Sun Hung Kai Properties LimitedHKEX: 16

Annual Report 2023/24

Oct 7, 2024 at 9:42 AM UTC · MarketScreener

Stock Codes : 16 (HKD counter) and 80016 (RMB counter)

Customer Focus

1 Premium Brand

Solid Foundations

3 6

Annual Report 2023/24

Stock Codes : 16 (HKD counter) and 80016 (RMB counter)

ITC in Xujiahui, Shanghai
Shanghai IFC in Lujiazui, Shanghai
Cullinan Harbour in Kai Tak, Hong Kong
ICC in West Kowloon, Hong Kong
Two IFC in Central, Hong Kong
High Speed Rail West Kowloon Terminus Development, Hong Kong

Contents

Board of Directors and Committees
Corporate Information and Information for Shareholders
Financial Highlights and Land Bank

Five-YearFinancial Summary
Business Structure
Chairman's Statement

24 Business Model and Strategic Direction

26 Review of Operations

Hong Kong Property Business

Mainland Property Business

Property Related Businesses

Telecommunications and Information Technology
Infrastructure and Other Businesses

Corporate Finance

Financial Review

Investor Relations

Sustainable Development

Corporate Governance Report

Directors' Report

Directors' Biographical Information

Executive Committee
Independent Auditor's Report and Consolidated Financial Statements

SUN HUNG KAI PROPERTIES LIMITED	1
ANNUAL REPORT 2023/24

Board of Directors and Committees

Board of Directors

Executive Directors

Non-Executive Directors

Independent Non-Executive Directors

Kwok Ping-luen,Raymond (Chairman & Managing Director) Wong Chik-wing,Mike (Deputy Managing Director)

Lui Ting, Victor (Deputy Managing Director)

Kwok Kai-fai, Adam

Kwok Kai-wang, Christopher

Tung Chi-ho, Eric

Fung Yuk-lun, Allen

Lau Tak-yeung, Albert

Fung Sau-yim, Maureen

Chan Hong-ki, Robert

Kwok Ho-lai,Edward (Alternate Director to Kwok Ping-luen, Raymond)

Kwan Cheuk-yin, William

Kwok Kai-chun, Geoffrey

Yip Dicky Peter

Wong Yue-chim, Richard

Li Ka-cheung, Eric

Fung Kwok-lun, William

Leung Nai-pang, Norman

Leung Ko May-yee, Margaret

Fan Hung-ling, Henry

Committees

Executive Committee

Audit and Risk Management Committee

Remuneration Committee

Nomination Committee

Kwok Ping-luen, Raymond

Wong Chik-wing, Mike

Lui Ting, Victor

Kwok Kai-fai, Adam

Kwok Kai-wang, Christopher

Tung Chi-ho, Eric

Fung Yuk-lun, Allen

Lau Tak-yeung, Albert

Fung Sau-yim, Maureen

Chan Hong-ki, Robert

Yung Sheung-tat, Sandy

Li Ching-kam, Frederick

Lam Ka-keung, Henry

Lo King-wai

Li Ka-cheung, Eric*

Yip Dicky Peter

Leung Nai-pang, Norman

Wong Yue-chim, Richard

Wong Yue-chim, Richard*

Li Ka-cheung, Eric

Kwan Cheuk-yin, William

Leung Nai-pang, Norman

Wong Yue-chim, Richard*

Kwan Cheuk-yin, William

Yip Dicky Peter

Leung Nai-pang, Norman

* Committee Chairman

2	SUN HUNG KAI PROPERTIES LIMITED
ANNUAL REPORT 2023/24

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 & Shanghai Banking
Auditor		Shops 1712-1716	Corporation Limited
Deloitte Touche Tohmatsu	17th Floor, Hopewell Centre	Industrial and Commercial Bank of China
183 Queen's Road East	(Asia) Limited
Registered Public Interest Entity Auditors
Wan Chai	Agricultural Bank of China Limited

Registered Office	Hong Kong	DBS Bank Ltd.
	Bank of Communications (Hong Kong) Limited
45th Floor, Sun Hung Kai Centre
Solicitors	Oversea-Chinese Banking Corporation Limited
30 Harbour Road	Woo Kwan Lee & Lo	MUFG Bank, Ltd
Hong Kong		Hang Seng Bank Limited
	Mayer Brown
Telephone	: (852) 2827 8111	China Construction Bank (Asia) Corporation Limited
Sit, Fung, Kwong & Shum
Facsimile	: (852) 2827 2862

Website	: www.shkp.com
E-mail	: shkp@shkp.com

Information for Shareholders

Share Listing

The Company's shares are listed on The Stock Exchange of Hong Kong Limited ("Stock Exchange") and are traded over the counter in the United States in the form of American Depositary Receipts ("ADR").

Stock Code

Stock Exchange	: 16 (HKD counter) and
	80016 (RMB counter)
Bloomberg	: 16 HK Equity (HKD counter) and
	80016 HK Equity (RMB counter)
Reuters	: 0016.HK (HKD counter) and
	80016.HK (RMB counter)
Trading Symbol for ADR	: SUHJY
CUSIP	: 86676H302

Investor Relations Contact

Telephone	: (852) 3766 5787
Facsimile	: (852) 2116 0597
E-mail	: ir@shkp.com

Financial Calendar for 2023/24

Interim results announcement	: 28 February 2024
Interim dividend paid	: 20	March 2024
Annual results announcement	: 5	September 2024
Closure of register of members1	: 4 to 7 November 2024
Record date1			(both days inclusive)
: 7	November 2024
Annual general meeting	: 7	November 2024
Ex-dividend date for final dividend	: 11	November 2024
Closure of register of members	: 13	November 2024
and record date2
Final dividend payable	: 21	November 2024

Notes:

For ascertaining shareholders' entitlement to attend and vote at the annual general meeting
For ascertaining shareholders' entitlement to the proposed 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 in English or in Chinese, 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 the Share Registrar, Computershare Hong Kong Investor Services Limited, by post to 17M Floor, Hopewell Centre, 183 Queen's Road East, Wan Chai, Hong Kong or by email at shkp@computershare.com.hk.

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 the Share Registrar by post or by email or by completing and returning the accompanying Reply Form.

SUN HUNG KAI PROPERTIES LIMITED	3
ANNUAL REPORT 2023/24

Financial Highlights and Land Bank

For the year ended 30 June	2024	2023	Change (%)
Financial Highlights (HK$ million)

Group revenue	71,506	71,195	+0.4
Profit attributable to the Company's shareholders
- Reported	19,046	23,907	-20.3
- Underlying1	21,739	23,885	-9.0
Gross rental income2	24,991	24,322	+2.8
Net rental income2	19,000	18,461	+2.9
Financial Ratios (%)

Net debt to shareholders' equity	18.3	18.2	+0.14
Dividend payout3	50.0	60.1	-10.14
Financial Information per Share (HK$)

Basic earnings per share for profit attributable to the Company's shareholders
- Reported	6.57	8.25	-20.3
- Underlying	7.50	8.24	-9.0
Dividends
- Interim dividend	0.95	1.25	-24.0
- Final dividend	2.80	3.70	-24.3
- Full-year dividend	3.75	4.95	-24.2
Shareholders' equity	209.40	207.80	+0.8
Land Bank in Hong Kong (gross floor area in million square feet)

Properties under development	19.6	21.6	-9.3
Completed properties5	38.2	36.4	+4.9
Total	57.8	58.0	-0.3
Land Bank on the Mainland (gross floor area in million square feet)

Properties under development	45.7	47.1	-3.0
Completed properties5	21.0	20.4	+2.9
Total	66.7	67.5	-1.2

Notes:

Underlying profit attributable to the Company's shareholders excluded the net effect of change in the valuation of investment properties
Including contributions from associates and joint ventures
Dividend payout based upon underlying profit
Change in percentage points
The Group has a 50% 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 2023/24

Underlying Earnings and Dividends per Share

HK$ 12

10.13 10.319.91

8.24

7.50

4.95

3.75	Underlying Earnings (Basic)

Dividends

2020		2021		2022		2023		2024

Shareholders' Equity per Share

HK$

240
230
220		204.90	207.70	207.80	209.40
210

197.30
200

190
180
170
160	2020	2021	2022	2023	2024

Net Debt to Shareholders' Equity Ratio

%
30
25
20		16.0	17.4	18.2	18.3

	14.1
15

10
5
0	2020	2021	2022	2023	2024

Land Bank in Hong Kong					Land Bank on the Mainland
million square feet									million square feet
80												100
													75.3
60		57.5	57.9	57.1	58.0	57.8		80		68.1	70.6	67.5	66.7

											60
40

											40

20

											20

0
											0
	2020	2021	2022	2023	2024		2020	2021	2022	2023	2024

						Properties Under Development			Completed Properties

SUN HUNG KAI PROPERTIES LIMITED	5
ANNUAL REPORT 2023/24

Five-Year Financial Summary

	2024	2023	2022	2021	2020
Consolidated Income Statement	HK$M	HK$M	HK$M	HK$M	HK$M


For the year ended 30 June
Group revenue	71,506	71,195	77,747	85,262	82,653
Segment revenue (including share of joint ventures and associates)	83,636	83,381	88,340	97,130	93,024
Segment operating profit (including share of joint ventures and	32,359
associates)	34,689	39,010	44,176	40,781
Underlying profit attributable to the Company's shareholders1	21,739	23,885	28,729	29,873	29,368
Net effect of change in fair value of investment properties	(2,693)	22	(3,169)	(3,187)	(5,847)
Profit attributable to the Company's shareholders	19,046	23,907	25,560	26,686	23,521
Dividends attributable to the Company's shareholders	10,867	14,344	14,344	14,344	14,344
Key Segment Revenue and Operating Profit
(including share of joint ventures and associates)

For the year ended 30 June
Segment Revenue	27,422
- Property sales	29,116	35,403	46,017	41,264
- Property rental	24,991	24,322	24,810	24,791	24,214
- Other businesses	31,223	29,943	28,127	26,322	27,546
	83,636	83,381	88,340	97,130	93,024
Segment operating profit	7,850
- Property sales	11,299	15,847	20,994	18,377
- Property rental	19,000	18,461	19,250	19,149	18,565
- Other businesses	5,509	4,929	3,913	4,033	3,839
	32,359	34,689	39,010	44,176	40,781
Consolidated Statement of Financial Position

As at 30 June
Investment properties	408,424	403,559	398,729	395,879	380,717
Property, plant and equipment	50,190	47,168	44,955	42,921	40,825
Associates and joint ventures	101,055	101,354	101,392	101,481	78,782
Other non-current assets	9,762	11,127	12,841	13,305	13,845
Properties for sale	214,077	211,639	207,136	200,934	196,153
Bank deposits and cash	16,221	15,280	20,323	21,781	31,705
Assets of subsidiaries contracted for sale	-	-	-	-	37,584
Other current assets	18,365	15,864	22,191	20,118	18,220
Total assets	818,094	805,991	807,567	796,419	797,831
Bank and other borrowings	(127,087)	(125,053)	(124,931)	(116,823)	(112,606)
Other liabilities	(79,936)	(74,142)	(75,892)	(79,970)	(94,810)
Net assets	611,071	606,796	606,744	599,626	590,415
Share capital	70,703	70,703	70,703	70,703	70,703
Reserves	536,014	531,352	531,243	523,117	501,110
Shareholders' equity	606,717	602,055	601,946	593,820	571,813
Perpetual capital securities	-	-	-	-	3,813
Non-controlling interests	4,354	4,741	4,798	5,806	14,789
Total equity	611,071	606,796	606,744	599,626	590,415
Net debt	110,866	109,773	104,608	95,042	80,901
Key Financial Information and Ratios	HK$	HK$	HK$	HK$	HK$

Per share data
Reported earnings per share (basic)	6.57	8.25	8.82	9.21	8.12
Underlying earnings per share (basic)	7.50	8.24	9.91	10.31	10.13
Dividends per share	3.75	4.95	4.95	4.95	4.95
Shareholders' equity per share	209.40	207.80	207.70	204.90	197.30
Financial ratios
Net debt to shareholders' equity (%)	18.3	18.2	17.4	16.0	14.1
Interest cover (times)	4.6	6.8	12.8	13.8	11.8
Dividend payout (%)2	50.0	60.1	49.9	48.0	48.9

Notes:

Underlying profit attributable to the Company's shareholders excluded the net effect of change in the valuation of investment properties
Dividend payout based on underlying profit

6	SUN HUNG KAI PROPERTIES LIMITED
ANNUAL REPORT 2023/24

Business Structure

Sun Hung Kai Properties

Hong Kong

Mainland

Property

Development

Property

Investment

Property Related Businesses

Telecommunications

Information Technology

Infrastructure & Other Businesses

Property

Development

Property

Investment

As at 30 June 2024

19.6 million sq.ft. under development with a majority for sale
38.2 million sq.ft. of completed properties with an overwhelming majority for rent / investment
Hotels
Property management
Construction
Insurance and mortgage services
Mobile telephone services
Data centres and IT infrastructure
Transport infrastructure operations and management
Port business
Air transport and logistics business
YATA
45.7 million sq.ft. under development, with over 50% being residences and offices for sale
21.0 million sq.ft. of completed properties with an overwhelming majority for rent /investment

The Group's principal subsidiaries, joint ventures and associates are listed from page 220 to page 228

SUN HUNG KAI PROPERTIES LIMITED	7
ANNUAL REPORT 2023/24

Chairman's Statement

I am pleased to present my report to the shareholders.

RESULTS

The Group's underlying profit attributable to the Company's shareholders for the year ended 30 June 2024, excluding the effect of fair-value changes on investment properties, amounted to HK$21,739 million, compared to HK$23,885 million last year. Underlying earnings per share were HK$7.50, compared to HK$8.24 last year.

Reported profit and reported earnings per share attributable to the Company's shareholders were HK$19,046 million and HK$6.57 respectively, compared to HK$23,907 million and HK$8.25 last year. The reported profit included a decrease in fair value of investment properties net of deferred taxation and non-controlling interests of HK$2,412 million, compared to an increase of HK$221 million last year.

DIVIDEND

The directors have recommended the payment of a final dividend of HK$2.80 per share for the year ended 30 June 2024. The dividend will be payable on 21 November 2024. Together

University Hill, Tai Po, Hong Kong

with the interim dividend of HK$0.95 per share, the dividend for the full year will be HK$3.75 per share, a decrease of 24% from last year.

BUSINESS REVIEW

Development Profit and Rental Income

Development Profit

For the year under review, profit generated from property sales totalled HK$7,850 million, as compared to HK$11,299 million in the previous financial year. Contracted sales reached about HK$37,500 million in attributable terms.

Rental Income

During the year, the Group's gross rental income, including contributions from joint ventures and associates, increased by 3% year-on-year to HK$24,991 million, and net rental income rose by 3% year-on-year to HK$19,000 million. The increase in rental income derived from the retail and serviced apartment portfolios offset the decrease in the office portfolio.

8	SUN HUNG KAI PROPERTIES LIMITED
ANNUAL REPORT 2023/24