Guangzhou Investment Announces 2006 Interim Results

Revenue & Profit Attributable to Shareholders
Surged 52% & 141% Respectively
Due to Significant Growth in Property Sales & Toll Road Operations

Financial Highlights

(Hong Kong, 17 September 2006) 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 interim results for the six months ended 30 June 2006.
Since the implementation of the policy of balanced development of residential and commercial properties , the Group has been focusing on developing the property market in Guangzhou City of Guangzhou Province. Benefiting from the relatively mature property market and strong demand, the Group recorded an impressive 52% growth in revenue, reaching HK$2,414 million. Profit attributable to shareholders also surged 141%, from HK$132 million in the corresponding period of 2005 to HK$318.7 million. In return for shareholders support, the Board of Directors declared an interim dividend of HK1.89 cents per share (2005 interim dividend: HK1.00 cents).
Since the Group changed its accounting policy for property sales recognition, the effect of the change from percentage of completion method to completed delivery was largely reflected in last year s results. Property sales of the Group during the period increased substantially by 568% to 167,000 square meters from 25,000 square maters last year, basically returning to normal level. Property sales proceeds reached HK$1,239 million, representing a remarkable growth of 347% over HK$277 million for the corresponding period last year. During the period under review, the Group s major properties sold were from the projects in Springland Garden, Glade Village District C, Southern Le Sand Phase 2, Lung Wah International Godown in Hong Kong and Tsuen Wan International Centre. In the first half of 2006, investment property revaluation gain was HK$69 million.
As for toll road operations, the Group recorded a revenue of HK$211 million for the first half of 2006, posting a year-on-year increase of 3.6% and an encouraging profit growth of 17.9%. Profit generated from the jointly controlled entity Guangzhou Northern Second Ring Expressway Co., surged from HK$20 million in the corresponding period last year to HK$30.49 million, translating into a substantial increase of 52%. In addition, the attributable profit in associated companies recorded a year-on-year growth of 18.9% to HK$120 million.
During the period, the 31.3% interest in GZI Real Estate Investment Trust held by the Group brought about an attributable profit of HK$33 million. The newsprint production was affected by the inspection and maintenance work during the Chinese New Year and also a drop in sales price, leading to a decrease in revenue by 11% in the first half of 2006.
For the first half of 2006, the GDP of Guangzhou posted a year-on-year growth of 14.2%, demonstrating robust economic development. During the period, the overall property price increased by 15.7% compared to the same period of last year to RMB6,153 per square meter. To ensure a more rational and healthy growth of the property market, the PRC government introduced a number of macro economic control measures in May. In view of the measures, apart from increased development in commercial projects, the Group also actively engaged in sales and development of small property unites to fulfill the government requirement and cater to the market need. From January to June this year, the Group registered an average sales price of RMB7,000 per square meter, slightly higher than the market average price of Guangzhou.
Looking ahead, the property market in Guangzhou is expected to provide a favorable market environment with stable growth. During the period, the GFA under development by the Group was over 1.3 million square meters, providing sufficient stock for its future development. In addition, apart from relying on the cost advantage of its land bank, the Group will actively engage in land auction to increase its land reserve, for the purpose of sustainable development.
For the toll road operations, the Group will actively pursue opportunities in promising expressway projects to increase the scale of operation, either through acquisition or participation.
As for newsprint production, following the upgrade and trial-run of production line 1 in June 2006 and the continued upgrade to be carried out in other production lines, the Group s newsprint capacity will increase substantially, strengthening the competitiveness of the Group and also bringing a larger market share as well as better return to shareholders.
Commenting on the interim results, Mr Ou Bingchang, chairman of GZI, said, For the first half of 2006, benefiting from the rise in property sales and toll road operations, the Group showed satisfactory performance. GZI will continue to implement effective business development strategies for enhancing its competitiveness and improvement of its operating efficiency, in order to seize market opportunities, and bring better returns to shareholders.
End
About Guangzhou Investment Company Limited

GZI was listed on The Stock Exchange of Hong Kong Limited in December 1992. The controlling shareholder of GZI, Yue Xiu Enterprises (Holdings) Limited, is the resident entity of the Guangzhou Municipal People s Government in Hong Kong. The Group has built up several businesses consisting of property, paper and toll road mainly located in Guangzhou. These businesses all have substantial market share in Southern China. Guangzhou Investment spun off some investment properties and listed as GZI Real Estate Investment Trust (stock code: 0405) in Hong Kong in December 2005.
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