Financial Performance - Total revenue for the year ended December 31, 2022, was $19,820,188 thousand, an increase of 17.7% from $16,832,185 thousand in 2021[2] - Net profit for the year was $9,966,238 thousand, representing a 39.5% increase compared to $7,128,409 thousand in 2021[3] - Basic and diluted earnings per share increased to $15.09 from $11.08, reflecting a growth of 35.5%[2] - The company reported a gross profit of $10,424,580 thousand, compared to $8,175,648 thousand in the previous year, indicating a growth of 27.5%[2] - Operating profit for the year was $10,079,101 thousand, up from $7,380,271 thousand, reflecting a 36.5% increase[2] - The company recorded a net other comprehensive loss of $58,722 thousand for the year, compared to a gain of $13,639 thousand in 2021[3] - The total comprehensive income for the year was $(9,906,695), reflecting a significant loss compared to the previous year's comprehensive income[6] - The company reported a significant increase in interest income, rising to $183,053 from $34,102 in the previous year[5] - The company reported a shareholder profit of $9.965 billion for 2022, an increase from $7.128 billion in 2021, representing a growth of approximately 39.5%[34] Assets and Liabilities - Total assets as of December 31, 2022, reached $20,035,161 thousand, up from $15,846,977 thousand in 2021, marking an increase of 26.8%[4] - The company’s total equity increased to $13,438,898 thousand from $9,671,736 thousand, a growth of 38.5%[4] - The total amount of business receivables, net of impairment provisions, was $438.276 million in 2022, down from $590.170 million in 2021, a decrease of about 25.7%[26] - The total liabilities for accounts payable and accrued items amounted to $3.283 billion in 2022, compared to $2.480 billion in 2021, reflecting an increase of approximately 32.4%[30] - The group’s total liabilities for container transportation and logistics were $6,596,263 thousand in 2022, compared to $6,175,241 thousand in 2021, indicating an increase of about 6.8%[17] Cash Flow and Dividends - Cash and bank balances increased significantly to $11,213,902 thousand from $7,197,101 thousand, a rise of 55.5%[4] - Operating cash flow for 2022 was $11,253,014, an increase of 26.3% from $8,898,841 in 2021[5] - The company paid dividends totaling $6,141,471 to shareholders in 2022, compared to $3,682,084 in 2021, reflecting a 66.7% increase[6] - The company plans to distribute a final dividend of $2.61 per share for the fiscal year 2022, consistent with the previous year[25] - The company plans to distribute a final dividend of $2.61 per share and a second special dividend of $1.95 per share to shareholders on June 29, 2023[39] Business Operations - The group's main business is container transportation and logistics, generating total revenue of $19,820,188 thousand in 2022, up from $16,832,185 thousand in 2021, representing a growth of approximately 17.7%[12] - Container transportation revenue alone reached $19,796,285 thousand in 2022, compared to $16,807,325 thousand in 2021, indicating an increase of about 17.7%[13] - The operating profit for the container transportation and logistics segment was $10,090,263 thousand in 2022, compared to $7,380,271 thousand in 2021, reflecting a significant rise of approximately 36.7%[15] - The logistics business, Orient Overseas Logistics, performed excellently in 2022, with the Freightsmart platform providing valuable new channels for managing supply chain disruptions[36] - The company experienced a decline in freight rates starting in the second half of 2022, following a strong performance in the first half due to port congestion and vessel supply shortages[28] Future Outlook and Strategy - The group plans to continue expanding its market presence and investing in new technologies to enhance operational efficiency[18] - The company anticipates that the economic environment in the U.S. will remain uncertain, with expectations of prolonged recovery affecting demand and imports[28] - The overall market environment is expected to remain challenging in the first half of 2023, with potential improvements dependent on macroeconomic factors and inventory adjustments by importers[37] - The company plans to continue investing in information technology and industry digitization to support sustainable development and enhance shareholder returns[34] Corporate Governance - The company has adopted a customized corporate governance code, ensuring compliance with local and international best practices[45] - The board and management are committed to maintaining high-quality corporate governance, which significantly contributes to corporate success and shareholder value[44] - All directors confirmed compliance with the company's securities trading code and the standard code for the year ended December 31, 2022[46] Shareholder Information - The annual general meeting is scheduled for May 19, 2023, with the notice to be sent to shareholders around April 24, 2023[47] - The 2022 annual report will be published on the Hong Kong Stock Exchange website and the company's website, with distribution to shareholders around April 26, 2023[47] - The company will suspend share transfer registration from May 15 to May 19, 2023, to determine shareholders eligible to attend the annual general meeting on May 19, 2023[42] - The company will not process share transfer registration from May 29 to May 31, 2023, to determine shareholders eligible for the proposed final and second special dividend[42] Employee Information - The company employed 11,188 full-time employees globally as of December 31, 2022, maintaining competitive compensation and benefits[41]

Fund Utilization - The net proceeds from the first placement amounted to approximately HKD 923.73 million, fully utilized by December 31, 2021, with HKD 861.02 million allocated for shipbuilding and HKD 62.71 million for container purchases[2]. - The net proceeds from the second placement were approximately HKD 3,477.66 million, with HKD 365.87 million used by December 31, 2021, and HKD 730.17 million utilized by June 30, 2022[4]. - For the new 23,000 TEU vessel orders, HKD 1,950 million is planned for stage payments, with HKD 365.87 million already used by December 31, 2021[4]. - The remaining unutilized net proceeds from the second placement as of June 30, 2022, were HKD 1,219.83 million for the 23,000 TEU vessels and HKD 18.88 million for the 16,000 TEU vessels[4][5]. - The company has fully utilized the funds allocated for container purchases and general corporate purposes as of the announcement date[5]. - The company plans to utilize the remaining funds for the 16,000 TEU vessel payments due by June 30, 2023[5]. - The total planned allocation for the new vessel orders includes HKD 1,248 million for the 16,000 TEU vessels, with HKD 1,229.12 million already settled[4][5]. Payments and Settlements - The company has no further payments due for the 16,000 TEU vessels in 2022, as all payments were settled by December 31, 2021[5]. Corporate Governance - The company’s board of directors includes both executive and independent non-executive members, ensuring diverse oversight[6]. Exchange Rate - The exchange rate used for reference is USD 1 to HKD 7.80[5].

Financial Performance - The company achieved a record net profit attributable to shareholders of $5.664 billion in the first half of 2022, compared to $2.811 billion in the same period of 2021, representing an increase of 101%[4]. - Earnings per share for ordinary shares were $8.58, up from $4.42 in the previous year, reflecting a 94% increase[4]. - Revenue for the six months ended June 30, 2022, was $11,061,132 thousand, a 58.5% increase from $6,987,582 thousand in 2021[61]. - Operating profit for the same period was $5,745,431 thousand, up 101.5% from $2,855,006 thousand in 2021[61]. - Net profit for the six months ended June 30, 2022, was $5,664,112 thousand, compared to $2,811,056 thousand in 2021, representing a 101.5% increase[61]. - The company reported a total comprehensive income of $5,633,841 thousand for the period, compared to $2,820,474 thousand in 2021[63]. - The company reported a significant increase in profit attributable to shareholders, reaching $5,663,643 thousand in 2022, compared to $2,810,857 thousand in 2021, representing a growth of approximately 101.5%[98]. - The company paid dividends totaling $2,179,232 thousand during the first half of 2022, compared to $872,062 thousand in the same period of 2021, which is an increase of approximately 149.5%[68]. Revenue and Operational Highlights - The strong performance was driven by sustained demand in the container shipping market, despite not experiencing extreme demand or vessel shortages[4]. - In the first half of 2022, the group achieved a record semi-annual revenue with a 61% increase compared to the same period in 2021, despite a 7% decrease in overall cargo volume[14]. - The average revenue per standard container increased by 74% in the first half of 2022, driven by high freight rates due to supply chain challenges[14]. - The Pacific route saw a 14% decrease in cargo volume, but revenue increased by 78%, with average revenue per standard container rising by 106%[16]. - The Atlantic route experienced a 15% decrease in cargo volume, while revenue and average revenue per standard container increased by 70% and 101%, respectively[20]. - The Asia/Europe route maintained stable cargo volume but saw a 55% increase in revenue and a 55% rise in average revenue per standard container[19]. - Container transportation and logistics accounted for $11,049,611 thousand of the total revenue, with other income contributing $11,521 thousand[87]. Financial Position and Liquidity - The net debt to equity ratio improved to 0.65 as of June 30, 2022, compared to 0.2 on June 30, 2020, indicating a strong financial position[6]. - As of June 30, 2022, the group had total current assets of $11.1 billion and total liabilities of $2.6 billion, resulting in net cash of $8.5 billion, up from $4.7 billion at the end of the previous year[26]. - Cash and bank balances rose significantly to $10,922,473 thousand from $7,197,101 thousand, indicating a strong liquidity position[65]. - Cash and cash equivalents at the end of the period reached $8,266,910 thousand, up from $2,216,859 thousand at the end of June 2021, indicating an increase of approximately 272.5%[68]. - The company’s total assets increased to $19,912,698 thousand as of June 30, 2022, from $15,846,977 thousand at the end of 2021, representing an increase of approximately 25.9%[67]. Dividends and Shareholder Information - The board declared an interim dividend of $3.43 per ordinary share, compared to $1.76 in 2021, and a special dividend of $2.57 per ordinary share, slightly down from $2.65 in 2021[4]. - The company declared an interim dividend of $3.43 per share for the six months ended June 30, 2022, up from $1.76 per share in 2021, reflecting a growth of 95.3%[99]. - As of June 30, 2022, the total issued share capital of the company was 660,373,297 ordinary shares[39]. - Faulkner Global Holdings Limited holds 469,344,972 shares, representing 71.07% of the company's equity[45]. Strategic Initiatives and Future Outlook - The company is committed to enhancing its digital capabilities through initiatives like IQAX, GSBN, and FreightSmart, positioning itself at the forefront of industry digitalization[10]. - Future outlook remains uncertain due to inflation and rising interest rates impacting consumer spending, despite resilient demand for imported goods[7]. - The group has no new container ships delivered in the first half of 2022, but expects 12 ships with a capacity of 23,000 TEU to be delivered starting in 2023[24]. Environmental and Social Responsibility - The group has been recognized for its environmental efforts, achieving the highest level in the Green Flag Program at the Ports of Long Beach and Los Angeles[32]. - The group was included in three sustainability-related Hang Seng indices, reflecting its commitment to ESG and sustainable development[32]. - The group signed the Neptune Declaration to support seafarers' health and welfare during the COVID-19 pandemic, emphasizing its social responsibility[33]. Employee and Governance Information - The group employed 10,935 full-time employees globally, offering competitive compensation and benefits, including medical insurance and retirement plans[28]. - The company has adopted a customized corporate governance code and regularly reviews it to ensure transparency, accountability, and independence[51]. - The company’s directors and senior management have no interests in shares or debentures that require disclosure under the Securities and Futures Ordinance[44].

Financial Performance - The company reported a revenue of $16.832 billion for 2021, a 105% increase from $8.191 billion in 2020[5]. - Operating profit surged to $7.380 billion, reflecting a 644% increase compared to $992 million in the previous year[5]. - The company achieved a net cash flow from operating activities of $8.899 billion, a 367% increase from $1.905 billion in 2020[5]. - Orient Overseas International reported a profit attributable to shareholders of $281.1 million for the six months ended June 30, 2021, compared to a profit of $10.2 million in the same period of 2020[19]. - Orient Overseas (International) Limited recorded a profit attributable to shareholders of $7.128 billion in 2021, a significant increase from $903 million in 2020[32]. - The company reported a pre-tax profit of $7.337 billion in 2021, a remarkable increase of 703% from $0.914 billion in 2020[85]. - EBITDA rose from $1.005 billion in 2020 to $7.398 billion in 2021, with an EBITDA margin improving from 12.3% to 43.9%[110]. - The company reported a significant increase in dividends paid to shareholders, rising by 1,763% to $3,682,084,000 in 2021[131]. Operational Developments - The company launched FreightSmart, an advanced online platform providing instant quotes and booking confirmations, marking a significant step in its digital transformation[10]. - The company launched a new multimodal container transport service from Xi'an, China to the US East Coast, utilizing the China-Europe Railway Express and its own shipping services[19]. - Orient Overseas Logistics established a new inland container transfer station in Baghdad, Iraq, and launched a door-to-door service in Amman, Jordan, enhancing logistics options in the region[17]. - The company launched the first rail-sea product in collaboration with its shipping division to address space shortages in the U.S. market[53]. - The company is developing a new intelligent solution for dynamic space allocation and priority booking to maximize revenue, set to launch in Q1 2022[57]. Asset Management - The total assets increased by 49% to $15.847 billion from $10.645 billion in 2020[5]. - The company ordered 10 vessels with a capacity of 16,000 TEU at a total cost of $1.576 billion, scheduled for delivery between Q4 2024 and Q4 2025[33]. - A total of 12 vessels with a capacity of 23,000 TEU are already under construction, with deliveries expected between 2023 and 2024[33]. - The company’s total debt at the end of 2021 was $2,691,000,000, with $1,558,000,000 being fixed-rate debt[126]. - The company’s capital commitments amounted to $3,160,000,000 at the end of 2021, mainly for new ship construction projects[130]. Market Expansion and Strategy - The company is considering strategic acquisitions to bolster its market position, with a budget of $100 million allocated for potential deals[162]. - Market expansion efforts include entering three new countries, projected to increase market share by 5%[161]. - The company plans to strengthen customer relationships and provide more end-to-end solutions while leading the industry's digital transformation[35]. - The company is focused on integrating AI and big data technologies to improve operational efficiency and address supply chain disruptions caused by the pandemic[56]. Environmental and Social Responsibility - The company emphasizes environmental, social, and governance (ESG) factors, preparing for upcoming international maritime regulations and ensuring the safety and welfare of its crew during the pandemic[34]. - OOCL became the first container shipping company globally to receive the "Safety, Quality and Environmental Management System" certification, covering international safety management regulations, ISO9001, and ISO14001 requirements[65]. - The company has implemented a corporate sustainable procurement strategy across all business levels and supply chain segments[63]. - The company introduced a carbon emissions calculator to help customers assess their supply chain's CO2 emissions, validated by a third-party consultant[64]. Governance and Management - The company has a diverse board with members holding degrees from prestigious institutions such as Princeton University and Stanford University[144][146][147]. - The board consists of 4 executive directors, 4 non-executive directors, and 5 independent non-executive directors, ensuring a balanced governance structure[184]. - The company has established a custom corporate governance code that adheres to local and international best practices[183]. - The board has delegated daily management responsibilities to the management team, led by the CEO[187]. Challenges and Risks - The company faced significant operational disruptions due to global port congestion, the Suez Canal incident, and labor shortages, impacting overall supply chain efficiency[40]. - The ongoing global supply chain disruptions have highlighted the interconnected nature of the container shipping system, with various factors causing significant delays and challenges[32]. - The company will continue to monitor key leading indicators and customer forecasts closely, especially in light of ongoing geopolitical events and potential COVID-19 fluctuations[36].

[Financial Highlights](index=4&type=section&id=Financial%20Highlights) In 2019, the company's overall performance significantly improved, driven by a substantial one-time gain and robust growth in continuing operations - In 2019, the company's overall performance significantly improved. Benefiting from a substantial one-time gain from the sale of Long Beach Container Terminal, full-year profit increased by **1,147%** year-on-year. Even excluding this gain, profit from continuing operations still achieved a strong growth of **104%**, reflecting the robust performance of core businesses[6](index=6&type=chunk) 2019 Key Financial Data (Million USD) | Indicator | 2019 | 2018 | Change (%) | | :--- | :--- | :--- | :--- | | **Consolidated Income Statement** | | | | | Revenue | 6,879 | 6,573 | 5% | | Operating Profit | 361 | 263 | 37% | | Profit from Continuing Operations | 154 | 75 | 104% | | Full-Year Profit | 1,349 | 108 | 1,147% | | **Consolidated Balance Sheet** | | | | | Total Assets | 11,202 | 10,054 | 11% | | Total Liabilities | 6,275 | 5,319 | 18% | | Equity Attributable to Ordinary Shareholders | 4,927 | 4,735 | 4% | | **Key Ratios** | | | | | EBIT Margin | 6.5% | 4.7% | 2.0 p.p. | | Debt to Equity Ratio | 0.81 | 0.89 | (8%) | | Net Debt to Equity Ratio | 0.23 | 0.41 | (18 p.p.) | | Earnings Per Ordinary Share (US Cents) | 215.5 | 17.3 | 1,146% | [2019 Key Events](index=5&type=section&id=2019%20Key%20Events) 2019 was a pivotal year for the company's business expansion and digital transformation, marked by network enhancements, industry awards, and technological advancements - 2019 was a pivotal year for the company's business expansion and digital transformation. The company strengthened its global service network by launching multiple new routes and received numerous industry awards for its outstanding achievements in sustainability and digitalization. Concurrently, the company actively promoted the construction of the Global Shipping Business Network (GSBN) and enhanced the technological level of services such as cold chain logistics. Important management appointments were also completed during the year[11](index=11&type=chunk)[14](index=14&type=chunk)[30](index=30&type=chunk) - The company achieved a series of significant accomplishments in 2019, including: - **Network Expansion**: Launched the Ocean Alliance Day 3 Product and added multiple new routes connecting the Middle East, Indian Subcontinent, Northern Europe, and Latin America[11](index=11&type=chunk)[17](index=17&type=chunk)[21](index=21&type=chunk)[33](index=33&type=chunk) - **Digital Transformation**: Won the ESCP Europe 'Digital Transformation Award' and executed the Global Shipping Business Network (GSBN) service agreement with nine industry operators, promoting industry digitalization[14](index=14&type=chunk)[30](index=30&type=chunk) - **Technology Upgrade**: Upgraded MyOOCLReefer services using Artificial Intelligence (AI), Internet of Things (IoT) technologies, and launched the 'CargoSmart IoT Reefer Solution'[45](index=45&type=chunk)[58](index=58&type=chunk) - **Sustainable Development**: Achieved the highest 'A' rating in BICEPS for three consecutive years and received multiple environmental accolades, including the 'Green Shipping Award' and 'Singapore Environmental Achievement Award'[12](index=12&type=chunk)[29](index=29&type=chunk)[40](index=40&type=chunk) - **Financial Performance**: Achieved a turnaround in the first half, recording a profit attributable to shareholders of **USD 139 million**[39](index=39&type=chunk) - **Management Change**: Mr. Wang Haimin succeeded Mr. Huang Xiaowen as Chief Executive Officer of Orient Overseas International Limited[48](index=48&type=chunk) [Chairman's Report](index=15&type=section&id=Chairman's%20Report) The Chairman's report highlights the company's excellent 2019 performance despite global uncertainties, attributing success to synergy with COSCO SHIPPING, robust financials, and digital/green investments - The Chairman emphasized in the report that despite global economic and trade uncertainties, the company achieved excellent results in 2019. This was primarily due to synergies with China COSCO Shipping Group, a robust financial position, and continuous investment in digitalization and green shipping. Looking ahead, the US-China trade agreement brings positive signals, but the COVID-19 pandemic also introduces new uncertainties[65](index=65&type=chunk)[67](index=67&type=chunk)[70](index=70&type=chunk) 2019 Annual Performance Highlights | Indicator | Amount (Million USD) | Remarks | | :--- | :--- | :--- | | Profit Attributable to Shareholders | 1,348.8 | 1147% year-on-year growth | | Gain from Sale of Long Beach Terminal | 1,153.6 | One-time gain | | Profit Excluding One-Time Gain | 195.2 | 80% year-on-year growth | - **Synergy**: Synergy with parent company COSCO Shipping Group was significant, exceeding initial targets and becoming a key success factor[65](index=65&type=chunk) - **Financial Position**: The Group's balance sheet remained robust, operating cash flow increased from **USD 590 million** to **USD 750 million**, and net debt decreased from **USD 1.95 billion** to **USD 1.13 billion**[66](index=66&type=chunk) - **Strategic Investment**: Ordered five new 23,000 TEU vessels, the first orders since 2015, to renew the fleet, improve cost structure, and adhere to the dual-brand strategy[66](index=66&type=chunk) - **Digital Progress**: Its subsidiary CargoSmart executed the Global Shipping Business Network (GSBN) service agreement with leading industry operators, promoting industry digital standards[67](index=67&type=chunk) - **2020 Outlook**: The market is increasingly complex; while the US-China trade agreement removes some uncertainty, the COVID-19 pandemic brings significant impact, further increasing market uncertainty[67](index=67&type=chunk)[70](index=70&type=chunk) [Business Review](index=19&type=section&id=Business%20Review) [Overall Performance of Container Transport and Logistics](index=19&type=section&id=Container%20Transport%20and%20Logistics) Despite global economic slowdown and weak demand, the Group achieved market-beating results through dual-brand synergy, with cargo volume up 3.8% and revenue up 5.2%, benefiting from stable supply-demand and the Long Beach terminal sale 2019 Quarterly Operating Performance (Year-on-Year) | Quarter | Cargo Volume (TEU) Growth | Revenue Growth | Revenue Per TEU Growth | | :--- | :--- | :--- | :--- | | Q1 | 1.6% | 5.9% | 4.2% | | Q2 | 4.6% | 7.1% | 2.4% | | Q3 | 4.1% | 5.8% | 1.6% | | Q4 | 4.8% | 2.3% | (2.4%) | | **Full Year** | **3.8%** | **5.2%** | **1.3%** | - The Group successfully exceeded its initial synergy targets, which was key to enhancing its ability to serve all stakeholders. Concurrently, the sale of Long Beach Container Terminal in California was completed, recording a gain of **USD 1.1536 billion**[73](index=73&type=chunk)[74](index=74&type=chunk) [Route Analysis](index=21&type=section&id=Route%20Analysis) Route performance varied, with Pacific routes increasing revenue despite negative industry growth, Asia/Europe benefiting from strong volume, and Atlantic routes showing the strongest double-digit growth in both volume and revenue 2019 Operating Data by Route | Service Route | Total Cargo Volume (Thousand TEU) | Change | Total Revenue (Million USD) | Change | | :--- | :--- | :--- | :--- | :--- | | Pacific Routes | 1,967 | (0.4%) | 2,513 | 3.1% | | Asia/Europe & Intra-Europe Routes | 1,423 | 9.3% | 1,233 | 3.9% | | Atlantic Routes | 478 | 12.0% | 593 | 15.3% | | Intra-Asia & Australasia Routes | 3,086 | 3.1% | 1,937 | 6.1% | | **All Routes** | **6,954** | **3.8%** | **6,276** | **5.2%** | - **Pacific Routes**: Despite overall industry negative growth, the Group increased revenue by **3.1%** through improved freight rates[76](index=76&type=chunk) - **Asia/Europe Routes**: Cargo volume significantly increased by **9.3%**, with a favorable freight environment[77](index=77&type=chunk) - **Atlantic Routes**: Benefited from robust economic conditions on both sides, with cargo volume and revenue increasing significantly by **12.0%** and **15.3%** respectively[78](index=78&type=chunk) - **Intra-Asia & Australasia Routes**: Market improved, and the Group expanded its network and capacity in fast-growing economies like Vietnam[78](index=78&type=chunk) [Maritime Terminals, Fleet & Other Operational Matters](index=22&type=section&id=Maritime%20Terminals%2C%20Fleet%20%26%20Other%20Operational%20Matters) The Group divested Long Beach Container Terminal in October 2019, maintained stable cargo volume at other equity-accounted terminals, operated 104 vessels by year-end, and ordered five new 23,000 TEU vessels, while preparing for IMO 2020 low-sulfur fuel regulations - In accordance with a national security agreement with the US government, Long Beach Container Terminal in California was divested from the Group in October 2019[80](index=80&type=chunk) Fleet Composition as of December 31, 2019 | Category | Number of Vessels | Capacity (TEU) | | :--- | :--- | :--- | | Owned/Long-term Leased | 68 | 585,035 | | Short-term Leased | 36 | 148,545 | | **Total** | **104** | **733,580** | - On March 10, 2020, the Group signed a contract to build five 23,000 TEU container vessels for **USD 778.4 million**, with delivery expected in 2023[81](index=81&type=chunk) - To comply with IMO 2020 regulations, all Group vessels, except for one with a scrubber installed, successfully transitioned to using low-sulfur fuel by the end of 2019[82](index=82&type=chunk) [Logistics Business & Information Technology](index=24&type=section&id=Logistics%20Business%20%26%20Information%20Technology) In 2019, the logistics business faced market challenges with negative growth in revenue, gross profit, and net profit, yet secured new contracts. The Group invested heavily in IT, enhancing infrastructure, cybersecurity, and applying AI/ML for container management, while CargoSmart advanced industry digitalization through the GSBN service agreement 2019 Logistics Business Performance Change | Indicator | Year-on-Year Change | | :--- | :--- | | Revenue | -0.1% | | Gross Profit | -8.0% | | Profit After Tax | -61.3% | - The Group continued to invest in IT, focusing on establishing an enterprise digital workspace, adopting a hybrid cloud strategy, launching a global cybersecurity threat monitoring center (STMC), and applying machine learning to predict empty container inventory and optimize repositioning operations[85](index=85&type=chunk) - CargoSmart signed the Global Shipping Business Network (GSBN) service agreement with nine maritime industry operators, aiming to establish a non-profit joint venture to accelerate the digital transformation of the shipping industry[86](index=86&type=chunk) [Major Customers and Suppliers](index=22&type=section&id=Major%20Customers%20and%20Suppliers) The Group's customer and supplier base is diversified, mitigating significant reliance risk on any single entity, with the largest supplier accounting for 7.8% of total purchases and the largest customer for 1.5% of total revenue - The Group's customer and supplier base is relatively dispersed, with no significant reliance risk on a single customer or supplier: - **Suppliers**: The largest supplier accounts for **7.8%** of total purchases, and the top five suppliers collectively account for **20.8%** - **Customers**: The largest customer accounts for **1.5%** of total revenue, and the top five customers collectively account for **5.8%**[79](index=79&type=chunk) [Corporate Responsibility](index=29&type=section&id=Corporate%20Responsibility) The company prioritizes corporate social responsibility, implementing systematic policies and practices across environmental protection, safety, community support, customer relations, and employee care, earning multiple environmental awards and actively promoting sustainable supply chains - The company highly values corporate social responsibility, with systematic policies and practices in environmental protection, safety and security, community support, customer relations, and employee care. The company has received numerous awards for its outstanding environmental performance and actively participates in various international environmental initiatives, committed to promoting sustainable supply chains[92](index=92&type=chunk) - **Environmental Protection**: The company is the world's first container shipping company to receive 'Safety, Quality and Environmental Management System' certification, actively participates in vessel speed reduction programs and ballast water management, and has received multiple environmental awards, such as the Lloyd's List 'Excellence in Environmental Management Award' and 'Hong Kong Sustainable Development Award'[93](index=93&type=chunk)[94](index=94&type=chunk) - **Safety and Security**: The company fully complies with US C-TPAT, EU AEO, and international ISPS regulations, and implements anti-piracy and cybersecurity measures to ensure cargo and information security[98](index=98&type=chunk)[99](index=99&type=chunk) - **Community and Education**: Supports education through the Tung OOCL Scholarship and encourages global employees to participate in various charitable and volunteer activities[100](index=100&type=chunk) - **Customer and Supplier Relations**: Upholds the core value of 'customer-centricity', maintains a diversified customer and supplier base, and establishes risk indicators to monitor concentration risk[101](index=101&type=chunk) - **Employee Care**: As an equal opportunity employer, the company invests in employee training and talent development, provides competitive compensation and benefits, and has established comprehensive internal communication and codes of conduct[102](index=102&type=chunk)[103](index=103&type=chunk) [Financial Overview](index=37&type=section&id=Financial%20Overview) [Consolidated Results Analysis](index=37&type=section&id=Consolidated%20Results%20Analysis) In 2019, Group total revenue grew 5% to USD 6.879 billion, driven by container transport and logistics. Operating profit increased 37% to USD 361 million. Full-year profit attributable to shareholders surged to USD 1.349 billion, primarily due to a USD 1.154 billion one-time gain from the Long Beach Container Terminal sale, with operating profit up 80% excluding this gain Group Performance Summary (Million USD) | Indicator | 2019 | 2018 | Change (%) | | :--- | :--- | :--- | :--- | | Group Operating Revenue | 6,878.7 | 6,572.7 | 5% | | Group Operating Profit | 361.3 | 262.9 | 37% | | Profit from Operating Activities | 195.2 | 108.2 | 80% | | Gain from Sale of Long Beach Container Terminal | 1,153.6 | – | Not Applicable | | **Profit Attributable to Shareholders** | **1,348.8** | **108.2** | **1,147%** | - Earnings Before Interest and Taxes (EBIT) increased from **USD 313.7 million** in 2018 to **USD 452.3 million**, and EBIT margin improved from **4.7%** to **6.5%**, primarily due to improved freight rates and cargo volume growth offsetting cost increases[128](index=128&type=chunk) - The sale of Long Beach Container Terminal (US terminal business) was completed on October 24, 2019, for a consideration of **USD 1.78 billion**, resulting in a net profit of approximately **USD 1.1536 billion** after deducting costs and taxes[129](index=129&type=chunk) [Business Segment Performance](index=38&type=section&id=Business%20Segment%20Performance) Container transport and logistics, the core business, accounted for over 99% of total revenue, with operating profit up 42% to USD 279 million. Other businesses, mainly Wall Street Plaza property and investment portfolio, saw operating profit rise 23% to USD 82 million, driven by fair value gains on investments Container Transport and Logistics Business Operating Performance (Million USD) | Indicator | 2019 | 2018 | Change (%) | | :--- | :--- | :--- | :--- | | Cargo Volume (Thousand TEU) | 6,954 | 6,697 | 4% | | Operating Revenue | 6,852.0 | 6,547.0 | 5% | | Operating Costs | (6,053.6) | (5,844.5) | (4%) | | **Operating Profit from Continuing Operations** | **279.3** | **196.0** | **42%** | - Benefiting from container sharing with COSCO SHIPPING Lines, container costs and empty container repositioning expenses decreased by **5%** year-on-year in 2019[114](index=114&type=chunk) - Operating profit from other businesses increased by **USD 15.1 million**, primarily due to a **USD 41 million** fair value gain on portfolio investments, compared to **USD 2.5 million** in the prior year[119](index=119&type=chunk)[120](index=120&type=chunk) [Balance Sheet and Capital Management](index=45&type=section&id=Balance%20Sheet%20and%20Capital%20Management) By end-2019, total assets increased to USD 11.2 billion. HKFRS 16 adoption led to recognition of USD 2.83 billion in right-of-use assets and USD 2.56 billion in lease liabilities. Total liabilities decreased 5% to USD 3.99 billion. Financial position improved, with debt-to-equity ratio falling from 0.89 to 0.81, and net debt-to-equity ratio significantly dropping from 0.41 to 0.23 - The initial adoption of HKFRS 16 had a significant impact on the balance sheet, with previously operating leases capitalized and recognized as right-of-use assets and lease liabilities[132](index=132&type=chunk)[143](index=143&type=chunk) Key Financial Ratios | Ratio | End of 2019 | End of 2018 | | :--- | :--- | :--- | | Debt to Equity Ratio | 0.81 | 0.89 | | Net Debt to Equity Ratio | 0.23 | 0.41 | | Net Asset Value Per Ordinary Share (USD) | 7.87 | 7.57 | - Shareholders' equity increased to **USD 4.927 billion** at year-end. Excluding the one-time gain from the sale of Long Beach Terminal, the average return on ordinary shareholders' equity increased from **2.3%** in 2018 to **4.0%**[147](index=147&type=chunk) [Cash Flow and Liquidity](index=50&type=section&id=Cash%20Flow%20and%20Liquidity) In 2019, the Group's cash flow was very strong, with a net inflow of USD 1.561 billion, compared to a net outflow of USD 228 million in 2018, driven by a 59% increase in operating cash flow to USD 948 million and a USD 1.709 billion inflow from the US terminal business sale, leading to ample liquidity of USD 2.859 billion in quick assets Quick Assets Change Analysis (Million USD) | Item | 2019 | 2018 | | :--- | :--- | :--- | | Net Operating Inflow | 948.1 | 597.8 | | Sale of Subsidiary | 1,709.2 | – | | Net Cash Generated From/(Used In) Investing Activities | 702.4 | (451.2) | | Net Cash Used In Financing Activities | (726.2) | (297.9) | | **Net Inflow/(Outflow)** | **1,561.0** | **(227.6)** | | Period-End Quick Assets Balance | 2,858.8 | 2,246.8 | - The Group's liquidity position is robust, holding **USD 2.859 billion** in quick assets at year-end, with **USD 649 million** in debt repayable in 2020, indicating ample funds[152](index=152&type=chunk) [Board of Directors and Senior Management](index=52&type=section&id=Board%20of%20Directors%20and%20Senior%20Management) This section details the backgrounds and professional qualifications of the company's Board of Directors and senior management, highlighting their extensive experience in the shipping industry and related fields - This section details the backgrounds and professional qualifications of the company's Board of Directors and senior management, including their extensive experience and professional qualifications in the shipping industry and related fields[154](index=154&type=chunk)[179](index=179&type=chunk) [Shareholder Information](index=62&type=section&id=Shareholder%20Information) This section provides key financial dates, shareholder service contact information, and equity structure details as of the end of 2019 - This section provides key financial dates, shareholder service contact information, and equity structure details as of the end of 2019[192](index=192&type=chunk)[197](index=197&type=chunk) Top Ten Ordinary Shareholders as of December 31, 2019 | Shareholder Name | Number of Shares Held | Percentage of Shares Held | | :--- | :--- | :--- | | Faulkner Global Holdings Limited | 315,779,045 | 50.4606% | | HKSCC Nominees Limited | 246,868,907 | 39.4490% | | SIPG (BVI) Development Co., Ltd. | 61,953,536 | 9.9000% | | Mok Kwun Cheung | 259,000 | 0.0414% | | Po Leung Kuk | 70,500 | 0.0113% | | Ho Fuk Chuen | 52,000 | 0.0083% | | Fung Sun Kwan U/D | 45,022 | 0.0072% | | Ho Hin Kwong | 40,454 | 0.0065% | | Leung Wong Kit Ling | 35,000 | 0.0056% | | Chow Mung Ha | 32,420 | 0.0052% | [Corporate Governance Report](index=65&type=section&id=Corporate%20Governance%20Report) [A. Board Functions and Structure](index=66&type=section&id=A.%20Board%20Functions%20and%20Structure) The Board, comprising executive, non-executive, and independent non-executive directors, ensures balanced oversight of strategy and management, with clear separation of Chairman and CEO roles, adhering to robust nomination and diversity policies - The Board's diverse composition, with rich corporate and industry experience and a reasonable balance between executive and non-executive directors, provides sufficient checks and balances to protect shareholders' interests[208](index=208&type=chunk) - The company clearly delineates the responsibilities of the Chairman (leading the Board) and the Chief Executive Officer (responsible for daily management), ensuring clear accountability[211](index=211&type=chunk)[212](index=212&type=chunk) [8. Board Committees](index=71&type=section&id=8.%20Board%20Committees) The company has nine clearly defined Board committees, including Executive, Audit, Remuneration, Nomination, Risk, Compliance, Finance, Share, and Inside Information Committees, with the Audit, Remuneration, and Nomination Committees predominantly composed of independent non-executive directors to ensure independence and objectivity - The company has nine clearly defined Board committees to assist the Board in fulfilling its responsibilities, with the composition of the Audit, Remuneration, and Nomination Committees complying with best corporate governance practices[218](index=218&type=chunk) - **Audit Committee**: Composed of **5** independent non-executive directors, responsible for reviewing financial reports, monitoring risk management, and internal control systems[220](index=220&type=chunk)[221](index=221&type=chunk) - **Remuneration Committee**: Composed of **2** independent non-executive directors and **1** executive director, responsible for reviewing and recommending remuneration policies for directors and senior management[227](index=227&type=chunk) - **Nomination Committee**: Composed of **3** independent non-executive directors, the Chairman, and **1** non-executive director, responsible for reviewing the Board structure and nominating director candidates[229](index=229&type=chunk) - **Risk Committee**: Responsible for formulating risk management strategies and overseeing their implementation[232](index=232&type=chunk) [B. Accountability and Audit](index=84&type=section&id=B.%20Accountability%20and%20Audit) The company maintains robust accountability and audit mechanisms, with PwC as external auditor. The Board, through the Audit Committee, annually reviews internal control effectiveness across financial, operational, compliance, and risk management, implementing a 'three lines of defense' risk governance model and standardized enterprise risk management procedures - The Board confirmed that the Group has maintained excellent and effective internal control systems and expressed satisfaction with the adequacy and effectiveness of risk management and internal control systems as of the end of 2019[251](index=251&type=chunk)[256](index=256&type=chunk) - The Group adopts a 'three lines of defense' risk governance model: the first line is functional units, the second line is risk management departments, and the third line is internal audit departments, ensuring comprehensive and independent risk management[254](index=254&type=chunk) [C. Shareholder Communication and Rights](index=88&type=section&id=C.%20Shareholder%20Communication%20and%20Rights) The company prioritizes shareholder communication via annual and interim reports and general meetings, with clear policies for shareholder communication, special general meeting requests, proposal submissions, and inquiries, and a 2018 dividend policy targeting 25% of annual consolidated net profit attributable to shareholders - The company has established clear shareholder rights procedures, where shareholders holding not less than **10%** of the voting shares have the right to request a special general meeting[258](index=258&type=chunk) - The company's adopted dividend policy aims to distribute **25%** of annual net profit as dividends, balancing shareholder returns and long-term company development[260](index=260&type=chunk) [Directors' Report](index=91&type=section&id=Directors'%20Report) [Business Review and Dividends](index=91&type=section&id=Dividends) This report references sections on business review, performance analysis, key risks, and future developments from the annual report, detailing interim and special dividends paid, and proposed final and special dividends of 2.69 US cents and 24.0 US cents per share, respectively 2019 Dividend Distribution (Per Ordinary Share) | Dividend Type | Amount (US Cents) | Status | | :--- | :--- | :--- | | Interim Dividend | 6.66 | Paid | | Special Dividend | 160.0 | Paid | | Proposed Final Dividend | 2.69 | Proposed | | Proposed Special Dividend | 24.0 | Proposed | [Directors' and Shareholders' Interests](index=92&type=section&id=Directors'%20and%20Chief%20Executive's%20Interests) The report discloses changes in Board members during the year, confirms no personal long positions in company shares for directors, notes some directors hold shares or options in associated corporations like COSCO SHIPPING Holdings, and details major shareholder holdings, including Faulkner Global Holdings Limited's 75% stake - As of the end of 2019, directors had no record of long positions in the company's shares. Some executive directors held shares or share options in associated corporations COSCO SHIPPING Holdings and COSCO SHIPPING Development[276](index=276&type=chunk)[277](index=277&type=chunk) Major Shareholder Holdings (December 31, 2019) | Shareholder Name | Nature of Interest | Number of Shares Held (Long Position) | Percentage | | :--- | :--- | :--- | :--- | | Faulkner Global Holdings Limited | Beneficial Owner | 469,344,972 | 75% | | China COSCO Shipping Group Co., Ltd. | Interest in Controlled Corporation | 469,344,972 | 75% | | SIPG (BVI) Development Co., Ltd. | Beneficial Owner | 61,953,536 | 9.90% | | PSD Investco Inc. | Beneficial Owner | 38,513,150 | 6.15% | [Connected Transactions](index=96&type=section&id=Connected%20Transactions) Transactions between the company and COSCO SHIPPING, its controlling shareholder, and their subsidiaries constitute continuing connected transactions. The company has multiple master agreements with COSCO SHIPPING Group covering business, fuel procurement, terminal services, equipment procurement, vessel services, and financial services, all conducted on normal commercial terms. The report also discloses one-off connected transactions, such as the joint venture with COSCO SHIPPING Logistics and JD Logistics - The Group has entered into a series of master agreements with its controlling shareholder, COSCO SHIPPING Group, regulating daily business dealings in shipping, logistics, terminals, fuel procurement, and other areas, ensuring fairness and reasonableness of transactions[284](index=284&type=chunk)[286](index=286&type=chunk)[289](index=289&type=chunk) - The company, COSCO SHIPPING Logistics, and JD Logistics entered into an agreement in March 2019 to establish a joint venture, 'Zhongjing Supply Chain Technology Co., Ltd.', with the company holding a **25.9%** stake[299](index=299&type=chunk) [Independent Auditor's Report](index=104&type=section&id=Independent%20Auditor's%20Report) PricewaterhouseCoopers issued an unqualified opinion on the company's 2019 consolidated financial statements, affirming their fair presentation of the Group's financial position, performance, and cash flows, prepared in accordance with relevant accounting standards and company ordinances - PricewaterhouseCoopers issued an unqualified opinion on the company's 2019 consolidated financial statements, affirming that the financial statements present fairly the Group's financial position, performance, and cash flows, and have been properly prepared in accordance with relevant accounting standards and company ordinances[316](index=316&type=chunk) - The report identified three key audit matters: 1. **Sale of LBCT LLC**: Given the significant gain from the sale, and the determination of consideration involved significant management judgment and assumptions 2. **Revenue Recognition for Container Transport**: The large number of in-transit voyage transactions at year-end makes revenue estimation complex when recognized on a percentage-of-completion basis 3. **Provision for Operating Expenses**: The estimation of operating expense provisions involves significant judgment and consideration of multiple factors, such as historical cost models and estimated supplier price lists[318](index=318&type=chunk) [Consolidated Financial Statements](index=110&type=section&id=Consolidated%20Financial%20Statements) [Consolidated Income Statement](index=110&type=section&id=Consolidated%20Income%20Statement) This statement presents the company's income, expenses, profits, and losses for the reporting period. In 2019, the company recorded total revenue of USD 6.879 billion and a full-year profit of USD 1.349 billion, comprising USD 154 million from continuing operations and USD 1.195 billion from discontinued operations (primarily the Long Beach terminal sale) Consolidated Income Statement Summary (Million USD) | Item | 2019 | 2018 | | :--- | :--- | :--- | | Revenue | 6,878.7 | 6,572.7 | | Operating Profit | 361.3 | 262.9 | | Profit Before Tax | 223.8 | 134.1 | | **Profit for the Year** | **1,348.8** | **108.2** | [Consolidated Balance Sheet](index=112&type=section&id=Consolidated%20Balance%20Sheet) This statement reflects the company's financial position at the end of the reporting period, including assets, liabilities, and shareholders' equity. As of December 31, 2019, total assets were USD 11.202 billion, total liabilities were USD 6.274 billion, and total shareholders' equity was USD 4.927 billion Consolidated Balance Sheet Summary (Million USD) | Item | December 31, 2019 | December 31, 2018 | | :--- | :--- | :--- | | Non-current Assets | 6,756.1 | 6,806.7 | | Current Assets | 4,445.8 | 3,247.2 | | **Total Assets** | **11,201.9** | **10,053.9** | | Non-current Liabilities | 3,504.2 | 3,805.9 | | Current Liabilities | 2,770.3 | 1,512.9 | | **Total Liabilities** | **6,274.5** | **5,318.7** | | **Total Equity** | **4,927.4** | **4,735.1** | [Consolidated Cash Flow Statement](index=114&type=section&id=Consolidated%20Cash%20Flow%20Statement) This statement shows the company's cash inflows and outflows during the reporting period, categorized into operating, investing, and financing activities. In 2019, operating activities generated USD 660 million net cash, investing activities generated USD 702 million net cash (primarily from asset sales), and financing activities used USD 726 million net cash, resulting in a net increase of USD 636 million in cash and cash equivalents for the year Consolidated Cash Flow Statement Summary (Million USD) | Item | 2019 | 2018 | | :--- | :--- | :--- | | Net Cash Generated From Operating Activities | 659.6 | 452.7 | | Net Cash Generated From/(Used In) Investing Activities | 702.4 | (451.2) | | Net Cash Used In Financing Activities | (726.2) | (297.9) | | **Net Increase/(Decrease) in Cash and Cash Equivalents** | **635.8** | **(296.4)** | [Consolidated Statement of Changes in Equity](index=115&type=section&id=Consolidated%20Statement%20of%20Changes%20in%20Equity) This statement details changes in each component of shareholders' equity during the reporting period. Beginning 2019 with USD 4.735 billion, equity decreased by USD 46.3 million due to new lease standard adoption, increased by USD 1.327 billion from total comprehensive income, and decreased by dividends paid, ending the year at USD 4.927 billion Summary of Changes in Shareholders' Equity (Million USD) | Item | Amount | | :--- | :--- | | Balance as at January 1, 2019 | 4,735.1 | | Adjustment on Adoption of HKFRS 16 | (46.3) | | Total Comprehensive Income for the Year | 1,327.1 | | Dividends Paid | (1,091.1) | | **Balance as at December 31, 2019** | **4,927.4** | [Other Information](index=202&type=section&id=Other%20Information) [Fleet and Container Information](index=202&type=section&id=Fleet%20and%20Container%20Information) This section details the Group's 104 operational vessels as of end-2019, including names, capacities, ownership, service routes, in-service years, and registration, along with owned and leased container quantities - As of December 31, 2019, the Group's fleet operated a total of **104** vessels, including **68** owned or long-term leased vessels, and **36** short-term leased vessels[81](index=81&type=chunk)[570](index=570&type=chunk) - As of December 31, 2019, the Group owned and leased a total of **686,482** containers, equivalent to **1,170,978** TEU[573](index=573&type=chunk) [Ten-Year Financial Summary](index=205&type=section&id=Ten-Year%20Financial%20Summary) This table provides a ten-year summary of key financial data from 2010 to 2019, including major items from the consolidated income statement and balance sheet, and key financial ratios, comprehensively illustrating the Group's long-term financial performance and trends Three-Year Financial Trends (Million USD) | Indicator | 2019 | 2018 | 2017 | | :--- | :--- | :--- | :--- | | Revenue | 6,879 | 6,573 | 5,982 | | Profit/(Loss) for the Year | 1,349 | 108 | 138 | | Total Assets | 11,202 | 10,054 | 10,069 | | Equity Attributable to Ordinary Shareholders | 4,927 | 4,735 | 4,683 | | Net Debt to Equity Ratio | 0.23 | 0.41 | 0.43 |