Swire Pacific Ltd A

Good afternoon, ladies and gentlemen. Welcome to the SWI Pacific 2022 Interim Results Analyst Briefing. May I introduce our speakers today? Mr. Guy Bradley, Chairman of SWI Pacific. Mr. Martin Murray, Finance Director of SWI Pacific. And Ms. Karen Tso, Managing Director of SWI Coca-Cola. Today's briefing will be concepted into English. Before we begin, may I remind all of you to switch your electronic devices into silent mode. Thank you. Following the presentation by our management, there will be a Q&A session. But before I hand over to Guy, we would like to introduce a short video showcasing SwyPacific's highlights for the first half of the year. Hope you enjoy the video. Hope you all enjoyed the video. May now invite Guy, Martin and Karen to take us through a detailed look at our results, please.

Good evening and thank you for joining us. Let me start with the financial highlights. Well, we had a very resilient first half performance, I would say, under some very challenging conditions. But our focus was very clear. We're focused on the greater China and Southeast Asia geography, where the company seeks to focus and grow its three core divisions and make new investments in the growth areas that we've discussed, like healthcare. Some highlights of the first six months, I'd just like to single out. On the property side, we managed to get the Taiku Lee Xi'an deal done and over the line, which should be very exciting as a new Taiku Lee. On the beverage side, we'll come onto this in more detail, but we were able to acquire the franchise territories in Vietnam and Cambodia for the sum of just over a billion US dollars, and we're very excited about that opportunity. And on the aviation side, we started to see in the second quarter some increased capacity and improved performance. And at the airline level, you saw Cathay Pacific becoming cash positive. So some early signals in Q2 there of the positive nature, which was very pleasing. That resilience that I talked about translated into improved performance in terms of both underlying profit and recurring underlying profit versus the prior year. And the resilience was shown across our three core divisions. But you can see on the right-hand side of the chart that the big impacts and the big improvement there has clearly been in the aviation numbers. So we remain in a strong financial position, and we've increased dividends by 15%. We've also announced today a share buyback program, and Martin will now go into much more detail on the financial numbers, probably including the buyback. Martin, thank you.

Thank you. So this first slide, the recurring underlying profit of 1.2 billion, and then we adjust for non-recurring items to get to the underlying profit, 1.7 billion, and then the statutory profit that principally adjusts for the net valuation of investment properties and the deferred tax relating to those. In terms of our revenue, our revenue is down 5%. That's mainly a reduction in property trading and also the reduction of charter hire from the closure of our marine division. The cash generation from operations is down 42%, partly because the operating profit was down slightly once we adjusted for the revaluation of the property. Our accounts receivable are up, and also the reduction in proceeds from property trading impacted that line too. this shows here our return on equity so clearly the left hand side shows the difficulty the groups faced since the outbreak of the pandemic and clearly the returns aren't yet where we want them to be and on the right hand side it shows you the make up of that so the recurring profit Again, good results, stable results from Swire Properties up in Swire Coca-Cola, the impact that COVID's had on the aviation business. And then the other big pieces is the translation differences of 3.2 billion and the dividends that we pay out to get the movement in our equity. Thank you. Here we just again show the recurring underlying profit, as the chairman said, in the property side. Very solid performance on that piece. We really look at the quarters here. So property and beverages really were impacted in the second quarter because of their size of their portfolio in mainland China and particularly the impact of the lockdowns in there. In terms of aviation, stronger results from Cathay Pacific, 34% improvement in their losses, 70% at an airline level. So they've been very impacted by what's happening in their associates on that front too. The good news on Cathay Pacific, very much related to the first quarter and particularly in the quarantine procedures that were implemented at the very start of the year. And with the adjustments to quarantine, it's good to see Cathay Pacific back being cash positive since May and the second half outlook looking much stronger. Here we show the adjustments in terms of the non-recurring items. So again, lower gains from the disposal of Thai cushion car parks. In terms of impairments, we have an impairment in the absence of the impairments of Cathy Pacific, and we took an impairment on the bakery. We got a remeasurement gain on the disposal of Spoh when we completed that transaction, and again, some ad hoc gains on disposals. In terms of the improvement and the underlying profit, the non-recurring items year on year weighed themselves out. So really, the movement in underlying profit is the same movement as the recurring profit. So again, as we said, the impact, particularly in the second quarter in properties and beverages, the first quarter in aviation, but a stronger first half. And then again, at the end, year on year, the non-recurring items are pretty much the same. In terms of the balance sheet, very strong net debt levels of 43 billion, which means we've got a very low gearing at 13.6%. Our interest cover is 6.6%. Average cost of debt is 3%. And in this environment, we've got 72% of our interest rate is on a fixed basis. And in terms of our liquidity, strong liquidity, Swire Properties had built up a lot of liquidity in the sale of CityPath back in 2021. So with their investments, that's come down slightly. But as you can see, we've got strong undrawn facilities and a good maturity profile in terms of our debt profile.