HKLH - 2022 Preliminary Results

RNS Number : 6956R
Hongkong Land Hldgs Ltd
02 March 2023
 

 

2nd March 2023

 

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

2022 PRELIMINARY ANNOUNCEMENT OF RESULTS

 

Highlights 

· Underlying profit down 20% to US$776 million

· Lower residential development profits on the Chinese mainland

· Slight decline in results from Investment Properties; asset values stable

· Group financial position remains strong

· Final dividend maintained at US¢16.00 per share

 

"Results in 2023 will principally depend on the pace of recovery of the property sector on the Chinese mainland.  Stable contributions are expected to continue from the Group's Investment Properties business, although rental reversions for the Hong Kong office portfolio are expected to remain negative.  The extent of improvement in performance from the Development Properties business will depend on policy support measures implemented on the Chinese mainland."

 

Ben Keswick

Chairman

 

Results

Year ended 31st December



2022

US$m

2021

US$m

Change

%

  Underlying profit attributable to shareholders*

776

966

-20

  Profit/(loss) attributable to shareholders

203

(349)

N/A

  Shareholders' funds

33,303

34,584

-4

  Net debt

5,817

5,104

+14


US¢

US¢

%

  Underlying earnings per share*

34.44

41.49

-17

  Earnings/(loss) per share

8.99

(15.00)

N/A

  Dividends per share

22.00

22.00

-


US$

US$

%

  Net asset value per share

14.95

15.05

-1

*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 27 to the financial statements. Management considers this to be a key measure which provides additional information to enhance understanding of the Group's underlying business performance.

The final dividend of US¢16.00 per share will be payable on 10th May 2023, subject to approval at the Annual General Meeting to be held on 4th May 2023, to shareholders on the register of members at the close of business on 17th March 2023.

 

HONGKONG LAND HOLDINGS LIMITED

 

PRELIMINARY ANNOUNCEMENT OF RESULTS

FOR THE YEAR ENDED 31ST DECEMBER 2022

 

OVERVIEW

The Group's profitability was significantly lower in 2022, primarily due to a lower contribution from the Development Properties business in the second half of the year, after a record performance in 2021. The contribution from Investment Properties was resilient, however, with only modest financial impacts in the retail portfolio from the pandemic measures introduced across China during 2022.  The impact of lower average office rents in Hong Kong was partially offset by a reduction in operating costs.

 

PERFORMANCE

Underlying profit attributable to shareholders fell by 20% to US$776 million.

 

Profit attributable to shareholders was US$203 million, after including net non-cash losses of US$573 million resulting primarily from lower valuations of the Group's investment properties.  This compares to a loss of US$349 million in 2021, which included a US$1,315 million reduction in property valuations mainly due to lower market rents for the Hong Kong Central Portfolio.

 

The net asset value per share at 31st December 2022 was US$14.95, compared with US$15.05 at the end of 2021.

 

The Directors recommend a final dividend of US¢16.00 per share, providing a total dividend for the year of US¢22.00 per share, unchanged from last year.

 

GROUP REVIEW

Investment Properties

In Hong Kong, office leasing demand remained subdued.  Against this backdrop, the Group's Central office portfolio remained resilient, outperforming the broader market due to its prime CBD location and premium offering.  At the end of 2022, physical vacancy was 4.9%, compared to 5.2% at the end of 2021 and, on a committed basis, it was 4.7%, compared to 4.9% at the end of 2021, well below average Central market vacancy levels.  Modestly negative rental reversions resulted in average office rents decreasing to HK$111 per sq. ft. in 2022, from HK$117 per sq. ft. in the prior year.

 

Retail market sentiment in Hong Kong was severely affected by the fifth wave of the pandemic in the first half of 2022.  Retail trading benefited in the second half of the year, however, as social distancing and travel restrictions were progressively relaxed.  Total retail sales nevertheless remained below pre-pandemic levels, due to a lack of tourists.  Average retail rents in 2022 in the Central LANDMARK retail portfolio decreased to HK$177 per sq. ft. from HK$190 per sq. ft. in 2021, primarily due to negative base rent reversions.  Vacancy was 0.5% on both a physical and committed basis, unchanged from the prior year.

 

In Singapore, contributions from the Group's office portfolio increased, due to positive rental reversions underpinned by a healthy level of occupier demand, with average office rents increasing to S$10.6 per sq. ft. in 2022 from S$10.3 per sq. ft. in 2021.  On a committed basis, vacancy in the Group's office portfolio remained low at 2.2%, compared with 2.9% at the end of 2021. 

 

In Beijing and Macau, pandemic measures negatively impacted trading at the Group's two luxury retail malls, with tenant sales and footfall in 2022 both lower than the prior year.

 

In Shanghai, development activities continued at the Group's 43%-owned prime 1.1 million sq. m. mixed-use development on the West Bund, with modest impacts from the covid related city-wide lockdowns. The West Bund development, which will be completed in phases from 2023 to 2027, remains on schedule.

 

The combined value of the Group's Investment Properties portfolio was reduced by 2% in 2022, due largely to a modest increase in capitalisation rates in the Hong Kong portfolio.  There was no change in the capitalisation rates for the Singapore, Beijing and Shanghai investment properties.

 

Development Properties

As anticipated, the profit contribution from the Group's Development Properties business on the Chinese mainland decreased compared to the prior year, as a result of a significantly lower profit contribution in the second half of the year, due to fewer planned sales completions and the impact of pandemic-related restrictions. 

 

The Group's attributable interest in contracted sales in 2022 decreased to US$1,300 million from US$2,648 million in 2021, mainly due to weak market sentiment for residential properties. At 31st December 2022, the Group had an attributable interest of US$2,087 million in sold but unrecognised contracted sales, compared with US$2,853 million at the end of 2021. 

 

In Singapore, recognised profits in 2022 were lower than the prior year.  2021 benefited from the construction progress of the wholly-owned 1,404-unit Parc Esta project, which was handed over to buyers in 2022.  The Group's attributable interest in contracted sales was US$615 million, compared to US$328 million in the prior year, driven by the healthy pre-sales performance of two new residential projects launched during the year.  The 407-unit Piccadilly Grand and Galleria and 639-unit Copen Grand projects are 85% and 100% pre-sold or reserved, respectively.

 

In the rest of Southeast Asia, there were increased contributions from completed projects in Indonesia and Vietnam.

 

Business Development

The Group continues to be disciplined in evaluating and selecting Development Properties opportunities on the Chinese mainland, with a focus on Tier 1 and Tier 2 cities.  During the year the Group made two acquisitions - a primarily residential site in Shanghai and an interest in a mixed-used commercial site in Suzhou. 

 

The Shanghai site, located in Xuhui District and adjacent to our mixed-used project in West Bund, has an attributable developable area of 18,700 sq. m. and will feature six high-rise apartment blocks with over 460 premium units.

 

The joint venture project in Suzhou was secured in August 2022 and will consist of a luxury mall and hotel.  The total developable area of the site is 132,600 sq. m., and it is expected to be completed in 2026.  This development reflects the Group's strategy of developing luxury and premium lifestyle retail properties on the Chinese mainland.  The Group currently has four such properties in operation, and the site in Suzhou will be added to the pipeline of ten further such developments.  

 

In addition, the Group increased its investments in two existing projects, including acquiring from KWG Property Holdings Limited the remaining 50% interest in WE City, a mixed-use project in Chengdu in December 2022, and acquiring a 15% interest in Yue City, a mixed-use project in Nanjing, from Country Garden with completion expected in the first half of 2023.

 

In Singapore, the Group acquired a 49% interest in a residential site in the Jalan Tembusu area with a total developable area of 60,000 sq. m., which is expected to be completed by 2025.

 

These land acquisitions increase the Group's attributable developable area under development across all projects to 4.9 million sq. m.

 

Financing

The Group's financial position remains strong.  Net debt of US$5.8 billion at 31st December 2022 was up from US$5.1 billion at the end of 2021, primarily due to lower proceeds from residential sales.  Net gearing at the end of the year was 17%, compared with 15% at the end of 2021.  As at 31st December 2022, the Group had committed liquidity of US$3.1 billion, with an average tenor of debt of 5.8 years, compared to 6.5 years at the end of 2021.

 

In July 2022, the Group completed a US$500 million share buyback programme, and it subsequently announced that an additional US$500 million would be invested through to the end of 2023.  As at 28th February 2023, the total amount invested in the buyback programme since it was first announced in September 2021 was US$556 million, with US$350 million invested in 2022.

 

SUSTAINABILITY

Hongkong Land's growth and progress on sustainability initiatives continues to be underpinned by its Sustainability Framework 2030, which addresses material topics that are linked to measurable targets. 

 

During the year, the Group committed to setting science-based targets that are aligned with the 1.5°C pathway.  These targets, which were validated by the Science Based Targets initiative, has resulted in the Group committing to a 46.2% reduction of Scope 1 and 2 greenhouse gas emissions by 2030 from 2019 levels and a 22% reduction in carbon intensity for Scope 3 greenhouse gas emissions over the same period.

 

The Group's continued commitment and strong performance on sustainability initiatives has been recognised in a number of ESG assessments, especially those involving in-depth assessments requiring active participation.  The Group was pleased to receive the highest 5-star rating from the Global Real Estate Sustainability Benchmark (GRESB) for its standing investments.  Hongkong Land also qualified, for the first time, as a constituent of the Dow Jones Sustainability Asia Pacific Index, as a result of the significant improvement in our scores in the 2022 S&P Global Corporate Sustainability Assessment.

 

PEOPLE

I would like to express my appreciation on behalf of the Board to all of our staff for their continued commitment and professionalism in providing high quality offerings to our tenants and customers, despite market and pandemic-related challenges.

 

Lord Powell of Bayswater and Percy Weatherall stepped down from the Board in March 2022, and Michael Wu stepped down from the Board in December 2022.  We are grateful to them for their contributions to the Group.  We were pleased to welcome Lincoln K.K. Leong and Lily Jencks to the Board as Independent Non-Executive Directors with effect from March and July 2022, respectively.

 

OUTLOOK

Results in 2023 will principally depend on the pace of recovery of the property sector on the Chinese mainland.  Stable contributions are expected to continue from the Group's Investment Properties business, although rental reversions for the Hong Kong office portfolio are expected to remain negative.  The extent of improvement in performance from the Development Properties business will depend on policy support measures implemented on the Chinese mainland.

 

Ben Keswick

Chairman

 

CHIEF EXECUTIVE'S REVIEW

 

Hongkong Land delivered a respectable result for the year, despite challenging market conditions, although profits were significantly lower.  The contribution from Development Properties fell as a result of pandemic measures on the Chinese mainland and a more uncertain global economic outlook in the second half of 2022, but the performance of Investment Properties was resilient.

 

STRATEGY

Hongkong Land is a landlord and a developer operating in China and Southeast Asia. The Group's primary focus is to develop, grow and hold for long-term investment a portfolio of prime commercial investment properties across the region, whilst it also develops premium residential and commercial properties for sale on an opportunistic basis to enhance shareholder returns.

 

The Group's Investment Properties are predominantly commercial and located in core business districts of key Asian gateway cities, with a concentration in Hong Kong and Singapore.  Returns principally arise from rental income and long-term capital appreciation.  The Investment Properties segment is the largest contributor to the Group's earnings given its relative size and maturity. It accounted for 83% of the Group's gross assets at the end of 2022 (2021: 83%) and contributed 70% of the Group's underlying operating profit before corporate expenses in 2022 (2021: 60%).

 

The Group's Development Properties are predominantly premium residential and mixed-use developments located primarily in China, Singapore and Indonesia. Returns principally arise from trading profits in respect of the immediate sale of the residential and office components; and rental and trading profits for certain commercial elements of mixed-use sites that are disposed of, or reclassified to Investment Properties, after rents have stabilised.  Development Properties accounted for 17% of the Group's gross assets at the end of 2022 (2021: 17%) and 30% of the Group's underlying operating profit before corporate expenses in 2021 (2021: 40%).

 

Geographically, China generates the bulk of the Group's earnings. Hong Kong, which predominantly comprises Investment Properties, accounted for 57% of the Group's underlying operating profit before corporate expenses (2021: 49%), while the Chinese mainland, which predominantly comprises Development Properties, accounted for 23% (2021: 33%).

 

The Investment Properties portfolios in Hong Kong and Singapore provide a stable stream of recurring earnings and balance sheet strength that enables the Group to selectively pursue new long-term investment opportunities in key gateway cities across the region. Earnings from the Development Properties business are largely reinvested to replenish the Group's land bank where opportunities arise.  The Group's share of capital allocated to new investments totalled US$1.0 billion in 2022 (2021: US$3.0 billion).

 

Hong Kong Investment Properties

In Hong Kong, the Group's Central Portfolio consists of 12 interconnected prime commercial buildings forming the heart of the financial district in Central, providing over 450,000 sq. m. of Grade A office and luxury retail space. This integrated mixed-use development is positioned as the pre-eminent office, luxury retail, restaurant, and hotel accommodation in Hong Kong. It continues to attract both prime office tenants and luxury retailers, in addition to housing the acclaimed Landmark Mandarin Oriental hotel.

 

Hong Kong's positioning as one of Asia's leading financial and business hubs, combined with the scarcity of supply of high-quality, well-managed space in Central and the unique qualities of the Group's portfolio, continue to support low vacancy and strong rents.  Despite the challenging conditions resulting from the pandemic and global uncertainties, Hong Kong continues to possess unique advantages as a financial centre that are not easily replicated. The Group remains confident that Hong Kong will continue to thrive as the primary gateway for capital flows in and out of the Chinese mainland and will remain an important finance and commercial hub for decades to come.

 

The Group's 54,000 sq. m. retail portfolio is integrated with its office buildings to create part of its distinctive and successful mixed-use business model. Tenants include numerous global luxury brand flagship stores, as well as a number of leading restaurants.  LANDMARK is firmly established as the iconic luxury shopping and fine dining destination in Hong Kong.  Its success depends on the health of the broader Hong Kong economy, as well as on Hong Kong remaining an attractive destination for affluent visitors from across the region.  The Group is working to ensure that it remains the clear market leader in the city in which global luxury brands are represented.

 

Other Investment Properties

Outside Hong Kong, the Group has similarly established itself as a leading provider of prime office and retail space.  In Singapore, Hongkong Land's attributable interests totalling 165,000 sq. m. - principally concentrated in the Marina Bay Area - include some of the finest Grade A office space in the market. In China, the Group's 43,000 sq. m. WF CENTRAL complex in Beijing is positioned as a premium retail and lifestyle destination, which includes a Mandarin Oriental hotel that has established itself as one of the most exclusive hotels in the city.  In Indonesia, the Group has attributable interests of over 100,000 sq. m. of Grade A office space through its 50%-owned joint venture, Jakarta Land.  In Cambodia, the EXCHANGE SQUARE complex comprises 26,000 sq. m. of office and retail space in the heart of Phnom Penh.

 

Our performance in these markets depends on the levels of demand for, and supply of, prime office and luxury retail space, both of which are influenced by global and regional macroeconomic conditions.  The Group is committed to maintaining excellence in product quality and service to retain and attract tenants and customers and will continue to seek new opportunities to develop prime investment properties in key Asian gateway cities.

 

Development Properties

The Group has established a strong and profitable Development Properties business focused primarily on the premium residential market segment in China, Singapore and Indonesia.  In China, the Group has a presence in seven key markets: Beijing, Chengdu, Chongqing, Hangzhou, Nanjing, Shanghai and Wuhan, which are expected to continue benefiting from the growth of the middle class and long-term urbanisation trends. While the capital invested in this business is significantly lower than that invested in Investment Properties, the earnings derived from Development Properties enhance the Group's diversification, overall profits and return on capital. The Group's attributable interest in the developable area of its projects at the end of 2022 totalled 10.7 million sq. m., compared to 10.2 million sq. m. at the end of 2021.  Of this, construction of approximately 54% had been completed at the end of 2022, compared to 48% at the end of 2021.

 

Annual returns from Development Properties fluctuate due to the nature of projects and the Group's accounting policy of recognising profits for sold properties on completion in a number of markets, including China.  Demand is also dependent on overall economic conditions, which can be significantly affected by government policies and the availability of credit.  Ongoing land acquisitions are necessary to build and maintain a stable income stream over the longer term.

 

REVIEW OF INVESTMENT PROPERTIES

Profits from Investment Properties in 2022 were 2% lower than the prior year, primarily due to negative office rental reversions in Hong Kong.  The value of the Group's Investment Properties portfolio at 31st December 2022 declined by 2%, mainly due to lower market rents for the Hong Kong Central Portfolio and a modest increase in capitalisation rates.

 

Hong Kong

Despite slowing demand due to global economic headwinds and rising office vacancies across Hong Kong, the Group's Central office portfolio continued to outperform the broader market.  Physical vacancy was 4.9% at the year-end, compared to 5.2% at the end of 2021.  On a committed basis, vacancy was 4.7%.  Vacancy for the overall Central Grade A office market was 8.8% at the end of 2022, compared to 8.0% at the end of 2021.  Rental reversions remained negative during the year.  The Group's average office rent in 2022 was HK$111 per sq. ft., down from last year's average of HK$117 per sq. ft.  Financial institutions and legal and accounting firms occupy 81% of the Group's total leased office space.  The weighted average lease expiry of the office portfolio at the end of 2022 stood at 4.0 years, compared to 4.2 years at the end of 2021.

 

The Group's luxury retail portfolio in Hong Kong was negatively impacted by pandemic restrictions in the first half of 2022, although sentiment and performance improved as social and travel restrictions were progressively relaxed towards the end of the year.  During the first half of 2022, the Group provided temporary rent relief to support tenants through the fifth wave of the pandemic, including turnover-only rent for food and beverage tenants and a full waiver of rents for tenants subject to mandatory closure of their businesses.  Average retail rent in 2022 decreased to HK$177 per sq. ft. from HK$190 per sq. ft. due to negative base rental reversions, partly offset by a decline in temporary rent relief provided to tenants.  Vacancy, on both a physical and committed basis, remained low at 0.5%.

 

Over the past year, the Group continued to refine its best-in-class services and offerings to its tenants and customers.  In March 2022, the Group launched a new LANDMARK app to provide shoppers and loyalty members with a more personalised and intuitive user experience.  The new platform also provides more flexibility in co-creating content with our tenants and partners and enables the Group to serve customers better through a deeper understanding of their needs.

 

In December 2022, the Group expanded its successful premium food hall concept in the basement level of Jardine House by launching BaseHall 2.  The venue provides a fluid space for multi-concept dining and the flexibility to host other events and experiences for our tenants and customers.  In addition to housing 13 unique food and beverage concepts, BaseHall 2 has an 18-seat chef's counter to provide a platform to incubate homegrown talents in Hong Kong.

 

The value of the Group's Investment Properties portfolio in Hong Kong at 31st December 2022, based on independent valuations, declined by 2% to US$26,131 million, primarily from a slight increase in capitalisation rates.

 

Singapore

Although the Singapore office leasing market remained healthy in 2022, market sentiment was affected by global economic headwinds towards the end of the year.  Overall vacancy across the entire Grade A central business district was 5.5% at the end of 2022, compared to 8.6% at the end of 2021.  Average rent at the Group's office portfolio increased to S$10.6 per sq. ft. in 2022, up from S$10.3 per sq. ft. in the previous year, driven by positive rental reversions.  Physical vacancy was 7.5% at the year end, whilst  on a committed basis vacancy was 2.2% at the end of 2022, compared to 2.9% at the end of 2021.  Financial institutions and legal and accounting firms occupy 73% of the Group's total leased office space. The weighted average lease expiry of the office portfolio at 2022 year-end stood at 3.4 years (2021: 3.4 years).

 

To further enhance the tenant experience, the Group has continued to leverage its popular 'By The Bay' mobile app to introduce exclusive retail offerings, deliver a series of health and wellness workshops and host community and charitable events.

 

Chinese Mainland

In Beijing, footfall and tenant sales at WF CENTRAL were negatively impacted by pandemic measures throughout the year. Tenant repositioning initiatives, however, remained on track with several new openings expected in the first half of 2023.

 

In Shanghai, planning and development of the Group's prime mixed-use development on the West Bund is proceeding on schedule.  Completion is expected in phases from 2023 to 2027. 

 

Other Investment Properties

ONE CENTRAL Macau was negatively impacted by pandemic measures, with lower footfall and tenant sales than the prior year, as the border with the Chinese mainland remained closed for most of the year.  Physical occupancy was 84%, compared to 91% at the end of the prior year. 

 

In Jakarta, occupancy across the office portfolio was 71% at the end of 2022, compared to 72% at the end of 2021.  On a committed basis, occupancy was 72%.  The average net rent was US$15.0 per sq. m. in 2022, compared to US$15.2 per sq. m. in the prior year, reflecting a satisfactory performance in the context of a structural surplus of city-wide office supply.

 

In Bangkok, planning of the Group's 49%-owned prime commercial joint-venture development in the central business district, secured in late 2017, is under review in response to the changing market conditions.  This development has a gross floor area of 290,000 sq. m.

 

Performance at the Group's other investment properties was within expectations.

 

REVIEW OF DEVELOPMENT PROPERTIES

Earnings from the Group's Development Properties business were lower in 2022 than in 2021, primarily due to construction delays caused by pandemic restrictions and fewer planned sales completions on the Chinese mainland.

 

Chinese Mainland

The Group's development properties on the Chinese mainland comprise 35 projects in seven cities, of which 14 are in Chongqing.  As at 31st December 2022, the Group's net investment in development properties on the Chinese mainland was US$6.5 billion, compared to US$6.3 billion at the end of 2021.

 

While the Development Properties business is predominantly focused on selling residential properties, the Group is also developing luxury and premium lifestyle retail properties on the Chinese mainland.  It currently has four such properties in operation, with a total attributable net leasable area of 170,000 sq. m.  In addition, a further ten projects, with an estimated attributable net leasable area of 323,000 sq. m., are expected to be launched from 2023 to 2027, as follows:

 

Luxury Retail Properties Pipeline

Project

City

Attributable net leasable area (sq. m.)

JL CENTRAL

Nanjing

23,000

Eternal Land

Chongqing

44,400

West Bund*

Shanghai

51,800

Suzhou CENTRAL*

Suzhou

39,400

*The West Bund luxury retail segment and Suzhou CENTRAL are recognised under Investment Properties.

 

Premium Lifestyle Retail Properties Pipeline

Project

City

Attributable net leasable area (sq. m.)

Galaxy Midtown

Shanghai

8,800

WE City

Chengdu

51,700

Yue City

Nanjing

16,200

Central Avenue

Chongqing

38,100

Hangzhou Bay

Hangzhou

22,800

Dream Land

Wuhan

26,700

 

With tightened credit conditions and macroeconomic headwinds on the Chinese mainland, the Group maintained its disciplined and consistent approach to evaluating expansion opportunities.  During the year, the Group secured two new joint venture projects: a residential project in West Bund, Shanghai and a commercial project in Suzhou.

 

Market sentiment remained weak throughout the year due to pandemic restrictions. The Group's share of total contracted sales in 2022 was US$1,300 million, 51% lower than the US$2,648 million achieved in the prior year. The Group's attributable interest in revenue recognised in 2022, including its share of revenue in joint ventures and associates, was US$1,873 million, compared to US$2,426 million in 2021.

 

At 31st December 2022, the Group's attributable interest in sold but not yet recognised contracted sales amounted to US$2,087 million, compared to US$2,853 million at the end of 2021.

 

Development Properties Pipeline (Chinese Mainland)

City

Number of projects

Developable area* ('000 sq. m.)

Revenue from property sales* (US$m)

% of Construction completed

% of Development Properties exposure on the Chinese Mainland

2022

2021

Chongqing

14

4,890

1,113

1,480

79%

33%

Shanghai

5

397

59

259

43%

22%

Nanjing

4

433

100

450

33%

16%

Wuhan

4

642

56

2

23%

16%

Chengdu

5

1,209

27

164

63%

8%

Beijing

1

38

-

-

-

4%

Hangzhou

2

309

518

71

53%

1%

*Includes HKL's share in joint ventures and associates

 

 

Singapore

With the relaxing of pandemic restrictions, residential market sentiment recovered during the year, with satisfactory sales performance at the Group's existing projects.

 

The Group completed one residential project during the year, the wholly-owned 1,404-unit Parc Esta, which was fully sold.

 

The Group's attributable interest in contracted sales was US$615 million in 2022, compared to US$328 million in the prior year.  The Group's attributable interest in revenue recognised in 2022 was US$379 million, compared to US$631 million in the prior year.

 

At 31st December 2022, the Group's attributable interest in sold but not yet recognised contracted sales amounted to US$589 million, compared to US$362 million at the end of 2021.

 

During the year, the Group secured a 49% interest in a residential site in the Jalan Tembusu area with a developable area of 60,000 sq. m., which is expected to yield a total of 638 units on completion.

 

Development Properties Pipeline (Singapore)

Project

Developable area* ('000 sq. m.)

Revenue from property sales* (US$m)

Expected Completion

% of Development Properties exposure in Southeast Asia

2022

2021

Parc Esta

108

164

501

Completed

-

Leedon Green

27

190

66

2023

6%

Piccadilly Grand and Galleria

20

25

-

2025

3%

Copen Grand

34

-

-

2025

4%

Tembusu Grand

29

-

-

2025

30%

*Includes HKL's share in joint ventures and associates

 

Indonesia and Other Development Properties

In Indonesia, construction of the Group's residential projects has largely recovered with the relaxation of pandemic restrictions.

 

During the year, the Group acquired a 50% interest in a 50.4 hectare primarily residential site in the southwest of Jakarta.  The project will consist of predominantly land houses and is expected to be completed in phases from 2025 to 2033.

 

In February 2022, the Group, in partnership with Astra International, established a joint venture with LOGOS SE Asia Pte Ltd to manage and develop modern logistics warehouses in Indonesia, with an initial focus in the Greater Jakarta area.

 

In the rest of Southeast Asia, construction activities continue to progress well, with pre-sales performance in line with expectations.

 

Development Properties Pipeline (Southeast Asia Ex. Singapore)

Country

Number of projects

Developable area* ('000 sq. m.)

Revenue from property sales* (US$m)

% of Construction completed

% of Development Properties exposure in Southeast Asia

2022

2021

Indonesia

6

743

67

37

24%

25%

Thailand

4

263

22

32

13%

22%

Philippines

3

710

20

25

12%

7%

Vietnam

1

40

90

47

100%

3%

*Includes HKL's share in joint ventures and associates

 

THE YEAR AHEAD

Looking ahead to 2023, the Group expects a steady improvement in the operating environments across a majority of its key markets.  The Group's Investment Properties portfolios in Hong Kong and Singapore remain well positioned in their respective markets, underpinned by their high quality tenant base and low vacancies.  In the Development Properties business, the extent of improvement in performance will depend on the pace of recovery of the Chinese mainland property sector.

 

We take pride in delivering outstanding services and products to our tenants and customers by upholding the highest quality standards.  These core values have served as the foundation of Hongkong Land's long-term success.  The Group intends to utilise its strong balance sheet and disciplined investment approach to further strengthen its market positions and achieve sustained growth.

 

 

Robert Wong

Chief Executive

 


 

Hongkong Land Holdings Limited

Consolidated Profit and Loss Account

for the year ended 31st December 2022

 


 


 

 






 


 

2022




2021


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)

 

2,244.4

 

 

 

-

 

 

 

2,244.4




2,384.3




-




2,384.3


 

Net operating costs

 

 

 

 

 

 

 

 

 

 














 

(note 3)

 

(1,398.4)

 

 

 

-

 

 

 

(1,398.4)




(1,440.9)




2.6




(1,438.3)


 

Change in fair value of

 

 

 

 

 

 

 

 

 

 














 

  investment properties

 

 

 

 

 

 

 

 

 

 














 

 (note 7) 

 

-

 

 

 

(559.3)

 

 

 

(559.3)




-




(1,375.5)




(1,375.5)


 


 

 

 

 

 

 

 

 

 

 














 

Operating profit/(loss)

 

 

 

 

 

 

 

 

 

 














 

 (note 4) 

 

846.0

 

 

 

(559.3)

 

 

 

286.7




943.4




(1,372.9)




(429.5)


 

Net financing charges

 

 

 

 

 

 

 

 

 

 














 


 

 

 

 

 

 

 

 

 

 














 


 

 

 

 

 

 

 

 

 

 














 

- financing charges

 

(234.9)

 

 

 

-

 

 

 

(234.9)




(222.2)




-




(222.2)


 

- financing income

 

66.8

 

 

 

-

 

 

 

66.8




67.0




-




67.0


 


 

 

 

 

 

 

 

 

 

 














 


 

 

 

 

 

 

 

 

 

 














 


 

(168.1)

 

 

 

-

 

 

 

(168.1)

 



(155.2)




-




(155.2)


 

Share of results of

 

 

 

 

 

 

 

 

 

 














 

associates and joint

 

 

 

 

 

 

 

 

 

 














 

ventures (note 5)

 

 

 

 

 

 

 

 

 

 














 


 

 

 

 

 

 

 

 

 

 














 


 

 

 

 

 

 

 

 

 

 














 

- before change in fair


 

 

 

 


 

 

 

 














 

  value of investment


 

 

 

 

 

 

 

 

 














 

  properties


229.3

 

 

 

-

 

 

 

229.3




355.9




-




355.9


 

Change in fair value of

 

 

 

 

 

 

 

 

 

 














 

  investment properties

 

-

 

 

 

(24.5)

 

 

 

(24.5)




-




80.6




80.6


 



 

 

 

 

 

 

 

 

 














 



 

 

 

 

 

 

 

 

 














 



229.3




(24.5)




204.8




355.9




80.6




436.5


 



 

 

 

 

 

 

 

 

 














 

Profit/(loss) before tax

 

907.2

 

 

 

(583.8)

 

 

 

323.4




1,144.1




(1,292.3)




(148.2)


 

Tax (note 6)

 

(131.7)

 

 

 

7.9

 

 

 

(123.8)




(178.7)




(16.9)




(195.6)


 


 

 

 

 

 

 

 

 

 

 














 

Profit/(loss) after tax

 

775.5

 

 

 

(575.9)

 

 

 

199.6




965.4




(1,309.2)




(343.8)


 


 

 

 

 

 

 

 

 

 

 














 

Attributable to:

 

 

 

 

 

 

 

 

 

 














 

Shareholders of the

 

 

 

 

 

 

 

 

 

 














 

  Company

 

776.1

 

 

 

(573.4)

 

 

 

202.7




966.0




(1,315.2)




(349.2)


 

Non-controlling interests

 

(0.6)

 

 

 

(2.5)

 

 

 

(3.1)




(0.6)




6.0




5.4


 


 

 

 

 

 

 

 

 

 

 














 


 

775.5

 

 

 

(575.9)

 

 

 

199.6




965.4




(1,309.2)




(343.8)


 

























 


 

 

 

 

 

 

 

 

 

 














 


 

US¢

 

 

 

 

 

 

 

US¢




US¢








US¢


 


 

 

 

 

 

 

 

 

 

 














 


 

 

 

 

 

 

 

 

 

 














 

Earnings/(loss) per share (basic and diluted)

  (note 8)

 

34.44

 

 

 

 

 

 

 

8.99




41.49








(15.00)


 



 

 

 

 

 

 

 

 

 














 


 


 

Hongkong Land Holdings Limited

Consolidated Statement of Comprehensive Income

for the year ended 31st December 2022

 


 


 

 

 

 

 

 

 

 

 

 




 

 

 

 


 

 

 

 

2022

US$m

 

 

 

 

 



2021

US$m

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 




 

 

 

 


 

 

 

 


 

 

 

 

 




 

 

 

 

Profit/(loss) for the year

 

 

 

 

199.6

 

 

 

 

 



(343.8)


 

 

 

Other comprehensive income/( expense)

 

 

 

 

 

 

 

 

 

 





 

 

 


 

 

 

 

 

 

 

 

 

 





 

 

 


 

 

 

 

 

 

 

 

 

 





 

 

 

Items that will not be reclassified to profit

 

 

 

 

 

 

 

 

 

 





 

 

 

  or loss:

 

 

 

 

 

 

 

 

 

 





 

 

 

Remeasurements of defined benefit plans

 

 

 

 

(1.6)

 

 

 

 

 



3.3


 

 

 

Tax on items that will not be reclassified

 

 

 

 

0.3

 

 

 

 

 



(0.5)


 

 

 


 

 

 

 

 

 

 

 

 

 





 

 

 


 

 

 

 

(1.3)

 

 

 

 

 



2.8


 

 

 

Items that may be reclassified subsequently

 

 

 

 

 

 

 

 

 

 





 

 

 

  to profit or loss:

 

 

 

 

 

 

 

 

 

 





 

 

 


 

 

 

 

 

 

 

 

 

 




 

 

 


 

 


 

 

 

 

 

 

 





 

 

 

Net exchange translation differences

 

 

 

 

 

 

 

 

 

 





 

 

 

- net loss arising during the year

 

 

 

 

(116.8)

 

 

 

 

 



(148.1)


 

 

 


 

 

 

 

 

 

 

 

 

 





 

 

 

Cash flow hedges

 

 

 

 

 

 

 

 

 

 





 

 

 


 

 

 

 

 

 

 

 

 

 




 

 

 


 

 

 

 

 

 

 

 

 

 





 

 

 

- net gain/(loss) arising during the year

 

 

 

 

2.4

 

 

 

 

 



(11.7)


 

 

 

- transfer to profit and loss

 

 

 

 

(2.4)

 

 

 

 

 



(0.1)


 

 

 


 

 

 

 

 

 

 

 

 

 




 

 

 


 

 

 

 

 

 

 

 

 

 





 

 

 


 

 

 

 

-

 

 

 

 

 



(11.8)


 

 

 

Tax relating to items that may be

 

 

 

 

 

 

 

 

 

 





 

 

 

  reclassified

 

 

 

 

-

 

 

 

 

 



1.9


 

 

 

Share of other comprehensive (expense)/

 

 

 

 

 

 

 

 

 

 





 

 

 

  income of associates and joint ventures

 

 

 

 

(523.6)

 

 

 

 

 



87.1


 

 

 


 

 

 

 

 

 

 

 

 

 




 

 

 


 

 

 

 

 

 

 

 

 

 





 

 

 


 

 

 

 

(640.4)

 

 

 

 

 



(70.9)


 

 

 


 

 

 

 

 

 

 

 

 

 




 

 

 


 

 

 

 

 

 

 

 

 

 





 

 

 

Other comprehensive expense for the

 

 

 

 

 

 

 

 

 

 





 

 

 

  year, net of tax

 

 

 

 

(641.7)

 

 

 

 

 



(68.1)


 

 

 


 

 

 

 

 

 

 

 

 

 





 

 

 

Total comprehensive expense for the year

 

 

 

 

(442.1)

 

 

 

 

 



(411.9)


 

 

 


 

 

 

 

 

 

 

 

 

 





 

 

 

Attributable to:

 

 

 

 

 

 

 

 

 

 





 

 

 

Shareholders of the Company

 

 

 

 

(431.9)

 

 

 

 

 



(419.4)


 

 

 

Non-controlling interests

 

 

 

 

(10.2)

 

 

 

 

 



7.5


 

 

 


 

 

 

 

 

 

 

 

 

 





 

 

 


 

 

 

 

(442.1)

 

 

 

 

 



(411.9)


 

 

 


 

 

 

 

 

 

 

 

 

 




 

 

 

 

 



 

<






 

Hongkong Land Holdings Limited

Consolidated Balance Sheet

at 31st December 2022

 






 











 





2022

US$m






2021

US$m



 





 









 

 













 

Net operating assets













 

F ixed assets

 



111.8






127.8



 

Right-of-use assets

 



13.0






12.4



 

Investment properties (note 10)

 



28,054.1






28,600.2



 

Associates and joint ventures

 



9,616.0






9,515.3



 

Non-current debtors

 



16.8






29.7



 

Deferred tax assets

 



98.2






67.7



 

Pension assets

 



0.9






1.8



 


 



 









 

Non-current assets

 



37,910.8






38,354.9



 


 



 









 


 



 









 

Properties for sale

 



2,910.7






2,970.5



 

Current debtors

 



539.4






1,029.4



 

Current tax assets

 



62.5






28.3



 

Bank balances

 



1,173.4






1,479.5



 


 



 









 

Current assets

 



4,686.0






5,507.7



 


 



 









 


 



 









 

Current creditors

 



(1,667.0)






(2,194.6)



 

Current borrowings (note 11)

 



(419.1)






(865.3)



 

Current tax liabilities

 



(328.9)






(202.9)



 


 



 









 


 



 









 

Current liabilities

 



(2,415.0)






(3,262.8)



 


 



 









 


 



 









 

Net current assets

 



2,271.0






2,244.9



 

Long-term borrowings (note 11)

 



(6,571.4)






(5,717.9)



 

Deferred tax liabilities

 



(257.1)






(227.9)



 

Pension liabilities

 



(1.8)






-



 

Non-current creditors

 



(24.4)






(35.8)



 


 



 









 


 



33,327.1






34,618.2



 

 

 



 









 

Total equity

 



 









 

Share capital

 



222.7






229.8



 

Share premium

 



-






67.4



 

Revenue and other reserves

 



33,080.7






34,286.6



 


 



 









 

Shareholders' funds

 



33,303.4






34,583.8



 

Non-controlling interests

 



23.7






34.4



 

 

 



 









 

 

 



33,327.1






34,618.2



 

 













 


Hongkong Land Holdings Limited

Consolidated Statement of Changes in Equity

for the year ended 31st December 2022



 

Attributable to

shareholders

Attributable to non-

 

 

 

Share

capital

US$m

 

Share

premium

US$m

 

Revenue

reserves US$m

 

Hedging

reserves

US$m

 

Exchange

reserves

US$m

 

of the Company US$m

 

controlling interests US$m

 

Total

equity

US$m

































2022
















At 1st January

229.8

 

67.4

 

34,022.4

 

(20.2)

 

284.4

 

34,583.8

 

34.4

 

34,618.2

Total comprehensive (expense)/income

-

 

-

 

201.4

 

17.2

 

(650.5)

 

(431.9)

 

(10.2)

 

(442.1)

Dividends paid by the Company (note 9)

-

 

-

 

(498.8)

 

-

 

-

 

(498.8)

 

-

 

(498.8)

Dividends paid to non-controlling shareholders

-

 

-

 

-

 

-

 

-

 

-

 

(0.5)

 

(0.5)

Unclaimed dividends forfeited

-

 

-

 

1.0

 

-

 

-

 

1.0

 

-

 

1.0

Repurchase of shares

(7.1)

 

(67.4)

 

(276.2)

 

-

 

-

 

(350.7)

 

-

 

(350.7)

















At 31st December

222.7

 

-

 

33,449.8

 

(3.0)

 

(366.1)

 

33,303.4

 

23.7

 

33,327.1

















2021
















At 1st January

233.4


257.3


34,881.2


(21.6)


358.8


35,709.1


29.4


35,738.5

Total comprehensive (expense)/income

-


-


(346.4)


1.4


(74.4)


(419.4)


7.5


(411.9)

Dividends paid by the Company (note 9)

-


-


(513.4)


-


-


(513.4)


-


(513.4)

Dividends paid to non-controlling shareholders

-


-


-


-


-


-


(0.9)


(0.9)

Unclaimed dividends forfeited

-


-


1.0


-


-


1.0


-


1.0

Disposal of subsidiaries

-


-


-


-


-


-


(1.6)


(1.6)

Repurchase of shares

(3.6)


(189.9)


-


-


-


(193.5)


-


(193.5)

















At 31st December

229.8


67.4


34,022.4


(20.2)


284.4


34,583.8


34.4


34,618.2