Half Yearly Results - 6 Months Ended 30 June 2016

RNS Number : 4501F

Hongkong Land Hldgs Ltd

28 July 2016

 

To: Business Editor                                                              28th July 2016

                                                               For immediate release

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

HONGKONG LAND HOLDINGS LIMITED

HALF-YEARLY RESULTS FOR THE SIX MONTHS ENDED 30TH JUNE 2016

Highlights

·    Underlying profit down 6%

·    Commercial portfolio benefited from low market vacancy

·    Steady contribution from mainland China residential business

·    Profit attributable to shareholders enhanced by gain on property revaluations

"While the performance from the Group's commercial portfolio is expected to remain stable for the full year, earnings from the residential business are likely to be lower as an improved contribution from mainland China will be more than offset by lower contributions elsewhere."

Ben Keswick

Chairman

Results

	(unaudited)
	Six months ended 30th June
	2016		2015	Change
	US$m		US$m	%
Underlying profit attributable to shareholders#		393	419	-6
Profit attributable to shareholders		1,263	513	+146
Shareholders' funds		29,743	28,685*	+4
Net debt		2,322	2,341*	-1
		US¢	US¢	%
Underlying earnings per share#		16.70	17.82	-6
Earnings per share		53.70	21.79	+146
Interim dividend per share		6.00	6.00	-
		US$	US$	%
Net asset value per share		12.64	12.19*	+4
# The Group uses 'underlying profit attributable to shareholders' in its internal financial reporting to distinguish between ongoing business performance and non-trading items, as more fully described in note 8 to the condensed financial statements.  Management considers this to be a key measure which provides additional information to enhance understanding of the Group's underlying business performance. * At 31st December 2015

The interim dividend of US¢6.00 per share will be payable on 12th October 2016 to shareholders on the register of members at the close of business on 19th August 2016.

HONGKONG LAND HOLDINGS LIMITED

HALF-YEARLY RESULTS FOR THE SIX MONTHS ENDED 30TH JUNE 2016

OVERVIEW

The Group's commercial portfolio provided a stable contribution as it benefited from lower levels of vacancy.  In the residential sector, while profits from mainland China remained steady, there was a reduced contribution from Singapore.

PERFORMANCE

During the first half of the year, the Group's underlying profit attributable to shareholders was US$393 million, compared with US$419 million in 2015.  The profit attributable to shareholders was US$1,263 million after accounting for a net gain of US$870 million arising on the valuation of the Group's investment properties.  This compares with a profit of US$513 million in 2015, after a valuation net gain of US$94 million.

The net asset value per share at 30th June 2016 was US$12.64, compared to US$12.19 at 31st December 2015.

The Directors have declared an unchanged interim dividend of US¢6.00 per share.

GROUP REVIEW

Commercial Property

In Hong Kong, low office vacancy levels continued to support the market. Vacancy in the Group's Central office portfolio at 30th June 2016 was 3.1%, compared with 3.4% at the end of 2015.  Office rental reversions were positive, and the Group's average office rent rose to HK$103 per sq. ft, compared to HK$101 per sq. ft in both the first and second halves of 2015.  The Group's Central retail portfolio remains fully occupied and the base rental reversions continued to be positive.  Lower turnover rent, however, led to the average retail rent reducing to HK$216 per sq. ft, compared with HK$219 per sq. ft and HK$223 per sq. ft in the first and second halves of 2015, respectively.

In Singapore, vacancy in the Group's office portfolio had reduced to 1.0% at 30th June 2016 from 3.0% at the end of 2015 as previously committed space was taken up during the period. 

In Beijing, the Group's luxury retail complex, WF CENTRAL at Wangfujing, is scheduled to open in the first half of 2017.

In Jakarta, work is continuing on the fifth tower at Jakarta Land, the Group's 50%-owned joint venture, which is on schedule for completion in 2018.

Residential Property

In the first six months of the year, the Group's attributable interest in contracted sales in mainland China was US$432 million, compared to US$328 million and US$474 million in the first and second halves of 2015, respectively.  At 30th June 2016, the Group had US$885 million in sold but unrecognised contracted sales, compared with US$821 million at the end of 2015.

In Singapore, there were no projects completed in the first half of 2016, while two projects had been completed in the first half of 2015.  The J Gateway project, which has been fully sold, is on schedule for completion in the second half of this year.  Pre-sales continue at the LakeVille and Sol Acres projects, which are scheduled for completion in 2017 and 2018, respectively.

Of the Group's other residential developments, in Indonesia, work is progressing well on the 49%-owned joint venture project, Nava Park, and the 40%-owned joint venture project, Anandamaya Residences.  Construction is also continuing in the Philippines at the 40%-owned joint venture project, Two Roxas Triangle, in Manila, and pre-selling has commenced at the 40%-owned joint venture, Mandani Bay, in Cebu.

Financing

The Group's financial position remained strong with net debt of US$2.3 billion at 30th June 2016, unchanged from the end of 2015.  Gearing was 8%, unchanged from the end of last year.

PEOPLE

Y.K. Pang is stepping down as Chief Executive on 31st July 2016, while remaining a Director of the Group, and will be succeeded by Robert Wong.  John Witt stepped down as Chief Financial Officer on 31st March 2016 and was replaced on 28th April by Simon Dixon.  We were saddened by the death of Lord Leach in June 2016. He made a significant contribution to the Group and his wise counsel will be greatly missed.

OUTLOOK

While the performance from the Group's commercial portfolio is expected to remain stable for the full year, earnings from the residential business are likely to be lower as an improved contribution from mainland China will be more than offset by lower contributions elsewhere.

Ben Keswick

Chairman

	Hongkong Land Holdings Limited Consolidated Profit and Loss Account
			(Unaudited) Six months ended 30th June												Year ended 31st December 2015
			2016						2015
		Underlying business performance US$m			Non-trading items US$m		Total US$m		Underlying business performance US$m		Non-trading items US$m		Total US$m		Underlying business performance US$m		Non-trading items US$m		Total US$m
Revenue (note 2)			782.8		-		782.8		905.1		-		905.1		1,932.1		-		1,932.1
Net operating costs (note 3)			(327.3)		-		(327.3)		(448.9)		-		(448.9)		(938.3)		-		(938.3)
Change in fair value of investment properties			-		986.2		986.2		-		72.3		72.3		-		999.9		999.9
Asset impairment reversals			-		-		-		-		13.9		13.9		-		13.9		13.9
Operating profit (note 4)			455.5		986.2		1,441.7		456.2		86.2		542.4		993.8		1,013.8		2,007.6
Financing charges			(54.4)		-		(54.4)		(58.0)		-		(58.0)		(114.8)		-		(114.8)
Financing income			22.1		-		22.1		19.4		-		19.4		40.4		-		40.4
Net financing charges			(32.3)		-		(32.3)		(38.6)		-		(38.6)		(74.4)		-		(74.4)
Share of results of associates and joint ventures (note 5)			59.6		(120.9)		(61.3)		85.9		12.9		98.8		140.5		69.2		209.7
Profit before tax			482.8		865.3		1,348.1		503.5		99.1		602.6		1,059.9		1,083.0		2,142.9
Tax (note 6)			(89.0)		1.0		(88.0)		(81.7)		(4.4)		(86.1)		(150.8)		13.6		(137.2)
Profit after tax			393.8		866.3		1,260.1		421.8		94.7		516.5		909.1		1,096.6		2,005.7
Attributable to: Shareholders of the Company			392.8		870.6		1,263.4		419.2		93.5		512.7		904.5		1,107.2		2,011.7
Non-controlling interests			1.0		(4.3)		(3.3)		2.6		1.2		3.8		4.6		(10.6)		(6.0)
			393.8		866.3		1,260.1		421.8		94.7		516.5		909.1		1,096.6		2,005.7
			US¢				US¢		US¢				US¢		US¢				US¢
Earnings per share (note 7)			16.70				53.70		17.82				21.79		38.44				85.50

Hongkong Land Holdings Limited Consolidated Statement of Comprehensive Income
					(Unaudited) Six months ended 30th June													Year ended 31st December
					2016 US$m								2015 US$m								2015 US$m
Profit for the period					1,260.1								516.5								2,005.7
Other comprehensive income/(expense)
Items that will not be reclassified to
profit or loss:
Remeasurements of defined benefit
plans					-								-								(3.4)
Tax on items that will not be reclassified					-								-								0.5
					-								-								(2.9)
Items that may be reclassified
subsequently to profit or loss:
Net exchange translation differences					26.4								(25.3)								(193.4)
Revaluation of other investments					(7.9)								12.5								8.3
Cash flow hedges
- net gain/(loss) arising during the period					36.0								(17.6)								(32.2)
- transfer to profit and loss					(1.3)								(1.4)								(2.5)
					34.7								(19.0)								(34.7)
Tax relating to items that may be
reclassified					(5.7)								3.2								5.8
Share of other comprehensive
income/(expense) of associates
and joint ventures					52.0								(53.6)								(214.4)
					99.5								(82.2)								(428.4)
Other comprehensive income/(expense)
for the period, net of tax					99.5								(82.2)								(431.3)
Total comprehensive income for the
period					1,359.6								434.3								1,574.4
Attributable to:
Shareholders of the Company					1,364.0								430.6								1,583.2
Non-controlling interests					(4.4)								3.7								(8.8)
					1,359.6								434.3								1,574.4

Hongkong Land Holdings Limited Consolidated Balance Sheet
			(unaudited) At 30th June							At 31st December
			2016 US$m				2015 US$m				2015 US$m
Net operating assets
Tangible fixed assets			36.6				24.8				34.0
Investment properties (note 10)			26,079.4				23,871.4				24,957.3
Associates and joint ventures			4,583.6				4,624.7				4,617.6
Other investments			53.3				65.4				61.3
Non-current debtors			80.8				39.1				41.2
Deferred tax assets			9.4				12.0				13.1
Pension assets			0.1				4.2				0.5
Non-current assets			30,843.2				28,641.6				29,725.0
Properties for sale			2,745.6				3,017.3				2,713.9
Current debtors			377.1				340.8				355.7
Current tax assets			18.5				14.8				8.3
Bank balances			1,560.3				1,707.1				1,569.2
Current assets			4,701.5				5,080.0				4,647.1
Current creditors			(1,640.2)				(1,393.9)				(1,483.8)
Current borrowings (note 11)			(18.8)				(279.6)				(168.9)
Current tax liabilities			(119.9)				(132.7)				(69.0)
Current liabilities			(1,778.9)				(1,806.2)				(1,721.7)
Net current assets			2,922.6				3,273.8				2,925.4
Long-term borrowings (note 11)			(3,863.0)				(4,002.1)				(3,740.8)
Deferred tax liabilities			(101.9)				(106.0)				(102.0)
Pension liabilities			(0.2)				-				(0.2)
Non-current creditors			(26.8)				(82.4)				(87.0)
			29,773.9				27,724.9				28,720.4
Total equity
Share capital			235.3				235.3				235.3
Revenue and other reserves			29,507.9				27,437.6				28,449.7
Shareholders' funds			29,743.2				27,672.9				28,685.0
Non-controlling interests			30.7				52.0				35.4
			29,773.9				27,724.9				28,720.4

Hongkong Land Holdings Limited Consolidated Statement of Changes in Equity
	Attributable to shareholders												Attributable to non-
		Share capital US$m		Share premium US$m		Revenue reserves US$m		Hedging reserves US$m		Exchange reserves US$m		of the Company US$m	controlling interests US$m			Total equity US$m
(Unaudited) Six months ended 30th June 2016
At 1st January 2016		235.3		370.0		28,222.7		(9.1)		(133.9)		28,685.0		35.4		28,720.4
Total comprehensive income		-		-		1,255.5		24.6		83.9		1,364.0		(4.4)		1,359.6
Dividends paid by the Company (note 9)		-		-		(305.8)		-		-		(305.8)		-		(305.8)
Dividends paid to non-controlling shareholders		-		-		-		-		-		-		(0.3)		(0.3)
At 30th June 2016		235.3		370.0		29,172.4		15.5		(50.0)		29,743.2		30.7		29,773.9
Six months ended 30th June 2015
At 1st January 2015		235.3		370.0		26,651.9		17.5		273.4		27,548.1		50.3		27,598.4
Total comprehensive income		-		-		525.2		(15.3)		(79.3)		430.6		3.7		434.3
Dividends paid by the Company (note 9)		-		-		(305.8)		-		-		(305.8)		-		(305.8)
Dividends paid to non-controlling shareholders		-		-		-		-		-		-		(2.0)		(2.0)
At 30th June 2015		235.3		370.0		26,871.3		2.2		194.1		27,672.9		52.0		27,724.9
Total comprehensive income for the six months ended 30th June 2016 included in revenue reserves mainly comprises profit attributable to shareholders of the Company of US$1,263.4 million (2015: US$512.7 million) and a fair value loss on other investments of US$7.9 million (2015: a gain of US$12.5 million).  The cumulative fair value gain on other investments amounted to US$15.6 million (2015: US$27.7 million).

 

Hongkong Land Holdings Limited Consolidated Statement of Changes in Equity
	Attributable to shareholders													Attributable to non-
		Share capital US$m		Share premium US$m		Revenue reserves US$m		Hedging reserves US$m		Exchange reserves US$m		of the Company US$m		controlling interests US$m		Total equity US$m
Year ended 31st December 2015
At 1st January 2015		235.3		370.0		26,651.9		17.5		273.4		27,548.1		50.3		27,598.4
Total comprehensive income		-		-		2,017.1		(26.6)		(407.3)		1,583.2		(8.8)		1,574.4
Dividends paid by the Company		-		-		(447.0)		-		-		(447.0)		-		(447.0)
Dividends paid to non-controlling shareholders		-		-		-		-		-		-		(6.1)		(6.1)
Unclaimed dividends forfeited		-		-		0.7		-		-		0.7		-		0.7
At 31st December 2015		235.3		370.0		28,222.7		(9.1)		(133.9)		28,685.0		35.4		28,720.4
The comprehensive income for the year ended 31st December 2015 included in revenue reserves mainly comprises profit attributable to shareholders of the Company of US$2,011.7 million and a fair value gain on other investments of US$8.3 million.  The cumulative fair value gain on other investments amounted to US$23.5 million.

Hongkong Land Holdings Limited Consolidated Cash Flow Statement
				(Unaudited) Six months ended 30th June							Year ended 31st December
				2016 US$m				2015 US$m				2015 US$m
Operating activities
Operating profit				1,441.7				542.4				2,007.6
Depreciation				1.5				1.4				2.9
Reversal of writedowns on properties for sale				(1.5)				(16.0)				(21.4)
Gain on reclassification of a trading property
to investment property				-				-				(63.2)
Change in fair value of investment properties				(986.2)				(72.3)				(999.9)
Asset impairment reversals				-				(13.9)				(13.9)
Decrease/(increase) in properties for sale				17.7				(113.6)				45.2
Increase in debtors				(20.0)				(56.1)				(13.3)
Increase/(decrease) in creditors				70.5				(9.0)				88.0
Interest received				21.2				21.2				41.2
Interest and other financing charges paid				(57.7)				(62.3)				(118.9)
Tax paid				(49.7)				(66.8)				(174.8)
Dividends from associates and joint ventures				29.9				45.6				116.7
Cash flows from operating activities				467.4				200.6				896.2
Investing activities
Major renovations expenditure				(47.0)				(22.2)				(57.8)
Developments capital expenditure				(62.2)				(56.5)				(152.3)
Investments in and loans to associates and
joint ventures				(4.7)				267.3				(255.8)
Advances and repayments from associates
and joint ventures				33.3				-				390.9
Payment of deposit for a joint venture				-				-				(70.9)
Cash flows from investing activities				(80.6)				188.6				(145.9)
Financing activities
Drawdown of borrowings				102.8				137.2				229.1
Repayment of borrowings				(169.6)				(149.7)				(575.7)
Dividends paid by the Company				(302.9)				(304.1)				(444.9)
Dividends paid to non-controlling shareholders				(2.1)				(2.0)				(4.4)
Cash flows from financing activities				(371.8)				(318.6)				(795.9)
Effect of exchange rate changes				(22.4)				(23.0)				(47.1)
Net (decrease)/increase in cash and cash
equivalents				(7.4)				47.6				(92.7)
Cash and cash equivalents at beginning of
period				1,565.9				1,658.6				1,658.6
Cash and cash equivalents at end of period				1,558.5				1,706.2				1,565.9

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'.  The condensed financial statements have been prepared on a going concern basis.  The condensed financial statements have not been audited or reviewed by the Group's auditors pursuant to the UK Auditing Practices Board guidance on the review of interim financial information.

The following amendments which are effective in the current accounting period and relevant to the Group's operations are adopted in 2016:

	Amendments to IFRS 11	Accounting for Acquisitions of Interests in Joint     Operations
	Amendments to IAS 1	Disclosure Initiative: Presentation of Financial     Statements
	Amendments to IAS 16 and     IAS 38	Clarification of Acceptable Methods of Depreciation     and Amortisation
	Annual Improvements to IFRSs	2012 - 2014 Cycle

There have been no changes to the accounting policies described in the 2015 annual financial statements upon the adoption of the above amendments to existing standards.  The adoption of these amendments do not have any significant impact on the results or financial position of the Group.

The Group has not early adopted any standard, interpretation or amendment that has been issued but is not yet effective.

2.   REVENUE

	Six months ended 30th June
				2016 US$m				2015 US$m
	Rental income			427.7				422.0
	Service income			64.9				63.2
	Sales of properties			290.2				419.9
				782.8				905.1

Service income includes service and management charges and hospitality service income.

3.   NET OPERATING COSTS

	Six months ended 30th June
				2016 US$m				2015 US$m
	Cost of sales			(280.6)				(400.6)
	Other income			5.0				4.8
	Administrative expenses			(51.7)				(53.1)
				(327.3)				(448.9)

4.   OPERATING PROFIT

	Six months ended 30th June
				2016 US$m				2015 US$m
	By business
	Commercial Property			410.4				405.0
	Residential Property			74.9				82.3
	Corporate			(29.8)				(31.1)
	Underlying business performance			455.5				456.2
	Change in fair value of investment properties
	- Commercial Property			986.2				66.1
	- Residential Property			-				6.2
				986.2				72.3
	Asset impairment reversals			-				13.9
				986.2				86.2
				1,441.7				542.4

5.   SHARE OF RESULTS OF ASSOCIATES AND JOINT VENTURES

	Six months ended 30th June
				2016 US$m				2015 US$m
	By business
	Commercial Property
	- operating profit			72.0				71.9
	- net financing charges			(21.0)				(18.0)
	- tax			(7.9)				(8.9)
	- net profit			43.1				45.0
	Residential Property
	- operating profit			29.9				63.1
	- net financing charges			1.6				2.4
	- tax			(11.5)				(21.2)
	- non-controlling interests			(3.5)				(3.4)
	- net profit			16.5				40.9
	Underlying business performance			59.6				85.9
	Change in fair value of investment properties
	(net of deferred tax)
	- Commercial Property			(121.1)				12.2
	- Residential Property			0.2				0.7
				(120.9)				12.9
				(61.3)				98.8

6.   TAX

	Six months ended 30th June
				2016 US$m				2015 US$m
	Tax charged to profit and loss is analysed as follows:
	Current tax			(90.3)				(95.9)
	Deferred tax
	- changes in fair value of investment properties			1.0				(4.4)
	- other temporary differences			1.3				14.2
				(88.0)				(86.1)
	Tax relating to components of other comprehensive income is analysed as follows:
	Cash flow hedges			(5.7)				3.2

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$8.8 million (2015: US$32.0 million) is included in share of results of associates and joint ventures.

7.   EARNINGS PER SHARE

Earnings per share are calculated on profit attributable to shareholders of US$1,263.4 million (2015: US$512.7 million) and on the weighted average number of 2,352.8 million (2015: 2,352.8 million) shares in issue during the period.

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

			Six months ended 30th June
			2016				2015
			US$m	Earnings per share US¢			US$m		Earnings per share US¢
	Underlying profit attributable to shareholders		392.8		16.70		419.2		17.82
	Non-trading items (note 8)		870.6				93.5
	Profit attributable to shareholders		1,263.4		53.70		512.7		21.79

8.   NON-TRADING ITEMS

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

An analysis of non-trading items is set out below:

	Six months ended 30th June
			2016 US$m		2015 US$m
	Change in fair value of investment properties		986.2		72.3
	Deferred tax on change in fair value of investment properties		1.0		(4.4)
	Share of change in fair value of investment properties of
	associates and joint ventures (net of deferred tax)		(120.9)		12.9
	Asset impairment reversals		-		13.9
	Non-controlling interests		4.3		(1.2)
			870.6		93.5

9.   DIVIDENDS

	Six months ended 30th June
			2016 US$m		2015 US$m
	Final dividend in respect of 2015 of US¢13.00 (2014: US¢13.00) per share		305.8		305.8

An interim dividend in respect of 2016 of US¢6.00 (2015: US¢6.00) per share amounting to a total of US$141.2 million (2015: US$141.2 million) is declared by the Board and will be accounted for as an appropriation of revenue reserves in the year ending 31st December 2016.

10. INVESTMENT PROPERTIES

	Six months ended 30th June					Year ended 31st December
			2016 US$m		2015 US$m		2015 US$m
	Net book value at beginning of period		24,957.3		23,697.3		23,697.3
	Exchange differences		(12.4)		0.2		(58.7)
	Additions		148.3		101.6		318.8
	Increase in fair value		986.2		72.3		999.9
	Net book value at end of period		26,079.4		23,871.4		24,957.3

11. BORROWINGS

		At 30th June								At 31st December
				2016 US$m				2015 US$m				2015 US$m
	Current
	Bank overdrafts			1.8				0.9				3.3
	Current portion of long-term  borrowings
	- bank loans			17.0				0.3				165.6
	- 3.65% Singapore dollar notes due 2015			-				278.4				-
				18.8				279.6				168.9
	Long-term
	Bank loans			919.8				1,095.9				836.7
	Medium term notes
	- due 2017			37.8				38.2				35.8
	- due 2019			103.0				103.1				103.1
	- due 2020			309.0				309.1				303.7
	- due 2021			71.0				69.4				69.8
	- due 2022			623.7				600.9				605.0
	- due 2023			179.3				179.3				179.4
	- due 2024			420.9				406.3				407.7
	- due 2025			652.5				653.8				653.2
	- due 2026			38.6				38.6				38.6
	- due 2027			186.0				186.0				186.2
	- due 2028			79.7				79.7				79.7
	- due 2029			50.8				50.8				50.9
	- due 2030			103.1				103.2				103.2
	- due 2031			25.4				25.4				25.4
	- due 2032			30.3				30.3				30.3
	- due 2040			32.1				32.1				32.1
				2,943.2				2,906.2				2,904.1
				3,863.0				4,002.1				3,740.8
				3,881.8				4,281.7				3,909.7

12. FINANCIAL INSTRUMENTS

Financial instruments by category

The fair values of financial assets and financial liabilities, together with carrying amounts at 30th June 2016 and 31st December 2015 are as follows:

	Loans and  receivables US$m		Derivatives used for hedging US$m		Available- for-sale US$m		Other  financial instruments  at amortised cost US$m			Other  financial instruments at fair value  through profit and loss US$m		Total carrying amount US$m			Fair value US$m
	30th June 2016
	Assets
	Other investments	-		-		53.3		-			-		53.3			53.3
	Debtors	158.5		65.5		-		-			11.6		235.6			235.6
	Bank balances	1,560.3		-		-		-			-		1,560.3			1,560.3
		1,718.8		65.5		53.3		-			11.6		1,849.2			1,849.2
	Liabilities
	Borrowings	-		-		-		(3,881.8)			-		(3,881.8)			(4,082.2)
	Creditors excluding
	non-financial liabilities	-		(1.4)		-		(572.6)			-		(574.0)			(574.0)
		-		(1.4)		-		(4,454.4)			-			(4,455.8)		(4,656.2)
	31st December 2015
	Assets
	Other investments	-		-		61.3		-			-			61.3		61.3
	Debtors	151.9		26.7		-		-			11.4			190.0		190.0
	Bank balances	1,569.2		-		-		-			-			1,569.2		1,569.2
		1,721.1		26.7		61.3		-			11.4			1,820.5		1,820.5
	Liabilities
	Borrowings	-		-		-		(3,909.7)			-			(3,909.7)		(4,019.9)
	Creditors excluding
	non-financial liabilities	-		(24.8)		-		(546.3)			-			(571.1)		(571.1)
		-		(24.8)		-		(4,456.0)			-			(4,480.8)		(4,591.0)

Fair value estimation

(i) Financial instruments that are measured at fair value

    For financial instruments that are measured at fair value in the balance sheet, the corresponding fair value measurements are disclosed by level of the following fair value measurement hierarchy:

(a)  Quoted prices (unadjusted) in active markets for identical assets or liabilities ('quoted prices in active markets')

The fair value of listed securities, which are classified as available-for-sale, is based on quoted prices in active markets at the balance sheet date.  The quoted market price used for listed investments held by the Group is the current bid price.

(b)  Inputs other than quoted prices in active markets that are observable for the asset or liability, either directly or indirectly ('observable current market transactions')

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

There were no changes in valuation techniques during the six months ended 30th June 2016 and the year ended 31st December 2015.

The table below analyses financial instruments carried at fair value at 30th June 2016 and 31st December 2015, by the levels in the fair value measurement hierarchy:

			Quoted prices in active markets US$m	Observable current  market transactions US$m			Total US$m
	30th June 2016
	Assets
	Available-for-sale financial assets
	- listed securities		53.3		-		53.3
	Derivative designated at fair value
	- through other comprehensive income		-		19.6		19.6
	- through profit and loss		-		45.9		45.9
			53.3		65.5		118.8
	Liabilities
	Derivative designated at fair value
	- through other comprehensive income		-		(1.4)		(1.4)
	31st December 2015
	Assets
	Available-for-sale financial assets
	- listed securities		61.3		-		61.3
	Derivative designated at fair value
	- through other comprehensive income		-		4.4		4.4
	- through profit and loss		-		22.3		22.3
			61.3		26.7		88.0
	Liabilities
	Derivative designated at fair value
	- through other comprehensive income		-		(18.0)		(18.0)
	- through profit and loss		-		(6.8)		(6.8)
			-		(24.8)		(24.8)

There were no transfers among the two categories during the six months ended 30th June 2016 and the year ended 31st December 2015.

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

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

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

13. CAPITAL COMMITMENTS AND CONTINGENT LIABILITIES

Total capital commitments at 30th June 2016 and 31st December 2015 amounted to US$473.2 million and US$502.9 million, respectively.

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

14. RELATED PARTY TRANSACTIONS

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

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

Management fee 

The management fee payable by the Group, under an agreement entered into in 1995, to Jardine Matheson Limited ('JML') in 2016 was US$2.0 million (2015: US$2.0 million), being 0.5% per annum of the Group's underlying profit in consideration for management consultancy services provided by JML, a wholly-owned subsidiary of JMH.

Property and other services 

The Group rented properties to Jardine Matheson group members.  Gross rents on such properties in 2016 amounted to US$10.0 million (2015: US$9.5 million).

The Group provided consultancy services to Jardine Matheson group members in 2016 amounting to US$0.2 million (2015: US$0.2 million).

Jardine Matheson group members provided property construction, maintenance and other services to the Group in 2016 in aggregate amounting to US$21.6 million (2015: US$22.4 million).

Hotel management services 

Jardine Matheson group members provided hotel management services to the Group in 2016 amounted to US$1.1 million (2015: US$1.2 million).

Outstanding balances with associates and joint ventures

Amounts of outstanding balances with associates and joint ventures are included in debtors and creditors as appropriate.  The amounts are not material.

Hongkong Land Holdings Limited

Principal Risks and Uncertainties

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

•    Economic Risk

•    Commercial Risk and Financial Risk

•    Regulatory and Political Risk

•    Terrorism, Pandemic and Natural Disasters

For greater detail, please refer to page 74 of the Company's Annual Report for 2015, a copy of which is available on the Company's website www.hkland.com.

Responsibility Statement

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

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

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

For and on behalf of the Board

Y.K. Pang

Simon Dixon

Directors

	The interim dividend of US¢6.00 per share will be payable on 12th October 2016 to shareholders on the register of members at the close of business on 19th August 2016.  The shares will be quoted ex-dividend on the Singapore Exchange and the London Stock Exchange on 17th and 18th August 2016, respectively.  The share registers will be closed from 22nd to 26th August 2016, inclusive. Shareholders will receive their cash dividends in United States dollars, unless they are registered on the Jersey branch register where they will have the option to elect for sterling.  These shareholders may make new currency elections for the 2016 interim dividend by notifying the United Kingdom transfer agent in writing by 23rd September 2016.  The sterling equivalent of dividends declared in United States dollars will be calculated by reference to a rate prevailing on 28th September 2016. Shareholders holding their shares through CREST in the United Kingdom will receive their cash dividends in sterling only as calculated above.  Shareholders holding their shares through The Central Depository (Pte) Limited ('CDP') in Singapore will receive their cash dividends in United States dollars unless they elect, through CDP, to receive Singapore dollars. Shareholders on the Singapore branch register who wish to deposit their shares into the CDP system by the dividend record date, being 19th August 2016, must submit the relevant documents to M & C Services Private Limited, the Singapore branch registrar, no later than 5.00 p.m. (local time) on 18th August 2016.

Hongkong Land Group

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

The Group owns and manages almost 800,000 sq. m. of prime office and luxury retail property in key Asian cities, principally in Hong Kong and Singapore.  Hongkong Land's properties attract the world's foremost companies and luxury brands.

Its Hong Kong Central 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, and a 50% interest in a leading office complex in Central Jakarta.  The Group also has a number of high quality residential and mixed-use projects under development in cities across Greater China and Southeast Asia, including a luxury retail centre at Wangfujing in Beijing.  In Singapore, its subsidiary, MCL Land, is a well-established residential developer.

Hongkong Land Holdings Limited is incorporated in Bermuda and has a standard listing on the London Stock Exchange as its primary listing, 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
Y.K. Pang	(852) 2842 8428
Simon Dixon	(852) 2842 8101
Brunswick Group Limited
Annabel Arthur	(852) 3512 5075

As permitted by the Disclosure Rules and Transparency Rules of the Financial Conduct Authority in the United Kingdom, the Company will not be posting a printed version of the Half-Yearly Results announcement to shareholders.  The Half-Yearly Results announcement will remain available on the Company's website, www.hkland.com, together with other Group announcements.

 

END

 

 

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