Jardine Matheson Holdings Limited

Good morning to everyone here in Jardine House and to those online. Welcome to the Jardine Matheson 2024 full-year results presentation. I'm John Witt, Group Managing Director, and I'm joined by Graham Baker, our Group Finance Director. Today, I'm going to talk about two things. Firstly, Jardine's sharpened focus on its role as an investment company and our investment proposition. Secondly, I'll share some strategic updates from across the group. Graham will then take you through the financial performance of the group and our portfolio companies. We'll conclude with the outlook and a question and answer session. For those of you present in the room today, please hold your questions until the end of the presentation. And for those participating online, you should be able to see a Q&A box at the bottom of your page. You can submit your questions as we go through the presentation, and we'll take them at the end. Jardine's long-term success has depended on our ability to adapt to the changing environment. As we look to the future of the group, we now see the need for Jardines to evolve once again. By sharpening our focus on our role as an engaged long-term investor, we aim to deliver superior returns to our shareholders. We set challenging financial objectives for Jardines to match these ambitions. These are set out on the right of the slide, and we believe they are the right metrics to assess our long-term performance. These objectives include delivering superior five-year total shareholder returns, achieving high-quality long-term growth in earnings and cash flows, driving returns on invested capital above the relevant costs of capital, and delivering growth in net asset value per share and progressive dividends. We will meet our financial objectives in a number of ways. Through decisive portfolio management, leveraging disciplined capital allocation and investment expertise, by continuing to influence strategy and driving accountability through board representatives at our portfolio companies, by ensuring high caliber leadership teams are in place in our portfolio companies, and incentivizing those teams to build bigger, stronger businesses supported by boards which include extensive industry expertise. Our approach to managing our portfolio is founded on a culture of integrity, of effective risk management, and a sustainable approach to doing business. This is underpinned by strong balance sheets and excellent access to bank funding and capital markets. Historically, we focused on underlying earnings per share and dividends per share to review our performance over time. We have achieved five-year growth of 3.7% per annum in underlying earnings per share and progressive five-year dividend growth of 5.5% per annum. We're now focusing more on total shareholder returns as we place greater emphasis on capital appreciation. Our five-year TSR performance has been disappointing, even as our performance last year stabilized. Well, this in part reflects wider geopolitical and economic trends. This is very much in focus as I move to outline our strategic priorities, which have changed to reflect our new approach. Our refreshed strategic priorities start with identifying, developing, and retaining high caliber leadership for the group and our portfolio companies. Since the beginning of 2024, we've continued to evolve the Jardine Matheson Board. We've welcomed two new independent NEDs, Caillou Jun and Ming Liu. Caillou, who joined the board in 2024, is a renowned economist, a professor at HKUST. Ming Liu, who joined us last month, is senior advisory partner at KKR and previously its chairman, Asia Pacific. Over the past two decades, Ming has done an exceptional job of building the KKR platform in Asia, not just in private equity, but across a number of asset classes. Both Caillou and Ming bring highly relevant regional and business experience to our board. At the same time, we have made important leadership changes across our portfolio companies. With new CEOs and refreshed boards in four of our key companies, they've moved with pace to appoint strong teams and develop new strategies to build shareholder value. In support of this, we've implemented new long-term incentive structures in our listed companies to better align the performance of their leadership teams with shareholder interest. Following the established principle that JM directors own a significant interest in the group, we have also introduced frameworks for executive management of our portfolio companies, including DFI, Hong Kong Land, and Astra to acquire and retain meaningful shareholdings in their companies. We have also sharpened our talent planning across the group to focus on senior leadership development, including programs co-designed with IMD and INSEAD. Our next priority includes influencing strategy and driving accountability across our portfolio companies. Jardines, through representation on the various boards of our portfolio companies, has played a role influencing the development and implementation of new company strategies. Let me share some key highlights in this area from the last year. Hong Kong Land's new strategy focuses the business on ultra-premium integrated commercial properties in Asia's gateway cities. As part of this shift, Hong Kong Land has prioritized simplifying its business by ending new investments in the build-to-sell segment and actively focusing on capital recycling. This has seen positive results, with Hong Kong Land achieving strong one-year TSR and outperforming sector benchmarks in five-year TSR, despite the challenging property down cycle. The key element of this new strategy is Hong Kong Land's $1 billion, tomorrow's central transformation of the landmark Hong Kong portfolio. The group is also making significant progress on its 43% owned, $8 billion U.S. dollar central development on the West Bund in Shanghai. DFI Retail is streamlining its portfolio, divesting non-core businesses, and focusing even more on strengthening its health and beauty and convenience businesses. In the year, DFI sold Hero Supermarket in Indonesia and its stake in Yongwei Super Stores, which completed last month. Mandarin Oriental is moving forward with pace on the expansion of its management business. has set an ambitious target to double its portfolio of hotels, resorts, and residences worldwide by 2033, and has already crossed the milestone of 40 hotels. As part of its strategy to drive greater capital efficiency, Mandarin Oriental completed the disposal of its Paris hotel and retail properties for some $400 million during the year while signing a new long-term hotel management contract. Astra has begun to focus more clearly on how each of its businesses can create long-term shareholder value. It has continued to actively pursue opportunities in existing core businesses, as well as new growth sectors. Astra is committed to transitioning away from coal, including into renewables, increasing its interest in supreme energy. It also expanded its investment in healthcare by acquiring a controlling stake in Heartology Cardiovascular Hospital. Jardine Cycling Carriage, which is our Southeast Asian investment arm, has been prioritizing active portfolio management and disciplined capital allocation to pay down debt and provide flexibility for further investments. In 2024, JC&C sold its interest in Siam City Cement, realizing $344 million. It also increased its interest in RE Corporation, which has a growing renewable energy portfolio to 41%. Jardine Pacific, which holds the group's unlisted companies, there has been continued progress on portfolio simplification. In 2024, Jardine Pacific sold its 50% stake in Jardine Aviation Services, and Jardine Schindler disposed of its Taiwan lifts business. Our third strategic priority is to evolve the group's portfolio to secure long-term, sustainable growth. By divesting non-strategic or lower yielding assets, capital can be directed towards strategic businesses. The group's diversified portfolio has allowed us to deliver resilient performance. We aim for portfolio companies to reinforce their standing in Asia's high potential markets and in sectors where they can achieve leadership, ensuring long-term value and sustainable growth. Our investment strategy focuses on building the group's presence in emerging markets like Indonesia and Vietnam, while also leveraging developed markets, namely Hong Kong and Singapore. To reiterate our capital allocation strategy, which supports our objective of delivering five-year TSR, we first prioritize organic investments within our portfolio companies to drive long-term growth and returns. We're also committed to growing dividends over time. Beyond that, we review M&A opportunities in new businesses, and deepening investments within the existing portfolio companies side by side. In both cases, we consider value, we consider earnings growth, and risk. All of this is underpinned by a commitment to maintaining a strong balance sheet, which gives us the confidence and flexibility to invest where and when we see the right opportunities throughout the business cycle. Finally, I should highlight our continued commitment to sustainability across Jardines. As an engaged investor, we expect our portfolio companies to take ownership of their respective sustainability strategies and commitments. We're working together to meet objectives. All of our portfolio companies have set short- and medium-term decarbonization targets, and a number of them have achieved validation for their emissions targets from the Science-Based Targets Initiative. Good progress has also been made in achieving Scope 1 and 2 emissions reductions. During the year, we developed a framework for integrating sustainability into investment appraisals. We began measuring scope three emissions and integrated climate risk into enterprise risk management. We were very pleased to see improved ESG ratings, both for Jardi Matheson overall and for our portfolio companies, recognizing the progress we are making. I'll now hand over to Graham to go through the group's financial performance for the year. Graham.

Thank you, John. Good morning, everyone. The group delivered a resilient performance in 2024. Although underlying profit fell by 11% to $1.5 billion, this was significantly impacted by non-cash impairments at Hong Kong land on its build-to-sell portfolio in the Chinese mainland. Excluding these, underlying net profit was just 1% down, as anticipated at the half year, or 3% up at constant exchange rates. Total revenue was $35.8 billion, marginally down, principally due to the impact of disposals and a weaker Indonesian rupiah. Revenues in ongoing businesses grew by 3% at constant exchange rates. underlying earnings per share were $5.07, down 12%, or 2%, excluding Hong Kong lands impairments. The board is recommending a final dividend of $1.65 per share, which produces an unchanged full-year dividend of $2.25. Looking across the portfolio, Astra delivered record profits, up 1% at their level in local currency, despite a soft auto market and lower coal prices. Astra's contribution to Jardines grew by 3%, more than offsetting headwinds from a stronger US dollar because of our increased stake in JC&C. We also saw an encouraging strong recovery at DFI, However, highly competitive market conditions in the Chinese mainland new car market mean we've recorded significantly lower earnings at Zhongsheng. Contributions from other businesses and corporate costs were broadly stable. Within corporate costs, overheads were 8% lower, offset by higher financing costs on parent company net debt. Outside underlying earnings, the group recorded a net non-trading loss for the year of $1.9 billion. The largest component, as in prior years, was a net fair value loss from revaluation of investment properties, primarily Hong Kong Land's central office portfolio, as a result of continuing soft market rental conditions. The group also made a number of impairment provisions outside underlying earnings, totaling $568 million, principally against the carrying value of associate investments. DFI's disposal of its interest in Yonghui also resulted in a loss recorded among other non-trading items. The sale has now completed with over $610 million net proceeds received and marks a significant milestone in DFI's ongoing portfolio simplification and strategy to drive improved shareholder returns. After all non-trading items, the group reported a net loss attributable to shareholders of $468 million, compared with a net profit of $686 million in 23. Turning now to the group's balance sheet, net borrowings excluding Astra's financial services companies fell by $1.1 billion to $7.3 billion, and gearing reduced by 1% to 14%. This was driven by debt reductions at almost all portfolio companies, led by JC&C, where consolidated net debt fell by $910 million, with proceeds from the sale of Siam City Cement, property sales in Malaysia, and its share of the enhanced 2023 dividend received during the year from Astra. Group cash flow from operating activities was $5 billion, up 9% as a result of lower working capital, principally in Astra, lower tax outgoings, and increased dividends into Astra from its associates and joint ventures. Investing activities outflows were substantially lower than the prior year at $971 million. Capital expenditure, principally organic investments by our portfolio companies, continues to be the group's highest priority deployment of capital. While the group invested over $2 billion of CapEx in 2024, this was below the prior year, principally as a result of the new strategy focus at Hong Kong Land, which saw no new development site acquisitions, and also the capital cycle at Astra, which had seen a substantial capital refresh by United Tractors in 2022 and 23. Higher spend on financing activities mainly reflected outflows for increased shareholdings in JC&C and Mandarin Oriental, as well as increased dividends to non-controlling interests paid in the year by Astra. The group has over $12 billion in liquidity headroom to finance future growth, a little less than the prior year as portfolio companies took the opportunity from improved balance sheet positions to trim surplus facilities. Overall, the group's portfolio companies continue to be highly cash generative, supported by strong balance sheets and access to considerable liquidity. Now turning to Jardine Matheson's corporate balance sheet and cash flows at the parent company level. As a reminder, net dividend income at this level reflects dividends from the group's portfolio companies and associates, net of parent company operating costs, and financing charges. net dividend income increased 12% in the year to nearly $900 million, following strong business performance recovery in 2023. As anticipated at the half year, cash cover for the Jardine Matheson dividend rose to two times. Net debt at parent company level rose to $1.3 billion at year end, primarily due to the purchases of 6.7% of JC&C, taking our holding to 84.6% and 7.8% of Mandarin Oriental taking our position to 88%. Parent company borrowings are financed by 10 and 15 year bonds, totaling $1.2 billion issued in 2021 at an effective interest rate of 2.6%, topped up with small amount of bilateral bank facilities. I'll now briefly go through the individual performance of each portfolio company for detail. Please refer to the portfolio company results briefings, which you can access via the Jardine's corporate website. Starting with Astra, I'll begin by reminding that the group holds its interest in Astra through JC&C, and the numbers on this slide reflect the contribution made by Astra to JC&C. Astra delivered a resilient performance in 2024. The underlying net profit contribution to JC&C, however, was 3% lower, impacted by a weaker Indonesian rupiah. In local currency terms, Astra reported record earnings, reflecting improved performances from most of its businesses, in particular, motorcycle sales, financial services, and infrastructure and logistics. Contributions from United Tractors heavy equipment, mining, construction, and energy segment decreased to $376 million. The drop primarily reflected a fall in Komatsu heavy equipment sales and coal mining, which despite an 11% increase in sales volume, saw lower revenue and profits due to falling coal prices. UT benefited from 32% higher gold sales and also started to record nickel mining profits from Stargate and nickel industries. Although M&A investments were lower in 2024, Astra will continue to prioritize value accretive opportunities to expand its interests in HEMCE. The contribution from automotive decreased by 3% to $330 million, with a higher two-wheel contribution offset by the impact of a weak car market. Astra's market share for motorcycles and cars both remained stable at 78% and 56% of the total market, respectively. Astra's financial services business remained stable despite the headwind from foreign exchange as the consumer finance business grew new amounts financed by 9% and underlying net profit by 6% on a local currency basis. There was a 31% increase in the contribution from infrastructure and logistics, primarily from higher toll road earnings. Astra has interests in 396 kilometers of toll roads and is seeing strong growth as these investments mature its toll road operating service business grows. Turning now to Hong Kong land, underlying profit fell to $410 million. As already mentioned, this primarily reflected non-cash impairments in its build to sell business in China. However, I'll begin with the prime properties investment segment as this is of course both the largest and the key ongoing business segment at Hong Kong land. The central office portfolio in Hong Kong remains highly sought after, with physical vacancy broadly unchanged in the year and committed vacancy levels significantly below the wider Grade A central market. Office rents in Hong Kong fell again, but once again by less than the Grade A office average. As a result of the fall in office rents, The balance sheet value of the group's prime properties investment portfolio in Hong Kong declined by 5%, excluding the impact of accounting reclassification for areas occupied by the group. Contributions from the luxury retail portfolio in Hong Kong were also lower due to planned tenant movements from the Tomorrow Central transformation. But the ultra high net worth retail segment remained resilient with higher customer spending. In Singapore, the office portfolio performed well with low vacancy rates. Average rent was up from the previous year, and the valuation of the group's portfolio in Singapore remained stable. The group's performance in China was mixed, with a lower contribution from One Central Macau but an increased contribution from Wangfu Central in Beijing due to tenant mix optimization. Overall, underlying net profit from prime properties was down 5% at $930 million. Turning to the build to sell segment, as mentioned, earnings were lower as a result of $314 million net non-cash impairments in China. excluding impairments, earnings from this segment, however, were 29% higher than the prior year, principally reflecting strong sales of residential units at the group's prime West Bund site in Shanghai. In Singapore, premium residential developments continued to attract strong market interest, although contracted sales were lower than the prior year due to limited inventory. It's worth noting that while committed to completing its existing portfolio of projects, Hong Kong Land will no longer deploy capital into new build to sell opportunities across the region. Accordingly, there was no capital expenditure for new land site acquisitions in 2024, and we expect profit contributions from this segment to decline over time as capital is recycled to higher value uses. We strongly support Hong Kong Land's new strategy. While we recognise short-term earnings headwinds, we're excited by the prospect of stronger recurring income streams from renovation of their existing super prime retail assets in Hong Kong and development of the West Boon project, as well in the mid-long term from new assets and businesses. DFI saw a strong recovery in 2024, delivering a 30% increase in underlying net profit. The health and beauty business reported stable underlying profit of $211 million. Manning's in Hong Kong and Guardian in Southeast Asia both saw increased earnings, but this was offset by weaker performance in Macau. Convenience profits rose by 17% as product assortment shifted towards higher margin categories. In Hong Kong, operating profit grew by 10% as cigarette volumes fell. In South China and Singapore, 7-Eleven saw stable like-for-like sales and a recovery in profit driven by product mix and ongoing cost control. South China in particular offers a significant earnings growth opportunity for DFI. In the food division, revenue was 2% lower, excluding divestments, but Singapore saw improved sales mix and effective cost control, which led to a meaningful earnings recovery. IKEA reported an 11% decline in like-for-like sales and a 13% drop in operating profit, as competition in Hong Kong and Indonesia intensified. Among associates, Maxime's reported lower underlying profits, while Yonghui's underlying losses reduced to $33 million. DFI completed the sale of its interest in Yonghui in February 2025. Jardine Pacific reported an underlying net profit of $149 million, 9% down, primarily because of weaker results at Zengfu and business disposals. Among the B2B businesses, JEC and Gammon both reported improved profits of 8% year on year. JEC saw higher sales with strong performance in Hong Kong and encouraging contributions from the trained joint ventures and newly acquired associate Kruger. Gammon's performance was driven by higher sales and tight cost control, with its forward order book also growing during the year. Hacktel also recorded an 8% increase in profit, driven by strong growth in the value of cargo handled in the year. Schindler's results primarily reflected top-up cost provisioning on a number of projects in Hong Kong and Singapore in 2024. Among Jardine Pacific's B2C businesses, both Zhengfu and Jardine Restaurant faced challenging conditions. Jardine Restaurant recorded a second year of losses, although these almost halved in 2024, with improvements starting to come through at Pizza Hut and KFC Hong Kong as sales recovered and cost control improved. Zeng Fu, however, saw a significant deterioration in market conditions and reported a net loss as changes in tax concessions for electric vehicles in Hong Kong particularly impacted sales of higher-end OEMs. There were, however, encouraging results from new brands, Smart and Denza. Portfolio simplification continued in JP with the sale of the group's 50% interest in Jardine Aviation Services, following the disposal of great few aseptic packaging in the second half of 2023. JC&C reported resilient earnings in 2024, although growth was impacted by foreign exchange headwinds. In Indonesia, Astra, whose performance I've covered already, accounts for the vast majority of the contribution. In Vietnam, JC&C's businesses contributed $103 million, unchanged from 2023. Ri's profits fell due to lower hydropower demand, but Takco's contribution rose 10% as automotive profits recovered, benefiting in part from registration tax incentives. Despite disappointingly weak business confidence in Vietnam over the last few years, we continue to believe that it offers an important growth opportunity for the group looking forwards. there was a stronger contribution from regional interests, which grew by 9% to $55 million, principally reflecting higher profits at cycle and carriage Singapore. We recorded underlying profit from our 21% interest in Zhongsheng down 41% to $83 million, due to pressures on volume and margins in the new car business, only partially offset by growth in the after sales and used car segments. We continue to believe in Zhongsheng's strong network, market positioning, and operational capabilities. The group has made promising progress in the EV segment by partnering with Ceres to distribute and service ITO electric vehicles. Turning finally to Mandarin Oriental, underlying net profit was $75 million, 8% down from 2023. This was primarily due to reductions in one-off residence branding fees in the management business and tax credits recognised in 2023. Importantly though, recurring fee income in the management business grew by 15%, reflecting three new hotel openings and an additional hotel rebranding, as well as one new branded residence. These brought the total number of properties in operation across 26 markets to 41 hotels, 12 residences, and 26 homes. Underlying earnings from the owned business were stable at $45 million, with solid revenue and profit growth at the majority of the group's owned hotels, particularly in Singapore, Tokyo, and Madrid, offsetting the impact of sale of the Paris hotel and retail interests. Looking ahead, eight new hotel and residence projects have been announced since the start of 2024, and the group has a strong development pipeline of 32 hotels and 18 residences to drive further progress towards its target of doubling its portfolio. I'll now hand back to John. Thank you, Graham.

Our portfolio companies to recap, have sharpened their focus on building value, with Hong Kong Land, DFI, and Mandarin Oriental all adopting and making strong early progress in executing new strategies. DFI, JC&C, and Jardine Pacific have continued to focus on portfolio simplification, with the divestments of Yongwei, Siam City Cement, and Jardine Aviation. We took the opportunity to grow our stake in JC&C, increasing our effective interest in Astra and our Vietnam holdings, and we also increased our holdings in Mandarin Oriental. Looking forward in 2025, we expect our results to be broadly stable, setting aside the 2024 impairments in Hong Kong land. With enhanced boards, strengthened leadership teams, exciting new strategies in many of our portfolio companies, and a sharpened shareholder focus on return, Jardine Matheson is well-positioned to drive mid- and long-term growth. The future looks encouraging. Thank you. I will now take your questions. To those of you online, please press the Submit Question button on your screen. And in the meantime, those of you here in person, just raise your hand, and one of our colleagues will pass you a mic.