Partnership deals eat into earnings for Road King
Toll road operator Road King Infrastructure recorded a year-on-year 7.26 per cent fall in attributable profit to HK$172.5 million for the first six months.
The company yesterday blamed the disappointing performance on a higher level of profit-sharing by mainland partners in a number of toll road projects but did not specify the projects.
Its share of profits would be raised after its partners' profit sharing offset their investment amount.
Despite the smaller profit directors proposed to more than double the interim dividend to 16 HK cents from seven HK cents previously.
Earnings per share fell 9.09 per cent to 30 HK cents.
During the first half, Road King's toll revenue climbed 1.98 per cent to HK$354.7 million.
The group said if the Jieyang Highway project, sold in September last year, was excluded toll revenue could have jumped 13 per cent.
Hefty sharing of profits from some toll road projects eroded the group's share of revenue.
'Some of the group's projects are in their second stage of income distribution where the joint-venture partners are entitled to a higher income sharing ratio,' it said.
'After the joint-venture partners having received their income distribution up to their original investment amount, the group's income sharing ratio will be adjusted upward and will be consistent with the overall growth of toll revenue and profit.'
As a result, Road King's turnover tumbled 36.72 per cent to HK$84.58 million in the first half.
Cash distribution from highway projects to the group grew 10 per cent to HK$267 million.
A toll increase for the Changsha-Yiyang expressway in Hunan was approved in April while the Anhui Bengbu Chaoyanglu bridge in Anhui is expected to come into service early next year.