WHARF HOLDINGS(00004)2023-04-04 09:30Land Reserves and Property Portfolio - The company's land reserve in Hong Kong and Mainland China totals 2.8 million square feet, with 600,000 square feet located at the Peak[3] - The company's land reserve for development properties in Mainland China is 1.7 million square meters as of the end of 2022[3] - The company's luxury property portfolio at the Peak continues to cater to high-end customers with top-tier customization and craftsmanship[3] - The company's International Finance Centers in Chengdu and Changsha have become local landmarks due to their prime locations and excellent retail management[3] - The company's land reserves include 2.8 million square feet in Hong Kong and 1.7 million square meters in mainland China, with flagship projects such as Mount Nicholson and The Peak[77] Hotel Operations - The company manages 16 hotels across Mainland China, Hong Kong, and the Philippines, offering over 5,000 rooms and suites[3] - Hotel segment revenue decreased by 26% to HKD 369 million, with an operating loss of HKD 27 million[32] - Hotel income decreased by 26% to HKD 369 million (2021: HKD 497 million), resulting in an operating loss of HKD 27 million (2021: profit of HKD 39 million)[53] - The Wharf Hotels group, including The Murray Hong Kong and Niccolo Hotels, received multiple accolades such as Forbes Travel Guide Five-Star Awards and TripAdvisor Travelers' Choice Awards[41] Financial Performance - The company's rental income experienced its first decline in recent years due to the pandemic and macroeconomic challenges in Mainland China[11] - The company's sales volume and recognized revenue from development properties significantly decreased in 2022[11] - Group revenue decreased by 19% to HKD 18.064 billion due to significant reductions in property development recognition in Hong Kong and Mainland China, and a reversal in investment property income growth[14] - The group reported a net loss attributable to shareholders of HKD 1.705 billion, with a basic net profit of HKD 303 million excluding investment property revaluation losses[14] - Total assets amounted to HKD 221.7 billion, with a net asset value of HKD 151.6 billion, equivalent to HKD 49.60 per share[14] - Net debt decreased by 60% to HKD 5.3 billion, with a debt ratio reduced to 3.4%[14] - Revenue decreased by 19% to HKD 18,064 million, and operating profit decreased by 23% to HKD 6,603 million[19] - Basic net profit dropped by 92% to HKD 303 million, and shareholder's loss was HKD 1,705 million[19] - Total assets decreased by 13% to HKD 221,745 million, and net debt decreased by 60% to HKD 5,316 million[19] - Development property revenue in Hong Kong decreased by 79% to HKD 905 million, and operating profit decreased by 59% to HKD 616 million[25] - Contracted sales in Mainland China decreased by 70% to RMB 4.2 billion, with unrecognized sales of RMB 8.5 billion at year-end[27] - Mainland China investment property revenue decreased by 11% to HKD 4,798 million, and operating profit decreased by 9% to HKD 3,226 million[30] - Logistics infrastructure revenue decreased by 1% to HKD 2,964 million, and operating profit decreased by 1% to HKD 763 million[34] - Throughput at Modern Terminals in Hong Kong decreased by 11% to 4.4 million TEUs, while Shenzhen's throughput increased by 19% to 2 million TEUs[35] - Hong Kong Air Cargo Terminals' cargo volume decreased by 18% to 1.6 million tons due to weak demand and cross-border restrictions[36] - Group's basic net profit decreased by 92% to HKD 303 million (2021: HKD 3.646 billion), and shareholders' share of the group's loss was HKD 1.705 billion (2021: profit of HKD 6.019 billion)[52] - Group revenue decreased by 19% to HKD 18.064 billion (2021: HKD 22.378 billion), and operating profit decreased by 23% to HKD 6.603 billion (2021: HKD 8.536 billion)[53] - Investment property income decreased by 11% to HKD 4.871 billion (2021: HKD 5.467 billion), and operating profit decreased by 9% to HKD 3.247 billion (2021: HKD 3.575 billion)[53] - Development property income decreased by 33% to HKD 7.462 billion (2021: HKD 11.193 billion), and operating profit decreased by 68% to HKD 935 million (2021: HKD 2.939 billion)[53] - Logistics income decreased by 1% to HKD 2.964 billion (2021: HKD 3.002 billion), and operating profit decreased by 1% to HKD 763 million (2021: HKD 771 million)[53] - Unrealized revaluation loss on investment properties amounted to HKD 735 million (2021: HKD 31 million)[54] - Other net expenses amounted to HKD 5.367 billion (2021: HKD 1.019 billion), including impairment provisions for development properties of HKD 4.24 billion (2021: HKD 3.336 billion)[55] - Financial expenses increased by 143% to HKD 646 million (2021: HKD 266 million), with the actual borrowing interest rate rising to 2.6% (2021: 1.8%)[56] - Tax expenses decreased by 43% to HKD 1.66 billion (2021: HKD 2.898 billion), including deferred tax of HKD 194 million due to revaluation surplus of mainland investment properties (2021: HKD 852 million)[58] - Group's underlying net profit decreased by 92% to HKD 303 million (2021: HKD 3.646 billion), with development properties loss expanding to HKD 4.054 billion (2021: HKD 1.252 billion)[58] - Total contracted sales dropped by 74% to HKD 5.678 billion (2021: HKD 21.864 billion), with Hong Kong sales decreasing by 79% to HKD 1.025 billion (2021: HKD 4.914 billion)[59] - Shareholders' equity decreased by 6% to HKD 151.6 billion (2021: HKD 162 billion), equivalent to HKD 49.60 per share (2021: HKD 53.02 per share)[60] - Total operating assets decreased by 10% to HKD 205.9 billion (2021: HKD 228.6 billion), with Hong Kong operating assets increasing by 1% to HKD 95.6 billion (2021: HKD 94.6 billion)[61] - Investment properties portfolio was reported at HKD 69.2 billion (2021: HKD 76.5 billion), accounting for 34% of total operating assets (2021: 33%)[62] - Development properties assets decreased by 11% to HKD 43 billion (2021: HKD 48.5 billion), including Hong Kong development properties of HKD 28.5 billion (2021: HKD 23.6 billion)[63] - Associates and joint ventures' interests decreased by 14% to HKD 30.8 billion (2021: HKD 35.9 billion)[64] - Long-term investments totaled HKD 48.9 billion (2021: HKD 52.9 billion), with HKD 40.3 billion in listed equities (2021: HKD 44.1 billion)[65] - Sales deposits decreased by 15% to HKD 8.2 billion (2021: HKD 9.6 billion), to be recognized in the coming years[66] - Net debt decreased by 60% to HKD 5.3 billion as of December 31, 2022, compared to HKD 13.2 billion in 2021, primarily due to the sale of long-term investments and reduced construction costs offset by land premium payments for the Kowloon Godown redevelopment[67] - The net debt to total equity ratio further declined to 3.4% in 2022 from 7.9% in 2021, reflecting a stronger financial position[67] - Total available credit facilities and issued debt securities amounted to HKD 35.9 billion, with HKD 19.9 billion utilized as of December 31, 2022[68][69] - The company's debt portfolio is primarily denominated in USD, HKD, and RMB, with funds mainly used for investment properties, development properties, and port investments[70] - Operating cash inflow before working capital changes was HKD 5.1 billion in 2022, down from HKD 7.5 billion in 2021, with total operating cash inflow reaching HKD 6.2 billion[71] - Total capital and development expenditures for 2022 amounted to HKD 7.905 billion, with HKD 6.546 billion allocated to development properties[72] - Future commitments for major expenditures over the next few years are estimated at HKD 21.654 billion, with HKD 8.163 billion already committed[74] - The company's dividend policy aims to distribute approximately 30% of its underlying net profit, subject to board approval based on financial performance and cash flow[75] - The first interim dividend of HKD 0.20 per share was paid on September 15, 2022, and the second interim dividend of HKD 0.20 per share will be paid on April 27, 2023, totaling HKD 0.40 per share for the year[134] - Revenue for 2022 decreased to HKD 18,064 million from HKD 22,378 million in 2021, a decline of 19.3%[192] - Operating profit before depreciation, amortization, interest, and taxes dropped to HKD 7,320 million in 2022 from HKD 9,290 million in 2021, a decrease of 21.2%[192] - Net loss attributable to shareholders was HKD 1,705 million in 2022, compared to a profit of HKD 6,019 million in 2021[192] - Basic and diluted loss per share was HKD 0.56 in 2022, down from a profit of HKD 1.97 per share in 2021[192] - Total comprehensive loss for 2022 was HKD 9,241 million, compared to a comprehensive income of HKD 4,758 million in 2021[193] - Fair value changes in equity investments resulted in a loss of HKD 1,520 million in 2022, compared to a loss of HKD 4,054 million in 2021[193] - Exchange differences on translation of Mainland operations led to a loss of HKD 5,035 million in 2022, compared to a gain of HKD 1,929 million in 2021[193] - Share of other comprehensive income from associates and joint ventures was a loss of HKD 1,252 million in 2022, compared to a gain of HKD 544 million in 2021[193] - Total assets decreased to HKD 221,745 million in 2022 from HKD 253,700 million in 2021, a decline of 12.6%[194] - Investment properties decreased to HKD 69,222 million in 2022 from HKD 76,525 million in 2021, a decline of 9.5%[194] - Bank deposits and cash decreased to HKD 14,648 million in 2022 from HKD 23,559 million in 2021, a decline of 37.8%[194] - Total liabilities decreased to HKD 66,038 million in 2022 from HKD 87,323 million in 2021, a decline of 24.4%[194] - Net assets decreased to HKD 155,707 million in 2022 from HKD 166,377 million in 2021, a decline of 6.4%[194] - The company reported a net loss of HKD 1,705 million in 2022 compared to a net profit of HKD 6,019 million in 2021[195] - Other comprehensive income showed a loss of HKD 7,508 million in 2022 compared to a loss of HKD 1,706 million in 2021[195] - Total equity decreased to HKD 155,707 million in 2022 from HKD 166,377 million in 2021, a decline of 6.4%[195] - The company paid dividends of HKD 611 million for the second interim dividend of 2021 and the first interim dividend of 2022[195] - Non-controlling interests' dividends paid were HKD 207 million in 2022 compared to HKD 710 million in 2021[195] - Operating cash inflow from operations increased to HKD 6,692 million in 2022 from HKD 3,553 million in 2021, reflecting improved operational efficiency[199] - Net cash from investing activities decreased to HKD 4,312 million in 2022 from HKD 11,314 million in 2021, primarily due to lower proceeds from the sale of other long-term investments[196] - Net cash used in financing activities increased to HKD 17,552 million in 2022 from HKD 7,414 million in 2021, driven by higher repayments of bank and other borrowings[196] - Cash and cash equivalents decreased by HKD 7,057 million in 2022, ending the year at HKD 14,648 million compared to HKD 23,559 million at the end of 2021[196] - The company paid HKD 1,222 million in dividends to company shareholders in both 2022 and 2021, maintaining consistent shareholder returns[196] - Interest paid decreased to HKD 132 million in 2022 from HKD 494 million in 2021, reflecting lower interest expenses[196] - Proceeds from the sale of other long-term investments decreased to HKD 14,273 million in 2022 from HKD 23,284 million in 2021, impacting overall investment cash flow[196] - New bank and other borrowings decreased significantly to HKD 8,258 million in 2022 from HKD 35,123 million in 2021, indicating reduced reliance on external financing[196] - The company's operating profit decreased to HKD 6,603 million in 2022 from HKD 8,536 million in 2021, reflecting challenging market conditions[199] - Cash and cash equivalents at the end of 2022 were HKD 14,648 million, down from HKD 23,559 million at the end of 2021, primarily due to higher cash outflows in financing activities[198] Sustainability and ESG Initiatives - The company has set a long-term goal for 2030 to reduce water usage, carbon emissions, electricity intensity, and waste as part of its sustainability efforts[4] - The company was awarded the AA+ rating in the Hang Seng ESG Index and received the Social Responsibility Advanced Index certification from the Hong Kong Quality Assurance Agency[4] - The group is integrating green efforts and has set a long-term goal for 2030 to reduce carbon emissions, energy intensity, water, and waste[16] - The group's ESG rating improved to AA+ in 2022, and it remains a constituent of the Hang Seng Sustainability Index Series[16] - The company implemented a Climate Change Policy Statement to address climate-related risks and opportunities, following TCFD recommendations[46] - Shanghai Wheelock Square achieved LEED Platinum certification, and Shanghai Times Square obtained ISO 50001 Energy Management System certification in 2022[47] - Wharf Holdings secured green loans to enhance the environmental performance of Chengdu IFS and Changsha IFS, and raised sustainability-linked loans to support ESG improvements[48] - The group's climate risk assessment includes scenario analysis to identify physical and transition risks and opportunities under different climate conditions[178] - The group's sustainability efforts are detailed in the independently published "Sustainability Report 2022"[178] Logistics and Infrastructure - The company's Modern Terminals and Hong Kong Air Cargo Terminals are key contributors to Hong Kong's status as an international trade and transportation hub[3] - Modern Terminals handled over 140 million TEUs in its 50 years of operation, but faced challenges in 2022 with declining throughput due to external environment deterioration and cross-border restrictions[13] - Throughput at Modern Terminals in Hong Kong decreased by 11% to 4.4 million TEUs, while Shenzhen's throughput increased by 19% to 2 million TEUs[35] - Hong Kong Air Cargo Terminals' cargo volume decreased by 18% to 1.6 million tons due to weak demand and cross-border restrictions[36] - The logistics segment, operating container terminals in Hong Kong and China, faces risks from global economic downturns, geopolitical tensions, and supply chain decentralization, with efforts focused on improving operational efficiency and financial stability[174] Corporate Governance and Board Structure - The company's Board of Directors consists of 12 members, including 5 executive directors and 7 independent non-executive directors, with a female representation of 25%[85] - The company aims to maintain at least the current level of female representation on the Board, with an ultimate goal of achieving gender equality[85] - The company's Board diversity includes 25% male and 75% female representation, with age groups primarily between 60-69 years (42%) and 70 years or above (50%)[87] - The company's Board members have diverse professional experiences across industries such as finance/accounting, real estate development, logistics, and public service[87] - The company adheres to the Corporate Governance Code, with the exception of Code Provision C.2.1, which allows the Chairman to also serve as the Managing Director for strategic planning efficiency[81] - The company has strengthened its corporate governance framework to ensure proper management, transparency, and accountability, benefiting shareholders and stakeholders[79] - The company's corporate culture is deeply rooted in high standards of business ethics and integrity, aligned with its mission and strategic goals[82] - The company's risk management framework includes oversight of major risks, including environmental, social, and governance (ESG) risks, and internal control systems[84] - The company's nomination committee reviews the