(Hong Kong, 17 August 2018) Shenzhen Expressway Company Limited (Stock Code: 600548. SH, 00548. HK) (hereinafter referred to as “Shenzhen Expressway” or the “Group”) announces the interim results of the Group for the six months ended 30 June 2018 (the “Reporting Period”). During the Reporting Period, the Group recorded revenue of approximately RMB2,678 million and the earnings per share was RMB0.444.
During the first half of 2018, the Group’s net profit recorded a YOY increase of 37.42%. This was mainly due to the growth of toll revenue recorded by the toll highways previously operated and invested by the Group during the Reporting Period and the revenue contributed by newly acquired projects such as Derun Environment, Yichang Expressway, etc., and compensation income from Meilin Checkpoint Renewal Project of RMB131 million.
During the Reporting Period, the Group recorded a YOY increase of 16.91% in revenue. In particular, toll revenue accounting for 91.97% of the Group’s revenue, which is the main source of revenue of the Group. Revenue from other businesses includes entrusted management services, Guilong real estate development etc. The toll revenue recorded a YOY increase of 14.42%, which was mainly due to the consolidation of Shenchang Company, Yichang Company into the Group’s consolidated financial statements and the natural growth of the Group’s original ancillary toll roads traffic volume.
During the Reporting Period, the Group recorded a YOY increase of 14.20 % in cost of service, which was mainly due to the consolidation of Shenchang Company and Yichang Company into the Group’s financial statements and increases in the depreciation and amortisation expenses of ancillary toll highways and carry-forward of real estate development costs of Guilong Development Project. The Group’s general and administrative expenses for the Reporting Period recorded a YOY increase of 4.15%. The increase was mainly due to the expansion of business scale, and the increase in the number of administrative staff. As US dollar bonds are affected by the RMB depreciation, exchange losses was generated, and interest expenses increased due to the increase of borrowing scale. The Group’s financial expenses for the Reporting Period increased by 43.15% year on year. In order to mitigate risks related to exchange rate, The company has arranged foreign exchange swap transactions at the beginning of the issuance of US dollar bonds to lock in foreign exchange risks. During the Reporting period, due to the depreciation of RMB, the fair value change income of the swap instruments recognized by the Group was hedged against exchange losses.
During the first half of 2018, The Group's main business of toll highway, environmental protection and other businesses demonstrated steady development.
In the toll highway business, the proposal about the Group's acquisition of 100% equity interests in Coastal Project has been approved by the general meeting of the Company, after that, the Group has signed the agreement with Shenzhen Transport Commission for the implementation of the truck transportation toll adjustment all types of trucks passing through the Coastal Project will be charged a toll at 50% of the normal fee from March 1, 2018 to December 31, 2020, and Shenzhen Transport Commission will give a compensation of RMB302 million to Coastal Company. The implementation of this Toll Adjustment policy is expected to help drive the growth of freight traffic along the Coastal Project and have a positive effect on the future operation performance of the Coastal Project. To improve road safety and quality and the traffic efficiency as well as to match the overall work plan and arrangement of the government's expressway construction, the preliminary work of the Group's preliminary design of the Jihe Expressway reconstruction and expansion project is in progress. In June 2018, approved by the Board of the Company, the Group signed a capital contribution agreement with other shareholders of Yangmao Company, which was planned to carry out the reconstruction and expansion of Yangmao Company, further leverage its line position and enhance its commercial value. In addition, Shenzhen Transport Commission has officially entrusted the Group to carry out preliminary work such as detailed planning and program design for the Shenshan Second Expressway (Shenzhen to Shenshan Special Cooperation Zone).
In environmental protection business, the Group held several meetings with the Suez Group, the shareholder of Derun Environment, after acquiring 20% equity interests in Derun Enviroment in 2017. Both parties officially signed the contract in July 2018 in relation to the establishment of a joint venture to conduct business cooperation in hazardous waste disposal, sanitation integration and water environment remediation, etc.
In recent years, the Group actively promote the research and implementation of intelligent transportation. During the Reporting Period, the Group signed a strategic cooperation framework agreement with Baidu Netcom Science and Technology Co., Ltd. The company will use its operational management experience and resource advantages. Baidu relies on its big data, artificial intelligence, and internet technology advantages. The two parties integrate resources and explore in-depth cooperation opportunities in areas such as intelligent transportation and smart environmental protection, and jointly expand national business investment projects. Advance the landing and empowerment of Baidu's “AI CITY” strategy in the transportation and environmental protection industries, and realize the deep wisdom application of “high-speed artificial intelligence + transportation and environmental protection”.In June 2018, the Group's “Shenzhen e Traffic” APP Integrated Service Platform (“Shenzhen e Traffic”) with its own intellectual property rights was officially launched, and it was the first to achieve senseless payment and actual operation in Guangdong Province.
In real estate development, Meilin Checkpoint Renewal Project intended to increase capital by publicly listing on the Shenzhen United Assets and Equity Exchange, using competitive negotiation to conduct a review, and introducing a professional real estate developer as a strategic investor and the listing price is not less than RMB2900 million. After the capital increase is completed, the strategic investor will hold 30.0% interests of the project. This will help improve the Group's asset structure, reduce the group's capital cost and asset-liability ratio, help improve project management level and overall return, and achieve expectations of the projects. In addition, the Guilong development project is progressing smoothly and the sales are in good condition. By operating and implementing the preliminary work of Interlaken Town Project, the Group has explored and accumulated some experience in the management and operation of property development projects, thereby developing a business development model suitable for the property market in such region.
Net Profit Amounts to RMB969 million Representing a YOY Increase of 37.42%
