Chief Executive’s Statement Dear Shareholders, Business Performance Despite the current headwinds in our primary markets, As reported by the Chairman, the interim result was our business continues to be on a solid financial footing. impacted by a subdued office market in Hong Kong We saw a steady performance across all our operations where we are seeing weak demand coupled with a during the first six months of 2024, demonstrating our continuous supply of new space coming on stream. resilience and adaptability to the challenging economic However, our portfolios have remained resilient, landscape. Our balance sheet remains strong and we supported by our strong placemaking attributes, enjoy a healthy gearing level thanks to our active capital including ESG initiatives, amenity provisions and tenant recycling strategy. engagement programmes. We have made good progress since announcing our Despite a significant recovery in 2023, our retail portfolio HK$100 billion investment plan in 2022, particularly in the in Hong Kong was impacted by macro-economic Chinese Mainland. This market is a key driver of revenue uncertainties. The continued outbound travel trend and growth and remains strategically important to our long- changes in tourist spending behaviour are adversely term expansion plans. We remain fully committed to our affecting the retail market. Our shopping malls remain home market in Hong Kong, where we are focused on the preferred choice for major retail tenants, with all of expanding and enhancing our flagship commercial them almost fully let. We continue to carry out portfolios at Taikoo Place and Pacific Place. improvements to our retail trade mix alongside innovative marketing campaigns and loyalty programme initiatives We also remain confident that Hong Kong will maintain that are helping to attract more local customers and its global competitiveness through the various initiatives tourists to our malls. put in place by the HKSAR Government. As a leading property developer in the city, we will continue to In the Chinese Mainland, we achieved record-high retail support Hong Kong’s position as the gateway to the sales in the first half of 2023 following the lifting of Chinese Mainland and its status as an international COVID-19-related restrictions. However, due to an financial centre. increase in outbound travel (reflecting the visa-free policy offered by some countries for Chinese Mainland Looking ahead, our focus is firmly on the future, guided travellers and the depreciation in certain currencies, in by our long-term commitment to placemaking. As we particular the Japanese Yen), renovation-related grow the business under our HK$100 billion investment disruption in some malls and the comparison to last plan, we will continue to demonstrate leadership in year’s post-pandemic high base, retail sales growth in the sustainable development while adopting innovative Chinese Mainland has normalised. Notably foot traffic in technologies to prepare ourselves for opportunities and our malls has remained steady. challenges ahead. We recorded a small underlying loss from our property trading activities in the first half of 2024 due to sales and marketing expenses incurred for several residential trading projects. 13