Annual Report 2011 - Hongkong Land

2 Financial Risk Management continued
Financial risk factors continued
iii) Liquidity risk continued
The table below analyses the Group’s non-derivative financial liabilities and net-settled derivative financial liabilities into
relevant maturity groupings based on the remaining period at the balance sheet date to the contractual maturity date.
Derivative financial liabilities are included in the analysis if their contractual maturities are essential for an understanding
of the timing of the cash flows. The amounts disclosed in the table are the contractual undiscounted cash flows.
Between Between Between Between Total
Within one and two and three and four and Beyond undiscounted
one year two years three years four years five years five years cash flow
US$m US$m US$m US$m US$m US$m US$m
At 31st December 2011
Borrowings 166.5 784.9 610.2 358.9 365.6 1,846.8 4,132.9
Creditors 307.2 38.6 49.2 20.4 10.6 20.7 446.7
Net settled derivative
financial instruments 5.7 3.5 1.5 – – – 10.7
At 31st December 2010
Borrowings 976.4 548.7 456.8 574.6 354.1 1,757.7 4,668.3
Creditors 314.8 50.6 38.8 15.2 18.7 16.0 454.1
Net settled derivative
financial instruments 8.4 6.2 3.8 1.5 – – 19.9
Capital management
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern whilst seeking
to maximise benefits to shareholders and other stakeholders. Capital is equity as shown in the consolidated balance sheet plus
net debt.
The Group actively and regularly reviews and manages its capital structure to ensure optimal capital structure and shareholder
returns, taking into consideration the future capital requirements of the Group and capital efficiency, prevailing and projected
profitability, projected operating cash flows, projected capital expenditures and projected strategic investment opportunities.
In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, purchase
Group shares, return capital to shareholders, issue new shares or sell assets to reduce debt.
The Group monitors capital on the basis of the Group’s consolidated gearing ratio and consolidated interest cover. The gearing
ratio is calculated as net debt divided by total equity. Net debt is calculated as total borrowings less bank balances. Interest cover
is calculated as underlying operating profit including the Group’s share of operating profit within associates and joint ventures
divided by net financing charges including the Group’s share of net financing charges within associates and joint ventures. The
Group does not have a defined gearing or interest cover benchmark or range.
The ratios at 31st December 2010 and 2011 are as follows:
2011 2010
Gearing ratio (%) 10 12
Interest cover (times) 10 12
Annual Report 2011 35