WHARF REIC(HK:01997)2025-04-14 09:00Visitor Trends and Retail Performance - In 2023, Hong Kong welcomed 45 million visitors, a year-on-year increase of 31%, although retail sales fell by 7% to HKD 377 billion[20]. - Despite a weak retail recovery, leasing demand for the group's flagship properties, Harbour City and Times Square, remained resilient with continued investment from top brands[22]. - New flagship stores for international brands like Fendi and Celine were opened in Harbour City, indicating continued confidence in the market[43]. Property and Rental Market - The office rental market faced challenges with a 90% occupancy rate, but rental prices adjusted downward due to market trends[22]. - The overall occupancy rate for Harbour City reached 94% at year-end, while the office occupancy rate increased to 90% despite a weak market[43][47]. - The year-end occupancy rate for Times Square was 93%, with office occupancy also at 90%[66][67]. Financial Performance - Group revenue decreased by 3% to HKD 12.91 billion, down from HKD 13.31 billion in 2023[24]. - Operating profit fell by 3% to HKD 9.69 billion, compared to HKD 9.99 billion in the previous year[24]. - Basic net profit increased by 2% to HKD 6.14 billion, up from HKD 6.01 billion in 2023[24]. - Shareholders' profit attributable to the group dropped by 81% to HKD 891 million, down from HKD 4.77 billion in 2023[31]. - Total assets remained at HKD 238.07 billion, a decrease of 3% from HKD 245.32 billion in 2023[31]. Sustainability and Environmental Initiatives - The group is committed to reducing its environmental footprint by 2030, including targets for greenhouse gas emissions and waste reduction[13]. - The group has been included in the Hang Seng Sustainable Development Index with an AA+ rating and received an A rating in the MSCI ESG ratings[13]. - The group has committed to setting science-based near-term targets to reduce carbon emissions, aligning its vision with global climate action and low-carbon transition agendas[105]. - The group continues to achieve ISO 14001 environmental management system certification, enhancing its overall environmental performance[106]. - The group has implemented innovative cooling systems at Harbour City to improve energy efficiency, which won the "Excellence in Energy Management Award" at the CLP Innovation Energy Saving Awards 2024[106]. Corporate Governance and Board Structure - The board consists of 12 directors, with 4 executive directors and 8 independent non-executive directors, ensuring strong independence as independent directors account for 67% of the board[148][155]. - The company emphasizes the importance of independent non-executive directors in maintaining good corporate governance and independent judgment[156]. - The company has adopted a formal Nomination Policy to ensure a sustainable and optimal board composition, focusing on skills, experience, and diverse perspectives[157]. - The board has established three committees: Audit, Remuneration, and Nomination, which regularly review their terms of reference[169]. Risk Management and Internal Controls - The risk management and internal control systems are continuously monitored and evaluated to ensure they align with the company's strategic objectives and risk tolerance[180]. - The risk management and internal control committee is responsible for identifying and reporting risks, including environmental, social, and governance risks[181]. - The group has adopted an Anti-Corruption Policy as a key component of its corporate governance framework, demonstrating a zero-tolerance approach to corruption[190]. Employee and Community Engagement - The company maintained a low injury rate of 3.1 incidents per 100 employees, with no recorded cases of work-related fatalities during the reporting year[107]. - The "School Activation" program has supported 82 schools and nearly 100,000 students since its launch in 2011, aiming to inspire students in their educational and career planning[113]. - The company has provided scholarships to 22 award winners from the Kowloon Warehouse Art Scholarship Program, enabling them to pursue art-related degrees at prestigious institutions worldwide[114]. Future Outlook and Challenges - The outlook for 2025 indicates challenges due to trade conflicts and global economic uncertainty, but potential opportunities with government stimulus measures[28]. - The company plans to finance its capital expenditures through internal resources, bank loans, and other borrowings, including the sale of equity investments[138].