Wharf Real Estate Investment Company (1997) investor relations material

Executive summary

• Underlying net profit rose 6% year-over-year, driven by lower borrowing costs and prudent debt management, reaching HK$3,311 million.

• Interim dividend per share increased by 42% to HK$0.94, reflecting a revised payout ratio from 65% to 90% of recurrent core earnings.

• Net cash inflow before financing surged 41% to HK$1.4 billion.

• The group agreed to dispose of Wheelock Place in Singapore at a 12% premium to book value, expecting a gain of HK$1 billion and net proceeds of HK$6.7 billion, with completion targeted for late August 2026.

• Group loss attributable to equity shareholders narrowed due to a lower non-cash, unrealized investment property revaluation deficit.

Financial highlights

• Group revenue for 1H26 was HK$6.3 billion, down 1% year-over-year; operating profit fell 2% to HK$4,604 million.

• Recurring core underlying net profit increased by 3% year-over-year to HK$3.2 billion.

• Hotel revenue increased by 10% and operating profit surged 94% year-over-year.

• Finance costs dropped 37% to HK$535 million, with effective borrowing rate down to 3.5%.

• Net debt decreased by HK$2.8 billion to HK$29.2 billion; gearing ratio improved to 15.9%.

Outlook and guidance

• Gradual and uneven growth expected, supported by inbound tourism and a stabilizing residential property market.

• Management remains optimistic about beating last year's retail sales, despite a slowdown in June and a higher base from May last year.

• Interest rate uncertainties and China's outbound investment rules may impact tenant commitments.

• The dividend payout policy will be reviewed regularly, with reductions only considered for strong reasons or major capital needs.

• No major CapEx is planned at the REIC level; cash flow is expected to remain well managed.