Red chip China Merchants Holdings has signed agreements to acquire stakes in a toll road and a ports project after reporting a 10.5 per cent decline in net profit for the year to December 31. Attributable profit last year was HK$704.47 million, down from HK$787.62 million a year earlier. Turnover fell 9.9 per cent to HK$1.34 billion. Profit from ports-related and manufacturing operations increased 17.8 per cent to HK$382.91 million and 26.8 per cent to HK$110.08 million, while its toll-road operation saw a profit decline of 43.2 per cent to HK$218.58 million. The board recommended a full dividend of 11 HK cents per share, up from eight HK cents in 1998. Managing director Zhao Huxiang attributed the net profit fall to the company's failure to collect an outstanding payment of HK$220 million - part of its share of profits on its investment in the Guiliu Expressway in Guangxi province. 'If the HK$220 million was included in our bottom line, our net profit would have grown over 20 per cent from the previous year,' he said, indicating the company will strive to collect the money. Under an agreement with its mainland partners, the firm was entitled to a minimum of HK$288 million of distributable profits last year. The payment failure has prompted China Merchants to sell half its 80 per cent stake in the joint venture for HK$930 million and led to a revised profit-sharing agreement. Mr Zhao said other than the Guangxi toll road, only three other of the company's seven toll roads had profit guarantee arrangements. One of them, the Guihuang Highway, in Guizhou province, had a profit shortfall of about HK$25 million from a guaranteed profit of HK$78 million. The other two had either surpassed or come close to the guarantee level. The company yesterday signed an agreement to acquire 49 per cent in three container port berths in Zhangzhou, Fujian province. They are due to be completed by year's end. Mr Zhao said the price was close to the three berths' combined expected construction cost of HK$500 million. The company has also agreed to acquire 60 per cent in theYu Yao Expressway, in Zhejiang province, for about 576 million yuan (HK$535 million). China Merchants will be entitled to 90 per cent of its distributable profit in the first year, and 60 per cent from the fifth year onwards. Mr Zhao said the investment's expected annual return was more than 10 per cent. The company has contributed HK$150 million to a HK$200 million venture capital fund set up with its parent, China Merchants Group. The fund paid about HK$8 million for 40 per cent of a transport information network portal project. The companies are exploring opportunities to construct a national fibre-optic network along the mainland's highways. China Merchants Holdings is also in talks to participate in a Shenzhen container logistics centre at the Zuhai airport. Yesterday, it announced the establishment of a logistics firm in Shanghai with Singapore's PSA - formerly known as Port of Singapore Authority - to transport goods overland.