Guangzhou Investment Achieved Remarkable Increase of Annual Profit in 2003

Synergistic Effects by the Acquisition of Guangzhou Development
Fully Reflected
Robust Property Sales and Rental Income in Guangzhou Recorded
GZI Achieved Remarkable Increase of Annual Profit in 2003

(Hong Kong 15 April, 2004) 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 today its annual results for the year ended 31 December 2003.
During the year under review, the Group s turnover recorded a year-on-year increase of 21.0% to HK$3,901,803,000, which was attributable to the impressive results of both property and highway businesses. Profit attributable to shareholders was HK$300,653,000, also representing a substantial increase as compared with 2002. Basic earnings per share were 4.89 HK cents while a loss of 23.90 HK cents per share was recorded in 2002. To reward the continuous support of shareholders, the Board of Directors recommends the payment of a final dividend of 1.08 HK cents per share. Together with the interim dividend of 0.8HK cents per share, total dividend for the year amounted to 1.88 HK cents per share. (2002: Nil)
The sales of properties in Hong Kong and the PRC reached HK$1.95 billion during the year and surged by 207% when compared with 2002. Pre-sales and sales of properties by the Group amounted to 294,643 sq. m.. Major projects for sale included Hong Cheng Garden, Hua Cheng Mansion and Galaxy City in Guangzhou. In addition, the Group has sold out the non-core residential property at Queen s Road West, with site area amounting to approximately 584 sq. m.
During the year, the rental area of the Group s properties increased significantly to 450,000 sq. m. The rental income of Guangzhou and Hong Kong properties amounted to HK$314 million, representing a year-on-year increase of 212%. Major rental projects included City Development Plaza, White Horse Commercial Building and Guangzhou Sports Stadium Building etc.
Commenting on the annual results, Mr. Ou Bingchang, Chairman of the Group, said, After completing the acquisition of a majority interest in the assets of Guangzhou City Construction & Development Holdings Limited ( Guangzhou Development ), the Group s land and project resources of different types increased significantly. The impressive synergistic effects were fully reflected in 2003. The high quality and convenient location of the Group s projects as well as the expansion of the domestic economy in the PRC stimulated the sales of the Group s residential projects. In addition, the recovery of the Hong Kong property market in 2003 expedited the sales of projects in Hong Kong. Over 70% of offer projects located in the urban area of Guangzhou were sold during the year. The significant increase in the Group s rental area was mainly attributable to the completion of a large number of new properties such as Fortune Square, resulting in substantial increase in rental income. All these constitute the growth momentum for the Group s business in 2003.
In 2003, the area of property under construction increased by 187,117 sq. m. Hence, the floor area of the property under construction increased to 1,200,000 sq. m. and the majority will be completed in 2004 and 2005, underpinning the Group s profitability for the coming few years.
As at 31 December 2003, the Group s land bank held for medium term development also increased to 3.62 million sq. m., of which 45% was located in the urban area of Guangzhou while the remaining 55% was located in the newly developed Nansha. The land bank in the urban area mainly included sites for office developments in Tianhe District and the sites for residential developments in Haizhu District. The Government s policy of raising compensation of urban renewal projects in Guangzhou last year is expected to reduce the supply of residential property in urban area, which in turn will enhance the value of the Group s land bank. As a number of major infrastructure projects for transportation in Nansha will be completed in the next one to two years, travel time from Nansha to major cities of the Pearl River Delta region will be further reduced. The Group owns enormous amount of land bank in Nansha, which were acquired at low cost and are suitable for short and medium term development.
During the year under review, GZI Transport Limited ( GZI Transport ; stock code: 1052), the toll road subsidiary of the Group, recorded a profit attributable to shareholders of HK$223.8 million, representing an increase of 57.1% as compared with 2002. The satisfactory growth in profit was primarily attributable to the mitigation of the negative factors in 2002 including traffic diversion by other new roads, losses of Guangzhou Northern Second Ring Expressway recoded in its first year of operations and the expiry of the tax waiver period of certain road projects. This together with the flourishing economy of the Pearl River Delta region helped stimulate the growth in traffic volume.
Guangzhou Paper Co., Ltd. ( Guangzhou Paper ) under the Group continued its cyclical adjustment in 2003. The turnover of Guangzhou Paper decreased by 12% to HK$1.0 billion when compared with 2002. Despite of that, the implementation of stringent cost control measures such as downsizing and early repayment of bank loans exceptionally reduced the administrative and finance costs, which considerably offset part of the increase in raw material cost.
Mr. Ou continued, Upon the completion of the acquisition of Guangzhou Development, the Group finished the reorganization and adjustment of its business model and shortened the construction and sales cycle. In 2004, the Group is confident of realizing the synergies brought forth by the acquisition of Guangzhou Development and increase its return on net assets. We expect the transaction volume of properties in Guangzhou region will increase along with the growing demand and decreasing inventory. The Group will increase its land bank in the urban area of Guangzhou while proactively seek after business opportunities for its expansion into the real estate markets of other cities in the Pearl River Delta region. As for highway business, the Group will continue its investment in expressway projects in the centre of the Pearl River Delta region, with a view of enhancing the future growth potential of the Group s toll road investment portfolio.
Looking ahead, Mr. Ou remarked, The promising economic environment in the Peal River Delta region, the signing of the Closer Economic Partnership Arrangement (CEPA) of Hong Kong with the Mainland as well as the proposed construction of Hong Kong-Zhuhai-Macau bridge will further accelerate the integrated development between the Pearl River Delta region, Guangzhou and Hong Kong. Meanwhile, the Guangdong Province is undergoing a second industrialization, which propels the development of heavy industries and the economic growth of Guangdong. Guangdong province is in the process of adjusting its household registration policy. It is proposed that residents originate from other provinces but have permanent address in Guangdong will be allowed to register as Guangdong households. This new policy is expected to increase demand for residential properties substantially. As the leading corporation the Guangdong Province, the Group s property and highway businesses based in Guangzhou will become major beneficiary. The Group will continue to strengthen its operational and cash flow controls on its existing properties and highway projects, so as to generate fruitful rewards for our supportive shareholders.

About GZI
GZI is one of the leading property developers in Guangzhou City. The Group is focusing on middle market residential projects in Guangzhou. It also develops offices and suburban residential projects selectively. In addition, the Group has built up other businesses such as, pulp and paper, and toll road which are mainly connected to the transportation hub of Guangzhou city.

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