Shenzhen Expressway Company Limited (“Shenzhen Expressway” or the “Company”) together with its subsidiaries (collectively the “Group”) announced its unaudited operating results for the six months ended 30 June 2010 (the “Period”).
In accordance with Hong Kong Financial Reporting Standards, during the Period, the Group achieved a revenue of RMB1,366 million. Profit attributable to equity holders of the Company amounted to RMB359 million, an increase of 14.7% year-on-year. Earnings per share reached RMB0.165 (2009 interim: RMB0.144). The board of directors does not recommend the payment of an interim dividend for the six months ended 30 June 2010 (2009 interim: nil).
Mr. Yang Hai, Chairman of Shenzhen Expressway, said, “The macro economy continued to recover during the first half of 2010, which has stimulated a growth in transportation demand. At the same time, the development of road networks was becoming better and better, which has energised the Group’s business and lifted substantially the traffic volumes and toll revenues of its toll expressways, resulting in a better-than-expected performance.”
During the Period, toll revenue, still the Group’s major income base, surged by 92.9% to RMB1,009 million. The increase was mainly attributable to the revenue contributed from Jihe East as it was consolidated into the Group, the toll revenue increase brought about by the opening of Qinglian Expressway and Yanba C and the good performance of existing highway projects.
For the Group’s toll roads in the Shenzhen region, average daily toll revenues generated from Meiguan Expressway, Jihe East, Jihe West, Yanpai Expressway, Yanba Expressway, Nanguang Expressway, Shuiguan Expressway and Shuiguan Extension amounted to RMB0.892 million, 1.371 million, 1.091 million, 0.407 million, 0.285 million, 0.442 million, 1.171 million and 0.231 million respectively, representing year-on-year increases of 16.0%、17.3%、22.6%、19.7%、49.2%、81.2%、20.6% and 28.7% respectively. The Group’s other toll highways located outside Shenzhen also saw substantial toll revenue increases. Qinglian Project commenced expressway operation on 1 July 2009 and registered an average daily toll revenue of RMB1.05 million during the Period, which was more than doubled as compared to the same period last year when the Class 1 Highway tolling mode was applied. Average daily toll revenues of Yangmao Expressway, Guangwu Project, Jiangzhong Project, GZ W2 Expressway, Wuhuang Expressway, Changsha Ring Road and Nanjing Third Bridge recorded year-on-year increases of 16.4%、28.2%、19.1%、56.2%、17.3%、14.9% and 23.0% respectively.
The Group’s cost of services during the Period increased by 84.6% year-on-year. The increase was mainly attributable to the fact that Jihe East Company has been consolidated into the Group, as well as a significant increase in depreciation and amortization expenses caused by the increases in traffic volume of the Group’s projects. Despite a decrease in the composite borrowing cost and an increase in currency exchange gains, given that Qinglian Project’s borrowing interests are no longer capitalized as the project has commenced the expressway operation mode, the Group’s finance costs for the Period increased by approximately 95.6%.
During the Period, the Group made effective progress in respect of project construction. The reconstruction of the Liannan Section (from Lianzhou to Fengbu Section) of Qinglian Project into an expressway has completed surface reconstruction of the original route in February, and 80% of the earthworks of road understructure for the new route has been completed. The whole project is expected to be completed in early 2011 and will lift the Group’s operation mileage by 27km. The road understructure of the expanded part of Shuiguan Expressway is close to completion. The whole project is expected to be completed in mid-2011. Besides, the Company has approved the reconstruction and expansion of the North Section of Meiguan Expressway to enhance management efficiency so as to stimulate the traffic capacity and service quality of the project.
Looking into the future, Chairman Mr. Yang Hai said, “We expect the operating performance of toll highways will maintain a steady growth in the short term. However, the economic situation is complicated and changeable, and we are ready for the challenges. In the second half, we will put our efforts to improve traffic capacity, enhance our service quality, and take full advantage of an improved road network. Facing the possible tightened credit policy, we will follow the policy closely, and adjust our financing strategy accordingly. We will continue to increase revenues and reduce costs and to optimize our assets structure, aiming to deliver the best return to shareholders.”
