2018 ANNUAL REPORT CONTENTS 3 Corporate Information 4 The Group’s Principal Businesses 6 Financial Highlights 14 Chairman’s Statement 16 Management Discussion and Analysis 27 Directors’ and Senior Management’s Profile 32 Directors’ Report 45 Corporate Governance Report 56 Independent Auditor’s Report Consolidated Financial Statements 61 – Consolidated Statement of Profit or Loss 62 – Consolidated Statement of Comprehensive Income 63 – Consolidated Statement of Financial Position 65 – Consolidated Statement of Changes in Equity 67 – Consolidated Statement of Cash Flows 69 – Notes to Financial Statements 183 Major Properties held by the Group CORPORATE INFORMATION as at 29 March 2019 Board of Directors Principal Bankers Executive Directors Bank of China (Hong Kong) Limited China CITIC Bank, Guangzhou Branch Mr. HUANG Xiaofeng (Chairman) China Merchants Bank Mr. WEN Yinheng (Managing Director) Chong Hing Bank Mrs. HO LAM Lai Ping, Theresa (Company Secretary) Dah Sing Bank Mr. TSANG Hon Nam (Chief Financial Officer) DBS Bank Ltd., Hong Kong Branch Hang Seng Bank Non-Executive Directors Industrial and Commercial Bank of China (Asia) Limited Industrial and Commercial Bank of China, Shenzhen Branch Mr. CAI Yong Malayan Banking Berhad Mr. ZHANG Hui OCBC Wing Hang Bank Limited Ms. ZHAO Chunxiao Standard Chartered Bank Mr. LAN Runing The Hongkong and Shanghai Banking Corporation Limited Mr. LI Wai Keung Registered Office Independent Non-Executive Directors 28th and 29th Floors Guangdong Investment Tower Dr. CHAN Cho Chak, John, GBS, JP 148 Connaught Road Central Dr. the Honourable LI Kwok Po, David, GBM, GBS, OBE, JP Hong Kong Mr. FUNG Daniel Richard, SBS, QC, SC, JP Telephone : (852) 2860 4368 Dr. the Honourable CHENG Mo Chi, Moses, GBM, GBS, OBE, JP Facsimile : (852) 2528 4386 Mr. WU Ting Yuk, Anthony, Email : [email protected] Standing Committee Member of CPPCC National Committee, GBS, JP Website : http://www.gdi.com.hk Audit Committee Share Registrar Dr. the Honourable LI Kwok Po, David Tricor Tengis Limited (Committee Chairman) Level 22, Hopewell Centre Dr. CHAN Cho Chak, John 183 Queen’s Road East Mr. FUNG Daniel Richard Hong Kong Dr. the Honourable CHENG Mo Chi, Moses Customer Service Hotline: (852) 2980 1333 Mr. WU Ting Yuk, Anthony Share Information Remuneration Committee Place of Listing Main Board of The Stock Exchange of Dr. CHAN Cho Chak, John (Committee Chairman) Hong Kong Limited Dr. the Honourable LI Kwok Po, David Stock Code 00270 Mr. FUNG Daniel Richard Board Lot 2,000 shares Dr. the Honourable CHENG Mo Chi, Moses Financial Year End 31 December Mr. WU Ting Yuk, Anthony Shareholders’ Calendar Nomination Committee Annual General Meeting 17 June 2019 3:00 p.m. Mr. HUANG Xiaofeng (Committee Chairman) Dr. CHAN Cho Chak, John Dr. the Honourable LI Kwok Po, David Final Dividend 37.5 HK cents per ordinary share, Mr. FUNG Daniel Richard payable on or about 26 July 2019 Dr. the Honourable CHENG Mo Chi, Moses Mr. WU Ting Yuk, Anthony Last Share Registration Date For attending Annual 11 June 2019, by 4:30 p.m. Company Secretary General Meeting Mrs. HO LAM Lai Ping, Theresa For entitlement to 20 June 2019, by 4:30 p.m. Final Dividend Auditor Closure of Register of Members Ernst & Young Final Dividend 21 June 2019 ANNUAL REPORT 2018 3 THE GROUP’S PRINCIPAL BUSINESSES 29 March 2019 Water Property Investment Resources and Development 96.04% 100% 73.82% GH Water Supply Guangdong Water Guangdong Land (Holdings) Limited Group (H.K.) Limited Holdings Limited 76.13% Guangdong Teem 30% 90.1% 99% (Holdings) Limited Foundation Gang-Wu Dongguan (Teem Plaza) Guangdong Yue Gang (Changzhou) Water Changping Jinsheng Water Supply Company Supply Co., Ltd. Water Co., Ltd. 100% Limited Global Head 43.86% 90.1% Developments Limited 60% 48% Dongguan Qingxi Dongguan (Guangdong Investment Guangzhou Tianhecheng Yangjiang Guangdong Guangdong Water Daojiao Hongfa Sewage Tower properties) Investment Co., Ltd. Qingyuan Huanbao Co., Ltd. Treatment Co., Ltd. Co., Ltd. 49% 97% 100% Guangzhou Guangdong Properties 68% 51% Nansha GDH Water Dapu Guangdong Guangzhou City Wanye Holdings Limited Gaozhou Co., Ltd. Huanbao Co., Ltd. (Guangdong Group Investment Management Guangdong Water Building properties) Company Limited Company Limited 49% (Panyu Wanbo CBD project) Shantou 98.8% 60% 55% Guangdong Water Yangjiang Guangdong Yizheng Gangyi Company Limited Enshi Guangdong Huanbao Co., Ltd. Water Supply 76.02% Zhengyuan Water Company Limited Tianjin Teem Shopping Company Limited 63.07% Center Co., Ltd. Xuyi Guangdong Water 98.8% (Tianjin Teem 60% Shopping Mall) Company Limited WuChuan Guangdong Gaoyou Gangyou 69.5% Huanbao Co., Ltd. Water Supply Yunfu Company Limited Guangdong Water 70% Company Limited Hainan Danzhou Tap Water Company 100% China City Water 70% Limited Zhaoqing HZ GDH Supply Investment 76.2% (Hong Kong) Limited Water Co., Ltd. Hainan Danzhou Guangdong Water 70% Company Limited Meizhou Guangdong 70% Water Co., Ltd. 100% Baoying Yuehai Xingning Yuehai Water Company 95% 70% Huanbao Co., Ltd. Limited Yangshan Guangdong Suixi Guangdong Water 86.96% Huanbao Co., Ltd. Company Limited Wuzhou Yuehai 100% Huanbao Fazhan Wuhua Yuehai Company Limited Luyuan Huanbao 70% Fengshun Guangdong Co.,Ltd. Water Co., Ltd. 100% 100% Wuhua Yuehai Wuhua Yuehai 80% Qingyuan Huanbao Shanwei Yuehai Huanbao Co., Ltd. Co., Ltd. Huanbao Co., Ltd. 100% 51% 85.8% Guangdong Yuehai Wuzhou Yuehai Shaoguan Guangdong Water Investment Jianghe Water Luyuan Huanbao Company Limited Company Limited Co., Ltd. 90% 54.29% 100% Liupanshui Guangdong Kaiping Guangdong Kaiping Yuehai Sewage Huanbao Co., Ltd. Water Co., Ltd. Treatment Co., Ltd. 4 GUANGDONG INVESTMENT LIMITED Property Investment Department Store Hotel Ownership, Operation Energy Projects, and Development Operation and Management Road and Bridge 85.20% 100% 100% Guangdong Teemall Guangdong (International) Hotel Guangxi Department Stores Ltd. Management Holdings Limited Xinchangjiang Gonglu 76.13% Company Limited Sheraton Guangzhou (Xingliu Expressway) 71.25% Hotel 100% Zhongshan Thermal 100% Fill Success Investments Limited Power Co., Ltd. Tianjin Teemall (Wharney Guangdong (Zhongshan Department Stores Ltd. Hotel (Hong Kong)) Power Plant) 100% Dongguan Yuehai 100% Yinping Development Guangdong Hotel Limited and Construction 25% Limited (Guangdong Hotel Guangdong Yudean (Hong Kong)) Jinghai Power Generation Co., Ltd. (Yudean Jinghai 100% Power Plant) Guangdong Hotel 100% (Zhu Hai) Guangzhou GDI Yinping Capital 99% Management Limited Shenzhen Guangdong Hotel Enterprise Ltd. (Guangdong Hotel (Shen Zhen)) Notes: (i) Projects of the Group are shown in italics and do not constitute part of the individual company’s or joint venture’s name. (ii) The English name of the entity marked with a “” is a translation of its Chinese name, and is included herein and in other sections of this Annual Report for identification purposes only. In the event of any inconsistency, the Chinese name shall prevail. ANNUAL REPORT 2018 5 FINANCIAL HIGHLIGHTS Financial Highlights for the year ended 31 December 2018 2017 Changes HK$’000 HK$’000 % Revenue 13,363,600 12,168,839 9.8 Profit for the year attributable to owners of the Company 5,015,119 5,685,371 –11.8 Earnings per share — Basic HK 76.71 cents HK 88.04 cents –12.9 Dividends per share Interim HK 16.00 cents HK 14.50 cents Proposed final HK 37.50 cents HK 34.00 cents HK 53.50 cents HK 48.50 cents 10.3 EBITDA 8,436,880 9,112,059 –7.4 Owners’ equity 40,372,255 40,214,459 0.4 Total assets 73,182,444 66,539,014 10.0 Net financial borrowings7 1,642,407 – N/A Key Ratios (as at 31 December) 2018 2017 Gearing1 7.0% N/A Interest cover2 56.26X 82.39X Liquidity3 3.21X 2.13X Return on average owners’ equity4 12.45% 15.70% Post-tax return on average assets5 7.87% 10.12% Dividend payout ratio6 69.74% 55.09% Share Information (as at 31 December) 2018 2017 Number of ordinary shares in issue 6,538m 6,538m Market capitalisation HK$98,983m HK$68,386m Closing market price per share HK$15.14 HK$10.46 Basic earnings per share HK 76.71 cents HK 88.04 cents Diluted earnings per share HK 76.68 cents HK 87.96 cents Net asset value8 per share HK$6.18 HK$6.15 6 GUANGDONG INVESTMENT LIMITED Notes: Net Financial indebtedness Profit for the year attributable to owners 1 4 7 Financial borrowings – Net asset value8 (opening equity8 + closing equity8)/2 cash and cash equivalents EBITDA Profit for the year Excluded non-controlling 2 5 8 Finance costs (opening total assets + closing total assets)/2 interests Current assets Dividends per share 3 6 Current liabilities Basic earnings per share Analysis of gross financial borrowings (as at 31 December) 2018 2017 HK$’000 HK$’000 Loans maturity profile Within 1 year 1,685,292 5,294,634 In the 2nd year 702,546 131,264 In the 3rd to 5th years, inclusive 6,852,721 444,671 Over 5 years 89,248 49,551 9,329,807 5,920,120 Currency % % Hong Kong dollars 70.0 95.5 Renminbi 30.0 4.5 Interest rate % % Floating 93.0 86.9 Fixed 0.5 1.0 Non-interest bearing 6.5 12.1 Source of financing (as at 31 December 2018) Available and committed Utilised % % Interest-bearing bank and other borrowings 94.2 93.5 Non-interest-bearing borrowings 5.8 6.5 100.0 100.0 ANNUAL REPORT 2018 7 FINANCIAL HIGHLIGHTS (CONTINUED) Analysis of the Group’s Businesses Year ended 31 December 2018 Revenue Segment results HK$’000 % HK$’000 % By Activity: Water resources 8,235,422 61.63 4,179,049 65.67 Property investment and development 1,654,263 12.38 1,148,017 18.04 Department store operation 716,497 5.36 185,754 2.92 Electric power generation