Link Rl Est Invt Tr Uts

Good afternoon, ladies and gentlemen. Welcome to our Linked Read 2025-2026 Infra-Results Presentations. Now on the stage, we have our Chair, Mr. Duncan Owen, and our Group CEO, George Hong Choi, our CFO, Ko Sung Un, and our Group CIO, John Shaunders. So on the screen, you can see our agenda today. And without further ado, let me hand the floor over to Duncan.

Thank you.

Thank you. Thank you. Good afternoon, ladies and gentlemen, and welcome to the 2025-2026 interim results presentation for Link Read. As today's meeting has been webcast live, I also extend a warm welcome to those joining us online. It's my pleasure to open proceedings and I will provide a few brief remarks now. With regards to the interim results period, despite a range of macroeconomic and market challenges, Link has continued to deliver resilient results during the first half of this year. We saw a modest decline of 3.4% in net property income compared with the same period last year. This is mainly due to market challenges in Hong Kong and the Chinese mainland. Our distributable amounts and distribution per unit are down 5.6% and 5.9% respectively compared with the first half of last year. Before inviting our management team to run through the details, I want to start with an overview of how global trends are shaping our business and the execution of our strategy. While capital markets continue to rally on the back of optimism about AI and interest rates look to be trending downwards, the global business landscape remains as complex as ever. Wars, geopolitical tensions and shifting trade dynamics continue to create uncertainty. The recent shifts in US policy are leading to fundamental structural changes in how investors view the world, which will continue to take shape over the months and years ahead. Whilst we're starting to see some encouraging signs of stabilisation in terms of the environment, our business, many of our tenants are still suffering from a prolonged period of challenge, particularly in Hong Kong. Therefore, it will take time before the improvement in consumer sentiment translates into higher rental income for Link. In anticipation of these challenges, ahead at the beginning of this calendar year, we launched a wide-ranging operational efficiency drive and have already made significant progress in reducing costs. On an annualised basis, we are on course to make savings of more than HK$200 million to our ongoing people and general and administrative costs. These efforts together of our ongoing asset enhancement are all part of our commitment to protect unit holder returns in future. Regarding strategy, Link's primary current strength is still owning and managing shopping malls in Hong Kong, the Greater Bay Area and other locations in APAC such as Australia and Singapore. We are continuing to focus on this strength. As we evolve and refine our strategy, alongside the active management and optimisation of the Link portfolio, we are also expanding our real estate investment capabilities. This includes some new capital partnerships as well as advancing investment opportunities. As a consequence, we're now managing close to US$1 billion in third-party capital already. This part of the group's business will continue to focus on value-add strategies and higher returns, providing diversification away from single market and sector dependency, enhancing unit holder value. We recently announced the planned retirement of our Group CEO, George Honchoy, and this will take effect by the end of this year. Before inviting him to run through the interim results, I'd like to convey gratitude to George on behalf of the Board and myself for his significant contribution and leadership. During his tenure, Link has grown and transformed to the benefit of unit holders, tenants, employees and the wider communities it serves, of course. The interim leadership team is on stage today. We look forward to welcoming John Saunders, our group chief investment officer to the board. We're excited to continue to work with Coxion N and John Saunders alongside the newly formed chairs committee, which is there to provide support and provide strategic guidance to the management. We are currently running a comprehensive search for a new CEO. We're seeking a proven real estate investor with international experience who can lead the next phase of the company's strategy. Given the seniority of the role, the search will continue to take time and it's reasonable to expect a lengthy notice period is possible for an incoming candidate. Hence our decision to put in place the robust interim management solution I was describing earlier. Thank you. I'd like to invite George now to take us through the presentation. George.

Thank you, Duncan. While our business continues to navigate and feel the effects of various macro and local market level challenges, I'm pleased to report that we have achieved a resilient set of results for the first half of 25-26. And I would like to express my sincere thanks and gratitude for the hard work and efforts of all our colleagues who have made this possible. As we approach the 20th anniversary of Link's IPO, I believe that this is also a moment for us to reflect with pride. Together we have delivered strong financial results and made positive impact on our communities, even as we face many challenges along the way. The achievements we have realised over the past 20 years give us every reason to be confident that Link's ability to successfully navigate the path ahead Back to the results. Negative rental reversions in Hong Kong and China Mainland have impacted our overall performance with NPI down and DPU declining. Despite the tough conditions, we remain committed to deliver strong returns to our unit holders. We have launched multiple efficiency initiatives aimed at reducing costs and preserving margins. On the balance sheet front, our capital position remained robust, supported by credit markets' flight to quality and our blue-chip reputation. Net gearing stood at 22.5%, and our cost of borrowing has declined to 3.2%, and we have also retained A-ratings from S&P, Moody's and Finch. This strong foundation enabled us to pursue inorganic growth and portfolio diversification. Our expansion into Australia and Singapore demonstrate this strategy, with retail assets in both markets achieving near full occupancy and strong double-digit reversion. Our KS and John will now give more details.

Thank you, George. Good afternoon to everyone. Despite the ongoing macroeconomic headwinds, we have taken the strategic decision to retain high occupancy levels at the expense of rental revenue. Our continued focus on cost restructuring will involve certain one-off charges. Meanwhile, we expect operating conditions in the second half to slightly worsen before stabilising. We believe our non-discretionary retail and kappa assets will remain resilient nonetheless. Our international business is a highlight. As George mentioned, our retail assets in Singapore and Australia achieved near-full occupancy and double-digit positive rental reversions during the period. On the financing side, we have benefited from the temporary dip in HIBOR, and our borrowing costs dropped to 3.2%. We have prudently managed our interest rate exposure with expectations of longer-term rates easing, and I will share more details in the next few slides. Valuation of the LR portfolio stood at HK$223 billion as of end September 2025, down about 1.3% from six months ago. Hong Kong and the Chinese mainland still hold the majority part of our portfolio at around 88%, while international with the majority in Australia and Singapore took up the rest. Cap rates have been relatively stable compared to six months ago. Breaking down by geographies, ongoing weakness in rental performance across Hong Kong and the Chinese mainland has led to decline in valuations. For our international portfolio, valuations have remained stable in local currency terms. However, the depreciation of Hong Kong dollar gave a slight uplift in reported valuations overall. Lastly, on capital management, Our strong financial position is underpinned by a healthy balance sheet as reflected in the key metrics shown below. As of September 30th, net gearing remained at a healthy level, while the average borrowing cost declined to 3.2%, supported by the temporary dip in highbore during the first half as discussed. Our fixed debt ratio remained within the prudent range of 50-70% at 66%. Reflecting our continued careful management of interest rate exposure and heightened uncertainty over future rate movements, financial stability is further reinforced through competitive credit margins and effective FX risk management. Over the past six months, we successfully refinanced more than HK$10 billion of debt at highly competitive rates, achieving a lower overall margin compared to previous year. Total debt increased slightly from $53.5 billion to $55 billion, primarily due to currency translation effects. Our debt maturity profiles remain healthy, with an average tenure of 2.9 years and a well-staggered schedule extending over the next 13 years. Strong A ratings from all three agencies secure favourable funding terms, supporting our future financing needs. We also remain well below covenant thresholds, providing ample headroom for acquisition and strategic opportunities. With that, I'll now hand over to John for the portfolio highlights. Thank you.

Thank you very much KS and welcome to all of you. Thank you for coming. I'll now walk you through the LinkREIT portfolio highlights, starting, of course, with the performance of our Hong Kong retail segment. Despite market challenges, occupancy remained very solid at well over 97%. And although revenue declined by 3.1% year over year, mainly due to negative 6 plus percent reversions. But pleasingly, tenant sales showed improvement, narrowing the decline to just over 2%. And I'll now break that down by category for you. Supermarkets in the foodstuff segment actually returned to positive growth, which is both encouraging, and it marks the first increase since 2023. And in that sector, we outperformed the Hong Kong market in the first half. F&B for the first half was flat, and that was broadly in line with the overall Hong Kong market trends. But the overall decline in linked tenant sales was dragged down by the general retail segment, which includes, of course, only a small proportion of valuable goods as opposed to our main tenancy focus on discretionary. Overall occupancy costs stayed very healthy at around 13%. And I would say that together, these metrics do suggest that while some challenges do still persist, resilience within the portfolio remains very strong and evident across our entire range of portfolio. That said, retail businesses in Hong Kong do continue to face some near term pressure from heightened e-commerce competition. And that has weighed on some non discretionary trades. But to cope with the challenges, we continue to proactively refine our tenant mix to stay ahead of evolving market trends, and we'll share more details on these initiatives in the forthcoming slides. Also, as a testament to our extremely capable leasing team, we've secured a little over 345 new leases during the reporting period, which is a very strong result indeed. Leasing activity was shaped in large part by emerging trends, including specialty F&B, learning and interest classes, and also game and family entertainment. We also capitalized on growing demand from Chinese mainland brands, and that's further diversifying our tenant mix beyond specialty F&B to include new operators in fashion services and entertainment. Meanwhile, tenant retention remained extremely healthy at around 80%, which underscores our focus on engagement and long term partnerships. Revenue from car parks and related business was broadly stable. Monthly income softened a little due to fewer tickets, but upward tariff adjustments helped offset much of that impact. In addition, we've rolled out smart parking systems to streamline operations and introduced dynamic pricing and diversified services. Leveraging real-time analytics, this approach aligns rates with demand patterns and that helps us maximize utilization and also deliver greater flexibility and value for our customers. Moreover, with the rising popularity of EVs, the growing demand for parking spaces equipped with charging facilities will provide additional support for our business performance. As part of our defensive strategy, we've continued with our asset enhancement projects with our current HK$2.3 billion pipeline. And during the reporting period, we invested HK$59 million at Lei Yimeng and HK$21 million at TKO SPART. These efforts reflect our vision to future-proof our assets, and those two projects are expected to respectively deliver ROIs of 14.5% and in Shunkwano at just over 29%. Alongside these major upgrades, we also made smaller improvements, including reconfiguring spaces to better meet tenant needs and to optimise product layout for better productivity. Now let's shift our focus to the Chinese mainland retail portfolio. In the first half of the financial year, there were still market headwinds which were exerting pressure across that mainland portfolio. Despite the challenges, though, the retail portfolio continues to show very strong occupancy of 95.9% amidst the prolonged tough conditions. Rental reversion was soft due to subdued sales sentiment primarily in Beijing. And indeed, if you include Link Plaza, Link Plaza Zhongguanchun and the retail portion of Link Square, rental reversions actually quite pleasingly were positive at plus 2.5%. We continue to optimize asset quality to drive sustainable growth and significant AIs were successfully completed at Tianhe and Tongzhu with a combined capital expenditure exceeding 440 million RMB. Both projects achieved outstanding double-digit ROIs even in the current more challenging market environment and I'll give you more details on the asset enhancement at Tianhe now. We also completed, just before I get to that, several small-scale projects at Central Walk, Liwan, Xibao, and as I mentioned before, Zhongguanchun, with an average ROI of around 9%. Combined with the strategic tenant remixing efforts, we've attracted more innovative and competitive brands. So let me walk you through an example from Linkplaza Qianhe that I think really highlights our asset enhancement capabilities. So down in the basement here, we strategically downsized an anchor supermarket tenant and introduced FoodiePlus, which is Link's own food court concept. And we applied that to the freed up space. We also took an underutilized area and turned it into leasable space, which further maximizes the value of the property. This approach isn't unique to Tianhe, of course. In fact, we implemented a similar concept at Select Assets in our Chinese mainland portfolio. This included Link Central Walk, Link Plaza Liwan and Link Plaza Tongzhou and it's proven to be really quite successful. Now I want to move on to our international retail portfolio. In Singapore we had near full occupancy and very pleasingly double digit rental reversion and I think that demonstrates strong leasing demand from tenants and underscores the dominant and strategic locations of our malls there. Thanks to SG60 promotions and the rollout of government vouchers, we saw solid support for tenant sales. That said, retail sentiment is still a little cautious and we need to monitor any signs for any slowdown in discretionary spending there. In Australia, occupancy across our retail centres remain very solid at over 98%. And the rental reversion was an extremely strong and quite impressive 16 plus percent. Tenant sales are also up by over 15%. So looking ahead, we remain optimistic about the retail sector, thanks to rising household incomes, lower interest rates and improving consumer sentiment. Let me just share with you now, if I may, some updates on our strategy. We've continued to actively manage and optimize the existing LINK portfolio, but we're also expanding LINK's real estate investment management capabilities, as you've heard, to some degree of success, as mentioned by the chairman earlier. In the first half our focus on active management, operational efficiency and streamlining has helped us reduce operating costs, preserve margins and this of course will be a constant ongoing effort. I'm also pleased to report that we've recently completed the streamlining of our integrated facilities management, the IFM contracts and this should yield significant savings both for now and in the long term. We're also actively exploring new investment opportunities with a particular focus, as we've mentioned before, in Singapore and Australia, while we continue to look for ways to divest and recycle assets, but only where appropriate. On the investment management front, as I said, you've heard from the chairman, Link Real Estate Partners is making very solid, very pleasing progress. Thank you John for running through the details before Q&A. I want to take a moment to express my heartfelt thanks for the trust and support that I've received over the past 16 years.

I'm truly grateful to our many stakeholders and colleagues and partners. And of course, I want to especially thank so many of you here in the room today, our unit holders and research analysts for all your ongoing support, the buy recommendations from time to time and not too often sell recommendations. It's truly a pleasure to Rl Est Invt Tr Uts To be a world class real estate investor and manager serving and improving the lives of those around us. I want to extend my best wishes to Link and all my colleagues. Together we have built a strong and resilient platform and one that will be well prepared to Thank you very much. I look forward to seeing how this truly exceptional organization will continue to evolve as I start my garden leave in January. Thank you.

Thank you, George. We all hope you have all the best and happy retirement. So now it comes to the Q&A session. Okay, for those of you here, you can raise your hands and ask questions. And then for those who are joining us through the webcast, you can use the Q&A functions to answer your questions. And please state your name and the company that you represent. Okay, I'll call first.

Thank you very much. First of all, thank you, Josh, for your leadership. We'll miss you and just wish you all the best. So this is Carl Chan from JPMorgan, and I have three questions. My first question is probably more for Duncan. So as we know, we are trying to identify a new CEO, right? Just curious from your perspective, what kind of qualities or track record do you most look forward to in the new CEO? And then when the new CEO is on board, what kind of KPI you will give him or her? And I'm just curious if there's any tentative timeline on when the new CEO will be on board. So that's my first question on the new CEO. And the second question is on the potential asset acquisition in Australia. So just curious if you can give us a bit more thoughts on the process behind. Number one, why are we interested in those three shopping malls in Australia? How very accurate do you think it will be? And how do we plan to fund the acquisition? And will this be a pure acquisition or will this be part of the fund management that we have been talking about? So that's my second question on the Australia potential acquisition. And my third question is on Hong Kong retail sales, because if we just look at the tenant sales of the last quarter, it seems like the year-on-year decline actually widened a little bit. So just curious for, let's say, October and November so far, do we see some marginal improvement? And what's our later guidance on the rental reversion for the second half of the year? Thank you very much.

Thank you. Three questions, but three or four questions in each of the questions. So let me, I'll try and deal with point one, And I'll hand to George, but I'll give a couple of headlines on point two and three before I hand to John. The CEO process, there's a high degree of transparency on it. It's a comprehensive search. It's an international search. And there is a process ongoing. So I won't comment in too much detail, but I'll give you a little bit of guidance. We are looking for a real estate investor with a proven track record who has worked across border and in an international environment we are looking for someone who has done that in a public as well as a private environment And we want someone who, of course, will continue to uphold the brand and the integrity of the brand in Link and bring a good degree of humility to how Link, in keeping with its brand, operates. I think those things are a given in some ways, but I think it's very important that we focus on those as key criteria moving forwards. In terms of timing, it's a proper process that is taking some time. It's begun as a global search. It has been gone from a long list to a long medium list to a medium medium list to a medium list to a long short list. But there will be a prolonged period of time probably before we can agree terms of the final candidate and it is likely a number of the candidates have extended notice periods because of the seniority in their existing organisations and the part that you didn't ask that I'll add is for that reason it's key that we put in the interim management Arrangements that we did promoting John Saunders to the board. So there were two executive directors and we have the chairs committee for oversight and support of the strategy with a real focus on ensuring we don't take a break or a pause in execution of the strategy going forwards during that interim period. So that's the real focus in terms of the other two. I don't think we'll comment on specific acquisitions. What I think I would say is acquisitions of retail mouths in Australia would be very much in line with our publicly declared strategy. John Saunders often describes this as the company's superpower in management of mouths. And as I said in my part of the presentation at the start, our core competence is management of retail mouths in Hong Kong, the Greater Bay Area, as well as other locations in APAC, such as Australia and Singapore. So it should come as no surprise to analysts or investors that we might be seeking opportunities in those markets. In terms of the third question and the headline about Hong Kong retail sales, well, the reversions have gone down 6.4% this half. The only thing I'll add, and I'll avoid stealing more of John's thunder, is there is an obvious lag effect. There is an average lease length, a normal lease length of three years in Hong Kong. If a property was let three years ago at the market rent with the best will in the world, most of those market rents are lower today. And when those leases renew, they will be at the market rent, which will be lower. So although we are genuinely seeing increased footfall, all sorts of positive signs of recovery, the real world may be recovering positively, but the impact on our numbers and seeing it come through the numbers will have a time lag. John?

Yeah, sure. So specifically on the Australia thing, I think we've said for quite some time that we are interested in doing more Australia. Clearly, the Australia existing portfolio is treating us very well. I think retail is very much center and core to what we do. So this is not at all opportunistic. It's very much strategic in nature. And it's an extremely good fit, I think, with what we already have down there as a portfolio and what we're very comfortable managing and operating. There was a question about funding, etc. We have plenty of capacity on the balance sheet to fund a transaction like that. And I think that allows us to bring to bear a fast liquidity solution. Rl Est Invt Tr Uts

Thank you. This is Cindy from Citi. I also have three questions. The first one I want to follow up on your link real estate partners. So just now we mentioned there has been some initial success and commitment. So can you walk us through the current structure of the third party capital with you and is there any target to AUM? How should we think about your pace say in three years or five years? What will it be? And the second question, I want to touch a little bit on your own portfolio reconstruction So just now we heard you want to increase your Australia portfolio. So is there say a target of increasing Australia portfolio to what percentage within the overall portfolio? And is it fair to say that you are thinking it's getting more confident and interested to buy in today than say three months or six months ago and why are you getting a little bit more interested? And in terms of, say, divestment, is there any asset within your portfolio that you think can be, well, interesting to sell it and recycle capital? And the third question is actually on your cost control initiatives. So we heard a lot of good news that you just shared on cost controls, but that has yet to reflect in the financial results. And if I hear correctly, I think KS mentioned that Equivocent in the second half, before things getting better, So can you share with us a little bit on how cost control has been doing? How would it affect our overall performance? And when it's stabilized, what type of margin levels are we targeting at? Thank you.

Thank you. I'll give some headline answers again, particularly around question one. And questions two I'll pass to John and then to KS respectively for question three. First of all, the overriding principles of the strategy for third party or for balance sheet are to buy the right assets that enhance returns and the quality of earnings for the group and the unit holders of the group. We do not have a fixed AUM target. The target is to buy the right assets on balance sheet. and to buy the right assets in partnership where we're co-investing to get the right returns from the assets. There will naturally be some management enhancing and there may well be some management fees that come with managing other partners' money alongside ours, which is aligned and is long term. But we're essentially a REIT that is looking first and foremost to maximise the value of its capital invested by its balance sheet. In terms of the target returns, I think this is relevant. It's self-evident that the balance sheet returns have tended to be high single-digit Where we allocate 10 or 20% of the balance sheet towards the funds, business or special situations, we would reasonably expect those returns to be higher and to be more enhancing to provide diversification. So you could look at a value add style type of return that would be 15% plus. In terms of I think the second question which was very much focused I think I've got some detailed notes here on timing and then we moved on to a degree to recycling and yes we'll always look to recycle but what we would not want to do was hold on to assets follow the market down and sell at the bottom of the market especially where there are assets that we have conviction on so I think I think there may however be some non-core assets that don't fit the criteria I've said in the past that might not be retail malls and might not be in the obvious target geographies that are obviously adjacent to us and we know and can operate in. So you could pick any number of offices as an example in the UK or warehousing in the mainland. In terms of the cost control, before I hand to John on question two, This year has a lot of noise in the cost control because when you make cost controls with targets, there are some exceptional items that go with that. So again, the benefits will come through in the full annualised, if you like, normalised cost controls that we would be making. There are some one-offs this year, but essentially the current annualised savings for the running and operating costs are a little bit in excess of HK$200 million.

Yeah, certainly. So just adding a little to the third party side, you know, obviously it's private capital for a reason, the clues in the name. But what I can say is that the clients who've trusted us as fiduciaries to manage capital on their behalf so far, they are all very well known names and are all institutional capital. I think the chairman said it very well when he said we don't have a specific target per se but I think our style has been to do things and then tell you that we've done them rather than perhaps tell you that we're going to do lots of things and it takes some time so I detected a couple of slightly widened eyes that after 18 months you know we do have a billion Rl Est Invt Tr Uts Why Australia? I think there's a number of reasons why Australia and why the retail sector in more detail. I mean, Australia, as I said before, it's doing us very well in terms of the existing portfolio. So I think it shows that where you have a high quality center and you match our capabilities to it, we can produce outsized returns and accrete earnings for the DPU. It's helpful, of course, that Australia has some fantastic demographics behind it, and that affects all areas of society, including property. But it's particularly powerful for retail and retail catchment. So that's fundamentally, I think, a lot of what's driving it. And I think it makes... It makes very good use of the balance sheet because we are clearly able to invest at rates which significantly beat our cost of capital.

I think on the point that Chair articulated on cost savings, I think if you look at the business, there's probably about from the revenue line down 10% of revenue that is controllable, whether it's staff costs at the property level or staff costs outside the property level at the regional centres. And I think where we have come in the first round is that with some of the staff headcount optimisation or restructuring, there will be one-off separation costs. No difference from a lot of companies as they go through restructuring of costs. And this year we'll see a bit more taking in as I guess the senior departures or some of these departures will come in the second half of the year. And then like what Chairman has said, on a structured basis into the next financial year, the aim is to shoot for about 200 over million of savings every year. Thank you.

Okay, Carl.

Hi, Carl Choi from Bank of America. Three quick questions. First on the third-party capital question, just want to find out if there are any limitations to the capital that you have raised in terms of, for example, geographies where you can make the investment. And going forward, is there any guiding principle between acquisitions that you've been making based on your own balance sheets and where you would be tapping third-party capital to make those acquisitions? Rl Est Invt Tr Uts And the third question is regarding a quick one housekeeping is regarding the headcount related reduction charges. Should I clarify that that you'll be making your digital income after absorbing those charges so you won't be isolating them out separately? Thanks.

Thank you. Again, I'm going to hand over to my colleagues. But in very simple terms, where we're working with third parties in partnership or in a fund structure, yes, the returns are higher. There's typically value add style returns. And yes, the strategies are relatively unencumbered, albeit they would be very focused in the region of APAC. So the geographies could be wider, the sectors could be wider, as opposed to balance sheets, where there's a big focus Rl Est Invt Tr Uts Rl Est Invt Tr Uts Rl Est Invt Tr Uts The key factor for all of the reversions, whether they're upwards or downwards, whether they're Beijing miles in the mainland or elsewhere, is there's always a lag indicator. So what's happening on the ground is always ahead of what you see in the financial numbers that come through because of that lag effect. And I think it's really important to note that as you do your modelling for the numbers, etc. John?

So on the third party capital side versus the balance sheet, I think the balance sheet is very clear. It continues to be very committed to Hong Kong and the Greater China area, the Greater Bay area particularly. It's also very much Rl Est Invt Tr Uts So that takes care of the balance sheets. In some respects, that's relatively straightforward. But again, as you can see from some of the results, when you get the right assets with the right operational management, you can produce very good returns from those. The fund, or the fund, the third party business, the capital business, that is, you know, capable of operating on a wider scope, taking in some other Rl Est Invt Tr Uts In that asset particularly there were some challenges. There was a new mall that was down the road that came into existence so we had some weaknesses in occupancy which is highly unusual for us because normally we pride ourselves on having very full buildings as you can see from the results. We had to deal with that, and in order to deal with that, that meant that there was steeper than normal reversions because suddenly we were competing, as I say, with a new offering. But they've increased occupancy there, or we've done lettings for around about 35 plus percent of the building overall. So I don't want to be too confident in predicting, but I do feel that that is largely shored up. And could there be some more weakness that comes from the general market? Yes, potentially. But I think we're now on a level playing field in terms of that asset. And by the way, that asset is a perfectly good asset. It just suddenly faced some competition and we've dealt with that. And as I said earlier, when you take out the impact of that particular property from the overall results in China, what's very encouraging is that we actually saw growth in reversions in China overall. So I think with some cautiousness going forward, I think it's not a bad picture.

On the hit count reduction, I guess, The way it's done is between a redundancy or retirement, there are statutory as well as contractual payments that we are obligated to fulfil. And the accounting treatment is such that the expense of these payments needs to be all front-loaded to the last day of the employment. So that's why I say a lot of this will then be surfacing as we cross into the end of the financial year, into the new year. And I guess when the exercise was conducted in the first half and the execution of this stuff is being done of this period and all, quite a fair bit of this one-off will then be expense into the second half of the financial year.

Mark? Thank you, management. This is Mark Leung from UBS. I got about three questions. I think the first one is regarding on the retail sales on the grant. I think in first half, our tenant sales was mainly dragged by the general retail. E-commerce Penetration They said they want to eliminate the brick and mortar retails in Hong Kong. So just want to see your view and what's our strategy in defending our position for the local neighborhood mall in regard on the e-commerce threats. Number three is regarding on the occupancy cost ratio. I think currency is about 13%, but if you look on the wide arc board across, seems the tenant margin is squeezing and also maybe some of the supermarkets are cutting the price. Do you think that the Occupancy Cost Ratio May Need To Further Trend Down In The Future In Order To Retain The Talent If That's The Case What Is The Sustainable Level Last But Not Least Is About The Hong Kong Car Park We Have A Slight Decline In The Car Park Just Want To Check With Management What Is Our Future Growth Outlook For The Hong Kong Car Park Because Seems The Number Of Cars Continue To Did Not Rebound Despite The Population Increase Thank You

Thank you. I think most of these are for John. But just to recap, I think there's a retail drag impact is the question. The occupancy costs, of which I'll just reiterate what's been said before in that we've focused on a strategy to maintain high levels of occupancy rather than to hold out for the last dollar in rent. And that's because it positions the company better for a recovery in rent out of the bottom of the cycle when there's high occupancy. I think your third question is related to that because it's about occupancy costs. And I think there is a fourth question which is about car parking, which may be a fourth that KS may want to comment on. But if I can hand to John now on the retail drag.

Yeah, sure. So, you know, yes, I guess when you look at the Hong Kong retail sales, the first thing to say is that it's encouraging. When we were speaking a few months ago, obviously, we had a few data points. And I suppose we were all hoping that a few data points might become a few more, and that we might be okay to start calling it a trend. But obviously those figures capture luxury, particularly they capture, you know, gold and jewelry. And there was also the impact of the latest sort of iPhone offerings, whatever number we've got up to next. No doubt my children will tell me on their Christmas list. And we don't really have much exposure to that. So I think that's why our figures lag a little just in a pure number sense. But I think the positive to take away from this is not per se the non-discretionary lag slightly, but more That this trend of retail sales data points does start to resemble the trend as opposed to an individual set. So I'm not going to make any forward predictions, but let's all hope that that continues because that will be good for us. It will be good for Hong Kong. I suppose e-commerce, yes, you get individual data points or individual announcements, but I mean e-commerce is something that's been on our radar for a very, very long time. It's not something we've suddenly started reacting to because of one particular reseller saying they're getting out of bricks and mortar. And I guess balanced against that, there have also been lots of reports, not so much in Hong Kong in the near term, but there have been lots of reports of retailers saying, actually, we realize we need to have a combination of Rl Est Invt Tr Uts Rl Est Invt Tr Uts Rl Est Invt Tr Uts Rl Est Invt Tr Uts On the occupancy cost side, you know, I think our occupancy costs are, you know, very, very good, you know, around about 13%. But again, it's something that the team, Emmanuel, you know, the team, they focus on constantly and the level of detail that they go into, and the level of partnership that they have with our tenants in respect of things like this is phenomenal. And yes, there are still some headwinds out there in terms of minimum wage and other things. But I would say, again, I think we feel fairly confident that a number around 13% is a good result. And I think we feel fairly confident that we should be able to keep that number roughly where it is. In terms of car parks... I think you have seen a reduction in the number of car registrations in Hong Kong. I think that reduction has flattened out to some degree. And yes, we've seen a reduction in the number of ticket sales, but we've also seen some of that reduction added back in terms of the fact that we were able to push through some higher pricing, partly in terms of the fixed-term contracts, the monthies. Rl Est Invt Tr Uts Rl Est Invt Tr Uts

Before I take another question, let's answer one question from the webcast. So there's a question from Principal AM. What will be the company's funding plan for the potential Australian malls acquisition? Will it be through equity debt or recycling some of the capital? Thank you.

So what you have read in the media, I think there's some element of truth that we are looking at it. From where we are in terms of gearing at 22-23%, I think we have the capacity to buy this and put this on balance sheet using our debt headroom. But at the same time, I think there's no due certainty at this stage, but we have already prepared pre-financing for Rl Est Invt Tr Uts

Simon Chong from Goldman Sachs. Just follow up on the retail questions. John, you mentioned that you have seen some improvement of green suits across your different mall. Is there anything that you can call out? And secondly, I think on your point about lagging, you know, rent being lagging, the retail sales performance, you know, can you give us a sense, you know, how long the lagging typically be? We understand that it's a three-year cycle, but if you can share it with us, that would be helpful. And also on the cost, this year I think the annualized cost saving is $200 million, whether you have any maybe longer-term target for the cost saving. Thank you.

Yeah, look, I'd say the bright spots, the things that are encouraging, you know, supermarkets and F&B, which have both been sectors that, you know, have had some challenging times over the last few years. So seeing those actually sort of flatten out and even show in the supermarket sense a little bit of growth, I think, is really encouraging. And at the end of the day, I think the best, the simple thing to always remember is that very roughly we work on a three year leasing cycle. So we're dealing in third, a third, a third, and that should give you good clues as to how to deal with the reversionary lag. We've been very defensive in nature during the difficult times and we will have recovery, but it takes time to wash through all of those leases. So again, it comes back to the point about retail sales hopefully becoming a continuing trend. You can't do anything about the maths. It is a third, a third, a third. What will change the trajectory, and I can't predict it, is how much growth you continue to get in the overall retail sales. Does it accelerate? Does it stay the same? Does it taper off? The bigger the growth, the quicker you get out of the tail end of your reversion-relag cycle. But I think you know how to calculate that cleverer than I do.

I think just on the cost saving points, it's worth just mentioning there are two elements. One is cost savings and the annualized figure that we've mentioned, which is often infrastructure, headcount related. The other is working more efficiently. And whilst we don't have hard costs and further savings next year, we do have aspirations to increase productivity through use of technology, adaption of AI, et cetera, to increase productivity, which So I think we come to the end of the briefing today. Thanks for coming.

Thank you. Bye bye. Thank you. Thank you.