TIDMHKLD TIDMJAR TIDMJDS
RNS Number : 6641Q
Hongkong Land Hldgs Ltd
03 March 2016
To: Business Editor 3rd March 2016
For immediate release
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
2015 PRELIMINARY ANNOUNCEMENT OF RESULTS
Highlights
-- Sound result in 2015
-- Continued strong performance from commercial portfolio
-- Entry into Shanghai with prime mixed-use site
-- Stable asset values
"While trading profits from the Group's operations should remain
sound in 2016, a reduced contribution from residential developments
is expected to result in underlying earnings being lower."
Ben Keswick
Chairman
Results
Year ended 31st December
2015 2014 Change
US$m US$m %
Underlying profit attributable
to shareholders(*) 905 930 -3
Profit attributable to shareholders 2,012 1,327 +52
Shareholders' funds 28,685 27,548 +4
Net debt 2,341 2,657 -12
------------------------------------- ------ ------ ------
USc USc %
------------------------------------- ------ ------ ------
Underlying earnings per
share(*) 38.44 39.52 -3
Earnings per share 85.50 56.42 +52
Dividends per share 19.00 19.00 -
------------------------------------- ------ ------ ------
US$ US$ %
------------------------------------- ------ ------ ------
Net asset value per share 12.19 11.71 +4
------------------------------------- ------ ------ ------
* 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 1 to the financial
statements. Management considers this to be
a key measure which provides additional information
to enhance understanding of the Group's underlying
business performance.
-------------------------------------------------------------
The final dividend of USc13.00 per share will be payable on 11th
May 2016, subject to approval at the Annual General Meeting to be
held on 4th May 2016, to shareholders on the register of members at
the close of business on 18th March 2016.
HONGKONG LAND HOLDINGS LIMITED
PRELIMINARY ANNOUNCEMENT OF RESULTS
FOR THE YEAR ENDED 31ST DECEMBER 2015
OVERVIEW
Hongkong Land produced a sound performance in 2015, although
modestly lower than the record results achieved in the past two
years. Results from the Group's commercial portfolio continued to
be strong, despite the contribution from Singapore being lower in
US dollar terms. Earnings from the residential sector declined,
although an improvement was seen in mainland China and there was a
gain recognised on a redeveloped property in Hong Kong.
PERFORMANCE
Underlying profit attributable to shareholders was US$905
million, a 3% decrease from 2014. Taking into account the net
non-trading gains of US$1,107 million recorded principally on
property valuations of the Group's investment properties, the
profit attributable to shareholders for the year was US$2,012
million. This compares to US$1,327 million in 2014, which included
net valuation gains of US$397 million.
The net asset value per share at 31st December 2015 was
US$12.19, compared with US$11.71 at the end of 2014.
The Directors are recommending a final dividend of USc13.00 per
share, providing a total dividend for the year of USc19.00 per
share, unchanged from the previous year.
GROUP REVIEW
Commercial Property
In Hong Kong, demand saw some improvement against a background
of little additional supply of premium grade space. Vacancy in the
Group's Central office portfolio was 3.4% at the year end, down
from 4.2% at 30th June 2015. Rental reversions were marginally
positive, and the Group's average office rent was HK$101 per sq.
ft, slightly down from 2014 due to timing differences of leases.
The Group's retail portfolio remained fully occupied and positive
rent reversions continued. The average retail rent rose 3% to
HK$221 per sq. ft.
In Singapore, vacancy in the Group's office portfolio at the
year end rose to 3.0%, compared with 1.9% at the end of June. The
year end vacancy would, however, have been 1.0% if space already
committed under new leases had been taken into account.
In mainland China, construction of the Group's prestigious
retail complex in Beijing, WF CENTRAL, is progressing
satisfactorily. The project, which is located on a prime site at
Wangfujing, is now scheduled to open in the first half of 2017.
Residential Developments
As anticipated, the contribution from the Group's residential
projects was lower than in 2014.
In Hong Kong, while there was a US$63 million gain from the
redevelopment of a residential property owned by the Group, the
overall contribution declined due to the absence of Serenade sales
which had benefited the prior year's result.
In mainland China, the Group produced a good performance from
its wholly-owned and joint venture projects despite challenging
market conditions. Profits were higher than in 2014, when the
results had been reduced by US$38 million in provisions relating to
the Shenyang joint ventures. Revenue recognised during the year,
however, including the Group's attributable interest in joint
ventures, declined by 19%. The Group's attributable interest in
contracted sales for the full year were 26% higher at US$802
million in 2015, which included sales from a new project in the
Pudong District of Shanghai.
In 2015, the Group undertook two new developments. In July, the
Group acquired jointly with its existing partner, Longfor
Properties, two residential sites adjacent to the Bamboo Grove
joint venture project in Chongqing, thereby consolidating further
its market position in the area. In September, a 50% joint venture
was entered into to develop a project located in an established
area of Pudong, within Shanghai's inner-ring road. The project will
comprise residential and commercial components, with a total
developable area of approximately 227,000 sq. m.
In April, the Group disposed of its Park Life joint venture in
Shenyang.
In Singapore, at the Group's wholly-owned subsidiary MCL Land,
three projects were completed in 2015 including Ripple Bay in the
second half of the year. However, the contribution was lower than
in 2014 which benefited from significantly higher provision
writebacks.
In Indonesia, satisfactory progress continues to be made at the
49%-owned joint venture project, Nava Park, and the 40%-owned joint
venture project, Anandamaya Residences. Construction is also
progressing well in the Philippines at the Group's 40%-owned
182-unit luxury development, Two Roxas Triangle, in Manila.
Financing
The Group's financial position remained strong with net debt of
US$2.3 billion at 31st December 2015, down from US$2.7 billion at
the end of 2014. Gearing at the end of the year was 8%, compared
with 10% in the prior year.
PEOPLE
On behalf of the Board, I would like to thank all of our staff
for their ongoing dedication and commitment to our tenants and
customers and to the operations of the Group itself. Their drive
and professionalism provides a strong foundation for our continuing
success.
Y.K. Pang will step down as Chief Executive on 31st July 2016,
while remaining a director of the Group, to become deputy managing
director of Jardine Matheson. He will be succeeded by Robert Wong,
currently responsible for the Group's residential developments. In
addition, John Witt will step down as Chief Financial Officer on
31st March 2016 to take up the position of group finance director
of Jardine Matheson, and will be replaced on 28th April by Simon
Dixon, currently the finance director of Astra International. We
are grateful to Y.K. and John for their leadership and significant
contributions to the Group over the past years.
OUTLOOK
While trading profits from the Group's operations should remain
sound in 2016, a reduced contribution from residential developments
is expected to result in underlying earnings being lower.
Ben Keswick
Chairman
CHIEF EXECUTIVE'S REVIEW
Hongkong Land continued to perform well in 2015 with a continued
strong contribution from its commercial property portfolio. Despite
increased operating profits from the Group's residential projects
in China and Singapore when compared to the prior year, the results
reflected the absence of sales in Hong Kong and lower reversal of
writedowns in Singapore. Nevertheless, the Group remains well
positioned in its key markets in Greater China and Southeast Asia
and continues to seek new development opportunities.
STRATEGY
The Group's commercial portfolios in Hong Kong and Singapore
continue to be its most important investments, located in the heart
of these two key Asian financial centres. The location, quality and
scale of these assets strengthen Hongkong Land's competitive
position and prominent presence in the Region, while providing a
steady stream of earnings. These are the foundations of the Group's
stable financial strength that enable it to continue to grow its
portfolio in its core markets in Greater China and Southeast
Asia.
(MORE TO FOLLOW) Dow Jones Newswires
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The recurring source of earnings at the residential business
continues to stabilise as the scale of the mainland China
operations grows. The Group's share in the developable area of its
projects totals 5.3 million sq. m. across five cities in China,
including Shanghai, the latest addition to the portfolio. Of the
5.3 million sq. m., construction on only 1.4 million sq. m., or
27%, had been completed by the end of 2015. The projects are
well-positioned to provide future earnings from further completions
over the coming years. In Singapore, MCL Land, the Group's
wholly-owned residential developer, remains a core contributor to
earnings and maintains a steady pipeline of projects. Meanwhile,
the joint venture projects in Indonesia and the Philippines are
still at early stages of development, but will provide additional
sources of income as these projects mature in the coming years.
Hong Kong's Central Portfolio
In Hong Kong, the Central portfolio consists of 12 buildings
that form the heart of the financial district. These inter-linked
buildings, representing over 450,000 sq. m. of Grade A office and
luxury retail space, are firmly positioned as the pre-eminent
office, retail, restaurant and hotel destination in the city. They
continue to be managed as an integrated mixed-use development, and
are a unique offering in Hong Kong. The portfolio continues to
attract both prime office tenants and luxury retailers who demand
the highest quality and service. As a core financial and business
centre in Asia, Hong Kong's economic conditions are naturally
affected by the global environment. Rental rates and vacancy at the
Group's portfolio have, however, remained resilient in the face of
uncertain economic factors. This is mainly due to the scarcity of
supply of high quality space in the core business district.
The Group's retail portfolio, which is integrated with the
office buildings, is critical to the success of the Group's unique
mixed-use business model. The portfolio includes the most
prestigious global retail brands in over 54,000 sq. m. of prime
retail space, with a significant number of luxury brand flagship
stores. The restaurants across the portfolio, which have been
accorded a total of ten Michelin stars, are performing well and
attract customers to Central throughout the day and in the
evenings.
Commercial Property Investments in Asia
Outside Hong Kong, the Group has similarly established itself as
a leading provider of office and retail space over recent years. In
Singapore, Hongkong Land's attributable interests of 160,000 sq. m.
include some of the finest premium Grade A office space in the
market, principally in the Marina Bay Area. In Indonesia, Jakarta
Land, the Group's 50%-owned joint venture, is continuing to extend
its 135,000 sq. m. office development, with construction underway
on a 73,000 sq. m. fifth tower. The Group continues to look for
large scale opportunities to develop premium commercial buildings
in the leading cities of Greater China and Southeast Asia. An
example of this is Hongkong Land's WF CENTRAL project. This
development, scheduled for completion in the first half of 2017, is
located at a prime Wangfujing site in Beijing and will be developed
into a prestigious retail complex, including an exclusive Mandarin
Oriental hotel.
The performance of the Group's commercial portfolio remains
subject to market fluctuations driven by supply and demand as well
as macro-economic conditions. Nevertheless, the Group is committed
to uphold its reputation for quality and service in order to
continue to retain current tenants and attract new premium tenants
and customers.
Residential Developments
Based on the Group's experience and reputation, it has
established a strong and profitable residential trading business
focusing primarily on the premium market in Greater China and
Southeast Asia. While the capital invested in this sector is
significantly lower than the commercial business, the residential
projects enhance the Group's overall profits and returns on
capital.
Annual returns from residential developments fluctuate due to
the nature of the projects and the Group's accounting policy of
only recognising profits on sold units at completion. Demand is
also dependent on overall economic conditions, which can be
significantly affected by government policies. Ongoing land
acquisitions are necessary to continue to build this income stream
over the longer term.
REVIEW OF COMMERCIAL PROPERTY
Hong Kong
Sentiment in the Hong Kong office leasing market remained
positive in 2015. This was due to the continued scarcity in Grade A
office supply coupled with incremental demand, mainly from the
financial services sector. Consequently, the Group's vacancy
decreased to 3.4% at the end of 2015, compared to 5.4% at the end
of 2014, as it continued to focus on yield management. Vacancy for
the overall Central Grade A market was 1.2% at the end of 2015,
down from 3.7% in 2014. The Group's average office rent in 2015 was
HK$101 per sq. ft. While this was consistent with the second half
of 2014, it was marginally down from 2014's full-year average of
HK$102 per sq. ft. This decrease was due to timing differences of
leases becoming effective, as reversions turned marginally positive
in 2015, having been slightly negative in 2014. Financial
institutions, legal firms and accounting firms continue to be
occupants for 78% of the Group's total leasable area.
The Group's retail portfolio remained resilient in spite of the
relatively challenging conditions in the luxury retail sector in
Hong Kong. Demand for the Group's premium retail space in the
Central District of Hong Kong remained strong and the portfolio was
fully occupied. The average rent was HK$221 per sq. ft in 2015, up
from HK$214 per sq. ft in 2014, as rental reversions continued to
be positive overall.
The value of the Group's portfolio in Hong Kong at 31st December
2015, based on independent valuations, increased by 6% to US$23.4
billion when compared to the prior year due to a small reduction in
capitalisation rates used by the independent valuers for the office
portfolio.
Singapore
The office leasing market in Singapore was relatively stable in
2015. Vacancy in the Group's office portfolio was 3.0% at the year
end, an increase from 1.7% at the end of 2014 due to transitions in
the portfolio. If the effect of leases already committed but
commencing after 31st December 2015 had been taken into account,
the adjusted year end vacancy would have been 1.0%. This compares
to the overall vacancy across the entire Grade A CBD market of 5.0%
as at 31st December 2015, compared to 6.1% at the end of 2014. The
Group's average rent was S$9.5 per sq. ft, an increase of 3% from
S$9.2 per sq. ft in the previous year as rental reversions
continued to be modestly positive in 2015. Due to the financial
nature of the district in which the Group's portfolio is located,
financial institutions, legal firms and accounting firms occupy 83%
of the total leasable area. There is, however, an increasing demand
for Grade A space from other sectors.
Other Commercial Property Investments
In mainland China, the development of WF CENTRAL, the Group's
prestigious retail project located on a prime site in the heart of
Beijing, is making good progress. This unique development will be
an iconic lifestyle destination for shopping and dining in the
Capital for both local and international customers. The project is
scheduled to open in the first half of 2017. The complex will also
include an exclusive 74-room Mandarin Oriental hotel. In the CBD
Core Area of Beijing's Chaoyang District, planning continues at the
Group's 30%-owned proposed office development. This project will be
developed as a prime Grade A office building of some 120,000 sq.
m.
In Shanghai, following the signing of a framework agreement with
the Lujiazui Group in September 2015, further discussions are in
progress to finalise a joint venture project in the Qiantan area of
Pudong. With a developable area of some 200,000 sq. m., this prime
site project will comprise both office and retail components.
In One Central, Macau, occupancy remained high at 96% at the end
of 2015, unchanged from the previous year. The challenging market
conditions, however, resulted in a decrease in sales-based rental
income and revenues fell by 8%, with the decrease partially offset
by the significant increase in the Group's fixed rents over the
past two years.
In Jakarta, development of the fifth tower at the Group's
50%-owned joint venture, Jakarta Land, is progressing well. The
project is scheduled for completion in 2018. Occupancy across the
portfolio was 93% at the year end, a modest decline from 95% at the
end of 2014. Nonetheless, the average rent in 2015 was US$25.3 per
sq. m., an increase of 5% from US$24.0 per sq. m. in the prior
year.
In Cambodia, the Group's 30,000 sq. m. prime mixed-use complex
comprising retail and office components in the heart of the Phnom
Penh is scheduled for completion in late 2016.
Performance at the Group's other commercial investment
properties in Hanoi and Bermuda remained within expectation, while
Gaysorn Plaza in Bangkok continued to be adversely affected by
local market conditions.
REVIEW OF RESIDENTIAL PROPERTY
The contribution from the Group's residential property business
fell as anticipated. Despite the Group benefiting from an increase
in profits from mainland China, a solid performance from Singapore,
and a gain which arose from the redevelopment of a property in Hong
Kong, the uplift in results was more than offset by the absence of
residential sales in Hong Kong and reduced reversal of writedowns
at MCL Land in Singapore.
Hong Kong and Macau
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In Hong Kong, the contribution was lower than the previous year
as sales at the Group's 97-unit Serenade project were concluded in
2014. This decrease was, however, partially offset by the US$63
million gain recognised from the redevelopment of a residential
property. This property, which was previously classified as a
trading property, will now be maintained by the Group as a
long-term investment.
Similar to Hong Kong, the contribution from Macau also fell in
2015 as a result of the completion of sales in the prior year at
the Group's One Central joint venture development.
Mainland China
The Group's residential business in mainland China consists of
projects in Beijing, Chengdu, Chongqing, Shanghai and Shenyang.
These are predominantly long-term projects of different product
types that are being developed in phases over time.
While sentiment in the residential market continued to be
cautious, the contribution from the Group's China residential
projects increased over the prior year. This was in part due to the
2014 results being adversely affected by provisions of US$38
million made against the value of the Group's joint ventures in
Shenyang. The Group's attributable interest in revenue recognised,
including its subsidiaries and its share of joint ventures,
however, was 19% lower at US$505 million due to the timing of
completion of projects and general market sentiment.
In 2015, the Group's attributable interest in contracted sales
was US$802 million compared with US$635 million in the previous
year. This amount, however, includes sales from a new project in
Shanghai's Pudong District. On a like-for-like basis, the Group's
share of contracted sales was 2% higher than the prior year.
At 31st December 2015, the value of sold but unrecognised
contracted sales (inclusive of the new Shanghai project) at the
Group's wholly-owned and joint venture residential projects
amounted to US$821 million compared with US$533 million at the end
of 2014. Excluding the new project, the Group's share in sold but
unrecognised sales was US$663 million at the year end.
Chongqing, the largest city in western China, remains the
Group's most important residential market in the country. It
accounts for approximately 80% of the Group's total residential
investments in mainland China. These consist of two 100%-owned
projects, Yorkville South and the adjacent Yorkville North, and
four 50%-owned joint ventures, Bamboo Grove, Landmark Riverside,
Central Avenue and the Group's latest project adjacent to Bamboo
Grove. This new project was jointly acquired with the existing
partner, Longfor Properties, for some US$400 million in the second
half of the year. It occupies a site area of approximately 348,000
sq. m. and will further consolidate the Group's market position in
the city.
Both of the Group's wholly-owned projects in Chongqing,
Yorkville South and Yorkville North, are in relatively early stages
of development. Revenue recognised during the period totalled
US$236 million, and compares with US$318 million in 2014 due to
timing of completions. Yorkville South is a 39 hectare development
at Zhaomushan near the core of the Two-River New Area of Chongqing.
Construction of approximately 32% of the some 880,000 sq. m.
developable area has been completed. At the adjacent Yorkville
North, 19% of the developable area of 1.1 million sq. m. has been
built.
Of the Group's other joint venture projects in Chongqing, Bamboo
Grove is scheduled to be fully completed in 2018, while Landmark
Riverside and Central Avenue are both at earlier stages of
development. Hongkong Land's attributable interest in sales
recognised from Bamboo Grove and Landmark Riverside in 2015
totalled US$125 million compared to US$185 million in 2014, while
Central Avenue will see its first completions in 2016.
Bamboo Grove, the Group's initial joint venture with Longfor
Properties, occupies a 78 hectare site at Dazhulin in Chongqing.
The primarily residential site will be fully developed into some
1.5 million sq. m. of developable area upon full completion.
Currently, 87% has already been developed.
Landmark Riverside, the Group's joint venture with China
Merchants Property Development, is a 34 hectare site consisting of
1 million sq. m. of developable space at Dan Zishi in Chongqing.
Development on approximately 26% of the developable area has been
completed so far.
At Central Avenue, the Group's second joint venture with China
Merchants in Chongqing, development is underway on this 40 hectare
site next to the city's Central Park in the Yubei District. When
completed, the project will consist of approximately 1.1 million
sq. m. of developable area, of which only 12% is under
construction.
In Chengdu, construction continues at WE City, the Group's 50%
joint venture with KWG Property Holding Group. The 19 hectare site
provides developable area of approximately 900,000 sq. m., of which
around 26% has been completed. The Group's share of the first full
year of sales from WE City in 2015 was US$108 million, compared to
US$66 million in the prior year.
In Beijing, at the Group's 90%-owned Maple Place project, 22
units were sold and handed over during the year, compared with 16
units in the prior year. A further 39 units consisting of villas,
townhouses and apartments remain available for future sale and are
currently mostly leased. Meanwhile, at Central Park, Hongkong
Land's 40%-owned joint venture with Vantone Group, the Group
continues to hold an interest in 72 apartments which are being
operated as serviced apartments.
In Shanghai, the Group entered into a 50% joint venture with the
CIFI Group to develop a prime site in Pudong in the second half of
the year. The project, which is located within Shanghai's
inner-ring road, will consist of residential and commercial space
with developable area totalling 227,000 sq. m.
In Shenyang, the Group disposed of its Park Life joint venture
in April.
Singapore
Results from operations in 2015 increased marginally over the
previous year. MCL Land, the Group's wholly-owned subsidiary,
completed three projects during the year. These were the 32-unit
Palms@Sixth Avenue and the 679-unit Ripple Bay, both of which were
fully sold; and the 75-unit Hallmark Residences, which was 97%
sold. Provisions previously made on two of these developments in
2008 have largely been written back in 2014 and 2015, in line with
sales of these projects. At the 221-unit Marina Bay Suites
development, which was 33%-owned by Hongkong Land, all of the
remaining 18 units were sold during the year. In 2014, three units
were handed over to buyers.
Beyond 2015, MCL Land has three 100%-owned projects scheduled
for completion from 2016 to 2018, with one scheduled in each year.
The 738-unit J Gateway project, which is expected to complete in
2016, is 100% pre-sold. LakeVille, consisting of 699 units and
expecting to complete in 2017, was 79% pre-sold. The 1,327-unit Sol
Acres executive condominium development (previously known as Choa
Chu Kang Grove), which is scheduled for completion in 2018, was 22%
pre-sold.
In the first half of 2015, MCL Land acquired a residential site
located adjacent to its LakeVille project for US$250 million.
Planning has begun for the project and some 700 units are planned
for sale. The project, which comprises developable area of
approximately 537,000 sq. ft, is expected to complete in 2019.
Other Residential Developments
In Indonesia, development continues at the Group's two
residential projects. At Nava Park, the Group's 49%-owned joint
venture with PT Bumi Serpong Damai in southwest of central Jakarta,
70% of the 377 units which have been launched for sale were
pre-sold at the year end. This project comprises a mix of
residential towers, semi-detached houses and villas on a 67 hectare
site. The first and second phases are scheduled for completion in
2016 and in 2018, respectively. At Anandamaya Residences, 90% of
the 509 units had been pre-sold at the year end. This luxury
apartment project, which is a 40%-owned joint venture development
with affiliate Astra International, is expected to complete in
2018.
In the Philippines, construction continues at Two Roxas
Triangle, the Group's 40%-owned luxury condominium tower in
Manila's central Makati area. The 182-unit development, which is
expected to complete in 2019, was 91% pre-sold at the year end. At
Mandani Bay, the Group's 40%-owned joint venture in Cebu,
construction is due to start in the first half of 2016. This 20
hectare site will consist principally of residential units, with
some office and retail components, and will be developed in phases
over ten years.
OUTLOOK
The Group's solid performance from both its commercial and
residential businesses is expected to continue in 2016. In the
residential sector, a significant portion of profits will continue
to be derived from mainland China. Contributions from these
projects, notably the Group's wholly-owned projects in Chongqing,
are anticipated to be higher than in 2015 as larger phases are due
to complete during the year. However, the gain from the newly
redeveloped property in Hong Kong will not be repeated in 2016. In
addition, the provisions at MCL Land's projects have now been
largely written back as sales are almost complete. As a result,
overall earnings in 2016 are anticipated to be lower.
We continue to maintain our well-established, strong market
positions in Greater China and Southeast Asia, which enable us to
seize future opportunities when they arise.
We pride ourselves on delivering outstanding service to our
tenants and customers, and on upholding the highest standards of
quality. These are our core values to which we will continue to
adhere. These values are fundamental to our long-term success as
they enable us to withstand the test of challenging market
conditions and competition, thus maintaining and strengthening our
market positions.
Y.K. Pang
(MORE TO FOLLOW) Dow Jones Newswires
March 03, 2016 04:07 ET (09:07 GMT)
Chief Executive
Hongkong Land Holdings Limited
Consolidated Profit and Loss Account
for the year ended 31st December 2015
2015 2014
Underlying Non- Underlying Non-
business trading business trading
performance items Total performance items Total
US$m US$m US$m US$m US$m US$m
Revenue (note 2) 1,932.1 - 1,932.1 1,876.3 - 1,876.3
Net operating costs
(note 3) (938.3) - (938.3) (809.0) (1.1) (810.1)
------- -------
993.8 - 993.8 1,067.3 (1.1) 1,066.2
Change in fair
value of investment
properties (note
7) - 999.9 999.9 - 15.9 15.9
Asset impairment
reversals - 13.9 13.9 - 9.2 9.2
Operating profit
(note 4) 993.8 1,013.8 2,007.6 1,067.3 24.0 1,091.3
Net financing charges
- Financing charges (114.8) - (114.8) (113.5) - (113.5)
- Financing income 40.4 - 40.4 44.5 - 44.5
(74.4) - (74.4) (69.0) - (69.0)
Share of results
of associates and
joint ventures
(note 5)
- before change
in fair value
of investment
properties 140.5 0.2 140.7 122.8 0.1 122.9
* change in fair value of
investment properties - 69.0 69.0 - 392.2 392.2
140.5 69.2 209.7 122.8 392.3 515.1
------- ------- ------- ----------- ------- -------
Profit before tax 1,059.9 1,083.0 2,142.9 1,121.1 416.3 1,537.4
Tax (note 6) (150.8) 13.6 (137.2) (187.9) (7.8) (195.7)
------- ------- ------- ----------- ------- -------
Profit after tax 909.1 1,096.6 2,005.7 933.2 408.5 1,341.7
------- ------- ------- ----------- ------- -------
Attributable to:
Shareholders of
the Company 904.5 1,107.2 2,011.7 929.9 397.5 1,327.4
Non-controlling
interests 4.6 (10.6) (6.0) 3.3 11.0 14.3
------- ------- ------- ----------- ------- -------
909.1 1,096.6 2,005.7 933.2 408.5 1,341.7
------- ------- ------- ----------- ------- -------
USc USc USc USc
Earnings per share
(note 8) 38.44 85.50 39.52 56.42
Hongkong Land Holdings Limited
Consolidated Statement of Comprehensive Income
for the year ended 31st December 2015
2015 2014
US$m US$m
Profit for the year 2,005.7 1,341.7
Other comprehensive income/(expense)
Items that will not be
reclassified to profit
or loss:
Remeasurements of defined
benefit plans (3.4) (2.5)
Tax on items that will
not be reclassified 0.5 0.4
(2.9) (2.1)
Items that may be reclassified
subsequently to profit
or loss:
Net exchange translation
differences (193.4) (119.2)
Revaluation of other investments 8.3 (4.5)
Cash flow hedges
- net (loss)/gain arising
during the year (32.2) 21.1
- transfer to profit and
loss (2.5) (0.8)
(34.7) 20.3
Tax relating to items
that may be reclassified 5.8 (3.5)
Share of other comprehensive
expense of associates
and joint ventures (214.4) (106.5)
(428.4) (213.4)
Other comprehensive expense
for the year, net of tax (431.3) (215.5)
-------- -------
Total comprehensive income
for the year 1,574.4 1,126.2
-------- -------
Attributable to:
Shareholders of the Company 1,583.2 1,113.3
Non-controlling interests (8.8) 12.9
-------- -------
1,574.4 1,126.2
-------- -------
Hongkong Land Holdings Limited
Consolidated Balance Sheet
at 31st December 2015
2015 2014
US$m US$m
Net operating assets
Tangible fixed assets 34.0 24.2
Investment properties (note
10) 24,957.3 23,697.3
Associates and joint ventures 4,617.6 4,904.1
Other investments 61.3 53.0
Non-current debtors 41.2 54.9
Deferred tax assets 13.1 3.7
Pension assets 0.5 4.7
---------
Non-current assets 29,725.0 28,741.9
Properties for sale 2,713.9 2,923.1
Current debtors 355.7 292.2
Current tax assets 8.3 12.7
Bank balances 1,569.2 1,662.6
--------- ---------
Current assets 4,647.1 4,890.6
--------- ---------
Current creditors (1,483.8) (1,441.7)
Current borrowings (note 11) (168.9) (288.6)
Current tax liabilities (69.0) (101.9)
--------- ---------
Current liabilities (1,721.7) (1,832.2)
--------- ---------
Net current assets 2,925.4 3,058.4
Long-term borrowings (note 11) (3,740.8) (4,031.0)
Deferred tax liabilities (102.0) (110.8)
Pension liabilities (0.2) -
Non-current creditors (87.0) (60.1)
--------- ---------
28,720.4 27,598.4
---------
Total equity
Share capital 235.3 235.3
Share premium 370.0 370.0
Revenue and other reserves 28,079.7 26,942.8
--------- ---------
Shareholders' funds 28,685.0 27,548.1
Non-controlling interests 35.4 50.3
--------- ---------
28,720.4 27,598.4
---------
Hongkong Land Holdings Limited
Consolidated Statement of Changes in Equity
for the year ended 31st December 2015
Attributable to Attributable
Shareholders to non-
Share Share Revenue Hedging Exchange of the controlling Total
capital premium reserves reserves reserves Company interests equity
US$m US$m US$m US$m US$m US$m US$m US$m
2015
At 1st January 235.3 370.0 26,651.9 17.5 273.4 27,548.1 50.3 27,598.4
Total
comprehensive
income - - 2,017.1 (26.6) (407.3) 1,583.2 (8.8) 1,574.4
Dividends paid
by the Company - - (447.0) - - (447.0) - (447.0)
Dividends paid
to
non-controlling
shareholders - - - - - - (6.1) (6.1)
Unclaimed
dividends
forfeited - - 0.7 - - 0.7 - 0.7
At 31st December 235.3 370.0 28,222.7 (9.1) (133.9) 28,685.0 35.4 28,720.4
-------- -------- --------- --------- --------- -------- ------------ --------
2014
At 1st January 235.3 370.0 25,753.3 (0.4) 498.8 26,857.0 42.1 26,899.1
Total
comprehensive
income - - 1,320.8 17.9 (225.4) 1,113.3 12.9 1,126.2
Dividends paid
by the Company - - (423.5) - - (423.5) - (423.5)
Dividends paid
to
non-controlling
shareholders - - - - - - (4.7) (4.7)
Unclaimed
dividends
forfeited - - 1.3 - - 1.3 - 1.3
-------- -------- --------- --------- --------- -------- ------------ --------
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At 31st December 235.3 370.0 26,651.9 17.5 273.4 27,548.1 50.3 27,598.4
-------- -------- --------- --------- --------- -------- ------------ --------
The comprehensive income included in revenue reserves mainly
comprises profit attributable to shareholders of the Company of
US$2,011.7 million (2014: US$1,327.4 million) and a fair value gain
on other investments of US$8.3 million (2014: loss of US$4.5
million). The cumulative fair value gain on other investments
amounted to US$23.5 million (2014: US$15.2 million).
Hongkong Land Holdings Limited
Consolidated Cash Flow Statement
for the year ended 31st December 2015
2015 2014
US$m US$m
Operating activities
Operating profit 2,007.6 1,091.3
Depreciation 2.9 2.4
Reversal of writedowns on properties
for sale (21.4) (55.6)
Gain on reclassification of a
trading property to
investment property (63.2) -
Change in fair value of investment
properties (999.9) (15.9)
Asset impairment reversals (13.9) (9.2)
Decrease/(increase) in properties
for sale 45.2 (310.5)
Increase in debtors (13.3) (28.6)
Increase in creditors 88.0 88.2
Interest received 41.2 50.7
Interest and other financing
charges paid (118.9) (132.0)
Tax paid (174.8) (134.3)
Dividends from associates and
joint ventures 116.7 152.5
Cash flows from operating activities 896.2 699.0
Investing activities
Major renovations expenditure (57.8) (37.8)
Developments capital expenditure (152.3) (136.6)
Investments in and loans to associates
and joint ventures (255.8) (215.6)
Advances and repayments from
associates and
joint ventures 390.9 478.2
Payment of deposit for a joint
venture (70.9) -
Cash flows from investing activities (145.9) 88.2
Financing activities
Drawdown of borrowings 229.1 1,216.9
Repayment of borrowings (575.7) (1,307.5)
Dividends paid by the Company (444.9) (421.1)
Dividends paid to non-controlling
shareholders (4.4) (4.7)
Cash flows from financing activities (795.9) (516.4)
Effect of exchange rate changes (47.1) (14.5)
------- ---------
Net (decrease)/increase in cash
and cash equivalents (92.7) 256.3
Cash and cash equivalents at
1st January 1,658.6 1,402.3
------- ---------
Cash and cash equivalents at
31st December 1,565.9 1,658.6
------- ---------
Hongkong Land Holdings Limited
Notes
1. ACCOUNTING POLICIES AND BASIS OF PREPARATION
The financial information contained in this announcement has
been based on the audited results for the year ended 31st December
2015 which have been prepared in conformity with International
Financial Reporting Standards, including International Accounting
Standards and Interpretations adopted by the International
Accounting Standards Board.
The following amendments which are effective in the current
accounting year and relevant to the Group's operations are adopted
in 2015:
Amendments to IAS Defined Benefit Plans: Employee
19 Contributions
Annual Improvements 2010 - 2012 Cycle
to IFRSs 2011 - 2013 Cycle
The adoption of these amendments does not have a material impact
on the Group's accounting policies and disclosures.
Amendments to IAS 19 'Employee Benefits' clarify the accounting
for defined benefit plans that require employees or third parties
to contribute towards the cost of the benefits. The objective of
the amendments is to simplify the accounting for contributions that
are independent of the number of years of employee service, for
example, employee contributions that are calculated according to a
fixed percentage of salary.
Annual Improvements to IFRSs 2010 - 2012 Cycle and 2011 - 2013
Cycle comprise a number of amendments to IFRSs. The amendments
which are relevant to the Group's operations include the
followings:
Amendment to IFRS 2 'Share-based Payment' clarifies the
definition of a 'vesting condition' and separately defines
'performance condition' and 'service condition'.
Amendment to IFRS 3 'Business Combinations' clarifies that an
obligation to pay contingent consideration which meets the
definition of a financial instrument is classified as a financial
liability or as equity, on the basis of the definitions in IAS 32
'Financial Instruments: Presentation'. The standard is further
amended to clarify that all non-equity contingent consideration,
both financial and non-financial, is measured at fair value at each
reporting date, with changes in fair value recognised in profit and
loss. It also clarifies that IFRS 3 does not apply to the
accounting for the formation of any joint arrangement under IFRS
11.
Amendment to IFRS 8 'Operating Segments' requires disclosure of
the judgements made by management in aggregating operating
segments. This includes a description of the segments which have
been aggregated and the economic indicators which have been
assessed in determining that the aggregated segments share similar
economic characteristics.
Amendment to IAS 24 'Related Party Disclosures' requires the
reporting entity to disclose the fees paid for key management
personnel services from another entity ('the management entity').
The reporting entity is not required to disclose the compensation
paid by the management entity to the management entity's employees
or directors.
Amendment to IFRS 13 'Fair Value Measurement' clarifies that the
portfolio exception in IFRS 13, which allows an entity to measure
the fair value of a group of financial assets and financial
liabilities on a net basis, applies to all contracts within the
scope of IAS 39 or IFRS 9.
Amendment to IAS 40 'Investment Property' clarifies that IAS 40
and IFRS 3 are not mutually exclusive when distinguishing between
investment property and owner-occupied property and determining
whether the acquisition of an investment property is a business
combination.
2. REVENUE
2015 2014
US$m US$m
Rental income 851.1 842.5
Service income 126.1 123.9
Sales of properties 954.9 909.9
1,932.1 1,876.3
------- -------
Service income includes service and management charges and
hospitality service income.
Total contingent rents included in rental income amounted to
US$10.5 million (2014: US$14.4 million).
3. NET OPERATING COSTS
2015 2014
US$m US$m
Cost of sales (904.6) (718.6)
Gain on reclassification of a trading
property to
investment property 63.2 -
Other income 10.0 13.6
Administrative expenses (106.9) (105.1)
(938.3) (810.1)
------- -------
4. OPERATING PROFIT
2015 2014
US$m US$m
By business
Commercial Property 802.3 800.7
Residential Property 253.3 328.9
Corporate (61.8) (62.3)
993.8 1,067.3
Change in fair value of investment
properties 999.9 15.9
Asset impairment reversals 13.9 9.2
Expenses relating to transfer of
listing segment of
the Company's shares - (1.1)
2,007.6 1,091.3
------- -------
5. SHARE OF RESULTS OF ASSOCIATES AND JOINT VENTURES
2015 2014
US$m US$m
By business
Commercial Property
- operating profit 139.4 152.4
- net financing charges (38.0) (35.8)
- tax (16.6) (18.6)
- net profit 84.8 98.0
Residential Property
- operating profit 100.4 69.5
- net financing charges 5.2 2.0
- tax (41.6) (41.4)
- non-controlling interests (8.3) (5.3)
- net profit 55.7 24.8
------ ------
Underlying business performance 140.5 122.8
Change in fair value of investment
properties
(net of deferred tax)
- Commercial Property 63.2 390.8
- Residential Property 5.8 1.4
------ ------
69.0 392.2
Asset disposals 0.2 0.1
69.2 392.3
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209.7 515.1
------ ------
Results are shown after tax and non-controlling interests in the
associates and joint ventures.
6. TAX
Tax charged to profit and loss is analysed as follows:
2015 2014
US$m US$m
Current tax (148.0) (169.0)
Deferred tax
- changes in fair value of investment
properties 13.6 (7.8)
- other temporary differences (2.8) (18.9)
10.8 (26.7)
(137.2) (195.7)
------- -------
Tax relating to components of other comprehensive income is
analysed as follows:
2015 2014
US$m US$m
Remeasurements of defined benefit
plans 0.5 0.4
Cash flow hedges 5.8 (3.5)
----- -----
6.3 (3.1)
----- -----
Tax on profits has been calculated at the rates of taxation
prevailing in the territories in which the Group operates. The
Group has no tax payable in the United Kingdom (2014: nil).
Share of tax charge of associates and joint ventures of US$62.7
million (2014: US$86.0 million) is included in share of results of
associates and joint ventures.
7. NON-TRADING ITEMS
Non-trading items are separately identified to provide greater
understanding of the Group's underlying business performance. Items
classified as non-trading items include fair value gains or losses
on revaluation of investment properties; gains and losses arising
from the sale of businesses, investments and investment properties;
impairment of non-depreciable intangible assets and other
investments; provisions for the closure of businesses;
acquisition-related costs in business combinations; and other
credits and charges of a non-recurring nature that require
inclusion in order to provide additional insight into underlying
business performance.
An analysis of non-trading items after interest, tax and
non-controlling interests is set out below:
2015 2014
US$m US$m
Change in fair value of investment
properties 999.9 15.9
Deferred tax on change in fair
value of investment properties 13.6 (7.8)
Share of change in fair value of
investment properties of associates
and joint ventures (net of deferred
tax) 69.0 392.2
Asset impairment reversals 13.9 9.2
Share of asset disposals of associates
and joint ventures 0.2 0.1
Expenses relating to transfer of
listing segment of the Company's
shares - (1.1)
Non-controlling interests 10.6 (11.0)
1,107.2 397.5
------- ------
8. EARNINGS PER SHARE
Earnings per share are calculated on profit attributable to
shareholders of US$2,011.7 million (2014: US$1,327.4 million) and
on the weighted average number of 2,352.8 million (2014: 2,352.8
million) shares in issue during the year.
Earnings per share are additionally calculated based on
underlying profit attributable to shareholders. A reconciliation of
earnings is set out below:
2015 2014
------------------- -------------------
Earnings Earnings
per share per share
US$m USc US$m USc
Underlying profit attributable
to
shareholders 904.5 38.44 929.9 39.52
Non-trading items (note
7) 1,107.2 397.5
------- -------
Profit attributable
to shareholders 2,011.7 85.50 1,327.4 56.42
------- -------
9. DIVIDENDS
2015 2014
US$m US$m
Final dividend in respect of 2014
of USc13.00
(2013: USc12.00) per share 305.8 282.3
Interim dividend in respect of
2015 of USc6.00
(2014: USc6.00) per share 141.2 141.2
----- -----
447.0 423.5
----- -----
A final dividend in respect of 2015 of USc13.00 (2014: USc13.00)
per share amounting to a total of US$305.8 million (2014: US$305.8
million) is proposed by the Board. The dividend proposed will not
be accounted for until it has been approved at the Annual General
Meeting. The amount will be accounted for as an appropriation of
revenue reserves in the year ending 31st December 2016.
10. INVESTMENT PROPERTIES
2015 2014
US$m US$m
At 1st January 23,697.3 23,583.0
Exchange differences (58.7) (48.2)
Additions 318.8 146.6
Increase in fair value 999.9 15.9
At 31st December 24,957.3 23,697.3
-------- --------
11. BORROWINGS
2015 2014
US$m US$m
Current
Bank overdrafts 3.3 4.0
Current portion of long-term
borrowings
- bank loans 165.6 0.3
- notes - 284.3
168.9 288.6
Long-term
Bank loans 836.7 1,119.6
Medium term notes
- due 2017 35.8 39.3
- due 2019 103.1 103.1
- due 2020 303.7 311.3
- due 2021 69.8 68.8
- due 2022 605.0 601.1
- due 2023 179.4 179.1
- due 2024 407.7 408.5
- due 2025 653.2 654.4
- due 2026 38.6 38.6
- due 2027 186.2 185.9
- due 2028 79.7 79.5
- due 2029 50.9 50.8
- due 2030 103.2 103.2
- due 2031 25.4 25.4
- due 2032 30.3 30.3
- due 2040 32.1 32.1
2,904.1 2,911.4
3,740.8 4,031.0
3,909.7 4,319.6
------- -------
12. CAPITAL COMMITMENTS AND CONTINGENT LIABILITIES
Total capital commitments at 31st December 2015 amounted to
US$502.9 million (2014: US$652.6 million).
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.
13. RELATED PARTY TRANSACTIONS
The parent company of the Group is Jardine Strategic Holdings
Limited and the ultimate holding company is Jardine Matheson
Holdings Limited ('JMH'). Both companies 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 are described below:
Management fee
The management fee payable by the Group, under an agreement
entered into in 1995, to Jardine Matheson Limited ('JML') in 2015
was US$4.5 million (2014: US$4.7 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 in 2015 amounted to US$19.1 million
(2014: US$19.0 million).
The Group provided consultancy services to Jardine Matheson
group members in 2015 amounting to US$0.4 million (2014: US$0.4
million).
Jardine Matheson group members provided property construction,
maintenance and other services to the Group in 2015 in aggregate
amounting to US$50.7 million (2014: US$30.6 million).
Hotel management services
Jardine Matheson group members provided hotel management
services to the Group in 2015 amounted to US$2.8 million (2014:
US$3.2 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. The
amounts are not material.
Hongkong Land Holdings Limited
Principal Risks and Uncertainties
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