| To : Business Editor | 18th September 1997 For immediate release |
The following announcement was today issued to the London Stock Exchange.
HONGKONG LAND HOLDINGS LIMITED
INTERIM REPORT 1997 HIGHLIGHTS
Results
"While market rents and capital values rose in Hong Kong in the first half of 1997, Hongkong Land's net income from properties for the full year will be largely unchanged as a result of the rent reversion cycle. The Group continues to be active in seeking property and infrastructure opportunities which will provide the basis of profit growth in the longer term."
Simon Keswick, Chairman
18th September 1997
The interim dividend of US¢3.50 per share will be payable on 25th November 1997 to Shareholders on the register of members at the close of business on 3rd October 1997 and will be available in cash with a scrip alternative. The share registers will be closed from 6th to 10th October 1997, inclusive.
HONGKONG LAND HOLDINGS LIMITED
INTERIM REPORT 1997
RESULTS
Hongkong Land Holdings Limited today announced that the net profit for the six months ended 30th June 1997 was US$207 million, compared with US$228 million in the first half of 1996, excluding the write back from a discontinued activity. The 9% decline reflects largely the absence of investment gains in the Group's 45%-owned associate, Connaught Investors. Earnings per share were US¢7.88, compared with US¢8.64 in 1996 excluding the discontinued activity, a reduction of 9%.
The Board has declared an unchanged interim dividend of US¢3.50 per share. The dividend will be payable in cash, with a scrip alternative at Shareholders' option.
GROUP REVIEW
Turning to the operations, the Chairman, Simon Keswick, said that the Group has continued to expand its property and infrastructure investments in Asia. Hongkong Land has recently announced plans to redevelop one of the Group's principal office buildings in Hong Kong and has established its first property joint venture in China.
The Hong Kong market continued to strengthen in the first half of 1997, with rising rents and capital values reflecting increased demand from regional and international tenants. Across the Region, however, several countries are experiencing softer markets.
Hongkong Land Holdings
In May 1997, Hongkong Land announced its intention to repurchase some 5% of the Company's issued share capital with the aim of improving net asset value per share. To date the Company has acquired some 0.7% at a cost of some US$50 million.
Hongkong Land China
Increasing demand for office space in Hong Kong in the first half of 1997 enabled the company to maintain its net income from properties at a similar level to that of the prior year despite generally negative rental reversions in the portfolio. While rents agreed in the first half of this year were higher than at the end of 1996, they remained well below the peak of 1994 when the 3-year leases now being renewed were signed. Occupancy throughout the portfolio is now some 97%. The Group continued to respond to changing tenant requirements and made further improvements to tenant services and to technical communications facilities.
Construction of a 300,000 sq. ft commercial building has now commenced at 1063 King's Road, Quarry Bay. The new property will provide first class office space in this decentralised commercial district upon completion in 1999.
The Group has announced plans to redevelop Swire House at 11 Chater Road, the oldest property in its prime Central District portfolio. At today's prices, the construction cost of the new building together with the upgrading of Hongkong Land's footbridges and other infrastructure is expected to be some US$300 million. Redevelopment will commence in late 1998 and completion of the 650,000 sq. ft project is scheduled for 2003. Accordingly, net income from properties will be affected during this period.
The new development will be linked to the remainder of the portfolio by upgraded pedestrian bridges and will provide tenants with high specification facilities and services. Its design and associated open areas dedicated to public use will make a significant contribution to a better environment in the Central business district.
The Group has formed a joint venture which intends to invest in a luxury residential development in China. The initial investment of the joint venture, in which the Group has a 40% interest, will be in excess of US$100 million.
Hongkong Land's infrastructure associate, The China Water Company, in which the Group has a one third interest, is expanding its operations with the addition of a water treatment plant at Yantai in Shandong province and a third in Shaoxing for which a letter of intent has been signed.
Hongkong Land International
In Singapore, the company has commenced construction of a 395,000 sq. ft office building with ancillary retail space at its prime site in the Marina Square commercial district. This project is scheduled for completion in late 1999.
Good progress has also been made on the company's second office building in Vietnam, 63 Ly Thai To, Hanoi, and it is expected that the 121,000 sq. ft commercial property will be completed by early 1998.
In the Philippines, Roxas Land, in which the Group holds a 40% interest, has started construction of the first of two luxury residential buildings at Roxas Triangle Towers in Manila. The first phase is scheduled for completion in 2000. Also in the Philippines, progress has been made by the Group's 20%-owned associate, Jardine Land, in acquiring a landbank and developing its two middle-income housing projects, Greenwoods and Lexington, which will provide 3,000 and 220 units respectively.
OUTLOOK
In conclusion, Simon Keswick said, "While market rents and capital values rose in Hong Kong in the first half of 1997, Hongkong Land's net income from properties for the full year will be largely unchanged as a result of the rent reversion cycle. The Group continues to be active in seeking property and infrastructure opportunities which will provide the basis of profit growth in the longer term."
Hongkong Land Holdings Limited
Notes
1. BASIS OF PREPARATION
The unaudited half-year results have been prepared under the historical cost convention as modified by the revaluation of certain fixed assets at 31st December 1996 and in conformity with International Accounting Standards. There have been no changes to the Group's accounting policies described in the 1996 Financial Statements.
2. SHARE OF RESULTS OF ASSOCIATES AND OTHERS
3. DISCONTINUED ACTIVITY
Discontinued activity in 1996 represented share of results up to 31st March 1996 and a write-back on disposal of the Group's investment in Trafalgar House.
4. TAXATION
Taxation on profits is provided at the rates of taxation prevailing in the territories in which the Group operates.
No deferred taxation has been provided as there were no material timing differences (1996: nil).
5. EARNINGS PER SHARE
The calculation of earnings per share is based on the profit after taxation and minority interests and on the weighted average of 2,630.1 million (1996: 2,636.9 million) shares in issue during the period, which excludes 69.6 million shares in the Company held by a subsidiary.
The calculation of earnings per share excluding discontinued activity in 1996 was based on the profit after taxation and minority interests and after adjusting for the exceptional profit from Trafalgar House of US$217.6 million.
Full conversion of convertible bonds would not result in material dilution of earnings per share.
6. CURRENT ASSETS
Bank balances and other liquid funds include liquid investments of US$112.9 million (1996: US$57.4 million).
7. CASH FLOW PER SHARE
Cash flow per share is based on operating cash flow and maintenance capital expenditure for investment properties, amounting to US$206.7 million (1996: US$221.9 million) and it is calculated on the weighted average of 2,630.1 million (1996: 2,636.9 million) shares in issue during the period, which excludes 69.6 million shares in the Company held by a subsidiary.
8. INTERIM REPORT
The Interim Report will be posted to Shareholders on or about 13th October 1997. Copies may be obtained from Butterfield Corporate Services Limited, P.O. Box HM 1540, Hamilton HM FX, Bermuda; Independent Registrars Group Limited, Bourne House, 34 Beckenham Road, Beckenham, Kent BR3 4TU, England; Coopers & Lybrand, Level 8, 580 George Street, Sydney NSW 2000, Australia and M & C Services Private Limited, 16 Raffles Quay #23-01, Hong Leong Building, Singapore 048581.
The interim dividend of US¢3.50 per share will be payable on 25th November 1997 to Shareholders on the register of members at the close of business on 3rd October 1997 and will be available in cash with a scrip alternative. The share registers will be closed from 6th to 10th October 1997, inclusive. Shareholders will receive their cash dividends in United States Dollars, unless they are registered on the United Kingdom branch register where they will have the option to elect for Sterling. These Shareholders may make new currency elections by notifying any one of the Company's registrars or the United Kingdom transfer agent in writing by 6th November 1997. 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 or the scrip alternative.
- end -
For further information, please contact:
| Hongkong Land Limited I C Durant |
(852) 2842 8428 (office) |
| Ludgate Asia Limited Martin Spurrier |
(852) 2543 5413 (office) |
Full text of this announcement can be accessed through the Internet at "http://www.irasia.com/listco/sg/hkland" and is also available through "First Call".
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