Page 43 - China Mobile Limited - Annual Report 2012

China Mobile Limited
Annual Report 2012
37
Financial Review
Fund Management, Cash Flow, Capital Structure
and Credit Ratings
Fund Management and Cash Flow
The Group consistently upheld prudent financial principles and strict fund
management policies. In order to further strengthen the safe custody of
its cash, enhance efficiency of fund usage and reduce the costs of
capital, the Group established China Mobile Finance to continue to
reinforce its centralized fund management function and make appropriate
allocations of funds, thereby enhancing the Group’s ability to deploy
internal funds effectively. The Group ensured the safety and integrity of its
funds through its highly centralized management of investments and
financing and strict control over its investments.
In 2012, the Group continued to generate strong cash flow. The Group’s
net cash generated from operating activities was approximately
RMB230.7 billion and its free cash flow was RMB103.3 billion. As at the
end of 2012, the Group’s total cash and bank balances were RMB408.3
billion, of which 99.1%, 0.2% and 0.7% were denominated in RMB, U.S.
dollars and Hong Kong dollars, respectively. The solid fund management
and sufficient cash flow further provided a solid foundation for the long-
term development of the Group.
Capital Structure
As at the end of 2012, the aggregate sum of the Group’s long-term and
short-term debts was RMB29.8 billion, and its total debt to total book
capitalization ratio was 4.0%, reflecting the fact that the Group’s financial
position continued to remain at a sound level. Of the total borrowings,
20.8% was denominated in RMB (consisting primarily of RMB bonds),
and 79.2% was denominated in U.S. dollars (consisting primarily of the
balances of the deferred consideration for the acquisition of the eight and
the ten provincial telecommunications operators). Approximately 79.4%
of the Group’s borrowings were made at floating interest rates. The
effective average interest rate of the borrowings of the Group in 2012
was approximately 1.36%. The effective interest coverage multiple was
about 408 times. This reflected the prudent financial risk management
principle consistently adopted by the Group, as well as its strong cash
flow and sound repayment capabilities.