Annual Report 2015/16 Annual Report 2015/16 Hopewell Holdings Limited, a Hong Kong-Based Group Listed on the Stock Exchange Since 1972 (Stock Code: 54)
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HOPEWELL HOLDINGS LIMITED Annual Report 2015/16 Annual Report 2015/16 Hopewell Holdings Limited, a Hong Kong-based group listed on the Stock Exchange since 1972 (stock code: 54). The Group has continuously grown and become one of the leading business conglomerates in Hong Kong. The Group is actively engaged in property development and investment, highway infrastructure, power, hotel & hospitality and other businesses. While achieving substantial long term growth, the Group recognises the vital importance of promoting sustainable development. It devotes significant resources to enhance corporate governance, promote environmental protection, make community investment, instill best workplace practices and engage stakeholders. CONTENTS 2 Financial Highlights 3 5-Year Financial Summary 4 Chairman’s Statement 10 Awards & Recognition 12 Profile of Directors 21 Management Discussion and Analysis 21 Business Review 66 Financial Review 75 Others 77 Highlights of Sustainability Report 79 Corporate Governance Report 93 Report of the Directors 111 Independent Auditor’s Report 113 Consolidated Statement of Profit or Loss and Other Comprehensive Income 114 Consolidated Statement of Financial Position 116 Consolidated Statement of Changes in Equity 117 Consolidated Statement of Cash Flows 119 Notes to the Consolidated Financial Statements — Company’s Statement of Financial Position 120 Notes to the Consolidated Financial Statements — Note 1 to 43 183 List of Major Properties 186 Glossary 191 Corporate Information 192 Financial Calendar Financial Highlights Revenue (HK$m) Earnings before Interest and Tax (HK$m) 10,000 9,235 3,000 9,000 119 1,850 2,500 8,000 2,257 Treasury Income Other 7,000 6,235 1,920 1,944 5,992 2,000 Segments 6,000 247 231 870 570 495 5,000 1,865 Group Turnover 1,500 Toll Road 2,093 Segment 4,000 7,266 623 610 1,000 667 3,000 Group’s Investment Attributable Property & 2,000 4,139 3,652 Share of Revenue 500 Hospitality 764 839 1,000 of JVs 683 0 0 FY14 FY15 FY16 FY14 FY15 FY16 Operating Prot* from Prime-Earning Prot Attributable to Owners of Businesses (HK$m) the Company (HK$m) 1,500 3,000 2,835 2,762 1,234 1,169 2,500 1,200 1,123 1,180 Toll Road Revaluation 395 1,345 405 Investment 2,000 gain of 900 440 (after interest & completed tax of JVs) 1,500 1,358 investment 125 properties and 600 exceptional items Investment 1,000 839 1,655 683 764 Property & 1,417 300 1,233 Core Prot Hospitality 500 0 0 FY14 FY15 FY16 FY14 FY15 FY16 * Being the EBIT net of the proportional share by non-controlling interests Net Asset vs Market Value per Share (HK$) Return on Shareholders’ Equity* 60 6 53.5 55 52.2 50.2 50 4 3.6% 45 3.0% 2.8% 40 35 2 28.4 30 27.0 24.6 25 20 0 FY14 FY15 FY16 FY14 FY15 FY16 Market Value per Share Net Asset Value per Share Return on Shareholders’ Equity * Based on prot attributable to owners of the Company excluding revaluation gain of completed investment properties and attributable deferred tax 2 HOPEWELL HOLDINGS LIMITED ANNUAL REPORT 2015/16 5-Year Financial Summary Consolidated Results (in HK$ million) Year ended 30 June 2012 2013 2014 2015 2016 Revenue 6,560 6,148 5,992 6,235 9,235 Turnover 1,758 1,725 2,093 1,865 1,850 Earnings before interest and tax 2,136 4,150 1,920 2,257 1,944 Profit before taxation 4,328 12,768 1,945 3,347 3,230 Taxation (365) (295) (329) (267) (235) Profit before non-controlling interests 3,963 12,473 1,616 3,080 2,995 Non-controlling interests (332) (267) (258) (245) (233) Profit attributable to owners of the Company 3,631 12,206 1,358 2,835 2,762 Consolidated Statement of Financial Position (in HK$ million) As at 30 June 2012 2013 2014 2015 2016 Investment properties 17,429 26,320 26,839 28,196 29,639 Property, plant and equipment 716 686 740 690 660 Properties under/for development 1,171 7,393 7,877 8,380 8,527 Interests in JVs 9,073 9,177 8,984 9,341 9,159 Amounts due from JVs (non-current) 2,117 3,513 763 – – Other non-current assets 24 41 40 48 48 Properties held for sale (Hopewell New Town and Broadwood Twelve) 1,992 1,676 1,486 1,620 1,425 Amounts due from JVs (current) 652 690 2,251 2,070 529 Bank balances and cash 7,976 5,357 5,210 4,485 3,647 Other current assets 491 551 480 413 211 Total assets 41,641 55,404 54,670 55,243 53,845 Corporate bonds and bank borrowings (non-current) 3,698 4,212 3,498 4,360 2,350 Other non-current liabilities 475 505 536 554 595 Corporate bonds and bank borrowings (current) 1,754 2,965 2,625 296 200 Other current liabilities 1,132 1,210 1,119 1,227 1,347 Total liabilities 7,059 8,892 7,778 6,437 4,492 Non-controlling interests 2,784 3,269 3,117 3,276 2,841 Shareholders’ equity 31,798 43,243 43,775 45,530 46,512 Per Share Basis 2012 2013 2014 2015 2016 Basic earnings per share (HK cents) 415 1,397 156 325 317 Dividend per share (HK cents) 139 100 130 120 130 — Interim 45 45 50 50 55 — Final 54 55 60 70 75 — Special 40 – 20# – – Net asset value per share (HK$) 36.5 49.6 50.2 52.2 53.5 # Represent distribution in specie of shares in HHI Financial Ratios 2012 2013 2014 2015 2016 Net debt to shareholders’ equity (excluding equity shared from HHI Group) Net cash 6% 3% 2% Net cash Return on shareholders’ equity* 4.3% 8.0%** 2.8% 3.6% 3.0% Dividend payout ratio* 64%# 25%** 78%Δ 63% 80% * Excluding revaluation gain of completed investment properties and attributable deferred tax ** Including land conversion gain of Hopewell Centre II HK$2,249 million # Taking into account of net realised gain on property sale of Broadwood Twelve Δ Excluding distribution in specie of shares in HHI HOPEWELL HOLDINGS LIMITED ANNUAL REPORT 2015/16 3 Chairman’s Statement I am pleased to report to shareholders that the Group achieved profit attributable to owners of the Company of HK$2,762 million for the financial year ended 30 June 2016. The Group’s total revenue for the year, including treasury income and its share of the revenues of JVs engaged in toll roads, power plant operations and property development, amounted to HK$9,235 million, 48% more than the previous year’s figure. The significant increase in revenue of the Group was principally due to the continued growth of investment property business together with the sales recognition of The Avenue Phase 2, which offset decreased electricity sales of Heyuan Power Plant, treasury income and hospitality business’ revenue. The Group’s EBIT before redevelopment gain and completion gain rose by 6% year-on-year to HK$1,944 million. This is mainly due to the continued growth of investment properties business and profit shared from residential property sales of The Avenue Phase 2, which were partly offset by an exchange loss due to RMB depreciation together with drops in treasury income, decreased electricity sales of Heyuan Power Plant and hospitality business. In the absence of redevelopment gain and completion gain, which were recorded in the previous year, the Group’s basic earnings per share amounted to HK$3.17, a 2% decrease on the previous year’s HK$3.25. Final Dividend The Board has proposed a final cash dividend of HK75 cents per share for the year ended 30 June 2016. Together with an interim cash dividend of HK55 cents per share paid on 22 March 2016, the total cash dividends for the year will amount to HK130 cents per share. This represents an increase of 8% on the last financial year’s total cash dividends of HK120 cents per share, and represents a payout ratio of 80% of the Company’s core profit (excluding the fair value gain of completed investment properties). Subject to shareholders’ approval at the 2016 Annual General Meeting to be held on Wednesday, 26 October 2016, the proposed final cash dividend will be paid on Tuesday, 8 November 2016 to shareholders who are registered at the close of business on Tuesday, 1 November 2016. Closure of Register of Members To ascertain shareholders’ eligibility to attend and vote at the 2016 Annual General Meeting to be held on Wednesday, 26 October 2016, the Register of Members of the Company will be closed from Wednesday, 19 October 2016 to Wednesday, 26 October 2016, both days inclusive, during which period no transfer of shares of the Company will be effected. In order to qualify to attend and vote at the 2016 Annual General Meeting, all transfers of share ownership, accompanied by relevant share certificates, must be lodged with the Company’s Share Registrar, Computershare Hong Kong Investor Services Limited at Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wan Chai, Hong Kong not later than 4:30 p.m. on Tuesday, 18 October 2016. 4 HOPEWELL HOLDINGS LIMITED ANNUAL REPORT 2015/16 To ascertain shareholders’ entitlement to the proposed final cash dividend, the Register of Members of the Company will be closed for one day on Tuesday, 1 November 2016, if and only if the proposed final cash dividend are approved by the shareholders at the 2016 Annual General Meeting.