SWIRE PACIFIC SWIRE PACIFIC 2019 INTERIM RESULTS ANALYST BRIEFING 8th August 2019 | Hong Kong 2 Disclaimer This document has been prepared by Swire Pacific Limited ("the "Company", and together with its subsidiaries, the "Group") solely for information purposes and certain information has not been independently verified. No representation or warranty, express or implied, is made as to, and no reliance should be placed on, the accuracy, fairness, completeness, reasonableness or correctness of the information ...

Financial Performance - Total revenue for 2018 was HKD 84,606 million, representing a 5% increase from HKD 80,289 million in 2017[8] - Operating profit decreased by 14% to HKD 30,888 million, down from HKD 35,864 million in the previous year[8] - Profit attributable to shareholders was HKD 23,629 million, a decline of 9% compared to HKD 26,070 million in 2017[8] - Cash generated from operations was HKD 18,328 million, down 7% from HKD 19,605 million in 2017[8] - The company's attributable basic profit increased by 80% to HKD 8,523 million compared to HKD 4,742 million in the previous year[10] - Basic earnings per share for 'A' shares rose to HKD 5.68 from HKD 3.15, and for 'B' shares increased to HKD 1.14 from HKD 0.63, both reflecting an 80% increase[10] - The company's attributable profit for 2018 was HKD 23,437 million, down 15.5% from HKD 27,731 million in 2017[47] - The net debt at the end of 2018 was HKD 62.7 billion, a 14% decrease from HKD 72.5 billion at the end of 2017[30] - The net debt to equity ratio at the end of 2018 was 19.3%, down 23.7% from the end of 2017[30] Dividends and Shareholder Returns - The 'A' share dividend per share increased by 43% to HKD 3.00 from HKD 2.10 in 2017[7] - The total dividend declared for the year is HKD 3.00 per 'A' share and HKD 0.60 per 'B' share, representing a 43% increase from the previous year[14] - The company aims to maintain sustainable dividend growth, with a payout ratio of 53% compared to 67% in the previous year[14] Sector Performance - The real estate sector was the largest source of profit for the group, contributing HKD 61.77 billion in recurring basic profit, compared to HKD 63.86 billion in 2017[28] - The aviation sector turned a profit in 2018, reflecting improved operating performance from Cathay Pacific and Hong Kong Aircraft Engineering Company[28] - The beverage sector in mainland China, Hong Kong, and Taiwan is expected to see revenue growth in 2019, outpacing volume growth[31] - The overall recurring profit for the trading and industrial sector is expected to increase in 2019[32] Operational Developments - The company aims to maintain long-term growth and sustainable development through innovation and enhancing operational efficiency[4] - Swire Properties is investing HKD 15 billion to redevelop Taikoo Place in Hong Kong, with the first phase completed in 2018[30] - The company plans to privatize its 25% stake in Hong Kong Aircraft Engineering Company, believing it will create long-term value[13] - The company expects to generate approximately HKD 30 billion from the sale of non-core assets and businesses in 2018 and 2019, significantly strengthening its balance sheet[13] Market Conditions and Outlook - The company is cautiously optimistic about maintaining good momentum in most businesses in 2019 despite macroeconomic uncertainties[21] - Cathay Pacific anticipates a challenging business environment in 2019, with a strong US dollar and geopolitical tensions negatively impacting cargo demand[31] - The retail property market in Hong Kong experienced strong sales growth for most of 2018, but growth slowed later in the year due to global trade uncertainties[52] - The company expects stable operating conditions for existing hotels in 2019, with an increase in occupancy rates for new hotels opening later in the year[124] Environmental and Social Responsibility - The company is committed to sustainability, focusing on reducing water usage and waste[170] - The company has appointed a Director of Diversity and Inclusion to enhance its efforts in this area[15] - The company is establishing a joint venture to set up Hong Kong's first dedicated PET and HDPE plastic recycling facility[190] Strategic Initiatives - The company plans to enhance shareholder value through the development and management of integrated commercial projects[44] - The strategy of the beverage division focuses on establishing a world-class bottling system and becoming a recognized top employer and business partner[169] - Future strategies include enhancing supply chain productivity and efficiency to manage costs effectively[170] Capital Expenditures and Investments - The projected capital expenditure for 2019 is HKD 3.44 billion, with further commitments of HKD 4.348 billion anticipated for 2020[119] - The company plans to invest heavily in production assets, logistics infrastructure, sales equipment, and digital capabilities, with capital commitments of HKD 931 million as of December 31, 2018[180]