Announcement

 

29th July 2021

                                                                                      

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 2021

 

Highlights

·   Underlying profit of US$394 million, up 12%

·    Continued resilient performance from Investment Properties

·    Net asset value per share down 4% on lower capital values

·    Five new development projects secured

 

"While higher second-half underlying profits are expected from the Group's Development Properties business due to more sales completions on the Chinese mainland, overall conditions are expected to be similar to those of the first-half."

 

Ben Keswick

Chairman

 

Results

	(unaudited)
	Six months ended 30th June
	2021		2020	Change
	US$m		US$m	%
Underlying profit attributable to shareholders#		394	353	+12
Loss attributable to shareholders		(865)	(1,828)	+53
Shareholders' funds		34,414	35,709*	-4
Net debt		4,262	4,568*	+7
		US¢	US¢	%
Underlying earnings per share#		16.90	15.12	+12
Loss per share		(37.06)	(78.31)	+53
Interim dividend per share		6.00	6.00	-
		US$	US$	%
Net asset value per share		14.75	15.30*	-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 7 to the condensed financial statements.  Management considers this to be a key measure which provides additional information to enhance understanding of the Group's underlying business performance. * At 31st December 2020

The interim dividend of US¢6.00 per share will be payable on 13th October 2021 to shareholders on the register of members at the close of business on 20th August 2021.

 

 

HONGKONG LAND HOLDINGS LIMITED

HALF-YEARLY RESULTS FOR THE SIX MONTHS ENDED 30TH JUNE 2021

 

OVERVIEW

The Group's results benefited from higher Development Properties profits due to the timing of sales completions, while contributions from Investment Properties remained resilient, despite negative rental reversions in Hong Kong. 

 

PERFORMANCE

Underlying profit attributable to shareholders during the first half was US$394 million, compared with US$353 million in the equivalent period in 2020. 

 

There was a loss attributable to shareholders for the first half of US$865 million, which includes net non-cash losses of US$1,259 million arising from the revaluation of the Group's investment properties due to lower open market rents.  This compares with a loss of US$1,828 million for the first half of 2020, which included net losses of US$2,180 million arising from investment property revaluations. 

 

The net asset value per share at 30th June 2021 was US$14.75, compared to US$15.30 at 31st December 2020.

 

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

 

GROUP REVIEW

Investment Properties

The Group's office portfolio in Hong Kong continued to perform relatively well amidst the ongoing market downturn.  Vacancy was 6.4% at the end of June 2021, compared to 6.3% at the end of 2020, and on a committed basis it was 5.5%, compared to 5.9% at the end of 2020.  Office rental reversions were negative, with average office rents of HK$118 per sq. ft in the first half of 2021.  This compares to an average rent of HK$121 per sq. ft and HK$119 per sq. ft in the first and second halves of 2020, respectively.  New office leasing activity saw a modest increase in the period as a result of improved sentiment and a narrowing rental gap between Central and other parts of the city.

 

Trading at the Group's Central retail portfolio benefited from a modest recovery in luxury retail market sentiment in the period.  Vacancy was 0.9% at the end of June 2021, compared to 0.3% at the end of 2020.  On a committed basis, vacancy was 0.8%, compared to 0.3% at the end of 2020.  Average retail rents were HK$180 per sq. ft in the first half of 2021, compared with HK$151 per sq. ft and HK$177 per sq. ft in the first and second halves of 2020, respectively.  Excluding temporary rent relief, average retail rents in the first half of 2021 were HK$203 per sq. ft.  Base retail rental reversions were negative in the period and the Group continued to provide temporary rent relief on a case-by-case basis. 

 

In Singapore, vacancy across the Group's office portfolio was 7.5% at the end of June 2021, compared with 2.1% at the end of 2020.  On a committed basis, vacancy was 2.1%, unchanged from the end of 2020.  Average office rents increased to S$10.2 per sq. ft in the first half of 2021, compared with S$9.9 per sq. ft in both the first and second halves of 2020.  Rental reversions remained positive in the first half of the year. 

 

In Beijing, trading at WF CENTRAL remained robust due to the strength of luxury retail market sentiment on the Chinese mainland, with tenant sales in the period exceeding those achieved in the equivalent periods in 2019 and 2020.

 

In Shanghai, construction has commenced at the Group's prime mixed-use project on the West Bund and remains on schedule, with completion in multiple phases to 2027. 

 

In Bangkok, the planning of the Group's 49%-owned prime retail and Grade A office development in the central business district continues.  The development has been delayed by COVID-19 related restrictions, with completion expected in 2027.

 

Development Properties

On the Chinese mainland, higher sales completions in the period resulted in an increased profit contribution, while the Group's attributable interest in contracted sales in the first half of 2021 was US$1,360 million, compared to US$591 million and US$1,544 million in the first and second halves of 2020, respectively.  Market sentiment in the Group's core markets remains stable.  At 30th June 2021, the Group had US$3,367 million in sold but unrecognised contracted sales, compared with US$2,584 million at the end of 2020.  Both sales completions and contracted sales are in line with expectations, with sales completions expected to strengthen in the second half of the year.

 

Although competition to secure sites for development on the Chinese mainland remains fierce, the Group has secured three predominantly residential projects during the period: a site located in the Lishui District of Nanjing with a developable area of 93,000 sq. m. and two further sites located in the Qiaokou and Guanggu Districts of Wuhan with an aggregate attributable developable area of 245,000 sq. m.

 

The profit contribution from the Singapore business in the first half of 2021 was higher than in the first half of 2020, which was impacted by pandemic-related disruptions.  The 309-unit Margaret Ville is fully pre-sold, whilst pre-sales at the 1,404-unit Parc Esta and the 638-unit Leedon Green projects are performing within expectations.  The Group's attributable interest in contracted sales was US$172 million in the first half of 2021, compared to US$301 million and US$331 million in the first and second halves of 2020, respectively.

 

During the period, the Group secured two joint venture projects in Singapore, including an executive condominium site in the Tengah area and a predominantly residential site at Northumberland Road.  The Group's effective interest in these projects equates to a developable area of 529,000 sq. ft.

 

In the rest of Southeast Asia, market sentiment remains weak in light of the ongoing impact of COVID-19 and related restrictions.

 

Financing

The Group's financial position remains strong.  Net debt declined to US$4.3 billion at 30th June 2021 from US$4.6 billion at the end of 2020.  Net gearing was 12% compared with 13% at the end of 2020.  

 

As at 30th June 2021, the Group had committed liquidity of US$4.4 billion, compared to US$4.3 billion at the end of 2020, with an average tenor of debt of 6.4 years compared to 6.6 years at the end of 2020.

 

PEOPLE

Our employees continue to show exemplary commitment and resilience in safeguarding the wellbeing of our customers, and on behalf of the Board, I would like to take this opportunity to thank them for their ongoing dedication and hard work during these difficult times.

 

James Watkins retired from the Board following today's Board meeting.  On 20th May 2021, it was announced that Simon Dixon would step down from the Board on 31st August 2021.  The Board would like to record its gratitude to both of them for their significant contribution to the Group.  As announced on 20th May 2021, Craig Beattie will be appointed as a Director and Chief Financial Officer of the Company with effect from 1st September 2021.

 

OUTLOOK

While higher second-half underlying profits are expected from the Group's Development Properties business due to more sales completions on the Chinese mainland, overall conditions are expected to be similar to those of the first-half.

 

 

Ben Keswick

Chairman

 

Hongkong Land Holdings Limited Consolidated Profit and Loss Account
	(unaudited)
	Six months ended 30th June																									Year ended 31st December
		2021										2020														2020
		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)		885.8				-				885.8				820.2				-				820.2							2,094.2								-					2,094.2
Net operating costs (note 3)		(476.4)				0.5				(475.9)				(389.4)				-				(389.4)							(1,135.2)								1.0					(1,134.2)
Change in fair value of investment properties		-				(1,248.8)				(1,248.8)				-				(2,062.9)				(2,062.9)							-								(3,443.4)					(3,443.4)
Operating profit/(loss) (note 4)		409.4				(1,248.3)				(838.9)				430.8				(2,062.9)				(1,632.1)							959.0								(3,442.4)					(2,483.4)
Net financing charges
-  financing charges		(106.9)				-				(106.9)				(99.5)				-				(99.5)							(194.9)								-					(194.9)
-  financing income		33.8				-				33.8				36.3				-				36.3							79.0								-					79.0
		(73.1)				-				(73.1)				(63.2)				-				(63.2)							(115.9)								-					(115.9)
Share of results of associates and    joint ventures (note 5)		120.1				(4.4)				115.7				45.2				(134.5)				(89.3)							267.5								(175.4)					92.1
Profit/(loss) before tax		456.4				(1,252.7)				(796.3)				412.8				(2,197.4)				(1,784.6)							1,110.6								(3,617.8)					(2,507.2)
Tax (note 6)		(62.1)				(4.8)				(66.9)				(61.7)				12.3				(49.4)							(149.5)								4.9					(144.6)
Profit/(loss) after tax		394.3				(1,257.5)				(863.2)				351.1				(2,185.1)				(1,834.0)							961.1								(3,612.9)					(2,651.8)
Attributable to:
Shareholders of the Company
(note 7)		394.4				(1,259.3)				(864.9)				352.8				(2,180.4)				(1,827.6)							963.3								(3,610.7)					(2,647.4)
Non-controlling interests		(0.1)				1.8				1.7				(1.7)				(4.7)				(6.4)							(2.2)								(2.2)					(4.4)
		394.3				(1,257.5)				(863.2)				351.1				(2,185.1)				(1,834.0)							961.1								(3,612.9)					(2,651.8)
		US¢								US¢				US¢								US¢							US¢													US¢
Earnings/(loss) per share (note 8)		16.90								(37.06)				15.12								(78.31)							41.27													(113.43)