China Merchants Holdings (Pacific) posts 45% increase in net profit in FY2013

Declares higher final dividend of 4.25 cents per share, making total of 7.0 cents per share for the year

Directors target an annual dividend payout ratio of at least 50% of annual underlying net profit

SINGAPORE, 27 February 2014 - Mainboard listed China Merchants Holdings (Pacific) Limited ("CMHP" or the "Group") today reported a net profit after tax (excluding exceptional items) of HK$865.4 million for the year ended 31 December 2013 ("FY2013"), a growth of 45% compared to HK$596.9 million achieved in the previous corresponding period ("FY2012"). Net profit after tax (including exceptional items) registered a marginal decline of 1% to HK$897.2 million compared to HK$906.5 million attained a year ago.

The FY2013 results included a gain from exceptional items amounting to HK$31.8 million compared to a gain of HK$309.5 million from exceptional items recorded in FY2012. The FY2012 exceptional items comprised a gain of HK$365.1 million from the disposal of the Group's entire interest in Yuyao Highway offset by an impairment loss adjustment of HK$55.5 million relating to the Group's property development business.

The impairment loss adjustment was reversed in FY2013 resulting in a gain of HK$31.8 million being recorded.

Group revenue for FY2013 rose by 31% from HK$1.4 billion in FY2012 to HK$1.9 billion in FY2013 largely on full-year contribution from the Beilun Port Expressway which the Group acquired in November 2012 and higher revenue contribution from the Yongtaiwen Expressway.

At the pre-tax profit level, Group pre-tax profit (including exceptional items) declined 8% to HK$1.1 billion from HK$1.2 billion a year ago while at the after-tax profit level, Group net profit (including exceptional items) of HK$897.2 million was 1% lower on previous corresponding period. Excluding the exceptional items, Group after-tax profit for FY2013 would have increased by 45% boosted by higher profit contribution from the toll road business and better performance from the property development business.

After taking into account non-controlling interests, net profit attributable to shareholders decreased 6% to HK$613.7 million. The Group's toll road business turned in a strong performance in FY2013. Net profit
contribution from toll road operations (excluding exceptional items) amounted to HK$571.3 million compared to HK$420.8 million a year ago. The profit growth of 36% was attributable to the recognition of 12 months earnings from the Beilun Port Expressway compared to 1.5 months earnings in FY2012 and higher contribution from the Group's other toll roads comprising the Yongtaiwen Expressway, Guiliu
Expressway and Guihuang Highway. Exchange gain and lower withholding tax also contributed to the increase in net profits which was partly offset by higher finance costs.

Toll revenue recorded by the Yongtaiwen Expressway increased by 4% on the corresponding period last year driven by higher traffic flow which was partly offset by the negative impact from the toll free policy for small passenger cars during major public holidays. Net profit contribution grew 13% from HK$261.4 million in FY2012 to HK$295 million in FY2013 on the back of the higher toll revenue registered and lower
finance costs from repayment of certain long term bank borrowings, partly offset by higher amortisation of toll road operating rights and higher operating and income tax expenses.

The Guiliu Expressway performed strongly in FY2013, registering an increase in net profits contribution of 37% on the back of higher toll revenue achieved. Due to the growth in traffic flow, toll revenue reported by this road increased 18% despite the negative impact from the toll free policy for small passenger cars during major public holidays.

The Guihuang Highway posted a net profit of HK$123.9 million, up 2% from HK$121.5 million achieved in the previous corresponding period. The profit growth is lower than the toll revenue increase of 10% as the performance of Guihuang Highway was affected by higher amortisation of toll road operating rights, higher staff costs and repairs and maintenance expenses, partially offset by higher subsidy income recorded.

The property development business achieved a revenue of HK$329.5 million, an increase of 37% over the corresponding period last year due to the continued recovery of the residential property market in New Zealand. This business segment posted a net profit of HK$48.7 million compared to a net loss of HK$88.3 million a year ago. The net loss for FY2012 of $88.3 million included an impairment loss adjustment of HK$55.5 million. In FY2013, the Group recognised an exceptional gain of HK$31.8 million
following the reversal of the impairment loss adjustment. Excluding these exceptional items, the performance of the property development business improved in FY2013 due to higher gross margin from sales of development properties and the recognition of deferred tax assets arising from tax losses, partially offset by higher operating costs.

Commenting on the Group's performance, CEO Mr Jiang Yan Fei said, "The Group has again delivered a double-digit growth in net profits (excluding exceptional items) and generated strong operating cash flows to reduce bank borrowings. This performance has been achieved through a combination of organic growth and benefits from previous years' acquisitions. Our core business of toll road operations remains
robust and our strong balance sheet and operating cash flow provides an excellent foundation to support future growth."

Mr Jiang has a positive outlook on the business as well as the overall toll road industry in the PRC, "We remain positive about the Group's prospects in FY2014 and expect our toll roads to continue to deliver positive results in light of the economic growth in the provinces where they are located and the continued growth in vehicle ownership. We do not anticipate major changes to the PRC government's transportation-related policies," Mr Jiang added.

At the end of 2013, the total length of the expressway network in China was 104,500 km, of which 8,260 km of expressways were built in 2013 alone. Chairman Mr Luo Hui Lai said, "Our solid FY2013 results provide further evidence of the effectiveness and potential of our growth strategy. We will continue to execute our growth strategy through selective acquisition of toll road projects with good growth
potential to further accelerate the Group's growth and development."

After taking into consideration the excellent financial results achieved and the Group's future needs, the Directors has proposed an increase in the final dividend to 4.25 cents per share, bringing the full year dividend to 7.0 cents per share, an increase of 27% on the previous year's payout of 5.5 cents per share.
"Given our strong track record of earnings growth and our confidence in our earnings sustainability, the Directors target an annual dividend payout ratio of at least 50% of our underlying annual net profits," Mr Luo said.

About China Merchants Holdings (Pacific) Limited (www.cmhp.com.sg)
China Merchants Holdings (Pacific) Limited ("CMHP") is a significant toll road operator listed on the Main Board of the SGX-ST. It has total assets in excess of HK$13 billion and is well-positioned to ride on growth prospects of the PRC's economic growth. As a subsidiary of China Merchants Group Limited, it is able to capitalise on the strong track record, reputation and network of the China Merchants Group to expand its toll road business and seek attractive investment opportunities overseas.
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Media and Analysts Contact:
Ms Selene Lim, Corporate Secretary
Tel: (+65) 6836-0200
DID: (+65) 6836-3245
Email: selene@cmhk.com.sg
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