Hutchison Whampoa Limited Annual Report 2001 Working Aroundtheworld Business Highlights2001 South Korea
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Contents 02 Business Highlights 2001 04 Financial Highlights 05 Analysis by Core Business of Group Turnover, EBIT and Profit 06 Chairman’s Statement 12 Operations Review 14 Ports and Related Services 22 Telecommunications 30 Property and Hotels 40 Retail and Manufacturing 46 Energy, Infrastructure, Finance and Investments 58 Biographical Details of Directors and Senior Management 60 Report of the Directors 71 Auditors’ Report 72 Consolidated Profit and Loss Account 73 Consolidated Balance Sheet 74 Balance Sheet of the Company, Unconsolidated 75 Consolidated Cash Flow Statement 76 Consolidated Statement of Total Recognised Gains and Losses 77 Notes to the Accounts 109 Principal Subsidiary and Associated Companies and Jointly Controlled Entities 117 Schedule of Principal Properties 122 Ten Year Summary 123 Notice of Meeting 23 :00 00 :00 01 :00 02 :00 03 :00 04 :00 05 :00 06 :00 07 :00 08 :00 09 :00 10 :00 11 :00 12 :00 13 :00 14 :00 15 :00 16 :00 17 :00 18 :00 19 :00 20 :00 21 :00 22 :00 1 Business Highlights 2001 Working around the world HPH obtains the HPH acquires HPH increases Hutchison Hutchison Hutchison acquires rights to operate eight port effective interest in Telecommunications is awarded 3G an additional three and develop Phase II operations from ECT, Rotterdam, to launches its GSM licences in Denmark mobile licences in of Kwangyang Port, the Philippines- 75.5%. dualband mobile and in Hong Kong. India’s Karnataka, South Korea. based ICTSI. service in Macau. Chennai and Andhra Pradesh. Ports and Related Services Telecommunications Hutchison Port Holdings (“HPH”) is Hutchison Telecommunications operates one of the world’s leading port investor, a wide range of integrated developer and operator with interests telecommunications services worldwide in Asia, Africa, Europe and the Americas. and is one of the world’s major providers Today, HPH operates a total of 169 berths of mobile communications. in 30 ports along with a number of transportation related service companies. Hutchison Whampoa Limited Annual Report 2001 2 Harbour Plaza Phase I of Le Parc Pacific Century PARKnSHOP Watsons Water Powwow is Hongkong Electric Hong Kong in Shenzhen is Place in Tokyo is opens its first launches a ranked the completes its is voted the“Best completed and all completed. megastore in new identity No 1 cooler preparatory work for a Business Hotel” in units sold. Guangzhou’s encompassing brand in the UK. new 22kV distribution the Asia Pacific Tianhe district, a bigger range of voltage system, the first region. China, and proves water products. of its kind to be to be very popular. introduced in Hong Kong. Property and Hotels Retail and Manufacturing Energy, Infrastructure, Hutchison Whampoa Property develops A S Watson operates three established Finance and Investments residential and commercial properties retail chains in Asia: PARKnSHOP The Group has major shareholdings for sale and lease. The Group’s hotel supermarkets; Watson’s personal care in Cheung Kong Infrastructure, division manages and operates hotels stores; and Fortress electrical appliances a diversified infrastructure company; under the name Harbour Plaza Hotels stores. It also operates one in the UK: Hongkong Electric, the sole supplier and Resorts. Savers. The manufacturing division of electricity to Hong Kong and produces and distributes a wide range Lamma Islands; and Husky Energy, of water and beverages brands in one of Canada’s largest integrated Asia and Europe. energy and energy related companies. 3 Financial Highlights Net Assets per Share 2001 2000 Percentage HK dollars HK$ millions HK$ millions change Turnover Company and subsidiary companies 61,460 57,022 +8% 59.4 58.7 Share of associated companies and jointly controlled entities 27,578 27,803 –1% 51.2 89,038 84,825 +5% Earnings before interest and other finance costs and taxation Company and subsidiary companies 14,582 13,347 +9% 21.1 Share of associated companies and 20.6 jointly controlled entities 7,264 6,220 + 17% Total earnings before interest and other finance costs and taxation (“EBIT”) 21,846 19,567 + 12% 97 98 99 00 01 Profit on disposal of investments less provisions 3,124 25,742 – 88% Interest and other finance costs Company and subsidiary companies 6,952 6,460 +8% Share of associated companies and jointly controlled entities 1,815 1,454 +25% Earnings and Dividends per Share Profit before taxation 16,203 37,395 –57% HK dollars Taxation 2,305 1,978 + 17% Profit after taxation 13,898 35,417 – 61% 27.52 Minority interests 1,810 1,299 + 39% Profit attributable to shareholders 12,088 34,118 –65% 8.00 Total assets 431,405 441,400 –2% Net debts (Note 1) 1,656 N/A N/A Shareholders’ funds (Note 2) 218,273 253,348 – 14% Net assets per share - book value (HK$) (Note 2) 51.2 59.4 – 14% 2.92 2.84 Earnings per share (HK$) 2.84 8.00 –65% 2.05 1.73 1.73 Dividends per share (HK$) 1.73 1.73 N/A 1.48 1.44 1.16 97 98 99 00 01 Dividend cover 1.6 4.6 –65% Earnings Net debts / net total capital 0.7% N/A N/A Dividends Return on average shareholders’ funds (Note 2) 5.1% 13.5% – 62% Note 1: Net debt is defined as total interest bearing borrowings net of cash and cash equivalents, managed funds, long term deposits and listed debt and equity securities (“cash and liquid investments”). Net total capital is defined as total borrowings plus share capital, reserves and minority interests net of cash and liquid investments. In 2000, cash and liquid investments exceeds total interest bearing borrowings. Note 2: The comparative figures of net assets and shareholders’ funds have been restated to comply with the current year’s presentation. Hutchison Whampoa Limited Annual Report 2001 4 Analysis by Core Business of Group Turnover, EBIT and Profit Turnover by 2001 2000 Percentage Geographical Area 2001 HK$ millions HK$ millions change Turnover Ports and related services 15,505 14,226 +9% Telecommunications 11,468 10,057 + 14% 20% Property and hotels 5,516 7,273 – 24% Retail and manufacturing 29,543 27,248 +8% 7% Cheung Kong Infrastructure 10,079 8,897 + 13% 14% Husky Energy 11,801 11,442 +3% Finance and investments 5,126 5,682 – 10% 47% 12% Total 89,038 84,825 +5% EBIT Ports and related services 5,791 5,341 +8% Telecommunications 719 476 + 51% Hong Kong Property and hotels 1,717 1,536 + 12% Mainland China Retail and manufacturing 537 665 – 19% Asia and Australia Cheung Kong Infrastructure 4,589 3,972 + 16% Europe Americas and others Husky Energy 2,036 2,116 –4% Finance and investments 6,457 5,461 +18% Total 21,846 19,567 + 12% EBIT by Geographical Area 2001 Profit attributable to shareholders Ports and related services 2,683 2,653 +1% Telecommunications 6,543 21,818 – 70% Property and hotels (1,984) (997) – 99% Retail and manufacturing (229) (217) –6% 34% Cheung Kong Infrastructure 2,253 2,689 – 16% Husky Energy 916 5,266 –83% Finance and investments 1,906 2,906 – 34% Total 12,088 34,118 – 65% 5% 7% 45% 9% The above information includes the Company, its subsidiary companies and its proportionate share of associated companies’ and jointly controlled entities’ respective items. Hong Kong Mainland China Asia and Australia Europe Americas and others 5 Chairman’s Statement The Group’s audited profit attributable to shareholders for the year amounted to HK$12,088 million (2000 – HK$34,118 million). Earnings per share amounted to HK$2.84 (2000 – HK$8.00). Excluding profits on disposal of investments less provisions of HK$3,124 million (2000 – HK$25,742 million), the Group’s profit increased 7% over the previous year. In the first half of 2001 the Group recorded a profit of HK$30,000 million on the disposal of its investment in VoiceStream. During the second half of the year, the Group recognised further profits on disposal of investments totalling HK$4,393 million from the sale of approximately 695 million shares of Vodafone Group (at an average price of £1.75) and approximately 89 million shares of Deutsche Telekom (at an average price of €21.26) pursuant to forward sales contracts for delivery in 2002. Partially offsetting these investment profits, the Group has made provisions totalling HK$31,269 million for the full year, which is comprised of a HK$1,500 million provision for certain property developments and a HK$29,769 million provision for diminution in value of its portfolio of equity investments. Overall, the Group has provisions on hand to fully cover the Group’s investments in Global Crossing and its subsidiary Asia Global Crossing. The Group’s provisions for diminutions in value of its portfolio of equity investments should be viewed in the context of the transactions that gave rise to these holdings. The equities were received as part of the consideration from the disposals over the last three years of certain second generation and other telecommunication assets near the height of their market valuation. Although the Group has made provisions, including those above, for the recent declines in equity market values, the Group has realised net profits of over HK$140,000 million from these transactions in 1999, 2000 and 2001. Hutchison Whampoa Limited Annual Report 2001 6 Significant continuing investment activities in all core businesses DIVIDEND Your Directors will recommend a final dividend of HK$1.22 per share (2000 – HK$1.22) at the forthcoming Annual General Meeting. This, together with the interim dividend of Ports and Related Services HK$0.51 paid on 16 October 2001 gives a total dividend of The Group’s ports and related services division reported HK$1.73 per share (2000 – HK$1.73).