2013 Interim Report
ZHEJIANG EXPRESSWAY CO., LTD.
2013 Interim Report
Seizing Opportunities and March Forward
In the first half of 2013, China's economy remained stable, the economy of Zhejiang Province and foreign trade
continued to pick up, and the trading volume in the Shanghai and Shenzhen stock markets recovered. Against this
background, Zhejiang Expressway seized opportunities to drive business growth and boost business income as well
as profits. During the Period, the Group completed the acquisition of a 76.55% equity interest in the Jinhua
Section of the Ningbo-Jinhua Expressway, which has already contributed toll income to the Group. In addition, the
IPO application for the listing of Zheshang Securities in the A share market has been accepted by the China
Securities Regulatory Commission, and is on the waiting list for IPOs.
Looking forward to the second half of the year, we will continue to initiate actions to promote healthy business
development, reduce costs and enhance efficiency. We will also generate strategic synergies with our parent
company by seeking suitable investment projects, nurturing management capabilities in our diversified businesses
and utilizing our advantage in financial resources to expand the space for future development and to improve
profitability.
Contents
2013 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
Appendices
Corporate Information
Corporate Structure of the Group
Financial Highlights
Location Map of Expressways in Zhejiang Province
2013 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, 2013 (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 Rmb3,647.27 million, representing an increase of 6.1% over the same
period in 2012. Profit for the Period attributable to owners of the Company was Rmb930.39 million, representing
an increase of 6.9% year-on-year. Earnings per share for the Period was Rmb21.42 cents (same period in 2012
(restated): Rmb20.03 cents).
The Directors have recommended to pay an interim dividend of Rmb6 cents per share, subject to shareholder approval
at the extraordinary general meeting of the Company expected to be held on October 17, 2013.
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
The rate of growth in the Chinese economy has slowed down in 2013 as a result of the slow recovery of the global
economy and the domestic policy to maintain steady growth and undergo structural adjustment. In the first half of
the year, China's GDP grew 7.6% year-on-year, while economic growth was down 0.1 percentage point from the first
quarter of 2013. Zhejiang Province, which saw its economy begin to stabilize and pick up in the second half of
2012, continued to grow steadily in the first half of the year. The province's GDP grew 8.3% year- on-year during
the Period, an increase the same as that of the first quarter of the year.
Benefiting from steady growth in the economy of Zhejiang Province as well as the recovery in foreign trade in the
province, the Group's income increased by 6.3% comparing with the same period last year, amounting to a total of
Rmb3,759.66 million. Of this income, Rmb1,987.14 million was generated from the three major expressways owned and
operated by the Group, representing an increase of 4.2% when compared with the same period in 2012 and accounting
for 52.9% of total income. Rmb1,016.65 million was generated from the Group's toll road- related businesses,
representing a slight decline of 2.0% when compared with the same period in 2012 and accounting for 27.0% of total
income. The securities business contributed an income of Rmb755.88 million to the Group, representing an increase
of 27.4% when compared with the same period in 2012 and accounting for 20.1% of total income.
A breakdown of the Group's income for the Period is set out below:
For the six months ended June 30,
2013 2012
Rmb'000 Rmb'000 % Change
(Unaudited) (Unaudited and
restated)
---------------------------------------------------------------------------------------------------
Toll income
Shanghai-Hangzhou-Ningbo Expressway 1,502,446 1,456,618 3.1%
Shangsan Expressway 359,199 338,830 6.0%
Jinhua section, Ningbo-Jinhua Expressway 125,490 112,198 11.8%
Other income
Service areas (mainly sales of goods) 962,830 987,188 -2.5%
Advertising 53,815 49,796 8.1%
Securities business income
Commission 579,077 450,200 28.6%
Bank interest 176,800 143,301 23.4%
---------------------------------------------------------------------------------------------------
Subtotal 3,759,657 3,538,131 6.3%
Less: Revenue taxes (112,389) (98,935) 13.6%
---------------------------------------------------------------------------------------------------
Revenue 3,647,268 3,439,196 6.1%
---------------------------------------------------------------------------------------------------
Toll Road Operations
A higher level of organic growth was maintained in the traffic volume of the Group's Shanghai-Hangzhou-Ningbo
Expressway and Shangsan Expressway during the Period as a result of apparent signs of stable growth in Zhejiang's
economy in the first half of the year. Although the organic growth in the traffic volume in the second quarter was
lower compared to the first quarter, it remained higher than in the fourth quarter last year.
The impact of the toll free policy on small passenger vehicles for the long holidays of Chinese New Year, Qingming
Festival and Labour Day during the Period led to a loss of approximately Rmb73 million in the Group's toll income.
Coupled with the impact of a number of negative factors such as the phasing out of the "Unified Toll Card" policy
early last year, the adjustment to the rounding off of the last figures for passenger vehicle tolls in mid-May and
the launch of the policy to adjust the classification of passenger vehicles in early August in the same year, the
Group's toll income suffered a loss of approximately Rmb169 million during the Period.
Meanwhile, following the implementation of the tolling policy based on actual travel routes in Zhejiang Province
on May 15, 2012, the Company has managed to increase its toll income by approximately Rmb69 million through the
implementation of a number of initiatives such as the marketing campaign on the tolling policy based on actual
travel routes, the fine-tuning of the toll-by-weight mechanism and the modification of weighing equipment. In
particular, the tolling policy based on actual travel routes had a larger positive impact on Shangsan Expressway,
and accordingly, the increase in toll income from Shangsan Expressway was higher than that from
Shanghai-Hangzhou-Ningbo Expressway during the Period.
Near the end of the Period, the Group completed the acquisition of a 76.55% equity interest in Zhejiang Jinhua
Yongjin Expressway Co., Ltd. ("Jinhua Co", which owns and operates the 69.7km Jinhua Section of the Ningbo-Jinhua
Expressway). During the Period, construction work on some bridges on S211 Provincial Road, which runs parallel to
the Ningbo-Jinhua Expressway, led to an increase in the number of vehicles rerouted to some parts of the Jinhua
Section of the Ningbo-Jinhua Expressway, while the continued traffic congestion on the roads in some areas of
Yiwu prompted a large number of local short-distance vehicles to switch to the nearby Jinhua Section of the
Ningbo-Jinhua Expressway. Moreover, benefiting from the rapid growth in import and export trade in Jinhua, the
traffic volume of large trucks and container trucks increased significantly on a year-on-year basis during the
Period.
Average daily traffic volume in full-trip equivalents along the Group's Shanghai-Hangzhou-Ningbo Expressway was
43,273 during the Period, representing an increase of 3.4% year-on-year. In particular, average daily traffic
volume in full-trip equivalents along the Shanghai-Hangzhou Section of the Shanghai-Hangzhou-Ningbo Expressway
was 43,636, representing an increase of 2.4% year-on-year, and that along the Hangzhou-Ningbo Section was 43,005,
representing an increase of 4.2% year-on-year. Average daily traffic volume in full-trip equivalents along the
Shangsan Expressway was 17,397 during the Period, representing an increase of 2.3% year-on-year. Average daily
traffic volume in full-trip equivalents along the Jinhua Section of the Ningbo-Jinhua Expressway was 12,993
during the Period, representing an increase of 10.4% year-on-year.
Total toll income from the 248km Shanghai-Hangzhou-Ningbo Expressway, the 142km Shangsan Expressway and the 70km
Jinhua Section of the Ningbo-Jinhua Expressway amounted to Rmb1,987.14 million during the Period, representing an
increase of 4.2% year-on-year. Toll income from the Shanghai-Hangzhou-Ningbo Expressway amounted to Rmb1,502.45
million, representing an increase of 3.1% year-on-year; toll income from the Shangsan Expressway amounted to
Rmb359.20 million, representing an increase of 6.0% year-on-year; while toll income from the Jinhua Section of
the Ningbo-Jinhua Expressway amounted to Rmb125.49 million, representing an increase of 11.8% year-on-year.
Toll Road-Related Business Operations
The Company 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 a roadside
advertising business.
During the Period, there was a decline in operating income due to the closure of the Yuyao Service Area from June
last year for an expansion project, which commenced service only in March this year, and for which the gas station
resumed full operations only from May 30 this year. This also had an impact on sales of refined oil products in
the service area, resulting in a year-on-year decline in overall income. During the Period, income from toll
road-related operations amounted to Rmb1,016.65 million, representing a decrease of 2.0% year-on-year.
Securities Business
During the Period, the aggregate trading volume of the Shanghai and Shenzhen stock exchanges rose by 22.8%
year-on-year as a result of the recovery in the Chinese stock market. Despite the year-on-year decline in the
market share of Zheshang Securities Co., Ltd. ("Zheshang Securities", a 70.83% owned subsidiary of Zhejiang
Shangsan Expressway Co., Ltd. ("Shangsan Co", a subsidiary of the Company)), a sizable year-on-year increase was
registered in commission income during the Period. Benefitting from an increase in trading volume in the stock
market and a slight rebound in the commission rate, there were year-on-year increases in income to varying
degrees across Zheshang Securities' securities brokerage business, investment banking and asset management
businesses during the Period.
To cope with uncertainties during the current recovery in the stock market, Zheshang Securities is taking measures
to gradually adjust its current business pattern dominated by the brokerage business, and vigorously improving
its income and profit structures to boost the comprehensive development of its various businesses by stepping up
the innovation of its businesses. Meanwhile, in order to speed up the process of its listing on the Shanghai
Stock Exchange, Zheshang Securities has submitted an IPO application which was accepted by the China Securities
Regulatory Commission on May 2, 2013 and is officially admitted into the waiting list for IPOs.
During the Period, Zheshang Securities realized income of Rmb755.88 million, an increase of 27.4% year-on- year.
Of this income, brokerage commission income amounted to Rmb579.08 million, a year-on-year increase of 28.6%, and
interest income from the securities business amounted to Rmb176.80 million, a year-on-year increase of 23.4%.
Moreover, securities investment gains from Zheshang Securities accounted for in the condensed consolidated
statement of profit or loss and other comprehensive income amounted to Rmb73.49 million during the Period.
Long-Term Investments
Zhejiang Expressway Petroleum Development Co., Ltd. (a 50% owned associate company of the Company) benefited from
a growth in the sales of refined oil products during the Period, the associate company realized an income of
Rmb3,085.49 million, representing an increase of 6.1% year-on-year. During the Period, net profit amounted to
Rmb11.34 million (same period in 2012: net profit of Rmb10.18 million).
JoinHands Technology Co., Ltd. ("JoinHands Technology", a 27.582%-owned associate company of the Company)
generated its income primarily from its property leasing activities, and the associate company did not make any
significant improvements to its operations during the Period. The Company has instituted legal proceedings with
regard to the transfer of the equity interest in the associated company and separately lodged an appeal against
the subsequent judgement thereon. On April 28, 2013, the Hangzhou Intermediate People's Court ruled in favour of
the Company in its final judgement which is to be executed after the court conducts an evaluation of the assets
of the associated company.
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 improving provincial economy led the
traffic volume on that section to pick up. The average daily traffic volume in full-trip equivalents along that
section was 12,318 vehicles, representing an increase of 2.26% year-on-year and generating a toll income of
Rmb141.22 million. Due to its heavy financial burden, a loss of Rmb27.88 million was recorded in the current
Period.
On March 30, 2013, the Company entered into a capital increase agreement with Zhejiang Communications Investment
Group Finance Co., Ltd. ("Zhejiang Communications Finance") and its existing shareholders, pursuant to which the
Company has conditionally agreed to make a capital contribution of Rmb280 million in cash to the equity capital
of Zhejiang Communications Finance, thereby enabling the Company to own a 35% equity interest in Zhejiang
Communications Finance. Earnings from the associated company were accounted for as share of gain of associates of
the Company from May 1, 2013, and Zhejiang Communications Finance realised profit of Rmb26.05 million from May 1,
2013 to the end of the Period.
Human Resources
During the Period, the Company actively revamped its human resource management, improved its remuneration and
performance policy, and promoted the pegging of overall remuneration increase with the productivity of employees,
thereby paving the way for increasing employees' remuneration. There was no significant change in other staff
matters and assignment compared with the details disclosed in the Company's most recent annual report.
Financial Analysis
The Group adopts a prudent financial policy with an aim to provide shareholders of the Company with sound returns
over the long term.
During the Period, profit attributable to owners of the Company was approximately Rmb930.39 million, representing
an increase of 6.9% year-on-year, return on owners' equity was 6.1%, representing an increase of 8.9%
year-on-year, while earnings per share for the Company was Rmb21.42 cents.
Liquidity and financial resources
As at June 30, 2013, current assets of the Group amounted to Rmb16,364.59 million in aggregate (December 31, 2012
(restated): Rmb15,707.99 million), of which bank balances and cash accounted for 22.3% (December 31, 2012
(restated): 31.0%), bank balances held on behalf of customers accounted for 47.4% (December 31, 2012 (restated):
47.7%), and held for trading investments accounted for 5.7% (December 31, 2012 (restated): 9.5%). Current ratio
(current assets over current liabilities) of the Group as at June 30, 2013 was 1.3 (December 31, 2012 (restated):
1.4). Excluding the effect of the customer deposits arising from the securities business, the resultant current
ratio of the Group (current assets less bank balances held on behalf of customers over current liabilities less
balance of accounts payable to customers arising from securities business) was 1.9 (December 31, 2012 (restated):
2.4).
As at As at
June 30, December 31,
2013 2012
Rmb'000 Rmb'000
(Restated)
----------------------------------------------------------------------------------------------------------------
Cash and cash equivalents
Rmb 2,738,150 3,382,797
US$ in Rmb equivalent 28,879 4,024
HK$ in Rmb equivalent 5,808 5,232
Time deposits
Rmb 869,433 1,459,433
US$ in Rmb equivalent -- 23,975
Held for trading investments -- Rmb 929,104 1,486,772
Available-for-sale investments -- Rmb 200,567 134,899
Total
Rmb 4,737,254 6,463,901
US$ in Rmb equivalent 28,879 27,999
HK$ in Rmb equivalent 5,808 5,232
----------------------------------------------------------------------------------------------------------------
The amount of held for trading investments of the Group as at June 30, 2013 was Rmb929.10 million (December 31,
2012: Rmb1,486.77 million), of which 97.1% was invested in bonds, 2.4% was invested in stocks, and the rest was
invested in open-end equity funds.
During the Period, net cash inflow generated from the Group's operating activities amounted to Rmb1,050.33
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, 2013, total liabilities of the Group amounted to Rmb12,948.91 million (December 31, 2012
(restated): Rmb11,863.63 million), of which 10.8% was loans and 59.3% was accounts payable to customers arising
from securities business.
Total interest-bearing borrowings of the Group as at June 30, 2013 amounted to Rmb1,400.00 million, representing
a decrease of 40.2% compared to that as at December 31, 2012. The borrowings comprised outstanding balances of
domestic commercial bank loans of Rmb970.00 million, loans from a domestic non- bank financial institution of
Rmb90.00 million and entrusted loans from an enterprise of Rmb340.00 million. Of the interest-bearing borrowings,
35.7% was not payable within one year. The details of the relevant outstanding amounts are as follows:
Maturity Profiles
>1 year -- 5 years Beyond
Gross Amount Within 1 year inclusive 5 years
Rmb'000 Rmb'000 Rmb'000 Rmb'000
----------------------------------------------------------------------------------------------------------------
Floating rates
Domestic commercial bank loans 970,000 470,000 500,000 --
Domestic other loans 340,000 340,000 -- --
Fix rates -- --
Domestic other loans 90,000 90,000 -- --
----------------------------------------------------------------------------------------------------------------
Total as at June 30, 2013 1,400,000 900,000 500,000 --
----------------------------------------------------------------------------------------------------------------
Total as at December 31, 2012 (Restated) 2,340,000 1,660,000 680,000 --
----------------------------------------------------------------------------------------------------------------
As at June 30, 2013, the Group's loans from domestic commercial banks include short-term loans and medium-term
loans, with floating interest rate ranging from 5.895% to 6.12% per annum; loans from an enterprise were
short-term loans, with floating interest rate of 5.24% per annum; loans from a domestic non-bank financial
institution were short-term loans, with the interest rate fixed at 5.40% per annum; while the annual interest
rate for accounts payable to customers arising from the securities business was fixed at 0.35%.
Total interest expenses for the Period amounted to Rmb43.08 million, while profit before interest and tax
amounted to Rmb1,480.42 million. The interest cover ratio (profit before interest and tax over interest expenses)
stood at 34.4 times (corresponding period of 2012 (restated): 18.3).
As at June 30, 2013, the asset-liability ratio (total liabilities over total assets) was 40.8% (December 31, 2012
(restated): 37.7%). Excluding the effect of customer deposits arising from the securities business, the resultant
asset-liability ratio (total liabilities less balance of accounts payable to customers arising from securities
business over total assets less bank balances held on behalf of customers) of the Group was 22.0% (December 31,
2012 (restated): 18.3%).
Capital structure
As at June 30, 2013, the Group had Rmb18,775.83 million in total equity, Rmb8,398.38 million in fixed-rate
liabilities, Rmb1,310.00 million in floating-rate liabilities, Rmb3,240.53 million in interest-free liabilities,
representing 59.2%, 26.5%, 4.1% and 10.2% 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 securities business by
total equity, was 28.0% as at June 30, 2013 (December 31, 2012 (restated): 22.3%).
Capital expenditure commitments and utilization
During the Period, capital expenditure of the Group totaled Rmb1,140.03 million, while capital expenditure of the
Company totaled Rmb1,059.01 million. Amongst the total expenditure of the Group, Rmb756.86 million was incurred
for acquiring 76.55% equity interest in Jinhua Co, Rmb280.00 million was incurred for 35% equity investment in
Zhejiang Communications Finance, Rmb61.12 million was incurred for acquisition and construction of properties,
Rmb19.98 million was incurred for purchase of equipments and Rmb22.07 million was incurred for service area
renovation and expansion.
As at June 30, 2013, the remaining capital expenditure committed by the Group and the Company totaled Rmb1,703.24
million and Rmb1,155.72 million, respectively. Amongst the remaining balance of capital expenditure committed by
the Group, Rmb1,000.00 million will be used for capital injection to Jinhua Co, Rmb435.93 million will be used for
acquisition and construction of properties, Rmb218.53 million for acquisition and construction of equipments and
facilities and Rmb48.78 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
As at June 30, 2013, Zhejiang Yuhang Expressway Co., Ltd. (a 51% owned subsidiary of the Company) provided a
property under construction as a mortgaged asset for its domestic commercial bank loan of Rmb100.00 million. The
carrying amount of the mortgaged asset was Rmb306.51 million. Besides, Jinhua Co provided the operating right of
its expressway as pledged asset for its domestic commercial bank loans of Rmb870.00 million. The carrying amount
of the pledged asset was Rmb1,933.30 million.
Except for the above, as at June 30, 2013, the Group did not have any other contingent liabilities, pledge of
assets or guarantees.
Foreign exchange exposure
Save for dividend payments to the holders of H shares in Hong Kong dollars, the Group's principal operations were
transacted and booked in Renminbi. Therefore, the Group's exposure to exchange fluctuation is limited. During the
Period, the Group has not used any financial instruments for hedging purpose.
Although the Directors do not foresee any material foreign exchange risks for the Group, there is no assurance
that foreign exchange risks will not affect the operating results of the Group in the future.
Outlook
The overall performance of the Group's toll road operations is influenced by the macroeconomic and regional
economic development. Existing statistical figures suggest that although the economy of Zhejiang Province is
maintaining steady growth, it is subject to downward pressure and the growth rate is likely to decline in the
second half of the year. As a result, organic growth in the traffic volume of the Group's expressways is expected
to slow down in the second half.
Meanwhile, the Jiaxing-Shaoxing Expressway, which opened to traffic on July 19, 2013, is expected to have a slight
diversion impact on the Group's Shanghai-Hangzhou-Ningbo Expressway. Since the Jiaxing-Shaoxing Expressway is
currently not yet open to trucks, the positive, favourable effect has not yet been fully reflected on the Group's
Shangsan Expressway. The opening of the Jiaxing-Shaoxing Expressway will cause a slight fall in the Group's
overall toll income for the whole year.
The Company's management is undertaking various measures to further increase income from its principal business.
By increasing income and plugging loopholes, the Company aims to step up marketing initiatives for newly opened
expressways such as Jiaxing-Shaoxing Expressway to attract more vehicles to use sections of expressways operated
by the Group. Meanwhile, the Group will cut the loss of toll income by taking special measures against a small
number of toll-evading trucks.
Moreover, both the uncertainty over the recovery of the Chinese stock market and the need for China to make
appropriate modifications to its monetary policy have presented new challenges and opportunities for Zheshang
Securities, prompting Zheshang Securities to accelerate the development of innovative businesses and to further
push forward the A-share listing process whilst strengthening cost control and risk control for facilitating the
sustainable development of its businesses.
In addition to continuing to strengthen its principal toll road operations, the Group is also actively engaging
in the development of toll road-related businesses with the acquisition of the franchise to operate two pairs of
service areas of expressways in Ningbo area in early August this year. In addition to the improvement of the
Group's securities and financial business, the Group's management will also seek to generate strategic synergies
with its parent company by seeking suitable investment projects, nurturing management capabilities in its
diversified businesses and utilizing its financial resources advantage to expand the space for future development
and improving profitability.
Disclosure of Interests and Other Matters
Purchase, Sale and Redemption of the Company's Shares
Neither the Company nor any of its subsidiaries had 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, 2013, none of the Directors, Supervisors and chief executives had registered an interest or short
position in the shares, underlying shares or debentures of the Company or any of its associated corporations that
was required to be recorded pursuant to Section 352 of the Securities and Futures Ordinance (Cap 571 of the Laws
of Hong Kong) (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.
Other Interests Discloseable under the SFO
As at June 30, 2013, 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:
----------------------------------------------------------------------------------------------------------------
Total interests Percentage of the
in number of issued share capital
ordinary shares of the Company
Substantial shareholders Capacity of the Company (domestic shares)
----------------------------------------------------------------------------------------------------------------
Zhejiang Communications Investment
Group Co. Ltd. Beneficial owner 2,909,260,000 100%
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
Percentage of
Total interests the issued
in number of share capital
ordinary shares of the Company
Substantial shareholders Capacity of the Company (H Shares)
----------------------------------------------------------------------------------------------------------------
JP Morgan Chase & Co. Beneficial owner, 172,403,570 (L) 12.02%
investment manager and 101,881,024 (P) 7.11%
custodian corporation/
approved lending agent
BlackRock, Inc. Interest of controlled 130,733,579 (L) 9.11%
corporations
Deutsche Bank Aktiengesellschaft Investment manager 86,121,242 (L) 6.01%
5,479,399 (S) 0.38%
----------------------------------------------------------------------------------------------------------------
The letter "L" denotes a long position. The Letter "S" denotes a short position. The Letter "P" denotes interest
in a lending pool.
Save as disclosed above, as at June 30, 2013, 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 for Securities Transactions by Directors of Listed Issuers
(the "Model Code") in Appendix 10 to the Listing Rules. 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 is listed in the section headed "Corporate
Information" of this report, confirms that, to the best of his/her knowledge:
- the condensed consolidated financial statements prepared in accordance with Hong Kong Financial Reporting
Standards issued by the Hong Kong Institute of Certified Public Accountants give a true and fair view of
the assets, liabilities, financial position and profit of the Group and the undertakings included in the
consolidation taken as a whole;
- the management discussion and analysis included in the interim report includes a fair review of the
development and performance of the business and the position of the Group and the undertakings included
in the consolidation taken as a whole during the period, together with a description of the principal
risks and uncertainties that the Group faces for the remaining six months of the financial year; and
- the interim report include a fair review of the material related party transactions that have taken place
during the Period and any material changes in the related party transactions described in the Company's
annual report for the year ended 31 December 2012.
The electronic version of this report is published on the website of The Stock Exchange of Hong Kong Limited
(http://www.hkex.com.hk) and on the Company's website (www.zjec.com.cn).
By order of the Board
Zhejiang Expressway Co., Ltd.
ZHAN Xiaozhang
Chairman
Hangzhou, the PRC, August 28, 2013
Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income
For the six months ended June 30,
2013 2012
Notes Rmb'000 Rmb'000
(Unaudited) (Unaudited and
restated)
----------------------------------------------------------------------------------------------------------------
Revenue 4 3,647,268 3,439,196
Operating costs (2,283,848) (2,176,784)
----------------------------------------------------------------------------------------------------------------
Gross profit 1,363,420 1,262,412
Securities investment gains 79,786 61,211
Other income 5 103,890 123,420
Administrative expenses (36,126) (35,994)
Other expenses (21,401) (16,755)
Share of gain (loss) of associates 4,791 (8,201)
Share of loss of a joint venture (13,938) --
Finance costs 6 (43,079) (75,664)
----------------------------------------------------------------------------------------------------------------
Profit before tax 7 1,437,343 1,310,429
Income tax expense 8 (374,175) (322,128)
----------------------------------------------------------------------------------------------------------------
Profit for the Period 1,063,168 988,301
----------------------------------------------------------------------------------------------------------------
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
when specific conditions are met:
Available-for-sale financial assets
-- Fair value (loss) gain during the Period (3,681) 5,436
-- Reclassification adjustments for cumulative gain included
in profit or loss upon disposal (1,381) --
Income tax relating to components of other comprehensive income 1,266 (1,359)
----------------------------------------------------------------------------------------------------------------
Other comprehensive (loss) income for the Period (net of tax) (3,796) 4,077
----------------------------------------------------------------------------------------------------------------
Total comprehensive income for the Period 1,059,372 992,378
----------------------------------------------------------------------------------------------------------------
Profit for the Period attributable to:
Owners of the Company 930,385 869,973
Non-controlling interests 132,783 118,328
----------------------------------------------------------------------------------------------------------------
1,063,168 988,301
----------------------------------------------------------------------------------------------------------------
Total comprehensive income for the Period attributable to:
Owners of the Company 928,429 872,099
Non-controlling interests 130,943 120,279
----------------------------------------------------------------------------------------------------------------
1,059,372 992,378
----------------------------------------------------------------------------------------------------------------
Earnings per share -- Basic and diluted 10 21.42 cents 20.03 cents
----------------------------------------------------------------------------------------------------------------
Condensed Consolidated Statement of Financial Position
As at As at
June 30, December 31,
2013 2012
Notes Rmb'000 Rmb'000
(Unaudited) (Unaudited and
restated)
----------------------------------------------------------------------------------------------------------------
NON-CURRENT ASSETS
Property, plant and equipment 1,638,818 1,634,299
Prepaid lease payments 69,234 70,321
Expressway operating rights 12,318,555 12,722,158
Goodwill 86,867 86,867
Other intangible assets 149,602 155,633
Interests in associates 567,997 280,057
Interest in a joint venture 356,016 369,954
Available-for-sale investments 173,065 133,000
Other receivables 13 -- 325,035
----------------------------------------------------------------------------------------------------------------
15,360,154 15,777,324
----------------------------------------------------------------------------------------------------------------
CURRENT ASSETS
Inventories 27,927 27,418
Trade receivables 11 64,166 64,447
Loans to customers arising from margin financing business 12 2,301,208 724,123
Other receivables and prepayments 13 579,078 621,023
Prepaid lease payments 2,154 2,154
Available-for-sale investments 200,567 134,899
Held for trading investments 929,104 1,486,772
Financial assets held under resale agreements 14 864,777 280,066
Bank balances held on behalf of customers 7,753,335 7,491,625
Bank balances and cash
-- Time deposits with original maturity over three months 869,433 1,483,408
-- Cash and cash equivalents 2,772,837 3,392,053
----------------------------------------------------------------------------------------------------------------
16,364,586 15,707,988
----------------------------------------------------------------------------------------------------------------
CURRENT LIABILITIES
Accounts payable to customers arising from securities business 7,682,376 7,481,819
Trade payables 15 420,485 408,612
Tax liabilities 211,982 223,592
Other taxes payable 32,250 54,226
Other payables and accruals 16 1,089,978 991,260
Dividends payable 1,232,271 94,998
Other loans 430,000 200,000
Financial assets sold under repurchase agreements 17 316,000 --
Placements from non-bank financial institutions 310,000 --
Long-term bonds due in one-year -- 1,000,000
Long-term loans due in one-year 470,000 460,000
----------------------------------------------------------------------------------------------------------------
12,195,342 10,914,507
----------------------------------------------------------------------------------------------------------------
Condensed Consolidated Statement of Financial Position
As at As at
June 30, December 31,
2013 2012
Rmb'000 Rmb'000
(Unaudited) (Unaudited and
restated)
----------------------------------------------------------------------------------------------------------------
Net current assets 4,169,244 4,793,481
----------------------------------------------------------------------------------------------------------------
Total assets less current liabilities 19,529,398 20,570,805
----------------------------------------------------------------------------------------------------------------
Non-current liabilities
Bank loans 500,000 680,000
Deferred tax liabilities 253,568 269,124
----------------------------------------------------------------------------------------------------------------
753,568 949,124
----------------------------------------------------------------------------------------------------------------
18,775,830 19,621,681
----------------------------------------------------------------------------------------------------------------
CAPITAL AND RESERVES
Share capital 4,343,115 4,343,115
Reserves 10,909,422 11,701,345
----------------------------------------------------------------------------------------------------------------
Equity attributable to owners of the Company 15,252,537 16,044,460
Non-controlling interests 3,523,293 3,577,221
----------------------------------------------------------------------------------------------------------------
18,775,830 19,621,681
----------------------------------------------------------------------------------------------------------------
Condensed Consolidated Statement of Changes in Equity
Attributable to owners of the Company
Investment
Share Share Statutory Capital revaluation Special Dividend Retained
capital premium reserves reserve reserve reserve reserve profits Total
Rmb'000 Rmb'000 Rmb'000 Rmb'000 Rmb'000 Rmb'000 Rmb'000 Rmb'000 Rmb'000
-----------------------------------------------------------------------------------------------------------------------
At January 1, 2012
(Audited and
originally
stated) 4,343,115 3,645,726 2,968,634 1,712 (1,555) 18,666 1,085,779 3,116,462 15,178,539
Merger accounting
restatement
(Note 2) -- -- -- -- -- 797,471 -- (236,477) 560,994
-----------------------------------------------------------------------------------------------------------------------
At January 1, 2012
(Unaudited and
restated) 4,343,115 3,645,726 2,968,634 1,712 (1,555) 816,137 1,085,779 2,879,985 15,739,533
Profit for the
Period -- -- -- -- -- -- -- 869,973 869,973
Other
comprehensive
income for the
Period -- -- -- -- 2,126 -- -- -- 2,126
-----------------------------------------------------------------------------------------------------------------------
Total
comprehensive
income for the
Period -- -- -- -- 2,126 -- -- 869,973 872,099
Dividend paid
to
non-controlling
interests -- -- -- -- -- -- -- -- --
Final dividend -- -- -- -- -- -- (1,085,779) -- (1,085,779)
Proposed interim
dividend -- -- -- -- -- -- 260,587 (260,587) --
-----------------------------------------------------------------------------------------------------------------------
At June 30, 2012
(Unaudited) 4,343,115 3,645,726 2,968,634 1,712 571 816,137 260,587 3,489,371 15,525,853
-----------------------------------------------------------------------------------------------------------------------
Non-controlling
interests Total
Rmb'000 Rmb'000
----------------------------------------------------
At January 1, 2012
(Audited and
originally
stated) 3,420,561 18,599,100
Merger accounting
restatement
(Note 2) 86,874 647,868
----------------------------------------------------
At January 1, 2012
(Unaudited and
restated) 3,507,435 19,246,968
Profit for the
Period 118,328 988,301
Other
comprehensive
income for the
Period 1,951 4,077
----------------------------------------------------
Total
comprehensive
income for the
Period 120,279 992,378
Dividend paid
to
non-controlling
interests (106,008) (106,008)
Final dividend -- (1,085,779)
Proposed interim
dividend -- --
----------------------------------------------------
At June 30, 2012
(Unaudited) 3,521,706 19,047,559
----------------------------------------------------
Attributable to owners of the Company
Investment
Share Share Statutory Capital revaluation Special Dividend Retained
capital premium reserves reserve reserve reserve reserve profits Total
Rmb'000 Rmb'000 Rmb'000 Rmb'000 Rmb'000 Rmb'000 Rmb'000 Rmb'000 Rmb'000
-----------------------------------------------------------------------------------------------------------------------
At January 1, 2013
(Audited and
originally
stated) 4,343,115 3,645,726 3,227,511 1,712 254 18,666 1,042,347 3,240,921 15,520,252
Merger accounting
restatement
(Note 2) -- -- -- -- -- 797,471 -- (273,263) 524,208
-----------------------------------------------------------------------------------------------------------------------
At January 1, 2013
(Unaudited and
restated) 4,343,115 3,645,726 3,227,511 1,712 254 816,137 1,042,347 2,967,658 16,044,460
Profit for the
Period -- -- -- -- -- -- -- 930,385 930,385
Other
comprehensive
income for the
Period -- -- -- -- (1,956) -- -- -- (1,956)
-----------------------------------------------------------------------------------------------------------------------
Total
comprehensive
income for the
Period -- -- -- -- (1,956) -- -- 930,385 928,429
Consideration
paid for
acquisition
of a subsidiary
under common
control -- -- -- -- -- (678,005) -- -- (678,005)
Dividend paid to
non-controlling
interest -- -- -- -- -- -- -- -- --
Final dividend -- -- -- -- -- -- (1,042,347) -- (1,042,347)
Proposed interim
dividend -- -- -- -- -- -- 260,587 (260,587) --
-----------------------------------------------------------------------------------------------------------------------
At June 30, 2013
(Unaudited) 4,343,115 3,645,726 3,227,511 1,712 (1,702) 138,132 260,587 3,637,456 15,252,537
-----------------------------------------------------------------------------------------------------------------------
Non-controlling
interests Total
Rmb'000 Rmb'000
----------------------------------------------------
At January 1, 2013
(Audited and
originally
stated) 3,496,023 19,016,275
Merger accounting
restatement
(Note 2) 81,198 605,406
----------------------------------------------------
At January 1, 2013
(Unaudited and
restated) 3,577,221 19,621,681
Profit for the
Period 132,783 1,063,168
Other
comprehensive
income for the
Period (1,840) (3,796)
----------------------------------------------------
Total
comprehensive
income for the
Period 130,943 1,059,372
Consideration
paid for
acquisition
of a subsidiary
under common
control (78,863) (756,868)
Dividend paid to
non-controlling
interest (106,008) (106,008)
Final dividend -- (1,042,347)
Proposed interim
dividend -- --
----------------------------------------------------
At June 30, 2013
(Unaudited) 3,523,293 18,775,830
----------------------------------------------------
Condensed Consolidated Statement of Cash Flows
For the six months ended June 30,
2013 2012
Rmb'000 Rmb'000
(Unaudited) (Unaudited and
restated)
----------------------------------------------------------------------------------------------------------------
Net cash from operating activities 1,050,327 601,880
Net cash (used in) from investing activities (709,921) 140,521
Net cash used in financing activities (959,622) (490,168)
----------------------------------------------------------------------------------------------------------------
Net (decrease) increase in cash and cash equivalents (619,216) 252,233
Cash and cash equivalents at beginning of the Period 3,392,053 3,139,820
----------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of the Period 2,772,837 3,392,053
----------------------------------------------------------------------------------------------------------------
Notes to Condensed Consolidated Financial Statements
1. Basis of Preparation
The condensed consolidated financial statements have been prepared in accordance with the applicable disclosure
requirements set out in Appendix 16 to the Rules Governing the Listing of Securities on The Stock Exchange of
Hong Kong Limited (the "Listing Rules") and with Hong Kong Accounting Standard 34 ("HKAS 34") "Interim Financial
Reporting".
2. Merger Accounting Restatement
During the Period, the Group has acquired the remaining 76.55% equity interest in Zhejiang Jinhua Yongjin
Expressway Co., Ltd. ("Jinhua Co"), of which 66.283% equity interest was acquired from Zhejiang Communications
Investment Group Co., Ltd ("Communications Group"). Since Communications Group is the parent company of the
Company, this transaction was regarded as business combination involving entities under common control and was
accounted for using merger accounting method, in accordance with the guidance set out in Accounting Guideline 5
"Merger Accounting for Common Control Combinations" issued by the Hong Kong Institute of Certified Public
Accountants (the "HKICPA"). As a result, the comparative condensed consolidated statement of profit or loss and
other comprehensive income and condensed consolidated statement of cash flows for the period ended June 30, 2012
and the consolidated statement of financial position as at December 31, 2012 have therefore been restated, in
order to include the losses, assets and liabilities of the combining entities since the date on which they first
come under common control.
The adopting of merger accounting method has resulted in a decrease in total comprehensive income attributable to
owners of the Company and a decrease in profit attributable to owners of the Company for the period ended June 30,
2012 by Rmb21,618,000 and Rmb21,618,000, respectively.
The effect of the merger accounting restatement described above on the condensed consolidated statement of profit
or loss and other comprehensive income for the six months ended June 30, 2012 by line items is as follows:
For the For the
six months Merger six months
ended June 30, accounting ended June 30,
2012 restatement 2012
Rmb'000 Rmb'000 Rmb'000
(Unaudited and (Unaudited
originally stated) and restated)
------------------------------------------------------------------------------------------------------------------
Revenue 3,329,181 110,015 3,439,196
Operating costs (2,076,791) (99,993) (2,176,784)
------------------------------------------------------------------------------------------------------------------
Gross profit 1,252,390 10,022 1,262,412
Securities investment gains 61,211 -- 61,211
Other income 124,881 (1,461) 123,420
Administrative expenses (33,410) (2,584) (35,994)
Other expenses (16,508) (247) (16,755)
Share of loss of associates (15,849) 7,648 (8,201)
Finance costs (31,223) (44,441) (75,664)
------------------------------------------------------------------------------------------------------------------
Profit before tax 1,341,492 (31,063) 1,310,429
Income tax expense (328,225) 6,097 (322,128)
------------------------------------------------------------------------------------------------------------------
Profit for the Period 1,013,267 (24,966) 988,301
------------------------------------------------------------------------------------------------------------------
Other comprehensive income
Items that may be reclassified subsequently to
profit or loss when specific conditions are met:
Available-for-sale financial assets
-- Fair value gain during the Period 5,436 -- 5,436
Income tax relating to components of other
comprehensive income (1,359) -- (1,359)
------------------------------------------------------------------------------------------------------------------
Other comprehensive income for the Period (net of tax) 4,077 -- 4,077
------------------------------------------------------------------------------------------------------------------
Total comprehensive income for the Period 1,017,344 (24,966) 992,378
------------------------------------------------------------------------------------------------------------------
Profit for the Period attributable to:
Owners of the Company 891,591 (21,618) 869,973
Non-controlling interests 121,676 (3,348) 118,328
------------------------------------------------------------------------------------------------------------------
1,013,267 (24,966) 988,301
------------------------------------------------------------------------------------------------------------------
Total comprehensive income attributable to:
Owners of the Company 893,717 (21,618) 872,099
Non-controlling interests 123,627 (3,348) 120,279
------------------------------------------------------------------------------------------------------------------
1,017,344 (24,966) 922,378
------------------------------------------------------------------------------------------------------------------
Earnings per share -- Basic and diluted 20.53 cents (0.50) cents 20.03 cents
------------------------------------------------------------------------------------------------------------------
The effect of the merger accounting restatement described above on the consolidated statement of financial
position as at December 31, 2012 by line items is as follows:
As at Merger As at
December 31, accounting December 31,
2012 restatement 2012
Rmb'000 Rmb'000 Rmb'000
(Audited and (Unaudited and
originally stated) restated)
---------------------------------------------------------------------------------------------------------------
NON-CURRENT ASSETS
Property, plant and equipment 1,357,844 276,455 1,634,299
Prepaid lease payments 66,931 3,390 70,321
Expressway operating rights 10,732,058 1,990,100 12,722,158
Goodwill 86,867 -- 86,867
Other intangible assets 155,633 -- 155,633
Interests in associates 465,513 (185,456) 280,057
Interest in a joint venture 369,954 -- 369,954
Available-for-sale investments 133,000 -- 133,000
Other receivables 325,035 -- 325,035
---------------------------------------------------------------------------------------------------------------
13,692,835 2,084,489 15,777,324
---------------------------------------------------------------------------------------------------------------
CURRENT ASSETS
Inventories 27,418 -- 27,418
Trade receivables 57,847 6,600 64,447
Loans to customers arising from margin
financing business 724,123 -- 724,123
Other receivables and prepayments 701,627 (80,604) 621,023
Prepaid lease payments 2,052 102 2,154
Available-for-sale investments 134,899 -- 134,899
Held for trading investments 1,486,772 -- 1,486,772
Financial assets held under resale agreement 280,066 -- 280,066
Bank balances held on behalf of customers Bank
balances and cash 7,491,625 -- 7,491,625
-- Time deposits with originally maturity over
three months 1,483,408 -- 1,483,408
-- Cash and cash equivalents 3,362,709 29,344 3,392,053
---------------------------------------------------------------------------------------------------------------
15,752,546 (44,558) 15,707,988
---------------------------------------------------------------------------------------------------------------
CURRENT LIABILITIES
Accounts payable to customers arising from
securities business 7,481,819 -- 7,481,819
Trade payables 378,364 30,248 408,612
Tax liabilities 223,592 -- 223,592
Other taxes payable 53,082 1,144 54,226
Other payables and accruals 973,031 18,229 991,260
Dividends payable 94,998 -- 94,998
Other loans -- 200,000 200,000
Long-term bonds due in one-year 1,000,000 -- 1,000,000
Long-term loans due in one-year -- 460,000 460,000
---------------------------------------------------------------------------------------------------------------
10,204,886 709,621 10,914,507
---------------------------------------------------------------------------------------------------------------
NET CURRENT ASSETS 5,547,660 (754,179) 4,793,481
---------------------------------------------------------------------------------------------------------------
TOTAL ASSETS LESS CURRENT LIABILITIES 19,240,495 1,330,310 20,570,805
---------------------------------------------------------------------------------------------------------------
NON-CURRENT LIABILITIES
Bank loans -- 680,000 680,000
Deferred tax liabilities 224,220 44,904 269,124
---------------------------------------------------------------------------------------------------------------
224,220 724,904 949,124
---------------------------------------------------------------------------------------------------------------
19,016,275 605,406 19,621,681
---------------------------------------------------------------------------------------------------------------
CAPITAL AND RESERVES
Share capital 4,343,115 -- 4,343,115
Reserves 11,177,137 524,208 11,701,345
---------------------------------------------------------------------------------------------------------------
Equity attributable to owners of the Company 15,520,252 524,208 16,044,460
Non-controlling interests 3,496,023 81,198 3,577,221
---------------------------------------------------------------------------------------------------------------
19,016,275 605,406 19,621,681
---------------------------------------------------------------------------------------------------------------
The effect of merger accounting restatement described above on the Group's equity as at January 1, 2013 and
January 1, 2012 is as follows:
As at Merger As at As at Merger As at
January 1, accounting January 1, January 1, accounting January 1,
2012 restatement 2012 2013 restatement 2013
Rmb'000 Rmb'000 Rmb'000 Rmb'000 Rmb'000 Rmb'000
(Audited and (Unaudited (Audited and (Unaudited
originally and originally and
stated) restated) stated) restated)
---------------------------------------------------------------------------------------------------------------
Share capital 4,343,115 -- 4,343,115 4,343,115 -- 4,343,115
Share premium 3,645,726 -- 3,645,726 3,645,726 -- 3,645,726
Statutory reserves 2,968,634 -- 2,968,634 3,227,511 -- 3,227,511
Capital reserve 1,712 -- 1,712 1,712 -- 1,712
Investment revaluation reserve (1,555) -- (1,555) 254 -- 254
Special reserve 18,666 797,471 816,137 18,666 797,471 816,137
Dividend reserve 1,085,779 -- 1,085,779 1,042,347 -- 1,042,347
Retained profits 3,116,462 (236,477) 2,879,985 3,240,921 (273,263) 2,967,658
---------------------------------------------------------------------------------------------------------------
Equity attributable to owners
of the Company 15,178,539 560,994 15,739,533 15,520,252 524,208 16,044,460
Non-controlling interests 3,420,561 86,874 3,507,435 3,496,023 81,198 3,577,221
---------------------------------------------------------------------------------------------------------------
Total 18,599,100 647,868 19,246,968 19,016,275 605,406 19,621,681
---------------------------------------------------------------------------------------------------------------
3. Principal Accounting Policy
The condensed consolidated financial statements have been prepared on the historical cost basis except for certain
financial instruments that are measured at fair value, as appropriate.
Except as described below, the accounting policies 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, 2012.
Merger accounting for business combination involving entities under common control
The condensed consolidated financial statements incorporate the financial statements items of the combining
entities or businesses in which the common control combination occurs as if they had been combined from the date
when the combining entities or businesses first came under the control of the controlling party.
The net assets of the combining entities or businesses are consolidated using the existing book values from the
controlling party's perspective. No amount is recognised in respect of goodwill or excess of acquirer's interest
in the net fair value of acquiree's identifiable assets, liabilities and contingent liabilities over cost at the
time of common control combination, to the extent of the continuation of the controlling party's interest.
The condensed consolidated statement of profit or loss and other comprehensive income includes the results of
each of the combining entities or businesses from the earliest date presented or since the date when the
combining entities or businesses first came under the common control, where this is a shorter period, regardless
of the date of the common control combination.
The comparative amounts in the condensed consolidated financial statements are presented as if the entities or
businesses had been combined at the end of the previous reporting period or when they first came under common
control, whichever is shorter.
During the Period, the Group has applied, for the first time, the following new and revised Hong Kong Financial
Reporting Standards ("HKFRSs") issued by HKICPA, which are effective for the Period. Except for the following,
the application of the other new and revised HKFRSs in the current interim period had no material impact on the
condensed consolidated financial statements and (or) relevant disclosures set out in these condensed consolidated
financial statements.
Impact of the application of HKFRS 11
HKFRS 11 replaces HKAS 31 Interests in Joint Ventures, and the guidance contained in a related interpretation,
HK(SIC) -- Int 13 Jointly Controlled Entities -- Non-Monetary Contributions by Venturers, has been incorporated
in HKAS 28 (as revised in 2011). HKFRS 11 deals with how a joint arrangement of which two or more parties have
joint control should be classified and accounted for. Under HKFRS 11, there are only two types of joint
arrangements -- joint operations and joint ventures. The classification of joint arrangements under HKFRS 11 is
determined based on the rights and obligations of parties to the joint arrangements by considering the structure,
the legal form of the arrangements, the contractual terms agreed by the parties to the arrangement, and, when
relevant, other facts and circumstances. A joint operation is a joint arrangement whereby the parties that have
joint control of the arrangement (i.e. joint operators) have rights to the assets, and obligations for the
liabilities, relating to the arrangement. A joint venture is a joint arrangement whereby the parties that have
joint control of the arrangement (i.e. joint venturers) have rights to the net assets of the arrangement.
Previously, HKAS 31 had three types of joint arrangements -- jointly controlled entities, jointly controlled
operations and jointly controlled assets. The classification of joint arrangements under HKAS 31 was primarily
determined based on the legal form of the arrangement (i.e. a joint arrangement that was established through a
separate entity was classified as a jointly controlled entity).
The initial and subsequent accounting of joint ventures and joint operations are different. Investments in joint
ventures are accounted for using the equity method (proportionate consolidation is no longer allowed).
Investments in joint operations are accounted for such that each joint operator recognises its assets (including
its share of any assets jointly held), its liabilities (including its share of any liabilities incurred jointly),
its revenue (including its share of revenue from the sale of the output by the joint operation) and its expenses
(including its share of any expenses incurred jointly). Each joint operator accounts for the assets and
liabilities, as well as revenues and expenses, relating to its interest in the joint operation in accordance with
the applicable standards. The directors of the Company reviewed and assessed the classification of the Group's
investment in joint arrangement in accordance with the requirements of HKFRS 11. The directors concluded that the
Group's interest in a jointly controlled entity under HKAS 31 should be classified as a joint venture under HKFRS
11. The application of HKFRS 11 has not had any material impact on the amount recognised in the Group's condensed
consolidated financial statements.
Amendments to HKAS 1 Presentation of Items of Other Comprehensive Income
The amendments to HKAS 1 introduce new terminology for statement of comprehensive income and income statement.
Under the amendments to HKAS 1, a statement of comprehensive income is renamed as a statement of profit or loss
and other comprehensive income and an income statement is renamed as a statement of profit or loss. The
amendments to HKAS 1 retain the option to present profit or loss and other comprehensive income in either a
single statement or in two separate but consecutive statements. However, the amendments to HKAS 1 require
additional disclosures to be made in other comprehensive section such that items of other comprehensive income
are grouped into two categories: (a) items that will not be reclassified subsequently to profit or loss; and
(b) items that may be reclassified subsequently to profit or loss when specific conditions are met. Income tax on
items of other comprehensive income is required to be allocated on the same basis -- the amendments do not change
the existing option to present items of other comprehensive income either before tax or net of tax. The
amendments have been applied retrospectively, and hence the presentation of items of other comprehensive income
has been modified to reflect the changes.
HKFRS 13 Fair value measurement
The Group has applied HKFRS 13 for the first time in the current interim period. HKFRS 13 establishes a single
source of guidance for and disclosures about, fair value measurement, and replaces those requirements previously
included in various HKFRSs. Consequential amendments have been made to HKAS 34 to require certain disclosures to
be made in the interim condensed consolidated financial statements.
The scope of the HKFRS 13 is broad, and applies to both financial instrument items and non-financial instrument
items for which other HKFRSs require or permit fair value measurements and disclosures about fair value
measurements, subject to a few exceptions. HKFRS 13 contains a new definition of "fair value" and defines fair
value as the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction in principal (or most advantageous) market at the measurement date under current market conditions.
Fair value under HKFRS 13 is an exit price regardless of whether that price is directly observable or estimated
using another valuation technique. Also, HKFRS 13 includes extensive disclosure requirements.
In accordance with the transitional provisions of HKFRS 13, the Group has applied the fair value measurement and
disclosure requirements prospectively. The Group has provided these disclosures in accordance with the
consequential amendments of HKAS 34 in note 20. Other than the additional disclosures, the application of HKFRS
13 has not had any material impact on the amount recognised in the Group's condensed consolidated financial
statements.
4. Revenue and Segment Information
Comparing to the same period last year, there were no 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, 2013
Service
area and
Toll advertising Securities
operation businesses operation Total
Rmb'000 Rmb'000 Rmb'000 Rmb'000
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
---------------------------------------------------------------------------------------------------------------
Segment revenue from external customers 1,921,545 1,010,644 715,079 3,647,268
---------------------------------------------------------------------------------------------------------------
Segment profit 868,464 27,839 166,865 1,063,168
---------------------------------------------------------------------------------------------------------------
For the six months ended June 30, 2012
Service
area and
Toll advertising Securities
operation businesses operation Total
Rmb'000 Rmb'000 Rmb'000 Rmb'000
(Unaudited (Unaudited (Unaudited
and restated) and restated) (Unaudited) and restated)
---------------------------------------------------------------------------------------------------------------
Segment revenue from external customers 1,844,153 1,028,811 566,232 3,439,196
---------------------------------------------------------------------------------------------------------------
Segment profit 824,047 23,565 140,689 988,301
---------------------------------------------------------------------------------------------------------------
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,
2013 2012
Rmb'000 Rmb'000
(Unaudited) (Unaudited and
restated)
---------------------------------------------------------------------------------------------------------------
Toll operation revenue 1,921,545 1,844,153
Service area businesses revenue (mainly sales of goods) 958,740 983,282
Advertising business rental revenue 51,904 45,529
Commission income from securities operation 538,279 422,931
Interest income from securities operation 176,800 143,301
---------------------------------------------------------------------------------------------------------------
Total revenue 3,647,268 3,439,196
---------------------------------------------------------------------------------------------------------------
5. Other Income
For the six months ended June 30,
2013 2012
Rmb'000 Rmb'000
(Unaudited) (Unaudited and
restated)
---------------------------------------------------------------------------------------------------------------
Interest income on bank balances, entrusted loan receivables
and financial products investment 45,746 72,158
Rental income 32,652 34,020
Handling fee income 2,193 3,396
Towing income 4,883 5,557
Exchange gain (loss), net 14 (3,552)
Others 18,402 11,841
---------------------------------------------------------------------------------------------------------------
Total 103,890 123,420
---------------------------------------------------------------------------------------------------------------
6. Finance Costs
For the six months ended June 30,
2013 2012
Rmb'000 Rmb'000
(Unaudited) (Unaudited and
restated)
---------------------------------------------------------------------------------------------------------------
Interest expenses wholly repayable within 5 years:
Bank loans 28,139 48,979
Long-term bonds 2,700 21,450
Other loans 10,415 5,235
Others 1,825 --
---------------------------------------------------------------------------------------------------------------
43,079 75,664
---------------------------------------------------------------------------------------------------------------
7. Profit before Tax
The Group's profit before tax has been arrived at after charging:
For the six months ended June 30,
2013 2012
Rmb'000 Rmb'000
(Unaudited) (Unaudited and
restated)
---------------------------------------------------------------------------------------------------------------
Depreciation of property, plant and equipment 95,632 85,734
Amortisation of prepaid lease payments 1,087 1,077
Amortisation of expressway operating rights
(included in operating costs) 403,604 402,005
Amortisation of other intangible assets 8,978 9,324
Cost of inventories recognised as an expense 871,039 908,265
---------------------------------------------------------------------------------------------------------------
8. Income Tax Expense
For the six months ended June 30,
2013 2012
Rmb'000 Rmb'000
(Unaudited) (Unaudited and
restated)
---------------------------------------------------------------------------------------------------------------
Current tax:
PRC enterprise income tax 388,811 326,801
Deferred tax (14,636) (4,673)
---------------------------------------------------------------------------------------------------------------
374,175 322,128
---------------------------------------------------------------------------------------------------------------
Under the Law of the PRC on Enterprise Income Tax (the "EIT Law") and Implementation Regulation of the EIT Law,
the 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.
9. Dividends
The Directors have recommended the payment of an interim dividend of Rmb6 cents per share (corresponding period
of 2012: Rmb6 cents per share), subject to shareholders' approval at the extraordinary general meeting of the
Company expected to be held on October 17, 2013.
10. 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 Rmb930,385,000 (corresponding period of 2012 (restated): Rmb869,973,000) and the 4,343,114,500 (2012:
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 was no potential
ordinary shares outstanding during the both periods.
11. Trade Receivables
The Group has no credit period granted to its trade customers of toll operation and service area businesses. The
following is an aged analysis of trade receivables presented based on the invoice date, which approximated the
respective revenue recognition dates, at the end of the reporting period:
As at As at
June 30, December 31,
2013 2012
Rmb'000 Rmb'000
(Unaudited) (Unaudited and
restated)
---------------------------------------------------------------------------------------------------------------
Within 3 months 62,497 64,138
3 months to 1 year 1,500 --
1 to 2 years -- 146
Over 2 years 169 163
---------------------------------------------------------------------------------------------------------------
Total 64,166 64,447
---------------------------------------------------------------------------------------------------------------
Included in the Group's trade receivable balance aged within 3 months were toll receivables from the Expressway
Fee Settlement Center of the Highway Administration Bureau of Zhejiang Province amounting to Rmb59,829,000
(December 31, 2012: Rmb58,173,000) which has been settled subsequent to the end of the reporting period. The
directors consider the credit risk of the balance to be minimal.
12. Loans to Customers Arising from Margin Financing Business
The Group has provided customers with margin financing and securities lending for securities transactions since
June 2012, 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
at a fixed rate of 8.6% (December 31, 2012: 8.6%) per annum. 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, 2013, 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 amounted to Rmb5,867,036,000 (December 31, 2012: Rmb2,745,885,000). Cash
collateral of Rmb170,807,000 (December 31, 2012: Rmb75,976,000) 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.
13. Other Receivables and Prepayments
As at As at
June 30, December 31,
2013 2012
Rmb'000 Rmb'000
(Unaudited) (Unaudited and
restated)
---------------------------------------------------------------------------------------------------------------
Current:
Entrusted loans receivables from related parties (Note 18(ii) (a)) 393,691 314,616
Interest receivables 52,319 73,440
Prepayments 22,392 31,543
Financial products investment receivables (Note a) 2,000 103,432
Others* 108,676 97,992
---------------------------------------------------------------------------------------------------------------
579,078 621,023
---------------------------------------------------------------------------------------------------------------
Non-current:
Entrusted loans receivables from related parties (Note 18(ii) (a)) -- 325,035
---------------------------------------------------------------------------------------------------------------
579,078 946,058
---------------------------------------------------------------------------------------------------------------
* The amounts were unsecured, interest-free and repayable on demand.
Note:
(a) Short-term fixed-yield and principal protected bank financial products.
14. Financial Assets held under Resale Agreement
As at June 30, 2013, the amount represented equity securities acquired by the Group which would be resold at a
predetermined price under resale agreements with individual customers in the PRC in 2013. The cash advance by the
Group carried interest at fixed rates ranging from 7.0% to 8.6% (December 31, 2012: 2.16% to 5.77%) per annum.
The Group conducted resale agreement under usual and customary terms of placements and held collaterals for these
transactions.
As at June 30, 2013, the collaterals are equity securities listed in the PRC, the fair value of equity securities
as collaterals was Rmb1,277,640,000 (December 31, 2012: Rmb299,918,000). In addition, as at December 31, 2012 the
collaterals also included debt securities listed in the PRC of which fair value was Rmb119,900,000.
15. Trade Payables
Trade payables mainly represent the construction payables for the improvement projects of toll expressways. The
following is an aged analysis of the trade payables presented based on the invoice date at the end of the
reporting period:
As at As at
June 30, December 31,
2013 2012
Rmb'000 Rmb'000
(Unaudited) (Unaudited and
restated)
---------------------------------------------------------------------------------------------------------------
Within 3 months 163,062 236,246
3 months to 1 year 128,131 37,328
1 to 2 years 26,051 29,117
2 to 3 years 8,694 49,122
Over 3 years 94,547 56,799
---------------------------------------------------------------------------------------------------------------
Total 420,485 408,612
---------------------------------------------------------------------------------------------------------------
16. Other Payables and Accruals
As at As at
June 30, December 31,
2013 2012
Rmb'000 Rmb'000
(Unaudited) (Unaudited and
restated)
---------------------------------------------------------------------------------------------------------------
Other liabilities:
Accrued payroll and welfare 444,069 408,689
Advance from customers 57,743 74,453
Toll collected on behalf of other toll roads 7,890 7,114
Consideration payable for acquisition of equity interest
in Shengxin Expressway Co., Ltd. 191,155 189,331
Consideration payable for non-controlling interest for
acquisition of additional interest in Jinhua Co under common control 101,512 --
Retention payable 107,485 85,613
Others 176,545 183,720
---------------------------------------------------------------------------------------------------------------
1,086,399 948,920
Other accruals 3,579 42,340
---------------------------------------------------------------------------------------------------------------
Total 1,089,978 991,260
---------------------------------------------------------------------------------------------------------------
17. Financial Assets sold under Repurchase Agreements
Sales and repurchase agreements are transactions in which the Group sells a security and simultaneously agrees to
repurchase it (or an asset that is substantially the same) at a fixed price on a future date. Since the
repurchase prices are fixed, the Group 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 2013, 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 carried interest at fixed rates ranging from 5.5% to 8.085% per annum. 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.
There was no financial assets sold under repurchase agreements for the year ended December 31, 2012.
18. Related Party Transactions and Balances
The following is a summary of the related party transactions during the Period occured in the Group's operating activities:
(i) Transactions and balances with government related parties
The Group operates in an economic environment currently predominated by entities directly or indirectly
owned or controlled by the PRC government ("government-related entities"). In addition, the Group itself is
part of a larger group of companies under the Communications Group which is controlled by the PRC
government. However, due to the business nature, in respect of the Group's toll road business, 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
(1) On March 20, 2013, the Company entered into an agreement with Communications Group pursuant to
which the Company conditionally agreed to purchase from Communications Group a 66.283% equity
interest in the Jinhua Co held by Communications Group at a cash consideration of
Rmb655,356,000. As at the date of this report, the acquisition has been completed.
(2) On March 30, 2013, the Company entered into the capital contribution agreement with Zhejiang
Communications Investment Group Finance Co., Ltd. ("Zhejiang Communications Finance") and its
existing shareholders (all of who are subsidiaries of Communications Group). Pursuant to the
agreement, the Company conditionally agreed to contribute an amount of Rmb280,000,000 in the
capital of Zhejiang Communications Finance, by way of cash. Upon completion, the Company owned
35% equity interest in Zhejiang Communications Finance. As at the date of this report, the
contribution has been completed.
(3) Pursuant to the entrusted loan contracts entered into between Jinhua Co and Communications
Group on February 28, 2013, Communications Group agreed to provide Jinhua Co with entrusted
loans amounted to Rmb340,000,000 at a floating interest rate of 5.24% per annum, with maturity
date of August 10, 2015. Such loans were early repaid in August, 2013.
(4) Pursuant to loan contracts entered into between Jinhua Co and Zhejiang Communications Finance
on March 8, 2013 and April 8, 2013, respectively, Zhejiang Communications Finance provided
Jinhua Co with loans amounted to Rmb90,000,000 at a fixed interest rate of 5.4% per annum, with
maturity date of March 8, 2014 and April 8, 2014. Part of the loans of Rmb30,000,000 was early
repaid in August, 2013.
(b) Transactions with other government related parties
(1) Pursuant to the operation management agreement entered into between Zhejiang Expressway
Investment Development Co., Ltd. ("Development Company"), a wholly owned subsidiary of the
Company, and Zhejiang Expressway Petroleum Development Co., Ltd. ("Petroleum Company") in
respect of the petrol stations in the service areas along Shanghai-Hangzhou-Ningbo and
Shangsan Expressways. Petroleum Company will have its expertise to assist Development Company
in running their petrol stations in service areas along Shanghai-Hangzhou-Ningbo and Shangsan
Expressways. During the Period, purchase of petroleum products from Petroleum Company totaled
Rmb811,976,000 (corresponding period of 2012: Rmb844,686,000).
Petroleum Company is a government related party and also an associate of the Group.
(2) The Group has entered into various significant transactions, including deposit placements,
borrowings and other general banking facilities, with certain banks and financial institutions
which are government-related entities in its ordinary course of business. In view of the nature
of those banking transactions, the directors are of the opinion that separate disclosure would
not be meaningful.
(ii) Transactions and balances with associates and other non-government related parties
(a) Transactions and balances with associates and its subsidiaries
(1) Pursuant to the board resolutions of the Company as at August 28, 2010 and the entrusted loan
contracts, the Company provided short-term entrusted loans during 2011 totalling Rmb390,000,000
with maturity date from November 4, 2011 to August 7, 2012 and long- term entrusted loan
totalling Rmb100,000,000 with maturity date on May 17, 2013 to Zhejiang Canal Concord Property
Co., Ltd. ("Zhejiang Canal Concord "), a subsidiary of Hangzhou Concord Construction and
Management Co., Ltd.,("Hangzhou Concord Company", which is also a subsidiary of the Group's
associate), at a fixed interest rate of 12% per annum. Such entrusted loans are guaranteed by
World Trade Center Zhejiang Real Estate Development Co., Ltd. ("World Trade Ltd"), a related
party of Hangzhou Concord Company, in full. Part of the short-term entrusted loans of
Rmb200,000,000 was early settled during 2011. The remaining balance of Rmb190,000,000 of the
short-term entrusted loans and part of the long-term entrusted loan of Rmb17,953,000 were
settled in 2012. The remaining balance of the long-term entrusted loan of Rmb82,047,000 was
settled in January, 2013.
(2) Pursuant to the board resolutions of the Company on August 28, 2010 and the entrusted loan
contract, the Company provided long-term entrusted loan during 2011 totalling Rmb200,000,000
with maturity date of April 25, 2013, to Hangzhou Canal Concord Property Co., Ltd., a
subsidiary of Hangzhou Concord Company, at a fixed interest rate of 12% per annum. Such
entrusted loan is guaranteed by World Trade Ltd in full. During the Period, such entrusted
loan was settled in full.
(3) Pursuant to the board resolutions of the Company on June 11, 2012, and the entrusted loan
contract, the Company provided long-term entrusted loan during 2012 totalling Rmb120,000,000
with maturity date of January 17, 2014 to Zhejiang Canal Concord at a fixed interest rate of
12% per annum. Such entrusted loan is guaranteed by World Trade Ltd in full.
(4) Pursuant to the board resolution of the Company on August 28, 2010, and entrusted loan
contract, the Company provided long-term entrusted loan during 2012 totalling Rmb190,000,000
with maturity date of February 7, 2014 to Zhejiang Canal Concord at a fixed interest
rate of 12% annually. Such entrusted loan is guaranteed by World Trade Ltd in full.
(5) Pursuant to the board resolutions of Development Company on April 22, 2013, and the entrusted
loan contract, Development Company provided entrusted loan on April 27, 2013 totalling
Rmb50,000,000 with maturity date of April 27, 2014 to Zhejiang Canal Concord, at a fixed
interest rate of 12% per annum. Such entrusted loan is guaranteed by World Trade Ltd in full.
For the six months ended June 30, 2013, interest income recognised on the above entrusted loan
transactions with associates and its subsidiaries were Rmb23,548,000 (corresponding period of 2012:
Rmb33,762,000).
As at June 30, 2013, interest receivables on the above entrusted loan transactions with associates and
its subsidiaries were Rmb33,691,000 (December 31, 2012: Rmb47,604,000). The amount will be repaid at
maturity.
19. Contingent Liabilities and Pledge of Assets
As at June 30, 2013, Zhejiang Yuhang Expressway Co., Ltd. ("Yuhang Co.," a 51% owned subsidiary of the Company) provided a
property under construction as a mortgaged asset for its domestic commercial bank loan of Rmb100,000,000. The
carrying amount of the mortgaged asset was Rmb306,508,000. Besides, Jinhua Co provided the operating right of its
expressway as pledged asset for its domestic commercial bank loans of Rmb870,000,000. The carrying amount of the
pledged asset was Rmb1,933,302,000.
Except for the above, as at June 30, 2013, the Group did not have any other contingent liabilities, pledge of
assets or guarantees.
20. Fair Value Measurements of Financial Instruments
Fair value of the Group's financial assets that are measured at fair value on a recurring basis
Some of the Group's financial assets are measured at fair value at the end of each reporting period. The
following table gives information about how the fair values of these financial assets are determined (in
particular, the valuation technique(s) and inputs used), as well as the level of the fair value hierarchy into
which the fair value measurements are categorised (levels 1 to 3) based on the degree to which the inputs to the
fair value measurements is observable.
- Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active market for
identical assets;
- Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level
1 that are observable for the asset, either directly (i.e. as prices) or indirectly (i.e. derived from
prices); and
- Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset
that are not based on observable market data (unobservable inputs).
Basis of fair value Relationship of
measurement/valuation Significant unobservable
Fair value as at Fair value technique(s) and key unobservable inputs to fair
Financial assets Classified as June 30, 2013 hierarchy input(s) input(s) value
In Rmb'000
1) Equity Held for Assets -22,098 Level 1 Quoted bid prices in N/A N/A
securities trading an active market.
listed in investments
exchange
-----------------------------------------------------------------------------------------------------------------------
2) Fund listed Held for Assets -4,606 Level 1 Quoted bid prices in N/A N/A
in exchange trading an active market.
investments
Available-for-sale Assets -59,275 Level 1 Quoted bid prices in N/A N/A
investments an active market.
-----------------------------------------------------------------------------------------------------------------------
3) Debt Held for Assets -902,400 Level 1 Quoted bid prices in N/A N/A
investments trading an active market.
listed in investments
exchange
Available-for-sale Assets -122,000 Level 1 Quoted bid prices in N/A N/A
investments an active market.
-----------------------------------------------------------------------------------------------------------------------
4) Investments Available-for-sale Assets -99,468 Level 2 Shares of the net N/A N/A
in structured investments assets of the
products products, determined
with reference to
the net asset value
of the products,
calculated by
observable (quoted)
prices of underlying
investment portfolio
and adjustments of
related expenses.
Assets -40,065 Level 3 Discounted cash flow. Actual yield The higher
Future cash flows are of the the actual
estimated based on underlying yield, the
applicable yield of investment higher the
the underlying portfolio fair value
investment portfolio
and adjustments of
related expenses,
discounted at a rate
that reflects the
credit risk of
various counterparties
-----------------------------------------------------------------------------------------------------------------------
5) Investments Available-for-sale Assets -41,824 Level 3 Discounted cash flow. Actual yield The higher
in trust investments Future cash flows are of the the actual
products estimated based on underlying yield, the
applicable yield of investments higher the
the underlying fair value
investment and
adjustments of
related expenses,
discounted at
a rate that
reflects the credit
risk of various
counterparties.
-----------------------------------------------------------------------------------------------------------------------
As at 30 June 2013 (unaudited)
Level 1 Level 2 Level 3 Total
Rmb'000 Rmb'000 Rmb'000 Rmb'000
-----------------------------------------------------------------------------------------------------------------------
Held for trading investments
-- Equity securities
Manufacturing 20,639 -- -- 20,639
Wholesaling 1,459 -- -- 1,459
-- Fund 4,606 -- -- 4,606
-- Debt investments
Corporate bonds 702,400 -- -- 702,400
Others 200,000 -- -- 200,000
-----------------------------------------------------------------------------------------------------------------------
Sub-total 929,104 -- -- 929,104
-----------------------------------------------------------------------------------------------------------------------
Available-for-sale investments
-- Fund 59,275 -- -- 59,275
-- Corporate bonds 122,000 -- -- 122,000
-- Structured products -- 99,468 40,065 139,533
-- Trust products -- -- 41,824 41,824
-----------------------------------------------------------------------------------------------------------------------
Sub-total 181,275 99,468 81,889 362,632
-----------------------------------------------------------------------------------------------------------------------
Total 1,110,379 99,468 81,889 1,291,736
-----------------------------------------------------------------------------------------------------------------------
There were no transfers between instruments in Level 1 and Level 2 during the six months ended 30 June 2013.
The following table represents the changes in Level 3 available-for-sale investments for the six months ended 30 June
2013.
Structured Trust
products products Total
Rmb'000 Rmb'000 Rmb'000
-----------------------------------------------------------------------------------------------------------------------
At beginning of this period -- -- --
Addition 40,000 41,000 81,000
Total gains in other comprehensive income 65 824 889
-----------------------------------------------------------------------------------------------------------------------
At end of the period 40,065 41,824 81,889
-----------------------------------------------------------------------------------------------------------------------
21. Summary of Financial Information of the Company
As at As at
June 30, December 31,
2013 2012
Rmb'000 Rmb'000
(Unaudited) (Unaudited and
restated)
---------------------------------------------------------------------------------------------------------------
Investment in subsidiaries 5,463,800 4,853,153
Amounts due from subsidiaries 655,348 522,694
Other assets 7,652,227 8,454,104
---------------------------------------------------------------------------------------------------------------
13,771,375 13,829,951
---------------------------------------------------------------------------------------------------------------
Total liabilities 2,342,393 1,940,568
---------------------------------------------------------------------------------------------------------------
Capital and reserves
Share capital 4,343,115 4,343,115
reserves 7,085,867 7,546,268
---------------------------------------------------------------------------------------------------------------
11,428,982 11,889,383
---------------------------------------------------------------------------------------------------------------
22. Events after the Reporting Period
Pursuant to the board resolutions of the Company on March 19, 2013 and the acquisition agreement
in respect of the Company's acquisition of 66.283% equity interest in Jinhua Co entered into between the Company
and Communications Group on March 20, 2013, as at the date of this report, the Company has completed its capital
injection in Jinhua Co of Rmb1,000,000,000. As a result, the registered capital of Jinhua Co was increased from
Rmb900,000,000 to Rmb1,900,000,000. Simultaneously, Jinhua Co early repaid its entrusted loans from
Communications Group of Rmb340,000,000, part of its loans from Zhejiang Communications Finance of Rmb30,000,000
and part of its bank loans of Rmb570,000,000.
23. Approval of Condensed Consolidated Financial Statements
The condensed consolidated financial statements were approved and authorised for issue by the board of directors
on August 28, 2013.
Corporate Information
Executive Directors Authorized Representatives
ZHAN Xiaozhang (Chairman) ZHAN Xiaozhang
LUO Jianhu (General Manager) ZHANG Jingzhong
DING Huikang
Statutory Address
Non-Executive Directors
12/F, Block A, Dragon Century Plaza
LI Zongsheng 1 Hangda Road
WANG Weili Hangzhou City, Zhejiang Province
WANG Dongjie PRC 310007
Tel: 86-571-8798 5588
Independent Fax: 86-571-8798 5599
Non-Executive Directors
Legal Advisers
ZHANG Junsheng
ZHOU Jun As to Hong Kong and US law:
PEI Ker-Wei Herbert Smith Freehills
23rd Floor, Gloucester Tower
Supervisors 15 Queen's Road Central
Hong Kong
FU Zhexiang
WU Yongmin As to English law:
LIU Haisheng Herbert Smith Freehills LLP
ZHANG Guohua Exchange House
ZHANG Xiahua Primrose Street
London EC2A 2HS
Company Secretary United Kingdom
Tony Zheng As to PRC law:
T & C Law Firm
11/F, Block A, Dragon Century Plaza
1 Hangda Road
Hangzhou City, Zhejiang Province
PRC 310007
Auditors H Shares Listing Information
Deloitte Touche Tohmatsu The Stock Exchange of Hong Kong Limited
35/F, One Pacific Place Code: 0576
88 Queensway
Hong Kong London Stock Exchange Plc
Investor Relations Consultant Code: ZHEH
Hill & Knowlton Strategies ADRs Information
36th Floor, PCCW Tower, Taikoo Place
979 King's Road, Quarry Bay US Exchange: OTC
Hong Kong Symbol: ZHEXY
Tel : 852-2894 6321 CUSIP: 98951A100
Fax: 852-2576 1990 ADR: H Shares 1:10
Principal Bankers Representative Office in Hong Kong
Industrial and Commercial Bank of China, Suite 2910
Zhejiang Branch 29/F, Bank of America Tower
China Construction Bank, Zhejiang Branch 12 Harcourt Road
Shanghai Pudong Development Bank, Hong Kong
Hangzhou Branch Tel: 852-2537 4295
Fax: 852-2537 4293
H Share Registrar and Transfer Office
Website
Hong Kong Registrars Limited
Room 1712-1716, 17/F, Hopewell Centre www.zjec.com.cn
183 Queen's Road East
Hong Kong
For Corporate Structure of the Group, please visit:
http://www.prnasia.com/sa/attachment/2013/08/20130830232758481010.pdf
For Financial Highlights, please visit:
http://www.prnasia.com/sa/attachment/2013/08/20130830232759631664.pdf
For Location Map of Expressways in Zhejiang Province, please visit:
http://www.prnasia.com/sa/attachment/2013/08/20130830232759792121.pdf
---------------------------------------------------------------------------------------------------
NOTE : To view the full set of the Company's 2013 Interim Report. Please visit www.zjec.com.cn
---------------------------------------------------------------------------------------------------
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