ZHEH.L Regulatory News (ZHEH)

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong KongLimited take no responsibility for the contents of this announcement, make norepresentation as to its accuracy or completeness and expressly disclaim anyliability whatsoever for any loss howsoever arising from or in reliance uponthe whole or any part of the contents of this announcement. ZHEJIANG EXPRESSWAY CO., LTD. (A joint stock limited company incorporated in the People's Republic of China with limited liability) (Stock code: 0576) 2014 Annual Results Announcement -- Revenue was Rmb9,051.12 million, representing an increase of 15.3% year-on-year-- Profit attributable to owners of the Company amounted to Rmb2,349.05 million, representing an increase of 23.2% year-on-year-- Earnings per share was Rmb54.09 cents-- A final dividend of Rmb26.5 cents per share is recommended The directors (the "Directors") of Zhejiang Expressway Co., Ltd. (the"Company") announced the audited consolidated results of the Company and itssubsidiaries (collectively the "Group") for the year ended December 31, 2014(the "Period"), with the basis of preparation as stated in note 1 set outbelow. RESULTS AND DIVIDENDS During the Period, revenue for the Group was Rmb9,051.12 million, representingan increase of 15.3% over 2013. Profit attributable to owners of the Companywas Rmb2,349.05 million, representing an increase of 23.2% year-on-year.Earnings per share for the Period was Rmb54.09 cents (2013: Rmb43.92 cents). The Directors have recommended to pay a final dividend of Rmb26.5 cents pershare (2013: Rmb25 cents). The final dividend is subject to shareholders'approval at the 2014 annual general meeting of the Company. Together with theinterim dividend of Rmb6 cents per share that has already been paid, the annualdividend payout during the Period is Rmb32.5 cents per share (2013: Rmb31cents). The audit committee of the Company has reviewed the Group's annual results ofthe Period. Set out below are the audited consolidated statement of profit orloss and other comprehensive income for the Period and consolidated statementof financial position as at December 31, 2014, together with the comparativefigures for 2013: CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME For the year ended December 31, 2014 2013 Notes Rmb'000 Rmb'000 ------------ ---------------- Revenue 3 9,051,123 7,851,115 Operating costs (5,576,211) (4,955,609) ------------ ----------------Gross profit 3,474,912 2,895,506 Securities investment gains 278,252 99,663 Other income 4 250,492 241,056 Administrative expenses (85,533) (84,792) Other expenses (103,443) (70,061) Share of profit of associates 65,020 21,537 Share of loss of a joint (33,277) (36,010)venture Finance costs (78,231) (95,161) ------------ ----------------Profit before tax 3,768,192 2,971,738 Income tax expense 5 (917,948) (756,761) ------------ ----------------Profit for the year 2,850,244 2,214,977 ------------ ----------------Other comprehensive incomeItems that may be reclassifiedsubsequently to profit or loss: Available-for-sale financial assets - Fair value gain during the 68,301 4,865year - Reclassification adjustments - (1,381)for cumulative gain included inprofit or loss upon disposal Income tax relating to (17,075) (871)components of other ------------ ----------------comprehensive income Other comprehensive income for 51,226 2,613the year (net of tax) ------------ ---------------- Total comprehensive income for 2,901,470 2,217,590the year ------------ ---------------- For the year ended December 31, Note 2014 2013 Rmb'000 Rmb'000 ------------ ----------------Profit for the yearattributable to: Owners of the Company 2,349,052 1,907,470 Non-controlling interests 501,192 307,507 ------------ ---------------- 2,850,244 2,214,977 ------------ ----------------Total comprehensive incomeattributable to: Owners of the Company 2,375,654 1,909,017 Non-controlling interests 525,816 308,573 ------------ ---------------- 2,901,470 2,217,590 ------------ ----------------Earnings per share - Basic and 7 Rmb54.09 cents Rmb43.92 centsdiluted ------------ ---------------- CONSOLIDATED STATEMENT OF FINANCIAL POSITION As at December 31, As at December 31, 2014 2013 Notes Rmb'000 Rmb'000 ------------ ---------------- Non-current assets Property, plant and equipment 2,987,465 1,762,042 Prepaid lease payments 66,001 68,156 Expressway operating rights 11,112,507 11,911,133 Goodwill 86,867 86,867 Other intangible assets 155,590 154,564 Interests in associates 627,866 574,733 Interest in a joint venture 300,667 333,944 Available-for-sale investments 221,232 143,514 Other receivables 50,828 401,400 ------------ ---------------- 15,609,023 15,436,353 ------------ ----------------Current assets Inventories 170,654 73,576 Trade receivables 8 135,609 101,428 Loans to customers arising from 8,545,913 2,946,911margin financing business Other receivables and 832,238 451,968prepayments Prepaid lease payments 2,155 2,155 Available-for-sale investments 570,021 281,924 Held for trading investments 2,124,740 1,181,025 Financial assets held under 2,724,598 874,254resale agreements Bank balances held on behalf of 16,576,751 8,228,160customers Bank balances and cash - Time deposits with original 761,320 704,459maturity over three months - Cash and cash equivalents 3,301,722 1,806,981 ------------ ---------------- 35,745,721 16,652,841 ------------ ---------------- As at December 31, As at December 31, 2014 2013 Notes Rmb'000 Rmb'000 ------------ ----------------Current liabilities Placements from other financial 1,940,000 310,000institutions Accounts payable to customers 16,545,146 8,167,103arising from securitiesbusiness Trade payables 9 693,604 421,994 Tax liabilities 463,648 331,611 Other taxes payable 67,642 53,417 Other payables and accruals 1,561,274 995,496 Dividends payable 76,139 94,976 Bank and other borrowings 150,000 540,000 Short-term financing note 883,570 1,000,000payable Financial assets sold under 6,299,057 -repurchase agreements ------------ ---------------- 28,680,080 11,914,597 ------------ ----------------Net current assets 7,065,641 4,738,244 ------------ ----------------Total assets less current 22,674,664 20,174,597liabilities ------------ ---------------- Non-current liabilities Bank and other borrowings 200,000 300,000 Bonds payable 1,200,000 - Deferred tax liabilities 145,042 205,638 ------------ ---------------- 1,545,042 505,638 ------------ ---------------- 21,129,622 19,668,959 ------------ ----------------Capital and reserves Share capital 4,343,115 4,343,115 Reserves 12,658,711 11,629,423 ------------ ----------------Equity attributable to owners 17,001,826 15,972,538of the Company Non-controlling interests 4,127,796 3,696,421 ------------ ---------------- 21,129,622 19,668,959 ------------ ----------------Notes: 1. BASIS OF PREPARATION The consolidated financial statements have been prepared in accordance withHong Kong Financial Reporting Standards issued by Hong Kong Institute ofCertified Public Accountants (the "HKICPA"). In addition, the consolidatedfinancial statements include applicable disclosures required by the RulesGoverning the Listing of Securities (the "Listing Rules") on The Stock Exchangeof Hong Kong Limited and by the Hong Kong Companies Ordinance, which for theyear continue to be those of the predecessor Companies Ordinance (Cap. 32), inaccordance with transitional and saving arrangement under Part 9 of the HongKong Companies Ordinance (Cap. 622), "Accounts and Audit", which are set out insections 76 to 87 of Schedule 11 to that Ordinance. 2. PRINCIPAL ACCOUNTING POLICIES The consolidated financial statements have been prepared on the historical costbasis except for certain financial instruments that are measured at fair valuesat the end of each reporting period, as explained in the accounting policiesbelow. Except as disclosed below, the accounting policies and methods of computationapplied in the consolidated financial statements for the Period are consistentwith those in the preparation of the Group's annual financial statements forthe year ended December 31, 2013. New and revised HKFRSs applied in the current year The Group has applied the following new and revised HKFRSs issued by the HKICPAfor the first time in the current year. Amendments to HKFRS 10, Investment EntitiesHKFRS 12 and HKAS 27 Amendments to HKAS 32 Offsetting Financial Assets and Financial Liabilities Amendments to HKAS 36 Recoverable Amount Disclosures for Non-Financial Assets Amendments to HKAS 39 Novation of Derivatives and Continuation of Hedge Accounting HK(IFRIC) - Int 21 Levies Except as disclosed below, the application of the new and revised HKFRSs in thecurrent year has had no material impact on the Group's financial performanceand positions for the current and prior years and/or on the disclosures set outin these consolidated financial statements. Amendments to HKAS 32 Offsetting Financial Assets and Financial Liabilities--------------------------------------------------------------------------- The Group has applied the amendments to HKAS 32 Offsetting Financial Assets andFinancial Liabilities for the first time in the current year. The amendments toHKAS 32 clarify the requirements relating to the offset of financial assets andfinancial liabilities. Specifically, the amendments clarify the meaning of'currently has a legally enforceable right of set-off' and 'simultaneousrealisation and settlement'. The amendments have been applied retrospectively. The Group has assessedwhether certain of its financial assets and financial liabilities qualify foroffset based on the criteria set out in the amendments and concluded that theapplication of the amendments has had no material impact on the amountsrecognised in the Group's consolidated financial statements. Amendments to HKAS 36 Recoverable Amount Disclosures for Non-Financial Assets----------------------------------------------------------------------------- The Group has applied the amendments to HKAS 36 Recoverable Amount Disclosuresfor Non- Financial Assets for the first time in the current year. Theamendments to HKAS 36 remove the requirement to disclose the recoverable amountof a cash-generating unit ("CGU") to which goodwill or other intangible assetswith indefinite useful lives had been allocated when there has been noimpairment or reversal of impairment of the related CGU. Furthermore, theamendments introduce additional disclosure requirements applicable to when therecoverable amount of an asset or a CGU is measured at fair value less costs ofdisposal. These new disclosures include the fair value hierarchy, keyassumptions and valuation techniques used which are in line with the disclosurerequired by HKFRS 13 Fair Value Measurements. The application of these amendments has had no material impact on thedisclosures in the Group's consolidated financial statements. New and revised HKFRSs issued but not yet effective HKFRS 9 Financial Instruments[1] HKFRS 14 Regulatory Deferral Accounts[2] HKFRS 15 Revenue from Contracts with Customers[3] Amendments to HKFRS 11 Accounting for Acquisitions of Interests in Joint Operations[5] Amendments to HKAS 1 Disclosure Initiative[5] Amendments to HKAS 16 and HKAS 38 Clarification of Acceptable Methods of Depreciation and Amortisation[5] Amendments to HKAS 19 Defined Benefit Plans: Employee Contributions[4] Amendments to HKFRSs Annual Improvements to HKFRSs 2010-2012 Cycle[6] Amendments to HKFRSs Annual Improvements to HKFRSs 2011-2013 Cycle[4] Amendments to HKFRSs Annual Improvements to HKFRSs 2012-2014 Cycle[5] Amendments to HKAS 16 and HKAS 41 Agriculture: Bearer Plants[5] Amendments to HKAS 27 Equity Method in Separate Financial Statements[5] Amendments to HKFRS 10 and HKAS 28 Sale or Contribution of Assets between an Investor and its Associate or Joint Venture[5] Amendments to HKFRS 10, HKFRS 12 and Investment Entities: Applying theHKAS 28 Consolidation Exception[5] [1] Effective for annual periods beginning on or after January 1, 2018[2] Effective for first annual HKFRS financial statements beginning on or after January 1, 2016[3] Effective for annual periods beginning on or after January 1, 2017[4] Effective for annual periods beginning on or after July 1, 2014[5] Effective for annual periods beginning on or after January 1, 2016[6] Effective for annual periods beginning on or after July 1, 2014, with limited exceptions HKFRS 9 Financial Instruments HKFRS 9 issued in 2009 introduced new requirements for the classification andmeasurement of financial assets. HKFRS 9 was subsequently amended in 2010 toinclude requirements for the classification and measurement of financialliabilities and for derecognition, and further amended in 2013 to include thenew requirements for general hedge accounting. Another revised version of HKFRS9 was issued in 2014 mainly to include a) impairment requirements for financialassets and b) limited amendments to the classification and measurementrequirements by introducing a 'fair value through other comprehensive income'("FVTOCI") measurement category for certain simple debt instruments. Key requirements of HKFRS 9 are described below: All recognised financial assets that are within the scope of HKAS 39 FinancialInstruments: Recognition and Measurement are subsequently measured at amortisedcost or fair value. Specifically, debt investments that are held within abusiness model whose objective is to collect the contractual cash flows, andthat have contractual cash flows that are solely payments of principal andinterest on the principal outstanding are generally measured at amortised costat the end of subsequent accounting periods. Debt instruments that are heldwithin a business model whose objective is achieved both by collectingcontractual cash flows and selling financial assets, and that have contractualterms of the financial asset give rise on specified dates to cash flows thatare solely payments of principal and interest on the principal amountoutstanding, are measured at FVTOCI. All other debt investments and equityinvestments are measured at their fair value at the end of subsequentaccounting periods. In addition, under HKFRS 9, entities may make anirrevocable election to present subsequent changes in the fair value of anequity investment (that is not held for trading) in other comprehensive income,with only dividend income generally recognised in profit or loss. With regard to the measurement of financial liabilities designated as at fairvalue through profit or loss, HKFRS 9 requires that the amount of change in thefair value of the financial liability that is attributable to changes in thecredit risk of that liability is presented in other comprehensive income,unless the recognition of the effects of changes in the liability's credit riskin other comprehensive income would create or enlarge an accounting mismatch inprofit or loss. Changes in fair value of financial liabilities attributable tochanges in the financial liabilities' credit risk are not subsequentlyreclassified to profit or loss. Under HKAS 39, the entire amount of the changein the fair value of the financial liability designated as fair value throughprofit or loss was presented in profit or loss. In relation to the impairment of financial assets, HKFRS 9 requires an expectedcredit loss model, as opposed to an incurred credit loss model under HKAS 39.The expected credit loss model requires an entity to account for expectedcredit losses and changes in those expected credit losses at each reportingdate to reflect changes in credit risk since initial recognition. In otherwords, it is no longer necessary for a credit event to have occurred beforecredit losses are recognised. The Directors of the Company anticipate that the application of HKFRS 9 in thefuture may have a material impact on amounts reported in respect of the Group'sfinancial assets and financial liabilities (e.g. the Group's investments inunlisted equity securities currently classified as available-for-saleinvestments may have to be measured at fair value at the end of subsequentreporting periods, with changes in the fair value being recognised in profit orloss). Regarding the Group's financial assets, it is not practicable to providea reasonable estimate of that effect until a detailed review has beencompleted. HKFRS 15 Revenue from Contracts with Customers In July 2014, HKFRS 15 was issued which establishes a single comprehensivemodel for entities to use in accounting for revenue arising from contracts withcustomers. HKFRS 15 will supersede the current revenue recognition guidanceincluding HKAS 18 Revenue, HKAS 11 Construction Contracts and the relatedInterpretations when it becomes effective. The core principle of HKFRS 15 is that an entity should recognise revenue todepict the transfer of promised goods or services to customers in an amountthat reflects the consideration to which the entity expects to be entitled inexchange for those goods or services. Specifically, the Standard introduces a5-step approach to revenue recognition: -- Step 1: Identify the contract(s) with a customer-- Step 2: Identify the performance obligations in the contract-- Step 3: Determine the transaction price-- Step 4: Allocate the transaction price to the performance obligations in the contract-- Step 5: Recognise revenue when (or as) the entity satisfies a performance obligation Under HKFRS 15, an entity recognises revenue when (or as) a performanceobligation is satisfied, i.e. when 'control' of the goods or servicesunderlying the particular performance obligation is transferred to thecustomer. Far more prescriptive guidance has been added in HKFRS 15 to dealwith specific scenarios. Furthermore, extensive disclosures are required byHKFRS 15. The Directors of the Company anticipate that the application of HKFRS15 in the future may have a material impact on the amounts reported anddisclosures made in the Group's consolidated financial statements. However, itis not practicable to provide a reasonable estimate of the effect of HKFRS 15until the Group performs a detailed review. Amendments to HKAS 16 and HKAS 38 Clarification of Acceptable Methods of------------------------------------------------------------------------Depreciation and Amortisation----------------------------- The amendments to HKAS 16 prohibit entities from using a revenue-baseddepreciation method for items of property, plant and equipment. The amendmentsto HKAS 38 introduce a rebuttable presumption that revenue is not anappropriate basis for amortisation of an intangible asset. This presumption canonly be rebutted in the following two limited circumstances: a) when the intangible asset is expressed as a measure of revenue; orb) when it can be demonstrated that revenue and consumption of the economic benefits of the intangible asset are highly correlated. The amendments apply prospectively for annual periods beginning on or afterJanuary 1, 2016. Currently, the Group uses the straight-line method fordepreciation and amortisation for its property, plant and equipment, expresswayoperating rights and other intangible assets respectively. The Directors of theCompany believe that the straight-line method is the most appropriate method toreflect the consumption of economic benefits inherent in the respective assetsand accordingly, The Directors of the Company do not anticipate that theapplication of these amendments to HKAS 16 and HKAS 38 will have a materialimpact on the Group's consolidated financial statements. Amendments to HKAS 19 Defined Benefit Plans: Employee Contributions------------------------------------------------------------------- The amendments to HKAS 19 clarify how an entity should account forcontributions made by employees or third parties to defined benefit plans,based on whether those contributions are dependent on the number of years ofservice provided by the employee. For contributions that are independent of the number of years of service, theentity may either recognise the contributions as a reduction in the servicecost in the period in which the related service is rendered, or to attributethem to the employees' periods of service using the projected unit creditmethod; whereas for contributions that are dependent on the number of years ofservice, the entity is required to attribute them to the employees' periods ofservice. The Directors of the Company do not anticipate that the application of theseamendments to HKAS 19 will have an impact on the Group's consolidated financialstatements as the Group does not have any defined benefit plans. Amendments to HKAS 27 Equity Method in Separate Financial Statements-------------------------------------------------------------------- The amendments allow an entity to account for investments in subsidiaries,joint ventures and associates in its separate financial statements -- At cost-- In accordance with HKFRS 9 Financial Instruments (or HKAS 39 Financial Instruments: Recognition and Measurement for entities that have not yet adopted HKFRS 9), or-- Using the equity method as described in HKAS 28 Investments in Associates and Joint Ventures. The accounting option must be applied by category of investments. The amendments also clarify that when a parent ceases to be an investmententity, or becomes an investment entity, it shall account for the change fromthe date when the change in status occurred. In addition to the amendments to HKAS 27, there are consequential amendments toHKAS 28 to avoid a potential conflict with HKFRS 10 Consolidated FinancialStatements and to HKFRS 1 First time Adoption of Hong Kong Financial ReportingStandards. The Directors of the Company do not anticipate that the application of theseamendments to HKAS 27 will have a material impact on the Group's consolidatedfinancial statements. Amendments to HKFRS 10 and HKAS 28 Sale or Contribution of Assets between an----------------------------------------------------------------------------Investor and its Associate or Joint Venture------------------------------------------- Amendments to HKAS 28: -- The requirements on gains and losses resulting from transactions between an entity and its associate or joint venture have been amended to relate only to assets that do not constitute a business.-- A new requirement has been introduced that gains or losses from downstream transactions involving assets that constitute a business between an entity and its associate or joint venture must be recognised in full in the investor's financial statements.-- A requirement has been added that an entity needs to consider whether assets that are sold or contributed in separate transactions constitute a business and should be accounted for as a single transaction. Amendments to HKFRS 10: -- An exception from the general requirement of full gain or loss recognition has been introduced into HKFRS 10 for the loss control of a subsidiary that does not contain a business in a transaction with an associate or a joint venture that is accounted for using the equity method.-- New guidance has been introduced requiring that gains or losses resulting from those transactions are recognised in the parent's profit or loss only to the extent of the unrelated investors' interests in that associate or joint venture. Similarly, gains and losses resulting from the remeasurement at fair value of investments retained in any former subsidiary that has become an associate or a joint venture that is accounted for using the equity method are recognised in the former parent's profit or loss only to the extent of the unrelated investors' interests in the new associate or joint venture. The Directors of the Company do not anticipate that the application of theseamendments to HKFRS 10 and HKAS 28 will have a material impact on the Group'sconsolidated financial statements. Annual Improvements to HKFRSs 2010-2012 Cycle--------------------------------------------- The Annual Improvements to HKFRSs 2010-2012 Cycle include a number ofamendments to various HKFRSs, which are summarised below. The amendments to HKFRS 8 (i) require an entity to disclose the judgements madeby management in applying the aggregation criteria to operating segments,including a description of the operating segments aggregated and the economicindicators assessed in determining whether the operating segments have 'similareconomic characteristics'; and (ii) clarify that a reconciliation of the totalof the reportable segments' assets to the entity's assets should only beprovided if the segment assets are regularly provided to the chief operatingdecision-maker. The amendments to the basis for conclusions of HKFRS 13 clarify that the issueof HKFRS 13 and consequential amendments to HKAS 39 and HKFRS 9 did not removethe ability to measure short-term receivables and payables with no statedinterest rate at their invoice amounts without discounting, if the effect ofdiscounting is immaterial. As the amendments do not contain any effective date,they are considered to be immediately effective. The amendments to HKAS 16 and HKAS 38 remove perceived inconsistencies in theaccounting for accumulated depreciation/amortisation when an item of property,plant and equipment or an intangible asset is revalued. The amended standardsclarify that the gross carrying amount is adjusted in a manner consistent withthe revaluation of the carrying amount of the asset and that accumulateddepreciation/amortisation is the difference between the gross carrying amountand the carrying amount after taking into account accumulated impairmentlosses. The amendments to HKAS 24 clarify that a management entity providing keymanagement personnel services to a reporting entity is a related party of thereporting entity. Consequently, the reporting entity should disclose as relatedparty transactions the amounts incurred for the service paid or payable to themanagement entity for the provision of key management personnel services.However, disclosure of the components of such compensation is not required. The Directors of the Company do not anticipate that the application of theseamendments will have a material effect on the Group's consolidated financialstatements. Annual Improvements to HKFRSs 2011-2013 Cycle--------------------------------------------- The Annual Improvements to HKFRSs 2011-2013 Cycle include a number ofamendments to various HKFRSs, which are summarised below. The amendments to HKFRS 3 clarify that the standard does not apply to theaccounting for the formation of all types of joint arrangement in the financialstatements of the joint arrangement itself. The amendments to HKFRS 13 clarify that the scope of the portfolio exceptionfor measuring the fair value of a group of financial assets and financialliabilities on a net basis includes all contracts that are within the scope of,and accounted for in accordance with, HKAS 39 or HKFRS 9, even if thosecontracts do not meet the definitions of financial assets or financialliabilities within HKAS 32. The amendments to HKAS 40 clarify that HKAS 40 and HKFRS 3 are not mutuallyexclusive and application of both standards may be required. Consequently, anentity acquiring investment property must determine whether: a) the property meets the definition of investment property in terms of HKAS 40; andb) the transaction meets the definition of a business combination under HKFRS 3. The Directors of the Company do not anticipate that the application of theseamendments will have a material effect on the Group's consolidated financialstatements. Annual Improvements to HKFRSs 2012-2014 Cycle--------------------------------------------- The Annual Improvements to HKFRSs 2012-2014 Cycle include a number ofamendments to various HKFRSs, which are summarised below. The amendments to HKFRS 5 introduce specific guidance in HKFRS 5 for when anentity reclassifies an asset (or disposal group) from held for sale to held fordistribution to owners (or vice versa), or when held-for-distributionaccounting is discontinued. The amendments apply prospectively. The amendments to HKFRS 7 provide additional guidance to clarify whether aservicing contract is continuing involvement in a transferred asset for thepurpose of the disclosures required in relation to transferred assets andclarify that the offsetting disclosures (introduced in the amendments to HKFRS7 Disclosure - Offsetting Financial Assets and Financial Liabilities issued inDecember 2011 and effective for periods beginning on or after 1 January 2013)are not explicitly required for all interim periods. However, the disclosuresmay need to be included in condensed interim financial statements to complywith HKAS 34 Interim Financial Reporting. The amendments to HKAS 34 clarify the requirements relating to informationrequired by HKAS 34 that is presented elsewhere within the interim financialreport but outside the interim financial statements. The amendments requirethat such information be incorporated by way of a cross- reference from theinterim financial statements to the other part of the interim financial reportthat is available to users on the same terms and at the same time as theinterim financial statements. The Directors of the Company do not anticipate that the application of thesewill have a material effect on the Group's consolidated financial statements 3. SEGMENT INFORMATION Information reported to the General Manager of the Company, being the chiefoperating decision maker, for the purposes of resource allocation andassessment of segment performance focuses on types of goods or servicesdelivered or provided. Specifically, the Group's principle reportable and operating segments underHKFRS 8 are as follows: (i) Toll operation - the operation and management of high grade roads and the collection of the expressway tolls.(ii) Service area and advertising businesses - the sales of food, restaurant operation, automobile service, operation of petrol stations and design and rental of advertising billboards along the expressways.(iii) Other toll road-related service - the toll road maintenance service and others.(iv) Securities operation - the securities broking, margin financing and securities lending services and proprietary trading. Segment revenue and results The following is an analysis of the Group's revenue and results by reportableand operating segment: For the year ended December 31, 2014 Toll related operation Service Other area toll and road- Toll advertising related Securities Total operation businesses service operation segment Elimination Total Rmb'000 Rmb'000 Rmb'000 Rmb'000 Rmb'000 Rmb'000 Rmb'000 --------- --------- ------ --------- --------- -------- ---------Revenue External 4,259,247 2,291,532 81,984 2,418,360 9,051,123 - 9,051,123Sales Inter-segment - 4,631 - - 4,631 (4,631) -sales --------- --------- ------ --------- --------- -------- --------- Total 4,259,247 2,296,163 81,984 2,418,360 9,055,754 (4,631) 9,051,123 --------- --------- ------ --------- --------- -------- ---------Segment 1,937,232 93,447 66,537 753,028 2,850,244 2,850,244profit --------- --------- ------ --------- --------- --------- For the year ended December 31, 2013 Toll related operation Service Other area toll and road- Toll advertising related Securities Total operation businesses service operation segment Elimination Total Rmb'000 Rmb'000 Rmb'000 Rmb'000 Rmb'000 Rmb'000 Rmb'000 --------- --------- ------ --------- --------- -------- ---------Revenue External 4,019,867 2,158,469 21,447 1,651,332 7,851,115 - 7,851,115sales Inter-segment - 4,755 - - 4,755 (4,755) -sales --------- --------- ------ --------- --------- -------- --------- Total 4,019,867 2,163,224 21,447 1,651,332 7,855,870 (4,755) 7,851,115 --------- --------- ------ --------- --------- -------- ---------Segment 1,721,848 59,789 30,787 402,553 2,214,977 2,214,977profit --------- --------- ------ --------- --------- -------- --------- Segment profit represents the profit after tax of each operating segment. Thisis the measure reported to the chief operating decision maker for the purposeof resource allocation and performance assessment. Inter-segment sales are charged at prevailing market rates. Segment assets and liabilities The following is an analysis of the Group's assets and liabilities byreportable and operating segment: Segment assets Segment liabilities As at As at As at As at December 31, December 31, December 31, December 31, 2014 2013 2014 2013 Rmb'000 Rmb'000 Rmb'000 Rmb'000 ---------- ---------- ------------ ----------- Toll operation 14,733,018 14,784,868 (1,783,759) (2,082,988) Toll relatedoperation Service area 915,371 926,171 (197,059) (234,708)and advertisingbusinesses Other toll 455,725 310,818 (56,933) -road-relatedservice Securities 35,163,763 15,980,470 (28,187,371) (10,102,539)Operation ---------- ---------- ------------ ----------- Total segment 51,267,877 32,002,327 (30,225,122) (12,420,235)assets(liabilities) Goodwill 86,867 86,867 - - ---------- ---------- ------------ -----------Consolidated 51,354,744 32,089,194 (30,225,122) (12,420,235)assets ---------- ---------- ------------ -----------(liabilities) Segment assets and segment liabilities represent the assets and liabilities ofthe subsidiaries operating in the respective reportable and operating segment. Other segment information Amounts included in the measure of segment profit or segment assets: For the year ended December 31, 2014 Toll related operation Service Other area and toll road- Toll advertising related Securities operation businesses service operation Total Rmb'000 Rmb'000 Rmb'000 Rmb'000 Rmb'000 ------- ------- ------- ------- -------Income tax 636,111 19,223 4,306 258,308 917,948expense Interest 48,558 7,759 243 2,547 59,107income Interest 18,037 - - 60,194 78,231expense Interests in - 231,609 364,439 31,818 627,866associates Interest in a 300,667 - - - 300,667joint venture Share of - 19,462 53,621 (8,063) 65,020profit (loss)of associates Share of loss (33,277) - - - (33,277)of a jointventure Gain on fair 15,864 - - 262,388 278,252value changeson held fortradinginvestments Additions to 707,664 12,592 12,749 746,439 1,479,444non-currentassets (Note) Depreciation 895,733 45,752 - 77,404 1,018,889andamortisation Loss on 3,522 9,459 - 458 13,439disposal of ------- ------- ------- ------- -------property,plant andequipment For the year ended December 31, 2013 Toll related operation Service Other area and toll road- Toll advertising related Securities operation businesses service operation Total Rmb'000 Rmb'000 Rmb'000 Rmb'000 Rmb'000 ------- ------- ------- ------- -------Income tax 585,570 18,252 (10) 152,949 756,761expense(credit) Interest 82,114 7,457 - 6,351 95,922income Interest 84,764 - - 10,397 95,161expense Interests in - 224,035 310,818 39,880 574,733associates Interest in a 333,944 - - - 333,944joint venture Share of - 40 27,669 (6,172) 21,537profit (loss)of associates Share of loss (36,010) - - - (36,010)of a jointventure Gain on fair 14,242 - - 84,040 98,282value changeson held fortradinginvestments Additions to 236,487 62,072 280,000 43,697 622,256non-currentassets (Note) Depreciation 900,966 31,500 - 90,057 1,022,523andamortisation Loss (gain) 2,798 (783) - 134 2,149on disposal ------- ------- ------- ------- -------of property,plant andequipment Note: non-current assets excluded financial instruments. Revenue from major services An analysis of the Group's revenue, net of discounts and taxes, for the year isas followed: For the year ended December 31, 2014 2013 Rmb'000 Rmb'000 ---------- ----------Toll operation 4,259,247 4,019,867revenue Service area 2,208,235 2,054,543businesses revenue(mainly sales ofgoods) Advertising 83,297 103,926business revenue Commission income 1,679,244 1,197,315from securitiesoperation Interest income 739,116 454,017from securitiesoperation Others 81,984 21,447 ---------- ----------Total 9,051,123 7,851,115 ---------- ----------Geographical information The Group's operations are located in the PRC (country of domicile). Allnon-current assets of the Group are located in the PRC. All of the Group's revenue from external customers is attributable to the groupentities' country of domicile (i.e. the PRC). Information about major customers During the years ended December 31, 2014 and 2013, there were no individualcustomers with sales over 10% of the total sales of the Group. 4. OTHER INCOME For the year ended December 31, 2014 2013 Rmb'000 Rmb'000 ---------- ----------Interest income on 59,107 95,922bank balances,entrusted loanreceivables andfinancial productsinvestment Rental income 120,265 88,739 Handling fee income 2,142 2,781 Towing income 9,372 10,155 Gain on disposal of 29,890 -an associate Gain on - 16deregistration ofan associate Exchange gain 1,173 (957)(loss), net Loss on commodity (20,785) (1,351)trading, net Others 49,328 45,751 ---------- ----------Total 250,492 241,056 ---------- ----------5. INCOME TAX EXPENSE For the year ended December 31, 2014 2013 Rmb'000 Rmb'000 ---------- ----------Current tax: PRC Enterprise 995,619 821,118Income Tax Deferred tax (77,671) (64,357) ---------- ---------- 917,948 756,761 ---------- ---------- Under the Law of the PRC on Enterprise Income Tax (the "EIT Law") andImplementation Regulation of the EIT Law, the applicable tax rate of the Groupis 25%. No Hong Kong Profits Tax has been provided as the Group's income neither arisesin, nor is derived from Hong Kong during the year. The tax charge for the year can be reconciled to the profit before tax per theconsolidated statement of profit or loss and other comprehensive income asfollows: For the year ended December 31, 2014 2013 Rmb'000 Rmb'000 ---------- ----------Profit before tax 3,768,192 2,971,738 ---------- ----------Tax at the PRC enterpriseincome tax rate of 25%(2013: 25%) 942,048 742,935 Tax effect of share of (16,255) (5,384)(profit) loss ofassociates Tax effect of share of 8,319 9,003loss of a joint venture Utilisation of unused tax (22,201) (9,441)loss previously notrecognised Tax effect of expenses not 6,037 19,648deductible for tax ---------- ----------purposes Tax charge for the year 917,948 756,761 ---------- ----------6. DIVIDENDS 2014 2013 Rmb'000 Rmb'000 ---------- ----------Dividends recognised asdistribution during theyear 2014 Interim - Rmb6cents (2013: 2013 Interim - Rmb6 cents) 260,587 260,587per share 2013 Final - Rmb25 cents(2013: 2012 Final - Rmb24 cents) 1,085,779 1,042,347per share ---------- ---------- 1,346,366 1,302,934 ---------- ---------- The Directors have recommended the payment of a final dividend of Rmb26.5 cents(2013: Rmb25 cents) per share totaling to Rmb1,150,925,000 (2013:Rmb1,085,779,000) in respect of the year ended December 31, 2014, which issubject to approval by the shareholders in the annual general meeting. 7. EARNINGS PER SHARE The calculation of the basic earnings per share is based on profit for the yearattributable to owners of the Company of Rmb2,349,052,000 (2013:Rmb1,907,470,000) and the 4,343,114,500 (2013: 4,343,114,500) ordinary sharesin issue during the year. Diluted earnings per share presented is the same as basic earnings per sharesince there were no potential ordinary shares outstanding for the year endedDecember 31, 2014 and 2013. 8. TRADE RECEIVABLES As at As at December 31, December 31, 2014 2013 Rmb'000 Rmb'000 ---------- ----------Trade receivablescomprise: A fellow subsidiary 3,212 3,077 Third parties 133,349 99,023 ---------- ----------Total trade receivables 136,561 102,100 Less: Allowance for (952) (672)doubtful debts ---------- ---------- 135,609 101,428 ---------- ---------- The Group has no credit period granted to its trade customers of toll operationand service area businesses. The Group's trade receivable balance for tolloperation is toll receivables from the Expressway Fee Settlement Centre of theHighway Administration Bureau of Zhejiang Province, which are normally settledwithin 3 months. All of these trade receivables were neither past due norimpaired in both periods. In respect of the Group's asset management service, security commission andfinancial advisory service operated by Zheshang Securities Co., Ltd. ("ZhejiangSecurities", a 70.83% owned subsidiary of Zhejiang Shangsan Expressway Co.,Ltd., which is a subsidiary of the Company), trading limits are set forcustomers. The Group seeks to maintain tight control over its outstandingaccounts receivable in order to minimise credit risk. Overdue balances areregularly monitored by management. The following is an aged analysis of trade receivables net of allowance fordoubtful debts presented based on the invoice date at the end of the reportingperiod, which approximated the respective revenue recognition dates: As at As at December 31, December 31, 2014 2013 Rmb'000 Rmb'000 ---------- ----------Within 3 months 116,473 90,812 3 months to 1 year 18,111 10,453 1 to 2 year 971 - Over 2 years 54 163 ---------- ----------Total 135,609 101,428 ---------- ---------- Movement of allowance for doubtful debts As at As at December 31, December 31, 2014 2013 Rmb'000 Rmb'000 ---------- ----------At the beginning of the 672 956year Impairment recognised for 280 7the year Amount reversed during the - (291)year ---------- ---------- At the end of the year 952 672 ---------- ---------- 9. TRADE PAYABLES Trade payables mainly represent the construction payables for the maintenanceprojects of toll expressways. The following is an aged analysis of tradepayables presented based on the invoice date at the end of the reportingperiod: As at As at December 31, December 31, 2014 2013 Rmb'000 Rmb'000 ---------- ----------Within 3 months 438,079 214,669 3 months to 1 year 119,156 82,048 1 to 2 years 67,732 29,518 2 to 3 years 10,897 8,496 Over 3 years 57,740 87,263 ---------- ----------Total 693,604 421,994 ---------- ----------BUSINESS REVIEW In 2014, China's economy grew at a slower while steady pace with a 7.4%increase in GDP compared with last year. Zhejiang Province's economy benefitedfrom smooth growth in fixed assets investment and consumption, as well as fromsolid increase in exports. During the Period, Zhejiang Province's GDP increased7.6% year-on-year and demonstrated an upward trend on quarterly basis. As Zhejiang Province's economy steadily improved and foreign trade increasedduring the Period, traffic volume on the Group's expressways continued towitness decent organic growth. In addition, trading in the domestic stockmarket was active. As a result, income from the Group's overall operationsincreased 15.5% year-on-year. Total income reached Rmb9,343.77 million, ofwhich Rmb4,407.70 million was generated from the three major expresswaysoperated by the Group, representing an increase of 6.0% year- on-year and 47.2%of the total income; Rmb2,388.00 million was from the Group's toll road-relatedbusinesses, representing an increase of 8.9% year-on-year and 25.5% of thetotal income; and Rmb2,548.07 million was from the securities business,representing an increase of 46.3% year-on-year and 27.3% of the total income. A breakdown of the Group's income for the Period is set out below: 2014 2013 Rmb'000 Rmb'000 % Change ---------- ----------Toll income Shanghai-Hangzhou-Ningbo 3,111,048 3,122,022 -0.4%Expressway Shangsan Expressway 987,429 769,723 28.3% Jinhua Section, 309,222 266,594 16.0%Ningbo-Jinhua Expressway Other income Service areas 2,216,382 2,062,558 7.5% Advertising 85,362 107,692 -20.7% Road maintenance 86,257 22,227 288.1% Securities businessincome Commission 1,808,953 1,288,151 40.4% Interest income 739,116 454,017 62.8% ---------- ----------Subtotal 9,343,769 8,092,984 15.5% Less: Revenue taxes (292,646) (241,869) 21.0% Revenue 9,051,123 7,851,115 15.3% ---------- ---------- Toll Road Operations Given the steadily improving economy in Zhejiang Province and the growth inforeign trade, the Group's expressways maintained solid organic growth intraffic volume. During the Period, the Group's three expressways, theShanghai-Hangzhou-Ningbo Expressway, the Shangsan Expressway and the JinhuaSection of the Ningbo-Jinhua Expressway, recorded organic growth of 6.5%, 7.4%and 11.8%, respectively, in traffic volume, with the varied rates of growth dueto the different regions where the three expressways are located. The Jiaxing-Shaoxing Bridge (not operated by the Group), which first opened fortraffic in July, 2013, diverted some traffic away from the Group'sShanghai-Hangzhou-Ningbo Expressway. However, the Company's proactive effortsin adopting measures such as attracting more traffic with better road signageresulted in an additional rise in traffic on the Group's Shangsan Expresswayand the Hangzhou-Ningbo Section of the Shanghai- Hangzhou-Ningbo Expressway,and allowed the positive impact on the Shangsan Expressway brought by theJiaxing-Shaoxing Bridge to be fully realised. During the Period, the opening ofthe Jiaxing-Shaoxing Bridge helped to drive an increase in toll income ofRmb154.79 million from the Shangsan Expressway, while it resulted in a decreasein toll income of Rmb112.90 million from the Shanghai-Hangzhou-NingboExpressway. Meanwhile, the Jinhua Section of the Ningbo-Jinhua Expressway continued to seehigh organic growth in traffic volume as a result of strong growth in trade atthe nearby Yiwu small commodities market and the booming development ofe-commerce and foreign trade in the surrounding areas. Since local roads thatrun parallel to the Jinhua Section of the Ningbo-Jinhua Expressway were underconstruction, and measures to attract more traffic with better road signagecontinued to be adopted, they led to positive growth in toll income. During thePeriod, toll income of the Jinhua Section of the Ningbo-Jinhua Expresswayincreased by Rmb11.74 million. In addition, construction on the Hangzhou Airport Road, started on April 15,2014, resulted in a decrease of Rmb57.91 million in toll income from theShanghai-Hangzhou- Ningbo Expressway, despite our effort to open a four-hourwindow for trucks to pass through every day. The opening of Qianjiang Road (notoperated by the Group) on April 16, 2014 also led to a decrease of Rmb10.24million in toll income from the Shanghai- Hangzhou-Ningbo Expressway. In response to several diversions that affected traffic volume on the Group'stoll road operations, the management of the Company took more initiatives toplug loopholes, introduced better road signage to attract more traffic,conducted marketing campaigns to promote the Company's distance-based tollpricing, and fine-tuned weighing equipment for accurate measurements toincrease toll income. During the Period, the average daily traffic volume in full-trip equivalentsalong the Group's Shanghai-Hangzhou-Ningbo Expressway was 45,198, representingan increase of 2.7% year-on-year. In particular, the average daily trafficvolume in full- trip equivalents along the Shanghai-Hangzhou section of theShanghai-Hangzhou- Ningbo Expressway was 43,563, representing a decrease of1.4% year-on-year, and that along the Hangzhou-Ningbo Section was 46,366,representing an increase of 5.6% year-on-year. Average daily traffic volume infull-trip equivalents along the Shangsan Expressway was 22,898, representing anincrease of 25.0% year-on-year. Average daily traffic volume in full-tripequivalents along the Jinhua Section of the Ningbo-Jinhua Expressway was15,911, representing an increase of 17.6% year-on-year. Total toll income from the 248km Shanghai-Hangzhou-Ningbo Expressway, the 142kmShangsan Expressway and the 70km Jinhua Section of the Ningbo-Jinhua Expresswaywas Rmb4,407.70 million during the Period, representing an increase of 6.0%year-on- year. Toll income from the Shanghai-Hangzhou-Ningbo Expressway wasRmb3,111.05 million, representing a decrease of 0.4% year-on-year; toll incomefrom the Shangsan Expressway was Rmb987.43 million, representing an increase of28.3% year-on-year. Toll income from the Jinhua Section of the Ningbo-JinhuaExpressway was Rmb309.22 million, representing an increase of 16.0%year-on-year. Toll Road-Related Business Operations The Company operates certain toll road-related businesses along its expresswaysthrough its subsidiaries and associated companies, including gas stations,restaurants and shops in service areas, as well as advertising at serviceareas, toll stations and expressway interchanges, and road maintenance. During the Period, the opening of the Jiaxing-Shaoxing Bridge diverted acertain amount of traffic volume from the Shanghai-Hangzhou-Ningbo Expressway.As a result the sales in service areas along the Shanghai-Hangzhou-NingboExpressway, which had been a bigger contributor to revenue in the past, wereadversely influenced. In addition, a large number of billboards along theexpressways were removed due to a clean up campaign of billboards along allexpressways in Zhejiang Province. This resulted in a substantial decline inadvertising revenue and a slight decline in overall revenue from servicesareas. However, the Group's toll road-related businesses as a whole recordedsolid growth as a result of additional income from external road maintenanceprojects and increased sales of refined oil products. Income from tollroad-related operations during the Period was Rmb2,388.00 million, representingan increase of 8.9% year-on-year. Securities Business During the Period, Zheshang Securities' average brokerage commission ratedeclined from 0.08% to 0.067% as a result of more intensified competition inthe securities industry and relaxed controls on commissions. The total tradingvolume of the Shanghai and Shenzhen stock markets increased 63.8% from lastyear due to a revival of activity in the domestic securities market. During thePeriod, the brokerage business of Zheshang Securities saw a substantialincrease in trading volume and posted a year-on- year increase of 27.3% inbrokerage commission income. In addition, while accelerating the all-round development of each businesssegment, Zheshang Securities has been actively exploring innovative businessstrategies, and constantly working to streamline its income and profitstructure and reduce the dominant role that its brokerage business has playedin the past. Income from investment banking, margin financing and securitieslending, and asset management recorded year-on-year increases of 52.1%, 97.1%and 134.5%, respectively. Zheshang Securities' IPO application to the Shanghai Stock Exchange wasaccepted by the China Securities Regulatory Commission in May, 2013. ZheshangSecurities remains on the wait list for an IPO. During the Period, Zheshang Securities' total operating income was Rmb2,548.07million, an increase of 46.3% year-on-year. Of this, brokerage commissionincome rose 40.4% year-on-year to Rmb1,808.95 million, and interest income fromthe securities business was Rmb739.12 million, an increase of 62.8%. Moreover,securities investment gains of Zheshang Securities included in the consolidatedstatement of profit or loss and other comprehensive income of the Group wasRmb262.39 million (2013: gains of Rmb85.42 million) during the Period. Long-Term Investments Zhejiang Expressway Petroleum Development Co., Ltd. (a 50% owned associatecompany of the Company) recorded income of Rmb6,365.63 million, which was flatcompared with last year as a result of both the sales volume increase ofrefined oil products in the first three quarters of the year and continuousadjustments to domestic refined oil product pricing, especially the threeconsecutive cuts in September 2014. During the Period, net profit of theassociate company was Rmb26.83 million (2013: net profit of Rmb21.63 million). Shengxin Expressway Co., Ltd. ("Shengxin Co", a 50% owned joint venture of theCompany) operates the 73.4km long Shaoxing Section of the Ningbo-JinhuaExpressway. During the Period, the average daily traffic volume in full-tripequivalents was 13,994, an increase of 10.3% year-on-year. Toll income duringthe Period was Rmb317.63 million. However, due to increased road maintenanceexpenses and its relatively heavy financial burden, the joint venture reporteda loss of Rmb66.55 million (2013: loss of Rmb72.02 million). During the Period, the income of Zhejiang Communications Investment GroupFinance Co., Ltd. (a 35% owned associate company of the Company) was mainlyderived from fees and commissions from providing financial services, includingarranging loans and receiving deposits, for the subsidiaries of ZhejiangCommunications Investment Group Co., Ltd., the Company's controllingshareholder. During the Period, this associate company realized a net profit ofRmb153.20 million (2013: net profit of Rmb79.05 million). FINANCIAL ANALYSIS The Group adopts a prudent financial policy with an aim to provide shareholdersof the Company with sound returns over the long term. During the Period, profit attributable to owners of the Company wasapproximately Rmb2,349.05 million, representing an increase of 23.2%year-on-year, return on owners' equity was 13.8%, representing an increase of15.7% year-on-year, while earnings per share for the Company was Rmb54.09cents. Liquidity and financial resources As at December 31, 2014, current assets of the Group amounted to Rmb35,745.72million in aggregate (December 31, 2013: Rmb16,652.84 million), of which bankbalances and cash accounted for 11.4% (December 31, 2013: 15.1%), bank balancesheld on behalf of customers accounted for 46.4% (December 31, 2013: 49.4%) heldfor trading investments accounted for 5.9%(December 31, 2013: 7.1%) and loansto customers arising from margin financing business held for tradinginvestments accounted for 23.9% (December 31, 2013: 17.7%). The current ratio(current assets over current liabilities) of the Group as at December 31, 2014was 1.2 (December 31, 2013: 1.4). Excluding the effect of the customer depositsarising from the securities business, the resultant current ratio of the Group(current assets less bank balances held on behalf of customers over currentliabilities less balance of accounts payable to customers arising fromsecurities business) was 1.6 (December 31, 2013: 2.2). The amount of held for trading investments of the Group as at December 31, 2014was Rmb2,124.74 million (December 31, 2013: Rmb1,181.03 million), of which91.2% was invested in bonds, 4.2% was invested in stocks, and the rest wasinvested in open-end equity funds. During the Period, net cash inflow generated from the Group's operatingactivities amounted to Rmb3,669.55 million. The Directors of the Company do not expect the Company to experience anyproblems with liquidity and financial resources in the foreseeable future. Borrowings and solvency As at December 31, 2014, total liabilities of the Group amounted toRmb30,225.12 million (December 31, 2013: Rmb12,420.24 million), of which 1.2%was bank and other borrowings, 4.0% was subordinated bonds, 20.8% was financialassets sold under repurchase agreements, 6.4% was placements from otherfinancial institutions and 54.7% was accounts payable to customers arising fromsecurities business. As at December 31, 2014, total interest-bearing borrowings of the Groupamounted to Rmb2,433.57 million, representing an increase of 32.3% compared tothat as at December 31, 2013. The borrowings comprised outstanding balances ofdomestic commercial bank loans of Rmb350.00 million, subordinated bonds ofRmb1,200.00 million, and beneficial certificates of Rmb883.57 million. Of theinterest-bearing borrowings, 57.5% was not payable within one year. As at December 31, 2014, all of the Group's loans from domestic commercialbanks were long-term loans, of which long-term loans due in one year amountedto Rmb150.00 million, with floating interest rate ranging from 5.895% to 6.765%per annum. The annual interest rates for subordinated bonds were fixed at 6.3%and 5.9%. The fixed interest rates of beneficial certificates ranged from 5.1%to 7.0% per annum, while the annual interest rate for accounts payable tocustomers arising from the securities business was fixed at 0.35%. Total interest expenses for the Period amounted to Rmb85.60 million, of whichcapitalized interest amounted to Rmb7.37 million, while profit before interestand tax amounted to Rmb3,846.42 million. The interest cover ratio (profitbefore interest and tax over interest expenses) stood at 44.9 (2013: 32.2)times. As at December 31, 2014, the asset-liability ratio (total liabilities overtotal assets) of the Group was 58.9% (December 31, 2013: 38.7%). Excluding theeffect of customer deposits arising from the securities business, the resultantasset-liability ratio (total liabilities less balance of accounts payable tocustomers arising from securities business over total assets less bank balancesheld on behalf of customers) of the Group was 39.3% (December 31, 2013: 17.8%). Capital structure As at December 31, 2014, the Group had Rmb21,129.62 million in total equity,Rmb26,867.77 million in fixed-rate liabilities, Rmb350.00 million infloating-rate liabilities, and Rmb3,007.35 million in interest-freeliabilities, representing 41.1%, 52.3%, 0.7% and 5.9% of the Group's totalcapital, respectively. The gearing ratio, which is computed by dividing thetotal liabilities less accounts payable to customers arising from thesecurities business by total equity, was 64.7% as at December 31, 2014(December 31, 2013: 21.6%). Capital expenditure commitments and utilization During the Period, capital expenditure of the Group totaled Rmb1,509.44million, while capital expenditure of the Company totaled Rmb300.93 million.Amongst the total capital expenditure of the Group, Rmb30.00 million wasincurred for setting up a wholly-owned subsidiary of the Company, Rmb1,276.98million was incurred for acquisition and construction of properties, Rmb195.28million was incurred for purchase and construction of equipments andfacilities, and Rmb7.18 million was incurred for service area renovation andexpansion. As at December 31, 2014, the capital expenditure committed by the Group and theCompany totaled Rmb1,020.15 million and Rmb510.81 million, respectively.Amongst the total capital expenditures committed by the Group, Rmb308.05million will be used for acquisition and construction of properties, Rmb431.40million for acquisition and construction of equipments and facilities, Rmb67.70million for service area renovation and expansion and Rmb213.00 million forequity investment. The Group will finance the above-mentioned capital expenditure commitments withinternally generated cash flow first and then will consider using debtfinancing to meet any shortfalls in priority to using other methods. Contingent liabilities and pledge of assets Pursuant to the board resolution of the Company dated November 16, 2012, theCompany and Shaoxing Communications Investment Group Co., Ltd. (the other jointventure partner that holds 50% equity interest in Shengxin Co) providedShengxin Co with joint guarantee for its bank loans of Rmb2,200.00 million, inaccordance with their proportionate equity interest in Shengxin Co. During thePeriod, Rmb50.00 million of the bank loans had been repaid. Pursuant to the resolution of shareholders' meeting dated June 26, 2012 ofZhejiang Yuhang Expressway Co., Ltd. ("Yuhang Co", a 51% equity interest ownedsubsidiary of the Company), Yuhang Co provided a property under construction asa mortgaged asset for its domestic commercial bank loan of Rmb150.00 million.As at December 31, 2014, the carrying amount of the mortgaged asset wasRmb786.71 million. Pursuant to the board resolution dated June 24, 2008 of Zhejiang Jinhua YongjinExpressway Co., Ltd. ("Jinhua Co"), Jinhua Co provided the operating right ofthe expressway operated by it as pledged asset for its domestic commercial bankloans of Rmb200.00 million. As at December 31, 2014, the carrying amount of thepledged asset was Rmb1,777.27 million. Except for the above, as at December 31, 2014, the Group did not have any othercontingent liabilities, pledge of assets or guarantees. Foreign exchange exposure Save for dividend payments to the holders of H shares in Hong Kong dollars, theGroup's principal operations were transacted and booked in Renminbi. Therefore,the Group's exposure to exchange fluctuation is limited. During the Period, theGroup has not used any financial instruments for hedging purpose. Although the Directors do not foresee any material foreign exchange risks forthe Group, there is no assurance that foreign exchange risks will not affectthe operating results of the Group in the future. OUTLOOK As the world economy continues to struggle for recovery, China's economy ismoving into a "new normal" as it downshifts from rapid growth to more moderatelevels of growth. It is anticipated that the Group's toll road business, whichis closely tied to macro-economic development, will see steady growth intraffic volume in 2015, while the rate of growth is expected to be lower than2014. Qianjiang Road, which opened in the first half of last year, and the HangzhouAirport Road, which is currently under construction, will continue to have aslight diversion impact on traffic from the Shanghai-Hangzhou-NingboExpressway. In addition, the Dongyang-Yongkang Expressway, which will open totraffic soon, is expected to have a slight diversion impact on traffic from theJinhua Section of the Ningbo-Jinhua Expressway. In view of the negative impactbrought by the diversions on surrounding new road networks, the Company willclosely monitor and conduct timely research and analysis as well as to improveroad signage to attract more traffic to the Group's expressways, therebyminimizing the loss caused by traffic diversions. Meanwhile, the Company willalso work to further control operating costs. After the launch of Shanghai-Hong Kong Stock Connect program, it is expectedthat a series of favorable policies will be launched to promote the developmentof the capital markets in China, including an expansion of the Shanghai-HongKong Stock Connect program and the launch of the Shenzhen-Hong Kong Connectprogram, which will present new opportunities to the Group's securitiesbusiness. Meanwhile, Zheshang Securities will pay close attention to marketpolicy updates, push to continue innovation in its business, and seek newprofit drivers. In addition, while Zheshang Securities focuses on reinforcingcost and risk controls, it will look to push forward its listing process on theShanghai Stock Exchange, promoting a sustainable and healthy development of itsvarious lines of businesses. Looking ahead to 2015, with China's economy moving into a "new normal" mode ofdevelopment, the Group's management believes that the new round of economicreforms will bring new opportunities and challenges to the Group'stransformational development. The Group will strengthen its core expresswaybusiness and improve its securities businesses as well as look for appropriateinvestment projects through diversified channels to further exploit its growthpotential and boost profitability in the future. PURCHASE, SALE AND REDEMPTION OF THE COMPANY'S SHARES Neither the Company nor any of its subsidiaries purchased, sold, redeemed orcancelled any of the Company's shares during the Period. COMPLIANCE WITH LISTING RULES APPENDIX 14 During the Period, the Company complied with all code provisions in theCorporate Governance Code and Corporate Governance Report (the "Code") set outin Appendix 14 to the Listing Rules, and adopted the recommended best practicesin the Code as and when applicable. By Order of the Board ZHAN Xiaozhang Chairman Hangzhou, the PRC, March 18, 2015 As at the date of this announcement, the executive directors of the Companyare: Mr. ZHAN Xiaozhang, Ms. LUO Jianhu and Mr. DING Huikang; the non-executivedirectors of the Company are: Mr. WANG Dongjie, Mr. DAI Benmeng andMr. ZHOU Jianping; and the independent non-executive directors of the Companyare: Mr. ZHOU Jun, Mr. PEI Ker-Wei and Ms. LEE Wai Tsang, Rosa.