Hang Lung : 2019 Interim Results

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HANG LUNG GROUP LIMITED

(Incorporated in Hong Kong with limited liability)

(Stock Code: 00010)

2019 INTERIM RESULTS

2019 Interim Results

CONTENTS

	Page
Financial Highlights	1
Review of Operations	2
Consolidated Financial Statements	17
Notes to the Consolidated Financial Statements	20
Other Information	35
Glossary	37

2019 Interim Results

FINANCIAL HIGHLIGHTS

in HK$ Million (unless otherwise stated)

RESULTS

	For the Six Months Ended June 30
				2018		Change
	2019
Revenue	4,505		5,457		-17%
Property Leasing		4,505		4,425		2%
Property Sales		-		1,032		-100%
Operating Profit	3,432		3,902		-12%
Property Leasing		3,432		3,337		3%
Property Sales		-		565		-100%
Net Profit Attributable to Shareholders	3,709		3,037		22%
Earnings Per Share (HK$)	$2.72		$2.23		22%
Interim Dividend Per Share (HK$)	$0.19		$0.19		-

UNDERLYING RESULTS

	For the Six Months Ended June 30
	2019	2018		Change
Underlying Net Profit Attributable to Shareholders	2,324	1,459		59%
Property Leasing		1,456		1,153		26%
Property Sales		868		306		184%
Underlying Earnings Per Share (HK$)	$1.71	$1.07		60%

FINANCIAL POSITION

	At June 30	At December 31
	2019	2018	Change
Shareholders' Equity	89,144	86,447	3%
Net Assets	153,705	150,736	2%
Net Debt	26,754	18,142	47%
Financial Ratio
Net Debt to Equity Ratio	17.4%	12.0%	5.4 pts
Debt to Equity Ratio	22.2%	20.3%	1.9 pts
Shareholders' Equity Per Share (HK$)	$65.5	$63.5	3%
Net Assets Per Share (HK$)	$112.9	$110.7	2%

1

2019 Interim Results

REVIEW OF OPERATIONS

CONSOLIDATED RESULTS

The core property leasing business continued its growth momentum with a 2% period-on-period increase in leasing revenue even after taking account of a 6% Renminbi depreciation against the Hong Kong Dollar. With no property sales recognized during the period, total revenue of Hang Lung Group Limited (the Company) and its subsidiaries (the Group) for the six months ended June 30, 2019 decreased 17% to HK$4,505 million, and operating profit declined 12% to HK$3,432 million. Net profit attributable to shareholders rose 22% to HK$3,709 million mainly attributable to the gain on disposal of non-core assets. Earnings per share increased likewise to HK$2.72.

The underlying net profit attributable to shareholders increased 59% to HK$2,324 million when excluding the effects of property revaluation gain.

Revenue and Operating Profit for the Six Months Ended June 30

			Revenue				Operating Profit
	___________________________	___________________________
	2019	2018	Change	2019	2018	Change
	___________________________	___________________________
	HK$ Million	HK$ Million			HK$ Million	HK$ Million
Property Leasing	4,505	4,425	2%		3,432	3,337	3%
Mainland China
	2,409	2,397	1%			1,635	1,602	2%
Hong Kong		2,096	2,028	3%			1,797	1,735	4%
Property Sales	-	1,032	-100%		-	565	-100%
	___________________________	___________________________
Total	4,505	5,457	-17%		3,432	3,902	-12%
	___________________________	___________________________

DIVIDEND

The Board of Directors has declared an interim dividend of HK19 cents per share for 2019 (2018: HK19 cents) to be paid by cash on September 26, 2019, to shareholders whose names appeared on the register of members on September 13, 2019.

2

2019 Interim Results

PROPERTY LEASING

The leasing performance of our properties during the first six months of 2019 sustained the solid growth momentum built up since the second half of last year. Total revenue of our leasing properties grew to HK$4,505 million period-on-period. Revenue from our Mainland portfolio increased 7% in RMB terms and that of our Hong Kong portfolio rose 3% comparing to the same period last year. Both the tenant retail sales and our rental turnover were resilient and on a sustainable trend. The performance was promising amid the US-China trade dispute and other global uncertainties.

Mainland China

Revenue of our mainland China leasing portfolio continued to grow. Except for Shanghai Grand Gateway 66 mall which is under a major upgrade program and Wuxi Center 66 office tower, all our mainland properties recorded revenue growth during the first half of 2019. Revenue of the entire portfolio advanced 7% to RMB2,083 million. Operating profit increased 9% to RMB1,414 million. Average margin improved to 68%.

Amidst the short-term rental interruption caused by the large scale renovation at Grand Gateway 66, revenue of our Shanghai properties advanced 4% period-on-period. Properties outside Shanghai achieved a remarkable 14% revenue growth period-on-period and continued the growth momentum with a 7% increment comparing to the second half of last year.

3