in PDF - Hongkong Land

Chairman’s Statement
Overview
Strong demand and high occupancy in Hong Kong’s Central district continued to
underpin both the office and retail sectors in 2008, enabling the Group to report a
reasonable increase in underlying profit despite provisions made against residential
development properties in Singapore. Although the positive rental reversion cycle
continued throughout the year and supply of grade A office space remains limited, it is
evident that the market in Hong Kong has now begun to decline.
Performance
Underlying profit rose 9% to US$375 million, while underlying earnings per share were
9% higher at US¢16.41. Net rental income was up 29% compared with 2007. The
contribution from residential development projects, however, was offset by a writedown
in the carrying value of development properties by MCL Land. Financing charges
were slightly lower than in 2007 due mainly to lower interest rates.
The independent valuation of the Group’s commercial investment properties at the end
of 2008, including the Group’s share of investment properties in joint ventures and
associates, was US$14,525 million, representing a decrease of 4% from the valuation at
the end of 2007. This reversed an increase of 11% at the half year. The adjusted net
asset value per share fell 3% to US$5.92 over the year. The loss attributable to
shareholders for 2008, after taking account of the revaluation, was US$109 million, and
compared with a profit of US$2,840 million in 2007.
The Directors are recommending a final dividend of US¢7.00 per share for 2008,
providing a total dividend for the year of US¢13.00 per share, unchanged from 2007.
Group Review
Rents remained at record levels throughout 2008 in Hong Kong’s Central district. While
demand for high quality commercial office space continued to be strong across all
business sectors, there were signs of weakening towards the end of the year. The luxury
retail market also performed well in Hong Kong for the first three quarters of 2008, but
it too started to weaken in the fourth quarter.
The Singapore office market also began to soften in the second half of the year, although
the Group’s wholly owned property One Raffles Link and its joint venture property One
Raffles Quay both remain fully let. The Group’s joint venture development, Marina Bay
Financial Centre, which is on schedule to complete in two phases in 2010 and 2012,
is also in a good position with over 60% of the commercial office space already
pre-committed.
4 Hongkong Land