Annual Report 2019

FAR EAST CONSORTIUM INTERNATIONAL LIMITED 36 MANAGEMENT DISCUSSION AND ANALYSIS 2. Liquidity, financial resources and net gearing The following table sets out the Group’s bank and cash balances, investment securities (which are considered as cash equivalent items due to their easily-monetizable nature), bank loans and borrowings and equity as at 31 March 2019. As at 31 March 2019 As at 31 March 2018 HK$ million HK$ million Bank loans, notes and bonds Due within 1 year (i) 4,243 6,199 Due 1–2 years 4,158 1,593 Due 2–5 years 12,799 7,273 Due more than 5 years 167 1,307 Total bank loans, notes and bonds 21,367 16,372 Investment securities 4,422 3,520 Bank and cash balances (ii) 2,648 4,591 Liquidity position 7,070 8,111 Net debts (iii) 14,297 8,261 Carrying amount of the total equity 13,632 13,144 Add: hotel revaluation surplus 17,838 15,593 Total adjusted equity 31,470 28,737 Net gearing ratio (net debts to total adjusted equity) 45.4% 28.7% Notes: (i) Include an amount of approximately HK$1,044 million which is reflected as liabilities due within one year even though such sum is not repayable within one year, as the relevant banks and/or financial institutions have discretionary rights to demand immediate repayment. (ii) The amount represents total restricted bank deposits, deposit in a financial institution, and bank balances and cash. (iii) Net debts represent total bank loans, notes and bonds less investment securities, bank and cash balances. To better manage the Group’s liquidity position, the Group’s treasury operation allocates a portion of its cash position to marketable investment securities. Investment securities shown on the consolidated statement of financial position represent primarily fixed income securities and investments in fixed income funds, the investment in the listed shares of The Star which the Group intends to hold for the long term, as well as the investment in the mortgage portfolio managed by BCG. The liquidity position of the Group as at 31 March 2019 was approximately HK$7.1 billion. Adjusting for the unrecognized hotel revaluation surplus of approximately HK$17,838 million, which is based on independent valuation assessed as at 31 March 2019, the Group’s total consolidated equity as at 31 March 2019 was approximately HK$31,470 million. The net gearing ratio of the Group was at 45.4% as at 31 March 2019, compared to 28.7% as at 31 March 2018. Such rise in net gearing ratio was primarily due to capital expenditure for replenishment of development pipeline and new investments made during FY2019. The Group will continue to adopt a prudent approach to capital management by maintaining its net gearing ratio at a healthy level.

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