Good morning to everyone here in Jardine House and to those online. Welcome to the Jardine Matheson 2024 full year results presentation. I'm John Witt, Group Managing Director, and I'm joined by Graham Baker, our Group Finance Director. Today, I'm going to talk about two things. Firstly, Jardine's sharpened focus on its role as an investment company and our investment proposition. Secondly, I'll share some strategic updates from across the group. Graham will then take you through the financial performance of the group and our portfolio companies. We'll conclude with the outlook and a question-and-answer session. For those of you present in the room today, please hold your questions until the end of the presentation. For those participating online, you should be able to see a Q&A box at the bottom of your page.
You can submit your questions as we go through the presentation, and we'll take them at the end. Jardine's long-term success has depended on our ability to adapt to the changing environment. As we look to the future of the group, we now see the need for Jardine's to evolve once again. By sharpening our focus on our role as an engaged long-term investor, we aim to deliver superior returns to our shareholders. We set challenging financial objectives for Jardine's to match these ambitions. These are set out on the right of the slide, and we believe they are the right metrics to assess our long-term performance. These objectives include delivering superior five-year total shareholder returns, achieving high-quality long-term growth in earnings and cash flows, driving returns on invested capital above the relevant costs of capital, and delivering growth in net asset value per share and progressive dividends.
We will meet our financial objectives in a number of ways: through decisive portfolio management, leveraging disciplined capital allocation and investment expertise, by continuing to influence strategy and driving accountability through board representatives at our portfolio companies, by ensuring high-caliber leadership teams are in place in our portfolio companies, and incentivizing those teams to build bigger, stronger businesses supported by boards which include extensive industry expertise. Our approach to managing our portfolio is founded on a culture of integrity, of effective risk management, and a sustainable approach to doing business. This is underpinned by strong balance sheets and excellent access to bank funding and capital markets. Historically, we focused on underlying earnings per share and dividends per share to review our performance over time. We have achieved five-year growth of 3.7% per annum in underlying earnings per share and progressive five-year dividend growth of 5.5% per annum.
We're now focusing more on total shareholder returns as we place greater emphasis on capital appreciation. Our five-year TSR performance has been disappointing, even as our performance last year stabilized. While this in part reflects wider geopolitical and economic trends, this is very much in focus as I move to outline our strategic priorities, which have changed to reflect our new approach. Our refreshed strategic priorities start with identifying, developing, and retaining high-caliber leadership for the group and our portfolio companies. Since the beginning of 2024, we've continued to evolve the Jardine Matheson board. We've welcomed two new independent NEDs, Keyu Jin and Ming Lu. Keyu, who joined the board in 2024, is a renowned economist and professor at HKUST. Ming Lu, who joined us last month, is Senior Advisory Partner at KKR and previously its Chairman Asia Pacific.
Over the past two decades, Ming has done an exceptional job of building the KKR platform in Asia, not just in private equity, but across a number of asset classes. Both Kayu and Ming bring highly relevant regional and business experience to our board. At the same time, we have made important leadership changes across our portfolio companies. With new CEOs and refreshed boards in four of our key companies, they've moved with pace to appoint strong teams and develop new strategies to build shareholder value. In support of this, we have implemented new long-term incentive structures in our listed companies to better align the performance of their leadership teams with shareholder interests.
Following the established principle that JM directors own a significant interest in the group, we have also introduced frameworks for executive management of our portfolio companies, including DFI, Hong Kong Land, and Astra to acquire and retain meaningful shareholdings in their companies. We have also sharpened our talent planning across the group to focus on senior leadership development, including programs co-designed with IMD and INSEAD. Our next priority includes influencing strategy and driving accountability across our portfolio companies. Jardine Matheson, through representation on the various boards of our portfolio companies, has played a role influencing the development and implementation of new company strategies. Let me share some key highlights in this area from the last year. Hong Kong Land's new strategy focuses the business on ultra-premium integrated commercial properties in Asia's gateway cities.
As part of this shift, Hong Kong Land has prioritized simplifying its business by ending new investments in the build-to-sell segment and actively focusing on capital recycling. This has seen positive results, with Hong Kong Land achieving strong one-year TSR and outperforming sector benchmarks in five-year TSR despite the challenging property downcycle. A key element of this new strategy is Hong Kong Land's $1 billion Tomorrow Central transformation of the landmark Hong Kong portfolio. The group is also making significant progress on its 43% owned $8 billion central development on the West Bund in Shanghai. DFI Retail is streamlining its portfolio, divesting non-core businesses, and focusing even more on strengthening its health and beauty and convenience businesses. In the year, DFI sold Hero Supermarket in Indonesia and its stake in Yongwei Super Stores, which completed last month.
Mandarin Oriental is moving forward with pace on the expansion of its management business. It has set an ambitious target to double its portfolio of hotels, resorts, and residences worldwide by 2033 and has already crossed the milestone of 40 hotels. As part of its strategy to drive greater capital efficiency, Mandarin Oriental completed the disposal of its Paris hotel and retail properties for $400 million during the year while signing a new long-term hotel management contract. Astra has begun to focus more clearly on how each of its businesses can create long-term shareholder value. It has continued to actively pursue opportunities in existing core businesses as well as new growth sectors. Astra is committed to transitioning away from coal, including into renewables, increasing its interest in Supreme Energy. It also expanded its investment in healthcare by acquiring a controlling stake in Hartology Cardiovascular Hospital.
Jardine Cycle & Carriage, which is our Southeast Asian investment arm, has been prioritizing active portfolio management and disciplined capital allocation to pay down debt and provide flexibility for further investments. In 2024, JC&C sold its interest in Siam City Cement, realizing $344 million. It also increased its interest in RE Corporation, which has a growing renewable energy portfolio, to 41%. At Jardine Pacific, which holds the group's unlisted companies, there has been continued progress on portfolio simplification. In 2024, Jardine Pacific sold its 50% stake in Jardine Aviation Services, and Jardine Schindler disposed of its Taiwan Lifts business. Our third strategic priority is to evolve the group's portfolio to secure long-term sustainable growth. By divesting non-strategic or lower-yielding assets, capital can be directed towards strategic businesses. The group's diversified portfolio has allowed us to deliver resilient performance.
We aim for portfolio companies to reinforce their standing in Asia's high-potential markets and in sectors where they can achieve leadership, ensuring long-term value and sustainable growth. Our investment strategy focuses on building the group's presence in emerging markets like Indonesia and Vietnam, while also leveraging developed markets, namely Hong Kong and Singapore. To reiterate our capital allocation strategy, which supports our objective of delivering five-year TSR, we first prioritize organic investments within our portfolio companies to drive long-term growth and returns. We are also committed to growing dividends over time. Beyond that, we review M&A opportunities in new businesses and deepening investments within the existing portfolio companies side by side. In both cases, we consider value, we consider earnings growth, and risk.
All of this is underpinned by a commitment to maintaining a strong balance sheet, which gives us the confidence and flexibility to invest where and when we see the right opportunities throughout the business cycle. Finally, I should highlight our continued commitment to sustainability across Jardine Matheson. As an engaged investor, we expect our portfolio companies to take ownership of their respective sustainability strategies and commitments. We're working together to meet objectives. All of our portfolio companies have set short and medium-term decarbonization targets, and a number of them have achieved validation for their emissions targets from the Science-Based Targets Initiative. Good progress has also been made in achieving Scope 1 and 2 emissions reductions. During the year, we developed a framework for integrating sustainability into investment appraisals. We began measuring Scope 3 emissions and integrated climate risk into enterprise risk management.
We were very pleased to see improved ESG ratings, both for Jardine Matheson overall and for our portfolio companies, recognizing the progress we are making. I'll now hand over to Graham to go through the group's financial performance for the year. Graham.
Thank you, John. Good morning, everyone. The group delivered a resilient performance in 2024. Although underlying profit fell by 11% to $1.5 billion, this was significantly impacted by non-cash impairments at Hong Kong Land on its build-to-sell portfolio in the Chinese mainland. Excluding these, underlying net profit was just 1% down, as anticipated at the half year, or 3% up at constant exchange rates. Total revenue was $35.8 billion, marginally down, principally due to the impact of disposals and a weaker Indonesian rupiah. Revenues in ongoing businesses grew by 3% at constant exchange rates.
Underlying earnings per share were $5.07, down 12%, or 2% excluding Hong Kong Land's impairments. The board is recommending a final dividend of $1.65 per share, which produces an unchanged full-year dividend of $2.25. Looking across the portfolio, Astra delivered record profits, up 1% at their level in local currency despite a soft auto market and lower coal prices. Astra's contribution to Jardine's grew by 3%, more than offsetting headwinds from a stronger US dollar because of our increased stake in JC&C. We also saw an encouraging strong recovery at DFI. However, highly competitive market conditions in the Chinese mainland new car market mean we've recorded significantly lower earnings at Zhongsheng. Contributions from other businesses and corporate costs were broadly stable. Within corporate costs, overheads were 8% lower, offset by higher financing costs on parent company net debt.
Outside underlying earnings, the group recorded a net non-trading loss for the year of $1.9 billion. The largest component, as in prior years, was a net fair value loss from revaluation of investment properties, primarily Hong Kong Land's central office portfolio, as a result of continuing soft market rental conditions. The group also made a number of impairment provisions outside underlying earnings, totaling $568 million, principally against the carrying value of associate investments. DFI's disposal of its interest in Yongwei also resulted in a loss recorded among other non-trading items. The sale has now completed with over $610 million net proceeds received and marks a significant milestone in DFI's ongoing portfolio simplification and strategy to drive improved shareholder returns. After all non-trading items, the group reported a net loss attributable to shareholders of $468 million, compared with a net profit of $686 million in 2023.
Turning now to the group's balance sheet, net borrowings, excluding Astra's financial services companies, fell by $1.1 billion to $7.3 billion, and gearing reduced by 1% to 14%. This was driven by debt reductions at almost all portfolio companies led by JC&C, where consolidated net debt fell by $910 million, with proceeds from the sale of Siam City Cement, property sales in Malaysia, and its share of the enhanced 2023 dividend received during the year from Astra. Group cash flow from operating activities was $5 billion, up 9% as a result of lower working capital, principally in Astra, lower tax outgoings, and increased dividends into Astra from its associates and joint ventures. Investing activities outflows were substantially lower than the prior year at $971 million. Capital expenditure, principally organic investments by our portfolio companies, continues to be the group's highest priority deployment of capital.
While the group invested over $2 billion of CapEx in 2024, this was below the prior year, principally as a result of the new strategy focus at Hong Kong Land, which saw no new development site acquisitions, and also the capital cycle at Astra, which had seen a substantial capital refresh by United Tractors in 2022 and 2023. Higher spend on financing activities mainly reflected outflows for increased shareholdings in JC&C and Mandarin Oriental, as well as increased dividends to non-controlling interests paid in the year by Astra. The group has over $12 billion in liquidity headroom to finance future growth, a little less than the prior year, as portfolio companies took the opportunity from improved balance sheet positions to trim surplus facilities. Overall, the group's portfolio companies continue to be highly cash generative, supported by strong balance sheets and access to considerable liquidity.
Now turning to Jardine Matheson's corporate balance sheet and cash flows at the parent company level. As a reminder, net dividend income at this level reflects dividends from the group's portfolio companies and associates, net of parent company operating costs and financing charges. Net dividend income increased 12% in the year to nearly $900 million, following strong business performance recovery in 2023. As anticipated at the half year, cash cover for the Jardine Matheson dividend rose to two times. Net debt at parent company level rose to $1.3 billion at year-end, primarily due to the purchases of 6.7% of JC&C, taking our holding to 84.6%, and 7.8% of Mandarin Oriental, taking our position to 88%. Parent company borrowings are financed by 10 and 15-year bonds totaling $1.2 billion, issued in 2021 at an effective interest rate of 2.6%, topped up with a small amount of bilateral bank facilities.
I'll now briefly go through the individual performance of each portfolio company for detail. Please refer to the portfolio company results briefings, which you can access via the Jardine's corporate website. Starting with Astra, I'll begin by reminding that the group holds its interest in Astra through JC&C, and the numbers on this slide reflect the contribution made by Astra to JC&C. Astra delivered a resilient performance in 2024. The underlying net profit contribution to JC&C, however, was 3% lower, impacted by a weaker Indonesian rupiah. In local currency terms, Astra reported record earnings, reflecting improved performances from most of its businesses, in particular motorcycle sales, financial services, and infrastructure and logistics. Contributions from United Tractors' heavy equipment, mining, construction, and energy segment decreased to $376 million.
The drop primarily reflected a fall in Komatsu heavy equipment sales and coal mining, which, despite an 11% increase in sales volume, saw lower revenue and profits due to falling coal prices. UT benefited from 32% higher gold sales and also started to record nickel mining profits from Stargate and Nickel Industries. Although M&A investments were lower in 2024, Astra will continue to prioritize value-accretive opportunities to expand its interests in HEMCE. The contribution from automotive decreased by 3% to $330 million, with a higher two-wheel contribution offset by the impact of a weak car market. Astra's market share for motorcycles and cars both remained stable at 78% and 56% of the total markets, respectively. Astra's financial services business remained stable despite the headwind from foreign exchange, as the consumer finance business grew new amounts financed by 9% and underlying net profit by 6% on a local currency basis.
There was a 31% increase in the contribution from infrastructure and logistics, primarily from higher toll road earnings. Astra has interests in 396 km of toll roads and is seeing strong growth as these investments mature and its toll road operating service business grows. Turning now to Hong Kong Land, underlying profit fell to $410 million. As already mentioned, this primarily reflected non-cash impairments in its build-to-sell business in China. However, I'll begin with the prime properties investment segment, as this is, of course, both the largest and the key ongoing business segment at Hong Kong Land. The central office portfolio in Hong Kong remains highly sought after, with physical vacancy broadly unchanged in the year and committed vacancy levels significantly below the wider Grade A central market. Office rents in Hong Kong fell again, but once again by less than the Grade A office average.
As a result of the fall in office rents, the balance sheet value of the group's prime properties investment portfolio in Hong Kong declined by 5%, excluding the impact of accounting reclassification for areas occupied by the group. Contributions from the luxury retail portfolio in Hong Kong were also lower due to planned tenant movements from the Tomorrow Central transformation. The ultra-high net worth retail segment remained resilient, with higher customer spending. In Singapore, the office portfolio performed well with low vacancy rates. Average rent was up from the previous year, and the valuation of the group's portfolio in Singapore remained stable. The group's performance in China was mixed, with a lower contribution from One Central Macau, but an increased contribution from Wangfu Central in Beijing due to tenant mix optimization. Overall, underlying net profit from prime properties was down 5% at $930 million.
Turning to the build-to-sell segment, as mentioned, earnings were lower as a result of $314 million net non-cash impairments in China. Excluding impairments, earnings from this segment, however, were 29% higher than the prior year, principally reflecting strong sales of residential units at the group's prime West Bund site in Shanghai. In Singapore, premium residential developments continued to attract strong market interest, although contracted sales were lower than the prior year due to limited inventory. It's worth noting that while committed to completing its existing portfolio of projects, Hong Kong Land will no longer deploy capital into new build-to-sell opportunities across the region. Accordingly, there was no capital expenditure for new land site acquisitions in 2024, and we expect profit contributions from this segment to decline over time as capital is recycled to higher value uses. We strongly support Hong Kong Land's new strategy.
While we recognize short-term earnings headwinds, we're excited by the prospect of stronger recurring income streams from renovation of their existing super prime retail assets in Hong Kong and development of the West Bund project, as well in the mid-long term from new assets and businesses. DFI saw a strong recovery in 2024, delivering a 30% increase in underlying net profit. The health and beauty business reported stable underlying profit of $211 million. Mannings in Hong Kong and Guardian in Southeast Asia both saw increased earnings, but this was offset by weaker performance in Macau. Convenience profits rose by 17% as product assortment shifted towards higher margin categories. In Hong Kong, operating profit grew by 10% as cigarette volumes fell. In South China and Singapore, 7-Eleven saw stable like-for-like sales and a recovery in profit driven by product mix and ongoing cost control.
South China in particular offers a significant earnings growth opportunity for DFI. In the food division, revenue was 2% lower, excluding divestments, but Singapore saw improved sales mix and effective cost control, which led to a meaningful earnings recovery. IKEA reported an 11% decline in like-for-like sales and a 13% drop in operating profit as competition in Hong Kong and Indonesia intensified. Among associates, Maxime's reported lower underlying profits, while Yongwei's underlying losses reduced to $33 million. DFI completed the sale of its interest in Yongwei in February 2025. Jardine Pacific reported an underlying net profit of $149 million, 9% down, primarily because of weaker results at Zung Fu and business disposals. Among the B2B businesses, JEC and Gammon both reported improved profits, up 8% year-on-year.
Corporation saw higher sales with strong performance in Hong Kong and encouraging contributions from the Train Joint Ventures and newly acquired associate Kruger. Gammon's performance was driven by higher sales and tight cost control, with its forward order book also growing during the year. Hactl also recorded an 8% increase in profit driven by strong growth in the value of cargo handled in the year. Jardine Schindler's results primarily reflected top-up cost provisioning on a number of projects in Hong Kong and Singapore in 2024. Among Jardine Pacific's B2C businesses, both Zung Fu and Jardine Restaurant Group faced challenging conditions. Jardine Restaurant Group recorded a second year of losses, although these almost halved in 2024, with improvements starting to come through at Pizza Hut and KFC Hong Kong as sales recovered and cost control improved.
Zung Fu, however, saw a significant deterioration in market conditions and reported a net loss as changes in tax concessions for electric vehicles in Hong Kong particularly impacted sales of higher-end OEMs. There were, however, encouraging results from new brands, Smart and Denza. Portfolio simplification continued in JP with the sale of the group's 50% interest in Jardine Aviation Services following the disposal of Great Fuel Aseptic packaging in the second half of 2023. JC&C reported resilient earnings in 2024, although growth was impacted by foreign exchange headwinds. In Indonesia, Astra, whose performance I've covered already, accounts for the vast majority of contribution. In Vietnam, JC&C's businesses contributed $103 million, unchanged from 2023. RE's profits fell due to lower hydropower demand, but Taco's contribution rose 10% as automotive profits recovered, benefiting in part from registration tax incentives.
Despite disappointingly weak business confidence in Vietnam over the last few years, we continue to believe that it offers an important growth opportunity for the group looking forwards. There was a stronger contribution from regional interests, which grew by 9% to $55 million, principally reflecting higher profits at Cyclone Carriage Singapore. We recorded underlying profit from our 21% interest in Zhongsheng, down 41% to $83 million due to pressures on volume and margins in the new car business, only partially offset by growth in the after-sales and used car segments. We continue to believe in Zhongsheng's strong network, market positioning, and operational capabilities. The group has made promising progress in the EV segment by partnering with Ceres to distribute and service Aito electric vehicles. Turning finally to Mandarin Oriental, underlying net profit was $75 million, 8% down from 2023.
This was primarily due to reductions in one-off residence branding fees in the management business and tax credits recognized in 2023. Importantly, though, recurring fee income in the management business grew by 15%, reflecting three new hotel openings and an additional hotel rebranding, as well as one new branded residence. These brought the total number of properties in operation across 26 markets to 41 hotels, 12 residences, and 26 homes. Underlying earnings from the owned business were stable at $45 million, with solid revenue and profit growth at the majority of the group's owned hotels, particularly in Singapore, Tokyo, and Madrid, offsetting the impact of sale of the Paris hotel and retail interests.
Looking ahead, eight new hotel and residence projects have been announced since the start of 2024, and the group has a strong development pipeline of 32 hotels and 18 residences to drive further progress towards its target of doubling its portfolio. I'll now hand back to John.
Thank you, Graham. Our portfolio companies, to recap, have sharpened their focus on building value, with Hong Kong Land, DFI, and Mandarin Oriental all adopting and making strong early progress in executing new strategies. DFI, JC&C, and Jardine Pacific have continued to focus on portfolio simplification with the divestments of Yongwei, Siam City Cement, and Jardine Aviation. We took the opportunity to grow our stake in JC&C, increasing our effective interest in Astra and our Vietnam holdings, and we also increased our holdings in Mandarin Oriental.
Looking forward in 2025, we expect our results to be broadly stable, setting aside the 2024 impairments in Hong Kong Land. With enhanced boards, strengthened leadership teams, exciting new strategies in many of our portfolio companies, and a sharpened shareholder focus on return, Jardine Matheson is well positioned to drive mid and long-term growth.
The future looks encouraging.
Thank you. I will now take your questions. To those of you online, please press the Submit Question button on your screen. In the meantime, those of you who are here in person, just raise your hand, and one of our colleagues will pass you a mic.
Hi, John. Hi, Graham. How are you? This is Jeff from CLSA. Congrats for the great and resilience of results. I have two questions. First one is regarding the change from owner-operator to investment manager.
Can you help us understand how has Jardine's influence on the underlying entities changed on the back of this? Any color would be appreciated. Second question would be about share buybacks. DFI and Hong Kong Land's share price has gone up over the past four months, but the JM share price has not caught up as much. Just wonder what's your latest take on that? Thank you very much.
Perfect. Thanks, Jeff. Maybe I'll start, and Graham, I'll hand to you. I think, first of all, in terms of as an engaged investor, what are we trying to achieve? I just want to reiterate that superior shareholder returns, and equally, we want to have strong accountability as we look into the portfolio companies who are driving those shareholder returns. We have set up very strong leadership teams. They're supported by the boards.
Now, on those boards, as Jardines, we participate. There are essentially two Jardine shareholder representatives on that board. While that board is very much the forum for key decision-making and agreements, that is the forum in which Jardine has influence. As an engaged investor, we clearly want to look for long-term shareholder returns and shareholder value being driven. We also remain preoccupied with leadership to ensure that future successors to the current leaders are being developed and very firmly in place. We also have an expectation, as I mentioned earlier, in terms of sustainability being a very important part of how we would like our portfolio companies to pursue their businesses to ensure those earnings growth are sustainable.
As an engaged investor, I suppose, as if I contrasted to where we might have been a few years ago, but more black-and-white comparison, I would say we have more focus on those longer-term returns, perhaps more detachment coming away from the individual businesses, focusing again on the impact on Jardine Matheson returns, because ultimately, we benefit from stronger individual portfolio company returns. At the same time, to be very clear, while we influence and are very much committed to each of these individual portfolio companies, those individual boards we see as the owner-operators of our businesses rather than Jardines itself.
I hope that's helpful.
On buybacks, as John highlighted, Jeff, we think about buybacks routinely as part of our capital allocation framework that starts with organic investment in the portfolio companies supporting the progress of the dividend.
We think about buybacks on a level playing field with external investment opportunities. You saw in 2024, we spent more than we've done for some time deepening our investments in JC&C. We also were offered a couple of blocks in Mandarin Oriental that we took the opportunity to pick up. We will continue to do as we have always done. We're not immune to the opportunities that are represented both in our own share price and indeed in the value that sits in the portfolio companies. In the near term, you also saw that our parent company level net debt level has pushed up. Reflecting our strong commitment to the quality of the group's and parent company's balance sheets, we do want to probably prioritize in the near term some recovery on the parent company balance sheet before we move forwards.
We do think about the parent company on an ongoing basis, also in relation to neutralizing script. We actually did a little bit less on that last year, partly as a result of the extra capital that we put into JC&C and Mandarin Oriental, but that has not changed the overall position that on a long-term basis, we would look to neutralize the effect of script and the effect that that has on earnings. Again, in the near term, we are pretty focused on parent company balance sheet in order to bring the flexibility to invest again. We want to keep the parent company. Our long-standing commitment is that holding companies in the group should not carry net debt. We have been there with net debt at both at parent company and JC&C level for a little while, and we want to make some headway on that in 2024.
Sorry, five.
Sorry. Thank you. Please.
Hi, management. This is Carl Chan from JP Morgan. Just a follow-up on your comments on the capital allocation, right? There are various ways for you to allocate capital. Just now you mentioned that we might prioritize in that reduction at a parent level. Then versus, let's say, investing in your own companies, for example, you have been increasing stake in JC&C and versus share buyback. Just curious, among all the various ways to allocate your capital, I understand that it seems like that reduction may be the first priority. After that, how would you prioritize that? Because from our perspective, we would still be very keen to hear a bit more about buyback and all those stuff. That is my first question. The second question is about the new leadership in the Ferry subsidiaries that we have.
Just curious, in the coming year, what may be the key KPI for the new CEOs, and in particular for Hong Kong Land, because we have some very exciting long-term targets from Hong Kong Land. Just curious, what's your thoughts on how they might be able to execute the new strategies? I guess in the near term, the rates are higher for longer. That may be a bit difficult for Hong Kong Land to execute some very accretive capital recycling activities. Just wondering, from your perspective, how do you see the new strategy coming out potentially this year? Thank you very much.
A gain, with that, please you start with that, John.
I think, again, each of the chief executives, Hong Kong Land chief executives, certainly among them, are incentivized based on short-term and long-term performance, and we have very specific targets to match.
What is immensely important for us, particularly in the property business, and I always say that the property business requires an enormous amount of patience from time to time, I suspect we're in one of these periods. Nonetheless, the emphasis is on doing things right to build longer-term shareholder value. That is what the board of Hong Kong Land has said, and that is what will be the key test of success at Hong Kong Land and indeed at each of the other individual portfolio companies. I would say in respect of 2025, it's strategy execution. I think this is what you and we as shareholders will be monitoring for Hong Kong Land. Is that capital recycling? Is that the progress being made in tomorrow's Central and West Bund? I suppose these are the key aspects.
We were very supportive of the recent management changes being put into place in terms of West Bund, because West Bund, while it won't impact the results in a very positive way for a couple of years, that is an immensely value-creative project that we see as sort of very much something for the next five to ten years. Seeing how that strategy gets executed, Mandarin Oriental, what we would be looking for, by contrast, is just the number of new hotel management contracts signed, including residences. We'd be looking at the increase in management fees on an ongoing basis, really with an emphasis on building out that very earnings-attractive investment-like proposition.
In respect of DFI, a third example, very much looking at where the value is being driven, particularly in two businesses that we find really exciting, the health and beauty business, both in North Asia and in South Asia, and convenience store. Convenience store constantly in the news at the moment because of the larger transaction that's constantly being debated. We too share a real enthusiasm for that business. Guangzhou, the business in South China, had a really good start. We're very confident of the business model. Seeing how that gets executed, even as we at the DFI board level continue to look to evolve that portfolio. These are the sort of, I suppose, a rough indication of the KPIs that we think are going to be very important in terms of 2025.
I suppose with that in mind, and Graham, you will chip in, yes, share buybacks are very important for us, and we look at them on an ongoing basis. We also look at other investment opportunities, both in the portfolio companies, but also at the Jardine Matheson level. We are looking at, as we said, the returns, maybe a focus more on the medium and longer-term returns rather than the short-term, given the nature of the investor that we are. We are looking at the risks. We are looking at how best to deploy our capital to generate the most shareholder value over a mid and long-term basis. Given the volatility of market conditions, that really changes. There is no recipe card for answering that question.
I'll just reinforce that again, John, by reminding everybody that the vast majority of capital that gets deployed in the Jardines group is deployed by the portfolio companies to drive them becoming bigger, stronger businesses with a strong, sustainable earnings growth trajectory ahead of them. What we do around the edges in terms of deploying capital into new businesses can occasionally be significant. When we privatized the shareholding in Jardines Strategic a few years ago, we deployed significant capital there. We have also deployed significant amounts of capital over the last few years into deepening our shareholdings in some of the portfolio companies and buying back JM shares. Nobody should get distracted in any of that.
The real way that we will drive value for the group and its shareholders at Jardines level is by helping the businesses become successful in executing great strategies exposed to growing markets in our key sectors in Asia. That is where the vast majority of capital will be deployed. Everything else, I understand the financial excitement around it. It makes spreadsheets whirr.
That is our first capital priority.
T hank you. Please.
Thank you. This is Raymond Liu from HSBC. I got three questions. The first question is about company structure. Can management share with us, is there any revealed on the existing shareholding structures across its portfolios? Say, for example, like JM increased the stake on JC&C by 6.7%, as you mentioned in the PBT. The second question is about synergy.
One of the largest portfolio evolvements in the past 12 months is related to Hong Kong Land. Can management share a bit more color on how much synergies that is going to create under the transformation to the whole group? The last question is about the impairments. If you look at the underlying earnings, one of the key tracks is about the impairments, of course, like both Hong Kong Land as well as some in DFI as well. Do you see any risk of another provisions or impairments in the next 12 months' time? Thank you.
Right. I suppose in respect of company structure, I mean, together with everything else, we monitor our company structures on an ongoing basis. As I said earlier, we like very much the accountability of the individual companies focused on their specific sector.
I mean, everything else is, again, looking at the opportunities in front of us and weighing the advantages and disadvantages of various courses of where we can deploy our capital. I mean, I would say on the synergies, synergies is not how we see significant value creation across the Jardine portfolio of companies. Now, there are significant synergies within some of our portfolio companies. I think of the Astra ecosystem where, to put it in very simple terms, selling a two-wheel motorcycle at the same time ensuring that a customer has finance to buy that motorcycle, ensuring at the same time insurance is provided for that customer, clearly that ecosystem generates significant revenue synergies and indeed some cost synergies in the back office. It's not to say there are not sort of some cost synergies to be got.
Graham has been leading the creation over the past two or three years of the Jardine Service Center, where we aim to get a very high-quality output to provide back office services for many of our group companies. Cost has certainly been an attractive feature of it, but it is to ensure that it is the most modern, the most flexible, cost-efficient, yes, but it is really not something we generally talk of as a significant source of shareholder value for Jardines. I think if I look, you mentioned Hong Kong Land, and I think there have been very much conversations between Hong Kong Land and Mandarin Oriental. Clearly, Mandarin Oriental see branded residences as a way they can provide value to the owners and developers of residential real estate.
Inevitably, there should be further opportunities for Hong Kong Land with its focus on that same ultra-premium high-end to find opportunities to work closely with Mandarin Oriental. Here in Central, Hong Kong Land and Mandarin Oriental have a very synergistic way of working in Central, and I think there's more to come on that. I would say it's incremental rather than a really core way of where we see driving value. Synergies, yes, I've pointed to a few. Astra, that ecosystem is really fundamental, but Jardines across its portfolio companies are really not a key focus. Probably more inefficiency to find those synergies rather than great synergies in and of themselves.
Impairments, I mean, the impairments in, I will speak as Hong Kong Land was, I think, a key focus for management, not so much impairments, but monitoring the condition of the market in mainland China and the impact on its various assets. You saw Hong Kong Land come out of that issue very quickly as we came into 2024 and conditions continued to deteriorate. No doubt, I have every confidence in Hong Kong Land management to continue to monitor the market. I think if I listened closely, indeed, both in the recent presentation and around the boardroom table, maybe a sense of a bit more of stability than 12 months ago, but I think it will be to management to continue to monitor market conditions, looking for the opportunities, but also assessing the risks as we go forward.
I think you've covered the key thing there, John, in impairments across the whole group is it's ultimately driven by the market. We're not in an accounting world of 30 years ago where in one blow you can clear the decks and say every asset, there's only upside on it from here on in. We have to follow market valuations, and clearly in a number of places we've seen those under pressure. I will say that in pulling it out as a key feature within the 2024 numbers, I'm hoping that they won't be a regular feature at that scale of our results. We do have to watch the market. There are balance sheet values that are very large on the Jardine Matheson balance sheet.
If the market were to calamitously change in a way that we do not anticipate, you would expect us to properly reflect that in the value of our balance sheet, which is what we have done. I cannot offer any guarantees, but I can say that at this point, based on the market conditions that we have seen and looked forward to in the near future, I believe that our portfolio company balance sheets are well stated.
Certainly not our base case, Graham.
Yes, indeed.
Sorry, right over here.
John Gwyn, thank you for your time. This is John Lane from UBS. I have three questions here. First of all, regarding on simplification. Looking back over the past five years, there have been a lot of business simplification in terms of business disposal and also privatization of Jardine Strategic.
Looking ahead, is there any further room that we could see further simplification? Maybe a bit more direct here is about for JC&C and also MO, the shareholding has increased to more than 80%. Would there be also an opportunity to privatize the both companies? A second one is regarding on the geographical exposure. Looking ahead, maybe in the next three to five years, how should we think about the exposure for Hong Kong, China combined versus Southeast Asia? The third one is about on the PowerPoint, I think you mentioned about the long-term earnings growth, quality earnings growth, and also if there's any quantitative numbers that could share to investor regarding on how much will be the earnings growth here. Thank you.
Right.
Maybe if I start off, I mean, I think simplification is something that each of the boards of our portfolio companies are talking about. Looking at the businesses that will add and create value going forward and looking for non-core, non-strategic, often low-yielding assets that we should be disposing to a better owner. That very much continues. That's very much in line with the focus across the portfolio companies, boards and managements on total shareholder return. I think it's a much more vigorous capital allocation, including the capital you've already allocated approach. I can see this as a continuing important theme across the portfolio companies for 2025.
I would say in terms of the broader question you raise, really I sort of come back to the answer we gave a few moments ago in terms of we continue to look at the overall structure of the group, taking into consideration other opportunities that we have, the returns and risks, but really focus it through a lens of driving shareholder return. That's essentially our views on simplification. More simplification to come at each of the individual portfolio companies level. I would say in terms of geographic exposure, geography we see ultimately as an output rather than an input, to be very clear. What does that mean? It means that we're in each of the individual portfolio companies focusing on where to build good businesses, strong businesses, attractive return businesses. We're really not deciding that's better because it's in Vietnam or it's better because it's in China.
Not at all. We start very much with the business opportunity in mind. I would say if I look sort of at the results of 2024, I mean, that dominance now of Southeast Asia led by Astra, we would see continuing certainly in the visible future. Southeast Asia, I think, is having a strong moment. We see it continued to be well positioned. Astra for us is a very core investment holding. We're enthusiastic about further investment opportunities, of which the leadership team in Astra is looking at. Vietnam, as we said, we continue to be enthusiastic. I would see sort of more to come from our existing businesses and new opportunities in Southeast Asia. Now, having said that, I want to say China is really important for us. We have disposed of a Yongwei, but do not take that as at all a China view.
Take it as our investment in Yongwei view in respect of China. In fact, I look at our enthusiasms going forward. As we noted in the presentation, West Bund is our largest new investment being made across the group at the moment. That will take a few years to come to fruition. It is not only West Bund. The other Hong Kong Land projects, Suzhou onward, these are sizable commitments of which we are looking for good returns to come out in the midterm. As I said earlier, we need a bit of patience with real estate given the development cycle in the business. Similarly, I think our convenience store business is very well placed in southern China. We will continue to absolutely look in China.
Of course, Hong Kong, where we sit here, we are absolutely confident of the future of Hong Kong and our B2B businesses, particularly are taking advantage of that. We'd like to see a bit more new office leasing coming into the market, frankly. Equally, Hong Kong's position as an international financial services city, I think, is underlined. This should be the trough of which we begin to build over time.
In terms of growth targets.
In terms of growth targets.
Maybe I'll take that, shall I? Oh, yes. Why don't you? Look, we obviously think about that. We're a long-term investor and we've put up the metrics that we want to be assessed by. We've made it clear that we're not happy with the performance over the last five years.
Partly what's staying our hands, though, is despite confidence in the businesses and the leadership of the new businesses, we're sitting here at a particular moment in time where there is a high degree of unpredictability in markets. You've seen, as I've talked about our 2024 results, that FX can make a significant difference to the earnings growth that we can put down. We saw US markets plunge yesterday by whatever they plunged by. I think we are in an environment at the moment where there is an elevated level of uncertainty, and we have to reflect on that. This isn't quite the moment where we're ready to come out trumpeting a particular target that we're aiming for. It's definitely more than we have delivered over the last few years.
We have also highlighted, and as you attended Hong Kong Land yesterday, there is a little bit of a short-term earnings headwind there where despite the fact that, as we say, we are confident we will get back to an earnings level in 2025 that excludes the impact of the impairments that we suffered in 2024, at their level, they are also seeing a headwind. They will not fully recover that if you looked at their guidance in detail. We have got a mix of pluses and minuses as we look into the near term. Again, in the midterm, we are not happy. We are not going to be continually saying we are happy with being flat on earnings. You can assume that we aspire to significantly more than that.
In terms of is this the moment for us to put out a headline number that then everybody's going to get very excited around, it just isn't the right moment in the cycle and the wider geopolitical environment.
Now, I'm just going to go to an online question that we have before coming back to the room from Jaden in Macquarie, a series of three questions. Graham, I think we'll play a double act. What further simplification and capital recycling steps would Jardine consider?
I think I'm going to play a British Parliament answer to that.
I refer the gentleman to the answer previously from me. Yes, I think we have been through that one a couple of times now. Sorry, Jaden.
Similarly, with cash cover the dividend times two, would Jardine consider a buyback of its own stock again, which would be NAV accretive at current levels?
Again, I'm just going to our priority in the short term is balance sheet repair at the parent level to provide flexibility, not to provide a big pile of gold to sit on. We want to get back to reinvesting. That can include internal and external opportunities. In the short term, we're focused on reduction of debt.
Now, the third question, with new management in place at Hong Kong Land, I add, and the strategic review now done, when is the end of negative asset revaluations for Hong Kong Land? I ask Graham this question every day. I think we're watching the market. As I said, we're very confident in the market, but frankly, I've learned over years to call an end to negative asset revaluations is very difficult.
Certainly, there were stable cap rates, which was excellent, but we will continue to monitor the office and indeed retail rents. I have to say, though, just standing back again on tomorrow's central, I think certainly the degree of Hong Kong Land's commitment is evident. Sometimes we lose track of the commitments coming from the key flagship brands that are building what will be international, both in terms of quality and in terms of size stores in that portfolio. That is a huge vote of confidence for the high-end retail community in Hong Kong. I also think it is indirectly a vote of confidence for Hong Kong as a very value-generating financial services center.
Again, I'm coming back to a little bit the patience, but I think it is simply a question of patience before we begin to see improvements rather than the negative asset revaluations that have been there for these past few years. While I can appreciate I'm going on to read, there is a degree of cap rate movement impacting investment properties. How confident are we asset values on the build-to-sell portfolio are sufficiently low? Graham, how confident are we?
We're as confident as our expert team supported by expert third-party valuers who've reviewed those up and down, further rechecked by our auditors as we can be. As I've said before, if the market shifts significantly upwards or downwards on those, we would have to adjust those valuations. For now, they are the best that our expert teams can come up with.
Another question, Simon from Goldman Sachs, who apologizes for not being here. You talked about the KPIs of senior executives at your portfolio companies. Can you also share with us what your own KPIs as leaders for the Jardine Group? Quite right. Quite right. First, I would say, just stepping back from that question, because we describe it as though it's always been this way. Starting, I want to say three, four years ago, we put into place a systematic way whereby myself and my colleagues all have significant Jardine share ownership. Part of annual incentives are deliberately flagged to be put to add to those Jardine shares, which are kept and indeed kept post-employment for a period of time. That really is meant to even further align the top team of Jardines with shareholder performance.
I think it's fair to say that the share price is very important to both of us as well as to our colleagues. On a short-term basis, many of the things that we've talked about over the past 20-30 minutes are part of our KPIs, encouraging the portfolio companies to find value, encouraging the portfolio companies to identify non-core, low-yielding assets and to realize them, as has been happening over the past two or three years. This is very important. Ensuring that the succession pipeline for leaders, our focus is really on, I would say, the management teams, chief executives, N minus one, ensuring that pipeline is in place. Obviously, sustainability, particularly in terms of making progress on decarbonization targets and our ratings across the group are very important. Our KPIs really reflect these objectives that we've talked of and really structured this presentation against.
I think then we move back to the room. Yes?
T hanks for taking my questions, John and Graham. This is George Roy from Citi. A couple of questions on Astra. How should we think about the business prospects at Astra, in particular with the four-wheel market, given the backdrop of the increasing EV adoption in Indonesia? My second question is on Mandarin Oriental. Obviously, the Causeway site is on track to complete by the second half of this year. Will Mandarin Oriental hold on to that asset when it's complete, or should we expect more synergy between Mandarin Oriental and Hong Kong Land?
I suppose first, business prospects, specifically around the four-wheel market. I would say the four-wheel market, we were disappointed with the evolution of the overall four-wheel market next year.
I think management is seeing either a stable market next year or a slight increase. Conversely, if we go forward five or ten years, which we must, we see continuing increases in GDP per capita in Indonesia. Despite comparable weaknesses over the past few years, we see the benefits of the investments the country has made in infrastructure coming to roost. I think the country's identification that more foreign direct investment is needed. Certainly, that's been a great success story in commodities. Much more work to be done in terms of manufacturing, which has a big impact in terms of the development of the middle class. I start off with sort of we don't see a sea change in terms of the overall size of the market in 2025.
We do see promise in that overall market as we go forward over the next five to ten years. Even as an investor in toll roads, we see a good increase in toll road performance in 2025. That means people are using their cars. That means that the infrastructure is being used. That multiplier effect across the economy should bring good things over time to the Indonesian economy. In terms of the two big features in the car market in Indonesia, an interesting question for you to address with Astra management directly, but I would make a couple of overall comments. I would say first, I mean, Astra at 55%-56% of the market with its consumer finance companies and its insurance companies is a very strong incumbent player. It is throughout Indonesia.
If you want ease and service as a customer, Astra is the dealership in which you go. If you want to have some assurance on the resale value of your second-hand car, you will go to the market leader. Really, Astra is absolutely intent on continuing its operational excellence because it's very much aware that the market is changing as new incumbents come into the market. New incumbents coming into the market is both a new theme and an old theme. It's a new theme because of the Chinese manufacturer now coming in. New manufacturers have been coming in for some period of time. This is the first part. The second part is looking at sort of the electrification of the cars coming in. Again, we see that process taking much, much longer than we see in really any other comparable country.
If we look at, say, Thailand, we see the infrastructure much more developed in terms of electricity fit for cars distributed widely, both in commercial settings and very importantly in residential settings. We really do not see that infrastructure at all in place. That is certainly true outside of Jakarta, but even within Jakarta is a key force. Where Astra, supported by Toyota, has very much been focusing on the hybrid side. Astra has, what, 60% interest in the overall hybrid market, which is growing apace. I think the hybrid, both from a cost efficiency perspective, a tax perspective, is a very attractive segment. Very much Astra is evolving, supported by Toyota and Daihatsu at the end of the day to address that market as it grows. I suppose, again, if I summarize, next year we should see some improvement.
Really, where the prize lies is over the next five to, say, ten years, in line with the economy and in line with Astra, supported by its OEMs, continuing to evolve its product mix, ensuring that you have very cost efficient, which is very important in Indonesia vehicles, but ultimately responding to the newer competitors as they come in and try to create some territory. The second question was in respect of the Causeway Bay, one of the very few en bloc buildings effectively on the waterfront. I think when I last looked, there were, in terms of buildings en bloc between Central and Northpoint, I think there were maybe 12. That included, I think, Jardine House, Mandarin Oriental, and the Hong Kong Club. The relevant list is an even shorter one. It is a great asset.
Conversely, Mandarin Oriental is building its brand, building its management company around the world. I think it's safe to say it's a non-core asset for Mandarin Oriental that will be realized when value commensurate to its strategic position on Hong Kong Land or Hong Kong's waterfront can be realized. I think Hong Kong Land, you mentioned, that's really for the management supported by its board to determine. I see a lot of investment taking place in Tomorrow's Central for the moment.
I think if I may, John, I'll just add two thoughts to the Astra answer. One is, of course, auto and four-wheel is very, very important to Astra. Remember, it's a third of the earnings base there. Yeah, 330 out of 990 or so in terms of the contribution to JC&C.
Although, of course, John rightly pointed out the synergies between that and the financial services business, remember, auto was flat last year. They increased the amount of new financing by 9% of the book. There is a very, very competitive business there in fences as well, which, of course, takes a lot of its lifeblood from the success of the auto franchise and the extraordinary market shares that Astra has achieved there through collaboration with its Japanese partners. There is also a great fence of business there. Of course, the other, and now the largest segment of Astra, is the HEMCE segment, which, of course, will ebb and flow with the coal price. It is not just the coal price any longer. There is gold production ramping back up, and we have nickel interest growing.
Look, I've said a number of times, I think people are sort of taking their eye off the ball a little bit. We take BYD very seriously. They're serious competition. That is not the only thing that impacts the future trajectory and our confidence, our strong commitment to our position in Astra.
Right. I have just noted the time, conscious of all of our schedules. I'm going to very much thank you for your participation here today and online. Thank you very much for your question. Best success to us all for 2025.