Final Results
Hongkong Land Hldgs Ld
06 March 2007
To: Business Editor 6th March 2007
For immediate release
The following announcement was today issued to a Regulatory Information Service
approved by the Financial Services Authority in the United Kingdom.
HONGKONG LAND HOLDINGS LIMITED
2006 PRELIMINARY ANNOUNCEMENT OF RESULTS
Highlights
• Capital values and rents continue to rise
• Adjusted net assets per share* up 23%
• Highly successful residential sales in Singapore and Macau
• Full year dividend per share increased by 25% to USc10
'The prospects for Hongkong Land are encouraging on a number of fronts. The
office leasing reversion cycle in Hong Kong will continue to benefit income in
the period ahead, at the same time as the retail element of our portfolio is
performing strongly. This positive trend in our commercial portfolio will be
complemented in the coming years by the recognition of profits on residential
sales already achieved.'
Simon Keswick, Chairman
6th March 2007
Results
+--------------------------------------------------------------------------------+
| Year ended 31st December |
| 2006 2005 Change|
| US$m US$m %|
+--------------------------------------------------------------------------------+
|Underlying profit attributable to shareholders 245 188 +31|
|Profit attributable to shareholders 1,901 2,061 -8|
|Shareholders' funds 9,197 7,215 +27|
|Adjusted shareholders' funds* 10,922 8,592 +27|
+--------------------------------------------------------------------------------+
| USc USc %|
+--------------------------------------------------------------------------------+
|Underlying earnings per share 10.98 8.42 +30|
|Earnings per share 85.31 92.58 -8|
|Dividends per share 10.00 8.00 +25|
+--------------------------------------------------------------------------------+
| US$ US$ %|
+--------------------------------------------------------------------------------+
|Net asset value per share 4.01 3.24 +24|
|Adjusted net asset value per share* 4.76 3.86 +23|
+--------------------------------------------------------------------------------+
* In preparing the Group's financial statements under International
Financial Reporting Standards ('IFRS'), the fair value model for
investment properties has been adopted. In accordance with this model,
the Group's investment properties have been included at their open
market value as determined by independent valuers. As there is no
capital gains tax in territories where the Group has significant
leasehold investment properties, no tax would be payable if those
properties were to be sold at the amounts included in the financial
statements. In relation to leasehold investment properties, however,
IFRS require deferred tax on any revaluation amount to be calculated
using income tax rates. This is in contrast to the treatment for the
revaluation element of freehold properties where IFRS require capital
gains tax rates to be used.
As Management considers that the Group's long leasehold properties have
very similar characteristics to freehold property, the adjusted
shareholders' funds and adjusted net asset value per share information
is presented on the basis that would be applicable if the leasehold
properties were freeholds. The adjustments made add back the deferred
tax provided in the financial statements that would not have been
provided if the properties were freeholds, which in any event would not
be payable on a sale of the properties.
The final dividend of USc7.00 per share will be payable on 16th May 2007,
subject to approval at the Annual General Meeting to be held on 9th May 2007, to
shareholders on the register of members at the close of business on 23rd March
2007. The ex-dividend date will be on 21st March 2007, and the share registers
will be closed from 26th to 30th March 2007,inclusive.
HONGKONG LAND HOLDINGS LIMITED
PRELIMINARY ANNOUNCEMENT OF RESULTS
FOR THE YEAR ENDED 31ST DECEMBER 2006
OVERVIEW
Broad-based demand and shrinking supply in Hong Kong's Central district drove
rents and capital values higher in both the office and retail sectors. With its
tenant base performing strongly, the rental premium commanded by Central
locations compared with decentralised districts has grown further.
PERFORMANCE
With rents rising throughout the year, net rental income improved by 25%
compared with 2005. The Group's residential property business also saw a strong
increase in earnings; largely due to the first contribution from MCL Land, the
Singapore developer in which the Group acquired a 77% interest in February 2006.
Partially offsetting revenue growth, the financing charge rose because of
increasing interest rates and higher debt levels, the latter largely reflecting
the cost of acquisition of MCL Land. Overall, underlying profit rose 31% to
US$245 million.
Capital values in the portfolio continued to rise, although at a slightly slower
pace than in the prior year. The independent valuation of the Group's investment
assets ended the year at US$11,651 million, a 21% increase over the end of 2005,
resulting in an increase in adjusted net asset value per share of 23% to
US$4.76. Net profit, including the revaluation, was US$1,901 million, a
reduction of 8% on the prior year because of the larger valuation surplus in
that year.
Following an increase in the interim dividend to USc3.00 per share, the
Directors are recommending a final dividend of USc7.00 per share, providing a
total dividend for the year of USc10.00 per share, an increase of 25% on 2005.
GROUP REVIEW
2006 represented the third year of rising rents since the recovery in Hong
Kong's Central district's office market began towards the end of 2003. Rents and
occupancy are now approaching levels last seen in the strong market of a decade
ago. Demand for high quality commercial space is both broad-based by sector and
founded on good business performance in a tenant base that is placing an
increasing premium on being located in Central.
The luxury sector of the retail market had a good year as well, with the
world-class quality of the new stores in Central attracting increasing
attention.
The Singapore office market also experienced rapidly rising rents, as demand
from the financial sector quickly absorbed supply. This included the stock
provided by the Group's new joint venture development at One Raffles Quay, which
was fully let on completion in October.
The Group's residential business had a quiet year for completions in both its
existing business and the newly acquired MCL Land portfolio. In terms of sales,
however, the year was highly successful. The Group's developments at One Central
in Macau (where the Group is joint venturing with Shun Tak) and Marina Bay
Residences in Singapore (with partners Cheung Kong and Keppel Land) were
substantially sold within days of being launched. The Group's joint venture at
Central Park in Beijing experienced a quieter launch of the final phase of that
development in October.
OUTLOOK
In conclusion, the Chairman, Simon Keswick said, 'The prospects for Hongkong
Land are encouraging on a number of fronts. The office leasing reversion cycle
in Hong Kong will continue to benefit income in the period ahead, at the same
time as the retail element of our portfolio is performing strongly. This
positive trend in our commercial portfolio will be complemented in the coming
years by the recognition of profits on residential sales already achieved.'
CHIEF EXECUTIVE'S REVIEW
STRATEGIC FOCUS
The overriding strategic requirement for the Group is to maximise the value of
its core Hong Kong investment portfolio. As we move towards the completion of
our programme of work in The Landmark complex, our portfolio leads the market in
underlining Central's position as the undisputed luxury retail destination in
Hong Kong, complementing its historic role as the city's centre for
international business. The work we are undertaking to upgrade the street
environment outside our buildings in Central also plays an important part in
raising the value of the Central District, not only for Hongkong Land but the
community at large.
Our strategy of broadening our commercial business regionally is gaining
momentum. One Raffles Quay in Singapore is now complete and fully let, and
together with the Marina Bay Financial Centre ('MBFC') will provide the Group
with critical mass in a second key Asian market. This will enable us to
contribute to, and participate in, the growth of value in Singapore, as that
city continues to upgrade its position in the region.
Our third strategic aim has been to grow our residential business so that it can
begin to make a significant, yet capital-efficient, contribution to profit. The
successful launches of our joint venture developments in Macau, Singapore and
Beijing have demonstrated that the value of the Hongkong Land brand can be
extended beyond our reputation in the commercial sector into the residential
market. Our new 77%-owned subsidiary, MCL Land, gives us critical mass in this
market in South East Asia and will contribute its own profit stream in the years
ahead.
COMMERCIAL PROPERTY
Central Portfolio
The up-cycle in office rents in the Central market in Hong Kong has entered its
third year. This has enabled us to drive average rents up 28% in the course of
2006, while holding vacancy, 4.5% at the year end, at broadly the same level as
the end of 2005, despite adding 2.8% by area to our portfolio with the
completion of York House.
The strength of demand for high quality centrally-located offices in the current
period of limited supply continues to support rents in the District. With
significant supply expected to be completed over the next 18 months in a number
of decentralised locations, tenants can anticipate having a broader range of
options. However, the size of the rental premium Central is commanding over
decentralised areas indicates the strength of the preference of many tenants for
a Central location where this is available.
The reversion pattern in our portfolio has been strongly positive since
mid-2005, and is expected to continue so for some time, with market rents now
exceeding HK$100 psf per month in premium buildings.
York House received its full Occupation Permit in November. By the end of the
year, the office portion of the building was 30% committed, while the retail
podium was fully let, enabling the building to increase its contribution to
revenue in 2007.
At the close of the year, we agreed a sale of 1063 King's Road, the development
in Island East which was completed in 1999. This transaction closed in February
2007. The sale of this non-core asset leaves our commercial portfolio in Hong
Kong focused exclusively in Central.
The luxury retail sector generated increased sales in 2006, enjoying a
particularly buoyant close to the year, with an exceptional Christmas season.
The extensive renovation of The Landmark over the last two years was completed
in time for this crucial retail sales period, and helped our tenant base to take
advantage of it.
The quality of the retail environment we are now able to provide, supported by
the improved streetscape around our Central portfolio, has been complemented by
the creation of a generation of new flagship stores for the leading luxury
brands. The success of The Landmark Mandarin Oriental which opened in Edinburgh
Tower in September 2005 has added another luxury component to the district, now
further supported by the re-opening of the original Mandarin Oriental, Hong Kong
after an extensive renovation.
Commercial Properties Outside Hong Kong
The Singapore market is of growing significance to the Group. One Raffles Link,
our wholly owned development in the city, remains fully let and has now been
joined in our investment portfolio by our interest in One Raffles Quay, a joint
venture development with Cheung Kong and Keppel Land. This gateway development
to the new Marina Bay district received its full Occupation Permit in October
and was 100% pre-let. A number of tenants were already operating by the year
end, while the remainder are currently fitting out their premises. Amid strong
demand for high quality office space in Singapore, the Group, together with the
same consortium of partners, has begun construction of the first phase of the
MBFC, which was formally launched by the Minister for National Development, Mah
Bow Tan, in October. The office portion of this phase comprises 180,000 sq. m of
GFA and will be completed in 2010. The option to acquire the second phase of the
MBFC, which can accommodate up to a further 194,000 sq. m of GFA, was exercised
by the consortium in February 2007.
Our prime retail portfolio in Hong Kong will be joined in 2009 by 37,000 sq. m
of luxury retail which we are building in Macau at One Central, our joint
venture development with Shun Tak in the heart of the Macau peninsula. The
development will also include a Mandarin Oriental hotel and serviced apartments.
Our commercial portfolio elsewhere in the region is located in Hanoi, Bangkok
and Jakarta. Our two buildings in Hanoi were 100% let at the year end in a
market of firming rents. In Bangkok our 49% interest in Gaysorn, a luxury retail
centre, is experiencing weaker footfall amid the negative factors in the Thai
market. Jakarta Land's portfolio saw an improvement in both occupancy and rents,
and during the year we increased our interest to 50%.
RESIDENTIAL PROPERTY
The profit contributed by our residential business in 2006 more than doubled to
US$43 million compared with the prior year. This was entirely due to the first
contribution from our newly acquired Singapore subsidiary, MCL Land. Within our
directly held developments, there were no completions during the year, limiting
profit generation to the disposal of a further four residential and two shop
units in our Hong Kong development at Ivy on Belcher's. From a sales
perspective, however, we had an exceptional year. Three developments were
launched in the last quarter.
Our joint venture with Shun Tak Holdings at One Central Macau pre-sold over 95%
of its 796 residential units. Two towers in the seven-tower development were
sold, en bloc, in separate transactions to European investment funds in the
period prior to public launch. The balance of the units were then sold very
rapidly after the public launch in November. The construction is on plan and
expected to be completed in 2009.
In Singapore, the residential component of the first phase of the MBFC, to be
named Marina Bay Residences and comprising 428 units, was substantially pre-sold
within days of launch at record prices. Completion and handover of these
apartments is projected for 2010.
The final phase of Central Park, our joint venture development in Beijing, was
launched for pre-sale in the last quarter of the year. The 490 units will be
released for sale in small batches due to the much less active market in the
city following the range of measures announced by the Government designed to
cool off the previously rapid growth of some sectors of the market. This fourth
phase of Central Park is projected to complete in 2008, while construction of
Phase III is on programme for completion in 2007 and is largely pre-sold.
Elsewhere in Mainland China, construction began on Phase I of Bamboo Grove, our
joint venture with the Longhu Group in Chongqing. This phase comprises some 650
units and will be the first of a number of phases on this large site with a
total land area of some 780,000 sq. m.
In the Philippines, sales at Roxas Triangle in Manila are now nearing
completion, with only five of the 182 units remaining. Our other Philippines
interest is our 40% holding in NorthPine Land, previously trading as Jardine
Land. This business booked a small profit for the year. The final element of our
residential business, our joint venture property fund, Grosvenor Land, realised
three further investments during 2006, and now holds three properties, which are
planned to be sold during 2007.
MCL LAND
MCL Land experienced an excellent year for sales, though a modest year for
profit. The only developments completed during 2006 were MeraPrime in Singapore
and the Desa Putra/Desa Villas complex in Malaysia. The Group's profit booked in
relation to MCL Land was in part due to these developments and in part due to
the negative goodwill arising on acquisition of our 77% interest in February.
From a sales perspective, by the end of the year MCL Land had completed the
pre-sale of almost all units in the six developments it has launched in
Singapore. The profit from these developments will benefit the Group's earnings
over the period 2007 to 2009. Further projects, relating to land bank secured in
2006, will be launched during 2007.
FINANCE
Two major syndicated loan facility commitments were signed during the year; a
7-year HK$7.5 billion transaction in Hong Kong and a 5-year S$800 million
facility in Singapore. The proceeds from both will largely be used for the
refinancing of existing lines at lower margins, but will also provide facilities
to finance further capital commitments, particularly at the MBFC in Singapore.
In December, a wholly-owned subsidiary of Hongkong Land sold some 3% of Hongkong
Land's existing share capital to Jardine Strategic Holdings at the prevailing
market price to raise US$269 million. The funds will help broaden the Group's
finance base and enhance its ability to invest in attractive emerging
opportunities.
OUTLOOK
With Hong Kong Central commanding premium rents at a time of limited supply in
the district beyond 2010, the outlook for investment income is very positive.
New developments will complete in Hong Kong, Singapore and Macau over the medium
term, further supporting our commercial revenues. Our success in residential
sales in Macau, Singapore and Mainland China will add an additional stream of
profits in the later years of the decade.
Nicholas Sallnow-Smith
Chief Executive
6th March 2007
__________________________________________________________________________________________________
Hongkong Land Holdings Limited
Consolidated Profit and Loss Account
for the year ended 31st December 2006
__________________________________________________________________________________________________
2006 2005
US$m US$m
__________________________________________________________________________________________________
Revenue (note 2) 555.9 367.6
Cost of sales (197.5) (95.7)
_________ _________
Gross profit 358.4 271.9
Other income 23.0 -
Administrative and other expenses (33.7) (28.2)
_________ _________
347.7 243.7
Increase in fair value of investment properties 1,952.6 2,367.9
Asset impairment provisions, reversals and disposals (note 3) (5.8) 11.1
_________ _________
Operating profit (note 4) 2,294.5 2,622.7
Net financing charges (72.3) (39.3)
_________ _________
Share of results of joint ventures excluding change in
fair value of investment properties 0.9 9.1
Share of change in fair value of investment properties
of joint ventures 49.8 0.9
Share of results of joint ventures (note 5) 50.7 10.0
_________ _________
Profit before tax 2,272.9 2,593.4
Tax (note 6) (365.5) (532.6)
_________ _________
Profit for the year 1,907.4 2,060.8
_________ _________
Attributable to:
Shareholders of the Company 1,900.9 2,060.5
Minority interests 6.5 0.3
_________ _________
1,907.4 2,060.8
_________ _________
__________________________________________________________________________________________________
USc USc
__________________________________________________________________________________________________
Earnings per share (note 7)
- basic 85.31 92.58
- diluted 82.35 92.48
Underlying earnings per share (note 7) 10.98 8.42
__________________________________________________________________________________________________
__________________________________________________________________________________________________
Hongkong Land Holdings Limited
Consolidated Balance Sheet
at 31st December 2006
__________________________________________________________________________________________________
2006 2005
US$m US$m
__________________________________________________________________________________________________
Net operating assets
Investment properties 11,650.7 9,778.7
Others 13.1 12.3
_________ _________
Tangible assets (note 8) 11,663.8 9,791.0
Joint ventures 894.5 638.8
Other investments 16.1 49.5
Deferred tax assets 0.5 1.6
Pension assets 13.9 10.8
Other non-current assets 22.9 47.7
_________ _________
Non-current assets 12,611.7 10,539.4
Properties for sale 800.3 87.2
Debtors, prepayments and others 208.0 97.2
Bank balances 1,166.5 1,092.8
2,174.8 1,277.2
Non-current assets classified as held for sale (note 9) 188.8 -
_________ _________
Current assets 2,363.6 1,277.2
_________ _________
Creditors and accruals (403.4) (232.7)
Current borrowings (note 10) (116.8) (379.0)
Current tax liabilities (25.8) (8.6)
_________ _________
(546.0) (620.3)
Liabilities directly associated with non-current assets
classified as held for sale (note 9) (3.0) -
_________ _________
Current liabilities (549.0) (620.3)
Net current assets 1,814.6 656.9
Long-term borrowings (note 10) (3,361.9) (2,568.6)
Deferred tax liabilities (1,739.6) (1,400.6)
Other non-current liabilities (21.3) (10.4)
_________ _________
9,303.5 7,216.7
_________ _________
Total equity
Share capital 229.5 229.5
Revenue and other reserves 8,967.8 7,063.5
Own shares held - (77.7)
_________ _________
Shareholders' funds 9,197.3 7,215.3
Minority interests 106.2 1.4
_________ _________
9,303.5 7,216.7
_________ _________
__________________________________________________________________________________________________
__________________________________________________________________________________________________
Hongkong Land Holdings Limited
Consolidated Statement of Recognised Income and Expense
for the year ended 31st December 2006
__________________________________________________________________________________________________
2006 2005
US$m US$m
__________________________________________________________________________________________________
Net exchange translation differences 22.3 11.0
Actuarial gains on defined benefit pension plans 3.5 1.4
Revaluation of other investments
- fair value gains 2.7 4.6
- reversal of loss on business combination 0.6 -
Gain on sale of own shares held 190.8 -
(Losses)/gains on cash flow hedges (24.7) 28.7
Tax on items taken directly to equity 2.4 (1.6)
_________ _________
Net income recognised directly in equity 197.6 44.1
Transfer to consolidated profit and loss account
on disposal of other investments (3.0) -
Transfer to consolidated profit and loss account
in respect of cash flow hedges 9.1 (1.7)
Profit for the year 1,907.4 2,060.8
_________ _________
Total recognised income and expense for the year 2,111.1 2,103.2
_________ _________
Attributable to:
Shareholders of the Company 2,104.6 2,102.9
Minority interests 6.5 0.3
_________ _________
2,111.1 2,103.2
_________ _________
__________________________________________________________________________________________________
__________________________________________________________________________________________________
Hongkong Land Holdings Limited
Consolidated Cash Flow Statement
for the year ended 31st December 2006
__________________________________________________________________________________________________
2006 2005
US$m US$m
__________________________________________________________________________________________________
Operating activities
Operating profit 2,294.5 2,622.7
Depreciation 1.2 0.7
Negative goodwill on acquisition of a subsidiary (14.1) -
Increase in fair value of investment properties (1,952.6) (2,367.9)
Asset impairment provisions, reversals and disposals (note 3) 5.8 (11.1)
Increase in properties for sale (262.5) (16.7)
Increase in debtors, prepayments and others (13.0) (16.3)
Increase in creditors and accruals 77.1 6.7
Interest received 66.2 34.3
Interest and other financing charges paid (121.8) (76.4)
Tax paid (12.5) (22.6)
Dividends received 15.0 2.8
Cash flows from operating activities 83.3 156.2
Investing activities
Major renovations expenditure (33.5) (14.5)
Developments capital expenditure (40.1) (78.5)
Purchase of a subsidiary (note 13) (237.8) -
Investments in and loans to joint ventures (167.3) (335.9)
Purchase of other investments - (47.4)
Disposal of joint ventures and other investments 1.5 10.1
Deposit received for sale of an investment property 18.9 -
Cash flows from investing activities (458.3) (466.2)
Financing activities
Net proceeds from issue of bonds - 411.7
Net proceeds from issue of convertible bonds - 395.2
Drawdown of bank loans 571.5 223.4
Repayment of bank loans/notes (193.1) (224.4)
Disposal of own shares held 268.5 -
Dividends paid by the Company (199.1) (155.5)
Dividends paid to minority shareholders (2.7) -
Cash flows from financing activities 445.1 650.4
Effect of exchange rate changes 3.7 1.8
_________ _________
Net increase in cash and cash equivalents 73.8 342.2
Cash and cash equivalents at 1st January 1,089.9 747.7
_________ _________
Cash and cash equivalents at 31st December 1,163.7 1,089.9
_________ _________
__________________________________________________________________________________________________
________________________________________________________________________________
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 2006 which have been prepared
in conformity with International Financial Reporting Standards, including
International Accounting Standards and Interpretations adopted by the
International Accounting Standards Board.
In 2006, the Group adopted the following amendments and interpretation to
existing Standards which are relevant to its operations:
IAS 21 (amended 2005), Net Investment in a Foreign Operation
IAS 39 (amended 2005), Cash Flow Hedge Accounting of Forecast Intragroup
Transactions
IAS 39 (amended 2005), The Fair Value Option
IAS 39 and IFRS 4 (amended 2005), Financial Guarantee Contracts
IFRIC 4, Determining whether an Arrangement contains a Lease
There have been no changes to the accounting policies as a result of adoption of
the above amendments and interpretation.
2. REVENUE
2006 2005
US$m US$m
_________________________
By business
Commercial property
Rental income 346.4 279.4
Service income 95.3 68.4
441.7 347.8
Residential property
Rental income 2.3 1.3
Service and management charges 0.1 0.4
Sales of trading properties 111.8 18.1
114.2 19.8
_________ _________
555.9 367.6
_________ _________
By geographical area
Hong Kong 427.0 349.2
Southeast Asia 128.9 18.4
_________ _________
555.9 367.6
_________ _________
Service income in Commercial Property includes service and management charges
and hospitality service income.
3. ASSET IMPAIRMENT PROVISIONS, REVERSALS AND DISPOSALS
2006 2005
Gross Net Gross Net
US$m US$m US$m US$m
________________________ _______________________
Asset impairment provisions (7.2) (7.2) - -
Asset impairment reversals 1.4 1.4 11.1 11.1
_________ _________ _________ _______
(5.8) (5.8) 11.1 11.1
_________ _________ _________ _______
By business
Commercial property (7.2) (7.2) - -
Residential property - - 1.0 1.0
Corporate 1.4 1.4 10.1 10.1
_________ _________ _________ _______
(5.8) (5.8) 11.1 11.1
_________ _________ _________ _______
Gross asset impairment provisions, reversals and disposals are shown before net
financing charges and tax. Net asset impairment provisions, reversals and
disposals are shown after net financing charges, tax and minority interests.
4. OPERATING PROFIT
2006 2005
US$m US$m
_____________________________
By business
Commercial property 332.4 255.5
Residential property 41.3 8.7
Corporate (26.0) (20.5)
_______ ________
347.7 243.7
Increase in fair value of investment properties
- Commercial property 1,953.1 2,367.9
- Residential property (0.5) -
1,952.6 2,367.9
Asset impairment provisions, reversals and disposals (note 3) (5.8) 11.1
_______ ________
2,294.5 2,622.7
_______ ________
5. SHARE OF RESULTS OF JOINT VENTURES
2006 2005
US$m US$m
___________________________
By business
Commercial property (0.9) 2.0
Residential property 1.8 7.1
_______ _______
0.9 9.1
Increase in fair value of investment properties
- Commercial property 46.7 0.7
- Residential property 3.1 0.2
49.8 0.9
_______ _______
50.7 10.0
_______ _______
Results are shown after tax and minority interests.
6. TAX
2006 2005
US$m US$m
___________________________
Current tax (21.8) (21.3)
Deferred tax
- increase in fair value of investment properties (340.2) (507.6)
- other temporary differences (3.5) (3.7)
(343.7) (511.3)
_______ _______
(365.5) (532.6)
_______ _______
Tax on profits is provided at the rates of taxation prevailing in the
territories in which the Group operates. The Group has no tax payable in the
United Kingdom.
7. EARNINGS PER SHARE
Basic earnings per share are calculated on profit attributable to shareholders
of US$1,900.9 million (2005: US$2,060.5 million) and on the weighted average
number of 2,228.1 million (2005: 2,225.6 million which excluded 69.6 million
shares in the Company held by a wholly-owned subsidiary) shares in issue during
the year.
Diluted earnings per share are calculated on profit attributable to shareholders
of US$1,920.4 million (2005: US$2,061.1 million), which is after adjusting for
the effects of the conversion of convertible bonds, and on the weighted average
number of 2,332.0 million (2005: 2,228.8 million) shares in issue during the
year. The number of shares for basic and diluted earnings per share is
reconciled as follows:
Ordinary shares in millions
2006 2005
___________________________
Weighted average number of shares in issue 2,228.1 2,225.6
Adjustment for shares to be issued on conversion of
convertible bonds 103.9 3.2
_______ _______
Weighted average number of shares for diluted earnings
per share 2,332.0 2,228.8
_______ _______
Earnings per share are additionally calculated based on underlying profit
attributable to shareholders. The difference between underlying profit
attributable to shareholders and profit attributable to shareholders is reconciled
as follows:
2006 2005
US$m US$m
__________________________
Underlying profit attributable to shareholders 244.7 187.5
Revaluation surpluses of investment properties 1,952.6 2,367.9
Deferred tax charges on revaluation surpluses of
investment properties (340.2) (507.6)
Share of revaluation surpluses of investment properties
of joint ventures (net of deferred tax) 49.8 0.9
Asset impairment provisions, reversals and disposals (5.8) 11.1
Share of asset disposals of joint ventures 1.1 0.8
Minority interests (1.3) (0.1)
_______ _______
Profit attributable to shareholders 1,900.9 2,060.5
Interest expense on convertible bonds (net of tax) 19.5 0.6
_______ _______
Profit for calculation of diluted earnings per share 1,920.4 2,061.1
_______ _______
8. TANGIBLE ASSETS
2006 2005
US$m US$m
___________________________
Net book value at 1st January 9,791.0 7,300.7
Exchange rate adjustments (0.5) 20.4
New subsidiary 25.9 -
Additions 85.2 102.7
Depreciation (1.2) (0.7)
Disposal (0.3) -
Net revaluation surplus 1,952.6 2,367.9
Classified as non-current assets held for sale (187.8) -
Transfer to properties for sale (1.1) -
_______ ________
Net book value at 31st December 11,663.8 9,791.0
_______ ________
9. NON-CURRENT ASSETS CLASSIFIED AS HELD FOR SALE
The major classes of assets and liabilities classified as held for sale are set
out below:
2006 2005
US$m US$m
__________________________
Investment property 187.8 -
Current assets 1.0 -
________ _______
Total assets 188.8 -
Current liabilities (3.0) -
________ _______
185.8 -
________ _______
The non-current assets classified as held for sale at 31st December 2006 were
related to the Group's investment property situated at 1063 King's Road, Hong
Kong. The sale was completed on 9th February 2007 for a consideration of
US$189.4 million. Gain on disposal is estimated at US$0.3 million net of
transaction costs.
10. BORROWINGS
2006 2005
US$m US$m
___________________________
Current
Bank overdrafts 2.8 2.9
Short-term borrowings 103.2 77.4
Current portion of long-term borrowings 10.8 298.7
116.8 379.0
Long-term borrowings
Bank loans 1,467.7 705.1
7% United States Dollar bonds due 2011 617.2 625.0
5.5% United States Dollar bonds due 2014 487.5 493.1
3.01% Singapore Dollar notes due 2010 206.7 190.4
3.65% Singapore Dollar notes due 2015 242.2 222.9
2.75% United States Dollar convertible bonds due 2012 340.6 332.1
3,361.9 2,568.6
_______ _______
3,478.7 2,947.6
_______ _______
Secured 242.1 -
Unsecured 3,236.6 2,947.6
_______ _______
3,478.7 2,947.6
_______ _______
11. NET ASSET VALUE PER SHARE
Net asset value per share is calculated on shareholders' funds of US$9,197.3
million (2005: US$7,215.3 million)and on 2,295.2 million (2005: 2,225.6 million
which excluded 69.6 million shares in the Company held by a wholly-owned
subsidiary) shares issued at year end.
Net asset value per share is additionally calculated based on adjusted
shareholders' funds. The difference between adjusted shareholders' funds and
shareholders' funds is reconciled as follows:
2006 2005
US$m US$m
____________________________
Shareholders' funds 9,197.3 7,215.3
Deferred tax on revaluation surpluses of
investment properties 1,708.1 1,371.7
Share of deferred tax on revaluation surpluses
of investment properties of joint ventures 16.7 5.2
_______ _______
Adjusted shareholders' funds 10,922.1 8,592.2
_______ _______
12. DIVIDENDS
2006 2005
US$m US$m
___________________________
Final dividend in respect of 2005 of USc6.00
(2004: USc5.00) per share 133.5 111.3
Interim dividend in respect of 2006 of USc3.00
(2005: USc2.00) per share 66.8 44.5
________ _______
200.3 155.8
________ _______
A final dividend in respect of 2006 of USc7.00 (2005: USc6.00) per share amounting to a
total of US$160.7 million (2005: US$133.5 million) is proposed by the Board. The
dividend proposed is not accounted for until it has been approved at the Annual General
Meeting. The amount will be accounted for as an appropriation of revenue reserves in
the year ending 31st December 2007.
13. PURCHASE OF A SUBSIDIARY
Fair value
Book value adjustments Fair value
US$m US$m US$m
_______________________________________
Investment properties 24.3 - 24.3
Other tangible assets 1.6 - 1.6
Joint ventures 34.8 1.8 36.6
Current assets 568.8 13.7 582.5
Current liabilities (129.5) - (129.5)
Long-term borrowings (88.9) - (88.9)
Deferred tax liabilities (1.0) (1.4) (2.4)
Other non-current liabilities (2.0) - (2.0)
_______ _________ _______
Net assets 408.1 14.1 422.2
_______ _________
Adjustment for minority interests (95.4)
_______
Net assets acquired 326.8
Excess of net assets acquired over consideration (14.1)
_______
Total consideration 312.7
Adjustment for carrying value of other investments (40.6)
Cash and cash equivalents acquired (34.3)
_______
Net cash outflow 237.8
_______
14. CASH FLOW PER SHARE
Cash flow per share is based on cash flows from operating activities less major
renovations expenditure amounting to US$49.8 million (2005: US$141.7 million)
and is calculated on the weighted average number of 2,228.1 million (2005:
2,225.6 million which excluded 69.6 million shares in the Company held by a
wholly-owned subsidiary) shares in issue during the year.
15. CAPITAL COMMITMENTS
2006 2005
US$m US$m
___________________________
Capital commitments 64.6 153.0
_______ _______
Contribution to joint ventures 1,060.3 479.1
_______ _______
16. CONTINGENT LIABILITIES
2006 2005
US$m US$m
___________________________
Guarantees in respect of facilities made available to
joint ventures 4.9 8.0
_______ _______
Guarantees in respect of facilities made available to joint ventures are stated
at their total respective contracted amounts. It is probable that the Group has
no obligations under these guarantees.
Various Group companies are involved in litigation arising in the ordinary
course of their respective businesses. Having reviewed outstanding claims and
taking into account legal advice received, the Directors are of the opinion that
adequate provisions have been made in the financial statements.
The final dividend of USc7.00 per share will be payable on 16th May 2007,
subject to approval at the Annual General Meeting to be held on 9th May 2007, to
shareholders on the register of members at the close of business on 23rd March
2007. The ex-dividend date will be on 21st March 2007, and the share registers
will be closed from 26th to 30th March 2007, 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 27th April 2007. The Sterling
equivalent of dividends declared in United States Dollars will be calculated by
reference to a rate prevailing on 2nd May 2007. 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.
-end-
For further information, please contact:
Hongkong Land Limited
N R Sallnow-Smith (852) 2842 8300
G M Brown (852) 2842 8138
Matheson & Co., Limited
Philip Hawkins (020) 7816 8136
GolinHarris
C T Hew (852) 2522 7928
Weber Shandwick Financial
Richard Hews/ Helen Thomas (020) 7067 0700
Full text of the Preliminary Announcement of Results and the Preliminary
Financial Statements for the year ended 31st December 2006 can be accessed
through the Internet at 'www.hkland.com'.
This information is provided by RNS
The company news service from the London Stock Exchange
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