Annual Report 2020
Hongkong Land Holdings Limited
Front cover : Hongkong Land’s diverse
portfolio spans 18 cities in Asia, including the
West Bund Financial Hub under construction
in Shanghai, building long-term value for
generations to come. (This rendering is for
illustration and reference only, subject to
change and government approval.)
Contents
Corporate Overview
Corporate Information
Highlights
Chairman’s Statement
Chief Executive’s Review
Financial Review
Directors’ Profiles
Financial Statements
Independent Auditors’ Report
Five Year Summary
Responsibility Statement
Corporate Governance
Principal Risks and Uncertainties
Shareholder Information
Offices
Report of the Valuers
Major Property Portfolio
1
2
3
4
6
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2 1
2 3
7 6
8 2
8 3
8 4
9 3
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9 5
9 7
9 8
development group. Founded in 1889, Hongkong Land’s business is built on excellence,
is a major listed property investment, management and
integrity and partnership.
The Group owns and manages more than 850,000 sq. m. of prime office and luxury
retail property in key Asian cities, principally in Hong Kong, Singapore, Beijing and Jakarta.
Its properties attract the world’s foremost companies and luxury brands.
The Group’s Central Hong Kong portfolio represents some 450,000 sq. m. of prime property.
It has a further 165,000 sq. m. of prestigious office space in Singapore mainly held
through joint ventures, a luxury retail centre at Wangfujing in Beijing, and a 50%
interest in a leading office complex in Central Jakarta. The Group also has a number
of high quality residential, commercial and mixed-use projects under development
in cities across China and Southeast Asia. In Singapore, its subsidiary, MCL Land,
is a well-established residential developer.
Hongkong Land Holdings Limited is incorporated in Bermuda and has a standard
listing on the London Stock Exchange, with secondary listings in Bermuda and
Singapore. The Group’s assets and investments are managed from Hong Kong by
Hongkong Land Limited. Hongkong Land is a member of the Jardine Matheson Group.
Annual Report 2020
1
Corporate Information
Directors
Ben Keswick Chairman
Hongkong Land Limited
(stepped down as Managing Director
Directors
on 15th June 2020)
John Witt Managing Director
(joined the Board on 15th June 2020)
Robert Wong Chief Executive
Simon Dixon
Mark Greenberg
John Witt Chairman
(appointed as chairman
on 15th June 2020)
Ben Keswick
(stepped down as chairman and director
on 15th June 2020)
(stepped down on 31st December 2020)
Robert Wong Chief Executive
Adam Keswick
Simon Keswick
Simon Dixon Chief Financial Officer
Graham Baker
(stepped down on 1st January 2020)
(joined the board on 15th June 2020)
Anthony Nightingale
Christina Ong
Y.K. Pang
Raymond M.J. Chow
Kenneth Foo
Robert L. Garman
Lord Powell of Bayswater, KCMG
Mark Greenberg
(stepped down on 31st December 2020)
David Hsu
David P. Lamb
Ling Chang Feng
Anne O’Riordan
Y.K. Pang
Jeremy Parr
Raymond Wong
Corporate Secretary
Jonathan Lloyd
Lord Sassoon, Kt
(stepped down on 9th April 2020)
Prijono Sugiarto
(joined the Board on 29th July 2020)
James Watkins
Percy Weatherall
Michael Wei Kuo Wu
Company Secretary
Jonathan Lloyd
Registered Office
Jardine House
33-35 Reid Street
Hamilton
Bermuda
2
Hongkong Land
Highlights
• Underlying profit of US$963 million, down 11%
• Net asset value per share down 7% on lower capital values
• Dividend level maintained
• 43% interest retained in the prime West Bund project in Shanghai
• Balance sheet and funding position remain strong
Results
Underlying profit attributable to shareholders*
963
1,076
(11)
(Loss)/profit attributable to shareholders
(2,647)
198
N/A
2020
US$m
2019
US$m
Change
%
Shareholders’ funds
Net debt
35,709
38,247
4,568
3,591
(7)
27
US¢
US¢
%
Underlying earnings per share*
41.27
46.12
(11)
Earnings per share
Dividends per share
Net asset value per share
(113.43)
8.48
N/A
22.00
22.00
–
US$
US$
15.30
16.39
%
(7)
* 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 27 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.
Annual Report 2020
3
Chairman’s Statement
Overview
The Group’s performance was negatively impacted by
COVID-19, particularly in relation to the granting of
retail rent relief in the Investment Properties business
and a lower contribution from Development Properties
as a result of fewer expected residential completions.
On the Chinese mainland, sentiment in the Group’s
Group’s active lease management in recent years,
the Central office portfolio performed relatively well amidst
the current market downturn. Physical vacancy at the end
of 2020 was 6.3%, whilst vacancy on a committed basis
was 5.9%. Rental reversions were broadly neutral, with
average office rents increasing from HK$118 per sq. ft
in 2019 to HK$120 per sq. ft in 2020.
markets has recovered to pre-pandemic levels.
Retail market sentiment in Hong Kong was severely
The Group responded decisively during the year to the
pandemic, prioritising the health and safety of our people
and customers and taking actions to manage costs and
to further strengthen our financial position. These efforts
will continue whilst the possibility of further waves of the
pandemic remains.
impacted by the pandemic and resulting travel
restrictions, although there were modest improvements
in the second half of the year. Average retail rent in 2020
decreased to HK$164 per sq. ft from HK$222 per sq. ft
in 2019, primarily due to the granting of temporary rent
relief, which has been charged to underlying profit as
incurred, and negative base rental reversions. Vacancy
The Group also remains focused on addressing changes in
was 0.3% on both a physical and committed basis,
customer behaviours, and the need to adapt and align to
unchanged from the prior year. The portfolio retains
new situations resulting from COVID-19, and is continuing
its position as the pre-eminent luxury shopping and fine
to add to its suite of digital services and flexible spaces
dining destination in Hong Kong.
that are available to tenants and customers.
Performance
Underlying profit attributable to shareholders fell 11%
to US$963 million.
The value of the Group’s Hong Kong Investment
Properties portfolio decreased by 10% compared to
the prior year, due to lower open market rents.
In Singapore, vacancy in the Group’s office portfolio was
2.1% on a physical and committed basis at the end of
Including net losses of US$3,610 million resulting from
2020, compared with 5.0% at the end of 2019. Rental
lower valuations of the Group’s investment properties,
reversions were positive, with average rents increasing
the loss attributable to shareholders was US$2,647 million.
to S$9.9 per sq. ft in 2020 from S$9.7 per sq. ft in 2019.
This compares to a profit of US$198 million in 2019,
which included net losses of US$878 million arising
from revaluations.
In Beijing, WF CENTRAL experienced a significant decline
in tenant sales and footfall in the first half of the year due
to the pandemic, whilst trading performance in the second
The net asset value per share at 31st December 2020 was
half of the year recovered to pre-pandemic levels buoyed
US$15.30, compared with US$16.39 at the end of 2019.
by the strong recovery in luxury retail spending on the
The Directors are recommending a final dividend of
Chinese mainland.
US¢16.00 per share, providing a total dividend for the
In Shanghai, planning and development of the Group’s
year of US¢22.00 per share, unchanged from last year.
prime mixed-use development on the West Bund,
Group Review
Investment Properties
In Hong Kong, office leasing activity in Central was largely
subdued as a result of economic uncertainties brought
about by the pandemic. However, as a result of the
secured in February 2020, is proceeding on schedule
with completion expected in multiple phases to 2027.
The project will be jointly developed with a strategic
investor headquartered on the Chinese mainland and
a government-held SPV, with the Group retaining
a 43% interest in the joint venture.
4
Hongkong Land
Development Properties
Financing
The Group’s Development Properties business saw
The Group’s financial position remains strong with net
varying levels of disruption across the region due to
debt of US$4.6 billion on 31st December 2020, up from
the temporary suspension of sales and development
US$3.6 billion at the end of 2019, primarily due to the
activities, with construction delays impacting its full
acquisition of the West Bund site. Net gearing at the
year performance.
On the Chinese mainland, sentiment in the Group’s
core markets has recovered to pre-pandemic levels.
Profit contribution decreased compared to the prior
year due to fewer planned completions resulting from
construction delays and a change in product sales mix
transferred to buyers. The Group’s attributable interest
in contracted sales of US$2,135 million was 14% higher
than in 2019 due to a change in sales location mix.
end of the year was 13%, compared with 9% at the
end of 2019. As at 31st December 2020, the Group
had committed liquidity of US$4.3 billion, compared to
US$3.2 billion at the end of 2019, with an average tenor
of debt of 6.6 years compared to 6.1 years at the end
of 2019.
People
Despite the unprecedented challenges brought about
At 31st December 2020, the Group had an attributable
by the pandemic, our employees have shown exemplary
interest of US$2,584 million in sold but unrecognised
commitment and resilience in safeguarding the wellbeing
contracted sales, compared with US$1,860 million at
of our customers. On behalf of the Board, I would like to
the end of 2019.
The Group participated in a number of land auctions
take this opportunity to thank them for their dedication
and hard work throughout the year.
during the year, although it remained difficult to secure
John Witt succeeded me as Managing Director
new sites due to a highly competitive primary land
on 15th June 2020. I will continue as Chairman.
market. The Group did, however, secure a wholly-owned
Mark Greenberg stepped down from the Board on
predominantly residential project in a prime location in
31st December 2020. We are grateful for his contribution
Chongqing during the year. The site has a developable
to the Group since his appointment as a Director in 2006.
area of 174,000 sq. m. and will be developed in two
phases, with completion expected in 2025.
In Singapore, recognised profits in 2020 were lower than
Outlook
The Group continues to operate in a challenging
the prior year largely due to construction delays caused
environment and uncertainty remains about the duration
by the pandemic. Despite the headwinds, pre-sales
at the 1,404-unit Parc Esta and the 638-unit Leedon
Green projects have performed well under current
of the pandemic and the impact it will have on the Group.
The Investment Properties portfolio and the Development
Properties business are, however, expected to remain
market conditions, with construction of the two projects
resilient in 2021.
scheduled to complete by 2021 and 2022, respectively.
The Group’s attributable interest in contracted sales
was US$632 million, compared to US$669 million in
the prior year.
In the rest of Southeast Asia, development activities
have largely resumed, although market sentiment
remains subdued in light of the ongoing impact of
COVID-19 and the restrictions imposed to contain it.
Ben Keswick
Chairman
11th March 2021
Annual Report 2020
5
Chief Executive’s Review
Hongkong Land produced a solid performance for the year
Geographically, China generates the bulk of the Group’s
despite the challenges caused by the ongoing pandemic,
earnings. Hong Kong, which predominantly comprises
with underlying earnings modestly lower than the record
Investment Properties, accounted for 54% of the Group’s
results achieved in 2019. Contributions from the Group’s
underlying operating profit before corporate expenses
Investment Properties portfolio were moderately impacted
(2019: 51%), whilst the Chinese mainland, which
by the provision of temporary retail rent relief and higher
predominantly comprises Development Properties,
average office vacancy. Results from Development
accounted for 28% (2019: 32%).
Properties were impacted by a delay in the timing of profit
recognition primarily resulting from pandemic-related
construction delays and lower margins due to changes
in the sales mix.
Strategy
Hongkong Land is a landlord and a developer in China and
The Investment Properties portfolios in Hong Kong and
Singapore provide a stable stream of recurring earnings
and balance sheet strength that enables the Group
to pursue new opportunities in both its Investment
Properties and Development Properties businesses in its
key markets. During 2020, the Group’s share of capital
allocated to new investments totalled US$3.5 billion
Southeast Asia. The Group operates a portfolio of prime
(2019: US$1.2 billion).
investment properties which it develops and holds as
long-term investments, and it also develops premium
Hong Kong Investment Properties
residential and commercial properties for sale.
The Group’s Investment Properties are predominantly
commercial in nature and located in core business
districts of key Asian gateway cities, with a concentration
in Hong Kong and Singapore. Returns principally arise
from rental income and long-term capital appreciation.
The Investment Properties segment is the largest
contributor to the Group’s earnings given its relative size
and maturity. It accounted for 86% of the Group’s gross
assets at the end of 2020 (2019: 87%) and contributed
65% of the Group’s underlying operating profit before
corporate expenses in 2020 (2019: 61%).
The Group’s Development Properties are primarily
premium residential and mixed-use developments located
on the Chinese mainland and in Singapore, with a growing
presence in other Southeast Asian markets. Returns
principally arise from trading profits in respect of the
immediate sale of the residential and office components,
and rental and trading profits for certain commercial
elements of mixed-use sites that are disposed of, or
reclassified to Investment Properties, after rents have
stabilised. Development Properties accounted for 14% of
the Group’s gross assets at the end of 2020 (2019: 13%)
and 35% of the Group’s underlying operating profit before
corporate expenses in 2020 (2019: 39%).
In Hong Kong, the Group’s Central Portfolio consists of
12 interconnected prime commercial buildings forming
the heart of the financial district in Central, providing over
450,000 sq. m. of Grade A office and luxury retail space.
This integrated mixed-use development is positioned
as the pre-eminent office, luxury retail, restaurant and
hotel accommodation in Hong Kong, and continues to
attract both prime office tenants and luxury retailers in
addition to housing the acclaimed Landmark Mandarin
Oriental hotel.
Hong Kong’s positioning as one of Asia’s main financial
and business hubs, combined with the scarcity of supply
of high-quality, well-managed space in Central and the
unique qualities of the Group’s portfolio, continue to
support low vacancy and strong rents. Despite the
challenging conditions resulting from the pandemic and
global uncertainties, Hong Kong continues to possess
unique advantages as a financial centre that are not easily
replicated. The Group remains confident that Hong Kong
will continue to thrive as the primary gateway for capital
flows in and out of the Chinese mainland and will remain
an important finance and commercial hub for decades
to come.
6
Hongkong Land
Central Portfolio top five office tenants
(in alphabetical order)
Central Portfolio top five retail tenants
(in alphabetical order)
in 2020
JP Morgan
KPMG
Mayer Brown
PricewaterhouseCoopers
Stock Exchange of Hong Kong
in 2020
Dickson Concepts
Hermes
Kering
LVMH Group
Richemont
The Group’s 54,000 sq. m. retail portfolio is integrated
a number of leading restaurants. LANDMARK is firmly
with its office buildings to create part of its distinctive and
established as the iconic luxury shopping and fine dining
successful mixed-use business model. Tenants include
destination in Hong Kong. Its success depends on the
numerous global luxury brand flagship stores, as well as
health of the broader Hong Kong economy as well as on
2016
39% Banks and other financial services
30% Legal
6% Property
8% Accounting
2% Trading
1% Governments
14% Others
2020
42% Banks and other financial services
30% Legal
6% Property
8% Accounting
2% Trading
1% Governments
11% Others
Central Portfolio office tenant profile
by area occupied
Hong Kong remaining an attractive destination for affluent
visitors from across the region. The Group is working to
ensure that, despite the current challenging conditions,
it remains the clear market leader in the city in which
global luxury brands continue to be represented.
Other Investment Properties
Outside Hong Kong, the Group has similarly established
itself as a leading provider of prime office and retail space.
In Singapore, Hongkong Land’s attributable interests
totalling 165,000 sq. m. – principally concentrated in the
Marina Bay Area – include some of the finest Grade A office
space in the market. On the Chinese mainland, the Group’s
49,000 sq. m. WF CENTRAL complex in Beijing is positioned
as a premium retail and lifestyle destination, which includes
a Mandarin Oriental hotel that has established itself as
one of the most exclusive hotels in the city. In Indonesia,
the Group has attributable interests of over 100,000 sq. m.
of Grade A office space through its 50%-owned joint
venture, Jakarta Land. In Cambodia, the EXCHANGE
SQUARE complex comprises 25,000 sq. m. of office and
retail space in the heart of Phnom Penh.
Our performance in these markets depends on the levels
of demand for, and supply of, prime office and luxury
retail space, both of which are influenced by global
and regional macroeconomic conditions. The Group is
committed to maintaining excellence in product quality
and service to retain and attract tenants and customers
and will continue to seek new opportunities to develop
prime investment properties in key Asian gateway cities.
Annual Report 2020
7
Development Properties
Hong Kong
The Group has established a strong and profitable
Overall demand in the office market remained subdued
Development Properties business focused primarily on
in 2020 on the backdrop of travel restrictions and other
the premium residential market segment on the Chinese
pandemic-related measures, with few new entrants in
mainland and in Southeast Asia. On the Chinese mainland,
the market. Physical vacancy in the Group’s Central office
the Group has a presence in seven key markets, namely
portfolio was 6.3% at the year-end, up from 2.9% at the
Beijing, Chengdu, Chongqing, Hangzhou, Nanjing,
end of 2019. On a committed basis, vacancy was 5.9%.
Shanghai and Wuhan, which are expected to continue
Vacancy for the overall Central Grade A office market was
benefiting from the growth of the middle class and
7.3% at the end of 2020, compared to 3.6% at the end
long-term urbanisation trends. Whilst the capital
of 2019. Rental reversions during the year were broadly
invested in this business is significantly lower than that
neutral, as the portfolio benefited from a number of
invested in Investment Properties, the earnings derived
leases which were concluded prior to the onset of the
from Development Properties enhance the Group’s
pandemic in Hong Kong. The Group’s average office
diversification, overall profits and return on capital.
rent in 2020 was HK$120 per sq. ft, up from last year’s
The Group’s attributable interest in the developable area
average of HK$118 per sq. ft. Financial institutions, legal
of its projects at the end of 2020 totalled 9.1 million
firms and accounting firms occupy 80% of the Group’s
sq. m., compared to 9.0 million sq. m. at the end of 2019.
total leased office space. The weighted average lease
Of this, construction of approximately 43% had been
expiry of the office portfolio at the end of 2020 stood
completed at the end of 2020, compared to 37% at
at 4.6 years, broadly unchanged from the end of 2019.
the end of 2019.
Annual returns from Development Properties fluctuate due
to the nature of projects and the Group’s accounting policy
of recognising profits for sold properties on completion
in a number of markets, including the Chinese mainland.
Demand is also dependent on overall economic conditions,
Central Portfolio
at 31st December 2020
Capital value (US$m)
23,969
4,109*
Office
Retail
which can be significantly affected by government policies
Gross revenue (US$m)
795
187*
and the availability of credit. Ongoing land acquisitions
Equivalent yield (%)
are necessary to build and maintain a stable income
– One and Two Exchange Square
3.00
stream over the longer term.
Review of Investment Properties
Profits from Investment Properties in 2020 were lower
– Landmark Atrium
Average unexpired term
of leases (years)
Area subject to renewal/review
4.50
4.6
1.9
than the prior year due primarily to rent relief granted in
in 2021 (%)
25
41
support of our retail tenants across the region and higher
average office vacancy.
* Includes hotel
8
Hongkong Land
Chief Executive’s Review The Group’s retail portfolio in Hong Kong was severely
culture and art. This new concept will continually have a
impacted by weakened sentiment in the luxury retail
curated roster of various retail concepts and experiences.
market as a result of the pandemic. However, vacancy,
on both a physical and committed basis, remained low
at 0.3%, unchanged from the end of 2019. Average
retail rent in 2020 decreased to HK$164 per sq. ft
from HK$222 per sq. ft in 2019, predominantly due to
temporary rent relief provided to tenants. Base rental
reversions were negative, reflecting falling retail rents
across Hong Kong.
The value of the Group’s Investment Properties portfolio in
Hong Kong at 31st December 2020, based on independent
valuations, declined by 10% to US$28.4 billion due to lower
open market rents, with no change in capitalisation rates.
Singapore
The Singapore office leasing market remained relatively
soft in 2020. Overall vacancy across the entire Grade A
In June 2020, the Group successfully opened BaseHall,
central business district was 6.8% at the end of 2020,
a first-of-its-kind food hall concept in the basement level
compared to 4.2% at the end of 2019. The Group’s
of Jardine House. BaseHall aims to provide our tenants
office portfolio continued to perform well, reflecting its
and other patrons with the best of the city’s buzzing
high quality and unique positioning. The Group’s average
culinary scene by championing Hong Kong’s exceptional
office rent in 2020 was S$9.9 per sq. ft, an increase from
food culture and incubating homegrown talents. The
S$9.7 per sq. ft in the previous year, due to positive rental
BaseHall has eight food outlets and two bars, all operated
reversions. Vacancy was low at 2.1%, on both a physical
by celebrated names in Hong Kong’s culinary landscape
and committed basis, at the year-end, compared to 5.0%
chosen for their creative concepts and outstanding
at the end of 2019. Financial institutions, legal firms and
offerings. To accommodate the demand for innovative
accounting firms occupy 77% of the Group’s total leased
concepts, vendors will rotate on a regular basis.
office space. The weighted average lease expiry of the
In December 2020, the Group debuted BELOWGROUND
on the basement level of the LANDMARK. BELOWGROUND
office portfolio at 2020 year-end stood at 3.8 years
(2019: 4.4 years).
is a hybrid cultural and retail destination that serves
Following the introduction of the ‘By the Bay’ mobile app
as a bridge to connect traditional luxury retail
in 2019, Bayspace, a plug-and-play flexible workspace,
with contemporary culture. By working alongside
was successfully launched in late 2020. Bayspace has
world-renowned streetwear brands and creative
been designed with agility in mind and offers mid- to
collaborators, BELOWGROUND aims to become
large-sized dedicated suites and project rooms for tenants
a thriving cultural ecosystem that shapes a future
looking to expand on short notice in a prestigious setting.
in which no boundaries exist between luxury, fashion,
12.70
13.14
13.03
13.26
11.18
11.64
13.82
14.39
15.04
15.46
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
Central Portfolio average office effective rent (US$/sq. ft per month)
Annual Report 2020
9
Chinese Mainland
In Bangkok, planning of the Group’s 49%-owned prime
In Beijing, trading at WF CENTRAL was negatively impacted
commercial joint venture development in the central
by the pandemic in the first half of 2020, with the Group
business district, secured in late 2017, continues to
providing temporary rent relief on a case-by-case basis.
progress. This development has a gross floor area of
Trading performance improved significantly in the second
290,000 sq. m. and is expected to complete in 2026.
half of the year due to a strong recovery in luxury retail
spending on the Chinese mainland. No further rent relief
was provided in the last two quarters as tenant sales
exceeded that of the same period last year.
In Shanghai, planning and development of the Group’s
prime mixed-use development on the West Bund,
secured in February 2020, is proceeding on schedule.
Completion is expected in phases from 2023 to 2027.
The project will be jointly developed with a strategic
investor headquartered on the Chinese mainland and
a government-held SPV, with the Group retaining a 43%
interest in the joint venture, as well as ongoing project
and asset management rights.
Other Investment Properties
One Central Macau was impacted by weakened sentiment
in the luxury retail market and pandemic-related travel
restrictions, although there were modest improvements in
Performances at the Group’s other investment properties
were within expectations under current market conditions.
Review of Development Properties
Earnings from the Group’s Development Properties
segment were lower in 2020 than in 2019, primarily due
to pandemic-related construction delays across the region
and lower margins on the Chinese mainland caused by
a change in sales mix.
Chinese Mainland
The Group’s development properties on the Chinese
mainland comprise 26 projects in seven cities, of which
12 projects are in Chongqing. As at 31st December 2020,
the Group’s net investment in development properties
on the Chinese mainland was US$4.8 billion, compared
to US$4.4 billion at the end of 2019.
trading from August 2020 due to the gradual relaxation of
The Group participated in a number of land auctions
border restrictions with the Chinese mainland. Occupancy
during the year, although it remained difficult to
was 92%, unchanged from the end of the prior year.
successfully secure new sites due to a highly competitive
Average retail rent in 2020 decreased to MOP$120 per
primary land market. The Group did, however, secure a
sq. ft from MOP$207 per sq. ft in 2019 due to temporary
174,000 sq. m. wholly-owned predominantly residential
rent relief.
In Jakarta, the office portfolio remains resilient due to its
high quality and unique positioning, despite the continued
surplus of city-wide office supply and ongoing impact of
the pandemic. Occupancy was 72% at the end of 2020,
compared to 77% at the end of 2019. On a committed
project in Chongqing during the year, to further strengthen
its already strong presence in the city. The site is located
immediately adjacent to the Guanyinqiao CBD in a mature
area that is master-planned for urban improvement.
The project will be developed in two phases, with
completion expected in 2025.
basis, occupancy was 79%. The average net effective
Market sentiment in the Group’s core markets started
rent was US$15.8 per sq. m. in 2020, compared to
to recover in the second quarter following the temporary
US$16.8 per sq. m. in the prior year.
closure of all sales galleries and the suspension of
In Phnom Penh, the office component of EXCHANGE
SQUARE, located in the heart of the city’s emerging
financial district, was 91% occupied at the end of 2020,
unchanged from the prior year.
construction activities and has since remained stable.
The Group’s share of total contracted sales in 2020 was
US$2,135 million, 14% higher than the US$1,868 million
achieved in the prior year. The Group’s attributable
10
Hongkong Land
Chief Executive’s Review interest in revenue recognised in 2020, including its share
Nanjing is the third most significant market for the
of revenue in joint ventures and associates, increased by
Group, representing some 19% of its Chinese mainland
13% to US$1,518 million from US$1,348 million in 2019.
Development Properties exposure. The Group has three
At 31st December 2020, the Group’s attributable
interest in sold but not yet recognised contracted sales
joint venture projects in Nanjing – Yue City, JL CENTRAL
and River and City.
amounted to US$2,584 million, an increase of 39% from
The Group’s attributable interest in the developable
US$1,860 million at the end of 2019.
area of its Nanjing projects at the end of 2020 totalled
Chongqing, the largest city in western China, remains
the most significant market for the Group, representing
some 38% of its Chinese mainland Development
Properties exposure. Including a newly acquired project
336,000 sq. m., unchanged from the prior year.
Construction of approximately 39% of this had been
completed at the end of 2020, compared to nil at the
end of 2019.
during the year, the Group has six wholly-owned projects
In the central business district of Beijing’s Chaoyang
in Chongqing – Yorkville South, Yorkville North, River One,
District, the Group’s 30%-owned Grade A office
The Pinnacle, Beryl Grove and a yet to be named project
development of 127,000 sq. m. of gross floor area
adjacent to Guanyinqiao CBD that was acquired in
remains in the planning phase, with construction expected
December 2020 – and six 50%-owned joint ventures:
to commence in 2022.
New Bamboo Grove, Landmark Riverside, Central Avenue,
Harbour Tale, Hillview, and Scholar’s Mansion.
Singapore
The Group’s attributable interest in 2020 revenue from
property sales in Chongqing, including its share of revenue
in joint ventures and associates, decreased by 7%
to US$1,000 million, from US$1,077 million in 2019.
The wholly-owned 309-unit Margaret Ville residential
project, with a developable area of 22,000 sq. m., was
98% pre-sold at the 2020 year-end, with completion
scheduled in 2021.
The Group’s attributable interest in the developable area
Construction of the wholly-owned 1,404-unit Parc
of its Chongqing projects at the end of 2020 totalled
Esta residential project, with a developable area of
4.3 million sq. m., compared to 4.1 million sq. m. at
98,000 sq. m., is on schedule and is expected to
the end of 2019. Of this, construction of approximately
complete in 2021. As at the end of 2020, 92% of
66% had been completed at the end of 2020, compared
units had been pre-sold.
to 58% at the end of 2019.
Development of the 50%-owned 638-unit Leedon
Shanghai is the second largest market for the Group,
Green residential project, with a developable area of
representing some 20% of its Chinese mainland
49,000 sq. m., is on schedule for completion in 2022.
Development Properties exposure. The Group has
At the end of 2020, 11% of the units had been pre-sold.
four joint venture projects in Shanghai – Parkville,
Galaxy Midtown, Irvine Bay and the trading component
of the West Bund project.
The Group’s attributable interest in contracted sales was
US$632 million in 2020, compared to US$669 million in
the prior year. The Group’s attributable interest in revenue
The Group’s attributable interest in the developable
recognised in 2020 was US$522 million, compared to
area of its Shanghai projects at the end of 2020 totalled
US$516 million in the prior year.
383,000 sq. m., compared to 256,000 sq. m. at the end
of 2019. Of this, construction of approximately 31% had
been completed at the end of 2020, compared to 46% at
the end of 2019.
At 31st December 2020, the Group’s attributable
interest in sold but not yet recognised contracted sales
amounted to US$676 million, an increase of 18% from
US$573 million at the end of 2019.
Annual Report 2020 11
Other Development Properties
The Velaris, a 40%-owned joint venture project
In Indonesia, development of the Group’s projects was
with Robinsons Land, is a two-hectare site situated
disrupted by the pandemic, with market sentiment yet to
in the Bridgetowne Township in Pasig City, Manila.
recover to pre-pandemic levels. Nava Park, the Group’s
The 1,953-unit luxury condominium project has a
49%-owned joint venture, is a 68-hectare site in the
developable area of 144,000 sq. m. and will be developed
southwest of Jakarta. Upon completion in 2031, Nava
in three phases through to 2031. Of the 185 units
Park will comprise a mix of landed houses, villas, mid-rise
launched, 28% had been pre-sold at the end of 2020.
apartments and low-rise commercial components. Of the
1,010 units that have been launched for sale, 77% had
been pre-sold at the end of 2020.
In Vietnam, the Marq, a 70%-owned residential
development in District 1 of Ho Chi Minh City, is a
515-unit luxury residential tower with a total developable
Asya, a joint venture which includes Astra International,
area of approximately 57,000 sq. m. Construction is
in which the Group has a 33.5% attributable interest,
progressing on schedule, with completion expected in
is a 67-hectare site located in the east of Jakarta.
2021. Of the 412 units launched, 71% had been pre-sold
The project will yield a total developable area of
at the end of 2020.
approximately 896,000 sq. m., comprising landed
houses, villas, apartments and low-rise commercial
shophouses. It will be developed in multiple phases
through to 2033. Of the 719 launched units, 43% had
been pre-sold at the end of 2020.
In Thailand, market sentiment has remained subdued
since the onset of the pandemic. Construction of the
Esse Sukhumvit 36, a 49%-owned 338-unit luxury
condominium tower in the Sukhumvit area of Bangkok,
was completed in early 2021. At the end of 2020,
Arumaya, the Group’s 40%-owned joint venture with
64% of the project had been sold.
Astra International, is a 299-unit luxury condominium
project located in South Jakarta. The project has a
developable area of 24,000 sq. m., and is expected to
complete in 2022. All of the units had been launched
as at the end of 2020, with 32% of the units reserved
or pre-sold.
Nonthaburi, the Group’s 49%-owned joint venture
project, is a 1,217-unit luxury landed housing project
located in Western Bangkok. The project has a total
developable area of 434,000 sq. m. and is expected to be
developed in four phases through to 2028. Lake Legend,
the first phase of the project, comprises 57 landed
Avania, the 50%-owned mixed-use development
houses. Of the 23 units launched, 26% had been
with Astra International situated in central Jakarta,
pre-sold at the end of 2020.
will consist of over 650 high-end apartments and a
Grade A office tower. The project has a developable
area of 131,000 sq. m. and will be developed in two
phases through to 2026. Sales launch for the first phase
of the project is expected to commence in late 2021.
King Kaew, a luxury residential project in which the Group
has a 49% interest, is situated on King Kaew Road close
to Suvarnabhumi International Airport. The project has
a developable area of 178,000 sq. m. and will comprise
474 villas. It is expected to complete in 2029. The sales
In the Philippines, development at Mandani Bay,
launch for the first phase of the project is expected to
a 40%-owned 20-hectare development in Cebu
commence in mid-2021.
comprising principally residential units, continues
to progress despite pandemic-related disruptions.
The project will be developed in multiple phases through
to 2036. Of the 4,179 residential and office units
launched, 86% had been pre-sold at the end of 2020.
Wireless Road, a luxury condominium site in which the
Group has a 49% interest, is situated on Wireless Road
in Bangkok’s central business district. The project has
a total developable area of 64,000 sq. m., and will consist
of over 700 units. Development will be in one phase,
with completion expected in 2024. Sales launch for
the first phase of the project is expected to commence
in mid-2021.
12
Hongkong Land
Chief Executive’s Review Sustainability
Hongkong Land has been a landlord and developer
The Year Ahead
The Group continues to operate in a challenging
of premium properties for more than 130 years.
environment and uncertainty remains about the duration
We strive to set an example of good corporate citizenship
of the pandemic and the impact it will have on the Group.
by having a well-designed sustainability strategy and
Depending on overall economic conditions, the Group’s
governance structure and adopting global best practices.
Investment Properties portfolio is expected to remain
Our continued growth and progress on sustainability
resilient, underpinned by its high-quality tenant base.
initiatives are guided and monitored by the Group’s
In the Development Properties business, it is hoped
Sustainability Committee, which reports to the Board.
that higher completions on the Chinese mainland will lead
We are in a strong position to continue integrating
to improved profit contributions. Higher financing
sustainability initiatives into our operational and financing
costs are anticipated partly due to West Bund-related
activities, investment analysis and risk assessments.
interest costs.
During the year, the Group entered into a number of
In the coming year, we will continue to uphold the very
sustainability-linked loans with an aggregate facility
highest standards in delivering innovative offerings and
amount of HK$4.4 billion. The facilities index tiered
world-class service to both our tenants and customers.
discounts to interest rates against ESG targets,
These values are critical to the future success of the
which incentivise the Group to demonstrate continuous
Group and remain our priority in order to protect our
improvements in greenhouse gas emissions, electricity
leading market positions and maintain strong shareholder
consumption, reducing food waste, and solar energy
returns over the long term.
Robert Wong
Chief Executive
11th March 2021
generation, whilst maintaining green building certifications
for the Group’s Central Portfolio.
In November 2020, the Group launched the HK$100 million
Hongkong Land HOME FUND, which was established as
a multi-year initiative to focus on creating initiatives
which benefit younger generations and our aspiration
to foster a more inclusive society. In its first phase of
collaborations, the fund worked with three community
organisations in a series of programmes that benefit
younger generations and families facing housing issues
in Hong Kong.
In recognition of our continued efforts to adhere to the
highest environmental standards, the Group was awarded
the ‘Sustainability Achievement of the Year’ at the RICS
Awards 2020 in Hong Kong in relation to its management
of the Hong Kong Central Portfolio.
Further details on the Group’s approach to sustainability
and related policies can be found on the Group’s website
at www.hkland.com/en/sustainability. The Group’s
sustainability performance for the financial year ended
31st December 2020 will be included in a standalone
Sustainability Report to be published on the Group’s
website in the second quarter of 2021.
Annual Report 2020 13
Financial Review
Results
Underlying Business Performance
Investment Properties
Development Properties
Corporate costs
2020
US$m
2019
US$m
963
524
(74)
1,064
675
(83)
as the portfolio benefited from a number of leases which
were concluded prior to the onset of the pandemic.
Average rents for the retail portfolio decreased by 26%,
predominantly as a result of temporary rent relief
provided to tenants.
The Hong Kong Central Portfolio remains the Group’s
largest profit contributor, generating 85% of the
operating profit contributed by the Group’s Investment
Properties, up by 2% compared to the prior year.
Underlying operating profit
1,413
1,656
Net financing charges
Tax
Non-controlling interests
Underlying profit attributable
to shareholders
Non-trading items
(160)
(288)
(2)
(188)
(370)
(22)
In Singapore, the Group’s Investment Properties
portfolio contributed 12% of total operating profits
from Investment Properties, marginally higher than
the 11% contributed in the prior year.
963
1,076
(3,610)
(878)
In Beijing, WF CENTRAL provided temporary rent relief
in support of its tenants during the first half of the year.
However, no further rent relief was provided in the
(Loss)/profit attributable
second half as trading performance improved as a result
to shareholders
(2,647)
198
of a strong recovery in luxury retail spending on the
Chinese mainland.
Underlying earnings per share
41.27
46.12
principally due to pandemic-related construction delays
and lower margins.
US¢
US¢
Operating profits from Development Properties decreased
by 22% from the previous year to US$524 million,
Underlying business performance is summarised in the
The operating profit contribution from Chinese mainland
above table, including the Group’s share of operating
Development Properties was down by 26% from the
profit from its associates and joint ventures. Given the
previous year to US$414 million, mainly due to lower
significance of the Group’s joint ventures, this provides
margins, with a higher ratio of completions arising from
a clearer summary of the Group’s performance during
more recently acquired developments with higher relative
the year.
The Group’s operating profit from Investment Properties
was US$963 million, 9% lower than the previous year,
primarily due to temporary rent relief provided to retail
tenants and higher average office vacancy.
In Hong Kong, average rents for the office portfolio
land costs, despite a 13% increase in attributable revenue
to US$1,518 million due to higher selling prices as a
consequence of a higher proportion of completions from
higher value developments in Hangzhou and Nanjing.
Including the impact of Land Appreciation Tax which is
accounted for within the tax line, the contribution from
the Group’s Chinese mainland Development Properties
increased by 2% despite broadly neutral rental reversions,
was down 28% from the prior year.
14
Hongkong Land
Revenue was recognised at the following projects in the
In other parts of Southeast Asia, the Group recorded
Chinese mainland:
higher recognised profits in 2020 compared to the prior
year primarily due to higher completions in Thailand
Project
City
interest
handed over
Attributable
Number of units
partially offset by fewer completions in Indonesia.
%
2020
2019
Net financing charges of US$160 million were 15%
WE City
Chengdu
Artisan Bay
Chengdu
Yorkville North Chongqing
Yorkville South Chongqing
Bamboo Grove Chongqing
50
33
100
100
50
157
368
664
58
–
2,293
–
755
1,700
4
New Bamboo
Grove
Chongqing
50
602
1,292
Landmark
Riverside
Chongqing
Central Avenue Chongqing
50
50
River One
Chongqing
100
Harbour Tale
Chongqing
Hangzhou Bay Hangzhou
River and City Nanjing
Parkville
Shanghai
Dream Land
Wuhan
50
30
50
50
50
1,293
340
219
23
662
861
–
630
410
1,057
–
–
–
–
112
–
In Singapore, operating profits from Development
Properties decreased by 13% from the previous year to
US$96 million due to pandemic-related construction delays
lower than the prior year primarily due to lower average
borrowing costs and higher capitalised interest. Weighted
average borrowing costs were 3.2%, compared to 3.8%
in the prior year.
The Group’s tax charge decreased by 22% to
US$288 million, with an effective tax rate of 23%,
lower than the prior year’s 25% effective tax rate due
to lower Land Appreciation Tax paid and withholding
tax provided in relation to the Group’s Development
Properties on the Chinese mainland.
In 2020, underlying profit attributable to shareholders
was US$963 million, 11% lower than the prior year.
Non-Trading Items
In 2020, the Group had net non-trading losses of
US$3,610 million compared to US$878 million in 2019.
These arose principally on revaluations of the Group’s
investment properties, including its share of joint ventures,
which were performed at 31st December 2020 by
independent valuers.
and lower margins on more recently acquired projects.
The loss on valuation came primarily from the Group’s
The Group’s attributable interest in revenue recognised
Central office portfolio in Hong Kong due to a decrease
was US$522 million, compared to US$516 million in 2019.
in open market rents, with no change in capitalisation
rates. The Central Portfolio decreased in value by 10%
to US$28.1 billion.
Annual Report 2020 15
Cash Flows
The Group’s consolidated cash flows are summarised as follows:
Operating activities
Operating profit, excluding non-trading items
Net interest
Tax paid
Payments for Development Properties sites
Expenditure on Development Properties projects
Sales proceeds from Development Properties
Dividends received from joint ventures
Others
Investing activities
Major renovations capex
Repayments from/(investments in and advances to)
associates and joint ventures
Development expenditure
Disposal of subsidiaries and other investments
Others
Financing activities
Dividends paid by the Company
Net drawdown of borrowings
Others
Net increase in cash and cash equivalents
Cash and cash equivalents at 1st January
Effect of exchange rate changes
2020
US$m
2019
US$m
959
(178)
(268)
(184)
(435)
1,108
113
(134)
1,170
(145)
(116)
(353)
(522)
1,143
420
(415)
981
1,182
(129)
(116)
599
(4,499)
2,613
–
(1,416)
(510)
1,458
(5)
943
508
1,418
64
(646)
(28)
158
(26)
(658)
(510)
25
(6)
(491)
33
1,369
16
Cash and cash equivalents at 31st December
1,990
1,418
16
Hongkong Land
Financial Review The cash inflows from operating activities for the year
site in Shanghai before being sold down to a 43% interest
were US$981 million, compared with US$1,182 million
which is recorded within the disposal of subsidiaries and
in the prior year. The decrease of US$201 million was
other investments line, whilst capital expenditure of
principally due to lower dividends from the Group’s joint
US$129 million for major renovations principally relates
venture Development Properties projects, partially offset
to the Group’s Hong Kong Central Portfolio.
by fewer new Development Properties sites acquired.
Under financing activities, the Company paid dividends
The Group’s operating profit from its subsidiaries
of US$510 million, being the 2019 final dividend of
(excluding non-trading items) was US$959 million,
US¢16.00 per share and the 2020 interim dividend of
18% lower than the prior year, largely due to an increased
US¢6.00 per share, unchanged compared to the prior
contribution from wholly-owned Development Properties
year. The Group had a net drawdown of borrowings of
projects in the Chinese mainland, partially offset by lower
US$1,458 million during the year.
Cash and cash equivalents were US$572 million higher
at the end of 2020. Taken together with an increase in
borrowings, the Group’s net debt at 31st December 2020
increased to US$4,568 million, from US$3,591 million at
the beginning of the year.
Year-end debt summary*
contributions from wholly-owned Development Properties
projects in Singapore. Net interest paid of US$178 million
was US$33 million higher than in 2019 due to higher
average net borrowings. In 2020, US$184 million was
paid by the Group to acquire wholly-owned Development
Properties sites, including The Riverside in Hangzhou
(US$112 million) and the Xiaoyuan Project (US$70 million),
a newly secured project in Chongqing, as compared
to US$353 million in 2019. Sales proceeds from
wholly-owned Development Properties were US$35 million
lower at US$1,108 million, principally due to lower sales
proceeds from projects in Singapore. Dividends received
from joint ventures decreased by US$307 million to
US$113 million, predominately due to receipts from
Bamboo Grove in the Chinese mainland in 2019.
Cash outflows from investing activities were
US$ bonds/notes
HK$ bonds/notes
HK$ bank loans
S$ bonds/notes
S$ bank loans
RMB bank loans
US$1,416 million, compared to US$658 million in the
PHP bank loans
prior year. Net repayments from the Group’s joint
THB bank loans
venture projects totalled US$599 million, compared
to US$646 million in net investments and advances in
the prior year primarily due to fewer new joint venture
Development Properties projects secured compared to the
prior year. Development expenditure of US$4,499 million
Gross debt
Cash
Net debt
was predominantly for the acquisition of the West Bund
* Before currency swaps
2020
US$m
2019
US$m
2,122
1,657
1,514
1,478
945
224
399
862
–
356
433
331
255
621
7
376
6,565
1,997
5,015
1,424
4,568
3,591
Annual Report 2020 17
facilities headroom is maintained to facilitate the Group’s
capacity to pursue new investment opportunities and to
provide some protection against market uncertainties.
Overall, the Group’s funding arrangements are designed
to strike an appropriate balance between equity and debt
from banks and capital markets, both short- and long-
term, to give flexibility to develop the business.
The Group’s Treasury operations are managed as cost
centres and are not permitted to undertake speculative
transactions unrelated to underlying financial exposures.
Funding
The Group is well financed with strong liquidity.
Net gearing at the end of the year was 13%, compared
with 9% at the end of 2019. Interest cover, calculated
as the underlying operating profits, including the Group’s
share of associates and joint ventures’ operating profits,
divided by net financing charges including the Group’s
share of associates and joint ventures’ net financing
charges, was 8.8 times, unchanged from the prior year.
Capital Management
The Group’s capital management policies are set out on
page 71.
New Investments
During 2020, the Group committed to invest, based on
its equity contribution and share of project level debt,
US$3.5 billion in new projects including its 43% interest
in the West Bund site (2019: US$1.2 billion). The Group
continues to assess new investment opportunities, which
are expected to be funded by a combination of internal
resources and external financing from banks and the debt
capital markets.
Dividends
The Board is recommending a final dividend of US¢16.00
per share for 2020, providing a total annual dividend of
US¢22.00 per share, the same as last year. The final
dividend will be payable on 12th May 2021, subject to
approval at the Annual General Meeting to be held on
5th May 2021, to shareholders on the register of members
at the close of business on 26th March 2021. No scrip
alternative is being offered in respect of the dividend.
Treasury Policy
The Group manages its treasury activities within
established risk management objectives and policies
using a variety of techniques and instruments. The main
objectives are to manage exchange, interest rate and
liquidity risks and to provide a degree of certainty in
respect of costs. The investment of the Group’s cash
balances is managed so as to minimise risk while seeking
to enhance yield. Appropriate credit guidelines are in
6%
7%
9%
9%
13%
place to manage counterparty credit risk.
2016
2017
2018
2019
2020
When economically sensible to do so, borrowings are
Net debt
Equity
taken in local currencies to hedge foreign currency
exposures on investments. A portion of borrowings
is denominated in fixed rates. Adequate committed
Net debt as a percentage of equity
18
Hongkong Land
Financial Review Both Moody’s and Standard & Poor’s have maintained
At 31st December 2020, the Group had total committed
their credit ratings of Hongkong Land Holdings Limited
lines of approximately US$8.9 billion. Of these lines, 55%
at A3 and A respectively.
The average tenor of the Group’s debt was 6.6 years
at 31st December 2020, up from 6.1 years at the end
of 2019, benefiting from increased issuance of long dated
bonds out of the Group’s MTN programme. Approximately
48% of the Group’s borrowings were at floating rates and
the remaining 52% were either fixed rate borrowings or
covered by interest rate hedges with major credit worthy
financial institutions, broadly in line with the end of 2019.
were sourced from banks with the remaining 45% from
the capital markets. At the end of 2020, the Group had
drawn US$6.6 billion of these lines leaving US$2.3 billion
of committed, but unused, facilities. Adding the Group’s
year-end cash balances, the Group had overall liquidity
at 31st December 2020 of US$4.3 billion, up from
US$3.2 billion at the end of 2019.
4,883
1,822
890
989
293
Interest
rate
Currency*
Maturity
2021
2022
2023
2024
2025
& beyond
52% Fixed
72% HK$
38% >5 years
48% Floating
10% S$
40% 2-5 years
13% RMB
5% THB
11% 1-2 years
11% <1 year
Committed facility maturity
at 31st December 2020 (US$m)
Debt profile at 31st December 2020
* After currency swaps
Annual Report 2020 19
Gross Assets
The Group’s gross assets, including its share of joint
Principal Risks and Uncertainties
A review of the principal risks and uncertainties facing
ventures, (excluding cash balances) is analysed below,
the Group is set out on page 93.
by activity and by location.
Accounting Policies
The Directors continue to review the appropriateness
of the accounting policies adopted by the Group with
regard to developments in International Financial
Reporting Standards. There are no changes to the
accounting policies as described in the 2019 annual
financial statements.
Simon Dixon
Chief Financial Officer
11th March 2021
86% Investment Properties
14% Development Properties
86% Investment Properties
14% Development Properties
Gross assets by activity
69% Hong Kong
13% Southeast Asia
69% Hong Kong
18% Chinese mainland and Macau
13% Southeast Asia
18% Chinese mainland and Macau
Gross assets by location
20
Hongkong Land
Financial Review Directors’ Profiles
Ben Keswick Chairman
Mr Keswick joined the Board as Managing Director
Robert Wong* Chief Executive
Mr Wong joined the Board as Chief Executive in 2016.
in April 2012 and held the position until June 2020.
He joined the Group in 1985 and has extensive experience
He has been Chairman since 2013. He was also
in property management and development. As a director
managing director of Dairy Farm, Jardine Matheson,
of Hongkong Land Limited since 1996, he had prime
Jardine Strategic and Mandarin Oriental from 2012 to
responsibility for the Group’s residential property business.
2020. Mr Keswick has held a number of executive
He is a member of both The Royal Institution of Chartered
positions since joining the Jardine Matheson group in
Surveyors and The Hong Kong Institute of Surveyors.
1998, including finance director and then chief executive
officer of Jardine Pacific between 2003 and 2007 and,
thereafter, group managing director of Jardine Cycle
& Carriage until 2012. He is executive chairman of
Jardine Matheson and Jardine Strategic, and chairman
of Dairy Farm, Jardine Cycle & Carriage and Mandarin
Oriental. Mr Keswick is also a director of Yonghui
Superstores and a commissioner of Astra. He has
an MBA from INSEAD.
John Witt* Managing Director
Mr Witt rejoined the Board as Managing Director in
June 2020, having previously served as the Chief
Financial Officer between 2010 and 2016. He has been
with the Jardine Matheson group since 1993 and has held
a number of senior finance positions, including group
finance director of Jardine Matheson from 2016 to 2020.
Mr Witt is chairman of Jardine Matheson Limited, group
managing director of Jardine Matheson and managing
director of Dairy Farm, Jardine Strategic and Mandarin
Oriental. He is also a director of Jardine Pacific and
Jardine Motors, and a commissioner and chairman
Simon Dixon* Chief Financial Officer
Mr Dixon joined the Board as Chief Financial Officer
in 2016. A Chartered Accountant, he joined the Jardine
Matheson group in 2006 from PricewaterhouseCoopers.
He was previously finance director of Astra, prior to which
he was group treasurer of Jardine Matheson from 2006
to 2010.
Adam Keswick
Mr Keswick joined the Board in 2012. Having joined
Jardine Matheson in 2001, he was appointed to the
Jardine Matheson board in 2007 and was deputy
managing director from 2012 to 2016. Mr Keswick is
a director of Dairy Farm, Jardine Strategic and Mandarin
Oriental. He is also a director of Ferrari NV and Yabuli
China Entrepreneurs Forum and vice chairman of the
supervisory board of Rothschild & Co.
Anthony Nightingale
Mr Nightingale joined the Board in 2006 and was
of the executive committee of Astra. Mr Witt is a
Managing Director of the Company from 2006 to 2012.
Chartered Accountant and has an MBA from INSEAD.
He is also a director of Dairy Farm, Jardine Cycle &
Carriage, Jardine Matheson, Jardine Strategic, Mandarin
Oriental, Prudential, Shui On Land and Vitasoy, and a
commissioner of Astra. He is chairperson of The Sailors
Home and Missions to Seafarers in Hong Kong.
* Executive Director
Annual Report 2020 21
Christina Ong
Mrs Ong joined the Board in May 2018. She is chairman
Prijono Sugiarto
Mr Sugiarto joined the Board in 2020. He is the president
and senior partner of Allen & Gledhill as well as co-head
commissioner of Astra and was the president and group
of its financial services department. She is a director of
CEO from 2010 to 2020. Mr Sugiarto is the chairman
Oversea-Chinese Banking Corporation, SIA Engineering
of the German Indonesian Chamber of Commerce.
Company and Singapore Telecommunications. She is also
In 2014, he was awarded Asia Business Leader of
a member of the Catalist Advisory Panel, and the corporate
The Year from CNBC.
governance advisory committee of the Monetary Authority
of Singapore, and a trustee of The Stephen A. Schwarzman
Scholars Trust.
Y.K. Pang
Mr Pang has been a Director of the Company since 2007.
James Watkins
Mr Watkins joined the Board in 2009. He was a director
and group general counsel of Jardine Matheson from 1997
to 2003. Mr Watkins qualified as a solicitor in 1969 and
was formerly a partner of Linklaters. He is also a director
He was Chief Executive of the Group from 2007 to 2016.
of Mandarin Oriental.
Percy Weatherall
Mr Weatherall joined the Board in 1994 and was
Managing Director from 2000 to 2006. He first joined
the Jardine Matheson group in 1976 and retired from
executive office in 2006. He is also a director of Dairy
Farm, Jardine Matheson, Jardine Strategic and Mandarin
Oriental. He is chairman of Corney & Barrow and
the Nith District Salmon Fishery Board.
Michael Wei Kuo Wu
Mr Wu joined the Board in 2012. He is chairman and
managing director of Maxim’s Caterers in Hong Kong.
He is also a non-executive director of Hang Seng Bank
and Jardine Matheson.
He is deputy managing director and chairman of Hong
Kong of Jardine Matheson, and chairman of Jardine Pacific.
He previously held a number of senior executive positions
in the Jardine Matheson group, which he joined in 1984.
Mr Pang is also deputy chairman of Jardine Matheson
Limited, and a director of Dairy Farm, Gammon, Jardine
Matheson (China), Jardine Strategic, Mandarin Oriental
and Greatview. He is chairman of the Hong Kong Tourism
Board, deputy chairman of the Hong Kong Management
Association, a member of the Council and General
Committee of the Hong Kong General Chamber of
Commerce and the Employers’ Federation of Hong Kong.
Lord Powell of Bayswater, KCMG
Lord Powell rejoined the Board in 2008, having first
served as a Director between 1992 and 2000. He was
previously Private Secretary and adviser on foreign affairs
and defence to British Prime Ministers Baroness Thatcher
and Sir John Major. He is a director of Jardine Strategic,
LVMH Moët Hennessy Louis Vuitton, Matheson & Co,
and the Northern Trust Corporation. He was previously
President of the China-Britain Business Council and
chairman of the Singapore-British Business Council.
He is an independent member of the House of Lords.
22
Hongkong Land
Directors’ Profiles Consolidated Profit and Loss Account
for the year ended 31st December 2020
2020
Underlying
Non-
business
trading
2019
Underlying
Non-
business
trading
performance
Note
US$m
items
US$m
Total
performance
US$m
US$m
items
US$m
Total
US$m
Revenue
Net operating costs
Change in fair value of investment properties
Operating (loss)/profit
Net financing charges
– financing charges
– financing income
Share of results of associates and joint ventures
– before change in fair value of
investment properties
– change in fair value of investment properties
(Loss)/profit before tax
Tax
3
4
9
5
6
9
7
2,094.2
–
2,094.2
2,319.7
–
2,319.7
(1,135.2)
1.0 (1,134.2)
(1,149.3)
34.4
(1,114.9)
– (3,443.4) (3,443.4)
–
(854.2)
(854.2)
959.0 (3,442.4) (2,483.4)
1,170.4
(819.8)
350.6
(194.9)
79.0
(115.9)
267.5
–
–
–
–
(194.9)
(204.8)
79.0
83.4
(115.9)
(121.4)
267.5
272.7
–
–
–
–
–
(175.4)
(175.4)
–
(32.6)
(204.8)
83.4
(121.4)
272.7
(32.6)
267.5
(175.4)
92.1
272.7
(32.6)
240.1
1,110.6 (3,617.8) (2,507.2)
1,321.7
(852.4)
469.3
(149.5)
4.9
(144.6)
(246.6)
(20.5)
(267.1)
(Loss)/profit after tax
961.1 (3,612.9) (2,651.8)
1,075.1
(872.9)
202.2
Attributable to:
Shareholders of the Company
Non-controlling interests
963.3 (3,610.7) (2,647.4)
1,076.4
(878.4)
198.0
(2.2)
(2.2)
(4.4)
(1.3)
5.5
4.2
961.1 (3,612.9) (2,651.8)
1,075.1
(872.9)
202.2
Earnings per share (basic and diluted)
8
41.27
(113.43)
46.12
US¢
US¢
US¢
US¢
8.48
Annual Report 2020 23
Consolidated Statement of Comprehensive Income
for the year ended 31st December 2020
(Loss)/profit for the year
Other comprehensive income/(expense)
Items that will not be reclassified to profit or loss:
Remeasurements of defined benefit plans
Tax on items that will not be reclassified
Items that may be reclassified subsequently to profit or loss:
Net exchange translation differences
– net gain arising during the year
Cash flow hedges
– net (loss)/gain arising during the year
– transfer to profit and loss
Tax relating to items that may be reclassified
Share of other comprehensive income of associates and joint ventures
Other comprehensive income for the year, net of tax
Total comprehensive (expense)/income for the year
Attributable to:
Shareholders of the Company
Non-controlling interests
Note
7
7
2020
US$m
(2,651.8)
1.7
(0.3)
1.4
2019
US$m
202.2
2.2
(0.4)
1.8
400.9
166.3
(20.8)
(0.4)
(21.2)
3.5
242.4
625.6
627.0
(2,024.8)
(2,025.1)
0.3
(2,024.8)
25.7
(0.6)
25.1
(4.1)
29.5
216.8
218.6
420.8
418.0
2.8
420.8
24
Hongkong Land
Consolidated Balance Sheet
at 31st December 2020
Net operating assets
Fixed assets
Right-of-use assets
Investment properties
Associates and joint ventures
Non-current debtors
Deferred tax assets
Pension assets
Non-current assets
Properties for sale
Current debtors
Current tax assets
Bank balances
Current assets
Current creditors
Current borrowings
Current tax liabilities
Current liabilities
Net current assets
Long-term borrowings
Deferred tax liabilities
Pension liabilities
Non-current creditors
Total equity
Share capital
Share premium
Revenue and other reserves
Shareholders’ funds
Non-controlling interests
Approved by the Board of Directors
Robert Wong
Simon Dixon
Directors
11th March 2021
Note
2020
US$m
2019
US$m
10
11
12
13
14
12
15
16
17
17
13
16
18
125.2
12.4
30,083.3
8,921.2
42.0
35.5
0.7
127.6
12.4
33,191.2
7,226.1
48.1
26.9
0.1
39,220.3
40,632.4
1,948.8
1,081.7
14.4
1,996.6
2,042.0
1,141.3
19.5
1,424.0
5,041.5
4,626.8
(1,572.0)
(689.5)
(153.0)
(1,460.8)
(715.3)
(261.0)
(2,414.5)
(2,437.1)
2,627.0
(5,875.4)
(195.8)
(1.3)
(36.3)
2,189.7
(4,299.9)
(210.9)
(1.5)
(20.0)
35,738.5
38,289.8
233.4
257.3
233.4
257.3
35,218.4
37,756.1
35,709.1
29.4
38,246.8
43.0
35,738.5
38,289.8
Annual Report 2020 25
Consolidated Statement of Changes in Equity
for the year ended 31st December 2020
Share
Share
Revenue
Hedging
Exchange
of the
controlling
Total
capital
premium
reserves
reserves
reserves
Company
interests
Note
US$m
US$m
US$m
US$m
US$m
US$m
US$m
equity
US$m
Attributable to
Attributable
shareholders
to non-
2020
At 1st January
Total comprehensive
(expense)/income
Dividends paid by
the Company
Dividends paid to
non-controlling
shareholders
Unclaimed dividends forfeited
Disposal of a subsidiary
19
233.4
257.3 38,039.8
8.3
(292.0)
38,246.8
43.0 38,289.8
–
–
–
–
–
– (2,646.0)
(29.9)
650.8
(2,025.1)
0.3 (2,024.8)
–
(513.4)
–
–
–
–
0.8
–
–
–
–
–
–
–
–
–
(513.4)
–
(513.4)
–
0.8
–
(0.9)
–
(0.9)
0.8
(13.0)
(13.0)
At 31st December
233.4
257.3 34,881.2
(21.6)
358.8
35,709.1
29.4 35,738.5
2019
At 1st January
Total comprehensive income
Dividends paid by
the Company
Dividends paid to
non-controlling
shareholders
Unclaimed dividends forfeited
Acquisition of a subsidiary
19
233.4
257.3 38,352.7
(8.8)
(493.1)
38,341.5
28.0 38,369.5
–
–
–
–
–
–
–
–
–
–
199.8
17.1
201.1
418.0
2.8
420.8
(513.4)
–
0.7
–
–
–
–
–
–
–
–
–
(513.4)
–
(513.4)
–
0.7
–
(0.9)
–
13.1
(0.9)
0.7
13.1
At 31st December
233.4
257.3 38,039.8
8.3
(292.0)
38,246.8
43.0 38,289.8
26
Hongkong Land
Consolidated Cash Flow Statement
for the year ended 31st December 2020
Operating activities
Operating (loss)/profit
Depreciation and amortisation
Change in fair value of investment properties
Gain on disposal of subsidiaries/other investments
Decrease/(increase) in properties for sale
Decrease/(increase) in debtors
Increase in creditors
Interest received
Interest and other financing charges paid
Tax paid
Dividends from associates and joint ventures
Cash flows from operating activities
Investing activities
Major renovations expenditure
Developments capital expenditure
Repayments from/(investments in and advances to) associates
and joint ventures
Acquisition of a subsidiary
Proceeds received for disposal of subsidiaries
Deposits refunded for disposal of subsidiaries
Proceeds on disposal of other investments
Cash flows from investing activities
Financing activities
Drawdown of borrowings
Repayment of borrowings
Principal elements of lease payments
Dividends paid by the Company
Dividends paid to non-controlling shareholders
Cash flows from financing activities
Net cash inflow
Cash and cash equivalents at 1st January
Effect of exchange rate changes
Note
4
10
4
20a
20b
20c
20c
2020
US$m
(2,483.4)
15.3
3,443.4
(7.2)
164.2
19.1
162.5
42.3
(220.1)
(267.9)
112.9
2019
US$m
350.6
13.6
854.2
(34.4)
(1.1)
(186.7)
26.7
50.3
(195.2)
(115.5)
419.6
981.1
1,182.1
(129.1)
(4,499.1)
599.0
–
4,619.0
(2,005.7)
(116.4)
(27.3)
(646.0)
(25.8)
–
–
–
157.5
(1,415.9)
(658.0)
3,726.9
(2,268.8)
(4.6)
(509.6)
(0.9)
943.0
508.2
1,418.0
64.2
1,334.5
(1,309.2)
(5.1)
(510.1)
(0.9)
(490.8)
33.3
1,368.9
15.8
Cash and cash equivalents at 31st December
20d
1,990.4
1,418.0
Annual Report 2020 27
Notes to the Financial Statements
1 Basis of Preparation
The financial statements have been prepared in accordance with International Financial Reporting Standards (‘IFRS’), including
International Accounting Standards (‘IAS’) and Interpretations adopted by the International Accounting Standards Board. The
financial statements have been prepared on a going concern basis and under the historical cost convention except as disclosed
in the accounting policies.
Details of the Group’s principal accounting policies are included in Note 27.
The Group has elected to early adopt the ‘Interest Rate Benchmark Reform – Phase 1: Amendments to IFRS 9, IAS 39 and
IFRS 7’ (effective 1st January 2020) in relation to hedge accounting for the Group’s annual reporting period commencing
1st January 2019.
Apart from the above, amendments which are effective in 2020 and relevant to the Group’s operations do not have a significant
effect on the Group’s accounting policies.
The Group has not early adopted any standard, interpretation or amendment that has been issued but not yet effective
(refer Note 28).
The principal operating subsidiaries, associates and joint ventures have different functional currencies in line with the economic
environments of the locations in which they operate. The functional currency of the Company is United States dollars. The
consolidated financial statements are presented in United States dollars.
The Group’s reportable segments are set out in Note 2 and are described on pages 29 to 30.
28
Hongkong Land
2 Segmental Information
Operating segments are identified on the basis of internal reports about components of the Group that are regularly reviewed
by the executive Directors of the Company for the purpose of resource allocation and performance assessment. The Group
has two operating segments, namely Investment Properties and Development Properties. No operating segments have been
aggregated to form the reportable segments. Set out below is an analysis of the Group’s underlying profit and total equity by
reportable segment.
Investment
Development
Investment
Development
2020
2019
Properties
US$m
Properties
US$m
Corporate
US$m
Total
US$m
Properties
US$m
Properties
US$m
Corporate
US$m
Total
US$m
Revenue
1,073.5
1,020.7
–
2,094.2
1,142.6
1,177.1
–
2,319.7
Net operating costs
(238.6)
(822.4)
(74.2)
(1,135.2)
(224.0)
(842.3)
(83.0)
(1,149.3)
Share of operating profit
of associates and
joint ventures
127.8
325.9
–
453.7
145.0
340.5
–
485.5
Underlying operating profit
962.7
524.2
(74.2)
1,412.7
1,063.6
675.3
(83.0)
1,655.9
Net financing charges
– subsidiaries
– share of associates and
joint ventures
Tax
– subsidiaries
– share of associates and
joint ventures
Non-controlling interests
– subsidiaries
– share of associates and
joint ventures
Underlying profit attributable
to shareholders
Non-trading items:
– change in fair value of
investment properties
– gain on disposal
of subsidiaries/
other investments
(Loss)/profit attributable
to shareholders
(115.9)
(44.2)
(160.1)
(149.5)
(138.2)
(287.7)
2.2
(3.8)
(1.6)
963.3
(3,611.7)
1.0
(3,610.7)
(2,647.4)
(121.4)
(66.6)
(188.0)
(246.6)
(123.6)
(370.2)
1.3
(22.6)
(21.3)
1,076.4
(912.8)
34.4
(878.4)
198.0
Annual Report 2020 29
2019
US$m
902.3
525.8
272.0
2 Segmental Information continued
Revenue
Underlying
operating profit
Underlying profit
attributable to
shareholders
2020
US$m
2019
US$m
2020
US$m
2019
US$m
2020
US$m
By geographical location
Hong Kong and Macau
Chinese mainland
Southeast Asia and others
Corporate, net financing charges and tax
986.7
537.4
570.1
–
1,042.0
711.3
566.4
–
812.7
414.6
259.6
902.3
563.9
272.7
812.7
404.8
257.9
(74.2)
(83.0)
(512.1)
(623.7)
2,094.2
2,319.7
1,412.7
1,655.9
963.3
1,076.4
Segment assets
Development
Investment
properties
properties
US$m
for sale
US$m
Others
US$m
Unallocated
Segment
assets and
liabilities
US$m
liabilities
US$m
Total
assets
and
liabilities
US$m
By business
2020
Investment Properties
Development Properties
Unallocated assets and liabilities
36,093.2
–
–
–
9,001.2
–
374.4
450.5
–
(751.0)
(2,920.2)
–
–
35,716.6
6,531.5
–
(6,509.6)
(6,509.6)
36,093.2
9,001.2
824.9
(3,671.2)
(6,509.6)
35,738.5
2019
Investment Properties
Development Properties
Unallocated assets and liabilities
By geographical location
2020
Hong Kong and Macau
Chinese mainland
Southeast Asia and others
Unallocated assets and liabilities
2019
Hong Kong and Macau
Chinese mainland
Southeast Asia and others
Unallocated assets and liabilities
37,820.1
–
–
–
7,823.9
–
366.0
773.8
–
(767.8)
(2,410.4)
–
–
37,418.3
6,187.3
–
(5,315.8)
(5,315.8)
37,820.1
7,823.9
1,139.8
(3,178.2)
(5,315.8)
38,289.8
28,971.1
2,466.5
4,655.6
–
154.8
6,948.1
1,898.3
–
158.8
401.6
264.5
–
(565.5)
(2,768.5)
(337.2)
–
–
–
28,719.2
7,047.7
6,481.2
–
(6,509.6)
(6,509.6)
36,093.2
9,001.2
824.9
(3,671.2)
(6,509.6)
35,738.5
32,156.5
917.4
4,746.2
–
153.3
5,607.7
2,062.9
–
149.8
602.3
387.7
–
(540.7)
(2,231.4)
(406.1)
–
–
–
31,918.9
4,896.0
6,790.7
–
(5,315.8)
(5,315.8)
37,820.1
7,823.9
1,139.8
(3,178.2)
(5,315.8)
38,289.8
Development properties for sale include properties for sale, contract assets and cost to fulfill contracts. Unallocated assets and
liabilities include tax assets and liabilities, bank balances and borrowings.
30
Hongkong Land
Notes to the Financial Statements 3 Revenue
Rental income
Service income
Sales of properties
– recognised at a point in time
– recognised over time
2020
US$m
937.6
147.5
484.3
524.8
1,009.1
2,094.2
2019
US$m
998.8
152.6
652.6
515.7
1,168.3
2,319.7
Total variable rents included in rental income amounted to US$19.9 million (2019: US$16.2 million).
The maturity analysis of lease payments, showing the undiscounted lease payments to be received after the balance sheet date
are as follow:
Within one year
Between one and two years
Between two and five years
Beyond five years
2020
US$m
800.8
601.0
788.9
280.1
2019
US$m
877.3
653.8
970.0
356.4
2,470.8
2,857.5
Generally the Group’s operating leases are for terms of three years or more.
Contract balances
Contract assets primarily relate to the Group’s rights to consideration for work completed but not billed, and are transferred to
receivables when the rights become unconditional which usually occurs when the customers are billed.
Costs to fulfil contracts includes costs recognised to fulfil future performance obligations on existing contracts that have not yet
been satisfied. Costs to obtain contracts include costs such as sale commissions and stamp duty paid, as a result of obtaining
contracts. The Group has capitalised these costs which are recognised in the profit and loss when the related revenue is recognised.
Contract liabilities primarily relate to the advance consideration received from customers relating to properties for sale.
Annual Report 2020 31
3 Revenue continued
Contract balances continued
Contract assets and contract liabilities relating to properties for sale are further analysed as follows:
Contract assets (see Note 12)
2020
US$m
290.3
2019
US$m
102.7
Contract liabilities (see Note 16)
(487.0)
(265.7)
At 31st December 2020, costs to fulfil contracts and costs to obtain contracts amounted to US$364.2 million
(2019: US$345.0 million) and US$17.1 million (2019: US$14.2 million), and US$412.1 million (2019: US$396.9 million)
and US$17.2 million (2019: US$12.7 million) have been recognised in profit and loss during the year respectively.
Revenue recognised in relation to contract liabilities
Revenue recognised in the current year relating to carried forward contract liabilities:
Properties for sale
2020
US$m
167.8
2019
US$m
286.1
Revenue expected to be recognised on unsatified contracts with customers
The timing of revenue to be recognised on unsatified performance obligations relating to properties for sale at 31st December 2020:
Within one year
Between one and two years
Between two and three years
2020
US$m
1,058.0
86.4
68.6
2019
US$m
566.3
439.4
–
1,213.0
1,005.7
32
Hongkong Land
Notes to the Financial Statements 4 Net Operating Costs
Cost of sales
Other income
Administrative expenses
Gain on disposal of subsidiaries/other investments
The following credits/(charges) are included in net operating costs:
Cost of properties for sale recognised as expense
Operating expenses arising from investment properties
Depreciation of fixed assets
Depreciation of right-of-use assets
Employee benefit expense
– salaries and benefits in kind
– defined contribution pension plans
– defined benefit pension plans
Auditors’ remuneration
– audit
– non-audit services
2020
US$m
(982.6)
31.2
(190.0)
7.2
2019
US$m
(989.6)
25.9
(185.6)
34.4
(1,134.2)
(1,114.9)
(769.1)
(191.5)
(10.8)
(4.5)
(173.6)
(1.8)
(1.9)
(177.3)
(2.2)
(0.7)
(2.9)
(789.8)
(179.6)
(8.3)
(5.3)
(167.1)
(1.8)
(1.9)
(170.8)
(2.0)
(0.3)
(2.3)
The number of employees at 31st December 2020 was 2,686 (2019: 2,403).
In relation to the COVID-19 pandemic, the Group had received government grants, the majority of which were in support
of employee retention, and rent concessions of US$9.6 million and US$0.9 million, respectively for the year ended
31st December 2020. These subsidies were accounted for as other income.
Annual Report 2020 33
5 Net Financing Charges
Interest expense
– bank loans and overdrafts
– other borrowings
Total interest expense
Interest capitalised
Commitment and other fees and exchange differences
Financing charges
Financing income
2020
US$m
(65.1)
(139.6)
(204.7)
22.2
(182.5)
(12.4)
(194.9)
79.0
(115.9)
Financing charges and financing income are stated after taking into account hedging gains or losses.
6 Share of Results of Associates and Joint Ventures
By business
Investment Properties
Development Properties
Underlying business performance
Non-trading items:
Change in fair value of investment properties
2020
US$m
75.2
192.3
267.5
(175.4)
92.1
Results are shown after tax and non-controlling interests in the associates and joint ventures.
The Group’s share of revenue of associates and joint ventures was US$1,294.9 million (2019: US$1,074.5 million).
2019
US$m
(60.0)
(134.2)
(194.2)
1.2
(193.0)
(11.8)
(204.8)
83.4
(121.4)
2019
US$m
78.3
194.4
272.7
(32.6)
240.1
34
Hongkong Land
Notes to the Financial Statements 7 Tax
Tax charged to profit and loss is analysed as follows:
Current tax
Deferred tax
– changes in fair value of investment properties
– other temporary differences
Reconciliation between tax expense and tax at applicable tax rate:
Tax at applicable tax rate
Change in fair value of investment properties not deductible
in determining taxable profit
Income not subject to tax
Expenses not deductible in determining taxable profit
Withholding tax
Land appreciation tax in Chinese mainland
Tax losses arising in the year not recognised
Others
Tax relating to components of other comprehensive income is analysed as follows:
Remeasurements of defined benefit plans
Cash flow hedges
2020
US$m
2019
US$m
(164.5)
(247.8)
4.9
15.0
19.9
(16.5)
(2.8)
(19.3)
(144.6)
(267.1)
409.4
(562.6)
30.7
(12.1)
27.3
(30.2)
(6.7)
(0.4)
(144.6)
(0.3)
3.5
3.2
(71.6)
(157.0)
47.6
(14.3)
(17.3)
(49.2)
(4.6)
(0.7)
(267.1)
(0.4)
(4.1)
(4.5)
The applicable tax rate for the year of 15.8% (2019: 31.2%) represents the weighted average of the rates of taxation prevailing
in the territories in which the Group operates.
Share of tax charge of associates and joint ventures of US$125.9 million (2019: US$136.2 million) is included in share of results
of associates and joint ventures.
Annual Report 2020 35
8 Earnings per Share
Earnings per share are calculated on loss attributable to shareholders of US$2,647.4 million (2019: profit of US$198.0 million)
and on the weighted average number of 2,333.9 million (2019: 2,333.9 million) shares in issue during the year.
Earnings per share are additionally calculated based on underlying profit attributable to shareholders. A reconciliation of earnings
is set out below:
2020
2019
Underlying profit attributable to shareholders
963.3
41.27
Non-trading items (see Note 9)
(3,610.7)
Earnings
per share
US¢
US$m
Earnings
per share
US¢
46.12
US$m
1,076.4
(878.4)
(Loss)/profit attributable to shareholders
(2,647.4)
(113.43)
198.0
8.48
9 Non-trading Items
An analysis of non-trading items after interest, tax and non-controlling interests is set out below:
Change in fair value of investment properties
Tax on change in fair value of investment properties
Gain on disposal of subsidiaries/other investments
Share of results of associates and joint ventures
– change in fair value of investment properties
– tax on change in fair value of investment properties
Non-controlling interests
2020
US$m
(3,443.4)
4.9
1.0
(187.7)
12.3
(175.4)
2.2
2019
US$m
(854.2)
(20.5)
34.4
(20.0)
(12.6)
(32.6)
(5.5)
(3,610.7)
(878.4)
36
Hongkong Land
Notes to the Financial Statements 10 Investment Properties
2020
At 1st January
Exchange differences
Additions
Disposal of subsidiaries
Transfer
Decrease in fair value
At 31st December
Freehold properties
Leasehold properties
2019
At 1st January
Exchange differences
Additions
(Decrease)/increase in fair value
At 31st December
Freehold properties
Leasehold properties
Under
Completed
development
commercial
commercial
properties
US$m
properties
US$m
Completed
residential
properties
US$m
Total
US$m
32,867.1
201.2
116.3
–
6.0
(3,423.6)
49.7
433.4
4,504.7
(4,921.6)
(6.0)
(15.9)
274.4
33,191.2
1.2
0.3
–
–
635.8
4,621.3
(4,921.6)
–
(3.9)
(3,443.4)
29,767.0
44.3
272.0
30,083.3
159.8
29,923.5
30,083.3
33,385.5
188.8
141.2
(848.4)
32,867.1
47.4
–
1.3
1.0
49.7
279.2
33,712.1
1.8
0.2
(6.8)
190.6
142.7
(854.2)
274.4
33,191.2
172.3
33,018.9
33,191.2
The Group measures its investment properties at fair value. The fair values of the Group’s investment properties at
31st December 2020 and 2019 have been determined on the basis of valuations carried out by independent valuers who
hold a recognised relevant professional qualification and have recent experience in the locations and segments of the
investment properties valued. The Group engaged Jones Lang LaSalle to value its commercial investment properties in
Hong Kong, Chinese mainland, Singapore, Vietnam and Cambodia which are either freehold or held under leases with
unexpired lease terms of more than 20 years. The valuations, which conform to the International Valuation Standards
issued by the International Valuation Standards Council and the HKIS Valuation Standards issued by the Hong Kong
Institute of Surveyors, were arrived at by reference to the net income, allowing for reversionary potential, of each property.
The Report of the Valuers is set out on page 97. The valuations are comprehensively reviewed by the Group.
At 31st December 2020, investment properties of US$964.4 million (2019: US$917.4 million) were pledged as security
for borrowings (see Note 17).
Annual Report 2020 37
10 Investment Properties continued
Fair value measurements of residential properties using no significant unobservable inputs
Fair values of completed residential properties are generally derived using the direct comparison method. This valuation method
is based on comparing the property to be valued directly with other comparable properties, which have recently transacted.
However, given the heterogeneous nature of real estate properties, appropriate adjustments are usually required to allow for
any qualitative differences that may affect the price likely to be achieved by the property under consideration.
Fair value measurements of commercial properties using significant unobservable inputs
Fair values of completed commercial properties in Hong Kong, Chinese mainland and Singapore are generally derived using
the income capitalisation method. This valuation method is based on the capitalisation of the net income and reversionary
income potential by adopting appropriate capitalisation rates, which are derived from analysis of sale transactions and valuers’
interpretation of prevailing investor requirements or expectations. The prevailing market rents adopted in the valuation have
reference to valuers’ views of recent lettings, within the subject properties and other comparable properties.
Fair values of completed commercial properties in Vietnam and Cambodia are generally derived using the discounted cash flow
method. The net present value of the income stream is estimated by applying an appropriate discount rate which reflects the
risk profile.
Fair values of under development commercial properties are generally derived using the residual method. This valuation method
is essentially a means of valuing the land by reference to its development potential by deducting development costs together
with developer’s profit and risk from the estimated capital value of the proposed development assuming completion as at the
date of valuation.
The Group’s policy is to recognise transfers between fair value measurements as of the date of the event or change in
circumstances that caused the transfer.
Information about fair value measurements using significant unobservable inputs at 31st December 2020:
Location of properties
Fair value
US$m
Valuation method
rent per month
discount rate
US$
%
Range of significant unobservable inputs
Prevailing market
Capitalisation/
Hong Kong
Chinese mainland
Singapore
Vietnam and Cambodia
28,078.2
Income capitalisation
5.2 to 29.4 per square foot
2.75 to 5.00
964.4
593.2
131.2
Income capitalisation
104.4 per square metre
3.75
Income capitalisation
7.6 to 8.8 per square foot
3.50 to 4.80
Discounted cash flow
19.2 to 42.4 per square metre
12.50 to 15.00
Total
29,767.0
Prevailing market rents are estimated based on independent valuers’ view of recent lettings, within the subject properties and
other comparable properties. The higher the rents, the higher the fair value.
Capitalisation and discount rates are estimated by independent valuers based on the risk profile of the properties being valued.
The lower the rates, the higher the fair value.
38
Hongkong Land
Notes to the Financial Statements 11 Associates and Joint Ventures
Unlisted associates
– share of attributable net assets
– amounts due from associates
Unlisted joint ventures
– share of attributable net assets
– amounts due from joint ventures
By business
Investment Properties
Development Properties
2020
US$m
60.8
422.8
483.6
6,021.0
2,416.6
8,437.6
8,921.2
5,132.1
3,789.1
8,921.2
2019
US$m
41.4
223.1
264.5
4,476.0
2,485.6
6,961.6
7,226.1
3,753.7
3,472.4
7,226.1
Amounts due from associates are interest free, unsecured and have no fixed terms of repayment.
Amounts due from joint ventures bear interests at rates ranging from approximately 0% to 8% per annum and are repayable
within one to fifteen years.
Movements of associates and joint ventures during the year:
At 1st January
Exchange differences
Share of results after tax and non-controlling interests
Share of other comprehensive income/(expense)
after tax and non-controlling interests
Dividends received and receivable
Investments in and advances to/(repayments from)
associates and joint ventures
Transfer from subsidiaries on partial disposal of interests
(see Note 20c)
Transfer to subsidiary on further acquisition of interests
Associates
Joint ventures
2020
US$m
264.5
(14.8)
4.2
29.2
(0.8)
2019
US$m
199.9
6.9
8.2
2020
US$m
2019
US$m
6,961.6
(15.7)
87.9
6,494.8
40.5
231.9
(0.5)
(1.0)
213.2
(110.8)
30.0
(415.3)
201.3
51.0
(817.5)
595.0
–
–
–
–
2,118.9
–
–
(15.3)
At 31st December
483.6
264.5
8,437.6
6,961.6
The material joint ventures of the Group are listed below. These joint ventures have share capital consisting solely of ordinary
shares, which are held directly by the Group.
Nature of investments in material joint ventures in 2020 and 2019:
Name of entity
Nature of business
of business
interest
2020
2019
Properties Sub F, Ltd
BFC Development LLP
Central Boulevard Development Pte Ltd
One Raffles Quay Pte Ltd
Property investment
Property investment
Property investment
Property investment
Macau
Singapore
Singapore
Singapore
49.0
33.3
33.3
33.3
49.0
33.3
33.3
33.3
Country of
incorporation/
% of
principal place
ownership
Annual Report 2020 39
11 Associates and Joint Ventures continued
Summarised financial information for material joint ventures
Summarised balance sheet at 31st December:
2020
Non-current assets
Current assets
Cash and cash equivalents
Other current assets
Total current assets
Non-current liabilities
Central
BFC
Boulevard
One Raffles
Properties
Development
Development
Sub F, Ltd
US$m
LLP
US$m
Pte Ltd
US$m
Quay
Pte Ltd
US$m
1,261.1
3,700.1
2,875.4
2,807.7
81.1
35.4
116.5
12.4
3.2
15.6
22.9
2.1
25.0
Financial liabilities (excluding trade payables)
–
(1,293.5)
(1,257.9)
Other non-current liabilities (including trade payables)
(133.6)
–
(21.5)
Total non-current liabilities
Current liabilities
(133.6)
(1,293.5)
(1,279.4)
(1,005.9)
Financial liabilities (excluding trade payables)
Other current liabilities (including trade payables)
–
(54.1)
(0.8)
(62.4)
(12.9)
(35.4)
(5.0)
(48.7)
Total current liabilities
(54.1)
(63.2)
(48.3)
(53.7)
Net assets
1,189.9
2,359.0
1,572.7
1,767.5
2019
Non-current assets
Current assets
Cash and cash equivalents
Other current assets
Total current assets
Non-current liabilities
1,356.9
3,755.7
2,909.6
2,857.6
58.4
34.8
93.2
11.6
0.6
12.2
23.6
1.8
25.4
Financial liabilities (excluding trade payables)
–
(1,268.8)
(1,206.5)
Other non-current liabilities (including trade payables)
(144.6)
–
(21.3)
Total non-current liabilities
Current liabilities
Financial liabilities (excluding trade payables)
Other current liabilities (including trade payables)
Total current liabilities
Net assets
(144.6)
(1,268.8)
(1,227.8)
(985.0)
–
(48.2)
(48.2)
(0.8)
(56.0)
(56.8)
(12.6)
(36.3)
(48.9)
(4.9)
(43.5)
(48.4)
1,257.3
2,442.3
1,658.3
1,841.8
40
Hongkong Land
15.4
4.0
19.4
(801.9)
(204.0)
12.4
5.2
17.6
(775.1)
(209.9)
Notes to the Financial Statements 11 Associates and Joint Ventures continued
Summarised financial information for material joint ventures continued
Summarised statement of comprehensive income for the year ended 31st December:
2020
Revenue
Depreciation and amortisation
Interest income
Interest expense
Profit from underlying business performance
Tax
Profit after tax from underlying business performance
Loss after tax from non-trading items
Loss after tax
Other comprehensive income
Central
BFC
Boulevard
One Raffles
Properties
Development
Development
Sub F, Ltd
US$m
LLP
US$m
Pte Ltd
US$m
Quay
Pte Ltd
US$m
48.0
(6.7)
0.3
(0.1)
14.2
(1.6)
12.6
(85.1)
(72.5)
5.1
151.3
118.8
113.2
–
0.1
–
0.1
–
0.1
(35.1)
(27.7)
(16.0)
81.5
(13.7)
67.8
(123.3)
(55.5)
41.9
64.7
(11.0)
53.7
(86.6)
(32.9)
1.2
69.4
(11.9)
57.5
(92.8)
(35.3)
18.9
Total comprehensive expense
(67.4)
(13.6)
(31.7)
(16.4)
Group’s share of dividends received and receivable
from joint ventures
–
23.2
18.0
19.3
2019
Revenue
Depreciation and amortisation
Interest income
Interest expense
Profit from underlying business performance
Tax
Profit after tax from underlying business performance
Profit/(loss) after tax from non-trading items
Profit after tax
Other comprehensive income
Total comprehensive income
85.6
(8.5)
0.3
(0.3)
39.7
(4.7)
35.0
(24.1)
10.9
7.6
18.5
161.0
–
0.3
120.7
–
0.3
110.6
–
0.2
(50.8)
(34.0)
(25.2)
75.1
(12.7)
62.4
21.3
83.7
45.3
129.0
58.4
(9.9)
48.5
21.6
70.1
9.0
79.1
57.6
(9.9)
47.7
12.3
60.0
26.7
86.7
Group’s share of dividends received and receivable
from joint ventures
20.1
25.1
16.2
15.9
The information contained in the summarised balance sheets and statements of comprehensive income reflect the amounts
presented in the financial statements of the joint ventures adjusted for differences in accounting policies between the Group
and the joint ventures, and fair value of the joint ventures at the time of acquisition.
Annual Report 2020 41
11 Associates and Joint Ventures continued
Reconciliation of summarised financial information
Reconciliation of the summarised financial information presented to the carrying amount of the Group’s interest in the material
joint ventures for the year ended 31st December:
2020
Net assets
Central
BFC
Boulevard
One Raffles
Properties
Development
Development
Sub F, Ltd
US$m
LLP
US$m
Pte Ltd
US$m
Quay
Pte Ltd
US$m
1,189.9
2,359.0
1,572.7
1,767.5
Interest in joint ventures (%)
49.0
33.3
33.3
33.3
Group’s share of net assets in joint ventures
Amounts due from joint ventures
583.0
–
786.3
431.2
524.2
–
589.2
37.1
Carrying value
2019
Net assets
583.0
1,217.5
524.2
626.3
1,257.3
2,442.3
1,658.3
1,841.8
Interest in joint ventures (%)
49.0
33.3
33.3
33.3
Group’s share of net assets in joint ventures
Amounts due from joint ventures
616.1
–
814.1
422.9
552.8
–
613.9
35.9
Carrying value
616.1
1,237.0
552.8
649.8
The Group has interests in a number of individually immaterial joint ventures. The following table analyses, in aggregate, the
share of profit and other comprehensive income and carrying amount of these joint ventures.
Share of profit
Share of other comprehensive income/(expense)
Share of total comprehensive income
2020
US$m
164.5
190.3
354.8
2019
US$m
155.0
(0.7)
154.3
Carrying amount of interests in these joint ventures
5,486.6
3,905.9
At 31st December 2020, the Group’s commitments to provide funding to its joint ventures, if called, amounted to
US$720.9 million (2019: US$1,024.0 million).
There were no contingent liabilities relating to the Group’s interests in the joint ventures at 31st December 2020 and 2019.
42
Hongkong Land
Notes to the Financial Statements 12 Debtors
Trade debtors
Contract assets (see Note 3)
Other debtors
– third parties
– associates and joint ventures
Non-current
Current
By geographical area of operation
Hong Kong and Macau
Chinese mainland
Southeast Asia and others
2020
US$m
53.2
290.3
725.2
55.0
1,123.7
42.0
1,081.7
1,123.7
152.8
186.0
784.9
2019
US$m
112.4
102.7
919.3
55.0
1,189.4
48.1
1,141.3
1,189.4
136.3
397.6
655.5
1,123.7
1,189.4
The fair value of trade debtors, contract assets and other debtors approximates to their carrying amounts, as the impact of
discounting is not significant. Derivative financial instruments are stated at fair value. The higher the discount rates, the lower
the fair value.
Significant financial difficulties of a debtor, probability that a debtor will enter bankruptcy or financial reorganisation, and default
or delinquency in payment are considered indicators that the debt is impaired and an allowance for impairment is made based on
the estimated irrecoverable amount determined by reference to past default experience.
The Group applied the simplified approach to measure expected credit loss, that is a lifetime expected loss allowance for trade
debtors and contract assets. To measure the expected credit losses, trade receivables and contract assets have been grouped
based on shared credit risk characteristics and the days past due. Changes in certain macroeconomic information, such as GDP
and inflation rate, are relevant for determining expected credit loss rates. The contract assets relate to unbilled work in progress
and have substantially the same risk characteristics as the trade debtors for the same types of contracts. The Group has therefore
concluded that the expected loss rates for trade debtors are a reasonable approximation of the loss rates for the contract assets.
The expected loss rates are based on the historical payment profiles of sales and the corresponding historical credit losses.
The historical loss rates are adjusted to reflect current and forward-looking information on macroeconomic factors and industry
trends affecting the ability of the customers to settle the receivables.
Annual Report 2020 43
12 Debtors continued
The loss allowance as at 31st December 2020 and 2019:
Below 30
Between 31
Between 61
More than
days
US$m
and 60 days
US$m
and 120 days
US$m
120 days
US$m
Total
US$m
2020
Expected loss rate (%)
Gross carrying amount – trade debtors
Gross carrying amount – contract assets
–
39.8
290.3
1
6.3
–
10
6.1
–
18
2.8
–
1
55.0
290.3
Loss allowance
(0.6)
(0.1)
(0.6)
(0.5)
(1.8)
2019
Expected loss rate (%)
Gross carrying amount – trade debtors
Gross carrying amount – contract assets
Loss allowance
–
105.9
102.7
–
–
2.9
–
–
–
3.1
–
–
–
0.5
–
–
–
112.4
102.7
–
Trade debtors, contract assets and other debtors are written off when there is no reasonable expectation of recovery. Indicators
that there is no reasonable expectation of recovery include, amongst others, the failure of a debtor to engage in a repayment plan
with the Group.
Other debtors are further analysed as follows:
Costs to fulfil contracts (see Note 3)
Costs to obtain contracts (see Note 3)
Prepayments
Derivative financial instruments
Amounts due from associates and joint ventures
Others
2020
US$m
364.2
17.1
176.4
33.4
55.0
134.1
780.2
2019
US$m
345.0
14.2
351.2
30.5
55.0
178.4
974.3
44
Hongkong Land
Notes to the Financial Statements 13 Deferred Tax Assets and Liabilities
2020
At 1st January
Exchange differences
Credited/(charged) to profit and loss
Charged to other comprehensive income
Disposal of subsidiaries
At 31st December
Deferred tax assets
Deferred tax liabilities
2019
At 1st January
Exchange differences
Credited/(charged) to profit and loss
Credited to other comprehensive income
Acquisition of a subsidiary
At 31st December
Deferred tax assets
Deferred tax liabilities
Revaluation
Accelerated
surpluses of
Other
capital
investment
temporary
Tax losses
US$m
allowances
US$m
properties
US$m
differences
US$m
Total
US$m
4.1
0.3
4.8
–
–
9.2
9.2
–
9.2
1.3
(0.1)
2.9
–
–
4.1
4.1
–
4.1
(92.3)
(0.4)
(5.2)
–
–
(27.5)
(0.7)
4.9
–
–
(68.3)
(4.1)
15.4
3.2
5.5
(184.0)
(4.9)
19.9
3.2
5.5
(97.9)
(23.3)
(48.3)
(160.3)
–
–
(97.9)
(23.3)
26.3
(74.6)
35.5
(195.8)
(97.9)
(23.3)
(48.3)
(160.3)
(88.2)
(0.5)
(3.6)
–
–
(11.2)
0.2
(16.5)
–
–
(55.4)
(153.5)
(0.4)
(2.1)
(4.5)
(5.9)
(0.8)
(19.3)
(4.5)
(5.9)
(92.3)
(27.5)
(68.3)
(184.0)
–
(92.3)
–
(27.5)
22.8
(91.1)
26.9
(210.9)
(92.3)
(27.5)
(68.3)
(184.0)
Deferred tax balances predominantly comprise non-current items. Deferred tax assets and liabilities are netted when
the taxes relate to the same taxation authority and where offsetting is allowed.
Deferred tax assets of US$23.1 million (2019: US$15.3 million) arising from unused tax losses of US$100.9 million
(2019: US$67.8 million) have not been recognised in the financial statements. Included in the unused tax losses,
US$14.8 million (2019: US$12.3 million) have no expiry date and the balance will expire at various dates up to and
including 2024.
Annual Report 2020 45
14 Properties for Sale
Properties under development
Completed properties
Provision for impairment
2020
US$m
1,741.0
239.6
1,980.6
(31.8)
2019
US$m
1,824.4
230.9
2,055.3
(13.3)
1,948.8
2,042.0
At 31st December 2020, properties under development which were not scheduled for completion within the next 12 months
amounted to US$1,098.0 million (2019: US$1,131.1 million).
15 Bank Balances
Deposits with banks and financial institutions
Bank balances
By currency
Chinese renminbi
Hong Kong dollar
Malaysian ringgit
Singapore dollar
United States dollar
Others
2020
US$m
1,847.3
149.3
1,996.6
1,306.1
59.4
30.4
373.4
224.0
3.3
2019
US$m
1,267.3
156.7
1,424.0
603.7
124.9
30.3
166.0
496.0
3.1
1,996.6
1,424.0
The weighted average interest rate on deposits with banks and financial institutions is 0.9% (2019: 2.0%) per annum.
46
Hongkong Land
Notes to the Financial Statements 16 Creditors
Trade creditors
Other creditors
Tenants’ deposits
Derivative financial instruments
Rent received in advance
Contract liabilities – properties for sale (see Note 3)
Lease liabilities
Non-current
Current
By geographical area of operation
Hong Kong and Macau
Chinese mainland
Southeast Asia and others
2020
US$m
622.3
174.4
281.6
16.1
21.2
487.0
5.7
1,608.3
36.3
1,572.0
1,608.3
609.2
859.5
139.6
2019
US$m
620.1
274.9
280.3
4.7
29.2
265.7
5.9
1,480.8
20.0
1,460.8
1,480.8
572.2
723.9
184.7
Derivative financial instruments are stated at fair value. Other creditors are stated at amortised cost. The fair value of these
creditors approximates their carrying amounts.
1,608.3
1,480.8
17 Borrowings
Current
Bank overdrafts
Bank loans
Current portion of long-term borrowings
– bank loans
– notes
Long-term
Bank loans
Notes
Secured
Unsecured
2020
2019
Carrying
amount
US$m
Fair value
US$m
Carrying
amount
US$m
Fair value
US$m
6.2
100.3
516.8
66.2
6.2
100.3
516.8
66.2
6.0
383.8
21.4
304.1
6.0
383.8
21.4
305.4
689.5
689.5
715.3
716.6
1,939.1
3,936.3
1,939.1
4,275.4
1,281.5
3,018.4
1,281.5
3,176.3
5,875.4
6,214.5
4,299.9
4,457.8
6,564.9
6,904.0
5,015.2
5,174.4
801.6
5,763.3
6,564.9
653.2
4,362.0
5,015.2
Annual Report 2020 47
17 Borrowings continued
The fair values are based on market prices or are estimated using the expected future payments discounted at market interest
rates ranging from 0.3% to 4.9% (2019: 1.4% to 6.4%) per annum. This is in line with the definition of ‘observable current
market transactions’ under the fair value measurement hierarchy. The fair value of current borrowings approximates their
carrying amounts, as the impact of discounting is not significant.
Secured borrowings at 31st December 2020 and 2019 were certain subsidiaries’ bank borrowings which were secured against
their investment properties and properties for sale.
The movements in borrowings are as follow:
Bank
Long-term
Short-term
overdrafts
US$m
borrowings
US$m
borrowings
US$m
Total
US$m
2020
At 1st January
Exchange differences
Transfer
Change in fair value
Change in bank overdrafts
Drawdown of borrowings
Repayment of borrowings
6.0
4,299.9
–
–
–
0.2
–
–
88.6
(518.0)
15.1
–
709.3
(12.3)
518.0
–
–
5,015.2
76.3
–
15.1
0.2
3,550.1
176.8
3,726.9
(1,560.3)
(708.5)
(2,268.8)
At 31st December
6.2
5,875.4
683.3
6,564.9
2019
At 1st January
Exchange differences
Transfer
Change in fair value
Change in bank overdrafts
Drawdown of borrowings
Repayment of borrowings
At 31st December
6.3
4,145.2
–
–
–
(0.3)
–
–
(0.9)
(315.4)
14.6
–
1,052.6
(596.2)
787.5
37.5
315.4
–
–
4,939.0
36.6
–
14.6
(0.3)
281.9
1,334.5
(713.0)
(1,309.2)
6.0
4,299.9
709.3
5,015.2
48
Hongkong Land
Notes to the Financial Statements 17 Borrowings continued
The borrowings are further summarised as follows:
By currency
2020
Hong Kong dollar
Singapore dollar
Chinese renminbi
Thai baht
2019
Hong Kong dollar
Singapore dollar
Chinese renminbi
Thai baht
Others
Fixed rate borrowings
Weighted
Weighted
average
average period
interest rates
outstanding
%
Years
US$m
Floating
rate
borrowings
US$m
Total
US$m
3.1
2.2
4.9
1.8
4.1
3.1
5.0
1.8
4.0
7.4
14.7
–
–
6.5
11.4
–
–
–
3,142.3
291.8
–
–
1,581.7
4,724.0
330.5
862.3
356.3
622.3
862.3
356.3
3,434.1
3,130.8
6,564.9
2,306.0
397.5
–
–
–
1,054.2
3,360.2
253.2
620.8
376.2
7.3
650.7
620.8
376.2
7.3
2,703.5
2,311.7
5,015.2
The weighted average interest rates and period of fixed rate borrowings are stated after taking into account hedging transactions.
The exposure of the Group’s borrowings to interest rate changes and the contractual repricing dates at 31st December after
taking into account hedging transactions are as follows:
Floating rate borrowings
Fixed rate borrowings
– within one year
– between one and two years
– between two and three years
– between three and four years
– between four and five years
– beyond five years
2020
US$m
2019
US$m
3,130.8
2,311.7
–
267.4
248.2
199.2
646.2
2,073.1
3,434.1
6,564.9
239.7
–
266.6
246.0
199.0
1,752.2
2,703.5
5,015.2
Annual Report 2020 49
17 Borrowings continued
Details of notes outstanding at 31st December are as follows:
Maturity
2020
2019
Current Non-current
US$m
US$m
Current
US$m
Non-current
US$m
2020
2020
2020
2020
2021
2022
2022
2022
2022
2023
2023
2024
2025
2025
2026
2027
2027
2027
2028
2028
2028
2028
2029
2029
2030
2030
2031
2032
2032
2033
2034
2035
2035
2035
2035
2038
2039
2040
–
–
–
–
66.2
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
52.8
504.8
39.3
25.8
141.5
38.6
414.3
38.6
607.6
38.8
100.2
60.9
25.7
38.3
41.7
57.9
45.6
51.1
70.8
594.7
103.2
25.5
30.5
110.3
89.6
77.5
51.1
50.9
50.9
102.0
111.3
112.4
32.1
64.3
64.2
111.4
64.2
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
65.5
52.5
497.5
39.1
25.6
140.8
38.4
406.7
38.4
609.1
38.6
99.7
60.7
25.6
38.1
41.5
57.6
45.4
50.8
70.5
–
102.8
25.4
30.3
–
89.2
77.2
–
–
–
–
109.2
110.2
32.0
66.2
3,936.3
304.1
3,018.4
Medium term notes
HK$500m 10-year notes at 4.22%
HK$500m 10-year notes at 4.24%
S$150m 10-year notes at 3.43%
HK$500m 10-year notes at 3.95%
HK$500m 12-year notes at 4.28%
HK$410m 10-year notes at 3.86%
US$500m 10-year notes at 4.50%*
HK$305m 10-year notes at 3.00%
HK$200m 10-year notes at 2.90%
HK$1,100m 10-year notes at 3.95%
HK$300m 10-year notes at 3.95%
US$400m 10-year notes at 4.625%*
HK$300m 15-year notes at 4.10%
US$600m 15-year notes at 4.50%*
HK$302m 15-year notes at 3.75%
HK$785m 15-year notes at 4.00%
HK$473m 15-year notes at 4.04%
HK$200m 15-year notes at 3.95%
HK$300m 15-year notes at 3.15%
HK$325m 15-year notes at 4.22%
HK$450m 10-year notes at 3.83%
HK$355m 10-year notes at 3.75%
HK$400m 15-year notes at 4.40%
HK$550m 10-year notes at 2.93%
US$600m 10-year notes at 2.875%*
HK$800m 20-year notes at 4.11%
HK$200m 20-year notes at 4.125%
HK$240m 20-year notes at 4.00%
HK$863m 12-year notes at 2.83%
HK$700m 15-year notes at 4.12%
HK$604m 15-year notes at 3.67%
HK$400m 15-year notes at 2.72%
HK$400m 15-year notes at 2.90%
HK$400m 15-year notes at 2.90%
HK$800m 15-year notes at 2.65%
S$150m 20-year notes at 3.95%
S$150m 20-year notes at 3.45%
HK$250m 30-year notes at 5.25%
* Listed on the Singapore Exchange
50
Hongkong Land
Notes to the Financial Statements 18 Share Capital
Authorised
Shares of US$0.10 each
Issued and fully paid
At 1st January and 31st December
19 Dividends
Ordinary shares in millions
2020
2019
2020
US$m
2019
US$m
4,000.0
4,000.0
400.0
400.0
2,333.9
2,333.9
233.4
233.4
Final dividend in respect of 2019 of US¢16.00 (2018: US¢16.00) per share
Interim dividend in respect of 2020 of US¢6.00 (2019: US¢6.00) per share
2020
US$m
373.4
140.0
513.4
2019
US$m
373.4
140.0
513.4
A final dividend in respect of 2020 of US¢16.00 (2019: US¢16.00) per share amounting to a total of US$373.4 million
(2019: US$373.4 million) is proposed by the Board. The dividend proposed will not be accounted for until it has been approved
at the 2021 Annual General Meeting. The amount will be accounted for as an appropriation of revenue reserves in the year
ending 31st December 2021.
20 Notes to Consolidated Cash Flow Statement
a) Development capital expenditure in 2020 included US$4,484.5 million for a prime mixed used site in the Xuhui District of
Shanghai, Chinese mainland.
b) Repayments from/(investments in and advances to) associates and joint ventures
By business
Investment Properties
Development Properties
By geographical location
Chinese mainland
Southeast Asia and others
2020
US$m
(0.9)
599.9
599.0
572.4
26.6
599.0
2019
US$m
(1.7)
(644.3)
(646.0)
(456.9)
(189.1)
(646.0)
Annual Report 2020 51
20 Notes to Consolidated Cash Flow Statement continued
c) Disposal of subsidiaries
Fair value of assets and liabilities of subsidiaries disposed of
Non-current assets
Current assets
Non-current liabilities
Current liabilities
Non-controlling interests
Net assets
Profit on disposal
Transfer to joint venture upon partial disposal of interest in subsidiaries
Translation differences on disposal proceeds received
Consideration
Cash and cash equivalents of subsidiaries disposed of
Net cash inflow for disposal of subsidiaries
Analysis of net cash inflow for disposal of subsidiaries:
Proceeds received for disposal of subsidiaries
Deposits refunded for disposal of subsidiaries
2020
US$m
4,922.0
85.0
(5.9)
(19.3)
(13.0)
4,968.8
7.2
(2,118.9)
(235.4)
2,621.7
(8.4)
2,613.3
4,619.0
(2,005.7)
2,613.3
Net cash inflow for disposal of subsidiaries in 2020 included US$47.1 million for disposal of 80% interest in a development
properties project in Vietnam and US$2,566.2 million for 57% interest in a prime mixed used project in the Xuhui District of
Shanghai, Chinese mainland.
d) Cash and cash equivalents
Bank balances (see Note 15)
Bank overdrafts (see Note 17)
2020
US$m
1,996.6
(6.2)
2019
US$m
1,424.0
(6.0)
1,990.4
1,418.0
52
Hongkong Land
Notes to the Financial Statements
21 Derivative Financial Instruments
The fair values of derivative financial instruments at 31st December are as follows:
Designated as cash flow hedges
– interest rate swaps
– cross currency swaps
Designated as fair value hedges
– interest rate swaps
– cross currency swaps
Interest rate swaps
2020
2019
Positive
fair value
US$m
Negative
fair value
US$m
Positive
fair value
US$m
Negative
fair value
US$m
–
9.7
1.7
22.0
3.3
12.8
–
–
–
19.7
1.3
9.5
1.8
–
–
2.9
The notional principal amounts of the outstanding interest rate swap contracts designated as fair value hedges and cash flow hedges
at 31st December 2020 were US$64.5 million (2019: US$64.2 million) and US$68.1 million (2019: US$66.8 million) respectively.
The fair values of interest rate swaps are based on the estimated cash flows discounted at market rates ranging from 0.2%
to 0.4% (2019: 1.5% to 2.4%) per annum.
Cross currency swaps
The contract amounts of the outstanding cross currency swap contracts at 31st December 2020 were US$2,100.0 million
(2019: US$1,567.0 million).
The outstanding interest rate swaps and cross currency swaps of an aggregate notional principal and contract amount of
US$1.7 billion are impacted by the IBORs reform.
22 Capital Commitments
Authorised not contracted
Contracted not provided
– contributions to joint ventures
– others
2020
US$m
3.9
720.9
104.0
824.9
828.8
2019
US$m
7.9
1,024.0
112.8
1,136.8
1,144.7
Annual Report 2020 53
23 Contingent Liabilities
Various Group companies are involved in litigation arising in the ordinary course of their respective businesses. Having reviewed
outstanding claims and taking into account legal advice received, the Directors are of the opinion that adequate provisions have
been made in the financial statements.
24 Related Party Transactions
The parent company of the Group is Jardine Strategic Holdings Limited and the ultimate holding company is Jardine Matheson
Holdings Limited (‘JMH’). Both companies 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
2020 was US$4.8 million (2019: US$5.4 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 rents on such properties in 2020 amounted to
US$19.3 million (2019: US$24.1 million).
The Group provided project management services and property management services to Jardine Matheson group members
in 2020 amounting to US$3.7 million (2019: US$3.0 million).
Jardine Matheson group members provided property maintenance and other services to the Group in 2020 in aggregate
amounting to US$63.1 million (2019: US$61.4 million).
Hotel management services
Jardine Matheson group members provided hotel management services to the Group in 2020 amounting to US$1.6 million
(2019: US$2.1 million).
Outstanding balances with associates and joint ventures
Amounts of outstanding balances with associates and joint ventures are included in associates and joint ventures, debtors and
creditors as appropriate (see Notes 11, 12 and 16).
Directors’ emoluments
Details of Directors’ emoluments (being the key management personnel compensation) are shown on page 90 under the heading
of ‘Remuneration in 2020’.
54
Hongkong Land
Notes to the Financial Statements 25 Summarised Balance Sheet of the Company
Included below is certain summarised balance sheet information of the Company disclosed in accordance with Bermuda law.
Net operating assets
Investments at cost
Unlisted shares in subsidiaries
Amounts due from subsidiaries
Creditors and other accruals
Total equity
Share capital (see Note 18)
Revenue and other reserves
Contributed surplus
Share premium
Revenue reserves
Shareholders’ funds
2020
US$m
2019
US$m
4,481.7
2,328.5
6,810.2
(35.1)
4,481.7
1,819.4
6,301.1
(32.8)
6,775.1
6,268.3
233.4
233.4
2,249.6
257.3
4,034.8
6,541.7
6,775.1
2,249.6
257.3
3,528.0
6,034.9
6,268.3
Subsidiaries are shown at cost less amounts provided.
The contributed surplus was set up on the formation of the Company in 1989 and, under the Bye-laws of the Company, is distributable.
Annual Report 2020 55
26 Principal Subsidiaries, Associates and Joint Ventures
The principal subsidiaries, associates and joint ventures of the Group at 31st December 2020 are set out below.
Attributable
interest
2020 2019
%
%
Issued share capital
Main activities
incorporation
Place of
Subsidiaries
Hongkong Land China Holdings Ltd*
100
100
USD
200,000,000
Investment holding
Bermuda
Hongkong Land International
100
100
USD
200,000,000
Investment holding
Bermuda
Holdings Ltd*
Hongkong Land Ltd*
100
100
USD
12,000
Group management
Bermuda
The Hongkong Land Company, Ltd
100
100
HKD
1,293,180,006
Investment holding
Hong Kong
The Hongkong Land Property
100
100
HKD
200
Property investment
Hong Kong
Company, Ltd
HKL (Chater House) Ltd
100
100
HKD
1,500,000
Property investment
Hong Kong
HKL (Landmark Hotel) Ltd
100
100
HKD
2
Hotel investment
Hong Kong
HKL (Prince’s Building) Ltd
100
100
HKD
200
Property investment
Hong Kong
Hongkong Land (HK) Investments Ltd
100
100
HKD
4,033,804,249
Investment holding
Hong Kong
Mulberry Land Company Ltd
100
100
HKD
200
Property investment
Hong Kong
Hongkong Land (Chongqing)
100
100
USD
550,990,000
Property development
Chinese mainland
Development Co Ltd
Hongkong Land (Chongqing North)
100
100
HKD
3,980,000,000
Property development
Chinese mainland
Development Co Ltd
Hongkong Land (Chongqing)
100
100
USD
2,200,000,000
Investment holding
Chinese mainland
Investment and Holding Co Ltd
Hongkong Land (Chonqqing)
100
100
RMB
900,000,000
Property development
Chinese mainland
Xinchen Development Co Ltd
Hongkong Land (Chongqing)
100
100
RMB
480,000,000
Property development
Chinese mainland
Xingyi Development Co Ltd
Hongkong Land (Hangzhou) Heyue
100
100
RMB
706,000,000
Property development
Chinese mainland
Investment and Development Co Ltd
Wangfu Central Real Estate
84
84
RMB
3,500,000,000
Property investment
Chinese mainland
Development Co Ltd
HKL (Esplanade) Pte Ltd
100
100
SGD
150,000,000
Property investment
Singapore
HKL Treasury (Singapore) Pte Ltd
100
100
Hongkong Land (Singapore) Pte Ltd
100
100
SGD
SGD
SGD
SGD
2
63,138,529†
1
519,525,895†
Finance
Singapore
Project management
Singapore
The Hongkong Land Treasury
100
100
SGD
2
Finance
Singapore
Services (Singapore) Pte Ltd
* Owned directly
† Preference shares
56
Hongkong Land
Notes to the Financial Statements 26 Principal Subsidiaries, Associates and Joint Ventures continued
Attributable
interest
2020 2019
%
%
Issued share capital
Main activities
incorporation
Place of
Subsidiaries continued
MCL Land Limited
100
100
SGD
511,736,041
Investment holding
Singapore
MCL Land (Everbright) Pte Ltd
100
100
SGD
4,000,000
Property development
Singapore
MCL Land (Regency) Pte Ltd
100
100
SGD
3,000,000
Property development
Singapore
Hongkong Land
100
100
Riels
4,000,000
Property investment
Cambodia
(Premium Development) Ltd
MCL Land (Quinn) Sdn Bhd
100
100
MYR
2,764,210
Property development Malaysia
MCL Land (Century Gardens) Sdn Bhd
100
100
MYR
29,117,145
Investment holding
Malaysia
MCL Land (Pantai View) Sdn Bhd
100
100
MYR
28,000,000
Property investment
Malaysia
MCL Land (Malaysia) Sdn Bhd
100
100
MYR
4,010,000
Property development Malaysia
HKL (Thai Developments) Ltd
100
100
Baht
2,592,000,000
Investment holding
Thailand
Central Building Ltd
65
65
USD
1,991,547
Property investment
Vietnam
Doan Ket International Co Ltd
73.9 73.9
USD
7,292,000
Property investment
Vietnam
HKL (Treasury Services) Ltd
100
100
USD
1
Finance
British Virgin
Islands
The Hongkong Land Notes Co Ltd
100
100
USD
2
Intra-group financing
British Virgin
Islands
The Hongkong Land Finance
100
100
USD
2
Intra-group financing
Cayman Islands
(Cayman Islands) Co Ltd
Associates and joint ventures
Normelle Estates Ltd
Properties Sub F, Ltd
Beijing Landmark Trinity Real Estate
Development Co Ltd
Beijing Premium Real Estate Ltd
Chongqing Central Park Co Ltd
Chongqing Lijia Development Co Ltd
Chengdu Premium Property
Development Co Ltd
50
49
30
40
50
50
50
50
49
30
40
50
50
50
HKD
MOP
10,000
Property investment
Hong Kong
1,000,000
Property investment
Macau
RMB
2,800,000,000
Property development
Chinese mainland
USD
12,000,000
Property development
Chinese mainland
HKD
4,640,000,000
Property development
Chinese mainland
RMB
USD
533,596,100
Property development
Chinese mainland
699,980,000
Property development
Chinese mainland
China West Premier Housing
50
50
USD
569,960,000
Property development
Chinese mainland
Development Co Ltd
Hangzhou Kesheng Property
30
30
RMB
50,000,000
Property development
Chinese mainland
Development Co Ltd
Hangzhou Keyi Property
30
30
RMB
150,000,000
Property development
Chinese mainland
Development Co Ltd
Hongkong Land (Chengdu)
33
33
RMB
50,000,000
Property development
Chinese mainland
Xingyi Development Co Ltd
Annual Report 2020 57
26 Principal Subsidiaries, Associates and Joint Ventures continued
Attributable
interest
2020 2019
%
%
Issued share capital
Main activities
incorporation
Place of
Associates and joint ventures continued
Hongkong Land Longfor (Chongqing)
50
50
RMB
2,000,000,000
Property development
Chinese mainland
Hongmao Development Co Ltd
Longfor Hongkong Land (Chongqing)
50
50
RMB
1,275,920,000
Property development
Chinese mainland
Development Co Ltd
Nanjing Shengxiangyuan Property
33
33
RMB
3,000,000,000
Property development
Chinese mainland
Development Co Ltd
Nanjing Xinyeezhi Property
50
50
USD
750,000,000
Property development
Chinese mainland
Development Co Ltd
Nanjing Yeezhi Jiangbei Property
50
50
RMB
1,500,000,000
Property development
Chinese mainland
Development Co Ltd
Shanghai Xinqiaogao
Development Co Ltd
26.7 26.7
RMB
4,000,000,000
Property development
Chinese mainland
Shanghai Xujing Property Co Ltd
Shanghai Yihui Development Co Ltd
Wuhan Dream Land Investment
and Development Co Ltd
50
50
50
50
50
50
RMB
4,200,000,000
Property development
Chinese mainland
RMB
830,000,000
Property development
Chinese mainland
RMB
1,200,000,000
Property development
Chinese mainland
Wuhan Yeezhi Minghong
66
66
RMB
600,000,000
Property development
Chinese mainland
Development Co Ltd
Yeezhi Yuexiang (Chongqing)
50
50
RMB
260,000,000
Property development
Chinese mainland
Development Co Ltd
Asia Radiant Pte Ltd
50
50
SGD
4,000,000
Property development
Singapore
BFC Development LLP
33.3 33.3
SGD
N/A
Property investment
Singapore
Central Boulevard Development Pte Ltd
33.3 33.3
SGD
One Raffles Quay Pte Ltd
33.3 33.3
SGD
Universal Estate Pte Ltd
50
50
SGD
6
6
2
Property investment
Singapore
Property investment
Singapore
Investment Holding
Singapore
PT Astra Modern Land
33.5 33.5
IDR 3,870,000,000,000
Property development
Indonesia
PT Award Global Infinity
PT Brahmayasa Bahtera
PT Bumi Parama Wisesa
PT Jakarta Land
Sunrise MCL Land Sdn Bhd
Roxas Land Corporation
Central and Hongkong Land Co Ltd
CPN and HKL Co Ltd
50
40
49
50
50
40
49
49
50
40
49
50
50
40
49
49
IDR
257,981,171,800
Property development
Indonesia
IDR
166,000,000,000
Property development
Indonesia
IDR 1,950,000,000,000
Property development
Indonesia
IDR
3,320,000,000
Property investment
Indonesia
MYR
2,000,000
Property development Malaysia
Peso
1,065,000,000
Property development
The Philippines
THB
4,986,250,000
Property development
Thailand
THB
4,000,000
Property development
Thailand
58
Hongkong Land
Notes to the Financial Statements 26 Principal Subsidiaries, Associates and Joint Ventures continued
Attributable
interest
2020 2019
%
%
Issued share capital
Main activities
incorporation
Place of
Associates and joint ventures continued
PFHKL 1 Co Ltd
PFHKL 2 Co Ltd
PFHKL 3 Co Ltd
PFHKL 4 Co., Ltd.
PFHKL 5 Co., Ltd.
PFHKL 6 Co., Ltd.
Gaysorn Land Co Ltd
S36 Property Co Ltd
NDC An Khang Joint Stock Co
Jardine Gibbons Properties Ltd
49
49
49
49
49
49
49
49
70
40
49
49
49
49
49
49
49
49
70
40
THB
THB
THB
THB
THB
THB
THB
THB
5,000,000
Property development
Thailand
5,000,000
Property development
Thailand
5,000,000
Property development
Thailand
5,000,000
Property development
Thailand
5,000,000
Property development
Thailand
5,000,000
Property development
Thailand
61,250,000
Property investment
Thailand
800,000,000
Property development
Thailand
VND 2,861,000,000,000
Property development
Vietnam
BD
600,000 ‘A’
Property investment
Bermuda
400,000 ‘B’
27 Principal Accounting Policies
Basis of consolidation
i) The consolidated financial statements include the financial statements of the Company, its subsidiaries, and the Group’s
interests in associates and joint ventures.
ii) A subsidiary is an entity over which the Group has control. The Group controls an entity when the Group is exposed to,
or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through
its power over the entity.
The purchase method of accounting is used to account for the acquisition of subsidiaries by the Group. The cost of
an acquisition includes the fair value at the acquisition date of any contingent consideration. The Group recognises
the non-controlling interest’s proportionate share of the recognised identifiable net assets of the acquired subsidiary.
In a business combination achieved in stages, the Group remeasures its previously held interest in the acquiree at its
acquisition-date fair value and recognises the resulting gain or loss in profit and loss. Changes in a parent’s ownership
interest in a subsidiary that do not result in the loss of control are accounted for as equity transactions. When control
over a previous subsidiary is lost, any remaining interest in the entity is remeasured at fair value and the resulting gain
or loss is recognised in profit and loss.
All material intercompany transactions, balances and unrealised surpluses and deficits on transactions between Group
companies have been eliminated.
iii) An associate is an entity, not being a subsidiary or joint venture, over which the Group exercises significant influence.
A joint venture is a type of joint arrangement whereby the parties that have joint control of the arrangement have rights
to the net assets of the joint venture. Joint control is the contractually agreed sharing of control of an arrangement, which
exists only when decisions about the relevant activities require unanimous consent of the parties sharing control.
Associates and joint ventures are included on the equity basis of accounting.
Profits and losses resulting from upstream and downstream transactions between the Group and its associates and joint
ventures are recognised in the consolidated financial statements only to the extent of unrelated investor’s interests in the
associates and joint ventures.
Annual Report 2020 59
27 Principal Accounting Policies continued
Basis of consolidation continued
iv) Non-controlling interests represent the proportion of the results and net assets of subsidiaries and their associates and joint
ventures not attributable to the Group.
v) The results of subsidiaries, associates and joint ventures are included or excluded from their effective dates of acquisition or
disposal, respectively. The results of entities other than subsidiaries, associates and joint ventures are included to the extent
of dividends received when the right to receive such dividend is established.
Foreign currencies
Transactions in foreign currencies are accounted for at the exchange rates ruling at the transaction dates.
Assets and liabilities of subsidiaries, associates and joint ventures, together with all other monetary assets and liabilities
expressed in foreign currencies, are translated into United States dollars at the rates of exchange ruling at the year-end.
Results expressed in foreign currencies are translated into United States dollars at the average rates of exchange ruling
during the year, which approximate the exchange rates at the dates of the transactions.
Exchange differences arising from the retranslation of the net investment in foreign subsidiaries, associates and joint ventures,
and of financial instruments which are designated as hedges of such investments, are recognised in other comprehensive income
and accumulated in equity under exchange reserves. On the disposal of these investments, such exchange differences are
recognised in profit and loss. Exchange differences on other investments measured at fair value through other comprehensive
income are recognised in other comprehensive income as part of the gains and losses arising from changes in their fair value.
All other exchange differences are recognised in profit and loss.
Goodwill and fair value adjustments arising on acquisition of a foreign entity after 1st January 2003 are treated as assets and
liabilities of the foreign entity and translated into United States dollars at the rate of exchange ruling at the year-end.
Impairment of non-financial assets
Assets that have indefinite useful lives are not subject to amortisation and are tested for impairment annually and whenever
there is an indication that the assets may be impaired. Assets that are subject to amortisation are reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. For the purpose of
assessing impairment, assets are grouped at the lowest level for which there is separately identifiable cash flows. Cash-generating
units or groups of cash-generating units to which goodwill has been allocated are tested for impairment annually and whenever
there is an indication that the units may be impaired. An impairment loss is recognised for the amount by which the carrying
amount of the asset exceeds its recoverable amount, which is the higher of an asset’s fair value less costs to sell and value in use.
Non-financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment annually.
Goodwill
Goodwill represents the excess of the sum of the consideration transferred, the amount of any non-controlling interests in the
acquiree, and the acquisition-date fair value of any previously held equity interest in the acquiree over the acquisition-date fair
value of the Group’s share of the net identifiable assets acquired. Non-controlling interests are measured at their proportionate
share of the net identifiable assets at the acquisition date. If the cost of acquisition is less than the fair value of the net assets
acquired, the difference is recognised directly in profit and loss. Goodwill on acquisitions of subsidiaries is included in intangible
assets. Goodwill on acquisitions of associates and joint ventures is included in investment in associates and joint ventures.
Goodwill is allocated to cash-generating units or groups of cash-generating units for the purpose of impairment testing and
is carried at cost less accumulated impairment loss.
The profit or loss on disposal of subsidiaries, associates and joint ventures is stated after deducting the carrying amount of
goodwill relating to the entity sold.
60
Hongkong Land
Notes to the Financial Statements
27 Principal Accounting Policies continued
Fixed assets and depreciation
The building component of owner-occupied leasehold properties are stated at cost less accumulated depreciation and impairment.
Other fixed assets are stated at cost less amounts provided for depreciation.
Depreciation of fixed assets is calculated on the straight line basis to allocate the cost or valuation of each asset to its residual
value over its estimated useful life. The residual values and useful lives are reviewed at each balance sheet date. The estimated
useful lives are as follows:
Hotel property
20 – 30 years
Furniture, equipment and motor vehicles
3 – 10 years
Where the carrying amount of a fixed asset is greater than its estimated recoverable amount, it is written down immediately to
its recoverable amount.
The profit or loss on disposal of fixed assets is recognised by reference to their carrying amount.
Leases
At inception of a contract, the Group assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if
the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
i) As a lessee
The Group enters into property leases for use as offices, as well as leases for motor vehicles for use in its operations.
The Group recognises right-of-use assets and lease liabilities at the lease commencement dates, that is the dates the
underlying assets are available for use. Right-of-use assets are measured at cost, less any accumulated depreciation and
impairment, and adjusted for any remeasurement of lease liabilities. The cost of the right-of-use assets includes amounts
of the initial measurement of lease liabilities recognised, lease payments made at or before the commencement dates less
any lease incentives received, initial direct costs incurred and restoration costs. Right-of-use assets are depreciated using
the straight-line method over the shorter of their estimated useful lives and the lease terms.
When right-of-use assets meet the definition of investment properties, they are presented in investment properties, and
are initially measured at cost and subsequently measured at fair value, in accordance with the Group’s accounting policy.
The Group also has interests in leasehold land for use in its operations. Lump sum payments were made upfront to acquire
these land interests from their previous registered owners or governments in the jurisdictions where the land is located.
There are no ongoing payments to be made under the term of the land leases, other than insignificant lease renewal costs
or payments based on rateable value set by the relevant government authorities. These payments are stated at cost and
are amortised over the term of the lease which includes the renewal period if the lease can be renewed by the Group without
significant cost.
Lease liabilities are measured at the present value of lease payments to be made over the lease terms. Lease payments
include fixed payments (including in-substance fixed payments) less any lease incentives receivable, variable lease payments
that depend on an index or a rate, and amounts expected to be paid under residual value guarantees. The lease payments also
include the exercise price of a purchase option reasonably certain to be exercised and payments of penalties for terminating a
lease, if the lease term reflects the Group exercising that option. The variable lease payments that do not depend on an index
or a rate are recognised as expense in the period on which the event or condition that triggers the payment occurs.
In calculating the present value of lease payments, the Group uses the incremental borrowing rate at the lease commencement
date if the interest rate implicit in the lease is not readily determinable. Lease liabilities are measured at amortised cost using
the effective interest method. After the commencement date, the amount of lease liabilities is increased by the interest costs
on the lease liabilities and decreased by lease payments made.
Annual Report 2020 61
27 Principal Accounting Policies continued
Leases continued
i) As a lessee continued
The carrying amount of lease liabilities is remeasured when there is a change in the lease term, or there is a change in future
lease payments arising from a change in an index or rate, or there is a change in the Group’s estimate of the amount expected
to be payable under a residual guarantee, or there is a change arising from the reassessment of whether the Group will be
reasonably certain to exercise an extension or a termination option. When the lease liability is remeasured, a corresponding
adjustment is made to the carrying amount of the right-of-use asset, or is recorded in profit or loss if the carrying amount of
right-of-use asset has been reduced to zero.
The Group has elected not to recognise right-of-use assets and lease liabilities for leases of low value assets (i.e. US$5,000
or less) and short-term leases. Low value assets comprised IT equipment and small items of office furniture. Short-term
leases are leases with a lease term of 12 months or less. Lease payments associated with these leases are recognised on
a straight-line basis as an expense in profit and loss over the lease term.
Lease liabilities are classified as non-current liabilities unless payments are within 12 months from the balance sheet date.
ii) As a lessor
The Group enters into contracts with lease components as a lessor on its investment properties. These leases are operating
leases as they do not transfer the risk and rewards incidental to the underlying investment properties. The Group recognises
the lease payments received under these operating leases on a straight line basis over the lease term as part of revenue in
the profit and loss.
Investment properties
Properties including those under operating leases which are held for long-term rental yields or capital gains are classified and
accounted for as investment properties, but the business model does not necessarily envisage that the properties will be held
for their entire useful life. Investment properties are carried at fair value, representing estimated open market value determined
annually by independent qualified valuers who have recent experience in the location and category of the investment property
being valued. The market value of commercial properties are calculated on the discounted net rental income allowing for
reversionary potential. The market value of residential properties are arrived at by reference to market evidence of transaction
prices for similar properties. Changes in fair value are recognised in profit and loss.
Properties for sale
Properties for sale, which comprise land and buildings held for resale, are stated at the lower of cost and net realisable value.
The cost of properties for sale comprises land cost, construction and other development costs, and borrowing costs.
Debtors
Debtors are recognised initially at the amount of consideration that is unconditional and measured subsequently at amortised
cost using the effective interest method. A contract asset arises if the Group has a right to consideration in exchange for goods
or services the Group has transferred to a customer, that is conditional on something other than the passage of time. All other
debtors, excluding derivative financial instruments, are measured at amortised cost except where the effect of discounting
would be immaterial. For trade debtors and contract assets, the Group applied the simplified approach as permitted by IFRS 9,
which requires expected lifetime losses to be recognised from initial recognition of the debtors. Provision for impairment is
established by considering potential financial difficulties of the debtor, probability that the debtor will enter bankruptcy or
financial reorganisation, and default or delinquency in payments. The carrying amount of the asset is reduced through the use
of an allowance account and the amount of the loss is recognised in arriving at operating profit. When a debtor is uncollectible,
it is written off against the allowance account. Subsequent recoveries of amount previously written off are credited to profit
and loss.
Debtors with maturities greater than 12 months after the balance sheet date are classified under non-current assets.
Cash and cash equivalents
For the purposes of the cash flow statement, cash and cash equivalents comprise deposits with banks and financial institutions,
and bank and cash balances, net of bank overdrafts. In the balance sheet, bank overdrafts are included in current borrowings.
62
Hongkong Land
Notes to the Financial Statements
27 Principal Accounting Policies continued
Provisions
Provisions are recognised when the Group has present legal or constructive obligations as a result of past events, it is probable
that an outflow of resources embodying economic benefits will be required to settle the obligations, and a reliable estimate of
the amount of the obligations can be made.
Borrowings and borrowing costs
Borrowings are initially recognised at fair value, net of transaction costs incurred. In subsequent periods, borrowings are stated
at amortised cost using the effective interest method.
Borrowing costs relating to major development projects are capitalised until the asset is substantially completed. Capitalised
borrowing costs are included as part of the cost of the asset. All other borrowing costs are expensed as incurred.
Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for
at least 12 months after the balance sheet date.
Current and deferred tax
The tax expense for the year comprises current and deferred tax. Tax is recognised in profit and loss, except to the extent that
it relates to items recognised in other comprehensive income or direct in equity. In this case, the tax is also recognised in other
comprehensive income or directly in equity, respectively.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet
date in the countries where the Group operates and generates taxable income. Management periodically evaluates positions
taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes
provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.
Deferred tax is provided, using the liability method, for all temporary differences arising between the tax bases of assets and
liabilities and their carrying values. Deferred tax is determined using tax rates and laws that have been enacted or substantially
enacted by the balance sheet date and are expected to apply when the related deferred tax asset is realised or the deferred tax
liability is settled.
Provision for deferred tax is made on the revaluation of certain non-current assets and, in relation to acquisitions, on the
difference between the fair value of the net assets acquired and their tax base. Deferred tax is provided on temporary differences
associated with investments in subsidiaries, associates and joint ventures, except where the Group is able to control the reversal
of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred
tax assets relating to the carry forward of unused tax losses are recognised to the extent that it is probable that future taxable
profit will be available against which the unused tax losses can be utilised.
Pension obligations
The Group operates a number of defined benefit and defined contribution plans, the assets of which are held in trustee
administered funds.
Pension accounting costs for defined benefit plans are assessed using the projected unit credit method. Under this method,
the costs of providing pensions are charged to profit and loss spreading the regular cost over the service lives of employees
in accordance with the advice of qualified actuaries, who carry out a full valuation of major plans every year. The pension
obligations are measured as the present value of the estimated future cash outflows by reference to market yields on high
quality corporate bonds which have terms to maturity approximating the terms of the related liability. Plan assets are measured
at fair value.
Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are recognised in other
comprehensive income in the year in which they occur. Past service costs are recognised immediately in profit and loss.
The Group’s total contributions relating to the defined contribution plans are charged to profit and loss in the year to which
they relate.
Annual Report 2020 63
27 Principal Accounting Policies continued
Derivative financial instruments
The Group only enters into derivative financial instruments in order to hedge underlying exposures and not as speculative
investments. Derivative financial instruments are initially recognised at fair value on the date a derivative contract is entered
into and are subsequently remeasured at their fair value. The method of recognising the resulting gain or loss is dependent
on the nature of the item being hedged. The Group designates certain derivatives as a hedge of the fair value of a recognised
asset or liability (fair value hedge), or a hedge of a forecast transaction or of the foreign currency risk on a firm commitment
(cash flow hedge), or a hedge of a net investment in a foreign entity.
At inception of the hedge relationship, the Group documents the economic relationship between hedging instruments and hedged
items including whether changes in the cash flows of the hedging instruments are expected to offset changes in the cash flows
of hedged items. The Group documents its risk management objective and strategy for undertaking its hedge transactions.
Changes in the fair value of derivatives that are designated and qualify as fair value hedges and that are highly effective, are
recognised in profit and loss, along with any changes in the fair value of the hedged asset or liability that is attributable to the
hedged risk. The gain or loss relating to the effective portion of interest rate swaps hedging fixed rate borrowings is recognised
in profit and loss within finance costs, together with changes in the fair value of the hedged fixed rate borrowings attributable to
interest rate risk. The gain or loss relating to the ineffective portion is recognised in profit and loss. When a hedging instrument
expires or is sold, or when a hedge no longer meets the criteria for hedge accounting, the cumulative adjustment to the carrying
amount of a hedged item for which the effective interest method is used is amortised to profit and loss over the residual period
to maturity.
Changes in the fair value of derivatives that are designated and qualify as cash flow hedges and that are highly effective, are
recognised in other comprehensive income and accumulated in equity under hedging reserves. Changes in the fair value relating
to the ineffective portion is recognised immediately in profit and loss. Where the hedged item results in the recognition of
a non-financial asset or of a non-financial liability, the deferred gains and losses are included in the initial measurement of the
cost of the asset or liability. The deferred amounts are ultimately recognised in profit and loss as the hedged item affects profit
and loss. Otherwise, amounts deferred in hedging reserves are transferred to profit and loss in the same periods during which
the hedged firm commitment or forecast transaction affects profit and loss. The gain or loss relating to the effective portion of
the interest rate swaps hedging variable rate borrowings is recognised in profit and loss within finance cost at the same time as
the interest expense on the hedged borrowings. When a hedging instrument expires or is sold, or when a hedge no longer meets
the criteria for hedge accounting, any cumulative gain or loss existing in hedging reserves at that time remains in the hedging
reserves and is recognised when the committed or forecast transaction ultimately is recognised in profit and loss. When a
committed or forecast transaction is no longer expected to occur, the cumulative gain or loss that was reported in hedging
reserves is immediately transferred to profit and loss.
Certain derivative transactions, while providing effective economic hedges under the Group’s risk management policies, do not
qualify for hedge accounting under the specific rules in IFRS 9. Changes in the fair value of any derivative instruments that do
not qualify for hedge accounting under IFRS 9 are recognised immediately in profit and loss.
Hedges of net investments in foreign entities are accounted for on a similar basis to that used for cash flow hedges. Any gain
or loss on the hedging instrument relating to the effective portion of the hedge is recognised in other comprehensive income and
accumulated in exchange reserves; the gain or loss relating to the ineffective portion is recognised immediately in profit and loss.
The fair value of derivatives which are designated and qualify as effective hedges are classified as non-current assets or liabilities
if the remaining maturities of the hedged assets or liabilities are greater than 12 months after the balance sheet date.
64
Hongkong Land
Notes to the Financial Statements
27 Principal Accounting Policies continued
Offsetting financial instruments
Financial assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable
right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability
simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable in the normal
course of business and in the event of default, insolvency or bankruptcy of the company or the counterparty.
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.
Earnings per share
Earnings per share are calculated on profit attributable to shareholders and on the weighted average number of shares in issue
during the year.
Dividends
Dividends proposed or declared after the balance sheet date are not recognised as a liability at the balance sheet date.
Revenue recognition
i) Properties for sale
Revenue from properties for sale is recognised when or as the control of the property is transferred to the customer. Revenue
consists of the fair value of the consideration received and receivable, net of value added tax, rebates and discounts. Proceeds
received in advance for pre-sale are recorded as contract liabilities. Depending on the terms of the contract and the laws that
apply to the contract, control of the property may transfer over time or at a point in time.
If control of the property transfers over time, revenue is recognised over the period of the contract by reference to the progress
towards complete satisfaction of that performance obligation. Otherwise, revenue is recognised at a point in time when the
customer obtains control of the property.
The progress towards complete satisfaction of the performance obligation is measured based on the Group’s efforts or inputs to
the satisfaction of the performance obligation, by reference to the contract costs incurred up to the end of reporting period as
a percentage of total estimated costs for each contract.
For properties for sale under development and sales contract for which the control of the property is transferred at a point in
time, revenue is recognised when the customer obtains the physical possession or the legal title of the completed property and
the Group has present right to payment and the collection of the consideration is probable.
ii) Investment properties
Rental income from investment properties are accounted for on an accruals basis over the lease term.
iii) Service income
Revenue from property management service and hospitality service are recognised when services are performed provided that
the amount can be measured reliably.
Annual Report 2020 65
27 Principal Accounting Policies continued
Pre-operating costs
Pre-operating costs are expensed as they are incurred.
Government grants
Grants from government are recognised at their fair values where there is reasonable assurance that the grants will be received,
and the Group will comply with the conditions associated with the grants.
Grants that compensate the Group for expenses incurred are recognised in the profit and loss as other income on a systematic
basis in the period in which the expenses are recognised. Unconditional grants are recognised in the profit and loss as other
income when they become receivable.
Grants related to assets are deducted in arriving at the carrying value of the related assets.
28 Standards and Amendments Issued but Not Yet Effective
A number of new standard and amendments effective for accounting periods beginning after 2020 have been published and
will be adopted by the Group from their effective dates. The Group is currently assessing the potential impact of these standard
and amendments but expects their adoption will not have a significant impact on the Group’s consolidated financial statements.
The more important standard and amendments are set out below.
i)
Interest Rate Benchmark Reform – Phase 2: Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 (effective from
1st January 2021) provides a number of practical expedients as a result of the reform which affect the measurement of
financial assets, financial liabilities and lease liabilities, and a number of reliefs for hedging relationships. The Group will apply
the amendments from 1st January 2021, but it is not expected the adoption will have a significant impact on the Group’s
consolidated financial statements.
ii) Amendment to IFRS 9: ‘Fees in the ‘10 per cent’ Test for Derecognition of Financial Liabilities’ (effective from 1st January 2022)
clarifies the requirement to derecognise the original financial liability and recognise a new financial liability where there is an
exchange between an existing borrower and lender of debt instrument with substantially different terms. The amendments
clarifies that the terms are substantially different if the discounted present value of the cash flows under the new terms
using the original effective interest rate, including any fees paid net of any fees received, is at least 10 per cent different
from the discounted present value of the remaining cash flows of the original financial liability. The Group will apply
the amendment from 1st January 2022, but it is not expected the adoption will have a significant impact on the Group’s
consolidated financial statements.
iii) Amendments to IAS 37 – Onerous Contracts – Cost of Fulfilling a Contract (effective from 1st January 2022) clarifies that
for the purpose of assessing whether a contract is onerous, the cost of fulfilling the contract includes both the incremental
costs of fulfilling that contract and an allocation of other costs that relate directly to fulfilling contracts. The Group will apply
the amendment from 1st January 2022, but it is not expected the adoption will have a significant impact on the Group’s
consolidated financial statements.
66
Hongkong Land
Notes to the Financial Statements
29 Financial Risk Management
Financial risk factors
The Group’s activities expose it to a variety of financial risks: market risk (including foreign exchange risk, interest rate risk and
price risk), credit risk and liquidity risk.
The Group’s treasury function co-ordinates, under the directions of the board of Hongkong Land Limited, financial risk management
policies and their implementation on a group-wide basis. The Group’s treasury policies are designed to manage the financial
impact of fluctuations in interest rates and foreign exchange rates and to minimise the Group’s financial risks. The Group uses
derivative financial instruments, principally interest rate swaps, cross-currency swaps and forward foreign exchange contracts
as appropriate for hedging transactions and managing the Group’s assets and liabilities in accordance with the Group’s financial
risk management policies. Financial derivative contracts are executed between third party banks and the Group entity that is
directly exposed to the risk being hedged. Hedge accounting is applied to remove the accounting mismatch between the hedging
instrument and the hedged item. The effective portion of the change in the fair value of the hedging instrument is deferred into
the cash flow hedge reserve through other comprehensive income and will be recognised in profit and loss when the hedged item
affects profit and loss. In general, the volatility in profit or loss can be reduced by applying hedge accounting.
Hedge effectiveness is determined at the inception of the hedge relationship, and through periodic prospective effectiveness
assessments to ensure that an economic relationship exists between the hedged item and hedging instrument.
For hedges of foreign currency purchases, the Group enters into hedge relationships where the critical terms of the hedging
instrument match exactly with the terms of the hedged item. The Group assesses whether the derivative designated in each
hedging relationship has been and expected to be effective in offsetting changes in cash flows of the hedged item using the
hypothetical derivative method.
Ineffectiveness may arise if the timing of the forecast transaction changes from what was originally estimated for hedges of
foreign currency purchases, or if there are changes in the credit risk of the Group or the derivative counterparty.
The Group enters into interest rate swaps that have similar critical terms as the hedged item, such as reference rate, reset dates,
payment dates, maturities and notional amount. The Group does not hedge 100% of its loans, therefore the hedged item is
identified as a proportion of the outstanding loans up to the notional amount of the swaps. As all critical terms matched during
the year, effective economic relationship existed between the swaps and the loans.
Hedge ineffectiveness for interest rate swaps is assessed using the same principles as for hedges of foreign currency purchases.
It may occur due to:
i) The credit value/debit value adjustment on the interest rate swaps which is not matched by the loan;
ii) Differences in critical terms between the interest rate swaps and loans; and
iii) The effects of the forthcoming reforms to IBORs, because these might take effect at a different time and have a different impact
on the hedged item (the floating-rate debt) and the hedging instrument (the interest rate swap used to hedge the debt).
The ineffectiveness during 2020 or 2019 in relation to interest rate swaps was not material.
Annual Report 2020 67
29 Financial Risk Management continued
Financial risk factors continued
i) Market risk
Foreign exchange risk
Entities within the Group are exposed to foreign exchange risk from future commercial transactions, net investments in foreign
operations and net monetary assets and liabilities that are denominated in a currency that is not the entity’s functional currency.
Entities in the Group use cross-currency swaps and forward foreign exchange contracts in a consistent manner to hedge
firm and anticipated foreign exchange commitments and manage their foreign exchange risk arising from future commercial
transactions. The Group does not usually hedge its net investments in foreign operations except in circumstances where there
is a material exposure arising from a currency that is anticipated to be volatile and the hedging is cost effective. Group entities
are required to manage their foreign exchange risk against their functional currency. Foreign currency borrowings are swapped
into the entity’s functional currency using cross-currency swaps except where the foreign currency borrowings are repaid with
cash flows generated in the same foreign currency. The purpose of these hedges is to mitigate the impact of movements in
foreign exchange rates on assets and liabilities and the profit and loss account of the Group.
Currency risks as defined by IFRS 7 arise on account of monetary assets and liabilities being denominated in a currency that
is not the functional currency. At 31st December 2020, there are no significant monetary balances held by group companies
that are denominated in a non-functional currency other than the cross-currency swap contracts with contract amounts of
US$2,100 million (2019: US$1,567 million). Differences resulting from the translation of financial statements into the Group’s
presentation currency are not taken into consideration.
Since the Group manages the interdependencies between foreign exchange risk and interest rate risk of foreign currency
borrowings using cross-currency swaps, the sensitivity analysis on financial impacts arising from cross-currency swaps is
included in the sensitivity assessment on interest rates under the interest rate risk section.
Interest rate risk
The Group is exposed to interest rate risk through the impact of rate changes on interest bearing liabilities and assets.
These exposures are managed partly by using natural hedges that arise from offsetting interest rate sensitive assets and
liabilities, and partly through fixed rate borrowings and the use of derivative financial instruments such as interest rate swaps.
The Group monitors interest rate exposure on a monthly basis by currency and business unit, taking into consideration
proposed financing and hedging arrangements. The Group’s guideline is to maintain 40% to 60% of its gross borrowings
in fixed rate instruments. At 31st December 2020, the Group’s interest rate hedge was 52% (2019: 54%) with an average
tenor of eight years (2019: seven years). The interest rate profile of the Group’s borrowings after taking into account hedging
transactions are set out in Note 17.
Cash flow interest rate risk is the risk that changes in market interest rates will impact cash flows arising from variable rate
financial instruments. Borrowings at floating rates therefore expose the Group to cash flow interest rate risk. The Group
manages this risk by using forward rate agreements to a maturity of one year, and by entering into interest rate swaps for
a maturity of up to five years. Forward rate agreements and interest rate swaps have the economic effect of converting
borrowings from floating rates to fixed rates. Details of interest rate swaps and cross-currency swaps are set out in Note 21.
Fair value interest rate risk is the risk that the value of a financial asset or liability and derivative financial instrument will
fluctuate because of changes in market interest rates. The Group manages its fair value interest rate risk by entering into
interest rate swaps which have the economic effect of converting borrowings from fixed rates to floating rates, to maintain
the Group’s fixed rate instruments within the Group’s guideline.
68
Hongkong Land
Notes to the Financial Statements
29 Financial Risk Management continued
Financial risk factors continued
i) Market risk continued
Interest rate risk continued
At 31st December 2020, if interest rates had been 100 basis points higher/lower with all other variables held constant, the
Group’s profit after tax would have been US$2 million (2019: US$1 million) lower/higher, and hedging reserve would have
been US$82 million (2019: US$40 million) higher/lower, as a result of fair value changes to cash flow hedges. The sensitivity
analysis has been determined assuming that the change in interest rates had occurred at the balance sheet date and had been
applied to the exposure to interest rate risk for both derivative and non-derivative financial instruments in existence at that
date. The 100 basis point increase or decrease represents management’s assessment of a reasonably possible change in
those interest rates which have the most impact on the Group, specifically the United States, Hong Kong, Chinese mainland
and Singapore rates, over the period until the next annual balance sheet date. In the case of effective fair value hedges,
changes in fair value of the hedged item caused by interest rate movements balance out in profit and loss account against
changes in the fair value of the hedging instruments. Changes in market interest rates affect the interest income or expense
of non-derivative variable-interest financial instruments, the interest payments of which are not designated as hedged items
of cash flow hedges against interest rate risks. As a consequence, they are included in the calculation of profit after tax
sensitivities. Changes in the market interest rate of financial instruments that were designated as hedging instruments in
a cash flow hedge to hedge payment fluctuations resulting from interest rate movements affect the hedging reserves and
are therefore taken into consideration in the equity-related sensitivity calculations.
ii) Credit risk
The Group’s credit risk is primarily attributable to deposits with banks, credit exposures to customers and derivative financial
instruments with a positive fair value. The Group has credit policies in place and the exposures to these credit risks are
monitored on an ongoing basis.
The Group manages its deposits with banks and financial institutions and transactions involving derivative financial instruments
by monitoring credit ratings and capital adequacy ratios of counterparties, and limiting the aggregate risk to any individual
counterparty. The utilisation of credit limits is regularly monitored. Similarly transactions involving derivative financial
instruments are with banks with sound credit ratings and capital adequacy ratios. In developing countries it may be necessary
to deposit money with banks that have a lower credit rating, however the Group only enters into derivative transactions with
counterparties which have credit ratings of at least investment grade. Management does not expect any counterparty to fail
to meet its obligations.
In respect of credit exposures to customers, the Group has policies in place to ensure that investment properties are leased
principally to corporate companies with appropriate credit history, and rental deposits in the form of cash or bank guarantee
are usually received from tenants. The Group receives progress payments from sales of residential properties to individual
customers prior to the completion of transactions. In the event of default by customers, the Group undertakes legal proceedings
to recover the property. Amounts due from associates and joint ventures are generally supported by the underlying assets.
The maximum exposure to credit risk is represented by the carrying amount of each financial asset in the balance sheet after
deducting any impairment allowance.
Annual Report 2020 69
29 Financial Risk Management continued
Financial risk factors continued
iii) Liquidity risk
Prudent liquidity risk management includes managing the profile of debt maturities and funding sources, maintaining sufficient
cash, and ensuring the availability of funding from an adequate amount of committed credit facilities and the ability to close
out market positions. The Group’s ability to fund its existing and prospective debt requirements is managed by maintaining
diversified funding sources with adequate committed funding lines from high quality lenders, and by monitoring rolling
short-term forecasts of the Group’s cash and gross debt on the basis of expected cash flows. In addition long-term cash
flows are projected to assist with the Group’s long-term debt financing plans.
At 31st December 2020, total committed and uncommitted borrowing facilities amounted to US$9,069 million
(2019: US$7,332 million) of which US$6,565 million (2019: US$5,015 million) was drawn down. Undrawn committed
facilities, in the form of revolving credit and term loan facilities, totalled US$2,356 million (2019: US$2,127 million).
Undrawn uncommitted facilities in the form of revolving credit loan facilities, amounted to US$148 million
(2019: US$190 million).
The following table analyses the Group’s non-derivative financial liabilities, net-settled derivative financial liabilities and
gross-settled financial instruments into relevant maturity groupings based on the remaining period at the balance sheet
date to the contractual maturity date. Derivative financial liabilities are included in the analysis if their contractual maturities
are essential for an understanding of the timing of the cash flows. The amounts disclosed in the table are the contractual
undiscounted cash flows.
Between
Between
Between
Between
Total
Within
one and
two and
three and
four and
Beyond
undiscounted
one year
US$m
two years
US$m
three years
US$m
four years
US$m
five years
five years
cash flows
US$m
US$m
US$m
903.1
780.3
929.7
18.9
398.8
0.2
(1.4)
(1.4)
(0.5)
603.2
2,022.4
3,060.3
7,917.5
0.2
–
0.5
–
2.3
802.4
–
(3.3)
85.3
572.6
62.8
445.5
639.8
678.2
2,484.2
(74.3)
(564.6)
(56.6)
(445.6)
(638.8)
(681.4)
(2,461.3)
895.4
881.3
503.6
1,290.7
4.4
12.1
340.1
0.2
(0.5)
(0.5)
(0.5)
(0.1)
545.0
2,548.3
6,123.1
0.2
–
2.7
900.9
–
(1.6)
132.7
(134.1)
68.0
(66.9)
555.7
(551.1)
45.5
(42.0)
428.4
623.0
1,853.3
(438.6)
(617.8)
(1,850.5)
2020
Borrowings
Creditors
Net settled derivative
financial instruments
Gross settled derivative
financial instruments
– inflow
– outflow
2019
Borrowings
Creditors
Net settled derivative
financial instruments
Gross settled derivative
financial instruments
– inflow
– outflow
None of the undiscounted borrowings at 31st December 2020 are impacted by the IBORs reform.
70
Hongkong Land
Notes to the Financial Statements
29 Financial Risk Management continued
Capital management
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern whilst seeking
to maximise benefits to shareholders and other stakeholders. Capital is equity as shown in the consolidated balance sheet plus
net debt.
The Group actively and regularly reviews and manages its capital structure to ensure optimal capital structure and shareholder
returns, taking into consideration the future capital requirements of the Group and capital efficiency, prevailing and projected
profitability, projected operating cash flows, projected capital expenditures and projected strategic investment opportunities.
In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, purchase
Group shares, return capital to shareholders, issue new shares or sell assets to reduce debt. The Group does not have a defined
dividend policy or share repurchase plan.
The Group monitors capital on the basis of the Group’s consolidated gearing ratio and consolidated interest cover. The gearing
ratio is calculated as net debt divided by total equity. Net debt is calculated as total borrowings less bank balances. Interest
cover is calculated as underlying operating profit and the Group’s share of underlying operating profit of associates and joint
ventures divided by net financing charges including the Group’s share of net financing charges within associates and joint
ventures. The Group does not have a defined gearing or interest cover benchmark or range.
The ratios at 31st December 2020 and 2019 are as follows:
Gearing ratio (%)
Interest cover (times)
Fair value estimation
2020
2019
13
9
9
9
i) Financial instruments that are measured at fair value based on inputs other than quoted prices in active
markets that are observable for the asset or liability, either directly or indirectly (‘observable current
market transactions’)
The fair values of derivative financial instruments are determined using rates quoted by the Group’s bankers at the balance
sheet date. The rates for interest rate swaps and forward foreign exchange contracts are calculated by reference to market
interest rates and foreign exchange rates.
Assets
Derivative designated at fair value
– through other comprehensive income
– through profit and loss
Liabilities
Derivative designated at fair value
– through other comprehensive income
– through profit and loss
There were no changes in valuation techniques during the year.
Observable current
market transactions
2020
US$m
2019
US$m
9.7
23.7
33.4
(16.1)
–
(16.1)
19.7
10.8
30.5
(1.8)
(2.9)
(4.7)
Annual Report 2020 71
29 Financial Risk Management continued
Fair value estimation continued
ii) Financial instruments that are not measured at fair value
The fair values of current debtors, bank balances, current creditors, current borrowings and current lease liabilities are assumed
to approximate their carrying amounts due to the short-term maturities of these assets and liabilities.
The fair values of long-term borrowings are based on market prices or are estimated using the expected future payments
discounted at market interest rates. The fair values of non-current lease liabilities are estimated using the expected future
payments discounted at market interest rates.
Financial instruments by category
The fair values of financial assets and financial liabilities, together with carrying amounts at 31st December 2020 and 2019 are
as follows:
Fair value
Financial
assets at
of hedging
amortised
instruments
US$m
costs
US$m
Other
financial
liabilities
US$m
Total
carrying
amount
US$m
Fair value
US$m
2020
Financial assets measured at fair value
Derivative financial instruments
Financial assets not measured at fair value
Debtors
Bank balances
33.4
–
–
–
–
242.3
1,996.6
2,238.9
Financial liabilities measured at fair value
Derivative financial instruments
(16.1)
Financial liabilities not measured at fair value
Borrowings
Trade and other payable excluding
non-financial liabilities
–
–
–
–
–
–
–
–
–
–
–
–
33.4
33.4
242.3
1,996.6
242.3
1,996.6
2,238.9
2,238.9
(16.1)
(16.1)
(6,564.9)
(6,564.9)
(6,904.0)
(802.4)
(802.4)
(802.4)
(7,367.3)
(7,367.3)
(7,706.4)
72
Hongkong Land
Notes to the Financial Statements
29 Financial Risk Management continued
Fair value estimation continued
Financial instruments by category continued
Fair value
of hedging
instruments
US$m
Financial
assets at
amortised
costs
US$m
Other
financial
liabilities
US$m
Total
carrying
amount
US$m
Fair value
US$m
2019
Financial assets measured at fair value
Derivative financial instruments
Financial assets not measured at fair value
Debtors
Bank balances
30.5
–
–
–
–
345.8
1,424.0
1,769.8
Financial liabilities measured at fair value
Derivative financial instruments
(4.7)
Financial liabilities not measured at fair value
Borrowings
Trade and other payable excluding
non-financial liabilities
–
–
–
–
–
–
–
–
–
–
–
–
30.5
30.5
345.8
1,424.0
345.8
1,424.0
1,769.8
1,769.8
(4.7)
(4.7)
(5,015.2)
(5,015.2)
(5,174.4)
(900.9)
(900.9)
(900.9)
(5,916.1)
(5,916.1)
(6,075.3)
Annual Report 2020 73
30 Critical Accounting Estimates and Judgements
Estimates and judgements used in preparing the financial statements are continually evaluated and are based on historical
experience and other factors, including expectations of future events that are believed to be reasonable according to
circumstances and conditions available. The existing and potential impacts arising from the COVID-19 pandemic have been
considered when applying estimates and assumptions in the preparation of the financial statements, including the Group’s
assessment of impairment of assets and the independent valuers’ valuation of the Group’s investment properties. Given the
uncertainty of the impact of COVID-19, the actual results may differ from these accounting estimates.
The estimates and assumptions that have a significant effect on the reported amounts of assets and liabilities, and income and
expenses are discussed below.
Investment properties
The fair values of investment properties are determined by independent valuers on an open market for existing use basis
calculated on the discounted net income allowing for reversionary potential. For investment properties in Hong Kong, Chinese
mainland and Singapore, capitalisation rates in the range of 2.75% to 3.50% for office (2019: 2.75% to 3.50%) and 3.75% to
5.00% for retail (2019: 3.75% to 5.00%) are used in the fair value determination.
Considerations have been given to assumptions that are mainly based on market conditions existing at the balance sheet date
and appropriate capitalisation rates. These estimates are regularly compared to actual market data and actual transactions
entered into by the Group.
Impairment of assets
The Group tests annually whether goodwill and other assets that have indefinite useful lives suffered any impairment. Other assets
are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset exceeds
its recoverable amount. The recoverable amount of an asset or a cash generating unit is determined based on the higher of its
fair value less costs to sell and its value-in-use, calculated on the basis of management’s assumptions and estimates. Changing
the key assumptions, including the discount rates or the growth rate assumptions in the cash flow projections, could materially
affect the value-in-use calculations.
The loss allowances for financial assets are based on assumptions about risk of default and expected loss rates. The Group uses
judgement in making these assumptions and selecting the inputs to the impairment calculation, based on the Group’s past history,
existing market conditions as well as forward looking estimates at the balance sheet date (see Note 12).
Income taxes
The Group is subject to income taxes in numerous jurisdictions. Significant judgement is required in determining the worldwide
provision for income taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain
during the ordinary course of business. Where the final tax outcome of these matters is different from the amounts that were
initially recorded, such differences will impact the income tax and deferred tax provisions in the period in which such
determination is made.
Provision of deferred tax follows the way management expects to recover or settle the carrying amount of the related assets or
liabilities, which the management may expect to recover through use, sale or combination of both. Accordingly, deferred tax will
be calculated at income tax rate, capital gains tax rate or combination of both. There is a rebuttable presumption in International
Financial Reporting Standards that investment properties measured at fair value are recovered through sale. Thus deferred tax
on revaluation of investment properties held by the Group are calculated at the capital gain tax rate.
Recognition of deferred tax assets, which principally relate to tax losses, depends on the management’s expectation of future
taxable profit that will be available against which the tax losses can be utilised. The outcome of their actual utilisation may
be different.
Revenue recognition
The Group uses the percentage of completion method to account for its contract revenue of certain development properties sales.
The stage of completion is measured by reference to the contract costs incurred to date compared to the estimated total costs for
the contract. Significant assumptions are required to estimate the total contract costs and the recoverable variation works that
affect the stage of completion and the contract revenue respectively. In making these estimates, management has relied on past
experience and the work of specialists.
74
Hongkong Land
Notes to the Financial Statements
30 Critical Accounting Estimates and Judgements continued
Non-trading items
The Group uses underlying business performance in its internal financial reporting to distinguish between the underlying profits
and non-trading items. The identification of non-trading items requires judgement by management, but follows the consistent
methodology as set out in the Group’s accounting policies.
Interest rate benchmark reform
Following the financial crisis, the reform and replacement of benchmark interest rates such as US$ LIBOR and other interbank
offered rates (‘IBORs’) has become a priority for global regulators. There is currently uncertainty around the timing and precise
nature of these changes.
To transition existing contracts and agreements that reference IBORs (including US$ LIBOR) to risk free rates (‘RFRs’) such as
US$ LIBOR to Secured Overnight Financing Rate, adjustments for term differences and credit differences might need to be applied
to RFRs, to enable the two benchmark rates to be economically equivalent on transition.
Group Treasury is managing the Group’s IBORs transition plan. The greatest change will be amendments to the contractual
terms of the IBORs-referenced floating-rate debt and the associated swap and the corresponding update of the hedge designation.
However, the changed reference rate may also affect other systems, processes, risk and valuation models, as well as having tax
and accounting implications.
Relief applied
The Group has applied the following reliefs that were introduced by the amendments made to IFRS 9 Financial Instruments in
September 2019:
i) When considering the ‘highly probable’ requirement, the Group has assumed that the IBORs interest rate on which the Group’s
hedged debt is based does not change as a result of IBORs reform.
ii) In assessing whether the hedge is expected to be highly effective on a forward-looking basis the Group has assumed that the
IBORs interest rate on which the cash flows of the hedged debt and the interest rate swap that hedges it are based is not
altered by IBORs reform.
iii) The Group has not recycled the cash flow hedge reserve relating to the period after the reforms are expected to take effect.
Assumptions made
In calculating the change in fair value attributable to the hedged risk of floating-rate debt, the Group has made the following
assumptions that reflect its current expectations:
i) The IBORs-referenced floating-rate debt will move to RFRs during 2023 and the spread will be similar to the spread included
in the interest rate swap used as the hedging instrument.
ii) No other changes to the terms of the floating-rate debt are anticipated.
iii) The Group has incorporated the uncertainty over when the IBORs-referenced floating-rate debt will move to RFRs, the resulting
adjustment to the spread, and the other aspects of the reform that have not yet been finalised by adjusting the discount rate
used in the calculation.
Annual Report 2020 75
Independent Auditors’ Report
To the members of Hongkong Land Holdings Limited
Report on the audit of the group financial statements
Opinion
In our opinion, Hongkong Land Holdings Limited’s Group (the ‘Group’) financial statements (the ‘financial statements’):
• give a true and fair view of the state of the Group’s affairs as at 31st December 2020 and of its loss and cash flows for the year
then ended;
• have been properly prepared in accordance with International Financial Reporting Standards (IFRSs) as issued by the International
Accounting Standards Board (IASB); and
• have been prepared in accordance with the requirements of the Companies Act 1981 (Bermuda).
We have audited the financial statements, included within the Annual Report, which comprise: the Consolidated Balance Sheet as
at 31st December 2020; the Consolidated Profit and Loss Account, the Consolidated Statement of Comprehensive Income, the
Consolidated Cash Flow Statement, and the Consolidated Statement of Changes in Equity for the year then ended; and the Notes
to the Financial Statements, which include a description of the significant accounting policies (‘the Principal Accounting Policies’).
Certain required disclosures have been presented in the Corporate Governance section, rather than in the Notes to
the Financial Statements. These disclosures are cross-referenced from the financial statements and are identified as audited.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (‘ISAs (UK)’) and applicable law. Our responsibilities
under ISAs (UK) are further described in the Auditors’ responsibilities for the audit of the financial statements section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Independence
We remained independent of the Group in accordance with the ethical requirements that are relevant to our audit of the financial
statements in the UK, which includes the Financial Reporting Council’s (‘FRC’s’) Ethical Standard as applicable to listed entities, and
we have fulfilled our other ethical responsibilities in accordance with these requirements.
Our audit approach
Overview
Materiality
• Overall Group materiality: US$268.0 million (2019: US$406.0 million), which represents 0.75% of net assets (2019: 1% of total
non-current assets).
• Specific Group materiality, applied to balances not related to investment properties: US$55.0 million (2019: US$66.0 million) which
represents 5% of underlying profit before tax.
Audit scope
• A full scope audit was performed on seven entities. These subsidiaries accounted for 92% of the Group’s revenue, 91% of the
Group’s loss before tax, 80% of the Group’s underlying profit before tax and 81% of the Group’s net assets.
• Full scope audits of four joint ventures were also performed which accounted for a further 4% of the Group’s loss before tax,
10% of the Group’s underlying profit before tax and 4% of the Group’s net assets.
Key audit matters
• Valuation of investment properties
• Impact of COVID-19
76
Hongkong Land
Our audit approach continued
The scope of our audit
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial statements.
Capability of the audit in detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our
responsibilities, outlined in the Auditors’ responsibilities for the audit of the financial statements section, to detect material misstatements
in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud,
is detailed below.
Based on our understanding of the Group and industry, we identified that the principal risks of non-compliance with laws and regulations
related to, but were not limited to, the Companies Act 1981 (Bermuda), the Listing Rules, tax regulations, employment regulation,
health and safety regulation and equivalent local laws and regulations applicable to significant reporting component teams, and we
considered the extent to which non-compliance might have a material effect on the financial statements. We also considered those laws
and regulations that have a direct impact on the preparation of the financial statements such as the Companies Act 1981 (Bermuda).
We evaluated management’s incentives and opportunities for fraudulent manipulation of the financial statements (including the risk of
override of controls), and determined that the principal risks were related to the posting of inappropriate journal entries and management
bias in accounting estimates and judgements. The Group engagement team shared this risk assessment with the component auditors
so that they could include appropriate audit procedures in response to such risks in their work. Audit procedures performed by the
Group engagement team and/or component auditors included:
• Gaining an understanding of the legal and regulatory framework applicable to the Group and the industries in which its businesses
operate, and considering the risk of any acts by the Group which may be contrary to applicable laws and regulations, including fraud;
• Discussions with management and internal audit, including consideration of known or suspected instances of non-compliance with
laws and regulation and fraud;
• Understanding the results of whistleblowing procedures and related investigations. We focused on known and suspected instances
of non-compliance with laws and regulations that could give rise to a material misstatement in the Group and company financial
statements, including, but not limited to, the Companies Act 1981 (Bermuda), the Listing Rules, tax legislation, employment
regulation, health and safety regulation and equivalent local laws and regulations applicable to significant reporting component teams;
• Review of reporting component auditors’ work, including any matters reported by component auditors’ relating to non-compliance
with laws and regulations or fraud;
• Challenging assumptions and judgements made by management in their significant accounting estimates that involved making
assumptions and considering future events that are inherently uncertain. In particular, in relation to the valuation of investment
properties (see related key audit matters below); and
• We did not identify any key audit matters relating to irregularities, including fraud. As in all of our audits we also addressed the risk
of management override of internal controls, including testing journals, and evaluated whether there was evidence of bias by the
Directors that represented a risk of material misstatement due to fraud.
There are inherent limitations in the audit procedures described above and the further removed non-compliance with laws and regulations
is from the events and transactions reflected in the financial statements, the less likely we would become aware of it. Also, the risk
of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may
involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion.
Annual Report 2020 77
Independent Auditors' Report
Our audit approach continued
Key audit matters
Key audit matters are those matters that, in the auditors’ professional judgement, were of most significance in the audit of the financial
statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud)
identified by the auditors, including those which had the greatest effect on: the overall audit strategy, the allocation of resources in the
audit and directing the efforts of the engagement team. These matters, and any comments we make on the results of our procedures
thereon, were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and
we do not provide a separate opinion on these matters.
This is not a complete list of all risks identified by our audit. The impact of COVID-19 is a new key audit matter this year. Otherwise,
the key audit matters below are consistent with last year.
Key audit matter
How our audit addressed the key audit matter
Valuation of investment properties
Refer to Note 30 (Critical Accounting Estimates and Judgements)
We understood management’s controls and processes for
and Note 10 (Investment Properties) to the consolidated
determining the valuation of investment properties and assessed
financial statements.
The fair value of the Group’s investment properties amounted to
US$30,083.3 million at 31st December 2020, with a revaluation
the inherent risk of material misstatement by considering the
degree of estimation uncertainty and the judgement involved
in determining assumptions to be applied.
loss of US$3,443.4 million recognised as a non-trading item in
We assessed the valuers’ qualifications and their expertise,
the Consolidated Profit and Loss account for the year. The Group’s
considering whether there were any matters that might have
property portfolio principally consists of commercial properties.
affected their objectivity or may have imposed scope limitations
The valuation of the Group’s investment property portfolio is
inherently subjective due to, among other factors, the individual
nature of each property, its location, prevailing market returns
upon their work. We found no evidence to suggest that the
objectivity of the valuers in their performance of the valuations
was compromised.
and the expected future rentals for that particular property.
Our work focused on the highest value properties in the
The valuations were carried out by third-party valuers
(the ‘valuers’). There is inherent estimation uncertainty in
portfolio, namely the buildings in the central business district
of Hong Kong.
determining a property’s valuation, as the valuers make
We read the valuation reports covering the majority of the total
assumptions, judgements and estimates in key areas.
investment property portfolio to consider whether the valuation
Valuations are principally derived using the income
methodology used was appropriate for each property and suitable
capitalisation method. Judgements are made in respect of
for use in determining the carrying value. We performed testing,
capitalisation rates and market rents.
on a sample basis, on the input data used in the valuation
We focused on the valuation of investment properties due
to the significant judgements and estimates involved in
determining the valuations.
78
Hongkong Land
process to satisfy ourselves of the accuracy of the property
information supplied to the valuers by management, for example
agreement of lease terms to tenancy agreements and other
supporting documents.
We understood and assessed the Group’s controls over data
used in the valuation of the investment property portfolio and
management’s review of the valuations.
The audit team, including our valuation specialists, attended
meetings with the valuers at which the valuations and the key
assumptions were discussed. We compared the capitalisation
rates used by the valuers with an estimated range of expected
rates, determined via reference to published benchmarks and
market information. We evaluated year-on-year movements in
capital value with reference to publicly available information and
rentals with reference to prevailing market rents. We evaluated
whether the assumptions used were appropriate in light of the
evidence provided by relevant transactions during the year.
Overall, we concluded that the assumptions used in the
valuations were appropriate.
We also assessed the adequacy of the disclosures related to
the valuation of investment properties in the context of IFRS
disclosure requirements and were satisfied that appropriate
disclosure has been made.
Our audit approach continued
Key audit matters continued
Key audit matter
Impact of COVID-19
How our audit addressed the key audit matter
The on-going COVID-19 pandemic has caused volatility to the
Our procedures in respect of the valuation of investment
global economy. There is inherent uncertainty for the pace
properties are covered in the related key audit matter above.
of global economic recovery which might have a future impact
on the real estate market and in determining the impact of
the pandemic on certain aspects of the financial statements.
We performed additional procedures to assess any control
implications arising from the impact of COVID-19, including
inquiries with respect to the operation of IT and business
The most significant impact of COVID-19 on the financial
process controls, and whether there has been any impact
statements has been in relation to the assumptions supporting
on the Group. We instructed our component teams to
the valuation of investment properties which have been
perform additional procedures to understand if there were
updated to reflect management’s best estimate of the impact
any changes to management’s planned operation of controls
of COVID-19.
We also considered whether COVID-19 had any impact on the
Group’s liquidity and ability to continue as a going concern.
Management’s way of working, including the operation of
controls, has been impacted by COVID-19 as a result of staff
members working remotely at times. For example, this has
meant virtual review meetings replaced in-person meetings.
or monitoring activities. Based on the inquiries performed and
the results of our audit procedures, we did not identify any
evidence of material deterioration in the control environment.
We increased the frequency and extent of our oversight
over component audit teams, using video conferencing and
remote working paper reviews, to satisfy ourselves as to the
appropriateness of audit work performed at significant and
material components.
We considered the appropriateness of disclosures in the financial
statements in respect of the impact of the current environment
and consider these to be appropriate.
We have examined the Group’s liquidity forecasts in light of
the impact of COVID-19. Our conclusions in relation to going
concern are set out in the section below.
How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the financial statements
as a whole, taking into account the structure of the Group, the accounting processes and controls, and the industry in which it operates.
The Group’s accounting processes are structured around finance functions, which are responsible for their own accounting records and
controls, which in turn, report financial information to the Group’s finance function in Hong Kong to enable them to prepare consolidated
financial statements.
In establishing the overall approach to the Group audit, we determined the type of work that needed to be performed by members of
the Group engagement team or by component auditors from member firms within the PwC Network and other auditors operating under
our instruction. Where the work was performed by component auditors, we determined the level of involvement we needed to have in
the audit work at those components to be able to conclude whether sufficient appropriate audit evidence had been obtained as a basis
for our opinion on the financial statements as a whole. The Group engagement team was involved in the significant reporting entities in
scope for Group reporting during the audit cycle through a combination of meetings and conference calls. Due to the current restrictions
on travel and social distancing measures, enacted as a response to COVID-19, the lead Group audit partner and other senior team
members were involved throughout the year through the regular use of video conference calls and other forms of communication to
direct and oversee the audit, including remote review of the work of component teams.
A full scope audit of the complete financial information was performed for seven subsidiaries. These subsidiaries, together with
procedures performed on centralised functions and at the Group level (on the consolidation and other areas of significant judgement),
accounted for 92% of the Group’s revenue, 91% of the Group’s loss before tax, 80% of the Group’s underlying profit before tax and
81% of the Group’s net assets. Full scope audits of the complete financial information were also performed for four principal joint
ventures which accounted for a further 4% of the Group’s loss before tax, 10% of the Group’s underlying profit before tax and 4% of
the Group’s net assets. This gave us the evidence we needed for our opinion on the financial statements as a whole.
Annual Report 2020 79
Independent Auditors' Report
Our audit approach continued
Materiality
The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for materiality.
These, together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of
our audit procedures on the individual financial statement line items and disclosures and in evaluating the effect of misstatements,
both individually and in aggregate on the financial statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Overall Group materiality
US$268.0 million (2019: US$406.0 million)
How we determined it
0.75% of net assets (2019: 1% of total non-current assets)
Rationale for benchmark applied
A key determinant of the Group’s value is investment property. As net assets is the primary
measure used by the shareholders in assessing the performance of the Group, we set an
overall Group materiality level based on net assets.
We set a specific materiality level of US$55.0 million for items not related to the carrying value of investment properties and their
related fair value changes (either wholly owned or held within joint ventures). This equates to 5% of underlying profit before tax.
For each component in the scope of our Group audit, we allocated a materiality that is less than our overall Group materiality. The range
of overall materiality allocated across components was US$2.1 million to US$49.5 million.
We use performance materiality to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected
misstatements exceeds overall materiality. Specifically, we use performance materiality in determining the scope of our audit and
the nature and extent of our testing of account balances, classes of transactions and disclosures, for example in determining sample
sizes. Our performance materiality was 75% of overall materiality, amounting to US$201.0 million for the items related to investment
properties and US$41.0 million for items not related to carrying value of investment properties in the group financial statements.
In determining the performance materiality, we considered a number of factors – the history of misstatements, risk assessment and
aggregation risk and the effectiveness of controls – and concluded that an amount at the upper end of our normal range was appropriate.
We agreed with the Audit Committee that we would report to them misstatements identified during our audit of investment property
related items above US$13.0 million (2019: US$20.0 million) as well as misstatements below that amount that in our view, warranted
reporting for qualitative reasons. For all other account balances, we agreed with the Audit Committee that we would report to them
misstatements identified during our audit above US$2.7 million (2019: US$3.3 million) as well as misstatements below that amount
that in our view, warranted reporting for qualitative reasons.
Conclusions relating to going concern
Our evaluation of the Directors’ assessment of the Group’s ability to continue to adopt the going concern basis of accounting included:
• Evaluating the inherent risks to the Group’s and its businesses’ business models and analysed how those risks might affect the
Group’s financial resources or ability to continue operations over the going concern period.
• Considering sensitivities over the level of available financial resources indicated by the Group’s financial forecasts taking account of
reasonably possible, but not unrealistic, adverse effects that could arise from adverse trading conditions as a result of COVID-19 and
impact the Group’s liquidity position over the going concern period.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually
or collectively, may cast significant doubt on the Group’s ability to continue as a going concern for a period of at least 12 months from
when the financial statements are authorised for issue.
In auditing the financial statements, we have concluded that the Directors’ use of the going concern basis of accounting in the preparation
of the financial statements is appropriate.
As not all future events or conditions can be predicted, this conclusion is not a guarantee as to the Group’s ability to continue as
a going concern.
Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant sections of
this report.
80
Hongkong Land
Reporting on other information
The other information comprises all of the information in the Annual Report other than the financial statements and our auditors’
report thereon. The Directors are responsible for the other information. Our opinion on the financial statements does not cover the
other information and, accordingly, we do not express an audit opinion or, any form of assurance thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider
whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or
otherwise appears to be materially misstated. If we identify an apparent material inconsistency or material misstatement, we are
required to perform procedures to conclude whether there is a material misstatement of the financial statements or a material
misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement
of this other information, we are required to report that fact. We have nothing to report based on these responsibilities.
Responsibilities for the financial statements and the audit
Responsibilities of the Directors for the financial statements
As explained more fully in the Responsibility Statement and the Corporate Governance section, the Directors are responsible for the
preparation of the financial statements in accordance with the applicable framework and for being satisfied that they give a true and
fair view. The Directors are also responsible for such internal control as they determine is necessary to enable the preparation of
financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are responsible for assessing the Group’s ability to continue as a going concern,
disclosing as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either
intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so.
Auditors’ responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement,
whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of
assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement
when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
A further description of our responsibilities for the audit of the financial statements is located on the FRC’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditors’ report.
Use of this report
This report, including the opinions, has been prepared for and only for the Company’s members as a body in accordance with Section 90
of the Companies Act 1981 (Bermuda) and for no other purpose. We do not, in giving these opinions, accept or assume responsibility
for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly
agreed by our prior consent in writing.
Partner responsible for the audit
The engagement partner responsible for this independent auditors’ report is John Waters.
PricewaterhouseCoopers LLP
Chartered Accountants
London
11th March 2021
(a) The maintenance and integrity of the Hongkong Land Holdings Limited website is the responsibility of the Directors; the work
carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility
for any changes that may have occurred to the financial statements since they were initially presented on the website.
(b) Legislation in Bermuda governing the preparation and dissemination of financial statements may differ from legislation in
other jurisdictions.
Annual Report 2020 81
Five Year Summary
2016
US$m
2017
US$m
2018
US$m
2019
US$m
2020
US$m
Profit/(loss) attributable to shareholders
3,311
5,614
2,457
198
(2,647)
Underlying profit attributable to shareholders
822
947
1,036
1,076
963
Investment properties
27,712
32,481
33,712
33,191
30,083
Net debt
2,008
2,549
3,564
3,591
4,568
Shareholders ’ funds
31,383
36,842
38,342
38,247
35,709
Net asset value per share
13.34
15.66
16.43
16.39
15.30
US$
US$
US$
US$
US$
44.24
46.12
41.27
40.24
34.92
19.00
20.00
22.00
22.00
22.00
15.66
16.43
16.39
15.30
13.34
2016
2017
2018
2019
2020
Underlying earnings
Dividends
2016
2017
2018
2019
2020
Underlying earnings/dividends
per share (US¢)
Net asset value per share (US$)
82
Hongkong Land
Responsibility Statement
The Directors of the Company confirm to the best of their knowledge that:
a. the consolidated financial statements have been prepared in accordance with International Financial Reporting Standards, including
International Accounting Standards and Interpretations adopted by the International Accounting Standards Board; and
b. the sections of this Report, including the Chairman’s Statement, Chief Executive’s Review and the Principal Risks and Uncertainties,
which constitute the management report, include a fair review of all information required to be disclosed by the Disclosure Guidance
and Transparency Rules 4.1.8 to 4.1.11 issued by the Financial Conduct Authority in the United Kingdom.
For and on behalf of the Board
Robert Wong
Simon Dixon
Directors
11th March 2021
Annual Report 2020 83
Corporate Governance
Overview of Governance Approach
The Hongkong Land Group (Hongkong Land Holdings Limited and its subsidiaries together known as the ‘Group’) understands the value
of good corporate governance to long-term sustainable success and attaches importance to the corporate stability that strong governance
brings, as well as the opportunities that result from it being part of the Jardine Matheson Holdings Limited (‘Jardine Matheson’) group.
The Group is committed to high standards of governance. The system of governance it has adopted has been developed over many
years by the members of the Jardine Matheson group which both the Group and its stakeholders regard as appropriate to the nature
of its business and the long-term strategy it pursues in its Asian markets, and is tailored to the Group’s size, ownership structure,
complexity and breadth of business. It enables the Group to benefit from Jardine Matheson’s strategic guidance and professional
expertise, while at the same time ensuring that the independence of the Board is respected and clear operational accountability rests
with the Company’s executive management teams. Having an effective corporate governance framework supports the Board in the
delivery of the Group’s strategy and supports long-term sustainable growth.
Group Structure
Jardine Matheson is the ultimate holding company of the Group. The structural relationship between Jardine Matheson group and the
Group is considered to be a key element of the Group’s success. By coordinating objectives, establishing common values and standards,
and sharing experience, contacts and business relationships, the Jardine Matheson group companies aim to optimise their opportunities
across the Asian countries where they operate.
The Company is incorporated in Bermuda. The Company’s property interests are held almost entirely in Asia. The Company’s equity
shares have as their primary listing a standard listing on the Main Market of the London Stock Exchange (the ‘LSE’), and the Company’s
primary regulator is the Financial Conduct Authority of the United Kingdom (the ‘FCA’).
The Disclosure Guidance and Transparency Rules (the ‘DTRs’) issued by the FCA require that this Report addresses all relevant information
about the corporate governance practices applied by the Company and the Group beyond the requirements under Bermuda law.
The Company also has secondary listings in Singapore and Bermuda. As the Company has only secondary listings on these exchanges,
the listing rules of such exchanges are not generally applicable. Instead, the Company must release the same information as it is
required to release under the rules applicable to it as a standard listed company on the LSE, in compliance with the rules applicable
to those exchanges in Singapore and Bermuda.
Governance and Legal Framework
As a company incorporated in Bermuda, the Company is governed by:
• The Bermuda Companies Act 1981 (the ‘Companies Act’);
• The Bermuda Hongkong Land Holdings Limited Consolidation and Amendment Act 1988 (as amended), pursuant to which the Company
was incorporated and the Bermuda HongkongLand Holdings Limited Regulations 1993 (as amended) was established; and
• The Company’s Memorandum of Association and Bye-laws.
The Bye-laws of the Company can be amended by the shareholders by way of a special resolution at a general meeting of the Company.
The Company’s standard listing in London means that it is bound by many of the same rules as premium-listed companies under the UK
Listing Rules, the DTRs, the Market Abuse Regulation1 (‘MAR’) and the Prospectus Regulation Rules, including in relation to continuous
disclosure, periodic financial reporting, disclosure of interests in shares, market abuse and the publication and content of prospectuses
in connection with admission to trading or offering securities to the public. The Company is also subject to regulatory oversight from the
FCA, as the Company’s principal securities regulator, and is required to comply with the Admission and Disclosure Standards of the Main
Market of the LSE. The Company and its Directors are also subject to legislation and regulations in Singapore relating to insider dealing.
The Company is not required to comply with the UK Corporate Governance Code (the ‘Code’), which applies to all premium-listed
companies and sets out the governance principles and provisions which are expected to be followed by companies, which are subject
to the Code.
When the shareholders approved the Company’s move to a standard listing from a premium listing in 2014, the Company stated that
it intended to maintain certain governance principles on the basis as was then applicable to the Company’s premium listing. As a result,
the Company has adopted a number of governance principles (the ‘Governance Principles’) based on the then applicable requirements
for a premium listing, which go further than the standard listing requirements.
1 The EU Market Abuse Regulation and, with effect from 1st January 2021, the UK Market Abuse Regulation.
84
Hongkong Land
Governance and Legal Framework continued
The key elements of the Governance Principles are as follows:
• When assessing a significant transaction (a larger transaction which would be classified as a class 1 transaction under the provisions
of the UK Listing Rules), the Company will engage an independent financial adviser to provide a fairness opinion on the terms of
the transaction.
• If the Company carries out a related party transaction which would require a sponsor to provide a fair and reasonable opinion under
the provisions of the UK Listing Rules, it will engage an independent financial adviser to confirm that the terms of the transaction are
fair and reasonable as far as the shareholders of the Company are concerned.
• Further, as soon as the terms of a significant transaction or a related party transaction are agreed, an announcement will be issued
by the Company providing such details of the transaction as are necessary for investors to evaluate the effect of the transaction on
the Company.
• At each annual general meeting (‘AGM’), the Company will seek shareholders’ approval to issue new shares on a non-pre-emptive
basis for up to 33% of the Company’s issued share capital, of which up to 5% can be issued for cash consideration.
• The Company adheres to a set of Securities Dealing Rules which follow the provisions of MAR with respect to market abuse and
disclosure of interests in shares.
The Management of the Group
The Board
The Board is responsible for ensuring that the Group is appropriately managed and achieves the strategic objectives it sets, in a way
that is supported by the right culture, values and behaviours throughout the Group.
The Directors have the full power to manage the business affairs of the Company, other than matters reserved to be exercised by
the Company in general meeting under Bermuda legislation or the Company’s Bye-laws. Key matters for which the Directors are
responsible include:
• Responsibility for the overall strategic aims and objectives of the Group;
• Establishing the Company’s purpose and values;
• Approval of the Group’s strategy and risk appetite to align with the Group’s purpose and values;
• Approval and oversight of the Group policy framework and approval of appropriate Group policies;
• Approval of the Annual Budget and monitoring of performance against it;
• Oversight of the Group’s operations;
• Approval of major changes to Group’s corporate or capital structure;
• Approval of major capital expenditure and significant transactions (in terms of size or reputational impact);
• Approval of interim and final financial statements upon recommendation from the Audit Committee, and interim management statements;
• Approval of Annual Report and Accounts;
• Approval of dividend policy and amount and form of interim and final dividend payments for approval by shareholders as required;
• Any significant changes to the Company’s accounting policies or practices upon recommendation from the Audit Committee;
• Appointment, reappointment or removal of the external auditor, subject to shareholder approval, upon recommendation from
the Audit Committee;
• Approval of matters relating to the AGM (resolutions and shareholder documentation);
• Approval of all shareholder circulars, prospectuses and listing particulars issued by the Company; and
• Approval of material public announcements concerning matters decided by the Board.
Responsibility for certain matters, including the approval of borrowing facilities and of capital expenditure (other than major capital
expenditure which is required to be approved by the Board) has been delegated to the finance committee established within the
Hong Kong-based Group management company, Hongkong Land Limited (‘HKL’).
Annual Report 2020 85
Board Composition and Operational Management
The Board’s composition and the way it operates provide stability, allowing the Company to take a long-term view as it seeks to grow
its business and pursue investment opportunities.
The Chairman has been appointed in accordance with the provisions of the Bye-laws of the Company, which provide that the chairman
of Jardine Matheson, or any Director nominated by him, shall be the Chairman of the Company.
The Company has a dedicated executive management team led by the Chief Executive. The Memorandum of Association of the Company,
however, provides for the chairman of Jardine Matheson to be, or to appoint, the Managing Director of the Company. Reflecting this,
and the Jardine Matheson group’s 50% interest in the Company’s share capital, the Chief Executive and the Managing Director meet
regularly. Similarly, the board of HKL, and its finance committee are chaired by the Managing Director and include Hongkong Land
Group executives as well as Jardine Matheson’s deputy managing director, group finance director and group general counsel.
The presence of Jardine Matheson representatives on the Board of the Company and on the board of HKL, as well as on its audit and
finance committees, provides an added element of stability to the Company’s financial planning and supervision, enhancing its ability to
raise finance and take a long-term view of business development. The presence of Jardine Matheson representatives on the Company’s
Board and nominations committee and HKL’s audit, finance and remuneration committees also strengthens the ability of management to
work effectively together in exploiting the full range of the Jardine Matheson group’s commercial strengths.
As at 11th March 2021, the Company comprises 13 Directors, three of whom (23%) – Christina Ong, Prijono Sugiarto and Michael Wu
– are regarded as Independent Non-Executive Directors. Four further Non-Executive Directors – Anthony Nightingale, Lord Powell of
Bayswater, James Watkins and Percy Weatherall – do not have any executive responsibilities, nor have they been an employee of the
Company or the Group within the past five years, and they are sufficiently distanced from the day-to-day operations of the Company
for the Company to take the view that they are independent Directors, even though they have served on the Board for over nine years.
The names of all the Directors and brief biographies appear on pages 21 and 22 of this Report.
Ben Keswick has been Chairman of the Board since 16th May 2013. John Witt has held the role of Managing Director from 15th June 2020.
Robert Wong has been Chief Executive since 1st August 2016. Ben Keswick previously held the roles of Chairman and Managing Director
on a combined basis from 16th May 2013. The Board considers that there is a clear division of responsibilities among the Chairman,
the Managing Director and the Chief Executive, in order to ensure an appropriate balance of power and authority.
Chairman
The Chairman’s role is to lead the Board, ensuring its effectiveness while taking account of the interests of the Group’s various
stakeholders, and promoting high standards of corporate governance. The Chairman’s principal responsibilities are in the areas of
strategy, relationships, governance and people. He leads the Board in overseeing the long-term strategic direction of the Group and
approving its key business priorities. His key responsibilities also include:
• Leading the development of the culture and values of the Group;
• Supporting the development and maintenance of relationships with existing and new key business partners, governments
and shareholders;
• Ensuring (together with the Managing Director and the Chief Executive) an appropriate focus on attracting and retaining the right
people and carrying out succession planning for senior management positions;
• Creating a culture of openness and transparency at Board meetings;
• Building an effective Board supported by a strong governance framework;
• Ensuring all Directors effectively contribute to discussions and feel comfortable in engaging in healthy debate and constructive challenge;
• Ensuring all Directors receive accurate, timely and clear information; and
• Promoting effective communication between Executive and Non-Executive Directors.
86
Hongkong Land
Corporate Governance Managing Director
The Managing Director acts as chairman of HKL and of its finance committee, as well as being a member of the Company’s nominations
committee and the remuneration committee established in HKL. He has responsibility for representing Jardine Matheson, as the
major shareholder in the Company, in its oversight of the day-to-day management by the Chief Executive and his leadership team
of the business.
Chief Executive
The responsibility for running the Group’s business and all the executive matters affecting the Group rests with the Chief Executive.
The implementation of the Group’s strategy is delegated to the Company’s executive management, with decision-making authority
within designated financial parameters delegated to the HKL finance committee. The Chief Executive has day-to-day responsibility for:
• The effective management of the Group’s business;
• Leading the development of the Company’s strategic direction and implementing the agreed strategy;
• Identifying and executing new business opportunities;
• Managing the Group’s risk profile and implementing and maintaining an effective framework of internal controls;
• Developing targets and goals for his executive team;
• Ensuring effective communication with shareholders and key stakeholders and regularly updating institutional investors on the
business strategy and performance;
• Providing regular operational updates to the Board on all matters of significance relating to the Group’s business or reputation;
• Overseeing the Group’s capital allocation, business planning and performance;
• Ensuring (together with the Chairman and the Managing Director) an appropriate focus on attracting and retaining the right people
and carrying out succession planning for senior management positions; and
• Fostering innovation and entrepreneurialism to drive the Group’s business forward.
Non-Executive Directors
The Non-Executive Directors bring insight and experience to the Board. They have responsibility for constructively challenging
the strategies proposed by the Executive Directors and scrutinising the performance of management in achieving agreed goals
and objectives.
Board Meetings
The Board usually holds four meetings each year and ad hoc procedures are adopted to deal with urgent matters which arise between
scheduled meetings. The majority of Board meetings are usually held in different locations around Asia and one Board meeting is
usually held in Bermuda, at the same time as the Company’s AGM each May.
In 2020, due to travel restrictions imposed as a result of the pandemic, it was necessary to hold all four Board meetings virtually.
The Board receives high quality, up to date information for each of its meetings, which is provided to Directors via a secure online
board information portal.
The Directors of the Company who do not serve on the board of HKL and who are based outside Asia will usually visit Asia and Bermuda
to discuss the Group’s business, as well as to participate in the four strategic reviews that precede the regular Board meetings. In 2020,
all of these strategic reviews were held virtually as a result of the pandemic. These Directors are not directly involved in the operational
management of the Group’s business activities, but their knowledge of the Group’s affairs, as well as their experience of the wider
Jardine Matheson group, provide significant value to the ongoing review by the Company of the Group’s business and reinforces the
Board oversight process.
Annual Report 2020 87
Board and Committee Attendance
Directors are expected to attend all Board and Audit Committee meetings. The table below shows the attendance at the scheduled
Board and Audit Committee meetings:
Current Directors of the Company
Board
Committee
Audit
Ben Keswick
John Witt
Robert Wong
Simon Dixon
Adam Keswick
Anthony Nightingale
Christina Ong
Y.K. Pang
Lord Powell of Bayswater
Prijono Sugiarto
James Watkins
Percy Weatherall
Michael Wu
Directors of HKL
Graham Baker 1
Jeremy Parr
Former Directors of the Company
Mark Greenberg 2
Lord Sassoon 3
4/4
2/2
4/4
4/4
4/4
4/4
4/4
4/4
4/4
2/2
4/4
4/4
4/4
–
–
4/4
1/1
–
2/2
–
–
–
–
–
2/2
–
–
–
–
–
1/1
2/2
2/2
–
1 Graham Baker joined the board of HKL on 15th June 2020.
2 Mark Greenberg stepped down as a Director on 31st December 2020.
3 Lord Sassoon retired from the Board on 9th April 2020.
Appointment and Retirement of Directors
Each new Director is appointed by the Board and the Nominations Committee has been established to assist the Board in such matters.
In accordance with the Company’s Bye-laws, each new Director is subject to retirement and re-appointment at the first AGM after
appointment. Thereafter, Directors are subject to retirement by rotation requirements under the Bye-laws whereby one-third of the
Directors retire at the AGM each year. These provisions apply to both Executive and Non-Executive Directors, but the requirement to
retire by rotation does not extend to the Chairman or Managing Director.
Simon Keswick and Lord Sassoon retired from the Board on 1st January 2020 and 9th April 2020, respectively. Ben Keswick stepped
down as Managing Director of the Company on 15th June 2020 and remains as the Chairman. John Witt joined the Board and took on
the role of Managing Director of the Company with effect from 15th June 2020. Prijono Sugiarto was appointed to the Board with effect
from 29th July 2020 and Mark Greenberg stepped down from the Board with effect from 31st December 2020.
In accordance with Bye-law 85, Lord Powell of Bayswater, James Watkins and Percy Weatherall retire by rotation at this year’s AGM
and, being eligible, offer themselves for re-election. In accordance with Bye-law 92, John Witt and Prijono Sugiarto will also retire and,
being eligible, offer themselves for re-election. None of the Directors proposed for re-election has a service contract with the Company
or its subsidiaries.
Company Secretary
All Directors have access to the advice of the Company Secretary, who is responsible for advising the Board on all governance matters.
88
Hongkong Land
Corporate Governance Committees
The Board is supported by the activities of its Committees (the Nominations, Remuneration and Audit Committees), which ensure the
right level of attention and consideration are given to specific matters. Matters considered by each of the Committees are set out in its
respective terms of reference. Copies of these documents can be obtained from the Company’s website at www.hkland.com.
Nominations Committee
The Board established a Nominations Committee (the ‘Nominations Committee’) in March 2021. The key responsibilities of the
Nominations Committee are to:
• Review the structure, size and composition of the Board and its committees and make recommendations on any appointments in
order to maintain a balance of skills, knowledge and experience, as well as a diversity of perspectives;
• Lead the process for Board appointments and nominate suitable candidates to the Board;
• Assess suitable candidates based on merit and objective criteria (giving consideration to the promotion of diversity of backgrounds,
knowledge, experience and skills), taking into account their ability to meet the required time commitments;
• Oversee the development of succession pipelines for both the Board and senior management positions, to ensure talent is identified
and nurtured to meet the challenges and opportunities facing the Group; and
• Satisfy itself that any skill gaps are addressed in the reviews of Board composition, and that appropriate development opportunities
are in place for Directors to keep abreast of market knowledge and industry trends to perform their role effectively.
The Nominations Committee consists of a minimum of three members, selected by the Chairman of the Board. The Chairman of
the Board is the chairman of the Nominations Committee. The current members of the Nominations Committee are Ben Keswick,
Adam Keswick and John Witt. The Nominations Committee meets at least annually and more often if necessary. It plays a key role
in the process of recruiting senior executives. Candidates for appointment as Executive Directors of the Company or for other senior
management positions may be sourced internally or externally, including by using the services of specialist executive search or
recruitment firms. The aim is to appoint individuals who combine international business knowledge and experience, industry knowledge
and experience if possible, and familiarity with, or adaptability to, Asian markets. When appointing Non-Executive Directors, the
Committee pays particular attention to the Asian business experience and relationships that they can bring.
Remuneration Committee
The Board established a Remuneration Committee (the ‘Remuneration Committee’) within HKL in March 2021. The key responsibilities
of the Remuneration Committee are to:
• Oversee the formulation of a Group-wide reward strategy and ensure the business implements the reward strategy in alignment with
its industry-specific needs;
• Review and approve the compensation of the Chief Executive and leadership team of the business;
• Review the terms of and design of performance related incentives (both short- and long-term), including the review and approval of
any changes to plan design, targets and metrics;
• Review and approve the overall compensation costs, including salary and bonus budgets, of the business; and
• Remain abreast of trends and developments in executive compensation and corporate governance as they relate to the Group’s
industry and countries of operation.
The Remuneration Committee consists of a minimum of three members, selected by the Chairman of the Board. The Chairman of the
Board is the chairman of the Committee. The current members of the Remuneration Committee are Ben Keswick, John Witt, Y.K. Pang,
Graham Baker and John Nolan (Jardines group human resources director). The Chief Executive and the Head of Human Resources will
generally attend meetings of the Remuneration Committee. The Remuneration Committee meets at least twice annually and more often
if necessary, with its meetings aligned with the key events in the Group’s annual remuneration cycle.
Audit Committee
The Board has established within HKL an Audit Committee (the ‘Audit Committee’), the current members of which are Y.K. Pang,
Graham Baker, Jeremy Parr and John Witt. None of them is directly involved in operational management. Graham Baker was appointed
as a member of the Audit Committee with effect from 15th June 2020. Mark Greenberg retired as a member of the Audit Committee
on 31st December 2020.
The chairman, chief executive and chief financial officer of HKL, together with representatives of the internal and external auditors,
also attend the Audit Committee meetings by invitation. Other individuals may attend part of a meeting for specific agenda items
as appropriate. The Audit Committee meets twice a year and reports to the Board after each meeting.
Annual Report 2020 89
Committees continued
Audit Committee continued
The role of the Audit Committee is governed by its terms of reference. The Committee’s remit includes:
• Independent oversight and assessment of financial reporting processes including related internal controls;
• Risk management and compliance;
• Overseeing the effectiveness of the internal and external audit functions;
• Considering the independence and objectivity of the external auditors; and
• Reviewing and approving the level and nature of non-audit work performed by the external auditors.
Prior to completion and announcement of the half-year and year-end results, a review of the financial information and of any issues
raised in connection with the preparation of the results, including the adoption of new accounting policies, is undertaken by the Audit
Committee with the executive management and a report is received from the external auditors. The external auditors also have access
to the full Board when necessary, in addition to the Chief Executive, the Chief Financial Officer and other senior executives.
The matters considered by the Audit Committee during 2020 included:
• Reviewing the 2019 annual financial statements and 2020 half-yearly financial statements, with particular focus on the impact of
COVID-19, provisioning and impairment assessments, assumptions that underpinned key valuation models and effectiveness of
financial controls;
• Reviewing the actions and judgements of management in relation to changes in accounting policies and practices, to ensure clarity of
disclosures and compliance with new accounting standards;
• Receiving reports from internal audit function on the status of the control environment of the Group and its business divisions,
and progress made in resolving matters identified in the reports;
• Reviewing the principal risks, evolving trends and emerging risks that affect the Group, and monitoring changes to the risk profile,
as well as the effectiveness of risk management measures and crisis management arrangements;
• Receiving updates on the cybersecurity threat landscape and the Group’s cybersecurity environment, risk management approach,
priorities and control effectiveness;
• Receiving reports from risk management and legal functions on key legal matters and compliance and code of conduct issues,
and the actions taken in addressing those issues and strengthening controls;
• Reviewing the annual internal audit plan and status updates;
• Reviewing and approving the revised terms of reference of the Group’s internal audit and risk management functions;
• Reviewing the biennial assessment of the effectiveness of PwC;
• Reviewing the independence, audit scope and fees of PwC, and recommending their re-appointment as the external auditor; and
• Conducting a review of the terms of reference of the Audit Committee.
Remuneration
The Board has overall responsibility for setting remuneration across the Group, ensuring it is appropriate and supports the Group’s
strategy, creating value for stakeholders. The Remuneration Committee has been established to assist the Board in these remuneration
matters. The Company’s policy is to offer competitive remuneration packages to its senior executives. It is recognised that, due to the
nature of the Group and its diverse geographic base, a number of its senior executives are required to be offered international terms
and the nature of the remuneration packages is designed to reflect this. Executive Directors joining from outside the Group may be
offered an initial fixed-term service contract to reflect any requirement for them to relocate.
Shareholders decide in general meetings the Directors’ fees which are payable to all Directors other than the Chief Executive and
the Chief Financial Officer, as provided for by the Company’s Bye-laws.
Remuneration in 2020
For the year ended 31st December 2020, the Directors received from the Group US$9.1 million (2019: US$9.0 million) in Directors’ fees
and employee benefits, being:
• US$0.8 million (2019: US$0.8 million) in Directors’ fees;
• US$8.1 million (2019: US$7.9 million) in short-term employee benefits including salary, bonuses, accommodation and deemed
benefits in kind; and
• US$0.2 million (2019: US$0.3 million) in post-employment benefits.
The information set out in the section above headed ‘Remuneration in 2020’ forms part of the audited financial statements.
90
Hongkong Land
Corporate Governance Share Schemes
The Company has in place notional share option plan under which cash bonuses are paid based on the performance of the Company’s
share price over a period. The notional plan was established to provide longer-term incentives for Executive Directors and senior
managers. Notional share options are granted after consultation between the Chairman and the Chief Executive as well as other
Directors as they consider appropriate. Notional share options are not granted to Non-Executive Directors.
Insurance and Indemnification
The Company purchases insurance to cover its Directors against their costs in defending themselves in civil proceedings taken against
them in that capacity and in respect of damages resulting from the unsuccessful defence of any proceedings. To the extent permitted
by law, the Company also indemnifies its Directors. Neither insurance nor indemnity arrangements provide cover where the Director
has acted fraudulently or dishonestly.
Risk Management and Internal Control
The Board has overall responsibility for the Group’s systems of risk management and internal control. The Board has delegated to
the Audit Committee responsibility for providing oversight in respect of risk management activities. The Audit Committee considers
the Group’s principal risks and uncertainties and potential changes to the risk profile and reviews the operation and effectiveness of
the Group’s systems of internal control (financial, operational and compliance) and the procedures by which these risks are monitored
and mitigated.
The Audit Committee considers the systems and procedures on a regular basis, and reports to the Board semi-annually. The systems
of internal control are designed to manage, rather than eliminate, business risk; to help safeguard the Group’s assets against fraud and
other irregularities; and to give reasonable, but not absolute, assurance against material financial misstatement or loss. Executive
management is responsible for the implementation of the systems of internal control throughout the Group.
The Group has an established risk management process which is reviewed on a regular basis and covers all business units within the
Group. This includes the maintenance of risk registers which detail the emerging and existing risks to the future success of the business
and the relevant key controls and mitigating factors which address those risks. These are reviewed on a regular basis.
The internal audit function also monitors the approach taken by the business units to risk. The internal audit function is independent
of the operating business and reports its findings, and recommendations for any corrective action required, to the Audit Committee.
The principal risks and uncertainties facing the Company are set out on page 93.
Delegations of Authority
The Group has in place an organisational structure with defined lines of responsibility and delegation of authority. There are established
policies and procedures for financial planning and budgeting, information and reporting systems, assessment of risk, and monitoring the
Group’s operations and performance. The information systems in place are designed to ensure that the financial information reported is
reliable and up to date.
Whistleblowing Policy
The Group has a whistleblowing policy covering the process by which employees can report, in confidence, matters of serious concern.
The Audit Committee has responsibility for overseeing the effectiveness of the formal procedures for employees to raise such matters
and is required to review any reports made under those procedures which are referred to it by the internal audit function.
Directors’ Responsibilities in respect of the Financial Statements
The Directors are required under the Companies Act to prepare financial statements for each financial year and to present them annually
to the Company’s shareholders at the AGM. The financial statements are required to present fairly, in accordance with International
Financial Reporting Standards (‘IFRS’), the financial position of the Group at the end of the year and the results of its operations and
its cash flows for the year then ended. The Directors consider that applicable accounting policies under IFRS, applied on a consistent
basis and supported by prudent and reasonable judgements and estimates, have been followed in preparing the financial statements.
The financial statements have been prepared on a going concern basis.
Annual Report 2020 91
Code of Conduct
The Group conducts business in a professional, ethical and even-handed manner. Its ethical standards are clearly set out in its Code
of Conduct, which is a set of guidelines to which every employee must adhere and is reinforced and monitored by an annual compliance
certification process, and is modelled on the Jardine Matheson group’s code of conduct. The Code of Conduct requires that all Group
companies comply with all laws of general application, all rules and regulations that are industry specific and proper standards of
business conduct. The Code of Conduct prohibits the giving or receiving of illicit payments and requires that all managers must be fully
aware of their obligations under the Code of Conduct and establish procedures to ensure compliance at all levels within their organisations.
The Company’s policy on commercial conduct underpins the Group’s internal control process, particularly in the area of compliance.
The policy is also set out in the Group’s Code of Conduct.
Inclusion and Diversity
The Code of Conduct also encourages inclusion and diversity, and requires all employees to be treated fairly, impartially and with dignity
and respect. As a multinational Group with a broad range of business operating across Asia, the Group believes in promoting equal
opportunities in recruiting, developing and rewarding its people regardless of race, gender, nationality, religion, sexual orientation,
disability, age or background. The scale and breadth of the Group’s business necessitate that they seek the best people from the
communities in which they operate most suited to their needs.
Directors’ Share Interests
The Directors of the Company in office on 11th March 2021 had interests* as set out below in the ordinary share capital of the Company.
These interests include those notified to the Company in respect of the Directors’ closely associated persons*.
Robert Wong
Simon Dixon
Anthony Nightingale
Y.K. Pang
* Within the meaning of MAR
400,000
300,000
2,184
638,000
In addition, Robert Wong held share options in respect of 1,650,000 ordinary shares issued pursuant to the Company’s notional share
option plan.
Substantial Shareholders
As a non-UK issuer, the Company is subject to the provisions of the DTRs which require that a person must in certain circumstances
notify the Company of the percentage of voting rights attaching to the share capital of the Company that person holds. The obligation
to notify arises if that person acquires or disposes of shares in the Company which results in the percentage of voting rights which the
person holds reaching, exceeding, or falling below, 5%, 10%, 15%, 20%, 25%, 30%, 50% and 75%.
The Company has been informed of the holding of voting rights of 5% or more attaching to the Company’s issued ordinary share capital
by Jardine Strategic Holdings Limited (‘Jardine Strategic’), which is directly interested in 1,176,616,646 ordinary shares carrying 50.41% of
the voting rights. By virtue of its interest in Jardine Strategic, Jardine Matheson is also interested in the same ordinary shares. Apart from
this shareholding, the Company is not aware of any holders of voting rights of 5% or more attaching to the issued ordinary share capital
of the Company as at 11th March 2021.
There were no contracts of significance with corporate substantial shareholders during the year under review.
Related Party Transactions
Details of transactions with related parties entered into by the Company during the course of the year are included in Note 24 to
the financial statements on page 54.
Securities Purchase Arrangements
The Directors have the power under the Companies Act and the Company’s Memorandum of Association to purchase the Company’s
shares. Any shares so purchased shall be treated as cancelled and, therefore, reduce the issued share capital of the Company.
When the Board reviews the possibility for share repurchases, it will take into consideration the potential for the enhancement of
earnings or asset values per share. When purchasing such shares, the Company is subject to the provisions of MAR.
Annual General Meeting
The 2021 AGM will be held on 5th May 2021. The full text of the resolutions and explanatory notes in respect of the meeting are
contained in the Notice of Meeting which accompanies this Report. A corporate website is maintained containing a wide range of
information of interest to investors at www.hkland.com.
92
Hongkong Land
Corporate Governance Principal Risks and Uncertainties
The Board has overall responsibility for risk management and internal control. The process by which the Group identifies and manages
risk is set out in more detail on page 91 of the Corporate Governance section of this Report. 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 this Report.
Economic Risk
The Group is exposed to the risk of negative developments in global and regional economies, and financial and property markets,
either directly or through the impact such developments might have on the Group’s joint venture partners, associates, bankers,
suppliers, customers or tenants. These developments could include recession, inflation, deflation and currency fluctuations, restrictions
in the availability of credit, increases in financing and construction costs and business failures, and reductions in office and retail rents,
office and retail occupancy, and sales prices of, and demand for, residential and mixed-use developments.
Such developments might increase costs of sales and operating costs, reduce revenues, increase net financing charges, or result in
reduced valuations of the Group’s investment properties or in the Group being unable to meet its strategic objectives.
Commercial Risk and Financial Risk
Risks are an integral part of normal commercial activities, and where practicable steps are taken to mitigate them. Risks can be more
pronounced when businesses are operating in volatile markets.
The Group makes significant investment decisions in respect of commercial and residential development projects and these are subject
to market risks. This is especially the case where projects are longer-term in nature and take more time to deliver returns.
The Group operates in regions which are highly competitive, and failure to compete effectively, whether in terms of price, tender terms,
product specification or levels of service can have an adverse effect on earnings or market share, as can construction risks in relation to
new developments. Significant competitive pressure may also lead to reduced margins.
It is essential for the products and services provided by the Group’s businesses to meet appropriate quality and safety standards and
there is an associated risk if they do not, including the risk of damage to brand equity or reputation, which might adversely impact the
ability to achieve acceptable revenues and profit margins.
The potential impact of disruption to IT systems or infrastructure, whether as a result of cyber-crime or other factors, could be
significant. There is also an increasing risk to our businesses from adverse social media commentary, which could influence customer
and other stakeholder behaviours and impact operations or profitability, or lead to reputational damage.
The steps taken by the Group to manage its exposure to financial risk are set out in the Financial Review on page 18 and Note 29 to
the financial statements on pages 67 to 73.
Regulatory and Political Risk
The Group is subject to a number of regulatory regimes in the territories in which it operates. Changes in such regimes, in relation to
matters such as foreign ownership of assets and businesses, exchange controls, planning controls, tax rules, climate-related regulation
and employment legislation, could have the potential to impact the operations and profitability of the Group.
Changes in the political environment, including political or social unrest, in the territories where the Group operates could adversely
affect the Group.
Pandemic, Natural Disasters, Climate Change and Terrorism
The Group could be impacted by a global or regional pandemic which seriously affects economic activity or the ability of businesses to
operate smoothly. In addition, many of the territories in which the Group operates can experience from time to time natural disasters
such as earthquakes and typhoons.
Ongoing changes to the physical climate in which the Group operates may have an impact on our businesses. Rising sea levels could,
in the future, affect the value of any coastal assets that the Group owns or develops.
The Group’s operations are vulnerable to the effects of terrorism, either directly through the impact of an act of terrorism or indirectly through
the effect on the Group’s businesses of generally reduced economic activity in response to the threat of, or an actual act of, terrorism.
Cybersecurity Risk
The Group’s businesses are ever more reliant on technology in their operations and face increasing numbers of cyberattacks from groups
targeting both individuals and businesses. The privacy and security of customer, tenant and corporate information is at risk of being
compromised through a breach of our or our suppliers’ IT systems or the unauthorised or inadvertent release of information, resulting
in brand damage, impaired competitiveness or regulatory action. Cyberattacks may also adversely affect our ability to manage our business
operations or operate information technology and business systems, resulting in business interruption, lost revenues, repair or other costs.
Annual Report 2020 93
Shareholder Information
Financial Calendar
2020 full-year results announced
Shares quoted ex-dividend
Share registers closed
Annual General Meeting to be held
2020 final dividend payable
2021 half-year results to be announced
Shares quoted ex-dividend
Share registers to be closed
2021 interim dividend payable
* Subject to change
Dividends
11th March 2021
25th March 2021
29th March to 2nd April 2021
5th May 2021
12th May 2021
29th July 2021*
19th August 2021*
23rd to 27th August 2021*
13th October 2021*
Shareholders will receive their cash dividends in United States Dollars, except when elections are made for alternate currencies in the
following circumstances.
Shareholders on the Jersey Branch Register
Shareholders registered on the Jersey branch register will have the option to elect for their dividends to be paid in Sterling. These
shareholders may make new currency elections for the 2020 final dividend by notifying the United Kingdom transfer agent in writing
by 28th April 2021. The Sterling equivalent of dividends declared in United States Dollars will be calculated by reference to a rate
prevailing on 3rd May 2021.
Shareholders holding their shares through CREST in the United Kingdom will receive their cash dividends in Sterling only.
Shareholders on the Singapore Branch Register who hold their shares through The Central Depository (Pte) Limited (‘CDP’)
Shareholders who are on CDP’s Direct Crediting Service (‘DCS’)
For those shareholders who are on CDP’s DCS, they 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 on CDP’s DCS
For those shareholders who are not on CDP’s DCS, they will receive their cash dividends in United States Dollars unless they elect,
through CDP, to receive Singapore Dollars.
Registrars and Transfer Agent
Shareholders should address all correspondence with regard to their shareholdings or dividends to the appropriate registrar or
transfer agent.
Principal Registrar
Jardine Matheson International Services Limited, P.O. Box HM 1068, Hamilton HM EX, Bermuda
Jersey Branch Registrar
Link Market Services (Jersey) Limited, 12 Castle Street, St Helier, Jersey JE2 3RT, Channel Islands
Singapore Branch Registrar
M & C Services Private Limited, 112 Robinson Road #05-01, Singapore 068902
United Kingdom Transfer Agent
Link Group, The Registry, 10th Floor, Central Square, 29 Wellington Street, Leeds LS1 4DL, United Kingdom
Press releases and other financial information can be accessed through the internet at www.hkland.com.
94
Hongkong Land
Offices
Hongkong Land Holdings Limited
Jardine House
33-35 Reid Street
Hamilton HM EX
Bermuda
Tel +1441 292 0515
E-mail: gpobox@hkland.com
Philip A. Barnes
Hongkong Land Limited
8th Floor, One Exchange Square
Hong Kong
Tel +852 2842 8428
E-mail: gpobox@hkland.com
Robert Wong
Hongkong Land (Beijing)
Management Company Limited
Room 303, Block 26, Central Park
No. 6 Chaoyangmenwai Avenue
Chaoyang District
Beijing 100020
China
Tel +86 10 6597 0921
E-mail: gpobox.bj@hkland.com
James Zhang
Hongkong Land (Chengdu)
Investment and Development
Company Limited
16F, Block A, Weland Centre
No. 246 Dongda Road
Jinjiang District
Chengdu 610065
Sichuan Province
China
Tel +86 28 61556008
E-mail: gpobox.cd@hkland.com
Yin Ming
Hongkong Land (Chongqing)
Investment and Holding Co. Ltd.
3/F, Zone D, Neptune Building
No. 62 Star Light Road
New North Zone
Chongqing 401147
China
Tel +86 23 6703 3016
E-mail: gpobox.cq@hkland.com
Ling Chang Feng
Hongkong Land (Hangzhou)
Shengyue Management Co. Ltd.
Unit 3001-1, Building One
Ping An Finance Centre
No. 280 Mingxin Road
Jianggan District
Hangzhou 310016
Zhejiang Province
China
Tel +86 571 87013930
E-mail: gpobox.hz@hkland.com
Shi Guangyu
Hongkong Land (Nanjing)
Puzhi Management Co., Ltd.
Unit B, 55/F, Nanjing Center
No. 1 Zhongshan South Road
Qinhuai District
Nanjing 210001
Jiangsu Province
China
Tel +86 25 8333 8388
E-mail: gpobox.nj@hkland.com
Wesley Wu
Hongkong Land (Philippines)
Consultancy, Inc.
1803 The Taipan Place
F. Ortigas Jr. Road
Ortigas Center
Pasig City 1605
Philippines
Tel +63 2 737 6348
E-mail: gpobox.ph@hkland.com
Lee Chee Hoe
Hongkong Land
(Premium Investments) Limited
Unit 702, 7th Floor, EXCHANGE SQUARE
No. 19 & 20
Street 106, Village 2
Sangkat Wat Phnom
Khan Daun Penh, Phnom Penh
Cambodia
Tel +855 2399 2063
E-mail: gpobox.cambodia@hkland.com
James Padden
Annual Report 2020 95
Offices
Hongkong Land (Shanghai)
Management Company Limited
11/F, Tower A, LCM
No. 2389 Zhangyang Road
Pudong New District
Shanghai 200135
China
Tel +86 21 2020 0086
E-mail: gpobox.sh@hkland.com
Zhao Jun
Hongkong Land (Singapore) Pte. Ltd.
One Raffles Quay
#22-10 South Tower
Singapore 048583
Tel +65 6238 1121
E-mail: gpobox.sg@hkland.com
Robert Garman
Hongkong Land (Wuhan) Investment and
Development Company Limited
Room 1208, CITIC PACIFIC MANSION
No. 1627 Zhongshan Avenue
Jiang An District
Wuhan 430014
Hubei Province
China
Tel +86 27 8289 1566
E-mail: gpobox.wh@hkland.com
Wang Yi Bin
HKL (Thai Developments) Limited
Unit B, 20th Floor, Gaysorn Tower
No. 127 Rajdamri Road
Lumpini Sub-District
Pathumwan District
Bangkok 10330
Thailand
Tel +66 2 033 0160 ext. 30168
Email: gpobox.thailand@hkland.com
William Bright
HKL (Vietnam)
Consultancy and Management
Company Limited
Suite 704, The Metropolitan
235 Dong Khoi
Ben Nghe Ward, District 1
Ho Chi Minh City
Vietnam
Tel +84 28 3827 9006
E-mail: gpobox.hcmc@hkland.com
Cosimo Jencks
Beijing Yee Zhi Real Estate
Consultancy Co., Ltd.
Room 1123A, 11/F
Office Tower 3 Beijing APM
No. 138 Wangfujing Street
Dongcheng District
Beijing 100006
China
Tel +86 10 6520 4800
E-mail: gpobox.bj@hkland.com
Shirley Lam
MCL Land Limited
One Raffles Quay
#22-10 South Tower
Singapore 048583
Tel +65 6238 1121
E-mail: gpobox.mcl@hkland.com
Tan Wee Hsien
PT Hongkong Land Consultancy
and Management
World Trade Centre 1, 17th Floor
Jl. Jend. Sudirman Kav. 29–31
Jakarta 12920
Indonesia
Tel +62 21 521 1125
E-mail: gpobox.indonesia@hkland.com
Francis Yee
96
Hongkong Land
Report of the Valuers
To Hongkong Land Holdings Limited
Dear Sirs
Revaluation of Investment Properties Held under Freehold and Leasehold
Further to your instructions, we have valued in our capacity as external valuers the investment properties held under freehold and
leasehold as described in the consolidated financial statements of Hongkong Land Holdings Limited. We are of the opinion that
the market value of the investment properties held under freehold in Cambodia and leasehold in China, Hong Kong, Singapore
and Vietnam as at 31st December 2020, totalled US$30,069,900,000 (United States Dollars Thirty Billion Sixty-Nine Million and
Nine Hundred Thousand).
Our valuations were prepared in accordance with the International Valuation Standards by the International Valuation Standards Council
and The HKIS Valuation Standards by The Hong Kong Institute of Surveyors.
We have inspected the properties without either making structural surveys or testing the services. We have been supplied with details
of tenure, tenancies and other relevant information.
In arriving at our opinion, each property was valued individually, on market value basis, calculated on the net income allowing for
reversionary potential, however no allowance has been made for expenses of realisation or for taxation which might arise in the event
of disposal.
Yours faithfully
Jones Lang LaSalle Limited
Hong Kong, 15th January 2021
Annual Report 2020 97
Major Property Portfolio
at 31st December 2020
Investment Properties
interest
Location
Total
Office
Retail
Attributable
Lettable area of the property
Hong Kong
Hong Kong
Hong Kong
Hong Kong
Hong Kong
Hong Kong
Hong Kong
Hong Kong
Hong Kong
Hong Kong
Hong Kong
Hong Kong
Hong Kong
Beijing
Macau
Singapore
Singapore
Singapore
Singapore
Singapore
Singapore
Jakarta
Jakarta
Jakarta
Jakarta
Jakarta
Phnom Penh
Bangkok
Hanoi
Hanoi
(in thousands of square metres)
35
43
139
63
42
23
45
10
51
43
19
29
123
285
43
60
73
15
19
25
17
4
7
30
39
53
47
30
–
4
59
42
–
32
10
38
–
–
23
71
52
57
95
116
37
56
69
14
17
17
5
3
6
5
4
–
–
–
5
–
4
–
23
13
–
13
43
19
6
–
–
3
6
8
6
4
4
1
2
8
12
1
1
Alexandra House
Chater House
Exchange Square
One Exchange Square
Two Exchange Square
Three Exchange Square
Podium
The Forum
Jardine House
Gloucester Tower
Landmark Atrium
Edinburgh Tower
York House
Prince’s Building
WF CENTRAL
One Central
One Raffles Link
One Raffles Quay
North Tower
South Tower
%
100
100
100
100
100
100
100
100
100
84
49
100
33.3
Marina Bay Financial Centre
33.3
50
50
50
50
50
100
49
65
73.9
Tower 1
Tower 2
Tower 3
World Trade Centre 1
World Trade Centre 2
World Trade Centre 3
World Trade Centre 5
World Trade Centre 6
EXCHANGE SQUARE
Gaysorn
Central Building
63 Ly Thai To
98
Hongkong Land
Development Properties
interest
Location
Total
completed
developed
Attributable
Construction
to be
Developable area of the property
Under
construction/
Artisan Bay
WE City
Beryl Grove
Central Avenue
Harbour Tale
Hillview
Landmark Riverside
River One
Scholar’s Mansion
The Pinnacle
Yorkville North
Hangzhou Bay
The Riverside
JL CENTRAL
Yue City
Galaxy Midtown
Irvine Bay
Dream Land
Lakeward Mansion
Leedon Green
Margaret Ville
Parc Esta
Arumaya
Asya
Avania
Nava Park
King Kaew
Nonthaburi
The Marq
%
33
50
100
50
50
50
50
100
50
100
100
30
100
50
33
26.7
50
50
66
50
100
100
40
33.5
50
49
49
49
70
(in thousands of square metres)
Chengdu
Chengdu
Chongqing
Chongqing
Chongqing
Chongqing
Chongqing
Chongqing
Chongqing
Chongqing
Chongqing
Hangzhou
Hangzhou
Nanjing
Nanjing
Shanghai
Shanghai
Wuhan
Wuhan
Singapore
Singapore
Singapore
Jakarta
Jakarta
Jakarta
Jakarta
Bangkok
Bangkok
Ho Chi Minh City
155
922
133
1,115
114
61
1,109
161
318
125
1,116
791
74
252
251
389
64
494
226
49
22
98
24
896
131
652
178
434
57
70
708
–
586
86
–
794
117
–
–
761
80
–
–
17
–
–
87
–
–
–
–
–
29
–
148
–
11
–
85
214
133
529
28
61
315
44
318
125
355
711
74
252
234
389
64
407
226
49
22
98
24
867
131
504
178
423
57
Annual Report 2020 99
Major Property Portfolio
Hong Kong – Central District
E N ’ S R O A D C E N T R A L
Q U E
P
E
D
D
E
R
S
T
R
E
E
T
D E S V O E U X R O A D C E N T R A L
I
C
E
H
O
U
S
E
9a
10
9
8
S
T
R
E
E
T
11
R O A D C E N T R A L
3
C O N N A U G H T
Hongkong Land properties
Public car park
Pedestrian bridges
Mass Transit Railway access
L
A
R
T
N
E
C
Standard
Chartered
Bank
D
A
O
R
’
S
N
E
E
U
Q
Bank of
China
L
A
R
T
N
E
D C
HSBC
A
O
X R
U
E
O
S V
E
D
7
6
I
C
E
H
O
12
U
S
E S
T
R
E
E
T
1
2
Stock
Exchange
U
O
B
R
A
H
R V I E
4
W S T R E E T
Airport E xpress Station
G S T R E E T
N
Statue
Square
D
A
O
R
R
E
T
A
H
C
Statue
Square
R
O
A
D
N
O
C
Mandarin
Oriental
L
A
R
T
N
E
C
D
A
O
R
T
H
G
U
A
N
J
A
C
K
S
O
N
5
General
Post Office
H E U
N C
A
M
M
A
N
Y
I
U
S
T
R
E
E
T
D
A
O
O R
G W
N
L U
9a
10
9
7
8
11
6
1
2
5
3
4
12
1 One Exchange Square
2 Two Exchange Square
3 Three Exchange Square
4 The Forum
5 Jardine House
6 Chater House
7 Alexandra House
8 Gloucester Tower
9 Edinburgh Tower
9a The Landmark Mandarin Oriental
10 York House
1 1 Landmark Atrium
12 Prince’s Building
100
Hongkong Land
Beijing, China
Chengdu, China
WF CENTRAL
CBD Z3 Project*
Central Park
WE City*
Artisan Bay*
Chongqing, China
Landmark Riverside
Yorkville South
Yorkville North
Central Avenue
River One
Xiao Yuan Project*
New Bamboo Grove
Hillview
Harbour Tale
The Pinnacle
Chongqing, China
Hangzhou, China
Macau, China
Scholar’s Mansion*
Beryl Grove*
Hangzhou Bay
The Riverside
One Central
* This rendering is for illustration and reference only, subject to change and government approval.
Indonesia
WTC
Indonesia
Anandamaya Residences
Nava Park
Arumaya*
Cambodia
Asya*
Avania*
Central Mansions
EXCHANGE SQUARE
313 Quayside
Thailand
Gaysorn
The ESSE Sukhumvit 36
British Embassy Site
Lake Legend
King Kaew Project*
Wireless Road Project*
Vietnam
Malaysia
Central Building
63 Ly Thai To
The Marq*
Wangsa Walk Mall
The Quinn*
Singapore
Marina Bay Financial Centre
One Raffles Quay
One Raffles Link
Parc Esta*
Singapore
Philippines
Leedon Green*
Margaret Ville*
Roxas Triangle Towers
Mandani Bay*
The Velaris Residences*
Shanghai, China
West Bund Site*
Parkville
Galaxy Midtown*
Irvine Bay*
Nanjing, China
Wuhan, China
JL CENTRAL*
Yue City*
River and City*
Dream Land
Lakeward Mansion*
* This rendering is for illustration and reference only, subject to change and government approval.
Hongkong Land Holdings Limited
Jardine House Hamilton Bermuda
www.hkland.com