Kerry Properties : Interim Results for the Six Months Ended 30 June 2018

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(Incorporated in Bermuda with limited liability)

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website:www.kerryprops.com

(Stock Code: 683)

INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2018

The Board of Directors (the "Board") of the Company announces the unaudited interim results of the Group for the six months ended 30 June 2018. The Audit and Corporate Governance Committee of the Company has met to review the results and the unaudited condensed consolidated interim financial statements of the Group for the six months ended 30 June 2018 prior to recommending them to the Board for approval.

The Group's profit attributable to shareholders for the six months ended 30 June 2018 was HK$3,990 million, representing an increase of 21% compared with HK$3,309 million reported for the same period in 2017. The Group measured its investment property portfolio on a fair value basis and recorded an increase in fair value of investment properties (net of deferred taxation) of HK$2,438 million for the six months ended 30 June 2018 (2017: HK$476 million). Before taking into account the effects of the aforementioned increase in fair value, the Group recorded a decrease of 45% in profit attributable to shareholders to HK$1,552 million for the six months ended 30 June 2018 (2017: HK$2,833 million). The decrease was mainly due to the adoption of new accounting standards starting from 1 January 2018 (Note 2) and the provision for impairment loss for property under development in Macau amounting to HK$1,175 million (2017: Nil) (Note 6).

Earnings per share for the six months ended 30 June 2018 was HK$2.75, representing an increase of 20% compared with HK$2.29 per share for the same period in 2017. The basis of calculating the earnings per share is detailed in Note 8 below.

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For identification purpose only

The effect on the Group's profit attributable to shareholders due to the net increase in fair value of the Group's investment properties and related tax effects is as follows:

Six months ended 30 June

2018 HK$ million

2017 HK$ millionChangeProfit attributable to shareholders before taking into account the net increase in fair value ofinvestment properties and related tax effects

1,552

2,833

-45%

Add:

Net increase in fair value of investment properties and related tax effects

2,438

476

Profit attributable to shareholders after taking into account the net increase in fair value of investment properties and related tax effects

3,990

3,309

+21%

The Directors have declared an interim dividend of HK$0.40 per share for the six months ended 30 June 2018 (the "Interim Dividend") (2017: HK$0.45), which is payable on Tuesday, 18 September 2018 to the shareholders of the Company (the "Shareholders") whose names appear on the registers of members of the Company (the "Registers of Members") on Thursday, 6 September 2018.

At the Company's Annual General Meeting held on 18 May 2018, the Shareholders approved the final dividend of HK$0.90 per share and a special dividend of HK$0.15 per share for the year ended 31 December 2017 which amounted to a total of approximately HK$1,524 million and was paid on 5 June 2018.

CONDENSED CONSOLIDATED INTERIM INCOME STATEMENT

Unaudited

Six months ended 30 June

20182017

NoteHK$'000HK$'000

Turnover	4	10,560,085	17,741,993
Cost of sales and direct expenses	(6,298,326)	(13,639,909)
Gross profit	4	4,261,759	4,102,084
Other income and net gains/(losses)	(726,631)	293,711
Administrative and other operating expenses	(532,260)	(486,293)
Increase in fair value of investment properties	3,386,745	474,400
Operating profit before finance costs	6,389,613	4,383,902
Finance costs	(350,858)	(215,970)
Operating profit	5	6,038,755	4,167,932
Share of results of associates and joint ventures	805,594	687,983
Profit before taxation	6,844,349	4,855,915
Taxation	7	(1,947,846)	(1,057,620)
Profit for the period	4,896,503	3,798,295
Profit attributable to:
Company's shareholders	3,990,095	3,309,224
Non-controlling interests	906,408	489,071
4,896,503	3,798,295
Earnings per share	8
- Basic	HK$2.75	HK$2.29
- Diluted	HK$2.75	HK$2.29

CONDENSED CONSOLIDATED INTERIM STATEMENT OF COMPREHENSIVE INCOME

Unaudited

Six months ended 30 June

2018	2017
HK$'000	HK$'000
Profit for the period	4,896,503	3,798,295
Other comprehensive income
Items that may be reclassified to profit or loss
Cash flow hedges	9,341	(176,395)
Fair value loss on available-for-sale investments	-	(2,980)
Share of other comprehensive income of associates
and joint ventures	(98,500)	160,583
Net translation differences on foreign operations	114,493	1,479,854
Items that will not be reclassified to profit or loss
Fair value loss on equity investments at fair value
through other comprehensive income	(15,805)	-
Other comprehensive income for the period, net of tax	9,529	1,461,062
Total comprehensive income for the period	4,906,032	5,259,357
Total comprehensive income attributable to:
Company's shareholders	3,945,253	4,442,866
Non-controlling interests	960,779	816,491
4,906,032	5,259,357

CONDENSED CONSOLIDATED INTERIM STATEMENT OF FINANCIAL POSITION

Unaudited	Audited
As at	As at
30 June	31 December
2018	2017
Note	HK$'000	HK$'000
ASSETS AND LIABILITIES
Non-current assets
Property, plant and equipment	9	5,990,348	6,109,169
Investment properties	9	73,951,879	64,340,586
Leasehold land and land use rights	9	2,092,127	2,114,323
Properties under development	16,158,068	20,545,581
Land deposits	523,690	1,803,074
Associates and joint ventures	23,925,577	23,832,979
Derivative financial instruments	60,650	37,342
Available-for-sale investments	-	5,344,294
Financial assets at fair value	5,355,226	-
Mortgage loans receivable	3,769,932	3,641,905
Intangible assets	9	122,504	122,504
131,950,001	127,891,757
Current assets
Properties under development	5,422,013	6,849,586
Completed properties held for sale	13,795,866	16,871,931
Accounts receivable, prepayments and deposits	10	2,116,786	7,566,211
Current portion of mortgage loans receivable	31,486	30,025
Tax recoverable	236,257	145,952
Tax reserve certificates	189,598	189,347
Listed securities at fair value through profit or loss	7,104	7,732
Derivative financial instruments	-	3,645
Restricted bank deposits	590,149	595,906
Cash and bank balances	13,517,240	13,151,714
35,906,499	45,412,049
Current liabilities
Accounts payable, deposits received and accrued charges	11	6,556,447	7,630,548
Contract liabilities	4,871,046	-
Deposits received on sale of properties	-	8,133,574
Taxation	2,092,019	2,093,149
Short-term bank loans and current portion
of long-term bank loans	12	7,364,583	8,903,148
20,884,095	26,760,419
Net current assets	15,022,404	18,651,630
Total assets less current liabilities	146,972,405	146,543,387
Non-current liabilities
Long-term bank loans	12	22,736,389	26,781,716
Fixed rate bonds	2,348,037	2,336,901
Amounts due to non-controlling interests	2,127,965	2,106,291
Deferred taxation	8,503,860	7,606,669
35,716,251	38,831,577
ASSETS LESS LIABILITIES	111,256,154	107,711,810
EQUITY
Capital and reserves attributable to the Company's shareholders
Share capital	1,454,570	1,446,538
Share premium	12,997,246	12,515,673
Other reserves	11,485,676	12,294,722
Retained profits	71,088,224	68,092,523
97,025,716	94,349,456
Non-controlling interests	14,230,438	13,362,354
TOTAL EQUITY	111,256,154	107,711,810