Annual Report 2023

Management Discussion and Analysis CHINA MERCHANTS PORT HOLDINGS COMPANY LIMITED 22 Total assets of the Group amounted to HK$172,314 million as at 31 December 2023, which remained basically the same as compared with the beginning of the year. The total liabilities of the Group increased by 3.8% from HK$49,579 million as at 31 December 2022 to HK$51,469 million as at 31 December 2023. As at 31 December 2023, net assets attributable to equity holders of the Company was HK$102,155 million, increased by 5.3% as compared to that as at 31 December 2022, mainly due to the increase in the retained earnings. The financial statements of the Group’s foreign investments are in Renminbi, Euro, United States dollar, Brazilian Real or other currencies and any exchange difference so arising from retranslation of these financial statements was recognized in the reserve of the Group. The Group has developed a sound foreign exchange rate risk management mechanism to prevent the impact arising from foreign exchange rate fluctuation on the Group, and thus maintaining foreign exchange risk at a manageable level. In general, the Group’s ports operation continued to yield stable cash inflow. For the year ended 31 December 2023, the Group’s net cash inflow from operating activities amounted to HK$7,238 million, representing a decrease of 17.6% year-on-year, among which, the receipt of cash dividends from associates and joint ventures were HK$2,034 million, a decrease of 21.5% year-on-year. Due to the decrease in capital expenditure on associates and joint ventures year-on- year and receipt of repayment of shareholder’s loan from an associate during the year, the Group’s cash flow from investing activities changed from a net outflow of HK$3,824 million for last year to a net inflow of HK$2,569 million for the year. At the same time, the Group repaid perpetual capital securities of US$600 million and notes payable of US$900 million during the year, the net cash outflow from financing activities increased from HK$4,904 million for last year to HK$7,108 million for the year. LIQUIDITY AND TREASURY POLICIES As at 31 December 2023, the Group had approximately HK$12,331 million in cash and bank balances, 10.1% of which was denominated in Hong Kong dollar, 28.4% in United States dollar, 49.3% in Renminbi, 5.8% in Euro, 2.5% in Brazilian Real and 3.9% in other currencies. The Group mainly derived its funding sources from its operating activities related to ports operation, bonded logistics operation and property investment, and investment returns received from associates and joint ventures, which amounted to HK$7,238 million in total. During the year, the Group incurred capital expenditure amounting to HK$1,873 million, while the Group adopted a prudent financial policy and maintained a sound financial position. In addition, as a significant portion of the Group’s bank loans were medium-term to long-term loans, the Group, supported by adequate undrawn bilateral bank facilities of HK$19,418 million, does not anticipate any difficulty in refinancing its short-term loans while the pressure for repaying the short-term loans is limited. SHARE CAPITAL AND FINANCIAL RESOURCES In October 2020, a wholly-owned subsidiary of the Company, issued US$600 million and US$200 million guaranteed perpetual capital securities with issuance interest rates of 3.50% and 3.875%, respectively (“ Perpetual Capital Securities ”), to provide the Group’s working capital. The Perpetual Capital Securities have no fixed maturity and are redeemable at the Company’s option on 9 October 2023 and 9 October 2025 or any distributions payment date at their principal amounts. On 10 October 2023, the Company exercised its right to redeem and repay US$600 million at 3.50% of Perpetual Capital Securities. The Stock Exchange of Hong Kong Limited (the “ HKSE ”) approved the withdrawal of the listing of those Perpetual Capital Securities, effective from 18 October 2023. As at 31 December 2023, the Company had 4,198,009,186 shares in issue. During the year, the Company issued 194,626,140 shares under the Company’s scrip dividend scheme.