CKI HOLDINGS(HK:01038)2022-08-17 08:49Financial Performance - For the six months ended June 30, 2022, the profit attributable to shareholders was HK$4,409 million, representing a 46% year-on-year increase[32]. - Earnings per share for the period were HK$1.75, compared to HK$1.20 in the previous year[26]. - The interim dividend declared is HK$0.70 per share, up from HK$0.69 per share in the previous year[33]. - Operating profit across various markets and business sectors grew by 6% in local currencies during the first half of 2022[32]. - Cash flow from operations for the period was HK$4,200 million, consistent with the record set in the previous year[32]. - The profit contribution from Power Assets was HK$1,032 million, an increase of 14% compared to the same period last year[34]. - The profit contribution from the UK infrastructure business was HKD 16.79 billion, an increase of 219% compared to the same period last year, primarily due to a non-cash deferred tax expense recognized in the previous year[35]. - The Australian infrastructure business reported a profit contribution of HKD 1.04 billion, up 9% year-on-year, with strong performances from SA Power Networks, Victoria Power Networks, and United Energy[37]. - The profit contribution from the Canadian infrastructure business was HKD 306 million, a 23% increase year-on-year, driven by strong performances from Reliance Home Comfort and Park'N Fly[39]. - The profit contribution from the New Zealand infrastructure business decreased by 16% to HKD 76 million, attributed to currency depreciation and rising operational costs[40]. - The profit contribution from the European infrastructure business was HKD 429 million, a decline of 3%, but an increase of 5% when measured in local currency[38]. - The Hong Kong and mainland China business reported a profit contribution of HKD 117 million, down 47% due to low traffic volumes on toll roads and weak performance in the cement business[41]. - The company reported a revenue of HKD 20,079 million for the six months ended June 30, 2022, a decrease of 0.9% compared to HKD 20,266 million in 2021[71]. - The profit before tax increased to HKD 4,685 million, representing a 40.8% increase from HKD 3,328 million in the previous year[71]. - The net profit for the period was HKD 4,632 million, up 42.6% from HKD 3,246 million in 2021[73]. - The company recorded a foreign exchange loss of HKD 5,066 million, contrasting with a gain of HKD 1,786 million in the previous year[73]. - Total comprehensive income for the period was HKD 7,252 million, down from HKD 8,340 million in the previous year[73]. Financial Position - The group maintained a strong financial position with cash holdings of HKD 9.6 billion and a net debt to total capital ratio of 12.9% as of June 30, 2022[42]. - As of June 30, 2022, the total cash and deposits of the group amounted to HKD 95.91 billion, while total loans were HKD 286.21 billion, including HKD 26.73 billion in HKD loans and HKD 259.48 billion in foreign currency loans[48]. - The net debt to total net capital ratio was 12.9%, calculated based on net debt of HKD 19.03 billion and total net capital of HKD 147.35 billion, a decrease from 14.7% at the end of 2021, primarily due to cash flow from investment activities[49]. - The total equity attributable to shareholders increased to HKD 118,309 million as of June 30, 2022, compared to HKD 115,834 million at the end of 2021, indicating a positive trend in shareholder value[76]. - The total current assets increased to HKD 13,258 million in 2022 from HKD 10,255 million in 2021, reflecting improved liquidity[74]. - The company’s non-current liabilities rose to HKD 26,491 million as of June 30, 2022, compared to HKD 20,489 million at the end of 2021, indicating increased leverage[74]. - The cash and cash equivalents increased to HKD 9,591 million as of June 30, 2022, from HKD 8,131 million in 2021, showing improved cash flow management[79]. Investment and Acquisition Activities - The company is actively pursuing new investment opportunities in renewable energy and carbon capture projects, with government support for initiatives like hydrogen energy[43][44]. - The company announced an agreement to acquire a 25% stake in Northumbrian Water for approximately GBP 867 million (about HKD 8 billion), increasing its economic interest to 39%[45]. - The company aims to leverage its strong financial position to capitalize on emerging acquisition opportunities and expand its business portfolio while maintaining prudent financial management[47]. - The company has previously engaged in mergers and acquisitions and may continue to do so, but faces intense competition and potential undisclosed issues with target companies[150]. - Regulatory approvals for mergers and acquisitions may be complex and not guaranteed, potentially hindering successful integration and realization of synergies[151]. Corporate Governance and Leadership - The company has maintained a strong leadership team with extensive experience in finance and risk management, including executives with nearly 40 years of relevant experience[57][58][59][60][61][62]. - The company emphasizes corporate governance and compliance, with board members participating in various committees to oversee financial and operational integrity[61][62]. - The leadership team includes members with advanced degrees in business and finance, enhancing the company's strategic decision-making capabilities[58][59][60][61][62]. - The company has a diverse board composition, including independent non-executive directors with extensive backgrounds in finance and management[61][62]. - The company has established an internal audit mechanism to evaluate risk management and internal control systems, focusing on financial, operational, and compliance monitoring[121]. - The Audit Committee, composed of four independent non-executive directors, reviewed the interim report for the six months ending June 30, 2022[122]. - The company has adopted a whistleblowing policy to handle potential misconduct and has implemented anti-fraud and anti-bribery policies[115]. - The company has established a Sustainability Committee to oversee sustainable development measures and assess related risks[127]. Market and Economic Risks - The company continues to face challenges from rising interest rates, high inflation, and geopolitical tensions, yet maintains a resilient performance[32]. - The ongoing COVID-19 pandemic continues to disrupt international trade and supply chains, contributing to economic uncertainty[132]. - The company faces risks related to economic conditions, interest rates, and market competition that may adversely affect its financial performance[134][137]. - The group is exposed to foreign exchange risks as its operations span multiple countries, with potential adverse effects on financial performance due to currency fluctuations[142]. - The group faces significant risks in the infrastructure market due to regulatory compliance and potential penalties for violations, which could impact returns on infrastructure investments[138]. - Supply chain disruptions caused by COVID-19 and global conflicts have led to increased costs and unpredictable delivery times, particularly affecting local operations[146]. - The potential impact of Brexit on the group's operations includes uncertainties in labor supply, supply chains, and exchange rates, which could affect profitability[147]. - Labor market changes, including rising inflation and low unemployment, create uncertainty in labor supply and costs for the group[145]. Shareholding Structure - As of June 30, 2022, the total shareholding of Li Ka-Shing in Cheung Kong Holdings is approximately 1,165,421,760 shares, representing 30.39% of the total equity[101]. - The company’s shareholding structure indicates significant control by Li Ka-Shing and associated trusts, reflecting a concentrated ownership model[104]. - The total shareholding of CK Infrastructure Holdings Limited is 1,906,681,945 shares, accounting for approximately 75.67% of the total equity[112]. - The shareholding structure indicates a high concentration of ownership among a few entities, which may impact corporate governance and decision-making[112]. - The overall voting power and control within the company are significantly influenced by the trust structures established by Li Ka-Shing and his family[107]. Compliance and Regulatory Environment - The company must comply with data protection laws, and failure to do so could result in regulatory actions and significant financial repercussions[154]. - The group cannot assure that future natural disasters will not severely damage infrastructure projects or assets, leading to adverse effects on business and financial performance[161]. - The company is subject to securities and futures regulations regarding the disclosure of shareholdings and interests[111]. - Increased scrutiny from political and regulatory bodies regarding privatization could lead to significant operational challenges for the company[153]. - The company has a policy in place to ensure compliance with securities trading standards for directors[119].