Guangdong Yueyun Transportation (03399HK) Announces Completion of Company Name Change and Fast Growth in 2013 Interim Profit

Guangdong Yueyun Transportation Announces Completion of Company Name Change

New name highlights Company's main business and competitive strength as HK-listed flagship of "Guangdong Provincial Communication Group"

Asset injections from parent createssynergies

First half net profit jumped 22.6% with basic earnings per share reaching RMB0.16

HONG KONG, Aug. 23, 2013 /PRNewswire/ -- Guangdong Yueyun Transportation Company Limited ("Yueyun Transportation" or the "Company," together with its subsidiaries collectively known as the "Group," stock code: 03399.HK), a leading expressway-related services provider in Guangdong Province engaged in motor vehicle transportation and auxiliary services, materials logistics services and expressway-related services, today announced the successful completion of the change in its company name. The English name of the Company is changed to "Guangdong Yueyun Transportation Company Limited" from "Guangdong Nan Yue Logistics Company Limited".

Yueyun Transportation, benefited from strong parent "Guangdong Provincial Communication Group Company Limited" (the "Parent Company" or the "GCGC") backing, proactively pushing forward corporate integrations and acquisitions. By the end of 2012, the Company completed a strategic business restructuring to acquire the Parent's Guangdong Vehicles Transportation Group Company Limited and swapping out the low profit margin intelligence transportation business. The strategic business restructuring broadened the Group's earnings base and further expanded its business network in the road transport industry. After this restructuring, Yueyun Transportation's core business became more focused. The new company name finely reflects the close relationship with its Parent Company and its core transportation-related business in Guangdong Province.

Chairman of the Board Mr. Liu Wei said: "It has been some eight years since the company's shares were listed in Hong Kong. As the flagship firm of GCGC listed in Hong Kong, the Company has become the leading transport and logistics services group in Guangdong Province and throughout China. In recent years, the Group actively expanded and integrated its business. The change in the company name not only more accurately reflects the nature of our business, but also enables the Group to take advantage of the 'Yueyun' brand to establish a good reputation, and let investors and the general public have a clearer understanding of the Company."

Currently, the Group's business structure is composed of three core businesses, namely, motor vehicle transportation, material logistics and expressway service zone operations. Of these, passenger transportation accounted for 40.6% of overall business. The Group also operates and manages 63.5 pairs of service zones, more than 50 passenger stations, more than 1,000 routes and over 5,000 buses.

2013 Interim results achieved satisfactory growth

Yueyun Transportation is pleased to announce its 2013 Interim Results. For the six months ended 30 June 2013 (the "Period"), Yueyun Transportation recorded a net profit attributable to owners of equity holders of the Company of RMB68.64 million, representing a yearly increase of 22.61% as compared to the restated profit of RMB55.98 million for the corresponding period last year. Benefiting from strategic restructuring by the end of 2012, the Group's earnings have grown markedly with improved operating efficiency up significantly, and sales costs, administrative expenses and financial expenses are now down apparently. Upon the strategic restructuring and asset swap as at the end of 2012, the Group restated its financial statement for 2012.  As for the six months ended June 2012, the Group's net profit attributable to owners of parent company was upwardly revised from RMB29.53 million to RMB55.98 million. As at 30 June 2013, the equity attributable to owners of the company per share was RMB3.41.

2013 Interim Financial Summary

For the first half year, the Group recorded turnover mainly from three business segments, namely motor vehicle transportation and auxiliary services, material logistics services and expressway service zones. Turnover of the Group amounted to RMB2.63 billion (2012: RMB2.92 billion), representing a decrease of 9.76% or RMB285 million compared to last year, which was mainly due to motor vehicle transportation and auxiliary services being affected by the transfer of three companies, including Meizhou Yueyun in June 2012, and the policy of changing from business tax to value-added tax, resulting in a year-on-year decrease in revenue of RMB142 million. If the above factors are not taken into account, turnover from motor vehicle transportation and auxiliary services for the first half year actually increased by 9.7%.

Gross profit of the Group for the first half of the year amounted to RMB437 million, representing a decrease of 15% year on year, as motor vehicle transportation and auxiliary services being affected by the transfer of three companies, including Meizhou Yueyun in June 2012, and the policy of changing from business tax to value-added tax, resulting in a fall of RMB61.35 million.  If the above factors are not taken into account, gross profit from motor vehicle transportation and auxiliary services for the first half actually increased by 4.7%.

Segmental Business Overview:

Motor vehicle transportation and auxiliary services

During the period, the company recorded a turnover of RMB1,068 million for the motor vehicle transportation and auxiliary services business, accounting for 40.6% of total turnover. The gross profit stood at RMB251 million, representing year-on-year fall of 17.1%. Of the total, cross-border transportation operations obtained a gross profit of RMB19 million, maintaining a similar level as last period. Meanwhile domestic transport operations achieved a gross profit of RMB232 million, representing a decline of approximately 18%. The gross profit drop was mainly due to the transfer of three companies, including Meizhou Yueyun, in June 2012, and the policy of changing from business tax to value-added tax. If the above factors are not taken into account, gross profit from motor vehicle transportation and auxiliary services actually increased by 3.7% compared to the same period last year. The Group operated over 2,500 domestic passenger transportation stops and managed 53 passenger terminals, carrying 27.73 million passengers for the period.

Material logistics services

During the period, turnover from the material logistics services business declined by 9.4% to RMB 1,180 million, accounted for approximately 44.9% of total turnover. The decrease in turnover was mainly due to the decreased number of work projects and the decline in steel price. Gross profit from the material logistics services business amounted to RMB55 million, representing an increase of approximately 8.4%. Gross margin was 4.67%, expanding by 0.77 percentage points year-on-year (2012:3.9%). In accordance with the "Guangdong Province Highway Construction Plan from 2013 to 2017," total investment in expressway construction will amount to RMB722.6 billion, with a total of 5,464 kilometers and 69 expressway projects to be completed. The Company believes the plan will have positive impact on the Group's material logistics services segment.

Expressway service zones

The Group's expressway service zone business mainly includes operation of convenience stores, restaurants, petrol stations and expressway outdoor advertising. For the period, turnover from expressway service zones increased by 18.6% to RMB307 million, accounting for 11.7% of the Group's total turnover. Gross profit for the period rose 13.9% year on year, with a gross profit margin of 21.7%. The Group currently manages a total of 63.5 pairs of service zones, increased by 3.5 pairs from 60 pairs in 2012. Higher turnover for the period was attributable to an increase in the number of service zones. Also, the policy of "Toll-free for small vehicles during major holidays" promoted passenger traffic. The Group will carry out intensive commercial development on service zones with commercial value. Meanwhile, efforts will be made into building the brand of "Loyee" convenient stores and the expansion of chain-store outlets beyond the service zones.

Tai Ping Interchange toll business

Tai Ping Interchange, located in Dongguan recorded revenue of RMB75 million, representing an increase of 9.4%. Such a change was mainly due to increased turnover as a result of strengthened efforts to combat escapes from paying tolls led by GCGC and organic growth in vehicle traffic during the period. Tai Ping Interchange business' gross profit was RMB62 million, rising 8.3% year-on-year.

Selling costs, administrative expenses and financial expenses drop significantly

Thanks to synergy creation after the strategic reorganization in the first half, the Group's profitability clearly improved for the period. Selling and administrative expenses declined by approximately 13% to RMB268 million compared to the corresponding period of last year. And finance costs for the period declined by 45.3% year-on-year to RMB17 million. Such a decrease was mainly due to the strengthening of internal controls by the Group during the first half of the year and the cash pool function of the Group was fully utilized with appropriate planning on funding arrangements that realized the synergy from the restructuring, resulting in a substantial decrease in finance costs.

Development of land held by Guangdong Province Transportation Engineering Co Ltd

As approved by the extraordinary general meeting held on 30 November 2010, the company acquired 100% equity interests of Guangdong Province Transportation Engineering Company Limited. According to the Special Plan on Old Plant Renovations in Guangzhou (2010-2020), a land parcel owned by Guangdong Province Transportation Engineering Co Ltd was included in the "old towns, old plants and old villages" (the "Three Olds") redevelopment project. Currently, the use of land has been parceled and has now been converted to commercial purposes. The Group will actively pursue the project.

Chairman of Yueyun Transportation Mr. Liu Wei said: "Upon completion of our reorganization at end-2012, Yueyun began to consolidate the various businesses according to the guiding principle of network-based, brand-based and chain-based operations so as to materialize the synergies among different businesses. In addition, the Group strengthened its internal controls and management with emphasis on cost controls and thus the Group successfully achieved significant growth in operating results for the first half of 2013 as compared to the same period in the previous year. Looking forward, the Group will continue to consolidate and expand its core business operations after the change in the company name. The passenger business in particular will become the long-term development focus on scale-based and network-based principles. The expressway service zone business will also be continuously enhanced. In the meantime, the company will further strengthen its market leadership in the industry and operating region by mergers and acquisitions, always striving to maximize shareholders' interests!"

About Guangdong Yueyun Transportation Company Limited (Stock Code: 03399.HK)

Guangdong Yueyun Transportation Company Limited, or "the Group" (Stock Code: 03399.HK) is principally engaged in the provision of motor vehicle transportation and auxiliary services, integrated logistics services and expressway-related services. It was founded in 1999 and listed on the Hong Kong Stock Exchange in 2005. The controlling shareholder of the Company is Guangdong Provincial Communication Group Company Limited ("GCGC"), a state-owned enterprise established in the People's Republic of China (the "PRC"). The English name of the Company is changed to "Guangdong Yueyun Transportation Company Limited" from "Guangdong Nan Yue Logistics Company Limited", effective from 5 August 2013. Currently, the principal businesses of the Group are: (1) motor vehicle transportation and auxiliary services, mainly including transportation services within Guangdong Province, interprovincial transportation services and cross-border transportation services between Hong Kong and Guangdong Province, as well as traffic rescue and operation of passenger and cargo terminals; (2) material logistics services, mainly including logistics management of construction materials for expressways and other large-scale infrastructure projects; and (3) expressway service zones operation and related auxiliary services, such as operating food and beverage networks, convenience stores, petrol stations, vehicle repair and outdoor advertising for expressways. The Group's business also includes the operation and toll collection at Tai Ping Interchange in Guangdong Province.