Hong Kong Stock Exchanges and
Clearing Limited and The Stock Exchange of Hong Kong Limited take
no responsibility for the contents of this announcement, make no
representation as to its accuracy or completeness and expressly
disclaim any liability whatsoever for any loss howsoever arising
from or in reliance upon the whole or any part of the contents of
this announcement.
ZHEJIANG EXPRESSWAY CO., LTD.
(A joint stock limited company incorporated in the People's Republic of China with limited
liability)
(Stock code: 0576)
CONTINUING
CONNECTED TRANSACTION
ASPHALT PAVEMENT ON-SITE THERMAL REGENERATION
ENGINEERING AGREEMENT FOR THE YEAR OF 2018
ASPHALT PAVEMENT ON-SITE THERMAL
REGENERATION ENGINEERING AGREEMENT FOR THE YEAR OF 2018
On August 7, 2018, the Company
entered into Asphalt Pavement On-site Thermal Regeneration
Engineering Agreement for the year of 2018 with Zhejiang Shunchang,
pursuant to which Zhejiang Shunchang, a non wholly-owned subsidiary
of Communications Group, agreed to provide the Engineering Services
to the Target Expressways from the date of execution of Asphalt
Pavement On-site Thermal Regeneration Engineering Agreement for the
year of 2018 to November 20,
2018.
LISTING RULES IMPLICATIONS
As at the date of this announcement, Communications Group is a
controlling shareholder of the Company. Zhejiang Shunchang is a non
wholly-owned subsidiary of Communications Group. Therefore,
Zhejiang Shunchang is a connected person of the Company and as a
result, the transactions under Asphalt Pavement On-site Thermal
Regeneration Engineering Agreement for the year of 2018 constitute
continuing connected transactions for the Company under Chapter 14A
of the Listing Rules.
Pursuant to Rules 14A.81 and 14A.82 of the Listing Rules, as the
transactions contemplated under Asphalt Pavement On-site Thermal
Regeneration Engineering Agreement for the year of 2018 and the
Previous Transactions were entered into with parties who are
connected with one another and within a 12-month period, Asphalt
Pavement On-site Thermal Regeneration Engineering Agreement for the
year of 2018 and the Previous Transactions are required to be
aggregated for the calculation of the relevant percentage ratios to
determine the classification of the transactions.
As the applicable percentage ratios in respect of the
transactions contemplated under Asphalt Pavement On-site Thermal
Regeneration Engineering Agreement for the year of 2018 after
aggregating the Previous Transactions, are more than 0.1% but less
than 5%, Asphalt Pavement On-site Thermal Regeneration Engineering
Agreement for the year of 2018 will be subject to the reporting,
announcement and annual review requirements but exempt from the
independent Shareholders' approval requirement under Chapter 14A of
the Listing Rules.
BACKGROUND
On May 30, 2018, the Company
organised a public tender in respect of the provision of
Engineering Services to the Target Expressways, namely, the
Shanghai-Hangzhou-Ningbo
Expressway, Jinhua section of the Ningbo-Jinhua Expressway and the
Huihang Expressway (the "Public Tender"). A tender notice in
respect of the Public Tender was published on the website of
www.chinabidding.com.cn on May 30,
2018.
Evaluation of the Public Tender was conducted by a committee
consisting of industry experts. The management of the Company
decided to accept the committee's recommendation and awarded a
contract to Zhejiang Shunchang to provide the Engineering Services.
Zhejiang Shunchang was amongst three entities (two of which being
independent suppliers) who submitted tenders to the Company and
obtained the highest score.
ASPHALT PAVEMENT ON-SITE THERMAL
REGENERATION ENGINEERING AGREEMENT FOR THE YEAR OF 2018
On August 7, 2018, the Company
entered into Asphalt Pavement On-site Thermal Regeneration
Engineering Agreement for the year of 2018 with Zhejiang Shunchang,
a non wholly-owned subsidiary of Communications Group, pursuant to
which Zhejiang Shunchang agreed to provide the Engineering Services
to the Target Expressways from the date of execution of Asphalt
Pavement On-site Thermal Regeneration Engineering Agreement for the
year of 2018 to November 20,
2018.
Principal terms of Asphalt Pavement On-site Thermal Regeneration
Engineering Agreement for the year of 2018 are set out below:
Date: |
August 7, 2018 |
|
Parties: |
(1) the Company, as the contract
letting party; and |
|
|
|
(2) Zhejiang Shunchang, as
the contractor |
|
|
Term: |
From the date of execution of Asphalt Pavement
On-site Thermal Regeneration Engineering Agreement for the year of
2018 to November 20, 2018 |
|
|
Scope of services: |
Zhejiang Shunchang agreed to provide certain
Engineering Services in respect of the Target Expressways, namely
the Shanghai-Hangzhou-Ningbo Expressway, Jinhua section of the
Ningbo-Jinhua Expressway and the Huihang Expressway, including
asphalt pavement on-site thermal regeneration work, roadbed work,
bridge work, toll station expansion work and road safety related
work. |
|
|
Consideration: |
RMB76,564,938 |
|
|
Basis of consideration: |
The consideration was determined as a result of
the Public Tender of the Engineering Services for the Target
Expressways. Zhejiang Shunchang was successfully awarded the bid in
accordance with terms of the Public Tender. |
|
|
|
The factors for assessment include, but not
limited to: (i) price; (ii) the working plan proposed by the
tenderers, the technical capability and dedicated equipment of the
tenderers; (iii) the standard of safety management of the tenderers
and their capability of handling emergency events; (iv) the quality
of work and the ability to deliver work on a timely manner; (v) the
experience of the tenderers in similar projects; and (vi) the past
performance and achievements of tenderers. According to the
evaluation of the assessment committee, Zhejiang Shunchang
successfully obtained the highest overall score among all the
bidders. |
|
|
Payment: |
The consideration shall be payable by the Company
to the Zhejiang Shunchang as follows: (i) 97% to be payable upon
completion of the Engineering Services; and (ii) 3% to be payable
within 15 days after the completion acceptance and the finalisation
of the completion and settlement report. |
|
Governing law: |
PRC law |
Cap for Asphalt Pavement On-site
Thermal Regeneration Engineering Agreement for the year of 2018
For the purpose of complying with Chapter 14A of the Listing
Rules, the Company has set a cap in respect of the aggregate fees
payable by the Company to Zhejiang Shunchang for the Engineering
Services during the term of Asphalt Pavement On-site Thermal
Regeneration Engineering Agreement for the year of 2018, which
shall not exceed RMB76,564,938.
The above cap was determined after taking into account total
service fees payable to Zhejiang Shunchang in respect of Asphalt
Pavement On-site Thermal Regeneration Engineering Agreement for the
year of 2018.
REASONS FOR AND BENEFITS OF THE
TRANSACTION
Engineering Services, including asphalt pavement on-site thermal
regeneration service, are necessary for the operation of the Target
Expressways. Zhejiang Shunchang has the relevant qualifications and
expertise to provide such services to the Company. In addition, the
Company has also gone through the Public Tender in accordance with
which Zhejiang Shunchang was selected as the qualified service
provider for the Engineering Services.
Given the above, the Directors (including the independent
non-executive Directors) are of the view that the terms of Asphalt
Pavement On-site Thermal Regeneration Engineering Agreement for the
year of 2018 are on normal commercial terms, in the ordinary and
usual course of business of the Company and are fair and reasonable
and in the interests of the Company and the Shareholders as a
whole.
LISTING RULES IMPLICATIONS
As at the date of this announcement, Communications Group is a
controlling shareholder of the Company. Zhejiang Shunchang is a non
wholly-owned subsidiary of Communications Group. Therefore,
Zhejiang Shunchang is a connected person of the Company and as a
result, the transactions under Asphalt Pavement On-site Thermal
Regeneration Engineering Agreement for the year of 2018 constitute
continuing connected transactions for the Company under Chapter 14A
of the Listing Rules.
Pursuant to Rules 14A.81 and 14A.82 of the Listing Rules, as the
transactions contemplated under Asphalt Pavement On-site Thermal
Regeneration Engineering Agreement for the year of 2018 and the
Previous Transactions were entered into with parties who are
connected with one another and within a 12-month period, Asphalt
Pavement On-site Thermal Regeneration Engineering Agreement for the
year of 2018 and the Previous Transactions are required to be
aggregated for the calculation of the relevant percentage ratios to
determine the classification of the transactions.
As the applicable percentage ratios in respect of the
transactions contemplated under Asphalt Pavement On-site Thermal
Regeneration Engineering Agreement for the year of 2018 after
aggregating with the Previous Transactions, are more than 0.1% but
less than 5%, Asphalt Pavement On-site Thermal Regeneration
Engineering Agreement for the year of 2018 will be subject to the
reporting, announcement and annual review requirements but exempt
from the independent Shareholders' approval requirement under
Chapter 14A of the Listing Rules.
INFORMATION ON THE PARTIES
The Company is a joint stock company established under the laws
of the PRC with limited liability on March
1, 1997, the H Shares of which are listed on the Main Board
of the Stock Exchange. It is principally engaged in investing in,
developing and operating high-grade roads in the PRC. The Group
also carries on certain other businesses such as securities
brokerage, investment banking, asset management, margin financing
and securities lending through Zhejiang Zheshang Securities Co.,
Ltd..
Zhejiang Shunchang is a non wholly-owned subsidiary of
Communications Group which is incorporated under the laws of the
PRC on November 11, 2003. Zhejiang
Shunchang is principally engaged in the construction and
maintenance of expressway and toll road projects.
DEFINITIONS
In this announcement, unless the context specifies otherwise,
the following defined expressions have the following meanings:
"Asphalt Pavement On-Site Thermal Regeneration
Engineering Agreement for the year of 2018" |
asphalt pavement on-site thermal regeneration
engineering agreement dated August 7, 2018 entered into between the
Company and Zhejiang Shunchang, pursuant to which Zhejiang
Shunchang agreed to provide the Engineering Services to the Target
Expressways |
|
|
"associate" |
has the meaning ascribed to it under the Listing
Rules |
|
"Board" |
the board of Directors |
|
"Communications Group" |
Zhejiang Communications Investment Group Co.,
Ltd.*, a wholly state-owned enterprise established in the PRC, and
the controlling shareholder of the Company |
|
"Company" |
Zhejiang Expressway Co., Ltd., a joint stock
limited company incorporated in the PRC with limited liability |
|
"connected
person" |
has the meaning ascribed to it under the Listing
Rules |
|
"controlling shareholder" |
has the meaning ascribed to it under the Listing
Rules |
|
"Director(s)" |
the directors of the Company |
|
"Engineering Services" |
engineering services of the following works,
including (i) asphalt pavement on-site thermal regeneration work;
(ii) roadbed work such as slope treatment; (iii) bridge work such
as bridge fault maintenance and reinforcement; (iv) toll road
station expansion work and (v) road safety work |
|
"Group" |
the Company and its subsidiaries |
|
"Hong Kong" |
the Hong Kong Special Administrative Region of the
PRC |
|
"Listing
Rules" |
Rules Governing the Listing of Securities on The
Stock Exchange of Hong Kong Limited |
|
"percentage ratios" |
has the meaning ascribed to it under Rule 14.04(9)
of the Listing Rules |
|
"PRC" |
the People's Republic of China (for the purpose of
this announcement, excludes Hong Kong, Macau and Taiwan) |
|
"Previous Transactions" |
the agreements entered into within a 12-month
period prior to the date of Asphalt Pavement On-site Thermal
Regeneration Engineering Agreement for the year of 2018 between or
among the Group and Communications Group's associates in relation
to highway operations and maintenance services. For details, please
refer to the announcements issued by the Company dated April 8,
2016, June 23 and 26, 2017 and May 28, 2018 respectively. |
|
"RMB" |
Renminbi, the lawful currency of the PRC |
|
"Shareholder(s)" |
holder(s) of the share(s) of the Company |
|
"Stock Exchange" |
The Stock Exchange of Hong Kong Limited |
|
"subsidiary(ies)" |
has the meaning ascribed to it under the Listing
Rules |
|
"Target Expressways" |
the Shanghai-Hangzhou-Ningbo Expressway, Jinhua
section of the Ningbo-Jinhua Expressway and the Huihang
Expressway |
|
"Zhejiang Shunchang" |
Zhejiang Shunchang High-grade Expressway
Maintenance Co., Ltd.*, a non wholly-owned subsidiary of
Communications Group |
|
|
"%" |
per cent. |
|
* English names for reference
only |
|
|
On behalf of the Board
ZHEJIANG EXPRESSWAY CO.,
LTD.
YU
Zhihong
Chairman
Hangzhou, the PRC, August 7, 2018
As at the date of this announcement,
the Chairman of the Company is Mr. YU Zhihong; the executive
Directors of the Company are: Mr. CHENG Tao and Ms. LUO Jianhu; the
other non-executive Directors of the Company are: Mr. DAI Benmeng,
Mr. YU Qunli and Mr. YU Ji; and the independent non-executive
Directors of the Company are: Mr. PEI Ker-Wei, Ms. LEE Wai Tsang,
Rosa and Mr. CHEN Bin.