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

Hi, good morning. [Foreign Language] Welcome to our Q4 2022 Analyst Presentation. And I thank everyone for attending it. The agenda today, as you can see, is to give you an overview of quarter 4 2022. And then to review Minor Hotels, Minor Food, Minor Lifestyle and also to cover corporate information and then also give you a quick snapshot about business outlook and our strategy in terms of back to growth. So just on quarter 4 2022, some of the major developments here, which have happened today in the quarter of 2022. Minor Hotels opened the Anantara Plaza, in Nice, in France. So it's our seventh Anantara in Europe, which has been successfully opened in Europe as Anantara makes its debut into Europe as well. And then we also looked at -- we also -- NH Hotels have also opened a hotel in Boat Lagoon in Phukhet. So NH Hotels, for the first time, have ventured out of Europe and South America into Asia. Minor Hotels also partnered with Dusit Medical Services to launch the BDMS wellness clinic and retreat at the Anantara Riverside as we explore more into wellness and creating the guest experiences around wellness. We are also specializing in bringing some of the wellness concepts into Minor Hotels as well. The next one is Anantara Vacation Club also opened the Anantara Vacation Club at Avani+ in Mai Khao, in Khao Lak as a destination as well. In terms of Minor Food, we have expanded into the beverage retail category by acquiring 50.1% stake in a bubble tea brand, which is called GAGA and to -- this is to solidify our existing food brand portfolio and also capitalizing on some of the new concepts in terms of what's in the food sector today. Minor Food also opened its first 2-day outlets, a unique French roast chicken concept, which has been imported from Singapore in order to try -- in order to also strengthen our Minor Food leadership category in Thailand as well. Benihana opened its first equity -- Benihana also opened its equity outlet in Covent Garden, the largest store in the U.K. So we now have 2 Benihanas in the U.K., 1 in Chelsea and also the new 1 in Covent Garden. Burger King also opened its new flagship store in Bangkok, featuring with some of the digital advanced technologies. Dairy Queen piloted the first pop-up store with a bit of fun design and seating service for a limited time-only menu to actually elevate our customer experience as well. And the last one is The Pizza Company also has revitalized the brand and its concept, and that is being rolled out in this year also. Moving on, some of the key highlights. So the first box I would like to address is the strong net PAT growth in quarter 4 of 2022. So a Minor MINT reported at the core net profit of THB 2.4 billion, but an impressive growth and a performance year-on-year and Q-on-Q as well. Minor Hotels also posted a core profit of THB 1.9 billion in the quarter 4 of 2022, a surge of 57% year-on-year. And it was mainly attributed to the robust performance of the hotels in all regions, but especially in Europe, LatAm, Thailand and Australia. RevPAR in all the destinations have exceeded pre-COVID levels in quarter 4 of 2022. Minor Food also reported a core profit growth of 39% year-on-year, which again exceeded pre-pandemic levels by 56% and contributed to a profitable -- tenth consecutive quarter in Minor Food since the pandemic happened. Thailand and Australia hubs have helped to offset some of the challenges in the operating environments in China. As you know, China was in lockdown in quarter 4, but now in quarter 1, this year, China has opened and we see a surge in terms of our trading or revenue as well. So in 2022, Minor reported a core net profit of EUR 2 billion, which is a strong improvement compared to a core loss of THB 9.3 billion in 2021. So the turnaround was almost about THB 11 billion because we went from a loss to a profit. In terms of liquidity and balance sheet, we continue to remain focused on strengthening our balance sheet, also managing our liquidity, as you all know. The sale and management of the Tivoli Coimbra in Portugal, we completed it successfully. Our net debt repayment, together with the higher equity base from profit generation in assets also significantly reduced our net debt to the equity ratio to 1.17 at the end of quarter 4 of 2022 from 1.36, which was at the end of 2021. And now we're at 1.19 at the end of Q2, we were at 1.19, which was at the Q3 of 2022. MINT also optimizes its fixed float split of its debts by way of accelerating payments on high interest on the floating rate debt. So we are -- as the debt costs are starting to increase, we are controlling our debt from being fixed to floating from being -- sorry, floating to fixed and also paying off some of the most expensive debt, which has also happened in quarter 4. Our liquidity position has also been strong with a positive cash flow during quarter 4 of 2022. Our cash in hand and unutilized credit facilities remain at THB 23 billion and THB 36 billion, respectively, at the end of December 2022. So as you can see, our cash in hand and also our liquidity in terms of existing facilities remained quite strong, which is THB 23 billion and another THB 36 billion in total -- sorry, THB 36 billion on undrawn credit facilities. The outlook looks quite promising. As you have seen Q2, Q3 and Q4 of 2022 has been very strong. Q-on-Q and year-on-year performance has been surging upwards. And Q1 of 2023 remains quite optimistic, and the bookings look quite strong. And in terms of the food, we also remain quite bullish looking at the numbers in 2023. The lesser demand continues to be strong, as you know. The demand for our European hotels will be further driven by international travel returning back and some of the flights returning back to sort of normalcy within Europe. We are seeing the MICE business also returning in Europe as well. The pickup is quite strong. And the outlook for Q1, Q2 and Q3, where we have some visibility in terms of MICE, we are already seeing bookings on the books, which is ahead of prior year. RevPAR of our hotels in Australia and the Maldives continue to remain solid. As you know that Maldives and Australia had a fantastic year, especially Australia continues to enjoy that trend in terms of RevPAR growth, mainly driven by ADR. Our store traffic in terms of our food, together with the brand revitalization we have done looks quite promising in our restaurants, and we see on the daily trading numbers that the trend is moving upwards. We then look at back to growth, which is our strategy now in terms of our new 3-year plan strategy from 2022 to 2025 has been finalized in order to accelerate our business growth in most of the regions. And in order to achieve both financial and nonfinancial objectives, we also continue to focus on our 6 key pillars, which is, as you know, it's all about winning -- having a winning world-class brand portfolio, value capture and productivity, investments and partnership and portfolio management in terms of expansion and continuing our strategy of back to growth. And the last one is all about digital and innovation in terms of transformation. And then we have people development and of course, sustainability framework, which is also becoming quite an important factor for MINT as well. Moving on, we can, as you can see, our Q4 2022 year-on-year performance recap. As you can see, our reported to our core net profits grew by -- in terms of revenue -- sorry, top line is revenue, grew by 35% year-on-year. And the revenue contribution, 78% came from Minor Hotels, 20% from Minor Food, and Minor Lifestyle was 2%. The rebound of the hotels was mainly contributed from higher drive of domestic and international travel activities and also our solid pricing strategy which has helped us to drive ADR contributing more towards profitability and also sustainable growth in the future and offsetting some of the challenges we've had in terms of costs. Whether it's inflation, whether it's cost of labor, whether it's cost of goods. And the business has been quite strong in terms of all 3 verticals, whether it's Minor Food, Minor Hotels or Minor Lifestyle. The core net profit increased by 44% year-on-year to THB 2.4 billion in Q4 of 2022. So as you can see, our core net profit in 2021 was a negative THB 1.557 billion, a loss. And in 2022, quarter 4, we turned that around to THB 2.379 billion profit. Again, Minor Hotels contributing 81% of the profit, Minor Food contributing 17% and Minor Lifestyle contributing 2% to this profit growth which you are seeing. Next one is also a Q-on-Q performance recap. So when you look at Q-on-Q, our revenues -- core revenues increased 3% Q-on-Q in spite of the seasonality in China, Maldives, Anantara Vacation Club and also some of our world-class restaurants under the Wolseley Group, which has done exceptionally well. In the U.K., which has -- which did lead to our Q-on-Q improvement. The core net profit also improved by 18% Q-on-Q to THB 2.4 billion in the quarter. So when you look at the top chart, which is reported revenue of THB 35.325 billion to THB 35.964 billion, a 33% increase Q-on-Q, but the net profit growth went from THB 4.6 billion to a growth of -- sorry, THB 2 billion to THB 2.379 billion, which is an 18% growth in core net profit. Next, we look at our international presence in terms of where we are today. So Minor Hotels, Minor Food and the combination, as you can see, in terms of combined business, 78% comes from our international presence and 22% comes from Thailand. So this is a result of our diversification strategy, which we implemented which has been implemented a few years ago. And Minor MINT footprint is now in 63 countries at the end of quarter 4 of 2024 across all its businesses across hospitality and restaurants and the food. Next, we now move into Minor Hotels. So Minor Hotels, in terms of its financial highlights, our core revenue of THB 28 billion in quarter 4 of 2022 which is a surge of 42% year-on-year. And the year-on-year was mainly attributed towards the strong rebound in the hotel business from higher travel demand and also our pricing strategy, which has led to this robust performance, contributing this growth. And the main key regions include Europe, LatAm, Thailand and Australia. If you look at the financial performance here, on a on Q4 of 2021 to 2022, our revenues grew by 42%. On Q3 to Q4, our revenues grew by 4%, as I said before. EBITDA actually grew by 25% year-on-year. And on Q-on-Q, it grew by 2% and mainly because of seasonality. In 2021, also in terms of EBITDA, there was also some of the government subsidies, which we did receive and also some of the lease expenses also contributed to a contribution in 2021. So therefore, the growth actually in 2022 excluding that would be much higher. If I look at the performance snapshot by business in terms of revenue, as you can see, on the right-hand side, the owned and leased hotels grew by 48%. The management letting rights, which are mainly attributed to Australia and New Zealand grew by 58%. The managed hotels grew by 43%, and our mixed-use business grew by 10 -- sorry, declined by 10%, mainly because of timing factor on the residential side. And then on the bottom, you look at the business performance snapshot by geography. As you can see, the Q4 revenue grew by 73% in Thailand, year-on-year change of 79%. Europe, a slight decline of 4% and year-on-year grew by 38%, and the decline was mainly because of seasonality because Europe Q4 goes into low season or what we call the winter season. Australia and New Zealand, the same thing, like again, seasonality 1% decline with a 58% growth year-on-year. Maldives is 100% growth 102% and year-on-year, a growth of 13% because Maldives again Q4 was very strong, and also the season was very strong as well. And that's the reason you see such a strong growth in terms of Q-on-Q revenue growth. And the last one is the Americas where we see a 29% Q-on-Q growth and year-on-year growth was 28%. Next, we, again, in terms of Minor Hotels, when you look at our outlook, when you look at Minor Hotels, we embarked on a diversification strategy about a few years ago, which has really helped us to diversify our business across the globe and becoming a truly global company today. So Minor MINT now operates hotels under a combination of owned, leased and management letting rights in 56 countries. And here, you can see the hotels under investment, the hotels under management, the combination of the 2 and where we have a new pipeline coming as well and some of the hubs we have to manage the business today. So 91% of our revenue contribution came from international and 9% came from Thailand. Next, Minor Hotels portfolio, again to continue, the owned and leased business contribute over 80% of Minor Hotels revenue in 2022, Q4. In terms of geography, Europe is the majority contributor with 70% for Minor Hotels, followed by Thailand and Australia and also New Zealand as well. So when you look at the -- on the left-hand side, the system-wide room contribution by ownership, you can see that lease contributes -- sorry, leased hotels have 46% of the total rooms; owned hotels has 75% of the total room size, which is about 76,996 rooms at the end of Q4 of 2022; management letting rights, which is mainly from Australia, is 8% of our room inventory. Our managed business is about 19% of our room inventory and JVs is about 2% of our room inventory. On the right-hand side, if you look at the room contribution by geography, 61% of the rooms contribution comes from Europe; 11% comes from Asia; Middle East is 8%; Oceania is 9%; and the Americas is 11%. At the bottom, when you look at the revenue contribution by business unit, our owned and leased assets contribute 82% of our revenue, which is THB 27.960 billion. The managed business contributed 3%; management letting rights contribute 8%; and the mixed use contribute 7%. On the right-hand side, again, at the bottom, you see in terms of revenue contribution by geography, Thailand contributes 12%, Europe contributes 70%, the Americas contribute 2%, Maldives and Middle East contributed 3% and Australia and New Zealand contributes 8%. Next, we look at owned. Now we zoom into our owned and leased assets. So in terms of our owned and leased assets, our number of keys was 54,255. We had a slight growth in quarter 4 of 2022 with the addition of some of the new hotels. Our occupancy grew from -- our occupancy slightly declined versus 2019. But when you look at our rate, our ADR, growth was 34% versus 2019. So ADR growth was very, very strong. And on year-on-year our growth was 26%. So if you look at 2019, ADR growth was way higher than what we actually anticipated for the quarter. And the last one was RevPAR. So the RevPAR growth mainly driven by ADR growth was 21% compared to 2019 positively and a 66% growth year-on-year in terms of RevPAR growth for Q4 of 2022. At the bottom, you see how the occupancies are trending mainly because of seasonality. So Q1, the occupancy is slightly below because of seasonality in Europe. Q2, it starts to ramp up. Q3, it starts to ramp up again because of the high season in Europe. Q4, again, it starts to ramp up because of the high season in Thailand and other places as well. And you can see the monthly system-wide sales growth, monthly system wide RevPAR growth in '22 -- in 2019 and the monthly system wide RevPAR growth in 2022 versus 2019 at the bottom as well, which is -- so the graph is -- it shows how RevPAR has grown month-on-month. As you can see, the last quarter has been very strong with a growth of 14%, 28%, 16% and 18%. Next one, we then go into owned and leased hotels in Europe and the Americas. So the hotels in Europe and the Americas was one of the largest contributors to the owned and leased portfolio. Our RevPAR of Europe and the Americas hotel, it surged by 56% -- sorry, 66% year-on-year in euros and led by slightly higher average occupancy, but the room rate is stronger due to stronger travel demand. So RevPAR also exceeded 2029 level by 10% which was mainly driven by rate and Southern Europe posted the strongest RevPAR improvement over pre-pandemic level followed by LatAm and Northern Europe. We then look at operating -- operational stats. So occupancies Q4 of '19 compared to Q4 of 2022. Occupancies declined by 7%, but the ADR increased by 22%. So as I said before, it's all driven by ADR, which was our key focus. And therefore, RevPAR growth was 10% as a result of that. On the right-hand side, you see the geographical breakdown in terms of revenue contribution. So Spain plus 1.4; Italy, 1.5; Benelux, 2.2; Central Europe was 1.9; and LatAm was 2. So when you look at the revenue contribution, 28% comes from Spain, Italy is 21%, Benelux is 21%, Central Europe is 23%, and the Americas is 7%. Occupancies are at the bottom again, mainly because of seasonality in Europe and LatAm, the winter seasons and the Q1 and also at the tail end of Q4. And you can see the occupancy sort of tapering off in December because mainly driven by winter. But when you look at the RevPAR growth compared to 2019, we are way above 2019, especially the last 3 months of the -- well, the high season in June and July was 16% and 9% up. And August, September was 7% up. And then even during winter, we are still up by 17%, 5% and 6% in terms of RevPAR growth in euro terms. We then move on to Thailand our owned hotels in Thailand. So our RevPAR of our owned hotels recovered strongly both year-on-year and Q-on-Q, surging by 207% year-on-year, and Q-on-Q was 66% increase as the country reopened to international tourists in July 2022, and the airline seating capacities are also starting to ramp up and we see the demand coming into Thailand is also increasing faster. Our RevPAR increased the same level as 2019, and in the first quarter since -- in the first quarter since the pandemic mainly driven by rate again. And the RevPAR in December actually exceeded pre-pandemic levels by 9% led by hotels in Bangkok, which is again a gateway city for Thailand. And this is in spite of having no Chinese business coming into Asia or into Thailand because of China was in a lockdown in Q4 of last year. When you look at our occupancies compared to 2019 as you can see, our occupancies decline, but our focus was driving rate and the rates increased by 16% compared to 2019. And therefore, our RevPAR was almost flat on 2019. Our occupancies continue to grow. As you can see on the right-hand side, Q1 was 31%. Q2 was 43%. Q3, we went up to 52%. And then Q4 was 57%, 64% and 70%, which is, again, December was a high season. So we were -- we touched 70% in terms of occupancies. And then you look at RevPAR growth. As you can see, the RevPAR growth prior to opening the country and post opening the country mainly November and December showed a RevPAR growth of 1% and December showed a RevPAR growth of 9% over 2019. We then go into our hotels in the Maldives. Again, Maldives had a very strong year. The RevPAR growth of our owned hotels in Maldives remained above pre-pandemic levels. So we were quite strong. For the sixth consecutive quarter, our RevPAR growth continues to grow above pre-pandemic levels. So we were -- we outperformed by 22% in terms of U.S. dollars in quarter 4 of 2022. Again, mainly driven by ADR, our average rate from the Minor Hotels. And also, we see an improvement on the prior quarter was also seen as well. So when you look at the occupancies, the occupancies were slightly down compared to 2019, but the rate was up by 32% over 2019, and therefore, resulting in a RevPAR growth of 22% of 2019. On the right-hand side, you see the graph in terms of occupancy. And down below, you see the RevPAR growth, where in November and December, it was a surge of 48% and 41% over 2019 numbers in terms of U.S. dollars. So Maldives has been very strong for us in the last 2 years, and it continues the outlook, also looks quite strong as well. Moving on to our asset-light business. So our RevPAR, what we call in management letting rights, increased by a very strong 56% year-on-year, which surpassed our pre-pandemic levels by 35% in terms of Australian dollars, mainly fueled by strong leisure demand coming in attributed towards school holidays, the festive season and also some international travel increased. And again, our strategy in terms of driving rate it really worked here as well, and we've had 1 of the best years ever in Australia. So our RevPAR also increased. And when you look at the graph further down, in terms of number of rooms, we managed a total inventory now of 6,400 rooms in the management letting rights business. Our RevPAR increased by 35% in Australian dollar terms from $143 to $193. And on the occupancy, you can see how the occupancy is trending as well. On the managed hotels on the right-hand side, you see, again, number of rooms slightly down, but the -- when you look at RevPAR, it shows an increase of 29% or growth on 2019. Our RevPAR growth down the graph below in terms of Australian dollars has been very strong, as you can see, especially in December was up by 41%. In November, we were up by 28%. In October, we were up by 36%. And the high season, we were way up about 52% in the month of September and also August was about 30%. And then the first -- the second quarter, April, May and June, as you can see the winter and the -- sorry, the school holidays and the festive season was up by 49%, 44% and 57%. In terms of RevPAR growth compared to 2019. RevPAR growth, this is in Australian dollars, and then on the right-hand side below, you see the RevPAR growth versus 2019 in Thai baht. Again, Thai baht has been -- the growth in Thai baht also has been strong as well. Next one, we move on to what we call a hotel expansion pipeline. So here, what we do is we only show hotels which are signed and which are in progress -- in terms of progress, in terms of construction as well. We do not include hotels which are under discussion or other pipeline we have, which is much more than what you see here. So we have in total of 65 hotels with another 13,500 room rights coming in. And in terms of our strategy here is to expand our portfolio through asset-light business, which is through management letting rights or management -- hotel management contracts. And that is our medium- to long-term plan. And also, we see a strong growth in terms of our pipeline in the Middle East. And now with China, the JV we signed with Funyard Hotels, that is also proving to be strong, and we see a strong expansion in our pipeline. We've already signed some hotels. And it's good to see our Chinese pipeline also picking up quite strongly as well. So the top half shows the owned and leased hotels. So we will have 6 hotels opening in 2023 under what we call the asset -- our owned assets with about 1,152 rooms. And in 2025, we have 2 hotels opening with 266 rooms. And as you can see, our asset light strategy, which we have been driving, we will be opening 22 hotels this year with 5,520 rooms, and 21 hotels opening next year and 14 hotels opening in 2023 under the various brands. Again, mainly driven by Thailand, UAE, Vietnam and China. So there's a lot of hotels coming in China and also hotels coming in Europe as well and Australia also. Next, we then move on to our mixed-use business. So in terms of our mixed-use business, mainly driven by timing, our mixed-use business decreased by about 10%. Despite the Anantara Vacation Club and our plaza and entertainment business actually continued to grow and the number of points sold and the number of members also increased. The mismatch was mainly because of timing again, as I said before. And when you look at on the left-hand side, you see the residential projects, the current projects we have today and the pipeline, which is shown down below. And on the right-hand side, you see the Anantara Vacation Club, where our membership grew by 5%. And today, our total members is about 17,700 -- sorry, 17,362 members. China is 43% of that in terms of membership. Thailand is 17%. And then you have Singapore, Hong Kong, Malaysia and others coming in as well. In terms of inventory, also, we grew our inventory by 9% from 265 units to 288 units, mainly adding Khao Lak into Anantara Vacation Club inventory as well. In 2025, our focus -- our forecast is to grow the inventory from 288 to about 320. Moving on, we now move on to the food business. So again, our food -- our core revenue surged by 21% year-on-year in quarter 4, mainly driven by improvements in Thailand and Australia, positive contribution from a joint venture and the reclassification of our contract and manufacturing unit under Minor Food. On quarter 4, the core EBITDA increased by 16% year-on-year to 1.6 billion and Minor Food, the net profit remained positive for the tenth consecutive quarter since we got affected by COVID. So Minor Food has remained positive for 10 quarters since COVID and exceeded quarter of 2019 pre-pandemic level, and this is in spite of China being locked down. So if you look at Minor Food, revenues went from THB 6 billion to THB 7.2 billion, which is a 21% increase year-on-year. EBITDA grew from THB 1.3 billion to THB 1.6 billion, which is a 16% growth year-on-year. And the net profit growth was 39% year-on-year compared to the same quarter of 2021 from THB 290 million to THB 402 million. On the right-hand side, you look at the operational statistics year-on-year. So the number of outlets went from 2,377 to 2,531. And same-store growth in Q4 was positive 4.4% and total system sales growth was a positive of 17% overall. You look at the graph below, which shows, again, the evolution of month by month for total system sales and same-store system sales, which has been positive in terms of growth. The next one, we move on to Minor Food international presence. So today, the revenue split is 60/40. 60% comes from Thailand and international is 40%, in spite of China being locked down. And we will see the international presence growing in terms of revenue contribution this year as China has already reopened in quarter 1 of 2023. The restaurant presence now we have is in 24 countries across the region, both in terms of own and franchise model, and we continue to cautiously look for opportunities to expand in these markets. And hence, we did -- and also looking at some of the latest concepts and some of the concepts which are in demand like I mentioned to you before, like the acquisition we did or the partnership we did, joint venture we did with GAGA, which is a bubble tea brand in Thailand, and we hope to roll that brand out in Thailand and maybe take it outside Thailand very soon as well. Moving on to Minor Food portfolio. As you can see, the number of outlets, 50% is owned, 50% is franchised. In terms of system-wide outlet contribution out of the 2,531 outlets. On the right-hand side, you see the system-wide outlook contribution by geography, Thailand is quite strong. Thailand still contributes 75% in terms of the number of outlets. Australia has 13% of the number of outlets. China has 6% and others have 6%. In terms of revenue contribution, which is the 1 below, Q4 by business, our owned outlets contributed 94% of the THB 7.266 billion of revenue and franchise contributed 6%. On the right-hand side, in terms of core remedy contribution by geography, Thailand is still strong at 61%. So Thailand contributed 61%; Australia contributed 11%. China was only 11%, but we hope to see that growing much stronger and the others contributed 17%. Moving on just zooming into Thailand as a hub. So Thailand reported a total system sales growth of 20%, 20.2% year-on-year in quarter 4 of 2022, mainly driven by a 4.1% increase in system sales and also the outlet expansion across its brands, including The Pizza Company, Swensen's, Dairy Queen, Burger King, Bonchon and Coffee Journey. The Thailand hub will continue to focus and sentinwhat we call our brand recognition and profitable expansion as well. So same-store growth Q4 of '19, it was negative 1% and Q4 of 2022 is posted 4.1%. Total system sales in 2019 was 7.6% and in 2022 -- sorry, 2019 was 7.6%. 2022 quarter 4 was 20%. So total system sales growth was quite strong, as you can see. Thailand hub, we've also embarked in terms of our digital transformation and also the digital loyalty program and the CRM campaign actually led to some of these increases, the strong increases in revenue. The digital wallet and the digital touch points at our restaurants, such as self-ordering kiosks, has also increased our customer experience as well, adding to the increase in terms of revenue moving forward. So on the left-hand side, you see the monthly trend, both in terms of total system sales growth and same-store systems sales growth for Thailand hub. Next, we move on to China. So as we know, China has been challenging in Q4, mainly driven by the lockdown. The total system sales in China have decreased by 20% year-on-year. In quarter 4, despite the increase of the number of stores, mainly, as I said, driven because of the lockdown in key cities because the government did impose dine-in restrictions at our restaurants. And the lockdown was lifted in December. And now we see the surge throughout the country resulted in a strong growth causing a growth in Q1 of this year. But in last year, we saw a same-store system sales decline to 26% year-on-year in China. We start to see the reshape increase recovery, as I said, in 2023. So here, in terms of operational stats, the same-store, as I said, the system sales growth, mainly driven by the lockdown was negative 26%, and total system sales growth was negative 20%. And the graph shows the monthly trend as well. Despite of the lockdowns, we continue to do delivery as well, but the dine-in was affected because there was no dine-in allowed in our stores in China. We continue to implement cost-saving strategies, which actually reduced the impact in terms of our losses in China. And the China hub remain adaptive to the local environment and focusing on resilient and strong business recovery coming in 2023. Moving on to Australia, so Australia reported a very strong total system sales growth 18.9% year-on-year, attributed mainly towards the same-store system sales growth of 15%. And also the reopening of the stores, the airports and also the flood impacted sites, and as a result of that system sales growth grew strongly year-on-year and improved as a result of the improved business conditions in Australia. So again, as you can see, system sales growth quarter 4 of 2019 was 1%, but quarter 4 of 2022 has grown to 15%. Total system sales growth quarter 4 of 2019 was 1%, and quarter 4 of 2022 was almost 19%. You can see the trend. So we started with a negative trend, and we went into a positive trend for May onwards, and then August, September, October, it peaked. And then November, December, it starts to taper off. This as a marketing program was also launched nationwide at all our coffee clubs to increase the brand awareness and the recognition, again, driving customer loyalty as well and which has actually contributed towards the increase in our revenues in Australia. Moving on to our third vertical business, which is Minor Lifestyle. So again, Minor Lifestyle, quarter 4 revenue shows a decrease of 21%, 21% but mainly because of the reclassification of our contract manufacturing business to Minor Food. So it was just a reclassification from Minor Lifestyle to Minor Food. Excluding such international business restructuring, the Lifestyle revenue actually grew by 6% year-on-year when you exclude that. Even with the lower number of outlets we have today, the growth was mainly driven by stronger door-to-door campaign for Minor Smart Kids. Our core EBITDA and net profit remain positive but decreased year-on-year by THB 111 million and THB 45 million, respectively. And this was mainly due to the higher sales mix of low margin of corporate sales of home and kitchenware businesses and higher rental expenses, as well as some write-off expenses relating to existing brands. Again, Minor Lifestyle contributes about 2% of our net profit. So it's fairly insignificant. But we continue to drive the business with a continued focus in terms of net profit which has been positive in quarter 4 of 2022. Moving on to some of the corporate information, so this would be mainly looking at how we -- the balance sheet management and cash flow management. So in terms of credit rating, as we all know -- well let me cover the new ones first. So if you look at some of the new initiatives, the first one was the ICO loan, which we got during COVID in Europe for EUR 250 million was fully paid -- was fully repaid in July, December and January of 2023. So as at end of Jan, the loan of EUR 250 million has been fully paid at our NH level in Europe. In terms of strengthening equity base, we actually raised, as we all know, a perpetual bond of THB 10.5 billion, which was successfully issued in February of 2023, again, at an interest rate of 6.1%. Asset rotation, the sale and manage back of our Tivoli hotel in Coimbra, in Portugal, was completed in quarter 4 of 2022, which gave us a cash contribution of EUR 5.5 million. So those are the 3 new actions, which we did this year -- sorry, in quarter 4. And then when you look at -- we continue to have at the MINT level, a Fitch rating of A with a stable outlook. NH has a credit rating by Fitch as well, NH's credit rating by Fitch which is B with a stable outlook. And the secured debenture rating was BB-. NH's credit trading by Moody's was BBB with a stable outlook. Our corporate bonds of THB 7 billion was successfully issued in March of 2022. In terms of strengthening equity base, we also have 3 tranches of warrants, which were issued to strengthen our equity base by approximately THB 15 billion over the next 2 years, up to 2024. So we have Warrant 7, Warrant 8 and Warrant 9. Warrant 7 and Warrant 8 matures this year, Warrant 9 matures next year. We then have also the perp bonds, which we issued in July 2022 as well last year in 2022. At NH level, we did some asset rotation. We continue to focus also on asset rotation to strengthen our balance sheet and reduce our debt. The sale of our 2 owned assets in Netherlands and Germany were also completed in quarter 4 of 2022 for giving us a euro -- giving us EUR 19 million and the sale of 2 owned assets in Belgium and also the U.K. was completed in quarter 3 of 2022, giving us EUR 46.5 million as well. Moving on to CapEx. So again, here, you see the CapEx plan. So as we emerge beyond COVID and emerge quite strongly, the CapEx will ramp up to about THB 10 billion to THB 13 billion per year from 2023 to 2025. And the source of funds for the project -- for these CapExs will be mainly coming from net operating cash flow and also some of the debt refinancing we are doing. MINT has also reinforced our balance sheet where we have reduced our net leverage ratio to 1.17x, which is well under our covenant threshold, which is 1.75x at the end of 2022 and the cash of hand and unutilized facilities was THB 23 billion and THB 36 billion, respectively, in total. When you look at the CapEx plan, Minor Hotels comes -- bears the larger chunk in terms of CapEx. And then we have some for Minor Food to continue to expand our outlets. When you look at the leverage, as you can see, how our leverage peaked and also has reduced, and as I said, in 2022, it was down to -- it was -- Q4 was down, and our debt -- to 1.17x debt covenant threshold policy versus a -- debt covenant threshold policy, which is like 1.75x. So the first graph, we show the net interest-bearing debt to equity and the red dots show the net interest-bearing debt to equity, excluding the impairment from COVID of 2019. The one below shows backup financing. As I said, we have net cash on hand -- sorry, cash on hand was about close to THB 23 billion, and unutilized facilities, it's about THB 36 billion. So the cash position on the balance sheet, including our net interest-bearing debt to equity has been very strong in 2022 as well. Moving on, as a result of the strong cash flow position we have, the average cash flow continues to be positive at THB 2.9 billion, THB 2.9 billion in 2022, Q4. And 2019 was THB 9.7 billion. In 2022, we moved out to -- we moved up to a free cash flow of THB 10.9 billion. And you can see Q-on-Q how the cash flow has moved up as well. Next one is again -- the next slide, please. Okay. Here, we show our diversified debt profile and how we actively manage debt management as well, mainly in the climate of increasing interest rates where we have been focusing to ensure that the business is not affected by the headwinds in terms of increasing interest rates in most of the geographies. So as you know, we have increased the portion of our fixed debt as a result of that. And today, our exposure to fixed versus floating rates is 46% -- sorry, 56% is fixed and 44% is floating as of the end of 2022. And we are showing some additional repayment of some of the floating debt this year which will now reduce our floating debt ratio further. And therefore, our fixed debt will be higher, which will result in us shielding the interest rate hikes from most of the economies or most of the geographies. But when you look at the debt profile by currency actually, U.S. dollars is 6%, Australian dollar is 3%, Thai baht, 19% and euros is 69%. And of course, as I said before, the fixed is 56%, floating debt is 44%. Now when we dial down actually by currency, in terms of euros, we have 60% of our debt is fixed versus 48% in quarter 1 of 2022. So we managed to fix most of our debt in euros. And only 40% is floating today. Because MINT restructured its euro derivatives with a competitive fixed rate in July 2022. And also the NH redeemed the high interest, as I said before, the ICO loan of EUR 250 million, repaying the loan in August, in December and in January 2023. So this total debt has been fully repaid. If you look at the Thai baht, we only have -- we have 42% fixed and 58% floating. So the maturity debt profile of the Thai baht floating, the debt is approximately 3 years, while the BOT rate has increased at a slower pace compared to the other jurisdictions, and the lower magnitude than the other countries, as I said. So therefore, it gives us enough time to maneuver this debt piece as well. Coming on to U.S. dollars, which is more volatile and the rates increasing much faster, we have 93% of our U.S. dollar debt is fixed. So only 7% is floating. So therefore, we're almost 100% shield in terms of any interest rates in terms of U.S. dollars. As you know, because the trend remains hawkish on interest rate inflation, so we have to move on to fixing these rates, and as a result of that, interest rates hikes in U.S. dollars has been shielded and has been protected as a result of fixing our debt. The Australian dollar, we have 100% floating today due to the syndication facility and the refinancing we did in 2022. And we are in the process of hedging this which is happening at the moment. But the debt in Australian dollars amounts to only 3% of our total debt. Because you see the debt profile by currency, so Australian dollar is only 3%. Moving on to our growth strategy, which we call Back to Growth, which is our 3-year strategic plan, which has been implemented now. And the outlook for 2023, in terms of occupancy, we expect Thailand to rebound strong, driven by some of the government initiatives as well, like We Travel Together campaign and also the opening of the borders, which has also helped us, and we see the occupancies and the rates moving up in Thailand and see a continued strong growth in Thailand. ADR. We see a strong significant increase in Thailand as the demand comes quite strong as well. In terms of Europe and LATAM, again, we continue to see a strong leisure demand and occupancies driving, but mainly driven by rate. And also, we see larger MICE groups also starting to come back into our hotels and moving from regional travel to long distance travel within Europe happening as well with the big corporates. The business segment will support a further ADR increase in Australia -- sorry, in Europe, as the price elasticity is relatively low amongst the business travelers, as you know, like Europe and LATAM, which is completely dominated by NH and the AVANIs and Anantaras and Tivoli brands in Europe in key strategic locations. Therefore, we can command a higher rate and driving occupancies there as well. Australia, moving on to Australia. We continue to enjoy a strong stable occupancy rate, mainly coming from domestic travel and also corporate travel returning as well. With the RevPar mainly driven by ADR growth in Australia, so we've continued to focus on ADR growth in Australia as well. Maldives remains a major touristic destination and Minor Hotels will be also opening, AVANI, the first AVANI hotels in the Maldives in April this year, and we have some additional hotels in the pipeline, which is as a result of Maldives' strong growth in occupancy and mainly driven by India. We are quite confident about Maldives. So we are positioning Maldives for us in terms of brand, Anantaras and AVANI will be positioned at the upper upscale or upper luxury with getting higher ADR increases. So in terms of margin, we will grow the hotel and mixed-use, we will continue to grow with our efforts in terms of cost control and margins as well. And therefore, the hotels are expected to expand the year-on-year performance growing strongly despite of inflationary pressure, despite of interest rate hikes, despite our cost of living and wage cost increases. And as I said before, and explained to you how we are dealing with some of these in terms of interest rates, we managed to change from floating to fixed and in terms of U.S. dollars, like most of our debt now is in fixed. And therefore, we are shielding ourselves from some of these increases as well. This is for Minor Hotels, the outlook. Minor Food. We see the growth continuing for Minor Food. Again, this year, we will also enjoy a further strong growth in Minor Food, mainly because of the reshaped recovery of China. And in Jan, we already saw our revenue surged about 80% compared to the lockdown we had last year in China. So China is coming back quite strong in terms of our restaurant business there. The -- if you look at Thailand, the private consumption is expected to recover and dining business will also recover, rising from tourism and also the inflation starting to deflate a little bit. The brand revitalization program continues with Minor Food Group with new products, new concepts which excites our customers and also the market. And also the outlet expansion will continue to be executed across all the brands with new innovative concepts and also customized branding in terms of key locations as well. As I said before, China will see a V-shape recovery, which we have already -- which we are already seeing in Jan and continues into Feb as well. The cancellation of the dining business will help us to now open all our restaurants with dining and get benefit of the dining customers as well. We also have the loyalty program, which is also working quite strong. And in terms of more -- there's more room for penetration to grow the Riverside brand aggressively in Tier 1 and Tier 2 cities, which has also a strong purchasing power, which we are looking as well as China starts to reopen. Australia, the higher consumer spending on dining and travel and other non-essential items and service is indicative of improving our confidence, business confidence in Australia. As I said, the Hotel Group has enjoyed a very strong growth in Australia, and we hope we are also seeing on the food side, also the growth continuing as well. Again, brand loyalty is important. So we continue to drive brand loyalty through digital innovation and also loyalty programs as well. And the last one is the store network expansion, which we will continue, like with smaller store size and kiosk, which will also generate on a revenue per square meter, a higher portion as well. The last one, moving on to our 3-year strategy. So just to give you some outlook or guideline. We continue to focus on our revenue growth will be about 12% to 15% on a CAGR basis. We are also looking at the core ROIC to be above 10%. In terms of nonfinancial growth, we want to be an employer of choice, and we will be an employer of choice because of the sheer volume of our business which is driven by people and also to be a sustainable business as well, driving sustainability across all our business units globally. And how are you going to do this? So we have a winning brand portfolio, again, driving growth through market brand portfolio, clustering operations as well. We have a value capture and productivity, Again, looking at short paybacks for our new concepts and our new stores, maximizing ROIC and return on investment, strengthening our capabilities as a group because when you look at Minor Hotels and Minor Food today as the largest global player, one of the largest global players, we can continue to command our position in the marketplace. Investment and partnership. We continue to look at investments and partnerships with joint venture partners with sovereign wealth funds, leveraging our credibility and also on our relationship across all the business units. Digital innovation remains a high priority for us. At Minor Hotels, we're looking at -- we have a multi-brand booking engine. We have data analytics. We have data touch points. We have customer-reach data platform as well. At Minor Food, we can now have customer segmentation. We have product innovation, which is happening. Pizza Company has relaunched with its new brand with the Pizza brand and exciting new products as well. Supply chain and logistics planning and consolidation has been done. Digital touch points have been implemented as well, and the customer engagement and retention of these customers has also been implemented as well. In terms of development, we call it the Talent for the Future. The leadership development and agile adaptability is a continued focus as well. As we all know, Minor Hotels also opened a world-class hospitality school in partnership with Les Roches in -- during the pandemic and the school is now starting to pick up momentum, and we see more and more students enrolling in our school as well. The last one is sustainability framework in terms of people, value chain, planet and governance and share value. So our 3 core pillars are people, value chain and planet and supply and with the foundation of strong governance and shared value for sustainability, the sustainability framework. We then look at some of the 3-year aspirations, which is called Back to Growth. So when you look at 2017 in terms of how we evolve, we have 158 hotels. In 2025, our target is to get to about 600 hotels. We had 132 residences built today in 2017. We have 220 restaurant -- residences built today. 186 vacation club units. We are hoping to get up to 320 vacation club units. 2,064 restaurants in 2017 and going up to 3,400 in 2025. Retail outlets, we -- as we continue to ramp down and making sure that we are focusing on net profit. So we've reduced our retail outlets from 398 to 220. In 2022, as an actual, we are at 531 hotels. So therefore, we feel that we can easily exceed our target in 2025 to 600. In 2022, we had 2,531 restaurants and we think like with China and other places and some of the new concepts we have acquired, where there's Bonchon, there's GAGA, we can get up to 340 restaurants. And the vacation club units, we had 288 and we will get up to 320. So that gives you an outlook in terms of the temperature check as to where we were in 2017 and where we ended up in 2022 and where we will be in 2023, then as an aspiration goal for MINT. That concludes my presentation for MINT. And we can then move on to Q&As if there is any.

[Operator Instructions]. I saw [indiscernible] raising hands, [indiscernible]. While waiting for him, [indiscernible].

I just wanted to get a broad sense on the medium-term outlook for the Europe market. Firstly, what is driving the near-term recovery in the room rates even higher than pre-COVID levels? And are these factors such a number over the medium term?

[ Manish ], thank you for your questions. I think we -- as we see the trend in 2022 in Europe continuing to be stronger despite no Chinese tourists -- no Chinese travel into Europe. We feel that trend will continue based on what we are seeing on our books for 2023, both in terms of MICE business, and also the corporates returning back. And people are -- and because we have our hotels in key destinations and the key cities and some of the best locations as well, we feel that what we have on our books for corporate travel is starting to come back, including meetings, incentive business, conferences book. I'm actually at the moment in Dubai today because we just opened NH Hotel, the first NH hotel in Europe -- sorry, in Middle East. And I can tell you, like we opened with 150 rooms, and we're already running at, which -- the hotel only opened last week, and we're running at 85% occupancy. And last night we were full. So that's Middle East. But when I look at Europe, Europe also continues to be strong. Our quarter 1 in Europe, which is normally a low season, which is affected by winter, is quite strong compared to even last year where we enjoyed -- last year, we had a -- we had the Omicron crisis in Europe in the first quarter. We don't have it this year in the first quarter. But compared to 2019, we see growth in terms of -- mainly driven by rate. So what we are doing is we're actually yielding our rates and managing our rates quite carefully because we have moved into what we call dynamic pricing instead of static pricing and that has also helped us to drive our rates up as well.

Right. On that point, how do you see the supply situation? Is it much lower than what it was pre-pandemic?

The supply at the moment because of pandemic, everything was put on ice. And therefore, there is supply restrictions. And it depends. Like Europe, of course, we have there is barriers of entry in Europe because in most of the key cities like you can't get license to open new hotels where we are shielded by that. And therefore, like as we continue to see demand surging up, all we are doing is we are making sure that we yield those demand base and not driving occupancy as such but driving the rate because with less occupancy and higher rate, our profitability is much stronger as we can control our manpower, we can control our cost of sales, our cost of wages and cost of goods as well.

Sure. And just lastly, on the capital structure, while you shared guidance on revenue growth and ROIC. How do you see your capital structure in 3 years' time? And on that line on CapEx, how do you break that up between maintenance CapEx and growth CapEx for you?

So I think -- well, most of the CapEx because of the last 2 years, we have been preserving cash. Our strategy was to preserve cash during pandemic and making sure that we have enough liquidity in case the pandemic actually extended beyond 2 years. So all those CapExes which were put on hold, we have started to push the button and these are CapEx, which are revenue-generating CapEx. There is some maintenance CapEx, which will continue anyway. But most of the CapEx here, which has been shown here, is basically revenue-generation CapEx, like where it's upgrades and uplift to our rooms and our facilities as well. And in terms of capital structure, as I said before, like you can see our net interest-bearing debt to equity has really come down. And now with our projections in terms of revenue growth of 10% to 15% on a CAGR basis, yielding a higher EBITDA margin and giving us a better cash flow, most of these will be funded through net operating cash flow in the business. And we see our debt -- our net interest-bearing debt further reducing in the coming years as well.

[ Mr. Barnett ].

Okay. Thanks for your presentation. I was wondering about the availability and cost of labor to staff your hotels and all of your eating establishments because I've read that there's a shortage of those type of workers coming back into the labor force. I was wondering how you were kind of deal with that or how you're dealing with that and I'd also like to know about how inflation is impacting your cost of goods in the restaurant business and labor costs in general?

Okay. Thank you, Burnett, for your questions. I think in terms of people, most of the industries today are facing the same challenges in terms of shortage of people and people leaving the industry and moving on. And the impact has been a little bit more severe in hospitality industry and travel as well and mainly driven because of COVID, where we had to make some layoffs, and we had to restructure our labor costs and reduce our costs to save the impact -- to reduce our impact in the last 2 years. As we return back to and surging about pre-COVID levels, mainly driven by occupancy, especially on the hotel side -- sorry, mainly driven by rates and not occupancy, on the hotel side, we have what we call the smart labor planning, which we have done, which we knew it was happening as we started to see the demand coming in, in most of the geographies, Australia, for example, Europe, Thailand, Asia and other places have -- and including Middle East is facing -- they are all facing the same challenges. But what we've done is by doing clustering and also getting labor back on to us, we have been able to actually reduce the impact by large. I think Australia was a little bit more challenging because with the students not returning back to Australia because of the lockdown, but now we see the lockdown has been eased last year, so the students are coming back and the -- and therefore, we are getting the labor force back as well. Europe, we are managing labor really well. And even on the hotel -- on the food side, again, we've been managing the labor force, predominantly our food business stems a lot from Thailand, about 60%, 70% contribution of revenues driven by Thailand and Australia as well. So we are -- we've seen labor sort of returning back where we are able to manage the business. And it's not like we have not been impacted that much because of some of the initiatives we took in the early months. In terms of inflation, cost of goods, as I said before, yes, inflation continues to rise. But what we've done is because we have increased our rates, we have increased our prices on the food as well. We are protected or we have reduced the impact by large in terms of some of the inflationary pressures we are having in different geographies. Same with cost of goods. Cost of goods, most of our contracts have been fixed. So we have these long-term fixed contracts, which has really helped us to protect us against the increases in terms of cost increases for food and beverage and everything else. And because as a result of these long-term fixed contracts, we've been able to reduce or we've been able to maintain our cost base as well. In terms of interest rate hikes, as I explained, we have a much higher base in terms of fixed rate and especially in U.S. dollars, it's almost 100% is fixed. So therefore, we are managing some of these increases, whether it's cost of labor, cost of goods or cost of debt.

Okay. That's a very complete answer. Could I ask 1 question about, what is the impact of the war in Europe on consumer behavior? I mean in terms of hotel, travel or eating out stuff.

So if I look at Europe and when I look at our segments coming from Ukraine or Russia, it's very, very low. But as a result of the war, actually our base now in Middle East, we are seeing a huge surge of the Russian business has really picked up, and it's very strong. And I'm sitting at the NH -- the new NH Hotel in Dubai, we are running at about 85% occupancy. And last night, we were full. And about 40% of our business base is Russians and staying longer period and spending more money because they are allowed to come to the Middle East. It's fairly easy for them to stay here. It's safer. And also the Maldives as well. And now we also see Russians in Thailand as well. So actually -- so when you look at exposure or impact, it's actually in a good way, it's turned -- it's impacted in a positive way. In the Maldives, we've seen a surge in terms of our Russian business. In Thailand, again, and also the Middle East has been very strong.

[indiscernible].

I have some questions on the 2-year plan. Can you talk a bit more about the hotel expansion from 530 hotels to 600. Is that mainly true on balance sheet or more Asset-Light?

It's mainly driven by an Asset-Light strategy, so when you saw the pipeline, right, you see that a lot of our hotels in the next 3 years, are mainly stemming from our Asset-Light strategy. So this slide here, as you can see, we have in terms of our managed and other hotels, we have 22 hotels coming through Asset-Light strategy and only 5 or 6 hotels coming through our Asset-Heavy strategy. And this is mainly some of the hotels, which we started developing pre-pandemic, and we are now completing because during Tandem, we had to put it on ice. And we were not allowed to do construction. So we are completing construction, I'd say, for example, the hotel in the Maldives, Maldives will open on the first of April. We have a hotel in Bali also which will open as well, and then the others will open this year. But mainly -- it's mainly driven by our Asset-Light strategy.

Got it. And to follow up on the 2-year revenue growth, right, of 12% to 15%. Can you walk us through the key driver for this and also a follow-up, is margins stable? Or should we expect a greater flow through to the bottom line?

So our revenue growth is we are based on the prior historics and based on our pipeline, we project close to 12% to 15% growth, mainly contributing from both organic and inorganic growth. So basically, if you look at the hotel side, you've just seen the pipeline. We have all these hotels coming into stream. We have management -- sorry, the Asset-Light strategy kicking in and about 50 hotels coming in as management as well. So that will add to our core revenue growth in terms of inorganic growth. Organic growth, as we continue to increase our rates and set the inflation pressures off, and we are now seeing inflation sort of tapering off in most of the jurisdictions as well. We will continue to enjoy higher margins as our EBITDA keeps improving as well. So growth will be on the food side, again, opening new stores in China, opening stores in Thailand and also rolling out some of our food concepts, which we acquired in the last few years, whether it's Bonchon, whether it's GAGA, whether it's the new Pizza concept and whether it's Poulet, some of our new concepts which we are rolling out. So therefore, the revenue growth will come as a combination of both organic and -- but majority through inorganic growth as well.

Okay. And just 1 last question on 2023. I think you're guiding for better revenue and margins. What are the area of risk that you're looking out for?

In terms of risk, the only risk we are looking for is there is some softening in some of our key markets, whether it's U.K. and Germany, outbound. So as some of these countries are facing some economic headwinds. But we are quite confident that this we are -- we will be able to offset through some of the new destinations, which we have already been active in most of the jurisdictions like we've been -- like today, like we've been very active with India. We are hoping that China -- we know that China will return and we are projecting growth from China only from Q3 of this year because we want to be fairly conservative and realistic as well. We see growth stemming from South America, which is quite strong. We see U.S. -- a strong growth of U.S. outbound business coming in as well because of the strong dollar. And therefore, like we have -- as a result of our diversification in market strategy, we are able to offset some of the challenges which we are seeing in terms of demand growth. The other challenge, of course, we have is, as I said -- as I mentioned before, is labor or cost of the people. We continue to see cost of labor increasing and also pressures in terms of getting talent. Again, we -- through our initiatives we have, we are able to reduce the impact in our businesses across food or hotels. Hence, recently we also opened the world-class hospitality school in partnership with Les Roches to create that talent pool as well for our future growth. So I think -- and then of course, like some of the challenges like where we have foreseen interest rates hike and we have worked proactively to try and reduce them by switching our debt from floating to fixed and also using some of the derivative instruments to also protect us against the interest rate hikes as well. We are hopeful that by next year, interest rates will -- towards the end of next year, interest rates will start to taper off or start to reduce whilst inflation will also continue to go down as well. So these are some of the headwinds, which we have -- we are projecting and taking measures against the ones we can control. And the ones we can't control, we have to make sure that we can navigate through these difficult periods as well.

Next question will be from [indiscernible].

I have a couple of questions. The first one is on your 3-year expansion where you talk about more Asset-Light to Asset-Heavy, right? From my understanding, it takes about 10 to 12 Asset-Light contracts for -- to be equivalent to about 1 Asset-Heavy expansion. So in terms of operation, what is harder and what I'm trying to get at is basically how sustainable is this magnitude of Asset-Light expansion in the medium to longer term for you guys?

Well, thank you, and it's a good question actually because yes, the asset -- actually, we're trying to move from Asset-Heavy to Asset-Light. And that's mainly because of the growth we are experiencing as a global company now where we are able to get more management contracts. And when you look at China, for example, the opening of the China gateway is huge for us. Look at -- when you look at our pipeline and in terms of the number of hotels we will open in China as a result of our joint venture, which we established during COVID. Yes, the Asset-Heavy has a higher equity contribution, but it comes at a cost because the CapEx is high, we have to leverage through debt and all those things. But when you look at net-net sometimes and when we have our distribution platform, which is strong and which we can grow easily without adding any costs to it because all we are doing is we're doing a plug and play into some of the gateway key cities. We feel that we can drive more in terms of profits from an asset line -- Asset-Light perspective by not compromising our debt situation as we continue to focus on our debt because our focus is also not net debt-to-EBITDA -- sorry, not net debt-to-equity, but it's also net debt-to-EBITDA because we want to reduce that. Our strategy is to reduce that to less than 5x in the coming years. And therefore, like -- and that's the reason we are adopting this strategy. And it's just the event where we are -- more demand coming through management contracts. Like say, for example, in the Middle East, we've always said we will not invest because of the optics in terms of the cost -- investment costs and debt and all those things. But our pipeline in the Middle East has been very strong. We have more than 40 hotels in the Middle East today and the pipeline is very strong again. China, again, we are not investing in hotels. We have a JV in China. Again, China, the pipeline is quite strong. Europe, we're doing some sale and leaseback, which actually reduces our debt exposure in terms of buying assets. And if we are buying assets, we are buying them with some of our strategic partners or sovereign wealth funds, like, for example, last year, as you know, we also concluded joint venture -- sorry, we did a deal with the Abu Dhabi -- ADFD, Abu Dhabi Fund, where the fund where they came into -- they invested about just over $100 million on some of our assets in Thailand. So therefore, we are looking at a mix of all this to manage our business on one side to keep growing our earnings which is the revenue growth I gave you. And as a result of that, the earnings will grow as well. And to -- on the other side, to continue to do the balance sheet management where we can continue to reduce our net debt and reduce the net debt over EBITDA as well.

So you talked about balance sheet management and looking at net debt. So my question is that if you have -- you talked about exploring new asset acquisition with JV partners, the question is, are you looking at a deal similar to the Abu Dhabi one you did last year or a new asset acquisition with JV partners? That's the first part. And then the second part is that if you are looking basically to run down debt quite quickly, like you mentioned, could we potentially see perp being recalled earlier or in the medium term? What's your thought on that?

So to answer your first question, whether we see opportunities to do deals like what we did with ADFD last year. Yes, there is because I think based on our first -- the entry into ADFD, which is sovereign wealth fund, they are so happy with the performance, and they would like to do more with us this year and we are hoping we will be able to announce something soon with them again, where as part of or expansion plan, they will also help us to expand so that we don't take on 100% of equity risk. In terms of asset rotation, we continue to look at asset rotation as well. But asset rotation has always been 1 of our strategic pillars. And what we are doing is we are rotating high-yielding assets and investing and where the assets are mature or where we see that there is a lot of need for CapEx. And we don't see the return on investment on those assets. We will rotate them. And we have done that last year. You saw the ones we've done where we did a sale and manage back in Portugal. We've done the sale of the asset in London, where we've been able to sell a mature asset at a really good price. So that will continue. And then the last question, the second question was -- sorry, what was your second question?

Now that you are running down debt quite quickly. Are the perpetuity bonds being considered for recall, yes?

Yes. Yes. I think with the perps, we were quite proactive in terms of perps. And what we're doing is we are using the perps to dial down or repay some of the high interest rate debt. And also perps gives us the equity accounting as well. So I don't see us -- well, we are -- this year, we have a U.S. dollar perp maturing as well, which we took in during the pandemic. So we are using that to reduce our high interest-bearing debt and also using that to shore up equity in our balance sheet as well.

And last question for me is you talked about ADR being able to be increased across the region, across your key markets. But given the different stage of recovery, could you zoom in into different markets. For example, in Europe, how much further can ADR grow when it's already about 20-something percent above 2019 level.

Yes. So I think in Europe, our focus is driving rates again. And I think we want to make sure that we drive rates above inflation and above cost of labor and some of the headwinds we are facing with regards to cost of operations, actually, whether it's laundry, whether it's energy, energy costs have spiraled up quite drastically and quite significantly in Europe. So what we want to do is our focus is to ensure that we keep growing our EBITDA margin and not diluting our EBITDA margin. And therefore, we focus on some of the new key segments in Europe, the key segments where we are getting a higher rate through our dynamic pricing model which we implemented a few years ago, and it's working really well because we've seen the results last year. And we continue to see the results this year as well. And the outlook, what we have on our books is quite strong in Europe. Moving on to Australia. Australia continues to benefit from the rate hike -- the rate increases. But would we see 40%, 60% rate increases this year? No. I think it will dial down a bit. But would our margins improve from last year? Yes. And would our earnings improve from last year? Yes. Maldives. Again, Maldives is starting to soften because the other markets are opening, like Maldives was the first to open just post pandemic and the Middle East. But what we are doing is we are managing the different market segments and the different geographies in the Maldives as well to ensure that we don't see a drop in certain markets. And I think with Maldives, it's a unique destination and people will always still go to the Maldives. And with the Chinese tourism emerging maybe in Q3, that will also help us to drive demand in the Maldives. Asia and Thailand, as you know, like we've seen demand. And also we've seen some of the government initiatives as well to help to drive tourism and to help to drive domestic tourism as well. Our rates have been very strong. Actually, because it depends on which segment you operate, if you look at the luxury segment, the rate -- there's not much rate resistance as long as you manage your inventory carefully and manage your rates carefully. So we've been quite mindful that we don't sort of dump our rates or do heavy discounting like some of the others are doing and panicking way ahead of time. So we continue to monitor through our technology and through our AI, and we manage those rates quite carefully.

Two questions will be related to financial. The first question is about the current interest rate portion. So fix is at 56%. So due to the rising interest rate environment, can you guide what is the target proportion of the fixed portion at the end of the year?

So -- well, I think if you look at that slide where we showed the interest rates -- when you look at euros, we have 60% fixed and 40% floating and we are paying down debt. So I hope -- we are hopeful that we will be able to move more towards fixed. U.S. dollars, 93% is fixed. Australian dollar, we just did the refinancing, 100% floating, but we are in the process of hedging which is underway. And Thai Baht is 42% fixed and 50% -- versus 58%, which is floating. And the maturity of the Thai Baht floating is about 3 years whilst the VOT has increased at a slower pace compared to the other currencies. So I think from a -- we will -- we are trying to move more towards fixed but making sure that we try not to jump too fast and fix these rates at a higher cost now knowingly that the interest rates will start to taper off next year.

Just to add similar to what I explained in the last quarter, our fixed float split strategy is to heighten the proportion of fixed higher than float. Say, for example, 50-50 fixed float, we're going to increase fix to higher than like up to 60% in the rising rate environment. We did so in the past, but this quarter, it's come down to 56% only because 1 of our syndicated loans in Aussie dollars has been refi or refinanced just this past December and then the process of doing hedging to attach to this new refi syndicated loans in Aussie dollar are still underway. We're still waiting for a market window like Dilip said, we have to get the right both optimal price -- hedging pricing to go in through that hedging strategy. Hence, at the moment, at the end of the year, Aussie dollar position, we still have like 100% float, but we're going to increase that into fixed portion pretty soon with the hedging strategy.

The next question related on finance, as well on financing. It's about how much percentage of the asset-backed debt from total interest-bearing debt.

Let me take this because it's on -- you can find it in our balance sheet as well on note to financials. If you look at on a consolidated basis, our debt exclude perps roughly about 4% are min secured debt and another 29% are subsidiary debts and 67% are min unsecured debt. But if you look at the consolidated base, it includes perps, which recorded in equity section. Total min-secured debts will be roughly about 15% to 16%. And subsidiary debt will be about 20-ish percent, while the rest 55% will be unsecured. You can find more detail in the note to financial of our balance sheet, too.

Next question is related to the demand again. Does the management think that the revenge travel, the cliche demand going to happen again this year as well. So how do you think that the hotel situation, particularly in Europe with expected mild recession there in the first quarter.

So [indiscernible], I'll take it. As I covered before, yes, there was pent-up demand and what we call, revenge travel. We also see some of the new trends now. We call it bleisure, where it's business with leisure. And now the new trend is what we call less B, which is more leisure with a little bit of business. So there's these new trends which are coming up as well. Now therefore, people are taking more sort of -- with working remotely, spending more time with family, friends and the generational travel, we see that trend continuing actually because last year, when most of the European borders opened, yes, the pent-up demand was very strong. But we actually did plan that this pent-up demand will taper off but it does continue at the moment. And now what we are seeing is the corporate market is coming up to actually reduce -- to mitigate the risk of the revenge travel or the pent-up demand sort of reducing over the number of months. And we see this as a trend. We see new markets opening. So therefore, our focus is managing our demand by geographies and shifting from lower-demand geographies to high-demand geographies like say, we're focusing on the Russian market for Middle East, Maldives and Thailand. We are focusing on the Indian market for some of the other Asian locations. Indian market is also traveling quite strong into Europe as well now. So therefore, we see this not revenge travel. Yes, revenge travel will start to taper off over the period, but we also see these other new markets coming in to offset that reduction in revenge travel. And on the restaurant side, as you can see, like dine-in business is coming in quite strong as, again, we will benefit from China now opened its borders. We've already seeing a V-shape curve in China. And therefore, again, on the food business, we will see quite a strong positive recovery this year.

[indiscernible] raising hands again.

Just a quick follow-up on the fixed rate debt, right? I think, you mentioned that you do expect interest rate to taper off next year. Does it still make sense to increase the fixed portion at this juncture? And also, typically, how long are the debt fixed for?

Well, it depends on the portion and geography and the loans that we have. But at this juncture, will not have like a [ stepping ] stone what we should do, but in theory, we wouldn't have like adjust from 50-50 to 60 fixed -- in a rising interest rate environment, were up the fixed portion to 60. But when we see the rate trend coming down, we're going to adjust down the fixed proportion and get the floating portion up. That's what we have done in the past few years, as you can see in our record. So we will continue to be agile and look at the situation on an ongoing basis to adjust this number.

Next question is on the mixed-use business. Can you talk about the 2023 prospect from its U.S. business and AVC compared to pre-COVID level?

So the mixed-use business comprises of AVC. It comprises of residential, and it comprises of plaza as well. So the AVC business or our Anantara Vacation Club, the timeshare business will be stronger this year as China opens because we've not been able to really increase our membership base there. And therefore, with China opening, that will help a lot. So therefore, we see the timeshare business actually becoming stronger. We are just about to launch timeshare in the Middle East. We are in the process of getting our license and that will help as well for us to continue to increase that base and the business in the timeshare business. The challenge we've had is the last 2 years, our members have not been able to use their points. So we will see a lot of the points usage this year in terms of members using their points, but also increase in terms of member base will be driven coming from China, coming from Asia, coming from with the opening of the Middle East. So therefore, we see that business actually growing this year as well. And with regards to residential, like most of our -- we are launching the new projects, which is in the pipeline. Desaru in Malaysia, was launched as well. So we are starting to sell, which has a -- it's a time lag because with the residential business, like it was quite strong during COVID and now like we are -- with the new pipeline coming, we hope that we can continue to maintain that as a core business as well. So Desaru is coming. Bali also will open this year, so we will have residences to sell in Bali as well. So again, the residential business will continue to grow under the mixed-use segment.

[indiscernible]. All right. So we go ahead on the question on [indiscernible]. Yes, we do.

Okay. Just a question on the tax rate. In the past year, tax rate was relatively high 35%. Can you provide a little bit more details on the reasoning of such a high tax rate last year? And what is the expected effective tax rate going forward?

Well, I think it's a combination of deferred tax adjustment as well as the -- some of the entities that start to generate profit, start to have to pay tax, but you cannot see it holistically at the consolidated entity because we have to look at how we pay tax on the individual entity basis. So some of the entity that generate -- start to generate profit, start to pay tax, but we wouldn't be able to use that entity that may make losses to compensate for the entity that make probably not to pay tax. So a combination of those things, I think, make our tax -- effective tax rate a little bit higher last year. And you can see the detailed deferred tax adjustment in our note to financial as well.

Can we expect it to come down back closer to historical rate this year?

Yes, we aim to see it normalize once the entity -- most of the -- majority of our entities start to make profits and almost all of our entities make profit. So when business activity is back to normal, we should get back to our normal tax rates -- effective tax rates.

Next question is on the energy cost. The price of the European natural gas has decreased quite a lot since [ mid of ] 2022. So the contract that we have in the price, is it still below the market price?

Yes. So in Europe, we have negotiated the energy prices. We just also concluded the negotiation of energy prices in the U.K. saving us about GBP 700,000 over the next 2 years. And in other jurisdictions also, we have -- the energy prices have been contracted as well. And therefore, we see even though the demand is coming and the energy usage is higher, at a slightly higher price because the new contracted prices are higher than the baseline pricing. We -- most of these price increases have been mitigated by the rate increase, which we are seeing in Euro.

Due to the limited time, we think we will conclude the presentation here. If there are further questions, our IR team are more than happy to take them any time after this. So this concludes our presentation of the year-end 2022. Thank you very much and have a good day, everyone.

Thank you.

Thank you.