Ports and Related Services Retail Infrastructure Energy Telecommunications 2015 Annual Report 22nd Floor, Hutchison House, 10 Harcourt Hutchison House, Hong Kong Road, 22nd Floor, Telephone: +852 2128 1188 Facsimile: www.ckh.com.hk +852 2128 1705 Corporate Information CK Hutchison Holdings Limited Board of dIreCtors eXeCUtIVe dIreCtors NoN-eXeCUtIVe dIreCtors Chairman CHOW Kun Chee, Roland, LLM LI Ka-shing, GBM, KBE, LLD (Hon), DSSc (Hon) LEE Yeh Kwong, Charles, GBM, GBS, OBE, JP Commandeur de la Légion d’Honneur Grand Officer of the Order Vasco Nunez de Balboa LEUNG Siu Hon, BA (Law) (Hons), Hon LL.D. Commandeur de l’Ordre de Léopold George Colin MAGNUS, OBE, BBS, MA Group Co-Managing director and INdepeNdeNt NoN-eXeCUtIVe dIreCtors Deputy Chairman KWOK Tun-li, Stanley, BSc (Arch), AA Dipl, LLD (Hon), ARIBA, MRAIC LI Tzar Kuoi, Victor, BSc, MSc, LLD (Hon) CHENG Hoi Chuen, Vincent, GBS, OBE, JP Group Co-Managing director The Hon Sir Michael David KADOORIE, GBS, LLD (Hon), DSc (Hon) FOK Kin Ning, Canning, BA, DFM, FCA (ANZ) Commandeur de la Légion d’Honneur Commandeur de l’Ordre des Arts et des Lettres Commandeur de l’Ordre de la Couronne CHOW WOO Mo Fong, Susan, BSc Commandeur de l’Ordre de Leopold II Group Deputy Managing Director LEE Wai Mun, Rose, JP, BBA Frank John SIXT, MA, LLL Group Finance Director and Deputy Managing Director William Elkin MOCATTA, FCA Alternate to Michael David Kadoorie IP Tak Chuen, Edmond, BA, MSc Deputy Managing Director William SHURNIAK, SOM, LLD (Hon) KAM Hing Lam, BSc, MBA WONG Chung Hin, CBE, JP Deputy Managing Director WONG Yick-ming, Rosanna, PhD, DBE, JP LAI Kai Ming, Dominic, BSc, MBA Deputy Managing Director aUdIt CoMMIttee CoMpaNY seCretarY WONG Chung Hin (Chairman) Edith SHIH, BSE, MA, MA, EdM, Solicitor, FCIS, FCS(PE) KWOK Tun-li, Stanley CHENG Hoi Chuen, Vincent aUdItor William SHURNIAK PricewaterhouseCoopers reMUNeratIoN CoMMIttee BaNKers WONG Yick-ming, Rosanna (Chairman) The Hongkong and Shanghai Banking Corporation Limited LI Ka-shing Bank of China (Hong Kong) Limited CHENG Hoi Chuen, Vincent Standard Chartered Bank (Hong Kong) Limited WONG Chung Hin Contents Corporate Information 1 Contents 2 Corporate Profile 4 Analyses of Core Business Segments by Geographical Location – Pro forma basis 5 Analyses by Core Business Segments 6 Key Financial Information 7 Key Business Indicators 8 Business Highlights 10 Chairman’s Statement 16 Operations Review 20 Ports and Related Services 28 Retail 40 Infrastructure 46 Energy 52 Telecommunications 68 Finance & Investments and Others 73 Additional Information 80 Group Capital Resources and Liquidity 86 Risk Factors 91 Environmental, Social and Governance Report 103 Information on Directors 121 Information on Senior Management 123 Report of the Directors 150 Corporate Governance Report 169 Independent Auditor’s Report 170 Consolidated Income Statement 171 Consolidated Statement of Comprehensive Income 172 Consolidated Statement of Financial Position 174 Consolidated Statement of Changes in Equity 177 Consolidated Statement of Cash Flows 179 Notes to the Financial Statements 276 Principal Subsidiary and Associated Companies and Joint Ventures 280 Independent Assurance Report on the Unaudited Pro Forma Financial Information 282 Reconciliation from CKHH Statutory Results to CKHH Pro Forma Results 283 Ten Year Summary Information for Shareholders 2015 Annual Report 1 Corporate Profile Hutchison Group (the “Group”) is a renowned multinational conglomerate committed CKto development, innovation and technology in many different sectors. We operate a variety of businesses in over 50 countries across the world with over 270,000 employees. We have a strong commitment to the highest standards of corporate governance, transparency and accountability, which has been recognised by numerous international awards and commendations. Our operations consist of five core businesses – ports and related services, retail, infrastructure, energy, and telecommunications. Ports and Related Services We are the world’s leading port investor, developer and operator, holding interests in 48 ports comprising 269 operational berths in 25 countries, including container terminals operating in five of the 10 busiest container ports in the world. In 2015, our ports handled a total throughput of 83.8 million twenty-foot equivalent units (“TEU”). We also engage in mid-stream operations, river trade, cruise terminal operations and ports related logistics services. Retail The Group’s retail division is the largest international health and beauty retailer in Asia and Europe with over 12,000 retail stores in 25 markets worldwide. Its diverse retail portfolio comprises health and beauty products, supermarkets, and consumer electronics and electrical appliances. It also manufactures and distributes bottled water and beverage products in Hong Kong and Mainland China. 1 2 CK Hutchison Holdings Limited Infrastructure The Group’s infrastructure business includes its shareholding in Cheung Kong Infrastructure Holdings Limited (“CKI”), interests in six infrastructure assets that are co-owned with CKI, as well as its aircraft leasing business. CKI is the largest publicly listed infrastructure company in Hong Kong with diversified investments in energy infrastructure, transportation infrastructure, water infrastructure, waste management and infrastructure related business. It operates mainly in Hong Kong, the Mainland, the United Kingdom, the Netherlands, Portugal, Australia, New Zealand and Canada. The Group’s aircraft leasing business has a portfolio of over 60 aircraft leased to commercial airlines. Energy The Group’s investments in energy are principally in Western and Atlantic Canada, the United States and the Asia Pacific Region. Husky Energy Inc (“Husky Energy”) is an integrated energy company listed in Canada. Telecommunications We are a leading global operator of mobile telecommunications and data services, and a pioneer of mobile broadband technology. We are also a major owner and operator of fibre-optic fixed-line networks in Hong Kong. Our operations offer telecommunications services including 4G long-term evolution (LTE) and 3G multi-media mobile, second- generation mobile, fixed-line, Internet and broadband services, including international connectivity services over both fibre-optic and mobile networks. 2015 Annual Report 3 Analyses of Core Business Segments by Geographical Location - Pro forma basis (before profits on disposal of investments & others) ^ 2015 Pro forma Total Revenue Ports & Related Services HK$396,087 million Retail 3% Europe Infrastructure Canada HK$182,010 million 6% HK$37,953 million Energy 35% Telecommunications 40% Asia, Australia 97% & Others # 14% HK$50,403 million 33% 19% 24% Canada 9% Asia, Australia & Others # 29% Europe 13% 46% (of which the UK 21%) ^ Hong Kong 2015 Pro forma Total EBITDA HK$62,691 million 4% Hong Kong 16% HK$92,093 million 33% Mainland Europe China 6% HK$48,843 million 6% 56% 10% 6%* 14% 7% Canada HK$7,007 million 7% 3% 10% 36% 8% Asia, Australia & Others # 94% Mainland China 7% 44% HK$40,467 million HK$16,724 million 37% Canada 72% 8% 48% Asia, Australia & Others # 8% 18% Europe ^ 2015 Pro forma Total EBIT 53% 11% Hong Kong (of which the UK 34%) HK$62,079 million 6% 21% Mainland Europe 48% China Canada 31% HK$34,960 million 5% HK$1,069 million 13% 17% 33% 20% 1% 69% Hong Kong 19% HK$5,856 million 2% * 25% 9% Canada 34% 2% 45% 11% 44% 48% Asia, Australia Mainland China 9% & Others # HK$11,521 million Asia, Australia & Others # 20% HK$12,801 million Europe Hong Kong 56% 4% 5% (of which the UK 37%) 27% Mainland China 47% 14% 22% 1% Hong Kong 18% 19% HK$2,974 million 3% * * Represents contributions from Finance & Investments and Others 9% # Includes Panama, Mexico and the Middle East Includes contribution from the USA for Husky Energy Mainland China ^ The basis of preparation is set out in note 1 on Page 5 and the HK$8,453 million 53% “Reconciliation from CKHH Statutory Results to CKHH Pro Forma Results”. 4 CK Hutchison Holdings Limited Analyses by Core Business Segments CKHH Pro forma Results(1) HWL Results(2) for the year ended for the year ended 31 December 2015 31 December 2014 HK$ millions HK$ millions Change % Total Revenue (3) Ports and related services (3) 33,767 35,624 -5% Retail 151,903 157,397 -3% Infrastructure 43,844 45,419 -3% Husky Energy 33,824 57,368 -41% 3 Group Europe 62,799 65,623 -4% Hutchison Telecommunications Hong Kong Holdings 22,042 16,296 35% Hutchison Asia Telecommunications 6,900 5,757 20% Finance & Investments and Others 19,668 21,389 -8% Total Comparable Revenue 374,747 404,873 -7% Additional Contributions (4) 21,340 – NA Total Revenue 396,087 404,873 -2% EBITDA (3) Ports and related services (3) 11,840 12,133 -2% Retail 14,838 15,549 -5% Infrastructure 24,147 24,483 -1% Husky Energy 7,922 14,410 -45% 3 Group Europe 17,396 15,598 12% Hutchison Telecommunications Hong Kong Holdings 2,891 2,780 4% Hutchison Asia Telecommunications 1,176 (278) 523% Finance & Investments and Others 1,786 3,461 -48% Total Comparable EBITDA 81,996 88,136 -7% Additional Contributions (4) 10,097 – NA Total EBITDA before profits on disposal of investments & others 92,093 88,136 5% EBIT (3) Ports and related services (3) 7,887 7,944 -1% Retail 12,328 13,023 -5% Infrastructure 18,101 18,215 -1% Husky Energy 1,884 6,324 -70% 3 Group Europe 11,664 6,892 69% Hutchison Telecommunications Hong Kong Holdings 1,448 1,380 5% Hutchison Asia Telecommunications 1,176 (1,465) 180% Finance & Investments and Others 1,540 3,000 -49% Total Comparable