The Group monitors its risk to a shortage of funds based on the maturity of its financial instruments, financial assets and liabilities and projected cash flows from operations.
The Group’s objective is to maintain a balance between continuity of funding and flexibility through the use of trade and bills payables and interest-bearing bank loans. As at 31 December 2013, the Group had trade and bills payables amounting to RMB18,077,489,000 (31 December 2012: RMB18,016,746,000). In addition, as at 31 December 2013, the Group had interest-bearing bank loans amounting to RMB2,683,171,000 (31 December 2012: RMB2,434,374,000) which will mature within 12 months. The management has reviewed the Group’s working capital and capital expenditure requirements and determined that the Group has no significant liquidity risk.
The table below summarises the maturity profile of the Group’s financial liabilities at the end of the reporting period, based on contractual undiscounted payments.
31 December 2013
NOTES TO FINANCIAL STATEMENTS (C ontinued )
39. financiaL RiSK management obJectiveS and PoLicieS (continued) Liquidity risk (continued)
group
within 1 year total
Rmb’000 Rmb’000
2013
Interest-bearing bank loans and interest payables 2,687,438 2,687,438
Trade and bills payables 18,077,489 18,077,489
Financial liabilities included in customers’ deposits and
other payables 545,367 545,367
Due to related companies 464,142 464,142
21,774,436 21,774,436
Within 1 year 1 to 2 years Total
RMB’000 RMB’000 RMB’000
(Restated) (Restated)
2012
Interest-bearing bank loans and
interest payables 2,441,654 – 2,441,654
Trade and bills payables 18,016,746 – 18,016,746
Financial liabilities included in customers’
deposits and other payables 855,588 – 855,588
Due to related companies 234,695 – 234,695
Cross currency swap – 498,691 498,691
21,548,683 498,691 22,047,374
31 December 2013
NOTES
TO FINANCIAL STATEMENTS (C ontinued )
39. financiaL RiSK management obJectiveS and PoLicieS (continued) Liquidity risk (continued)
company
within 1 year total
Rmb’000 Rmb’000
2013
Interest-bearing bank loans and interest payables 2,687,438 2,687,438
Amounts due to subsidiaries 659,178 659,178
3,346,616 3,346,616
Within 1 year 1 to 2 years Total
RMB’000 RMB’000 RMB’000
2012
Interest-bearing bank loans and interest
payables 2,441,654 – 2,441,654
Cross currency swap – 498,691 498,691
Amounts due to subsidiaries 679,976 – 679,976
3,121,630 498,691 3,620,321
31 December 2013
NOTES TO FINANCIAL STATEMENTS (C ontinued )
39. financiaL RiSK management obJectiveS and PoLicieS (continued) equity price risk
Equity price risk is the risk that the fair values of equity securities decrease as a result of changes in the levels of equity indices and the value of individual securities. The Group is exposed to equity price risk arising from other investments (note 16) as at 31 December 2013. The Group’s listed investments are valued at market price as at 31 December 2013 and 31 December 2012.
The market equity index for the following stock exchange, at the close of business of the nearest trading day in the year to the end of the reporting period, and its highest and lowest points during the year were as follows:
31 december high/low 31 December High/low
2013 2013 2012 2012
Shanghai – A Share Index 2,116 2,434/ 2,269 2,478/
1,950 1,949
The following table demonstrates the sensitivity to every 10% change in the fair values of the equity investments, with all other variables held constant and before any impact on tax, based on their carrying amounts at the end of the reporting period. For the purpose of this analysis, for the other equity investments, the impact is deemed to be on the other investment revaluation reserve and no account is given for factors such as impairment which might impact on the statement of profit or loss.
increase/
carrying amount decrease increase/
of equity in profit/loss decrease
investments before tax in equity*
Rmb’000 Rmb’000 Rmb’000
2013
Investments listed in:
Shanghai – Available-for-sale 135,000 – 13,500
2012
Investments listed in:
Shanghai – Available-for-sale 124,200 – 12,420
* Excluding retained earnings
31 December 2013
NOTES
TO FINANCIAL STATEMENTS (C ontinued )
39. financiaL RiSK management obJectiveS and PoLicieS (continued) capital management
The primary objective of the Group’s capital management is to ensure that the Group has healthy capital structure in order to support the Group’s stability and growth.
The Group regularly reviews and manages its capital structure and makes adjustments to it, taking into consideration changes in economic conditions, future capital requirements of the Group, prevailing and projected profitability and operating cash flows, projected capital expenditures and projected strategic investment opportunities.
The Group monitors capital using a gearing ratio, which is net debt divided by the total capital plus net debt.
Net debt includes interest-bearing bank loans, amounts due to related companies, trade and bills payables and customers’ deposits, other payables and accruals, less cash and cash equivalents and pledged deposits.
Capital includes the equity attributable to owners of the parent company. The gearing ratios as at the end of the reporting periods were as follows:
2013 2012
Rmb’000 RMB’000
Interest-bearing bank loans 2,683,171 2,434,374
Due to related companies 464,142 234,695
Trade and bills payables 18,077,489 18,016,746
Customers’ deposits, other payables and accruals 2,046,809 1,722,010
Less: Cash and cash equivalents (9,015,813) (7,067,349)
Pledged deposits (6,406,795) (6,240,244)
Net debt 7,849,003 9,100,232
Equity attributable to owners of the parent company 15,927,254 15,064,348
Total capital 15,927,254 15,064,348
Capital and net debt 23,776,257 24,164,580
Gearing ratio 33% 38%
31 December 2013
NOTES TO FINANCIAL STATEMENTS (C ontinued )
40. eventS afteR the RePoRting PeRiod
On 20 March 2014, the board of director recommended a final dividend and a special dividend (of which shareholders being given an option to elect to receive such special dividend all in new shares or partly in new shares and partly in cash). The final dividend is subject to the approval from the Company’s shareholders at the forthcoming annual general meeting.
As disclosed in note 36 to the financial statements, the Company received a requisition letter from Shinning Crown and Shine Group on 17 March 2014, requesting the Board to convene a special general meeting for the approval, confirmation and ratification by the Independent Shareholders of the Share Repurchases and the Breaches of Duties, and for the approval and confirmation of the acceptance of the Payment. The special general meeting is scheduled to be held on 17 April 2014.
41. aPPRovaL of the financiaL StatementS
The financial statements were approved and authorised for issue by the board of directors of the Company on 20 March 2014.