ENDURING VISION STRIKING ICONS Corporate Profi Le
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Stock Code: 12 Annual Report 2008 ENDURING VISION STRIKING ICONS Corporate Profi le Founded in 1976 by its Chairman, Dr Th e Honourable Lee Shau Kee, GBM, Henderson Land Development Company Limited is a leading property group with a focus on Hong Kong and mainland China. Its core businesses comprise property development and property investment. In addition, it has direct equity interests in a listed subsidiary, Henderson Investment Limited, and three listed associates, Th e Hong Kong and China Gas Company Limited (which in turn has equity stakes in a listed associate, Towngas China Company Limited), Hong Kong Ferry (Holdings) Company Limited and Miramar Hotel and Investment Company, Limited. Henderson Land has been listed in Hong Kong since 1981 where it is one of the largest property groups. As at 30 June 2008, Henderson Land had market capitalization of HK$104 billion and the combined market capitalization of the Company, its listed subsidiary and its four listed associates was HK$246 billion. The Company is vertically integrated, with project management, construction, property management, and fi nancial services supporting its core businesses. In all aspects of its operations, Henderson Land strives to add value for its shareholders, customers and the community through its commitment to excellence in product quality and service delivery as well as a continuous focus on sustainability and the environment. As Henderson Land builds its business concurrently in Hong Kong and mainland China, the Group is bringing major new commercial and residential projects to customers far and wide, providing them with unparalleled living and working environments. Th e Group is introducing iconic development projects (epitomised by the soon to be completed World Financial Centre in Beijing, pictured on the front cover), utilising the same mix of innovative designs, high quality construction and property management and community commitment that have helped us earn a solid reputation to-date. Contents inside front Corporate Profi le 2 Awards & Accolades 4 Group Structure 5 Highlights of Annual Results 8 Chairman’s Statement Review of Operations Business in Hong Kong 32 Land Bank 34 Property Development 42 Property Investment 48 Property Related Businesses 50 Marketing 55 Subsidiary and Associated Companies Business in Mainland China and Macau 65 Land Bank 68 Progress of Major Development Projects 78 Major Investment Properties 80 Human Resources 83 Corporate Social Responsibility 86 Financial Review 94 Five Year Financial Summary 96 Corporate Governance Report 102 Report of the Directors 120 Biographical Details of Directors and Senior Management 126 Report of the Independent Auditor 127 Accounts 199 Corporate Information 202 Notice of Annual General Meeting 204 Financial Calendar 1 Henderson Land Development Company Limited Annual Report 2008 Awards & Accolades During the year the Group was again honoured with many awards and accolades, refl ecting not only its commercial success and the quality of its products and services, but also its commitment to the community and the environment. As a measure of the many facets of the Group’s day-to-day operations, these honours range from achievements in areas such as construction quality, sales and marketing excellence, site safety and property management to waste management, environmental awareness and dedication to corporate social responsibility. Quality Building Award 2008 Best Hong Kong Deal Hong Kong Outstanding Hong Kong Art & Design Th e Hong Kong Construction Association, FinanceAsia Enterprises Parade 2007 Festival 2008 Th e Hong Kong Institute of Architects Economic Digest Hong Kong Communication Art Awards for Achievement 2007 – and 9 other institutes/disciplines Centre Henderson Land Development Hong Kong Outstanding Non-Residential Category – Grand Award US$5.5 billion restructuring Enterprises (Blue Chip) Outstanding Greater China (Four Seasons Hotel & Four Seasons Place) Design Awards 2008 (Grand Waterfront Showfl at) Special Award Category: Innovation – Merit Award (Union Hospital Extension) 2007/08 International Mercury 2007 HKCA Safety Award Lisa味道Quality Life Gold Wastewise Logos Hong Kong Top Awards Hong Kong Construction Association Award 2008 Environmental Service Brand MerComm, Inc. Campaign Committee, Awards 2007 Safety 2007 Lisa味道 Environmental Th e Chinese Gold Award (Category: Annual (E Man & Heng Lai) Th e Most Prestigious Protection Department Manufacturers’ Reports – Overall Presentation : Luxury Residence Proactive Safety Contractor Award 2007 and 9 other institutes/ Association of Hong Holding & Property Developments) (Th e Beverly Hills) (Heng Shung & Heng Tat) disciplines Kong, Hong Kong Brand Development Dawning Views Council (Well Born) Top Ten Hong Kong Top Service Brand 2 Henderson Land Development Company Limited Annual Report 2008 Awards & Accolades Caring Company 2007 / 08 TVB Most Popular TV Commercial Reader’s Digest Asia’s Hong Kong Enterprise Hong Kong Council of Social Services Awards 2008 Trusted Brands 2008 Environmental Achievement Television Broadcasts Limited Reader’s Digest Association Far Award 2008 Henderson Land, Hong Kong & China East Limited Hong Kong Environmental Gas, Hong Kong Ferry, Miramar, Hang Th e Most Popular TV Commercial Protection Association Yick, Well Born & Goodwill Awards –Real Estate (Th e Sparkle) Gold Award (Category: Property Real Estate – Merit Award (Th e Sparkle) Developer – Hong Kong) Employers Gold Star Award Considerate Contractors Site Considerate Contractors Site Award Scheme 2007 Construction Industry Safety Employees Retraining Board Award Scheme 2007 Development Bureau Award Scheme 2007/2008 Development Bureau Labour Department, Occupational Platinum Award Considerate Contractors Site Award Safety & Health Council and 9 (Well Born & Hang Yick) Outstanding Waste Bronze Award – Kwun Tong 223 (Heng Lai) other government departments/ Management Performance Merit Award – 39 Conduit Road, Mid-Levels institutes/disciplines Grand Award (Heng Shung) Merit Award – Silver Award – Building Sites Sha Tin Town Lot 539 (Private Sector) Kwun Tong 223 (Heng Lai) Merit Award – Safety Team Sha Tin Town Lot 539 (Heng Lai) 3 Henderson Land Development Company Limited Annual Report 2008 Group Structure Henderson Land Group Structure Market capitalization as at 30 June 2008 Henderson Land Development Company Limited: HK$104 billion Six listed companies of the Group: HK$246 billion Henderson Land Development Company Limited Investment holding, property development and investment in Hong Kong and mainland China, hotel operation, project and property management, construction and provision of fi nance 31.36% 67.94% 39.06% 44.21% Hong Kong Ferry (Holdings) Henderson Investment Th e Hong Kong and China Gas Miramar Hotel and Company Limited Limited Company Limited Investment Company, Limited Production and distribution Property development and Property investment, hotel Infrastructure of gas in Hong Kong and investment operation and travel business mainland China 45.63% Towngas China Company Limited Sale and distribution of liquefi ed petroleum gas and natural gas in mainland China Company & subsidiary Associates Note: all percentage shareholdings shown above were fi gures as of 30 June 2008 4 Henderson Land Development Company Limited Annual Report 2008 Highlights of Annual Results 2008 2007 Change Note HK$ million HK$ million Property sales – Revenue 1 11,163 7,895 +41% – Profi t contribution 2 4,385 3,825 +15% Net rental income 3 2,728 2,381 +15% Profi t attributable to Shareholders – Reported profi t 15,472 9,818 +58% – Underlying profi t 4 5,707 5,883 -3% – Adjusted underlying profi t 5 5,707 4,945 +15% HK$ HK$ Earnings per share – Based on reported profi t 7.54 5.19 +45% – Based on underlying profi t 4 2.78 3.11 -11% – Based on adjusted underlying profi t 5 2.78 2.61 +7% Dividends per share 1.10 1.10 – Net asset value per share 6 56.46 47.47 +19% Adjusted net asset value per share 7 60.05 50.94 +18% Net debt to shareholders’ equity 16.5% 9.5% +7 percentage points 30 June 2008 30 June 2008 Hong Kong Mainland China Million Million square feet square feet Land bank (attributable fl oor area) – Properties held for/under development 8 8.4 115.7 – Completed investment properties 9 10.0 3.1 18.4 118.8 Agricultural land (total land area) 34.0 Not Applicable Notes: 1 Representing the Group’s attributable share of the value of properties in Hong Kong and mainland China sold by subsidiaries, associates and jointly controlled entities (“JCEs”). 2 Including the Group’s attributable share of profi t contribution from property sales in Hong Kong and mainland China by associates and JCEs. 3 Including the Group’s attributable share of net rental income from investment properties in Hong Kong and mainland China held by associates and JCEs. 4 Excluding the surplus on revaluation (net of deferred tax) of the investment properties held by subsidiaries, associates and JCEs. 5 Aft er excluding the non-recurrent income included in the results for the year ended 30 June 2007 totalling HK$938 million made up of the excess, amounting to HK$352 million, of the fair values of net assets comprised in the companies acquired from Henderson Investment Limited during that year over the consideration paid, and the Group’s share of gain of HK$586 million arising from the disposal by an associate of ten piped city-gas joint venture projects. 6 Representing the amount attributable to equity shareholders of the Company. 7 As there is no capital gains tax in Hong Kong, total deferred tax liabilities arising from the revaluation of the investment properties held by subsidiaries, associates and JCEs in the amount of HK$7,710 million (2007: HK$6,750 million), equivalent to HK$3.59 per share (2007: HK$3.47 per share), as provided for and included in the Group’s consolidated balance sheet would not be payable if these investment properties were to be sold at the revalued amounts under the current tax regime. Accordingly, such deferred tax as provided for under HKAS-INT 21 has been excluded from the above calculation in order to provide a better understanding of the net asset value attributable to equity shareholders of the Company.