2020 Annual Report Sustainable Future 2020 Annual Report Corporate Information BOARD OF DIRECTORS AUDIT COMMITTEE CHENG Hoi Chuen, Vincent (Chairman) Executive Directors KWOK Tun-li, Stanley LI Tzar Kuoi, Victor, BSc, MSc, LLD (Hon) WONG Kwai Lam Chairman and Group Co-Managing Director FOK Kin Ning, Canning, BA, DFM, FCA (ANZ) NOMINATION COMMITTEE Group Co-Managing Director WONG Yick-ming, Rosanna (Chairman) (2) Frank John SIXT, MA, LLL (3) Group Finance Director and Deputy Managing Director LI Tzar Kuoi, Victor (4) IP Tak Chuen, Edmond, BA, MSc FOK Kin Ning, Canning Deputy Managing Director Frank John SIXT (4) (4) KAM Hing Lam, BSc, MBA IP Tak Chuen, Edmond Deputy Managing Director KAM Hing Lam (4) LAI Kai Ming, Dominic, BSc, MBA LAI Kai Ming, Dominic (4) Deputy Managing Director Edith SHIH (4) Edith SHIH, BSE, MA, MA, EdM, Solicitor, CHOW Kun Chee, Roland (4) FCG (CS, CGP), FCS (CS, CGP) (PE) LEE Yeh Kwong, Charles (4) Non-Executive Directors LEUNG Siu Hon (4) (4) CHOW Kun Chee, Roland, LLM George Colin MAGNUS (4) LEE Yeh Kwong, Charles, GBM, GBS, OBE, JP WOO Mo Fong, Susan (alias CHOW WOO Mo Fong, Susan) KWOK Tun-li, Stanley (4) LEUNG Siu Hon, BA (Law) (Hons), LL.D. (Hon) CHENG Hoi Chuen, Vincent George Colin MAGNUS, OBE, BBS, MA The Hon Sir Michael David KADOORIE (4) WOO Mo Fong, Susan, BSc LEE Wai Mun, Rose (4) (alias CHOW WOO Mo Fong, Susan) WONG Kwai Lam (4) Independent Non-Executive Directors KWOK Tun-li, Stanley, BSc (Arch), AA Dipl, LLD (Hon), ARIBA, MRAIC REMUNERATION COMMITTEE CHENG Hoi Chuen, Vincent, GBS, OBE, JP WONG Yick-ming, Rosanna (Chairman) LI Tzar Kuoi, Victor The Hon Sir Michael David KADOORIE, GBS, LLD (Hon), DSc (Hon) Commandeur de la Légion d’Honneur CHENG Hoi Chuen, Vincent Commandeur de l’Ordre des Arts et des Lettres WONG Kwai Lam Commandeur de l’Ordre de la Couronne Commandeur de l’Ordre de Leopold II SUSTAINABILITY COMMITTEE LEE Wai Mun, Rose, JP, BBA Frank John SIXT (Chairman) William Elkin MOCATTA, FCA Alternate to The Hon Sir Michael David Kadoorie Edith SHIH WONG Yick-ming, Rosanna Paul Joseph TIGHE (1), BSc WONG Kwai Lam, BA, PhD COMPANY SECRETARY WONG Yick-ming, Rosanna, PhD, DBE, JP Edith SHIH, BSE, MA, MA, EdM, Solicitor, FCG (CS, CGP), FCS (CS, CGP) (PE) SENIOR ADVISOR LI Ka-shing, GBM, KBE, LLD (Hon), DSSc (Hon) AUDITOR Commandeur de la Légion d’Honneur Grand Officer of the Order Vasco Nunez de Balboa PricewaterhouseCoopers Certified Public Accountants Commandeur de l’Ordre de Léopold Registered Public Interest Entity Auditor Notes: (1) Appointed as Director on 28 December 2020 (2) Appointed as Chairman on 26 November 2020 (3) Ceased to be Chairman on 26 November 2020 (4) Ceased to be member on 26 November 2020 Contents Corporate Information 1 Contents 2 Corporate Profile 4 Analyses of Core Business Segments by Geographical Location 5 Analyses by Core Business Segments 7 Key Financial Information 8 Business Highlights 10 Chairman’s Statement 15 Operations Review 18 Ports and Related Services 24 Retail 34 Infrastructure 38 Energy 42 Telecommunications 52 Finance & Investments and Others 57 Additional Information 63 Group Capital Resources and Liquidity 69 Risk Factors 76 Information on Directors 92 Information on Senior Management 94 Directors’ Report 100 Corporate Governance Report 123 Independent Auditor’s Report 128 Consolidated Income Statement 129 Consolidated Statement of Comprehensive Income 130 Consolidated Statement of Financial Position 132 Consolidated Statement of Changes in Equity 134 Consolidated Statement of Cash Flows 136 Notes to the Financial Statements 259 Principal Subsidiary and Associated Companies and Joint Ventures 263 Ten Year Summary Information for Shareholders 2020 Annual Report 1 Corporate Profile Hutchison Group (the “Group”) is a renowned multinational conglomerate committed to CK development, innovation and technology in many different sectors. We operate a variety of businesses in about 50 countries across the world with over 300,000 employees. We have a strong commitment to the highest standards of corporate governance, transparency and accountability, as recognised by numerous international awards and commendations. As at 31 December 2020, our operations consist of five core businesses – ports and related services, retail, infrastructure, energy, and telecommunications. Ports and Related Services As the world’s leading port investor, developer and operator, the Group’s ports division holds interests in 52 ports comprising 283 operational berths in 26 countries, including container terminals operating in six of the 10 busiest container ports in the world. In 2020, the division handled a total throughput of 83.7 million twenty-foot equivalent units (“TEU”). It also engages in river trade, cruise terminal operations and ports related logistic services. Retail The Group’s retail division is the world’s largest international health and beauty retailer, with over 16,000 stores in 27 markets worldwide. Its diverse retail portfolio comprises health and beauty products, supermarkets, as well as 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 CK Infrastructure Holdings Limited (“CKI”) and interests in six infrastructure assets that are co-owned with CKI, which is a global infrastructure company with infrastructure investments and developments in different parts of the world. The company has diversified investments in energy infrastructure, transportation infrastructure, water infrastructure, waste management, waste- to-energy, household infrastructure and infrastructure related businesses. Its investments and operations span across Hong Kong, Mainland China, the United Kingdom, Continental Europe, Australia, New Zealand and Canada. Energy The Group held its energy investments in associated company Husky Energy Inc., which was merged with Cenovus Energy Inc. (“Cenovus Energy”) at the beginning of 2021. The Group currently has a 15.71% interest in Cenovus Energy, the third largest Canadian oil and natural gas producer and the second largest Canadian-based refiner and upgrader. Cenovus Energy operates in Canada, the United States and the Asia Pacific region, and its shares are listed on the Toronto and New York stock exchanges. Telecommunications A pioneer in mobile data communication technologies, the Group’s telecommunications division is a leading global operator and innovator of converged telecommunication and digital services around the world, implementing innovative technologies in international interconnectivity. 2020 Annual Report 3 Analyses of Core Business Segments by Geographical Location 2020 Total Revenue HK$403,846 million Europe HK$210,471 million 5% 40% 14% 41% 7% Mainland China HK$32,589 million 7% 8% 8% 9% 75% 7% 8% 1% 24% 16% 52% Hong Kong HK$38,268 million (UK: 17%) 6% 74% 8% 12% 40% 9% Asia, Australia & Others (1) HK$64,063 million 8% 26% 36% 24% 14% 8% 13% Canada (2) HK$30,874 million 8% 92% (3) (4) Reported: HK$96,944 million 2020 Total EBITDA Underlying: HK$95,165 million 15% 12% Europe HK$58,800 million (Reported: HK$75,383 million) 15% 4% 10% 23% 63% (5) 5% 13% 30% 52% (6) -25% 15% 5% Mainland China HK$7,762 million 1% 25% 38% 9% 28% 5% 11% 19% Hong Kong HK$4,429 million 62% 25% 29% 18% 28% 36% 15% 5% (UK: 23%) Asia, Australia & Others (1) HK$18,531 million 27% 14% 46%2% 11% 2% 8% 31% 30% 19% Canada (excluding Husky) HK$1,285 million 100% 52% Canada (Husky only) (2) -24% 5% 78% HK$(533) million (Reported: HK$(25,442) million) 8% (UK: 23%) 100% (3) (4) Reported: HK$53,854 million 2020 Total EBIT Underlying: HK$52,075 million 24% Europe HK$34,792 million (Reported: HK$51,375 million) 24% 12% 4% 11% 22% 63% (5) 20% 17%5% 33% 45% (6) Mainland China HK$5,452 million 5% 34% -8% 26% 38% 9% 27% 5% 13% 22% Hong Kong HK$2,213 million 32% 67% 23% 38% 18% 21% 21% (UK: 24%) Asia, Australia & Others (1) HK$11,205 million 4% 26% 19% 49% 2% 4% -6% 35% 10% Canada (excluding Husky) HK$697 million -54% 62% 100% -52% (2) 95% Canada (Husky only) (UK: 23%) HK$(4,866) million (Reported: HK$(29,775) million) 21% 100% 4% 10% Reported Underlying Note 1: Includes Panama, Mexico and the Middle East Reported Underlying Note 2: Includes contribution from the USA for Husky Europe Ports & Related Services Note 3: Prepared under Pre-IFRS 16 basis which is set out in note 1 on page 5 Mainland China Note 4: The outer pie chart represents EBITDA and EBIT %-mix on a reported Retail Hong Kong basis. The inner pie chart represents underlying EBITDA and EBIT Infrastructure %-mix, which excludes the gain on disposal of tower assets completed Asia, Australia & Others (1) in 2020 of HK$16.6 billion, dilution gain from the merger of VHA with Energy TPG Corporation Limited of HK$10.1 billion, and the Group’s share of (2) Canada impairment and other charges of Husky of HK$(24.9) billion Telecommunications Finance & Investments and Others Note 5: Represents EBITDA and EBIT %-mix for Europe on a reported basis Finance & Investments and Others Note 6: Represents EBITDA and EBIT %-mix for Europe on an underlying basis 4 CK Hutchison Holdings Limited Analyses by Core Business Segments Pre-IFRS 16 (1) Pre-IFRS 16 (1) Local currencies 2020 2019 Change change HK$ million % HK$ million % % % Revenue (2) Ports and Related Services (2) 32,865 8% 35,375 8% -7% -5% Retail 159,619 40% 169,225 38% -6% -6% Infrastructure 52,792 13% 51,191 12% 3% 4% Energy 31,179 8% 47,618 11%