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CHEUNG KONG INFRASTRUCTURE HOLDINGS LIMITED
ANNOUNCES 1999 RESULTS
THE CHAIRMAN'S LETTER


16 March, 2000 -- Hong Kong

TO OUR SHAREHOLDERS

We are pleased to report that 1999 was a solid year of growth for Cheung Kong Infrastructure Holdings Limited ("CKI"). Net profit for the year ended 31st December, 1999 was HK$3,141 million, an increase of 10 per cent. from the previous year. Earnings per share were HK$1.39.

The Board of Directors is recommending a final dividend of HK$0.29 per share. Together with the interim dividend of HK$0.13 per share, this will bring the total dividend for the year to HK$0.42 per share, a 11 per cent. increase from the HK$0.38 per share paid in respect of last year. The proposed dividend will be paid on 16th May, 2000, following approval at the Annual General Meeting, to shareholders whose names appear on the Register of Members on 10th May, 2000.

At the dawn of the new millennium, the overall economy in 1999 has generally improved. Capitalising on the Group's solid foundation, sound financial base and strong human resources, CKI consolidated its existing businesses and embarked on a globalisation and diversification strategy. Significant progress was made in the year:-

1.  

The Group's full-year profit contribution experienced satisfactory growth during the year, rising 10 per cent. The performance of the three core businesses were as follows:

Transportation + 29%
Energy + 3 %
Infrastructure materials - 8 %
     
2.   The transportation division reported another year of satisfactory growth, with most of the China's investment projects becoming operational and revenue generating.
     
3.   As in prior years, the energy division remained the major profit contributor to CKI, with Hongkong Electric Holdings Limited ("Hongkong Electric") and China's power investments both bringing in steady earnings.
     
4.   The infrastructure materials division experienced a slight drop in profit contribution compared to the previous year, due to a sluggish market and price erosion.
     
5.  

For CKI, 1999 was a year of expansion. A few milestone acquisitions have been made:

i.   The Group acquired a 40 per cent. interest in the Beidou bridge in Panyu, Guangdong province of China, signifying the Group's continued interest in China's infrastructure market.
     
ii.   The Group acquired a 50 per cent. interest in Eastern Harbour Crossing Company Limited in the SAR, the Group's first infrastructure project in Hong Kong.
     
iii.   CKI invested in two energy projects in Australia, marking a positive start to the Group's global initiatives. The first project was the acquisition of a 19.97% stake in Envestra Limited, the largest listed gas distribution company in Australia, resulting in CKI becoming the co-largest shareholder of the company. The second project was in joint venture with Hongkong Electric in winning the tender for a 200-year right to operate the electricity distribution network in the state of South Australia. The total investment amounted to approximately HK$16 billion, half of which will be borne by CKI. This was the Group's first participation in a privatisation project. These two investments also exemplified the Group's diversification strategy in extending the energy core business from electricity to natural gas and from energy generation to energy distribution.
     
iv.   In 1999, CKI's holding in Hongkong Electric increased from 36.11 per cent. at the beginning of the year to 37.63 per cent. at year end. As one of the two power companies in Hong Kong with a strong position, steady income and low PE ratio, Hongkong Electric was an excellent investment for CKI.
     
v.   CKI acquired a 50 per cent. interest in Legend Power Limited which owns a number of international patents on energy saving technology, signifying CKI's diversification into electronic infrastructure businesses.
     
vi   As at the end of 1999, the Group's investments outside Hong Kong reached HK$19 billion, of which HK$10 billion was in the Mainland and HK$9 billion in Australia, reflecting the Group's emergence as a global infrastructure player.
     
6.   As at the end of 1999, the Group's net debt to equity ratio was 11.4 per cent. with cash on hand of HK$1.443 billion and debt of HK$3.976 billion. With a solid financial position and strong cash flow, the Group has the financial capacity to aggressively invest in high quality capital intensive infrastructure businesses.

Prospects

With a "Global Mind, Local Touch" philosophy, CKI is dedicated to a prudent, carefully formulated globalisation and diversification plan, while maintaining a strong presence in existing infrastructure businesses. In adhering to the plans, all three core businesses of CKI--transportation, energy and infrastructure materials--have each made marked investment progress early in the new millennium.

Looking to the future, China's impending admission to the WTO will provide CKI with historic investment opportunities. The ensuing economic growth and influx of foreign investment into the country will translate into greater needs for improved infrastructure. When this occurs, CKI, a leading China infrastructure player, will be poised to benefit. Back in Hong Kong, the local economy is transforming. To facilitate this change, the SAR government has initiated several infrastructure projects. CKI will be in a leading position to profit as these projects begin and the economy gradually recovers.

Following the success of globalisation initiatives in 1999, the Group will continue to pursue aggressively overseas investment opportunities in Australia, North America, Europe and Asia.

As the world evolves into the cyber age, CKI targets to extend its technology base from traditional civil/electrical/mechanical oriented infrastructure projects to electronic infrastructure businesses, and will pursue appropriate investment opportunities in this arena as part of its diversification strategy.

Finally, I wish to welcome Mr. Barrie Cook and Mr. Eric Kwan who joined the Board of Directors this year. I would like to take this opportunity to thank everyone in CKI for their contributions and diligent work in the previous year.

 

Li Tzar Kuoi, Victor
Chairman

Hong Kong, 16th March, 2000

 

PURCHASE, SALE OR REDEMPTION OF SHARES

The Company has not redeemed any of its shares during the year. Neither the Company nor any of its subsidiaries has purchased or sold any of the Company's shares during the year.

 

MILLENNIUM ISSUE

The Group has completed on schedule its Year 2000 compliance programme. All of the critical systems of the Group were Year 2000 compliant as at 31st December, 1999. Over the millennium change and various relevant dates in the year 2000, the Group carried out various tests on and closely monitored the performance of all major systems. No business disruption has been experienced by the Group before, during and after the millennium change.

More details on the Group's Year 2000 readiness will be set out in the 1999 Annual Report.

PRACTICE NOTE 19 TO THE STOCK EXCHANGE LISTING RULES

The following information is disclosed in accordance with the Practice Note 19:

(1)   The Group has entered into a transferable loan facility agreement of A$33 million of which the whole of the loan amount was drawn as at the end of 1999. The facility will mature in 2003. Under the provision of the loan agreement, it is an event of default if Hutchison Whampoa Limited ("Hutchison Whampoa") ceases to own (directly or indirectly) at least 35% of the issued share capital of the Company. The obligation has been complied with.
     
(2)   The Group has entered into a loan facility agreement of A$75 million of which A$3.6 million remained undrawn as at the end of 1999. The facility will mature in 2003. Under the provision of the loan agreement, it is an event of default if Hutchison Whampoa ceases to own (directly or indirectly) at least 35% of the issued share capital of the Company. The obligation has been complied with.
     
(3)   The Group has entered into a short term syndicated facility agreement of A$1,250 million of which no drawdown was made as at the end of 1999. The facility will mature in 2000. Under the provision of the loan agreement, it is an event of default if Hutchison Whampoa ceases to own (directly or indirectly) at least 35% of the issued share capital of the Company. The obligation has been complied with.
     
(4)   The Group has entered into a long term syndicated facility agreement of A$500 million of which no drawdown was made as at the end of 1999. The facility will mature in 2005. Under the provision of the loan agreement, it is an event of default if Hutchison Whampoa ceases to own (directly or indirectly) at least 35% of the issued share capital of the Company. The obligation has been complied with.
     
(5)   On 12th December, 1999, CKI Utilities Development Limited, HEI Utilities Development Limited and Utilities Management Pty Ltd (collectively as "Purchasers"), affiliated companies being ultimately owned as to 50% by the Company and 50% by Hongkong Electric, entered into agreements with the vendors, namely, the State of South Australia and ETSA Utilities for the acquisition of the right to manage and operate ETSA Utilities for 200 years. To fund the acquisition, a wholly owned subsidiary of the Company advanced A$1,750 million (approximately HK$8,873 million, equivalent to about 40% of the Group's net assets as at 31st December, 1999) to the Purchasers on 28th January, 2000. The aforesaid advance is funded by the two facilities obtained by the Group as set out in paragraphs (3) and (4) above. Details of the facilities are set out in paragraphs (3) and (4). Under each of the said facilities, the Company guarantees the due and punctual payment of all amounts due under the facilities.

NOTICE OF ANNUAL GENERAL MEETING

NOTICE IS HEREBY GIVEN that the Annual General Meeting of Shareholders of the Company will be held at the Ballroom, 1st Floor, Harbour Plaza Hong Kong, 20 Tak Fung Street, Hunghom, Kowloon, Hong Kong on Wednesday, 10th May, 2000 at 2:20 p.m. for the following purposes:

1.   To receive and consider the audited Financial Statements, the Group Managing Director's Report and the Reports of the Directors and Auditors for the year ended 31st December, 1999.
     
2.   To declare a final dividend.
     
3.   To elect Directors.
     
4.   To appoint Auditors and authorise the Directors to fix their remuneration.
     
5.  

To consider and, if thought fit, pass with or without amendments, the following resolutions as Ordinary Resolutions:

ORDINARY RESOLUTIONS

(i)   "THAT a general mandate be and is hereby unconditionally given to the Directors to issue and dispose of additional shares not exceeding twenty per cent. of the existing issued share capital of the Company at the date of the said Resolution until the next Annual General Meeting."
(ii)   "THAT:-
(a)   subject to paragraph (b) below, the exercise by the Directors during the Relevant Period (as hereinafter defined) of all the powers of the Company to repurchase shares of HK$1.00 each in the capital of the Company in accordance with all applicable laws and the requirements of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited or of any other stock exchange as amended from time to time, be and is hereby generally and unconditionally approved;
(b)   the aggregate nominal amount of shares of the Company to be repurchased by the Company pursuant to the approval in paragraph (a) above shall not exceed ten per cent. of the aggregate nominal amount of the share capital of the Company in issue at the date of this Resolution, and the said approval shall be limited accordingly; and
(c)   for the purposes of this Resolution, "Relevant Period" means the period from the passing of this Resolution until whichever is the earliest of:-
(1)   the conclusion of the next Annual General Meeting of the Company;
(2)   the expiration of the period within which the next Annual General Meeting of the Company is required by law to be held; and
(3)   the date on which the authority set out in this Resolution is revoked or varied by an ordinary resolution of the shareholders in general meeting."
(iii)   "THAT the general mandate granted to the Directors to issue and dispose of additional shares pursuant to Ordinary Resolution (i) set out in the notice convening this meeting be and is hereby extended by the addition thereto of an amount representing the aggregate nominal amount of the share capital of the Company repurchased by the Company under the authority granted pursuant to Ordinary Resolution (ii) set out in the notice convening this meeting, provided that such amount shall not exceed ten per cent. of the aggregate nominal amount of the issued share capital of the Company at the date of the said Resolution."

By Order of the Board
Eirene Yeung
Company Secretary
Hong Kong, 16th March, 2000

Notes:   1.   Any Member entitled to attend and vote at the meeting is entitled to appoint proxy to attend and vote in his stead. A proxy need not be a Member of the Company.
    2.   The Register of Members will be closed from Wednesday, 3rd May, 2000 to Wednesday, 10th May, 2000, both days inclusive, during which period no transfer of shares will be effected. In order to qualify for the proposed final dividend, all share certificates with completed transfer forms either overleaf or separately, must be lodged with the Company's Branch Registrars, Central Registration Hong Kong Limited, 17th Floor, Hopewell Centre, 183 Queen's Road East, Hong Kong, not later than 4:00 p.m. on Tuesday, 2nd May, 2000.
    3.   Concerning item 5(i) above, the Directors wish to state that they have no immediate plans to issue any new shares of the Company. Approval is being sought from the Members as a general mandate for the purposes of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited ("the Listing Rules").
    4.   Concerning item 5(ii) above, the Directors are not aware of any consequences which may arise under the Takeover Code as a result of any repurchase of shares of the Company. The Explanatory Statement containing the information necessary to enable the shareholders to make an informed decision on whether to vote for or against the resolution to approve the repurchase by the Company of its own shares, as required by the Listing Rules, will be set out in a separate letter from the Company to be enclosed with the 1999 Annual Report.

CHEUNG KONG INFRASTRUCTURE HOLDINGS LIMITED
1999 RESULTS ANNOUNCEMENT
SUMMARY OF AUDITED RESULTS

for the year ended 31st December


HK$ million Note 1999 1998

Turnover 1 3,063 3,291

Operating profit 1,331 1,122
Share of results of associates 2,004 1,971
Share of results of jointly controlled entities   49 33

Profit before taxation 3,384 3,126
Taxation 2 (245) (273)


Profit after taxation 3,139 2,853
Minority interests 2 2

 
Profit attributable to shareholders 3,141 2,855
Dividends (947) (857)

Profit for the year retained 2,194 1,998

 
Earnings per share

3

$1.39 $1.27

 
Dividends per share      
          Interim   $0.13 $0.12
          Final   $0.29 $0.26

    $0.42 $0.38

Notes:

1.   Turnover
    Turnover represents net sales from infrastructure materials businesses and return on investments and interest income received and receivable from infrastructure project investments, net of withholding tax, where applicable.
     
2.   Taxation
   
HK$ million 1999 1998

Company and Subsidiaries
          Hong Kong profits tax - current 59 94
  - deferred 1 1

    60  95

Associates
          Hong Kong profits tax - current 182 178
  - deferred 3 -

  185 178

Total 245 273

     
   
(a)  Hong Kong profits tax is provided for at the rate of 16 per cent. (1998: 16 per cent.) on the estimated assessable profits for the year less available tax relief for losses brought forward.
(b) Tax deferred or accelerated by the effects of timing differences is provided, using the liability method, to the extent that it is probable that a liability or an asset will crystallise in the foreseeable future.
     
3.   Earnings per share
    The calculation of earnings per share is based on the profit attributable to shareholders of HK$3,141 million (1998: HK$2,855 million) and on 2,254,209,945 shares (1998: 2,254,209,945 shares) in issue during the year.


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