Swire Pacific Ltd A

Hope you enjoyed the video. May I now invite Guy, Martin and Adrian to please take us through the details of the interim results of 2024.

Good evening and thank you for joining us. I see these interim results as a very solid set of results, especially when one considers the challenging operating environment that we've all been working under for the last six months and not notwithstanding, of course, the impacts on the comparisons from the disposal of Swire Coca-Cola USA in the second half of 2023. The Aviation Division was the main driver for our underlying profit performance with continued robust demand for travel and their confidence in the future of that sector was demonstrated when they announced yesterday a commitment of 100 billion Hong Kong dollars in investments over the next seven years. So I think it's a tremendously strong statement of confidence from Cathay Pacific. Talking of 100 billion dollars investment plans, on the property side, you probably just heard if you're in the property briefing that in terms of their commitment to 100 billion dollars over 10 years, We've now achieved a 65% commitment rate on that scale, which I think, again, is an incredible testament to the pace at which the Swire Properties has been investing in both Hong Kong, Southeast Asia, and the Chinese mainland. I'll give you some details about some of those investments in a later slide. But moving on to beverages, we were very excited in February this year to – take a 39% interest in the share capital of the Thai Nantip Beverage Corporation Limited, which is essentially the Thailand franchise for Coca-Cola and the Laos franchise. And we have a conditional agreement to move that stake up to majority in phases. So some good highlights, I think, for the first six months. So all that translated into a 2% drop in recurring underlying profit to $4.8 billion. But given our progressive dividend policy, we're raising our dividends per A share by 4%. One other thing to highlight in this slide, I think, is down at the bottom right, is the performance in 2024 of HACO. who've had a good six months and a big improvement on prior year. We're very happy about that too. In terms of the business performance, obviously you heard Tim talking earlier about the reduction in Hong Kong office rents on the property side. Part of that is obviously due to the rental loss from the sale of nine floors in One Island East last year. Part of that's due to just the softening of the Hong Kong office market We think that in the first half that market remained subdued and the retail market remained extremely challenging for reasons that I think we all understand. In the Chinese mainland, retail sales started to normalize, but they remain ahead, comfortably ahead of the levels that they were at pre-pandemic. And so, again, I think you can see a sort of certain flight to quality in terms of our best-in-city locations for our retail premises in the Chinese mainland. And the exciting news, I think, today at the Swire Properties level was the announcement of a share buyback program of up to 1.5 billion Hong Kong dollars running through to May 2025. On the beverages side, a mixed picture. You saw profit increases in Hong Kong, in Taiwan, and in Southeast Asia. We had a significant contribution, actually, from Thailand and Laos, and that was slightly offset by a decrease in profit from the Chinese mainland, which was largely due to currency impact. On aviation, as I mentioned, the results were driven by an ongoing robust demand for travel, both on the passenger and a very solid cargo business, and then Heiko said, Again, showing its recovery, achieved a growth of 535% in recurring profit on the back of last year. So very creditable performance across all the core divisions, I think, given the conditions under which we're all operating. I'll just turn to Martin to take you through the financial performance, and I'll come back and talk about some of the operations.

Thank you, Chairman, and good afternoon. We're having a bit of a technical issue here because my – I'm off sync with all your – have I pressed this button with my – this is not in sync. I can use your screen. So the – yeah, the first half summary report that you can see on the screen, which I can't see in front of me – I do believe these are very good results given the current economic environment and after making adjustment for the like-for-like comparisons year on year. On the top left-hand side, you see the statutory profit, which mainly reflects the adjustments in respect of fair value of investment properties, which was down 7%. There's no impact on operating cash flows nor on underlying profit attributable to shareholders, which remained flat. at $6.6 billion. The recurring underlying profit of $4.8 billion was only marginally down on 2023, despite the impact of the disposal of Swag Coca-Cola US in the second half of last year. The absence of Swag Coca-Cola US on our results impacts the revenue and the cash generated from operations, as you can see on the left-hand side. Also, as previously mentioned, in terms of improving the returns on shareholders, We continue our progressive dividend policy and declare a first interim dividend up 4% on prior years. We also continue our £6 billion share buyback programme, which will continue through to May 2025. This slide again highlights the non-recurring items included in the underlying profit year-on-year. The gain on disposal of investment properties highlights the increase in the sale of Taikushin car parks. The gain on disposal of property, plant and equipment was mainly driven by asset sales on a hangar reallocation and a joint venture in Hayco and the disposal of shares in Caddler. The deemed disposal gain from the sale and shares of Air China was significantly down from the gain recorded in 2023. We also incurred lower impairment charges on the acquisition of Delta Health over the impairment of New Life Plastics back in 2023. This slide shows the waterfall chart in the movement of underlying profit. So in Swire Properties, again, from the presentation that was done earlier, performed very well despite the weak office environment in Hong Kong and the impact of higher interest rates regarding their investment pipeline. In beverages, this shows the $913 million decline relating to the sale of Swire Coca-Cola US, which was partly offset by the investment in Thailand and Laos, the new bottling franchise. The business was also impacted by weakness in the currency in the Chinese mainland and Vietnam. In aviation, it continues to recover of Cathay Pacific and the strong performance of Hayco. Cathay benefited from the increased capacity, which also flows through to the cargo business and much better results from their associates. We'll go deeper into the performance of the core divisions in later slides. In slide 12, this shows how the non-recurring items impact each of the divisions. So in Swire Props, it shows the sale of the Taikushin car parks. Beverages shows the impact of the sale of Swire Coca-Cola US. Aviation at Cathay, the impact of the deemed disposal of your China shares. And in Aviation in Heiko, the sale of assets on the relocation of the hangar in the joint venture company. Here we highlight some of the key balance sheet and financial metrics. as at the 30th of June our net debt increased to £63.5 billion, with capital expenditure of £9 billion and £2 billion spent on the share buyback programme. Gearing is very healthy at under 20%, with our weighted average cost of debt at 4%, with 68% being covered on a fixed rate basis. The Group's committed available liquidity increased to £46.8 billion, We have a solid maturity profile and a good mix of bank financing and bonds. In June, Swire Pacific successfully priced a 500 million five-year bond at a very tight spread and after swapping at a 4.5% rate. Swire Props has benefited from tapping the dim sum bond market and benefited from lower interest rates. 33% of its debt is in Revenue B. With that, I'll pass back to you, Chairman.