KUALA LUMPUR 29 April 2010 PLUS Expressways Berhad ("PLUS Expressways")'s expansion drive continues full steam ahead with further additions to the expressway network and business on the international and local front.
The recently announced acquisition of up to 74% equity stake in Indu Navayuga Infra Project Private Limited, the concession company for the 38.6km Padalur-Trichy Highway is pending commencement of operations targeted by end May 2010. This will be another successful venture in India after the opening of its first expressway project, the Bhiwandi-Kalyan-Shil Phata ("BKSP") Highway in Mumbai in August 2009. The acquisition of the Padalur-Trichy Highway bodes well for the Group as the brownfield project will immediately contribute to the revenue stream for the Group.
Meanwhile, on the domestic front, the Group has expanded its business into toll-related ventures through the proposed acquisition of 20% equity interest in Touch 'n Go Sdn Bhd ("TnG"). On 28 April 2010, PLUS Expressways entered into the share sale agreement with UEM Land Holdings Berhad ("UEM Land"), a subsidiary of UEM Group, for the acquisition of TnG for a cash consideration of RM33 million. This acquisition will allow PEB to have a role in the future strategic business decision of TnG, which will allow TnG to achieve its growth aspirations.
The strategic investment in TnG provides the Group with an opportunity for an early participation in the upside potential of TnG arising from the positive outlook of the micro Electronic Payment System market. As a value-driven company, PLUS Expressways is constantly on the lookout for opportunities to unlock further growth in toll roads or toll-related businesses.
Besides business expansion, the Group also continues to explore the needs for further lane widening, additional linkages or interchanges and other upgrading requirements to increase the mainline capacity and encourage more travelling along its expressways. Just recently, the Group had announced the construction of three new strategic interchanges along the North-South Expressway ("NSE") which will improve connectivity and provide potential new traffic into the existing expressway network. These interchanges will cost approximately RM250 million.
On its growth strategy, India and Indonesia will be the focus countries going forward as the Group has garnered invaluable experience from these two countries. Further, the need for good infrastructure networks to cater to the high growth rate of these economies and rising populations have become top priorities for the governments of both countries.
PLUS Expressways has persistently delivered value to its stakeholders and members of the Malaysian public. For financial year 2009, the Group will distribute dividends of RM825 million to its stakeholders consisting mostly of government related investment agencies. These agencies which include Khazanah Nasional Berhad, Kumpulan Wang Simpanan Pekerja ("KWSP" or "EPF"), Permodalan Nasional Berhad ("PNB"), Kumpulan Wang Amanah Persaraan (Diperbadankan), Amanah Raya Trustees Berhad, Lembaga Tabung Haji and Pertubuhan Keselamatan Sosial Malaysia ("PERKESO") will stand to receive dividends of about RM700 million through their 84% collective holding in PLUS Expressways. The dividends will also flow back to the millions of their members and contributors.
Apart from dividend, in 2009 the Group has reinvested about 35% of toll collections into activities and initiatives that benefit highway users. RM443 million was spent on highway maintenance which include pavement structural overlays, slope rehabilitation and structural strengthening of bridges, RM137 million on expressways and facilities upgrading including the enhancement of Rest and Service Areas and laybys, as well as about RM20 million given out as toll discounts.
PLUS Expressways has also put in place various toll discount initiatives as part of the Travel Incentive Programme such as PLUSMiles Loyalty Programme and off peak and festive toll discounts. By the end of 2009, close to 26 million Class 1 vehicles had benefited from the programmes. The Group has been pro-active in supporting the Government's call, to provide incentives to highway users, being the first expressway Group in the country to offer such discounts and still actively pursuing with these programmes.
The Group will continue to spend significant amounts on maintenance and upgrading to preserve the assets and improve the facilities for the comfort and safety of users. It has been and will continue to be the Group's priority to provide a quality alternative travel route for motorists and to ensure a safe, convenient and comfortable journey for its users at all times.
To reinforce the Group's reputation as a responsible corporate citizen, it has undertaken impactful corporate social responsibility and environmental initiatives. The CSR efforts are mainly focused on two core areas – community involvement and education, particularly in the area of road safety awareness.
Commenting on the outlook for 2010, the Group's Chairman, Tan Sri Mohd Sheriff Mohd Kassim said, "In line with the general economic projections for 2010, we believe that the Malaysian economy is on its road to recovery. This is evidenced by the traffic volume growth of 9.1% recorded for PLUS up to March this year, along with Elite, Linkedua and KLBK recording strong traffic volume growths for the same period. While the toll expressways business remains as our primary focus, the Group will also channel its efforts in promoting and marketing its expertise and experience in expressway operation and management. This includes the provision of technical and consultancy services as well as toll operation and maintenance services to other highway operators, locally and abroad. We are confident of delivering strong performance for 2010 and will persevere in driving the expansion momentum to achieve better shareholders' value".