2020
Interim Report
CONTENTS
Section I | Definition | 2 |
Section II | Company Information and Principal Financial Indicators | 7 |
Section III | Summary of the Company's Business | 11 |
Section IV | Discussion and Analysis of the Operation | 14 |
Section V | Significant Matters | 47 |
Section VI | Changes in Ordinary Shares and Information on Shareholders | 71 |
Section VII | Information on Preferred Shares | 80 |
Section VIII | Profiles of Directors, Supervisors and Senior Management | 81 |
Section IX | Information on Corporate Bonds | 83 |
Section X | Financial Reporting | 84 |
Section XI | Documents Available for Inspection | 232 |
Important Notice
- The board of Directors, the supervisory committee, and the directors, supervisors and senior management of the Company warrant the truthfulness, accuracy and completeness of the contents of this interim report and there is no false representation in, misleading statement in, and material omission from, this report and they jointly and severally accept legal responsibility for such contents.
- Absent Directors
Position held by | Name of absent | ||
absent director | director | Reasons for absence | Name of proxy |
Director | Mr. Wu Xinhua | Business | Mr. Yao Yongjia |
Director | Ms. Hu Yu | Business | Mr. Yao Yongjia |
Director | Mr. Ma Chung Lai, | Business | Mr. Yao Yongjia |
Lawrence | |||
Director | Mr. Zhang Zhuting | Business | Mr. Lin Hui |
Director | Mr. Zhou Shudong | Business | Mr. Chen Liang |
- This interim report is unaudited. The Audit Committee convened a meeting on 20 August 2020 to consider and review the interim report and interim financial statements of the Group and to submit its observations and recommendations to the board of Directors. The Audit Committee considers that the Company's interim report and interim financial statements for 2020 are in compliance with the applicable accounting standards and have been properly disclosed by the Company.
IV. | Sun Xibin, Person in Charge of the Company, Dai Qian, Person in Charge of the Accounting Body of the Company, |
and Yao Qunfang, Chief Accountant (Head of the Accounting Department), hereby warrant the truthfulness, accuracy | |
and completeness of the financial reports contained in this interim report. |
- Proposal of profit distribution or proposal of capitalisation of capital reserve for the Reporting Period reviewed by the board of Directors
Applicable | ✔ | Not Applicable | ||
VI. | Risk warning for forward-looking statements | |||
Applicable | Not Applicable | |||
✔ | ||||
Forward-looking statements in this interim report which involve development strategies and plans do not constitute | ||||
actual commitments of the Company to investors. There may be differences between the future actual results of the | ||||
Company and these forward-looking statements. Investors and related parties are advised to keep sufficient risk | ||||
awareness in this regard, and understand the difference among plans, predictions and commitments. | ||||
VII. | Was there any misappropriation of the Company's funds by the Controlling Shareholder and its related/connected | |||
parties for non-operational purpose? | ||||
No | ||||
VIII. | Did the Company provide any guarantee to external parties in violation of the required decision-making process? | |||
No | ||||
IX. | Major risk alert | |||
Applicable | Not Applicable | |||
✔ | ||||
X. | Others | |||
Applicable | Not Applicable | |||
✔ |
Unless otherwise specified, the financial figures involved in this report are expressed in RMB.
In this report, there may be a tail difference between the sum of individual data and the number of related data, which is caused by rounding when calculating data.
2 | 2020 Interim Report |
SECTION I DEFINITION
Unless the context herein otherwise requires, the following terms shall have the meanings as follows:
DEFINITIONS OF COMMONLY USED TERMS
Company | Jiangsu Expressway Company Limited (江蘇寧滬高速公路股份有限公司) |
Group | the Company and its subsidiaries |
Controlling Shareholder, | Jiangsu Communications Holding Company Limited(江蘇交通控股有限公 |
Communications Holding, or | 司) |
Jiangsu Communications Holding | |
China Merchants Expressway | China Merchants Expressway Network & Technology Holdings Co., Ltd. |
Network | (招商局公路網絡科技控股股份有限公司) |
Ningchang Zhenli Company | Jiangsu Ningchang Zhenli Expressway Company Limited(江蘇寧常鎮溧高 |
速公路有限公司) | |
Ninghu International Company | Jiangsu Expressway International (Hong Kong) Company Limited |
Yangtze River Management Company | Jiangsu Yangtze River Expressway Management Co.,Ltd. (江蘇揚子江高 |
速通道管理有限公司) | |
Ninghu Investment Company | Jiangsu Ninghu Investment Development Co., Ltd. (江蘇寧滬投資發展有 |
限責任公司) | |
Ninghu Factoring | Ninghu Commercial Factoring (Guangzhou) Co., Ltd. (寧滬商業保理(廣 |
州)有限公司) | |
Ninghu Properties Company | Jiangsu Ninghu Properties Co., Ltd. (江蘇寧滬置業有限責任公司) |
Hanwei Company | Nanjing Hanwei Property Development Company Limited (南京瀚威房地 |
產開發有限公司) | |
Guangjing Xicheng Company | Jiangsu Guangjing Xicheng Expressway Company Limited (江蘇廣靖錫 |
澄高速公路有限責任公司) | |
Zhendan Company | Jiangsu Zhendan Expressway Company Limited (江蘇鎮丹高速公路有限 |
公司) | |
Wufengshan Toll Bridge Company | Jiangsu Wufengshan Toll Bridge Company Limited (江蘇五峰山大橋有限 |
公司) | |
Longtan Bridge Company | Jiangsu Longtan Bridge Co., Ltd. (江蘇龍潭大橋有限公司) |
Xiexin Company or Xiexin Ninghu | Jiangsu Xiexin Ninghu Gas Co., Ltd. (江蘇協鑫寧滬天然氣有限公司) |
Company |
Jiangsu Expressway Company Limited | 3 |
SECTION I DEFINITION
Kuailu Company | Jiangsu Kuailu Motor Transport Co., Ltd. (江蘇快鹿汽車運輸股份有限公司) |
Suzhou Expressway Company or | Suzhou Expressway Management Company Limited (蘇州市高速公路管理 |
Suzhou Expressway Management | 有限公司) |
Yangtze Bridge Company | Jiangsu Yangtze Bridge Co., Ltd. (江蘇揚子大橋股份有限公司) |
Hutong Bridge Company | Jiangsu Hutong Bridge Co., Ltd.(江蘇滬通大橋有限責任公司) |
Finance Company or | Jiangsu Communications Holding Group Finance Co., Ltd. (江蘇交通控股 |
Group Finance Company | 集團財務有限公司) |
Media Company | Jiangsu Communications & Culture Media Company Limited (江蘇交通文 |
化傳媒有限公司) | |
Sundian or Xiandai R&B Company | Jiangsu Sundian Engineering Co., Ltd. (江蘇現代路橋有限責任公司) |
Network Operation Company | Jiangsu Expressway Network Operation and Management Co., Ltd. (江蘇 |
高速公路聯網營運管理有限公司) | |
Bank of Jiangsu | Bank of Jiangsu Co., Ltd. (江蘇銀行股份有限公司) |
Luode Fund Company | Jiangsu Luode Equity Investment Fund Management Company Limited |
(江蘇洛德股權投資基金管理有限公司) | |
Yichang Company | Jiangsu Yichang Expressway Co., Ltd. (江蘇宜長高速公路有限公司) |
Changyi Company | Jiangsu Changyi Expressway Co., Ltd. (江蘇常宜高速公路有限公司) |
Nanlin Hotel | Suzhou Nanlin Hotel Co., Ltd. (蘇州南林飯店有限責任公司) |
Yanjiang Company | Jiangsu Yanjiang Expressway Co., Ltd. (江蘇沿江高速公路有限公司) |
Jiangsu Leasing or Jiangsu Financial | Jiangsu Financial Leasing Co., Ltd. (江蘇金融租賃股份有限公司) |
Leasing Company | |
Railway Group Company | Jiangsu Railway Group Limited (江蘇省鐵路集團有限公司) |
Tongxingbao Company | Jiangsu Tongxingbao Smart Transport Technology Co., Ltd. (江蘇通行寶 |
智慧交通科技股份有限公司) | |
Jinghu Company | Jiangsu Jinghu Expressway Company Limited (江蘇京滬高速公路有限公 |
司) | |
Runyang Bridge Company | Jiangsu Runyang Bridge Development Co., Ltd. (江蘇潤揚大橋發展有限責 |
任公司) |
4 | 2020 Interim Report |
SECTION I DEFINITION
Expressway Petroleum Company or | Jiangsu Expressway Petroleum Development Co., Ltd. (江蘇高速公路石油 |
Jiangsu Petroleum Company | 發展有限公司) |
Taixing Oil Products Company | Taixing Hechang Oil Products Trading Co., Ltd. (泰興市和暢油品銷售有限 |
公司) | |
Far East Shipping Company | Jiangsu Far East Shipping Co., Ltd. (江蘇遠東海運有限公司) |
Information Company | Jiangsu Expressway Information Engineering Co.,Ltd. (江蘇高速公路信息 |
工程有限公司) | |
Maintenance Technology Company | Jiangsu Expressway Engineering Maintenance Technology Co., Ltd. (江 |
蘇高速公路工程養護技術有限公司) | |
Engineering Maintenance Company | Jiangsu Expressway Engineering Maintenance Company Limited (江蘇高 |
速公路工程養護有限公司) | |
Orient Operation Company | Jiangsu Orient Expressway Operation and Management Company |
Limited (江蘇東方高速公路經營管理有限公司) | |
East Road & Bridge Company | Jiangsu East Road & Bridge Construction Maintenance Co., Ltd. (江蘇東 |
方路橋建設養護有限公司) | |
Sujiahang Company | Suzhou Sujiahang Expressway Co., Ltd. (蘇州蘇嘉杭高速公路有限公司) |
Real Estate Parent Fund Phase II | Phase II of Real Estate Investment Parent Fund (房地產投資母基金二期) |
Luode Dening | Nanjing Luode Dening Real Estate Investment Partnership (Limited |
Partnership) (南京洛德德寧房地產投資合夥企業(有限合夥)) | |
Zhongbei Zhiyuan | Nanjing Luode Zhongbei Zhiyuan Equity Investment Partnership (Limited |
Partnership) (南京洛德中北致遠股權投資合夥企業(有限合夥)) | |
Highway Center | Highway Development Center of Transportation Department of Jiangsu |
Province (江蘇省交通運輸廳公路事業發展中心) | |
Expressway Management Center | Expressway Operation and Management Center Department of Jiangsu |
Province (江蘇省高速公路經營管理中心) | |
Ninghang Company | Jiangsu Ninghang Expressway Co., Ltd. (江蘇寧杭高速公路有限公司) |
Husuzhe Company | Jiangsu Husuzhe Expressway Co., Ltd. (江蘇滬蘇浙高速公路有限公司) |
Huatong Company | Jiangsu Huatong Engineering Testing Co., Ltd. (江蘇華通工程檢測有限公 |
司) |
Jiangsu Expressway Company Limited | 5 |
SECTION I DEFINITION
Sutong Bridge Company | Jiangsu Sutong Bridge Co., Ltd. (江蘇蘇通大橋有限公司) |
Xinhua Media | Jiangsu Xinhua Newspaper Media Group Co., Ltd.(江蘇新華報業傳媒集團 |
有限公司) | |
Fuanda Fund | Fuanda Fund Management Co., Ltd. (富安達基金管理有限公司) |
Engineering Testing Company | Sundian Engineering Testing Co., Ltd. (現代工程檢測有限公司) |
Micro Video Company | Nanjing Micro Video Technology Company Limited (南京感動科技有限公 |
司) | |
CDB Kai Yuan Phase II Fund | Suzhou Industrial Park CDB Kai Yuan Investment Center Phase II (Limited |
Partnership) (蘇州工業園區國創開元二期投資中心(有限合夥)) | |
Hanrui Center | Plot No. 2 Complex Project located in the central business district of new |
city in the south of Nanjing | |
Shanghai-Nanjing Expressway | Jiangsu Section of Shanghai-Nanjing Expressway |
Guangjing Expressway | Northern connection of Guangling-Jingjiang Section, Jiangyin Yangtze |
Bridge | |
Xicheng Expressway | Southern connection of Jiangyin-Wuxi Section, Jiangyin Yangtze Bridge |
Jiangyin Bridge | Jiangyin Yangtze Bridge |
Sujiahang Expressway | Jiangsu Section of Suzhou-Jiaxing-Hangzhou Expressway |
Yanjiang Expressway | Changzhou-Taicang Expressway |
Changjia Expressway | Kunshan-Wujiang Section of Changshu-Jiaxing Expressway |
Zhendan Expressway | Zhenjiang-Danyang Expressway |
Ningchang Expressway | Lishui Guizhuang Hub-Changzhou South Interchange Expressway |
Zhenli Expressway | Dantu Hub-Liyang Qianma Hub Expressway |
Xiyi Expressway | Wuxi North Hub-Yixing Xiwu Hub Expressway |
Wuxi Huantaihu Expressway | Wuxi Shuofang Hub-Wuxi Nanquan Interchange Expressway |
Sujiayong Expressway | Suzhou-Jiaxing-Ningbo Expressway |
Wufengshan Toll Bridge | Wufengshan Toll Bridge and North-South Connection Project |
6 | 2020 Interim Report |
SECTION I DEFINITION
Changyi Expressway | Changzhou-Yixing Expressway |
Yichang Expressway | Jiangsu Section of Yixing-Changxing Expressway |
Reporting Period | the half year period from 1 January 2020 to 30 June 2020 |
year-on-year | as compared with the same period of 2019 |
CSRC | China Securities Regulatory Commission |
SFC | The Securities and Futures Commission of Hong Kong |
SSE | Shanghai Stock Exchange |
Stock Exchange | The Stock Exchange of Hong Kong Limited |
A Shares | RMB-denominated ordinary shares issued by the Company and listed on |
the SSE | |
H Shares | overseas-listed foreign shares issued by the Company and listed on the |
Stock Exchange | |
ADR | Level 1 depositary receipts of the Company listed and traded in the over- |
the-counter market of the United States | |
Listing Rules | Listing Rules of the SSE and/or Hong Kong Listing Rules |
Listing Rules of SSE | Rules Governing the Listing of Stocks on Shanghai Stock Exchange |
Hong Kong Listing Rules | Rules Governing the Listing of Securities on The Stock Exchange of |
Hong Kong Limited | |
PRC Accounting Standards | Accounting Standards for Business Enterprises and Relevant Provisions |
promulgated by the Ministry of Finance of the People's Republic of China | |
Deloitte or Auditor | Deloitte Touche Tohmatsu Certified Public Accountants LLP |
Corporate Governance | The Corporate Governance Code set out in Appendix 14 to the Hong |
Code | Kong Listing Rules |
Jiangsu Expressway Company Limited | 7 |
SECTION II COMPANY INFORMATION AND PRINCIPAL FINANCIAL INDICATORS
1. COMPANY INFORMATION
Name of the Company in Chinese | 江蘇寧滬高速公路股份有限公司 |
Abbreviated Chinese Name | 寧滬高速 |
Name of the Company in English | Jiangsu Expressway Company Limited |
Abbreviated English Name | Jiangsu Expressway |
Legal Representative of the Company | Sun Xibin |
2. CONTACT PERSONS AND CONTACT METHODS
Secretary to the Board | Representatives of securities affairs | ||
Name | Yao Yong Jia | Tu Jun and Lou Qing | |
Address | 6 Xianlin Avenue, Nanjing, | 6 Xianlin Avenue, Nanjing, | |
Jiangsu Province, the PRC | Jiangsu Province, the PRC | ||
Telephone | 8625-84362700-301835 | 8625-84362700-301838 | |
Fax | 8625-84207788 | 8625-84466643 | |
jsnh@jsexpwy.com | |||
3. | CHANGE OF BASIC INFORMATION | ||
Registered address of the Company | 6 Xianlin Avenue, Nanjing, Jiangsu Province, the PRC | ||
Postal code of the Company's registered address | 210049 | ||
Business address of the Company | 6 Xianlin Avenue, Nanjing, Jiangsu Province, the PRC | ||
Postal code of the Company's business address | 210049 | ||
Website of the Company | http://www.jsexpressway.com | ||
jsnh@jsexpwy.com |
4. CHANGE OF PLACES FOR DISCLOSURE AND INSPECTION OF INFORMATION
Designated Media for Information | China Securities Journal and Securities Times |
Disclosure | |
Websites Designated by CSRC for | www.sse.com.cn |
Publication of Interim Reports | www.hkexnews.hk |
www.jsexpressway.com | |
Interim Reports Available at | Shanghai Stock Exchange, 528 Pudong Road South, |
Shanghai, the PRC; Hong Kong Registrars Limited, Shops | |
1712-1716, 17/F, Hopewell Centre, 183 Queen's Road East, | |
Wanchai, Hong Kong; Hong Kong registered address of | |
the Company, 17/F, One Island East, Taikoo Place, No.18 | |
Westlands Road, Quarry Bay, Hong Kong; Headquarters of | |
the Company, 6 Xianlin Avenue, Nanjing, Jiangsu Province, | |
the PRC |
8 | 2020 Interim Report |
SECTION II COMPANY INFORMATION AND PRINCIPAL FINANCIAL INDICATORS
5. INFORMATION ON THE COMPANY'S SHARES
Previous stock | ||||
Class of shares | Listing stock exchange | Stock abbreviation | Stock code | abbreviation |
A Shares | Shanghai Stock Exchange | 寧滬高速 | 600377 | - |
H Shares | The Stock Exchange of | Jiangsu Express | 00177 | - |
Hong Kong Limited | ||||
ADR | United States | JEXYY | 477373104 | - |
6. OTHER RELEVANT INFORMATION
Applicable | ✔ | Not Applicable |
7. KEY ACCOUNTING DATA AND PRINCIPAL FINANCIAL INDICATORS
- Key accounting data
Unit: Yuan | Currency: RMB | |||||||
Increase/decrease | ||||||||
in the Reporting | ||||||||
Period as | ||||||||
Corresponding | compared to the | |||||||
The Reporting | period of | corresponding | ||||||
Period | the previous | period of the | ||||||
Key accounting data | (January-June) | year | previous year | |||||
(%) | ||||||||
Operating revenue | 2,668,351,072.50 | 4,835,457,868.83 | -44.82 | |||||
Net profit attributable to the | ||||||||
shareholders of the Company | 485,637,446.44 | 2,281,609,028.13 | -78.72 | |||||
Net profit attributable to the | ||||||||
shareholders of the Company net of | ||||||||
non-recurring profit or loss | 419,417,173.47 | 2,266,132,472.27 | -81.49 | |||||
Net cash flow from operating activities | 895,329,150.48 | 2,927,496,390.90 | -69.42 | |||||
Increase/decrease | ||||||||
at the end of the | ||||||||
As at | Reporting Period | |||||||
As at the end of | the end of | as compared to | ||||||
the Reporting | the previous | the end of the | ||||||
Period | year | previous year | ||||||
(%) | ||||||||
Net assets attributable to the | ||||||||
shareholders of the Company | 25,927,524,625.17 | 28,546,983,607.15 | -9.18 | |||||
Total assets | 58,378,917,728.48 | 55,625,048,624.75 | 4.95 | |||||
Note: The figures under the "As at the end of the previous year" were audited, and other figures were unaudited.
Jiangsu Expressway Company Limited | 9 |
SECTION II COMPANY INFORMATION AND PRINCIPAL FINANCIAL INDICATORS
7. KEY ACCOUNTING DATA AND PRINCIPAL FINANCIAL INDICATORS (CONTINUED)
- Principal financial indicators
Increase/ | ||||||||
decrease in | ||||||||
the Reporting | ||||||||
Period as | ||||||||
compared to the | ||||||||
The Reporting | Corresponding | corresponding | ||||||
Period | period of the | period of the | ||||||
Principal financial indicators | (January-June) | previous year | previous year | |||||
(%) | ||||||||
Basic earnings per share (yuan/share) | 0.0964 | 0.4529 | -78.71 | |||||
Diluted earnings per share (yuan/share) | N/A | N/A | N/A | |||||
Basic earnings per share net of | 0.0833 | 0.4498 | -81.48 | |||||
non-recurring profit or loss (yuan/share) | ||||||||
Weighted average return on net assets (%) | 1.71 | 8.28 | Decreased by | |||||
6.57 percentage | ||||||||
points | ||||||||
Weighted average return on net assets net of | 1.48 | 8.23 | Decreased by | |||||
non-points recurring profit or loss (%) | 6.75 percentage | |||||||
points | ||||||||
Note: The figures were unaudited.
Explanations on the key accounting data and financial indicators of the Company
Applicable | ✔ | Not Applicable |
8. DIFFERENCES IN ACCOUNTING DATA UNDER DOMESTIC AND FOREIGN ACCOUNTING STANDARDS
Applicable | ✔ | Not Applicable |
10 2020 Interim Report
SECTION II COMPANY INFORMATION AND PRINCIPAL FINANCIAL INDICATORS
9. ITEMS AND AMOUNTS OF NON-RECURRING PROFIT/LOSS
✔ | Applicable | Not Applicable | ||||
Unit: Yuan Currency: RMB | ||||||
Items of non-recurring profit or loss | Amount | Note (if applicable) | ||||
Government grants accounted in profit or loss of the | 9,387,442.24 | Mainly compensation | ||||
period excluding those that are closely related to | recognized and the | |||||
the ordinary operations of the Company and grants | additional part of VAT | |||||
in compliance with national policies and regulations | deduction for construction | |||||
or subject to fixed amounts or fixed quantity under | of Ningchang Expressway, | |||||
certain standards | and subsidy received for | |||||
maintaining employment | ||||||
Profits or losses from changes in fair values of | 59,344,946.40 | |||||
financial assets held for trading, derivative financial | ||||||
assets, financial liabilities held for trading and | ||||||
derivative financial liabilities, and investment gains | ||||||
from disposal of financial assets held for trading, | ||||||
derivative financial assets, financial liabilities held | ||||||
for trading, derivative financial liabilities and other | ||||||
debt investments, excluding effective hedging | ||||||
activities related to ordinary business operations of | ||||||
the Company | ||||||
Other non-operating income and expenses other than | 19,804,293.98 | |||||
the aforesaid items | ||||||
Effects attributable to minority interests | -182,238.99 | |||||
Effects of income tax | -22,134,170.66 | |||||
Total | 66,220,272.97 | |||||
10. OTHERS
Applicable | ✔ | Not Applicable |
Jiangsu Expressway Company Limited | 11 |
SECTION III SUMMARY OF THE COMPANY'S BUSINESS
- EXPLANATIONS ON THE PRINCIPAL BUSINESSES AND BUSINESS MODELS OF THE COMPANY AND INDUSTRY OVERVIEW DURING THE REPORTING PERIOD
Established on 1 August 1992 in the Jiangsu Province of the People's Republic of China, the Group is the only listed company in the transportation and infrastructure industry of the Jiangsu Province. On 27 June 1997, the Company issued 1,222,000,000 H Shares which were listed on the Stock Exchange. On 16 January 2001, the Company issued 150,000,000 A Shares which were listed on the SSE. The Group established the Level I American Depositary Receipt (ADR) Program which became effective on 23 December 2002, trading in the over-the-counter market in the United States of America. As at 30 June 2020, the total share capital of the Company comprised 5,037,747,500 shares with a par value of RMB1 each.
The Company is principally engaged in the investment, construction, operation and management of toll roads and bridges in the Jiangsu Province and the development and operation of ancillary service areas along such expressways. The Company also owns the entire or partial interests of other toll roads and bridges located in the Jiangsu Province, including Shanghai-Nanjing Expressway, Ningchang Expressway, Zhenli Expressway, Guangjing Expressway, Xicheng Expressway, Xiyi Expressway, Zhendan Expressway, Jiangyin Bridge and Sujiahang Expressway, etc. As at 30 June 2020, 17 road and bridge projects were directly operated and invested by the Company, and over 840 kilometers of the roads and bridges open to traffic were owned or invested by the Company.
The Group's operating areas are located in the Yangtze River Delta, which is the most economically vibrant region in the PRC. The road and bridge projects owned or invested by the Company involve the roads and bridges serving as the major transport corridors linking roads stretching east-to-west and south-to-north across the Jiangsu Province. The vibrant economy in the region leads to hectic traffic. The Jiangsu Section of Shanghai-Nanjing Expressway, being the Group's core assets, links six large and medium cities namely Shanghai, Suzhou, Wuxi, Changzhou, Zhenjiang and Nanjing, and is one of the busiest expressways in the PRC.
In addition, the Group is also actively exploring and venturing into other new business fields, including finance, quasi-finance, real estate development and industrial investments, aiming to further enhance profitability and achieve sustainable development of the Group. As at 30 June 2020, the Company owned seven wholly-owned subsidiaries (Note), four non-wholly-owned subsidiaries and participated in eleven joint ventures by shares, with total assets of approximately RMB58,379 million and net assets of approximately RMB30,314 million.
Note: On 23 April 2020, at the second extraordinary general meeting of of the Company, it was resolved to agree the Company consolidate Ningchang Zhenli Company, a wholly-owned subsidiary, by way of absorption and merger. After completion of such merger, the Company had six wholly-owned subsidiaries.
12 2020 Interim Report
SECTION III SUMMARY OF THE COMPANY'S BUSINESS
- SIGNIFICANT CHANGES IN THE MAJOR ASSETS OF THE COMPANY DURING THE REPORTING PERIOD
Applicable | ✔ | Not Applicable |
- ANALYSIS OF CORE COMPETITIVENESS DURING THE REPORTING PERIOD
✔ | Applicable | Not Applicable |
The Group has been focusing on the transport infrastructure industry for years. The roads operated by the Company play a dominant role in the expressway networks in southern Jiangsu. It has accumulated rich experiences in large infrastructure investment, construction, operation and management and built a progressive and innovative management and staff team. Through the complete investment decision- making and operation management system and leveraging on excellent financing platforms, the Group vigorously expanded into infrastructure, financial investment and other industries, gradually achieved industrial upgrading and transformation and the coordinated development of ancillary businesses, building its distinct competitive edges in operation and development in the future.
Unique geographical advantages. The Group's operating areas are located in the Yangtze River Delta, the most economically vibrant region in the PRC. The road and bridge projects owned or invested by the Company are core components of the road transport corridors linking the two important industrial belts along the Yangtze River, Shanghai and Nanjing in the southern part of Jiangsu. With the integrated development of the Yangtze River Delta, the prosperous economy in the region created a favorable environment for the long-term development of the Group and promoted the sustainable and steady improvement on the Group's economic efficiency.
High-qualityroad and bridge assets. 17 road and bridge projects are controlled or invested by the Group. Core road and bridge assets are main lines in the expressway network in Jiangsu Province and an integral part in the national expressway network. With outstanding quality, road assets gradually achieved coordinated benefits. The quality road network resources lay a solid foundation for the stable growth in the operating results of the Group and provided guarantees to the sustainable and healthy development of the Company.
Leading operation concepts. The Group is engaged in road operation and has accumulated rich operation experience. The growth in the operating results from the Jiangsu Section of Shanghai-Nanjing Expressway is mainly attributable to the increase in the daily average traffic volume and the improved utilization of expressways, which demonstrated the competitive edge of the Group in roads operation and management. Meanwhile, the Group strengthened the development results with systems and built a modern corporate operation management and control pattern. It takes a leading position in road smoothness and rescue in the PRC.
Jiangsu Expressway Company Limited | 13 |
SECTION III SUMMARY OF THE COMPANY'S BUSINESS
- ANALYSIS OF CORE COMPETITIVENESS DURING THE REPORTING PERIOD (CONTINUED)
Professional management team. The Group has built a professional and experienced operation management team after years of accumulation and development. The efficient management capacity not only guarantees the quality and efficiency of the Group's quality and efficiency in expressway operation but also effectively reduced the management cost and operational risks in routine operation, promoting the leading profitability of the Group in the industry. The Group gradually cultivated a capital operation team with international horizon leveraging on the capital market and boosted the strategic research and investment development capability of the Group. It actively uses capital operation to optimize the asset portfolio and acquire overseas projects. The brand image of the Group was further enhanced driven by assets and capital operation as two wheels.
Outstanding financing platforms. The Group maintains the listing status in three cities (Shanghai, Hong Kong and New York) of two countries (China and the U.S.) and achieves sound operation and sustainable performance growth with high credit rating, low gearing ratio and strong solvency. The Group achieved outstanding results in investor relations management and owns a stable investors base and an excellent market image in the domestic and overseas capital markets thanks to its long-term policies with high proportion of cash bonus. The smooth financing channels will facilitate the Group to consistently improve the financing structure and reduce financing costs in the future development through leveraging on the capital market.
14 2020 Interim Report
SECTION IV DISCUSSION AND ANALYSIS OF THE OPERATION
- DISCUSSION AND ANALYSIS OF THE OPERATION
The year of 2020 is the decisive year for completing the building of a moderately prosperous society in all respects and the final year of the "13th Five-Year Plan".The Group firmly focused on strategic targets in three major industries, namely "transport infrastructure,financial investment and transport +".In the first half of the year, faced with the severe situation of COVID-19 epidemic and the robust resumption of work and production, the Group, under the coordination and deployment of the Board, implemented the measures on prevention and control of the epidemic and assurance of road accessibility, and adhered to the general principle of making progress while maintaining stability and the new development concept, and promoted all works in a solid and orderly manner, achieving a development trend of making progress in spite of difficulties and making progress while maintaining stability.
As of the end of June 2020, total assets of the Company amounted to RMB58,379 million and net assets attributable to shareholders of the Company amounted to RMB25,928 million. During the Reporting Period, the Company realized operating profit of RMB2,668 million, total profits of RMB658 million, net profit attributable to shareholders of the Company of RMB486 million and earnings per share of RMB0.0964. The operating net cash flow amounted to RMB895 million and the weighted average return on net assets was 1.71%.
Changes in tolling policies. Firstly, the Notice of the General Office of the State Council on Issuing the Implementation Plan for Deepening the Reform of Toll Road System and Cancelling the Provincial Toll Stations of Expressways (《國務院辦公廳關於印發深化收費公路制度改革取消高速公路省界收費站實施方案的 通知》), further deepened the reform of the toll road system, accelerated the cancelation of the provincial toll stations of expressways across the country, and allowed toll collection with non-stoppassage of vehicles. Secondly,the Notice of the Ministry of Transport on Vehicle Toll Exemption for Toll Road during the Prevention and Control Period of COVID-19Epidemic 《( 交通運輸部關於新冠肺炎疫情防控期間免收收費 公路車輛通行費的通知》), waved the tolls on toll roads from 00: 00 on 17 February 2020 till the end of the containment of COVID-19epidemic. According to the Notice of the Ministry of Transport on Resumption of Toll Collection on Toll Roads (《交通運輸部關於恢復收費公路收費的公告》), toll collection was resumed on all legally approved toll roads from 00:00 on 6 May 2020. Thirdly, by the Notice of the Department of Finance of the Development and Reform Commission of Transportation Department of Jiangsu Province on the Implementation of Differentiated Tolls for the Tolls of 2-5Axis Trucks on Expressways within the Interconnected Toll Network 《( 江蘇省交通運輸廳發展和改革委員會財政廳關於對聯網收費高速公路2-5軸貨車 通行費實行差異化收費的通知》), all expressways within the interconnected toll network in Jiangsu Province implemented differentiated tolls for 2-5axle trucks during the prevention and control period of COVID-19epidemic from 16 February 2020, and the charging standards for 2-5axle trucks will be reduced by 6.95%, 14.01%, 5.00% and 5.00%, respectively to support the development of the real economy and reduce logistics cost. According to the Notice on the Implementation of Differentiated Tolls for Six-AxleTrucks on Expressways (《關於對高速公路六軸貨車通行費實行差異化收費的通知》), a 5% discount was applied on the basis of the current toll standard for six-axletrucks.
Jiangsu Expressway Company Limited | 15 |
SECTION IV DISCUSSION AND ANALYSIS OF THE OPERATION
- DISCUSSION AND ANALYSIS OF THE OPERATION (CONTINUED)
The impact of the COVID-19outbreak. Firstly, the prevention and control of epidemic and assurance of road accessibility. The expressway network is an important part of the development of national economy, after the outbreak of the COVID-19, the Group united multiple parties to strictly prevent the spread of the COVID-19, and ensure that "every vehicle must be checked and every person's temperature must be measured". Toll roads could be used on a free-of-charge basis from 0:00 on 17 February 2020, the Group quickly implemented the system switching to achieve "exemption of all charges that ought to be exempted". The Group strengthened the maintenance of station facilities, road condition patrols, congestion clearing, and prepared for duty according to the main post responsibility and deputy post responsibility in advance to ensure smooth traffic flow of road network, safe and stable road conditions, and contribute to the healthy development of the economy and society in terms of transportation. Secondly, the change of expressway traffic. During the Reporting Period, affected by multiple factors such as the COVID-19 outbreak, the policy on toll-free travel and the resumption of work and production, the average daily traffic volume of Shanghai-Nanjing Expressway was 99,200 vehicles, representing a year- on-year decrease of 2.17%. In particular, the traffic flow of the expressway network in the early stage of the epidemic continued to decline; after the implementation of the policy on toll-free travel, the traffic flow recovered quickly; after the resumption of toll collection on 6 May, the increase in traffic flow slowed down. During the Reporting Period,the overall trend of the traffic volume of other roads and bridges operated by the Group was basically the same as that of the Jiangsu section of Shanghai-Nanjing Expressway. Thirdly,the change in toll revenue. During the Reporting Period, the overall toll revenue of the toll roads and bridges operated by the Group decreased significantly as compared with the corresponding period of the previous year. In particular, the toll revenue of Shanghai-Nanjing Expressway from January to June was RMB1,176,273,000, representing a year-on-year decrease of 53.74%.
Investment in road and bridge construction. Firstly,the construction of road and bridge projects. As of the end of June 2020, the construction of Wufengshan Toll Bridge, Longtan Bridge, Changyi Expressway, and Yichang Expressway projects had incurred an aggregate investment of approximately RMB10,045 million, RMB1,316 million, RMB3,331 million and RMB2,732 million, respectively, representing 81.70%, 21.05%, 87.67% and 68.68% of the total investment of the project, respectively. As the projects under construction will be completed in succession and put into operation, they will become a new profit growth point for the Group in the future. Secondly,the integration of road and bridge resources. In order to optimize the Company's management structure and improve operational efficiency, the Company implemented the merger its wholly-owned subsidiary Ningchang Zhenli Company. After the completion of the merger, the compounded effect of "1+1﹥2" will be realized. Thirdly, the research of investment projects. Focusing on domestic and overseas road and bridge projects with promising long-term benefits, the Group actively carried out analysis and demonstration of investment projects, further strengthened, improved and expanded the principal business, and shared the dividends of the development with investors.
16 2020 Interim Report
SECTION IV DISCUSSION AND ANALYSIS OF THE OPERATION
- DISCUSSION AND ANALYSIS OF THE OPERATION (CONTINUED)
Road operation management. Firstly,the promotion of the 5G applications implementation. Following the pace of the "Internet +" times, the Group explored the scenario-based application of 5G technology, and vigorously promoted the construction of intelligent expressways. On 28 June, China Tower Corporation Limited announced that the 5G network coverage of the Jiangsu section of Shanghai-Nanjing Expressway exceeded 96%, making it the first main lines expressway with 5G network fully connected in the PRC. Secondly, the road accessibility through intelligent management and control. Aiming at the characteristics of large traffic difference and wide breadth of road of Shanghai-Nanjing Expressway, the Group tried design by section and differentiated management and control to realize "intelligent expansion"in limited space. In the first half of 2020, Wuxi section of Shanghai-Nanjing Expressway, which used to be congested, has normalized its management and control systems for ramp and lane with huge traffic flow and has significantly improved the traffic efficiency. Thirdly, the carrying out of centralized maintenance of super-long sections. The Group carried out the closed centralized maintenance of long-distance sections with huge traffic flow in the Suzhou section with frequent congestion of Shanghai-Nanjing Expressway for the first time in the PRC, and completed a single 22-kilometer mat coat and nearly 50-kilometer medium- sized maintenance project within 8 working days. The number of work types, single-day workload, and time saving set a new industry record, which was highly recognized by the Ministry of Transport and peers both inside and outside the province. Fourthly,the maintenance and intelligent management of pilot roads and bridges. The Group used the intelligent control system of road maintenance quality to realize intelligent supervision by means of Internet of Things, RFID and other information means for the first time. It put forward the multi-dimensional quality evaluation method and preliminarily constructed the multi-dimensional evaluation system for maintenance project quality. It also developed an intelligent road inspection system for expressway and successfully passed the appraisal, filling the gap in the corresponding sectors in the PRC.
-
Toll road and bridge business
1. Business performance and analysis of project operation
During the Reporting Period, affected by the COVID-19 epidemic and the policy on toll-free travel, the Group recorded toll revenue of approximately RMB1,777,601,000, representing a year-on-year decrease of approximately 52.97% and representing approximately 66.62% of the total operating revenue of the Group. Of which, Shanghai-Nanjing Expressway recorded an average daily traffic volume of 99,200 vehicles, representing a year-on-year decrease of approximately 2.17%, and an average daily toll revenue of approximately RMB6,463,040 (average daily toll revenue, including that of the toll-free period, the same below), representing a year-on-year decrease of approximately 53.99% Note .
Jiangsu Expressway Company Limited | 17 |
SECTION IV DISCUSSION AND ANALYSIS OF THE OPERATION
- DISCUSSION AND ANALYSIS OF THE OPERATION (CONTINUED)
-
Toll road and bridge business (Continued)
1. Business performance and analysis of project operation (Continued)
The traffic volume of other road and bridge projects operated by the Group including Zhenli Expressway, Wuxi Huantaihu Expressway and Changjia Expressway continued to maintain a relatively good growth momentum. During the Reporting Period, their overall movements in traffic volumes of passenger vehicles and trucks were basically consistent with that of Shanghai-Nanjing Expressway. The data of the operations of each of the road and bridge projects is set out as below:
Comparison of the data of average daily traffic volume and toll revenue (average daily toll revenue,including that of the toll-free period):
-
Toll road and bridge business (Continued)
Corresponding | |||||||||
Reporting | period of the | Year-on-year | |||||||
Projects | Period | previous year | change | ||||||
(%) | |||||||||
Shanghai-Nanjing Expressway | Total traffic volume (vehicle/day) | 99,199 | 101,398 | -2.17 | |||||
Average daily toll revenue (RMB'000/day) | 6,463.04 | 14,047.78 | -53.99 | ||||||
Ningchang Expressway | Total traffic volume (vehicle/day) | 52,197 | 41,887 | 24.61 | |||||
Average daily toll revenue (RMB'000/day) | 1,008.11 | 2,526.18 | -60.09 | ||||||
Zhenli Expressway | Total traffic volume (vehicle/day) | 21,293 | 15,199 | 40.09 | |||||
Average daily toll revenue (RMB'000/day) | 363.10 | 735.83 | -50.65 | ||||||
Xicheng Expressway | Total traffic volume (vehicle/day) | 87,949 | 81,123 | 8.41 | |||||
Average daily toll revenue (RMB'000/day) | 883.90 | 1,593.76 | -44.54 | ||||||
Guangjing Expressway | Total traffic volume (vehicle/day) | 89,063 | 73,421 | 21.30 | |||||
Average daily toll revenue (RMB'000/day) | 424.99 | 827.31 | -48.63 | ||||||
Xiyi Expressway | Total traffic volume (vehicle/day) | 24,241 | 22,947 | 5.64 | |||||
Average daily toll revenue (RMB'000/day) | 416.94 | 869.37 | -52.04 | ||||||
Wuxi Huantaihu Expressway | Total traffic volume (vehicle/day) | 12,701 | 8,454 | 50.24 | |||||
Average daily toll revenue (RMB'000/day) | 98.98 | 89.88 | 10.12 | ||||||
Jiangyin Bridge | Total traffic volume (vehicle/day) | 99,202 | 92,060 | 7.76 | |||||
Average daily toll revenue (RMB'000/day) | 1,729.14 | 3,249.55 | -46.79 | ||||||
Sujiahang Expressway | Total traffic volume (vehicle/day) | 56,486 | 68,630 | -17.70 | |||||
Average daily toll revenue (RMB'000/day) | 1,312.82 | 3,508.31 | -62.58 | ||||||
Yanjiang Expressway | Total traffic volume (vehicle/day) | 54,044 | 54,957 | -1.66 | |||||
Average daily toll revenue (RMB'000/day) | 1,997.49 | 4,122.68 | -51.55 | ||||||
Changjia Expressway | Total traffic volume (vehicle/day) | 46,783 | 18,274 | 156.00 | |||||
Average daily toll revenue (RMB'000/day) | 486.75 | 398.63 | 22.11 | ||||||
Zhendan Expressway | Total traffic volume (vehicle/day) | 18,060 | 15,087 | 19.71 | |||||
Average daily toll revenue (RMB'000/day) | 107.97 | 191.35 | -43.57 | ||||||
18 2020 Interim Report
SECTION IV DISCUSSION AND ANALYSIS OF THE OPERATION
- DISCUSSION AND ANALYSIS OF THE OPERATION (CONTINUED)
- Toll road and bridge business (Continued)
1. Business performance and analysis of project operation (Continued)
Note: 1. 2020 is a leap year. The number of days in February increased by one day year-on-year. The average daily toll revenue decreased more than the toll revenue during the Reporting Period.
- The tolls on toll roads nationwide were waived from 00:00 on 17 February 2020 until 00:00 6 May 2020. In general, at the beginning of the epidemic outbreak, the traffic flow on the expressway network continued to decline. After the implementation of the policy of exempting vehicle tolls, the traffic flow recovered quickly. The growth of traffic flow slowed down after the tolls were restored on 6 May.
- During the Reporting Period, road maintenance operations were carried out at the G42 Hurong Expressway Shuofang Hub-Suzhou North Hub (from Nanjing to Shanghai), during which half-opening traffic control measures were taken to divert vehicles to Huantaihu Expressway. Affected by this, the toll revenue of Wuxi Huantaihu Expressway increased as compared with the corresponding period of the previous year.
- During the Reporting Period, the main line of Changjia Expressway was opened and the traffic volume increased significantly. Affected by this, the toll revenue of Changjia Expressway increased as compared with the corresponding period of the previous year.
2. Business Development
-
Actively advancing the construction of road and bridge projects under construction
During the Reporting Period, the Group continued to efficiently advance the construction of road and bridge projects under construction in an orderly way. During the Reporting Period, Wufengshan Bridge Project incurred an investment of RMB1,038 million, with cumulated investment of RMB10,045 million as of the end of June 2020, representing 81.70% of the total investment of the project, and it is expected to be completed in 2021. Changyi Expressway Project incurred an investment of RMB436 million, with cumulated investment of RMB3,331 million as of the end of June 2020, representing 87.67% of the total investment of the project; Yichang Expressway Project incurred an investment of RMB738 million, with cumulated investment of RMB2,732 million as of the end of June 2020, representing 68.68% of the total investment of the project; and Longtan Bridge Project incurred an investment of RMB945 million, with cumulated investment of RMB1,316 million as of the end of June 2020, representing 21.05% of the total investment of the project. - The toll road and bridge projects in Turkey
During the Reporting Period, the Group accelerated the investment progress of the acquisitions in relation to the toll road and bridge projects in Turkey, and the relevant approval procedures are being processed.
Jiangsu Expressway Company Limited | 19 |
SECTION IV DISCUSSION AND ANALYSIS OF THE OPERATION
- DISCUSSION AND ANALYSIS OF THE OPERATION (CONTINUED)
-
Operation of ancillary services
Ancillary services of the Group mainly include lease of service areas, sale of petroleum products and other related operations provided at the service areas along the expressway. During the Reporting Period, the Group realized revenue of approximately RMB611,872,000 from ancillary services, representing a year-on-year increase of approximately 0.15%. In particular, sales revenue of petroleum products was approximately RMB495,285,000, representing approximately 80.95% of the total revenue from ancillary services, representing a year-on-year increase of approximately 1.18%; rental income from service areas amounted to approximately RMB102,161,000; and other income was approximately RMB14,426,000.
During the Reporting Period, due to the impact of the novel coronavirus outbreak, the road network traffic continued to decline in the initial period, resulting in a decrease in sales of petroleum products. However, with the implementation of the national policy on toll-free travel, the traffic volume of trucks and passenger vehicles on expressway network was quickly recovered, and the sales of petroleum products subsequently increased, making up for the adverse impact of the previous sales of petroleum products. During the Reporting Period, the Group actively introduced competition mechanisms and managed to secure more profit margins through actively carrying out negotiations with petroleum suppliers. In the first half of 2020, the gross profit and gross profit margin of petroleum products operation of the Group increased by 45.67 percentage points and 6.10 percentage points as compared with the first half of 2019, respectively, and drove the gross profit margin of ancillary services business operation increased by approximately 4.39 percentage points year-on-year.
-
Operation of ancillary services
- Business of property development and sales
In the first half of 2020, the "houses are for living, not for speculative investment" was the main principle of the property market regulation. The impact of the novel coronavirus outbreak had a significant impact on the Group's income from its property business. During the Reporting Period, the Group seized the market sales window period to actively increase efforts in de-stocking.
During the Reporting Period, the pre-sale area of commodity housing of Ninghu Properties Company was 5,995.22 square meters, and the pre-sale revenue of RMB176,088,000 was realized, representing a year-on-year decrease of 68.33% and 63.60%, respectively. Affected by the epidemic, there was a year-on-year decrease in the delivery scale of housing. From January to June, a total of 93 units were delivered, with sales revenue carried forward amounting to approximately RMB239,599,000, representing a decrease of 41.82% as compared with the corresponding period of the previous year. The net profit after tax realized was approximately RMB54,620,000, representing a year-on-year decrease of approximately 49.05%.
During the Reporting Period, the sale and leasing of the Hanrui Center developed by Hanwei Company were carried out in an orderly manner. In the first half of 2020, 26 units of commodity housing (apartments) were signed contracts with a pre-sale area of 1,526.06 square meters, achieving pre-sale revenue of RMB38,047,000. Approximately 50% of shops have completed negotiations on potential leasing.
20 2020 Interim Report
SECTION IV DISCUSSION AND ANALYSIS OF THE OPERATION
-
DISCUSSION AND ANALYSIS OF THE OPERATION (CONTINUED)
(IV) Other businesses
Other businesses of the Group mainly comprised of the advertising businesses of certain subsidiaries, management services provided by Yangtze River Management Company and property services provided by Ninghu Properties Company. During the Reporting Period, the Group realized revenue from other businesses of approximately RMB39,280,000, representing a year-on-year increase of approximately 18.57% and which is mainly attributable to the year-on-year increase in revenue from commission operation and management services.
- PRINCIPAL OPERATIONS DURING THE REPORTING PERIOD
-
Analysis of principal businesses
1. Table of analysis on changes in relevant items in the financial statements
-
Analysis of principal businesses
Unit: Yuan | Currency: RMB | |||||||
Corresponding | ||||||||
period of the | ||||||||
Item | Reporting Period | previous year | Changes | |||||
(%) | ||||||||
Operating income | 2,668,351,072.50 | 4,835,457,868.83 | -44.82 | |||||
Operating costs | 1,859,290,222.19 | 1,955,644,387.14 | -4.93 | |||||
Selling expenses | 8,977,337.47 | 18,630,332.26 | -51.81 | |||||
Administrative expenses | 73,831,410.68 | 85,673,931.47 | -13.82 | |||||
Financial expenses | 256,387,221.40 | 226,517,238.35 | 13.19 | |||||
Net cash flow from operating activities | 895,329,150.48 | 2,927,496,390.90 | -69.42 | |||||
Net cash flow from investing activities | -3,291,196,408.42 | -3,203,647,193.79 | 2.73 | |||||
Net cash flow from financing activities | 2,275,283,608.14 | 290,135,764.89 | 684.21 | |||||
Tax and surcharge | 39,258,353.21 | 55,403,316.19 | -29.14 | |||||
Gain on change in fair value | 50,461,176.80 | 21,207,890.81 | 137.94 | |||||
Investment income | 147,761,973.92 | 478,199,640.69 | -69.10 | |||||
Other income | 9,387,442.24 | 2,612,095.39 | 259.38 | |||||
Non-operating revenue | 29,557,223.53 | 1,608,479.04 | 1,737.59 | |||||
Income tax | 173,933,369.86 | 651,267,942.06 | -73.29 | |||||
Other comprehensive income, net of tax | -809,582,328.42 | 531,287,650.30 | -252.38 | |||||
Note: The figures in the table are unaudited.
Jiangsu Expressway Company Limited | 21 |
SECTION IV DISCUSSION AND ANALYSIS OF THE OPERATION
- PRINCIPAL OPERATIONS DURING THE REPORTING PERIOD (CONTINUED)
-
Analysis of principal businesses (Continued)
1. Table of analysis on changes in relevant items in the financial statements (Continued)
Explanations on the reasons for the change of operating income: A year-on-yearsignificant decrease in the Group's toll revenue was mainly due to the impact of the COVID-19and the policy on toll-freetravel during the Reporting Period; the scale of delivery and transfer of property business were less than that of the corresponding period of the previous year as a result of the COVID-19,and the delivery and the income of property business deceased year-on-year,resulting in a year-on-yeardecrease in operating income.
Explanations on the reasons for the changes of operating costs: A year-on-yeardecrease in operating costs was mainly due to the scale of delivery and transfer of real estate projects during the Reporting Period were less than that of the corresponding period of the previous year as a result of the impact of the COVID-19,and the costs of property sales business deceased year-on-year.
Explanations on the reasons for the changes in selling expenses: A year-on-yeardecrease in selling expenses was mainly due to the decrease in advertisement and promotion fee and commission fee for agent of real estate sales of Ninghu Properties Company and Hanwei Company during the Reporting Period as a result of the impact of the COVID-19.
Explanations on the reasons for the changes in administrative expenses: A year-on-year decrease in administrative expenses was mainly due to the strengthening of budget management and strict expenses control by the Group to reduce the impact of the COVID-19during the Reporting Period.
Explanations on the reasons for the changes in financial expenses: During the Reporting Period, the comprehensive loan costs of the Group's capitalization of interest-bearingdebts decreased as compared with the corresponding period of the previous year, however, a year-on-yearincrease in financial expenses was mainly due to the increased scale of interest-bearingdebts of the Group as compared with the corresponding period of the previous year as a result of the impact of the COVID-19and the policy on toll-freetravel.
Explanations on the reasons for the changes in R&D expenses: None.
Explanations on the reasons for the changes in net cash flow from operating activities: A year-on-yearsignificant decrease in the net cash flow from operating activities was mainly due to a year-on-yeardecrease in toll revenue and revenue from pre-salesof property projects as a result of the impact of the COVID-19and the policy on toll-freetravel during the Reporting Period.
-
Analysis of principal businesses (Continued)
22 2020 Interim Report
SECTION IV DISCUSSION AND ANALYSIS OF THE OPERATION
- PRINCIPAL OPERATIONS DURING THE REPORTING PERIOD (CONTINUED)
-
Analysis of principal businesses (Continued)
1. Table of analysis on changes in relevant items in the financial statements (Continued)
Explanations on the reasons for the changes in net cash flow from investing activities: A year-on-yearincrease in the net cash flow from investing activities was mainly due to a year-on-yearincrease in the investment in the construction of road and bridge projects under construction and net cash outflow from the purchase of wealth management products during the Reporting Period.
Explanations on the reasons for the changes in net cash flow from financing activities: A year-on-yearsignificant increase in the net cash flow from financing activities was mainly due to a year-on-yearincrease in net cash inflow from the Group's borrowings as a result of the impact of the COVID-19and the policy on toll-freetravel during the Reporting Period.
Explanations on the reasons for the changes in tax and surcharge: A year-on-yeardecrease in provisions of tax and surcharge was mainly due to the fact that the operating revenue of the Group was lower than that of the corresponding period of the previous year.
Explanations on the reasons for the changes in gain on change in fair value: Mainly due to the year-on-yearincrease in the fair value of other non-currentfinancial assets held by Ninghu Investment Company, a subsidiary of the Company during the Reporting Period.
Explanations on the reasons for the changes in investment income: Mainly due to the impact of the COVID-19and the policy on toll-freetravel during the Reporting Period, certain associates which have a larger proportion of their business engaged in road and bridge sector incurred operating losses.
Explanations on the reasons for the changes in other income: Mainly due to the inclusion of deductible portion into other income as a result of the implementation of national policies, which stipulated that commencing from 1 April 2019, an extra 10% shall be credited against deductible input VAT, in line with the policy for deduction of tax amount payable.
Explanations on the reasons for the changes in non-operating revenue: Mainly due to the receipt of pit compensation during the Reporting Period.
Explanations on the reasons for the changes in income tax: Mainly due to the year-on-year decrease in the taxable income of the Group as a result of the impact of the COVID-19and the policy on toll-freetravel during the Reporting Period.
Explanations on the reasons for the changes in other comprehensive income, net of tax: Mainly due to the decrease in the fair value of other equity instruments investment held by the Group during the Reporting Period, resulting in a year-on-yeardecrease in other comprehensive income.
-
Analysis of principal businesses (Continued)
Jiangsu Expressway Company Limited | 23 |
SECTION IV DISCUSSION AND ANALYSIS OF THE OPERATION
- PRINCIPAL OPERATIONS DURING THE REPORTING PERIOD (CONTINUED)
-
Analysis of principal businesses (Continued)
1. Table of analysis on changes in relevant items in the financial statements (Continued) - Principal operating activities classified by industries and regions
-
Analysis of principal businesses (Continued)
Unit: Yuan Currency: RMB
Principal operating activities classified by industries | |||||||||||||
Change in | Change in | ||||||||||||
operating | operating | ||||||||||||
revenue over the | costs over the | Change in gross | |||||||||||
corresponding | corresponding | profit margin over | |||||||||||
Gross profit | period of last | period of last | the corresponding | ||||||||||
By industries | Operating revenue | Operating costs | margin | year | year | period of last year | |||||||
(%) | (%) | (%) | |||||||||||
Toll road business | 1,777,600,712.74 | 1,197,035,388.35 | 32.66 | -52.97 | 0.91 | Decreased by 35.95 percentage | |||||||
points | |||||||||||||
Shanghai-Nanjing Expressway | 1,176,273,277.15 | 643,622,193.65 | 45.28 | -53.74 | 2.46 | Decreased by 30.01 percentage | |||||||
points | |||||||||||||
Guangjing Expressway and | 238,218,656.79 | 111,470,130.86 | 53.21 | -45.64 | -33.86 | Decreased by 8.33 percentage | |||||||
Xicheng Expressway | points | ||||||||||||
Ningchang Expressway and | 249,559,632.44 | 317,048,082.41 | -27.04 | -57.73 | 18.57 | Decreased by 81.75 percentage | |||||||
Zhenli Expressway | points | ||||||||||||
Xiyi Expressway and Wuxi | 93,898,635.01 | 101,726,699.57 | -8.34 | -45.92 | 5.25 | Decreased by 52.67 percentage | |||||||
Huantaihu Expressway | points | ||||||||||||
Zhendan Expressway | 19,650,511.35 | 23,168,281.86 | -17.90 | -43.26 | -9.23 | Decreased by 44.20 percentage | |||||||
points | |||||||||||||
Ancillary services business | 611,871,621.75 | 525,002,197.70 | 14.20 | 0.15 | -4.73 | Increased by 4.39 percentage | |||||||
points | |||||||||||||
Property sales business | 239,598,650.73 | 110,236,786.05 | 53.99 | -41.82 | -46.38 | Increased by 3.91 percentage | |||||||
points | |||||||||||||
Other businesses | 39,280,087.28 | 27,015,850.09 | 31.22 | 18.57 | 112.95 | Decreased by 30.49 percentage | |||||||
points | |||||||||||||
Total | 2,668,351,072.50 | 1,859,290,222.19 | 30.32 | -44.82 | -4.93 | Decreased by 29.24 percentage | |||||||
points | |||||||||||||
Note: During the Reporting Period, the operating costs of other businesses increased by 112.95% year-on- year was mainly due to the increase in operating costs of Yangtze River Management Company, which was established on 6 June 2019.
Principal operating activities classified by industries and products: Nil.
24 2020 Interim Report
SECTION IV DISCUSSION AND ANALYSIS OF THE OPERATION
- PRINCIPAL OPERATIONS DURING THE REPORTING PERIOD (CONTINUED)
-
Analysis of principal businesses (Continued)
1. Table of analysis on changes in relevant items in the financial statements (Continued) - Analysis of costs
During the Reporting Period, accumulated operating costs amounted to approximately RMB1,859,290,000, representing a year-on-year decrease of approximately 4.93%. The cost structure of each business category is set out below:
- Analysis of costs
-
Analysis of principal businesses (Continued)
Unit: Yuan Currency: RMB
By Industries | |||||||
Changes in | |||||||
percentage of | |||||||
the amount for | |||||||
Proportion of the | the Reporting | ||||||
Proportion of | amount in total | Period compared | |||||
the amount in | costs for the | with the | |||||
total costs for | Amount for the | corresponding | corresponding | ||||
Components of | Amount for the Reporting | the Reporting | corresponding | period of last | period of last | ||
By Industries | costs | Period | Period | period of last year | year | year | Explanation |
(%) | (%) | (%) | |||||
Toll road operations | - | 1,197,035,388.35 | 64.38 | 1,186,295,935.98 | 60.66 | 0.91 | - |
- | Depreciation and | 745,349,229.43 | 40.09 | 722,765,894.88 | 36.96 | 3.12 | |
amortization | |||||||
- | Costs on maintenance | 90,000,499.83 | 4.84 | 83,907,384.95 | 4.29 | 7.26 | Mainly due to the centralized |
maintenance of pavement on | |||||||
certain sections of Nanjing | |||||||
Shanghai Expressway and a year- | |||||||
on-year increase in the costs of | |||||||
road maintenance as a result of a | |||||||
comprehensive renovation of the | |||||||
facilities and greening along the | |||||||
expressways during the Reporting | |||||||
Period. | |||||||
- | Costs on system | 4,238,044.31 | 0.23 | 7,078,171.66 | 0.36 | -40.13 | Mainly due to higher costs on system |
maintenance | maintenance as affected by the | ||||||
withdrawal of provincial toll stations in | |||||||
the corresponding period of last year | |||||||
- | Costs on toll collection | 48,350,275.51 | 2.60 | 73,256,312.21 | 3.75 | -34.00 | Mainly due to the decrease in toll |
revenue during the Reporting Period, | |||||||
the corresponding road network | |||||||
management fees decreased year- | |||||||
on-year, and the renovation of toll | |||||||
station areas along the expressway in | |||||||
the corresponding period of last year, | |||||||
resulting in a year-on-year decrease in | |||||||
costs on toll collection. | |||||||
- | Labour costs | 309,097,339.27 | 16.62 | 299,288,172.28 | 15.30 | 3.28 |
Jiangsu Expressway Company Limited | 25 |
SECTION IV DISCUSSION AND ANALYSIS OF THE OPERATION
- PRINCIPAL OPERATIONS DURING THE REPORTING PERIOD (CONTINUED)
-
Analysis of principal businesses (Continued)
1. Table of analysis on changes in relevant items in the financial statements (Continued) - Analysis of costs (Continued)
-
Analysis of principal businesses (Continued)
By Industries | |||||||
Changes in | |||||||
percentage of | |||||||
the amount for | |||||||
Proportion of the | the Reporting | ||||||
Proportion of | amount in total | Period compared | |||||
the amount in | costs for the | with the | |||||
total costs for | Amount for the | corresponding | corresponding | ||||
Components of | Amount for the Reporting | the Reporting | corresponding | period of last | period of last | ||
By Industries | costs | Period | Period | period of last year | year | year | Explanation |
(%) | (%) | (%) | |||||
Ancillary service businesses | - | 525,002,197.70 | 28.24 | 551,071,965.03 | 28.18 | -4.73 | - |
- | Raw materials | 377,916,696.35 | 20.33 | 405,635,189.34 | 20.74 | -6.83 | Mainly due to the year-on-year decrease |
in procurement cost of raw materials as | |||||||
a result of the impact of the COVID-19 | |||||||
and the drop in oil prices during the | |||||||
Reporting Period. | |||||||
- | Depreciation and | 28,252,899.48 | 1.52 | 26,911,715.93 | 1.38 | 4.98 | |
amortization | |||||||
- | Labour costs | 81,461,935.33 | 4.38 | 83,861,022.12 | 4.29 | -2.86 | |
- | Other costs | 37,370,666.54 | 2.01 | 34,664,037.64 | 1.77 | 7.81 | Mainly due to the year-on-year increase |
in property management fees in the | |||||||
service area during the Reporting | |||||||
Period. | |||||||
Property sales businesses | - | 110,236,786.05 | 5.93 | 205,590,031.45 | 10.51 | -46.38 | During the Reporting Period, there was |
a year-on-year decrease in the scale | |||||||
of delivery and transfer of real estate | |||||||
projects, resulting in a year-on-year | |||||||
decrease in the cost of property sales | |||||||
business. | |||||||
Other businesses | - | 27,015,850.09 | 1.45 | 12,686,454.68 | 0.65 | 112.95 | Mainly due to a year-on-year increase in |
the costs of other business as a result |
of the increase in the management cost of Yangtze River Management Company and the increase in the scale of the property management concerning the property projects delivered by the subsidiaries during the Reporting Period.
26 2020 Interim Report
SECTION IV DISCUSSION AND ANALYSIS OF THE OPERATION
- PRINCIPAL OPERATIONS DURING THE REPORTING PERIOD (CONTINUED)
-
Analysis of principal businesses (Continued)
2. Others - Detailed explanation on major changes in the composition or source of the Company's profit
-
Analysis of principal businesses (Continued)
Applicable ✔ N/A
- Others
Applicable ✔ N/A
-
Explanation on major changes in profits caused by non-principal businesses
Applicable ✔ N/A
- Analysis of Assets and Liabilities
✔ | Applicable | N/A |
1. Assets and Liabilities
Unit: RMB Currency: RMB
Proportion of | ||
balance to the | ||
Balance at the end | total assets as | |
of the Reporting | at the end of the | |
Item | Period | Reporting Period |
(%) |
Percentage change in | |||
Proportion of | balance at the end of | ||
balance to the total | the Reporting Period | ||
assets as at the | as compared to that | ||
Balance at the end of | end of the previous | at the end of the | |
the previous period | period | previous period | Explanation on changes |
(%) | (%) |
Held-for-trading financial assets | 1,765,073,027.10 | 3.02 | 676,935,184.62 | 1.22 | 160.74 | Mainly due to the increase in wealth |
management products held by the | ||||||
Group at the end of the Reporting | ||||||
Period as compared to the | ||||||
beginning of the period. | ||||||
Notes receivable | 1,997,100.00 | - | - | - | - | Mainly due to the increase in the bank |
acceptances receivable at the end | ||||||
of the Reporting Period. |
Jiangsu Expressway Company Limited | 27 |
SECTION IV DISCUSSION AND ANALYSIS OF THE OPERATION
- PRINCIPAL OPERATIONS DURING THE REPORTING PERIOD (CONTINUED)
-
Analysis of Assets and Liabilities (Continued)
1. Assets and Liabilities (Continued)
-
Analysis of Assets and Liabilities (Continued)
Proportion of | ||
balance to the | ||
Balance at the end | total assets as | |
of the Reporting | at the end of the | |
Item | Period | Reporting Period |
(%) |
Percentage change in | |||
Proportion of | balance at the end of | ||
balance to the total | the Reporting Period | ||
assets as at the | as compared to that | ||
Balance at the end of | end of the previous | at the end of the | |
the previous period | period | previous period | Explanation on changes |
(%) | (%) |
Accounts Receivable | 412,901,378.17 | 0.71 | 224,285,157.62 | 0.40 | 84.10 | Mainly due to the increase in |
financing factoring balance at | ||||||
the end of the Reporting Period | ||||||
as compared to the beginning of | ||||||
the period. | ||||||
Prepayments | 57,315,472.23 | 0.10 | 26,865,058.19 | 0.05 | 113.35 | Mainly due to the increase in |
prepayments for petroleum | ||||||
products at the end of the Reporting | ||||||
Period as compared to the | ||||||
beginning of the period. | ||||||
Other receivables | 118,522,734.38 | 0.20 | 51,199,899.50 | 0.09 | 131.49 | Mainly due to the cash dividends |
declared but not yet paid by | ||||||
associates during the Reporting | ||||||
Period. | ||||||
Other current assets | 514,936,839.58 | 0.88 | 379,340,961.34 | 0.68 | 35.75 | Mainly due to the increase in the |
Group's prepaid VAT at the end of | ||||||
the Reporting Period as compared | ||||||
to the beginning of the period. | ||||||
Other equity instruments | 4,567,964,324.49 | 7.82 | 5,655,468,613.24 | 10.17 | -19.23 | Mainly due to the decrease in the |
investment | book value of the other equity | |||||
instruments investment recognized | ||||||
at fair value by the Group during | ||||||
the Reporting Period. | ||||||
Construction in progress | 17,618,050,406.77 | 30.18 | 14,501,734,494.95 | 26.07 | 21.49 | Mainly due to the investment in |
construction of road and bridge | ||||||
projects in progress. | ||||||
Right-of-use assets | 2,022,347.44 | - | 637,434.33 | - | 217.26 | Mainly due to the increase in the |
right-of-use assets recognized in | ||||||
accordance with the New Lease |
Standards during the Reporting
Period.
28 2020 Interim Report
SECTION IV DISCUSSION AND ANALYSIS OF THE OPERATION
- PRINCIPAL OPERATIONS DURING THE REPORTING PERIOD (CONTINUED)
-
Analysis of Assets and Liabilities (Continued)
1. Assets and Liabilities (Continued)
-
Analysis of Assets and Liabilities (Continued)
Proportion of | ||
balance to the | ||
Balance at the end | total assets as | |
of the Reporting | at the end of the | |
Item | Period | Reporting Period |
(%) |
Percentage change in | |||
Proportion of | balance at the end of | ||
balance to the total | the Reporting Period | ||
assets as at the | as compared to that | ||
Balance at the end of | end of the previous | at the end of the | |
the previous period | period | previous period | Explanation on changes |
(%) | (%) |
Short-term borrowings | 1,380,880,336.29 | 2.37 | 1,972,708,495.84 | 3.55 | -30.00 | Mainly due to the partial repayment |
of short-term borrowings during the | ||||||
Reporting Period. | ||||||
Notes Payable | 895,000,000 | 1.53 | - | - | - | Mainly due to the issuance of bank |
acceptances by the subsidiaries | ||||||
engaged in the construction of | ||||||
roads and bridges, concerning the | ||||||
payment of construction projects | ||||||
during the Reporting Period. | ||||||
Accounts payable | 1,043,858,654.62 | 1.79 | 1,262,414,819.54 | 2.27 | -17.31 | Mainly due to the decrease in project |
payment payable during the | ||||||
Reporting Period. | ||||||
Other payables | 2,591,604,474.14 | 4.44 | 261,048,444.02 | 0.47 | 892.77 | The increase is mainly due to the cash |
dividends declared but not paid at | ||||||
the end of the Reporting Period. | ||||||
Non-current liabilities due within | 4,164,076,736.49 | 7.13 | 3,161,145,193.63 | 5.68 | 31.73 | Mainly due to the adjustment of RMB1 |
one year | billion of medium-term notes due | |||||
within one year to non-current | ||||||
liabilities due within one year during | ||||||
the Reporting Period. | ||||||
Other current liabilities | 6,357,724,161.56 | 10.89 | 5,092,083,748.87 | 9.15 | 24.86 | Mainly due to the ultra short-term |
notes newly issued during the | ||||||
Reporting Period, resulting | ||||||
in increase in the balance as | ||||||
compared to the beginning of | ||||||
the period. | ||||||
Long-term borrowings | 10,055,235,181.77 | 17.22 | 8,335,475,444.12 | 14.99 | 20.63 | Mainly due to the increase in loans |
for road and bridge projects under | ||||||
construction during the Reporting |
Period as compared to the beginning of the period.
Jiangsu Expressway Company Limited | 29 |
SECTION IV DISCUSSION AND ANALYSIS OF THE OPERATION
- PRINCIPAL OPERATIONS DURING THE REPORTING PERIOD (CONTINUED)
-
Analysis of Assets and Liabilities (Continued)
1. Assets and Liabilities (Continued)
-
Analysis of Assets and Liabilities (Continued)
Proportion of | ||
balance to the | ||
Balance at the end | total assets as | |
of the Reporting | at the end of the | |
Item | Period | Reporting Period |
(%) |
Percentage change in | |||
Proportion of | balance at the end of | ||
balance to the total | the Reporting Period | ||
assets as at the | as compared to that | ||
Balance at the end of | end of the previous | at the end of the | |
the previous period | period | previous period | Explanation on changes |
(%) | (%) |
Bonds payable | - | - | 997,460,933.93 | 1.79 | -100.00 | Mainly due to the adjustment of RMB1 | |||||||
billion of medium-term notes due | |||||||||||||
within one year to non-current | |||||||||||||
liabilities due within one year during | |||||||||||||
the Reporting Period. | |||||||||||||
Lease | 1,094,340.47 | - | - | - | - | Mainly due to the lease liabilities | |||||||
liabilities | recognized in accordance with the | ||||||||||||
New Lease Standards during the | |||||||||||||
Reporting Period | |||||||||||||
Deferred income tax liabilities | 157,788,364.52 | 0.27 | 416,613,871.66 | 0.75 | -62.13 | Mainly due to the adjustment of other | |||||||
comprehensive income based | |||||||||||||
on the fair value of other equity | |||||||||||||
instruments held by the Group, | |||||||||||||
and the adjustment to the deferred | |||||||||||||
income tax liabilities accordingly | |||||||||||||
during the Reporting Period. | |||||||||||||
Deferred income | 128,703,380.91 | 0.22 | 41,177,151.42 | 0.07 | 212.56 | Mainly due to the receipt of subsidies | |||||||
concerning the withdrawal of | |||||||||||||
provincial boundary toll stations | |||||||||||||
during the Reporting Period. | |||||||||||||
Other comprehensive income | 504,015,493.00 | 0.86 | 1,291,748,071.42 | 2.32 | -60.98 | Mainly due to the adjustment of other | |||||||
comprehensive income based | |||||||||||||
on the fair value of other equity | |||||||||||||
instruments held by the Group | |||||||||||||
during the Reporting Period. | |||||||||||||
Other explanations
The calculation basis for total gearing ratio: liabilities divided by total assets; the calculation
basis for net gearing ratio: liabilities divided by shareholders' equity.
30 2020 Interim Report
SECTION IV DISCUSSION AND ANALYSIS OF THE OPERATION
- PRINCIPAL OPERATIONS DURING THE REPORTING PERIOD (CONTINUED)
-
Analysis of Assets and Liabilities (Continued)
2. Restrictions on major assets as at the end of the Reporting Period - Applicable N/A
-
Analysis of Assets and Liabilities (Continued)
Unit: Yuan Currency: RMB | |||
Book value as at the | |||
end of the Reporting | |||
Item | Period | Reasons for restriction | |
Bank deposits | 2,359,744.84 | Deposit of mortgage loans to customers | |
Bank deposits | 65,208,534.35 | Regulated pre-sale proceeds | |
Intangible assets | 1,813,651,978.68 | Pledge of concession rights of toll | |
expressways | |||
Total | 1,881,220,257.87 | ||
- Explanation for restrictions on bank deposits
At the end of the Reporting Period, other monetary funds of the Group included customers' deposit for mortgage loans of RMB2,360,000 and regulated pre-sale proceeds of RMB65,209,000. The regulated pre-sale proceeds are project funds placed in escrow with banks as required by Nanjing Bureau of Housing and Urban- Rural Development (南京市住房和城鄉建設局) for the purpose of facilitating the smooth development of property projects and strengthening the supervision of monetary capital for property development projects. Project capital must be paid in full into banks before applications for construction permits are made. Developers shall release the project deposits by tranches depending on the construction progress. The remaining project deposits shall be released upon the completion of the construction and delivery of the units.
Jiangsu Expressway Company Limited | 31 |
SECTION IV DISCUSSION AND ANALYSIS OF THE OPERATION
- PRINCIPAL OPERATIONS DURING THE REPORTING PERIOD (CONTINUED)
- Analysis of Assets and Liabilities (Continued)
- Restrictions on major assets as at the end of the Reporting Period (Continued)
-
Explanation for restrictions on intangible assets
Guangjing Xicheng Company, a subsidiary of the Group, entered into a loan contract with Wuxi branch of Industrial and Commercial Bank of China in respect of a loan of RMB1,200,000,000 in aggregate, which was secured by the toll road concession right of Guangjing Expressway. As at the end of the Reporting Period, the loan balance amounted to RMB581,000,000.
Zhendan Company, a subsidiary of the Group, entered into a loan contract with each of Jiangsu Branch of Communications Bank, Zhongshan South Road Sub- branch of China Construction Bank and Gulou Sub-branch of Postal Saving Bank of China in respect of a total loan amount of RMB139,650,000, RMB600,000,000 and RMB230,000,000,respectively, which were secured by the toll road concession right of Zhendan Expressway. As at the end of the Reporting Period, the loan balance amounted to RMB135,450,000, RMB500,000,000 and RMB97,756,000, respectively.
-
Explanation for restrictions on intangible assets
- Other explanations
- Applicable N/A
- Capital expenditures
In the first half of 2020, the main capital expenditures of the Group are as follows:
Items of Capital Expenditures | Amount | |
(RMB) | ||
Investment in the construction of Wufengshan Toll Bridge | 1,037,517,588.84 | |
Investment in the construction of Changyi Expressway | 435,634,199.78 | |
Investment in the construction of Yichang Expressway | 738,646,549.32 | |
Investment in the construction of Longtan Bridge | 945,329,036.06 | |
Equity investment in Suzhou Industrial Park CDB Kai Yuan Investment | ||
Center Phase II (Limited Partnership) | 34,269,230.68 | |
Alteration and addition of service areas and toll collection points | 16,103,092.99 | |
Software renovation of toll stations | 19,287,971.38 | |
Double tank renovation project | 2,423,815.28 | |
Other capital expenditures of the Group | 54,516,503.35 | |
Total | 3,283,727,987.68 | |
32 2020 Interim Report
SECTION IV DISCUSSION AND ANALYSIS OF THE OPERATION
- PRINCIPAL OPERATIONS DURING THE REPORTING PERIOD (CONTINUED)
-
Analysis of Assets and Liabilities (Continued)
3. Other explanations (Continued) - Capital structure and solvency
The Group attached great importance to maintain a reasonable capital structure and continuously improved its profitability in order to maintain the Group's good credit rating and stable financial position. At the end of the Reporting Period, the total liabilities of the Group amounted to approximately RMB28,064,668,000. The overall gearing ratio of the Group was approximately 48.07% (Note: the calculation basis of the overall gearing ratio: liabilities/total assets), an increase of approximately 6.83 percentage points from the beginning of the period. In view of the Group's stable and abundant operating cash flow and sound capacity of financing and capital management, the management believes that the gearing ratio remained at a safe level at the end of the Reporting Period. - Financial strategy and financing arrangement
During the Reporting Period, the Group actively expanded its financing channels, adjusted its debt structure and controlled financing costs. Through adopting a proactive financing strategy, the Company was able to meet the funding needs of its operation and management and project investment and controlled the financing costs effectively. The Group's borrowing requirements are not subject to seasonality. During the Reporting Period, an additional fund of RMB8,110,000,000 was obtained through direct financing. As at 30 June 2020, the Group's borrowings amounted to RMB11,453,755,000, of which RMB2,274,909,000 were fixed-rate loans. As at the end of the Reporting Period, the balance of interest-bearing liabilities amounted to approximately RMB21,703,755,000, representing an increase of approximately RMB2,370,835,000 as compared with the beginning of the period. In the first half of 2020, the government adhered to the prudent monetary policy, the liquidity was reasonably abundant, the market interest rates were reasonably stable, and the financing costs on the market lowered as compared with the same period of last year. During the Reporting Period, the rate of the consolidated borrowing costs on interest- bearing liabilities of the Group was approximately 3.99%, representing a decrease of approximately 0.43 percentage point year-on-year, approximately 0.73 percentage point lower than the bank lending rate for the same period. During the Reporting Period, the Company's major financing activities included:
- Capital structure and solvency
-
Analysis of Assets and Liabilities (Continued)
Jiangsu Expressway Company Limited | 33 |
SECTION IV DISCUSSION AND ANALYSIS OF THE OPERATION
- PRINCIPAL OPERATIONS DURING THE REPORTING PERIOD (CONTINUED)
-
Analysis of Assets and Liabilities (Continued)
3. Other explanations (Continued) - Financial strategy and financing arrangement (Continued)
-
Analysis of Assets and Liabilities (Continued)
Prevailing | |||||||||||||
Interest | bank | Decreases | |||||||||||
Type of | Financing | rate of | benchmark | in financing | |||||||||
financing instrument | Date of issuance | Term | amount | issuance | interest rate | costs | |||||||
RMB'000 | % | % | % | ||||||||||
Ultra short-term note | 8 | January 2020 | 93 days | 720,000 | 2.20 | 4.35 | 2.15 | ||||||
Ultra short-term note | 9 | January 2020 | 92 days | 340,000 | 2.20 | 4.35 | 2.15 | ||||||
Ultra short-term note | 10 January 2020 | 97 days | 600,000 | 2.29 | 4.35 | 2.06 | |||||||
Ultra short-term note | 10 | January 2020 | 98 days | 200,000 | 2.20 | 4.35 | 2.15 | ||||||
Ultra short-term note | 3 | March 2020 | 227 days | 500,000 | 2.10 | 4.35 | 2.25 | ||||||
Ultra short-term note | 1 | April 2020 | 198 days | 400,000 | 2.20 | 4.35 | 2.15 | ||||||
Ultra short-term note | 8 | April 2020 | 190 days | 600,000 | 1.78 | 4.35 | 2.57 | ||||||
Ultra short-term note | 8 | April 2020 | 190 days | 500,000 | 1.77 | 4.35 | 2.58 | ||||||
Ultra short-term note | 15 | April 2020 | 191 days | 600,000 | 1.75 | 4.35 | 2.60 | ||||||
Ultra short-term note | 15 | April 2020 | 191 days | 700,000 | 1.74 | 4.35 | 2.61 | ||||||
Ultra short-term note | 26 | April 2020 | 187 days | 300,000 | 1.68 | 4.35 | 2.67 | ||||||
Ultra short-term note | 6 | May 2020 | 184 days | 500,000 | 1.67 | 4.35 | 2.68 | ||||||
Ultra short-term note | 13 | May 2020 | 184 days | 500,000 | 1.65 | 4.35 | 2.70 | ||||||
Ultra short-term note | 13 | May 2020 | 184 days | 500,000 | 1.67 | 4.35 | 2.68 | ||||||
Ultra short-term note | 20 | May 2020 | 184 days | 400,000 | 1.65 | 4.35 | 2.70 | ||||||
Ultra short-term note | 20 | May 2020 | 184 days | 500,000 | 1.65 | 4.35 | 2.70 | ||||||
Ultra short-term note | 27 May 2020 | 142 days | 250,000 | 1.65 | 4.35 | 2.70 | |||||||
- Credit policy
In order to minimize credit risk, the Group has controlled credit limits, undertaken credit approvals and implemented other control procedures to ensure that necessary follow-up actions are taken to recover overdue debts. In addition, the Group reviews the recovery of its receivables on each balance sheet date to ensure that adequate provisions are made for bad debts. In view of the above, the management of the Group considers that the Group's credit risk is relatively low.
34 2020 Interim Report
SECTION IV DISCUSSION AND ANALYSIS OF THE OPERATION
- PRINCIPAL OPERATIONS DURING THE REPORTING PERIOD (CONTINUED)
-
Analysis of Assets and Liabilities (Continued)
3. Other explanations (Continued) - Contingencies
As a common practice in the real estate industry, Ninghu Properties Company and Hanwei Company, subsidiaries of the Group, provide joint liabilities guarantees in connection with mortgage loans granted to buyers of commodity housing properties. The guarantee obligation shall begin from the effective date of a guarantee contract and cease when the registration of mortgage in respect of a purchased properties is completed and the Building Right Encumbrances Certificate is submitted to banks for enforcement. As at 30 June 2020, the outstanding guarantees amounted to approximately RMB590,188,000.
The Company has provided a wholly-owned subsidiary, Ninghu Factoring with guarantees for their application for comprehensive credit, with a maximum guarantee balance of RMB810,000,000. The guarantee method is joint liability guarantee, with a guarantee period of one year; as of 30 June 2020, the guarantee balance was approximately RMB110,000,000. - Entrusted loans
As at 30 June 2020, the entrusted loans obtained by the Company and its subsidiaries were as follows:
- Contingencies
-
Analysis of Assets and Liabilities (Continued)
Unit: Yuan Currency: RMB | |||||||
Overdue | |||||||
Source of | Amount | Unexpired | outstanding | ||||
Type | funds | incurred | balance | amount | |||
Entrusted loans | Internal funds | 110,000,000 | 1,407,000,000 | 0 | |||
Note: As of the end of the Reporting Period, the Company's entrusted loan balance was RMB1,407,000,000. In particular, the entrusted loans to Zhendan Company, a controlling subsidiary were RMB21,000,000, and the entrusted loans to Hanwei Company and Ninghu Properties Company, the wholly-owned subsidiaries, were RMB436,000,000 and RMB950,000,000, respectively.
Jiangsu Expressway Company Limited | 35 |
SECTION IV DISCUSSION AND ANALYSIS OF THE OPERATION
- PRINCIPAL OPERATIONS DURING THE REPORTING PERIOD (CONTINUED)
-
Analysis of Assets and Liabilities (Continued)
3. Other explanations (Continued) - Foreign exchange risks
The Group is currently operating its businesses principally in the PRC. There are no material foreign exchange risks as the Group's operating revenue and capital expenditure are all settled in Renminbi except for dividend payments for H Shares and the Group has no investment in foreign currency. The Group obtained a loan of USD9,800,000 from the Spanish Government in 1998 at the interest rate of 2% per annum which the Group will make annual payments in relation to the repayment of the principal and interests and it will become due on 18 July 2027. As at 30 June 2020, the balance of the loan was equivalent to approximately RMB14,909,000, against which no foreign exchange hedging arrangements were made by the Group. Fluctuation in exchange rates will have no material impact on the Group's results.
- Foreign exchange risks
-
Analysis of Assets and Liabilities (Continued)
(IV) Analysis of investment
1. Overall analysis of external investment
- Applicable N/A
During the Reporting Period, the total amount of external investment of the Group was approximately RMB3,191,397,000, representing a year-on-year increase of approximately 20.97%. The specific projects include investment in the construction of roads and bridges under construction, and investment in Suzhou Industrial Park CDB Kai Yuan Investment Center Phase II (Limited Partnership).
- Material equity investments
✔ | Applicable | N/A |
- Investment in Luode Parent Real Estate Fund
On 24 April 2020, the twentieth meeting of the ninth session of the board of directors of the Company approved the participation by Ninghu Investment Company, a wholly-owned subsidiary of the Company, in the establishment of the Phase III Parent Real Estate Fund initiated by Luode Fund Company, with total size of the fund no more than RMB1.5 billion, in which Ninghu Investment Company will invest no more than RMB500 million; other partners and teams will invest no more than RMB1,000 million. For details of the above investment project, please refer to the announcements published by the Company on the website of Shanghai Stock Exchange (www.sse.com.cn) on 25 April 2020 and on the website of the Stock Exchange (www.hkex.com.hk) on 24 April 2020, respectively.
36 2020 Interim Report
SECTION IV DISCUSSION AND ANALYSIS OF THE OPERATION
- PRINCIPAL OPERATIONS DURING THE REPORTING PERIOD (CONTINUED)
(IV) Analysis of investment (Continued)
1. Overall analysis of external investment (Continued)
- Material equity investments (Continued)
-
Investment in Luode Parent Real Estate Fund (Continued)
As of the date of this report, the relevant investment agreement has been signed on 24 July 2020. For details of the investment agreement, please refer to the relevant announcements published by the Company on the website of Shanghai Stock Exchange (www.sse.com.cn) on 25 July 2020 and on the website of the Stock Exchange (www.hkex.com.hk) on 24 July 2020, respectively.
-
Investment in Luode Parent Real Estate Fund (Continued)
- Material non-equity investments
✔ | Applicable | N/A |
- Accelerating the progress of road and bridge projects under construction
During the Reporting Period, the Group accelerated the progress of road and bridge projects under construction, of which, RMB1,037,518,000, RMB435,634,000, RMB738,647,000 and RMB945,329,000 were invested in the construction of the Wufengshan Toll Bridge project, Changyi Expressway, Yichang Expressway and Longtan Bridge Project, respectively.
- Subscription for CDB Kai Yuan Phase II Fund
Upon approval by the board of directors of the Company, Ninghu Investment Company has subscribed for a total of RMB1.2 billion units in CDB Kai Yuan Phase II Fund. During the Reporting Period, Ninghu Investment Company made a capital contribution of approximately RMB34,269,000. As at the end of the Reporting Period, Ninghu Investment Company has made an aggregate capital contribution of RMB953,800,000.
Jiangsu Expressway Company Limited | 37 |
SECTION IV DISCUSSION AND ANALYSIS OF THE OPERATION
- PRINCIPAL OPERATIONS DURING THE REPORTING PERIOD (CONTINUED)
(IV) Analysis of investment (Continued)
1. Overall analysis of external investment (Continued)
- Financial assets measured at fair value
- Applicable N/A
Unit: Yuan Currency: RMB | |||||||||
Initial | Investment | Change in | |||||||
Item | investment cost | Source of funds | Purchased/Sold | income | fair value | ||||
Fund investments | 9,999,400.00 | Internal funds | - | - | 5,070,695.74 | ||||
Wealth management products | 1,732,700,000 | Internal funds | - | 5,374,015.76 | - | ||||
Gold investments | 10,473,492.09 | Internal funds | -7,564,479.66 | 3,421,316.72 | -1,745,020.34 | ||||
Other non-current financial | 919,531,171.55 | Internal funds | 34,269,230.68 | - | 47,094,108.45 | ||||
assets (CDB Kai Yuan | |||||||||
Phase II) | |||||||||
Other non-current financial | 150,000,000.00 | Internal funds | -150,000,000.00 | - | -27,890.68 | ||||
assets (Luode Dening) | |||||||||
Other non-current financial | 300,000,000.00 | Internal funds | - | - | 61,082.85 | ||||
assets (Zhongbei Zhiyuan) | |||||||||
Other equity Instruments | 1,947,506,804.71 | Internal funds | - | 93,130,000 | -525,950,000 | ||||
(Bank of Jiangsu) | |||||||||
Other equity Instruments | 270,898,456.89 | Internal funds | - | 56,160,000 | -194,220,000 | ||||
(Jiangsu Leasing Company) | |||||||||
Fuanda Asset Management | 2,000,000,000 | Internal funds | - | - | -367,334,288.75 | ||||
Scheme | |||||||||
New shares | 206,442.80 | Internal funds | -187,996.84 | 88,437.12 | 8,200.78 | ||||
38 2020 Interim Report
SECTION IV DISCUSSION AND ANALYSIS OF THE OPERATION
- PRINCIPAL OPERATIONS DURING THE REPORTING PERIOD (CONTINUED)
(IV) Analysis of investment (Continued)
1. Overall analysis of external investment (Continued)
-
Financial assets measured at fair value (Continued)
During the Reporting Period, Ninghu Investment Company, a subsidiary of the Company, continued to hold Fuanda Advantageous Growth Fund purchased in 2011, in which approximately 10,000,000 units were available in total with a net value of approximately RMB22,891,000 at the beginning of the Reporting Period. Investment cost amounted to approximately RMB9,999,000. Its fair value increased by approximately RMB5,070,000 and its cumulative fair value increased by approximately RMB17,961,000 during the Reporting Period. During the Reporting Period, Ninghu Investment Company continued to engage in gold bullion investment commenced in 2014 at an investment cost of approximately RMB10,473,000 with a net value being approximately RMB13,694,000 at the beginning of the Reporting Period, and sold approximately RMB7,564,000 of the gold with an investment income of approximately RMB3,421,000 during the Reporting Period. At the end of the Reporting Period, its net value was approximately RMB4,385,000. Its fair value decreased by approximately RMB1,745,000 while its cumulative fair value increased by approximately RMB1,476,000 during the Reporting Period. During the Reporting Period, Ninghu Investment Company continued to hold Luode Parent Fund subscribed for in 2016, with a net value of approximately RMB38,414,000 at the beginning of the Reporting Period, and a net value of approximately RMB38,386,000 at the end of the Reporting Period. Its fair value decreased by approximately RMB28,000 and its cumulative fair value increased by approximately RMB38,386,000 during the Reporting Period. During the Reporting Period, Ninghu Investment Company continued to hold CDB Kai Yuan Phase II Fund subscribed for in 2016 at an investment cost of RMB919,531,000 with its net value of approximately RMB1,107,666,000 at the beginning of the Reporting Period, and it increased the principal amount of investment of RMB34,269,000 during the Reporting Period. At the end of the Reporting Period, its net value was approximately RMB1,189,029,000. Its fair value increased by approximately RMB47,094,000 while its cumulative fair value increased by approximately RMB235,229,000 during the Reporting Period. During the Reporting Period, Ninghu Investment Company participated in Real Estate Investment FOF Second Issue initiated and established by Luode Fund Company at an investment cost of RMB300,000,000. At the end of the Reporting Period, its net value was approximately RMB300,157,000. Its fair value increased by approximately RMB61,000 while its cumulative fair value increased by approximately RMB157,000 during the Reporting Period.
-
Financial assets measured at fair value (Continued)
- Material disposal of assets and equity interest
Applicable ✔ N/A
Jiangsu Expressway Company Limited | 39 |
SECTION IV DISCUSSION AND ANALYSIS OF THE OPERATION
- PRINCIPAL OPERATIONS DURING THE REPORTING PERIOD (CONTINUED)
(VI) Analysis of major subsidiaries and investee companies
✔ | Applicable | N/A |
1. Operations of major subsidiaries
Unit: Yuan Currency: RMB
Equity | |||||||||||||||||||||
interest | Percentage | Year-on- | |||||||||||||||||||
attributable | of the | year increase/ | |||||||||||||||||||
to the | Company's | decrease in | |||||||||||||||||||
Name of company | Principal businesses | Investment cost | Company | Total assets | Net assets | Net profit | net profit | net profit | |||||||||||||
% | % | % | |||||||||||||||||||
Ningchang Zhenli | Expressway construction, | 5,029,236,884.47 | 100 | 6,733,460,015.85 | 6,652,574,218.91 | -65,185,260.10 | - | -129.03 | |||||||||||||
Company | management, maintenance and toll | ||||||||||||||||||||
collection | |||||||||||||||||||||
Guangjing Xicheng | Expressway construction, | 2,125,000,000 | 85 | 12,750,116,443.10 | 6,651,712,145.04 | 65,887,527.32 | 13.61 | -81.59 | |||||||||||||
Company | management, maintenance and toll | ||||||||||||||||||||
collection | |||||||||||||||||||||
Zhendan Company | Expressway construction, | 423,910,000 | 70 | 1,677,724,493.31 | 501,350,673.18 | -40,708,214.99 | - | 65.49 | |||||||||||||
management, maintenance and toll | |||||||||||||||||||||
collection | |||||||||||||||||||||
Wufengshan Toll | Expressway construction, | 3,112,980,000 | 64.5 | 10,318,143,324.72 | 4,829,024,960.27 | 215,994.57 | 0.04 | -81.90 | |||||||||||||
Bridge Company | management, maintenance and toll | ||||||||||||||||||||
collection | |||||||||||||||||||||
Ninghu Investment | Investments in various types of | 1,318,100,000 | 100 | 1,995,462,982.84 | 1,810,776,444.56 | 55,345,582.58 | 11.43 | 109.93 | |||||||||||||
Company | infrastructure, industries and assets | ||||||||||||||||||||
Ninghu Properties | Real estate development, operation | 500,000,000 | 100 | 2,581,085,959.65 | 1,175,218,751.88 | 54,619,874.66 | 11.28 | -49.05 | |||||||||||||
Company | and consultancy | ||||||||||||||||||||
Hanwei Company | Real estate development and | 184,499,800 | 100 | 1,820,771,752.03 | -22,580,894.04 | -21,903,613.83 | - | -16.39 | |||||||||||||
operation | |||||||||||||||||||||
Yangtze River | Expressway construction, | 50,000,000 | 100 | 59,483,961.01 | 50,136,478.35 | 124,563.56 | 0.03 | - | |||||||||||||
Management | management and maintenance | ||||||||||||||||||||
Company | |||||||||||||||||||||
Longtan Bridge | Expressway construction, | 785,090,000 | 53.6 | 1,363,937,347.56 | 1,233,735,497.56 | -114,223.55 | - | - | |||||||||||||
Company | management, maintenance and toll | ||||||||||||||||||||
collection | |||||||||||||||||||||
- During the Reporting Period, as affected by the COVID-19 and the policy on toll- free travel, the operating results of Ningchang Zhenli Company, Guangjing Xicheng Company and Zhendan Company, the subsidiaries of the Group in road and bridge sector, decreased significantly year-on-year.
- During the Reporting Period, Ninghu Investment Company recorded an increase in net profit by approximately 109.93% year-on-year due to an increase in fair value of its other non-current financial assets during the Reporting Period.
40 2020 Interim Report
SECTION IV DISCUSSION AND ANALYSIS OF THE OPERATION
- PRINCIPAL OPERATIONS DURING THE REPORTING PERIOD (CONTINUED)
(VI) Analysis of major subsidiaries and investee companies (Continued)
- Operations of major subsidiaries (Continued)
- Please refer to the section headed "Business of property development and sales" in this report for the operational performance and changes in the results of Ninghu Properties Company.
- Please refer to the section headed "Business of property development and sales" in this report for the operational performance of Hanwei Company.
-
Operations of key associates
During the Reporting Period, the investment income of the Group amounted to approximately RMB147,762,000, representing a decrease of approximately 69.10% year-on-year and approximately 30.52% of the Group's net profit. Although the year-on-year increase in the bonus of Jiangsu Leasing and Bank of Jiangsu invested by the Group during the Reporting Period, the associates in road and bridge sector recorded an operating loss as affected by the COVID-19 and the policy on toll-free travel. A year-on-year decrease in investment income was recorded as a result of an investment income of approximately RMB-10,412,000 recognized by associates directly invested by the Group. Operating results of certain key associates are set out below:
Equity | Net profit | ||||||||||||||||
interest | attributable | ||||||||||||||||
attributable | to the | Contribution | Percentage of | Year-on-year | |||||||||||||
to the | shareholders of | to investment | the Company's | increase/ | |||||||||||||
Name of Company | Principal business | Investment cost | Company | the associates | income | net profit | decrease | ||||||||||
RMB | % | RMB | RMB | % | % | ||||||||||||
Suzhou Expressway Company | Mainly responsible for the management | 526,090,677 | 30.01 | 32,210,226.66 | 9,666,289.02 | 2.00 | -91.47 | ||||||||||
(the original Sujiahang | and operation businesses of | ||||||||||||||||
Company) | Sujiahang Expressway and Changjia | ||||||||||||||||
Expressway | |||||||||||||||||
Yangtze Bridge Company | Mainly responsible for the management | 631,159,243 | 26.66 | -56,000,003.00 | -14,929,600 | - | -111.84 | ||||||||||
and operation of Jiangyin Bridge | |||||||||||||||||
Yanjiang Company | Mainly responsible for the management | 1,466,200,000 | 25.15 | -90,454,006.45 | -24,965,305.78 | - | -124.33 | ||||||||||
and operation of Yanjiang | |||||||||||||||||
Expressway | |||||||||||||||||
- As affected by the COVID-19 and the policy on toll-free travel, the Group's associates in the road and bridge sector recorded operating losses, resulting in a year-on-year significant decrease in investment income contributed.
Jiangsu Expressway Company Limited | 41 |
SECTION IV DISCUSSION AND ANALYSIS OF THE OPERATION
- PRINCIPAL OPERATIONS DURING THE REPORTING PERIOD (CONTINUED)
(VII) Structured entities controlled by the Company
Applicable ✔ N/A
- OTHER DISCLOSURES
- Profit warning and explanation of projected accumulated net loss from the beginning of the year to the end of the next reporting period or material changes over the corresponding period of previous year
- Applicable N/A
As affected by the COVID-19 and the policy on toll-free travel, it is expected that the accumulated net profit from the beginning of the year to the end of the next reporting period will decrease significantly over the corresponding period of previous year.
- Possible risks
- Applicable N/A
With a view to optimizing the corporate governance system of the Group, strengthening risk management, and enhancing the Company's capability to deal with risks, the Group determined the basic principles for risk assessment, established the standards of risk assessment, and identified material risks of the Group after taking into account the in combination with the industry risks, thus establishing the risk management system. According to the macro environment and the Group's current business situation, the Group will pay keen attention to the following main risks and proactively take effective countermeasures:
1. Risks associated with industry policy
Risk analysis: The Group is primarily engaged in the investment, construction, operation and management of toll roads and bridges, and toll revenue are the major source of revenue for the Group. The business revenue of the Group is subject to the direct and indirect influence of adjustments and changes in the national macro-control policy and taxation policy. Due to the impact of COVID-19 and the policy on toll-free travel, the toll revenue of the Group will see significant decreases and the Group is exposed to operational risks arising from policies.
42 2020 Interim Report
SECTION IV DISCUSSION AND ANALYSIS OF THE OPERATION
- OTHER DISCLOSURES (CONTINUED)
- Possible risks (Continued)
-
Risks associated with industry policy (Continued)
Counter-measures: The Group will follow closely with relevant policies and actively interpret policies in response to policy-related risks. It will establish a dynamic tracking and assessment mechanism and enhance the contact and communication with competent government authorities, especially transportation, financial, taxation and pricing departments, to make timely business decisions accordingly in a timely manner. It will strive for favorable policies and flexible and differentiated charging standards and develop new profit growth points to reduce downward pressures on toll revenue. Meanwhile, the Group will develop new profit growth points and proactively commence various business activities relating to the principal businesses aiming to reduce the risks associated with arising from relatively simple industrial structure. - Risks associated with competition pattern
Risk analysis: The traditional expressway industry faces severe competition with limited growth potential in market size. The opening of roads and bridges with substitution effects may reduce the market share and revenue growth of the Group. With the expansion of railway network in Jiangsu Province, the convenient high-speed railway has changed the way people travel, which has profound effects on the future development of the principal business of the Group.
Counter-measures: Facing the competition and the substitution effect in the industry, the Group will speed up in digitalized transformation. It will leverage on information technology to improve the capability on judging, releasing, sharing and controlling road information to consistently enhance operation management and improve service quality. It will focus on explore added value of traffic services and create more sources of revenue through multi- channels. Meanwhile, the Group will pay close attention to regional planning on road network and nodes in road and railway operation and establish tracking and appraisal mechanisms to enhance the response capacity. For diversion network with competition, it will adjust marketing strategies in a timely manner and adapt to market demands to stabilize sources of revenue.
-
Risks associated with industry policy (Continued)
Jiangsu Expressway Company Limited | 43 |
SECTION IV DISCUSSION AND ANALYSIS OF THE OPERATION
- OTHER DISCLOSURES (CONTINUED)
- Possible risks (Continued)
-
Risks associated with project investment
Risk analysis: In the course of the Group's business, road and bridge projects newly constructed and new projects with investments are subject to the influence of regional economy and other related factors. In particular, with the deepening of development of the "going-out" strategy of the Group, more mergers and acquisitions projects may emerge in overseas markets. Thus there is a risk that future returns may fall short of expectations. In addition, investment in financial and similar financial products may involve risks of losses and return due to market fluctuations and systematic risks.
Counter-measures: For uncertainties in achieving revenue from projects, the Group, on one hand, improves the mechanism on the enrolment and cultivation of professional talents and boosts the capacity on preliminary researches on projects to fully and comprehensively analyze the feasibility on investment in projects; on the other hand, it establishes or appoints professional appraisal teams to provide professional views to fully keep abreast of the revenue and potential risks of investment projects. It will enhance forward-looking judgment in decision-making on investment, comprehensively analyze internal and external factors affecting decision-making on projects and establish scientific investment decision-making procedures to reduce chances of investment risks. - Risks associated with lower-than-expected rate of destocking
Risk analysis: Under the general background with current new norms of the economy and due to its long industry chain and cycle, the real estate sector is more susceptible to the changes in market environment and policies. The economic operating environment, changes in fiscal and monetary policies and the policies for taming the property market may affect the sales cycle and sales performance of the Group's real estate business, leading to an extension of the real estate sales cycle and affecting the progress of destocking.
Counter-measures: It will establish the risk management system and normalized risk appraisal mechanisms, stay up-to-date with policies concerning the industry and the development trend of the macro-economy and the industry and integrate risk management into real estate projects. It will reinforce specialized management of projects and strive for delicacy management in various stages from market and projects selection, planning and design to operation and execution. It will build its capability to gain insights into the policy and market trend, adopt effective prevention measures and step up efforts to accelerate the destocking rate and reduce risks to the largest extent.
-
Risks associated with project investment
44 2020 Interim Report
SECTION IV DISCUSSION AND ANALYSIS OF THE OPERATION
- OTHER DISCLOSURES (CONTINUED)
-
Possible risks (Continued)
5. Safety risks associated with road management
Risk analysis: The increasing traffic volume makes it more and more challenging to maintain road safety and manage road condition. In the operation and management of expressways, any failure to perform the responsibility of safety risk prevention may result in serious road safety accidents and incur liabilities relating to the safety management in service areas, which could in turn adversely affect the realization of the Group's business objectives, and even have a negative impact on the image of the Group's brand.
Counter-measures: The Group will strengthen trainings on operation safety, enhance employees' awareness of operation safety and optimize the accountability and assessment system to ensure that oversight responsibility is in place and duly performed by a particular person. The Group will strengthen its supervision over operation safety, and ensure that the maintenance of production safety equipment is conducted on a regular basis and overhaul is carried out according to a standardized procedure to improve its capacity to ensure production safety with a view to eliminating all potential operation safety risks. The Group will strengthen multi-party coordination and cooperation and properly manage the layout of on- site operating areas in order to minimize the impact on traffic and ensure that all potential risks are eliminated.
-
Possible risks (Continued)
- Other Disclosures
✔ | Applicable | N/A |
- Establishment of Ninghu International Company, a wholly-owned subsidiary
During the Reporting Period, the Company completed the registration procedures for Ninghu International Company and obtained the Certificate of Incorporation and the Business Registration Certificate issued by the Companies Registry and the Business Registration Office of the Island Revenue Department in Hong Kong, respectively. - Consolidation of Ningchang Zhenli Company, a wholly-owned subsidiary by merger
On 26 February 2020, the sixteenth meeting of the ninth session of the board of directors of the Company resolved that, the Company was approved to consolidate Ningchang Zhenli Company, a wholly-owned subsidiary by way of merger, and submitted the same to the general meeting for consideration. For details, please refer to the relevant announcements published by the Company on the website of Shanghai Stock Exchange (www.sse.com.cn) on 27 February 2020 and on the website of the Stock Exchange (www.hkex.com.hk) on 26 February 2020, respectively. On 23 April 2020, the second extraordinary general meeting of the Company resolved that, the Company was approved to consolidate Ningchang Zhenli Company, a wholly-owned subsidiary by way of merger. For details, please refer to the relevant announcements published by the Company on the website of Shanghai Stock Exchange (www.sse.com.cn) on 24 April 2020 and on the website of the Stock Exchange (www.hkex.com.hk) on 23 April 2020, respectively.
Jiangsu Expressway Company Limited | 45 |
SECTION IV DISCUSSION AND ANALYSIS OF THE OPERATION
- OTHER DISCLOSURES (CONTINUED)
- Other Disclosures (Continued)
- Adjustment of the amortization method for road operation rights
On 24 April 2020, the twentieth meeting of the ninth session of the board of directors of the Company resolved that, the Company was approved to adjust the amortization method for road operation rights in 2020. The road operation rights are amortized at the standard passenger vehicle flow under the new toll rates. The adjustment resulted in a change of RMB-42,540,000 in the amortization of toll road operation rights within the consolidation scope of the Company in the first half of 2020.- Toll road and bridge projects in Turkey
As of the end of the Reporting Period, this overseas investment has obtained the Enterprise Overseas Investment Certificate (Enterprise Overseas Investment Certificate No. N1000202000216) issued by the Ministry of Commerce of the People's Republic of China and the Filing Notice of Overseas Investment Project (Fa Gai Ban Wai Zi Bei [2020] No.- issued by the National Development and Reform Commission of the People's Republic of China. Other approval procedures required for this overseas investment are being processed.
- Receipt of an Approval for Registration of Public Issuance of Corporate Bonds
On 30 July 2020, the Company received the "Approval on the Public Issuance of Corporate Bonds to Professional Investors by Jiangsu Expressway Company Limited" (Zheng Jian Xu Ke [2020] No. 1635) issued by the CSRC, which approved the application for registration of the Company's public issuance of corporate bonds not exceeding RMB8 billion to professional investors. The issue of the first tranche shall be completed within 12 months from the date of approval; the issue of the remaining tranches shall be completed within 24 months from the date of approval.- Registration of Medium-term Notes
On 14 August 2020, the Company's medium-term notes issue with principal amount of not more than RMB2 billion has been registered by the National Association of Financial Market Institutional Investors, with a registration term of 2 years. On 21 August 2020, the Group completed the issue of the medium-term notes with principal amount of RMB2 billion.
46 2020 Interim Report
SECTION IV DISCUSSION AND ANALYSIS OF THE OPERATION
- OTHER DISCLOSURES (CONTINUED)
-
Other Disclosures (Continued)
7. Investment plan and financing arrangement
-
Other Disclosures (Continued)
In the second half of 2020, the main capital expenditures of the Group are as follows:
Capital Expenditures | Amount | |
(RMB Yuan) | ||
Investment in the construction of Wufengshan Toll Bridge | 2,005,942,411.16 | |
Investment in the construction of Changyi Expressway | 423,985,800.22 | |
Investment in the construction of Yichang Expressway | 1,111,353,450.68 | |
Investment in the construction of Longtan Bridge | 548,150,963.94 | |
Equity investment in Suzhou Industrial Park CDB Kai Yuan Investment Center | ||
Phase II (Limited Partnership) | 65,730,769.32 | |
Other capital expenditures of the Group | 1,330,845,300.00 | |
Total | 5,486,008,695.32 | |
Note: The information in the above table includes capital investment in the subsidiaries of the Group.
On the basis of fully leveraging its own capital, the Group timely adjusted its financing strategy based on the financing condition of the capital market so as to satisfy its own funding needs for operation and development, while further optimizing its debt structure and reducing capital risks. As at the date of the disclosure of this report, the Group has obtained a registered amount of RMB8 billion for corporate bonds and RMB2 billion for medium-term notes. The Group signed credit facilities contracts with banks but has not yet utilized the facilities. The loan amount of the credit facilities with a term of over one year were approximately RMB30,500 million. The credit line will be sufficient for supporting capital expenditure, debt roll-over and business development of the Group. Meanwhile, the Group is actively exploring various types of financing channels such as convertible bonds and overseas bonds. Selecting the right financing products for the Group will not only provide the Group with sufficient and efficient funds for its present stage of development, but also make prior arrangements for its future development strategies. If other capital expenditure is required under special cases, the Group will adjust its financing plan based on the size of expenditure and the actual cash flow condition.
Jiangsu Expressway Company Limited | 47 |
SECTION V SIGNIFICANT MATTERS
- OVERVIEW OF THE GENERAL MEETINGS
Inquiry index of the | Disclosure date | ||||||
designated website for | of publishing the | ||||||
Session of the meeting | Convening date | publishing the resolutions | resolutions | ||||
The 2020 First Extraordinary | 25 February 2020 | www.sse.com.cn; | 26 | February 2020 | |||
General Meeting | www.hkexnews.hk; | ||||||
www.jsexpressway.com | |||||||
The 2020 Second | 23 April 2020 | www.sse.com.cn; | 24 | April 2020 | |||
Extraordinary General | www.hkexnews.hk; | ||||||
Meeting | www.jsexpressway.com | ||||||
The 2019 Annual General | 23 June 2020 | www.sse.com.cn; | 24 | June 2020 | |||
Meeting | www.hkexnews.hk; | ||||||
www.jsexpressway.com | |||||||
Information on the general meetings | |||||||
Applicable | Not Applicable | ||||||
✔ |
- PROFIT DISTRIBUTION PLAN OR PLAN FOR CONVERSION OF CAPITAL RESERVES INTO SHARE CAPITAL
- Proposed half-yearly profit distribution plan or plan for conversion of capital reserves into share capital
Whether to distribute or convert | No |
Number of bonus shares per share (share) | 0 |
Amount of cash dividends per share | |
(Yuan) (tax inclusive) | 0 |
Number of shares converted per share (share) | 0 |
Relevant information on the profit distribution plan or plan for conversion of capital reserves into share capital
Not Applicable
- UNDERTAKINGS AND PERFORMANCE OF UNDERTAKINGS
- Undertakings of the de facto controller of the Company, Shareholders, related parties, offeror, the Company and other relevant parties during the Reporting Period or continuing up to the Reporting Period
Applicable | ✔ | Not Applicable |
48 2020 Interim Report
SECTION V SIGNIFICANT MATTERS
IV. APPOINTMENT AND REMOVAL OF ACCOUNTANT
Information on appointment and removal of accountant
✔ | Applicable | Not Applicable |
The reappointment of Deloitte as the domestic auditor of the Company for the year of 2020 was approved at the Company's 2019 Annual General Meeting. The audit fee amounted to RMB2,400,000 for the year. Deloitte, a firm of practising certified public accountants approved by the Ministry of Finance (MOF) and the CSRC to act as a reporting accountant and/or as auditor for Hong Kong listed companies incorporated in the Mainland, was engaged to audit the financial statements of the Company for the financial year ending 31 December 2020 prepared in accordance with the PRC Accounting Standards and to discharge the duties as an international auditor under the Hong Kong Listing Rules. Deloitte was also appointed as the internal control auditor of the Company for the year of 2020 at the meeting. The audit fee was RMB800,000.
Information on change of accountant during the auditing period
Applicable | ✔ | Not Applicable |
Explanation from the Company on the "Non-Standard Audit Report" issued by the accountant
Applicable | ✔ | Not Applicable |
Explanation by the Company on the certified public accountant's issuance of "Non-Standard Audit Report" in respect of the financial statements in the annual report for the preceding year
Applicable | ✔ | Not Applicable |
- MATTERS CONCERNING BANKRUPTCY AND RESTRUCTURING
Applicable | ✔ | Not Applicable |
VI. MATERIAL LITIGATION AND ARBITRATION
The Company was involved in material litigation and arbitration during the Reporting Period
- The Company was not involved in any material litigation or arbitration during the Reporting Period
VII. SANCTIONS AND RECTIFICATIONS ON THE LISTED COMPANY AND ITS DIRECTORS, SUPERVISORS, SENIOR MANAGEMENT MEMBERS, CONTROLLING SHAREHOLDER, DE FACTO CONTROLLER AND OFFERER
Applicable | ✔ | Not Applicable |
Jiangsu Expressway Company Limited | 49 |
SECTION V SIGNIFICANT MATTERS
VIII. EXPLANATION FOR INTEGRITY OF THE COMPANY AND ITS CONTROLLING SHAREHOLDER AND DE FACTO CONTROLLER DURING THE REPORTING PERIOD
Applicable | ✔ | Not Applicable |
IX. THE EQUITY INCENTIVE SCHEME, EMPLOYEE SHARE OWNERSHIP SCHEME OR OTHER EMPLOYEE INCENTIVE MEASURES OF THE COMPANY AND THE IMPACT THEREOF
- Equity incentive events disclosed in announcements with no further progress or changes after implementation
Applicable | ✔ | Not Applicable |
- Incentive events which have not been disclosed in announcements or have seen further progress
Equity Incentive Scheme
Applicable | ✔ | Not Applicable | |
Other information | |||
Applicable | Not Applicable | ||
✔ | |||
Employee Share Ownership Scheme | |||
Applicable | Not Applicable | ||
✔ | |||
Other Incentive Measures | |||
Applicable | Not Applicable | ||
✔ |
50 2020 Interim Report
SECTION V SIGNIFICANT MATTERS
- MAJOR RELATED PARTY/CONNECTED TRANSACTION
-
Related party/connected transaction relating to day-to-day operations
1. Matters which were disclosed in an announcement but had no further progress or no changes after implementation
-
Related party/connected transaction relating to day-to-day operations
✔ | Applicable | Not Applicable | ||
Description of the Event | Enquiry Index |
On 23 March 2018, Guangjing Xicheng Company, a controlled subsidiary of the Company entered into "Service Area Petrol Stations Leasing and Operation Agreement" with each of Expressway Petroleum Company and Taixing Oil Products Company respectively. The lease price is determined based on the refueling volume. The Agreements shall be valid from 1 April 2018 to 31 December 2020 and the lease amount for the year of 2020 will be not exceeding RMB12,000,000.
For details, please refer to the announcement on the ordinary r e l a t e d p a r t y / c o n t i n u i n g c o n n e c t e d t r a n s a c t i o n s p u b l i s h e d b y t h e C o m p a n y on the website of the SSE at www.sse.com.cn on 26 March 2 0 1 8 a n d o n t h e w e b s i t e o f t h e S t o c k E x c h a n g e a t www.hkexnews.hk on 23 March 2018 respectively.
On 31 M arch 2020, due to the increase in the leasing pricing standard of Expressway Petroleum Company, Guangjing Xicheng Company entered into "Supplementary Agreement for Service Area Petrol Stations Leasing" with each of Expressway Petroleum Company and Taixing Oil Products Company respectively.The estimated annual rent for the year of 2020 will be not exceeding RMB13,200,000, based on the estimated refueling volume in 2020.
For details, please refer to the supplemental announcement o n t h e o r d i n a r y r e l a t e d p a r t y/c o n t i n u i n g c o n n e c t e d transactions published by the Company on the website of the SSE at www.sse.com.cn on 1 April 2020 and on the website o f t h e S t o c k E x c h a n g e a t www.hkexnews.hk on 21 April 2020 respectively.
On 23 March 2018, the Company and Railway Group Company entered into the property leasing agreement in respect of the office property located at No. 189 Maqun Avenue, Nanjing City, Jiangsu Province, with a term of lease commencing from 1 April 2018 to 31 December 2020. The annual rent for the year of 2020 will be not exceeding RMB3,612,400.
For details, please refer to the announcement on the ordinary r e l a t e d p a r t y / c o n t i n u i n g c o n n e c t e d t r a n s a c t i o n s p u b l i s h e d b y t h e C o m p a n y on the website of the SSE at www.sse.com.cn on 26 March 2 0 1 8 a n d o n t h e w e b s i t e o f t h e S t o c k E x c h a n g e a t www.hkexnews.hk on 23 March 2018 respectively.
Jiangsu Expressway Company Limited | 51 |
SECTION V SIGNIFICANT MATTERS
- MAJOR RELATED PARTY/CONNECTED TRANSACTION (CONTINUED)
- Related party/connected transaction relating to day-to-day operations (Continued)
1. Matters which were disclosed in an announcement but had no further progress or no changes after implementation (Continued)
Description of the Event | Enquiry Index |
On 27 April 2018, the Company entered into the property lease contract with Engineering Testing Company in relation to the property of the Company situated at 3-4/F, Office Building B in the Courtyard at No. 8 Xianlin Avenue, Nanjing, Jiangsu Province, for a term from 1 June 2018 to 31 December 2020 and the rent cap for the year of 2020 will be not exceeding RMB1,500,000.
On 26 October 2018, Ninghu Investment Company, Guangjing Xicheng Company and Ningchang Zhenli Company, which are the subsidiaries of the Company, entered into a Cooperation Agreement with Media Company on the Operation of the Existing Advertising Facilities and the Development and Operation of New Advertising Resources Along the Roads and Bridges for a valid term commencing from 1 January 2019 to 31 December 2021. The contract values for the year of 2020 will not exceed RMB50,000,000, RMB12,000,000 and RMB5,000,000, respectively.
On 22 March 2019, the Company, Guangjing Xicheng Company, Ningchang Zhenli Company and Zhendan Company respectively entered into the Technical Service Contract on Coordination, Command and Dispatch of the Cloud Platform with Tongxingbao Company with a term from 22 March 2019 to 31 December 2021. It is estimated that the annual cloud platform usage fee will not exceed RMB2,000,000, R M B 9 0 0 , 0 0 0 , R M B 7 0 0 , 0 0 0 a n d R M B 2 1 0 , 0 0 0 , respectively.
For details, please refer to the Announcement on Resolutions of the Board published by the C o m p a n y o n t h e w e b s i t e o f the SSE at www . sse . com . cn on 28 April 2018 and on the website of the Stock Exchange at www.hkexnews.hk on 27 April 2018 respectively.
For details, please refer to the announcement on the ordinary r e l a t e d p a r t y / c o n t i n u i n g c o n n e c t e d t r a n s a c t i o n s published by the Company on the website of the SSE at www.sse. com . cn on 27 October 2018 and on the website of the Stock Exchange at www.hkexnews.hk on 26 October 2018 respectively.
For details, please refer to the announcement on the ordinary r e l a t e d p a r t y / c o n t i n u i n g c o n n e c t e d t r a n s a c t i o n s p u b l i s h e d b y t h e C o m p a n y on the website of the SSE at
- . sse . com . cn and on the website of the Stock Exchange at www.hkexnews.hk on 25 March 2019 respectively.
52 2020 Interim Report
SECTION V SIGNIFICANT MATTERS
- MAJOR RELATED PARTY/CONNECTED TRANSACTION (CONTINUED)
- Related party/connected transaction relating to day-to-day operations (Continued)
1. Matters which were disclosed in an announcement but had no further progress or no changes after implementation (Continued)
Description of the Event | Enquiry Index |
On 22 March 2019, Ningchang Zhenli Company entered into the Service Area Petrol Stations Leasing Contract with Expressway Petroleum Company, with a term commencing from 1 April 2019 to 31 December 2021. It is expected that the total amount of contract in 2020 will not exceed RMB6,640,000.
For details, please refer to the announcement on the ordinary r e l a t e d p a r t y / c o n t i n u i n g c o n n e c t e d t r a n s a c t i o n s p u b l i s h e d b y t h e C o m p a n y on the website of the SSE at
- . sse . com . cn and on the website of the Stock Exchange at www.hkexnews.hk on 25 March 2019 respectively.
On 22 March 2019, the Company, Guangjing Xicheng Company and Ningchang Zhenli Company respectively entered into the contracts on maintenance of monitoring and communication systems and procurement of spare parts with Information Company for a term from 1 April 2019 to 31 March 2020. The amount of the contract for the period from 1 January 2020 to 31 March 2020 is expected to be not exceeding RMB1,000,000, RMB1,500,000 and RMB500,000 respectively.
On 31 March 2020, the Company, Guangjing Xicheng Company respectively entered into the contracts involving maintenance of the three major systems, procurement of spare parts and related upgrade and transformation of such systems and maintenance of monitoring and communication systems and procurement of spare parts with Information Company for a term from 1 April 2020 to 31 March 2021. The amount of the contract for the period from 1 April 2020 to 31 December 2020 is expected to be not exceeding RMB31,500,000 and RMB13,500,000 respectively.
On 22 March 2019, the Company, Guangjing Xicheng Company and Ningchang Zhenli Company respectively entered into the ETC Customer Service Outlets Management Agreement with Tongxingbao Company for a term from 1 April 2019 to 31 March 2020. The fees include the rental, utility charge and sewage charge for the outlets. The total amount cap of three ETC Customer Service Outlets Management Agreements is expected to be no more than RMB200,000, RMB50,000 and RMB20,000, respectively from 1 January 2020 to 31 March 2020.
For details, please refer to the announcement on the ordinary r e l a t e d p a r t y / c o n t i n u i n g c o n n e c t e d t r a n s a c t i o n s p u b l i s h e d b y t h e C o m p a n y on the website of the SSE at
- . sse . com . cn and on the website of the Stock Exchange at www.hkexnews.hk on 25 March 2019 respectively.
For details, please refer to the announcement on the ordinary r e l a t e d p a r t y / c o n t i n u i n g c o n n e c t e d t r a n s a c t i o n s p u b l i s h e d b y t h e C o m p a n y on the website of the SSE at
- . sse . com . cn and on the website of the Stock Exchange at www.hkexnews.hk on 1 April 2020 respectively.
For details, please refer to the announcement on the ordinary r e l a t e d p a r t y / c o n t i n u i n g c o n n e c t e d t r a n s a c t i o n s p u b l i s h e d b y t h e C o m p a n y on the website of the SSE at
- . sse . com . cn and on the website of the Stock Exchange at www.hkexnews.hk on 25 March 2019 respectively.
Jiangsu Expressway Company Limited | 53 |
SECTION V SIGNIFICANT MATTERS
- MAJOR RELATED PARTY/CONNECTED TRANSACTION (CONTINUED)
- Related party/connected transaction relating to day-to-day operations (Continued)
1. Matters which were disclosed in an announcement but had no further progress or no changes after implementation (Continued)
Description of the Event | Enquiry Index |
O n 31 M a r c h 2020, e a c h o f t h e C o m p a n y a n d Guangjing Xicheng Company (a controlled subsidiary of the Company) entered into ETC Customer Service Outlets Management Agreement with Tongxingbao Company, respectively. Both agreements have a term beginning from 1 April 2020 to 31 March 2021.The maximum amount of the agreements are expected to be not exceeding RMB600,000 and RMB150,000, respectively from 1 April 2020 to 31 December 2020.
O n 21 J u n e 2019, Y a n g t z e R i v e r M a n a g e m e n t Company, a wholly-owned subsidiary of the Company, entered into the Entrusted Operation Management Agreement with Yangtze Bridge Company and its controlled subsidiary Hutong Bridge Company, and Guangjing Xicheng Company and its controlled subsidiaries Changyi Company and Yichang Company, for a term commencing from 1 July 2019 to 31 March 2020 . T h e e n t r u s t e d m a n a g e m e n t f e e p a y a b l e by Yangtze Bridge Company and Hutong Bridge Company to Yangtze River Management Company shall not exceed RMB9,750,000, while the entrusted management fee payable by Guangjing Xicheng Company, Changyi Company and Yichang Company to Yangtze River Management Company shall not exceed RMB11,500,000 with total entrusted management fee not exceeding RMB21,250,000.
For details, please refer to the announcement on the ordinary r e l a t e d p a r t y / c o n t i n u i n g c o n n e c t e d t r a n s a c t i o n s p u b l i s h e d b y t h e C o m p a n y on the website of the SSE at
- . sse . com . cn and on the website of the Stock Exchange at www.hkexnews.hk on 1 April 2020 respectively.
For details, please refer to the announcement on the ordinary r e l a t e d p a r t y / c o n t i n u i n g c o n n e c t e d t r a n s a c t i o n s p u b l i s h e d b y t h e C o m p a n y on the website of the SSE at www.sse.com.cn on 22 June 2 0 1 9 a n d o n t h e w e b s i t e o f t h e S t o c k E x c h a n g e a t www.hkexnews.hk on 23 June 2019 respectively.
54 2020 Interim Report
SECTION V SIGNIFICANT MATTERS
- MAJOR RELATED PARTY/CONNECTED TRANSACTION (CONTINUED)
- Related party/connected transaction relating to day-to-day operations (Continued)
1. Matters which were disclosed in an announcement but had no further progress or no changes after implementation (Continued)
Description of the Event | Enquiry Index |
On 31 March 2020, Yangtze River Management Company, a wholly-owned subsidiary of the Company, entered into the Entrusted Operation Management Agreement with Yangtze Bridge Company, Hutong Bridge Company, and Guangjing Xicheng Company (a controlled subsidiary of the Company), Yichang C o m p a n y a n d C h a n g y i C o m p a n y , f o r a t e r m commencing from 1 April 2020 to 31 March 2021. The maximum entrusted management fee will be RMB45 million, of which the estimated fees payable in the period from 1 April 2020 to 31 December 2020 will not exceed RMB17.85 million, RMB1.81 million, RMB19.73 million, RMB0 and RMB0 respectively. As Changyi Company and Yichang Company have not commenced their operations, it is estimated that the entrusted management fee payable to Yangtze River Management Company shall be RMB0.
For details, please refer to the announcement on the ordinary r e l a t e d p a r t y / c o n t i n u i n g c o n n e c t e d t r a n s a c t i o n s p u b l i s h e d b y t h e C o m p a n y on the website of the SSE at
- . sse . com . cn and on the website of the Stock Exchange at www.hkexnews.hk on 1 April 2020 respectively.
On 23 August 2019, Zhendan Company and Media Company entered into the Management Cooperation Agreement on entrusting the overall advertising business to Media Company for management. The term of the agreement shall commence on 1 January 2020 and end on 31 December 2022. The contract sums for 2020 will be not more than RMB100,000.
For details, please refer to the announcement on the ordinary r e l a t e d p a r t y / c o n t i n u i n g c o n n e c t e d t r a n s a c t i o n s published by the Company on the website of the SSE at www.sse. com.cn on 26 August 2019 and on the website of the Stock Exchange at www.hkexnews.hk on 23 August 2019 respectively.
On 31 March 2020, each of the Company, Guangjing Xicheng Company and Zhendan Company entered into Expressway Network Technical Services Framework Agreement with Tongxingbao Company, respectively, with the term of three years commencing from 1 January 2020 to 31 December 2022. The estimated amount under the three agreements are not exceeding RMB16 million, RMB3.5 million and RMB0.22 million, respectively in 2020.
For details, please refer to the announcement on the ordinary r e l a t e d p a r t y / c o n t i n u i n g c o n n e c t e d t r a n s a c t i o n s p u b l i s h e d b y t h e C o m p a n y on the website of the SSE at
- . sse . com . cn and on the website of the Stock Exchange at www.hkexnews.hk on 1 April 2020 respectively.
Jiangsu Expressway Company Limited | 55 |
SECTION V SIGNIFICANT MATTERS
- MAJOR RELATED PARTY/CONNECTED TRANSACTION (CONTINUED)
- Related party/connected transaction relating to day-to-day operations (Continued)
1. Matters which were disclosed in an announcement but had no further progress or no changes after implementation (Continued)
Description of the Event | Enquiry Index |
On 31 March 2020, each of the Company, Guangjing Xicheng Company and Zhendan Company entered into SDWAN Charge Backup Network Service Contract with Tongxingbao Company, respectively. All three contracts have a term beginning from 1 April 2020 to 31 December 2022. It is estimated that the amount under the contracts will not exceed RMB3.5 million, RMB1.3 million and RMB0.3 million, respectively from 1 April 2020 to 31 December 2020.
On 31 March 2020, the Company entered into the contract for renewal of the property lease with Xiandai R&B Company in respect of the office building. The term of lease was from 1 January 2020 to 31 December 2022 and the annual rent for 2020 was RMB1,690,000.
For details, please refer to the announcement on the ordinary r e l a t e d p a r t y / c o n t i n u i n g c o n n e c t e d t r a n s a c t i o n s p u b l i s h e d b y t h e C o m p a n y on the website of the SSE at
- . sse . com . cn and on the website of the Stock Exchange at www.hkexnews.hk on 1 April 2020 respectively.
For details, please refer to the announcement on the ordinary r e l a t e d p a r t y / c o n t i n u i n g c o n n e c t e d t r a n s a c t i o n s p u b l i s h e d b y t h e C o m p a n y on the website of the SSE at
- . sse . com . cn and on the website of the Stock Exchange at www.hkexnews.hk on 1 April 2020 respectively.
On 31 March 2020, the Company and Guangjing Xicheng Company (a controlled subsidiary of the Company) entered into the Expressway Maintenance Services Contracts with Xiandai R&B Company, respectively. The term of relevant contracts is from 1 April 2020 to 31 March 2021. It is estimated that the total amount under the contracts of this project for the period 1 April 2020 to 31 December 2020 will not exceed RMB305 million and RMB120 million, respectively.
On 31 March 2020, the Company, Guangjing Xicheng Company and Zhendan Company entered into the Expressway Network Management Services Framework A g r e e m e n t w i t h N e t w o r k O p e r a t i o n C o m p a n y, respectively, with the term of three years from 1 January 2020 to 31 December 2022, of which the amounts in 2020 are expected to be not exceeding RMB23 million, RMB5 million and RMB0.50 million, respectively.
For details, please refer to the announcement on the ordinary r e l a t e d p a r t y / c o n t i n u i n g c o n n e c t e d t r a n s a c t i o n s p u b l i s h e d b y t h e C o m p a n y on the website of the SSE at
- . sse . com . cn and on the website of the Stock Exchange at www.hkexnews.hk on 1 April 2020 respectively.
For details, please refer to the announcement on the ordinary r e l a t e d p a r t y / c o n t i n u i n g c o n n e c t e d t r a n s a c t i o n s p u b l i s h e d b y t h e C o m p a n y on the website of the SSE at
- . sse . com . cn and on the website of the Stock Exchange at www.hkexnews.hk on 1 April 2020 respectively.
56 2020 Interim Report
SECTION V SIGNIFICANT MATTERS
- MAJOR RELATED PARTY/CONNECTED TRANSACTION (CONTINUED)
- Related party/connected transaction relating to day-to-day operations (Continued)
1. Matters which were disclosed in an announcement but had no further progress or no changes after implementation (Continued)
Description of the Event | Enquiry Index |
On 31 March 2020, each of the Company and its controlled subsidiaries Guangjing Xicheng Company and Zhendan Company entered into Maintenance Technology Research and Service Agreement with Maintenance Technology Company, respectively, and the annual maintenance technology research and services fees in 2020 are expected to be not exceeding RMB9.80 million, RMB1.60 million and RMB0.13 million, respectively.
On 31 March 2020, the Company and Guangjing Xicheng Company (a controlled subsidiary of the C o m p a n y), Z h e n d a n C o m p a n y, Y a n g t z e R i v e r Management Company and Micro Video Company have entered into contracts involving panoramic HD camera installation, SDWAN network construction in service areas, gantry snapshot and Cloudification, video surveillance platform upgrade and reconstruction, use of Cloud dispatch platform, Cloud services for Cloud check-in system, etc. The terms of the four contracts of the Company,Guangjing Xicheng Company, Zhendan Company, Yangtze River Management Company and Micro Video Company are from 1 April 2020 to 31 March 2021, and it is expected that the amount of contracts for the period from 1 April 2020 to 31 December 2020 will not exceed RMB8 million, RMB1.20 million, RMB1.10 million and RMB0.40 million, respectively.
For details, please refer to the announcement on the ordinary r e l a t e d p a r t y / c o n t i n u i n g c o n n e c t e d t r a n s a c t i o n s p u b l i s h e d b y t h e C o m p a n y on the website of the SSE at
- . sse . com . cn and on the website of the Stock Exchange at www.hkexnews.hk on 1 April 2020 respectively.
For details, please refer to the announcement on the ordinary r e l a t e d p a r t y / c o n t i n u i n g c o n n e c t e d t r a n s a c t i o n s p u b l i s h e d b y t h e C o m p a n y on the website of the SSE at
- . sse . com . cn and on the website of the Stock Exchange at www.hkexnews.hk on 1 April 2020 respectively.
Jiangsu Expressway Company Limited | 57 |
SECTION V SIGNIFICANT MATTERS
- MAJOR RELATED PARTY/CONNECTED TRANSACTION (CONTINUED)
- Related party/connected transaction relating to day-to-day operations (Continued)
1. Matters which were disclosed in an announcement but had no further progress or no changes after implementation (Continued)
Description of the Event | Enquiry Index |
On 31 March 2020, Guangjing Xicheng Company (a controlled subsidiary of the Company) entered into the Bridge Inspection Agreement with Engineering Testing Company, in which the transaction amount estimated to be incurred for bridge inspection for the year of 2020 will not exceed RMB1.6 million.
On 24 June 2020, Guangjing Xicheng Company (a controlled subsidiary of the Company) entered into the Supplemental Agreement for Bridge Inspection with Engineering Testing Company, as an additional amount of RMB1.2 million is required due to the adjustment of sections of bridge for inspection and task details, it is expected that the aggregate of transaction amount to be incurred for the project of bridge inspection for the year 2020 between Guangjing Xicheng Company and Engineering Testing Company will not exceed RMB2.8 million.
On 24 June 2020, the Company and East Road & Bridge Company entered into the contract on new project of coating and renovation of steel box girders for a term from 1 July 2020 to 31 December 2020, with an expected aggregate contractual amount of no more than RMB1.5 million for the project.
For details, please refer to the announcement on the ordinary r e l a t e d p a r t y / c o n t i n u i n g c o n n e c t e d t r a n s a c t i o n s p u b l i s h e d b y t h e C o m p a n y on the website of the SSE at
- . sse . com . cn and on the website of the Stock Exchange at www.hkexnews.hk on 1 April 2020 and the announcement on resolution of the Board published by the Company on the website of the SSE at www.sse.com.cn on 29 June 2020 and on the website of the Stock Exchange at www.hkexnews.hk on 24 June 2020.
For details, please refer to the announcement on resolution of the Board published by the C o m p a n y o n t h e w e b s i t e o f the SSE at www . sse . com . cn on 29 June 2020 and on the website of the Stock Exchange at www.hkexnews.hk on 24 June 2020.
On 24 June 2020, Guangjing Xicheng Company, a controlled subsidiary of the Company and Engineering Maintenance Company entered into the contract for bridge inspection, maintenance, reinforcement and design, with an aggregate contractual amount of no more than RMB1.65 million, for a term commencing from 1 July 2020 and ending on 30 October 2020.
For details, please refer to the announcement on resolution of the Board published by the C o m p a n y o n t h e w e b s i t e o f the SSE at www . sse . com . cn on 29 June 2020 and on the website of the Stock Exchange at www.hkexnews.hk on 24 June 2020.
58 2020 Interim Report
SECTION V SIGNIFICANT MATTERS
- MAJOR RELATED PARTY/CONNECTED TRANSACTION (CONTINUED)
-
Related party/connected transaction relating to day-to-day operations (Continued)
2. Matters which were disclosed in an announcement but had further progress or changes after implementation
-
Related party/connected transaction relating to day-to-day operations (Continued)
Applicable | ✔ | Not Applicable |
3. Matters which were not disclosed in an announcement
Applicable | ✔ | Not Applicable |
- Related party/connected transaction as a result of acquisition of assets or acquisition of or disposal of equities
1. Matters which were disclosed in an announcement but had no further progress or changes after implementation
Applicable | ✔ | Not Applicable |
2. Matters which were disclosed in an announcement but had further progress or changes after implementation
Applicable | ✔ | Not Applicable |
3. Matters which were not disclosed in an announcement
Applicable | ✔ | Not Applicable |
4. Status of the realization of the agreed performance targets for the Reporting Period required to be disclosed
Applicable | ✔ | Not Applicable |
Jiangsu Expressway Company Limited | 59 |
SECTION V SIGNIFICANT MATTERS
- MAJOR RELATED PARTY/CONNECTED TRANSACTION (CONTINUED)
-
Major related party/connected transactions related to joint external investment
1. Matters which were disclosed in an announcement but had no further progress or changes after implementation
-
Major related party/connected transactions related to joint external investment
Applicable | ✔ | Not Applicable |
2. Matters which were disclosed in an announcement but had further progress or changes after implementation
Applicable | ✔ | Not Applicable |
3. Matters which were not disclosed in an announcement
Applicable | ✔ | Not Applicable |
(IV) Related party/connected transactions involving creditors' rights and debts
1. Matters which were disclosed in an announcement but had no further progress or changes after implementation
✔ | Applicable | Not Applicable | ||
Description of the Event | Enquiry Index | |||
On 27 March 2017, the Company entered into a loan agreement with Guangjing Xicheng Company. The Company will lend up to RMB2 billion, in effect for three years from the date of approval by shareholders at the general meeting. Interest is calculated at the prevailing interest rate of the ultra-short-term notes to be issued by the Company. Repayment of the principal and the related interest expenses are to be borne by Guangjing Xicheng Company.
On 22 March 2019, the Company entered into the Financial Services Agreement with Finance Company for a term of three years commencing on 1 April 2019. The maximum daily deposit balance (including interest accrued) should not exceed RMB500,000,000 and should be lower than 5% of the audited operating revenue, total assets or market value of the Company; meanwhile, Finance Company should grant the Company a comprehensive unsecured credit facility of no less than RMB2,000,000,000.
F o r d e t a i l s , p l e a s e r e f e r t o t h e announcement and circular on the ordinary related party/connected t r a n s a c t i o n s p u b l i s h e d b y t h e C o m p a n y o n t h e w e b s i t e o f t h e SSE at www.sse.com.cn and on the website of the Stock Exchange at www.hkexnews.hk on 27 March 2017 and 4 May 2017.
F o r d e t a i l s , p l e a s e r e f e r t o t h e a n n o u n c e m e n t s o n t h e o r d i n a r y related party/continuing connected t r a n s a c t i o n s p u b l i s h e d b y t h e Company on the website of the SSE at www . sse . com . cn on 25 March 2019 and on the website of the Stock Exchange at www.hkexnews.hk on 24 March 2019, respectively.
60 2020 Interim Report
SECTION V SIGNIFICANT MATTERS
- MAJOR RELATED PARTY/CONNECTED TRANSACTION (CONTINUED)
(IV) Related party/connected transactions involving creditors' rights and debts (Continued)
1. Matters which were disclosed in an announcement but had no further progress or changes after implementation (Continued)
Description of the Event | Enquiry Index |
On 26 February 2020, the Company signed a loan agreement with Wufengshan Toll Bridge Company. The amount of loan that the Company provided to Wufengshan Toll Bridge Company was no more than RMB1.5 billion. The loans shall be valid for three years from the date of the approval at the general meeting, and the loans shall be applied towards road & bridge projects and shall be drawn in accordance with the progress of the projects with a term of three years commencing from the respective date of drawdown. Interest was calculated on the basis of the prevailing interest rates of the corporate bonds to be issued. The expenses in relation to the repayment of the principal and interest of the issued bonds shall be paid by Wufengshan Toll Bridge Company.
F o r d e t a i l s , p l e a s e r e f e r t o t h e announcements on the related party/ connected transactions published b y t h e C o m p a n y o n t h e w e b s i t e o f t h e S S E a t w w w . s s e . c o m . c n and on the website of the Stock Exchange at www.hkexnews.hk on 27 February 2020 and the relevant circular published by the Company o n t h e w e b s i t e o f t h e S S E a t www.sse.com.cn on 6 March 2020 and on the website of the Stock Exchange at www.hkexnews.hk on 5 March 2020.
On 26 February 2020, the Company signed a loan agreement with Changyi Company and Yichang Company respectively. The amount of loans that the Company provided to Changyi Company and Yichang Company, indirect controlled subsidiaries of the Company, was no more than RMB0.3 billion and RMB0.7 billion, respectively. The above loans shall be valid for three years from the date of the approval at the general meeting, and the loans shall be applied towards road & bridge projects and shall be drawn in accordance with the progress of the projects with a term of three years commencing from the respective date of drawdown. Interest was calculated on the basis of the prevailing interest rates of the corporate bonds to be issued. The expenses in relation to the repayment of the principal and interest shall be paid by Changyi Company and Yichang Company.
F o r d e t a i l s , p l e a s e r e f e r t o t h e announcements on the related party/ connected transactions published b y t h e C o m p a n y o n t h e w e b s i t e o f t h e S S E a t w w w . s s e . c o m . c n and on the website of the Stock Exchange at www.hkexnews.hk on 27 February 2020 and the relevant circular published by the Company o n t h e w e b s i t e o f t h e S S E a t www.sse.com.cn on 6 March 2020 and on the website of the Stock Exchange at www.hkexnews.hk on 5 March 2020.
Jiangsu Expressway Company Limited | 61 |
SECTION V SIGNIFICANT MATTERS
- MAJOR RELATED PARTY/CONNECTED TRANSACTION (CONTINUED)
(IV) Related party/connected transactions involving creditors' rights and debts (Continued)
1. Matters which were disclosed in an announcement but had no further progress or changes after implementation (Continued)
Description of the Event | Enquiry Index |
On 31 March 2020, the Company signed a loan agreement with Guangjing Xicheng Company. The Company proposes to use proceeds raised from the issued medium-term notes and ultra-short term notes to provide loans to Guangjing Xicheng Company, a controlled subsidiary of the Company, with no more than RMB0.6 billion and RMB0.5 billion, respectively, which shall be applied towards the repayment of due loans of Guangjing Xicheng Company. The above loans shall be valid for two years from the date of the approval at the general meeting, with a term of three years. Interest of loans is calculated on the basis of the prevailing interest rates of the medium-term notes and ultra-short term notes to be issued. The expenses in relation to the repayment of the principal and interest shall be paid by Guangjing Xicheng Company.
F o r d e t a i l s , p l e a s e r e f e r t o t h e a n n o u n c e m e n t s o n t h e r e l a t e d party/connected transactions and discloseable transactions published by the Company on the website of the SSE at www.sse.com.cn and on the website of the Stock Exchange at www.hkexnews.hk on 1 April 2020 and the relevant circular published by the Company on the website of the SSE at www.sse.com.cn on 7 May 2020 and on the website of the Stock Exchange at www.hkexnews.hk on 6 May 2020.
On 31 March 2020, the Company signed a loan agreement with Wufengshan Toll Bridge Company. The Company proposed to use proceeds raised from the issued medium-term notes to provide Wufengshan Toll Bridge Company, a controlled subsidiary of the Company, with loans of no more than RMB1.8 billion, which shall be applied towards road & bridge projects construction or the replacement of the late stage project loans. The above loans shall be valid for two years from the date of the approval at the general meeting, with a term of three years. Interest of loans is calculated on the basis of the prevailing interest rates of the medium-term notes to be issued. The expenses in relation to the repayment of the principal and interest shall be paid by Wufengshan Toll Bridge Company.
F o r d e t a i l s , p l e a s e r e f e r t o t h e a n n o u n c e m e n t s o n t h e r e l a t e d party/connected transactions and discloseable transactions published by the Company on the website of the SSE at www.sse.com.cn and on the website of the Stock Exchange at www.hkexnews.hk on 1 April 2020 and the relevant circular published by the Company on the website of the SSE at www.sse.com.cn on 7 May 2020 and on the website of the Stock Exchange at www.hkexnews.hk on 6 May 2020.
62 2020 Interim Report
SECTION V SIGNIFICANT MATTERS
- MAJOR RELATED PARTY/CONNECTED TRANSACTION (CONTINUED)
(IV) Related party/connected transactions involving creditors' rights and debts (Continued)
1. Matters which were disclosed in an announcement but had no further progress or changes after implementation (Continued)
Description of the Event | Enquiry Index |
On 31 March 2020, the Company signed a loan agreement with Yichang Company. The Company provided Yichang Company, an indirect controlled subsidiary of the Company, with loans of no more than RMB1 billion, which shall be applied towards road & bridge projects construction. The above loans shall be valid for two years from the date of the approval at the general meeting, with a term of three years. Interest of loans is calculated on the basis of the prevailing interest rates of the medium-term notes to be issued. The expenses in relation to the repayment of the principal and interest shall be paid by Yichang Company.
On 24 June 2020, the Company signed an agreement for use of direct financing funds by way of unified borrowing and repayment with Jiangsu Communications Holding . Jiangsu Communications Holding will provide the proceeds it applied from the local government raised through special bond, with a funding balance of no more than RMB500 million. The funding cost shall be calculated based on the amount, interest rate, term of the bond and commission charges actually incurred and shall not exceed the lending rate of the People's Bank of China with the same term. The repayment of the principal and related interest and expenses shall be paid by the Company. No pledge or guarantee is required to be provided by the Company. Such borrowing shall be valid for a term of three years with effect from the signing date of the agreement. Interest is calculated on the basis of the prevailing interest rates of the local government special bond issued by Jiangsu Communications Holding. The expenses in relation to the repayment of the principal and interest shall be paid by the Company.
F o r d e t a i l s , p l e a s e r e f e r t o t h e a n n o u n c e m e n t s o n t h e r e l a t e d party/connected transactions and discloseable transactions published by the Company on the website of the SSE at www.sse.com.cn and on the website of the Stock Exchange at www.hkexnews.hk on 1 April 2020 and the relevant circular published by the Company on the website of the SSE at www.sse.com.cn on 7 May 2020 and on the website of the Stock Exchange at www.hkexnews.hk on 6 May 2020.
F o r d e t a i l s , p l e a s e r e f e r t o t h e announcement on resolution of the Board published by the Company o n t h e w e b s i t e o f t h e S S E a t www.sse.com.cn on 29 June 2020 and on the website of the Stock Exchange at www.hkexnews.hk on 24 June 2020.
Jiangsu Expressway Company Limited | 63 |
SECTION V SIGNIFICANT MATTERS
- MAJOR RELATED PARTY/CONNECTED TRANSACTION (CONTINUED)
(IV) Related party/connected transactions involving creditors' rights and debts (Continued)
1. Matters which were disclosed in an announcement but had no further progress or changes after implementation (Continued)
Description of the Event | Enquiry Index |
Wufengshan Toll Bridge Company, Changyi Company, Yichang Company, all being controlled subsidiaries of the Company signed an agreement for use of direct financing funds by way of unified borrowing and repayment with Jiangsu Communications Holding, pursuant to which Jiangsu Communications Holding will, as the principal, raise proceeds by way of issuance of short-term notes, ultra-short-term notes, medium- term notes, corporate bonds and insurance funds and other types of direct financing instrument for the aforesaid controlled subsidiaries of the Company. Each of the funding balance will not exceed RMB1,000 million. The funding cost shall be calculated based on the amount, interest rate, term of the financing product and commission charges actually incurred and shall not exceed the lending rate of the People's Bank of China with the same term. The repayment of the principal and related interest and expenses shall be born and paid by each of the subsidiaries. No pledge or guarantee is required to be provided by Wufengshan Toll Bridge Company, Changyi Company and Yichang Company. The term is three years. Interest is calculated on the basis of the prevailing interest rates of direct financing product issued by Jiangsu Communications Holding. The repayment of the principal and related interest and expenses shall be born and paid by Wufengshan Toll Bridge Company, Changyi Company and Yichang Company.
2. Matters which were disclosed in an announcement but had further progress or changes after implementation
Applicable | ✔ | Not Applicable |
64 2020 Interim Report
SECTION V SIGNIFICANT MATTERS
- MAJOR RELATED PARTY/CONNECTED TRANSACTION (CONTINUED)
(IV) Related party/connected transactions involving creditors' rights and debts (Continued)
3. Matters which were not disclosed in an announcement
✔ | Applicable | Not Applicable | ||||
Unit: Yuan Currency: RMB | ||||||
Related party | Related relationship | Funding provided to related parties | Funding provided by related parties to the listed Company | |||
Opening balance Amount incurred Closing balance | Opening balance Amount incurred Closing balance |
Communications Holding | Parent company |
Group Finance Company | Subsidiary of the parent company |
Far East Shipping Company | Subsidiary of the parent company |
Sutong Bridge Company | Subsidiary of the parent company |
Total |
- | - | - | 1,430,344,904.11 | 479,258,627.97 | 1,909,603,532.08 | |||||
- | - | - | 810,975,608.33 | -175,285,045.84 | 635,690,562.49 | |||||
- | - | - | 60,079,750.00 | -7,250.00 | 60,072,500.00 | |||||
- | - | - | 100,119,625.00 | -100,119,625.00 | - | |||||
- | - | - | 2,401,519,887.44 | 203,846,707.13 | 2,605,366,594.57 | |||||
Reasons for related creditor's rights and debts | The related creditor's rights and debts were formed due to the borrowing and lending of funds among the related parties. The |
above funds shall be provided at a rate not exceeding the prevailing bank loan interest rate in the same period. The Company | |
and its subsidiaries were not required to provide any guarantee and pledge. |
Effect of related creditor's rights and debts on the Company's operation result and financial condition
The related creditor's rights and debts did not have material impact on the Company's operation result and financial condition.
- Other major related party/connected transactions
Applicable | ✔ | Not Applicable |
(VI) Others
✔ | Applicable | Not Applicable |
1. Confirmation Opinion by Independent Non-executive Directors on Related Party/ Connected Transactions
The independent non-executive Directors of the Company have reviewed all related party/ connected transactions and confirmed that:
- Such transactions were conducted in the ordinary and usual course of business of the Group;
- Such transactions were conducted on normal commercial terms; and
- Such transactions were conducted in accordance with the terms of the agreements governing the relevant transactions. The transaction terms were fair and reasonable and in the interests of the Company's shareholders as a whole.
Jiangsu Expressway Company Limited | 65 |
SECTION V SIGNIFICANT MATTERS
XI. MATERIAL CONTRACTS AND THEIR PERFORMANCE
1 Mandated, contracting and lease matters
✔ | Applicable | Not Applicable |
- Mandated matters
Applicable | ✔ | Not Applicable |
- Contracting matters
Applicable | ✔ | Not Applicable |
- Lease matters
✔ | Applicable | Not Applicable | |||||||||||
Unit: Yuan | Currency: RMB | ||||||||||||
Amount | Date of | ||||||||||||
Name of | Status of | of leased | commencement | Date of expiry of | Lease | Basis of determination | Effect of lease income | Related party | Related party | ||||
lessor | Name of lessee | leased assets | assets | of lease | lease | income | of lease income | on the Company | transaction | relationship | |||
Company | Jiaxing Kaitong Investment | Meicun Service | 12,955,904 | 10 January 2017 | 9 January 2023 | 280,000,000 | A tender agency was engaged by | During the Reporting | No | Other | |||
Co., Ltd. (嘉興市凱通投資 | Area | the Company for open tendering | Period, the profit | ||||||||||
有限公司) | at a price starting from RMB | derived from such | |||||||||||
200,000,000 and for selection of | service area increased | ||||||||||||
the bidder with the highest score | by RMB1,059,000 year- | ||||||||||||
based on its comprehensive | on-year. | ||||||||||||
review, which was considered | |||||||||||||
and approved by the board of | |||||||||||||
Directors of the Company. | |||||||||||||
Company | Jiaxing Tonghui Expressway | Xianrenshan | 17,805,392 | 16 June 2017 | 15 June 2023 | 143,510,346 | A tender agency was engaged by | During the Reporting | No | Other | |||
Service Zone Operation | Service Area | the Company for open tendering | Period, the profit | ||||||||||
and Management Co., | at a price starting from RMB | derived from such | |||||||||||
Ltd. (嘉興市同輝高速公路 | 100,300,000 and for selection of | service area decreased | |||||||||||
服務區經營管理有限公司) | the bidder with the highest score | by RMB2,351,000 year- | |||||||||||
based on its comprehensive | on-year. | ||||||||||||
review, which was considered | |||||||||||||
and approved by the board of | |||||||||||||
Directors of the Company. | |||||||||||||
Company | Tongxiang Yintong | Huanglishu Service | 47,256,513 | 1 July 2017 | 30 June 2023 | 133,070,000 | A tender agency was engaged by | During the Reporting | No | Other | |||
Expressway Service | Area | the Company for open tendering | Period, the profit | ||||||||||
Zone Operation and | at a price starting from RMB | derived from such | |||||||||||
Management Co., Ltd. (桐 | 108,020,000 and for selection of | service area increased | |||||||||||
鄉市銀通高速公路服務區經 | the bidder with the highest score | by RMB2,223,000 year- | |||||||||||
營管理有限公司) | based on its comprehensive | on-year. | |||||||||||
review, which was considered |
and approved by the board of Directors of the Company
66 2020 Interim Report
SECTION V SIGNIFICANT MATTERS
XI. MATERIAL CONTRACTS AND THEIR PERFORMANCE (CONTINUED)
1 Mandated, contracting and lease matters (Continued)
- Lease matters (Continued)
Amount | Date of | |||||||||
Name of | Status of | of leased | commencement | Date of expiry of | Lease | Basis of determination | Effect of lease income | Related party | Related party | |
lessor | Name of lessee | leased assets | assets | of lease | lease | income | of lease income | on the Company | transaction | relationship |
Company | Jiaxing Kaitong Investment | Yangcheng Lake | 60,930,582 | 15 May 2018 | 14 May 2027 | 185,000,000 A tender agency was engaged | During the Reporting | No | Other | |
Co., Ltd. (嘉興市凱通投資 | Service Area | by the Company for open | Period, the profit | |||||||
有限公司) | tendering at a price starting | derived from such | ||||||||
from RMB176,080,000 and for | service area decreased | |||||||||
selection of the bidder with | by RMB6,089,000 year- | |||||||||
the highest score based on its | on-year. | |||||||||
comprehensive review, which | ||||||||||
was considered and approved | ||||||||||
by the board of Directors of the | ||||||||||
Company. | ||||||||||
Company | Dragon City Tourism Holding | Fangmaoshan | 20,919,070 | 11 May 2018 | 10 May 2026 | 185,260,000 A tender agency was engaged | During the Reporting | No | Other | |
Group Co., Ltd. (龍城旅遊 | Service Area | by the Company for open | Period, the profit | |||||||
控股集團有限公司) | tendering at a price starting | derived from such | ||||||||
from RMB160,000,000 and for | service area increased | |||||||||
selection of the bidder with | by RMB6,874,000 year- | |||||||||
the highest score based on its | on-year. | |||||||||
comprehensive review, which | ||||||||||
was considered and approved | ||||||||||
by the board of Directors of the | ||||||||||
Company. | ||||||||||
Company | Nanjing Baisheng Business | Douzhuang Service | 17,806,972 | 21 September | 20 September | 160,040,000 An agency was engaged by the | During the Reporting | No | Other | |
Management Co., Ltd. (南 | Area | 2018 | 2026 | Company to conduct open | Period, the profit | |||||
京百盛商業管理有限公司) | tendering with a minimum bid of | derived from such | ||||||||
RMB 160,000,000. The bidder | service area increased | |||||||||
with the highest overall score | by RMB7,607,000 year- | |||||||||
won the bid. The matter has | on-year. | |||||||||
been considered and approved | ||||||||||
by the board of directors of the | ||||||||||
Company. |
Explanations on lease:
According to the plan for upgrading the business models of the service areas of the Company, the Company adopted the "outsourcing + supervision" and "platform expansion" models to outsource and upgrade all service areas in their entirety along Shanghai-Nanjing Expressway, further developing the geographic advantages and potential economic benefits of the road.
Jiangsu Expressway Company Limited | 67 |
SECTION V SIGNIFICANT MATTERS
XI. MATERIAL CONTRACTS AND THEIR PERFORMANCE (CONTINUED)
2 | Guarantees | |||||
Applicable | Not Applicable | |||||
✔ | ||||||
Unit: Yuan, Currency: RMB | ||||||
Guarantees provided by the Company for its subsidiaries | ||||||
Total amount of the guarantees for subsidiaries during the | 110,000,000.00 | |||||
Reporting Period | ||||||
Balance of the total amount of the guarantees for | 110,000,000.00 | |||||
subsidiaries at the end of the Reporting Period (B) | ||||||
Explanations on the joint settlement responsibilities in | Nil. | |||||
relation to premature guarantees | ||||||
Explanations on the Guarantees | The Company has provided Ninghu | |||||
Factoring, a subsidiary of the Company, | ||||||
with guarantees for their application for | ||||||
comprehensive credit, with a maximum | ||||||
guarantee balance of RMB810,000,000. | ||||||
The guarantee method is joint liability | ||||||
guarantee, with a guarantee period | ||||||
of one year; as of 30 June 2020, the | ||||||
guarantee balance was approximately | ||||||
RMB110,000,000. | ||||||
3 | Other material contracts | |||||
Applicable | ✔ | Not Applicable |
XII. POVERTY ALLEVIATION WORK OF THE LISTED COMPANY
Applicable | ✔ | Not Applicable |
XIII. CONVERTIBLE CORPORATE BONDS
Applicable | ✔ | Not Applicable |
XIV. ENVIRONMENT-RELATED INFORMATION
- Description on the environmental protection of the company and its key subsidiaries falling under key sewage emission entities announced by the environment protection authorities
Applicable | ✔ | Not Applicable |
68 2020 Interim Report
SECTION V SIGNIFICANT MATTERS
XIV. ENVIRONMENT-RELATED INFORMATION (CONTINUED)
- Description on the environmental protection of companies not falling under key sewage emission entities
✔ | Applicable | Not Applicable |
Sound insulation and noise reduction work has been actively carried out. By the end of the first half year of 2020, sound barrier along Shanghai-Nanjing Expressway have been built for 56.64 km, and the repair of the sound barrier of 140.20 square meters was completed.
In response to the environmental protection requirements related to the "Outline of Expressway Maintenance, Management and Development under 13th Five-year Plan of Jiangsu Province (江 蘇省高速公路"十三五"養護管理發展綱要)", milling planer material used in major and medium repair project of asphalt pavement should be recycled. In the first half year of 2020, the volume of recycled milling planer material was 15,363 cubic meters, and the waste recovery rate reached 100%.
- Reason for failure to disclose environmental information by companies not falling under key sewage emission entities
Applicable | ✔ | Not Applicable |
(IV) Explanations on subsequent progresses or changes in respect of environmental information disclosed during the Reporting Period
Applicable | ✔ | Not Applicable |
XV. EXPLANATION ON OTHER SIGNIFICANT MATTERS
- Details, reasons and impact of the changes to the accounting policies, accounting estimates and audit methods compared with those in the last accounting period
✔ | Applicable | Not Applicable |
Due to changes in the road network charging model in 2020, in order to more objectively and fairly reflect the amortized cost of road and bridge assets, as approved by the twentieth meeting of the ninth session of the board of directors of the Company, the Company has taken the standard car flow translated by the new toll standard as the basis for the amortization of highway operation rights since 1 January 2020. In the first half of 2020, the impact on the amortization of highway operation rights within the scope of the Company's consolidation amounted to RMB-42.54 million, which reduced operating costs by RMB42.54 million. If this change in accounting estimates would be adopted in 2019, it is expected that the Company's amortization of road operating rights in 2019 would be increased by RMB5.6532 million and its operating costs would be increased by RMB5.6532 million.
Jiangsu Expressway Company Limited | 69 |
SECTION V SIGNIFICANT MATTERS
XV. EXPLANATION ON OTHER SIGNIFICANT MATTERS (CONTINUED)
- Particulars, correction amount, reasons and its impact of significant accounting errors which required to be amended by retrospective restatement during the Reporting Period
Applicable | ✔ | Not Applicable |
- Others
Applicable | ✔ | Not Applicable |
XVI. CORPORATE GOVERNANCE
For the period of six months ended 30 June 2020, other than the following code provisions, the Company has complied with all of the applicable code provisions of the Corporate Governance Code under Appendix 14 to the Hong Kong Listing Rules.
Code provision | Compliance Corporate governance procedures |
A2.7 | The chairman should at least hold No |
meetings annually with the independent | |
non-executive directors, in the absence | |
of other directors |
A4.2 | All directors appointed to fill a casual No |
vacancy should be subject to election | |
by shareholders at the first general | |
meeting after appointment. Every | |
director, including those appointed | |
for a specific term, should be subject | |
to retirement by rotation at least once | |
every three years |
During the Reporting Period, the Board has 13 members, of whom 3 are executive directors and the rest are non-executive directors. This ensures adequate independence of the board of directors and safeguards the decisions of the board of directors from being prejudiced by the opinions of executive directors.
All directors were elected or replaced at general meetings. The Company has introduced the cumulative voting system for the election of directors. According to the Company Law and the Articles of Association, each session of the board of directors is for a term of three years, with each director appointed for a term of three years, and all directors should retire upon the expiry of the three-year term, instead of retirement by rotation. Any re-appointment is subject to reelection at a general meeting.
70 2020 Interim Report
SECTION V SIGNIFICANT MATTERS
XVI. CORPORATE GOVERNANCE (CONTINUED)
Code provision | Compliance Corporate governance procedures |
A6.7 | I n d e p e n d e n t n o n - e x e c u t i v e No |
directors and other non-executive | |
directors, as equal board members, | |
should give the board and any | |
committees on which they serve | |
the benefit of their skills, expertise | |
and varied backgrounds and | |
qualifications through regular | |
attendance and active participation. | |
In general, they should also attend | |
general meetings to gain and | |
develop a comprehensive and | |
balanced understanding of the | |
views of the shareholders |
All independent non-executive directors and other non-executive directors have attended board meetings and meetings of various committees regularly and contributed their skills and expertise to the Company's decision - making process . During the Reporting Period, except for Mr. Ma Chung Lai, Lawrence, Mr. Wu Xinhua and Madam Hu Yu, non-executive directors, and Mr. Zhang Zhuting, independent non-executive d i r e c t o r, w h o w e r e u n a b l e t o a t t e n d the second 2020 extraordinary general meeting and the annual general meeting for 2019, due to their business reasons, all independent non-executive directors and other non-executive directors have attended the general meetings of the Company held.
XVII. MATERIAL CHANGE
Save as disclosed in this report, there has been no material change in respect of (a) the development of business of the Group and its financial position; (b) important events affecting the Group; and (c) the likely future development in the business of the Group and prospects for the year, since the publication of the 2019 annual report of the Company.
Jiangsu Expressway Company Limited | 71 |
SECTION VI CHANGES IN ORDINARY SHARES AND INFORMATION ON SHAREHOLDERS
- CHANGES IN SHARE CAPITAL
- Table of changes in shares
-
Table of changes in shares
There is no change in the total number of shares and share capital structure of the Company during the Reporting Period. - Explanation on the changes in shares
-
Table of changes in shares
Applicable | ✔ | Not Applicable |
3. For changes in shares occurred during the period after the Reporting Period until the disclosure date of the Interim Report, their impact on financial indicators such as earnings per share and net assets per share (if any)
Applicable | ✔ | Not Applicable |
4. Other matters which the Company thought it is necessary to disclose or which were required to be disclosed by securities regulatory authorities
Applicable | ✔ | Not Applicable |
- Changes in shares subject to selling restrictions
Applicable | ✔ | Not Applicable | |||||
II. | SHAREHOLDERS | ||||||
(I) | Total number of shareholders: | ||||||
Total number of ordinary shareholders as of the end of the Reporting Period | 29,392 | ||||||
Total number of preference shareholders with voting rights restored as at | 0 | ||||||
the end of the Reporting Period |
Note: As at the end of June 2020, the Company had 28,971 A-share ordinary shareholders and 421 H Share shareholders, totaling 29,392 shareholders.
72 2020 Interim Report
SECTION VI CHANGES IN ORDINARY SHARES AND INFORMATION ON SHAREHOLDERS
- SHAREHOLDERS (CONTINUED)
- Table of shareholdings of top ten shareholders and top ten shareholders of shares in circulation (or shareholders without being imposed on any sales restrictions) as at the end of the Reporting Period
Unit: Share | |||||||||||||
Shareholdings of top ten shareholders | |||||||||||||
Number of | Number | ||||||||||||
shares held as | of shares | ||||||||||||
Change during | at the end of | with sales | Pledged or frozen | ||||||||||
Name of shareholder | the Reporting | the Reporting | restrictions | Status of | Type of | ||||||||
(full name) | Period | Period | Percentage | held | shares | Number | shareholder | ||||||
(%) | |||||||||||||
Jiangsu Communications Holding | - | 2,742,578,825 | 54.44 | - | Nil | - | State-owned | ||||||
Company Limited | legal person | ||||||||||||
China Merchants Expressway Network & | - | 589,059,077 | 11.69 | - | Nil | - | State-owned | ||||||
Technology Holdings Co., Ltd. | legal person | ||||||||||||
BlackRock, Inc. | 10,964,529 | 158,338,523 | 3.14 | - | Unknown | - | Foreign legal | ||||||
person | |||||||||||||
Mitsubishi UFJ Financial Group Inc. | 8,365,546 | 131,568,517 | 2.61 | - | Unknown | - | Foreign legal | ||||||
person | |||||||||||||
JPMorgan Chase & Co. | 13,270,055 | 119,807,927 | 2.38 | - | Unknown | - | Foreign legal | ||||||
person | |||||||||||||
Huitianfu Fund Management Co., Ltd. | 23,999,974 | 70,000,000 | 1.39 | - | Unknown | - | Others | ||||||
Social Security Fund 1103 Portfolio (匯 | |||||||||||||
添富基金管理股份有限公司-社保基金 | |||||||||||||
1103組合) | |||||||||||||
Citigroup Inc. | 1,897,922 | 63,343,239 | 1.26 | - | Unknown | - | Foreign legal | ||||||
person | |||||||||||||
Jiantou Zhongxin Asset Management | - | 21,410,000 | 0.42 | - | Unknown | - | State-owned | ||||||
Co.,Ltd. | legal person | ||||||||||||
China Pacific Life Insurance Co., Ltd. - | - | 12,500,000 | 0.25 | - | Unknown | - | Others | ||||||
CPLI Stock Dividend Product (Shou Zi | |||||||||||||
Ying)(中國太平洋人壽保險股份有限公 | |||||||||||||
司-中國太平洋人壽股票紅利型產品(壽 | |||||||||||||
自營) | |||||||||||||
National Social Security Fund 114 portfolio | 3,531,299 | 9,632,923 | 0.19 | - | Unknown | - | Others | ||||||
(全國社保基金一一四組合) | |||||||||||||
Jiangsu Expressway Company Limited | 73 |
SECTION VI CHANGES IN ORDINARY SHARES AND INFORMATION ON SHAREHOLDERS
- SHAREHOLDERS (CONTINUED)
- Table of shareholdings of top ten shareholders and top ten shareholders of shares in circulation (or shareholders without being imposed on any sales restrictions) as at the end of the Reporting Period (Continued)
Shareholding of top ten shareholders without selling restrictions | ||||||
Number of shares | ||||||
without selling | Class and number of shares | |||||
Name of shareholder | restrictions in circulation | Class | Number | |||
Jiangsu Communications Holding Company Limited | 2,742,578,825 | RMB ordinary shares | 2,742,578,825 | |||
China Merchants Expressway Network & Technology | 589,059,077 | RMB ordinary shares | 589,059,077 | |||
Holdings Co., Ltd. | ||||||
BlackRock, Inc. | 158,338,523 | Overseas listed foreign | 158,338,523 | |||
shares | ||||||
Mitsubishi UFJ Financial Group Inc. | 131,568,517 | Overseas listed foreign | 131,568,517 | |||
shares | ||||||
JPMorgan Chase & Co. | 119,807,927 | Overseas listed foreign | 119,807,927 | |||
shares | ||||||
Huitianfu Fund Management Co., Ltd. - Social Security | 70,000,000 | RMB ordinary shares | 70,000,000 | |||
Fund 1103 Portfolio (匯添富基金管理股份有限公司 | ||||||
-社保基金1103組合) | ||||||
Citigroup Inc. | 63,343,239 | Overseas listed foreign | 63,343,239 | |||
shares | ||||||
Jiantou Zhongxin Asset Management Co., Ltd. | 21,410,000 | RMB ordinary shares | 21,410,000 | |||
China Pacific Life Insurance Co., Ltd. - CPLI Stock | 12,500,000 | RMB ordinary shares | 12,500,000 | |||
Dividend Product (Shou Zi Ying) Entrusted Investment | ||||||
(中國太平洋人壽保險股份有限公司-中國太平洋人壽股 | ||||||
票紅利型產品(壽自營)) | ||||||
National Social Security Fund 114 portfolio | 9,632,923 | RMB ordinary shares | 9,632,923 | |||
(全國社保基金一一四組合) | ||||||
Illustration on the related relationship or acting-in- concert
Illustration on the preference shareholders with voting rights restored and the shareholding thereof
- The Company is not aware of the existence of related relationship or acting- in-concert arrangement with respect to the above shareholders;
- During the Reporting Period, none of the related parties, strategic investors of the Company and general legal persons became the top ten shareholders of the Company because of placing of new shares; and
- The number of shares of H shareholders is based on the record of the register kept according to the Securities and Futures Ordinance of Hong Kong.
Nil
74 2020 Interim Report
SECTION VI CHANGES IN ORDINARY SHARES AND INFORMATION ON SHAREHOLDERS
- SHAREHOLDERS (CONTINUED)
-
Table of shareholdings of top ten shareholders and top ten shareholders of shares in circulation (or shareholders without being imposed on any sales restrictions) as at the end of the Reporting Period (Continued)
Interests and short positions
-
Table of shareholdings of top ten shareholders and top ten shareholders of shares in circulation (or shareholders without being imposed on any sales restrictions) as at the end of the Reporting Period (Continued)
Number of A Shares | |||||||
Percentage of | |||||||
Directly | Number of | A Shares | |||||
Name of shareholder | Capacity | interested | A Shares | (total shares) | |||
Jiangsu Communications | Other | Yes | 2,742,578,825 (L) | 71.88% (54.44%) (L) | |||
Holding Company | |||||||
Limited | |||||||
China Merchants | Other | Yes | 589,059,077 (L) | 15.44% (11.69%) (L) | |||
Expressway Network & | |||||||
Technology Holdings | |||||||
Co., Ltd.(1) | |||||||
Jiangsu Expressway Company Limited | 75 |
SECTION VI CHANGES IN ORDINARY SHARES AND INFORMATION ON SHAREHOLDERS
- SHAREHOLDERS (CONTINUED)
-
Table of shareholdings of top ten shareholders and top ten shareholders of shares in circulation (or shareholders without being imposed on any sales restrictions) as at the end of the Reporting Period (Continued)
Interests and short positions (Continued)
-
Table of shareholdings of top ten shareholders and top ten shareholders of shares in circulation (or shareholders without being imposed on any sales restrictions) as at the end of the Reporting Period (Continued)
Number of H Shares | ||||
Percentage of | ||||
Directly | Number of | H Shares | ||
Name of shareholder | Capacity | interested | H Shares | (total shares) |
BlackRock, Inc. | Interest of controlled | No | 158,338,523(L) | 12.96%(3.14%)(L) |
corporation(3) | 178,000(S) | 0.01%(0.00%)(S) | ||
Mitsubishi UFJ | Interest of controlled | No | 131,568,517(L) | 10.76%(2.61%)(L) |
Financial Group, Inc. | corporation(2) | 119,807,927(L) | 9.80%(2.38%)(L) | |
JPMorgan Chase & | Interest of controlled | No | 4,370,647(S) | 0.35%(0.09%)(S) |
Co. | corporation/ | 74,435,686(P) | 6.09%(1.48%)(P) | |
investment | ||||
manager/custodian | 63,343,239(L) | 5.18%(1.26%)(L) | ||
- corporation/ | ||||
approved lending | ||||
agent(4) | ||||
Citigroup Inc. | Interest of controlled | No | 2,000(S) | 0.00%(0.00%)(S) |
corporation/ | ||||
approved lending | 62,315,448(P) | 5.09%(1.24%)(P) | ||
agent/custodian - | ||||
corporation(5)
Notes: (L) Long position; (S) Short position; (P) Lending pool
- China Merchants Group Limited was deemed to be interested in the Company by virtue of its controlling interest in its subsidiary, China Merchants Expressway Network.
- Mitsubishi UFJ Financial Group, Inc. was deemed to be interested in the Company by virtue of its indirectly wholly- owned subsidiaries.
76 2020 Interim Report
SECTION VI CHANGES IN ORDINARY SHARES AND INFORMATION ON SHAREHOLDERS
- SHAREHOLDERS (CONTINUED)
-
Table of shareholdings of top ten shareholders and top ten shareholders of shares in circulation (or shareholders without being imposed on any sales restrictions) as at the end of the Reporting Period (Continued)
Interests and short positions (Continued) - BlackRock, Inc. was deemed to be interested in the long position of a total of 158,338,523 H Shares of the Company and in the short position of 178,000 H Shares by virtue of its control over a number of corporations, which were indirectly wholly-owned by BlackRock, Inc., except the following:
- BlackRock Holdco 6, LLC was indirectly owned as to 90% by BlackRock, Inc. BlackRock Holdco 6, LLC held interests in the Company through its indirectly wholly-owned subsidiaries as follows:
- BlackRock Institutional Trust Company, National Association held 32,303,058 (long position) and 178,000 H Shares (short position) of the Company.
- BlackRock Fund Advisors held 59,340,000 H Shares (long position) of the Company.
- BR Jersey International Holdings L.P. was indirectly owned as to 86% by BlackRock, Inc. BR Jersey International Holdings L.P. held interests in the Company through its indirectly wholly-owned subsidiaries as follows:
- BlackRock Japan Co., Ltd. held 3,236,650 H Shares (long position) of the Company.
- BlackRock Asset Management Canada Limited held 1,746,000 H Shares (long position) of the Company.
- BlackRock Investment Management (Australia) Limited held762,000 H Shares (long position) of the Company.
- BlackRock Asset Management North Asia Limited held 683,129 H Shares (long position) of the Company.
- BlackRock Investment Management (Taiwan) Limited held 24,000 H Shares (long position) of the Company.
- BlackRock (Singapore) Limited held 390,000 H Shares (long position) of the Company.
- BlackRock Group Limited was indirectly owned as to 90% by BR Jersey International Holdings L.P. (see note 3(b) above). BlackRock Group Limited held interests in the Company through its directly or indirectly wholly- owned subsidiaries as follows:
- BlackRock (Netherlands) B.V. held 906,000 H Shares (long position) of the Company.
- BlackRock Advisors (UK) Limited held 278,000 H Shares (long position) of the Company.
- BlackRock International Limited held 164,000 H Shares (long position) of the Company.
- BlackRock Asset Management Ireland Limited held 11,047,865 H Shares (long position) of the Company.
- BLACKROCK (Luxembourg) S.A. held 18,856,000 H Shares (long position) of the Company.
-
Table of shareholdings of top ten shareholders and top ten shareholders of shares in circulation (or shareholders without being imposed on any sales restrictions) as at the end of the Reporting Period (Continued)
Jiangsu Expressway Company Limited | 77 |
SECTION VI CHANGES IN ORDINARY SHARES AND INFORMATION ON SHAREHOLDERS
- SHAREHOLDERS (CONTINUED)
-
Table of shareholdings of top ten shareholders and top ten shareholders of shares in circulation (or shareholders without being imposed on any sales restrictions) as at the end of the Reporting Period (Continued)
Interests and short positions (Continued) - BlackRock Investment Management (UK) Limited held 8,633,185 H Shares (long position) of the Company.
- BlackRock Fund Managers Limited held 2,974,959 H Shares (long position) of the Company.
- BlackRock Asset Management (Schweiz) AG held 10,000 H Shares (long position) of the Company.
- BlackRock Life Limited held 2,495,677 H Shares (long position) of the Company.
- JPMorgan Chase & Co. was deemed to be interested in the long position of a total of 119,807,927 H Shares of the Company (of which 5,294,230 H Shares were held through cash settled (off exchange) derivatives) and the short position of 4,370,647 H Shares (of which 4,268,073 H Shares were held through cash settled (off exchange) derivatives). JPMorgan Chase & Co. held interests in the following capacities:
-
Table of shareholdings of top ten shareholders and top ten shareholders of shares in circulation (or shareholders without being imposed on any sales restrictions) as at the end of the Reporting Period (Continued)
Capacity | Number of shares | Number of shares | Number of shares | |||
(long position) | (short position) | (lending pool) | ||||
Interest of controlled corporation | 10,371,294 | 4,370,647 | ||||
Investment manager | 33,709,440 | |||||
Person having a security interest in shares | 1,291,507 | |||||
Approved lending agent | 74,435,686 | |||||
- Citigroup Inc. was deemed to be interested in the long position of a total of 63,343,239 H Shares of the Company (of which 84,000 H Shares were held through cash settled (off exchange) derivatives) and the short position of 2,000 H Shares (of which 2,000 H Shares were held through cash settled (off exchange) derivatives). Citigroup Inc. held interests in the following capacities:
Capacity | Number of shares | Number of shares | Number of shares | |||
(long position) | (short position) | (lending pool) | ||||
Interest of controlled corporation | 1,027,791 | 2,000 | ||||
Approved lending agent | 62,315,448 | |||||
Save as disclosed above, to the best of the Company's knowledge, there was no other person required to make disclosure under the Securities and Futures Ordinance of Hong Kong as at the latest practicable date.
78 2020 Interim Report
SECTION VI CHANGES IN ORDINARY SHARES AND INFORMATION ON SHAREHOLDERS
- SHAREHOLDERS (CONTINUED)
-
Table of shareholdings of top ten shareholders and top ten shareholders of shares in circulation (or shareholders without being imposed on any sales restrictions) as at the end of the Reporting Period (Continued)
Interests and short positions (Continued)
Shareholdings of top ten shareholders subject to selling restrictions and their selling restrictions
-
Table of shareholdings of top ten shareholders and top ten shareholders of shares in circulation (or shareholders without being imposed on any sales restrictions) as at the end of the Reporting Period (Continued)
Applicable | ✔ | Not Applicable |
- Strategic investors or general legal persons becoming the top ten shareholders because of the placing of new Shares
Applicable | ✔ | Not Applicable |
- CHANGE OF CONTROLLING SHAREHOLDERS AND DE FACTO CONTROLLERS
Applicable | ✔ | Not Applicable |
IV. DIRECTORS' INTERESTS AND SHORT POSITIONS IN SHARES, UNDERLYING SHARES AND DEBENTURES
As at 30 June 2020, none of the Directors and chief executives of the Company had any interests, long positions or short positions in the shares or underlying shares or debentures of the Company or any of its associated corporations (within the meaning of Part XV of the Securities and Futures Ordinance) that was required to be recorded in the register maintained by the Company pursuant to section 352 of the Securities and Futures Ordinance, or as otherwise notified to the Company and the Stock Exchange pursuant to the provisions under the Model Code for Securities Transactions by the Directors.
- REPURCHASE, SALE OR REDEMPTION OF SECURITIES
During the Reporting Period, there was no repurchase, sale or redemption of any of its listed securities by the Company and/or any of its subsidiaries; and the Company and its subsidiaries have not issued or grant any convertible securities, options, warrants or other similar rights at any time.
VI. PUBLIC FLOAT
According to public information and as far as the Directors know, the board of Directors is of the view that the public float of the shares of the Company as at 28 August 2020 (being the latest practicable date prior to the publication of this Report) complied with the requirements of the Hong Kong Listing Rules.
Jiangsu Expressway Company Limited | 79 |
SECTION VI CHANGES IN ORDINARY SHARES AND INFORMATION ON SHAREHOLDERS
VII. DIVIDEND ARRANGEMENT WAIVED OR AGREED BY THE SHAREHOLDERS
During the Reporting Period, no dividend arrangement was waived by any of the shareholders.
VIII. MODEL CODE FOR SECURITIES TRANSACTIONS BY DIRECTORS OF LISTED ISSUERS
The Company has adopted a Code of Conduct for securities transactions by its directors on standards no lower than the provisions under the Model Code for Securities Transactions by Directors of Listed Issuers (the "Model Code") under Appendix 10 of the Hong Kong Listing Rules. Having made specific enquiries to all the Directors, the Directors have fully complied with the provisions stipulated under the Model Code and the Company's code of conduct for securities transactions by directors.
80 2020 Interim Report
SECTION VII INFORMATION ON PREFERRED SHARES
Applicable | ✔ | Not Applicable |
Jiangsu Expressway Company Limited | 81 |
SECTION VIII PROFILES OF DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
- CHANGES IN SHAREHOLDINGS
- Changes in shareholdings held by current or resigned directors, supervisors and members of senior management officers during the Reporting Period
Applicable | ✔ | Not Applicable |
Other Information
Applicable | ✔ | Not Applicable |
- Equity incentives granted to directors, supervisors and senior management officers during the Reporting Period
Applicable | ✔ | Not Applicable |
- CHANGES OF DIRECTORS, SUPERVISORS, AND SENIOR MANAGEMENT OFFICERS OF THE COMPANY
✔ Applicable | Not Applicable | |
Name | Position Held | Change |
Dai Qian (戴倩) | Chief Financial Officer | Appointed |
Ren Zhuohuo (任卓華) | Chief Financial Officer | Resigned |
Kong Yuanyi (孔元翌) | Staff Representative Supervisor | Elected |
Shao Li(邵莉) | Staff Representative Supervisor | Resigned |
Explanation on the changes of directors, supervisors and senior management officers of the Company
✔ | Applicable | Not Applicable |
- Biographical details of a new senior management:
Dai Qian, male, born in 1978, is a post-graduate with a master degree and also senior accountant. Mr. Dai served successively as the head of the financial audit department, assistant to director of financial management department and deputy director of the financial management department of Jiangsu Communications Holding Company Limited. (江蘇交通控股有限公司) from 2014 to 2020. He is the Chief Financial Officer and Party Committee Member of Jiangsu Expressway Company Limited since June 2020. Mr. Dai has been engaged in financial management for a long time and has extensive theoretical and practical experience.
- Biographical details of a new staff representative supervisor:
Kong Yuanyi, female, born in February 1976, graduated from Nanjing University as a postgraduate with master's degree, and is an economist and national secondary enterprise human resource manager. Ms. Kong has successively served as the head of the office, assistant to the director of the Party and Mass Work Department of the Company, and is currently the deputy director (in charge of work) of the Party and Mass Work Department of the Company.
82 2020 Interim Report
SECTION VIII PROFILES OF DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
- OTHER EXPLANATIONS
✔ | Applicable | Not Applicable |
- Independent Non-executive Directors
The Company has appointed a sufficient number of independent non-executive Directors. Zhang Zhuting, Chen Liang, Lin Hui, Zhou Shudong and Liu Xiaoxing were appointed as independent non- executive Directors of ninth session of the board of Directors of the Company, accounting for more than one-third of the members of the board of Directors. Five independent non-executive Directors are currently serving at renowned universities in the PRC, and are senior experts in the academic fields of economic management, industry policies and regulations, financial accounting and online finance respectively and are well-versed with academic theories and management experience. Independent Directors respectively serve as members of various committees of the board of Directors. Independent non-executive directors represent a majority in the Audit Committee, the Nomination Committee and the Remuneration and Appraisal Committee, and an independent non- executive Director acts as the Chairman at each of these committees.
- Staff Remuneration and Training
As at 30 June 2020, the Group (including its controlled subsidiaries) had 5,517 staff members in total, comprising 801 managerial and technical staff members and 4,716 manufacturing staff members. During the Reporting Period, total amount of staff remuneration reached RMB435,066,000. The Company gave full play to the incentive and restrictive role of the position- based salary system in the first half of 2020. The Company continued to optimize staff remuneration composition, intensified the relationship between performance wages and dose-effect, comprising basic wages to provide reasonable protection, performance-based remuneration acting as an incentive for their potential driving force as well as welfare and insurance to secure their livelihood and rights and interests. Based on the principle of "fixing salary based on position, remuneration is gained based on performance", remuneration and benefits are paid reasonably with reference to the scientific assessment of an employee's performance at work. In the meantime, the Company makes contributions to "five social insurances and the housing provident fund" for the employees in accordance with law, and provides a number of tailor-made welfare benefits schemes such as supplemental medical treatment and enterprise annuity.
In terms of training, we comprehensively checked the existing staff team, formulated personnel training plan base on the enterprise development needs and team structure, implemented policy separately, conducted multi-level training and improved job matching by organically combining professionalism with comprehensiveness. The Company arranged an online training at Shanghai Stock Exchange Academy for middle and senior management to effectively cultivate a group of professional talents who is familiar with the market and have expertise in business operation. The young reserve talents were provided 100 online courses covering three modules including self-management, management of others, and business management for learning. At the same time, the Company carried out offline Python language learning activities to provide technical support for operating, maintenance and inspection of "intelligent high-speed". With the learning activities platforms such as of "Young Employees' Classroom", "Micro-lession Competition" and "Friday Classroom", the Company practically improved the training pertinence and effectiveness.
Jiangsu Expressway Company Limited | 83 |
SECTION IX INFORMATION ON CORPORATE BONDS
Applicable | ✔ | Not Applicable |
84 2020 Interim Report
CONSOLIDATED BALANCE SHEET
For the period ended 30 June 2020
Unit: RMB
Item | Note | 30 June 2020 31 December 2019 Item | Note | 30 June 2020 31 December 2019 |
Current Assets: | ||
Cash and bank balances | VI 1 | 396,394,765.02 |
Held-for-trading financial assets | VI 2 | 1,765,073,027.10 |
Notes receivable | VI 3 | 1,997,100.00 |
Accounts receivable | VI 4 | 412,901,378.17 |
Prepayments | VI 5 | 57,315,472.23 |
Other receivables | VI 6 | 118,522,734.38 |
Inventories | VI 7 | 4,205,525,438.16 |
Other current assets | VI 8 | 514,936,839.58 |
Total Current Assets | 7,472,666,754.64 | |
Non-current Assets: | ||
Investments in other equity | ||
instruments | VI 9 | 4,567,964,324.49 |
Other non-current financial assets | VI 10 | 1,527,572,276.51 |
Long-term equity investments | VI 11 | 6,854,005,331.89 |
Investment properties | VI 12 | 17,943,058.91 |
Fixed assets | VI 13 | 1,876,221,904.35 |
Construction in progress | VI 14 | 17,618,050,406.77 |
Right-of-use assets | VI 16 | 2,022,347.44 |
Intangible assets | VI 15 | 18,246,503,188.58 |
Long-term prepaid expenses | VI 17 | 9,087,093.25 |
Deferred tax assets | VI 18 | 171,925,471.65 |
Other non-current assets | VI 19 | 14,955,570.00 |
Current Liabilities:
503,443,740.45 Short-term borrowings
676,935,184.62 Notes payable
-
Accounts payable
224,285,157.62 Receipts in advance
26,865,058.19 Contract liabilities
51,199,899.50 Employee benefits payable
4,164,567,305.10 Taxes payable
379,340,961.34 Other payables
Non-current liabilities due within one year
6,026,637,306.82 Other current liabilities
Total Current Liabilities
5,655,468,613.24
1,446,175,745.21
6,939,251,518.62 Non-current Liabilities:
18,394,459.79 Long-term borrowings
1,907,362,713.72 Bonds payable
14,501,734,494.95 Lease liabilities
637,434.33 Deferred income
18,927,999,470.50 Provisions
11,418,643.58 Deferred tax liabilities
175,012,653.99 Total Non-current Liabilities
14,955,570.00 TOTAL LIABILITIES
Shareholders' Equity:
Share capital
Capital reserve
Other comprehensive income
Surplus reserve
General risk reserve
Retained profits
Total shareholders' equity attributable to equity holders of the Company
Minority interests
VI 20 | 1,380,880,336.29 | 1,972,708,495.84 | |
VI 21 | 895,000,000.00 | - | |
VI 22 | 1,043,858,654.62 | 1,262,414,819.54 | |
VI 23 | 7,832,692.14 | 10,698,899.04 | |
VI 24 | 1,068,685,183.35 | 1,134,150,940.01 | |
VI 25 | 714,309.08 | 1,563,119.99 | |
VI 26 | 182,671,042.18 | 225,458,836.37 | |
VI 27 | 2,591,604,474.14 | 261,048,444.02 | |
VI 28 | 4,164,076,736.49 | 3,161,145,193.63 | |
VI 29 | 6,357,724,161.56 | 5,092,083,748.87 | |
17,693,047,589.85 | 13,121,272,497.31 | ||
VI 30 | 10,055,235,181.77 | 8,335,475,444.12 | |
VI 31 | - | 997,460,933.93 | |
VI 32 | 1,094,340.47 | - | |
VI 33 | 128,703,380.91 | 41,177,151.42 | |
VI 34 | 28,798,736.77 | 30,211,590.82 | |
VI 18 | 157,788,364.52 | 416,613,871.66 | |
10,371,620,004.44 | 9,820,938,991.95 | ||
28,064,667,594.29 | 22,942,211,489.26 | ||
VI 35 | 5,037,747,500.00 | 5,037,747,500.00 | |
VI 36 | 10,501,913,183.87 | 10,501,913,183.87 | |
VI 37 | 504,015,493.00 | 1,291,748,071.42 | |
VI 38 | 3,551,167,000.42 | 3,551,167,000.42 | |
VI 39 | 2,001,131.77 | 141,891.32 | |
VI 40 | 6,330,680,316.11 | 8,164,265,960.12 | |
25,927,524,625.17 | 28,546,983,607.15 | ||
4,386,725,509.02 | 4,135,853,528.34 | ||
Total Non-current Assets | 50,906,250,973.84 | 49,598,411,317.93 | TOTAL SHAREHOLDERS' EQUITY | ||
TOTAL LIABILITIES AND | |||||
TOTAL ASSETS | 58,378,917,728.48 | 55,625,048,624.75 | SHAREHOLDERS' EQUITY | ||
30,314,250,134.19 | 32,682,837,135.49 | |
58,378,917,728.48 | 55,625,048,624.75 | |
The accompanying notes form part of the financial statements
The financial statements on pages 84 to 231 were signed by the following:
Legal Representative: | Person in Charge of the Accounting Body: | Chief Accountant: |
Sun Xibin | Dai Qian | Yao Qunfang |
Jiangsu Expressway Company Limited | 85 |
BALANCE SHEET OF THE COMPANY
For the period ended 30 June 2020
Unit: RMB | |||||||||||||||
Item | Note | 30 June 2020 | 31 December 2019 | Item | Note | 30 June 2020 | 31 December 2019 | ||||||||
Current Assets: | Current Liabilities: | ||||||||||||||
Cash and bank balances | 52,958,672.42 | 72,993,232.97 | Short-term borrowings | 883,563,416.67 | 2,022,320,888.89 | ||||||||||
Held-for-trading financial assets | 1,631,004,410.66 | 370,000,000.00 | Accounts payable | 435,994,055.49 | 589,591,720.53 | ||||||||||
Accounts receivable | XIV 1 | 185,004,319.14 | 158,693,671.56 | Receipts in advance | 2,329,430.76 | 4,679,590.76 | |||||||||
Prepayments | 32,125,304.69 | 5,983,721.61 | Employee benefits payable | 707,454.17 | 1,023,753.28 | ||||||||||
Other receivables | XIV 2 | 169,820,075.10 | 13,182,864.41 | Taxes payable | 66,974,759.39 | 26,068,004.78 | |||||||||
Inventories | 12,319,904.89 | 12,961,862.11 | Other payables | 3,485,874,589.17 | 154,434,539.62 | ||||||||||
Non-current assets due within one | Non-current liabilities due within | ||||||||||||||
year | 986,238,867.23 | 30,284,152.78 | one year | 4,100,228,833.18 | 3,055,176,013.26 | ||||||||||
Other current assets | 988,640,746.32 | 404,998,605.25 | Other current liabilities | 6,271,391,789.00 | 4,998,884,246.00 | ||||||||||
Total Current Assets | 4,058,112,300.45 | 1,069,098,110.69 | Total Current Liabilities | 15,247,064,327.83 | 10,852,178,757.12 | ||||||||||
Non-current Assets: | Non-current Liabilities: | ||||||||||||||
Investments in other equity | Long-term borrowings | 513,155,181.77 | 13,827,444.12 | ||||||||||||
instruments | 3,374,688,524.49 | 4,188,311,013.24 | Bonds payable | - | 997,460,933.93 | ||||||||||
Long-term equity investments | XIV 3 | 17,920,542,727.08 | 17,437,162,898.62 | Deferred income | 50,849,120.00 | - | |||||||||
Fixed assets | 969,409,032.54 | 1,010,379,375.99 | Deferred tax liabilities | - | 144,200,424.02 | ||||||||||
Construction in progress | 69,593,578.03 | 78,110,869.95 | |||||||||||||
Intangible assets | 9,074,806,268.17 | 9,394,393,034.42 | Total Non-current Liabilities | 564,004,301.77 | 1,155,488,802.07 | ||||||||||
Long-term prepaid expenses | 4,245,282.92 | 5,660,377.22 | |||||||||||||
Deferred tax assets | 59,205,198.16 | - | 12,007,667,559.19 | ||||||||||||
Other non-current assets | 964,955,570.00 | 1,901,079,653.58 | TOTAL LIABILITIES | 15,811,068,629.60 | |||||||||||
Total Non-current Assets | 32,437,446,181.39 | 34,015,097,223.02 | Shareholders' Equity: | ||||||||||||
Share capital | 5,037,747,500.00 | 5,037,747,500.00 | |||||||||||||
Capital reserve | 7,401,175,276.67 | 7,401,175,276.67 | |||||||||||||
Other comprehensive income | 125,924,779.15 | 730,095,757.57 | |||||||||||||
Surplus reserve | 2,518,873,750.00 | 2,518,873,750.00 | |||||||||||||
Retained profits | 5,600,768,546.42 | 7,388,635,490.28 | |||||||||||||
TOTAL SHAREHOLDERS' EQUITY | 20,684,489,852.24 | 23,076,527,774.52 | |||||||||||||
TOTAL LIABILITIES AND | |||||||||||||||
35,084,195,333.71 | 35,084,195,333.71 | ||||||||||||||
TOTAL ASSETS | 36,495,558,481.84 | SHAREHOLDERS' EQUITY | 36,495,558,481.84 | ||||||||||||
The accompanying notes form part of the financial statements
The financial statements on pages 84 to 231 were signed by the following:
Legal Representative: | Person in Charge of the Accounting Body: | Chief Accountant: |
Sun Xibin | Dai Qian | Yao Qunfang |
86 2020 Interim Report
CONSOLIDATED INCOME STATEMENT
For the period ended 30 June 2020
Unit: RMB | |||||
Amount for the | Amount for the | ||||
Item | Note | current period | prior period | ||
I. | Total operating income | VI 41 | 2,668,351,072.50 | 4,835,457,868.83 | |
Including: Operating income | 2,668,351,072.50 | 4,835,457,868.83 | |||
Less: | Total operating costs | 2,237,744,544.95 | 2,341,869,205.41 | ||
Including: Operating costs | VI 41 | 1,859,290,222.19 | 1,955,644,387.14 | ||
Taxes and levies | VI 42 | 39,258,353.21 | 55,403,316.19 | ||
Selling expenses | VI 43 | 8,977,337.47 | 18,630,332.26 | ||
Administrative expenses | VI 44 | 73,831,410.68 | 85,673,931.47 | ||
Financial expenses | VI 45 | 256,387,221.40 | 226,517,238.35 | ||
Including: Interest expenses | 243,777,161.13 | 227,654,018.44 | |||
Interest income | 2,833,886.76 | 3,577,594.21 | |||
Add: | Other income | VI 46 | 9,387,442.24 | 2,612,095.39 | |
Investment income | VI 47 | 147,761,973.92 | 478,199,640.69 | ||
Including: Income from investments | |||||
in associates and joint | |||||
ventures | -10,411,795.68 | 355,157,835.85 | |||
Gains from changes in fair | |||||
values | VI 48 | 50,461,176.80 | 21,207,890.81 | ||
Impairment reversals (losses) | |||||
of credit | VI 49 | - | -130,000.00 | ||
Losses from disposal of assets | VI 50 | - | -295,936.53 | ||
II. | Operating profit | 638,217,120.51 | 2,995,182,353.78 | ||
Add: | Non-operating income | VI 51 | 29,557,223.53 | 1,608,479.04 | |
Less: | Non-operating expenses | VI 52 | 9,752,929.55 | 11,041,962.04 | |
III. | Total profit | 658,021,414.49 | 2,985,748,870.78 | ||
Less: | Income tax expenses | VI 53 | 173,933,369.86 | 651,267,942.06 | |
IV. | Net profit | 484,088,044.63 | 2,334,480,928.72 |
- Categorized by the nature of continuing operation:
1. | Net profit from continuing operations | 484,088,044.63 | 2,334,480,928.72 |
2. | Net profit from discontinued operations | - | - |
(II) Categorized by ownership:
1. Net profit attributable to owners of the
Company | 485,637,446.44 | 2,281,609,028.13 |
2. Profit or loss attributable to minority
interests | -1,549,401.81 | 52,871,900.59 |
Jiangsu Expressway Company Limited | 87 |
CONSOLIDATED INCOME STATEMENT
For the period ended 30 June 2020
Amount for the | Amount for the | ||||||
Item | Note | current period | prior period | ||||
V. Other comprehensive income, net of tax | -809,582,328.42 | 531,287,650.30 | |||||
Other comprehensive income attributable to owners | |||||||
of the Company, net of tax | -787,732,578.42 | 527,602,150.30 | |||||
(I) Other comprehensive income that cannot be | |||||||
reclassified to profit or loss | -787,732,578.42 | 527,602,150.30 | |||||
1. Other comprehensive income that cannot | |||||||
be reclassified into profit or loss under | |||||||
the equity method | 6,045,888.15 | 124,907,965.20 | |||||
2. Changes in fair value of investments in | |||||||
other equity instruments | -793,778,466.57 | 402,694,185.10 | |||||
(II) Other comprehensive income that will be | |||||||
reclassified to profit or loss | - | ||||||
Other comprehensive income attributable to | |||||||
minority interests, net of tax | -21,849,750.00 | 3,685,500.00 | |||||
2,865,768,579.02 | |||||||
VI. | Total comprehensive income | -325,494,283.79 | |||||
Total comprehensive income attributable to owners | |||||||
of the Company | -302,095,131.98 | 2,809,211,178.43 | |||||
Total comprehensive income attributable to minority | |||||||
interests | -23,399,151.81 | 56,557,400.59 | |||||
VII. Earnings per share | |||||||
(I) Basic earnings per share | 0.0964 | 0.4529 | |||||
(II) Diluted earnings per share | N/A | N/A | |||||
The accompanying notes form part of the financial statements
The financial statements on pages 84 to 231 were signed by the following:
Legal Representative: | Person in Charge of the Accounting Body: | Chief Accountant: |
Sun Xibin | Dai Qian | Yao Qunfang |
88 2020 Interim Report
INCOME STATEMENT OF THE COMPANY
For the period ended 30 June 2020
Unit: RMB | |||||
Amount for the | Amount for the | ||||
Item | Note | current period | prior period | ||
I. | Operating income | XIV 4 | 1,775,522,114.91 | 3,122,046,925.72 | |
Less: | Operating costs | XIV 4 | 1,124,158,133.09 | 1,115,103,028.87 | |
Taxes and levies | 7,726,056.87 | 20,996,091.91 | |||
Administrative expenses | 56,827,028.35 | 57,722,948.33 | |||
Financial expenses | 169,796,077.56 | 138,513,026.65 | |||
Including: Interest expenses | 156,421,990.58 | 137,115,213.12 | |||
Interest income | 667,955.82 | 919,916.26 | |||
Add: | Other income | 7,447,135.54 | 1,627,822.84 | ||
Investment income | XIV 5 | 212,845,681.02 | 361,285,280.94 | ||
Including: Income from investments | |||||
in associates and joint | |||||
ventures | 11,214,219.51 | 245,926,085.00 | |||
Impairment reversals (losses) | |||||
of credit | - | - | |||
Gains from disposal of assets | - | 67,583.94 | |||
II. | Operating profit | 637,307,635.60 | 2,152,692,517.68 | ||
Add: | Non-operating income | 28,042,899.71 | 1,436,015.48 | ||
Less: | Non-operating expenses | 8,219,236.53 | 7,678,462.89 | ||
III. | Total profit | 657,131,298.78 | 2,146,450,070.27 | ||
Less: | Income tax expenses | 127,634,392.64 | 466,863,503.40 | ||
IV. | Net profit | 529,496,906.14 | 1,679,586,566.87 | ||
(I) Net profit from continuing operations | 529,496,906.14 | 1,679,586,566.87 | |||
(II) Net profit from discontinued operations | - | - | |||
Jiangsu Expressway Company Limited | 89 |
INCOME STATEMENT OF THE COMPANY
For the period ended 30 June 2020
Amount for the | Amount for the | ||
Item | Note | current period | prior period |
V. Other comprehensive income, net of tax | -604,170,978.42 | 506,717,650.30 |
- Other comprehensive income that cannot be
reclassified into profit or loss | -604,170,978.42 | 506,717,650.30 |
1. Other comprehensive income that cannot be reclassified into profit or loss under
the equity method | 6,045,888.15 | 124,907,965.20 |
2. Changes in fair value of investments in
other equity instruments | -610,216,866.57 | 381,809,685.10 | |
(II) Other comprehensive income that will be | |||
reclassified into profit or loss | - | - | |
VI. Total comprehensive income | -74,674,072.28 | 2,186,304,217.17 | |
The accompanying notes form part of the financial statements
The financial statements on pages 84 to 231 were signed by the following:
Legal Representative: | Person in Charge of the Accounting Body: | Chief Accountant: |
Sun Xibin | Dai Qian | Yao Qunfang |
90 2020 Interim Report
CONSOLIDATED CASH FLOW STATEMENT
For the period ended 30 June 2020
Unit: RMB | ||||
Amount for the | Amount for the | |||
Item | Note | current period | prior period | |
I. | Cash Flows from Operating Activities: | |||
Cash receipts from the sale of goods and the rendering | ||||
of services | 2,724,400,874.76 | 5,240,391,028.41 | ||
Other cash receipts relating to operating activities | VI 55 (1) | 125,996,536.84 | 98,154,643.84 | |
Sub-total of cash inflows from operating activities | 2,850,397,411.60 | 5,338,545,672.25 | ||
Cash payments for goods purchased and services | ||||
received | 934,531,215.93 | 991,054,370.10 | ||
Net increase in loans to customers and advances | - | 500,004.00 | ||
Cash payments to and on behalf of employees | 414,329,720.82 | 424,438,938.38 | ||
Payments of various types of taxes | 348,231,442.18 | 898,469,530.85 | ||
Other cash payments relating to operating activities | VI 55 (2) | 257,975,882.19 | 96,586,438.02 | |
Sub-total of cash outflows from operating activities | 1,955,068,261.12 | 2,411,049,281.35 | ||
Net Cash Flow from Operating Activities | VI 56 (1) | 895,329,150.48 | 2,927,496,390.90 | |
II. | Cash Flows from Investing Activities: | |||
Cash receipts from disposals and recovery | ||||
of investments | 2,113,389,861.59 | 3,804,205,807.87 | ||
Cash receipts from investment income | 171,131,564.26 | 63,582,954.06 | ||
Net cash receipts from disposals of fixed assets, | ||||
intangible assets and other long-term assets | 17,903.54 | 117,486.66 | ||
Other cash receipts relating to investing activities | VI 55 (3) | - | - | |
Sub-total of cash inflows from investing activities | 2,284,539,329.39 | 3,867,906,248.59 | ||
Cash payments to acquire or construct fixed assets, | ||||
intangible assets and other long-term assets | 2,343,360,064.33 | 1,477,781,578.00 | ||
Cash payments to acquire investments | 3,232,375,673.48 | 5,593,771,864.38 | ||
Net cash payments for acquisitions of subsidiaries and | ||||
other business units | - | - | ||
Other cash payments relating to investing activities | VI 55 (4) | - | - | |
Sub-total of cash outflows from investing activities | 5,575,735,737.81 | 7,071,553,442.38 | ||
Net Cash Flow from Investing Activities | -3,291,196,408.42 | -3,203,647,193.79 | ||
Jiangsu Expressway Company Limited | 91 |
CONSOLIDATED CASH FLOW STATEMENT
For the period ended 30 June 2020
Amount for the | Amount for the | |||||||
Item | Note | current period | prior period | |||||
III. Cash Flows from Financing Activities: | ||||||||
Cash receipts from capital contributions | 289,710,000.00 | 479,200,555.00 | ||||||
Including: cash receipts from capital contributions from | ||||||||
minority owners of subsidiaries | 289,710,000.00 | 479,200,555.00 | ||||||
Cash receipts from borrowings | 2,243,690,000.00 | 1,402,400,000.00 | ||||||
Cash receipts from issue of bonds | 8,110,000,000.00 | 2,200,000,000.00 | ||||||
Sub-total of cash inflows from financing activities | 10,643,400,000.00 | 4,081,600,555.00 | ||||||
Cash repayments of borrowings | 7,983,069,130.59 | 3,604,177,864.07 | ||||||
Cash payments for distribution of dividends or profits or | ||||||||
settlement of interest expenses | 366,506,631.30 | 185,038,115.49 | ||||||
Including: payments for distribution of dividends or profits | ||||||||
to minority owners of subsidiaries | ||||||||
Other cash payments relating to financing activities | VI 55 (5) | 18,540,629.97 | 2,248,810.55 | |||||
Sub-total of cash outflows from financing activities | 8,368,116,391.86 | 3,791,464,790.11 | ||||||
Net Cash Flow from Financing Activities | 2,275,283,608.14 | 290,135,764.89 | ||||||
IV. | Effect of Foreign Exchange Rate Changes on Cash | |||||||
and Cash Equivalents | ||||||||
V. | Net Increase (Decrease) in Cash and Cash | |||||||
Equivalents | VI 56 (1) | -120,583,649.80 | 13,984,962.00 | |||||
Add: Opening balance of Cash and Cash Equivalents | VI 56 (2) | 449,410,135.63 | 515,126,921.66 | |||||
VI. | Closing balance of Cash and Cash Equivalents | VI 56 (2) | 328,826,485.83 | 529,111,883.66 | ||||
The accompanying notes form part of the financial statements | ||
The financial statements on pages 84 to 231 were signed by the following: | ||
Legal Representative: | Person in Charge of the Accounting Body: | Chief Accountant: |
Sun Xibin | Dai Qian | Yao Qunfang |
92 2020 Interim Report
CASH FLOW STATEMENT OF THE COMPANY
For the period ended 30 June 2020
Unit: RMB | |||
Amount for the | Amount for the | ||
Item | Note | current period | prior period |
I. | Cash Flows from Operating Activities: | ||
Cash receipts from the sale of goods and the rendering | |||
of services | 1,845,349,180.10 | 3,234,856,552.12 | |
Other cash receipts relating to operating activities | 299,749,044.26 | 13,448,956.02 | |
Sub-total of cash inflows from operating activities | 2,145,098,224.36 | 3,248,305,508.14 | |
Cash payments for goods purchased and services | |||
received | 618,208,661.70 | 663,165,218.95 | |
Cash payments to and on behalf of employees | 292,475,237.16 | 275,249,186.63 | |
Payments of various types of taxes | 158,875,403.33 | 648,620,931.41 | |
Other cash payments relating to operating activities | 27,008,854.24 | 21,532,011.57 | |
Sub-total of cash outflows from operating activities | 1,096,568,156.43 | 1,608,567,348.56 | |
Net Cash Flow from Operating Activities | 1,048,530,067.93 | 1,639,738,159.58 | |
II. | Cash Flows from Investing Activities: | ||
Cash receipts from disposals and recovery of investments | 994,067,790.92 | 2,322,000,000.00 | |
Cash receipts from investment income | 119,099,618.38 | 53,169,304.50 | |
Net cash receipts from disposals of fixed assets, | |||
intangible assets and other long-term assets | 16,855.00 | 83,000.00 | |
Other cash receipts relating to investing activities | 11,000,000.00 | 461,000,000.00 | |
Sub-total of cash inflows from investing activities | 1,124,184,264.30 | 2,836,252,304.50 | |
Cash payments to acquire or construct fixed assets, | |||
intangible assets and other long-term assets | 48,293,691.18 | 43,729,073.78 | |
Cash payments to acquire investments | 2,802,072,201.58 | 4,462,000,000.00 | |
Net cash payments for acquisitions of subsidiaries and | |||
other business units | - | - | |
Other cash payments relating to investing activities | 821,000,000.00 | 11,000,000.00 | |
Sub-total of cash outflows from investing activities | 3,671,365,892.76 | 4,516,729,073.78 | |
Net Cash Flow from Investing Activities | -2,547,181,628.46 | -1,680,476,769.28 | |
Jiangsu Expressway Company Limited | 93 |
CASH FLOW STATEMENT OF THE COMPANY
For the period ended 30 June 2020
Amount for the | Amount for the | ||
Item | Note | current period | prior period |
- Cash Flows from Financing Activities:
Cash receipts from borrowings | 850,000,000.00 | 1,025,000,000.00 | ||
Cash receipts from issue of bonds | 8,110,000,000.00 | 2,200,000,000.00 | ||
Sub-total of cash inflows from financing activities | 8,960,000,000.00 | 3,225,000,000.00 | ||
Cash repayments of borrowings | 7,318,861,130.59 | 3,070,927,864.07 | ||
Cash payments for distribution of dividends or profits or | ||||
settlement of interest expenses | 145,778,116.27 | 105,699,493.12 | ||
Other cash payments relating to financing activities | 16,743,753.16 | 3,123,810.55 | ||
Sub-total of cash outflows from financing activities | 7,481,383,000.02 | 3,179,751,167.74 | ||
Net Cash Flow from Financing Activities | 1,478,616,999.98 | 45,248,832.26 | ||
IV. | Effect of Foreign Exchange Rate Changes on Cash | |||
and Cash Equivalents | - | - | ||
V. | Net Decrease in Cash and Cash Equivalents | -20,034,560.55 | 4,510,222.56 | |
Add: Opening balance of Cash and Cash Equivalents | 72,993,232.97 | 100,931,394.05 | ||
VI. | Closing balance of Cash and Cash Equivalents | 52,958,672.42 | 105,441,616.61 | |
The accompanying notes form part of the financial statements | ||
The financial statements on pages 84 to 231 were signed by the following: | ||
Legal Representative: | Person in Charge of the Accounting Body: | Chief Accountant: |
Sun Xibin | Dai Qian | Yao Qunfang |
Unit: RMB | |||||||||||||||||||
Amount for the current period | |||||||||||||||||||
Item | |||||||||||||||||||
Attributable to owners of the Company | |||||||||||||||||||
Other equity instruments | Other | Total | |||||||||||||||||
Share | Preferred | Perpetual | Less: Treasury | comprehensive | Special | Surplus | General | Retained | Minority | shareholders' | |||||||||
capital | shares | debts | Others | Capital reserve | shares | income | reserve | reserve | Risk Provision | profits | interests | equity | |||||||
I. | Closing balance as at 31 December 2019 | 5,037,747,500.00 | - | - | - | 10,501,913,183.87 | - | 1,291,748,071.42 | - | 3,551,167,000.42 | 141,891.32 | 8,164,265,960.12 | 4,135,853,528.34 | 32,682,837,135.49 | |||||
II. | Changes for the period | - | - | - | - | - | - | -787,732,578.42 | - | - | 1,859,240.45 | -1,833,585,644.01 | 250,871,980.68 | -2,368,587,001.30 | |||||
(I) | Total comprehensive income | - | - | - | - | - | - | -787,732,578.42 | - | - | - | 485,637,446.44 | -23,399,151.81 | -325,494,283.79 | |||||
(II) | Owners' contributions and reduction in capital | - | - | - | - | - | - | - | - | - | - | - | 289,710,000.00 | 289,710,000.00 | |||||
1. | Ordinary shares contributed by | ||||||||||||||||||
shareholders | - | - | - | - | - | - | - | - | - | - | - | 289,710,000.00 | 289,710,000.00 |
2. Capital reserve of investee under equity
method | - | - | - | - | - | - | - | - | - | - | - | - | - | ||||||||||||||
(III) Profit distribution | - | - | - | - | - | - | - | - | - | 1,859,240.45 | -2,319,223,090.45 | -15,438,867.51 | -2,332,802,717.51 | ||||||||||||||
1. | Transfer to surplus reserve | - | - | - | - | - | - | - | - | - | - | - | - | ||||||||||||||
2. | Transfer to general risk reserve | - | - | - | - | - | - | - | - | - | 1,859,240.45 | -1,859,240.45 | - | - | |||||||||||||
3. | Distributions to shareholders | - | - | - | - | - | - | - | - | - | - | -2,317,363,850.00 | -15,438,867.51 | -2,332,802,717.51 | |||||||||||||
III. | Closing balance as at 30 June 2020 | 5,037,747,500.00 | - | - | - | 10,501,913,183.87 | - | 504,015,493.00 | - | 3,551,167,000.42 | 2,001,131.77 | 6,330,680,316.11 | 4,386,725,509.02 | 30,314,250,134.19 | |||||||||||||
The accompanying notes form part of the financial statements. | ||
The financial statements on pages 84 to 231 were signed by the following: | ||
Legal Representative: | Person in Charge of the Accounting Body: | Chief Accountant: |
Sun Xibin | Dai Qian | Yao Qunfang |
94 | ||
June 30 ended period the For | CONSOLIDATED | Report Interim 2020 |
2020 | STATEMENT | |
EQUITY SHAREHOLDERS' IN CHANGES OF |
Unit: RMB | ||||||||||||||||||
Amount for the prior period | ||||||||||||||||||
Item | ||||||||||||||||||
Attributable to owners of the Company | ||||||||||||||||||
Other equity instruments | Other | Total | ||||||||||||||||
Share | Preferred | Perpetual | Less: Treasury | comprehensive | Special | Surplus | General | Retained | Minority | shareholders' | ||||||||
capital | shares | debts | Others | Capital reserve | shares | income | reserve | reserve | Risk Provision | profits | interests | equity | ||||||
I. | Closing balance as at 31 December 2018 | 5,037,747,500.00 | - | - | - | 10,428,388,234.50 | - | 837,827,667.08 | - | 3,411,194,284.79 | - | 6,422,040,045.25 | 3,216,659,209.60 | 29,353,856,941.22 | ||||
II. | Changes for the period | - | - | - | - | - | - | 527,602,150.30 | - | - | - | -35,754,821.87 | 535,757,955.59 | 1,027,605,284.02 | ||||
(I) | Total comprehensive income | - | - | - | - | - | - | 527,602,150.30 | - | - | - | 2,281,609,028.13 | 56,557,400.59 | 2,865,768,579.02 | ||||
(II) | Owners' contributions and reduction in capital | - | - | - | - | - | - | - | - | - | - | - | 479,200,555.00 | 479,200,555.00 |
1. Ordinary shares contributed by
shareholders | - | - | - | - | - | - | - | - | - | - | - | 479,200,555.00 | 479,200,555.00 | |||||||||||||||
(III) | Profit distribution | - | - | - | - | - | - | - | - | - | - | -2,317,363,850.00 | - | -2,317,363,850.00 | ||||||||||||||
1. | Transfer to surplus reserve | - | - | - | - | - | - | - | - | - | - | - | - | - | ||||||||||||||
2. | Distributions to shareholders | - | - | - | - | - | - | - | - | - | - | -2,317,363,850.00 | - | -2,317,363,850.00 | ||||||||||||||
III. | Closing balance as at 30 June 2019 | 5,037,747,500.00 | - | - | - | 10,428,388,234.50 | - | 1,365,429,817.38 | - | 3,411,194,284.79 | - | 6,386,285,223.38 | 3,752,417,165.19 | 30,381,462,225.24 | ||||||||||||||
The accompanying notes form part of the financial statements. | ||
The financial statements on pages 84 to 231 were signed by the following: | ||
Legal Representative: | Person in Charge of the Accounting Body: | Chief Accountant: |
Sun Xibin | Dai Qian | Yao Qunfang |
ended period the For | SHAREHOLDERS' IN CHANGES OF STATEMENT CONSOLIDATED | Expressway Jiangsu |
2020 June 30 | EQUITY | Limited Company |
95
Unit: RMB | |||||||||||||||
Amount for the current period | |||||||||||||||
Other equity instruments | Less: | Other | Total | ||||||||||||
Share | Preferred | Perpetual | Capital | Treasury | comprehensive | Special | General Risk | Retained | owner's | ||||||
Item | capita | shares | debts | Others | reserve | shares | income | reserve | Surplus reserve | Provision | profits | equity | |||
I. | Closing balance as at 31 December 2019 | 5,037,747,500.00 | - | - | - | 7,401,175,276.67 | - | 730,095,757.57 | - | 2,518,873,750.00 | - | 7,388,635,490.28 | 23,076,527,774.52 | ||
II. | Changes for the period | - | - | - | - | - | - | -604,170,978.42 | - | - | - | -1,787,866,943.86 | -2,392,037,922.28 | ||
(I) Total comprehensive income | - | - | - | - | - | - | -604,170,978.42 | - | - | - | 529,496,906.14 | -74,674,072.28 | |||
(II) Owners' contributions and reduction in capital | - | - | - | - | - | - | - | - | - | - | - | - |
1. Capital reserve of investee under equity
method | - | - | - | - | - | - | - | - | - | - | - | - | |||||||||||||
((III) Profit distribution | - | - | - | - | - | - | - | - | - | - | (2,317,363,850.00) | (2,317,363,850.00) | |||||||||||||
1. | Distributions to shareholders | - | - | - | - | - | - | - | - | - | - | (2,317,363,850.00) | (2,317,363,850.00) | ||||||||||||
III. Closing balance as at 30 June 2020 | 5,037,747,500.00 | - | - | - | 7,401,175,276.67 | - | 125,924,779.15 | - | 2,518,873,750.00 | - | 5,600,768,546.42 | 20,684,489,852.24 | |||||||||||||
The accompanying notes form part of the financial statements. | ||
The financial statements on pages 84 to 231 were signed by the following: | ||
Legal Representative: | Person in Charge of the Accounting Body: | Chief Accountant: |
Sun Xibin | Dai Qian | Yao Qunfang |
96 | ||
ended period the For | STATEMENT | Report Interim 2020 |
2020 June 30 | CHANGES OF | |
COMPANY THE OF EQUITY SHAREHOLDERS' IN |
Unit: RMB | |||||||||||||||||||||||||||||||||
Amount for the prior period | |||||||||||||||||||||||||||||||||
Other equity instruments | Less: | Other | Total | ||||||||||||||||||||||||||||||
Share | Preferred | Perpetual | Capital | Treasury | comprehensive | Special | General Risk | Retained | owner's | ||||||||||||||||||||||||
Item | capita | shares | debts | Others | reserve | shares | income | reserve | Surplus reserve | Provision | profits | equity | |||||||||||||||||||||
I. | Closing balance as at 31 December 2018 | 5,037,747,500.00 | - | - | - | 7,327,650,327.30 | - | 289,485,951.71 | - | 2,518,873,750.00 | - | 6,602,016,006.52 | 21,775,773,535.53 | ||||||||||||||||||||
II. | Changes for the period | - | - | - | - | - | - | 506,717,650.30 | - | - | - | -637,777,283.13 | -131,059,632.83 | ||||||||||||||||||||
(I) | Total comprehensive income | - | - | - | - | - | - | 506,717,650.30 | - | - | - | 1,679,586,566.87 | 2,186,304,217.17 | ||||||||||||||||||||
(II) | Profit distribution | - | - | - | - | - | - | - | - | - | - | -2,317,363,850.00 | -2,317,363,850.00 | ||||||||||||||||||||
1. | Distributions to shareholders | - | - | - | - | - | - | - | - | - | - | -2,317,363,850.00 | -2,317,363,850.00 | ||||||||||||||||||||
III. | Closing balance as at 30 June 2019 | 5,037,747,500.00 | - | - | - | 7,327,650,327.30 | - | 796,203,602.01 | - | 2,518,873,750.00 | - | 5,964,238,723.39 | 21,644,713,902.70 | ||||||||||||||||||||
The accompanying notes form part of the financial statements. | ||
The financial statements on pages 84 to 231 were signed by the following: | ||
Legal Representative: | Person in Charge of the Accounting Body: | Chief Accountant: |
Sun Xibin | Dai Qian | Yao Qunfang |
COMPANY THE OF EQUITY SHAREHOLDERS' IN CHANGES OF STATEMENT 2020 June 30 ended period the For | Limited Company Expressway Jiangsu |
97
98 2020 Interim Report
NOTES TO THE FINANCIAL STATEMENTS
For the period ended 30 June 2020
- BASIC INFORMATION ABOUT THE COMPANY
-
General
Jiangsu Expressway Co., Ltd. (the "Company") is a joint-stock limited company incorporated in Nanjing, Jiangsu province on 1 August 1992, with headquarter located in Nanjing. The principal activities of the Company and its subsidiaries (collectively referred it as the "Group") mainly include: construction, operation and management of the Jiangsu section of Shanghai-Nanjing Expressway (the "Shanghai-Nanjing Expressway") and other toll roads in Jiangsu Province PRC, and the provision of passenger transport services and other supporting services along the toll roads.
The Company issued 1,222,000,000 shares on the Stock Exchange of Hong Kong Limited ("H shares") and 150,000,000 shares on the Shanghai Stock Exchange ("A shares") with par value of RMB1 in June 1997 and December 2000 respectively.
The parent company and ultimate shareholder of the Company is Jiangsu Communications Holding Company Limited ("Communications Holding"). - Scope of consolidated financial statements
The Company and the consolidated financial are approved by the Board of Directors on 28 August 2020.
Subsidiaries consolidated in the financial statements are listed in Note VII "Equity in other entities".
-
General
- BASIS OF PREPARATION OF FINANCIAL STATEMENTS
Basis of preparation
The Group has adopted the Accounting Standards for Business Enterprises ("ASBE") issued by the Ministry of Finance ("MOF") and related rules. The Group has disclosed relevant financial information in accordance with Information Disclosure and Presentation Rules for Companies Offering Securities to the Public No. 15 - General Provisions on Financial Reporting (Revised in 2014). In addition, the Group also disclosed relevant disclosure in accordance with the disclosure requirements of the Hong Kong Companies Ordinance and the Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong Limited.
Going concern
As at 30 June 2020, the Group had total current liabilities in excess of total current assets of RMB10,220,380,835.21. As at 30 June 2020, the Group has available unutilized bank loan facilities with a time limit over one year of approximately RMB30,484,023,000.00 and authorized but not issued super short-term bonds with a time limit over one year of approximately RMB750,000,000.00. The Group's management believes the facilities above are to provide all necessary financial support to the Group in the foreseeable future so as to maintain the Group's ability to continue as a going concern, the financial statements have been prepared on a going concern basis.
Jiangsu Expressway Company Limited | 99 |
NOTES TO THE FINANCIAL STATEMENTS
For the period ended 30 June 2020
-
BASIS OF PREPARATION OF FINANCIAL STATEMENTS (CONTINUED)
Basis of accounting and principle of measurement
The Group has adopted the accrual basis of accounting. Except for certain financial instruments which are measured at fair value, the Group adopts the historical cost as the principle of measurement in the financial statements. Where assets are impaired, provisions for asset impairment are made in accordance with relevant requirements.
Where the historical cost is adopted as the measurement basis, assets are recorded at the amount of cash or cash equivalents paid or the fair value of the consideration given to acquire them at the time of their acquisition. Liabilities are recorded at the amount of proceeds or assets received or the contractual amounts for assuming the present obligation, or, at the amounts of cash or cash equivalents expected to be paid to settle the liabilities in the normal course of business.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using valuation technique. Fair value measurement and disclosure in the financial statements are determined according to the above basis.
Fair value measurements are categorized into Level 1, 2 or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:
- Level 1 inputs are unadjusted quoted prices in active markets for identical assets or liabilities that the entity can access at the measurement date;
- Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and
- Level 3 inputs are unobservable inputs for the asset or liability.
- SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES
The Group are principally engaged in toll road operation. The Group determines the specific accounting policies according to the toll road industry characteristics, shown mainly on the provision for credit impairment, depreciation for fixed assets, amortization for toll road operation rights and recognition timing of revenue. Refer to Note III 9, 13, 16 and 22 for detail specific accounting policies. For description of significant accounting judgments, estimation and assumption made by management, see Note IV.
1. Statement of compliance with the ASBE
The financial statements of the Company have been prepared in accordance with ASBE, and present truly and completely, the Company's and consolidated financial position as of 30 June 2020, changes in equity of the Company and consolidated shareholders and the Company's and consolidated results of operations and cash flows for the period ended 30 June 2020.
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Jiangsu Expressway Co. Ltd. published this content on 15 September 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 15 September 2020 08:49:09 UTC