Guangzhou Investment Announces 2005 Interim Results

Guangzhou Investment Announces 2005 Interim Results

Benefit from Rise in Valuation of Leased Property & Continuous Growth in Toll Road & Newsprint Business, Profit Attributable to Shareholders Recorded Encouraging Growth of 19%

(25 September 2005 - Hong Kong) - Guangzhou Investment Company Limited ("GZI" or the "Group"; stock code: 0123), one of the ten largest integrated property developers in Guangzhou, is pleased to announce its unaudited interim results for the six months ended 30 June 2005.

Benefited from the rise in valuation of rental properties and continuous growth in toll road and newsprint manufacturing businesses, the Group recorded an encouraging growth of 19% in profit attributable to shareholders to HK$132 million during the period under review. Affected by the changes in the accounting policies on property business, the Group s turnover dropped to HK$1,588 million (1H 2004: HK$2,274 million). Basic earnings per share amounted to HK 2.08 cents, representing an increase of 18% as compared with HK 1.77 cents for the corresponding period in 2004. In return for the support of our shareholders, the Board of Directors proposed an interim dividend payment of HK$0.01 per share (2004 interim dividend: HK0.83 cents).

With the successive improvement in the commercial environment in Guangzhou, the level of rents and occupancy ratio for rental properties continued to increase. The Group s strategy with "emphasis on both development of residential properties and operation of commercial properties" proved to be a remarkable success. Newly launched commercial property appealed to a lot of multi-national companies and premium commercial tenants. During the period under review, revenue from property rentals for Guangzhou and Hong Kong reached HK$244 million, representing a growth of 21% from the first half of 2004. Due to the increase in revenue, valuation of the Group s rental properties increased by HK$663 million.

During the period, the Group s revenue recognition of property sales on the books changed from the percentage completion method to recognition upon full completion of the project. The floor area of properties sold during the period was 25,000 sq.m., with a turnover of HK$277 million, representing a decrease of 83% and 75% respectively as compared with the same period last year.

For the first half of 2005, the Group s major toll road business achieved a turnover of HK$204 million, representing a growth of 7% from the first half of 2004, which was mainly attributable to further enhancement in the comprehensive road network as well as the organic growth in traffic flow. In addition, profit attributed to associated companies reached HK$103 million, with a growth of 13% as compared to the corresponding period in 2004. The performance was particularly promising for the jointly controlled entity Northern Second Ring Expressway, which boosted profit attributable to jointly controlled entities to substantially increase by 57 times to HK$14.53 million as compared with the same period last year.

The Group s newsprint manufacturing business also benefited from strong demand for newsprint in the domestic market. With the increase in selling price and the strengthening of internal management, the Group successfully achieved after-tax profits of HK$49.02 million, representing a growth of 36% from the first half of 2004.

Looking ahead, the Group is confident of the robust development of the Guangzhou property market. The Group s ample business experience of over two decades in Guangzhou would enable it to manage and avoid risks of potential policy changes. The Group will leverage on the foundation of the well-established strategy of the year to strengthen its capability in mastering short-term market trend through adjustment of development and sales plans, so as to capitalize on its competitive advantages to deliver outstanding market performance.

During the period, the Group s floor area under construction amounted to 1.2 million sq.m., including office and residential property projects with prime location, comprehensive ancillary facilities and creative design, which are expected to bring forth significant contribution to the Group. With the revision of the boundaries of Guangzhou s administrative districts, the new economical belt in the southern part of Guangzhou would become more manifest over time with the establishment of the new Nansha district. The Group has substantial land reserves in Nansha and is expected to greatly benefit from the rapid development of the district. This is borne out by the positive sale volume recorded for the Group s developed projects in Nansha.

For further information, please contact:
iPR ASIA LTD
Jane Yip/ Ellen Chan/ Charlotte Cheung
Tel: 2136 6175/ 2136 8059/ 2136 6950
Fax: 2136 6068
Email: janeyip@iprasia.com.hk / ellenchan@iprasia.com.hk/ charlottecheung@iprasia.com.hk
Website: www.iprasia.com.hk