CHEUNG KONG INFRASTRUCTURE HOLDINGS LIMITED
INTERIM REPORT FOR 1998

20 August, 1998 -- Hong Kong

INTERIM RESULTS

20 per cent. profit growth - Net profit up 20 per cent. to HK$1.231 billion - All three divisions recorded profit growth - Cash in hand HK$1.438 billion - Net debt to equity ratio 10 per cent. - Interim dividend up 20 per cent. to HK$0.12 per share

We are pleased to report that Cheung Kong Infrastructure Holdings Limited achieved satisfactory growth in the first half of 1998. Net profit for the half year ended 30th June, 1998 amounted to HK$1.231 billion, a 20 per cent. increase over that of last year. Earnings per share were HK$0.55. The results reflect continued growth from all of the three core businesses:

-	Infrastructure Materials + 5%
-	Energy + 30%
-	Transportation + 87%

The Board of Directors has declared an interim dividend for 1998 of HK$0.12 per share (HK$0.10 per share in 1997). The interim dividend will be paid on Tuesday, 13th October, 1998 to shareholders whose names appear on the Register of Members on Monday, 12th October, 1998.

The importance of having solid foundations is being highlighted in the face of the regional financial turmoil. Amid testing times, the strengths and diversity of our core businesses have sustained the Group's continued profit growth. CKI Materials produced higher earnings in the face of a depressed regional market. Our infrastructure projects in the Mainland have demonstrated satisfactory underlying growth. In a tight credit environment, the Group's strong recurring cash flow from operations and solid financial position provide the drivers for further growth.

Highlights in the first half are summarised as follows:

-	The Group's cash injection into PRC infrastructure projects reached HK$9.8 billion as at the end of June, 1998.
-	Our infrastructure projects in the Mainland are maturing, and showed strong profit contribution growth of 86 per cent. over the same period last year.
-	Profit contribution of Hongkong Electric Holdings Limited ("Hongkong Electric") increased from a year ago due to the contribution of a full period. Hongkong Electric's core business showed steady growth of 5.5 per cent. in the first half by benefiting from demand growth while profit contribution from its property development associate was minimal during the term.
-	CKI Materials posted another period of higher earnings on the back of continued cost reduction and productivity improvements. We have benefited from a broad-based decline in import and raw material prices, and enjoyed further improvements in productivity.
-	Our financial position remains strong. Recurring cash flow from the core businesses has not been affected by the regional financial turmoil, and currently exceeds HK$2.4 billion per annum. As at 30th June, 1998, the Group's net debt to equity ratio was 10 per cent., with cash of HK$1.438 billion and debt of HK$3.3 billion.

PROSPECTS

The infrastructure business in Hong Kong and the Mainland has been relatively unaffected by the continuing impact of the regional financial turmoil. The PRC infrastructure sector is set to remain active as the government is increasing infrastructure spending across the country through the banking and capital markets. As the Hong Kong economy is going through an adjustment phase, the government has strengthened its commitment to speed up infrastructure spending.

The Group's first half results reflect the resilience of our operations to the impact of the turmoil. As the underlying demand for electricity remains strong, Hongkong Electric's growth prospects will be steady. CKI Materials continues to enjoy leading market positions, and will benefit from increased public and infrastructure spending in Hong Kong. Our infrastructure projects in the Mainland are positioned to generate further growth from the underlying performance of the existing projects and the commencement of new projects.

We believe the Group's forward momentum can be sustained through the internal growth of the core operations. With a strong financial position, the Group is well positioned to capture suitable investment opportunities arising from the turmoil by applying a disciplined, prudent approach to ensure superior returns.

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, 20th August, 1998

PURCHASE, SALE OR REDEMPTION OF SHARES

The Company has not redeemed any of its shares during the six months ended 30th June, 1998. Neither the Company nor any of its subsidiaries has purchased or sold any of the Company's shares during this period.

MILLENNIUM ISSUE

The Group's Year 2000 compliance programme involves testing and assessing all major systems for their Year 2000 compliance. Suppliers and service providers have been asked to confirm that their products and services are Year 2000 compliant. The Group is also assessing its suppliers' commitment to become Year 2000 compliant.

The Group is aiming for its major systems to be Year 2000 compliant by mid 1999. The overall progress of the programme is on schedule.

More details on the Group's Year 2000 compliance programme will be set out in the 1998 Interim Report.

CONSOLIDATED PROFIT AND LOSS ACCOUNT for the six months ended 30th June 1998 The unaudited consolidated profit and loss account for the six months ended 30th June 1998 and the comparisons with last year are set out below:
	Year ended 31st December (audited)       Six months ended 30th June (unaudited)   1997     HK$ million Note 1998 1997   3,346     Turnover 1 1,711 1,599   1,061     Operating profit 572 532   1,635     Share of results of associated companies 754 606   2,696     Profit before taxation 1,326 1,138   (283)     Taxation 2 (95) (113)   2,413     Profit after taxation 1,231 1,025   (2)     Minority interests - -     2,411     Profit attributable to shareholders 1,231 1,025   (721)     Dividends (271) (225)                 1,690     Profit for the period retained 960 800     HK$1.15     Earnings per share 3 HK$0.55 HK$0.53   HK$0.32     Dividends per share   HK$0.12 HK$0.10
Notes:
1.	Turnover Turnover represents net sales from infrastructure materials businesses and return on investments and interest income received and receivable from joint ventures established in the Mainland, net of withholding tax, where applicable.
2.	Taxation Year ended 31st December       Six months ended 30th June   1997     HK$ million   1998 1997         Company and Subsidiaries         142               Hong Kong profits tax - current   26 63   2       - deferred   (2) -   144          24 63         Associated companies         139               Hong Kong profits tax - current   71 50   283     Total   95 113
	(a)	Hong Kong profits tax is provided for at the rate of 16.0 per cent. (1997: 16.5 per cent.) on the estimated assessable profits for the period less available tax relief for losses brought forward.
	(b)	Tax deferred or accelerated by the effects of timing differences is provided, using the liability method, to the extent that it is probable that a liability or an asset will crystallise in the foreseeable future.
3.	Earnings per share The calculation of earnings per share is based on the profit attributable to shareholders of HK$1,231 million (1997: HK$1,025 million) and on 2,254,209,945 shares (1997: weighted average of 1,921,269,192 shares) in issue during the period.
CHEUNG KONG INFRASTRUCTURE HOLDINGS LIMITED NOTICE OF PAYMENT OF INTERIM DIVIDEND, 1998 The Board of Directors of Cheung Kong Infrastructure Holdings Limited announces that the Group's unaudited consolidated profit attributable to shareholders for the six months ended 30th June, 1998 amounted to HK$1.231 billion which represents earnings of HK$0.55 per share. The Directors have resolved to pay an interim dividend for 1998 of HK$0.12 per share to shareholders whose names appear on the Register of Members of the Company on Monday, 12th October, 1998. The dividend will be paid on Tuesday, 13th October, 1998. The Register of Members of the Company will be closed from Monday, 5th October, 1998 to Monday, 12th October, 1998, both days inclusive, during which period no transfer of shares will be effected. In order to qualify for the interim dividend, all share certificates with completed transfer forms either overleaf or separately, must be lodged with the Company's Branch Share Registrars, Central Registration Hong Kong Limited, Hopewell Centre, 17th Floor, 183 Queen's Road East, Hong Kong, not later than 4:00 p.m. on Wednesday, 30th September, 1998.
By Order of the Board Eirene Yeung Secretary
Hong Kong, 20th August, 1998

 

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