Wharf Real Estate Investment Company (1997) investor relations material

Executive summary

• Underlying net profit remained stable at HK$3,119 million, with underlying EPS at HK$1.03, unchanged year-over-year, while core underlying net profit from Hong Kong investment properties and hotels rose 3%.

• Group reported a loss attributable to equity shareholders of HK$2,406 million, mainly due to a larger unrealised investment property revaluation deficit of HK$5,118 million.

• Interim dividend per share increased by 3% to HK$0.66, maintaining a payout ratio of 65% of core underlying net profit.

• Net debt reduced to HK$33.3 billion, the lowest since listing, with gearing at a record low of 17.6%.

• Deleveraging efforts and lower borrowing costs supported financial stability despite weak market conditions.

Financial highlights

• Group revenue decreased by 1% to HK$6,407 million; operating profit fell 4–5% to HK$4,684 million year-over-year.

• Investment property revenue dropped 3% to HK$5,371 million; hotel revenue rose 2% to HK$766 million, with hotel operating profit nearly doubling to HK$47 million.

• Borrowing costs dropped by 27% year-over-year, with an effective rate of 4.4%.

• Net debt reduced by 36% from the 2020 peak, now at HK$33.3 billion.

• Shareholders’ equity at HK$185.2 billion, or HK$61.01 per share.

Outlook and guidance

• Hong Kong’s stock market shows renewed momentum, supported by capital inflows and a robust events calendar.

• The group will maintain proactive management, low leverage, and selective capital investment to navigate macroeconomic headwinds.

• No quick turnaround expected in the second half; retail rental likely to remain soft.

• Macro environment, interest rate trajectory, and currency movement are critical factors for future performance.

• Retail market in Hong Kong is in a base-building phase, with sales at 2011 levels and Harbour City retail revenue at 2014 levels.