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Dear Shareholders,
In 2010, total traffic volume and toll revenue of the Group's existing toll road projects were 90 million vehicles and RMB1,959 million, representing an increase of 11% and 4% respectively over 2009. Due to the fact that two major expressway projects in Hebei are at the stage where our joint venture partners are receiving a larger portion of the returns to recover their investment costs, the performance of the Group’s toll road business in 2010 was tarnished to a certain extent. It is anticipated that starting from 2013 the partners would have recovered their investment costs, therefore the Group’s entitlement in the return of the projects will gradually increase in accordance with the joint venture agreements. In order to optimise the value of its toll road portfolio, in 2010, the Group, via the joint ventures, disposed of Hanguan Highway located in Hebei Province and a portion of Heye Highway located in Hefei, Anhui Province. The Group has put in additional effort in securing new expressway projects in 2010. To this end, the Group has reached consensus with certain business partners to acquire the operating rights of two expressways in the Shanxi and Henan provinces, and is currently establishing a joint venture enterprise in preparation for completing the acquisition of the expressway project in the Shanxi Province. As discussed in last year's annual report, the Group's property business in 2010 improved significantly. Contracted sales in 2010 amounted to HK$7,573 million, representing an increase of 20% over 2009. Revenue generated from the delivery of properties was HK$4,942 million, representing an increase of 7% over 2009, and a net profit of HK$482 million was realised. In 2010, the Group, through public tenders and auctions, successfully acquired four pieces of residential and commercial land with a total GFA of 610,000 sqm. These projects are located in Liwan District of Guangzhou, Changping District of Beijing, Jiading District of Shanghai and Binhu District of Wuxi, all of which satisfied the investment return and cash flow requirements as well as the development plans of the Group. Apart from these, the Group also completed the acquisition of the International City project located in Shijiazhuang, Hebei in June 2010, adding another 200,000 sqm to the Group's total GFA. With the coordination of the Tianjin Municipal Government, in August 2010, the Group withdrew the lawsuit against the former major shareholders of Sunco Real Estate in Hong Kong. The relevant claims will be resolved through mediation by the Tianjin Municipal Government. The information of relevant claims is currently under review. The Group expects that the rapid economic growth and increase in personal disposable income in the PRC will continue to benefit the Group's business in 2011. With respect to the toll road business, the Group will continue to identify and invest in appropriate expressway projects in the next few years, in order to optimise and improve the Group's portfolio and the return thereof. For the property business, we believe that with the dedicated integration and enhancement arrangements undertaken in the past few years, the management team has been polished to become one of the leading teams in the industry, and the operations have entered into a virtuous cycle whereby the business will provide a gratifying return to the Group in the foreseeable future. Through further improvement in the quality of the products, the competence of the staff teams and the recognition of the brand, the Group is committed to realise the hidden value as well as the profitability of the existing projects. Meanwhile, the Group will continue to identify suitable land to make the property business much stronger. I hereby express my sincere gratitude to all of our trustworthy, hardworking and creative staff, the Group's most valuable asset, for their effort and contribution in the past year, and thanks to our customers, business partners and shareholders for their enduring support. Ko Yuk Bing
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The Group's profit attributable to the owners of the Company for 2010 was HK$625 million (2009: HK$728million). Earnings per Share for 2010 was HK$0.84 (2009: HK$0.99). The 2009 results had included a gain of HK$579 million from the disposal of two toll road projects (including Jihe Expressway (Eastern Section)). Deducting the aforesaid gain, the profit after tax increased by 319% in 2010, mainly due to the significant improvement of the property business.
