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HK Bourse: Results Announcement From Cosco International Holdings Ltd. -9-

23 Mar 2017 4:21 am
 
 
 
As at 31st December 2016, the Group's total assets decreased by 0.8% to HK$9,388,144,000 (2015: 
HK$9,467,315,000). Total liabilities decreased by 2% to HK$1,342,403,000 (2015: 
HK$1,367,691,000). The Group remained cautious about potential credit risks that surrounded the 
shipping services industry. All business units focused on internal management, intensified their efforts 
on receivables management, working capital management and costs control, and attained remarkable 
results. As a result, the Group recorded net operating cash inflow in recent years, and the net cash 
generated from operating activities for the year reached HK$400,963,000, out of which 
HK$270,093,000 was attributable to the decrease of trade receivables and other receivables. The 
Group's selling, administrative and general expenses decreased by 17% as compared to 2015. 
 
Net asset value attributable to shareholders was HK$7,702,161,000 (2015: HK$7,729,155,000). Net 
assets value per share was HK$5.02 (2015: HK$5.04), slightly decreased by 0.4% as compared to the 
end of 2015. 
 
As at 31st December 2016, the Group's total bank borrowings increased to HK$67,076,000 (2015: 
HK$36,062,000), which was mainly for the purpose of working capital requirement for general trading 
business. For the maturity profile, please refer to the table below. The Group's total cash on hand and 
non-committed unutilised standby banking facilities increased by 7% to HK$6,722,017,000 (2015: 
 
 
 
 
                                                  - 18 - 
HK$6,260,730,000) and increased by 4% to HK$1,256,418,000 (2015: HK$1,211,191,000) 
respectively. The gearing ratio, which represented total borrowings over total assets, was 0.7% (2015: 
0.4%). 
 
Debt Analysis 
 
 
                                                                                 31st December 2015 
                                                     31st December 2016 
                                                     HK$'000            %        HK$'000            % 
 
Classified by maturity: 
 -- repayable within one year                                                       36,062           100 
                                                          67,076        100 
 
 
Classified by type of loan: 
 -- unsecured                                                                       36,062           100 
                                                          67,076        100 
 
 
Classified by currency: 
 -- Renminbi                                                                        36,062           100 
                                                          67,076        100 
 
Both the bank borrowings and the gearing ratio remained low since the end of 2015. While the 
corporate headquarters provided funds to the operating units, the use of more costly bank borrowings to 
support working capital requirement was reduced. Furthermore, the Group continued its efforts in 
securing higher yields through exploring channels of deposits with major financial institutions. 
 
The Group had restricted bank deposits of HK$559,000 (2015: HK$597,000) as security for bank credit 
facilities and other purposes. 
 
In considering the Group's current level of cash and bank balances, funds generated internally from 
operations, the unutilised banking facilities available and a relatively low debt level, the Board is 
confident that the Group will have sufficient resources to meet its foreseeable capital expenditures and 
debt repayment requirements. 
 
TREASURY POLICY 
 
The Group operates principally in Hong Kong, China Mainland and Singapore, and is exposed to 
foreign exchange risk arising from various currency exposures, primarily with respect to United States 
dollars and Renminbi. Foreign exchange risk arises from commercial transactions, recognised assets 
and liabilities and net investments in foreign operations. The Group managed its foreign exchange 
exposure through matching its operating costs and borrowings against its receivables on sales. 
Nevertheless, the Group is still exposed to relevant foreign exchange risk in respect of Renminbi and 
United States dollars exchange rate fluctuations such that the Group's profit margin might be impacted 
accordingly. 
 
 
 
 
                                                 - 19 - 
The Group continued to monitor and adjust its debt portfolio from time to time in light of market 
conditions, the objective of which is to reduce potential interest rate risk exposure, improve debt 
structure and lower interest expenses. The Group also maintained the policy of financial supports to 
major business units to reduce the level of external borrowings. 
 
As at 31st December 2016, borrowings of the Group carried interests at rates calculated with reference 
 
to the benchmark interest rates announced by the People's Bank of China. The Group had used forward 
foreign exchange contracts to hedge its foreign currency exposure in 2016. 
 
As for cash management, the Group selects suitable cash investment instruments based on the balance 
among security, return and liquidity to ensure sufficient funds are available and an appropriate level of 
liquidity is maintained to meet all its obligations during different stages of the shipping cycle. 
 
The Group maintained a healthy cash position. As at 31st December 2016, the Group had net cash, 
which represented total cash and deposits net of short-term borrowings, of HK$6,654,941,000 (2015: 
HK$6,224,668,000). To enhance the Group's revenue and to maintain availability of cash at appropriate 
times to meet the Group's commitments and needs, the Group, on the basis of balancing risk, return 
and liquidity, invested in suitable and low-risk deposit products, including overnight deposits, term 
deposits and offshore fixed deposits. Cash and deposits of the Group were placed with highly reputable 
financial institutions both in Hong Kong, China Mainland, Singapore, Japan, Germany and the United 
States. During the year, the Group strengthened its funds management and had actively negotiated with 
banks to strive for higher deposit yields for the huge sum of liquid funds on hand. The Group achieved 
a 1.4% return on the Group's cash for the year, representing 40 basis points above 3-month US Dollar 
London Interbank Offered Rate as at the end of 2016. The Group had no financial instruments for 
interest rate hedging purposes. 
 
MAJOR CUSTOMERS AND SUPPLIERS 
 
For the year ended 31st December 2016, sales to the largest customer and aggregate sales to the five 
largest customers accounted for 39% and 67% respectively (2015: 39% and 47% respectively) of the 
total revenue of the Group, while purchases from the largest supplier and aggregate purchases from the 
five largest suppliers accounted for 68% and 74% respectively (2015: 64% and 75% respectively) of 
the total cost of sales of the Group. 
 
None of the Directors or their associates had interests in any of the five largest customers and 
suppliers. 
 
Save as disclosed above, to the knowledge of the Directors, none of the shareholders of the Company 
(the "Shareholders") owning more than 5% of the Company's shares had interests in the five largest 
customers and suppliers. 
 
 
 
 
                                                 - 20 - 
EMPLOYEES 
 
As at 31st December 2016, excluding joint ventures and associates, the Group had 829 (2015: 969) 
employees, of which 100 (2015: 102) were Hong Kong employees. During the year, total employee 
benefit expenses, including directors' emoluments and provident funds, were HK$292,999,000 (2015: 
HK$304,082,000). Employees were remunerated on the basis of their performance and experience. 
Remuneration packages include salary and a year-end discretionary bonus, which are determined with 
reference to market conditions and individual performance. During the year, all of the Hong Kong 
employees have participated in the Mandatory Provident Fund Scheme or recognised occupational 
retirement scheme. No share option scheme is in operation and no share options of the Company are 
outstanding. 
 
FINAL AND SPECIAL DIVIDENDS 
 
The Board has recommended the payment of a final dividend of 5.5 HK cents (2015: 9 HK cents) per 
share for the year ended 31st December 2016. Meanwhile, in order to celebrate the 20th anniversary of 
the Company's being a listed subsidiary of COSCO SHIPPING (Hong Kong) Co., Limited, the Board 
recommended the payment of special dividend of 5 HK cents per share (2015: Nil). The proposed final 
dividend and special dividend will be payable on 28th June 2017 to the shareholders whose names 
appear on the register of members of the Company (the "Register of Members") on 9th June 2017 
subject to the shareholders' approval in the annual general meeting of the Company to be held on 29th 
May 2017 (the "AGM"). The proposed final dividend and special dividend together with the interim 
dividend of 4 HK cents per share, total dividends per share for the year 2016 are 14.5 HK cents (2015: 
16 HK cents). 
 
CLOSURE OF REGISTER OF MEMBERS 
 
For the purpose of ascertaining shareholders' right to attend and vote at the AGM, the Register of 
Members will be closed from 24th May 2017 to 29th May 2017, both days inclusive, during which no 
transfer of shares of the Company will be registered. In order to be eligible to attend and vote at the 
AGM, all transfer documents accompanied by the relevant share certificate(s) must be lodged with the 
Company's branch share registrar and transfer office in Hong Kong, Tricor Abacus Limited (the 
"Branch Share Registrar") at Level 22, Hopewell Centre, 183 Queen's Road East, Hong Kong for 
 
 
 
 

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