万科海外(01036) - 2018 - 年度财报

Company Information The report lists key company information including core management, board members, committees, auditor, legal counsel, principal bankers, and registered office - The report lists the company's core management, board members, various committee compositions, auditor (KPMG), legal counsel, principal bankers, and registered office[8][9] Biographical Details of Directors The report details the personal biographies of executive, non-executive, and independent non-executive directors, including their roles within and outside Vanke, professional backgrounds, and industry experience - The report provides detailed personal biographies of executive directors, non-executive directors, and independent non-executive directors, including their tenure within and outside the Vanke system, professional backgrounds, and industry experience[12][13][14] - Executive Director Mr Zhang Xu also serves as Executive Vice President and Chief Operating Officer of Vanke Co, Ltd, while Executive Director Ms Que Dongwu is Vanke's Vice President and General Manager of Overseas Business Division, indicating close management ties between the company and its parent company Vanke[12][13] Management Discussion and Analysis This section provides an overview of the Group's business and financial performance, strategic outlook, and key risks for the reporting period Business Review The Group's total revenue increased by 5% to approximately HK$102 million, primarily driven by rental income growth from Regent Centre, with investment property fair value growing 8% to HK$1.968 billion - 2018 Key Performance Indicators | Indicator | 2018 | 2017 | Year-on-year Change | | :--- | :--- | :--- | :--- | | Total Revenue | HK$101.8 million | HK$96.5 million | +5% | | Investment Property Fair Value | HK$1.968 billion | HK$1.83 billion | +8% | | Related Profit (excluding fair value changes) | HK$540.8 million | HK$54.2 million | +898% | Leasing and Property Management The Group's core leasing asset, Regent Centre, saw increased rental rates and occupancy, boosting segment revenue to HK$101.8 million and segment profit (excluding fair value changes) to HK$77.4 million - Regent Centre Leasing Performance | Indicator | End of 2018 | End of 2017 | | :--- | :--- | :--- | | Occupancy Rate | 99% | 97% | | Average Monthly Rent | HK$9.7/sq ft | HK$9.5/sq ft | - An upgrade of Regent Centre's air-conditioning system was completed in the first quarter of 2018, with a total expenditure of approximately HK$31 million, aimed at improving energy efficiency and cooling performance[24] Property Development and Financing This segment recorded a 14,688% profit increase to HK$473 million, mainly from recognizing sales profit from the 'Pavilia Bay' property development project by associate Ultimate Vantage - The Group's share of profit from associates (Ultimate Vantage and Goldrich Holdings) was HK$466 million, compared to only HK$46 thousand in the same period last year, primarily due to the recognition of sales profit from the "Pavilia Bay" project[29] - The Group provides mortgage financing services to buyers of the "Pavilia Bay" project through another associate, Goldrich Holdings[27] Financial Review The Group maintains a robust financial position with no interest-bearing debt and significantly increased bank balances and cash, while key performance indicators demonstrate stable leasing and enhanced profitability Rights Issue The report details the utilization of net proceeds from the 2015 rights issue, with approximately HK$393 million remaining reallocated for future land or property acquisitions - Net Proceeds from Rights Issue Utilization (as at end of 2018) | Item | Total Unutilized (HK$ million) | | :--- | :--- | | Acquisition of land or properties | 393 | | Total Unutilized | 393 | Liquidity and Financial Resources At year-end 2018, the Group's equity attributable to shareholders increased to HK$3.667 billion, with no interest-bearing debt and bank balances and cash significantly rising to HK$1.425 billion - Liquidity Indicators (End of 2018) | Indicator | Amount | | :--- | :--- | | Equity attributable to shareholders | HK$3.667 billion | | Interest-bearing debt | 0 | | Bank balances and cash | HK$1.425 billion | Key Performance Indicators The Group's five key performance indicators show improved occupancy and average rent, stable service cost-to-income ratio, zero gearing, and a significant increase in return on equity to 20.3% - Overview of 2018 Key Performance Indicators | Indicator | 2018 | 2017 | | :--- | :--- | :--- | | Occupancy Rate of the Property | 99% | 97% | | Average Rent of the Property | HK$9.7/sq ft | HK$9.5/sq ft | | Service Cost-to-Income Ratio | 22.4% | 22.3% | | Gearing Ratio | 0% | 0% | | Return on Equity | 20.3% | 5.3% | Principal Risks and Uncertainties The Group faces key risks including high reliance on the Hong Kong property market, potential underperformance of business partners, M&A uncertainties, funding needs for acquisitions, and potential conflicts of interest with its parent company Vanke - The Group's business is highly concentrated in Hong Kong, making its performance susceptible to fluctuations in Hong Kong's economic conditions and property market[77] - As the parent company Vanke operates businesses in Hong Kong through two platforms, the Group (75% owned) and Vanke Hong Kong (100% owned), and some directors hold positions in both platforms, there are potential business competition and conflicts of interest[84] Environmental Policy The Group is committed to environmentally sound business practices, aiming to reduce emissions and optimize resource use through efficiency improvements, energy-saving equipment, and promoting eco-friendly measures among stakeholders - In property development projects, the Group strives to obtain environmental certifications such as BEAM Plus (Hong Kong) and LEED (US) where practicable[86] Relationships with Suppliers, Customers and Employees The Group maintains close cooperation with its property management company and strives for excellent tenant service, while noting an 89% employee turnover rate in 2018 attributed to normal replacement and efficiency improvements - The employee turnover rate in 2018 was 89%, a significant increase from 17% in 2017, which the company attributed to normal staff replacement and efforts to enhance work efficiency[92] Employees and Remuneration Policy The Group reduced its employee count to three by year-end 2018, leading to a decrease in staff costs (including directors' emoluments) from HK$7.8 million to HK$5.4 million, with administrative support provided by Vanke Hong Kong on a cost basis - Changes in Employees and Costs | Indicator | End of 2018 | End of 2017 | | :--- | :--- | :--- | | Number of Employees | 3 | 6 | | Staff Costs | HK$5.4 million | HK$7.8 million | Outlook Management anticipates economic uncertainties in 2019 due to global factors, with the Group planning to diversify its business by seeking opportunities in Hong Kong and overseas, while expecting stable high occupancy and rents for Regent Centre - Facing macroeconomic uncertainties, the Group's strategy is to continue pursuing business diversification and expanding into Hong Kong and overseas markets[94] Final Dividend The Board recommends a final dividend of HK$0.09 per share for the year ended December 31, 2018, a 200% increase from the previous year, subject to approval at the Annual General Meeting - Final Dividend Proposal | Year | Final Dividend Per Share | | :--- | :--- | | 2018 | HK$0.09 | | 2017 | HK$0.03 | Report of the Directors This statutory disclosure outlines the company's principal business as investment holding, confirms annual results, and recommends a final dividend of HK$0.09 per share - This report is a statutory disclosure document, outlining the company's principal business as investment holding and confirming the annual results and the proposed final dividend of HK$0.09 per share[100][102] - The report discloses directors' shareholdings in associated corporations (Vanke) and major shareholder information, with Vanke Co, Ltd holding 75.0% of the company's shares through an indirect wholly-owned subsidiary[113][119] - The report identifies directors' interests in competing businesses, clarifying a potential competitive relationship between the Group and Vanke Hong Kong Group in Hong Kong property development business[130][131] - Major Customer and Supplier Proportions | Category | Proportion | | :--- | :--- | | Largest Customer | 9.7% | | Top Five Customers (total) | 26.4% | | Largest Supplier | 72.4% | | Top Five Suppliers (total) | 88.3% | Environmental, Social and Governance Report This report covers the Group's property leasing and management business (Regent Centre), detailing environmental initiatives like energy-saving upgrades and disclosing key environmental data, alongside social responsibility policies and community engagement - The scope of this report covers only the Group's property leasing and management business (Regent Centre), excluding property development and financing businesses led by joint venture partners[143] - Environmentally, the Group completed an energy-saving upgrade of Regent Centre's air-conditioning system, and the report discloses key environmental data such as electricity consumption, water usage, and paper recycling[144][149][150][151] - Regarding social responsibility, the report outlines the company's equal opportunity employment policy, healthy and safe working environment, anti-corruption whistleblowing system, and community investment activities[151][153][159][160] Corporate Governance Report The report confirms the company's compliance with the Corporate Governance Code for 2018, with minor deviations corrected, and details the board's composition, committee functions, and oversight of risk management and internal controls - The report confirms that, except for a few deviations such as the non-separation of the Chairman and Chief Executive Officer roles, the company complied with the Corporate Governance Code throughout 2018, with the deviation corrected in February 2019[163] - The Board of Directors comprises two executive directors, three non-executive directors, and three independent non-executive directors, meeting the requirement that independent non-executive directors constitute at least one-third of the board[170][174] - The report details the responsibilities, composition, and annual work summaries of the Remuneration Committee, Nomination Committee, and Audit Committee, reflecting the operation of the company's governance structure[179][185][197] - The Board is responsible for overseeing the Group's risk management and internal control systems and has reviewed their effectiveness for the year, deeming them effective and adequate[195][196] Independent Auditor's Report KPMG issued an unqualified opinion on the Group's 2018 consolidated financial statements, with 'Valuation of investment properties' identified as a key audit matter due to its significant impact and subjective judgments - Auditor KPMG issued an unqualified opinion on the company's consolidated financial statements for the year ended December 31, 2018, stating that the financial statements present a true and fair view of the Group's financial position and performance[219] - The report identifies "Valuation of investment properties" as a key audit matter because investment properties account for 53% of the Group's total assets, their fair value changes significantly impact profit before tax, and the valuation involves significant subjective judgments and estimates (e.g., capitalization rates and market rents)[221][227] Financial Statements This section presents the Group's consolidated financial performance, position, equity changes, and cash flows for the reporting period, along with detailed notes explaining accounting policies and financial data Consolidated Statement of Comprehensive Income The Group's profit and total comprehensive income surged by 336% to HK$677 million in 2018, primarily driven by a significant increase in share of results of associates from HK$46 thousand to HK$466 million - Consolidated Statement of Comprehensive Income Summary (HK$ thousand) | Item | 2018 | 2017 | | :--- | :--- | :--- | | Revenue | 101,780 | 96,460 | | Gross Profit | 78,976 | 74,940 | | Operating Profit | 203,329 | 162,169 | | Share of Results of Associates | 465,682 | 46 | | Profit Before Tax | 689,790 | 167,791 | | Profit for the Year | 676,843 | 155,149 | | Earnings Per Share (HK$) | 1.74 | 0.40 | Consolidated Statement of Financial Position At year-end 2018, total assets increased to HK$3.747 billion and net assets to HK$3.667 billion, driven by rising investment property fair value and increased bank balances, maintaining a robust financial structure with no interest-bearing debt - Consolidated Statement of Financial Position Summary (HK$ thousand) | Item | 2018 | 2017 | | :--- | :--- | :--- | | Non-current Assets | 2,306,572 | 2,053,988 | | Investment Properties | 1,968,000 | 1,830,000 | | Interests in Associates | 338,435 | 223,772 | | Current Assets | 1,439,959 | 1,023,408 | | Bank Balances and Cash | 1,425,085 | 865,905 | | Net Assets | 3,666,767 | 3,001,610 | | Total Equity | 3,666,767 | 3,001,610 | Consolidated Statement of Changes in Equity Total shareholders' equity increased from HK$3.002 billion at the beginning of the year to HK$3.667 billion at year-end, primarily due to the HK$677 million profit for the year, net of the HK$11.686 million final dividend paid - Summary of Changes in Equity (HK$ thousand) | Item | Amount | | :--- | :--- | | As at January 1, 2018 | 3,001,610 | | Profit and Total Comprehensive Income for the Year | +676,843 | | Approved Final Dividend for Prior Year | -11,686 | | As at December 31, 2018 | 3,666,767 | Consolidated Statement of Cash Flows Net cash and cash equivalents increased by HK$559 million for the year, with HK$66.7 million from operating activities and a significant HK$504 million net inflow from investing activities, mainly from associate dividends and repayments - Consolidated Statement of Cash Flows Summary (HK$ thousand) | Item | 2018 | 2017 | | :--- | :--- | :--- | | Net Cash from Operating Activities | 66,698 | 83,082 | | Net Cash from Investing Activities | 504,168 | 90,587 | | Net Cash Used in Financing Activities | (11,686) | (11,686) | | Net Increase in Cash and Cash Equivalents | 559,180 | 161,983 | | Cash and Cash Equivalents at Beginning of Year | 865,905 | 703,922 | | Cash and Cash Equivalents at End of Year | 1,425,085 | 865,905 | Notes to the Financial Statements These notes provide detailed explanations of key accounting policies, significant judgments, and breakdowns of financial data, covering revenue, segment information, investment property valuation, associate investments, dividends, and financial risk management Revenue and Segment Information Group revenue primarily comprises rental income (HK$86.3 million) and property management fees (HK$15.48 million), with the 'Leasing and Property Management' segment contributing all revenue and HK$213 million in segment results, while 'Property Development and Financing' contributed HK$473 million in segment results without revenue - 2018 Segment Results (HK$ thousand) | Segment | Revenue | Segment Results | | :--- | :--- | :--- | | Leasing and Property Management | 101,780 | 213,357 | | Property Development and Financing | 0 | 473,217 | | Total | 101,780 | 686,574 | Investment Properties The Group's investment properties were valued at HK$1.968 billion at year-end 2018, an increase of HK$136 million from the beginning of the year, with valuation performed by independent surveyors using the income capitalization approach - The fair value measurement of investment properties is classified as Level 3, utilizing significant unobservable inputs such as capitalization rates (3.5%-4%) and market rent per square foot (HK$9.5-10.3)[366] Interests in Associates and Amounts Due from Associates The Group holds 20% interests in Ultimate Vantage Limited (UVL) and Goldrich Holdings Limited, with UVL's 'Pavilia Bay' project generating HK$2.007 billion in profit for the year, significantly contributing to the Group's profit - Associate UVL's property development project "Pavilia Bay" recognized HK$9.959 billion in revenue and HK$2.007 billion in profit in 2018, serving as the primary source of the Group's profit for the year[383] Dividends The Board proposes a final dividend of HK$0.09 per share for 2018, totaling approximately HK$35.06 million, subject to shareholder approval, while the 2017 final dividend of HK$0.03 per share was paid during the year - Dividend Distribution Status | Financial Year | Dividend Type | Amount Per Share | Status | | :--- | :--- | :--- | :--- | | 2018 | Final Dividend | HK$0.09 | Proposed | | 2017 | Final Dividend | HK$0.03 | Paid in 2018 | Financial Risk Management and Fair Value The Group primarily faces credit and liquidity risks, but is not exposed to interest rate or foreign exchange risks due to no interest-bearing borrowings and all operations being Hong Kong-based and denominated in HKD - The Group has no interest-bearing borrowings and is therefore not affected by fluctuations in market interest rates[417] - All of the Group's assets and operations are in Hong Kong, and cash flows are denominated in Hong Kong dollars, thus there is no foreign exchange risk[418] Overview of Property Projects This section provides a summary of the Group's key property projects, including Regent Centre (100% owned, completed for investment) and Pavilia Bay (20% interest, completed for sale) - Major Property Projects | Project Name | Location | Type | Effective Interest | Status | | :--- | :--- | :--- | :--- | :--- | | Regent Centre | Kwai Chung, New Territories | Industrial/Warehouse | 100% | Completed and held for investment | | Pavilia Bay | Tsuen Wan, New Territories | Residential | 20% | Completed and held for sale | Five-Year Financial Summary This section presents a five-year summary of key financial figures, including revenue, profit for the year, and net assets, illustrating the Group's financial performance and growth trends over time - Five-Year Financial Summary (HK$ thousand) | Item | 2018 | 2017 | 2016 | 2015 | 2014 | | :--- | :--- | :--- | :--- | :--- | :--- | | Revenue | 101,780 | 96,460 | 91,244 | 89,067 | 85,809 | | Profit for the Year | 676,843 | 155,149 | 131,320 | 161,705 | 137,555 | | Net Assets | 3,666,767 | 3,001,610 | 2,858,147 | 2,738,513 | 1,552,423 |