Swire Pacific Ltd A

Good afternoon, ladies and gentlemen. Welcome to Swire Pacific 2022 Annual Results Analyst Briefing. Joining us at the briefing today are Mr. Guy Bradley, Chairman of Swire Pacific, and Mr. Martin Murray, Finance Director of Swire Pacific. Before we go through a detailed look at our results for 2022, we'd like to show you a short video highlighting Swire Pacific's key developments and achievements in the year. Enjoy the video. Thank you. May we now invite Guy and Martin to take us through a detailed look at the results for 2022.

Thank you and good evening everybody and welcome. For those of you that come and see us often, you'll recognize that we're without Karen So, who runs our beverage division. She's up in Zhejiang province at a big bottler conference at the moment, but she tells me that we'll get her back for the interim, so you'll have to do with Martin and I for today. Okay, so the Swire Pacific 2022 performance, there were three major highlights as far as I was concerned. The first one being the exciting expansion that both the Swire Properties Division and the Swire Coca-Cola Division demonstrated in the year. The second highlight was clearly the recovery of aviation with the cessation of the COVID-19 related measures. And thirdly, we commenced a share buyback program, the first time for a long time, and as you just heard in the video, have produced a 15% dividend growth. On the financial front, and Martin will cover that in some detail in a second, I've taken out in this top left-hand figure for recurring underlying profit, I've taken out the effect of Cathay Pacific, which is in line with our dividend policy. And you can see on that basis, the RUP for the year-on-year is pretty flat. But we have raised dividends by 15% to $3 a share. As I mentioned just now, we did commence a share buyback program for up to 4 billion Hong Kong dollars announced in the middle of last year. It's been very successful, I think, in terms of producing a strong share price performance since. And so far to date, the total consideration spent on buying back those shares has been about 2.6 billion Hong Kong dollars. At the core business level, you can see on the left, the property division, in terms of recurring underlying profit, managed to put in a performance that was pretty flat to the previous year, which, given all the COVID uncertainties in 2022, I thought was a very strong performance from the property division. Beverages, too. 2021 was a record year at $2.5 billion. Profit on a recurring basis 2022 with all the lockdowns and the impact that we had in the Chinese mainland on COVID and still delivered a great a great figure at 2.4 billion Hong Kong dollars in terms of IUP. On the aviation side, obviously, it looks on this chart like the losses got bigger. But if you pay attention to the colors of the box there, you can see that there was a big change in the loss making of the associate business of Cathay Pacific and an improvement in the actual Cathay Pacific airline and its subs business. between 2021 and 2022. And that last point, I think, is the takeaway, which is very encouraging. Cathy Pacific had a very good end second half of 2022, and we're very confident they'll take that into the new year. Okay, Martin, finance, please. Thanks, Guy.

So we're reading from right to left. So we reported a statutory profit of 4.2 billion above our 2021 statutory profit of 3.4 billion. The underlying profit, which principally adjusts for the changes in the value of the investment properties, was 4.7 billion versus 5.3 billion in 2021. And disregarding the non-recurring items, the recurring profit was 3.8 billion versus 4.9 billion in 2021. With a strong outlook, we can hit our dividend target, hence this increased 15% and we hit our target of $3. The cash from operations principally reflects less trading income from SWI properties. So here we look at the right-hand side again in terms of the recurring profit of 3.8 versus the 4.9 reported in 2021. You can see that this is mainly driven by the losses in Cathay Pacific. However, if you disregard the $2.8 billion from the losses from their associates, the results from Cathay Pacific improved. We'll talk about that later. The second half results from Cathay Pacific were very exciting. The performance of Swire Properties was solid, despite the weak Hong Kong office environment and the impact of COVID-19 in mainland China in the second and third quarters. And similarly, the beverage business was not too far off its record profit in 2021 of $2.5 billion, again despite a very difficult second and third quarter in mainland China. The underlying profit of 4.7 billion against the 5.3 billion adjusts for the following non-recurring items. So we had lower gains from the disposal of Taikushin car parks, the gain on the disposal of Swire Pacific offshore, and the absence of impairments in Cathay Pacific, with some impairments taken in the Quinian Bakery. Statutory profit adjusts for the valuation of investment properties with a net gain in 2022. Slide 12, again, this just shows the movements in a waterfall chart. Swire properties, the increase in trading profit from 8 Star Street and the River in Vietnam, was offset by lower office rental, weaker rental in mainland China, and higher losses from hotels. In the beverage business, the COVID impact in mainland China and increased costs was partially offset by the continued strong performance in the US business. In aviation, again, very strong second-half performance from Cathay Pacific, not including the Associates. In slide 13 here, we have the balance sheet, and it remains very strong. We have had significant capex, but gearing remains relatively low at 18%, which I'm very comfortable with. And this includes the $2.6 billion in the share buyback. 60% of our borrowings is fixed, and our weighted average cost of debt remains at 3.2%. Here we've got very healthy liquidity. You'll see that our bank balances and short-term deposits have come down. We had built a war chest for COVID, but given the change in interest rate environments, we no longer have to hold that. And so we've also got a very solid and prudent debt maturity profile. I'll pass back to the chairman.