Yuexiu Transport Announce 2015 annual results

Financial Highlights:

Yuexiu Transport announces the annual results for the year ended 31 December 2015 via press conference in Hong Kong today .During the reporting year, toll income hit another record high, increasing by 19.5% to RMB 2.215 billion. The growth was mainly attributable to additional contribution from the Suiyuenan Expressway upon its incorporation into the consolidated statements and the organic growth of existing projects, including GNSR Expressway and Changzhu Expressway.

However, profit attributable to the shareholders of the Company decreased by 12.7% to RMB 532 million as it was affected by the depreciation of Renminbi and the non-current items, including provisions for impairment of Jinbao Expressway and Qinglian Expressway. Nevertheless, the Group’s cash flow level was not affected by such non-current items.The Board has recommended the payment of a final dividend of HK$0.16 per share for 2015, bringing the total dividend for the year to HK$0.28 per share. This also represents an annual dividend payout ratio of 72.2%, reflecting the Group's stable and sustainable dividend policy.

1. As the total assets of the company further enlarged, new catalysts for business results were injected. Despite the slow global economic recovery and an uncertain prospect, the Group pressed on with its expansion plan by taking over the Suiyuenan Expressway and acquiring the remaining 10% equity interest in Changzhu Expressway to attain entire ownership. The completion of these two acquisitions has increased the Group’s attributable toll mileage of expressways and bridges to 378.3 km, thus enlarging the size of assets and enhancing the sustainable profitability.In addition, the acquisition of Suiyuenan Expressway extended the average remaining year of the asset portfolio and filled up the gap from Xian Expressway’s termination of charging period. The moves have also met the Group’s needs for strategic development and have added impetus to its growth to cope with complicated business environment.

2. More efficient asset management of the company has achived.  The Group disposed of its 51% equity interest in Wuzhou Chishuixu Port in Guangxi by public tender in December 2015, marking a breakthrough in its way of disposing of assets. This will enable the Group to focus more on its core business. The cash return will be partly used for settling liabilities, optimizing the Group’s financial structure and preparing for potential acquisitions.

3. Being able to diversify funding sources, foreign exchange risk control will be actively in progress. During early 2015, the company opportunely capitalized on the European Central Bank’s economic stimulus, which included negative interest rate and quantitative easing, by issuing 200 million euros’ worth of 3-year guaranteed medium term notes with a coupon rate of only 1.625%. The initiative also expanded the source of financing. It also minimized its exposure to foreign exchange risk by settling liabilities denominated in the US dollars and HK dollars in advance in view of the interest rate hike initiated by the US Federal Reserve, the strengthening of the US dollar and Renminbi’s depreciation pressure. On the other hand, the five interest rate cuts by the People's Bank of China since November 2014 have led to a gradual decrease in the costs of onshore borrowings and have indicated further room for reduction in the financing cost in the future. Aiming to reduce its exposure to foreign exchange risk, the Group will consider increasing the use of local currency financing such as domestic commercial bank loans or the issuance of Renminbi medium term notes to an appropriate level. It will also seek to settle its Hong Kong dollar liabilities in advance and replace them with the ones denominated in Renminbi.

4. Keep focusing on toll road business development, while making efforts to achieve a balance between business expansion and financial stability. In the future, the Group will continue to implement the existing regional strategies by focusing on the investment in  and   operation of expressway projects as the core business. It will also keep searching for acquisition opportunities in central provinces of China, setting its sights on potential targets for merger and acquisition with an internal rate of return of no less than 10%, while maintaining a balance between short-term cash flows and profitability.On the other hand, the Group continues to take a flexible and innovative approach to evaluate the impact of potential acquisition targets on all credit rating indicators, and also will optimize the entire portfolio of assets, enhance the Group’s profitability and make the best efforts to generate reasonable returns to shareholders.