Duty Free Concessions in Hong Kong and Abroad

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Duty Free Concessions in Hong Kong and Abroad DEPARTMENT STORE SERVICE C Free M Duty Y CM MY INFRASTRUCTURE CY CMY K New World Development Company Limited takes every practicable measure to conserve resources and minimise waste. FSC Annual Report PROPERTY 2011 Annual Report 2011 Corporate Philosophy Vision To build a better society through innovation and sustainable growth Missions • Pioneer urban living standard through the delivery of superb quality products • Deliver superior customer services that win customers’ trust • Commit to long-term value creation for shareholders via distinguished leadership • Nurture a professional and energetic staff force with commitment and pride • Care for the communities we serve and respect the environment we live in Core Values • Innovation and initiative • Pursuit of excellence • Integrity and trust • People growth and development • Social responsibility • Stakeholders’ interest Contents 2 Corporate Profi le 4 Corporate Structure 5 Financial Highlights 6 Chairman’s Statement 8 Managing Director’s Report Business Review 12 Property 20 Infrastructure 24 Service 28 Department Store 30 Direct Investment 31 Other Businesses 32 Corporate Governance Report 36 Corporate Citizenship 50 Management Discussion and Analysis 55 Corporate Information 56 Project Summary 74 Directors’ Profi le 79 Financial Section Contents Property Our property development portfolio is focused on residential usage in Hong Kong and Mainland China. This is complemented by a sizable investment property portfolio comprising shopping malls, offices, hotels and service apartments. Our property arm in Mainland China, New World China Land, is one of the leading national property developers in Mainland China. Infrastructure Our infrastructure portfolio includes roads, energy, water and ports & logistics projects in Hong Kong, Mainland China and Macau. Service Our service businesses comprise facilities management, contracting & transport and strategic investments. Department Store New World Department Store operates and manages renowned department store chain in 17 major cities in Mainland China. Hong Kong property (development & investment) Hotels (Hong Kong, Mainland China & Southeast Asia) New World Strategic Investment Limited (direct investment) LISTED COMPANIES OTHER BUSINESSES CSL New World Mobility Group (23.6%) New World Telecommunications Limited New World TMT Limited New World China Enterprises • Infrastructure • Service Projects Limited • Mainland China property (development & investment) Corporate Structure • Department store business 04 Financial Highlights FY2011 FY2010 HK$m HK$m (Restated) Revenues 32,882.0 30,218.6 Segment results(1) 10,987.6 11,215.2 Profi t before taxation 15,577.8 17,572.0 Profi t attributable to shareholders of the Company 9,153.9 12,398.6 Earnings per share (HK$) 2.32 3.19 Dividend per share (HK Cents) Interim 10.0 10.0 Final 28.0 28.0 Full-year 38.0 38.0 Total assets 229,115.4 199,980.1 Net debt(2) 34,992.4 27,113.5 Gearing ratio(3) 26.0% 23.6% Remarks: (1) Segment results: including share of results of jointly controlled entities and associated companies (2) Net debt: The aggregate of bank loans, other loans, fixed rate bonds and convertible bonds less cash and bank balances (3) Gearing ratio: Net debt divided by total equity New World Development Company Limited Annual Report 2011 05 Chairman’s Statement Entering the 12th Five-Year Plan, different sectors in China are moving on a development track as well as facing various new opportunities and challenges. TO OUR SHAREHOLDERS, Quoting from the Former Ode on the Red Cliff, “Do you know of the water and the moon? The river flows endlessly, yet it never disappears. The moon waxes and wanes, yet it never grows bigger or smaller. Therefore, if you look in the eyes of change, everything in this world changes in an instant. But if you look in the eyes of stability, everything in the world, including humanity, is eternal.” Dozens of words have demonstrated precisely the truth of the changing universe. The changes of the water and the moon happen on their appearances, but never on their physical natures. Therefore, whether changes happen depends on people’s mind and view. Since nothing remains permanent in the world, change is just the eternal fact. Entering the 12th Five-Year Plan, different sectors in China are moving on a development track as well as facing various new opportunities and challenges. Amidst the changing and sophisticated global landscape and economic environment, countries are proactive in looking for ways to overcome the current crisis. Like biological evolution, “survival of the fittest” during the course of reformation is to adapt to changes in the surrounding environment and make changes accordingly. Going through the time of a fishing port, entrepot trade development, light industry development in the 50’s and 60’s, and then the major development of financial and service industries, nowadays, Hong Kong has already transformed from a tiny fishing village to an international financial centre, and is even becoming an offshore Renminbi centre. Such remarkable economic achievements were the results of the joint efforts of Hong Kong people, who leveraged upon their adaptive capabilities to tap into development opportunities and forge ahead. New World Group has been acting in the same way to achieve its clear and practical goal of maximising shareholders’ returns by adopting appropriate strategies, optimising products and services based on market trends. Whilst having a long standing history, the Group often reviews its operating strategies. Our improvement and innovative ideas have never been hindered by our proven record, which instead has paved the way for determined, practical development and new directions. As Confucius said, “Reviewing what you have learned and learning anew, you are fit to be a teacher.” New ideas can be gained through reviewing past experience. Inspirations and thoughts may even come from failures in the past. This is because modern and advanced technologies as well as new knowledge are able to make up the shortcomings of and add value to old methods. Going forward, the Group will continue to press ahead steadily with an open mindset, a practical attitude, a broad vision and a unique insight, adhering to its ultimate objective of serving the nation and the wider community in the changing landscape. Dr. Cheng Yu-Tung Chairman Hong Kong, 29 September 2011 New World Development Company Limited Annual Report 2011 07 Managing Director’s Report The Group will keep monitoring the risks affecting our operations and adjust our plans and executions for the best interests of the Group’s stakeholders. 08 TO OUR SHAREHOLDERS, After a short-term stabilisation in 2010, external risks include slow economic recovery in US, sovereign debt crisis in Europe, social unrest in North Africa and Middle East are increasing economic uncertainties. Among all countries, China’s economy is expected to deliver the best growth. While the system risk of global economy is increasing, Hong Kong has still achieved a reasonable economic growth with GDP increased by 5.1% in real terms over a year earlier in the second quarter of 2011 and its unemployment rate was at a record low of 3.2% from June to August 2011. Favourable conditions still persist in Hong Kong property market. Mortgage rate is expected to stay low for a while. Though there is more land supply released by the Hong Kong Government, the shortage of physical market has not been jeopardised as the demand remains stable. The Group has re-launched The Masterpiece in August 2011 with satisfactory response. So far, over 40 units were sold. In the coming 12 months, the Group will launch six residential projects to provide attributable 1,949 units according to market condition. To take care of the underprivileged, Premier Wen Jia-Bao has just depicted publicly again the determination to provide affordable housing and has introduced the idea of public rental housing. This act is good for long-term development of housing market as the underprivileged will gradually migrate to middle income class with the government “subsidy”. Like a lot of developed countries, the abundance of middle-income class is crucial for the healthy development of the property market. Recently, apart from implementation of tightening measures on certain cities, the Central Government also allows a reasonable advancement of residential property prices based on local economic improvement such as GDP growth. It is expected by the market that the Central Government will further fine-tune those austerity measures in order to consolidate and enhance the positive results of austerity and effectively manage inflation to ensure stable development of the market in due regard to the situation of the local and the global economic development. Overall, the Group is cautiously optimistic about the Mainland China property market. We will continue our development plan to tap into the huge opportunities brought by the urbanisation in Mainland China according to the good side of the market. At the same time, we also hold a prudent approach in developing our Mainland China operations by appropriately adjusting our plan according to market and policy variations. Service and Infrastructure businesses generate sustainable cashflow. In the 12th Five-Year Plan, the reinforcement of expressway network remains an important target for Mainland China. Road operators will not only benefit from greater investment opportunities, but also a more developed and comprehensive road network.
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