Wharf Real Estate Investment Company (1997) investor relations material

Executive summary

• Underlying net profit rose 5% year-over-year to HK$6,456 million (HK$2.13 per share), supported by interest cost savings and deleveraging, despite market challenges and a HK$10,528 million investment property revaluation deficit.

• Group reported a loss attributable to equity shareholders of HK$4,257 million due to the revaluation deficit, compared to a profit last year.

• Dividend per share increased 6% to HK$1.32, with a 10% rise in the second half to HK$0.66.

• Net debt reduced to HK$32 billion, with gearing at a record low of 17.2%.

• Profitability was dampened by global risks, local oversupply, and market volatility.

Financial highlights

• Group revenue decreased by 1% year-over-year to HK$12,815 million; operating profit fell 4% to HK$9,349 million.

• Net asset value per share at year-end was HK$59.85, a 3% decrease year-over-year.

• Interest costs declined by HK$662 million (25%), reducing average interest rates by 1.5 percentage points to 4.1%.

• Interest cover remains strong at 6.7x, affirmed by Moody's A2 rating with stable outlook.

• Investment properties revenue dropped 1% to HK$10,653 million; hotel revenue increased 6% to HK$1,631 million.

Outlook and guidance

• The business environment remains volatile due to geopolitical tensions, global disruptions, and evolving consumer markets.

• Hong Kong's recovery is progressing gently, with mixed outlook due to global risks and local sector challenges.

• Office sector faces near-term challenges from new supply, impacting occupancy and rental rates.

• The group will maintain low leverage and financial flexibility to navigate ongoing headwinds.

• Potential benefits expected from U.S. interest rate cuts and a strong event pipeline in retail and hospitality.