Page 32 - Kirin Holdings Teaching Note

FINANCE

The 2016-2018 medium-term business plan to restructure

and revitalise the Kirin Group had by 2019, in terms of

corporate profitability and financial soundness, achieved

what it set out to do. However, the question that raises its

head is how the Kirin Group going to use its free cash flow.

Three areas can be identified:

1. Ensure sustainable growth over medium to long-term
2. Allocate resources to the business portfolio to realise

growth

3. Structure finances to ensure that cash continues to be

generated dependably.

Kirin Group policy for allocating cash is to give first priority

to growth-oriented investments, which tend to be

associated with expanding business through mergers and

acquisitions. In addition, the Group is set to leverage its

shared value by stepping up investment in its intangible

assets that supports sustainable growth, namely human

resources, the Group's brands, R&D, supply chain and IT.