Cheung Kong Infrastructure Holdings Limited
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Financial Review

Financial Resources, Treasury Activities And Gearing Ratio

The Group's capital expenditure and investments were funded from cash on hand, internal cash generation, syndicated loans, notes, share placement and other project loans.

As at 30th June, 2016, cash and bank deposits on hand amounted to HK$11,258 million and the total borrowings of the Group amounted to HK$17,605 million, which included Hong Kong dollar notes of HK$260 million and foreign currency borrowings of HK$17,345 million. Of the total borrowings, 92 per cent were repayable between 2017 and 2020 and 8 per cent were repayable beyond 2020. The Group's financing activities continue to be well received and fully supported by its bankers.

The Group adopts conservative treasury policies in cash and financial management. To achieve better risk control and minimise the cost of funds, the Group's treasury activities are centralised. Cash is generally placed in short-term deposits mostly denominated in U.S. dollars, Hong Kong dollars, Australian dollars, New Zealand dollars, British pounds, Canadian dollars, Euro or Renminbi. The Group's liquidity and financing requirements are reviewed regularly. The Group will continue to maintain a strong capital structure when considering financing for new investments or maturity of bank loans.

As at 30th June, 2016, the Group maintained a net debt position with a net debt to net total capital ratio of 5 per cent, which was based on its net debt of HK$6,347 million and net total capital, which represents the total borrowings plus total equity net of cash and bank deposits, of HK$115,448 million. This ratio was lower than the net debt to net total capital ratio of 8 per cent at the year end of 2015. This change was mainly due to the funds raised in an issue of perpetual capital securities and the sales proceeds from disposal of investment in securities, which were partially utilised for redemption of perpetual capital securities issued in 2010.

To minimise currency risk exposure in respect of its investments in other countries, the Group generally hedges those investments with the appropriate level of borrowings denominated in the local currencies of those countries. The Group also entered into certain interest rate and currency swaps to mitigate interest rate and other currency exposure risks. As at 30th June, 2016, the notional amounts of these derivative instruments amounted to HK$43,618 million.

Charge On Group Assets

As at 30th June, 2016:

  • the Group's obligations under finance leases totalling HK$29 million were secured by charges over the leased assets with carrying value of HK$27 million; and
  • the shares of a subsidiary with net asset value of HK$1,098 million were pledged to secure bank borrowings totalling HK$1,171 million granted to the Group.

Contingent Liabilities

As at 30th June, 2016, the Group was subject to the following contingent liabilities:

HK$ million  
Guarantee in respect of bank loan drawn by affiliated companies 1,259
Other guarantee given in respect of an affiliated company 745
Performance bond indemnities 99
Sub-contractor warranties 6
Total 2,109


The Group, including its subsidiaries but excluding affiliated companies, employs a total of 2,068 employees. Employees' cost (excluding directors' emoluments) amounted to HK$348 million. The Group ensures that the pay levels of its employees are competitive and that its employees are rewarded on a performance related basis within the general framework of the Group's salary and bonus system.

Preferential subscription of 2,978,000 new shares of the Company was given to those employees who had subscribed for shares of HK$1.00 each in the Company at HK$12.65 per share on the flotation of the Company in 1996. The Group does not have any share option scheme for employees.


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