Cheung Kong Infrastructure announces 1997 results

To our shareholders

We are pleased to report that Cheung Kong Infrastructure Holdings Limited achieved another year of satisfactory growth in 1997. Net profit was HK$2,411 million, 172 per cent. over that of last year. Earnings per share were HK$1.15, up 53 per cent. Solid growth in profit contribution was recorded in all of the three core businesses of Infrastructure Materials, Energy and Transportation:

-	Infrastructure Materials + 16%
-	Energy + 1,091%
-	Transportation + 90%

The Board of Directors is recommending a final dividend of HK$0.22 per share. Together with the interim dividend of HK$0.10 per share, this will bring the total dividend for the year to HK$0.32 per share, a 100 per cent. increase from the HK$0.16 per share paid in respect of last year. The proposed dividend will be paid on 15th May, 1998 following approval at the Annual General Meeting, to shareholders whose names appear on the register of members on 14th May, 1998.

Both our PRC and Hong Kong businesses enjoyed a good year in 1997. CKI Materials enjoyed another record year, and Hongkong Electric Holdings Limited ("Hongkong Electric") continued its steady growth. In last year's annual report, we identified that one of the Company's goals is to capture more opportunities in China's rapidly growing infrastructure sector. We are glad to report that tangible results were achieved in China during the past year which will serve as solid foundations for future growth. Let us take a look at our major achievements in 1997:

- We maintained the momentum of our infrastructure investment in China. As at end 1997, the number of PRC infrastructure projects increased to 66. During 1997, the Group committed to invest HK$4.3 billion in PRC infrastructure projects, bringing the total amount of committed investment to HK$10.9 billion.

- We are one of the largest investors in the infrastructure sectors of Hong Kong and mainland China. In addition to Hong Kong, our projects now span seven connecting provinces in the Mainland from Jilin Province in the north to Guangdong Province in the south. We have interests in over 700 km of toll roads and 5,965 MW of power plants in Hong Kong and mainland China.

- CKI Materials maintained market leadership in Hong Kong, and both the cement and concrete operations achieved record profits.

- We acquired the controlling interest in Hongkong Electric. As a result, our power portfolio has expanded significantly. More importantly, our financing capacity has been enhanced with a larger capital base and quality recurring income.

- With a net debt to equity ratio of 3.8 per cent. and cash on hand of HK$2.4 billion as at the end of 1997, we have the financial capacity and flexibility to propel our growth plans and to capture strategic opportunities.

Also during the year, the Company was included as a constituent stock in the Hang Seng Index about one year after listing on the Hong Kong Stock Exchange, and received a credit rating of "A-" from Standard & Poor's.

Prospects

The regional financial turmoil has had a limited impact on the infrastructure business in Hong Kong and mainland China, the two principal markets in which we operate. We are confident about the business prospects of these two markets, in particular that the governments of Hong Kong and mainland China have recently announced plans to significantly increase infrastructure spending. Higher infrastructure spending in Hong Kong will benefit CKI Materials, and possibly present other investment opportunities. Infrastructure development remains a priority sector for the PRC government. In the face of increasing demand for infrastructure investment, private participation will continue to be an important source of funding.

The key pillars of our solid foundations are in place. The performance of the businesses of Hongkong Electric and CKI Materials will continue to provide the stability and cash flow, while the opportunities in the infrastructure business in Hong Kong and mainland China will underpin our growth prospects. We are optimistic that our existing businesses and carefully-selected growth opportunities will continue to generate quality earnings and cash flow.

I would like to thank the Board of Directors and all employees for their support and hard work.

Li Tzar Kuoi, Victor, Chairman

Hong Kong, 19th March, 1998

HK$ million	Note	1997	1996
Turnover		3,346	3,041
Operating profit		1,061	971
Share of results of associated companies		1,635	-
Profit before taxation		2,696	971
Taxation	1	(283)	(87)
Profit after taxation		2,413	884
Minority interests		(2)	2
Profit attributable to shareholders		2,411	886
Dividends		(721)	(361)
Profit for the year retained		1,690	525
Earnings per share	2	$1.15	$0.75
Dividends per share
Interim		$0.10	-
Final		$0.22	$0.16
		$0.32	$0.16

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Notes

1. Taxation

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HK$ million		1997	1996
Company and Subsidiaries
Hong Kong profits tax	- current	142	91
	- deferred	2	(5)
PRC income tax		-	1
		144	87
Associated companies
Hong Kong profits tax	- current	139	-
Total		283	87

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(a) Hong Kong profits tax is provided for at the rate of 16.5 per cent. (1996: 16.5 per cent.) on the estimated assessable profits for the year less available tax relief for losses brought forward.

(b) PRC income tax was charged on the estimated assessable profits of operating activities in the mainland China, calculated at rates applicable.

(c) Tax deferred or accelerated by the effects of timing differences is provided, using liability method, to the extent that it is probable that a liability or an asset will crystallise in the foreseeable future.

2. Earnings per share

The calculation of earnings per share is based on the profit attributable to shareholders of HK$2,411 million (1996: HK$886 million) and on the weighted average number of 2,089,107,818 shares (1996: 1,184,977,077 shares) in issue during the year.

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