Hopewell Highway Infrastructure : Announces FY 2016/17 Interim Results

Press Release

• Net profit grew 6% yoy to RMB267 million, mainly due to growth in core operations and narrowed net exchange loss

• An interim dividend of RMB8.6 cents (equivalent to HK9.59416 cents) per share

• The growth momentum of the GS Superhighway has persisted. Its average daily full-length equivalent traffic reached historical high, while average daily toll revenue returned to the peak level recorded in 1H FY14 after the tariff cut in June 2012

• Western Delta Route ("WDR") recorded strong growth with net profit rising 168% yoy to RMB51 million (HHI's share)

• RMB49 million of net exchange loss on RMB depreciation (HHI's share) (1H FY16: RMB60 million)

• No need for HHI to inject further capital into West Route JV

• Strong financial position with HHI corporate level net cash of RMB523 million or RMB0.17 per share as at 31 December 2016

  Upcoming: 2H FY17 and beyond

• FY17 net profit will be supported by healthy core operation

• Approximately 100% dividend payout target (full-year basis) is sustainable, given (i) HHI corporate level net cash of RMB523 million as at 31 December 2016; (ii) HHI expects to receive approximately RMB700 million dividend from the GS Superhighway JV in 2017, which is more than HHI's annual regular dividend that was distributed to shareholders in FY16; (iii) West Route JV targets to distribute dividend to HHI starting from 2020 the earliest

• WDR is financially self-sufficient until at least 2022

• PBOC lending rate cuts will lower WDR's finance cost by approximately RMB58 million and RMB61 million in FY17 and FY18 respectively (HHI's share)

• GS Superhighway JV's profit sharing ratio will adjust from 48% to 45% starting from 1 July 2017. This will have a one-off impact on HHI's FY18 results

During the period under review, HHI's share of the aggregate net toll revenues of its expressway projects increased by 7% from RMB1,023 million to RMB1,092 million. Guangzhou-Shenzhen Superhighway ("GS Superhighway") maintained growth momentum with net toll revenue increasing by 4%. The Western Delta Route continued to record healthy growth, with a 13% increase in net toll revenue to RMB301 million.

The increase in GS Superhighway's net toll revenue was mainly offset by the increased interest expenses as a result of the additional RMB2 billion bank loan borrowed in August 2016, leading to a 6% decrease in its net profit to RMB274 million. Due to continuous growth in toll revenue and traffic, as well as the PBOC lending rate cuts, the Western Delta Route first turned profitable in FY16, and

net profit surged 168% yoy to RMB51 million during the period under review from RMB19 million in the last corresponding period.

HHI's profit before net exchange loss (after deduction of the related income tax) increased by 2% from RMB315 million to RMB321 million during the period under review. The increase in net profit of the four expressway projects was offset by the fall in net interest income at corporate level. However, net exchange loss on the GS Superhighway JV's US Dollar and HK Dollar loans shared by HHI during the period under review reduced to RMB49 million from RMB60 million in the last corresponding period. As a result, the profit attributable to owners of the Company increased by 6% from RMB251 million to RMB267 million.

The Company believes that HHI's net profit for FY17 will be supported by the healthy core operations of GS Superhighway and Western Delta Route. In light of HHI's strong financial position, the Board believes that the Company's target payout ratio of approximately 100% on a full-year basis is sustainable. Net cash on hand at HHI corporate level and steady dividend from the GS Superhighway JV provide solid bases for strong dividend. It is expected that dividend from the GS Superhighway JV to HHI will amount to approximately RMB700 million in 2017, which is more than the Company's annual regular dividend to shareholders in FY16. Moreover, in view of the healthy growth in toll revenue, the West Route JV targets to distribute dividend to HHI starting from 2020 the earliest.

On 4 January 2017, the Board of Directors declared an interim dividend of RMB8.6 cents (equivalent to HK9.59416 cents at the exchange rate of RMB1: HK$1.11560) per share for the year ending 30 June 2017 (interim dividend of FY16: RMB8.4 cents per share, equivalent to HK9.9737 cents per share). Shareholders have been given the option of electing to receive the interim dividend in either RMB or HK Dollars or a combination of RMB and HK Dollars. The interim dividend will be paid on 22 February 2017 to shareholders registered at the close of business on 19 January 2017.

Mr. Thomas Wu, Managing Director of HHI, said: "We are very pleased to see that the average daily full-length equivalent traffic of both GS Superhighway and Western Delta Route reached historical high during the period under review. Going forward, we are confident that the growth momentum of our expressway projects will sustain, given a more comprehensive regional expressway network and healthy economic growth in the near future."

GS Superhighway's average daily toll revenue rose 4% yoy to RMB9.2 million and returned to the peak level recorded in 1H FY14 after the tariff cut in June 2012. Meanwhile, its average daily full- length equivalent traffic grew 6% yoy to 99,000 vehicles and reached a historical high.

The average daily toll revenue and average daily full-length equivalent traffic of the Western Delta Route grew steadily by 13% and 16% yoy to RMB3.4 million and 46,000 vehicles respectively, both of which had reached historical high levels.

Given no debt at the corporate level, HHI enjoys a strong and solid financial position. As at 31 December 2016, HHI corporate level net cash on hand (excluding JV companies) amounted to RMB523 million (30 June 2016: RMB652 million). The cash on hand of RMB523 million, together with available banking facilities of HKD500 million (or RMB448 million) and stable cash dividend from the GS Superhighway JV will provide sufficient financial resources for its operations and potential investments.

Details of the expressways' traffic and revenue figures can be found at the website: www.hopewellhighway.com

(in million RMB, unless otherwise stated)

N1: Net cash is defined as bank balances and cash less corporate debt, excluding JV companies' bank balances and cash of RMB252 million as at 31 December 2016 (as at 30 June 2016: RMB262 million).

N2: Average daily full-length equivalent traffic is defined as the total distance travelled by all vehicles on the expressway divided by the full length of the expressway and the number of days in the period under review.

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Hopewell Highway Infrastructure Limited

Hopewell Highway Infrastructure Limited, a subsidiary of Hopewell Holdings Limited, is a leading infrastructure company in the Pearl River Delta region and is involved in all phases of expressway infrastructure projects from initiating and promoting to developing and operating. The existing toll expressway projects held by HHI with total 6 lanes in dual directions include: (1) the Guangzhou-Shenzhen Superhighway, a major expressway connecting Guangzhou, Dongguan, Shenzhen and Hong Kong (certain sections being 10 lanes); (2) Phase I of the Western Delta Route ("Phase I West"), an expressway linking Guangzhou and Shunde; (3) Phase II of the Western Delta Route ("Phase II West"), an expressway linking the end of Phase I West in Shunde at the northern end and extending southwards to Zhongshan; and (4) Phase III of the Western Delta Route ("Phase III West") an expressway connecting Phase II West in Zhongshan at the northern end and extending southwards to Zhuhai.