Sino Land : Final Results for the Year Ended 30 June 2019

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(Incorporated in Hong Kong with limited liability)

(Stock Code: 83)

CHAIRMAN'S STATEMENT

I am pleased to present 2018/2019 Annual Report to the shareholders.

FINAL RESULTS

The Group's reported net profit attributable to shareholders for the year ended 30th June, 2019 ("Financial Year") was HK$6,914.9 million compared to HK$7,581.0 million last year excluding the one-off gain from disposal of 80% interest in its property development project The Palazzo, Chengdu. Net profit for the year ended 30th June, 2018 ("Last Financial Year") was HK$13,995.9 million and included a one-off gain on disposal of subsidiary of HK$5,653.0 million and a fair value gain on the 20% interest retained of HK$761.9 million.

Earnings per share for the Financial Year was HK$1.03 (2017/2018: HK$2.18). The reported profit for the Financial Year included a revaluation surplus (net of deferred taxation) on investment properties of HK$2,415.7 million compared with a revaluation surplus (net of deferred taxation) of HK$2,184.1 million for the Last Financial Year.

The Group's underlying net profit attributable to shareholders, excluding the effect of fair-value changes on investment properties for the Financial Year was HK$4,671.0 million compared to HK$5,594.0 million last year excluding the one-off gain from The Palazzo, Chengdu. Underlying profit for the Last Financial Year was HK$11,247.0 million, restated. Underlying earnings per share was HK$0.69 (2017/2018: HK$1.75, restated).

DIVIDENDS

The Directors have resolved to recommend a final dividend of 41 cents per share in respect of the Financial Year to shareholders whose names appear on the Register of Members of the Company on 31st October, 2019. Together with the interim dividend of 14 cents per share paid on 23rd April, 2019, the total dividend for the Financial Year is 55 cents per share.

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The Directors propose that shareholders be given the option to receive the final dividend in new shares in lieu of cash. The scrip dividend proposal is subject to: (1) the approval of the proposed final dividend at the Annual General Meeting to be held on 24th October, 2019; and (2) The Stock Exchange of Hong Kong Limited granting the listing of and permission to deal in the new shares to be issued pursuant to this proposal.

A circular containing details of the scrip dividend proposal will be dispatched to shareholders together with the form of election for scrip dividend on or about 7th November, 2019. It is expected that the final dividend warrants and share certificates for the scrip dividend will be dispatched to shareholders on or about 3rd December, 2019.

BUSINESS REVIEW

(1) Sales Activities

Total revenue from property sales for the Financial Year, including property sales of associates and joint ventures recognised by the Group, was HK$2,986.5 million (2017/2018: HK$8,890.5 million).

Total revenue from property sales comprises mainly the sales of residential units in Commune Modern in Fanling (98% sold), The Spectra in Yuen Long (99% sold), Marinella (99% sold) and Providence Bay in Pak Shek Kok (99% sold) as well as the sales of carparking spaces in Mayfair By The Sea I and II, The Coronation, The Mediterranean and The Spectra. In respect of the sales of the commercial project at 38 Wai Yip Street in Kowloon East (49% sold), the Group obtained the Certificate of Compliance for the project on 27th June, 2019. In accordance with the Group's change in accounting policy on revenue recognition from property sales, earnings derived from this project will be recognised in the next financial year.

During the Financial Year, the Group launched three residential projects for sale, namely Grand Central in Kwun Tong which has 1,999 residential units (82% sold), Mayfair By The Sea 8 in Pak Shek Kok which has 528 residential units (76% sold) and Madison Park in Cheung Sha Wan which has 100 residential units (70% sold). To date, attributable revenue from property sales derived from Grand Central, Mayfair By The Sea 8 and Madison Park amounted to approximately HK$22.4 billion.

(2) Land Bank

As at 30th June, 2019, the Group has a land bank of approximately 22.1 million square feet of attributable floor area in Mainland China, Hong Kong, Singapore and Sydney which comprises a balanced portfolio of properties of which 39.4% is commercial; 37.1% residential; 11.0% industrial; 7.1% car parks and 5.4% hotels. In terms of breakdown of the land bank by status, 9.3 million square feet were properties under development, 11.9 million square feet of properties for investment and hotels, together with 0.9 million square feet of properties held for sale. The Group will continue to be selective in replenishing its land bank to optimise its earnings potential.

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During the Financial Year, the Group obtained the right to develop a residential project at LOHAS Park in Tseung Kwan O from MTR Corporation Limited (also known as LOHAS Park Package Eleven Property Development) with attributable floor area of approximately 382,587 square feet and acquired a site from the HKSAR Government with attributable floor area of approximately 11,582 square feet. Details of the projects are as follows:

		Group's	Attributable
Location	Usage	Interest	Floor Area
			(Square feet)
1. Site C2 of The Remaining Portion	Residential	Joint	382,587
of Tseung Kwan O Town Lot No. 70		Venture
LOHAS Park Package Eleven Property
Development,
Tseung Kwan O,
New Territories,
Hong Kong
2. Lot No. 765 in	Residential	100%	11,582
Demarcation District No. 332
South Lantau Road,
Cheung Sha,
Lantau Island,
New Territories,
Hong Kong
				394,169

Subsequent to the Financial Year, the Group acquired 30% equity interest in a commercial project in Qianhai, Shenzhen in July 2019 with attributable floor area of 258,336 square feet. Details of the project are as follows:-

		Group's	Attributable
Location	Usage	Interest	Floor Area
			(Square feet)
Lot No. T102-0261	Commercial	30%	258,336
Land Parcel 03, Unit 7,
Qianwan Area,
Qianhai, Shenzhen-Hong Kong Modern
Service Industry Cooperation Zone,
Shenzhen,
People's Republic of China

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(3) Property Development

During the Financial Year, the Group obtained Certificates of Compliance for three projects, namely Commune Modern, 38 Wai Yip Street and The Hillside. Details of the three projects are as follows:

			Group's	Attributable
Location	Usage	Interest		Floor Area
				(Square feet)
1.	Commune Modern	Residential/	100%	209,909
	28 Wo Fung Street,	Commercial/
	Luen Wo Hui,	Car Park
	Fanling,
	New Territories,
	Hong Kong
2.	NKIL 6313	Commercial	30%	147,040
	38 Wai Yip Street,
	Kowloon Bay,
	Kowloon,
	Hong Kong
3.	The Hillside	Residential	100%	11,195
	9 Sik On Street,
	Wan Chai,
	Hong Kong
					368,144

(4) Rental Activities

For the Financial Year, the Group's gross rental revenue, including attributable share from associates and joint ventures, increased 3.8% to HK$4,239.9 million (2017/2018: HK$4,082.5 million) and net rental income increased 3.1% to HK$3,685.2 million (2017/2018: HK$3,572.0 million). Overall occupancy of the Group's investment property portfolio was at approximately 96% (2017/2018: 96%) for the Financial Year.

The Group's retail portfolio in Hong Kong recorded an increase in rental income with overall occupancy rate maintained at approximately 97% (2017/2018: 97%) for the Financial Year. The Group's flagship shopping malls, namely Tuen Mun Town Plaza Phase I, Olympian City 1, 2 and 3 showed steady leasing performance.

The leasing performance of the Group's office portfolio saw stable rental growth while overall occupancy rate was at approximately 96% (2017/2018: 96%) for the Financial Year. Leasing performance of the Group's industrial portfolio saw a steady rental growth with slight improvement in the occupancy rate to approximately 94% (2017/2018: 93%).

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The Group's investment property portfolio primarily serves the need of its customers which include tenants, shoppers and the communities around the properties. The design and condition of the properties together with the quality of service provided to customers are of paramount importance. To ensure that the properties are in good condition with the proper layout and design, the Group would perform regular review of the properties. On service quality, the Group places a strong emphasis on regular training particularly for all front-line staff to ensure that the service provided to customers meets their expectations. Comments from customers, reports by silent shoppers and recognitions from professional institutions all play a role in assessing the quality of service delivered by the staff.

As at 30th June 2019, the Group has approximately 11.9 million square feet of attributable floor area of investment properties and hotels in Mainland China, Hong Kong, Singapore and Sydney. Of this portfolio, commercial developments (retail and office) account for 61.6%, industrial 14.7%, car parks 13.2%, hotels 7.7%, and residential 2.8%.

(5) Hotels

The Group's portfolio of hotels comprises The Fullerton Hotel Singapore, The Fullerton Bay Hotel Singapore, Conrad Hong Kong, The Westin Sydney and The Olympian Hong Kong. Overall business performance of the Group's hotels was steady during the Financial Year. The Group will continue to improve the quality of its hotel services to ensure our discerning guests have enjoyable experiences during their stays in the hotels.

(6) Mainland China Business

On 8th April, 2019, National Development and Reform Commission ("NDRC") under the State Council released a policy to remove restrictions for household restriction or Hukou in cities with an urban population of 1 million to 3 million. This will enable workers who have migrated from rural areas to urban cities to be entitled to social benefits including health care and education as well as the right to purchase property in cities where they reside. This is part of China's reform on the Hukou registration system to facilitate Central Government's countrywide urbanisation plan. The reform of the Hukou system is positive for the housing market in Mainland China.

As at 30th June 2019, the Group has approximately 5.3 million attributable square feet of land bank in Mainland China. Of the total, approximately 4.3 million square feet are projects under development. These projects include 100% interest in Dynasty Park in Zhangzhou, 50% interest in a serviced apartment project in Qianhai and 20% interest in The Palazzo in Chengdu. Subsequent to the Financial Year, the Group acquired 30% equity interest in a new commercial development site located in Qianwan Area in Qianhai in July 2019. Including this site, total attributable floor area for the projects under development would be approximately 4.5 million square feet.

Other than the matters mentioned above, there has been no material change from the information published in the report and accounts for the year ended 30th June, 2018.

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