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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Zhejiang Expressway Co | LSE:ZHEH | London | Ordinary Share | CNE1000004S4 | 'H' CNY1 |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 92.1998 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
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TIDMZHEH
Deepen Reform and Innovation Achieve Steady Growth
In the first half of 2014, China's economic growth has been leveling off. Benefiting from
the gradual recovery of Zhejiang Province's economy and an improved environment for
foreign trade, the Group's total income increased by 12.9% compared with the corresponding
period of last year to Rmb4,244.23 million. Traffic volumes for the Group's three
expressways, namely Shanghai-Hangzhou-Ningbo Expressway, Shangsan Expressway and Jinhua
Section of Ningbo-Jinhua Expressway increased 7.0%, 6.7% and 11.7% respectively, in line
with the economic growth of the regions in which they are located. Additionally, while
accelerating the comprehensive development of each business segment, Zheshang Securities
has been actively working to improve its income and profit structure to gradually reduce
the dominant role that its brokerage business played in the past.
In the future, for the toll road business, the Group will make efforts to further
increase income from its main businesses through various measures, including reducing
costs, increasing operational efficiency, and improving facilities management and
service quality. Meanwhile, the Group will continue to strengthen its securities
businesses. Also, the Group will look for suitable investment projects while nurturing
management capabilities in its diversified operations. By taking advantage of its
financial resources, the Group will create strategic synergies with its parent company
in order to broaden its future development, improve profitability, and achieve
sustainable development over the long term.
Contents
2014 Interim Results
Business Review
Financial Analysis
Outlook
Disclosure of Interests and Other Matters
Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income
Condensed Consolidated Statement of Financial Position
Condensed Consolidated Statement of Changes in Equity
Condensed Consolidated Statement of Cash Flows
Notes to Condensed Consolidated Financial Statements
2014 Environmental and Social Responsibility Report
Appendices
Corporate Information
Corporate Structure of the Group
Financial Highlights
Location Map of Expressways in Zhejiang Province
2014 Interim Results
The directors (the "Directors") of Zhejiang Expressway Co., Ltd. (the "Company") announce
the unaudited consolidated operating results of the Company and its subsidiaries
(collectively the "Group") for the six months ended June 30, 2014 (the "Period"), with the
basis of preparation as stated in note 1 to the condensed consolidated financial
statements set out below.
During the Period, revenue for the Group was Rmb4,121.82 million, representing an increase
of 13.0% over the same period in 2013. Profit for the Period attributable to owners of
the Company was Rmb1,063.43 million, representing an increase of 14.3% year-on-year.
Earnings per share for the Period was Rmb24.49 cents (same period in 2013: Rmb21.42 cents).
The Directors have recommended to pay an interim dividend of Rmb6 cents per share,
subject to shareholders' approval at the extraordinary general meeting of the Company
expected to be held on October 16, 2014.
The interim report has not been audited or reviewed by the auditors but has been reviewed
by the audit committee of the Company.
Business Review
As the government's macro economic control policies that are aimed at sustaining stable
growth and the implementation of deep level structural reforms gradually took effect,
the growth of the nation's economy has been stabilizing. China recorded 7.4% GDP growth
in the first half of 2014 compared with the corresponding period of last year. During
the first half of 2014, though Zhejiang Province saw varied levels of growth in investment,
consumption and exports, the growth rate of Zhejiang Province's economy was slower
than the corresponding period of last year. During the Period, the GDP of Zhejiang
Province increased 7.2% compared with the corresponding period of last year.
Benefiting from the gradual recovery of Zhejiang Province's economy and an improved
environment for foreign trade, the Group's total income increased by 12.9% compared
with the corresponding period of last year to Rmb4,244.23 million. Income generated
from the three major expressways operated by the Group was Rmb2,111.52 million,
representing an increase of 6.3% over the corresponding period of 2013 and 49.8% of
total income. Income from the Group's toll road-related businesses was Rmb1,208.56
million, representing an increase of 18.9% over the corresponding period of 2013 and
28.5% of total income. The Group's securities business contributed income of Rmb924.15
million, representing an increase of 22.3% over the corresponding period of 2013 and
21.7% of total income.
A breakdown of the Group's income for the Period is set out below:
For the six months
ended June 30,
2014 2013
Rmb'000 Rmb'000 % Change
Toll income
Shanghai-Hangzhou-Ningbo
Expressway 1,495,972 1,502,446 -0.4%
Shangshan Expressway 470,822 359,199 31.1%
Jinhua section, Ningbo-Jinhua
Expressway 144,724 125,490 15.3%
Other income
Service areas 1,138,682 962,830 18.3%
Advertising 50,027 53,815 -7.0%
Road maintenance 19,852 - N/A
Securities business income
Commission 641,797 579,077 10.8%
Interest income 282,349 176,800 59.7%
Subtotal 4,244,225 3,759,657 12.9%
Less: Revenue taxes (122,403) (112,389) 8.9%
Revenue 4,121,822 3,647,268 13.0%
Toll Road Operations
The organic growth in toll road traffic volume is closely associated with the
regional economy along the toll roads. During the Period, the traffic volume
on the Group's three expressways experienced varying levels of organic growth
corresponding to the regions in which they are located. Organic traffic volume
growth rates for the Shanghai-Hangzhou-Ningbo Expressway, Shangsan Expressway
and Jinhua Section of Ningbo-Jinhua Expressway were 7.0%, 6.7% and 11.7%,
respectively, of which the growth rate was slightly lower than the corresponding
period of last year for the Shanghai-Hangzhou-Ningbo Expressway, at about
equal level for the Shangsan Expressway, and at a slightly higher level for
the Jinhua Section of Ningbo-Jinhua Expressway.
Since the opening of Jiaxing-Shaoxing Bridge (not operated by the Group) in
July, 2013, a certain level of traffic diversion has taken place for the
Group's Shanghai-Hangzhou-Ningbo Expressway and resulted in a decrease of
Rmb75.00 million in terms of the Group's toll income during the Period.
However, the Jiaxing-Shaoxing Bridge has a more positive effect on the Shangsan
Expressway. Most of the vehicles passing through Jiangsu Province, Taizhou and
Wenzhou took the Shangsan Expressway, while a number of vehicles traveling
between Shanghai, Taizhou and Wenzhou and between Jiangsu and Ningbo also
chose to take the Shangsan Expressway or Hangzhou-Ningbo Section of the
Shanghai-Hangzhou-Ningbo Expressway as a result of the Company's effective
promotions to attract more traffic. During the Period, the opening of the
Jiaxing-Shaoxing Bridge led to an increase of Rmb86.00 million in terms of
toll income on the Shangsan Expressway.
The Jinhua Section of the Ningbo-Jinhua Expressway maintained a relatively high
organic growth in traffic volume as a result of continuing high speed economic
development in Yiwu and nearby regions, as well as a speedy increase in small
truck ownership in Yiwu. Construction work on roads surrounding the Ningbo-Jinhua
Expressway and the Company's effective promotions efforts also had a positive
impact on toll income. Container trucks traveling along the Ningbo-Jinhua
Expressway also posted a notable increase in miles driven. During the Period,
the Jinhua Section of the Ningbo-Jinhua Expressway recorded an increase of
approximately Rmb5.00 million in toll income as a result of factors such as
construction work on surrounding roads.
Meanwhile, toll income from the Shanghai-Hangzhou-Ningbo Expressway decreased
by approximately Rmb18.00 million as a result of construction on the Hangzhou
Airport road that began on April 15, 2014. Moreover, the opening of the
Qianjiang Road (not operated by the Group) on April 16, 2014, also led to a
decline in toll income of the Shanghai-Hangzhou-Ningbo Expressway by approximately
Rmb2.70 million.
The average daily traffic volume in full-trip equivalents along the Group's
Shanghai-Hangzhou-Ningbo Expressway was 43,764 during the Period, representing
an increase of 1.2% year-on-year. In particular, average daily traffic volume
in full-trip equivalents along the Shanghai-Hangzhou Section of the
Shanghai-Hangzhou-Ningbo Expressway was 42,211, representing a decrease of 3.3%
year-on-year. The average daily traffic volume in full-trip equivalents along the
Hangzhou-Ningbo Section was 44,873, representing an increase of 4.3% year-on-year.
The average daily traffic volume in full-trip equivalents along the Shangsan
Expressway was 22,435 during the Period, representing an increase of 29.0% year-on-year.
The average daily traffic volume in full-trip equivalents along the Jinhua
Section of the Ningbo-Jinhua Expressway was 15,162 during the Period, representing
an increase of 17.3% year-on-year.
Total toll income from the 248 km Shanghai-Hangzhou-Ningbo Expressway, the 142 km
Shangsan Expressway and the 70 km Jinhua Section of the Ningbo-Jinhua Expressway
amounted to Rmb2,111.52 million during the Period, representing an increase of 6.3%
year-on-year. Toll income from the Shanghai-Hangzhou-Ningbo Expressway was
Rmb1,495.97 million, representing a decrease of 0.4% year-on-year; toll income from
the Shangsan Expressway was Rmb470.82 million, representing an increase of 31.1%
year-on-year; while toll income from the Jinhua Section of the Ningbo-Jinhua Expressway
was Rmb144.73 million, representing an increase of 15.3% year-on-year.
Toll Road-Related Business Operations
The Company also operates certain toll road-related businesses along its expressways
through its subsidiaries and associated companies, including gas stations, restaurants,
shops in service areas, advertising at service areas, toll plazas and expressway
interchanges, as well as road maintenance.
During the Period, with the opening of the Jiaxing-Shaoxing Bridge, the service areas
along Shangsan Expressway saw significant growth in income due to the increase in traffic
volume. However, the decrease in traffic volume on the Shanghai-Hangzhou-Ningbo Expressway
adversely affected income from service areas along the expressway, and these service
areas make a relatively large contribution to income from service areas. Therefore, the
overall income from service areas declined. However, due to a solid increase in sales of
refined oil products and additional income from the external road maintenance projects,
the Group's toll road-related businesses achieved a solid increase in overall income.
Income from toll road-related businesses was Rmb1,208.56 million for the Period,
representing an increase of 18.9% year-on-year.
Securities Business
During the Period, although the Shanghai and Shenzhen stock indices declined slightly,
the aggregate trading volume increased by 4.7% compared with the corresponding period
of last year. Despite the slight growth in market share and trading volume of Zheshang
Securities Co., Ltd. ("Zheshang Securities", a 70.83% owned subsidiary of Zhejiang
Shangsan Expressway Co., Ltd. which is a subsidiary of the Company), its average commission
rate declined from 0.08% to 0.072% due to intensified competition in the securities
industry and the gradual relaxation of controls on commissions. As a result, income
from Zheshang Securities' brokerage business was generally flattish compared with the
same period last year.
Additionally, while accelerating the comprehensive development of each business
segment, Zheshang Securities has been actively working to improve its income and
profit structure to gradually reduce the dominant role that its brokerage business
played in the past. During the Period, income from investment banking, margin financing
and securities lending, as well as asset management businesses of Zheshang Securities
all grew steadily year-on- year.
The IPO application submitted by Zheshang Securities was accepted by the China
Securities Regulatory Commission in May 2013. Zheshang Securities remains on the
waiting list for an IPO.
During the Period, Zheshang Securities' total operating income was Rmb924.15 million,
an increase of 22.3% year-on-year. Brokerage commission income was Rmb641.80 million,
a year-on-year increase of 10.8%. Interest income from the securities business was
Rmb282.35 million, a year-on-year increase of 59.7%. Moreover, securities investment
gains from Zheshang Securities included in the condensed consolidated statement
of profit or loss and other comprehensive income of the Group was Rmb79.15 million
during the Period.
Long-Term Investments
Zhejiang Expressway Petroleum Development Co., Ltd. (a 50% owned associate company
of the Company) recorded income of Rmb3,265.30 million, a year-on-year increase of
5.8%. The increase was primarily attributable to an increase in sales volume of
refined oil products. During the Period, net profit realized was Rmb11.36 million
(corresponding period of 2013: net profit of Rmb11.34 million).
Shengxin Expressway Co., Ltd. ("Shengxin Company", a 50% owned joint venture
of the Company) operates the 73.4km Shaoxing Section of the Ningbo-Jinhua Expressway.
During the Period, the traffic volume of the Shaoxing Section of the Ningbo-Jinhua
Expressway increased as the economy of Zhejiang Province grew steadily. The average
daily traffic volume in full-trip equivalents was 13,661, an increase of 10.9%
year-on-year. Toll income during the Period was Rmb152.92 million. However, due
to an increase in road maintenance costs and its relatively heavy financial burden,
the joint venture reported a loss of Rmb31.20 million (corresponding period of
2013: loss of Rmb27.88 million).
JoinHands Technology Co., Ltd. is a 27.582% owned associate company of the Company.
The Company instituted legal proceedings with regards to the transfer of the equity
interest in this associate company and then lodged an appeal against the subsequent
judgment. The appeal was ruled in favor of the Company by the Hangzhou Intermediate
People's Court on April 28, 2013 regarding the Company's priority of compensation
for the mortgaged properties. These mortgaged properties were auctioned off by the
court and the Company has received proceeds of Rmb23.83 million as consideration
for its equity interest transfer on May 16, 2014. From then on, JoinHands
Technology Co., Ltd. is no longer an associate of the Company.
Zhejiang Communications Investment Group Finance Co., Ltd. (a 35% owned associate
company of the Company) derives income mainly from fees and commissions for
providing financial services, including arranging loans to, and receiving
deposits from subsidiaries of Zhejiang Communications Investment Group Co., Ltd.
(the controlling shareholder of the Company). Profit from Zhejiang Communications
Investment Group Finance Co., Ltd. was accounted for as gain of associates of the
Company starting from May 1, 2013 and realized a net profit of Rmb66.89 million
during the Period.
Human Resources
During the Period, the Company actively revamped its human resource management,
improved its remuneration and performance policy, and promoted the pegging of
overall remuneration increase with the productivity of employees, thereby paving
the way for increasing employees' remuneration. There was no significant change
in other staff matters and assignment compared with the details disclosed in
the Company's most recent annual report.
Financial Analysis
The Group adopts a prudent financial policy with an aim to provide shareholders
of the Company with sound returns over the long term.
During the Period, profit attributable to owners of the Company was approximately
Rmb1,063.43 million, representing an increase of 14.3% year-on-year, return on
owners' equity was 6.7%, representing an increase of 9.8% year-on-year, while
earnings per share for the Company was Rmb24.49 cents.
Liquidity and financial resources
As at June 30, 2014, current assets of the Group amounted to Rmb19,874.86 million
in aggregate (December 31, 2013: Rmb16,652.84 million), of which bank balances and
cash accounted for 12.6% (December 31, 2013: 15.1%), bank balances held on behalf
of customers accounted for 48.9% (December 31, 2013: 49.4%), and held for trading
investments accounted for 9.0% (December 31, 2013: 7.1%). Current ratio
(current assets over current liabilities) of the Group as at June 30, 2014 was
1.4 (December 31, 2013: 1.4). Excluding the effect of the customer deposits
arising from the securities business, the resultant current ratio of the Group
(current assets less bank balances held on behalf of customers over current
liabilities less balance of accounts payable to customers arising from securities
business) was 2.1 (December 31, 2013: 2.2).
As at As at
June 30, December 31,
2014 2013
Rmb'000 Rmb'000
Cash and cash equivalents
Rmb 1,739,561 1,773,310
US$ in Rmb equivalent 28,301 28,209
HK$ in Rmb equivalent 5,458 5,462
Time deposit - Rmb 726,245 704,459
Held for trading investments - Rmb 1,785,239 1,181,025
Available-for-sale investments - Rmb 512,789 281,924
Total 4,797,593 3,974,389
Rmb 4,763,834 3,940,718
US$ in Rmb equivalent 28,301 28,209
HK$ in Rmb equivalent 5,458 5,462
The amount of held for trading investments of the Group as at June 30, 2014 was
Rmb1,785.24 million (December 31, 2013: Rmb1,181.03 million), of which 93.4% was
invested in bonds, 6.2% was invested in stocks, and the rest was invested in
open-end equity funds.
During the Period, net cash inflow generated from the Group's operating activities
amounted to Rmb1,401.75 million.
The Directors do not expect the Company to experience any problems with liquidity
and financial resources in the foreseeable future.
Borrowings and solvency
As at June 30, 2014, total liabilities of the Group amounted to Rmb14,823.48 million
(December 31, 2013: Rmb12,420.24 million), of which 4.7% was bank and other
borrowings, 6.7% was short-term loan note and 65.3% was accounts payable to customers
arising from securities business.
As at June 30, 2014, total interest-bearing borrowings of the Group amounted to
Rmb1,700.00 million, representing a decrease of 7.6% compared to that as at
December 31, 2013. The borrowings comprised outstanding balances of domestic commercial
bank loans of Rmb300.00 million, loans from a domestic non-bank financial institution
of Rmb400.00 million and short-term loan note with three-month maturity of
Rmb1.00 billion. Of the interest-bearing borrowings, 11.8% was not payable within
one year.
Maturity Profile of Interest-bearing Borrowings
-----------------------------------------------
More 1 year-
5 year Beyond
Gross total Within 1 year inclusive 5 year
Rmb'000 Rmb'000 Rmb'000 Rmb'000
Floating rates
Domestic commercial bank loans 300,000 100,000 200,000 -
Fixed rates
Loans from a domestic non-bank
financial institution 400,000 400,000 - -
Short-term loan note 1,000,000 1,000,000 - -
Total as at June 30, 2014 1,700,000 1,500,000 200,000 -
Total as at December 31, 2013 1,840,000 1,540,000 300,000 -
As at June 30, 2014, all of the Group's loans from domestic commercial banks were
long-term loans, of which long-term loans due in one year amounted to Rmb100.00 million,
with floating interest rate ranging from 5.895% to 6.765% per annum. Loans from a
domestic non-bank financial institution were short-term loans, with the interest rate
fixed at 5.04% per annum. The annual coupon rate for the latest short-term loan note
was fixed at 4.87%, while the annual interest rate for accounts payable to customers
arising from the securities business was fixed at 0.35%.
Total interest expenses for the Period amounted to Rmb43.27 million, while profit
before interest and tax amounted to Rmb1,717.91 million. The interest cover ratio
(profit before interest and tax over interest expenses) stood at
39.7 (corresponding period of 2013: 34.4) times.
As at June 30, 2014, the asset-liability ratio (total liabilities over total assets)
of the Group was 42.9% (December 31, 2013: 38.7%). Excluding the effect of customer
deposits arising from the securities business, the resultant asset-liability ratio
(total liabilities less balance of accounts payable to customers arising from securities
business over total assets less bank balances held on behalf of customers) of the Group
was 20.7% (December 31, 2013: 17.8%).
Capital structure
As at June 30, 2014, the Group had Rmb19,741.37 million in total equity, Rmb12,276.94
million in fixed- rate liabilities, Rmb300.00 million in floating-rate liabilities,
and Rmb2,246.54 million in interest-free liabilities, representing 57.1%, 35.5%, 0.9%
and 6.5% of the Group's total capital, respectively. The gearing ratio, which is
computed by dividing the total liabilities less accounts payable to customers arising
from the securities business by total equity, was 26.0% as at June 30, 2014
(December 31, 2013: 21.6%).
Capital expenditure commitments and utilization
During the Period, capital expenditure of the Group totaled Rmb193.55 million, while
capital expenditure of the Company totaled Rmb41.87 million. Amongst the total
capital expenditure of the Group, Rmb57.50 million was incurred for setting up a
wholly-owned subsidiary of the Company and external equity acquisition by Zheshang
Securities, Rmb114.29 million was incurred for acquisition and construction of
properties, Rmb20.15 million was incurred for purchase and construction of equipments
and facilities, and Rmb1.61 million was incurred for service area renovation
and expansion.
As at June 30, 2014, the remaining capital expenditure committed by the Group and the
Company totaled Rmb1,550.97 million and Rmb270.00 million, respectively. Amongst
the remaining balance of total capital expenditures committed by the Group,
Rmb1,209.80 million will be used for acquisition and construction of properties,
Rmb324.78 million for acquisition and construction of equipments and facilities,
Rmb16.39 million for service area renovation and expansion.
The Group will finance the above-mentioned capital expenditure commitments with
internally generated cash flow first and then will consider using debt financing
to meet any shortfalls in priority to using other methods.
Contingent liabilities and pledge of assets
Pursuant to the board resolution of the Company dated November 16, 2012,
the Company and Shaoxing Communications Investment Group Co., Ltd.
(the other joint venture partner that holds 50% equity interest in Shengxin Co)
provided Shengxin Co with a joint guarantee for its bank loans of Rmb2,200.00
million, in accordance with their proportionate equity interest in Shengxin
Co. During the Period, Rmb25.00 million of the bank loans had been repaid.
Pursuant to the resolution of shareholders' meeting dated June 26, 2012 of
Zhejiang Yuhang Expressway Co., Ltd. ("Yuhang Co", a 51% owned subsidiary
of the Company), Yuhang Co provided a property under construction as a
mortgaged asset for its domestic commercial bank loan of Rmb100.00 million.
As at June 30, 2014, the carrying amount of the mortgaged asset was
Rmb525.40 million.
Pursuant to the board resolution dated June 24, 2008 of Zhejiang Jinhua Yongjin
Expressway Co., Ltd. ("Jinhua Co", a 100% owned subsidiary of the Company),
Jinhua Co provided the operating right of the expressway operated by it as
pledged asset for its domestic commercial bank loans, the remaining outstanding
balance of which was Rmb200.00 million. As at June 30, 2014, the carrying
amount of the pledged asset was Rmb1,829.78 million.
Except for the above, as at June 30, 2014, the Group did not have any other
contingent liabilities, pledge of assets or guarantees.
Foreign exchange exposure
Save for dividend payments to the holders of H shares in Hong Kong dollars,
the Group's principal operations were transacted and booked in Renminbi.
Therefore, the Group's exposure to exchange fluctuation is limited.
During the Period, the Group has not used any financial instruments for
hedging purpose.
Although the Directors do not foresee any material foreign exchange risks
for the Group, there is no assurance that foreign exchange risks will not
affect the operating results of the Group in the future.
Outlook
Though the economy is still facing downward pressure, a series of
"stabilizing growth" policies implemented by the state are gradually yielding
results. While external demands are expected to improve somewhat, internal
growth of economic development is expected to strengthen. Therefore, we expect
that the organic growth in traffic volume of the Group's expressways will
maintain a steady rate in the second half of this year.
Qianjiang Road, which opened for traffic in the first half of this year, and
the construction works on the airport road near the Second Qianjiang Bridge,
are still expected to have an adverse impact on the Group's
Shanghai- Hangzhou-Ningbo Expressway. Therefore, the Group will closely monitor
the construction work on the airport road, analyze impact from the newly opened
road network of the Qianjiang Road and the Jiaxing-Shaoxing Bridge, and undertake
effective promotional efforts to attract more vehicles to the expressways
operated by the Group so as to reduce the negative impact of traffic diversion.
Meanwhile, Zhejiang Provincial Government recently launched a specific
rectification action on billboard advertising along expressways in the province.
The billboards on the two sides of the main lines of the expressways must be
removed by the end of October this year, which will restrict the advertising
business carried out by Zhejiang Expressway Investment Development Co., Ltd.
(a 100% owned subsidiary of the Company) to service areas, toll plazas and
expressway interchanges.
Additionally, Zheshang Securities transferred its entire 25% equity interest in
Zheshang Fund Management Co., Ltd. to Tonglian Capital Management Co., Ltd.
through electronic online bidding on the Zhejiang Property and Stock Exchange
on August 14, 2014. The total consideration received for such transfer was
Rmb207.00 million, and is expected to have a positive effect on the Group's
results for the second half of 2014.
A series of policies carried out by the Chinese government to reform China's
stock markets, which include the establishment of the Shanghai-Hong Kong Stock
Connect, the anticipated recovery of the Chinese stock market and increased
liquidity in China are expected to present new challenges and opportunities for
Zheshang Securities. Zheshang Securities will accelerate the development of
innovative businesses and further push forward the A-share listing process while
strengthening cost and risk control to facilitate the sustainable development
of its businesses.
The Group's management is making efforts to further strengthen its core businesses
through various measures, including reducing costs, increasing operational efficiency,
improving operating management facilities, and further enhance service quality.
In addition to continuing to strengthen its securities businesses, the Group will
look for suitable investment projects while nurturing management capabilities in
diversified operations. By leveraging its financial resources, the Group will develop
strategic synergies with its parent company in order to broaden its scope of future
development, improve profitability, and achieve sustainable development over
the long term.
Disclosure of Interests and Other Matters
Purchase, Sale and Redemption of the Company's Shares
Neither the Company nor any of its subsidiaries has purchased, sold, redeemed
or cancelled any of the Company's shares during the Period.
Disclosure of Directors', Supervisors' and Chief Executive's Interests and
Short Positions in the Shares, Underlying Shares and Debentures
As at June 30, 2014, none of the Directors, supervisors and chief executives
of the Company had any interest or short position in the shares, underlying
shares or debentures of the Company or any of its associated corporations
(within the meaning of Part XV of the Securities and Futures Ordinance
(Cap 571 of the Laws of Hong Kong) (the "SFO")) as recorded in the register
required to be kept pursuant to Section 352 of the SFO, or as otherwise
notified to the Company and The Stock Exchange of Hong Kong Limited
(the "Stock Exchange") pursuant to the Model Code for Securities Transactions
by Directors of Listed Issuers (the "Model Code") in Appendix 10 to the Rules
Governing the Listing of Securities on the Stock Exchange
(the "Listing Rules").
Other Interests Discloseable under the SFO
As at June 30, 2014, the following shareholders held 5% or more of the issued
share capital of the Company according to the register of interests in shares
required to be kept by the Company pursuant to Section 336 of the SFO:
Percentage of
Total interests the issued
in number of share capital
ordinary shares of the Company
Substantial shareholders Capacity of the Company (domestic shares)
Zhejiang Communications
Investment Group Co., Ltd. Beneficial owner 2,909,260,000 100%
Percentage of
Total interests the issued
in number of share capital
ordinary shares of the Company
Substantial shareholders Capacity of the Company (H Shares)
JP Morgan Chase & Co. Beneficial owner, 201,538,938 (L) 14.05%
investment manager and 1,866,000 (S) 0.13%
custodian corporation/ 148,181,542 (P) 10.33%
approved lending agent
BlackRock, Inc. Interest of controlled 130,511,912 (L) 9.10%
corporations
Invesco Asset Investment manager/ 88,834,000 (L)
Management Limited advisor of various
accounts
Deutsche Bank Investment manager 85,135,815 (L) 5.94%
Aktiengesellschaft 3,786,000 (S) 0.26%
The letter "L" denotes a long position. The Letter "S" denotes a short position.
The Letter "P" denotes interest in a lending pool.
Save as disclosed above, as at June 30, 2014, no person had registered an interest
or short position in the shares or underlying shares of the Company that was
required to be recorded pursuant to Section 336 of the SFO.
Compliance with the Corporate Governance Code and the Model Code
During the Period, the Company had complied with all code provisions in the
Corporate Governance Code and Corporate Governance Report (the "Code") set out
in Appendix 14 to the Listing Rules, and had adopted the recommended best practices
in the Code as and when applicable.
The Company has adopted a code of conduct regarding directors' securities transactions
on terms no less exacting than the required standard set out in the Model Code.
The Directors have confirmed their full compliance with the required standard set
out in the Model Code and its code of conduct regarding directors' securities
transactions during the Period.
Responsibility Statement of the Directors in Respect of the Interim Report and
Accounts
Each of the Directors of the Company, whose name and function are listed in
the section headed "Corporate Information" of this report, confirms that, to
the best of his/her knowledge:
- the condensed consolidated financial statements prepared in accordance
with Hong Kong Financial Reporting Standards issued by the Hong Kong
Institute of Certified Public Accountants give a true and fair view of
the assets, liabilities, financial position and profit of the Group
and the undertakings included in the consolidation taken as a whole;
- the management discussion and analysis included in the interim report
includes a fair review of the development and performance of the business
and the position of the Group and the undertakings included in the
consolidation taken as a whole during the Period, together with a
description of the principal risks and uncertainties that the Group
faces for the remaining six months of the financial year; and
- the interim report include a fair review of the material related party
transactions that have taken place during the Period and any material
changes in the related party transactions described in the Company's
annual report for the year ended 31 December 2013.
By order of the Board
Zhejiang Expressway Co., Ltd.
ZHAN Xiaozhang
Chairman
Hangzhou, the PRC, August 27, 2014
The electronic version of this report is published on the HKExnews website
of the Hong Kong Exchanges and Clearing Limited (http://www.hkexnews.com.hk)
and on the Company's website (www.zjec.com.cn).
Condensed Consolidated Statement of Profit or Loss
and Other Comprehensive Income
For the six months ended June 30,
2014 2013
Notes Rmb'000 Rmb'000
(Unaudited) (Unaudited)
Revenue 3 4,121,822 3,647,268
Operating costs (2,580,471) (2,283,848)
Gross profit 1,541,351 1,363,420
Securities investment gains 87,240 79,786
Other income 4 140,164 103,890
Administrative expenses (33,552) (36,126)
Other expenses (26,556) (21,401)
Share of profit of associates 24,868 4,791
Share of loss of a joint venture (15,602) (13,938)
Finance costs 5 (39,869) (43,079)
Profit before tax 6 1,678,044 1,437,343
Income tax expense 7 (430,799) (374,175)
Profit for the Period 1,247,245 1,063,168
Other comprehensive loss
Items that may be subsequently
reclassified to profit or loss:
Available-for-sale financial assets
- Fair values loss during the Period (2,719) (3,681)
- Reclassification adjustments for
cumulative
gain included in profit or loss - (1,381)
upon disposal
Income tax relating to components
of other comprehensive loss 680 1,266
Other comprehensive loss for
the Period (net of tax) (2,039) (3,796)
Total comprehensive income for
the Period 1,245,206 1,059,372
Profit for the Period attributable to:
Owners of the Company 1,063,433 930,385
Non-controlling interests 183,812 132,783
1,247,245 1,063,168
Total comprehensive income for the
Period attributable to:
Owners of the Company 1,062,183 928,429
Non-controlling interests 183,023 130,943
1,245,206 1,059,372
Earnings per share 9 24.49 cents 21.42 cents
- Basic and diluted
Condensed Consolidated Statement of Financial Position
As at As at
June 30, December 31,
2014 2013
Note Rmb'000 Rmb'000
(Unaudited) (Audited)
NON-CURRENT ASSETS
Property, plant and equipment 1,801,968 1,762,042
Prepaid lease payments 67,079 68,156
Expressway operating rights 11,511,820 11,911,133
Goodwill 86,867 86,867
Other intangible assets 145,997 154,564
Interests in associates 597,414 574,733
Interest in a joint venture 318,342 333,944
Available-for-sale investments 160,500 143,514
Other receivables - 401,400
14,689,987 15,436,353
CURRENT ASSETS
Inventories 71,277 73,576
Trade receivables 10 116,871 101,428
Loans to customers arising from margin
financing business 11 3,256,393 2,946,911
Other receivables and prepayments 12 773,945 451,968
Prepaid lease payments 2,155 2,155
Available-for-sale investments 512,789 281,924
Held for trading investments 1,785,239 1,181,025
Financial assets held under resale agreements 13 1,130,604 874,254
Bank balances held on behalf of customers 9,726,025 8,228,160
Bank balances and cash
- Time deposits with original maturity 726,245 704,459
over three months
- Cash and cash equivalents 1,773,320 1,806,981
19,874,863 16,652,841
As at As at
June 30, December 31,
2014 2013
Note Rmb'000 Rmb'000
(Unaudited) (Audited)
CURRENT LIABILITIES
Accounts payable to customers
arising from
securities business 9,686,410 8,167,103
Trade payables 14 511,459 421,994
Tax liabilities 255,147 331,611
Other taxes payable 36,418 53,417
Other payables and accruals 15 1,071,569 995,496
Dividends payable 171,240 94,976
Bank and other borrowings 500,000 540,000
Financial assets sold under repurchase 16 630,531 -
agreementsPlacements from other financial institution 560,000 310,000
Short-term loan note 1,000,000 1,000,000
14,422,774 11,914,597
Net current assets 5,452,089 4,738,244
Total assets less current liabilities 20,142,076 20,174,597
Non-current liabilities
Bank loans 200,000 300,000
Deferred tax liabilities 200,708 205,638
400,708 505,638
19,741,368 19,668,959
CAPITAL AND RESERVES
Share capital 4,343,115 4,343,115
Reserves 11,605,827 11,629,423
Equity attributable to owners of the Company 15,948,942 15,972,538
Non-controlling interests 3,792,426 3,696,421
19,741,368 19,668,959
Condensed Consolidated Statement of Changes in Equity
Non-
controlling
interests Total
Attributable to owners of the Company
Investment
Share Share Statutory Capital revaluation Special Dividend Retained
capital premium reserve reserve reserve reserves reserve profits Total
Rmb'000 Rmb'000 Rmb'000 Rmb'000 Rmb'000 Rmb'000 Rmb'000 Rmb'000 Rmb'000 Rmb'000 Rmb'000
At January 4,343,115 3,645,726 3,227,511 1,712 254 18,666 1,042,347 3,240,921 15,520,252 3,496,023 19,016,275
1, 2013
(Audited)
Merger - - - - - 797,471 - (273,263) 524,208 81,198 605,406
accounting
restatement
At January 4,343,115 3,645,726 3,227,511 1,712 254 816,137 1,042,347 2,967,658 16,044,460 3,577,221 19,621,681
1, 2013
(Restated)
Profit for - - - - - - - 930,385 930,385 132,783 1,063,168
the Period
Other - - - - (1,956) - - - (1,956) (1,840) (3,796)
comprehensive
loss for
the Period
Total - - - - (1,956) - - 930,385 928,429 130,943 1,059,372
comprehensive
income for
the Period
Consideration - - - - - (678,005) - - (678,005) (78,863)(756,868)
paid for
acquisition
of a subsidiary
under common
control
Dividend paid - - - - - - - - - (106,008)(106,008)
to non-controlling
interests
Final dividend - - - - - - (1,042,347) (1,042,347) - (1,042,347)
Proposed interim - - - - - - 260,587 (260,587) - - -
dividend
At June 4,343,115 3,645,726 3,227,511 1,712 (1,702) 138,132 260,587 3,637,456 15,252,537 3,523,293 18,775,830
30, 2013
(Unaudited)
At January 4,343,115 3,645,726 3,545,859 1,712 1,801 138,132 1,085,779 3,210,414 15,972,538 3,696,421 19,668,959
1, 2014
(Audited)
Profit for - - - - - - - 1,063,433 1,063,433 183,812 1,247,245
the Period
Other - - - - (1,250) - - - (1,250) (789) (2,039)
comprehensive
loss for the Period
Total - - - - (1,250) - - 1,063,433 1,062,183 183,023 1,245,206
comprehensive income
for the Period
Dividend paid - - - - - - - - - (87,018)(87,018)
to non-controlling
interest
Final dividend - - - - - - (1,085,779) - (1,085,779) -(1,085,779)
Proposed interim - - - - - - 260,587 (260,587) - - -
dividend
At June 4,343,115 3,645,726 3,545,859 1,712 551 138,132 260,587 4,013,260 15,948,942 3,792,426 19,741,368
30, 2014
(Unaudited)
Condensed Consolidated Statement of Cash Flows
For the six months ended,
2014 2013
Rmb'000 Rmb'000
(Unaudited) (Unaudited)
Net cash from operating activities 1,401,752 1,050,327
Net cash used in investing activities (218,880) (709,921)
Net cash used in financing activities (1,216,533) (959,622)
Net decrease in cash and cash equivalents (33,661) (619,216)
Cash and cash equivalents at beginning of the Period 1,806,981 3,392,053
Cash and cash equivalents at end of the Period 1,773,320 2,772,837
Notes to Condensed Consolidated Financial Statements
1. BASIS OF PREPARATION
The condensed consolidated financial statements have been prepared in accordance with
Hong Kong Accounting Standard 34 Interim Financial Reporting issued by the Hong Kong
Institute of Certified Public Accountants (the "HKICPA") as well as with the applicable
disclosure requirements of Appendix 16 to the Rules Governing the Listing of Securities
on The Stock Exchange of Hong Kong Limited (the "Listing Rules").
2. PRINCIPAL ACCOUNTING POLICIES
The condensed consolidated financial statements have been prepared on the historical
cost basis except for certain financial instruments that are measured at fair value,
as appropriate.
Except as disclosed below, the accounting policies and methods of computation applied
in the condensed consolidated financial statements for the Period are consistent with
those in the preparation of the Group's annual financial statements for the year ended
December 31, 2013.
Financial assets sold under repurchase agreements
Financial assets sold subject to agreements with a commitment to repurchase at a specific
future date are not derecognised in the condensed consolidated statement of financial
position. The proceeds from selling such assets are presented under "financial assets
sold under repurchase agreements" in the condensed consolidated statement of financial
position. The difference between the selling price and repurchasing price is recognised
as interest expense during the term of the agreement using the effective interest method.
In the Period, the Group has applied, for the first time, new interpretation and amendments
to Hong Kong Financial Reporting Standards ("HKFRSs") issued by HKICPA, which are effective
for the Period. The application of the new interpretation and amendments to HKFRSs during
the Period has had no material effect on the condensed consolidated financial statements
and/or relevant disclosures set out in these condensed consolidated financial statements.
3. REVENUE AND SEGMENT INFORMATION
Compared to the same period last year, there were no major changes in the reportable
and operating segments of the Group during the Period.
Segment revenue and results
The following is an analysis of the Group's revenue and results by reportable
and operating segments:
For the six months ended June 30, 2014
Toll related operation
Service Other
area and toll road
Toll advertising related Securities Total
operation businesses service operation Segment Elimination Total
Rmb'000 Rmb'000 Rmb'000 Rmb'000 Rmb'000 Rmb'000 Rmb'000
(unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited)
Revenue
External sales 2,041,188 1,183,241 19,050 878,343 4,121,822 - 4,121,822
Inter-segment sales - 2,377 4,459 - 6,836 (6,836) -
Total 2,041,188 1,185,618 23,509 878,343 4,128,658 (6,836) 4,121,822
Segment profit 942,673 63,071 18,789 222,712 1,247,245 1,247,245
For the six months ended June 30, 2013
Toll related operation
Service Other
area and toll road
Toll advertising related Securities Total
operation businesses service operation Segment Elimination Total
Rmb'000 Rmb'000 Rmb'000 Rmb'000 Rmb'000 Rmb'000 Rmb'000
(unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited)
Revenue
External sales 1,921,545 1,010,644 - 715,079 3,647,268 - 3,647,268
Inter-segment sales - 2,377 - - 2,377 (2,377) -
Total 1,921,545 1,013,021 - 715,079 3,649,645 (2,377) 3,647,268
Segment profit 868,464 20,250 7,589 166,865 1,063,168 1,063,168
---------
Segment profit represents the profit after tax of each operating segment. This is the measure
reported to the chief operating decision maker - the Company's General Manager, for the purpose
of resource allocation and performance assessment.
3. REVENUE AND SEGMENT INFORMATION (Continued)
Revenue from major services
An analysis of the Group's revenue, net of discounts and taxes, for the Period is as follows:
For the six months ended June 30,
2014 2013
Rmb'000 Rmb'000
(Unaudited) (Unaudited)
Toll operation revenue 2,041,188 1,921,545
Service area businesses revenue (mainly sales of goods) 1,134,635 958,740
Advertising business revenue 48,606 51,904
Commission income from securities operation 595,994 538,279
Interest income from securities operation 282,349 176,800
Others 19,050 -
Total 4,121,822 3,647,268
4. OTHER INCOME
For the six months ended June 30,
2014 2013
Rmb'000 Rmb'000
(Unaudited) (Unaudited)
Interest income on bank balances, entrusted loan
receivables and financial products investment 34,494 45,746
Rental income 55,155 32,652
Gain on disposal of an associate (Note) 24,490 -
Handling fee income 1,487 2,193
Towing income 4,695 4,883
Exchange gain, net 861 14
Others 18,982 18,402
Total 140,164 103,890
Note: The Company instituted legal proceedings with regards to the transfer of the equity
interest in JoinHands Technology Co., Ltd. ("JoinHands Technology", a 27.582% owned
associate) and then lodged an appeal against the subsequent judgment of the Company's
priority of compensation for the mortgaged properties. The appeal was ruled in favor
of the Company by the Hangzhou Intermediate People's Court on April 28, 2013. These
mortgaged properties in JoinHands Technology were auctioned off by the court and the
Company has received Rmb23,834,000 on May 16, 2014. From then on, JoinHands Technology
was no longer an associate of the Company. For the Period, gain on disposal of an
associate amounted to Rmb24,490,000 was recoginised.
5. FINANCE COSTS
For the six months ended June 30,
2014 2013
Rmb'000 Rmb'000
(Unaudited) (Unaudited)
Interest expenses wholly repayable within 5 years:
Bank and other borrowings 14,425 40,379
Long-term bonds - 2,700
Short-term loan note 28,845 -
Total borrowing costs
43,270 43,079
Less: Amount capitalised in the cost of qualifying assets (3,401) - 39,869 43,079
6. PROFIT BEFORE TAX
The Group's profit before tax has been arrived at after charging:
For the six months ended June 30,
2014 2013
Rmb'000 Rmb'000
(Unaudited) (Unaudited)
Depreciation of property, plant and equipment 88,812 95,632
Amortisation of prepaid lease payments 1,077 1,087
Amortisation of expressway operating rights 404,193 403,604
(included in operating costs)
Amortisation of other intangible assets 10,033 8,978
(included in operating costs)
Cost of inventories recognised as an expense 1,045,030 871,039
7. INCOME TAX EXPENSE
For the six months ended June 30,
2014 2013
Rmb'000 Rmb'000
(Unaudited) (Unaudited)
Current tax:
PRC Enterprise Income Tax 435,049 388,811
Deferred tax (4,250) (14,636)
430,799 374,175
Under the Law of the PRC on Enterprise Income Tax (the "EIT Law") and Implementation
Regulation of the EIT Law, the applicable tax rate of the Group is 25%.
No Hong Kong Profits Tax has been provided as the Group's income neither arises in,
nor is derived from Hong Kong during the Period.
8. DIVIDENDS
The Directors have recommended the payment of an interim dividend of Rmb6 cents per
share (corresponding period of 2013: Rmb6 cents per share), subject to shareholders'
approval at the extraordinary general meeting of the Company.
9. EARNINGS PER SHARE
The calculation of the basic earnings per share is based on profit for the Period
attributable to owners of the Company of Rmb1,063,433,000 (corresponding period of
2013: Rmb930,385,000) and the 4,343,114,500 (2013: 4,343,114,500) ordinary shares
in issue during the Period.
Diluted earnings per share presented is the same as basic earnings per share since
there were no potential ordinary shares outstanding during both periods.
10. TRADE RECEIVABLES
As at As at
June 30, December 31,
2014 2013
Rmb'000 Rmb'000
(Unaudited) (Audited)
Trade receivables comprise:
A fellow subsidiary 1,500 3,077
Third parties 116,043 99,023
Total trade receivables 117,543 102,100
Less: Allowance for doubtful debts (672) (672)
116,871 101,428
The Group has no credit period granted to its trade customers of toll operation
and service area businesses. The Group's trade receivable balance for toll operation
is toll receivables from the Expressway Fee Settlement Centre of the Highway
Administration Bureau of Zhejiang Province, which are normally settled within
3 months. All of these trade receivables were neither past due nor impaired in
both periods.
In respect of the Group's asset management service operated by Zheshang Securities
Co., Ltd., trading limits are set for customers. The Group seeks to maintain tight
control over its outstanding accounts receivable in order to minimise credit risk.
Overdue balances are regularly monitored by management.
The following is an aged analysis of trade receivables, net of allowance for doubtful
debts presented based on the invoice date at the end of the reporting period, which
approximated the respective revenue recognition dates:
As at As at
June 30, December 31,
2014 2013
Rmb'000 Rmb'000
(Unaudited) (Audited)
Within 3 months 97,317 90,812
3 months to 1 year 19,391 10,453
Over 2 years 163 163
Total 116,871 101,428
11. LOANS TO CUSTOMERS ARISING FROM MARGIN FINANCING BUSINESS
The Group has provided customers with margin financing and securities lending for
securities transactions, the credit facility limits to margin clients are determined
by the discounted market value of the collateral securities accepted by the Group.
All of the loans to margin clients which are secured by the underlying pledged
securities are interest bearing. The Group maintains a list of approved stocks for
margin lending at a specified loan to collateral ratio. Any excess in the lending
ratio will trigger a margin call which the customers have to make good of the shortfall.
The Group has the right to process forced liquidation if the customer fails to make
good of the shortfall within a short period of time.
As at June 30, 2014, loans to customers under the margin financing and securities
lending activities carried out in the PRC were secured by the customers' stock securities
and cash collaterals. The undiscounted market value of the stock security collaterals was
amounted to Rmb9,581,111,000 (December 31, 2013: Rmb8,207,640,000). Cash collateral of
Rmb246,610,000 (December 31, 2013: Rmb222,313,000) received from clients has been included
in accounts payable to customers arising from securities business.
No aged analysis is disclosed as in the opinion of the directors, the aged analysis
does not give additional value in view of the nature of business of securities
margining financing.
12. OTHER RECEIVABLES AND PREPAYMENTS
As at As at
June 30, December 31,
2014 2013
Rmb'000 Rmb'000
(Unaudited) (Audited)
Current:
Entrusted loans receivables from 474,654 54,000
related parties (Note 17(ii))
Interest receivables 112,523 122,392
Prepayments 44,107 30,195
Financial products investment 62,000 168,000
receivables (Note a)
Others 80,661 77,381
773,945 451,968
Non-current:
Entrusted loans receivables from - 401,400
related parties (Note 17(ii))
- 401,400
773,945 853,368
Note:
(a) Short-term fixed-yield and principal protected bank financial products.
13. FINANCIAL ASSETS HELD UNDER RESALE AGREEMENT
As at As at
June 30, December 31,
2014 2013
Rmb'000 Rmb'000
(Unaudited) (Audited)
Analysed by collateral type:
Bonds 153,503 20,500
Stock securities (Note) 977,101 853,754
1,130,604 874,254
Analysed by market:
Shanghai/Shenzhen Stock Exchange 1,130,604 874,254
Note: The financial assets (pledged by stock) held under resale agreements are those
resale agreements which qualified investors entered into with the Group to purchase
the specified securities at a predetermined price and a predetermined day in the future.
13. FINANCIAL ASSETS HELD UNDER RESALE AGREEMENT (Continued)
The collaterals include both equity and debt securities listed in the PRC. As at
June 30, 2014, the fair value of equity and debt securities as collaterals was
Rmb2,650,255,000 (December 31, 2013: Rmb1,915,221,000) and Rmb153,622,000
(December 31, 2013: Rmb20,500,000), respectively.
14. TRADE PAYABLES
Trade payables mainly represent the construction payables for the maintenance
projects of toll expressways. The following is an aged analysis of the trade
payables presented based on the invoice date at the end of the reporting
period:
As at As at
June 30, December 31,
2014 2013
Rmb'000 Rmb'000
(Unaudited) (Audited)
Within 3 months 214,332 214,669
3 months to 1 year 193,375 82,048
1 to 2 years 39,635 29,518
2 to 3 years 6,652 8,496
Over 3 years 57,465 87,263
Total 511,459 421,994
15. OTHER PAYABLES AND ACCRUALS
As at As at
June 30, December 31,
2014 2013
Rmb'000 Rmb'000
(Unaudited) (Audited)
Other liabilities:
Accrued payroll and welfare 576,568 544,469
Advance from customers 60,522 94,124
Toll collected on behalf of other toll roads 3,021 5,057
Retention payable 126,545 143,807
Others 281,882 192,382
1,048,538 979,839
Other accruals 23,031 15,657
Total 1,071,569 995,496
16. Financial assets sold under repurchase agreements
Sales and repurchase agreements are transactions in which the Group sells a security
and simultaneously agrees to repurchase it (or an asset that is substantially the same)
at a fixed price on a future date. Since the repurchase prices are fixed, the Group is
still exposed to substantially all the credit risks and market risks and rewards of those
securities sold. These securities are not derecognised but regarded as "collateral" for
the secured lending from these counterparties because the Group retains substantially all
the risks and rewards of these securities. In addition, the cash received is recognised
as financial liability.
As at 30 June, 2014, the Group entered into repurchase agreements with certain counterparties.
The proceeds from selling such securities are presented as financial assets sold under
repurchase agreements. The cash advanced to the Group were interest bearing. Because the
Group sells the contractual rights to the cash flows of the securities, it does not have
the ability to use the transferred securities during the term of the arrangement.
17. RELATED PARTY TRANSACTIONS AND BALANCES
The following is a summary of the related party transactions during the Period:
(i) Transactions and balances with government related parties
The Group operates in an economic environment currently predominated by entities directly
or indirectly owned or controlled by the PRC government ("government-related entities").
In addition, the Group itself is part of a larger group of companies under the Communications
Group which is controlled by the PRC government. However, due to the business nature,
in respect of the Group's toll road business and securities business, the directors are
of the opinion that it is impracticable to ascertain the identity of counterparties and
accordingly whether the transactions are with other government-related entities in the PRC.
Details of other significant transactions with government related parties are
summarised below:
(a) Transactions with Communications Group
Pursuant to the leasing and operation agreement entered into between Zhejiang Jinhua Yongjin
Expressway Co., Ltd. ("Jinhua Co", a 100% owned subsidiary of the Company) and Zhejiang
Communications Investment Group Industrial Development Co., Ltd. (Zhejiang Communications
Investment, a fellow subsidiary of Communications Group), Jinhua Co leased the toll road
service area to Zhejiang Communications Investment and Zhejiang Communications Investment
managed the operation of the service area and the advertising business in respect of the
toll road service area. Such business began from January 1, 2011, and will be expired at
the same time with the operating right for Jinhua Section in 2030.
For the six months ended June 30, 2014, Jinhua Co earned the leasing income of
Rmb1,500,000 (corresponding period of 2013: Rmb1,500,000).
17. RELATED PARTY TRANSACTIONS AND BALANCES (Continued)
(i) Transactions and balances with government related parties (Continued)
(b) Transactions with other government related parties
(1) Pursuant to the operation management agreement entered into between Zhejiang Expressway
Investment Development Co., Ltd. ("Development Company", a wholly owned subsidiary of
the Company), and Zhejiang Expressway Petroleum Development Co., Ltd. ("Petroleum Company")
in respect of the petrol stations in the service areas along Shanghai-Hangzhou-Ningbo and
Shangsan Expressways. Petroleum Company assists Development Company in running their petrol
stations along these roads. During the Period, purchase of petroleum products from Petroleum
Company totaled Rmb988,858,000 (corresponding period of 2013: Rmb811,976,000).
Petroleum Company is a government related party and also an associate of the Group.
(2) The Group has entered into various significant transactions, including deposit placements,
borrowings and other general banking facilities, with certain banks and financial institutions
which are government-related entities in its ordinary course of business. In view of the nature
of those banking transactions, the directors are of the opinion that separate disclosure would
not be meaningful.
(ii) Transactions and balances with associates and other non-government related parties
(1) On July 25, 2013 and December 30, 2013, Zhejiang Communications Finance provided the Company
with short-term loans amounted to Rmb190,000,000 and Rmb150,000,000, at a fixed interest
rate of 5.04% per annum, with maturity date of January 24, 2014 and March 31, 2014 respectively.
Such loans were repaid on the maturity date. On June 9, 2014, Zhejiang Communications
Finance provided the Company with short- term loans amounted to Rmb400,000,000, at a fixed
interest rate of 5.04%, with maturity date of December 9, 2014. During the Period, the relevant
interest expense amounted to Rmb3,293,000. Such loan was early settled before the issue
date of the report.
(2) Pursuant to the board resolutions of the Company as at August 28, 2010 and the entrusted
loan contracts, the Company continued to provide entrusted loans totaling Rmb400,000,000,
with a term of 18 months, to Zhejiang Canal Concord Property Co., Ltd.
("Zhejiang Canal Concord", a subsidiary of the Group's associate), at a fixed interest
rate of 12% per annum. Such entrusted loans are guaranteed by World Trade Center
Zhejiang Real Estate Development Co., Ltd. ("World Trade Ltd"), in full.
17. RELATED PARTY TRANSACTIONS AND BALANCES (Continued)
(ii) Transactions and balances with associates and other non-government
related parties (Continued)
(3) Pursuant to the board resolutions of Development Company on April 22, 2013,
and the entrusted loan contract, Development Company provided entrusted loan
on April 27, 2013 totalling Rmb50,000,000 with maturity date of April 27,
2014 to Zhejiang Canal Concord, at a fixed interest rate of 12% per annum.
Such entrusted loan was guaranteed by World Trade Ltd in full and was repaid
on the maturity date. Development Company continued to provide entrusted loan
on May 28, 2014 totalling Rmb50,000,000 with maturity date of May 27, 2015 to
Zhejiang Canal Concord, at a fixed interest rate of 12% per annum. Such entrusted
loan is guaranteed by World Trade Ltd in full.
For the six months ended June 30, 2014, the interest income recognised on the
above entrusted loan transactions with the associate were Rmb24,940,000
(corresponding period of 2013: Rmb23,548,000).
Interest receivables as at June 30, 2014 on the above entrusted loan transactions
with the associate were Rmb24,654,000 (December 31, 2013: Rmb5,400,000). The amount
will be repaid at maturity.
(4) The Group has entered into a financial services agreement with Zhejiang Communications
Finance. Pursuant to the agreement, Zhejiang Communications Finance agreed to provide
the Group with Deposit Services, the Loan and Financial Leasing Services, the Clearing
Services and Other Financial Services. On June 30, 2014, the balance of the Group
under account of Zhejiang Communications Finance is Rmb194,827,000
(December 31, 2013: Rmb60,443,000).
18. FAIR VALUE MEASUREMENTS OF FINANCIAL INSTRUMENTS
This note provides information about how the Group determines fair value of various
financial assets and financial liabilities.
Fair value measurements recognised in the condensed consolidated statement of financial
position that are measured at fair value on a recurring basis
Some of the Group's financial assets and financial liabilities are measured at fair
value at the end of each reporting period. The following table gives information about
how the fair value of these financial assets and financial liabilities are determined
(in particular, the valuation technique(s) and input(s) used).
Relationship of
Basis of fair value unobservable
Fair value measurement/valuation Significant inputs
Fair value as at hierachy technique(s) and key input(s) unobservable input(s) to fair value
Financial Classified June 30, December 31,
assets as 2014 2013
Rmb'000 Rmb'000
(Unaudited)(Audited)
1)Equity Held Assets - Assets - Level 1 Quoted bid prices in N/A N/A
investment for 111,370 78,658 an active market
listed trading
in investments
exchange
2)Equity Held Assets - - Level 1 Quoted bid prices in N/A N/A
securities for 1,406 an active market
and trading
Open investments
-ended
equity
funds
Held Assets - Assets - Level 2 Shares of the net assets N/A N/A
for 5,176 5,242 of the products, determined with
trading reference to the net asset value
investments of the products, calculated by
observable (quoted) prices of
underlying investment portfolio
and adjustment of related expenses.
3)Fund Available Assets - Assets - Level 1 Quoted bid prices in N/A N/A
listed -for 40,894 44,574 an active market
in -sale
exchange investment
4)Debt Held Assets - Assets - Level 1 Quoted bid prices N/A N/A
investments for 588,979 443,810 in an active market
listed trading
in investments
exchange
and debt
investment
in interbank
market
Available Assets - Assets - Level 1 Quoted bid prices N/A N/A
-for 127,000 127,000 in an active market
-sale
investment
Held Assets - Assets - Level 2 Discounted cash flow. N/A N/A
for 1,078,308 653,315 Future cash flows are estimated
trading on applying the interest curves of
investments different types of bonds as the
key parameter.
18. FAIR VALUE MEASUREMENTS OF FINANCIAL INSTRUMENTS (Continued)
Relationship of
Basis of fair value unobservable
Fair value measurement/valuation Significant inputs
Fair value as at hierachy technique(s) and key input(s) unobservable input(s) to fair value
Financial Classified June 30, December 31,
assets as 2014 2013
Rmb'000 Rmb'000 Level 2
(Unaudited)(Audited)
5)Investment Available Assets- Assets- Shares of the net assets of N/A N/A
in -for 211,200 126,948 the products, determined with
structured -sale reference to the net asset value
products investment of the products, calculated by
observable (quoted) prices of
underlying investment portfolio
and adjustment of related expenses.
Assets- Assets- Level 3 Discounted cash flow. Future cash Actual yield The higher
163,031 74,402 flows are estimated based on of the the actual
applicable yield of underlying underlying yield,
investment portfolio and adjustment investment the higher
of related expenses, discounted portfolio the fair
at a rate that reflects the and the value
credit risk of various discount rate
counterparties
6)Investment Available Assets- Assets- Level 3 Discounted cash flow. Future cash Actual yield The higher
in trust -for 92,664 41,514 flows are estimated based on of the the actual
products -sale applicable yield of underlying underlying yield, the
investment investment portfolio and adjustment investment higher the
of related expenses, discounted portfolio fair value
at a rate that reflects the and the
credit risk of various discount rate
counterparties
18. FAIR VALUE MEASUREMENTS OF FINANCIAL INSTRUMENTS (Continued)
As at June 30, 2014 (Unaudited)
Level 1 Level 2 Level 3 Total
Rmb'000 Rmb'000 Rmb'000 Rmb'000
Held for trading investments
- Equity securities
a. Manufacturing 56,612 - - 56,612
b. Finance service 27,769 - - 27,769
c. Information technology service 6,020 - - 6,020
d. Energy and water service 2,898 - - 2,898
e. Transportation, storage and 2,057 - - 2,057
postal service
f. Real Estate 3,805 - - 3,805
g. Construction 2,435 - - 2,435
h. Mining 5,055 - - 5,055
i. Wholesaling 2,260 - - 2,260
j. Agriculture, forestry, fishing and 262 - - 262
animal husbandry
k. Leasing and commercial service 788 - - 788
l. Culture, Sports and Entertainment 749 - - 749
m. Others 660 - - 660
Sub-total 111,370 - - 111,370
- Open-ended fund 1,406 5,176 - 6,582
- Corporate bonds 588,979 1,078,308 - 1,667,287
Sub-total 701,755 1,083,484 - 1,785,239
Available-for-sale investments
- Fund 40,894 - - 40,894
- Corporate bonds 127,000 - - 127,000
- Structured products - 211,200 163,031 374,231
- Trust products - - 92,664 92,664
Sub-total 167,894 211,200 255,695 634,789
18. FAIR VALUE MEASUREMENTS OF FINANCIAL INSTRUMENTS (Continued)
As at December 31, 2013 (Audited)
Level 1 Level 2 Level 3 Total
Rmb'000 Rmb'000 Rmb'000 Rmb'000
Held for trading investments
- Equity securities
a. Manufacturing 43,720 - - 43,720
b. Finance service 15,482 - - 15,482
c. Information technology service 6,396 - - 6,396
d. Energy and water service 3,057 - - 3,057
e. Transportation, storage and 1,218 - - 1,218
postal service
f. Real Estate 2,002 - - 2,002
g. Construction 1,539 - - 1,539
h. Mining 2,937 - - 2,937
i. Wholesaling 1,170 - - 1,170
j. Agriculture, forestry, fishing and 366 - - 366
animal husbandry
k. Others 771 - - 771
78,658 - - 78,658
- Open-ended fund - 5,242 - 5,242
- Corporate bonds 443,810 653,315 - 1,097,125
Sub-total 522,468 658,557 - 1,181,025
Available-for-sale investments
- Fund 44,574 - - 44,574
- Corporate bonds 127,000 - - 127,000
- Structured products - 126,948 74,402 201,350
- Trust products - - 41,514 41,514
Sub-total 171,574 126,948 115,916 414,438
There were no transfers between instruments in Level 1 and Level 2 in the current and prior period.
18. FAIR VALUE MEASUREMENTS OF FINANCIAL INSTRUMENTS (Continued)
The following table represents the changes in Level 3 available-for-sale investments.
Structured Trust
products products Total
Rmb'000 Rmb'000 Rmb'000
As at January 1, 2013 - - -
Addition 74,810 41,000 115,810
Total (loss) gain recognised in
other comprehensive income (408) 514 106
As at December 31, 2013 74,402 41,514 115,916
Addition 138,770 52,500 191,270
Disposal (49,500) (500) (50,000)
Total loss recognised in other
comprehensive loss (641) (850) (1,491)
As at June 30, 2014 163,031 92,664 255,695
19. SUMMARY OF FINANCIAL INFORMATION OF THE COMPANY
As at As at
June 30, December 31,
2014 2013
Rmb'000 Rmb'000
(Unaudited) (Audited)
Investments in subsidiaries 6,640,021 6,610,021
Amounts due from subsidiaries 537,549 328,324
Other assets 6,559,357 6,645,966
13,736,927 13,584,311
Total liabilities 1,909,325 1,323,793
Capital and reserves
Share capital 4,343,115 4,343,115
reserves 7,484,487 7,917,403
11,827,602 12,260,518
20. EVENTS AFTER THE REPORTING PERIOD
As at August 14, 2014, Zheshang Securities, together with Yangshengtang Co., Ltd.,
an independent third party, auctioned off their respective 25% equity interest
(totaling 50%) in Zheshang Fund Management Co., Ltd. in the manner of a bundled
transfer through electronic bidding at Zhejiang Property and Stock Exchange. The
hammer price reached at Rmb414,000,000 offered by Tonglian Capital Management Co.,
Ltd., another shareholder (independent from the Group) of Zheshang Fund. Zheshang
Securities will receive a consideration of Rmb207,000,000. The equity transfer is
still subject to approval from China Securities Regulatory Commission and equity
transfer registration. Upon the disposal of such equity interest, Zheshang Securities
will have no equity interest in Zheshang Fund any more.
21. APPROVAL OF CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The condensed consolidated financial statements were approved and authorised for
issue by the board of directors on August 27, 2014.
2014 Environmental and Social Responsibility Report
I. Scope of Report
The scope of this environmental and social responsibility report covers the
Company and its subsidiaries with businesses related to expressway operations.
Zheshang Securities Co. Ltd. and its affiliates, joint ventures and joint-stock
companies are not included in this report.
II. Reporting Period
This environmental and social responsibility report covers the reporting period
from 1 July 2013 to 30 June 2014.
III. Environmental and Social Responsibility Report
1. Quality of Work Environment
(1) Work Environment
Employees are the foundation for the Company's survival and development as well
as the Company's valuable assets. The Company is committed to creating the
corporate values of integrity, harmony, openness and progressiveness, providing
employees with a good working environment and relaxed working atmosphere, and
striving to establish a career platform on which the full potential of employees
can be realized. Through a number of recruitment channels including campus
recruitment, social recruitment, recommendation, self- recommendation, and recruitment
agencies, the Company enlists talent and builds talent reserves that are in line with
the Company's strategic requirements. A remuneration philosophy of grading by job
specification, promotion by ability, and compensation adjusted by performance have
been implemented. Compensation and benefits such as basic salaries, incentive payments,
paid vacations, supplemental medical scheme and corporate annuity are provided.
Career development paths such as competition for positions, two-way selection process,
democratic recommendation and tasks swapping between employees have been implemented.
In order to resolve the employees' parking problem at the frontline stations, the
company invested RMB1,090,000 during the reporting period for the construction of
parking sheds by way of repairing and reconstructing the administration buildings
at the Hangzhou management office, Shaoxing management office and the information
centre.
As at the end of the reporting period, there were a total of 3,770 employees of the Company, among
them 488 were hired by third-party employment agencies. The percentage of male employees and the
percentage of female employees were 56.6% and 43.4% respectively. During the reporting period, the
employee turnover was 169, representing 4.5% of the Company's total number of employees.
(2) Occupational Health and Safety
The Company adheres to the production safety policy of "people-oriented production and safe
development", and upholds the management principle of seamless integration between business operation
and production safety. A responsibility system of production safety targets and risk-based deposits
system have been implemented. Standardized safety operation procedures specific to the job positions
have been implemented. Identification of potential sources of occupational health and safety hazards,
assessment of risks and formulation of control measures are carried out from time to time. The
Company's occupational health and safety management system has been certified by a third-party
organization Hangzhou WIT Certification Co. Ltd. From time to time, the Company also carries out
various forms of safety alert education sessions and training, as well as activities of special
themes such as "identification of hidden risks", "knowing and carrying out responsibilities" and
"production safety month". The Company provides personal accident insurance for all employees,
arranges for regular staff medical inspections, and procures labour protection supplies for the
protection of employees as necessary.
During the reporting period, the Company spent RMB544,000 for the purchase of employees' personal
accident insurance, RMB933,000 for staff medical inspections and RMB7,598,000 for the procurement
of labour safety supplies and subsidies for use by the employees. During the reporting period,
7 cases of injured employees were reported, representing 0.2% of the total number of employees,
while there was no fatal case of employees that was work-related.
(3) Development and Training
Staff development and training are pertinent to uplift employees' capabilities as well as to
sustain the Company's development. The Company provides all staff with four types of training,
namely new employee orientation programs, internal training, external training and online
training. Employees are encouraged to participate in further education through appropriate
incentives for those who have met training requirements and achieved results. According to the
specific characteristics of different job positions, training including integrated management
knowhow training, professional and technical business training, and production job skills
training are provided in different categories and degrees of depth for the improvement of
employees' technical capabilities and management skills.
During the reporting period, the Company has actively carried out various types of education
and training tasks. The expenditure for training and development amounted to RMB4,410,000 and
the accumulated training reached a total of 72,000 man-class-hours. The average training
hours for senior staff, mid-level staff and junior staff were approximately 40 class-hours,
31 class-hours and 19 class-hours, respectively.
(4) Building a Corporate Culture
Corporate culture is the soul of the Company's development and its soft power equipped to
beat the competition. During the reporting period, the Company was facing new circumstances
and new challenges of reforms and innovations as well as restructuring and development.
After a comprehensive selection process, Beijing AproaChina Investment and Management
Consulting Co. Ltd. was selected to help the Company rebuild its corporate culture. Through
processes including corporate culture diagnosis, corporate culture refinement, corporate
culture discussions among all staff, and corporate culture establishment and promotion, a
system of corporate culture which is appropriate for the Company's development needs has
been established, at the same time consolidating and summarizing the fine traditions the
Company has accumulated over the past 17 years since the establishment of the Company.
A corporate culture handbook was prepared, a three-year corporate culture development plan
was formulated and the establishment of "Home for Employees" and staff club for the
frontline staff was greatly supported, with an aim to enhance internal vitality and
stimulate the employees' enthusiasm for work, pro-activeness and initiatives so that they
can support and safeguard the Company's new developments.
(5) Labour Standards
The Company supports and complies with the labour and employment laws and regulations,
adheres to fair and equitable employment policies, and condemns the use of child labour
and forced labour. Employment contracts are signed for 100% with all employees. The Company
has established a collective bargaining process for the negotiation of employees' wages
and has set up a system in which any major issues that may affect labour rights would require
the consideration by and consent from the employees' representatives. A labour dispute
arbitration committee has been put in place for the employees to protect labour rights.
Dedicated rooms for psychological counseling and expressing emotion have also been established
at the frontline stations. These facilities are manned by qualified, part-time psychological
counselors who offer psychological consultations and counseling services to the employees, and
guide them toward the maintenance of rational and peaceful minds, congenial work environments
and contented lives. A distress relief fund (the distribution of which is in form of festive
regards and living subsidies) has been established by the Company for the purposes of
resolving special living difficulties of its staff resulted from critical illness and
accidents. With the practical circumstances in mind, the Company has formulated the
"Employee Retirement Administrative Guideline", which provides alternatives to properly
resolve the actual difficulties of the elderly employees who are unable to fulfill the
job requirements of their current positions. During the reporting period, the Company did
not employ any child labour, nor has there been any labour dispute.
2. Environmental Protection
(1) Emissions
Protecting the environment is a shared responsibility of every member of society. The Company
is primarily engaged in the investment, development and operation of high-grade highways.
Although they are different from businesses which are involved in operations with direct
impact to the environment, there are still certain direct or indirect impacts to the environment.
The Company strictly complies with all environment-related laws and regulations.
Environmental assessments are conducted according to relevant policy requirements.
Wastewater disposal in the serviced areas as well as dust emission during the asphalt mixing
process are in line with national standards. The "low-carbon, environmental friendly and high
efficiency" asphalt pavement process which makes use of hot in-place recycling technique to
achieve reduced use of asphalt mixture and enhance recycled materials for reuse is promoted
and implemented. The Company's environmental management system has been certified by a
third-party organization Hangzhou WIT Certification Co. Ltd.
Reporting Period
Wastewater from toilets, restaurants and plaza within
the service areas 743,000 metric tons
Compliance rate of discharged wastewater 100%
Recovered waste asphalt mixture 84,000 metric tons
Reused of waste asphalt mixture 10,000 metric tons
Dust emission compliance rate for hot mix asphalt 100%
(2) Resource Consumption
The Company encourages all staff to conserve resources for the improvement of the environment
and cost reduction. On the basis that quality of products and services are ensured, the
Company strives to minimize the quantity used as well as wastage during the resource
utilization processes, to use energy-saving, low-power technology and products as much
as possible, to adopt energy-efficient light sources for the energy saving transformation
of lighting equipment, and to encourage and support staff to bring up justifiable
suggestions about energy conservation and energy saving.
Reporting Period
Water[Note 1] 1,848,000 metric ton
Electricity[Note 1] 36,384,000 kWh
Steam 2,392.7 metric ton
Fuel
Gasoline 760.6 metric ton
Diesel 1,688.70 metric ton
Heavy oil 2,892.2 metric ton
Note 1: The water and electricity charges for the Company's headquarters are included in the
property management fees and are difficult to estimate. As such, the data on water and
electricity consumption excludes the water and electricity consumed by the Company's
headquarters.
(3) Environment and Natural Resources
The Company adopts an energy-saving and green environmental management policy. Integrated with
the specific locations and environment of the frontline toll stations, "Beautiful Stations"
are erected with planting of greeneries, fruit trees and seasonal crops, with an aim to create
a rural economy and achieve a greener environment at the same time, to enhance the appearances
of the frontline stations and to improve the work environment of the frontline staff. In the
office areas, the Company places green plants at appropriate spots according to the spatial
arrangements at work place so as to create a vibrant atmosphere in the work environment.
Video conferencing, office automation and email systems are widely used by the Company.
Daily consumption of paper and office supplies is minimized and double-sided printing in the
offices is encouraged to reduce the consumption of paper and its impact on the environment.
During the reporting period, the Company consumed 820 cartons of paper (each carton contains
5,000 pieces of paper).
3. Operation Practices
(1) Management of Suppliers
The selection and identification of suppliers for the Company is subject to the "Guidelines
on Management of Company's Bidding" issued by the Company. The procurements which are
within the scope and meet the standards should be processed by way of tender, competitive
negotiation and quotation comparison, and are conducted based on the principles of
transparency, fairness, equity and integrity. The Company has established a bidding
management committee and a bid evaluation committee. Any member of the bid evaluation
committee who is found connected to potential suppliers must abstain from the evaluation.
In relation to maintenance projects, equipment replacements, asphalt and stone procurements,
the Company identified 50 suppliers by way of tender, with total procurement amounted to
RMB280,427,000 during the reporting period.
(2) Security System
The Company's quality management policy is to ensure safety, accessibility, quality and
efficiency. Its core responsibilities in respect of products and services are to ensure
that highways and ancillary facilities are intact, smooth and accessible. In order to
best fulfill its core responsibilities, the Company has prepared mid to long- term road
maintenance plans as well as annual maintenance schedules, established a standardized toll
services system, formed an emergency team and set up a response mechanism for traffic
accidents. An integrated support service combining dining, shopping, sanitation, fueling
and vehicle repair has been established. Equipment repairs, maintenance and emergency
handling procedures were standardized. An operational system for the assurance of
occupational health and production safety was formulated. Access to the Zhejiang
Provincial expressway service hotline 12122 has been set up. The retention period for
vehicles images and inquiry procedures were standardized. With a team who provides
courteous customer service and collects tolls only according to defined charging
mechanism, the Company's quality management system has been certified by a third-party organization Hangzhou WIT Certification Co. Ltd.
During the reporting period, the Company invested RMB391,878,000 on road maintenance for
road surface treatment of 408,000 square meters of defective road surface, 70.5 kilometers
of pavement overlay (single carriageway), overlay at 196 bridgeheads as well as
protection and reinforcement of 33 high slopes. As inspected by the Zhejiang Road
Administration Bureau, the pavement quality indices (PQI) of Shanghai-Hangzhou-Ningbo
Expressway, Shangsan Expressway and Ningbo-Jinhua Expressway were 94.3, 94.4 and 94.1,
respectively, all of which have met the highest standards recognized by the government
transportation authority, and was named as a "2013 Progressive Unit in Zhejiang Province
Highway Maintenance Responsibilities Targets Inspection". The Company monitors the full
length of highways and carries out regular road inspections and special inspections in
response to abnormal weather and events, with an aim to detect abandoned objects or
spilled materials on expressways as early as possible and to take appropriate measures to
clean or to remove them. Public liability insurances are purchased to cover the potential
loss suffered by the Company as a result of traffic accidents caused by abandoned objects
or spillage on roads. During the reporting period, there were 487 traffic accidents along
Shanghai-Hangzhou-Ningbo Expressway, Shangsan Expressway and Ningbo-Jinhua Expressway
caused by abandoned objects or spillage on roads, of which 13 were covered by the
Company's public liability insurances and compensated by the insurance company for the
benefit of the parties involved. There was no similar traffic accident for which the court
held that the Company had to be liable for the compensation.
During the reporting period, the full length of the Shanghai-Hangzhou-Ningbo Expressway,
Shangsan Expressway and Ningbo-Jinhua Expressway were open for 331 days, inaccessible or
closed for 34 days (including complete closure, closure of certain lanes, closure for a
specified period, closure of toll stations and traffic diversion from main roads, etc.)
due to causes such as traffic accidents, bad weather and road construction. The total
number of the Company's ETC lanes reached 104, and a total of 22 automatic card issuing
lanes at the entrances were added. The throughput of vehicles reached 144,598,000 units.
During the reporting period, the Company's 24-hour service hotline received a total of
approximately 4,500 inquiries, of which 106 were related to customer complaints,
representing a complaint rate of seven millionths (0.00007%) and the ratio of complaint
handling and response was 100%. 1,109 customers were randomly selected for customer
satisfaction survey and the results demonstrated that the rate of customer satisfaction
was 97.6%.
In order to improve the overall appearance of the service areas, the Company carried out
improvements on spatial arrangement and upgraded hardware equipment for some service
areas under its management during the reporting period. The Company carried out a
questionnaire survey in respect to customer demand and consumer trend, after which
new foods and beverages including fast foods and local specialty snacks were
introduced to meet customers' needs. The Company made contribution to public liability
insurance in order to cover the losses incurred by its customers from accidental
injuries within the service areas. The Company was awarded as one of the ten best
contenders in the "The First Session of Outstanding Management Company of Highway
Service Areas in China". The Company was assessed and selected by the China Highway
and Transportation Society among more than 200 competitors in China, and reviewed by
competent authorities including the Zhejiang Provincial Communication Department.
Jiaxing service area, Shaoxing service area, Yuyao service Area and Chang'an service
area were awarded as four-star service areas, and Shengzhou service area, Xinchang
service area and Tiantai service area were awarded as three-star service areas.
During the reporting period, the Company performed 31,473 roadside assistances. From
receiving a request for roadside assistance to dispatch of rescue team, the average
response time required was approximately 5 minutes.
During the reporting period, the Company has not been involved in any intellectual
property litigation or any proceedings in relation to customer privacy leakage, nor
has there been any food safety incident in its service areas.
(3) External Liabilities
Due to the inherent characteristics of our products and services, such as highway
traffic noises and occasional spillage of dangerous goods on the roads, there are
inevitably some impacts to the social environment and the daily lives of the residents
along the roads. In this respect, the Company, through consultation with the government
and residents, has installed soundproofed glasses in the affected residential units,
and planted trees on roadsides to mitigate the noise nuisance caused to the residents.
The Company has taken a series of measures to reduce or eliminate spillage of dangerous
goods on the roads, including registration of vehicles carrying dangerous goods at the
entrances, placement of warning signs, upgrading accident-prone road sections,
formulation of internal emergency response plans, assisting local governments along the
highways in preparation of contingency plans, and organizing emergency drills to shorten
response time and improve handling capacity.
During the reporting period, there were a total of 3 incidents of dangerous goods spillage
along the Shanghai- Hangzhou-Ningbo Expressway, Shangsan Expressway and Ningbo-Jinhua
Expressway. The Company properly handled the incidents through active cooperation with
the safety production supervision authorities and government environmental agencies and
acted according to their requirements. No incident of dangerous goods spillage occurred
due to the Company's fault.
(4) Anti-corruption
All of the Company's staff are familiar with the legal liabilities in respect to corruption.
In order to strengthen its internal anti-corruption and anti-bribery monitoring work.
The Company has established an internal monitoring unit-discipline inspection and
supervision office, and each frontline station is manned with part-time discipline
inspection and liaison personnel. The Company fortifies the responsibility of leaders
and employees at all levels in fighting against corruption by way of signing a "letter of
responsibility against corruption". Anti-corruption education activities such as
"performance evaluation and integrity evaluation", "watching anti-corruption education
videos", "visiting police education bases" and holding "anti-corruption business reporting
seminars" are carried out. During the reporting period, there was no major illegal case in
relation to corruption.
4. Community Involvement
(1) Investment in Community
The Company particpates in the establishment of civilized units and is enthusiastic about
public welfare activities in the community. In particular, it actively engages in helping
the distressed people by providing material, mental and capability enhancement assistances,
with an aim to uplift the civil qualities of the villagers in targeted villages, promote
moral and ethical education, enrich their business and cultural lives, improve their living
environment and quality of life, and to care for the left-behind children. During the
reporting period, the Company cooperated with 20 institutions in giving assistance and
sharing of cultural life with identified parties, helped 21 poor children to continue with
their school, giving assistance amounting in total to RMB279,000.
(2) Volunteer Programme
Volunteer programme is an important vehicle through which our staff contributes to society.
It is also a cultural value which the Company advocates. A number of volunteer service
teams are formed to carry out volunteer activities in various forms and with different
contents which take place during festive occasions and holidays. These include emergency
rescues, traffic directions, services for the convenience of people, unpaid blood
donations and driving safety initiatives. During the reporting period, the Company
organized 129 volunteer activities in which a total of 1,235 employees participated,
and 58 employees engaged in blood donations.
(3) Donation
The Company supports the development of cultural and sports activities in Zhejiang Province
and has entered into a donation agreement with Zhejiang Sports Bureau, pursuant to which
the Company donates RMB1,000,000 every year to Zhejiang College of Sports (three years in
total) for the funding of teaching, scientific research and talent development. In
response to the call of Zhejiang Provincial government, all employees took the initiative
to contribute a total of RMB143,000 to support the Zhejiang Provincial government in the
development and implementation of aquatic improvement projects for the enhancement of
people's living environment throughout the province.
(This environmental and social responsibility report of 2014 was approved by the Board
on 27 August 2014.)
Executive Directors Authorized Representatives
ZHAN Xiaozhang (Chairman) ZHAN Xiaozhang
LUO Jianhu (General Manager) ZHANG Jingzhong
DING Huikang
Statutory Address
Non-Executive Directors 12/F, Block A, Dragon Century Plaza 1 Hangda Road
Hangzhou City, Zhejiang Province PRC 310007
LI Zongsheng Tel : 86-571-8798 5588
WANG Weili Fax: 86-571-8798 5599
WANG Dongjie
Independent Non-Executive Directors
ZHANG Junsheng Legal Advisers
ZHOU Jun
PEI Ker-Wei As to Hong Kong and US law:
Herbert Smith Freehills
23rd Floor, Gloucester Tower
Supervisors 15 Queens Road Central
Hong Kong
FU Zhexiang
WU Yongmin
LIU Haisheng (Resigned on 8 April, 2014) As to English law:
ZHANG Guohua Herbert Smith Freehills LLP
ZHANG Xiahua Exchange House
Primrose Street
London EC2A 2EG
Company Secretary United Kingdom
Tony Zheng As to PRC law:
T & C Law Firm
11/F, Block A, Dragon Century Plaza
1 Hangda Road
Hangzhou City, Zhejiang Province
PRC 310007
Corporate Information
Auditors H Shares Listing Information
Deloitte Touche Tohmatsu The Stock Exchange of Hong Kong Limited
35/F, One Pacific Place Code: 0576
88 Queensway
Hong Kong London Stock Exchange Plc
Investor Relations Consultant Code: ZHEH
PR Concpets Asia Limited ADRs Information
16/F., Methodist House
36 Hennessy Road, Wanchai US Exchange: OTC
Hong Kong Symbol: ZHEXY
Tel: 852-2117 0861 CUSIP: 98951A100
Fax: 852-2117 0869 ADR: H Shares 1:10
Principal Bankers Representative Office in Hong Kong
Industrial and Commercial Bank of China, Suite 2910
Zhejiang Branch 29/F, Bank of America Tower
Shanghai Pudong Development Bank, 12 Harcourt Road
Hangzhou Branch Hong Kong
Tel : 852-2537 4295
Fax: 852-2537 4293
H Share Registrar and Transfer Office
Hong Kong Registrars Limited Website
Room 1712-1716, 17/F, Hopewell Centre
183 Queen's Road East www.zjec.com.cn
Hong Kong
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NOTE : To view the full set of the Company's 2014 Interim Report. Please visit www.zjec.com.cn
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