Group Financial Position
Total assets increased from HK$247,386 million at the end of 2012 to HK$267,779 million at the end of 2013. Continuing construction and installation of equipment for the iron ore mine were the main drivers of the increase in business assets, which are analysed below:
Fair Value of Investment Properties
Fair value of investment properties directly held by the Group decreased from HK$16,359 million as at 31 December 2012 to HK$14,932 million as at 31 December 2013, despite a general upward revaluation for the year, due to the disposal of DCH Commercial Centre, an office tower in Hong Kong, in January 2014. The property was classified as an asset held for sale at the end of 2013 for accounting purposes. The breakdown by geographical location is shown below:
Derivative Financial Instruments
As at 31 December 2013, the Group had gross outstanding derivative instruments amounting to HK$29 billion. These derivative instruments had a negative fair value of HK$2.6 billion on 31 December 2013. All the derivative instruments were to fix interest rate and foreign currency exposure. The valuation loss in interest rate swaps arose because current interest rates are below the interest rates fixed by the swaps. The breakdown by type of derivative financial instrument is shown below:
Inventories comprises mainly iron ore, scrap metal, steel, motor vehicles, spare parts, electrical appliances, food and other trading items. Inventory as at 31 December 2013 increased 24% as compared with 31 December 2012, due primarily to an increase in finished special steel products, motor vehicle stocks and fast moving consumer products. The breakdown of inventory by business and by type is shown below:
Financing of needs during 2013 was met by a 2% increase in net debt and the proceeds from the issuance of perpetual capital securities. More details on outstanding debts and available loan and trade facilities can be found here.
Total Ordinary Shareholders’ Funds and Perpetual Capital Securities
Total ordinary shareholders’ funds and perpetual capital securities increased from HK$84,678 million as at 31 December 2012 to HK$101,763 million as at 31 December 2013, due to the issuance of US$1 billion in perpetual capital securities during the year, plus the profit and other comprehensive income for the year, offset by dividends paid to ordinary shareholders and distribution to holders of perpetual capital securities of HK$2,256 million.