Preliminary Results
Hongkong Land Hldgs Ld
26 February 2002
The following announcement was today issued to the London
Stock Exchange.
HONGKONG LAND HOLDINGS LIMITED
2001 PRELIMINARY ANNOUNCEMENT OF RESULTS
* 8% decline in property values reflects weak rental market
* Occupancy in Hong Kong Central portfolio remains high
* Chater House over 50% pre-let
* Significant commercial site acquired in Singapore joint
venture
* Debt profile enhanced by global bond issue
'The outlook for our core market is closely tied to the timing
and strength of global economic recovery. The present period
of weakness has, however, significantly deterred investment in
new supply so that when demand recovers we should see a
positive response in values and rentals in Hongkong Land's
prime locations.'
Simon Keswick, Chairman
'Despite a very competitive market, occupancy in our core
portfolio held up well, and we were able to secure important
development opportunities in the commercial, residential and
infrastructure sectors of our business.'
Nicholas Sallnow-Smith, Chief Executive
26th February 2002
Results
Prepared in accordance with IAS as Year ended 31st December
modified by revaluation of leasehold 2001 2000 Change
properties* US$m US$m %
------------------------------------------------------------------------------
Underlying profit 213 230 -7
Net (loss)/profit (416) 2,244 n/m
------------------------------------------------------------------------------
USc USc %
------------------------------------------------------------------------------
Underlying earnings per share 8.94 9.11 -2
(Loss)/earnings per share (17.49) 89.09 n/m
Dividends per share 9.00 9.00 -
------------------------------------------------------------------------------
US$ US$ %
------------------------------------------------------------------------------
Net asset value per share 2.72 2.91 -7
------------------------------------------------------------------------------
* The Group's financial statements are prepared under
International Accounting Standards ('IAS') which,
following recent changes, no longer permit leasehold
interests in land to be carried at valuation. This
treatment does not reflect the generally accepted
accounting practice in the territories in which the Group
has significant leasehold interests, nor how management
measures the performance of the Group. Accordingly, the
Group has presented supplementary financial information
prepared in accordance with IAS as modified by the
revaluation of leasehold properties in addition to the IAS
financial statements. The figures included in the above
summary, the Chairman's Statement and Chief Executive's
Review are based on this supplementary financial
information unless otherwise stated.
The final dividend of USc5.50 per share will be payable on
16th May 2002, subject to approval at the Annual General
Meeting to be held on 8th May 2002, to shareholders on the
register of members at the close of business on 15th March
2002. The ex-dividend date will be on 13th March 2002, and
the share registers will be closed from 18th to 22nd March
2002, inclusive.
HONGKONG LAND HOLDINGS LIMITED
PRELIMINARY ANNOUNCEMENT OF RESULTS
FOR THE YEAR ENDED 31ST DECEMBER 2001
OVERVIEW
2001 saw weakening sentiment in the office market in Hong
Kong, with the events in the United States in September
accelerating the decline. The effect of this has been
mitigated in Central by a lack of supply, with occupancy in
high quality buildings remaining firm. Elsewhere in the
region markets were also difficult, except in Mainland China
where underlying growth in demand has continued, albeit at a
slower pace.
PERFORMANCE
Net rental income was little changed in 2001 as reversions
were largely neutral over the course of the year, but higher
levels of debt, following the share repurchases completed in
January 2001, led to increased financing charges. Underlying
earnings, which exclude net valuation deficit on investment
properties and asset impairment provisions and disposals, fell
by 7% to US$213 million. Underlying earnings per share
reduced by 2% on 2000 to USc8.94.
The annual independent valuation of the Group's investment
property portfolio led to a net valuation deficit of US$600
million, which under the new provisions of revised
International Accounting Standards is now taken through the
profit and loss account. After this deficit and US$29 million
of asset impairment provisions and disposals the reported loss
for the year was US$416 million.
Largely due to the net valuation deficit, shareholders' funds
were reduced by US$899 million, or 13%, to US$6,048 million
compared with end 2000. The impact in the reduction in asset
values on net asset value per share was tempered by the
Group's action in December 2001 when it bought back and
cancelled a further 6.7% of its share capital at a cost of
US$295 million. As a consequence of this decrease in the
number of shares outstanding, net asset value per share at
31st December 2001 benefited by 3%, restricting the overall
fall in the year to 7%.
The Directors recommend a final dividend of USc5.50 per share
which, together with the interim dividend of USc3.50 per
share, gives an unchanged total annual dividend.
STRATEGIC REVIEW
The Group's core portfolio of prime assets will be
strengthened by the completion this year of Chater House, at
the heart of Hong Kong's Central district. The Group
continues to make strategic investments focusing on high
quality assets in the best locations. These include new
developments, such as One Marina Boulevard in Singapore and
the Group's new residential site at Central Park in Beijing,
and refurbishments, of which the upgrade of the Alexandra
House retail podium in Hong Kong beginning this year is the
latest example. This consistent focus on well-located prime
assets continues to yield the benefits of premium levels of
rent and occupancy, together with the ability to build
valuable long-term relationships with high quality tenants.
The Group took advantage of the decline in US dollar interest
rates to enhance its debt profile. It raised US$600 million
on excellent terms through a maiden ten-year global bond
issue, enabling the Company to diversify its source of debt
financing and lengthen the maturity of its debt. The Group's
strong cash flow has proven its worth not only in assuring
stability of earnings in challenging times but also in
securing this favourable access to financial markets.
OUTLOOK
In conclusion, the Chairman, Simon Keswick said, 'The outlook
for our core market is closely tied to the timing and strength
of global economic recovery, especially in the United States.
From a medium-term perspective, however, the present period of
weakness has significantly deterred investment in new supply
so that when demand recovers we should see a positive response
in values and rentals in Hongkong Land's prime locations.'
CHIEF EXECUTIVE'S REVIEW
STRATEGIC FOCUS
2001 was a difficult year in many respects. Nevertheless, it
afforded opportunities for each of our three business segments
to take significant steps in developing strategically.
* Our Commercial Property business secured a major site, in
joint venture, on the Marina South extension of the CBD in
Singapore.
* Our Residential Property business entered into a joint
venture agreement to develop an excellently-located 300,000
sq. m site in Beijing.
* Our Infrastructure business, in joint venture with leading
airport industry partners, was awarded the concession
to build a logistics terminal at Hong Kong International
Airport.
COMMERCIAL PROPERTY
Central Portfolio
The sharp upturn in market rents in Hong Kong's Central
district that characterised the year 2000 was already slowing
by the year-end. Deteriorating global financial markets
weakened demand for commercial space in the first half of
2001. Because forthcoming supply is limited to our own Chater
House, this had only a modest impact on market rents. The
psychological effect of the September 11th attacks in the US
damaged sentiment further, however, with the potential
availability of surrendered or sub-let space creating downward
pressure on the market.
As was typical in previous periods of market weakness, high
quality, landlord-owned buildings have out-performed less well-
located strata-titled properties. Vacancy in prime properties
in Central remains in single figures, and in our own portfolio
is under 5%. With the delay in the likely release of IFC II,
the outlook for supply in the near term in Central is even
more restricted. With supply static, rents will be driven by
demand, where the uncertain outlook is heavily dependent on US
economic recovery and the prospects for growth in our tenants'
businesses. For our office tenants, concentrated in the
financial services and professional sectors, China's growing
need to tap global capital markets is key to a turnaround in
sentiment. In the retail sector, despite the weak consumer
demand in the territory as a whole, the luxury brands, where
our portfolio is focused, have performed relatively more
strongly and demand for space still exceeds supply.
If we are to maximise the value of our core portfolio, we need
to ensure it remains fresh and competitive. Our range of
investment programmes supporting this goal include both
visible enhancements and equally important operational and
service upgrades. 2001 saw the completion of the renovation
of the bridge network connecting our Central properties, ready
for the opening of the new Chater House at its centre. Chater
House itself is more than 50% pre-let and, together with the
forthcoming renovation of the Alexandra House retail podium,
demonstrates Hongkong Land's commitment to the consistent
upgrading of its portfolio over time. Less visibly, 2002 will
see the completion of a 5-year programme to upgrade the
mechanical and electrical support in the Landmark office
towers, providing levels of redundancy in power and air-
conditioning capacity far exceeding the original specification
of these original buildings.
Across the portfolio, we are now building out mobile telephony
and broadband networks to provide IT and telecommunication
service levels that will match or exceed the infrastructure in
newer buildings. This commitment to the provision of leading
edge services and the highest quality property management is
one of the keys to tenant retention, particularly those whose
businesses depend on being able to rely on their landlord's
long-term commitment to quality services.
Other Commercial Properties
The commercial property market in Singapore in 2001 reflected
the weakness of the local economy, with softening rents and
capital values. One Raffles Link, however, has established a
premium position in the market and maintained its 100%
occupancy level. In February, a consortium in which Hongkong
Land partnered with Keppel Land and Cheung Kong Holdings
successfully tendered for the first site to be offered on the
Marina South extension to Singapore's CBD. The consortium
will construct over 1.6 million sq. ft GFA of high grade
commercial space on the site over the next 4 years.
Government approval has been obtained for the consortium's
plans for the site, consisting of two office towers. A 18-
storey, 31,000 sq. ft net floor plate will be specified to
meet financial services requirements, complemented by a 42-
storey, 18,000 sq. ft net floor plate tower. On its
completion, Hongkong Land will be invested in two of the
largest floor plate office buildings in Singapore.
Our two office buildings in Vietnam continue to command
premium rents, although the market has yet to show any
material signs of recovery. In the medium term, the trade
agreement with the US and the more open approach the
authorities are taking to the international trading community
will be positive for values.
In October, the Group announced a small investment in Gaysorn
Plaza, a centrally-located retail centre in Bangkok. The
investment - which will fund the complete refurbishment of the
asset - gives the Group an effective interest of 31.5%
alongside high quality local partners. The refurbishment will
be completed later in 2002, and the centre has already
attracted top quality tenants and is 60% pre-let.
RESIDENTIAL PROPERTY
The Group entered into a joint venture in May with the Vantone
Group in Beijing. The joint venture has now received initial
approval for a residential complex of more than
300,000 sq. m called Central Park in the Central Business
District. The development will be built out in four phases
over the next five years. Interest in the first phase has
been very encouraging, and a strong response is anticipated
when pre-sales commence in 2002. At our existing investment
in Beijing at Maple Place, occupancy has been maintained at
over 70% despite the weakness in the global economy. The
Group's interest in this development has reduced from 40% to
35% following a restructuring designed to allow Rodamco Asia
to take a majority stake.
In the Philippines, our luxury apartment joint venture
development at Roxas Triangle in Manila was completed and
launched in the fourth quarter. While 50% of the units have
been sold, sales activity is weak. The quality of the product
has, however, been widely acknowledged as setting a new
standard in the Philippines.
Grosvenor Land, our residential property fund joint venture
with Grosvenor Estates, raised fresh capital during the year
and has increased its equity funds to US$70 million. To date,
some 60% of this has been invested in 10 purchases,
predominantly in Hong Kong.
In the Group's growing wholly-owned residential business in
Hong Kong, the redevelopment of our site at Belcher's Street
in Western District is now under way. Demolition is in
progress and building plan approval has been obtained with
completion expected in early 2004. A further site in Western,
at Victoria Road, and a larger site in Tai Hang Road, where
the Group has entered into a development agreement with the
existing owners, are both the subject of planning review which
will be determined during the course of 2002. While the
residential market in Hong Kong remained weak throughout 2001,
the Group's residential portfolio, both wholly owned and its
interest in Grosvenor Land, is fully let and generating
acceptable yields.
INFRASTRUCTURE
In 2000, we noted our intention to add investments in the
logistics field to our existing Infrastructure portfolio.
During 2001, this objective was met, with the success of the
Tradeport consortium, in which Hongkong Land has a 30% stake,
in winning the concession to build a 42,000 sq. m logistics
centre at Hong Kong International Airport. Construction is
already in progress and expected to be completed in 2003.
Separately, the Group has a 33% stake in a logistics site in
Penang, Malaysia. In December 2001, we complemented these
investments by signing a joint venture agreement for a 36%
interest to develop a logistics facility on the Zhang Jiang Hi-
Tech Park in Shanghai. Construction is expected to be
completed in 2003.
In the port sector of the portfolio, work continues on the CT9
development where Hongkong Land has a 28.5% interest in the
ACT consortium. Although construction has been slower than
planned, this is not expected significantly to affect the
timing of the delivery of the berths which ACT will swap with
berths in CT8 on completion. China Infrastructure Group, in
which the Group took a 24% stake at the end of 2000, saw rapid
growth in both activity and profit at its Zhapu facility,
while the business licence to operate in Phase 2 of the Zhapu
development was obtained late in the year. Additional equity
investment raised our stake in the company to 43% by year end.
Also in Mainland China, China Water Company continued to
secure good investment opportunities, with five plants
operational, two under construction, and other joint ventures
under negotiation. Central China Power faced a more difficult
market. Coal prices rose, as a result of Central Government
policy to close marginal coal producers, while tariffs and
volume failed to compensate. With no significant prospects
for improvement, and consequently little opportunity for
profitable growth of the business, the company's management
decided to exit the sector through the sale of individual
plants. By the year end, investor interest in the generating
capacity at San Men Xia had been obtained, with negotiation on
terms continuing. Although values to be achieved on sale are
not yet known, the Group has decided to provide against the
likely shortfall against carrying value in the 2001 accounts.
Winstar Communications Hong Kong, a joint venture in which
Hongkong Land has invested US$3 million for a 25% interest,
was affected by the bankruptcy of both Winstar Communications,
the US-based partner, and PSINet, the wireless local loop
'LMDS' licensee on whose behalf the joint venture was building
out a network in Hong Kong. A series of steps were taken in
2001 to minimise the risks posed by these events. The LMDS
licence has been acquired from PSINet and the liabilities of
the joint venture significantly reduced. The strategic
position of the business will be reassessed in 2002.
CORPORATE DEVELOPMENTS
2001 saw the Group undertake two major refinancings. In March
the Group's first unsecured syndication was signed, raising
HK$6.38 billion (US$818 million) in 5 and 7 year tranches.
This was followed in April by the Group's first global bond
offering. Investor interest was strong and the planned size
of the bond doubled to US$600 million. This 10-year issue,
combined with the Hong Kong Dollar syndication, raised the
equivalent of US$1.4 billion with an average life of 7.5
years.
In December, the Group purchased and cancelled a block of
165.7 million of its own shares at a price of $1.78 per share.
The opportunity to acquire such a substantial stake at market
price has enabled the Group to raise earnings and net asset
value per share, and lift gearing to the levels planned at the
time of the December 2000 tender offer to buy-back up to 10%
of shares in issue.
Taken together, these transactions represent a significant
step in restructuring the Group's capital structure, raising
the efficiency of the balance sheet while at the same time
lengthening debt maturities.
OUTLOOK
In conclusion, despite a very competitive market, occupancy in
our core portfolio held up well, and we were able to secure
important development opportunities in the commercial,
residential and infrastructure sectors of our business. With
our sound financial position and well motivated people we can
look beyond the current downturn with confidence.
Nicholas Sallnow-Smith
Chief Executive
26th February 2002
------------------------------------------------------------------------------
Hongkong Land Holdings Limited
Consolidated Profit and Loss Account
for the year ended 31st December 2001
------------------------------------------------------------------------------
Prepared in accordance with
Prepared in accordance IAS as modified by revaluation
with IAS of leasehold properties (refer note 1)
2000 2001 2001 2000
US$m US$m Note US$m US$m
---------------- ----------------
386 397 2 Revenue 397 386
(97) (102) Recoverable and non- recoverable costs (78) (77)
------ ------ ------ ------
289 295 Net income from properties 319 309
1 - Other income - 1
(27) (29) Administrative and other expenses (29) (27)
------ ------ ------ ------
263 266 290 283
Fair value (losses)/gains on investment
- - properties (599) 2,022
125 (72) 3 Asset impairments and disposals (29) (10)
------ ------ ------ ------
388 194 4 Operating profit/(loss) (338) 2,295
(41) (51) Net financing charges (51) (41)
Share of results of associates and joint
13 - 5 ventures (1) 17
------ ------ ------ ------
360 143 Profit/(loss) before tax (390) 2,271
(27) (27) 6 Tax (26) (27)
------ ------ ------ -----
333 116 Profit/(loss) after tax (416) 2,244
- - Minority interests - -
------ ------ ------ ------
333 116 7 Net profit/(loss) (416) 2,244
------ ------ ------ ------
----------------- ----------------
USc USc USc USc
----------------- ----------------
8 Earnings/(loss) per share
13.23 4.88 - basic (17.49) 89.09
8.27 7.91 - underlying 8.94 9.11
----------------- -----------------
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Hongkong Land Holdings Limited
Consolidated Balance Sheet
At 31st December 2001
------------------------------------------------------------------------------
Prepared in accordance with
Prepared in accordance IAS as modified by revaluation
with IAS of leasehold properties (refer note 1)
2000 2001 2001 2000
US$m US$m Note US$m US$m
----------------- -----------------
9 Net operating assets
Tangible assets
735 814 Investment properties 7,107 7,620
6 5 Others 14 16
-------- ------- ------- --------
741 819 7,121 7,636
798 738 10 Leasehold land payments - -
208 357 Associates and joint ventures 378 229
25 17 Other investments 17 25
2 2 Deferred tax assets 2 2
10 10 Pension assets 10 10
-------- ------- ------- --------
1,784 1,943 Non-current assets 7,528 7,902
41 45 Property held for sale 45 41
35 56 Debtors, prepayments and others 56 35
1,494 569 Bank balances and other liquid funds 569 1,494
-------- ------- ------- --------
1,570 670 Current assets 670 1,570
-------- ------- ------- --------
(474) (209)11 Creditors and accruals (209) (474)
(927) (503) Borrowings (503) (927)
(13) (15) Current tax liabilities (15) (13)
-------- ------- ------- --------
(1,414) (727) Current liabilities (727) (1,414)
156 (57)11 Net current (liabilities)/assets (57) 156
(1,098) (1,407) Long-term borrowings (1,407) (1,098)
(11) (13) Deferred tax liabilities (15) (13)
-------- ------- ------- --------
831 466 6,049 6,947
-------- ------- ------- --------
Capital employed
246 230 Share capital 230 246
663 314 Revenue and other reserves 5,896 6,778
(78) (78) Own shares held (78) (78)
-------- ------- ------- --------
831 466 Shareholders' funds 6,048 6,946
- - Minority interests 1 1
-------- ------- ------- --------
831 466 6,049 6,947
-------- ------- ------- --------
------------------ -----------------
US$ US$ US$ US$
------------------ -----------------
0.35 0.21 Net asset value per share 2.72 2.91
------------------ -----------------
------------------------------------------------------------------------------
Hongkong Land Holdings Limited
Consolidated Statement of Changes in Shareholders' Funds
for the year ended 31st December 2001
------------------------------------------------------------------------------
Prepared in accordance with
Prepared in accordance IAS as modified by revaluation
with IAS of leasehold properties (refer note 1)
2000 2001 2001 2000
US$m US$m Note US$m US$m
----------------- -----------------
At 1st January
5,225 6,946 - as previously reported 6,946 5,225
(4,217) (6,115) - effect of adopting IAS 40 - -
-------- ------- ------- --------
1,008 831 6,946 5,225
- 143 - effect of adopting IAS 39 143 -
-------- ------- ------- --------
1,008 974 - as restated 7,089 5,225
Net exchange translation differences
(10) (22) - amount arising in the year (23) (23)
- transfer to consolidated profit and
19 - loss account - 19
Revaluation of other investments
- (83) - fair value losses (83) -
- transfer to consolidated profit and
- (2) loss account on disposal (2) -
Cash flow hedges
- (18) - fair value losses (18) -
- transfer to consolidated profit and
- 11 loss account 11 -
Net (losses)/gains not recognised in
9 (114) consolidated profit and loss account (115) (4)
333 116 Net profit/(loss) (416) 2,244
(227) (215) 12 Dividends (215) (227)
(292) (295) Repurchase of ordinary shares (295) (292)
-------- ------- ------- --------
831 466 At 31st December 6,048 6,946
-------- ------- ------- --------
------------------ -----------------
------------------------------------------------------------------------------
Hongkong Land Holdings Limited
Consolidated Cash Flow Statement
for the year ended 31st December 2001
------------------------------------------------------------------------------
Prepared in accordance with
Prepared in accordance IAS as modified by revaluation
with IAS of leasehold properties (refer note 1)
2000 2001 2001 2000
US$m US$m Note US$m US$m
----------------- -----------------
Cash flows from operating activities
388 194 Operating profit/(loss) (338) 2,295
25 29 Depreciation and amortisation 5 5
Fair value losses/(gains) on
- - investment properties 599 (2,022)
(125) 72 Asset impairments and disposals 29 10
(2) (1) Increase in debtors and prepayments (1) (2)
(10) (8) Decrease in creditors and accruals (8) (10)
90 56 Interest received 56 90
(128) (119) Interest and other financing charges paid(119) (128)
(25) (21) Tax paid (21) (25)
1 - Dividends received - 1
214 202 202 214
Cash flows from investing activities
(16) (21) Major renovations expenditure (21) (16)
(80) (76) Developments capital expenditure (76) (80)
Investments in and loans to
(20) (113) joint ventures (113) (20)
208 - 13 Disposal of an associate - 208
(12) (8) Purchase of other investments (8) (12)
- 6 Disposal of other investments 6 -
80 (212) (212) 80
Cash flows from financing activities
- 591 Net proceeds from issue of bonds 591 -
162 - Drawdown of secured bank loans - 162
(1) (474) Repayment of secured bank loans (474) (1)
146 389 Drawdown of unsecured bank loans 389 146
(186) (248) Repayment of unsecured bank loans (248) (186)
(51) - Repurchase of 4% convertible bonds - (51)
- (307) Repayment of 4% convertible bonds (307) -
- (64) Repayment of 7.625% bonds (64) -
(227) (215) Dividends paid by the Company (215) (227)
- (587) Repurchase of ordinary shares (587) -
(157) (915) (915) (157)
1 - Effect of exchange rate changes - 1
------- ------- ------ -------
Net (decrease)/increase in cash and cash
138 (925) equivalents (925) 138
Cash and cash equivalents at 1st
1,353 1,491 January 1,491 1,353
------- ------- ------ -------
Cash and cash equivalents at 31st
1,491 566 December 566 1,491
------- ------- ------ -------
----------------- ----------------
USc USc USc USc
----------------- ----------------
7.87 7.59 14 Cash flow per share 7.59 7.87
----------------- ----------------
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Hongkong Land Holdings Limited
Notes
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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 2001 which have been prepared in conformity with
International Accounting Standards ('IAS'). The Group has
presented supplementary financial information prepared in
accordance with IAS as modified by the revaluation of
leasehold properties.
Unless otherwise indicated, the following notes are prepared
in accordance with IAS.
Other than described below, there have been no other changes
to the accounting policies described in the 2000 annual
financial statements.
(a) Financial statements prepared in accordance with IAS
In 2001, the Group adopted IAS 39 - Financial Instruments:
Recognition and Measurement and IAS 40 - Investment Property.
In accordance with IAS 39, non-current investments and
derivatives are recognised on the balance sheet at fair value
with unrealised gains and losses arising from the changes in
fair value taken to reserves until realised. This is a change
in accounting policy as in previous years non-current
investments were stated on the balance sheet at cost less
amounts provided and derivatives were recognised only to the
extent of premiums paid or received on options. The effect of
this change has been to increase shareholders' funds at 1st
January 2001 by US$143 million.
In accordance with IAS 40 and as a result of an inability to
estimate reliably the element of leasehold property values
attributable to the building component, leasehold land and
buildings which are investment properties are carried at
depreciated historical cost. Similarly leasehold interests in
land in respect of other leasehold properties are carried at
depreciated cost. This is a change in accounting policy as in
previous years the Group had reflected the fair value of
leasehold investment properties in the financial statements
and recorded fair value changes in property revaluation
reserves, except for movements on individual properties below
cost which were dealt with in the consolidated profit and loss
account. The effect of this change has been to decrease net
profit for the year ended 31st December 2000 by US$21 million,
and shareholders' funds at 1st January 2001 by US$6,115
million.
(b)Financial information prepared in accordance with IAS as
modified by revaluation of leasehold properties
As described above, in prior years the Group reflected the
fair value of leasehold properties in its financial
statements. Changes in IAS, which came into effect during
2001, no longer permit the valuation of leasehold interests in
land. As a result, the Group is required to account for
leasehold land in respect of investment and other properties
at depreciated cost in order to comply with IAS. This
treatment does not reflect the generally accepted accounting
practice in the territories in which the Group has significant
leasehold interests, nor how management measures the
performance of the Group. Accordingly, the Group has
presented supplementary financial information on pages 10 to
13 prepared in accordance with IAS as modified by the
revaluation of leasehold properties. In accordance with IAS
40, changes in fair values of investment properties which were
previously taken directly to property revaluation reserves are
recorded in the consolidated profit and loss account. The
effect of this change has been to increase net profit for the
year ended 31st December 2000 by US$1,890 million.
2. REVENUE
2001 2000
US$m US$m
---------------------------
By business
Property
Rental income 337 327
Service and management charges 60 58
Income from property trading - 1
------------ ------------
397 386
------------ ------------
By geographical area
Hong Kong 379 374
Southeast Asia 18 12
------------ ------------
397 386
------------ ------------
3. ASSET IMPAIRMENTS AND DISPOSALS
2001 2000
Gross Net Gross Net
US$m US$m US$m US$m
------------------ ------------------
Impairment
(provisions)/reversals on properties (43) (43) 135 135
Other assets provisions (31) (31) (22) (22)
Profit on disposal of associates
and investments 2 2 12 12
-------- --------- -------- -------
(72) (72) 125 125
-------- --------- -------- -------
By business
Property (44) (44) 113 113
Infrastructure (30) (30) - -
Corporate 2 2 12 12
-------- --------- -------- -------
(72) (72) 125 125
-------- --------- -------- -------
Gross asset impairments and disposals are shown before net
financing charges and tax. Net asset impairments and
disposals are shown after net financing charges, tax and
minority interests.
4. OPERATING PROFIT
2001 2000
US$m US$m
------------------------------
By business
Property 287 282
Infrastructure (2) (1)
Corporate (19) (18)
----------- ------------
266 263
Asset impairments and disposals (72) 125
------------ ------------
194 388
------------ ------------
5. SHARE OF RESULTS OF ASSOCIATES AND JOINT VENTURES
2001 2000
US$m US$m
--------------------------------
By business
Property (1) -
Infrastructure 1 2
Corporate - 11
--------------- --------------
- 13
--------------- --------------
6. TAX
2001 2000
US$m US$m
------------- ---------------
Company and subsidiaries 26 26
Associates and joint ventures 1 1
------------- ---------------
27 27
------------- ---------------
Tax on profits is provided at the rates of taxation prevailing
in the territories in which the Group operates.
7. NET PROFIT
The difference between net profit as shown in the financial
statements prepared in accordance with IAS and net loss as
shown in the supplementary financial information is reconciled
as follows:
2001 2000
US$m US$m
------------------------------
Net profit as shown in financial statements 116 333
Depreciation of investment properties 18 16
Amortisation of leasehold land payments 6 5
Revaluation of leasehold properties net of impairment (557) 1,890
Deferred tax 1 -
-------------- -------------
Net (loss)/profit as shown in supplementary
financial information (416) 2,244
--------------- -------------
8. EARNINGS PER SHARE
Earnings per share are calculated on net profit of US$116
million (2000: US$333 million) and on the weighted average
number of 2,379 million (2000: 2,519 million) shares in issue
during the year, which excludes 70 million shares in the
Company held by a wholly-owned subsidiary.
Earnings per share reflecting the revaluation of leasehold
properties are calculated on net loss of US$416 million (2000:
profit of US$2,244 million)as shown in the supplementary
financial information.
Additional earnings per share are also calculated based on
underlying profit. The difference between underlying profit
and net profit is reconciled as follows:
Prepared in accordance with
Prepared in accordance IAS as modified by revaluation
with IAS of leasehold properties (refer note 1)
2000 2001 2001 2000
US$m US$m US$m US$m
----------------- -----------------
333 116 Net profit/(loss) (416) 2,244
- - Revaluation of leasehold properties 600 (2,024)
(125) 72 Asset impairments and disposals 29 10
-------- ---------- -------- -------
208 188 Underlying profit 213 230
-------- ---------- -------- -------
9.TANGIBLE ASSETS AND CAPITAL COMMENTS
2001 2000
US$m US$m
------------------------
Tangible assets
Net book value at 1st January
- as previously reported 7,636 5,562
- effect of adopting IAS 40 (6,895) (4,880)
- as restated 741 682
Exchange rate adjustments (8) (7)
Additions 116 84
Depreciation (23) (20)
Transfer (1) -
(Release of contingency)/write-back (6) 2
---------- ---------
Net book value at 31st December 819 741
---------- ---------
Capital commitments 639 513
---------- ---------
10. LEASEHOLD LAND PAYMENTS
2001 2000
US$m US$m
--------------------------
Net book value at 1st January
- as previously reported - -
- effect of adopting IAS 40 798 676
------------- ------------
- as restated 798 676
Exchange rate adjustments (10) (6)
Amortisation (6) (5)
(Impairment)/write-back (43) 133
Transfer (1) -
------------- ------------
Net book value at 31st December 738 798
------------- ------------
By nature
Investment properties 729 788
Other properties 9 10
------------- ------------
738 798
------------- ------------
11. BORROWINGS
2001 2000
US$m US$m
----------------------------
Hong Kong Dollar
Secured bank loans 881 1,241
Unsecured bank loans and overdraft 212 175
7.625% bonds - 1993/2001 - 64
1,093 1,480
Singapore Dollar
Secured bank loans - 120
Unsecured bank loans 216 -
216 120
United States Dollar
Secured bank loans 2 3
Unsecured bank loans and overdraft 2 114
4% convertible bonds due 2001 - 307
7% bonds - 2001/2011 596 -
600 424
Vietnamese Dong
Unsecured bank loans and overdraft 1 1
------------- ------------
1,910 2,025
Less: Current borrowings (503) (927)
------------- ------------
1,407 1,098
------------- ------------
The 4% convertible bonds and 7.625% bonds due 2001 were repaid
at par on 23rd February 2001 and 10th December 2001
respectively.
The US$600 million 7% bonds due 2011 issued in April 2001 are
listed on the Luxembourg Stock Exchange. The bonds raised
US$591 million net of expenses and were swapped into floating
rate Hong Kong Dollar borrowings.
12. DIVIDENDS
2001 2000
US$m US$m
--------------------
Final dividend in respect of 2000 of USc5.50
(1999: USc5.50) per share 131 139
Interim dividend in respect of 2001 of USc3.50
(2000: USc3.50) per share 84 88
--------- --------
215 227
--------- --------
A final dividend in respect of 2001 of USc5.50 (2000: USc5.50)
per share amounting to a total of US$122 million (2000: US$131
million) is proposed by the Board. The dividend proposed is
not accounted for until it has been approved at the Annual
General Meeting. The amount will be accounted for as an
appropriation of revenue reserves in the year ending 31st
December 2002.
13. DISPOSAL OF AN ASSOCIATE
In 2000, Hongkong Land International Holdings Limited, a
wholly-owned subsidiary of the Company, disposed of its 45%
interest in Connaught Investors Limited to Jardine Strategic
Holdings Limited, a substantial shareholder of the Company.
14. CASH FLOW PER SHARE
Cash flow per share is based on cash flows from operating
activities less major renovations expenditure amounting to
US$181 million (2000: US$198 million) and is calculated on the
weighted average number of 2,379 million (2000: 2,519 million)
shares in issue during the year, which excludes 70 million
shares in the Company held by a wholly-owned subsidiary.
15. CONTINGENT LIABILITIES
A subsidiary of the Group has given guarantees in respect of
the Group's obligations to the Container Terminal 9
development in Hong Kong. The contingent liability in respect
of the guarantees was US$93 million (2000: US$271 million).
The final dividend of USc5.50 per share will be payable on
16th May 2002, subject to approval at the Annual General
Meeting to be held on 8th May 2002, to shareholders on the
register of members at the close of business on 15th March
2002. The ex-dividend date will be on 13th March 2002, and
the share registers will be closed from 18th to 22nd March
2002, inclusive. Shareholders will receive their 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 by notifying the United Kingdom transfer agent in
writing by 26th April 2002. The Sterling equivalent of
dividends declared in United States Dollars will be calculated
by reference to a rate prevailing on 2nd May 2002.
Shareholders holding their shares through The Central
Depository (Pte) Limited ('CDP') in Singapore will receive
United States Dollars unless they elect, through CDP, to
receive Singapore Dollars.
For further information, please contact
Hongkong Land Limited
N R Sallnow-Smith (852) 2842 8300
Francis Heng (852) 2842 8400
Matheson & Co. Limited
Martin Henderson (44) 20 816 8135
Golin/Harris Forrest (852) 2501 7937
Adrian Overholser
Weber Shandwick Square Mile
Richard Hews/Trish Featherstone (44) 20 950 2800
Full text of the Preliminary Announcements of Results and the
Preliminary Financial Statements for the year ended 31st
December 2001 can be accessed through the Internet at
'www.hkland.com'.
NOTE TO EDITORS
Hongkong Land is a leading property investment, management and
development group with a major portfolio in Hong Kong and with
other property and infrastructure interests in Asia.
Hongkong Land Holdings Limited is incorporated in Bermuda with
its primary share listing in London. The Company's shares are
also listed in Singapore, where the bulk of the shares are
traded, and in Bermuda. In addition, it has a sponsored
American Depositary Receipt programme. Hongkong Land is a
member of the Jardine Matheson Group.
The Group employs some 700 people and its operations are
managed from Hong Kong by Hongkong Land Limited through three
operating companies: Hongkong Land China Holdings Limited,
Hongkong Land International Holdings Limited and Hongkong Land
Infrastructure Holdings Limited:
* Hongkong Land China Holdings Limited owns and manages
some five million sq. ft of prime office and retail space in
the heart of Hong Kong's Central business district, of which
ten percent is under redevelopment, and is developing a range
of property activities in Hong Kong and Mainland China.
* Hongkong Land International Holdings Limited is establishing
a portfolio of property projects elsewhere in Asia.
* Hongkong Land Infrastructure Holdings Limited holds
infrastructure investments in Hong Kong, Mainland China and
a number of countries in Asia and is seeking to further
develop its regional portfolio.
This information is provided by RNS
The company news service from the London Stock Exchange
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