WorldReginfo - d930b7f2-b74a-49ea-993d-33d5f2a11b1e - WorldReginfo Annual Report 2014/15 Annual Stock Code : 16 Warrant Code : 1441 2014/15 Annual Report C105708 3 4 2 1 5 1. Sun Hung Kai Centre in Wanchai, Hong Kong 2. The Cullinan at Kowloon Station, Hong Kong 3. International Commerce Centre at Kowloon Station, Hong Kong 4. Two International Finance Centre in Central, Hong Kong 5. One International Finance Centre in Central, Hong Kong WorldReginfo - d930b7f2-b74a-49ea-993d-33d5f2a11b1e 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 22 Business Model and Strategic Direction 24 Review of Operations 26 Hong Kong Property Business 52 Mainland Property Business 72 Property Related Businesses 81 Telecommunications and Information Technology 82 Infrastructure and Other Businesses 85 Corporate Finance 86 Financial Review 88 Investor Relations 90 Sustainable Development 98 Corporate Governance Report 112 Directors’ Report 136 Directors’ Biographical Information 147 Executive Committee 148 Consolidated Financial Statements WorldReginfo - d930b7f2-b74a-49ea-993d-33d5f2a11b1e Board of Directors and Committees Board of Directors Executive Directors Kwok Ping-luen, Raymond (Chairman & Managing Director) Wong Chik-wing, Mike (Deputy Managing Director) Lui Ting, Victor (Deputy Managing Director) Kwok Kai-fai, Adam Kwong Chun Chan Kwok-wai, Patrick (Chief Financial Officer) Tung Chi-ho, Eric Fung Yuk-lun, Allen Kwok Ho-lai, Edward (Alternate Director to Kwok Ping-luen, Raymond) Non-Executive Directors Lee Shau-kee (Vice Chairman) Woo Po-shing Kwan Cheuk-yin, William 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 Leung Nai-pang, Norman Leung Kui-king, Donald Leung Ko May-yee, Margaret Committees Executive Committee Kwok Ping-luen, Raymond Wong Chik-wing, Mike Lui Ting, Victor Kwok Kai-fai, Adam Kwong Chun Chan Kwok-wai, Patrick Tung Chi-ho, Eric Fung Yuk-lun, Allen Chow Kwok-yin, Eric Wong Chin-wah, Jimmy Yung Sheung-tat, Sandy Audit Committee Li Ka-cheung, Eric* Yip Dicky Peter Wong Yick-kam, Michael Leung Kui-king, Donald Remuneration Committee Wong Yue-chim, Richard* Li Ka-cheung, Eric Kwan Cheuk-yin, William Leung Nai-pang, Norman Nomination Committee Wong Yue-chim, Richard* Kwan Cheuk-yin, William Yip Dicky Peter Leung Nai-pang, Norman * Committee Chairman SUN HUNG KAI PROPERTIES LIMITED 2 ANNUAL REPORT 2014/15 WorldReginfo - d930b7f2-b74a-49ea-993d-33d5f2a11b1e Corporate Information and Information for Shareholders Corporate Information Company Secretary Share Registrar Principal Bankers Yung Sheung-tat, Sandy Computershare Hong Kong Bank of China (Hong Kong) Limited Investor Services Limited The Hongkong and Shanghai Banking Auditor Shop Nos. 1712–1716 Corporation Limited Deloitte Touche Tohmatsu 17th Floor, Hopewell Centre The Bank of Tokyo-Mitsubishi UFJ, Ltd. 183 Queen’s Road East Mizuho Bank, Ltd. Registered Office Wanchai Sumitomo Mitsui Banking Corporation Hong Kong Hang Seng Bank Limited 45th Floor, Sun Hung Kai Centre United Overseas Bank Limited 30 Harbour Road Solicitors Agricultural Bank of China Limited Hong Kong Bank of Communications Co., Ltd. Telephone : (852) 2827 8111 Woo, Kwan, Lee & Lo OCBC Wing Hang Bank Limited Facsimile : (852) 2827 2862 Mayer Brown JSM Website : www.shkp.com Winston Chu & Company E-mail : [email protected] Clifford Chance Information for Shareholders Share Listing Financial Calendar for 2014/15 The Company’s shares are listed on The Stock Exchange of Interim results announcement : 27 February 2015 Hong Kong Limited (“Stock Exchange”) and are traded over Interim dividend paid : 24 March 2015 the counter in the United States in the form of American Annual results announcement : 10 September 2015 Depositary Receipts (“ADR”). Closure of register of members1 : 9 to 12 November 2015 (both days inclusive) Stock Code Annual general meeting : 12 November 2015 Stock Exchange : 16 Ex-dividend date for final dividend : 16 November 2015 Bloomberg : 16 HK Equity Closure of register of members2&3 : 18 November 2015 Reuters : 0016.HK Final dividend payable : 26 November 2015 Trading Symbol for ADR : SUHJY CUSIP : 86676H302 Notes: 1. For the purpose of ascertaining shareholders’ entitlement to attend and vote at the Investor Relations Contact annual general meeting. Telephone : (852) 3766 5787 2. For the purpose of ascertaining shareholders’ entitlement to the proposed final dividend. 3. The register of warrantholders will also be closed. Facsimile : (852) 2116 0597 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 in English or in Chinese, 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 the Share Registrar, 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 the Share Registrar by post or by email or by completing and returning the accompanying Change Request Form. SUN HUNG KAI PROPERTIES LIMITED ANNUAL REPORT 2014/15 3 WorldReginfo - d930b7f2-b74a-49ea-993d-33d5f2a11b1e Financial Highlights and Land Bank For the year ended 30 June 2015 2014 Change (%) Financial Highlights (HK$ million) Revenue 66,783 75,100 –11.1 Profit attributable to the Company’s shareholders – Reported 31,082 33,520 –7.3 – Underlying1 19,825 21,415 –7.4 Gross rental income2 19,681 18,489 +6.4 Net rental income2 15,352 14,272 +7.6 Financial Ratios Net debt to shareholders’ funds (%) 11.2 15.7 –4.53 Dividend payout (%) 47.4 42.1 +5.33 Financial Information per Share (HK$) Basic earnings per share for profit attributable to the Company’s shareholders – Reported 11.09 12.45 –10.9 – Underlying 7.07 7.95 –11.1 Dividends – Interim dividend 0.95 0.95 – – Final dividend 2.40 2.40 – – Full-year dividend 3.35 3.35 – Shareholders’ funds 156.82 152.21 +3.0 Land Bank in Hong Kong (gross floor area in million square feet) Properties under development4 22.1 18.2 +21.4 Completed investment properties5 28.7 28.7 – Total 50.8 46.9 +8.3 Land Bank on the Mainland (gross floor area in million square feet) Properties under development6 68.0 74.8 –9.1 Completed investment properties5 11.6 9.5 +22.1 Total 79.6 84.3 –5.6 Notes: 1. Underlying profit attributable to the Company’s shareholders excluded the net effect of changes in the valuation of investment properties 2. Including contributions from associates and joint ventures 3. Change in percentage points and dividend payout based upon underlying profit 4. Excluding 1.6 million square feet of gross floor area from two sites acquired after the end of the financial year and over 30 million square feet of agricultural land in terms of site area 5. The Group has a 50% stake in a premium 950,000 square-foot shopping mall in Singapore in addition to property holdings in Hong Kong and on the mainland 6. Lowered by 8.6 million square feet in July 2015 due to a reduced stake in a project in Foshan SUN HUNG KAI PROPERTIES LIMITED 4 ANNUAL REPORT 2014/15 WorldReginfo - d930b7f2-b74a-49ea-993d-33d5f2a11b1e Underlying Earnings and Dividends per Share HK$ Shareholders’ Funds per Share Net Debt to Shareholders’ Funds Ratio HK$ % 30 25 20 15 10 5 0 Land Bank in Hong Kong Land Bank on the Mainland million square feet million square feet 60 90 86.1 83.8 81.1 84.3 79.6 50.8 46.9 50 44.2 46.6 46.6 75 40 60 30 45 20 30 10 15 0 0 FY 2011 2012 2013 2014 2015 FY 2011 2012 2013 2014 2015 Properties Under Development Completed Investment Properties SUN HUNG KAI PROPERTIES LIMITED ANNUAL REPORT 2014/15 5 WorldReginfo - d930b7f2-b74a-49ea-993d-33d5f2a11b1e Group Financial Summary Key Financial Information and Ratios Financial year 2015 2014 2013 2012 2011 HK$ HK$ HK$ HK$ HK$ Reported earnings per share (basic) 11.09 12.45 15.28 16.63 18.71 Underlying earnings per share (basic) 7.07 7.95 7.05 8.37 8.36 Dividends per share 3.35 3.35 3.35 3.35 3.35 Shareholders’ funds at book value per share 156.82 152.21 144.48 132.49 119.44 Net debt/Shareholders’ funds (%) 11.2 15.7 12.5 16.4 17.1 Interest cover (times)1 9.3 11.1 8.7 13.7 18.3 Key Consolidated Income Statement Items For the year ended 30 June 2015 2014 2013 2012 2011 HK$M HK$M HK$M HK$M HK$M Revenue 66,783 75,100 53,793 68,400 62,553 Operating profit before changes in fair value of investment properties 22,778 24,982 19,300 24,988 21,366 Operating profit after changes in fair value of investment properties 33,765 37,113 38,487 44,470 46,436 Profit attributable to the Company’s