REG - Hongkong Land Hldgs Jardine Matheson Hdg - 2024 PRELIMINARY RESULTS
07/03/2025 12:15
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RNS Number : 8578Z Hongkong Land Hldgs Ltd 07 March 2025
Announcement
7 March 2025
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
2024 PRELIMINARY ANNOUNCEMENT OF RESULTS
Highlights
· Strategic Vision to 2035 launched
· Underlying profit down 44% to US$410 million (down 12% to US$724
million excluding provisions)
· Prime portfolios continued to be underpinned by market-leading
occupancy levels
· Build-to-sell contributions from the Chinese mainland excluding
provisions up over 40% from the prior year
· Capital recycling initiatives progressing
· Group financial position remains strong; net debt reduced by US$0.3
billion
· Final dividend at US¢17.00 per share, up 6%
"In 2024, we introduced a new strategy which will see the Group recycle
capital out of the build-to-sell segment and focus on our core capabilities to
develop ultra-premium integrated commercial properties in Asia's gateway
cities to drive sustainable, long-term growth.
The Group's overall trading performance for the year was resilient, despite
underlying profits being impacted by non-cash provisions from the Chinese
mainland build-to-sell business. We expect a partial recovery in 2025
underlying profits amidst uncertain market conditions, although at levels well
below that of 2023.
The Group remains in a robust financial position with a pipeline of
ultra-premium properties under development. Capital recycling initiatives
will be prioritised in line with our new strategy."
Michael Smith
Chief Executive
Results
Year ended 31 December
2024 2023 Change
US$m US$m %
Underlying profit attributable to shareholders(*) 410 734 -44
Underlying profit excl. Chinese mainland non-cash provisions(#) 724 824 -12
Loss attributable to shareholders (1,385) (582) +138
Shareholders' funds 29,940 31,965 -6
Net debt 5,088 5,371 -5
US¢ US¢ %
Underlying earnings per share(*) 18.56 33.15 -44
Underlying earnings per share excl. Chinese mainland 32.81 37.22 -12
non-cash provisions(#)
Loss per share (62.76) (26.29) +139
Dividends per share 23.00 22.00 +5
US$ US$ %
Net asset value per share 13.57 14.49 -6
* 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 30 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.
# excludes net provisions for the Chinese mainland build-to-sell segment
A final dividend of US¢17.00 per share will be payable on 14 May 2025,
subject to approval at the Annual General Meeting to be held on 2 May 2025, to
shareholders on the registers of members at the close of business on 21 March
2025.
HONGKONG LAND HOLDINGS LIMITED
PRELIMINARY ANNOUNCEMENT OF RESULTS
FOR THE YEAR ENDED 31 DECEMBER 2024
Dear Shareholders,
It is my pleasure to be writing to you for the first time as Chairman of
Hongkong Land.
2024 was a transformational year for Hongkong Land. Following the appointment
of Michael Smith as Chief Executive in April, the Group embarked on an
in-depth review of its business strategy, with the goal of setting clear
long-term growth objectives and targets to deliver enhanced shareholder value.
This process concluded in October with the announcement of a new strategic
direction, underpinned by a range of enhancements to our governance, including
the composition and operation of our Board and Committees.
A NEW STRATEGIC DIRECTION FOR HONGKONG LAND
As a result of the strategic review, the Group's clear ambition is to become
the leader in Asia's gateway cities focused on ultra-premium integrated
commercial properties. The new strategy reinforces Hongkong Land's core
capabilities, generate growth in long-term recurring income and deliver
superior returns to shareholders.
Our priority is now to simplify the business, with a primary focus on
ultra-premium mixed-use commercial properties in Asia's gateway cities. As a
result, we will no longer invest in the build-to-sell segment, but will
instead actively recycle capital out from this segment into new integrated
commercial property opportunities.
Anchoring the portfolio will be the Group's existing flagship prime mixed-use
projects in Hong Kong, Singapore and Shanghai, which provide a resilient base
of significant recurring earnings to support future investments in Asia's
gateway cities.
This strategy will, in time, enable us to focus on a smaller number of
ultra-premium projects consistent with Hongkong Land's brand name and
reputation. In order to deliver enhanced shareholder value, the Board agreed
clear long-term growth objectives and targets with management, supported by
near-term performance metrics.
This new strategy is not expected to be reliant on group net debt or funding
from shareholders, preserving our investment grade credit-rating. The speed at
which we can implement our plans will rely on our capital recycling and
management capabilities.
Given the size and diversity of the Group's existing real estate portfolio,
the new strategy is expected to take a number of years, with progress to be
measured across three implementation phases. Phase one primarily focuses on
the recycling of capital and establishment of deal sourcing and fundraising
capabilities. Further phases involve the deployment of capital into long-term
prime properties investment opportunities, accompanied by active capital
recycling and third-party capital initiatives.
STRENGTHENING OUR CORPORATE GOVERNANCE
The Board and its Committees, and senior management, together play a key role
in delivering against our priorities. The effective delivery of our strategy
depends on high quality debate around the boardroom table, with strong
contributions from all Directors.
This year marked a new beginning for Hongkong Land. Michael successfully led
the Group's strategic review. On 28 October, I became the Chair of the Board
and the Remuneration and Nominations Committees. As management continues to
focus on growing shareholder value and returns, the Board aims to provide both
challenge and support, with effective discussion and decision-making.
We especially value the opportunity to leverage the industry expertise and
experience of the Company's Non-Executive Directors. In October, we were
delighted to welcome Ming Mei as an Independent Non-Executive Director and as
a member of the Remuneration and Nominations Committees.
In 2024, we focused on reshaping our governance framework and how it operates,
in a way that supports the implementation of the Group's new strategy. We
established an Investment Committee of the Board at the end of October, to
support management on material strategic decisions relating to capital
expenditures, partnerships and transactions.
We have also updated the Committees' terms of reference and enhanced their
operation, to enable them to play an important role in supporting the Board
through their more in-depth focus on relevant matters, leveraging the
skillsets and experience of the members of each Committee.
Finally, I want to express our gratitude to our former Chief Executive Robert
Wong, for his over 38 years' outstanding service to the Group. Also to my
predecessor Ben Keswick, for his significant contribution over many years as
Chairman and Director. Further thanks and acknowledgements must be made to
Anthony Nightingale, Y.K. Pang and Christina Ong, who all stepped down from
the Board in 2024; and Graham Baker and Adam Keswick, who stepped down from
the Remuneration and Nominations Committees respectively. We will continue to
benefit from Adam's expertise as a Non-Executive Director.
EMBEDDING SUSTAINABILITY INTO EVERYTHING WE DO
Our continued commitment and strong performance on sustainability initiatives
was recognised in a number of ESG ratings. The Group was awarded a top Global
Real Estate Sustainability Benchmark (GRESB) score of 100 for the Development
Benchmark (Diversified), the highest score globally. In addition, the Group
was named Global Listed Sector Leader (Diversified Sector) under both GRESB's
Standing Investment and Development benchmarks. Additionally, for the first
time, we were included as a constituent of the Dow Jones Sustainability World
Index, placing us among the top 6% of global performers. The Group also
qualified as a constituent of the Dow Jones Sustainability Asia Pacific Index
for the third consecutive year.
There was good progress in 2024 against the Group's 2030 decarbonisation
targets, which were validated by the Science Based Targets initiative in 2022.
Absolute Scope 1 and 2 carbon emissions reduced by 33% against a 2019
baseline. Increasing procurement of renewable energy and implementation of
further energy efficiency initiatives in the coming years will be critical to
achieving our 2030 target, as the Group's pipeline of commercial properties
are progressively completed.
From increasing green building certification and sustainable financing, to
reducing commercial waste, and enhancing collaboration between tenants and our
teams, we have taken a holistic approach to continually enhancing the
sustainability of the business.
Finally, I am delighted we continue to make strong advances in our corporate
citizenship ambitions. In 2024, Hongkong Land HOME FUND hit a milestone of
supporting half a million people across Asia. We take great pride in making a
meaningful contribution, through time, expertise and investment, to our local
communities.
Sustainable development remains at the top of our agenda. Going forward, we
continue to set ambitious targets across the business and collaborate closely
with our stakeholders to deliver on them.
FOCUSING ON THE TEN YEARS AHEAD
Looking ahead, the Group is focused on undertaking the initial phase of work
to position the business to deliver on its new strategy, which primarily
include the recycling of capital, the establishment of deal sourcing and
fundraising capabilities, and delivering our pipeline of integrated commercial
projects across the Chinese mainland and the wider region.
While there are macroeconomic challenges ahead, we are optimistic on the
long-term potential for ultra-premium integrated commercial assets in selected
Asia gateway cities and will continue to actively seek new investment
opportunities in these markets.
On behalf of the Board, I would like to express my appreciation to our
shareholders, our valued partners and to the wider community for your
continued support. Most of all, thanks must go to our colleagues, who are
the key to our success, for their exceptional work throughout the past year.
John Witt
Chairman
CHIEF EXECUTIVE'S REVIEW
It has been an incredible first year as Chief Executive of Hongkong Land. I am
proud to lead a business built on a legacy of innovation and exceptional
hospitality - ever since we reclaimed land to build Hong Kong's iconic Central
district over 135 years ago.
Today, Hongkong Land has unique, world-class assets and developments in Asia's
greatest cities - from Singapore to Shanghai, with a coveted portfolio of over
2,500 premium tenants, including the world's leading corporations and most
prestigious luxury brands. The Hongkong Land brand travels across
geographies in this region and beyond, with blue chip tenants, investment
partners and high-net worth customers who know us and trust us.
For us, Experience is central. More than a tagline, this sums us up as a
business. We harness our heritage and real-estate expertise to realise our
vision for city centres that connect and inspire for generations to come. The
targets we have set, plans we have agreed and changes we are making to our
business model will enable us to do this for another century.
When we take our fundamental strengths together, mapped against a
comprehensive assessment of where the growth opportunities are across Asia, it
has crystallised into the core elements of the new strategy we will pursue.
In short, our ambition is to become the leader in Asia's gateway cities
focused on ultra-premium, integrated commercial properties.
INTRODUCING A NEW STRATEGY TO REALISE OUR AMBITION
In October I announced that we will strategically focus our growth in
ultra-premium integrated commercial assets in Asia's gateway cities. This
includes continuing to invest in our existing gateway cities' portfolios,
whilst also seeking out new opportunities in other regional gateway cities.
To fund this growth, we will recycle up to US$10 billion over the next 10
years, primarily from three main sources - winding down existing inventory
from the build-to-sell segment across the entire Group, divestment of non-core
commercial assets, and recycling mature prime property assets into REITS and
other third-party capital vehicles. While the target of US$10 billion will
adjust from year-to-year depending on market conditions, a greater share is
expected to be realised in the short to medium term, with an initial estimated
target of US$4 to 6 billion by 2027.
The exit from the build-to-sell segment is a strategic pivot for our business,
with no new standalone investments to be made in this segment. The capital
currently invested in this segment will, in time, produce superior shareholder
returns as we redeploy capital to prime commercial assets that will produce
growth in resilient recurring income.
We have a long track record of being a steward of shareholders' capital. In
time, we will look to bring in third party capital in a more disciplined and
systematic way, to support our growth ambitions and to improve returns on our
equity. Finally, we will evolve our capital allocation framework with more
discipline and an absolute focus on creating shareholder value.
STARTING A NEW CHAPTER FOR HONGKONG LAND
The roll-out of the new strategy has already commenced, with the initial phase
focused on the recycling of capital as well as the establishment of deal
sourcing and fundraising capabilities. In January 2025, we welcomed Michelle
Ling to the newly created role of Chief Investment Officer. Michelle's focus
will be on formulating and implementing investment and capital management
strategies, while also facilitating the Group's growth through strategic
transactions. With over 20 years of experience in the real estate sector,
encompassing both private and public domains, Michelle brings a wealth of
expertise to our organisation and we are excited to have her on board.
Our people will sit at the centre of making this new future for Hongkong Land
a reality. Guided by redefined values that empower our colleagues, and with
talent development programmes in progress, we are matching our commitment to
excellence in everything we do, with action that grows a best-in-class team.
At the end of last year, we removed the barriers that existed between teams
based on their geographies, to deepen a culture of collaboration and
innovation.
Additionally, a new share-based Long-Term Incentive Plan ('LTIP') has been
introduced for senior leadership effective from 1 January 2025, to align
senior management's interests with those of shareholders. The plan will
principally reward senior leadership based on Total Shareholder Returns
('TSR') over a three to five year period, measured both in absolute terms and
with reference to a basket of real estate peers' TSR performance.
In capturing what makes Hongkong Land unique within our business strategy, and
the way our people work, the Board and I have agreed there also needs to be
greater visibility to the wider world. At the end of 2024, we introduced a new
visual and corporate identity for Hongkong Land - one which captures our
strengths, our premium position and our aspiration for the future. And in
February 2025, we began the roll-out of Experience is central to embed our new
branding across our portfolio.
MAKING MAJOR INVESTMENTS IN OUR PORTFOLIO
Our portfolios in Hong Kong, Shanghai and Singapore are the anchors to our new
strategy. Investments announced in 2024 epitomise the strategic focus on
ultra-premium integrated commercial properties, that will deliver value over
the long-term.
In June 2024, the Group started work on the Tomorrow's CENTRAL transformation
to reinforce Central Hong Kong as a world class destination for luxury retail,
lifestyle and business. This project involves a US$1 billion strategic
investment, of which US$400 million will be met by the Group.
AN OVERVIEW OF OUR OPERATIONS
Despite an uncertain macro-economic backdrop, Hongkong Land delivered a
resilient performance for the year. Contributions from the Prime Properties
Investment segment were lower, although our commercial portfolios across the
region outperformed their respective markets. The contribution from the
build-to-sell segment decreased due to the non-cash provisions recognised in
the Chinese mainland business, however excluding this charge, earnings were
29% higher than the prior year.
Profits from Prime Properties Investments in 2024 were 5% lower than the prior
year, primarily a result of lower contributions from the Group's Hong Kong
Central Portfolio, partially offset by better performances in the office
portfolio in Singapore. The value of the Group's Investment Properties
portfolio at 31 December 2024 declined by 5%, mainly due to lower market rents
for the Hong Kong office portfolio.
Hong Kong
The Group's Central office portfolio remains the pre-eminent, best-in-class
office space in the market. Physical vacancy was 7.3% at year end, broadly
unchanged from the end of 2023. On a committed basis, vacancy was 7.1%,
significantly lower than the wider Grade A Central market vacancy level of
11.6%, indicating our offices continue to be in high demand despite subdued
broader market fundamentals. The Group's average portfolio office rent in 2024
was HK$101 per sq. ft., down from last year's average of HK$106 per sq. ft.
Grade A Central office rents fell by as much as 13% in 2024. The weighted
average lease expiry of the office portfolio at the end of 2024 stood at 3.7
years. The Group's Central office portfolio's outperformance of key benchmarks
in the Central Grade A office market is indicative of a market further
bifurcating between the most premium space and the rest. Our new strategy to
focus on ultra-premium office spaces indicates our portfolio is well
positioned to take advantage of supportive market conditions when they occur.
Contributions from the Group's luxury retail portfolio in Hong Kong were lower
in 2024 compared to 2023, due to planned tenant movements as part of the
Tomorrow's CENTRAL transformation. However, the ultra-high net worth segment
remained resilient, as customers with cumulative spending of over HK$200,000
per annum increased by 1% compared to 2023, despite a generally weak luxury
retail market in 2024. This is an indication that Hong Kong continues to be
unrivalled as one of the world's most attractive and diverse cities that
attracts ultra-high net worth individuals, and Landmark is the destination of
choice for them to spend. Average retail rent in 2024 increased to HK$210 per
sq. ft. from HK$203 per sq. ft. due to positive rental reversions. Vacancy on
both a physical and committed basis remained low at 3.0%, despite tenant
relocations as a result of the works in progress.
Upon completion of the Tomorrow's CENTRAL transformation over a three-year
period, Landmark will house 10 world-class multi-storey Maison destinations. A
20,000 sq. ft. flagship Sotheby's retail space opened in 2024 with two more
exciting Maisons expected to open in 2025. The Maisons will meet our luxury
tenants' demand for additional luxury retail space to house their integrated
and experiential offerings, to cater to Landmark's deep pool of loyal and
discerning clients. This will also further expand the Group's regional market
share and leadership in the luxury goods segment.
The value of the Group's Investment Properties portfolio in Hong Kong at 31
December 2024, based on independent valuations, declined by 5% to US$22.8
billion (excluding impact of accounting reclassification for areas occupied by
the Group), as a result of a decline in market rent for HK office.
Singapore
The Group's Singapore office portfolio delivered another year of strong
operational performance. Physical vacancy at the Group's office portfolio was
1.6% at the end of 2024, while on a committed basis vacancy was 1.0%, compared
to 0.9% at the end of 2023. Average rent increased to S$11.1 per sq. ft. in
2024, up from S$10.9 per sq. ft. in the previous year. The weighted average
lease expiry of the office portfolio at the 2024 year-end stood at 3.3 years
(2023: 3.1 years). The valuation of the Investment Properties portfolio in
Singapore was stable year over year.
Chinese Mainland & Macau
Performances were mixed during the year, with contributions in One Central
Macau reducing due to the impact of planned mall renovations, as well as a
weaker operating environment. Conversely, contributions from the Group's
luxury retail mall in Beijing, WF CENTRAL, increased compared to the prior
year, driven by tenant mix optimisations despite a challenging market
landscape.
The first component of West Bund, the Group's mega-development in Shanghai,
was completed in 2024 with resounding success, as 80 luxury residential units
were handed over to buyers in 2024. These ultra-premium residential units were
sold at prices amongst the highest in the Shanghai primary residential market,
which is evidence that the Group's products continue to be highly
sought-after. Completion of the other components is expected to occur in
phases from 2025 to 2027.
Development of luxury retail projects in Suzhou and Chongqing progressed well,
with openings scheduled in 2027. Four Mandarin Oriental hotels are under
construction in mixed use projects, bringing the number of hotels in operation
and under development to eight.
A REVIEW OF OUR BUILD-TO-SELL SEGMENT
Although earnings from the Group's build-to-sell business were lower in 2024
compared to 2023, this was as a result of US$314 million net non-cash
provisions in the Chinese mainland build-to-sell segment recognised during the
year. Excluding the provision, contributions from the build-to-sell segment
increased by 29% compared to 2023.
As the Group had moderated its pace of land banking for the build-to-sell
segment since 2022 and will no longer deploy capital into new opportunities,
contributions is expected to decline over the next several years as capital is
recycled.
Chinese Mainland
As at 31 December 2024, the Group's net investment in the build-to-sell
segment on the Chinese mainland was US$5.8 billion, compared to US$6.6 billion
at the end of 2023.
The Group's attributable interest in revenue recognised in 2024, including its
share of revenue in joint ventures and associates, was US$2,204 million,
compared to US$1,621 million in 2023, primarily due to more completions and an
active program to accelerate sales of existing inventory. The Group's share of
total contracted sales in 2024 was US$1,343 million, lower than the US$1,530
million achieved in the prior year. At 31 December 2024, the Group's
attributable interest in sold but not yet recognised contracted sales amounted
to US$1,112 million, compared to US$2,031 million at the end of 2023.
Singapore
The Group's premium residential developments in Singapore continued to draw
strong interest in the market. In November, the Group launched sales for one
project - Nava Grove - in which 64% was pre-sold at the end of 2024. The
Group's attributable interest in contracted sales was US$460 million in 2024,
compared to US$587 million in the prior year, primarily due to limited
inventory available for sale. The Group's attributable interest in revenue
recognised in 2024 was US$351 million, compared to US$443 million in the prior
year. At 31 December 2024, the Group's attributable interest in sold but not
yet recognised contracted sales amounted to US$829 million, compared to US$736
million at the end of 2023.
2025 OUTLOOK
Macro-economic challenges and geopolitical uncertainties are likely to persist
in 2025, resulting in challenging market conditions.
Results in 2024 were impacted by non-cash provisions from the Chinese mainland
build-to-sell business. For 2025, contributions from the Central Portfolio
will be impacted by negative office rental reversions and the ongoing
Tomorrow's CENTRAL transformation which will see up to 40% of Landmark's
leasable floor area under renovation. Lower margins and substantially lower
contributions from the build-to-sell segment are also expected, as the Group
continues to wind-down residential inventory amidst uncertain market
conditions. Overall, we expect 2025 underlying profits to partially recover
from the prior year, although at levels well below that of 2023.
The Group remains in a robust financial position with a pipeline of
ultra-premium properties under development. Capital recycling initiatives will
be prioritised in line with our new strategy.
LOOKING FORWARD
Over the past several years, we have witnessed a growing divergence between
the performances of the highest quality commercial spaces and the rest. Our
properties across the region are highly sought after and enjoyed sustained
outperformance relative to their respective markets. Our strategic focus on
ultra-premium commercial properties will further solidify our position to
deliver sustainable growth over the long-term.
We will continue to curate a portfolio in Hong Kong and across the region that
continues to set new standards in place creation. We will progress the
evolution of our business operations in line with our strategy and
Sustainability Framework 2030. Our mission is clear: we create experience-led
city centres, ones that unlock value for generations to come.
Thanks to the hard work, decision-making and thinking that we undertook in
2024, we began 2025 with a strong start - a new leadership focus, a new
business strategy, a new corporate mission and identity all in place. Now all
our attention is firmly fixed on delivering growth and value.
Michael Smith
Chief Executive
Hongkong Land Holdings Limited
Consolidated Profit and Loss Account
for the year ended 31 December 2024
2024 2023
Underlying Non- Total Underlying Non- Total
business trading US$m business trading US$m
performance items performance items
US$m US$m US$m US$m
Revenue (note 2) 2,002.1 - 2,002.1 1,844.3 - 1,844.3
Net operating costs
(note 3) (1,417.9) (8.3) (1,426.2) (1,050.0) 16.6 (1,033.4)
Change in fair value of
investment properties
(note 7) - (1,887.6) (1,887.6) - (1,323.5) (1,323.5)
Operating (loss)/profit
(note 4) 584.2 (1,895.9) (1,311.7) 794.3 (1,306.9) (512.6)
Net financing charges
- financing charges (245.0) - (245.0) (265.9) - (265.9)
- financing income 78.8 - 78.8 81.5 - 81.5
(166.2) - (166.2) (184.4) - (184.4)
Share of results of
associates and joint
ventures (note 5)
- before change in fair
value of investment
properties 115.0 - 115.0 234.7 - 234.7
- change in fair value of
investment properties - 139.2 139.2 - 18.0 18.0
115.0 139.2 254.2 234.7 18.0 252.7
(Loss)/profit before tax 533.0 (1,756.7) (1,223.7) 844.6 (1,288.9) (444.3)
Tax (note 6) (120.7) (31.4) (152.1) (107.2) (25.6) (132.8)
(Loss)/profit after tax 412.3 (1,788.1) (1,375.8) 737.4 (1,314.5) (577.1)
Attributable to:
Shareholders of the
Company 409.6 (1,794.5) (1,384.9) 734.2 (1,316.5) (582.3)
Non-controlling interests 2.7 6.4 9.1 3.2 2.0 5.2
412.3 (1,788.1) (1,375.8) 737.4 (1,314.5) (577.1)
US¢ US¢ US¢ US¢
(Loss)/earnings per share
(note 8)
- basic 18.56 (62.76) 33.15 (26.29)
- diluted 18.55 (62.76) 33.15 (26.29)
Hongkong Land Holdings Limited
Consolidated Statement of Comprehensive Income
for the year ended 31 December 2024
2024 2023
US$m US$m
Loss for the year (1,375.8) (577.1)
Other comprehensive income/(expense)
Items that will not be reclassified to profit
or loss:
Remeasurements of defined benefit plans 0.3 0.7
Tax on items that will not be reclassified - (0.1)
0.3 0.6
Items that may be reclassified subsequently
to profit or loss:
Net exchange translation differences
- net gain/(loss) arising during the year 75.2 (82.2)
- transfer to profit and loss 3.2 0.6
78.4 (81.6)
Cash flow hedges
- net gain/(loss) arising during the year 12.2 (53.1)
- transfer to profit and loss (3.2) (2.2)
9.0 (55.3)
Tax relating to items that may be
reclassified (1.5) 9.1
Share of other comprehensive expense
of associates and joint ventures (246.3) (59.1)
(160.4) (186.9)
Other comprehensive expense for the
year, net of tax (160.1) (186.3)
Total comprehensive expense for the year (1,535.9) (763.4)
Attributable to:
Shareholders of the Company (1,542.4) (767.4)
Non-controlling interests 6.5 4.0
(1,535.9) (763.4)
Hongkong Land Holdings Limited
Consolidated Balance Sheet
at 31 December 2024
2024 2023
US$m US$m
Net operating assets
Fixed assets 203.2 99.7
Right-of-use assets 104.4 12.1
Investment properties (note 10) 24,759.9 26,687.2
Associates and joint ventures (note 11) 10,046.2 10,585.2
Non-current debtors 11.5 14.2
Deferred tax assets 53.5 113.3
Pension assets 0.9 1.0
Non-current assets 35,179.6 37,512.7
Properties for sale 2,359.7 2,926.1
Current debtors 349.0 374.1
Current tax assets 36.4 60.4
Bank balances 1,073.4 1,195.6
Assets classified as held for sale 54.3 -
Current assets 3,872.8 4,556.2
Current creditors (1,642.4) (2,155.1)
Current borrowings (note 12) (823.7) (781.6)
Current tax liabilities (110.4) (189.8)
Current liabilities (2,576.5) (3,126.5)
Net current assets 1,296.3 1,429.7
Long-term borrowings (note 12) (5,341.6) (5,785.3)
Deferred tax liabilities (249.9) (249.1)
Pension liabilities - (0.1)
Non-current creditors (915.9) (920.6)
29,968.5 31,987.3
Total equity
Share capital 220.7 220.7
Revenue and other reserves 29,719.4 31,744.7
Shareholders' funds 29,940.1 31,965.4
Non-controlling interests 28.4 21.9
29,968.5 31,987.3
Hongkong Land Holdings Limited
Consolidated Statement of Changes in Equity
for the year ended 31 December 2024
Attributable to Attributable to non-
shareholders
Share Capital Revenue Hedging Exchange of the Company US$m controlling interests US$m Total
capital reserves reserves US$m reserves reserves equity
US$m US$m US$m US$m US$m
2024
At 1 January 220.7 - 32,299.5 (57.7) (497.1) 31,965.4 21.9 31,987.3
Total comprehensive expense - - (1,384.6) (0.1) (157.7) (1,542.4) 6.5 (1,535.9)
Dividends paid by the Company (note 9) - - (485.5) - - (485.5) - (485.5)
Share-based incentives - 1.4 - - - 1.4 - 1.4
Unclaimed dividends forfeited - - 1.2 - - 1.2 - 1.2
At 31 December 220.7 1.4 30,430.6 (57.8) (654.8) 29,940.1 28.4 29,968.5
2023
At 1 January 222.7 - 33,449.8 (3.0) (366.1) 33,303.4 23.7 33,327.1
Total comprehensive expense - - (581.7) (54.7) (131.0) (767.4) 4.0 (763.4)
Dividends paid by the Company (note 9) - - (488.7) - - (488.7) - (488.7)
Dividends paid to non-controlling shareholders - - - - - - (0.6) (0.6)
Unclaimed dividends forfeited - - 1.3 - - 1.3 - 1.3
Repurchase of shares (2.0) - (81.2) - - (83.2) - (83.2)
Disposal of subsidiaries - - - - - - (5.2) (5.2)
At 31 December 220.7 - 32,299.5 (57.7) (497.1) 31,965.4 21.9 31,987.3
Hongkong Land Holdings Limited
Consolidated Cash Flow Statement
for the year ended 31 December 2024
2024 2023
US$m US$m
Operating activities
Operating loss (1,311.7) (512.6)
Depreciation 12.7 16.5
Change in fair value of investment properties 1,887.6 1,323.5
Gain on acquisition of subsidiaries - (31.6)
Net gain on disposal of subsidiaries and joint ventures (9.6) (15.9)
Loss on disposal of an investment property 10.3 -
Exchange reserve loss realised on distribution 7.6 -
Loss on measurement of the disposal group 13.5 -
Decrease in properties for sale 752.1 187.5
Decrease in debtors 86.7 83.0
(Decrease)/increase in creditors (547.9) 8.2
Interest received 65.3 46.4
Interest and other financing charges paid (245.8) (251.2)
Tax paid (147.3) (287.3)
Dividends from associates and joint ventures 97.1 135.1
Cash flows from operating activities 670.6 701.6
Investing activities
Major renovations expenditure (78.5) (85.3)
Repayments from associates and joint ventures 259.2 1,018.3
Investments in associates and joint ventures (16.9) (401.4)
Advances to associates and joint ventures (111.5) (377.8)
Disposal of subsidiaries - 29.3
Disposal of joint ventures - 8.5
Acquisition of subsidiaries 13.8 (30.9)
Disposal of an investment property 15.5 -
Cash flows from investing activities 81.6 160.7
Financing activities
Drawdown of borrowings 2,371.0 2,121.9
Repayment of borrowings (2,737.3) (2,569.5)
Repayments to associates and joint ventures (26.6) (56.5)
Advances from associates and joint ventures 95.5 165.0
Principal elements of lease payments (2.7) (3.4)
Repurchase of shares - (83.2)
Dividends paid by the Company (478.2) (486.2)
Dividends paid to non-controlling shareholders - (0.6)
Cash flows from financing activities (778.3) (912.5)
Net cash outflow (26.1) (50.2)
Cash and cash equivalents at 1 January 1,112.2 1,171.5
Effect of exchange rate changes (18.9) (9.1)
Cash and cash equivalents at 31 December 1,067.2 1,112.2
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 31 December 2024 which have been prepared
in accordance with International Financial Reporting Standards, including
International Accounting Standards ('IAS') and Interpretations as issued by
the International Accounting Standards Board ('IASB').
There are no amendments which are effective in 2024 and relevant to the
Group's operations that have a significant impact on the Group's results,
financial position and accounting policies.
The Group has not early adopted any standard, interpretation or amendment that
has been issued but not yet effective.
2. REVENUE
2024 2023
US$m US$m
Rental income 887.6 934.7
Service income and others
- recognised at a point in time 35.3 33.7
- recognised over time 177.4 175.5
212.7 209.2
Sales of properties
- recognised at a point in time 881.0 671.7
- recognised over time 20.8 28.7
901.8 700.4
2,002.1 1,844.3
Total variable rents included in rental income amounted to US$36.2 million
(2023: US$41.0 million).
3. NET OPERATING COSTS
2024 2023
US$m US$m
Cost of sales (1,265.4) (913.6)
Other income 70.0 54.3
Administrative expenses (209.0) (221.6)
Gain on acquisition of subsidiaries - 31.6
Net gain on disposal of subsidiaries and joint ventures 9.6 15.9
Loss on disposal of an investment property (10.3) -
Loss on measurement of the disposal group (13.5) -
Exchange reserve loss realised on distribution (7.6) -
(1,426.2) (1,033.4)
Cost of sales included a US$146.9 million provision on the Chinese mainland
properties for sale (2023: US$29.5 million) arising from the deterioration in
market conditions that resulted in projected sales prices being lower than
development costs. A corresponding deferred tax credit of US$10.8 million
(2023: US$5.0 million) was recognised.
4. OPERATING (LOSS)/PROFIT
2024 2023
US$m US$m
By business
Prime Properties Investment 778.3 833.7
Build-to-sell (102.6) 54.3
Corporate (91.5) (93.7)
584.2 794.3
Change in fair value of investment properties (1,887.6) (1,323.5)
Others (8.3) 16.6
(1,311.7) (512.6)
5. SHARE OF RESULTS OF ASSOCIATES AND JOINT VENTURES
2024 2023
US$m US$m
By business
Prime Properties Investment
- operating profit 152.1 150.4
- net financing charges (51.2) (51.7)
- tax (16.6) (16.2)
- net profit 84.3 82.5
Build-to-sell
- operating profit 228.4 218.2
- net financing charges (52.9) (32.4)
- tax (144.9) (33.6)
- non-controlling interest 0.1 -
- net profit 30.7 152.2
Underlying business performance 115.0 234.7
Change in fair value of investment properties
(net of tax) 139.2 18.0
254.2 252.7
The build-to-sell business included a US$178.2 million net provision after
including a deferred tax credit (2023: US$65.7 million). This arose due to
the deterioration in market conditions that resulted in projected sales prices
being lower than development costs. In 2023, the net profit also included a
net gain of US$50.4 million arising from acquisitions.
6. TAX
2024 2023
US$m US$m
Tax charged to profit and loss is analysed as follows:
Current tax (93.4) (155.1)
Deferred tax (58.7) 22.3
(152.1) (132.8)
Tax relating to components of other comprehensive income is analysed as
follows:
2024 2023
US$m US$m
Remeasurements of defined benefit plans - (0.1)
Cash flow hedges (1.5) 9.1
(1.5) 9.0
Tax on profits has been calculated at the rates of taxation prevailing in the
territories in which the Group operates.
Share of tax charge of associates and joint ventures of US$168.4 million
(2023: US$51.7 million) is included in share of results of associates and
joint ventures.
7. NON-TRADING ITEMS
Non-trading items are separately identified to provide greater understanding
of the Group's underlying business performance. Items classified as
non-trading items include fair value gains or losses on revaluation of
investment properties; gains and losses arising from the sale of businesses
and investment properties; impairment of non-depreciable intangible assets;
provisions for the closure of businesses; acquisition-related costs in
business combinations; and other credits and charges of a non-recurring nature
that require inclusion in order to provide additional insight into underlying
business performance.
An analysis of non-trading items after interest, tax and non-controlling
interests is set out below:
2024 2023
US$m US$m
Change in fair value of investment properties (1,887.6) (1,323.5)
Tax on change in fair value of investment properties (31.4) (25.6)
Gain on disposal of subsidiaries - 16.6
Loss on disposal of an investment property (10.3) -
Gain on disposal of a joint venture 9.6 -
Exchange reserve loss realised on distribution (7.6) -
Share of change in fair value of investment properties in
associates and joint ventures (net of tax) 139.2 18.0
Non-controlling interests (6.4) (2.0)
(1,794.5) (1,316.5)
8. EARNINGS PER SHARE
Basic earnings per share are calculated on loss attributable to shareholders
of US$1,384.9 million (2023: US$582.3 million) and on the weighted average
number of 2,206.6 million (2023: 2,215.1 million) shares in issue during the
year.
The dilutive potential ordinary shares were not included in the calculation of
diluted earnings per share as their inclusion would be antidilutive.
Accordingly, diluted earnings per share were the same as basic earnings per
share (2023: same).
Additional basic and diluted earnings per share are calculated based on
underlying profit attributable to shareholders. A reconciliation of earnings
is set out below:
2024 2023
US$m Basic earnings per share US¢ Diluted earnings Basic earnings per share US¢ Diluted earnings per share
per share US$m US¢
US¢
Underlying profit attributable to shareholders 409.6 18.55 734.2 33.15 33.15
18.56
Non-trading items (note 7) (1,794.5) (1,316.5)
Loss attributable to shareholders (1,384.9) (62.76) (582.3) (26.29)
(62.76) (26.29)
9. DIVIDENDS
2024 2023
US$m US$m
Final dividend in respect of 2023 of US¢16.00
(2022: US¢16.00) per share 353.1 355.9
Interim dividend in respect of 2024 of US¢6.00
(2023: US¢6.00) per share 132.4 132.8
485.5 488.7
A final dividend in respect of 2024 of US¢17.00 (2023: US¢16.00) per share
amounting to a total of US$375.1 million (2023: US$353.1 million) is proposed
by the Board. The dividend proposed will not be accounted for until it has
been approved at the 2025 Annual General Meeting. The amount will be
accounted for as an appropriation of revenue reserves in the year ending 31
December 2025.
10. INVESTMENT PROPERTIES
2024 2023
US$m US$m
At 1 January 26,687.2 28,054.1
Exchange differences 113.2 (69.7)
Additions 77.1 49.6
Disposal (12.7) -
Transfer to fixed assets (111.7) -
Transfer to right-of-use assets (94.2) -
Disposal of subsidiaries - (23.3)
Decrease in fair value (1,887.6) (1,323.5)
Classified as held for sale (11.4) -
At 31 December 24,759.9 26,687.2
11. ASSOCIATES AND JOINT VENTURES
2024 2023
US$m US$m
By Business
Prime Properties Investment 4,677.7 4,610.0
Build-to-sell 5,368.5 5,975.2
10,046.2 10,585.2
To align with market practice, amounts due to associates and joint ventures of
US$1,301.0 million for 2023, previously reported net against Associates and
Joint Ventures are now presented within Creditors. The previously reported
balances of Current and Non-current creditors for 2023 increased by US$449.2
million and US$851.8 million respectively. The related cash flows in 2023,
previously classified under investing activities as repayments from/advances
to associates and joint ventures of US$165.0 million and US$56.5 million
respectively, are now represented under financing activities.
12. BORROWINGS
2024 2023
US$m US$m
Current
Bank overdrafts 0.2 1.2
Bank loans 6.4 74.2
Current portion of long-term borrowings
- bank loans 177.2 306.5
- medium term notes 639.9 399.7
823.7 781.6
Long-term
Bank loans 2,069.7 1,909.7
Medium term notes
- due 2025 - 641.3
- due 2026 220.5 225.3
- due 2027 187.3 186.0
- due 2028 183.7 182.3
- due 2029 122.0 121.1
- due 2030 699.8 698.6
- due 2031 570.5 569.5
- due 2032 141.0 139.9
- due 2033 525.8 524.7
- due 2034 115.8 77.0
- due 2035 255.2 253.3
- due 2038 108.7 111.9
- due 2039 109.5 112.8
- due 2040 32.1 31.9
3,271.9 3,875.6
5,341.6 5,785.3
6,165.3 6,566.9
13. CAPITAL COMMITMENTS AND CONTINGENT LIABILITIES
Total capital commitments as at 31 December 2024 amounted to US$1,155.9
million (2023: US$813.8 million).
Various Group companies are involved in litigation arising in the ordinary
course of their respective businesses. Having reviewed the outstanding
claims and taking into account the legal advice received, the Directors are of
the opinion that adequate provisions have been made in the financial
statements.
14. RELATED PARTY TRANSACTIONS
The parent company of the Group is Jardine Strategic Limited ('JSL') and the
ultimate parent company of the Group is Jardine Matheson Holdings Limited
('JMH'). Both JMH and JSL are incorporated in Bermuda.
In the normal course of business, the Group has entered into a variety of
transactions with the subsidiaries, associates and joint ventures of JMH
('Jardine Matheson group members'). The more significant of these
transactions are described below:
Management fee
The management fee payable by the Group, under an agreement entered into in
1995, to Jardine Matheson Limited ('JML') in 2024 was US$2.1 million (2023:
US$3.7 million), being 0.5% per annum of the Group's underlying profit in
consideration for management consultancy services provided by JML, a
wholly-owned subsidiary of JMH.
Property and other services
The Group rented properties to Jardine Matheson group members. Gross rentals
on such properties in 2024 amounted to US$19.0 million (2023: US$19.8
million).
The Group provided project management services and property management
services to Jardine Matheson group members in 2024 amounting to US$3.8 million
(2023: US$3.9 million).
Jardine Matheson group members provided property maintenance and other
services to the Group in 2024 in aggregate amounting to US$59.0 million (2023:
US$58.8 million).
Hotel management services
Jardine Matheson group members provided hotel management services to the Group
in 2024 amounting to US$3.1 million (2023: US$3.6 million).
Outstanding balances with associates and joint ventures
Amounts of outstanding balances with associates and joint ventures are
included in associates and joint ventures, debtors and creditors as
appropriate.
Hongkong Land Holdings Limited
Principal Risks and Uncertainties
The following are the principal risks and uncertainties facing the Company as
required to be disclosed pursuant to the Disclosure Guidance and Transparency
Rules issued by the Financial Conduct Authority in the United Kingdom and are
in addition to the matters referred to in the Chairman's Statement, Chief
Executive's Review and other parts of the Company's 2024 Annual Report (the
'Report').
As the risks and uncertainties described below have been newly defined and
categorised for inclusion in the Report for the first time, following the
Group's implementation of its new strategy and operating model, no analysis
regarding the relative significance of each risk and uncertainty, compared to
the prior year, is provided.
Risk relating to Execution of Strategy
Under the Group's new strategy, it will reallocate part of its financial and
human resources from its current focus on build-to-sell to the development and
management of integrated properties in the ultra-premium sector in Asia's
gateway cities. The successfulness in executing this strategy relies on taking
certain business transformations that are necessary for the strategy's
implementation.
This transition will involve changes to the experience and skills that the
Group requires for its management and third-party relationships as well as to
its organisational model, possibly leading to temporary operational disruption
or inefficiency. This could result in quality and safety standards, and hence
reputation and brand, being compromised.
Furthermore, the Group's new strategy, including an increase in its AUM from
US$40 billion to US$100 billion by 2035, focused on achieving ambitious goals,
which may affect the Group in making the right investment decisions. Any
difference in judging the market, responding to competitive trends and
demonstrating agility in certain conditions could also lead to the Group not
being able to execute the new strategy effectively.
Mitigation Measures:
· Maintain strong leadership support to champion the strategy and address
any challenges that may arise
· Implement a comprehensive plan that outlines the potential obstacles to
a successful reorganisation as well as the critical steps, resources and
timeframe necessary to achieve it
· Ensure adequate resources (financial, manpower and technological) are
allocated to support the execution of the new strategies
· Engage all relevant stakeholders early in the transition process to
obtain their buy-in and support, and communicate the strategy to employees to
ensure their alignment with its goals
· Establish a robust monitoring and feedback system to track progress in
the execution of the strategy, identify issues early and make necessary
adjustments
Economic Risk
Uncertainties in global and regional economies and financial markets,
involving volatility in interest and exchange rates, excessive inflation,
deflation or recession, can adversely affect the pricing and demand for the
Group's properties. Such developments might increase the Group's operating and
financing costs or reduce its occupancy rates and revenues, as well as its
access to credit. This would affect the valuations for the Group's investment
properties and profitability. At the same time, these developments could also
impact on the performance of the Group's joint venture partners, associates,
bankers, suppliers and other third parties to support it.
In addition, geopolitical instability in jurisdictions in which the Group's
properties are located could lead to unfavorable market sentiment, posing a
threat to its business activity and affecting strategic aspirations for growth
and returns on investment. For instance, political tensions, which could
result in greater protectionism, sanctions, nationalisation or expropriation,
may bring impact to the global geopolitical situation outside its own markets
and affect worldwide sentiment.
Mitigation Measures:
· Monitor the volatile macroeconomic environment and consider economic
factors in strategic and financial planning
· Make agile adjustments to existing business plans, where appropriate,
and explore new business streams and markets
· Review pricing strategies on a regular basis
· Conduct stress testing in relation to various economic scenarios, such
as inflation or interest rate changes, to understand their potential impacts
and to prepare measures to address them
Risks from Customers' Changing Requirements and Market Competition
Customer preferences can shift due to evolving lifestyle trends, technological
advancement and economic developments, necessitating continuous adaptation by
the Group in order to maintain and enhance its business performance. For
instance, Hong Kong's position as a leading financial centre and luxury
shopping destination may be eroded over time, leading to reduced demand for
premium integrated properties, whilst over supply and changes in consumption
pattern on the Chinese mainland could affect demand for high-end property.
Other trends that could impact demand include preferences for decentralised
office space, co-working environments, remote working and digital retailing.
If competitors are able to anticipate, understand and respond to these
developments more effectively than the Group, particularly in new gateway
markets, it may experience difficulty in gaining market share or lose current
market share. This would result in the Group suffering a decline in financial
performance and not achieving its strategic objectives for rapid growth.
Mitigation Measures:
· Undertake continual upgrades and improvements to maintain the
competitiveness of the Group's portfolio
· Maintain ongoing engagement with government authorities, local
communities and public organisations
· Enhance tenants' experience through the provision of value-added
services such as concierge and lounges
· Foster a sense of community by organising networking events, workshops
and social activities
· Establish a customer relationship management programme and digital
offering capabilities
· Adopt best practices with respect to sustainability and transition to
net zero, including executing on green building initiatives and collaborating
with our tenants to achieve sustainability goals
Investment Management Risk
To support its new strategy of recycling capital from existing
lower-performing assets to investments in ultra-premium projects, the Group
will need to modify its investment management lifecycle. For instance, revised
approaches to the appraisal of potential investments in or for the development
of ultra-premium integrated properties may be required, especially in less
familiar markets. Similarly, new practices for exiting from current
investments, including updated pricing and timing for their sale, is required
in implementing the divestment process. The new investment management
lifecycle should co-ordinate investment and divestment activities so that the
objectives can be achieved. Any difficulties in executing these activities
could result in the Group having a sub-optimal mix of property investments or
geographic concentration that does not achieve the business transformation and
growth objectives of its strategy.
Mitigation Measures:
· Conduct sufficient research, due diligence and evaluation of investment
opportunities
· Maintain transparent and consistent communication with all
stakeholders, including employees, investors and customers, regarding
divestment decisions, to manage their expectations and address any concerns
that they have
· Develop a clear framework and levels of authority for investment
decisions
· Perform regular monitoring of performance, as well as strategic
reviews, of new businesses and projects
· Carry out continuous review of the implementation of the strategic plan
Financial Strength and Reporting
If the Group is not able to carry out its new strategy of capital recycling at
sufficient speed or with adequate returns to fund growth in new areas, its
profitability may be negatively affected, as certain existing revenue streams
may decline before new ones can be fully established. The Group's new strategy
also seeks to bring in third-party capital to support growth. However, it may
not be able to develop effective relationships with providers of third-party
capital, which may adversely affect the Group's access to such capital. Any
over-reliance on third-party capital under this strategy could also create
financial strain, if market conditions deteriorate and the Group cannot
generate sufficient returns to meet its debt obligations. These factors may
eventually lead to liquidity issues and a loss of investor confidence or lower
credit rating.
The Group also has exposure to market and credit risk which can also adversely
impact its financial strength and funding capabilities. Its market risk
includes fluctuations in foreign currencies, interest rates and the pricing of
equities and debt, that could all negatively affect the value of its assets
and liabilities, as well as its profitability. The Group's credit risk is
primarily attributable to deposits held with banks, debt investments and
exposure to tenants.
In addition, the Group faces the risk that its external financial reporting
does not meet relevant regulatory requirements, possibly leading to fines or
penalties as well as reputational damage or loss of investor confidence. This
risk could increase as these requirements evolve and become more stringent
over time, making it more challenging for the Group to ensure the integrity
and timeliness of its financial reporting.
Mitigation Measures:
· Conduct sufficient research and detailed cashflow forecasting to
evaluate potential opportunities
· Perform strategic reviews of the market situation and monitor exposure
to changes in liquidity
· Manage the Group's exposure to fluctuations in foreign exchange,
interest rates and counterparty risk
· Maintain adequate buffers in committed facilities to enable the Group
to pursue new investment opportunities and to provide protection against
market uncertainty
· Maintain an appropriate balance between equity and debt, and between
short and long-term facilities, to provide flexibility for developing the
business
· Not undertaking speculative transactions unrelated to the Group's
underlying financial exposure
· Making ongoing developments to financial systems and controls, to
ensure the integrity of financial information
· Conducting regular internal audits of compliance with financial
policies and internal controls over financial reporting
People and Culture Risk
Ensuring that the Group has the right management talent, equipped with
leadership skills and specialist expertise, is critical in enabling it to
execute its new strategy effectively and to implement the required changes to
its organisational model. Therefore, any significant failure to attract,
retain and develop such talent could undermine this strategy as well as the
Group's operational and financial performance. The transition required under
the new strategy involves a potential reallocation and reskilling of resources
to new roles, with these processes involving additional time and costs.
The Group also faces talent shortages in certain areas, including retail
management and sustainability, for which there is high market demand. If the
Group is not able to hire key talent or carry out reskilling of existing
personnel in these specialisms, it may not be able to execute related
initiatives successfully, undermining its operational performance and
growth.
Mitigation Measures:
· Active communication with employees to develop their understanding of
the Group's new strategic direction
· Enhance the Group's performance management system to reinforce its high
performance culture
· Conduct proactive manpower and succession planning
· Enhance the Group's modern employer branding by implementing a talent
development plan that includes training to up-skill staff as well as
appropriate compensation and benefits
· Implement a strategy to promote Inclusion, Equity & Diversity
across the Group
· Develop an employee retention programme
Health and Safety Risk
The Group faces health and safety risk in terms of the possible impact of such
issues as accidents, security incidents or hygiene-related matters on its
tenants. In addition, the Group's business activities include construction and
renovation, hence it faces the risk of fatalities or serious injuries taking
place if working conditions are unsafe or workers do not adhere to its safety
procedures. If the Group fails to prevent, avoid and detect safety-related
issues, even where its relevant operations are managed by third party service
providers, its brand could be damaged and the trust that its tenants have in
the Group eroded, especially given its focus on the luxury sector. These
issues would ultimately undermine the Group's financial performance and
shareholder value.
Mitigation Measures:
· Ensure that all structural elements, electrical systems and plumbing in
the Group's buildings are regularly inspected and maintained
· Provide tenants with clear instructions and guidelines on emergency
procedures and safety protocols
· Establish a safety leadership culture and framework in all markets
· Conduct regular safety training for all employees and subcontractors
· Conduct proper contractor selection and evaluation, and incorporate
site safety requirements in tenders and contracts
· Establish a contractor safety incentive scheme
· Conduct active monitoring of site safety through the Digital Work and
Smart Site Supervision Systems
· Establish a Group Safety Accident Investigation Committee to raise work
safety awareness at construction sites. Conduct regular safety audits of
operating buildings and construction sites to ensure the Group's guidelines,
requirements and local regulations for safety are adhered to by both
employees, vendors and contractors
· Conduct periodic drills and tests of crisis response procedures
established for safety incidents
· Ensure that adequate insurance coverage, including employee
compensation and construction all risks, is adequate and effective
Environmental and Climate Risk
Environmental and climate-related risks are growing in significance, as shown
by the increasing frequency and intensity of potentially damaging natural
events and disasters, such as typhoons, storms and floods. These pose growing
physical threats to the Group's properties and other assets, which could lead
to safety-related issues and disruption to operations and supply chains in the
future. In addition, sea level rises could adversely impact asset values and
business continuity. As a result, the Group may face higher costs for
implementing measures to reduce the impact of climate-related events,
including physical defenses and insurance. Failure on the part of the Group to
manage environmental and climate risk could lead to it incurring even greater
costs of recovery from climate-related events, negatively affecting its
financial performance, reputation and hence ability to achieve its long-term
strategic objectives.
Market pressure, from shareholders, customers, lenders, rating agencies, etc.,
for improving sustainability performance is also increasing. In addition, the
Group has committed to certain officially published targets, including in
relation to decarbonisation. It therefore faces a growing challenge in driving
sustainability initiatives and delivering on sustainability performance,
increasing the risk of negative media exposure or reputational damage arising
if it does not meet compliance standards or other expectations. Any failure on
the part of the Group to improve the quality of its reporting on climate and
other sustainability-related performance, to meet these requirements, could
also lead to reputational issues for the Group.
Mitigation Measures:
· Implement measures to achieve the Group's targets and commitments to
decarbonisation under the Science-Based Targets initiative
· Update climate risk assessments and action plans for climate adaptation
based on the recommendations of the Task Force on Climate-related Financial
Disclosures, including implementing measures to address physical risks posed
by climate change and identifying opportunities in the global transition to a
low-carbon economy
· Perform ongoing retrofitting of existing assets and deploy emerging
PropTech solutions to drive energy efficiency
· Increase the procurement of renewable energy, including expanding
capacity for onsite renewable energy generation, to reduce carbon emissions
· Continue implementing the Group's robust and long-standing green
building certification programme to minimise the environmental impact of
existing assets
· Assess emerging sustainability reporting standards and requirements,
and align the Group's disclosures with market best practice
· Engage and collaborate with industry peers and government authorities
on climate-related issues with the aim of establishing a task force aimed at
addressing the risk of rising sea levels in Hong Kong
· Enhance operations and emergency preparedness to mitigate and minimise
the impact of climate-related risks
· Maintain a Property Damage and Business Interruption insurance policy
with adequate coverage, to mitigate the potential financial impact on the
Group of catastrophic events
· Make ongoing developments to systems and controls for the collection,
aggregation and reporting of sustainability-related data, as well as conduct
external and internal assurance reviews of the Group's sustainability
reporting and governance
· Communicate in a transparent manner the Group's efforts to enhance its
performance in sustainability to its stakeholders
Technology and Cybersecurity Risk
The Group is increasingly reliant on technology, exposing it to greater
cybersecurity and privacy-related risk. Cyberattacks are becoming more
frequent and sophisticated globally, posing significant threats to the Group's
digital infrastructure and information technology systems. The use of digital
platforms also heightens the Group's vulnerability to cyber threats. Further,
disruptive technologies, such as Generative AI, introduce new types of risk,
such as advanced phishing and deepfake attacks. Cyber risk is further
accentuated by the Group's exposure to breaches in cybersecurity taking place
at its business partners, third parties and customers, through any Group
systems that are connected with those of such counterparties.
Cyberattacks may also stem from a lack of cybersecurity awareness on the part
of employees, resulting in human error that cybercriminals can exploit,
disrupting critical equipment and facilities used by the Group in daily
operations.
If a cyberattack takes place at the Group or at its partners, third parties or
customers, it may face the costs of having to recover systems, lost revenue,
brand damage or regulatory action and penalties.
Mitigation Measures:
· Define a cybersecurity programme and establish a centralised function
to provide oversight and management of cybersecurity matters and to strengthen
cyber defenses and security measures
· Engage external consultants to perform assessments of the Group's
business functions against industry benchmarks
· Perform regular vulnerability assessments, penetration testing and
internal audits to identify weaknesses
· Maintain disaster recovery plans and backup for data restoration
· Arrange regular security awareness training for all employees and
phishing testing to raise their cybersecurity awareness
· Maintain sufficient cyber-related insurance to protect the Group's
financial position from the impacts of cyberattacks
Legal, Regulatory and Compliance Risk
The Group is continuously subject to new or changing regulations in the
jurisdictions in which it operates, as well as to those with
cross-jurisdictional impact, covering such matters as tax (e.g., stamp duty),
employment, cybersecurity, data privacy, home ownership, capital remittances,
sustainability (e.g., carbon pricing, building standards, safety, etc.) and
reporting requirements. The complexity created by this regulatory environment
leads to a risk that the Group inadvertently breaches its compliance
obligations. As the Group embarks on its shift towards new gateway cities in
Asia, this risk is increased as it may not initially have sufficient internal
understanding of regulations in each target jurisdiction.
If a robust approach to compliance is not maintained, the Group may face
claims, lawsuits, investigations, fines and sanctions being imposed by
regulatory authorities or negative media exposure, adversely affecting its
operations, reputation and profitability.
Mitigation Measures:
· Stay up to date on new and draft regulations in all jurisdictions in
which the Group operates
· Engage external consultants and legal experts to assess the
implications of prospective or new regulations, where necessary
· Implement a mandatory code of conduct that applies to all business
functions and employees across the Group
· Maintain a robust Corporate Governance Framework which includes a
whistleblowing channel
· Maintain an independent internal audit function that reports directly
to the Group's Audit Committee on risk management, control environment and
significant non-compliance matters
· Maintain a Crime insurance policy with adequate coverage
· Engage with government bodies, regulators and industry associations,
including participating in consultations on proposed policy and regulatory
changes
· Provide regular compliance training to employees to ensure that they
understand the importance of compliance
Risks from Partnerships and Other Third-Party Relationships
The effectiveness of the Group's relationships with joint venture partners and
in strategic alliances with other companies, government authorities, etc.,
will affect its performance. These relationships create opportunities for
growth, improving operational efficiency and promoting innovation. However,
they also introduce risks that could lead to vicarious responsibility for the
actions of these parties, causing reputational damage and undermining
shareholder value. These risks could stem from these parties' operations or
their non-compliance with regulatory requirements that they face. Also,
disputes with such parties may arise, as a result of differences in corporate
culture, priorities, management approaches and risk appetite between the Group
and such parties. Furthermore, any over-reliance on certain third-parties may
expose the Group to poor performance outcomes, such as delays in delivery, low
service quality or data security issues.
These reputational and operational challenges could hinder the Group in
achieving its strategic objectives for growth in profitability and scale.
Mitigation Measures:
· Conduct thorough research, due diligence and evaluation of investment
opportunities and potential business partners
· Develop a clear framework and levels of authority for investment and
partnership decisions
· Conduct regular communication with partners and establish clear
communication channels
· Build up networks beyond local partners, such as with government
authorities and the media
Hongkong Land Holdings Limited
Responsibility Statements
The Directors of the Company confirm that, to the best of their knowledge:
(a) the consolidated financial statements prepared in accordance with
International Financial Reporting Standards, including International
Accounting Standards and Interpretations as issued by the International
Accounting Standards Board, give a true and fair view of the assets,
liabilities, financial position and profit or loss of the Group; and
(b) the Chairman's Statement, Chief Executive's Review, Financial Review and
the description of Principal Risks and Uncertainties facing the Group as set
out in the Company's 2024 Annual Report, which constitute the management
report required by the Disclosure Guidance and Transparency Rule 4.1.8,
include a fair review of all information required to be disclosed under Rules
4.1.8 to 4.1.11 of the Disclosure Guidance and Transparency Rules issued by
the Financial Conduct Authority in the United Kingdom.
For and on behalf of the Board
Michael Smith
Craig Beattie
Directors
Dividend Information for Shareholders
The final dividend of US¢17.00 per share will be payable on 14 May 2025,
subject to approval at the Annual General Meeting to be held on 2 May 2025, to
shareholders on the registers of members at the close of business on 21 March
2025. The shares will be quoted ex-dividend on 20 March 2025, and the share
registers will be closed from 24 to 28 March 2025, inclusive.
Shareholders will receive cash dividends in United States Dollars, except
where elections are made for alternate currencies in the following
circumstances:
Shareholders on the Jersey branch register
Shareholders registered on the Jersey branch register can elect for their
dividends to be paid in Pounds Sterling. These shareholders may make new
currency elections for the 2024 final dividend by notifying the United Kingdom
transfer agent in writing by 25 April 2025. The Pounds Sterling equivalent of
dividends declared in United States Dollars will be calculated by reference to
an exchange rate prevailing on 30 April 2025.
Shareholders holding their shares through the CREST system in the United
Kingdom will receive cash dividends in Pounds Sterling only, as calculated
above.
Shareholders on the Singapore branch register who hold their shares through
The Central Depository (Pte) Limited ('CDP')
Shareholders who are enrolled in CDP's Direct Crediting Service ('DCS')
Those shareholders who are enrolled in CDP's DCS will receive their cash
dividends in Singapore Dollars, unless they opt out of CDP Currency Conversion
Service, through CDP, to receive United States Dollars.
Shareholders who are not enrolled in CDP's DCS
Those shareholders who are not enrolled in CDP's DCS will receive their cash
dividends in United States Dollars, unless they elect, through CDP, to receive
Singapore Dollars.
Shareholders on the Singapore branch register who wish to deposit their shares
into the CDP system by the dividend record date, being 21 March 2025, must
submit the relevant documents to Boardroom Corporate & Advisory Services
Pte. Ltd., the Singapore branch registrar, by no later than 5.00 p.m. (local
time) on 20 March 2025.
About Hongkong Land Group
Hongkong Land is a major listed property investment, management and
development group. Founded in 1889, it is a market leader in the development
of experience-led city centres that unlock value for generations by combining
innovation, placemaking, exceptional hospitality and sustainability.
The Group focuses on developing, owning and managing ultra-premium mixed-use
real estate in Asian gateway cities, featuring Grade A office, luxury retail,
residential and hospitality products. Its mixed-use real estate footprint
spans more than 850,000 sq. m., with flagship projects in Hong Kong, Singapore
and Shanghai. Its properties hold industry-leading green building
certifications and attract the world's foremost companies and luxury brands.
The Group's Hong Kong Central portfolio represents some 450,000 sq. m. of
prime property. LANDMARK, the luxury shopping destination of the Hong Kong
Central portfolio, is undergoing a three-year, US$1 billion expansion and
upgrade, which aims to reinforce the portfolio as a world-class destination
for luxury, retail, lifestyle and business. The Group has a further 165,000
sq. m. of prestigious office space in Singapore, mainly held through joint
ventures, and five retail centres on the Chinese mainland, including a luxury
retail centre at Wangfujing in Beijing.
In Shanghai, the Group owns a 43% interest in a 1.1 million sq. m. mixed-use
project in West Bund. Due to complete in 2028, it will comprise Grade A
offices, luxury and retail space, high-end waterfront residential apartments,
hotels and convention and cultural facilities. Alongside LANDMARK, it forms
part of the Group's CENTRAL Series of globally-recognised destinations for
luxury and lifestyle experiences.
Hongkong Land Holdings Limited is incorporated in Bermuda and has a primary
listing in the equity shares (transition) category of the London Stock
Exchange, with secondary listings in Bermuda and Singapore. Hongkong Land is
a member of the Jardine Matheson Group.
- end -
For further information, please contact:
Mark Lam (852) 2842 8211
Gary Leung (852) 2842 0601
Kay Lau (Brunswick Group Limited) (852) 6021 7009
Full text of the Preliminary Announcement of Results and the Preliminary
Financial Statements for the year ended 31 December 2024 can be accessed via
the Hongkong Land corporate website at 'www.hkland.com'.
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