NWS HOLDINGS LIMITED NWS HOLDINGS LIMITED STOCK CODE: 659 NWS Holdings Limited (incorporated in Bermuda with limited liability) ANNUAL REPO 28/F New World Tower 18 Queen’s Road Central Central, Hong Kong Tel : (852) 2131 0600 Fax : (852) 2131 0611 E-mail : [email protected] R T www.nws.com.hk 2018 Annual Report 2018 Connecting Lives Building Futures NWS Holdings Limited takes every practicable measure to conserve resources and minimize waste. ™ This annual report is printed on FSC certified paper and other controlled material using chemistry free plate system and soy ink. The FSC™ logo identifies product group from responsible forestry in accordance with the rules of the Forest Stewardship Council®. About NWS Holdings NWS Holdings Limited (Hong Kong stock code: 659) is the infrastructure and service flagship of New World Development Company Limited (Hong Kong stock code: 17). Listed on the Hong Kong Stock Exchange, NWS Holdings embraces a range of businesses predominately in Hong Kong and Mainland China. With a workforce of approximately 30,000 people, NWS Holdings is committed to achieving sustainable growth in its two core business areas of infrastructure and services. VISION MISSION CORE VALUES To build a dynamic and Synergize and develop • Reputable customer care premier group of business units that: • Pride and teamwork infrastructure and service • Nurture total integrity • Innovation management companies • Attain total customer driven by a shared • Community contributions satisfaction passion for customer value and environmental and care • Foster learning culture awareness and employee pride • Stakeholders’ interest • Build a world-class service provider brand • Maximize financial returns CONNECTING LIVES • BUILDING FUTURES NWS HOLDINGS LIMITED This year’s annual report features a brightly coloured bird, its vibrancy NWS HOLDINGS LIMITED STOCK CODE: 659 representing the Group’s diverse and flourishing business segments. In NWS Holdings Limited (incorporated in Bermuda with limited liability) ANNUAL REPO 28/F New World Tower 18 Queen’s Road Central Central, Hong Kong tune with the seasons and changing conditions, birds migrateTel : (852) 2131 0600 in search Fax : (852) 2131 0611 E-mail : [email protected] R T of the resources they require. Similarly, NWS Holdingswww.nws.com.hk adapts to the 2018 evolving market conditions, and continuously seeks out new Annual Report 2018 opportunities for growth. With its wings spread wide, the bird in this Connecting Lives Building Futures cover design symbolizes the Group’s determination to maintain growth momentum. Together with the Group’s corporate tagline, “Connecting Lives‧Building Futures”, the design underpins our commitment to NWS Holdings Limited takes every practicable measure to conserve resources and minimize waste. This annual report is printed on FSC™ certified paper using chemistry free plate system and soy ink. The FSC™ logo identifies product group from responsible forestry in accordance with the rules of the delivering strong, sustainable shareholder and stakeholder value.Forest Stewardship Council®. Download the NWS Holdings Annual Report 2018 Contents Corporate Profile 2 Major Events and Accolades 4 Financial Highlights 6 Chairman’s Statement 8 Board of Directors and Senior Management 10 Corporate Governance Report 23 Risk Management 47 Sustainability 54 Management Discussion and Analysis 68 Reports and Financial Statements 86 Five-Year Financial Summary 228 Project Key Facts and Figures 230 Glossary of Terms 242 Corporate Information 244 2 NWS HOLDINGS LIMITED Corporate Profile As at 30 June 2018 (Please refer to Project Key Facts and Figures on page 230 to page 241 for project details) ROADS projects in Mainland China with15 a network of approximately 700 km long ENVIRONMENT 72 projects in cities across Greater45 China region LOGISTICS INFRASTRUCTURE Handling capacity of As one of the leading infrastructure players in Greater China, NWS Holdings operates an extensive business network, million TEUs managing and operating 97 projects in 16.5 four major segments: Roads, Environment, per year for rail container terminals Logistics and Aviation. and port projects AVIATION Owned commercial aircraft for111 leasing Annual Report 2018 3 Corporate Profile FACILITIES MANAGEMENT Over million visitors attended8.2 events at Hong Kong Convention and Exhibition Centre this year Over specialties35 and subspecialties in Gleneagles Hong Kong Hospital SERVICES The Services division of NWS Holdings operates primarily in Hong Kong. The portfolio spans facilities management, healthcare, construction and public transport, supports the smooth running CONSTRUCTION of daily life and drives the city’s growth. & TRANSPORT Hip Hing Group has approximately HK$ billion gross47.1 value of contracts on hand Our bus and ferry fleets carry approximately million patronage per1.1 day 4 NWS HOLDINGS LIMITED Major Events and Accolades AUGUST NOVEMBER • The Group was named Dream • Two of NWS Holdings’ signature Employer of the Year and garnered community programmes won a Gold the Best Employer Brand Award at the and a Bronze award at the China 2017 eighth Asia’s Best Employer Brand Golden Awards for Excellence in Awards 2017 organized by World HRD Public Relations 2017, organized by Congress. China International Public Relations Association. These accolades came in addition to the Asia Responsible Enterprise Awards 2018, received later SEPTEMBER in June. • NWS Holdings was selected as a constituent stock of the Hang Seng Corporate Sustainability Benchmark DECEMBER Index for the seventh consecutive year. It was again named the highest- scoring constituent company in Fair Operating Practices. • Hong Kong Convention and Exhibition Centre championed the Outstanding Venue Award at the 2017 AFECA Asian Awards, organized by the Asian Federation of Exhibition and • NWS Holdings garnered two gold Convention Associations, reaffirming awards in the Enterprise and Volunteer its leading position in the region. Team categories respectively at the eighth Hong Kong Outstanding Corporate Citizenship Awards. This was the sixth gold the Group has received for its commitment to corporate volunteering. Annual Report 2018 5 Major Events and Accolades JANUARY JUNE • NWS Holdings acquired a 30% stake in Suiyuenan Expressway for a cash consideration of approximately RMB1.1 billion, extending its roads 2018 business to Hubei province in Mainland China. • Goshawk Aviation Limited (“Goshawk”) entered into an agreement to acquire Sky Aviation Leasing International Limited, placing it among the top 10 aircraft lessors in the world. Subsequent to this acquisition, Goshawk placed its first direct orders MARCH with Airbus and Boeing to purchase a total of 40 new aircraft. • Gleneagles Hong Kong Hospital, a joint venture between Parkway Pantai • SUEZ NWS Limited won the Dafa Limited and NWS Holdings, officially hazardous waste treatment project in opened. The Honourable Mrs Carrie Kaohsiung, Taiwan with an annual Lam, Chief Executive of the HKSAR, capacity of 29,200 tonnes. officiated at the ceremony. • The NWS Holdings Charities Foundation donated HK$10 million to Hong Kong Shue Yan University to enhance its teaching and learning facilities. 6 NWS HOLDINGS LIMITED Financial Highlights 2018 2017 HK$’m HK$’m Revenue 35,114.8 31,385.0 Profit attributable to shareholders of the Company 6,068.8 5,628.9 Net Debt 3,518.0 3,229.3 Total assets 78,138.6 75,725.9 Net Assets 50,123.8 49,275.0 Shareholders’ funds 49,950.0 49,057.1 2018 2017 HK$ HK$ Basic Earnings per Share 1.56 1.46 Dividend per Share – interim and final 0.78 0.73 – special final – 0.72 Net Assets per Share 12.86 12.67 2018 2017 Net Gearing Ratio 7% 7% Return on Equity 12% 11% Return on Capital Employed 10% 9% Dividend Payout Ratio 50% 100% Annual Report 2018 7 Financial Highlights Revenue by Region AOP by Region for the year ended 30 June 35.1billion for the year ended 30 June 5.2billion 2018 2018 2017 2017 2016 2016 2015 2015 2014 2014 HK$’billion 0510 15 20 25 30 35 40 HK$’billion 0123456 Hong Kong Mainland China Others Hong Kong Mainland China Others AOP by Division Total Equity for the year ended 30 June 5.2billion as at 30 June 50.1billion HK$’billion 50 2018 2017 45 2016 2015 40 2014 35 HK$’billion 0123456 2014 2015 2016 2017 2018 Infrastructure Services Net Debt and billion Debt Profile Net Gearing Ratio 3.5 as at 30 June 10.2billion as at 30 June and 7% HK$’billion % Maturity 10 30 2018 8 2017 20 Interest term 6 2018 4 2017 10 Nature 2 2018 2017 0 0 HK$’billion 0246810 12 2014 2015 2016 2017 2018 Short-term Fixed rate Within one year Net Debt Net Gearing Ratio bank loans, Floating rate In the second year overdrafts and other In the third to fth year borrowings After the fth year Long-term bank loans 8 NWS HOLDINGS LIMITED Chairman’s Statement will cast a shadow over China’s second half outlook, the Central Government has reiterated its firm commitment towards economic transformation and upgrading, by deepening supply-side structural reforms and stimulating domestic consumptions. The resolve to maintain financial market stability remains strong. Other coherent and integrated policies are in place to facilitate urbanization and regional development, and to raise environmental protection standards. This calls for increased spending on public infrastructure. With proven expertise and experience in infrastructure- related projects, the Group remains optimistic in capturing and developing new investment opportunities in China in the years to come despite the recent uncertainty. The across the board growth posted by the Infrastructure division reflected the strong fundamentals and operational efficiency of the individual business segments. With clear government objectives to improve transportation efficiency to enhance regional and international interconnectivity, quality expressways and rail freight facilities are essential components to China’s economic development. The impressive toll revenue and traffic growth reported by Tangjin Expressway (Tianjin North Dear Shareholders, Section) evidently demonstrated the potential synergistic effects arising from the coordinated The Group continued to demonstrate its proficiency development of the Beijing-Tianjin-Hebei region.