SINGAPORE (Mar 5): Property group Hongkong Land, a member of the Jardine Group of companies, reported earnings of US$198.0 million ($274 million) for FY2019 ended December, down from earnings of US$2.48 billion a year ago. 

This was due to the group booking losses of US$878.4 million, resulting primarily from lower valuations of the group’s investment properties, compared to net gains from revaluations amounting to US$1.42 billion in FY2018.

In addition, the group booked a net loss in fair value of investment properties of associates and joint ventures of US$32.6 million in FY2019, compared to gains of US$188.6 million a year ago.

Stripping off net non-trading items, underlying earnings for FY2019 would have been a record high of US$1.08 billion, a 4% increase from underlying earnings of US$1.04 billion a year ago.

Revenue for the year fell 13% to US$2.32 billion, from US$2.67 billion a year ago, due to US$364.8 million decline in revenue from sale of properties. 

Rental income and service income for the year inched up by 1.6% and 2.0% respectively from the previous year. 

The group’s net operating costs for the year fell 28.4% to US$1.1 billion from $1.6 billion in FY2018. Notably, cost of sales fell to US$989.6 million from US$1.4 billion a year ago. This, however, was partially offset by a 6.5% increase in administrative expenses to US$185.6 million, as well as an increase in gain on disposal and fair value investments to US$34.4 million. 

Consequently, the group’s operating profit fell to US$350.6 million from US$2.3 billion in FY2018. 

The group had a net debt position of US$3.6 billion as at end-December with a net gearing of 9%, both of which were relatively unchanged from FY2018. However, the group expects net debt to increase in FY2020 amid payments for land purchases to which it has already committed. 

As at December 31, 2019, cash and cash equivalents stood at US$1.4 billion. 

Earnings per share came in at 8.48 US cents for FY2019, dropping from 104.92 US cents in FY2018.

The group’s net asset value per share remained fairly stable at was US$16.39, compared with US$16.43 at the end of 2018. 

The board of directors are proposing a final dividend of 16 US cents per share. This brings total dividend for FY2019 to 22 US cents per share, unchanged from FY2018. 

In its outlook statement, the group expects its FY2020 results to be adversely affected by the Covid-19 outbreak, with the performances of its development properties in the Chinese mainland and retail properties expected to bear the brunt of this. 

“The extent of the impact will be dependent on the duration and geographic extent of the outbreak. Stable contributions are expected from the group’s other businesses, although there are expected to be higher financing costs,” says Hongkong Land. 

Shares in Hongkong Land closed 6 US cents higher, or 1.2% up, at US$5.05 on Thursday prior to the results announcement.