Hong Kong Stock Exchanges and
Clearing Limited and The Stock Exchange of Hong Kong Limited take
no responsibility for the contents of this announcement, make no
representation as to its accuracy or completeness and expressly
disclaim any liability whatsoever for any loss howsoever arising
from or in reliance upon the whole or any part of the contents of
this announcement.
ZHEJIANG EXPRESSWAY CO., LTD.
(A joint stock limited company incorporated in the People's Republic of China with limited
liability)
(Stock code: 0576)
2017 Annual
Results Announcement
- Revenue was Rmb9,626.34 million,
representing a decrease of 1.1% year-on-year
- Profit attributable to owners of the Company amounted to
Rmb3,202.13 million, representing an
increase of 5.4% year-on-year
- Basic earnings per share was Rmb73.73
cents, and diluted earnings per share was Rmb71.36 cents
- A final dividend of Rmb30.0 cents
per share is recommended
The directors (the "Directors") of Zhejiang Expressway Co., Ltd.
(the "Company") announced the audited consolidated results of the
Company and its subsidiaries (collectively the "Group") for the
year ended December 31, 2017 (the
"Period"), with the basis of preparation as stated in note 1 set
out below.
During the Period, revenue for the Group was Rmb9,626.34 million, representing a decrease of
1.1% over 2016. Profit attributable to owners of the Company was
Rmb3,202.13 million, representing an
increase of 5.4% year-on-year. Basic earnings per share for the
Period was Rmb73.73 cents (2016:
Rmb69.94 cents), and diluted earnings
per share for the Period was Rmb71.36
cents (2016: Rmb69.94
cents).
The Directors have recommended to pay a final dividend of
Rmb30.0 cents per share (2016:
Rmb29.5 cents). The final dividend is
subject to shareholders' approval at the 2017 annual general
meeting of the Company and is expected to be paid by no later than
August 31, 2018. Together with the
interim dividend of Rmb6 cents per
share that has already been paid, the total dividend payout during
the Period is Rmb36.0 cents per share
(2016: Rmb35.5 cents).
The audit committee of the Company has reviewed the Group's
annual results of the Period. Set out below are the audited
consolidated statement of profit or loss and other comprehensive
income for the Period and consolidated statement of financial
position as at December 31, 2017,
together with the comparative figures for 2016:
CONSOLIDATED STATEMENT OF
PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME |
|
|
|
|
|
|
|
For the year
ended
December 31, |
|
Notes |
2017
Rmb'000 |
|
2016
Rmb'000 |
|
|
-------------------------------- |
|
-------------------------------- |
|
|
|
|
|
|
|
|
|
|
Continuing operations Revenue |
3 |
9,626,340 |
|
9,735,347 |
Operating costs |
|
(4,656,163) |
|
(4,596,048) |
|
|
------------------------------ |
|
------------------------------ |
|
|
|
|
|
Gross profit |
|
4,970,177 |
|
5,139,299 |
Securities investment gains |
|
774,885 |
|
223,573 |
Other income and gains and losses |
4 |
103,639 |
|
289,390 |
Administrative expenses |
|
(98,496) |
|
(81,687) |
Other expenses |
|
(134,327) |
|
(85,099) |
Share of profit of associates |
|
161,502 |
|
64,699 |
Share of profit of a joint venture |
|
17,668 |
|
9,797 |
Finance costs |
|
(611,747) |
|
(671,387) |
|
|
------------------------------ |
|
------------------------------ |
|
|
|
|
|
Profit before tax |
|
5,183,301 |
|
4,888,585 |
Income tax expense |
5 |
(1,192,269) |
|
(1,161,570) |
|
|
------------------------------ |
|
------------------------------ |
|
|
|
|
|
Profit for the year from continuing
operations |
|
3,991,032 |
|
3,727,015 |
|
|
|
|
|
Discontinued operations
Profit for the year from discontinued operations |
|
– |
|
81,594 |
|
|
----------------------------- |
|
----------------------------- |
|
|
|
|
|
Profit for the year |
|
3,991,032 |
|
3,808,609 |
|
|
================= |
|
================= |
|
|
|
|
|
Profit for the year attributable to owners of the
Company:
–Continuing operations
–Discontinued operations |
|
3,202,130
– |
|
2,957,291
80,114 |
|
|
----------------------------- |
|
----------------------------- |
|
|
|
|
|
|
|
3,202,130 |
|
3,037,405 |
|
|
----------------------------- |
|
----------------------------- |
|
|
|
|
|
Profit for the year attributable to
non-controlling interests:
–Continuing operations
–Discontinued operations |
|
788,902
– |
|
769,724
1,480 |
|
|
----------------------------- |
|
----------------------------- |
|
|
|
|
|
|
|
788,902 |
|
771,204 |
|
|
----------------------------- |
|
----------------------------- |
|
|
|
|
|
Other comprehensive income |
|
|
|
|
Items that may be reclassified
subsequently
to profit or loss: |
|
|
|
|
Available-for-sale financial assets: |
|
|
|
|
–Fair value gain during the year |
|
276,849 |
|
114,883 |
–Reclassification adjustments for
cumulative gain upon disposal |
|
(105,560) |
|
(64,791) |
Share of other comprehensive
expense
of associates |
|
(2,672) |
|
(205) |
Exchange differences arising on translation
Income tax relating to items that may |
|
(605) |
|
511 |
be reclassified subsequently |
|
(42,822) |
|
(12,523) |
|
|
----------------------------- |
|
----------------------------- |
|
|
|
|
|
Other comprehensive income for the year,
net of income tax |
|
125,190 |
|
37,875 |
|
|
----------------------------- |
|
----------------------------- |
|
|
|
|
|
Total comprehensive income for the year |
|
4,116,222 |
|
3,846,484 |
|
|
================ |
|
----------------------------- |
|
|
|
|
|
Total comprehensive income attributable
to:
Owners of the Company
Non-controlling interests |
|
3,259,347
856,875 |
|
3,057,158
789,326 |
|
|
----------------------------- |
|
----------------------------- |
|
|
|
|
|
|
|
4,116,222 |
|
3,846,484 |
|
|
================ |
|
----------------------------- |
Earnings per share
From continuing and discontinued operations
Basic (Rmb cents) |
7 |
73.73 |
|
69.94 |
|
|
================ |
|
----------------------------- |
|
|
|
|
|
Diluted (Rmb cents) |
|
71.36 |
|
69.94 |
|
|
================ |
|
----------------------------- |
|
|
|
|
|
From continuing operations
Basic (Rmb cents) |
|
73.73 |
|
68.09 |
|
|
================ |
|
----------------------------- |
|
|
|
|
|
Diluted (Rmb cents) |
|
71.36 |
|
68.09 |
|
|
================ |
|
================ |
CONSOLIDATED STATEMENT OF FINANCIAL
POSITION |
|
|
|
|
As at
December 31,
2017 |
|
As at
December 31,
2016 |
|
Notes |
Rmb'000 |
|
Rmb'000 |
|
|
----------------------------- |
|
----------------------------- |
|
|
|
|
|
Non-current assets |
|
|
|
|
Property, plant and equipment |
|
2,948,134 |
|
3,066,571 |
Prepaid lease payments |
|
65,300 |
|
52,522 |
Expressway operating rights |
|
13,379,674 |
|
14,498,800 |
Goodwill |
|
86,867 |
|
86,867 |
Other intangible assets |
|
161,486 |
|
148,906 |
Interests in associates |
|
1,686,227 |
|
1,310,486 |
Interest in a joint venture |
|
303,065 |
|
285,397 |
Available-for-sale investments |
|
711,715 |
|
1,790,978 |
Deferred tax assets |
|
355,803 |
|
362,681 |
|
|
----------------------------- |
|
----------------------------- |
|
|
|
|
|
|
|
19,698,271 |
|
21,603,208 |
|
|
----------------------------- |
|
----------------------------- |
|
|
|
|
|
Current assets Inventories |
|
|
|
|
Inventories |
|
131,261 |
|
206,814 |
Trade receivables |
8 |
244,587 |
|
275,318 |
Loans to customers arising from
margin
financing business |
|
7,851,609 |
|
7,910,032 |
Other receivables and prepayments |
|
911,226 |
|
2,855,099 |
Prepaid lease payments |
|
2,137 |
|
1,639 |
Derivative financial assets |
|
4,587 |
|
10,931 |
Available-for-sale investments |
|
1,800,835 |
|
1,342,920 |
Held for trading investments |
|
12,568,694 |
|
8,144,132 |
Financial assets held under resale
agreements |
|
9,793,492 |
|
3,965,329 |
Bank balances and clearing settlement
fund
held on behalf of customers |
|
15,035,007 |
|
20,082,265 |
Bank balances, clearing settlement
fund,
deposits and cash |
|
|
|
|
– Time deposits with
original maturity
over three
months |
|
20,000 |
|
165,000 |
–Cash and cash
equivalents |
|
5,588,814 |
|
7,198,745 |
|
|
----------------------------- |
|
----------------------------- |
|
|
|
|
|
|
|
53,952,249 |
|
52,158,224 |
|
|
----------------------------- |
|
----------------------------- |
|
|
|
|
|
Current liabilities |
|
|
|
|
Placements from other financial
institutions |
|
– |
|
700,000 |
Accounts payable to customers
arising from
securities business |
14,933,719 |
|
20,073,435 |
Trade payables |
9 |
628,592 |
|
784,300 |
Tax liabilities |
|
608,284 |
|
455,249 |
Other taxes payable |
|
90,266 |
|
76,631 |
Other payables and accruals |
|
2,515,399 |
|
2,431,148 |
Dividends payable |
|
261,239 |
|
261,046 |
Derivative financial liabilities |
|
3,941 |
|
413 |
Bank and other borrowings |
|
420,000 |
|
2,116,395 |
Short-term financing note payable |
|
762,800 |
|
4,828,340 |
Bonds payable |
|
1,300,000 |
|
3,000,000 |
Financial assets sold under repurchase
agreements |
|
10,523,414 |
|
7,486,743 |
Financial liabilities at fair value
through
profit or loss |
|
373,427 |
|
293,658 |
|
|
----------------------------- |
|
----------------------------- |
|
|
|
|
|
|
|
32,421,081 |
|
42,507,358 |
|
|
----------------------------- |
|
----------------------------- |
|
|
|
|
|
Net current assets |
|
21,531,168 |
|
9,650,866 |
|
|
----------------------------- |
|
----------------------------- |
|
|
|
|
|
Total assets less current liabilities |
|
41,229,439 |
|
31,254,074 |
|
|
----------------------------- |
|
----------------------------- |
|
|
|
|
|
Non-current liabilities |
|
|
|
|
Bank and other borrowings |
|
60,000 |
|
– |
Bonds payable |
|
8,850,000 |
|
6,700,000 |
Convertible bond |
10 |
2,720,654 |
|
– |
Deferred tax liabilities |
|
394,434 |
|
378,147 |
|
|
----------------------------- |
|
----------------------------- |
|
|
|
|
|
|
|
12,025,088 |
|
7,078,147 |
|
|
----------------------------- |
|
----------------------------- |
|
|
|
|
|
|
|
29,204,351 |
|
24,175,927 |
|
|
================ |
|
================ |
|
|
|
|
|
Capital and reserves |
|
|
|
|
Share capital |
|
4,343,115 |
|
4,343,115 |
Reserves |
|
16,311,385 |
|
13,974,042 |
|
|
----------------------------- |
|
----------------------------- |
|
|
|
|
|
Equity attributable to owners of the Company |
|
20,654,500 |
|
18,317,157 |
Non-controlling interests |
|
8,549,851 |
|
5,858,770 |
|
|
----------------------------- |
|
----------------------------- |
|
|
|
|
|
|
|
29,204,351 |
|
24,175,927 |
|
|
================ |
|
================ |
Notes:
1. BASIS
OF PREPARATION
The consolidated financial statements have been prepared in
accordance with Hong Kong Financial Reporting Standards issued by
Hong Kong Institute of Certified Public Accountants (the "HKICPA").
In addition, the consolidated financial statements include
applicable disclosures required by the Rules Governing the Listing
of Securities on the Stock Exchange of Hong Kong Limited ("Listing
Rules") and by the Hong Kong Companies Ordinance ("CO").
2. PRINCIPAL
ACCOUNTING POLICIES
The consolidated financial statements have been prepared on the
historical cost basis except for certain financial instruments that
are measured at fair values at the end of each reporting
period.
Except as disclosed below, the accounting policies and methods
of computation applied in the 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, 2016.
Amendments to HKFRSs that are
mandatorily effective for the current year
The Group has applied the following amendments to HKFRSs issued
by the HKICPA for the first time in the current year.
Amendments to HKAS
7
Disclosure Initiative
Amendments to HKAS
12 Recognition
of Deferred Tax Assets for Unrealised Losses
Amendments to HKFRS
12
As part of the Annual Improvements to HKFRSs 2014-2016
Cycle
Except as described below, the application of the amendments to
HKFRSs in the current year has had no material impact on the
Group's financial performance and positions for the current and
prior years and/or on the disclosures set out in these consolidated
financial statements.
Amendments to HKAS 7 Disclosure Initiative
The Group has applied these amendments for the first time in the
current year. The amendments require an entity to provide
disclosures that enable users of financial statements to evaluate
changes in liabilities arising from financing activities, including
both cash and non-cash changes. In addition, the amendments also
require disclosures on changes in financial assets if cash flows
from those financial assets were, or future cash flows will be,
included in cash flows from financing activities.
Specifically, the amendments require the following to be
disclosed: (i) changes from financing cash flows; (ii) changes
arising from obtaining or losing control of subsidiaries or other
businesses; (iii) the effect of changes in foreign exchange rates;
(iv) changes in fair values; and (v) other changes.
Apart from the additional disclosure, the application of these
amendments has had no impact on the Group's consolidated financial
statements.
3. SEGMENT
INFORMATION
Information reported to the General Manager of the Company,
being the chief operating decision maker, for the purposes of
resource allocation and assessment of segment performance focuses
on types of goods or services delivered or provided.
Specifically, the Group's reportable and operating segments
under HKFRS 8 are as follows:
(i)
Toll operation – the operation and management of high grade roads
and the collection of the expressway tolls.
(ii)
Securities operation – the securities broking, margin financing and
securities lending, securities underwriting and sponsorship, asset
management, advisory services and proprietary trading.
(iii)
Other operation – properties development, hotel operation and other
ancillary services.
Segment revenue and results
The following is an analysis of the Group's revenue and results
by reportable and operating segment:
For the year ended December 31, 2017 |
|
|
|
|
|
|
|
Continuing operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Toll
operation |
|
Securities
operation |
|
Others |
|
Total |
|
Rmb'000 |
|
Rmb'000 |
|
Rmb'000 |
|
Rmb'000 |
|
--------------- |
|
--------------- |
|
--------------- |
|
--------------- |
|
|
|
|
|
|
|
|
Revenue – external customers |
5,986,249 |
|
3,491,250 |
|
148,841 |
|
9,626,340 |
|
========= |
|
========= |
|
========= |
|
========= |
|
|
|
|
|
|
|
|
Segment profit |
2,754,152 |
|
1,045,237 |
|
191,643 |
|
3,991,032 |
|
========= |
|
========= |
|
========= |
|
========= |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the year ended December 31, 2016 |
|
|
|
|
|
|
|
Continuing operations |
|
|
|
|
|
|
|
|
Toll
operation |
|
Securities
operation |
|
Others |
|
Total |
|
Rmb'000 |
|
Rmb'000 |
|
Rmb'000 |
|
Rmb'000 |
|
--------------- |
|
--------------- |
|
--------------- |
|
--------------- |
|
|
|
|
|
|
|
|
Revenue – external customers |
5,279,348 |
|
4,175,240 |
|
280,759 |
|
9,735,347 |
|
========= |
|
========= |
|
========= |
|
========= |
|
|
|
|
|
|
|
|
Segment profit |
2,477,506 |
|
1,247,877 |
|
1,632 |
|
3,727,015 |
|
========= |
|
========= |
|
========= |
|
========= |
Segment profit represents the profit after tax of each operating
segment. This is the measure reported to the chief operating
decision maker for the purposes of resource allocation and
performance assessment.
Segment assets and liabilities
The following is an analysis of the Group's assets and
liabilities by reportable and operating segment:
|
Segment
assets |
|
Segment
liabilities |
|
As at
December 31, 2017 |
|
As at
December 31, 2016 |
|
As at
December 31, 2017 |
|
As at
December 31, 2016 |
|
Rmb'000 |
|
Rmb'000 |
|
Rmb'000 |
|
Rmb'000 |
|
--------------- |
|
--------------- |
|
--------------- |
|
--------------- |
|
|
|
|
|
|
|
|
Continuing operations |
|
|
|
|
|
|
|
Toll operation |
18,261,586 |
|
17,883,833 |
|
(4,995,482) |
|
(5,261,742) |
Securities operation |
53,215,230 |
|
53,839,312 |
|
(39,424,352) |
|
(44,172,118) |
Others |
2,086,837 |
|
1,951,420 |
|
(26,335) |
|
(151,645) |
|
-------------------- |
|
-------------------- |
|
-------------------- |
|
-------------------- |
|
|
|
|
|
|
|
|
Total segment assets(liabilities) |
73,563,653 |
|
73,674,565 |
|
(44,446,169) |
|
(49,585,505) |
Goodwill |
86,867 |
|
86,867 |
|
– |
|
– |
|
-------------------- |
|
------------------- |
|
------------------- |
|
------------------- |
|
|
|
|
|
|
|
|
Consolidated assets (liabilities) |
73,650,520 |
|
73,761,432 |
|
(44,446,169) |
|
(49,585,505) |
|
-------------------- |
|
============ |
|
=========== |
|
=========== |
Segment assets and segment liabilities represent the assets and
liabilities of the subsidiaries operating in the respective
reportable and operating segment.
Other segment information
Amounts included in the measure of segment profit/loss or
segment assets:
For the year ended December 31,
2017 |
Continuing operations |
|
Toll
operation |
|
Securities
operation |
|
Others |
|
Total |
|
Rmb'000 |
|
Rmb'000 |
|
Rmb'000 |
|
Rmb'000 |
|
-------------- |
|
-------------- |
|
-------------- |
|
-------------- |
Income tax expense |
845,248 |
|
339,462 |
|
7,559 |
|
1,192,269 |
Interest income on bank balances and entrusted
loan receivables |
25,945 |
|
– |
|
72 |
|
26,017 |
Interest expense |
135,275 |
|
476,472 |
|
– |
|
611,747 |
Interests in associates |
– |
|
317,163 |
|
1,369,064 |
|
1,686,227 |
Interest in a joint venture |
303,065 |
|
– |
|
– |
|
303,065 |
Share of (loss) profit of associates |
– |
|
(7,466) |
|
168,968 |
|
161,502 |
Share of profit of a joint venture |
17,668 |
|
– |
|
– |
|
17,668 |
Gain on fair value changes on held for trading
investments |
174 |
|
525,491 |
|
– |
|
525,665 |
Gain on decrease in fair value in respect of the
derivative component of Convertible Bond (as defined in Note
10) |
149,479 |
|
– |
|
– |
|
149,479 |
Additions to non-current assets (Note) |
106,652 |
|
306,397 |
|
30,356 |
|
443,405 |
Depreciation and amortisation Loss on disposal of
property, |
1,283,545 |
|
110,401 |
|
19,137 |
|
1,413,083 |
Loss on disposal of property, plant and
equipment |
2,484 |
|
1,081 |
|
– |
|
3,565 |
|
======== |
|
======== |
|
======== |
|
========= |
|
|
|
|
|
|
|
|
For the year ended December 31,
2016 |
Continuing operations |
|
Toll
operation |
|
Securities
operation |
|
Others |
|
Total |
|
Rmb'000 |
|
Rmb'000 |
|
Rmb'000 |
|
Rmb'000 |
|
-------------- |
|
-------------- |
|
-------------- |
|
-------------- |
Income tax expense |
761,688 |
|
399,882 |
|
– |
|
1,161,570 |
Interest income on bank balances and entrusted
loan receivables |
27,459 |
|
– |
|
40 |
|
27,499 |
Interest expense |
134,351 |
|
537,036 |
|
– |
|
671,387 |
Interests in associates |
– |
|
109,401 |
|
1,201,085 |
|
1,310,486 |
Interest in a joint venture |
285,397 |
|
– |
|
– |
|
285,397 |
Share of profit of associates |
– |
|
5,397 |
|
59,302 |
|
64,699 |
Share of profit of a joint venture |
9,797 |
|
– |
|
– |
|
9,797 |
Gain on fair value changes on held for trading
investments |
6,819 |
|
198,434 |
|
– |
|
205,253 |
Additions to non-current assets (Note) |
2,564,064 |
|
169,388 |
|
595,094 |
|
3,328,546 |
Depreciation and amortisation |
1,174,338 |
|
104,227 |
|
17,849 |
|
1,296,414 |
(Gain) loss on disposal of property, plant and
equipment |
(2,414) |
|
(239) |
|
2 |
|
(2,651) |
|
======== |
|
======== |
|
======== |
|
======== |
Note:
Non-current assets excluded financial instruments and deferred
tax assets.
Revenue from major services
An analysis of the Group's revenue from continuing operations,
net of discounts and taxes, for the year is as follows:
|
For the year
ended
December 31, |
|
2017 |
|
2016 |
|
Rmb'000 |
|
Rmb'000 |
|
--------------- |
|
--------------- |
Toll operation revenue |
5,986,249 |
|
5,279,348 |
Commission and fee income from securities
operation |
2,088,310 |
|
2,664,959 |
Interest income from securities operation |
1,402,940 |
|
1,510,281 |
Revenue from sales of properties |
47,865 |
|
196,928 |
Hotel and catering revenue |
100,976 |
|
83,831 |
|
--------------- |
|
--------------- |
|
|
|
|
Total |
9,626,340 |
|
9,735,347 |
|
========= |
|
========= |
Geographical information
The Group's operations are located in the PRC. All non-current
assets of the Group are located in the PRC.
All of the Group's revenue from external customers is
attributable to the group entities' country of domicile (i.e. the
PRC).
Information about major customers
During the years ended December 31,
2017 and 2016, there are no individual customers with sales
over 10% of the total sales of the Group.
4. OTHER
INCOME AND GAINS AND LOSSES
|
For the year
ended
December 31, |
|
2017 |
|
2016 |
|
Rmb'000 |
|
Rmb'000 |
|
------------ |
|
------------ |
|
|
|
|
Continuing operations |
|
|
|
Interest income on bank balances and entrusted
loan receivables |
26,017 |
|
27,499 |
Rental income (Note) |
42,498 |
|
38,696 |
Handling fee income |
2,818 |
|
2,449 |
Towing income |
7,128 |
|
7,718 |
Gain on decrease in fair value in respect of the
derivative component of Convertible Bond |
149,479 |
|
– |
Exchange loss, net |
(212,146) |
|
(22,758) |
Gain on commodity trading, net |
21,125 |
|
126,905 |
Others |
66,720 |
|
108,881 |
|
------------ |
|
----------- |
|
|
|
|
Total |
103,639 |
|
289,390 |
|
======= |
|
======= |
Note: Rental income included
contingent rent of approximately
Rmb3,817,000 (2016: Rmb3,649,000) during the year.
5. INCOME
TAX EXPENSE
|
For the year
ended
December 31, |
|
2017 |
|
2016 |
|
Rmb'000 |
|
Rmb'000 |
|
--------------- |
|
-------------- |
Continuing operations |
|
|
|
Current tax: |
|
|
|
PRC Enterprise Income Tax |
1,211,926 |
|
1,216,487 |
Deferred tax |
(19,657) |
|
(54,917) |
|
--------------- |
|
--------------- |
|
1,192,269 |
|
1,161,570 |
|
========= |
|
========= |
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 PRC subsidiaries is 25%.
Hong Kong Profits Tax is calculated at 16.5% of the estimated
assessable profit. No Hong Kong Profits Tax has been provided as
the Group has no estimated assessable profit in Hong Kong for both years.
The tax charge for the year can be reconciled to the profit
before tax from continuing operations per the consolidated
statement of profit or loss and other comprehensive income as
follows:
|
For the year
ended
December 31, |
|
2017 |
|
2016 |
|
Rmb'000 |
|
Rmb'000 |
|
--------------- |
|
--------------- |
|
|
|
|
Profit before tax |
5,183,301 |
|
4,888,585 |
|
========== |
|
========= |
|
|
|
|
Tax at the PRC enterprise income tax rate of 25%
(2016: 25%) |
1,295,825 |
|
1,222,146 |
Tax effect of share of profit of associates |
(40,376) |
|
(16,174) |
Tax effect of share of profit of a joint
venture |
(4,417) |
|
(2,449) |
Utilisation of unused tax loss previously not
recognised |
(35,505) |
|
(24,045) |
Tax effect of expenses not deductible for tax
purposes |
25,126 |
|
13,143 |
Tax effect of income not subjected to tax
purpose |
(48,384) |
|
(31,051) |
|
--------------- |
|
--------------- |
|
|
|
|
Tax charge for the year |
1,192,269 |
|
1,161,570 |
|
========== |
|
========== |
6. DIVIDENDS
|
For the year
ended
December 31, |
|
2017 |
|
2016 |
|
Rmb'000 |
|
Rmb'000 |
|
--------------- |
|
--------------- |
Dividends recognised as distribution during the
year: |
|
|
|
2017 Interim – Rmb6 cents
(2016: 2016 Interim – Rmb6 cents) per share |
260,587 |
|
260,587 2016 |
2016 Final – Rmb29.5 cents
(2016: 2015 Final – Rmb28 cents) per share |
1,281,219 |
|
1,216,072 |
|
--------------- |
|
--------------- |
|
1,541,806 |
|
1,476,659 |
|
========= |
|
========= |
Final dividend of Rmb30.0 cents
per share in respect of the year ended December 31, 2017 (2016: final dividend of
Rmb29.5 cents per share in respect of
the year ended December 31, 2016) in
the total amount of Rmb1,302,934,000
(2016: Rmb1,281,219,000) has been
proposed by the Directors and is subject to approval by the
shareholders in the annual general meeting.
7. EARNINGS
PER SHARE
For continuing operations
The calculation of the basic and diluted earnings per share
attributable to the owners of the Company is based on the following
data:
Earnings figures are calculated as follows:
|
For the year
ended |
|
December
31, |
|
2017 |
|
2016 |
|
Rmb'000 |
|
Rmb'000 |
|
--------------- |
|
-------------- |
Profit for the year attributable to owners of the
Company |
3,202,130 |
|
3,037,405 |
Less: |
|
|
|
Profit for the year from discontinued
operations |
– |
|
(80,114) |
|
-------------- |
|
-------------- |
|
|
|
|
Earnings for the purpose of basic earnings per
share from continuing operations |
3,202,130 |
|
2,957,291 |
|
|
|
|
Effect of dilutive potential ordinary shares
arising from Convertible Bond |
16,180 |
|
– |
|
-------------- |
|
-------------- |
|
|
|
|
Earnings for the purpose of diluted earnings per
share from continuing operations |
3,218,310 |
|
2,957,291 |
|
========= |
|
========= |
Number of shares
|
For the year
ended
December 31, |
|
2017 |
|
2016 |
|
'000 |
|
'000 |
|
------------- |
|
------------- |
Number of ordinary shares for the purpose of basic
earnings per share |
4,343,115 |
|
4,343,115 |
Effect of dilutive potential ordinary shares
arising from Convertible Bond |
166,746 |
|
– |
|
------------- |
|
------------- |
|
|
|
|
Weighted average number of ordinary shares for the
purpose of diluted earnings per share |
4,509,861 |
|
4,343,115 |
|
======== |
|
======== |
For continuing and discontinued
operations
The calculation of the basic and diluted earnings per share from
continuing and discontinued operations attributable to the owners
of the Company is based on the following data:
|
For the year
ended
December 31, |
|
2017 |
|
2016 |
|
Rmb'000 |
|
Rmb'000 |
|
--------------- |
|
--------------- |
Earnings for the purpose of basic earnings per
share |
|
|
|
(Profit for the year
attributable to owners of the Company) |
3,202,130 |
|
3,037,405 |
Effect of dilutive potential ordinary shares
arising from Convertible Bond |
16,180 |
|
– |
|
--------------- |
|
--------------- |
|
|
|
|
Earnings for the purpose of diluted earnings per
share |
3,218,310 |
|
3,037,405 |
|
========= |
|
========= |
For discontinued operations
For the year ended December 31,
2016, basic earnings per share for discontinued operations
was Rmb1.85 cents per share, based on
profit for the year attributable to owners of the Company from the
discontinued operations of Rmb80,114,000 and the denominators detailed
above. Diluted earnings per share was the same as basic earnings
per share since there were no potential ordinary shares outstanding
as at December 31, 2016.
8. TRADE
RECEIVABLES
|
As at |
|
As at |
|
December 31, |
|
December 31, |
|
2017 |
|
2016 |
|
Rmb'000 |
|
Rmb'000 |
|
--------------- |
|
--------------- |
Trade receivables comprise: |
|
|
|
Fellow subsidiaries |
10,207 |
|
8,068 |
Third parties |
236,608 |
|
268,656 |
|
--------------- |
|
---------------- |
|
|
|
|
Total trade receivables |
246,815 |
|
276,724 |
Less: Allowance for doubtful debts |
(2,228) |
|
(1,406) |
|
--------------- |
|
--------------- |
|
|
|
|
|
244,587 |
|
275,318 |
The Group has no credit period granted to its trade customers of
toll operation business. The Group's trade receivable balance for
toll operation is toll receivables from the respect expressway fee
settlement centre of Zhejiang
Province and Anhui
Province, which are normally settled within 3 months. All of
these trade receivables were neither past due nor impaired in both
years.
In respect of the Group's asset management service, security
commission and financial advisory service operated by Zheshang
Securities Co., Ltd. ("Zheshang Securities"), trading limits are
set for customers. The Group seeks to maintain tight control over
its outstanding accounts receivable in order to minimise credit
risk. Overdue balances are regularly monitored by management.
The following is an aged analysis of trade receivables, net of
allowance for doubtful debts presented based on the invoice date at
the end of the reporting period, which approximated the respective
revenue recognition dates:
|
As at
December 31, |
|
As at
December 31, |
|
2017 |
|
2016 |
|
Rmb'000 |
|
Rmb'000 |
|
--------------- |
|
--------------- |
Within 3 months |
222,020 |
|
263,822 |
3 months to 1 year |
20,468 |
|
9,409 |
1 to 2 years |
2,010 |
|
1,484 |
Over 2 years |
89 |
|
603 |
|
--------------- |
|
--------------- |
|
|
|
|
Total |
244,587 |
|
275,318 |
|
========= |
|
========= |
Movement of allowance for doubtful
debts
|
As at
December 31, |
|
As at
December 31, |
|
2017 |
|
2016 |
|
Rmb'000 |
|
Rmb'000 |
|
--------------- |
|
--------------- |
At the beginning of the year |
1,406 |
|
1,292 |
Impairment recognised for the year |
947 |
|
449 |
Amount reversed during the year |
(125) |
|
(244) |
Disposal of a subsidiary |
– |
|
(91) |
|
--------------- |
|
--------------- |
|
|
|
|
At the end of the year |
2,228 |
|
1,406 |
|
========= |
|
========= |
The Group determines the allowance for impaired debts based on
the evaluation of collectability and aged analysis of accounts and
on management's judgement including the assessment of change in
credit quality and the past collection history of each client. The
Directors consider the credit risk of the balance to be
minimal.
9. TRADE
PAYABLES
Trade payables mainly represent the construction payables for
the improvement projects of toll expressways. The following is an
aged analysis of trade payables presented based on the invoice
date:
|
As at
December 31, |
|
As at
December 31, |
|
2017 |
|
2016 |
|
Rmb'000 |
|
Rmb'000 |
|
--------------- |
|
--------------- |
Within 3 months |
267,464 |
|
339,391 |
3 months to 1 year |
73,433 |
|
117,706 |
1 to 2 years |
112,374 |
|
190,561 |
2 to 3 years |
70,812 |
|
38,879 |
Over 3 years |
104,509 |
|
97,763 |
|
--------------- |
|
--------------- |
|
|
|
|
Total |
628,592 |
|
784,300 |
|
========= |
|
========= |
10. CONVERTIBLE
BOND
On April 21, 2017, the Company
issued a zero coupon convertible bond due 2022 in an aggregate
principal amount of Euro365,000,000
(the "Convertible Bond"). The Convertible Bond is listed on The
Stock Exchange of Hong Kong Limited ("Stock Exchange").
The principal terms of the Convertible Bond are set out
below:
(1) Conversion
right
The Convertible Bond will, at the
option of the holder (the "Bondholders"), be convertible (unless
previously redeemed, converted or purchased and cancelled) on or
after June 1, 2017 up to April 11, 2022 into fully paid ordinary shares
with a par value of Rmb1.00 each at
an initial conversion price (the "Conversion Price") of
HK$13.10 per H share and a fixed
exchange rate of HK$8.2964 to
Euro1.00 (the "Fixed Exchange Rate").
The Conversion Price is subject to the anti-dilutive adjustments
and certain events including mainly: share consolidation,
subdivision or re-classification, capitalisation of profits or
reserves, capital distributions, rights issues of shares or options
over shares, rights issues of other securities and issues at less
than current market price. The latest Conversion Price is
HK$12.54 per H share.
(2) Redemption
(i)
Redemption at maturity
Unless previously redeemed, converted
or purchased and cancelled as provided herein, the Company will
redeem each Convertible Bond at 100 percent of its outstanding
principal amount on April 21, 2022
(the "Maturity Date").
(ii)
Redemption at the option of the Company
The Company may, having given not
less than 30 nor more than 60 days' notice, redeem the Convertible
Bond in whole and not some only at 100 percent of their outstanding
principal amount as at the relevant redemption date:
(a)
at any time after April 21, 2020 but
prior to the Maturity Date, provided that no such redemption may be
made unless the closing price of an H share translated into Euro at
the prevailing rate applicable to each Stock Exchange business day,
for any 20 Stock Exchange business days within a period of 30
consecutive Stock Exchange business days, the last of such Stock
Exchange business day shall occur not more than 10 days prior to
the date upon which notice of such redemption is given, was, for
each such 20 Stock Exchange business days, at least 130 percent of
the Conversion Price (translated into Euro at the Fixed Exchange
Rate); or
(b)
if at any time the aggregate principal amount of the Convertible
Bond outstanding is less than 10 percent of the aggregate principal
amount originally issued.
(iii)
Redemption at the option of the Bondholders
The Company will, at the option of
the Bondholders, redeem whole or some of that holder's bond on
April 21, 2020 (the "Put Option
Date") at 100 percent of their outstanding principal amount on the
Put Option Date.
The Convertible Bond comprises two components:
(i)
Debt component was initially measured at fair value amounted to
approximately Euro297,801,000
(equivalent to Rmb2,190,578,000). It
is subsequently measured at amortised cost by applying effective
interest rate method after considering the effect of the
transaction costs. The effective interest rate used is 4.28%.
(ii)
Derivative component comprises conversion right of the Bondholders,
redemption option of the Company, and redemption option of the
Bondholders.
Transaction costs totalling Rmb16,725,000 that relate to the issue of the
Convertible Bond are allocated to the (including conversion right
and redemption options) components in proportion to their
respective fair values. Transaction costs amounting to
approximately Euro419,000 (equivalent
to Rmb3,079,000) relating to the
derivative component were charged to profit or loss immediately.
Transaction costs amounting to approximately Euro1,855,000 (equivalent to Rmb13,646,000) relating to the debt component are
included in the carrying amount of the debt portion and amortised
over the period of the Convertible Bond using the effective
interest method.
The derivative component was measured at fair value with
reference to valuation carried out by firm of independent
professional valuers.
The movement of the debt and derivative components of the
Convertible Bond for the year is set out as below:
|
Debt
component |
|
Derivative
components |
|
Total |
|
Euro'000 |
|
Rmb'000 |
|
Euro'000 |
|
Rmb'000 |
|
Euro'000 |
|
Rmb'000 |
Convertible Bond issued on April 21, 2017 |
297,801 |
|
2,190,578 |
|
67,199 |
|
494,302 |
|
365,000 |
|
2,684,880 |
Issue cost |
(1,855) |
|
(13,646) |
|
– |
|
– |
|
(1,855) |
|
(13,646) |
Exchange realignment |
– |
|
132,958 |
|
– |
|
– |
|
– |
|
132,958 |
Interest charge |
8,558 |
|
65,941 |
|
– |
|
– |
|
8,558 |
|
65,941 |
Gain on decrease in fair value |
– |
|
– |
|
(23,004) |
|
(149,479) |
|
(23,004) |
|
(149,479) |
|
----------- |
|
----------- |
|
----------- |
|
----------- |
|
----------- |
|
----------- |
|
|
|
|
|
|
|
|
|
|
|
|
Total |
304,504 |
|
2,375,831 |
|
44,195 |
|
344,823 |
|
348,699 |
|
2,720,654 |
|
======= |
|
======= |
|
======= |
|
======= |
|
======= |
|
======= |
No conversion or redemption of the Convertible Bond has occurred
up to December 31, 2017.
BUSINESS REVIEW
The global economy recovered substantially in 2017, continuing
with the revival trend. China's
economy steadily expanded, with a 6.9% increase in national GDP
during the Period compared with last year. During the Period,
Zhejiang Province's economy
benefited from a stable increase in services, manufacturing, and
import and export trade as well as strong consumer demand. In 2017,
Zhejiang Province's GDP grew by
7.8% year-on-year, 0.9 percentage points higher than the national
rate.
During the Period, revenue from the Group's overall operations
decreased 1.1% year-on-year. Total revenue reached Rmb9,626.34 million, of which Rmb5,986.25 million was generated from the five
major expressways operated by the Group, representing an increase
of 13.4% year-on-year and 62.2% of the total revenue, and
Rmb3,491.25 million was from the
securities business, representing a decrease of 16.4% year-on-year
and 36.3% of the total revenue. A breakdown of the Group's revenue
for the Period is set out below:
|
2017 |
|
2016 |
|
|
|
Rmb'000 |
|
Rmb'000 |
|
% Change |
|
--------------- |
|
--------------- |
|
--------------- |
Toll revenue |
|
|
|
|
|
Shanghai-Hangzhou-Ningbo
Expressway |
3,772,880 |
|
3,342,577 |
|
12.9% |
Shangsan Expressway |
1,244,280 |
|
1,112,297 |
|
11.9% |
Jinhua section, Ningbo-Jinhua
Expressway |
362,345 |
|
335,090 |
|
8.1% |
Hanghui Expressway |
477,656 |
|
446,392 |
|
7.0% |
Huihang Expressway |
129,088 |
|
42,992 |
|
200.3% |
Securities business revenue |
|
|
|
|
|
Commission and fee income |
2,088,310 |
|
2,664,959 |
|
-21.6% |
Interest income |
1,402,940 |
|
1,510,281 |
|
-7.1% |
Other operation revenue |
|
|
|
|
|
Property sales |
47,865 |
|
196,928 |
|
-75.7% |
Hotel operation |
100,976 |
|
83,831 |
|
20.5% |
|
--------------- |
|
--------------- |
|
|
|
|
|
|
|
|
Total revenue |
9,626,340 |
|
9,735,347 |
|
-1.1% |
|
========= |
|
========= |
|
|
Toll Road Operations
Benefiting from Zhejiang
Province's favorable economic development momentum, during
the Period, traffic volume on the Group's expressways registered
satisfactory organic growth. During the Period, the organic traffic
volume growth rates for the Group's five expressways, namely the
Shanghai-Hangzhou-Ningbo
Expressway, the Shangsan Expressway, the Jinhua Section of the
Ningbo-Jinhua Expressway, the Hanghui Expressway, and Huihang
Expressway, were 9.8%, 10.8%, 9.6%, 9.8% and 7.4%, respectively,
with the varied rates of growth due to the different regions where
the five expressways are located.
During the Period, driven by a number of positive factors,
traffic volume on the Company's expressways registered steady
growth. Since the G20 Hangzhou Summit was held in 2016, the
"post-G20 effect" has positively impacted the region, leading to
rapid development of tourism in Zhejiang
Province and also further development of the Internet
economy as well as transformation and upgrade of the real economy,
leading to different sections of the expressways having recorded
varied growth in traffic volume and toll revenue. In addition, the
Ministry of Communication and Transport started nationwide special
rectification measures following the release of "Regulations on
Overloaded Trucks on Roadways" on September
21, 2016. As a result, the increase of truck traffic on the
expressways operated by the Company were approximately 5 percentage
points higher than that of passenger vehicles. In addition,
starting from November 25, 2016,
trucks were able to resume and use the Second Bridge over Qiantang
River along the Shanghai-Hangzhou-Ningbo Expressway, which is
also conducive to the growth of traffic volume between Qiaosi
Interchange and Hongken Interchange of the Shanghai-Hangzhou-Ningbo Expressway, a section
of approximately 23.7 kilometers.
During the Period, the opening of neighboring new roadways
caused certain traffic volume diversion for some expressways
operated by the Group. On December 1,
2016, the Hangzhou-Xin'anjiang-Jingdezhen Expressway was
opened, and during the Period this expressway continued to cause
various degrees of diversion impact on traffic volume along the
Hanghui Expressway and the Huihang Expressway. In addition, the
Dongyang-Yiwu Provincial Highway was opened to traffic on
June 30, 2017, leading to a decline
in short-distance traffic volume on the Jinhua Section of the
Ningbo-Jinhua Expressway.
During the Period, the average daily traffic volume in full-trip
equivalents along the Group's Shanghai-Hangzhou-Ningbo Expressway was
57,275, representing an increase of 13.2% year-on-year. In
particular, the average daily traffic volume in full trip
equivalents along the Shanghai-Hangzhou section of the Shanghai-Hangzhou-Ningbo Expressway was
59,814, representing an increase of 22.1% year-on-year, and that
along the Hangzhou-Ningbo Section was 55,461, representing an
increase of 10.1% year-on-year. Average daily traffic volume in
full-trip equivalents along the Shangsan Expressway was 30,223,
representing an increase of 11.6% year-on-year. Average daily
traffic volume in full-trip equivalents along the Jinhua Section of
the Ningbo-Jinhua Expressway was 19,708, representing an increase
of 9.9% year-on-year. Average daily traffic volume in full-trip
equivalents along the Hanghui Expressway was 17,500 representing an
increase of 8.2% year-on-year. Average daily traffic volume in
full-trip equivalents along the Huihang Expressway was 7,240,
representing a decrease of 2.3% year-on-year.
During the Period, total toll revenue from the 248km
Shanghai-Hangzhou-Ningbo
Expressway, the 142km Shangsan Expressway, the 70km Jinhua Section
of the Ningbo-Jinhua Expressway, the 122km Hanghui Expressway and
the 82km Huihang Expressway was Rmb5,986.25
million. Among which, toll revenue from the Shanghai-Hangzhou-Ningbo Expressway was
Rmb3,772.88 million, representing an
increase of 12.9% year-on-year; toll revenue from the Shangsan
Expressway was Rmb1,244.28 million,
representing an increase of 11.9% year-on-year; toll revenue from
the Jinhua Section of the Ningbo-Jinhua Expressway was Rmb362.35 million, representing an increase of
8.1% year-on-year; toll revenue from the Hanghui Expressway was
Rmb477.66 million, representing an
increase of 7.0% year-on-year; and toll revenue from the Huihang
Expressway was Rmb129.09 million.
Securities Business
During the Period, domestic market conditions remained
lackluster due to volatility, and trading volume on the
Shanghai and Shenzhen stock markets decreased 11.7%
year-on-year in aggregate. Though revenue from Zheshang Securities'
investment banking business experienced growth, its other business
segments including securities brokerage, margin financing and
securities lending recorded varied levels of revenue decreases
year-on-year.
During the Period, Zheshang Securities recorded total revenue of
Rmb3,491.25 million, a decrease of
16.4% year-on-year. Of which, commission and fee income declined
21.6% year-on-year to Rmb2,088.31
million, and interest income from the securities business
was Rmb1,402.94 million, representing
a decrease of 7.1% year-on-year. In addition, during the Period,
securities investment gains of Zheshang Securities included in the
consolidated statement of profit or loss and other comprehensive
income of the Group was Rmb778.80
million, representing an increase of 279.4% year-on-year
(2016: securities investment gains of Rmb205.28 million).
Zheshang Securities was listed and issued new shares (A-shares)
on the Shanghai Stock Exchange on June 26,
2017. The listing has created favorable conditions for
market financing, market capitalization management and business
development. Zheshang Securities continued to strengthen its
internal control management, optimize its business structure,
stepping up business expansion, and bolstering its high-quality
project pipeline to overcome the unfavorable operational impact
brought about by the market conditions.
Other Business Operations
Other business income was mainly derived from hotel operations
and sales of ancillary apartments, namely the Qiyu Apartments.
Grand New Century Hotel, owned by Zhejiang Yuhang Expressway
Co., Ltd. (a 51% owned subsidiary of the Company), realized revenue
of Rmb100.98 million for the Period.
Qiyu Apartments during the Period realized sales revenue of
Rmb47.87 million.
Long-Term Investments
Zhejiang Shaoxing Shengxin Expressway Co., Ltd. ("Shengxin Co",
a 50% owned joint venture of the Company) operates the 73.4km
Shaoxing Section of the
Ningbo-Jinhua Expressway. During the Period, the average daily
traffic volume in full-trip equivalents was 19,211, representing an
increase of 13.2% year-on-year. Toll revenue during the Period was
Rmb399.34 million. During the Period,
the joint venture reported a net profit of Rmb35.34 million. (2016: net profit of
Rmb19.59 million).
During the Period, Zhejiang Communications Investment Group
Finance Co., Ltd. (a 35% owned associate of the Company), derived
income mainly from interest, fees and commissions for providing
financial services, including arranging loans and receiving
deposits, for the subsidiaries of Zhejiang Communications
Investment Group Co., Ltd., the controlling shareholder of the
Company. During the Period, the associate company realized a net
profit of Rmb321.40 million (2016:
net profit of Rmb122.57 million).
During the Period, Yangtze United Financial Leasing Co., Ltd. (a
13% owned associate of the Company), was involved in the finance
leasing business, transferring and receiving financial leasing
assets, fixed-income securities investment businesses, and other
businesses approved by the China Banking Regulatory Commission.
During the Period, the associate company realized a net profit of
Rmb265.25 million (2016: net profit
of Rmb134.15 million).
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 Rmb3,202.13
million, representing an increase of 5.4% year-on-year,
basic earnings per share for the Company from continuing and
discontinued operations was Rmb73.73
cents, representing an increase of 5.4%, diluted earnings
per share for the Company from continuing and discontinued
operations was Rmb71.36 cents,
representing an increase of 2.0%, and return on owners' equity was
15.5%, representing a decline of 6.6% year-on-year.
Liquidity and financial resources
As at December 31, 2017, current
assets of the Group amounted to Rmb53,952.25
million in aggregate (December 31,
2016: Rmb52,158.22 million),
of which bank balances, clearing settlement fund, deposits and cash
accounted for 10.4% (December 31,
2016: 14.1%), bank balances and clearing settlement fund
held on behalf of customers accounted for 27.9% (December 31, 2016: 38.5%), held for trading
investments accounted for 23.3% (December
31, 2016: 15.6%) and loans to customers arising from margin
financing business accounted for 14.6% (December 31, 2016: 15.2%). The current ratio
(current assets over current liabilities) of the Group as at
December 31, 2017 was 1.7
(December 31, 2016: 1.2). Excluding
the effect of the customer deposits arising from the securities
business, the resultant current ratio of the Group (current assets
less bank balances and clearing settlement fund held on behalf of
customers over current liabilities less balance of accounts payable
to customers arising from securities business) was 2.2
(December 31, 2016: 1.4).
The amount of held for trading investments of the Group as at
December 31, 2017 was Rmb12,568.69 million (December 31, 2016: Rmb8,144.13 million), of which 97.0% was invested
in bonds, 0.6% was invested in stocks, and the rest was invested in
open-end equity funds.
During the Period, net cash used in the Group's operating
activities amounted to Rmb829.67
million. The currency mix in which cash and cash equivalents
are held has not substantially changed as compared to the same
period last year.
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 December 31, 2017, total
liabilities of the Group amounted to Rmb
44,446.17 million (December 31,
2016: Rmb49,585.51 million),
of which 1.1% was bank and other borrowings, 1.7% was short-term
financing note payable, 22.8% was bonds payable, 6.1% was
convertible bond, 23.7% was financial assets sold under repurchase
agreements and 33.6% was accounts payable to customers arising from
securities business.
As at December 31, 2017, total
interest-bearing borrowings of the Group amounted to Rmb14,113.45 million, representing a decrease of
15.2% compared to that as at December 31,
2016. The borrowings comprised outstanding balances of a
domestic financial institution of Rmb420.00
million, borrowings from a domestic institution of
Rmb60.00 million, subordinated bonds
of Rmb5.95 billion, corporate bonds
of Rmb3.40 billion, beneficial
certificates of Rmb1,562.80 million,
and convertible bond denominated in Euro and equivalents to
Rmb2,720.65 million. Of the
interest-bearing borrowings, 82.4% was not payable within one
year.
As at December 31, 2017, the
annual floating interest rate of the Group's borrowings from a
domestic financial institution was 4.2195%. The annual fixed
interest rate from a domestic institution was 3.0%. Beneficial
certificates amounted Rmb1.80 million
with annual floating rate at 2.0%, and the beneficial certificates
amounted Rmb1,561.00 million with
annual fixed rates between 3.7% and 5.3%. The annual interest rates
for subordinated bonds were fixed at rates between 3.63% and 6.3%.
The annual interest rates for corporate bonds were fixed at 3.08%
and 4.9%. The annual coupon rate for convertible bond was nil.
While the annual interest rate for accounts payable to customers
arising from the securities business was fixed at 0.35%.
Total interest expenses and profit before interest and tax for
the Period amounted to Rmb611.75
million and Rmb5,795.05
million, respectively. The interest cover ratio (profit
before interest and tax over interest expenses) stood at 9.5 (2016:
8.4) times.
As at December 31, 2017, the
asset-liability ratio (total liabilities over total assets) of the
Group was 60.3% (December 31, 2016:
67.2%). 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 and
clearing settlement fund held on behalf of customers) of the Group
was 50.3% (December 31, 2016:
55.0%).
Capital structure
As at December 31, 2017, the Group
had Rmb29,204.35 million in total
equity, Rmb39,148.79 million in
fixed-rate liabilities, Rmb421.80
million in floating-rate liabilities, and Rmb4,875.58 million in interest-free liabilities,
representing 39.7%, 53.2%, 0.6% and 6.5% of the Group's total
capital, respectively. The gearing ratio, which is computed by
dividing the total liabilities less accounts payable to customers
arising from the securities business by total equity, was 101.1% as
at December 31, 2017 (December 31, 2016: 122.1%).
Capital expenditure commitments and
utilization
During the Period, capital expenditure of the Group totaled
Rmb 436.31 million. Amongst the total
capital expenditure, Rmb 218.91
million was incurred for acquiring equity investments,
Rmb51.06 million was incurred for
acquisition and construction of properties, and Rmb166.34 million was incurred for purchase and
construction of equipment and facilities.
As at December 31, 2017, the
capital expenditure committed by the Group totaled Rmb812.14 million. Amongst the total capital
expenditures committed by the Group, Rmb360.00 million will be used for acquiring
equity investments, Rmb162.02 million
will be used for acquisition and construction of properties and
Rmb290.12 million for acquisition and
construction of equipment and facilities.
The Group will consider financing the above-mentioned capital
expenditure commitments with internally generated cash flow first
and then will comprehensively consider using debt financing and
equity financing to meet any shortfalls.
Contingent liabilities and pledge of
assets
Pursuant to the board resolution of the Company dated
November 16, 2012, the Company and
Shaoxing Communications Investment Group Co., Ltd. (the other joint
venture partner that holds 50% equity interest in Shengxin Co)
provided Shengxin Co with joint guarantee for its bank loans of
Rmb2.2 billion, in accordance with
their proportionate equity interest in Shengxin Co. During the
Period, Rmb209.00 million of the bank
loans had been repaid. As at December 31,
2017, the remaining bank loan balance is Rmb1,683.00 million.
Except for the above, as at December 31,
2017, the Group did not have any other contingent
liabilities, pledge of assets or guarantees.
Foreign exchange exposure
During the Period, save for (i) dividend payments to the holders
of H shares in Hong Kong dollars,
(ii) borrowing HK$432.53 million on
June 8, 2016 and repayment on the
borrowing on June 8, 2017, and (iii)
Zheshang International Financial Holding Co., Limited. (a wholly
owned subsidiary of Zheshang Securities) operating in Hong Kong, (iv) issuance of the zero coupon
convertible bond in an aggregate principal amount of Euro 365.00 million in Hong Kong capital market, the Group's
principal operations were transacted and booked in Renminbi.
During the Period, the Group completed one-year HK dollar
forwards of equivalent amount to hedge the foreign exchange risk
derived from the Hong Kong dollar
borrowing, which was purchased in 2016. Except for the above, the
Group has not used any other financial instruments for hedging
purpose during the Period.
OUTLOOK
Looking ahead to 2018, the global economy continues to recover
gradually, but still faces multiple uncertainties. Under the
Chinese government's prudent macroeconomic policy, the domestic
economy is expected to maintain stable growth as it transitions
from a high-speed to a high-quality development stage. Zhejiang Province will focus on the real
economy as well as growing the new economy with the digital sector
as the core component, and accelerating economic restructuring,
transformation and upgrading. The performance of the overall
economy is expected to be steady and positive, which will provide a
stable external environment for the Company's development. The
overall traffic volume of the expressways operated by the Company
is expected to maintain steady growth in 2018.
The Company will continue to promote the construction of
electronic toll collection (ETC) lanes, fully promote mobile
payment at all toll stations and set up self-service payment lanes
on a trial basis to improve the efficiency of toll collection
systems. The Company will continue to apply technological tools to
attract more vehicles and improve its service standards in multiple
aspects so as to enhance service quality and customer satisfaction.
The Company will also increase the usage of big data applications,
establish a vehicle confidence system, improve expressway operation
capacity under the Group to assure safe and smooth traffic flow,
with an aim to establish the Company's brand recognition in the
industry. By fully leveraging advantages in expressway operations
and management, the Group will seek to export its management
capabilities in the expressway sector using market principles.
As the government continues to actively promote the healthy
development of the multi-tiered capital market and the China
Securities Regulatory Commission gradually improves the supervision
system of the business chain and facilitates the enhancement of
capital market services, these measures will bring new
opportunities and challenges to the securities business of the
Group. In order to address market and industry challenges and
promote the sustainable and healthy development of all its
businesses, Zheshang Securities will transform and upgrade its
traditional businesses, actively grow innovative businesses,
optimize and adjust its business structure and continuously improve
profitability and competitiveness.
In order to adapt to the new economic transformation and
developments in 2018, the Company will leverage on its development
advantages, expand and enhance the core expressway business, and
strengthen its securities business. The management will continue to
monitor government policies and the external environment to
appropriately adjust the Company's operational strategy. With a
focus on effective risk control, the Company will continue to
explore suitable investment and development projects via different
channels, thereby growing its management capability to operate
diversified businesses, with the goal of achieving high-quality and
sustainable development.
IMPORTANT EVENTS OCCURRED SINCE THE
END OF THE PERIOD
There has been no occurrence of important events affecting the
Group since the end of the Period.
PURCHASE, SALE AND REDEMPTION OF THE
COMPANY'S SHARES
Neither the Company nor any of its subsidiaries purchased, sold,
redeemed or cancelled any of the Company's shares during the
Period
COMPLIANCE WITH LISTING RULES APPENDIX
14
During the Period, the Company 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
adopted the recommended best practices in the Code as and when
applicable.
By Order of the
Board
Zhejiang Expressway Co., Ltd.
ZHAN
Xiaozhang
Chairman
Hangzhou, the PRC, March 16, 2018
As at the date of this announcement,
the executive directors of the Company are: Mr. ZHAN Xiaozhang, Mr.
CHENG Tao and Ms. LUO Jianhu; the non-executive directors of the
Company are: Mr. WANG Dongjie and Mr. DAI Benmeng; and the
independent non-executive directors of the Company are: Mr. ZHOU
Jun, Mr. PEI Ker-Wei and Ms. LEE Wai Tsang, Rosa.