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Public company info - CK Hutchison Holdings Ltd. , 00001.HK

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CK Hutchison Holdings Ltd., 00001.HK - Company Profile
Chairman LI Tzar Kuoi, Victor
Share Issued (share) 3,835,000,000
Par Currency Hong Kong Dollar
Par Value 1.0
Industry Conglomerates
Corporate Profile Business Summary: The principal activities of the Group are operates the ports and related services, retail, infrastructure, energy and telecommunications industries. Performance for the year: On a Pre-IFRS 16 basis, profit attributable to ordinary shareholders for 2020 of HK$29,000 million, a decrease of 27% compared to 2019. On a Post-IFRS 16 basis, profit attributable to ordinary shareholders of HK$29,143 million decreased by 27% from 2019. Earnings per share were HK$7.56 for the year ended 31 December 2020, a decrease of 27%. Business Review Ports and Related Services The Ports and Related Services division handled 83.7 million twenty-foot equivalent units (“TEU”) through 283 operating berths in 2020, a 3% decline compared to 2019. Lower volumes were primarily attributable to poor performance in the first half of 2020 arising from the critical disruption of trade flows and supply chains due to the spread of the pandemic. In certain regions, the situation improved in the second half of 2020, with throughput volume increasing 16% and 2% against the first half of 2020 and the second half of last year respectively, demonstrating the gradual recovery and stabilisation of the trade volumes across all regions, particularly in the Mainland where volumes in the second half exceeded the same period last year. These improvements were partly offset by the concession expiry of Dammam port in Saudi Arabia in September 2020. For the full year, Revenue of HK$32,865 million, EBITDA(4) of HK$10,914 million and EBIT(4) of HK$6,717 million were 7%, 19% and 26% lower respectively against 2019. Despite the throughput growth, EBITDA and EBIT in the second half were 3% and 6% lower respectively compared to the first half of 2020, primarily due to the concession expiry in Dammam and the corresponding closure provisions made in the second half. Retail The Retail division had 16,167 stores across 27 markets at the end of 2020. Despite a 2% increase in store portfolio compared to 2019, the division experienced a material impact on sales starting from February as the pandemic spread globally. As a result, for the full year, Revenue, EBITDA(5) and EBIT(5) of HK$159,619 million, HK$14,397 million and HK$10,933 million decreased by 6%, 15% and 20% respectively. Excluding a one-off dilution gain recognised in the first half of 2019, EBITDA and EBIT decreased by 11% and 16% respectively. Following the gradual easing of the restrictive lockdowns in the second half, EBITDA and EBIT increased significantly by 111% and 168% respectively when compared to the first half of 2020. Comparing against the second half of 2019, EBITDA and EBIT both increased by 12%. The robust recovery was the result of the strategic decision to drive further digital transformation to accelerate the integration of physical store portfolio and online channels which helped boost eCommerce sales growth by 90% in 2020. Together with the continuing focus on customer engagement, the division’s loyalty member base continues to increase, reaching 139 million with 65% sales participation. Infrastructure The Infrastructure division comprises a 75.67%(6) interest in CK Infrastructure Holdings Limited (“CKI”), a subsidiary listed in Hong Kong as well as 10% of the economic benefits deriving from the Group’s direct holdings in six co-owned infrastructure investments with CKI. Total EBITDA(7) of this division of HK$29,066 million was 2% higher than 2019, whereas EBIT(7) of HK$18,488 million was 4% lower. The higher EBITDA was mainly driven by the gain on disposal of Portugal Renewable Energy in October 2020, partly offset by pandemic and adverse foreign currency translation impacts, as well as lower earnings from Northumbrian Water which entered a new regulatory regime in April 2020. EBIT was lower due to higher depreciation and amortisation mainly from Energy Developments in Australia and UK Rails that more than offset the EBITDA growth. Energy In January 2021, Cenovus Energy Inc. (“Cenovus Energy”), a Canadian integrated oil and natural gas company listed on the Toronto and New York stock exchanges, announced the completion of the combination of Cenovus Energy and Husky. The merger creates Canada’s third largest oil and natural gas producer, based on total company production, with about 750,000 barrels of oil equivalent per day (“boe/day”) of low-cost oil and natural gas production. The combined company also becomes the second largest Canadian-based refiner and upgrader, with total North American refining and upgrading capacity of approximately 660,000 barrels per day (“bbls/day”). Cenovus Energy anticipates to achieve approximately C$1 billion of synergies in 2021, which combined with the strong portfolio of well-matched upstream production, midstream and downstream assets, as well as improved financial strength, are expected to generate value enhancement for the Group. Post-completion, Husky was delisted from the Toronto Stock Exchange and the Group currently holds approximately 15.71% of Cenovus Energy, together with warrants representing a further 1.08% to 16.79%(8). The results of the Energy division reported in 2020 represent the Group’s 40.19% share of Husky’s results for the year. Husky announced Post-IFRS 16 net loss of C$10,016 million for 2020, as compared to the net loss of C$1,370 million for 2019, primarily due to the impairment charges, as well as operational challenges in 2020, including significant crude oil demand reduction due to the pandemic, increased global crude oil supplies in the first half of 2020 as OPEC negotiations broke down, and the Government of Alberta’s mandatory production quotas introduced in 2019 which were only lifted in December 2020. As a result of the declines in forecasted long-term commodity prices, reduced capital investment and delayed future development plans, as well as market indicators including the merger with Cenovus Energy, Husky recognised in total C$8.6 billion in 2020 of non-cash after-tax impairments and other charges (2019: C$2.3 billion). The Group’s 40.19% share of the impairment and other charges, after consolidation adjustments, of HK$24,909 million and HK$5,983 million in 2020 and 2019 respectively, were included in the Group’s EBITDA and EBIT results. Together with the adverse underlying operating results, the Group’s share of LBITDA(9) and LBIT(9) in 2020 were HK$23,003 million and HK$28,096 million respectively, compared to EBITDA and LBIT of HK$3,139 million and HK$3,004 million respectively in 2019. CK Hutchison Group Telecom In November 2020, the Group entered into an agreement to dispose of its European telecommunications tower assets for an aggregate consideration of €10 billion. Following the transactions, the Group will be able to increase its focus on developing its networks and IT platforms, and will retain optionality to accelerate the rollout of its 5G networks, while benefiting from significant additional financial capacity to support future growth and opportunities. The disposals of tower assets in Denmark, Austria and Ireland, pursuant to this agreement, were completed in December 2020 and as a result the Group recognised a disposal gain(10) of HK$16,583 million. Revenue of this division of HK$90,663 million (€10,231 million) was 3% lower than 2019, whereas EBITDA(11) and EBIT(11) of HK$48,540 million (€5,309 million) and HK$32,581 million (€3,512 million) respectively were 37% and 54% higher than 2019 respectively, primarily due to the aforementioned disposal gain. Prospects: Looking ahead into 2021, with the spread of the pandemic being well contained, economic growth will be sustained in the Mainland. However, the outlook for the year remains unclear for other major economies with uncertainties surrounding the threat level posed by new virus variants, substantial geopolitical risks, as well as risks to trade stability, risks arising from Brexit, and macro-economic risks associated with the unprecedented levels of global debt. Nevertheless, with the expected easing of the pandemic following rollout of effective vaccination programs globally, economic conditions should improve. In 2020, the Group reacted quickly to rapidly changing business environments by accelerating digitalisation, enhancing its retail “online plus offline” platform strategy and maintaining stringent cost control at all levels. The Group also emphasised working capital management measures across all businesses, resulting in a significant improvement in free cash flow against 2019. In 2021, the Group will continue to react nimbly to changing business conditions, which will likely be similar to the second half of 2020, while continuing to prioritise health and safety for the Group's employees and the Group's customers and preserving the Group's strong balance sheet and liquidity. The Group’s year end net debt to net total capital ratio of 22.2% is expected to be further reduced following the various transactions completing in 2021. The Group is in a strong financial position and expects a solid performance in 2021.

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