Group Cash Flows

Cash generated from our business operations for 2013 increased 14% to HK$8.6 billion, primarily because more cash was generated from our property business in the PRC as a result of increased sales. Other cash receipts in 2013 included proceeds from the disposal of CITIC Plaza Shenhong in Shanghai, as well as HK$773 million from the disposal of our 18.6% interest in CITIC Telecom, which was directly offset by a cash outflow of HK$758 million to subscribe for the rights issue of CITIC Telecom to maintain our level of shareholdings. Including an issue of US$1 billion in perpetual capital securities and an increase in net borrowing of HK$3.8 billion, total sources of cash in 2013 amounted to HK$27 billion.

The Group also acquired a 25% interest in Xingcheng Phase II for a consideration of HK$659 million, making it a wholly-owned subsidiary of the Group. Including this transaction, capital expenditure outflows during the year were around HK$15 billion, 36% lower than the previous year. More details on capital expenditure can be found below. Other cash outflows mainly comprised an increase in non-current deposit payments in relation to new phases of the steel plants and iron ore project, as well as an investment in bank deposits with maturity over three months. Together with dividends paid to ordinary shareholders, distribution to holders of perpetual capital securities, interest paid and various other payments, the total use of cash in 2013 was HK$27 billion, breaking even with the total sources of cash.

Source of Cash by Business

Capital Expenditure

In 2013, the capital expenditure in our special steel business was mainly comprised of additional shares in Xingcheng Phase II and expenditure for the high speed wire product plant at Xingcheng, the Jiangdu pellet plant and renovation of existing plants at Xingcheng and Daye.

Capital expenditure for the iron ore business included continuing expenditure for the construction of the production lines and common facilities, and capitalised interest.

Capital expenditure for our property development projects on the mainland was higher during 2013, mainly due to a relocation expense for current residents at our Westgate Garden development site in Shanghai.

Capital Commitments

As at 31 December 2013, the contracted capital commitments of CITIC Pacific Limited and its subsidiary companies amounted to HK$5 billion. Details of the capital commitments are listed under Note 36 to the financial statements.

Future capital expenditures will be funded by the Group’s cash and deposits, as well as available credit facilities. The chapter Liquidity risk management describes the HK$35 billion of cash and deposits held by the Group and HK$ 13 billion of available committed facilities as at 31 December 2013.

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