2020 E-mail : [email protected] Closure of register of members – 2020 Annual General Meeting 5 June 2020 –10 June 2020 Stock Code (both dates inclusive) The Stock Exchange of Hong Kong Limited: 34 – Final dividend 17 June 2020 –18 June 2020 (both dates inclusive) Final dividend payable 29 June 2020 Phase 2 Phase 3 3 KOWLOON DEVELOPMENT COMPANY LIMITED ANNUAL REPORT 2019 Group’s Business Structure KOWLOON DEVELOPMENT COMPANY LIMITED (A member of the Polytec Group) Stock Code: 34 MAINLAND POLYTEC ASSET HONG KONG CHINA HOLDINGS LIMITED PROPERTY Stock Code: 208 PROPERTY 70.8% Property Development Property Development Major development projects: Major development projects: • 63 Pokfulam⊕ • Le Cove City (Shenyang) • Tseung Kwan O 江灣城（瀋陽） • Clear Water Bay Road • The Gardenia (Shenyang) Development Landbank: 翠堤灣（瀋陽） MAINLAND MACAU 257,000 sq m • Le Cove Garden (Huizhou) CHINA OTHERS # PROPERTY 江灣南岸花園（惠州） PROPERTY • The Lake (Foshan) Property Investment 山語湖（佛山） Flagship investment property: • Le Cove City (Wuxi) • Pioneer Centre Property Development Property Investment Ice & Cold Storage 江灣城（無錫） Major development project: Major investment property: The Hong Kong Ice & Cold Investment Landbank: • City Plaza (Tianjin) • Zhongshan (Zhongshan) • The Macau Square Storage Company Limited 55,000 sq m 城市廣場（天津） Development Landbank: Investment Landbank: is one of the largest ice • Shanghai (Shanghai) making distributors in Property Management 208,000 sq m 13,000 sq m Development Landbank: Hong Kong Properties under 3,010,000 sq m management: Oil 1,632,000 sq m Oil production and exploration in Kazakhstan Financial Investments Fixed-income and equity investments in Hong Kong and other recognised financial markets ⊕ Obtained the Occupation Permit on 6 February 2020. # The development of this project is under the co-investment agreement with Polytec Holdings International Limited. 4 KOWLOON DEVELOPMENT COMPANY LIMITED ANNUAL REPORT 2019 Highlights For the year ended 31 December 2019, the Group’s net profit attributable to shareholders of the Company amounted to HK$2,450 million compared to HK$2,193 million in 2018, an increase of 11.7%. Excluding revaluation from the Group’s investment properties net of tax and fair value gains on its interests in the property development projects, underlying net profit attributable to shareholders of the Company for 2019 rose to HK$2,600 million from HK$1,711 million in 2018, an increase of 52.0%. The underlying net earnings per share for 2019 were HK$2.21 compared to HK$1.45 in 2018. Final dividend of HK$0.54 per share is proposed. Full year dividend for 2019 amounts to HK$0.78 per share. Artist’s Impression of 63 Pokfulam (Hong Kong) 5 KOWLOON DEVELOPMENT COMPANY LIMITED ANNUAL REPORT 2019 Five-Year Financial Summary Shareholders’ Equity Profit Attributable to Shareholders HK$ million HK$ million 2,450 27,068 25,676 2,193 24,905 23,580 22,894 1,635 1,202 947 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 Net Asset Value per Share Dividends per Share HK$ HK$ 0.78 23.00 0.72 21.82 21.17 20.49 0.65 19.90 0.60 0.58 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 6 KOWLOON DEVELOPMENT COMPANY LIMITED ANNUAL REPORT 2019 Five-Year Financial Summary Key Consolidated Income Statement Data HK$ million 2015 2016 2017 2018 2019 Revenue 3,993 6,778 3,120 2,842 11,624 Profit from Operations 1,275 796 446 2,533 3,430 Profit Attributable to Shareholders 1,202 947 1,635 2,193 2,450 Earnings per Share (HK$) 1.04 0.82 1.41 1.86 2.08 Underlying Profit Attributable to Shareholders (Note 3) 643 818 1,525 1,711 2,600 Underlying Earnings per Share (HK$) (Note 3) 0.56 0.71 1.31 1.45 2.21 Dividends 668 690 765 847 918 Dividends per Share (HK$) (Note 2) 0.58 0.60 0.65 0.72 0.78 Key Consolidated Statement of Financial Position Data HK$ million 2015 2016 2017 2018 2019 Non-Current Assets 30,430 31,783 29,546 31,527 30,527 Current Assets 19,047 14,876 19,540 25,935 21,605 Total Assets 49,477 46,659 49,086 57,462 52,132 Current Liabilities (9,073) (8,810) (13,070) (14,159) (6,785) Non-Current Liabilities (14,300) (10,758) (7,720) (13,478) (14,026) Net Assets 26,104 27,091 28,296 29,825 31,321 Share Capital 8,417 8,417 8,636 8,636 8,636 Reserves 14,477 15,163 16,269 17,040 18,432 Shareholders’ Equity 22,894 23,580 24,905 25,676 27,068 Non-controlling Interests 3,210 3,511 3,391 4,149 4,253 Total Equity 26,104 27,091 28,296 29,825 31,321 Net Asset Value per Share (HK$) 19.90 20.49 21.17 21.82 23.00 (%) (Note 4) Gearing Ratio 61.02 49.29 46.76 66.24 41.28 Notes: 1. The financial information in this summary is extracted from the published financial statements for the last five years. 2. In 2018, a special interim dividend to be satisfied by way of distribution in specie of share in Polytec Asset Holdings Limited (“PAH”) held by the Group on the basis of 1 ordinary share of PAH for every 10 ordinary shares of the Company. 3. Underlying profit excludes revaluation of investment properties and interests in property development. 4. Gearing ratio represents bank borrowings, loans from related companies/ultimate holding company and a fellow subsidiary less amounts due from related companies/fellow subsidiaries and net of cash and bank balances over equity attributable to shareholders of the Company. 7 KOWLOON DEVELOPMENT COMPANY LIMITED ANNUAL REPORT 2019 Chairman’s Statement Artist’s Impression of Phase 2 development of Le Cove Garden (Huizhou) Group Results and Dividends Market Overview and Business Review For the year ended 31 December 2019, the Group’s In Hong Kong, the US-China trade dispute and social net profit attributable to shareholders of the Company movement events have had adverse impacts on the amounted to HK$2,450 million compared to HK$2,193 economy.

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