Results

"We do not see any early prospect of recovery in the Hong Kong commercial property market. But we are well positioned to withstand the downturn and to benefit from Asia's recovery when that occurs."

Simon Keswick, Chairman
10th March 1999

The final dividend of US¢5.50 per share will be payable on 9th June 1999, subject to approval at the Annual General Meeting to be held on 2nd June 1999, to Shareholders on the register of members at the close of business on 1st April 1999. The ex-dividend date will be on 26th March 1999, and the share registers will be closed from 5th to 9th April 1999, inclusive.

HONGKONG LAND HOLDINGS LIMITED

PRELIMINARY ANNOUNCEMENT OF RESULTS
FOR THE YEAR ENDED 31ST DECEMBER 1998

OVERVIEW

Hongkong Land's performance in 1998 was inevitably impacted by the general economic downturn in the Region, and particularly by the steep decline in property values in our key Hong Kong market. But our past financial prudence and high standards of property management have paid off in a continuing strong balance sheet and high occupancy of our properties.

PERFORMANCE

Hongkong Land Holdings Limited today announced that, excluding exceptional items, net profit for the year ended 31st December 1998 declined by 9% to US$370 million from US$407 million in 1997. In light of the substantial fall in markets, the Board has decided to provide for the estimated decline in the value of its development properties. Together with provisions against other property and infrastructure investments in Southeast Asia, exceptional items amounted to US$248 million. After accounting for these, the consolidated net profit after taxation and minority interests for the year declined to US$126 million compared with US$392 million in 1997.

Earnings per share, excluding exceptional items, were US¢14.64 in 1998 compared with recurring earnings per share in 1997 of US¢15.60, a decrease of 6%.

The annual valuation of the Group's investment properties was carried out at the end of 1998 by independent professional valuers and produced a net valuation deficit for the year of US$3,472 million. Principally as a result of this, Shareholders' funds at the year end fell to US$4,925 million, down 44% from US$8,832 million in 1997. Net asset value per share fell 44% in 1998, from US$3.48 to US$1.95.

The Group purchased and cancelled 15 million of its own shares during 1998, some 0.6%, at a cost of US$20 million.

The Directors recommend a final dividend of US¢5.50 per share, payable in cash, which, together with the interim dividend of US¢3.50 per share, will make a total annual dividend of US¢9.00 per share, 35% lower than the 1997 final dividend. This reduction, while substantial, takes account of the need for financial prudence in a period of weakening rental income and the need to fund new projects.

GROUP REVIEW

Hong Kong Investment Properties

Turning to the operations, the Chairman, Simon Keswick, said that with considerable supply coming onto the Hong Kong commercial property market in 1998 at a time of weak net demand, market rents have been under sustained downward pressure and this has affected rentals in the Group's core Central portfolio. In view of the lower rents and higher capitalisation rates, the value of the Group's investment properties overall fell by some 43% over the year.

Initiatives taken in 1996 and 1997 to reduce the number of reversions in the 1998/1999 period have helped the Group both to maintain high levels of occupancy in its portfolio and to minimise the fall in average rents, despite the competitive pressure. Nevertheless, 1999 will see further pressure on rentals until the new supply in Central is absorbed.

A series of investments are in progress to upgrade the quality of both the office and retail portfolio, demonstrating to the Group's tenants its commitment to providing them with the quality they require, and enabling the Group to continue to achieve high occupancy rates.

Development Properties

The Group's further commitment to its core market has been demonstrated by the commencement of the redevelopment of its site at 11 Chater Road (previously known as Swire House), which is projected to be completed in 2002.

The Group's development at 1063 King's Road, Quarry Bay, Hong Kong will be completed mid-year on schedule and on budget, although it will begin leasing in a difficult market.

Construction of the Group's commercial and retail development in Singapore at One Raffles Link, Marina Square is progressing well. Completion of the office floors is expected this year, with the retail component available early in the year 2000. While the Singapore market has also been affected by the regional economic decline, leasing interest is encouraging.

In September, the Group took delivery of the second phase of Maple Place, its interest in the residential estate of Beijing Riviera. Leasing of the units is progressing well.

The construction of the Group's joint venture luxury residential development in the Philippines continues but is not scheduled for completion until 2000. New sales are limited in the current weak market in Manila.

The Group's second office building in Vietnam, 63 Ly Thai To, was completed in March and is now over 50% let, although demand in the Hanoi market for office space remains low.

Infrastructure

In December 1998, the Land Grant for the development of Container Terminal 9 was signed. As part of this transaction, Asia Container Terminals, in which Hongkong Land holds a 28.5% stake, will take delivery of 2 berths in Container Terminal 8 in 2003/4.

In Mainland China, the Group's infrastructure investments have progressed satisfactorily. Central China Power Corporation, in which the Group has a 25% interest, began delivering power commercially in August and expects to have 4 units in operation by the end of 1999. China Water Company, where the Group holds a 40% interest, is operating profitably and has further investments under development.

The Tangerang-Merak toll road in Indonesia, where the Group's stake is some 13%, is handling traffic volumes in line with expectations. The weak currency and high local interest rates have substantially reduced the US$ returns that can be expected from the investment. A further provision has been made against its carrying value.

OUTLOOK

In conclusion, Simon Keswick said, "We do not see any early prospect of recovery in the Hong Kong commercial property market. But we are well positioned to withstand the downturn and to benefit from Asia's recovery when that occurs."

1 BASIS OF PREPARATION

The financial information contained in this announcement has been based on the audited results for the year ended 31st December 1998 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.

In accordance with International Accounting Standard 12 (Revised) on Income Taxes which is effective from 1st January 1998, deferred taxation is provided, using the liability method, in respect of all temporary differences between the tax bases of assets and liabilities and their carrying values. This is a change in accounting policy as previously deferred taxation was provided under the liability method in respect of timing differences between profit as computed for taxation purposes and profit as stated in the Financial Statements to the extent that a liability or asset was expected to be payable or receivable in the foreseeable future.

The comparative figures for 1997 have been restated to reflect the change in policy. The effect of this change has been to decrease the profit after taxation and minority interests for the year ended 31st December 1997 by US$2.3 million. Shareholders' funds have been increased by US$1.6 million at 1st January 1997 and decreased by US$0.7 million at 1st January 1998. There have been no other changes to the Group's accounting policies.

2 SHARE OF RESULTS OF ASSOCIATES AND JOINT VENTURES

3 OTHER INCOME

4 EXCEPTIONAL ITEMS

Exceptional items after taxation and minority interests amounted to US$244.0 million (1997: US$15.0 million).

5 TAXATION

Taxation on profits is provided at the rates of taxation prevailing in the territories in which the Group operates.

The applicable tax rate represents the weighted average of the rates of taxation prevailing in the territories in which the Group operates.

6 EARNINGS PER SHARE

The convertible bonds were anti-dilutive and therefore ignored in calculating diluted earnings per share. As a result, earnings per share and diluted earnings per share were the same.

7 CASH FLOW PER SHARE

Cash flow per share is based on cash flows from operating activities less major renovations expenditure amounting to US$335.0 million (1997: US$399.6 million) and is calculated on the weighted average of 2,524.8 million (1997: 2,612.3 million) shares in issue during the year, which excludes 69.6 million shares in the Company held by a subsidiary.

8 CASH FLOWS FROM OPERATING ACTIVITIES

9 ANNUAL REPORT

The Annual Report will be posted to Shareholders on or about 4th May 1999. 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¢5.50 per share will be payable on 9th June 1999, subject to approval at the Annual General Meeting to be held on 2nd June 1999, to Shareholders on the register of members at the close of business on 1st April 1999. The ex-dividend date will be on 26th March 1999, and the share registers will be closed from 5th to 9th April 1999, 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 21st May 1999. The Sterling equivalent of dividends declared in United States Dollars will be calculated by reference to a rate prevailing ten business days prior to the payment date. Shareholders holding their shares through The Central Depository (Pte) Limited ("CDP") in Singapore will receive United States Dollars unless they elect, through CDP, to receive Singapore Dollars.

For further information, please contact:

Hongkong Land Limited E P K Weatherall/N R Sallnow-Smith	(852) 2842 8300
Forrest International Limited Sue Gourlay/Rosemary Sayer	(852) 2522 6475

Full text of the Preliminary Announcement of Results and the Preliminary Financial Statements for the year ended 31st December 1998 can be accessed through the Internet at "http://www.irasia.com/listco/sg/hkland". This announcement is also available through "First Call".

Source: Hongkong Land Holdings Limited

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