2010 First Quarterly Results Announcement
Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong
Limited take no responsibility for the contents of this announcement, make no
representation as to its accuracy or completeness and expressly disclaim any
liability whatsoever for any loss howsoever arising from or in reliance upon
the whole or any part of the contents of this announcement.
ZHEJIANG EXPRESSWAY CO.,LTD.
(A joint stock limited company incorporated in the People's Republic of China
with limited liability)
(Stock code: 0576)
2010 First Quarterly Results Announcement
For the Three Months Ended March 31
This set of 2010 first quarterly results announcement of Zhejiang Expressway
Co., Ltd. (the "Company") has been prepared in satisfaction of section 4.3 of
the Disclosure and Transparency Rules of the United Kingdom Listing Authority.
The accounting policies adopted for the financial information of this
announcement set out below are consistent with the accounting policies adopted
in the Group's annual report for the year ended December 31, 2009.
The audit committee of the Company has reviewed the quarterly results of the
Company and its subsidiaries (the "Group") for the three months ended March 31,
2010 (the "Period"). Set out below are the Group's unaudited condensed
consolidated statement of comprehensive income, condensed consolidated
statement of financial position and condensed consolidated statement of cash
flow for the Period together with the comparative figures for 2009:
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)
For the three
months
ended March 31,
2010 2009
Notes Rmb'000 Rmb'000
Revenue 1 1,500,679 1,296,566
Operating costs (835,362) (693,682)
Gross profit 665,317 602,884
Securities investment gains 37,352 20,184
Other income 2 33,071 27,810
Administrative expenses (14,354) (14,507)
Other expenses 3,029 (6,841)
Share of losses of associates (4,903) (9,240)
Share of profit of a jointly controlled entity - 5,420
Finance costs (15,007) (15,150)
Profit before tax 704,505 610,560
Income tax expense (177,814) (154,547)
Profit for the Period 526,691 456,013
Other comprehensive income
Available-for-sale financial assets:
- Fair values gain during the Period 3,821 -
- Reclassification adjustments for cumulative gain
included in profit or loss upon disposal (17,365) -
Income tax relating to components of other
comprehensive income 3,386 -
Other comprehensive loss for the Period (net of tax) (10,158) -
Total comprehensive income for the Period 516,533 456,013
Profit for the Period attributable to:
Owners of the Company 418,495 358,992
Minority interests 108,196 97,021
526,691 456,013
Total comprehensive income for the Period
attributable to:
Owners of the Company 413,225 358,992
Minority interests 103,308 97,021
516,533 456,013
Earnings per share - Basic 3 Rmb9.64 Rmb8.27
cents cents
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at As at
March 31, December 31,
2010 2009
Rmb'000 Rmb'000
(Unaudited) (Audited)
Non-current assets 14,344,765 14,499,001
Current assets 18,467,161 17,903,780
Current liabilities 13,827,830 13,931,561
Net current assets 4,639,331 3,972,219
Total assets less current liabilities 18,984,096 18,471,220
Non-current liabilities 1,402,709 1,406,366
17,581,387 17,064,854
Capital and reserves
Share capital 4,343,115 4,343,115
Reserves 10,253,730 9,840,505
Equity attributable to owners of the Company 14,596,845 14,183,620
Minority interests 2,984,542 2,881,234
17,581,387 17,064,854
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOW (UNAUDITED)
For the three months
ended March 31,
2010 2009
Rmb'000 Rmb'000
Net cash from operating activities 363,449 485,527
Net cash used in investing activities (173,921) (1,062,385)
Net cash used in financing activities - (63,373)
Net increase (decrease) in cash and cash equivalents 189,528 (640,231)
Cash and cash equivalents at beginning of
the Period 5,049,003 3,736,945
Cash and cash equivalents at end of the Period 5,238,531 3,096,714
Notes:
1. Segment Information
Comparing to the same period last year, there was no change in the principal
activities of the Group during the Period. The operating results by principal
activities are summarized as follows:
For the three months ended March 31,
2010 2009
Revenue Segment Revenue Segment
Profit Profit
Rmb'000 Rmb'000 Rmb'000 Rmb'000
Unaudited Unaudited Unaudited Unaudited
Segment by business activities
- Toll income 787,123 498,802 718,779 436,250
- Toll road-related operations 374,321 10,550 287,073 16,446
- Securities operation 339,235 155,965 290,714 150,188
1,500,679 665,317 1,296,566 602,884
Securities investment gains 37,352 20,184
Other income 33,071 27,810
Administrative expenses (14,354) (14,507)
Other expenses 3,029 (6,841)
Share of loss of associates (4,903) (9,240)
Share of profit of a jointly - 5,420
controlled entity
Finance costs (15,007) (15,150)
Profit before tax 704,505 610,560
No further analysis of the revenue and profit from operating activities by
geographical segment was prepared as the revenue and profit from operating
activities of the Group were all generated from the People's Republic of China
(the "PRC") during the Period.
2. Other Income
For the three
months
ended March 31,
2010 2009
Rmb'000 Rmb'000
Unaudited Unaudited
Interest income on bank balances and entrusted loan 9,930 5,464
receivable
Rental income 13,779 9,621
Net exchange gain (loss) 115 (93)
Handling fee income 2,093 2,272
Towing income 2,583 2,559
Interest income from structured deposit - 2,000
Others 4,571 5,987
Total 33,071 27,810
3. Earnings per Share
The calculation of the basic earnings per share is based on the profit
attributable to owners of the Company for the Period of Rmb418,495,000 (2009:
Rmb358,992,000) and the 4,343,114,500 ordinary shares (2009: 4,343,114,500
ordinary shares) in issue during the Period.
No diluted earnings per share have been calculated as there were no potential
dilutive ordinary shares in issue in both periods.
4. Provisions
Subsequent to the relevant disclosure made in the Company's 2009 annual report
(pages 105 - 106) relating to "Provisions", as at the date of this
announcement, there is no material change for the Period except for the
following.
Prior to the restructuring of Zheshang Securities by the Company, the original
person-in-charge of one of the Sales Departments under Zheshang Securities
illegally absorbed public deposits and appropriated funds, and thus caused a
loss. During the Period, a compensation amount of Rmb2,700,000 was paid.
BUSINESS REVIEW
With the State's implementation of an array of measures to cope with the
international financial crisis, the momentum toward an overall recovery of the
domestic economy developed further and economic growth continued to rebound.
The GDP growth rate of the country for the first quarter of 2010 was 11.9%,
representing an increase of 5.7 percentage points over the same period last
year. During the Period, the economy of Zhejiang Province also showed a trend
of rapid recovery, with its GDP for the first quarter of 2010 increasing by 15%
over the same period last year. Benefiting from a further recovery of the
macro-economy, the two expressways owned by the Group witnessed growths in
traffic volumes to different extents during the Period.
The Group realized a total income of Rmb1,547.23 million during the Period,
representing an increase of 15.6% year-on-year. Of the total income, Rmb812.78
million was attributable to the two main expressways owned and operated by the
Group, representing 52.5% of the total income; Rmb377.83 million was
attributable to toll road-related businesses of the Group, representing 24.4%
of the total income; and the securities business generated an income of
Rmb356.62 million for the Group, representing 23.1% of the total income.
Toll Road Operations
Benefiting from a further recovery of the macro-economy and completion of the
widening project of the Shanghai Section of the Shanghai-Hangzhou Expressway,
the Shanghai-Hangzhou-Ningbo Expressway enjoyed a recovery of traffic volume
faster than expected during the Period, while its organic growth of traffic
volume was also greater than expected. Different road sections recorded growths
in traffic volumes to different extents, while growth on the Shanghai-Hangzhou
Section of the Shanghai-Hangzhou-Ningbo Expressway was particularly
significant, with its growth rate of traffic volume reaching 17.8% for the
first quarter of 2010.
Benefiting from the economic recovery, the Shangsan Expressway, which had
witnessed a significant decrease in truck traffic volume last year as a result
of sluggish external trade demand, recorded a growth in traffic volume for the
first quarter of 2010. However, the dual-path identification system implemented
in mid-October 2009 has brought certain negative effects to the traffic volume
allocated to on the Shangsan Expressway. Thus, its traffic growth was not as
significant as that of the Shanghai-Hangzhou-Ningbo Expressway during the
Period.
The average daily traffic volume in full-trip equivalents for the
Shanghai-Hangzhou-Ningbo Expressway was 36,848 during the Period, an increase
of 13.4% year-on-year. In particular, the average daily traffic volume in
full-trip equivalents along the Shanghai-Hangzhou Section of the expressway was
37,574, an increase of 17.8% year-on-year, while the average daily traffic
volume in full-trip equivalents along the Hangzhou-Ningbo Section was 36,329,
an increase of 10.4% year-on-year. The average daily traffic volume in
full-trip equivalents along the Shangsan Expressway was 19,246 during the
Period, an increase of 0.7% year-on-year.
During the Period, toll income from the Shanghai-Hangzhou-Ningbo Expressway
amounted to Rmb635.76 million, an increase of 14.1% year-on-year, while toll
income from the Shangsan Expressway amounted to Rmb177.02 million, a 4.4%
decrease year-on-year.
Toll Road-related Businesses
The Company also operates certain toll road-related businesses along its
expressways through its subsidiaries and associated companies, including gas
stations, restaurants and shops in service areas, as well as roadside
advertising and vehicle service businesses.
During the Period, as the macro-economy continued to recover, traffic volumes
of the two expressways owned by the Group have picked up. With the traffic
return and a surge in prices of petroleum products, income from the
aforementioned toll road-related businesses amounted to Rmb377.83 million
during the Period, representing a year-on-year increase of 30.3%.
Securities Business
In the first quarter of 2010, given a steadily and rapidly growing
macro-economy and a positive trading atmosphere in the stock market, the two
markets in Shanghai and Shenzhen performed steadily. Zheshang Securities has
been actively expanding various businesses, while its market share of the
brokerage business, total number of transactions and customer assets entrusted
continued to rise, continuing a positive development trend. The Company's
various businesses including investment banking, asset management, fixed income
and futures intermediary services have made notable progress. However, with
market competition further intensifying, average commission rates of the
brokerage business have decreased.
During the Period, Zheshang Securities recorded an operating income of
Rmb356.62 million, representing an increase of 16.3% year-on-year. Of this
income, brokerage commission income amounted to Rmb310.57 million, a
year-on-year increase of 10.8%; and bank interest income amounted to Rmb46.05
million, a year-on-year increase of 74.3%. In addition, Zheshang Securities
invested more than 90% of the proprietary securities trading business in
relatively low-risk bonds in order to control risks. As a result, an income of
Rmb37.26 million from securities investment was accounted for during the Period
in the condensed consolidated statement of comprehensive income.
Long-term Investments
For Zhejiang Expressway Petroleum Development Co., Ltd. (a 50% owned associated
company of the Company), benefiting from a further recovery of the
macro-economy and a surge in prices of petroleum products, sales of petroleum
products increased significantly during the Period. The associated company
realized sales income of Rmb751.42 million, representing an increase of 37.0%
year-on-year. During the Period, net profit of the associated company was
Rmb1.07 million.
During the Period, as traffic diversions to the new neighboring road network
have stabilized, the 69.7km Jinhua Section of the Ningbo-Jinhua Expressway,
operated by Zhejiang Jinhua Yongjin Expressway Co., Ltd. (a 23.45% owned
associated company of the Company), recorded an average daily traffic volume in
full-trip equivalents of 9,056; while toll income amounted to Rmb40.85 million,
an increase of 26.9% year-on-year. However, due to its heavy financial burden,
the associated company incurred a loss of Rmb19.66 million during the Period.
JoinHands Technology Co., Ltd. (a 27.582% owned associated company of the
Company) generated its income primarily from its printing operations and
property leasing during the Period. Due to a lack of improvement in its
operations, the associated company incurred a loss of Rmb0.77 million during
the Period.
FINANCIAL ANALYSIS
Liquidity and Financial Resources
As at March 31, 2010, current assets held by the Group amounted to Rmb18,467.16
million in aggregate (December 31, 2009: Rmb17,903.78 million), of which bank
balance and cash accounted for 29.9% (December 31, 2009: 29.5%), bank balance
held on behalf of customers accounted for 63.5% (December 31, 2009: 64.4%) and
held-for-trading investments accounted for 3.7% (December 31, 2009: 2.9%).
Current ratio (current assets over current liabilities) as at March 31, 2010
was 1.3 (December 31, 2009: 1.3). Excluding the effect of customer deposits
arising from the securities business, the resultant current ratio of the Group
(current assets less balance of cash held on behalf of customers over current
liabilities less balance of customer deposits arising from securities dealings)
was 3.1 (December 31, 2009: 2.6).
During the Period, net cash inflow generated from the operating activities of
the Group amounted to Rmb363.45 million.
Borrowings and Solvency
As at March 31, 2010, total liabilities of the Group amounted to Rmb15,230.54
million (December 31, 2009: Rmb15,337.93 million), of which 76.6% was customer
deposits arising from securities dealings and 10.7% was borrowings.
Total interest expenses for the Period amounted to Rmb15.01 million, whilst
profit before interest and tax amounted to Rmb719.51 million. Therefore, the
interest cover ratio (profit before interest and tax over interest expenses)
stood at 47.9 (2009: 41.3).
The asset-liability ratio (total liabilities over total assets) was 46.4% as at
March 31, 2010 (December 31, 2009: 47.3%). Excluding the effect of customer
deposits arising from the securities business, the resultant asset-liability
ratio (total liabilities less balance of customer deposits arising from
securities dealings over total assets less balance of cash held on behalf of
customers) of the Group was 16.9% (December 31, 2009: 18.4%).
Capital Structure
As at March 31, 2010, the Group had total equity of Rmb17,581.39 million,
fixed-rate liabilities of Rmb12,871.78 million, floating-rate liabilities of
Rmb422.27 million and interest-free liabilities of Rmb1,936.49 million,
representing 53.6%, 39.2%, 1.3% and 5.9% of the Group's total capital,
respectively. The gearing ratio, which was computed by dividing the total
liabilities less balance of customer deposits arising from securities dealings
by total equity, was 20.2% as at March 31, 2010 (December 31, 2009: 22.5%).
OUTLOOK
As a result of the stimulation upon investments and consumption by the
government's domestic demand-boosting policies, as well as the recovery growth
in import and export trades, China's economy recorded a rapid, double-digit
growth for the first quarter of 2010. Since the beginning of this year,
Zhejiang Province's economy continued the upward trend extended from the fourth
quarter of 2009. As economic recovery continues, the economic growth rate of
Zhejiang Province is expected to be higher than that of the country.
As the macro-economy has been further improving since the beginning of the
year, the traffic volumes of the two expressways of the Group have rallied and
resumed growth. Toll incomes and the toll road-related businesses are expected
to continue to improve. The ShenJiaHuHang Expressway, which was opened to
traffic in early-February of this year, has so far brought less-than-expected
traffic diversions to the Group's expressways. On the other hand, the ZhuYong
Expressway, which plans to be opened to traffic in July, is expected to cause
traffic diversions to certain sections of the expressways of the Group after
its opening.
The long-awaited toll-by-weight policy for trucks on expressways in Zhejiang
Province has been officially implemented since mid-April of this year. The
policy aims at reducing overloading practices by trucks and road accidents,
thus lowering road maintenance costs and enhancing travelling capacity. Based
on preliminary statistics, the policy will bring a slight increase on the
Company's toll income.
Meanwhile, the grand opening of the Shanghai World Expo on May 1 will stimulate
traffic growth within the Yangtze River Delta region. As a result, traffic
volumes along the Group's expressways are expected to grow, thereby bringing
further positive impact to the Company.
Zheshang Securities will continue to maintain a steady growth momentum for its
various businesses as it further increases its number of branch offices and
enhances its business network deployment; expands the market shares of its
various businesses; and embarks on other securities businesses including
investment banking and asset management. However, costs are expected to
increase significantly during the business expansion process.
Despite further improvements, the domestic macro-economy still faces
uncertainties concerning the recovery of the international economy, with a
number of contradictions and difficulties remaining to be resolved. Having
experienced an economic downturn, the various businesses of the Company are
heading toward an upward trend. Although neighboring expressway networks have
been getting more extensive and unfavorable factors such as traffic diversions
remain, the management of the Company is confident that it will continue to
strengthen the core expressway business and increase the core competitiveness
of the securities business, whilst stepping up the process of project
acquisitions to cultivate new sources of profit growth, with a view to
achieving greater operating results for the Company.
By Order of the Board
Chen Jisong
Chairman
Hangzhou, the PRC, May 10, 2010
As at the date of this announcement, the executive directors of the Company
are: Messrs. Chen Jisong, Zhan Xiaozhang, Jiang Wenyao and Zhang Jingzhong; the
non-executive directors are: Messrs. Zhang Luyun and Zhang Yang; and the
independent non-executive directors are: Messrs. Tung Chee Chen, Zhang Junsheng
and Zhang Liping.
Statement :
1. An electronic version of the Company's 2010 First Quarterly Results Announcement
is available at www.zjec.com.cn.
2. A copy of this document has been submitted to the UK Listing Authority and will
shortly be available for inspection at the UK Listing Authority Document Viewing
Facility which is situated at the Financial Services Authority, 25 The North Colonnade,
Canary Wharf, London E14 5HS.
Monday, 20th May 2024
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