Henderson Land Development : 2016 Final Results Announcement

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

The Group's reported profit attributable to equity shareholders for the year ended 31 December 2016 amounted to HK$21,916 million, representing an increase of HK$590 million or 3% over HK$21,326 million for the previous year. Reported earnings per share were HK$6.03 (2015: HK$5.87 as adjusted for the bonus issue in 2016).

Excluding the fair value change (net of non-controlling interests and tax) of investment properties and investment properties under development, the Group's Underlying Profit attributable to equity shareholders for the year ended 31 December 2016 was HK$14,169 million, representing an increase of HK$3,160 million or 29% over HK$11,009 million for the previous year. Underlying Earnings Per Share were HK$3.90 (2015: HK$3.03 as adjusted for the bonus issue in 2016).

The Board recommends the payment of a final dividend of HK$1.13 per share to shareholders whose names appear on the Register of Members of the Company on Tuesday, 13 June 2017, and such final dividend will not be subject to any withholding tax in Hong Kong. Including the interim dividend of HK$0.42 per share already paid, the total dividend for the year ended 31 December 2016 will amount to HK$1.55 per share (2015: HK$1.45 per share).

The proposed final dividend will be payable in cash and is expected to be distributed to shareholders on Wednesday, 21 June 2017.

The Board proposes to make a bonus issue of one new share for every ten shares held (2015: one bonus share for every ten shares held) to shareholders whose names appear on the Register of Members on Tuesday, 13 June 2017. The relevant resolution will be proposed at the forthcoming annual general meeting, and if passed and upon the Listing Committee of The Stock Exchange of Hong Kong Limited granting the listing of and permission to deal in such new shares, share certificates of the bonus shares will be posted on Wednesday, 21 June 2017.

The Group's Underlying Profit attributable to equity shareholders for the year ended 31 December 2016 was up by 29% to HK$14,169 million. Pre-tax profit contribution from property sales (including the attributable contribution from subsidiaries, associates and joint ventures) increased by 0.2% to HK$3,987 million, whilst pre-tax net rental income (including the attributable contribution from subsidiaries, associates and joint ventures) increased by 3% to HK$6,481 million. Besides, there was a total net gain of HK$3,930 million arising from the disposal of various non-core investment properties.

Property Sale

Hong Kong's property market has become active since the second quarter of 2016. In response to the continuing price increases, the Government in November 2016 raised the ad valorem stamp duty on residential property transactions for non first-time buyers to a flat rate of 15%. A new round of demand-suppression measures by the Government, coupled with a subsequent interest rate rise in the US, led to relatively cautious overall market sentiment by the year end.

Development projects which were launched during the year, including "Double Cove Summit" (Phase 5 of "Double Cove") in Ma On Shan, "Wellesley" in Mid-Levels, "Seven Victory Avenue" in Ho Man Tin, as well as "Harbour Park" and "Park One" in Cheung Sha Wan, drew encouraging market responses. Meanwhile, "39 Conduit Road" in Mid-Levels, "Double Cove" (Phases 1-4) in Ma On Shan, as well as an array of urban redevelopment boutique residences under "The H Collection" were re-launched and sold well. For the year ended 31 December 2016, the Group sold an attributable total amount of HK$10,082 million of Hong Kong residences.

During the year, the 156,000-square-foot office building "Golden Centre" in Sheung Wan was sold en-bloc at the consideration of HK$4,368 million. Together with the disposal of other non-residential properties such as the industrial units at "Global Gateway Tower" in Cheung Sha Wan, as well as the shop units at "The Zutten" in Ma Tau Kok and "PARKER33" in Shau Kei Wan, attributable proceeds arising from these disposals totalled HK$4,811 million. Including the aforesaid residential sales revenue, the Group sold HK$14,893 million worth of Hong Kong properties in attributable terms during the year under review, an increase of 30% as compared with HK$11,472 million for the year before.

After the end of the financial year under review, twelve shops at "Fairview Height" in Mid-levels, which were previously held for leasing, were disposed of in January 2017 at a total consideration of HK$515 million (subject to adjustment). "Newton Place Hotel" in Kwun Tong and "Newton Inn" in North Point were sold in February 2017 at about HK$2,248 million (subject to adjustment) and HK$1,000 million (subject to adjustment) respectively. The Group also released "Eden Manor" and "Mega Cube" for sale in March 2017 and market responses were satisfactory.

Property Development

The Group has 39 urban redevelopment projects with 80% to 100% of their ownerships acquired, representing about 3.8 million square feet in total attributable gross floor area.

The Group has made use of multiple channels to expand its development land bank in Hong Kong. With the exception of a few projects earmarked for rental purposes, there will be abundant supply of saleable areas for the Group's property sales in the coming years with details shown as follows:

1. Area available for sale in 2017: No. of projects (million sq. ft.) (Note 1) Note

2. Unsold units from major development projects offered for sale

   (Table 1) 25 0.7

3. Projects pending sale in 2017

   (Table 2) 8 1.3

   Sub-total: 2.0 Of which an

   attributable floor area of about 800,000 sq. ft. was sourced from urban redevelopment projects

4. Projects in Urban Areas:

5. Existing urban redevelopment projects

   (Table 3) 5 1.4 Dates of sales launch are not yet fixed and one of them is pending finalisation of land premium with the Government

6. Newly-acquired Urban Redevelopment Projects

   • Ownership Fully Consolidated

     (Table 4) 17 1.8 Most of them are expected to be available for sale or leasing in 2018-2019

7. Newly-acquired Urban Redevelopment Projects

   • with 80% or above ownership secured

     (Table 5) 22 2.0 Most of them are expected to be available for sale in 2019-2021

8. Newly-acquired Urban Redevelopment Projects

   • with over 20% but less than 80% ownership secured

     (Table 6) 30 0.8 Redevelopments of

     these projects are subject to successful consolidation of their ownerships

9. 15 Middle Road

Tsim Sha Tsui, Kowloon (acquired through public tender)

1 0.3 To be held for rental purposes upon completion of development

Sub-total: 6.3 Total for the above categories (A) and (B) development projects: 8.3
10. Major development projects in the New Territories:

• Fanling North/Kwu Tung 4.0 (Note 2)

• Wo Shang Wai 0.9 (Note 2)

• Kwun Chui Road, Area 56, Tuen Mun Town Lot No.

  500 (acquired through public tender)

  0.8

• Yuen Long Town Lot 524 0.1

• Others 0.3

Sub-total: 6.1 Total for categories (A) to (C): 14.4

Note 1: Gross floor area is calculated on the basis of the Buildings Department's approved plans or the Government's latest town planning parameters, as well as the Company's development plans. For certain projects, it may be subject to change depending on the actual needs in future.

Note 2: Developable area is subject to finalisation of land premium.