Ctf Services Ltd S/Adr

Limited Financial Year 2025, and it results in an analyst briefing. I'm Sylvia, the head of Group Investor Relations and Corporate Communications. Thank you for joining us today, both online and in person. Due to the impact of the very strong typhoon, we have to delay the analyst briefing to today, and we truly appreciate your flexibility and also continued support. Our senior management will walk you through the overview of the resource highlight, and also the outlook of each of our five business segments, and also our strategy moving forward. And the Q&A session will follow. For those joining us online, please click on the question mark icon on the left-hand side of your screen, and you will be able to submit a question, and our management will address it later. Without further ado, may I now invite our Executive Director and Group Co-CEO, Mr. Gilbert Ho. and Executive Director and Group Chief Operating and Financial Officer, Mr. Jim Lam to kick-start the meeting. Thank you.

Thank you. Again, thank you everyone for joining our presentation today. I understand it messed up everyone's schedule, but unfortunately we can't do the presentation yesterday. So, first of all, the Financial year 25 was a stable year for us. We continued our effort to redefine and strengthen the group business portfolio. As you can see, we have done a number of acquisition as well as disposal. We also renamed our insurance segment to financial services segment. And obviously because of a couple of the acquisitions, and we will explain also later on that will be one of the focus on the fast growing wealth management business. Okay, sorry, sorry, okay. Okay, and also with the logistic warehouses, we also renamed, or I would say rebrand, give the logistic asset a brand, called CDF Logistics, to leverage the strong brand equity of Charter Cook. We will continue to grow these particular segments and drive synergies across different portfolios, so that the tenant's mix can actually can move across different assets. In the capital market, we have issued a number of convertible bonds with the initial aim to increase our public flow and hopefully to also enhance the liquidity of our stock. We will obviously talk about the diploma shares as well as the EB that we issued yesterday, later on. We also maintain the sustainable and progressive dividend policy and we continue to have a very consistent dividend distribution to our shareholders. In terms of the portfolio optimizations, as I mentioned, we have done a number of divestments throughout the financial year 2025. We have very timely disposed of the free-duty businesses. We also disposed one of the investment that the group invested in 2011, Heaver Group, we disposed it earlier this year. Last but not least, we also dispose of our investment in Italy, which is a solar farm investment, which we invested in 2018-19. In terms of the strategic advancement, as I mentioned, we have renamed the insurance segments into financial services segments to reflect its expanded scope. With the two new members that we acquired throughout the year, first of all, the USEMARC in that group, as well as the Black Coin Group, which is focusing on external asset management. We also established, through CTF Live, we also established a Bermuda operations to serve the high net worth clients who want offshore insurance policies. For the logistics segments, as I said, we will grant the asset of the logistics segments to have a consistent brand name of CDF Logistics. We will also, going forward, target the undervalued logistics assets in two main areas. One is the Greater Bay areas, the other is the Yangtze River Delta, which is around the Shanghai areas. So for the investors who are looking into our stock, I think the key investment features when you're looking at CDFS, first of all is the operational excellence across our very diversified business portfolio. All of them actually has very similar characteristics with stable cash flow and resilient earnings. you can see from the results that even during the trade war, at the geopolitical tensions, we still deliver a relatively stable result for 2025. With the expansion of differential surfaces, we hope that we can actually leverage on a very strong brand name of Chardai Folk and also a very strong network of Chardai Folk group to deliver unparalleled surfaces to our different clients within the differential surfaces segments. We continue to do portfolio optimizations. As you can see, since 2018, we have done a series of portfolio optimizations and it's not the end. In fact, we just done one portfolio optimization yesterday, which we'll talk about later on. Obviously, the aim is to maximize long-term shareholders' value. Jim will talk about the financial management and the diversified sources of funding, which is actually one of the foundations of our quantitative expansions of the group. Dividend policy, which I'm not going to talk about further. I think the actions say it all. We continued our dividend distributions for 22 consecutive years, and it's counting and will continue. Last but not least, about our independent management team. All of us has been with the group for quite some years now. So for 2025, our AOP up 7% year-on-year to $4.4, $4.5 billion. That actually includes two business, which is Free Duty and Waikiki. If we exclude that two business, our AOP actually has gone up by 9% to $4.5 billion. In terms of each business segments, role segments, the AOP is $1.4 billion, decreased 8% year on year, which I will actually explain a little bit about that later. If we exclude Let's put it this way, if we're just looking at the operating rows, which is, because we have four rows which the concession period has expired throughout the year, if we exclude that four rows, the AOP actually has gone up by 1%. Financial services, which for this financial year only has CDF insurance, has gone up by 29% to $1.24 billion. Logistics business, the AOP has gone up by 3% to $740 million. Constructions, $790 million, our AOP. If we exclude Waiki, it slightly decreased by 7% because of the project completions of the construction business. Facility management is $89 million. Because free duty was disposed in the middle of the financial years, which was completed by the end of 2024 in December, if we exclude the free duty business, the AOP actually was increased by 16%. Last but not least, our strategic investment has increased by over 1,000% to $237 million. So, looking ahead, the different business segments on roads, we do see the changes in the road segments because of, first of all, of the economic situation and also the shifting traffic pattern. Second, the rising competition of newly developed roads. So, I think from a long-term perspective, we are unlikely to further expand on the road segments. However, we will try to enhance the earning of our existing row portfolio, including some expansions on our current rows, if we can find that the return of such expansion actually makes sense. On the financial services segment, CDF lies, as I mentioned, establishes permitted operations to provide insurance products for high net worth individuals. We definitely will continue to boost our agency force, which I will talk about later. And also upon the completion of USMART as well as Blackhorn, we will use that to expand on a very holistic wealth management platform, which hopefully with all the different financial services units can actually work together to build our entire wealth management platform. And last but not least is to utilise the strength of CTF Group for Crossout about the different wealth management products including insurance, brokerage as well as the external asset managers services of Blackhorn. For logistics, we will continue. to diversify the tenant base for both the logistic properties in Hong Kong as well as in China to offer more flexible arrangements to attract both short-term and long-term tenants. We will look for acquisitions in this space, especially in the GBA as well as Yangji River data which is around the Shanghai area, for some undervalued logistic assets. For our construction business, we will continue to grow and gain market shares on the Hong Kong recovering construction market. As all of you know, a number of large construction contractor has closed down. So from our perspective, it is a time for our city of construction group to gain market share in this respect. We will also explain later on that you can see the portion of government related projects has increased from 40 odd percent to now 61 percent of our entire construction in progress. So that we will continue to focus on the government projects, especially the latest policy address has strengthened the effort in delivering the northern metropolis construction developments. The facility management, the three parts, the CEC, GHK as well as KTSP, I think we will continue to leverage on the government initiatives in supporting mega events in both CEC as well as KTSP and for GHK, which we will explain also later on, that we now achieve AOP, meaning that it finished its RAMA phase and is now that going into a phase of fast growing development, we will continue to expand its healthcare network in Hong Kong to diversify its revenue stream and also capture more patients from different areas in Hong Kong. I will pass it to Jim to talk about the financial first and then we will talk about the different business segments updates.

Sure, thank you Gilbert. FY25 financial results. As Kevin mentioned, AOP for this year increased by 7% year-on-year to $4.5 billion. Adjusted EBITDA, which is a proxy of our cash flow generation for the year and included dividend received from our joint ventures and associated company increased by 1% to $7.3 billion. Profit attributable to shareholders increased by 4% year-on-year to $2.2 billion. The board approved final ordinary dividend of $0.35 per share, which is the same as last year, including the interim ordinary dividend of $0.30 per share and also the one-off interim special dividend of $0.30 per share. Total dividend for the year amounted to $0.95 per share. Even if we exclude the special dividend, the ordinary dividend for the year of $0.65 per share generate 8.3% dividend yield for the stock based on the latest closing price, which is quite attractive. Cash on hand amounted to $20.2 billion. We have committed and drawn back the facility of $9.6 billion. So total available liquidity is close to $30 billion. Lead debt balance was 14.7 billion, which translates into a lead gearing ratio of 37%, which is more or less the same as a year ago. Lead debt to adjusted EBITDA ratio is two times, which suggests now we remain in a very healthy financial position. As you know, we have strategically shifted a substantial portion of our debt to the lower cost renminbi borrowing since E2023. This helped us to save our interest expenses and also it will serve as a lateral hatch against our renminbi denominated asset. As of 30 of June, 2025, our renminbi debt to total debt ratio actually furthered to 62%. Renminbi liability to renminbi asset increased to almost 80%, and the fixed rate debt now accounted for about 70% of our total debt. Because of the increase in proportion of renminbi borrowing and also the decrease in HIBOR during the year, We have weakness decline in average borrowing cost from 4.7% in fiscal 2024 to 4.1% in fiscal 2025. We do expect our interest rate average borrowing cost to continue to come down in fiscal 2025 given expected interest rate cut, given expected third interest rate cut in the U.S. and the moderate declining interest rate in the mainland. Debt maturity profile, we had about $35 billion of gross debt as of 30 June 2025, of which about $9.4 billion, or 27%, will mature in the coming 12 months. We've been negotiating with banking partners for refinancing of the debt that will fall due within the next 12 months, and we expect the majority of the refinancing will be done before December 2025. We have quite a diversified sources of funding. We have bank loans, both onshore and offshore. We have issued US dollar in Hong Kong. We have issued panel bonds in the market in mainland. And we have also issued two convertible bonds this year in order to restore our fee fraud. Heart of the press is the 2.2 billion EB transaction announced last night. This chart shows the movement of our lag-grain ratio since 2019. Back in 2019, we had flat cash position. Then the lag-grain ratio increased to 31% due to the acquisition of CDF Life. Thanks to the strong cash flow generation and to some extent non-core disposal process, our lag-grain ratio has been gradually coming down to just 8% in fiscal 2023. From the general offer by CDFE, our giving ratio increased to 35% due partly to the payment of a special dividend of $6.5 billion and also partly to the redemption of our public PERP with an amount of US dollar $1 billion, which is also associated with the acquisition of CDF Life because the PERP was issued in fiscal year 2019. As I mentioned earlier, the net gain ratio in fiscal 2025 is 37%. Our target net gain ratio remain unchanged, 40% to 45% in the near to medium term. Despite the headwind to the macroeconomy built in Hong Kong and the mainland, we've been able to grow our AOP, cash flow, as well as that profit from 2023 to 2025. And we are also improving our return on equity. thanks to the more optimal capital structure. We've been paying, we have a very long dividend track record. We've been paying dividend for 22 consecutive years. We have adopted the current progressive and sustainable dividend policy since fiscal 2019 and we gradually increased our ordinary DPS from 58 cents per share in fiscal 2019 to the current 65 cents per share. We paid out special dividend one in the fiscal year 2024 and the other one in the fiscal year 2025. And for the current year, we have given the shareholders a script option for the final ordinary dividend for fiscal year 2025. We also announced a one for ten bonus issue. The purpose of both is to increase the liquidity and trading volume of our stock. As you know, we have issued two CBs. The primary purpose is to restore the public fraud of the company. We issued the first CB, 780 million, in January 2025, and upon its maturity in July, approximately 27 percent of the CB were converted, and we managed to increase our public fraud to about 24.4 percent. Because it's still below the 25% minimum requirement, as a result we purchased the remaining outstanding CB and issued new CB with an amount of $518 million. As of today, part of that $850 million CB has been converted and our latest public flow is about 24.5%. So we are confident that the outstanding CB will get converted because the current share It's about the conversion price by quite a wide margin. And upon full conversion of the 850 million CB, our FIFO will be able to increase to 26.4%, which is about the 25% minimum requirement.