Welcome to CK Asset Holdings Limited 2023 annual results presentation. My name is Gerald. As usual, I will be going through our presentation quickly, followed by a Q&A session with our management team. Annual results highlights. Revenue reached HKD 71 billion in 2023. Profit attributable to shareholders, HKD 17.34 billion. In per share terms, HKD 4.86, compared to HKD 5.41 from last year, a reduction of 10.2%.
We declared a final dividend of HKD 1.62, making full year dividend HKD 2.05. In terms of dividend per share, it is a reduction of 10.1% compared to last year. Net book value per share up 3.2% to HKD 108.72. Going to principal activity analysis. 70% of our profit contribution is now recurrent in nature, versus 81% of our revenue being recurrent in nature. 45% of our contribution from Hong Kong, 11% from the Mainland, and 44% from overseas. Quite a diversified mix. Turning to divisional performance.
Property sales. A reduction or drop in the divisional activity has led to a lower contribution in 2023. Revenue was HKD 13.1 billion, profit contribution, HKD 4.5 billion, and a drop of 57%. Margin was a healthy 34%. Major contribution from Laguna Verona, Dongguan, HKD 1.2 billion. Hupan Mingdi , Shanghai, HKD 748 million. [Alpha Turro], HKD 635 million. 21 Borrett Road, HKD 548 million. Despite the tough conditions, virtually all of our markets experienced very healthy margins, 35.7% in Hong Kong, 33.8% from the Mainland, and 22% from overseas.
We still have HKD 19.4 billion of contracted sales not yet recognized. About HKD 7 billion would be scheduled for recognition in 2024. In terms of contracted sales in calendar year 2023, it totaled about HKD 18.2 billion, which was up from financial year 2022 or calendar year 2022, which was HKD 12.2 billion. Turning to property rental.
HKD 5.9 billion of revenue, HKD 4.6 billion of profit contribution, roughly the same as 2022. Margin was a very healthy 78.4%. Major contribution from CKC I, HKD 1.1 billion. Social healthcare rental properties, HKD 751 million. The Whampoa or Whampoa Garden, HKD 668 million. Hutchison Logistics Centre, HKD 625 million.
A bit of analysis for you. You can see there is a slight shift in revenue mix. Out of the HKD 5.9 billion, HKD 1.2 billion is from others. Mainly an increase from our social and healthcare rental properties, giving us a more diversified mix of contribution. Although if you look at the geographical spread, the bulk of our contribution, HKD 3.7 billion out of the HKD 4.6 billion, was from Hong Kong. There is now a total of 22 million square feet of investment properties that we manage and own.
We had a fair value increase in value of HKD 3.2 billion, mostly coming from the almost completing CKC II office property as well as our Hutchison Logistics Centre. Hotels and service suites operation. Margins has recovered back to pre-COVID level, almost 35%, and a big jump in profit contribution to HKD 1.5 billion, which is still shy of pre-COVID, but this is a very encouraging development indeed.
The bulk of our contribution, to no surprise, from Hong Kong, HKD 1.65 billion. Average hotel occupancy in 2023 was 79%, and average service suites occupancy was 90%. We now have 267 million square feet under our management in the property and project management division, and are providing us a very steady HKD 359 million of contribution and almost 40% margin. Turning to our pub operation, again, three division managed pubs.
We call it Pub Company, Pub Partners, which is tenanted pubs and our own Brewing & Brands division. If you look at the HKD 997 million contribution, it is a 19% increase from 2022. But if you exclude fixed asset impairment and the disposal gain from 2022, just look at proper contribution in its plainest form, then it is actually a slight reduction compared to 2022, because of the well-talked about and well-covered cost pressure that we experienced last year. Infrastructure and utility asset operation. These are the joint ventures we have.
We added one in this category, the U.K. Rail or rolling stock, after the equity capitalization exercise that we did last year. Now it is classified as part of our joint venture portfolio. And a very healthy margin, indeed, 33% overall. It is very resilient and also very steady and resilient contribution, HKD 7.77 billion in 2023, up 4% from 2022. I will turn a few pages to my colleague, Mr. Simon Man. Simon?
Thank you, Gerald. The group's interest in listed REITs remain more or less the same at the year-end date. 34% in the Hui Xian REIT, which own and manage a portfolio of 11.8 million square feet of hotel and service suites, office, and retail properties on the mainland. And 26.2% in the Fortune REIT, which own and manage a portfolio of 3 million square feet of retail properties in Hong Kong and Singapore.
And 18.2% in the Prosperity REIT, which own and manage a portfolio of 1.3 million square feet of office, retail, and industrial properties in Hong Kong. Hui Xian REIT is an associate, and the group share a net profit of HKD 55 million for the year. Taking into account its net rental for the year and the exchange loss realized on bank loan repayment during the year.
Distribution received from Fortune REIT and Prosperity REIT amounted to HKD 55 million in 2023 and were recognized as investment income. For the group's gearing and maturity profile, at the year-end date, the group's bank and other borrowings amounted to HKD 54.9 billion. With HKD 17.8 billion repayable within one year, HKD 30.4 billion within two to five years, and HKD 6.7 billion beyond five years.
Taking into account the bank balance and deposit of HKD 42.5 billion at the year-end date, the group carry a net debt of HKD 12.4 billion. And it is 3.2% if we take the net debt to shareholder fund, and 3% if we take the net debt to the net total capital. And our credit rating from Moody's is A2 stable, and from Standard & Poor's is A stable. At the year-end date, we have a land bank of 132 million square feet.
74 million sq uare feet was under development, of which 7 million square feet was in Hong Kong, 63 million sq uare feet on the mainland, and 4 million sq uare feet overseas. About 22 million sq uare feet was held for rental income, including 13 million sq uare feet in Hong Kong, 5 million sq uare feet on the mainland, and 4 million sq uare feet overseas. 9 million sq uare feet was held for hotel and serviced suite operation, with 8 million sq uare feet in Hong Kong and 1 million sq uare feet on the mainland. About 27 million sq uare feet was held for pub operation in the U.K. It added up to a total of 130 million sq uare fee t at the year-end date. Gerald, I will pass it back to you to talk about ESG.
Thanks, Simon. In terms of progress on the ESG front, I will just highlight a few things from the next two pages. In terms of decarbonization progress, we had submitted our SBTs in early part of this year, and it is in a validation process. We also have obtained, in terms of green finance, two additional sustainability-linked loans. Turning to the next page, if you look at property development, CKC, which is the building we are in now, our headquarter, we have received the Platinum rating as an existing building recently.
In terms of pub operation, we have committed to net zero in 2040, and as well as aiming to procure 80% of renewable energy by 2025, and 100% by 2030. Our hotel and service suites division have also been a signatory to the Energy Saving Charter and the 4T Charter organized by the Environment Bureau of the Government.
Even our 267 million square feet property manager, our Citybase, Goodwell, and Hutchison Property Management Company, have all been accredited with the ISO 14001 certification, Environmental Management System certification. These are what we have been doing so far, and there is a lot more to come on this front. I think that is all in terms of presentation. We will now open the floor for questions. I have already seen many questions from our online audience.
I will consolidate some of your questions into one, and hopefully do not miss out any of them. We welcome the rest of our management team, our Chairman, Mr. Victor Li, our Deputy MD, Mr. Edmond Ip, of course, Simon, and myself. Again, thank you for your questions. The first question is, what are your thoughts on your profit or earnings per share dropping 18.7%? Chair.
You have to remember, in 2022, we still have the aircraft leasing business, and we sold it off at the end of 2022. In 2022, the P&L includes the one-off gain as well as the leasing income from the aircraft leasing business. If we are comparing apples to apples, the drop in earnings per share from our continuing operation was 10.2%.
But the point number two I have is that the whole investment community, I think, had expected a gap in development earnings this year. Because if we had bought a lot of land during the peak, let us say four and five years ago, our gearing would not be at 3%, and we may be holding quite a few projects with book values that are higher than market values.
Overall, against the backdrop of high interest rate environment, COVID recovery, and all the geopolitical tensions, I think this is okay set of results and continues to demonstrate that our, what I call return-centric incarnation and financial conservatism are serving us well.
I would also like to add that our diversified and global approach to seeking out investment opportunities have strengthened the quality. I keep using this word, the quality of our balance sheet and the quality of our earnings. As and when the market recovers, we should be well-placed to deliver for our shareholders more sustainable earnings. Thank you.
Thank you, Chairman.
I think this set of results basically reflect the fact that we slowed down on our land purchase a couple years ago.
Thank you, Chairman. The next question is on the residential market. What is your view on the residential market right now as the government has removed all the property cooling measures? Will you still adopt a more aggressive pricing approach for the upcoming launch of Blue Coast, just like you did for The Coast Line?
This question was asked earlier on the press con. Quite a number of people asked about this question, but let me repeat. The removal of the cooling measure is providing a good support to the property market, and we welcome that. I do not have a crystal ball on the future, but my view is that most of the negative news, such as the interest rate, inflation, geographic tensions and the government, Chinese call it the punitive stamp duties.
It seems a lot of negative news has already come out already, and the downside pressure seems more limited than the potential upside. This is probably why we are seeing a significant pickup in volume in the market recently. As for the Blue Coast, normally, in pricing, we have to consider a range of factors, location, transport, unit sizes, product positioning, et cetera.
What I can add is many of the units, I do not know how many of you have seen it, but many of the units in the Blue Coast have an ocean view or corner window, which is rather rare in Hong Kong. The project is located right on top of the MTR station.
It may be the only one that has direct access this way. It is practically minutes from the Admiralty, but physically living on the south side of Hong Kong Island. Actually, I pass by the project every day from home to work. I would prefer not to comment on specific price strategy, but Justin and the sales team will discuss with me when it is the time for launch on this lovely well-located site, will be soon when we launch this project. Thank you.
Thank you, Chairman. The next question on property sales again. Property sales contribution of HKD 4.5 billion was much less than 2022, and with only HKD 7 billion contracted sales scheduled for recognition in 2024, are you still focusing on property development? Is it still a core part of your business going forward?
As I said earlier, the lower amount of contribution is a direct result of our plan. It is our prudent replenishment approach during the peak of market a few years ago. Some people actually say that we timed the market or timed the cycle correctly. This has allowed CKA to invest capital to enlarge our recurrent income base globally without impacting the health of our balance sheet.
Hong Kong is our home, and property development is one of our core businesses, but our focus is to invest to generate reasonable and predictable returns wherever it may be from. In fact, if you look at our freehold pubs, that is around, if I remember correctly, about 27 million floor area. In social housing, approximately about 4 million in floor area. Both portfolios are part of our overall property business or land bank. Both pubs and social housing are property.
Yes, they are providing us with a diversified earning stream, but at the core, they are property business. The strength of CKA is that we have choices. We have choices between Hong Kong and internationally. We have choices so that we can time the cycle. We will be very happy to buy more land in Hong Kong if we can generate reasonable returns. In fact, through land exchange, government or Urban Renewal Authority tenders, we did add about eight sites in the last three years to our land bank. We do have a decent pipeline. We just avoided that peak of the market. Thank you.
Next question on property rental contribution. It was more or less flat. Revenue from office segments had dropped about 12% against the backdrop of much higher vacancies in Hong Kong offices. What is your outlook for the segments in 2024 and any update on CKC II pre-letting?
Well, leasing activities for offices or high-end retail is still challenging. It is not a secret. It will take some time to recover. But mass market retail and industrials are doing quite well. The overall occupancy of our Hong Kong investment property portfolio is about 90%, and we will continue to try our best to do better.
We are fortunate that we are able to further diversify and rebalance our rental income stream to mitigate the pressure on particularly office portfolio. This is through the acquisition of Civitas last year, which is why we are able to protect overall contribution of our rental portfolio. I am glad to see that our strategy is working as planned.
All right.
CKC II will be completing in mid-2024, and pre-letting efforts are continuing. We hope to see a solid contribution from this iconic building in the future. Thank you.
More on investment property. Your portfolio has grown significantly from 17 million square feet in June of last year to 22 million square feet at the end of 2023. Could you elaborate more on your outlook on your investment property portfolio?
The increase in our investment property portfolio was driven mainly by the completion of our acquisition of Civitas. It was close to, what, 700 social housing properties in the U.K., as well as the completed office and retail commercial properties in Upper West Shanghai. Together with the upcoming completion of CKC II, they all will be good addition to our overall portfolio mix. Thanks.
Turning to the hotel and service suites division, will the hotel occupancy tax have much of an impact on your division?
Not really. I mean, you have to understand our portfolio. If you lease out the rooms for extended stays, I believe the rules are 28 days, and you have to fulfill certain operational conditions, then you do not have to pay that tax. So, a good part of our portfolio is of that type of hotel, so we should be fine. If on daily travelers, the industry improves, a bit of increase in tax is not a big problem. Thank you.
What is your outlook on the overall hotel and service suites segment?
Well, it is improving. In 2023, our hotel and service suites contribute about HKD 1.5 billion of profit. 2024 starts up quite okay, quite well. I believe the occupancy of this division is about 90%.
Your pub operation recorded a 19% increase in EBIT, but if you add back the asset impairment, it was lower than 2022. Could you elaborate on that and what is your outlook?
Can I recommend, Gerald, that you answer that, but because I am running short of time, can we do other questions first, and then we come back after I have left to do the CKHH analysts meetings, then you can continue with this.
Infrastructure and utility division seems to be performing very steadily. Do you have any plans to divest minority interest or even majority interest in these businesses, like you did with Northumbrian Water in 2022?
I have to give you the same answer year to year. We never really have a plan to sell any of our core business, as they are good cash-generating assets. However, if a good offer comes in, it is our duty to evaluate it, if it is good for us to capitalize on the opportunity and take some money off the table. I am sorry, I cannot give you a very straightforward answer. Can we move on?
Your gearing is very low, 3%. Can you share with us your capital deployment plan?
We're happy with the strong balance sheet, and the quality of our business is good. We can continue to be prudent. We have the choice, I keep using this word, we have the choice to be selective in what, when, and where we want to invest going forward. It's almost our motto that we're patient, and there's no deal that we must win. The focus is really on profit margin, and cost of entry. We've got to be careful when the cost of capital is higher than before.
We'll get our Chairman to answer two more questions, which was probably the most popular questions that I've been seeing. Why have you reduced your dividend per share by 10% despite having such a strong balance sheet?
Now, we have debated at the board, and ourselves have debated along on this topic. But we believe there's actually more than one way to return value or capital to shareholders. One obviously is a steady dividend policy. The other is actually share buyback. We have been buying back our shares opportunistically and steadily in the last few years. in 2023, we have spent almost HKD 2 billion buying back over 45 million shares. I believe that going forward, that would also be part of our strategy.
Leading to that, do you have any plans for share buyback?
I think I have answered that question already.
Well, with that, I think, Chairman.
Gerald, I have to go, so can I switch the CKHH meeting, and you continue, please?
Okay.
Thank you.
Right. Okay. Thank you, Chairman. I will just answer the question on the pub set. I think that probably covers most of the questions we have. This will be the last question we will take on this session. The question was, if you include add back impairment, adjusted EBIT was actually lower than 2022 outlook, and whether we can elaborate on that.
What we like to say is asset sort of provision is a function of interest rates and long-term growth, and obviously U.K. interest rates is at more than 1.5% higher than the prior year. It can go up and down during cycles. If you really exclude this and focus on operations, we can say that the performance actually was about the same, largely about the same as 2022.
We were able to increase prices multiple times to mitigate much of the increase in wages and cost of goods sold and supply chain cost increase and also utility costs, but not all of it. Most of it. We did as much as we could. Volume is still below pre-COVID, and conditions are still pretty tough or challenging.
But the team is very much focused to do what we can going forward to improve margins and overall profitability, while offering a great customer experience. We are hopeful that better days are ahead. I think with this, we will conclude our Q&A session for our analysts, and thank you for joining us, and we will see you again soon. Thank you.