At the core of the Group’s commitment to a sustainable future, Henderson Land embraces innovation and continually aligns its operations to best practice. Henderson Land follows a strategy emphasizing sustainability, that is driving the progressive development of its business and ensuring its long term success. (Cover Photo: Many of the Group’s signature buildings in Hong Kong and mainland China have been recognized for their green features. From left to right, The Gloucester, Mira Moon, Henderson Metropolitan, Two International Finance Centre, World Financial Centre, Arch of Triumph, Hill Paramount. The photo below shows the Winter Garden inside World Financial Centre.) Annual Report 2011 Annual Two ifc, Hong Kong Platinum BEAM Rating (left) DELIVERING A Centro, Shanghai SUSTAINABLE LEED Gold Certification (right) FUTURE Annual Report 2011 CORPORATE PROFILE Founded in 1976 by its Chairman, Dr The Honourable Lee Shau Kee, GBM, Henderson Land Development Company Limited is a leading Heilongjiang property group with a focus on Hong Kong and mainland China. Its core 4.0 million sq.ft. businesses comprise property development and property investment. In addition, it has direct equity interests in a listed subsidiary, Henderson million sq.ft. Investment Limited, and three listed associates, The Hong Kong and 20.1 China Gas Company Limited (which in turn has equity stakes in a Jilin listed subsidiary, Towngas China Company Limited), Hong Kong Ferry (Holdings) Company Limited and Miramar Hotel and Investment Company, Limited. Liaoning Xinjiang 54.2 million sq.ft. Henderson Land has been listed in Hong Kong since 1981 where it is Inner Mongolia Beijing one of the largest property groups. As at 31 December 2011, Henderson Land had market capitalization of HK$91 billion and the combined 35.4 million sq.ft. Hebei market capitalization of the Company, its listed subsidiaries and associates was HK$253 billion. Ningxia Shanxi Shandong The Company is vertically integrated, with project management, construction, property management, and financial services supporting its Qinghai 1.1 million sq.ft. Gansu core businesses. In all aspects of its operations, Henderson Land strives Jiangsu Shaanxi Henan to add value for its shareholders, customers and the community through its commitment to excellence in product quality and service delivery as Anhui Shanghai well as a continuous focus on sustainability and the environment. Xizang Hubei Sichuan million sq.ft. Zhejiang 14.5 Chongqing Jiangxi Hunan Fujian New Territories 4.4 million sq.ft. Guizhou 1.7 million sq.ft. Kowloon 3.6 million sq.ft. Taiwan Hong Kong Island Yunnan Guangdong 2.2 million sq.ft. Guangxi 14.2 million sq.ft. New Territories 6.0 million sq.ft. Hainan Kowloon 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 2011. 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 2011 Final Results 10 Chairman’s Statement Review of Operations Business in Hong Kong 36 Land Bank 44 Property Development 52 Property Investment 58 Property Related Businesses Business in Mainland China and Macau 62 Land Bank 66 Progress of Major Development Projects 76 Major Investment Properties 82 Subsidiary & Associated Companies 94 Financial Review 102 Five Year Financial Summary 106 Sustainability and CSR 112 Corporate Governance Report 120 Report of the Directors 138 Biographical Details of Directors and Senior Management Forward-Looking Statements This annual report contains certain statements that 146 Report of the Independent Auditor are forward-looking or which use certain forward- looking terminologies. These forward-looking 147 Accounts statements are based on the current beliefs, 242 Corporate Information assumptions and expectations of the Board of 245 Notice of Annual General Meeting Directors of the Company regarding the industry and markets in which it operates. These forward- 248 Financial Calendar looking statements are subject to risks, uncertainties and other factors beyond the Company’s control which may cause actual results or performance to differ materially from those expressed or implied in such forward- looking statements. Awards & Accolades 17. 12. 11. 10. 6. 5. 4. 1. The 8th Top 10 Influential Brands in China China United Business News, China Wisdom Engineering Association and 3 other research institutes / associations Top 10 Influential Brands in China Real Estate Industry 2. Hang Seng Corporate Sustainability 9. metroBOX Greater China Excellent Brand 13. Excellence in Facility Management Index Series Awards 2011 Award 2011 Hang Seng Indexes Company Limited metroBOX, Yangcheng Metro News Hong Kong Institute of Facility Constituent Company Greater China Excellent Brand for Luxury Management 3. The 5th Annual Autodesk HK BIM Properties (Hill Paramount) Excellence in Facility Management Award - Awards 2011 10. HKCA Safety Award 2010 Office Building (Manulife Financial Centre) Autodesk Hong Kong Construction Association Excellence in Facility Management Award - 4. Caring Company 2010/11 HKCA Proactive Safety Contractors Award Retail (Metro City Phase II) Hong Kong Council of Social Services 2010 (E Man, Heng Shung & Grandic) 14. Family-Friendly Employers Award Henderson Land, Hong Kong & China Gas, HKCA Safety Merit Award 2010 (Heng Lai) Scheme 2011 Hong Kong Ferry, Miramar, Hang Yick, Well 11. The 2nd Hong Kong Outstanding Family Council Born & Goodwill Corporate Citizenship Award Distinguished Family-Friendly Employer (The 5. BCI Asia Top 10 Awards 2011 Hong Kong Productivity Council Hong Kong & China Gas Company Limited) BCI Asia Services Industry - Merit Award (Property Family-Friendly Employer (Hang Yick, Well Top 10 Developers Awards 2011 Management) Born & Goodwill) 6. The Excellence of Listed Enterprise Outstanding Corporate Volunteer Team - 15. World Top 1000 Chinese Enterprises Awards 2011 Silver Award (Team of Care) Yazhou Zhoukan CAPITAL WEEKLY 12. 2010 Customer Relationship Best Business Performance Award 2011 - 7. 2011 International ARC Awards Excellence Awards Hong Kong Region (The Hong Kong and Mercomm, Inc. Asia Pacific Customer Service Consortium China Gas Company Limited) Gold Award (category: Financial Data - Corporate Health & Safety Achievement of 16. CAPITAL Outstanding Enterprise 2011 Real Estate Development) the Year 2010 (Property Management) CAPITAL Bronze Award (category: Interior Design - Customer Loyalty Program of the Year 2010 Outstanding Hong Kong Branding Enterprise Real Estate Development) (Property Management) (Miramar Hotel and Investment Company, 8. Golden Brick Award for Real Estate Corporate Environmental & Social Limited) of China Leadership of the Year 2010 (Property 17. 2010/11 One Factory-One Year-One 21st Century Business Herald and the Management - Goodwill) Environmental Project (1-1-1) Programme Organizing Committee of Boao 21st High Speed Customer Service of the Year Federation of Hong Kong Industries Century Real Estate Forum 2010 (Property Management - Goodwill) Hang Seng-Pearl River Delta Environmental 2011 Most Outstanding Architecture Award Merit - Integrated Support Team of the Year Award - Green Participant (The Hongkong & (39 Conduit Road) 2010 (Goodwill) Yaumati Ferry Company Limited) Henderson Land Development Company Limited 2 Annual Report 2011 16. 15. 14. 13. 9. 8. 7. 3. 2. 1. Building Environmental Hong Kong Green Awards 2011 Assessment Method (BEAM) (Left) Leadership in Energy and Environmental Design (LEED) (Right) During the year, Henderson Land again garnered many awards and acknowledgements for the quality of its projects and services, reflecting its continued commercial success and its contributions in important areas such as environmental awareness and sustainability. In the Hong Kong Green Awards 2011, Henderson Land Group companies as a whole won more than 30 awards and certificates, becoming the largest winner of the year. As further recognition of the Group’s comprehensive approach to sustainability, many Group projects are achieving the highest ratings under the globally recognized LEED and BEAM schemes. For example, during the year, Centro achieved a Gold LEED and Platinum BEAM rating, while One International Finance Centre, Two International Finance Centre, Manulife Financial Centre, and Henderson Metropolitan all achieved Platinum BEAM ratings, the highest possible under the scheme’s stringent requirements. Henderson Land Development Company Limited Annual Report 2011 3 Group Structure Henderson Land Group Structure Market capitalization as at 31 December 2011 Henderson Land Development Company Limited: HK$91 billion Six listed companies of Henderson Land Group: HK$253 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 Henderson The Hong Kong and Miramar Hotel (Holdings) Investment China Gas and Investment Company Limited Limited Company Limited Company, Limited Property development Infrastructure Production and distribution Property investment,