MANAGEMENT DISCUSSION & ANALYSIS FINANCING 2023 2022 (1) Gearing ratio 12.7% 6.5% (1) Interest cover – times Per financial statements 10.0 48.3 Underlying 26.8 74.7 (1) Cash interest cover – times Per financial statements 4.0 12.1 Underlying 10.0 13.4 (1) Refer to Glossary on page 223 for definitions. Capital Management Audited Financial Information The Group’s primary objectives when managing capital are to safeguard the Group’s ability to operate as a going concern, so that it can continue to provide returns for shareholders, and to secure access to finance at a reasonable cost. The Group considers a number of factors in monitoring its capital structure, which principally include the gearing ratio, cash interest cover and the return cycle of its investments. For the purpose of the gearing ratio, the Group defines net debt as total borrowings and lease liabilities less short-term deposits and bank balances. Capital comprises total equity, as shown in the consolidated statement of financial position. In order to maintain or adjust the gearing ratio, the Group may adjust the amount of dividends paid to shareholders, repurchase shares, raise new debt financing or sell assets to reduce debt. The gearing ratios at 31st December 2023 and 31st December 2022 were as follows: 2023 2022 HK$M HK$M Total borrowings 41,169 22,835 Lease liabilities 607 614 Less: Short-term deposits and bank balances 5,097 4,502 Net debt 36,679 18,947 Total equity 288,149 292,258 Gearing ratio 12.7% 6.5% The Group has given certain covenants under facilities from third-parties, including maintenance of a minimum amount of tangible net worth. The Group has significant headroom on all covenants, and does not expect any breach in the foreseeable future. 88