Benefitting from the Strong Growth of Traffic and Toll Revenue 

On 25 March 2011, The Company announced its results for the year ended 31 December 2010 (the “Reporting Period”).

In accordance with Hong Kong Financial Reporting Standards (“HKFRS”), the Company and its subsidiaries (collectively, the “Group”) recorded a revenue of RMB3,040 million for the Year. Of the revenue, toll income amounted to RMB2,150 million, representing an increase of 61.2% year-on-year. Profit attributable to equity holders of the Company (“Net Profit”) amounted to RMB750 million, representing an increase of 38.1% year-on-year. Earnings per share was RMB0.342 (2009：RMB0.248).

Mr. Yang Hai, Chairman of the Company, said, “In 2010, benefitting from China’s continuous economic growth and an increasing enhancement of road networks, together with active management and marketing strategies adopted by the Group, traffic volumes and toll revenues of various toll highways operated and invested by the Group recorded strong growth, and profits of the Group were significantly enhanced.”

During the Reporting Period, each highway project operated and invested by the Group recorded double-digit year-on-year increases in both traffic volume and toll revenue, in which Yanba Expressway, Nanguang Expressway, Guangwu Project and GZ W2 Expressway recorded significant growths. Average daily toll revenues generated from these four projects amounted to RMB0.335 million, RMB0.524 million, RMB0.472 million and RMB0.672 million respectively, representing year-on-year increases of 57.1%, 72.9%, 54.3% and 42.7% respectively. The opening of Yanba C in March 2010 increased the total operating mileage of Yanba Expressway. Together with the opening of Huishen Coastal Expressway at the same time, the resultant synergistic effects generated among the relevant road networks had stimulated traffic volume growth, which led to a relatively significant year-on-year toll revenue growth on Yanba Expressway. Benefitting from the expansion and reconstruction of Songbai Road, a municipal road parallel to Nanguang Expressway, and active business strategies adopted by the Company, the toll revenue of Nanguang Expressway maintained rapid growth. The second phase of Guangwu Expressway commenced operation at the end of June 2010, and the entire expressway from Guangzhou, Guangdong to Wuzhou, Guangxi has been opened. The synergistic effects among road networks significantly enhanced the operational performance of Guangwu Project. Benefitting from an enhancement in road networks and an active implementation of traffic improvement measures by the government, the cross-border traffic function of GZ W2 Expressway became increasingly prominent, which had a remarkably positive impact on its operational performance. Moreover, Qinglian Expressway operated as an expressway and carried out toll-by-weight system during the whole year and its overall performance remained stable. The average daily toll revenue recorded approximately RMB1.037 million, representing a considerable increase compared with that before operation as an expressway.

During the Reporting Period, with favorable factors including a sound external economic environment, active management strategies of the Group, the consolidation of Jihe East into the Group’s accounts, and the contribution from new projects’ operation, toll revenue of the Group increased significantly by 61.2% year-on-year. However, the expansion of the operation scale also led to a significant increase in depreciation and amortisation expenses, causing the operating costs of Group’s toll highways to increase by 62.2% year-on-year. During the Reporting Period, the Group’s finance costs increased by 32.9% year-on-year due to an increase in the expensed borrowing costs of Qinglian Project.

During the Reporting Period, the Group’s projects under construction progressed smoothly. The reconstruction of the Liannan Section of Qinglian Class 1 Highway into an expressway was completed on schedule. The road has adopted expressway toll  standards since 25 January 2011 which marked the entire opening of the 216-km Qinglian Expressway. For the reconstruction and expansion of the North Section of Meiguan Expressway, approximately 90% of the land requisition, demolition and relocation works as well as preparation works for construction were completed, and some of the construction works for passages, culverts and bridge foundations were also commenced. The progress of the expansion of Shuiguan Expressway progressed smoothly and expected to be completed in mid-2011. For the entrusted construction management business, the construction management work on Nanping (Phase II), Shenyun Project, Hengping Link Section and Longhua Link Section progressed well, and construction costs were basically in line with expectations. Various management work on Coastal Expressway progressed actively. The effective progress of the above-mentioned construction projects will provide a solid support to future earnings of the Group.

Looking ahead, Mr. Yang said, “The growth of the macro-economy and the “Twelfth Five-year” planning will push ahead the continued development of the toll road business. However, the tightening monetary policy of the State and the changing policies on the highway industry will also bring challenges to the Group’s future business development despite numerous opportunities for the Group. Under such situation, Shenzhen Expressway will closely monitor the changes in government policies. While striving for better operating results, the Company will further improve its debt structure, rationally control capital costs, and actively look into possibilities on businesses related to the toll road business, so as to enhance the sustainability of the Group and strive for the best returns for the shareholders.”

 Appendix I:

2010 Annual Results Highlights

Appendix II:

Basic Operating Statistics of Each Toll Highway

during the Reporting Period