Good afternoon. Welcome to the live webcast of CK Hutchison 2022 final results presentation. Today our speakers are Mr. Victor Li, our Chairman and Group Co-Managing Director, Mr. Kenneth Fok, Group Co-Managing Director, Mr. Frank Sixt, Group Finance Director and Deputy Managing Director. Mr. Dominic Light, Deputy Managing Director of CK Hutchison and Group Managing Director of A.S. Watson Group, and Malina I, CEO of Asia and Europe of A.S. Watson and Group COO of A.S. Watson Group. The Chairman, Kenneth and Dominic are still in the media presentation. Mr. Frank Sixt will be our first speaker. During the presentation, please feel free to raise your question in the chat box, which is at the lower right-hand side of your screen. The Q&A session will follow the presentation. Before I hand over to Frank, please also pay attention to our disclaimer, which you can find on page two of the presentation. We can start now. Hello, everybody, I'm happy to be pinch-hitting at this stage for the chairman and the co-managing directors. I think if we can go straight to the slides that are in front of you, starting with slide, whatever it is, 3. You know, we talked in the chairman's statement about the developing headwinds that started to really come into play in the second half of last year and are continuing into the first half of this year. I think it's important to understand how the group is positioned because they are reasonably significant. The first, of course, right, is inflation and the corollary to that or the inflation, particularly in energy prices and particularly in Europe. You know, I think it's fair to say that the businesses most impacted by inflation are the telecom operations, somewhat in ports, and businesses have varying degrees of ability to in effect, pass inflationary cost increases through, right, in terms of price increases. Just to give you a sense of what the price pressures look like, if you look at wage price inflation for 2023, we're looking in Europe, in the UK and in Europe at wage settlements, which are ranging from effectively a low of about 8.5%, up to a high as high as 18%, right, in some environments. It's not an insignificant amount. Having said that, across the settled and expected universe in ports and in A.S. Watson so far, that basically means a cost increase of give or take HKD 250 million-300 million. It's not helpful in terms of margin management, but it's not the end of the world. In terms of energy prices, in 2022, we were not terrifically impacted because we were basically 70%-90% hedged in most of our major telecom markets. That is not the case in 2023. We have some hedging in place and we have some places where we don't. We have more exposure to energy prices in 2023. Having said that, I think it's very important to remember that, you know, in effect, our, you know, significant but non-controlling interest in Cenovus Energy acts as a rather massive hedge against energy price inflation. Again, you know, this is something which is, you know, difficult for our businesses to swallow. Certainly kicks them into heavy energy conservation mode at every possible opportunity, which is probably not a bad thing. You know, in terms of the company as a whole, you know, whether it's hedged directly or indirectly, it, it should not have an overwhelmingly adverse impact on us as we go through the year. The knock-on effects obviously have been the US dollar at a 20-year high and the steepest, fastest rises in base rates all around the world in the last 40 years. You know, on the interest rate front, you know, we're in a good position to weather the storm. Obviously we've been repaying gross debt. We'll be dealing with that a little bit later on. And we've been reducing net debt overall. You know, we're down closer to 16% today than to the 16.7% that we were at the end of 2022. Our cost of debt remains low, so it ticked up a little bit, but it's still, you know, for 2022, it was still on average, the cost of debt capital was 2%. The average duration of our maturities, right, was still 4.8 years. You combine that with the fact that 73%, right, of the group's debt exposure is in fixed rates, right? You know, contributing to that duration and that average cost. So we've got in a sense, quite a bit of cushion to deal with the rising rates environment. You've seen us dealing with that as we went through 2022 with the reductions in gross debt and so on, that we'll be talking about, and we'll continue to manage it very closely as we go forward. Interest rates are not going to pose a huge threat, right, in the near future to us. And on foreign exchange, I mean, there's been a stabilization. The US dollar is well off of its highs registered in the fourth quarter. And it's good to remember that we actually have quite a strong internal hedge. Basically because we have a lot of our borrowings denominated in euros, and a lot of our earnings denominated in euros, and so that cushions the impact quite meaningfully for us. All in all, you know, the headwinds are there, but we believe in and of themselves they'll be manageable. On the next slide 4, right, what are our key strategic directions? I'm not gonna dwell on them because I think for each of the divisions, Canning will be talking about them. They're not changing much, but they are progressing. I think I'll just move from there onto the next slide, which is slide 6, and get into the results announcement. You'll see right away the impact of currency movements over 2022. Our revenues are up 3%. If you'd measured them in local currencies, they would've been up 10%. Our earnings at HKD 36.7 billion are up 10%. If you'd measured them in local currencies, they would've been up 15%. Our EPS, the same 10%, obviously. Our dividend that we've just announced will be increased by the same 10%. That is consistent with the promises that we made in 2015 to, you know, maintain our payout ratio steady and to have dividends increase as earnings increase, and also the corollary. Fortunately for 2022, we had a very healthy increase of earnings and an increase in dividends, and I hope that stands us in good stead because I'm not sure that there are a lot of companies in Hong Kong that will be increasing, right, their dividends, right, at this juncture. If I go to the next page, right, you start to get a sense of some of the pressures that we've been under. Our EBITDA, rough proxy for cash on a pre-IFRS 16 basis, so that's without taking... It's essentially EBITDA after leases, if you think of it that way, we're not taking account of the lease accounting inflation that hits the EBITDA line, even though it's not generating cash. That was up 7%. It would've been up 14%, right, if you were measuring it in local currencies. Operating free cash flow is a little bit down, we'll drill down on that. It was down 6% compared to last year. The reason for that lies entirely in our subsidiary universe. You know, we have less EBITDA from subsidiaries, and we have more, quite a bit more from associated companies. We'll get to it in a detailed slide, but they kinda come pretty close to balancing each other off. Of course, we had another very, very strong cash generative year. That was able to reduce, right, our net debt to net total capital ratio by 3.6 points from year-end 2021. That, I think is a good thing, and that direction of travel has been continuing as we've been reducing gross debt at a fairly aggressive rate, given the change in direction of travel in interest rates. If we look at how EBITDA, and again, using the pre-IFRS 16 EBITDA as a rough proxy for cash, right, you know, what does it look like both in terms of the geographic and by sector splits? I would focus you, because we had large incomings in the telecoms division from completion of the Cellnex transactions in the UK. I would focus you on the inner rings, which tell you more about the relative normalized operating contributions, right, of the businesses. What you see right away, and it's a theme that will be recurring as we go through this presentation, is that the major changes from 2021 in terms of sector contribution is the telecoms contribution reduced from 33% to 27%, right, and the finance and investment contribution increased from 10% to 18%. Finance and investment is where, because it is a strategic but non-controlling interest, it's where we hold, right, our 16.6% of Cenovus Energy. Not surprisingly, Cenovus made had very good cash flow during the year, so it made a significant contribution to our EBITDA reported as an associated company. I think if you, if you go through on the right, you kinda see the attribution moving from 2021 reported EBITDA through to 2022 EBITDA. Of course, the one-off net gains, right, coming out of 2021, the underlying for 2021 being HKD 106.4 billion, roughly. Ports lifted their contribution by HKD 1.2 billion. Retail was only a snick off. Retail much more challenging in terms of earnings, right, than actually in terms of cash generation, which is a very bit of very good news. Infrastructure made a better contribution. The significant negative is CKH Group Telecom, and again, we will be talking about that, but that has to do with some year-on-year corporate stuff and some year-on-year real operational adversity, particularly, well, actually mainly in Italy. Not unexpected, and something that we think is leveling off. You move on. I mean, HAT, obviously, with the moving from our single interest in Indonesia to the merged interest in Indosat Ooredoo Hutchison, suddenly becomes a positive lifter of our EBITDA on a consolidated basis. Finance investments and others, again, that is essentially the share of the Cenovus contribution. Then moving to the right of the underlying EBITDA for 2022, you have the adverse hit coming from exchange translations. Not insignificant. It's almost $1 billion. A very significant one-off net gain that we realized because of completing the Cellnex transactions. I think that probably also includes the merger gains in Indonesia. Is that correct? That's right. All in all, you know, leading us to a year where EBITDA is up 7% on a reported basis and would have been up 14% if you were looking at local currencies. Now let's take a look at operating free cash flow. Now operating free cash flow is essentially, right, the EBITDA of our subsidiaries and the dividends that we receive from our associates as opposed to the EBITDA contribution, right? From our associates minus CapEx minus investments. Again, you see that right away that the difference, right? Is essentially all in the EBITDA of subsidiaries line. Cutting right through it for the company and its subsidiaries, there's a HKD 9 billion shortfall year-on-year. That's coming mainly from CKHGT, from CKH Group Telecoms, from Hutchison Asia Telecoms, because it moved from being a subsidiary in Indonesia to being an associated company in Indonesia. So no concerning operating decline there and a very modest reduction in A.S. Watson's. I think that it's important to understand that the decline, right, particularly in CKHGT, is probably half attributable to an actual operating decline, and probably half of it is attributable to year-on-year corporate comparables, right? Again, that's something we'll get into in more detail later on in the presentation. The slightly happier picture is when you go to the next page, it's what happened to free cash flow. Of course, free cash flow starts with operating cash flow, then deals with all of the things like the proceeds that we receive from our towers, but also our interest payments, which were modestly, but not concerning at all, right, year-on-year. Working capital changes, very positive, right, and favorable movements. Sorry. Movements on 5G license payments, which we'll talk about when we get to the telecom section. One way or another, they all added up to HKD 47.7 billion, which is a whopping 44% increase in free cash flow, compared to 2021. The walk from 2021 free cash flow through to 2022 free cash flow is on the right. Uh, and it's, uh, pretty, pretty easy to understand. Uh, it's the, uh, as we discussed, right, the, uh, declines, right, from the EBITDA of subsidiaries, uh, in and of themselves, and the EBITDA of subsidiaries resulting from foreign currency movements. Uh, but on the positive side, right? The actual dividends that we received from our associates, uh, increased. Most importantly, if you go across towards the right, uh, working capital changes were very positive, and a lot of that has to do with, uh, really the, the, the most world-class working capital management I think I've ever experienced coming from our, uh, retail group, uh, among others. So, uh, again, a very, very good movement there. Plus, you'll recall that last year there was an unusual adversity in working capital simply because we, in the context of the merger in Indonesia, repaid some very large Huawei accounts that had been sitting in payables relating to Hutchison 3 Indonesia so that we could proceed with the merger. So that this is a kind of more normalized picture than last year, in relation to that single large item. CapEx, I'm happy to report, was down meaningfully in comparison. That obviously helps free cash flow. We spent less on telecoms licenses by a considerable amount in 2022 than we had in 2021. You put all of that together, and you had a very healthy free cash flow profile for the year as a whole. Healthy free cash flow profiles tend to translate, as they do on slide 11, into pretty healthy financial profiles. You know, the first and most obvious positive movement was the very significant reduction, right, in our net debt to net total capital position, which I've talked about, but I haven't talked about how much gross debt was reduced, and that goes to the impact of rising interest rates, right? It also goes to, you know, managing refinancing risks and so on. We actually reduced gross debt by HKD 41.7 billion while reducing net debt by HKD 35 billion. This is a year where the reduction in the gross debt exposure, I think matters. That HKD 284.6 billion is literally HKD 41.7 billion less than it was at the end of 2021. As I mentioned before, our average maturity profile, and you can see the maturity profile in the That section on the lower left-hand side, is still 4.8 years remaining, and that was the same in 2021, which reflects kind of the management of what we've been repaying and how we've been repaying it. Our liquidity is very high. You know, a little bit lower because we use some to repay debt, but as a practical matter, it's a very, very large pool of liquid assets. No change, by the way, at all, in the quality there. A change in terms of the yield, in particular a portion of it, which is basically deposits and fixed income securities. We had a pickup of 147 basis points overall, right, in terms of the return. Needless to say, we also had a reduction, right, in terms of the average balance in those categories, during the year. I think 2% cost of debt speaks for itself. The fact that 73% of it, right, after swaps, right, is in fixed rates, means that there is not a lot of risk. I mean, you do the quick math, right? You know, 100 basis points rise in short-term rates doesn't really hit us all that hard on the interest expense line. I think that's a good place to be. I think that's pretty well all that I wanted to say about our cash and financial profile and overall results. We're, we're gonna wait for Canning and Victor to get here to go through ports, I think. Dominic, are you on the line? Is Dominic on the line? Oh, okay. Okay. Okay. Well, I think what I'll do is just offer up some brief comments on the stuff that don't require a lot of comments. For example, the infrastructure slide, which is slide 14. Keep going. 14. Very good contribution again from CKI, and of course, they reported, I think yesterday, they reported. Their contribution up to HKD 7.7 billion to us, up 3% right, for the year. Right. Their EBITDA marginally lower than last year in terms of contribution to us, but would have been up 5% in local currencies. I think the important thing is that from an earnings point of view, again, actually, if you take out the corporate items that don't have anything to do with the underlying earnings and cash generation of the actual operating infrastructure assets, right, then you would have been looking at earnings that would have been up by 7%, right, in reported currency, and would have been up by 16% if you reported them year-over-year in their local currencies. CKI is doing well, pretty well what you would expect it to do, which is just behaving like an anchor for the group, but anchor that keeps us stable in however turbulent the seas may be. That's set to go on as we look into this year. There are no resets under any of the major RAV assets in 2022. No reason to expect the net debt ratio, either on a see-through basis or on a company basis to move particularly adversely during the course of the year. Very, very solid company generating very good cash. And, I have to say with a measure of inherent protection against inflationary pressures just because of the nature of the regulated asset bases and businesses. Strong cash position, low gearing, very good rating. I think CKI will continue to be a good, a good anchor for our businesses as we go forward. I'll skip over the telecommunications businesses and just go to slide 18, where I can say a little bit about Cenovus's contribution. You know, it was obviously not at all insignificant. Cenovus contributed HKD 6.6 billion, if I remember right, to our earnings in the year. That's on slide 18. They also increased, right, their dividends, right? Both their base dividends and they announced a variable dividend program in addition to their stock buyback program, which is gonna be quite important to us, because as they reach and exceed, right, their targeted debt profile. Which is basically to get their debt to below CAD 4 billion, they have announced that they will follow a rigid excess free cash flow regime, where excess free cash flow will be 100% distributed from that point on in a mix of share buybacks, depending on the accretion opportunity that's available to the company in that category. Otherwise by way of variable dividends, which means that for 2023, I think it's quite reasonable, all things considered, to expect a performance, right, that is better in terms of cash flow contribution and probably similar, if not better, in terms of earnings contribution. A couple of things are happening at Cenovus that are I think quite good news. One is they've increased the scale, right, of their refining assets and transportation assets quite significantly over the course of last year through completion of the Superior Refinery, which they've I believe announced, and also through the acquisition of BP's interest in the Toledo Refinery. All of that basically reduces exposure to heavy light differentials when you get right down to it, because it increases the extent to which, what you're really selling to third-party customers, is either products going through refining assets or products that you're able to move into different markets, including the Gulf market in the U.S. I think that is good news. If you've just looked at heavy light differentials, comparing first half of last year to where we've been in the second half and where we are today, you could get a little bit discouraged. There are two things that mitigate that in terms of contribution to our group. One was that in the first half, unfortunately, some of that heady price action that they were seeing in WCS crude at Hardisty, was given up in the form of hedging losses. They no longer have a base hedging program at all on fundamental commodity price risk at this point. This is all stuff that Cenovus have announced themselves. that makes a difference in terms of the contribution profile, right, that we can expect. Of course, the mix of their exposure is significantly lower this year, basically because what they're really selling is refined products. If you look at what's been happening to refined product margins, right, that's been much more favorable than what's been happening to heavy oil and light oil differentials. All in all, you know, we're expecting, as I say, you know, something like a same-same or maybe slightly better performance from an earnings contribution point of view. We are hopeful that we'll also be seeing from a dividend contribution point of view, a meaningful uplift year on year. Frank? Yeah. Frank? Yeah. Ken has joined us already. Good. Should we? Yeah. Of course. Ken, do you want to cover some pages that we have reserved for you? Let's. Frank doing very well. You wanna finish. Let's back up to ports. Page 4 is the strategy piece. We haven't talked about that one. We can follow up with ports. Page 4, can you just switch that? Okay. Yes. Basically, this is our clear strategy going forward. You know, I think I will do the creative long-term value and geography business. Frank, what have you done the sustainability and financial? No. I've done all of the financial stuff, but I haven't covered ports, I haven't covered retail, I haven't covered telecom. Okay. I haven't covered sustainability, so. All right. Let's go just. Actually, you know, our main strategy is through, you know, we try to progress, do a lot more M&A transactions, and particularly in the telecom market. What we have still, things that, you know, try to do, try to find more value from the telecom business. Like, you know, what we did in the tower transactions. Also, you know, do much, do more. We still have 3 country that we haven't done in market consolidation. The first one is the first one is U.K., where we are in deep discussion with Vodafone. Also in Nordic, we are also exploring opportunity. These are the key focus that we will focus. Of course, then the asset-light strategy that you have seen, that we have done the tower deal and also we have done a network sharing in Italy, which we have announced. Hopefully, there will be more of this kind of transactions that we can announce. This will be our main strategy. Of course, on the operating side, we continue to digitalize our business and use IT investment to reduce our costs. For example, the NGen in the port business. You know, we have done more and more ports that we are rolling out on NGen. The main thing is to using technology to reduce costs. Of course, you know, last but not the least, you know, our share is so cheap, so the share buys back, we will continuous in the pipeline. This is, you know, operating in 2023 is not easy, but these are the things that we will continue to do. Okay? On the, you know, another you know, strategy that we have is geography and business diversity. What else you have seen that our business has rendered resilient in a difficult time, like ports and retail, we are actually able to do very good business. The geography actually help us because, for example, in the retail, when China you know, is having difficulties where they have a huge lockdown in Q2 '22. Again, but it was, you know, the other side of the equations, actually, the rest of the world is actually come perform quite well to overcome it. This. That. Also, you know, you'll find out that in the telecom industry that we are suffering with power costs and all those, and then, but our investment in Cenovus actually give us some relief on that. That, you know, this model is has been helping us very nice, okay. Going in the future, we will revisit this model from time to time. On the sustainability, I think, Frank, can you do this? Also on the financial side. Sure. Yeah. Sure. There's a slide later on where we will go into sustainability a little bit more. You know, it has become an important focus for us, not just because it is very much the right thing to do and very much a necessary thing to be involved in. Basically the a sensible sustainability agenda is something that is required. It's required by our customers, it's required by the people who work for us, it's required by our shareholders, it's required by our bankers and our bondholders, and at the end of the day, it's required by regulators. You know, we've been looking at it as an opportunity to improve the organizations among other things, improve the attractiveness of the organizations to the best and the most talented people. As we just announced, we have adopted some targets, which I'll be talking about later, but both in terms of short-term decarbonization targets and longer-term pathway towards net zero. We'll get to that when we discuss the slide. This is an area that I think we see as presenting more opportunity than risk, as long as we handle it right. Then in terms of the maintenance of a robust financial profile, Kenny, I've gone through the finance slides and the operating free cash flow, right? Financial profile slides. I think the only thing that I would add is so long as the current management teams, our chairman, Kenny, myself, and everybody who works with us are around, it ain't gonna change, right? That robust financial profile, right, is a pillar that you can rely on, right? To see us through times however turbulent they may be. I think with that, Kenny, we would probably go to the ports slide, would be the next one that hasn't been covered. That's slide 12. This is a very, very interesting page because that, and you've seen that in EBITDA, actually, you know, went up 8%. Okay? However, in the local currency and then 4% and 4% in reported currency. How is that? If you look at the throughput, it actually went down by 4%. It mostly come from, you know, China and Hong Kong. You notice that the trust actually, you know, the TEU is reduced by 7%. Actually, two-third of them are from Hong Kong, and one-third is from Yantian. The China port do better than the Hong Kong port because they are in the, you know, they are in the where place where the cargo is. Whereas in Hong Kong it's, you know, it's difficult for the cargo to come down to Hong Kong. In the China business, you know, is affected by the, you know, there was 2 months of lockdown in Shanghai. Otherwise, the China business was doing quite okay. Other than that, the other are very small differences, so that, you know, if you see that there is down in TEU and then how come the, you know, the EBITDA actually went up. One of the reason then the EBITDA went up is that because the goods we got is, you know, stay in our port was because our logistic problem is staying into our port much, much longer. Actually, you know, this year we recorded 34% increase in storage income. That as a result, that the total EBITDA actually went up by 8% in local currency. Now, if you look at the waterfall chart, start from in the middle, start from 2021, you know, the trust, you know, is reduced by HKD 200 million, basically almost 50/50 from Hong Kong and Yantian. That, you know, which is still due to the traffic is being reduced. The mainland is almost similar to last year. Basically it's Shanghai and then because of the 2 months lockdown. The other parts do better, so that give a quite almost a pretty even result. For Euro, and you know, the increase is mainly due to storage income. The throughput is not, is a little bit reduced, but the storage income is wonderful, especially in Barcelona and in Rotterdam and also in Felixstowe. That, you know, quite a pleasing performance. Of course, in Asia and Australia, actually the increase is not come from Asia and Australia, it's come from Mexico. Mexico is doing very well. Mexico and Pakistan is doing very well, whereas the others are so-so. Again, you know, you know, because of the strong performance of Mexico, and so they give a huge uplift to this division. On the consolidation on the corporate side, it is basically due to OCL had a good performance. However, all these good things, they have some bad things happen is the foreign exchange we gave up HKD 500 million, almost HKD 600 million. The end result we get a 4% increase in EBITDA. Going forward, I think the good thing about the storage income may be not as good as this year, but we hope that, you know, especially, you know, the goods will pick up. However, we haven't seen it in the first two months. Normally, you know, the wellness inventory, when it is low in the first few months and it should pick up in the rest of the year, we are still cropping for good growth in the second half of 2023. We will also, you know, have some new facility, you know, in Egypt, in Thailand and in Middle East, and it will be open. That will give us more growth in those area. I think I have no more to add to the port business. Next page should be retail. Retail. Is Dominic there? Yes, I'm here. Can you- Now. I will say it on slide 13, retail. Let's start with the store number. With a store portfolio of over 16,100 stores, the retail division remains the world's largest international Health and Beauty retailer. Operating in 28 markets under 12 retail brands and with a strong loyalty member base of 141 million. Our store numbers stood at 16,142 at year-end, you know, very exact. A decrease of 2%. If we exclude Health and Beauty China, it is 1% increase. We continue to carry out our store optimization program, whereby we continue to open new stores in good and strategic locations and close those non-performing stores without a future upon lease expiry. During the last year, the division opened a total of 668 stores while closing 924 stores, mainly in Health and Beauty China and Ukraine, our exit from Russia in the middle of last year. Thus bringing the total store network to 16,142 that you see on this slide. The store split between Asia and Europe is about 50/50, around 8,000 in Asia and 8,000 in Europe. For the new store open, average payback period remains healthy at 13 months. It's a very good payback and it has been maintained at this level for a good number of years. On EBITDA, which you see, you know, below the store number. EBITDA for the year is reported at HKD 14.3 billion, representing a decrease of 11% in reported currency or 2% in local currency. The EBITDA split is 33% from Asia and 67% from Europe. Historically, this ratio has been around 50/50, and this change in ratio last year is primarily attributed to the underperformance of Health and Beauty China. That down to Asia, ratio to become, you know, 33% versus 67% in Europe. If we exclude Health and Beauty China, the EBITDA decrease would have been only 1% in reported currency and indeed an increase of 9% in local currency, given the strength of the Hong Kong dollars. Reported currency, 1% decrease. Local currency in fact is an increase of 9%. Let's move over to the EBITDA waterfall chart on the right, which shows the year-on-year EBITDA change of each division in HKD. Starting with an EBITDA base of HKD 16.03 billion in 2021. That's on the left-hand side of the bar, the red bar. We saw a sharp decrease of HKD 1.527 billion or 58% for Health and Beauty China, which was severely affected by the ongoing pandemic related restrictions and lockdown measures throughout last year. At its peak, Health and Beauty China had over 1,000 stores temporarily closed in late November last year. The better news is that following the easing of the lockdown restrictions at the end of last year, i.e., December, the China operation has started to recover strongly, and the trading performance in January, February, and up to now is quite encouraging. Bad year, a tough year for China for 2022, they had a very robust start, you know, entering into 2023. Next, bar chart is Health and Beauty Asia. With the relaxation of the pandemic restrictions in various countries in the second half of last year, EBITDA from the Health and Beauty Asia division increased 33% or HKD 838 million, notably in Malaysia, Thailand, Philippines, and Turkey. We move next to Western Europe. For Western Europe, where trading has fully returned to normal in the second half of last year. The EBITDA for the year increased 5% or HKD 414 million, primarily from the United Kingdom and the luxury retail business, while the Benelux countries deliver more modest results because they had an exceptional strong year in 2021, because they stayed open because of the essential nature of the stores. That's why they had a very good base in 2021 and another 5% increase in 2022. For Health and Beauty Eastern Europe, the next block, we saw great trading, good trading results in Rossmann entities in Poland, Czech Republic, and Hungary, as well as the Drogas business in Latvia, but partially offset by a trading loss in Rossmann's Ukraine. The next EBITDA growth still registered at 8% or HKD 194 million increase over 2021. Good performance in Rossmann and Drogas in Latvia offset, you know, the trading loss in Rossmann's Ukraine and still register an 8% increase. In summary, for our health and beauty businesses, which accounts for over 95% of the retail division's EBITDA. These charts demonstrate that the significant EBITDA drop in Health and Beauty China has been fully compensated by EBITDA growth in other regions. Excluding China, in fact, the EBITDA in other regions actually registered a 12% increase in local currency. Lastly, for other retail, we see a 202 million decrease. In fact, our retail business in PARKnSHOP, the grocery business, and Fortress, the electrical, were doing pretty well and reported good EBITDA growth. The decrease in EBITDA primarily attributed by the water and beverage business in China, where the F&B and outdoor activities were hampered by the COVID restrictions and city lockdown, so it dragged the EBITDA down. Also included in this HKD 202 million number are the non-cash one-time asset write-off in Ukraine and also the closure cost associated with our exit from Russia in the middle of last year. Of course, you know, the FX cannot be underestimated. With a strong Hong Kong dollar, we recorded a HKD 1.44 billion FX translation loss, thus resulting in a total EBITDA, the end block of HKD 14.3 billion, an 11% decrease from 2021. This is 2022. For the outlook for this year, we expect Health and Beauty China to continue to grow while Health and Beauty China will see a strong recovery. We are seeing it already in the first two months of the year. Health and Beauty Europe will continue to deliver robust performance both in the Western Europe and also the Eastern Europe through Poland. In the meantime, you know, we'll continue to drive our strategic pillars, i.e., the GOBI, the own brand and exclusive, the O plus O, the offline plus online strategy, and CLM to increase customer connectivity and customer lifetime value. On this, I can pass to Frank to talk about our infrastructure business. Yeah. Thank you, Dominic. The next page should be Telecom, page 15. Oh, telecom, huh? Okay. Yeah. Already talked about the infrastructure. Okay. Thank you. Okay. On the telecom side, I think 2022 is a story of two side. Okay? You know, on one side is very happy that we are able to complete the tower transaction in the UK. Not only the, you know, we are able to get the green light from the competition side, and then, you know, that will be, you know, we have received almost EUR 4 billion, EUR 3-plus billion from that transaction and which underpin the financial performance of the telecom divisions. That is the good side. The tough side is that the... You know, because of exchange rate then because of cost escalation, then we see a tough performance on the EBITDA side. If you see that on the left-hand corner, the, you know, HKD 20.8 billion. That it represent a 20% decrease in EBITDA. Even if you take the foreign exchange away, that is 11% in local. That's it. Then the waterfall chart will explain to you where the concern is. Of course, you know, if you go from the, go to the second column, HKD 728. Of course, when you receive cash and then you got to give away something, and that is the tower rental. That, you know, you know, in order to make a comparison, we take up the tower rental separately so that the equivalent normalized twenty... You know, this is the HKD 728, is the amount that we paid in 2022 delta to 2021. Okay? Then they become HKD 29 billion. If you want, you know, the... All the other operations, you know, is all more or less the same. UK is more or less the same and a little bit better. UK actually did very good in the marketing and then we get good, in, you know, one of the better increase in subscriber base for it. The financial performance is quite good, HKD 119 million. If you look at Sweden, you know, is recovering very well, under, you know, under the current management and another good year. Denmark, you know, more or less the same. Austria, very good, performance. Ireland, you know, the increase in revenue is not able to, not able to overcome the cost. The big figure is Italy, EUR 2.88 billion. You know, where did it come from? Actually, it is a sign of two story. One is the revenue side. As I say that, you know, as our competitor, Iliad, continues to build up their network and they utilize a network in less and less. As a result, there is a EUR 1.44 billion reduction out of the EUR 2.8. EUR 1.4 is the reduction in net margin from the revenue. If you look at our base, our base is doing quite well. We're able to maintain our base, actually increase it a little bit. Actually, you know, compared to last year, our base is doing better by about, you know, by about 1%, EUR 100 million. The wholesale business, which include our Iliad roaming into our network, actually take, well, I think it's about EUR 150 million drop. You know, income, you know, about 70% come from Iliad. That, you know, as I say, we are in between strategy where we took all the income from Iliad in the previous year. Now they are moving away, we have to rely on our own. That. On the OpEx side, you know, our bit, you know, is about 1.4 billion. However, HKD 400 million is, there was a cost. There was some in-other income which was debit into the cost last year, which doesn't happen this year. The real difference is about HKD 1 billion in cost. Basically, you know, HKD 400 million come from a higher spectrum fee which only occurred in 2022 and not occurred, I mean, 2021. Of course the, you know, then the inflation side on energy costs about HKD 300 million. The other higher OpEx on inflation, HKD 300-400 million. Totally account for the HKD 1 billion of that. Going forward, you know, what do we do on operation? Actually, you know, we will continue to see pressure in the energy costs and the inflation unit costs. However, if you look at all our operations, we are doing a lot of repricing in our base. That, we are hopeful that, you know, this will give some revenue, some margin along to overcome, hopefully to offset the cost increase in terms of energy and inflation. The CapEx side, I think we will continuously reduce CapEx in 2023 to get more cash in. As I said, very often the in-market consolidation in U.K., merging with Vodafone. The asset light strategy will continues to our main strategy. You have seen that we have an announcement in general about our sharing network in Italy with Iliad. With that, we can move to next page 16. This is actually, I repeat what I'm saying. The 5G coverage, we are going full speed and then doing 5G in U.K., Italy and all those. The pricing initiative, we have actually started doing a lot of repricing as we have stated here in U.K., Italy, Sweden, Denmark and Austria. You know, everywhere we are doing a price increase. Of course, we have a lot of. In order to get our P&L performing better, and energy, we have a lot of initiatives. You know, just basically give you a taste of what we are doing. Okay? Page 17 is basically a detailed summary of what I just described in the bar chart. I think if you look at. I think the main thing to look at is Italy. Italy, you know, you've got a revenue decrease, HKD 115 million. You know, as I say that, you know, HKD 130 million come from Elliott. Actually the base continues to perform. We are looking forward for the base. The strategy is that is have the base to perform so that we can overcome this shortfall from the wholesale side. On the cost side, we have extraordinary costs on the energy side. You know, we have extra costs on the licensing part, which is not present. The thing that I would like to highlight you to look at is the middle column. Starting with CapEx. You know, remember, I keep on want to focus our, my team to make sure that the CapEx on equipment is basically equal to depreciation. If you look at the total column, HKD 18 billion CapEx that we spent, and then depreciation is HKD 14 billion. The equivalent depreciation is HKD 14, we are still HKD 4 billion away from it. If you look at where is the culprit, it's still the U.K., because U.K. we're still on the catching up mode. That, you know, U.K. actually going forward, you know, hopefully this HKD 336 million over depreciation will be much less. Also, if you go to look at Sweden and Denmark, those two, you know, they actually incur CapEx more than depreciation. Basically because that, you know, they have to replace the Huawei equipment with Ericsson equipment. This is extraordinary. Not in the ordinary business they are within the guidelines. I think that we are approaching where we want to be in terms of controlling CapEx. I think going forward in 2023 is basically a story of, you know, controlling our costs, especially, you know, the energy costs. That, you know, we can actually, you know, try to minimize that cost increase. Of course, you know, we are now, I think three or four business of the business is doing repricing. That's, that will give extra revenue to overcome the cost increase. 2023 will be a difficult year. Having said that, we are working very hard on the Vodafone merger. That will be very accretive to us. The synergy is huge. With Ofcom, you know, stated that they do not think this is fixed fixations on the four-player market. They will look at the three-player market, provide the competition in there. I think that gives us a lot of hope that, you know, in the UK, the merger, you know, can be successful. We are on the final stage of negotiation with Vodafone, and both sides want the deal. Hopefully we can announce shortly that we have reached commercial agreement. Okay? On the Nordic side. Nordic is doing very well by itself. Of course, if we can merge, it will do even better. We are talking to the right, to the other part, competitors to see what, you know, as opportunity. I think the other parties also recognize that it's accretive to each other when you do that. You know, conversation is going on, but this is not as close as in the UK. On the asset light strategy, you have seen two in action already, which is the tower deal and also the network sharing deal in Italy with Elliott. We are, you know... There could be some other thing happening, but no, I cannot mention it today. We are very active on operational and also on-Continue so that we can make things happen, and good for the company. Thank you. Kyle? Yes. The next page is page 18. Frank has touched upon Cenovus. Maybe you can talk about IOH and TPG, and then Frank can follow, finish with the HUTCHMED. Well, I think, I think, in those said Hutchison and DPG have similar story. You know, before we were putting cash in, we are incurring losses. Our network is not as good as the other, and then it always relies on head office to put in money so that they can build a better network. How much head office can support when the local business cannot generate enough money? This is why we are always behind. With the merger, you know, you can see that the EBITDA, you know, with the merger, you know, the EBITDA is more than double, number one. There's a huge synergy deliver. You know, they pay dividend in to us, the cash into us, instead of we putting in cash. We can record a profit instead of becoming loss. Actually, TPG and Indosat all, you know, achieve their goals. I'm looking for better things from them till 2023. Thank you. Okay. I'm supposed to pick up on HUTCHMED. Just before I go there, just to finish off on Cenovus. Obviously, I mentioned the outlook in terms of earnings contribution and cash contribution in the way of dividends. It's also good to bear in mind that in terms of value contribution, Cenovus has been steadily trading at between 4 and 5 times what it was trading at when we did the merger in 2020. Obviously in terms of value, right, this has been very, very accretive, right, to CK Hutchison. Lastly, in terms of the other operations on HUTCHMED, which I still inclined to call Chi-Med, but it's now called HUTCHMED. You've seen quite a turn, right, in the course of the last couple of months. That's because it's no secret that, you know, in terms of, you know, market performance. I mean, the company hit some really serious headwinds with the issues around NASDAQ listings for China-controlled companies and accounts and all of the stuff that went with that. Also, you know, it's not the easiest place for a company based in the mainland, right, to, you know, achieve distribution of scale, right, for new drugs and new drug discoveries. So I think they announced and have executed a change in strategy that has been quite salutary. They did a very significant non-dilutive deal with Takeda, right? Which, at the end of the day, they are partnering, so that their partner will take over the marketing and sales, right, of all of the current discovery drugs, in offshore markets, I believe in Europe and America and other markets. That allows HUTCHMED to focus on, I think, what it really does best, which is creating a delivery pipeline of discovery drugs, right? Which so far has been, you know, pretty world-class. We own 20, sorry, 38%, right, of the company. It has a current market cap of $2.6 billion. Over the course, of course, of the last couple of months, right? It has beat its last 12-month average in terms of the share price. The directional change, I think, has been very well received. I think that the focus on drug discovery and development, right, and of course, on marketing, sales and distribution, right, outside of Europe and the US, will serve them very well, and in particular, in the mainland. I think that the company is actually on a reasonable path towards profitability, which is good for any biopharma company. In terms of its market perception, I mean, it's clearly on an improving trend. If we go to slide 20. I'll move very quickly on this, although it's a very important topic. It's where have we been on sustainability? I think the important message is that for the first time, looking at all of our underlying decarbonization plans, in all of the businesses, and many of which, I mean, including everything in retail, everything in telecoms, and quite a bit of the stuff in CKI, have already been validated under the Science Based Targets initiative, right? We felt comfortable to announce for the whole group, right, that we do have, right, a target to reduce Scope 1 and 2 emissions, right, by 2035 by 50% as against a 2020, right, benchmark year. I can tell you, I mean, we don't, we don't set targets like that unless we see very, very clear pathways to achieving them. I think that's a very important thing in the area of sustainability. There's, you know, there's been a lot of noise and a lot of unfortunate stuff around greenwashing and so on. You'll never get that from us. That's the reason why we have not just gone out and put a net zero target or net zero target date. What we have said, and it's meaningful, is that we are committed, Right, to continuing to pursue net zero before 2050 to be in line at least with the Paris Accords direction of travel. Personally, I think that we will be able to do better than that, but we're not gonna set ourselves a target unless behind that target we actually see all of the ways and means by which the target will be achieved and the timeline over which it will be achieved. So I'm hopeful that in future years, uh, we'll be able to, uh, pull both of these targets in actually. Um, but, you know, for today, uh, this is the first time that we have announced targets. Next year will be an important year, uh, in terms of continuing to fulfill the plans that are behind those targets, uh, and in terms of validating the targets for the divisions that have not yet been, uh, completely validated. Just a couple of things in terms of other progress during twenty twenty-two and the... Our, our, uh, sustainability report is, uh, about a hundred pages long and will be available at the same time as the annual report. </transcript> Applying the rules: 1. **Remove starter conjunctions:** "So I'm hopeful..." becomes "I'm hopeful..." 2. **Remove filler sounds:** "uh," "Um," "uh," "uh," "uh," "uh," "uh," "uh," "uh," "uh," "uh," "uh," "uh," "uh," "uh," "uh," "uh," "uh," "uh," "uh," "uh," "uh," "uh," "uh," "uh," "uh," "uh," "uh," "uh," "uh," "uh," "uh," "uh," "uh," "uh, I really do encourage everybody to read it because I think you get a sense that it's actually a business opportunity for us, right, you know, as well as the right thing to do from the point of view of all of our stakeholders. So it's a very encouraging area, right, overall, and potentially one that will develop into a very meaningful new business for us. At any rate, in 2022, we did our first green bond report because we had issued a green bond in 2021. And that was validated as required by Sustainalytics, as I recall. We did our first TCFD report, so the Task Force on Climate-related Financial Disclosures requirements, which are becoming regulatory requirements in terms of our financial reporting. That was issued. We got an upgrade from MSCI, from a horrible starting point, to a not unreasonable, but still, a triple B rating that we can continue to work to try to improve. Very recently we got an upgrade from Sustainalytics, to medium risk at 26.5. You know, we started in 2020 with them at severe risk at 48.5, so it is serious progress. Unfortunately, they view us as a conglomerate, which is probably correct, but in their lexicon, conglomerates can't get out of their medium risk category. I do take some comfort, though, that we rank seventh out of the 114 conglomerates that they rank globally. You know, we are not seen, you know, even by the more aggressive sustainability ratings agencies as being in any way on the back foot, compared to our peers, not just here, right, but all around the world. I think very good progress in an area where we will continue to work very hard in the coming years. Wow. Thank you. That I think is it for the presentation. Yeah. Thank you. We will now begin the Q&A session. Due to the time constraint, we may not be able to answer all your question today. Our IR department will answer the remaining questions shortly. Mr. Chairman, the first question is: What is the priority of the company's capital allocation? I think it's earnings and cash flow accretive telecom in-market consolidation. I think Kenny has explained that quite well. We're also putting money into opening new retail stores with good payback period. Also new infrastructure projects through CKI and its opcos. With the completion of TowerAsia sales, some capital will be allocated for debt repayment and share buybacks. Thank you, Chairman. Next question is on retail. What was the performance of Health and Beauty China and retail as a whole in the first two months of 2023? I think with the opening, especially in China, positive momentum is continuing from last year and the first 2 months of 2023. In particular, good growth in Western Europe, U.K., and Benelux, and Eastern Europe, like Poland. China has finally get a rebound from the very tough period in 2022. Thank you, Chairman. The next question is on telecoms. What do you think is the regulatory risk for the UK in market consolidation? I think, Kenny, maybe you can answer this better than I can. Well, thank you, Chairman. I think I have explained it in my presentation. Actually, what in U.K. Ofcom has said in December, they do not have a fixation of number of players. The most important thing is that, you know, if a merger occur and then it got to be pro-competition. This is a significant change, whereas before they insist on 4 players. We feel that with Vodafone and ourselves coming together, the number 3 and number 4 player will be get together, will be similar size to number 1 and number 2. That will enable us to build a network that can compete with number one, number two. You know, so that there's a lot of things that we can, and we can prove. Therefore we can provide better competition. I think, you know, we are in a good place on that front. I'm much more hopeful that we can achieve a successful result. Thank you, Mr. Fok. The next question is, What was the throughput performance for the port business. What was the throughput performance in the first two months of 2023? What is the outlook for the full year? Still going to be tough with really high inflation and high interest rates. Growth and consumer demand in a lot of countries have weakened. I think a lot of retailers still have an issue of overstocking their inventories in previous months. I think the first 2 months of 2023 still very similar to Q4 2022. With the gradual easing of the supply chain pressures and Mainland opening up even more, I'm hopeful that there'll be growth in the second half of 2023. Thank you, Mr. Chairman. The next question is on telecom. What is the expected increase of energy and salary costs for European telecoms in 2023? Do you expect tariff in-increment this year will be able to offset this? Penin, I thought you've answered that in the earlier... Yes. Yes, we have. Yes. Yes, we have. I don't think we need to, Carl, maybe same similar questions, we don't need to answer it three times. Understood. Okay. The next question is about HUD. Can you elaborate on the plan for HUD to develop residential units at Tsing Yi? It's a suggestion to the Hong Kong government. It's not approved yet. It's just that Hong Kong, it's always under pressure to produce more homes for people. We respond to the government's request on finding more land. HUD is 100% owned by CKHH. On the land that HUD owns, it has about over 10,000 units. It's on a plot ratio that is similar to neighborhoods in that area of around 5. The reason we mentioned the incorporate the government land to build another 5,000 units on a land owned by the government is because that piece of land has no land access right now. The only access the government land has is via HUD. The reason that piece of land was created with no public access is it's land that was created to help build the Tsing Ma Bridge. It's below a cliff of Tsing Yi. Which means that it's not accessible from the northern side of Tsing Yi. Whereas HUD is the last site that is accessible from the west or southwestern side of Tsing Yi. That's why the only way to unlock the potential of the government land is via an HUD redevelopment. If we continue to operate as a ship repair operation, then the road access to the government land would not be possible. This is only a suggestion to the government. If approved, we will have to find also alternative location for the continued maintenance of and ship repair operation. Thank you, Mr. Chairman. Maybe we will have the last 2 question today. The next question is, What attributed to a 33% increase in EBITDA for Health and Beauty Asia? Which countries were the main contributors? Dominic, have we answered that already? No, not exactly. Okay. I think I can give a short answer. Yeah, please. Basically, I think, yeah, the 30% increase in EBITDA is in the Health and Beauty Asia. The countries that contribute to that is Malaysia, Thailand, Philippines, and Turkey. Although this question was covered in the press conference, but not in the security meeting that we have right now. The increase in the EBITDA is a result of increased sales, increased traffic after the opening of these countries. You know, through the trading mix, we have some better products with higher mix, higher EBITDA margin. You know, that also contribute to the increase in EBITDA. Yeah. Malaysia is doing very well. Also, even in Philippines, we've opened. Yes one store. Right. It's been, quite encouraging. Okay. Thank you, Mr. Chairman. Thank you, Chairman. Yeah, the last question today. What are the growth drivers for the company in the medium term? It will be quite a balanced growth in our core business. Ports, investing in new berths where needed, and expanding handling capacity, enhancing costs. Developing logistics and non-container terminal business. For retail, earning growth will come from new store in high growth markets with good payback periods. Doing more of our own label exclusive sales, while continuing on our O+O policy with our loyal members, which has served us very well. For infrastructure, we've always had organic growth. Inflation is actually very good for our infrastructure business in the medium term. I wanna highlight this, that inflation is not so interesting in the year the inflation happens. The way regulated assets are calculated, the principle, which is the... We call it RAV, regulated asset value, is increased according to inflation for the year. When the principal is increased, the expected return on that new principal will spread over all the future years. A high inflation year is not exactly obvious benefit to the year the inflation happens. A high inflation year is very good for the business starting from year 2 to year 3 after inflation happens. Now, we've started to receive the cash, additional cash flow because of inflation, but the P&L will be booked about 2 and 3 years later as you recognize it through the regulated asset system. For details, I think on the infrastructure business, some of you are also shareholders of CKI, and a conversation with Ivan Chan will be very beneficial. Lastly, also for infrastructure. We have a new business in renewable energy. The organic growth in infrastructure is quite encouraging. Lastly, for telecom, I think revenue sources from 5G, including fixed wireless access, will increase EBITDA growth. We're hopeful about our in-market consolidation. Still a bit of headwind on costs also. Any additional comments? No, none here. No. I think your comment is very comprehensive, Victor. That, you know, it's not gonna be an easy year. No ... this year. Going forward, we have a lot of good things going forward for us. Thank you. Thank you, everyone. Okay. Thank you very much. Thank you very much, speakers. This concludes our live webcast today. Thank you very much for joining our presentation.