Stock Code : 00270 Annual Report 2019 2019 ANNUAL REPORT www.gdi.com.hk CONTENTS 3 Corporate Information 4 The Group’s Principal Businesses 6 Financial Highlights 14 Chairman’s Statement 16 Management Discussion and Analysis 27 Directors’ and Senior Management’s Profile 32 Directors’ Report 43 Corporate Governance Report 55 Independent Auditor’s Report Consolidated Financial Statements 60 – Consolidated Statement of Profit or Loss 61 – Consolidated Statement of Comprehensive Income 62 – Consolidated Statement of Financial Position 64 – Consolidated Statement of Changes in Equity 66 – Consolidated Statement of Cash Flows 68 – Notes to Financial Statements 187 Major Properties held by the Group 2 GUANGDONG INVESTMENT LIMITED CORPORATE INFORMATION as at 27 March 2020 Board of Directors Principal Bankers Executive Directors Bank of China (Hong Kong) Limited China CITIC Bank, Guangzhou Branch Mr. HOU Wailin (Chairman) China Merchants Bank Mr. WEN Yinheng (Managing Director) Chong Hing Bank Mrs. HO LAM Lai Ping, Theresa (Company Secretary) Dah Sing Bank Mr. TSANG Hon Nam (Chief Financial Officer) DBS Bank Ltd., Hong Kong Branch Hang Seng Bank Non-Executive Directors Industrial and Commercial Bank of China (Asia) Limited Mr. CAI Yong Industrial and Commercial Bank of China, Shenzhen Branch Ms. ZHAO Chunxiao Standard Chartered Bank Mr. LAN Runing The Hongkong and Shanghai Banking Corporation Limited Mr. LI Wai Keung Registered Office Independent Non-Executive Directors 28th and 29th Floors Dr. CHAN Cho Chak, John, GBS, JP Guangdong Investment Tower Dr. the Honourable LI Kwok Po, David, GBM, GBS, OBE, JP 148 Connaught Road Central Mr. FUNG Daniel Richard, SBS, QC, SC, JP Hong Kong Dr. the Honourable CHENG Mo Chi, Moses, GBM, GBS, OBE, JP Telephone : (852) 2860 4368 Mr. WU Ting Yuk, Anthony, Facsimile : (852) 2528 4386 Standing Committee Member of CPPCC National Committee, GBS, JP Email : [email protected] Website : http://www.gdi.com.hk Audit Committee Mr. WU Ting Yuk, Anthony (Committee Chairman) Share Registrar Dr. CHAN Cho Chak, John Tricor Tengis Limited Dr. the Honourable LI Kwok Po, David Level 54, Hopewell Centre Mr. FUNG Daniel Richard 183 Queen’s Road East Dr. the Honourable CHENG Mo Chi, Moses Hong Kong Customer Service Hotline: (852) 2980 1333 Remuneration Committee Dr. CHAN Cho Chak, John (Committee Chairman) Share Information Dr. the Honourable LI Kwok Po, David Place of Listing Main Board of The Stock Exchange of Mr. FUNG Daniel Richard Hong Kong Limited Dr. the Honourable CHENG Mo Chi, Moses Stock Code 00270 Mr. WU Ting Yuk, Anthony Board Lot 2,000 shares Financial Year End 31 December Nomination Committee Mr. HOU Wailin (Committee Chairman) Shareholders’ Calendar Dr. CHAN Cho Chak, John Annual General Meeting Dr. the Honourable LI Kwok Po, David 12 June 2020 3:00 p.m. Mr. FUNG Daniel Richard Dr. the Honourable CHENG Mo Chi, Moses Final Dividend Mr. WU Ting Yuk, Anthony 40.5 HK cents per ordinary share, payable on or about 30 July 2020 Company Secretary Last Share Registration Date Mrs. HO LAM Lai Ping, Theresa For attending Annual 8 June 2020, by 4:30 p.m. General Meeting Auditor For entitlement for 18 June 2020, by 4:30 p.m. Ernst & Young Final Dividend Closure of Register of Members Final Dividend 19 June 2020 ANNUAL REPORT 2019 3 THE GROUP’S PRINCIPAL BUSINESSES 27 March 2020 Water Property Investment Resources and Development 100% 96.04% Guangdong Water GH Water Supply Group (H.K.) Limited 73.82% (Holdings) Limited Guangdong Land Holdings Limited 76.13% 99% 30% 90.1% GDH Teem Guangdong Yue Gang Foundation Gang-Wu DongguanChangping Jinsheng Water Supply Company Limited (Changzhou) Water Supply Co., Ltd. Water Co., Ltd. (Holdings) Limited (Teem Plaza) 43.86% 90.1% 48% Dongguan Qingxi 100% Yangjiang Guangdong Dongguan Daojiao Hongfa Guangdong Water Co., Ltd. Sewage Treatment Co., Ltd. Qingyuan Huanbao Co., Ltd. Global Head Developments Limited 60% 49% 97% (Guangdong Investment Guangzhou Tianhecheng Guangzhou Nansha GDH Dapu Guangdong 51% Water Co., Ltd. Huanbao Co., Ltd. Tower properties) Gaozhou Guangdong Water Investment Co., Ltd. Company Limited 98.8% 60% 49% Yangjiang Guangdong Yizheng Gangyi Water Shantou Guangdong Water Huanbao Co., Ltd. Supply Company Limited 74% Company Limited 100% Enshi Guangdong Zhengyuan Water Company Limited 68% Guangdong Properties 98.8% 60% Guangzhou City Wanye 63.07% WuChuan Guangdong Gaoyou Gangyou Water Holdings Limited Xuyi Guangdong Water Huanbao Co., Ltd. Supply Company Limited Investment Management Company Limited (Guangdong Group 69.5% Company Limited Yunfu Guangdong Water Building properties) Company Limited 100% 70% (Panyu Wanbo CBD project) 100% China City Water Supply Investment Zhaoqing HZ GDH Hainan Danzhou Tap (Hong Kong) Limited Water Co., Ltd. Water Company Limited 76.2% Hainan Danzhou Guangdong Water Company Limited 100% 70% 76.02% Baoying Yuehai 70% Xingning Yuehai Huanbao Water Company Limited Meizhou Guangdong Co., Ltd. Tianjin YueHai Teem Water Co., Ltd. Shopping Center Co., Ltd. 95% 86.96% Yangshan Guangdong 100% (Tianjin Teem Huanbao Co., Ltd. Wuhua Yuehai Luyuan Wuzhou Yuehai Huanbao 70% Huanbao Co.,Ltd. Fazhan Company Limited Shopping Mall) Suixi Guangdong Water Company Limited 46% 100% 100% Xinghua Guangdong Water Wuhua Yuehai Wuhua Yuehai Qingyuan Company Limited 70% Huanbao Co., Ltd. Huanbao Co., Ltd. Fengshun Guangdong Water Co., Ltd. 100% 51% Guangdong Yuehai Water Investment Wuzhou Yuehai Jianghe 80% Company Limited Water Company Limited Shanwei Yuehai Huanbao Co., Ltd. 54.29% 100% Kaiping Guangdong Water Kaiping Yuehai Sewage 85.8% Co., Ltd. Treatment Co., Ltd. Shaoguan Guangdong Luyuan Huanbao Co., Ltd. 65% Zhanjiang Hedi Water Supply 90% Operation Company Limited Lipu Guangdong Water Company Limited 98% 100% Chaozhou Guangdong Nanchang Water Supply 70.28% Huanbao Company Limited Company Limited Kunming Guangdong Water Co., Ltd. 100% 77.49% 74.47% Fengcheng Water Supply Fengcheng Jianyi Water Pizhou Guangdong Water Company Limited Supply Company Limited Company Limited 100% 79% Yugan Water Supply Company Limited Jiangxi Guangdong Public Utilities Holdings Co., Ltd. 100% 100% Laian Guangdong Water Supply Quzhou Guangdong Company Limited Huanbao Facilities Operation 90% Company Limited Liupanshui Guangdong Huanbao Co., Ltd. 100% Zhejiang Bohua Environment 67.76% Technology Engineering Longxi Bohua Sewage Company Limited Treatment Company Limited 100% Jiangxi Lianhe 100% Yunhe Guangdong Huanbao Construction Engineering Company Limited Company Limited 100% Wenling Guangdong Huanbao Company Limited 100% Cangnan Guangdong Huanbao Company Limited 4 GUANGDONG INVESTMENT LIMITED Department Store Hotel Ownership, Operation Energy Projects, Operation and Management Road and Bridge 85.20% 100% 100% GDH Teem Guangdong (International) Hotel Guangxi Management Holdings Limited Department GDH Highway Co., Ltd Store Co., Ltd. 76.13% (Xingliu Expressway) Sheraton Guangzhou 71.25% Hotel 100% Zhongshan GDH Fill Success Investments Limited Energy Co., Ltd. (Wharney Guangdong (Zhongshan Hotel (Hong Kong)) Energy Project) 100% Dongguan Yuehai 100% Yinping Development Guangdong Hotel Limited and Construction 25% Limited (Guangdong Hotel Guangdong Yudean (Hong Kong)) Jinghai Power Generation Co., Ltd. (Yudean Jinghai 100% Power Plant) Guangdong Hotel 100% (Zhu Hai) Guangzhou GDI Yinping Capital 99% Management Limited Shenzhen Guangdong Hotel Enterprise Ltd. (Guangdong Hotel (Shen Zhen)) Notes: (i) Projects of the Group are shown in italics and do not constitute part of the individual company’s or joint venture’s name. (ii) The English name of the entity marked with a “” is a translation of its Chinese name, and is included herein and in other sections of this Annual Report for identification purposes only. In the event of any inconsistency, the Chinese name shall prevail. ANNUAL REPORT 2019 5 FINANCIAL HIGHLIGHTS Financial Highlights for the year ended 31 December 2019 2018 Changes HK$’000 HK$’000 % Revenue 16,691,209 13,363,600 24.9 Profit for the year attributable to owners of the Company 5,044,370 5,015,119 0.6 Earnings per share — Basic HK 77.16 cents HK 76.71 cents 0.6 Dividends per share Interim HK 17.30 cents HK 16.00 cents Proposed final HK 40.50 cents HK 37.50 cents HK 57.80 cents HK 53.50 cents 8.0 EBITDA 9,053,590 8,436,880 7.3 Owners’ equity 41,156,367 40,372,255 1.9 Total assets 76,424,494 73,182,444 4.4 Net financial borrowings7 – 1,642,407 N/A Key Ratios (as at 31 December) 2019 2018 Gearing1 N/A 7.0% Interest cover2 26.94X 50.11X Liquidity3 2.45X 3.21X Return on average owners’ equity4 12.37% 12.45% Post-tax return on average assets5 7.55% 7.87% Dividend payout ratio6 74.91% 69.74% Share Information (as at 31 December) 2019 2018 Number of ordinary shares in issue 6,538m 6,538m Market capitalisation HK$106,566m HK$98,983m Closing market price per share HK$16.30 HK$15.14 Basic earnings per share HK 77.16 cents HK 76.71 cents Diluted earnings per share HK 77.16 cents HK 76.68 cents Net asset value8 per share HK$6.30 HK$6.18 6 GUANGDONG INVESTMENT LIMITED FINANCIAL HIGHLIGHTS (CONTINUED) Notes: Net Financial indebtedness Profit for the year attributable to owners 1 4 7 Financial borrowings – Net asset value8 (opening equity8 + closing equity8)/2 cash and cash equivalents EBITDA Profit for the year Excluded non-controlling 2 5 8 Finance costs incurred (opening total assets + closing total assets)/2 interests Current assets Dividends per share 3 6 Current liabilities Basic earnings per share Analysis of gross financial borrowings (as at 31 December) 2019