CHIEF EXECUTIVE’S STATEMENT Dear shareholders, Recurring underlying profit from property investment decreased slightly in the first half of 2022. This mainly We continue to operate in a difficult environment, reflected lower retail rental income from Hong Kong and with significant challenges posed by COVID-19 in the higher operating costs, partly offset by higher retail rental first half of 2022. However, our business remained income from the Chinese Mainland. resilient, and we recorded a solid performance from our investment portfolio in Hong Kong and the In Hong Kong, a weaker office market reflected subdued Chinese Mainland. demand and a decline in business activity, particularly during the fifth COVID-19 wave in the first quarter of 2022. Despite short-term setbacks, the Company remains However, leasing activity has recovered with the gradual on a sound financial footing. Our asset management easing of COVID-19 restrictions. Positive reversions were strategy over the last five years has strengthened our achieved at some of our Taikoo Place properties, and our balance sheet, and with our HK$100 billion investment overall office portfolio remained resilient, with high plan, we are actively managing a pipeline of new occupancy. projects in our core markets, which we intend to implement over a 10-year period. During the first quarter of 2022, Hong Kong’s retail market was severely disrupted by COVID-19 related 2022 is a landmark year for Swire Properties, as we social distancing measures including dining restrictions celebrate 50 years of transformative placemaking and and mandatory closures of certain outlets and premises. investment. As a homegrown Hong Kong company, we Tenants’ sales and footfall at our malls decreased are proud to celebrate this milestone in the same year significantly during this period. However, we began to that Hong Kong marks the 25th anniversary of its return see some recovery starting from mid-April, following the to China. gradual relaxation of restrictions and the introduction of Looking ahead, we remain fully committed to scaling up the HKSAR Government’s consumption voucher scheme. our investment in Hong Kong and the Chinese In the Chinese Mainland, retail sales began the year Mainland, as well as in South East Asia. Our leadership in strongly. However, our malls were affected to varying sustainable development and the digital transformation degrees by the resurgence of COVID-19 cases and related of our business also remain priorities as we focus on our preventive measures, particularly in Shanghai and Beijing, long-term growth. in the second quarter of 2022. Our office portfolio in the Chinese Mainland proved resilient despite COVID-19 2022 Interim Results at a Glance related controls in the cities where we operate. We recorded a small recurring underlying loss from our Our underlying profit decreased by HK$373 million to property trading activities in the first half of 2022, as a HK$4,140 million in the first half of 2022, principally result of the sales and marketing expenses at our reflecting the reduction in profit from the sale of non- residential project, EIGHT STAR STREET, in Hong Kong. core assets in Hong Kong. Recurring underlying profit in Our hotel business in Hong Kong and the Chinese the first half of 2022 was HK$3,643 million, compared Mainland continued to suffer from COVID-19 and its with HK$3,716 million in the first half of 2021. associated travel restrictions. 12 Swire Properties Limited Interim Report 2022