Swire Pacific Limited Class A Stock

Good afternoon, ladies and gentlemen. Welcome to Swire Pacific 2026 Interim Results Analyst Briefing. Today at the briefing are Mr. Guy Bradley, Chairman of Swire Pacific; Mr. Martin Murray, Finance Director of Swire Pacific; and Ms. Karen So, Chief Executive Officer of Swire Coca-Cola. Before we take a detailed look at our results, we'd love to show you a short video highlighting Swire Pacific's key developments and achievements in the first half of 2026. Please enjoy the video.

[Presentation]

May we now invite Guy, Martin and Karen to take us through the details of the results.

Thank you. Good evening, everybody, and thank you for joining us. I will just kick off with a couple of strategic highlights here. The 2 points I'd like to emphasize are basically that the first half recurring underlying profit is the highest underlying profit that we've reported -- and that's driven basically by consumer sentiment in all of our divisions improving and that's a very good trend to see. The second highlight, of course, is that we haven't stopped investing and the levels of investments that we have across all our businesses are indeed record levels of capital for the group. So 2 very good highlights for the half year.

I look at the specific details across the 3 main divisions in property, and we continue to execute against the $100 billion plan and we've currently got 7 projects in the Chinese Mainland under development, which is more than we've ever had in our history and 2 of which will open in phases at least start to open later this year in Sanya and in Beijing at Taikoo Place. On the trading side, also it's worth highlighting that we've got -- we're doing a lot more of that, and we've got very good projects going on in Miami and Bangkok. What the slide doesn't say is that we've also got quite a lot going on in Hong Kong, our home base, where our residential trading brand is extremely well known and well regarded and I can list 269 Queen's Road East, La Montana, Headland residences and the projects in Panote. So we've got 4 projects that are to be going on with. So quite a lot of activity on the residential trading side.

Switching over to beverages. The integration of the new franchises in Southeast Asia is progressing well. We're very happy that we're able to expand firstly to Vietnam, Cambodia and then into Thailand and Laos. And those territories are in the process of integrating into our business. at all sorts of levels, and we're happy with how that's all going so far. Focusing on the Chinese Mainland, we have a HKD 12 billion investment plan to open up new facilities and to invest in market cold drink equipment, and we continue to push that out. On the aviation side, you heard yesterday about the Cathay Pacific group and the $150 billion of investment. But I'd just like to highlight the HAECO side of aviation here and they have a new Xiamen facility opening in later in the year, and they've just announced a new investment in Vietnam as their first expansion of the base maintenance business into Southeast Asia. So lots going on.

On the financial side, Martin will cover that shortly in more detail, but we're very happy to report that underlying profits increased by 43% versus prior year to GBP 7.8 billion. And in turn, we've announced a 15% increase in the first interim dividend to HKD 1.50 per share. Just looking at the at the recurring level by division. The recurring underlying profit for the first half was $7 billion, which was up 48%. And the positive news was across all the 3 major divisions. As you can see here, 37% up in property driven obviously by residential trading, that extremely good sale of the 60 Water Bay Road property, but also accelerating retail performance in both Hong Kong and the Chinese Mainland.

On the beverage side, they had a good year and driven mostly by an improvement in the Chinese mainland. And so UP was up 5% in beverages and aviation, 39% increase, Cafe speaks for itself. You've seen that yesterday, but I also like to say that there is a very good sort of robust demand for HAECO and their base maintenance and engine overhaul services. So very encouraging signs across the 3 major divisions in terms of profit contribution. With that, I will ask Martin to dive into the financial side in a bit more detail. Thank you.

Thank you, Guy. Yes. So as the Chairman mentioned, all the core divisions are performing incredibly well on the back of strong consumer sentiment. -- which has led to strong profit at both the underlying and the recurring level, which is very pleasing to see. You can see that, that leads to strong cash flow, reduced gearing, which allows us to have the record investment and maintain our progressive dividend, which is up 15%. This slide is a bit repetitive. It shows the movement in the recurring underlying profit that the Chairman mentioned was at record levels. So in the property division, up 37%, primarily driven by the residential trading profit of the sale of 60 would be road but also the continued robust retail sales in the Chinese Mainland and some positive momentum in retail in Hong Kong, which is pleasing to see. .

Beverage is up 5%, improving consumer sentiment in the Chinese Mainland. So more challenges in Southeast Asia, some of the commodity prices have gone up. But again, the integration of that continues to go well. On the aviation side, really strong performance, up 39%, driven mainly by the high load factors, yields from Cathay Pacific despite the higher oil price in the second quarter and HAECO continues to go well in both the base maintenance and the engine side. lower interest rates helping the head office and other costs. On the nonrecurring items, these are mainly from the Aviation division in the first half of 2026. You'll see the $309 million and the $434 million and relates to the sale of the Cathay shares at the Swire Pacific level to get us back to the 45% and the [ 434 ] is the deemdisposal the gain on the deep disposal in Cathy of Air China.

Last year, the big movement came from property investment, which was the Miami sale, that's the 833 in 2025. On the liquidity piece, you'll see there's some refinancing in '28, '29. We're going through that process and now we push that out to the 2021, 2032. We have -- our debt has come down 4%. Our weighted average cost of debt is down as well at 3.4%. So we're in great shape on the balance sheet fixed rate borrowing are at 75%. And then this is just the overall picture that we get asked about in terms of the overall strategy. As I said, we actively manage balance sheet prudently.

Our gearing has come down to 19.3%, weighted average cost of debt, 3.4%, 75% up fixed borrowing rate -- our primary objective strategically is for our long-term strategic investments, which we're doing at record levels across all our core divisions. And then we focus on operational excellence, driving up returns through targets from each of the businesses. Roy mentioned earlier that in the property business, doing more residential trading, for example. -- and at the same time, maintaining our dividend growth strategy and potentially looking at share buyback is in that order. With that, I will -- oh, sorry, it was a sustainability slide, I do forget, I apologize.

We have launched our SD 2050 slide. strategy. We've moved it into reporting like the ISSP, so climate nature and social. It's the same so waste and water in that piece. And then on the left-hand side, you'll see our 2030 targets and on the right-hand side, progress against that. So we've almost achieved our 2030 targets across climate and nature and hit our targets for people. and focus on the communities. So making strong progress on our sustainability targets. With that, I'll pass it back to you, Guy.

Thank you. I'll just take the property side. This is a familiar chart to everybody by now, but it keeps getting better. It shows that the $100 billion plan that we announced, I think in 2022 is now almost 70% committed, and that's across the 3 major core markets that we're invested in. A bit more detail on the next slide, which shows that the pipeline is good. It's diverse and in terms of sector, it's diverse in terms of geography. So we're having a sort of balanced investment plan as we go forward, and that's what we want to see.

The first half results, as I say, were driven significantly by the residential profit on the trading. But being encouraging note for me here for this half is that our rental income is going up, driven by -- on the retail side, driven -- particularly driven by the Hong Kong and the Chinese Mainland portfolios and that's very encouraging from a future point of view. On the Chinese Mainland itself, you can see now the 2 points here to note are that the contribution of gross rental income from the Chinese Mainland is now almost half, it's at 46% and growing. And specifically, if you look at the Chinese Mainland retail, it's now our biggest contributor in terms of gross rental income, and that's an incredible performance that's grown over the last 10 years.

Just looking at the Hong Kong office market, which has historically been our top contributor. Obviously, it's a cyclical soft point, I would say. We've had a good defensive position with high occupancy through that soft part of the cycle. And as you heard Tim say in the previous session, we're now sort of starting to come out of that cycle with rents starting to go up led in Pacific Place in our case. And we think that's a good sign as we start to look ahead at the next 2 to 3 years. In terms of outlook, we think there'll be positive momentum across all the different portfolios. We've got narrowing reversions in the Hong Kong OS portfolio. And as I said just now, led by Pacific Place, probably a little bit slower in Taikoo Place.

On the retail side, we're seeing positive growth momentum in the Chinese Mainland and a sustained recovery in Hong Kong as confidence and sentiment improves. Karen...

Thank you, and good afternoon, everyone. So I'm pleased to report that why Coca-Cola has delivered a broad-based growth. This performance demonstrates our effective strategy, our resilient portfolio and our ability to execute with discipline in a very dynamic operating environment, serving a consumer base of nearly 1 billion people. So let's look at the market overview. The first half of 2026 saw improving market conditions, particularly in the Chinese Mainland, where demand rebounded in the first -- in the fast-moving consumer sectors following a very challenging 2025.

The China's consumer market remained broad and deemed. It is also at the forefront of the digital retail space. and we are closely matching consumers changing consumption habit by capturing the volume growth in the e-commerce channel, immediate consumption and also through our investment in the cold drink equipment for emerging new sales channel. The conflict in the Middle East continues to drive uncertainty in oil and aluminum prices. This is a headwind felt by bottlers worldwide. Other input cost inflation has continued to weigh on our margin, particularly in Southeast Asia. We are managing our exposure through advanced purchase contract and commercial initiative.

The consumption trends are evolving towards a better value product by maintaining a disciplined channel packaging pricing strategy, we are capturing the growth with affordable entry pack that meets the consumer needs. Water sparkling continues to remain our core growth driver, we are also rapidly growing our low and no sugar portfolio alongside the functional portfolio to meet the shifting consumer preference. This shift in our product mix is already taking place in the key markets, highlighted by our successful consumer-led rollout like Sprite, our expansion to the energy category through Monster brand accelerated growth of the zero-calorie sparkling drinks.

We invest for the long term in every market we serve. That means the disciplined capital allocation operational excellence and relentless focus on innovation. In Greater China, our major investment program, which was first announced in 2023 is well underway. We continue to advance our RMB 12 billion investment plan in new facility and equipment in the Chinese Mainland to support our expected growth. I'm delighted to report that in May, our 2 world-class intelligent green production plant commenced production in Kunshan of Jiangsu Province and Guangzhou in Guangdong. Together, they host over 20 production lines and they are set to boost our total mainland China production capacity by 10%. Both of these facility are integrating AI into our manufacturing process and a LEGO certified.

Building on this momentum, construction is also underway for our new production facility in Hainan province targeted for completion by end '27. In the Taiwan region, production upgrade work continues with a newly automated storage and retrieval system and also an accepted production line at our Taiwan facility. Turning to Southeast Asia, we remain confident in the long-term growth potential of this market, driven by favorable demographic, the potential of growing sparkling beverages in the market with currently low per capita consumption and positive GDP growth. We have invested significantly in equipment and production assets, including our new affordable small sparkling package in Vietnam.

We also continue to transfer digital expertise, operational know-how, innovation from global best practice to our Southeast Asia businesses. So underpinning all of this, our investment in digital and AI, and we're building an intelligent enterprise on the foundation of modern process, trusted data and a unified digital core by scaling AI across organization, we're empowering our team with better insight, automating routine tasks and enabling a faster, higher quality decision. So let me walk you through our financial results. Our recurring attributable profit in the first half of 2026 was HKD 907 billion representing a 5% increase from the same period in '25. This was mainly driven by the robust performance in the Chinese Mainland. In the Chinese Mainland, recurring profit increased by 24% to driven by strong growth across the emerging channels such as e-commerce.

Our first -- our business in the first half year remained relatively insulated from the higher raw material costs due to our effective procurement strategy. In Vietnam and Cambodia, recurring profit was down by 13% to HKD 98 million. That drop was largely due to strip out that once-off impact. Attributable profit we have actually grown by 15%. In the thin and Lou, recurring profit went down by 10% to HKD 95 million, mainly due to lower interest income. After cash was deployed to acquire the 30% stake in our Vietnam bottler. Excluding those impact, the profit will have grown by 16% due to the strong sparkling volume growth and the commercial initiatives in this market. In Hong Kong, profit [Technical Difficulty] revenue grown by 10%, driven by the volume rise across the market.

Overall EBITDA increased by 11%, with our margin edging up from 4.8% to 12.9%. On the strong -- our strong first half performance reflected the effectiveness of our strategy and also the discipline of our commercial execution. It lays a strong foundation for the remainder of the year. However, we anticipate that the macroeconomic and geopolitical environment will remain complex elevated aluminum price and ongoing energy volatility will continue to place pressure on raw material and logistic expenses. While this headwind present margin risk across the beverage industry, we have put in place a range of commercial and cost initiatives to reduce the exposure.

In the Chinese Mainland, our business is growing steadily, and we're capturing category specific growth even as broader consumer sentiment remain very conscious. In the Southeast Asia, we are confident over the long-term growth potential in Vietnam, affordability led growth supported by our entry pad strategy in sparkling and portfolio expansion will help us capture further growth. In Thailand, while the impact of sugar test gave cautious for -- caution. We are encouraged by the early signs of our entrance into energy category, and we'll continue to expand our low and no-sugar portfolio.

Overall, we remain confident about the prospect of our market, while supported by our continued long-term investment, and we'll continue to innovate and transfer operational expertise to Southeast Asia. And all of this is meant for driving a better execution in the market for further growth. So with that, thank you, and now hand over to Martin.

Thank you. And Aviation has performed exceptionally well and continues to do so. So it's fantastic to see. As Karen mentioned, all our core businesses are investing into the long term. And from a HAECO perspective, it's an exciting time zone on that piece, particularly the problems they've had we're cleaning that up and we've exited the U.S. side like we did in properties, very much Swire Pacific focused on Greater China. And then we've got the excitement of moving the Xiamen facility will open later this year. And then as the Chairman mentioned, in [ 2028 ] moving facilities into Vietnam. So exciting times in terms of investment in HAECO. And then the Cathay group has $150 billion committed that was mentioned earlier and it's great to see Cathay growing again with Hong Kong being in aviation and financial hub. And so we're targeting to have 150 new aircraft joining the fleet over the next 10 years and targeting 150 destinations by the end of that 10-year period. .

The results are very strong in both HAECO and particularly so really driven by the Cathay strong results. in HAECO, you can see the base maintenance, line maintenance and engine performing well and other items coming down as we exited the ITM program last year. On the Cathay group, it really is a great story in both passenger and cargo with strong growth in capacity, up 11.8%. And strong load factors and higher yield across the board. So first quarter, very strong second quarter was impacted by the Middle East and the higher oil price but strong factors made it a good first half overall.

And the outlook, again remains good for both entities who will continue, we think, to have strong base maintenance and engine services. And at the Cathay side, whilst we -- there is still the Middle East uncertainty and a higher oil price, we expect load factors and yield to continue to be strong. With healthcare, I'll mention this very briefly, healthcare as we've said for a while now, is patients. As we look to expand healthcare, we believe a lot of our targets are overvalued at this point in time. So we're really rebidding down the operations side. it's great to see Delta moving in the right direction, and we have a new CEO appointed to lead our health care business. So we're heavily focused on our business that we own in Delta and landing more on that front. But the healthcare business will remain a small part of the portfolio over the medium term. With that, I'll pass it back to you, Guy.

Thank you. So 3 key takeaways from what we just heard. An excellent first half with very good and improving consumer sentiment. We expect that consumer sentiment improvement and to translate across into the second half. And we continue thirdly to with our planned strategic investment program across all of our businesses. So I would say, a very good set of results in the first half, which we anticipate barring anything untoward will continue into the remainder of the year. Thanks very much. We can take questions. .

[Operator Instructions] We have a gentleman in front. Thank you, Nico.

Is John from UBS. Come question, a good result. Two questions from me. Number one, could I ask about the exchangeable bond on Cafe. So I saw that today's share price for Cafe has always surpassed the conversion price. So I guess should we be the end of June next year, the company, I mean by Pacific does not need to be paid. -- the exchangeable bond. And also maybe a follow-up question regarding on this 1 is regarding on -- would that be also possible to consider to issue active bond on Swire Properties. My second question is about, given all the fee business has been doing very well. So it seems to me that it is now in the half period with foreign net gearing -- so how do we think about the CapEx and also investment in the new business or maybe existing business?

Yes. Look, on the exchangeable bond, -- that was done in June. And as you mentioned, we'll expire in June next year. Time and June was favorable market conditions when we're looking to do a bond like that, it was an instrument that we looked at and the pricing is superbly attractive, helps us get the balance sheet Cathay riding high, but the Middle East crisis gives you that flexibility but what will happen in the next 12 months on that piece. But again, we still own 45% and we can refinance it. So it's a really strong financial instrument that we thought we're pleased with it. So our property is there's no -- been discussion on doing something like that with that. Is it opportunistic financing at the time. .

Harvest period on capital...

And what I think is -- the slide speak for themselves in terms of the intent of the continued investment. I mean the strategy that we have in properties is recycling we've recycled over $60 billion on that piece. We're not changing strategy in any sense. We're investing heavily across all the core divisions and that piece -- we've got 7 properties in the -- under execution. So we have very much focused on the execution and delivery phase as well. But yes, it's exciting times. .

Any next questions?

This is Jeffrey from CLSA. So my question is about the interim dividend, 15% Y-o-Y growth here. So just trying to pick your brain on how -- or what factors have you considered amount 1 cases 30% growth in interim dividend to maybe perhaps your outlook for the rest of the year for the entire Swire group? And three, have you considered anything about rebalancing the split between interim and final dividend for Swire Pacific? So just trying to figure out when you think about passing through Cathay dividend income to your shareholders. Is there any particular time frame that in your mind when that will happen?

Yes. Look, the Cathay is a great 30% story, but again, your percentages of bases, right? So they're coming out of a low base in terms of the dividend on that piece. So it's great to see them having bigger dividends. From a Swire Pacific point of view, as we said, strategic investments and a progressive dividend on that bit with a strong balance sheet allows us to do that. So I think the outlook remains really strong. I would expect the dividend to continue to be strong in that pace. .

I think the question that will get asked afterwards is about the share buyback. And I think 1 of the reasons for the strength of the dividend around here with the share price gone up so much, then the progressive dividends is more favorable to share buyback at this point in time. And so therefore, that's why you'll see the focus.

Any other question? Yes, gentleman in front in the middle.

Just 2 questions. One on Coca-Cola. I look at on the slide showing the margin improvement and that I think the [indiscernible] margin had already been exceeded China, if I was correct. Maybe I was wrong. But anyhow, would you be able to share with us how you are thinking about the medium-term on the margin trends for China as well as the market? That's the first one. The second 1 I think a lot of comments across the group on investments and with, I guess, Cafe and also Swire Property self-funded. And now I think, Martin, you also mentioned that the care business is too pricy. Where else could you invest outside of you mentioned dividend and share buybacks? Just trying to think what else you can invest in. .

Thank you for the question. Yes, we do have margin improvement in the first half. And I do see the trend will continue. And this is also the goal for our business as well to continue to drive margin improvement across all our business through our commercial initiative portfolio package pricing strategy and also through cost efficiency exercise to improve our overall organization effectiveness. Thank you.

Yes. I mean there's no change in the strategy in terms of the capital commitments we still are executing across all the businesses. So property still has a big pipeline on that front, and we've been clear on the capital expenditure on that piece. There's no change the healthcare is obviously a small part of the portfolio at this point as well. So there's no change in that strategy. The balance sheet is marginally improved on that bit. It's still up at 19% gearing on that piece. So it just gives us flexibility in terms of what we can do and continue to do progressive dividends and things. So -- so I think we're in good shape in that point in time.

We're not looking for a new steady new segments, but we're not going to see something out of right field that's not in our core businesses. So all the investments are through our core businesses.

Any mix questions? Yes, gentlemen in front in the gray shirt.

Choi from Bank of America. Actually, I have 2 questions for Karen. I think first of all, congratulations on the Mainland performance. I think is very strong despite the very weak consumer sentiment. So can you give us more color about what strategies you are making in the Mainland cash? You mentioned e-commerce. We all know that e-commerce is nothing new. So if you can talk us through more about your strategy in the Mainland. And secondly, I think on the cost sensitivity to the margin especially if oil price is trending down towards the end of this year or even next year, what kind of margin should we expect on the overall breakage side?

Thank you. Yes, overall, the consumer sentiment in China still remain cautious. -- yet there are lots of opportunity that we can grow our sparkling business, especially in China. So 1 of the things that we're seeing consumers shifting the purchase behavior from the traditional channel to e-commerce, which is online and also to the immediate consumption channel, tourism, and those are the very, very strong emerging channel. And we are able to also deploy lots of the smart cooler into the channel that we have not been able to capture the consumption in the past.

So overall, I would have to say the very effective allocation of our resources to invest in the place in the channel where the consumers are actively shifting the consumer behavior that helps us to capture the consumer purchase in China. And overall, the beverage category is still growing nicely in China. So on your second question on the cost pressure, we do see moving into the second half, the cost pressure will continue. Especially when -- in the first half, we are a little bit insulated by cost due to our advanced purchase. But in second half, we were having more pressure. But having said that, we continue to use our commercial initiative through a better pricing, right channel to be deployed in the market to mitigate those risks and also through our cost efficiency exercise to make sure where our organization is efficient. Thank you.

Any other questions? Gentleman at the back.

Karen I promise this is my last question. Just maybe for the sales or on China for the first half, can you help us understand maybe perhaps the momentum between first quarter and second quarter -- do we see some deceleration in the second quarter in light of what's happening at the rest of the world? Or do we see an accelerating trend as you go through the first 6 months of 2026?

Thank you, Thomas. No, I think for the first half -- for the first quarter and the second quarter, our volume both growing at a high single digit or even double-digit number, so which is very nice to and this is driven by sparkling growth, which is the core driver of our growth. At the same time, packaged water also delivered a huge volume growth for us. Thank you. .

Any more questions? Looks like everybody is happy. So thank you very much for joining us this afternoon. That concludes our session for today. Thank you.

Good evening, everybody, and thank you for joining us. Let's get straight in, and I'll start with the strategic highlights. I think you can see that we've basically been delivering across the business on our growth strategy in each of the different core businesses under the Swire Pacific name.

On property, we've got a very healthy pipeline of new projects on the way. We continue to do effective capital recycling of noncore assets. Importantly, for us, we're continuing to invest in the Greater Bay Area, which is a stated objective of the property team. And we're very pleased last year to launch our first residential project successfully, I would say, in Shanghai in the Chinese Mainland. So property is very much on strategy and continuing to deliver good growth.

Beverages, it's been a tough year in 2025 in terms of the environment. But I think you can see the resilience of the beverage business for us. We continue to invest through the cycle here, and that investment has been in new plants and new equipment in both the Chinese Mainland and in Vietnam so far. And we continue to try to integrate the new Southeast Asian franchises that we've successfully acquired over the last few years, specifically Vietnam and Thailand.

On the aviation front, the story has been very good. HAECO completed the sale in November last year of its U.S.A. business. So now the strategy is to focus the business on Hong Kong, the Chinese Mainland and future opportunities in Southeast Asia. So we're very focused at HAECO. And as you heard yesterday, the Cathay Group is investing in more than 100 new generation aircraft and improving its products with a capital program there. So very good results on the aviation side.

Talking numbers briefly here. The underlying profit, very pleased to see it was up 9% to HKD 11.4 billion, driven mostly by capital recycling. And as I mentioned, strong recurring profit in aviation. That translates for us into a 13% increase in the ordinary dividend, which I think is very healthy. And you can see our financial health is strong with a good deal of available liquidity and a gearing ratio of 20.6%.

Just looking at the recurring underlying profit of HKD 9.8 billion. It's 5% up on last year, driven by high demand for air travel and a very resilient performance, as you've seen from both the Property and Beverages divisions. The Hong Kong office market, which has been a very core component of the property business, saw a very steady occupancy in 2025. And I think what we've seen in the soft cycle that it's at is a continued flight to quality and the new buildings that Swire Properties has been investing in are benefiting from that flight to quality trend.

I think we can see signs of a retail pickup, both in Hong Kong and in the Chinese Mainland and residential projects. Obviously, in Shanghai is nearly fully sold, but I think the sentiment in the Hong Kong residential market is also starting to pick up.

On the beverage side, 2025 was a solid performance, fairly flat delivery of recurring underlying profit, but we do feel conditions are set to improve. Aviation up 19% at the IUP level. HAECO Group achieved a 73% growth in recurring profit due to demand for base maintenance and engine overhaul services. And Cathay, as you know, has a third consecutive year of profit driven by very robust demand for travel and strong cargo performance.

I think I'll pass over to Martin now for a little detailed look at the financials. Martin?

Thank you. Thanks, Chairman. Yes. So again, just to highlight, we think they are very strong good results. The strong underlying profit driven by the underlying profit growth in Swire Properties.

In the aviation side, it's more on the recurring profit level, continued 3 years of really strong recurring profit from aviation and solid beverage results. The statutory profit adjusts for the fair revaluation losses of the investment properties to fair value.

You can see the strong cash generated from operations, which comes from the -- particularly the sale in Miami and also the full year of the Thailand subsidiary. And these strong results have enabled us to continue our progressive dividend, which the dividend up 13%. And this slide basically highlights the strong underlying profit per division.

So you can see there the 2 blues are the things that are driving that. So the big one is the 27% increase in Swire Properties underlying profit. Aviation has been driven, as I said, by a strong recurring profit. And the 2 red boxes are really the offset, which is the absence of revaluation gains that we talked about last year in Beverages and T&I.

This slide is the same, but it breaks it down by category. So in terms of the nonrecurring items, we had the gain on disposals of the investment properties, which was driving the strong underlying profit from Swire Properties, which was the sale of the Brickell City Center in Miami, the Tsing Yi Industrial Estate, the 43rd floor of One Island East and more Taikoo Shing car parks that have been going for a number of years now.

We have the gain and losses on disposal of property, plant and equipment. This, again, driven by the loss on disposal of HAECO America, partly offset by a gain in the sale of the ITM business. We've got exchange losses in Thailand and the fair value loss of Cadeler and the reversal of some impairments in the CX subsidiaries. And then you've got the fair value loss on the Hong Kong offices getting you back to the statutory profit.

This slide, I've just shown you the 5 years of underlying profit because it really kind of highlights, one, the post-COVID 3 strong years of recurring profit driven by the good results from aviation. And over that 5-year period, it really sort of highlights the strategy of recycling noncore assets and exiting businesses. So back in 2021, we exited the marine side of things.

You can see over the period, we've focused our strategy on Greater China and Southeast Asia. So we've exited our noncore U.S. businesses, which in 2023 was Coca-Cola USA. and then, of course, HAECO Americas this year. And we've tidied up some of the underperforming assets over that period. So we really have 3 very strong divisions currently.

To liquidity and maturity profile, a very healthy liquidity base at December '25. Group liquidity at HKD 64 billion and bank balances at HKD 23 billion and a healthy maturity profile with the average term of debt of 3.5 years.

In terms of financial position, our net debt is HKD 65 billion, which is down 8% weighted average cost of debt, 3.6%, down from 4%. The 72% of our debt is fixed and the gearing is down to 20.6%.

This slide really looks about how we do our capital allocation, which, again, we take a medium-term view on that piece, so we can ride economic cycles. So our strong balance sheet is the core of our ability to have our capital allocation. So healthy gearing, low cost of debt and fixed borrowings on that side.

Our first priority is looking at long-term strategic investments in our core markets, whether they be assets within the HKD 100 billion plan within Swire Properties, the new franchise as we roll out in Southeast Asia and Swire Beverages and HAECO moving its Xiamen investment. Then we look at trying to improve the return on investments from each of the operating companies. So each of the operating companies target efficiencies and improved margins.

Swire Properties are doing more residential trading than they had previously as part of the portfolio to improve their returns. And then finally, that drives the ability to have a sustainable dividend policy. And as we've done in the past, we have the possibility of share buybacks as part of the armory that we have.

Again, another -- like the Swire Properties one, they've had 9 years of consecutive increasing in dividend. We changed our dividend policy 5 years ago. So we pay out not less than half our recurring underlying profit, excluding our share in Cathay, but pass-through of all dividends received from Cathay over time. And that's allowed us to also have a progressive dividend policy, which, as you see, was up 13% from last year.

We're very proud of our sustainability progress throughout the group. We've rebranded it SD 2050, and again, it's under the pillars mainly following what the regulatory is going, so under climate nature, which is water and waste and social people and communities. We're doing really well towards our 2030 targets that are on the left there. So we're already at 46%, reducing our Scope 1 and 2 to our 50% target by 2030. 64% waste is diverted from the 65% target for 2030, 27% reduction in water withdrawal compared to the 30% reduction. We've achieved our 30% females on the Board. And again, we make a positive impact to the communities, and we've made over HKD 120 million of donations from Swire Trust.

Thanks, Martin. On the property side, I'll just do a quick review of that, given the fact that Swire Properties have just spent an hour talking about that in detail.

At an overview level, the underlying profit increased by 27%, which, as you know, is primarily driven by the gains of the disposal of noncore assets. At the recurring underlying profit level is a small decrease, which is mainly due to the loss of rental income from the sale of Brickell City Centre retail mall and lower office rental income in Hong Kong.

Very good story on the Chinese Mainland. Over the 10 years, attributable gross rental income has grown at a CAGR of 10%. And we anticipate with all the new construction projects that are underway that we will double our GFA in the near term. And that's an incredible performance, I think, when you take a look at the last few years. So very happy about the direction that we're heading in the Chinese Mainland.

In Hong Kong, which -- where we've had a tough time with the cycle, we have a very strong defensive position. I think here in Hong Kong office, the occupancy levels are very high, and we look very well positioned, I think, to capture the recovery in demand when it does come. On the retail side, our malls are 100% let and the retail sales are outperforming the market at the moment. So small signs of retail recovery, I think, in Hong Kong.

We've talked a lot about the HKD 100 billion commitments for Swire Properties that was set in 2022. As you heard Tim say a few minutes ago, we're now about 2/3 committed on that, and most of the Chinese Mainland commitment has already been made. So very good progress along that investment plan.

Finally, on strategic updates. The focus remains the disciplined execution of that HKD 100 billion investment plan across the core markets of Swire Properties. In the Chinese Mainland, 5 new developments will start to open from later this year. And I think I'd just like to highlight the very successful sale of 6 Deep Water Bay Road, which was completed early this year. The sale was booked this year, but made at the end of last year at a very, very attractive price. And that is not only a good example of the way that we are able to fetch those sort of very high levels of residential pricing, but also the way that we're able to turn our capital around. And I think that's been really successful and reflects the upturn, I think, in the level of interest in Hong Kong residential. So we're very pleased about that.

Finally, just in terms of the new projects, you can see from this chart that there's a very balanced geographical mix, a very balanced sectoral mix. And overall, we're hoping to add 12.4 million square feet to the portfolio over the next sort of 3 or 4 years, which I think is a great story. It reflects the pipeline that we've got. And I can sit here and say there's more to come on that. So very encouraging performance, I think, for Swire Properties in what's quite a tough consumer market, both in Hong Kong and the Chinese Mainland, but we do see signs of that improving.

I'll switch over to Coca-Cola now and ask Karen to take us through where that business is.

Thank you, and good afternoon, everyone. I will walk through Swire Coca-Cola's performance in 2025 and our strategic update. It was a challenging year. Our priority were clear: deliver sustainable earnings, maintain cost discipline and continue to invest where we see long-term value.

So let me turn to our financial results for the year. In 2025, Swire Coca-Cola delivered a recurring attributable profit of HKD 1.39 billion, broadly in line with our performance last year. This result was achieved against a very challenging operating environment across the region. The impact of those factors on underlying performance was offset by the full year contribution from ThaiNamthip, which has become a subsidiary on the 30th September 2024 and also by our continued discipline in central cost control.

So let me walk you through performance by market. In the Chinese Mainland, performance remained resilient. Recurring profit increased by 1%, with revenue also up by 1% in local currency despite a very significant disruption to the ready-to-drink beverage industry, driven by the aggressive subsidy from the food delivery platform over the summer months. Our management has responded swiftly, rolling out targeted consumer commercial initiative to strengthen the route-to-market model and enhancing our execution across the emerging online channel.

In Hong Kong, the performance strengthened with recurring profit up by 14%, supported by higher revenue. So this reflects our strong commercial execution, effective marketing campaigns and a favorable product mix with sparkling juice and coffee all delivering year-on-year revenue growth.

The recurring profit for Taiwan has decreased by 6%. Revenue in local currency terms was flat compared to last year. The results were mainly affected by a higher cost associated with the capacity enhancement project at our Taoyuan plant.

The attributable recurring profit from Vietnam and Cambodia in 2025 was HKD 152 million, which is a decrease of 35% from last year, principally due to the very difficult operating environment. Revenue decreased by 11% in Hong Kong dollar term, which is mainly impacted by the unfavorable exchange rate with the depreciation of the Vietnamese Dong and the intense competition amid an overall contraction across the beverage industry. So against this backdrop, our sparkling category saw a decline in revenue and volume term.

The results were also adversely affected by a onetime expenses related to the relocation of our Ho Chi Minh plant to a new plant in Thanh H a province. In Thailand, performance was affected by the economic softness, primarily driven by the significant decline in the tourism industry. So I've mentioned the recurring profit of each region, and now I would like to cover our volume performance.

In the Chinese Mainland, despite the market disruption, our overall volume remained flat with sparkling category also stable. Meanwhile, I would like to mention our energy category is the star performer, which continued to show strong momentum, increasing by 53% year-on-year. For Hong Kong, although the volume declined by 3%, our overall revenue increased by 2%, reflecting the favorable mix and the effective pricing management. For Vietnam and Cambodia, total volume decreased by 7%, which is in line with the overall industry competition.

Our EBITDA margin performance remained resilient overall. In the Chinese Mainland, EBITDA margin improved to 11.7%, despite the very challenging market conditions noted across the peak summer seasons. The strong revenue growth and supply chain optimization initiative in Hong Kong translate to an uplift of its EBITDA margin from 16.6% to 18%. Taiwan was adversely affected by the additional operating costs incurred for the onetime Taoyuan plant redevelopment project. Our Southeast Asia market were affected by the intense competition in a very difficult operating environment.

So turning to the strategy. We continue to invest decisively to support our long-term growth in the Chinese Mainland. As announced in 2023, Swire Coca-Cola plans to invest over RMB 12 billion over the next decade in production facility and logistics infrastructure. This has included a new production facility in Zhengzhou, Kunshan, which is near Shanghai, Guangzhou and most recently in Hainan. The Zhengzhou facility commenced operation in October last year. New plants in Kunshan, Guangzhou are expected to begin operation in May this year, while construction of our Hainan facility is underway and scheduled to be in operational by 2028.

So beyond capacity expansion, all these new facilities are designed to set a new benchmark for scale, sustainability and innovation, supported by unified digital foundation that enhance safety, efficiency and operational resilience across our manufacturing network. So taken as a whole, this investment will further strengthen our manufacturing footprint, enhancing our supply chain resilience and further support our business growth in our market.

In Southeast Asia, in July last year, Swire Coca-Cola inaugurated a new USD 136 million flagship manufacturing plant, which is the largest of our 3 production sites in Vietnam. This is the first food and beverage plant in Vietnam to achieve LEED Gold Green Building certification and reflecting Swire Coca-Cola's commitment to innovation and sustainability. So this investment underscore our commitment to the market and support job description and also strengthen our foundation for sustainable development.

In February this year, we also completed the sale of 30% interest in the Vietnam franchise to ThaiNamthip, further strengthening the regional alignment. At a headquarter level, we have moved to a simplified regional management structure, and the appointment of the Chief Operating Officer in December last year will further accelerate our decision-making and response to the market changes. So overall, this reinforces our focus on disciplined execution in the near term and our continued investment behind our long-term growth drivers and steady progress in our building of our sustainable value.

So now I would like to turn to Martin for Cathay Pacific update.

Thank you. So yes, so on to aviation, which really has been the driver of the improvement of our recurring profit over the last 3 years, post-COVID. Obviously, the Cathay Pacific Group has been an outstanding performer. But also HAECO this year, it's great to see -- you can see on the recurring profit of nearly HKD 1.2 billion from HAECO. And now they've exited the U.S. and ITM, they really are into the -- that recurring profit should be a solid number going forward. And again, outstanding results from Cathay Pacific 3 years in a row.

In HAECO, the pleasing bit is across all 3 of the core businesses, as you see on the left-hand side there. So the improvement in aviation post-COVID is finally coming through in HAECO as it's cleaned up its noncore assets. And again, it's exciting times in HAECO with the opening of the new Xiamen facility, which is best-in-class and looks outstanding, creating a lot of excitement. We've exited the U.S., as I mentioned, and the focus is also growing their business in Southeast Asia and Vietnam.

Cathay, again, they had their announcements yesterday. Another set of great results on the passenger side, driven by the ASK growth, which is up 26%. Had record revenue. So yield comes down as you increase your ASKs, but the load factor remained positive, which is a great sign.

Cathay Cargo continued to remain strong as well, again, with high -- an increase, nearly double-digit 8.3% increase in freight ton kilometers, flattish load factor. And then similarly, the yield comes down with the higher capacity.

It's very exciting times. They've got HKD 100 billion investment plans announced last year. They've cleaned up their balance sheet by buying back the 50% of the preference shares, repurchasing 68% of the convertible bond, buying back the Qatar share of 9.56%, leaving our share up to 47.6%.

In health care, we sort of stepped back a little bit as we wait for the valuation of health care investments to come off highs. And at the same time, we're learning a lot with the investments we've made. So DeltaHealth has become the first foreign owned and got its Class III status for cardiovascular hospital in the Chinese Mainland. We've got a new professor in cardiology. So we expect that business to improve over the next few months. And then in Indonesia, that's our investment, our minority shareholder in there, which is a profitable investment that we made back in 2024.

With that, I'll pass back to Chairman for the outlook.

Thank you. So final slide here on the outlook. Global uncertainty, notwithstanding, we do think our core divisions will continue to perform well this year. On the property side, we have an exciting pipeline of new developments across all our markets. The consumer sentiment, as I mentioned earlier, we do think will continue to pick up in both the Chinese Mainland and Hong Kong.

Early signs of new momentum in the Hong Kong office market. And we do think that there will be a positive contribution going forward from our residential projects that are being built. Beverages, that same consumer sentiment pickup in the Chinese Mainland should impact our biggest territory for Coca-Cola. But I would say that the challenging competitive situation in Southeast Asia, particularly in Thailand and the economic weakness in that region is expected to remain in the near term.

On the aviation side, we're very excited to open a new Xiamen facility later in 2026, this year, which will enhance the HAECO Xiamen operational efficiency, and they continue to explore investment opportunities in Southeast Asia.

On the Cathay side, both the passenger and the cargo capacity are expected to grow in 2026, although the situation in the Middle East is obviously introducing quite a bit of uncertainty for the global economy, and that may impact Cathay at some point. The strategy, though, is to continue adding frequency and destinations to take advantage of the new runway at Hong Kong International Airport. So with that, I'll leave the presentation, and we'll be very happy to take questions. Thank you.

Thank you, Guy, Martin and Karen. Let's take questions. We'll take questions in English. Please state your name and organization with no more than 2 questions at a time. So gentleman in front, please. Kenneth Ngai?

Congratulations with the good result. This is Raymond Liu from HSBC. So I got 2 questions. The first question is related to shareholders' return, like the slide on page -- Slide 15. So as you mentioned, like investors are very pleased to have like 13% DPS growth. Just wonder like how should we think of the progressive dividend policy down the road? Like should we think of like the growing free cash flow payout ratio? Or how should we think of the growth down the road?

And the same, like, at the same slide, you mentioned about the share buyback. Can management share any color about a new potential new share buyback program? So that's the first question. And the second question is about beverage business. So the management mentioned that, like, the 2026 business is set to improve. So can management provide some more color on the key drivers for the improvement in 2026? And would there be any update about the spin-off of the Southeast Asia business?

Thank you. So on the dividend front, as I said, we changed the dividend policy 5 years ago to make it a bit more certain given the uncertainty of being in aviation. We have a slightly different dividend policy from Swire Properties.

Swire Properties pay out approximately 50% of the underlying profit. We pay out at least 50% of our recurring profit because the successful strategy of Swire Properties and doing that underlying profit and the part of their strategy to keep recycling noncore pieces, and with the strength of the aviation business and the way that the whole cost side has been addressed during COVID, then we're very confident that, that progressive dividend policy will be in place for some time to come, barring another COVID-type event. So that -- and then probably the easiest way to look at it is, again, similar to properties, expect a mid-single-digit constant improvement.

In terms of share buyback, we always say, look, we have a very simple strategy. We have -- where we operate, the chances to get places like Xi'an and Sanya are -- take a long time. So the strategic investments for a medium-term strategy is always key. Franchises in Southeast Asia come up only at those point in time. So they're always the priority. Then in terms of improving the operating companies' returns as the slide showed, then it's all about the dividend first. The share buyback is something that's up our sleeve and that bit. We know that the market likes it. We can't do a very big one in any event, given the liquidity of the stock. So it's always available to us. We can't -- as you know, we can't exercise a share buyback program while we may have price-sensitive information on that bit. So it's not going to be there all the time, but it's certainly part of our strategy.

Thank you, Raymond, for your question. I would like to answer your question by the perspective in Chinese Mainland market and also our Southeast Asia. So what we have seen is the consumer sentiment and the overall economic situation has shown an improvement and pickup in -- particularly in quarter 4 of last year. And we're expecting this improvement in the consumer sentiment and overall economic situation will continue into 2026.

And what we have also seen in China last year is that there is a structural change in the purchasing channel from moving from traditional channel to a convenient online channel. And with that, we have invest, and we have pivot our route-to-market model and invest on our commercial strategy to capture the growth in those channels. And we believe we are much more equipped in capture the fast-growing channel in those emerging online channel. And plus the digitization will help us in capturing more operating efficiency and also capturing consumer consumption. So I think we are very optimistic about our prospect in Chinese Mainland.

So moving to Southeast Asia, there are a number of short-term factors that has impacted our business performance last year. Like, in Vietnam, we are facing extreme weather and their government tax policy that has a short-term impact on our business. And we believe those factors will be moderated as we move in 2026. And overall, expecting the GDP to have an improvement on this. And plus the Southeast Asia market is young, vibrant, low per capita consumption. So we are very confident on the long-term prospect of this market.

Gentleman in the middle.

So this is John Lam from UBS. Two questions here. One is regarding on -- probably a follow-up question regarding the dividend. First of all, we're glad to see about 13% dividend growth. And I'm not sure if we could interpret it because last year, the group, I mean, including Swire Properties and also Swire Pacific has been successfully recycled some of the capital. And therefore, the dividend growth is partly driven by more capital recycled. Not sure if we could think about this way. Or maybe if, let's say, in 2026, we have another similar size of capital recycling, then we could expect another 13% dividend growth for 2026. Not sure we could think about this way.

Second one is about the NAV discount questions. So actually, I just come back from the Swire Properties analyst briefing. And I think the CFO also mentioned about to narrow the NAV discount. And I think this is also a similar question probably to Swire Pacific. So not sure how -- first of all, I'm not sure how the good things about the NAV discount for property business and also for Swire Pacific.

Yes. Thank you. So yes, look, on the dividend front, yes, it always helps when Swire Properties are paying underlying on that front. But our payout ratio is 50% on that piece, and our policy at least that. And so the strong growth of aviation and the dividend pass-through that we get from them makes me very confident that we can continue the progressive dividend policy on the basis that we know the sort of strategies that the operating companies are following.

So again, I'll go back to my earlier point, I think -- and of course, we can always pay out special dividends if there was an exceptional underlying profit piece. The second question was relating to the

NAV.

The NAV. Fanny's still there. Yes, Well done, Fanny. Look, similar to Fanny, I mean, it's Swire Pacific's at a double discount on that bit. So Swire Properties at a discount, we're at a double that bit. It has improved. It is improving. It's something that we do focus on. I think there are a lot of -- as property companies that are now doing more recycling of assets, you'll see that narrow. But yes, that's just part of the Hong Kong property cycle.

Gentleman in the third row, please.

I got 3 questions. Just one on the Middle East disruptions, oil price, heightened oil price, I think the obvious impact would be on the Cathay Pacific. Would you be able to share with us, other than Cathay Pacific, anything else that you think would have a bit of a disruption on your group business? That's the first one.

And then the second one, just on the investments. Over the last couple of years, a lot of capital recycled. And one of the things that you've been talking about is the health care business. Wondering whether you can give us some more updates. I hear that the valuation remain to be quite high. What are you waiting for over there? Do you have any hurdle rate that you are thinking of?

And then the last one is the slide on the beverage EBITDA margins across the country was very helpful. We can visualize how the margins differences among the market. Would you be able to share with us, Vietnam market, obviously, or ASEAN market is lower. How should we think in the medium or longer run, the margin profile of -- in each individual market?

Can we have your name and organization as well?

Sorry. Simon Cheung from Goldman Sachs.

Thanks. I'll take the first question, which was on the Middle East. And as you heard, the impact on -- for us is primarily through Cathay Pacific initially and the fuel price. It's very early to tell where else there might be some impact, but we're not expecting too much impact, at this point at this early stage in other parts of the group. Martin, do you want to cover the health care question?

Yes. Well, health care is we've made almost $3 billion investment so far in health care. And obviously, COVID came along and it had its challenges. We like the fundamentals of it, and we're learning a lot. We managed to get the DeltaHealth as a subsidiary. So we now run that. Even though we have a minority in Indonesia, we run those. We have the management contract. We're learning all the time on that piece.

Our -- we're a long-term holder in what we think is a fantastic business. Obviously, with wellness and sustainability, a lot of the venture capital companies went in and they have got a different model. They want to exit on that piece. So we have a different valuation. We have to look at operating that company for the long term and making sure that our discounted cash flows and our investment models make sense to us because we can't just commit, buy it, can't just hurry and sell it at a high price. So we think the market is -- well, we've been watching it now for a while. And the longer you watch it, the more you can see that the companies are underperforming to what they were trying to sell you at in the first place. So we think patience is the right strategy, but we do like the fundamentals of that industry.

Thank you for your question. I will take the question on the EBITDA margin. Okay. Yes, we certainly see there is a potential to improve our EBITDA margin by market, especially in the Chinese Mainland. As I mentioned just now, the Chinese Mainland last year was disrupted by the structural channel shift and also a very aggressive pricing subsidy from the food delivery platform, which has impacted the beverage industry.

We don't see that as sustainable, and we're expecting the market will be returning more to the normal. And we will endeavor to improve our EBITDA margin by our revenue growth management initiative, channel-specific packaging and also our pricing management strategy. In the Southeast Asia market as well, we will endeavor to improve our margin, and we see a huge potential by further growing our sparkling category, which is the most profitable category that we are having, and also continues our efforts in revenue growth management and launching specific packaging in capturing consumer occasions.

Thank you. I think we have time for one more question. Everybody happy? Wonderful. Then that's a wrap for today's session. Thank you so much for joining us. Have a great evening.