CHEUNG KONG INFRASTRUCTURE HOLDINGS LIMITED
ANNOUNCES 1998 RESULTS

THE CHAIRMAN'S LETTER

Solid Prospects Solid Growth

TO OUR SHAREHOLDERS

We are pleased to report that Cheung Kong Infrastructure Holdings Limited ("CKI") reported satisfactory growth in 1998. Net profit for the year ended 31st December, 1998 reached HK$2.855 billion, 18 per cent. over that of last year. Earnings per share were HK$1.27, up 10 per cent.

The Board of Directors is recommending a final dividend of HK$0.26 per share. Together with the interim dividend of HK$0.12 per share, this will bring the total dividend for the year to HK$0.38 per share, a 19 per cent. increase from the HK$0.32 per share paid in respect of last year. The proposed dividend will be paid on 14th May, 1999 following approval at the Annual General Meeting, to shareholders whose names appear on the Register of Members on 13th May, 1999.

While the general economic slowdown and tight credit situation in 1998 have put pressure on many companies, this environment has also presented opportunities to those with a solid foundation and financial position to gain a stronger market position. In the case of CKI:

1.		Solid growth in profit contribution was recorded in all of the three core businesses: Infrastructure Materials +8% Energy +22% Transportation +63%
2.		Our infrastructure projects in the Mainland reported an increase of 58 per cent. in profit contribution. Our PRC portfolio is entering a mature phase, with the majority of the projects contributing in 1998.
3.		Hongkong Electric Holdings Limited ("Hongkong Electric") reported a net profit increase of 5.5 per cent., on the back of a 6.8 per cent. increase in electricity sales.
4.		CKI Materials produced satisfactory results in a challenging environment. Despite keen market competition, our continued progress in cost control and improved productivity combined to sustain higher profits.

Our financial position has remained solid. As at the end of 1998, the Group's net debt to equity ratio was 8.7 per cent., with cash on hand of HK$1.331 billion and debt of HK$3.1 billion.

PROSPECTS

China's economic growth in the past year has been, to a large extent, driven by infrastructure investment. Through the domestic banking and capital markets, 1998 saw a continuing increase in funding for infrastructure development, which has received the priority of the various levels of PRC government. The Group can only benefit from a more robust infrastructure market which is still in the high growth stage of development. The commitment to infrastructure spending can also be witnessed in Hong Kong where the government has affirmed its intention to speed up the investment process.

We are looking forward to the new year with confidence. Our core businesses, which have been constantly tested by the difficult economic conditions, have delivered solid results. With the completion of major commercial buildings, Hongkong Electric's growth prospects will continue to be steady. Given strong market positions and an efficient cost structure, CKI Materials is well positioned to benefit from the increased spending in public housing and infrastructure in Hong Kong. With the majority of projects becoming operational, our infrastructure portfolio in China has matured, and is poised to report continued growth. We are confident that the internal growth of all of the core businesses will continue.

Our financial strengths are building up at a time when asset values across the region have been deflating. Many attractive opportunities in the infrastructure sector have arisen in the wake of the regional financial turmoil. We will rigorously pursue quality projects by applying a disciplined approach.

In a particularly challenging environment, I would like to thank the Board of Directors for its sound guidance and all employees for their hard work and dedication.

Li Tzar Kuoi, Victor
Chairman

Hong Kong, 18th March, 1999

 

PURCHASE, SALE OR REDEMPTION OF SHARES

The Company has not redeemed any of its shares during the year. Neither the Company nor any of its subsidiaries has purchased or sold any of the Company's shares during the year.

MILLENNIUM ISSUE

The Group's Year 2000 compliance programme involves testing and assessing all major systems for their Year 2000 compliance. Third parties including suppliers, service providers and business partners have been asked to confirm their status and progress of Year 2000 compliance.

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 Annual Report.

 

CHEUNG KONG INFRASTRUCTURE HOLDINGS LIMITED
1998 RESULTS ANNOUNCEMENT
SUMMARY OF AUDITED RESULTS

for the year ended 31st December

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HK$ million	Notes	1998	1997
Turnover	1	3,291	3,314
Operating profit		1,122	1,059
Share of results of associated     companies		1,971	1,635
Share of results of jointly     controlled entities	2	33	2
Profit before taxation		3,126	2,696
Taxation	3	(273)	(283)
Profit after taxation		2,853	2,413
Minority interests		2	(2)
Profit attributable to     shareholders		2,855	2,411
Dividends		(857)	(721)
Profit for the year retained		1,998	1,690
Earnings per share	4	$1.27	$1.15
Dividends per share
Interim		$0.12	$0.10
Final		$0.26	$0.22
		$0.38	$0.32

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Notes:

1.		Turnover
		Turnover represents net sales from infrastructure materials businesses and return on investments and interest income received and receivable from other infrastructure investments in the Mainland, net of withholding tax, where applicable.
2.		Share of Results of Jointly Controlled Entities
		The Group's share of results of jointly controlled entities are accounted for in accordance with the Statement of Standard Accounting Practice No.21 "Accounting for Interests in Joint Ventures" issued by the Hong Kong Society of Accountants which become effective from 1st January, 1998. The adoption has no effect on the Group's profit attributable to shareholders or reserves. However, the Group's share of results of jointly controlled entities are required to be disclosed separately and certain comparative figures have been reclassified to conform with the current year's presentation.
3.		Taxation
		HK$ million 1998 1997 Company and Subsidiaries           Hong Kong profits tax - current 94 142   - deferred 1 2     95  144 Associated companies           Hong Kong profits tax - current 178 139 Total 273 283
		(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 year 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.
4.		Earnings per share
		The calculation of earnings per share is based on the profit attributable to shareholders of HK$2,855 million (1997: HK$2,411 million) and on 2,254,209,945 shares (1997: weighted average of 2,089,107,818 shares) in issue during the year.

 

NOTICE OF ANNUAL GENERAL MEETING

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NOTICE IS HEREBY GIVEN that the Annual General Meeting of Shareholders of the Company will be held at the Ballroom, 1st Floor, Harbour Plaza Hong Kong, 20 Tak Fung Street, Hunghom, Kowloon, Hong Kong on Thursday, 13th May, 1999 at 12:15 p.m. for the following purposes:

1.		To receive and consider the audited Financial Statements, the Group Managing Director's Report and the Reports of the Directors and Auditors for the year ended 31st December, 1998.
2.		To declare a final dividend.
3.		To elect Directors.
4.		To appoint Auditors and authorise the Directors to fix their remuneration.
5.		To consider and, if thought fit, pass with or without amendments, the following resolutions as Ordinary Resolutions:
ORDINARY RESOLUTIONS
		(i)   "THAT a general mandate be and is hereby unconditionally given to the Directors to issue and dispose of additional shares not exceeding twenty per cent. of the existing issued share capital of the Company at the date of the said Resolution until the next Annual General Meeting." (ii)   "THAT:-     (a)    subject to paragraph (b) below, the exercise by the Directors during the Relevant Period (as hereinafter defined) of all the powers of the Company to repurchase shares of HK$1.00 each in the capital of the Company in accordance with all applicable laws and the requirements of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited or of any other stock exchange as amended from time to time, be and is hereby generally and unconditionally approved; (b)   the aggregate nominal amount of shares of the Company to be repurchased by the Company pursuant to the approval in paragraph (a) above shall not exceed ten per cent. of the aggregate nominal amount of the share capital of the Company in issue at the date of this Resolution, and the said approval shall be limited accordingly; and (c)   for the purposes of this Resolution, "Relevant Period" means the period from the passing of this Resolution until whichever is the earliest of:-     (1)   the conclusion of the next Annual General Meeting of the Company; (2)   the expiration of the period within which the next Annual General Meeting of the Company is required by law to be held; and (3)   the date on which the authority set out in this Resolution is revoked or varied by an ordinary resolution of the shareholders in general meeting." (iii)   "THAT the general mandate granted to the Directors to issue and dispose of additional shares pursuant to Ordinary Resolution (i) set out in the notice convening this meeting be and is hereby extended by the addition thereto of an amount representing the aggregate nominal amount of the share capital of the Company repurchased by the Company under the authority granted pursuant to Ordinary Resolution (ii) set out in the notice convening this meeting, provided that such amount shall not exceed ten per cent. of the aggregate nominal amount of the issued share capital of the Company at the date of the said Resolution."
By Order of the Board Eirene Yeung Company Secretary Hong Kong, 18th March, 1999
Notes:   1.   Any Member entitled to attend and vote at the meeting is entitled to appoint proxy to attend and vote in his stead. A proxy need not be a Member of the Company.     2.   The Register of Members will be closed from Thursday, 6th May, 1999 to Thursday, 13th May, 1999, both days inclusive, during which period no transfer of shares will be effected. In order to qualify for the proposed final dividend, all share certificates with completed transfer forms either overleaf or separately, must be lodged with the Company's Branch 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, 5th May, 1999.     3.   Concerning item 5(i) above, the Directors wish to state that they have no immediate plans to issue any new shares of the Company. Approval is being sought from the Members as a general mandate for the purposes of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited ("the Listing Rules").     4.   Concerning item 5(ii) above, the Directors are not aware of any consequences which may arise under the Takeover Code as a result of any repurchase of shares of the Company. The Explanatory Statement containing the information necessary to enable the shareholders to make an informed decision on whether to vote for or against the resolution to approve the repurchase by the Company of its own shares, as required by the Listing Rules, will be set out in a separate letter from the Company to be enclosed with the 1998 Annual Report.

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