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Premium Brand Solid Foundations www.shkp.com Annual Report 2010/11 2010/11 Annual Report2010/11 Annual Stock Code : 16 WorldReginfo - e8e265d8-be51-4fa0-8e99-f5a4241e7df3 WorldReginfo - e8e265d8-be51-4fa0-8e99-f5a4241e7df3 International Commerce Centre is the tallest building in Hong Kong and part of a magnificent Victoria Harbour gateway with International Finance Centre on the opposite shore. Its offices with the highest quality and specifications are well complemented by world-class hotels, serviced suites and a shopping mall, forming a new business hub in the territory. WorldReginfo - e8e265d8-be51-4fa0-8e99-f5a4241e7df3 2010/11 Annual Report WorldReginfo - e8e265d8-be51-4fa0-8e99-f5a4241e7df3 Contents 2 Board of Directors and Committees 3 Corporate Information and Information for Shareholders 4 Financial Highlights and Land Bank 6 Group Financial Summary 7 Business Structure 8 Chairman’s Statement 20 Review of Operations 82 Corporate Governance 88 Investor Relations 90 Corporate Social Responsibility 96 Financial Review 98 Directors’ Report 118 Directors and Organization 136 Financial Contents WorldReginfo - e8e265d8-be51-4fa0-8e99-f5a4241e7df3 Board of Directors and Committees Board of Directors Chairman Kwong Siu-hing1 (Non-Executive Director) Executive Directors Kwok Ping-kwong, Thomas2 (Vice Chairman & Managing Director) Kwok Ping-luen, Raymond2 (Vice Chairman & Managing Director) Chan Kai-ming Chan Kui-yuen, Thomas Kwong Chun Wong Chik-wing, Mike Chan Kwok-wai, Patrick (Chief Financial Officer) Non-Executive Directors Lee Shau-kee (Vice Chairman) Kwok Ping-sheung, Walter Woo Po-shing Kwan Cheuk-yin, William Lo Chiu-chun, Clement1 Wong Yick-kam, Michael Woo Ka-biu, Jackson (Alternate Director to Woo Po-shing) Independent Non-Executive Directors Yip Dicky Peter Wong Yue-chim, Richard Li Ka-cheung, Eric Fung Kwok-lun, William Committees Executive Committee Kwok Ping-kwong, Thomas Kwok Ping-luen, Raymond Chan Kai-ming Chan Kui-yuen, Thomas Kwong Chun Wong Chik-wing, Mike Chan Kwok-wai, Patrick Audit Committee Li Ka-cheung, Eric* Yip Dicky Peter Wong Yick-kam, Michael Remuneration Committee Wong Yue-chim, Richard* Lo Chiu-chun, Clement3 Li Ka-cheung, Eric Nomination Committee Wong Yue-chim, Richard* Kwan Cheuk-yin, William Yip Dicky Peter * Committee Chairman Notes: 1. Madam Kwong Siu-hing and Mr. Lo Chiu-chun, Clement will retire from office by rotation at the annual general meeting to be held on 8 December 2011 (the “AGM”) and have informed the Company that they will not seek re-election as Directors. 2. Mr. Kwok Ping-kwong, Thomas and Mr. Kwok Ping-luen, Raymond have been appointed as joint Chairmen of the Company, such appointment to take effect from the close of the AGM after the passing of the special resolution on the proposed amendments to the articles of association of the Company. They will both continue to serve as Managing Directors and Executive Directors of the Company. 3. Mr. Kwan Cheuk-yin, William has been appointed as a member of the Remuneration Committee in place of Mr. Lo Chiu-chun, Clement with effect from 9 December 2011. 2 SUN HUNG KAI PROPERTIES LIMITED Annual Report 2010/11 WorldReginfo - e8e265d8-be51-4fa0-8e99-f5a4241e7df3 Corporate Information and Information for Shareholders Corporate Information Company Secretary Share Registrars Principal Bankers Yung Sheung-tat, Sandy Computershare Hong Kong Bank of China (Hong Kong) Limited Investor Services Limited The Hongkong and Shanghai Banking Auditor Shops Nos. 1712-1716 Corporation Limited Deloitte Touche Tohmatsu 17th Floor, Hopewell Centre The Bank of Tokyo — Mitsubishi UFJ, Ltd 183 Queen’s Road East Industrial and Commercial Bank of China Registered Office Wanchai Mizuho Corporate Bank, Ltd. 45th Floor, Sun Hung Kai Centre Hong Kong Sumitomo Mitsui Banking Corporation 30 Harbour Road Bank of Communications Hong Kong Solicitors BNP Paribas Telephone : (852) 2827 8111 Woo, Kwan, Lee & Lo Hang Seng Bank Limited Facsimile : (852) 2827 2862 Mayer Brown JSM China Construction Bank Website : www.shkp.com Winston Chu & Company E-mail : [email protected] Clifford Chance Information for Shareholders Financial Calendar for 2010/11 Share Listing Interim results announcement : 28 February 2011 The Company’s shares are listed on The Stock Exchange of Interim dividend paid : 23 March 2011 Hong Kong and are traded over the counter in the United Annual results announcement : 15 September 2011 States in the form of American Depositary Receipts (ADR). Closure of register of members : 5 to 8 December 2011 (for the purpose of ascertaining (both days inclusive) Stock Code shareholders’ entitlement to attend and vote at the annual The Stock Exchange of Hong Kong : 16 general meeting) Bloomberg : 16 HK Equity Annual general meeting : 8 December 2011 Reuters : 0016.HK Closure of register of members : 14 to 16 December 2011 Trading Symbol for ADR : SUHJY (for the purpose of ascertaining (both days inclusive) CUSIP : 86676H302 shareholders’ entitlement to Investor Relations Contact the proposed final dividend) Final dividend payable : on or about 19 January 2012 Telephone : (852) 3766 5787 Facsimile : (852) 2827 0676 E-mail : [email protected] Choice of Language or Means of Receipt of Corporate Communications This annual report is now available in printed form in English and in Chinese, and on the website of the Company. If (i) shareholders, who have received or chosen to receive printed copies of this annual report, wish to receive the same in the other language; or (ii) shareholders, who have received or chosen to receive or are deemed to have consented to receive this annual report by electronic means, wish to receive printed copies; or (iii) shareholders for any reason have difficulty in receiving or gaining access to this annual report on the Company’s website, they may obtain printed copies free of charge by sending a request to the Company c/o Share Registrars, Computershare Hong Kong Investor Services Limited, by post to 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong or by email at [email protected]. For shareholders who wish to change their choice of language or means of receipt of the Company’s future corporate communications free of charge, they may at any time notify the Company by giving reasonable notice (of not less than 7 days) to the Company c/o Share Registrars by post or by email or by completing and returning the accompanying Change Request Form. SUN HUNG KAI PROPERTIES LIMITED Annual Report 2010/11 3 WorldReginfo - e8e265d8-be51-4fa0-8e99-f5a4241e7df3 Financial Highlights and Land Bank For the year ended 30 June 2011 2010 Change (%) Financial Highlights (HK$ million) Revenue 62,553 33,211 +88.4 Profit attributable to the Company’s shareholders – Reported 48,097 30,0395 +60.1 – Underlying1 21,479 13,883 +54.7 Gross rental income2 12,609 11,082 +13.8 Net rental income2 9,511 8,314 +14.4 Financial Ratios Net debt to shareholders’ funds (%) 17.1 14.15 +3.03 Dividend payout (%) 40.1 49.9 -9.83 Financial Information per Share (HK$) Earnings per share for profit attributable to the Company’s shareholders – Reported 18.71 11.715 +59.8 – Underlying 8.36 5.41 +54.5 Dividends – Interim dividend 0.95 0.85 +11.8 – Final dividend 2.40 1.85 +29.7 – Full-Year dividend 3.35 2.70 +24.1 Shareholders’ funds 119.44 102.425 +16.6 Land Bank in Hong Kong (gross floor area in million square feet) Properties under development 4 16.5 16.6 -0.6 Completed investment properties 27.7 27.6 +0.4 Total 44.2 44.2 – Land Bank on the Mainland (gross floor area in million square feet) Properties under development 78.6 76.8 +2.3 Completed investment properties 7.5 5.5 +36.4 Total 86.1 82.3 +4.6 Notes: 1. Underlying profit attributable to the Company’s shareholders excluded the net effect of changes in the valuation of investment properties 2. Including contributions from jointly controlled entities and associates 3. Change in percentage points, dividend payout based upon underlying profit 4. Excluding over 26 million square feet of farmland in terms of site area 5. Restated for the early adoption of HKAS 12 (amendments) 4 SUN HUNG KAI PROPERTIES LIMITED Annual Report 2010/11 WorldReginfo - e8e265d8-be51-4fa0-8e99-f5a4241e7df3 Underlying Earnings and Dividends per Share* HK$ 10.0 8.36 8.0 6.0 5.41 4.61 4.80 4.84 4.0 3.35 Dividends 2.70 Underlying Earnings 2.30 2.50 2.50 2.0 Based upon underlying earnings 0.0 FY 2007 2008 2009 2010 2011 Shareholders’ Funds per Share# Net Debt to Shareholders’ Funds Ratio# HK$ % 125 30 120 115 25 110 119.44 105 20 17.1 100 14.2 14.2 14.1 95 91.95 92.98 102.42 15 13.0 90 10 85 80.30 80 5 75 70 0 FY 2007 2008 2009 2010 2011 FY 2007 2008 2009 2010 2011 # Comparative figures for FY 2007-2010 were restated for the early adoption of HKAS 12 (Amendments) Land Bank in Hong Kong Land Bank on the Mainland million square feet million square feet 60 90 82.3 86.1 50 75 43.5 43.0 41.9 44.2 44.2 40 60 55.3 50.6 45.8 30 45 20 30 10 15 0 0 FY 2007 2008 2009 2010 2011 FY 2007 2008 2009 2010 2011 Properties Under Development Completed Investment Properties SUN HUNG KAI PROPERTIES LIMITED Annual Report 2010/11 5 WorldReginfo - e8e265d8-be51-4fa0-8e99-f5a4241e7df3 Group Financial Summary Key Financial Information and Ratios (Restated)2 Financial year 2011 2010 2009 2008 2007 HK$ HK$ HK$ HK$ HK$ Reported earnings per share 18.71 11.71 3.89 11.61 9.20 Underlying earnings per share 8.36 5.41 4.84 4.80 4.61 Dividends per share 3.35 2.70 2.50 2.50 2.30 Shareholders’ funds at book value per share 119.44 102.42 92.98 91.95 80.30 Net debt / Shareholders’ funds