Annual Report 2011/12 PREMIUM BRAND ry rsa nive SOLID FOUNDATIONS 40th An www.shkp.com 2011/12 Annual Report Stock Code : 16 1 The Cullinan at Kowloon Station in Hong Kong 2 2 International Commerce Centre at Kowloon Station in Hong Kong 1 3 3 International Finance Centre in Central, Hong Kong 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 24 Business Model and Strategic Direction 26 Review of Operations 28 Hong Kong Property Business 54 Mainland Property Business 76 Property Related Businesses 85 Telecommunications and Information Technology 86 Infrastructure and Other Businesses 89 Corporate Finance 90 Financial Review 92 Investor Relations 94 Sustainable Development 96 Customer Service 98 Environmental Protection and Promotion 100 The Group and the Community 102 Staff Development and Personal Growth 104 Corporate Governance Report 116 Directors’ Report 140 Directors’ Biographical Information 152 Executive Committee 153 Financial Statements SUN HUNG KAI PROPERTIES LIMITED Annual Report 2011/12 1 Board of Directors and Committees Board of Directors Executive Directors Kwok Ping-kwong, Thomas (Chairman & Managing Director) Kwok Ping-luen, Raymond (Chairman & Managing Director) Wong Chik-wing, Mike (Deputy Managing Director) Lui Ting, Victor (Deputy Managing Director) Chan Kui-yuen, Thomas Kwong Chun Chan Kwok-wai, Patrick (Chief Financial Officer) Kwok Kai-fai, Adam (Alternate Director to Kwok Ping-kwong, Thomas) Kwok Ho-lai, Edward (Alternate Director to Kwok Ping-luen, Raymond) Non-Executive Directors Lee Shau-kee (Vice Chairman) Kwok Ping-sheung, Walter 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 Committees Executive Committee Kwok Ping-kwong, Thomas Kwok Ping-luen, Raymond Wong Chik-wing, Mike Lui Ting, Victor Chan Kui-yuen, Thomas Kwong Chun Chan Kwok-wai, Patrick So Chung-keung, Alfred Tung Chi-ho, Eric 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 Remuneration Committee Wong Yue-chim, Richard* Li Ka-cheung, Eric Kwan Cheuk-yin, William Nomination Committee Wong Yue-chim, Richard* Kwan Cheuk-yin, William Yip Dicky Peter * Committee Chairman 2 SUN HUNG KAI PROPERTIES LIMITED Annual Report 2011/12 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 Sumitomo Mitsui Banking Corporation Registered Office Wanchai Industrial and Commercial Bank of China 45th Floor, Sun Hung Kai Centre Hong Kong Limited 30 Harbour Road Mizuho Corporate Bank, Ltd. Hong Kong Solicitors Bank of Communications Co., Ltd. United Overseas Bank Limited Telephone : (852) 2827 8111 Woo, Kwan, Lee & Lo Hang Seng Bank Limited Facsimile : (852) 2827 2862 Mayer Brown JSM BNP Paribas Website : www.shkp.com Winston Chu & Company E-mail : [email protected] Clifford Chance Information for Shareholders Share Listing Financial Calendar for 2011/12 The Company’s shares are listed on The Stock Exchange of Interim results announcement : 28 February 2012 Hong Kong and are traded over the counter in the United Interim dividend paid : 27 April 2012 States in the form of American Depositary Receipts (ADR). Annual results announcement : 13 September 2012 Closure of register of members1 : 12 to 15 November 2012 Stock Code (both days inclusive) Annual general meeting : 15 November 2012 The Stock Exchange of Hong Kong : 16 2 Bloomberg : 16 HK Equity Closure of register of members : 21 to 23 November 2012 Reuters : 0016.HK (both days inclusive) Trading Symbol for ADR : SUHJY Final dividend payable : on or about 20 December 2012 CUSIP : 86676H302 Notes: Investor Relations Contact 1. For the purpose of ascertaining shareholders’ entitlement to attend and vote Telephone : (852) 3766 5787 at the annual general meeting. Facsimile : (852) 2116 0597 2. For the purpose of ascertaining shareholders’ entitlement to the proposed E-mail : [email protected] final dividend. 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, 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 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 Share Registrar by post or by email or by completing and returning the accompanying Change Request Form. SUN HUNG KAI PROPERTIES LIMITED Annual Report 2011/12 3 Financial Highlights and Land Bank For the year ended 30 June 2012 2011 Change (%) Financial Highlights (HK$ million) Revenue 68,400 62,553 +9.3 Profit attributable to the Company’s shareholders – Reported 43,080 48,097 -10.4 – Underlying1 21,678 21,479 +0.9 Gross rental income2 14,444 12,609 +14.6 Net rental income2 11,069 9,511 +16.4 Financial Ratios Net debt to shareholders’ funds (%) 16.4 17.1 -0.73 Dividend payout (%) 40.0 40.1 -0.13 Financial Information per Share (HK$) Earnings per share for profit attributable to the Company’s shareholders – Reported 16.63 18.71 -11.1 – Underlying 8.37 8.36 +0.1 Dividends – Interim dividend 0.95 0.95 – – Final dividend 2.40 2.40 – – Full-Year dividend 3.35 3.35 – Shareholders’ funds 132.49 119.44 +10.9 Land Bank in Hong Kong (gross floor area in million square feet) Properties under development4 18.1 16.5 +9.7 Completed investment properties5 28.5 27.7 +2.9 Total 46.6 44.2 +5.4 Land Bank on the Mainland (gross floor area in million square feet) Properties under development 74.4 78.6 -5.3 Completed investment properties5 9.4 7.5 +25.3 Total 83.8 86.1 -2.7 Notes: 1. Underlying profit attributable to the Company’s shareholders excluded the net effect of changes in the valuation of investment properties 2. Including contributions from jointly controlled entities and associates 3. Change in percentage points; dividend payout based upon underlying profit 4. Excluding about 27 million square feet of farmland in terms of site area 5. The Group has a 50-per-cent stake in a premium 950,000-square-foot shopping mall in Singapore, in addition to property holdings in Hong Kong and on the mainland 4 SUN HUNG KAI PROPERTIES LIMITED Annual Report 2011/12 # Comparative figures for FY 2008–2010 were restated for the early adoption of HKAS 12 (Amendments) Properties Under Development Completed Investment Properties SUN HUNG KAI PROPERTIES LIMITED Annual Report 2011/12 5 Group Financial Summary Key Financial Information and Ratios (Restated)1 Financial year 2012 2011 2010 2009 2008 HK$ HK$ HK$ HK$ HK$ Reported earnings per share 16.63 18.71 11.71 3.89 11.61 Underlying earnings per share 8.37 8.36 5.41 4.84 4.80 Dividends per share 3.35 3.35 2.70 2.50 2.50 Shareholders’ funds at book value per share 132.49 119.44 102.42 92.98 91.95 Net debt / Shareholders’ funds (%) 16.4 17.1 14.1 14.2 14.2 3 Interest cover (times) 13.0 16.9 15.9 13.7 7.6 Key Income Statement Items (Restated)1 For the year ended 30 June 2012 2011 2010 2009 2008 HK$M HK$M HK$M HK$M HK$M Revenue 68,400 62,553 33,211 34,234 24,471 Operating profit before change in fair value of investment properties 24,988 21,366 13,842 13,983 10,728 Operating profit after change in fair value of investment properties 44,470 46,436 30,311 11,329 22,934 Profit attributable to the Company’s shareholders 43,080 48,097 30,039 9,984 29,475 Underlying profit attributable to 4 the Company’s shareholders 21,678 21,479 13,883 12,415 12,186 Key Statement of Financial Position Items (Restated)1 As at 30 June 2012 2011 2010 2009 2008 HK$M HK$M HK$M HK$M HK$M Investment properties and fixed assets2 252,458 230,759 200,826 180,205 175,610 Associates and jointly controlled entities 49,515 41,935 35,826 31,775 34,100 Other financial assets and loans 4,109 3,637 3,900 3,418 5,259 Intangible assets2 4,699 5,049 4,357 4,647 4,971 Net current assets 114,862 93,017 65,170 68,615 64,888 Non-current liabilities (74,684) (62,202) (42,054) (45,595) (44,234) Net assets 350,959 312,195 268,025 243,065 240,594 Share capital 1,308 1,285 1,285 1,282 1,282 Share premium and reserves 345,251 305,680 261,936 237,117 234,490 Shareholders’ funds 346,559 306,965 263,221 238,399 235,772 Non-controlling interests 4,400 5,230 4,804 4,666 4,822 Total Equity 350,959 312,195 268,025 243,065 240,594 Notes: 1.