Zhejiang Expressway Expressway Monitoring System Software

 
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 
 EXPRESSWAY MONITORING SYSTEM SOFTWARE MAINTENANCE AGREEMENTS; AND  EXPRESSWAY 
               MECHANICAL AND ELECTRICAL ENGINEERING AGREEMENTS 
 
THE EXPRESSWAY MONITORING SYSTEM SOFTWARE MAINTENANCE AGREEMENTS AND EXPRESSWAY 
MECHANICAL AND ELECTRICAL ENGINEERING AGREEMENTS 
 
On August 7, 2018, the Company and certain of its subsidiaries entered into (i) 
the Expressway Monitoring System Software Maintenance Agreements and (ii) the 
Expressway Mechanical and Electrical Engineering Agreements with Zhejiang 
Information, a wholly-owned subsidiary of the controlling shareholder of the 
Company, pursuant to which the Company and certain of its subsidiaries agreed 
to purchase, and Zhejiang Information agreed to provide, expressway monitoring 
system software maintenance services and expressway mechanical and electrical 
engineering services. 
 
LISTING RULES IMPLICATIONS 
 
As at the date of this announcement, Communications Group is a controlling 
shareholder of the Company. Zhejiang Information is a wholly-owned subsidiary 
of Communications Group. Therefore, Zhejiang Information is a connected person 
of the Company and as a result, the transactions under the Expressway 
Monitoring System Software Maintenance Agreements and the Expressway Mechanical 
and Electrical Engineering Agreements constitute continuing connected 
transactions for the Company under Chapter 14A of the Listing Rules. 
 
Pursuant to Rules 14A.81 and 14A.82 of the Listing Rules, as the transactions 
contemplated under the Expressway Monitoring System Software Maintenance 
Agreements, the Expressway Mechanical and Electrical Engineering Agreements and 
the Previous Transactions were entered into with parties who are connected with 
one another and within a 12-month period, the Expressway Monitoring System 
Software Maintenance Agreements, the Expressway Mechanical and Electrical 
Engineering Agreements and the Previous Transactions are required to be 
aggregated for the calculation of the relevant percentage ratios to determine 
the classification of the transactions. 
 
As the applicable percentage ratios in respect of the transactions contemplated 
under the Expressway Monitoring System Software Maintenance Agreements and the 
Expressway Mechanical and Electrical Engineering Agreements, after aggregating 
the Previous Transactions, are more than 0.1% but less than 5%, the Expressway 
Monitoring System Software Maintenance Agreements and the Expressway Mechanical 
and Electrical Engineering Agreements will be subject to the reporting, 
announcement and annual review requirements but exempt from the independent 
Shareholders' approval requirement under Chapter 14A of the Listing Rules. 
 
THE EXPRESSWAY MONITORING SYSTEM SOFTWARE MAINTENANCE AGREEMENTS 
 
On August 7, 2018, the Company and certain of its subsidiaries entered into the 
Expressway Monitoring System Software Maintenance Agreements with Zhejiang 
Information, a wholly-owned subsidiary of the controlling shareholder of the 
Company, pursuant to which the Company and certain of its subsidiaries agreed 
to purchase expressway monitoring system software maintenance services from 
Zhejiang Information. 
 
Principal terms of the Expressway Monitoring System Software Maintenance 
Agreements are set out below: 
 
Date:          August 7, 2018 
 
Parties:       (1)    The Company and certain subsidiaries of the Company 
               (namely Shangsan Co, Hanghui Co, Jiaxing Co and Jinhua Co); and 
 
               (2)     Zhejiang Information 
 
Term:          For the year ended 2018 
 
Consideration: RMB792,000 
 
Basis of       Consideration has been determined after arm's length negotiation 
consideration: between the parties and with reference to comparable prices 
               available in the market and historical fees paid by the Company 
               for similar services, to ensure that the consideration and terms 
               of services are fair and reasonable to the Company. 
 
Payment:       The consideration is paid in two installments: (i) 50% to be 
               paid within seven days after June 30, 2018; and (ii) 50% to be 
               paid within seven days after the expiry of the term of the 
               Expressway Monitoring System Software Maintenance Agreements, 
               provided that it has passed the service quality assessment. 
 
Scope of       Expressway monitoring system software maintenance services of 
services:      certain expressways under management of the Company, which 
               includes, but not limited to: (i) system maintenance; (ii) 
               application maintenance; (iii) device sensor maintenance; and 
               (iv) version upgrades. 
 
Governing law: PRC law 
 
 
THE EXPRESSWAY MECHANICAL AND ELECTRICAL ENGINEERING AGREEMENTS 
 
On August 7, 2018,  the Company and certain of its subsidiaries entered into 
the Expressway Mechanical and Electrical Engineering Agreements with Zhejiang 
Information, a wholly-owned subsidiary of the controlling shareholder of the 
Company, pursuant to which the Company and certain of its subsidiaries agreed 
to purchase expressway mechanical and electrical engineering services from 
Zhejiang Information. 
 
Principal terms of the Expressway Mechanical and Electrical Engineering 
Agreements are set out below: 
 
Date:          August 7, 2018 
 
Parties:       (1)    The Company and certain subsidiaries of the Company 
               (namely Shangsan Co, Hanghui Co, Jiaxing Co, Jinhua Co and 
               Huihang Co); and 
 
               (2)     Zhejiang Information 
 
Term:          For the year ended 2018 
 
Consideration: RMB24,910,570.36 
 
Basis of       The consideration has been determined by public tender 
consideration: procedures which are open to other independent third party 
               service providers. The factors for assessment include, but are 
               not limited to, the tender prices, relevant experience in 
               construction design, company reputation and quality of work and 
               technological solutions. According to the evaluation of the 
               assessment committee, Zhejiang Information successfully obtained 
               the highest overall score among all the bidders. 
 
Payment:       The consideration is paid in three installments: (i) 20% to be 
               paid upon execution of the Expressway Mechanical and Electrical 
               Engineering Agreements; (ii) 77% to be paid after the delivery 
               acceptance; and (iii) 3% to be paid upon expiry of defects 
               liability period. 
 
Scope of       Expressway mechanical and electrical engineering services of 
services:      certain expressway under management of the Company, which 
               includes, but not limited to: (i) construction of ETC lanes; 
               (ii) renewal of lane IPCs; (iii) retrofit of communication 
               systems; and (iv) retrofit of electromechanical systems of 
               certain tunnels. 
 
Governing law: PRC law 
 
 
 
Cap for the Expressway Monitoring System Software Maintenance Agreements 
 
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 and 
certain of its subsidiaries to Zhejiang Information during the term of the 
Expressway Monitoring System Software Maintenance Agreements, which shall not 
exceed RMB792,000. 
 
The above cap was determined after arm's length negotiation between the parties 
and with reference to comparable prices available in the market as well as 
historical fees paid by the Company for similar services. 
 
Cap for the Expressway Mechanical and Electrical Engineering Agreements 
 
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 and 
certain of its subsidiaries to Zhejiang Information during the term of the 
Expressway Mechanical and Electrical Engineering Agreements, which shall not 
exceed RMB24,910,570.36. 
 
The above cap was determined after arm's length negotiation between the parties 
and with reference to comparable prices available in the market as well as 
historical fees paid by the Company for similar services. 
 
REASONS FOR AND BENEFITS OF THE TRANSACTIONS 
 
As a wholly-owned subsidiary of Communications Group, Zhejiang Information 
fully understands the Company's business and operating needs, and maintains 
effective communication to provide more quality services to the Company. 
Zhejiang Information has the relevant qualifications and expertise to provide 
expressway monitoring system software maintenance services and expressway 
mechanical and electrical engineering services to the Company. The transactions 
contemplated under the Expressway Monitoring System Software Maintenance 
Agreements and Expressway Mechanical and Electrical Engineering Agreements are 
and will be conducted in the ordinary and usual course of business of the 
Company, and the consideration paid by the Company to Zhejiang Information will 
not be higher than the average market price and will not be less favorable than 
those provided by independent third parties to the Group for similar services. 
 
Given the above, the Directors (including the independent non-executive 
Directors) are of the view that the terms of the Expressway Monitoring System 

Software Maintenance Agreements and Expressway Mechanical and Electrical 
Engineering Agreements 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 is a controlling 
shareholder of the Company. Zhejiang Information is a wholly-owned subsidiary 
of Communications Group. Therefore, Zhejiang Information is a connected person 
of the Company and as a result, the transactions under the Expressway 
Monitoring System Software Maintenance Agreements and the Expressway Mechanical 
and Electrical Engineering Agreements constitute continuing connected 
transactions for the Company under Chapter 14A of the Listing Rules. 
 
Pursuant to Rules 14A.81 and 14A.82 of the Listing Rules, as the transactions 
contemplated under the Expressway Monitoring System Software Maintenance 
Agreements, the Expressway Mechanical and Electrical Engineering Agreements and 
the Previous Transactions were entered into with parties who are connected with 
one another and within a 12-month period, the Expressway Monitoring System 
Software Maintenance Agreements, the Expressway Mechanical and Electrical 
Engineering Agreements and the Previous Transactions are required to be 
aggregated for the calculation of the relevant percentage ratios to determine 
the classification of the transactions. 
 
As the applicable percentage ratios in respect of the transactions contemplated 
under the Expressway Monitoring System Software Maintenance Agreements and the 
Expressway Mechanical and Electrical Engineering Agreements, after aggregating 
with the Previous Transactions, are more than 0.1% but less than 5%, the 
Expressway Monitoring System Software Maintenance Agreements and the Expressway 
Mechanical and Electrical Engineering Agreements will be subject to the 
reporting, announcement and annual review requirements but exempt from the 
independent Shareholders' approval requirement under Chapter 14A of the Listing 
Rules. 
 
None of the Directors have a material interest in the transactions contemplated 
under the Expressway Monitoring System Software Maintenance Agreements and 
Expressway Mechanical and Electrical Engineering Agreements, and none are 
required to abstain from voting on the relevant Board resolutions. 
 
INFORMATION ON THE PARTIES 
 
The Company is a joint stock company established under the laws of the PRC with 
limited liability on March 1, 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 securities brokerage, investment banking, 
asset management, margin financing and securities lending through Zhejiang 
Zheshang Securities Co., Ltd.. 
 
Zhejiang Information is a wholly-owned subsidiary of Communications Group which 
was incorporated under the laws of the PRC with limited liability on July 22, 
2004. Zhejiang Information is principally engaged in the business of 
electromechanical system integration, intelligent transportation software and 
hardware research and development, and big data analysis operations within the 
highway sector. 
 
DEFINITIONS 
 
In this announcement, unless the context specifies otherwise, the following 
defined expressions have the following meanings: 
 
"associate"       has the meaning ascribed to it under the Listing Rules 
 
"Board"           the board of Directors 
 
"Communications   Zhejiang Communications Investment Group Co., Ltd.*, a wholly 
Group"            state-owned enterprise established in the PRC, and the 
                  controlling shareholder of the Company 
 
"Company"         Zhejiang Expressway Co., Ltd., a joint stock limited company 
                  incorporated in the PRC with limited liability 
 
"connected        has the meaning ascribed to it under the Listing Rules 
person" 
 
"controlling      has the meaning ascribed to it under the Listing Rules 
shareholder" 
 
"Director(s)"     the directors of the Company 
 
"ETC"             electronic toll collection 
 
"Expressway       the various expressway mechanical and electrical engineering 
Mechanical and    agreements dated August 7, 2018 entered into between Zhejiang 
Electrical        Information on the one hand and the Company and relevant 
Engineering       subsidiaries of the Company (namely Shangsan Co, Hanghui Co, 
Agreements"       Jiaxing Co, Jinhua Co and Huihang Co) on the other hand, 
                  pursuant to which the Company and certain of its subsidiaries 
                  agreed to purchase expressway mechanical and electrical 
                  engineering services from Zhejiang Information 
 
"Expressway       the various expressway monitoring system software maintenance 
Monitoring System agreements dated August 7, 2018 entered into between Zhejiang 
Software          Information on the one hand and the Company and relevant 
Maintenance       subsidiaries of the Company (namely Shangsan Co, Hanghui Co, 
Agreements"       Jiaxing Co and Jinhua Co) on the other hand, pursuant to 
                  which the Company and certain of its subsidiaries agreed to 
                  purchase expressway monitoring system software maintenance 
                  services from Zhejiang Information 
 
"Group"           the Company and its subsidiaries 
 
"Hanghui Co"      Zhejiang Hanghui Expressway Co., Ltd.*, a 88.674% owned 
                  subsidiary of the Company 
 
"Hong Kong"       the Hong Kong Special Administrative Region of the PRC 
 
"Huihang Co"      Huangshan Yangtze Huihang Expressway Co., Ltd.*, a 
                  wholly-owned subsidiary of the Company 
 
"IPC"             industrial process computer 
 
"Jiaxing Co"      Zhejiang Jiaxing Expressway Co., Ltd.*, a 99.9995% 
                  owned subsidiary of the Company 
 
"Jinhua Co"       Zhejiang Jinhua Yongjin Expressway Co., Ltd.*, a directly 
                  wholly-owned subsidiary of the Company 
 
"Listing Rules"   Rules Governing the Listing of Securities on The Stock 
                  Exchange of Hong Kong Limited 
 
"percentage       has the meaning ascribed to it under Rule 14.04(9) of the 
ratios"           Listing Rules 
 
"PRC"             the People's Republic of China (for the purpose of this 
                  announcement, excludes Hong Kong, Macau and Taiwan) 
 
"Previous         the agreements entered into within a 12-month period prior to 
Transactions"     the date of the Expressway Monitoring System Software 
                  Maintenance Agreements and the Expressway Mechanical and 
                  Electrical Engineering Agreements between or among the Group 
                  and Communications Group's associates in relation to 
                  information technology service and mechanical and electrical 
                  engineering services. For details, please refer to the 
                  announcements issued by the Company dated 
                  December 22, 2017, January 4 and April 17, 2018, 
                  respectively. 
 
"RMB"             Renminbi, the lawful currency of the PRC 
 
"Shangsan Co"     Zhejiang Shangsan Expressway Co., Ltd.*, a 73.625% owned 
                  subsidiary of the Company 
 
"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 
 
"%"               per cent. 
 
"Zhejiang         Zhejiang Expressway Information Engineering Technology Co., 
Information"      Ltd, a company incorporated in the PRC and a wholly-owned 
                  subsidiary of Communications Group 
 
*  English names for reference only 
 
                                           On behalf of the Board 
                                                  ZHEJIANG EXPRESSWAY CO., LTD. 
                                                YU Zhihong 
                                                  Chairman 
 
Hangzhou, the PRC, August 7, 2018 
 
As at the date of this announcement, the Chairman of the Company is Mr. YU 
Zhihong; the executive Directors of the Company are: Mr. CHENG Tao and Ms. LUO 
Jianhu; the other non-executive Directors of the Company are: Mr. DAI Benmeng, 
Mr. YU Qunli and Mr. YU Ji; and the independent non-executive Directors of the 
Company are: Mr. PEI Ker-Wei, Ms. LEE Wai Tsang, Rosa and Mr. CHEN Bin. 
 
 
 
END 
 

(END) Dow Jones Newswires

August 07, 2018 10:23 ET (14:23 GMT)