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Shenzhen Expressway Announces 2011 Interim Results - Net Profit Amounts to RMB353 Million

Release time：2011-08-12

On 12 August 2011, Shenzhen Expressway announced its unaudited operating results of the Company and its subsidiaries (collectively, the “Group”) for the six months ended 30 June 2011 (the “Reporting Period”).

During the Reporting Period, in accordance with Chinese Accounting Standards (CAS), the Group recorded a revenue of RMB1,179 million, representing an increase of 11.8% as compared to the corresponding period of the previous year. Of the revenue, toll income amounted to RMB1,117 million, an increase of 10.6% year-on-year. Net profit attributable to owners of the Company (“Net Profit”) amounted to RMB353 million and earnings per share was RMB0.162, a decrease of 1.94% year-on-year. The Board does not recommend any payment of interim dividend for the six months ended 30 June 2011 (2010 Interim: Nil).

Mr. Yang Hai, Chairman of the Company, said, “During the first half of 2011, the Group’s business performed well overall under an environment whereby the domestic economy continued to maintain growth. However, due to an increase in operating costs for fulfilling the business plans and as impacted by inflation, the results of the Group declined slightly year-on-year.”

During the Reporting Period, toll incomes from toll highway projects operated and invested by the Group maintained growth on the whole, while performance of each project varied. Among the toll highway projects, average daily toll revenues of Yanba Expressway, Nanguang Expressway, Guangwu Project and Qinglian Expressway increased year-on-year significantly by 26.0%、31.0%、70.5% and 19.6% respectively. Benefitting from a year-on-year increase in toll mileage and synergetic effects brought by the commencement of operation of Huishen Coastal Expressway, Yanba Expressway has maintained a satisfactory growth in toll revenue during the Reporting Period. Nanguang Expressway achieved growth mainly attributable to expressway users’ increased familiarity with the expressway and that the economies of peripheral regions were becoming active. The road network synergetic effects brought by the opening of the Phase Ⅱ of Guangwu Expressway has led to a significant growth in toll revenue at Guangwu Project. The Liannan Section of Qinglian Project has completed its reconstruction into an expressway and was open to traffic early this year. The increase in toll mileage and the improvement on traffic conditions have enhanced the operating performance of the project. Meanwhile, during the Reporting Period, road surface construction works were underway for the expansion of Shuiguan Expressway which has affected traffic volume to a certain extent. Affected by combined factors such as changes in road networks including the opening of Mawu Expressway and traffic control measures implemented in Wuhan City, Wuhuang Expressway saw its average daily toll revenue decrease to a certain extent.

During the Reporting Period, the Group realized a revenue of RMB1,179 million, representing a year-on-year increase of 11.8%; but year-on-year growth slowed as compared to the recovery growth in the previous year. As regards costs, due to inflation and an expanded operating scale, staff costs and road maintenance costs increased rapidly, the operating costs of toll roads increased by 19.2% year-on-year. Finance costs were basically on par with the same period of the previous year mainly attributable to a year-on-year increase in the Group’s foreign exchange gains during the Reporting Period, recently offsetting the impact of increased loan interests which were accounted for as expenses after the opening of the Liannan Section of Qinglian Project.

During the Reporting Period, the Group has actively pushed forward projects under construction. The reconstruction of the Liannan Section of Qinglian Project into an expressway was completed and started to operate in January 2011, signifying the whole 216 km Qinglian Expressway has been fully opened. The expansion work of Shuiguan Expressway, which was handled by Qinglong Company, was successfully completed in late June 2011, and the expanded Shuiguan Expressway was opened to traffic. The road surface maintenance and traffic improvement works on the South Section of Meiguan Expressway were completed in early August 2011. For the reconstruction and expansion of the North Section of Meiguan Expressway, approximately 90% of the land requisition, demolition and relocation works have been completed, and invitations for tender for road surface works are currently underway. The project is expected to be completed in early 2013. Upon implementation and completion of all the above-said projects, the traffic capacity and service standards of the projects will be enhanced. In addition, the Company has entered into the agreement with Longli Government (Longli County, Guizhou Province) on 12 August. Pursuant to the agreement, the Company is responsible for the construction and management of the PhaseⅠof Guilong Road by way of the “Build-Transfer” mode as well as primary development for approximately 3,000 Mu (approximately 2,000,000 square metres) land. Through the project, the Company is able to further develop its road construction and relevant businesses, strengthening and enhancing the advantages of its core business. Moreover, the arrangement of the development of the relevant lands could reduce the recovery risk of construction funds, as well as benefitting the Company from broadening and enriching the Company’s development direction and experience.

Looking ahead, Mr. Yang said, “No material changes are expected in the macro-economy in the second half of 2011, while the stability of the operational performance of the Company’s toll roads will continue in the short-term. The management of the Company will continue to focus on major work including operation, maintenance, construction, financing and development of new businesses, and actively and orderly push ahead various work plans. Meanwhile, the Group will continue to pay attention to changes in the external environment and will respond in a prompt manner, striving to enhance the Group’s operating results and management so as to achieve greater returns for its shareholders.”

Appendix I:

2011 Interim Results Highlights

(Unit: RMB million)	The R eporting Period	2010 Interim	Change
Revenue	1,179	1,055	+11.76%
Of which: Toll revenue	1,117	1,009	+10.63%
Net p rofit attributable to owners of the Company	353	359	-1.94%
Earnings per share (RMB)	0.162	0.165	-1.94%
Return on net assets （ % ）	4.02	4.32	Decreased by 0.30 percentage point

Appendix II:

Basic Operating Statistics of Various Toll Highways duringthe Reporting Period

Toll Highway	Percentage of interests held by the Group	Percentage of revenue consolidated	Average daily mixed traffic volume (’000 of vehicles)			Average daily toll revenue (RMB’000)
Toll Highway	Percentage of interests held by the Group	Percentage of revenue consolidated	2011 Interim	2010 Interim	Change	2011 Interim	2010 Interim	Change
Shenzhen region ：
Meiguan Expressway	100%	100%	120	109	9.4%	949	892	6.4%
Jihe West	100%	100%	113	106	6.3%	1,391	1,371	1.5%
Jihe East	100%	100%	97	84	16.0%	1,210	1,091	10.9%
Yanba Expressway	100%	100%	26	20	28.4%	358	285	26.0%
Yanpai Expressway	100%	100%	37	37	-0.2%	411	407	0.9%
Nanguang Expressway	100%	100%	55	44	24.2%	579	442	31.0%
Shuiguan Expressway	40%	-	120	129	-6.9%	1,101	1,171	-6.0%
Shuiguan Extension	40%	-	35	37	-7.4%	212	231	-8.2%
Other regions in Guangdong Province ：
Qinglian Expressway	76.37%	100%	21	18	19.1%	1,257	1,050	19.6%
Yangmao Expressway	25%	-	24	21	14.2%	1,212	1,158	4.7%
Guangwu Project	30%	-	24	1 4	73.2%	646	379	70.5%
Jiangzhong Project	25%	-	86	57	51.2%	951	806	17.9%
GZ W2 Expressway	25%	-	33	24	39.0%	723	581	24.4%
Other Provinces in the PRC ：
Wuhuang Expressway	55%	-	38	37	1.9%	1,129	1,257	-10.1%
Changsha Ring Road	51%	-	9.6	8.8	9.5%	81	72	12.6%
Nanjing Third Bridge	25%	-	24	24	1.2%	829	807	2.8%

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