Hopewell Highway Infrastructure : Interim Results for the Six Months Ended 31 December 2016

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(incorporated in the Cayman Islands with limited liability)

• Net profit grew 6% year-on-year 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% year-on- year to RMB51 million (HHI's share)

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

• In August 2016, the GS Superhighway JV borrowed RMB2 billion to reimburse past capital expenditure funded by its shareholders, which has strengthened HHI's financial position

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

• West Route JV utilised surplus cash to (i) fully prepay RMB373 million of bank loan principal due in 2017 by September 2016 and (ii) prepay over 37% of RMB435 million bank loan principal due in 2018 as of 31 December 2016 (JV company level)

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

* For identification purpose only

• FY17 net profit will be supported by healthy core operations

• 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

The Board is pleased to announce that the Group's unaudited interim results for the six months ended 31 December 2016 presented in RMB (million) were as follows:

Note 1: Excluding exchange differences on US Dollar and HK Dollar loans, and related income tax.

During the period under review, the Group's share of the aggregate net toll revenues of its expressway projects increased by 7% from RMB1,023 million to RMB1,092 million. The GS Superhighway's growth momentum persisted with net toll revenue increased by 4%. The Western Delta Route continued to record healthy growth, with a 13% increase in net toll revenue to RMB301 million. GS Superhighway, Phase I West, Phase II West and Phase III West contributed 73% (RMB791 million), 5% (RMB56 million), 16% (RMB180 million) and 6% (RMB65 million) respectively to the Group's share of aggregate net toll revenues.

Given healthy core operation, the Group's share of the aggregate EBITDA of toll expressways (excluding exchange differences on the GS Superhighway JV's US Dollar and HK Dollar loans as well as the related income tax) increased by 6% from RMB860 million to RMB915 million. The rise in the Western Delta Route's toll revenue led to a 14% EBITDA growth from RMB222 million to RMB253 million.

The Group's share of depreciation and amortisation charges of the GS Superhighway JV increased by 8% from RMB210 million to RMB228 million as a result of persistent growth in its full-length equivalent traffic and additional improvement works were completed. With healthy growth in full-length equivalent traffic of the Western Delta Route, its depreciation and amortisation charges also increased. Hence, the Group's share of aggregate depreciation and amortisation charges increased by 13% to RMB335 million.

During the period under review, the increase in interest expenses of the GS Superhighway JV was mainly attributable to an additional 8-year bank loan of RMB2 billion (JV company level) drawn in August 2016 to reimburse past capital expenditure funded by its shareholders. In June 2016, the West Route JV entered into agreement with the bank to lower the lending rate of Phase I West's bank loan with outstanding principal of RMB539 million (JV company level) by 10% to 4.635%. Moreover, Phase II West's new financial plan was completed during the first half of FY16. The increase in registered capital in Phase II West totalling approximately RMB636 million had been completed. After the additional project bank loan raised by the West Route JV in October 2015, the remaining shareholder's loan advanced by the Group to the West Route JV as interim financing for Phase II West was repaid. Thus, both the interest expenses of Phase I West and Phase II West fell. In addition, a series of PBOC's lending rate cuts for RMB loan announced on 21 November 2014, 28 February 2015, 10 May 2015, 27 June 2015, 25 August 2015 and 23 October 2015 benefited the West Route JV by lowering its finance costs.

The EIT rate applicable for both GS Superhighway and Phase I West is 25% since 2012 and until the expiry of their contractual operation periods. Phase II West's applicable EIT rate from 2013 to 2015 was 12.5%, and it rises to 25% from 2016 until the expiry of its contractual toll collection period. Phase III West was exempted from EIT from 2013 to 2015. Its applicable rate from 2016 to 2018 is 12.5%, and it will rise to 25% from 2019 until the expiry of its contractual toll collection period.