[Executive Summary](index=3&type=section&id=I.%20Executive%20Summary) The Group's profit attributable to shareholders and underlying net profit declined in H1 2019 due to trade tensions, economic slowdown, and currency fluctuations [Group Performance Overview](index=3&type=section&id=I.A.%20Group%20Performance%20Overview) Wharf Holdings Limited's profit attributable to shareholders decreased by 14% to HKD 2.45 billion, with underlying net profit down 12% to HKD 2.236 billion, primarily due to adverse factors such as US-China trade friction, Hong Kong's economic slowdown, and RMB exchange rate fluctuations, leading to an uncertain full-year outlook - Mainland China assets exceeded **RMB 100 billion**, accounting for over **70% of the Group's total assets** and contributing approximately **80% to the Group's profit**[5](index=5&type=chunk) - Unpredictable US-China trade friction has a profound impact on both economies and Hong Kong's economy[5](index=5&type=chunk) - In Hong Kong, travel warnings, economic slowdown, shrinking exports and re-exports, declining retail sales, stock market volatility, and employment concerns further dampened already weak demand[5](index=5&type=chunk) Group Profit Performance H1 2019 | Metric | H1 2019 (HKD million) | H1 2018 (HKD million) | Change (%) | | :--- | :--- | :--- | :--- | | Underlying Net Profit | 2,236 | 2,527 | -12% | | Profit Attributable to Shareholders | 2,450 | 2,860 | -14% | - The first interim dividend was **HKD 0.25 per share**, consistent with the prior year, totaling **HKD 762 million**[7](index=7&type=chunk) [Business Review](index=4&type=section&id=II.%20Business%20Review) [Overall Business Composition](index=4&type=section&id=II.A.%20Overall%20Business%20Composition) The Group's business primarily focuses on property-related sectors, including investment properties, hotels, and development properties in Hong Kong and Mainland China, with property businesses contributing 67% of revenue and 84% of underlying net profit during the period, alongside logistics operations - Property businesses contributed **67% of the Group's revenue** and **84% of the Group's underlying net profit**[8](index=8&type=chunk) - The investment property portfolio forms a recurring income base, while the development property portfolio drives asset turnover[8](index=8&type=chunk) - Other businesses include Modern Terminals and Hong Kong Air Cargo Terminals, which operate logistics businesses[8](index=8&type=chunk) [Hong Kong Properties](index=4&type=section&id=II.B.%20Hong%20Kong%20Properties) Hong Kong development properties primarily rely on the Mount Nicholson project, which contributed HKD 3.6 billion in contracted sales in H1 2019, with other redevelopment and development projects in Kowloon Tong and Kowloon East addressing luxury residential and core business district expansion needs - The Mount Nicholson project is the primary source of **contracted sales for Hong Kong development properties**[9](index=9&type=chunk) - Demand for luxury homes remains stable, differing from mass-market sales cycles[9](index=9&type=chunk) [Peak Property Portfolio](index=4&type=section&id=II.B.1.%20Peak%20Property%20Portfolio) Mount Nicholson, a joint venture development, recorded contracted sales of four houses and two apartment units totaling HKD 3.6 billion in H1, with an average selling price of HKD 94,000 per sq ft, while other Peak projects are under redevelopment Mount Nicholson H1 2019 Sales Data | Metric | Data | | :--- | :--- | | Contracted Sales Units | 4 houses and 2 apartment units | | Total Sales Value | HKD 3.6 billion | | Average Selling Price | HKD 94,000 per sq ft | - Superstructure works for 11 Plantation Road and 77 Peak Road redevelopment projects are complete, providing a total of **15 houses**[10](index=10&type=chunk) [Kowloon Tong Residential Project](index=4&type=section&id=II.B.2.%20Kowloon%20Tong%20Residential%20Project) Located at a prime junction of Lion Rock Tunnel Road and Lung Cheung Road, adjacent to the Beacon Hill luxury residential area, this project has a total developable gross floor area of 436,000 sq ft and has been approved for four 13-story residential towers, with foundation work currently underway - The project is located at the junction of Lion Rock Tunnel Road and Lung Cheung Road, adjacent to the traditional luxury residential area of Beacon Hill[11](index=11&type=chunk) - It has a total developable gross floor area of **436,000 sq ft**, approved for four 13-story residential towers, with foundation work currently in progress[11](index=11&type=chunk) [Kowloon East Projects](index=4&type=section&id=II.B.3.%20Kowloon%20East%20Projects) Driven by the government's "Energizing Kowloon East" initiative, the Group's Kowloon East projects, including Kowloon Godown and the Yau Tong Bay waterfront joint venture, will benefit from the area's transformation into a core business district, with Kowloon Godown having multiple redevelopment options and Yau Tong Bay providing over 6,300 residential units - Kowloon East projects will benefit from the government's "Energizing Kowloon East" initiative, aiming to create another core business district in Hong Kong[12](index=12&type=chunk) - Kowloon Godown has multiple redevelopment options, currently under study[13](index=13&type=chunk) - The Yau Tong Bay residential project has a total gross floor area of **4 million sq ft**, will provide over **6,300 residential units**, and its overall building plans have been approved[13](index=13&type=chunk) [Mainland China Development Properties](index=5&type=section&id=II.C.%20Mainland%20China%20Development%20Properties) Mainland China development property revenue recognized decreased by 10% to HKD 5.232 billion in H1, with operating profit down 1% to HKD 1.828 billion, but operating profit margin improved by 3 percentage points to 35%; contracted sales decreased by 10% to RMB 6.5 billion, mainly from Hangzhou, Beijing, Shanghai, and Suzhou, and the Group remains cautious about future project profitability, having acquired no new land parcels in the past year - Basic demand for quality properties in Mainland China's tier-one cities remains solid, but government controls on new residential sales prices impact future project profitability[14](index=14&type=chunk) - The Group remains cautious, having acquired no new land parcels in the past year[14](index=14&type=chunk) Mainland China Development Properties H1 2019 Performance | Metric | H1 2019 | H1 2018 | Change (%) | | :--- | :--- | :--- | :--- | | Recognized Revenue | HKD 5.232 billion | HKD 5.792 billion | -10% | | Operating Profit | HKD 1.828 billion | HKD 1.838 billion | -1% | | Operating Profit Margin | 35% | 32% | +3 percentage points | | Contracted Sales | RMB 6.5 billion | RMB 7.24 billion | -10% | | Unrecognized Sales | RMB 23.5 billion | RMB 21.766 billion | +8% | | Land Bank | 3.6 million sq m | - | - | [Mainland China Investment Properties](index=5&type=section&id=II.D.%20Mainland%20China%20Investment%20Properties) Mainland China investment property revenue grew 22% to HKD 1.958 billion, and operating profit increased 30% to HKD 1.162 billion, primarily driven by the opening of Changsha IFS; however, most cities may face an oversupply of office space in the coming years Mainland China Investment Properties H1 2019 Performance | Metric | H1 2019 (HKD) | Change (%) | | :--- | :--- | :--- | | Revenue | 1.958 billion | +22% | | Operating Profit | 1.162 billion | +30% | - An oversupply of office space in most cities may intensify in the coming years[15](index=15&type=chunk) [Changsha IFS](index=5&type=section&id=II.D.1.%20Changsha%20IFS) Changsha IFS has rapidly become a new landmark in Central China, with overall revenue of HKD 378 million and operating profit of HKD 130 million in H1; the mall achieved 98% occupancy and 97% opening rate, with tenant sales reaching RMB 2.138 billion, and has received multiple international awards - Changsha IFS has rapidly emerged as a new landmark in Central China, integrating entertainment, fashion, shopping, culture, and dining[16](index=16&type=chunk) Changsha IFS H1 2019 Performance | Metric | Amount (HKD) | | :--- | :--- | | Overall Revenue | 378 million | | Operating Profit | 130 million | [Mall](index=5&type=section&id=II.D.1.a.%20Mall) Changsha IFS Mall, covering 246,000 sq m, achieved 98% occupancy and 97% opening rate, with H1 tenant sales reaching RMB 2.138 billion, and has received multiple international awards including "RLI International Shopping Centre 2019" - The mall received multiple international awards, including "RLI International Shopping Centre 2019", solidifying its status as a retail hotspot[17](index=17&type=chunk) - The tenant mix includes over **70 brands** making their debut in Hunan Province, with an occupancy rate of **98%** and an opening rate of **97%**[18](index=18&type=chunk) - Tenant sales maintained strong momentum in H1 2019, reaching **RMB 2.138 billion**[18](index=18&type=chunk) [Offices & Hotel](index=6&type=section&id=II.D.1.b.%20Offices%20%26%20Hotel) Changsha IFS features premium offices and a hotel in its two towers, with Tower 1 being the tallest building in Hunan Province

Land and Property Development - The group maintains a land reserve of 3.7 million square meters for its mainland development properties, focusing on first and second-tier cities[2] - The group’s land reserve for Hong Kong properties is approximately 3 million square feet, with a focus on luxury residential developments in Kowloon Tong[2] - The group has a total land reserve of 3.7 million square feet, with significant projects in Kowloon East and various residential developments[62] - The current land bank includes 3 million square feet in Hong Kong and 3.7 million square meters in mainland China[173] - The group has acquired 12 land parcels in Suzhou, Hangzhou, Foshan, and Guangzhou, with a total consideration of RMB 18.1 billion, covering a total floor area of 810,000 square meters[63] Financial Performance - Adjusted net profit decreased by 11% to HKD 6.51 billion, while total assets amounted to HKD 227.3 billion, and the asset-to-liability ratio stood at 18.5%[30] - The group's total assets (excluding cash) reached HKD 210 billion, with real estate, logistics, CME2, and other assets accounting for 80%, 8%, 8%, and 4% respectively[25] - The group's revenue for 2018 was HKD 21,055 million, a decrease of 13% compared to HKD 24,321 million in 2017[34] - Operating profit fell to HKD 8,752 million, down 36% from HKD 6,458 million in the previous year[34] - Shareholders' profit attributable to the company dropped by 50% to HKD 6,623 million, compared to HKD 13,119 million in 2017[34] - The total assets of the group increased by 2% to HKD 227,349 million from HKD 222,647 million in 2017[34] - The total equity decreased by 5% to HKD 138,760 million from HKD 145,471 million in 2017[34] - The group's revenue decreased by 13% to HKD 21.055 billion, compared to HKD 24.321 billion in 2017, reflecting a 28% increase in investment property income and a 24% decline in development property income[140] Investment Properties - The group’s investment properties in mainland China are primarily located in key cities such as Changsha, Chengdu, Chongqing, Suzhou, and Wuxi, with the Changsha International Financial Center and Chengdu International Financial Center being comparable in scale and importance to Hong Kong's Harbour City[2] - The fair value of the investment property portfolio was HKD 74.7 billion as of December 31, 2018, down from HKD 82.1 billion in 2017, with revaluation gains netting HKD 4.465 billion[142] - Investment property income rose by 28% to HKD 3.586 billion, with operating profit increasing by 26% to HKD 1.984 billion, benefiting from contributions from Chengdu International Financial Center and the newly opened Changsha International Finance Center[140] Hotel Operations - The hotel network managed by the group has expanded to 17 hotels, including 4 modern Niccolo hotels and 13 Marco Polo hotels, with a new Niccolo hotel in Suzhou expected to open in 2020[3] - The average revenue per available room (RevPAR) for the Chengdu Niccolo Hotel increased by 28% with an occupancy rate of 85%[84] - Kowloon Warehouse Group operates 17 hotels in the Asia-Pacific region, totaling 5,750 rooms, with hotel revenue increasing by 22% year-on-year[102] - The company’s hotel, The Murray, Hong Kong, was recognized as one of the World's Greatest Places 2018 by Time Magazine[122] Logistics Operations - The group’s logistics operations are supported by modern container terminals and air cargo stations, which are crucial for maintaining Hong Kong's status as an international trade and transport hub[3] - The logistics operations continue to be a leading global player, although the port business performance is slowing down due to competition[28] - Modern Container Terminal's revenue decreased by 4% to HKD 2.616 billion, with operating profit declining by 9% to HKD 597 million[111] - The throughput at Modern Container Terminal in Hong Kong grew moderately by 2% to 530,000 TEUs, while Shenzhen's throughput decreased by 7%[112] Community and Corporate Social Responsibility - The group actively supports various community initiatives, promoting the concept of "corporate social responsibility" through projects like the "School Activation" program[3] - The company supported 76 secondary schools through its "School Activation" initiative, benefiting over 66,000 students[131] - The company has implemented a clear corporate social responsibility governance framework to manage environmental, social, and governance issues[129] Awards and Recognition - The group received multiple awards in 2018, including recognition in the top 100 commercial real estate performance awards in China[3] - Kowloon Warehouse Group was ranked fourth in the 2018 China Commercial Real Estate TOP100 by the media outlet "Guandian" and received the Annual Responsibility Brand Award at the 7th China Public Welfare Festival[117] - The company received the International Real Estate Award for Comprehensive Development Project from Forbes[120] Strategic Investments and Future Plans - The group’s long-term strategic investment in CME2 aims to reinvest capital and profits released from CME1 into larger market opportunities[3] - The group is exploring investment opportunities in emerging economies to enhance asset performance and generate direct returns[175] - Future capital commitments are estimated at HKD 27.182 billion, with HKD 13.804 billion already committed as of December 31, 2018[168] Corporate Governance - The board is committed to maintaining high corporate governance standards, ensuring accountability and sustainable development[176] - The board consists of ten members, equally divided between executive and independent non-executive directors, promoting diversity in skills and experience[181] - The company has adopted a formal nomination policy since January 2019 to ensure a balanced skill set and diversity among board members[186]