REG - Hongkong Land Hldgs Jardine Matheson Hdg - Half-Year Results
01/08/2024 10:45
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RNS Number : 8035Y Hongkong Land Hldgs Ltd 01 August 2024
Announcement
1st August 2024
The following announcement was issued today to a Regulatory Information
Service approved by the Financial Conduct Authority in the United Kingdom.
HONGKONG LAND HOLDINGS LIMITED
HALF-YEAR RESULTS FOR THE SIX MONTHS ENDED 30TH JUNE 2024
Highlights
• Underlying loss of US$7 million due to provisions in China Development
Properties
• Excluding non-recurring provisions, underlying profit was US$288 million
• Investment Properties contributions resilient, underpinned by market
leading occupancy levels
• Tomorrow's CENTRAL: US$1 billion strategic investment in the future of
the Central Portfolio announced
• Interim dividend of US¢6 per share, unchanged from the prior year
"The Group's first half results produced a modest underlying loss due to
non-cash provisions in the carrying value of some China Development Properties
projects. Contributions from Investment Properties were stable, despite
market headwinds. Excluding provisions, Development Properties contributions
were lower than the first half of 2023 due to the phasing of project
completions.
The Group continues to invest for growth and to strengthen its market leading
position. Tomorrow's CENTRAL, a US$1 billion investment to reimagine our
core Hong Kong retail portfolio will shortly commence in phases over the next
three years. In Shanghai, the next chapter of Hongkong Land's growth is
being crafted with the development of the West Bund project, a large and
diverse district of commercial and residential properties that will open in
phases between 2024 and 2027."
Michael Smith
Chief Executive
Results
(unaudited)
Six months ended 30th June
2024 2023 Change
US$m US$m %
Underlying (loss)/profit attributable to shareholders(#) (7) 422 N/A
Loss attributable to shareholders (833) (333) +150
Shareholders' funds 30,504 31,965* -5
Net debt 5,357 5,371* -
US¢ US¢ %
Underlying (loss)/earnings per share(#) (0.31) 19.02 N/A
Loss per share (37.75) (15.00) +152
Interim dividend per share 6.00 6.00 -
US$ US$ %
Net asset value per share 13.82 14.49* -5
# The Group uses 'underlying profit attributable to shareholders' in its
internal financial reporting to distinguish between ongoing business
performance and non-trading items, as more fully described in note 7 to the
condensed financial statements. Management considers this to be a key
measure which provides additional information to enhance understanding of the
Group's underlying business performance.
* At 31st December 2023.
The interim dividend of US¢6.00 per share will be payable on 16th October
2024 to shareholders on the register of members at the close of business on
23rd August 2024.
HONGKONG LAND HOLDINGS LIMITED
HALF-YEAR RESULTS FOR THE SIX MONTHS ENDED 30TH JUNE 2024
OVERVIEW
The Group's portfolio of Investment Properties delivered a solid performance
in the first half of the year, with stable contributions from the luxury
retail and Singapore office segments, and a mild reduction in Hong Kong office
rental income.
On the Chinese mainland, persistent weak sentiment in the residential sector
resulted in reduced demand and sales prices in both primary and secondary
markets in most cities. The weak market conditions prompted an extensive
review of the sales pricing of the Group's development projects, resulting in
significant non-cash provisions against the carrying value of selected
projects. Excluding provisions, contributions from Development Properties
were significantly lower than the prior period, due to the timing of project
completions. Overall, the Group recorded a small underlying loss for the
first half of 2024.
The Group's fundamentals remain sound, with resilient operating cash flows
from its Investment Properties portfolio and a strong balance sheet.
The Group is currently undergoing a comprehensive strategic review of its
overall business strategy and commercial priorities. Upon its completion,
which is expected to be before the end of 2024, the Group intends to present a
strategy update.
FINANCIAL PERFORMANCE
The underlying loss attributable to shareholders was US$7 million, while the
underlying loss per share was US¢0.31; both results were significantly lower
than the prior year. This included a non-cash provision of US$295 million in
China Development Properties. Excluding the impact of the non-cash
provision, underlying profit attributable to shareholders was US$288 million,
32% lower than the prior year.
There was a loss attributable to shareholders of US$833 million in the first
half of 2024, compared to a loss of US$333 million in the first half of 2023.
This figure reflected unrealised net non-cash losses arising primarily from
revaluations of the Investment Properties portfolio of US$826 million and
US$755 million in the first half of 2024 and 2023, respectively. The 2024
net revaluation loss is principally attributable to the Hong Kong office
portfolio, following a modest decrease in market rents, partially offset by a
valuation gain for the Hong Kong retail portfolio driven by expected rental
uplifts resulting from the LANDMARK investment. The valuation of the
remainder of the Investment Properties portfolio was stable.
The net asset value per share at 30th June 2024 was US$13.82, compared with
US$14.49 at the end of 2023.
Net debt at 30th June 2024 was US$5.4 billion, unchanged from the end of
2023. Net gearing was 18%, compared to 17% at the end of 2023.
As at 30th June 2024, the Group had undrawn committed facilities and cash of
US$3.0 billion, with an average debt tenor of 6.2 years. 65% of the Group's
interest rate on debt is at fixed rates.
The Directors are recommending an interim dividend of US¢6.00 per share,
unchanged from the prior year.
DEVELOPMENT ACTIVITIES
In June 2024, the Group announced Tomorrow's CENTRAL, a strategic investment
in the expansion and transformation of its luxury retail offering in Hong Kong
over the next three years. This US$1 billion investment will be financed
both by the Group's luxury brand partners, who will contribute an estimated
US$600 million to design and build their new global flagships, and Hongkong
Land, who will invest US$400 million to create new multi-story Maison retail
spaces. In total, the LANDMARK will have 10 new world-class Maison
destinations which will be unique both in Hong Kong and globally.
The Group is making this strategic investment to meet its luxury tenants'
demand for significant additional retail space and enhanced brand
representation in the heart of Hong Kong. The milestone project will expand
the Group's regional market share and leadership in the luxury goods segment
and strengthen the attractiveness of its CENTRAL portfolio ecosystem to
tenants and customers through enhanced lifestyle, dining and retail concepts.
The investment will create additional value for shareholders through a
combination of significant rental growth from new, long-term leases, and an
uplift in the capital value of the prime retail portfolio. The US$400
million investment is to be financed over three years from operating cash
flows.
In July, the first of 10 Maisons was opened by Sotheby's at LANDMARK CHATER.
The 24,000 sq. ft. space, designed to cater to the needs of a new generation
of art enthusiasts and experienced collectors, features a pioneering dual
concept Maison with curated retail across art, luxury, and collectibles, as
well as immersive experiences and museum-quality exhibitions.
Also in June, the Group launched The Ring, Chengdu, a wholly-owned retail-led
mixed-used development. The 220,000 sq. m. commercial complex includes a
seven-storey retail complex, two office towers as well as a hotel. The Ring,
Chengdu marks the Group's second commercial development to open as part of the
'The Ring' experiential-led lifestyle retail series on the Chinese mainland.
Construction activities at the flagship, riverfront West Bund project in
Shanghai continues at pace. The project, with a developable gross floor area
exceeding 1.1 million sq. m., is the largest in the Group's history and will
include all the hallmarks Hongkong Land is renowned for, including prime Grade
A offices, luxury retail and hotels, serviced apartments and residential,
alongside a variety of arts and cultural programming creating a
community-based environment. The luxury retail segment of West Bund will
also become the first location outside of the LANDMARK to become part of the
Group's GLOBAL CENTRAL vision - which is to create world-class luxury
lifestyle and retail destinations that serve as gravitational hubs for the
world's most prestigious brands. The first phase of the project, largely
comprising residential and serviced apartments, completed in the first half of
the year. The remainder of the development will open gradually in phases
from 2025 to 2027.
GROUP REVIEW
Investment Properties
In Hong Kong, office leasing demand remained weak, with subdued new enquiry
levels. The Group's Central office portfolio remained resilient and
continued to outperform the market, underpinned by flight to quality demand.
Physical and committed vacancy was 7.3% and 6.8% respectively at the end of
June 2024, compared to 7.4% and 6.8% at the end of 2023. This compares
favourably to 12.1% vacancy in the wider Central Grade A office market.
Negative rental reversions resulted in average office rents decreasing to
HK$103 per sq. ft., compared to HK$107 per sq. ft. for the same period last
year.
There was a moderate decline in sales at the Group's LANDMARK retail portfolio
primarily due to some leakage of sales to other destinations due to the strong
Hong Kong dollar, as well as planned tenant movements ahead of the announced
LANDMARK transformation. Average retail rents were HK$206 per sq. ft.,
compared with HK$204 per sq. ft. for the same period last year. Physical
vacancy increased to 2.6% as a result of the transformation works, which are
scheduled to begin in the third quarter of 2024.
Combined contributions from the Group's CENTRAL series luxury retail malls in
Beijing and Macau were stable during the period. Higher tenant sales at WF
CENTRAL, Beijing were mainly driven by tenant mix optimisation, which offset
lower contributions from One CENTRAL Macau, which is currently undergoing
upgrade works. Market conditions have recently become more challenging
however, with a meaningful reduction in luxury goods sales in China in the
second quarter.
In Singapore, the Group's office portfolio saw moderate rental growth,
supported by low vacancies and limited new supply. Vacancy across the
Group's office portfolio was 2.6% at the end of June 2024, compared with 1.9%
at the end of 2023. On a committed basis, vacancy was 1.1%. Leasing demand
remained subdued given macroeconomic uncertainties, with new deals primarily
driven by flight to quality as tenants are prioritising space quality over
size. Rental reversions were positive, with average rents increasing to
S$11.1 per sq. ft., compared to S$10.9 per sq. ft. for the same period last
year.
Development Properties
On the Chinese mainland, residential sales continued to be impacted by low
consumer confidence, although sales performances varied between different
cities, with demand for well-located projects remaining healthy. In the
first half of the year, the Group fully sold all residential units at its
flagship West Bund development. Profits from these sales will be recognised
upon handover to buyers in the second half of 2024. More generally, sales
completions were limited in the period, with a greater number of profitable,
fully sold projects to be handed over to buyers later in the year.
The Group's attributable interest in contracted sales was US$838 million,
compared to US$745 million and US$785 million in the first and second halves
of 2023, respectively. At 30th June 2024, the Group had US$2,215 million in
sold but unrecognised contracted sales, compared with US$2,031 million at the
end of 2023.
Deteriorating market conditions on the Chinese mainland prompted an extensive
review of the pricing and competitive positioning of the Group's development
projects, with pricing adjusted where needed to improve sales velocity.
Following this review, non-cash provisions totalling US$295 million were
recorded on a limited number of projects. The provisions were required where
expected sales price, based on market comparables, had fallen below the
carrying value. Most of the affected projects were in non-prime locations in
Wuhan, Nanjing and Chongqing.
In Singapore, the profit contribution from residential development projects
was lower compared to the same period in 2023, due to limited inventory
available for sale. The Group's attributable interest in contracted sales
was US$25 million, compared to US$487 million and US$100 million in the first
and second halves of 2023, respectively. Two new projects, which were
acquired in late 2023, are expected to be launched in the second half of 2024.
In the rest of South East Asia, total contributions were lower due to the
timing of planned sales completions.
SUSTAINABILITY
Decarbonisation
Since committing to ambitious science-based targets in 2022, the Group has
made encouraging progress. Scope 1 and 2 greenhouse gas ('GHG') emissions
reduced by 29% at the end of 2023 compared to the 2019 baseline, which is more
than halfway towards achieving the Group's committed 46.2% reduction in Scope
1 and 2 GHG emissions by 2030.
Green Buildings
As a leader in sustainable building practices, the Group constantly reinvests
in its existing asset portfolio to obtain market leading sustainability
certifications. The Group has recently announced that it is the first
developer to achieve 'Triple-Platinum' status for all of its commercial
buildings in Hong Kong, across LEED, WELL Core Platinum and BEAM
certifications.
OUTLOOK
Market conditions are expected to remain challenging for the remainder of the
year. Despite market uncertainties, the Group's Investment Properties
portfolio is well positioned and resilient, underpinned by its quality and
premium positioning.
The Central office portfolio is expected to continue outperforming the broader
market, underpinned by the unique Central ecosystem and scarcity of supply of
high-quality, well-managed space in Central. The Group expects committed
occupancy levels to remain stable, as a vast majority of 2024 office lease
expiries have already been renewed.
There will be a mild reduction in contributions from the retail portfolio in
Hong Kong for the remainder of the year, as the LANDMARK transformation
commences in the third quarter of 2024. However, this strategic investment
will enable the Group to capture the rental upside from the expanded presence
of our luxury retail partners, as well as further enhancing the Central
ecosystem.
Luxury retail sales in China have declined in recent months, although WF
CENTRAL in Beijing is expected to deliver a stable performance driven by
tenant repositioning efforts. Trading at One CENTRAL Macau for the remainder
of the year will be impacted by ongoing upgrading works, which will bring a
new retail experience to market by early 2025.
In Singapore, office demand is expected to be muted, due to the uncertain
macroeconomic outlook, limiting near-term growth potential in office rents.
Although in a tightly supplied market, the Group's market leading office
portfolio should continue to enjoy low vacancies.
Contributions from the Development Properties business are expected to
increase in the second half of the year, due to planned project completions on
the Chinese mainland, with several fully sold projects scheduled to be handed
over to buyers.
While full-year underlying profit will be significantly below 2023, due to the
impact of provisions already recognised, the Group's diversified portfolio
remains resilient and continues to make strategic investments to drive future
growth.
Michael Smith
Chief Executive
Hongkong Land Holdings Limited
Consolidated Profit and Loss Account
for the six months ended 30th June 2024
(unaudited) Year ended 31st December
Six months ended 30th June
2024 2023 2023
Underlying Non- Total Underlying Non- Total Underlying Non-
business trading US$m business trading US$m business trading
performance items performance items performance items Total
US$m US$m US$m US$m US$m US$m US$m
Revenue 972.4 - 972.4 670.3 - 670.3 1,844.3 - 1,844.3
(note 2)
Net operating costs (758.3) - (758.3) (277.6) - (277.6) (1,050.0) 16.6 (1,033.4)
(note 3)
Change in fair value of investment properties (note 7) - (864.6) (864.6) - (742.6) (742.6) - (1,323.5) (1,323.5)
Operating profit/(loss) (note 4) 214.1 (864.6) (650.5) 392.7 (742.6) (349.9) 794.3 (1,306.9) (512.6)
Net financing charges
- financing charges (123.1) - (123.1) (123.7) - (123.7) (265.9) - (265.9)
- financing income 41.6 - 41.6 40.1 - 40.1 81.5 - 81.5
(81.5) - (81.5) (83.6) - (83.6) (184.4) - (184.4)
Share of results of associates and joint (78.1) 54.7 (23.4) 164.3 (8.6) 155.7 234.7 18.0 252.7
ventures
(note 5)
Profit/(loss) before tax 54.5 (809.9) (755.4) 473.4 (751.2) (277.8) 844.6 (1,288.9) (444.3)
Tax (note 6) (60.2) (12.0) (72.2) (49.8) (2.7) (52.5) (107.2) (25.6) (132.8)
(Loss)/profit after tax (5.7) (821.9) (827.6) 423.6 (753.9) (330.3) 737.4 (1,314.5) (577.1)
Attributable to:
Shareholders of the Company (note 8) (6.9) (826.1) (833.0) 422.2 (755.2) (333.0) 734.2 (1,316.5) (582.3)
Non-controlling interests 1.2 4.2 5.4 1.4 1.3 2.7 3.2 2.0 5.2
(5.7) (821.9) (827.6) 423.6 (753.9) (330.3) 737.4 (1,314.5) (577.1)
US¢ US¢ US¢ US¢ US¢ US¢
(Loss)/earnings per share (note 8) (0.31) (37.75) 19.02 (15.00) 33.15 (26.29)
Hongkong Land Holdings Limited
Consolidated Statement of Comprehensive Income
for the six months ended 30th June 2024
(unaudited) Year ended
Six months ended 31st
30th June December
2024 2023 2023
US$m US$m US$m
Loss for the period (827.6) (330.3) (577.1)
Other comprehensive income/(expense)
Items that will not be reclassified to
profit or loss:
Remeasurements of defined benefit
plans - - 0.7
Tax on items that will not be reclassified - - (0.1)
-
- - 0.6
Items that may be reclassified
subsequently to profit or loss:
Net exchange translation differences
- net loss arising during the period (54.2) (209.2) (82.2)
- transfer to profit and loss - - 0.6
(54.2) (209.2) (81.6)
Cash flow hedges
- net gain/(loss) arising during the period 9.6 (16.4) (53.1)
- transfer to profit and loss (2.7) (1.4) (2.2)
6.9 (17.8) (55.3)
Tax relating to items that may be
reclassified (1.1) 2.9 9.1
Share of other comprehensive expense
of associates and joint ventures (229.3) (204.7) (59.1)
(277.7) (428.8) (186.9)
Other comprehensive expense for the
period, net of tax (277.7) (428.8) (186.3)
Total comprehensive expense for the
period (1,105.3) (759.1) (763.4)
Attributable to:
Shareholders of the Company (1,108.8) (759.1) (767.4)
Non-controlling interests 3.5 - 4.0
(1,105.3) (759.1) (763.4)
Hongkong Land Holdings Limited
Consolidated Balance Sheet
at 30th June 2024
(unaudited) At 31st
At 30th June December
2024 2023 2023
US$m US$m US$m
Net operating assets
Fixed assets 93.8 104.1 99.7
Right-of-use assets 11.0 13.7 12.1
Investment properties (note 10) 25,844.8 27,167.4 26,687.2
Associates and joint ventures (note 11) 8,888.6 8,943.5 9,284.2
Non-current debtors 14.1 13.2 14.2
Deferred tax assets 70.4 107.4 113.3
Pension assets 1.0 0.9 1.0
Non-current assets 34,923.7 36,350.2 36,211.7
Properties for sale 2,422.1 3,085.1 2,926.1
Current debtors 336.9 531.2 374.1
Current tax assets 48.2 58.5 60.4
Bank balances 1,068.9 1,143.4 1,195.6
Current assets 3,876.1 4,818.2 4,556.2
Current creditors (1,422.6) (1,779.3) (1,705.9)
Current borrowings (note 12) (677.5) (858.5) (781.6)
Current tax liabilities (132.0) (238.2) (189.8)
Current liabilities (2,232.1) (2,876.0) (2,677.3)
Net current assets 1,644.0 1,942.2 1,878.9
Long-term borrowings (note 12) (5,747.9) (5,829.6) (5,785.3)
Deferred tax liabilities (229.6) (278.7) (249.1)
Pension liabilities (0.5) (2.2) (0.1)
Non-current creditors (60.8) (25.4) (68.8)
30,528.9 32,156.5 31,987.3
Total equity
Share capital 220.7 221.5 220.7
Revenue and other reserves 30,282.8 31,911.9 31,744.7
Shareholders' funds 30,503.5 32,133.4 31,965.4
Non-controlling interests 25.4 23.1 21.9
30,528.9 32,156.5 31,987.3
Hongkong Land Holdings Limited
Consolidated Statement of Changes in Equity
for the six months ended 30th June 2024
Share Revenue Hedging Exchange Attributable to Attributable to non-controlling interests Total equity US$m
capital reserves reserves reserves shareholders of the Company US$m US$m
US$m US$m US$m US$m
Six months ended 30th June 2024 (unaudited)
At 1st January 2024 220.7 32,299.5 (57.7) (497.1) 31,965.4 21.9 31,987.3
Total comprehensive (expense)/income - (833.0) 8.1 (283.9) (1,108.8) 3.5 (1,105.3)
Dividends paid by the Company (note 9) - (353.1) - - (353.1) - (353.1)
At 30th June 2024 220.7 31,113.4 (49.6) (781.0) 30,503.5 25.4 30,528.9
Six months ended 30th June 2023 (unaudited)
At 1st January 2023 222.7 33,449.8 (3.0) (366.1) 33,303.4 23.7 33,327.1
Total comprehensive expense - (333.0) (16.9) (409.2) (759.1) - (759.1)
Dividends paid by the Company (note 9) - (355.9) - - (355.9) - (355.9)
Dividends paid to non-controlling shareholders - - - - - (0.6) (0.6)
Repurchase of shares (1.2) (53.8) - - (55.0) - (55.0)
At 30th June 2023 221.5 32,707.1 (19.9) (775.3) 32,133.4 23.1 32,156.5
Year ended 31st December 2023
At 1st January 2023 222.7 33,449.8 (3.0) (366.1) 33,303.4 23.7 33,327.1
Total comprehensive (expense)/income - (581.7) (54.7) (131.0) (767.4) 4.0 (763.4)
Dividends paid by the Company - (488.7) - - (488.7) - (488.7)
Dividends paid to non-controlling shareholders - - - - - (0.6) (0.6)
Unclaimed dividends forfeited - 1.3 - - 1.3 - 1.3
Repurchase of shares (2.0) (81.2) - - (83.2) - (83.2)
Disposal of subsidiaries - - - - - (5.2) (5.2)
At 31st December 2023 220.7 32,299.5 (57.7) (497.1) 31,965.4 21.9 31,987.3
Hongkong Land Holdings Limited
Consolidated Cash Flow Statement
for the six months ended 30th June 2024
(unaudited) Year ended 31st December
Six months ended
30th June
2024 2023 2023
US$m US$m US$m
Operating activities
Operating loss (650.5) (349.9) (512.6)
Depreciation and amortisation 6.3 8.4 16.5
Change in fair value of investment properties 864.6 742.6 1,323.5
Gain on acquisition of subsidiaries - (31.6) (31.6)
Net gain on disposal of subsidiaries and joint
ventures - - (15.9)
Decrease/(increase) in properties for sale 437.0 (41.6) 187.5
Decrease/(increase) in debtors 65.7 (9.2) 83.0
(Decrease)/increase in creditors (254.5) 123.9 8.2
Interest received 31.4 22.4 46.4
Interest and other financing charges paid (119.9) (124.0) (251.2)
Tax paid (92.5) (127.2) (287.3)
Dividends from associates and joint ventures 32.1 58.9 135.1
Cash flows from operating activities 319.7 272.7 701.6
Investing activities
Major renovations expenditure (36.9) (48.1) (85.3)
Repayments from associates and joint ventures 156.7 721.1 1,183.3
Investments in associates and joint ventures (0.7) (110.8) (401.4)
Advances to associates and joint ventures (69.4) (127.6) (434.3)
Disposal of subsidiaries - - 29.3
Disposal of joint ventures - - 8.5
Acquisition of subsidiaries - (30.9) (30.9)
Cash flows from investing activities 49.7 403.7 269.2
Financing activities
Drawdown of borrowings 1,245.6 836.6 2,121.9
Repayment of borrowings (1,320.7) (1,106.6) (2,569.5)
Principal elements of lease payments (1.2) (1.5) (3.4)
Repurchase of shares - (55.0) (83.2)
Dividends paid by the Company (346.2) (353.6) (486.2)
Dividends paid to non-controlling shareholders - (0.6) (0.6)
Cash flows from financing activities (422.5) (680.7) (1,021.0)
Net cash outflow (53.1) (4.3) (50.2)
Cash and cash equivalents at beginning of period 1,112.2 1,171.5 1,171.5
Effect of exchange rate changes (18.1) (26.4) (9.1)
Cash and cash equivalents at end of period 1,041.0 1,140.8 1,112.2
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.
There are no changes to the accounting policies as described in the 2023
annual financial statements. A number of amendments issued by the
International Accounting Standards Board were effective from 1st January 2024
and do not have significant impact on the Group's results, financial position
and accounting policies.
The Group has not early adopted any standards, interpretations or amendments
that have been issued but not yet effective.
2. REVENUE
Six months ended 30th June
2024 2023
US$m US$m
Rental income 451.4 463.9
Service income and others
- recognised at a point in time 18.5 16.6
- recognised over time 88.7 86.6
107.2 103.2
Sales of properties
- recognised at a point in time 408.9 94.4
- recognised over time 4.9 8.8
413.8 103.2
972.4 670.3
By business
Investment Properties 526.9 538.4
Development Properties 445.5 131.9
972.4 670.3
3. NET OPERATING COSTS
Six months ended 30th June
2024 2023
US$m US$m
Cost of sales (679.8) (218.3)
Other income 22.1 21.1
Gain on acquisition of subsidiaries - 31.6
Administrative expenses (100.6) (112.0)
(758.3) (277.6)
Cost of sales included a US$147.5 million provision in China Development
Properties (2023: Nil) arising from a deterioration in market conditions that
resulted in projected sales prices being lower than development cost. A
corresponding deferred tax credit of US$4.7 million was recognised.
4. OPERATING PROFIT/(LOSS)
Six months ended 30th June
2024 2023
US$m US$m
By business
Investment Properties 406.4 422.1
Development Properties (151.7) 18.3
Corporate (40.6) (47.7)
Underlying business performance 214.1 392.7
Change in fair value of investment properties (864.6) (742.6)
(650.5) (349.9)
5. SHARE OF RESULTS OF ASSOCIATES AND JOINT VENTURES
Six months ended 30th June
2024 2023
US$m US$m
By business
Investment Properties
- operating profit 76.0 75.4
- net financing charges (26.7) (25.1)
- tax (8.1) (8.3)
- net profit 41.2 42.0
Development Properties
- operating (loss)/profit (108.3) 161.2
- net financing charges (23.7) (15.8)
- tax 12.7 (23.1)
- net (loss)/profit (119.3) 122.3
Underlying business performance (78.1) 164.3
Change in fair value of investment properties
(net of tax) 54.7 (8.6)
(23.4) 155.7
The Development Properties net loss in 2024 included a US$151.8 million net
provision after including a deferred tax credit. This arose due to a
deterioration in market conditions that resulted in projected sales prices
being lower than development cost. In 2023, the net profit included a net
gain of US$50.4 million arising from acquisitions.
6. TAX
Six months ended 30th June
2024 2023
US$m US$m
Tax charged to profit and loss is analysed as follows:
Current tax (49.3) (47.8)
Deferred tax
- changes in fair value of investment properties (12.0) (2.7)
- other temporary differences (10.9) (2.0)
(72.2) (52.5)
Tax relating to components of other comprehensive income or expense is
analysed as follows:
Cash flow hedges (1.1) 2.9
Tax on profits has been calculated at the rates of taxation prevailing in the
territories in which the Group operates.
The Group is within the scope of the OECD Pillar Two model rules, and has
applied the exception to recognising and disclosing information about deferred
tax assets and liabilities relating to Pillar Two income taxes from 1st
January 2023. Pillar Two legislation has been enacted or substantially
enacted in certain jurisdictions in which the Group operates. The Group has
assessed that the income tax expense related to Pillar Two income taxes in the
relevant jurisdictions for the interim period is immaterial.
Share of tax charge of associates and joint ventures of US$1.5 million (2023:
US$30.5 million) is included in share of results of associates and joint
ventures.
7. NON-TRADING ITEMS
Non-trading items are separately identified to provide greater understanding
of the Group's underlying business performance. Items classified as
non-trading items include fair value gains or losses on revaluation of
investment properties; gains and losses arising from the sale of businesses
and investment properties; impairment of non-depreciable intangible assets;
provisions for the closure of businesses; acquisition-related costs in
business combinations; and other credits and charges of a non-recurring nature
that require inclusion in order to provide additional insight into underlying
business performance.
An analysis of non-trading items after interest, tax and non-controlling
interests is set out below:
Six months ended 30th June
2024 2023
US$m US$m
Change in fair value of investment properties (864.6) (742.6)
Tax on change in fair value of investment properties (12.0) (2.7)
Share of change in fair value of investment properties of
associates and joint ventures (net of tax) 54.7 (8.6)
Non-controlling interests (4.2) (1.3)
(826.1) (755.2)
8. (LOSS)/EARNINGS PER SHARE
Loss per share is calculated on loss attributable to shareholders of US$833.0
million (2023: US$333.0 million) and on the weighted average number of 2,206.6
million (2023: 2,220.2 million) shares in issue during the period.
(Loss)/earnings per share is/are additionally calculated based on underlying
(loss)/profit attributable to shareholders. A reconciliation of earnings is
set out below:
Six months ended 30th June
2024 2023
US$m US$m Earnings/
Loss (loss)
per share per share
US¢ US¢
Underlying (loss)/profit attributable to
shareholders (6.9) (0.31) 422.2 19.02
Non-trading items (note 7) (826.1) (755.2)
Loss attributable to shareholders (833.0) (37.75) (333.0) (15.00)
9. DIVIDENDS
Six months ended 30th June
2024 2023
US$m US$m
Final dividend in respect of 2023 of US¢16.00 353.1 355.9
(2022: US¢16.00) per share
An interim dividend in respect of 2024 of US¢6.00 (2023: US¢6.00) per share
amounting to a total of US$132.4 million (2023: US$132.9 million) is declared
by the Board and will be accounted for as an appropriation of revenue reserves
in the year ending 31st December 2024.
10. INVESTMENT PROPERTIES
Six months ended 30th June Year ended
31st
December
2024 2023 2023
US$m US$m US$m
At beginning of period 26,687.2 28,054.1 28,054.1
Exchange differences (20.1) (179.2) (69.7)
Additions 42.3 35.1 49.6
Disposal of subsidiaries - - (23.3)
Decrease in fair value (864.6) (742.6) (1,323.5)
At end of period 25,844.8 27,167.4 26,687.2
11. ASSOCIATES AND JOINT VENTURES
At 30th June At 31st
December
2024 2023 2023
US$m US$m US$m
By business
Investment Properties 4,547.1 4,480.1 4,590.8
Development Properties 4,341.5 4,463.4 4,693.4
8,888.6 8,943.5 9,284.2
12. BORROWINGS
At 30th June At 31st December
2024 2023 2023
US$m US$m US$m
Current
Bank overdrafts 0.6 2.6 1.2
Bank loans 45.5 61.5 74.2
Current portion of long-term borrowings
- bank loans 631.4 219.1 306.5
- medium term notes - 575.3 399.7
677.5 858.5 781.6
Long-term
Bank loans 1,843.7 2,586.6 1,909.7
Medium term notes
- due 2025 640.5 641.9 641.3
- due 2026 221.0 38.4 225.3
- due 2027 186.2 185.3 186.0
- due 2028 182.6 181.8 182.3
- due 2029 121.3 120.8 121.1
- due 2030 698.9 698.0 698.6
- due 2031 569.8 569.0 569.5
- due 2032 140.1 139.5 139.9
- due 2033 524.9 88.7 524.7
- due 2034 115.1 76.7 77.0
- due 2035 253.7 252.6 253.3
- due 2038 108.7 108.8 111.9
- due 2039 109.5 109.7 112.8
- due 2040 31.9 31.8 31.9
3,904.2 3,243.0 3,875.6
5,747.9 5,829.6 5,785.3
6,425.4 6,688.1 6,566.9
13. FINANCIAL INSTRUMENTS
Financial instruments by category
The fair values of financial assets and financial liabilities, together with
carrying amounts at 30th June 2024 and 31st December 2023 are as follows:
Fair value of Financial Total Fair
hedging assets at amortised costs Other carrying amount value
instruments US$m financial liabilities US$m US$m
US$m US$m
30th June 2024
Financial assets measured at
fair value
Derivative financial instruments 0.9 - - 0.9 0.9
Financial assets not measured
at fair value
Amounts due from associates and joint ventures - 2,181.9 - 2,181.9 2,181.9
Debtors - 230.9 - 230.9 230.9
Bank balances - 1,068.9 - 1,068.9 1,068.9
- 3,481.7 - 3,481.7 3,481.7
Financial liabilities measured
at fair value
Derivative financial instruments (56.5) - - (56.5) (56.5)
Financial liabilities not measured at
fair value
Borrowings - - (6,425.4) (6,425.4) (6,172.1)
Creditors - - (1,020.1) (1,020.1) (1,020.1)
- - (7,445.5) (7,445.5) (7,192.2)
31st December 2023
Financial assets measured at fair value
Derivative financial instruments 4.0 - - 4.0 4.0
Financial assets not measured at
fair value
Amounts due from associates and joint ventures - 2,269.7 - 2,269.7 2,269.7
Debtors - 245.1 - 245.1 245.1
Bank balances - 1,195.6 - 1,195.6 1,195.6
- 3,710.4 - 3,710.4 3,710.4
Financial liabilities measured at
fair value
Derivative financial instruments (62.0) - - (62.0) (62.0)
Financial liabilities not measured
at fair value
Borrowings - - (6,566.9) (6,566.9) (6,326.5)
Creditors - - (1,145.4) (1,145.4) (1,145.4)
- - (7,712.3) (7,712.3) (7,471.9)
Fair value estimation
(a) Financial instruments that are measured at fair value based on observable
current market transactions
At 30th June 2024 At 31st December
US$m 2023
US$m
Assets
Derivative designated at fair value
- through other comprehensive income 0.9 2.7
- through profit and loss - 1.3
0.9 4.0
Liabilities
Derivative designated at fair value
- through other comprehensive income (56.5) (62.0)
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 are calculated by reference to market interest rates.
There were no changes in valuation techniques during the six months ended 30th
June 2024 and the year ended 31st December 2023.
(b) Financial instruments that are not measured at fair value
The fair values of current debtors, bank balances, current creditors, current
borrowings and current lease liabilities are assumed to approximate their
carrying amounts due to the short-term maturities of these assets and
liabilities.
The fair values of long-term borrowings are based on market prices or are
estimated using the expected future payments discounted at market interest
rates. The fair values of non-current lease liabilities are estimated using
the expected future payments discounted at market interest rates.
14. CAPITAL COMMITMENTS AND CONTINGENT LIABILITIES
Total capital commitments at 30th June 2024 and 31st December 2023 amounted to
US$1,148.0 million and US$813.8 million, respectively.
Various Group companies are involved in litigation arising in the ordinary
course of their respective businesses. Having reviewed outstanding claims
and taking into account legal advice received, the Directors are of the
opinion that adequate provisions have been made in the condensed financial
statements.
15. RELATED PARTY TRANSACTIONS
The parent company of the Group is Jardine Strategic Limited ('JSL') and the
ultimate parent company of the Group is Jardine Matheson Holdings Limited
('JMH'). Both JMH and JSL are incorporated in Bermuda.
In the normal course of business, the Group has entered into a variety of
transactions with the subsidiaries, associates and joint ventures of JMH
('Jardine Matheson group members'). The more significant of these
transactions during the six months ended 30th June 2024 are described below:
Management fee
The management fee payable by the Group, under an agreement entered into in
1995, to Jardine Matheson Limited ('JML') was nil (2023: US$2.1 million),
being 0.5% per annum of the Group's underlying profit in consideration for
management consultancy services provided by JML, a wholly-owned subsidiary of
JMH.
Property and other services
The Group rented properties to Jardine Matheson group members. Gross rents
on such properties amounted to US$9.9 million (2023: US$9.0 million).
The Group provided project management services and property management
services to Jardine Matheson group members amounting to US$2.0 million (2023:
US$1.4 million).
Jardine Matheson group members provided property maintenance and other
services to the Group in aggregate amounting to US$26.5 million (2023: US$27.6
million).
Hotel management services
Jardine Matheson group members provided hotel management services to the Group
amounting to US$1.7 million (2023: US$1.8 million).
Outstanding balances with associates and joint ventures
Amounts of outstanding balances with associates and joint ventures are
included in associates and joint ventures, and debtors as appropriate.
Hongkong Land Holdings Limited
Principal Risks and Uncertainties
The Board has overall responsibility for risk management and internal
control. The following have been identified previously as the areas of
principal risk and uncertainty facing the Company, and they remain unchanged:
• Economic Risk
• Commercial Risk
• Financial and Treasury Risk
• Regulatory and Political Risk
• Pandemic, War, Terrorism and Natural Disasters Risk
• Key Contracts Risk
• Cybersecurity Risk
• Governance and Misconduct Risk
• Health and Safety Risk
• People Risk
• Investment, Strategic Transactions and Partnerships Risk
• Environmental and Climate Risk
For greater detail, please refer to pages 105 to 109 of the Company's Annual
Report for 2023, a copy of which is available on the Company's website
www.hkland.com.
Responsibility Statements
The Directors of the Company confirm to the best of their knowledge that:
(a) the condensed financial statements prepared in accordance with IAS 34
'Interim Financial Reporting' give a true and fair view of the assets,
liabilities, financial position and profit and losses of the Group; and
(b) the interim management report includes a fair review of all information
required to be disclosed under Rules 4.2.7 and 4.2.8 of the Disclosure
Guidance and Transparency Rules issued by the Financial Conduct Authority in
the United Kingdom.
For and on behalf of the Board
Michael Smith
Craig Beattie
Directors
Dividend Information for Shareholders
The interim dividend of US¢6.00 per share will be payable on 16th October
2024 to shareholders on the register of members at the close of business on
23rd August 2024. The shares will be quoted ex-dividend on 22nd August
2024, and the share registers will be closed from 26th to 30th August 2024,
inclusive.
Shareholders will receive cash dividends in United States Dollars, except when
elections are made for alternate currencies in the following circumstances.
Shareholders on the Jersey branch register
Shareholders registered on the Jersey branch register can elect for their
dividends to be paid in Sterling. These shareholders may make new currency
elections for the 2024 interim dividend by notifying the United Kingdom
transfer agent in writing by 27th September 2024. The Sterling equivalent of
dividends declared in United States Dollars will be calculated by reference to
a rate prevailing on 2nd October 2024.
Shareholders holding their shares through CREST in the United Kingdom will
receive cash dividends in Sterling only, as calculated above.
Shareholders on the Singapore branch register who hold their shares through
The Central Depository (Pte) Limited ('CDP')
Shareholders who are on CDP's Direct Crediting Service ('DCS')
Those shareholders on CDP's DCS will receive their cash dividends in Singapore
Dollars unless they opt out of CDP Currency Conversion Service, through CDP,
to receive United States Dollars.
Shareholders who are not on CDP's DCS
Those shareholders not on CDP's DCS will receive their cash dividends in
United States Dollars unless they elect, through CDP, to receive Singapore
Dollars.
Shareholders on the Singapore branch register who wish to deposit their shares
into the CDP system by the dividend record date, being 23rd August 2024, must
submit the relevant documents to Boardroom Corporate & Advisory Services
Pte. Ltd., by no later than 5.00 p.m. (local time) on 22nd August 2024.
About Hongkong Land Group
Hongkong Land is a major listed property investment, management and
development group. Founded in 1889, Hongkong Land's business is built on
excellence, integrity and partnership.
The Group owns and manages more than 850,000 sq. m. of prime office and luxury
retail assets in key Asian cities, principally Hong Kong, Singapore, Beijing
and Jakarta. Its properties hold industry leading green building
certifications and 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, five retail centres on the
Chinese mainland, including a luxury retail centre at Wangfujing in Beijing,
and a 50% interest in a leading office complex in Central Jakarta. The Group
also has a number of high-quality residential, commercial and mixed-use
projects under development in cities across China and Southeast Asia,
including a 43% interest in a 1.1 million sq. m. mixed-use project in West
Bund, Shanghai. Its subsidiary, MCL Land, is a well-established residential
developer in Singapore.
Hongkong Land Holdings Limited is incorporated in Bermuda and has a primary
listing in the equity shares (transition) category of the London Stock
Exchange, with secondary listings in Bermuda and Singapore. The Group's
assets and investments are managed from Hong Kong by Hongkong Land Limited.
Hongkong Land is a member of the Jardine Matheson Group.
- end -
For further information, please contact:
Hongkong Land Limited
Mark Lam (852) 2842 8211
Gary Leung (852) 2842 0601
Brunswick Group Limited
Kay Lau (852) 6021 7009
As permitted by the Disclosure Guidance and Transparency Rules of the
Financial Conduct Authority in the United Kingdom, the Company will not be
posting a printed version of the Half-Year Results announcement for the six
months ended 30th June 2024 to shareholders. This Half-Year Results
announcement will be made available on the Company's website, www.hkland.com,
together with other Group announcements.
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