WHEELOCK AND COMPANY LIMITED Interim Report 2001/02
• Unaudited Group profit of HK$460.8 million, an increase of 0.1% over last year.
• With a well-diversified business portfolio, the Group demonstrated the resilient nature of its operations.
• Wharf’s core office portfolio over 90% occupied, with retail at over 98% and serviced apartments over 85%. Tower 6 of Gateway II under active leasing.
• Sorrento (Phase I), the MTRC Kowloon Station Package Two development on Union Square, launched with favourable response.
• Pre-sale for two other developments – Bellagio and Palm Cove – targeted for first half of 2002.
• i-CABLE’s strong earnings momentum continuing on the back of strong turnover growth.
• Modern Terminals’ throughput growth outperformed industry average.
• Group well-positioned to benefit from China’s entry into the WTO.
GROUP RESULTS
The unaudited Group profit attributable to Shareholders for the six months ended
30 September 2001 amounted to HK$460.8 million, compared to HK$460.5 million achieved in the same period last year. Earnings per share were 22.7 cents (2000 – 22.7 cents).
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INTERIM DIVIDEND a total of more than 4% drop in
The Board has declared an interim the average mortgage rate this year.
dividend in respect of the half-year Together with the Government’s shift
period ended 30 September 2001 of 2.5 towards a much more pro-market
cents (2000 – 2.5 cents) per share, stance, Hong Kong’s residential
payable on Thursday, 31 January 2002 property market now appears to be
to Shareholders on record as at stabilized.
11 January 2002.
On the macro front, most western
BUSINESS REVIEW countries have come closer together
With a well-diversified portfolio of to work on possible solutions or
businesses in the areas of property precautionary actions in arresting any
development, property investment, further world-wide recessionary slump,
quality retail, CME (communications, as a result of the “911” tragedy in the
media and entertainment) and logistics, United States. Moreover, this particular
most of which have a substantial incident has also prompted central
recurrent earnings base, the Wheelock banks around the world to relax their
Group has explicitly demonstrated the monetary policy further. Given that the
resilient character of its operations long-term fundamentals of Hong Kong
under the prevailing volatile market have not changed, being strategically
conditions. located at the doorstep of China which
is widely anticipated to be the market
Rising sales transactions for primary with the highest growth potential in the
residential units recorded recently in coming decade, economic activities here
Hong Kong are indicative signs of will pick up at some stage following
interest rate cuts taking effect after the conclusion of the WTO deal.
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PROPERTY Corporation, and two Wharf group’s
During the period under review, the companies. The initial batch out of the
Group continued its sales of various total 1,272 units under Phase I has property projects, including mainly The just been launched with extremely
Primrose, The Astrid, Forest Hill and favourable response. Construction
My Loft. works have been progressing according
to schedule. Completion of Phase I is
Bellagio, the Sham Tseng site, is a joint expected by the end of 2002. venture development equally owned by the Company, New Asia Realty and The residential development on Castle
Wharf. The lease modification for the Peak Road known as Palm Cove will enlarged CDA site has recently been have a total of 228,000 square feet finalized with the Government. in GFA providing 260 units.
Construction works for all four phases Superstructure works are in progress have been progressing according to and pre-sale is targeted to take place in schedule. Pre-sale for initial phases the first half of 2002. covering 1,704 units is targeted to take place during the first half of 2002. The King’s Park development is owned
Completion of these phases of the by a five-member consortium development is scheduled for 2003. comprising Realty Development
Corporation, New World Development,
Sorrento, the MTRC Kowloon Station Sino Land, Chinese Estates and
Package Two development, is equally Manhattan Garments. This residential owned by a five-member consortium site located in Homantin will be comprising the Company, New developed into eight towers consisting
Asia Realty, Realty Development of 700 units with a total GFA of
3 WHEELOCK AND COMPANY LIMITED Interim Report 2001/02
904,200 square feet. Demolition works This redevelopment will proceed when
have completed and the tendering for market conditions improve in
foundation works is now in progress. Singapore.
In Singapore, the physical hand-over of The office tower as well as podium
units to purchasers marked the levels 3, 4 and 5 of the Wheelock Place
successful completion of the Ardmore in Singapore are currently 93 per cent
Park project undertaken by Marco Polo let to quality multinational tenants.
Developments Limited, a subsidiary of
the Company. Following the grant of The former Marco Polo Hotel
the Temporary Occupation Permit in Singapore site is now being redeveloped
May 2001, the Certificate of Statutory into a freehold, luxury high-rise
Completion was also obtained on condominium complex with 467,600
18 October 2001. To-date stage billings square feet in GFA, known as “Grange
representing 98 per cent of the total Residences”. Foundation works have
sale price of all units sold have been now completed and other construction
billed and 85 per cent of those have works have been progressing according
been collected. to schedule. Completion is expected by
the second half of 2003.
The average occupancy of Ardmore
View is currently 96 per cent with RETAIL
duration of leases ranging from 12 to In the first half of this financial year,
24 months. Provisional planning the weak economy and consumer
permission for the redevelopment of sentiments had put pressure on the
this property to 110,200 square feet Group’s retail business. In spite of the
GFA was obtained in February 2000. positive turnover growth, the need to
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offer deeper discounts to stimulate sales renovation in August and re-opened a has caused Lane Crawford to suffer a month later with its retail area doubled decline in operating margin. To restore and a Joyce Beauty outlet appended. the position, tighter cost control and One Hugo shop was added in Causeway merchandizing control programmes Bay and two Boss concession counters have been implemented. were also opened in Times Square Lane
Crawford and Central Lane Crawford.
The fourth On Pedder boutique in
Hong Kong opened in April 2001 has WHARF achieved a satisfactory result. The The Group’s principal associate Wharf company will continue to focus on Holdings recorded an unaudited profit maintaining and extending this brand of HK$1,145 million for the half-year across the region. period ended 30 June 2001. Driven by
stable recurrent earnings and value
Joyce Boutique’s turnover showed a creation opportunities originating from significant drop during the period under its flagship investment property at review due mainly to the closure of four Kowloon Point, Wharf has successfully
Armani Shops in January 2001. built up significant presence in all three
Sluggish sales and deeper promotional core business areas of property, CME discounts were again the main reasons and logistics. for a narrowing profit margin. The company’s cost rationalization exercise Bucking the trend of the lacklustre continued. market conditions, the occupancy rate
of Harbour City office excluding Tower
In terms of expansionary movements, 6 of Gateway II had improved steadily
Joyce at Pacific Place was closed for to over 90 per cent in the first six
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months of this year. By securing high of Causeway Bay. During the first
quality tenants such as Japan six months, Times Square office
Airlines, Singapore Telecom and maintained a 92 per cent occupancy
GlaxoSmithKline at the newly launched while the retail portion remained
Tower 6, Harbour City office has virtually full at more than 98 per cent.
explicitly demonstrated its exceptional
ability in attracting multinationals in Nelson Court on Waterloo Road was
addition to trading houses. Apart from launched during early 2001. The pre-
the office portion, other segments sale was extremely well received to an
also did fairly well. Persistently high extent that majority of the units were
average occupancy at 98 per cent has sold within hours. Following the
shown that shops in Harbour City successful completion of various
are under keen demand. With its development projects including Galaxia,
outstanding quality and services, Serenade Cove and Nelson Court which
Gateway Apartments achieved an totalled 1.1 million square feet, Wharf
occupancy rate of 85 per cent at the made a move in July to buy over
end of June. Extensive studies are being Wheelock’s 15.6 per cent interest in the
carried out for Ocean Terminal’s Yau Tong Consortium in order to
renovation plan as well as the building replenish its land reserve.
plan for the approved Ferris wheel.
Despite a slow-down in the global
Being a widely accepted successful case economy as well as intense competition
in the Hong Kong retail property during the first six months, the three
sector, Times Square continues its role Marco Polo Hotels in Hong Kong
as the centre of gravity for both business managed to maintain an overall
and leisure activities within the district occupancy of over 84 per cent.
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After achieving a net profit of HK$20 from 25 per cent to 33 per cent. million in year 2000, i-CABLE’s strong PCCW-HKT and the company are now earnings momentum was carried widely accepted to be the two clear forward into this year. The company leaders in this particular business reported HK$76.5 million in net segment. earnings for the six months ended June
2001 on the back of strong turnover During the first six months of this year, growth, especially from its Internet and Wharf New T&T continued its rapid
Multimedia business, and operating and successful transformation into a leverage. high-value fixed-line business. While
installed fixed-lines increased from
Despite the adverse economic 140,000 to over 180,000 in six months, conditions and rampant piracy, Pay TV revenues generated by this segment subscribers grew by 11 per cent from a almost doubled to HK$260 million, year ago to 537,000. As piracy proved representing 56 per cent of the total to be the root cause of the rising churn revenue. since the beginning of this year, the company has placed this issue under By securing contracts to build a new top priority and initiated various IP-based wide area network for the anti-piracy measures to tackle the Central Clearing and Settlement System problem head-on. (“CCASS”) under the HKSCC and a
high performance community network
By doubling its Broadband subscribers for the Securities and Futures to over 100,000 in the first six months Commission, Wharf New T&T’s high of this year, the company’s share of the recognition given by the business residential Broadband market improved community in Hong Kong, especially
7 WHEELOCK AND COMPANY LIMITED Interim Report 2001/02
the finance sector, was explicitly throughput volumes before CT9 comes
illustrated. In order to further enhance on stream in the second half of 2003.
the company’s profile, it has recently
been renamed as Wharf New T&T Modern Terminals’ involvement in the
from its former name of New T&T. construction of container terminal
business in Southern China continues
Modern Terminals handled altogether to gain momentum. The investment in
1.53 million TEUs during the first half Kaifeng Container Terminals is
of this year. This figure represents a now contributing positively. While
growth of 13 per cent over the same continuing to manage the Shekou
period last year and compares Container Terminal 1 operation, the
favourably with the industry average. construction of Shekou Container
Terminal 2 has begun.
Despite some initial delays, the
Container Terminal 9 development is OUTLOOK
now progressing satisfactorily. Additional A combination of the downward trend
investments are being made in capacity of global interest rates, together with
enhancement to accommodate an the local banking deregulation process,
additional 400,000 TEUs in existing Hong Kong interest rates are at an all
terminals to cope with the rising time low. Most property end-users
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would find it much more affordable to around. Occupancy in Orchard Road buy than to rent, and investors would has however been firmly supported by attempt to look for better alternative the relatively tight supply situation in investments than bank deposits at that area. This would benefit the extreme low yield. With its sizeable Group’s investment property, Wheelock landbank, mainly represented by its Place, with its strategic location along
74 per cent effective interest in Orchard Road.
Bellagio, 61 per cent effective interest in Sorrento and 11 per cent effective The Group is well-positioned to benefit interest in the King’s Park Homantin from China’s entry into the WTO. project, the Group is well-placed to While rising business and trading take advantage of the gradual recovery activities between the Greater China of the economy once more positive region and the rest of the world will factors have returned to restore definitely have positive impacts on the confidence of consumers and office demand and throughput cargo investors. flow in Hong Kong, the China
domestic market will offer great
It is anticipated that the current weak opportunities for all the three core office and retail rental markets in businesses under the group in terms of
Singapore will take some time to turn long term future growth.
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