1H 2024 Half-Year Results Presentation

Good morning. Good morning. Lots of familiar faces, which is great to see. And as most of you know, this is my first time doing this. I have leniency on the newbie. But welcome, everyone, to Hong Kong Land's results presentation for the first half of 2024. I am Michael Smith, the chief executive of Hong Kong Land, and with me is Craig Beatty, our chief financial officer. Over the past few months, I've had an opportunity of meeting many of our colleagues, our business partners and tenants from across the region, to better understand their achievements, their challenges, and their aspirations. I was impressed by the expertise and passion there is in abundance amongst colleagues across the business, and the high standards and expectations to which Hong Kong land is held by our business partners and tenants. Having spent that time getting to know the business, I've initiated a strategic review of our overall business strategy, our long-term goals, and our commercial priorities.

This is the first time in 135 years that Hong Kong Land has had a self-reflection. And the strategic review will look at how we optimize the way we operate and better leverage our core strengths to deliver sustained growth of the business. The review will conclude before the end of the year at which time we intend to present our vision for Hong Kong Land's future to you all. Getting back to the presentation at hand, there'll be an opportunity for questions at the end. For those of you on the webcam, please send us your questions through the website and we'll include them in the Q&A session. So firstly, the agenda. Today, I'm gonna take you through some key highlights of the first half of the year, provided trading update on the group's key business strategies before turning it over to Craig to talk through the financial and sustainability highlights. I'll then conclude with our outlook for the second half of the year, followed by a Q&A session. Before moving on to the results, let me first walk through a few key highlights from the

first half of the year. All monetary amounts are in US dollars, unless otherwise stated. Firstly, on the office front. Despite headwinds in the global financial markets, the group's core office portfolios continue to outperform the market. In Hong Kong, portfolio vacancy remains significantly lower than the market, despite completion of new supply in Central. This is largely a result of the group's capturing a flight to quality demand via active lease management, delivering premium tenant services, as well as strong sustainability credentials. In Singapore, our portfolio is effectively fully occupied, with positive rental reversions driven by both tight supply in the core business district around Marina Bay and market-leading offerings and amenities. On the luxury retail front, the group is pleased to deepen its strategic partnerships with its luxury retail tenants by meeting their changing demands on space and elevated experience

for their discerning shoppers. In Hong Kong, the recently announced Tomorrow Central transformation plan for Landmark will result in the creation of 10 multi-story masons and a luxury retail proposition that would not only be unique in the city but also globally. The group will invest around $400 million over the next three years to complete this project with our luxury retail partners investing a further $600 million on their respective flagships and I think that $600 million is quite a conservative estimate. One central Macau is currently undergoing an evolution. While the scale of the project is significantly smaller than that of Landmark, this repositioning will help result in improvement of amenities and optimization of tenant mix to better cater the group's deep pull of very important customers. On the Chinese mainland retail, the group continues to make steady progress on growing its retail footprint and recurring income base. WF Central in Beijing benefited from higher tenant

sales and rents post-repositioning, whilst the Ring Chongqing saw double digit tenant sales growth in the first half of 2024. Separately the group opened the ring Chengdu in June which has had net less net lessable area of some 51,000 square meters and achieves over 90% occupancy. Capital recycling from our development property business. In light of the subdued property market conditions on Chinese mainland, the group conducted a comprehensive review of its pricing strategy on its build to sell portfolio. So this was a very, very granular project by project assessment that we undertook across our portfolio. A non-cash provision of $290 million was recognized on a handful of selected projects with a bulk of its relating to residential assets in non-prime locations, principally across three cities, which Craig will explain further, to facilitate recycling of capital from existing inventory.

Well-located projects in core areas, such as the residential for sale component of the Westbun project, continue to outperform the market. On the financial front, the group continues to maintain a strong balance sheet and a net gearing position with no change to net debt from the end of last year. Our average borrowing cost sits at 3.7%, a result of our active capital management. Our credit ratings remain robust, despite macroeconomic uncertainties. On the sustainability front, as expectations on the group's sustainability performance from tenants, from key business partners, and the investment community continue to increase. I am pleased to report that the group continues to make solid progress towards sustainability commitments across the region. On decarbonisation, the group remains on track in working towards its absolute Scope 1 and 2 emissions target of 46.2% by 2030 from its 2019 baseline.

For 2023, this group achieved a 29% reduction, so we're more than halfway to our goal. In addition, the group recently became the first developer to attain triple platinum ratings for existing building certifications from Beam Plus, LEED, and Well Standards across its entire commercial portfolio in Hong Kong, underscoring our commitment to meet and exceed the highest standards. Turning to an overview of the 2024 half-year results, The group's underlying loss in the first half of 2024 was $7 million, significantly down year on year as the group recorded a non-cash provision on selected development properties across China's mainland. Excluding this provision, the underlying profit was $288 million. Profit from the group's investment properties remained resilient, as improved performance from our Singapore office and Chinese mainland retail partially offset reduced contributions from the Hong Kong office portfolio. Loss attributable to