Agenda A Snapshot of 2014 Key Achievements Sustainable Growth Land Bank Business Review Property Development Property Investment & Management Hospitality Investment & Management Diversified and Robust Capital Structure Future Plans & Strategies 2014 Results Highlights Appendix 2
Disclaimer This presentation contains forward-looking statements that involve risks and uncertainties. These statements are generally indicated by the use of forwardlooking terminology such as believe, expect, anticipate, estimate, plan, project, target, may, will or similar words that express an indication of actions or results of actions that may or are expected to occur in the future. You should not place undue reliance on these forward-looking statements, which apply only as of the date of this presentation. These forward-looking statements are based on our own information and on information form other sources we believe to be reliable. Our actual results may be materially less favourable than those expressed or implied by these forward-looking statements which affect the market price of our shares. 3
A Snapshot of 2014 4
Key Achievements Achieved net profit attributable to shareholders of HK$1,944 million, riding on resilient growth in recurring rental income and operating profit, sustainable capital value gains from prime investment properties, as well as upward rental reversions of commercial and hospitality investment properties of the Group Captured favourable windows to sell remaining residential units despite challenging operating environment in local residential property market Residential development pipeline has expanded to six projects extending well beyond 2018 following acquisition of prime harbour-front residential site in Shau Kei Wan Revenue base and presence of Lanson Place hospitality brand be strengthened further with full opening of Lanson Place Bukit Ceylon Serviced Residences in Kuala Lumpur in December 2014, and another 10-year management contract signed to manage 186 luxurious serviced apartment units in downtown Puxi, Shanghai Robust capital structure on the back of U.S.$1,000,000,000 medium term note programme and low gearing level 5
2014 Sustainable Growth HK$ M 25,000 Shareholders Equity 20,000 15,000 10,000 5,000 0 2010 2011 2012 2013 2014 To further grow and diversify our asset portfolio to create long-term value for our stakeholders 6
Balanced and Diversified Land Bank in Hong Kong 1 2 Seymour The Pierre Se 3 The Warren 4 5 4 6 6 Kau To, Shatin (two plots) 7 12 7 Siu Sau, Tuen Mun 8 Shau Kei Wan 5 11 9 9 Landmark East 1 2 10 13 3 8 10 W Square 11 Shui Hing Centre 12 Winner Godown Building 13 Development properties Investment properties Hospitality property 7
Land Bank (as at 31 December 2014) Strategic land bank with focus on Hong Kong Investment Property By Business Segment Land Bank Overview (sq. ft.) Residential Development By Geographical Segment Hospitality 13% Industrial 27% Office/ Retail 60% Investment Property 80% Residential Development 20% China 17% Hong Kong 83% Attributable Gross Floor Area / Saleable Area Hong Kong ( 000 sq. ft.) China ( 000 sq. ft.) Others ( 000 sq. ft.) Total ( 000 sq. ft.) Valuation as at 31 December 2014 (HK$ M) Residential Development 514* 104* - 618 N/A Investment Property # Office/Retail 1,467-33 (London) 1,500 16,138 Industrial 684 - - 684 2,162 Hospitality 114 122 (Shanghai/ Beijing) 103 (Kuala Lumpur) 339 2,719 Subtotal 2,265 122 136 2,523 21,019 Total 2,779 226 136 3,141 N/A * Includes (i) unsold units; (ii) pre-sold units (the revenue of which had not been recognised); and (iii) units under development # Excludes miscellaneous industrial properties and agricultural land 8
Business Review 9
Property Development 10
Sales and Development Pipeline (as at 31 December 2014) Property Development Portfolio Hong Kong A sustainable and scalable residential project pipeline Available Gross Floor Area ( 000 sq. ft.) Presold Gross Floor Area ( 000 sq. ft.) 2015 2016 2017 Estimated completion 2018 & Beyond Group s Interest Seymour* 3 N/A 30% Providence Bay* 237 N/A 15% Completed Development Providence Peak* 159 N/A 15% The Graces* 64 N/A 15% The Warren* 10 N/A 100% The Pierre* 2 N/A 100% Projects Under Development Hong Kong Homantin Hillside* 128 4 50% Kau To STTL 567 318 N/A 35% Kau To STTL 565 142 N/A 35% Shau Kei Wan 46 N/A 100% Siu Sau, Tuen Mun 159 N/A 100% Shanghai * These properties are stated on a saleable area basis Upper Riverside* 210 N/A 50% 11
Completed Development Seymour, 9 Seymour Road, Mid-Levels Approximately 98% of the residential units have been sold 12
Completed Development Cont d Providence Bay, Providence Peak, The Graces, Pak Shek Kok, Tai Po Providence Bay: approximately 64% of the residential units have been sold Providence Peak: approximately 81% of the residential units have been sold The Graces: approximately 83% of the residential units have been sold Of which, around 4%, 1% and 35% of the residential units of Providence Bay, Providence Peak and The Graces were sold, respectively, in 2014 13
Completed Development Cont d The Warren, 9 Warren Street, Causeway Bay Approximately 83% of the residential units have been sold Nearly all of the sold units were handed over to purchasers by December 2014 14
Completed Development Cont d The Pierre, 1 Coronation Terrace, Mid-Levels West Over 97% of the residential units were pre-sold in September 2012 Occupation permit obtained in May 2014 Revenue and related profit from the pre-sale recognised in 1H 2014 Around 92% of the residential units were handed over to purchasers by December 2014 15
Project Under Development in Hong Kong Homantin Hillside, 8 Wai Yin Path, Hung Hom Saleable area of approximately 128,000 sq. ft. for 173 residential units In close proximity to upcoming Ho Man Tin MTR station of Kwun Tong Line Extension as well as Shatin to Central Link Initial pre-sale launched in November 2014 with 4% of the residential units being sold Superstructure work underway Project scheduled for completion in 2016 16
Project Under Development in Hong Kong Cont d Kau To, Shatin Two sites (STTL 567 & 565) acquired in August 2012 and January 2013 Combined gross floor area of approximately 460,000 sq. ft. Earmarked for low-density luxury apartments and houses Foundation work underway Projects scheduled for completion in 2017 17
Project Under Development in Hong Kong Cont d Shau Kei Wan Prime harbour-front residential site acquired in April 2014 Gross floor area of approximately 46,000 sq. ft. Design and planning work completed Project scheduled for completion in 2018 18
Project Under Development in Hong Kong Cont d Siu Sau, Tuen Mun Gross floor area of approximately 159,000 sq. ft. Earmarked for low-density residential development Green area site formation work underway Project scheduled for completion by 2019 19
Project Under Development in Shanghai Upper Riverside, Lujiazui, Shanghai Located along the Huangpu River at Lujiazui, Pudong Saleable area of approximately 210,000 sq. ft. for 97 apartment units Interior fitting out works underway Project scheduled for completion in 2015 20
Property Investment & Management 21
Investment Portfolio in Hong Kong Gross floor area ( 000 sq. ft.) Occupancy as at 31 Dec 2014 Leases renewed in 2014 Average rental reversion upon lease renewal Leases expiring/rent review in 2015 Grade-A Offices Landmark East (AIA Kowloon Tower/ AXA Tower) 1,338 96% 22% 32% 24% W Square 129 84% 34% 13% 32% Industrial Properties Winner Godown Building Shui Hing Centre 497 187 100% 19% 25% 42% As at 31 December 2014, the Group s portfolio of investment properties, comprising 1.5 million square feet of Grade-A office buildings and 0.7 million square feet of industrial buildings, had an aggregate fair market valuation of HK$17,560 million Recorded both increasing spot rents and positive rental reversions 22
Investment Portfolio in London Commercial Property at Savile Row/Vigo Street, West End Net internal area of Grade-A office and retail space of approximately 14,000 sq. ft. Achieved full occupancy Commercial Property at Brook Street, West End Net internal area of Grade-A office and retail space of approximately 19,000 sq. ft. Achieved an occupancy of approximately 74% 23
Hospitality Investment & Management 24
Hospitality Portfolio Strong brand recognition in Asian gateway cities by customers and property owners Lanson Place Properties Management Lanson Place Properties Investment & Management Lanson Place Jin Qiao Serviced Residences No. of units/rooms: 102 Location: Shanghai Aroma Garden Serviced Suites by Lanson Place* No. of units/rooms: 79 Location: Shanghai Parkside Serviced Suites by Lanson Place** No. of units/rooms: 186 Location: Shanghai Hong Kong Beijing Shanghai Lanson Place Central Park Serviced Residences Group s interest: 30% No. of units/rooms: 105 Location: Beijing Lanson Place Jinlin Tiandi Serviced Residences Group s interest: 23.4% No. of units/rooms: 106 Location: Shanghai Kondominium No. 8 No. of units/rooms: 132 Location: Kuala Lumpur Ambassador Row Hotel Suites by Lanson Place No. of units/rooms: 221 Location: Kuala Lumpur Lanson Place Winsland Serviced Residences No. of units/rooms: 67 Location: Singapore Kuala Lumpur Singapore Lanson Place Lifestyle Services Lanson Place Hotel Group s interest: 100% No. of units/rooms: 194 Location: Hong Kong Lanson Place Bukit Ceylon Serviced Residences Group s interest: 50% No. of units/rooms: 150 Location: Kuala Lumpur *Target soft-opening in second quarter of 2015 **Target soft-opening in first quarter of 2016 The Warren Homantin Hillside (coming) The Pierre Upper Riverside (coming) Le Nouvel Ardmore 25
Hospitality Investment and Management Lanson Place Bukit Ceylon Serviced Residences had full opening in December 2014 Second property in the Group s portfolio to qualify as one of the Small Luxury Hotels of the World The first Small Luxury Hotel in Kuala Lumpur s central business district Lanson Place Hotel in Hong Kong and Lanson Place Jinlin Tiandi Serviced Residences in Shanghai recorded gradual rise in both occupancy and average rental rates upon completion of refurbishment Lanson Place Central Park Serviced Residences in Beijing continued to achieve an occupancy of over 90% with steady growth in average rental rate Awards and recognition Lanson Place Hotel: 2014 Certificate of Excellence by TripAdvisor, Expedia Insiders Select 2014 by Expedia.com and 5-Stars award at the 2014-2015 International Hotel Awards in the category of Hotel Renovation/Refurbishment for Hong Kong in the Asia Pacific region Lanson Place Central Park Serviced Residences and Lanson Place Hospitality Management Limited: The Best Serviced Apartments of China and The Best Serviced Apartment Operator of China respectively at the 9th China Hotel Starlight Awards Lanson Place Jinlin Tiandi Serviced Residences: Best Park View and Best Location by City Weekend Best Homes of China 2014 26
Diversified and Robust Capital Structure November 2012 First drawdown of S$170 million unrated 10-year fixed rate bond at a coupon rate of 4.25% January 2013 Second drawdown of HK$480 million unrated 10-year fixed rate bond at a coupon rate of 3.95% May 2013 Third drawdown of HK$100 million unrated 10-year fixed rate bond at a coupon rate of 3.8% August 2014 Fourth drawdown of HK$100 million unrated 7-year fixed rate bond at a coupon rate of 4.3% October 2014 Fifth drawdown of HK$100 million unrated 7-year fixed rate bond at a coupon rate of 4.1% November 2014 Sixth drawdown of HK$100 million unrated 10-year fixed rate bond at a coupon rate of 4.5% Reflection of strong market recognition and confidence in our financial position As of 31 December 2014, the Group maintained a healthy gearing at 10%. Total cash on hand and unutilized revolving loan facilities were HK$3,803 million Solid financial capability for future investments and acquisition opportunities 27
Future Plans & Strategies 28
Future Plans & Strategies In near term In mid-to-long term Property Development Property Investment & Management Hospitality Investment & Management Capture the right windows to launch/relaunch new projects and remaining units of completed projects, including Homantin Hillside in Hong Kong and Upper Riverside in Shanghai Maximise rental reversions on renewal or upon rent review and enhance tenant profile by further capturing quality tenants Further build the brand in both existing and new markets in the region through long-term third party management contracts Foster customer-oriented lifestyle driven services Leverage government s initiative to expedite and increase land supply to proactively replenish land bank and enhance development pipeline Continue to explore and acquire yieldenhancing investment opportunities in Hong Kong and key gateway cities to grow asset portfolio and recurring earnings Continue to build presence of Lanson Place in Asia and beyond Continue to launch our Lanson Place Lifestyle Services in our property development projects 29
2014 Results Highlights 30
Financial Results Summary For the year ended 31 December (HK$ M) 2014 2013 Continuing operations Revenue 1,784 1,736 3% Gross profit 926 819 13% Change in fair value of investment properties and financial instruments 1,539 2,121 27% Profit from operations 2,148 2,723 21% Share of results of joint ventures/associates 2 169 99% Profit attributable to equity holders of the company 1,944 2,661 27% Basic earnings per share (HK$) 1.45 1.99 27% Final dividend per share (HK cents) 9.3 9.3 Total dividend per share (HK cents) 13.5 13.5 Dividend payout 181 181 31
Segment Results Overview For the year ended 31 December (HK$ M) 2014 2013 Property Development Revenue 944 1,010 7% Profit before taxation 170 290 41% Property Investment & Management Revenue 669 564 19% Fair value changes in investment properties and financial instruments 1,537 1,986 23% Profit before taxation 1,930 2,331 17% Profit before taxation excluding fair value changes in investment properties and financial instruments and a one-off disposal gain of investment in an associated company Hospitality Investment & Management 393 315 25% Revenue 147 141 4% Fair value changes in investment properties and financial instruments 23 98 77% Profit before taxation 59 135 56% Profit before taxation excluding fair value changes in investment properties and financial instruments 35 29 21% 32
Balance Sheet Summary (HK$ M) 31 December 2014 31 December 2013 Total assets 27,528 26,705 3% Net assets 22,680 20,895 9% Equity attributable to equity holders of the company 22,679 20,894 9% Investment properties 20,586 19,003 8% Properties for sale 1,322 1,425 7% Bank balances and cash 1,593 1,242 28% 33
Balance Sheet Summary Cont d (HK$ M) 31 December 2014 31 December 2013 Total borrowings 3,879 4,687 17% Net borrowings 2,286 3,445 34% Gearing ratio (net borrowings to net assets) Maturity profile of borrowings Repayable: 10.1% 16.5% Within one year 64 2% 1,740 37% Between one and two years 459 12% 32 1% Between two and five years 1,427 37% 1,236 26% After five years 1,929 49% 1,679 36% 3,879 100% 4,687 100% Financial Resources Bank balances and cash 1,593 1,242 Unutilised revolving loan facilities 2,210 1,679 3,803 2,921 34
Appendix
Investment Thesis 1 A credible and integrated property player in Hong Kong with a balanced and growing development and investment portfolio 2 Strong track record in developing luxury and quality residential properties at premium values 3 Owns a diversified portfolio of high-quality Grade-A office and hospitality investment properties, enabling a sustainable and growing recurring income stream 4 Manages high-end serviced residences and boutique hotel with high occupancy across Hong Kong, China and South East Asia under the Lanson Place brand 5 Maintains a robust capital structure and healthy gearing with good access to capital markets 36
Five Years Financial Summary Year ended 31 December 2014 HK$ M 2013 HK$ M 2012 (Restated) HK$ M 2011 (Restated) HK$ M 2010 (Restated) HK$ M RESULTS Continuing operations revenue 1,783.5 1,736.2 891.7 1,191.0 1,416.0 Profit before taxation from continuing operations 2,033.1 2,746.2 4,612.1 2,847.4 2,515.2 Taxation (89.5) (91.4) (78.4) (81.8) (48.1) Profit for the year from continuing operations 1,943.6 2,654.8 4,533.7 2,765.6 2,467.1 Profit/(Loss) for the year from discontinued operations - 6.4 260.1 (31.9) (23.3) Profit for the year 1,943.6 2,661.2 4,793.8 2,733.7 2,443.8 Attributable to: Equity holders of the Company - From continuing operations 1,943.6 2,654.6 4,476.6 2,242.6 1,943.4 - From discontinued operations - 6.4 260.1 (31.9) (23.3) 1,943.6 2,661.0 4,736.7 2,210.7 1,920.1 Non-controlling interests - From continuing operations - 0.2 57.1 523.0 523.7 1,943.6 2,661.2 4,793.8 2,733.7 2,443.8 37
Five Years Financial Summary Cont d As at 31 December 2014 HK$ M 2013 HK$ M 2012 (Restated) HK$ M 2011 (Restated) HK$ M 2010 (Restated) HK$ M ASSETS AND LIABILITIES Total assets 27,527.8 26,705.1 23,578.1 20,212.5 17,631.2 Total liabilities (4,847.6) (5,809.9) (5,216.3) (4,849.8) (4,377.6) Non-controlling interests (1.2) (1.5) (2.0) (2,435.0) (2,343.3) Equity attributable to the equity holders of the Company 22,679.0 20,893.7 18,359.8 12,927.7 10,910.3 38