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The consolidated revenue of the Group for 2009 was HK$5,916 million (2008: HK$5,913 million), which was almost at
the same level with that in year 2008. The growth contributed by the water distribution business, the property investment
and department stores businesses was almost offset by the decrease in the power generation and hotel businesses.
The consolidated net profit attributable to shareholders of the Group increased by 8.9% to HK$2,044 million (2008:
HK$1,877 million). The profit before tax increased by 21.4% or HK$522 million to HK$2,959 million (2008: HK$2,437
million). The growth was mainly contributed by the increase in the property investment and development businesses.
An increase in the fair value of investment properties for HK$203 million (2008: decrease in value for HK$494 million)
and an impairment of interest in an associate for the power generation business for HK$75 million (2008: HK$100
million) were recorded in the consolidated income statement for the year. Mainly because of the low interest rate, the
finance cost decreased by 32.1% to HK$258 million.
The basic earnings per share were 33.03 HK cents (2008: 30.54 HK cents), representing an increase of 8.2% as
compared with that in 2008.
A summary of the performance of the Group's major businesses during 2009 is as follows:
Profit contribution from the Dongshen Water Supply Project remained significant to the Group. The Company's interest
in the holding company of the Dongshen Water Supply Project has increased by 0.63% to 89.08% during the year. The
holding company in turn has a 99% interest in the Dongshen Water Supply Project.
The designed annual capacity of water supply is 2.423 billion cubic meters. The total water supply to Hong Kong,
Shenzhen and Dongguan during the year amounted to 1.993 billion cubic meters (2008: 2.019 billion cubic meters), a
decrease of 1.3%, generating revenue amounted to HK$3,867,903,000 (2008: HK$3,443,842,000), an increase of
12.3%.
Pursuant to the Hong Kong Water Supply Agreement for 2009 to 2011 entered into between the Government of the
Hong Kong Special Administrative Region and the Guangdong Province Government in 2008, the total annual revenue
for water sales to Hong Kong for the three years 2009, 2010 and 2011 are to be HK$2,959 million, HK$3,146 million
and HK$3,344 million, respectively. Compared to the total annual revenue of HK$2,494.8 million for 2008, there was
an increase of 18.6% in the Hong Kong water sales revenue during the year.
Affected by the economic slowdown, the water sales volume to the Shenzhen area decreased by 4.9% to 911 million
cubic meters during the year (2008: 958 million cubic meters). The water sales revenue to the Shenzhen area in 2009
decreased by 4.1% to HK$784,409,000 (2008: HK$817,717,000), while the water sales volume to the Dongguan area
decreased by 12.5% to 357 million cubic meters during the year (2008: 408 million cubic meters). The water sales
revenue to the Dongguan area in 2009 decreased by 5.2% to HK$124,494,000 (2008: HK$131,325,000).
The profit before tax of the water distribution business for the year under review was HK$1,840,706,000 (2008:
HK$2,130,116,000), which was HK$289,410,000 less than that in 2008. The EBITDA of the water distribution business
during the year amounted to HK$2,966,219,000 (2008: HK$3,389,126,000), HK$422,907,000 less than that of 2008.
The decrease of both profit before tax and EBITDA were due to the one-off subsidy of approximately HK$730 million
realized in 2008.
The Group's effective interest in 中山火力發電有限公司 (Zhongshan Thermal Power Co., Ltd.) ("ZTP") is 59.85%
(Zhongshan Power (Hong Kong) Limited ("ZPHK"), a 95% owned subsidiary of the Company holding a 63% interest in
ZTP). ZTP has 2 power generation units with a total installed capacity of 110 MW. Sales of electricity for the year
amounted to 688 million kwh (2008: 603 million kwh), an increase of 14.1%. Sales revenue for the year amounted to
HK$389,049,000 (2008: HK$321,573,000), an increase of 21%. The increase in revenue was mainly due to the
increases in both the electricity sales and the average electricity tariff. Because of the significant decrease in coal price,
the profit margin for the year had increased substantially as compared to that in 2008. The profit before tax for the year
was HK$156,697,000 (2008: loss before tax HK$52,532,000).
On 22 July 2009, ZPHK entered into two agreements with 中山興中集團有限公司 (Zhongshan Xingzhong Group Co.,
Ltd.) ("Xing Zhong") regarding a proposed project for the construction of two 300 MW heat and electricity supply
plants (the "Zhongshan Project") utilising the existing land and certain auxiliary facilities of ZTP. Pursuant to the aforesaid
agreements, ZPHK and Xing Zhong have agreed to make additional contribution into ZTP in order to provide part of the
funding for the Zhongshan Project, and their respective interests in ZTP will then be adjusted to 75% and 25%, after
the completion of the contribution. ZPHK and Xing Zhong have also agreed to extend the original term of the joint
venture, which is due to expire in 2013, for another 30 years from the issue of new business licence to ZTP after the
approval of the Zhongshan Project by the relevant PRC authorities. In order to facilitate the obtaining of all requisite PRC
government approvals for the Zhongshan Project, the existing power generation units of ZTP may be closed down in
the future.
On 20 October 2009, the Company, Chun Wai Consultants Limited ("Chun Wai") (which is a wholly-owned subsidiary
of GDH Limited) and GDH Limited entered into an agreement, under which, the Company agreed to acquire the entire
issued share capital ("Sale Share") of Golden River Chain Limited ("Golden River"), a wholly-owned subsidiary of Chun
Wai, and the shareholder's loan due from Golden River to Chun Wai ("Sale Loan"). In addition, GDH Limited agreed to
guarantee the obligations of Chun Wai thereunder. Golden River had an indirect equity interests of 25% of 廣東粤電
靖海發電有限公司 (Guangdong Yudean Jinghai Power Generation Co., Ltd.) ("Yudean Jinghai"), which owns and
operates a coal-fired power plant with two 600 MW power generators located in Huilai Town, Jieyang City, Guangdong
Province. The consideration for the Sale Share and the Sale Loan is HK$84,289,000 and HK$515,711,000, respectively,
and was paid by the Company in cash on 4 January 2010 upon the completion of the transaction. In addition, the
Company will make further capital contribution of RMB342 million (approximately HK$388 million) in Yudean Jinghai.
The Group's effective interest in Shaoguan PPD is 45.9%. Guangdong Power (International) Limited, a 51% owned
subsidiary of the Company, holds a 90% interest in Shaoguan PPD. As mentioned in the Group's 2008 Annual Report,
Shaoguan PPD's power generation unit was closed down at the end of 2008.
The Group's effective interest in Yue Jiang Power Plant is 11.48% (Shaoguan PPD holding a 25% interest in this
project). Yue Jiang Power Plant has 2 power generation units with a total installed capacity of 600 MW. Sales of the
electricity for the year amounted to 3,122 million kwh (2008: 2,836 million kwh), an increase of 10.1%. Sales revenue
for the year reached HK$1,629,379,000 (2008: HK$1,421,968,000), an increase of 14.6%. The increase in revenue was
mainly due to increases in both the electricity sales and the average electricity tariff. The profit before tax for the year
was HK$80,154,000 whereas a loss before tax of HK$253,437,000 was recorded in 2008. In view of the expected
increases in coal price and operating cost but decrease in tariff in the coming year, an impairment provision of
HK$75,405,000 in relation to the investment in Yue Jiang Power Plant has been made during the year.
The Group's effective interest in Meixian Power Plant is 12.25% (a 49% associate of the Company, Guangdong Power
Investment Limited ("GD Power Investment"), holding a 25% interest in the project). During the year, no dividend
income was received by GD Power Investment from this investment (2008: HK$20,540,000).
In 2009, the profit before tax of the Group's 51% owned jointly-controlled entity (the "JCE") which holds interests in
the "1 Road and 2 Bridges" project amounted to HK$205,443,000 in aggregate (2008: HK$299,830,000), a decrease
of 31.5%.
Humen Bridge
The JCE has a profit sharing ratio of 23% in this project. During the year, average daily traffic flow of this bridge
decreased by 8.2% to 57,682 vehicle trips (2008: 62,825 vehicle trips). Revenue for the year amounted to
HK$982,928,000 (2008: HK$1,116,205,000), a decrease of 11.9%. Following the completion of the repair and
maintenance works at the Guangshen Highway in 2008, the Humen Bridge could no longer benefit from the
traffic that would otherwise be diverted to it as a result of the said maintenance works. Accordingly, the profit
before tax for the year decreased by 5.7% to HK$760,213,000 (2008: HK$805,747,000).
Shantou Haiwan Bridge
The JCE holds a 30% interest in this project. During the year, the average daily traffic flow of this bridge increased
by 1.9% to 13,508 vehicle trips (2008: 13,258 vehicle trips). Revenue for the year increased by 5.7% to
HK$193,512,000 (2008: HK$183,095,000). The profit before tax for the year was HK$143,813,000 (2008:
HK$137,835,000), an increase of 4.3%.
Guangzhou-Shantou Highway (Huizhou Section)
The JCE holds a 51% interest in this project. During the year, the average daily traffic flow of this highway has
increased by 16.3% to 17,574 vehicle trips (2008: 15,105 vehicle trips). Revenue for the year was HK$76,546,000
(2008: HK$57,088,000), an increase of 34.1%. Profit before tax for the year was HK$22,152,000 (2008:
HK$5,661,000), an increase of 291.3%, mainly due to the increase of traffic flow.
The Group's effective interest in this project is 70%. During the year, the average daily traffic flow of this highway
increased by 18.2% to 4,222 vehicle trips (2008: 3,572 vehicle trips). Revenue increased by 46.8% to HK$20,947,000
(2008: HK$14,268,000). The loss before tax for the year increased to HK$7,088,000 (2008: HK$4,000) as a result of
the increase in interest expenses.
The Group's effective interest in this project is 20%. During the year, the average daily traffic flow of this bridge
decreased by 4.3% to 52,349 vehicle trips (2008: 54,690 vehicle trips). As a result, revenue for the year has decreased
by 5.0% to HK$138,142,000 (2008: HK$145,364,000). The profit before tax for the year was HK$50,248,000 (2008:
HK$71,550,000), a decrease of 29.8%.
As at 31 December 2009, the Group held an effective equity interest of 76.0% in 廣東天河城(集團)股份有限公司
(Guangdong Teem (Holdings) Limited) ("GD Teem"), which owns the investment property Teem Plaza comprising of a
shopping mall, an office building and a hotel.
Revenue of Teem Plaza, comprising rental income from both the shopping mall (including rentals from department
store run by the Group) and the office building, during the year reached HK$837,047,000 (2008: HK$744,468,000), an
increase of 12%. The profit before tax for the year increased by 211% to HK$783,941,000 (2008: HK$252,476,000),
including the revaluation gain of HK$172,767,000 (2008: losses of HK$379,109,000) in respect of Teem Plaza.
The Teemall, one of the most popular shopping malls in the premier area of Guangzhou, has a total gross floor area
and lettable area of approximately 160,000 square meters and 97,000 square meters, respectively. The mall is operated
at a full capacity with an average occupancy rate of approximately 99% during the year (2008: 99%). The mall is
successful in retaining existing brand-name tenants and attracting new ones. The strong demands for shop spaces in
the mall and the use of the open tender system for selecting tenants resulted in good rental increase.
The office building, known as the Teem Tower (粤海天河城大廈), is a 45-storey Grade A office tower with a total gross
floor area and lettable area of approximately 102,000 square meters and 90,000 square meters, respectively. With an
occupancy rate of 87% (2008: 80%) as at 31 December 2009, the total rental income for the year was HK$136,070,000
(2008: HK$106,027,000), an increase of 28%. The profit before tax for the year increased to HK$132,945,000 (2008:
HK$98,878,000).
The hotel, which will be a 5-star hotel with approximately 450 hotel rooms, is expected to be completed in near future.
Sheraton Overseas Management Corporation has been engaged to operate, manage and promote the hotel under the
name of Sheraton Guangzhou Hotel (粤海喜來登酒店) for an initial 10-year term. The estimated total development cost
of the hotel (inclusive of both the historic land and further development costs) is about HK$993 million, of which
approximately HK$427 million has been invested as at 31 December 2009.
During the year, GD Teem acquired a piece of land in Tianjin. The land will be developed into a large-scale modern
shopping mall with a total gross floor area above ground and underground of approximately 137,100 square meters
and 56,000 square meters, respectively. The estimated total investment of the mall is about RMB2,130 million, of which
approximately HK$562 million has been invested as at 31 December 2009. The mall is expected to be completed in
2013 if the progress is on schedule.
Average occupancy rate of the Guangdong Investment Tower for 2009 was 96.5% (2008: 100%), which was 3.5%
lower than that in 2008. The total rental income for the year was HK$32,174,000 (2008: HK$33,068,000), a decrease
of 2.7%. The decrease in rental income was mainly due to the decrease in occupancy rate but compensated by the
increase in the average rental.
With further expansion of department stores business, as at 31 December 2009, the Group held an effective interest of
85.12% in both 廣東天河城百貨有限公司 (Guangdong Teemall Department Stores Ltd.) which operates the Teemall
store and Teemall store — Beijing road branch ("Ming Sheng store") and 廣州市天河城萬博百貨有限公司 which
operates the 天河城百貨歐萊斯折扣店 ("Wan Bo store"). The 3 stores in aggregate with leased area of approximately
62,100 square meters (2008: 61,900 square meters) generating revenue of HK$475,893,000 (2008: HK$433,266,000),
an increase of 9.8%. The profit before tax for the year was HK$213,404,000 (2008: HK$204,135,000), an increase of
4.5%.
The Teemall store sells a wide range of products and its sales rank very high among the major department stores in
Guangzhou. The revenue of the Teemall store increased by 0.2% to HK$392,173,000 (2008: HK$391,570,000) arising
from the improvement of the retail market and the success of various promotion activities launched at Teemall store
during the year.
The Ming Sheng store was opened in August 2008 and had an increase in revenue from HK$3,937,000 in 2008 to
HK$34,338,000 in 2009.
The Wan Bo store operates as an outlet mall selling brand name products at substantial discount. The revenue of Wan
Bo store for the year was HK$49,382,000 (2008: HK$37,759,000), an increase of 31%.
In 2009, the Group's share of profit of 廣東吉之島天貿百貨有限公司 (Guangdong Jusco Teem Stores Co. Ltd.), a
26.6% associate of the Group, amounted to HK$29,684,000 (2008: HK$29,754,000).
As at 31 December 2009, our hotel management team managed a total of 38 hotels (2008: 34 hotels), of which 2 were
in Hong Kong, 1 in Macau and 35 in Mainland China. Of these 38 hotels, 9 were owned by the Group (2 in Hong Kong,
4 in Shenzhen, 1 in Zhuhai, 1 in Zhengzhou and 1 in Changzhou).
Among the 9 hotels owned by the Group, 5 were star-rated hotels and 4 were limited service hotels. During the year,
the average room rate of the star-rated hotels of the Group in Hong Kong, Shenzhen, Zhuhai, and Changzhou was
HK$432 (2008: HK$515), a decrease of 16.1% as compared with that of 2008. The average room rate of the 4 limited
service hotels of the Group in Shenzhen and Zhengzhou was HK$180, a decrease of 8.0% as compared with that of
2008.
For the hotel business as a whole, the revenue for the year decreased by 16.0% to HK$311,805,000 (2008:
HK$371,352,000), and profit before tax decreased by 77.8% to HK$22,759,000 (2008: HK$102,503,000). The
decrease was due to global economic downturn and impairments of HK$36,183,000 (2008: nil).
As at 31 December 2009, the cash and bank balances of the Group decreased by HK$229 million to HK$3,871 million
(2008: HK$4,100 million), of which 22% in Hong Kong dollars, 76% in Renminbi and 2% in US dollars.
During the year under review, the level of the Group's financial borrowing decreased by HK$2,576 million due to the
repayment of certain interest-bearing debts.
As at 31 December 2009, the Group's financial borrowings amounted to HK$7,473 million (2008: HK$10,049 million),
of which 8% in Renminbi and 92% in Hong Kong dollars, including the non-interest-bearing receipt in advance of
HK$1,537 million. Of the Group's total financial borrowings, HK$1,703 million was repayable within one year while the
remaining balance of HK$4,344 million and HK$1,426 million are repayable within two to five years and beyond five
years from the balance sheet date, respectively.
Other than the bank debts incurred in respect of our water distribution business, the Group maintained credit facilities
of RMB50 million as at 31 December 2009 (2008: RMB50 million).
The gearing (i.e. net financial indebtedness/net asset value (excluded minority interests)) of the Group as at 31 December
2009 was 0.23 times (2008: 0.41 times). The improvement is in fact a reflection of the reduction in the level of the
Group's financial borrowings and the increase in the net assets of the Group. The Group is in a healthy debt servicing
position as the EBITDA /finance cost is 15.84 times (2008: 9.73 times).
The existing cash resources and available credit facilities of the Group, together with steady cash flows generated from
the Group's operations, are sufficient to meet the Group's payment obligation and business requirements.
As at 31 December 2009, none of the Group's property, plant and equipment, investment properties, intangible assets
and bank deposits was pledged to secure general banking facilities granted to the Group (2008: Nil).
The Group's capital expenditure in 2009 amounted to HK$831 million which was principally related to the land and
development cost for the Tianjin Teem Shopping Mall and the construction in progress of the Sheraton Guangzhou
Hotel and the Zhongshan Project.
As at 31 December 2009, total Renminbi borrowings amounted to HK$620 million (2008: HK$930 million).
As at 31 December 2009, the Group's total floating rate borrowings amounted to HK$5,936 million (2008: HK$8,394
million). For the purpose of interest rate risk management, the Group has entered into certain fixed interest rate swap
agreements, amounting to HK$5,400 million (2008: HK$5,400 million), with remaining life of 3 years.
As at 31 December 2009, the Group had a total of 4,016 employees, of which 836 were at the managerial level. Among
the employees, 3,810 were employed by subsidiaries in Mainland China and 206 were employed by the head office and
subsidiaries in Hong Kong. Total remuneration paid for the year was approximately HK$406,858,000 (2008:
HK$381,223,000).
In 2009, even when facing the challenges of continuing adverse economic situation and business environments, the
Group further enhanced its human resources, staff productivity and creativity in order to strengthen the overall
competitiveness of the enterprise. At the same time, the Group raised and improved its management standard further
for efficiency and competitive advantages. Despite the unfavourable external conditions in the past year, all these
measures have made it possible for the Group to successfully maintain a stable and healthy growth. To sustain our
growth in the long term, the Group has implemented the core value of corporate culture, "Credibility, Integrity and
Profitability", and aimed at creating an environment of fair competition with an impartial reward and discipline system
conducive to nurturing our human resources. The Group has put in place the mechanism for regular performance
appraisals of and feedback to senior management staff to ensure their integrity and performance. Our remuneration
and incentive packages are driven mainly by the operating results. In order to effectively motivate our employees, the
incentive bonuses we pay to our management, key staff and employees with outstanding performance are determined
by reference to the operating net cash flows and profits after tax, as well as by a policy that links rewards with individual
performance. The Group has adopted a share option scheme to attract and motivate outstanding employees to
contribute to the continuing success of the Group in the long run. In terms of staff training and development, the Group
encourages and subsidizes our staff to actively participate in relevant professional development and training programs.
The Group has also continued to offer its various functional skilled-based and general corporate culture internal training
to upgrade the overall quality of all our staff and thereby lay down a solid foundation for the sustainable growth and
development of the Group in the years ahead.
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