Corporate Profile Corporate DELIVERING VALUE WITH INFINITE VISION Henderson Land’s progressive business strategy of concurrent development in Hong Kong and mainland China is backed by its substantial and geographically diverse land bank of quality sites which has been built up over the years and currently provides the basis for a steadily expanding portfolio of iconic properties. In Hong Kong, impressive new projects have recently been launched, with more in the pipeline as the Group pursues the conversion and development of new sites and also acquires old buildings for redevelopment. In mainland China, the Group’s progress is exemplified by the launch of the World Financial Centre in Beijing (pictured on front cover), another milestone in Henderson Land’s portfolio of innovative, award-winning and much sought after development projects. Delivering Value with Infinite Vision Annual Report 2009 3.3 million sq.ft. Corporate Profile Heilongjiang 19.9 million sq.ft. 51.2 million sq.ft. Jilin Founded in 1976 by its Chairman, Dr The 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 Liaoning businesses comprise property development and property investment. In Xinjiang addition, it has direct equity interests in a listed subsidiary, Henderson Inner Mongolia Investment Limited, and three listed associates, The Hong Kong and Beijing China Gas Company Limited (which in turn has equity stakes in a 34.4 million sq.ft. listed subsidiary, Towngas China Company Limited), Hong Kong Hebei Ferry (Holdings) Company Limited and Miramar Hotel and Investment Company, Limited. Ningxia Shanxi Shandong Henderson Land has been listed in Hong Kong since 1981 where it is one Qinghai 2.3 million sq.ft. of the largest property groups. As at 31 December 2009, Henderson Land Gansu Jiangsu had market capitalization of HK$125 billion and the combined market Shaanxi Henan capitalization of the Company, its listed subsidiaries and associates was HK$268 billion. Anhui Shanghai Xizang Hubei The Company is vertically integrated, with project management, Sichuan construction, property management, and financial services supporting its Zhejiang 13.1 million sq.ft. core businesses. In all aspects of its operations, Henderson Land strives to Chongqing Jiangxi add value for its shareholders, customers and the community through its commitment to excellence in product quality and service delivery as well Hunan as a continuous focus on sustainability and the environment. Fujian Guizhou 15.4 million sq.ft. Taiwan Yunnan Guangdong Guangxi 6.6 million sq.ft. New Territories Hainan New Territories Kowloon 3,897,427 sq.ft. Kowloon Hong Kong Island 2,002,264 sq.ft. 1,464,662 sq.ft. Hong Kong Island The diagram above provides an overview of the Group's substantial and diverse, yet balanced development land bank in Hong Kong and mainland China as at 31 December 2009. It illustrates the attributable developable gross floor area by location. Henderson Land's quality land reserve is earmarked for both commercial and residential projects, which are expected to provide handsome returns for the Group during the years to come. Contents Inside front Corporate Profile 2 Awards & Accolades 4 Group Structure 5 Highlights of 2008 / 2009 Final Results 9 Chairman’s Statement Review of Operations Business in Hong Kong 34 Land Bank 39 Property Development 48 Property Investment 54 Property Related Businesses 56 Marketing 61 Subsidiary & Associated Companies Business in Mainland China and Macau 72 Land Bank 77 Progress of Major Development Projects 86 Major Investment Properties 88 Human Resources 91 Corporate Social Responsibility 94 Financial Review 104 Five Year Financial Summary 106 Corporate Governance Report 114 Report of the Directors 134 Biographical Details of Directors and Senior Management 142 Report of the Independent Auditor 143 Accounts 234 Corporate Information 237 Notice of Annual General Meeting 240 Financial Calendar Awards & Accolades 1 3 4 2 11 9 10 16 19 17 18 1 Intelligent Building of the Year for 2009 8 National Enterprise Environmental Asian Institute of Intelligent Buildings Achievement Award 2008 - 2009 World Financial Centre, Beijing Hong Kong Environmental Protection Association 4 IR Magazine Awards 2009 - 2 Building Environmental Assessment Method Hong Kong and Taiwan 9 Carbon Reduction Charter (BEAM) IR Magazine Environmental Protection Department BEAM Society Certificate of Excellence AIA Tower & Manulife Financial Centre (Goodwill) Platinum Standard 5 World Top 1000 Chinese Enterprises 10 Hong Kong Awards for Environmental Excellence (World Financial Centre, Beijing) Yazhou Zhoukan Environmental Campaign Committee, 3 HKIS Property Marketing Awards 2008 2009 Top 20 Enterprises Award Environmental Protection Department and The Hong Kong Institute of Surveyors (Hong Kong Region) 9 other institutes/disciplines “Class of Excellence” Wastewi$e Label – City The Best Property Marketing Award 2008 6 Hong Kong Outstanding Enterprises (The Beverly Hills) Landmark I, Golden Centre, ING Tower, Metro City Parade 2008 Plaza II, Kowloon Building, Sunshine City Phase I-V Top Ten Property Marketing Awards 2008 Economic Digest (The Beverly Hills) Shopping Arcade, Trend Plaza (Goodwill) Hong Kong Outstanding Enterprises (Blue Chip) Top Ten Property Sales Brochures Awards 2008 11 HKCA Safety Award 2008 (The Beverly Hills) 7 Caring Company 2008 / 09 Hong Kong Construction Association Top Five Clubhouse Facilities Awards 2008 Hong Kong Council of Social Services HKCA Safety Gold Award 2008 (E Man & Heng Tat) (The Beverly Hills) Henderson Land, Hong Kong & China Gas, HKCA Safety Merit Award 2008 (Heng Tat) The Best Environmental Operation Award 2008 Hong Kong Ferry, Miramar, Hang Yick, Proactive Safety Contractor Award 2008 (The Sherwood) Well Born & Goodwill (E Man & Heng Lai) Henderson Land Development Company Limited 2 Annual Report 2009 5 6 8 7 14 12 13 15 21 22 20 23 16 2008/09 International MERCUry Awards and 19th Annual ASTRID Awards MerComm, Inc. MERCUry Awards - Bronze Award (Category: Design: Annual Report Cover) ASTRID Awards - Silver Award 20 The Asset Triple A Asian Awards 2008 (Category: Cover: Annual Reports – The Asset 12 Construction Industry Safety Award Photography) The Hong Kong and China Gas Company Limited - Scheme 2008/2009 US$1 billion 10-year bond Labour Department, Occupational Safety 17 Customer Relationship Excellence Awards 2008 Best Investment Grade Bond & Health Council and 9 other government Best Corporate Bond departments/institutes/disciplines Asia Pacific Customer Service Consortium Merit Award - Sha Tin Town Lot 539 (Heng Lai) Best Use of Knowledge Management of the Year 21 2009 Hong Kong Awards for Industries 2008 (Property Management) Hong Kong Retail Management Association 13 Considerate Contractors Site Award Innovative Technology of the Year 2008 Customer Service Grand Award Scheme 2008 (Property Management) (The Hong Kong and China Gas Company Limited) Development Bureau Considerate Contractors Site Award – 18 The Best Brand Enterprise Award 2008 22 Travel & Meeting Industry for 2009 (Greater China) Fanling SSTL 231 (Heng Lai) Travel Weekly China Hong Kong Productivity Council Best New Business Hotel Award (The Mira Hong 14 TVB Weekly Outstanding Award 2009 Well Born Real Estate Management Limited Kong – Miramar Hotel and Investment Company, TVB Weekly Limited) 19 Hong Kong Q-Mark Service Scheme 15 Hong Kong Art & Design Festival 2009 Hong Kong Q-Mark Council 23 CAPITAL Best of the Best 2009 Hong Kong Communication Art Centre Hong Kong Q-Mark Service Certificate CAPITAL Outstanding Greater China Design (Well Born Real Estate Management Limited & The Best Travel Agency Award (Miramar Travel – Awards 2009 (Cité 33 Show Flat) Hang Yick Properties Management Limited) Miramar Hotel and Investment Company, Limited) Henderson Land Development Company Limited Annual Report 2009 3 Group Structure Henderson Land Group Structure Market capitalization as at 31 December 2009 Henderson Land Development Company Limited: HK$125 billion Six listed companies of the Group: HK$268 billion Henderson Land Development Company Limited Investment holding, property development and investment in Hong Kong and mainland China, hotel operation, project and property management, construction, department store operation and provision of finance 31.36% 67.94% 39.88% 44.21% Hong Kong Ferry The Hong Kong Miramar Hotel (Holdings) Henderson and China Gas and Investment Company Limited Investment Limited Company Limited Company, Limited Infrastructure Production and distribution Property investment, hotel Property development and of gas in Hong Kong and operation, food and investment mainland China beverage operations and travel business 45.61%* Towngas China Company Limited Sale and distribution of liquefied petroleum gas and natural gas in mainland China Note: all percentage shareholdings shown above were figures as of 31 December 2009 * Towngas China Company Limited was accounted for and consolidated into the consolidated accounts of The Hong Kong and China Gas Company Limited as a subsidiary starting from 31 December 2009. Henderson Land Development Company Limited Annual Report 2009 Highlights of 2008/2009 Final Results For the eighteen For the financial months ended year ended 31 December 2009 30 June 2008 Note HK$ million HK$ million Change (restated) Property sales – Revenue 1 8,700 11,163 -22% – Profit contribution 2 3,739 ,385 -15% Net rental income 3 4,540 2,728 +66% Profit attributable to Shareholders – Underlying profit 4 6,088 5,708 +7% – Reported profit 14,320 15,73 -7% HK$ HK$ Earnings per share – Based on underlying profit 4 2.84 2.78 +2% – Based on reported profit 6.67 7.5 -12% Dividends per share 1.30 1.10 +18% At 31 December 2009 At 30 June 2008 HK$ HK$ Net asset value per share 5 62.01 56.5 +10% Adjusted net asset value per share 6 66.08 60.0 +10% Net debt to shareholders’ equity 19.2% 16.5% + 2.7 percentage points At 31 December 2009 At 30 June 2008 Million square feet Million square feet Hong Kong Land bank (attributable floor area) – Properties held for/under development 7 9.4 8. – Completed investment properties 8 10.4 10.0 19.8 18.