HIGHLIGHTS OF 2017 INTERIM RESULTS

For the six months ended 30 June 2017 2016

Unaudited Unaudited

Note HK$ million HK$ million Change

Property sales

- Revenue

1

10,019

6,136

+63%

- Pre-tax profit contribution

1

3,167

1,191

+166%

Property leasing

- Gross rental income

1

4,143

4,070

+2%

- Pre-tax net rental income

1

3,303

3,262

+1%

Profit attributable to equity shareholders

- Underlying profit

2

10,731

4,782

+124%

- Reported profit 14,158 8,611 +64%

HK$ HK$ Earnings per share

- Based on underlying profit

2, 3

2.68

1.20

- Based on reported profit

3

3.54

2.15

(restated) +123%

(restated) +65%

Interim dividend per share 0.48 0.42 +14%

At 30 June At 31 December

The Group's reported profit attributable to equity shareholders for the six months ended 30 June 2017 amounted to HK$14,158 million. Excluding the fair value change of investment properties and investment properties under development, the Group's underlying profit (Note2) attributable to equity shareholders was HK$10,731 million.

During the period under review, the Group made use of multiple channels to replenish its development land bank in Hong Kong and encouraging progress was achieved: (1) In May 2017, the Group won the tender for a prestigious commercial site at Murray Road, Central at HK$23,280 million; (2) The number of urban redevelopment projects with 80% to 100% of their ownerships acquired increased to 45, representing about 4.0 million square feet in total attributable gross floor area; and (3) The Group had land reserves in the New Territories of 44.9 million square feet, the largest holding among all property developers in Hong Kong. Negotiation of the land premium regarding the land lot at Kwu Tung North and one land lot at Fanling North is now under way with the Government. Upon finalisation, the relevant developments will commence shortly.

The following three major income pillars of the Group have been progressing well:

As regards "property sales", the Group plans to embark on the sale of three development projects in the second half of this year. Together with unsold stocks, a total of about 1,900 residential units and 300,000 square feet of quality commercial/office space in Hong Kong will be available for sale in the second half of this year. Besides, the disposal of "Newton Inn" in North Point was already completed in July 2017, whilst completion of the disposal of "Newton Place Hotel" is expected to take place in October 2017. Total proceeds of about HK$3,248 million arising from disposals of these two hotels may be recognised in the accounts in the second half of this year.

As regards "rental business", the Grade-A office development at 18 King Wah Road, the Ginza-style commercial project at Hillwood Road as well as the retail mall at "Eltanin•Square Mile" are scheduled for opening by the end of 2017, when the Group's rental portfolio in Hong Kong will be expanded to about 9.2 million square feet in attributable gross floor area. In mainland China, an office/commercial site with a total developable area of about 960,000 square feet in the southern extension of Huangpu River, Xuhui District, Shanghai was acquired during the period under review. Together with the adjacent site acquired earlier, these will become a large-scale integrated

2017

Unaudited

2016

Audited

development with a total gross floor area of about 3,000,000 square feet. Other rental properties under development have been

progressing well, paving the way for the Group's further growth in recurrent rental income.

HK$ HK$ Change

Net asset value per share 3 68.86 65.87 (restated) +5%

Net debt to shareholders' equity 19.3% 12.7% +6.6 percentage

points

The "associates", namely, Hong Kong and China Gas, Miramar and Hong Kong Ferry, serve as another steady recurrent income stream to the Group. In particular, Hong Kong and China Gas has 242 projects on the mainland, spread across 26 provinces, autonomous regions and municipalities. With a total of 26.0 million piped-gas customers in Hong Kong and mainland China, as well as its expanding scope of businesses, it is poised to provide promising returns to the Group.

Properties in Hong Kong

Land bank (attributable floor area)

Million square feet

Million square feet

Over the years, the Group has been "sowing" by way of acquisition of a massive land bank in the New Territories and various old tenement buildings for redevelopment. Thus, the Group has built up an extensive land bank in Hong Kong for steady property development over the long term. Together with the continually expanding rental portfolio and the investments in associated companies, these three major income pillars are the long-established steady income streams to the Group. The Group is now "bearing fruit", with its

  • Properties under development 4 13.7 13.7

  • Unsold units from major launched projects 1.2 0.7

    Sub-total: 14.9 14.4

  • Completed properties (including hotels) for rental 9.3 9.7

    Total: 24.2 24.1 New Territories land (attributable land area) 44.9 44.8

    Properties in Mainland China

    Land bank (attributable floor area)

  • Properties held for/under development 38.9 91.0

  • Completed stock for sale 2.9 3.7

  • Completed properties for rental 6.4 6.4

48.2 101.1

sizeable and valuable asset portfolio serving as a solid foundation for sustainable growth.

Land costs in Hong Kong have soared recently amid intensifying competition. However, the Group has accumulated a sufficient land bank to support its property development for the years to come. With its sizeable assets, ample financial resources, as well as a shrewd and seasoned management team, the Group is well placed to follow its long-term development strategies to pursue further growth. Following the successful disposals of various non-core properties in early 2017, the Group will continue to capture appropriate business opportunities to realise the genuine value of the other assets, thereby creating ever improving value for the shareholders. Barring unforeseen circumstances, the Group's results in the current financial year are expected to be satisfactory.

Lee Shau Kee

Chairman

Hong Kong, 22 August 2017

Note 1: This amount includes the Group's attributable share of contributions from subsidiaries, associates and joint ventures ("JVs").

Note 2: Excluding the Group's attributable share of fair value change (net of tax) of the investment properties held by subsidiaries, associates and JVs.

Note 3: The earnings per share were calculated based on the weighted average number of shares as adjusted for the effect of the bonus issues under Hong Kong Accounting Standard 33, "Earnings Per Share". The net asset value per share at 30 June 2017 was calculated based on the number of issued shares outstanding at 30 June 2017, whilst the net asset value per share at 31 December 2016 was calculated based on the number of issued shares outstanding at 31 December 2016 and as adjusted for the bonus issue effected in 2017.

Note 4: Including the total developable area of about 5.3 million square feet from the projects in Fanling North/Kwu Tung North and Wo Shang Wai, which are subject to finalisation of land premium.

The information in this advertisement does not constitute a statutory results announcement. The results announcement is available on the Company's website at www.hld.com and on Hong Kong Exchanges and Clearing Limited's HKExnews at www.hkexnews.hk. The financial information relating to the year ended 31 December 2016 included in this press release does not constitute the Company's statutory annual consolidated financial statements for that year but is derived from those financial statements. Further information relating to these statutory financial statements to be disclosed in accordance with section 436 of the Companies Ordinance (Chapter 622) is as follows: The Company has delivered the financial statements for the year ended 31 December 2016 to the Registrar of Companies as required by section 662(3) of, and Part 3 of Schedule 6 to, the Companies Ordinance. The Company's auditor has reported on the financial statements of the Group for the year ended 31 December 2016. The auditor's report was unqualified; did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying its report; and did not contain a statement under sections 406(2), 407(2) or (3) of the Companies Ordinance.

Henderson Land Development Company Ltd. published this content on 22 August 2017 and is solely responsible for the information contained herein.
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