Good afternoon, ladies and gentlemen. Welcome to Swire Pacific 2022 annual results analyst briefing. Joining us at the briefing today are Mr. Guy Bradley, Chairman of Swire Pacific, and Mr. Martin Murray, Finance Director of Swire Pacific. Before we go through a detailed look at our results for 2022, we'd like to show you a short video highlighting Swire Pacific's key developments and achievements in the year. Enjoy the video. May we now invite Guy and Martin to take us through a detailed look at the results for 2022.
Thank you, good evening, everybody, and welcome. For those of you that come and see us often, you'll recognize that we're without Karen So, who runs our beverage division. She's up in Zhejiang Province at a big bottler conference at the moment, she tells me that we'll get her back for the interim. You have to deal with Martin Murray and I for today. The Swire Pacific 2022 performance, there were three major highlights as far as I was concerned. The first one being the exciting expansion that both the Swire Properties division and the Swire Coca-Cola division demonstrated in the year. The second highlight was clearly the recovery of aviation with the cessation of the COVID-19 related measures.
Thirdly, we commenced a share buyback program, the first time for a long time, as you just heard in the video, have produced a 15% dividend growth. On the financial front, Martin will cover that in some detail in a second, I've taken out in this top left-hand figure for recurring underlying profit. We've taken out the effect of Cathay Pacific, which is in line with our dividend policy. You can see, on that basis, the IUP for the year-over-year is pretty flat. We have raised dividends by 15% to HKD 3 a share. As I mentioned just now, we did commence a share buyback program for up to HKD 4 billion, announced in the middle of last year.
It's been very successful, I think, in terms of producing a strong share price performance since, and so far to date, the total consideration spent on buying back those shares has been about HKD 2.6 billion. At the core business level, you can see on the left, the property division in terms of recurring underlying profit managed to put in a performance that was pretty flat to the previous year, which given all the COVID uncertainties in 2022, I thought was a very strong performance from the property division. Beverages too. 2021 was a record year at HKD 2.5 billion profit on a recurring basis.
2022, with all the lockdowns and the impact that we had in the Chinese mainland on COVID, still delivered a great figure at HKD 2.4 billion in terms of IUP. On the aviation side, obviously, it looks on this chart like the losses got bigger. If you pay attention to the colors of the box there, you can see that there was a big change in the loss making of the associate business of Cathay Pacific, and an improvement in the actual Cathay Pacific airline and its subs, between 2021 and 2022. That last point, I think, is the takeaway, which is very encouraging. Cathay Pacific had a very good end second half of 2022, and we're very confident they'll take that into the new year. Okay. Martin, finance, please.
Thanks, Guy. We're reading from right to left. We reported a statutory profit of HKD 4.2 billion above our 2021 statutory profit of HKD 3.4 billion. The underlying profit, which principally adjusts for the changes in the value of the investment properties, was HKD 4.7 billion versus HKD 5.3 billion in 2021. Disregarding the non-recurring items, the recurring profit was HKD 3.8 billion versus HKD 4.9 billion in 2021. With a strong outlook, we can hit our dividend target, hence it's increased 15% and we hit our target of HKD 3. The cash from operations principally reflects less trading income from Swire Properties.
Here, if we look at the right-hand side again, in terms of the recurring profit of HKD 3.8 billion versus the HKD 4.9 billion reported in 2021. You can see that this is mainly driven by the losses in Cathay Pacific. If you disregard the HKD 2.8 billion from the losses from their associates, the results from Cathay Pacific improved, and we'll talk about that later. The second half results from Cathay Pacific were very exciting. The performance for Swire Properties was solid despite the weak Hong Kong office environment and the impact of COVID-19 in mainland China in the second and third quarters. Similarly, the beverage business was not too far off its record profit in 2021 of HKD 2.5 billion. Again, despite a very difficult second and third quarter in mainland China.
The underlying profit of HKD 4.7 billion against HKD 5.3 billion adjusts for the following non-recurring items. We had lower gains from the disposal of Taik oo Shing car parks, the gain on the disposal of Swire Pacific Offshore, and the absence of impairments in Cathay Pacific, with some impairments taken in the Qinyuan Bakery. Statutory profit adjusts for the valuation of investment properties with a net gain in 2022. Slide 12, again, this just shows the movements in a waterfall chart. Swire Properties, the increase in trading profit from EIGHT STAR STREET and The River in Vietnam was offset by lower office rental, weaker rental in mainland China, and higher losses from hotels.
In the beverage business, the COVID-19 impact in mainland China and increased costs was partially offset by the continued strong performance in the U.S. business. In aviation, again, very strong second half performance from Cathay Pacific, not including the associates. In slide 13 here, we have the balance sheet, and it remains very strong. We have had significant CapEx, but gearing remains relatively low at 18%, which I'm very comfortable with. This includes the HKD 2.6 billion in the share buyback. 60% of our borrowings is fixed, and our weighted average cost of debt remains at 3.2%. Here we've got very healthy liquidity. You'll see that our bank balances and short-term deposits have come down.
We had built a war chest for COVID, but given the change in the interest rate environments, we no longer have to hold that. We've also got a very solid and prudent debt maturity profile. With that, I'll pass it back to the chairman.
Thank you. We're looking at the individual businesses and first, Swire Properties. Those of you that were at the Swire Properties presentation will have just heard, 2022 was extremely robust performance in what were at times challenging market conditions. Recurring underlying profit was pretty much the same as it was the year before, which is a very creditable achievement, I think, given all the turbulence faced last year. In the strategic sense, we made significant progress last year. Taikoo Li Xi'an, which is a 70% owned project that we acquired in the early part of 2022, is very exciting for us. It becomes the next Taikoo Li project following the success of Chengdu and Taikoo Li Qiant an.
Also in the Chinese mainland, we announced the Sanya retail project where we have a 50% interest in Hainan Island, which is very exciting for Swire Properties and also the collaboration with the Jing'an District government on Zhangyuan. Lastly, in February 2023, we were able to buy from our partner the 50% in Sino-Ocean Taikoo Li Chengdu that we didn't already own. There's some very good progress, I think, in the Chinese mainland in the investment property portfolio, in the core core cities that we're in.
In Hong Kong, in the investment property portfolio, you could see that we continue to invest in Cityg ate and Two Taikoo Place obtained its OP in September and is now currently enjoying a 56% occupancy rate as part of this drive to decentralize Hong Kong office down into Taikoo Place. Two Taikoo Place, as you all know, is the latest tech and high building, latest high spec building that Swire Properties has produced. Finally, on the residential side, we acquired a site in Wanchai at 269 Queens Road East earlier in the year at a government tender. We acquired our first site in Bangkok, a 40% interest in a residential site, and we continue to look in the Chinese mainland for similar high potential residential trading.
This shows the flat nature of the recurring underlying profit. You can see that underlying profit dropped 9%. That really reflects the difference in between 2021 and 2022 in terms of the decrease in profit from divestment. Specifically, we sold less car parks in Taikoo Shing last year than we did the year before. Basically, both those numbers are very similar. I just want to highlight the contribution in this chart from the Chinese mainland. You know, Chinese mainland retail is now the second largest rental contributor, as you can see in the chart on the right, at 30% of gross rental income for the company. If you include office, that figure goes up to 37%, which is just behind the contribution of Hong Kong office at 42%.
Great, great performance from the Chinese mainland in the last two or three years. If you look, it actually goes back further than that. If you look at the chart on the left, you can see the compound growth rate at 12% of the gross rental income since 2014, which is a, you know, a very healthy rate of growth. In terms of investing in the long term, Swire Properties have announced this HKD 100 billion plan to develop projects in the Chinese mainland, in Hong Kong, and in trading in Southeast Asia over the next 10 years. We're delighted to say that of that HKD 100 billion, about HKD 39 billion has already been committed in there. The pipeline continues.
You can see in the bottom left, there's two projects, one in Guangzhou, Julong Wan, and one in Beijing, which will be an asset reinforcement project for Taikoo Li Sanlitun, where we've both in both cases signed framework agreements. We're hopeful that they will turn into two more projects for us in the Chinese mainland. Meanwhile, in Hong Kong, we continue to invest in our two core areas of Pacific Place and Taikoo Place. Lots of long-term potential growth for Swire Properties, which is very exciting. That's basically reflected in the timeline here. You can see at the top, from 2023, we expect to add about another 8.2 million sq ft of attributable GFA, by realizing some of that growth potential.
Hopefully, that number will grow even larger over time. Moving on to beverages and Swire Coca-Cola, they've had a fantastic year in 2022. First, thing that happened was they managed to successfully restructure the still beverage production facilities, from which we're able to get synergies and an ability to do our own innovative solutions and products through that still beverage pipeline. At the same time, we'll be able to realize good cost and distribution efficiencies by operating those plants ourselves. Complicated restructure that's gonna leave us in great shape in terms of controlling our own destiny. The really big exciting expansion news last year was the acquisition of the Cambodia and Vietnam franchise territories from The Coca-Cola Company.
This 16% increase in franchise population takes Swire Coca-Cola to a total of 882 million people being served in Swire franchise territories, which includes Vietnam every day. That's a staggeringly high number. We're very excited about those two new markets and there's a lot of opportunity and potential to capture growth in those developing markets. In terms of per capita consumption, they're relatively low vis-à-vis some of the more mature markets that we're in. Huge opportunity for both of those. I mentioned that 2022 was our second most profitable year. You can see the figures there on the left. The U.S.A. was a major contributor to that great result in 2022, where profit increased by 41%.
The Chinese Mainland, on the other hand, decreased its profit by 36%, where sales and operations were adversely affected by COVID-19 related measures throughout the year. This just shows the diversity in our, in our territories, in our categories and therefore in our revenue growth. I won't say too much more about those as they're familiar to all of you, I'm sure. Finally, just to show the sort of adverse effects of growth, you can see that revenue increased by 4%, although volume decreased and our EBITDA margin decreased just a little bit versus 2021. As you'll see in the outlook, we've started this year pretty well, and we're quite confident that the Chinese Mainland will bounce back in a healthy way in 2023.
In terms of Aviation, I'm gonna ask Martin Murray to take you through those slides, and I'll come back and deal with healthcare and the outlook.
Thank you, Chairman. In Aviation, you can see Cathay Pacific Group, HKD 2.9 billion of losses are attributable share against HKD 2.4 billion. The top of the charts on the left there, the top band is HAECO attributable profit of HKD 185 million, down from HKD 394 million. If you remove the government assistance that we had in the U.S., that number actually improved. In the bottom part there, you'll see that the exciting part is the profit for the year of Cathay Pacific, where again it's been profitable. Great second half result. Cash positive since the end of the second quarter last year. The CX associates there, HKD 2.8 billion, that's an associate of an associate. That's 45%.
They have 16% of the 45%. Air China has had a little drag in terms of its performance. Again, I think the surprise for me was that the market has reacted with some sort of disappointment in terms of the losses becoming greater, even though in January, the December trading report of Cathay Pacific had said that the losses were gonna be between HKD 6.4 billion and HKD 7 billion, and they came in at HKD 6.5 billion. It should not have been a surprise to the market. If we move forward to this slide, it just shows you the impact that the COVID-19 had on Hong Kong and Cathay Pacific.
You know, Hong Kong and Cathay does not have a domestic market, and we had a big prolonged state in terms of the measures introduced, which really impacted the business. It's great to see that even at 30% capacity, the business was profitable in the second half. There are the key measures. Again, we're seeing now that Cathay has moved to the rebuild phase. The attributable profit, you can see that it's suddenly is profitable again in the second half. Cash burn is now positive and strong liquidity. The excitement is now that the COVID-19 measures have lifted, then they really are rebuilding. By the end of March, they expect capacity to be at 50%. The freighters are at full capacity.
It means that the freighters for the year, because 50% is on the passenger bellies, so they'll be at 85%. By the end of the year, they're targeting 70% and 100% by 2024. With HAECO, as I mentioned, the HAECO profit decreased due to the absence of the financial systems from the U.S. government. HAECO's recovery is lagging a little bit. Line maintenance is down, and the Cabin Solutions remains a little bit difficult. You can see in the bottom left-hand box there. The engine business is doing well, Chairman.
In terms of healthcare, as most of you know, this is a very nascent business investment for us. We've been in it for a couple of years. Those couple of years have been COVID years. We're in three investments, all of which are quite small, minority positions in Shanghai and in the Greater Bay Area. I'd just like to highlight two new developments that we got in 2022. One in at the DeltaHealth Hospital, where in Shanghai, where we opened an oncology center. It's primarily a cardiology hospital, but we're managing to branch into oncology. We did that from the start of the first quarter of 2022. The common theme there being thoracic surgery.
The second highlight of the year for me really was the opening of the Shenzhen New Frontier United Family Hospital, which opened in May 2022. In both of those cases, the hospitals, that got off to a good start and continues to do so. The DeltaHealth investment seems to be tracking where we wanted it to go. We're quite comfortable with where that's at. I would stress that it's very early and these numbers are very small. We do hope to scale this up over the next 10 years to become a reasonably sized division of Swire Pacific. On sustainability and ESG, which as you all know, is a subject that we take very seriously, we've got a few highlights from 2022.
I'll just pull off two or three from this chart. Firstly, the sustainable finance represented more than 1/3 of total new group financing in 2022. We really are getting into gear in terms of green finance. Secondly, you'll note the number of women on our board now represents just under 30%, and we're working on that. The target is 30% by 2024. We're at 28.6%. I think that's a constant chase, and I think we're gonna, you know, we're gonna sort of get there by 2024 probably on that. Thirdly, on the goal to reduce our greenhouse gas emissions by 50% by 2030, well, we're about 19% of the way there.
19 of 50 already by 2022. A lot of effort has gone into reducing that number. It's a big impact. Finally, I'll just point to the charitable trust. The Swire Group Charitable Trust donated HKD 55 million to the community in 2022. Lastly, before we take questions, a few comments on the outlook for 2023. You know, we continue to chase our strategic objectives of growing our core businesses and improving returns to shareholders. I think the opening of the border between Hong Kong and the Chinese mainland will have, and is having, a significant positive effect on our businesses and particularly on our aviation businesses.
I remain very optimistic about the prospects for our businesses in 2023, notwithstanding various global economic headwinds that might be out there. In terms of property specifically, I think we can see a stronger recovery in retail property investment income in both the Chinese mainland and possibly less so, but also in Hong Kong and in the hotel business. Whilst the office market in Hong Kong is expected to remain slightly soft in the near term. Beverages wise, you can expect an increase in volumes in the Chinese mainland, while commodity prices, we think will be lower. I think they peaked in 2022. Then you've got the contribution in 2023 of the newly acquired bottling operations in Southeast Asia, and they're already kicking into profit.
Aviation wise, you know, you can expect, as you heard yesterday, that passenger flight capacity will reach 70% of pre-COVID-19 levels by the end of the year. Performance from associates will also improve with the lifting of COVID-19 related measures. Finally, on HAECO, we expect an improvement in their results during the year with the recovery of international air traffic, despite a slower recovery for HAECO from the COVID-19 impact. And with that, we would love to take some questions. Thank you.
Thank you, Guy and Martin. As said, we're ready to take some questions. Please kindly advise your name and organization. Please ask your questions in English with no more than two questions at a time. please take my cue and our colleagues will pass you a microphone. Any questions from the floor, please? Right, the gentleman in the front. [Can you] please.
Thanks, Guy and Martin for the presentation. Simon Cheung from Goldman Sachs. I got two questions. Obviously, business has turned around, and you have done very well with your capital allocation or expansion with, as you mentioned, property and the Coca-Cola business. I've seen, however, that, you know, some of the smaller division, like industrial divisions, you do still incur a bit of losses over there. I know the size of which is not significant. How are you thinking about that business? I guess going forward, you know, your individual company has their development plan, and you mentioned that, you know, your healthcare business, you are still looking for opportunity over there. How are you thinking about the pace of investment on that? That's the first question.
The second question, just also earlier you commented that, you know, the share buyback obviously been very positive to your share price performance, and that HKD 4 billion, you spent HKD 2.6 billion. I guess investors generally wanted to get a sense whether there would be more to come after, you know, maybe the AGM or in May. Thank you.
I'll take the first, the first two. In terms of the losses you referred to in the trading and industries division, I think there was one particular case that, where, that you're referring to, which would have been our Qinyuan Bakery division. You know, that's had a struggling couple of years in 2021 and 2022, no doubt. COVID hasn't helped. I think that we feel for 2023 that some of those losses are probably gonna be reduced and, you know, that business looks like it's trending in the right direction, but it's a tough business at the moment and I've no really great news to report.
The other two good businesses in the trading and industries division are our Motors in Taiwan and Swire Resources. They managed to weather through 2022 and we're reasonably optimistic that they will show profits in 2023. It's really just the bakery business that looks difficult at this stage. The second part of your question was the pace of development in healthcare. I mean, it's been deliberately slow, partly because COVID's been a problem for hospitals in China, as you know, and partly because, you know, the management here have not been able to go into China and find more investments because of COVID. Yeah, that's why we started slow.
You asked about the pace, and I think now that there are no restrictions on travel, that you can expect the pace of investment to pick up post-COVID-19.
On the share buyback program, we did announce a HKD 4 billion program, as you mentioned, we're HKD 2.6 billion through that. We have to stop it during the blackout period, which is now over, that'll continue through to the AGM in May. It has improved the liquidity for both the A and B shares, we're pretty pleased with how that's performed to date.
Thank you. Any next question, please? Right, the gentleman here.
Thank you. Evan Li from HSBC. More of a strategic question on how would you expect to manage your capital going forward, and what will be your priorities? I think, if you look in your ROE, you know, is that gonna be a angle or a target, you know, for the group overall, in thinking about, you know, in managing your asset portfolio. Also in terms of your future capital expenditure, you know, and in view of, you know, also thinking about your share buyback going forward, how would you balance between, you know, returning shareholders return and also you're looking to new acquisitions and new businesses? That'd be the first question. Second question would be more of a ESG question.
Longer term, you have a target on hitting net zero by 2050, but understanding, you know, a lot of your businesses as a more of a conglomerate company, are you thinking about, you know, renewable energy certificates, you know, carbon trading as part of your scheme in achieving that? Thank you.
Take the first one.
Sure. Well, in terms of return on equity, obviously we've been dragged down over the last 2 years by the aviation side, so it's great seeing that bounce back. I think strategically, what we can clearly demonstrate that through COVID we've been able to continue our investments and particularly in our core businesses. We announced over 12 months ago the HKD 100 billion plan for Swire Properties, and they've already committed HKD 39 billion of that. Swire Coca-Cola has moved into Southeast Asia, which we're very excited about. Again, we've got the bounce back in aviation. At the same time, our balance sheet is strong, so we can look at other aspects. We did do the share buyback program in terms of that.
The dividend, we removed aviation from that, in order to, you know, get a consistent and growing dividend target there. We've got a healthy balance sheet. We look at capital allocation at every board meeting. Yeah, we'll continue to. You will see a big improvement in the return on equity with the bounce back in aviation.
On ESG, yeah, you're right. We've got an aggressive target to be down to zero for 2050. We asked already using renewable energy sources both in Swire Coca-Cola and in Swire Properties in terms of fueling our energy needs from renewable sources in the Chinese mainland. That's already begun. We're gonna need more of that, and we are gonna end up needing some carbon offsets for sure. It's a very aggressive target, yeah, the internal work on bringing down the carbon footprint is good, it's not gonna be enough on its own.
Thank you. Any other questions, please? If that's all the questions we have, that's a wrap for today's session. Thank you so much for joining us today.
Thank you.