REG - CK Infrastructure - Interim Report 2024
02/09/2024 11:00
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RNS Number : 5333C CK Infrastructure Holdings Limited 02 September 2024
Interim Report 2024
CK Infrastructure
Energy Infrastructure
Transportation Infrastructure
Water Infrastructure
Waste Management
Household Infrastructure
Infrastructure Related Businesses
GLOBAL INFRASTRUCTURE PLAYER
CKI
A Leading Player in the Global Infrastructure Arena
CKI is one of the world's largest global infrastructure companies. The company
aims to make the world a better place through a variety of infrastructure
investments and developments in different parts of the world. The Group 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 Hong Kong, Mainland China, the United Kingdom,
Continental Europe, Australia, New Zealand, Canada and the United States.
THE HALF YEAR AT A GLANCE
4,311
Profit attributable to shareholders (HK$ million)
1.71
Earnings per share (HK$)
0.72
Interim dividend per share (HK$)
CONTENTS
2 Corporate Information and Key Dates
4 Chairman's Letter
11 Financial Review
13 Directors' Biographical Information
24 Consolidated Income Statement
25 Consolidated Statement of Comprehensive Income
26 Consolidated Statement of Financial Position
27 Consolidated Statement of Changes in Equity
29 Condensed Consolidated Statement of Cash Flows
30 Notes to the Consolidated Interim Financial Statements
41 Directors' Responsibility Statement
42 Directors' Interests and Short Positions in Shares, Underlying
Shares and Debentures
48 Interests and Short Positions of Shareholders
50 Corporate Governance
56 Other Information
57 Risk Factors
CORPORATE INFORMATION AND KEY DATES
BOARD OF DIRECTORS
Executive Directors
LI Tzar Kuoi, Victor (Chairman)
FOK Kin Ning, Canning (Deputy Chairman)
Frank John SIXT
KAM Hing Lam (Group Managing Director)
IP Tak Chuen, Edmond (Deputy Chairman)
Andrew John HUNTER (Deputy Managing Director)
CHAN Loi Shun (Chief Financial Officer)
CHEN Tsien Hua
Independent Non-executive Directors
CHEONG Ying Chew, Henry
KWOK Eva Lee
SNG Sow-mei alias POON Sow Mei
LAN Hong Tsung, David
Paul Joseph TIGHE
Non-executive Directors
LEE Pui Ling, Angelina
George Colin MAGNUS
Alternate Directors
MAN Ka Keung, Simon
(alternate to IP Tak Chuen, Edmond)
Eirene YEUNG
(alternate to KAM Hing Lam)
AUDIT COMMITTEE
Paul Joseph TIGHE (Chairman)
CHEONG Ying Chew, Henry
SNG Sow-mei alias POON Sow Mei
LAN Hong Tsung, David
REMUNERATION COMMITTEE
CHEONG Ying Chew, Henry (Chairman)
LI Tzar Kuoi, Victor
SNG Sow-mei alias POON Sow Mei
NOMINATION COMMITTEE
KWOK Eva Lee (Chairperson)
LI Tzar Kuoi, Victor
CHEONG Ying Chew, Henry
SUSTAINABILITY COMMITTEE
IP Tak Chuen, Edmond (Chairman)
Paul Joseph TIGHE
LAN Hong Tsung, David
Eirene YEUNG
EXECUTIVE COMMITTEE
LI Tzar Kuoi, Victor (Chairman)
KAM Hing Lam
IP Tak Chuen, Edmond
Andrew John HUNTER
CHAN Loi Shun
CHEN Tsien Hua
CHAN Kee Ham, Ivan
LUN Pak Lam
LUK Sai Hong, Victor
TONG BARNES Wai Che, Wendy
Duncan Nicholas MACRAE
CHIU Yue Seng
COMPANY SECRETARY
Eirene YEUNG
AUTHORISED REPRESENTATIVES
IP Tak Chuen, Edmond
Eirene YEUNG
PRINCIPAL BANKERS
Australia and New Zealand Banking Group Limited
Bank of China (Hong Kong) Limited
Barclays Bank PLC
BNP Paribas
Canadian Imperial Bank of Commerce
Mizuho Bank, Ltd.
MUFG Bank, Ltd.
Commonwealth Bank of Australia
The Hongkong and Shanghai Banking Corporation Limited
AUDITOR
Deloitte Touche Tohmatsu
Registered Public Interest Entity Auditors
LEGAL ADVISERS
Woo, Kwan, Lee & Lo
REGISTERED OFFICE
Clarendon House, Church Street, Hamilton HM11, Bermuda
PRINCIPAL PLACE OF BUSINESS
12th Floor, Cheung Kong Center, 2 Queen's Road Central, Hong Kong
PRINCIPAL SHARE REGISTRAR AND TRANSFER OFFICE
Computershare Investor Services (Bermuda) Limited
5 Reid Street, PO Box HM 1475,
Hamilton HM FX, Bermuda
(Location of principal register of members at Clarendon House, Church Street,
Hamilton HM 11, Bermuda)
BRANCH SHARE REGISTRAR AND TRANSFER OFFICE
Computershare Hong Kong Investor Services Limited
Rooms 1712-1716, 17th Floor, Hopewell Centre, 183 Queen's Road East, Hong Kong
STOCK CODES
Stock Exchange of Hong Kong: 1038
London Stock Exchange: CKI
Bloomberg: 1038 HK
Reuters: 1038.HK
WEBSITE
www.cki.com.hk
INVESTOR RELATIONS
For further information about CK Infrastructure Holdings Limited, please
contact:
Ivan CHAN
CK Infrastructure Holdings Limited
12th Floor, Cheung Kong Center,
2 Queen's Road Central,
Hong Kong
Telephone: (852) 2122 3986
Facsimile: (852) 2501 4550
Email: contact@cki.com.hk
KEY DATES
Interim Results Announcement 14th August,
2024
Record Date for Interim Dividend 13th
September, 2024
Payment of Interim Dividend 25th
September, 2024
CHAIRMAN'S LETTER
GROWTH MOMENTUM CONTINUES ON STRONG SOLID FOUNDATION
CK Infrastructure Holdings Limited ("CKI", the "Company" or the "Group")
achieved a stable performance during the first half of 2024. While underlying
uncertainties stemming from weak economies, high interest rates and ongoing
geopolitical tensions remain in the global markets, CKI continues to provide
steady operating results from a diverse portfolio of infrastructure
businesses.
For the six months ended 30th June, 2024, the Group recorded profit
attributable to shareholders of HK$4,311 million, representing an increase of
2% as compared with the same period last year.
During the period under review, two acquisitions in the United Kingdom were
made. These meaningful additions further strengthen the Group's portfolio.
DIVIDEND GROWTH
The Board of Directors of CKI (the "Board") has declared an interim dividend
for 2024 of HK$0.72 per share (2023: HK$0.71 per share), representing 1.4%
growth over the corresponding period last year. The interim dividend will be
paid on Wednesday, 25th September, 2024, to shareholders whose names appear on
the Register of Members of the Company at the close of business on Friday,
13th September, 2024. As at the date hereof, the Company does not hold any
treasury shares (whether in the Central Clearing and Settlement System, or
otherwise).
BUSINESS REVIEW
Power Assets
Profit contribution from Power Assets was HK$1,082 million, an increase of 2%
as compared to the same period last year. Operational performance of
businesses in Power Assets's portfolio continued to be resilient. In April, HK
Electric entered into a contract to construct a new gas-fired generation unit,
another step in advancing towards the phasing out of coal-fired generation by
2035.
United Kingdom Infrastructure Portfolio
Profit contribution from the United Kingdom was HK$1,865 million, an increase
of 17% as compared with the same period last year. (In local currency, the
result was an increase of 14%.) This positive growth can be mainly attributed
to higher revenue, lower finance charges borne by the portfolio's businesses,
and higher foreign currency exchange between the Pound Sterling and the Hong
Kong Dollar.
UK Power Networks ("UKPN") performed strongly despite the fact that results
were negatively impacted by the commencement of the new regulatory period in
April last year. During the period under review, UK Power Networks Services,
the non-regulated arm of UKPN, acquired a 69 MW renewable energy portfolio,
comprising mainly solar assets. With 90% of the revenue underpinned by
long-term agreements and renewable subsidies from the United Kingdom
government, this additional business is poised to generate recurrent and
stable returns and cashflows. It also expands the Group's renewable energy
capacity - a much in demand commodity - in the country.
Northern Gas Networks and Wales & West Gas Networks reported solid
earnings, benefitting from good operating performances and lower finance
costs. Both companies are actively working on hydrogen-related projects as
they make further inroads into contributing towards the country's net zero
target.
In July 2024, Northumbrian Water received the draft determination for the
regulatory period from 2025-2030, potentially providing for higher allowed
returns and higher total expenditure allowances. The final determination will
be announced at the end of the year. Possible investments over the next
five-year period of more than £4.5 billion have been proposed by Northumbrian
Water for upgrading the network to improve water quality, enhancing
environmental performance, upgrading water treatment and monitoring, as well
as ensuring reliable and resilient water supply.
UK Rails achieved a satisfactory performance in the first half of 2024.
Upgrade and modification projects for a number of fleets are progressing
smoothly as planned.
At the end of April 2024, CKI, alongside strategic partners CK Asset and Power
Assets, completed the acquisition of Phoenix Energy, the largest gas
distribution network in Northern Ireland. The enterprise value of the entire
transaction was approximately HK$7.4 billion. CKI owns 40% of the shareholding
of this company. Phoenix Energy covers 78% of gas connections in Northern
Ireland and serves 48% of the population there. Operating under a regulatory
framework, Phoenix Energy provides CKI with stable cashflows, immediate yield
and recurring profits.
Australian Infrastructure Portfolio
Profit contribution from the portfolio of infrastructure investments in
Australia increased 5% over the previous period to HK$864 million. (In local
currency, the result was an increase of 7%.) The increase is mainly attributed
to higher revenues generated from the various businesses.
SA Power Networks is currently working on its draft proposal for the upcoming
regulatory reset for the period 2025-2030 and will submit its proposal in
December. In May, SA Power Networks became the first Australian electricity
distribution network to receive certification from the Climate Bond
Initiative.
Victoria Power Networks and United Energy, the Group's electricity
distribution networks in the state of Victoria, implemented prompt remedial
works after severe storms hit the state in January and February. Beon, the
unregulated businesses of Victoria Power Networks, has been awarded a number
of solar and battery projects amidst the country's ramp up on renewable energy
construction.
Australian Gas Infrastructure Group (AGIG), which consists of Australian Gas
Networks, Multinet Gas Networks and the Dampier Bunbury Pipeline, recorded
good operational performance. AGIG is a leader in Australia's renewable
hydrogen industry. In South Australia, Hydrogen Park South Australia ("HyP
SA") is the largest operational electrolyser in the country. It supplies about
3,700 customers in southern Adelaide with a blend of up to 10% renewable
hydrogen in the gas network - a first in Australia. Other renewable hydrogen
projects being developed by AGIG include Hydrogen Park Gladstone ("HyP
Gladstone"), which will soon commence blending renewable hydrogen into the
network, and Hydrogen Park Murray Valley ("HyP MV"), of which the electrolyser
is under construction.
Performance from Energy Developments ("EDL") was stable. Expansion of the
Agnew power station in Western Australia was completed in April, with
increased gas generation complementing the solar, wind and battery facilities
for the gold mine, yielding additional revenue to EDL.
Infrastructure Portfolio in Continental Europe
In Continental Europe, profit contribution was HK$419 million, a slight
decrease of 1%. (In local currency, the result was the same as last year.)
During the period under review, ista achieved a stable performance. The
reconstruction of Dutch Enviro Energy's waste-to-energy plant in Rozenburg
subsequent to the fire incident last year has progressed well.
Canadian Infrastructure Portfolio
Profit contribution from Canada was HK$301 million, a decrease of 25% from the
corresponding period last year. (In local currency, the result was a decrease
of 25%.) The performance was mainly impacted by lower contribution from
Canadian Power due to the absence of last year same period's particularly high
energy prices. Canadian Midstream Assets recorded a solid performance,
Reliance Home Comfort satisfactory operations, while Park'N Fly saw strong
demand in its key markets of Toronto and Montreal, boosting revenues.
New Zealand Portfolio
Net profit contribution from New Zealand increased 11% to HK$80 million during
the first half. (In local currency, the result was an increase of 13%.) A
strong performance was realised from Enviro NZ, while the Draft Decision for
the regulatory period commencing April 2025 for Wellington Electricity was
released in May with the Final Decision due in November.
Hong Kong and Mainland China Business
In Hong Kong and Mainland China, CKI's portfolio recorded profit contribution
of HK$96 million, a decrease of 6%. The toll road operations in Mainland China
saw low traffic volume, while both pricing and sales volume were low for the
infrastructure materials manufacturing business in Mainland China.
STRONG FINANCIAL PLATFORM
CKI's financial position continued to be strong and robust. Cash on hand was
HK$9.2 billion. The net debt to net total capital ratio was a healthy 9.8% as
at 30th June, 2024, and an industry low of 47.8% when sharing of net debt in
infrastructure investment portfolio on a look-through basis. This sound
underlying foundation provides the Group with the financial flexibility to
weather any market uncertainties and form a solid backing for new acquisition
opportunities.
Standard & Poor's has reaffirmed the Group's credit rating of "A/Stable"
in February.
CONTINUED PROGRESS IN ENVIRONMENTAL SUSTAINABILITY
CKI continues to make encouraging progress and achievements in the areas of
sustainability and decarbonisation. The electricity distribution networks are
making investments in systems to support their local communities towards
achieving net zero with initiatives such as smart grid, EV charging facilities
and integration systems with solar, wind and battery. The gas distribution
networks in the United Kingdom and Australia continue to work on clean
hydrogen and biomethane projects, while EDL's sustainable energy production
from landfill gas is making good headway. Other notable initiatives include UK
Rails's battery trains, Dutch Enviro Energy's carbon capture project, Canadian
Power's Okanagan wind farms, HK Electric's gas-fired generation unit, and UK
Power Networks Services's newly added renewables portfolio, which consists of
70 renewable generation assets including 65 solar photovoltaic, four onshore
wind and one hydro generation assets.
CKI will also continue to study new investment opportunities that arise from
this global decarbonisation journey as part of the overall business
development strategy.
SUBSEQUENT EVENT
On 14th August, 2024, it was announced that a consortium comprising CKI, CK
Asset and Power Assets, which will own 40%, 40% and 20% interests in the
portfolio, respectively, had entered into an agreement to acquire a portfolio
of operating onshore wind farms in the United Kingdom for a purchase price of
approximately £350 million (approximately HK$3.5 billion). This marks CKI's
third acquisition in 2024. The transaction is expected to be completed in
September. The portfolio comprises of 32 wind farms located in England,
Scotland and Wales, totalling 175 MW in installed capacity and 137 MW in net
attributable capacity. The portfolio will provide immediate returns, stable
cashflows and recurring profit contributions. Revenues are generated from (i)
government subsidies, which are inflation-linked; and (ii) power revenue,
including from power purchase agreements as well as from selling power to the
market.
OUTLOOK
Market uncertainties persist around the world as interest rates remain high
and geopolitical tensions pervade headlines. With strong recurring income and
predictable cashflow, CKI has shown its resilience during difficult financial
times.
Despite the challenging backdrop, CKI is in an advantageous position to
explore new acquisitions with its strategic partners within the CK Group,
including CK Asset and Power Assets, who also have very solid financials.
Given the higher interest rate environment and tightened liquidity, the
barriers to entry in the infrastructure sector are expected to be heightening,
benefitting existing players with operational experience and financial
strength like ourselves.
As we broaden the diversity of our infrastructure portfolio in terms of
industry sector and geographic location, the Group is also focused on driving
organic growth, nurturing more synergies within our business units, and
pursuing other meaningful growth opportunities that arise from the
ever-changing environment.
As always, we can never overstate our emphasis on fiscal responsibility. By
carefully offsetting continued earnings growth with a comfortable gearing
position, we strive to capture the optimum balance between stability and
growth. In addition, there is no "must win" mantra when it comes to our
acquisition bids.
I would like to take this opportunity to thank the Board, our staff and our
stakeholders for their continued support and commitment to the Group.
VICTOR T K LI
Chairman
14th August, 2024
FINANCIAL REVIEW
FINANCIAL RESOURCES, TREASURY ACTIVITIES AND GEARING RATIO
The Group's capital expenditure and investments were funded from cash on hand,
internal cash generation, loans, notes, bonds, share placement and other
project loans.
As at 30th June, 2024, cash and bank deposits on hand amounted to HK$9,180
million and the total borrowings of the Group amounted to HK$23,400 million,
which included Hong Kong dollar borrowings of HK$2,673 million and foreign
currency borrowings of HK$20,727 million. Of the total borrowings, 35 per
cent were repayable in 2024, 65 per cent were repayable between 2025 and 2028.
The Group has secured loan facilities with certain banks for borrowings to be
refinanced in 2024. The Group's financing activities continue to be well
received and fully supported by its bankers.
The Group adopts conservative treasury policies in cash and financial
management. To achieve better risk control and minimise the cost of funds, the
Group's treasury activities are centralised. Cash is generally placed in
short-term deposits mostly denominated in U.S. dollars, Hong Kong dollars,
Australian dollars, New Zealand dollars, British pound, Canadian dollars or
Renminbi. The Group's liquidity and financing requirements are reviewed
regularly. The Group will continue to maintain a strong capital structure when
considering financing for new investments or maturity of bank loans.
As at 30th June, 2024, the Group maintained a net debt position with a net
debt to net total capital ratio of 9.8 per cent. This was based on HK$14,220
million of net debt and HK$145,574 million of net total capital, which
represents the total borrowings plus total equity net of cash and bank
deposits. This ratio was higher than that of 7.7 per cent at the year end of
2023. This change was mainly due to the fund utilised for the investment in a
gas distribution network operator in Northern Ireland during the period.
The net debt to net total capital ratio would be 47.8 per cent by sharing of
net debt in infrastructure investment portfolio on a look-through basis, which
was based on HK$120,115 million of net debt and HK$251,469 million of net
total capital. This ratio was slightly higher than that of 46.4 per cent at
the year end of 2023.
To minimise currency risk exposure in respect of its investments in other
countries, the Group generally hedges those investments with (i) currency
swaps and (ii) the appropriate level of borrowings denominated in the local
currencies. The Group also entered into certain interest rate swaps to
mitigate interest rate risks. As at 30th June, 2024, the notional amounts of
these derivative instruments amounted to HK$52,690 million.
CHARGE ON GROUP ASSETS
As at 30th June, 2024, certain assets were pledged to secure bank borrowings
totalling HK$1,580 million granted to the Group.
CONTINGENT LIABILITIES
As at 30th June, 2024, the Group was subject to the following contingent
liabilities:
HK$ million
Other guarantees given in respect of an affiliated company 68
Performance bond indemnities 168
Sub-contractor warranties 24
Total 260
EMPLOYEES
The Group, including its subsidiaries but excluding affiliated companies,
employs a total of 2,408 employees. Employees' cost (excluding directors'
emoluments) amounted to HK$521 million. The Group ensures that the pay levels
of its employees are competitive and that its employees are rewarded on a
performance related basis within the general framework of the Group's salary
and bonus system.
Preferential subscription of 2,978,000 new shares of the Company was given to
those employees who had subscribed for shares of HK$1.00 each in the Company
at HK$12.65 per share on the flotation of the Company in 1996. The Group does
not have any share option scheme for employees.
DIRECTORS' BIOGRAPHICAL INFORMATION
LI Tzar Kuoi, Victor, aged 60, has been the Chairman of the Company since its
incorporation in May 1996. He has been a member of the Remuneration Committee
of the Company since March 2005, the Chairman of the Executive Committee of
the Company since April 2005 and a member of the Nomination Committee of the
Company since January 2019. Mr. Li is the Chairman and Executive Director of
CK Hutchison Holdings Limited, and the Chairman and Managing Director and the
Chairman of the Executive Committee of CK Asset Holdings Limited. He is also
the Chairman of CK Life Sciences Int'l., (Holdings) Inc., a Non-executive
Director of Power Assets Holdings Limited and HK Electric Investments Manager
Limited ("HKEIM") as the trustee-manager of HK Electric Investments, and a
Non-executive Director and the Deputy Chairman of HK Electric Investments
Limited. Except for HKEIM, all the companies/investment trust mentioned above
are listed in Hong Kong. Mr. Li is also the Deputy Chairman of Li Ka Shing
Foundation Limited and Li Ka Shing (Global) Foundation, and the Member Deputy
Chairman of Li Ka Shing (Canada) Foundation. He serves as a member of the 14th
National Committee of the Chinese People's Political Consultative Conference
of the People's Republic of China and a member of the Chief Executive's
Council of Advisers of the Hong Kong Special Administrative Region ("HKSAR").
He is also Vice Chairman of the Hong Kong General Chamber of Commerce. Mr. Li
is the Honorary Consul of Barbados in Hong Kong and is awarded the Grand
Officer of the Order of the Star of Italy. He is a director of certain
substantial shareholders of the Company within the meaning of Part XV of the
Securities and Futures Ordinance ("SFO"), and a director of certain companies
controlled by certain substantial shareholders of the Company. He holds a
Bachelor of Science degree in Civil Engineering, a Master of Science degree in
Civil Engineering and a degree of Doctor of Laws, honoris causa (LL.D.). Mr.
Li is a nephew of Mr. Kam Hing Lam, the Group Managing Director of the
Company.
KAM Hing Lam, aged 77, has been the Group Managing Director of the Company
since its incorporation in May 1996 and a member of the Executive Committee of
the Company since April 2005. He is the Deputy Managing Director of CK
Hutchison Holdings Limited, the Deputy Managing Director and Executive
Committee Member of CK Asset Holdings Limited, and the President of CK Life
Sciences Int'l., (Holdings) Inc. All the companies mentioned above are listed
companies. Mr. Kam is also the Chairman of Hui Xian Asset Management Limited,
which manages Hui Xian Real Estate Investment Trust, a real estate investment
trust listed on The Stock Exchange of Hong Kong Limited ("SEHK"). Mr. Kam is a
director of certain substantial shareholders of the Company within the meaning
of Part XV of the SFO, and a director of certain companies controlled by
certain substantial shareholders of the Company. He holds a Bachelor of
Science degree in Engineering and a Master's degree in Business
Administration. Mr. Kam is an uncle of Mr. Li Tzar Kuoi, Victor, the Chairman
of the Company.
IP Tak Chuen, Edmond, aged 72, has been an Executive Director of the Company
since its incorporation in May 1996, the Deputy Chairman of the Company since
February 2003, a member of the Executive Committee of the Company since April
2005 and the Chairman of the Sustainability Committee of the Company since
December 2020. He is Deputy Managing Director of CK Hutchison Holdings
Limited, and the Deputy Chairman and Executive Committee Member of CK Asset
Holdings Limited. He is also the Senior Vice President and Chief Investment
Officer of CK Life Sciences Int'l., (Holdings) Inc. All the companies
mentioned above are listed companies. Mr. Ip is also a Non-executive Director
of Hui Xian Asset Management Limited, which manages Hui Xian Real Estate
Investment Trust, a real estate investment trust listed on SEHK. He is a
director of certain substantial shareholders of the Company within the meaning
of Part XV of the SFO, and a director of certain companies controlled by
certain substantial shareholders of the Company. He holds a Bachelor of Arts
degree in Economics and a Master of Science degree in Business Administration.
FOK Kin Ning, Canning, aged 72, has been an Executive Director and Deputy
Chairman of the Company since March 1997. Mr. Fok is the Deputy Chairman of CK
Hutchison Holdings Limited. Mr. Fok is also the Chairman of Hutchison
Telecommunications Hong Kong Holdings Limited, TPG Telecom Limited, HK
Electric Investments Manager Limited as the trustee-manager of HK Electric
Investments, and HK Electric Investments Limited and the Executive Chairman of
CK Hutchison Group Telecom Holdings Limited ("CKHGT"). Mr. Fok is also the
Deputy President Commissioner of PT Indosat Tbk. Except for HKEIM and CKHGT,
all the companies/investment trust mentioned above are listed in Hong Kong or
overseas. Mr. Fok is a director of certain substantial shareholders of the
Company within the meaning of Part XV of the SFO, and a director of certain
companies controlled by certain substantial shareholders of the Company. He
holds a Bachelor of Arts degree and a Diploma in Financial Management, and is
a fellow of Chartered Accountants Australia and New Zealand.
Frank John SIXT, aged 72, has been an Executive Director of the Company since
its incorporation in May 1996. Mr. Sixt is the Group Co-Managing Director and
Group Finance Director of CK Hutchison Holdings Limited. He is also the
Non-executive Chairman of TOM Group Limited, the Chairman and an Alternate
Director of Hutchison Telecommunications (Australia) Limited, a Non-executive
Director of TPG Telecom Limited, a Director of Cenovus Energy Inc., and an
Alternate Director of HK Electric Investments Manager Limited as the
trustee-manager of HK Electric Investments, and HK Electric Investments
Limited. Except for HKEIM, all the companies/investment trust mentioned above
are listed in Hong Kong or overseas. He has almost four decades of legal,
global finance and risk management experience, and possesses deep expertise in
overseeing financial reporting system, risk management and internal control
systems as well as sustainability issues and related risks. Mr. Sixt is a
director of certain substantial shareholders of the Company within the meaning
of Part XV of the SFO, and a director of certain companies controlled by
certain substantial shareholders of the Company. He holds a Master's degree in
Arts and a Bachelor's degree in Civil Law, and is a member of the Bar and of
the Law Society of the Provinces of Quebec and Ontario, Canada.
Andrew John HUNTER, aged 65, has been an Executive Director of the Company
since December 2006, Deputy Managing Director of the Company since May 2010
and a member of the Executive Committee of the Company since March 2007. He
acted as the Chief Operating Officer of the Company from December 2006 to May
2010. Mr. Hunter is the Chairman and Executive Director of Power Assets
Holdings Limited. He is also an Executive Director of CK Hutchison Holdings
Limited. All the companies mentioned above are listed companies. Prior to the
appointment to the board of Power Assets Holdings Limited in 1999, Mr. Hunter
was the Finance Director of the Hutchison Property Group. He holds a Master of
Arts degree and a Master's degree in Business Administration. He is a member
of the Institute of Chartered Accountants of Scotland and of the Hong Kong
Institute of Certified Public Accountants. He has over 40 years of experience
in accounting and financial management.
CHAN Loi Shun, aged 62, has been an Executive Director of the Company since
January 2011, Chief Financial Officer of the Company since January 2006 and a
member of the Executive Committee of the Company since April 2005. He joined
the CK Group in January 1992. Mr. Chan is also an Executive Director of Power
Assets Holdings Limited, HK Electric Investments Manager Limited as the
trustee-manager of HK Electric Investments, and HK Electric Investments
Limited. Except for HKEIM, all the companies/investment trust mentioned above
are listed in Hong Kong. Mr. Chan is a director of certain companies
controlled by a substantial shareholder of the Company within the meaning of
Part XV of the SFO. Mr. Chan is a fellow of the Hong Kong Institute of
Certified Public Accountants, a fellow of the Association of Chartered
Certified Accountants and also a member of the Institute of Certified
Management Accountants (Australia).
CHEN Tsien Hua, aged 62, has been an Executive Director of the Company since
January 2017, a member of the Executive Committee of the Company since March
2007 and the Head of Business Development of the Company since 2005. She
joined Hutchison Whampoa Limited in August 1992 and has been with the Company
since July 1996. Ms. Chen holds a Bachelor's degree in Social Sciences and a
Master's degree in Business Administration.
CHEONG Ying Chew, Henry, aged 76, has been an Independent Non-executive
Director of the Company since its incorporation in May 1996. He has been a
member of the Audit Committee of the Company since December 1998 and acted as
the Chairman of the Audit Committee of the Company from December 1998 to
December 2006. Mr. Cheong has been a member of the Remuneration Committee of
the Company since January 2005 and the Chairman of the Remuneration Committee
of the Company since January 2012. Mr. Cheong has also been a member of the
Nomination Committee of the Company since February 2024. He is also an
Independent Non-executive Director of CK Asset Holdings Limited, New World
Department Store China Limited and Skyworth Group Limited, and an Independent
Director of BTS Group Holdings Public Company Limited. Mr. Cheong is an
Executive Director and the Deputy Chairman of Worldsec Limited. All the
companies mentioned above are listed companies. He holds a Bachelor of Science
degree in Mathematics and a Master of Science degree in Operational Research
and Management.
KWOK Eva Lee, aged 82, has been an Independent Non-executive Director of the
Company since September 2004. She has been a member of the Nomination
Committee of the Company since January 2019 and the Chairperson of the
Nomination Committee of the Company since December 2020. She acted as a member
of the Audit Committee of the Company from September 2004 to June 2019. She is
also an Independent Non-executive Director of CK Asset Holdings Limited and CK
Life Sciences Int'l., (Holdings) Inc., and a Director of Li Ka Shing (Canada)
Foundation ("LKS Canada Foundation"). She currently serves as the Chair and
Chief Executive Officer of Amara Holdings Inc. ("Amara"). Mrs. Kwok also acts
as an Independent Director of Cenovus Energy Inc. Mrs. Kwok currently acts as
the Chairperson of the Remuneration Committee of CK Life Sciences Int'l.,
(Holdings) Inc. and also sits on the Governance Committee of Cenovus Energy
Inc. Except for LKS Canada Foundation and Amara, all the companies mentioned
above are listed companies. She is a director of a company controlled by a
substantial shareholder of the Company within the meaning of Part XV of the
SFO. In addition, she was an Independent Director of Bank of Montreal, a
listed company, and previously sat on the Human Resources and Compensation
Committee of Cenovus Energy Inc., the Compensation Committee, Corporate
Governance Committee and the Audit Committee of Husky Energy Inc., the Audit
Committee of CK Life Sciences Int'l., (Holdings) Inc., the Audit Committee and
Pension Fund Society of the Bank of Montreal, the Nominating and Governance
Committee of Shoppers Drug Mart Corporation, the Independent Committee of
Directors and Human Resources Committee of Telesystems International Wireless
(TIW) Inc., the Independent Committee of Directors and the Corporate
Governance Committee of Fletcher Challenge Canada Ltd., the Audit and
Corporate Governance Committees of Clarica Life Insurance Company, the
Corporate Governance Committee of Air Canada, the Innovation Saskatchewan (IS)
Board of Directors and the Saskatchewan-Asia Advisory Council of Saskatchewan.
SNG Sow-mei alias POON Sow Mei, aged 83, has been an Independent Non-executive
Director of the Company since September 2004. She has been a member of the
Audit Committee of the Company since September 2004 and a member of the
Remuneration Committee of the Company since September 2022. She acted as the
Chairperson of the Audit Committee of the Company from July 2020 to May 2022.
She is an Independent Non-executive Director of CK Asset Holdings Limited, a
listed company. She is also an Independent Non-executive Director of ESR Asset
Management (Prosperity) Limited (formerly known as ARA Asset Management
(Prosperity) Limited), which manages Prosperity Real Estate Investment Trust,
a real estate investment trust listed on SEHK. Mrs. Sng is also a member of
the Audit Committee and the Nomination Committee of ESR Asset Management
(Prosperity) Limited. Mrs. Sng was previously an Independent Non-executive
Director, the Lead Independent Director and a member of the Audit Committee of
Hutchison Port Holdings Management Pte. Limited, as the trustee-manager of
Hutchison Port Holdings Trust, a business trust listed on the Singapore
Exchange Securities Trading Limited ("SGX-ST"), an Independent Director and a
member of the Audit Committee of ESR Trust Management (Suntec) Limited
(formerly known as ARA Trust Management (Suntec) Limited), which manages
Suntec Real Estate Investment Trust, a real estate investment trust listed on
SGX-ST, and an Independent Non-executive Director and a member of the Audit
Committee of ESR Asset Management (Fortune) Limited (formerly known as ARA
Asset Management (Fortune) Limited), which manages Fortune Real Estate
Investment Trust, a real estate investment trust listed on the SEHK. Mrs. Sng
was also previously a Director of INFA Systems Ltd. and the Senior Consultant
(International Business) of Singapore Technologies Electronics Ltd. Prior to
her appointment with Singapore Technologies Pte Ltd. where Mrs. Sng was the
Director, Special Projects (North East Asia) in 2000 and a Consultant in 2001,
Mrs. Sng was the Managing Director of CapitaLand Hong Kong Ltd. for
investments in Hong Kong and the region including Japan and Taiwan. In Hong
Kong from 1983 to 1997, Mrs. Sng was the Centre Director and then as Regional
Director of the Singapore Economic Development Board and Trade Development
Board respectively. Mrs. Sng was Singapore's Trade Commissioner in Hong Kong
from 1990 to 1997. Mrs. Sng holds a Bachelor of Arts degree from the Nanyang
University in Singapore and has wide experience in various fields of
industrial investment, business development, strategic and financial
management, especially in property investment and management. In 1996, Mrs.
Sng was conferred the title of PPA(P) - Pingat Pentadbiran Awam (Perak), the
Singapore Public Administration Medal (Silver) by the Republic of Singapore.
LAN Hong Tsung, David, aged 84, has been an Independent Non-executive Director
and a member of the Audit Committee of the Company since February 2005, and a
member of the Sustainability Committee of the Company since February 2024. Dr.
Lan is an Independent Non-executive Director of Cinda Financial Holdings Co.,
Limited. He is also an Independent Non-executive Director of ESR Asset
Management (Prosperity) Limited (formerly known as ARA Asset Management
(Prosperity) Limited), which manages Prosperity Real Estate Investment Trust,
a real estate investment trust listed on SEHK. He was previously an
Independent Non-executive Director of Hutchison Telecommunications Hong Kong
Holdings Limited and SJM Holdings Limited, both are listed companies, for 15
years and 11 years respectively. Dr. Lan was also previously an Independent
Non-executive Director of ESR Asset Management (Fortune) Limited (formerly
known as ARA Asset Management (Fortune) Limited), which manages Fortune Real
Estate Investment Trust, a real estate investment trust listed on the SEHK. He
is the Chairman of David H T Lan Consultants Limited, and holds directorship
at Nanyang Commercial Bank, Limited since April 2002 and International Probono
Legal Services Association Limited since 2019. Dr. Lan acted as Supervisor of
Nanyang Commercial Bank (China), Limited for 12 years and 9 months since
December 2007 until his reappointment as Senior Consultant from October 2020.
Dr. Lan was a Senior Advisor of Mitsui & Company (Hong Kong) Limited for
19 years till his retirement in March 2019. He was also the President of the
International Institute of Management for almost 7 years till his retirement
in June 2019. He was the Secretary for Home Affairs of the HKSAR Government
till his retirement in July 2000. He had served as civil servant in various
capacities for 39 years and was awarded the Gold Bauhinia Star Medal on 1st
July, 2000. He was appointed as the 10th and 11th National Committee Member of
the Chinese People's Political Consultative Conference of the People's
Republic of China. Dr. Lan is a Chartered Secretary and a Fellow Member of The
Hong Kong Chartered Governance Institute and The Chartered Governance
Institute. He received his Bachelor of Arts degree from the University of
London and completed the Advanced Management Program of the Harvard Business
School, Boston. He was also a Fellow at Queen Elizabeth House, University of
Oxford. Dr. Lan was conferred with Doctor of Business Administration, honoris
causa by University of the West of England, Bristol, Doctor of Humanities,
honoris causa by Don Honorio Ventura Technological State University, and
holder of Visiting Professorship Awards of Bulacan State University and Tarlac
State University.
Paul Joseph TIGHE, aged 68, has been an Independent Non-executive Director of
the Company since April 2017. He has been a member of the Audit Committee of
the Company since March 2019 and the Chairman of the Audit Committee of the
Company since May 2022. He has been a member of the Sustainability Committee
of the Company since December 2020. He is also an Independent Non-executive
Director of CK Hutchison Holdings Limited and CK Life Sciences Int'l.,
(Holdings) Inc., both listed companies. Mr. Tighe is a director of a
substantial shareholder of the Company within the meaning of Part XV of the
SFO, and a director of a company controlled by a substantial shareholder of
the Company. He is a former career diplomat with Australia's Department of
Foreign Affairs and Trade. He has around 37 years of experience in government
and public policy, including 28 years as a diplomat. He has served as
Australian Consul-General to Hong Kong and Macau (from 2011 to 2016),
Australian Ambassador to Greece, Bulgaria and Albania (from 2005 to 2008),
Deputy Head of Mission and Permanent Representative to the United Nations'
Economic and Social Commission for Asia and the Pacific at the Australian
Embassy in Bangkok (from 1998 to 2001) and as Counsellor in the Australian
Delegation to the Organisation for Economic Co-operation and Development in
Paris (from 1991 to 1995). In between overseas assignments, Mr. Tighe has held
several positions at the headquarters of the Department of Foreign Affairs and
Trade in Canberra, including as head of the Department's Trade and Economic
Policy Division, head of the Diplomatic Security, Information Management and
Services Division, head of the Agriculture and Resources Branch and Director
of the International Economic Analysis Section. Before joining the Department
of Foreign Affairs and Trade, Mr. Tighe worked in the Overseas Economic
Relations Division of the Australian Treasury (from 1986 to 1988), in the
Secretariat of the Organisation for Economic Co-operation and Development in
Paris (from 1984 to 1986) and in the Australian Industries Assistance
Commission (from 1980 to 1984). He holds a Bachelor of Science degree from the
University of New South Wales.
LEE Pui Ling, Angelina, aged 75, has been a Non-executive Director of the
Company since September 2004 and prior to that an Independent Non-executive
Director of the Company from May 1996. Mrs. Lee is a solicitor and a Fellow of
the Institute of Chartered Accountants in England and Wales. She holds a
Bachelor of Laws degree from and was awarded an Honorary Fellowship by
University College London, University of London. Amongst her public
appointments, Mrs. Lee was a Member of the Exchange Fund Advisory Committee of
the Hong Kong Monetary Authority and a Non-executive Director of the
Securities and Futures Commission. Mrs. Lee is a Non-executive Director of
Henderson Land Development Company Limited and TOM Group Limited, and an
Independent Non-executive Director of Great Eagle Holdings Limited, all of
which are listed companies. Mrs. Lee is also a director of a company
controlled by a substantial shareholder of the Company within the meaning of
Part XV of the SFO.
George Colin MAGNUS, aged 88, acted as an Executive Director and Deputy
Chairman of the Company from May 1996 to October 2005, has been a
Non-executive Director of the Company since November 2005. He is also a
Non-executive Director of CK Hutchison Holdings Limited and an Independent
Non-executive Director of HK Electric Investments Manager Limited as the
trustee-manager of HK Electric Investments, and HK Electric Investments
Limited. He acted as an Executive Director of Cheung Kong (Holdings) Limited
("CKH") since 1980 and Deputy Chairman since 1985 until he retired from these
offices in October 2005. He has been a Non-executive Director of CKH since
November 2005 until his resignation in June 2015. He has been an Executive
Director of Hutchison Whampoa Limited ("HWL") since 1980 and was re-designated
as a Non-executive Director since November 2005 until his resignation in June
2015. He served as Deputy Chairman of HWL from 1984 to 1993. Mr. Magnus was
previously the Chairman of Power Assets Holdings Limited (formerly known as
Hongkong Electric Holdings Limited) from 1993 to 2005, a Non-executive
Director from 2005 to 2012 and an Independent Non-executive Director until
January 2014. Except for HKEIM, CKH and HWL, all the companies/investment
trust mentioned above are listed in Hong Kong. He is a director of a
substantial shareholder of the Company within the meaning of Part XV of the
SFO. He holds a Master's degree in Economics from King's College, Cambridge.
MAN Ka Keung, Simon, aged 67, has been an Alternate Director to Mr. Ip Tak
Chuen, Edmond, Deputy Chairman of the Company, since February 2008. He joined
the CK Group in December 1987. He is Executive Committee Member and General
Manager of Accounts Department of CK Asset Holdings Limited, a listed company.
He is a director of certain companies controlled by a substantial shareholder
of the Company within the meaning of Part XV of the SFO. He has over 43 years
of experience in accounting, auditing, tax and finance. He holds a Bachelor's
degree in Economics and is a member of Chartered Accountants Australia and New
Zealand.
Eirene YEUNG, aged 63, Alternate Director to Mr. Kam Hing Lam, the Group
Managing Director of the Company, and the Company Secretary and a member of
the Sustainability Committee of the Company. She is also Executive Committee
Member and Company Secretary, and General Manager of Company Secretarial
Department of CK Asset Holdings Limited. She is also the Company Secretary of
CK Life Sciences Int'l., (Holdings) Inc. Ms. Yeung is a Non-executive Director
of ESR Asset Management (Fortune) Limited (formerly known as ARA Asset
Management (Fortune) Limited), the manager of Fortune Real Estate Investment
Trust. All the companies/investment trust mentioned above are listed in Hong
Kong. She is a director of certain companies controlled by a substantial
shareholder of the Company within the meaning of Part XV of the SFO. Ms. Yeung
joined the CK Group in August 1994. She is a solicitor of the High Court of
the HKSAR and a non-practising solicitor of the Senior Courts of England and
Wales. She is also a fellow member of The Hong Kong Chartered Governance
Institute and The Chartered Governance Institute.
CONSOLIDATED INCOME STATEMENT
for the six months ended 30th June
Unaudited
HK$ million Notes 2024 2023
Turnover 2 19,090 19,534
Sales and interest income from
infrastructure investments 2 2,478 3,180
Other income 3 347 387
Operating costs 4 (1,918) (2,107)
Finance costs (415) (370)
Exchange gain 108 133
Share of results of associates 1,351 1,239
Share of results of joint ventures 2,626 2,047
Profit before taxation 4,577 4,509
Taxation 5 (53) (50)
Profit for the period 6 4,524 4,459
Attributable to:
Shareholders of the Company 4,311 4,239
Owners of perpetual capital securities 219 219
Non-controlling interests (6) 1
4,524 4,459
Earnings per share 7 HK$1.71 HK$1.68
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the six months ended 30th June
Unaudited
HK$ million 2024 2023
Profit for the period 4,524 4,459
Other comprehensive income
Items that may be reclassified subsequently to profit or loss:
(Loss)/Gain from fair value changes of derivatives designated as effective (15) 10
cash flow hedges
Gain/(Loss) from fair value changes of derivatives designated as effective net 617 (1,233)
investment hedges
Exchange differences on translation of financial statements of foreign (1,339) 3,424
operations
Share of other comprehensive income of associates 16 1,053
Share of other comprehensive income of joint ventures 425 796
Income tax relating to components of other comprehensive income (158) (256)
(454) 3,794
Items that will not be reclassified to profit or loss:
Share of other comprehensive (expense)/income of associates (286) 22
Share of other comprehensive (expense)/income of joint ventures (1,153) 134
Income tax relating to components of other comprehensive income 335 (41)
(1,104) 115
Other comprehensive (expense)/income for the period (1,558) 3,909
Total comprehensive income for the period 2,966 8,368
Attributable to:
Shareholders of the Company 2,755 8,151
Owners of perpetual capital securities 219 219
Non-controlling interests (8) (2)
2,966 8,368
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
HK$ million Notes Unaudited 30/6/2024 Audited 31/12/2023
Property, plant and equipment 3,113 3,079
Investment properties 408 408
Interests in associates 38,440 39,240
Interests in joint ventures 104,690 104,093
Other financial assets 1,541 1,542
Derivative financial instruments 770 624
Goodwill and intangible assets 2,219 2,299
Deferred tax assets - 1
Total non-current assets 151,181 151,286
Inventories 177 178
Derivative financial instruments 685 536
Debtors and prepayments 9 772 796
Bank balances and deposits 9,180 13,077
Total current assets 10,814 14,587
Bank and other loans 13,165 9,024
Derivative financial instruments 43 1,072
Creditors, accruals and others 10 5,958 5,902
Taxation 47 101
Total current liabilities 19,213 16,099
Net current liabilities (8,399) (1,512)
Total assets less current liabilities 142,782 149,774
Bank and other loans 10,235 15,173
Derivative financial instruments 353 465
Deferred tax liabilities 499 505
Other non-current liabilities 341 360
Total non-current liabilities 11,428 16,503
Net assets 131,354 133,271
Representing:
Share capital 11 2,520 2,520
Reserves 118,867 120,773
Equity attributable to shareholders of the Company 121,387 123,293
Perpetual capital securities 9,885 9,885
Non-controlling interests 82 93
Total equity 131,354 133,271
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the six months ended 30th June, 2024
Attributable to shareholders of the Company
HK$ million Share capital Share premium Contributed surplus Property revaluation reserve Hedging reserve Exchange translation reserve Retained profits Sub-total Perpetual capital securities Non-controlling interests Total
At 1st January, 2024 (audited) 2,520 16,185 6,062 68 1,620 (7,011) 103,849 123,293 9,885 93 133,271
Profit for the period - - - - - - 4,311 4,311 219 (6) 4,524
Loss from fair value changes of derivatives designated as effective cash flow - - - - (15) - - (15) - - (15)
hedges
Gain from fair value changes of derivatives designated as effective net - - - - - 617 - 617 - - 617
investment hedges
Exchange differences on translation of financial statements of foreign - - - - - (1,337) - (1,337) - (2) (1,339)
operations
Share of other comprehensive income/(expense) of associates - - - - 186 (170) (286) (270) - - (270)
Share of other comprehensive income/(expense) of joint ventures - - - - 425 - (1,153) (728) - - (728)
Income tax relating to components of other comprehensive income - - - - (158) - 335 177 - - 177
Total comprehensive income/(expense) for the period - - - - 438 (890) 3,207 2,755 219 (8) 2,966
Dividend paid - - - - - - (4,661) (4,661) - (3) (4,664)
Distribution paid on perpetual capital securities - - - - - - - - (219) - (219)
At 30th June, 2024 (unaudited) 2,520 16,185 6,062 68 2,058 (7,901) 102,395 121,387 9,885 82 131,354
At 1st January, 2023 (audited) 2,520 16,185 6,062 68 1,552 (8,936) 101,942 119,393 9,885 104 129,382
Profit for the period - - - - - - 4,239 4,239 219 1 4,459
Gain from fair value changes of derivatives designated as effective cash flow - - - - 10 - - 10 - - 10
hedges
Loss from fair value changes of derivatives designated as effective net - - - - - (1,233) - (1,233) - - (1,233)
investment hedges
Exchange differences on translation of financial statements of foreign - - - - - 3,427 - 3,427 - (3) 3,424
operations
Share of other comprehensive income of associates - - - - 236 817 22 1,075 - - 1,075
Share of other comprehensive income of joint ventures - - - - 796 - 134 930 - - 930
Income tax relating to components of other comprehensive income - - - - (256) - (41) (297) - - (297)
Total comprehensive income/(expense) for the period - - - - 786 3,011 4,354 8,151 219 (2) 8,368
Dividend paid - - - - - - (4,611) (4,611) - - (4,611)
Distribution paid on perpetual capital securities - - - - - - - - (219) - (219)
At 30th June, 2023 (unaudited) 2,520 16,185 6,062 68 2,338 (5,925) 101,685 122,933 9,885 102 132,920
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
for the six months ended 30th June
Unaudited
HK$ million Notes 2024 2023
Net cash from operating activities 12a 641 1,686
Net cash from investing activities 12b 443 38
Net cash utilised in financing activities (4,981) (7,716)
Net decrease in cash and cash equivalents (3,897) (5,992)
Cash and cash equivalents at 1st January 13,077 18,045
Cash and cash equivalents at 30th June 9,180 12,053
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
1. BASIS OF PREPARATION
The consolidated interim financial statements are prepared in accordance with
Hong Kong Accounting Standard 34 "Interim Financial Reporting" issued by the
Hong Kong Institute of Certified Public Accountants ("HKICPA"), which is
identical to the International Accounting Standard 34 "Interim Financial
Reporting" issued by International Accounting Standards Board ("IASB"), as
well as the applicable disclosure requirements of the Rules Governing the
Listing of Securities on The Stock Exchange of Hong Kong Limited ("Hong Kong
Stock Exchange").
The accounting policies adopted for the preparation of the consolidated
interim financial statements are consistent with those set out in the Group's
consolidated annual financial statements for the year ended 31st December,
2023, except for adoption of the amendments to Hong Kong Financial Reporting
Standards ("HKFRS") issued by the HKICPA and International Financial Reporting
Standards ("IFRS") issued by the IASB, which are effective to the Group for
accounting periods beginning on 1st January, 2024. The adoption of those
amendments to HKFRSs and IFRSs has no material impact on the Group's results
and financial position for the current or prior periods and does not result in
any significant change in accounting policies of the Group.
2. TURNOVER
Turnover represents net sales of infrastructure materials, interest income
from loans granted to associates and joint ventures, sales of waste management
services and share of turnover of joint ventures. Sales of infrastructure
materials and waste management services were substantially recognised at a
point in time.
Turnover comprises both sales and interest income from infrastructure
investments and share of turnover of joint ventures as follows:
Six months ended
30th June
HK$ million 2024 2023
Sales of infrastructure materials 751 981
Interest income from loans granted to associates 52 136
Interest income from loans granted to joint ventures 698 1,076
Sales of waste management services 977 987
Sales and interest income from infrastructure investments 2,478 3,180
Share of turnover of joint ventures 16,612 16,354
Turnover 19,090 19,534
3. OTHER INCOME
Other income includes the following:
Six months ended
30th June
HK$ million 2024 2023
Bank interest income 303 350
4. OPERATING COSTS
Operating costs include the following:
Six months ended
30th June
HK$ million 2024 2023
Cost of inventories sold 702 907
Cost of services provided 580 599
Depreciation of property, plant and equipment 149 149
Amortisation of intangible assets 9 16
5. TAXATION
Taxation is provided for at the applicable tax rates on the estimated
assessable profits less available tax losses. Deferred taxation is provided on
temporary differences under the liability method using tax rates applicable to
the Group's operations in different countries.
Six months ended
30th June
HK$ million 2024 2023
Current taxation - Hong Kong 1 1
Current taxation - outside Hong Kong 33 25
Deferred taxation 19 24
Total 53 50
6. PROFIT FOR THE PERIOD AND SEGMENT INFORMATION
for the six months ended 30th June
Infrastructure Investments
Investments In United Kingdom Australia Continental Europe Hong Kong and Canada New Zealand Total before Unallocated Consolidated
Power Assets
Mainland China
unallocated
items
Holdings
items
Limited
HK$ million 2024 2023 2024 2023 2024 2023 2024 2023 2024 2023 2024 2023 2024 2023 2024 2023 2024 2023 2024 2023
Turnover - - 9,094 9,185 3,507 3,308 2,361 2,514 1,477 1,696 1,410 1,580 1,241 1,251 19,090 19,534 - - 19,090 19,534
Sales and interest income from infrastructure investments - - 212 579 327 410 110 107 751 981 101 116 977 987 2,478 3,180 - - 2,478 3,180
Bank interest income - - - - - - - - 33 27 - - 2 1 35 28 268 322 303 350
Other income - - - - - - - - 24 35 - - 3 2 27 37 17 - 44 37
Change in fair value of other financial assets - - - - - - - - - - - - - - - - - (5) - (5)
Depreciation and amortisation - - - - - - - - (51) (53) - - (106) (112) (157) (165) (1) - (158) (165)
Other operating expenses - - - - - - - - (766) (980) - - (782) (796) (1,548) (1,776) (212) (161) (1,760) (1,937)
Finance costs - - - - - - - - - - - - (54) (50) (54) (50) (361) (320) (415) (370)
Exchange (loss)/gain - - - - - - - - (4) (9) - - - - (4) (9) 112 142 108 133
Share of results of associates and joint ventures 1,082 1,066 1,653 1,013 537 416 309 317 105 105 242 322 49 47 3,977 3,286 - - 3,977 3,286
Profit/(Loss)
before taxation 1,082 1,066 1,865 1,592 864 826 419 424 92 106 343 438 89 79 4,754 4,531 (177) (22) 4,577 4,509
Taxation - - - - - - - - (2) (3) (42) (36) (9) (7) (53) (46) - (4) (53) (50)
Profit/(Loss) for the period 1,082 1,066 1,865 1,592 864 826 419 424 90 103 301 402 80 72 4,701 4,485 (177) (26) 4,524 4,459
Attributable to:
Shareholders of the Company 1,082 1,066 1,865 1,592 864 826 419 424 96 102 301 402 80 72 4,707 4,484 (396) (245) 4,311 4,239
Owners of perpetual capital securities - - - - - - - - - - - - - - - - 219 219 219 219
Non-controlling interests - - - - - - - - (6) 1 - - - - (6) 1 - - (6) 1
1,082 1,066 1,865 1,592 864 826 419 424 90 103 301 402 80 72 4,701 4,485 (177) (26) 4,524 4,459
Segment profit attributable to shareholders of the Company represents the
profit earned by each segment after the profit attributable to owners of
perpetual capital securities and non-controlling interests without allocation
of gains or losses from treasury activities, corporate overheads and other
expenses of the Group's head office.
7. EARNINGS PER SHARE
The calculation of earnings per share is based on the profit attributable to
shareholders of the Company of HK$4,311 million (2023: HK$4,239 million) and
on 2,519,610,945 shares (2023: 2,519,610,945 shares) in issue during the
interim period.
8. INTERIM DIVIDEND
The interim dividend declared by the Board of Directors is as follows:
Six months ended
30th June
HK$ million 2024 2023
Interim dividend of HK$0.72 per share (2023: HK$0.71 per share) 1,814 1,789
9. DEBTORS AND PREPAYMENTS
Included in debtors and prepayments are trade debtors of HK$287 million
(HK$363 million at 31st December, 2023) and their aging analysis is as
follows:
HK$ million 30/6/2024 31/12/2023
Less than 1 month 211 199
1 to 3 months 45 102
More than 3 months but less than 12 months 23 54
More than 12 months 18 18
Gross total 297 373
Loss allowance (10) (10)
Total after allowance 287 363
Trade with customers is carried out largely on credit, except for new
customers, residential customers of waste management services and customers
with unsatisfactory payment records, where payment in advance is normally
required. Invoices are normally due within 1 month of issuance, except for
certain well- established customers, where the terms are extended to 2 months,
and certain customers with disputed items, where the terms are negotiated
individually. Each customer has a maximum credit limit, which was granted and
approved by senior management in accordance with the laid-down credit review
policy and procedures.
10. CREDITORS, ACCRUALS AND OTHERS
Included in creditors, accruals and others are trade creditors of HK$250
million (HK$329 million at 31st December, 2023) and their aging analysis is as
follows:
HK$ million 30/6/2024 31/12/2023
Current 130 211
1 month 64 42
2 to 3 months 27 39
Over 3 months 29 37
Total 250 329
11. SHARE CAPITAL
There were no movements in the share capital of the Company in the six months
ended 30th June, 2024.
12. NOTE TO CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
a) Funds from operations
Six months ended
30th June
HK$ million 2024 2023
Net cash from operating activities 641 1,686
Dividends received from associates 1,566 1,660
Dividends received from joint ventures 1,126 691
Funds from operations* 3,333 4,037
(*) Funds from operations represent net cash from operating activities
and dividends received from associates and joint ventures.
b) Net cash from investing activities include the following:
Six months ended
30th June
HK$ million 2024 2023
Investment in joint ventures (1,377) (40)
13. FAIR VALUE MEASUREMENT OF FINANCIAL INSTRUMENTS
Except for certain investments in securities which are stated at cost, the
carrying values of all financial assets and financial liabilities approximate
to their fair values.
The fair value of the Group's financial instruments and non-financial
instruments are grouped into Level 1 to 3 with reference to the observability
and significance of the inputs used in the valuation technique as follows:
Level 1: Quoted prices (unadjusted) in active markets for identical assets or
liabilities.
Level 2: Inputs other than quoted prices included within Level 1 that are observable
for asset or liability, either directly (i.e. as prices) or indirectly (i.e.
derived from prices).
Level 3: Inputs for the asset or liability that are not based on observable market data
(unobservable inputs).
At 30th June, 2024, investment properties amounting to HK$408 million (HK$408
million at 31st December, 2023) and unlisted investment in securities
amounting to HK$352 million (HK$353 million at 31st December, 2023) were
measured at fair value based on value inputs, other than quoted prices, that
are observable either directly or indirectly. Other investments amounting to
HK$1,189 million (HK$1,189 million at 31st December, 2023) were measured at
fair value based on value inputs that are not observable market data but
change of these value inputs to reasonable possible alternatives would not
have material effect on the Group's results and financial position.
Derivative financial instruments were measured at fair value based on value
inputs, other than quoted prices, that are observable either directly or
indirectly.
14. COMMITMENTS
The Group's capital commitments outstanding at 30th June, 2024 and not
provided for in the consolidated interim financial statements are as follows:
Contracted but not
provided for
HK$ million 30/6/2024 31/12/2023
Investments in joint ventures 1 3
Plant and machinery 180 131
Other financial assets 128 139
Total 309 273
15. CONTINGENT LIABILITIES
The contingent liabilities of the Group are as follows:
HK$ million 30/6/2024 31/12/2023
Other guarantee given in respect of a joint venture 68 142
Performance bond indemnities 168 174
Sub-contractor warranties 24 22
Total 260 338
16. EVENT AFTER THE REPORTING PERIOD
In August 2024, a consortium comprising CKI, CK Asset Holdings Limited and
Power Assets Holdings Limited, which will own 40%, 40% and 20% interests in
the portfolio, have entered into an agreement to acquire a portfolio of
operating onshore wind farms in the United Kingdom for approximately
£350 million (approximately HK$3.5 billion), subject to certain closing
adjustments. The portfolio comprises of 32 wind farms located in England,
Scotland and Wales, totalling 175 MW in installed capacity and 137 MW in net
attributable capacity. The transaction is expected to be completed in
September.
17. REVIEW OF CONSOLIDATED INTERIM FINANCIAL STATEMENTS
The consolidated interim financial statements are unaudited, but have been
reviewed by the Audit Committee.
DIRECTORS' RESPONSIBILITY STATEMENT
The Directors confirm that to the best of their knowledge:
- the financial statements have been prepared in accordance with
Hong Kong Accounting Standard 34 "Interim Financial Reporting" issued by the
Hong Kong Institute of Certified Public Accountants, which is identical to the
International Accounting Standard 34 "Interim Financial Reporting" issued by
International Accounting Standards Board, as well as the applicable disclosure
requirements of the Rules Governing the Listing of Securities on The Stock
Exchange of Hong Kong Limited and gives a true and fair view of the assets,
liabilities, financial position and profit or loss of the Group; and
- this Interim Report 2024 includes a fair review of the
information required by:
- DTR 4.2.7R of the Disclosure Guidance and Transparency Rules
("DTR") sourcebook of the UK's Financial Conduct Authority, being an
indication of important events that have occurred during the first six months
of the financial year ending 31st December, 2024 and their impact on the
condensed set of financial statements; and a description of the principal
risks and uncertainties for the remaining six months of the financial year;
and
- DTR 4.2.8R, being related party transactions that have taken
place in the first six months of the financial year ending 31st December,
2024, which have materially affected the financial position or performance of
the Group during that period; and any changes in the related party
transactions described in the 2023 Annual Report that could materially affect
the financial position or performance of the Group during the first six months
of the financial year ending 31st December, 2024.
On behalf of the Board
Victor T K LI
Chairman
14th August, 2024
DIRECTORS' INTERESTS AND SHORT POSITIONS IN SHARES, UNDERLYING SHARES AND
DEBENTURES
As at 30th June, 2024, the interests or short positions of the Directors and
chief executives of the Company in the shares, underlying shares and
debentures of the Company or any of its associated corporations (within the
meaning of Part XV of the Securities and Futures Ordinance ("SFO")) which were
notified to the Company and The Stock Exchange of Hong Kong Limited ("Stock
Exchange") pursuant to Divisions 7 and 8 of Part XV of the SFO (including
interests or short positions which they were taken or deemed to have under
such provisions of the SFO), or which were recorded in the register required
to be kept by the Company under Section 352 of the SFO, or which were
required, pursuant to the Model Code for Securities Transactions by Directors
of Listed Issuers set out in Appendix C3 to the Rules Governing the Listing of
Securities, to be notified to the Company and the Stock Exchange, were as
follows:
(1) LONG POSITIONS IN SHARES
Number of Ordinary Shares/Share Stapled Units
Name of Company Name of Director Capacity Personal Family Corporate Other Total Approximate
Interests
Interests
Interests
Interests
% of
Shareholding
Company Li Tzar Kuoi, Interest of child or spouse & beneficiary of trusts - 227,000 - 5,428,000 5,655,000 0.22%
Victor
(Note 1)
Kam Hing Lam Beneficial owner 100,000 - - - 100,000 0.003%
CK Hutchison Holdings Limited Li Tzar Kuoi, Beneficial Owner, interest of child or spouse, interest of controlled 220,000 405,200 2,572,350 (Note 3) 1,162,632,010 1,165,829,560 30.43%
Victor corporations & beneficiary of trusts
(Note 2)
Kam Hing Lam Beneficial owner & interest of child or spouse 51,040 57,360 - - 108,400 0.002%
Fok Kin Ning, Canning Interest of controlled corporation - - 6,011,438 (Note 9) - 6,011,438 0.15%
Frank John Sixt Beneficial owner 166,800 - - - 166,800 0.004%
Lan Hong Tsung, David Beneficial owner 13,680 - - - 13,680 0.0003%
Lee Pui Ling, Angelina Beneficial owner 111,334 - - - 111,334 0.002%
CK Hutchison Holdings Limited George Colin Magnus Beneficial owner, interest of child or spouse & founder & beneficiary 85,361 16,771 - 833,868 936,000 0.02%
of a discretionary trust
(Note 10)
Man Ka Keung, Simon Beneficial owner & interest of child or spouse 9,895 11,895 - - 11,895 0.0003%
(Note 11)
(Note 11)
Power Assets Holdings Limited Kam Hing Lam Interest of child or spouse - 100,000 - - 100,000 0.004%
Lee Pui Ling, Angelina Beneficial owner 8,800 - - - 8,800 0.0004%
HK Electric Investments and Li Tzar Kuoi, Interest of controlled corporation & beneficiary of trusts - - 5,170,000 2,700,000 7,870,000 0.08%
HK Electric Investments
Victor
(Note 5) (Note 6)
Limited
Kam Hing Lam Interest of child or spouse - 1,025,000 - - 1,025,000 0.01%
Fok Kin Ning, Canning Interest of controlled corporation - - 2,000,000 - 2,000,000 0.02%
(Note 9)
Lee Pui Ling, Angelina Beneficial owner 2,000 - - - 2,000 0.00002%
Hutchison Telecommunications (Australia) Limited Fok Kin Ning, Canning Beneficial owner & interest of controlled corporation 4,100,000 - 1,000,000 - 5,100,000 0.037%
(Note 9)
Frank John Sixt Beneficial owner 1,000,000 - - - 1,000,000 0.007%
Hutchison Telecommunications Hong Kong Holdings Limited Li Tzar Kuoi, Interest of child or spouse, interest of controlled corporations & - 192,000 353,047,203 53,604,826 406,844,029 8.44%
Victor beneficiary of trusts
(Note 7)
(Note 8)
Fok Kin Ning, Canning Interest of controlled corporation - - 1,202,380 - 1,202,380 0.024%
(Note 9)
Frank John Sixt Beneficial owner 255,000 - - - 255,000 0.005%
George Colin Magnus Beneficial owner & interest of child or spouse 13,201 132 - - 13,333 0.0002%
(2) LONG POSITIONS IN DEBENTURES
Amount of Debentures
Name of Name of Capacity Personal Family Corporate Other Total
Company Director Interests Interests Interests Interests
Cheung Kong Li Tzar Kuoi, Interest of controlled - - US$10,000,000 - US$10,000,000
Infrastructure Victor corporation 4.2% Guaranteed 4.2% Guaranteed
Finance (BVI) Perpetual Perpetual
Limited Capital Capital
Securities Securities
(Note 4)
Notes:
1. The discretionary beneficiaries of each of The Li Ka-Shing Unity
Discretionary Trust ("DT1") and another discretionary trust ("DT2") are, inter
alia, Mr. Li Tzar Kuoi, Victor, his wife and children, and Mr. Li Tzar Kai,
Richard. Each of the trustees of DT1 and DT2 holds units in The Li Ka-Shing
Unity Trust ("UT1") but is not entitled to any interest or share in any
particular property comprising the trust assets of the said unit trust. Li
Ka-Shing Unity Trustee Company Limited ("TUT1") as trustee of UT1 holds a
total of 5,428,000 shares of the Company.
The entire issued share capital of TUT1 and of the trustees of DT1 and DT2 are
owned by Li Ka-Shing Unity Holdings Limited ("Unity Holdco"). Mr. Li Ka-shing
and Mr. Li Tzar Kuoi, Victor are respectively interested in one-third and
two-thirds of the entire issued share capital of Unity Holdco. TUT1 is
interested in the shares of the Company by reason only of its obligation and
power to hold interests in those shares in its ordinary course of business as
trustee and, when performing its functions as trustee, exercises its power to
hold interests in the shares of the Company independently without any
reference to Unity Holdco or any of Mr. Li Ka-shing and Mr. Li Tzar Kuoi,
Victor as a holder of the shares of Unity Holdco as aforesaid.
By virtue of the above and as a director of the Company and a discretionary
beneficiary of each of DT1 and DT2, Mr. Li Tzar Kuoi, Victor is taken to have
a duty of disclosure in relation to the shares of the Company held by TUT1 as
trustee of UT1 under the SFO.
2. The 1,162,632,010 shares in CK Hutchison Holdings Limited ("CK
Hutchison") comprise:
(a) 1,005,817,044 shares held by TUT1 as trustee of UT1 together with
certain companies which TUT1 as trustee of UT1 is entitled to exercise or
control the exercise of one-third or more of the voting power at their general
meetings ("TUT1 related companies"). By virtue of being a director of the
Company and a discretionary beneficiary of each of DT1 and DT2 as described in
Note 1 above, Mr. Li Tzar Kuoi, Victor is taken to have a duty of disclosure
in relation to the said shares of CK Hutchison held by TUT1 as trustee of UT1
and TUT1 related companies under the SFO.
(b) 72,387,720 shares held by Li Ka-Shing Castle Trustee Company
Limited ("TUT3") as trustee of The Li Ka-Shing Castle Trust ("UT3") together
with certain companies which TUT3 as trustee of UT3 is entitled to exercise or
control the exercise of one-third or more of the voting power at their general
meetings ("TUT3 related companies"). The discretionary beneficiaries of each
of the two discretionary trusts ("DT3" and "DT4") are, inter alia, Mr. Li Tzar
Kuoi, Victor, his wife and children, and Mr. Li Tzar Kai, Richard. Each of the
trustees of DT3 and DT4 holds units in UT3 but is not entitled to any interest
or share in any particular property comprising the trust assets of the said
unit trust.
The entire issued share capital of TUT3 and of the trustees of DT3 and DT4 are
owned by Li Ka-Shing Castle Holdings Limited ("Castle Holdco"). Mr. Li
Ka-shing and Mr. Li Tzar Kuoi, Victor are respectively interested in one-third
and two-thirds of the entire issued share capital of Castle Holdco. TUT3 is
only interested in the shares of CK Hutchison by reason only of its obligation
and power to hold interests in those shares in its ordinary course of business
as trustee and, when performing its functions as trustee, exercises its power
to hold interests in the shares of CK Hutchison independently without any
reference to Castle Holdco or any of Mr. Li Ka-shing and Mr. Li Tzar Kuoi,
Victor as a holder of the shares of Castle Holdco as aforesaid.
By virtue of the above and as a director of the Company and a discretionary
beneficiary of each of DT3 and DT4, Mr. Li Tzar Kuoi, Victor is also taken to
have a duty of disclosure in relation to the said 72,387,720 shares of CK
Hutchison held by TUT3 as trustee of UT3 and TUT3 related companies under the
SFO.
(c) 84,427,246 shares held by a company controlled by Li Ka-Shing
Castle Trustee Corporation Limited as trustee of DT3.
3. The 2,572,350 shares in CK Hutchison comprise:
(a) 2,272,350 shares held by certain companies in which Mr. Li Tzar
Kuoi, Victor is entitled to exercise or control the exercise of one-third or
more of the voting power at their general meetings.
(b) 300,000 shares held by Li Ka Shing Foundation Limited ("LKSF"). By
virtue of the terms of the constituent documents of LKSF, Mr. Li Tzar Kuoi,
Victor may be regarded as having the ability to exercise or control the
exercise of one-third or more of the voting power at general meetings of LKSF.
4. Such interests are held by a company of which Mr. Li Tzar Kuoi,
Victor is entitled to exercise or control the exercise of one-third or more of
the voting power at its general meetings.
5. The 5,170,000 share stapled units in HK Electric Investments
and HK Electric Investments Limited ("HKEI") are held by LKSF. By virtue of
the terms of the constituent documents of LKSF, Mr. Li Tzar Kuoi, Victor may
be regarded as having the ability to exercise or control the exercise of
one-third or more of the voting power at general meetings of LKSF.
6. The 2,700,000 share stapled units in HKEI are held by TUT1 as
trustee of UT1. By virtue of being a director of the Company and a
discretionary beneficiary of each of DT1 and DT2 as described in Note 1 above,
Mr. Li Tzar Kuoi, Victor is taken to have a duty of disclosure in relation to
the said 2,700,000 shares stapled units of HKEI held by TUT1 as trustee of UT1
under the SFO.
7. The 353,047,203 shares in Hutchison Telecommunications Hong Kong
Holdings Limited ("HTHK") comprise:
(a) 2,519,250 shares held by certain companies in which Mr. Li Tzar
Kuoi, Victor is entitled to exercise or control the exercise of one-third or
more of the voting power at their general meetings.
(b) 350,527,953 shares held by LKSF. By virtue of the terms of the
constituent documents of LKSF, Mr. Li Tzar Kuoi, Victor may be regarded as
having the ability to exercise or control the exercise of one-third or more of
the voting power at general meetings of LKSF.
8. The 53,604,826 shares in HTHK comprise:
(a) 153,280 shares held by TUT3 as trustee of UT3. By virtue of being
a director of the Company and a discretionary beneficiary of each of DT3 and
DT4 as described in Note 2(b) above, Mr. Li Tzar Kuoi, Victor is taken to have
a duty of disclosure in relation to the said 153,280 shares of HTHK held by
TUT3 as trustee of UT3 under the SFO.
(b) 53,451,546 shares held by TUT1 as trustee of UT1 together with a
company which TUT1 as trustee of UT1 is entitled to exercise or control the
exercise of one-third or more of the voting power at its general meetings
("TUT1 related company"). By virtue of being a director of the Company and a
discretionary beneficiary of each of DT1 and DT2 as described in Note 1 above,
Mr. Li Tzar Kuoi, Victor is taken to have a duty of disclosure in relation to
the said 53,451,546 shares of HTHK held by TUT1 as trustee of UT1 and TUT1
related company under the SFO.
9. Such interests are held by a company which is equally owned by
Mr. Fok Kin Ning, Canning and his wife.
10. Such interests comprise 184,000 shares held by a company
controlled by a trust under which Mr. George Colin Magnus is a discretionary
beneficiary and 649,868 shares indirectly held by a trust of which Mr. George
Colin Magnus is the settlor and a discretionary beneficiary.
11. Such 9,895 shares are jointly held by Mr. Man Ka Keung, Simon and
his wife, the remaining 2,000 shares are held by his wife.
Save as disclosed above, none of the Directors or chief executives of the
Company had, as at 30th June, 2024, any interests or short positions in the
shares, underlying shares and debentures of the Company or any of its
associated corporations (within the meaning of Part XV of the SFO) which would
have to be notified to the Company and the Stock Exchange pursuant to
Divisions 7 and 8 of Part XV of the SFO (including interests or short
positions which they were taken or deemed to have under such provisions of the
SFO), or which were recorded in the register required to be kept by the
Company under Section 352 of the SFO, or which were required to be notified to
the Company and the Stock Exchange pursuant to the Model Code.
INTERESTS AND SHORT POSITIONS OF SHAREHOLDERS
So far as is known to any Director or chief executive of the Company, as at
30th June, 2024, shareholders (other than Directors or chief executives of the
Company) who had interests or short positions in the shares or underlying
shares of the Company which would fall to be disclosed to the Company under
the provisions of Divisions 2 and 3 of Part XV of the SFO, or which were
recorded in the register required to be kept by the Company under Section 336
of the SFO were as follows:
LONG POSITIONS OF SUBSTANTIAL SHAREHOLDERS IN THE SHARES OF THE COMPANY
Name Capacity Number of Ordinary Shares Total Approximate % of Shareholding
Hutchison Infrastructure Holdings Limited Beneficial owner 1,906,681,945 1,906,681,945 75.67%
Aspire Rich Limited Interest of controlled corporation 1,906,681,945 (Note i) 1,906,681,945 75.67%
Robust Faith Limited Interest of controlled corporation 1,906,681,945 (Note i) 1,906,681,945 75.67%
CK Hutchison Capital Securities (2) Limited Interest of controlled corporations 1,906,681,945 (Note ii) 1,906,681,945 75.67%
CK Hutchison Capital Securities (3) Limited Interest of controlled corporations 1,906,681,945 (Note iii) 1,906,681,945 75.67%
CK Hutchison Global Investments Limited Interest of controlled corporations 1,906,681,945 (Note iv) 1,906,681,945 75.67%
CK Hutchison Holdings Limited Interest of controlled corporations 1,906,681,945 (Note v) 1,906,681,945 75.67%
Notes:
i. This represents the same block of shares in the Company as
shown against the name of Hutchison Infrastructure Holdings Limited ("HIHL")
above. Since HIHL is equally controlled by Aspire Rich Limited ("Aspire Rich")
and Robust Faith Limited ("Robust Faith"), each of Aspire Rich and Robust
Faith is deemed to be interested in the same number of shares in which HIHL is
interested under the SFO.
ii. As Aspire Rich is wholly-owned by CK Hutchison Capital
Securities (2) Limited ("CK 2"), CK 2 is deemed to be interested in the same
number of shares in which Aspire Rich is deemed to be interested under the
SFO.
iii. As Robust Faith is wholly-owned by CK Hutchison Capital
Securities (3) Limited ("CK 3"), CK 3 is deemed to be interested in the same
number of shares in which Robust Faith is deemed to be interested under the
SFO.
iv. As CK 2 and CK 3 are wholly-owned by CK Hutchison Global
Investments Limited ("CK Global"), CK Global is deemed to be interested in the
same number of shares in which CK 2 and CK 3 are deemed to be interested under
the SFO.
v. As CK Global is wholly-owned by CK Hutchison Holdings Limited
("CK Hutchison"), CK Hutchison is deemed to be interested in the same number
of shares in which CK Global is deemed to be interested under the SFO.
Save as disclosed above, as at 30th June, 2024, the Company had not been
notified by any persons (other than Directors or chief executives of the
Company) who had interests or short positions in the shares or underlying
shares of the Company which would fall to be disclosed to the Company under
the provisions of Divisions 2 and 3 of Part XV of the SFO, or which were
recorded in the register required to be kept by the Company under Section 336
of the SFO.
CORPORATE GOVERNANCE
The Board of Directors ("Board") and the management of the Company are
committed to the maintenance of good corporate governance practices and
procedures at the Company and its subsidiaries ("Group"). The Company believes
that good corporate governance provides a framework that is essential for
effective management, a healthy corporate culture, successful business growth
and enhancing shareholder value. The corporate governance principles of the
Company emphasize a quality Board, sound internal controls, and transparency
and accountability to all shareholders.
The Company has applied the principles and complied with all code provisions
and, where applicable, the recommended best practices of the Corporate
Governance Code ("CG Code") as set out in Part 2 of Appendix C1 to the Rules
Governing the Listing of Securities ("Listing Rules") on The Stock Exchange of
Hong Kong Limited ("Stock Exchange") throughout the six months ended 30th
June, 2024.
The Group adheres to high corporate governance standards and conducts its
businesses with ethics and integrity. The Group's vision, values and strategy
are inextricably linked to its purpose and business operations. In compliance
with the CG Code, the Company has adopted, and regularly reviews its
comprehensive set of corporate governance policies such as Anti-Fraud and
Anti-Bribery Policy, Anti-Money Laundering Policy, Employee Code of Conduct,
Policy on Handling of Confidential Information, Information Disclosure, and
Securities Dealing, and Whistleblowing Policy - Procedures for Reporting
Possible Improprieties. The Group maintains a robust corporate governance
framework and internal control systems to uphold its accountability with
support from internal and external auditors and other professional advisors.
(1) BOARD COMPOSITION AND BOARD PRACTICES
The Board, accountable to the shareholders under the leadership of the
Chairman of the Board ("Chairman"), leads, directs and supervises the
Company's affairs to enable the long-term success of the Company. The Board is
responsible for shaping and monitoring the corporate culture, setting
long-term strategic objectives, policies and directions of the Company with
appropriate focus on values creation and risk management. The Board evaluates
the Group's operating, financial and sustainability performance and oversees
the executive management of the Company.
As at 30th June, 2024 and as the date of this Interim Report, the Board
consists of fifteen Directors, comprising eight Executive Directors (including
the Chairman, Group Managing Director, two Deputy Chairmen, Deputy Managing
Director, Chief Financial Officer and two Executive Directors), two
Non-executive Directors and five Independent Non-executive Directors. Two
Alternate Directors have been appointed. Throughout the six months ended 30th
June, 2024 and up to the date of this Interim Report, one-third of the Board
are Independent Non-executive Directors and more than one of them have
appropriate professional qualifications, or accounting or related financial
management expertise. All Directors (including Non-executive Directors) are
subject to retirement by rotation at least once every three years. Retiring
Directors are eligible for re-election by shareholders at general meetings in
accordance with the Company's Bye-laws and the CG Code.
The positions of Chairman and Group Managing Director are currently held by
separate individuals with a view to maintaining an effective segregation of
duties respecting management of the Board and the day-to-day management of the
Group's business.
All Directors make active contribution to the affairs of the Board and the
Board acts in the best interests of the Group. In addition to regular Board
meetings, the Chairman meets with the Independent Non-executive Directors
without the presence of other Directors twice every year, providing an
exclusive platform for Independent Non-executive Directors to raise concerns,
exchange views and discuss issues about the Company or its business, such as
corporate governance enhancement, efficiency of the Board and any other
matters they may wish to discuss without the presence of the Executive
Directors and the management.
The Company Secretary, reporting to the Chairman, advises the Board on
corporate governance and other regulatory compliance matters and is
responsible for keeping the Board abreast of developments in the law, rules
and regulations that may affect the Company's business and operations. The
Company Secretary also assists the Board in monitoring the Company's
compliance with Board procedures and the requirements under the Listing Rules
and other applicable law, rules and regulations.
(2) MODEL CODE FOR SECURITIES TRANSACTIONS BY DIRECTORS
The Company has adopted a code of conduct regarding directors' securities
transactions on terms no less exacting than the required standard set out in
the "Model Code for Securities Transactions by Directors of Listed Issuers"
under Appendix C3 to the Listing Rules ("Model Code"). The Company will review
and revise its code regarding directors' securities transactions to reflect
any amendments to Appendix C3 to the Listing Rules from time to time. All
Directors have confirmed that they have complied with the required standards
set out in the Model Code regarding their dealings in securities of the
Company during the six months ended 30th June, 2024.
The Board has established written guidelines no less exacting than the Model
Code for relevant employees in respect of their dealings in the Company's
securities. The Company has adopted a policy on handling of confidential
information, information disclosure, and securities dealing, applicable to the
Group's employees when they are in possession of confidential or inside
information in relation to the Group. The policy satisfies the requirements
under Part XIVA of the Securities and Futures Ordinance. The policy is
available on the Company's intranet and disseminated to the employees.
(3) RISK MANAGEMENT AND INTERNAL CONTROL
The Company has an internal audit function in place to conduct ongoing an
independent assessment of the Group's risk management (including significant
risks relating to Environment, Social and Governance ("ESG")) and internal
control systems and review of their effectiveness in accordance with the CG
Code. The Group Internal Audit prepares its audit plan using a risk based
methodology in consultation with, but independent of, the management for
review by the audit committee of the Company ("Audit Committee"). The audit
work focuses on financial, operational and compliance controls review and
those areas of the Group's activities with greatest perceived risks (including
ESG risks). An integral part of the internal audit function is to monitor and
ensure effective implementation of the risk management and internal control
systems.
The Board, through the Audit Committee, has conducted a review of the
effectiveness of the risk management and internal control systems of the Group
for the six months ended 30th June, 2024.
(4) AUDIT COMMITTEE
The Audit Committee comprises four members, all of whom are Independent
Non-executive Director. The Audit Committee is chaired by Mr. Paul Joseph
Tighe with Mr. Cheong Ying Chew, Henry, Mrs. Sng Sow-mei alias Poon Sow Mei
and Mr. Lan Hong Tsung, David as members. The Audit Committee is responsible
for overseeing the Group's financial reporting, risk management and internal
control systems, monitoring the integrity of the Group's financial
information, overseeing the relationship with the external auditor of the
Company, reviewing the arrangements that the Company's employees may use, in
confidence and anonymity, to raise concerns about possible improprieties and
ensuring proper arrangements are in place for fair and independent
investigations and follow-up actions, and performing corporate governance
functions delegated by the Board.
The Group's interim report for the six months ended 30th June, 2024 have been
reviewed by the Audit Committee.
(5) REMUNERATION COMMITTEE
A majority of the members of the Company's Remuneration Committee are
Independent Non-executive Directors. The Remuneration Committee is chaired by
Mr. Cheong Ying Chew, Henry, an Independent Non-executive Director, with
another Independent Non-executive Directors, Mrs. Sng Sow-mei alias Poon Sow
Mei and the Chairman, Mr. Victor T K Li, as members. The principal
responsibilities of the Remuneration Committee include making recommendations
to the Board on the Company's policy and structure for the remuneration
packages of all Directors and the senior management, making recommendations on
the remuneration of Non-executive Directors and, with delegated
responsibility, determining the remuneration packages of individual Executive
Directors and senior management, with reference to the corporate goals and
objectives of the Board resolved from time to time.
(6) NOMINATION COMMITTEE
A majority of the members of the Company's Nomination Committee are
Independent Non-executive Directors. The Nomination Committee is chaired by
Mrs. Kwok Eva Lee, an Independent Non-executive Director, with another
Independent Non-executive Director, Mr. Cheong Ying Chew, Henry and the
Chairman, Mr. Victor T K Li, as members. The principal responsibilities of the
Nomination Committee include reviewing the structure, size, diversity profile
and skills matrix of the Board and the independence of the Independent
Non-executive Directors, making recommendations to the Board on the
appointment or re-appointment of Directors and succession planning for
Directors and reviewing the Director Nomination Policy and the Board Diversity
Policy of the Company periodically.
(7) SUSTAINABILITY COMMITTEE
The Sustainability Committee comprises three Directors, a majority of whom are
Independent Non-executive Directors, and the Company Secretary. The
Sustainability Committee is chaired by Mr. Ip Tak Chuen, Edmond, Deputy
Chairman. Other members include two Independent Non-executive Directors, Mr.
Lan Hong Tsung, David and Mr. Paul Joseph Tighe, and the Company Secretary,
Ms. Eirene Yeung. The principal responsibilities of the Sustainability
Committee include overseeing management, and advising the Board, on the
development and implementation of the sustainability initiatives of the Group,
including reviewing the related sustainability and ESG policies and practices,
and assessing and making recommendations on matters concerning the Group's
sustainability development and sustainability and ESG risks and opportunities.
(8) INVESTOR RELATIONS AND SHAREHOLDERS ENGAGEMENT
The Company's Shareholders Communication Policy is available on the Company's
website. The policy is subject to review on a regular basis to ensure its
implementation and effectiveness.
The Company commits to engaging stakeholders in ongoing dialogues to
understand their evolving needs, concerns and expectations. The Company
establishes different forms of engagement for different groups of stakeholders
to keep consistent interactions and maintains different communication channels
for shareholders and investors to communicate their views on matters regarding
the Company's businesses and affairs. These channels include (i) corporate
communications(Note 1) published on the websites of the Company and the Stock
Exchange with notice of availability of corporate communications to be
distributed to shareholders(Note 2) by email or by post (where applicable)
(and, in case of actionable corporation communications(Note 3), further
disseminated to shareholders in accordance with the Listing Rules); (ii)
general meetings which provide a forum for shareholders to raise comments and
exchange views with the Board; (iii) updated and key information regarding the
Group available on the website of the Company; (iv) the Company's website
which offers a communication platform between the Company and its shareholders
and stakeholders; (v) press conferences and briefing meetings with analysts
held from time to time, where applicable, to provide updates on the
performance of the Group; (vi) the Company's Branch Share Registrar who deals
with shareholders for share registration and related matters; (vii) the
Corporate Affairs Department of the Company handling enquiries from
shareholders and investors generally; and (viii) other dedicated communication
channels, activities and events operated or organised by designated business
units and departments at various levels engaging different groups of
stakeholders.
Notes:
1. "Corporate Communications" refers to any documents issued or to
be issued by the Company for the information or action of holders of any of
the Company's shares or securities or the investing public, including but not
limited to directors' reports, annual accounts and auditor's reports, interim
reports, notices of meetings, listing documents, circulars and proxy forms.
2. "Shareholders", for the purpose of this section, include holder
of the shares in or other securities of the Company.
3. "Actionable Corporate Communications" refer to any Corporate
Communications that seek instructions from Shareholders on how they wish to
exercise their rights or made an election as Shareholders.
OTHER INFORMATION
PURCHASE, SALE OR REDEMPTION OF THE COMPANY'S LISTED SECURITIES
During the six months ended 30th June, 2024, neither the Company nor any of
its subsidiaries had purchased, sold or redeemed any of the Company's listed
securities (including sale of treasury share). As at 30th June, 2024, the
Company and its subsidiaries did not hold any treasury shares (whether in the
Clearing and Settlement System, or otherwise).
DISCLOSURE UNDER CHAPTER 13 OF THE LISTING RULES
The following information is disclosed in accordance with Rule 13.22 of
Chapter 13 of the Listing Rules:
As at 30th June, 2024, the Group's financial assistance to certain affiliated
companies exceeded the assets ratio of 8 per cent. A combined statement of
financial position of the affiliated companies as at 30th June, 2024 is set
out below:
HK$ million
Non-current assets 508,053
Current assets 28,982
Current liabilities (67,853)
Non-current liabilities (285,105)
Net assets 184,077
Share capital 55,355
Reserves 128,028
Non-controlling interests 694
Total equity 184,077
As at 30th June, 2024, the consolidated attributable interest of the Group in
these affiliated companies amounted to HK$83,565 million.
RISK FACTORS
The Group's businesses, financial condition, results of operations and growth
prospects may be affected by risks and uncertainties directly or indirectly
pertaining to the Group's businesses. The risk factors set out below are those
that could result in the Group's businesses, financial condition, results of
operations or growth prospects differing materially from expected or
historical results. Such factors are by no means exhaustive or comprehensive,
and there may be other risks in addition to those shown below which are not
known to the Group or which may not be material now but could turn out to be
material in the future. In addition, this Interim Report does not constitute a
recommendation or advice to invest in the shares or other securities of the
Company and investors are advised to make their own judgement or consult their
own investment advisors before making any investment in the shares or other
securities of the Company.
GLOBAL ECONOMY
Continued trade protectionism, fluctuation of major currencies, supply chain
disruptions, persistent high interest rates and inflationary pressure in some
countries, tight fiscal policy and monetary policy, high commodity prices and
energy costs, cost of living crisis, continuing geopolitical tensions and
increasing climate risks have created uncertainties and volatility in the
world economy and global financial markets. Continued slowdown in global
economic growth could lead to economic contractions in certain markets,
commercial and consumer delinquencies, weakened consumer confidence, and
increased market volatility and decline in the value of the assets.
The Group is a diversified infrastructure investment company with businesses
presently in Hong Kong, Mainland China, the United Kingdom ("UK"), Continental
Europe, Australia, New Zealand, Canada and the United States. Any adverse
economic, social and/or political conditions in those countries and places in
which the Group operates may potentially impact on the Group's businesses,
financial condition or results of operations, asset values and liabilities.
ECONOMIC CONDITIONS AND INTEREST RATES
The industries in which the Group operates are affected by the economic
conditions of the various places where the Group's investments or operations
are located, the population growth of these places, mark to market value of
securities investments, the currency environment and interest rates cycles.
There can be no assurance that the combination of the above factors the Group
experiences in the future will not adversely affect its financial condition or
results of operations.
Inflation and interest rates remain high in many countries. The interest rate
cycle has impact on the aggregate demand from all sectors, which may in turn
affect the businesses of the Group. While the Group regularly reviews its
exposure to interest rate fluctuations and may manage such exposure using
hedging instruments, there can be no guarantee that the Group will not be
affected by the interest rate exposure.
In particular, certain businesses in the Group are subject to regulatory
regimes in which local interest rates are taken into account in the
calculation of the regulated cost of capital, which flows through to allowed
revenue. There can be no assurance that any changes in the regulated cost of
capital can be fully mitigated by the businesses. Furthermore, income from
finance and treasury operations is dependent upon the capital markets,
interest rate and currency environment, and the worldwide economic and market
conditions, and therefore there can be no assurance that changes in these
conditions will not adversely affect the Group's business, financial
condition, results of operations and growth prospects. The volatility in the
financial markets may also adversely affect the income to be derived by the
Group from its finance and treasury activities.
CONCENTRATION IN GEOGRAPHICAL MARKETS AND BUSINESS TYPES
The business operation of the Group may be viewed as substantially
concentrated in certain geographical markets or in one particular or more
types of business. If and when the Group's operations are exposed to any
deterioration in the economic, social or political conditions as well as any
incidence of social unrest, strike, riot, civil disturbance or disobedience or
terrorism, or even outbreaks of epidemics in such geographical markets or
business segments, the adverse circumstances may materially disrupt the
Group's operations and, in turn, impact the revenue, profitability and
financial condition of the Group.
HIGHLY COMPETITIVE MARKETS
Unlike the Group's regulated businesses, which do not experience significant
competition, some of the Group's non-regulated business, such as the Group's
waste management, off-airport car parking, rolling stock leasing, cement and
household infrastructure businesses, face competition across the diverse
markets in which they operate. New market entrants and intensified price
competition among existing market players could adversely affect the Group's
businesses, financial condition, results of operations or growth prospects.
Competition risks faced by the Group include (a) possible restrictions on the
access by the shuttle buses operated by the Group's off- airport car parking
businesses as imposed by the airport authorities that operates the on-airport
car parking businesses; (b) the availability of rail link services from city
centre to airport which may reduce the usage of the off-airport car park; and
(c) significant competition and pricing pressure from other competitors
attempting to capture a higher level of market share. Such risks may adversely
affect the financial performance of the Group's operation.
INFRASTRUCTURE MARKET
The Group has historically focused, and continues to focus, its portfolio on
regulated businesses in the power and infrastructure sectors. The
infrastructure market is highly regulated. Some of the investments owned by
the Group in the power and infrastructure sectors (for example, water, gas and
electricity) are subject to regulatory pricing and strict adherence must be
made to the licence requirements, codes and guidelines established by the
relevant regulatory authorities from time to time. Failure to comply with
these licence requirements, codes or guidelines may lead to penalties, or, in
extreme circumstances, amendment, suspension or cancellation of the relevant
licences by the authorities. Many of the Group's regulated businesses have
recently been undergoing challenging regulatory resets with lower permitted
return and restrictions on shareholders' distribution under certain
circumstances. Interest and inflation rates, high energy cost, energy windfall
tax, cap on the energy retail prices in certain markets as well as tougher
stances adopted by regulators may affect the returns of the Group's
infrastructure businesses. Any operational practices that are significantly
out of step with community expectations can lead to concerns with regulators
or local or national governments, and may ultimately lead to more stringent
regulatory resets, regulatory oversight as well as negative publicity that
could also have a reputational impact.
The distribution and transmission networks of the Group's utilities
investments are also exposed to supply interruptions. If an extreme weather
and climate event, earthquake, storm, flood, fire, sabotage, terrorist attack,
outbreaks of epidemics or any other unplanned event interrupts service, the
loss of cash flow resulting from the interruption and the cost of recovery
from network damage could be considerable and potentially cause poor customer
perceptions and may also lead to claims and litigation. Moreover, some losses
from events such as terrorist attacks may not be recoverable. The
Russia-Ukraine conflict and the instability in the Middle East will continue
to put energy supply at risk and cause substantial price volatility. Increases
in the number or duration of supply interruptions could result in material
increases in the costs associated with the operation of the distribution and
transmission networks. The capacity factor (load factor) of the wind farms
acquired by the Group could also be affected by the wind conditions, which
could result in the fluctuation of revenues. Some investments in non-regulated
business may also be impacted by regulatory reform. All of these uncertain
factors could have a material adverse effect on the businesses, financial
condition, results of operations or growth prospects of the Group.
CRUDE OIL MARKETS
The Group's investment in Husky Midstream Limited Partnership ("HMLP")
comprises oil pipelines, storage facilities and ancillary assets in Canada.
Its results of operation and financial condition may be dependent on the
prices received for refined products and crude oil of Cenovus Energy Inc.
("Cenovus"). Fluctuation of crude oil prices could impact the value and
quantity of Cenovus' oil production. HMLP also has other customers apart from
Cenovus and their demand for HMLP's services may depend on prices received for
their refined products and crude oil. Prices for refined products and crude
oil are based on local and global supply and demand as well as availability
and costs of transportation. Supply and demand may be affected by a number of
factors including, but not limited to, actions taken by the Organisation of
the Petroleum Exporting Countries (OPEC), non-OPEC crude oil supply, social
and political conditions in oil producing countries, the occurrence of natural
disasters, general and specific economic conditions, technological
developments, prevailing weather patterns and the availability of alternate
sources of energy. Furthermore, HMLP is also susceptible to unforeseen
pipeline releases at rivers or nature reserves. If the above events occurred
or further occurred, it may adversely affect the Group's financial condition
and results of operations.
CAPEX INVESTMENT
Capex investment plans for regulated business are proposed and planned based
on the asset conditions, regulatory compliance and government initiative, such
as net zero emission and hydrogen plan. Aggressive targets could require huge
capital investment in a short period of time. That would cause concerns on:
affordability of the customers for the increase in tariff; construction is
constrained by the availability of labour and resources. Excess demand would
further drag up capital investment project costs, which might cause cost of
funding not being able to be justified by the weighted average cost of capital
(WACC) return allowed by the regulator.
A significant amount of capital expenditure is also required for the Group to
maintain the assets of its existing businesses. While the relevant asset
companies have their own asset management plans, there is a risk that due to
unforeseen events, capital expenditure required for the replacement of assets
could exceed budgeted amounts and hence affect the businesses, financial
condition, results of operations or growth prospects of the Group.
CURRENCY FLUCTUATIONS
The Group is a global infrastructure group and is exposed to potential
currency fluctuations in these countries and territories in which the Group
operates, particularly with respect to U.S. dollars, Hong Kong dollars,
Australian dollars, New Zealand dollars, British pounds sterling, Canadian
dollars and Euros. The results of the Group are recorded in Hong Kong dollars
but its various subsidiaries, associates and joint ventures may receive
revenue and incur expenses in other currencies. Any currency fluctuations on
translation of the accounts of these subsidiaries, associates and joint
ventures and also on the repatriation of earnings, equity investments and
loans may therefore impact the Group's financial condition or results of
operations, asset values and liabilities.
To minimise currency risk exposure in respect of its investments in other
countries, the Group generally hedges those investments with (i) currency
swaps and (ii) an appropriate level of borrowings denominated in the local
currencies. The Group has not entered into any speculative derivative
transaction.
Although currency exposures have been managed by the Group, a depreciation or
fluctuation of the currencies in which the Group conducts operations relative
to the Hong Kong dollar could adversely affect the Group's businesses,
financial condition, results of operations or growth prospects.
CYBERSECURITY
With the fast expanding adoption of internet, networking, information and
operational technology, rapid development of artificial intelligence (AI)
technology, cyber fraud, cyber attacks and security breaches around the world
are occurring at a higher frequency and intensity. As the Group's businesses
focus on power and infrastructure sectors, they could be particularly prone to
cyber-attacks and security breaches due to their structural importance. The
Group's critical utility, data and information assets are not immune from
attack, damage or unauthorised access. Cybersecurity risks could have material
adverse effect on the operational and business performance, as well as the
business reputation of the Group. The Group continuously strives to enhance
the cybersecurity protection of its business.
There can be no assurance that the Group will be free from cyber fraud, cyber
attacks or security breaches or that it will not experience any major damage
to its assets or activities. Cyber fraud, cyber-attacks or security breaches
suffered by the Group's systems could result in significant impact on the
Group's business reputation, businesses, financial condition, results of
operations or growth prospects. As threats related to cyber security develop
and grow, the Group and its businesses may also find it necessary to make
further investments to enhance cybersecurity, which may impact the Group's
results of operations and financial condition.
LABOUR
The labour markets in which the Group operates are undergoing major short- and
long-term structural changes. Unemployment rates are at lows and people are
seeking to improve work life balance. There is a high level of uncertainty in
labour availability and cost. There is no assurance that the situation will
improve anytime soon. Turnover of key personnel may lead to disruption of
businesses.
SUPPLY CHAIN DISRUPTIONS
Geopolitical tensions have disrupted supply of raw materials, transportation
and port operations. In addition to escalating costs, unpredictable lead time
and quality issues, there are widespread shortages of shipping availability.
Increase in energy and oil prices has added complexity to the disruption.
Global disruptions have spilled over to domestic supply chains. Specific
domestic issues include shortage of labour which is particularly acute in some
areas the Group is operating in. There is no assurance that the situation will
improve anytime soon.
STRATEGIC PARTNERS
Most of the Group's businesses are conducted through non wholly-owned
subsidiaries, associates, internal joint ventures, and, to a lesser extent,
external joint ventures in which the Group shares control and strategic
alliances had been formed by the Group with other strategic or business
partners. There can be no assurance that any of the external strategic or
business partners will continue their relationships with the Group in the
future or that the Group will be able to pursue its stated strategies with
respect to its non wholly-owned subsidiaries, associates and joint ventures
and the markets in which they operate. Furthermore, the joint venture partners
may (a) have economic or business interests or goals that are inconsistent
with those of the Group; (b) take actions contrary to the Group's policies or
objectives; (c) undergo a change of control; (d) experience financial and
other difficulties; or (e) be unable or unwilling to fulfill their obligations
under the joint ventures, which may affect the Group's businesses, financial
condition, results of operations or growth prospects.
IMPACT OF POSSIBLE ECONOMIC SANCTIONS ON BUSINESS PARTNERS, SUPPLIERS,
CUSTOMERS OR BUSINESSES IN GENERAL
Governments and multinational organisations (including but not limited to the
State Department and the Department of the Treasury's Office of Foreign Assets
Control of the United States, His Majesty's Treasury, the Office of Financial
Sanctions Implementation or other UK government agency, the European Union
("EU") or any member state thereof and the United Nations), from time to time
administer certain laws and regulations that impose restrictions with respect
to activities, transmission of funds or transactions with certain countries,
governments, entities and individuals that are the subject of economic
sanctions. There can be no assurance that such sanctions or other restrictions
will not affect the jurisdictions in which the Group conducts its business,
any of the Group's business partners, suppliers, customers or otherwise. To
the extent that any such sanction or restriction is imposed in any
jurisdictions where the Group's business operates, the Group may need to cease
operations in those jurisdictions and suffer losses in that regard. If any of
the Group's business partners or suppliers is impacted by sanctions or
restrictions, the provision of goods, services or support by them may be
disrupted or discontinued, which may affect the Group's ability to continue to
operate related businesses. If any of the Group's business partners is
affected by sanctions or restrictions, the discontinuation or disruption of
strategic alliances with such business partners may also affect the Group's
ability to continue to operate related businesses and/or may result in
suspension of operations. There can be no assurance that the Group will be
able to obtain alternative goods, services, support or alliance it needs for
the operation of its business, in a timely manner or at competitive terms, and
no assurance that any compensation recoverable from business partners or
suppliers for the discontinued or disrupted supply, service, support or
alliance will be available or adequate. If any of the Group's customers are
affected by sanctions or restrictions, the Group may be forced to discontinue
the provision of services or goods to such customers and the Group will suffer
losses in that regard. If any of the Group's assets are in the possession of
such customers, there can be no assurance that such assets can be repossessed
by the Group especially if such assets are located in countries or regions
subject to sanctions or restrictions and no assurance that any compensation
recoverable from such customers or insurers for the Group's failure to
repossess such assets will be available. Any of these factors could have a
material adverse effect on the Group's financial condition and results of
operations.
MERGERS AND ACQUISITIONS
The Group has undertaken significant merger and acquisition activities in the
past, and as part of its strategic growth plans, expects to continue to do so
in the future if there are appropriate acquisition opportunities in the
market. In pursuit of new business opportunities, the Group is experiencing
more intense competition where competing bidders are more aggressive in the
valuation of the assets on the back of abundant market liquidity and lower
return requirements, and a willingness to take market risk. Although due
diligence and detailed analysis are conducted before merger and acquisition
activities are undertaken, there can be no assurance that these can fully
expose all hidden problems, potential liabilities and unresolved disputes that
the target company may have. In addition, valuations and analyses on the
target company conducted by the Group and by professionals alike are based on
numerous assumptions, and there can be no assurance that those assumptions are
correct or appropriate or that they will receive universal recognition.
Relevant facts and circumstances used in the analyses could have changed over
time, and new facts and circumstances may come to light as to render the
previous assumptions and the valuations and analyses based thereon obsolete.
Some of these merger and acquisition activities are subject to regulatory
approvals in overseas countries and there can be no assurance that such
approvals will be obtained, and even if granted, there may be burdensome
conditions attached to such approvals. There might be longer and more
complicated foreign investment approval processes in particular for
"sensitive" infrastructure assets such as electricity and gas networks. The
increasing geopolitical tensions have accelerated these trends as governments
have responded with additional foreign investment regulations to protect local
enterprises from foreign acquisitions and also to protect strategic assets
from foreign control. The Group may not necessarily be able to successfully
integrate the target business into the Group and may not be able to derive any
synergy from the acquisition, leading to an increase in costs, time and
resources. For merger and acquisition activities undertaken overseas, the
Group may also be exposed to different and changing political, social, legal
and regulatory requirements at the local, national and international level.
The Group may also need to face different cultural issues when dealing with
local employees, customers, governmental authorities and pressure groups.
IMPACT OF LOCAL, NATIONAL AND INTERNATIONAL REGULATIONS
The local business risks in different countries and territories in which the
Group operates could have a material impact on the businesses, financial
condition, results of operations or growth prospects. The Group has
investments in different countries and territories around the world and the
Group is, and may increasingly become, exposed to different and changing
political, social, legal, tax, regulatory and environmental requirements at
the local, national or international level. Also, new guidelines, directives,
policies or measures by governments, whether fiscal, tax, regulatory,
environmental or other competitive changes, may lead to an increase in
additional or unplanned operating expenses and capital expenditures, increase
in market capacity, reduction in government subsidies, may pose a risk to the
overall investment return of the Group's businesses and may delay or prevent
the commercial operation of a business, which may result in loss of revenue
and profits and adversely affect the Group's businesses, financial condition,
results of operations or growth prospects.
Political, regulatory and media attention has increased significantly towards
privatised companies in countries in which the Group operates. Regulators in
some of these countries have warned of increasingly onerous regulatory resets,
and some major political parties are promoting policies to bring energy, water
and railways back into public ownership, which could potentially have serious
and material consequences for the Group if such regulations and policies are
enacted. Group companies are responding to these risks by focusing on their
core strategies of delivering and outperforming regulatory outputs such as
safety, reliability and customer service, at the lowest cost possible; by
conveying the positive benefits to customers of the services they provide; and
by engaging collaboratively with regulators and politicians to demonstrate the
advantages of private ownership.
COMPLIANCE WITH PERSONAL DATA PROTECTION LEGISLATION
In the ordinary course of its operations, various businesses of the Group
collect, store and use data that is protected by personal data protection laws
in the different countries in which they operate. As regulatory focus on
privacy issues continues to increase and worldwide laws and regulations
concerning the handling of personal information expand and become more
complex, potential risks related to personal data collection and use within
the Group's businesses are expected to intensify.
In the event that any relevant business of the Group is unable to meet its
obligations under applicable data protection laws, it may be subject to
regulatory actions or civil claims. The cost of regulatory or legal actions,
and any monetary or reputational damage suffered as a result of such action
could have a material adverse effect on the Group's financial condition and
results of operations.
HEALTH AND SAFETY LAWS OR REGULATIONS
Many aspects of the Group's businesses and their operations are inherently
dangerous, such as the operation and maintenance of electricity generation and
distribution businesses, and gas transmission and distribution businesses
which have the potential to trigger operational hazards. In addition, certain
operational aspects of the Group's businesses that are not currently regarded
or proven to have adverse effects could be later found to be hazardous, such
as the operations effected by electric and magnetic fields.
The Group's businesses are subject to laws and regulations governing health
and safety matters to protect both the public, employees and contractors, who
could potentially be harmed by these activities, as well as laws and
regulations relating to pollution, the protection of the environment, and the
use and disposal of hazardous substances and waste materials, which are all
subject to change in the future. Any breach of these obligations, or even
incidents that do not amount to a breach could adversely affect the Group's
results of operations and reputation.
The Group and its businesses are also increasingly subject to regulations in
relation to climate change. While the Group commits significant expenditure
towards complying with these laws and regulations, the cost of future
environmental obligations is often inherently difficult to estimate. If
additional and more onerous requirements are imposed or the Group or its
businesses are less able to recover additional costs imposed, the Group's
business, results of operations and financial condition may be materially and
adversely affected.
ENVIRONMENTAL REGULATIONS
The Group is required to comply with numerous laws and regulations relating to
the protection of the environment and land use in the UK, Australia, New
Zealand, Continental Europe, Canada, Hong Kong, Mainland China and elsewhere.
These laws and regulations may change over time.
The Group believes that it and its businesses have obtained all material
environmental approvals currently required to operate their facilities.
However, the Group and its businesses may incur significant additional costs
as a result of current and future environmental regulations and requirements
to obtain approvals. In addition, there can be no assurance that the
requirements to obtain such approvals may not become more stringent in the
future and that such approvals would be renewed when they expire. Furthermore,
there is a risk that some environmental agencies may seek to retroactively
alter certain permitting conditions, particularly in cases where certain
practices were established and agreed upon in principle but were not
documented.
In addition, the Group's businesses may be significantly impacted by evolving
environmental regulations and decarbonisation efforts in the countries where
they operate.
Failure to comply with environmental laws and regulations could result in the
imposition of civil or criminal liabilities, the imposition of liens or fines
and additional expenditures to bring the facilities into compliance, which
would have a material adverse effect on the Group's business, financial
condition, results of operations or growth prospects.
IMPACT OF NEW ACCOUNTING STANDARDS
The International Accounting Standards Board has from time to time issued a
number of new and revised International Financial Reporting Standards
("IFRS"). The International Accounting Standards Board may in the future issue
new and revised standards and interpretations. In addition, interpretations on
the application of the IFRS will continue to develop. These factors may
require the Group to adopt new accounting policies. The adoption of new
accounting policies or new IFRS might or could have a significant impact on
the Group's financial position or results of operations.
CONNECTED TRANSACTIONS
CK Hutchison Holdings Limited ("CK Hutchison") is also listed on The Stock
Exchange of Hong Kong Limited. Although the Group believes that its
relationship with CK Hutchison provides it with significant business
advantages, the relationship results in various connected transactions under
the Rules Governing the Listing of Securities on The Stock Exchange of Hong
Kong Limited ("Listing Rules") and accordingly any transactions entered into
between the Group and CK Hutchison, its subsidiaries or associates are
connected transactions, which, unless one of the exemptions is available, will
be subject to compliance with the applicable requirements of the Listing
Rules, including the issuance of announcements, the obtaining of independent
shareholders' approval at general meetings and disclosure in annual reports
and financial statements. Independent shareholders' approval requirements may
also lead to unpredictable outcomes causing disruptions to as well as an
increase in the risks of the Group's business activities. Independent
shareholders may also take actions that are in conflict with the interests of
the Group.
RISKS ARISING FROM CLIMATE CHANGE
Some of the Group's assets and businesses, and many of the Group's customers
and suppliers are located in areas that would be affected in the medium to
long term by climate change. Climate change may increase the frequency and
intensity of extreme weather events, and some of which can result in natural
disasters. It could disrupt supply chains, interrupt business operations and
cause financial and physical damages. Alternation in weather patterns, such as
typhoons, droughts, or rainfall amount may cause shortage of crops for food
and other natural resources. The harsher temperatures in some locations may
also pose an increased risk for staff working in those locations. Changes in
microclimates for certain locations may render certain businesses obsolete.
Some governments are also beginning to introduce legislation or requirements
to restrict emissions and other environmental protective measures. Some
regulators have issued new disclosure requirements in relation to
climate-related financial risk disclosures and plan to mandate the
disclosures. Regulations, new disclosure requirements, disruption and damage
arising from climate change could have a material impact on the Group's
businesses and adversely affect the Group's financial condition and results of
operations.
There can be no assurance that climate change and its impact including rising
sea levels, prolonged droughts, heat waves, severe storms or flooding and
other extreme weather patterns will not occur and result in major disruption
or damage to the Group's assets and businesses, which could materially and
adversely affect the Group's business, financial condition, results of
operations and growth prospects.
TRANSITION RISKS
Pressure on businesses to support the transition to low-carbon economic
systems is rising. In a low-carbon economy, emissions are minimised through
the use of low-carbon resources, while resource efficiency is maximised by the
reduction of wasteful and high-emissions consumption. Infrastructure
businesses faced unexpected pressure from regulatory, legal, market,
technological, and reputational risks generated by the transition which could
have a material impact on the Group's businesses and adversely affect the
Group's financial condition and results of operations. For example, additional
legal and/or regulatory measures imposing limitation on GHG emissions or
efficiency improvements, may results in potential litigation, operation
restriction and significant compliance cost.
NATURAL DISASTERS
Some of the Group's assets and projects, and many of the Group's customers and
suppliers are located in areas at risk of damage from earthquakes, floods,
storms, drought, bushfires, frost and similar disasters and the occurrence of
any of these disasters could disrupt the Group's business and materially and
adversely affect the Group's businesses, financial condition, results of
operations or growth prospects.
There can be no assurance that earthquakes, floods, storms, drought,
bushfires, extreme weather or other natural disasters will not occur and
result in major damage to the Group's infrastructure projects, or assets or
facilities or on the general supporting infrastructure facilities in the
vicinity, which could adversely affect the Group's businesses, financial
condition, results of operations or growth prospects.
REPUTATIONAL RISKS
The Group's portfolio is primarily comprised of regulated businesses, and
maintaining trust in the Group is critical to its ability to maintain strong
relationships with the relevant regulators as well as investors and employees.
Damage to the Group's reputation can therefore cause significant harm to its
business and prospects. The Group also has strategic alliances with its
affiliated companies, and the Group's reputation could also be harmed by the
failure of an affiliate, a vendor or other third parties with which it does
business, to comply with laws or regulations.
In addition, any failure or perceived failure of any of the Group's portfolio
businesses to deliver appropriate standards of service and quality or to
handle or use confidential information appropriately can result in user or
regulators' dissatisfaction, litigation and heightened regulatory scrutiny,
all of which can lead to lost turnover, higher operating costs and harm to the
Group's and its businesses' reputation. Adverse publicity or negative
information posted on social media regarding the Group or its businesses,
whether or not true, may result in reputational harm, and have a material
adverse effect on the Group's business and prospects. Should any of these or
other events or factors that can undermine the Group's reputation occur, there
is no assurance that the additional costs and expenses that it may need to
incur to address the issues giving rise to the reputational harm could not
adversely affect its business and results of operations.
PUBLIC HEALTH EMERGENCY
Although COVID-19 no longer constitutes a public health emergency of
international concern, the repercussions of the pandemic may continue to
affect different economics around the world, including the places of
businesses in which the Group operates. There can be no assurance that there
will not be another significant global outbreak of a severe communicable
disease, and if such an outbreak were to occur, it could have an adverse
impact on the operations of the Group and its results of operations might
suffer. The potential impact on the Group's businesses, financial condition,
results of operations or growth prospects will depend on a range of factors,
including the duration, severity and scope of the pandemic, the impact of the
pandemic on economic activity globally, the possibility of resurgence and
variants, and the measures adopted by governments.
POTENTIAL RISKS IN RELATION TO WITHDRAWAL OF THE UK FROM EUROPEAN UNION'S
MEMBERSHIP ("BREXIT")
The UK left the EU on 31st January, 2020. The Trade and Cooperation Agreement
between the UK and the EU, which was signed on 30th December, 2020 and applied
provisionally as from 1st January, 2021, entered into force on 1st May, 2021.
It sets out preferential arrangements in various aspects such as trade,
security, areas on ongoing collaboration/cooperation and governance. Brexit
has continued to create significant uncertainty about the new economic and
social partnership between the UK and the EU, and has impacted trade
intensity, labour availability, supply chain, exchange rates and gross
domestic product levels in the UK.
SOCIAL INCIDENTS, TERRORIST THREATS AND GEOPOLITICAL TENSIONS
The Group is a diversified infrastructure investment company with businesses
presently in Hong Kong, Mainland China, the UK, Continental Europe, Australia,
New Zealand, Canada and the United States. In recent years, a series of social
incidents, terrorist activities and geopolitical tensions occurred across the
globe that resulted in economic losses, multiple deaths, casualties,
persistent supply chain disruptions and volatility in commodity markets. There
can be no assurance that countries in which the Group operates will not have
any social incidents or they will be immune from terrorist threats or
geopolitical tensions, and if these events occur, it may have an adverse
impact on the Group's businesses, financial condition, results of operations
or growth prospects.
DIVIDENDS
Since its listing on the Hong Kong Stock Exchange in 1996, the Company has
grown its dividends in each of the past 27 years. However, the Company's track
record of dividend payment may not continue in the future. The Company's
principal assets consist of its ownership stakes in its operating portfolio
businesses. The Company's ability to pay dividends and fulfil its obligations
depends, among other factors, on the ability of its portfolio businesses to
distribute dividends, repay intercompany loans provided by the Company or
extend intercompany loans to the Company. The Group's portfolio businesses are
subject to regulations that may limit the amount of dividends, loans or
advances they may make to the Company.
In addition, the Company's ability to pay dividends may be constrained by
business considerations, such as the impact of dividends on the Company's
credit ratings or competitive position. Furthermore, as a Bermuda incorporated
company and under the Bye-laws, the Company may not declare or pay a dividend,
or make a distribution out of contributed surplus, if there are reasonable
grounds for believing that (i) the Company is, or would after the payment be,
unable to pay its liabilities as they become due or (ii) the realisable value
of its assets would thereby become less than the aggregate of its liabilities
and its issued share capital and share premium account.
DUAL LISTING OF THE COMPANY'S SHARES
Dual listing of the Company's shares on the Hong Kong Stock Exchange and the
London Stock Exchange may lead to an inefficient market in the shares as it
results in differences in liquidity, settlement and clearing systems, trading
currencies, prices and transaction costs between the Hong Kong Stock Exchange
and the London Stock Exchange. These and other factors can hinder the
transferability of the Shares between the two exchanges.
The Company's shares are quoted and traded in Hong Kong dollars on the Hong
Kong Stock Exchange. The shares will be quoted and traded in Pound Sterling on
the London Stock Exchange. The market price of the shares on those exchanges
may also differ due to exchange rate fluctuations.
Consequently, the trading in, and liquidity of, the Company's shares will be
split between these two exchanges. The characteristics of the Hong Kong and UK
capital markets are different. The Hong Kong Stock Exchange and the London
Stock Exchange have different trading hours, trading characteristics
(including trading volume and liquidity), trading and listing rules, market
regulations, and investor bases. As a result of these differences, the price
of the Shares may fluctuate and may at any time be different on the Hong Kong
Stock Exchange and the London Stock Exchange, even allowing for currency
differences. This could adversely affect the trading of the Shares on these
exchanges and increase their price volatility and adversely affect the price
and liquidity of the Shares on these exchanges.
PAST PERFORMANCE AND FORWARD LOOKING STATEMENTS
The past performance and the results of operations of the Group as contained
in this Interim Report are historical in nature and past performance can be no
guarantee of future results of the Group. This Interim Report may contain
forward-looking statements and opinions that involve risks and uncertainties.
Actual results may differ materially from expectations discussed in such
forward-looking statements and opinions. Neither the Group nor the directors,
employees or agents of the Group assume (a) any obligation to correct or
update the forward-looking statements or opinions contained in this Interim
Report; and (b) any liability in the event that any of the forward-looking
statements or opinions does not materialise or turns out to be incorrect.
This interim report 2024 (both English and Chinese versions) ("Interim
Report") has been published on the Company's website (https://www.cki.com.hk)
and the website of Hong Kong Exchanges and Clearing Limited
(https://www.hkexnews.hk) with notice of availability distributed to
shareholders by email (if shareholders have provided a valid email address) or
by post (if shareholders have not provided an email address or the email
address is invalid). A copy of the English version has also been submitted to
the National Storage Mechanism and will shortly be available for inspection
at: https://data.fca.org.uk/#/nsm/nationalstoragemechanism
(https://data.fca.org.uk/#/nsm/nationalstoragemechanism) .
If a shareholder wishes to receive the Company's corporate communications
(including but not limited to the Interim Report) from the Company in printed
form, please follow the instructions set out in the "Dissemination of
Corporate Communications" under the "Investor Information" section of the
Company's website, to complete the relevant Request Form and return the
completed form to the Company's Branch Share Registrar, Computershare Hong
Kong Investor Services Limited.
Any such request from a shareholder will cease to be valid after one year, or
such shorter period if the original request is revoked in writing, or
superseded by a subsequent written request, by such shareholder, prior to the
expiry date of the original request. A shareholder wishing to continue to
receive corporate communications in printed form after expiry of the original
request must complete and return a fresh Request Form.
Shareholders may at any time choose to change their choice as to the language
of the Company's corporate communications (including but not limited to the
Interim Report) by reasonable prior notice in writing to the Company c/o the
Company's Branch Share Registrar by email to cki.ecom@computershare.com.hk or
by post to 17M Floor, Hopewell Centre, 183 Queen's Road East, Hong Kong.
Shareholders who have requested receiving the Company's corporate
communications in printed form in either English or Chinese version will
receive both English and Chinese versions of the Interim Report since both
language versions are bound together into one booklet.
In order to receive actionable corporate communications by email, shareholders
are also required to follow the relevant instructions set out in the
"Dissemination of Corporate Communications" under the "Investor Information"
section of the Company's website, to complete the relevant Request Form and
return the completed form to the Company's Branch Share Registrar,
Computershare Hong Kong Investor Services Limited.
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. END IR GCGDCCXGDGSDRecent news on CK Infrastructure Holdings
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