CKI Announces Interim Results For 1997
22 August, 1997 -- Hong Kong
The unaudited profit attributable to shareholders of the Group for the half year ended 30th June, 1997 amounted to HK$1,025 million, representing an increase of 195 per cent. over the comparable 1996 period. Earnings per share is HK$0.53 which represents an increase of 56 per cent. The results reflect strong growth from the three core businesses of transportation, energy and infrastructure materials:
- Profit contribution from the transportation sector was up 400 per cent.
- The acquisition of a controlling interest of Hongkong Electric Holdings Limited ("Hongkong Electric") in March 1997 boosted the energy sector's profit contribution by 809 per cent.
- Infrastructure materials continued its solid performance with a 16 per cent. increase in profit contribution as both Green Island Cement (Holdings) Limited ("Green Island Cement") and Anderson Asia (Holdings) Limited ("Anderson Asia") reported satisfactory gains. In addition to the strong financial performance, the first half of 1997 was also marked by many achievements, in particular:
- The market capitalisation of Cheung Kong Infrastructure Holdings Limited ("CKI") increased from HK$17 billion at the initial public offering in July 1996 to HK$51 billion as at the end of June 1997, a threefold increase in a year. CKI is at present the largest infrastructure company listed in Hong Kong in terms of market capitalisation.
- The momentum of project signings carried into the first half of 1997, as all three businesses expanded their portfolio of projects in the PRC. As at the end of June 1997, the Group invested and committed to invest an aggregate HK$9,121 million in infrastructure projects in a number of provinces in the PRC. The number of joint ventures in the PRC increased from 32 as at the end of 1996 to 52 as at the end of June 1997.
- CKI has been assigned a credit rating of "A-" by Standard & Poor's, the highest credit rating among infrastructure companies in Hong Kong.
The Board of Directors has declared an interim dividend for 1997 of HK$0.10 per share (1996: nil). The interim dividend will be paid on Wednesday, 15th October, 1997 to shareholders whose names appear on the register of members on Tuesday, 14th October, 1997.
Profit contribution of the transportation sector grew 400 per cent. as a result of additional projects and full period contribution of existing projects. During the period, the Group entered into additional projects in Guangdong, Liaoning, Hebei and Henan provinces. The total length of transportation projects in which the Group has an interest increased from 382 km as at the end of 1996 to 714 km as at the end of June 1997, making CKI one of the largest investors in the transportation sector in the PRC.
The energy sector reported a 809 per cent. increase in profit contribution due to Hongkong Electric's contribution. In March 1997, as part of a reorganisation of the Cheung Kong Group, the Group completed the acquisition of a 35.01 per cent. interest in Hongkong Electric, one of Hong Kong's two power utilities. The Group's interest in Hongkong Electric has since increased to 35.7 per cent. through purchases in the open market.
In addition, the Group entered into co-generation power plant joint ventures in Liaoning Province in early 1997. As a result of the addition of Hongkong Electric and the Liaoning power plants, the Group's energy portfolio has expanded substantially as the combined installed capacity in which CKI has an interest increased from 2,200 MW as at the end of 1996 to 5,305 MW as at the end of June 1997. Through Hongkong Electric, the Group has also expanded outside Hong Kong and the PRC. A joint venture agreement to construct a 450 MW power plant in Thailand was recently signed by Hongkong Electric.
After an exceptionally good year in 1996, Green Island Cement and Anderson Asia continued their positive growth trend, with profit contribution up 16%.
Green Island Cement has been able to maintain its Hong Kong market share of 45 per cent. and posted satisfactory growth in profit contribution as a result of continued market leadership and margin improvement. Green Island Cement has commenced the waste-to-energy program of marine pollutants - burning (MARPOL).
In January 1997, Green Island Cement concluded a joint venture with Guangdong International Trust and Investment Corporation regarding an integrated cement and concrete operation in the Pearl River Delta.
In Hong Kong, Anderson Asia's concrete production volume was at a record level, and average selling price of concrete increased over the same period last year. In China, two new concrete batching plants have commenced operation at Shenzhen and Niu Tou Island in January 1997. The on-site plant at the Zhuhai Power Plant has begun production in June 1997. This brings the total number of batching plants to four including Guangzhou.
After the reunification with China, Hong Kong will continue to enjoy stability and prosperity. The ties between Hong Kong and the mainland are expected to grow closer, strengthening economic vitality. Transportation links across the border will develop at a faster pace. Both Hong Kong and the mainland will see good economic prospects, which will benefit the Group's business, particularly in the areas of transportation infrastructure and infrastructure materials.
We see continued strong growth in the three main businesses. The Group's transportation portfolio currently spans four provinces. With the total length of roads and bridges doubling that of a year ago, contribution will continue to increase. The energy sector will see a strong second half due to the full period contribution of Hongkong Electric and the Liaoning power plants. In infrastructure materials, Green Island Cement and Anderson Asia are expected to maintain their market leading positions in Hong Kong, and to expand their PRC presence.
During the first half of 1997, the Group concluded 20 PRC joint venture contracts with a total investment of HK$2,528 million in the three main businesses. The Group's success in identifying and securing infrastructure projects reflects, in addition to our unique strengths, the enormous scale of China's infrastructure sector. While there has been increased interest among numerous PRC-based companies and overseas investors in China's infrastructure sector, we believe the market is so large and opportunities so abundant that there is considerable room for infrastructure companies to participate in. All infrastructure companies actively pursuing investments in China are, in fact, complementing each others' efforts. Given China's continued demand for infrastructure investment, the market environment remains favourable.
With dedicated teams of project development professionals working in different regions of China, the Group has in discussion numerous joint venture opportunities. We are confident that some of them will progress into contracts and that the strong momentum of the Group's project signings can be maintained.
Other than the three main businesses in which the Group has established solid foundations, the Group is constantly exploring new businesses for expansion. For example, the Group has recently invested in water plants in the PRC.
We are honored that, in July 1997, CKI has been selected as a constituent stock of the Hang Seng Index, the first comprehensive infrastructure company to be included. This is a recognition of our achievements.
The Group is in a strong financial position, with sizeable recurring cash flow and ample financing capacity. Coupled with a favourable market environment, strong internal growth and momentum of securing new projects, and expansion into new business areas, we are confident of an excellent year for the Group. The rate of growth will strengthen as projects come on-stream and new projects are secured.
I would like to thank the Board of Directors and all employees for their support and hard work.
Li Tzar Kuoi, Victor
Hong Kong, 22nd August, 1997
PURCHASE, SALE OR REDEMPTION OF SHARES
The Company has not redeemed any of its shares during the six months ended 30th June, 1997. Neither the Company nor any of its subsidiaries has purchased or sold any of the Company's shares during this period.
NOTICE OF PAYMENT OF INTERIM DIVIDEND, 1997
The Board of Directors of Cheung Kong Infrastructure Holdings Limited announces that the Group's unaudited consolidated profit attributable to shareholders for the six months ended 30th June, 1997 amounted to HK$1,025 million which represents earnings of HK$0.53 per share. The Directors have resolved to pay an interim dividend for 1997 of HK$0.10 per share to shareholders whose names appear on the Register of Members of the Company on Tuesday, 14th October, 1997. The dividend will be paid on Wednesday, 15th October, 1997.
The Register of Members of the Company will be closed from Tuesday, 7th October, 1997 to Tuesday, 14th October, 1997, both days inclusive, during which period no transfer of shares will be effected. In order to qualify for the interim dividend, all share certificates with completed transfer forms either overleaf or separately, must be lodged with the Company's Branch Share Registrars, Central Registration Hong Kong Limited, Hopewell Centre, 17th Floor, 183 Queen's Road East, Hong Kong, not later than 4:00 p.m. on Monday, 6th October, 1997.
By Order of the Board
Hong Kong, 22nd August, 1997
CONSOLIDATED PROFIT AND LOSS ACCOUNT
for the six months ended 30th June 1997
Profit Attributable To Shareholders
Six months ended 30th June
The unaudited consolidated profit and loss account for the six months period is set out below:-
|-||Share of results of associated companies||606||-|
|971||Profit before taxation||1,138||383|
|884||Profit after taxation||1,025||347|
|886||Profit attributable to shareholders||1,025||347|
|525||Profit for the period retained||800||347|
|HK$0.75||Earnings per share||3||HK$0.53||HK$0.34|
|HK$0.16||Dividend per share||HK$0.10||-|
By Business Segment
Six months ended 30th June 1997
By Geographic Region
Six months ended 30th June 1997
Turnover represents net sales from infrastructure materials businesses and returns on investments and interest income received and receivable from PRC joint ventures, net of withholding tax, where applicable.
31st December Six months ended
30th June 1996 HK$ million 1997 1996
Company and Subsidiaries
Hong Kong profits tax
91 - provision for the period 63 39 (5) - deferred - (3) 1 PRC income tax - -
- Associated companies
Hong Kong profits tax
87 Total 113 36
- Hong Kong profits tax is provided for at the rate of 16.5 per cent. (1996: 16.5 per cent.) on the estimated assessable profits for the period less available tax losses.
- PRC income tax was charged on the estimated assessable profits of operating activities in Mainland China, calculated at rates applicable.
- Deferred taxation is accounted for at the current rate of taxation in respect of material timing differences between profit as computed for taxation purposes and profit as stated in the accounts to the extent that a liability or an asset is expected to crystallise in the foreseeable future.
- Earnings per share
The calculation of earnings per share is based on the profit attributable to shareholders of HK$1,025 million (1996: HK$347 million) and on the weighted average number of 1,921,269,192 shares (1996: 1,026,000,000 shares) in issue during the period.
- Comparative figures
Certain comparative figures have been reclassified to conform with the current period's presentation.