11 Sep 2008
Press Conference for 2008 Interim Results
With Favorable Government Policies Environmental Protection Business Continues Robust Growth
China Everbright International Limited ("Everbright International" or "the Group"), announced its unaudited interim results for the six months ended 30 June 2008.
In the first half of 2008, the Group's environmental protection business grew rapidly with certain projects commencing operation. All four major sectors of the business had steady growth, contributing to increased turnover and recurring profit of the Group. During the period under review, the consolidated turnover of the Group amounted to HK$788,711,000, representing an increase of 52% from HK$519,686,000 for the corresponding period last year. EBITDA on recurring basis was HK$288,683,000, representing a growth of 58% from HK$182,365,000 for the same period last year. Profit attributable to equity shareholders of the Company was HK$134,208,000, a decrease of 20% as compared to the profit of HK$167,551,000 for the last corresponding period. Basic earnings per share for the first half of 2008 were HK4.28 cents, HK1.16 cents less than the HK5.44 cents of the last corresponding period. Notwithstanding the robust growth in core business earnings, the Group recorded a decline in net profit during the period because of the following reasons: (1) The result of last corresponding period included non-recurring profit of HK$37,347,000, comprising profit on sale of other financial assets of HK$23,683,000 and valuation gains on investment properties of HK$13,664,000; (2) Significant increase in deferred tax charge as compared with last corresponding period is due to introduction of dividend withholding tax on foreign enterprise investors in the PRC amounting to HK$16,515,000 and the one-off write-back of deferred tax of HK$17,686,000 last year arising from the promulgation of Tax Unification Policy in the PRC. Stripping the impact of these factors, the net profit for the period increased by 34% as compared with last corresponding period. To thank shareholders for their support and taking into consideration the long term continual development of the Group, the Board declared to pay an interim dividend of HK0.6 cent per share (2007: HK0.6 cent per share) to equity shareholders of the Company.
During the period under review, turnover from environmental protection business was HK$724,692,000, an increase of 55% when compared with the last corresponding period and accounting for 92% of the Group's total turnover. EBITDA of the business reached HK$247,018,000, representing an increase of 69% against the last corresponding period and accounting for 86% of the EBITDA on recurring basis of the Group.
During the period under review, the Jiangyin waste-to-energy project commenced commercial operation and the taking over and upgrade work of the Jiangyin Waste Water Treatment Project was completed. The Group also took over the Boxing Waste Water Treatment Project, which began operation and has started to receive waste water treatment fees. The Group is now upgrading the project. In addition, the upgraded Zibo Southern and Northern Plants are in compliance with Grade 1A discharge standard. Phase II of the Suzhou Methane-to-Energy Project was successfully completed and commenced commercial operation. The completion of these projects expanded the scale of the Group's environmental protection business.
The total number of environmental protection projects operated by the Group has increased to 22, commanding a total investment of approximately RMB5.05 billion. All the operations together have an annual household waste processing capacity of approximately 1.5 million tonnes, an annual on-grid power generation capacity of approximately 400 million kilowatt-hour, a daily waste water treatment capacity of approximately 1.5 million tonnes and other waste processing capacity of approximately 20,000m3 per annum. At present, the Group had completed environmental protection projects of investment cost totaling of approximately RMB3.65 billion. Investment in projects still under construction amounted to around RMB1.20 billion. For projects yet to commence construction, the estimated investment cost is approximately RMB200 million.
Mr. Chen Xiaoping, Chief Executive Officer of Everbright International, said, "Our environmental protection business has developed into a cluster-based model that facilitate lateral business development. This model allows the Group to explore and extend other environmental protection projects to other areas and build long-term cooperative relationship with local governments and also enables the Group to reap many benefits of centralized management. Currently, the Group has environmental protection projects in Suzhou City, Yixing City, Jiangyin City and Changzhou City in Jiangsu Province, Jinan City, Qingdao City, Zibo City and Binzhou City in Shandong Province. Our projects not only benefit prosperous cities by giving them a green environment but create an ecologically viable environment for factories in remote areas. Moreover, the Group has also been active in exploring projects in other regions, such as the Pearl River Delta, so as to strengthen the Group's leadership in the environmental protection industry in China."
During the period under review, traffic on the Fuzhou Qingzhou Bridge ("Qingzhou Bridge") continued to grow and generated steady cash flow for the Group. For the six months ended 30 June 2008, the average daily number of standard vehicles crossing the bridge increased to 34,632, 15% higher than in the same period in 2007, and brought an EBITDA of HK$49,590,000 to the Group, representing an increase of 15% as compared with the last corresponding period.
In addition, the Group owns a four-storey commercial complex with a shopping arcade in Shenzhen Zhongshan Garden for lease, with major tenants including Walmart, Park'n Shop and Macdonald's. During the period under review, the property was 98% occupied. It brought to the Group an EBITDA of HK$6,143,000, an increase of 26% compared with the last corresponding period. In addition, the Shanghai Trade Square and International Apartments, 14%-owned by the Group, continued to have a steady operation.
Mr. Chen concluded, "This year the country has increased spending on environmental protection and rolled out a series of environmental protection policies, aiming to achieve complete collection and treatment of sewage in 36 major cities within two years, reasonably adjust sewage discharge fee, sewage treatment fee and waste handling charges, development of energy-efficient service and environmental protection businesses and exploring renewable energy. All these are presenting huge business opportunities to our environmental protection business. To enhance competitiveness, the Group will continue to push forward development of our four major sectors, invest more resources in research and development of environmental protection technologies, step up training to ensure mastery of key technologies by our staff, and promote innovation and continuously improve the core competence of the Group. With the support of its parent company, China Everbright Holdings Company Limited, the Group will seek to take full advantage of the "Everbright Environment" brand to secure more development projects, strengthen leadership in the environmental protection industry and ultimately generate more fruitful returns for shareholders."
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