Financial Data and Key Metrics Changes - In 2025, the underlying net profit increased by 5%, and the dividend per share rose by 6% to HKD 1.32, reflecting a year-on-year increase of 10% in the second half [4][9] - Net debt decreased to HKD 32 billion, with gearing reaching a new low of 17.2%, leading to a significant decline in interest costs [4][9] - NAV per share was HKD 59.85 at year-end, representing a mild drop of 3% [5] Business Line Data and Key Metrics Changes - The investment properties portfolio maintained an overall occupancy rate of 92%, with retail revenue at Harbour City growing by 2% despite challenges [5][7] - Office revenue increased by 1% due to improved occupancy, although negative rental reversion persisted [8][9] - The hotel sector saw improved revenue and occupancy, driven by a vibrant inbound tourism market, although average room rates were below expectations [11][12] Market Data and Key Metrics Changes - Hong Kong's retail sales grew by 5% in the second half of the year, indicating a potential new base for recovery, primarily driven by discretionary spending [6][7] - Inbound tourism increased by 12%, with a more diversified mix of visitors contributing to retail sales turning positive [5] - The overall consumption recovery remained uneven, posing challenges for landlords and the retail sector [6] Company Strategy and Development Direction - The company aims to maintain low leverage and a healthy financial position while navigating ongoing market disruptions [14][15] - Incremental improvements are planned for Times Square to enhance competitiveness without significant capital expenditure [27] - The company is focused on retaining tenants through flexible leasing strategies and enhancing the quality of its properties [31][32] Management's Comments on Operating Environment and Future Outlook - The management highlighted significant global disruptions, including geopolitical tensions and rapid technological changes, impacting the business environment [13][14] - Despite signs of economic recovery in Hong Kong, the outlook remains mixed due to external risks and challenges in the investment properties sector [14][15] - The management remains vigilant regarding interest rate fluctuations and plans to continue deleveraging to maintain financial flexibility [9][46] Other Important Information - The company achieved strong ratings and green building certifications, with 37% of financing being sustainable as of December last year [12] - The management is exploring the impact of AI on property management and marketing, although it remains cautious about switching investments from properties to tech stocks [55][60] Q&A Session Summary Question: Retail sales sentiment and expectations for 2026 - Management noted that retail sales in Hong Kong started to pick up in mid-2025, with early numbers from January indicating continued strength [17][18] Question: Details on HKD 1 billion capital commitment - The capital expenditure primarily focuses on upgrading older office spaces to regain competitiveness [22] Question: Magnitude of negative rental reversion - Management indicated single-digit negative rental reversion overall, with expectations that it may not improve significantly in 2026 [26] Question: Plans for Times Square - Incremental improvements will be made to Times Square, with no grand plans for extensive redevelopment [27] Question: Strategy for Harbour City amid competition - The company aims to retain flagship brands and enhance tenant performance through marketing efforts [32] Question: Interest cost management and hedging policy - The company plans to maintain a floating interest rate strategy, with no current plans to switch to fixed rates [59] Question: Repositioning of high-end retailers - Management emphasized the importance of retaining flagship stores and collaborating with brands for expansion [66]

Financial Data and Key Metrics Changes - In 2025, the underlying net profit increased by 5%, and the dividend per share rose by 6% to HKD 1.32, reflecting a year-on-year increase of 10% in the second half [4][9] - Net debt decreased to HKD 32 billion, with gearing reaching a new low of 17.2%, leading to a significant decline in interest costs [4][9] - NAV per share was HKD 59.85 at year-end, representing a mild drop of 3% [5] Business Line Data and Key Metrics Changes - The Hong Kong investment properties and hotel underlying net profit increased by 7%, primarily due to a reduction in borrowing costs exceeding mild declines in revenue and operating profit [9] - Retail revenue at Harbour City grew by 2%, while office revenue increased by 1% due to improved occupancy, despite negative rental reversion [7][10] - The overall occupancy rate for the investment properties portfolio remained resilient at 92% [5] Market Data and Key Metrics Changes - Hong Kong's retail sales grew by 5% in the second half of the year, indicating a potential new base for the market [6] - Inbound tourism saw a 12% increase in visitors, contributing positively to retail sales, which turned positive in May with a 1% increase [5] - The office market maintained an occupancy rate of over 90%, outperforming the market despite downward pressure on rental rates [7] Company Strategy and Development Direction - The company aims to maintain low leverage and a healthy financial position while navigating ongoing market challenges [15] - There is a focus on enhancing the quality and appeal of office spaces through ongoing upgrades to remain competitive amid new supply [8][22] - The company is committed to sustainability, with 37% of financing being sustainable as of December last year [12] Management's Comments on Operating Environment and Future Outlook - The management highlighted significant global disruptions, including geopolitical tensions and rapid technological changes, impacting the business environment [13][14] - Despite signs of economic recovery in Hong Kong, the outlook remains mixed due to external risks and challenges in the investment properties sector [14][15] - The management remains cautious about the retail market, noting that recovery is uneven and dependent on various factors, including consumer confidence and sector performance [19] Other Important Information - The company has received strong ratings and green building certifications, including LEED Platinum for Times Square and Harbour City's offices [12] - The hotel sector showed improvement in revenue and occupancy, although average room rates were below expectations due to price sensitivity among customers [11] Q&A Session All Questions and Answers Question: Retail sales sentiment and expectations for 2026 - Management noted that retail sales in Hong Kong started to pick up in the middle of last year, with early numbers from January indicating continued strength [17] - The management expressed hope for gradual improvement in retail sales, but acknowledged ongoing uncertainties [18] Question: Details on HKD 1 billion capital commitment for Hong Kong IP - The capital expenditure primarily focuses on upgrading older office spaces to regain competitiveness [21][22] Question: Magnitude of negative rental reversion and plans for Times Square - Management indicated that negative rental reversion is in the single digits and emphasized the need for leasing flexibility to maintain occupancy [26][27] Question: Strategy for Harbour City amid increasing competition - The management highlighted the importance of retaining flagship stores and maintaining competitive advantages through marketing and tenant support [32][65] Question: Impact of AI on property management - AI is expected to enhance property management efficiency and service quality, although the full benefits are still being assessed [54]

Core Viewpoint - Sales in February remained flat, with a near-term recovery deemed unlikely due to the ongoing effects of the conflict in the Middle East [1] Group 1 - The British Retail Consortium reported that sales did not show any growth in February [1] - The impact of the Middle East conflict is expected to hinder any potential recovery in the retail sector [1]