Swire Pacific Ltd A

Good afternoon, ladies and gentlemen. Welcome to Swire Pacific 2023 Annual Results Analyst Briefing. Joining us at the briefing today are Mr. Guy Bradley, Chairman of Swire Pacific, Mr. Martin Moray, Finance Director of Swire Pacific, and Ms. Karen So, Managing Director of Swire Coca-Cola. Before we take a detailed look at our annual results for 2023, we would love to show you a short video highlighting Swire Pacific's key developments and achievements in 2023. Enjoy the video. Thank you. ... ... May we now invite Guy, Martin and Karen to take us through the details of the annual results of 2023.

Good evening and thank you for joining us. I think we'll get straight into it. Look, it was a great set of results, first thing to say. Obviously helped by well, we hit a record underlying profit at $36.2 billion, and that does include the $22.9 billion gain from the sale of Swag Coca-Cola USA and the contribution from the agreements to sell 12 floors at One Island East, which are two extremely satisfactory deals that got done last year. This chart just shows the level of deal activity at the underlying profit level. In properties, you heard an hour ago that they've now committed almost 60% of the $100 billion plan to the core markets of Swire Properties, and that's a tremendous achievement in what's just about two years since they announced that plan. Beverages had a great year. You can see they completed at the start of the year the acquisition of the franchise territory in Vietnam, having just finished Cambodia just before the start of 2023. They then restructured the still beverages business in the mainland China market. As I mentioned, we disposed of the Swire Coca-Cola USA business. And then very recently, on the back of that disposal, we've conditionally agreed to acquire a majority stake in in the bottling businesses in Thailand and Laos. That was done in February 2024. So lots going on on the beverage front in 2023. Aviation, you heard yesterday, they declared an ordinary dividend for the first time since 2019, which I think is a good sign of their recovery. But meanwhile, they continue to invest, and they've ordered 32 passenger aircraft last year, on the narrow-body front with six cargo freighters. So there's growth plans happening on the aviation side. And lastly, on a much smaller scale in healthcare, we were very happy to conclude a minority investment in Indonesia in conjunction with the Indonesian Investment Authority in the hospital sector down there. And as of this week, we've reached in principle agreement to acquire... what will be a controlling stake in Delta Health in Shanghai, which is a main cardiology hospital in that city. Just a few highlights before Martin does the detail on the numbers. Obviously, at the recurring underlying profit level, we also had a substantial gain from 3.8 billion in the prior year to 10.4 billion, which is very significant. Very, very satisfactory, and we're paying an increase of 7% in the ordinary dividends on the A shares, which is a good result. I think you can see in the chart on the bottom line there that both the property and beverages business were reasonably stable year on year, but the big turnaround, of course, came from aviation, and you can see that in the bottom right there, a huge swing in the results from aviation. primarily Cathay Pacific and its subsidiaries. This next chart talks a bit more about the underlying operations and what's happening, which is where we saw the recurring underlying profit of 10.4 billion. In property terms, you heard Tim talk about the retail recovery in both Hong Kong and the Chinese mainland, and I think that's probably the biggest driver, somewhat offset by a rather subdued Hong Kong office situation. In beverages, we're just seeing an increased contribution now throughout 2023 from the Southeast Asia portfolio, and I think you can expect that to continue into 2024 with the addition of the Thailand interest. Aviation, Cathay continued to rebuild its network, its frequencies, and that had a positive effect with good yields in 2023. And Hayco, on the back of that uplift in aviation, was able to ride on that and delivered an 86% increase in recurring profit. I'll now just hand over to Martin to talk about the detailed financial performance.

Thank you, Chairman. I'll start with the middle column because it's the biggest number. The underlying profit of 36.2, as the Chairman said, are excellent results. The statutory profit, the consolidated profit is attributable to shareholders, which basically adjusts for the principal movement in the investments at $28.9 billion, and then adjusting for the non-recurring items, a recurring underlying profit, a very strong recurring underlying profit of $10.5 billion. Revenue up 3%, and again, as the Chairman mentioned, delighted to continue with the progressive dividend policy of 7% on top of the special dividend that was paid on the sale of Swire Coca-Cola in the US. This slide here basically is, we can quickly go through the non-recurring items on that piece. So if we look at the right-hand side there of the underlying profit and make the comparison to the recurring profit, it shows there. So in property, you have the gain on one island's east where the 12 flows of 5.4 billion, nine flows were included in the 2023 number, 2.7 billion is our attributable level. In beverages, you have the 22.9 billion gain on the sale of swag Coca-Cola US, and then partly offset by a small payment on the recycling business. In aviation, we had a deemed disposal rate when Air China sold down its shares, and also they reversed some of the impairments. Some of the aircraft that they didn't expect to come back came back into the fleet with some terrific results from Cathay Pacific that were announced yesterday. There was an impairment in Goodwill in Hazel, and as you know, we sold the cabin solution business. There had been a drag on the HACO business earlier in the year with a loss, including the results there. And then... And then lastly, as we were very excited actually to announce our investment in Delta Health, I saw a small impairment there of 250 million actually reflects the better pricing that we did in terms of doing the deal for the majority. So it's a good news story in terms of, as we explained with the entry into healthcare, taking a patient view and waiting for valuations to come down to better levels. And here, just the reconciliation which is outlined in the press release in terms of the difference between the underlying profit to the statutory profit to the recurring. On the recurring, as the Chairman mentioned, these are really strong results even though they look quite flat. So I think from a property point of view, as we mentioned earlier, Tim and Fanny went through very resilient results. It's fantastic to see the results, particularly on the retail side, given the being offset by the softness in the office market that's been there for the last couple of years. Beverages is flat, but you have to remember that we are missing four months from SWAC Coca-Cola US in that piece. So again, great results on that and the first contributions from Vietnam and then the terrific results from aviation that were announced yesterday and fantastic to see Cathy back in business and paying a dividend again. In terms of the balance sheet, again, we have a very strong balance sheet. Cash from operations is strong, up to $14.5 billion. Our weighted average cost of debt remains relatively low at 4%. Gross borrowings, the fixed are at 76% on that piece. And gearing is a very well-managed 17%. And on the maturity profile, we've got a strong maturity profile. We have got some debt being refinanced in the second half of this year at very manageable levels.