TIDMHKLD TIDMJAR
RNS Number : 6956R
Hongkong Land Hldgs Ltd
02 March 2023
2nd March 2023
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
2022 PRELIMINARY ANNOUNCEMENT OF RESULTS
Highlights
-- Underlying profit down 20% to US$776 million
-- Lower residential development profits on the Chinese mainland
-- Slight decline in results from Investment Properties; asset values stable
-- Group financial position remains strong
-- Final dividend maintained at USc16.00 per share
"Results in 2023 will principally depend on the pace of recovery
of the property sector on the Chinese mainland. Stable
contributions are expected to continue from the Group's Investment
Properties business, although rental reversions for the Hong Kong
office portfolio are expected to remain negative. The extent of
improvement in performance from the Development Properties business
will depend on policy support measures implemented on the Chinese
mainland."
Ben Keswick
Chairman
Results
Year ended 31st December
2022 2021 Change
US$m US$m %
Underlying profit attributable to
shareholders(*) 776 966 -20
Profit/(loss) attributable to shareholders 203 (349) N/A
Shareholders' funds 33,303 34,584 -4
Net debt 5,817 5,104 +14
------------------------------------------------ ------- ------- ------
USc USc %
------------------------------------------------ ------- ------- ------
Underlying earnings per share(*) 34.44 41.49 -17
Earnings/(loss) per share 8.99 (15.00) N/A
Dividends per share 22.00 22.00 -
------------------------------------------------ ------- ------- ------
US$ US$ %
------------------------------------------------ ------- ------- ------
Net asset value per share 14.95 15.05 -1
------------------------------------------------ ------- ------- ------
*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 27 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 USc16.00 per share will be payable on 10th
May 2023, subject to approval at the Annual General Meeting to be
held on 4th May 2023, to shareholders on the register of members at
the close of business on 17th March 2023.
HONGKONG LAND HOLDINGS LIMITED
PRELIMINARY ANNOUNCEMENT OF RESULTS
FOR THE YEARED 31ST DECEMBER 2022
OVERVIEW
The Group's profitability was significantly lower in 2022,
primarily due to a lower contribution from the Development
Properties business in the second half of the year, after a record
performance in 2021. The contribution from Investment Properties
was resilient, however, with only modest financial impacts in the
retail portfolio from the pandemic measures introduced across China
during 2022. The impact of lower average office rents in Hong Kong
was partially offset by a reduction in operating costs.
PERFORMANCE
Underlying profit attributable to shareholders fell by 20% to
US$776 million.
Profit attributable to shareholders was US$203 million, after
including net non-cash losses of US$573 million resulting primarily
from lower valuations of the Group's investment properties. This
compares to a loss of US$349 million in 2021, which included a
US$1,315 million reduction in property valuations mainly due to
lower market rents for the Hong Kong Central Portfolio.
The net asset value per share at 31st December 2022 was
US$14.95, compared with US$15.05 at the end of 2021.
The Directors recommend a final dividend of USc16.00 per share,
providing a total dividend for the year of USc22.00 per share,
unchanged from last year.
GROUP REVIEW
Investment Properties
In Hong Kong, office leasing demand remained subdued. Against
this backdrop, the Group's Central office portfolio remained
resilient, outperforming the broader market due to its prime CBD
location and premium offering. At the end of 2022, physical vacancy
was 4.9%, compared to 5.2% at the end of 2021 and, on a committed
basis, it was 4.7%, compared to 4.9% at the end of 2021, well below
average Central market vacancy levels. Modestly negative rental
reversions resulted in average office rents decreasing to HK$111
per sq. ft. in 2022, from HK$117 per sq. ft. in the prior year.
Retail market sentiment in Hong Kong was severely affected by
the fifth wave of the pandemic in the first half of 2022. Retail
trading benefited in the second half of the year, however, as
social distancing and travel restrictions were progressively
relaxed. Total retail sales nevertheless remained below
pre-pandemic levels, due to a lack of tourists. Average retail
rents in 2022 in the Central LANDMARK retail portfolio decreased to
HK$177 per sq. ft. from HK$190 per sq. ft. in 2021, primarily due
to negative base rent reversions. Vacancy was 0.5% on both a
physical and committed basis, unchanged from the prior year.
In Singapore, contributions from the Group's office portfolio
increased, due to positive rental reversions underpinned by a
healthy level of occupier demand, with average office rents
increasing to S$10.6 per sq. ft. in 2022 from S$10.3 per sq. ft. in
2021. On a committed basis, vacancy in the Group's office portfolio
remained low at 2.2%, compared with 2.9% at the end of 2021.
In Beijing and Macau, pandemic measures negatively impacted
trading at the Group's two luxury retail malls, with tenant sales
and footfall in 2022 both lower than the prior year.
In Shanghai, development activities continued at the Group's
43%-owned prime 1.1 million sq. m. mixed-use development on the
West Bund, with modest impacts from the covid related city-wide
lockdowns. The West Bund development, which will be completed in
phases from 2023 to 2027, remains on schedule.
The combined value of the Group's Investment Properties
portfolio was reduced by 2% in 2022, due largely to a modest
increase in capitalisation rates in the Hong Kong portfolio. There
was no change in the capitalisation rates for the Singapore,
Beijing and Shanghai investment properties.
Development Properties
As anticipated, the profit contribution from the Group's
Development Properties business on the Chinese mainland decreased
compared to the prior year, as a result of a significantly lower
profit contribution in the second half of the year, due to fewer
planned sales completions and the impact of pandemic-related
restrictions.
The Group's attributable interest in contracted sales in 2022
decreased to US$1,300 million from US$2,648 million in 2021, mainly
due to weak market sentiment for residential properties. At 31st
December 2022, the Group had an attributable interest of US$2,087
million in sold but unrecognised contracted sales, compared with
US$2,853 million at the end of 2021.
In Singapore, recognised profits in 2022 were lower than the
prior year. 2021 benefited from the construction progress of the
wholly-owned 1,404-unit Parc Esta project, which was handed over to
buyers in 2022. The Group's attributable interest in contracted
sales was US$615 million, compared to US$328 million in the prior
year, driven by the healthy pre-sales performance of two new
residential projects launched during the year. The 407-unit
Piccadilly Grand and Galleria and 639-unit Copen Grand projects are
85% and 100% pre-sold or reserved, respectively.
In the rest of Southeast Asia, there were increased
contributions from completed projects in Indonesia and Vietnam.
Business Development
The Group continues to be disciplined in evaluating and
selecting Development Properties opportunities on the Chinese
mainland, with a focus on Tier 1 and Tier 2 cities. During the year
the Group made two acquisitions - a primarily residential site in
Shanghai and an interest in a mixed-used commercial site in
Suzhou.
The Shanghai site, located in Xuhui District and adjacent to our
mixed-used project in West Bund, has an attributable developable
area of 18,700 sq. m. and will feature six high-rise apartment
blocks with over 460 premium units.
The joint venture project in Suzhou was secured in August 2022
and will consist of a luxury mall and hotel. The total developable
area of the site is 132,600 sq. m., and it is expected to be
completed in 2026. This development reflects the Group's strategy
of developing luxury and premium lifestyle retail properties on the
Chinese mainland. The Group currently has four such properties in
operation, and the site in Suzhou will be added to the pipeline of
ten further such developments.
In addition, the Group increased its investments in two existing
projects, including acquiring from KWG Property Holdings Limited
the remaining 50% interest in WE City, a mixed-use project in
Chengdu in December 2022, and acquiring a 15% interest in Yue City,
a mixed-use project in Nanjing, from Country Garden with completion
expected in the first half of 2023.
In Singapore, the Group acquired a 49% interest in a residential
site in the Jalan Tembusu area with a total developable area of
60,000 sq. m., which is expected to be completed by 2025.
These land acquisitions increase the Group's attributable
developable area under development across all projects to 4.9
million sq. m.
Financing
The Group's financial position remains strong. Net debt of
US$5.8 billion at 31st December 2022 was up from US$5.1 billion at
the end of 2021, primarily due to lower proceeds from residential
sales. Net gearing at the end of the year was 17%, compared with
15% at the end of 2021. As at 31st December 2022, the Group had
committed liquidity of US$3.1 billion, with an average tenor of
debt of 5.8 years, compared to 6.5 years at the end of 2021.
In July 2022, the Group completed a US$500 million share buyback
programme, and it subsequently announced that an additional US$500
million would be invested through to the end of 2023. As at 28th
February 2023, the total amount invested in the buyback programme
since it was first announced in September 2021 was US$556 million,
with US$350 million invested in 2022.
SUSTAINABILITY
Hongkong Land's growth and progress on sustainability
initiatives continues to be underpinned by its Sustainability
Framework 2030, which addresses material topics that are linked to
measurable targets.
During the year, the Group committed to setting science-based
targets that are aligned with the 1.5degC pathway. These targets,
which were validated by the Science Based Targets initiative, has
resulted in the Group committing to a 46.2% reduction of Scope 1
and 2 greenhouse gas emissions by 2030 from 2019 levels and a 22%
reduction in carbon intensity for Scope 3 greenhouse gas emissions
over the same period.
The Group's continued commitment and strong performance on
sustainability initiatives has been recognised in a number of ESG
assessments, especially those involving in-depth assessments
requiring active participation. The Group was pleased to receive
the highest 5-star rating from the Global Real Estate
Sustainability Benchmark (GRESB) for its standing investments.
Hongkong Land also qualified, for the first time, as a constituent
of the Dow Jones Sustainability Asia Pacific Index, as a result of
the significant improvement in our scores in the 2022 S&P
Global Corporate Sustainability Assessment.
PEOPLE
I would like to express my appreciation on behalf of the Board
to all of our staff for their continued commitment and
professionalism in providing high quality offerings to our tenants
and customers, despite market and pandemic-related challenges.
Lord Powell of Bayswater and Percy Weatherall stepped down from
the Board in March 2022, and Michael Wu stepped down from the Board
in December 2022. We are grateful to them for their contributions
to the Group. We were pleased to welcome Lincoln K.K. Leong and
Lily Jencks to the Board as Independent Non-Executive Directors
with effect from March and July 2022, respectively.
OUTLOOK
Results in 2023 will principally depend on the pace of recovery
of the property sector on the Chinese mainland. Stable
contributions are expected to continue from the Group's Investment
Properties business, although rental reversions for the Hong Kong
office portfolio are expected to remain negative. The extent of
improvement in performance from the Development Properties business
will depend on policy support measures implemented on the Chinese
mainland.
Ben Keswick
Chairman
CHIEF EXECUTIVE'S REVIEW
Hongkong Land delivered a respectable result for the year,
despite challenging market conditions, although profits were
significantly lower. The contribution from Development Properties
fell as a result of pandemic measures on the Chinese mainland and a
more uncertain global economic outlook in the second half of 2022,
but the performance of Investment Properties was resilient.
STRATEGY
Hongkong Land is a landlord and a developer operating in China
and Southeast Asia. The Group's primary focus is to develop, grow
and hold for long-term investment a portfolio of prime commercial
investment properties across the region, whilst it also develops
premium residential and commercial properties for sale on an
opportunistic basis to enhance shareholder returns.
The Group's Investment Properties are predominantly commercial
and located in core business districts of key Asian gateway cities,
with a concentration in Hong Kong and Singapore. Returns
principally arise from rental income and long-term capital
appreciation. The Investment Properties segment is the largest
contributor to the Group's earnings given its relative size and
maturity. It accounted for 83% of the Group's gross assets at the
end of 2022 (2021: 83%) and contributed 70% of the Group's
underlying operating profit before corporate expenses in 2022
(2021: 60%).
The Group's Development Properties are predominantly premium
residential and mixed-use developments located primarily in China,
Singapore and Indonesia. Returns principally arise from trading
profits in respect of the immediate sale of the residential and
office components; and rental and trading profits for certain
commercial elements of mixed-use sites that are disposed of, or
reclassified to Investment Properties, after rents have stabilised.
Development Properties accounted for 17% of the Group's gross
assets at the end of 2022 (2021: 17%) and 30% of the Group's
underlying operating profit before corporate expenses in 2021
(2021: 40%).
Geographically, China generates the bulk of the Group's
earnings. Hong Kong, which predominantly comprises Investment
Properties, accounted for 57% of the Group's underlying operating
profit before corporate expenses (2021: 49%), while the Chinese
mainland, which predominantly comprises Development Properties,
accounted for 23% (2021: 33%).
The Investment Properties portfolios in Hong Kong and Singapore
provide a stable stream of recurring earnings and balance sheet
strength that enables the Group to selectively pursue new long-term
investment opportunities in key gateway cities across the region.
Earnings from the Development Properties business are largely
reinvested to replenish the Group's land bank where opportunities
arise. The Group's share of capital allocated to new investments
totalled US$1.0 billion in 2022 (2021: US$3.0 billion).
Hong Kong Investment Properties
In Hong Kong, the Group's Central Portfolio consists of 12
interconnected prime commercial buildings forming the heart of the
financial district in Central, providing over 450,000 sq. m. of
Grade A office and luxury retail space. This integrated mixed-use
development is positioned as the pre-eminent office, luxury retail,
restaurant, and hotel accommodation in Hong Kong. It continues to
attract both prime office tenants and luxury retailers, in addition
to housing the acclaimed Landmark Mandarin Oriental hotel.
Hong Kong's positioning as one of Asia's leading financial and
business hubs, combined with the scarcity of supply of
high-quality, well-managed space in Central and the unique
qualities of the Group's portfolio, continue to support low vacancy
and strong rents. Despite the challenging conditions resulting from
the pandemic and global uncertainties, Hong Kong continues to
possess unique advantages as a financial centre that are not easily
replicated. The Group remains confident that Hong Kong will
continue to thrive as the primary gateway for capital flows in and
out of the Chinese mainland and will remain an important finance
and commercial hub for decades to come.
The Group's 54,000 sq. m. retail portfolio is integrated with
its office buildings to create part of its distinctive and
successful mixed-use business model. Tenants include numerous
global luxury brand flagship stores, as well as a number of leading
restaurants. LANDMARK is firmly established as the iconic luxury
shopping and fine dining destination in Hong Kong. Its success
depends on the health of the broader Hong Kong economy, as well as
on Hong Kong remaining an attractive destination for affluent
visitors from across the region. The Group is working to ensure
that it remains the clear market leader in the city in which global
luxury brands are represented.
Other Investment Properties
Outside Hong Kong, the Group has similarly established itself as
a leading provider of prime office and retail space. In Singapore,
Hongkong Land's attributable interests totalling 165,000 sq. m. -
principally concentrated in the Marina Bay Area - include some of
the finest Grade A office space in the market. In China, the
Group's 43,000 sq. m. WF CENTRAL complex in Beijing is positioned
as a premium retail and lifestyle destination, which includes a
Mandarin Oriental hotel that has established itself as one of the
most exclusive hotels in the city. In Indonesia, the Group has
attributable interests of over 100,000 sq. m. of Grade A office
space through its 50%-owned joint venture, Jakarta Land. In
Cambodia, the EXCHANGE SQUARE complex comprises 26,000 sq. m. of
office and retail space in the heart of Phnom Penh.
Our performance in these markets depends on the levels of demand
for, and supply of, prime office and luxury retail space, both of
which are influenced by global and regional macroeconomic
conditions. The Group is committed to maintaining excellence in
product quality and service to retain and attract tenants and
customers and will continue to seek new opportunities to develop
prime investment properties in key Asian gateway cities.
Development Properties
The Group has established a strong and profitable Development
Properties business focused primarily on the premium residential
market segment in China, Singapore and Indonesia. In China, the
Group has a presence in seven key markets: Beijing, Chengdu,
Chongqing, Hangzhou, Nanjing, Shanghai and Wuhan, which are
expected to continue benefiting from the growth of the middle class
and long-term urbanisation trends. While the capital invested in
this business is significantly lower than that invested in
Investment Properties, the earnings derived from Development
Properties enhance the Group's diversification, overall profits and
return on capital. The Group's attributable interest in the
developable area of its projects at the end of 2022 totalled 10.7
million sq. m., compared to 10.2 million sq. m. at the end of 2021.
Of this, construction of approximately 54% had been completed at
the end of 2022, compared to 48% at the end of 2021.
Annual returns from Development Properties fluctuate due to the
nature of projects and the Group's accounting policy of recognising
profits for sold properties on completion in a number of markets,
including China. Demand is also dependent on overall economic
conditions, which can be significantly affected by government
policies and the availability of credit. Ongoing land acquisitions
are necessary to build and maintain a stable income stream over the
longer term.
REVIEW OF INVESTMENT PROPERTIES
Profits from Investment Properties in 2022 were 2% lower than
the prior year, primarily due to negative office rental reversions
in Hong Kong. The value of the Group's Investment Properties
portfolio at 31st December 2022 declined by 2%, mainly due to lower
market rents for the Hong Kong Central Portfolio and a modest
increase in capitalisation rates.
Hong Kong
Despite slowing demand due to global economic headwinds and
rising office vacancies across Hong Kong, the Group's Central
office portfolio continued to outperform the broader market.
Physical vacancy was 4.9% at the year-end, compared to 5.2% at the
end of 2021. On a committed basis, vacancy was 4.7%. Vacancy for
the overall Central Grade A office market was 8.8% at the end of
2022, compared to 8.0% at the end of 2021. Rental reversions
remained negative during the year. The Group's average office rent
in 2022 was HK$111 per sq. ft., down from last year's average of
HK$117 per sq. ft. Financial institutions and legal and accounting
firms occupy 81% of the Group's total leased office space. The
weighted average lease expiry of the office portfolio at the end of
2022 stood at 4.0 years, compared to 4.2 years at the end of
2021.
The Group's luxury retail portfolio in Hong Kong was negatively
impacted by pandemic restrictions in the first half of 2022,
although sentiment and performance improved as social and travel
restrictions were progressively relaxed towards the end of the
year. During the first half of 2022, the Group provided temporary
rent relief to support tenants through the fifth wave of the
pandemic, including turnover-only rent for food and beverage
tenants and a full waiver of rents for tenants subject to mandatory
closure of their businesses. Average retail rent in 2022 decreased
to HK$177 per sq. ft. from HK$190 per sq. ft. due to negative base
rental reversions, partly offset by a decline in temporary rent
relief provided to tenants. Vacancy, on both a physical and
committed basis, remained low at 0.5%.
Over the past year, the Group continued to refine its
best-in-class services and offerings to its tenants and customers.
In March 2022, the Group launched a new LANDMARK app to provide
shoppers and loyalty members with a more personalised and intuitive
user experience. The new platform also provides more flexibility in
co-creating content with our tenants and partners and enables the
Group to serve customers better through a deeper understanding of
their needs.
In December 2022, the Group expanded its successful premium food
hall concept in the basement level of Jardine House by launching
BaseHall 2. The venue provides a fluid space for multi-concept
dining and the flexibility to host other events and experiences for
our tenants and customers. In addition to housing 13 unique food
and beverage concepts, BaseHall 2 has an 18-seat chef's counter to
provide a platform to incubate homegrown talents in Hong Kong.
The value of the Group's Investment Properties portfolio in Hong
Kong at 31st December 2022, based on independent valuations,
declined by 2% to US$26,131 million, primarily from a slight
increase in capitalisation rates.
Singapore
Although the Singapore office leasing market remained healthy in
2022, market sentiment was affected by global economic headwinds
towards the end of the year. Overall vacancy across the entire
Grade A central business district was 5.5% at the end of 2022,
compared to 8.6% at the end of 2021. Average rent at the Group's
office portfolio increased to S$10.6 per sq. ft. in 2022, up from
S$10.3 per sq. ft. in the previous year, driven by positive rental
reversions. Physical vacancy was 7.5% at the year end, whilst on a
committed basis vacancy was 2.2% at the end of 2022, compared to
2.9% at the end of 2021. Financial institutions and legal and
accounting firms occupy 73% of the Group's total leased office
space. The weighted average lease expiry of the office portfolio at
2022 year-end stood at 3.4 years (2021: 3.4 years).
To further enhance the tenant experience, the Group has
continued to leverage its popular 'By The Bay' mobile app to
introduce exclusive retail offerings, deliver a series of health
and wellness workshops and host community and charitable
events.
Chinese Mainland
In Beijing, footfall and tenant sales at WF CENTRAL were
negatively impacted by pandemic measures throughout the year.
Tenant repositioning initiatives, however, remained on track with
several new openings expected in the first half of 2023.
In Shanghai, planning and development of the Group's prime
mixed-use development on the West Bund is proceeding on schedule.
Completion is expected in phases from 2023 to 2027.
Other Investment Properties
ONE CENTRAL Macau was negatively impacted by pandemic measures,
with lower footfall and tenant sales than the prior year, as the
border with the Chinese mainland remained closed for most of the
year. Physical occupancy was 84%, compared to 91% at the end of the
prior year.
In Jakarta, occupancy across the office portfolio was 71% at the
end of 2022, compared to 72% at the end of 2021. On a committed
basis, occupancy was 72%. The average net rent was US$15.0 per sq.
m. in 2022, compared to US$15.2 per sq. m. in the prior year,
reflecting a satisfactory performance in the context of a
structural surplus of city-wide office supply.
In Bangkok, planning of the Group's 49%-owned prime commercial
joint-venture development in the central business district, secured
in late 2017, is under review in response to the changing market
conditions. This development has a gross floor area of 290,000 sq.
m.
Performance at the Group's other investment properties was
within expectations.
REVIEW OF DEVELOPMENT PROPERTIES
Earnings from the Group's Development Properties business were
lower in 2022 than in 2021, primarily due to construction delays
caused by pandemic restrictions and fewer planned sales completions
on the Chinese mainland.
Chinese Mainland
The Group's development properties on the Chinese mainland
comprise 35 projects in seven cities, of which 14 are in Chongqing.
As at 31st December 2022, the Group's net investment in development
properties on the Chinese mainland was US$6.5 billion, compared to
US$6.3 billion at the end of 2021.
While the Development Properties business is predominantly
focused on selling residential properties, the Group is also
developing luxury and premium lifestyle retail properties on the
Chinese mainland. It currently has four such properties in
operation, with a total attributable net leasable area of 170,000
sq. m. In addition, a further ten projects, with an estimated
attributable net leasable area of 323,000 sq. m., are expected to
be launched from 2023 to 2027, as follows:
Luxury Retail Properties Pipeline
Project City Attributable net leasable area (sq. m.)
JL CENTRAL Nanjing 23,000
----------- ----------------------------------------
Eternal Land Chongqing 44,400
----------- ----------------------------------------
West Bund* Shanghai 51,800
----------- ----------------------------------------
Suzhou CENTRAL* Suzhou 39,400
----------- ----------------------------------------
*The West Bund luxury retail segment and Suzhou CENTRAL are
recognised under Investment Properties.
Premium Lifestyle Retail Properties Pipeline
Project City Attributable net leasable area (sq. m.)
Galaxy Midtown Shanghai 8,800
----------- ----------------------------------------
WE City Chengdu 51,700
----------- ----------------------------------------
Yue City Nanjing 16,200
----------- ----------------------------------------
Central Avenue Chongqing 38,100
----------- ----------------------------------------
Hangzhou Bay Hangzhou 22,800
----------- ----------------------------------------
Dream Land Wuhan 26,700
----------- ----------------------------------------
With tightened credit conditions and macroeconomic headwinds on
the Chinese mainland, the Group maintained its disciplined and
consistent approach to evaluating expansion opportunities. During
the year, the Group secured two new joint venture projects: a
residential project in West Bund, Shanghai and a commercial project
in Suzhou.
Market sentiment remained weak throughout the year due to
pandemic restrictions. The Group's share of total contracted sales
in 2022 was US$1,300 million, 51% lower than the US$2,648 million
achieved in the prior year. The Group's attributable interest in
revenue recognised in 2022, including its share of revenue in joint
ventures and associates, was US$1,873 million, compared to US$2,426
million in 2021.
At 31st December 2022, the Group's attributable interest in sold
but not yet recognised contracted sales amounted to US$2,087
million, compared to US$2,853 million at the end of 2021.
Development Properties Pipeline (Chinese Mainland)
City Number of Developable Revenue from property sales* % of % of
projects area* ('000 sq. (US$m) Construction Development
m.) completed Properties
exposure on
the Chinese
Mainland
2022 2021
---------------- ----------------
Chongqing 14 4,890 1,113 1,480 79% 33%
---------------- ---------------- ---------------- ---------------- ---------------- ---------------
Shanghai 5 397 59 259 43% 22%
---------------- ---------------- ---------------- ---------------- ---------------- ---------------
Nanjing 4 433 100 450 33% 16%
---------------- ---------------- ---------------- ---------------- ---------------- ---------------
Wuhan 4 642 56 2 23% 16%
---------------- ---------------- ---------------- ---------------- ---------------- ---------------
Chengdu 5 1,209 27 164 63% 8%
---------------- ---------------- ---------------- ---------------- ---------------- ---------------
Beijing 1 38 - - - 4%
---------------- ---------------- ---------------- ---------------- ---------------- ---------------
Hangzhou 2 309 518 71 53% 1%
---------------- ---------------- ---------------- ---------------- ---------------- ---------------
*Includes HKL's share in joint ventures and associates
Singapore
With the relaxing of pandemic restrictions, residential market
sentiment recovered during the year, with satisfactory sales
performance at the Group's existing projects.
The Group completed one residential project during the year, the
wholly-owned 1,404-unit Parc Esta, which was fully sold.
The Group's attributable interest in contracted sales was US$615
million in 2022, compared to US$328 million in the prior year. The
Group's attributable interest in revenue recognised in 2022 was
US$379 million, compared to US$631 million in the prior year.
At 31st December 2022, the Group's attributable interest in sold
but not yet recognised contracted sales amounted to US$589 million,
compared to US$362 million at the end of 2021.
During the year, the Group secured a 49% interest in a
residential site in the Jalan Tembusu area with a developable area
of 60,000 sq. m., which is expected to yield a total of 638 units
on completion.
Development Properties Pipeline (Singapore)
Project Developable area* Revenue from property sales* (US$m) Expected % of Development
('000 sq. m.) Completion Properties
exposure in
Southeast Asia
2022 2021
------------------ ------------------
Parc Esta 108 164 501 Completed -
------------------ ------------------ ------------------ ------------------ -----------------
Leedon Green 27 190 66 2023 6%
------------------ ------------------ ------------------ ------------------ -----------------
Piccadilly Grand
and Galleria 20 25 - 2025 3%
------------------ ------------------ ------------------ ------------------ -----------------
Copen Grand 34 - - 2025 4%
------------------ ------------------ ------------------ ------------------ -----------------
Tembusu Grand 29 - - 2025 30%
------------------ ------------------ ------------------ ------------------ -----------------
*Includes HKL's share in joint ventures and associates
Indonesia and Other Development Properties
In Indonesia, construction of the Group's residential projects
has largely recovered with the relaxation of pandemic
restrictions.
During the year, the Group acquired a 50% interest in a 50.4
hectare primarily residential site in the southwest of Jakarta. The
project will consist of predominantly land houses and is expected
to be completed in phases from 2025 to 2033.
In February 2022, the Group, in partnership with Astra
International, established a joint venture with LOGOS SE Asia Pte
Ltd to manage and develop modern logistics warehouses in Indonesia,
with an initial focus in the Greater Jakarta area.
In the rest of Southeast Asia, construction activities continue
to progress well, with pre-sales performance in line with
expectations.
Development Properties Pipeline (Southeast Asia Ex.
Singapore)
Country Number of Developable Revenue from property sales* % of % of
projects area* ('000 (US$m) Construction Development
sq. m.) completed Properties
exposure in
Southeast Asia
2022 2021
---------------- ----------------
Indonesia 6 743 67 37 24% 25%
---------------- --------------- ---------------- ---------------- --------------- ---------------
Thailand 4 263 22 32 13% 22%
---------------- --------------- ---------------- ---------------- --------------- ---------------
Philippines 3 710 20 25 12% 7%
---------------- --------------- ---------------- ---------------- --------------- ---------------
Vietnam 1 40 90 47 100% 3%
---------------- --------------- ---------------- ---------------- --------------- ---------------
*Includes HKL's share in joint ventures and associates
THE YEAR AHEAD
Looking ahead to 2023, the Group expects a steady improvement in
the operating environments across a majority of its key markets.
The Group's Investment Properties portfolios in Hong Kong and
Singapore remain well positioned in their respective markets,
underpinned by their high quality tenant base and low vacancies. In
the Development Properties business, the extent of improvement in
performance will depend on the pace of recovery of the Chinese
mainland property sector.
We take pride in delivering outstanding services and products to
our tenants and customers by upholding the highest quality
standards. These core values have served as the foundation of
Hongkong Land's long-term success. The Group intends to utilise its
strong balance sheet and disciplined investment approach to further
strengthen its market positions and achieve sustained growth.
Robert Wong
Chief Executive
Hongkong Land Holdings Limited
Consolidated Profit and Loss Account
for the year ended 31st December 2022
2022 2021
Underlying Non- Underlying Non-
business trading business trading
performance items Total performance items Total
US$m US$m US$m US$m US$m US$m
Revenue (note 2) 2,244.4 - 2,244.4 2,384.3 - 2,384.3
Net operating costs
(note 3) (1,398.4) - (1,398.4) (1,440.9) 2.6 (1,438.3)
Change in fair value
of
investment properties
(note 7) - (559.3) (559.3) - (1,375.5) (1,375.5)
Operating
profit/(loss)
(note 4) 846.0 (559.3) 286.7 943.4 (1,372.9) (429.5)
Net financing charges
- financing charges (234.9) - (234.9) (222.2) - (222.2)
- financing
income 66.8 - 66.8 67.0 - 67.0
(168.1) - (168.1) (155.2) - (155.2)
Share of results of
associates and joint
ventures (note 5)
- before change in
fair
value of investment
properties 229.3 - 229.3 355.9 - 355.9
Change in fair value
of
investment properties - (24.5) (24.5) - 80.6 80.6
229.3 (24.5) 204.8 355.9 80.6 436.5
--------- ---------- ----------- ----------------- ----------- ---------
Profit/(loss) before
tax 907.2 (583.8) 323.4 1,144.1 (1,292.3) (148.2)
Tax (note 6) (131.7) 7.9 (123.8) (178.7) (16.9) (195.6)
--------- ---------- ----------- ----------------- ----------- ---------
Profit/(loss) after
tax 775.5 (575.9) 199.6 965.4 (1,309.2) (343.8)
--------- ---------- ----------- ----------------- ----------- ---------
Attributable to:
Shareholders of the
Company 776.1 (573.4) 202.7 966.0 (1,315.2) (349.2)
Non-controlling interests (0.6) (2.5) (3.1) (0.6) 6.0 5.4
--------- ---------- ----------- ----------------- ----------- ---------
775.5 (575.9) 199.6 965.4 (1,309.2) (343.8)
--------- ---------- ----------- ----------------- ----------- ---------
USc USc USc USc
Earnings/(loss) per
share (basic and diluted)
(note 8) 34.44 8.99 41.49 (15.00)
Hongkong Land Holdings Limited
Consolidated Statement of Comprehensive Income
for the year ended 31st December 2022
2022 2021
US$m US$m
Profit/(loss) for the year 199.6 (343.8)
Other comprehensive income/( expense)
Items that will not be reclassified
to profit
or loss:
Remeasurements of defined benefit
plans (1.6) 3.3
Tax on items that will not be
reclassified 0.3 (0.5)
(1.3) 2.8
Items that may be reclassified
subsequently
to profit or loss:
Net exchange translation differences
- net loss arising during the
year (116.8) (148.1)
Cash flow hedges
- net gain/(loss) arising during
the year 2.4 (11.7)
- transfer to profit and loss (2.4) (0.1)
- (11.8)
Tax relating to items that may
be
reclassified - 1.9
Share of other comprehensive (expense)/
income of associates and joint
ventures (523.6) 87.1
(640.4) (70.9)
Other comprehensive expense for
the
year, net of tax (641.7) (68.1)
------------- ------------
Total comprehensive expense for
the year (442.1) (411.9)
------------- ------------
Attributable to:
Shareholders of the Company (431.9) (419.4)
Non-controlling interests (10.2) 7.5
------------- ------------
(442.1) (411.9)
------------- ------------
Hongkong Land Holdings Limited
Consolidated Balance Sheet
at 31st December 2022
2022 2021
US$m US$m
Net operating assets
F ixed assets 111.8 127.8
Right-of-use assets 13.0 12.4
Investment properties (note
10) 28,054.1 28,600.2
Associates and joint ventures 9,616.0 9,515.3
Non-current debtors 16.8 29.7
Deferred tax assets 98.2 67.7
Pension assets 0.9 1.8
Non-current assets 37,910.8 38,354.9
Properties for sale 2,910.7 2,970.5
Current debtors 539.4 1,029.4
Current tax assets 62.5 28.3
Bank balances 1,173.4 1,479.5
--------------- -----------
Current assets 4,686.0 5,507.7
Current creditors (1,667.0) (2,194.6)
Current borrowings (note 11) (419.1) (865.3)
Current tax liabilities (328.9) (202.9)
Current liabilities (2,415.0) (3,262.8)
Net current assets 2,271.0 2,244.9
Long-term borrowings (note
11) (6,571.4) (5,717.9)
Deferred tax liabilities (257.1) (227.9)
Pension liabilities (1.8) -
Non-current creditors (24.4) (35.8)
--------------- -----------
33,327.1 34,618.2
--------------- -----------
Total equity
Share capital 222.7 229.8
Share premium - 67.4
Revenue and other reserves 33,080.7 34,286.6
--------------- -----------
Shareholders' funds 33,303.4 34,583.8
Non-controlling interests 23.7 34.4
--------------- -----------
33,327.1 34,618.2
--------------- -----------
Hongkong Land Holdings Limited
Consolidated Statement of Changes in Equity
for the year ended 31st December 2022
Attributable to Attributable
shareholders to non-
Share Share Revenue Hedging Exchange of the controlling Total
capital premium reserves reserves reserves Company interests equity
US$m US$m US$m US$m US$m US$m US$m US$m
2022
At 1st January 229.8 67.4 34,022.4 (20.2) 284.4 34,583.8 34.4 34,618.2
Total comprehensive (expense)/income - - 201.4 17.2 (650.5) (431.9) (10.2) (442.1)
Dividends paid by the Company (note
9) - - (498.8) - - (498.8) - (498.8)
Dividends paid to non-controlling
shareholders - - - - - - (0.5) (0.5)
Unclaimed dividends forfeited - - 1.0 - - 1.0 - 1.0
Repurchase of shares (7.1) (67.4) (276.2) - - (350.7) - (350.7)
At 31st December 222.7 - 33,449.8 (3.0) (366.1) 33,303.4 23.7 33,327.1
------------------- --------------- ----------- -------------- -------- -------- ----------- ----------
2021
At 1st January 233.4 257.3 34,881.2 (21.6) 358.8 35,709.1 29.4 35,738.5
Total comprehensive (expense)/income - - (346.4) 1.4 (74.4) (419.4) 7.5 (411.9)
Dividends paid by the Company (note
9) - - (513.4) - - (513.4) - (513.4)
Dividends paid to non-controlling
shareholders - - - - - - (0.9) (0.9)
Unclaimed dividends forfeited - - 1.0 - - 1.0 - 1.0
Disposal of subsidiaries - - - - - - (1.6) (1.6)
Repurchase of shares (3.6) (189.9) - - - (193.5) - (193.5)
At 31st December 229.8 67.4 34,022.4 (20.2) 284.4 34,583.8 34.4 34,618.2
------------------- --------------- ----------- -------------- -------- -------- ----------- ----------
Hongkong Land Holdings Limited
Consolidated Cash Flow Statement
for the year ended 31st December 2022
2022 2021
US$m US$m
Operating activities
Operating profit/(loss) 286.7 (429.5)
Depreciation and amortisation 17.5 16.3
Change in fair value of investment properties 559.3 1,375.5
Loss on disposal of fixed assets 2.8 -
Gain on acquisition of subsidiaries (1.3) -
Gain on disposal of subsidiaries and joint
ventures - (37.6)
Decrease/(increase) in properties for
sale 88.9 (991.6)
Decrease in debtors 487.4 52.4
(Decrease)/increase in creditors (498.0) 633.3
Interest received 45.6 43.2
Interest and other financing charges paid (228.2) (215.8)
Tax paid (124.7) (156.7)
Dividends from associates and joint ventures 222.3 239.1
Cash flows from operating activities 858.3 528.6
Investing activities
Major renovations expenditure (94.6) (98.9)
Developments capital expenditure - (1.5)
Investments in and advances to associates
and joint
ventures (617.6) (397.1)
Disposal of subsidiaries - 5.7
Disposal of joint ventures - 59.6
Acquisition of subsidiaries (14.5) -
Cash flows from investing activities (726.7) (432.2)
Financing activities
Drawdown of borrowings 2,399.6 1,840.0
Repayment of borrowings (1,954.7) (1,764.1)
Principal elements of lease payments (4.1) (3.3)
Repurchase of shares (352.3) (191.9)
Dividends paid by the Company (503.7) (509.1)
Dividends paid to non-controlling shareholders (0.5) (0.9)
Cash flows from financing activities (415.7) (629.3)
--------- ---------
Net cash outflow (284.1) (532.9)
Cash and cash equivalents at 1st January 1,476.1 1,990.4
Effect of exchange rate changes (20.5) 18.6
--------- ---------
Cash and cash equivalents at 31st December 1,171.5 1,476.1
--------- ---------
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
2022 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 Group has adopted the Amendments to IAS 37 - Onerous
Contracts - Cost of Fulfilling a Contract (effective from 1st
January 2022). The amendments clarify that for the purpose of
assessing whether a contract is onerous, the cost of fulfilling the
contract includes both the incremental costs of fulfilling that
contract and an allocation of other costs that relate directly to
fulfilling contracts. The Group applied the amendments from 1st
January 2022 and there is no material impact on the Group's
consolidated financial statements.
Apart from the above, there are no other amendments which are
effective in 2022 and relevant to the Group's operations that have
a significant impact on the Group's results, financial position and
accounting policies.
The Group has not early adopted any standard, interpretation or
amendment that has been issued but not yet effective.
2. REVENUE
2022 2021
US$m US$m
Rental income 927.5 946.7
Service income 190.9 182.3
Sales of properties
- recognised at a point in time 953.4 687.6
- recognised over time 172.6 567.7
1,126.0 1,255.3
2,244.4 2,384.3
------- -------
Total variable rents included in rental income amounted to
US$30.9 million (2021: US$29.2 million).
3. NET OPERATING COSTS
2022 2021
US$m US$m
Cost of sales (1,223.7) (1,283.9)
Other income 40.8 16.0
Administrative expenses (214.0) (208.5)
Loss on disposal of fixed assets (2.8) -
Gain on acquisition of subsidiaries 1.3 -
Gain on disposal of subsidiaries and
joint ventures - 37.6
Asset impairment reversal - 0.5
(1,398.4) (1,438.3)
--------- ---------
4. OPERATING PROFIT/(LOSS)
2022 2021
US$m US$m
By business
Investment Properties 820.7 836.0
Development Properties 114.1 196.5
Corporate (88.8) (89.1)
------- ---------
846.0 943.4
Change in fair value of investment properties (559.3) (1,375.5)
Gain on disposal of subsidiaries - 2.1
Asset impairment reversal - 0.5
286.7 (429.5)
------- ---------
5. SHARE OF RESULTS OF ASSOCIATES AND JOINT VENTURES
2022 2021
US$m US$m
By business
Investment Properties
- operating profit 130.7 136.8
- net financing charges (43.4) (31.8)
- tax (15.0) (16.6)
- net profit 72.3 88.4
Development Properties
- operating profit 289.5 447.8
- net financing charges (16.8) (8.7)
- tax (113.9) (169.9)
- non-controlling interests (1.8) (1.7)
- net profit 157.0 267.5
------- -------
Underlying business performance 229.3 355.9
Change in fair value of investment properties
(net of tax) (24.5) 80.6
204.8 436.5
------- -------
6. TAX
2022 2021
US$m US$m
Tax charged to profit and loss is analysed
as follows:
Current tax (128.3) (191.1)
Deferred tax 4.5 (4.5)
(123.8) (195.6)
------- -------
Tax relating to components of other comprehensive income is
analysed as follows:
2022 2021
US$m US$m
Remeasurements of defined benefit plans 0.3 (0.5)
Cash flow hedges - 1.9
----- -----
0.3 1.4
----- -----
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$127.0
million (2021: US$198.2 million) is included in share of results of
associates and joint ventures.
7. NON-TRADING ITEMS
Non-trading items are separately identified to provide greater
understanding of the Group's underlying business performance. Items
classified as non-trading items include fair value gains or losses
on revaluation of investment properties; gains and losses arising
from the sale of businesses and investment properties; impairment
of non-depreciable intangible assets; provisions for the closure of
businesses; acquisition-related costs in business combinations; and
other credits and charges of a non-recurring nature that require
inclusion in order to provide additional insight into underlying
business performance.
An analysis of non-trading items after interest, tax and
non-controlling interests is set out below:
2022 2021
US$m US$m
Change in fair value of investment properties (559.3) (1,375.5)
Tax on change in fair value of investment
properties 7.9 (16.9)
Gain on disposal of subsidiaries - 2.1
Asset impairment reversal - 0.5
Share of change in fair value of investment
properties in
associates and joint ventures (net of tax) (24.5) 80.6
Non-controlling interests 2.5 (6.0)
(573.4) (1,315.2)
------- ---------
8. EARNINGS PER SHARE
Earnings per share are calculated on profit attributable to
shareholders of US$202.7 million (2021: loss of US$349.2 million)
and on the weighted average number of 2,253.7 million (2021:
2,328.3 million) shares in issue during the year.
Earnings per share are additionally calculated based on
underlying profit attributable to shareholders. A reconciliation of
earnings is set out below:
2022 2021
------------------- ---------------------
Earnings Earnings
per share per share
US$m USc US$m USc
Underlying profit attributable
to
shareholders 776.1 34.44 966.0 41.49
Non-trading items (note 7) (573.4) (1,315.2)
------- ---------
Profit/(loss) attributable
to shareholders 202.7 8.99 (349.2) (15.00)
------- ---------
9. DIVIDS
2022 2021
US$m US$m
Final dividend in respect of 2021 of USc16.00
(2020: USc16.00) per share 364.5 373.4
Interim dividend in respect of 2022 of
USc6.00
(2021: USc6.00) per share 134.3 140.0
498.8 513.4
----- -----
A final dividend in respect of 2022 of USc16.00 (2021: USc16.00)
per share amounting to a total of US$356.3 million (2021: US$367.6
million) is proposed by the Board. The dividend proposed will not
be accounted for until it has been approved at the 2023 Annual
General Meeting. The amount will be accounted for as an
appropriation of revenue reserves in the year ending 31st December
2023.
10. INVESTMENT PROPERTIES
2022 2021
US$m US$m
At 1st January 28,600.2 30,083.3
Exchange differences (77.3) (155.7)
Additions 95.4 56.4
Transfer to fixed assets (4.9) -
Disposal of subsidiaries - (8.3)
Decrease in fair value (559.3) (1,375.5)
At 31st December 28,054.1 28,600.2
-------- ---------
11. BORROWINGS
2022 2021
US$m US$m
Current
Bank overdrafts 1.9 3.4
Bank loans 87.4 86.0
Current portion of long-term borrowings
- bank loans 150.4 155.5
- medium term notes 179.4 620.4
419.1 865.3
Long-term
Bank loans 2,924.9 1,882.2
Medium term notes
------- -------
- due 2023 - 179.2
- due 2024 394.9 406.8
- due 2025 642.9 644.5
- due 2026 38.6 38.6
- due 2027 186.2 186.0
- due 2028 182.7 182.5
- due 2029 121.3 121.2
- due 2030 698.3 697.7
- due 2031 569.2 568.6
- due 2032 140.2 140.0
- due 2033 89.2 89.1
- due 2034 77.1 77.1
- due 2035 253.8 253.6
- due 2038 109.6 109.0
- due 20 39 110.6 109.9
- due 2040 31.9 31.9
3,646.5 3,835.7
6,571.4 5,717.9
6,990.5 6,583.2
------- -------
12. CAPITAL COMMITMENTS AND CONTINGENT LIABILITIES
Total capital commitments at 31st December 2022 amounted to
US$1,016.9 million (2021: US$1,183.5 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 financial statements.
13. 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 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 2022
was US$3.8 million (2021: US$4.8 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 2022 amounted to US$16.9 million
(2021: US$19.5 million).
The Group provided project management services and property
management services to Jardine Matheson group members in 2022
amounting to US$4.7 million (2021: US$3.4 million).
Jardine Matheson group members provided property maintenance and
other services to the Group in 2022 in aggregate amounting to
US$65.3 million (2021: US$48.7 million).
Hotel management services
Jardine Matheson group members provided hotel management
services to the Group in 2022 amounting to US$2.2 million (2021:
US$3.6 million).
Outstanding balances with associates and joint ventures
Amounts of outstanding balances with associates and joint
ventures are included in associates and joint ventures, debtors and
creditors as appropriate.
Hongkong Land Holdings Limited
Principal Risks and Uncertainties
The following are the principal risks and uncertainties facing
the Company as required to be disclosed pursuant to the Disclosure
Guidance and Transparency Rules issued by the Financial Conduct
Authority in the United Kingdom and are in addition to the matters
referred to in the Chairman's Statement, Chief Executive's Review
and other parts of the Company's 2022 Annual Report (the
'Report').
Economic Risk
The Group is exposed to the risk of negative developments in
global and regional economies and financial and property markets,
either directly or through the impact such developments might have
on the Group's joint venture partners, associates, bankers,
suppliers, customers or tenants. These developments could include
recession, inflation, deflation and currency fluctuations,
restrictions in the availability of credit, increases in financing
and construction costs and business failures, and reductions in
office and retail rents, office and retail occupancy, and sales
prices of, and demand for, residential and mixed-use
developments.
Such developments might increase costs of sales and operating
costs, reduce revenues, increase net financing charges, or result
in reduced valuations of the Group's investment properties or in
the Group being unable to meet its strategic objectives.
Mitigation Measures
-- Monitor the volatile macroeconomic environment and consider economic factors in strategic
and financial planning processes.
-- Make agile adjustments to existing business plans and explore new business streams and new
markets.
-- Review pricing strategies.
Commercial Risk
Risks are an integral part of normal commercial activities and
where practicable steps are taken to mitigate them. Risks can be
more pronounced when businesses are operating in volatile
markets.
The Group makes significant investment decisions regarding
commercial and residential development projects, and these are
subject to market risks. This is especially the case where projects
are longer-term in nature and take more time to deliver
returns.
The Group operates in regions that are highly competitive, and
failure to compete effectively, whether in terms of price, tender
terms, product specification or levels of service, and failure to
manage change in a timely manner, can have an adverse effect on
earnings or market share, as can construction risks in relation to
new developments. Significant competitive pressure may also lead to
reduced margins.
It is essential for the products and services provided by the
Group's businesses to meet the appropriate quality and safety
standards, and there is an associated risk if they do not,
including the risk of damage to brand equity or reputation, which
might adversely impact the ability to achieve acceptable revenues
and profit margins.
The potential impact of disruption to IT systems or
infrastructure, whether due to cyber-crime or other factors, could
be significant. There is also an increasing risk to our businesses
from adverse social media commentary, which could influence
customer and other stakeholder behaviours and impact operations or
profitability or lead to reputational damage.
Mitigation Measures
-- Utilise market intelligence and deploy digital strategies for business-to-consumer businesses.
-- Establish customer relationship management programme and digital commerce capabilities.
-- Engage in longer-term contracts and proactively approach suppliers for contract renewals.
-- Re-engineer existing business processes.
Financial and Treasury Risk
The Group's activities expose it to a variety of financial
risks, including market risk, credit risk and liquidity risk.
The market risk the Group faces include i) foreign exchanges
risk from future commercial transactions, net investments in
foreign operations and net monetary assets and liabilities that are
denominated in a currency that is not the entity's functional
currency; ii) interest rate risk through the impact of rate changes
on interest-bearing liabilities and assets; and iii) securities
price risks as a result of its equity investments and limited
partnership investment funds which are measured at fair value
through profit and loss, and debt investments which are measured at
fair value through other comprehensive income.
The Group's credit risk is primarily attributable to deposits
with banks, contractual cash flows of debt investments carried at
amortised cost and those measured at fair value through other
comprehensive income, credit exposure to customers and derivative
financial instruments with a positive fair value.
The Group may face liquidity risk if its credit rating
deteriorates or if it is unable to meet its financing
commitments.
Mitigation Measures
-- Limiting foreign exchange and interest rate risks to provide
a degree of certainty about costs.
-- Management of the investment of the Group's cash resources
so as to minimise risk, while seeking to enhance yield.
-- Adopting appropriate credit guidelines to manage counterparty
risk.
-- When economically sensible to do so, taking borrowings
in local currency to hedge foreign exchange exposures
on investments.
-- A portion of borrowings is denominated in fixed rates.
Adequate headroom in committed facilities is maintained
to facilitate the Group's capacity to pursue new investment
opportunities and to provide some protection against market
uncertainties.
-- The Group's funding arrangements are designed to keep an appropriate balance between equity
and debt from banks and capital markets, both short and long term in tenor, to give flexibility
to develop the business. The Company also maintains sufficient cash and marketable securities,
and ensures the availability of funding from an adequate amount of committed credit facilities
and the ability to close out market positions.
-- The Group's treasury operations are managed as cost centres and are not permitted to undertake
speculative transactions unrelated to underlying financial exposure.
The detailed steps taken by the Group to manage its exposure to
financial risk will be set out in the Financial Review and in a
note to the Financial Statements in the Report.
Regulatory and Political Risk
The Group is subject to a number of regulatory regimes in the
territories it operates. Changes in such regimes, in relation to
matters such as foreign ownership of assets and businesses,
exchange controls, planning controls, tax rules, climate-related
regulation and employment legislation, could have the potential to
impact the operations and profitability of the Group.
Changes in the political environment, including political or
social unrest, in the territories where the Group operates, could
adversely affect the Group.
Mitigation Measures
-- Stay connected and informed of relevant new and draft regulations.
-- Engage external consultants and legal experts where necessary.
-- Raise awareness via principal's brand conference with an annual update on new regulations
that may have been implemented in other markets.
Pandemic, War, Terrorism and Natural Disasters Risk
A global or regional pandemic would impact the Group's business,
affecting travel patterns, demand for the Group's products and
services, and possibly the Group's ability to operate effectively.
The Group's properties and/or project sites are also vulnerable to
the effects of war and terrorism, either directly through the
impact of an act of war and terrorism or indirectly through
generally reduced economic activity in response to the threat of or
an actual act of war and terrorism. In addition, a number of the
territories in which the Group operates can experience from
time-to-time natural disasters such as typhoons, floods,
earthquakes and tsunamis.
Mitigation Measures
-- Flexible work arrangements and compliance with hygiene protocols.
-- Supply chain stabilisation includes sourcing backup suppliers and better coordination with
logistics partners.
-- Insurance programmes that provide robust cover for natural disasters including property
damage
and business interruption.
Key Contracts Risk
Many of the Group's businesses and projects rely on concessions,
management, outsourcing or other vital contracts. Accordingly,
cancellation, expiry or termination, or the renegotiation of any
such concession, management, outsourcing or other third-party key
contracts could adversely affect the financial condition and
results of operations of certain subsidiaries, associates and joint
ventures of the Group.
Mitigation Measures
-- Monitor materials and services providers' performance and compliance with standards set
out
in contracts to ensure quality.
-- Engage experts to manage the key contracts.
-- Diversify suppliers/contractors portfolio to avoid over-reliance on specific suppliers/
contractors
for key operations.
Cybersecurity Risk
The Group's businesses are ever more reliant on technology in
their operations and face increasing numbers of cyberattacks from
groups targeting both individuals and businesses. As a result, the
privacy and security of customer, tenant and corporate information
are at risk of being compromised through a breach of our or our
suppliers' IT systems or the unauthorised or accidental release of
information, resulting in brand damage, impaired competitiveness or
regulatory action. Cyberattacks may also adversely affect our
ability to manage our business operations or operate information
technology and business systems, resulting in business
interruption, lost revenues, repair or other costs.
Mitigation measures
-- Engage external consultants to perform assessments on the business units with industry
benchmarks.
-- Define cybersecurity programme and centralised function to provide oversight, manage
cybersecurity
matters, and strengthen cyber defences and security measures.
-- Perform regular vulnerability assessment and/or penetration testing to identify
weaknesses.
-- Maintain disaster recovery plans and backup for data restoration.
-- Arrange regular security awareness training at least annually and phishing testing to
raise
users' cybersecurity awareness.
Governance and Misconduct Risk
Effective management of the Group's risks depends on the
existence of an appropriate governance structure, tone from top
leadership, and functioning system of internal controls. Ethical
breaches, management override of controls, employee fraud and
misconduct, or other deficiencies in governance and three lines of
internal controls may result in financial loss and reputational
damage for the Group.
Inadequate capability and diversity in management or the board
may also lead to sub-optimal deliberations and decisions.
The Group holds minority stakes in various companies. Lack of
control or significant influence over these companies may lead to
losses on the Group's investment if the companies are
mismanaged.
Mitigation Measures
-- Established Groupwide mandatory code of conduct that applies to all Group businesses and new
joiners.
-- Maintain a robust Corporate Governance Framework which includes a whistle-blowing channel.
-- Compliance department reviews internal controls.
-- Maintain functionally independent internal audit function that reports to the Group Audit
Committee on risk management, the control environment and significant non-compliance matters.
-- Maintain Crime and General Liability insurance policies with adequate coverage.
Health and Safety Risk
The Group's businesses engage in construction, renovation or
other physical activities that may lead to serious injury or fatal
incidents if work conditions are unsafe or workers do not take due
care to observe safety procedures.
Mitigation Measures
-- Establish safe working environments and regular safety training for all employees and subcontractors.
-- Establish contractual requirements for contractors to comply with high expected levels of
safety standards.
-- Incorporate site safety plans in tenders and contracts.
-- Conduct occupational health and safety awareness campaigns.
-- Purchase sufficient insurance coverage including employee compensation and construction of
all risks.
-- Establish proper contractor selection process.
-- Ensure contractors follow the Group's guidelines, requirements and local regulations.
-- Conduct regular audits on operating buildings and construction sites.
-- Conduct periodic drills and crisis management procedures for safety incidents.
People Risk
The competitiveness of the Group's businesses depends on the
quality of the people that it attracts and retains. Unavailability
of needed human resources may impact the ability of the Group's
businesses to operate at capacity, implement initiatives and pursue
opportunities.
The pandemic has accelerated corporate investments in digital
projects and stimulated global consumer demand for e-commerce. This
has created heightened demand and competition across industries for
various skillsets, particularly in IT and logistics.
Pandemic-related travel restrictions and a more stringent approach
to issuing work visas to non-locals in some of the key markets have
also disrupted the availability of labour across borders,
exacerbating labour shortages as economies rebound.
Mitigation Measures
-- Ensure proactive manpower planning and succession planning are in place.
-- Enhance modern employer branding, training for staff members, compensation and benefits,
and
talent development plan.
-- Implement strategy to promote diversity and inclusion across the Group.
-- Provide employee retention programmes.
-- Establish employee assistance programmes.
Investment, Strategic Transactions and Partnerships Risk
Competition for attractive investment opportunities has
increased with the rise of global investment funds and deep pools
of low-cost capital, supporting a greater appetite by investors
across sectors for strategic transactions and partnerships to
optimise the business portfolio and enhance growth. As the Group's
businesses pursue projects and investments against keen
competitors, they face pressure on the terms they are willing to
secure and accept prized assets and relationships.
In addition, conflicts with strategic partners may arise due to
various reasons such as different corporate cultures and management
styles.
Mitigation Measures
-- Conduct sufficient research, due diligence and evaluation of investment opportunities and
potential business partners.
-- Develop clear frameworks and levels of authority for investment or partnership decisions.
-- Regular performance monitoring and strategic reviews of new businesses and projects.
Environmental and Climate Risk
Global climate change has led to a trend of increased frequency
and intensity of potentially damaging natural events for the
Group's assets and operations. With interest in sustainability
surging in recent years from investors, governments and other
interested parties, expectations by regulators and other
stakeholders for accurate corporate sustainability reporting and
commitments towards carbon neutrality and other
sustainability-related goals are also growing. This brings
increasing challenges to the Group and its businesses to meet key
stakeholders' expectations.
Mitigation Measures
In addition to being addressed under the Group's Risk Management
Framework and processes, mitigation measures are reviewed and
approved by the Group's Sustainability Committee as part of a
broader sustainability framework already in place to execute on
initiatives over the long term.
Mitigation measures in respect of environmental and climate
risks:
-- A commitment to the Science-Based Targets initiative's campaign to set decarbonisation
targets
in line with climate science, to meet the goals of the Paris Agreement, aimed at limiting
global warming to 1.5degC.
-- Perform and update climate risk assessments and adaptation action plans based on the
recommendations
of the Task Force on Climate-related Financial Disclosure ('TCFD), including implementing
measures to address physical risks posed by climate change and identifying opportunities
in
the global transition to a low-carbon economy.
-- Consistent retrofitting of existing assets, as well as identification and deployment of
emerging
PropTech solutions to drive energy efficiency.
-- Increase the procurement of renewable energy, including expanding onsite renewable energy
generation capacity, to reduce emissions.
-- Continue implementing the Group's robust and long-standing green building certification
programme
to minimize environmental impact of existing assets.
-- Establish performance-based targets on embodied carbon emissions targeting concrete, rebar
and structural steel used for new developments.
-- Support the financial sector's green transition via increased participation in the
sustainable
financing markets.
-- Test and audit periodically the Group's Business Continuity Plans.
-- Assess emerging ESG reporting standards and requirements, and align the Group's
disclosures
to best market practice.
Hongkong Land Holdings Limited
Responsibility Statements
The Directors of the Company confirm to the best of their
knowledge that:
(a) the consolidated financial statements prepared in accordance
with International Financial Reporting Standards, including
International Accounting Standards and Interpretations adopted by
the International Accounting Standards Board, give a true and fair
view of the assets, liabilities, financial position and profit and
losses of the Group; and
(b) the Chairman's Statement, Chief Executive's Review,
Financial Review and Principal Risks and Uncertainties of the
Company's 2022 Annual Report, which constitute the management
report required by the Disclosure Guidance and Transparency Rule
4.1.8, include a fair review of all information required to be
disclosed under Rules 4.1.8 to 4.1.11 of the Disclosure Guidance
and Transparency Rules issued by the Financial Conduct Authority in
the United Kingdom.
For and on behalf of the Board
Robert Wong
Craig Beattie
Directors
Dividend Information for Shareholders
The final dividend of USc16.00 per share will be payable on 10th
May 2023, subject to approval at the Annual General Meeting to be
held on 4th May 2023, to shareholders on the register of members at
the close of business on 17th March 2023. The shares will be quoted
ex-dividend on 16th March 2023, and the share registers will be
closed from
20th to 24th March 2023, inclusive.
Shareholders will receive their cash dividends in United States
Dollars, except when elections are made for alternate currencies in
the following circumstances.
Shareholders on the Jersey branch register
Shareholders registered on the Jersey branch register will have
the option to elect for their dividends to be paid in Sterling.
These shareholders may make new currency elections for the 2022
final dividend by notifying the United Kingdom transfer agent in
writing by
21st April 2023. The Sterling equivalent of dividends declared
in United States Dollars will be calculated by reference to a rate
prevailing on 26th April 2023.
Shareholders holding their shares through CREST in the United
Kingdom will receive their cash dividends in Sterling only as
calculated above.
Shareholders on the Singapore branch register who hold their
shares through T he Central Depository (Pte) Limited ('CDP')
Shareholders who are on CDP's Direct Crediting Service
('DCS')
Those shareholders who are on CDP's DCS will receive their cash
dividends in Singapore Dollars unless they opt out of CDP Currency
Conversion Service, through CDP, to receive United States
Dollars.
Shareholders who are not on CDP's DCS
Those shareholders who are not on CDP's DCS will receive their
cash dividends in United States Dollars unless they elect, through
CDP, to receive Singapore Dollars.
Shareholders on the Singapore branch register who wish to
deposit their shares into the CDP system by the dividend record
date, being 17th March 2023, 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 March 2023.
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, four retail centres on the Chinese mainland, including a
luxury retail centre at Wangfujing in Beijing, and a 50% interest
in a leading office complex in Central Jakarta. The Group also has
a number of high-quality residential, commercial and mixed-use
projects under development in cities across China and Southeast
Asia, including a 43% interest in a 1.1 million sq. m. mixed-use
project in West Bund, Shanghai. Its subsidiary, MCL Land, is a
well-established residential developer in Singapore.
Hongkong Land Holdings Limited is incorporated in Bermuda and
has a primary listing in the standard segment 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 8601
Brunswick Group Limited
Nan Dong (852) 9768 8379
- Full text of the Preliminary Announcement of Results and the
Preliminary Financial Statements for the year ended 31st December
2022 can be accessed via the Hongkong Land corporate website at
'www.hkland.com'.
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FR UURAROKUORAR
(END) Dow Jones Newswires
March 02, 2023 06:20 ET (11:20 GMT)
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