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GZI Transport Press Release - Final Results

Date: 2003-04-10
View Count: 26

 Analysis of Results

 

In 2002, GZI Transport’s profit attributable to shareholders amounted to HK$156.1 million, which was down by 29.1 per cent compared with 2001. The above result of 2002 was primarily affected by three temporary factors. Firstly, in late 2001 GZI Transport disposed Xinfeng and Dongyang Highways whose future yields will decline and no longer received contributions from these projects in 2002. Secondly, traffic volume of certain toll roads such as Guangshan and Guangzhen Highways were diverted by newly completed Guangyuan Road East nearby. Thirdly, in line with normal pattern, the newly open Guangzhou Northern Second Ring Expressway incurred loss in 2002, the first year of operation.

 

Strategy & Prospects

 

These negative factors affecting the Group’s performance in 2002 such as disposing Xinfeng and Dongyang Highways in late 2001, traffic diversion by Guangyuan Road East and the newly opened GNSR Expressway incurring loss will all improve in 2003. Toll traffic volume growth in Guangshen and Guangshan Highways have rebounded substantially in the first three months of this year. Shantou Bay Bridge acquired last year replenished our portfolio and will contribute full year profit in 2003. Loss of GNSR Expressway will also be narrowed due to rising traffic volume.


 In 2002, Cargo traffic and passenger traffic on highways of Guangdong Province grew by 11.8 per cent and 10.8 per cent respectively against the backdrop of 10.8 per cent GNP growth. Sales of passenger cars in China (including Guangdong) amounted to 1.13 million vehicles and increased significantly by 54 per cent compared with 2001. Taking advantage of the strong traffic growth in Guangdong and other Provinces, the Group will selectively replenish and expand its toll road portfolio. The day to day toll collection work will be further strengthened by continue launching the Collecting a Million Toll without Mistakes Campaign to upgrade staff quality. Costs and expenses will also be effectively controlled to deliver satisfactory returns to shareholders.

 

Consolidated Profit and Loss Account




2002



2001




HK$’000



HK$’000









Turnover


355,638



418,616


Other revenues


3,577



27,060


Amortisation of interests in toll

  • highways and bridges


(75,748)



(79,663)


Toll highways and bridges

  • maintenance expenses


(61,817)



(77,101)


Administrative expenses


(30,294)



(39,999)


Other operating expenses


(378)



(4,436)


Provision for impairment of

  • other investments


(33,462)
GZI Transport Press Release - Final Results



--
GZI Transport Press Release - Final Results









Operating profit


157,516



244,477


Finance costs


(36,448)



(49,148)


Share of profits of associated companies


150,746



119,744


Share of loss of a jointly controlled entity


(36,102)
GZI Transport Press Release - Final Results



--
GZI Transport Press Release - Final Results









Profit before taxation


235,712



315,073


Taxation


(35,195)
GZI Transport Press Release - Final Results



(29,827)
GZI Transport Press Release - Final Results









Profit after taxation


200,517



285,246


Minority interests


(44,418)
GZI Transport Press Release - Final Results



(64,942)
GZI Transport Press Release - Final Results









Profit attributable to shareholders


156,099
GZI Transport Press Release - Final Results



220,304
GZI Transport Press Release - Final Results









Dividends


62,990
GZI Transport Press Release - Final Results



57,523
GZI Transport Press Release - Final Results









Basic earnings per share


14.92 cents
GZI Transport Press Release - Final Results



21.14 cents
GZI Transport Press Release - Final Results









Fully Diluted earnings per share


14.57 cents
GZI Transport Press Release - Final Results



20.55 cents
GZI Transport Press Release - Final Results









 

Analysis of Profit and Loss Account

 

Turnover of the Group for the year ended 31st December 2002 amounted to HK$355.6 million was 15.0 per cent lower than 2001 due to disposal of Xinfeng Highways and negative traffic growth in certain toll roads such as Guangshen and Guangshan Highways. Taking the disposal factor aside, turnover decline was 4.9 per cent.

 

Other revenues declined by 86.8 per cent to HK$3.6 million for the year ended 31st December 2002 primarily due to loss of revenue from disposal of an other investment (Dongyang Highways) in December 2001.

 

Amortisation of toll highways and bridges in 2002 was HK$75.7 million which was 4.9 per cent lower than 2001. Taking aside the amount attributable to Xinfeng Highways, amortisation was 2.4 per cent higher and was in line with the Group’s amortisation rates.

 

Toll highways and bridges maintenance expenses for the year ended 31st December 2002 were reduced by 19.8 per cent to HK$61.8 million due to disposal of Xinfeng Highways and negative traffic growth in certain toll road projects, whose maintenance expenses are linked to toll revenue. Taking aside the disposal factor, the decline was 9.2 per cent.

 

Administrative expenses incurred in 2002 amounted to HK$30.3 million which was 24.3 per cent lower than 2001. The decrease was mainly due to disposal of an other investment (Dongyang Highways) resulting in lower amortisation; reduction of Directors’ discretionary bonus; and lower bank charges of loans obtained from banks in China during the year as compared to loans raised in Hong Kong in 2001.

 

In April 2002, the disposal of 5.0 per cent of the Group’s interest in a jointly controlled entity, Guangzhou Northern Second Ring Expressway Co., Limited ("GNSR Expressway"), to a minority shareholder with a gain of HK$6.2 million was recorded as reduction to other operating expenses.

 

Provision for impairment of other investments amounted to HK$33.5 million had been made in 2002.

 

Finance costs in 2002 declined by 25.8 per cent to HK$36.4 million mainly due to redemption of convertible bonds in December 2001 and repayment of US dollars bank loan in January 2002.

 

Share of profits of associated companies for the year amounted to HK$150.7 million and increased by 25.9 per cent as compared to HK$119.7 million in 2001. Traffic volume of Humen Bridge increased substantially in the year. Contribution from Qinglian Highways rose remarkably due to traffic flow picking up in the second half of the year, lower finance costs from debt refinancing and increased stake by the Group. The recently acquired Shantou Bay Bridge also started profit contribution to the Group in July 2002.

 

The Group’s jointly controlled entity, GNSR Expressway with total investment of Rmb2.7 billion, commenced toll collection in January 2002. For full year of 2002, GNSR Expressway was operating at an attributable loss of HK$36.1 million, approximately two third of which was incurred in first half. Such performance was typical for expressway at its initial stage of operation when traffic flow has not yet reached its optimal level.

 

Inspite of lower pre-tax profit, taxation during the year rose by 18.0 per cent to HK$35.2 million mainly due to expiration of the "tax" concession period of certain subsidiaries.


 Minority interest for 2002 amounted to HK$44.4 million which was 31.6 per cent lower than 2001 mainly due to lower operating profit. In addition, disposal of Xinfeng Highways and acquisition of the remaining 34.0 per cent stake in a subsidiary holding Qinglian Highways also reduced total minority interest by HK$13.9 million.


 For the year ended 31st December 2002, the Group achieved attributable profit to shareholders of HK$156.1 million as compared to HK$220.3 million in 2001. Basic earnings per share for the two years amounted to 14.92 cents and 21.14 cents respectively.

 

Final Dividend

 

The Directors recommended the payment of final dividend of 3.0 cents (2001: 2.5 cents) per share to shareholders. Together with the interim dividend of 3.0 cents (2001: 3.0 cents) per share, total dividends for the year ended 31st December 2002 will amount to 6.0 cents (2001: 5.5 cents) per share.

 

Contact: Sophia Yan, Executive Director of Guangzhou Investment Co. Ltd.
(Tel: 2116 8022 ; Fax: 2598 7688)

 

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