Annual Report 2007 - Hmdatalink.com hm datalink

Management Discussion and AnalysisThe Group’s major achievements in 2007,including the successful launch of Geely’sfirst mid-end sedan model: “Vision” and thesignificant improvement in product mix to includemore higher-priced products, should pave wayfor the Group’s operating associates to achieveits sales target in 2008, and the substantial effortdevoted to restructure the associates’ partsprocurement system and dealers’ network, shouldhave built up a good foundation for the Group’ssustained long-term growth in the future.CAPITAL STRUCTURE ANDTREASURY POLICIESThe business activities of the Group are mainlyfinanced by the share capital, dividends receivedfrom the Group’s two major associates, netproceeds from the top-up placement of 600million shares issued by the Company in February2007. As at 31 December 2007, the Group’sshareholders’ funds amounted to approximatelyHK$2,441 million (As at 31 December 2006:approximately HK$1,030 million). Save for the 600million shares issued for the top-up placementin February 2007 and 449,694,954 shares issuedupon conversion of convertible bonds, no furthershares were issued by the Group during theperiod.EXPOSURE TO FOREIGNEXCHANGE RISKThe Group considers that fluctuations inexchange rate do not impose a significant riskto the Group since the Group’s operations areprincipally in the Mainland China and Hong Kongand all assets and liabilities are denominatedeither in Renminbi or Hong Kong dollars.LIQUIDITY AND FINANCIALRESOURCESAs at 31 December 2007, the Group’s currentratio (current assets/current liabilities) was11.12 (As at 31 December 2006: 1.48 (restated))and the gearing ratio of the Group was 14%(As at 31 December 2006: 70%) which wascalculated on the Group’s total borrowings tototal shareholders’ equity. Total borrowings(excluding the embedded derivatives of theCompany’s convertible bonds and trade and otherpayables) as at 31 December 2007 amounted toapproximately HK$330 million (As at 31 December2006: approximately HK$716 million) were mainlythe Company’s convertible bonds and short-termbank borrowings (secured). For the Company’sconvertible bonds, they were unsecured,interest-bearing and repaid on maturity. Forthe bank borrowings, they were secured bynotes receivables, interest-bearing and repaidon maturity. Should other opportunities ariserequiring additional funding, the Directors believethe Group is in a good position to obtain suchfinancing.GEELY AUTOMOBILE HOLDINGS LIMITED30ANNUAL REPORT 2 0 0 7