Annual Report 2019

ANNUAL REPORT 2019 21 MANAGING DIRECTOR’S REPORT The strategic relationship is synergistic to the Group’s property development and hotel businesses and strengthens the already established relationship with The Star and CTF. For more details on our financial results, please refer to the section entitled “Management Discussion and Analysis”. Positioning for the Next Growth Phase Our four core pillars of growth are now residential property development, hotel development and operations, car parking business and the newly added gaming operations, following our recent acquisitions. As mentioned in my previous report, our established “Chinese Wallet” strategy has now been extended to an “Asian Wallet” strategy whereby we target middle class customers from Asia for the growing outbound tourism market and for the increasing appetite in international property investment business. We believe that there remain significant long-term opportunities in these market segments and we will continue with our regionalisation approach in targeting these opportunities. We will also seek partnership with operators possessing land ownership in good locations to jointly develop their sites for regeneration or repurposing which will help improve utilization of land resources. In addition to building a diverse development pipeline which allows us to manage cyclicality in different regions, we will continue to allocate more capital to recurring cash flow businesses such as hotels and car parks. Following the establishment of BCG which specializes in mortgage loans, we are looking at opportunities to establish more asset management platforms in different asset classes such as hotels and car parks. This will create a new earning stream for the Group and at the same time create avenues to unlock the significant value hidden within the Group’s property portfolio. We will continue with our prudent approach in allocating capital across different divisions and regions to allow us to generate higher returns on equity compared to our peer groups in Hong Kong. We firmly believe this approach should drive share price out-performance. Capital Structure and Balance Sheet Management Adhering to prudent financial management, the Group continued to optimize its capital structure. During the Year, we bought back 12.7 million Shares with a total value of HK$52.5 million. For the coming year we will target a buyback of up to HK$200 million. We believe this is a good approach to enhance earnings per share and utilize capital freed up through unlocking of value in our hotel portfolio. During the Year, we also completed a number of major loan financing including AUD660 million construction loan for West Side Place (Towers 1 and 2), HK$1.5 billion unsecured club loan for the Group, SGD417 million Holland Road development loan, and HK$2.3 billion Dorsett refinancing club loan. As at 31 March 2019, the Group’s cash and liquidity position amounted to HK$7.1 billion (HK$8.1 billion as at 31 March 2018). In addition, the Group’s undrawn banking facilities was at HK$9.0 billion and the Group had 8 unencumbered hotel assets with capital value of HK$5.0 billion, which can be used as collateral for further bank borrowings, should additional liquidity be needed. Net gearing ratio (adjusting for hotel revaluation surplus of HK$17,838 million which was not recognized on the balance sheet) was at 45.4% as at 31 March 2019. Balance sheet was suitably geared up without significantly affecting the Group’s credit standing. Capital was deployed for land replenishments, as well as new business investments in gaming and mortgage finance.