ANNUAL REPORT 2017
2017 8/F, DCH Building, 20 Kai Cheung Road, Kowloon Bay, Hong Kong Annual Report Tel: (852) 2768 3388 www.dch.com.hk 34 Dah Chong Hong Holdings Limited Annual Report 2017
ABOUT DCH Dah Chong Hong (“DCH”, stock code: 01828) is an integrated motor and consumer products distribution company operating in Asia with an extensive logistics network. DCH is a leading distributor and dealer of motor vehicles in Greater China and provides a full range of motor related services including maintenance, rental, repair and financing. DCH’s consumer products business includes the distribution of food and FMCG, healthcare and electronic products as well as food processing, trading and retail.
Dedicated to bringing to quality products to consumers across Asia, DCH is the preferred partner of over 1,000 brands from more than 30 countries with operations in 12 Asian economies. DCH is a subsidiary of China’s largest conglomerate CITIC Limited (stock code: 00267), DCH employs over 17,000 staff across the region. For more details, please visit www.dch.com.hk. Food & FMCG
Healthcare
Electrical
Motor
Logistics
Contents
2 Summary of the Year 37 Five Year Key Operational Data 77 Directors and Senior Management 4 Financial Highlights 39 Environment, Social and 81 Report of the Directors 6 Chairman’s Letter to Governance Report 96 Financial Statements Shareholders 44 Business Partners and 97 Independent Auditor’s Report Customers 11 Business Review 193 Major Properties Held by the 14 Motor Business 46 Human Resources Group 19 Consumer Products Business 48 Community Initiatives 203 Definition of Terms 25 Financial Review 50 Environmental Initiatives 204 Corporate Information 32 Risk Management 55 ESG Reporting Guide Index 36 Five Year Summary 58 Corporate Governance 2 Dah Chong Hong Holdings Limited Annual Report 2017 SUMMARY OF THE YEAR
GROUP OVERVIEW
Profit Basic Total attributable earnings dividend Revenue to shareholders per share per share $50,506$802 43.71 16.95 HK$ million HK$ million HK cents HK cents
MOTOR BUSINESS
100,000+ 20+ New vehicles Motor brands sold annually
1,000,000+ 100+ Vehicles serviced Showrooms and annually 4S shops
CONSUMER PRODUCTS BUSINESS 1,000+ 80+ Brands distributed Food and electronics shops
75,000+ 40+ Points of Logistics centres sales served Dah Chong Hong Holdings Limited Annual Report 2017 3 SUMMARY OF THE YEAR (CONTINUED)
OUR PEOPLE Management Workforce Employees by gender by gender
17,751 18% 82% 41% 59% Female Male Female Male
Workforce by geography Training and development 11% 1,897 18,000+ Participants 63% 26% 11,179 4,675 140,000+ Training hours Mainland China Hong Kong & Macao Others
OUR LOCATIONS
Asian 12 economies
COMMUNITY INITIATIVES 50+ 1,000+ 5,000+ Events Volunteers Service hours
RECOGNITIONS 4 Dah Chong Hong Holdings Limited Annual Report 2017 FINANCIAL HIGHLIGHTS
For the year (HK$ million) 2017 2016
Revenue 50,506 46,462 Profit from operations 1,427 1,065 Profit attributable to shareholders 802 511 Segment profit after taxation Notes Motor Business 1,198 796 Consumer Products Business 105 200 Other Businesses 45 66
At year end (HK$ million) 2017 2016
Total debt 6,927 7,424 Cash and bank deposits 1,138 1,160 Net debt 5,789 6,264 Shareholders’ funds 10,145 8,732 Total capital 15,934 14,996 Capital employed 17,072 16,156 Net gearing ratio 36.3% 41.8%
For the year (HK cents) 2017 2016
Earnings per share 43.71 27.89 Dividend per share Interim 5.05 4.75 Final 11.90 3.69 Total 16.95 8.44
Notes: (i) Segment profit after taxation are before corporate expenses and recharges and the corresponding tax impacts. (ii) As a result of re-alignment of business segments for the purposes of reporting to DCH’s senior executive management, segment results from the business as conducted by DCH Auriga Holding Limited (formerly known as LF Distribution Holding Limited) and its subsidiaries acquired on 30 June 2016 have been included in “Consumer Products Business”. Its results for July to December 2016 were presented as a separate operating segment in the 2016 annual financial statements. (iii) Comparative figures presented above have been adjusted to conform to current year’s presentation. Dah Chong Hong Holdings Limited Annual Report 2017 5 FINANCIAL HIGHLIGHTS (CONTINUED)
Revenue Profit attributable to shareholders (HK$ million) (HK$ million) 55,000 1,000 50,506 901 50,000 46,489 46,462 900 44,803 802 45,000 42,261 800 750 40,000 700 35,000 600 570 30,000 511 500 25,000 400 20,000 15,000 300 10,000 200 5,000 100 0 0 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017
2017 2017 vs. vs. 2016 +9% 2016 +57%