Earnings Transcript for 0019.HK - Q4 Fiscal Year 2021

Donna Suen: May I now invite Guy, Martin, and Karen to take us through a detailed look at our results for 2021. Over to you guys, please.

Guy Bradley: Thank you, Donna. And thank you, everybody for joining us in the first evening as we try to put a bit more color here on the annual results came out today on the media and press announcements. And let me dive straight into the presentation and hopefully we'll share the workload here between myself, Martin, and Karen, we'll get through the chops and then look forward to some questions and answers at the end in the usual format. The highlights of 2021 are here, I will touch on all of them as we go through, essentially focusing on three core businesses, property, beverages, and aviation, exiting Marine Services and starting to invest in health care in the Chinese Mainland. So the key thing here is focus for us. In terms of the profit, you can see the turnaround versus the prior year both on the underlying profit basis and the recurring underlying profits. The numbers string versus 2020 has been quite good, just demonstrating the resilience I think of the businesses that we're in. The highlights between the three core divisions here, you can see property holding its own year-on-year, and beverages had a remarkable year in 2021 growing those profits by 23% to $2.5 billion an all-time record for beverages. And aviation had a very good second half, as you can see here, which meant that their full year result was 70% better than the prior year. So all three core divisions are delivering for us in 2021. Balance sheet is very strong. Martin will cover that in a few minutes time. I would just like to point out a couple of things here. The gearing ratio at 11.9%, if we were to -- is pretty low. If we were to gear up to a level at 30%, that would free up about HKD 59 billion worth of capital for us to deploy in some of these growth areas. So I think there's plenty of room on the balance sheet for increased investment. The dividend, again 260 a share versus 170 the year before 53% increase. And I think Martin will get into a bit more detail there with the new policy. Turning to the actual strategy here. Of course, you heard when we spoke to the media that the corporate strategy that we've been on now for a while is to drive investments in the three core divisions. In the Property division, we aim to invest an HKD 100 billion over the next 10 years, which is a large amount of commitment towards property. Swire Coca-Cola will continue to invest and we will see to expand territories to increase the growth right there, and what's been a really successful business for us. HAECO investing HKD 5.5 billion in relocating their facility in Xiamen to somewhat net new airports. And as you probably know by now in healthcare, we've allocated HKD 20 billion to invest in this new sector in the Chinese Mainland over the next ten years. I just thought you'd be interested at the bottom there to see what we've already committed to in terms of capital. And you can see the number, that HKD 55 billion is not a small number. So in terms of major projects that are underway, there's quite a lot going on, not just in property, but also in the Beverage business, in Aviation, and in the new businesses that we're trying to target to go after consumer spending in the Chinese Mainland. In order to do a lot of this new investment, of course, we -- also the other part of the strategy is to divest our non-core businesses and to recycle some of that capital through -- to fund some of the growth that we want to do in areas that we want to be in. So you can see here the list of divestments for 2021 is pretty good list. Continuing on the previous year or two, we've been doing -- launch our office building, divestments, where they were non-core. What we've done in 2021, we've disposed the equity interest in Cadeler, our renewable energy business. we sold our interest in Hong Kong United dock yards, and I'm still down on the bottom there, meaning that we're now out of Marine. And then in the property side, we've continued to dispose of non-core assets like the tight machine car parks, the East Miami Hotel, and some land that we've been sitting on in Fort Lauderdale. In terms of sustainability and ESG, the key message here is that we want you to know that we take this subject very seriously. Our biggest in print on the world is on climate, and we set a target which is quite aggressive of 50% reduction in greenhouse gas emissions by 2030. The baseline being 2018, we're already 12% decreased in terms of scope one and scope two, so we're on the way to that target and we're pushing it very hard. And some of the other targets around that involving wastewater, I'd like to also flag the people target in terms of diversity, we want to have 30% of our senior managers as women by 2024, and we're already a quarter female in that carter. So I think we're nearly there, it would be nice to push out a bit harder and I think we will. In terms of the communities, it's a big part of what we do as a responsible member of the community is support that community, and you can see with the launch of trust tomorrow, in the last couple of years, we've put HKD 150 million behind the campaign to support in the form of 50 grounds and 1.6 million beneficiaries mostly in Hong Kong so tremendous support there and this campaign is ongoing. I'm not going to do what I said I'd do which is hand over the Martin Murray for some detailed financial performance slides and then I'll come back with Karen and talk about the business review.

Martin Murray: Thank you Kevin. Swire Pacific performed well during 2021, despite the continuing impact of COVID-19 an improved performance for most of the divisions ended out with the recurring underlying profits showing a full 4.9 billion as the loss last year of 609 million. The consolidated profit attributable to shareholders, was 3.4 billion as is last year's loss of 11 billion and the underlying profit, which principally adjust for the value of investment properties was 5.3 billion versus a loss of 4 billion at morning on those slides in our latest slide. Just want to highlight the 50% increase in revenue driven by the strong Swire properties and Swire performance. The cash, strong cash from operations of 15 billion and 53% increase in the dividend to $2.6 ratio. Next slide, please. Our stated aim is to deliver sustainable growth through same return on equity over time. And you can see the graph on the left there, with the given COVID, we've still got a way to go to get back to where we want to be. On the slide on the right, the state graph shows the change in equity over the year. Solid results from a Swire Properties, record profit from slides Coca Cola, reduced losses from SPO and the Cathay Pacific. The management loss of $1.6 billion on the sale of SPO, the gain on the investment, property sales, the Hong Kong investment evaluation, and then we have various others in translation in terms of the movement. Next slide, please. On the right-hand side there it shows you the recurring underlying profit, and again, to just repeat, the resilient performance there you can see of Swire Properties the record $2.5 billion compared to the $2 billion from Swire Beverages, and the reduction you can see there from the Cathay Pacific and Marine Services. The differences between the recurring and the underlying is in the non-recurring items, and you can see there the big one at the top is Swire Properties, the Chairman mentioned the recycling of the Taikoo Shing car parks and the sale of East Miami, and also the smaller impairment charges in both Cathay Pacific and SPO. Next slide, please. This again, just repeats the step change, again, pointing out the substantial reduction in losses from Cathay Pacific and also the big reduction and impairments from SPO and Cathay Pacific, partially offset by the decrease in gain because we sold Cityplaza in 2020. Next slide, please. Again, just to emphasize a strong financial position. And I mentioned the strong cash from operations of 15 billion. The net debt remains at $38 billion [Indiscernible] is low at 11.9%, our weighted average cost of debt at 3.2% and 84% of our borrowing is fixed. Thank you. Next slide. And we also have a very healthy liquidity position, which will enable us to execute on those pipeline projects, we built up our liquidity in 2020 given the uncertainty of COVID, because financing was actually cheap to $17 billion and now we reduced it to $55 billion and we have a very prudent maturity profile. Next slide. It's even mentioned we did revise our dividend policy at the interims, so our new policy is to deliver sustainable growth and dividends and to pay out not less than half of our recurring underlying profit, excluding the shares of Cathay Pacific and results of Cathay Pacific but including all dividends received from that company, a way the only dividend over time. And on the next slide, you can see that again has improved our dividend to 2.6 a 53% increase and something we want to continue to increase overtime. Thank you.

Guy Bradley: Thank you, martin. Thank yo very much. Now the business review starting with property and apologies for any of you on the call who sat through the property's presentation, I will try to make duplication as little as possible, but there are some things here that are really important. And so I don't really apologize for saying them again. So look, stable performance year-on-year, but I think the key highlights here in terms of Swire Properties and what they've got doing -- going on in the Chinese Mainland two successful openings in 2021, Taikoo Li Qiantan, pictured there on the top left and the extension to Taikoo Li Sanlitun in Beijing. And those openings have sat the company off in good stead. Taikoo Li Qiantan was probably a record-breaking opening for us. Really interesting strategic investments. We told you about the second phase of INDIGO in Beijing, which is about an RMB 8 billion commitment from Swire Properties up in Beijing there to build a decentralized office location to add on to the retail mall that is INDIGO 1, and that's now underway. Ground is being broken and we're very excited about the potential that has for being the de -centralized office location as you've seen us do down here in Hong Kong. And then the recent years, of course, what you see is tremendous is the next fourth Taikoo Li project, which is going to be in Xiang. And the team are very excited about having another project, where we can work with some heritage design and a really collaborative district government to help us to bring something really special to are very special city. So great news there for Swire Properties. Also exciting is actually the ability to revitalize the Zhangyuan Compound right across from HKRI Taikoo Hui in Shanghai. And when that gets finished in its big development phases, that's going to be a superb complement to talk to right across the road and make for really, really powerful retail district in that part of Zhangyuan. And not to forget that we're actually trying to now promote the excellent Swire residential trading brand. We probably don't -- not done enough that in the last few years, but we now currently have about ten projects in our core markets underway. And the picture that shows the Chai Wan residential project that's already broken ground. So some exciting things going on on the property side. I will skip this slide with the numbers because, I mean, they will -- they've all been seen. but the points on here for Chinese Mainland, I'd just like to flag again that if you look at the charts on the right, our biggest business is Swire Properties is Hong Kong office, and that's a 42% contributor to gross rental income. But if you go to the left of that, you can see the next biggest contributor in terms of gross rental income is the Chinese Mainland retail, which is 30% now of our total. So our two biggest contributors there, Hong Kong office and Chinese Mainland retail, both of which have performed really well in difficult situations in the last year or two, and we think will continue to perform well going forward. This is some pictures, some images of some of the developments that I mentioned, so I'd just like to finish on property by showing you this. We talked about a $100 billion of capital that we're going to allocate over the next 10 years, this gives you a breakdown of the rough allocations split by geography and by sector. Half of the 100 billion we want to put towards the Chinese Mainland primarily to develop the exciting retail-led mix-used projects that we've become famous for under the two brand names, Taikoo Li and Taikoo Hui. On the right-hand-side for Hong Kong, we want see allocate about 30% of that money to continuing the expansion in reinvestment of our core asset locations, which are obviously in Taikoo Place and in Pacific Place, and there's a lot more work that we can do to make sure those senses become best in the world financial hubs. Interestingly, the last bit here is the residential brown that I mentioned where we think we can command a premium in many cases through our design and through our reputation for quality, and we won't throw allocate about 20% of our future 10-year capital allocation to doing more of that. And we want to do more of it not just in our home base of Hong Kong, but also in the Chinese Mainland, and increasingly in Southeast Asia. At this point, I would like to invite Karen So to talk about the Beverage story. Thank you.

Karen So: Thank you, Guy. So I was -- I would like to share with you the story in Swire Coca-Cola. We're very pleased to see the strong growth of our business in Swire Coca-Cola. In 2021, we hit a wake-up profit of HKD 2.5 billion in 2021, which is the increase of 23% over last year. The growth was filled on a strong foundation of continuous, perfect growth over the last four years. Our public growth over last three years was Kaga of 28%. In 2021, Chinese Mainland product growth increased by 36%. The revenue in local currency increased by 15%, which is mainly driven by the relentless efforts of our team in building distribution infrastructure, executing capability and those are our effective revenue management initiating. Over to the U.S. side, which is our second largest market. Our profit in U.S. increased by 24%. The revenue is increased, reflecting our effort in price increase, and also our strengthening of execution capability and also improve of product mixed. Thailand increased by 15% and Hong Kong reduced slightly by 1%. So our overall revenue growth and operational efficiency is filled by our digital innovation. And we continue to leverage on the successful integration of our franchise in the Chinese Mainland and the USA. The next slide please. So the total attributable profit in 2021 was HKD 2.549 billion, is mainly contributed by our two largest markets, the Chinese Mainland and USA, which has respectively grown their profit by 36% and 24%. You could look at circular chart on the right-hand side, which shows you our split of revenue by category. We have a full portfolio spreading across sparkling, juice, energy, water, tea, and a few other categories, which is relevant to our market. In terms of our market mixed Chinese Mainland and USA contributed maturity of our revenue. Chinese Mainland contributes 57% and the USA contributes 35% down at the bottom of the slide, you can see our financial data and they are all very healthy. Revenue grew by 20% in Hong Kong dollar term attributable by 23% and our margin has improved. Next slide please. So we're seeing strong revenue growth and low growth across all our key market. If you look at Chinese Mainland our revenue grew by 15% in local currency term. Hong Kong did a very good turnaround last year over the big hit in 2020 by COVID. Hong Kong grew revenue by 9%. Taiwan was slightly impacted by COVID attack in the second half of the year, so our revenue growth was 2%. U.S. has really, really good strong consumer demand, and the revenue grew by 15%. Our margin improved in all our key market. Chinese Mainland, Taiwan, and U.S.A. Next slide, please. We remain very optimistic on the business outlook. Our revenue is expected to grow strongly in Chinese Mainland and in U.S.A. Taiwan is expected to continue to improve, however, we expect Hong Kong will continue to be challenged by the current COVID-19 outbreak. We will continue to invest for the future with significant investment in our digital tools, capability, infrastructure, and manufacturing facility, and capability of our team. And we will work close with the Coca-Cola company to continue to drive our portfolio and product innovation. We will drive profit growth with our focus on our margin management and also balancing the cost pressure with our revenue growth initiative. So with that, I would like to hand over to Guy to continue to talk about our Aviation business.

Guy Bradley: Right. Aviation. I'm not going to again, spend along on this specifically relating to Cathay, as you'll have heard all this yesterday. But there you can see on the chart the numbers show what a great second-half Cathay had, and the improvement of 74% year-on-year in terms of their profitability. And what I would like to single out on there, there actually is the HAECO performance where if you can see in terms of attributable profit, they grew 310% versus prior year, which I think is a very laudable performance given the fact that the aviation industry here has been in such a difficult situation for that time, so well done HAECO. On this chart here, I think we really just wanted to show you the impact on flying aviation here of the COVID situation. You can just see for yourselves that the difference with pre -pandemic during pandemic is absolutely staggering, and it's been very, very difficult to keep the numbers going under these sorts of conditions. But we expect those to not be for too much longer. In terms of Cathay Pacific, you heard that the capacity remains quite limited for various COVID -related restrictions imposed on the ability to fly cargo around passengers, since of the outlook, we expect an increase in monthly cash burn versus what we saw in the last half of 2021. The good news is the liquidity remains at a healthy level to be able to keep us going. I think the start of 2022 has been extremely challenging, our capacity was constrained when quarantine requirements got tighter and travel restrictions are still pretty much endemic here, and we're looking forward to those being lifted at some point this year. On the HAECO front, you see that I mentioned that HAECO has remained profitable despite the impacts of COVID. The Hong Kong business did incur a loss given the fact that the demand for line maintenance had dropped and that's all linked with the ability to fly in and out of Hong Kong, but in the Americas they managed to record an increase in profit and the profit of HAECO Xiamen increased when the demand for its base maintenance recovered gradually in the second half as some of the global travel starting to pick up. So overall, HAECO had a profitable year in 2021. Just quickly on healthcare, it's the new business that we want to do more of -- l mentioned that we want to allocate about HK$20 billion by 2030. And so this just reminds everybody what the strategy is. We're focused on premium and private healthcare services in the three big clusters of Jing-Jin-Ji, Yangtze River Delta, and the GBA, and that's [Indiscernible] in a core geography target. We're looking at asset-based businesses, which fit property development that they also fits our management expertise in terms of services in the service management. And we have very, very keen on finding strong strategic partnerships with local expertise. So that's the strategy. And we've got off to a reasonable start. We have shares in five hospitals, we have six clinics, and six elderly care homes, and that's not too bad for first 12 months or so of getting into this, but we fully expect to do a lot more in the sector as it continues to grow. I will just finish now in terms of the outlook. I'll cut that both in terms of short term and medium term. In the short-term for Swire Properties, we think there's still good growth prospects coming out with the Chinese Mainland driven by retail. Hong Kong will continue to be impacted, as we know, by the fifth waves of the pandemic. And we hope that impacts are not too many more months, but it's, it's currently a difficult place to be in retail at the moment. Swire Coca-Cola, as Karen just said, strong growth is expected to continue from the Chinese Mainland and the USA. However, we do want some points for rising commodity prices which may impact performance. On the aviation side, Cathay Pacific remains impacted by COVID-19 restrictions but we do expect a recovery from the second half of 2022. And HAECO want to recover some rate that's very similar with that given that there's a link with the line maintenance. And lastly, medium-term wise, we're confident that our future is good, and we're firmly committed to both Hong Kong and the Chinese Mainland. And we've talked about the exciting investment opportunity pipeline in Greater China for properties, further leveraging the two brands, Taikoo Li and Taikoo Hui. And we also want to increase the investments in Pacific Place and Taikoo place. That's why Coca-Cola expects continued strong growth over the long medium to long-term in the Chinese Mainland on the USA. And in Aviation, we are confident of the industry recovery and the return of Hong Kong airports as a leading international aviation hub. Finally, with healthcare, we will continue to tap into this sector which we see good growth in the Chinese Mainland, and as I said, we're focusing on premium specialty hospitals, clinics, and elderly care homes in those major cities. And at that point I think we'll pause and take some questions and answers, please.

A - Donna Suen: Thank you Guy, Martin, and Karen. We will now proceed to the Q&A session. Analysts are welcome to give me questions anytime by clicking the Q&A box at the bottom of the window. Please provide your questions in English with no more than two questions at a time. The first question is from Simon Cheung of Goldman Sachs. There are two parts to this question. Firstly, the group has been very active in recycling capital by divesting non-core assets over the last two years, where else do you see opportunity for further divestments? And are you feeling comfortable with the overall portfolio mix? Thank you.

Guy Bradley: Martin, do you want to take that?

Martin Murray: Yes, well, we have been very active. Swire Properties has recycled $43 billion and we have, as we just mentioned, extensive Marine Services division, which does give us very little giving and it's good to be seeing us investing in Xi'an and other other big projects and so there will be significant lower the same thing of non-core assets, there's not much left in the portfolio that is in the total material. So it will be more an investment going forward.

Donna Suen: Thank you, Guy and Martin, the follow-up question it's for beverage business, we notice quite a bit of a margin squeeze in the second half of 2021, perhaps you too hire raw material costs. Can you comment about the launch and trends and the expectation in 2022 given the cost of inflationary pressure? Thank you.

Guy Bradley: Karen, please.

Karen So: Sure. Thank you for the question. So we're seeing a rising trend on our raw material. We have established a procurement policy and a steering committee to manage our fluctuation in our raw material costs. And we do use our pre-buy and hedging policy to minimize the risk as much as possible. And we will continue to balance the impact of the raw material with our revenue growth initiative and which including price increase whenever appropriately.

Donna Suen: Thank you, Karen. One more follow-up question from Simon. About the HKD 20 billion investment budget set for China Healthcare Industry, what would be roughly to speak to which the 20 billion Hong Kong dollars be deployed? And when would you anticipate these businesses to gain more meaningful scale? Thank you.

Guy Bradley: Well the answer goes hand-in-hand I think the two questions there, in terms of speed and we don't know at this point what I can say is that we're trying to build a scale platform for the health care business, which argues for sooner rather than later. But we need to find the right platform and now when we do we will allocate the amount of capital that we need to get into that platform it's not to buy completely. So it's difficult to say at this point, we started off with some value small investments. I think we've ended up putting just under HKD 2 billion into the sector so far. But the aim is to scale that up as fast as we possibly can.

Donna Suen: Thank you, Guy. Next question is from [Indiscernible] of Bank of America. There are two parts to the question. Firstly, Swire Properties, it's targeting mid-single-digit percentage per year growth, and dividend per share. Does management have any target for annual DPS growth for Swire Pacific or how long would it take to return DPS to peak level of over HKD 3 per share? Thank you.

Guy Bradley: Martin.

Martin Murray: Well, I think you mentioned the target of $3 per share and hopefully we'll get there as soon as possible. So we've taken at the volatility of the Aviation business of Cathay Pacific into that dividend and we no longer have the marine services division, which has been very volatile. So we do hope that our core businesses with the strong outlook that Guy mentioned, will get us to that very quickly.

Donna Suen: Thank you, Martin, just a quick addition from [Indiscernible]. What's the expected impact of a raw material cost increase on Beverage division in 2020?

Guy Bradley: In 20?

Donna Suen: In 2022, sorry.

Guy Bradley: 2022. Karen?

Karen So: Yes. Thank you. I guess the question is similar to the first one. Well, currently we're seeing the increasing strength of the raw material in particularly that the key raw material that we're using, which is the PET aluminum can, and also corn. So we have established our procurement policy and we do have a designated committee to manage the fluctuation of the raw material. And we have a quite a mature system to manage that, and we used pre -buy financial hedges to minimize the fluctuation. And we continue in our system to use revenue growth management initiative, to which is through a better product mix, better packaging mix to manage our revenue and margin to balance out the cost increase. And we also -- which is also including price rises where appropriate.

Donna Suen: Thank you, Karen. And the next question is from [Indiscernible] of DBS Bank. Can we expect [Indiscernible] to support [Indiscernible] Cathay in case of further business decline? Thank you.

Guy Bradley: As we said at the press briefing, we are a long-term committed shareholder for Cathay Pacific. At the moment their liquidity levels look pretty good, but our commitment is long term. We like the business. We like the brands, the jewel brand strategy that they've got and we think that Hong Kong International Airport is a hub for Southern China, it has some great future prospects ahead.

Donna Suen: Thank you Guy, the next question is from Thomas Norton from Pristiq. What do you think the impact on profits would be from the planned HKD 54 billion in investments that you've outlined? Thank you.

Guy Bradley: Martin

Martin Murray: Well, we obviously have our hydro rates. And then as you said, the targets that we've set for [Indiscernible] is over ten years and for the healthcare business is over five. And so as we continue to recycle, we expect to return on equity to improve that to historical levels and we expect to hit target dividend rate.

Donna Suen: Thank you, Martin. And the next question is from [Indiscernible] from [Indiscernible]. The Swire Beverages division performs very well. Do you consider taking it to IPO and allow division with greater independent financing for the long-term expansion? Thank you.

Guy Bradley: Karen, do you want to get that?

Karen So: Would Martin want to go for that?

Martin Murray: Well, when we look at -- obviously, everything's opened book for me when we talk strategically, but there's actually no plans to list any of our businesses and currently, it's a difficult time in Hong Kong. And so we'll continue to explore on an annual basis or continue to look at the structure of the business, but there's absolutely no plans at the moment for listing Beverages.

Guy Bradley: We continue to think that there's a lot of growth, good growth to be having in all our key markets for beverages. So we'd like to try and realize some of that growth before we're thinking of things like that. We're interested in exploring new territories if the caller company brought those to us as well. So there's two ways to grow we can grow our existing territories and business and we are happy to look at expansive growth.

Donna Suen: Thank you all. The next question is from Thomas Norton again, from Pristiq. Given that your share price is trading at HKD 45 dollars compared to your book value of around HKD 175 dollars. You can buy your current investment portfolio at around a 75% discount to value with no costs or due diligence required. Why would you not buyback shares at these levels? Thank you.

Martin Murray: We will have a general mandate to buyback shares. We do consider it various points in time. Obviously, the current share price. And it is something that we can consider. At the moment there's a lot of investment opportunities, a lot of projects on the table. So again, it's part of capital allocation strategy and we will consider it.

Donna Suen: Thank you, Martin. Another question from [Indiscernible] from Citigroup. Can you tell us the expected timeline for the completion of SPO disposal? Thank you.

Guy Bradley: Martin, do you have [Indiscernible] to that?

Martin Murray: We said last night and to completion will be done over next 2,3 months.

Donna Suen: Okay. Thank you Martin. Next question is from you, [Indiscernible]. From a three-year perspective, is the company's growth still mainly from real estate? And what is the biggest challenge? Thank you.

Guy Bradley: What is the biggest challenge in real estate?

Donna Suen: Yes. Mainly from real estate.

Guy Bradley: I think from a three-year forward-looking perspective, there’s good growth coming out to Swire Coca-Cola as well as Swire Properties. And as much as we can get the pandemic behind us, I think you're going to see some very good growth coming out of Aviation. So it isn't all going to be a Swire Properties and great story over the next three years. I'm hopeful that we'll -- our three core divisions will show -- will benefit from that growth and one of the biggest challenges in growing Swire Properties -- well some of these projects are extremely big. They're big lump sum investments and there's a lot of moving parts in terms of pulling them all together and making them world class and sometimes that takes time and so the biggest challenge is try and take less time than they might, we have a great team on the ground in the Chinese Mainland we've got a great team here in Hong Kong and they have got lots of experience we're getting better at that over time.

Donna Suen: Thank you, Guy. A follow up question from Ryukyu. The capital expenditure plan is to invest 120 billion RMB in Mainland China in 10 years. Is it difficult to increase the dividend ratio in the future? Thank you.

Guy Bradley: Well, I'll let Martin sort out the dividend ratio, but that $120 billion isn't all in the Chinese Mainland, I think if you refer back to some of the charts, you'll see that at least 30% of the $100 billion will be allocation towards Hong Kong, and about 20% to a range of markets across our residential trading ground. Martin?

Martin Murray: To answer the question, no, we say we have a low getting just over 10% at the moment. We can keep getting up to the slide we mentioned was at 30% that gives us an immediate cash ability of over $50 billion. And so we've got plenty headroom in terms of our own good result, the cash we generate is very healthy and so, no, we think we can make all those investments, we will continue over that period to recycle some of the non-core assets that is an ongoing strategy too. But we see no impact on our target dividend because of those investment targets.

Donna Suen: Thank you Guy and Martin and interest of time we will take one more question before we wrap up. And the last question is from [Indiscernible] of MS. What kind of return would you be looking for from the healthcare business, say in five years if you have spent $10 billion would you be making 10% return or net profit of $1 billion of net income or lower? Thank you.

Guy Bradley: It looks like Martin again.

Martin Murray: Well, look we have [Indiscernible] we would be expecting, those returns over time. The investment in healthcare is going to be staggered, as Guy mentioned it takes five to eight years to build it from scratch or we invest in a mature business already. So that strategy is still to be determined though, it will meet all our [Indiscernible]. that we currently have.

Donna Suen: Thank you, Martin, Guy, and Karen. Now that concludes our analyst briefing. Thank you once again for joining us, hope you have a good day. Thank you.