CK Hutchison Holdings Limited

Welcome to the live webcast of CK Hutchison 2025 annual results presentation. Our speakers today are Mr. Victor Lee, our chairman, who will join us later, Mr. Frank Six, our group co-managing director and group finance director, Mr. Dominic Lai, group co-managing director of CK Hutchison and chairman of AS Wilson Group, Mr. Kwan Cheung, our group CFO. During the presentation, please feel free to put down your question in the chat box which is at the lower right-hand side of the screen. The Q&A session will follow the presentation. Before I hand over to Frank, please also pay attention to our disclaimer, which you can find on page two of the presentation. We can start now.

Very good. Thank you for being with us. Let's move straight through to slide three. I'll go through the usual explanatory deck as expeditiously as we can, but hopefully comprehensively. So starting on the left-hand side, as you can see, revenues for 2025 were well above 2024 levels, which is very good news. In fairness, that 6% increase came as to 2% from Forex differences. We were in a very strong sterling and euro environment in 2025 compared to 2024. But nevertheless, the remaining 4% was underlying, and that's close to 19%. a billion dollars of incremental revenue. Looking at net earnings in the middle, on an underlying basis, we are up 7%. That's by about a billion and a half dollars compared to 2024. The underlying, of course, leaves out in both years the one-time largely non-cash items, a write-down in 2024 relating to our assets in Vietnam, and the non-cash charges that arose out of the Vodafone merger transaction that we explained during the first half. If you look at the decline in the reported change, that's about $5.2 billion, and the difference is entirely the difference between those two large one-off items, which was about $6.7 billion, $1.5 of improvement on the underlying items, and the difference is $5.247 which accounts for the reported change. EPS, I think, self-explanatory, as well as dividends per share. And as you can see, we've related dividends per share far more to the underlying performance for the year than to the reported performance for pretty obvious reasons. If we can go to the next slide. From this point on, we're actually starting to focus more towards cash generation and understanding the group's cash flows. So that's why we use pre-IFRS numbers on these slides, which someday Quan will explain it to you in chapter and verse, but basically means that when you look at EBITDA, you're looking at EBITDA after leases, after actual lease expenses, and then you are ignoring notional balance sheet depreciation of lease assets as well as notional financing costs associated with IFRS 16 lease accounting. So those are the key differences. So again, you look at EBITDA, the underlying change was $9.4 billion, which is approximately 9%. And again, 7% of that is fully underlying and 2% out of that It was driven by favorable Forex tailwinds during the year. I should just make the point, in case anybody's wondering, obviously the underlying at 115.7 does not include the non-cash charge for the year, but it also doesn't include the cash proceeds, which show up in a different part of the cash flow analysis. EBIT I'm not going to dwell on. I think it's quite self-explanatory. Operating pre-cash flow, we will have a detailed slide on that, but as you can see, a healthy improvement, and not surprisingly, a very significant improvement in our debt profile. At the end of the year, we were at 13.9% consolidated total. Net debt to net total capital as opposed to 16.2% when we exited 2024. And I can assure you that that has continued to improve as we've seen the consolidated effects early on this year of good performance as well as, of course, the completion of the UK rails transaction by CKI. Okay, the next slide deserves a bit more of a dwell, and this is understanding EBITDA on the left-hand side. We're looking at, as I say, 104.8 million reported as against an underlying 115.7 million, and we'll explain how you get the differences between those in detail on the right-hand side. It's, I think, always best to focus on the underlying. And first of all, in terms of geographical distribution, interestingly, not really all that much change year on year. And likewise, in terms of the splits between the contributions, a bit of an uptick in terms of telecoms year on year, which is nice to see. significant uptake in terms of infrastructure. And the rest was kind of breaking down pretty well in line with last year's breakdown. So the diversification and the spread remains very strong, both between businesses and geographically. So turning to the graph on the right, we're going from left to right from 2024's reported EBITDA to 2024's Underlying EBITDA, I think that's relatively simple. That's just taking out the impact of the write-down on our Vietnam asset. So that takes you to a comparable underlying for 2024 of $106.3 billion. Then we look at what contributed to this year's increases, and you start with ports. We'll have a detailed discussion of ports in a later slide. but obviously we've seen very good performance over the year, in particular from our European assets and from our assets in the Americas. Dominic will be taking you through that in detail. We've also started to see with the ructions in trade policy having the usual trend, impact when there's disruption in this business, it results in an increasing level of storage charges, and we started seeing that in 2025, and we are continuing to see it for pretty obvious reasons today as we sit here. For A.S. Watson, again, good healthy growth in EBITDA contribution, largely coming from the growth in the health and beauty Asia footprint and in Western and Eastern Europe, Eastern Europe being largely Poland. And Dominic will take you through chapter and verse of that. Infrastructure reported yesterday. And I would say just very well distributed growth right across the board, across almost all of their assets and all of their asset classes. So very, very solid performance for CK infrastructure. When you get to CKH Group Telecom, a very healthy uplift. Now, one thing that we need to understand, though, is that out of that $2.4 billion of uplift, about a billion of that is the increased contribution from our share of Vodafone 3s EBITDA in the UK. So leaving that aside for a moment, if you look at all of the other businesses, I would say that they all – experienced moderate increases in growth. And what did contribute a lot was the comparison year-on-year of corporate expenses, because we had a lot less transaction costs booked in 25 than in 24, and we also had some very healthy gains on trading in CKHGT's pound sterling notes, which gave us a nice contribution. Lastly, finance investments and others. Again, you see a reasonably healthy lift. That's coming from good performances from things like IOH on an underlying basis. Obviously, TPG had quite a remarkable year, and I'm sure Quan will be talking about that later on, but it gave us a very good contribution. And we also, in finance investment and others, we recognized the proceeds from the sale of a non-core asset in Chimet as an associate, and we had a better contribution from Synovus, and we were dragged back a little bit by a continuing difficult contribution from Mariano Group in France and in Europe. So that plus the foreign currency translations that I already mentioned take you to an underlying of $115.7 billion, from which to get to the reported, you take out the $10.9 of one-time largely non-cash movements relating to the Vodafone 3 merger, and you end up with $104.8. Okay, so now that we've got that behind us, we can go to the next slide, which is how do you get to operating a free cash flow. And this, of course, starting on the left-hand side, it basically starts with the underlying EBITDA of 115.7, and then you back out the portion of EBITDA that is the share of EBITDA of associated companies, and you replace that with the actual dividends or distributions that you got from associated companies and, of course, the same treatment for joint ventures. So that's how you get EBITDA. from 115 down to 62.9 on the first bar. And then you look at CapEx, right, and investment, right, on the right-hand side of the brown bar, and that's how you then get down to the operating level free cash flow, right, which, as I say, is HK$40.5 billion, an increase of 4%, right, on the year. Again, in the circle diagram at the top, not really much to highlight in terms of changes, although infrastructure was a pickup and contribution, as was telecom, as was retail year-on-year. Now, if we go to the right-hand side, we do exactly the same analysis, but we do it by division. So if you look at ports, long and the short of it, year-on-year, You are looking at capex and investment having increased, but you're looking at a somewhat more significant increase year-on-year, that is, of earnings from subsidiaries and associates. So basically it washes out, and you've got a couple hundred million dollar difference in operating pre-cash flow reports over the course of the year, so slightly higher. reinvestment, but higher operating contribution as well to fund that capex and investment. On the retail side, again, Dominic can take you through that, but we had a year-on-year overall increase of $900 million. So that's operating free cash flow of $11.3 billion, which I think, if I remember right, was $10.4 last year. And that $900 million comes in part from very, very disciplined capital management and very solid overall management, and, of course, the EBITDA increase that we talked about for retail earlier on. Infrastructure, again, a strong lift, and that is despite some incremental changes spending in CapEx and investment by comparison to last year. CKH Group Telecom, well, there you see the big difference, right, between the EBITDA growth for the year, right, and the operating free cash flow growth, and that's simply because the EBITDA lift is not reflected in operating free cash flow, and indeed probably will not be meaningfully anyway for the next year or two, as the company is in the full implementation stage of its combination plan, and that means no scope for dividends or distributions likely in the near term. So that really explains the profile for CKH Group Telecom. Better year-on-year nevertheless, and that is, in part due to the reduction in capital spending. And that in itself is also partially due to the deconsolidation of the capital spending in 3UK for the seven months after the merger. Lastly, to go to the next slide, and we get down to free cash flow, an increase of 102%. But this is where we do include the cash proceeds from the Vodafone 3 merger in the U.K. So if you exclude those, it's still a very good performance. We're still up 29% for the year. Just going through the waterfall, I'm not quite sure what you call that on the left-hand side. So you start, obviously, with the operating free cash flow that we just went through. Then you look at interest and taxes, and you'll find that interest, interestingly, was lower, and Quan will explain that. Later, when he goes through the financial profile of the company, taxes were a little bit higher, largely because governments are looking for more taxes just about everywhere, but not a meaningfully higher amount. Working capital changes are very interesting and quite complex. Working capital is generally well managed, but you have to remember that there are huge FX impacts, right, on the inventory components and other components of working capital, particularly with the strength of the euro last year. So in that improvement of 3.3 billion Hong Kong dollars, right, you actually had favorable exchange movements, right, of almost $6 billion, right, And the same exchange movements give you negatives such as in our consolidation of CKI, the cash flow impact of market-to-market collateral requirements under currency swaps, or currency hedges rather, that they go into, which I'm sure they've explained many times in their own results announcements. So that kind of explains the working capital changes. The changes to others, it's mainly the deconsolidation of cash and the consumer acquisition costs that are capitalized when you look at EBITDA but are still cash going out. Those are, by and large, the main drivers. with some disposals in terms of listed investments during the year, and some new investments during the year. That takes you down to the underlying pre-cash flow. That's up 29%, as I said at the outset, at HK$26.3 billion. And then you add to that the cash proceeds that we took in from the Vodafone 3 merger, and you end up with the HK$41,201. If I just take you then across the division-by-division contribution to that movement from $20.4 to $26.3 billion underlying, we've already talked about the EBITDA differences. We've talked about the dividends from associates and JVs. We've talked about interest and taxes. Working capital, you will find this is the year-on-year comparison. So it's actually a bit of a reduction, but part of the reason is that when you look at A.S. Watson in particular, right, there was, again, I mean, a year-on-year comparison is not just, right, the actual close to $6 billion, right, in the year. It's also that in 2024, right, we had a negative year. profile in terms of foreign exchange movements on working capital of another $2 billion. So that's how you get to the roughly $8.6 billion upside for A.S. Watson's free cash flow compared to 2024. Infrastructure, I think, just goes with the performance of the businesses and CKH Group Telecom. Again, that includes the deconsolidation impact of about $2.5 $4 billion of capex and the other cash flow improvements that I referred to earlier on. So all of that. Others, I think we've basically talked about that. It's the proceeds on some sales of some investments. And it's year on year. less proceeds coming out of, remember that in 2024 we sold almost $7 billion worth of Celnex stock, and we didn't have anything of that comparable scale in 2025. So that's how you get to your 26.3, add in the cash proceeds, and you're back up to the underlying at $41.2 billion. And with that, I'll take a breath and hand you over to our CFO to take you through the group's resulting financial profile.

Thanks, Frank. So on slide eight, I'd be very happy to report, of course, as Frank has alluded to, the group's financial profile continues to improve. Net debt as of 31st December 2025 was approximately $113 billion in Hong Kong, a reduction of around $16 billion from 2024. and represent a net debt to net total capital ratio of just under 14% on a pre-RVS16 basis. The group's gross debt of $263 billion is very well-laden, as you can see on the chart, with an average maturity of 4.8 years. Approximately 37% of the gross debt is from banks, and 63% is from issuance of bonds and notes. After swaps, 65% of the gross debt carries fixed interest rates, and 35% is floating. The average cost of debt has reduced from 3.6% for 2024 to 3.3% for 2025. The Group's cash and liquid assets holding of $151 billion as of 31st December 2025 provides a lot of comfort in today's very volatile financial markets, so we're very happy to have such a high liquidity. and with the recent upgrade from Fitch following a change in Fitch's rating methodology, the group is now rated single A by all three credit rating agencies, A2 from Moody's and A from both S&P and Fitch. I can turn to Dominic to talk about the port business.