Zhejiang Expressway : Announces 2011 Interim Results
08/23/2011| 06:45am US/Eastern
To: Business Editors
[FOR IMMEDIATE RELEASE]Zhejiang Expressway Announces 2011 Interim Results
Net Profit Increases by 5.2% to RMB900.32 Million
(Hong Kong, August 23, 2011) – Zhejiang Expressway Co., Ltd. (“Zhejiang Expressway” or the “Company”) (HKEx code: 576; LSE code: ZHEH; ADR code: ZHEXY) today announced the unaudited consolidated operating results of the Company and its subsidiaries (collectively the “Group”) for the six months ended June 30, 2011 (the “Period”).
During the Period, revenue for the Group amounted to Rmb3,339.37 million, an increase of
6.7 % year-on-year. Profit attributable to owners of the Company amounted to Rmb900.32 million, an increase of 5.2% year-on-year. Earnings per share for the Period was Rmb2 0 . 7 3 cents (2010 Interim: Rmb19.70 cents). The board of directors recommended an interim dividend of Rmb6cents per share (2010 interim: Rmb6 cents per share).
Mr. Chen Jisong, Chairman of the Company said, “In the first half of 2011, due to the impact from the macro-economic control initiatives of the PRC Government, China’s domestic economy growth had appropriately slowed down. During the Period, the growth pace of Zhejiang Province’s economy also tended to slow in the second quarter of 2011, with the overall economic structure undergoing the adjustment process of continuous improvement. Given the gradual slowdown of growth in the domestic economy and in automobile sales in China, the organic growth of traffic volume on the Group’s expressways also showed a significant falling trend during the Period. As China’s stock market remained volatile and tumbled during the Period, revenue from the securities business of the Group was generally on par with the same period last year.”
In the first half of 2011, the growth of traffic volumes and toll incomes on the Group’s expressways have slowed due to the impact from a slowdown of growth in the macro-economy of China. There were frequent severe weather conditions in Zhejiang Province during the first half and the abolition of toll tariffs for local Class II highways resulted in some diversions of trucks. All these have caused negative impact upon traffic volumes and toll income. Meanwhile, the gradual increase in large trucks has led to a decrease in small and medium trucks, thereby weakening the positive impact of the toll-by-weight policy on toll income on the whole.
During the Period, average daily traffic volume in full-trip equivalents along the Shanghai-Hangzhou-Ningbo Expressway was 39,703, a growth of 4.7% as compared to the same period last year, while total toll income amounted to Rmb1,437.23 million, a growth of
5.5% year-on-year. Average daily traffic volume in full-trip equivalents along the Shangsan
Expressway was 17,089, while total toll income was Rmb354.68 million, representing slight decreases of 9.3% and 6.1% respectively year-on-year.
Zhejiang Expressway Announces 2011 Interim Results…P.2
During the Period, income from the service areas (except for the gas station business) declined as a result of the slackened growth in traffic volume on the Group’s two expressways. However, the surge in the selling prices of petroleum products prompted a significant rise in the sales of petroleum products, thereby generating satisfactory income on the whole. Income of toll road-related businesses of the Group amounted to Rmb954.94 million during the Period, an increase of 19.5% year-on-year.
As for the securities business, Zheshang Securities endeavored to expand various businesses, and consequently the market share of its securities brokerage business and the total number of customers continued to increase in the Period, while the investment banking and asset management businesses maintained steady growth in the first half of 2011. But as competition in the securities business intensified further due to the volatility and adjustments of the domestic stock market, the positive effect from the increased market share of Zheshang Securities was offset by a decline in commission rates, thereby impacting the performance of the securities business. The securities business realized an operating income of Rmb689.28 million during the Period, an increase of 0.1% year-on-year.
Looking forward, Mr. Chen said, “As inflationary pressures begin to subside in the second half of 2011, the intensity of the macro-economic control initiatives is likely to be eased. And the organic growth in traffic volume on the Group's expressways is likely to improve in the second half of 2011 as the impact from traffic diversions to the Zhuyong Expressway is stabilizing and the economic environment in Zhejiang Province is improving. In addition, the commenced operation of new toll stations and ETC lanes will enable the Group to further enhance the traffic capacity of its expressways. However, the relevant implementation policies for specifically rectifying highway tolling, expected to be formulated by Zhejiang Province in the second half of the year, will perhaps affect the current toll standards, thereby triggering uncertainties over the toll income to be generated on the Group’s expressways.”
Mr. Chen concluded, “In the second half of the year, the Company’s management will closely monitor the changes in policies for the industry and the impact of road networks within the province on the Group. We will adjust business strategies on a timely basis to strengthen the expressway core business, and strive to seek and cultivate new businesses and new income bases so as to achieve a sustainable and healthy development of the Company.”
Established in 1997, Zhejiang Expressway Co., Ltd. is regarded by the Zhejiang Provincial Government as its main enterprise for investment, development, operation, maintenance and management of high-grade roads in Zhejiang Province. The Company has concession rights to operate the Shanghai-Hangzhou-Ningbo Expressway and the Shangsan Expressway for a period of 30 years. The Company and its subsidiaries also carry out certain ancillary businesses such as automobile servicing, operation of gas stations and billboard advertising along expressways, as well as the securities business.
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Encl. Condensed Consolidated Statement of Comprehensive Income (Unaudited) For further information, please contact:
Mr. Tony Zheng / Ms. Helen Wu Mr. Brian Chan / Ms. Christy Lai
Zhejiang Expressway Co., Ltd. Rikes Hill & Knowlton Limited
Tel: (86571) 8798 7700 Tel: (852) 2520 2201
Fax: (86571) 8795 0329 Fax: (852) 2520 2241
Email: b r i a n . c h a n @ r i k e s . h i l l a n d k n o w l t o n . c o mZhejiang Expressway Co., Ltd.2011 Interim Results
(Prepared in accordance with Hong Kong Accounting Standards)Condensed Consolidated Statement of Comprehensive Income (Unaudited)
For the six months ended
Securities investment gains
Share of loss of associates
Profit before tax 1,393,914 1,412,244
Income tax expense (352,347) (362,597)
Profit for the Period 1,041,567 1,049,647
Other comprehensive expenses
Available-for-sale financial assets:
- Fair values loss during the Period (8,662) (841)
- Reclassification adjustments for cumulative
gain included in profit or loss upon disposal (4,072) (23,453) Income tax relating to components of other