Wharf Interim Results 2001 by taoyni


									                          Wharf Final Results 2001:
                    Core Assets to Shine on Unique Strengths

Hong Kong, March 18, 2002 …… The Directors of The Wharf (Holdings) Limited
announced today that Group profit attributable to shareholders for the year ended December
31, 2001 amounted to HK$2,519 million, an increase of 1% over the previous year.

Earnings per share were HK$1.03, compared to HK$1.02 recorded in last year. A final
dividend of 50 cents per share has been recommended, bringing the total dividend for the
year to 78 cents.

Commenting on the results, Wharf’s Chairman and Chief Executive Gonzaga W J Li said
despite the difficult economic environment, the overall performance of the Wharf Group met
expectations during the year.

He said Harbour City and Times Square, the Group’s core investment properties in Hong
Kong, continued to record high occupancy rates, contributing an aggregate rental of HK$3
billion, an increase of 6% over a year ago. This demonstrated the resilient nature of these
two quality properties amid a soft rental market.

On the CME (Communications, Media & Entertainment) front, i-CABLE reported profit for
the second consecutive year, achieving a sevenfold increase in profit to HK$167 million
with healthy gains in pay TV and broadband subscriber numbers. Meanwhile, Wharf New
T&T achieved EBIT positive with an excellent growth in installed fixed lines to 240,000,
representing an annual growth rate of 70%.

On logistics, Modern Terminals was able to maintain its profits as it reported a 4.7%
throughput growth with productive gain of almost 12% during the year.


Flagship property Harbour City, making up 50% of the Group’s business assets, continued to
perform well despite a soft rental market. The steady flow of recurrent rental income from
it generally accounts for 60% of the Group’s total gross rental income.

Mr Li said excluding Tower 6 of Gateway II, Harbour City office maintained an occupancy
rate of 91% at year end. Tower 6’s marketing programme is in accordance with budget and
it is expected that its occupancy would reach 80% by mid-year. “In the anticipation of the
opportunities brought by China’s entry into the WTO, the large cluster of China business
operators now occupying the office premises at Harbour City would help attract corporate
tenants eyeing the China Market,” he said.

Gateway Apartments continued to receive favourable response from corporate tenants and
occupancy was maintained at around 85% at attractive rates.

Notwithstanding the adverse economic conditions and relatively poor consumer sentiments,
retail occupancy at Harbour City managed to hold up firmly at a percentage of high nineties
throughout 2001 due mainly to its constant enhancement in trade-mix and promotional efforts.
The rental space along Canton Road continued to attract deluxe retailers with Joyce’s
Kowloon flagship store opening in March 2002 and Prada opening in May 2002.

Times Square maintained a distinctively high occupancy of 98% for its retail podium
throughout the year. In the meantime, Times Square offices managed to deliver double-digit
growth in rental revenue for 2001 as a result of an improved average occupancy of 91%.

“Bulk of the tenancy renewals concluded during 2001, equivalent to 30% of total floor area,
turned positive in rental reversion. Since more than 50% of the retail tenancies are due for
renewal in year 2002, opportunities will be taken to further refine the tenants quality and
trade mix of the complex,” Mr Li said.

On development projects, following the successful launch of Nelson Court in early 2001, the
Group's recent launch of Sorrento Phase I again has met with overwhelming market response.
Sale proceeds of HK$4 billion have been generated from the project.

Reviewing the Group’s China business, Mr Li said Wharf would continue to adopt a prudent
approach balancing risks and rewards. "With the Group's already up and running Times
Square properties in Shanghai and Beijing plus various other projects in China, we are
certainly well-positioned to benefit from any opportunities arising," he added.

CME (Communications, Media and Entertainment)

i-CABLE Communications reported a sevenfold increase in net profit to HK$167 million for
2001 and recommended its first dividend payout to shareholders to signal the company's
confidence over the competitive first/early mover advantage that it enjoys. Turnover
increased by 17% to HK$1,931 million, with Broadband access emerging as a key driver for
revenue growth.

For the Pay TV business, the company is optimistic about subscriber growth in 2002 as it
continues to invest to enhance signal security, programming, marketing and customer
services, in addition to the upcoming exclusive carriage of the full 2002 FIFA World Cup in
June. Seventeen new channels will be added by end of May, including more pay-per-view
and premium channels to generate additional subscription revenue, as well as more basic
channels to enhance subscriber penetration and to monetise network capacity.

The Broadband access business turned in a strong performance and recorded a profit after 18
months of operation to exceed all expectations with total subscribers more than tripled to
160,000 during the year. With an estimated market share rising rapidly to over 30% in the
residential sector, the company’s position as one of the two leading providers of Broadband
access service in Hong Kong was further strengthened.

The name of New T & T was officially changed to Wharf New T & T in October last year as
an important strategic move to further enhance the company's profile and to demonstrate the
Group's long-term commitment to this business. Wharf New T&T’s target of transforming
itself from a low-value IDD into a high-value FTNS operator finally paid off. A first time
ever net profit, amounting to HK$8 million, was achieved in 2001.

Business fixed lines grew 52% to just under 200,000 and the company now holds a 11%
share of the business market. "While its emphasis on business fixed lines, both voice and
data, will definitely continue, Group management is now targeting at 15% share of the
business market on a 6-month time horizon," the Group said.

The year 2001 was a milestone year for the Group's telecommunications business.


Constrained by the softening global economy and competition from other South China ports,
the Group's container terminal business showed a relatively slow growth in 2001.
Nonetheless, Modern Terminals managed to outperform the other local operators and its
Kwai Chung market share expanded from 28.6% to 30.7%. A total throughput of 3.52
million TEUs was reported, representing a growth of 4.7% over the previous year.

According to Mr Li, upon the completion of CT9 in 2005, together with the company’s
further investments and enhancements in its existing facilities, Modern Terminals will
command a total capacity of 5.5 million TEUs. Cost will be driven down further as a result
of the economies of scale and continuous improvement on productivity.

Going Forward

Recent economic indicators and other statistics coming out of U.S. seem to be suggesting a
highly probable rebound in the second half of 2002 which matches with the current market
expectations. Besides, momentum has gradually built up for opportunities arising out of
China's entry into the WTO.

Looking ahead, Mr Li believed that the Group’s five core assets including Harbour City,
Times Square, i-CABLE, Wharf New T&T and Modern Terminals will continue to shine.
“These gems of the Group, complemented by the Group’s three unique strengths namely a
very solid foundation built through continuous value creation in the past twenty years, a
simple focused group structure and very strong recurrent earnings streams, will continue to
contribute to the Group’s future success. The management has full confidence in our ability
to take up any challenge going ahead," he said.



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