Stock Code: 12 ANNUAL REPORT 2019 Corporate Profile Founded in 1976 by 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 businesses comprise property development and property investment. In addition, it has direct equity interests in a listed subsidiary, Henderson Investment Limited, and three listed associates, The Hong Kong and China Gas Company Limited (which in turn has equity stakes in a listed subsidiary, Towngas China Company Limited), Hong Kong Ferry (Holdings) Company Limited and Miramar Hotel and Investment Company, Limited. Henderson Land has been listed in Hong Kong since 1981 where it is one of the largest property groups. As at 31 December 2019, Henderson Land had a market capitalisation of HK$185 billion and the combined market capitalisation of the Company, its listed subsidiary and its associates was about HK$474 billion. The Company is vertically integrated, with project management, construction, property management, and financial services supporting its core businesses. In all aspects of its operations, Henderson Land strives to add value for its shareholders, customers and the community through its commitment to excellence in product quality and service delivery as well as a continuous focus on sustainability and the environment. Contents Inside front Corporate Profile 2 Land Bank – Hong Kong and Mainland China 4 Awards & Accolades 6 Group Structure 7 Highlights of 2019 Final Results 10 Chairmen’s Statement Review of Operations Business in Hong Kong 44 Progress of Major Development Projects 54 Major Completed Investment Properties Business in Mainland China 60 Progress of Major Development Projects 73 Major Completed Investment Properties 74 Business Model and Strategic Direction 76 Financial Review 90 Five Year Financial Summary 92 Sustainability and CSR 94 Corporate Governance Report 111 Report of the Directors 127 Biographical Details of Directors and Senior Management 137 Financial Statements 138 Report of the Independent Auditor 261 Corporate Information 264 Notice of Annual General Meeting 268 Financial Calendar FORWARD-LOOKING STATEMENTS This annual report contains certain statements that are forward looking or which use certain forward-looking terminologies. These forward-looking statements are based on the current beliefs, assumptions and expectations of the Board of Directors of the Company regarding the industry and markets in which it operates. These forward-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. Land Bank – Hong Kong and Mainland China Heilongjiang Hong Kong Jilin 5.0 million sq.ft. Liaoning Xinjiang 1.04 million sq.ft. 4.45 million sq.ft. New Territories Inner Mongolia Beijing 6.4 Hebei Kowloon million sq.ft. Ningxia Shanxi Shandong Hong Kong 2.4 Island million sq.ft. Qinghai 4.47 Gansu Shaanxi Jiangsu million sq.ft. Henan Anhui 6.87 Shanghai million sq.ft. Xizang Hubei 3.76 Sichuan 0.69 million sq.ft. million sq.ft. Zhejiang Chongqing The diagram above provides an overview of the Group’s substantial 3.28 million sq.ft. and diverse, yet balanced development land bank in Hong Kong Hunan Jiangxi and mainland China as at 31 December 2019. It illustrates the attributable developable gross floor area by location. Henderson Land’s quality land reserve is earmarked for both commercial and Guizhou 4.78 Fujian residential projects, which are expected to provide handsome million sq.ft. returns for the Group during the years to come. Taiwan Yunnan Guangdong Guangxi 2.52 million sq.ft. Hong Kong Henderson Land Development Company Limited Hainan Henderson Land Development Company Limited 2 Annual Report 2019 Annual Report 2019 3 Awards & Accolades Murray Road project Harbour East Leadership in Energy and Environmental Design Asia Property Awards 2019 1 2 (LEED) Best Commercial Green Development (China – Hong Kong) – 5-Star Winner Platinum Pre-certification (Core & Shell) Best Office Development (China – Hong Kong) – 5-Star Winner Best Green Office Development (Hong Kong) – Winner WELL Building Standard Best Office Development (Hong Kong) – Winner Platinum Level Pre-certification Best Universal Design Development (Hong Kong) – Highly Commended China Healthy Building Design Label 3-Star Rating 1. Asia Pacific Property Awards Provisional Gold Rating 10. Galaxy Awards 2019 5 Years + EcoPioneer 2019-2020 (1-19 Chung Ching Street, MerComm, Inc. (The Hong Kong Shipyard 3 4 5 6 7 International Property Awards 456-466 Sai Yeung Choi Street Bronze Award (Annual Reports – Limited, The Hongkong & North and 50-56 Wong Chuk Print: Sustainability Report – Yaumati Ferry Company Limited) Mixed-use Architecture Street, New Kowloon Inland Lot Hong Kong – Award Winner Asia/Pacific) 3 Years + EcoPioneer No. 6562, Kai Tak and New (25 awarded properties in total) (Various projects in Hung Hom) Kowloon Inland Lot No. 6565, 11. Caring Company 2019/20 EcoPartner Residential Development Kai Tak) Hong Kong – Award Winner Hong Kong Council of Social (28 awarded properties in total) Provisional Silver Rating Service (ARTLANE) (38 Fuk Chak Street and 15. APAC Business Awards (Henderson Land, Best Retail Architecture – Tuen Mun Town Lot No. 547 Hong Kong & China Gas, APAC Insider, UK Hong Kong 5-Star Winner (Castle Peak Road, Castle Peak Hong Kong Ferry, Miramar, Recognised Leaders in Sea (68 Kimberley Road) Bay, Area 48, Tuen Mun, Miramar Travel, Hang Yick, Transport Solutions – Hong New Territories)) 2. Asia Property Awards 2019 Well Born and Goodwill) Kong (Hong Kong Ferry) Provisional Bronze Rating PropertyGuru (The Addition and The Richmond) 12. Hang Seng Corporate 16. ERB Manpower Developer Best Universal Design Sustainability Index Series Award Scheme 8 9 10 11 Development (China – 4. Green Building Award 2019 Hang Seng Indexes Company Employees Retraining Board Hong Kong) – 5-Star Winner Hong Kong Green Building Limited Manpower Developer (2011-21) (ARTLANE) Council and Professional Green Constituent Company (Miramar) Best Universal Design Building Council (Henderson Land, Manpower Developer 1st Development (Hong Kong) – Green Building Leadership Winner (ARTLANE) Hong Kong & China Gas and (2010-20) (Hong Kong Ferry) Category (Developer) – Finalist Towngas China) Best Boutique Condo 17. 2019 International Customer Development (Hong Kong) – 5. 2019 AIA Hong Kong Honors 13. HKCA Safety Award 2018 Relationship Excellence Winner (ARTLANE) and Awards Hong Kong Construction Awards Best Mixed Use Development The American Institute of Association Asia Pacific Customer Service (China – Hong Kong) – 5-Star Architects Hong Kong Chapter Winner (Square Mile) HKCA Proactive Safety Consortium Merit Award for Architecture Contractor Award (E Man, Best Use of Knowledge Best Commercial Green (H Code) Heng Lai and Heng Shung) Development (China – Management of the Year 2019 HKCA Safety Merit Award (Grandic) (Property Management) 12 13 14 Hong Kong) – 5-Star Winner 6. World’s Best Employers (Square Mile) 2019 – Top 500 HKCA Safe Person-in-charge (Hang Yick, Well Born and H-Privilege) Best Mixed Use Development Forbes Award (E Man, Heng Lai and (Hong Kong) – Winner Heng Shung) Best Corporate Brand of the Year (Square Mile) 7. The Listed Enterprise HKCA Safe Supervisor Award 2019 (Property Management) (Hang Yick and Well Born) Best Green Mixed Use Excellence Awards 2019 (E Man, Heng Lai and Heng Shung) Development (Hong Kong) – CAPITAL WEEKLY 17 Consecutive Years of 14. BOCHK Corporate Participation (Well Born) Winner (Square Mile) Outstanding Corporate Results Environmental Leadership Best Universal Design Performance Award Awards 2018 18. Excellence in Facility Development (Hong Kong) – 8. BCI Asia Top 10 Awards 2019 Federation of Hong Kong Industries Management Award 2019 Highly Commended The Hong Kong Institute of (Square Mile) BCI Asia Manufacturing Sector – Gold Award Top 10 Developers Award (Hong Kong & China Gas) Facility Management 3. BEAM Plus (New Buildings) EcoPartner Excellence Award (Office Hong Kong Green Building 9. International ARC Awards 2019 (The Hong Kong Shipyard Building) (AIA Financial Centre) MerComm, Inc. Limited, The Hongkong & Merit Award (Retail) 15 16 17 18 Council Final Bronze Rating (Mega Cube) Silver Award (Specialized A.R.: Yaumati Ferry Company Limited) (Mira Place One) CSR – Corporate Social Responsibility Report) Henderson Land Development Company Limited Henderson Land Development Company Limited 4 Annual Report 2019 Annual Report 2019 5 Group Structure Henderson Land Group Structure Market capitalisation as at 31 December 2019 Henderson Land Development Company Limited: HK$185 billion Six listed companies of Henderson Land Group: HK$474 billion Henderson Land Development Company Limited Investment holding, property development and investment in Hong Kong and mainland China, project and property management, construction and provision of finance 33.41% 69.27% 41.53% 49.01% 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 Department store operation Production and distribution Hotel and serviced and investment in Hong Kong of gas in Hong Kong and apartment, property rental, mainland China food and beverage, and travel 67.76% Towngas China Company Limited Sale and distribution