OREANDA-NEWS. March 05, 2011. 2010 was a milestone year for Cheung Kong Infrastructure Holdings Limited (“CKI” or the “Group”). During the year, CKI reported strong organic growth from existing businesses, while significant acquisitions were made to strengthen the Group’s global portfolio, reported the press-centre of Cheung Kong Infrastructure Holdings.

For the year ended 31st December, 2010, profit attributable to shareholders of HKD5,028 million was achieved. This good result can be attributed to the strong performance of our existing portfolio, as well as the 2 months of profit contribution from the electricity distribution networks in the United Kingdom which were acquired during the year.

While the profit attributable to shareholders for 2010 was lower than that reported for the previous year, the results for 2009 benefited from a one-off disposal gain of HKD 1,314 million arising from the sale of Mainland China power assets to Power Assets Holdings Limited (formerly known as Hongkong Electric Holdings Limited (“HK Electric”)) (“Power Assets”).

After adjusting for this item, an increase of approximately 18 per cent would have been recorded this year.

The Board of Directors of CKI (the “Board”) has recommended a final dividend of HKD 1.00 per share. Together with the interim dividend of HKD 0.33 per share, this will bring the total dividend for the year to HKD 1.33, an 11 per cent increase over last year. This increase reflects the Group’s continued trend of dividend growth since listing. The proposed dividend will be paid on 20th May, 2011 following approval at the 2011 Annual General Meeting to those shareholders whose names appear on the Register of Members of the Company on 18th May, 2011.

A Year of Acquisitions
2010 was a landmark year of business expansion for CKI as three strategic acquisitions were made.

1. New Cement Production Facilities in Mainland China
In March, CKI committed an investment of HKD 700 million to develop new cement production facilities in Yunfu, Guangdong Province. The new plant will have a clinker production capacity of 4,500 tonnes per day.

Upon completion in 2012, the new cement production facilities will strengthen CKI’s materials business in Mainland China and is poised to generate attractive returns.

2. First Foray into Electricity Generation in the United Kingdom
In May, CKI completed the acquisition of a stake in Seabank Power Limited (“Seabank Power”), which owns and operates Seabank Power Station near Bristol. The power station comprises two combined-cycle turbine generation units with an aggregate capacity of approximately 1,140 MW.

CKI acquired 25 per cent of Seabank Power at a net consideration of approximately HKD 1.18 billion (approximately GBP105.8 million). CKI also has a 9.7 per cent indirect stake in the company through Power Assets.

The acquisition will provide immediate and stable returns to the Group. In 2010, 7 months of profit contribution were recorded.

3. Major Acquisition of Electricity Distribution Networks in the United Kingdom
In October, CKI led a consortium in completing the acquisition of 100 per cent of EDF Energy PLC’s (“EDF”) regulated and non-regulated electricity network activities in the United  Kingdom.

The total consideration was approximately HKD 70 billion (GBP5.775 billion). The consortium, which also comprises Power Assets, has renamed the business, UK Power Networks Holdings Limited (“UK Power Networks”), to own and manage these electricity network activities. CKI has a 40 per cent direct stake in the company and a 15.5 per cent indirect stake through Power Assets.

UK Power Networks comprises three of the 14 regional networks in the United Kingdom with a distribution area that covers London, South East England and the East of England. Together, these networks distribute approximately 28 per cent of the electrical power in the United Kingdom, making UK Power Networks the largest electricity distribution network owners in the United Kingdom.

The company also includes a non-regulated business comprising commercial contracts to own and operate the electricity distribution networks of a number of privately owned sites, such as the London Underground, Heathrow and Gatwick airports, as well as the Channel Tunnel Rail Link. This major acquisition has delivered immediate profit contribution to CKI. In 2010, 2 months of profit contribution – amounting to HKD 432 million – were reported by UK Power Networks. The scale of the business is expected to significantly enhance the revenue stream from CKI’s United Kingdom portfolio in the future.

A Year of Organic Growth
Power Assets (formerly known as HK Electric)
In 2010, profit contribution from Power Assets was HKD 2,770 million, an increase of 7 per cent over 2009. While the profit for Hong Kong operations in 2010 was slightly above that of 2009, the international operations outside of Hong Kong have grown 24 per cent.

Consistent with the past few years, Power Assets has continued to focus on its international businesses as a driver for growth. In 2010, significant expansion was undertaken together with CKI in the United Kingdom. Power Assets’ acquisitions during the period under review included a 25 per cent stake in Seabank Power and a 40 per cent stake in UK Power Networks, the three electricity networks in the country formerly owned by EDF.

In February 2011, the name of Hongkong Electric Holdings Limited has been changed to Power Assets Holdings Limited to reflect the company’s ongoing commitment to aggressively pursue international business and the prospective shift in the proportion of profit contribution generated from within Hong Kong to outside of Hong Kong.

Power On for The Future
As CKI steps into a new decade, it is apparent that our acquisition strategy has proven fruitful. We have made a number of successful acquisitions over the past few years and accumulated extensive experience in acquiring projects on a global scale.

The performance of our portfolio – in terms of both the countries and industries in which we operate – has been very strong. Steady performance and organic growth of our existing businesses are expected to continue.

The Group has maintained a strong balance sheet and financial position. We have continued to maintain our “A-” rating from Standard & Poor’s, which we have held since shortly after listing in 1996. Following an active year of major acquisitions in 2010, the Group has cash on hand of over HK\\$5 billion and a net debt to equity ratio of 6 per cent. This provides the financial capacity and flexibility to fund new acquisitions.

Currently, we have a good deal flow and are vigorously pursuing other investment opportunities in different sectors around the world. A number of exciting new projects are now under study. I would like to take this opportunity to thank the Board, management and staff for their efforts and contributions, as well as our shareholders for their continued support.

Li Tzar Kuoi, Victor
Chairman.