Swire Pacific Ltd A

Good afternoon, ladies and gentlemen. Welcome to Swire Pacific Interim Results Analyst Briefing. Joining us at the briefing today are Mr. Guy Bradley, Chairman of Swire Pacific, Mr. Martin Murray, Finance Director of Swire Pacific, and Ms. Karen So, Managing Director of Swire Coca-Cola. Before we take a detailed look at our interim results, we'd like to show you a short video highlighting Swire Pacific's key development and achievement in the reported period. Enjoy the video. May I now invite Guy, Martin and Karen to take us through the details of the interim results of 2023.

Thank you. Well, it was a strong first-half performance, driven by a rebound from all core divisions in the first half, main driver being aviation. As you saw yesterday, there were very strong profits reported by Cathay Pacific at the airline subsidiary level, and they were partially offset by results from its associates. Elsewhere, the big news was the announcement of a proposed sale of Swire Coca-Cola USA for HK$30.4 billion, which realises a gain of over HK$22 billion if approved. To go with that, there is an announcement of a proposed special dividend of HK$11.7 billion, We're also proposing a 4% increase in the interim dividends for the first half. And in terms of focus, we still remain committed to executing the strategic plans in our core markets of Hong Kong, the Chinese mainland and Southeast Asia. Just looking at some numbers, the recurring underlying profit was up 284% to 4.9 billion versus prior year 1.3. This came, as you can see in the bottom half of the chart there, from all divisions, although aviation, as I said, was the big recovery versus the prior year. The sale of Swire Coca-Cola USA, I'll go into much more detail at the end of the presentation, but at this stage I'd just like to highlight that the gain we estimate on the consideration of US$3.9 billion, which is approximately HK$30.4 billion, will be over HK$22 billion. And we propose to pay a special dividend of approximately half that gain, which would amount to a per share, per A share dividend of $8.12 and per B share, $1.624 Hong Kong dollars. We expect the transaction to complete in the second half of 2023. I'll now just pass over to Martin Murray to discuss the financial performance in more detail.

Thank you, Guy. So, yes, the statutory profit was $4.2 billion in the first half versus the $1.9 billion last year. The underlying profit, which adjusts for the changes in the valuation of the investment properties, was $5.6 billion versus the $1.75 billion. And the recurring underlying profit was $4.9 billion versus the $1.3 billion. Revenue and cash generation significantly improved, allowing us to pay a mid-single-digit growth of dividends of 4%, as Guy mentions. And if the sale of the 100% equity interest in Swag Coca-Cola USA increases, is approved by the independent shareholders. That will result in another substantial and immediate return to shareholders' value through the special dividend. Looking on the right-hand side of this page, you can see the breakdown of recurring underlying profit. And as Guy mentioned, supply properties is up 6%, beverages up 41%, and aviation up 137%, albeit with a decline in the results from HECO, weaker results from Cabin Solutions, and the impact of lower FX impact. The head office increases are driven by the higher interest rates with the healthcare results improving post-COVID. This slide shows the movement in our significant non-recurring items. So CX didn't participate in the issuance of new shares in Air China in January, which reduced their shareholding from 18% to 16%, resulting in a deemed net gain of $853 million. And also there was a smaller gain in the sale of Taikushin car parks, which was offset in an impairment in our plastics recycling business. This chart shows the step change in our underlying profit. So Swire Properties, you'll see their higher rental income and the recovery of the hotel business being partially offset by the softening in the Hong Kong office market. In beverages, strong results from the U.S. and the Chinese mainland and the first half contribution from the business in Vietnam. And then the big turnaround in Cathay Pacific, which has been partially offset by the losses from Air China, which we report three months in arrears. And then, again, for the non-recurring items, we've just been through those. In terms of the balance sheet, it remains strong. Our gearing has increased to 21%, net debt $67 billion. But assuming the disposal of SWAG Coca-Cola US, gearing will come down to under 15%. Our weighted average cost of debt is there at 3.8%, of which 64% is fixed. And then we've got a good maturity profile there with a weighted average term of debt of 3.2 years. I'll pass back.