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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
Hong Kong Stock Exchanges and Clearing Limited and The Stock Exchange of Hong
Kong Limited take no responsibility for the contents of this announcement, make
no representation as to its accuracy or completeness and expressly disclaim any
liability whatsoever for any loss howsoever arising from or in reliance upon
the whole or any part of the contents of this announcement.
ZHEJIANG EXPRESSWAY CO., LTD.
(A joint stock limited company incorporated in the People's Republic of China
with limited liability)
(Stock code: 0576)
CONTINUING CONNECTED TRANSACTIONS
IN RELATION TO
THE PROVISION OF SERVICES BY MAINTENANCE CO AND
ZHEJIANG SHUNCHANG
ROAD MAINTENANCE AGREEMENT
On 6 April 2017, the Company organised a public tender in respect of the
provision of Maintenance Services to the Group's four expressways, namely, the
Shanghai-Hangzhou-Ningbo Expressway, the Shangsan Expressway, Jinhua section of
the Ning bo-Jinhua Expressway and the Hanghui Expressway. Maintenance Co
succeeded in the tender and was awarded a contract to provide the Maintenance
Services.
On 23 June 2017, the Company entered into the Road Maintenance Agreement with
Maintenance Co, pursuant to which Maintenance Co agreed to provide the
Maintenance Services to the Group's four expressways from 23 June 2017 to 30
November 2017.
ASPHALT ROAD GEOTHERMAL POWER REGENERATION AGREEMENT
On 21 April 2017, the Company organised an invitation to tender in respect of
the provision of Regeneration Services to the Group's five expressways, namely,
the Shanghai-Hangzhou-Ningbo Expressway, the Shangsan Expressway, Jinhua
section of the Ningbo-Jinhua Expressway, the Hanghui Expressway and the Huihang
Expressway. Zhejiang Shunchang succeeded in the tender and was awarded a
contract to provide the Regeneration Services.
On 23 June 2017, the Company entered into the Asphalt Road Geothermal Power
Regeneration Agreement with Zhejiang Shunchang, pursuant to which Zhejiang
Shunchang agreed to provide the Regeneration Services to the Group's five
expressways from 23 June 2017 to 20 October 2017.
LISTING RULES IMPLICATIONS
As at the date of this announcement, Communications Group holds approximately
67% of the issued share capital of the Company. By virtue of this shareholding
interest, Communications Group is a controlling shareholder of the Company.
Therefore, Maintenance Co and Zhejiang Shunchang, as subsidiaries of
Communications Group, are connected persons of the Company and as a result, the
transactions under the Road Maintenance Agreement and the Asphalt Road
Geothermal Power Regeneration Agreement constitute continuing connected
transactions for the Company under Chapter 14A of the Listing Rules.
As the Road Maintenance Agreement and the Asphalt Road Geothermal Power
Regeneration Agreement are entered into by the Group with parties who are
connected with one another within a 12-month period and are similar in nature,
the continuing connected transactions contemplated under the Road Maintenance
Agreement and the Asphalt Road Geothermal Power Regeneration Agreement should
be aggregated in accordance with Rule 14A.81 of the Listing Rules.
As the applicable percentage ratios in respect of the transactions contemplated
under the Road Maintenance Agreement and the Asphalt Road Geothermal Power
Regeneration Agreement, on an aggregated basis, are more than 0.1% but less
than 5%, the Road Maintenance Agreement and the Asphalt Road Geothermal Power
Regeneration Agreement are subject to the reporting, announcement and annual
review requirements but exempt from the independent Shareholders' approval
requirement under Chapter 14A of the Listing Rules.
ROAD MAINTENANCE AGREEMENT
Principal terms of the Road Maintenance Agreement are set out below:
Date: 23 June 2017.
Parties: (1) the Company; and
(2) Maintenance Co.
Term: The term of the Road Maintenance Agreement is
from 23 June 2017 to 30 November 2017.
Subject matter: Maintenance Co agreed to provide certain
maintenance services in respect of the Target
Expressways (Maintenance), namely
Shanghai-Hangzhou-Ningbo Expressway, the
Shangsan Expressway, Jinhua section of the
Ningbo-Jinhua Expressway and the Hanghui
Expressway, including road work, roadbed work,
bridge work, road safety related work and
certain specific maintenance services.
Service fees and The total service fees payable by the Company
basis of the fees: to Maintenance Co under the Road Maintenance
Agreement shall be RMB244,412,627 (the "
Service Fees (Maintenance)").
The Service Fees (Maintenance) were determined
as a result of a public tender (the "Public
Tender") of the Maintenance Services for the
Target Expressways (Maintenance), where
Maintenance Co has succeeded in its bid in
accordance with the terms of the Public
Tender.
On 13 March 2017, a tender notice in respect
of the Public Tender was published on the
website of the Communications Group and
www.chinabidding.com.cn. Seven entities
expressed their interest and each of them made
the relevant payment to the Company to obtain
the tender documents for the Public Tender.
After their internal consideration, four
entities (three of which being independent
suppliers) eventually submitted their tender
to the Company.
Tender evaluation was conducted by a committee
consisting of four experts in this industry.
The committee evaluated the following factors
before deciding to recommend accepting the
tender submitted by the Maintenance Co: (1)
the working plan proposed by the tenderers and
their technical capability; (2) the standard
of safety management of the tenderers and
their capability of handling emergency events;
(3) the quality of work and ability to deliver
work on a timely manner; (4) the experience of
the tenderers in similar projects and (5) the
reputation of tenderers.
To ensure that the terms offered by the
Maintenance Co are fair, reasonable and no
less favourable than those provided by the
independent third parties to the Group, the
Company has compared the price offered by each
of the tenderers for the Maintenance Services
and the price offered by each of the
independent suppliers is higher than that
offered by Maintenance Co.
After taking into account the above evaluation
criteria, the management of the Company has
decided to accept the committee's
recommendation and award a contract for the
Maintenance Services to Maintenance Co.
Terms of payment: The Service Fees (Maintenance) shall be
payable by the Group to the Maintenance Co as
follows:
(i) 95% of the Service Fees (Maintenance)
to be payable upon completion of the
Maintenance Services; and
(ii) 5% of the Service Fees (Maintenance) to
be payable within 15 days after the completion
acceptance and the finalisation of the
completion and settlement report.
ASPHALT ROAD GEOTHERMAL POWER REGENERATION AGREEMENT
Principal terms of the Asphalt Road Geothermal Power Regeneration Agreement are
set out below:
Date: 23 June 2017.
Parties: (1) the Company; and
(2) Zhejiang Shunchang.
Term: The term of the Asphalt Road Geothermal Power
Regeneration Agreement is from 23 June 2017 to
20 October 2017.
Subject matter: Zhejiang Shunchang agreed to provide certain
regeneration services in respect of the Target
Expressways (Regeneration), namely
Shanghai-Hangzhou-Ningbo Expressway, the
Shangsan Expressway, Jinhua section of the
Ningbo-Jinhua Expressway, the Hanghui
Expressway and the Huihang Expressway,
including geothermal power regeneration work
and defects repair work.
Service fees and The total service fees payable by the Company
basis of the fees: to Zhejiang Shunchang under the Asphalt Road
Geothermal Power Regeneration Agreement shall
be RMB34,683,906 (the "Service Fees
(Regeneration)").
The Service Fees (Regeneration) were
determined as a result of an invitation to
tender (the "Tender Invitation" ) of t he
Regeneration Services for the Target
Expressways (Regeneration), where Zhejiang
Shunchang has succeeded in its bid in
accordance with the terms of the Tender
Invitation.
The Company sent invitations to tender
directly to four entities on 21 April 2017.
All of the four entities expressed their
interest and each of them made the relevant
payment to the Company to obtain the tender
documents for the Tender Invitation. After
their internal consideration, four entities
(three of which being independent suppliers)
eventually submitted their tender to the
Company.
Tender evaluation was conducted by a committee
consisting of four experts in this industry.
The committee evaluated the following factors
before deciding to recommend accepting the
tender submitted by Zhejiang Shunchang: (1)
the working plan proposed by the tenderers and
their technical capability; (2) the s ta nd a
r d of safety management of the tenderers and
their capability of handling emergency events;
(3) the quality of work and ability to deliver
work on a timely manner; (4) the experience of
the tenderers in similar projects and (5) the
reputation of tenderers.
To ensure that the terms offered by Zhejiang
Shunchang are fair, reasonable and no less
favourable than those provided by the
independent third parties to the Group, the
Company has compared the price offered by each
of the tenderers for the Regeneration Services
and the price offered by each of the
independent suppliers is higher than that
offered by Zhejiang Shunchang.
After taking into account the above evaluation
criteria, the management of the Company has
decided to accept the committee's
recommendation and award a contract for the
Regeneration Services to Zhejiang Shunchang.
Terms of payment: The Service Fees (Regeneration) shall be
payable by the Group to the Zhejiang Shunchang
as follows:
(i) 95% of the Service Fees (Regeneration)
to be payable upon completion of the
Regeneration Services; and
(ii) 5% of the Service Fees (Regeneration)
to be payable within 15 days after the
completion acceptance and the finalisation of
the completion and settlement report.
Cap for the Road Maintenance Agreement and Asphalt Road Geothermal Power
Regeneration Agreement
For the purpose of complying with Chapter 14A of the Listing Rules, the Company
has set a cap in respect of the aggregate fees payable by the Company (i) to
Maintenance Co for the Maintenance Services during the term of the Road
Maintenance Agreement and (ii) to Zhejiang Shunchang for the Regeneration
Services during the term of the Asphalt Road Geothermal Power Regeneration
Agreement, which shall not exceed RMB307,000,000.
The above cap was determined after taking into account (i) the total service
fees payable to the Maintenance Co and Zhejiang Shunchang in respect of the
Road Maintenance Agreement and the Asphalt Road Geothermal Power Regeneration
Agreement, respectively and (ii) the additional service fees, being
approximately 10% of the service fees that may be payable to the Maintenance Co
and Zhejiang Shunchang, respectively, in the event that additional maintenance
services or regeneration services not contemplated under the Road Maintenance
Agreement and the Asphalt Road Geothermal Power Regeneration Agreement are
required by the Company.
REASONS FOR AND BENEFITS OF THE TRANSACTION
Specific maintenance services including the Maintenance Services are necessary
for the operation of the Target Expressways (Maintenance). Maintenance Co has
the relevant qualifications and expertise to provide such services to the
Company. In addition, the Company has gone through the Public Tender in
accordance with which Maintenance Co was selected as the qualified service
provider for the Maintenance Services. On the basis that the price offered by
Maintenance Co being the lowest amongst the tenderers, the terms offered by
Maintenance Co are no less favourable than those provided by the independent
third parties to the Group.
Geothermal regeneration services including the Regeneration Services are
necessary for the operation of the Target Expressways (Regeneration). Zhejiang
Shunchang has the relevant qualifications and expertise to provide such
services to the Company. In addition, the Company has gone through the Tender
Invitation in accordance with which Zhejiang Shunchang was selected as the
qualified service provider for the Regeneration Services. On the basis that the
price offered by Zhejiang Shunchang being the lowest amongst the tenderers, the
terms offered by Zhejiang Shunchang are no less favourable than those provided
by the independent third parties to the Group.
Given the above, the Directors (including the independent non-executive
Directors) are of the view that the terms of each of the Road Maintenance
Agreement and the Asphalt Road Geothermal Power Regeneration Agreement are on
normal commercial terms, in the ordinary and usual course of business of the
Company and are fair and reasonable and in the interests of the Company and the
Shareholders as a whole.
LISTING RULES IMPLICATIONS
As at the date of this announcement, Communications Group holds approximately
67% of the issued share capital of the Company. By virtue of this shareholding
interest, Communications Group is a controlling shareholder of the Company.
Therefore, Maintenance Co and Zhejiang Shunchang, as subsidiaries of
Communications Group, are connected persons of the Company and as a result, the
transactions under the Road Maintenance Agreement and the Asphalt Road
Geothermal Power Regeneration Agreement constitute continuing connected
transactions for the Company under Chapter 14A of the Listing Rules.
As the Road Maintenance Agreement and the Asphalt Road Geothermal Power
Regeneration Agreement are entered into by the Group with parties who are
connected with one another within a 12-month period and are similar in nature,
the continuing connected transactions contemplated under the Road Maintenance
Agreement and the Asphalt Road Geothermal Power Regeneration Agreement should
be aggregated in accordance with Rule 14A.81 of the Listing Rules.
As the applicable percentage ratios in respect of the transactions contemplated
under the Road Maintenance Agreement and the Asphalt Road Geothermal Power
Regeneration Agreement, on an aggregated basis, are more than 0.1% but less
than 5%, the Road Maintenance Agreement and the Asphalt Road Geothermal Power
Regeneration Agreement are subject to the reporting, announcement and annual
review requirements but exempt from the independent Shareholders' approval
requirement under Chapter 14A of the Listing Rules.
INFORMATION ON THE PARTIES
The Company is a joint stock company established under the laws of the PRC with
limited liability on 1 March 1997, the H Shares of which are listed on the Main
Board of the Stock Exchange. It is principally engaged in investing in,
developing and operating high-grade roads in the PRC. The Group also carries on
certain other businesses such as operation of gas stations, restaurants and
shops in service areas, advertising at expressway interchanges and external
road maintenance, as well as securities related business.
Maintenance Co is a subsidiary of Communication Group which is incorporated
under the laws of the PRC on 28 January 2014. Maintenance Co is principally
engaged in the construction of transportation projects and maintenance of toll
road.
Zhejiang Shunchang is a subsidiary of Communication Group which is incorporated
under the laws of the PRC on 11 November 2003. Zhejiang Shunchang is
principally engaged in the construction and maintenance of toll road projects
and reforests projects.
DEFINITIONS
In this announcement, unless the context specifies otherwise, the following
defined expressions have the following meanings:
"Asphalt Road Geothermal Power Regeneration the Asphalt Road Geothermal Power
Agreement" Regeneration Agreement dated 23
June 2017 entered into between the
Company and Zhejiang Shunchang,
pursuant to which Zhejiang
Shunchang agreed to provide the
Regeneration Services to the Target
Expressways (Regeneration)
"Board" the board of Directors
"Communications Group" Zhejiang Communications Investment
Group Co., Ltd.*,
"Company" Zhejiang Expressway Co., Ltd.,
"connected person" has the meaning ascribed to it
under the Listing Rules
"controlling shareholder" has the meaning ascribed to it
under the Listing Rules
"Director(s)" the directors of the Company
"Group" the Company and its subsidiaries
"H Shares" overseas listed foreign shares in
the share capital of the Company
with a nominal value of RMB1 per
share, which are listed on the Main
Board of the Stock Exchange
"Hong Kong" the Hong Kong Special
Administrative Region of the PRC
"Listing Rules" Rules Governing the Listing of
Securities on The Stock Exchange of
Hong Kong Limited
"Maintenance Co" Zhejiang Expressway Maintenance
Co., Ltd.*, a company incorporated
in the PRC and an indirectly-owned
subsidiary of Communications Group
"Maintenance Services" maintenance services including (i)
roadwork such as pavement diseases
treatment, bridge deck overlay,
pavement overlay; (ii) roadbed work
such as slope treatment; (iii)
bridge work such as bridge fault
maintenance and reinforcement and
deck system maintenance; (iv) road
safety work such as signs, road
markings and fence maintenance and
(v) specific maintenance services
such as tunnelling and greening
"percentage ratio" has the meaning ascribed to it
under Rule 14.04(9) of the Listing
Rules
"PRC" the People's Republic of China (for
the purpose of this announcement,
excludes Hong Kong, Macau and
Taiwan)
"Regeneration Services" Regeneration services including
geothermal power regeneration work
and defects repair work
"RMB" Renminbi, the lawful currency of
the PRC
"Road Maintenance Agreement" the road maintenance agreement
dated 23 June 2017 entered into
between the Company and Maintenance
Co, pursuant to which Maintenance
Co agreed to provide the
Maintenance Services to the Target
Expressways (Maintenance)
"Shareholder(s)" holder(s) of the share(s) of the
Company
"Stock Exchange" The Stock Exchange of Hong Kong
Limited
"subsidiary(ies)" has the meaning ascribed to it
under the Listing Rules
"Target Expressways (Maintenance)" the Shanghai-Hangzhou-Ningbo
Expressway, the Shangsan
Expressway, Jinhua section of the
Ningbo-Jinhua Expressway and the
Hanghui Expressway
"Target Expressways (Regeneration)" the Shanghai-Hangzhou-Ningbo
Expressway, the Shangsan
Expressway, Jinghua section of the
Ningbo-Jinhua Expressway, the
Hanghui Expressway and the Huihang
Expressway
"Zhejiang Shunchang" Zhejiang Shunchang High-grade
Expressway Maintenance Co., Ltd., a
company incorporated in the PRC and
an indirectly-owned subsidiary of
Communications Group
"%" per cent.
* English names for reference only
On behalf of the Board
ZHEJIANG EXPRESSWAY CO., LTD.
ZHAN Xiaozhang
Chairman
Hangzhou, PRC, 23 June 2017
As at the date of this announcement, the executive directors of the Company
are: Mr. ZHAN Xiaozhang, Mr. CHENG Tao and Ms. LUO Jianhu; the non-executive
directors of the Company are: Mr. WANG Dongjie, Mr. DAI Benmeng and Mr. ZHOU
Jianping; and the independent non-executive directors of the Company are: Mr.
ZHOU Jun, Mr. PEI Ker-Wei and Ms. LEE Wai Tsang, Rosa.
END
(END) Dow Jones Newswires
June 23, 2017 10:22 ET (14:22 GMT)
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