TIDMHKLD TIDMJDS TIDMJAR
RNS Number : 7133V
Hongkong Land Hldgs Ltd
26 July 2018
To: Business Editor 26th July 2018
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
HALF-YEARLY RESULTS FOR THE SIX MONTHSED 30TH JUNE 2018
Highlights
-- Underlying profit down 3% due to timing of sales completions in mainland China
-- Continued strong performance from investment properties
-- Five new projects secured
"The strong performance from the Group's investment properties
is expected to continue in the second half of the year, while the
contribution from development properties will benefit from higher
sales completions in mainland China."
Ben Keswick
Chairman
Results
(unaudited)
Six months ended
30th June
2018 2017 Change
US$m US$m %
restated
Underlying profit attributable
to shareholders(#) 455 470 -3
Profit attributable to
shareholders 1,124 3,114 -64
Shareholders' funds 37,286 36,842* +1
Net debt 3,125 2,549* +23
USc USc %
Underlying earnings per
share(#) 19.39 19.96 -3
Earnings per share 47.90 132.36 -64
Interim dividend per share 6.00 6.00 -
US$ US$ %
Net asset value per share 15.93 15.66* +2
# 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 8 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 2017
The accounts have been restated due to changes
in accounting policies upon adoption of IFRS
9 'Financial Instruments' and IFRS 15 'Revenue
from Contracts with Customers', as set out
in note 1 to the condensed financial statements.
The interim dividend of USc6.00 per share will be payable on
10th October 2018 to shareholders on the register of members at the
close of business on 17th August 2018.
HONGKONG LAND HOLDINGS LIMITED
HALF-YEARLY RESULTS FOR THE SIX MONTHSED 30TH JUNE 2018
OVERVIEW
Results from the Group's investment properties were higher, due
to positive rental reversions in Hong Kong, while profits from
development properties were lower, due to the timing of sales
completions in mainland China, partially offset by a higher
contribution from Singapore.
PERFORMANCE
Underlying profit attributable to shareholders during the first
half was US$455 million, compared with US$470 million in 2017.
Including the net gains of US$661 million arising on the
revaluation of the Group's investment properties, the profit
attributable to shareholders was US$1,124 million. This compares
with a profit of US$3,114 million in the first half of 2017, which
included net gains of US$2,608 million arising from
revaluations.
The net asset value per share at 30th June 2018 was US$15.93,
compared to US$15.66 at 31st December 2017.
The Directors have declared an unchanged interim dividend of
USc6.00 per share.
GROUP REVIEW
Investment Properties
Hong Kong's Central office leasing market continues to benefit
from tight supply. At the end of June, the Group's Central office
vacancy was 1.9%, compared with 1.4% at the end of 2017. Rental
reversions in the portfolio remained positive. The Group's average
office rent rose to HK$111 per sq. ft, compared to HK$106 per sq.
ft and HK$109 per sq. ft in the first and second halves of 2017,
respectively. The Group's Central retail portfolio effectively
remains fully occupied, with mildly positive rental reversions. The
average retail rent increased to HK$231 per sq. ft, compared with
HK$224 per sq. ft and HK$225 per sq. ft in the first and second
halves of 2017, respectively. The value of the Group's investment
property portfolio in Hong Kong increased by 2%, due to the impact
of higher open market rents.
In Singapore, mildly negative rental reversions continued,
although there are signs of a market recovery with reversions
expected to become positive later in the year. The average office
rent was S$9.1 per sq. ft, unchanged from both the first and second
halves of 2017. Vacancy in the Group's office portfolio remained
low at 0.1% at the end of June, compared with 0.3% at the end of
2017.
In mainland China, the retail component of WF CENTRAL, which
opened in late 2017, is performing in line with expectations. The
hotel component of the development, Mandarin Oriental Wangfujing,
is expected to open towards the end of the year.
Planning of the Group's 49%-owned, 440,000 sq. m. prime
commercial joint-venture development in the central business
district of Bangkok in Thailand, secured in late 2017, continues in
line with schedule. This development is expected to complete in
2025.
Development Properties
In mainland China, fewer sales completions in the period
resulted in a lower profit contribution, while the Group's
attributable interest in contracted sales was lower due to fewer
sales launches. The attributable interest in contracted sales in
mainland China was US$650 million in the first half of 2018,
compared to US$701 million and US$411 million in the first and
second halves of 2017, respectively.
The number of sales completions will increase in the second
half, particularly in relation to projects in Chongqing. At 30th
June 2018, the Group had US$1,507 million in sold but unrecognised
contracted sales, compared with US$1,032 million at the end of
2017.
During the period, the Group secured a commercial site with a
developable area of 235,000 sq. m. in Xinjiekou, Nanjing, a mature
business and retail district in the heart of the city.
In Singapore, the Group recognised profits on the completion of
the 1,327-unit Sol Acres executive condominium development. In
addition, it benefited from profit recognised on the percentage of
completion of sold units to date at the 710-unit Lake Grande
project, which is on schedule for completion in 2019. The 309-unit
Margaret Ville project was launched for sale in May 2018. In April
2018, the Group was successful in a conditional joint tender for
the en-bloc acquisition of Tulip Garden, a freehold residential
site, for redevelopment. The project will comprise 670 mid-rise
apartments with a developable area of 47,000 sq. m.
The Group's joint venture projects in the rest of Southeast Asia
are progressing on schedule. During the period, the Group entered
into agreements to develop three new projects in Bangkok, Jakarta
and Manila.
Financing
The Group's financial position remains strong with net debt of
US$3.1 billion at 30th June 2018, up from US$2.5 billion at the end
of 2017. Net gearing was 8%, compared with 7% at the end of the
year. Net debt is expected to continue to move modestly higher as
payments are made for already committed land purchases.
PEOPLE
Dr Richard Lee stepped down as a Director on 9th May 2018. We
would like to thank him for his significant contribution to the
Company over many years. We would also like to welcome Christina
Ong, who has joined the Board.
OUTLOOK
The strong performance from the Group's investment properties is
expected to continue in the second half of the year, while the
contribution from development properties will benefit from higher
sales completions in mainland China.
Ben Keswick
Chairman
Hongkong Land Holdings Limited
Consolidated Profit and Loss Account
(unaudited)
Six months ended 30th June Year ended 31st December
2018 2017 2017
Underlying Non- Underlying Non-
Underlying Non- business trading business trading
business trading performance items Total performance items Total
performance items Total US$m US$m US$m US$m US$m US$m
US$m US$m US$m restated restated restated restated restated restated
Revenue (note 2) 1,515.9 - 1,515.9 816.0 - 816.0 1,616.1 - 1,616.1
Net operating
costs
(note 3) (997.2) 8.3 (988.9) (363.6) 36.7 (326.9) (740.2) 51.4 (688.8)
Change in fair
value
of investment
properties - 665.4 665.4 - 2,693.6 2,693.6 - 4,677.9 4,677.9
Gain on
acquisition
of a subsidiary - - - - - - - 3.0 3.0
Operating profit
(note 4) 518.7 673.7 1,192.4 452.4 2,730.3 3,182.7 875.9 4,732.3 5,608.2
Financing charges (78.2) - (78.2) (57.4) - (57.4) (121.3) - (121.3)
Financing income 26.0 - 26.0 21.6 - 21.6 43.1 - 43.1
Net financing
charges (52.2) - (52.2) (35.8) - (35.8) (78.2) - (78.2)
Share of results
of associates
and
joint ventures
(note
5) 73.6 (1.4) 72.2 135.5 (76.4) 59.1 301.8 (53.1) 248.7
----------- ------- ------- ----------- -------- -------- ------------ --------- ---------
Profit before tax 540.1 672.3 1,212.4 552.1 2,653.9 3,206.0 1,099.5 4,679.2 5,778.7
Tax (note 6) (85.7) (2.0) (87.7) (81.6) 0.1 (81.5) (151.3) (1.8) (153.1)
----------- ------- ------- ----------- -------- -------- ------------ --------- ---------
Profit after tax 454.4 670.3 1,124.7 470.5 2,654.0 3,124.5 948.2 4,677.4 5,625.6
----------- ------- ------- ----------- -------- -------- ------------ --------- ---------
Attributable to:
Shareholders of
the
Company 455.1 669.3 1,124.4 469.6 2,644.6 3,114.2 946.8 4,667.1 5,613.9
Non-controlling
interests (0.7) 1.0 0.3 0.9 9.4 10.3 1.4 10.3 11.7
----------- ------- ------- ----------- -------- -------- ------------ --------- ---------
454.4 670.3 1,124.7 470.5 2,654.0 3,124.5 948.2 4,677.4 5,625.6
----------- ------- ------- ----------- -------- -------- ------------ --------- ---------
USc USc USc USc USc USc
Earnings per
share
(note 7) 19.39 47.90 19.96 132.36 40.24 238.61
Hongkong Land Holdings Limited
Consolidated Statement of Comprehensive Income
Year
(unaudited) ended
Six months ended 31st
30th June December
2018 2017 2017
US$m US$m US$m
restated restated
Profit for the period 1,124.7 3,124.5 5,625.6
Other comprehensive income/(expense)
Items that will not be
reclassified to
profit or loss:
Remeasurements of defined
benefit
plans - - 2.3
Tax on items that will
not be reclassified - - (0.4)
- - 1.9
Items that may be reclassified
subsequently to profit
or loss:
------- --------- --------
Net exchange translation
differences
* net (loss)/gain arising during the period (179.4) (23.0) 72.2
- transfer to profit
and loss - - 11.2
(179.4) (23.0) 83.4
Cash flow hedges
* net gain/(loss) arising during the period 4.0 (31.4) (27.8)
- transfer to profit
and loss (1.5) (1.6) (2.8)
2.5 (33.0) (30.6)
Tax relating to items
that may be
reclassified (0.4) 5.4 5.1
Share of other comprehensive
(expense)/
income of associates
and joint ventures (88.4) 126.1 237.2
(265.7) 75.5 295.1
Other comprehensive (expense)/income
for the period, net of
tax (265.7) 75.5 297.0
------- --------- --------
Total comprehensive income
for the
period 859.0 3,200.0 5,922.6
------- --------- --------
Attributable to:
Shareholders of the Company 859.8 3,187.6 5,905.7
Non-controlling interests (0.8) 12.4 16.9
------- --------- --------
859.0 3,200.0 5,922.6
------------------------------------------------ ------- --------- --------
Hongkong Land Holdings Limited
Consolidated Balance Sheet
(unaudited) At 31st
At 30th June December
2018 2017 2017
US$m US$m US$m
restated restated
Net operating assets
Tangible fixed assets 119.9 50.0 106.9
Investment properties
(note 10) 33,068.7 30,360.0 32,481.0
Associates and joint
ventures 5,810.0 4,684.7 5,578.8
Other investments 110.8 88.4 103.0
Non-current debtors 25.6 36.8 28.5
Deferred tax assets 17.2 11.0 15.5
Pension assets 0.1 - 0.1
Non-current assets 39,152.3 35,230.9 38,313.8
Properties for sale 2,508.1 1,859.1 2,398.4
Current debtors 568.6 563.3 495.1
Current tax assets 15.8 19.0 10.6
Bank balances 1,769.3 1,902.0 1,622.1
--------- --------- ---------
Current assets 4,861.8 4,343.4 4,526.2
--------- --------- ---------
Current creditors (1,486.0) (1,219.3) (1,507.1)
Current borrowings (note
11) (354.6) (364.4) (190.6)
Current tax liabilities (128.3) (116.9) (113.5)
--------- --------- ---------
Current liabilities (1,968.9) (1,700.6) (1,811.2)
--------- --------- ---------
Net current assets 2,892.9 2,642.8 2,715.0
Long-term borrowings
(note 11) (4,539.5) (3,419.4) (3,980.3)
Deferred tax liabilities (158.2) (126.5) (135.1)
Pension liabilities (0.5) (2.4) -
Non-current creditors (29.3) (29.1) (36.9)
--------- --------- ---------
37,317.7 34,296.3 36,876.5
--------- --------- ---------
Total equity
Share capital 234.0 235.3 235.3
Share premium 301.6 386.9 386.9
Revenue and other reserves 36,750.0 33,642.2 36,219.6
--------- --------- ---------
Shareholders' funds 37,285.6 34,264.4 36,841.8
Non-controlling interests 32.1 31.9 34.7
--------- --------- ---------
37,317.7 34,296.3 36,876.5
--------- --------- ---------
Hongkong Land Holdings Limited
Consolidated Statement of Changes in Equity
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
2018 (unaudited)
At 1st January 2018
* as previously reported 235.3 386.9 36,285.8 (7.7) (126.6) 36,773.7 34.7 36,808.4
* change in accounting policies (note 1) - - 81.2 - (13.1) 68.1 - 68.1
------- ------- -------- -------- -------- -------- ------------ --------
* as restated 235.3 386.9 36,367.0 (7.7) (139.7) 36,841.8 34.7 36,876.5
Total comprehensive income - - 1,124.4 4.9 (269.5) 859.8 (0.8) 859.0
Dividends paid by the Company
(note 9) - - (329.4) - - (329.4) - (329.4)
Dividends paid to non-controlling
shareholders - - - - - - (1.8) (1.8)
Share repurchase (1.3) (85.3) - - - (86.6) - (86.6)
------- ------- -------- -------- -------- -------- ------------ --------
At 30th June 2018 234.0 301.6 37,162.0 (2.8) (409.2) 37,285.6 32.1 37,317.7
------- ------- -------- -------- -------- -------- ------------ --------
Six months ended 30th June
2017 (unaudited)
At 1st January 2017
* as previously reported 235.3 386.9 31,093.6 18.6 (440.0) 31,294.4 20.0 31,314.4
* change in accounting policies (note 1) - - 104.1 - (15.9) 88.2 - 88.2
------- ------- -------- -------- -------- -------- ------------ --------
* as restated 235.3 386.9 31,197.7 18.6 (455.9) 31,382.6 20.0 31,402.6
Total comprehensive income - - 3,114.2 (30.0) 103.4 3,187.6 12.4 3,200.0
Dividends paid by the Company
(note 9) - - (305.8) - - (305.8) - (305.8)
Dividends paid to non-controlling
shareholders - - - - - - (0.5) (0.5)
------- ------- -------- -------- -------- -------- ------------ --------
At 30th June 2017 235.3 386.9 34,006.1 (11.4) (352.5) 34,264.4 31.9 34,296.3
------- ------- -------- -------- -------- -------- ------------ --------
Total comprehensive income for the six months ended 30th June 2018 included in
revenue reserves mainly comprises profit attributable to shareholders of the
Company of US$1,124.4 million (2017: US$3,114.2 million).
Hongkong Land Holdings Limited
Consolidated Statement of Changes in Equity (continued)
Attributable to Attributable
shareholders to non-
Share Share Revenue Hedging Exchange of the controlling Total
capital premium reserves reserves reserves Company interests equity
US$m US$m US$m US$m US$m US$m US$m US$m
Year ended 31st December
2017
At 1st January 2017
* as previously reported 235.3 386.9 31,093.6 18.6 (440.0) 31,294.4 20.0 31,314.4
* change in accounting policies (note 1) - - 104.1 - (15.9) 88.2 - 88.2
* as restated 235.3 386.9 31,197.7 18.6 (455.9) 31,382.6 20.0 31,402.6
Total comprehensive income - - 5,615.8 (26.3) 316.2 5,905.7 16.9 5,922.6
Dividends paid by the Company - - (447.0) - - (447.0) - (447.0)
Dividends paid to non-controlling
shareholders - - - - - - (2.2) (2.2)
Unclaimed dividends forfeited - - 0.5 - - 0.5 - 0.5
------- ------- -------- -------- -------- -------- ------------ --------
At 31st December 2017 235.3 386.9 36,367.0 (7.7) (139.7) 36,841.8 34.7 36,876.5
------- ------- -------- -------- -------- -------- ------------ --------
The comprehensive income for the year ended 31st December 2017 included in revenue
reserves comprises profit attributable to shareholders of the Company of US$5,613.9
million.
Hongkong Land Holdings Limited
Consolidated Cash Flow Statement
Year
(unaudited) ended
Six months ended 31st
30th June December
2017 2017
2018 US$m US$m
US$m restated restated
Operating activities
Operating profit 1,192.4 3,182.7 5,608.2
Depreciation 2.0 1.4 3.0
Change in fair value of
investment properties (665.4) (2,693.6) (4,677.9)
Change in fair value of
other investments (8.3) (36.7) (51.4)
Gain on acquisition of
a subsidiary - - (3.0)
(Increase)/decrease in
properties for sale (157.5) 79.0 (292.4)
(Increase)/decrease in
debtors (61.8) (43.2) 24.2
(Decrease)/increase in
creditors (45.1) 154.8 308.2
Interest received 20.8 18.2 41.9
Interest and other financing
charges paid (85.7) (58.0) (117.8)
Tax paid (55.3) (61.2) (137.2)
Dividends from associates
and joint ventures 36.5 29.3 94.4
Cash flows from operating
activities 172.6 572.7 800.2
Investing activities
Major renovations expenditure (42.8) (47.3) (108.2)
Developments capital expenditure (38.1) (52.5) (105.5)
Acquisition of a subsidiary - - (42.6)
Investments in and advances
to associates
and joint ventures (296.6) (31.5) (670.5)
Payment of deposit for
a joint venture - (43.5) (20.1)
Cash flows from investing
activities (377.5) (174.8) (946.9)
Financing activities
Drawdown of borrowings 1,131.8 74.1 825.1
Repayment of borrowings (333.8) (219.9) (586.1)
Dividends paid by the Company (326.4) (302.0) (443.4)
Dividends paid to non-controlling
shareholders (1.4) (0.5) (3.8)
Change in interests in subsidiaries - 15.0 15.0
Share repurchase (86.6) - -
Cash flows from financing
activities 383.6 (433.3) (193.2)
Net cash inflow/(outflow) 178.7 (35.4) (339.9)
Cash and cash equivalents
at beginning of
period 1,616.6 1,898.4 1,898.4
Effect of exchange rate
changes (27.6) 28.5 58.1
Cash and cash equivalents
at end of period 1,767.7 1,891.5 1,616.6
--------- --------- ---------
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 2017 annual financial statements except for the adoption of
IFRS 9 'Financial Instruments' and IFRS 15 'Revenue from Contracts
with Customers' from 1st January 2018 as set out below.
The other amendments, which are effective in 2018 and relevant
to the Group's operations, do not have a significant effect on the
Group's accounting policies.
The Group has not early adopted any standard, interpretation or
amendment that have been issued but not yet effective.
IFRS 9 'Financial Instruments'
Under IFRS 9, the gains and losses arising from changes in fair
value of the Group's investments in equity securities, previously
classified as available-for-sale, will be recognised in profit and
loss, instead of through other comprehensive income. Such fair
value gains or losses on revaluation of these investments are
classified as non-trading items, and do not have any impact on the
Group's underlying profit attributable to shareholders and
shareholders' funds. The new hedge accounting rules, which align
the accounting for hedging instruments closely with the Group's
risk management practices, has no significant impact to the
Group.
IFRS 15 'Revenue from Contracts with Customers'
IFRS 15 establishes a comprehensive framework for the
recognition of revenue. It replaces IAS 11 'Construction Contracts'
and IAS 18 'Revenue' which covers contracts for goods and services.
The core principle in the framework is that revenue is recognised
when control of a good or service transfers to a customer. The new
standard mainly changes the Group's revenue recognition on certain
property sales, from completion method to percentage of completion
method. This will lead to earlier recognition of revenue when
compared to the current completion method.
Changes to accounting policies on adoption of IFRS 9 and IFRS 15
have been applied retrospectively and the comparative financial
statements have been restated.
The effects of adopting IFRS 9 and IFRS 15
(a) On the consolidated profit and loss account for the six
months ended 30th June 2017:
Increase/(decrease) in
profit upon adopting
IFRS IFRS
9 15
US$m US$m
Revenue - (480.7)
Net operating costs 36.7 422.8
Share of results of associates
and joint ventures - 0.2
Tax - 9.9
----- -------
Profit attributable to shareholders
of the Company* 36.7 (47.8)
----- -------
* Further analysed as:
Underlying profit attributable
to shareholders - (47.8)
Non-trading items 36.7 -
----- -------
Profit attributable to shareholders 36.7 (47.8)
----- -------
Underlying earnings per share
(USc) - (2.03)
----- -------
Earnings per share (USc) 1.56 (2.03)
----- -------
(b) On the consolidated statement of comprehensive income for
the six months ended 30th June 2017:
Increase/(decrease) in
total comprehensive
income upon adopting
IFRS IFRS
9 15
US$m US$m
Profit for the period 36.7 (47.8)
Other comprehensive income
Items that may be reclassified
subsequently to
profit or loss:
Net exchange translation differences
- net gain arising during
the period - 2.1
Revaluation of other investments
at fair value
through other comprehensive
income (36.7) -
Share of other comprehensive
income of
associates and joint ventures - 0.4
Other comprehensive income
for the period,
net of tax (36.7) 2.5
------ ------
Total comprehensive income
for the period attributable
to shareholders of the Company - (45.3)
------ ------
(c) On the consolidated balance sheet at 1st January
Increase/(decrease) upon adopting
IFRS 9 IFRS 15 Total
2018 2017 2018 2017 2018 2017
US$m US$m US$m US$m US$m US$m
Assets
Associates and
joint
ventures - - 28.0 24.7 28.0 24.7
Properties for
sale - - (136.2) (328.2) (136.2) (328.2)
Current debtors - - (3.3) (21.1) (3.3) (21.1)
Equity and liabilities
Revenue and
other reserves - - 68.1 88.2 68.1 88.2
Deferred tax
liabilities - - 8.2 13.1 8.2 13.1
Current creditors - - (187.8) (425.9) (187.8) (425.9)
----- ----- ------- ------- ------- -------
(d) Changes in principal accounting policies on adoption of IFRS
9 and IFRS 15
Investments
The Group's equity investments are measured at fair value
through profit and loss, unless management has elected to recognise
the fair value gains and losses through other comprehensive income.
For equity investments fair value through other comprehensive
income, there is no subsequent reclassification of the fair value
gains and losses to profit and loss upon its derecognition.
All purchases and sales of investments are recognised on the
trade date, which is the date that the Group commits to purchase or
sell the investments.
Debtors
Debtors, excluding derivative financial instruments, are
measured at amortised cost except where the effect of discounting
would be immaterial. For trade debtors, the Group applied the
simplified approach permitted by IFRS 9, which requires expected
lifetime losses to be recognised from initial recognition of the
debtors. The carrying amount of the asset is reduced through the
use of an allowance account and the amount of the loss is
recognised in arriving at operating profit. When a debtor is
uncollectible, it is written off against the allowance account.
Subsequent recoveries of amount previously written off are credited
to profit and loss.
Debtors with maturities greater than 12 months after the balance
sheet date are classified under non-current assets.
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 and on equity investments
which are fair value through profit and loss; 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.
Revenue recognition
Revenue is measured at the fair value of the consideration
received and receivable and represents amounts receivable for goods
and services provided in the normal course of business, net of
discounts and sales related taxes.
(i) Revenue from properties for sale is recognised when or as
the control of the asset is transferred to the customer. Depending
on the terms of the contract and the laws that apply to the
contract, control of the asset may transfer over time or at a point
in time. Control of the asset is transferred over time if the
Group's performance:
-- provides all of the benefits received and consumed simultaneously by the customer; or
-- creates and enhances an asset that the customer controls as the Group performs; or
-- does not create an asset with an alternative use to the Group
and the Group has an enforceable right to payment for performance
completed to date.
If control of the asset transfers over time, revenue is
recognised over the period of the contract by reference to the
progress towards complete satisfaction of that performance
obligation. Otherwise, revenue is recognised at a point in time
when the customer obtains control of the asset.
The progress towards complete satisfaction of the performance
obligation is measured based on the Group's efforts or inputs to
the satisfaction of the performance obligation, by reference to the
contract costs incurred up to the end of reporting period as a
percentage of total estimated costs for each contract.
For property development and sales contract for which the
control of the property is transferred at a point in time, revenue
is recognised when the customer obtains the physical possession or
the legal title of the completed property and the Group has present
right to payment and the collection of the consideration is
probable.
In determining the transaction price, the Group adjusts the
promised amount of consideration for the effect of a financing
component if it is significant.
(ii) Receipts under operating leases are accounted for an
accrual basis over the lease terms.
(iii) Revenue from rendering of services is recognised when
services are performed, provided that the amount can be measured
reliably.
(iv) Interest income from a financial asset is recognised on a
time-proportion basis using the effective interest method.
(v) Dividend income is recognised when the right to receive
payment is established.
2. REVENUE
Six months ended 30th June
2018 2017
US$m US$m
Rental income 484.1 445.5
Service income 76.4 67.3
Sales of properties 955.4 303.2
------- -----
1,515.9 816.0
------- -----
Service income includes service and management charges and
hospitality service income.
3. NET OPERATING COSTS
Six months ended 30th June
2018 2017
US$m US$m
Cost of sales (926.2) (306.9)
Other income 16.6 42.8
Administrative expenses (79.3) (62.8)
------- -------
(988.9) (326.9)
------- -------
4. OPERATING PROFIT
Six months ended 30th June
2018 2017
US$m US$m
By business
Investment Properties 456.6 433.5
Development Properties 96.0 52.5
Corporate (33.9) (33.6)
------- -------
Underlying business performance 518.7 452.4
Change in fair value of investment
properties 665.4 2,693.6
Change in fair value of other
investments 8.3 36.7
------- -------
1,192.4 3,182.7
------- -------
5. SHARE OF RESULTS OF ASSOCIATES AND JOINT VENTURES
Six months ended 30th June
2018 2017
US$m US$m
By business
Investment Properties
- operating profit 72.9 69.9
- net financing income (21.4) (17.8)
- tax (8.6) (8.5)
- net profit 42.9 43.6
Development Properties
- operating profit 52.2 197.8
- net financing income 5.6 3.7
- tax (24.7) (106.5)
- non-controlling interests (2.4) (3.1)
- net profit 30.7 91.9
------ -------
Underlying business performance 73.6 135.5
Change in fair value of investment
properties
(net of deferred tax) (1.4) (76.4)
72.2 59.1
------ -------
6. TAX
Six months ended 30th June
2018 2017
US$m US$m
Tax charged to profit and loss
is analysed as follows:
Current tax (65.4) (87.7)
Deferred tax
- changes in fair value of investment
properties (2.0) 0.1
- other temporary differences (20.3) 6.1
------ ------
(87.7) (81.5)
------ ------
Tax relating to components of
other comprehensive income is
analysed as follows:
Cash flow hedges (0.4) 5.4
------ ------
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$36.7
million (2017: US$91.3 million) is included in share of results of
associates and joint ventures.
7. EARNINGS PER SHARE
Earnings per share are calculated on profit attributable to
shareholders of US$1,124.4 million (2017: US$3,114.2 million) and
on the weighted average number of 2,347.2 million (2017: 2,352.8
million) shares in issue during the period.
Earnings per share are additionally calculated based on
underlying profit attributable to shareholders. A reconciliation of
earnings is set out below:
Six months ended 30th
June
2018 2017
Earnings Earnings
per share per share
US$m USc US$m USc
Underlying profit attributable
to shareholders 455.1 19.39 469.6 19.96
Non-trading items (note
8) 669.3 2,644.6
Profit attributable
to shareholders 1,124.4 47.90 3,114.2 132.36
------- -------
8. NON-TRADING ITEMS
Non-trading items are separately identified to provide greater
understanding of the Group's underlying business performance. Items
classified as non-trading items include fair value gains or losses
on revaluation of investment properties and on equity investments
which are fair value through profit and loss; gains and losses
arising from the sale of businesses, investments and investment
properties; impairment of non-depreciable intangible assets and
other investments; provisions for the closure of businesses;
acquisition-related costs in business combinations; and other
credits and charges of a non-recurring nature that require
inclusion in order to provide additional insight into underlying
business performance.
An analysis of non-trading items is set out below:
Six months ended 30th June
2018 2017
US$m US$m
Change in fair value of investment
properties 665.4 2,693.6
Deferred tax on change in fair
value of investment properties (2.0) 0.1
Share of change in fair value of
investment properties of
associates and joint ventures (net
of deferred tax) (1.4) (76.4)
Change in fair value of other investments 8.3 36.7
Non-controlling interests (1.0) (9.4)
669.3 2,644.6
----- -------
9. DIVIDS
Six months ended 30th June
2018 2017
US$m US$m
Final dividend in respect of 2017
of USc14.00
(2016: USc13.00) per share 329.4 305.8
----- -----
An interim dividend in respect of 2018 of USc6.00 (2017:
USc6.00) per share amounting to a total of US$140.4 million (2017:
US$141.2 million) is declared by the Board and will be accounted
for as an appropriation of revenue reserves in the year ending 31st
December 2018.
10. INVESTMENT PROPERTIES
Year
ended
31st
Six months ended 30th June December
2018 2017 2017
US$m US$m US$m
Net book value at beginning
of period 32,481.0 27,712.3 27,712.3
Exchange differences (145.2) (127.1) (123.1)
Additions 67.5 81.2 213.9
Increase in fair value 665.4 2,693.6 4,677.9
---------
Net book value at end of
period 33,068.7 30,360.0 32,481.0
-------- -------- ---------
11. BORROWINGS
At 31st
At 30th June December
2018 2017 2017
US$m US$m US$m
Current
Bank overdrafts 1.6 10.5 5.5
Short-term borrowings 235.2 - -
Current portion of long-term
borrowings
* bank loans 117.8 317.3 5.0
* medium term notes - 36.6 180.1
354.6 364.4 190.6
Long-term
Bank loans 1,708.2 557.9 1,127.0
Medium term notes
- due 2019 101.9 102.4 102.3
- due 2020 301.6 304.1 306.0
- due 2021 64.6 68.0 66.4
- due 2022 599.6 608.5 605.2
- due 2023 177.5 178.3 178.2
- due 2024 396.3 406.2 402.7
- due 2025 649.3 650.9 650.2
- due 2026 38.2 38.4 38.3
- due 2027 184.2 185.0 184.9
- due 2028 78.9 79.2 79.2
- due 2029 50.3 50.6 50.5
- due 2030 102.0 102.5 102.3
- due 2031 25.2 25.3 25.2
- due 2032 30.0 30.2 30.1
- due 2040 31.7 31.9 31.8
2,831.3 2,861.5 2,853.3
4,539.5 3,419.4 3,980.3
------- ------- ---------
4,894.1 3,783.8 4,170.9
------- ------- ---------
12. FINANCIAL INSTRUMENTS
Financial instruments by category
The fair values of financial assets and financial liabilities,
together with carrying amounts at 30th June 2018 and 31st December
2017 are as follows:
Fair
value Financial Other
Fair value of through assets financial Total
hedging profit at amortised liabilities carrying Fair
instruments and loss cost US$m amount value
US$m US$m US$m US$m US$m
30th June 2018
Financial assets
measured at fair
value
Other investments
* equity investments - 110.8 - - 110.8 110.8
Derivative financial
instruments 10.6 - - - 10.6 10.6
------ --------- ------------- ------------- --------- ---------
10.6 110.8 - - 121.4 121.4
------ -------------
Financial assets
not measured at
fair value
Debtors - - 335.3 - 335.3 335.3
Bank balances - - 1,769.3 - 1,769.3 1,769.3
------ --------- ------------- --------- ---------
- - 2,104.6 - 2,104.6 2,104.6
------ --------- ------------- ------------- --------- ---------
Financial liabilities
measured at fair
value
Derivative financial
instruments (18.4) - - - (18.4) (18.4)
------ --------- ------------- ------------- --------- ---------
Financial liabilities
not measured at
fair value
Borrowings - - - (4,894.1) (4,894.1) (4,942.4)
Trade and other
payable excluding
non-financial liabilities - - - (671.0) (671.0) (671.0)
- - - (5,565.1) (5,565.1) (5,613.4)
------ --------- ------------- ------------- --------- ---------
Financial instruments by category
Fair Financial
value assets Other
Fair value of through at financial Total
hedging profit amortised liabilities carrying Fair
instruments and loss cost US$m amount value
US$m US$m US$m US$m US$m
31st December 2017
Financial assets
measured at fair
value
Other investments
* equity investments - 103.0 - - 103.0 103.0
Derivative financial
instruments 14.5 - - - 14.5 14.5
------ --------- ---------- ------------- --------- ---------
14.5 103.0 - - 117.5 117.5
------ -------------
Financial assets
not measured at
fair value
Debtors - - 217.9 - 217.9 217.9
Bank balances - - 1,622.1 - 1,622.1 1,622.1
------ --------- ---------- --------- ---------
- - 1,840.0 - 1,840.0 1,840.0
------ --------- ---------- ------------- --------- ---------
Financial liabilities
measured at fair
value
Derivative financial
instruments (16.3) - - - (16.3) (16.3)
------ --------- ---------- ------------- --------- ---------
Financial liabilities
not measured at
fair value (4,170.9) (4,170.9) (4,292.7)
Trade and other
payable excluding
non-financial liabilities - - - (667.9) (667.9) (667.9)
- - - (4,838.8) (4,838.8) (4,960.6)
------ --------- ---------- ------------- --------- ---------
Fair value estimation
(a) Financial instruments that are measured at fair value
For financial instruments that are measured at fair value in the
balance sheet, the corresponding fair value measurements are
disclosed by level of the following fair value measurement
hierarchy:
(i) Quoted prices (unadjusted) in active markets for identical
assets or liabilities ('quoted prices in active markets')
The fair values of listed investments are based on quoted prices
in active markets at the balance sheet date. The quoted market
price used for listed investments held by the Group is the current
bid price.
(ii) Inputs other than quoted prices in active markets that are
observable for the asset or liability, either directly or
indirectly ('observable current market transactions')
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 2018 and the year ended 31st December
2017.
The table below analyses financial instruments carried at fair
value at 30th June 2018 and 31st December 2017, by the levels in
the fair value measurement hierarchy:
Observable
Quoted prices current
in active market
markets transactions Total
US$m US$m US$m
30th June 2018
Assets
Other investments
- equity investments 110.8 - 110.8
Derivative financial instruments
at fair value
- through other comprehensive
income - 8.3 8.3
- through profit and loss - 2.3 2.3
------------- ------------- ------
110.8 10.6 121.4
------------- ------------- ------
Liabilities
Derivative financial instruments
at fair value
- through other comprehensive
income - (4.2) (4.2)
- through profit and loss - (14.2) (14.2)
------------- ------------- ------
- (18.4) (18.4)
31st December 2017
Assets
Other investments
- equity investments 103.0 - 103.0
Derivative financial instruments
at fair value
- through other comprehensive
income - 4.8 4.8
- through profit and loss - 9.7 9.7
------------- ------------- ------
103.0 14.5 117.5
------------- ------------- ------
Liabilities
Derivative financial instruments
at fair value
* through other comprehensive income - (7.7) (7.7)
- through profit and loss - (8.6) (8.6)
- (16.3) (16.3)
------------- ------------- ------
There were no transfers among the two categories during the six
months ended 30th June 2018 and the year ended 31st December
2017.
(b) Financial instruments that are not measured at fair
value
The fair values of current debtors, bank balances, current
creditors and current borrowings 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.
13. CAPITAL COMMITMENTS AND CONTINGENT LIABILITIES
Total capital commitments at 30th June 2018 and 31st December
2017 amounted to US$1,350.1 million and US$1,365.6 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.
14. 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 2018
was US$2.3 million (2017: US$2.6 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 2018 amounted to US$11.5 million
(2017: US$10.3 million).
Jardine Matheson group members provided property maintenance and
other services to the Group in 2018 in aggregate amounting to
US$25.6 million (2017: US$22.2 million).
Hotel management services
Jardine Matheson group members provided hotel management
services to the Group in 2018 amounting to US$1.9 million (2017:
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. The
amounts are not material.
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 and Financial Risk
-- Commercial Risk
-- Regulatory and Political Risk
-- Terrorism, Pandemic and Natural Disasters
For greater detail, please refer to page 78 of the Company's
Annual Report for 2017, 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
Simon Dixon
Directors
The interim dividend of USc6.00 per share will
be payable on 10th October 2018 to shareholders
on the register of members at the close of
business on 17th August 2018. The shares will
be quoted ex-dividend on the Singapore Exchange
and the London Stock Exchange on 15th and 16th
August 2018, respectively. The share registers
will be closed from 20th to 24th August 2018,
inclusive.
Shareholders will receive their cash dividends
in United States Dollars, unless they are registered
on the Jersey branch register, in which case
they will have the option to elect for their
dividends to be paid in Sterling. These shareholders
may make new currency elections for the 2018
interim dividend by notifying the United Kingdom
transfer agent in writing by 21st September
2018. The Sterling equivalent of dividends
declared in United States Dollars will be calculated
by reference to a rate prevailing on 26th September
2018.
Shareholders holding their shares through CREST
in the United Kingdom will receive their cash
dividends in Sterling only as calculated above.
Shareholders holding their shares through The
Central Depository (Pte) Limited ('CDP') in
Singapore 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 17th
August 2018, 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 16th August 2018.
Hongkong Land Group
Hongkong Land is a leading 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
in Hong Kong, Singapore and Beijing. 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, 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 Greater China
and Southeast Asia. In Singapore, its subsidiary, MCL Land, is a
well-established residential developer.
Hongkong Land Holdings Limited is incorporated in Bermuda and
has a standard 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
Robert Wong (852) 2842 8428
Simon Dixon (852) 2842 8101
Brunswick Group Limited
Annabel Arthur (852) 3512 5075
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-Yearly
Results announcement to shareholders. The Half-Yearly Results
announcement will remain available on the Company's website,
www.hkland.com, together with other Group announcements.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR VELBLVDFLBBV
(END) Dow Jones Newswires
July 26, 2018 05:06 ET (09:06 GMT)
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