TIDMHKLD TIDMJAR

RNS Number : 0551U

Hongkong Land Hldgs Ltd

28 July 2022

Announcement

28th July 2022

The following announcement was issued today to a Regulatory Information Service approved by the Financial Conduct Authority in the United Kingdom.

HONGKONG LAND HOLDINGS LIMITED

HALF-YEAR RESULTS FOR THE SIX MONTHSED 30TH JUNE 2022

Highlights

   --   Underlying profit up 8% 
   --   Higher profits from Development Properties 
   --   Investment Properties profits marginally lower 
   --   Group's financial position remains strong 
   --   Additional US$500 million share buyback announced 

"Resilient financial performance at Hongkong Land in the first half of 2022 was pleasing to see, although contracted sales of China Development Properties were affected by weak market sentiment. The Group's full-year underlying profits are expected to be significantly lower than the prior year. This is primarily due to the planned timing of sales completions and the impact of pandemic-related restrictions on construction activities on the Chinese mainland, which will result in some completions being deferred from the second half of 2022 into 2023."

Ben Keswick

Chairman

Results

 
                                                     (unaudited) 
                                      Six months ended 30th June 
                                                   2022     2021  Change 
                                                   US$m     US$m       % 
-----------------------------------------------  ------  -------  ------ 
 Underlying profit attributable to 
  shareholders(#)                                   425      394      +8 
 Profit/(loss) attributable to shareholders         292    (865)     n/m 
 Shareholders' funds                             33,619  34,584*      -3 
 Net debt                                         6,062   5,104*     +19 
-----------------------------------------------  ------  -------  ------ 
                                                    USc      USc       % 
-----------------------------------------------  ------  -------  ------ 
 Underlying earnings per share(#)                 18.67    16.90     +10 
 Earnings/(loss) per share                        12.83  (37.06)     n/m 
 Interim dividend per share                        6.00     6.00       - 
-----------------------------------------------  ------  -------  ------ 
                                                    US$      US$       % 
-----------------------------------------------  ------  -------  ------ 
 Net asset value per share                        14.99   15.05*       - 
-----------------------------------------------  ------  -------  ------ 
# The Group uses 'underlying profit attributable to shareholders' 
 in its internal financial reporting to distinguish between 
 ongoing business performance and non-trading items, as more 
 fully described in 
 note 7 to the condensed financial statements. Management 
 considers this to be a key measure which provides additional 
 information to enhance understanding of the Group's underlying 
 business performance. 
 * At 31st December 2021. 
 

The interim dividend of USc6.00 per share will be payable on 12th October 2022 to shareholders on the register of members at the close of business on 19th August 2022.

HONGKONG LAND HOLDINGS LIMITED

HALF-YEAR RESULTS FOR THE SIX MONTHSED 30TH JUNE 2022

OVERVIEW

Anti-pandemic measures taken across China led to subdued consumer demand in the Group's retail and residential properties businesses in the period, although the impact on underlying profit in the first half of the year was modest. Profits from the Group's Investment Properties business were marginally lower than the same period last year, while a greater number of residential sales completions in China resulted in a higher contribution from the Development Properties business.

PERFORMANCE

Underlying profit attributable to shareholders was US$425 million, US$31 million higher than the prior year.

Profit attributable to shareholders was US$292 million in the first half of 2022, compared to a loss of US$865 million in the first half of 2021. This is after including losses mainly arising from Investment Property revaluations of US$133 million in 2022 and US$1,259 million in 2021.

The net asset value per share at 30th June 2022 was US$14.99, compared with US$15.05 at the end of 2021.

The Directors are recommending an interim dividend of USc6.00 per share.

GROUP REVIEW

Investment Properties

In Hong Kong, anti-pandemic measures introduced in the early part of the year impacted the number of new office leasing enquiries and resulted in the Group providing rental support to a select number of retail tenants. Despite these challenges, the Group's Central office portfolio continued to benefit from a flight to quality, as a number of new tenants committed to long-term leases.

Physical vacancy was 5.4% at the end of June 2022, compared to 5.2% at the end of 2021 and, on a committed basis, it was 5.1%, compared to 4.9% at the end of 2021. Rental reversions were negative, reflecting lower market rents. Average office rents were HK$112 per sq. ft. in the first half of 2022, compared to HK$118 per sq. ft. and HK$115 per sq. ft. in the first and second halves of 2021, respectively.

Vacancy at the Group's LANDMARK retail portfolio was unchanged from the end of 2021, although base rental reversions remained negative. Tourism has not yet returned to Hong Kong, due to a combination of travel and quarantine restrictions, adversely impacting retail sales levels. Average retail rents were HK$168 per sq. ft. in the first half of 2022, compared with HK$180 per sq. ft. and HK$190 per sq. ft. in the first and second halves of 2021, respectively. These average rents included the impact of temporary rental support.

Footfall and tenant sales at the Group's retail operations in Beijing and Macau were also negatively impacted by pandemic-related restrictions, although a number of luxury brands opened new stores as planned despite the market challenges.

In Shanghai, city-wide lockdowns saw development activities at the multi-phase West Bund site suspended for over two months, although construction has since resumed.

In Singapore, the Group's office portfolio continued to benefit from healthy leasing momentum, with average office rents increasing to S$10.5 per sq. ft. in the first half of 2022, compared to S$10.2 per sq. ft. and S$10.3 per sq. ft. in the first and second halves of 2021, respectively. On a committed basis, vacancy in the Group's office portfolio remained low at 3.0%, compared with 2.9% at the end of 2021.

Development Properties

On the Chinese mainland, there were more sales completions in the first half of 2022, resulting in higher profits than the same period last year.

Pandemic-related shutdowns impacted construction progress at the Group's mixed-use Galaxy Midtown project in Shanghai, possibly delaying anticipated sales completions from the end of 2022 into early 2023.

Market sentiment was weak in a majority of the cities where the Group has a presence, impacting contracted sales despite the continued relaxation of cooling measures. The Group's attributable interest in contracted sales was US$419 million in the first half of 2022, compared to US$1,360 million and US$1,288 million in the first and second halves of 2021, respectively. At 30th June 2022, the Group had US$2,425 million in sold but unrecognised contracted sales, compared with US$2,853 million at the end of 2021.

Results from the Group's residential development activities in Singapore declined compared to the first half of 2021, primarily due to lower completion progress on projects. Pre-sales at the 407-unit Piccadilly Grand project commenced in May 2022 and it is 75% sold. The Group's attributable interest in contracted sales was US$270 million in the first half of 2022, compared to US$172 million and US$156 million in the first and second halves of 2021, respectively.

Sales demand for the Group's projects in the rest of Southeast Asia was generally subdued.

Business Development

On the Chinese mainland, the Group secured a 34% interest in a primarily residential site in Xuhui District in Shanghai, adjacent to our 1.1 million sq. m. mixed-used project in West Bund. The site has an attributable developable area of 18,700 sq. m. and will feature six high-rise apartment blocks with over 470 premium residential units.

In Singapore, the Group acquired a 49% interest in a residential site in the Tanjong Katong area with a developable area of 599,000 sq. ft., which is expected to yield 638 units.

Financing

Net debt at 30th June 2022 was US$6.1 billion, up from US$5.1 billion at the end of 2021, primarily due to lower residential pre-sale proceeds, investments in recently acquired development sites and the buyback of Group shares.

Net gearing was 18%, compared with 15% at the end of last year. As at 30th June 2022, the Group had committed liquidity of US$2.6 billion, compared to US$4.0 billion at the end of 2021, with an average debt tenor of 6.4 years, compared to 6.5 years at the end of 2021. 55% of the Group's interest rate on debt is at fixed rates, with an average hedge tenor of 7.3 years.

In September 2021, the Group announced a US$500 million share buyback programme, of which US$491 million had been invested up to 22nd July 2022, reducing issued share capital by 4%. An additional US$500 million has been allocated to buy back shares until the end of 2023.

OUTLOOK

Resilient financial performance at Hongkong Land in the first half of 2022 was pleasing to see, although contracted sales of China Development Properties were affected by weak market sentiment. The Group's full-year underlying profits are expected to be significantly lower than the prior year. This is primarily due to the planned timing of sales completions and the impact of pandemic-related restrictions on construction activities on the Chinese mainland, which will result in some completions being deferred from the second half of 2022 into 2023.

Ben Keswick

Chairman

 
 
Hongkong Land Holdings Limited 
 Consolidated Profit and Loss Account 
 for the six months ended 30th June 2022 
-------------------------------------------------------------------------------------------------------------------------------- 
 
                                                     (unaudited) 
                                             Six months ended 30th June                          Year ended 31st December 
                                       2022                             2021                               2021 
 
 
                            Underlying     Non-            Underlying       Non-              Underlying       Non- 
                              business  trading              business    trading                business    trading 
                           performance    items    Total  performance      items      Total  performance      items      Total 
                                  US$m     US$m     US$m         US$m       US$m       US$m         US$m       US$m       US$m 
 
 
Revenue (note 2)                 894.0        -    894.0        885.8          -      885.8      2,384.3          -    2,384.3 
Net operating costs (note 
 3)                            (499.9)        -  (499.9)      (476.4)        0.5    (475.9)    (1,440.9)        2.6  (1,438.3) 
Change in fair value of 
 investment properties               -  (120.5)  (120.5)            -  (1,248.8)  (1,248.8)            -  (1,375.5)  (1,375.5) 
 
Operating profit/(loss) 
 (note 4)                        394.1  (120.5)    273.6        409.4  (1,248.3)    (838.9)        943.4  (1,372.9)    (429.5) 
Net financing charges 
 
 
  *    financing charges       (114.4)        -  (114.4)      (106.9)          -    (106.9)      (222.2)          -    (222.2) 
 
  *    financing income           24.9        -     24.9         33.8          -       33.8         67.0          -       67.0 
 
 
                                (89.5)        -   (89.5)       (73.1)          -     (73.1)      (155.2)          -    (155.2) 
Share of results of 
 associates 
 and 
 joint ventures (note 5)         175.5   (21.4)    154.1        120.1      (4.4)      115.7        355.9       80.6      436.5 
                           -----------  -------  -------  -----------  ---------  ---------  -----------  ---------  --------- 
 
Profit/(loss) before tax         480.1  (141.9)    338.2        456.4  (1,252.7)    (796.3)      1,144.1  (1,292.3)    (148.2) 
Tax (note 6)                    (55.8)      6.8   (49.0)       (62.1)      (4.8)     (66.9)      (178.7)     (16.9)    (195.6) 
                           -----------  -------  -------  -----------  ---------  ---------  -----------  ---------  --------- 
 
Profit/(loss) after tax          424.3  (135.1)    289.2        394.3  (1,257.5)    (863.2)        965.4  (1,309.2)    (343.8) 
                           -----------  -------  -------  -----------  ---------  ---------  -----------  ---------  --------- 
 
Attributable to: 
Shareholders of the 
Company 
  (note 7)                       424.6  (132.8)    291.8        394.4  (1,259.3)    (864.9)        966.0  (1,315.2)    (349.2) 
Non-controlling interests        (0.3)    (2.3)    (2.6)        (0.1)        1.8        1.7        (0.6)        6.0        5.4 
                           -----------  -------  -------  -----------  ---------  ---------  -----------  ---------  --------- 
 
                                 424.3  (135.1)    289.2        394.3  (1,257.5)    (863.2)        965.4  (1,309.2)    (343.8) 
                           -----------  -------  -------  -----------  ---------  ---------  -----------  ---------  --------- 
 
 
                                   USc               USc          USc                   USc          USc                   USc 
 
 
Earnings/(loss) per share 
 (note 8)                        18.67             12.83        16.90               (37.06)        41.49               (15.00) 
 
 
 
 
 
Hongkong Land Holdings Limited 
 Consolidated Statement of Comprehensive Income 
 for the six months ended 30th June 2022 
 
 
                                                                            Year 
                                                           (unaudited)     ended 
                                                      Six months ended      31st 
                                                             30th June  December 
                                                         2022     2021      2021 
                                                         US$m     US$m      US$m 
 
 
Profit/(loss) for the period                            289.2  (863.2)   (343.8) 
Other comprehensive income/ 
 ( expense) 
 
Items that will not be reclassified 
 to 
   profit or loss: 
 
Remeasurements of defined benefit 
   plans                                                    -        -       3.3 
Tax on items that will not 
 be reclassified                                            -        -     (0.5) 
 
                                                            -        -       2.8 
Items that may be reclassified 
   subsequently to profit or loss: 
                                                      -------  -------  -------- 
 
Net exchange translation differences 
- net loss arising during the 
 period                                               (259.6)   (55.9)   (148.1) 
 
Cash flow hedges 
 
 
  *    net gain/(loss) arising during the period         20.4    (7.5)    (11.7) 
- transfer to profit and loss                           (2.5)    (0.2)     (0.1) 
 
 
                                                         17.9    (7.7)    (11.8) 
Tax relating to items that 
 may be 
   reclassified                                         (3.0)      1.3       1.9 
Share of other comprehensive 
 (expense)/ 
   income of associates and joint 
    ventures                                          (373.5)      5.8      87.1 
 
 
                                                      (618.2)   (56.5)    (70.9) 
 
 
Other comprehensive expense 
 for the 
   period, net of tax                                 (618.2)   (56.5)    (68.1) 
                                                      -------  -------  -------- 
 
Total comprehensive expense 
 for the 
   period                                             (329.0)  (919.7)   (411.9) 
                                                      -------  -------  -------- 
 
Attributable to: 
Shareholders of the Company                           (322.7)  (922.2)   (419.4) 
Non-controlling interests                               (6.3)      2.5       7.5 
                                                      -------  -------  -------- 
 
                                                      (329.0)  (919.7)   (411.9) 
    ------------------------------------------------  -------  -------  -------- 
 
 
 
 
 
Hongkong Land Holdings Limited 
 Consolidated Balance Sheet 
 as 30th June 2022 
 
 
                                                   (unaudited)    At 31st 
                                                  At 30th June   December 
                                              2022        2021       2021 
                                              US$m        US$m       US$m 
 
Net operating assets 
Fixed assets                                 118.6       126.0      127.8 
Right-of-use assets                           14.9        10.2       12.4 
Investment properties (note 
 10)                                      28,278.1    28,814.7   28,600.2 
Associates and joint ventures 
 (note 11)                                 9,574.0     8,990.6    9,515.3 
Non-current debtors                           34.6        29.9       29.7 
Deferred tax assets                           60.1        42.0       67.7 
Pension assets                                 1.2         0.6        1.8 
 
Non-current assets                        38,081.5    38,014.0   38,354.9 
 
 
Properties for sale                        3,161.1     2,304.3    2,970.5 
Current debtors                              862.0       995.7    1,029.4 
Current tax assets                            41.4        34.5       28.3 
Bank balances                                746.7     2,352.9    1,479.5 
                                         ---------   ---------  --------- 
 
Current assets                             4,811.2     5,687.4    5,507.7 
 
 
Current creditors                        (1,982.7)   (2,241.8)  (2,194.6) 
Current borrowings (note 12)               (366.6)     (906.5)    (865.3) 
Current tax liabilities                    (208.9)     (158.5)    (202.9) 
 
 
Current liabilities                      (2,558.2)   (3,306.8)  (3,262.8) 
 
 
Net current assets                         2,253.0     2,380.6    2,244.9 
Long-term borrowings (note 
 12)                                     (6,441.6)   (5,708.7)  (5,717.9) 
Deferred tax liabilities                   (228.4)     (204.0)    (227.9) 
Pension liabilities                          (0.1)       (1.8)          - 
Non-current creditors                       (17.0)      (35.6)     (35.8) 
                                         ---------   ---------  --------- 
 
                                          33,647.4    34,444.5   34,618.2 
                                         ---------   ---------  --------- 
 
Total equity 
Share capital                                224.3       233.4      229.8 
Share premium                                    -       257.3       67.4 
Revenue and other reserves                33,395.0    33,922.8   34,286.6 
                                         ---------   ---------  --------- 
 
Shareholders' funds                       33,619.3    34,413.5   34,583.8 
Non-controlling interests                     28.1        31.0       34.4 
                                         ---------   ---------  --------- 
 
                                          33,647.4    34,444.5   34,618.2 
                                         ---------   ---------  --------- 
 
 
 
 
 
Hongkong Land Holdings Limited 
 Consolidated Statement of Changes in Equity 
 for the six months ended 30th June 2022 
 
 
                                                                 Attributable to  Attributable 
                                                                    shareholders       to non- 
                      Share    Share   Revenue   Hedging  Exchange        of the   controlling     Total 
                    capital  premium  reserves  reserves  reserves       Company     interests    equity 
                       US$m     US$m      US$m      US$m      US$m          US$m          US$m      US$m 
 
 
Six months ended 
30th June 2022 
(unaudited) 
At 1st January 
 2022                 229.8     67.4  34,022.4    (20.2)     284.4      34,583.8          34.4  34,618.2 
Total 
 comprehensive 
 (expense)/income         -        -     291.8      23.9   (638.4)       (322.7)         (6.3)   (329.0) 
Dividends paid by 
 the Company (note 
 9)                       -        -   (364.5)         -         -       (364.5)             -   (364.5) 
Repurchase of 
 shares               (5.5)   (67.4)   (204.4)         -         -       (277.3)             -   (277.3) 
                    -------  -------  --------  --------  --------  ------------  ------------  -------- 
 
At 30th June 2022     224.3        -  33,745.3       3.7   (354.0)      33,619.3          28.1  33,647.4 
                    -------  -------  --------  --------  --------  ------------  ------------  -------- 
 
Six months ended 
30th June 2021 
(unaudited) 
At 1st January 
 2021                 233.4    257.3  34,881.2    (21.6)     358.8      35,709.1          29.4  35,738.5 
Total 
 comprehensive 
 (expense)/income         -        -   (864.9)     (0.5)    (56.8)       (922.2)           2.5   (919.7) 
Dividends paid by 
 the Company (note 
 9)                       -        -   (373.4)         -         -       (373.4)         (0.9)   (374.3) 
                    -------  -------  --------  --------  --------  ------------  ------------  -------- 
 
At 30th June 2021     233.4    257.3  33,642.9    (22.1)     302.0      34,413.5          31.0  34,444.5 
                    -------  -------  --------  --------  --------  ------------  ------------  -------- 
 
Year ended 31st 
December 2021 
At 1st January 
 2021                 233.4    257.3  34,881.2    (21.6)     358.8      35,709.1          29.4  35,738.5 
Total 
 comprehensive 
 (expense)/income         -        -   (346.4)       1.4    (74.4)       (419.4)           7.5   (411.9) 
Dividends paid by 
 the Company              -        -   (513.4)         -         -       (513.4)             -   (513.4) 
Dividends paid to 
 non-controlling 
 shareholders             -        -         -         -         -             -         (0.9)     (0.9) 
Unclaimed 
 dividends 
 forfeited                -        -       1.0         -         -           1.0             -       1.0 
Disposal of 
 subsidiaries             -        -         -         -         -             -         (1.6)     (1.6) 
Repurchase of 
 shares               (3.6)  (189.9)         -         -         -       (193.5)             -   (193.5) 
 
At 31st December 
 2021                 229.8     67.4  34,022.4    (20.2)     284.4      34,583.8          34.4  34,618.2 
                    -------  -------  --------  --------  --------  ------------  ------------  -------- 
 
 
 
 
Hongkong Land Holdings Limited 
 Consolidated Cash Flow Statement 
 for the six months ended 30th June 2022 
 
 
                                                              (unaudited) 
                                                         Six months ended          Year ended 
                                                                30th June       31st December 
                                                         2022        2021                2021 
                                                         US$m        US$m                US$m 
 
 
Operating activities 
 
 
Operating profit/(loss)                                 273.6     (838.9)             (429.5) 
Depreciation and amortisation                             8.9         7.7                16.3 
Change in fair value of investment 
 properties                                             120.5     1,248.8             1,375.5 
Gain on disposal of subsidiaries 
 and joint 
 ventures                                                   -           -              (37.6) 
Increase in properties for sale                       (358.8)     (353.7)             (991.6) 
Decrease in debtors                                     157.0        79.2                52.4 
(Decrease)/increase in creditors                      (143.3)       708.3               633.3 
Interest received                                        13.3        20.1                43.2 
Interest and other financing charges 
 paid                                                 (105.0)     (109.3)             (215.8) 
Tax paid                                               (42.9)      (79.3)             (156.7) 
Dividends from associates and joint 
 ventures                                                42.1        39.6               239.1 
 
 
Cash flows from operating activities                   (34.6)       722.5               528.6 
 
Investing activities 
 
 
Major renovations expenditure                          (41.5)      (50.1)              (98.9) 
Developments capital expenditure                            -       (1.5)               (1.5) 
Investments in and advances to 
 associates 
  and joint ventures                                  (310.6)      (34.5)             (397.1) 
Proceeds received for disposal 
 of subsidiaries                                            -           -                 5.7 
Proceeds received for disposal 
 of joint ventures                                          -           -                59.6 
 
 
Cash flows from investing activities                  (352.1)      (86.1)             (432.2) 
 
Financing activities 
 
 
Drawdown of borrowings                                1,087.7       593.8             1,840.0 
Repayment of borrowings                               (753.3)     (505.1)           (1,764.1) 
P rincipal elements of lease payments                   (1.9)       (1.4)               (3.3) 
Repurchase of shares                                  (278.9)           -             (191.9) 
Dividends paid by the Company                         (370.6)     (369.4)             (509.1) 
Dividends paid to non-controlling 
 shareholders                                               -       (0.9)               (0.9) 
 
 
Cash flows from financing activities                  (317.0)     (283.0)             (629.3) 
 
Net cash (outflow)/inflow                             (703.7)       353.4             (532.9) 
Cash and cash equivalents at beginning 
 of period                                            1,476.1     1,990.4             1,990.4 
Effect of exchange rate changes                        (30.2)         5.7                18.6 
 
Cash and cash equivalents at end 
 of period                                              742.2     2,349.5             1,476.1 
                                                     --------     -------        ------------ 
 
 
 

Hongkong Land Holdings Limited

Notes to Condensed Financial Statements

   1.   ACCOUNTING POLICIES AND BASIS OF PREPARATION 

The condensed financial statements have been prepared in accordance with IAS 34 'Interim Financial Reporting' and on a going concern basis. The condensed financial statements have not been audited or reviewed by the Group's auditors pursuant to the UK Auditing Practices Board guidance on the review of interim financial information.

There are no changes to the accounting policies as described in the 2021 annual financial statements and the Group has not early adopted any standard or amendments that have been issued but not yet effective. The more important amendments applicable to the Group is as follows:

Amendments to IAS 37 - Onerous Contracts - Cost of Fulfilling a Contract (effective from 1st January 2022)

The amendments clarifies that for the purpose of assessing whether a contract is onerous, the cost of fulfilling the contract includes both the incremental costs of fulfilling that contract and an allocation of other costs that relate directly to fulfilling contracts. The Group applied the amendment from 1st January 2022 and there is no significant impact on the Group's consolidated financial statements.

   2.   REVENUE 
 
                       Six months ended 30th June 
                                      2022   2021 
                                      US$m   US$m 
 
 
 Rental income                       455.6  469.8 
 Service income                       92.2   83.3 
 Sales of properties 
                                     -----  ----- 
 
 - recognised at a point in time     235.4   46.0 
 - recognised over time              110.8  286.7 
 
                                     346.2  332.7 
                                     -----  ----- 
 
                                     894.0  885.8 
                                     -----  ----- 
 By business 
 Investment Properties               521.4  541.9 
 Development Properties              372.6  343.9 
                                     -----  ----- 
 
                                     894.0  885.8 
                                     -----  ----- 
 
   3.   NET OPERATING COSTS 
 
                     Six months ended 30th June 
                                  2022     2021 
                                  US$m     US$m 
 
 
 Cost of sales                 (402.8)  (383.9) 
 Other income                      9.8      4.5 
 Administrative expenses       (106.9)   (97.0) 
 Asset impairment reversal           -      0.5 
                               ------- 
 
                               (499.9)  (475.9) 
                               -------  ------- 
 

4. OPERATING PROFIT/( LOSS)

 
                                           Six months ended 30th June 
                                                      2022       2021 
                                                      US$m       US$m 
 
 By business 
 Investment Properties                               412.8      431.7 
 Development Properties                               25.9       21.2 
 Corporate                                          (44.6)     (43.5) 
                                                   -------  --------- 
 
 Underlying business performance                     394.1      409.4 
 Change in fair value of investment properties     (120.5)  (1,248.8) 
 Asset impairment reversal                               -        0.5 
                                                   -------  --------- 
 
                                                     273.6    (838.9) 
                                                   -------  --------- 
 
   5.   SHARE OF RESULTS OF ASSOCIATES AND JOINT VENTURES 
 
                                       Six months ended 30th June 
                                                     2022    2021 
                                                     US$m    US$m 
 
 By business 
 Investment Properties 
 
 - operating profit                                  68.5    70.6 
 - net financing charges                           (17.6)  (16.3) 
 - tax                                              (8.7)   (8.7) 
 
 
 - net profit                                        42.2    45.6 
 
 Development Properties 
 
 - operating profit                                 196.8   120.8 
 - net financing charges                            (4.6)   (4.3) 
 - tax                                             (57.8)  (40.4) 
 - non-controlling interests                        (1.1)   (1.6) 
 
 
 - net profit                                       133.3    74.5 
                                                   ------  ------ 
 
 Underlying business performance                    175.5   120.1 
 Change in fair value of investment properties 
    (net of deferred tax)                          (21.4)   (4.4) 
 
                                                    154.1   115.7 
                                                   ------  ------ 
 
   6.   TAX 
 
                                           Six months ended 30th June 
                                                         2022    2021 
                                                         US$m    US$m 
 
 
 Tax charged to profit and loss is analysed 
  as follows: 
 
 Current tax                                           (40.5)  (62.9) 
 Deferred tax 
 - changes in fair value of investment 
  properties                                              6.8   (4.8) 
 - other temporary differences                         (15.3)     0.8 
                                                       ------  ------ 
 
                                                       (49.0)  (66.9) 
                                                       ------  ------ 
 
 Tax relating to components of other comprehensive 
  income or expense is analysed as follows: 
 
 Cash flow hedges                                       (3.0)     1.3 
                                                       ------  ------ 
 

Tax on profits has been calculated at the rates of taxation prevailing in the territories in which the Group operates.

Share of tax charge of associates and joint ventures of US$65.2 million (2021: US$52.7 million) is included in share of results of associates and joint ventures.

   7.   NON-TRADING ITEMS 

Non-trading items are separately identified to provide greater understanding of the Group's underlying business performance. Items classified as non-trading items include fair value gains or losses on revaluation of investment properties; gains and losses arising from the sale of businesses and investment properties; impairment of non-depreciable intangible assets; provisions for the closure of businesses; acquisition-related costs in business combinations; and other credits and charges of a non-recurring nature that require inclusion in order to provide additional insight into underlying business performance.

An analysis of non-trading items after interest, tax and non-controlling interests is set out below:

 
                                                    Six months ended 30th June 
                                                             20 22          2021 
                                                              US$m          US$m 
 
 
 Change in fair value of investment properties             (120.5)     (1,248.8) 
 Deferred tax on change in fair value of investment 
  properties                                                   6.8         (4.8) 
     Share of change in fair value of investment 
      properties of 
     associates and joint ventures (net of deferred 
      tax)                                                  (21.4)         (4.4) 
 Asset impairment reversal                                       -           0.5 
 Non-controlling interests                                     2.3         (1.8) 
 
                                                           (132.8)     (1,259.3) 
                                                           -------   ----------- 
 
 
   8.   EARNINGS/(LOSS) PER SHARE 

Earnings per share are calculated on profit attributable to shareholders of US$291.8 million (2021: loss of US$864.9 million) and on the weighted average number of 2,274.0 million (2021: 2,3 33 . 9 million) shares in issue during the period.

Earnings per share are additionally calculated based on underlying profit attributable to shareholders. A reconciliation of earnings is set out below:

 
                                                     Six months ended 30th June 
                                                  2022                      2021 
 
 
                                                       Earnings                   Earnings 
                                                      per share                  per share 
                                             US$m           USc        US$m            USc 
 
 
     Underlying profit attributable 
      to 
     shareholders                           424.6         18.67       394.4          16.90 
 Non-trading items (note 7)               (132.8)                 (1,259.3) 
 
 Profit/(loss) attributable 
  to shareholders                           291.8         12.83     (864.9)        (37.06) 
                                          -------                 --------- 
 
 
   9.   DIVIDS 
 
                                    Six months ended 30th June 
                                                   2022   2021 
                                                   US$m   US$m 
 
 
   Final dividend in respect of 2021 of USc 16 
    .00 
    (2020: USc16.00) per share                    364.5  373.4 
                                                  -----  ----- 
 

An interim dividend in respect of 20 22 of USc 6 .00 (2021: USc6.00) per share amounting to a total of US$134.6 million (2021: US$140. 0 million) is declared by the Board and will be accounted for as an appropriation of revenue reserves in the year ending 31st December 20 22 .

10. INVESTMENT PROPERTIES

 
                                                  Year ended 
                                                        31st 
                      Six months ended 30th June    December 
                                 2022       2021        2021 
                                 US$m       US$m        US$m 
 
 
 At beginning of period      28,600.2   30,083.3    30,083.3 
 Exchange differences         (232.7)     (45.9)     (155.7) 
 Additions                       31.1       26.1        56.4 
 Disposal of subsidiaries           -          -       (8.3) 
 Decrease in fair value       (120.5)  (1,248.8)   (1,375.5) 
                                                  ---------- 
 
 At end of period            28,278.1   28,814.7    28,600.2 
                             --------  ---------  ---------- 
 

11. ASSOCIATES AND JOINT VENTURES

 
                                                At 31st 
                               At 30th June    December 
                              2022     2021        2021 
                              US$m     US$m        US$m 
 
 
 By business 
 Investment Properties     4,870.3  4,907.3     5,025.9 
 Development Properties    4,703.7  4,083.3     4,489.4 
                                             ---------- 
 
                           9,574.0  8,990.6     9,515.3 
                           -------  -------  ---------- 
 

12. BORROWINGS

 
                                      At 30th June  At 31st December 
                                     2022     2021              2021 
                                     US$m     US$m              US$m 
 
 
 Current 
 
 
 Bank overdrafts                      4.5      3.4               3.4 
 Bank loans                         117.8     62.4              86.0 
 Current portion of long-term 
  borrowings 
 
   *    bank loans                  179.9    218.9             155.5 
 
   *    medium term notes            64.4    621.8             620.4 
 
 
                                    366.6    906.5             865.3 
 
 Long-term 
 
 
 Bank loans                       2,630.5  2,339.5           1,882.2 
 Medium term notes 
 
 - due 2022                             -     65.0                 - 
 - due 2023                         178.2    179.9             179.2 
 - due 2024                         397.8    411.0             406.8 
 - due 2025                         643.5    645.4             644.5 
 - due 2026                          38.3     38.6              38.6 
 - due 2027                         184.9    186.7             186.0 
 - due 2028                         181.4    183.2             182.5 
 - due 2029                         120.5    121.8             121.2 
 - due 2030                         697.3    697.9             697.7 
 - due 2031                         568.4     25.5             568.6 
 - due 2032                         139.2    140.6             140.0 
 - due 2033                          88.6     89.5              89.1 
 - due 203 4                         76.6     77.4              77.1 
 - due 203 5                        252.1    254.6             253.6 
 - due 2038                         105.8    109.5             109.0 
 - due 203 9                        106.8    110.5             109.9 
 - due 2040                          31.7     32.1              31.9 
 
 
                                  3,811.1  3,369.2           3,835.7 
 
 
                                  6,441.6  5,708.7           5,717.9 
                                  -------  -------  ---------------- 
 
                                  6,808.2  6,615.2           6,583.2 
                                  -------  -------  ---------------- 
 

13. FINANCIAL INSTRUMENTS

Financial instruments by category

The fair values of financial assets and financial liabilities, together with carrying amounts at 30th June 2022 and 31st December 2021 are as follows:

 
 
                                                                         Other 
                                                    Financial        financial 
                                 Fair value of         assets      liabilities      Total 
                                       hedging   at amortised     at amortised   carrying       Fair 
                                   instruments          costs            costs     amount      value 
                                          US$m           US$m             US$m       US$m       US$m 
 
 
     30th June 2022 
     Financial assets measured 
      at fair value 
 Derivative financial instruments         23.1              -                -       23.1       23.1 
                                        ------                  -------------- 
 
     Financial assets not measured 
      at fair 
         value 
 Debtors                                     -          253.9                -      253.9      253.9 
 Bank balances                               -          746.7                -      746.7      746.7 
                                        ------  -------------   --------------  ---------  --------- 
 
                                             -        1,000.6                -    1,000.6    1,000.6 
                                        ------  -------------   --------------  ---------  --------- 
 
     Financial liabilities measured 
      at fair 
         value 
 Derivative financial instruments        (0.1)              -                -      (0.1)      (0.1) 
                                        ------                  -------------- 
 
     Financial liabilities not 
      measured at 
         fair value 
 Borrowings                                  -              -        (6,808.2)  (6,808.2)  (6,603.0) 
     Trade and other payable 
      excluding 
     non-financial liabilities               -              -          (787.5)    (787.5)    (787.5) 
                                        ------  -------------   --------------  ---------  --------- 
 
                                             -              -        (7,595.7)  (7,595.7)  (7,390.5) 
                                        ------  -------------   --------------  ---------  --------- 
 
 
 
     31st December 2021 
     Financial assets measured 
      at fair value 
 Derivative financial instruments         22.4        -           -        22.4          22.4 
                                        ------            --------- 
 
     Financial assets not measured 
      at fair 
         value 
 Debtors                                     -    247.2           -       247.2         247.2 
 Bank balances                               -  1,479.5           -     1,479.5       1,479.5 
                                        ------  -------   ---------   ---------   ----------- 
 
                                             -  1,726.7           -     1,726.7       1,726.7 
                                        ------  -------   ---------   ---------   ----------- 
 
     Financial liabilities measured 
      at fair 
         value 
 Derivative financial instruments       (17.6)        -           -      (17.6)        (17.6) 
                                        ------  -------   ---------   ---------   ----------- 
 
     Financial liabilities not 
      measured at 
         fair value 
 Borrowings                                  -        -   (6,583.2)   (6,583.2)     (6,810.0) 
     Trade and other payable 
      excluding 
     non-financial liabilities               -        -     (948.2)     (948.2)       (948.2) 
                                        ------  -------   ---------   ---------   ----------- 
 
                                             -        -   (7,531.4)   (7,531.4)     (7,758.2) 
                                        ------  -------   ---------   ---------   ----------- 
 
 

Fair value estimation

(a) Financial instruments that are measured at fair value based on observable current market transactions

 
                                                  At 31st 
                                       At 30th   December 
                                     June 2022       2021 
                                          US$m       US$m 
 
 
 Assets 
 Derivative designated at fair 
  value 
 - through other comprehensive 
  income                                  22.1        9.9 
 - through profit and loss                 1.0       12.5 
                                   -----------  --------- 
 
                                          23.1       22.4 
                                   -----------  --------- 
 
 Liabilities 
 Derivative designated at fair 
  value 
 - through other comprehensive 
  income                                 (0.1)     (17.6) 
 
 

The fair values of derivative financial instruments are determined using rates quoted by the Group's bankers at the balance sheet date. The rates for interest rate swaps and forward foreign exchange contracts are calculated by reference to market interest rates and foreign exchange rates.

There were no changes in valuation techniques during the six months ended 30th June 20 22 and the year ended 31st December 2021.

(b) Financial instruments that are not measured at fair value

The fair values of current debtors, bank balances, current creditors, current borrowings and current lease liabilities are assumed to approximate their carrying amounts due to the short-term maturities of these assets and liabilities.

The fair values of long-term borrowings are based on market prices or are estimated using the expected future payments discounted at market interest rates. The fair values of non-current lease liabilities are estimated using the expected future payments discounted at market interest rates.

14. CAPITAL COMMITMENTS AND CONTINGENT LIABILITIES

Total capital commitments at 30th June 2022 and 31st December 2021 amounted to US$1,049.8 million and US$1,183.5 million, respectively.

Various Group companies are involved in litigation arising in the ordinary course of their respective businesses. Having reviewed outstanding claims and taking into account legal advice received, the Directors are of the opinion that adequate provisions have been made in the condensed financial statements.

15. RELATED PARTY TRANSACTIONS

The parent company of the Group is Jardine Strategic Limited ('JSL') and the ultimate parent company of the Group is Jardine Matheson Holdings Limited ('JMH'). Both JMH and JSL are incorporated in Bermuda.

In the normal course of business, the Group has entered into a variety of transactions with the subsidiaries, associates and joint ventures of JMH ('Jardine Matheson group members'). The more significant of these transactions during the six months ended 30th June 2022 are described below:

Management fee

The management fee payable by the Group, under an agreement entered into in 1995, to Jardine Matheson Limited ('JML') was US$2.1 million (2021: US$2.0 million), being 0.5% per annum of the Group's underlying profit in consideration for management consultancy services provided by JML, a wholly-owned subsidiary of JMH.

Property and other services

The Group rented properties to Jardine Matheson group members. Gross rents on such properties amounted to US$8.4 million (2021: US$9.5 million).

The Group provided project management services and property management services to Jardine Matheson group members amounting to US$1.3 million (2021: US$1.1 million).

Jardine Matheson group members provided property maintenance and other services to the Group in aggregate amounting to US$26.2 million (2021: US$22.8 million).

Hotel management services

Jardine Matheson group members provided hotel management services to the Group amounting to US$1.0 million (2021: US$1.2 million).

Outstanding balances with associates and joint ventures

Amounts of outstanding balances with associates and joint ventures are included in debtors and creditors as appropriate.

Hongkong Land Holdings Limited

Principal Risks and Uncertainties

The Board has overall responsibility for risk management and internal control. The following have been identified previously as the areas of principal risk and uncertainty facing the Company, and they remain unchanged:

   --    Economic Risk 
   --    Commercial Risk 
   --      Financial and Treasury Risk 
   --    Regulatory and Political Risk 
   --      Key Contracts Risk 
   --    Pandemic, Terrorism and Natural Disasters Risk 
   --    Cybersecurity Risk 
   --      People Risk 
   --      Investment, Strategic Transactions and Partnerships Risk 
   --      Environmental and Climate Risk 

For greater detail, please refer to pages 98 to 101 of the Company's Annual Report for 2021, a copy of which is available on the Company's website www.hkland.com.

Responsibility Statement

The Directors of the Company confirm to the best of their knowledge that:

(a) the condensed financial statements have been prepared in accordance with IAS 34; and

(b) the interim management report includes a fair review of all information required to be disclosed by the Disclosure Guidance and Transparency Rules 4.2.7 and 4.2.8 issued by the Financial Conduct Authority in the United Kingdom.

For and on behalf of the Board

Robert Wong

Craig Beattie

Directors

Dividend Information for Shareholders

The interim dividend of USc6.00 per share will be payable on 12th October 2022 to shareholders on the register of members at the close of business on 19th August 2022. The shares will be quoted ex-dividend on 18th August 2022, and the share registers will be closed from 22nd to 26th August 2022, inclusive.

Shareholders will receive their cash dividends in United States Dollars, except when elections are made for alternate currencies in the following circumstances.

Shareholders on the Jersey branch register

Shareholders registered on the Jersey branch register will have the option to elect for their dividends to be paid in Sterling. These shareholders may make new currency elections for the 2022 interim dividend by notifying the United Kingdom transfer agent in writing by 23rd September 2022. The Sterling equivalent of dividends declared in United States Dollars will be calculated by reference to a rate prevailing on 28th September 2022.

Shareholders holding their shares through CREST in the United Kingdom will receive their cash dividends in Sterling only as calculated above.

Shareholders on the Singapore branch register who hold their shares through T he Central Depository (Pte) Limited ('CDP')

Shareholders who are on CDP's Direct Crediting Service ('DCS')

Those shareholders who are on CDP's DCS will receive their cash dividends in Singapore Dollars unless they opt out of CDP Currency Conversion Service, through CDP, to receive United States Dollars.

Shareholders who are not on CDP's DCS

Those shareholders who are not on CDP's DCS will receive their cash dividends in United States Dollars unless they elect, through CDP, to receive Singapore Dollars.

Shareholders on the Singapore branch register who wish to deposit their shares into the CDP system by the dividend record date, being 19th August 2022, must submit the relevant documents to M & C Services Private Limited, the Singapore branch registrar, by no later than 5.00 p.m. (local time) on 18th August 2022.

About Hongkong Land Group

Hongkong Land is a major listed property investment, management and development group. Founded in 1889, Hongkong Land's business is built on excellence, integrity and partnership.

The Group owns and manages more than 850,000 sq. m. of prime office and luxury retail property in key Asian cities, principally Hong Kong, Singapore, Beijing and Jakarta. Its properties attract the world's foremost companies and luxury brands.

The Group's Central Hong Kong portfolio represents some 450,000 sq. m. of prime property. It has a further 165,000 sq. m. of prestigious office space in Singapore mainly held through joint ventures, four retail centres on the Chinese mainland, including a luxury retail centre at Wangfujing in Beijing, and a 50% interest in a leading office complex in Central Jakarta. The Group also has a number of high-quality residential, commercial and mixed-use projects under development in cities across China and Southeast Asia, including a 43% interest in a 1.1 million sq. m. mixed-use project in West Bund, Shanghai. Its subsidiary, MCL Land, is a well-established residential developer in Singapore.

Hongkong Land Holdings Limited is incorporated in Bermuda and has a primary listing on the London Stock Exchange, with secondary listings in Bermuda and Singapore. The Group's assets and investments are managed from Hong Kong by Hongkong Land Limited. Hongkong Land is a member of the Jardine Matheson Group.

- end -

For further information, please contact:

 
Hongkong Land Limited 
Mark Lam                  (852) 2842 8211 
Gary Leung                (852) 2842 8601 
 
Brunswick Group Limited 
Nan Dong                  (852) 9768 8379 
 

As permitted by the Disclosure Guidance and Transparency Rules of the Financial Conduct Authority in the United Kingdom, the Company will not be posting a printed version of the Half-Year Results announcement for the six months ended 30th June 2022 to shareholders. This Half-Year Results announcement will be made available on the Company's website, www.hkland.com, together with other Group announcements.

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IR DZGZNKRNGZZG

(END) Dow Jones Newswires

July 28, 2022 05:32 ET (09:32 GMT)

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