CK Hutchison Holdings Limited

Welcome to the live webcast of CK Hutchison 2026 Interim Results Presentation. Our speakers today are Mr. Frank Six, Group Co-Managing Director and Group Finance Director of CK Hutchison. Mr. Dominic Lai, Group Co-Managing Director of CK Hutchison and Chairman of A.S. Watson Group. Mr. Kwan Cheung, Group Chief Financial Officer of CK Hutchison. 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 Mr. Six, please also pay attention to our disclaimer, which you can find on page two of the presentation. We can start now.

Good. Thank you, Eva. Thanks, everybody. Welcome. Let's start straight into the slides on slide three, which I think is up in front of you right now. Let me do a little bit of stage setting here for how this presentation is set up. This is the only page that uses the statutory numbers, that is to say the reported numbers after applying IFRS 16. As you know, we like to look at our businesses on a pre-IFRS 16 basis because we think that that makes it easier to understand and analyze the actual underlying Cash performances of the business, which we spend a lot of time trying to do. So once we get past this slide, everything that you'll be looking at will be on a pre-IFRS 16 basis. The other thing that you'll notice is that we make a lot of stress on underlying performance as opposed to the full reported performance. Why do we do that? It's essentially because when we look at the underlying, we are excluding the effect of very material one-off things like asset sales, which of course in the The first half we had the sale of UK Power Networks and we had the sale of UK Rails which are wonderful things to have but you're not understanding your businesses if you're just looking at gross numbers that include one-time events such as those. The second thing that we had to do this year is to exclude all of the effects relating to the telecoms business in the UK. Frankly, the mathematics of comparing the first half last year when we had three UK on a standalone basis for several months and then we had the merger impact coming in, which gave us a rather large non-cash loss and a lot of cash that came in later on. We then proceeded from there, and you get to looking at this first half of 2026. Our interest in MergeCo generated losses for us as they built out the combined business plan, which was expected. But nevertheless, by the time we get to the end of April, we've achieved certainty that the transaction to sell our remaining interest to Vodafone is going to complete, which basically means that from that point on, we've treated our interest there as an asset held for sale. We've stopped equity accounting for the results. All of that noise makes a period on period comparison very, very, very messy. So we decided the best thing to do is simply to ignore and not take account of the impacts of the UK telecom business when looking at the first half of 2025 or the first half of 2026. So that's the scene setter or the background setter. And now I'll get into the meat of the slides and try and move as efficiently as I can, starting with the revenue. is a recurring theme that we enjoyed by comparison to the first half of in 2025 some very favorable foreign currency headwinds. So, for example, when you look at this revenue growth, actually 4% of that comes from positive Forex movements compared to the January to June movements in 2025. Hutchison Holdings Limited When we get to net earnings, I mean, again, we have a solid 6% pre-IFRS 16 growth, 7% post. That's actually a very small numerate difference. and that translates into the reported EPS, obviously. And the dividend per share, the way that we did that was pretty well exactly the same way as we've been doing it for many periods now, was to look at the underlying pre-IFRS growth, 6%. and take a slightly cautious approach in the first half. You'll know that last year, of course, in the second half, we made sure that the dividend for the whole year reflected the underlying earnings growth for the full year. And I wouldn't expect that we would do that again this year. If we go to the next page, we're now in a world where everything is Presented on a pre-IFRS 16 basis. You can think of that, the major difference being that when you see EBITDA numbers, you're looking at EBITDA after lease expenses, and that is particularly important in businesses like our retail businesses. So we had very good underlying EBITDA growth, but again, two-thirds of that came from positive Forex movements. Pretty well the same pattern in terms of the underlying changes in EBIT. Once you go to operating free cash flow, that number looks a little bit disappointing because it's a decline compared to the first half of last year. But there's really nothing to be alarmed about. We'll go into this in a bit more detail in a later slide. But fundamentally, there were two significant investments made in what are called associates and joint ventures in 2026 that were not there in 2025. And that's an equity investment that we made in Northumbrian Water. and you can just think of that as money good because that under the regulatory regime all of this does is it makes sure that the company is not overly debt burdened in order to Northumbrian Water will never be like Thames Water and that's just an equity investment that's going to give a very very good regulated RAV return as we go forward. The other was a strange one. It's a timing difference. In 2025, we received a major return of capital from TPG, which is another associate in Australia. And we were always going to use that to repay loans, but we didn't get to do it in 2025. We did it in early 2026. So it's really a timing difference, right? rather than a real difference. If you take those two items out, which total 3.7 billion Hong Kong dollars, then obviously you get back to pretty well the same growth in operating free cash flow as you see in EBITDA. The last thing that I would point out is the obvious, which is with the cash inflows in the group, our consolidated net debt to total capital dropped to 8.1%. And obviously with the proceeds that we've now received in the second half from the sale of our interest in Vodafone 3 in the UK, that drops to more in the area of 2%. So we have a very first world problem in terms of being overcapitalized, if you want to think of it that way. If we go to the next page, we take a look at EBITDA. First, looking at the circular charts on the left, I would not look at the reported charts because they're very distorted by the one-time elements, so looking at the underlying really not much significant change important to note as always that this company is is the multinational arm of the group and so a total of five percent right of our cash generation if you want to think of it that way comes from Hong Kong and the Chinese mainland There's another slight distortion in here because the EBITDA contribution from Synovus, our share of Synovus' EBITDA, was really quite high, and that all lands in finance and investment. You might have thought that it would land in Canada, but it doesn't. It lands in finance and investment, so that's why that's 24% compared to last year, 20%. If we go down and take a look at the mix by business, I mean, you've got the same sort of minor distortion in terms of finance investment and others relative to everything else but other than that not a lot has changed in the mix I think now if we go to the waterfall on the right the first thing we have to do is go from the reported numbers in the first half of 2025 and take out the one-time items, which I described, including all of the UK-related items. So that basically gives you an underlying EBITDA number comparable for the first half of 2025 of $53.4 billion. And if we go through very quickly the How you get to this year's reported number of 79.6 ports is a little bit down. That's really quite unfair because that is after taking account of our two ports in Panama being stolen from us, which accounts for 450-some-odd million of lost EBITDA for the four months from February. and we also had a significantly lower contribution from some interest in shipping lines so if you take those out actually we would have had good growth right but for the unlawful expropriation that took place of our Panamanian assets so Ports is operating very well underneath and Dominic will be talking more about that later retail healthy growth right infrastructure. I can tell you right away that that is entirely due to losing the contribution from the assets that were sold, UK rails and UK power assets, for the months that they were no longer owned by us, but that everything else basically showed the appropriate amount of growth year on year. Infrastructure results are actually very good despite being A little bit lower on the EBITDA front than in 2025. CKH Group Telecom we'll be going into in more detail, not having the easiest of times. The cost structure doesn't go away, but some of the revenue opportunity did go away, and bingo, you get an adverse comparison to the first half of last year, and I'll let Quan go through that later on. The contribution from finance and investment and others is significantly up. Now that's really because of two reasons. One is the contribution that we got from a very, very good performance from IOH in Indonesia, which is accounted for under this division. And also the Synovus contribution partially offset by a one-time gain that we had last year, which we didn't have this year. So if you go all the way over to the right, after the 56.5% of underlying EBITDA, you add back the one-time items and Vodafone 3's results, you get to a 79.653%. And then you'll notice that the impact of IFRS 16 would take that to 92%. $1.9 billion. So that's actually a US dollar $1.7 billion difference between pre- and post-IFRS on the EBITDA line, which is precisely why we like to present it on a pre-IFRS basis rather than a post-IFRS basis. If we go to the next slide, operating free cash flow, again, as I said before, it does look a little bit disappointing. but that is entirely due, if you look at the brown bar on the right-hand side of the first half 2026, 30.635. In coming, you'll see that $3.7 billion that I referred to in the investments in associates and joint ventures. That's what the light brown color is about. And of course, if you take that out, then you would have completely restored growth. If you look at the circular chart, really not much to comment there. Although, again, the finance and investment contribution here has actually shrunk, which is interesting because the EBITDA has gone up. But because that is largely due to Synovus, the fact that the EBITDA goes up by our attributable share doesn't mean that the cash necessarily comes into operating free cash flow. What goes into operating free cash flow is the dividend that we receive. And so when you take that into account, the contribution is quite a bit lower. I think as we move to the right-hand chart, what's probably most interesting is to understand what this is telling you in terms of the reinvestment profile of these businesses, how much Money goes back into them out of the cash that they generate. So if you look first at ports, right, it was 21%, right, of EBITDA, right, in the first half. If you look at retail, an extraordinarily earnings-efficient business, right, the reinvestment rate is 12%, right, of EBITDA in the first half. If you look at infrastructure, it's 25%, right. When you get to telecoms, right, Of course, it's 43%. So our highest rate of reinvestment or requirement to keep capital at work is in the telecoms business, which is precisely why it makes it quite painful if you have constraints on revenue and margin growth at the same time. And in finance and investments, you've got this, as I say, monstrous leap in terms of The share of EBITDA, that was actually $8.7 billion coming from Synovus, but when you get down to what we actually got by way of dividends, it's not $13.5 billion, it's $2. some odd billion, and very, very low reinvestment. That's the loan repayment that I talked about that was actually done through an associated company, which is why it's in that little light brown color there. If we go then down, and we'll get through this, I promise, from operating free cash flow to actual free cash flow, the bar on the left-hand side, the graph on the left-hand side, just takes you through from operating free cash flow on an actual basis. So these are the sums. So interest in taxes paid, $7.4 billion. That's actually lower than in the first half of last year. Working capital changes are also lower than the first half of last year. Telecoms licenses, minor, minor spending in Austria and on the license in Hong Kong. And others, really nothing of great importance in there. Most of that relates to non-cash customer acquisition costs, capitalization in the telco businesses. But nevertheless, that gets you down to free cash flow of 7.705, which looks a little bit lame compared to the first half of last year, which was 10.697. So to understand that, you have to go to the graph on the right-hand side and walk through the year-on-year comparison. So you start by stripping the proceeds of the UK merger that were in the first half out of the reported free cash flow. The first half of 2025. You also take out, and this is really quite interesting, there was a very favorable foreign exchange movement on inventories in the first half of last year for exchange rate movements between January 1st June 30, 2025 This year's movement actually was the reverse for the same period in 2026. So you've got to take that out to get to the comparable number. So that's the comparable underlying first half. Free cash flow last year was actually $10.7 billion. And then we go through the attribution of that. The EBITDA of subsidiaries seems to be contributing very little, and that is not really a correct assessment. I mean, ports, EBITDA was actually up, AS Watson's was up significantly, infrastructure was up on an underlying basis, but it unfortunately got eaten up by declines in the contribution from the subsidiaries in telecoms. Dividends from associates and JVs are up for the year and that is particularly true in AS Watson and infrastructure and of course the dividends that we received in finance and investment from Synovus and IOH. The working capital changes, as I say, was a little bit better than last year. The CapEx and telecoms licenses was a little bit worse. You're seeing a bit more spending in ports. I think Dominic will talk about that. We've got some catch-up ball to play in terms of some of the older facilities. So we will be spending more in capex imports this year than we were last year. And you'll see that again in the second half, actually. But again, the investments in associates, the next column, the $3.2 billion, that's what I was talking about on those two investments that we made that drove that big difference. And so that fundamentally is how you get down. to $7.7 billion of underlying free cash flow. The items to the right that are negative, the advances to UK telecoms businesses were basically commitments that had been made at the time of the merger and then were paid in the first half of this year that didn't exist in the first half of last year. and the exchange impact, as you can see, negative this year. Then you add in all of the net proceeds from the one-off disposals, and you end up with the reported number of free cash flow, which is $58.3 billion, which is 88% ahead of last year. So we've gotten through that. I will turn you over and stop droning on. I'll turn you over to Quan, who will give you a quick snapshot of our financial profile.

Thanks, Frank, and I promise to be very quick. So the group's financial profile remains very strong. Liquidity further improved in the period to approximately $187 billion, resulting in a net debt of approximately $64 billion. and a net debt to net total capital ratio of 8.1%. Now, this is before accounting for the proceeds from our UK telecom business transaction, which Frank's alluded to, of 4.3 billion pounds, approximately 45 billion Hong Kong. So we take this into consideration. a performer net debt at the end of June will be under 20 billion Hong Kong and a performer net debt to net total capital ratio will be approximately 2.5% at the end of June. Now the group's debt maturity profile remains very well-ladded with a refinancing requirement for the remainder of 2026 very manageable as you can see from the chart. The group's average cost of debt for the period of 3.3% is consistent and in line with the average cost of debt for 2025 and as of the 30th June, 63% of our total debt is on fixed interest rates after swaps and 61% is from bonds and notes. So again, we are very well positioned for refinancing. On that, I will hand over to Dominic to talk about bonds.