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$m ---------------- ---------------- 386 397 2 Revenue 397 386 (97) (102) Recoverable and non- recoverable costs (78) (77) ------ ------ ------ ------ 289 295 Net income from properties 319 309 1 - Other income - 1 (27) (29) Administrative and other expenses (29) (27) ------ ------ ------ ------ 263 266 290 283 Fair value (losses)/gains on investment - - properties (599) 2,022 125 (72) 3 Asset impairments and disposals (29) (10) ------ ------ ------ ------ 388 194 4 Operating profit/(loss) (338) 2,295 (41) (51) Net financing charges (51) (41) Share of results of associates and joint 13 - 5 ventures (1) 17 ------ ------ ------ ------ 360 143 Profit/(loss) before tax (390) 2,271 (27) (27) 6 Tax (26) (27) ------ ------ ------ ----- 333 116 Profit/(loss) after tax (416) 2,244 - - Minority interests - - ------ ------ ------ ------ 333 116 7 Net profit/(loss) (416) 2,244 ------ ------ ------ ------ ----------------- ---------------- USc USc USc USc ----------------- ---------------- 8 Earnings/(loss) per share 13.23 4.88 - basic (17.49) 89.09 8.27 7.91 - underlying 8.94 9.11 ----------------- ----------------- ------------------------------------------------------------------------------ Hongkong Land Holdings Limited Consolidated Balance Sheet At 31st December 2001 ------------------------------------------------------------------------------ Prepared in accordance with Prepared in accordance IAS as modified by revaluation with IAS of leasehold properties (refer note 1) 2000 2001 2001 2000 US$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 ----------------- ---------------- ------------------------------------------------------------------------------ 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 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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