ZHEJIANG EXPRESSWAY CO., LTD.
Zhejiang Expressway Co., Ltd
Deepen Reform and Innovation Achieve Steady Growth
In the first half of 2015, Zhejiang Province's economy steadily improved, and
traffic volume on the Group's expressways continued to maintain decent organic
growth. In addition, trading activities on the domestic stock markets were
active. As a result, income from the Group's overall operations increased 46.2%
year-on-year to Rmb6,203.63 million, of which Rmb2,230.83 million was generated
by the three major expressways operated by the Group, representing an increase
of 5.7% year-on-year and 36.0% of the total income. Income from the Group's
toll road-related businesses was Rmb940.00 million, representing a decrease of
22.2% year-on-year and 15.2% of the total income. The Group's securities
business contributed income of Rmb3,025.10 million, representing an increase of
227.3% year-on-year and 48.8% of the total income.
Looking ahead to the second half of the year, China's economy is under a full
transition to the "new normal." The Group will analyze both internal and
external environment and strengthen its strategic development research. It will
focus on enhancing its core toll road business by prudently investing in and
acquiring high-quality road assets. The Group will also optimize its securities
business and seek suitable investment projects via a wide variety of channels
so as to further expand the asset size of its core business and enhance
profitability in the future.
Contents
2015 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
2015 Environmental and Social Responsibility Report
Appendices
Corporate Information
Corporate Structure of the Group
Financial Highlights
Location Map of Expressways in Zhejiang Province
2015 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, 2015 (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 Rmb5,959.48 million, representing
an increase of 44.6% over the same period in 2014. Profit for the Period
attributable to owners of the Company was Rmb1,514.45 million, representing an
increase of 42.4% year-on-year. Earnings per share for the Period was Rmb34.87
cents (same period in 2014: Rmb24.49 cents).
The Directors have recommended to pay an interim dividend of Rmb6 cents per
share (same period in 2014: Rmb6 cents), subject to shareholders' approval at
the extraordinary general meeting of the Company to be held in due course.
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
Benefiting from a series of policies on ensuring steady growth in the first
half of 2015, China's economy is currently in a steady phase. The national GDP
exceeded expectations and grew by 7.0% year-on-year. Thanks to the initial
success of Zhejiang's economic transformation and upgrade, which partially
offset the slow growth suggested by conventional economic growth indicators
(investment, consumption and exports), Zhejiang Province's GDP increased by
8.3% year-on-year.
As Zhejiang Province's economy steadily improved during the Period, traffic
volume on the Group's expressways continued to maintain decent organic growth.
In addition, trading activities on the domestic stock markets were active. As a
result, income from the Group's overall operations increased 46.2% year-on-year
to Rmb6,203.63 million, of which Rmb2,230.83 million was generated by the three
major expressways operated by the Group, representing an increase of 5.7%
year-on-year and 36.0% of the total income. Income from the Group's toll road-
related businesses was Rmb940.00 million, representing a decrease of 22.2%
year-on-year and 15.2% of the total income. The Group's securities business
contributed income of Rmb3,025.10 million, representing an increase of 227.3%
year-on-year and 48.8% of the total income.
A breakdown of the Group's income for the Period is set out below:
For the six months
ended June 30,
2015 2014
Rmb'000 Rmb'000 % Change
Toll income
Shanghai-Hangzhou-Ningbo Expressway 1,552,029 1,495,972 3.7%
Shangsan Expressway 513,395 470,822 9.0%
Jinhua section, Ningbo-Jinhua Expressway 165,406 144,724 14.3%
Toll road-related business
Service areas 887,622 1,138,682 -22.0%
Advertising 22,994 50,027 -54.0%
Road maintenance 29,385 19,852 48.0%
Securities business income
Commission 2,132,766 641,797 232.3%
Interest income 892,330 282,349 216.0%
Other income
Hotel business 7,702 - N/A
Subtotal 6,203,629 4,244,225 46.2%
Less: Revenue taxes (244,150) (122,403) 99.5%
Revenue 5,959,479 4,121,822 44.6%
Toll Road operations
Driven by the macro and regional economic effects, the Group's expressways'
traffic volume maintained solid growth. During the Period, the organic traffic
volume growth rates for the Group's three expressways, the
Shanghai-Hangzhou-Ningbo Expressway, the Shangsan Expressway and the Jinhua
Section of the Ningbo-Jinhua Expressway, were of 5.9%, 8.6% and 10.8%,
respectively, with the varied rates of growth due to the different regions
where these three expressways are located.
The construction on the neighbouring Hangzhou Airport Road started on April 15,
2014, resulting in a truck traffic restriction for 23.7 km section of the
Group's Shanghai-Hangzhou-Ningbo Expressway. The opening of the Qianjiang Road
on April 16, 2014 also diverted traffic and led to a loss in toll income from
the Shanghai- Hangzhou-Ningbo Expressway in the same period of 2014. During the
period, as the traffic diversion effect gradually stabilized, toll income of
Shanghai-Hangzhou-Ningbo Expressway posted decent growth.
Since its opening in July, 2013, the Jiaxing-Shaoxing Bridge (not operated by
the Group) has had positive effects to the Shangsan Expressway. During the
Period, the high traffic volume growth stabilized and toll income of the
section returned to stable growth.
Meanwhile, the Jinhua Section of the Ningbo-Jinhua Expressway continued to have
a high organic growth in traffic volume resulting from strong growth in trade
at the nearby Yiwu small commodities market and the booming development of
e-commerce and foreign trade in the surrounding areas. The positive effects on
toll income growth caused by construction of local roads that run parallel to
the Jinhua Section of the Ningbo-Jinhua Expressway gradually diminished.
Meanwhile, since the neighbouring Hangzhou-Jinhua-Quzhou Expressway has closed
since June 6, 2015 due to construction, the diverted traffic has led to a
substantial growth in traffic volume in the Jinhua Section of the Ningbo-Jinhua
Expressway.
During the Period, the average daily traffic volume in full-trip equivalents
along the Group's Shanghai-Hangzhou- Ningbo Expressway was 46,449, representing
an increase of 6.1% year-on-year. In particular, the average daily traffic
volume in full-trip equivalents along the Shanghai-Hangzhou section of the
Shanghai-Hangzhou- Ningbo Expressway was 44,251, representing an increase of
4.8% year-on-year, and that along the Hangzhou- Ningbo Section was 48,021,
representing an increase of 7.0% year-on-year. Average daily traffic volume in
full- trip equivalents along the Shangsan Expressway was 25,081, representing
an increase of 11.8% year-on-year. Average daily traffic volume in full-trip
equivalents along the Jinhua Section of the Ningbo-Jinhua Expressway was
17,852, representing an increase of 17.7% year-on-year.
During the Period, total toll income from the 248km Shanghai-Hangzhou-Ningbo
Expressway, the 142km Shangsan Expressway and the 70km Jinhua Section of the
Ningbo-Jinhua Expressway was Rmb2,230.83 million, representing an increase of
5.7% year-on-year. Toll income from the Shanghai-Hangzhou-Ningbo Expressway was
Rmb1,552.03 million, representing an increase of 3.7% year-on-year; toll income
from the Shangsan Expressway was Rmb513.39 million, representing an increase of
9.0% year-on-year. Toll income from the Jinhua Section of the Ningbo-Jinhua
Expressway was Rmb165.41 million, representing an increase of 14.3%
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 and shops in service areas, as well as advertising at
expressway interchanges and external road maintenance.
During the Period, affected by the temporary closure of the Bei'an Service Area
to the north of the Hangzhou Bay Bridge for renovation and the competition from
surrounding new service areas, the Group's income from service areas along the
expressway (excluding gas stations) recorded only a slight increase
year-on-year.
In addition, Zhejiang Province took action to remove billboards from along
sides of the expressway, which gradually narrowed the advertising business of
the Group's subsidiary to expressway exchange areas, toll stations and service
areas. As a result, advertising income was substantially reduced within the
period.
During the Period, external road maintenance projects brought satisfactory
revenue. However, total income from toll road-related operations was adversely
affected by several reductions to retail price of domestic refined oil. During
the Period, income from toll road-related operations was Rmb940.00 million,
representing a decrease of 22.2% year-on-year.
Securities Business
During the Period, Zheshang Securities' average brokerage commission rate
continued to decline due to intensified competition in the securities industry
and the gradual relaxation of controls on commissions. Benefiting from a
revival of activity in the domestic securities market, the total trading volume
of the Shanghai and Shenzhen stock markets increased 545.8% from last year. As
a result, even though the Shanghai and Shenzhen stock markets were
significantly volatile in June, 2015, the brokerage business of Zheshang
Securities achieved a substantial increase in trading volume and posted a
year-on-year increase of 308.6% in brokerage commission income.
In addition, while accelerating the comprehensive development of each of its
business segment, Zheshang Securities has been actively developing innovative
businesses, and constantly working to improve its income and profit structure.
During the Period, even though income from its investment banking business
slightly decreased, Zheshang Securities margin financing and securities
lending, as well as asset management businesses recorded significant
year-on-year increases of 353.3% and 267.5%, respectively.
Zheshang Securities' IPO application to the Shanghai Stock Exchange was
accepted by the China Securities Regulatory Commission in May, 2013, and it
remains on the wait list for an IPO.
During the Period, Zheshang Securities' total operating income was Rmb3,025.10
million, an increase of 227.3% year-on-year. Of this, brokerage commission
income rose 232.3% year-on-year to Rmb2,132.77 million, and interest income
from the securities business was Rmb892.33 million, an increase of 216.0%.
Moreover, during the Period, securities investment gains of Zheshang Securities
included in the condensed consolidated statement of profit or loss and other
comprehensive income of the Group was Rmb324.65 million (the corresponding
period of 2014: gains of Rmb79.15 million).
Other Business
Grand New Century Hotel Yuhang Hangzhou, owned and operated by Zhejiang Yuhang
Expressway Co., Ltd. (a 51% owned subsidiary of the Company), began operating
on April 28, 2015 and realized income (including sales tax and additional tax)
of Rmb7.70 million as of June 30, 2015.
Long-Term Investments
Zhejiang Expressway Petroleum Development Co., Ltd. (a 50% owned associate
company of the Company), adversely affected by the continuous reduction in
prices of domestic refined oil product and declining sales volume, recorded
income of Rmb2,554.88 million, a decrease of 21.8% from last year. During the
Period, net profit of the associate company was Rmb7.42 million (corresponding
period of 2014: net profit of Rmb11.36 million).
Shengxin Expressway Co., Ltd. ("Shengxin Co", a 50% owned joint venture of the
Company) operates the 73.4km Shaoxing Section of the Ningbo-Jinhua Expressway.
During the Period, the average daily traffic volume in full- trip equivalents
was 14,357, an increase of 5.1% year-on-year. Toll income during the Period was
Rmb154.94 million. However, due to its relatively heavy financial burden, the
joint venture reported a loss of Rmb30.47 million (corresponding period of
2014: loss of Rmb31.20 million).
During the Period, Zhejiang Communications Investment Group Finance Co., Ltd.
(a 35% owned associate company of the Company), derives income mainly from
interest, fees and commissions for providing financial services, including
arranging loans and receiving deposits, for the subsidiaries of Zhejiang
Communications Investment Group Co., Ltd., the controlling shareholder of the
Company. During the Period, this associate company realized a net profit of
Rmb78.49 million (corresponding period of 2014: net profit of Rmb 66.89
million).
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 Rmb1,514.45 million, representing an increase of 42.4%
year-on-year, return on owners' equity was 8.7%, representing an increase of
30.7% year-on-year, while earnings per share for the Company was Rmb34.87
cents.
Liquidity and financial resources
As at June 30, 2015, current assets of the Group amounted to Rmb74,885.63
million in aggregate (December 31, 2014: Rmb35,745.72 million), of which bank
balances and cash accounted for 11.4% (December 31, 2014: 11.4%), bank balances
held on behalf of customers accounted for 57.1% (December 31, 2014: 46.4%),
held for trading investments accounted for 5.9% (December 31, 2014: 5.9%) and
loans to customers arising from margin financing business accounted for 21.8%
(December 31, 2014: 23.9%). Current ratio (current assets over current
liabilities) of the Group as at June 30, 2015 was 1.2 (December 31, 2014: 1.2).
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 1.8
(December 31, 2014: 1.6).
Cash and cash equivalents
As at As at
June 30, December 31,
2015 2014
Rmb'000 Rmb'000
(Unaudited) (Audited)
Rmb 7,849,578 3,266,792
US$ in Rmb equivalent 30,146 28,832
HK$ in Rmb equivalent 13,819 6,098
Time deposit - Rmb 606,320 761,320
Held for trading investments - Rmb 4,437,443 2,124,740
Available-for-sale investments - Rmb 600,711 570,021
Total 13,538,017 6,757,803
Rmb 13,494,052 6,722,873
US$ in Rmb equivalent 30,146 28,832
HK$ in Rmb equivalent 13,819 6,098
The amount of held for trading investments of the Group as at June 30, 2015 was
Rmb4,437.44 million (December 31, 2014: Rmb2,124.74 million), of which 90.3%
was invested in bonds, 4.8% was invested in stocks, and the rest was invested
in open-end equity funds.
During the Period, net cash flow used in the Group's operating activities
amounted to Rmb3,899.54 million. Excluding the effect of increase of loans to
customers arising from margin financing business of Zheshang Securities, the
resultant net cash inflow generated from operating activities amounted to
Rmb3,886.39 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, 2015, total liabilities of the Group amounted to Rmb68,836.45
million (December 31, 2014: Rmb30,225.12 million), of which 0.4% was bank
borrowings, 3.0% was short-term loan note, 12.6% was bonds payable, 12.6% was
financial assets sold under repurchase agreements, 2.1% was placements from
other financial institutions and 62.0% was accounts payable to customers
arising from securities business.
As at June 30, 2015, total interest-bearing borrowings of the Group amounted to
Rmb11,090.00 million, representing an increase of 355.7% compared to that as at
December 31, 2014. The borrowings comprised outstanding balances of domestic
commercial bank loans of Rmb300.00 million, short-term loan note with three-
month maturity of Rmb500.00 million, beneficial certificates of Rmb1,590.00
million, subordinated bonds of Rmb7.20 billion and corporate bonds of Rmb1.50
billion. Of the interest-bearing borrowings, 70.8% was not payable within one
year.
Maturity Profile
Gross Within >1 year- Beyond
total 1 year 5 year 5 year
inclusive
Rmb'000 Rmb'000 Rmb'000 Rmb'000
Floating rates
Domestic commercial bank loans 300,000 150,000 150,000 -
Fixed rates
Short-term loan note payable 1,590,000 1,590,000 - -
- beneficial certificates
Short-term loan note payable 500,000 500,000 - -
- short-term loan note
Bonds payable - subordinated 7,200,000 1,000,000 6,200,000 -
bonds
Bonds payable - corporate bonds 1,500,000 - 1,500,000 -
Total as at June 30,2015 11,090,000 3,240,000 7,850,000 -
Total as at December 31,2014 2,433,570 1,033,570 1,400,000 -
As at June 30, 2015, the Group's loans from domestic commercial banks were
short and long-term loans, of which long-term loans due in one year amounted to
Rmb150.00 million, with floating interest rate ranging from 5.085% to 6.33% per
annum. The annual coupon rate for short-term loan note was fixed at 2.93%. The
fixed annual interest rates of beneficial certificates ranged from 5.2% to
6.47% respectively. The fixed annual interest rates for subordinated bonds
ranged from 5.7% to 6.3% respectively. The annual coupon rate for corporate
bonds was fixed at 4.9%, 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 Rmb172.19 million, while
profit before interest and tax amounted to Rmb2,939.40 million. The interest
cover ratio (profit before interest and tax over interest expenses) stood at
17.1 times (corresponding period of 2014: 39.7 times).
As at June 30, 2015, the asset-liability ratio (total liabilities over total
assets) of the Group was 75.8% (December 31, 2014: 58.9%). 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 54.4% (December 31, 2014: 39.3%).
Capital structure
As at June 30, 2015, the Group had Rmb21,948.38 million in total equity,
Rmb63,576.95 million in fixed- rate liabilities, Rmb300.00 million in
floating-rate liabilities, and Rmb4,959.49 million in interest-free
liabilities, representing 24.2%, 70.0%, 0.3% and 5.5% 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 119.2% as at June 30, 2015 (December
31, 2014: 64.7%).
Capital expenditure commitments and utilization
During the Period, capital expenditure of the Group totalled Rmb282.60 million,
while capital expenditure of the Company totalled Rmb118.61 million. Amongst
the total capital expenditure of the Group, Rmb98.01 million was incurred for
equity investment, Rmb105.07 million was incurred for acquisition and
construction of properties, Rmb61.51 million was incurred for purchase and
construction of equipments and facilities, and Rmb18.01 million was incurred
for service area renovation and expansion.
As at June 30, 2015, the remaining capital expenditure committed by the Group
and the Company totalled Rmb737.57 million and Rmb392.20 million, respectively.
Amongst the remaining balance of total capital expenditures committed by the
Group, Rmb115.00 million will be used for equity investment, Rmb202.98 million
will be used for acquisition and construction of properties, Rmb369.90 million
for acquisition and construction of equipment and facilities, Rmb49.69 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, Rmb55.00 million of the bank loans had been repaid.
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 a
pledged asset for its domestic commercial bank loans, the remaining outstanding
balance of which was Rmb100.00 million. As at June 30, 2015, the carrying
amount of the pledged asset was Rmb1,721.73 million.
Except for the above, as at June 30, 2015, 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 and
Zheshang Futures Co., Ltd. (a wholly owned subsidiary of Zheshang Securities)
setting up Zheshang Futures (Hong Kong) Co., Limited with HK$10.00 million
contributed capital on April 23, 2015, 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
Since the global economy is recovering slowly and China's economy is facing
downward pressure, the economy of Zhejiang province also continues to encounter
headwinds in the "new normal" phase. Due to both macro and regional economic
factors affecting the Group's toll road business, overall traffic volume growth
in 2015 will remain steady, although slower than the growth seen in 2014.
The Dongyang-Yongkang Expressway that was opened to traffic in July, 2015 is
expected to have a slight diversion impact on traffic for the Jinhua Section of
the Ningbo-Jinhua Expressway. To address this negative effect caused by the
surrounding new road networks, the Group will continue to attract more traffic
to the Group's expressways by closely monitoring the roads and conducting
timely research and analysis, thereby minimizing the loss caused by traffic
diversions from new road networks.
In recent years, the Chinese government's policy of allowing small passenger
cars to travel for free on toll roads during important holidays has brought
challenges and pressure to the Group's toll road business. However, the
Ministry of Transport of the PRC has newly published a draft amendment of the
Regulation of the Administration of Toll Roads to solicit opinions from the
public, which we expect might present new opportunities to the expressway toll
sector.
The stock markets in Shanghai and Shenzhen were hit by major volatility in
mid-June. While the Chinese government has already ushered in a series of
stabilization measures, it is expected that proactive financial policies, an
accommodative monetary policy, and other moves that promote the development of
the capital markets will be enacted in the second half of the year. The Group
anticipates that these will bring new opportunities for the Group's securities
business. Zheshang Securities Co., Ltd. will further reinforce its risk and
cost controls, closely monitor new market policies, as well as seek new profit
drivers by continuously innovating its business. In terms of the ongoing public
offering process, Zheshang Securities' IPO may be delayed due to the IPO
suspension imposed by the China Securities Regulatory Commission.
Looking ahead to the second half of 2015, China's economy is under a full
transition to the "new normal." The new session of the management of the
Company believes that the economic transformation and optimization of the
industry structure in Zhejiang Province will bring new opportunities for the
Group to grow and evolve. Management will analyze both internal and external
environment and strengthen its strategic development research. It will focus on
enhancing its core toll road business by prudently investing in and acquiring
high-quality road assets. The Group will also optimize its securities business
and seek suitable investment projects via a wide variety of channels so as to
further expand the asset size of its core business and enhance profitability in
the future.
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, 2015, 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, 2015, 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:
Substantial Capacity Total interests Percentage of the
shareholders in number of issued share
ordinary shares capital of the
of the Company Company (domestic
shares)
Zhejiang Communications Beneficial owner 2,909,260,000 100%
Investment Group Co.,
Ltd.
Substantial Capacity Total interests Percentage of the
shareholders in number of issued share
ordinary shares capital of the
of the Company Company
(H Shares)
BlackRock, Inc. Interest of 190,559,467 (L) 13.29%
controlled
corporations
JP Morgan Chase & Co. Beneficial owner, 160,528,605 (L) 11.19%
investment manager 76,571,808 (P) 5.34%
and custodian
corporation/
approved lending
agent
The letter "L" denotes a long position. The Letter "P" denotes interest in a
lending pool.
Save as disclosed above, as at June 30, 2015, 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 includes 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 2014.
By order of the Board
Zhejiang Expressway Co., Ltd.
ZHAN Xiaozhang
Chairman
Hangzhou, the PRC, August 21, 2015
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 (http://www.zjec.com.cn/).
Condensed Consolidated Statement of Profit or Loss and Other Comprehensive
Income
For the six months ended
June 30,
Notes 2015 2014
Rmb'000 Rmb'000
(Unaudited) (Unaudited)
Revenue 3 5,959,479 4,121,822
Operating costs (3,385,571) (2,580,471)
Gross profit 2,573,908 1,541,351
Securities investment gains 332,925 87,240
Other income 4 111,284 140,164
Administrative expenses (40,772) (33,552)
Other expenses (43,854) (26,556)
Share of profit of associates 21,141 24,868
Share of loss of a joint venture (15,234) (15,602)
Finance costs 5 (168,937) (39,869)
Profit before tax 6 2,770,461 1,678,044
Income tax expense 7 (710,645) (430,799)
Profit for the Period 2,059,816 1,247,245
Other comprehensive income (loss)
Items that may be reclassified
subsequently to profit or loss:
Available-for-sale financial assets
- Fair values gain (loss) during the Period 21,747 (2,719)
- Reclassification adjustments for cumulative (410) -
gain included in profit or loss upon disposal
Exchange differences on translating foreign (125) -
operations
Income tax relating to components of other (5,334) 680
comprehensive income (loss)
Other comprehensive income (loss) for the Period 15,878 (2,039)
(net of tax)
Total comprehensive income for the Period 2,075,694 1,245,206
Profit for the Period attributable to:
Owners of the Company 1,514,448 1,063,433
Non-controlling interests 545,368 183,812
2,059,816 1,247,245
Total comprehensive income for the Period
attributable to:
Owners of the Company 1,522,570 1,062,183
Non-controlling interests 553,124 183,023
2,075,694 1,245,206
Earnings per share - Basic and diluted 9 34.87 cents 24.49 cents
Condensed Consolidated Statement of Financial Position
As at As at
June 30, December 31,
2015 2014
Notes Rmb'000 Rmb'000
(Unaudited) (Audited)
NON-CURRENT ASSETS
Property, plant and equipment 3,064,021 2,987,465
Prepaid lease payments 64,925 66,001
Expressway operating rights 10,710,162 11,112,507
Goodwill 86,867 86,867
Other intangible assets 152,561 155,590
Interests in associates 685,391 627,866
Interest in a joint venture 285,433 300,667
Available-for-sale investments 393,375 221,232
Other receivables 12 456,461 50,828
15,899,196 15,609,023
CURRENT ASSETS
Inventories 211,351 170,654
Trade receivables 10 213,183 135,609
Loans to customers arising from margin financing 11 16,331,848 8,545,913
business
Other receivables and prepayments 12 825,338 832,238
Prepaid lease payments 2,155 2,155
Dividends receivable 40,494 -
Available-for-sale investments 600,711 570,021
Held for trading investments 4,437,443 2,124,740
Financial assets held under resale agreements 13 999,819 2,724,598
Bank balances held on behalf of customers 42,723,429 16,576,751
Bank balances and cash
- Time deposits with original maturity over three 606,320 761,320
months
- Cash and cash equivalents 7,893,543 3,301,722
74,885,634 35,745,721
CURRENT LIABILITIES
Placements from other financial institutions 1,470,000 1,940,000
Accounts payable to customers arising 42,673,988 16,545,146
from securities business
Trade payables 14 740,669 693,604
Tax liabilities 448,298 463,648
Other taxes payable 121,744 67,642
Other payables and accruals 15 2,243,815 1,561,274
Dividends payable 1,257,112 76,139
Bank borrowings 150,000 150,000
Financial assets sold under 16 2,090,000 883,570
repurchase agreements
Short-term loan note payable 8,642,966 6,299,057
Bonds payable 1,000,000 -
60,838,592 28,680,080
NET CURRENT ASSETS 14,047,042 7,065,641
TOTAL ASSETS LESS CURRENT LIABILITIES 29,946,238 22,674,664
NON-CURRENT LIABILITIES
Bank loans 150,000 200,000
Bonds payable 7,700,000 1,200,000
Deferred tax liabilities 147,855 145,042
7,997,855 1,545,042
21,948,383 21,129,622
CAPITAL AND RESERVES
Share capital 4,343,115 4,343,115
Reserves 13,030,356 12,658,711
Equity attributable to owners of the Company 17,373,471 17,001,826
Non-controlling interests 4,574,912 4,127,796
21,948,383 21,129,622
Condensed Consolidated Statement of Changes in Equity
Attributable to owners of the Non- Total
Company controlling
interests
Share Share Statutory Capital Investment Special Dividend Retained
capital premium reserve reserve revaluation reserves reserve profits Total
reserve
Rmb'000 Rmb'000 Rmb'000 Rmb'000 Rmb'000 Rmb'000 Rmb'000 Rmb'000 Rmb'000 Rmb'000 Rmb'000
At January 1, 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
2014 (Audited)
Profit for the - - - - - - - 1,063,433 1,063,433 183,812 1,247,245
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 to - - - - - - - - - (87,018) (87,018)
non-controlling
interests
Final dividend - - - - - - (1,085,779) - (1,085,779) - (1,085,779)
Proposed - - - - - - 260,587 (260,587) - - -
interim dividend
At June 30, 2014 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
(Unaudited)
Attributable to owners of the Company Non-controlling Total
interests
Share Share Statutory Capital Investment Foreign Special Dividend
capital premium reserve reserve revaluation currency reserves reserve Retained
reserve translation profits Total
reserve
Rmb'000 Rmb'000 Rmb'000 Rmb'000 Rmb'000 Rmb'000 Rmb'000 Rmb'000 Rmb'000 Rmb'000 Rmb'000 Rmb'000
At January 1, 4,343,115 3,645,726 3,907,055 1,712 28,403 - 138,132 1,150,925 3,786,758 17,001,826 4,127,796 21,129,622
2015 (Audited)
Profit for the - - - - - - - - 1,514,448 1,514,448 545,368 2,059,816
Period
Other
comprehensive - - - - 8,187 (65) - - - 8,122 7,756 15,878
income for the
Period
Total - - - - 8,187 (65) - - 1,514,448 1,522,570 553,124 2,075,694
comprehensive
income
for the Period
Dividend paid
to - - - - - - - - - - (106,008) (106,008)
non-controlling
interests
Final dividend - - - - - - - (1,150,925) - (1,150,925) - (1,150,925)
Proposed - - - - - - - 260,587 (260,587) - - -
interim
dividend
At June 30, 4,343,115 3,645,726 3,907,055 1,712 36,590 (65) 138,132 260,587 5,040,619 17,373,471 4,574,912 21,948,383
2015
(Unaudited)
Condensed Consolidated Statement of Cash Flows
For the six months
ended,
2015 2014
Rmb'000 Rmb'000
(Unaudited) (Unaudited)
Net cash (used in)from operating activities (3,899,544) 1,401,752
Net cash used in investing activities (198,724) (218,880)
Net cash from (used in) financing activities 8,690,214 (1,216,533)
Net increase (decrease) in cash and cash equivalents 4,591,946 (33,661)
Cash and cash equivalents at beginning of the Period 3,301,722 1,806,981
Effect of exchange rate changes on the balance of (125) -
cash and cash equivalents held in foreign
currencies
Cash and cash equivalents at end of the Period 7,893,543 1,773,320
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.
In the Period, the Group has applied, for the first time, new Interpretation
and amendments to Hong Kong Financial Reporting Standards (the "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.
Except for the above, 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, 2014.
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, 2015
Toll related operation
Toll Service Other toll Securities Other Total Elimination Total
operation area and road operation operation segment
advertising related
businesses service
Rmb'000 Rmb'000 Rmb'000 Rmb'000 Rmb'000 Rmb'000 Rmb'000 Rmb'000
(unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited)
Revenue
External 2,156,365 905,541 28,436 2,861,871 7,266 5,959,479 - 5,959,479
sales
Inter- - 2,377 8,878 - - 11,255 (11,255) -
segment
sales
Total 2,156,365 907,918 37,314 2,861,871 7,266 5,970,734 (11,255) 5,959,479
Segment 1,027,957 19,572 25,536 990,906 (4,155) 2,059,816 2,059,816
profit
For the six months ended June 30, 2014
Toll related operation
Toll Service Other toll Securities Other Total Elimination Total
operation area and road operation operation segment
advertising related
businesses service
Rmb'000 Rmb'000 Rmb'000 Rmb'000 Rmb'000 Rmb'000 Rmb'000 Rmb'000
(unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited)
Revenue
External 2,041,188 1,183,241 19,050 878,343 - 4,121,822 - 4,121,822
sales
Inter- - 2,377 4,459 - - 6,836 (6,836) -
segment
sales
Total 2,041,188 1,185,618 23,509 878,343 - 4,128,658 (6,836) 4,121,822
Segment 942,673 63,071 18,789 222,712 - 1,247,245 1,247,245
profit
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.
Revenue from major services
An analysis of the Group's revenue, net of discounts and taxes, for the Period
is as followed:
For the six months ended June
30,
2015 2014
Rmb'000 Rmb'000
(Unaudited) (Unaudited)
Toll operation revenue 2,156,365 2,041,188
Service area businesses revenue (mainly sales of 883,489 1,134,635
goods)
Advertising business revenue 22,052 48,606
Commission income from securities operation 1,969,541 595,994
Interest income from securities operation 892,330 282,349
Others 35,702 19,050
Total 5,959,479 4,121,822
4. OTHER INCOME
For the six months ended June
30,
2015 2014
Rmb'000 Rmb'000
(Unaudited) (Unaudited)
Interest income on bank balances, entrusted 28,449 34,494
loan
receivables and financial products
investment
Rental income 50,056 55,155
Gain on disposal of an associate - 24,490
Handling fee income 1,674 1,487
Towing income 4,228 4,695
Exchange (loss) gain, net (9) 861
Others 26,886 18,982
Total 111,284 140,164
5. FINANCE COSTS
For the six months ended June
30,
2015 2014
Rmb'000 Rmb'000
(Unaudited) (Unaudited)
Interest expenses wholly repayable within 5
years:
Bank and other borrowings 8,058 14,425
Long-term bonds 111,546 -
Short-term bonds 9,977 -
Short-term loan note 42,609 28,845
Total borrowing costs 172,190 43,270
Less: Amount capitalised in the cost of (3,253) (3,401)
qualifying assets
168,937 39,869
6. PROFIT BEFORE TAX
The Group's profit before tax has been arrived at after charging:
For the six months ended
June 30,
2015 2014
Rmb'000 Rmb'000
(Unaudited) (Unaudited)
Depreciation of property, plant and equipment 98,700 88,812
Amortisation of prepaid lease payments 1,076 1,077
Amortisation of expressway operating rights 402,345 404,193
(included in operating costs)
Amortisation of other intangible assets (included in 11,477 10,033
operating costs)
Cost of inventories recognised as an expense 794,047 1,045,030
7. INCOME TAX EXPENSE
For the six months ended June 30,
2015 2014
Rmb'000 Rmb'000
(Unaudited) (Unaudited)
Current tax:
PRC Enterprise Income Tax 713,166 435,049
Deferred tax (2,521) (4,250)
710,645 430,799
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 2014: 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 Rmb1,514,448,000 (corresponding
period of 2014: Rmb1,063,433,000) and the 4,343,114,500 (corresponding period
of 2014: 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,
2015 2014
Rmb'000 Rmb'000
(Unaudited) (Audited)
Trade receivables comprise:
A fellow subsidiary 1,500 3,212
Third parties 212,635 133,349
Total trade receivables 214,135 136,561
Less: Allowance for doubtful debts (952) (952)
213,183 135,609
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 and regularly monitor overdue balances.
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,
2015 2014
Rmb'000 Rmb'000
(Unaudited) (Audited)
Within 3 months 176,172 116,473
3 months to 1 year 34,575 18,111
1 to 2 years 2,322 971
Over 2 years 114 54
Total 213,183 135,609
11. LOANS T O CUST OMERS 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, 2015, 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 Rmb48,790,440,000 (December
31, 2014: Rmb24,411,134,000). Cash collateral of Rmb3,541,271,000 (December 31,
2014: Rmb975,337,000) 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,
2015 2014
Rmb'000 Rmb'000
(Unaudited) (Audited)
Current:
Entrusted loans receivables from related parties (Note 154,856 491,911
17(ii) (2))
Interest receivables 266,515 163,609
Prepayments 53,331 86,242
Financial products investment receivables - 17,000
Bonds subscription receivables 280,000 -
Others 70,636 73,476
825,338 832,238
Non-current: 456,461 50,828
Entrusted loans receivables from related parties (Note
17(ii) (2))
456,461 50,828
1,281,799 883,066
13. FINANCIAL ASSETS HELD UNDER RESALE AGREEMENT
As at As at
June 30, December 31,
2015 2014
Rmb'000 Rmb'000
(Unaudited) (Audited)
Analysed by collateral type:
Bonds 99,649 1,316,942
Stock securities 900,170 1,407,656
999,819 2,724,598
Analysed by market:
Inter-bank market 29,649 1,316,942
Shanghai/Shenzhen Stock Exchange 970,170 1,407,656
999,819 2,724,598
The collaterals include both equity and debt securities listed in the PRC. As
at June 30, 2015, the fair value of equity and debt securities as collaterals
was Rmb4,656,515,000 (December 31, 2014: Rmb4,762,681,000) and Rmb98,140,000
(December 31, 2014: Rmb1,320,746,000), 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:
As at As at
June 30, December 31,
2015 2014
Rmb'000 Rmb'000
(Unaudited) (Audited)
Within 3 months 309,638 438,079
3 months to 1 year 297,503 119,156
1 to 2 years 63,309 67,732
2 to 3 years 15,925 10,897
Over 3 years 54,294 57,740
Total 740,669 693,604
15. OTHER PAYABLES AND ACCRUALS
As at As at
June 30, December 31,
2015 2014
Rmb'000 Rmb'000
Other liabilities: (Unaudited) (Audited)
Accrued payroll and welfare 1,190,826 841,314
Advance from customers 59,433 96,763
Toll collected on behalf of other toll roads 2,600 2,759
Retention payable 165,010 176,416
Deposit received for disposal of an associate 103,500 103,500
Others 492,787 263,169
2,014,156 1,483,921
Other accruals 229,659 77,353
Total 2,243,815 1,561,274
16. FINANCIAL ASSETS SOLD UNDER REPURCHASE AGREEMENTS
As at As at
June 30, December 31,
2015 2014
Rmb'000 Rmb'000
(Unaudited) (Audited)
Analysed as collateral type:
Bonds 3,116,396 2,400,257
Beneficial rights 5,526,570 3,898,800
8,642,966 6,299,057
Analysed by market:
Shanghai Stock Exchange 90,000 70,000
Inter-bank market 3,026,396 2,330,257
Other financial institutions 5,526,570 3,898,800
8,642,966 6,299,057
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 are 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, 2015, 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 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 Zhejiang Communications Investment Group Co.,
Ltd. (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
For the six months ended June
30,
2015 2014
Rmb'000 Rmb'000
(Unaudited) (Unaudited)
Toll road service area leasing income earned 1,500 1,500
(Note)
Property leasing income earned 807 776
Office building property management expense 389 -
incurred
Road maintenance service expense incurred 1,863 2,120
Note: 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.
(b) Transactions with other government related parties
(1) Petroleum Co
For the six months ended June 30,
2015 2014
Rmb'000 Rmb'000
(Unaudited) (Unaudited)
Purchase of petroleum products 735,770 988,858
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.
Petroleum Company is a government related party and also an associate of the
Group.
(2) Others
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) Loan advanced from Zhejiang Communications Investment Group Finance
Co., Ltd. ("Zhejiang Communications Finance")
For the six months ended June 30,
2015 2014
Rmb'000 Rmb'000
(Unaudited) (Unaudited)
Interest expenses incurred - 3,293
During the Period, no loan advanced from Zhejiang Communications Finance was
incurred. The Company has fully repaid loans advanced from Zhejiang
Communications Finance as at December 31, 2014.
(2) Loans advanced to a subsidiary of Zhejiang Concord Property
Investment Co., Ltd. ("Zhejiang Concord Property")
As at As at
June 30, December 31,
2015 2014
Rmb'000 Rmb'000
(Unaudited) (Audited)
Outstanding loan receivable balances 600,000 500,000
Interest receivables 11,318 42,739
611,318 542,739
Analysed for reporting purpose as:
Current assets 154,857 491,911
Non current assets 456,461 50,828
611,318 542,739
For the six months ended June 30,
2015 2014
Rmb'000 Rmb'000
(Unaudited) (Unaudited)
Interest income earned 21,794 24,940
The Group advanced several entrusted loans to a subsidiary of Zhejiang Concord
Property. During the Period, the Group advanced additional entrusted loans
totaling Rmb500,000,000 (corresponding period of 2014: Rmb50,000,000) and
received settlement of loan principal and interests amounting to Rmb400,000,000
(corresponding period of 2014: Rmb50,000,000) and Rmb11,304,000 (corresponding
period of 2014: Rmb1,686,000), respectively.
The entrusted loans were unsecured and repayable in accordance with the terms
of entrusted loan agreements, carrying interests at an effective interest rate
of 8% (2014: 10%) per annum. Such entrusted loans were guaranteed by World
Trade Center Zhejiang Real Estate Development Co., Ltd., in full.
(3) Financial service provided by Zhejiang Communications Finance
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.
As at As at
June 30, December 31,
2015 2014
Rmb'000 Rmb'000
(Unaudited) (Audited)
Bank balances and cash
- Time deposits with original maturity over three 20,000 20,000
months
- Cash and cash equivalents 634,241 536,751
654,241 556,751
For the six months ended June
30,
2015 2014
Rmb'000 Rmb'000
(Unaudited) (Unaudited)
Interest income earned 1,824 848
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).
Fair value as at Fair Basis of fair Significant Relationship
value value unobservable of
hierarchy measurement/ input(s) unobservable
valuation inputs to
technique(s) fair value
and key input
(s)
Financial Classified as June 30, December
assets 31,
2015 2014
Rmb'000 Rmb'000
(Unaudited) (Audited)
1) Equity Held for trading Assets - Assets - Level 1 Quoted bid N/A N/A
investment investments 211,022 89,877 prices in an
listed in active market
exchange
2) Equity Available-for-sale Assets - Assets - Level 2 Derived from N/A N/A
secutiies investment 76,168 8,761 recent
listed on transaction
National price
Equities
Exchange
and
Quotations
(inactive
due to low
transaction
volume)
3) Listed Held for trading Assets - Assets - Level 1 Quoted bid N/A N/A
Open-ended investments 220,428 97,718 prices in an
equity active market
funds
4) Funds Available-for-sale Assets - Assets - Level 1 Quoted bid N/A N/A
listed in investment 44,220 35,233 prices in an
exchange active market
5) Debt Held for trading Assets - Assets - Level 1 Quoted bid N/A N/A
investments investments 1,502,803 621,813 prices in an
listed in active market
exchange
Available-for-sale Assets - N/ Assets - Level 1 Quoted bid N/A N/A
investment A 122,000 prices in an
active market
6) Debt Held for trading Assets - Assets - Level 2 Discounted N/A N/A
investments investments 2,503,190 1,315,332 cash flow.
in Future cash
inter-bank flows are
market estimated
based on
applying the
interest yield
curves of
different
types of bonds
as the key
parameter.
7) Investment Available-for-sale Assets - Assets - Level 2 Shares of the N/A N/A
in investment 311,989 246,053 net assets of
structured the products,
products determined
with reference
to the net
asset value of
the products,
calculated by
observable
(quoted)
prices of
underlying
investment
portfolio and
adjustment of
related
expenses.
Available-for-sale Assets - Assets - Level 3 Discounted Actual yield The higher
investment 230,492 251,191 cash flow. of the the actual
Future cash underlying yield, the
flows are investment higher the
estimated portfolio fair value
based on and the
applicable discount
yield of rate
underlying
investment
portfolio and
adjustment of
related
expenses,
discounted at
a rate that
reflects the
credit risk of
various
counterparties
8) Investment Available-for-sale Assets - Assets - Level 3 Discounted Actual yield The higher
in trust investment 86,620 89,515 cash flow. of the the actual
products Future cash underlying yield, the
flows are investment higher the
estimated portfolio fair value
based on and the
applicable discount
yield of rate
underlying
investment
portfolio and
adjustment of
related
expenses,
discounted at
a rate that
reflects the
credit risk of
various
counterparties
As at June 30,2015 (Unaudited)
Level 1 Level 2 Level 3 Total
Rmb'000 Rmb'000 Rmb'000 Rmb'000
Held for trading investments
- Equity securities
a. Manufacturing 73,107 - - 73,107
b. Finance service 99,365 - - 99,365
c. Information technology service 20,017 - - 20,017
d. Energy and water service 1,065 - - 1,065
e. Transportation, storage and postal 8,836 - - 8,836
service
f. Real Estate 651 - - 651
g. Construction 3,133 - - 3,133
h. Mining 2,131 - - 2,131
i. Culture, Sports and Entertainment 649 - - 649
j. Others 2,068 - - 2,068
211,022 - - 211,022
- Open-ended funds 220,428 - - 220,428
- Bonds 1,502,803 2,503,190 - 4,005,993
Sub-total 1,934,253 2,503,190 - 4,437,443
Available-for-sale investments
- Equity securities
a. Manufacturing - 28,259 - 28,259
b. Information technology service - 13,922 - 13,922
c. Transportation, storage and postal - 1,157 - 1,157
service
d. Agriculture, forestry, fishery and - 3,710 - 3,710
animal husbandry
e. Leasing and commercial service - 5,359 - 5,359
f. Others - 23,761 - 23,761
- 76,168 - 76,168
- Funds 44,220 - - 44,220
- Structured products - 311,989 230,492 542,481
- Trust products - - 86,620 86,620
Sub-total 44,220 388,157 317,112 749,489
As at December 31, 2014 (Audited)
Level 1 Level 2 Level 3 Total
Rmb'000 Rmb'000 Rmb'000 Rmb'000
Held for trading investments
- Equity securities
a. Manufacturing 14,915 - - 14,915
b. Finance service 73,395 - - 73,395
c. Energy and water service 1,543 - - 1,543
d. Mining 24 - - 24
89,877 - - 89,877
- Open-ended funds 97,718 - - 97,718
- Bonds 621,813 1,315,332 - 1,937,145
Sub-total 809,408 1,315,332 - 2,124,740
Available-for-sale investments
- Equity securities
a. Manufacturing - 1,763 - 1,763
b. Information technology service - 6,998 - 6,998
- 8,761 - 8,761
- Funds 35,233 - - 35,233
- Corporate bonds 122,000 - - 122,000
- Structured products - 246,053 251,191 497,244
- Trust products - - 89,515 89,515
Sub-total 157,233 254,814 340,706 752,753
There were no transfers between instruments in Level 1 and Level 2 in the
current and prior period.
The following table represents the changes in Level 3 available-for-sale
investments.
Structured Trust Total
products products
Rmb'000 Rmb'000 Rmb'000
As at January 1, 2014 74,402 41,514 115,916
Addition 154,870 42,000 196,870
Total gain recognised in other comprehensive 21,919 6,001 27,920
income
As at December 31, 2014 251,191 89,515 340,706
Addition (Disposal) (19,920) 11,500 (8,420)
Total loss recognised in other comprehensive loss (779) (14,395) (15,174)
As at June 30, 2015 230,492 86,620 317,112
19. SUMMARY OF FINANCIAL INFORMATION OF THE COMPANY
As at As at
June 30, December 31,
2015 2014
Rmb'000 Rmb'000
(Unaudited) (Audited)
Investments in subsidiaries 6,640,021 6,640,021
Amounts due from subsidiaries 611,841 530,619
Other assets 7,913,222 6,855,808
15,165,084 14,026,448
Total liabilities 2,971,722 1,468,381
Capital and reserves
Share capital 4,343,115 4,343,115
reserves 7,850,247 8,214,952
12,193,362 12,558,067
20. EVENTS AFTER THE REPORTING PERIOD
As at July 31, 2015, the Company held the board meeting and the Board of
Directors approved the resolution of acquisition of 80.614% equity share of
Zhejiang Hanghui Expressway Co., Ltd. from Communications Group, for a cash
consideration of Rmb1,699,348,471.50 (equivalent to approximately
HK$2,153,527,400). The resolution is still subject to shareholders' approval at
the extraordinary general meeting of the Company and approval from State-owned
Assets Supervision and Administration Commission of the People 's Government of
Zhejiang Province.
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 21, 2015.
2015 Environment and Social Responsibility Report
Reporting Scope
The reporting scope of this Environment and Social Responsibility Report
includes the Company and all affiliated companies involved in the highway
business, exclusive of Zheshang Securities and its associated companies, joint
ventures and joint-stock companies.
Reporting Period
The reporting period is from 1 July 2014 to 30 June 2015.
Environment and Social Responsibility Report
Elements of Work Environment
Work Environment
We believe that employees are the most valuable assets of the Company and we
rely on them for development. The Company is committed to fostering the
corporate values of integrity, harmony, open-mindedness and ambition, with the
goal of encouraging a competitive yet relaxing working atmosphere in which
employees can fully utilize their talents. The Company attracts and retains
talented people who fit well into the strategic requirements of the Company by
means of campus recruiting, social recruiting, references and recruitment
through agencies. Remuneration is determined based on an employee's function
and ability, and also their performance. The whole remuneration package offered
by the company to its employees includes basic salary, incentive pay, paid
leaves, supplementary health insurance, annuity, etc. Employees are given the
opportunity to pursue their most suitable career path through contest,
discretionary choice, references and rotations.
As at 30 June 2015, the Company had a headcount of 3,874 employees (2014:
3,770), of which 441 (2014: 488) were hired by third-party labor service
agencies, and male and female employees took up 57.8% and 42.2%, respectively.
During the reporting period, 182 employees resigned (2014: 169), representing
4.6 % of the headcount (2014: 4.5%).
Occupational Health and Safety
The Company insists on "human-oriented safe development", and focuses primarily
on safety in all business and production activities. The Company has
implemented production safety accountability and safety risk deposits, defined
the duties and responsibilities of each position for the purpose of production
safety, set forth standardized safe operation procedures in line with the
nature of each job, regularly assessed hazards and risks in occupational health
and safety and took appropriate action to ensure risks were kept under control.
The Occupational Health and Safety (OHS) management system of the Company was
certified by Hangzhou-based WIT Assessment. During the reporting period, the
Company promoted standardization of production safety, commissioned the
development of a production safety management information software, built a
production safety information management platform, hosted special activities
including "Year of Good Tunnel Safety Management Practices" and "Find Hidden
Fire Hazards", and carried out diversified forms of safety education and
training programmes to reduce the probability of accidents to a minimum. The
Company has also purchased personal accident insurance and arranged physical
check-ups for all employees, and bought relevant Personal Protective Equipment
(PPE) to provide employees with protection during work.
During the reporting period, the Company paid Rmb564,000 (2014: Rmb544,000) on
personal accident insurance, Rmb968,000 (2014: Rmb933,000) on physical
check-ups, and Rmb7,684,000 (2014: Rmb7,598,000) on PPEs. During the reporting
period, 3 employees (2014: 7) were injured at work, representing 0.07% of the
headcount, and there was no death caused by work.
Development and Training
Development and training are essential to enhance the abilities of employees,
in order to ensure the sustainable growth of the Company. The Company provides
four types of training for staff, namely induction training, internal training,
external training and online training. Employees are encouraged to receive
continuing education and those who meet learning requirements and have achieved
positive results will be rewarded. Management knowledge training, technical
training, and work skills training of different classes and levels
corresponding to relevant jobs are provided to sharpen the skills and
management abilities of employees.
During the reporting period, the Company ran a wide range of educational and
training programmes, totaling 75,000 class hours (2014: 72,000 class hours),
and incurred total expenses of Rmb4,500,000 (2014: Rmb4,410,000). The senior
management, middle management and grassroots employees of the Company received
48 class hours, 33 class hours, and 19 class hours of training on average
respectively (2014: 40 class- hours, 31 class hours and 19 class hours).
Corporate Culture
During the reporting period, the Company focused on reform, innovation,
transformation and development, and promoted corporate culture by compiling and
circulating our Corporate Culture Handbook, unveiling a corporate culture
development plan and defining vision, core values and philosophy of the
Company. The philosophy of "create value for customers, create opportunities
for employees, deliver performance for shareholders and create fortune for
society" is deeply rooted in every staff member.
During the reporting period, Gu Weilin, a clerk working at the Company's Dayun
tollhouse, was awarded as a National Model Worker; Xu Yongquan, chief of the
Company's Shaoxing office, won Zhejiang's May 1st Labour Medal, and twenty
workers won the honorary title of "One Hundred Moral Models". The Company
appraised all high-performers and organized speaking tours of model workers in
order to motivate all employees to do an excellent job, foster talent, and
encourage dedication. Tollhouse brand, culture and signature projects were
developed to highlight the theme "Beautiful Tollhouse, Beautiful Life". During
the reporting period, Xinchang tollhouse, Tongxiang tollhouse, Fucun tollhouse
and Dongyang tollhouse were among the first "Beautiful Tollhouses" named by the
Communications Group.
During the reporting period, nearly 100 employees took part in a variety of
special events organized under the theme "Year of Culture Promotion by
Communications Group", such as an electrician skills contest, a culture wall
design, and "Heart To Heart" cycling. Over 1,800 employees participated in 16
special training sessions on corporate culture. "Home of Workers" and the staff
club helped boost morale across the Company, and helped fuel work enthusiasm,
all of which had positive effects on employee's productivity.
Labor Standards
The Company obeys and follows all relevant labor laws, respects justice and
fairness in its employment policies, never employed child labor or forced labor
but signs employment contracts with all employees. The Company supports group
negotiation of wages but any major changes in the rights and interests of
employees must be made by a resolution in the worker's congress. A commission
of conciliation is formed to defend the rights and interests of employees.
Tollhouses of the Company are equipped with a counseling room and an emotion
venting room with part-time qualified psychologists to provide services and to
help employees stay in peace, enjoy work and have a happy life. A poverty
relief foundation is established to give assistance, in forms of holiday gifts
and subsistence allowances, to those employees who are having hard times
because of serious illness or accidents. The Company has launched a series of
policies named Administrative Measures for Early Retirement, to make acceptable
arrangements for senior employees who are no longer suitable for their current
positions. During the reporting period, the Company hired no child labor and
had no labor disputes.
Environmental Protection
Effluents
Every member of the Company's society is obligated to protect the environment.
The Company is principally engaged in investing, developing and operating
high-end expressways. Its businesses, though different from those enterprises
involved in the environment business directly, do have an impact on the
environment. The Company follows all environment-related laws and regulations
strictly, and conducts environment impact assessments as required for all new
projects. All service areas have to meet national standards on sewage treatment
and disposal. The Company's dust emission from asphalt mixing also meets
national standards. The company promotes the use of low-carbon,
environmentally-friendly and effective hot-in-place recycling on asphalt
pavements to reduce the use of bituminous mixtures and recycle them. The
environment management system of the Company is certified by WIT Assessment, a
third-party institution.
Reporting
Period
2015 2014
Waste water discharge from toilets, canteens and the
square
in the service stations (0,000 tonnes) 80.0 74.3
Waste water discharge compliance rate 100% 100%
Recovery of bituminous mixture waste (Note 1) (0,000 9.2 8.4
tonnes)
Recycling of bituminous mixture waste (Note 2) (0,000 4.6 1.0
tonnes)
Dust emission compliance rate from asphalt mixing 100% 100%
Note 1: During the reporting period, there was an increase in asphalt pavement
maintenance workload because of the country- wide inspections of arterial
expressway maintenance.
Note 2: During the reporting period, as the results of trial use of the
technology of hot in-place recycling on asphalt pavement was satisfactory, the
Company promoted the use of this technology.
Resource Consumption
The Company encourages all employees to save resources, protect the environment
and lower costs. Without compromising service and product quality, the Company
tries to minimize resource consumption and usage. Energy-efficient processes
and products are used wherever possible. The Company's lighting equipment is
also remodeled for energy savings. Employees are encouraged and supported to
make rationalization proposals for energy saving, emission reduction and
efficiency improvements.
Reporting Period
2015 2014
Water (0,000 tonnes) 133.2 130.8 (adjusted)
Power (0,000 kWh) 3,863.8 3,638.4
Steam (tonnes) 2,372.0 2,392.7
Oil
Gasoline (Note 1) (tonnes) 657.0 760.6
Diesel oil (tonnes) 1,821.0 1,688.7
Heavy oil (Note 2) (tonnes) 1,232.1 2,892.2
Natural gas (0,000 m3) 100.1
Note 1: The Company scrapped some vehicles that were identified as yellow
symbol in the environmental protection test.
Note 2: Shanghai & Hangzhou road maintenance center of the Company phased in
the use of natural gas as batching plant fuel in place of heavy oil during the
reporting period.
Environment and Natural Resources
The Company follows an environmental management policy that is focused on
energy saving, consumption reduction and environmental protection. Tollhouses
are beautified by planting greens, fruit trees and crops strategically in order
to improve both the air quality of the local environment as well as working
environment for the grass root employees. During the reporting period,
environmentally-friendly materials were maximized when decorating new offices.
A lot of plants are placed in offices to purify the air and cleanse the working
environment, and the air quality inside the Company's new offices is up to
national standards. In order to save on paper and other office products, the
Company uses video conferencing systems as well as electronic communications
such as emails widely. The Deskmedia paperless digital conferencing system was
introduced in the Company's offices in order to minimize the use of paper and
other office consumables. The Company also encourages double-sided printing to
minimize environmental impact and paper consumption. During the reporting
period, the Company used 807 cartons of paper (corresponding period of 2014:
820 cartons) (5,000 pieces/carton).
Business Practices
Supplier Management
The Company chooses suppliers according to the Administrative Measures for
Bids. Suppliers of compliant procurement projects must be determined by means
of bidding, competitive negotiation, inquiry and comparison, subject to the
rules of transparency, fairness, justice and good faith. The Company has formed
a bid management committee and a bid evaluation committee. If any member of the
bid evaluation committee has any kind of interest in a prospective supplier, he
or she needs to sidestep. During the reporting period, the Company selected 69
suppliers by bidding (2014: 50) and purchased maintenance machinery, safety
renovation devices and upgraded equipment at a combined value of Rmb320,781,000
(2014: Rmb280,427,000).
Assurance System
Safe, smooth, high-quality and efficient traffic defines the quality management
philosophy of the Company. It is the core responsibility of the Company to keep
expressways and the ancillary facilities intact, flat and smooth. In order to
achieve this, the Company has deployed a medium- to long-term maintenance plan
and annual maintenance plan, put in place a standardized toll service system,
and put together a traffic accident response team and mechanism. A full range
of services are provided, including catering, shopping, hygiene, fuel refills
and vehicle repairs. An effective equipment maintenance, support and emergency
response mechanism and an OHS system have been implemented. The Company has
also set up a service hotline 12122, and has specified traffic video storage
periods and inquiry procedures. The tollbooth staff is good-mannered with
respects to rules. The quality management system of the Company is certified by
WIT Assessment, a third party institution.
During the reporting period, the Company recorded road maintenance costs of
Rmb384,800,000 (the corresponding period of 2014: Rmb391,878,000). This
included the improvement of 375,000 square meters of distressed pavement (the
corresponding period of 2014: 408,000 square meters), and pavement overlay
mileage of 76 km (the corresponding period of 2014: 70.5 km) (single breadth),
repaved 107 bridgeheads (the corresponding period of 2014: 196), and
consolidated 21 high slope protections (the corresponding period of 2014: 33).
The Zhejiang Expressway Administration Bureau tested the
Shanghai-Hangzhou-Ningbo Expressway, Shangsan Expressway, and the Jinhua
Section of the Ningbo-Jinhua Expressway and rated their Pavement Quality Index
(PQI) as 92.7, 92.7 and 92.5 (the corresponding period of 2014: 94.3, 94.4 and
94.1), respectively, among the best in class as recognized by the
communications authority. The Company was acclaimed as the most advanced unit
for its excellent performance in Zhejiang expressway maintenance in 2014. The
Company seeks to spot and clear litter on the road as early as possible by
implementing regular road monitoring and patrols, and extraordinary patrols
under unusual weather or events. Public liability insurance is acquired against
potential losses arising from traffic accidents caused by litter on the road.
During the Period, there were 568 events of road litter incidents on the
Shanghai-Hangzhou-Ningbo Expressway, Shangsan Expressway, and the Jinhua
Section of the Ningbo-Jinhua Expressway (the corresponding period of 2014:
487), of which 12 incidents were covered by public liability insurance (the
corresponding period of 2014: 13). There were no traffic accidents for which
the Company was legally obligated under a court ruling.
During the reporting period, the Shanghai-Hangzhou-Ningbo Expressway, Shangsan
Expressway, and the Jinhua Section of the Ningbo-Jinhua Expressway were open
for traffic for 340 days (the corresponding period of 2014: 331 days), and
blocked or closed on the remaining 25 days (the corresponding period of 2014:
34 days) due to traffic accidents, weather, road construction or other problems
(including full closure, lane closure, timed closure, tollbooth closure and
split traffic). The Company has 112 ETC lanes (the corresponding period of
2014: 104), and 78 lanes with a self-service card issue machine at the entrance
(the corresponding period of 2014: 22), of which 8 were newly added during the
reporting period (the corresponding period of 2014: 22). A total of 174,930,000
vehicles passed through the Company's tollbooths in the first half (the
corresponding period of 2014: 144,598,000).
During the reporting period, the Company received a total of 4,650 incoming
calls (the corresponding period of 2014: 4,500) via its service hotline,
including 77 complaints (the corresponding period of 2014: 106). The complaint
rate was 4 ppm (the corresponding period of 2014: 7 ppm) and the complaint
settlement and response rate was 100% (the corresponding period of 2014: 100%).
The result of surveying 908 customers at random (the corresponding period of
2014: 1,109) showed that customer satisfaction rate was at 98.1 % (the
corresponding period of 2014: 97.6%).
During the reporting period, the Company optimized the layout of some service
areas under its management, and upgraded hardware and equipment to present a
more attractive appearance. To better satisfy customers' needs, some service
areas have brought in renowned Chinese or foreign branded restaurants and
baggage stores to allow customers to enjoy better shopping experience, and this
move has been widely applauded by customers. The Jiaxing, Shaoxing, Bei'an,
Cicheng, Yuyao and Chang'an service areas received four-star ratings and the
Shengzhou, Xinchang and Tiantai service areas received three-star ratings from
the Zhejiang Provincial Communication Department.
During the reporting period, the Company responded to 31,455 roadside service
requests (the corresponding period of 2014: 31,473) and the duration from
receiving a request to dispatching a team averaged about five minutes (the
corresponding period of 2014: five minutes).
During the reporting period, the Company was not involved in any charge of
intellectual property, private client information leakage and no food safety
accidents happened at service areas.
External Responsibilities
The Company's products and services have some impact on the environment and the
life of residents along the roadside, such as noise from vehicles running on
expressways and occasional accidents of leakage of hazardous products. The
Company regularly exchanges views with the government and affected residents,
and does its best to minimize the impact of noise on the life of residents via
initiatives such as installing sound-proof glass and planting trees on the
roadside. The possibility of leakage of hazardous products in transit is
mitigated or eliminated by a combination of effective measures, for example,
registration of vehicles loaded with hazardous products, warning signage,
renovation of dangerous sections, development of an internal contingency plan,
assistance to local governments along the roadside in drafting a contingency
plan, and organization of drills to shorten response time and sharpen
employee's crisis management skills.
During the reporting period, no accidents of leakage of hazardous products
occurred on the Shanghai-Hangzhou- Ningbo expressway, Shangyu-Sanmen
expressway, and the Jinhua part of Ningbo-Jinhua expressway. The Company took
active measures as required by the production safety supervisor and
environmental authorities and no leakage of hazardous products caused by the
Company occurred.
Anti-Corruption
The Company has implemented strict internal discipline management and appointed
a part-time discipline liaison for each tollhouse, to tighten the internal
surveillance of corruption and bribery. The Company continues to strengthen the
anti-corruption responsibility of all management members and employees by
signing the "Anti- corruption Commitment". The Company also created the Code of
Conduct of Part-time Discipline Liaisons to reinforce the training and
management of the discipline liaison team while enhancing their capabilities
and performance. "Corruption Risk Awareness" campaign was launched to
effectively prevent and root up corruption risk in management. During the
reporting period, no material events of corruption took place.
Community Involvement
Community Investment
The Company takes part in the construction of civilised units, places
significant emphasis on community activities, and actively joins pair-up
poverty alleviation program to extend generous financial, social and skill-
related assistance to those in need and improve the quality of the villagers in
pair-up villages. The Company also promotes good manner and public morals,
improves the cultural lives, living environment and lifestyle of rural
residents, and cares for left-behind children. During the reporting period, the
Company paired up with 22 households to provide them with financial and social
assistance, and assisted with the education of 24 children in need as well as
made donations worth Rmb286,000 in total.
Volunteer Activities
The Company believes that volunteer activities are an important way to pay back
society and strongly advocates the spirit of community service. The Company has
formed several volunteer groups, all of which are involved in a variety of
activities on non-working days, including first-aid, road guidance, public
service, blood donation, and safe driving initiatives. During the reporting
period, the Company organized 203 volunteer activities, with a total of 1,612
participants, and 62 participated in blood donation events.
Donations
The Company supports the development of culture and sports in Zhejiang. A
sponsorship cooperation agreement was entered with the Sports Bureau of
Zhejiang Province, whereby during the reporting period, the Company provided
funding of Rmb1,000,000 for education, scientific studies and talent
development to the Zhejiang College of Sports.
Corporate Information
EXECUTIVE DIRECTORS STATUTORY ADDRESS
ZHAN Xiaozhang (Chairman) 12/F, Block A, Dragon Century Plaza 1
Hangda Road
CHENG Tao (Appointed on July 1, 2015) Hangzhou City, Zhejiang Province PRC
310007
LUO Jianhu (General Manager) Tel : 86-571-8798 5588
DING Huikang (Resigned on July 1, Fax: 86-571-8798 5599
2015)
NON-EXECUTIVE DIRECTORS PRINCIPAL PLACE OF BUSINESS
WANG Dongjie 5/F., No. 2, Mingzhu International
Business Center 199 Wuxing Road
DAI Benmeng Hangzhou City, Zhejiang Province PRC
310020
ZHOU Jianping Tel: 86-571-8798 5588
Fax: 86-571-8798 5599
INDEPENDENT
NON-EXECUTIVE DIRECTORS LEGAL ADVISERS
ZHOU Jun As to Hong Kong and US law:
PEI Ker-Wei Herbert Smith Freehills
LEE Wai Tsang Rosa 23rd Floor, Gloucester Tower 15 Queen's
Road Central Hong Kong
SUPERVISORS As to English law:
WU Yongmin Herbert Smith Freehills LLP Exchange
House
ZHANG Guohua Primrose Street London EC2A 2HS United
Kingdom
YAO Huiliang (Appointed on July 1,
2015)
SHI Ximin (Appointed on July 1, 2015) As to PRC law:
LU Xinghai (Appointed on July 1, T & C Law Firm
2015)
FU Zhexiang (Resigned on July 1, 11/F, Block A, Dragon Century Plaza 1
2015) Hangda Road
ZHANG Xiuhua (Resigned on July 1, Hangzhou City, Zhejiang Province PRC
2015) 310007
COMPANY SECRETARY H SHARES LISTING INFORMATION
Tony ZHENG The Stock Exchange of Hong Kong Limited
Code: 0576
AUTHORIZED REPRESENTATIVES LONDON STOCK EXCHANGE PLC
ZHAN Xiaozhang Code: ZHEH
LUO Jianhu (Appointed on July 1,
2015)
ZHANG Jingzhong (Resigned on July 1,
2015)
ADRS INFORMATION
AUDITORS US Exchange: OTC
Deloitte Touche Tohmatsu 35/F, One Symbol: ZHEXY
Pacific Place 88 Queensway
Hong Kong CUSIP: 98951A100
ADR: H Shares 1:10
INVESTOR RELATIONS CONSULTANT
PR Concepts Asia Limited 16/F., REPRESENTATIVE OFFICE IN HONG KONG
Methodist House
36 Hennessy Road, Wanchai Hong Kong Room 2910
Tel : 852-2117 0861 29/F, Bank of America Tower 12 Harcourt
Road
Fax: 852-2117 0869 Hong Kong
Tel : 852-2537 4295
PRINCIPAL BANKERS Fax: 852-2537 4293
Industrial and Commercial Bank of
China, Zhejiang Branch
Shanghai Pudong Development Bank, WEBSITE
Hangzhou Branch
www.zjec.com.cn
H SHARE REGISTRAR AND TRANSFER OFFICE
Hong Kong Registrars Limited
Room 1712-1716, 17/F, Hopewell Centre
183 Queen's Road East
Hong Kong
NOTE : To view the full set of the Company's 2015 Interim Report. Please visit
http://www.zjec.com.cn/
---------------------------------------------------------------------------------------------------------------------------
ZHEJIANG EXPRESSWAY : LD - 2015 Interim Results Announcement
September 01, 2015 at 07:47 am
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