www.shkp.com Premium Brand 2009/10 Annual Report 2009/10 Solid Foundations 2009/10 Annual Report Stock Code : 16 WorldReginfo - 90f7112b-7953-4198-b181-96f9eeb9d012 Premium Brand • Solid Foundations Sun Hung Kai Properties is reframing Hong Kong’s cityscape with iconic landmark developments, and the Group’s long history and reputation for quality will ensure that they enrich and enliven the territory for generations to come. 1 2 Cover photo 1 International Commerce Centre in Kowloon, Hong Kong 2 International Finance Centre in Central, Hong Kong WorldReginfo - 90f7112b-7953-4198-b181-96f9eeb9d012 Contents 2 Board of Directors and Committees 3 Corporate and Shareholders’ Information 4 Financial Highlights and Land Bank 6 Group Financial Summary 7 Corporate Structure 8 Chairman’s Statement 20 Review of Operations 80 Corporate Governance 84 Investor Relations 86 Corporate Social Responsibility 92 Financial Review 94 Directors’ Report 111 Directors and Organization 128 Financial Contents WorldReginfo - 90f7112b-7953-4198-b181-96f9eeb9d012 Board of Directors and Committees Board of Directors Chairman Kwong Siu-hing (Non-Executive Director) Executive Directors Kwok Ping-kwong, Thomas (Vice Chairman & Managing Director) Kwok Ping-luen, Raymond (Vice Chairman & Managing Director) Chan Kai-ming Chan Kui-yuen, Thomas Kwong Chun Wong Chik-wing, Mike Chan Kwok-wai, Patrick (Chief Financial Officer) Non-Executive Directors Lee Shau-kee (Vice Chairman) Kwok Ping-sheung, Walter Woo Po-shing Kwan Cheuk-yin, William Lo Chiu-chun, Clement 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 Committees Audit Committee Li Ka-cheung, Eric* Yip Dicky Peter Wong Yick-kam, Michael Remuneration Committee Wong Yue-chim, Richard* Lo Chiu-chun, Clement Li Ka-cheung, Eric Nomination Committee Wong Yue-chim, Richard* Kwan Cheuk-yin, William Yip Dicky Peter Executive Committee Kwok Ping-kwong, Thomas Kwok Ping-luen, Raymond Chan Kai-ming Chan Kui-yuen, Thomas Kwong Chun Wong Chik-wing, Mike Chan Kwok-wai, Patrick * Committee Chairman SUN HUNG KAI PROPERTIES LIMITED 2 Annual Report 2009/10 WorldReginfo - 90f7112b-7953-4198-b181-96f9eeb9d012 Corporate and Shareholders’ Information Corporate Information Company Secretary Share Registrars Principal Bankers Yung Sheung-tat, Sandy Computershare Hong Kong Bank of China (Hong Kong) Limited Investor Services Limited The Hongkong and Shanghai Banking Auditors Shops Nos. 1712-1716 Corporation Limited Deloitte Touche Tohmatsu 17th Floor, Hopewell Centre The Bank of Tokyo 183 Queen’s Road East — Mitsubishi UFJ, Ltd Registered Office Wanchai Sumitomo Mitsui Banking Corporation Hong Kong Industrial and Commercial Bank of China 45th Floor, Sun Hung Kai Centre Mizuho Corporate Bank, Ltd 30 Harbour Road Solicitors Bank of Communications Hong Kong BNP Paribas Telephone : (852) 2827 8111 Woo, Kwan, Lee & Lo Hang Seng Bank Limited Facsimile : (852) 2827 2862 Mayer Brown JSM The Bank of East Asia, Limited Website : www.shkp.com Winston Chu & Company E-mail : [email protected] Clifford Chance Shareholders’ Information Financial Calendar Share Listing Financial Calendar for 2009/10 The Company’s shares are listed on The Stock Exchange of Interim results announcement 11 March 2010 Hong Kong and are traded over the counter in the United States in Interim dividend paid 4 May 2010 the form of American Depositary Receipts (ADR) Annual results announcement 20 September 2010 Closure of register of members 25 November 2010 – Stock Code 2 December 2010 The Stock Exchange of Hong Kong : 16 (both days inclusive) Bloomberg : 16 HK Equity Annual general meeting 2 December 2010 Reuters : 0016.HK Final dividend payable 6 December 2010 Trading Symbol for ADR : SUHJY CUSIP : 86676H302 Investor Relations Contact Telephone : (852) 3766 5787 Facsimile : (852) 2827 0676 E-mail : [email protected] 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 a printed copy of this annual report wish to receive the same in the other language to that chosen by the shareholders; or (ii) shareholders who have received or chosen to receive this annual report by electronic means wish to receive a printed copy, or who for any reason have difficulty in receiving or gaining access to this annual report on the Company’s website, they may obtain the same free of charge by sending a request to the Company’s Share Registrars, 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 could at any time notify the Company’s Share Registrars by post or by email. SUN HUNG KAI PROPERTIES LIMITED Annual Report 2009/10 3 WorldReginfo - 90f7112b-7953-4198-b181-96f9eeb9d012 Financial Highlights and Land Bank For the year ended 30 June 2010 2009 Change (%) Financial Highlights (HK$ million) Revenue 33,211 34,234 -3.0 Profit attributable to the Company’s shareholders – Reported 28,043 10,356 +170.8 – Underlying1 13,883 12,415 +11.8 Gross rental income2 11,082 9,763 +13.5 Net rental income2 8,314 7,271 +14.3 Financial Ratios Net debt to shareholders’ funds (%) 15.2 15.2 — Dividend payout (%) 49.9 51.7 -1.83 Financial Information per Share (HK$) Earnings per share for profit attributable to the Company’s shareholders – Reported 10.93 4.04 +170.5 – Underlying 5.41 4.84 +11.8 Dividends – Interim dividend 0.85 0.80 +6.2 – Final dividend 1.85 1.70 +8.8 – Full-Year 2.70 2.50 +8.0 Shareholders’ funds 95.36 86.69 +10.0 Land Bank in Hong Kong (gross floor area in million square feet) Properties under development4 16.6 15.9 +4.4 Completed investment properties 27.6 26.0 +6.2 Total 44.2 41.9 +5.5 Land Bank on the mainland (gross floor area in million square feet) Properties under development 76.8 52.3 +46.8 Completed investment properties 5.5 3.0 +83.3 Total 82.3 55.3 +48.8 Notes: 1 Underlying profit attributable to the Company’s shareholders excluded the effect of fair value change on investment properties 2 Including contributions from jointly controlled entities and associates 3 Change in percentage points, dividend payout based upon underlying profit 4 Excluding about 26 million square feet of agricultural land in terms of site area SUN HUNG KAI PROPERTIES LIMITED 4 Annual Report 2009/10 WorldReginfo - 90f7112b-7953-4198-b181-96f9eeb9d012 Underlying Earnings and Dividends per Share* HK$ 6.0 5.41 5.0 4.80 4.84 4.61 4.34 4.0 3.0 2.70 2.50 2.50 2.20 2.30 Dividends 2.0 Underlying Earnings Based upon underlying earnings 1.0 0.0 FY2006 2007 2008 2009 2010 Shareholders’ Funds per Share Net Debt to Shareholders’ Funds Ratio HK$ % 98 20 94 19 95.36 90 85.51 86.69 18 86 17 82 16 15.3 15.2 15.2 78 74.43 15 74 14.0 70 67.25 14 13.4 66 13 62 12 58 11 FY2006 2007 2008 2009 2010 FY 2006 2007 2008 2009 2010 Land Bank in Hong Kong Land Bank on the mainland million square feet million square feet 60 90 82.3 50 75 43.5 43.0 44.2 40.8 41.9 40 60 55.3 50.6 45.8 30 45 20 30 19.8 10 15 0 0 FY20062007 2008 2009 2010 FY 2006 2007 2008 2009 2010 Properties Under Development Completed Investment Properties SUN HUNG KAI PROPERTIES LIMITED Annual Report 2009/10 5 WorldReginfo - 90f7112b-7953-4198-b181-96f9eeb9d012 Group Financial Summary Key Financial Information and Ratios Financial year 2010 2009 2008 2007 2006 HK$ HK$ HK$ HK$ HK$ Reported earnings per share 10.93 4.04 10.87 8.52 8.23 Underlying earnings per share 5.41 4.84 4.80 4.61 4.34 Dividends per share 2.70 2.50 2.50 2.30 2.20 Shareholders' funds at book value per share 95.36 86.69 85.51 74.43 67.25 Net debt / Shareholders' funds (%) 15.2 15.2 15.3 14.0 13.4 Interest cover (times)3 15.9 13.7 7.6 9.2 9.9 Key Income Statement Items For the year ended 30 June 2010 2009 2008 2007 2006 HK$M HK$M HK$M HK$M HK$M Revenue 33,211 34,234 24,471 30,994 25,598 Operating profit before change in fair value of investment properties 13,842 13,983 10,728 11,562 12,314 Operating profit after change in fair value of investment properties 30,311 11,329 22,934 20,466 21,424 Profit attributable to the Company's shareholders 28,043 10,356 27,602 21,226 19,850 Underlying profit attributable to the Company's shareholders2 13,883 12,415 12,186 11,495 10,468 Key Statement of Financial Position Items As at 30 June 2010 2009 2008 2007 2006 HK$M HK$M HK$M HK$M HK$M Investment properties and fixed assets1 200,826 180,205 175,610 151,995 129,024 Associates and jointly controlled entities 32,481 28,842 31,193 23,098 24,046 Other financial assets and loans 3,900 3,418 5,259 7,417 4,776 Intangible asset1 4,357 4,647 4,971 5,258 5,514 Net current assets 65,170 68,615 64,888 50,667 48,854 Non-current liabilities (56,870) (58,807) (57,864) (49,940) (41,667) Net assets 249,864 226,920 224,057 188,495 170,547 Share capital 1,285 1,282 1,282 1,246 1,246 Share premium and reserves 243,793 220,986 217,968 184,230 166,283 Shareholders' funds 245,078 222,268 219,250 185,476 167,529 Non-controlling interests 4,786 4,652 4,807 3,019 3,018 Total Equity 249,864 226,920 224,057 188,495 170,547 Notes: 1 Figures of fixed assets and intangible assets for the years 2006 to 2008 have been restated to reflect the Group's adoption of HK(IFRIC)