Net profit amounts to RMB1,426 million, Representing a YOY growth of 21.98%

(Hong Kong, 23 March 2018) Shenzhen Expressway Company Limited (Stock Code: 600548. SH, 00548. HK) (hereinafter referred to as “Shenzhen Expressway” or the “Group”) announce the results of the Group for the FY2017 ("the Year" or “FY2017”). For the year ended 31 December 2017 (hereinafter referred to as the “Reporting Period”), Shenzhen Expressway realised revenue of approximately RMB4,837 million (same as below) and net profit of approximately RMB1,426 million with earnings per share of RMB0.654. The Board recommended the payment of a final dividend of RMB0.30 (tax included) per share in cash for 2017.

In 2017, in addition to upgrading and consolidating the core business of toll highway, Shenzhen Expressway adhered to a market-oriented, specialised and industrialised approach to adjust and integrate its internal organisational structure and functions. It has gradually established various business platforms for investment, environmental protection, operation, construction and advertising. The Group gave full play to its own competitive advantages in operation of infrastructure as well as infrastructure management and integrated management, so as to expand its business sectors to construction and operation services of urban and transport infrastructure and joint comprehensive development of land. In addition, the Group prudently sought opportunities for cooperation with leading and branded enterprises in the environmental protection industry, thereby gradually developing the Group’s professional competitive strengths in certain environmental protection segments and striving for greater rooms for the development of the Group’s operation.

During the Reporting Period, the Group recorded net profit of RMB1,426 million, representing a YOY increase of 21.98%. This was mainly due to the growth of toll revenue recorded by the toll highways operated and invested by the Group during the Reporting Period and the revenue contributed by newly acquired projects. During 2017, the Group recorded revenue of approximately RMB4,837 million, representing a YOY increase of 6.72%. Excluding the effect of de-consolidating the Consulting Company from the Group’s financial statements, the Group recorded a YOY increase of 15.20%. In particular, toll revenue amounted to approximately RMB4,285 million, representing a YOY increase of 16.43% and accounting for 88.59% of the Group’s revenue, which is the main source of revenue of the Group. The growth of the Group’s revenue during the Reporting Period was primarily attributable to the growth of toll revenue from the Group’s existing ancillary toll highways and the revenue contribution resulted from the consolidation of Changsha Ring Road and Yichang Expressway into the Group’s financial statements.

During 2017, the cost of services of the Group amounted to approximately RMB2,499 million, representing a YOY decrease of 1.35%. Among which, Changsha Ring Road and Yichang Expressway had been consolidated into the Group’s financial statements, resulting in an increase in cost of services, while the de-consolidation of Consulting Company from the financial statements has resulted in a decrease in cost of business of engineering consulting accordingly. After excluding the effect of the change of scope of consolidation, the cost of services for the Reporting Period recorded a YOY increase of 3.71%, which was mainly due to the YOY increases in the depreciation and amortisation expenses of ancillary toll highways and carry-forward of real estate development costs of Guilong Development Project during the Reporting Period.

Toll revenue continued to grow and asset pool continued to expand

In 2017, the toll highway business of the Group saw stable development. On one hand, most of the toll highway projects under its operation and investment recorded increases in traffic volume and toll revenue. On the other hand, the Group acquired 100% equity interest in the quality road assets Yichang Expressway and 100% equity interest in Coastal Expressway (Shenzhen Section) at the considerations of RMB1.27 billion and RMB1.47 billion respectively. These two projects situated in a superior location and will contribute considerable amount of toll revenue to the Group. The above acquisitions have further expanded the asset scale of toll highway of the Group and consolidated the core advantages of the Group in investment, management and operation of toll highway. They also laid a foundation for the growth of profit of the core business of the Group in the future and was in line with the development strategies of the Group and its interest as a whole. In addition, the construction of the main project of Outer Ring Project invested by the Group has fully commenced and is expected to be completed by the end of 2019. The commissioning of the project will bring another strong revenue growth point to the Group.

Expanded the two main business and entered into the environmental protection industry at a high starting point

In addition to consolidating and upgrading the core business of toll highway, after in-depth research, the Group will proactively explore the investment prospects and opportunities of the macro environmental protection industry that takes water environment treatment and solid waste treatment as the main content and will enter into the environmental protection industry at a high starting points by cooperating with the leading enterprises in the industry. During the Reporting Period, the Group subscribed 15% equity interest in Water Planning Company after capital increase and 20% equity interest in Derun Environment at considerations of RMB61.89 million and approximately RMB4.4 billion respectively. Through the above acquisitions, the Group and related parties have complemented each other with their advantages in supply chains and generated synergistic effect in talents and technology resources, regional competitive capability and market expansion capability. They can also further deepen their cooperation to help the Company to enhance its market competitiveness in the environmental protection industry and strengthen subsequent development momentum and profitability. In addition, the Group also taken into account the regional expansion strategy to swiftly involve itself in the construction and operation of entity projects such as river channel treatment in Shenzhen-Shanwei Special Cooperation Zone when participating in the city comprehensive development and construction.

Expanded financing channels and maintained stable financial condition

The Group attached great emphasis to maintaining a reasonable capital structure in order to ensure good credit ratings and stable financial condition. In 2017, the Group made adjustment to the internal debt structure and coordinated project investment. As a result, capital cost recorded a further decrease while investment capability was enhanced. During the Reporting Period, the Group’s composite borrowing costs amounted to 4.68%, which was 0.29 percentage point lower than that in 2016. Furthermore, in this year, the issuance of Shenzhen Expressway A Shares Convertible Bonds was approved at the general meeting and the investment M&A fund was established successfully. These measures could lower the Company’s financing cost and provide a strong capital foundation for the subsequent transformation and upgrade of the Group.