WHARF REIC(01997)2023-04-03 09:17Financial Performance - Group revenue decreased by 22% to HKD 12.459 billion (2021: HKD 16.043 billion) primarily due to the phased withdrawal from non-core property development [12]. - Basic net profit fell by 5% to HKD 6.175 billion (2021: HKD 6.518 billion), while the loss attributable to shareholders was HKD 8.856 billion (2021: profit of HKD 4.391 billion) reflecting a 302% decline [12]. - Total revenue for the year 2022 increased by 2% to HKD 8,175 million, with operating profit rising by 7% to HKD 6,345 million [18]. - Total revenue for 2022 was HKD 12,459 million, a decrease of 22.4% from HKD 16,043 million in 2021 [188]. - Operating profit for 2022 was HKD 8,841 million, down 2.5% from HKD 9,064 million in 2021 [188]. - The company reported a net loss of HKD 8,943 million for 2022, compared to a profit of HKD 4,439 million in 2021 [188]. - The fair value of investment properties decreased by HKD 14,913 million in 2022, compared to a decrease of HKD 2,203 million in 2021 [188]. - Total assets as of December 31, 2022, were HKD 255,249 million, down from HKD 272,268 million in 2021 [191]. - The company reported a total comprehensive income of HKD 5,684 million for 2021, which decreased to a loss of HKD 11,674 million in 2022, reflecting a significant decline in performance [192]. Market Conditions - In 2022, the retail sales in Hong Kong recorded a moderate year-on-year decline of 0.8%, primarily due to fewer tourists and contributions from the local market [7]. - The overall market environment remains challenging, with increased competition and cautious tenant behavior impacting leasing decisions [30]. - The group continues to face challenges from external uncertainties, including inflation and geopolitical tensions, impacting consumer behavior and asset prices [7]. - The hotel sector is preparing for the return of travelers, although facing challenges related to labor shortages [14]. - The outlook for 2023 anticipates gradual recovery in the retail and hotel sectors as travel resumes, despite initial challenges such as limited flight availability and labor shortages [11]. Corporate Governance - The group maintains a robust governance structure to address environmental, social, and governance challenges, led by a dedicated sustainability steering committee [52]. - The company has implemented a zero-tolerance policy towards corruption and strictly adheres to anti-corruption laws and regulations [52]. - The board consists of 12 members, with 4 executive directors and 8 independent non-executive directors, enhancing overall independence and diversity [86]. - The company has adopted a board diversity policy, recognizing the benefits of a diverse board for enhancing overall performance [86]. - The company has established a set of securities trading codes that exceed the standards set by the Listing Rules, ensuring compliance among all directors during the fiscal year [97]. Sustainability Initiatives - The group aims to achieve long-term goals by 2030, including reducing greenhouse gas emissions and water usage, while maintaining sustainable business performance [6]. - The company emphasizes long-term positive social impact and environmental sustainability, aligning its business strategies with the United Nations Sustainable Development Goals [51]. - The company has set long-term environmental goals for 2030, including reducing direct emissions and electricity consumption [54]. - The group secured a sustainable development performance-linked loan of HKD 500 million in 2022 to support its sustainability commitments [55]. - The company is integrating environmental measures to formulate a carbon neutrality roadmap in support of Hong Kong's Climate Action Blueprint 2050 [55]. Investment Properties - Investment properties account for 90% of the group's total assets, primarily located in Hong Kong, making the group vulnerable to economic conditions and regulatory changes in the region [172]. - Revenue from investment properties represented 85% of the company's total income for the year ending December 31, 2022 [183]. - The company emphasizes the importance of accurate valuation of investment properties due to their significant impact on overall profit, with small errors potentially leading to substantial financial misstatements [182]. - The company employs external valuation firms to assess the fair value of investment properties, ensuring independence and objectivity in the valuation process [182]. - The rental income may be adversely affected by oversupply in shopping malls and office spaces, leading to potential adjustments in rental levels due to external economic factors [172]. Community Engagement - The group was recognized as the second highest fundraising organization for the Community Chest for two consecutive years and holds an AA+ rating in the Hang Seng Sustainability Index [6]. - The group is committed to corporate social responsibility through various community projects, including art scholarships and design internship programs [5]. - The "School Activation" program has supported over 87,000 students through partnerships with over 70 organizations since its launch in 2011 [57]. - The group reported a total donation of HKD 44 million during the fiscal year [138]. Financial Position - The total assets as of December 31, 2022, amounted to HKD 255.324 billion, with net asset value per share decreasing to HKD 62.70 (2021: HKD 67.89), an 8% decline [12]. - The group maintained a stable debt-to-equity ratio of 23.2%, with net debt reduced by HKD 2.385 billion to HKD 45.149 billion [12]. - The company has a strong financial position with a liquid investment portfolio valued at HKD 13.1 billion [73]. - The company’s total equity decreased from HKD 210,876 million at the beginning of 2022 to HKD 194,881 million by the end of the year, indicating a decline in shareholder value [192]. - The company’s cash and cash equivalents decreased from HKD 1,800 million at the beginning of 2022 to HKD 1,340 million at the end of the year, reflecting liquidity challenges [193].