Minor International Public Company Limited (MINT) Earnings Call Transcript & Summary

[Foreign Language] Good morning, and welcome to Minor International's 2021 Analyst Meeting. It is our pleasure to introduce the presentation, and as you'll hear from Mr. Dillip Rajakarier, Group CEO of Minor International. Joining Mr. Dillip during Q&A session are Mr. Chaiyapat Paitoon, Chief Strategy Officer; Mr. Brian Delaney, Chief Financial Officer; Mr. Kosin Chantikul, Chief Investment Officer. At the end of the presentation, we will open the floor for Q&A. And now I would like to hand over to Mr. Dillip for the presentation.

Hi, everyone. Good morning. [Foreign Language]. Hope everyone is keeping well and safe. Thank you for taking the time today to attend the investor presentation today for Q4 and also we will touch base on some of the hot topics, which is in play today. So today's agenda, as you can see, we have -- I'll give you a quick summary of our Q4 '21 review based on our 3 vertical business units, Minor Hotels, Minor Food and Minor Lifestyle. And then we'll also cover some corporate information. We would also like to touch base on what we have done in terms of our strong foundations, which we have established to position for recovery. And then we'll quickly also touch base on business outlook and our strategic priorities for 2022. So the first one is looking at Q4 '21 highlights. So we put it into 4 different verticals here. So Q4 '21, as we have all seen, the performance was very strong in most geographies. And Minor MINT reported a net -- a core net profit of THB 1.7 billion for the first time since COVID -- since we got hit by COVID. Minor Hotels reported a robust performance for Q4 mainly fueled by stronger trends across all geographies, particularly Europe, Middle East and the Maldives. And with the net profit for the first time in 7 quarters, we managed to post a net profit in Q4 of 2021. Minor Food, of course, with its strong fundamentals continue to be profitable, and it was profitable in Q4 '21 as well, and it's been profitable for the sixth consecutive quarter since we got hit by COVID. And I have to also mention that all the hubs in Minor Food reported positive net profit as well. Minor Lifestyle, again, turned into a profitable position in Q4, mainly driven by some of the strategic measures, which we took, including smart planning in terms of human capital and also cost-cutting measures, which we did and some of the store closures as well. And all these contributed to a profit in Minor Lifestyle in the fourth quarter. Now the second one is like to talk about promising long-term outlook. We have seen -- and this is from the data points we have today that we also -- based on what we are seeing today, we expect that the global hotel industry is -- will come back in 2022, mainly in Q3 and Q4 because I think we've already factored in Q1 and Q2, which could be a little bit soft compared to our expectations. But I think all the data points we're seeing today in terms of bookings -- in terms of booking pace, in terms of the different market segments, I think the indications are quite strong. So just to give you an example, the month of January, our booking pace in Europe was almost the same as what we had in the month of October last year, which was quite strong. So even though Europe is going through a low quarter, I think, as we know, what we call revenge travel and people wanting to travel that has really fueled our bookings for Europe in the first and the second quarter. Again Australia has now fully reopened for international borders and people who are vaccinated can travel into Australia. That's been a big step since 21st of Feb. And again, we have seen our trend in Australia for Jan, Feb and March has been very positive and actually has been quite strong. And for the first time, all 3 months, we did budget as well in Australia. So that's quite positive for us. Australia, as you know, the last 2 years went through a little bit of a hard time because they closed the borders, they closed their international borders. They also had their local lockdowns as well. But I think now they're pretty much opened up, and we see demand coming back quite strong. And this is mainly driven by domestic demand in Australia. So regional travel has really picked up which has actually contributed to our growth in Australia for Q4 and also Q1 this year. Of course, Maldives has been a hero for us. Maldivies and the Middle East. They continue to drive both rate and occupancy. Our rates in the Maldivies are much higher than 2019, which is actually -- it's a strong fundamental, which we have there. In spite of as you know, in the Maldives, prior to COVID, Maldives alone, the Chinese market was about 40% of their market mix. And for us, the Chinese market was about 15% to 20% of our market mix. In spite of losing that market mix because China is in a lockdown and China is not able to travel, we shifted pretty quick into other markets where we've really leveraged our sales force and our PR force into the new markets, and we've been able to capture new market segments or and in some existing markets increasing demand into the Maldives, which has really contributed to our hotels running at high occupancies and our hotels running at rates, which are higher than 2019. The next one is we continue to focus and to be disciplined in terms of our response to COVID-19. As we all know, the measures we took as soon as we got hit by COVID in 2020 has actually reaped benefits in 2021 and also which will help us in 2022 as well. We had to take some short-term pain, and that's mainly to strengthen our balance sheet and also to focus on our cash flows and to make sure that we were trending more towards positive cash flow in most of our business units. So as a result of that, we had to reduce CapEx. We had to put some of our projects on hold, and there was 2 reasons for that. One was to protect cash and the other one was because of the COVID situation in certain countries and also the lockdowns, we were unable to continue full force with the constructions. And that has -- so therefore, those 2 actually led to delay some of our projects, which will open this year. For example, our project in Maldives since the new AVANI which will open -- which was scheduled to open end of last year. That will open in the third quarter of this year. Ubud in Bali also will open this year. And we just opened -- actually Khao Lak as an AVANI this week. Again, which was scheduled to open in the last few quarters ago. And that's mainly because of CapEx, protection of cash and also our ability, like the construction, we couldn't deploy construction force because of COVID as well. So those things got delayed. The sale -- one of the things which also in our plan in terms of strengthening our balance sheet, one of the last things we did last year was to also close on the sale of 40% of our interest in 5 of our assets in Thailand. This was a great strategic move pretty much strengthening our relationship with our partners in Abu Dhabi, and we were quite fortunate enough to close the transaction well ahead of schedule as we did with other transactions as well. And it's nice to have a strong partner, ADFD, who have actually come in as a shareholder of 40% of our interest in our assets, in the 5 assets in Thailand. As a result of this, as you all have seen, our net D/E has fallen below our debt covenant today. We are running at about -- we disclosed our net D/E is 1.36. Our debt covenant is 1.75. So we are well below our debt covenant in terms of our net D/E, which was again done ahead of schedule. In spite of having waivers from our bondholders, we managed to bring our net D/E way below our threshold. Free cash flow continues to be positive. And for the third quarter, it was THB 3.7 billion. Whilst the cash in hand remained at THB 25 billion at the end of 2021. So again, we have been preserving cash, and we've been generating cash as well as a result of Q4 turning into a profit. So that has also helped us with the cash flows as well. And the last one is the stronger foundations in terms of positioning ourselves for recovery. So as we said, like in the Maldives and in the Middle East, we have adopted a different strategy in terms of sales and commercial operations. Looking at new markets, looking at loyalty, looking at how we can tap into some of the new segments as well, which is health and hygiene or health and wellness, some for kids, the timeshare or Anantara Vacation Club, which has really helped us to actually position ourselves for recovery for this year. So again, we look at leveraging our brands and also leveraging our sales initiatives in different classes of products and services to really create that demand, which will help us with a strong recovery for this year. Minor Food, again, will adopt it -- it will continue to adopt its strong recovery and also continue to focus on its distribution channels, and we'll expand. Again, we are looking at expansion on Minor Food as well in terms of selectively expanding our outlets, especially in China. So again, China has been one of our other key markets outside Thailand. And therefore, we continue to focus on China and also Australia as well. In Australia, we were able to successfully launch Bonchon into Australia as well. We've launched 1 store as a test store, which has been quite successful, and we see the revenues or the sales coming in quite strong. And now we are hoping to roll out that brand into Australia in the coming months as well. And this is all using our existing infrastructure and our existing systems and existing people in some of these hubs we have, whether it's Australia or whether it's China. So therefore, we don't actually see huge cost burdens launching these new brands or test marketing some of these new brands as well. It actually benefits us from scalability and everything goes to add to contribution because our costs are already fixed. We did some smart planning in terms of HR and also cost reductions as well, which has actually helped us to increase our margins as well. In the long term, both Minor Hotels and Minor Food will respond to what we call the new trends on what the customers are focusing on mainly on guest experience, guest wellness. Innovation is one of our key hot topics and digital transformation has been the backbone of this company, which has actually helped us to go through COVID in the last 2 years as well. And the last one, the last pillar is, of course, it's -- we've been putting a lot of resources and time in terms of sustainability because I think sustainability in most of our hotels and most of our food brands is becoming quite important for us and also having the culture and the mindset of sustainability from top-down has been fully supported even at the board level. Sustainability is one of our Board agenda and our 5 year plan agenda as well. So therefore, we continue to focus on sustainable strategies. We have KPIs now, which are focusing around sustainability as well. From top management to the people at the unit level as well. So therefore, this will help us to actually reaffirm our support in terms of sustainability that by 2050, we were trying to be carbon neutral as well. So that's one of our targets, which we are working towards as well. Moving on, just to look at Q4 '21 performance recap, I think as you have seen Minor -- MINT core revenues increased significantly, 89% year-on-year. And pretty much, as I said, due to the strong rebound of the hotel business in all geographies and which is fueled by high travel, higher travel activities and mainly because of most of the geographies actually easing their lockdown or restrictions or some eliminating totally the lockdown or restrictions, which has actually helped us a lot. And also -- we've also had some good gain on real estate, what we call mixed-use sales as well. And together with Minor Food, in terms of continuing to focus on the top line and also margins and continue to be profitable again in the last quarter has actually helped us for Q4. So if you look at our core revenues, we actually grew from THB 14 billion to THB 26 billion. So that's an 89% growth year-on-year. And then if you look at the revenue contribution, Minor Food is 23%. Our Lifestyle is 3%, and Minor Hotel continues to be the largest share, which is about 74%. We then dial down into net profit. Net profit this year, as we have seen, our numbers have grown to THB 1.6 billion or THB 1.7 billion from a loss which we had last year. Q4 loss was about THB 4.2 billion loss. So it's a significant turnaround in Q4 this year. And we have seen Q-on-Q the trend. The trend has been positive. The trend has been improving. And again, for us to close Q4 on a high note for the first time in Minor, in MINT to be profitable was a great achievement as well. We then move to Q-on-Q. So here, again, the third quarter, we were THB 19 billion. And the fourth quarter, core revenues increased to TBH 26 billion. So that's a 35% increase. Again, as I said Q-on-Q, we've been improving our performance. Q-on-Q, we've been reducing our losses. So Q3, this year, 2021, we had a loss of THB 2.3 billion or THB 2.4 billion loss, and that turned into a profit in Q4 to THB 1.6 billion. So those are the key highlights on Q-on-Q. The next 1 is our international presence. So this is something which we have shared with our investors and also our shareholders. So we continue -- like Thailand is still 25% and international is 75% in 2021. And again, usually, it's about. The split is about 70-30 but again, this is mainly driven by the international hubs rebounding and their performance, the performance coming much stronger than Thailand, mainly 2 reasons and Thailand, the hospitality sector still continues to be challenging with -- because of the restrictions and some of the lockdown issues we have, even though the government has slowly reducing some of these until we see seamless trouble, this would be a challenge. So therefore, the mix actually moved more towards international. So we are getting 75% of our revenue contribution coming from international market today. We then go into Minor Hotels. So Minor Hotels some of the key financial highlights is that -- the revenues again significantly grew by 172% year-on-year due to stronger business rebound across all geographies and also the real estate or mixed-use sales. And also like some of the European government subsidies, which we received as well. Again, we have a higher flow-through from revenue. That has actually helped us with the margins improving as well, especially with NH and also real estate business continues to focus on cost minimization measures and also Minor Hotels reporting a net profit for the first time in 7 quarters of THB 1.2 billion in the fourth quarter has helped us a lot in these numbers as well. So -- and it compares to a core loss which we had of THB 4.3 billion in the same quarter last year. So that's a significant turnaround for mining hotels this year. So our net back -- just to give you an idea, our revenues last year was THB 7.2 billion. This year was almost THB 20 billion. So that's almost 3x. Our EBITDA went from a loss of THB 1.5 billion to a profit of THB 7.1 billion. So as we can see, as the revenue starts to ramp up and the flow-through becomes much stronger. And that's mainly because of the measures we took in 2020 with regards to technology, with regards to digital transformation, with regards to cost measures, both in terms of smart resource planning or manpower planning and also some smart cost cutting or savings, which we had as well. And this resulted in a net profit of THB 1.2 billion compared to a net loss of THB 4.6 billion in the same quarter last year. And if you look at the prior quarter, we still made a loss of THB 2.4 billion in Q3 of '21. And in Q4, we turned around to a profit of THB 1.2 billion. And if you look at some of the performance by business, they're all in green today, which is quite positive. So owned and leased assets, Q-on-Q was up by 30% in terms of revenue, management letting rights, which is predominantly Australia was up by 34% Q-on-Q; and year-on-year was up by 5%, and managed hotel was up by 96%. That's a big jump. And that's mainly driven by Maldives and Middle East as well. And then we have year-on-year, the jump was 104%, so more than double. And then mixed-use business was up by 82% and year-on-year, we were up by 121%. If we then look at the business performance by geography, again, they're all in green. Thailand, Q4 revenues were up by 318% year-on-year, up by 100%. Europe continues to be strong, again up by 23% and 322% year-on-year. Australia, again, 34% up and 4% up. In spite of Australia having a lockdown, we suffered lockdown in October and November of 2021 and December, the turnaround was very, very strong. And then, of course, Maldives continues to be one of our heroes; and Middle East, up by 113% and year-on-year up by 60% because last year also, our performance was very strong in both hubs Maldives and the Middle East. And this year, we continue to be even stronger in both -- in these both countries as well, in these both segments. And the Americas are slowly starting to open up. So we see a growth of 45%, revenue growth. And year-on-year was up by 76%. And because last year, I think some of the hotels were closed. And this year, with the restrictions easing, we see that the Americas are also coming back quite strong as well. We then go to the next slide. So again, this is the international presence we have. So as I said, the graph is quite skewed, 91% coming from international and only 9% coming from Thailand. And mainly because -- this is mainly driven by the lockdown and the restrictions we are having in Thailand, we had in Thailand in Q4. But otherwise, normally as I said before, our -- the revenue contribution is about 80-20 based on Thailand having a normalized year. But unfortunately, Thailand was suffered because of the lockdown and the number of cases increasing in Q4 of last year as well. Okay. The next one is when we look at the Minor Hotels portfolio, just some quick call outs is that when you look at the core revenue contribution, owned and leased hotels actually contribute almost 79% of our revenues are contributed by our owned and leased assets. So again, that segment continues to be strong. Even though, yes, we have a risk in terms of owned assets and leased assets carrying both in our balance sheet and also exposed to the lease rental as well. But the returns are strong on this owned and leased assets. Our managed hotels contributed 3%. Management letting rights gain, which is predominantly Australia contributes 7% of our revenue, and mixed-use contributes about 11%, which also includes real estate and timeshare as well. And then -- if you then look at the revenue contribution by geography, as you can see, Europe continues to spear ahead. 71% comes from Europe. Americas is 2% because we're starting to open up our hotels. Australia and New Zealand is 7%; Maldives and Middle East, 4%; and Thailand is only -- Thailand is 10% and the others come to about 6%. We then go into details. So if I dive into owned and leased hotels. So as we can see, system-wide RevPAR increased by 278% year-on-year, mainly led by recovery in some of the key regions and the higher travel demand we have seen, which has also helped us with increasing our average room rate as well. So we were able to uplift our ADR as well. So when you look at the ADR uplift year-on-year, it's about 38%. And Q-on-Q, it's about 7%. So that, again, is quite strong. RevPAR uplift, of course, is 278% year-on-year and Q-on-Q, it's about 27%. So these are some of the key highlights I would like to touch base on Minor, on the lease -- on the Minor Hotels, the leased and the owned business segment as well. What we -- what you can see is if you look at the last quarter, which is October, November, December, 73% of our hotels is almost -- it's above our 2019 levels, which is quite a positive trend, actually. The trend is becoming stronger and becoming positive. So we only have about 27% drop. And therefore, 73% of our portfolio is trading above at 2019 levels, which is great in terms of RevPAR growth. The next one is moving on to owned and leased assets, focusing on Europe and the Americas, predominantly NH. Again, as you see, occupancy year-on-year grew by 33%. Even though like Q-on-Q, we were -- we are still trailing a little bit behind 2019. But when I look at 2020, I think the indicator is quite strong in terms of recovery. So what we are saying here is, if you look at the graph down 30% is below our COVID levels. And 5% below ADR in terms of pre-COVID as well. So I think we'll be able to catch up on this pretty quick in the coming quarters, especially Europe going into a high season in the second and the third quarter, I think the demand will be quite strong. Geographies by breakdown, as you can see, the revenue breakdown. Spain contributes 31%; Italy contributes 18%; Benelux contributed 17%; and Central Europe contributes 29%. So these are our 4 big hubs we have. And again, if you look at the system-wide RevPAR increase index in terms of the number of times that will give you an indication on how strong the demand is coming back. The next one is owned hotels in Thailand and the Maldives. So on the left-hand side, we talk about operational stats for Thailand. Again, RevPAR for our owned hotels improved both year-on-year and Q-on-Q. In spite of the lockdowns, Thailand reopened international tourists on the 1st of November. And then domestic tourism started to also resume in September following the easing of international provincial travel restrictions and was further boosted by also, We Travel Together campaign, which was instigated by the government in order to boost domestic tourism. Again, our numbers have been quite strong. And above industry levels as well today within Thailand. Looking at Q1 year-on-year, our occupancy last year, Q4 was 24%, this year was 30%. So the occupancies grew. But what's remarkable is the rate because for us, we focus a lot on the rate because especially because of inflationary cost increases and everything else, our focus is more on the rate. So our rates increased year-on-year by 24%, which is a great result for us. And we continue focusing on the rate and also balancing the occupancy as well. We then move to the statistics for the Maldives. So Maldives coming from a high base in 2020, in spite of that, our occupancies in 2021 compared to 2020, the same quarter grew by 19%. And more importantly, the ADR in U.S. dollars grew by 22%. Now that's a big increase, especially, again, as I said, our focus is new markets, our focus is market mix and our focus is to drive ADR, which actually has a greater flow-through, which has actually helped us with our margins as well. And therefore, the RevPAR increase on Q on -- on year-on-year is about 70% compared to the same quarter last year, which was also a strong quarter last year as well. But this year, in 2021, the fourth quarter was much stronger than the same quarter of 2020. Okay. Moving on. On the asset-light business, again, as we say, we always call our Minor -- MINT strategy as asset right, which is the balance of owned, leased and asset-light business just to leverage the maximum shareholder return. And on the asset-light side, which is mainly management letting rights or service suites predominantly under the Oaks brand in Australia and New Zealand, together with all the management contracts we have, the RevPAR of management letting rights increased by 10% year-on-year in Australian dollars in local currency. And that was great because in Australia, it was important for us to increase our RevPAR again, because of some of the cost increases we have. But when you look at the trend on the management letting rights, we are now above -- in December, we are now above the pre-COVID levels, which was quite positive. October -- September, October and November suffered a little because Australia imports COVID restrictions and lockdown in some provinces. And that actually impacted our numbers. But December, as soon as the borders opened and as soon as international -- as soon as local provincial travel borders open without restrictions, the December was a gangbuster and that was -- we went above 2019 of pre-COVID levels for December. We then go to managed hotels. Again, managed hotels continue to have a stronger outlook as well. Our system-wide RevPAR actually increased year-on-year by 114%. Again, driven by our strategy in terms of both ADR and occupancy to drive those 2. And as you can see, the graph below, we are trending upwards month-on-month. The trend is quite positive. We then look at hotel expansion pipeline. So these are some of the hotels, which scheduled to open in 2022, '23, '24 and '25. And one thing to note is that these are hotels where we have signed the management contracts on the managed hotels, and they are in construction, in progress. And therefore, unless otherwise, there are some huge external factors. These hotels should open this year and next year as well. Just some callouts. AVANI Khao Lak opened already. Paris will open this year. Nice, we are targeting to open at least by the end of the year, which will be another Anantara in Europe. Milan, Alicante, Germany, Mexico, Italy and Australia. Again, under the NH collection, as you can see, NH collection is gaining some momentum and we should be opening those hotels this year as well. And then, of course, under the NH or nhow brand, we should be open in our hotels in Italy and also in Germany as well. And then below that, we have the hotels under the managed contract scheduled to open this year. There are -- there have been some delays, as we all know, due to logistics issues due to construction some of the challenges in construction. And therefore, these hotels might slip a little bit, but hopefully, they will open within this year or the latest by next year as well. So these are some of the pipeline we have. So we have 63 hotels and about -- adding another 12,500 rooms opening as well. And you've seen the momentum has been quite strong even during COVID. We did some hotel rebrands. We did some new hotel openings like we opened the first hotel on the World Island in Dubai under the Anantara brand, which was a great achievement, and it's a fantastic hotel, which we opened and its position at the high end as well. We signed management contracts with Bahrain. We're signing management contracts in Saudi because that's another new market, which is going to get some good momentum, especially for Thailand, based on the relationship issues, which has now been resolved, as we all know, between Saudi and Thailand, and this will give a great momentum and another market segment for us to continue to push our friends in Saudi to come and visit Thailand because the Saudis, we understand our brands, they love Anantara because they received the Maldives, they received the Middle East. And therefore, once Thailand opens, we have another new market segment to jump on, which will be the Saudi market segment. Both outbound and inbound is quite strong. As we can see, Saudis investing trillions of dollars in terms of expanding their hospitality business. And we are -- we've been able to handle link and also get some management contracts in Saudi. And on the food side, we're also hoping to expand our food brands also into Saudi as well because now there won't be any restrictions between Thailand and Saudi, which is another great opening as well. Okay. The next one is the mixed-use business. So again, the mixed-use business, again, has been also one of the key contributors to our Q4 numbers, in '21. Both the residential development and the Anantara Vacation Club continue to perform quite strong. In spite of Anantara Vacation Club, having challenges not being able to tap on the Chinese tourists, but we've been able to open our China office and get business out of there and actually promoting members within our portfolio in China, and that has helped us to navigate through this tough time we had in Thailand. And therefore, like if you look at Anantara Vacation Club, actually continues to increase the number of members has gone up from -- year-on-year has gone up by 18% -- 8% from 15,200 to 16,500 members. But more importantly, we've also been able to keep the membership base quite strong, and we've been able to offer our existing members, other locations, whilst Thailand has been closed or we had restrictions in Thailand. Of course, on the residential project, it's nice to see some new pipeline coming in as well, which we haven't and because this is one of the legs of Minor Hotels, which is to create residential as one of our core business. And therefore, we will continue to expand on the -- and make sure that this becomes one of our core business as well so that it doesn't create any spikes in -- on a Q-on-Q basis or on a quarter or on a year-on-year basis. So we are looking at some new pipeline as well, which we are working on. As we all know, this is some of the existing pipeline, which has been disclosed today, like including Anantara Siam, the residences where we're hoping to build about 73 -- or about 7,200 condominium or what we call residential units. On the back of our success we had with Sunridges units, which is just next door. We sold at one of the highest price in terms of on a per square meter basis as well. So -- and also the Silom office, which will launch in 2023, and that is on schedule. We have a 40% JV here. Aberdeen Hills continued to perform. We have some units to sell there. And Anantara Ubud residences, which will be launched, again, that's a pipeline. So we will continue to add to this pipeline so that the residential unit -- the residential business becomes one of our core businesses going forward as well. The next one is, I think most of you or the whole world is worried or is anxious to understand what's happening within the global economy. With regards to the impact between the Russian and the Ukrainian disputes we have. So just to highlight, even though we have a minimum impact or exposure in these both countries we are continuing to monitor the situation because we do have Russian guests who stay with us in the Maldives. We do have Russian guests who also stay with us in the Middle East. And we do have Russian guests to stay with us in Thailand as well. So when you look at the key feeder market for MINT, it's about 2% the Russian tours. And Thailand has 2%. Maldives, of course, has 13%; Europe and LatAm has 0.5%. Sri Lanka is 7% because Sri Lanka is another country, which has opened its borders and there's no travel restrictions. And the Russian tourist segment there is about 7%. And Middle East is 3%. So our biggest exposure we have, as you can see, is Maldives, Sri Lanka and the Middle East. We've already taken steps to mitigate this risk. And we -- so far, we are monitoring it quite closely with regards to delays, with regards to cancellations. And we are filling them. Those segments with other segments or other markets which are traveling, which continue to travel quite strongly into these countries. For example, in the Maldives, I think April is going to be Easter. And Thailand, of course, April will be Songkran or the Thai Festive New Year's holidays. We see the demand coming quite strong. In the Maldives mainly driven from Europe because of the Easter break and also the school break as well and Sri Lanka also is picking up as well. So we continue to monitor these 2 segments quite carefully to make sure that we don't have a backlash because of this dispute. Our immediate response to the situation, as you can see, and as I've said, we continue to shift our marketing strategies into new key 3D markets whilst -- we hope that the issues will be resolved in the coming weeks. Our supply chain team is also monitoring our costs because, of course, the cost of fuel has increased as we have all seen the oil cost per barrel has -- is hitting record level of $110, which will, of course, have an impact in terms of supply chain and also mainly in the Maldives as well where everything is driven by fuel as well. So -- but we continue to monitor the situation quite carefully and taking measures to mitigate the risk as a potential of this conflict we have between these 2 countries. The impact on the macro backdrop, as we all know, is that, as we know, Russia is the world's third largest producer of oil and the second largest producer of natural gas. So of course, we see the cost of oil and the cost of gas going up, especially some of our -- in Europe will have an impact in other countries, not as much as Europe. And then we look at Portugal and Spain actually use little Russian energy. So that will mitigate some of our risk. Germany gets more than half of its natural gas and more than 30% of the crude oil supply from Russia, and we've seen some increases there. And Russia and Ukraine was stop, they are the weak exporter, both account for about 29% of the global market in terms of the wheat. We now move to Minor Food. So Minor Food, as I said, is continuing to perform well and continue to be profitable for the -- for the seventh consecutive quarter -- sixth consecutive quarter, both cash flow-wise and also profit wise as well. All hubs reporting positive net profit in Minor Food -- revenues increased by 3% year-on-year because last year also, we switched gears to delivery because we had to focus a lot on delivery and our delivery actually was quite strong. The delivery channel was very strong in spite of some of our dine-in restaurants who are closed because of the restrictions and the lockdown. And we're coming from a base of last year to this year, a 3% increase in revenue. EBITDA coming again from a higher base on a Q-on-Q was about 23% Q-on-Q. And on a year-on-year slight drop, mainly driven by some of the stores were closed in this year and last year, Q4 was quite strong as well. Net profit, as you can see, again, Q-on-Q has been positive and year-on-year. It's about a 42% drop on the same time in the same quarter last year. We look at operational stats. I think one of the key drivers for our net profit drop was our BreadTalk hub in Singapore. And there, the profits declined, which actually impacted mindful growth. In spite of Thailand continuing to be strong, the BreadTalk in Singapore actually continue to pull down our profitability, the performance within Minor Food Group. China continues to perform, and China was good and also Australia as well because Australia was starting to rebound. So when I go into the operational statistics, you look at same-store sales growth, it was slightly negative and total system sales growth has been positive at 6% compared to year-on-year. The same quarter last year was negative 15%, and this year was positive 6%. And as you can see, like both same-store system sales and total system sales are above the pre-COVID levels. You do see spikes in April, May and June and mainly because of the lockdowns we had. But then you see the trend plateauing and now the trend continuing to be positive as well. We then look at the international presence. So Thailand continues to be strong. 56% of our revenue comes from Thailand and 44% comes from international. And as you can see on the international market, with the different brands, our biggest hubs are Australia, China and the Middle East and some of the other joint ventures we have in Vietnam and other -- Cambodia and other places as well. So the operational statistics, 95% of our stores were opened; and 5% of our stores remain closed. And this was mainly our strategy in terms of we look at cash flow positive and EBITDA positive. And if we cannot make the store EBITDA positive, we continue to close the store until we can make the stores EBITDA positive, which will also help us to become cash flow positive as well. Minor Food portfolio, again, the next slide. If you look at systems-wide outlet contribution, our owned stores contribute at 50%. So it's a balance. We have a 50-50 balance, 50% comes from our owned stores and 50% comes from our franchise stores. Out of 2,389 stores we have. And if you look at the revenue contribution, owned stores contribute 93% and the franchise stores contribute 7%, mainly because of the franchise fee. So again, the owned stores, we have -- we take the full P&L into account here. The system-wide outlet contribution, again, Thailand contributed 74%; Australia, 14%; China, 6%; and the others are 6%. So again, we have 3 main hubs, which is pretty much Thailand, Australia and China, which contributes 74% in Thailand, 14% in Australia and 6% in China. So that's about 94% comes from these 3 hubs. Moving on. Operational statistics by hub. So looking at Thailand. Thailand Hub reported a strong total system sales, mainly because of the outlet expansion and reopening of some of the stores which we had closed, which were able to be cash flow positive and EBITDA positive as well. And system sales was flat again, coming from a stronger year last year. But grew on a Q-on-Q basis. So on a Q-on-Q basis, we focus on the food group to make sure that the trend is quite positive. And mainly, this was mainly driven by the gradual reopening of our dining stores and also extended hours in terms of -- extended operating hours in Thailand. So as we know, last year, we had to close our stores at 9:00, and then it got extended to 11:00. So that helps a lot in terms of the later we are opened, we're able to capture more of the dine-in business instead of just focusing on delivery. So the dine-in business is coming in quite nicely because of that. China hub continues to report a strong total system sales, mainly also because of the store expansion as well. However, the system sales was under pressure because of some of the outbreaks we've had in China in certain provinces, which has actually led to reduced traffic in terms of our customers and a temporary closure of some stores in China. So again, China continues to battle with COVID and they're trying to implement a 0 COVID policy and they're quite strong about that. And therefore, like between the provinces, we are still seeing some soft spots because of that. Moving on to Australia. The decline of total system sales was mainly because of the decrease -- due to a decrease in system sales. However, the business is becoming -- it's coming back quite strong. And as I said before, Australia, October, November had some challenging months because the provinces were shut down, interprovincial travel was not allowed, and also in certain parts of the country, there was lockdowns as well. So both the Hotels and the Food had a little bit of a soft spot in October and November. But in December, as you saw, the trend has picked up and also we see the trend picking up in December within Minor Food in Australia as well. The next topic is, again, it's on our radar, and it's also one of our key concerns and also one of our risks, as I covered before the Russian-Ukrainian crisis. And also like if you look at Minor Food, what are some of the issues we have in terms of the rising cost, the rising cost because of price of fuel increasing, inflationary increase, cost of salaries, cost of wages going up. And therefore, what measures we have taken in Minor Food, not only just Minor Food, but also Minor Hotels as well. So what we've done is, particularly in Minor Food, we've been building up stock. So basically, the adverse price impact, at least until the second quarter of this year, should not impact us too much in terms of our margins and all those things. But we are taking measures. And the measures we have taken is also price increase. So we are implementing a price increase in certain menu items because of the inflationary increases and our cost of goods increasing as well. And also cost of labor going up because of cost of salaries going up as well. We are using multiple suppliers to create competition in terms of our bargaining power. We're also using suppliers globally to get the best pricing as well. We are securing future contracts also because of the good relationships we've had over the years with our suppliers as well. And the last one is, we continue to enhance and retune our menu engineering, what is between product and also promotion in terms of pricing, in terms of menu items, in terms of menu engineering as well. So I think Minor Food, one of the things we would like to highlight is Minor Food profitability for this year. I think it is expected to be not too far out from our pre-COVID of 2019, which will be quite a strong comeback. I think we are hoping to get Minor Food, the performance either back to 2019 or about 2019 profitability levels. Moving on, Minor Lifestyle. Again, it's a business which is 3% of our revenues, but we continue to focus again on this as well. Our Q4 '21 revenues declined by 10%, but on a Q-on-Q basis, it was an improvement of 84%, mainly driven by the strong sales growth in home and kitchenware business, together with the e-commerce platform which we set up, and that has helped us to alleviate some of the softer performance in the Fashion and the Manufacturing sectors. But if you look at the results, both EBITDA and net profit turned positive in Q4 despite a drop in revenue. So here, as we see year-on-year, our net profit last year for the same quarter was THB 124 million loss, which we turned into THB 135 million profit in Q4 this year in spite of top line declining because of the restrictions and the lockdown measures. Again, when you look at the number of shops, the number of stores, the same-store system sales, it's slightly up compared to the same quarter last year. But the total system sales is better than the drop we had in the same quarter of last year as well. But when you see the graph, we are now trending above the COVID levels, which is quite positive as well, both same-store and total system sales as well. That brings me to the end of the three business units. And just quickly, next is to touch base on more of the corporate strategies and what we're doing at the higher -- at the MINT level, again, touching based on our CapEx and balance sheet strength. So here, as I said, our CapEx plan, including maintenance CapEx, including renovations, pipeline, everything was suspended in 2020 and 2021. And we continue to monitor that in 2022 and going forward as well, pretty much to preserve cash and to make sure that there is no leakage as well because we don't want to open up hotels too quickly if there is no turnaround in the business. So we would like to push it a little bit down the road so that we can then make sure that whilst the economy is recovering, we can also then open the hotels in terms of good timing, so that the hotels will not be bleeding cash. As you can see, our CapEx plans have been reduced. And you can see between Minor Hotels, Lifestyle and Minor Food, Minor Hotels, of course, has a big chunk of the CapEx, both in terms of maintenance and in terms of new projects which we are launching. We took measures, again, as we said. What also helped us with the balance sheet is also the reissuance of our corporate bonds, perpetual bonds and also the asset revaluation or the land revaluation surplus, which we were able to benefit, which has brought our covenants way below our threshold levels. In addition to the three warrants which we issued like the MINT W7, W8 and W9, we will further strengthen our equity base and all these three warrants are performing above -- they're already in the money as we know. Our share price continues to be stable and continues to, in spite of the last 3, 4 days, I think we continue to -- it's been showing a slight upward increase as well. And the MINT, as we know, we continue to have A TRIS rating, and we continue to enjoy that as well. We then look at the leverage. So again, as I said, our leverage internal policy, we've managed to bring it way below our internal policy of 1.5 to 1.36. We have cash on hand as at the end of Q4 '21 of over THB 25 billion. Outstanding debt excludes lease liabilities, which as per the covenant calculation as well, and we assume 100% of the conversion of our MINT W7 at THB 21.60 per share and MINT W8 at THB 28, which is already in the money, and MINT W9 at THB 31 at the moment. We then move on to the strong foundations, talking about our team in terms of strong foundations position for recovery. So here, as I said, like we look at business recovery and cost control led flow through to improve our margins. So basically, smart human resource managing and cost control measures have really helped us since 2019. You can see the quarterly year-on-year cost control measures, which we have taken, excluding noncore items. So again, we continue to focus on costs. We continue to drive top line as well, which will have a better flow-through also. And when you look at our EBITDA, the margin actually, in Q4, we are up to 32% or 32.6%, which has been a huge turnaround from Q4, which was negative 0.4%. We've now moved to plus 32.6%. Of course, during COVID, our EBITDA margins were impacted, which was negative 27% in second quarter of 2020, when we got hit by COVID. That was the peak. And in the last quarter, in 2021, Q4, we've managed to get it up to 32.6%. We then move to the cost reductions, also preserving liquidity. As we know, there are some uncertainties as well, which we have planned. We always say, expect the unexpected. That's always been one of the culture of Minor. And as a result of that, we were able to move quickly in 2020, strengthening our balance sheet, both in MINT and also in NH, because they're two separate public listed companies. We continue to do some strategies in terms of balance sheet strengthening in 2021, which we achieved well ahead of time and well ahead of our timeline forecast as well. But saying that our CapEx reduction plans, again, we reduced our CapEx by about 20% -- 30% in 2020. We are hoping to reduce it again by another 50%. And then, we are looking at another reduction within mixed-use of about 31%. So these are some of the plans we have in terms of preserving liquidity, but making sure that it doesn't have a huge impact on our bottom line in terms of profitability as well. So it's a fine balance between the two, between preserving cash flow and also driving earnings as well. So it's all about timing. And therefore, on some of the projects, we've pushed the timing forward. As we see the business recovery coming quite slow, we've pushed the timing forward to match with the business recovery timing as well. The next one is, again, we say that -- we've always said that we needed to make sure that our cash situation was quite strong, and that was one of our key drivers in 2020, when we got hit by COVID, is to strengthen our cash and to make sure that we had enough cash, both for expansion, and if there are any unexpected events, at least -- we did forecast at that time COVID to last for about 2 years. And that was our worst case scenario planning, which has become a likely case now. But at the same time, we have cash on hand of THB 25 billion, and we also have further working capital facilities of another THB 33 billion. So that's about THB 58 billion of cash which we have in our war chest to make sure that we go through -- or we have taken through the last 2 years and to make sure that there's no hiccups in the coming years as well. As you can see, the free cash flow has been on a positive trend. So if I look at 2020, first quarter was negative 6.4 and has continued, and 2020, when the COVID was bad, it went down to negative 8.7. Since then, it's continuously becoming on a positive trend. So 4.4 to 4.7 to 3.2 to positive 2.8 to plus 4.9 and now plus 3.7. And these are net of the asset sales and net of the NH collection, the Calderon sale, which we had, which also helped to spike up the cash flow. And it's also net of two hotels, which we sold in the Algarve in Portugal, the Tivoli Marina Vilamoura and the Tivoli Carvoeiro as well, and it's a net of 40% interest in the five assets in Thailand as well. Okay. Next one is the stronger balance sheet position. So again, as we know, if I look at both MINT and NH as two separate public listed companies, and the MINT level, the corporate bonds were issued. As we know, we issued THB 10 billion of corporate bonds, successful. We had a 5-year callable perpetual bond of THB 3 million, which we issued to replace the 3-year callable USD 300 million of perpetual bond in December 2021. And the company and the senior unsecured debt, like the ratings still remain at A and the subordinated perpetual debentures at BB+, which has been affirmed by TRIS with a negative outlook they maintain. The extension of the waiver on the covenant testing, we have it until end of this year. So the first covenant testing will be in March 2023 for December this year. And the change in the covenant calculation to exclude impairment arising from COVID-19 from the mixed equity until 2024. So we have that for another 2 years. The sale and management of the two hotels in Portugal for EUR 148 million helped to further strengthen our balance sheet and our cash flow as well. The sale of our 40% interest in the five assets in Thailand to ADFD, Abu Dhabi Fund, for USD 104 million or USD 105 million helped us to further strengthen the cash flow and the balance sheet and also reduce our debt. The higher equity base, partly coming from the land revaluation surplus, was about THB 12.6 billion, which again helped us with our D/E as well, strengthening our balance sheet. Moving on to NH. We managed to issue the EUR 400 million unsecured -- the notes which were due in 2026, to redeem the EUR 357 million loan, which was due in 2023. So we moved the maturity wall from 2023 to 2026 in terms of the notes of EUR 400 million. We also managed to move the maturity extension of the syndicated facility, which is the ICO loan revolving credit facilities from 2023 to 2026. The ICO is, again, a grant or a loan which was given to us by the Spanish government at a lower interest rate. And then the extension of the waiver of the covenant testing on all material loans until December 2022. We also managed to do a sale and leaseback of NH, the Barcelona Gran Hotel Calderón for EUR 125 million, to further strengthen our cash flow and also our balance sheet there. And we also did a rights offering of about EUR 106 million, which completed in 2021, which was fully subscribed as well. So that helped us with another cash injection of about EUR 106 million at the NH Group. Moving on to the business outlook. Again, as I said, if I take it by some of the hubs we have, some of the main hubs, Europe being one of the major hubs due to Hotels exposure. So several European nations have started to, as we all know, have started to reclassify COVID from being a pandemic to an endemic, which means it will be treated like a normal cold, flu and we have to deal with it as a normal flu or an endemic. We see a strong pickup on the tourism in Europe and the gradual recovery of the business coming in. These are the data points we are seeing based on our pickups on a daily basis in terms of bookings coming through and in terms of our pipeline building up for the coming months as well. NH Group has been holding up its average daily rate, or ADR, despite lower business activities, to ensure that the recovery is in place. And since the last week of January, the pickup of reservations in Europe has been well observed, meaning that the worst weeks of Omicron are behind, and that's what we are seeing. So we're seeing a strong pickup coming on a month-on-month or on a day-on-day basis or a week-on-week basis in Europe, which is quite positive. We are also seeing a strong turnaround of the second half in terms of bookings and corporate bookings coming through as well, as a result of the easing of the restrictions also. Australia is all fully opened and international borders have been opened for fully vaccinated travelers since 21st of Feb. International travelers will also be able to take part in terms of driving tourism, and also our Food sector as well there, in addition to the domestic market. Thailand continues to show some easy. The test and go, again, has been further relaxed from -- the first stage was 1st of Feb, where they introduced Test & Go again, which was quite good, but we had two Test & Go. On the 1st of March, now, that has been reduced to just one. So basically, you come to Thailand, you have one test and then you go. You're able to move around. Three more sandboxes from the destinations from Krabi, Phang-Nga, Surat Thani were also reopened as well, which again helped. And also, the fourth phase of the We Travel Together campaign to boost domestic tourism has also helped us as well. The Maldives. Again, the Maldivian government has been quite strategic in terms of opening the country pretty quick in 2020. And as a result of that, they have benefited from the strong tourism which is coming to the Maldives as well. Both our food and hotels have done really well as a result of that. And they are recovering at a much faster pace. We were quite happy to see our team members in the Maldives when, in 2021, all the hotels in the Maldives beat their budgets by almost 60% or 70% more than what was budgeted, which was showing a strong recovery as well. So I think together with our efforts in terms of driving RevPar, pretty much focusing on rate has also helped our margins to increase quite significantly as well. Okay. On Minor Hotels, in terms of our key strategic priorities, we have four. One is to strengthen our brand equity, and we launched the GHA, what we call Global Hotel Alliance, Discovery 2.0 loyalty program. And this, we hope, and we can see, this will be another game changer for Minor Hotels in terms of loyalty and discovery as well. So this program has been launched, which means you can travel not only within Minor Hotels, but within the Global Hotel Alliance platform, and there are quite a number of hotels in the alliance. And therefore, this will also help us to reposition our loyalty program and compete with the Bonvoys, with the Hiltons and with Hyatt passport program as well. NH will be joining this program, again, bringing another 10 million or 11 million members into it, and therefore, strengthening the platform to about 21 million members, which is as big as the Hyatt platform in terms of loyalty members as well and will continue to grow. And one of the things which we are also exploring is that due to our joint venture agreement, which we signed with Funyard Hotels and also Country Garden, Funyard has about 120 million members and Country Garden has about 100 million. And this is a very strong membership platform, which we can leverage out of China when China starts to open. So sooner or later, our Global Hotel Alliance will become one of the largest membership platform or one of the largest loyalty platform once we start to integrate NH and once we start to integrate China as well. We then look at enhancing customer experience. I think this is something important, which we have been working on. In terms of engagement with our customers, the Design, Personalization, Health and Wellness is becoming one of our key pillars. Sustainability, of course, we continue to drive that. And then the last one is Food and Beverage because the hotels continue to reinvent themselves in terms of food and beverage, new concepts, new offerings, pop-ups, which is continuing to work really well, and that will drive the F&B segment. Digital transformation continues to be on our mindset in terms of marketing, Internet booking engines. The Anantara and the Avani digital post application will also improve, what we call, the seamless travel, or it will also help to be convenient to our guests as well. And the last one, of course, is the asset portfolio management, which we continue to focus on in terms of asset rotation and utilization strategy as well. Moving on to the Minor Food in terms of some of their key strategies. Improving the operating environment of Minor Food and also to proactively implement the digital transformation strategy is our key focus for this year again in our key markets in Thailand, in Australia, and also in China. In Thailand now, the restaurants are now operating in regular hours, until 11 p.m. And hopefully, once the next phase of the restrictions get lifted, that will help us a lot in terms of driving that dining business as well. The loyalty program of each brand has been launched and Sizzler also will be launching another loyalty program in Jan 2022 to drive repeat purchasing, to drive loyalty to our brands, and also try to retain our loyalty customers within our brands as well. Australia, the business growth has been driven by the hub's focus on service, on partnership and also delivery with aggregators as well, and also supporting the franchisees also in Australia as well, which is our key priority for Australia. So rationalization, again, has resulted on a 10% lower number of outlets from pre-COVID level, has helped us to make the other stores more profitable and also more resilient as well. And then China has started year on a positive note with positive same-store sales in January in spite of the lockdowns we've had in several key cities in China. Looking ahead in China, the hubs plan to utilize technology to help to improve the different facets of operations as well and also uplifting the brand and expansion also will help us with the China hub performing for this year also. Next one is the Minor Food, some of their key strategic priorities. So we focus on brand revitalization. So again, we are looking at the Pizza Company -- the future of Pizza Company and how do we maintain some of our brands driving the dine-in business whilst we continue to focus on the delivery business as well. We launched a new concept, which is called The Pizza Company Signature, which we are testing. It's in the test mode. A new store has been launched together with the chicken concept, which is called -- a new chicken concept, which we created within The Pizza Company as well, which is called Chick-A-Boom. And that seems to pick up quite nicely as well, but this is in test phase. And if it works, we will start to roll it out. Swensen's launched a new concept, which is called the Craft Bar, which is selling premium concept of ice cream and the credentials as well. The digital customer experience, we continue to focus on that. We are also in the process of fully integrating our omnichannel, so that the guest experience or the customer experience is much better through offering it through one channel instead of going into each of our brands. The loyalty ecosystem. Again, the focus is there to see -- and also with a variety of payment options, which we are looking at. We're also looking at the new trends in terms of digital currency as well, again, trying to see how we can bring that into Minor Food and also Minor Hotels as work. And then, the next one is expansion of our own delivery channels, which is the 1112D in terms of upgrading the basics and also further enhancing the app experience there as well. We are launching our delivery function in our brand apps as well. I think if you look at Minor Food, Minor Food, some of the USP has been always, we own our own delivery channel. We have our own drivers to do the deliveries, which guarantees a 30-minute delivery of pizzas, which guarantees your food is delivered hot and to the highest standard, and also delivered in the most hygienic way using our own drivers and our own platform as well. And this is something we are getting back to, to make sure that we continue to drive that. And that will help us to also compete with the aggregators today, because we can compete with the aggregators today with all our brands under the Food Group. And also, to drive expansion as well. So again, we continue to drive organic growth, opening new stores, and also expanding the brands as well. That pretty much brings me to the end of my presentation. I'm happy to take any Q&As, if you please, and open to the floor.

Now we are open for the Q&A session. There have been questions coming through during the presentation, but I believe that some of our presentation slides already addressed those questions sent through. So we have, therefore, selected only new questions which our presentation fully has not addressed. So you can either type the questions through the chatbot or either raise your hand at the icon.

So one of the questions that we have right now is, what are Minor financial targets in 2022, and including the operational strategy [indiscernible]?

Okay. I think it's a great segue to talk about our outlook for this year. If I look at the statistics for 2022, we are hoping to, in 2022, in Q3 and Q4, we are hoping to get back to 2019 levels. 2021, 2022, Q1 and Q2 will be slightly soft because of issues we have today. But our focus is to get back to 2019, in this year, at least by Q4 of this year. I know most of the studies or everyone's expectations is that to get back to -- and some of them say that the hospitality industry will get back to 2019 levels in 2023, which based on the data points we have and based on how our occupancy is trending and how the bookings are coming through, we believe that we will be able to expedite that within Minor Hotels much faster, in Q4 of this year. We also see the same trend on the food side as well. So I think we can pretty much safely say that we would try to get to 2019 levels by Q4 of this year. Now looking at our targets. If you know NH, their occupancies in 2019 was about 62%. And then, in 2020, because of COVID, dropped to 28%. In '21, it was about 33%. We're hoping to get back to 50% in the full year of 2022. But the last 2 quarters of NH will be on par or ahead of 2019. It's the first 2 quarters, which is dragging it down a little bit compared to 2019. If I look at Oaks. Oaks in 2019 had business in Australia of 77%. We're hoping to close at 75% this year. So again, we'll get back to 2019 numbers. And then, therefore -- sorry, NH, the numbers I gave you was for Minor Hotels. But if I look at NH, in 2019, we were running at 70%. In 2020, we dropped to 25%. In 2021, we then picked up to 31% -- 34%. And this year, we're hoping to close it at about 63%, which is pretty close to 2019 numbers. And that's pretty much the last 2 quarters going ahead of 2019. So that's where we are seeing the trend. And even the rate, if I look at the rate, so Minor Hotels in 2019 was about THB 5,700. This year, our target is to get it up to THB 6,400, which is ahead of 2019. So our focus is more on rate because we feel that has a better flow through and you get a better quality of customer segment who would actually spend money on F&B, spend money on spa. So you're getting higher quality customers who are coming through as well. NH, their rate in 2019 was THB 3,700 -- THB 3,722. In 2022, we are budgeting or we are hoping to get that up to about THB 3,900. So again, as you can see, our focus is more on the rate. And therefore, we hope that this year, in the last 2 quarters, we will show quite a positive trend. And if you look at MINT as a company, we're hoping to make a profit for the full year in 2022. So 2020, we made a loss of about THB 20 billion. We reduced that to THB 9.6 million in 2021, and we're hoping to turn that around into a profit for the full year this year for MINT.

The next question is on asset rotation. Should we expect more asset recycle this year?

I think in terms of asset rotation, it's a fine balance between rotating assets, which are some of our trophy assets, to reduce debt or to increase cash flow, but also it has a negative impact in terms of our earnings. So we just need to have a fine balance to manage that. As we have continued to reduce our debt coverage, and now our debt coverage is below our threshold at 1.34, we continue to reassess our asset rotation strategy. So basically, our asset rotation strategy is all driven by, as we rotate assets, are we able to refill or bring in earnings at a higher level. So if we are rotating assets at getting a yield of 7%, 8%, are we then able to refill that with a higher yield or higher yielding assets coming in too, so that we can keep growing our earnings, because I think it's important that we continue to show our earnings growth over the years, whilst we continue to balance what we call the asset-right strategy. So our strategy is to balance the asset rotation together with our earnings strategy. And of course, as a result of that, it will be a balance sheet strengthening as well. So we need to balance all three components together, and that's what we are doing.

Next question is on economic scale. In your view, is it possible for China's government to relax zero COVID-19 policy?

I think based on the conversations we're having with our joint venture partners who are quite influential and know what's happening in China, I think China has taken a lot of costly measures, which are great. They were able to contain COVID. They were able to bring the vaccination in place. But due to the size of the population, it's not easy, and they do have some challenges. But I think sooner or later, China will start to open up. And our take is that maybe by Q3 or Q4, we will see some travel into China and some travel, a lot, out of China coming through as well. But at the moment, our expectation is that -- we always expect the unexpected, and we think it will be quite soft whilst they start to open and whilst they start to control the number of COVID cases in China.

Next question is on government subsidy from Europe. Will there be any government subsidies for NH Hotel Group this year?

I think mainly the government subsidies are as a result of some of the hotel closures or where we were forced to close hotels in certain countries, like, for example, in Germany, in Austria, in Amsterdam, in Holland, and places like that. As we start to reopen hotels and as we start to rebuild the business and the occupancy is starting to come up, and the government is easing the restrictions, I think these subsidies will stop. So there's going to be a switch soon. I don't think the subsidies will extend beyond Q1, maybe this year, because most of the governments have opened up the borders, most of the governments have eased the travel restrictions, or eliminated the travel restrictions and are allowing borderless travels between Europe. So our take is that, again, to be taking a cautious view, I don't think we will see any subsidies coming beyond Q1 of this year.

Next on cost cutting. Where is the largest cut, in which area? And how much of this cost control can be permanent [indiscernible]?

So some of the cost cuttings which we have actually shared in the past is that it's come through payroll, of course, with regards to headcount reductions and payroll cost cutting. In the first year, we were able to produce about 35% saving, and that was mainly because of staff or headcount reduction and also pay cuts as well. So what we did was, if we look at that -- just take that component, we then had what is permanent and what is temporary. So what was permanent is the headcount reductions or what we call the smart planning in terms of our human catalog. And what was temporary is the salary pay cuts. Now the salary pay cuts, we had to go back to full salaries with the renewed headcount, mainly because of the challenges we have in most countries today with labor. There is a huge, huge challenge in terms of labor force. A lot of the labor force is leaving the hospitality industry. And therefore, retaining staff, and there is a cost element to training staff and acquiring staff. And when you weigh the two, we felt that with the reduced headcounts, we had to go back to full salaries for our team members towards the mid of last year. And that actually helped us a lot in terms of retaining staff and also keeping the staff motivated, even though the headcount was less. So our permanent savings on the headcount reductions -- will come through the headcount reductions in terms of payroll, which we believe will be about 15%. We have other cost-saving items. So we reduced overhead costs. We did supply chain rationalization. And those are permanent savings, and those will continue to help us to increase our margins, which you have seen. In Q4, when you look at the margin, EBITDA margin was up to 36%. And we are hoping to at least maintain that over the next few quarters. And this is coming through -- so every single cost reduction we did, we had a permanent element and a temporary element. So overall, the cost savings was quite high, and we hope to at least maintain overall about at least 15% to 20% of that on a permanent basis moving forward.

The next is on performance of Swensen's. What is the reason for strong same-store sales growth of Swensen's in the fourth quarter? Is it from Swensen's Craft, delivery, or is it from low [ base ]?

I think Swensen's, it's mainly because of some of the new concepts we added with Swensen's. Swensen's has done really, really well and quite strong. Swensen's Craft, again, it's performing and Siam Paragon has become one of the top sellers. And this is something new, which we have introduced. And therefore, like we see the growth -- the performance of Swensen's continuing mainly because of the new concepts they've introduced and some of the new items also they have introduced as well.

Next on the land revaluation. Please provide more color on the loss from land revaluation of THB 3 billion in the fourth quarter? And will there be more in 2022?

So I think if you look at the land revaluation, it was about THB 12.6 billion in total. And there is an element, because there was some land where we had to revalue, which gave us an uplift, and there was some where there was an impairment, which we had to account for as well. So the land revaluation to the balance sheet, which is fine. It increases equity and all those things. Unfortunately, the impairment element goes to our P&L statement, which actually takes a hit on our P&L as well. But the net-net, I think, we don't see anything coming up in the coming months or in the coming years or the coming quarters because we went through a fairly extensive exercise, both within Minor Hotels and also separately with NH as well, to make sure that our analysis is fairly realistic based on the future as well, so that we don't have to take any future impairments also. So we don't see any impact coming as a result of this in the future quarters.

We see Tan Xuan's raised hand. Please go ahead and unmute your microphone.

This is Tan Xuan from Goldman. Two questions. First relates to cost inflation. I think earlier you mentioned that for Food segment, you do expect profitability back to 2019 level. Can I understand that as full pass-through of all cost inflation for Food segment?

So yes, that is correct. I think we have cost inflation resulting from few items. One is the supply chain, cost of supplies or the cost of goods going up. And the other one also coming from the high cost of labor as well. So in order to reduce our exposure on the supply chain, as you know, we have done some building up of our stock, which will actually help us through until at least the second quarter of this year. We've also implemented price increases to negate the increase in cost of goods as well. And in terms of labor costs increasing, through our smart resource planning, we managed to -- even though our labor costs will go up slightly, but because of the headcount reduction, overall, we should be able to maintain our margins moving forward. As a result of that, we should be able to get our Food profits back to 2019 levels. So that is our rationale.

Great. And on Hotel margins as well, can you discuss how margins look like if the top line revenue do go back to 2019 level, given the cost inflation there as well?

So again, on the Hotel, I think our focus is to drive ADR, which will actually offset some of the cost increases because, of course, in Europe, I spent quite a bit of time in Europe, both in 2020 and '21 and also this year as well. And when we actually drill down into the details, we look at operating costs, including sellers and wages, like cost impact is about 20% to 25% on our business within NH. And what we did was by reducing -- like so we did a lot of headcount reductions in Europe. And these are some of the headcount reductions that are permanent saves, which will also now help with a slightly increasing cost in Europe. But also, like we continue to focus on driving ADR. And therefore, the ADR increase will help us to offset the cost increases coming because of inflation, because of fuel price increases and all these things as well. Like say, for example, if you look at Maldives. Maldives, of course, we are -- Maldives relies on fuel. And of course, the fuel prices have been going up. But because we've been increasing our ADR by 20% to 30%, that has offset some of the cost increases as well, because we're getting customers who are paying higher rates, who are also spending more within our hotels on some of the most expensive menu items, which actually has a higher margin, and we have increased our menu pricing as well to offset some of the inflationary price increases, which we are facing today.

And my final question will be on the divestment. Can you walk us through the earnings impact for the divestment that was made in 2021? Is it fair to assume a 7% to 8% yield and then cost savings from cost of debt? Is that a fair way to look at it?

I think, yes, if you take a broad brush approach, I think that's about right, because we have -- but don't forget, like when we did the sale and leaseback, for example, which helped us to reengineer our balance sheet and also to get more cash and reduce debt. The sale and leaseback, when you look at the actual model, which we had for these hotels, 25% of the EBITDA will go to pay the lease, but we still retain 75% of the EBITDA of those hotels. So the leakage in terms of the lease cost is about 25%, but that also gets offset by interest, because now we are not holding these assets on our balance sheet, and that reduces our interest element as well. So I think overall, when you actually engineer the whole thing, we're looking at about 5%, 6%, I think, that's what we are looking at because we are able to maintain the asset due to the sale and leaseback, the model we have. In spite of selling the asset, we sale and leaseback it. Of course, in the Algarve, we have management fees, which we get. And in the Maldives, we have management fees, which we get from Blackstone, which is slightly different to the sale and leaseback one.

We have time for one more question if anyone wants to raise hand. If there is no further questions, this concludes our presentation, and if there are any follow-up questions, our IR team are more than happy to take them any time after this. Thank you very much for your time today, and have a good day.

Thank you.