![]() # Annual Report 2022 #### Hongkong Land Holdings Limited #### Building a Better, More Sustainable Community ![]() ## Contents #### Corporate Overview 1 #### Corporate Information 2 #### Highlights 3 #### Chairman’s Statement 4 #### Chief Executive’s Review 7 #### Financial Review 1 4 #### Sustainability 2 0 #### Directors’ Profiles 2 2 #### Financial Statements 2 4 #### Independent Auditors’ Report 7 7 #### Five Year Summary 8 3 #### Responsibility Statements 8 4 #### Corporate Governance 8 5 #### Shareholder Information 1 0 6 #### Offices 1 0 7 #### Report of the Valuers 1 0 9 #### Major Property Portfolio 1 1 0 Front cover : Sustainability is the foundation upon which Hongkong Land’s purpose, vision and mission are built. Guided by our Sustainability Framework 20 3 0 which includes the four spotlights of Climate & Economic Resilience, Inspirational Connections, Operational Excellence, and Vibrant Communities & Cities, we are committed to continue engaging and collaborating with stakeholders to advance the sustainability agenda across the communities we serve. ![]() is a major listed property investment, management and development group. Founded in 1889, Hongkong Land’s business is built on excellence, integrity and partnership. The Group owns and manages more than 850,000 sq. m. of prime office and luxury retail assets in key Asian cities, principally Hong Kong, Singapore, Beijing and Jakarta. Its properties hold industry leading green building certifications and 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, four retail centres on the Chinese mainland, including 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, including a 43% interest in a 1.1 million sq. m. mixed-use project in West Bund, Shanghai. Its subsidiary, MCL Land, is a well-established residential developer in Singapore. Hongkong Land Holdings Limited is incorporated in Bermuda and has a primary listing in the standard segment of 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. 1 ![]() Directors Ben Keswick Chairman John Witt Managing Director Robert Wong Chief Executive Craig Beattie Lily Jencks (joined the Board on 28th July 2022) Adam Keswick Lincoln K.K. Leong (joined the Board on 4th March 2022) Anthony Nightingale Christina Ong Y.K. Pang Prijono Sugiarto Michael Wei Kuo Wu (stepped down on 31st December 2022) Company Secretary Jonathan Lloyd Registered Office Jardine House 33-35 Reid Street Hamilton Bermuda ### Corporate Information #### Hongkong Land Limited Directors John Witt Chairman Robert Wong Chief Executive Craig Beattie Chief Financial Officer Graham Baker Matthew Bland (joined the board on 1st April 2022) Raymond M.J. Chow (stepped down on 31st July 2022) Kenneth Foo Robert L. Garman David Hsu (stepped down on 1st August 2022) Kong Kei Yeuk (joined the board on 1st May 2022) Ling Chang Feng Anne O’Riordan Y.K. Pang John Simpkins Yanjun Sun (Steve) (joined the board on 1st August 2022) Raymond Wong Corporate Secretary Jonathan Lloyd 2 ![]() • Underlying profit down 20% to US$776 million • Lower residential development profits on the Chinese mainland • Slight decline in results from Investment Properties; asset values stable • Group financial position remains strong • Final dividend maintained at US¢16.00 per share Results 2022 2021 Change US$m US$m % Underlying profit attributable to shareholders \* 776 966 (20) Profit/(loss) attributable to shareholders 203 (349) N/A Shareholders’ funds 33,303 34,584 (4) Net debt 5,817 5,104 14 US¢ US¢ % Underlying earnings per share \* 34.44 41.49 (17) Earnings/(loss) per share 8.99 (15.00) N/A Dividends per share 22.00 22.00 – US$ US$ % Net asset value per share 14.95 15.05 (1) \* 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. ### Highlights 3 ![]() ### Chairman’s Statement #### Overview The Group’s profitability was significantly lower in 2022, primarily due to a lower contribution from the Development Properties business in the second half of the year, after a record performance in 2021. The contribution from Investment Properties was resilient, however, with only modest financial impacts in the retail portfolio from the pandemic measures introduced across China during 2022. The impact of lower average office rents in Hong Kong was partially offset by a reduction in operating costs. #### Performance Underlying profit attributable to shareholders fell by 20% to US$776 million. Profit attributable to shareholders was US$203 million, after including net non-cash losses of US$573 million resulting primarily from lower valuations of the Group’s investment properties. This compares to a loss of US$349 million in 2021, which included a US$1,315 million reduction in property valuations mainly due to lower market rents for the Hong Kong Central Portfolio. The net asset value per share at 31st December 2022 was US$14.95, compared with US$15.05 at the end of 2021. The Directors recommend a final dividend of US¢16.00 per share, providing a total dividend for the year of US¢22.00 per share, unchanged from last year. #### Group Review #### Investment Properties In Hong Kong, office leasing demand remained subdued. Against this backdrop, the Group’s Central office portfolio remained resilient, outperforming the broader market due to its prime CBD location and premium offering. At the end of 2022, physical vacancy was 4.9%, compared to 5.2% at the end of 2021 and, on a committed basis, it was 4.7%, compared to 4.9% at the end of 2021, well below average Central market vacancy levels. Modestly negative rental reversions resulted in average office rents decreasing to HK$111 per sq. ft. in 2022, from HK$117 per sq. ft. in the prior year. Retail market sentiment in Hong Kong was severely affected by the fifth wave of the pandemic in the first half of 2022. Retail trading benefited in the second half of the year, however, as social distancing and travel restrictions were progressively relaxed. Total retail sales nevertheless remained below pre-pandemic levels, due to a lack of tourists. Average retail rents in 2022 in the Central LANDMARK retail portfolio decreased to HK$177 per sq. ft. from HK$190 per sq. ft. in 2021, primarily due to negative base rent reversions. Vacancy was 0.5% on both a physical and committed basis, unchanged from the prior year. In Singapore, contributions from the Group’s office portfolio increased, due to positive rental reversions underpinned by a healthy level of occupier demand, with average office rents increasing to S$10.6 per sq. ft. in 2022 from S$10.3 per sq. ft. in 2021. On a committed basis, vacancy in the Group’s office portfolio remained low at 2.2%, compared with 2.9% at the end of 2021. In Beijing and Macau, pandemic measures negatively impacted trading at the Group’s two luxury retail malls, with tenant sales and footfall in 2022 both lower than the prior year. In Shanghai, development activities continued at the Group’s 43%-owned prime 1.1 million sq. m. mixed-use development on the West Bund, with modest impacts from the covid related city-wide lockdowns. The West Bund development, which will be completed in phases from 2023 to 2027, remains on schedule. The combined value of the Group’s Investment Properties portfolio was reduced by 2% in 2022, due largely to a modest increase in capitalisation rates for the Hong Kong portfolio. There was no change in the capitalisation rates for the Singapore, Beijing and Shanghai investment properties. 4 ![]() #### Development Properties As anticipated, the profit contribution from the Group’s Development Properties business on the Chinese mainland decreased compared to the prior year, as a result of a significantly lower profit contribution in the second half of the year, due to fewer planned sales completions and the impact of pandemic-related restrictions. The Group’s attributable interest in contracted sales in 2022 decreased to US$1,300 million from US$2,648 million in 2021, mainly due to weak market sentiment for residential properties. At 31st December 2022, the Group had an attributable interest of US$2,087 million in sold but unrecognised contracted sales, compared with US$2,853 million at the end of 2021. In Singapore, recognised profits in 2022 were lower than the prior year. 2021 benefited from the construction progress of the wholly-owned 1,404-unit Parc Esta project, which was handed over to buyers in 2022. The Group’s attributable interest in contracted sales was US$615 million, compared to US$328 million in the prior year, driven by the healthy pre-sales performance of two new residential projects launched during the year. The 407-unit Piccadilly Grand and Galleria and 639-unit Copen Grand projects are 85% and 100% pre-sold or reserved, respectively. In the rest of Southeast Asia, there were increased contributions from completed projects in Indonesia and Vietnam. #### Business Development The Group continues to be disciplined in evaluating and selecting development opportunities on the Chinese mainland, with a focus on Tier 1 and Tier 2 cities. During the year the Group made two acquisitions – a primarily residential site in Shanghai and an interest in a mixed-used commercial site in Suzhou. The Shanghai site, located in Xuhui District and adjacent to our mixed-used project in West Bund, has an attributable developable area of 18,700 sq. m. and will feature six high-rise apartment blocks with over 460 premium units. The joint venture project in Suzhou was secured in August 2022 and will consist of a luxury mall and hotel. The total developable area of the site is 132,600 sq. m., and it is expected to be completed in 2026. This development reflects the Group’s strategy of developing luxury and premium lifestyle retail properties on the Chinese mainland. The Group currently has four such properties in operation, and the site in Suzhou will be added to the pipeline of ten further such developments. In addition, the Group increased its investments in two existing projects, including acquiring from KWG Property Holdings Limited the remaining 50% interest in WE City, a mixed-use project in Chengdu in December 2022, and acquiring a 15% interest in Yue City, a mixed-use project in Nanjing, from Country Garden with completion expected in the first half of 2023. In Singapore, the Group acquired a 49% interest in a residential site in the Jalan Tembusu area with a total developable area of 60,000 sq. m., which is expected to be completed by 2025. These land acquisitions increase the Group’s attributable developable area under development across all projects to 4.9 million sq. m. #### Financing The Group’s financial position remains strong. Net debt of US$5.8 billion at 31st December 2022 was up from US$5.1 billion at the end of 2021, primarily due to lower proceeds from residential sales. Net gearing at the end of the year was 17%, compared with 15% at the end of 2021. As at 31st December 2022, the Group had committed liquidity of US$3.1 billion, with an average tenor of debt of 5.8 years, compared to 6.5 years at the end of 2021. In July 2022, the Group completed a US$500 million share buyback programme, and it subsequently announced that an additional US$500 million would be invested through to the end of 2023. As at 28th February 2023, the total amount invested in the buyback programme since it was first announced in September 2021 was US$556 million, with US$350 million invested in 2022. 5 ![]() #### Chairman’s Statement #### Sustainability Hongkong Land’s growth and progress on sustainability initiatives continues to be underpinned by its Sustainability Framework 2030, which addresses material topics that are linked to measurable targets. During the year, the Group committed to setting science-based targets that are aligned with the 1.5°C pathway. These targets, which were validated by the Science Based Targets initiative, has resulted in the Group committing to a 46.2% reduction of Scope 1 and 2 greenhouse gas emissions by 2030 from 2019 levels and a 22% reduction in carbon intensity for Scope 3 greenhouse gas emissions over the same period. The Group’s continued commitment and strong performance on sustainability initiatives has been recognised in a number of ESG assessments, especially those involving in-depth submissions. The Group was pleased to receive the highest 5-star rating from the Global Real Estate Sustainability Benchmark (‘GRESB’) for its standing investments. Hongkong Land also qualified, for the first time, as a constituent of the Dow Jones Sustainability Asia Pacific Index, as a result of the significant improvement in our scores in the 2022 S&P Global Corporate Sustainability Assessment. #### People I would like to express my appreciation on behalf of the Board to all of our staff for their continued commitment and professionalism in providing high quality offerings to our tenants and customers, despite market and pandemic-related challenges. Lord Powell of Bayswater and Percy Weatherall stepped down from the Board in March 2022, and Michael Wu stepped down from the Board in December 2022. We are grateful to them for their contributions to the Group. We were pleased to welcome Lincoln K.K. Leong and Lily Jencks to the Board as Independent Non-Executive Directors with effect from March and July 2022, respectively. #### Outlook Results in 2023 will principally depend on the pace of recovery of the property sector on the Chinese mainland. Stable contributions are expected to continue from the Group’s Investment Properties business, although rental reversions for the Hong Kong office portfolio are expected to remain negative. The extent of improvement in performance from the Development Properties business will depend on policy support measures implemented on the Chinese mainland. #### Ben Keswick Chairman 2nd March 2023 66 ![]() Hongkong Land delivered a respectable result for the year, despite challenging market conditions, although profits were significantly lower. The contribution from Development Properties fell as a result of pandemic measures on the Chinese mainland and a more uncertain global economic outlook in the second half of 2022, but the performance of Investment Properties was resilient. #### Strategy Hongkong Land is a landlord and a developer operating in China and Southeast Asia. The Group’s primary focus is to develop, grow and hold for long-term investment, a portfolio of prime commercial investment properties across the region, whilst it also develops premium residential and commercial properties for sale on an opportunistic basis to enhance shareholder returns. The Group’s Investment Properties are predominantly commercial 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 83% of the Group’s gross assets at the end of 2022 (2021: 83%) and contributed 70% of the Group’s underlying operating profit before corporate expenses in 2022 (2021: 60%). The Group’s Development Properties are predominantly premium residential and mixed-use developments located primarily in China, Singapore and Indonesia. 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 17% of the Group’s gross assets at the end of 2022 (2021: 17%) and 30% of the Group’s underlying operating profit before corporate expenses in 2022 (2021: 40%). Geographically, China generates the bulk of the Group’s earnings. Hong Kong, which predominantly comprises Investment Properties, accounted for 57% of the Group’s underlying operating profit before corporate expenses (2021: 49%), while the Chinese mainland, which predominantly comprises Development Properties, accounted for 23% (2021: 33%). 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 selectively pursue new long-term investment opportunities in key gateway cities across the region. Earnings from the Development Properties business are largely reinvested to replenish the Group’s land bank where opportunities arise. The Group’s share of capital allocated to new investments totalled US$1.0 billion in 2022 (2021: US$3.0 billion). #### Hong Kong Investment Properties 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. It continues to attract both prime office tenants and luxury retailers, in addition to housing the acclaimed Landmark Mandarin Oriental hotel. ### Chief Executive’s Review #### Central Portfolio office tenant profile #### by area occupied 42% Banks and other financial services 31% Legal 3% Trading 8% Accounting 5% Property 11% Others 40% Banks and other financial services 30% Legal 6% Property 8% Accounting 1% Governments 2% Trading 13% Others 2 01 8 2 022 7 ![]() #### Chief Executive’s Review #### 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. In China, the Group’s 43,000 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 26,000 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. Hong Kong’s positioning as one of Asia’s leading 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. The Group’s 54,000 sq. m. retail portfolio is integrated with its office buildings to create part of its distinctive and successful mixed-use business model. Tenants include numerous global luxury brand flagship stores, as well as a number of leading restaurants. LANDMARK is firmly established as the iconic luxury shopping and fine dining destination in Hong Kong. Its success depends on the health of the broader Hong Kong economy, as well as on Hong Kong remaining an attractive destination for affluent visitors from across the region. The Group is working to ensure that it remains the clear market leader in the city in which global luxury brands are represented. #### Central Portfolio top five retail tenants #### (in alphabetical order) in 2022 Dickson Concepts Giorgio Armani Hermes Kering LVMH #### Central Portfolio top five office tenants #### (in alphabetical order) in 2022 JP Morgan KPMG Mayer Brown PricewaterhouseCoopers Stock Exchange of Hong Kong 8 ![]() #### Development Properties The Group has established a strong and profitable Development Properties business focused primarily on the premium residential market segment in China, Singapore and Indonesia. In China, the Group has a presence in seven key markets: Beijing, Chengdu, Chongqing, Hangzhou, Nanjing, Shanghai and Wuhan, which are expected to continue benefiting from the growth of the middle class and long-term urbanisation trends. While the capital invested in this business is significantly lower than that invested in Investment Properties, the earnings derived from Development Properties enhance the Group’s diversification, overall profits and return on capital. The Group’s attributable interest in the developable area of its projects at the end of 2022 totalled 10.7 million sq. m., compared to 10.2 million sq. m. at the end of 2021. Of this, construction of approximately 54% had been completed at the end of 2022, compared to 48% at the end of 2021. 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 China. Demand is also dependent on overall economic conditions, which can be significantly affected by government policies and the availability of credit. Ongoing land acquisitions are necessary to build and maintain a stable income stream over the longer term. #### Review of Investment Properties Profits from Investment Properties in 2022 were 2% lower than the prior year, primarily due to negative office rental reversions in Hong Kong. The value of the Group’s Investment Properties portfolio at 31st December 2022 declined by 2%, mainly due to lower market rents for the Hong Kong Central Portfolio and a modest increase in capitalisation rates. #### Hong Kong Despite slowing demand due to global economic headwinds and rising office vacancies across Hong Kong, the Group’s Central office portfolio continued to outperform the broader market. Physical vacancy was 4.9% at the year end, compared to 5.2% at the end of 2021. On a committed basis, vacancy was 4.7%. Vacancy for the overall Central Grade A office market was 8.8% at the end of 2022, compared to 8.0% at the end of 2021. Rental reversions remained negative during the year. The Group’s average office rent in 2022 was HK$111 per sq. ft., down from last year’s average of HK$117 per sq. ft. Financial institutions and legal and accounting firms occupy 81% of the Group’s total leased office space. The weighted average lease expiry of the office portfolio at the end of 2022 stood at 4.0 years, compared to 4.2 years at the end of 2021. #### Central Portfolio at 31st December 2022 Office Retail Capital value (US$m) 22,391 3,740\* Gross revenue (US$m) 745 215 \* Equivalent yield (%) – One and Two Exchange Square 3.05 – Landmark Atrium 4.50 Average unexpired term of leases (years) 4.0 1.8 Area subject to renewal/review in 2023 (%) 22 45 \* Includes hotel 9 ![]() #### Chief Executive’s Review The Group’s luxury retail portfolio in Hong Kong was negatively impacted by pandemic restrictions in the first half of 2022, although sentiment and performance improved as social and travel restrictions were progressively relaxed towards the end of the year. During the first half of 2022, the Group provided temporary rent relief to support tenants through the fifth wave of the pandemic, including turnover-only rent for F&B tenants and a full waiver of rents for tenants subject to mandatory closure of their businesses. Average retail rent in 2022 decreased to HK$177 per sq. ft. from HK$190 per sq. ft. due to negative base rental reversions, partly offset by a decline in temporary rent relief provided to tenants. Vacancy, on both a physical and committed basis, remained low at 0.5%. Over the past year, the Group continued to refine its best-in-class services and offerings to its tenants and customers. In March 2022, the Group launched a new LANDMARK app to provide shoppers and loyalty members with a more personalised and intuitive user experience. The new platform also provides more flexibility in co-creating content with our tenants and partners and enables the Group to serve customers better through a deeper understanding of their needs. In December 2022, the Group expanded its successful premium food hall concept in the basement level of Jardine House by launching BaseHall 2. The venue provides a fluid space for multi-concept dining and the flexibility to host other events and experiences for our tenants and customers. In addition to housing 13 unique food and beverage concepts, BaseHall 2 has an 18-seat chef’s counter to provide a platform to incubate homegrown talents in Hong Kong. The value of the Group’s Investment Properties portfolio in Hong Kong at 31st December 2022, based on independent valuations, declined by 2% to US$26,131 million, primarily from a slight increase in capitalisation rates. #### Singapore Although the Singapore office leasing market remained healthy in 2022, market sentiment was affected by global economic headwinds towards the end of the year. Overall vacancy across the entire Grade A central business district was 5.5% at the end of 2022, compared to 8.6% at the end of 2021. Average rent at the Group’s office portfolio increased to S$10.6 per sq. ft. in 2022, up from S$10.3 per sq. ft. in the previous year, driven by positive rental reversions. Physical vacancy was 7.5% at the year end, whilst on a committed basis vacancy was 2.2% at the end of 2022, compared to 2.9% at the end of 2021. Financial institutions and legal and accounting firms occupy 73% of the Group’s total leased office space. The weighted average lease expiry of the office portfolio at 2022 year end stood at 3.4 years (2021: 3.4 years). 14.18 15.06 15.46 2022202120202019201820172016201520142013 12.70 13.14 13.03 13.26 13.82 14.39 15.04 Central Portfolio average office effective rent (US$/sq. ft. per month) 10 ![]() To further enhance the tenant experience, the Group has continued to leverage its popular ‘By The Bay’ mobile app to introduce exclusive retail offerings, deliver a series of health and wellness workshops and host community and charitable events. Chinese Mainland In Beijing, footfall and tenant sales at WF CENTRAL were negatively impacted by pandemic measures throughout the year. Tenant repositioning initiatives, however, remained on track with several new openings expected in the first half of 2023. In Shanghai, planning and development of the Group’s prime mixed-use development on the West Bund is proceeding on schedule. Completion is expected in phases from 2023 to 2027. #### Other Investment Properties ONE CENTRAL Macau was negatively impacted by pandemic measures, with lower footfall and tenant sales than the prior year, as the border with the Chinese mainland remained closed for most of the year. Physical occupancy was 84%, compared to 91% at the end of the prior year. In Jakarta, occupancy across the office portfolio was 71% at the end of 2022, compared to 72% at the end of 2021. On a committed basis, occupancy was 72%. The average net rent was US$15.0 per sq. m. in 2022, compared to US$15.2 per sq. m. in the prior year, reflecting a satisfactory performance in the context of a structural surplus of city-wide office supply. In Bangkok, planning of the Group’s 49%-owned prime commercial joint-venture development in the central business district, secured in late 2017, is under review in response to the changing market conditions. This development has a gross floor area of 290,000 sq. m. Performance at the Group’s other investment properties was within expectations. #### Review of Development Properties Earnings from the Group’s Development Properties business were lower in 2022 than in 2021, primarily due to construction delays caused by pandemic restrictions and fewer planned sales completions on the Chinese mainland. Chinese Mainland The Group’s development properties on the Chinese mainland comprise 35 projects in seven cities, of which 14 are in Chongqing. As at 31st December 2022, the Group’s net investment in development properties on the Chinese mainland was US$6.5 billion, compared to US$6.3 billion at the end of 2021. While the Development Properties business is predominantly focused on selling residential properties, the Group is also developing luxury and premium lifestyle retail properties on the Chinese mainland. It currently has four such properties in operation, with a total attributable net leasable area of 170,000 sq. m. In addition, a further ten projects, with an estimated attributable net leasable area of 323,000 sq. m., are expected to be launched from 2023 to 2027, as follows: #### Luxury retail properties pipeline Project City Attributable net leasable area (sq. m.) JL CENTRAL Nanjing 23,000 Eternal Land Chongqing 44,400 West Bund\* Shanghai 51,800 Suzhou CENTRAL\* Suzhou 39,400 \* The West Bund luxury retail segment and Suzhou CENTRAL are recognised under Investment Properties. #### Premium lifestyle retail properties pipeline Project City Attributable net leasable area (sq. m.) Galaxy Midtown Shanghai 8,800 WE City Chengdu 51,700 Yue City Nanjing 16,200 Central Avenue Chongqing 38,100 Hangzhou Bay Hangzhou 22,800 Dream Land Wuhan 26,700 11 ![]() #### Chief Executive’s Review With tightened credit conditions and macroeconomic headwinds on the Chinese mainland, the Group maintained its disciplined and consistent approach to evaluating expansion opportunities. During the year, the Group secured two new joint venture projects: a residential project in West Bund, Shanghai and a commercial project in Suzhou. Market sentiment remained weak throughout the year due to pandemic restrictions. The Group’s share of total contracted sales in 2022 was US$1,300 million, 51% lower than the US$2,648 million achieved in the prior year. The Group’s attributable interest in revenue recognised in 2022, including its share of revenue in joint ventures and associates, was US$1,873 million, compared to US$2,426 million in 2021. At 31st December 2022, the Group’s attributable interest in sold but not yet recognised contracted sales amounted to US$2,087 million, compared to US$2,853 million at the end of 2021. #### Development Properties pipeline #### (Chinese mainland) City Number of projects Developable area \* (‘000 sq. m.) Revenue from property sales \* (US$m) % of construction completed % of Development Properties exposure on the Chinese mainland 2022 2021 Chongqing 14 4,890 1,113 1,480 79% 33% Shanghai 5 397 59 259 43% 22% Nanjing 4 433 100 450 33% 16% Wuhan 4 642 56 2 23% 16% Chengdu 5 1,209 27 164 63% 8% Beijing 1 38 – – 0% 4% Hangzhou 2 309 518 71 53% 1% \* Includes HKL’s share in joint ventures and associates #### Singapore With the relaxing of pandemic restrictions, residential market sentiment recovered during the year, with satisfactory sales performance at the Group’s existing projects. The Group completed one residential project during the year, the wholly-owned 1,404-unit Parc Esta, which was fully sold. The Group’s attributable interest in contracted sales was US$615 million in 2022, compared to US$328 million in the prior year. The Group’s attributable interest in revenue recognised in 2022 was US$379 million, compared to US$631 million in the prior year. At 31st December 2022, the Group’s attributable interest in sold but not yet recognised contracted sales amounted to US$589 million, compared to US$362 million at the end of 2021. During the year, the Group secured a 49% interest in a residential site in the Jalan Tembusu area with a developable area of 60,000 sq. m., which is expected to yield a total of 638 units on completion. #### Development Properties pipeline (Singapore) Project Developable area \* (‘000 sq. m.) Revenue from property sales \* (US$m) Expected completion % of Development Properties exposure in Southeast Asia 2022 2021 Parc Esta 108 164 501 Completed 0% Leedon Green 27 190 66 2023 6% Piccadilly Grand and Galleria 20 25 – 2025 3% Copen Grand 34 – – 2025 4% Tembusu Grand 29 – – 2025 30% \* Includes HKL’s share in joint ventures and associates 12 ![]() #### Indonesia and other Development Properties In Indonesia, construction of the Group’s residential projects has largely recovered with the relaxation of pandemic restrictions. During the year, the Group acquired a 50% interest in a 50.4 hectare primarily residential site in the southwest of Jakarta. The project will consist of predominantly land houses and is expected to be completed in phases from 2025 to 2033. In February 2022, the Group, in partnership with Astra International, established a joint venture with LOGOS SE Asia Pte Ltd to manage and develop modern logistics warehouses in Indonesia, with an initial focus in the Greater Jakarta area. In the rest of Southeast Asia, construction activities continue to progress well, with pre-sales performance in line with expectations. #### Development Properties pipeline (Southeast Asia ex. Singapore) Country Number of projects Developable area \* (‘000 sq. m.) Revenue from property sales \* (US$m) % of construction completed % of Development Properties exposure in Southeast Asia 2022 2021 Indonesia 6 743 67 37 24% 25% Thailand 4 263 22 32 13% 22% Philippines 3 710 20 25 12% 7% Vietnam 1 40 90 47 100% 3% \* Includes HKL’s share in joint ventures and associates #### The Year Ahead Looking ahead to 2023, the Group expects a steady improvement in the operating environments across a majority of its key markets. The Group’s Investment Properties portfolios in Hong Kong and Singapore remain well positioned in their respective markets, underpinned by their high quality tenant base and low vacancies. In the Development Properties business, the extent of improvement in performance will depend on the pace of recovery of the Chinese mainland property sector. We take pride in delivering outstanding services and products to our tenants and customers by upholding the highest quality standards. These core values have served as the foundation of Hongkong Land’s long-term success. The Group intends to utilise its strong balance sheet and disciplined investment approach to further strengthen its market positions and achieve sustained growth. #### Robert Wong Chief Executive 2nd March 2023 13 ![]() #### Results #### Underlying business performance 2022 2021 US$m US$m Investment Properties 951 973 Development Properties 404 644 Corporate costs (89) (89) Underlying operating profit 1,266 1,528 Net financing charges (228) (196) Tax (261) (365) Non-controlling interests (1) (1) Underlying profit attributable to shareholders 776 966 Non-trading items (573) (1,315) Profit/(loss) attributable to shareholders 203 (349) US¢ US¢ Underlying earnings per share 34.44 41.49 Underlying business performance is summarised in the above table, including the Group’s operating profit from its associates and joint ventures. Given the significance of the contribution from the Group’s joint ventures, this provides a clearer summary of the Group’s performance during the year. The Group’s operating profit from Investment Properties was US$951 million, 2% lower than the previous year, primarily due to negative office rental reversions in Hong Kong. The two largest operating profit contributors within Investment Properties are the Hong Kong Central Portfolio (82%) and Singapore (12%). In Hong Kong, there was a 2% decrease in operating profit in 2022. Office average net rent was down 5% compared to 2021, at HK$111 per sq. ft. per month. There were negative base rental reversions in the LANDMARK retail portfolio in 2022, although the impact of this was partially offset by a reduction in temporary rental support provided to tenants due to the pandemic. Operating costs were lower year-on-year helping to reduce the impact of lower rents. In Singapore, Investment Properties operating profit was US$117 million, 1% higher than the previous year, primarily due to an increase in average rent. Operating profit at ONE CENTRAL Macau was 30% lower than the prior year as retail sales at the mall were significantly lower in 2022 due to pandemic measures in place throughout much of the year. Operating profits from Development Properties decreased by 37% from the previous year to US$404 million, primarily due to fewer planned sales completions and the impact of pandemic-related restrictions on the Chinese mainland in the second half of the year. The split of operating profits between countries was 75% from the Chinese mainland, 12% from Singapore, 8% from Indonesia and 5% from Others. In respect of revenue recognised on the Chinese mainland, there was a 15% reduction in the number of units handed over to buyers in 2022 compared to the prior year. The split by city was as follows: City Number of units handed over 2022 2021 Chengdu 118 2% 926 12% Chongqing 4,240 67% 4,294 57% Hangzhou 1,599 25% 395 5% Nanjing 65 1% 1,424 19% Shanghai 136 2% 453 6% Wuhan 207 3% 16 1% Total 6,365 100% 7,508 100% In Singapore, the Group’s attributable interest in revenue recognised was US$379 million, compared to US$631 million in 2021, with the reduction reflecting the different phasing and construction progress of projects year-on-year. In other parts of Southeast Asia, operating profits from Development Properties increased mainly due to completion progress on projects in Indonesia and Vietnam. Net financing charges of US$228 million were US$32 million higher than the prior year primarily due to an increase in average net debt. Weighted average borrowing costs were 3.3%, compared to 3.1% in the prior year with the impact of rising interest rates mitigated by a significant amount of fixed rate debt. ### Financial Review 14 ![]() #### Cash Flows The Group’s consolidated cash flows are summarised as follows: 2022 2021 US$m US$m Operating activities Operating profit, excluding non-trading items 846 943 Net interest (183) (173) Tax paid (125) (157) Payments for Development Properties sites (364) (1,205) Expenditure on Development Properties projects (401) (373) Sales proceeds from Development Properties 1,071 1,674 Dividends received from joint ventures 222 239 Others (208) (419) 858 529 Investing activities Major renovations capex (95) (99) Investments in and advances to associates and joint ventures (618) (397) Development expenditure – (2) Disposal/(acquisition) of subsidiaries and joint ventures (14) 66 (727) (432) Financing activities Dividends paid by the Company (504) (509) Net drawdown of borrowings 445 76 Shares repurchase (352) (192) Others (4) (5) (415) (630) Net decrease in cash and cash equivalents (284) (533) Cash and cash equivalents at 1st January 1,476 1,990 Effect of exchange rate changes (20) 19 Cash and cash equivalents at 31st December 1,172 1,476 The Group’s tax charge decreased to US$261 million, with an effective tax rate of 25%, lower than the prior year 27% effective tax rate due to a smaller share of profits coming from the Chinese mainland where tax rates are higher than in Hong Kong. #### Non-Trading Items In 2022, the Group had net non-trading losses US$573 million compared to US$1,315 million in 2021. These arose principally on revaluations of the Group’s investment properties by independent valuers (including its share of joint ventures) at 31st December each year. The decrease in valuations in 2022 came primarily from the Group’s Central Portfolio in Hong Kong due to a modest increase in capitalisation rates for office buildings and a decrease in open market rents for retail buildings. In 2021, the decrease was due to lower open market rents. The Central Portfolio decreased in value by 2% in 2022 and 5% in 2021. At 31st December 2022, the value of the Central Portfolio was US$26.1 billion. 15 ![]() #### Financial Review The Group’s Development Properties business comprises a mixture of wholly owned projects (recorded within operating activities) and joint venture projects (recorded within investing activities). The net cash inflow from operating activities for the year were US$858 million, compared with a net cash inflow of US$529 million in the prior year. The increase of US$329 million was principally due to a lower number of Development Properties sites acquired during the year, partially offset by lower sales proceeds from Development Properties projects. Net outflows in others relates primarily to net working capital changes. In 2022, US$364 million was paid by the Group for wholly owned Development Properties sites that were committed at the end of 2021, principally two projects in Chengdu, Artistic Bay (US$165 million) and Creative Land Project (US$121 million). Sales proceeds received in 2022 decreased by US$603 million due to a lower number of planned sales launches and weak market sentiment. Net cash outflows from investing activities were US$727 million in 2022, compared to a net cash outflow of US$432 million in the prior year. Net investments in the Group’s joint venture projects totalled US$618 million, compared to US$397 million in the prior year. This increase was primarily due to lower pre-sales proceeds on joint venture projects. In 2022, the Group invested US$930 million in land acquisitions with joint venture partners, compared to US$1,011 million in the prior year. Capital expenditure of US$95 million for major renovations principally relates to the Group’s Central Portfolio in Hong Kong. Under financing activities, the Company paid dividends of US$504 million, being the 2021 final dividend of US¢16.00 per share and the 2022 interim dividend of US¢6.00 per share, unchanged compared to the prior year. The Group also spent US$352 million in the purchase of its own shares in 2022 and had a net drawdown of borrowings of US$445 million during the year. Cash and cash equivalents were US$304 million lower at the end of 2022. Taken together with an increase in borrowings, the Group’s net debt at 31st December 2022 increased to US$5,817 million, from US$5,104 million at the beginning of the year. #### Year-end debt summary \* 2022 2021 US$m US$m US$ bonds/notes 2,091 2,606 HK$ bonds/notes 1,515 1,631 HK$ bank loans 1,427 430 S$ bonds/notes 220 219 S$ bank loans 391 389 RMB bank loans 1,009 973 THB bank loans 337 335 Gross debt 6,990 6,583 Cash 1,173 1,479 Net debt 5,817 5,104 \* Before currency swaps 16 ![]() #### Capital Management The Group actively reviews and manages its capital structure to ensure optimal shareholder returns through a combination of profitability, cash flows, investing activities and balance sheet strength. The Group’s capital management policies are set out on page 72. #### New Investments During 2022, the Group committed to invest, based on its equity contribution, and share of project level debt, US$1.0 billion in new projects (2021: US$3.0 billion). The Group continues to assess new investment opportunities on a disciplined basis, which are expected to be funded by a combination of internal resources and external financing from banks and the debt capital markets. #### Capital Commitments Outstanding capital commitments as of 31st December 2022 was US$1,017 million (2021: US$1,184 million), including the Group’s share of the capital commitments of joint venture companies of US$942 million (2021: US$1,067 million). The largest commitments relate to the Group’s 49% share of a joint-venture mixed use project in Bangkok and various development projects on the Chinese mainland. #### Share Buy-back The Group completed a US$500 million share buyback program in July 2022, which was followed by the announcement of an additional US$500 million to be invested through to the end of 2023. As at 28th February 2023, the total amount invested in the buyback programme since it was first announced in September 2021 was US$556 million, including US$350 million invested in 2022. #### Dividends The Board is recommending a final dividend of US¢16.00 per share for 2022, providing a total annual dividend of US¢22.00 per share, the same as last year. The final dividend will be payable on 10th May 2023, subject to approval at the Annual General Meeting to be held on 4th May 2023, to shareholders on the register of members at the close of business on 17th March 2023. No scrip alternative is being offered in respect of the dividend. #### Treasury Policy The Group manages its treasury activities within established risk management objectives and policies using a variety of techniques and instruments. The main objectives are to manage exchange, interest rate and liquidity risks and to provide a degree of certainty in respect of costs. The investment of the Group’s cash balances is managed so as to minimise risk while seeking to enhance yield. Appropriate credit guidelines are in place to manage counterparty credit risk. When economically sensible to do so, borrowings are taken in local currencies to hedge foreign currency exposures on investments. A portion of borrowings is denominated in fixed rates. Adequate committed facilities headroom is maintained to facilitate the Group’s capacity to pursue new investment opportunities and to provide some protection against market uncertainties. Overall, the Group’s funding arrangements are designed to strike an appropriate balance between equity and debt from banks and capital markets, both short and long term, to give flexibility to develop the business. The Group’s Treasury operations are managed as cost centres and are not permitted to undertake speculative transactions unrelated to underlying financial exposures. 17 ![]() #### Financial Review #### Debt profile at 31st December 2022 \* After currency swaps Interest rate Currency\* Maturity 41% >5 years 44% 2-5 years 9% 1-2 years 6% <1 year 53% Fixed 47% Floating 72% HK$ 14% RMB 9% S$ 5% THB At 31st December 2022, the Group had total committed lines of approximately US$8.9 billion with a diversified range of maturity dates. Of these lines, 57% were sourced from banks with the remaining 43% from the capital markets. At the end of 2022, the Group had drawn US$7.0 billion of these lines leaving US$1.9 billion of committed, but unused, facilities. Adding the Group’s year end cash balances, the Group had overall liquidity at 31st December 2022 of US$3.1 billion, down from US$4.0 billion at the end of 2021. #### Committed facility maturity #### at 31st December 2022 (US$m) 2027 & beyond 2026 2023 2024 2025 3,231 1,496 2,532 1,293 377 #### Funding The Group is well financed with strong liquidity. Net gearing at the end of the year was 17%, compared with 15% at the end of 2021. 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 5.5 times, down from 7.8 times in 2021. The decrease was mainly due to lower underlying operating profits and higher average net debt during the year. #### Net debt as a percentage of equity 2018 2019 2020 2021 2022 17% Net debt Equity 15% 9%9% 13% Both Moody’s and Standard & Poor’s have maintained their credit ratings of Hongkong Land Holdings Limited at A3 and A respectively. The average tenor of the Group’s debt was 5.8 years at 31st December 2022, down from 6.5 years at the end of 2021. On average, approximately 53% of the Group’s borrowings were either fixed rate borrowings or covered by interest rate hedges with major credit worthy financial institutions and the remaining 47% were at floating rates. The majority of the Group’s debt is denominated in Hong Kong dollars, of which 68% was at fixed rate. 18 ![]() #### Gross Assets The Group’s gross assets, including its share of joint ventures, (excluding cash balances) is analysed below, by activity and by location. #### Gross assets by activityGross assets by location 83% Investment Properties 17% Development Properties 66% Hong Kong 20% Chinese mainland and Macau 14% Southeast Asia 83% Investment Properties 17% Development Properties 66% Hong Kong 20% Chinese mainland and Macau 14% Southeast Asia #### Principal Risks and Uncertainties A review of the principal risks and uncertainties facing the Group is set out on pages 101 to 105. #### 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 2022 annual financial statements. #### Craig Beattie Chief Financial Officer 2nd March 2023 19 ![]() ### Sustainability #### Overview Since its founding in 1889, Hongkong Land’s business has been built on the principles of excellence, integrity and partnership. As the global calls for climate action and improvement of environmental, social and governance (‘ESG’) performance become increasingly urgent, Hongkong Land recognises that the real estate and construction sectors have significant roles to play in a global transition to a low carbon economy and is committed to continue engaging and collaborating with our stakeholders to advance sustainability agendas in the communities it serves. The Group’s continued growth and progress on delivering positive outcomes for our business and stakeholders is underpinned by its Sustainability Framework 2030 which highlights key focus areas that are linked to measurable targets. Putting this framework into practice requires the Group to strive for continuous improvement and further integration of ESG considerations into our operations across the region. #### ESG Disclosure In line with the Task Force on Climate-related Financial Disclosures (‘TCFD’) reporting requirements for standard listed companies in the United Kingdom, the Group’s climate-related disclosures in its Sustainability Report – Framework 2030 and Climate Action is made available on the same date as its Annual Report 2022. To facilitate the holistic evaluation of its climate-related activities, the Group publishes its TCFD disclosures separately from its Annual Report but alongside other information relevant to climate action including risk management, decarbonisation targets and pathway, as well as results of climate risk assessments and mitigation measures. The climate-related disclosures are consistent with the TCFD recommendations on: • governance – all recommended disclosures; • strategy – all recommended disclosures; • risk management – all recommended disclosures; and • metrics and targets – disclosure (c). Requirements under metrics and targets – disclosures (a) and (b) will be addressed in the Sustainability Performance Report 2022, which will be published on the Group’s website in the second quarter of 2023. The report will present relevant environmental and social-related performance data covering the financial year ended 31st December 2022. Further details on the Group’s approach to sustainability and related policies can also be found on the Group’s website at www.hkland.com/en/sustainability. #### Highlights in 2022Decarbonisation As part of Hongkong Land’s commitment to accelerate its contributions on climate action, the Group announced in February 2022 its pledge to setting science-based targets that are aligned with the 1.5°C pathway. We are leading the net zero transition by setting ambitious emission reduction targets. The targets, which were validated by the Science Based Target initiative in June 2022, will result in the Group committing to a 46.2% reduction of Scope 1 and 2 emissions by 2030 from 2019 levels and a 22% reduction in carbon intensity for Scope 3 emissions over the same period. #### Green Buildings and Renewable Energy Hongkong Land has a long history of reinvesting in existing assets and undertaking a robust green building certification programme. At the end of 2022, 88% of our leasing portfolio, including those held in joint ventures, achieved green building certification. All of our buildings in Hong Kong and Singapore, comprising 51% of our leasing portfolio, hold the highest possible ratings of BEAM Plus Platinum and Green Mark Platinum certifications respectively. The Group’s luxury retail flagship in Beijing, WF CENTRAL, is among the first commercial complexes in Beijing to be powered by 100% renewable energy. The renewable energy is generated by photovoltaic and wind power systems from Northwest China. This project marks a significant milestone in Hongkong Land’s commitment to supporting the Chinese Central Government’s ambition to achieve carbon neutrality by 2060. 20 ![]() In recognition of our efforts to adhere to the highest standards for property management, the Group’s Exchange Square complex in Hong Kong was awarded the Grand Award at the Quality Property and Facility Management Award 2022 under the Large-Scale Office Building Management Category jointly organised by the Hong Kong Association of Property Management Companies and the Hong Kong Institute of Surveyors Property and Facility Management Division. #### Green Finance In July 2022, the Group published its inaugural green finance report to provide stakeholders updates on its green financing transactions in accordance with its Green Financing Framework. The report outlined the use of proceeds for the Group’s green bonds, as well as green elements of the relevant projects financed. The Group had sustainability-linked loans with an aggregate facility amount of US$2.2 billion at the end of 2022, up from US$1.9 billion at the end of the prior year. The facilities index against ESG targets for continuous improvements in energy efficiency, reducing food waste, and renewable energy generation, while maintaining green building certifications for the Group’s Central Portfolio. #### Corporate Social Responsibility The Hongkong Land HOME FUND, which was established to focus on creating initiatives which benefit younger generations and our aspiration to foster a more inclusive society, celebrated its second anniversary in November 2022. Since its inception, the fund has committed over US$10.5 million which benefitted over 190,000 people across the region. Key milestones achieved during the past year include committing US$4.1 million in new projects focused on youth and those most impacted by the pandemic; increasing the number of NGO partnerships from three to more than 80 across the region; the continued growth of the HERE2HELP volunteering team which contributed over 5,500 hours to serve more than 50,000 people; and a matching gift programme for tenants and employees in Hong Kong which raised over US$150,000 to support causes aligned to the vision of the HOME FUND. During the year, the Group also received a number of prestigious awards in recognition of its efforts on specific projects which created positive impact on the community. For its work in collaborating with like-minded partners to help improve the facilities of the Christian Zheng Sheng Association, an educational establishment dedicated to helping young people in need in Hong Kong, the Group was proud to receive the Outstanding Collaboration Project accolade at the Hong Kong Volunteer Award 2022, as well as the Corporate Social Responsibility Project of the Year at the RICS Awards 2022 – Hong Kong. #### ESG Ratings Over the past year, the Group delivered significant improvements on ESG ratings, especially on in-depth assessments which require active participation by companies. The Group’s latest ESG ratings as at 31st December 2022 are listed below. • Global Real Estate Sustainability Benchmarks (‘GRESB’) – the highest 5-star rating for Standing Investments which recognises entities placed in the top 20% of the benchmark • Dow Jones Sustainability Indices (‘DJSI’) – a score of 70/100 and qualified as a constituent of the Dow Jones Sustainability Asia Pacific Index, improving from 52/100 in the prior year • Sustainalytics – a Company ESG Rating of 17.6, Low Risk (on a scale of severity 0-40+), improving from 20.4, Medium Risk in the prior year • Climate Disclosure Project (‘CDP’) – a Climate Change score of ‘B’ 21 ![]() #### Ben Keswick Chairman Ben Keswick joined the Board as Managing Director in April 2012 and held the position until June 2020. He has been Chairman since 2013. He was also managing director of Jardine Matheson from 2012 to 2020. He has held a number of executive positions since joining the Jardine Matheson group in 1998, including finance director and then chief executive officer of Jardine Pacific between 2003 and 2007, and group managing director of Jardine Cycle & Carriage until March 2012. He is executive chairman of Jardine Matheson and chairman of DFI Retail Group and Mandarin Oriental. He is also chairman of Jardine Cycle & Carriage and a commissioner of Astra. He is a director of Yonghui Superstores and held the position of chairman between 2018 and 2020. He has an MBA from INSEAD. #### John Witt \* Managing Director John 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. John is chairman of Jardine Matheson Limited, group managing director of Jardine Matheson and managing director of DFI Retail Group and Mandarin Oriental. He is also a director of Jardine Pacific and Jardine Motors, as well as a commissioner and chairman of the executive committee of Astra. John is a Chartered Accountant and has an MBA from INSEAD. #### Robert Wong \* Chief Executive Robert Wong joined the Board as Chief Executive in 2016. He joined the Group in 1985 and has extensive experience in property management and development. As a director of Hongkong Land Limited since 1996, he had prime responsibility for the Group’s residential property business. He is a member of both The Royal Institution of Chartered Surveyors and The Hong Kong Institute of Surveyors. #### Craig Beattie \* Chief Financial Officer Craig Beattie joined the Board as Chief Financial Officer in 2021. He has previously held a number of senior finance positions in the Jardine Matheson group since joining from EY in the UK in 2006, including the chief financial officer of Mandarin Oriental from 2018 to 2021 and group treasurer of Jardine Matheson from 2016 to 2018. He is a Chartered Accountant. #### Lily Jencks Lily Jencks joined the Board in July 2022. She is an architectural and landscape designer, with a master’s degree from the University of Pennsylvania. She ran the design company JencksSquared and architectural and landscape practice Lily Jencks Studio. She is currently the founder and director of the Jencks Foundation. #### Adam Keswick Adam 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. Adam is a director of DFI Retail Group and Mandarin Oriental. He is also a director of Ferrari NV, Schindler and Yabuli China Entrepreneurs Forum and vice chairman of the supervisory board of Rothschild & Co. \* Executive Director ### Directors’ Profiles 22 ![]() Lincoln K.K. Leong Lincoln K.K. Leong joined the Board in March 2022. He is the Chairman of the Audit Committee of the Company. Lincoln is an independent non-executive director of SUNeVision Holdings Ltd., Link Asset Management Limited, as Manager of Link Real Estate Investment Trust, and Standard Chartered Bank (Hong Kong) Limited. He was previously the chief executive officer of MTR Corporation Limited and a non-executive director of Jardine Strategic Holdings Limited and Mandarin Oriental International Limited. Lincoln is a Chartered Accountant and has extensive experience in the accountancy and investment banking industries. #### Anthony Nightingale Anthony Nightingale joined the Board in 2006 and was Managing Director of the Company from 2006 to 2012. He is also a director of DFI Retail Group, Jardine Cycle & Carriage, Jardine Matheson, Shui On Land and Vitasoy, and a commissioner of Astra. He is the chairperson of The Sailors Home and Missions to Seafarers in Hong Kong. He is a past chairman of the Hong Kong General Chamber of Commerce and served on many Hong Kong Government committees from 1992 to 2022, also representing Hong Kong on the APEC Business Advisory Council from 2005 to 2017. #### Christina Ong Christina Ong joined the Board in 2018. She is chairman and senior partner of Allen & Gledhill as well as co-head of its financial services department. She is a director of Oversea-Chinese Banking Corporation and Singapore Telecommunications. She is also a member of the Catalist Advisory Panel, Civil Aviation Authority of Singapore and the corporate governance advisory committee of the Monetary Authority of Singapore, and a trustee of The Stephen A. Schwarzman Scholars Trust. Y.K. Pang Y.K. Pang has been a Director of the Company since 2007. He was Chief Executive of the Group from 2007 to 2016. He is deputy managing director and chairman of Hong Kong of Jardine Matheson, and chairman of Jardine Pacific. He has held a number of senior executive positions in the Jardine Matheson group, which he joined in 1984. Y.K. is also deputy chairman of Jardine Matheson Limited, and a director of Gammon, Jardine Matheson (China), Mandarin Oriental and Greatview. He is chairman of the Hong Kong Tourism Board and the Hong Kong Management Association, and a member of the Council and General Committee of the Hong Kong General Chamber of Commerce and the Employers’ Federation of Hong Kong. Prijono Sugiarto Prijono Sugiarto joined the Board in 2020. He is the president commissioner of Astra and was the president and group CEO from 2010 to 2020. Prijono is the chairman of the German Indonesian Chamber of Commerce. In 2014, he was awarded Asia Business Leader of The Year from CNBC. 23 ![]() | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | | | | | 2022 | | | 2021 | | | | | Underlying | Non- | | Underlying | Non- | | | | | business | trading | | business | trading | | | | | performance | items | Total | performance | items | Total | | | Note | US$m | US$m | US$m | US$m | US$m | US$m | | Revenue | 3 | 2,244.4 | – | 2,244.4 | 2,384.3 | – | 2,384.3 | | Net operating costs | 4 | (1,398.4 ) | – | (1,398.4 ) | (1,440.9) | 2.6 | (1,438.3) | | Change in fair value of investment properties | 9 | – | (559.3) | (559.3) | – | (1,375.5) | (1,375.5) | | Operating profit/(loss) | | 846.0 | (559.3) | 286.7 | 943.4 | (1,372.9) | (429.5) | | Net financing charges | 5 | | | | | | | | – financing charges | | (234.9) | – | (234.9) | (222.2) | – | (222.2) | | – financing income | | 66.8 | – | 66.8 | 67.0 | – | 67.0 | | | | (168.1) | – | (168.1) | (155.2) | – | (155.2) | | Share of results of associates and joint ventures | 6 | | | | | | | | – before change in fair value of investment properties | | 229.3 | – | 229.3 | 355.9 | – | 355.9 | | – change in fair value of investment properties | 9 | – | (24.5) | (24.5) | – | 80.6 | 80.6 | | | | 229.3 | (24.5) | 204.8 | 355.9 | 80.6 | 436.5 | | Profit/(loss) before tax | | 907.2 | (583.8) | 323.4 | 1,144.1 | (1,292.3) | (148.2) | | Tax | 7 | (131.7) | 7.9 | (123.8) | (178.7) | (16.9) | (195.6) | | Profit/(loss) after tax | | 775.5 | (575.9) | 199.6 | 965.4 | (1,309.2) | (343.8) | | Attributable to: | | | | | | | | | Shareholders of the Company | | 776.1 | (573.4) | 202.7 | 966.0 | (1,315.2) | (349.2) | | Non-controlling interests | | (0.6) | (2.5) | (3.1) | (0.6) | 6.0 | 5.4 | | | | 775.5 | (575.9) | 199.6 | 965.4 | (1,309.2) | (343.8) | | | | US¢ | | US¢ | US¢ | | US¢ | | Earnings/(loss) per share (basic and diluted) | 8 | 34.44 | | 8.99 | 41.49 | | (15.00) | ### Consolidated Profit and Loss Account for the year ended 31st December 2022 24 ![]() ### Consolidated Statement of Comprehensive Income for the year ended 31st December 2022 | | | | | | --- | --- | --- | --- | | | | 2022 | 2021 | | | Note | US$m | US$m | | Profit/(loss) for the year | | 199.6 | (343.8) | | Other comprehensive income/(expense) | | | | | Items that will not be reclassified to profit or loss: | | | | | Remeasurements of defined benefit plans | | (1.6) | 3.3 | | Tax on items that will not be reclassified | 7 | 0.3 | (0.5) | | | | (1.3) | 2.8 | | Items that may be reclassified subsequently to profit or loss: | | | | | Net exchange translation differences | | | | | – net loss arising during the year | | (116.8) | (148.1) | | Cash flow hedges | | | | | – net gain/(loss) arising during the year | | 2.4 | (11.7) | | – transfer to profit and loss | | (2.4) | (0.1) | | | | – | (11.8) | | Tax relating to items that may be reclassified | 7 | – | 1.9 | | Share of other comprehensive (expense)/income of associates | | | | | and joint ventures | 11 | (523.6) | 87.1 | | | | (640.4) | (70.9) | | Other comprehensive expense for the year, net of tax | | (641.7) | (68.1) | | Total comprehensive expense for the year | | (442.1) | (411.9) | | Attributable to: | | | | | Shareholders of the Company | | (431.9) | (419.4) | | Non-controlling interests | | (10.2) | 7.5 | | | | (442.1) | (411.9) | 25 ![]() | | | | | | --- | --- | --- | --- | | Consolidated Balance Sheet | | | | | at 31st December 2022 | | | | | | | 2022 | 2021 | | | Note | US$m | US$m | | Net operating assets | | | | | Fixed assets | | 111.8 | 127.8 | | Right-of-use assets | | 13.0 | 12.4 | | Investment properties | 10 | 28,054.1 | 28,600.2 | | Associates and joint ventures | 11 | 9,616.0 | 9,515.3 | | Non-current debtors | 12 | 16.8 | 29.7 | | Deferred tax assets | 13 | 98.2 | 67.7 | | Pension assets | | 0.9 | 1.8 | | Non-current assets | | 37,910.8 | 38,354.9 | | Properties for sale | 14 | 2,910.7 | 2,970.5 | | Current debtors | 12 | 539.4 | 1,029.4 | | Current tax assets | | 62.5 | 28.3 | | Bank balances | 15 | 1,173.4 | 1,479.5 | | Current assets | | 4,686.0 | 5,507.7 | | Current creditors | 16 | (1,667.0) | (2,194.6) | | Current borrowings | 17 | (419.1) | (865.3) | | Current tax liabilities | | (328.9) | (202.9) | | Current liabilities | | (2,415.0) | (3,262.8) | | Net current assets | | 2,271.0 | 2,244.9 | | Long-term borrowings | 17 | (6,571.4) | (5,717.9) | | Deferred tax liabilities | 13 | (257.1) | (227.9) | | Pension liabilities | | (1.8) | – | | Non-current creditors | 16 | (24.4) | (35.8) | | | | 33,327.1 | 34,618.2 | | Total equity | | | | | Share capital | 18 | 222.7 | 229.8 | | Share premium | | – | 67.4 | | Revenue and other reserves | | 33,080.7 | 34,286.6 | | Shareholders’ funds | | 33,303.4 | 34,583.8 | | Non-controlling interests | | 23.7 | 34.4 | | | | 33,327.1 | 34,618.2 | Approved by the Board of Directors #### Robert WongCraig Beattie Directors 2nd March 2023 26 ![]() | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Consolidated Statement of Changes in Equity | | | | | | | | | | | for the year ended 31st December 2022 | | | | | | | | | | | | | | | | | | Attributable to | Attributable | | | | | | | | | | shareholders | to non- | | | | | Share | Share | Revenue | Hedging | Exchange | of the | controlling | Total | | | | capital | premium | reserves | reserves | reserves | Company | interests | equity | | | Note | US$m | US$m | US$m | US$m | US$m | US$m | US$m | US$m | | 2022 | | | | | | | | | | | At 1st January | | 229.8 | 67.4 | 34,022.4 | (20.2) | 284.4 | 34,583.8 | 34.4 | 34,618.2 | | Total comprehensive | | | | | | | | | | | (expense)/income | | – | – | 201.4 | 17.2 | (650.5) | (431.9) | (10.2) | (442.1) | | Dividends paid by the Company | 19 | – | – | (498.8) | – | – | (498.8) | – | (498.8) | | Dividends paid to non-controlling | | | | | | | | | | | shareholders | | – | – | – | – | – | – | (0.5) | (0.5) | | Unclaimed dividends forfeited | | – | – | 1.0 | – | – | 1.0 | – | 1.0 | | Repurchase of shares | | (7.1) | (67.4) | (276.2) | – | – | (350.7) | – | (350.7) | | At 31st December | | 222.7 | – | 33,449.8 | (3.0) | (366.1) | 33,303.4 | 23.7 | 33,327.1 | | 2021 | | | | | | | | | | | At 1st January | | 233.4 | 257.3 | 34,881.2 | (21.6) | 358.8 | 35,709.1 | 29.4 | 35,738.5 | | Total comprehensive | | | | | | | | | | | (expense)/income | | – | – | (346.4) | 1.4 | (74.4) | (419.4) | 7.5 | (411.9) | | Dividends paid by the Company | 19 | – | – | (513.4) | – | – | (513.4) | – | (513.4) | | Dividends paid to non-controlling | | | | | | | | | | | shareholders | | – | – | – | – | – | – | (0.9) | (0.9) | | Unclaimed dividends forfeited | | – | – | 1.0 | – | – | 1.0 | – | 1.0 | | Disposal of subsidiaries | | – | – | – | – | – | – | (1.6) | (1.6) | | Repurchase of shares | | (3.6) | (189.9) | – | – | – | (193.5) | – | (193.5) | | At 31st December | | 229.8 | 67.4 | 34,022.4 | (20.2) | 284.4 | 34,583.8 | 34.4 | 34,618.2 | 27 ![]() | | | | | | --- | --- | --- | --- | | Consolidated Cash Flow Statement | | | | | for the year ended 31st December 2022 | | | | | | | 2022 | 2021 | | | Note | US$m | US$m | | Operating activities | | | | | Operating profit/(loss) | | 286.7 | (429.5) | | Depreciation and amortisation | 4 | 17.5 | 16.3 | | Change in fair value of investment properties | 10 | 559.3 | 1,375.5 | | Loss on disposal of fixed assets | 4 | 2.8 | – | | Gain on acquisition of subsidiaries | 4 | (1.3) | – | | Gain on disposal of subsidiaries and joint ventures | 4 | – | (37.6) | | Decrease/(increase) in properties for sale | | 88.9 | (991.6) | | Decrease in debtors | | 487.4 | 52.4 | | (Decrease)/increase in creditors | | (498.0) | 633.3 | | Interest received | | 45.6 | 43.2 | | Interest and other financing charges paid | | (228.2) | (215.8) | | Tax paid | | (124.7) | (156.7) | | Dividends from associates and joint ventures | | 222.3 | 239.1 | | Cash flows from operating activities | | 858.3 | 528.6 | | Investing activities | | | | | Major renovations expenditure | | (94.6) | (98.9) | | Developments capital expenditure | | – | (1.5) | | Investments in and advances to associates and joint ventures | 20 (a) | (617.6) | (397.1) | | Disposal of subsidiaries | | – | 5.7 | | Disposal of joint ventures | | – | 59.6 | | Acquisition of subsidiaries | | (14.5) | – | | Cash flows from investing activities | | (726.7) | (432.2) | | Financing activities | | | | | Drawdown of borrowings | 17 | 2,399.6 | 1,840.0 | | Repayment of borrowings | 17 | (1,954.7) | (1,764.1) | | Principal elements of lease payments | | (4.1) | (3.3) | | Repurchase of shares | | (352.3) | (191.9) | | Dividends paid by the Company | | (503.7) | (509.1) | | Dividends paid to non-controlling shareholders | | (0.5) | (0.9) | | Cash flows from financing activities | | (415.7) | (629.3) | | Net cash outflow | | (284.1) | (532.9) | | Cash and cash equivalents at 1st January | | 1,476.1 | 1,990.4 | | Effect of exchange rate changes | | (20.5) | 18.6 | | Cash and cash equivalents at 31st December | 20 (b) | 1,171.5 | 1,476.1 | 28 ![]() ### Notes to the Financial Statements General Information Hongkong Land Holdings Limited (the ‘Company’) is incorporated in Bermuda and has a primary listing in the standard segment of the London Stock Exchange, with secondary listings in Bermuda and Singapore. 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 adopted the following amendments for the annual reporting period commencing 1st January 2022. Amendments to IAS 37 – Onerous Contracts – Cost of Fulfilling a Contract (effective from 1st January 2022) The amendments clarify 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 applied the amendments from 1st January 2022 and there is no material impact on the Group’s consolidated financial statements. Apart from the above, there are no other amendments which are effective in 2022 and relevant to the Group’s operations that have a significant impact on the Group’s results, financial position and 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 30 to 32. 29 ![]() #### Notes to the Financial Statements 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 properties Development properties Corporate Total US$m US$m US$m US$m 2022 Revenue 1,065.7 1,178.7 – 2,244.4 Net operating costs (245.0) (1,064.6) (88.8) (1,398.4) Share of operating profit of associates and joint ventures 130.7 289.5 – 420.2 Underlying operating profit 951.4 403.6 (88.8) 1,266.2 Net financing charges – subsidiaries (168.1) – share of associates and joint ventures (60.2) (228.3) Tax – subsidiaries (131.7) – share of associates and joint ventures (128.9) (260.6) Non-controlling interests – subsidiaries 0.6 – share of associates and joint ventures (1.8) (1.2) Underlying profit attributable to shareholders 776.1 Non-trading items – change in fair value of investment properties (573.4) Profit attributable to shareholders 202.7 30 ![]() 2 Segmental Information continued Investment properties Development properties Corporate Total US$m US$m US$m US$m 2021 Revenue 1,097.6 1,286.7 – 2,384.3 Net operating costs (261.6) (1,090.2) (89.1) (1,440.9) Share of operating profit of associates and joint ventures 136.8 447.8 – 584.6 Underlying operating profit 972.8 644.3 (89.1) 1,528.0 Net financing charges – subsidiaries (155.2) – share of associates and joint ventures (40.5) (195.7) Tax – subsidiaries (178.7) – share of associates and joint ventures (186.5) (365.2) Non-controlling interests – subsidiaries 0.6 – share of associates and joint ventures (1.7) (1.1) Underlying profit attributable to shareholders 966.0 Non-trading items – change in fair value of investment properties (1,317.8) – gain on disposal of subsidiaries 2.1 – asset impairment reversal 0.5 (1,315.2) Loss attributable to shareholders (349.2) Revenue Underlying operating profit Underlying profit attributable to shareholders 2022 2021 2022 2021 2022 2021 US$m US$m US$m US$m US$m US$m By geographical location Hong Kong and Macau 964.8 989.6 793.1 813.4 793.1 813.4 Chinese mainland 1,058.5 781.0 310.5 540.4 305.6 532.3 Southeast Asia and others 221.1 613.7 251.4 263.3 250.6 261.3 Corporate, net financing charges and tax – – (88.8) (89.1) (573.2) (641.0) 2,244.4 2,384.3 1,266.2 1,528.0 776.1 966.0 31 ![]() #### Notes to the Financial Statements 2 Segmental Information continued Segment assets Segment liabilities Unallocated assets and liabilities Total assets and liabilities Investment properties Development properties for sale Others US$m US$m US$m US$m US$m US$m By business 2022 Investment Properties 33,776.0 – 444.7 (712.6) – 33,508.1 Development Properties – 9,931.9 655.7 (2,768.1) – 7,819.5 Unallocated assets and liabilities – – – – (8,000.5) (8,000.5) 33,776.0 9,931.9 1,100.4 (3,480.7) (8,000.5) 33,327.1 2021 Investment Properties 34,406.8 – 494.3 (762.9) – 34,138.2 Development Properties – 10,464.9 666.9 (3,517.4) – 7,614.4 Unallocated assets and liabilities – – – – (7,134.4) (7,134.4) 34,406.8 10,464.9 1,161.2 (4,280.3) (7,134.4) 34,618.2 By geographical location 2022 Hong Kong and Macau 26,905.5 209.6 165.6 (518.7) – 26,762.0 Chinese mainland 2,299.4 8,076.6 453.7 (2,612.0) – 8,217.7 Southeast Asia and others 4,571.1 1,645.7 481.1 (350.0) – 6,347.9 Unallocated assets and liabilities – – – – (8,000.5) (8,000.5) 33,776.0 9,931.9 1,100.4 (3,480.7) (8,000.5) 33,327.1 2021 Hong Kong and Macau 27,367.5 208.8 157.1 (557.2) – 27,176.2 Chinese mainland 2,440.3 8,291.1 655.1 (3,338.9) – 8,047.6 Southeast Asia and others 4,599.0 1,965.0 349.0 (384.2) – 6,528.8 Unallocated assets and liabilities – – – – (7,134.4) (7,134.4) 34,406.8 10,464.9 1,161.2 (4,280.3) (7,134.4) 34,618.2 Development properties for sale include properties for sale, contract assets and cost to fulfil contracts. Unallocated assets and liabilities include tax assets and liabilities, bank balances and borrowings. 32 ![]() 3 Revenue 2022 2021 US$m US$m Rental income 927.5 946.7 Service income and others 190.9 182.3 Sales of properties – recognised at a point in time 953.4 687.6 – recognised over time 172.6 567.7 1,126.0 1,255.3 2,244.4 2,384.3 Total variable rents included in rental income amounted to US$30.9 million (2021: US$29.2 million). The maturity analysis of lease payments, showing the undiscounted lease payments to be received after the balance sheet date are as follow: 2022 2021 US$m US$m Within one year 744.6 789.8 Between one and two years 557.0 594.9 Between two and five years 714.8 732.9 Beyond five years 235.3 206.6 2,251.7 2,324.2 Generally the Group’s operating leases are for terms of three years or more. Contract balances Contract assets primarily relate to the Group’s rights to consideration for work completed but not billed, and are transferred to receivables when the rights become unconditional which usually occurs when the customers are billed. Costs to fulfil contracts includes costs recognised to fulfil future performance obligations on existing contracts that have not yet been satisfied. Costs to obtain contracts include costs such as sale commissions and stamp duty paid, as a result of obtaining contracts. The Group has capitalised these costs which are recognised in the profit and loss when the related revenue is recognised. Contract liabilities primarily relate to the advance consideration received from customers relating to properties for sale. Contract assets and contract liabilities relating to properties for sale are further analysed as follows: 2022 2021 US$m US$m Contract assets (see Note 12) 4.8 447.8 Contract liabilities (see Note 16) (513.2) (972.0) At 31st December 2022, costs to fulfil contracts and costs to obtain contracts amounted to US$4.6 million (2021: US$97.3 million) and US$7.0 million (2021: US$5.5 million), and US$130.5 million (2021: US$446.3 million) and US$5.0 million (2021: US$18.5 million) have been recognised in profit and loss during the year respectively. 33 ![]() #### Notes to the Financial Statements 3 Revenue continued Revenue recognised in relation to contract liabilities Revenue recognised in the current year relating to carried forward contract liabilities: 2022 2021 US$m US$m Properties for sale 610.6 372.8 Revenue expected to be recognised on unsatisfied contracts with customers The timing of revenue to be recognised on unsatisfied performance obligations relating to properties for sale at 31st December 2022: 2022 2021 US$m US$m Within one year 552.9 879.4 Between one and two years 212.6 405.0 765.5 1,284.4 4 Net Operating Costs 2022 2021 US$m US$m Cost of sales (1,223.7) (1,283.9) Other income 40.8 16.0 Administrative expenses (214.0) (208.5) Loss on disposal of fixed assets (2.8) – Gain on acquisition of subsidiaries 1.3 – Gain on disposal of subsidiaries and joint ventures – 37.6 Asset impairment reversal – 0.5 (1,398.4) (1,438.3) The following charges are included in net operating costs: Cost of properties for sale recognised as expense (965.7) (1,039.5) Operating expenses arising from investment properties (212.5) (219.3) Depreciation of fixed assets (13.1) (12.6) Depreciation of right-of-use assets (4.4) (3.7) Employee benefit expense – salaries and benefits in kind (197.5) (184.2) – defined contribution pension plans (5.8) (5.9) – defined benefit pension plans (1.5) (1.8) (204.8) (191.9) Auditors’ remuneration – audit (2.5) (2.3) – non-audit services (1.1) (1.0) (3.6) (3.3) The number of employees at 31st December 2022 was 2,932 (2021: 2,880). In relation to the COVID-19 pandemic, the Group received government grants of US$2.2 million (2021: US$0.2 million) for the year ended 31st December 2022. These subsidies were accounted for as other income. 34 ![]() 5 Net Financing Charges 2022 2021 US$m US$m Interest expense – bank loans and overdrafts (76.4) (59.4) – other borrowings (142.9) (148.0) Total interest expense (219.3) (207.4) Interest capitalised 3.3 4.9 (216.0) (202.5) Commitment and other fees and exchange differences (18.9) (19.7) Financing charges (234.9) (222.2) Financing income 66.8 67.0 (168.1) (155.2) Financing charges and financing income are stated after taking into account hedging gains or losses. #### 6 Share of Results of Associates and Joint Ventures 2022 2021 US$m US$m By business Investment Properties 72.3 88.4 Development Properties 157.0 267.5 Underlying business performance 229.3 355.9 Non-trading items: Change in fair value of investment properties (24.5) 80.6 204.8 436.5 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$1,502.9 million (2021: US$2,094.8 million). 35 ![]() #### Notes to the Financial Statements 7 Tax Tax charged to profit and loss is analysed as follows: 2022 2021 US$m US$m Current tax (128.3) (191.1) Deferred tax – changes in fair value of investment properties 7.9 (16.9) – other temporary differences (3.4) 12.4 4.5 (4.5) (123.8) (195.6) Reconciliation between tax expense and tax at applicable tax rate: Tax at applicable tax rate (38.9) 71.5 Change in fair value of investment properties not deductible in determining taxable profit (86.3) (240.1) Income not subject to tax 22.7 36.4 Expenses not deductible in determining taxable profit (13.0) (13.9) Withholding tax (3.5) (4.4) Land appreciation tax in Chinese mainland (11.4) (38.6) Tax losses arising in the year not recognised (4.4) (8.7) Over provision in prior years 6.4 1.2 Others 4.6 1.0 (123.8) (195.6) Tax relating to components of other comprehensive income is analysed as follows: Remeasurements of defined benefit plans 0.3 (0.5) Cash flow hedges – 1.9 0.3 1.4 The applicable tax rate for the year of 32.9% (2021: 12.2%) 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$127.0 million (2021: US$198.2 million) is included in share of results of associates and joint ventures. 36 ![]() 8 Earnings per Share Earnings per share are calculated on profit attributable to shareholders of US$202.7 million (2021: loss of US$349.2 million) and on the weighted average number of 2,253.7 million (2021: 2,328.3 million) shares in issue during the year. Earnings per share are additionally calculated based on underlying profit attributable to shareholders. A reconciliation of earnings is set out below: 2022 2021 Earnings per share Earnings per share US$m US¢ US$m US¢ Underlying profit attributable to shareholders 776.1 34.44 966.0 41.49 Non-trading items (see Note 9) (573.4) (1,315.2) Profit/(loss) attributable to shareholders 202.7 8.99 (349.2) (15.00) 9 Non-trading Items An analysis of non-trading items after interest, tax and non-controlling interests is set out below: 2022 2021 US$m US$m Change in fair value of investment properties (559.3) (1,375.5) Tax on change in fair value of investment properties 7.9 (16.9) Gain on disposal of subsidiaries – 2.1 Asset impairment reversal – 0.5 – 2.6 Share of results of associates and joint ventures – change in fair value of investment properties (26.4) 92.3 – tax on change in fair value of investment properties 1.9 (11.7) (24.5) 80.6 Non-controlling interests 2.5 (6.0) (573.4) (1,315.2) 37 ![]() #### Notes to the Financial Statements 10 Investment Properties Completed commercial properties Under development commercial properties Completed residential properties Total US$m US$m US$m US$m 2022 At 1st January 28,282.7 41.8 275.7 28,600.2 Exchange differences (76.7) – (0.6) (77.3) Additions 93.3 – 2.1 95.4 Transfer to fixed assets – – (4.9) (4.9) (Decrease)/increase in fair value (538.9) 1.6 (22.0) (559.3) At 31st December 27,760.4 43.4 250.3 28,054.1 Freehold properties 138.6 Leasehold properties 27,915.5 28,054.1 2021 At 1st January 29,767.0 44.3 272.0 30,083.3 Exchange differences (153.8) – (1.9) (155.7) Additions 56.0 – 0.4 56.4 Disposal of subsidiaries (8.3) – – (8.3) (Decrease)/increase in fair value (1,378.2) (2.5) 5.2 (1,375.5) At 31st December 28,282.7 41.8 275.7 28,600.2 Freehold properties 136.6 Leasehold properties 28,463.6 28,600.2 The Group measures its investment properties at fair value. The fair values of the Group’s investment properties at 31st December 2022 and 2021 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 109. The valuations are comprehensively reviewed by the Group. At 31st December 2022, investment properties of US$935.6 million (2021: US$1,040.3 million) were pledged as security for borrowings (see Note 17). 38 ![]() 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: Range of significant unobservable inputs Location of properties Fair value Valuation method Prevailing market rent per month Capitalisation/ discount rate US$m US$ % 2022 Hong Kong 26,130.9 Income capitalisation 5.8 to 28.2 per square foot 2.80 to 5.00 Chinese mainland 935.6 Income capitalisation 106.1 per square metre 3.75 Singapore 589.3 Income capitalisation 7.4 to 7.7 per square foot 3.35 to 4.80 Vietnam and Cambodia 104.6 Discounted cash flow 21.0 to 42.8 per square metre 12.50 to 15.00 Total 27,760.4 2021 Hong Kong 26,551.6 Income capitalisation 6.0 to 28.2 per square foot 2.75 to 5.00 Chinese mainland 1,040.3 Income capitalisation 114.0 per square metre 3.75 Singapore 588.1 Income capitalisation 7.4 to 7.8 per square foot 3.35 to 4.80 Vietnam and Cambodia 102.7 Discounted cash flow 18.6 to 42.8 per square metre 12.50 to 15.00 Total 28,282.7 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. 39 ![]() #### Notes to the Financial Statements 11 Associates and Joint Ventures 2022 2021 US$m US$m Unlisted associates – share of attributable net assets 12.8 112.4 – amounts due from associates 422.8 424.4 435.6 536.8 Unlisted joint ventures – share of attributable net assets 6,729.4 5,996.6 – amounts due from joint ventures 2,451.0 2,981.9 9,180.4 8,978.5 9,616.0 9,515.3 By business Investment Properties 4,960.4 5,025.9 Development Properties 4,655.6 4,489.4 9,616.0 9,515.3 Amounts due from associates are interest free, unsecured and have no fixed terms of repayment. Amounts due from joint ventures bear interests at rates up to 10% per annum and are repayable within one to thirteen years. Movements of associates and joint ventures during the year: Associates Joint ventures 2022 2021 2022 2021 US$m US$m US$m US$m At 1st January 536.8 483.6 8,978.5 8,437.6 Exchange differences 24.4 (9.8) 38.5 (62.8) Share of results after tax and non-controlling interests 19.6 19.0 185.2 417.5 Share of other comprehensive (expense)/income after tax and non-controlling interests (59.7) 7.1 (463.9) 80.0 Dividends received and receivable (0.8) (0.8) (228.1) (238.9) Investments in and advances to/(repayments from) associates and joint ventures (84.7) 37.7 726.5 368.1 Disposal – – – (23.0) Transfer to subsidiaries on acquisition of additional interest – – (56.3) – At 31st December 435.6 536.8 9,180.4 8,978.5 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 2022 and 2021: Name of entity Nature of business Country of incorporation/ principal place of business % of ownership interest 2022 2021 Properties Sub F, Ltd Property investment Macau 49 49 BFC Development LLP Property investment Singapore 33 33 Central Boulevard Development Pte Ltd Property investment Singapore 33 33 One Raffles Quay Pte Ltd Property investment Singapore 33 33 40 ![]() 11 Associates and Joint Ventures continued Summarised financial information for material joint ventures Summarised balance sheet at 31st December: Properties Sub F, Ltd BFC Development LLP Central Boulevard Development Pte Ltd One Raffles Quay Pte Ltd US$m US$m US$m US$m 2022 Non-current assets 1,165.6 3,752.4 2,900.8 2,915.6 Current assets Cash and cash equivalents 55.4 18.9 27.3 10.5 Other current assets 45.8 4.1 3.1 3.2 Total current assets 101.2 23.0 30.4 13.7 Non-current liabilities Financial liabilities (excluding trade payables) – (1,272.2) (1,181.5) (764.3) Other non-current liabilities (including trade payables) (126.8) – (20.9) (214.9) Total non-current liabilities (126.8) (1,272.2) (1,202.4) (979.2) Current liabilities Financial liabilities (excluding trade payables) – (1.3) (9.7) (2.2) Other current liabilities (including trade payables) (46.1) (58.4) (42.7) (46.9) Total current liabilities (46.1) (59.7) (52.4) (49.1) Net assets 1,093.9 2,443.5 1,676.4 1,901.0 2021 Non-current assets 1,202.2 3,732.4 2,885.3 2,900.1 Current assets Cash and cash equivalents 31.3 11.1 23.8 9.6 Other current assets 38.2 3.1 2.7 4.5 Total current assets 69.5 14.2 26.5 14.1 Non-current liabilities Financial liabilities (excluding trade payables) – (1,264.7) (1,209.1) (777.9) Other non-current liabilities (including trade payables) (130.7) – (20.9) (214.0) Total non-current liabilities (130.7) (1,264.7) (1,230.0) (991.9) Current liabilities Financial liabilities (excluding trade payables) – (0.7) (8.8) (2.3) Other current liabilities (including trade payables) (42.2) (54.9) (39.7) (46.4) Total current liabilities (42.2) (55.6) (48.5) (48.7) Net assets 1,098.8 2,426.3 1,633.3 1,873.6 41 ![]() #### 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: Properties Sub F, Ltd BFC Development LLP Central Boulevard Development Pte Ltd One Raffles Quay Pte Ltd US$m US$m US$m US$m 2022 Revenue 65.5 157.7 117.9 119.2 Depreciation and amortisation (4.5) – – – Interest income 0.3 – – – Interest expense (0.1) (48.1) (31.1) (19.0) Profit from underlying business performance 27.3 67.1 55.8 67.2 Tax (3.2) (11.5) (9.4) (11.4) Profit after tax from underlying business performance 24.1 55.6 46.4 55.8 Loss after tax from non-trading items (29.2) (0.5) (0.9) (1.1) Profit/(loss) after tax (5.1) 55.1 45.5 54.7 Other comprehensive income 0.2 12.6 43.9 28.3 Total comprehensive income/(expense) (4.9) 67.7 89.4 83.0 Group’s share of dividends received and receivable from joint ventures – 16.8 15.4 18.5 2021 Revenue 82.0 156.8 122.5 112.1 Depreciation and amortisation (4.8) – – – Interest income 0.1 – – – Interest expense – (31.3) (23.4) (13.3) Profit from underlying business performance 39.4 86.2 69.4 65.9 Tax (4.6) (14.3) (11.6) (11.0) Profit after tax from underlying business performance 34.8 71.9 57.8 54.9 Profit/(loss) after tax from non-trading items (41.8) 114.2 73.7 133.9 Profit/(loss) after tax (7.0) 186.1 131.5 188.8 Other comprehensive expense (6.9) (52.6) (13.0) (27.8) Total comprehensive income/(expense) (13.9) 133.5 118.5 161.0 Group’s share of dividends received and receivable from joint ventures 37.8 22.1 19.3 18.3 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 . 42 ![]() 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: Properties Sub F, Ltd BFC Development LLP Central Boulevard Development Pte Ltd One Raffles Quay Pte Ltd US$m US$m US$m US$m 2022 Net assets 1,093.9 2,443.5 1,676.4 1,901.0 Interest in joint ventures (%) 49 33 33 33 Group’s share of net assets in joint ventures 536.0 814.5 558.8 633.6 Amounts due from joint ventures – 424.0 – 38.2 Carrying value 536.0 1,238.5 558.8 671.8 2021 Net assets 1,098.8 2,426.3 1,633.3 1,873.6 Interest in joint ventures (%) 49 33 33 33 Group’s share of net assets in joint ventures 538.4 808.8 544.4 624.5 Amounts due from joint ventures – 421.6 – 38.0 Carrying value 538.4 1,230.4 544.4 662.5 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. 2022 2021 US$m US$m Share of profit 135.9 252.2 Share of other comprehensive (expense)/income (492.3) 114.5 Share of total comprehensive (expense)/income (356.4) 366.7 Carrying amount of interests in these joint ventures 6,175.3 6,002.8 At 31st December 2022, the Group’s commitments to provide funding to its joint ventures, if called, amounted to US$942.4 million (2021: US$1,067.3 million). There were no contingent liabilities relating to the Group’s interests in the joint ventures at 31st December 2022 and 2021. 43 ![]() #### Notes to the Financial Statements 12 Debtors 2022 2021 US$m US$m Trade debtors 228.5 63.9 Contract assets (see Note 3) 4.8 447.8 Other debtors – third parties 244.9 472.4 – associates and joint ventures 78.0 75.0 556.2 1,059.1 Non-current – other debtors 16.8 29.7 Current – trade debtors 228.5 63.9 – contract assets 4.8 447.8 – other debtors 306.1 517.7 539.4 1,029.4 556.2 1,059.1 By geographical area of operation Hong Kong and Macau 124.1 139.2 Chinese mainland 131.5 220.8 Southeast Asia and others 300.6 699.1 556.2 1,059.1 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. 44 ![]() 12 Debtors continued The loss allowance as at 31st December: Below 30 days Between 31 and 60 days Between 61 and 120 days More than 120 days Total US$m US$m US$m US$m US$m 2022 Expected loss rate (%) – 7 25 30 1 Gross carrying amount – trade debtors 223.2 2.9 1.2 2.7 230.0 Gross carrying amount – contract assets 4.8 – – – 4.8 Loss allowance (0.2) (0.2) (0.3) (0.8) (1.5) 2021 Expected loss rate (%) – – 10 48 1 Gross carrying amount – trade debtors 60.4 0.9 1.1 3.1 65.5 Gross carrying amount – contract assets 447.8 – – – 447.8 Loss allowance – – (0.1) (1.5) (1.6) 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: 2022 2021 US$m US$m Costs to fulfil contracts (see Note 3) 4.6 97.3 Costs to obtain contracts (see Note 3) 7.0 5.5 Prepayments 116.8 238.9 Derivative financial instruments 5.0 22.4 Amounts due from associates and joint ventures 78.0 75.0 Others 111.5 108.3 322.9 547.4 45 ![]() #### Notes to the Financial Statements 13 Deferred Tax Assets and Liabilities Tax losses Accelerated capital allowances Revaluation surpluses of investment properties Other temporary differences Total US$m US$m US$m US$m US$m 2022 At 1st January 9.5 (90.5) (40.6) (38.6) (160.2) Exchange differences (0.5) – 2.5 (0.4) 1.6 Credited/(charged) to profit and loss 33.2 9.2 7.9 (45.8) 4.5 Credited to other comprehensive income – – – 0.3 0.3 Acquisition of subsidiaries – – – (5.1) (5.1) At 31st December 42.2 (81.3) (30.2) (89.6) (158.9) Deferred tax assets 42.2 – – 56.0 98.2 Deferred tax liabilities – (81.3) (30.2) (145.6) (257.1) 42.2 (81.3) (30.2) (89.6) (158.9) 2021 At 1st January 9.2 (97.9) (23.3) (48.3) (160.3) Exchange differences 0.1 0.5 (0.4) 1.2 1.4 Credited/(charged) to profit and loss 0.2 5.1 (16.9) 7.1 (4.5) Credited to other comprehensive income – – – 1.4 1.4 Disposal of subsidiaries – 1.8 – – 1.8 At 31st December 9.5 (90.5) (40.6) (38.6) (160.2) Deferred tax assets 9.5 – – 58.2 67.7 Deferred tax liabilities – (90.5) (40.6) (96.8) (227.9) 9.5 (90.5) (40.6) (38.6) (160.2) 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$28.8 million (2021: US$31.4 million) arising from unused tax losses of US$117.8 million (2021: US$135.8 million) have not been recognised in the financial statements. Included in the unused tax losses, US$11.6 million (2021: US$15.0 million) have no expiry date and the balance will expire at various dates up to and including 2026. 46 ![]() 14 Properties for Sale 2022 2021 US$m US$m Properties under development 2,230.0 2,058.7 Completed properties 729.3 961.6 2,959.3 3,020.3 Provision for impairment (48.6) (49.8) 2,910.7 2,970.5 At 31st December 2022, properties under development which were not scheduled for completion within the next 12 months amounted to US$1,477.7 million (2021: US$1,658.6 million). 15 Bank Balances 2022 2021 US$m US$m Deposits with banks and financial institutions 1,090.6 1,364.0 Bank balances 82.8 115.5 1,173.4 1,479.5 By currency Chinese renminbi 418.5 654.3 Hong Kong dollar 44.1 47.3 Malaysian ringgit 25.1 29.0 Singapore dollar 490.3 530.5 United States dollar 191.6 214.7 Others 3.8 3.7 1,173.4 1,479.5 The weighted average interest rate on deposits with banks and financial institutions is 3.9% (2021: 0.7%) per annum. 47 ![]() #### Notes to the Financial Statements 16 Creditors 2022 2021 US$m US$m Trade creditors 717.3 791.2 Other creditors 157.7 150.9 Tenants’ deposits 266.1 272.7 Derivative financial instruments 16.2 17.6 Rent received in advance 13.9 19.9 Contract liabilities – properties for sale (see Note 3) 513.2 972.0 Lease liabilities 7.0 6.1 1,691.4 2,230.4 Non-current 24.4 35.8 Current 1,667.0 2,194.6 1,691.4 2,230.4 By geographical area of operation Hong Kong and Macau 608.5 601.8 Chinese mainland 1,021.6 1,503.5 Southeast Asia and others 61.3 125.1 1,691.4 2,230.4 Derivative financial instruments are stated at fair value. Other creditors are stated at amortised cost. The fair value of these creditors approximates their carrying amounts. 17 Borrowings 2022 2021 Carrying amount Fair value Carrying amount Fair value US$m US$m US$m US$m Current Bank overdrafts 1.9 1.9 3.4 3.4 Bank loans 87.4 87.4 86.0 86.0 Current portion of long-term borrowings – bank loans 150.4 150.4 155.5 155.5 – notes 179.4 177.8 620.4 623.5 419.1 417.5 865.3 868.4 Long-term Bank loans 2,924.9 2,924.9 1,882.2 1,882.2 Notes 3,646.5 3,274.3 3,835.7 4,059.4 6,571.4 6,199.2 5,717.9 5,941.6 6,990.5 6,616.7 6,583.2 6,810.0 Secured 873.2 870.9 Unsecured 6,117.3 5,712.3 6,990.5 6,583.2 48 ![]() 17 Borrowings continued The fair values are based on market prices or are estimated using the expected future payments discounted at market interest rates ranging from 2.4% to 5.1% (2021: 0.5% to 4.9%) per annum. This is in line with the definition of ‘observable current market transactions’ under the fair value measurement hierarchy. The fair value of current borrowings approximates their carrying amounts, as the impact of discounting is not significant. Secured borrowings at 31st December 2022 and 2021 were certain subsidiaries’ bank borrowings which were secured against their investment properties and properties for sale. The movements in borrowings are as follow: Bank overdrafts Long-term borrowings Short-term borrowings Total US$m US$m US$m US$m 2022 At 1st January 3.4 5,717.9 861.9 6,583.2 Exchange differences – (66.1) (22.9) (89.0) Transfer – (284.5) 284.5 – Subsidiaries acquired – 65.8 1.4 67.2 Change in fair value – (11.3) (3.0) (14.3) Change in bank overdrafts (1.5) – – (1.5) Drawdown of borrowings – 2,256.4) 143.2 2,399.6 Repayment of borrowings – (1,106.8) (847.9) (1,954.7) At 31st December 1.9 6,571.4 417.2 6,990.5 2021 At 1st January 6.2 5,875.4 683.3 6,564.9 Exchange differences – (40.9) (3.4) (44.3) Transfer – (715.0) 715.0 – Change in fair value – (8.8) (1.7) (10.5) Change in bank overdrafts (2.8) – – (2.8) Drawdown of borrowings – 1,684.9 155.1 1,840.0 Repayment of borrowings – (1,077.7) (686.4) (1,764.1) At 31st December 3.4 5,717.9 861.9 6,583.2 49 ![]() #### Notes to the Financial Statements 17 Borrowings continued The borrowings at 31st December are further summarised as follows: Fixed rate borrowings Weighted average interest rates Weighted average period outstanding Floating rate borrowings Total % Years US$m US$m US$m By currency 2022 Hong Kong dollar 4.2 6.4 3,410.4 1,622.9 5,033.3 Singapore dollar 3.7 12.7 286.8 324.6 611.4 Chinese renminbi 4.3 – – 1,009.1 1,009.1 Thai baht 2.3 – – 336.7 336.7 3,697.2 3,293.3 6,990.5 2021 Hong Kong dollar 3.2 6.9 3,676.7 990.2 4,666.9 Singapore dollar 2.3 13.7 285.3 323.1 608.4 Chinese renminbi 4.8 – – 973.1 973.1 Thai baht 1.5 – – 334.8 334.8 3,962.0 2,621.2 6,583.2 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: 2022 2021 US$m US$m Floating rate borrowings 3,293.3 2,621.2 Fixed rate borrowings – within one year 246.0 267.0 – between one and two years 199.7 245.8 – between two and three years 642.9 199.5 – between three and four years 38.6 644.5 – between four and five years 186.2 38.5 – beyond five years 2,383.8 2,566.7 3,697.2 3,962.0 6,990.5 6,583.2 50 ![]() 17 Borrowings continued Details of notes outstanding at 31st December are as follows: 2022 2021 Current Non-current Current Non-current Maturity US$m US$m US$m US$m Medium term notes HK$410m 10-year notes at 3.86% 2022 – – 52.6 – US$500m 10-year notes at 4.50%\* 2022 – – 503.1 – HK$305m 10-year notes at 3.00% 2022 – – 39.1 – HK$200m 10-year notes at 2.90% 2022 – – 25.6 – HK$1,100m 10-year notes at 3.95% 2023 141.0 – – 140.8 HK$300m 10-year notes at 3.95% 2023 38.4 – – 38.4 US$400m 10-year notes at 4.625%\* 2024 – 394.9 – 406.8 HK$300m 15-year notes at 4.10% 2025 – 38.4 – 38.4 US$600m 15-year notes at 4.50%\* 2025 – 604.5 – 606.1 HK$302m 15-year notes at 3.75% 2026 – 38.6 – 38.6 HK$785m 15-year notes at 4.00% 2027 – 100.0 – 99.8 HK$473m 15-year notes at 4.04% 2027 – 60.6 – 60.6 HK$200m 15-year notes at 3.95% 2027 – 25.6 – 25.6 HK$300m 15-year notes at 3.15% 2028 – 38.2 – 38.1 HK$325m 15-year notes at 4.22% 2028 – 41.5 – 41.5 HK$450m 10-year notes at 3.83% 2028 – 57.6 – 57.6 HK$355m 10-year notes at 3.75% 2028 – 45.4 – 45.3 HK$400m 15-year notes at 4.40% 2029 – 50.9 – 50.8 HK$550m 10-year notes at 2.93% 2029 – 70.4 – 70.4 US$600m 10-year notes at 2.875%\* 2030 – 595.7 – 595.1 HK$800m 20-year notes at 4.11% 2030 – 102.6 – 102.6 US$500m 10-year notes at 2.25%\* 2031 – 495.8 – 495.3 HK$375m 10-year notes at 1.957% 2031 – 48.0 – 47.9 HK$200m 20-year notes at 4.125% 2031 – 25.4 – 25.4 HK$240m 20-year notes at 4.00% 2032 – 30.4 – 30.3 HK$863m 12-year notes at 2.83% 2032 – 109.8 – 109.7 HK$700m 15-year notes at 4.12% 2033 – 89.2 – 89.1 HK$604m 15-year notes at 3.67% 2034 – 77.1 – 77.1 HK$400m 15-year notes at 2.72% 2035 – 50.9 – 50.8 HK$400m 15-year notes at 2.90% 2035 – 50.7 – 50.7 HK$400m 15-year notes at 2.90% 2035 – 50.7 – 50.7 HK$800m 15-year notes at 2.65% 2035 – 101.5 – 101.4 S$150m 20-year notes at 3.95% 2038 – 109.6 – 109.0 S$150m 20-year notes at 3.45% 2039 – 110.6 – 109.9 HK$250m 30-year notes at 5.25% 2040 – 31.9 – 31.9 179.4 3,646.5 620.4 3,835.7 \* Listed on the Singapore Exchange. 51 ![]() #### Notes to the Financial Statements 18 Share Capital Ordinary shares in millions 2022 2021 2022 2021 US$m US$m Authorised Shares of US$0.10 each 4,000.0 4,000.0 400.0 400.0 Issued and fully paid At 1st January 2,297.5 2,333.9 229.8 233.4 Repurchased and cancelled (70.5) (36.4) (7.1) (3.6) At 31st December 2,227.0 2,297.5 222.7 229.8 During the year, the Company repurchased 70.5 million (2021: 36.4 million) ordinary shares from the stock market at a cost of US$350.7 million (2021: US$193.5 million), which resulted in a charge of US$7.1 million (2021: US$3.6 million) to share capital, US$67.4 million (2021: US$189.9 million) to share premium, and US$276.2 million (2021: nil) to revenue reserve. 19 Dividends 2022 2021 US$m US$m Final dividend in respect of 2021 of US¢16.00 (2020: US¢16.00) per share 364.5 373.4 Interim dividend in respect of 2022 of US¢6.00 (2021: US¢6.00) per share 134.3 140.0 498.8 513.4 A final dividend in respect of 2022 of US¢16.00 (2021: US¢16.00) per share amounting to a total of US$356.3 million (2021: US$367.6 million) is proposed by the Board. The dividend proposed will not be accounted for until it has been approved at the 2023 Annual General Meeting. The amount will be accounted for as an appropriation of revenue reserves in the year ending 31st December 2023. 20 Notes to Consolidated Cash Flow Statement a) Investments in and advances to associates and joint ventures 2022 2021 US$m US$m By business Investment Properties (44.2) (20.9) Development Properties (573.4) (376.2) (617.6) (397.1) By geographical location Chinese mainland (508.6) (277.6) Southeast Asia and others (109.0) (119.5) (617.6) (397.1 ) 52 ![]() 20 Notes to Consolidated Cash Flow Statement continued b) Cash and cash equivalents 2022 2021 US$m US$m Bank balances (see Note 15) 1,173.4 1,479.5 Bank overdrafts (see Note 17) (1.9) (3.4) 1,171.5 1,476.1 21 Derivative Financial Instruments The fair values of derivative financial instruments at 31st December are as follows: 2022 2021 Positive fair value Negative fair value Positive fair value Negative fair value US$m US$m US$m US$m Designated as cash flow hedges – interest rate swaps 0.5 – – 1.4 – cross currency swaps 4.5 12.8 9.9 16.2 Designated as fair value hedges – cross currency swaps – 3.4 12.5 – Interest rate swaps The notional principal amounts of the outstanding interest rate swap contracts designated as cash flow hedges at 31st December 2022 were US$66.9 million (2021: US$66.6 million). The fair values of interest rate swaps are based on the estimated cash flows discounted at market rates ranging from 2.5% to 3.7% (2021: 0.2% to 0.7%) per annum. Cross currency swaps The contract amounts of the outstanding cross currency swap contracts at 31st December 2022 were US$2,100.0 million (2021: US$2,600.0 million). 53 ![]() #### Notes to the Financial Statements 22 Capital Commitments 2022 2021 US$m US$m Authorised not contracted 1.1 1.7 Contracted not provided – contributions to joint ventures 942.4 1,067.3 – others 73.4 114.5 1,015.8 1,181.8 1,016.9 1,183.5 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 Limited (‘JSL’) and the ultimate parent company of the Group is Jardine Matheson Holdings Limited (‘JMH’). Both JMH and JSL 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 2022 was US$3.8 million (2021: US$4.8 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 2022 amounted to US$16.9 million (2021: US$19.5 million). The Group provided project management services and property management services to Jardine Matheson group members in 2022 amounting to US$4.7 million (2021: US$:3.4 million). Jardine Matheson group members provided property maintenance and other services to the Group in 2022 in aggregate amounting to US$65.3 million (2021: US$48.7 million). Hotel management services Jardine Matheson group members provided hotel management services to the Group in 2022 amounting to US$2.2 million (2021: US$3.6 million). Outstanding balances with associates and joint ventures Amounts of outstanding balances with associates and joint ventures are included in associates and joint ventures, debtors and creditors as appropriate (see Notes 11, 12 and 16). Directors’ emoluments Details of Directors’ emoluments (being the key management personnel compensation) are shown on page 96 under the heading of ‘Remuneration Outcomes in 2022’. 54 ![]() | | | | | | --- | --- | --- | --- | | 25 | Summarised Balance Sheet of the Company | | | | | Included below is certain summarised balance sheet information of the Company disclosed in accordance with Bermuda law. | | | | | | 2022 | 2021 | | | | US$m | US$m | | | Net operating assets | | | | | Investments at cost | | | | | Unlisted shares in subsidiaries | 4,481.7 | 4,481.7 | | | Amounts due from subsidiaries | 2,462.2 | 2,209.9 | | | | 6,943.9 | 6,691.6 | | | Creditors and other accruals | (31.1) | (38.4) | | | | 6,912.8 | 6,653.2 | | | Total equity | | | | | Share capital (see Note 18) | 222.7 | 229.8 | | | Revenue and other reserves | | | | | Contributed surplus | 1,973.3 | 2,249.6 | | | Share premium | – | 67.4 | | | Revenue reserves | 4,716.8 | 4,106.4 | | | | 6,690.1 | 6,423.4 | | | Shareholders’ funds | 6,912.8 | 6,653.2 | | | 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. | 55 ![]() #### Notes to the Financial Statements 26 Principal Subsidiaries, Associates and Joint Ventures The principal subsidiaries, associates and joint ventures of the Group at 31st December 2022 are set out below. Attributable interest Issued share capital Main activities Place of incorporation 2022 2021 % % Subsidiaries Hongkong Land China Holdings Limited\* 100 100 USD 200,000,000 Investment holding Bermuda Hongkong Land International Holdings Ltd\* 100 100 USD 200,000,000 Investment holding Bermuda Hongkong Land Limited\* 100 100 USD 12,000 Group management Bermuda Blossom Noble (HK) Limited 100 100 HKD 156,000,001 Property investment Hong Kong Grateful Point (HK) Limited 100 100 HKD 171,000,001 Property investment Hong Kong The Hongkong Land Company, Limited 100 100 HKD 2,147,317,117 Investment holding Hong Kong The Hongkong Land Property Company, Limited 100 100 HKD 200 Property investment Hong Kong HKL (Chater House) Limited 100 100 HKD 1,500,000 Property investment Hong Kong HKL (Jardine House) Limited 100 – HKD 21,401,000,001 Property investment Hong Kong HKL (Landmark Hotel) Limited 100 100 HKD 2 Hotel investment Hong Kong HKL (One EXSQ) Limited 100 100 HKD 24,035,000,001 Property investment Hong Kong HKL (Podium) Limited 100 100 HKD 826,000,001 Property investment Hong Kong HKL (Prince’s Building) Limited 100 100 HKD 200 Property investment Hong Kong HKL (The Forum) Limited 100 100 HKD 2,543,592,818 Property investment Hong Kong HKL (Three EXSQ) Limited 100 100 HKD 16,502,250,316 Property investment Hong Kong HKL (Two EXSQ) Limited 100 100 HKD 21,570,000,001 Property investment Hong Kong Hongkong Land (HK) Investments Limited 100 100 HKD 4,033,804,249 Investment holding Hong Kong Hongkong Land (West Bund) Development Limited 100 100 HKD 11,216,548,649 Investment holding Hong Kong Violet Castle (HK) Limited 100 100 HKD 55,200,001 Property investment Hong Kong Chengdu Premium Property Development Co Ltd 100 50 USD 699,980,000 Property development Chinese mainland Hongkong Land (Chengdu) Ruilong Development Co. Ltd. 100 100 RMB 500,000,000 Property development Chinese mainland Hongkong Land (Chengdu) Xinchang Development Co. Ltd. 100 100 RMB 650,000,000 Property development Chinese mainland Hongkong Land (Chongqing) Development Co Ltd 100 100 RMB 5,669,110,000 Property development Chinese mainland Hongkong Land (Chongqing) Investment and Holding Co Ltd 100 100 USD 2,200,000,000 Investment holding Chinese mainland Hongkong Land (Chongqing) Xinchen Development Co Ltd 100 100 RMB 900,000,000 Property development Chinese mainland \* Owned directl y 56 ![]() Attributable interest Issued share capital Main activities Place of incorporation 2022 2021 % % Subsidiaries continued Hongkong Land (Chongqing North) Development Co Ltd 100 100 HKD 3,980,000,000 Property development Chinese mainland Hongkong Land (Chongqing North) Management Co. Ltd. 100 100 RMB 124,830,400 Property management Chinese mainland Hongkong Land (Chongqing) Xingmao Development Co. Ltd. 100 100 RMB 1,610,000,000 Property management Chinese mainland Hongkong Land (Chongqing) Xingyi Development Co Ltd 100 100 RMB 480,000,000 Property development Chinese mainland Hongkong Land (Hangzhou) Heyue Investment and Development Co Ltd 100 100 RMB 706,000,000 Property development Chinese mainland Hongkong Land (Nanjing) Xuanzhi Development Co. Ltd. 100 100 RMB 50,000,000 Property development Chinese mainland Hongkong Land (Shanghai) Asset Management Co. Ltd. 100 100 RMB 50,000,000 Investment holding Chinese mainland Hongkong Land (Shanghai) Zhibin Management Co. Ltd. 100 100 RMB 10,000,000 Property investment Chinese mainland Hongkong Land (Wuhan) Xinghui Development Co. Ltd. 100 100 RMB 1,500,000,000 Property development Chinese mainland Wangfu Central Real Estate Development Company Limited 84 84 RMB 3,500,000,000 Property investment Chinese mainland HKL (Esplanade) Pte Limited 100 100 SGD 150,000,000 Property investment Singapore HKL Treasury (Singapore) Pte Ltd 100 100 SGD 2 Finance Singapore SGD 66,555,263 † Hongkong Land (Singapore) Pte Ltd 100 100 SGD 100,000 Project management Singapore SGD 519,525,895 † The Hongkong Land Treasury Services (Singapore) Pte Ltd 100 100 SGD 2 Finance Singapore 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 (Premium Development) Ltd 100 100 Riels 61,400,000,000 Property investment Cambodia MCL Land (Century Gardens) Sdn Bhd 100 100 MYR 29,117,145 Investment holding Malaysia MCL Land (Malaysia) Sdn Bhd 100 100 MYR 4,010,000 Property development Malaysia MCL Land (Pantai View) Sdn Bhd 100 100 MYR 29,000,000 Property investment Malaysia MCL Land (Quinn) Sdn Bhd 100 100 MYR 2,764,210 Property development Malaysia HKL (Thai Developments) Limited 100 100 Baht 2,592,000,000 Investment holding Thailand Doan Ket International Company Limited 74 74 USD 7,292,000 Property investment Vietnam † Preference shares #### 26 Principal Subsidiaries, Associates and Joint Ventures continued 57 ![]() #### Notes to the Financial Statements Attributable interest Issued share capital Main activities Place of incorporation 2022 2021 % % Subsidiaries continued HKL (Treasury Services) Limited 100 100 USD 1 Finance British Virgin Islands The Hongkong Land Notes Company Limited 100 100 USD 2 Intra-group financing British Virgin Islands The Hongkong Land Finance (Cayman Islands) Company Limited 100 100 USD 2 Intra-group financing Cayman Islands Associates and joint ventures Normelle Estates Limited 50 50 HKD 10,000 Property investment Hong Kong Properties Sub F, Limited 49 49 MOP 1,000,000 Property investment Macau Beijing Landmark Trinity Real Estate Development Co Ltd 30 30 RMB 2,800,000,000 Property development Chinese mainland Chengdu Ruipeng Property Co. Ltd. 50 50 RMB 980,000,000 Property development Chinese mainland Chongqing Central Park Co Ltd 50 50 HKD 4,640,000,000 Property development Chinese mainland Chongqing Lijia Development Co Ltd 50 50 RMB 533,596,100 Property development Chinese mainland Chongqing Shunyun Development Co. Ltd. 50 50 RMB 3,100,000,000 Property development Chinese mainland Chongqing Yirun Huacheng Development Co. Ltd. 50 50 RMB 1,070,000,000 Property development Chinese mainland China West Premier Housing Development Co Ltd 50 50 USD 569,960,000 Property development Chinese mainland Hangzhou Kesheng Property Development Co Ltd 30 30 RMB 100,000,000 Property development Chinese mainland Hangzhou Keyi Property Development Co Ltd 30 30 RMB 150,000,000 Property development Chinese mainland Hongkong Land (Chengdu) Xingyi Development Co Ltd 33 33 RMB 50,000,000 Property development Chinese mainland Hongkong Land (Wuhan) Xingyao Development Co. Ltd. 50 50 RMB 430,000,000 Property development Chinese mainland Hongkong Land Longfor (Chongqing) Hongmao Development Co Ltd 50 50 RMB 600,000,000 Property development Chinese mainland Longfor Hongkong Land (Chongqing) Development Co Ltd 50 50 RMB 275,920,000 Property development Chinese mainland Longfor Hongkong Land (Chongqing) Real Estate Management Co Ltd 50 50 RMB 155,000,000 Property management Chinese mainland Nanjing Shengxiangyuan Property Development Co Ltd 33 33 RMB 4,227,500,000 Property development Chinese mainland Nanjing Xinyeezhi Property Development Co Ltd 50 50 USD 750,000,000 Property development Chinese mainland Nanjing Yeezhi Jiangbei Property Development Co Ltd 50 50 RMB 100,000,000 Property development Chinese mainland #### 26 Principal Subsidiaries, Associates and Joint Ventures continued 58 ![]() Attributable interest Issued share capital Main activities Place of incorporation 2022 2021 % % Associates and joint ventures continued Shanghai Puchen Property Co. Ltd. 43 43 RMB 850,000,000 Property development Chinese mainland Shanghai Xinqiaogao Development Co Ltd 27 27 RMB 4,000,000,000 Property development Chinese mainland Shanghai Xujing Property Co Ltd 50 50 RMB 4,200,000,000 Property development Chinese mainland Shanghai Yibin Property Co. Ltd. 43 43 RMB 30,200,000,000 Property development Chinese mainland Shanghai Yihui Development Co Ltd 50 50 RMB 830,000,000 Property development Chinese mainland Shanghai Zhibin Huizhao Property Co. Ltd. 34 – RMB 1,600,000,000 Property development Chinese mainland Suzhou Rongzhi Property Development Co. Ltd. 40 – RMB 400,000,000 Property investment Chinese mainland Suzhou Yuanzhi Property Development Co. Ltd. 53 – RMB 1,200,000,000 Property investment Chinese mainland Wuhan Dream Land Investment and Development Co Ltd 50 50 RMB 1,200,000,000 Property development Chinese mainland Wuhan Yeezhi Minghong Development Co Ltd 66 66 RMB 600,000,000 Property development Chinese mainland Yeezhi Yuexiang (Chongqing) Development Co Ltd 50 50 RMB 17,736,869 Property development Chinese mainland Asia Radiant Pte Ltd 50 50 SGD 4,000,000 Property development Singapore BFC Development LLP 33 33 SGD N/A Property investment Singapore Central Boulevard Development Pte Ltd 33 33 SGD 6 Property investment Singapore Maximus Commercial SG Pte. Ltd. 50 50 SGD 4,000,000 Property development Singapore Maximus Residential SG Pte. Ltd. 50 50 SGD 4,000,000 Property development Singapore One Raffles Quay Pte Ltd 33 33 SGD 6 Property investment Singapore Taurus Properties SG Pte. Ltd. 50 50 SGD 4,000,000 Property development Singapore Tembusu Residential Pte. Ltd. 49 – SGD 4,000,100 Property development Singapore PT Astra Land LOGOS Indonesia 25 – IDR 28,800,000,000 Property development Indonesia PT Asya Mandira Land 50 34 IDR 3,870,000,000,000 Property development Indonesia PT Award Global Infinity 50 50 IDR 340,982,000,000 Property development Indonesia PT Brahmayasa Bahtera 40 40 IDR 166,000,000,000 Property development Indonesia PT Bumi Parama Wisesa 49 49 IDR 1,150,000,000,000 Property development Indonesia PT Jakarta Land 50 50 IDR 3,320,000,000 Property investment Indonesia PT Lazuli Karya Sarana 50 – IDR 1,210,000,000,000 Property development Indonesia Sunrise MCL Land Sdn Bhd 50 50 MYR 2,000,000 Property development Malaysia RHK Land Corporation 40 40 Peso 2,800,000,000 Property development The Philippines Roxas Land Corporation 40 40 Peso 1,065,000,000 Property development The Philippines #### 26 Principal Subsidiaries, Associates and Joint Ventures continued 59 ![]() #### Notes to the Financial Statements Attributable interest Issued share capital Main activities Place of incorporation 2022 2021 % % Associates and joint ventures continued Central and Hongkong Land Company Limited 49 49 THB 4,836,750,000 Property development Thailand CPN and HKL Company Limited 49 49 THB 4,000,000 Property development Thailand HKL Noble (Wireless) Co., Ltd. 74 74 THB 100,000 Property development Thailand PFHKL 1 Co., Ltd. 49 49 THB 5,000,000 Property development Thailand PFHKL 2 Co., Ltd. 49 49 THB 5,000,000 Property development Thailand PFHKL 3 Co., Ltd. 49 49 THB 5,000,000 Property development Thailand PFHKL 4 Co., Ltd. 49 49 THB 5,000,000 Property development Thailand PFHKL 5 Co., Ltd. 49 49 THB 5,000,000 Property development Thailand PFHKL 6 Co., Ltd. 49 49 THB 5,000,000 Property development Thailand Gaysorn Land Co Ltd 49 49 THB 61,250,000 Property investment Thailand NDC An Khang Joint Stock Company 70 70 VND 2,072,511,590,000 Property development Vietnam Jardine Gibbons Properties Limited 40 40 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 fi nancial statements only to the extent of unrelated investor’s interests in the associates and joint ventures . #### 26 Principal Subsidiaries, Associates and Joint Ventures continued 60 ![]() 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. 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. 61 ![]() #### 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. Owner-occupied portions of multi-purpose properties are accounted for as tangible fixed assets unless the portion is considered insignificant, in which case this portion is treated as part of investment properties. 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. 62 ![]() 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 Trade 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 . 63 ![]() #### 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. 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. 64 ![]() #### 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. 65 ![]() #### 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 . 66 ![]() #### 27 Principal Accounting Policies continued Revenue recognition continued 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. 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 2023 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 amendment is set out below. Amendment to IAS 12 – Deferred Tax related to Assets and Liabilities arising from a Single Transaction (effective 1st January 2023) requires companies to recognise deferred tax on transactions that, on initial recognition, give rise to equal amounts taxable and deductible temporary differences. They typically apply to transactions such as leases of lessees and decommissioning obligations and will require the recognition of additional deferred tax assets and liabilities. The Group is assessing the potential impact on the Group’s consolidated financial statements. 67 ![]() #### 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 2022 or 2021 in relation to interest rate swaps was not material. 68 ![]() 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 2022, 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 (2021: US$2,600 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 2022, the Group’s interest rate hedge was 53% (2021: 60%) with an average tenor of seven years (2021: 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 . 69 ![]() #### 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 2022, 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$8 million (2021: US$2 million) lower/higher, and hedging reserve would have been US$78 million (2021: US$108 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. 70 ![]() 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 2022, total committed and uncommitted borrowing facilities amounted to US$9,168 million (2021: US$9,292 million) of which US$6,990 million (2021: US$6,583 million) was drawn down. Undrawn committed facilities, in the form of revolving credit and term loan facilities, totalled US$2,028 million (2021: US$2,541 million). Undrawn uncommitted facilities in the form of revolving credit loan facilities, amounted to US$150 million (2021: US$168 million). The following table analyses the Group’s non-derivative financial liabilities, net-settled derivative financial liabilities and gross-settled financial instruments into relevant maturity groupings based on the remaining period at the balance sheet date to the contractual maturity date. Derivative financial liabilities are included in the analysis if their contractual maturities are essential for an understanding of the timing of the cash flows. The amounts disclosed in the table are the contractual undiscounted cash flows. Within one year Between one and two years Between two and three years Between three and four years Between four and five years Beyond five years Total undiscounted cash flows US$m US$m US$m US$m US$m US$m US$m 2022 Borrowings 698.0 914.5 2,139.5 960.7 345.3 3,286.8 8,344.8 Creditors 872.2 7.2 0.2 0.2 – 2.2 882.0 Net settled derivative financial instruments – – – – – – – Gross settled derivative financial instruments – inflow 74.0 456.3 650.3 28.5 28.5 1,184.6 2,422.2 – outflow (77.0) (453.3) (646.6) (29.9) (29.9) (1,179.7) (2,416.4) 2021 Borrowings 1,068.8 509.4 717.7 1,307.9 742.2 3,524.0 7,870.0 Creditors 928.5 16.8 0.2 0.2 0.2 2.3 948.2 Net settled derivative financial instruments (1.4) (0.4) – – – – (1.8) Gross settled derivative financial instruments – inflow 583.5 74.0 456.6 651.1 28.5 1,213.4 3,007.1 – outflow (572.4) (67.6) (453.6) (646.5) (29.9) (1,209.4) (2,979.4) None of the undiscounted borrowings at 31st December 2022 are impacted by the IBORs reform . 71 ![]() #### 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 2022 and 2021 are as follows: 2022 2021 Gearing ratio (%) 17 15 Interest cover (times) 6 8 Fair value estimation i) Financial instruments that are measured at fair value in the balance sheet 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. Observable current market transactions 2022 2021 US$m US$m Assets Derivative designated at fair value – through other comprehensive income 5.0 9.9 – through profit and loss – 12.5 5.0 22.4 Liabilities Derivative designated at fair value – through other comprehensive income (12.8) – – through profit and loss (3.4) (17.6) (16.2) (17.6) There were no changes in valuation techniques during the year . 72 ![]() 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 2022 and 2021 are as follows: Fair value of hedging instruments Financial assets at amortised costs Other financial liabilities Total carrying amount Fair value US$m US$m US$m US$m US$m 2022 Financial assets measured at fair value Derivative financial instruments 5.0 – – 5.0 5.0 Financial assets not measured at fair value Debtors – 418.0 – 418.0 418.0 Bank balances – 1,173.4 – 1,173.4 1,173.4 – 1,591.4 – 1,591.4 1,591.4 Financial liabilities measured at fair value Derivative financial instruments (16.2) – – (16.2) (16.2) Financial liabilities not measured at fair value Borrowings – – (6,990.5) (6,990.5) (6,616.7) Trade and other payable excluding non-financial liabilities – – (882.0) (882.0) (882.0) – – (7,872.5) (7,872.5) (7,498.7) 73 ![]() #### Notes to the Financial Statements 29 Financial Risk Management continued Fair value estimation continued Financial instruments by category continued Fair value of hedging instruments Financial assets at amortised costs Other financial liabilities Total carrying amount Fair value US$m US$m US$m US$m US$m 2021 Financial assets measured at fair value Derivative financial instruments 22.4 – – 22.4 22.4 Financial assets not measured at fair value Debtors – 247.2 – 247.2 247.2 Bank balances – 1,479.5 – 1,479.5 1,479.5 – 1,726.7 – 1,726.7 1,726.7 Financial liabilities measured at fair value Derivative financial instruments (17.6) – – (17.6) (17.6) Financial liabilities not measured at fair value Borrowings – – (6,583.2) (6,583.2) (6,810.0) Trade and other payable excluding non-financial liabilities – – (948.2) (948.2) (948.2) – – (7,531.4) (7,531.4) (7,758.2) 74 ![]() 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 climate change and 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 2.80% to 3.40% for office (2021: 2.75% to 3.35%) and 3.75% to 5.00% for retail (2021: 3.75% to 5.00%) are used in the fair value determination. Consideration has 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. The independent valuers have considered climate change, sustainability, resilience and environmental, social and governance (‘ESG’) within their valuations. Properties held by the Group are considered to currently display ESG characteristics that would be expected in the market, and therefore there were no direct and tangible pricing adjustments required to the valuation of investment properties. The Group will monitor these considerations for each reporting period. Impairment of assets 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) . 75 ![]() #### Notes to the Financial Statements 30 Critical Accounting Estimates and Judgements continued 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. 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 on some IBORs. 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. 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 might also affect other systems, processes, risk and valuation models, as well as having tax and accounting implications. Group Treasury is managing the Group’s IBORs transition plan. There are no outstanding contracts at 31st December 2022 impacted by the IBORs reform. 76 ![]() #### 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 2022 and of its profit 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 2022; the Consolidated Profit and Loss Account, the Consolidated Statement of Comprehensive Income, the Consolidated Cash Flow Statement, 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. Our opinion is consistent with our reporting to the Audit Committee. 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$249million(2021:US$259million),basedon0.75%(2021:0.75%)ofthenetassets. ● SpecificGroupmateriality,appliedtobalancesandtransactionsnotrelatedtoinvestmentproperties:US$45million(2021:US$57million) whichrepresents5%(2021:5%)ofunderlyingprofitbeforetaxoftheGroup. Audit scope • Fullscopeauditswereperformedonsixteensubsidiaries.Thesesubsidiaries,togetherwithproceduresperformedoncentralised functionsandattheGrouplevel,accountedfor93%oftheGroup’srevenue,82%oftheGroup’sprofitbeforetax,80%oftheGroup’s underlyingprofitbeforetaxand81%oftheGroup’snetassets; • Fullscopeauditsoffivejointventureswerealsoperformed,whichaccountedforafurther9%oftheGroup’sprofitbeforetax, 7%oftheGroup’sunderlyingprofitbeforetaxand4%oftheGroup’snetassets. Key audit matter • Valuation of investment properties 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. Inparticular,welookedatwheretheDirectorsmadesubjectivejudgements,forexampleinrespectofsignificantaccountingestimates that involved making assumptions and considering future events that are inherently uncertain. As in all of our audits we also addressed the risk of management override of internal controls, including evaluating whether there was evidence of bias by the Directors that represented a risk of material misstatement due to fraud. 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. ### Independent Auditors’ Report 77 ![]() #### Independent Auditors’ Report Our audit approach continued Key audit matters continued This is not a complete list of all risks identified by our audit. The key audit matter below is consistent with last year. Key audit matter Valuation of investment properties Refer to Note 30 (Critical Accounting Estimates and Judgements) and Note 10 (Investment Properties) to the consolidated financial statements. The fair value of the Group’s investment properties amounted to US$28,054.1millionat31stDecember2022,witharevaluation lossofUS$559.3millionrecognisedasanon-tradingiteminthe Consolidated Profit and Loss Account for the year. The Group’s property portfolio principally consists of commercial properties. 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 andtheexpectedfuturerentalsforthatparticularproperty. The valuations were carried out by third party valuers (the ‘valuers’). Valuations are principally derived using the income capitalisation method. There is inherent estimation uncertainty and judgement in determining a property’s valuation as the valuers make assumptions in key areas, in particular in respect of capitalisation rates and market rents. We focused on the valuation of investment properties due to the significant judgements and estimates involved in determining the valuations. How our audit addressed the key audit matter We understood management’s controls and processes for determining the valuation of investment properties and assessed the inherent risk of material misstatement by considering the degree of estimation uncertainty and the judgement involved in determining assumptions to be applied. Weassessedthevaluers’qualificationsandtheirexpertise, considering whether there were any matters that might have affected their objectivity or may have imposed scope limitations upon their work. We found no evidence to suggest that the objectivity of the valuers in their performance of the valuations was compromised. Our work focused on the highest value properties in the portfolio, in particular the properties located in Central, Hong Kong. We read the valuation reports covering the majority of the Group’s investment property portfolio to consider whether the valuation methodology used was appropriate for each property and suitable for use in determining the carrying value. We performed testing, on a sample basis, of the input data used in the valuation process to satisfy ourselves of the accuracy of the property information supplied to the valuers bymanagement,forexampleagreeingleasetermstotenancy agreements and other supporting documents. We understood and assessed the 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experts,attended meetings with the valuers at which the valuations, key assumptions and climate change risk considerations 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 values 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. Withthesupportofourinternalvaluationexperts,wealso questionedtheexternalvaluersastotheextenttowhichrecent markettransactionsandexpectedrentalvalueswhichtheymade use of in deriving their valuations took into account the impact of climate change and related ESG considerations. Overall, we concluded that the assumptions used in the valuations were appropriate. 78 ![]() Our audit approach continued 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 necessary for us 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, visits and conference calls. The Group audit partner and other senior team members undertook two visits to Hong Kong and were involved throughout the year in regular conference calls and other forms of communication to direct and oversee the audit. The Group audit partner visited Singapore and other senior team members also visited Shanghai, Chongqing and Singapore during the year to oversee and review the work of component teams in those locations, along with regular communication through conference call and remote review of the work of component teams. Afullscopeauditofthecompletefinancialinformationwasperformedforsixteen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93%oftheGroup’srevenue,82%oftheGroup’sprofit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fiveprincipaljoint ventureswhichaccountedforafurther9%oftheGroup’sprofitbeforetax,7%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. The impact of climate risk on our audit Inplanningandexecutingouraudit,wehaveconsideredthepotentialimpactofclimatechangeontheGroup’sbusinessanditsfinancial statements. We also considered the Group’s governance framework and preliminary risk assessment process as outlined in the Task Force on Climate-related Financial Disclosures (‘TCFD’) section within the Sustainability Report – Framework 2030 and Climate Action (‘Sustainability Report’), which is a separate report published on the same date as the 2022 Annual Report. TheGrouphasdevelopedaplantoidentifyandassessitsexposuretoclimate-relatedrisksandopportunities.TheGrouphasalso committed to design, build and renovate properties according to standards set out in green building certification schemes and has set out targets to reduce its carbon footprint by 2030. Further information is provided in the Group’s TCFD section of the Sustainability Report. Whilst the Group is committed to reduce carbon emission by 2030, management continues to perform periodic reviews and refine its plans to achieve these targets. Climate change could have a significant impact on the Group’s financial business as the operations and strategy of the Group are adapted to address the potential financial and non-financial risks which could arise from both the physical and transitional risks. Management has evaluated these as disclosed in the TCFD section of the Sustainability Report. We considered the area that could potentially be materially impacted by climate risk, and consequently where we focused our audit work, to be in respect of the valuation of investment properties. To respond to the audit risks identified in this area we tailored our audit approach to address these, in particular, we • Gained an understanding and evaluated whether the impact of both physical and transition risks arising due to climate risk had been appropriately included in the valuation model of investment properties; and • Reviewedandchallengedmanagementandtheexternalvaluersonhowtheclimaterelatedriskshadbeenincorporatedintothe valuation models. We also considered the consistency of the disclosures in relation to climate change (including the TCFD section) within the Annual Report with the financial statements and our knowledge obtained from our audit. This included reading and challenging the disclosures given in the narrative reporting within the other information to the impact disclosed within the financial statements. Ourproceduresdidnotidentifyanymaterialimpactinthecontextofourauditofthefinancialstatementsasawhole,orourkeyaudit matter, for the year ended 31st December 2022. 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$249million(2021:US$259million) How we determined it 0.75%ofnetassetsoftheGroup(2021:0.75%ofnetassetsoftheGroup) 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$45million(2021:US$57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wasbasedon5%oftheGroup’s consolidatedunderlyingprofitbeforetaxfortheyearended31stDecember2022.Inarrivingatthisjudgement,wehadregardtothe fact that underlying profit is an important financial indicator of the Group. 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materialityallocatedacrosscomponentswasUS$0.4milliontoUS$18.4million(2021:US$0.8milliontoUS$55.5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%(2021:75%)ofoverallmateriality,amountingtoUS$186million(2021:US$194million)forthe itemsrelatedtoinvestmentpropertiesandUS$33million(2021:US$42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 in the middle of our normal range was appropriate. We agreed with the Audit Committee that we would report to them misstatements identified during our audit in respect of investment propertyrelateditemsaboveUS$12million(2021:US$12million)aswellasmisstatementsbelowthisamountthat,inourview, warranted reporting for qualitative reasons. For all other account balances and transactions, we agreed with the Audit Committee that wewouldreporttothemmisstatementsidentifiedduringourauditaboveUS$2.2million(2021:US$2.8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 business models and analysed how those risks might affect the Group’s financial resources or ability to continue operations over the going concern period; • Assessing management’s base case and severe but plausible downside scenario models supporting the Board’s going concern assessment, evaluating the process by which the assessments have been drawn up, ensuring that the calculations in the model were mathematically accurate and that the overall methodology used was appropriate; • 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 potential adverse trading conditions and impact the Group’s liquidity position over the going concern period; • Evaluating the committed financing facilities currently available to the Group and ensuring that the models appropriately included all contractualdebtrepaymentsandcommittedcapitalexpenditures;and • Agreeing the cash on hand and available facilities included in the going concern assessment as part of our year end audit work. 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 twelve 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. 80 ![]() Conclusions relating to going concern continued 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. 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Statements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. Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities,outlinedabove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regulations, 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 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 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; 81 ![]() #### Independent Auditors’ Report Responsibilities for the financial statements and the audit continued Auditors’ responsibilities for the audit of the financial statements continued • 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 matter above); 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. We are less likely to become aware of instances of non-compliance with laws and regulations that are not closely related to events and transactions reflected in the financial statements. 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. Our audit testing might include testing complete populations of certain transactions and balances, possibly using data auditing techniques. However, it typically involves selecting a limited number of items for testing, rather than testing complete populations. We will often seektotargetparticularitemsfortestingbasedontheirsizeorriskcharacteristics.Inothercases,wewilluseauditsamplingtoenable us to draw a conclusion about the population from which the sample is selected. 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 opinion, 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 this opinion, 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, including without limitation underanycontractualobligationsofthecompany,savewhereexpresslyagreedbyourpriorconsentinwriting. Partner responsible for the audit The engagement partner on the audit resulting in this independent auditors’ report is John Waters. Other matter Induecourse,asrequiredbytheFinancialConductAuthorityDisclosureGuidanceandTransparencyRule4.1.14R,thesefinancial statements will form part of the ESEF-prepared annual financial report filed on the National Storage Mechanism of the Financial Conduct Authority in accordance with the ESEF Regulatory Technical Standard (‘ESEF RTS’). This auditors’ report provides no assurance over whether the annual financial report will be prepared using the single electronic format specified in the ESEF RTS. #### PricewaterhouseCoopers LLP Chartered Accountants London 2nd March 2023 82 ![]() ### Five Year Summary 2018 2019 2020 2021 2022 US$m US$m US$m US$m US$m Profit/(loss) attributable to shareholders 2,457 198 (2,647) (349) 203 Underlying profit attributable to shareholders 1,036 1,076 963 966 776 Investment properties 33,712 33,191 30,083 28,600 28,054 Net debt 3,564 3,591 4,568 5,104 5,817 Shareholders’ funds 38,342 38,247 35,709 34,584 33,303 US$ US$ US$ US$ US$ Net asset value per share 16.43 16.39 15.30 15.05 14.95 #### Underlying earnings/dividends #### per share (US¢) #### Net asset value per share (US$) DividendsUnderlying earnings 2022 34.44 22.00 41.49 22.00 2018 2019 2020 2021 41.27 22.00 44.24 22.00 46.12 22.00 2022 14.95 15.05 2018 2019 2020 2021 15.30 16.43 16.39 83 ![]() ### Responsibility Statements The Directors of the Company confirm to the best of their knowledge that: a. the consolidated financial statements prepared in accordance with International Financial Reporting Standards, including International Accounting Standards and Interpretations adopted by the International Accounting Standards Board, give a true and fair view of the assets, liabilities, financial position and profit and losses of the Group; and b. the Chairman’s Statement, Chief Executive’s Review, Financial Review and Principal Risks and Uncertainties of this Annual Report, which constitute the management report required by the Disclosure Guidance and Transparency Rule 4.1.8, include a fair review of all information required to be disclosed under Rules 4.1.8 to 4.1.11 of the Disclosure Guidance and Transparency Rules issued by the Financial Conduct Authority in the United Kingdom. For and on behalf of the Board #### Robert WongCraig Beattie Directors 2nd March 2023 84 ![]() ### Corporate Governance #### Overview of the Group’s Governance Approach The Hongkong Land Group (Hongkong Land Holdings Limited (the ‘Company’) and its subsidiaries together known as the ‘Group’) understands the value of good corporate governance in driving the long-term sustainable success of business. It attaches importance to the corporate stability that strong governance brings, and 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, and both the Group and its stakeholders regard it as appropriate to the nature of its business and the long-term strategy it pursues in its markets, primarily China and Southeast Asia. The Group’s governance framework is tailored to its 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. The Company also ensures that the Group retains and promotes those characteristics and values of a family-owned business that have enabled the Group to prosper over the long-term: • A long-term perspective – the Group takes a long-term view in its decision-making and investments and draws on the many years’ experience of our Directors, as opposed to focussing on short-term profitability. This leads to long-term growth generations for our shareholders and the communities where we operate. • Credibility and trust – the credibility and trust that family ownership brings to the business are highly valued by our partners and other stakeholders, especially in developing markets. • Deep knowledge of the business and our markets – the involvement of many generations of the family in the running of the Group has led to a deep understanding of how to drive successful growth by the business across its markets, giving the Group a competitive advantage. The Group believes that its stakeholders gain significant value from the historical governance approach the Group has taken as a family-owned business and that it is therefore important to retain the key elements of this approach. It is also important, without losing these benefits, to adapt to changing circumstances in our markets and, where appropriate, to the developing expectations of stakeholders and changes in best practice and the approach taken by our peers. Accordingly, the Company continues to focus on enhancing the Group’s approach to corporate governance more generally, focussing on changes which benefit the Group. The Company has focussed in 2022 on changing the Group’s approach to corporate governance more generally and has led a series of changes to the governance of the Group, including the composition of the Company’s Board. These changes, which were made to the Board in March and July 2022, have increased the diversity and brought greater sector expertise to the Board through the appointment of two new Independent Non-Executive Directors. In addition, the Company has established formal Audit, Remuneration and Nominations Committees at the listed company level. Independent Non-Executive Directors with a broad and diverse range of backgrounds are a valuable source of external perspectives and are a key element of good governance and decision-making. The Company and the Group can benefit from the expertise and experience they bring, and the Company is taking steps to increase the independence and diversity of its Board. Having an effective corporate governance framework supports the Board in delivering the Group’s strategy and supports long-term sustainable growth, and ensuring it operates transparently and in accordance with the best practice. #### Group Structure Jardine Matheson is the ultimate holding company of the Group. The structural relationship between the Jardine Matheson group and the Group is considered 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, including the Group, aim to optimise their opportunities across the Asian countries in which they operate. #### Governance and Legal Framework The Company is incorporated in Bermuda. The Company’s property interests are held almost entirely in Asia. The primary listing of the Company’s equity shares is a standard listing on the Main Market of the London Stock Exchange (the ‘LSE’). The Company also has secondary listings in Singapore and Bermuda. As the Company has only secondary listings on these exchanges, many of the listing rules of such exchanges are not applicable. Instead, the Company must release the same information in Singapore and Bermuda as it is required to release under the rules which apply to it as a standard-listed company on the LSE. 85 ![]() #### Corporate Governance #### Governance and Legal Framework continued 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 Hongkong Land Holdings Limited Regulations 1993 (as amended) were implemented; and • The Company’s Memorandum of Association and Bye-laws. The shareholders can amend the Company’s Bye-laws by way of a special resolution at a general meeting of the Company. The Company’s standard listing on the LSE means that it is bound by many of the same rules as premium-listed companies under the UK Listing Rules, the Disclosure Guidance and Transparency Rules (the ‘DTRs’) issued by the Financial Conduct Authority in the United Kingdom (the ‘FCA’), the UK Market Abuse Regulation (the ‘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 the offering of 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. In addition, the Company and its Directors are subject to legislation and regulations in Singapore relating, among other things, to insider dealing. Some of the rules applicable to premium-listed companies do not apply to the Company. When the shareholders approved the Company’s move to a standard listing from a premium listing in 2014, however, the Company stated that it intended to maintain certain governance principles which were then-applicable to the Company’s premium listing. As a result, the Company adopted several governance principles (the ‘Governance Principles’) based on the then-applicable requirements for a premium listing, which go further than the standard listing requirements. 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. In addition, the Company shall observe the mandatory related party transaction rules under the DTRs, including assessment, approval and disclosure requirements for material related party transactions, that apply to UK standard-listed companies. • 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 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 expected to be followed by companies subject to the Code. However, the Company does have regard to the Code in developing and implementing its approach to corporate governance and disclosure. #### 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 Company’s business affairs, other than matters reserved to be exercised by the Company in the 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; 86 ![]() #### The Board continued • 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 annual financial statements upon recommendation from the Audit Committee, as well as interim management statements; • Approval of the Annual Report and Accounts; • Approval of dividend policy and the 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, re-appointment or removal of the external auditor, subject to shareholders’ approval, upon recommendation from the Audit Committee; • Approval of matters relating to 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 (‘HKLL’), with specific written terms of reference outlining its role and authorities. The Company sees the value of regularly reviewing the effectiveness of its processes and making improvements where appropriate. #### Board Composition and Operational Management The Board’s composition and how 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. However, the Memorandum of Association of the Company 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 53% interest in the Company’s share capital, the Chief Executive and the Managing Director meet regularly. Similarly, the board of HKLL and its finance committee are chaired by the Managing Director. They include Hongkong Land Group executives and Jardine Matheson’s deputy managing director, group finance director and group general counsel. The presence of Jardine Matheson representatives on the Board and Audit Committee of the Company, as well as on the board and finance committee of HKLL, 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. In addition, the presence of Jardine Matheson representatives on the Company’s Board, Audit, Nominations and Remuneration Committees, as well as HKLL’s finance committee, 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 2nd March 2023, the Company comprises 11 Directors, four of whom (36%) – Christina Ong, Prijono Sugiarto, Lily Jencks and Lincoln K.K. Leong – are Independent Non-Executive Directors as defined by the Code. In addition, a Non-Executive Director – Anthony Nightingale – does not have any executive responsibilities, nor has he been an employee of the Company or the Group within the past five years, and he is sufficiently distanced from the day-to-day operations of the Company for the Company to take the view that he is an Independent Non-Executive Director, even though he has served on the Board for over nine years, bringing the number of Independent Non-Executive Directors to five (45%). The names of all the Directors and brief biographies appear on pages 22 and 23 of this Annual Report. 87 ![]() #### Corporate Governance #### Board Composition and Operational Management continued On 2nd March 2023, it was announced that Stuart Grant would join the Board on 3rd March 2023. With the addition of Stuart Grant, the number of Independent Non-Executive Directors increases to six (50%) out of 12 Directors. 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 combined from 16th May 2013 until the separation of these roles from 15th June 2020. The Board considers that there is a clear division of responsibilities among the Chairman, the Managing Director and the Chief Executive to ensure an appropriate balance of power and authority is maintained at all times. Number of Directors International business Executive leadership Strategy & business acumen Financial acumen Corporate governance, risk management and/or sustainability Property development Property investment Property management 50-59 Executive Directors Non-Executive Directors60-59 70-75 #### Age of Directors Capacity of Directors #### Directors’ experience 40-49 Independent Non-Executive Directors 3 2 2 4 Chinese Over 10 years Canadian Singaporean 6-10 years #### Nationality of Directors Tenure of Directors British Indonesian 5 years or below 6 1 42 15 2 1 0 62 841 73 5 9 10 11 0 62 841 73 5 9 10 11 0 62 841 73 5 9 10 11 0 2 4 1 3 5 Number of Directors 88 ![]() #### 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, external relationships, governance and people. In addition, 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, with the Managing Director and the Chief Executive, 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; • Leading, with the Managing Director, the succession planning for the Chief Executive; • 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 (including the Independent Non-Executive Directors). Managing Director The Managing Director acts as chairman of HKLL and of its finance committee, as well as being a member of the Company’s Nominations Committee and the Remuneration Committee. In addition, he has responsibility for representing Jardine Matheson, as the major shareholder of the Company, including: • Providing oversight of the day to-day management by the Group Chief Executive and his leadership team of the business; • Carrying out ongoing reviews of the business, financial and operational performance of each business against agreed objectives; • Providing regular feedback to the Group Chief Executive on his/her performance and conducting an annual performance review; • Leading the Group Chief Executive succession planning; • Ensuring that there is appropriate discussion of future competencies required of the management team to execute the strategy; • Ensuring that the information submitted to the Board is of high quality and provided on a timely basis; • Ensuring the Board conducts reviews on past significant capex decisions; and • Communicating with shareholders as appropriate. #### 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 HKLL finance committee. In addition, the Chief Executive has day-to-day operational 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 relevant 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. In addition, Non-Executive Directors work on individual initiatives as appropriate. 89 ![]() #### Corporate Governance #### Board Meetings The Board usually holds four scheduled meetings each year, and ad hoc procedures are adopted to deal with urgent matters between scheduled meetings. Board meetings are usually held in different locations around the Group’s markets. In March 2022, as border restrictions began to ease, a hybrid Board meeting was held in Singapore. The May 2022 Board meeting was held virtually. In-person Board meetings were held in Singapore in July 2022 and in Bangkok in December 2022. 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 Company reviews the information provided to the Board regularly, to ensure that it remains relevant to the needs of the Board in carrying out its duties. The Directors of the Company who do not serve on the board of HKLL and who are based outside Asia will usually visit the region and Bermuda to discuss the Group’s business and participate in the four strategic reviews that precede the regular Board meetings. 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. #### Board Attendance Directors are expected to attend all Board meetings. The table below shows the attendance at the scheduled 2022 Board meetings: Meetings eligible to attend Attendance Directors of the Company Non-Executive Directors Ben Keswick 4/4 100% Lily Jencks 1 2/2 100% Adam Keswick 4/4 100% Lincoln K.K. Leong 2 3/3 100% Anthony Nightingale 4/4 100% Christina Ong 4/4 100% Y.K. Pang 4/4 100% Prijono Sugiarto 3/4 75% Executive Directors John Witt 4/4 100% Robert Wong 4/4 100% Craig Beattie 4/4 100% Former Directors of the Company Lord Powell of Bayswater 3 1/1 100% Percy Weatherall 4 1/1 100% Michael Wu 5 4/4 100% 1 Lily Jencks joined the Board on 28th July 2022. 2 Lincoln K.K. Leong joined the Board on 4th March 2022. 3 Lord Powell of Bayswater retired as a Director at the close of business on 3rd March 2022. 4 Percy Weatherall retired as a Director at the close of business on 3rd March 2022. 5 Michael Wu stepped down as a Director on 31st December 2022. #### Appointment and Retirement of Directors The Board appoints each new Director, 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-election at the first AGM after appointment. After that, 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 of the Company. John Witt, being the Managing Director, has a service contract with the Company that has a notice period of six months. Lord Powell of Bayswater and Percy Weatherall retired from the Board at the close of business on 3rd March 2022. Lincoln K.K. Leong and Lily Jencks joined the Board on 4th March 2022 and 28th July 2022, respectively. Michael Wu stepped down as a Director on 31st December 2022. 90 ![]() #### Appointment and Retirement of Directors continued In accordance with Bye-law 85, Robert Wong and Christina Ong will retire by rotation at this year’s AGM and, being eligible, offer themselves for re-election. In accordance with Bye-law 92, Lily Jencks and Stuart Grant will also retire and, being eligible, offer themselves for re-election. Robert Wong has a service contract with a subsidiary of the Company that has a notice period of six months. None of the other Directors proposed for re-election has a service contract with the Company or its subsidiaries. Directors need to obtain the Chairman’s approval before accepting additional appointments that might affect their time to devote to the role as a Director of the Company. #### Company Secretary All Directors have access to the advice of the Company Secretary, who is responsible for advising the Board on all governance matters. #### 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 to the Board on any appointments to maintain a right balance of skills, knowledge and experience and independence, as well as a diversity of perspectives; • Support the Chairman to 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 the diversity of social and ethnic 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 as circumstances require, or by the circulation of Committee circulars and recommendations to the Board for approval as it deems appropriate. It plays a key role in the process of recruiting senior executives. Candidates for appointment as Executive Directors of the Company or 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. #### 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 applicable law, every Director shall be indemnified and secured harmless out of the assets of the Company against all liability and loss suffered and expenses reasonably incurred. However, neither insurance nor indemnity arrangements provide cover where the Director has acted fraudulently or dishonestly. #### 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 of 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. 91 ![]() #### Corporate Governance #### Directors’ Responsibilities in respect of the Financial Statements Under the Companies Act, the Directors are required to prepare financial statements for each financial year and present them annually to the Company’s shareholders at the AGM. The financial statements are required to present fairly, in accordance with the 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 consistently 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. #### Substantial Shareholders As classified 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 and that 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 Limited (‘Jardine Strategic’), which is directly interested in 1,176,616,646 ordinary shares carrying 52.89% 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 Company’s issued ordinary share capital as of 2nd March 2023. There were no contracts of significance with substantial corporate 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. #### Engagement with Shareholders and Stakeholders Shareholders and Investors The Board and senior management team recognise communications with shareholders and investors to be an important component of Hongkong Land’s commitment to strong corporate governance. The Group proactively engages with the investment community through a number of channels to articulate its business and sustainability strategies, provide updates on its progress towards key objectives, and to collect the community’s views and feedback, as follows: • The Chief Executive and Chief Financial Officer are made available to address queries at the Group’s interim and annual results presentations, followed by interactions during roadshows or post results discussions with major shareholders and investors; • The Chief Financial Officer provides business updates to the analyst community prior to the start of black-out periods ahead of interim and annual results announcements; • The Chief Executive, Chief Financial Officer, and/or the Investor Relations team regularly attend one-on-one meetings with major shareholders, bondholders and potential investors – over 50 meetings were conducted during the year; • The publication of annual reports, results announcements and presentations, interim management statements and press releases; • The publication of business, sustainability and other general updates via social media platforms; and • The Group’s AGMs. Other Stakeholders The Group frequently engages with stakeholder groups outside of the investment community, focussing primarily on sustainability-related issues and opportunities to collaborate on corporate social responsibility initiatives. Hongkong Land’s engagement with stakeholders is guided by the Group’s Sustainability Framework 2030 (https://hklandblob.blob.core.windows.net/assets/sustainability/sustainability- governance/hll\_sustainabilityframework\_2030\_en.pdf), which was developed via consultations with stakeholders to help the Group prioritise material topics. These engagements, which are attended by senior management, primarily include: • Ongoing dialogue with environmental Non-Governmental Organisations (‘NGOs’), financial institutions and government agencies on risks from rising sea levels; • Collaborating with other landlords via an Alliance on the sourcing and trialling of PropTech solutions to drive energy efficiency for commercial buildings; 92 ![]() Other Stakeholders continued • Regular communications with contractors and other developers to learn and share best practices on refining building designs and optimising the use of carbon intensive building materials; • Engaging with tenants to raise awareness and best practices on Diversity and Inclusion initiatives; • Collaborating with NGOs and tenants to deliver charitable initiatives via economic contributions, community investments, and volunteering; and • Attending real estate sector and sustainability conferences, seminars, workshops, and events, including contributing to panel discussions. Shareholders and other stakeholders may send their enquiries and concerns by e-mail at gpobox@hkland.com. #### 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 Company’s issued share capital. When the Board reviews the possibility of share repurchases, it will consider the potential for enhancing earnings or asset values per share. When purchasing such shares, the Company is subject to the provisions of MAR. During the year ended 31st December 2022, the Company repurchased and cancelled a total of 70,509,604 of its ordinary shares for an aggregate cost of US$351 million. The ordinary shares, which were repurchased in the market, represented approximately 3.1% of the Company’s issued ordinary share capital as at 1st January 2022 before repurchase. #### Workforce Engagement The Group is working hard to support the growth of the next generation of leaders within our businesses, ensuring our colleagues can develop the skills they need. We also aim to create an owner mindset among our staff and support this by enhancing our incentive structures to focus less on current profits and more on value creation over a longer time horizon. This longer-term view also incentivises experimentation and innovation. The Group also conducted a staff engagement survey in December 2023 and achieved a best-in-class result. #### Annual General Meeting The 2023 AGM will be held on 4th May 2023. The full text of the resolutions and explanatory notes in respect of the meeting are contained in the Notice of AGM, despatched at the same time with this Annual Report. #### Corporate Website A corporate website is maintained containing a wide range of information of interest to investors at www.hkland.com. #### Group Policies #### Code of Conduct The Group conducts business in a professional, ethical and even-handed manner. Its ethical standards are set out in its Code of Conduct, a set of guidelines to which every employee must adhere. It is reinforced and monitored by an annual compliance certification process and 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. It requires that all Directors and employees must be fully aware of their obligations under the Code of Conduct and establish procedures to ensure compliance at all levels within their businesses. 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. #### Data Privacy The Group is committed to being a responsible custodian of the data entrusted to it by customers, employees, business partners and other stakeholders keeping the data secure and processing it in accordance with legal requirements and stakeholder expectations as they continue to evolve. Appropriate protections are in place to prevent misuse and unauthorised disclosure of personal data. In addition, the Group’s Code of Conduct and Data Breach Notification Policy underlines the Group’s commitment to being a responsible data custodian. 93 ![]() #### Corporate Governance #### Whistleblowing Policy The Group has a whistleblowing policy covering how employees can report matters of serious concern. The Audit Committee is responsible for overseeing the effectiveness of the formal procedures for colleagues to raise such matters and is required to review any reports made under those procedures referred to it by the internal audit function. In addition, the Group has a whistleblowing service managed by an independent third-party service provider to supplement existing whistleblowing channels to assist employees and third parties in reporting suspected illegal or unethical behaviour or other matters of serious concern and is intended to help foster an inclusive, safe and respectful workplace. The service, which is available 24 hours in multiple local languages, and is accessible through phone hotline or online, and as anonymous submissions, may be used by colleagues to report a matter of concern to a manager supervisor, Human Resources, Executive Directors, Legal representative or the Chief Financial Officer. Reports may be lodged by one of three channels: email, website and telephone hotline. Each report is allocated a unique case number which enables follow-up with the reporter where applicable. Once a report is lodged, it is sent to certain authorised persons at the Group level. These include senior representatives from legal, compliance and finance teams who have experience in dealing with such matters. The authorised persons will follow up on the report and investigate where necessary. The reporter, if they choose to, will be notified of the outcome. All reports are treated confidentially and any retaliation against a person reporting a potential breach of the Code of Conduct in good faith will not be tolerated. #### Diversity and Inclusion The Group will continue to foster a culture of inclusivity and empowerment, where colleagues with different backgrounds feel comfortable in being themselves, in voicing their ideas and have equal opportunities to thrive. The Group applies the principle that colleagues should always treat others in a way they would expect others to treat them. Bullying, intimidation, discrimination, and harassment of others have no place in the Group and will not be tolerated. As a multinational Group with a broad range of businesses operating across Asia, the Group believes in promoting equal opportunities in recruiting and developing all employees, regardless of ethnicity, gender, age, sexual orientation, disability, background or religion, should be treated fairly and with dignity, and be valued for the contributions they make in their role. 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. All staff are encouraged and supported to develop their full potential and contribute to the sustainable growth of the Group. Employees views and ideas are essential, and they are encouraged to express them respectfully with colleagues at all levels within the organisation. To build an inclusive workplace, we incorporate the Diversity and Inclusion principles by modelling the Jardine Matheson group’s Diversity and Inclusion Policy. This includes: • Ongoing collaboration with Jardine Matheson group to ensure a set of inclusive working arrangements and policies to support Diversity and Inclusion; • Keeping our recruitment, promotion and retention systems fair and based on aptitude, merit and ability, including ongoing reviews of remuneration to ensure appropriateness of pay levels; • Active talent management and career support for our talent pools to provide equitable opportunities that will enable a diverse future pipeline of leaders; and • Cultivating the right set of leadership behaviours through learning campaigns to ensure our people behave in a way consistent with the principles we have put in place. The Company keeps the composition of its Board and senior management positions under review to ensure that it adapts to the changing business landscape. The Company is actively focussed on increasing gender diversity. The Group has a Diversity and Equal Opportunity Policy. #### Remuneration Report #### Message from the Board/Remuneration Committee The Board is pleased to present shareholders with the 2022 Remuneration Report. This report sets out the Group’s approach to remuneration for its executives and Directors, particularly the link between the Group’s values, strategy and its remuneration framework, the link between performance and reward, and remuneration outcomes for senior executives. #### The Group’s Remuneration Philosophy and Framework for Rewarding Staff The remuneration outcomes in 2022 reflect the intended operation of the remuneration framework. At the heart of the Group’s remuneration framework is our commitment to deliver competitive remuneration for excellent performance to attract the best and motivate and retain talented individuals, while aligning the interests of executives and shareholders. The Company aims to ensure all remuneration is delivered in a manner that is aligned with the values of the Company. 94 ![]() #### The Group’s Remuneration Philosophy and Framework for Rewarding Staff continued It does this through: • Incentives based on financial measures and strategic objectives that reflect key goals critical to sustained organisational success; • Consideration of business and operational risk, as well as sustainability development goals through the design of performance objectives; • Incentives and policies which align the interests of executives to those of shareholders; • Best-practice governance and ensuring remuneration outcomes are reasonable, taking into account community and stakeholder expectations; and • Remuneration levels and outcomes appropriately reflect the challenge and complexity of being a multinational Asian-based property group with diverse property business. The Company’s policy is to offer competitive remuneration packages to its senior executives. The Company relies on a reward framework that provides varying levels of remuneration and benefits depending on employee level. The remuneration packages are designed to reflect the nature of the Group and its diverse geographic base. Accordingly, the remuneration mix for employees varies depending on level. At senior executive levels, more remuneration is ‘at risk’ depending on performance levels against goals. At more junior levels, more remuneration is directed toward fixed remuneration. The Company strives to provide an appropriate amount of remuneration ‘at risk’ for the achievement of goals – whether those are short- or long-term in nature. #### Directors’ Remuneration 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. The remuneration of the Company’s Non-Executive Directors is not linked to performance. This is consistent with Non-Executive Directors being responsible for objective and independent oversight of the Group. The total amount provided to all Directors (including the Managing Director but exclusive of salaried Executive Directors of the Company who are not entitled to such fees) must not exceed the sum agreed by shareholders at a general meeting. The maximum aggregate remuneration of US$1.5 million per annum was approved by shareholders at the 2022 AGM. Executive Directors (excluding the Managing Director, who is also the Jardine Matheson Managing Director) are paid a basic fixed salary as well as discretionary annual incentive bonuses by and receive certain employee benefits from the Group. Non-Executive Directors do not receive bonuses or any other incentive payments or retirement benefits. The Non-Executive Directors are reimbursed for expenses properly incurred in performing their duties as a Director of the Company. The schedule of fees paid to Directors in respect of the financial year 2022 is set out in the table below. Fees are annual fees, unless otherwise stated: USD (per annum) Chairman/Managing Director fee: 110,000 Base Director fee: 100,000 Audit Committee fee: 35,000 Nominations Committee fee: 15,000 Director Director Fee US$ Audit Committee Fee US$ Nominations Committee Fee US$ Total Fees US$ 1 Ben Keswick (Chairman) 110,000 – 15,000 125,000\* 2 John Witt (Managing Director) 110,000 – 15,000 125,000\* 3 Robert Wong – – – – 4 Craig Beattie – – – – 5 Lily Jencks 100,000 – – 100,000 6 Adam Keswick 100,000 – 15,000 115,000\* 7 Lincoln K.K. Leong 100,000 35,000 – 135,000 8 Anthony Nightingale 100,000 – – 100,000 9 Christina Ong 100,000 – – 100,000 10 Y.K. Pang 100,000 35,000 – 135,000\* 11 Prijono Sugiarto 100,000 – – 100,000 Total 920,000 70,000 45,000 1,035,000 \* Fees surrendered to Jardine Matheson 95 ![]() #### Corporate Governance #### Remuneration Committee 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. In March 2022, the Remuneration Committee established by the Board within HKLL in March 2021 had been dissolved. The Board has established a Remuneration Committee (the ‘Remuneration Committee’) at the Company level in March 2022. 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 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 Remuneration Committee. The current members of the Remuneration Committee are Ben Keswick, John Witt, Y.K. Pang and Graham Baker. The Chief Executive and the Director and Head of Human Resources will generally attend meetings of the Remuneration Committee. The Remuneration Committee meets as circumstances require, or by circulation of Committee circular reviews and recommends to the Board for approval as it deems appropriate. #### How Remuneration Framework is Linked to the Business Strategy The Group’s remuneration strategy is designed to support and reinforce its business and sustainability strategies. The at-risk components of remuneration are tied to measures that reflect the successful execution of these strategies in both the short and long term. So, the Group’s actual performance directly affects what executives are paid. #### Remuneration Outcomes in 2022 For the year ended 31st December 2022, the Directors received from the Group US$8.6 million (2021: US$10.3 million) in Directors’ fees and employee benefits, being: • US$1.2 million (2021: US$0.7 million) in Directors’ fees; • US$7.3 million (2021: US$7.9 million) in short-term employee benefits, including salary, bonuses, accommodation and deemed benefits in kind; and • US$0.1 million (2021: US$1.7 million) in post-employment benefits. The information set out in the section above headed ‘Remuneration Outcomes in 2022’ forms part of the audited financial statements. #### Share Schemes The Company has in place a 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. #### Directors’ Share Interests The Directors of the Company in office on 2nd March 2023 had interests\* as set out below in the ordinary share capital of the Company. These interests include those notified to the Company regarding the Directors’ closely associated persons\*. Robert Wong 400,000 Lincoln K.K. Leong 456,818 Anthony Nightingale 2,184 Y.K. Pang 738,000 \* Within the meaning of MAR In addition, Robert Wong and Craig Beattie held share options regarding 2,200,000 and 60,000 ordinary shares, respectively, issued pursuant to the Company’s notional share option plan. 96 ![]() #### Audit Committee Report #### Audit Committee In March 2022, the Audit Committee established by the Board within HKLL (the ‘Former Audit Committee’) had been dissolved. The Board has established an Audit Committee (the ‘Audit Committee’) at the Company level in March 2022. The Audit Committee consists of a minimum of three members, the current members of which are Y.K. Pang, Graham Baker (Financial Expert) and Lincoln K.K. Leong (Chairman of the Audit Committee and Independent Non-Executive Director). None of them is directly involved in operational management of the Company. On 3rd March 2023, Stuart Grant will be appointed as an Independent Non-Executive Director and become a member of the Audit Committee on 1st June 2023. With the appointment of Lincoln K.K. Leong and Stuart Grant, both Independent Non-Executive Directors, to the Audit Committee in March 2022 and June 2023, the Company is moving towards a majority of independent members in its Audit Committee. Lincoln K.K. Leong, Stuart Grant and Graham Baker are the members of the Audit Committee with recent financial experience and expertise. In addition, Graham Baker and Stuart Grant also have a deep understanding of risk management. The Chairman, Chief Executive and Chief Financial Officer, and representatives of the internal and external auditors, also attend the Audit Committee meetings by invitation. In addition, 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. The role of the Audit Committee is governed by its terms of reference. The Audit Committee’s remit includes: • Independent oversight and assessment of financial reporting processes including related internal controls; • Independent oversight of risk management and compliance; • Monitoring and reviewing 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. Before 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 entire 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 2022 included: • Reviewing the 2021 annual financial statements and 2022 half-year 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, training, 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 the biennial assessment of the effectiveness of PwC; • Reviewing the Group’s governance approach to cybersecurity management, data security and privacy management across its businesses; • Reviewing the independence, audit scope and fees of PwC, and recommending their re-appointment as the external auditor at general meeting; and • Conducting a review of the terms of reference of the Audit Committee. 97 ![]() #### Corporate Governance #### Former and Current Audit Committees Attendance 1 & 2 The table below shows the attendance at the scheduled 2022 Audit Committee meetings: Members of the Former Audit Committee Meeting eligible to attend Attendance Directors of the Company John Witt 1/1 100% Y.K. Pang (Chairman) 1/1 100% Directors of HKLL Graham Baker 1/1 100% Jeremy Parr 0/1 – Members of the Current Audit Committee Meeting eligible to attend Attendance Directors of the Company Lincoln K.K. Leong (Chairman) 1/1 100% Y.K. Pang 1/1 100% Director of HKLL Graham Baker 1/1 100% 1 The Former Audit Committee was dissolved on 3rd March 2022. 2 The Audit Committee was established on 4th March 2022. #### Auditor Independence and Effectiveness The Group auditor’s independence and objectivity are safeguarded by control measures including: • Limiting the nature of non-audit services (including the adoption by the Company of a non-audit services policy); • The external auditor’s own internal processes to approve requests for non-audit work to the external audit work; • Monitoring changes in legislation related to auditor independence and objectivity; • The rotation of the lead auditor partner after five years; • Independent reporting lines from the external auditor to the Audit Committee and providing an opportunity for the external auditor to have in-camera sessions with the Audit Committee; • Restrictions on the employment by the group of certain employees of the external auditor; • Providing a confidential helpline that employees can use to report any concerns; and • An annual review by the Audit Committee of the policy to ensure the objectivity and independence of the external auditor. The Board’s annual review in 2022 of the Auditor’s Independence and Effectiveness found that PwC performed their duties effectively. The Board found the level of professional scepticism, the number and regularity of meetings with the Audit Committee, feedback from Audit Committee members and internal stakeholders and the levels of technical skills and experience to be effective. #### Risk Management and Internal Control The Board has overall responsibility for the Group’s risk management systems 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. It reviews the operation and effectiveness of the Group’s internal control systems (financial, operational and compliance) and the procedures by which these risks are monitored and mitigated. The Audit Committee considers the systems and procedures regularly and reports to the Board semi-annually. The Jardine Matheson Group Audit and Risk Management (‘JM GARM’) is appointed to assist the Audit Committee in fulfilling its assurance and reporting roles. JM GARM adheres to international standards for the professional practice of internal audit. To safeguard its independence and objectivity, JM GARM reports functionally to the Audit Committee of the Company and has full and unrestricted access to all business functions, records, properties and personnel. 98 ![]() #### Risk Management and Internal Control continued The internal control systems are designed to manage, rather than eliminate, business risk; to help safeguard the Group’s assets against fraud and other irregularities; and give reasonable, but not absolute, assurance against material financial misstatement or loss. Executive management is responsible for implementing the systems of internal control throughout the Group. The Group has an established risk management process that is reviewed regularly and covers all business units within the Group. This includes the maintenance of risk registers that detail the emerging and existing risks to the future success of the business and the relevant key controls and mitigating factors that address those risks. These are reviewed regularly. The internal audit function also monitors the approach taken by HKLH Management 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 Company’s principal risks and uncertainties are set out on pages 101 to 105. #### Risk Governance Structure HKL Board of Directors HKL Management HKL Audit Committee HKL Compliance Internal Audit (‘JM GARM’) Report Monitor/ Review Delegate/ Oversee External Audit (‘PwC’) The Group’s Management is responsible for: • Identifying and assessing principal risks and uncertainties to which it is exposed; • Implementing the most appropriate actions to mitigate and control those risks to an acceptable level; • Providing adequate resources to minimise, offset or transfer the effects of any loss that may occur while managing acceptable risk/ benefit relationships; • Monitoring the effectiveness of the systems of risk management and internal control; • Reporting periodically to the Group’s Board of Directors via Audit Committee and JM GARM on the principal risks and uncertainties; and • Working with external and internal auditors to monitor and improve its control environment. 99 ![]() #### Corporate Governance #### Risk Management Framework Risk management is integrated into each business unit’s strategic planning, budgeting, decision-making and operations. Central to this is the continuous and systematic application of: Risk Identification Risk Treatment Risk Reporting & Monitoring Risk Assessment Risk Management Framework based on ISO 31000 and COSO principles is embedded in the Group to identify, assess and define the strategies to monitor risks. The risk registers prepared by each business unit provide the basis for the aggregation process, which summarises the principal risks and uncertainties facing the Group as a whole. Risk Identification • Identify and document the Group’s exposure to uncertainty with existing strategic objectives • Adopt structured and methodical techniques to identify critical risks Risk Assessment • Evaluate risks by estimating likelihood, financial and reputational damage, and the speed at which the risk materialises, based on its inherent and residual level • Determine risk rating using the risk heatmap, with four levels of residual risk status Risk Treatment • Tolerate – accept if within the Group’s risk appetite • Terminate – dispose or avoid risks were no appetite • Risks may be accepted if mitigated to an appropriate level via: • Transfer – take out insurance or share risk through contractual arrangements with business partners; and • Treat – redesign or monitor existing controls or introduce new controls Risk Reporting & Monitoring • Periodic review of principal risks and uncertainties • Setting key risk indicators to enhance monitoring and mitigation of risks • Regular reporting of principal risks and uncertainties from business units to the Group’s Board of Directors via Audit Committee and JM GARM 100 ![]() #### Principal Risks and Uncertainties The following are the principal risks and uncertainties facing the Company as required to be disclosed pursuant to the DTRs issued by the FCA and are in addition to the matters referred to in the Chairman’s Statement, Chief Executive’s Review and other parts of this Annual 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. Mitigation Measures • Monitor the volatile macroeconomic environment and consider economic factors in strategic and financial planning processes. • Make agile adjustments to existing business plans and explore new business streams and new markets. • Review pricing strategies. Commercial 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 regarding 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 that are highly competitive, and failure to compete effectively, whether in terms of price, tender terms, product specification or levels of service, and failure to manage change in a timely manner, 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 the 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 due to 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. Mitigation Measures • Utilise market intelligence and deploy digital strategies for business-to-consumer businesses. • Establish customer relationship management programme and digital commerce capabilities. • Engage in longer-term contracts and proactively approach suppliers for contract renewals. • Re-engineer existing business processes. 101 ![]() #### Corporate Governance #### Principal Risks and Uncertainties continued Financial and Treasury Risk The Group’s activities expose it to a variety of financial risks, including market risk, credit risk and liquidity risk. The market risk the Group faces include i) foreign exchanges 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; ii) interest rate risk through the impact of rate changes on interest-bearing liabilities and assets; and iii) securities price risks as a result of its equity investments and limited partnership investment funds which are measured at fair value through profit and loss, and debt investments which are measured at fair value through other comprehensive income. The Group’s credit risk is primarily attributable to deposits with banks, contractual cash flows of debt investments carried at amortised cost and those measured at fair value through other comprehensive income, credit exposure to customers and derivative financial instruments with a positive fair value. The Group may face liquidity risk if its credit rating deteriorates or if it is unable to meet its financing commitments. Mitigation Measures • Limiting foreign exchange and interest rate risks to provide a degree of certainty about costs. • Management of the investment of the Group’s cash resources so as to minimise risk, while seeking to enhance yield. • Adopting appropriate credit guidelines to manage counterparty risk. • When economically sensible to do so, taking borrowings in local currency to hedge foreign exchange exposures on investments. • A portion of borrowings is denominated in fixed rates. Adequate headroom in committed facilities is maintained to facilitate the Group’s capacity to pursue new investment opportunities and to provide some protection against market uncertainties. • The Group’s funding arrangements are designed to keep an appropriate balance between equity and debt from banks and capital markets, both short and long term in tenor, to give flexibility to develop the business. The Company also maintains sufficient cash and marketable securities, and ensures the availability of funding from an adequate amount of committed credit facilities and the ability to close out market positions. • The Group’s treasury operations are managed as cost centres and are not permitted to undertake speculative transactions unrelated to underlying financial exposure. The detailed steps taken by the Group to manage its exposure to financial risk are set out in the Financial Review on page 17 and Note 29 to the financial statements on pages 68 to 74. Regulatory and Political Risk The Group is subject to a number of regulatory regimes in the territories 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. Mitigation Measures • Stay connected and informed of relevant new and draft regulations. • Engage external consultants and legal experts where necessary. • Raise awareness via principal’s brand conference with an annual update on new regulations that may have been implemented in other markets. 102 ![]() #### Principal Risks and Uncertainties continued Pandemic, War, Terrorism and Natural Disasters Risk A global or regional pandemic would impact the Group’s business, affecting travel patterns, demand for the Group’s products and services, and possibly the Group’s ability to operate effectively. The Group’s properties and/or project sites are also vulnerable to the effects of war and terrorism, either directly through the impact of an act of war and terrorism or indirectly through generally reduced economic activity in response to the threat of or an actual act of war and terrorism. In addition, a number of the territories in which the Group operates can experience from time-to-time natural disasters such as typhoons, floods, earthquakes and tsunamis. Mitigation Measures • Flexible work arrangements and compliance with hygiene protocols. • Supply chain stabilisation includes sourcing backup suppliers and better coordination with logistics partners. • Insurance programmes that provide robust cover for natural disasters including property damage and business interruption. Key Contracts Risk Many of the Group’s businesses and projects rely on concessions, management, outsourcing or other vital contracts. Accordingly, cancellation, expiry or termination, or the renegotiation of any such concession, management, outsourcing or other third-party key contracts could adversely affect the financial condition and results of operations of certain subsidiaries, associates and joint ventures of the Group. Mitigation Measures • Monitor materials and services providers’ performance and compliance with standards set out in contracts to ensure quality. • Engage experts to manage the key contracts. • Diversify suppliers/contractors portfolio to avoid over-reliance on specific suppliers/contractors for key operations. 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. As a result, the privacy and security of customer, tenant and corporate information are at risk of being compromised through a breach of our or our suppliers’ IT systems or the unauthorised or accidental 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. Mitigation Measures • Engage external consultants to perform assessments on the business units with industry benchmarks. • Define cybersecurity programme and centralised function to provide oversight, manage cybersecurity matters, and strengthen cyber defences and security measures. • Perform regular vulnerability assessment and/or penetration testing to identify weaknesses. • Maintain disaster recovery plans and backup for data restoration. • Arrange regular security awareness training at least annually and phishing testing to raise users’ cybersecurity awareness. 103 ![]() #### Corporate Governance #### Principal Risks and Uncertainties continued Governance and Misconduct Risk Effective management of the Group’s risks depends on the existence of an appropriate governance structure, tone from top leadership, and functioning system of internal controls. Ethical breaches, management override of controls, employee fraud and misconduct, or other deficiencies in governance and three lines of internal controls may result in financial loss and reputational damage for the Group. Inadequate capability and diversity in management or the board may also lead to sub-optimal deliberations and decisions. The Group holds minority stakes in various companies. Lack of control or significant influence over these companies may lead to losses on the Group’s investment if the companies are mismanaged. Mitigation Measures • Established Groupwide mandatory code of conduct that applies to all Group businesses and new joiners. • Maintain a robust Corporate Governance Framework which includes a whistleblowing channel. • Compliance department reviews internal controls. • Maintain functionally independent internal audit function that reports to the Group Audit Committee on risk management, the control environment and significant non-compliance matters. • Maintain Crime and General Liability insurance policies with adequate coverage. Health and Safety Risk The Group’s businesses engage in construction, renovation or other physical activities that may lead to serious injury or fatal incidents if work conditions are unsafe or workers do not take due care to observe safety procedures. Mitigation Measures • Establish safe working environments and regular safety training for all employees and subcontractors. • Establish contractual requirements for contractors to comply with high expected levels of safety standards. • Incorporate site safety plans in tenders and contracts. • Conduct occupational health and safety awareness campaigns. • Purchase sufficient insurance coverage including employee compensation and construction of all risks. • Establish proper contractor selection process. • Ensure contractors follow the Group’s guidelines, requirements and local regulations. • Conduct regular audits on operating buildings and construction sites. • Conduct periodic drills and crisis management procedures for safety incidents. People Risk The competitiveness of the Group’s businesses depends on the quality of the people that it attracts and retains. Unavailability of needed human resources may impact the ability of the Group’s businesses to operate at capacity, implement initiatives and pursue opportunities. The pandemic has accelerated corporate investments in digital projects and stimulated global consumer demand for e-commerce. This has created heightened demand and competition across industries for various skillsets, particularly in IT and logistics. Pandemic-related travel restrictions and a more stringent approach to issuing work visas to non-locals in some of the key markets have also disrupted the availability of labour across borders, exacerbating labour shortages as economies rebound. Mitigation Measures • Ensure proactive manpower planning and succession planning are in place. • Enhance modern employer branding, training for staff members, compensation and benefits, and talent development plan. • Implement strategy to promote diversity and inclusion across the Group. • Provide employee retention programmes. • Establish employee assistance programmes. 104 ![]() #### Principal Risks and Uncertainties continued Investment, Strategic Transactions and Partnerships Risk Competition for attractive investment opportunities has increased with the rise of global investment funds and deep pools of low-cost capital, supporting a greater appetite by investors across sectors for strategic transactions and partnerships to optimise the business portfolio and enhance growth. As the Group’s businesses pursue projects and investments against keen competitors, they face pressure on the terms they are willing to secure and accept prized assets and relationships. In addition, conflicts with strategic partners may arise due to various reasons such as different corporate cultures and management styles. Mitigation Measures • Conduct sufficient research, due diligence and evaluation of investment opportunities and potential business partners. • Develop clear frameworks and levels of authority for investment or partnership decisions. • Regular performance monitoring and strategic reviews of new businesses and projects. Environmental and Climate Risk Global climate change has led to a trend of increased frequency and intensity of potentially damaging natural events for the Group’s assets and operations. With interest in sustainability surging in recent years from investors, governments and other interested parties, expectations by regulators and other stakeholders for accurate corporate sustainability reporting and commitments towards carbon neutrality and other sustainability-related goals are also growing. This brings increasing challenges to the Group and its businesses to meet key stakeholders’ expectations. Mitigation Measures In addition to being addressed under the Group’s Risk Management Framework and processes, mitigation measures are reviewed and approved by the Group’s Sustainability Committee as part of a broader sustainability framework already in place to execute on initiatives over the long term. Mitigation measures in respect of environmental and climate risks: • A commitment to the Science Based Targets initiative’s campaign to set decarbonisation targets in line with climate science, to meet the goals of the Paris Agreement, aimed at limiting global warming to 1.5°C. • Perform and update climate risk assessments and adaptation action plans based on the recommendations of the Task Force on Climate-related Financial Disclosures, including implementing measures to address physical risks posed by climate change and identifying opportunities in the global transition to a low-carbon economy. • Consistent retrofitting of existing assets, as well as identification and deployment of emerging PropTech solutions to drive energy efficiency. • Increase the procurement of renewable energy, including expanding onsite renewable energy generation capacity, to reduce emissions. • Continue implementing the Group’s robust and long-standing green building certification programme to minimise environmental impact of existing assets. • Establish performance-based targets on embodied carbon emissions targeting concrete, rebar and structural steel used for new developments. • Support the financial sector’s green transition via increased participation in the sustainable financing markets. • Test and audit periodically the Group’s Business Continuity Plans. • Assess emerging ESG reporting standards and requirements, and align the Group’s disclosures to best market practice. #### Effectiveness Review of Risk Management and Internal Control Systems The effectiveness of the Company’s risk management and internal control systems is monitored by the internal audit function, which reports functionally to the Audit Committee. The findings of the internal audit function and recommendations for any corrective action required are reported to the Audit Committee and, if appropriate, to the Jardine Matheson audit committee. 105 ![]() ### Shareholder Information #### Financial Calendar 2022 full-year results announced 2nd March 2023 Shares quoted ex-dividend 16th March 2023 Share registers closed 20th to 24th March 2023 Annual General Meeting to be held 4th May 2023 2022 final dividend payable 10th May 2023 2023 half-year results to be announced 28th July 2023\* Shares quoted ex-dividend 17th August 2023\* Share registers to be closed 21st to 25th August 2023\* 2023 interim dividend payable 11th October 2023\* \* Subject to change #### Dividends 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 2022 final dividend by notifying the United Kingdom transfer agent in writing by 21st April 2023. The Sterling equivalent of dividends declared in United States Dollars will be calculated by reference to a rate prevailing on 26th April 2023. Shareholders holding their shares through CREST in the United Kingdom will receive their cash dividends in Sterling only as calculated above. 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’) Those shareholders who are on CDP’s DCS 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 Those shareholders who are not on CDP’s DCS 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, 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. 106 ![]() #### Hongkong Land Holdings Limited Jardine House 33-35 Reid Street Hamilton HM 12 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 11/F, Office Tower Three Beijing APM No. 138 Wangfujing Street Dongcheng District Beijing 100006 China Tel +86 10 6520 4800 E-mail: gpobox.bj@hkland.com Zhou Peng #### 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. 16/F, Building B, The Ring Centre No. 118 Hucai Road Liangjiang New Area District Chongqing 401122 China Tel +86 23 6136 7777 E-mail: gpobox.cq@hkland.com Ling Chang Feng ### Offices #### 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 Huang Lei #### 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 107 ![]() #### Hongkong Land (Shanghai) #### Management Company Limited No. 2599 Longteng Avenue Xuhui District Shanghai 200232 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 4/F, Building No. 5 Wuhan Dream Land Jinyintan Avenue, Dong Xi Hu District Wuhan 430048 Hubei Province China Tel +86 27 8289 6866 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 E-mail: gpobox.thailand@hkland.com William Bright #### 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 Rick Hwang #### MCL Land Limited One Raffles Quay #22-10 South Tower Singapore 048583 Tel +65 6238 1121 E-mail: gpobox.mcl@hkland.com Robert Garman #### PT Hongkong Land Consultancy #### and Management Menara Astra, 39th Floor, Suite B2 Jl. Jend. Sudirman Kav. 5-6 Jakarta 10220 Indonesia Tel +62 21 5088 9822 E-mail: gpobox.indonesia@hkland.com Francis Yee #### Offices 108 ![]() ### 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 2022, totalled US$28,041,700,000 (United States Dollars Twenty-Eight Billion Forty-One Million and Seven 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, 23rd January 2023 109 ![]() ### Major Property Portfolio at 31st December 2022 Operational Investment Properties Attributable interest Location Lettable area of the property Total Office Retail % (in thousands of square metres) Alexandra House 100 Hong Kong 35 30 5 Chater House 100 Hong Kong 43 39 4 Exchange Square 100 139 One Exchange Square Hong Kong 53 – Two Exchange Square Hong Kong 47 – Three Exchange Square Hong Kong 30 – Podium Hong Kong – 5 The Forum Hong Kong 4 – Jardine House 100 Hong Kong 63 59 4 Gloucester Tower 100 Hong Kong 42 42 – Landmark Atrium 100 Hong Kong 25 – 25 Edinburgh Tower 100 Hong Kong 44 31 13 York House 100 Hong Kong 10 10 – Prince’s Building 100 Hong Kong 52 38 14 WF CENTRAL 84 Beijing 42 – 42 ONE CENTRAL 49 Macau 18 – 18 One Raffles Link 100 Singapore 29 23 6 One Raffles Quay 33 123 North Tower Singapore 71 – South Tower Singapore 52 – Marina Bay Financial Centre 33 284 Tower 1 Singapore 56 3 Tower 2 Singapore 95 6 Tower 3 Singapore 116 8 World Trade Centre 1 50 Jakarta 40 36 4 World Trade Centre 2 50 Jakarta 60 56 4 World Trade Centre 3 50 Jakarta 70 67 3 World Trade Centre 5 50 Jakarta 15 14 1 World Trade Centre 6 50 Jakarta 19 17 2 EXCHANGE SQUARE 100 Phnom Penh 26 17 9 Gaysorn 49 Bangkok 17 5 12 63 Ly Thai To 74 Hanoi 7 6 1 110 ![]() Developable area of the property Development Properties Attributable interest Location Total Construction completed Under construction/ to be developed % (in thousands of square metres) Artistic Bay 100 Chengdu 99 – 99 Creative Land 100 Chengdu 84 – 84 Natural Jewel 50 Chengdu 107 – 107 WE City 100 Chengdu 921 707 214 Beryl Grove 100 Chongqing 133 129 4 Central Avenue 50 Chongqing 1,118 865 253 Century Land 100 Chongqing 208 – 208 Eternal Land 50 Chongqing 276 – 276 Harbour Tale 50 Chongqing 114 114 - Landmark Riverside 50 Chongqing 1,252 927 325 Re City 50 Chongqing 748 – 748 River One 100 Chongqing 161 161 – Scholar’s Mansion 50 Chongqing 318 286 32 Yorkville North 100 Chongqing 1,116 1,116 – Hangzhou Bay 30 Hangzhou 788 304 484 Grand Mansion 100 Nanjing 93 – 93 JL CENTRAL 50 Nanjing 252 – 252 Yue City 33 Nanjing 265 54 211 Galaxy Midtown 27 Shanghai 392 74 318 West Bund 43 Shanghai 285 – 285 Xuhui Xietu Project 34 Shanghai 55 – 55 Dream Land 50 Wuhan 493 295 198 Lakeward Mansion 66 Wuhan 226 – 226 Origin Land 100 Wuhan 212 – 212 Peak View 50 Wuhan 68 – 68 Copen Grand 50 Singapore 68 – 68 Leedon Green 50 Singapore 54 – 54 Piccadilly Grand 50 Singapore 39 – 39 Tembusu Grand 49 Singapore 60 – 60 Arumaya 40 Jakarta 24 – 24 Asya 50 Jakarta 481 86 395 Avania 50 Jakarta 120 – 120 Nava Park 49 Jakarta 484 192 292 Project Lazuli 50 Jakarta 315 – 315 Lake Legend Bangna-Suvarnabhumi 49 Bangkok 179 10 169 Nonthaburi 49 Bangkok 230 23 207 111 ![]() #### Major Property Portfolio 9 7 12 11 9 a 1 0 8 6 1 2 3 4 5 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 9 a The Landmark Mandarin Oriental 10 York House 1 1 Landmark Atrium 12 Prince’s Building #### Hong Kong – Central District Mass Transit Railway access Public car park Hongkong Land properties Pedestrian bridges C H AT E R R O A D 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 S T R E E T Q U E E N ’ S R O A D C E N T R A L I C E H O U S E S T R E E T P E D D E R S T R E E T M A N Y I U S T R E E T L U N G W O R O A D M A N C H E U N G S T R E E T H A R B O U R V I E W S T R E E T J A C K S O N R O A D C O N N A U G H T R O A D C E N T R A L C O N N A U G H T R O A D C E N T R A L Q U E E N ’ S R O A D C E N T R A L DES V O E UX R O A D CE N T R AL Stock Exchange 10 11 9 9a 7 6 1 2 4 3 5 12 8 Statue Square Mandarin Oriental Statue Square General Post Office HSBC Standard Chartered Bank Bank of China Airport Express Station #### Beijing, ChinaMacau, China WF CENTRAL | Mandarin Oriental Wangfujing, Beijing ONE CENTRAL CBD Z 3 Project \*  112 ![]() Yorkville North | The Ring, Chongqing  Landmark Riverside  #### Chongqing, China Harbour Tale Scholar’s Mansion \* Eternal Land | Chongqing CENTRAL Project \* Re City \* Century Land | The Ring, Century Land Project \*  Beryl Grove \* Hillview \* This rendering is for illustration and reference only, subject to change and government approval. Residential  Office Retail Hotel Development PropertiesInvestment Properties #### Chengdu, China WE City | The Ring, Chengdu \*  Artisan Bay \* Artistic Bay \* Natural Jewel \* Creative Land \* Central Avenue | The Ring, Central Avenue Project Yorkville South River One The Pinnacle ![]() #### IndonesiaShanghai, ChinaNanjing, ChinaWuhan, China Parkville | LCM  Yue City | The Ring, Nanjing Project \* JL CENTRAL \*  Anandamaya Residences Avania \* River and City World Trade Centre  Nava Park Arumaya \* Asya \* Grand Mansion \* #### Suzhou, China Hudong CENTRAL Project #### Hangzhou, China The Riverside Hangzhou Bay | The Ring, Hangzhou Project  Century Origin \* Galaxy Midtown | The Ring Live \*  Irvine Bay West Bund Financial Hub \*  Wuhan Dream Land | The Ring, Wuhan \*  Lakeward Mansion \* Peak View \* Origin Land \* This rendering is for illustration and reference only, subject to change and government approval. Residential  Office Retail Hotel Development PropertiesInvestment Properties ![]() #### PhilippinesMalaysia CambodiaThailand #### SingaporeVietnam Marina Bay Financial Centre  One Raffles Quay  One Raffles Link | CityLink Mall  Leedon Green \* Parc Esta \* Piccadilly Grand \* Copen Grand \* Tembusu Grand \* 6 3 Ly Thai To  The Marq Central Mansions British Embassy Site  EXCHANGE SQUARE  3 1 3 QUAYSIDE Gaysorn Lake Legend Chaengwattana Lake Legend Bangna-Suvarnabhumi \* Wireless Road Project \* Mandani Bay \*  The Quinn \* Roxas Triangle Towers The Velaris Residences \* Wangsa Walk Mall ![]() #### Hongkong Land Holdings Limited #### Jardine House Hamilton Bermuda www.hkland.com