CK Hutchison : results for the year ended 31 December 2016

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HK$ millions

Pro forma results

2015 (1)

HK$ millions Change

Local currency change

Total Revenue (2) 372,686 396,087 -6% -2%

Total EBITDA (2) 91,980 92,093 - +6%

Total EBIT (2) 62,414 62,079 +1% +7%

Profit attributable to ordinary shareholders before profits on disposal of investments

& others 33,313 32,128 +4% +11%

Profits on disposal of investments & others (305) (960) +68% Profit attributable to ordinary shareholders 33,008 31,168 +6%

Recurring earnings per share (3) HK$8.63 HK$8.32 +4%

Earnings per share (4) HK$8.55 HK$8.08 +6%

Final dividend per share HK$1.945 HK$1.850 +5%

Full year dividend per share HK$2.680 HK$2.550 +5%

1. CKHH Pro forma results for the year ended 31 December 2015 assume that the Reorganisation was effective as at 1 January 2015. Pro forma revenue, earnings before interest expenses and other finance costs, tax, depreciation and amortisation ("EBITDA") and earnings before interest expenses and other finance costs and tax ("EBIT") by operating segments for the year ended 31 December 2015 have been reclassified to include the respective additional contributions as a result of the Reorganisation to enable a like-for-like comparison with CKHH actual results for the year ended 31 December 2016. The CKHH statutory results for the year ended 31 December 2015 reflect the impact of Reorganisation that occurred on 3 June 2015 and the total revenue and profit attributable to ordinary shareholders for the year ended 31 December 2015 reported on that basis was HK$316,318 million and HK$118,570 million respectively. See the Consolidated Income Statement included in this Announcement and CKHH 2015 Annual Report for Reconciliation from CKHH Statutory Results to CKHH Pro forma Results for the year ended 31 December 2015.

2. Total revenue, EBITDA and EBIT include the Group's proportionate share of associated companies and joint ventures' respective items.

3. Recurring earnings per share is calculated based on profit attributable to ordinary shareholders before profits on disposal of investments and others, after tax. For the year ended 31 December 2016, the recurring earnings per share is calculated based on CKHH's weighted average number of shares outstanding during the year of 3,859,441,388. For the year ended 31 December 2015, recurring earnings per share on a pro forma basis was calculated based on profit attributable to ordinary shareholders before exceptional items of HK$32,128 million and on CKHH's issued shares outstanding as at 31 December 2015 of 3,859,678,500.

4. Earnings per share is calculated based on profit attributable to ordinary shareholders. For the year ended 31 December 2016, the earnings per share is calculated based on CKHH's weighted average number of shares outstanding during the year of 3,859,441,388. For the year ended 31 December 2015, earnings per share on a pro forma basis was calculated based on profit attributable to ordinary shareholders of HK$31,168 million and on CKHH's issued shares outstanding as at 31 December 2015 of 3,859,678,500 and the earnings per share on a statutory basis of HK$36.91 as at 31 December 2015 was calculated based on the profit attributable to ordinary shareholders of HK$118,570 million and on CKHH's weighted average number of shares outstanding during the year ended 31 December 2015 of 3,212,671,194.

Economic and political uncertainty continued to weigh on global growth through 2016. Volatility in major exchange rates and commodity prices in particular, contributed to a challenging business environment in many of the sectors and geographies in which the Group operates. On balance, however, the Group's geographical and business diversification delivered a steady performance for the year.

With the completion of the Wind Tre joint venture in Italy and continuing organic growth in the Group's telecommunications businesses outside of Hong Kong, the Telecommunication division made a significant contribution to the Group's growth in 2016. Together with the execution of strategic transactions on the Group's Energy and Infrastructure divisions, the Group was able to achieve 4% and 6% growth in recurring and reported earnings per share respectively. That growth would have been over 10% but for continuing declines in Euro exchange rates and the precipitous fall of Sterling after the Brexit vote.

EBITDA was flat compared to last year while EBIT showed a modest 1% increase. However, if major currency fluctuations are removed, EBITDA and EBIT grew 6% and 7% respectively against last year in local currencies, reflecting accretive contributions from the Wind Tre merger in Italy, acquisitions made by the Infrastructure division in late 2015, strong performances in the UK and Indonesian telecommunication operations and gains from the strategic disposal of Husky Energy's pipeline assets.

Recurring profit attributable to ordinary shareholders in 2016 before profits on disposal of investments and others was HK$33,313 million, a 4% increase in reported currency and 11% increase in local currencies. Recurring earnings per share were HK$8.63 for the full year 2016.

Profits on disposal of investments and others after tax in 2016 was a charge of HK$305 million comprising a non-cash mark-to-market gain of HK$598 million on the acquisition of an additional interest in an existing port operation offset by a non-cash impairment charge of HK$577 million on certain non-core investments held by the ports division and the Group's 50% share of operating losses1 of Vodafone Hutchison Australia ("VHA") of HK$326 million. The Group's share of VHA's losses in 2016 represented a substantial improvement over the HK$960 million loss recorded in 2015.

Profit attributable to ordinary shareholders for the year ended 31 December 2016 increased 6% to HK$33,008 million from HK$31,168 million for 2015.

The Board recommends the payment of a final dividend of HK$1.945 per share (2015 final dividend - HK$1.850 per share), payable on Wednesday, 31 May 2017 to those persons registered as shareholders of the Company on Wednesday, 17 May 2017, being the record date for determining shareholders' entitlement to the proposed final dividend. Combined with the interim dividend of HK$0.735 per share, the full year dividend amounts to HK$2.680 per share (2015 full year dividend - HK$2.550 per share).

1 The Group's 50% share of VHA's operating losses continued to be included as a P&L charge under "Others" of the Group's profits on disposal of investments and others line as VHA continues to operate under the leadership of Vodafone under the applicable terms of our shareholders' agreement since the second half of 2012.

The ports and related services division throughput was 81.4 million twenty-foot equivalent units ("TEU") in 2016, 3% lower compared to 2015 mainly due to weaker intra-Asia and transhipment cargoes in Hong Kong and mounting competition in Rotterdam. Total revenue of HK$32,184 million was 5% lower than last year principally due to adverse foreign currency translation. In local currencies, revenue was flat against last year. EBITDA decreased 3% in reported currency to HK$11,639 million, but increased 2% in local currencies, reflecting cost savings initiatives implemented during the year and a gain on disposal of the Huizhou ports operation. In reported currency, EBIT decreased 5% to HK$7,567 million, while remaining flat against last year in local currencies mainly due to the higher amortisation charge on the renewed concession of the Jakarta operations.

The division had 275 operating berths at the end of the year. This division will continue to focus on enhancing service capabilities and efficiencies in order to maintain a stable contribution in 2017. A cautious approach will be maintained along with rigorous cost discipline in light of the uncertain global trade outlook and potential impact on the Group's businesses of structural changes in shipping line alliances.

The retail division has over 13,300 stores across 25 markets as at 31 December 2016. Net additions for the year were 931 stores, an 8% increase compared to 2015. Total reported revenue of HK$151,502 million was flat compared to last year. EBITDA and EBIT of HK$14,567 million and HK$12,059 million respectively, were both 2% lower than last year due to adverse foreign currency translation impacts. In local currencies, revenue, EBITDA and EBIT all increased by 3%, reflecting strong growth in most businesses of the division, partly offset by the poor performances of the retail operations in Hong Kong. The Hong Kong retail operations, whilst maintaining stable market share, were affected by cost inflation and lower tourist arrivals in Hong Kong. Fortress, the consumer electronics and electrical appliance retail operation in Hong Kong, was also adversely impacted by the significantly lower sales of mobile handsets. EBITDA and EBIT of the Hong Kong retail operations declined 48% and 68% respectively, whilst EBITDA and EBIT of the rest of the division in local currencies both increased by 8%. Given the Hong Kong operations now only represent approximately 4% and 2% of the retail division's EBITDA and EBIT, its impact on the division's performance will be less significant going forward.

The Health and Beauty segment, which represents 95% of the division's EBITDA, grew its EBITDA and EBIT both by 6% in local currencies. In Europe, EBITDA and EBIT increased 9% and 11% in local currencies respectively resulting from a 4% organic growth in store numbers and 3.8% comparable stores sales growth. Health and Beauty UK, in particular, has made significant progress in its performances and was a major growth contributor to the division.

In Asia, despite negative comparable store sales growth of 4.0% for the year, organic expansion of stores continued with a 14% increase in store numbers against last year, resulting in EBITDA and EBIT growth of 3% and 2% in local currencies respectively. The majority of the Health and Beauty operations in Asia have reported encouraging growth rates. Health and Beauty China subdivision, the largest profit contributor to this division, was negatively impacted by a 5% RMB depreciation in reported currency. In local currency, EBITDA grew 1%, while EBIT remained stable against last year with the expansion of its store portfolio offsetting comparable store sales declines in mature stores. The management team has implemented strategic programs focusing on revitalising these mature stores through renovation, store segmentation and cost control measures, with initial positive results seen. The management team is confident that the operation in the Mainland will continue to grow as the GDP growth in the Mainland, one of the world's largest economies, is projected to remain at a high level.

Strategically, the retail division plans net openings of over 1,000 stores in 2017, with 65% under the Health and Beauty format in the Mainland and Asia. Operationally, the division will continue to focus on promoting its own brand products, enhancing its customer relationship management activities and developing Big Data and e-commerce capabilities.

The Infrastructure division comprises a 75.67%2 interest in Cheung Kong Infrastructure Holdings Limited ("CKI"), a company listed on the Stock Exchange of Hong Kong ("SEHK") and the Group's interests in six co-owned infrastructure investments with CKI. The aircraft leasing business, previously reported under this division, was disposed of in December 2016.

Total revenue, EBITDA and EBIT of this division of HK$53,211 million, HK$31,128 million and HK$22,162 million respectively were 5%, 4% and 6% lower than last year in reported currency as a result of adverse foreign currency translation impacts. In local currencies, the division reported stable growth in total revenue, EBITDA and EBIT of 3%, 5% and 3% respectively, mainly reflecting this division's defensive investment strategy which provided a sustainable and predictable growth contribution to the Group.

CKI

CKI announced profit attributable to shareholders of HK$9,636 million, 14% lower than HK$11,162 million reported last year. During the year, CKI faced many challenges, including volatile exchange rates, in particular British Pound, and the rising interest rates. Despite these influences, CKI's operations around the world performed well and total profit contribution in Hong Kong Dollars was at a similar level to 2015. The reduction in attributable profit was mainly due to a smaller UK deferred tax credit in 2016 than 2015, and the 2015 reversal of provisions and expenses made earlier relating to non-operational matters.

2 In January 2015, CKI completed a share placement and share subscription transaction, which resulted in the Group's interest in CKI reducing from 78.16% to 75.67%. In March 2016, CKI issued new shares in connection with an issue of perpetual capital securities. Subsequent to this transaction, the Group currently holds a 71.93% interest. As these new shares are currently disregarded for the purpose of determining the number of shares held by the public, the Group's profit sharing in CKI continues to be 75.67%.