Results

"In 1998 income from properties will show the full effect of the negative rent reversion cycle. Capital values also remain under pressure and have fallen by some 10% so far this year. Notwithstanding these challenges, the Group has entered the year with a clear strategy, a strong balance sheet and with its investment properties almost fully let."

Simon Keswick, Chairman
18th March 1998

The final dividend of US¢8.50 per share will be payable on 17th June 1998, subject to approval at the Annual General Meeting to be held on 10th June 1998, to Shareholders on the register of members at the close of business on 9th April 1998. The share registers will be closed from 13th to 17th April 1998, inclusive.

HONGKONG LAND HOLDINGS LIMITED

PRELIMINARY ANNOUNCEMENT OF RESULTS
FOR THE YEAR ENDED 31ST DECEMBER 1997

PERFORMANCE

Hongkong Land Holdings Limited today announced that the consolidated net profit after taxation and minority interests for the year ended 31st December 1997 declined to US$395 million compared with US$432 million in 1996 excluding the write-back from a discontinued activity.

Earnings per share excluding the asset provision were US¢15.68 in 1997 compared with recurring earnings per share in 1996 of US¢16.40, a decrease of 4%.

The annual valuation of the Group's investment properties was carried out at the end of 1997 by independent professional valuers and produced a net valuation deficit for the year of US$845 million, which has been charged to reserves. Shareholders' funds at the year end were US$8,833 million, down 11% from US$9,871 million in 1996. Net asset value per share fell 7% in 1997 from US$3.75 to US$3.48.

The Group purchased and cancelled 108 million of its own shares, some 4%, during 1997 at a cost of US$253 million. This action enhanced both earnings and assets per share.

The Directors recommend a final dividend of US¢8.50 per share, payable in cash, which, together with an interim dividend of US¢3.50 per share, will make a total annual dividend of US¢12.00 per share, unchanged from 1996. In view of the current low share price and the share repurchase programme, the Board has decided not to offer a scrip dividend alternative.

GROUP REVIEW

Overview
Turning to the operations, the Chairman, Simon Keswick, said that during 1997 the Group achieved satisfactory average rents in its prime investment property portfolio in Hong Kong, while good progress was made on current building projects, and infrastructure activity was expanded in Mainland China.

Hongkong Land China
Sentiment in the Hong Kong property market was positive in the first half of 1997. Rents were steady and, continuing the trend established in 1996, property values continued to rise. In the second half, however, as problems developed in several Asian economies, confidence was eroded.

The more challenging market conditions in the second half led to the value of the Group's properties at year end falling some 10% below the level at the end of 1996. Average rents were steady during 1997, and occupancy of the Group's office and retail portfolio, which totals some 5 million sq. ft, was maintained at the satisfactory level of 98%.

Looking forward, the Group faces both increased competition from the new buildings being erected in Hong Kong's Central business district and a leasing market that has yet to reflect fully the economic difficulties being experienced in the Region.

Several new initiatives were launched during 1997 to enhance the Group's competitive position. The most important of these was the decision to proceed with the redevelopment of the Group's property at 11 Chater Road (currently known as Swire House), where demolition of the existing 35 year old building will commence later in 1998.

In Mainland China the Group made progress with initiatives in both property and infrastructure. In October a 40% interest in a US$130 million residential estate in Beijing was acquired and leasing of the units has commenced. In December a 28% interest in Central China Power Corporation, which is developing mid-sized power stations in central China, was acquired for US$40 million. The Group also increased its shareholding in the China Water Company, in which its investment now totals US$21 million. These three investments give the Group a good operating platform in Mainland China from which further expansion can take place.

Hongkong Land International
In Singapore work commenced on the Group's 395,000 sq. ft prime commercial and retail development at One Raffles Link, Marina Square. Although property values and the currency in Singapore have been affected by the economic difficulties in Asia, preliminary leasing interest in the building has been encouraging.

In the Philippines work is progressing well on the Group's joint venture residential property development with Ayala Land. The market was, however, depressed during the year, and further new sales of the apartments were negligible.

In Vietnam the Group's second office development in Hanoi was completed, and the first tenancy signed in February 1998. Demand for office space is currently weak in Hanoi reflecting cautious international investment sentiment towards Vietnam.

OUTLOOK

In conclusion, Simon Keswick said, "In 1998 income from properties will show the full effect of the negative rent reversion cycle. Capital values also remain under pressure and have fallen by some 10% so far this year. Notwithstanding these challenges, the Group has entered the year with a clear strategy, a strong balance sheet and with its investment properties almost fully let."

1   BASIS OF PREPARATION

The financial information contained in this announcement has been based on the audited results for the year ended 31st December 1997 which have been prepared under the historical cost convention as modified by the revaluation of certain fixed assets and in conformity with International Accounting Standards on the basis of the accounting policies set out in the Financial Statements.

2   SHARE OF RESULTS OF ASSOCIATES AND JOINT VENTURES

* This represented the excess of the cost of acquisition over the Group's share of net assets of the acquired ventures.

3   OTHER INCOME

4   TAXATION

Tax on profits has been calculated at rates of taxation prevailing in the territories in which the Group operates. There was no United Kingdom tax for the year (1996: US$0.2 million).

5   EARNINGS PER SHARE

The calculation of earnings per share is based on the profit after taxation and minority interests of US$394.7 million (1996: US$649.4 million) and on the weighted average of 2,612.3 million (1996: 2,632.8 million) shares in issue during the year, which excludes 69.6 million shares in the Company held by a subsidiary.

The calculation of earnings per share excluding asset provision and discontinued activity is based on the profit after taxation and minority interests and after adjusting for the provision of US$15 million on the Indonesian toll road investment in 1997 and the exceptional profit from Trafalgar House of US$217.6 million in 1996.

Full conversion of convertible bonds would not result in material dilution of earnings per share.

6   CASH FLOW PER SHARE

Cash flow per share is based on operating cash flow and maintenance capital expenditure for investment properties, amounting to US$396.6 million (1996: US$402.5 million) and is calculated on the weighted average of 2,612.3 million (1996: 2,632.8 million) shares in issue during the year, which excludes 69.6 million shares in the Company held by a subsidiary.

7   CASH FLOWS FROM OPERATING ACTIVITIES

8   ANNUAL REPORT

The Annual Report will be posted to Shareholders on or about 7th May 1998. Copies may be obtained from Butterfield Corporate Services Limited, P.O. Box HM1540, Hamilton HM FX, Bermuda; IRG plc, Bourne House, 34 Beckenham Road, Beckenham, Kent BR3 4TU, England and M & C Services Private Limited, 16 Raffles Quay #23-01, Hong Leong Building, Singapore 048581.

The final dividend of US¢8.50 per share will be payable on 17th June 1998, subject to approval at the Annual General Meeting to be held on 10th June 1998, to Shareholders on the register of members at the close of business on 9th April 1998. The share registers will be closed from 13th to 17th April 1998, inclusive. Shareholders will receive their dividends in United States Dollars. Shareholders registered on the United Kingdom branch register also have the option to elect for Sterling calculated by reference to a rate prevailing ten business days prior to the payment date. Such Shareholders may make new currency elections by notifying any one of the Company's registrars or the UK transfer agent in writing by 29th May 1998. 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. There is no scrip alternative being offered in respect of the current dividend. Those Shareholders who have made a permanent scrip election will be notified separately of their dividend payment arrangement.

For further information, please contact:

Full text of the Preliminary Announcement of Results and the Preliminary Financial Statements for the year ended 31st December 1997 can be accessed through the Internet at "http://www.irasia.com/listco/sg/hkland". This announcement is also available through "First Call".

© Copyright 1996-2008 irasia.com Ltd. All rights reserved.

DISCLAIMER: irasia.com Ltd makes no guarantee as to the accuracy or completeness of any information provided on this website. Under no circumstances shall irasia.com Ltd be liable for damages resulting from the use of the information provided on this website. TRADEMARK & COPYRIGHT: All intellectual property rights subsisting in the contents of this website belong to irasia.com Ltd or have been lawfully licensed to irasia.com Ltd for use on this website. All rights under applicable laws are hereby reserved. Reproduction of this website in whole or in part without the express written permission of irasia.com Ltd is strictly prohibited. TERMS OF USE: Please read the Terms of Use governing the use of our website.