Zhejiang Expressway Co., Ltd Annual Report 2021

FY2021 Annual Report · Zhejiang Expressway Co., Ltd
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Definition of Terms

Company Profile

Corporate Structure of the Group

Review of Major Corporate Events

Particulars of Major Road Projects

Financial and Operating Highlights

Chairman’s Statement

Management Discussion and Analysis

Principal Risks and Uncertainties

Corporate Governance Report

Directors, Supervisors and Senior Management Profiles

Report of the Directors

Report of the Supervisory Committee

Connected Transactions

Independent Auditor’s Report

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5

6

8

10

13

17

38

41

57

71

80

82

97

Consolidated Financial Statements & Notes 102

Independent Auditor’s Report 278

(Issued by a third country auditor registered with the UK Financial Reporting Council)

Location Map of Expressways in Zhejiang Province 285

Corporate Information 283

 
 
 
 
 
 
Associate

has the meaning ascribed to it under the Listing Rules

Audit Committee

the audit committee of the Company

Board

China Merchants

the board of directors of the Company

China  Merchants  Expressway  Network  &  Technology  Holdings  Co  Ltd.  (

招商局公路網絡科技控股股
),  a  joint  stock  limited  company  established  in  the  PRC  on  December  18,  1993,  whose 

份有限公司
shares are listed on the Shenzhen Stock Exchange

Company or Zhejiang 

Expressway

Zhejiang  Expressway  Co.,  Ltd.,  a  joint  stock  limited  company  incorporated  in  the  PRC  with  limited 
liability on March 1, 1997

Communications Group

Zhejiang  Communications  Investment  Group  Co.,  Ltd.  (
),  a  wholly 
state-owned  enterprise  established  in  the  PRC,  on  December  29,  2001  and  the  controlling 
shareholder of the Company

浙江省交通投資集團有限公司

Connected Person

has the meaning ascribed to it under the Listing Rules

Controlling Shareholder

has the meaning ascribed to it under the Listing Rules

De’an Co

Directors

GDP

Group

H Shares

Hanghui Co

HangNing Co

Huihang Co

Deqing  County  De’an  Highway  Construction  Co.,  Ltd.  (
),  a  80.1% 
owned  subsidiary  of  the  Company,  which  is  established  with  Zhejiang  Hongtu  Transportation 
Construction Company (

) for PPP Project in Deqing County

德清縣德安公路建設有限責任公司

the directors of the Company

浙江交工宏途交通建設有限公司

gross domestic product

the Company and its subsidiaries

the  overseas  listed  foreign  shares  of  Rmb1.00  each  in  the  share  capital  of  the  Company  which  are 
primarily  listed  on  the  Hong  Kong  Stock  Exchange  and  traded  in  Hong  Kong  dollars  since  May  15, 
1997

Zhejiang Hanghui Expressway Co., Ltd. (
Company

浙江杭徽高速公路有限公司

), a 51% owned subsidiary of the 

Zhejiang  HangNing  Expressway  Co.,  Ltd.  (
of the company, which is established in the PRC with limited liability

浙江杭寧高速公路有限責任公司

),  a  30%  owned  associate 

Huangshan  Yangtze  Huihang  Expressway  Co.,  Ltd  (
wholly-owned subsidiary of the Company

黃山長江徽杭高速公路有限責任公司

),  a 

Hong Kong Stock 

The Stock Exchange of Hong Kong Limited

Exchange

Independent third 

party(ies)

Jiaogong Maintenance

Jinhua Co

Listing Rules

LongLiLiLong Co

Jiaxing Branch

Maintenance Co

Ningbo Yongtaiwen Co

Period

PRC

Rmb

02

any  person(s)  or  company(ies)  and  their  respective  ultimate  beneficial  owner(s),  to  the  best  of  the 
Directors’ knowledge, information and belief having made all reasonable enquiries, are third parties 
independent of the Group and its connected persons in accordance with the Listing Rules

Zhejiang  Jiaogong  High-grade  Expressway  Maintenance  Co.,  Ltd.  (

浙江交工高等級公路養護有
),  a  company  established  in  the  PRC  and  an  indirectly  non-wholly  owned  subsidiary  of 

限公司
Communications Group

Zhejiang  Jinhua  Yongjin  Expressway  Co.,  Ltd.  (
subsidiary of the Company

浙江金華甬金高速公路有限公司

),  a  wholly-owned 

the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited

Zhejiang  LongLiLiLong  Expressway  Co.,  Ltd.  (
subsidiary of the Company

浙江龍麗麗龍高速公路有限公司

),  a  wholly-owned 

Jiaxing  Branch  of  Zhejiang  LongLiLiLong  Expressway  Co.,  Ltd.;  Zhejiang  Jiaxing  Expressway 
Co.,  Ltd.  has  been  absorbed  and  merged  by  LongLiLiLong  Co.,  and  its  main  assets  and  business 
continued to exist under Jiaxing branch

Zhejiang Expressway Maintenance Co., Ltd. (
in the PRC and an indirect non-wholly owned subsidiary of Communications Group

浙江滬杭甬養護工程有限公司

), a company incorporated 

Zhejiang  Ningbo  Yongtaiwen  Expressway  Co.,  Ltd.  (
),  a  limited 
liability  company  established  in  the  PRC  on  April  26,  2004  and  an  approximately  80.45%  owned 
subsidiary of Communications Group

浙江寧波甬台温高速公路有限公司

the period from January 1, 2021 to December 31, 2021

the People’s Republic of China

Renminbi, the lawful currency of the PRC

ANNUAL REPORTDefinition of TermsSFO

Shangsan Co

Shareholders

Shengxin Co

Securities and Futures Ordinance (Chapter 571, Laws of Hong Kong)

Zhejiang  Shangsan  Expressway  Co.,  Ltd.  (
),  a  limited  liability  company 
established  in  the  PRC  on  January  1,  1998  which  is  owned  as  to  73.625%  by  the  Company  and 
18.375% by China Merchants, respectively

浙江上三高速公路有限公司

the shareholders of the Company

Shengxin  Expressway  Co.,  Ltd.  (
Company

浙江紹興嵊新高速公路有限公司

),  a  50%  owned  joint  venture  of  the 

Shenjiahuhang Co

Zhejiang  Shenjiahuhang  Expressway  Co.,  Ltd.(
subsidiary of the Company

浙江申嘉湖杭高速公路有限公司

),  a  wholly-owned 

SRCB

Shanghai  Rural  Commercial  Bank  Co.,  Ltd.  (
associate of the Company

上海農村商業銀行股份有限公司

)  a  4.85%  owned 

Supervisory Committee

the supervisory committee of the Company

Yangtze Financial 

Leasing

Linping Co

Yangtze United Financial Leasing Co., Ltd. (
of the Company

長江聯合金融租賃有限公司

), a 10.61% owned associate 

Zhejiang  Linping  Expressway  Co.,  Ltd.  (
“Zhejiang  Yuhang  Expressway  Co.,  Ltd.”  (
of the Company

浙江臨平高速公路有限責任公司

浙江余杭高速公路有限責任公司

),  formerly  known  as 
),  a  51%  owned  subsidiary 

Zhajiasu Co

Jiaxing Zhajiasu Expressway Co., Ltd., a 55% owned subsidiary of the Company

Zhejiang Communications 

Finance

Zheshang Development

Zheshang Financial

Zhejiang  Communications  Investment  Group  Finance  Co.,  Ltd.  (

), a 20.08% owned associate of the Company

司
Zheshang Development Group Co., Ltd.* (
established in the PRC and a 46.22% owned associate of Communications Group

浙商中拓集團股份有限公司

浙江省交通投資集團財務有限責任公

), a joint stock limited company 

Zhejiang  Zheshang  Financial  Holding  Co.,  Ltd.*  (
),  is  a  wholly-owned 
subsidiary  of  the  Communications  Group,  was  established  under  the  laws  of  the  PRC  with  limited 
liability in August 2018

浙江浙商金控有限公司

Zhejiang Grand Hotel

Zhejiang Grand Hotel Limited (

), a wholly-owned subsidiary of the Company

Zhejiang Hongtu

Zhejiang Information

浙江大酒店有限公司

Zhejiang  Hongtu  Transportation  Construction  Company  (
liability company incorporated in the PRC and non-wholly owned by Communications Group

浙江交工宏途交通建設有限公司

),  a  limited 

Zhejiang High-speed Information Engineering Technology Ltd. (
knwon as Zhejiang Expressway Information Engineering Technology Co., Ltd (

浙江高信技術股份有限公司

浙江高速信息工程技術
), a company incorporated in the PRC and a 65.85% owned subsidiary of Communications 

), formerly 

有限公司
Group

Zhejiang International 

Hong Kong

Zhejiang Expressway International (Hong Kong) Co., Ltd. (
subsidiary of the Company 

浙江滬杭甬國際

(
香港

)
有限公司

), a wholly-owned 

Zhejiang Shunchang

Zhejiang  Shunchang  High-grade  Expressway  Maintenance  Co.,  Ltd.  (

浙江順暢高等級公路養護有限
),  a  company  established  in  the  PRC  and  a  non-wholly  owned  subsidiary  of  Communications 

公司
Group

Zheshang FoF

Zhejiang  Zheshang  Transform  and  Upgrade  Fund  of  Funds  Partnership  (Limited  Partnership),  a 
24.99% owned associate of the Company

Zheshang Securities

Zheshang  Securities  Co.,  Ltd.  (
Shangsan Co

浙商證券股份有限公司

),  a  54.7894%  owned  subsidiary  of  the 

Zhejiang Zheqi

Zhoushan Co

Zhejiang  Zheqi  Industrial  Co.,  Ltd.*  (
indirectly non-wholly owned subsidiary of the Company

浙江浙期實業有限公司

),  a  company  established  in  the  PRC,  an 

Zhejiang  Zhoushan  Bay  Bridge  Co.,  Ltd.(
Shenjiahuhang Co

浙江舟山跨海大橋有限公司

),  a  51%  owned  subsidiary  of 

03

Zhejiang  Expressway  is  a  listed  company  principally  engaging  in  investing  in,  developing  and 
operating  of  high-grade  roads  as  well  as  securities  business.  The  Company  was  incorporated 
on  March  1,  1997  as  an  infrastructure  company  of  the  Zhejiang  Provincial  Government  for 
investing  in,  developing  and  operating  expressways  and  Class  1  roads  in  Zhejiang  Province. 
The securities business is carried out by its subsidiary Zheshang Securities, which was listed on 
the Shanghai Stock Exchange (SH Stock Code: 601878) in June 2017.

Major  assets  operated  by  the  Group  include  nine  expressways  namely  the  248  km 
Shanghai-Hangzhou-Ningbo  Expressway,  the  141  km  Shangsan  Expressway,  the  70  km  Jinhua 
section  of  Ningbo-Jinhua  Expressway,  the  122  km  Hanghui  Expressway,  the  82  km  Huihang 
Expressway,  the  93  km  Shenjiahuhang  Expressway,  the  46  km  Zhoushan  Bay  Bridge,  the  222 
km  LongLiLiLong  Expressways  and  the  50km  Zhajiasu  Expressway.  Among  which,  apart  from 
Huihang  Expressway  which  is  situated  within Anhui  Province  in  the  PRC,  the  rest  of  the  eight 
expressways  are  situated  within  Zhejiang  Province  in  the  PRC. As  at  December  31,  2021,  total 
assets of the Company and its subsidiaries amounted to Rmb176,296.68 million.

Incorporated  on  December  29,  2001,  Communications  Group,  the  controlling  shareholder  of 
the  Company,  is  a  wholly  state-owned  communications  company  established  by  the  Zhejiang 
Provincial  Government.  It  mainly  operates  a  diversity  of  businesses,  such  as  investment, 
operations, maintenance, toll collection and ancillary services of expressways; construction and 
building  of  transportation  project,  ocean  and  coastal  transport;  as  well  as  real  estates.  On  July 
11,  2016,  Zhejiang  Provincial  Party  Committee  and  Zhejiang  Provincial  Government  carried  out 
a  merger  and  restructuring  of  Communications  Group  and  Zhejiang  Railroad  Investment  Group 
Co., Ltd. In July 2018, Zhejiang Provincial Party Committee and Zhejiang Provincial Government 
carried  out  a  merger  and  restructuring  of  Communication  Group  and  Zhejiang  Commercial 
Group  Co.,  Ltd.  Upon  merger  and  restructuring,  Communications  Group  will  be  responsible 
for  the  investment  and  financing,  construction,  operation  and  management  of  transport  related 
fundamental  facilities  including  expressways,  railroads,  key  cross-region  mass  transit  railways 
and integrated transport hubs.

The  H  Shares  of  the  Company,  which  represent  approximately  33%  of  the  issued  share  capital 
of  the  Company,  were  listed  on  the  Hong  Kong  Stock  Exchange  on  May  15,  1997,  and  the 
Company  subsequently  obtained  a  secondary  listing  on  the  London  Stock  Exchange  on  May  5, 
2000.

With a solid foundation built on the Group’s expressway business, the Company will expand its 
main  businesses  scale,  enhance  its  core  competitiveness,  and  grow  its  financial  and  securities 
business  so  as  to  increase  its  profit  contribution  to  the  Group.  Looking  ahead,  the  Company 
will  seize  sound  investment  opportunities  to  acquire  new  projects,  and  strive  to  develop 
the  Company  into  an  international  investment  holdings  company  with  a  primary  focus  on 
transportation infrastructure investment and operation.

04

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e

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1. 

2. 

3. 

On January 20, 2021, the Company successfully issued five-year zero coupon convertible 
bonds in an aggregate amount of Euro230 million.

On  February  10,  2021,  the  Board  approved  the  Company  to  entrust  Zhejiang 
Communications Investment Expressway Operation Management Co., Ltd. to operate and 
manage the LongLiLiLong Expressways.

On February 11, 2021, the PPP project of Duihekou to Aibuli section of Zhenhai-Anji Road 
in Deqing County, undertaken by the Company and Zhejiang Hongtu, was completed and 
opened to traffic. The total length of this section of the project is approximately 14.62km.

4. 

On March 23, 2021, the Company announced its 2020 annual results.

5. 

6. 

On  March  26,  2021,  the  Company  completed  the  early  redemption  of  the  remaining 
outstanding  Euro365  million  five-year  zero  coupon  convertible  bonds  issued  by  the 
Company  on  April  21,  2017,  at  the  aggregate  principal  amount  of  Euro100,000  together 
with accrued interest.

On  April  21,  2021,  the  Company  held  its  Annual  General  Meeting  to  approve,  inter  alia, 
the  payment  of  a  dividend  of  Rmb35.5  cents  per  share,  the  reappointment  of  Deloitte 
Touche  Tohmatsu  Certified  Public  Accountants  as  Hong  Kong  auditor  of  the  Company, 
the  reappointment  of  Pan-China  Certified  Public  Accountants  LLP  as  the  PRC  auditor 
of  the  Company,  the  grant  of  general  mandate  to  the  Board  to  issue,  allot  and  deal  with 
additional H Shares of not more than 20% of the issued H Shares of the Company, and the 
corresponding amendments to the articles of association of the Company as it thinks fit.

7. 

On April 30, 2021, the Company announced its 2021 first quarterly results.

8. 

9. 

On  May  7,  2021,  the  Company  entered  into  a  share  transfer  agreement  with  natural 
persons  Mr.  ZHOU  Minghai  and  Mr.  SHI  Guoliang  to  acquire  55%  equity  interests  in  the 
Zhajiasu Company at a consideration of Rmb771,650,000.

On  June  10,  2021,  the  Company  held  the  first  meeting  of  the  union  member 
representatives  and  employee  representatives  of  the  seventh  session  to  elect  Mr.  LU 
Xinghai  and  Mr.  WANG  Yubing  as  the  Supervisors  Representing  Employees  of  the  ninth 
session of the Supervisory Committee.

10.  On  June  21,  2021,  the  “Zheshang  Securities  Shanghai-Hangzhou-Ningbo  Expressway 
Closed-end  Infrastructure  Securities  Investment  Fund”  with  the  Company  as  promoter 
was  listed  on  the  Shanghai  Stock  Exchange,  and  the  aggregate  funds  raised  amounted 
to Rmb4,360 million. The project is the first infrastructure public REITs project in Zhejiang 
Province, as well as one of the first batch of infrastructure public REITs projects in China.

06

ANNUAL REPORTReview of Major Corporate Events11.  On  June  28,  2021,  the  Company  held  its  second  Extraordinary  General  Meeting  of  2021 
to  elect  the  members  of  the  Board  and  the  Supervisory  Committee  of  the  ninth  session 
(excluding the Supervisors Representing Employees).

12.  On June 30, 2021, the Company held the first meeting of the Board of the ninth session to 
appoint the Chairman of the Company, the chairman and members for each of the special 
committees  of  the  Board,  senior  management  officers  and  authorized  representatives  of 
the Company.

13.  On  July  5,  2021,  the  Company  received  the  international  credit  ratings  of  “A+”  and  “A” 

from Fitch and S&P respectively as well as a “stable” rating outlook.

14.  On  July  9,  2021,  the  Company  was  successfully  selected  as  the  “Benchmarking 
Enterprises  in  the  Management  Benchmarking Action  of  Key  State-owned  Enterprises”  of 
the State-owned Assets Supervision and Administration Commission of the State Council.

15.  On  July  14,  2021,  the  Company  successfully  issued  the  five-year  bonds  in  an  aggregate 

amount of USD470 million, at the interest rate of 1.638% per annum.

16.  On August 19, 2021, the Company announced its 2021 interim results.

On  the  same  date,  the  Board  approved  the  resolution  of  the  absorption  and  merger  of 
Zhejiang Jiaxing Expressway Co., Ltd. (“Jiaxing Co”) by LongLiLiLong Co. The change of 
industrial  and  commercial  registration  for  the  aforementioned  absorption  and  merger  has 
been  completed  on  January  20,  2022,  and  the  main  assets  and  business  of  Jiaxing  Co 
continued to exist under “Jiaxing Branch of Zhejiang LongLiLiLong Expressway Co., Ltd.”.

17.  On October 29, 2021, the Company announced its 2021 third quarterly results.

On the same date, the Board approved the Company to operate and manage the Zhejiang 
Section  of  the  ShenSuZheWan  Expressway,  the  Xiwu  to  Xinwu  Section  of  the  Ningbo 
YongTaiWen Expressway and the South Connection of Qianjiang Channel as entrusted by 
the relevant branches and subsidiaries of the Communications Group.

18.  On  November  9,  2021,  the  Company  held  its  third  Extraordinary  General  Meeting  of 
2021 to approve the proposed amendment to the Articles of Association of adding “labour 
dispatch” to the business scope of the Company.

19.  On  December  17,  2021,  the  Company  was  awarded  the  “Most  Valuable  Listed  Company 
for  Investment  during  the  14th  Five-Year  Plan”  in  the  11th  China  Securities  Golden 
Bauhinia Awards.

20.  On  9  March  2022,  the  consortium  formed  by  the  Company,  China  Merchants  and  four 
other  companies  entered  into  a  termination  protocol  with  the  turkish  company  IC  Ictas  to 
terminate the Turkey project.

07

Expressway

Percentage 
of Ownership

Length in 
Kilometers

Number of 
Lanes

Number of Toll 
Stations

Number of 
Service Areas

Start of 
Operation

Remaining 
Years of 
Operation

Shanghai-Hangzhou Expressway

– Jiaxing Section
– Linping Section
– Hangzhou Section

Hangzhou-Ningbo Expressway

– Hangzhou to Hongken section
– Hongken to Duantang section
– Duantang to Dazhujia section

Shangsan Expressway
Ningbo-Jinhua Expressway

– Jinhua Section
Hanghui Expressway
– Changyu Section
– Changhang Section

Huihang Expressway
Shenjiahuhang Expressway

– Huzhou Section
– Lianhang Section
Zhoushan Bay Bridge
LongLi Expressway
LiLong Expressway
– Liandu Section
– Other Sections
Zhajiasu Expressway

100%
51%
100%

100%
100%
100%
73.625%

100%

51%
51%
100%

100%
100%
51%
100%

100%
100%
55%

88.1
11.1
3.4

15.7
123.4
6.2
141.4

69.7

36.7
85.6
81.6

42.0
50.9
46.3
119.8

22.97
79.47
50.28

8
6
4

4
8
4
4

4

4
4
4

4
4
4
4

4
4
4

7
1
1

1
11
1
11

7

5
8
4

3
7
8
9

2
5
4

2
0
0

0
2
0
3

1

1
1
2

1
1
1
3

0
1
1

1998
1995-1998
1995

1992
1995
1996
2000

2005

2004
2006
2004

2008
2010
2009
2006

2007
2006
2002

7
7
7

6
6
6
9

9

8
10
12

12
14
13
10

11
10
9

CURRENT TOLL RATES ON THE EXPRESSWAYS UNDER 
THE GROUP
1.  Passenger vehicle classification and toll rates

Toll for passenger vehicles = Entrance fee + Mileage fee x Actual mileage traveled + Tunnel (bridge) superimposed toll

Class

Classification standard

Toll rates of expressways in Zhejiang 
Province for passenger vehicles

Mileage fee 
(Rmb/vehicle/km)

Entrance fee 
(Rmb/trip)

Toll rates of Huihang 
Expressway for 
passenger vehicles

Mileage fee 
(Rmb/vehicle/km)

Class 1

Class 2

Class 3

Class 4

≤ 9 seats 
(with a length less than 6m)
10-19 seats 
(with a length less than 6m) 
Passenger car trailer
≤39 seats 
(with a length no less than 6m)
≥40 seats 
(with a length no less than 6m)

0.40

0.40

0.80

1.20

5

5

10

15

0.45

0.8

1.1

1.3

Note:  For  Shanghai-Hangzhou-Ningbo  Expressway,  the  mileage  fee  for  class  1  and  class  2  passenger  vehicles  is 

Rmb0.45/vehicle/km.

08

ANNUAL REPORTParticulars of Major Road Projects 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2.  Truck and special motor vehicle classification and toll rates

Toll for trucks and special motor vehicles = Mileage fee x Actual mileage traveled + Tunnel (bridge) superimposed toll

Class

Classification standard

Toll rates of expressways in 
Zhejiang Province for trucks 
and special motor vehicles
(Rmb/vehicle/km)

Toll rates of Huihang 
Expressway for trucks 
and special motor vehicles
(Rmb/vehicle/km)

Class 1

Class 2

Class 3

Class 4

Class 5

2 axles (with a length less than 
6m and maximum authorized total 
weight less than 4,500kg)

2 axles (with a length no less than 
6m or maximum authorized total 
weight no less than 4,500kg)

3 axles

4 axles

5 axles

Class 6

6 axles or above (inclusive)

Notes:

1.  Total number of axles includes floating axles.

0.45

0.841

1.321

1.639

1.675

1.747

0.45

0.9

1.35

1.7

1.85

2.2

2.  For trucks with 6 axles above running on Huihang Expressway, toll rates of trucks with each additional axle shall be 
calculated  at  1.1  times  of  the  standard  rate  for  Class  6  trucks;  whereas  toll  rates  of  trucks  with  10  axles  or  above 
shall be calculated at the standard rate for trucks with 10 axles.

09

 
 
 
 
 
 
 
 
RESULTS

Revenue
Profit Before Tax
Income Tax Expense
Profit for the year
Profit for the year attributable to：

Owners of the Company
Non-controlling interests

Basic Earnings Per Share (EPS) 

(Rmb cents)

Diluted EPS (Rmb cents)

Diluted EPS(Rmb cents)

Year ended December 31,

2017
Rmb’000
(Restated)

11,720,781
4,482,540
(1,156,278)
3,326,262

2018
Rmb’000
(Restated)

11,837,093
4,661,797
(1,108,239)
3,553,558

2019
Rmb000
(Restated)

2020
Rmb000
(Restated)

2021
Rmb000

12,617,094
5,298,330
(1,351,157)
3,947,173

12,451,534
4,533,614
(1,160,027)
3,373,587

16,262,601
8,164,125
(1,873,961)
6,290,164

2,643,346
682,916

3,074,140
479,418

3,243,392
703,781

2,416,395
957,192

4,762,431
1,527,733

60.86
58.97

70.78
66.67

74.68
72.21

55.64
55.19

109.65
102.50

RETURN ON EQUITY (ROE)

ROE

Diluted EPS(Rmb cents)

2017
(Restated)

2018
(Restated)

2019
(Restated)

2020
(Restated)

2021

14.4%

15.3%

18.2%

10.2%

17.5%

Segmental Revenue / 2021

Segmental Net Profit / 2021

1.5%

Other Business

11.5%

Other Business

39.4%

Securities
Business

Toll Road
Business

59.1%

10

37.7%

Securities
Business

Toll Road
Business

50.8%

ANNUAL REPORTFinancial and Operating Highlights 
 
 
 
 
 
 
 
 
 
Revenue / Rmb Million

11,721

11,837

12,617

12,452

18,000
16,000
14,000
12,000
10,000
8,000
6,000
4,000
2,000
0

2017
(Restated)

2018
(Restated)

2019
(Restated)

2020
(Restated)

Net profit / Rmb Million

8,000

6,000

4,000

2,000

0

3,326

3,554

3,947

3,374

2017
(Restated)

2018
(Restated)

2019
(Restated)

2020
(Restated)

Basic EPS / Rmb Cents

60.86

70.78

74.68

55.64

2017
(Restated)

2018
(Restated)

2019
(Restated)

2020
(Restated)

14.4

15.3

18.2

10.2

120

100

80

60

40

20

0

ROE / %

20

15

10

5

0

16,263

2021

6,290

2021

109.65

2021

17.5

2017
(Restated)

2018
(Restated)

2019
(Restated)

2020
(Restated)

2021

11

YU Zhihong
Chairman

12

ANNUAL REPORTChairman’s StatementDear Shareholders,

On  behalf  of  the  Board  of  Directors,  it  is  my  pleasure  to  present  the  annual  results  of  Zhejiang 

Expressway  Co.,  Ltd.,  and  its  subsidiaries  (collectively  referred  to  as  “the  Group”)  for  the  year 

2021.

In 2021, despite the challenges posed by the complex macro environment and resurgence of the 

novel coronavirus (“Covid-19”) epidemic, the economic development and pandemic containment 

in China remained stable, with key indicators achieving targets and annual national GDP growth 

reaching 8.1%. Zhejiang Province, where the major business of the Group is located, continued 

to  open-up  and  surged  to  the  third  place  nationwide  in  terms  of  foreign  trade  volume.  GDP  for 

the province grew by 8.5%, exceeding the national average.

In  face  of  the  impact  from  the  epidemic  and  macroeconomic  pressure,  the  Group  took 

proactive  actions  to  do  better  during  the  opening  year  of  the  14th  Five-Year  Plan,  continuously 

strengthening  the  brand  influence  of  its  core  business  operations  and  enhancing  the  core 

competitiveness of its securities business. During the Period, the Group’s core toll road business 

recorded toll revenue of Rmb9,607.20 million, representing a year-on-year increase of 39.5%. In 

addition, revenue from the securities business remained stable with steady progress. During the 

Period,  total  revenue  of  the  Group  increased  by  30.6%  year-on-year  to  Rmb16,262.60  million, 

profit  attributable  to  owners  of  the  Company  increased  by  97.1%  year-on-year  to  Rmb4,762.43 

million,  and  ROE  (return  on  equity)  was  17.5%.  The  Directors  recommended  a  dividend  of 

Rmb37.5  cents  per  share,  an  indication  of  the  Group’s  ability  to  provide  stable  shareholder 

returns.

The  Group  adhered  to  strengthening  of  its  core  toll  road  business,  focusing  on  improving 

service  quality  and  brand  image,  as  well  as  enhancing  its  abilities  in  ensuring  smooth  traffic, 

maintenance  and  marketing.  With  regards  to  the  construction  of  intelligent  expressways, 

the  Group  continued  to  elevate  its  digitalization  capabilities  and  achieved  breakthroughs  in 

terms  of  design,  application  scenarios  and  service  effectiveness,  including  the  completion  of 

effectiveness  evaluation  of  the  Shanghai-Hangzhou-Ningbo  Expressway  intelligent  upgrade 

project  (Phase  I)  and  the  continuous  optimization  of  Phase  II  implementation  plan.  Meanwhile, 

the  Group  constantly  expanded  the  scale  of  its  core  toll  road  business  by  proactively  pursuing 

investment  and  M&A  projects  at  home  and  abroad,  including  the  successful  acquisition  of  a 

55%  controlling  interests  in  Jiaxing  Zhajiasu  Expressway  Co.,  Ltd.,  which  further  increased  its 

operating mileage and market share in the northern part of Zhejiang province.

13

Chairman’s StatementDuring  the  Period,  the  Chinese  capital  market  progressively  deepened  reforms  and  open-up, 

overall  development  momentum  remained  sound,  as  it  continued  to  pursue  high-quality 

development. The Group actively seized market opportunities and constantly enhanced its core 

competitiveness. Performance of the securities business remained stable and recorded revenue 

of  Rmb6,403.02  million,  representing  a  year-on-year  increase  of  25.9%.  The  key  businesses 

of  Zheshang  Securities,  including  brokerage,  investment  banking  and  securities  margin  trading 

showed favorable momentum and drove the growth of the entire business segment.

It  is  also  worth  mentioning  that  the  Group’s  capital  operation  continued  to  be  optimized  and 

was  highly  recognized  by  the  international  market.  International  credit  rating  agencies,  Fitch 

and Standard & Poor’s (S&P), assigned the Group “A+” and “A” ratings, respectively. Financing 

channels  have  also  been  expanded  further,  including  the  successfully  listing  of  Hanghui 

Expressway  public  REITs  on  the  Shanghai  Stock  Exchange,  marking  the  first  of  its  kind  in 

Zhejiang Province.

Looking forward, 2022 will be the critical year for implementation of the 14th Five-Year Plan. The 

Group will adhere to the principle of high-quality and sustainable development, and focus on the 

five  areas  of  “technology,  service,  development,  reform  and  safety”.  Meanwhile,  the  Group  will 

continue  to  implement  regular  epidemic  containment,  enhance  core  competitiveness,  improve 

operational  performance,  cultivate  professional  talents,  and  devote  itself  in  pursuing  the  goal 

of  “Striving  for  Excellence”.  In  addition,  the  Group  will  fully  leverage  its  competitive  edges  in 

the  capital  market,  proactively  expand  its  financing  channels  to  meet  to  the  needs  of  business 

operation and development.

For  the  core  toll  road  operations  business,  the  Group  will  strive  to  build  a  renowned  brand  for 

expressway  operations  and  services  in  China,  focus  on  technology  empowerment  and  service 

quality, and at the same time seize M&A opportunities at home and abroad, proactively explore 

new  profit  growth  drivers  to  further  expand  the  scale  of  its  core  business.  For  the  securities 

business,  the  Group  will  continue  to  optimize  its  business  structure,  enhance  the  coordination 

and  synergies  between  each  business  segment,  in  order  to  steadily  move  towards  becoming  a 

top-tier securities company in China.

14

ANNUAL REPORTChairman’s StatementOn  behalf  of  the  Board,  I  would  like  to  thank  our  investors,  shareholders,  business  partners, 

customers,  management  team  and  employees  for  your  support.  As  we  look  ahead,  we  will 

work  diligently  together  and  harness  the  strength  of  our  collaborative  spirit  to  achieve  efficient 

management,  safeguard  the  overall  interests  of  the  Company  and  generate  greater  value  for 

shareholders.

YU Zhihong
Chairman

March 24, 2022

15

Stable Overall Performance 
with Steady Progress, Providing 
Stable Returns to Shareholders

In  face  of  the  impact  from  the  epidemic  and  macroeconomic  pressure, 

the Group took proactive actions to do better during the opening year of 

the 14th Five-Year Plan, continuously strengthening the brand influence 

of its core business operations and enhancing the core competitiveness 

of  its  securities  business.  Overall  annual  results  remained  stable  with 

steady  progress,  achieving  a  ROE  (return  on  equity)  of  17.5%.  The 

Directors  recommended  a  dividend  of  Rmb37.5  cents  per  share,  an 

indication of the Group's ability to provide stable shareholder returns.

BUSINESS REVIEW
In 2021, despite the frequent recurring of the epidemic worldwide, the overall situation improved 

under  the  background  of  accelerated  COVID-19  vaccination.  The  global  economy  gradually 

recovered  amid  fluctuations,  but  the  recovery  trends  were  highly  divergent.  In  the  face  of 

the  challenging  and  complex  international  environment,  as  well  as  the  sporadic  rebound  of 

the  epidemic  situation  at  home,  the  Chinese  government  adhered  to  the  general  keynote  of 

maintaining  stable  growth  with  steady  progress,  coordinated  the  prevention  and  control  of 

the  epidemic  in  a  scientific  manner  and  maintained  economic  and  social  development.  With 

increased  support  for  the  real  economy,  and  thorough  implementation  of  strategy  to  expand 

domestic  demand,  the  national  economy  continued  to  recover  steadily,  and  the  national 

GDP  grew  by  8.1%  year-on-year.  In  2021,  Zhejiang  Province  firmly  advanced  high-quality 

development  to  build  a  demonstration  zone  of  common  prosperity.  The  rapid  expansion  of 

the  digital  economy  and  the  accelerated  growth  rate  of  foreign  trade  have  helped  Zhejiang 

Province’s  economy  to  grow  steadily.  The  province’s  GDP  increased  by  8.5%  year-on-year, 

representing a growth rate which was higher than the national average.

During  the  Period,  toll  revenue  of  the  Group’s  expressways  recorded  significant  growth  due 

to  the  effect  of  low  base  in  the  same  period  in  2020.  Revenue  from  the  securities  business 

recorded stable growth, benefiting from the positive momentum in the domestic capital markets. 

During  the  Period,  total  revenue  of  the  Group  was  Rmb16,262.60  million,  representing  an 

increase of 30.6% year-on-year, of which Rmb9,607.20 million was generated by the nine major 

expressways operated by the Group (2020 (restated): Rmb6,888.35 million), representing 59.1% 

of  the  total  revenue.  Revenue  generated  by  the  securities  business  was  Rmb6,403.02  million 

(2020: Rmb5,087.34 million), representing 39.4% of the total revenue.

17

Management Discussion and AnalysisYUAN Yingjie
Executive Director and 
General Manager

A breakdown of the Group’s revenue for the Period is set out below:

Toll road operation revenue

Shanghai-Hangzhou-Ningbo Expressway
Shangsan Expressway
Jinhua section, Ningbo-Jinhua 

Expressway

Hanghui Expressway
Huihang Expressway
Shenjiahuhang Expressway
Zhoushan Bay Bridge
LongLiLiLong Expressways
Zhajiasu Expressway
Securities business revenue

Commission and fee income
Interest income

Other operation revenue
Hotel and catering
Construction

2021
Rmb’000

9,607,199
4,288,494
1,225,287

542,069
641,440
151,287
777,938
933,884
718,344
328,456
6,403,024
4,155,663
2,247,361
252,378
113,526
138,852

2020
Rmb’000
(Restated)

6,888,345
3,216,475
960,320

380,889
450,251
100,792
555,322
715,537
508,759
–
5,087,340
3,266,806
1,820,534
475,849
125,336
350,513

% change

39.5%
33.3%
27.6%

42.3%
42.5%
50.1%
40.1%
30.5%
41.2%
Not applicable
25.9%
27.2%
23.4%
–47.0%
–9.4%
–60.4%

Total revenue

16,262,601

12,451,534

30.6%

Toll Road Operations
During  the  Period,  the  traffic  volume  of  the  Group’s  expressways  generally  maintained  a 

steady  growth  as  China’s  economy  continued  to  recover,  while  toll  revenue  achieved  a 

significant  increase,  mainly  attributable  to  the  low  base  of  the  same  period  in  2020  as  a 

result  of  the  combined  impact  of  the  COVID-19  pandemic  and  subsequent  toll-free  policy.  The 

performance of the toll revenue and traffic volume varied among different sections of the Group’s 

expressways due to various factors.

19

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Striving to Strengthen the Core 
Toll Road Operations Business 
and Proactively Pursuing 
Investment and M&A Projects

The  Group  is  committed  to  improving  the  service  quality  and  brand 

image of its core toll road operations business, enhancing its abilities in 

ensuring  smooth  traffic,  maintenance  and  marketing,  and  continuously 

elevating  its  digitalization  capabilities  for  the  construction  of  intelligent 

expressways.  The  Group  also  continued  to  expand  the  scale  of  its 

core  toll  road  business  by  proactively  promoting  investment  and  M&A 

projects  at  home  and  abroad,  including  the  successful  acquisition  of 

55%  equity  interests  in  Jiaxing  Zhajiasu  Expressway  Co.,  Ltd.,  which 

further increased its operating mileage and market share.

From  February  12,  2020  to  August  5,  2020,  the  Zhejiang  Provincial  Government  helped 

enterprises  to  resume  work  and  production  by  expanding  the  discount  rate  of  tolls  to  15%  for 

Class-3  and  Class-4  passenger  vehicles  with  ETC  registrations,  as  well  as  trucks  from  other 

provinces with ETC registrations. Starting from August 6, 2020, the discount was restored to the 

original  5%.  The  reduction  of  discounts  on  ETC  concessions  for  the  above  vehicles  generated 

certain positive impact on the toll revenue during the Period.

With  the  approval  of  the  Zhejiang  Provincial  Government,  the  relevant  local  governments 

have  respectively  implemented  a  policy  to  pay  the  tolls  for  local  Class-1  passenger  vehicles 

with  ETC  registration  travelling  on  the  Jiaxing  City  Section  of  the  Shanghai-Hangzhou 

Expressway  from  September  1,  2020  to  December  31,  2022,  the  Jiashan  Section  of  the 

Shanghai-Hangzhou  Expressway  from  November  10,  2020  to  December  31,  2022,  the  Jinhua 

Jindong  Section  of  the  Ningbo-Jinhua  Expressway  from  March  26,  2021  to  December  31, 

2022  and  the  expressways  within  Deqing  County  from  September  1,  2021  to  December  31, 

2022.  This  will  help  the  passenger  vehicles  traffic  volume  growth  of  the  relevant  sections  of 

the  Shanghai-Hangzhou-Ningbo  Expressway,  Ningbo-Jinhua  Expressway  and  Shenjiahuhang 

Expressway.

However,  the  traffic  volume  of  the  Group’s  Expressways  was  still  adversely  affected  by 

the  epidemic  containment  policies  and  measures.  During  the  2021  Chinese  New  Year,  the 

government  encouraged  people  to  celebrate  the  festival  in  situ  to  control  the  epidemic,  and 

the  number  of  vehicles  returning  to  hometowns  and  taking  road  trips  decreased  significantly  in 

January  and  February  2021.  In  the  second  half  of  2021,  as  the  epidemic  in  Zhejiang  Province 

and  the  surrounding  provinces  and  cities  resurged,  some  expressways  adopted  traffic  control 

measures, leading to a decrease in the traffic volume of the Group’s expressways. In particular, 

the Shanghai-Hangzhou-Ningbo Expressway, Shangsan Expressway, Zhoushan Bay Bridge and 

Zhajiasu Expressway were more affected.

21

Continuously Improving 
Core Competitiveness of 
Zheshang Securities with Core 
Businesses Showing Favorable 
Momentum

The  Group  actively  seized  market  opportunities  and  constantly 

enhanced  its  core  competitiveness.  Performance  of  the  securities 

business  remained  stable.  During  the  Period,  the  key  businesses  of 

Zheshang  Securities,  including  brokerage,  investment  banking  and 

securities  margin  trading  showed  favorable  momentum  and  drove  the 

growth of the entire business segment.

In  addition,  certain  sections  of  the  Group’s  expressways  were  also  affected  by  the 

diversion  of  traffic  from  neighboring  road  networks.  The  Shaoxing-Xinchang  Section  of  the 

Hangzhou-Shaoxing-Taizhou  Expressway  has  been  opened  to  traffic  since  July  10,  2020,  and 

the  Taizhou  Section  has  been  opened  to  traffic  since  December  22,  2020,  so  the  traffic  volume 

on  Shangsan  Expressway  was  affected  due  to  traffic  diversion.  In  order  to  alleviate  traffic 

congestion,  the  East-Route  of  the  Hangzhou  Ring  Expressway  (Xiasha  East  Interchange  to 

Hongken  Junction)  was  closed  to  semi-trailer  traffic  from  January  28,  2021  to  October  30,  2022. 

In  addition,  the  southern  connection  of  the  Qianjiang  Channel  provided  a  60%  discount  for 

semi-trailer  trucks  from  February  9,  2021  to  July  8,  2021.  The  traffic  volume  of  semi-trailers  on 

the  Shanghai-Hangzhou-Ningbo  Expressway  was  negatively  affected.  The  opening  to  traffic  of  the 

West Parallel of the Hangzhou Ring Expressway since December 22, 2020, and semi-trailers being 

prohibited from the West-Route of Hangzhou Ring Expressway (from Nanzhuangdou Interchange to 

Hangzhou South Junction) during the period from January 28, 2021 to October 30, 2022, will have a 

certain negative impact on the traffic volume of Shenjiahuhang Expressway.

Looking  back  at  2021,  the  Group’s  core  expressway  business  maintained  steady  development. 

In  terms  of  operation  management,  the  Group  deepened  implementation  of  branding  concept 

in  operation,  and  the  cultural  brand  of  “Super  Intelligent-Zhejiang  Expressway”  was  honored 

with  the  “Excellent  Cultural  Brand”  in  the  Third  Transportation Awards.  The  intelligent  upgrade 

and  innovation  project  of  Zhejiang  Expressway  was  carried  out  in  an  orderly  manner  and  was 

awarded the 2021 China Expressway Informatization Classic Project by the China Highway and 

Transportation Society. The Group also carried out the guardrail and traffic markings renovation 

project,  strengthened  the  systematic  management  of  congested  road  sections  with  high  traffic 

volume effectively improving the traffic efficiency. In addition, the Group initiated pilot projects for 

differentiated toll collection and conducted marketing activities such as “Expressways + tourism”, 

to constantly improve its marketing capabilities.

In  terms  of  investment  and  financing,  the  Group  successfully  acquired  a  55%  controlling  stake 

in  Jiaxing  Zhajiasu  Expressway  Co.  Ltd.  (“Zhajiasu  Company”)  in  May  2021,  increasing  its 

controlling  mileage  by  50  kilometers  and  expanding  the  scale  of  its  core  expressway  business. 

In  June  2021,  the  Hanghui  Expressway  public  REITs  project  was  successfully  listed  on  the 

Shanghai Stock Exchange, which was conducive to revitalizing the stock assets and innovating 

financing model. The successful issuance of 230 million Euro convertible bonds and 470 million 

USD  bonds  fully  leveraged  the  functions  of  the  listing  platform  and  continuously  expanded  its 

financing channels in the capital market.

23

During  the  Period,  total  toll  revenue  from  the  248km  Shanghai-Hangzhou-Ningbo  Expressway, 

the  141km  Shangsan  Expressway,  the  70km  Jinhua  Section  of  the  Ningbo-Jinhua  Expressway, 

the  122km  Hanghui  Expressway,  the  82km  Huihang  Expressway,  the  93km  Shenjiahuhang 

Expressway,  the  46km  Zhoushan  Bay  Bridge,  the  222km  LongLiLiLong  Expressways  and  the 

50km Zhajiasu Expressway was Rmb9,607.20 million.

During  the  Period,  the  daily  average  traffic  volume  in  full-trip  equivalents,  toll  revenue  and  the 

corresponding year-on-year growth rates on the Group’s expressways are listed below:

The Group’s Expressway Sections

Daily Average 
Traffic Volume
(in Full-Trip 
Equivalents)

Year-on-year 
Growth

Toll
Revenue

Year-on-year 
Growth

(Rmb million)

Shanghai-Hangzhou-Ningbo 

Expressway

73,924

2.45%

4,288.49

33.3%

– Shanghai-Hangzhou Section

71,934

–0.22%

– Hangzhou-Ningbo Section

75,377

4.39%

Shangsan Expressway

33,863

–8.59%

1,225.29

27.6%

Jinhua Section, Ningbo-Jinhua 

Expressway

Hanghui Expressway

30,894

24,161

6.57%

3.99%

542.07

641.44

Huihang Expressway

9,290

10.20%

151.29

Shenjiahuhang Expressway

Zhoushan Bay Bridge

LongLiLiLong Expressways

Zhajiasu Expressway

34,526

22,183

14,076

37,910

4.78%

6.18%

8.89%

2.21%

777.94

933.88

718.34

328.46

Not applicable

42.3%

42.5%

50.1%

40.1%

30.5%

41.2%

Note: 

1. 

Traffic  volume  during  the  same  period  in  2020  included  traffic  volume  through  the  toll-free  period  (from 

February 17, 2020 to May 5, 2020).

2. 

Traffic  volume  and  toll  revenue  of  Zhajiasu  Expressway  referred  to  the  figures  from  May  to  December 

2021.

24

ANNUAL REPORTManagement Discussion and Analysis 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Securities Business
With the establishment of Beijing Stock Exchange and the simultaneous launch of the pilot run of 

the registration-based IPO system, as well as amid the positive market environment as a result 

of  capital  market  reform,  securities  trading  activities  increased  and  the  domestic  capital  market 

flourished. Zheshang Securities has actively grasped the market opportunities and continuously 

improved  its  compliance  and  risk  control  standards  as  well  as  core  competitiveness,  resulting 

in stable and progressive operating results. In particular, the brokerage business and securities 

margin  trading  business  grew  significantly,  while  the  investment  banking  business  maintained 

a  sound  development  momentum.  Meanwhile,  Zheshang  Securities  completed  the  work  of 

private  placement  during  the  Period,  effectively  replenishing  capital  to  support  and  ensure  the 

development of various businesses.

During  the  Period,  Zheshang  Securities  recorded  total  revenue  of  Rmb6,403.02  million,  an 

increase  of  25.9%  year-on-year,  of  which,  commission  and  fee  income  increased  27.2% 

year-on-year  to  Rmb4,155.66  million,  and  interest  income  from  the  securities  business  was 

Rmb2,247.36  million,  an  increase  of  23.4%  year-on-year.  In  addition,  securities  investment 

gains  of  Zheshang  Securities  included  in  the  consolidated  statement  of  profit  or  loss  and  other 

comprehensive income of the Group was Rmb1,835.56 million (2020: Rmb1,483.02 million).

Hotel and Catering Business
The recurring epidemic at home and abroad in 2021 affected the recovery of real world business 

operations  and  the  resumption  of  business  travel  demand,  disrupting  the  recovery  pace  of  the 

hotel  and  catering  business.  The  Group’s  two  hotels  strived  to  overcome  the  impact  of  the 

epidemic,  implemented  business  transformative  and  innovative  business  models  progressively, 

and gradually resumed normal operations.

Zhejiang Grand Hotel, owned by Zhejiang Grand Hotel Limited (a 100% owned subsidiary of the 

Company), recorded revenue of Rmb45.45 million for the Period (2020: Rmb51.45 million).

Grand  New  Century  Hotel,  owned  by  Zhejiang  Linping  Expressway  Co.  Ltd.  (a  51%  owned 

subsidiary  of  the  Company,  which  was  formerly  known  as  “Zhejiang  Yuhang  Expressway  Co., 

Ltd.”), recorded revenue of Rmb68.08 million for the Period (2020: Rmb73.89 million). 

25

Long-Term Investments
Zhejiang  Shaoxing  Shengxin  Expressway  Co.,  Ltd.  (“Shengxin  Co”,  a  50%  owned  joint  venture 

of  the  Company)  operates  the  73.4km  Shaoxing  Section  of  Ningbo-Jinhua  Expressway.  During 

the  Period,  the  average  daily  traffic  volume  in  full-trip  equivalents  was  27,102,  representing  an 

increase  of  1.40%  year-on-year.  Toll  revenue  of  Rmb504.47  million  (2020:  Rmb378.18  million). 

During the Period, the joint venture recorded a net profit of Rmb112.50 million (2020: Rmb32.56 

million).

Zhejiang  HangNing  Expressway  Co.,  Ltd.  (a  30%  owned  associate  of  the  Company)  operates 

the  99km  HangNing  Expressway.  From  February  to  December  2021,  the  associate  company 

recorded a net profit of Rmb188.89 million.

During  the  Period,  Zhejiang  Communications  Investment  Group  Finance  Co.,  Ltd.  (a  20.08% 

owned  associate  of  the  Company)  derived  income  mainly  from  interest,  fees  and  commissions 

for  providing  financial  services,  including  arranging  loans  and  receiving  deposits,  for  Zhejiang 

Communications  Investment  Group  Co.,  Ltd.,  the  controlling  shareholder  of  the  Company,  and 

its  subsidiaries.  During  the  Period,  the  associate  company  recorded  a  net  profit  of  Rmb890.25 

million (2020: Rmb636.83 million).

During the Period, Yangtze United Financial Leasing Co., Ltd. (a 10.61% owned associate of the 

Company) was primarily engaged in the finance leasing business, the transferring and receiving 

of  financial  leasing  assets,  fixed-income  securities  investment,  and  other  businesses  approved 

by  the  China  Banking  and  Insurance  Regulatory  Commission.  During  the  Period,  the  associate 

company recorded a net profit of Rmb440.11 million (2020: Rmb330.90 million).

During  the  Period,  Shanghai  Rural  Commercial  Bank  Co.,  Ltd.  (a  4.85%  owned  associate  of 

the  Company)  was  primarily  engaged  in  the  commercial  banking  business,  including  deposits, 

short-, medium-, and long-term loans, domestic and overseas settlements and other businesses 

approved  by  the  China  Banking  and  Insurance  Regulatory  Commission.  The  associate  was 

successfully  listed  on  the  Shanghai  Stock  Exchange  on August  19,  2021. As  of  the  date  of  this 

report, the associate company has not yet released its audited financial data for the year 2021.

26

ANNUAL REPORTManagement Discussion and AnalysisDuring  the  Period,  Zhejiang  Zheshang  Transform  and  Upgrade  Fund  of  Funds  Partnership 

(Limited  Partnership)  (a  24.99%  owned  associate  of  the  Company)  was  primarily  engaged  in 

equity  investments,  investment  management  and  investment  consultation.  During  the  Period, 

the  share  of  profit  of  the  associate  attributable  to  the  Company  is  Rmb178.44  million  (2020: 

Rmb42.24 million).

FINANCIAL ANALYSIS
The Group adopts a prudent financial policy with an aim to provide shareholders of the Company 

with sound returns over the long term.

During the Period, profit attributable to owners of the Company was approximately Rmb4,762.43 

million,  representing  an  increase  of  97.1%  year-on-year,  basic  earnings  per  share  was 

Rmb109.65  cents,  representing  an  increase  of  97.1%  year-on-year,  diluted  earnings  per  share 

was  Rmb102.50  cents,  representing  an  increase  of  85.7%  year-on-year,  and  return  on  owners’ 

equity was 17.5%, representing an increase of 71.6% year-on-year.

Liquidity and financial resources
As  at  December  31,  2021,  current  assets  of  the  Group  amounted  to  Rmb130,843.32  million 

in  aggregate  (December  31,  2020  (restated):  Rmb91,652.14  million),  of  which  bank  balances, 

clearing  settlement  fund,  deposits  and  cash  accounted  for  13.5%  (December  31,  2020 

(restated):  9.8%),  bank  balances  and  clearing  settlement  fund  held  on  behalf  of  customers 

accounted  for  29.3%  (December  31,  2020  (restated):  29.6%),  financial  assets  at  FVTPL 

accounted  for  34.7%  (December  31,  2020  (restated):  31.8%)  and  loans  to  customers  arising 

from  margin  financing  business  accounted  for  14.8%  (December  31,  2020  (restated):  16.4%). 

The  current  ratio  (current  assets  over  current  liabilities)  of  the  Group  as  at  December  31,  2021 

was  1.30  (December  31,  2020  (restated):  1.30).  Excluding  the  effect  of  the  customer  deposits 

arising from the securities business, the resultant current ratio of the Group (current assets less 

bank  balances  and  clearing  settlement  fund  held  on  behalf  of  customers  over  current  liabilities 

less  balance  of  accounts  payable  to  customers  arising  from  securities  business)  was  1.60 

(December 31, 2020 (restated): 1.40).

27

The  amount  of  financial  assets  at  FVTPL  included  in  current  assets  of  the  Group  as  at 

December  31,  2021  was  Rmb45,445.71  million  (December  31,  2020:  Rmb29,158.09  million),  of 

which  77.4%  was  invested  in  bonds,  6.9%  was  invested  in  stocks,  6.4%  was  invested  in  equity 

funds, and the rest were invested in structured products and trust products.

During  the  Period,  net  cash  from  the  Group’s  operating  activities  amounted  to  Rmb2,823.00 

million.  The  currency  mix  in  which  cash  and  cash  equivalents  are  held  has  not  substantially 

changed as compared to the same period last year.

The Directors do not expect the Company to experience any problems with liquidity and financial 

resources in the foreseeable future.

Cash and cash equivalents
Restricted bank balances and cash
Time deposits
Financial assets at fair value through profit or loss

Total

As at December 31,

2021
Rmb’000

17,153,977
132,090
413,843
45,445,711

2020
Rmb’000
(Restated)

8,645,085
23,986
313,600
29,158,094

63,145,621

38,140,765

28

ANNUAL REPORTManagement Discussion and Analysis 
 
 
 
 
 
 
 
 
Borrowings and Solvency
As  at  December  31,  2021,  total  liabilities  of  the  Group  amounted  to  Rmb131,873.66  million 

(December  31,  2020  (restated):  Rmb98,500.70  million),  of  which  12.7%  was  bank  and  other 

borrowings, 6.0% was short-term financing note, 21.0% was bonds payable, 19.1% was financial 

assets  sold  under  repurchase  agreements  and  28.9%  was  accounts  payable  to  customers 

arising from securities business.

As  at  December  31,  2021,  total  interest-bearing  borrowings  of  the  Group  amounted  to 

Rmb54,048.37  million,  representing  an  increase  of  16.6%  compared  to  that  as  at  December 

31,  2020.  The  borrowings  comprised  outstanding  balances  of  domestic  commercial  bank  loans 

of  Rmb14,534.41  million,  borrowings  from  other  domestic  financial  institutions  of  Rmb2,152.57 

million,  borrowings  from  other  domestic  institutions  of  Rmb56.94  million,  short-term  financing 

note of Rmb6,526.56 million, beneficial certificates of Rmb1,414.14 million, long-term beneficial 

certificates  of  Rmb1,005.62  million,  mid-term  notes  of  Rmb3,062.37  million,  subordinated 

bonds  of  Rmb10,041.65  million,  corporate  bonds  of  Rmb10,596.63  million,  asset  backed 

securities  of  Rmb2,942.82  million,  and  convertible  bond  denominated  in  Euro  that  equivalents 

to  Rmb1,714.66  million.  Of  the  interest-bearing  borrowings,  61.7%  was  not  payable  within  one 

year.

As at December 31, 2021, the Group’s borrowings from domestic commercial banks bore annual 

fixed  interest  rates  ranged  from  4.13%  to  4.85%,  annual  floating  interest  rates  ranged  from 

4.08%  to  4.70%,  the  annual  fixed  interest  rates  of  other  domestic  financial  institutions  ranged 

from  3.82%  to  4.13%,  and  the  annual  fixed  interest  rates  of  other  domestic  institutions  ranged 

was 3.0%. As at December 31, 2021, the annual fixed interest rates of beneficial certificates was 

3.25%,  the  annual  floating  interest  rates  of  beneficial  certificates  ranged  from  3.0%  to  19.0%. 

The  annual  fixed  interest  rates  for  short-term  financing  notes  ranged  from  2.61%  to  2.8%.  The 

annual  fixed  interest  rates  for  long-term  beneficial  certificates  ranged  was  4.10%,.  The  annual 

fixed interest rate for a mid-term note were 3.64% and 3.86%. The annual fixed annual interest 

rates  for  subordinated  bonds  ranged  from  3.50%  to  4.60%.  The  annual  fixed  interest  rate  for 

corporate  bond  ranged  from  1.638%  to  3.85%.  The  annual  fixed  interest  rate  for  asset  backed 

securities  was  3.70%.  The  annual  coupon  rate  for  convertible  bond  denominated  in  Euro  was 

nil,  while  the  annual  interest  rate  for  accounts  payable  to  customers  arising  from  the  securities 

business was fixed at 0.35%.

29

Floating rates

Borrowings from domestic commercial 

banks

Borrowings from a domestic financial 

institution

Beneficial Certificates
Asset backed securities

Fixed rates

Borrowings from domestic commercial 

banks

Borrowings from a domestic financial 

institution

Borrowings from a domestic institution
Beneficial Certificates
Short-term financing notes
Long-term Beneficial Certificates
Subordinated bonds
Corporate bonds
Mid-term notes
Asset backed securities
Convertible bonds

Gross 
amount
Rmb’000

Maturity Profile
Within 
1 year
Rmb’000

2-5 years 
inclusive
Rmb’000

Beyond 
5 years
Rmb’000

14,462,553

1,282,733

4,825,550

8,354,270

1,121,317
412,583
2,128,419

103,527
412,583
82,712

395,280
–
–

622,510
–
2,045,707

71,859

71,859

–

–

1,031,252
56,936
1,001,558
6,526,561
1,005,615
10,041,651
10,596,630
3,062,374
814,402
1,714,662

801,252
56,936
1,001,558
6,526,561
5,615
3,641,651
3,605,868
3,062,374
57,441
–

230,000
–
–
–
1,000,000
6,400,000
6,990,762
–
216,663
1,714,662

–
–
–
–
–
–
–
–
540,298
–

Total as at December 31, 2021

54,048,372

20,712,670

21,772,917

11,562,785

Total as at December 31, 2020 (Restated)

46,349,989

21,523,800

21,504,339

3,321,850

Total  interest  expenses  and  profit  before  interest  and  tax  for  the  Period  amounted  to 

Rmb1,942.53  million  and  Rmb10,106.66  million,  respectively.  The  interest  cover  ratio  (profit 

before  interest  and  tax  over  interest  expenses)  stood  at  5.2  (Corresponding  period  of  2020 

(restated): 3.2 times).

Profit before tax and interest
Interest expenses
Interest cover ratio

30

2021
Rmb’000

10,106,658
1,942,533
5.2

2020
Rmb’000
(Restated)

6,632,107
2,098,493
3.2

ANNUAL REPORTManagement Discussion and Analysis 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
As at December 31, 2021, the asset-liability ratio (total liabilities over total assets) of the Group 

was  74.8%  (December  31,  2020  (restated):  72.7%).  Excluding  the  effect  of  customer  deposits 

arising from the securities business, the resultant asset-liability ratio (total liabilities less balance 

of  accounts  payable  to  customers  arising  from  securities  business  over  total  assets  less  bank 

balances  and  clearing  settlement  fund  held  on  behalf  of  customers)  of  the  Group  was  68.0% 

(December 31, 2020 (restated): 65.9%).

Capital Structure
As at December 31, 2021, the Group had Rmb44,423.03 million in total equity, Rmb100,209.19 

million in fixed-rate liabilities, Rmb18,124.87 million in floating-rate liabilities, and Rmb13,539.59 

million  in  interest-free  liabilities,  representing  25.2%,  56.8%,  10.3%  and  7.7%  of  the  Group’s 

total  capital,  respectively.  The  gearing  ratio,  which  is  computed  by  dividing  the  total  liabilities 

less  accounts  payable  to  customers  arising  from  the  securities  business  by  total  equity,  was 

211.2% as at December 31, 2021 (December 31, 2020 (restated): 193.4%).

Total equity
Fixed rate liabilities
Floating rate liabilities
Interest-free liabilities

As at December 31, 2021

As at December 31, 2020

Rmb’000

%

44,423,025
100,209,191
18,124,872
13,539,594

25.2%
56.8%
10.3%
7.7%

Rmb’000
(Restated)

36,945,993
73,858,938
11,860,430
12,781,336

%
(Restated)

27.3%
54.5%
8.8%
9.4%

Total

176,296,682

100.0%

135,446,697

100.0%

Long-term interest-bearing liabilities

33,695,918

19.1%

25,125,083

18.5%

Gearing ratio 1 (note)
Gearing ratio 2 (note)
Asset-liabilities ratio 1 (note)
Asset-liabilities ratio 2 (note)

211.2%
75.9%
74.8%
68.0%

193.4%
68.0%
72.7%
65.9%

Note:

Gearing  ratio  1  represents  the  total  liabilities  less  balance  of  accounts  payable  to  customers  arising  from  securities 

business  to  the  total  equity;  Gearing  ratio  2  represents  the  total  amount  of  the  long-term  interest-bearing  liabilities  to 

the  total  equity; Asset-liabilities  ratio  1  represents  total  liabilities  to  total  assets; Asset-liabilities  ratio  2  represents  total 

liabilities  less  balance  of  accounts  payable  to  customers  arising  from  securities  business  to  total  assets  less  bank 

balances and clearing settlement fund held on behalf of customers.

31

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Capital Expenditure Commitments and Utilization
During  the  Period,  capital  expenditure  of  the  Group  totaled  Rmb  2,015.34  million.  Amongst 

the  total  capital  expenditure  of  the  Group,  Rmb815.09  million  was  incurred  for  acquiring  equity 

investments,  Rmb186.82  million  was  incurred  for  acquisition  and  construction  of  properties 

and  ancillary  facilities,  and  Rmb1,013.43  million  was  incurred  for  purchase  and  construction  of 

equipment and facilities.

As  at  December  31,  2021,  the  capital  expenditure  committed  by  the  Group  amounted  to 

Rmb3,624.36  million  in  total.  Amongst  the  remaining  balance  of  total  capital  expenditure 

committed  by  the  Group,  Rmb210.00  million  will  be  used  for  acquiring  equity  investments, 

Rmb1,516.88  million  will  be  used  for  acquisition  and  construction  of  properties,  Rmb1,897.48 

million for acquisition and construction of equipment, facilities and ancillary facilities.

The  Group  will  first  consider  financing  the  above-mentioned  capital  expenditure  commitments 

with internal resources, and then will comprehensively consider using debt financing and equity 

financing to meet any shortfalls.

Contingent Liabilities and Pledge of Assets
Pursuant  to  the  board  resolution  of  the  Company  dated  November  16,  2012,  the  Company  and 

Shaoxing Communications Investment Group Co., Ltd. (the other joint venture partner that holds 

50%  equity  interest  in  Shengxin  Co)  provided  Shengxin  Co.  with  joint  guarantee  for  its  bank 

loans of Rmb2.20 billion, in accordance with their proportionate equity interests in Shengxin Co. 

During  the  Period,  Rmb210.00  million  of  the  bank  loans  had  been  repaid. As  at  December  31, 

2021, the remaining bank loan balance was Rmb873.00 million.

Zhejiang Shenjiahuhang Expressway Co., Ltd. and Zhejiang Zhoushan Bay Bridge Co., Ltd., the 

subsidiaries of the Company, pledged their rights of toll on expressway for their bank borrowing, 

as  at  December  31,  2021,  the  remaining  bank  loan  balance  was  Rmb1,919.60  million  and 

Rmb6,114.46 million respectively.

Deqing  County  De’an  Highway  Construction  Co.,  Ltd.,  a  subsidiary  of  the  Company,  pledged 

its trade receivables for its bank borrowing, as at December 31, 2021, the remaining bank loan 

balance was Rmb611.96 million.

32

ANNUAL REPORTManagement Discussion and AnalysisHuangshan  Yangtze  Huihang  Expressway  Co.,  Ltd.,  a  subsidiary  of  the  Company,  pledged  its 
right of toll on expressway and advertisement operation right for its borrowing, as at December 
31, 2021, the remaining balance was Rmb1,193.27 million.

LongLiLiLong,  a  subsidiary  of  the  Company,  pledged  its  right  of  toll  on  expressway  for  its  bank 
and other borrowing, as at December 31, 2021, the remaining bank and other borrowing balance 
was Rmb5,100.00 million.

Zhajiasu,  a  subsidiary  of  the  Company,  pledged  its  right  of  toll  on  expressway  for  its  bank 
borrowing,  as  at  December  31,  2021,  the  remaining  bank  loan  balance  was  Rmb1,818.32 
million.

During  the  Period,  Rmb2,013.00  million  of  the  senior  class  securities  had  been  repaid  for  the 
Rmb47.70  million  Zhejiang  Expressway’s  Huihang  Expressway  asset  backed  securities  issued 
on September 23, 2019, the remaining Rmb806.31 million will be secured by the Company.

Except  for  the  above,  as  at  December  31,  2021,  the  Group  did  not  have  any  other  contingent 
liabilities, pledge of assets or guarantees.

Foreign Exchange Exposure
During  the  Period,  save  for  (i)  dividend  payments  to  the  holders  of  H  shares  in  Hong  Kong 
dollars;  (ii)  Zheshang  International  Financial  Holding  Co.,  Limited.  (a  wholly  owned  subsidiary 
of  Zheshang  Securities)  operating  in  Hong  Kong;  (iii)  issuance  of  the  zero  coupon  convertible 
bond  with  a  principal  amount  of  Euro230  million  in  Hong  Kong  capital  market  in  January  2021, 
which  will  be  due  in  January  2026;  (iv)  the  short  term  international  commercial  bank  borrowing 
with a principal amount of Euro130 million, which was borrowed in April 2021 and repaid in July 
2021; and (v) issuance of the senior fixed-rate bonds with a principal amount of USD470 million 
in Hong Kong capital market in July 2021, which will be due in July 2026 and has an coupon rate 
of 1.638%; the Group’s principal operations were transacted and booked in Renminbi.

During the Period, the Group has not used financial instruments for hedging purpose.

Use of proceeds from convertible bond
The  Company  issued  a  zero  coupon  convertible  bond  due  2026  in  an  aggregate  principal 
amount  of  Euro230.00  million  on  January  20,  2021,  to  improve  the  debt  structure,  increase 
liquidity  to  meet  financial  and  operational  needs  and  enhance  the  investment  capability  of  the 
Group. After  deducting  cost  of  issue  of  approximately  Euro1.00  million,  the  net  proceeds  from 
the  issuance  of  the  convertible  bond  were  approximately  Euro229.00  million,  and  were  used  to 
repay existing borrowings.

33

OUTLOOK
In  2022,  the  negative  impact  of  the  epidemic  on  the  global  economy  is  expected  to  diminish 

continuously  as  the  vaccination  rate  continues  to  rise  and  the  development  of  effective  drugs 

advances.  However,  the  global  economic  recovery  is  still  facing  uncertainties  caused  by  virus 

variants  and  epidemic  resurgence.  Despite  the  burdens  of  contracted  demand,  supply  chain 

disruption  and  weakening  expectations  as  well  as  uncertainties  brought  on  by  the  ongoing 

Russia-Ukraine  conflict,  China’s  economy  is  expected  to  achieve  stable  growth  in  2022  with 

the  support  of  the  government’s  sound  and  effective  macro  policies  and  initiatives  to  smooth 

the  economic  circulations.  Zhejiang  Province  will  actively  implement  policies  to  strengthen 

enterprises  by  reducing  their  encumbrances,  vigorously  develop  the  digital  economy,  focus  on 

organizing  the  Hangzhou  Asian  Games  to  ensure  its  success  and  give  full  play  of  the  event 

to  jointly  boost  the  high-quality  development  in  building  a  demonstration  zone  of  common 

prosperity,  in  which  case  a  favorable  environment  for  the  development  of  the  Group’s  relevant 

businesses will be created. Under the premise of controlled epidemic, the overall traffic volume 

on the Group’s expressways is expected to achieve stable growth in 2022.

On  January  20,  2022,  changing  in  the  industrial  and  commercial  registration  for  the  absorption 

and  merger  of  Zhejiang  Jiaxing  Expressway  Co.  Ltd.  (“Jiaxing  Company”)  by  LongLiLiLong 

Company  was  completed  and  the  principal  assets  and  business  of  Jiaxing  Company  were 

transferred  to  the  “Jiaxing  Branch  of  Zhejiang  LongLiLiLong  Expressway  Co.  Ltd.”  for  the 

continuation of the company. This will be conducive to the coordination of internal management 

resources, enhancing operational management efficiency. It will improve the optimal allocation of 

financial resources and create incremental revenue from integration, improve overall profitability 

and achieve sustainable operation.

34

ANNUAL REPORTManagement Discussion and AnalysisIt has been the Group’s steadfast principle to uphold high-quality and sustainable development, 

focusing  on  technology  empowerment,  customer  service,  capacity  development,  deepening 

reform  and  safety  management.  The  Group  will  actively  accelerate  the  construction  of  the 

intelligent  Shanghai-Hangzhou-Ningbo  Expressway  (Phase  II),  enrich  and  improve  data 

integration applications such as “Intelligent Expressway”, and continue to steer the digital reform 

process.  It  will  focus  on  optimizing  the  comprehensive  road  environment  and  improving  the 

capability  of  branding  operation,  deepen  the  implementation  of  marketing  strategies  such  as 

reward program, “Expressway + Tourism” and “Expressway + Service Area”, study differentiated 

toll  collection  to  achieve  a  discount  system  with  a  win-win  situation,  and  continuously  innovate 

personalized  services  to  enhance  customer  stickiness.  The  Group  will  carry  out  research  on 

relevant expressway widening, deepen the utilization plan of the resources along expressways, 

and  actively  expand  low-cost  financing  channels  to  meet  the  operational  development  needs 

of  its  core  business.  It  will  also  actively  carry  out  reforms  of  its  systems  and  mechanisms, 

strengthen  the  building  of  talent  team,  and  constantly  activate  its  organic  growth  capabilities. 

It  will  also  strictly  implement  regular  epidemic  prevention  and  control,  continuously  improve 

its  safety  and  risk  control  abilities  to  ensure  smooth  traffic  flow,  laying  a  solid  foundation  for 

high-quality development.

Meanwhile,  in  order  to  meet  the  growing  trend  of  traffic  volume,  the  Group  is  expected  to 

allocate  approximately  RMB1.2  billion  to  add  and  expand  service  areas  along  some  of  the 

expressways. However, due to factors such as land acquisition, the exact amount of investment 

and  project  progress  will  be  subject  to  the  actual  situation.  The  addition  and  expansion  of 

service  areas  will  help  optimize  the  layout  of  expressway  service  areas,  improve  the  service 

functions and facilities, and enhance the overall image of the service areas. New traffic volume 

will  be  attracted  by  strengthening  the  comprehensive  service  capacity  of  expressways  and 

improving  the  conditions  of  public  travelling,  improving  the  operation  capacity  of  service  areas 

and creating new landmarks for consumption upgrade.

35

The  Chinese  government  will  scale  up  in  depth  capital  market  reforms  by  focusing  on  the  full 

implementation of the registration-based IPO system for stock issuance as the main theme and 

optimize the market-based and legal-based bond default handling mechanism to encourage the 

standardized and healthy development of the capital market. Zheshang Securities will grasp the 

opportunities of capital market reform and development, actively adapt to the profound changes 

in  the  industry  brought  by  the  registration-based  IPO  system  reform,  focus  on  increasing  the 

reserve of investment banking projects and proactively connect to the business of Beijing Stock 

Exchange. Zheshang Securities will focus on pushing forward the issuance of convertible bonds 

and  exploring  innovative  equity  financing  methods  to  accelerate  the  pace  of  multi-channel 

financing. In addition, Zheshang Securities will continue to push for the mixed ownership reform 

of  Zheshang  Futures  Co.,  Ltd.  and  introduce  high-quality  strategic  investors  to  further  enhance 

market  competitiveness.  Zheshang  Securities  will  also  effectively  leverage  on  the  resource 

endowment of Zhejiang local brokerage firms, dig deep into local high-quality project resources, 

and continuously facilitate the coordinated development of various business segments.

In  the  face  of  the  complex  and  volatile  domestic  and  international  economic  situation,  the 

Group  will  continue  to  strengthen  its  expressway  business  and  optimize  its  securities  and 

finance  business  based  on  its  own  strength.  The  management  will  actively  study  the  changes 

in  government  policy  and  market  environment,  focus  on  exploring  the  investment  opportunities 

of  high-quality  expressway  projects  under  the  premise  of  risk  control,  and  continuously 

expand  the  scale  of  its  core  business.  Meanwhile,  the  management  will  also  leverage  the 

Group’s  brand  and  experience  advantages  in  the  field  of  transportation  infrastructure  REITs 

to  enhance  the  financing  capacity  of  the  public  REITs  listing  platform  and  increase  research 

efforts  on  transportation-related  infrastructure  projects  to  drive  the  high-quality  and  sustainable 

development of the Company.

36

ANNUAL REPORTManagement Discussion and AnalysisHUMAN RESOURCES
In  2021,  the  Group’s  human  resources  management  focused  on  key  areas  such  as 

organizational restructuring, team building, mechanism reform and innovative management, and 

strived  to  provide  strong  organizational  and  talent  support  for  the  development  of  all  business 

lines.

During  the  Period,  the  Group  developed  and  issued  relevant  regulations,  including  the 

Administrative Measures for Employees’ Career Development Paths, further clarifying the career 

development  paths  of  employees,  as  well  as  promoted  and  appointed  management  members 

through  diversified  channels  to  speed  up  the  development  of  management  team.  The  Group 

also  continued  to  intensify  talents  recruitment  by  building  up  the  employer  brand,  deepening 

enterprise-school  cooperation,  expanding  recruitment  channels  and  taking  other  measures.  In 

addition,  it  improved  its  policies  and  measures  on  gross  payroll  control,  performance-linked 

bonus  distribution  and  differentiated  incentives,  to  further  strengthen  the  remuneration 

incentive-oriented function.

As of December 31, 2021, there were 8,957 employees within the Group, amongst whom 4,465 

mainly  worked  in  the  related  positions  of  the  toll  road  operation  business  and  4,492  worked  in 

the related positions of the securities business.

37

TOLL ROAD BUSINESS RISKS

Economic Environment
Currently, the global epidemic remains evolving, and the external environment is becoming more 

complex  and  harsher,  while  the  economic  development  in  China  is  also  facing  burdens  arising 

from  shrinking  demand,  interrupted  supply  and  weaker  expectations,  which  will  bring  some 

uncertainties  to  the  sustained  recovery  and  development  of  China’s  economy.  Given  that  the 

expressway toll collection business is closely related to the macroeconomy, the performance of 

the Group’s expressways is expected to be uncertain in terms of traffic volume and toll revenue.

Roads Competition
The  Group’s  expressways  will  be  negatively  affected  by  the  diversion  to  the  surrounding  road 

networks and traffic control measures. The Hangzhou–Shaoxing–Taizhou Expressway has been 

fully  opened  to  traffic  since  February  2022,  which  is  expected  to  cause  certain  traffic  volume 

diversion  to  the  Group’s  adjacent  Shaoxing  section  of  the  Hangzhou-Ningbo  Expressway  and 

the  parallel  Shangsan  Expressway.  The  opening  of  the  Hangzhou-Taizhou  High-speed  Railway 

in January 2022 is expected to have a certain negative impact on the passenger vehicles traffic 

volume  of  the  Shangsan  Expressway  of  the  Group.  In  order  to  alleviate  traffic  congestion,  the 

prohibition of entry of semi-trailers on the East-Route (from Xiasha East Interchange to Hongken 

Junction)  and  West-Route  (from  Nanzhuangdou  Interchange  to  Hangzhou  South  Junction)  of 

Hangzhou Ring Expressway from January 28, 2021 to October 30, 2022 will adversely affect the 

traffic  flow  of  semi-trailers  on  relevant  sections  of  the  Shanghai-Hangzhou-Ningbo  Expressway 

and  the  Shenjiahuhang  Expressway  respectively.  Therefore,  there  is  no  assurance  that  the  toll 

revenue of the Group’s expressways will not be negatively affected in the future.

38

ANNUAL REPORTPrincipal Risks and UncertaintiesToll Policy
As approved by the Zhejiang Provincial Government, the toll roads across the province continue 

to  implement  a  5%  discount  on  tolls  for  all  vehicles  with  ETC  devices,  and  the  state-owned 

expressway  sections  within  the  province  continue  to  implement  a  15%  discount  on  tolls  for  all 

qualified  trucks  with  ETC  in-vehicle  device  in  the  province.  In  February  2022,  the  Ministry  of 

Transport  of  the  PRC  announced  the  2022  Legislative  Scheme  of  the  Ministry  of  Transport, 

indicating  that  it  would  facilitate  the  revision  of  the Administrative  Regulations  on Toll  Roads  in 

due  course. Accordingly  there  are  certain  possibilities  of  policy  adjustments  in  the  expressway 

operation  industry.  Therefore,  there  is  no  assurance  that  the  operating  results  of  the  Group’s 

expressway business will not be adversely affected in the future.

SECURITIES BUSINESS RISKS
Market Fluctuations
The securities business is highly susceptible to market fluctuations and may experience periods 

of  high  volatility  accompanied  by  reduced  liquidity.  It  may  be  materially  affected  by  economic 

and  other  factors  such  as  the  global  market  conditions;  the  availability  and  cost  of  capital;  the 

liquidity  of  the  global  markets;  the  level  and  volatility  of  stock  prices,  commodity  prices  and 

interest rates; currency values and other market indices; inflation; natural disasters; acts of war 

or  terrorism;  as  well  as  investor  sentiment  and  confidence  in  the  financial  markets. There  is  no 

assurance as to whether our securities business will be adversely affected by fluctuations in the 

market, or whether our securities business will continue to contribute to our overall profit margin.

Regulation of the Securities Business
We  are  subject  to  extensive  regulations  in  the  PRC  that  govern  how  we  conduct  our  securities 

business, and we are subject to risks of intervention by the PRC regulatory authorities. We could 

be  fined,  prohibited  from  engaging  in  some  of  our  business  activities  or  subject  to  limitations 

or  conditions  on  our  business  activities,  among  other  things.  Significant  regulatory  actions 

against  us  could  have  material  adverse  impacts  on  our  financial  position,  cause  us  significant 

reputational  harm,  or  harm  our  business  prospects.  New  laws,  regulations  or  changes  in  the 

enforcement  of  existing  laws  or  regulations  applicable  to  our  clients  may  also  adversely  affect 

our business.

FINANCIAL RISKS
For  financial  risks  and  uncertainties  of  the  Group,  please  see  notes  6,  53  and  54  to  the 

Consolidated Financial Statements.

39

STATEMENT OF RESPONSIBILITY FROM THE 
DIRECTORS WITH RESPECT TO THE ANNUAL REPORT 
AND THE COMPANY’S ACCOUNTS
The  Directors  of  the  Company,  whose  names  and  functions  are  listed  on  pages  57  to  62,  duly 

confirm that to the best of their knowledge:

– 

the  consolidated  financial  statements  prepared  and  subject  to  disclosure  under  the  Hong 

Kong Financial Reporting Standards issued by the Hong Kong Institute of Certified Public 

Accountants give a true and fair view of the assets, liabilities, financial position and profit 

of  the  Group,  and  cover  the  enterprises  that  have  been  consolidated  into  the  Company; 

and

– 

the “Management Discussion and Analysis” section included in this annual report includes 

a  fair  review  of  the  development  and  performance  of  the  business  and  the  position  of 

the  Group,  covers  the  enterprises  that  have  been  consolidated  into  the  Company  and 

describes the principal risks and uncertainties faced by the Group.

From the beginning of year 2021 up to now, there has been no occurrence of significant events 

that would have a material impact on the normal operation of the Group.

By Order of the Board

Tony ZHENG
Company Secretary

Hangzhou, Zhejiang Province, the PRC

March 24, 2022

40

ANNUAL REPORTPrincipal Risks and UncertaintiesCORPORATE GOVERNANCE PRACTICES
To  govern  the  daily  functioning  of  the  Board  of  Directors  of  the  Company,  the  Company  has 

adopted  its  own  Guidelines  on  Corporate  Governance  that  closely  followed  the  principles  of 

good Corporate Governance Code (“CG Code”) in Appendix 14 of the Listing Rules (available at 

www.hkex.com.hk).

During  the  Period,  except  for  the  Code  E.1.3,  the  Company  has  complied  with  all  code 

provisions in the CG Code and adopted the recommended best practices in the CG Code as and 

when applicable. The Directors of the Company have been informed that the latest amendment 

of  Listing  Rules  and  CG  Code  will  be  adopted  and  applied  for  the  daily  operation  of  the 

Company.

DIRECTORS’ SECURITIES TRANSACTIONS
The Company has adopted the Rules on Securities Dealings (“Rules on Securities Dealings”) for 

the Directors, supervisors, senior management personnel and other employees of the Company 

on  terms  no  less  exacting  than  the  required  standard  set  out  in  the  Model  Code  for  Securities 

Transactions  by  Directors  of  Listed  Issuers  (the  “Model  Code”)  set  out  in  Appendix  10  of  the 

Listing Rules.

Upon  specific  inquiries  to  all  the  Directors,  the  Company’s  Directors  have  confirmed  their 

respective compliance with the required standards for securities transactions by Directors as set 

out in the Model Code and the Rules on Securities Dealings of the Company.

BOARD OF DIRECTORS OF THE COMPANY (THE “BOARD”)
The Chairman of the Company during the Period was:

Mr. YU Zhihong

The executive directors of the Company during the Period were:

Mr. CHEN Ninghui

Mr. YUAN Yingjie 

Ms. LUO Jianhu 

(Appointed as General Manager, with effect from May 19, 2021)

(Resigned, with effect from May 19, 2021)

41

Corporate Governance Report 
 
The non-executive directors of the Company during the Period were:

Mr. JIN Chaoyang 

Mr. DAI Benmeng 

Mr. FAN Ye

(Appointed, with effect from July 1, 2021)

(Resigned, with effect from July 1, 2021)

Mr. HUANG Jianzhang  

(Appointed, with effect from July 1, 2021)

The independent non-executive directors of the Company during the Period were:

Mr. PEI Ker-Wei

Ms. LEE Wai Tsang, Rosa

Mr. CHEN Bin

During the Period, the Board held a total of 12 meetings. Individual attendances by the directors 

(as indicated by the number of meetings attended/number of relevant meetings held during their 

tenure) are as follows:

Mr. YU Zhihong (Chairman)
Mr. CHEN Ninghui
Mr. YUAN Yingjie (General Manager)
Ms. LUO Jianhu (Resigned)
Mr. JIN Chaoyang
Mr. DAI Benmeng (Resigned)
Mr. FAN Ye
Mr. HUANG Jianzhang
Mr. PEI Ker-Wei
Ms. LEE Wai Tsang, Rosa
Mr. CHEN Bin

Attendance 
in person

Attendance 
by proxy

Attendance 
through 
communication

3/12
6/12
6/12
2/5
1/5
2/7
4/12
4/5
6/12
6/12
3/12

3/12

3/5

2/12

3/12

6/12
6/12
6/12
3/5
1/5
5/7
6/12
1/5
6/12
6/12
6/12

42

ANNUAL REPORTCorporate Governance Report 
 
 
 
 
 
During  the  Period,  the  Company  held  four  shareholders’  general  meetings.  The  meetings  were 

chaired  by  the  Chairman,  and  all  executive  directors  were  present  at  the  meetings.  Meanwhile, 

the  Company  actively  encouraged  independent  non-executive  directors  to  attend  shareholders’ 

meetings.

According  to  the  “Reply  of  the  State  Council  on  the  Adjustment  of  the  Provisions  Applicable 

to  the  Notice  Period  for  the  Holding  Shareholders’  General  Meetings  for  Overseas  Listed 

Companies”  (Guo  Han  [2019]  No.  97),  it  was  agreed  that  the  requirements  on  the  notice 

period  of  the  general  meetings,  shareholders’  proposal  rights  and  convening  procedures  for 

joint  stock  companies  incorporated  in  China  and  listed  overseas  shall  be  uniformly  governed 

by  the  relevant  provisions  under  the  Company  Law,  pursuant  to  which,  the  Company  made 

corresponding  amendments  to  the  Articles  of  Association  as  follows:  “When  the  Company 

convenes  an  annual  general  meeting,  a  notice  shall  be  given  to  all  shareholders  twenty  days 

prior  to  the  date  of  the  meeting;  and  when  the  Company  convenes  an  extraordinary  general 

meeting,  a  notice  shall  be  given  to  all  shareholders  fifteen  days  prior  to  the  date  of  the 

meeting.” As such, the Company’s notice period for convening a shareholders’ meeting is not in 

compliance with the code provision E.1.3 as stipulated in the CG Code.

The  Board  is  charged  with  duties  as  well  as  given  powers  that  are  expressly  specified  in  the 

Articles  of  Association  of  the  Company,  the  scope  of  which  mainly  includes,  amongst  others: 

to  determine  the  business  plans  and  investment  proposals  of  the  Company;  to  prepare  the 

annual  financial  budget  and  final  accounts  of  the  Company;  to  determine  the  dividend  policy 

of  the  Company;  to  appoint  or  dismiss  senior  managerial  officers  of  the  Company  as  well  as  to 

determine  their  remuneration;  and  to  draw  up  proposals  for  any  material  acquisition  or  sale  by 

the Company.

To assist the Board to effectively discharge its duties, the Board has set up the Audit Committee, 

the Nomination Committee, the Remuneration Committee, and the Strategic Committee.

43

Under  the  Corporate  Governance,  the  Board  plays  a  key  role  in  all  aspects  and  works  closely 

with  the  management.  While  the  Board  fully  retains  its  power  to  decide  on  matters  within  its 

scope of duties and powers, relevant preparation and drawing up of work plans or proposals are 

usually delegated to the management.

The  Company  has  complied  with  the  requirements  under  Rules  3.10(1),  (2)  and  3.10A  of 

the  Listing  Rules  regarding  the  appointment  of  independent  non-executive  directors,  with 

three  independent  non-executive  directors  appointed,  at  least  one  of  whom  possessing  the 

appropriate  professional  qualification  or  accounting  or  related  financial  management  expertise 

and  the  number  of  independent  non-executive  Directors  (three)  appointed  represents  at  least 

one-third of Board members of the Company (a total of nine).

Pursuant  to  Rule  3.13  of  the  Listing  Rules,  the  Company  had  specifically  inquired  with  all 

three  independent  non-executive  directors  and  received  their  respective  annual  confirmation 

of  independence.  Each  of  the  three  independent  non-executive  directors  of  the  Company 

confirmed that they and their immediate family members had complied with the requirements of 

the  guidelines  regarding  independence  under  Rule  3.13  of  the  Listing  Rules  during  the  Period. 

The Company continues to consider the independent non-executive directors to be independent.

There  were  no  financial,  business,  family  or  other  material  or  relevant  relationships  between 

members  of  the  Board,  including  that  between  the  Chairman  and  the  General  Manager  of  the 

Company.

Each newly appointed director receives induction on the first occasion of his or her appointment, 

so as to ensure that he or she has appropriate understanding of the business and operations of 

the Company and that he or she is fully aware of his or her responsibilities and obligations under 

the  Listing  Rules  and  relevant  regulatory  requirements.  Directors  are  also  regularly  updated 

on  the  Group’s  business  and  industry  environments  where  appropriate  in  the  management’s 

monthly reports to the Board as well as briefings and materials circulated to the Board before a 

Board meeting.

44

ANNUAL REPORTCorporate Governance ReportIn addition, during the Period, the Company has arranged for all its executive and non-executive 

directors  to  undergo  continuous  trainings  designed  to  develop  and  refresh  their  knowledge  and 

skills  so  as  to  ensure  that  their  contribution  to  the  Board  remains  informed  and  relevant.  Upon 

the re-election of the members of the Board, the Company has arranged listing training for newly 

appointed  directors  to  improve  their  understanding  of  the  Listing  Rules  and  relevant  rules,  and 

enhance  the  compliance  with  the  requirements  in  relation  to,  among  others,  the  management 

of  connected  transactions,  information  disclosure  obligations,  risk  management  and  internal 

control,  so  as  to  help  directors  improve  the  effectiveness  of  performance.  However,  as  the 

management  considers  that  the  independent  non-executive  directors  of  the  Company  are  very 

experienced,  knowledgeable  and  resourceful,  the  Company  has  not  arranged  any  professional 

briefings  or  training  programs  for  its  independent  non-executive  directors  and  has  decided  to 

leave it to the independent non-executive directors to undergo the trainings as they see fit.

CHAIRMAN AND GENERAL MANAGER
During the Period, Mr. YU Zhihong served as the Chairman and Mr. YUAN Yingjie and Ms. LUO 

Jianhu  (Resigned)  served  as  the  General  Manager  of  the  Company,  respectively.  The  roles 

of  Chairman  and  General  Manager  are  fully  segregated  as  expressly  set  out  in  the Articles  of 

Association of the Company.

NON-EXECUTIVE DIRECTORS
Terms  for  the  non-executive  directors  of  current  session  of  the  Board  started  on  July  1,  2021 

and will expire on June 30, 2024.

45

SPECIAL COMMITTEES UNDER THE BOARD
The  Board  has  set  up  the  Audit  Committee,  the  Nomination  Committee,  the  Remuneration 

Committee, and the Strategic Committee. Roles and functions for each committee are specified 

in  its  terms  of  reference,  details  of  which  can  be  found  under  the  “Corporate  Governance” 

section on the Company’s website.

During  the  Period,  Ms.  LUO  Jianhu  resigned  from  the  positions  as  an  executive  Director, 

General Manager and a member of the Strategic Committee of the Company on May 19, 2021. 

Mr. YUAN Yingjie was appointed as the General Manager on May 19, 2021, and as an executive 

director and a member of the Strategic Committee on July 1, 2021.

Due to the above change of positions, Mr. YUAN Yingjie ceased to be a non-executive Director, 

a  member  of  the  Audit  Committee  and  a  member  of  the  Remuneration  Committee  of  the 

Company, and Mr. JIN Chaoyang was appointed to take up such positions on July 1, 2021.

Mr.  DAI  Benmeng  resigned  from  the  positions  as  a  non-executive  Director,  a  member  of  the 

Nomination Committee and a member of the Remuneration Committee of the Company on July 

1, 2021, and Mr. FAN Ye was appointed to take up such positions and also as a member of the 

Audit Committee on July 1, 2021.

After the above adjustments, the composition of each of the special committees of the Board is 

as follows:

The  Audit  Committee  of  the  Company  comprises  of  the  three  independent  non-executive 

directors  and  two  non-executive  directors,  namely  Mr.  PEI  Ker-Wei,  Ms.  LEE  Wai Tsang,  Rosa, 

Mr.  CHEN  Bin,  Mr.  JIN  Chaoyang  and  Mr.  FAN  Ye,  of  whom  Mr.  PEI  Ker-Wei  serves  as  the 

chairman of the Audit Committee.

The Nomination Committee of the Company comprises of the Chairman of the Board, the three 

independent  non-executive  directors  and  one  non-executive  director,  namely  Mr.  YU  Zhihong, 

Mr.  PEI  Ker-Wei,  Ms.  LEE  Wai  Tsang,  Rosa,  Mr.  CHEN  Bin  and  Mr.  FAN  Ye,  of  whom  Mr.  YU 

Zhihong serves as the chairman of the Nomination Committee.

46

ANNUAL REPORTCorporate Governance ReportThe  Remuneration  Committee  of  the  Company  comprises  of  the  three  independent 

non-executive  directors  and  two  non-executive  directors,  namely,  Mr.  PEI  Ker-Wei,  Ms.  LEE 

Wai Tsang, Rosa, Mr. CHEN Bin, Mr. JIN Chaoyang and Mr. FAN Ye, of whom Mr. PEI Ker-Wei 

serves as the chairman of the Remuneration Committee.

The  Strategic  Committee  of  the  Company  mainly  comprises  of  the  Chairman  of  the  Board, 

Mr.  YU  Zhihong,  and  the  two  executive  directors,  namely  Mr.  CHEN  Ninghui  and  Mr.  YUAN 

Yingjie  as  well  as  Mr.  Tony  ZHENG,  Ms.  RUAN  Liya,  Mr.  ZHANG  Jingzhong  and  several 

outside experts and advisors, of whom Mr. YU Zhihong serves as the chairman of the Strategic 

Committee.

During the Period, the Audit Committee held a total of four meetings. Individual attendances by 

the members of the Audit Committee (as indicated by the number of meetings attended/number 

of meetings held during their tenure) are as follows:

Mr. PEI Ker-Wei
Ms. LEE Wai Tsang, Rosa
Mr. CHEN Bin
Mr. YUAN Yingjie (Resigned)
Mr. JIN Chaoyang
Mr. FAN Ye

Attendance 
in person

Attendance 
by proxy

4/4
4/4

2/2

3/4

3/4

2/2
1/4

At  the  meetings  held  during  the  Period,  the Audit  Committee  reviewed  financial  statements  for 

the  quarterly,  interim  and  annual  results,  and  discussed  the  matters  such  as  the  internal  audit, 

the effectiveness of internal control system and the improvement of total risk management of the 

Company.

47

 
 
 
During  the  Period,  the  Nomination  Committee  held  a  total  of  three  meetings.  Individual 

attendances  by  the  members  of  the  Nomination  Committee  (as  indicated  by  the  number  of 

meetings attended/number of meetings held during their tenure) are as follows:

Mr. YU Zhihong
Mr. PEI Ker-Wei
Ms. LEE Wai Tsang, Rosa
Mr. CHEN Bin
Mr. DAI Benmeng (Resigned)
Mr. FAN Ye

Attendance 
in person

Attendance 
by proxy

Attendance 
through 
communication

3/3
3/3
3/3
3/3
2/2
1/1

During  the  Period,  the  Nomination  Committee  discussed,  considered  and  approved  the 

nomination  of  the  proposed  candidates  for  new  directors  and  supervisors,  Chairman,  senior 

management  members  and  General  Manager  of  the  Company  by  way  of  telecommunication. 

Thereafter,  the  proposed  candidates  for  new  directors  of  the  Company  were  approved  by  the 

Board  of  Directors  and  the  shareholders’  general  meeting,  the  proposed  candidates  for  new 

supervisors  of  the  Company  were  approved  by  the  shareholders’  general  meeting,  and  the 

proposed  candidates  for  Chairman,  senior  management  members  and  General  Manager  of  the 

Company were approved by the Board of Directors.

48

ANNUAL REPORTCorporate Governance Report 
 
 
 
During  the  Period,  the  Remuneration  Committee  held  a  total  of  two  meetings.  Individual 

attendances  by  the  members  of  the  Remuneration  Committee  (as  indicated  by  the  number  of 

meetings attended/number of meetings held during their tenure) are as follows:

Mr. PEI Ker-Wei
Ms. LEE Wai Tsang, Rosa
Mr. CHEN Bin
Mr. DAI Benmeng (Resigned)
Mr. YUAN Yingjie (Resigned)
Mr. JIN Chaoyang
Mr. FAN Ye

Attendance 
in person

Attendance 
by proxy

Attendance 
through 
communication

1/2
1/2

1/1

1/2

1/1

1/2
1/2
1/2
1/1
1/1

1/1

During the Period, the Strategic Committee did not hold any meeting.

The  Board  of  the  Company  is  responsible  for  developing  and  reviewing  the  Company’s 

corporate  governance  policies  and  practices,  and  monitoring  the  Company’s  compliance  with 

the  CG  Code  and  its  disclosure  in  this  report;  the  Board  reviews  and  monitors  the  training  and 

continuous professional development of Directors and senior management through the works of 

human  resources  department,  and  reviews  and  monitors  the  Company’s  policies  and  practices 

in  relation  to  the  compliance  with  legal  and  regulatory  requirements  through  the  works  of  the 

discipline inspection and supervision office and the audit department.

The  Directors  have  all  confirmed  their  responsibility  for  preparing  the  accounts,  and  that  there 

were  no  significant  uncertain  events  or  conditions  which  would  have  a  material  impact  on  the 

Company’s ability to continue to operate as a going concern.

49

 
 
 
 
DIVERSIFICATION OF BOARD MEMBERS
The  Company  believes  that  the  diversification  of  Board  members  is  one  of  the  key  elements  to 
maintain  the  Company’s  competitive  advantage,  improve  business  performances,  and  promote 
the  Company’s  continued  development.  When  determining  the  composition  of  the  Board, 
the  Company  takes  into  consideration  a  number  of  aspects  to  diversify  the  Board  members, 
including but not limited to gender, age, culture, education background, professional experience, 
work and living background, knowledge and skills, etc..

The Board of the Company attaches great importance to female directors, with the gender ratio 
of  male  and  female  members  of  89%  and  11%  respectively.  The  board  will  take  opportunities 
to  increase  the  proportion  of  female  members  over  time  as  and  when  suitable  candidates  are 
identified.

The  Board  members  of  the  Company  have  skills  in  multiple  professional  fields,  such  as  legal, 
accounting, finance, management, computer science and construction engineering, with related 
experience  in  different  professional  sectors.  The  diversified  backgrounds  of  the  Board  is 
beneficial to the corporate governance, and related experiences satisfy the requirements for the 
Company’s business development, which helps the Company to make important decisions.

The  age  distribution  of  the  Board  members  of  the  Company  is  between  40  and  65.  The  Board 
members with different age groups can provide diversified sight of views and opinions.

NOMINATION POLICY
The  Company’s  Nomination  Committee  is  responsible  for  assessing  the  Board’s  structure, 
number  of  members  and  a  diversified  composition,  introducing  right  talents  when  appropriate 
to  enrich  the  Board,  providing  recommendation  or  suggestion  on  the  candidates  to  serve 
as  new  directors  of  the  Company  to  the  Board  when  needed.  The  assessment  as  well  as 
recommendation  or  suggestion  above  would  have  fully  taken  into  consideration  any  pros 
and  cons  to  the  diversification  of  Board  members  and  new  perspectives,  skills,  expertise 
and  experience  given  to  the  Board.  (Please  refer  to  “the  Terms  of  Reference  for  Nomination 
Committee” under the “Corporate Governance” section on the Company’s website for details)

AUDITORS’ REMUNERATION
During  the  Period,  the  Company  paid  approximately  RMB4.24  million  and  RMB0.93  million 
to  Deloitte  Touche  Tohmatsu  Certified  Accountants  (the  Hong  Kong  auditor)  and  Zhejiang 
Pan-China  Certified  Public  Accountants  LLP  (the  PRC  auditor),  respectively,  for  the  audit 
services  they  rendered  in  2021.  Besides,  the  Company  paid  approximately  RMB0.20  million  to 
Zhejiang  Pan-China  Certified  Public  Accountants  LLP  (the  PRC  auditor)  for  other  assurance 
service provided.

50

ANNUAL REPORTCorporate Governance ReportSECRETARY TO THE BOARD
During  the  Period,  the  Secretary  to  the  Board  helped  the  Company  maintain  a  sound  and 

effective  corporate  governance  framework,  reviewed  risk  management  and  internal  control 

systems  to  ensure  regulatory  compliance,  and  provided  compliance  advice  to  the  Board  and 

senior  management  in  the  decision  making  process. The  Secretary  to  the  Board  also  complied 

with  the  requirements  of  Rule  3.29  under  the  Listing  Rules  regarding  undergoing  relevant 

professional trainings.

DIRECTORS, SUPERVISORS AND GENERAL MANAGER’S 
INTERESTS IN SHARES AND UNDERLYING SHARES OF 
THE COMPANY
As  at  December  31,  2021,  none  of  the  Directors,  Supervisors  and  General  Manager  had  any 

interests  or  short  positions  in  the  shares,  underlying  shares  or  debentures  of  the  Company  or 

any of its associated corporations (within the meaning of Part XV of the SFO) as recorded in the 

register required to be kept pursuant to Section 352 of the SFO, or as otherwise notified to the 

Company and the Stock Exchange pursuant to the Model Code.

INTERESTS AND SHORT POSITIONS OF OTHER 
PERSONS IN SHARES AND UNDERLYING SHARES OF 
THE COMPANY
As  at  December  31,  2021,  the  interests  and  short  positions  of  other  persons  in  the  shares 

and  underlying  shares  of  the  Company  as  recorded  in  the  register  required  to  be  kept  by  the 

Company pursuant to Section 336 of the SFO, or as otherwise notified to the Company and the 

Stock Exchange are set out below:

Substantial Shareholders

Capacity

Total interests 
held in ordinary 
shares of the 
Company

Percentage 
of the issued 
share capital of 
the Company 
(Domestic Shares)

Communications Group

Beneficial Owner

2,909,260,000

100%

51

 
 
 
 
Substantial Shareholders

Capacity

JP Morgan Chase & Co.

Interest of controlled corporations/
investment manager/custodian 
corporation/approved lending agent

BlackRock, Inc.

Interest of controlled corporations

Morgan Stanley

Interest of controlled corporations

Citigroup Inc.

Interest of controlled corporations/
custodian corporation/approved 
lending agent

Total interests 
held in ordinary 
shares of the 
Company

133,893,010(L)
27,067,025(S)
80,457,102(P)

114,372,062(L)
478,000(S)

108,959,616(L)
11,375,977(S)

98,830,827(L)
1,022,000(S)
97,262,234(P)

Percentage 
of the issued 
share capital of 
the Company 
(H Shares)

9.33(L)
1.88(S)
5.61(P)

7.98(L)
0.03(S)

7.59(L)
0.79(S)

6.89(L)
0.07(S)
6.78(P)

China Merchants Expressway 

Beneficial Owner

71,784,000(L)

5.01(L)

Network & Technology 
Holdings Co Ltd.

The  letter  “L”  denotes  a  long  position.  The  letter  “S”  denotes  a  short  position.  The  letter  “P” 

denotes an interest in a lending pool.

Save as disclosed above, as at December 31, 2021, no other persons had any interests or short 

positions  in  the  shares  or  underlying  shares  of  the  Company  that  were  required  to  be  recorded 

pursuant  to  Section  336  of  the  SFO,  or  as  otherwise  notified  to  the  Company  and  the  Stock 

Exchange.

52

ANNUAL REPORTCorporate Governance Report 
 
 
 
SHAREHOLDERS’ RIGHTS
According  to  the  Articles  of  Association  of  the  Company,  the  shareholders,  alone  or  in 

aggregate, holding more than 3% of the shares of the Company can make a temporary proposal 

and submit the same in writing to the Board of Directors ten days prior to the date of the general 

meeting.  The  Board  shall  notify  other  shareholders  within  two  days  upon  the  receipt  of  the 

proposal,  and  submit  such  temporary  proposal  to  the  general  meeting  for  consideration.  The 

contents of the temporary proposal shall be within the scope of power of a general meeting, and 

include a clear subject and specific matters to be resolved.

Written  requests,  proposals  and  enquiries  may  be  sent  to  the  Company  through  the  contact 

details listed on page 283 of this report.

INVESTOR RELATIONS
The  Board  of  the  Company  is  committed  to  ensuring  that  all  shareholders  and  investors  have 

equal  and  timely  access  to  information  about  the  Company  so  as  to  enable  them  to  accurately 

assess  the  Company’s  fair  value.  Such  information  is  available  through  multiple  channels 

including  financial  reports,  shareholders’  meetings,  regular  and  irregular  announcements,  the 

Hong  Kong  Stock  Exchange’s  website  (www.hkexnews.hk)  and  the  Company’s  own  website 

(www.zjec.com.cn).

Activities  such  as  investor  and  analyst  briefings,  one-on-one  meetings,  conference  calls, 

roadshows,  and  press  conferences  are  held  regularly  by  senior  management  of  the  Company, 

particularly after each publication of its results announcement.

53

Great  importance  is  also  attached  to  maintaining  clear  and  effective  communication  channels 

with  investors  as  part  of  the  Company’s  bid  to  enhance  its  transparency  and  to  promote  the 

investors’ understanding of all lines of its business. Any parties who wish to learn more about the 

Company may do so via the contact details listed below:

Mr. Tony Zheng

Company Secretary

Tel: 86-571-87987700

Fax: 86-571-87950329

Email: zhenghui@zjec.com.cn

During  the  Period,  the  last  shareholders’  meeting  of  the  Company  took  place  at  10:00  a.m.  on 

Tuesday,  November  9,  2021  at  the  headquarters  of  the  Company.  Details  of  this  extraordinary 

general meeting of the shareholders were set out in the announcement dated November 9, 2021 

on resolutions passed at the extraordinary general meeting of the shareholders.

The  next  shareholders’  general  meeting  of  the  Company  is  expected  to  be  held  in  May  2022 

with  exact  date  and  matters  for  consideration  to  be  specified  in  the  notice  of  the  shareholders’ 

general meeting when it is issued.

The  Company  has  an  issued  share  capital  of  4,343,114,500  shares  comprising  of  domestic 

shares  and  foreign  shares  listed  overseas  (H  shares).  The  domestic  shares  are  held  by 

Zhejiang Communications Investment Group Co., Ltd. as to 2,909,260,000 shares, representing 

approximately  67%  of  the  total  issued  capital  of  the  Company.  The  remaining  1,433,854,500 

shares are H shares, representing approximately 33% of the total issued capital of the Company. 

As  at  the  date  of  this  report,  to  the  best  of  the  Directors’  knowledge,  other  than  Universal 

Cosmos  Limited,  an  associate  of  Zhejiang  Communications  Investment  Group  Co.,  Ltd.,  which 

holds  2.07%  of  the  H  shares  of  the  Company,  the  remaining  97.93%  of  the  H  Shares  of  the 

Company are held by the public.

54

ANNUAL REPORTCorporate Governance ReportDIVIDEND POLICY
The  Company  has  been  consistently  attaching  great  importance  to  the  return  for  those 

shareholders  who  support  the  Company’s  development  for  a  long  term,  by  sharing  its 

development  results,  maintaining  a  stable  dividend  payout  level  and  striving  to  keep  the 

absolute  dividend  payout  relatively  steady.  During  the  Period,  the  dividend  payout  accounted 

for  approximately  34.2%  of  the  distributable  profits  of  the  Company  for  the  year.  Details  of  the 

dividend payout will be announced after the 2021 annual general meeting of the Company.

RISK MANAGEMENT AND INTERNAL CONTROL
The  Company  has  an  internal  control  system  that  aims  to  protect  assets,  preserve  accounting 

and financial information, as well as to ensure the truthfulness of financial statements, including 

the  establishment  of  functional  departments  and  units,  defining  duties  and  responsibilities, 

the  execution  of  management  systems  and  quality  control  mechanisms,  and  the  management 

system  on  environment,  occupational  health  and  safety.  With  the  system,  the  Company  is 

capable  of  taking  necessary  steps  to  react  to  possible  changes  in  its  businesses  as  well  as 

external  operating  environment.  Throughout  the  operating  process,  the  Company’s  internal 

control measures are being continuously enhanced, fulfilled and are deemed effective.

The Company attaches great importance to risk management, by perfecting its risk management 

mechanism  and  relevant  regulations,  improving  risk  reporting  mechanism,  and  revising  its 

risk  management  manual.  It  also  assigns  the  responsibilities  for  risk  management  to  all 

branches  and  departments,  conducts  risk  investigation  and  assessment,  as  well  as  develops 

risk  mitigation  plans  and  takes  risk  control  measures  in  response  to  major  risks  faced  by  the 

Company.

The Company’s Audit Committee is charged with the duties of monitoring and reviewing internal 

controls,  and  directs  monitoring  activities.  Aside  from  reviewing  the  annual  audit  reports  by 

external  auditors,  the  committee  also  reviews  the  effectiveness  of  internal  control  system  and 

risk management mechanism by reviewing the internal special audit and risk investigation on the 

Company’s  core  businesses  conducted  by  the  Company’s  audit  department  on  a  regular  basis. 

During  the  year,  the Audit  Committee  focused  on  the  implementation  of  the  annual  budget,  the 

management of tender purchase and the use of administrative expenses and electromechanical 

repair  and  maintenance  expenses  of  the  Company.  The  audit  department  carried  out  specific 

audit  into  these  issues  and  monitored  rectifications  thereof,  thus  ensuring  the  effective 

functioning of the Company’s management systems.

55

During the Period, the directors of the Company carried out a review on the effectiveness of the 

Company’s  internal  control  system,  covering  all  material  aspects  of  internal  control,  including 

financial  control,  operational  control,  compliance  control  and  risk  management  functions. 

The  internal  control  system  of  the  Company  was  deemed  to  be  effective  and  sufficient,  and 

there  were  no  material  breaches  in  the  internal  control  system  that  might  have  an  impact  to 

shareholders’  rights  and  interests.  The  risk  management  of  the  Company  was  deemed  to  be 

effective and controllable.

DISCLOSURE OF INSIDE INFORMATION
The  Company  has  developed  a  disclosure  policy  to  provide  a  general  guide  to  its  directors, 

supervisors,  senior  management  and  relevant  employees  in  handling  confidential  information, 

monitoring  information  disclosure  and  responding  to  enquiries.  Control  procedures  have  been 

implemented  to  ensure  that  unauthorized  access  to  and  use  of  inside  information  are  strictly 

prohibited.

MANAGEMENT FUNCTIONS
The  management  functions  of  the  Board  and  the  management  are  expressly  stipulated  in  the 

Articles of Association of the Company. Pursuant to the Articles of Association of the Company, 

the management of the Company is assigned the functions to be in charge of the production and 

business  operation  of  the  Company,  to  organize  the  execution  of  resolutions  of  the  Board,  to 

procure the implementation of annual business plans and investment programs of the Company, 

to  develop  plans  for  the  establishment  of  internal  management  structure  of  the  Company,  to 

prepare  the  basic  management  systems  of  the  Company,  and  to  formulate  basic  rules  and 

regulations of the Company, etc..

SIGNIFICANT EVENTS OCCURRED AFTER THE END OF 
THE FINANCIAL YEAR
Since the end of the Reporting Period, there has not been any significant event that would have 

a material impact on the Company.

56

ANNUAL REPORTCorporate Governance ReportMr. YU Zhihong
Chairman

Mr. CHEN Ninghui
Executive Director

B o r n   i n   1 9 6 4 ,   i s   a   g r a d u a t e   f r o m   t h e   D e p a r t m e n t   o f 
Electro-mechanic  Engineering,  Zhejiang  University,  and  holds  a 
Master’s Degree in management from the Management Institute of 
Zhejiang University.

Starting  from  1985,  Mr. Yu  Zhihong  worked  at  Xiushui Township  in 
Xiucheng  District  of  Jiaxing  City  as  Deputy  Manager  of  Township 
Industrial  Company  and  Deputy  Head  of  Township,  from  1987 
successively  served  as  Secretary  to  Xiucheng  District  Office, 
Secretary  of  the  Xiucheng  District  Youth  League,  Deputy  Party 
Secretary  and  Party  Secretary  of  Tanghui  Township  in  Xiucheng 
District,  from  1995  working  as  Deputy  Director,  Deputy  Party 
Secretary,  Director  and  then  Party  Secretary  of  Management 
Committee  for  the  Economic  Development  Zone  of  Jiaxing  City, 
from  2005  as  Party  Secretary  of  Haining  City  and  as  Member 
of  Party  Standing  Committee  of  Jiaxing  City,  from  2010  as 
Deputy  Mayor  of  Hangzhou  City,  Party  Secretary  of  Qianjiang 
New  Development  Zone’s  Construction  Committee,  and  then 
Party  Secretary  of  Xiaoshan  District,  Member  of  Party  Standing 
Committee  of  Hangzhou  City,  and  he  became  the  Deputy  Party 
Secretary and then Mayor of Shaoxing City since 2013.

Mr.  Yu  Zhihong  assumed  the  positions  of  Chairman  and  Party 
Secretary  of  Zhejiang  Communications  Investment  Group  Co.,  Ltd. 
since  October  2016,  and  became  Member  of  Zhejiang  Provincial 
Party Committee since June 2017.

Born in 1963, a postgraduate at the Party School of the Communist 
Party  of  China,  graduated  from Arizona  State  University,  the  United 
States  with  a  Master’s  Degree  in  Business  Administration  and  a 
Senior Economist.

Mr. Chen has worked since 1981. He had served at Zhejiang Urban 
and  Rural  Construction  Material  Equipment  Co.,  Ltd.  (formerly 
known  as  the  Material  Equipment  Division  of  the  Department  of 
Development  of  Zhejiang  Province)  as  General  Manager,  Chairman 
and Party Secretary; Zhejiang Communications Investment Industrial 
Development  Corporation  as  Chairman  and  Party  Secretary; 
Zhejiang  Communications  Investment  Group  Co.,  Ltd.  as  Assistant 
General  Manager;  Zhejiang  Communications  Investment  Property 
Group Co., Ltd. as Chairman and Party Secretary, and etc..

Mr.  Chen  is  currently  an  Executive  Director  and  Party  Secretary  of 
the Company.

57

Directors, Supervisors and  Senior Management Profiles 
 
Mr. YUAN Yingjie

Executive Director

Ms. LUO Jianhu

Executive Director

58

Born  in  1976,  is  a  senior  engineer.  He  obtained  a  Bachelor’s 
degree  of  Engineering  in  Highways  and  Urban  Roads  from  Xi’an 
University  of  Highway  Traffics,  and  both  Master  and  doctorate 
degrees  of  Engineering  in  Roads  and  Railways  Engineering  from 
Chang’an University.

S i n c e  2004,  M r.  Yu a n  h a s  w o r k e d  i n  Z h e j i a n g  H i g h w a y 
Management  Bureau  and  Zhejiang  Department  of  Transportation. 
Since  2014,  he  was  deputy  director  of  Construction  Management 
Office  of  Zhejiang  Department  of  Transportation.  From  2017, 
he  was  deputy  director  of  chief  engineer  office  of  Zhejiang 
Communications  Investment  Group  Co.,  Ltd.  From  2018,  he 
was  deputy  general  manager  of  the  expressway  construction 
department,  deputy  general  manager  and  general  manager  of  the 
expressway  management  department  of  Zhejiang  Communications 
Investment Group Co., Ltd.

He is currently an Executive Director, General Manager and Deputy 
Party Committee Secretary of the Company.

Born  in  1971,  graduated  from  Zhejiang  University  with  a  Bachelor’s 
Degree in Law and graduated from the National Accounting Institute 
in 2016 with an EMBA Degree, majoring in Financial Accounting. She 
is a lawyer and Senior Economist.

Since  she  started  her  career  in  August  1994,  Ms.  Luo  had  held 
such  positions  as  the  Board  Secretary  of  Zhejiang  Transportation 
Engineering  Construction  Group  Co.,  Ltd.,  the  Deputy  Director, 
Director  of  the  Legal  Affairs  Department,  the  Deputy  Director, 
Director  of  the  Secretarial  Office  to  the  Board,  Board  Secretary  and 
the  Manager  of  the  Investment  and  Development  Department  of 
Zhejiang Communications Investment Group Co., Ltd.

Ms.  Luo  has  ceased  to  be  an  Executive  Director,  General  Manager 
and  Deputy  Party  Committee  Secretary  of  the  Company  since  19 
May 2021.

ANNUAL REPORTDirectors, Supervisors and  Senior Management Profiles 
 
Mr. JIN Chaoyang
Non-Executive Director

Born in 1970, a senior engineer, is a university graduate from Changsha 
University of Science and Technology in Highway Engineering.

Mr.  Jin  began  work  in  December  1989.  He  served  as  Deputy  General 
Manager  and  Party  Committee  Member  of  Zhejiang  JinLiWen 
Expressway  Co.,  Ltd.;  General  Manager  of  Safety  Supervision  and 
Management  Department  of  Zhejiang  Communications  Investment 
Group  Co.,  Ltd.;  Director,  General  Manager  and  Deputy  Party 
Secretary  of  Hangzhou  City  Expressway  Co.,  Ltd.;  Deputy  Chairman, 
Deputy  General  Manager  and  Deputy  Party  Secretary  of  Zhejiang 
Communications  Investment  Expressway  Operation  Management  Co., 
Ltd..

Mr.  Jin  is  currently  General  Manager  of  Expressway  Management 
Department of Zhejiang Communications Investment Group Co., Ltd..

Mr. DAI Benmeng
Non-Executive Director

Born  in  1965,  graduated  from  the  Party  School  of  the  Zhejiang 
Committee  of  the  Communist  Party  of  China  (浙江省委黨校)  with  a 
Bachelor’s Degree of Economics and Management and is a Senior 
Economist.

He  began  working  in  February  1987  and  has  been  a  Director 
and  the  Deputy  General  Manager  of  Wenzhou  Shipping  Co., 
Ltd.  (溫州海運有限公司),  a  Director  and  the  General  Manager 
of  Zhejiang  Wenzhou  Yongtaiwen  Expressway  Co.,  Ltd.  (浙
江溫州甬台溫高速公路有限公司),  a  Director  and  the  General 
Manager  of  Zhejiang  Jinji  Property  Co.,  Ltd.  (浙江金基置業有限
公司),  the  person  in  charge  of  Zhejiang  Province  North  Zhejiang 
Expressway  Management  Co.,  Ltd.  (浙江浙北高速公路管理有限
公司),  the  Chairman  of  Zhejiang  ShenSuZheWan  Expressway 
C o . ,  L t d .  (浙江申蘇浙皖高速公路有限公司) ,  a n d  t h e  G e n e r a l 
Manager  of  the  Shanghai-Jiaxing-Huzhou-Hangzhou  Branch  of  the 
Communications  Group  (交通集團申嘉湖杭分公司),  the  Manager  of 
Human  Resources  Department  and  the  Minister  of  Organization 
Department  of  Zhejiang  Communications  Investment  Group  Co., 
Ltd..  Mr.  Dai  is  currently  the  Party  Committee  Member  of  the 
Zhejiang Communications Investment Group Co., Ltd..

Mr. Dai has ceased to be a Non-executive Director of the Company 
since 1 July 2021.

59

 
 
 
Mr. FAN Ye

Non-Executive Director

Born in 1982, an economist, graduated from Zhejiang University with a 
Doctorate in Economy.

Since  2010,  Mr.  Fan  has  served  at  the  Investment  Development 
Department  of  Zhejiang  Economy  Construction  Investment  Co.,  Ltd. 
(浙江省經濟建設投資有限公司).  Since  2013,  he  has  served  at  the 
Railway Transportation Department of Zhejiang Economy Construction 
Investment  Co.,  Ltd.,  and  served  as  Assistant  General  Manager, 
General Manager of the New Industry Department of CSR Hangzhou 
Rail  Transit  Co.,  Ltd.  (杭州南車城市軌道交通車輛有限公司).  Since 
2014,  Mr.  Fan  has  served  as  Deputy  General  Manager  of  Zhejiang 
Economy  Construction  Investment  Co.,  Ltd.,  and  since  2018  he  has 
been  the  Deputy  General  Manager  of  Zhejiang  Communications 
Investment Property Group Co., Ltd. (浙江省交投地產集團有限公司).

Mr. Fan is currently the General Manager of the Industrial Investment 
Management  Department  (I)  of  Zhejiang  Communications  Investment 
Group Co., Ltd..

Mr. HUANG Jianzhang

Non-Executive Director

Born  in  1980,  a  senior  economist,  graduated  from  Zhejiang 
University  majoring  in  Business  Management  with  a  Master’s 
Degree in Management.

Mr.  Huang  began  work  in  March  2005.  He  served  as  Deputy 
General  Manager  of  Juhua  Holdings  Co.  Ltd.;  Manager  of  the 
Securities  Department  of  Zhejiang  Juhua  Co.,  Ltd.;  Assistant 
Director  and  Deputy  Director  of  the  Board  Secretary’s  Office 
of  Zhejiang  Expressway  Co.  Ltd.;  Deputy  Manager  (in  charge 
of  the  work)  and  Manager  of  the  Investment  and  Development 
Department of Zhejiang Expressway Co. Ltd..

Mr. Huang is currently the Vice President of Development Research 
Institute and Deputy General Manager of Strategy and Legal Affairs 
Department  of  Zhejiang  Communications  Investment  Group  Co., 
Ltd..

60

ANNUAL REPORTDirectors, Supervisors and  Senior Management Profiles 
 
Mr. PEI Ker-Wei

Independent Non-Executive Director

Born  in  1957,  is  a  full  Professor  of  Accountancy  at  the  School  of 
Accountancy  at  the  W.  P.  Carey  School  of  Business Arizona  State 
University.  Mr.  Pei  received  his  Ph.D.  Degree  in  Accounting  from 
University of North Texas in 1986.

He  served  as  the  Chairman  of  the  Globalization  Committee  of  the 
American  Accounting  Association  in  1997  and  as  the  President  of 
the  Chinese  Accounting  Professors  Association  –  North  America 
from 1993 to 1994.

Mr.  Pei  currently  also  serves  as  an  External  Director  of  China 
Merchant Group, and an Independent Director of Want Want China 
Holdings  (HK  Stock  Code:  00151)  and  Zhong  An  Group  Limited 
(HK Stock Code: 00672).

Ms. LEE Wai Tsang, Rosa

Independent Non-Executive Director

Born  in  1977,  Ms.  Lee  has  over  17  years  of  experience  in  the 
financial  sector.  She  holds  a  Master  of  Science  in  Finance  from 
Boston College and MBA from University of Chicago.

Ms.  Lee  is  a  licensed  person  for  asset  management  under  the 
Securities and Futures Ordinance (“SFO”). Ms. Lee is a Director of 
Grand  Investment  (Bullion)  Limited  and  Tianjin  Yishang  Friendship 
Holdings  Company  Ltd.  Ms.  Lee  is  a  Chief  Investment  Officer  of 
Grand Finance Group Company Ltd.

Ms.  Lee  was  an  Executive  Director  of  Grand  Investment 
International  Ltd  (stock  code:  1160)  from  2005  to  2018  and  was 
appointed as its Chairman from 2013 to 2017. Ms. Lee also served 
as  a  Director  of  Grand  Finance  Group  Company  Ltd  from  2005  to 
2019.

61

 
 
Mr. CHEN Bin

Independent Non-Executive Director

Born  in  1967,  graduated  from  University  of  South  China  in 
Computer Science. He also holds a second Bachelor’s Degree from 
Chongqing University in Management Engineering.

Mr.  Chen  worked  at  Tianshi  Network  Company  of  TCL  Group  as 
Deputy  General  Manager  from  1998  to  2005,  at  Webex  Group  in 
the  USA  as  General  Manager  of  China  Investment  from  2005  to 
2006,  and  at  Cybernaut  China  Investment  Fund  as  Senior  Partner 
from  2006  to  2008.  Mr.  Chen  has  become  Chief  Executive  and 
Founding  Partner  of  Zhejiang  Cybernaut  Investment  Management 
Co., Ltd. since 2008.

62

ANNUAL REPORTDirectors, Supervisors and  Senior Management Profiles 
 
Mr. ZHENG Ruchun

Supervisor Representing Shareholders

Born  in  1962,  is  a  professorial  senior  accountant.  He  graduated 
from  Jiangxi  College  of  Finance  and  Economics  with  a  Bachelor’s 
degree in Accounting in 1985, and obtained an EMBA degree from 
Arizona State University in 2012.

From  1985  to  1988,  Mr.  Zheng  worked  as  a  teacher  in  the 
accounting  department  of  Jiangxi  College  of  Finance  and 
Economics. From 1988 to 2002, he successively worked as deputy 
section  chief  of  the  finance  department  and  section  chief  of  the 
collection  department  of  Zhejiang  Highway  Management  Bureau. 
From  1998  to  2005,  he  successively  worked  as  director  of  the 
comprehensive accounting department and assistant to the general 
commander  in  the  highway  construction  headquarters  of  Jinliwen 
Expressway. From 2005 to 2019, he successively worked as deputy 
general  manager,  general  manager,  chairman  of  the  board  and 
secretary  of  the  party  committee  of  Zhejiang  Jinliwen  Expressway 
Co., Ltd..

H e  i s  c u r r e n t l y  t h e  d e p u t y  c h i e f  a c c o u n t a n t  o f  Z h e j i a n g 
Communications Investment Group Co., Ltd..

63

 
 
Mr. LU Xinghai

Supervisor Representing Employees

Born  in  1967,  graduated  from  the  Psychology  Department  of 
Hangzhou  University  with  a  Doctoral  Degree  in  the  Management 
Psychology. He is a senior economist.

Mr.  Lu  had  served  as  the  Manager  of  Human  Resources 
Department  of  Hangzhou  Zhongcui  Food  Co.,  Ltd.  and  Deputy 
Manager of Human Resources Department of the Company.

Mr.  Lu  is  currently  the  Director  of  Party  and  Masses  Work 
Department  and  a  Supervisor  Representing  Employees  of  the 
Company.

Mr. ZHAN Huagang

Supervisor Representing Employees

Born in 1961, graduated from Zhejiang University with a Bachelor’s 
Degree  of  Engineering  in  Internal  Combustion  Engine  from  the 
Department of Thermophysical Engineering. He is a professor-level 
Senior Engineer.

Since  Mr.  Zhan  started  his  career  in  1982,  he  had  worked  at 
Zhejiang Province Vehicular Transport Company (浙江省汽車運輸公
司),  and  successively  served  as  an  assistant  engineer  of  Zhejiang 
Office  of  Motor  Vehicles  (浙江省車輛監理所),  an  engineer  of  the 
Machinery and Materials Section of Zhejiang Highway Management 
Bureau  (浙江省公路管理局),  and  the  deputy  section  chief,  section 
chief and a senior engineer of the Equipment and Materials Section 
of  Zhejiang  Road  and  Bridge  Engineering  Office  (浙江省路橋工程
處).  He  also  worked  at  Zhejiang  Provincial  Expressway  Executive 
Commission as a Senior Engineer.

He has been working at Zhejiang Expressway Co., Ltd. as Manager 
of  the  Operations  Management  Department,  Director  of  the 
monitoring  center,  Manager  of  the  Investment  and  Development 
Division,  Manager  of  the  Equipment  Management  Department, 
Manager  of  the  Engineering  Management  Department  and  Head 
of the Maintenance Management Office, and Director of the testing 
center. He is concurrently the Deputy General Manager of Zhejiang 
Expressway  Investment  Development  Co.,  Ltd.  and  Chairman  and 
General Manager of Zhejiang Expressway Advertising Co., Ltd..

Mr.  Zhan  has  ceased  to  serve  as  the  Supervisor  Representing 
Employees of the Company since 1 July 2021.

64

ANNUAL REPORTDirectors, Supervisors and  Senior Management Profiles 
 
Mr. WANG Yubing

Supervisor Representing Employees

Born  in  1969,  graduated  from  Shanghai  University  of  Finance  and 
Economics with a Bachelor’s Degree. He is a senior accountant.

He started his career in 1991 and worked at the audit office of East 
China  Investigation  and  Design  Institute  (華東勘測設計研究院).  He 
had  served  as  Head  of  Finance  Department  of  Hangzhou  KFC  Ltd 
(杭州肯德基有限公司),  Principal Accountant  of  Finance  Department 
of  Zhejiang  Liantong  Leasing  Co.,  Ltd  (浙江聯通租賃有限公司). 
Then  he  had  served  as  Supervisor  in  the  Financial  Planning 
Department, Supervisor in the Internal Audit Department, Assistant 
Manager and Deputy Manager of the Legal Audit Department in the 
Company.

He  is  currently  the  Manager  of Audit  Department  and  a  Supervisor 
Representing Employees of the Company.

65

 
 
Ms. HE Meiyun

Independent Supervisor

Born  in  1964,  is  a  Senior  Economist.  She  graduated  from  the 
Zhejiang University in 1986 and later received an Executive Master 
of  Business Admiration  (EMBA)  in  Cheung  Kong  Graduate  School 
of Business (長江商學院).

Ms. He had served as the Secretary of Youth League Committee at 
the  Hangzhou  Business  School  (杭州商業學校)  and  as  a  Secretary 
to  the  Board,  Deputy  General  Manager,  General  Manager  and 
Vice  Chairman  at  Baida  Group  Co.,  Ltd.  (百大集團股份有限公司), 
a  company  listed  on  the  Shanghai  Stock  Exchange  (stock  code: 
600865).  Ms.  He  also  served  as  a  General  Manager  of  Ping  An 
Securities  Company  Limited,  Zhejiang  Branch  (平安證券浙江分
公司),  Executive  Deputy  Director  of  the  Professional  Secretarial 
Committee  to  the  board  of  directors  of  Zhejiang  Provincial  Listed 
Company  Association  (浙江省上市公司協會),  Deputy  Secretary 
General  of  Hangzhou  Joint  Stock  Promotion  Association  (杭州股
份制促進會),  an  Independent  Director  of  Lanzhou  Minbai  Co.,  Ltd. 
(蘭州民百股份有限公司),  and  an  Independent  Director  of  Xilinmen 
Co.,  Ltd.  (喜臨門股份有限公司).  Ms.  He  currently  serves  as  Vice 
Chairman  of  Zhejiang  Shiqiang  Group  Co.,  Ltd.  (浙江施強集團有
限公司),  a  Member  of  the  Equity  Investment  and  M&A  Committee 
of  Zhejiang  Merchants  Association  (浙商總會股權投資與併購委員
會), a Supervisor of Zhejiang M&A Federation (浙江併購聯合會), an 
Independent Director of Guangyu Co., Ltd. (廣宇股份有限公司), and 
an Independent Director of Gujia Home Furnishing Co., Ltd. (顧家家
居股份有限公司).

Mr. WU Qingwang

Independent Supervisor

Born  in  1965,  a  PRC  Lawyer.  He  graduated  from  Hangzhou 
University  (杭州大學)  with  a  Bachelor  Degree  in  Law  in  1989  and 
later  received  a  Master’s  Degree  and  a  Doctoral  Degree  in  Civil 
and  Commercial  Law  in  Southwest  University  of  Political  Science 
and Law (西南政法大學) in 1995 and 2004, respectively

Mr.  Wu  had  worked  in  Chun’an  Justice  Bureau  (淳安司法局)  since 
1989  and  in  Zhejiang  Securities  Co.,  Ltd.  (浙江證券有限公司)  from 
1995  to  1996.  Mr.  Wu  has  been  working  in  Zhejiang  Xinyun  Law 
Firm  (浙江星韻律師事務所)  and  is  currently  a  Partner,  specializing 
in civil and commercial litigation, arbitration and project negotiation. 
Mr.  Wu  is  on  the  Panel  of  Arbitrators  in  China  International 
Economic  and  Trade  Arbitration  Commission  and  Shanghai 
International  Economic  and  Trade Arbitration  Commission.  Mr.  Wu 
also  serves  as  an  Independent  Director  of  Hangzhou  CNCR 
Information Technology Co., Ltd.(Stock Code: 300250).

66

ANNUAL REPORTDirectors, Supervisors and  Senior Management Profiles 
 
Other Members of Senior Management

Mr. Tony H. ZHENG

Mr. LI Wei

Born  in  1969,  Mr.  Zheng  graduated  from  University  of  California  at 
Berkeley with a BS Degree in Civil Engineering in 1995.

Mr.  Zheng  joined  the  Company  in  June  1997,  and  had  served  as 
Deputy  Director  of  the  Secretarial  Office  to  the  Board,  Assistant 
Company  Secretary,  Director  of  the  Secretarial  Office  to  the  Board 
and Director of Hong Kong Representative Office of the Company.

Mr.  Zheng  is  currently  the  Deputy  General  Manager  and  Company 
Secretary of the Company. He also serves as a Director of Taiping 
Science  and Technology  Insurance  Co.,  and  Zhejiang  International 
Hong Kong.

Born  in  1969,  graduated  from  Lanzhou  Jiaotong  University  with 
a  Bachelor ’s  Degree  in  engineering.  Mr.  Li  studied  logistics 
management at Dresden University of Technology in Germany from 
2004 to 2005. He is a senior engineer.

Mr.  Li  started  his  career  in  July  1991,  and  served  as  Deputy 
Director  of  Jinhua  Administrative  Branch,  Office  Director  and  Vice 
Chairman  of  Labor  Union  of  Zhejiang  JinLiWen  Expressway  Co., 
Ltd. He also worked as Deputy General Manager and a Member of 
the Party Committee in Zhejiang ShenSuZheWan Expressway Co., 
Ltd.,  and  Deputy  General  Manager  of  Zhejiang  ShenJiaHuHang 
Expressway  Co.,  Ltd.,  Zhejiang  Expressway  Logistics  Co.,  Ltd., 
Zhejiang  Ningbo  YongTaiWen  Expressway  Co.,  Ltd.,  Zhejiang 
Taizhou  YongTaiWen  Expressway  Co.,  Ltd.,  Zhejiang  Zhoushan 
Bay  Bridge  Co.,  Ltd.  and  Zhejiang  Zhoushan  Northbound 
Expressway  Co.,  Ltd.,  and  served  as  Deputy  General  Manager 
and  a  Member  of  the  Party  Committee  in  Zhejiang  JinLiWen 
Expressway Co., Ltd.

Mr.  Li  is  currently  the  Deputy  General  Manager  and  a  Party 
Committee Member of the Company.

67

 
 
Ms. ZHANG Xiuhua

Mr. WANG Bingjiong

Born  in  1969,  Ms.  Zhang  is  a  Senior  Economist,  and  the  Deputy 
General  Manager  of  the  Company.  Ms.  Zhang  graduated  from 
Chongqing  Jiaotong  University  majoring  in  transportation 
management  with  a  bachelor’s  degree  in  science,  and  obtained 
a  master ’s  degree  in  business  administration  from  Zhejiang 
University in 2006.

From  July  1991  to  February  1997,  she  worked  in  the  Operation 
Division  of  the  Zhejiang  Provincial  Expressway  Executive 
Commission.  She  has  worked  in  the  Company  since  March  1997, 
and served as Assistant Manager, Deputy Manager, Manager of the 
Operation Department and Assistant to General Manager.

Ms.  Zhang  is  currently  the  Deputy  General  Manager  and  a  Party 
Committee Member of the Company.

Born  in  1967,  graduated  from  the  Party  School  of  the  Communist 
Party of China majoring in business administration. He has a title of 
Engineer.

Mr.  Wang  has  worked  since  1989.  He  had  served  as  Deputy 
General  Manager  at  the  Expressway Administration  Department  of 
Zhejiang Communications Investment Group Co., Ltd.

Mr.  Wang  is  currently  the  Deputy  General  Manager  and  a  Party 
Committee Member of the Company.

68

ANNUAL REPORTDirectors, Supervisors and  Senior Management Profiles 
 
Mr. WU Xiangyang

Ms. RUAN Liya

Chief Financial Officer

Born  in  1972,  a  professor-level  senior  engineer,  having  a  Master 
Degree  in  engineering  from  Chang’an  University  and  a  Bachelor 
Degree  in  engineering  from  Harbin  University  of  Civil  Engineering 
and Architecture.

Mr.  Wu  started  his  career  in  1996,  and  served  as  Assistant 
Manager  of  the  Project  Maintenance  Department  and  Assistant 
General Manager of the Traffic Operation Management Department 
of  Zhejiang  Communications  Investment  Group  Co.,  Ltd., 
Deputy  Chief  Commissioner  of  Hangzhou  Regional  Construction 
C o m m i s s i o n ,  H a n g z h o u - S h a o x i n g  S e c t i o n a l  C o n s t r u c t i o n 
Commission for West Parallel Expressway of Hangzhou Ring Road, 
Lin’an-Jiande  Sectional  Construction  Commission  of  Lin’an-Jinhua 
E x p r e s s w a y   a n d   C o n s t r u c t i o n   C o m m i s s i o n   o f   Z h e j i a n g 
Jiande-Jinhua  Expressway.  He  also  worked  as  Deputy  General 
Manager  and  a  Member  of  the  Party  Committee  in  Hangzhou  City 
Expressway  Co.,  Ltd.,  and  Deputy  General  Manager  in  Zhejiang 
LinJin  Expressway  Co.,  Ltd.  and  Zhejiang  HangXuan  Expressway 
Co., Ltd..

Mr.  Wu  is  currently  the  Deputy  General  Manager  and  Party 
Committee Member of the Company.

Born  in  1983,  an  economist,  graduated  from  Zhejiang  University 
with a Master Degree in Science.

Ms.  Ruan  started  her  career  in  2007,  and  served  as  Investment 
Director  of  Zhejiang  Jinji  Real  Estate  Co.,  Ltd.  She  also  worked  in 
Zhejiang  Communications  Investment  Group  Co.,  Ltd.  as  Director 
and Assistant Manager of Investment Development Department, as 
well as Assistant General Manager and Deputy General Manager of 
Strategic Development and Legal Affairs Department.

Ms.  Ruan  is  currently  the  Chief  Financial  Officer  and  Party 
Committee Member of the Company.

69

 
 
Mr. MA Ting

Chairman of Labor Union

Born  in  1982,  graduated  from  the  Electronic  Information  School 
of  Zhejiang  Sci-Tech  University  with  a  Bachelor  Degree  of 
Engineering in Electronic Information Engineering.

Mr.  Ma  started  his  career  in  August  2005.  He  served  as  the 
deputy  office  director  of  the  Supervision  and  Executive  Center 
at  Hangjinqu  Branch,  the  assistant  to  the  Office  Director  and  the 
deputy  director  of  the  Party  Committee  Affairs  Department  (News 
Center) of Zhejiang Communications Investment Group Co., Ltd.

Mr.  Ma  is  currently  a  Party  Committee  Member,  Secretary  of  the 
Disciplinary  Inspection  Commission  and  Chairman  of  the  Labor 
Union of the Company.

Mr. XU Xiaoyan 

Chairman of Labor Union

Born  in  1974,  a  senior  engineer,  graduated  from  Wuhan  University 
of Technology.

Mr.  Xu  started  his  career  in  1997,  and  served  as  Deputy  Manager 
and  Chief  Engineer  of  the  Eighth  Contract  Sectional  Project  of 
Hubei  Xiangyang-Shiyan  Expressway  constructed  by  Zhejiang 
Communications  Investment  Group  Co.,  Ltd..  He  also  served 
as  Chief  Economist,  Office  Director,  Board  Secretary,  Deputy 
Secretary  of  the  Party  Committee  and  Secretary  of  the  Discipline 
Inspection  Commission  of  Zhejiang  Jiaogong  Road  &  Bridge 
Construction  Co.,  Ltd.,  as  well  as  Deputy  Secretary  of  the 
Discipline  Inspection  Commission,  Vice  Chairman  of  Labor  Union, 
Director  of  Discipline  Inspection  and  Supervision  Department, 
Director  of  the  Party  Committee  Affairs  Department  and  HR 
Manager  of  Zhejiang  Jiaogong  Group  Co.,  Ltd..  He  worked  in 
Zhejiang  JinLiWen  Expressway  Co.,  Ltd.  as  Deputy  Secretary 
of  the  Party  Committee,  Secretary  of  the  Discipline  Inspection 
Commission and Chairman of Labor Union.

Mr.  Xu  has  ceased  to  be  a  Party  Committee  Member,  Secretary  of 
the Disciplinary Inspection Commission and Chairman of the Labor 
Union of the Company since September 2021.

70

ANNUAL REPORTDirectors, Supervisors and  Senior Management Profiles 
 
The  Directors  of  the  Company  hereby  present  their  report  and  the  audited  financial  statements 
of the Group for the year ended December 31, 2021.

PRINCIPAL ACTIVITIES
The  principal  activities  of  the  Group  comprise  the  operation,  management  of  high  grade  roads, 
as well as provision of security broking service and proprietary securities trading.

BUSINESS REVIEW
A  review  of  the  business  of  the  Group  and  analysis  of  the  Group’s  performance  using  key 
performance  indicators  is  provided  in  the  section  headed  “Management  Discussion  and 
Analysis” of this annual report.

In addition, discussions on the Group’s environmental policies and performance and an account 
of the Group’s key relationships with its employees, customers, suppliers and others that have a 
significant impact on the Group and on which the Group’s success depends are provided in the 
Company’s 2021 Environmental and Social Responsibility Report.

SEGMENT INFORMATION
During  the  Period,  the  entire  revenue  and  segment  profit  of  the  Group  were  derived  from  the 
People’s Republic of China (“PRC”). Accordingly, no further analysis of the revenue and segment 
profit by geographical area is presented. An analysis of the Group’s revenue and segment profit 
by principal activities for the year ended December 31, 2021 is set out in note 8 to the financial 
statements.

RESULTS AND DIVIDENDS
The  Group’s  profit  for  the  year  ended  December  31,  2021  and  the  state  of  financial  position  at 
that date are set out in the financial statements on pages 102 to 277.

The  Directors  have  recommended  the  payment  of  a  dividend  of  Rmb0.375  (approximately 
HK$0.459) per share in the year of 2021. The final dividend is subject to shareholders’ approval 
at  the  2021  annual  general  meeting  of  the  Company  and  is  expected  to  be  paid  on  or  around 
June  30,  2022.  This  recommendation  has  been  incorporated  in  the  financial  statements  as 
an  allocation  of  retained  earnings  within  the  capital  and  reserves  section  in  the  consolidated 
statement  of  financial  position.  The  dividend  payout  ratio  reached  34.2%  during  the  Period. 
Further details of the dividends are set out in note 17 to the financial statements.

71

Report of the DirectorsFIVE YEAR SUMMARY FINANCIAL INFORMATION
The  following  is  a  summary  of  the  published  consolidated  results,  and  of  the  assets,  liabilities 

and non-controlling interests of the Group prepared on the basis set out in the notes below.

Results

2021
Rmb’000

Year ended December 31,
2020
Rmb’000
(Restated)

2019
Rmb’000
(Restated)

2018
Rmb’000
(Restated)

2017
Rmb’000
(Restated)

Revenue
Operating costs
Gross profit
Securities investment gains
Other income and gains and 

losses

Administrative expenses
Other expenses and impairment 

losses

Share of profit of associates
Share of profit of a joint venture
Finance costs
Profit before tax
Income tax expense
Profit for the year
Profit for the year attributable to 

16,262,601
(9,521,482)
6,741,119
1,835,563

12,451,534
(8,038,467)
4,413,067
1,611,873

12,617,094
(7,378,876)
5,238,218
1,402,684

11,837,093
(6,485,466)
5,351,627
512,449

11,720,781
(6,505,217)
5,215,564
774,885

733,071
(173,447)

425,319
(147,839)

270,298
(143,720)

419,093
(128,363)

157,160
(129,936)

(51,972)
966,075
56,249
(1,942,533)
8,164,125
(1,873,961)
6,290,164

(374,624)
688,029
16,282
(2,098,493)
4,533,614
(1,160,027)
3,373,587

(106,285)
652,824
34,941
(2,050,630)
5,298,330
(1,351,157)
3,947,173

(62,850)
350,578
30,037
(1,810,774)
4,661,797
(1,108,239)
3,553,558

(156,938)
161,502
17,668
(1,557,365)
4,482,540
(1,156,278)
3,326,262

owners of the Company

4,762,431

2,416,395

3,243,392

3,074,140

2,643,346

Profit for the year attributable to 

non-controlling interests

1,527,733

957,192

703,781

479,418

682,916

Earnings per share
Basic (Rmb cents)
Diluted (Rmb cents)

109.65
102.50

55.64
55.19

74.68
72.21

70.78
66.67

60.86
58.97

72

ANNUAL REPORTReport of the Directors 
 
 
 
 
 
 
 
 
 
 
 
 
Assets and liabilities

Total assets
Total liabilities
Net Assets

Notes:

As at December 31,

2021
Rmb’000

2020
Rmb’000
(Restated)

2019
Rmb’000
(Restated)

2018
Rmb’000
(Restated)

2017
Rmb’000
(Restated)

176,296,682
131,873,657
44,423,025

135,446,697
98,500,704
36,945,993

110,637,256
82,442,275
28,194,981

100,147,241
70,543,447
29,603,794

95,470,731
67,927,994
27,542,737

1. 

The  consolidated  results  of  the  Group  for  the  four  years  ended  December  31,  2020  have  been  abstracted  from 

the  Company’s  annual  report  on  March  23,  2021,  while  those  for  the  year  ended  December  31,  2021  were 

prepared  based  on  the  consolidated  statement  of  profit  or  loss  and  other  comprehensive  income  as  set  out  on 

page 102 of the financial report.

2. 

The  2021  basic  earnings  per  share  is  based  on  the  profit  attributable  to  owners  of  the  Company  for  the  year 

ended  December  31,  2021  of  Rmb4,762,431,000  (2020  restated:  Rmb2,416,395,000)  and  the  4,343,114,500 

(2020: 4,343,114,500) ordinary shares in issue during the year.

The  2021  diluted  earnings  per  share  is  based  on  the  profit  for  the  purpose  of  diluted  earnings  per  share 

attributable  to  owners  of  the  Company  for  the  year  ended  December  31,  2021  of  Rmb4,702,924,000  (2020 

restated:  Rmb2,441,676,000)  and  the  4,588,176,000  (2020:  4,424,084,000)  weighted  average  number  of 

ordinary shares for the purpose of diluted earnings per share during the year.

MAJOR CUSTOMERS AND SUPPLIERS
In  the  year  under  review,  the  five  largest  customers  and  suppliers  of  the  Group  accounted  for 

less than 30% of the total turnover and purchases, respectively.

None of the directors of the Company or any of their associates or any shareholders (which, to 

the best knowledge of the directors, own more than 5% of the Company’s issued share capital) 

had any beneficial interest in the Group’s five largest customers.

DONATION
During the year, the total amount of donation made by the group is Rmb8,846,000 for charitable 

or other purposes.

73

 
 
 
 
 
 
 
 
 
 
 
 
 
PRO PERTY, PLANT AND EQUIPMENT
Details of movements in property, plant and equipment of the Group during the year are set out 
in note 19 to the financial statements.

CAPITAL COMMITMENTS
Details of the capital commitments of the Group as at December 31, 2021 are set out in note 52 
to the financial statements.

RESERVES
Details  of  movements  in  the  reserves  of  the  Group  during  the  year  are  set  out  in  the 
consolidated statement of changes in equity on page 107 to the financial statements.

DISTRIBUTABLE RESERVES
As at December 31, 2021, before the proposed final dividend, the Company’s reserves available 
for  distribution  by  way  of  cash  or  in  kind,  as  determined  based  on  the  lower  of  the  amount 
determined  under  PRC  accounting  standards  and  the  amount  determined  under  HKGAAP, 
amounted to Rmb7,747,958,000. In addition, in accordance with the Company Law of the PRC, 
the  amount  of  approximately  Rmb3,645,726,000  standing  to  the  credit  of  the  Company’s  share 
premium  account  as  prepared  in  accordance  with  the  PRC  accounting  standards  was  available 
for distribution by way of capitalization issues.

TRUST DEPOSITS
As at December 31, 2021, other than the deposits placed with a non-bank financial institution of 
Rmb2,460,550,000,  the  Group’s  deposits  have  been  placed  with  commercial  banks  in  the  PRC 
and the Group has not encountered any difficulty in the withdrawal of funds.

PURCHASE, REDEMPTION OR SALE OF THE LISTED 
SECURITIES OF THE COMPANY
On  March  26,  2021,  the  Company  has  redeemed  all  of  the  outstanding  Euro365  million  zero 
coupon  convertible  bonds  due  2022  at  the  principal  amount  of  Euro100,000  together  with 
accrued interest.

Save as disclosed above, neither the Company nor any of its subsidiaries purchased, redeemed 
or sold any of the Company’s listed securities during the year.

74

ANNUAL REPORTReport of the DirectorsDIRECTORS
The Directors of the Company during the year and as at the date of this report are:

CHAIRMAN
Mr. YU Zhihong

EXECUTIVE DIRECTORS
Mr. CHEN Ninghui
Mr. YUAN Yingjie (Appointed as General Manager on May 19, 2021)
Ms. LUO Jianhu (Resigned on May 19, 2021)

NON-EXECUTIVE DIRECTORS
Mr. JIN Chaoyang (Appointed on July 1, 2021)
Mr. DAI Benmeng (Resigned on July 1, 2021)
Mr. FAN Ye
Mr. HUANG Jianzhang (Appointed on July 1, 2021)

INDEPENDENT NON-EXECUTIVE DIRECTORS
Mr. PEI Ker-Wei
Ms. LEE Wai Tsang, Rosa
Mr. CHEN Bin

DIRECTORS’ AND SENIOR MANAGEMENT’S 
BIOGRAPHIES
Biographical  details  of  the  Directors  of  the  Company  and  the  senior  management  of  the  Group 
are set out on pages 57 to 70 in the Company’s annual report.

75

DIRECTORS’ SERVICE CONTRACTS
Each  of  the  Director  of  the  Company  has  entered  into  a  service  agreement  with  the  Company, 
which effect from July 1, 2021 to June 30, 2024.

Save  as  disclosed  above,  none  of  the  Directors  and  Supervisors  has  entered  into  any  service 
contract  with  the  Company  which  is  not  terminable  by  the  Company  within  one  year  without 
payment of compensation, other than statutory compensation.

DIRECTORS’ AND SUPERVISORS’ INTERESTS IN 
CONTRACTS
As at December 31, 2021 or during the year, none of the Directors or Supervisors had a material 

interest, either directly or indirectly, in any contract of significance to the business of the Group 

to which the Company, its holding company, or any of its subsidiaries or fellow subsidiaries was 

a party.

DIRECTORS, SUPERVISORS AND CHIEF EXECUTIVE’S 
RIGHTS TO SUBSCRIBE FOR SHARES OR DEBENTURES
At  no  time  during  the  year  were  there  rights  to  acquire  benefits  by  means  of  the  acquisition  of 

shares in or debentures of the Company granted to any Director, Supervisor and chief executive 

or their respective spouse or minor children, or were any such rights exercised by them; or was 

the Company, its holding company, or any of its subsidiaries or fellow subsidiaries a party to any 

arrangement to enable any such persons to acquire such rights in any other body corporate.

SHARE CAPITAL
There were no movements in the Company’s issued share capital during the year.

PRE-EMPTIVE RIGHTS
There is no provision for pre-emptive rights in the Company’s Articles of Association or the laws 

of the PRC which would require the Company to offer new shares on a pro rata basis to existing 

shareholders.

76

ANNUAL REPORTReport of the DirectorsDIRECTORS’ AND CONTROLLING SHAREHOLDERS’ 
INTERESTS IN COMPETING BUSINESS
Save  for  their  respective  interests  in  the  Group,  none  of  the  directors  and  controlling 

shareholders  of  the  Company  was  interested  in  any  business  which  competes  or  is  likely  to 

complete with the businesses of the Group for the Period.

CONTRACT OF SIGNIFICANCE WITH CONTROLLING 
SHAREHOLDERS
Save as disclosed in this annual report, there is no contract of significance entered into between 

the  Company,  or  one  of  its  subsidiary  companies,  and  a  controlling  shareholder  or  any  of  its 

subsidiaries.

TAXATION AND TAX RELIEF
According  to  a  Notice  issued  jointly  by  PRC  Ministry  of  Finance  and  State  Administration  of 

Taxation regarding individual income tax policies (Caishuizi[1994] No.020), the dividend incomes 

received  by  foreign  individuals  from  a  foreign-invested  enterprise  are  exempt  from  individual 

income tax.

As  stipulated  by  a  Notice  issued  by  the  PRC  State Administration  of  Taxation  in  relation  to  the 

withholding  and  payment  of  enterprise  income  tax  by  Chinese  resident  enterprises  for  payment 

of  dividend  to  H  shareholders  Who  are  overseas  non-resident  enterprises  (Guoshuihan  [2008] 

No.897), the Company as a Chinese resident enterprises is required to withhold 10% enterprise 

income  tax  when  it  distributes  dividends  for  the  year  2008  and  thereafter  to  all  non-resident 

enterprise  holders  of  H  shares  of  the  Company  (including  HKSCC  Nominees  Limited,  other 

nominees,  trustees  or  other  entities  and  organizations,  who  will  be  deemed  as  non-resident 

enterprise holders of H shares) whose names appear on the H share register of members of the 

Company on the record date.

Dividends  payable  to  the  Shareholders  who  are  mainland  individual  investors  or  corporate 

investors  investing  in  the  H  Shares  via  the  Shanghai-Hong  Kong  Stock  Connect  or  the 

Shenzhen-  Hong  Kong  Stock  Connect  will  be  paid  in  Rmb  by  China  Securities  Depository  and 

Clearing Corporation Limited Shanghai Branch (“CSDC Shanghai Branch”) or Shenzhen Branch 

(“CSDC Shenzhen Branch”) as entrusted by the Company.

77

According  to  the  requirements  of  the  “Notice  on  Taxation  Policies  Concerning  the 
Shanghai-Hong  Kong  Stock  Connect  Pilot  Program  (Finance  Tax[2014]  No.  81《(關於滬港股
票市場交易互聯互通機制試點有關稅收政策的通知》(財稅[2014]81號 ))  and  “Notice  on  Taxation 
Policies  Concerning  the  Shenzhen-Hong  Kong  Stock  Connect  Pilot  Program  (Finance 
Ta x [2016]  N o .127)及 《關於深港股票市場交易互聯互通機制試點有關稅收政策的通知》 (財稅
[2016]127號)  jointly  published  by  the  Ministry  of  Finance,  State Administration  of  Taxation  and 
China  Securities  Regulatory  Commission,  the  Shanghai-Hong  Kong  Stock  Connect  and  the 

Shenzhen-Hong Kong Stock Connect tax arrangements are as follows: (i) for Chinese Mainland 

individual  investors  who  invest  in  the  H  Shares  via  the  Shanghai-Hong  Kong  Stock  Connect  or 

the  Shenzhen-Hong  Kong  Stock  Connect,  the  Company  will  withhold  individual  income  tax  at 

the rate of 20% in the distribution of final dividend. Individual investors may, by producing valid 

tax  payment  proofs,  apply  to  the  competent  tax  authority  of  China  Securities  Depository  and 

Clearing  Company  Limited  for  tax  credit  relating  to  the  withholding  tax  already  paid  abroad; 

and  (ii)  for  Chinese  Mainland  securities  investment  funds  that  invest  in  the  H  Shares  via  the 

Shanghai-Hong Kong Stock Connect or the Shenzhen-Hong Kong Stock Connect, the Company 

will  withhold  individual  income  tax  in  the  distribution  of  final  dividend  pursuant  to  the  foregoing 

provisions.

For  Chinese  mainland  corporate  investors  that  invest  in  the  H  Shares  via  the  Shanghai-Hong 

Kong Stock Connect or the Shenzhen-Hong Kong Stock Connect, the Company will not withhold 

the income tax in the distribution of final dividend and such investors shall file the tax returns on 

their own.

Under current practice of the Hong Kong Inland Revenue Department, no tax is payable in Hong 

Kong in respect of dividends paid by the Company.

Shareholders  of  the  Company  are  taxed  and/or  enjoy  tax  relief  in  accordance  with  the 

aforementioned regulations.

SUFFICIENCY OF PUBLIC FLOAT
Based  on  the  information  that  is  publicly  available  to  the  Company  and  within  the  knowledge 

of  the  Directors,  as  at  the  latest  practicable  date  prior  to  the  issue  of  this  annual  report,  the 

Company has maintained sufficient amount of public float as required under the Listing Rules.

78

ANNUAL REPORTReport of the DirectorsDIRECTORS’ PERMITTED INDEMNITY PROVISION
The  Company  purchased  appropriate  liability  insurance  coverage  for  the  directors,  supervisors 

and  senior  management  members  of  the  Group  during  the  year  ended  31  December  2021 

against  all  actions,  costs,  charges,  losses,  damages  and  expenses  which  they  or  any  of  them 

may sustain or incur in connection with their duties or the exercise of their powers.

AUDITORS
Deloitte  Touche  Tohmatsu  Certified  Public  Accountants  Hong  Kong,  who  has  served  as  the 

Company’s  Hong  Kong  auditors  since  2005,  will  retire  and  a  resolution  for  their  re-appointment 

as  Hong  Kong  auditors  of  the  Company  will  be  proposed  at  the  forth  coming  Annual  General 

Meeting of the shareholders.

By Order of the Board

YU Zhihong
Chairman

Hangzhou, Zhejiang Province, the PRC

March 24, 2022

79

During  the  Period,  the  Supervisory  Committee  duly  performed  its  supervisory  responsibilities, 

and  safeguarded  the  legitimate  interests  of  the  shareholders  and  the  Company  in  accordance 

with relevant rules and regulations under the Company Law of the PRC, the Company’s Articles 

of Association and the Rules of Procedure of the Supervisory Committee.

Main  tasks  undertaken  by  the  Supervisory  Committee  during  the  Period  were  to  assess  and 

supervise  lawfulness  and  appropriateness  of  the  activities  of  the  Directors,  General  Manager 

and  other  senior  management  of  the  Company  in  their  business  decision-making  and  daily 

management  processes,  through  a  combination  of  activities  including  holding  meetings  of  the 

Supervisory  Committee  and  sitting  in  on  general  meetings  of  shareholders  and  meetings  of 

the  Board.  The  Supervisory  Committee  discussed  and  reviewed  the  financial  statements  to  be 

submitted  by  the  Board  to  the  general  meeting  of  shareholders  after  carefully  examining  the 

operating results and the financial position of the Company.

During  the  Period,  the  Supervisory  Committee  held  a  total  of  two  supervisory  meetings, 

and  attended  six  Board  meetings  and  three  general  meetings,  and  had  no  objection  to  the 

contents  of  the  reports  and  proposals  submitted  by  the  Board  of  the  Company  to  the  general 

meetings  of  shareholders  for  consideration.  The  Supervisory  Committee  considered  that  the 

Company’s operations were in strict compliance with the Company Law, the Company’s Articles 

of  Association  and  the  relevant  national  provisions,  that  all  decision-making  procedures  were 

legitimate,  and  that  the  Company  had  sound  internal  control  functions  and  personnel  and  all 

operating  activities  were  regulated  in  an  orderly  manner.  The  Supervisory  Committee  of  the 

Company  supervised  the  implementation  of  the  resolutions  passed  at  the  general  meetings 

of  shareholders,  and  believed  that  the  Board  of  the  Company  was  able  to  conscientiously 

implement  the  relevant  resolutions  of  general  meetings.  The  management  of  the  Company 

has  earnestly  executed  the  relevant  decisions  and  plans  of  the  Board,  so  that  its  operating 

results achieved a significant increase, the brands of main business operation were adequately 

demonstrated,  the  function  of  the  listing  platform  was  effectively  utilized,  and  the  technological 

and digital capabilities continued to be improved.

The  Supervisory  Committee  has  reviewed  the  financial  statements  of  the  Company  for  2021 

prepared  by  the  Board  for  submission  to  the  general  meeting  of  shareholders,  and  concluded 

that the financial statements accurately reflected the financial position of the Company in 2021, 

and complied with the relevant laws, regulations and the Company’s Articles of Association. The 

Company  maintained  a  relatively  stable  dividend  payout,  providing  satisfactory  returns  to  its 

shareholders.

80

ANNUAL REPORTReport of Supervisory CommitteeDuring the Period, the Supervisory Committee considered that the connected transactions of the 

Company were fair and reasonable without prejudice to the interests of the shareholders and the 

Company.

During  the  Period,  the  members  of  the  Board,  General  Manager  and  other  senior  management 

of the Company complied  with  their fiduciary duties and acted in good  faith and  diligently  while 

performing their responsibilities. There was no incident of abuse of power or infringement of the 

interests of shareholders or employees.

The  Supervisory  Committee  is  satisfied  with  the  performance  across  various  lines  of  business 

achieved by the Board and the management of the Company during the Period.

By the order of the Supervisory Committee

ZHENG Ruchun
Chairman of the Supervisory Committee

Hangzhou, Zhejiang Province, the PRC

March 24, 2022

81

During  the  year  ended  December  31,  2021,  the  Company  had  the  following  non-exempt 

connected transactions and continuing connected transactions.

CONNECTED TRANSACTIONS

1. 

Joint Venture Agreement

On June 21, 2021, Zheshang Development and Zhejiang Zheqi entered into a joint venture 
agreement  (the  “Joint  Venture  Agreement”),  pursuant  to  which  Zheshang  Development 
and  Zhejiang  Zheqi  jointly  established  a  joint  venture  principally  engaged  in  spot  and 

futures  trading  of  commodities  and  supply  chain  management  with  a  registered  capital  of 

Rmb150,000,000  which  may  increase  to  Rmb300,000,000,  depending  on  the  operating 

business  conditions  after  the  commencement  of  the  joint  venture.  Please  refer  to  the 

announcement of the Company dated June 21, 2021 for details.

Communications  Group,  which  holds  approximately  67%  of  the  issued  share  capital  of 

the  Company,  is  a  controlling  shareholder  of  the  Company.  Zheshang  Development  is 

an  associate  of  Communications  Group,  and  therefore  it  is  a  connected  person  of  the 

Company.  Zhejiang  Zheqi  is  a  wholly-owned  subsidiary  of  Zheshang  Futures,  which, 

in  turn,  is  an  indirectly  non-wholly  owned  subsidiary  of  the  Company.  As  a  result,  the 

transactions under the Joint Venture Agreement constituted connected transactions for the 

Company under Chapter 14A of the Listing Rules.

As  the  applicable  percentage  ratios  in  respect  of  the  transactions  contemplated  under 

the  Joint  Venture  Agreement  were  more  than  0.1%  but  less  than  5%,  the  transactions 

contemplated  under  the  Joint  Venture  Agreement  were  subject  to  the  reporting, 

announcement  and  annual  review  requirements  but  exempt  from  the  independent 

Shareholders’ approval requirement under Chapter 14A of the Listing Rules.

82

ANNUAL REPORTConnected Transactions2.  Commodity Spread Swap Agreement

On  July  2,  2021,  Zhejiang  Zheqi  and  Zheshang  Financial  entered  into  a  commodity 
spread swap agreement (the “Commodity Spread Swap Agreement”), pursuant to which 
Zhejiang Zheqi and Zheshang Financial were involved in a commodity spread swap based 

on  the  spreads  between  the  gold  futures  contracts  on  the  Shanghai  Stock  Exchange  and 

the  Au9999  spot  gold  contracts  on  the  Shanghai  Gold  Exchange.  The  maximum  margin 

requirement  under  the  Commodity  Spread  Swap Agreement  is  Rmb380,000,000  payable 

by  Zheshang  Financial  to  Zhejiang  Zheqi.  At  the  conclusion  of  the  Commodity  Spread 

Swap  Agreement,  Zhejiang  Zheqi  will  return  the  margin  payment,  together  with  a  return 

to  Zheshang  Financial.  Please  refer  to  the  announcement  of  the  Company  dated  July  2, 

2021 for details.

Zheshang Financial is a wholly-owned subsidiary of Communications Group, and therefore 

it  is  a  connected  person  of  the  Company.  Zhejiang  Zheqi  is  an  indirectly  non-wholly 

owned  subsidiary  of  the  Company.  As  a  result,  the  transaction  contemplated  under  the 

Commodity Spread Swap Agreement constituted a connected transaction for the Company 

under Chapter 14A of the Listing Rules.

As  the  highest  applicable  percentage  ratios  in  respect  of  the  transaction  contemplated 

under  the  Commodity  Spread  Swap  Agreement  were  more  than  0.1%  but  less  than  5%, 

the  transactions  contemplated  under  the  Commodity  Spread  Swap  Agreement  were 

subject  to  the  reporting,  announcement  and  annual  review  requirements  but  exempt  from 

the  independent  Shareholders’  approval  requirement  under  Chapter  14A  of  the  Listing 

Rules.

83

CONTINUING CONNECTED TRANSACTIONS

1.  Deposit Services with Zhejiang Communications Finance

Pursuant  to  the  financial  services  agreement  dated  March  30,  2016  (the  “Financial 
Services Agreement”) entered into between the Company and Zhejiang Communications 
Finance,  Zhejiang  Communications  Finance  agreed  to  provide  the  Company  and  its 

subsidiaries  with  a  range  of  financial  services  including  certain  deposit  services  (the 
“Deposit  Services”)  for  a  term  of  three  years  from  the  date  of  the  Financial  Services 
Agreement  subject  to  the  terms  and  conditions  provided  therein.  Please  refer  to  the 

announcement of the Company dated March 30, 2016 for details.

Since  the  Financial  Services  Agreement  expired  on  March  30,  2019,  on  March  18, 
2019,  the  Company  entered  to  the  new  financial  services  agreement  (the  “New 
Financial  Services  Agreement”),  together  with  a  supplemental  agreement,  among 
others,  to  increase  the  annual  caps  for  the  Deposit  Services  from  Rmb1,400,000,000  to 
Rmb2,500,000,000  (including  any  interest  accrued  thereon)  (the  “Financial  Services 
Supplemental  Agreement”),  with  Zhejiang  Communications  Finance  for  renewal  of  the 
terms  of  the  Financial  Services Agreement  with  effect  from  March  30,  2019  for  a  term  of 

three  years.  Save  as  otherwise  provided,  all  terms  and  conditions  under  the  Financial 

Services Agreement remained substantially unchanged. Please refer to the announcement 

of the Company dated March 18, 2019 for details.

As  the  issued  share  capital  of  Zhejiang  Communications  Finance  is  owned  as  to 

35%,  40%  and  25%  by  the  Company,  Communications  Group  and  Ningbo  Yongtaiwen 

Co,  respectively  as  at  the  date  of  the  New  Financial  Services  Agreement,  Zhejiang 

Communications  Finance  is  a  connected  person  of  the  Company.  As  such,  under  the 

Chapter  14A  of  the  Listing  Rules,  the  provision  of  Deposit  Services  under  the  New 

Financial  Services  Agreement  constituted  a  continuing  connected  transaction  for  the 

Company.

84

ANNUAL REPORTConnected TransactionsPursuant  to  the  Financial  Services  Agreement,  the  Deposit  Services  to  be  provided  by 

Zhejiang Communications Finance to the Company and its subsidiaries include the current 

deposit,  time  deposit,  call  deposit  and  agreement  deposit  services. The  Deposit  Services 

will  be  provided  under  the  New  Financial  Services  Agreement  on  a  non-exclusive  basis 

and  the  Company  and  its  subsidiaries  are  entitled  to  determine  whether  to  accept  the 

Deposit  Services  provided  by  Zhejiang  Communications  Finance  or  decide  to  accept 

deposit services provided by other financial institutions. The Company and its subsidiaries 

are  not  obliged  to  accept  any  Deposit  Services  provided  by  Zhejiang  Communications 

Finance.

The  interest  rate  to  be  paid  by  Zhejiang  Communications  Finance  for  the  deposits  of  the 

Company and its subsidiaries with Zhejiang Communications Finance shall be determined 

based  on  the  prevailing  deposit  interest  rate  promulgated  by  the  People’s  Bank  of  China 

for  the  same  period  and  should  not  be  lower  than  the  deposit  interest  rates  offered  by 

major  commercial  banks  in  the  PRC  for  comparable  deposits  of  comparable  periods. The 

maximum amount of the daily deposit balance (including any interest accrued thereon) for 

the  deposits  of  the  Company  and  its  subsidiaries  with  Zhejiang  Communications  Finance 

shall  not  be  more  than  Rmb1,400,000,000  under  the  New  Financial  Services Agreement 

and  Rmb2,500,000,000  under  the  Financial  Services  Supplemental Agreement  during  the 

term of the New Financial Services Agreement.

As the applicable percentage ratios (other than the profits ratio) in respect of the Deposit 

Services  under  the  New  Financial  Services Agreement  are  more  than  0.1%  but  less  than 

5%,  the  Deposit  Services  constituted  continuing  connected  transactions  of  the  Company 

under Chapter 14A of the Listing Rules subject to the reporting, announcement and annual 

review  requirements  under  Chapter  14A  of  the  Listing  Rules,  but  were  exempt  from  the 

independent Shareholders’ approval requirement under Chapter 14A of the Listing Rules.

As the relevant applicable percentage ratios (other than the profits ratio) in respect of the 

revised  annual  caps  for  the  Deposit  Services  under  the  Financial  Services  Supplemental 

Agreement  was  more  than  5%  but  less  than  25%,  such  transactions  were  subject  to 

the  reporting,  announcement,  annual  review  and  independent  Shareholders’  approval 

requirements  under  Chapter  14A  of  the  Listing  Rules.  Pursuant  to  Rule  14A.54  of  the 

Listing  Rules,  the  Company  should  re-comply  with  the  applicable  requirements  under 

Chapter 14A of the Listing Rules before the existing annual caps for the Deposit Services 

under the New Financial Services Agreement are exceeded.

85

During  the  Period,  the  maximum  amount  of  the  daily  deposit  balance  (including  any 

interest  accrued  thereon)  for  the  deposits  of  the  Company  and  its  subsidiaries  with 

Zhejiang Communications Finance under the New Financial Services Agreement together 

with the Financial Services Supplemental Agreement amounted to Rmb2,483,914,000.

2.  Construction Service Agreements

On  June  21,  2019,  De’an  Construction  as  employer  entered  into  a  construction  service 
agreement  and  its  supplemental  agreement  (the  “Construction  Service  Agreements”) 
with  Zhejiang  Hongtu  as  contractor  in  relation  to  the  provision  of  construction  services 

for  the  Public-Private-Partnership  (PPP)  projects  in  respect  of  the  construction  of 

bridges,  tunnels  and  public  service  station  from  Deqing  County  to  the  juncture  between 

Deqing  County  and  Anji  County  for  a  total  consideration  of  Rmb809,315,640  (the 
“Total  Consideration”).  The  term  of  the  Construction  Service  Agreements,  which 
is  the  construction  period,  is  36  months.  Please  refer  to  the  announcement  and  the 

supplemental  announcement  of  the  Company  dated  June  21,  2019  and  July  2,  2019 

respectively for details.

On  March  27,  2020,  the  Company  entered  into  a  supplemental  agreement  to  revise  the 

annual  caps  for  the  continuing  connected  transactions  under  the  Construction  Service 

Agreements  to  the  amount  of  Rmb380,000,000  for  the  two  years  ending  31  December 
2021  (the  “Revised  Annual  Caps”)  whilst  the  Total  Consideration  remained  unchanged. 
In determining the Revised Annual Caps, the Company has considered the actual amount 

paid,  the  actual  construction  progress,  the  estimated  costs  and  the  expected  completion 

of  PPP  Project  construction  in  2021.  Please  refer  to  the  announcement  dated  March  27, 

2020 for details.

86

ANNUAL REPORTConnected TransactionsZhejiang  Hongtu  is  an  indirectly  non-wholly  owned  subsidiary  of  Communications  Group. 

As  such,  Zhejiang  Hongtu  is  a  connected  person  of  the  Company  and,  as  a  result,  the 

transactions under the Construction Service Agreements constituted continuing connected 

transactions for the Company under Chapter 14A of the Listing Rules.

As  the  applicable  percentage  ratios  (other  than  the  profits  ratio)  in  respect  of  the 

transactions  contemplated  under  the  Construction  Service  Agreement  was  more  than 

0.1% but less than 5%, the Construction Service Agreement was subject to the reporting, 

announcement  and  annual  review  requirements  but  exempt  from  the  independent 

Shareholders’ approval requirement under Chapter 14A of the Listing Rules.

During  the  Period,  the  total  service  fees  paid  by  the  De’an  Construction  to  Zhejiang 

Hongtu in respect of the construction services under the Construction Service Agreement 

amounted to Rmb68,348,000.

87

3.  Road Maintenance Agreements

i. 

2019 Daily Road Maintenance Agreements

a. 

Daily Road Maintenance (First Contract Section) Agreements 2019

On December 27, 2019, various management offices of the Company, Jiaxing 
Co  (formerly  known  as  Zhejiang  Jiaxing  Expressway  Co.,  Ltd*  (浙江嘉興高速
公路有限責任公司),  which  has  been  merged  and  absorbed  by  LongLiLiLong 
Co  and  was  a  branch  of  LongLiLiLong  Co  as  at  the  Latest  Practicable  Date), 
Hanghui  Co,  and  Huihang  Co  separately  entered  into  a  series  of  agreements 
with  Maintenance  Co  (the  “Daily  Road  Maintenance  (First  Contract 
Section)  Agreements  2019”),  pursuant  to  which  Maintenance  Co  agreed  to 
provide  day-to-day  maintenance  services  including  road  patrol,  inspection 
of  the  maintenance  status  of  pavements  and  roadbeds,  pavement  diseases 
treatment,  greening  and  sloping,  maintenance  of  safety  facilities,  and  bridge 
maintenance  (“Maintenance  Services”)  to  four  expressways  operated  by  the 
Group,  namely  the  Shanghai-Hangzhou-Ningbo  Expressway,  the  Shangsan 
Expressway, the Hanghui Expressway and the Huihang Expressway. The term 
of  the  Daily  Road  Maintenance  (First  Contract  Section)  Agreements  2019  is 
three  years  from  January  1,  2020  to  December  31,  2022. The  annual  service 
fees payable by the Group to Maintenance Co shall be Rmb68,111,019, which 
amount  to  Rmb204,333,057  in  total  from  2020  to  2022.  Please  refer  to  the 
announcement of the Company dated December 27, 2019 for details.

b. 

Daily Road Maintenance (Second Contract Section) Agreements 2019

On  December  27,  2019,  each  of  Shenjiahuhang  Co  and  Zhoushan  Co 
entered  into  an  agreement  with  Jiaogong  Maintenance  (the  “Daily  Road 
Maintenance  (Second  Contract  Section)  Agreements  2019”),  pursuant  to 
which  Jiaogong  Maintenance  agreed  to  provide  Maintenance  Services  to  two 
expressways  operated  by  the  Group,  namely  the  Shenjiahuhang  Expressway 
and  the  Zhoushan  Bay  Bridge.  The  term  of  the  Daily  Road  Maintenance 
(Second  Contract  Section)  Agreements  is  three  years  from  January  1,  2020 
to  December  31,  2022.  The  annual  service  fees  payable  by  the  Group  to 
Jiaogong  Maintenance  in  2020  shall  be  Rmb27,158,624.  The  annual  service 
fees  payable  by  the  Group  to  Jiaogong  Maintenance  in  2021  and  2022  shall 
be  Rmb26,334,280  respectively.  Please  refer  to  the  announcement  of  the 
Company dated December 27, 2019 for details.

88

ANNUAL REPORTConnected Transactionsc. 

Daily Road Maintenance (Third Contract Section) Agreements 2019

On  December  27,  2019,  each  of  Jinhua  Co  and  Xintian  Management 
Office  entered  into  an  agreement  with  Zhejiang  Shunchang  (the  “Daily 
Road  Maintenance  (Third  Contract  Section)  Agreements”),  pursuant 
to  which  Zhejiang  Shunchang  agreed  to  provide  Maintenance  Services  to 

three  expressways  operated  by  the  Group,  namely  Xintian  Section  of  the 

Shangsan  Expressway,  Jinhua  Section  of  the  Ningbo-Jinhua  Expressway 

and  Yiwu  Section  of  the  Yidong  Expressway.  The  term  of  the  Daily  Road 

Maintenance (Third Contract Section) Agreements is three years from January 

1,  2020  to  December  31,  2022.  The  annual  service  fees  payable  by  the 

Group  to  Zhejiang  Shunchang  shall  be  Rmb22,076,202  in  2020,  2021  and 

2022  respectively.  Please  refer  to  the  announcement  of  the  Company  dated 

December 27, 2019 for details.

Each  of  Maintenance  Co,  Jiaogong  Maintenance  and  Zhejiang  Shunchang 

is  an  indirect  subsidiary  of  Communications  Group.  As  such,  each  of 

Maintenance  Co,  Jiaogong  Maintenance  and  Zhejiang  Shunchang  was 

a  connected  person  of  the  Company  and  the  respective  transactions 

contemplated  under  the  Daily  Road  Maintenance  (First  Contract  Section) 

Agreements  2019,  the  Daily  Road  Maintenance  (Second  Contract  Section) 

Agreements  2019  and  the  Daily  Road  Maintenance  (Third  Contract 
Section)  Agreements  2019  (collectively  the  “2019  Daily  Road  Maintenance 
Agreements”) constituted continuing connected transactions for the Company 
under Chapter 14A of the Listing Rules.

The proposed annual cap on the aggregate service fees payable by the Group 

under  the  2019  Daily  Road  Maintenance  Agreements  for  the  financial  years 

ending December 31, 2021 was RMB120,000,000. During the Period, the total 

service  fees  paid  by  the  Group  in  respect  of  the  Maintenance  Services  under 

the 2019 Daily Road Maintenance Agreements amounted to Rmb112,773,000.

89

ii. 

2021 Dedicated Road Maintenance Agreements

a. 

Dedicated Road Maintenance Agreements in April 2021

On  April  30,  2021,  the  Company  and  its  various  subsidiaries  entered  into 
(i)  the  dedicated  road  maintenance  agreements  (the  “Dedicated  Road 
Maintenance  (First  Contract  Section)  Agreements”)  with  Jiaogong 
Maintenance,  pursuant  to  which  Jiaogong  Maintenance  agreed  to  undertake 

dedicated maintenance projects to three expressways operated by the Group, 

namely  the  Jiaxing  and  Ningbo  Section  of  the  Shanghai-Hangzhou-Ningbo 

Expressway,  the  Shenjiahuhang  Expressway  and  the  Zhoushan  Bay 
Bridge;  and  (ii)  the  dedicated  maintenance  agreements  (the  “Dedicated 
Road  Maintenance  (Second  Contract  Section)  Agreements”)  with 
Zhejiang  Shunchang,  pursuant  to  which  Zhejiang  Shunchang  agreed  to 

undertake  dedicated  maintenance  projects  to  five  expressways  operated 

by  the  Group,  namely  the  Hangzhou  and  Shaoxing  Section  of  the 

Shanghai-Hangzhou-Ningbo  Expressway,  the  Shangsan  Expressway,  the 

Jinhua  Section  of  the  Ningbo-Jinhua  Expressway,  the  Hanghui  Expressway 

and  the  Huihang  Expressway,  from  April  30,  2021  to  November  30,  2021. 

The  total  service  fees  payable  by  the  Group  to  Jiaogong  Maintenance  should 

be  Rmb159,675,577  under  the  Dedicated  Road  Maintenance  (First  Contract 

Section)  Agreements;  and  the  total  service  fees  payable  by  the  Group  to 

Zhejiang  Shunchang  should  be  Rmb158,993,744  under  the  Dedicated  Road 

Maintenance (Second Contract Section) Agreements.

Each  of  Jiaogong  Maintenance  and  Zhejiang  Shunchang  is  an  indirect 

subsidiary  of  Communications  Group.  Therefore,  each  of  Jiaogong 

Maintenance  and  Zhejiang  Shunchang  is  a  connected  person  of  the 

Company and as a result, the respective transactions contemplated under the 

Agreements  constitute  continuing  connected  transactions  for  the  Company 

under Chapter 14A of the Listing Rules.

90

ANNUAL REPORTConnected TransactionsThe  proposed  annual  cap  on  the  aggregate  service  fees  of  the  Dedicated 
Road  Maintenance  (First  Contract  Section)  Agreements  and  the  Dedicated 
Road  Maintenance  (Second  Contract  Section)  Agreements  payable 
by  the  Group  for  the  financial  years  ending  December  31,  2021  was 
Rmb319,000,000.  During  the  Period,  the  total  service  fees  paid  by  the  Group 
under  the  Dedicated  Road  Maintenance  (First  Contract  Section)  Agreements 
and the Dedicated Road Maintenance (Second Contract Section) Agreements 
amounted to Rmb301,689,000.

b. 

Dedicated Road Maintenance Agreements in May 2021

On  May  31,  2021,  LongLiLiLong  Co,  a  wholly  owned  subsidiary  of  the 
Company, entered into the following agreements:

(i) 

(ii) 

a  dedicated  maintenance  agreement  with  Zhejiang  Shunchang 
(the  “Dedicated  Maintenance  Agreement  on  Pavements  (Third 
Contract  Section)”),  pursuant  to  which  Zhejiang  Shunchang  agreed 
to  undertake  the  dedicated  maintenance  projects,  namely  pavement 
disease  treatment,  overlay  of  pavement  and  other  preventive  dedicated 
maintenance  projects,  road  marking  improvement  and  other  traffic 
safety  related  projects,  for  LongLiLiLong  Expressway  (Quzhou  Section) 
operated  by  the  LongLiLiLong  Co  from  May  31,  2021  to  November  15, 
2021.  The  total  service  fees  payable  by  LongLiLiLong  Co  to  Zhejiang 
Shunchang  shall  be  Rmb7,128,655.  Please  refer  to  the  announcement 
dated May 31, 2021 for details;

a  dedicated  maintenance  agreement  with  Jiaogong  Maintenance  (the 
“Dedicated  Maintenance  on  Pavements  (Fourth  Contract  Section) 
Agreement”),  pursuant  to  which  Jiaogong  Maintenance  agreed  to 
undertake  the  dedicated  maintenance  projects,  namely  pavement 
disease  treatment,  overlay  of  pavement  and  other  preventive  dedicated 
maintenance projects, road marking improvement and other traffic safety 
related projects, for LongLiLiLong Expressway (Lishui Section) operated 
by the LongLiLiLong Co from May 31, 2021 to November 15, 2021. The 
total service fees payable by LongLiLiLong Co to Jiaogong Maintenance 
shall  be  Rmb50,208,088.  Please  refer  to  the  announcement  dated  May 
31, 2021 for details;

91

(iii)  a  dedicated  maintenance  agreement  with  Zhejiang  Shuangchuang 
(the  “Dedicated  Maintenance  Agreement  on  Roadbeds,  Tunnels 
and  Bridges  (Third  Contract  Section)”)  pursuant  to  which  Zhejiang 
Shunchang  agreed  to  undertake  the  dedicated  maintenance  projects, 

which  include  sloping  maintenance  and  other  roadbed  related  projects; 

repair and reinforcement of diseased bridge, tunnel maintaining roadway 

repair and other bridge and tunnel related projects; signs and markings 

upgrades,  sound  barrier  installation  and  other  environment  protection 

facility  improvements  related  projects,  for  LongLiLiLong  Expressway 

(Quzhou  Section)  operated  by  LongLiLiLong  Co  from  May  31,  2021  to 

December  31,  2021.  The  total  service  fees  payable  by  LongLiLiLong 

Co  to  the  Zhejiang  Shunchang  in  respect  of  the  transactions  under  the 

Dedicated  Maintenance Agreement  on  Roadbeds,  Tunnels  and  Bridges 

(Third  Contract  Section)  amounted  to  Rmb778,840.  Please  refer  to  the 

announcement dated May 31, 2021 for details; and

(iv)  a  dedicated  maintenance  agreement  with  Jiaogong  Maintenance  (the 
“Dedicated  Maintenance  Agreement  on  Roadbeds,  Tunnels  and 
Bridges  (Fourth  Contract  Section)”)  pursuant  to  which  Jiaogong 
Maintenance  agreed  to  undertake  the  dedicated  maintenance  projects, 

which  include  sloping  maintenance  and  other  roadbed  related  projects; 

repair and reinforcement of diseased bridge, tunnel maintaining roadway 

repair and other bridge and tunnel related projects; signs and markings 

upgrades,  sound  barrier  installation  and  other  environment  protection 

facility  improvements  related  projects,  for  LongLiLiLong  Expressway 

(Lishui  Section)  operated  by  LongLiLiLong  Co  from  May  31,  2021  to 

December  31,  2021.  The  total  service  fees  payable  by  LongLiLiLong 

Co  to  Jiaogong  Maintenance  in  respect  of  the  transactions  under  the 

Dedicated  Maintenance  Agreement  on  Roadbeds,  Tunnels  and  Bridge 

(Fourth  Contract  Section)  amounted  to  Rmb13,652,085.  Please  refer  to 

the announcement dated May 31, 2021 for details.

92

ANNUAL REPORTConnected TransactionsEach  of  Jiaogong  Maintenance  and  Zhejiang  Shunchang  is  an  indirect 

subsidiary  of  Communications  Group.  Therefore,  Zhejiang  Shunchang 

and  Jiaogong  Maintenance  are  connected  persons  of  the  Company  and 

as  a  result,  the  respective  transactions  contemplated  under  the  Dedicated 

Maintenance  Agreement  on  Pavements  (Third  Contract  Section),  Dedicated 

Maintenance Agreement  on  Pavements  (Fourth  Contract  Section),  Dedicated 

Maintenance  Agreement  on  Roadbeds,  Tunnels  and  Bridges  (Third  Contract 

Section),  Dedicated  Maintenance  Agreement  on  Roadbeds,  Tunnels  and 

Bridges  (Fourth  Contract  Section)  respectively  constituted  continuing 

connected  transactions  for  the  Company  under  Chapter  14A  of  the  Listing 

Rules.

The  annual  cap  on  the  aggregate  service  fees  payable  by  LongLiLiLong 

Co  under  the  Dedicated  Maintenance  Agreement  on  Pavements  (Third 

Contract  Section),  Dedicated  Maintenance  Agreement  on  Pavements 

(Fourth  Contract  Section),  Dedicated  Maintenance  Agreement  on  Roadbeds, 

Tunnels  and  Bridges  (Third  Contract  Section),  Dedicated  Maintenance 

Agreement  on  Roadbeds,  Tunnels  and  Bridges  (Fourth  Contract  Section) 

was  Rmb73,000,000.  During  the  Period,  the  total  service  fees  paid  by 

LongLiLiLong Co under the Dedicated Maintenance Agreement on Pavements 

(Third  Contract  Section),  Dedicated  Maintenance  Agreement  on  Pavements 

(Fourth  Contract  Section),  Dedicated  Maintenance  Agreement  on  Roadbeds, 

Tunnels  and  Bridges  (Third  Contract  Section),  Dedicated  Maintenance 

Agreement  on  Roadbeds,  Tunnels  and  Bridges  (Fourth  Contract  Section) 

amounted to Rmb67,171,000.

Pursuant  to  Rule  14A.81  to  Rule  14A.83  of  the  Listing  Rules,  continuing 

connected  transactions  with  the  same  connected  person  or  parties  who  are 

connected with one another may be aggregated. As the applicable percentage 

ratios in respect of the aggregated annual caps for transactions contemplated 

under  the  2021  Dedicated  Maintenance  Agreements  and  2019  Daily  Road 

Maintenance  Agreements  were  more  than  0.1%  but  less  than  5%,  the  2021 

Dedicated  Road  Maintenance  Agreements  were  respectively  subject  to  the 

reporting,  announcement  and  annual  review  requirements  but  exempt  from 

the independent Shareholders’ approval requirement under Chapter 14A of the 

Listing Rules.

93

4.  Expressway Mechanical and Electrical System Maintenance Agreements

On  May  31,  2021,  LongLiLiLong  Co,  entered  into  the  expressway  mechanical  and 
electrical  system  maintenance  agreements  with  Zhejiang  Information  (the  “Expressway 
Mechanical  and  Electrical  System  Maintenance  Agreements”),  pursuant  to  which 
LongLiLiLong Co agreed to purchase, and Zhejiang Information agreed to provide, certain 
expressway  mechanical  and  electrical  system  maintenance  services.  The  term  of  the 
Expressway Mechenical and Electrical System Maintenance Agreements is for three years 
ending  May  30,  2024.  The  annual  service  fees  payable  by  LongLiLiLong  Co  to  Zhejiang 
Information  would  be  Rmb4,829,647.84,  which  amount  to  Rmb14,488,943.52  in  total  for 
three years.

The  annual  cap  on  the  aggregate  service  fees  payable  by  LongLiLiLong  Co  under 
Expressway  Mechanical  and  Electrical  System  Maintenance  Agreements  was 
Rmb5,000,000.  During  the  Period,  the  total  service  fees  paid  by  LongLiLiLong  Co  to 
Zhejiang Information in respect of the transactions under the Expressway Mechanical and 
Electrical System Maintenance Agreements amounted to Rmb2,056,000.

Zhejiang Information is a 65.85% owned subsidiary of Communications Group. Therefore, 
Zhejiang  Information  is  a  connected  person  of  the  Company  and  as  a  result,  the 
transactions  under  the  Expressway  Mechanical  and  Electrical  System  Maintenance 
Agreements constitute continuing connected transactions for the Company under Chapter 
14A of the Listing Rules.

Pursuant  to  Rule  14A.81  to  Rule  14A.83  of  the  Listing  Rules,  the  respective  transactions 
contemplated  under  the  Expressway  Mechanical  and  Electrical  System  Maintenance 
Agreements  are  required  to  be  aggregated  with  the  respective  transactions  contemplated 
under  the  agreements  entered  into  within  a  12-month  period  prior  to  the  date  of  the 
Expressway  Mechanical  and  Electrical  System  Maintenance  Agreements  between  or 
among  the  Group  and  Zhejiang  Information  in  relation  to  mechanical  and  electrical 
engineering  services  dated  March  16,  2020,  October  14,  2020,  December  16,  2020 
respectively  (the  “Previous Agreements”),  which  were  transactions  entered  into  with  the 
same connected person.

As  the  applicable  percentage  ratios  in  respect  of  the  transactions  contemplated  under 
the  Expressway  Mechanical  and  Electrical  System  Maintenance  Agreements,  after 
aggregating  the  Previous  Agreements,  are  more  than  0.1%  but  less  than  5%,  the 
Expressway  Mechanical  and  Electrical  System  Maintenance  Agreements  will  be  subject 
to  the  reporting,  announcement  and  annual  review  requirements  but  exempt  from  the 
independent Shareholders’ approval requirement under Chapter 14A of the Listing Rules.

94

ANNUAL REPORTConnected Transactions5.  Entrusted Management Agreements

On December 13, 2021, the Company entered into the entrusted management agreements 
with branch and subsidiaries of the Communications Group (the “Entrusted Management 
Agreements”),  pursuant  to  which  each  of  Shensuzhewan  Branch,  Ningbo  Yongtaiwen 
Co  and  Santongdao  South  Connection  Co  shall  entrust  the  Company  to  take  over  the 

operation and management of (i) Zhejiang Section of the Shensuzhewan  Expressway, (ii) 

Xiwu  to  Xinwu  Section  of  Ningbo  Yongtaiwen  Expressway;  and  (iii)  South  Connection  of 

Qianjiang  Channel,  respectively.  The  term  of  the  Entrusted  Management  Agreement  is 

36  months.  Please  refer  to  announcement  of  the  Company  dated  December  13,  2021  for 

details. The proposed annual cap on the aggregate entrusted management service fees of 

the Entrusted Management Agreements for the each of the three years from July 1, 2021 

to June 30, 2024 shall not exceed Rmb10,000,000.

As  each  of  Shensuzhewan  Branch,  Ningbo  Yongtaiwen  Co  and  Santongdao  South 

Connection  Co  is  a  branch  or  subsidiary  of  Communications  Group  and  thus  is 

a  connected  person  of  the  Company  and  as  a  result,  the  respective  transactions 

contemplated  under  the  Entrusted  Management  Agreements  constituted  continuing 

connected transactions for the Company under Chapter 14A of the Listing Rules.

Pursuant  to  Rule  14A.81  to  Rule  14A.83  of  the  Listing  Rules,  continuing  connected 

transactions  with  the  same  connected  person  or  parties  who  are  connected  with  one 

another  may  be  aggregated. As  the  highest  applicable  percentage  ratio  in  respect  of  the 

aggregated  annual  cap  for  transactions  contemplated  under  the  Entrusted  Management 

Agreements  and  the  previous  continuing  connected  transaction  of  the  same  nature  with 

Communications  Group  and  its  subsidiaries  is  more  than  0.1%  but  less  than  5%,  the 

transactions  contemplated  under  the  Entrusted  Management  Agreements  were  subject 

to  the  reporting,  announcement  and  annual  review  requirements  but  exempt  from  the 

independent Shareholders’ approval requirement under Chapter 14A of the Listing Rules.

During  the  Period,  the  total    entrusted  management  service  fees  to  be  received  by  the 

Company under the Entrusted Management Agreement amounted to Rmb7,044,000.

95

The  independent  non-executive  Directors  have  reviewed  the  continuing  connected 

transactions  described  above  and  confirmed  that  such  continuing  connected  transactions 

have been entered into:

a) 

in the ordinary and usual course of business of the Group;

b) 

on normal commercial terms or on terms no less favourable to the Group than terms 

available to or from independent third parties; and

c) 

in  accordance  with  the  relevant  agreement  governing  them  on  terms  that  are  fair 

and reasonable and in the interests of the Shareholders as a whole.

The  Company’s  auditor  was  engaged  to  report  on  the  Group’s  continuing  connected 

transactions  in  accordance  with  Hong  Kong  Standard  on  Assurance  Engagements 

HKSAE3000  “Assurance  Engagements  Other  Than  Audits  or  Reviews  of  Historical 

Financial  Information”  and  with  reference  to  Practice  Note  740  “Auditor’s  Letter  on 

Continuing  Connected  Transactions  under  the  Hong  Kong  Listing  Rules”  issued  by  the 

Hong  Kong  Institute  of  Certified  Public  Accountants.  The  auditors  have  issued  their 

unqualified  letter  containing  their  findings  and  conclusions  in  respect  of  the  continuing 

connected transactions in accordance with the Rule 14A.56 of the Listing Rules. A copy of 

the auditor’s letter has been provided to the Stock Exchange.

During  the  year,  details  of  the  related  party  transactions  and  continuing  related  party 

transactions  under  the  accounting  standards  for  this  report  that  the  Company  and  its 

subsidiaries  have  entered  into  with  Communications  Group  and  its  subsidiaries  that 

constitute  connected  transactions  and  continuing  connected  transactions  to  be  disclosed 

under  the  Listing  Rules  are  set  out  in  note  58  to  the  consolidated  financial  statements. 

The Company has complied with the disclosure requirements in respect of such connected 

transactions and continuing connected transactions in accordance with Chapter 14A of the 

Listing Rules.

96

ANNUAL REPORTConnected TransactionsTO THE MEMBERS OF ZHEJIANG EXPRESSWAY CO., LTD.

浙江滬杭甬高速公路股份有限公司

(Incorporated in the People’s Republic of China with limited liability)

Opinion
We  have  audited  the  consolidated  financial  statements  of  Zhejiang  Expressway  Co.,  Ltd.  (the  “Company”) 

and  its  subsidiaries  (collectively  referred  to  as  the  “Group”)  set  out  on  pages  102  to  277,  which  comprise  the 

consolidated statement of financial position as at December 31, 2021, and the consolidated statement of profit or 

loss  and  other  comprehensive  income,  consolidated  statement  of  changes  in  equity  and  consolidated  statement 

of cash flows for the year then ended, and notes to the consolidated financial statements, including a summary of 

significant accounting policies.

In  our  opinion,  the  consolidated  financial  statements  give  a  true  and  fair  view  of  the  consolidated  financial 

position  of  the  Group  as  at  December  31,  2021,  and  of  its  consolidated  financial  performance  and  its 

consolidated  cash  flows  for  the  year  then  ended  in  accordance  with  Hong  Kong  Financial  Reporting  Standards 

(“HKFRSs”) issued by the Hong Kong Institute of Certified Public Accountants (“HKICPA”) and have been properly 

prepared in compliance with the disclosure requirements of the Hong Kong Companies Ordinance.

Basis for Opinion
We conducted our audit in accordance with Hong Kong Standards on Auditing (“HKSAs”) issued by the HKICPA. 

Our  responsibilities  under  those  standards  are  further  described  in  the Auditor’s  Responsibilities  for  the Audit  of 

the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with 

the  HKICPA’s  Code  of  Ethics  for  Professional Accountants  (the  “Code”),  and  we  have  fulfilled  our  other  ethical 

responsibilities  in  accordance  with  the  Code.  We  believe  that  the  audit  evidence  we  have  obtained  is  sufficient 

and appropriate to provide a basis for our opinion.

Key Audit Matters
Key  audit  matters  are  those  matters  that,  in  our  professional  judgment,  were  of  most  significance  in  our  audit 

of  the  consolidated  financial  statements  of  the  current  period.  These  matters  were  addressed  in  the  context  of 

our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not 

provide a separate opinion on these matters.

97

Independent Auditor’s ReportKey audit matter

How our audit addressed the key audit matter

Determination of consolidation scope of structured entities

We  identified  the  determination  of  consolidation 

Our  procedures  in  relation  to  the  management’s 

scope  of  structured  entities,  which  invested  by  the 

determination  of  consolidation  scope  of  structured 

Group’s  securities  operation  segment  (defined  in 

entities included:

Note  8),  as  a  key  audit  matter  due  to  significant 

judgement  applied  by  management  in  determining 

•  Te s t i n g   a n d   e v a l u a t i n g   k e y   c o n t r o l s   o f   t h e 

whether  a  structured  entity  is  required  to  be 

management  in  determining  the  consolidation  scope 

consolidated  by  the  Group  and  the  significance 

of structured entities;

of  these  balances  to  the  Group’s  consolidated 

financial statements as a whole.

•  Examining,  on  a  sample  basis,  the  documents  and 

information  used  by  the  management  in  assessing 

The  Group  held  interests  as  investor  or  acted  as 

the consolidation criteria of structured entities against 

investment  manager  in  various  structured  entities 

the  related  agreements  and  other  related  service 

including  collective  asset  management  schemes, 

agreements  of  structured  entities  newly  established, 

investment funds and limited partnership enterprises. 

invested  or  with  changes  in  proportion  of  ownership 

As  disclosed  in  Note  6  to  the  consolidated  financial 

interests or contractual terms during the year;

statements, to determine whether a structured entity 

should  be  consolidated,  the  management  applied 

•  Assessing  management  judgement  in  determining 

significant  judgement  in  determining  whether  the 

the  scope  for  consolidation  and,  on  a  sample  basis, 

Group  has  power  over  the  structured  entities,  and 

assessing  the  conclusion  about  whether  a  structured 

assess  whether  the  combination  of  investments 

entity should be consolidated or not.

it  held  together  with  its  remuneration  and  credit 

enhancement  creates  exposure  to  variability  of 

returns  from  the  activities  of  the  collective  asset 

management  schemes  and  investment  funds  that 

is  of  such  significance  that  it  indicates  the  Group 

controlled the structured entities.

As disclosed in Notes 45 and 60 to the consolidated 

financial  statements,  as  at  December  31,  2021, 

the  total  assets  of  the  consolidated  structured 

entities  amounted  to  Rmb8,716,481  thousands  and 

the  total  assets  of  the  unconsolidated  structured 

entities  managed  by  the  Group  amounted  to 

Rmb117,599,057 thousands, respectively.

98

ANNUAL REPORTIndependent Auditor’s ReportOther Information
The  directors  of  the  Company  are  responsible  for  the  other  information.  The  other  information  comprises  the 

information  included  in  the  annual  report,  but  does  not  include  the  consolidated  financial  statements  and  our 

auditor’s report thereon.

Our opinion on the consolidated financial statements does not cover the other information and we do not express 

any form of assurance conclusion thereon.

In  connection  with  our  audit  of  the  consolidated  financial  statements,  our  responsibility  is  to  read  the  other 

information  and,  in  doing  so,  consider  whether  the  other  information  is  materially  inconsistent  with  the 

consolidated  financial  statements  or  our  knowledge  obtained  in  the  audit  or  otherwise  appears  to  be  materially 

misstated.  If,  based  on  the  work  we  have  performed,  we  conclude  that  there  is  a  material  misstatement  of  this 

other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities  of  Directors  and  Those  Charged  with  Governance  for  the 
Consolidated Financial Statements
The  directors  of  the  Company  are  responsible  for  the  preparation  of  the  consolidated  financial  statements  that 

give  a  true  and  fair  view  in  accordance  with  HKFRSs  issued  by  the  HKICPA  and  the  disclosure  requirements 

of  the  Hong  Kong  Companies  Ordinance,  and  for  such  internal  control  as  the  directors  of  the  Company 

determine is necessary to enable the preparation of consolidated financial statements that are free from material 

misstatement, whether due to fraud or error.

In  preparing  the  consolidated  financial  statements,  the  directors  of  the  Company  are  responsible  for  assessing 

the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and 

using  the  going  concern  basis  of  accounting  unless  the  directors  of  the  Company  either  intend  to  liquidate  the 

Group or to cease operations, or have no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Group’s financial reporting process.

99

Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Our  objectives  are  to  obtain  reasonable  assurance  about  whether  the  consolidated  financial  statements  as  a 

whole  are  free  from  material  misstatement,  whether  due  to  fraud  or  error,  and  to  issue  an  auditor’s  report  that 

includes  our  opinion  solely  to  you,  as  a  body,  in  accordance  with  our  agreed  terms  of  engagement,  and  for  no 

other purpose. We do not assume responsibility towards or accept liability to any other person for the contents of 

this report. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in 

accordance with HKSAs will always detect a material misstatement when it exists. Misstatements can arise from 

fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected 

to influence the economic decisions of users taken on the basis of these consolidated financial statements.

As  part  of  an  audit  in  accordance  with  HKSAs,  we  exercise  professional  judgment  and  maintain  professional 

scepticism throughout the audit. We also:

• 

Identify  and  assess  the  risks  of  material  misstatement  of  the  consolidated  financial  statements,  whether 

due  to  fraud  or  error,  design  and  perform  audit  procedures  responsive  to  those  risks,  and  obtain  audit 

evidence  that  is  sufficient  and  appropriate  to  provide  a  basis  for  our  opinion.  The  risk  of  not  detecting  a 

material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve 

collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• 

Obtain  an  understanding  of  internal  control  relevant  to  the  audit  in  order  to  design  audit  procedures  that 

are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness 

of the Group’s internal control.

• 

Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates 

and related disclosures made by the directors of the Company.

• 

Conclude  on  the  appropriateness  of  the  directors’  use  of  the  going  concern  basis  of  accounting  and, 

based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions 

that  may  cast  significant  doubt  on  the  Group’s  ability  to  continue  as  a  going  concern.  If  we  conclude 

that  a  material  uncertainty  exists,  we  are  required  to  draw  attention  in  our  auditor’s  report  to  the  related 

disclosures  in  the  consolidated  financial  statements  or,  if  such  disclosures  are  inadequate,  to  modify  our 

opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. 

However, future events or conditions may cause the Group to cease to continue as a going concern.

100

ANNUAL REPORTIndependent Auditor’s Report• 

Evaluate the overall presentation, structure and content of the consolidated financial statements, including 

the  disclosures,  and  whether  the  consolidated  financial  statements  represent  the  underlying  transactions 

and events in a manner that achieves fair presentation.

• 

Obtain  sufficient  appropriate  audit  evidence  regarding  the  financial  information  of  the  entities  or 

business  activities  within  the  Group  to  express  an  opinion  on  the  consolidated  financial  statements. 

We  are  responsible  for  the  direction,  supervision  and  performance  of  the  group  audit.  We  remain  solely 

responsible for our audit opinion.

We  communicate  with  those  charged  with  governance  regarding,  among  other  matters,  the  planned  scope  and 

timing  of  the  audit  and  significant  audit  findings,  including  any  significant  deficiencies  in  internal  control  that  we 

identify during our audit.

We  also  provide  those  charged  with  governance  with  a  statement  that  we  have  complied  with  relevant  ethical 

requirements  regarding  independence,  and  to  communicate  with  them  all  relationships  and  other  matters  that 

may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats 

or safeguards applied.

From  the  matters  communicated  with  those  charged  with  governance,  we  determine  those  matters  that  were  of 

most significance in the audit of the consolidated financial statements of the current period and are therefore the 

key  audit  matters.  We  describe  these  matters  in  our  auditor’s  report  unless  law  or  regulation  precludes  public 

disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be 

communicated  in  our  report  because  the  adverse  consequences  of  doing  so  would  reasonably  be  expected  to 

outweigh the public interest benefits of such communication.

The engagement partner on the audit resulting in the independent auditor’s report is Ma Hing Fai.

Deloitte Touche Tohmatsu

Certified Public Accountants

Hong Kong

March 24, 2022

101

NOTES

12/31/2021
Rmb’000

12/31/2020
Rmb’000
(Restated)

7

9
10

11

12

13
14

Revenue

Including: interest income under effective interest method

Operating costs

Gross profit
Securities investment gains
Other income and gains and losses
Administrative expenses
Other expenses
Impairment losses under expected credit loss model, 

net of reversal

Share of profit of associates
Share of profit of a joint venture
Finance costs

Profit before tax
Income tax expense

Profit for the year

Other comprehensive income
Items that may be reclassified subsequently to 

profit or loss:

Exchange differences on translation of financial statements 

of foreign operations

Share of other comprehensive income/(loss) of an associate, 

net of related income tax

Other comprehensive income/(loss) for the year, 

net of income tax

Total comprehensive income for the year

16,262,601
2,247,361

12,451,534
1,820,534

(9,521,482)

(8,038,467)

6,741,119
1,835,563
733,071
(173,447)
(117,363)

65,391
966,075
56,249
(1,942,533)

8,164,125
(1,873,961)

4,413,067
1,611,873
425,319
(147,839)
(191,012)

(183,612)
688,029
16,282
(2,098,493)

4,533,614
(1,160,027)

6,290,164

3,373,587

(4,963)

(2,349)

43,607

(24,160)

38,644

(26,509)

6,328,808

3,347,078

102

ANNUAL REPORTConsolidated Statement of Profit or Loss and Other Comprehensive IncomeFor the year ended December 31, 2021 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Profit for the year attributable to:

Owners of the Company
Non-controlling interests

Total comprehensive income attributable to:

Owners of the Company
Non-controlling interests

Earnings per share
Basic (Rmb cents)

Diluted (Rmb cents)

NOTES

12/31/2021
Rmb’000

12/31/2020
Rmb’000
(Restated)

4,762,431
1,527,733

2,416,395
957,192

6,290,164

3,373,587

4,803,862
1,524,946

2,391,092
955,986

6,328,808

3,347,078

109.65

102.50

55.64

55.19

18

103

For the year ended December 31, 2021 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NOTES

12/31/2021
Rmb’000

12/31/2020
Rmb’000
(Restated)

01/01/2020
Rmb’000
(Restated)

NON-CURRENT ASSETS
Property, plant and equipment
Right-of-use assets
Expressway operating rights
Goodwill
Other intangible assets
Interests in associates
Interest in a joint venture
Financial assets at fair value through  

profit or loss (“FVTPL”)

Contract assets
Other receivables and prepayments
Financial assets held under resale agreements
Deferred tax assets

CURRENT ASSETS
Inventories
Trade receivables
Loans to customers arising from margin

financing business

Other receivables and prepayments
Dividends receivable
Derivative financial assets
Financial assets at FVTPL
Financial assets held under resale agreements
Bank balances and clearing settlement fund 

held on behalf of customers

Bank balances, clearing settlement fund, 

deposits and cash 
– Restricted bank balances and cash
– Time deposits with original maturity over 

three months

– Cash and cash equivalents

19
20
21
22
23
25
26

27
28
31
32
47

29

30
31

39
27
32

33

34

34
34

5,019,619
666,686
26,053,256
86,867
303,350
9,675,046
440,574

363,878
–
1,216,289
10,000
1,617,799

4,487,223
562,535
25,859,558
86,867
207,068
6,560,343
384,325

244,123
1,007,618
2,685,000
120,000
1,589,901

4,612,498
379,031
28,232,977
86,867
182,851
6,080,155
368,043

16,898
686,557
–
–
1,256,086

45,453,364

43,794,561

41,901,963

371,714
467,892

370,725
373,400

333,458
335,922

19,394,130
1,379,105
128
613,718
45,445,711
7,078,206

15,013,429
3,132,066
2,835
525,629
29,158,094
7,002,471

8,751,643
424,830
2,005
6,250
22,235,480
8,110,354

38,392,804

27,090,816

20,141,931

132,090

23,986

–

413,843
17,153,977

313,600
8,645,085

302,726
8,090,694

130,843,318

91,652,136

68,735,293

104

ANNUAL REPORTConsolidated Statement of Financial PositionAt December 31, 2021 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NOTES

12/31/2021
Rmb’000

12/31/2020
Rmb’000
(Restated)

01/01/2020
Rmb’000
(Restated)

CURRENT LIABILITIES
Placements from other financial institutions
Accounts payable to customers arising from 

securities business

Trade payables
Tax liabilities
Other taxes payable
Other payables and accruals
Contract liabilities
Dividends payable
Derivative financial liabilities
Bank and other borrowings
Short-term financing note payable
Bonds payable
Convertible bonds
Financial assets sold under repurchase 

agreements

Financial liabilities at FVTPL
Lease liabilities

35

36
37

38

39
40
41
42
43

44
45
46

500,000

400,000

270,000

38,069,350
1,387,533
1,305,228
916,269
5,872,066
204,214
–
451,368
2,316,307
7,940,702
10,455,661
–

25,250,426
2,925,391
105,699

27,054,052
1,098,574
1,202,136
447,898
6,158,797
79,231
50
497,427
8,855,320
6,306,716
6,361,764
–

11,525,087
2,910,725
91,346

20,024,356
1,536,680
537,868
152,405
2,084,549
15,674
1,342
5,565
10,054,271
6,532,990
2,281,229
2,793,103

9,017,680
321,883
70,577

97,700,214

72,989,123

55,700,172

NET CURRENT ASSETS

33,143,104

18,663,013

13,035,121

TOTAL ASSETS LESS CURRENT LIABILITIES

78,596,468

62,457,574

54,937,084

NON-CURRENT LIABILITIES
Bank and other borrowings
Bonds payable
Convertible bonds
Deferred tax liabilities
Lease liabilities

40
42
43
47
46

14,427,610
17,193,430
1,714,662
477,525
360,216

11,119,040
13,706,383
766
386,498
298,894

10,626,730
12,892,042
2,687,228
347,331
188,772

34,173,443

25,511,581

26,742,103

44,423,025

36,945,993

28,194,981

105

At December 31, 2021 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
CAPITAL AND RESERVES

Share capital

Reserves

NOTES

12/31/2021
Rmb’000

12/31/2020
Rmb’000
(Restated)

01/01/2020
Rmb’000
(Restated)

48

4,343,115

4,343,115

4,343,115

22,807,227

19,267,125

13,463,770

Equity attributable to owners of the Company

Non-controlling interests

49

27,150,342

17,272,683

23,610,240

13,335,753

17,806,885

10,388,096

44,423,025

36,945,993

28,194,981

The consolidated financial statements on pages 102 to 277 were approved and authorised for issue by the board 

of directors on March, 24 2022 and are signed on its behalf by:

DIRECTOR
CHEN Ninghui

DIRECTOR
YUAN Yingjie

106

ANNUAL REPORTConsolidated Statement of Financial PositionAt December 31, 2021 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Attributable to owners of the Company

  Share 
capital

Share 
premium

Statutory 
reserve

Capital 
reserve

Share of 
differences 
arising on 
translation

Investment 
revaluation 
reserve

Dividend 
reserve

Rmb’000

Rmb’000

Rmb’000

Rmb’000

Rmb’000

Rmb’000

Rmb’000

(Note i)

Retained 
profits

Rmb’000

Sub-total

Rmb’000

Non-
controlling 
interests

Total

Rmb’000

Rmb’000

Special 
reserves

Rmb’000

(Note ii)

At December 31, 2020 (originally stated)

4,343,115

3,355,621

5,392,584

1,712

(24,160)

Adjustments (Note 2)

–

–

–

–

–

509

–

1,541,806

284,982

9,220,290

24,116,459

13,335,753

37,452,212

–

6,352,960

(6,859,179)

(506,219)

–

(506,219)

At January 1, 2021 (restated)

4,343,115

3,355,621

5,392,584

1,712

(24,160)

509

1,541,806

6,637,942

2,361,111

23,610,240

13,335,753

36,945,993

Profit for the year

Other comprehensive income/(loss) for the year

Total comprehensive income/(loss) for the year

Acquisition of a subsidiary

Acquisition of minority interests of a subsidiary

Disposal of a subsidiary and listing of REITs

Non-public A shares issuance by a subsidiary

Dividend declared to non-controlling interests

2020 dividend (Note 17)

Proposed 2021 dividend

Transfer to reserves

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

246,503

–

–

–

–

–

–

–

–

–

–

–

–

–

43,607

(2,176)

43,607

(2,176)

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

(1,541,806)

1,628,668

–

–

–

–

–

(33)

(263,625)

541,704

–

–

–

–

4,762,431

4,762,431

1,527,733

6,290,164

–

41,431

(2,787)

38,644

4,762,431

4,803,862

1,524,946

6,328,808

–

–

–

–

–

–

(1,628,668)

(246,503)

–

(33)

631,350

631,350

(9)

(42)

(263,625)

(229,747)

(493,372)

541,704

2,259,405

2,801,109

–

(249,015)

(249,015)

(1,541,806)

–

–

–

–

–

(1,541,806)

–

–

At December 31, 2021

4,343,115

3,355,621

5,639,087

1,712

19,447

(1,667)

1,628,668

6,915,988

5,248,371

27,150,342

17,272,683

44,423,025

107

Consolidated Statement of Changes in EquityFor the year ended December 31, 2021 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Attributable to owners of the Company

  Share 
capital

Share 
premium

Statutory 
reserve

Capital 
reserve

Share of 
differences 
arising on 
translation

Investment 
revaluation 
reserve

Dividend 
reserve

Rmb’000

Rmb’000

Rmb’000

Rmb’000

Rmb’000

Rmb’000

Rmb’000

(Note i)

Retained 
profits

Rmb’000

Sub-total

Rmb’000

Non-
controlling 
interests

Total

Rmb’000

Rmb’000

Special 
reserves

Rmb’000

(Note ii)

At January 1, 2020 (originally stated)

4,343,115

3,355,621

5,339,429

Adjustments (Note 2)

–

–

–

At January 1, 2020 (restated)

4,343,115

3,355,621

5,339,429

1,712

–

1,712

Profit for the year (restated)

Other comprehensive loss for the year

Total comprehensive income/(loss) for the year

Consideration adjustment for acquisition of 
subsidiaries under common control

Consideration paid for acquisition of subsidiaries 

under common control (Note 2)

Recognition of the Company’s share of the equity 

change of the investee

Changes due to partial disposal of convertible 

bond issued by a subsidiary

Conversion of Convertible Bond 2019 of a subsidiary

Redemption of Convertible Bond 2019 of a subsidiary

Deemed partial disposal of interest in a subsidiary 
upon conversion of Convertible Bond 2019

Dividend declared to non-controlling interests

Contribution from non-controlling interests

Capital injection to a subsidiary acquired-under 

common control

2019 dividend (Note 17)

Proposed 2020 dividend

Transfer to reserves

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

53,155

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

1,652

1,541,806

(807,227)

7,817,907

21,594,015

10,388,096

31,982,111

–

–

2,491,100

(6,278,230)

(3,787,130)

–

(3,787,130)

1,652

1,541,806

1,683,873

1,539,677

17,806,885

10,388,096

28,194,981

–

(24,160)

(1,143)

(24,160)

(1,143)

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

(1,541,806)

1,541,806

–

–

–

–

76,662

(238,140)

(12,107)

–

–

–

1,027,654

–

–

4,100,000

–

–

–

2,416,395

2,416,395

957,192

3,373,587

–

(25,303)

(1,206)

(26,509)

2,416,395

2,391,092

955,986

3,347,078

–

–

–

–

–

–

–

–

–

–

–

(1,541,806)

(53,155)

76,662

(238,140)

(12,107)

–

–

–

76,662

(238,140)

(12,107)

–

–

–

64,214

64,214

(464,244)

(464,244)

(3,676)

(3,676)

1,027,654

2,608,993

3,636,647

–

–

(217,944)

(217,944)

4,328

4,328

4,100,000

(1,541,806)

–

–

–

–

–

–

4,100,000

(1,541,806)

–

–

At December 31, 2020 (restated)

4,343,115

3,355,621

5,392,584

1,712

(24,160)

509

1,541,806

6,637,942

2,361,111

23,610,240

13,335,753

36,945,993

108

ANNUAL REPORTConsolidated Statement of Changes in Equity (Continued)For the year ended December 31, 2021 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Notes:

(i) 

Statutory reserves comprise:

(a) 

Statutory surplus reserve

In  accordance  with  the  Company  Law  of  the  People’s  Republic  of  China  (the  “PRC”)  and  the  respective 
articles  of  association  of  the  Company  and  its  subsidiaries  (collectively  the  “Entities”),  the  Entities  are 
required  to  allocate  10%  of  the  profit  after  tax,  as  determined  in  accordance  with  the  PRC  accounting 
standards  and  regulations  applicable  to  the  Entities,  to  the  statutory  surplus  reserve  until  such  reserve 
reaches  50%  of  the  registered  capital  of  the  respective  Entities.  Subject  to  certain  restrictions  set  out 
in  the  Company  Law  of  the  PRC  and  the  respective  articles  of  association  of  the  Entities,  part  of  the 
statutory surplus reserve may be converted to increase the respective Entities’ capital.

(b) 

General risk reserve

In accordance with the Finance Regulation for Financial Enterprises, securities companies are required to 
allocate 10% of the profit after tax, as determined in accordance with the PRC accounting standards and 
regulations,  to  the  general  risk  reserve. This  general  risk  reserve  may  be  used  to  cover  potential  losses 
on risk exposures.

(c) 

Transaction risk reserve

In accordance with the Securities Law of the PRC, securities companies are required to allocate not less 
than  10%  of  the  profit  after  tax,  as  determined  in  accordance  with  the  PRC  accounting  standards  and 
regulations,  to  the  transaction  risk  reserve. This  transaction  risk  reserve  may  be  used  to  cover  potential 
losses on securities transactions.

(ii) 

Special reserves mainly comprise:

(a) 

(b) 

(c) 

(d) 

Other  reserve  which  was  arising  from  the  Group’s  change  of  interests  in  subsidiaries.  Amount 
represented  the  difference  between  the  carrying  value  of  net  assets  attributable  to  the  Group  acquired 
and  the  payment  consideration  arising  from  acquisition,  or  the  dilute  gain  or  loss  of  interests  in 
subsidiaries.

Other reserve which was arising from the spin-off and offering of shares by Zheshang Securities Co., Ltd. 
(“Zheshang Securities”) in prior years.

Other reserve which was arising from the Group’s change of interest in an associate. Amount represented 
the  difference  between  the  carrying  value  of  net  assets  attributable  to  the  Group  arising  from  the 
associate’s  ownership  interest  change  in  its  subsidiaries  other  than  those  recognized  in  profit  or  loss  or 
other comprehensive income.

Merger  reserve  which  was  arising  from  the  acquisition  of  subsidiaries  under  common  control  using  the 
merger  accounting  method.  This  includes  the  capital  of  the  combining  entities  at  their  existing  book 
values since the first date they were under common control and were reduced by the Group’s payment of 
cash consideration to the controlling party.

109

Profit before tax
Adjustments for:
Finance costs
Interest income
Foreign exchange (gain)/loss
Share of profit of associates
Share of profit of a joint venture
Depreciation of property, plant and equipment
Amortisation of expressway operating rights
Depreciation of right-of-use assets
Amortisation of other intangible assets
Impairment losses under expected credit loss model, net of reversal

– trade receivables and other receivables
– advance to customers arising from margin financing business
– financial assets held under resale agreements
– contract asset
Other impairment loss

– property, plant and equipment
– allowance for write-down of inventories

Loss/(gain) on disposal of property, plant and equipment
Gain on disposal of expressway operating rights
Gain on disposal of an associate
Loss/(gain) arising from deemed disposal of associates
Gain on decrease in fair value in respect of derivative component of 

Year ended
12/31/2021
Rmb’000

Year ended
12/31/2020
Rmb’000
(Restated)

8,164,125

4,533,614

1,942,533
(119,027)
(136,629)
(966,075)
(56,249)
508,183
2,550,036
92,484
67,762

(6,817)
13,157
(71,731)
–

–
7,000
6,433
(53,789)
(5,521)
46,705

2,098,493
(56,786)
82,903
(688,029)
(16,282)
484,050
2,360,744
89,640
49,787

12,787
(972)
171,315
482

12,688
15,673
(23,848)
–
–
(23,904)

Convertible Bond

(27,453)

(200,178)

110

ANNUAL REPORTConsolidated Statement of Cash FlowsFor the year ended December 31, 2021 
 
 
Operating cash flows before movements in working capital
Increase in inventories
Increase in trade receivables
Decrease/(increase) in contract asset
Increase in loans to customers arising from margin financing business
Decrease/(increase) in other receivables and prepayments
Increase in financial assets at FVTPL
Decrease in financial assets held under resale agreements
Increase in restricted bank balance
Increase in bank balances and clearing settlement fund held on 

behalf of customers

Increase in net derivative financial assets
Increase in placements from other financial institutions
Increase in accounts payable to customers arising from securities 

business

Increase/(decrease) in trade payables
Increase in other taxes payable
Increase in contract liabilities
Increase/(decrease) in other payables and accruals
Increase in financial liabilities at FVTPL
Increase in financial assets sold under repurchase agreements

Cash generated from operations
Income taxes paid
Interest paid

Year ended
12/31/2021
Rmb’000

11,955,127
(7,989)
(93,543)
1,007,618
(4,393,858)
578,036
(16,407,372)
105,996
(108,104)

(11,301,988)
(134,148)
100,000

11,015,298
200,264
468,371
124,983
(415,623)
14,666
13,725,339

6,433,073
(1,752,542)
(1,857,536)

Year ended
12/31/2020
Rmb’000
(Restated)

8,902,177
(52,940)
(39,773)
(321,543)
(6,260,814)
(2,729,893)
(7,149,839)
816,568
(23,986)

(6,948,885)
(27,517)
130,000

7,029,696
(420,991)
295,493
63,557
4,278,083
2,588,842
2,507,407

2,635,642
(802,971)
(1,707,380)

NET CASH FROM OPERATING ACTIVITIES

2,822,995

125,291

111

For the year ended December 31, 2021 
 
 
 
 
 
 
 
 
INVESTING ACTIVITIES
Interest received
Dividends received from associates
Investment in associates
Proceed from disposal of associates
Withdrawal of investment in associates
Prepayment for investment in an associate
Proceeds on disposal of property, plant and equipment
Proceeds on disposal of expressway operating rights
Purchases of property, plant and equipment
Purchases of other intangible assets
Net cashflow on acquisition of a subsidiary
Net cashflow on disposal of subsidiaries before acquisition
New entrusted loans originated
Placement of time deposits
Withdrawal of time deposits

Year ended
12/31/2021
Rmb’000

NOTE

114,114
587,372
(73,419)
11,676
51,498
–
11,024
64,902
(884,599)
(71,429)
(678,986)
351,648
(180,000)
(150,000)
249,757

51

Year ended
12/31/2020
Rmb’000
(Restated)

59,021
370,424
(196,259)
–
16,813
(2,685,000)
59,357
–
(825,130)
(64,187)
–
–
–
–
2,726

NET CASH USED IN INVESTING ACTIVITIES

(596,442)

(3,262,235)

112

ANNUAL REPORTConsolidated Statement of Cash FlowsFor the year ended December 31, 2021 
 
 
 
 
 
 
 
FINANCING ACTIVITIES
Dividends paid
Dividends paid to non-controlling shareholders
New bank and other borrowings raised
Repayment of bank and other borrowings
New entrusted loans raised
Repayment of entrusted loans
New issue of bonds payable, including assets-backed bonds
Repayment of bonds payable
Proceed from issuance of Convertible Bond
Issue costs of Convertible Bond
Issue of short-term financing note payable
Repayment of short-term financing note payable
Repayments of lease liabilities
Disposal of Convertible bonds
Repayment of Convertible bonds
Capital deduction by non-controlling interests in respect 

of a subsidiary

Capital injection by non-controlling interests in respect 

of a subsidiary

Acquisition of subsidiaries under common control
Prepayment for acquisition of a subsidiary under 

common control

Capital received from Communications Group

Year ended
12/31/2021
Rmb’000

NOTES

(1,533,306)
(249,065)
25,643,315
(30,573,649)
56,173
(250,000)
13,682,282
(6,135,700)
1,810,675
(6,716)
24,663,840
(23,027,100)
(100,369)
–
(773)

Year ended
12/31/2020
Rmb’000
(Restated)

(1,539,772)
(219,235)
13,315,398
(14,203,954)
250,000
(195,000)
6,909,772
(2,045,990)
–
–
28,108,020
(28,336,400)
(78,846)
616,884
(2,830,043)

(493,414)

–

2,801,109
–

4,328
76,662

–
–

(238,140)
4,100,000

NET CASH FROM FINANCING ACTIVITIES

6,287,302

3,693,684

NET INCREASE IN CASH AND CASH EQUIVALENTS

8,513,855

556,740

CASH AND CASH EQUIVALENTS AT JANUARY 1

8,645,085

8,090,694

Effect of foreign exchange rate changes
CASH AND CASH EQUIVALENTS AT DECEMBER 31

34

(4,963)
17,153,977

(2,349)
8,645,085

113

For the year ended December 31, 2021 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1.  CORPORATE INFORMATION
Zhejiang  Expressway  Co.,  Ltd.  (the  “Company”)  was  established  in  the  People’s  Republic  of  China  (the  “PRC”) 

with  limited  liability  on  March  1,  1997.  The  H  shares  of  the  Company  (“H  Shares”)  were  subsequently  listed  on 

The Stock Exchange of Hong Kong Limited (the “Stock Exchange”) on May 15, 1997.

All of the H Shares of the Company were admitted to the Official List of the United Kingdom Listing Authority (the 

“Official List”). Dealings in the H Shares on the London Stock Exchange commenced on May 5, 2000.

On July 18, 2000, with the approval of the Ministry of Foreign Trade and Economic Co-operation of the PRC, the 

Company changed its business registration into a Sino-foreign joint stock limited company.

In  the  opinion  of  the  directors  of  the  Company  (the  “Directors”),  the  immediate  and  ultimate  holding  company 

of  the  Company  is  Zhejiang  Communications  Investment  Group  Co.,  Ltd.  (the  “Communications  Group”),  a 

state-owned enterprise established in the PRC.

The  addresses  of  the  registered  office  and  principal  place  of  business  of  the  Company  are  disclosed  in  the 

corporate information section of the annual report.

The consolidated financial statements are presented in Renminbi (“Rmb”), which is also the functional currency of 

the Company.

The  Company  is  an  investment  holding  company.  The  Company  and  its  subsidiaries  (collectively  referred  to  as 

the “Group”) during the current year are involved in the following principal activities:

(a) 

the operation, maintenance and management of high grade roads;

(b) 

the  provision  of  securities  and  future  broking  services,  margin  financing  and  securities  lending  services, 

securities  underwriting  and  sponsorship  services,  asset  management,  advisory  services  and  proprietary 

trading;

(c) 

the hotel operation, construction service of a high grade road, investment in other financial institutions and 

other ancillary services.

114

ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 20212.  MERGER ACCOUNTING RESTATEMENT
The Group accounts for all its business combinations involving entities under common control using the principles 

of  merger  accounting  in  accordance  with  Accounting  Guideline  5  “Merger  Accounting  for  Common  Control 

Combinations” (“AG 5”) issued by the Hong Kong Institute of Certificated Public Accountants (the “HKICPA”).

On  November  10,  2020,  the  Company  entered  into  an  equity  purchase  agreement  with  Communications  Group 

to  acquire  100%  equity  interest  in  Zhejiang  LongLiLiLong  Expressway  Co.,  Ltd.  (“LongLiLiLong  Co”)  at  a  cash 

consideration  of  Rmb238,140,000.  LongLiLiLong  Co  is  principally  engaged  in  the  operation  and  management  of 

toll  collection  rights  of  the  LongLi  Expressway  and  LiLong  Expressway  located  in  Zhejiang  Province,  the  PRC, 

with a total length of 222.2 kilometers The acquisition has been approved on December 23, 2020 and in January 

2021, LongLiLiLong Co then became a wholly owned subsidiary of the Company upon the revision of Articles of 

Association and modification of business registration.

Since  Communications  Group  is  the  immediate  and  ultimate  holding  company  of  the  Company,  the  above 

acquisitions  were  regarded  as  business  combinations  involving  entities  under  common  control  and  were 

accounted  for  using  AG  5.  As  a  result,  the  comparative  consolidated  statement  of  profit  or  loss  and  other 

comprehensive  income,  consolidated  statement  of  cash  flows  and  consolidated  statement  of  changes  in  equity 

for  the  year  ended  December  31,  2020  and  the  consolidated  statement  of  financial  position  as  at  December  31, 

2020 and January 1, 2020 have therefore been restated in order to include the financial performance, assets and 

liabilities of the combining entities since the date on which they first come under common control.

115

2.  MERGER ACCOUNTING RESTATEMENT (Continued)
The  effects  of  the  merger  accounting  restatement  in  respect  of  the  acquisition  of  100%  equity  interests  in 

LongLiLiLong  Co  on  the  consolidated  statement  of  profit  or  loss  and  other  comprehensive  income  for  the  year 

ended December 31, 2020 are as follows:

Merger
accounting
restatement
Rmb’000

Year ended
12/31/2020
Rmb’000
(Originally
stated)

Year ended
12/31/2020
Rmb’000

(Restated)

Revenue

11,942,775

508,759

12,451,534

including: interest income under effective interest 

method

Operating costs

Gross profit/(loss)
Securities investment gains
Other income and gains and losses
Administrative expenses
Other expenses
Impairment losses under expected credit loss model, 

net of reversal

Share of profit of associates
Share of profit of a joint venture
Finance costs

1,820,534

–

1,820,534

(7,303,651)

(734,816)

(8,038,467)

4,639,124
1,611,873
410,198
(140,342)
(181,499)

(183,566)
688,029
16,282
(1,745,389)

(226,057)
–
15,121
(7,497)
(9,513)

(46)
–
–
(353,104)

4,413,067
1,611,873
425,319
(147,839)
(191,012)

(183,612)
688,029
16,282
(2,098,493)

116

ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2021 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2.  MERGER ACCOUNTING RESTATEMENT (Continued)

Profit/(loss) before tax
Income tax expense, credit

Profit for the year

Other comprehensive income
Items that may be reclassified subsequently to 

profit or loss:

Exchange differences on translation of financial 

statements of foreign operations

Share of other comprehensive loss of an associate, 

net of related income tax

Other comprehensive income for the year, 

net of income tax

Merger
accounting
restatement
Rmb’000

Year ended
12/31/2020
Rmb’000
(Originally
stated)

Year ended
12/31/2020
Rmb’000

(Restated)

5,114,710
(1,160,174)

(581,096)
147

4,533,614
(1,160,027)

3,954,536

(580,949)

3,373,587

(2,349)

(24,160)

(26,509)

–

–

–

(2,349)

(24,160)

(26,509)

Total comprehensive income for the year

3,928,027

(580,949)

3,347,078

Profit for the year attributable to:

Owners of the Company
Non-controlling interests

Total comprehensive income attributable to:

Owners of the Company
Non-controlling interests

Earnings per share

– Basic (Rmb cents)

– Diluted (Rmb cents)

2,997,344
957,192

(580,949)
–

2,416,395
957,192

3,954,536

(580,949)

3,373,587

2,972,041
955,986

(580,949)
–

2,391,092
955,986

3,928,027

(580,949)

3,347,078

69.01

68.32

(13.37)

(13.13)

55.64

55.19

117

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2.  MERGER ACCOUNTING RESTATEMENT (Continued)
The  effects  of  the  merger  accounting  restatement  in  respect  of  the  acquisition  of  100%  equity  interest  in 

LongLiLiLong Co on the consolidated statements of financial positions as at January 1, 2020 and December 31, 

2020 are as follows:

Year
Ended
01/01/2020
Rmb’000
(Originally
stated)

4,280,735
379,031
22,867,446
86,867
182,851
6,080,155
368,043
16,898
686,557

Merger
accounting
restatement
Rmb’000

331,763
–
5,365,531
–
–
–
–
–
–

Year
Ended
01/01/2020
Rmb’000

(Restated)

4,612,498
379,031
28,232,977
86,867
182,851
6,080,155
368,043
16,898
686,557

Year
Ended
12/31/2020
Rmb’000
(Originally
stated)

4,175,373
562,535
20,931,505
86,867
207,068
6,560,343
384,325
244,123
1,007,618

Merger
accounting
restatement
Rmb’000

311,850
–
4,928,053
–
–
–
–
–
–

Year
Ended
12/31/2020
Rmb’000

(Restated)

4,487,223
562,535
25,859,558
86,867
207,068
6,560,343
384,325
244,123
1,007,618

–

–

–

2,923,140

(238,140)

2,685,000

–
924,602

–
331,484

–
1,256,086

120,000
1,258,270

–
331,631

120,000
1,589,901

35,873,185

6,028,778

41,901,963

38,461,167

5,333,394

43,794,561

NON-CURRENT ASSETS
Property, plant and equipment
Right-of-use assets
Expressway operating rights
Goodwill
Other intangible assets
Interests in associates
Interest in a joint venture
Financial assets at FVTPL
Contract asset
Other receivables and 

prepayments

Financial assets held under 

resale agreements
Deferred tax assets

118

ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2021 
 
 
 
 
 
  
 
 
 
 
 
 
  
 
 
 
 
 
 
  
 
 
 
 
 
 
  
2.  MERGER ACCOUNTING RESTATEMENT (Continued)

Merger
accounting
restatement
Rmb’000

Year
Ended
01/01/2020
Rmb’000
(Originally
stated)

Year
Ended
01/01/2020
Rmb’000

(Restated)

Year
Ended
12/31/2020
Rmb’000
(Originally
stated)

Merger
accounting
restatement
Rmb’000

Year
Ended
12/31/2020
Rmb’000

(Restated)

333,261
319,339

197
16,583

333,458
335,922

370,533
361,974

192
11,426

370,725
373,400

CURRENT ASSETS
Inventories
Trade receivables
Loans to customers arising from 

margin financing business

8,751,643

–

8,751,643

15,013,429

–

15,013,429

Other receivables and 

prepayments

Dividends receivable
Derivative financial assets
Financial assets at FVTPL
Financial assets held under 

resale agreements

Bank balances and clearing 
settlement fund held on 
behalf of customers
Bank balances, clearing 

settlement fund, deposits 
and cash:
– Restricted bank balances 

  and cash

– Time deposits with 

  original maturity over 

three months

– Cash and cash equivalents

424,182
2,005
6,250
22,235,480

8,110,354

20,141,931

–

648
–
–
–

–

–

–

424,830
2,005
6,250
22,235,480

3,129,801
2,835
525,629
29,158,094

8,110,354

7,002,471

20,141,931

27,090,816

–

23,986

2,265
–
–
–

–

–

–

3,132,066
2,835
525,629
29,158,094

7,002,471

27,090,816

23,986

302,726
8,076,598

–
14,096

302,726
8,090,694

313,600
8,609,049

–
36,036

313,600
8,645,085

68,703,769

31,524

68,735,293

91,602,217

49,919

91,652,136

119

 
 
 
 
 
 
  
 
 
 
 
 
 
 
  
 
 
 
 
 
 
  
 
 
 
 
 
 
  
2.  MERGER ACCOUNTING RESTATEMENT (Continued)

Merger
accounting
restatement
Rmb’000

Year
Ended
01/01/2020
Rmb’000
(Originally
stated)

Year
Ended
01/01/2020
Rmb’000

(Restated)

Year
Ended
12/31/2020
Rmb’000
(Originally
stated)

Merger
accounting
restatement
Rmb’000

Year
Ended
12/31/2020
Rmb’000

(Restated)

270,000

–

270,000

400,000

–

400,000

20,024,356
1,387,856
537,868
149,735
2,049,479
15,674
1,342
5,565
4,598,533

6,532,990
2,281,229
2,793,103

9,017,680
321,883
70,577

–
148,824
–
2,670
35,070
–
–
–
5,455,738

–
–
–

–
–
–

20,024,356
1,536,680
537,868
152,405
2,084,549
15,674
1,342
5,565
10,054,271

6,532,990
2,281,229
2,793,103

9,017,680
321,883
70,577

27,054,052
974,743
1,202,136
441,007
6,105,775
79,231
50
497,427
6,348,772

6,306,716
6,361,764
–

11,525,087
2,910,725
91,346

–
123,831
–
6,891
53,022
–
–
–
2,506,548

–
–
–

–
–
–

27,054,052
1,098,574
1,202,136
447,898
6,158,797
79,231
50
497,427
8,855,320

6,306,716
6,361,764
–

11,525,087
2,910,725
91,346

50,057,870

5,642,302

55,700,172

70,298,831

2,690,292

72,989,123

18,645,899

(5,610,778)

13,035,121

21,303,386

(2,640,373)

18,663,013

54,519,084

418,000

54,937,084

59,764,553

2,693,021

62,457,574

CURRENT LIABILITIES
Placements from other 
financial institutions
Accounts payable to 

customers arising from 
securities business

Trade payables
Tax liabilities
Other taxes payable
Other payables and accruals
Contract liabilities
Dividends payable
Derivative financial liabilities
Bank and other borrowings
Short-term financing note 

payable

Bonds payable
Convertible bonds
Financial assets sold under 
repurchase agreements
Financial liabilities at FVTPL
Lease liabilities

NET CURRENT ASSETS 

(LIABILITIES)

TOTAL ASSETS LESS 

CURRENT LIABILITIES

120

ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2021 
 
 
 
 
 
  
 
 
 
 
 
 
  
 
 
 
 
 
 
  
 
 
 
 
 
 
  
 
 
 
 
 
 
  
 
 
 
 
 
 
  
2.  MERGER ACCOUNTING RESTATEMENT (Continued)

Year
Ended
01/01/2020
Rmb’000
(Originally
stated)

6,421,600
12,892,042
2,687,228
347,331
188,772

Merger
accounting
restatement
Rmb’000

4,205,130
–
–
–
–

Year
Ended
01/01/2020
Rmb’000

(Restated)

10,626,730
12,892,042
2,687,228
347,331
188,772

Year
Ended
12/31/2020
Rmb’000
(Originally
stated)

7,919,800
13,706,383
766
386,498
298,894

Merger
accounting
restatement
Rmb’000

3,199,240
–
–
–
–

Year
Ended
12/31/2020
Rmb’000

(Restated)

11,119,040
13,706,383
766
386,498
298,894

22,536,973

4,205,130

26,742,103

22,312,341

3,199,240

25,511,581

31,982,111

(3,787,130)

28,194,981

37,452,212

(506,219)

36,945,993

4,343,115
17,250,900

–
(3,787,130)

4,343,115
13,463,770

4,343,115
19,773,344

–
(506,219)

4,343,115
19,267,125

21,594,015
10,388,096

(3,787,130)
–

17,806,885
10,388,096

24,116,459
13,335,753

(506,219)
–

23,610,240
13,335,753

31,982,111

(3,787,130)

28,194,981

37,452,212

(506,219)

36,945,993

NON-CURRENT LIABILITIES
Bank and other borrowings
Bonds payable
Convertible Bonds
Deferred tax liabilities
Lease liabilities

CAPITAL AND RESERVES
Share capital
Reserves

Equity attributable to owners

of the Company

Non-controlling interests

Note:  Notes  to  the  consolidated  statement  of  financial  position  are  presented  for  January  1,  2020  as  well  if  there  is 

merger accounting effect.

121

 
 
 
 
 
 
  
 
 
 
 
 
 
  
 
 
 
 
 
 
  
 
 
 
 
 
 
  
 
 
 
 
 
 
  
 
 
 
 
 
 
  
 
 
 
 
 
 
  
 
 
 
 
 
 
  
2.  MERGER ACCOUNTING RESTATEMENT (Continued)
The  effects  of  merger  accounting  restatement  in  respect  of  the  acquisition  of  100%  equity  interest  in 

LongLiLiLong Co on the consolidated statements of equity as at January 1 2020 and December 31, 2020 are as 

follows:

Year
Ended
01/01/2020
Rmb’000
(Originally
stated)

4,343,115
3,355,621
5,339,429
1,712
–

1,652
1,541,806
(807,227)
7,817,907
10,388,096

Merger
accounting
restatement
Rmb’000

–
–
–
–
–

–
–
2,491,100
(6,278,230)
–

Year
Ended
01/01/2020
Rmb’000

(Restated)

4,343,115
3,355,621
5,339,429
1,712
–

1,652
1,541,806
1,683,873
1,539,677
10,388,096

Year
Ended
12/31/2020
Rmb’000
(Originally
stated)

4,343,115
3,355,621
5,392,584
1,712
(24,160)

509
1,541,806
284,982
9,220,290
13,335,753

Merger
accounting
restatement
Rmb’000

–
–
–
–
–

–
–
6,352,960
(6,859,179)
–

Year
Ended
12/31/2020
Rmb’000

(Restated)

4,343,115
3,355,621
5,392,584
1,712
(24,160)

509
1,541,806
6,637,942
2,361,111
13,335,753

Share capital
Share premium
Statutory reserve
Capital reserve
Investment revaluation reserve
Share of differences arising 

on translation
Dividend reserve
Special reserves
Retained profits
Non-controlling interests

Total

31,982,111

(3,787,130)

28,194,981

37,452,212

(506,219)

36,945,993

122

ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2021 
 
 
 
 
 
  
 
 
 
 
 
 
  
 
 
 
 
 
 
  
 
 
 
 
 
 
  
2.  MERGER ACCOUNTING RESTATEMENT (Continued)
The  effects  of  merger  accounting  restatement  in  respect  of  the  acquisition  of  100%  equity  interest  in 

LongLiLiLong Co on the consolidated cash flows for the year ended December 31, 2020 are as follows:

Profit before tax
Adjustments for:
Finance costs
Interest income
Depreciation of property, plant and equipment
Amortisation of expressway operating rights
Impairment losses, net of reversal
Gain on disposal of property, plant and equipment
Other operating cash flow adjustments

Operating cash flows before movements in 

working capital

(Increase)/decrease in inventories
(Increase)/decrease in trade receivables
Increase in other receivables and prepayments
Decrease in trade payables
Increase in other taxes payable
Increase in other payables and accruals
Other working capital adjustments

Cash generated from operations
Income taxes paid
Interest paid

Merger
accounting
restatement
Rmb’000

Year ended
12/31/2020
Rmb’000
(Originally
stated)

Year ended
12/31/2020
Rmb’000

(Restated)

5,114,710

(581,096)

4,533,614

1,745,389
(55,186)
427,670
1,915,809
12,741
(23,725)
(506,877)

8,630,531
(52,945)
(44,935)
(2,728,225)
(395,978)
291,272
4,262,292
(7,596,514)

2,365,498
(802,971)
(1,352,049)

353,104
(1,600)
56,380
444,935
46
(123)
–

271,646
5
5,162
(1,668)
(25,013)
4,221
15,791
–

270,144
–
(355,331)

2,098,493
(56,786)
484,050
2,360,744
12,787
(23,848)
(506,877)

8,902,177
(52,940)
(39,773)
(2,729,893)
(420,991)
295,493
4,278,083
(7,596,514)

2,635,642
(802,971)
(1,707,380)

NET CASH FROM OPERATING ACTIVITIES

210,478

(85,187)

125,291

123

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2.  MERGER ACCOUNTING RESTATEMENT (Continued)
The  effects  of  merger  accounting  restatement  in  respect  of  the  acquisition  of  100%  equity  interest  in 

LongLiLiLong  Co  on  the  consolidated  cash  flows  for  the  year  ended  December  31,  2020  are  as  follows: 

(Continued)

INVESTING ACTIVITIES
Interest received
Proceeds on disposal of property, plant and equipment
Purchases of property, plant and equipment
Other investing cash flows

Year ended
12/31/2020
Rmb’000
(Originally
stated)

57,421
59,190
(783,342)
(2,555,483)

Merger
accounting
restatement
Rmb’000

Year ended
12/31/2020
Rmb’000

(Restated)

1,600
167
(41,788)
–

59,021
59,357
(825,130)
(2,555,483)

NET CASH USED IN INVESTING ACTIVITIES

(3,222,214)

(40,021)

(3,262,235)

FINANCING ACTIVITIES
New bank and other borrowings raised
Repayment of bank and other borrowings
New entrusted loans raised
Capital received from Communications Group
Other financing cash flows

11,295,398
(8,031,102)
50,000
–
232,240

2,020,000
(6,172,852)
200,000
4,100,000
–

13,315,398
(14,203,954)
250,000
4,100,000
232,240

NET CASH FROM FINANCING ACTIVITIES

3,546,536

147,148

3,693,684

NET INCREASE IN CASH AND CASH EQUIVALENTS

534,800

21,940

556,740

CASH AND CASH EQUIVALENTS AT JANUARY 1

8,076,598

14,096

8,090,694

Effect of foreign exchange rate changes

(2,349)

–

(2,349)

CASH AND CASH EQUIVALENTS AT DECEMBER 31

8,609,049

36,036

8,645,085

124

ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2021 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3.  APPLICATION OF AMENDMENTS TO HONG KONG FINANCIAL 

REPORTING STANDARDS (“HKFRSs”)

Amendments to HKFRSs that are mandatorily effective for the current year
In  the  current  year,  the  Group  has  applied  the  following  amendments  to  HKFRSs  issued  by  the  Hong  Kong 

Institute  of  Certified  Public  Accountants  (“HKICPA”)  for  the  first  time,  which  are  mandatorily  effective  for  the 

annual periods beginning on or after 1 January 2021 for the preparation of the consolidated financial statements:

Amendment to HKFRS 16
Amendments to HKFRS 9, HKAS 39,

HKFRS 7, HKFRS 4 and HKFRS 16

Covid-19-Related Rent Concessions
Interest Rate Benchmark Reform – Phase 2

In  addition,  the  Group  applied  the  agenda  decision  of  the  IFRS  Interpretations  Committee  (the  “Committee”) 

of  the  International Accounting  Standards  Board  issued  in  June  2021  which  clarified  the  costs  an  entity  should 

include as “estimated costs necessary to make the sale” when determining the net realisable value of inventories.

The  application  of  the  amendments  to  HKFRSs  in  the  current  year  has  had  no  material  impact  on  the  Group’s 

financial  positions  and  performance  for  the  current  and  prior  years  and/or  on  the  disclosures  set  out  in  these 

consolidated financial statements.

125

3.  APPLICATION OF AMENDMENTS TO HONG KONG FINANCIAL 

REPORTING STANDARDS (“HKFRSs”) (Continued)
New and amendments to HKFRSs in issue but not yet effective
The  Group  has  not  early  applied  the  following  new  and  revised  HKFRSs  that  have  been  issued  but  are  not  yet 

effective:

HKFRS 17
Amendments to HKFRS 3
Amendments to HKFRS 10 and HKAS 28

Insurance Contracts and the related Amendments3
Reference to the Conceptual Framework2
Sale or Contribution of Assets between an Investor

Amendment to HKFRS 16
Amendments to HKAS 1

Amendments to HKAS 1

And HKFRS Practice Statement 2

Amendments to HKAS 8
Amendments to HKAS 12

and its Associate or Joint Venture4

Covid-19-Related Rent Concessions beyond 30 June 20211
Classification of Liabilities as Current or Non-current and 

related amendments to Hong Kong Interpretation 5 (2020)3

Disclosure of Accounting Policies3

Definition of Accounting Estimates3
Deferred Tax related to Assets and Liabilities arising from a 

Single Transaction3

Amendments to HKAS 16

Property, Plant and Equipment – Proceeds before Intended 

Use2

Amendments to HKAS 37
Amendments to HKFRSs

Onerous Contracts – Cost of Fulfilling a Contract2
Annual Improvements to HKFRSs 2018 – 20202

1 
2 
3 
4 

Effective for annual periods beginning on or after 1 April 2021.

Effective for annual periods beginning on or after 1 January 2022.

Effective for annual periods beginning on or after 1 January 2023.

Effective for annual periods beginning on or after a date to be determined.

Except  for  the  new  and  amendments  to  HKFRSs  mentioned  below,  the  directors  of  the  Company  anticipate  that 

the  application  of  all  other  new  and  amendments  to  HKFRSs  will  have  no  material  impact  on  the  consolidated 

financial statements in the foreseeable future.

126

ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 20213.  APPLICATION OF AMENDMENTS TO HONG KONG FINANCIAL 

REPORTING STANDARDS (“HKFRSs”) (Continued)

Amendments  to  HKAS  1  Classification  of  Liabilities  as  Current  or  Non-current 
and related amendments to Hong Kong Interpretation 5 (2021)
The amendments provide clarification and additional guidance on the assessment of right to defer settlement for 

at least twelve months from reporting date for classification of liabilities as current or non-current, which:

• 

specify  that  the  classification  of  liabilities  as  current  or  non-current  should  be  based  on  rights  that  are  in 

existence at the end of the reporting period. Specifically, the amendments clarify that:

(i) 

the  classification  should  not  be  affected  by  management  intentions  or  expectations  to  settle  the 

liability within 12 months; and

(ii) 

if the right is conditional on the compliance with covenants, the right exists if the conditions are met 

at the end of the reporting period, even if the lender does not test compliance until a later date.

• 

clarify  that  if  a  liability  has  terms  that  could,  at  the  option  of  the  counterparty,  result  in  its  settlement  by 

the transfer of the entity’s own equity instruments, these terms do not affect its classification as current or 

non-current  only  if  the  entity  recognises  the  option  separately  as  an  equity  instrument  applying  HKAS  32 

Financial Instruments: Presentation.

In addition, Hong Kong Interpretation 5 was revised as a consequence of the Amendments to HKAS 1 to align the 

corresponding wordings with no change in conclusion.

127

3.  APPLICATION OF AMENDMENTS TO HONG KONG FINANCIAL 

REPORTING STANDARDS (“HKFRSs”) (Continued)

Amendments  to  HKAS  1  Classification  of  Liabilities  as  Current  or  Non-current 
and related amendments to Hong Kong Interpretation 5 (2021) (Continued)
(i) 

accounted separately as host debt and derivative components
As  at  31  December  2021,  the  Group’s  outstanding  convertible  instruments  include  counterparty 

conversion  options  that  do  not  meet  equity  instruments  classification  by  applying  HKAS  32  Financial 

Instruments:  Presentation.  The  Group  classified  as  current  or  non-current  based  on  the  earliest  date 

in  which  the  Group  has  the  obligation  to  redeem  these  instruments  through  cash  settlement.  The  host 

debt  component  is  measured  at  amortised  cost  with  carrying  amount  of  Rmb1,374,445,000  and  the 

derivative  component  (including  the  conversion  options)  is  measured  at  fair  value  with  carrying  amount 

of  Rmb340,217,000  as  at  31  December  2021,  both  of  which  are  classified  as  non-current  as  set  out  in 

Note  43.  Upon  the  application  of  the  amendments,  in  addition  to  the  obligation  to  redeem  through  cash 

settlement, the transfer of equity instruments upon the exercise of the conversion options that do not meet 

equity  instruments  classification  also  constitute  settlement  of  the  convertible  instruments.  Given  that  the 

conversion  options  are  exercisable  anytime,  the  host  liability  and  the  derivative  component  amounting  to 

Rmb1,714,662,000  would  be  reclassified  to  current  liabilities  as  the  holders  have  the  option  to  convert 

within twelve months.

Amendments  to  HKAS  12  Deferred  Tax  related  to Assets  and  Liabilities  arising 
from a Single Transaction
The amendments narrow the scope of the recognition exemption of deferred tax liabilities and deferred tax assets 

in  paragraphs  15  and  24  of  HKAS  12  Income  Taxes  so  that  it  no  longer  applies  to  transactions  that,  on  initial 

recognition, give rise to equal taxable and deductible temporary differences.

As  disclosed  to  the  consolidated  financial  statements,  for  leasing  transactions  in  which  the  tax  deductions  are 

attributable to the lease liabilities, the Group applies HKAS 12 requirements to the relevant assets and liabilities 

separately.  Temporary  differences  on  initial  recognition  of  the  relevant  assets  and  liabilities  are  not  recognised 

due to application of the initial recognition exemption.

Upon  the  application  of  the  amendments,  the  Group  will  recognise  a  deferred  tax  asset  (to  the  extent  that  it  is 

probable  that  taxable  profit  will  be  available  against  which  the  deductible  temporary  difference  can  be  utilised) 

and  a  deferred  tax  liability  for  all  deductible  and  taxable  temporary  differences  associated  with  the  right-of-use 

assets and the lease liabilities.

The  amendments  are  effective  for  annual  reporting  periods  beginning  on  or  after  1  January  2023,  with  early 

application  permitted. As  at  31  December  2021,  the  carrying  amounts  of  right-of-use  assets  and  lease  liabilities 

which  are  subject  to  the  amendments  amounted  to  Rmb377,812,000  and  Rmb465,915,000  respectively.  The 

Group is still in the process of assessing the full impact of the application of the amendments.

128

ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 20214.  BASIS OF PREPARATION OF CONSOLIDATED FINANCIAL 

STATEMENTS

The  consolidated  financial  statements  have  been  prepared  in  accordance  with  HKFRSs  issued  by  the  HKICPA. 

For the purpose of preparation of the consolidated financial statements, information is considered material if such 

information  is  reasonably  expected  to  influence  decisions  made  by  primary  users.  In  addition,  the  consolidated 

financial  statements  include  applicable  disclosures  required  by  the  Rules  Governing  the  Listing  of  Securities  on 

the Stock Exchange of Hong Kong Limited (“Listing Rules”) and by the Hong Kong Companies Ordinance.

The consolidated financial statements have been prepared on the historical cost basis, except for certain financial 

instruments that are measured at fair values at the end of each reporting period, as explained in the accounting 

policies below.

Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.

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 another valuation technique. In estimating the fair value of an asset or a liability, the Group takes 

into account the characteristics of the asset or liability if market participants would take those characteristics into 

account when pricing the asset or liability at the measurement date. Fair value for measurement and/or disclosure 

purposes  in  these  consolidated  financial  statements  is  determined  on  such  a  basis,  except  for  share-based 

payment transactions that are within the scope of HKFRS 2 Share-based Payment, leasing transactions that are 

accounted  for  in  accordance  with  HKFRS  16,  and  measurements  that  have  similarities  to  fair  value  but  are  not 

fair value, such as net realisable value in HKAS 2 Inventories or value in use in HKAS 36 Impairment of Assets.

For financial instruments which are transacted at fair value and a valuation technique that unobservable inputs is 

to be used to measure fair value in subsequent periods, the valuation technique is calibrated so that the results of 

the valuation technique equals the transaction price.

129

4.  BASIS OF PREPARATION OF CONSOLIDATED FINANCIAL 

STATEMENTS (Continued)

In addition, for financial reporting purposes, fair value measurements are categorised 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  quoted  prices  (unadjusted)  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.

5.  SIGNIFICANT ACCOUNTING POLICIES
Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and entities (including 

structured entities) controlled by the Company and its subsidiaries. Control is achieved when the Company:

• 

• 

• 

has power over the investee;

is exposed, or has rights, to variable returns from its involvement with the investee; and

has the ability to use its power to affect its returns.

The  Group  reassesses  whether  or  not  it  controls  an  investee  if  facts  and  circumstances  indicate  that  there  are 

changes to one or more of the three elements of control listed above.

130

ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 20215.  SIGNIFICANT ACCOUNTING POLICIES (Continued)
Basis of consolidation (Continued)
When  the  Group  has  less  than  a  majority  of  the  voting  rights  of  an  investee,  it  has  power  over  the  investee 

when  the  voting  rights  are  sufficient  to  give  it  the  practical  ability  to  direct  the  relevant  activities  of  the  investee 

unilaterally.  The  Group  considers  all  relevant  facts  and  circumstances  in  assessing  whether  or  not  the  Group’s 

voting rights in an investee are sufficient to give it power, including:

• 

• 

• 

• 

the size of the Group’s holding of voting rights relative to the size and dispersion of holdings of the other 

vote holders;

potential voting rights held by the Group, other vote holders or other parties;

rights arising from other contractual arrangements; and

any  additional  facts  and  circumstances  that  indicate  that  the  Group  has,  or  does  not  have,  the  current 

ability to direct the relevant activities at the time that decisions need to be made, including voting patterns 

at previous shareholders’ meetings.

When  the  Group  is  an  investor  of  a  fund  in  which  the  Group  also  acts  as  a  fund  manager,  the  Group  will 

determine  whether  it  is  a  principal  or  an  agent  for  the  purpose  of  assessing  whether  the  Group  controls  the 

relevant fund.

An  agent  is  a  party  primarily  engaged  to  act  on  behalf  and  for  the  benefit  of  another  party  or  parties  (the 

principal(s))  and  therefore  does  not  control  the  investee  when  it  exercises  its  decision-making  authority.  In 

determining whether the Group is an agent to the fund, the Group would assess:

• 

• 

• 

• 

the scope of its decision-making authority over the investee;

the rights held by other parties;

the remuneration to which it is entitled in accordance with the remuneration agreements; and

the decision maker’s exposure to variability of returns from other interests that it holds in the investee.

131

5.  SIGNIFICANT ACCOUNTING POLICIES (Continued)
Basis of consolidation (Continued)
Consolidation  of  a  subsidiary  begins  when  the  Group  obtains  control  over  the  subsidiary  and  ceases  when  the 

Group loses control of the subsidiary. Specifically, income and expenses of a subsidiary acquired or disposed of 

during the year are included in the consolidated statement of profit or loss and other comprehensive income from 

the date the Group gains control until the date when the Group ceases to control the subsidiary.

Profit  or  loss  and  each  item  of  other  comprehensive  income  are  attributed  to  the  owners  of  the  Company  and 

to  the  non-controlling  interests.  Total  comprehensive  income  of  subsidiaries  is  attributed  to  the  owners  of  the 

Company  and  to  the  non-controlling  interests  even  if  this  results  in  the  non-controlling  interests  having  a  deficit 

balance.

Where  necessary,  adjustments  are  made  to  the  financial  statements  of  subsidiaries  to  bring  their  accounting 

policies in line with the Group’s accounting policies.

All  intragroup  assets  and  liabilities,  equity,  income,  expenses  and  cash  flows  relating  to  transactions  between 

members of the Group are eliminated in full on consolidation.

Non-controlling  interests  in  subsidiaries  are  presented  separately  from  the  Group’s  equity  therein,  which 

represent present ownership interests entitling their holders to a proportionate share of net assets of the relevant 

subsidiaries upon liquidation.

Change in the Group’s interests in existing subsidiaries
Changes  in  the  Group’s  interests  in  subsidiaries  that  do  not  result  in  the  Group  losing  control  over  the 

subsidiaries are accounted for as equity transactions. The carrying amounts of the Group’s relevant components 

of  equity  and  the  non-controlling  interests  are  adjusted  to  reflect  the  changes  in  their  relative  interests  in  the 

subsidiaries,  including  re-attribution  of  relevant  reserves  between  the  Group  and  the  non-controlling  interests 

according to the Group’s and the non-controlling interests’ proportionate interests.

Any difference between the amount by which the non-controlling interests are adjusted, and the fair value of the 

consideration paid or received is recognised directly in equity and attributed to owners of the Company.

132

ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 20215.  SIGNIFICANT ACCOUNTING POLICIES (Continued)
Basis of consolidation (Continued)
Change in the Group’s interests in existing subsidiaries (Continued)
When  the  Group  loses  control  of  a  subsidiary,  the  assets  and  liabilities  of  that  subsidiary  and  non-controlling 

interests  (if  any)  are  derecognised.  A  gain  or  loss  is  recognised  in  the  profit  or  loss  and  is  calculated  as  the 

difference  between  (i)  the  aggregate  of  the  fair  value  of  the  consideration  received  and  the  fair  value  of  any 

retained  interest  and  (ii)  the  carrying  amount  of  the  assets  (including  goodwill),  and  liabilities  of  the  subsidiary 

attributable to the owners of the Company. All amounts previously recognised in other comprehensive income in 

related to that subsidiary are accounted for as if the Group had directly disposed of the related assets or liabilities 

of  the  subsidiary  (i.e.,  reclassified  to  profit  or  loss  or  transferred  to  another  category  of  equity  as  specified/

permitted by applicable HKFRSs).

Business combinations or asset acquisitions
Optional concentration test
The  Group  can  elect  to  apply  an  optional  concentration  test,  on  a  transaction-by-transaction  basis,  that 

permits  a  simplified  assessment  of  whether  an  acquired  set  of  activities  and  assets  is  not  a  business.  The 

concentration  test  is  met  if  substantially  all  of  the  fair  value  of  the  gross  assets  acquired  is  concentrated  in  a 

single identifiable asset or group of similar identifiable assets. The gross assets under assessment exclude cash 

and  cash  equivalents,  deferred  tax  assets,  and  goodwill  resulting  from  the  effects  of  deferred  tax  liabilities.  If 

the  concentration  test  is  met,  the  set  of  activities  and  assets  is  determined  not  to  be  a  business  and  no  further 

assessment is needed.

Asset acquisitions
When the Group acquires a group of assets and liabilities that do not constitute a business, the Group identifies 

and recognises the individual identifiable assets acquired and liabilities assumed by allocating the purchase price 

first  to  financial  assets/financial  liabilities  at  the  respective  fair  values,  the  remaining  balance  of  the  purchase 

price is then allocated to the other identifiable assets and liabilities on the basis of their relative fair values at the 

date of purchase. Such a transaction does not give rise to goodwill or bargain purchase gain.

133

5.  SIGNIFICANT ACCOUNTING POLICIES (Continued)
Business combinations or asset acquisitions (Continued)
Business combinations
Acquisitions of businesses, other than business combination under common control, are accounted for using the 

acquisition  method. The  consideration  transferred  in  a  business  combination  is  measured  at  fair  value,  which  is 

calculated as the sum of the acquisition-date fair values of the assets transferred by the Group, liabilities incurred 

by the Group to the former owners of the acquiree and the equity interests issued by the Group in exchange for 

control of the acquiree. Acquisition-related costs are generally recognised in profit or loss as incurred.

Except  for  certain  recognition  exemptions,  the  identifiable  assets  acquired  and  liabilities  assumed  must  meet 

the  definitions  of  an  asset  and  a  liability  in  the  Framework  for  the  Preparation  and  Presentation  of  Financial 

Statements (replaced by the Conceptual Framework for Financial Reporting issued in October 2010).

At  the  acquisition  date,  the  identifiable  assets  acquired  and  the  liabilities  assumed  are  recognised  at  their  fair 

value, except that:

• 

deferred  tax  assets  or  liabilities,  and  assets  or  liabilities  related  to  employee  benefit  arrangements  are 

recognised  and  measured  in  accordance  with  HKAS  12  Income  Taxes  and  HKAS  19  Employee  Benefits 

respectively;

• 

liabilities  or  equity  instruments  related  to  share-based  payment  arrangements  of  the  acquiree  or 

share-based  payment  arrangements  of  the  Group  entered  into  to  replace  share-based  payment 

arrangements  of  the  acquiree  are  measured  in  accordance  with  HKFRS  2  Share-based  Payment  at  the 

acquisition date (see the accounting policy below);

assets  (or  disposal  groups)  that  are  classified  as  held  for  sale  in  accordance  with  HKFRS  5 Non-current 

Assets Held for Sale and Discontinued Operations are measured in accordance with that standard; and

lease  liabilities  are  recognised  and  measured  at  the  present  value  of  the  remaining  lease  payments  (as 

defined in HKFRS 16) as if the acquired leases were new leases at the acquisition date, except for leases 

for  which  (a)  the  lease  term  ends  within  12  months  of  the  acquisition  date;  or  (b)  the  underlying  asset  is 

of low value. Right-of-use assets are recognised and measured at the same amount as the relevant lease 

liabilities,  adjusted  to  reflect  favourable  or  unfavourable  terms  of  the  lease  when  compared  with  market 

terms.

• 

• 

134

ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 20215.  SIGNIFICANT ACCOUNTING POLICIES (Continued)
Business combinations or asset acquisitions (Continued)
Business combinations (Continued)
Goodwill  is  measured  as  the  excess  of  the  sum  of  the  consideration  transferred,  the  amount  of  any 

non-controlling  interests  in  the  acquiree,  and  the  fair  value  of  the  acquirer’s  previously  held  equity  interest  in 

the  acquiree  (if  any)  over  the  net  amount  of  the  identifiable  assets  acquired  and  the  liabilities  assumed  as  at 

acquisition date. If, after re-assessment, the net amount of the identifiable assets acquired and liabilities assumed 

exceeds  the  sum  of  the  consideration  transferred,  the  amount  of  any  non-controlling  interests  in  the  acquiree 

and  the  fair  value  of  the  acquirer’s  previously  held  interest  in  the  acquiree  (if  any),  the  excess  is  recognised 

immediately in profit or loss as a bargain purchase gain.

Non-controlling  interests  that  are  present  ownership  interests  and  entitle  their  holders  to  a  proportionate  share 

of  the  relevant  subsidiary’s  net  assets  in  the  event  of  liquidation  are  initially  measured  at  the  non-controlling 

interests’ proportionate share of the recognised amounts of the acquiree’s identifiable net assets or at fair value. 

The choice of measurement basis is made on a transaction-by-transaction basis.

Merger  accounting  for  business  combination  involving  businesses  under 
common control
The consolidated financial statements incorporate the financial statements items of the combining businesses in 

which the common control combination occurs as if they had been combined from the date when the combining or 

businesses first came under the control of the controlling party.

The  net  assets  of  the  combining  or  businesses  are  consolidated  using  the  existing  book  values  from  the 

controlling  party’s  perspective.  No  amount  is  recognised  in  respect  of  goodwill  or  bargain  purchase  gain  at  the 

time of common control combination.

The  consolidated  statement  of  profit  or  loss  and  other  comprehensive  income  includes  the  results  of  each  of 

the  combining  entities  or  businesses  from  the  earliest  date  presented  or  since  the  date  when  the  combining  or 

businesses first came under the common control, where this is a shorter period.

The  comparative  amounts  in  the  consolidated  financial  statements  are  presented  as  if  the  businesses  had  been 

combined  at  the  beginning  of  the  previous  reporting  period  or  when  they  first  came  under  common  control, 

whichever is shorter.

135

5.  SIGNIFICANT ACCOUNTING POLICIES (Continued)
Goodwill
Goodwill arising on an acquisition of a business is carried at cost as established at the date of acquisition of the 

business (see the accounting policy above) less accumulated impairment losses, if any.

For  the  purposes  of  impairment  testing,  goodwill  is  allocated  to  each  of  the  Group’s  cash-generating  units 

(or  groups  of  cash-generating  units)  that  is  expected  to  benefit  from  the  synergies  of  the  combination,  which 

represent the lowest level at which the goodwill is monitored for internal management purpose and not larger than 

an operating segment.

A  cash-generating  unit  (or  group  of  cash-generating  units)  to  which  goodwill  has  been  allocated  is  tested  for 

impairment  annually  or  more  frequently  when  there  is  indication  that  the  unit  may  be  impaired.  For  goodwill 

arising  on  an  acquisition  in  a  reporting  period,  the  cash-generating  unit  (or  group  of  cash-generating  units) 

to  which  goodwill  has  been  allocated  is  tested  for  impairment  before  the  end  of  that  reporting  period.  If  the 

recoverable amount is less than its carrying amount, the impairment loss is allocated first to reduce the carrying 

amount  of  any  goodwill  and  then  to  the  other  assets  on  a  pro-rata  basis  based  on  the  carrying  amount  of  each 

asset in the unit (or group of cash-generating units).

On  disposal  of  the  relevant  cash-generating  unit  or  any  of  the  cash-generating  unit  within  the  group  of  cash 

generating  units,  the  attributable  amount  of  goodwill  is  included  in  the  determination  of  the  amount  of  profit  or 

loss on disposal. When the Group disposes of an operation within the cash-generating unit (or a cash generating 

unit within a group of cash-generating units), the amount of goodwill disposed of is measured on the basis of the 

relative  values  of  the  operation  (or  the  cash-generating  unit)  disposed  of  and  the  portion  of  the  cash-generating 

unit (or the group of cash-generating units) retained.

The Group’s policy for goodwill arising on the acquisition of associates and joint venture is described below.

136

ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 20215.  SIGNIFICANT ACCOUNTING POLICIES (Continued)
Investments in associates and a joint venture
An  associate  is  an  entity  over  which  the  Group  has  significant  influence.  Significant  influence  is  the  power  to 

participate  in  the  financial  and  operating  policy  decisions  of  the  investee  but  is  not  control  or  joint  control  over 

those policies.

A  joint  venture  is  a  joint  arrangement  whereby  the  parties  that  have  joint  control  of  the  arrangement  have  rights 

to  the  net  assets  of  the  joint  arrangement.  Joint  control  is  the  contractually  agreed  sharing  of  control  of  an 

arrangement,  which  exists  only  when  decisions  about  the  relevant  activities  require  unanimous  consent  of  the 

parties sharing control.

The  results  and  assets  and  liabilities  of  associates  and  joint  ventures  are  incorporated  in  these  consolidated 

financial  statements  using  the  equity  method  of  accounting.  The  financial  statements  of  associates  and  joint 

ventures  used  for  equity  accounting  purposes  are  prepared  using  uniform  accounting  policies  as  those  of  the 

Group  for  like  transactions  and  events  in  similar  circumstances.  Under  the  equity  method,  an  investment  in 

an  associate  or  a  joint  venture  is  initially  recognised  in  the  consolidated  statement  of  financial  position  at  cost 

and  adjusted  thereafter  to  recognise  the  Group’s  share  of  the  profit  or  loss  and  other  comprehensive  income 

of  the  associate  or  joint  venture.  Changes  in  net  assets  of  the  associate/joint  venture  other  than  profit  and  loss 

and  other  comprehensive  income  are  not  accounted  for  unless  such  changes  resulted  in  changes  in  ownership 

interest  held  by  the  Group.  When  the  Group’s  share  of  losses  of  an  associate  or  a  joint  venture  exceeds  the 

Group’s  interest  in  that  associate  or  joint  venture  (which  includes  any  long-term  interests  that,  in  substance, 

form part of the Group’s net investment in the associate or joint venture), the Group discontinues recognising its 

share  of  further  losses. Additional  losses  are  recognised  only  to  the  extent  that  the  Group  has  incurred  legal  or 

constructive obligations or made payments on behalf of the associate or joint venture.

An investment in an associate or a joint venture is accounted for using the equity method from the date on which 

the investee becomes an associate or a joint venture. On acquisition of the investment in an associate or a joint 

venture,  any  excess  of  the  cost  of  the  investment  over  the  Group’s  share  of  the  net  fair  value  of  the  identifiable 

assets and liabilities of the investee is recognised as goodwill, which is included within the carrying amount of the 

investment. Any excess of the Group’s share of the net fair value of the identifiable assets and liabilities over the 

cost of the investment, after reassessment, is recognised immediately in profit or loss in the period in which the 

investment is acquired.

137

5.  SIGNIFICANT ACCOUNTING POLICIES (Continued)
Investments in associates and a joint venture (Continued)
The  Group  assesses  whether  there  is  an  objective  evidence  that  the  interest  in  an  associate  or  a  joint  venture 

may  be  impaired.  When  any  objective  evidence  exists,  the  entire  carrying  amount  of  the  investment  (including 

goodwill)  is  tested  for  impairment  in  accordance  with  HKAS  36  as  a  single  asset  by  comparing  its  recoverable 

amount  (higher  of  value  in  use  and  fair  value  less  costs  of  disposal)  with  its  carrying  amount.  Any  impairment 

loss  recognised  is  not  allocated  to  any  asset,  including  goodwill,  that  forms  part  of  the  carrying  amount  of  the 

investment. Any reversal of that impairment loss is recognised in accordance with HKAS 36 to the extent that the 

recoverable amount of the investment subsequently increases.

When the Group ceases to have significant influence over an associate or joint control over a joint venture, it is 

accounted for as a disposal of the entire interest in the investee with a resulting gain or loss being recognised in 

profit or loss.

When the Group reduces its ownership interest in an associate or a joint venture but the Group continues to use 

the  equity  method,  the  Group  reclassifies  to  profit  or  loss  the  proportion  of  the  gain  or  loss  that  had  previously 

been recognised in other comprehensive income relating to that reduction in ownership interest if that gain or loss 

would be reclassified to profit or loss on the disposal of the related assets or liabilities.

When a group entity transacts with an associate or a joint venture of the Group, profits and losses resulting from 

the transactions with the associate or joint venture is recognised in the Group’s consolidated financial statements 

only to the extent of interests in the associate or joint venture that are not related to the Group.

Revenue from contracts with customers
The Group recognises revenue when (or as) a performance obligation is satisfied, i.e. when “control” of the goods 

or services underlying the particular performance obligation is transferred to the customer.

A  performance  obligation  represents  a  good  or  service  (or  a  bundle  of  goods  or  services)  that  is  distinct  or  a 

series of distinct goods or services that are substantially the same.

138

ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 20215.  SIGNIFICANT ACCOUNTING POLICIES (Continued)
Revenue from contracts with customers (Continued)
Control  is  transferred  over  time  and  revenue  is  recognised  over  time  by  reference  to  the  progress  towards 

complete satisfaction of the relevant performance obligation if one of the following criteria is met:

• 

the customer simultaneously receives and consumes the benefits provided by the Group’s performance as 

the Group performs;

• 

the Group’s performance creates or enhances an asset that the customer controls as the Group performs; 

or

• 

the Group’s performance does not create an asset with an alternative use to the Group and the Group has 

an enforceable right to payment for performance completed to date.

Otherwise,  revenue  is  recognised  at  a  point  in  time  when  the  customer  obtains  control  of  the  distinct  good  or 

service.

A  contract  asset  represents  the  Group’s  right  to  consideration  in  exchange  for  goods  or  services  that  the  Group 

has  transferred  to  a  customer  that  is  not  yet  unconditional.  It  is  assessed  for  impairment  in  accordance  with 

HKFRS  9.  In  contrast,  a  receivable  represents  the  Group’s  unconditional  right  to  consideration,  i.e.  only  the 

passage of time is required before payment of that consideration is due.

A  contract  liability  represents  the  Group’s  obligation  to  transfer  goods  or  services  to  a  customer  for  which  the 

Group has received consideration (or an amount of consideration is due) from the customer.

A  contract  asset  and  a  contract  liability  relating  to  the  same  contract  are  accounted  for  and  presented  on  a  net 

basis.

139

5.  SIGNIFICANT ACCOUNTING POLICIES (Continued)
Revenue from contracts with customers (Continued)
Contracts  with  multiple  performance  obligations  (including  allocation  of 
transaction price)
For  contracts  that  contain  more  than  one  performance  obligations,  the  Group  allocates  the  transaction  price  to 

each performance obligation on a relative stand-alone selling price basis.

The stand-alone selling price of the distinct good or service underlying each performance obligation is determined 

at contract inception. It represents the price at which the Group would sell a promised good or service separately 

to  a  customer.  If  a  stand-alone  selling  price  is  not  directly  observable,  the  Group  estimates  it  using  appropriate 

techniques such that the transaction price ultimately allocated to any performance obligation reflects the amount 

of  consideration  to  which  the  Group  expects  to  be  entitled  in  exchange  for  transferring  the  promised  goods  or 

services to the customer.

Over  time  revenue  recognition:  measurement  of  progress  towards  complete 
satisfaction of a performance obligation
Input method

The  progress  towards  complete  satisfaction  of  a  performance  obligation  is  measured  based  on  input  method, 

which  is  to  recognise  revenue  on  the  basis  of  the  Group’s  efforts  or  inputs  to  the  satisfaction  of  a  performance 

obligation  relative  to  the  total  expected  inputs  to  the  satisfaction  of  that  performance  obligation,  that  best  depict 

the Group’s performance in transferring control of goods or services.

Variable consideration
For contracts that contain variable consideration, the Group estimates the amount of consideration to which it will 

be entitled using either (a) the expected value method or (b) the most likely amount, depending on which method 

better predicts the amount of consideration to which the Group will be entitled.

The  estimated  amount  of  variable  consideration  is  included  in  the  transaction  price  only  to  the  extent  that  it  is 

highly  probable  that  such  an  inclusion  will  not  result  in  a  significant  revenue  reversal  in  the  future  when  the 

uncertainty associated with the variable consideration is subsequently resolved.

At  the  end  of  each  reporting  period,  the  Group  updates  the  estimated  transaction  price  (including  updating 

its  assessment  of  whether  an  estimate  of  variable  consideration  is  constrained)  to  represent  faithfully  the 

circumstances  present  at  the  end  of  the  reporting  period  and  the  changes  in  circumstances  during  the  reporting 

period.

140

ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 20215.  SIGNIFICANT ACCOUNTING POLICIES (Continued)
Revenue from contracts with customers (Continued)
Existence of significant financing component
In  determining  the  transaction  price,  the  Group  adjusts  the  promised  amount  of  consideration  for  the  effects  of 

the  time  value  of  money  if  the  timing  of  payments  agreed  (either  explicitly  or  implicitly)  provides  the  customer 

or  the  Group  with  a  significant  benefit  of  financing  the  transfer  of  goods  or  services  to  the  customer.  In  those 

circumstances,  the  contract  contains  a  significant  financing  component.  A  significant  financing  component  may 

exist regardless of whether the promise of financing is explicitly stated in the contract or implied by the payment 

terms agreed to by the parties to the contract.

For  contracts  where  the  period  between  payment  and  transfer  of  the  associated  goods  or  services  is  less  than 

one  year,  the  Group  applies  the  practical  expedient  of  not  adjusting  the  transaction  price  for  any  significant 

financing component.

For advance payments received from customers before the transfer of the associated goods or services in which 

the  Group  adjusts  for  the  promised  amount  of  consideration  for  a  significant  financing  component,  the  Group 

applies  a  discount  rate  that  would  be  reflected  in  a  separate  financing  transaction  between  the  Group  and  the 

customer at contract inception. The relevant interest expenses during the period between the advance payments 

were  received  and  the  transfer  of  the  associated  goods  and  services  are  accounted  for  on  the  same  basis  as 

other borrowing costs.

For  contracts  where  the  Group  transferred  the  associated  goods  or  services  before  payments  from  customers 

in  which  the  Group  adjusts  for  the  promised  amount  of  consideration  for  significant  financing  components,  the 

Group applies a discount rate that would be reflected in a separate financing transaction between the Group and 

the customer at contract inception. The Group recognises interest income during the period between the payment 

from customers and the transfer of the associated goods or services.

141

5.  SIGNIFICANT ACCOUNTING POLICIES (Continued)
Revenue from contracts with customers (Continued)
Principal versus agent
When another party is involved in providing goods or services to a customer, the Group determines whether the 

nature of its promise is a performance obligation to provide the specified goods or services itself (i.e. the Group 

is  a  principal)  or  to  arrange  for  those  goods  or  services  to  be  provided  by  the  other  party  (i.e.  the  Group  is  an 

agent).

The Group is a principal if it controls the specified good or service before that good or service is transferred to a 

customer.

The Group is an agent if its performance obligation is to arrange for the provision of the specified good or service 

by  another  party.  In  this  case,  the  Group  does  not  control  the  specified  good  or  service  provided  by  another 

party before that good or service is transferred to the customer. When the Group acts as an agent, it recognises 

revenue in the amount of any  fee  or commission to which it expects to be entitled in exchange for arranging for 

the specified goods or services to be provided by the other party.

Property, plant and equipment
Property,  plant  and  equipment  are  tangible  assets  that  are  held  for  use  in  the  production  or  supply  of  goods 

or  services,  or  for  administrative  purposes  (other  than  properties  under  construction  as  described  below),  are 

stated in the consolidated statement of financial position at cost, less subsequent accumulated depreciation and 

subsequent accumulated impairment losses, if any.

Properties  in  the  course  of  construction  for  production,  supply  or  administrative  purposes  are  carried  at  cost, 

less  any  recognised  impairment  loss.  Costs  include  any  costs  directly  attributable  to  bringing  the  asset  to  the 

location  and  condition  necessary  for  it  to  be  capable  of  operating  in  the  manner  intended  by  management  and, 

for qualifying assets, borrowing costs capitalised in accordance with the Group’s accounting policy. Depreciation 

of  these  assets,  on  the  same  basis  as  other  property  assets,  commences  when  the  assets  are  ready  for  their 

intended use.

Depreciation  is  recognised  so  as  to  write  off  the  cost  of  assets  (other  than  properties  under  construction)  less 

their residual values over their estimated useful lives, using the straight-line method. The estimated useful lives, 

residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any 

changes in estimate accounted for on a prospective basis.

142

ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 20215.  SIGNIFICANT ACCOUNTING POLICIES (Continued)
Property, plant and equipment (Continued)
The  estimated  useful  life  and  annual  depreciation  rate  (except  for  construction  in  progress),  after  taking  into 

account the residual value, adopted by the Group are set out below:

Leasehold land and buildings
Hotel
Ancillary facilities
Communication and signaling equipment
Motor vehicles
Machinery and equipment

Estimated
useful life

Annual
depreciation
rate

20 – 50 years
30 years
10 – 30 years
5 years
5 – 8 years
5 – 8 years

1.9% – 4.9%
3.2%
3.2% – 9%
19.4%
12.1% – 19.4%
12.1% – 19.4%

An  item  of  property,  plant  and  equipment  is  derecognised  upon  disposal  or  when  no  future  economic  benefits 

are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement 

of an item of property, plant and equipment is determined as the difference between the sales proceeds and the 

carrying amount of the asset and is recognised in profit or loss.

Intangible assets
Intangible assets acquired separately
Intangible  assets  with  finite  useful  lives  that  are  acquired  separately  are  carried  at  cost  less  accumulated 

amortisation and any accumulated impairment losses. Amortisation for intangible assets with finite useful lives is 

recognised  on  a  straight-line  basis  over  their  estimated  useful  lives.  The  estimated  useful  life  and  amortisation 

method  are  reviewed  at  the  end  of  each  reporting  period,  with  the  effect  of  any  changes  in  estimate  being 

accounted  for  on  a  prospective  basis.  Intangible  assets  with  indefinite  useful  lives  that  are  acquired  separately 

are carried at cost less any subsequent accumulated impairment losses (see the accounting policy in respect of 

impairment losses on tangible and intangible assets below).

143

 
 
 
5.  SIGNIFICANT ACCOUNTING POLICIES (Continued)
Intangible assets (Continued)
Intangible assets acquired in a business combination
Intangible  assets  acquired  in  a  business  combination  are  recognised  separately  from  goodwill  are  initially 

recognised at their fair value at the acquisition date (which is regarded as their cost).

Subsequent to initial recognition, intangible assets acquired in a business combination with finite useful lives are 

reported  at  cost  less  accumulated  amortisation  and  any  accumulated  impairment  losses,  on  the  same  basis  as 

intangible  assets  that  are  acquired  separately.  Intangible  assets  with  indefinite  useful  lives  are  carried  at  cost 

less  any  subsequent  accumulated  impairment  losses  (see  accounting  policy  in  respect  of  impairment  losses  on 

tangible and intangible assets below).

An  intangible  asset  is  derecognised  on  disposal,  or  when  no  future  economic  benefits  are  expected  from  use 

or  disposal.  Gains  and  losses  arising  from  derecognition  of  an  intangible  assets  are  measured  at  the  difference 

between  the  net  disposal  proceeds  and  the  carrying  amount  of  the  asset  and  are  recognised  in  profit  or  loss  in 

the period when the asset is derecognised.

Expressway operating rights under service concession arrangements
When the Group has a right to charge for usage of concession infrastructure, it recognises concession intangible 

assets  based  on  fair  value  of  the  consideration  paid  upon  initial  recognition.  Subsequent  costs  incurred  on 

expressway  widening  projects  and  upgrading  services  are  recognised  as  additional  costs  of  the  expressway 

operating  rights.  The  concession  intangible  assets  representing  expressway  operating  rights  are  carried  at  cost 

less accumulated amortisation and any accumulated impairment losses.

The  concession  intangible  assets  are  amortised  to  write-off  their  cost  over  their  expected  useful  lives  in  the 

remaining concession period on a straight-line basis.

Costs  in  relation  to  the  day-to-day  servicing,  repairs  and  maintenance  of  the  expressway  infrastructures  are 

recognised as expenses in the periods in which they are incurred.

144

ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 20215.  SIGNIFICANT ACCOUNTING POLICIES (Continued)
Impairment on property, plant and equipment, right-of-use assets and intangible 
assets  other  than  goodwill  (see  the  accounting  policy  in  respect  of  goodwill 
above)
At the end of each reporting period, the Group reviews the carrying amounts of its property, plant and equipment, 

right-of-use  assets,  and  intangible  assets  with  finite  useful  lives  to  determine  whether  there  is  any  indication 

that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the 

asset is estimated in order to determine the extent of the impairment loss (if any). Intangible assets with indefinite 

useful  lives  are  tested  for  impairment  at  least  annually,  and  whenever  there  is  an  indication  that  they  may  be 

impaired.

The  recoverable  amount  of  property,  plant  and  equipment,  right-of-use  assets,  and  intangible  assets  are 

estimated  individually,  when  it  is  not  possible  to  estimate  the  recoverable  amount  of  an  individual  asset 

individually, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs.

In  testing  a  cash-generating  unit  for  impairment,  corporate  assets  are  allocated  to  the  relevant  cash-generating 

unit  when  a  reasonable  and  consistent  basis  of  allocation  can  be  established,  or  otherwise  they  are  allocated 

to  the  smallest  group  of  cash  generating  units  for  which  a  reasonable  and  consistent  allocation  basis  can  be 

established. The recoverable amount is determined for the cash-generating unit or group of cash-generating units 

to which the corporate asset belongs, and is compared with the carrying amount of the relevant cash-generating 

unit or group of cash-generating units.

Recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in use, 

the  estimated  future  cash  flows  are  discounted  to  their  present  value  using  a  pre-tax  discount  rate  that  reflects 

current market assessments of the time value of money and the risks specific to the asset (or a cash-generating 

unit) for which the estimates of future cash flows have not been adjusted.

145

5.  SIGNIFICANT ACCOUNTING POLICIES (Continued)
Impairment on property, plant and equipment, right-of-use assets and intangible 
assets  other  than  goodwill  (see  the  accounting  policy  in  respect  of  goodwill 
above) (Continued)
If  the  recoverable  amount  of  an  asset  (or  a  cash-generating  unit)  is  estimated  to  be  less  than  its  carrying 

amount,  the  carrying  amount  of  the  asset  (or  the  cash-generating  unit)  is  reduced  to  its  recoverable  amount. 

For  corporate  assets  or  portion  of  corporate  assets  which  cannot  be  allocated  on  a  reasonable  and  consistent 

basis  to  a  cash-generating  unit,  the  Group  compares  the  carrying  amount  of  a  group  of  cash-generating  units, 

including  the  carrying  amounts  of  the  corporate  assets  or  portion  of  corporate  assets  allocated  to  that  group 

of  cash-generating  units,  with  the  recoverable  amount  of  the  group  of  cash-generating  units.  In  allocating  the 

impairment loss, the impairment loss is allocated first to reduce the carrying amount of any goodwill (if applicable) 

and  then  to  the  other  assets  on  a  pro-rata  basis  based  on  the  carrying  amount  of  each  asset  in  the  unit  or  the 

group of cash-generating units. The carrying amount of an asset is not reduced below the highest of its fair value 

less costs of disposal (if measurable), its value in use (if determinable) and zero. The amount of the impairment 

loss that would otherwise have been allocated to the asset is allocated pro rata to the other assets of the unit or 

the group of cash-generating units. An impairment loss is recognised immediately in profit or loss.

Where  an  impairment  loss  subsequently  reverses,  the  carrying  amount  of  the  asset  (or  cash-generating  unit 

or  a  group  of  cash-generating  units)  is  increased  to  the  revised  estimate  of  its  recoverable  amount,  but  so  that 

the  increased  carrying  amount  does  not  exceed  the  carrying  amount  that  would  have  been  determined  had  no 

impairment loss been recognised for the asset (or a cash-generating unit or a group of cash-generating units) in 

prior years. A reversal of an impairment loss is recognised immediately in profit or loss.

Inventories
Inventories include properties held for sale, consumables and parts for toll road operation, maintenance and hotel 

service and those commodities held for sale arising from the securities business.

Inventories  are  stated  at  the  lower  of  cost  and  net  realisable  value.  Cost  of  properties  held  for  sale  includes 

the  costs  of  land,  development  expenditure  incurred  and,  where  appropriate,  borrowing  costs  capitalised. 

Costs  of  other  inventories  are  calculated  using  the  weighted  average  method.  Net  realisable  value  represents 

the  estimated  selling  price  for  inventories  less  all  estimated  costs  of  completion  and  costs  necessary  to  make 

the  sale.  Costs  necessary  to  make  the  sale  include  incremental  costs  directly  attributable  to  the  sale  and 

non-incremental costs which the Group must incur to make the sale.

146

ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 20215.  SIGNIFICANT ACCOUNTING POLICIES (Continued)
Lease
Definition of a lease
A  contract  is,  or  contains,  a  lease  if  the  contract  conveys  the  right  to  control  the  use  of  an  identified  asset  for  a 

period of time in exchange for consideration.

For  contracts  entered  into  or  modified  or  arising  from  business  combinations  on  or  after  the  date  of  initial 

application or arising from business combinations, the Group assesses whether a contract is or contains a lease 

based on the definition under HKFRS 16 at inception, modification date or acquisition date, as appropriate. Such 

contract will not be reassessed unless the terms and conditions of the contract are subsequently changed.

The Group as lessee
Short-term leases and leases of low-value assets

The Group applies the short-term lease recognition exemption to leases of properties that have a lease term of 12 

months or less from the commencement date and do not contain a purchase option. It also applies the recognition 

exemption  for  lease  of  low-value  assets.  Lease  payments  on  short-term  leases  and  leases  of  low-value  assets 

are recognised as expense on a straight-line basis over the lease term.

Right-of-use assets

The cost of right-of-use asset includes:

• 

• 

• 

• 

the amount of the initial measurement of the lease liability;

any lease payments made at or before the commencement date, less any lease incentives received;

any initial direct costs incurred by the Group; and

an  estimate  of  costs  to  be  incurred  by  the  Group  in  dismantling  and  removing  the  underlying  assets, 

restoring  the  site  on  which  it  is  located  or  restoring  the  underlying  asset  to  the  condition  required  by  the 

terms and conditions of the lease, unless those costs are incurred to produce inventories.

Right-of-use  assets  are  measured  at  cost,  less  any  accumulated  depreciation  and  impairment  losses,  and 

adjusted for any remeasurement of lease liabilities.

147

5.  SIGNIFICANT ACCOUNTING POLICIES (Continued)
Lease (Continued)
The Group as lessee (Continued)
Right-of-use assets (Continued)

Right-of-use assets in which the Group is reasonably certain to obtain ownership of the underlying leased assets 

at  the  end  of  the  lease  term  are  depreciated  from  commencement  date  to  the  end  of  the  useful  life.  Otherwise, 

right-of-use  assets  are  depreciated  on  a  straight-line  basis  over  the  shorter  of  its  estimated  useful  life  and  the 

lease term.

The  Group  presents  right-of-use  assets  as  a  separate  line  item  on  the  consolidated  statement  of  financial 

position.

Refundable rental deposits

Refundable  rental  deposits  paid  are  accounted  under  HKFRS  9  Financial  Instruments  and  initially  measured 

at  fair  value.  Adjustments  to  fair  value  at  initial  recognition  are  considered  as  additional  lease  payments  and 

included in the cost of right-of-use assets.

Lease liabilities

At the commencement date of a lease, the Group recognises and measures the lease liability at the present value 

of  lease  payments  that  are  unpaid  at  that  date.  In  calculating  the  present  value  of  lease  payments,  the  Group 

uses  the  incremental  borrowing  rate  at  the  lease  commencement  date  if  the  interest  rate  implicit  in  the  lease  is 

not readily determinable.

The lease payments include:

• 

• 

fixed payments (including in-substance fixed payments) less any lease incentives receivable;

variable lease payments that depend on an index or a rate, initially measured using the index or rate as at 

the commencement date;

• 

amounts expected to be payable by the Group under residual value guarantees;

148

ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 20215.  SIGNIFICANT ACCOUNTING POLICIES (Continued)
Lease (Continued)
The Group as lessee (Continued)
Lease liabilities (Continued)

• 

• 

the exercise price of a purchase option if the Group is reasonably certain to exercise the option; and

payments of penalties for terminating a lease, if the lease term reflects the Group exercising an option to 

terminate the lease.

Variable lease payments that reflect changes in market rental rates are initially measured using the market rental 

rates  as  at  the  commencement  date.  Variable  lease  payments  that  do  not  depend  on  an  index  or  a  rate  are  not 

included  in  the  measurement  of  lease  liabilities  and  right-of-use  assets,  and  are  recognised  as  expense  in  the 

period on which the event or condition that triggers the payment occurs.

After the commencement date, lease liabilities are adjusted by interest accretion and lease payments.

The Group remeasures lease liabilities (and makes a corresponding adjustment to the related right-of-use assets) 

whenever:

• 

the  lease  term  has  changed  or  there  is  a  change  in  the  assessment  of  exercise  of  a  purchase  option,  in 

which  case  the  related  lease  liability  is  remeasured  by  discounting  the  revised  lease  payments  using  a 

revised discount rate at the date of reassessment.

• 

the lease payments change due to changes in market rental rates following a market rent review, in which 

cases the related lease liability is remeasured by discounting the revised lease payments using the initial 

discount rate.

The Group presents lease liabilities as a separate line item on the consolidated statement of financial position.

149

5.  SIGNIFICANT ACCOUNTING POLICIES (Continued)
Lease (Continued)
The Group as lessee (Continued)
Lease modifications

The Group accounts for a lease modification as a separate lease if:

• 

• 

the  modification  increases  the  scope  of  the  lease  by  adding  the  right  to  use  one  or  more  underlying 

assets; and

the consideration for the leases increases by an amount commensurate with the stand-alone price for the 

increase  in  scope  and  any  appropriate  adjustments  to  that  stand-alone  price  to  reflect  the  circumstances 

of the particular contract.

For  a  lease  modification  that  is  not  accounted  for  as  a  separate  lease,  the  Group  remeasures  the  lease  liability 

based  on  the  lease  term  of  the  modified  lease  by  discounting  the  revised  lease  payments  using  a  revised 

discount rate at the effective date of the modification.

The  Group  accounts  for  the  remeasurement  of  lease  liabilities  by  making  corresponding  adjustments  to  the 

relevant  right-of-use  asset.  When  the  modified  contract  contains  a  lease  component  and  one  or  more  additional 

lease  or  non-lease  components,  the  Group  allocates  the  consideration  in  the  modified  contract  to  each  lease 

component on the basis of the relative stand-alone price of the lease component and the aggregate stand-alone 

price of the non-lease components.

The Group as a lessor
Classification and measurement of leases

Leases for which the Group is a lessor are classified as finance or operating leases. Whenever the terms of the 

lease transfer substantially all the risks and rewards incidental to ownership of an underlying asset to the lessee, 

the contract is classified as a finance lease. All other leases are classified as operating leases.

Leases for which the Group is a lessor are all classified as operating leases for the reporting periods.

150

ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 20215.  SIGNIFICANT ACCOUNTING POLICIES (Continued)
Lease (Continued)
The Group as a lessor (Continued)
Classification and measurement of leases (Continued)

Rental  income  from  operating  leases  is  recognised  in  profit  or  loss  on  a  straight-line  basis  over  the  term  of  the 

relevant  lease.  Initial  direct  costs  incurred  in  negotiating  and  arranging  an  operating  lease  are  added  to  the 

carrying amount of the leased asset, and such costs are recognised as an expense on a straight-line basis over 

the lease term. Variable lease payments for operating leases that depend on an index or a rate are estimated and 

included in the total lease payments to be recognised on a straight-line basis over the lease term. Variable lease 

payments that do not depend on an index or a rate are recognised as income when they arise.

Interest  and  rental  income  which  are  derived  from  the  Group’s  ordinary  course  of  business  are  presented  as 

revenue.

Allocation of consideration to components of a contract

When  a  contract  includes  both  leases  and  non-lease  components,  the  Group  applies  HKFRS  15  Revenue 

from  Contracts  with  Customers  (“HKFRS  15”)  to  allocate  consideration  in  a  contract  to  lease  and  non-lease 

components.  Non-lease  components  are  separated  from  lease  component  on  the  basis  of  their  relative 

stand-alone selling prices.

Refundable rental deposits

Refundable  rental  deposits  received  are  accounted  for  under  HKFRS  9  and  initially  measured  at  fair  value. 

Adjustments to fair value at initial recognition are considered as additional lease payments from lessees.

Lease modification

Changes  in  considerations  of  lease  contracts  that  were  not  part  of  the  original  terms  and  conditions  are 

accounted  for  as  lease  modifications,  including  lease  incentives  provided  through  forgiveness  or  reduction  of 

rentals.

The  Group  accounts  for  a  modification  to  an  operating  lease  as  a  new  lease  from  the  effective  date  of  the 

modification, considering any prepaid or accrued lease payments relating to the original lease as part of the lease 

payments for the new lease.

151

5.  SIGNIFICANT ACCOUNTING POLICIES (Continued)
Foreign currencies
In  preparing  the  financial  statements  of  each  individual  group  entity,  transactions  in  currencies  other  than  the 

functional  currency  of  that  entity  (foreign  currencies)  are  recognised  at  the  rates  of  exchange  prevailing  at  the 

dates  of  the  transactions. At  the  end  of  the  reporting  period,  monetary  items  denominated  in  foreign  currencies 

are retranslated at the rates prevailing at that date.

Exchange  differences  arising  on  the  settlement  of  monetary  items,  and  on  the  retranslation  of  monetary  items, 

are recognised in profit or loss in the period in which they arise.

For  the  purposes  of  presenting  the  consolidated  financial  statements,  the  assets  and  liabilities  of  the  Group’s 

operations are translated into the presentation currency of the Group (i.e. Rmb) using exchange rates prevailing 

at  the  end  of  each  reporting  period.  Income  and  expenses  items  are  translated  at  the  average  exchange  rates 

for  the  period, unless exchange  rates fluctuate significantly during the period, in which case the exchange rates 

at the date of transactions are used. Exchange differences arising, if any, are recognised in other comprehensive 

income  and  accumulated  in  equity  under  the  heading  of  share  of  differences  arising  on  translation  (attributed  to 

non-controlling interests as appropriate).

Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are 

assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to 

the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.

Any  specific  borrowing  that  remain  outstanding  after  the  related  asset  is  ready  for  its  intended  use  or  sale  is 

included  in  the  general  borrowing  pool  for  calculation  of  capitalisation  rate  on  general  borrowings.  Investment 

income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets 

is deducted from the borrowing costs eligible for capitalisation.

All other borrowing costs are recognised in profit or loss in the period in which they are incurred.

152

ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 20215.  SIGNIFICANT ACCOUNTING POLICIES (Continued)
Government grants
Government  grants  are  not  recognised  until  there  is  reasonable  assurance  that  the  Group  will  comply  with  the 

conditions attaching to them and that the grants will be received.

Government  grants  are  recognised  in  profit  or  loss  on  a  systematic  basis  over  the  periods  in  which  the  Group 

recognises  as  expenses  the  related  costs  for  which  the  grants  are  intended  to  compensate.  Specifically, 

government  grants  whose  primary  condition  is  that  the  Group  should  purchase,  construct  or  otherwise  acquire 

non-current  assets  are  recognised  as  deferred  income  in  the  consolidated  statement  of  financial  position  and 

transferred to profit or loss on a systematic and rational basis over the useful lives of the related assets.

Government  grants  related  to  income  that  are  receivable  as  compensation  for  expenses  or  losses  already 

incurred  or  for  the  purpose  of  giving  immediate  financial  support  to  the  Group  with  no  future  related  costs  are 

recognised in profit or loss in the period in which they become receivable. Such grants are presented under other 

income.

Retirement benefit costs
Payments  to  defined  contribution  retirement  benefit  plans  are  recognised  as  an  expense  when  employees  have 

rendered services entitling them to the contributions.

Termination benefits
A liability for a termination benefit is recognised at the earlier of when the Group entity can no longer withdraw the 

offer of the termination benefit and when it recognises any related restructuring costs.

Short-term employee benefits
Short-term  employee  benefits  are  recognised  at  the  undiscounted  amount  of  the  benefits  expected  to  be  paid 

as  and  when  employees  rendered  the  services. All  short-term  employee  benefits  are  recognised  as  an  expense 

unless another HKFRS requires or permits the inclusion of the benefit in the cost of an asset.

A  liability  is  recognised  for  benefits  accruing  to  employees  (such  as  wages  and  salaries,  annual  leave  and  sick 

leave) after deducting any amount already paid.

153

5.  SIGNIFICANT ACCOUNTING POLICIES (Continued)
Taxation
Income tax expense represents the sum of the tax currently payable and deferred tax.

The  tax  currently  payable  is  based  on  taxable  profit  for  the  year.  Taxable  profit  differs  from  profit  before  tax 

because  of  items  of  income  or  expense  that  are  taxable  or  deductible  in  other  years  and  items  that  are  never 

taxable or deductible. The Group’s liability for current tax is calculated using tax rates that have been enacted or 

substantively enacted by the end of the reporting period.

Deferred  tax  is  recognised  on  temporary  differences  between  the  carrying  amounts  of  assets  and  liabilities  in 

the consolidated financial statements and the corresponding tax bases used in the computation of taxable profit. 

Deferred  tax  liabilities  are  generally  recognised  for  all  taxable  temporary  differences.  Deferred  tax  assets  are 

generally  recognised  for  all  deductible  temporary  differences  to  the  extent  that  it  is  probable  that  taxable  profits 

will  be  available  against  which  those  deductible  temporary  differences  can  be  utilised.  Such  deferred  tax  assets 

and  liabilities  are  not  recognised  if  the  temporary  difference  arises  or  from  the  initial  recognition  (other  than  in 

a  business  combination)  of  assets  and  liabilities  in  a  transaction  that  affects  neither  the  taxable  profit  nor  the 

accounting profit. In addition, deferred tax liabilities are not recognised if the temporary difference arises from the 

initial recognition of goodwill.

Deferred  tax  liabilities  are  recognised  for  taxable  temporary  differences  associated  with  investments  in 

subsidiaries and interests in associates and a joint venture, except where the Group is able to control the reversal 

of  the  temporary  difference  and  it  is  probable  that  the  temporary  difference  will  not  reverse  in  the  foreseeable 

future.  Deferred  tax  assets  arising  from  deductible  temporary  differences  associated  with  such  investments  and 

interests  are  only  recognised  to  the  extent  that  it  is  probable  that  there  will  be  sufficient  taxable  profits  against 

which  to  utilise  the  benefits  of  the  temporary  differences  and  they  are  expected  to  reverse  in  the  foreseeable 

future.

The  carrying  amount  of  deferred  tax  assets  is  reviewed  at  the  end  of  the  reporting  period  and  reduced  to  the 

extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to 

be recovered.

154

ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 20215.  SIGNIFICANT ACCOUNTING POLICIES (Continued)
Taxation (Continued)
Deferred  tax  assets  and  liabilities  are  measured  at  the  tax  rates  that  are  expected  to  apply  in  the  period  in 

which the liability is settled or the asset is realised, based on tax rate (and tax laws) that have been enacted or 

substantively enacted by the end of the reporting period.

The  measurement  of  deferred  tax  liabilities  and  assets  reflects  the  tax  consequences  that  would  follow  from  the 

manner in which the Group expects, at the end of the reporting period, to recover or settle the carrying amount of 

its assets and liabilities.

For  the  purposes  of  measuring  deferred  tax  for  leasing  transactions  in  which  the  Group  recognises  the 

right-of-use  assets  and  the  related  lease  liabilities,  the  Group  first  determines  whether  the  tax  deductions  are 

attributable to the right-of-use assets or the lease liabilities.

For  leasing  transactions  in  which  the  tax  deductions  are  attributable  to  the  lease  liabilities,  the  Group  applies 

HKAS 12 Income Taxes requirements to right-of-use assets and lease liabilities separately. Temporary differences 

on initial recognition of the relevant right-of-use assets and lease liabilities are not recognised due to application 

of  the  initial  recognition  exemption.  Temporary  differences  arising  from  subsequent  revision  to  the  carrying 

amounts  of  right-of-use  assets  and  lease  liabilities,  resulting  from  remeasurement  of  lease  liabilities  and  lease 

modifications, that are  not subject to initial recognition exemption are recognised on the date of remeasurement 

or modification.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets 

against current tax liabilities and when they relate to income taxes levied to the same taxation authority.

Current and deferred tax are recognised in profit or loss, except when they relate to items that are recognised in 

other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognised 

in  other  comprehensive  income  or  directly  in  equity  respectively.  Where  current  tax  or  deferred  tax  arises  from 

the  initial  accounting  for  a  business  combination,  the  tax  effect  is  included  in  the  accounting  for  the  business 

combination.

155

5.  SIGNIFICANT ACCOUNTING POLICIES (Continued)
Financial instruments
Financial  assets  and  financial  liabilities  are  recognised  when  a  group  entity  becomes  a  party  to  the  contractual 

provisions  of  the  instrument.  All  regular  way  purchases  or  sales  of  financial  assets  are  recognised  and 

derecognised  on  a  trade  date.  Regular  way  purchases  or  sales  are  purchases  or  sales  of  financial  assets  that 

require delivery of assets within the time frame established by regulation or convention in the market place.

Financial  assets  and  financial  liabilities  are  initially  measured  at  fair  value  except  for  trade  receivables  arising 

from contracts with customers which are initially measured in accordance with HKFRS 15. Transaction costs that 

are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial 

assets or financial liabilities at fair value through profit or loss (“FVTPL”)) are added to or deducted from the fair 

value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly 

attributable  to  the  acquisition  of  financial  assets  or  financial  liabilities  at  FVTPL  are  recognised  immediately  in 

profit or loss.

The  effective  interest  method  is  a  method  of  calculating  the  amortised  cost  of  a  financial  asset  or  financial 

liability  and  of  allocating  interest  income  and  interest  expense  over  the  relevant  period.  The  effective  interest 

rate is the rate that exactly discounts estimated future cash receipts and payments (including all fees and points 

paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or 

discounts)  through  the  expected  life  of  the  financial  asset  or  financial  liability,  or,  where  appropriate,  a  shorter 

period, to the net carrying amount on initial recognition.

Interest income which are derived from the Group’s ordinary course of business are presented as revenue.

Financial assets
Classification and subsequent measurement of financial assets

Financial assets that meet the following conditions are subsequently measured at amortised cost:

• 

• 

the financial asset is held within a business model whose objective is to collect contractual cash flows; and

the contractual terms give rise on specified dates to cash flows that are solely payments of principal and 

interest on the principal amount outstanding.

The Group doesn’t hold any financial assets which are classified as FVTOCI.

156

ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 20215.  SIGNIFICANT ACCOUNTING POLICIES (Continued)
Financial instruments (Continued)
Financial assets (Continued)
Classification and subsequent measurement of financial assets (Continued)

All  other  financial  assets  are  subsequently  measured  at  FVTPL,  except  that  at  the  date  of  initial  recognition 

of  a  financial  asset  the  Group  may  irrevocably  elect  to  present  subsequent  changes  in  fair  value  of  an  equity 

investment  in  other  comprehensive  income  if  that  equity  investment  is  neither  held  for  trading  nor  contingent 

consideration  recognised  by  an  acquirer  in  a  business  combination  to  which  HKFRS  3  Business  Combinations 

applies.

A financial asset is held for trading if:

• 

• 

• 

it has been acquired principally for the purpose of selling in the near term; or

on  initial  recognition  it  is  a  part  of  a  portfolio  of  identified  financial  instruments  that  the  Group  manages 

together and has a recent actual pattern of short-term profit-taking; or

it is a derivative that is not designated and effective as a hedging instrument.

In  addition,  the  Group  may  irrevocably  designate  a  financial  asset  that  are  required  to  be  measured  at  the 

amortised cost as measured at FVTPL if doing so eliminates or significantly reduces an accounting mismatch.

(i) 

Amortised cost and interest income

Interest  income  is  recognised  using  the  effective  interest  method  for  financial  assets  measured  subsequently 

at  amortised  cost.  For  financial  instruments  other  than  purchased  or  originated  credit-impaired  financial  assets, 

interest  income  is  calculated  by  applying  the  effective  interest  rate  to  the  gross  carrying  amount  of  a  financial 

asset,  except  for  financial  assets  that  have  subsequently  become  credit-impaired  (see  below).  For  financial 

assets  that  have  subsequently  become  credit-impaired,  interest  income  is  recognised  by  applying  the  effective 

interest  rate  to  the  amortised  cost  of  the  financial  asset  from  the  next  reporting  period.  If  the  credit  risk  on  the 

credit  impaired  financial  instrument  improves  so  that  the  financial  asset  is  no  longer  credit-impaired,  interest 

income  is  recognised  by  applying  the  effective  interest  rate  to  the  gross  carrying  amount  of  the  financial  asset 

from the beginning of the reporting period following the determination that the asset is no longer credit impaired.

157

5.  SIGNIFICANT ACCOUNTING POLICIES (Continued)
Financial instruments (Continued)
Financial assets (Continued)
Classification and subsequent measurement of financial assets (Continued)

(ii) 

Financial assets at FVTPL

Financial assets that do not meet the criteria for being measured at amortised cost are measured at FVTPL.

Financial  assets  at  FVTPL  are  measured  at  fair  value  at  the  end  of  each  reporting  period,  with  any  fair  value 

gains or losses recognised in profit or loss. The net gain or loss recognised in profit or loss includes any dividend 

or interest earned on the financial asset and is included in the “securities investment gains” line item.

Impairment of financial assets subject to impairment assessment under HKFRS 9

The  Group  performs  impairment  assessment  under  expected  credit  loss  (“ECL”)  model  on  financial  assets 

(including trade receivables, loans to customers arising from margin financing business, bank balances, clearing 

settlement  fund,  deposits  and  cash,  pledged  bank  deposit,  bank  balances  and  clearing  settlement  fund  held  on 

behalf  of  customers,  financial  assets  held  under  agreements  and  other  receivables),  and  other  items  (contract 

assets) which are subject to impairment under HKFRS 9. The amount of ECL is updated at each reporting date to 

reflect changes in credit risk since initial recognition.

Lifetime  ECL  represents  the  ECL  that  will  result  from  all  possible  default  events  over  the  expected  life  of  the 

relevant  instrument.  In  contrast,  12-month  ECL  (“12m  ECL”)  represents  the  portion  of  lifetime  ECL  that  is 

expected to result from default events that are possible within 12 months after the reporting date. Assessment are 

done based on the Group’s historical credit loss experience, adjusted for factors that are specific to the debtors, 

general  economic  conditions  and  an  assessment  of  both  the  current  conditions  at  the  reporting  date  as  well  as 

the forecast of future conditions.

The  Group  always  recognises  lifetime  ECL  for  trade  receivables  and  contract  assets.  The  ECL  on  these  assets 

are assessed collectively using a provision matrix with appropriate groupings.

For all other instruments, the Group measures the loss allowance equal to 12m ECL, unless when there has been 

a significant increase in credit risk since initial recognition, in which case the Group recognises lifetime ECL. The 

assessment  of  whether  lifetime  ECL  should  be  recognised  is  based  on  significant  increases  in  the  likelihood  or 

risk of a default occurring since initial recognition.

158

ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 20215.  SIGNIFICANT ACCOUNTING POLICIES (Continued)
Financial instruments (Continued)
Financial assets (Continued)
Impairment of financial assets subject to impairment assessment under HKFRS 9 (Continued)

(i) 

Significant increase in credit risk

In assessing whether the credit risk has increased significantly since initial recognition, the Group compares the 

risk of a default occurring on the financial instrument as at the reporting date with the risk of a default occurring 

on  the  financial  instrument  as  at  the  date  of  initial  recognition.  In  making  this  assessment,  the  Group  considers 

both  quantitative  and  qualitative  information  that  is  reasonable  and  supportable,  including  historical  experience 

and forward-looking information that is available without undue cost or effort.

In  particular,  the  following  information  is  taken  into  account  when  assessing  whether  credit  risk  has  increased 

significantly:

• 

an actual or expected significant deterioration in the financial instrument’s external (if available) or internal 

credit rating;

• 

• 

• 

• 

significant deterioration in external market indicators of credit risk, e.g. a significant increase in the credit 

spread, the credit default swap prices for the debtor;

existing  or  forecast  adverse  changes  in  business,  financial  or  economic  conditions  that  are  expected  to 

cause a significant decrease in the debtor’s ability to meet its debt obligations;

an actual or expected significant deterioration in the operating results of the debtor;

an  actual  or  expected  significant  adverse  change  in  the  regulatory,  economic,  or  technological 

environment  of  the  debtor  that  results  in  a  significant  decrease  in  the  debtor’s  ability  to  meet  its  debt 

obligations.

Irrespective  of  the  outcome  of  the  above  assessment,  the  Group  presumes  that  the  credit  risk  has  increased 

significantly  since  initial  recognition  when  contractual  payments  are  more  than  30  days  past  due,  unless  the 

Group has reasonable and supportable information that demonstrates otherwise.

159

5.  SIGNIFICANT ACCOUNTING POLICIES (Continued)
Financial instruments (Continued)
Financial assets (Continued)
Impairment of financial assets subject to impairment assessment under HKFRS 9 (Continued)

(i) 

Significant increase in credit risk (Continued)

Despite  the  aforegoing,  the  Group  assumes  that  the  credit  risk  on  a  debt  instrument  has  not  increased 

significantly  since  initial  recognition  if  the  debt  instrument  is  determined  to  have  low  credit  risk  at  the  reporting 

date.  A  debt  instrument  is  determined  to  have  low  credit  risk  if  i)  it  has  a  low  risk  of  default,  ii)  the  borrower 

has  a  strong  capacity  to  meet  its  contractual  cash  flow  obligations  in  the  near  term  and  iii)  adverse  changes 

in  economic  and  business  conditions  in  the  longer  term  may,  but  will  not  necessarily,  reduce  the  ability  of  the 

borrower to fulfil its contractual cash flow obligations. The Group considers a debt instrument to have low credit 

risk when it has an internal or external credit rating of ‘investment grade’ as per globally understood definitions.

The Group regularly monitors the effectiveness of the criteria used to identify whether there has been a significant 

increase  in  credit  risk  and  revises  them  as  appropriate  to  ensure  that  the  criteria  are  capable  of  identifying 

significant increase in credit risk before the amount becomes past due.

(ii) 

Definition of default

For internal credit risk management, the Group considers an event of default occurs when information developed 

internally or obtained from external sources indicates that the debtor is unlikely to pay its creditors, including the 

Group, in full (without taking into account any collaterals held by the Group).

Irrespective of the above, the Group considers that default has occurred when a financial asset is more than 90 

days past due unless the Group has reasonable and supportable information to demonstrate that a more lagging 

default criterion is more appropriate.

160

ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 20215.  SIGNIFICANT ACCOUNTING POLICIES (Continued)
Financial instruments (Continued)
Financial assets (Continued)
Impairment of financial assets subject to impairment assessment under HKFRS 9 (Continued)

(iii) 

Credit-impaired financial assets

A  financial  asset  is  credit-impaired  when  one  or  more  events  of  default  that  have  a  detrimental  impact  on  the 

estimated  future  cash  flows  of  that  financial  asset  have  occurred.  Evidence  that  a  financial  asset  is  credit 

impaired includes observable data about the following events:

(a) 

significant financial difficulty of the issuer or the borrower;

(b) 

a breach of contract, such as a default or past due event;

(c) 

the  lender(s)  of  the  borrower,  for  economic  or  contractual  reasons  relating  to  the  borrower’s  financial 

difficulty, having granted to the borrower a concession(s) that the lender(s) would not otherwise consider;

(d) 

it is becoming probable that the borrower will enter bankruptcy or other financial reorganisation; or

(e) 

the disappearance of an active market for that financial asset because of financial difficulties; or

(f) 

the purchase or origination of a financial asset at a deep discount that reflects the incurred credit losses.

(iv)  Write-off policy

The  Group  writes  off  a  financial  asset  when  there  is  information  indicating  that  the  counterparty  is  in  severe 

financial  difficulty  and  there  is  no  realistic  prospect  of  recovery.  Financial  assets  written  off  may  still  be  subject 

to  enforcement  activities  under  the  Group’s  recovery  procedures,  taking  into  account  legal  advice  where 

appropriate. A  write-off  constitutes  a  derecognition  event. Any  subsequent  recoveries  are  recognised  in  profit  or 

loss.

161

5.  SIGNIFICANT ACCOUNTING POLICIES (Continued)
Financial instruments (Continued)
Financial assets (Continued)
Impairment of financial assets subject to impairment assessment under HKFRS 9 (Continued)

(v) 

Measurement and recognition of ECL

The  measurement  of  ECL  is  a  function  of  the  probability  of  default  (“PD”),  loss  given  default  (“LGD”)  (i.e.  the 

magnitude  of  the  loss  if  there  is  a  default)  and  the  exposure  at  default  (“EAD”). The  assessment  of  the  PD  and 

LGD  is  based  on  historical  data  and  forward-looking  information.  Estimation  of  ECL  reflects  an  unbiased  and 

probability-weighted amount that is determined with the respective risks of default occurring as the weights. The 

Group  uses  a  practical  expedient  in  estimating  ECL  on  trade  receivables  and  contract  assets  using  a  provision 

matrix  taking  into  consideration  historical  credit  loss  experience,  adjusted  for  forward  looking  information  that  is 

available without undue cost or effort.

Generally, the ECL is the difference between all contractual cash flows that are due to the Group in accordance 

with  the  contract  and  the  cash  flows  that  the  Group  expects  to  receive,  discounted  at  the  effective  interest  rate 

determined at initial recognition. For a lease receivable, the cash flows used for determining the ECL is consistent 

with the cash flows used in measuring the lease receivable in accordance with HKFRS 16.

For a financial guarantee contract, the Group is required to make payments only in the event of a default by the 

debtor  in  accordance  with  the  terms  of  the  instrument  that  is  guaranteed.  Accordingly,  the  ECL  is  the  present 

value of the expected payments to reimburse the holder for a credit loss that it incurs less any amounts that the 

Group expects to receive from the holder, the debtor or any other party.

For  ECL  on  financial  guarantee  contracts  for  which  the  effective  interest  rate  cannot  be  determined,  the  Group 

will  apply  a  discount  rate  that  reflects  the  current  market  assessment  of  the  time  value  of  money  and  the  risks 

that are specific to the cash flows but only if, and to the extent that, the risks are taken into account by adjusting 

the discount rate instead of adjusting the cash shortfalls being discounted.

Lifetime  ECL  for  trade  receivables,  contract  assets  and  other  receivables  are  considered  on  a  collective 

basis  taking  into  consideration  past  due  information  and  relevant  credit  information  such  as  forward  looking 

macroeconomic information.

162

ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 20215.  SIGNIFICANT ACCOUNTING POLICIES (Continued)
Financial instruments (Continued)
Financial assets (Continued)
Impairment of financial assets subject to impairment assessment under HKFRS 9 (Continued)

(v) 

Measurement and recognition of ECL (Continued)

For collective assessment, the Group takes into consideration the following characteristics when formulating the 

grouping:

• 

• 

• 

Past-due status;

Nature, size and industry of debtors; and

External credit ratings where available.

The  grouping  is  regularly  reviewed  by  management  to  ensure  the  constituents  of  each  group  continue  to  share 

similar credit risk characteristics.

Interest income is calculated based on the gross carrying amount of the financial asset unless the financial asset 

is credit impaired, in which case interest income is calculated based on amortised cost of the financial asset.

The  Group  recognises  an  impairment  gain  or  loss  in  profit  or  loss  for  all  financial  instruments  by  adjusting  their 

carrying  amounts,  including  trade  receivables,  loans  to  customers  arising  from  margin  financing  business, 

other  receivables,  financial  assets  held  under  resale  agreements,  contract  assets,  pledged  bank  deposit,  bank 

balances and clearing settlement fund held on behalf of customers, and bank balances, clearing settlement fund, 

deposits and cash where the corresponding adjustment is recognised through a loss allowance account.

Derecognition/modification of financial assets

The  Group  derecognises  a  financial  asset  only  when  the  contractual  rights  to  the  cash  flows  from  the  asset 

expire,  or  when  it  transfers  the  financial  asset  and  substantially  all  the  risks  and  rewards  of  ownership  of  the 

asset  to  another  entity.  If  the  Group  retains  substantially  all  the  risks  and  rewards  of  ownership  of  a  transferred 

financial  asset,  the  Group  continues  to  recognise  the  financial  asset  and  also  recognises  a  collateralised 

borrowing for the proceeds received.

On  derecognition  of  a  financial  asset  measured  at  amortised  cost,  the  difference  between  the  asset’s  carrying 

amount and the sum of the consideration received and receivable is recognised in profit or loss.

A modification of a financial asset occurs if the contractual cash flows are renegotiated or otherwise modified.

163

5.  SIGNIFICANT ACCOUNTING POLICIES (Continued)
Financial instruments (Continued)
Financial assets (Continued)
Derecognition/modification of financial assets (Continued)

When  the  contractual  terms  of  a  financial  asset  are  modified,  the  Group  assesses  whether  the  revised  terms 

result  in  a  substantial  modification  from  original  terms  taking  into  account  all  relevant  facts  and  circumstances 

including  qualitative  factors.  If  qualitative  assessment  is  not  conclusive,  the  Group  considers  the  terms  are 

substantially  different  if  the  discounted  present  value  of  the  cash  flows  under  the  new  terms,  including  any  fees 

paid  net  of  any  fees  received,  and  discounted  using  the  original  effective  interest  rate,  is  at  least  10  per  cent 

different  from  the  discounted  present  value  of  the  remaining  cash  flows  of  the  original  financial  asset,  after 

reducing gross carrying amount that has been written off.

For non-substantial modifications of financial assets that do not result in derecognition, the carrying amount of the 

relevant financial assets will be calculated at the present value of the modified contractual cash flows discounted 

at  the  financial  assets’  original  effective  interest  rate.  Transaction  costs  or  fees  incurred  are  adjusted  to  the 

carrying  amount  of  the  modified  financial  assets  and  are  amortised  over  the  remaining  term. Any  adjustment  to 

the carrying amount of the financial asset is recognised in profit or loss at the date of modification.

Financial liabilities and equity
Classification as debt or equity

Debt  and  equity  instruments  are  classified  as  either  financial  liabilities  or  as  equity  in  accordance  with  the 

substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.

Financial instruments are classified as financial liabilities if the instruments include contractual obligation:

• 

• 

to deliver cash or another financial asset to another entity; or

to exchange financial assets or financial liabilities with another entity under conditions that are potentially 

unfavourable to the issuer.

Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting 

all of its liabilities. Equity instruments issued by the Group are recognised at the proceeds received, net of direct 

issue costs.

164

ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 20215.  SIGNIFICANT ACCOUNTING POLICIES (Continued)
Financial instruments (Continued)
Financial liabilities and equity (Continued)
Financial liabilities

All  financial  liabilities  are  subsequently  measured  at  amortised  cost  using  the  effective  interest  method  or  at 

FVTPL.

Financial liabilities at FVTPL

Financial  liabilities  are  classified  as  at  FVTPL  when  the  financial  liability  is  (i)  held  for  trading  or  (ii)  it  is 

designated as at FVTPL.

A financial liability is held for trading if:

• 

• 

it has been acquired principally for the purpose of repurchasing it in the near term; or

on  initial  recognition  it  is  a  part  of  a  portfolio  of  identified  financial  instruments  that  the  Group  manages 

together and has a recent actual pattern of short-term profit-taking; or

• 

it is a derivative, except for a derivative that is a financial guarantee contract or a designated and effective 

hedging instrument.

A  financial  liability  other  than  a  financial  liability  held  for  trading  may  be  designated  as  at  FVTPL  upon  initial 

recognition if:

• 

such  designation  eliminates  or  significantly  reduces  a  measurement  or  recognition  inconsistency  that 

would otherwise arise; or

• 

the  financial  liability  forms  part  of  a  group  of  financial  assets  or  financial  liabilities  or  both,  which 

is  managed  and  its  performance  is  evaluated  on  a  fair  value  basis,  in  accordance  with  the  Group’s 

documented  risk  management  or  investment  strategy,  and  information  about  the  grouping  is  provided 

internally on that basis; or

• 

it forms part of a contract containing one or more embedded derivatives, and HKFRS 9 permits the entire 

combined contract (asset or liability) to be designated as at FVTPL.

165

5.  SIGNIFICANT ACCOUNTING POLICIES (Continued)
Financial instruments (Continued)
Financial liabilities and equity (Continued)
Financial liabilities at FVTPL (Continued)

For  financial  liabilities  that  are  designated  as  at  FVTPL,  the  amount  of  change  in  the  fair  value  of  the  financial 

liability  that  is  attributable  to  changes  in  the  credit  risk  of  that  liability  is  recognised  in  other  comprehensive 

income, unless the recognition of the effects of changes in the liability’s credit risk in other comprehensive income 

would  create  or  enlarge  an  accounting  mismatch  in  profit  or  loss.  For  financial  liabilities  that  contain  embedded 

derivatives,  such  as  convertible  bond,  the  changes  in  fair  value  of  the  embedded  derivatives  are  excluded  in 

determining  the  amount  to  be  presented  in  other  comprehensive  income.  Changes  in  fair  value  attributable  to  a 

financial liability’s credit risk that are recognised in other comprehensive income are not subsequently reclassified 

to profit or loss; instead, they are transferred to retained profits upon derecognition of the financial liability.

Financial liabilities at amortised cost

Financial  liabilities  (including  accounts  payable  to  customers  arising  from  securities  business,  trade  payables, 

other  payables,  dividends  payable,  bank  and  other  borrowings,  placements  from  other  financial  institutions, 

short-term  financing  note  payable,  financial  assets  sold  under  repurchase  agreements,  bonds  payable  and 

convertible bond) are subsequently measured at amortised cost, using the effective interest method.

Financial guarantee contracts

For  financial  guarantee  contracts,  the  loss  allowances  are  recognised  at  the  higher  of  the  amount  of  the  loss 

allowance determined in accordance with HKFRS 9; and the amount initially recognised less, where appropriate, 

cumulative amount of income recognised over the guarantee period.

Convertible bond contains debt and derivative components

A conversion option that will be settled other than by the exchange of a fixed amount of cash or another financial 

asset for a fixed number of the Group’s own equity instruments is a conversion option derivative.

At  the  date  of  issue,  both  the  debt  component  and  derivative  components  are  recognised  at  fair  value.  In 

subsequent  periods,  the  debt  component  of  the  Convertible  Bond  2021  and  Convertible  Bond  2017  carried  at 

amortised  cost  using  the  effective  interest  method.  The  derivative  component  is  measured  at  fair  value  with 

changes in fair value recognised in profit and loss.

Transaction  costs  that  relate  to  the  issue  of  the  convertible  bond  are  allocated  to  the  debt  and  derivative 

components  in  proportion  to  their  relative  fair  values.  Transactions  costs  relating  to  the  derivative  component 

are  charged  to  profit  or  loss  immediately.  Transaction  costs  relating  to  the  debt  component  are  included  in  the 

carrying  amount  of  the  debt  portion  and  amortised  over  the  period  of  the  convertible  bond  using  the  effective 

interest method.

166

ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 20215.  SIGNIFICANT ACCOUNTING POLICIES (Continued)
Financial instruments (Continued)
Financial liabilities and equity (Continued)
Convertible bond contains equity component

The  component  parts  of  the  convertible  bond  are  classified  separately  as  financial  liability  and  equity  in 

accordance  with  the  substance  of  the  contractual  arrangements  and  the  definitions  of  a  financial  liability  and  an 

equity instrument. A conversion option that will be settled by the exchange of a fixed amount of cash or another 

financial asset for a fixed number of the Company’s own equity instruments is an equity instrument.

At  the  date  of  issue,  the  fair  value  of  the  liability  component  (including  any  embedded  non-equity  derivatives 

features)  is  estimated  by  measuring  the  fair  value  of  similar  liability  that  does  not  have  an  associated  equity 

component.

A conversion option classified as equity is determined by deducting the amount of the liability component from the 

fair  value  of  the  compound  instrument  as  a  whole.  This  is  recognised  and  included  in  equity,  net  of  income  tax 

effects, and is not subsequently remeasured. In addition, the conversion option classified as equity will remain in 

equity until the conversion option is exercised, in which case, the balance recognised in equity will be transferred 

to share premium. In case of convertible bond issued by a subsidiary, the equity component of the subsidiary is 

classified  as  and  grouped  under  non-controlling  interests  by  the  Group  on  consolidation.  Where  the  conversion 

option  remains  unexercised  at  the  maturity  date  of  the  convertible  bond,  the  balance  recognised  in  equity  will 

be  transferred  to  reserve.  No  gain  or  loss  is  recognised  in  profit  or  loss  upon  conversion  or  expiration  of  the 

conversion option.

Transaction  costs  that  relate  to  the  issue  of  the  convertible  bonds  are  allocated  to  the  liability  and  equity 

components  in  proportion  to  the  allocation  of  the  gross  proceeds.  Transaction  costs  relating  to  the  equity 

component are charged directly to equity. Transaction costs relating to the liability component are included in the 

carrying amount of the liability portion and amortised over the period of the convertible bonds using the effective 

interest method.

167

5.  SIGNIFICANT ACCOUNTING POLICIES (Continued)
Financial instruments (Continued)
Derivative financial instruments
Derivatives  are  initially  recognised  at  fair  value  at  the  date  derivative  contracts  are  entered  into  and  are 

subsequently  remeasured  to  their  fair  value  at  the  end  of  each  reporting  period.  The  resulting  gain  or  loss 

is  recognised  in  profit  or  loss  immediately,  unless  the  derivative  is  designated  and  effective  as  a  hedging 

instruments,  in  which  event  the  timing  of  recognition  in  profit  or  loss  depends  on  the  nature  of  the  hedge 

relationship.

Embedded derivatives

Derivatives embedded in hybrid contracts that contain financial asset hosts within the scope of HKFRS 9 are not 

separated. The entire hybrid contract is classified and subsequently measured in its entirety as either amortised 

cost or fair value as appropriate.

Derivatives embedded in non-derivative host contracts that are not financial assets within the scope of HKFRS 9 

are  treated  as  separate  derivatives  when  they  meet  the  definition  of  a  derivative,  their  risks  and  characteristics 

are not closely related to those of the host contracts and the host contracts are not measured at FVTPL.

Generally,  multiple  embedded  derivatives  in  a  single  instrument  that  are  separated  from  the  host  contracts  are 

treated as a single compound embedded derivative unless those derivatives relate to different risk exposures and 

are readily separable and independent of each other.

Financial assets held under resale agreements
Financial assets held under resale agreements where the Group acquires financial assets which will be resold at 

a predetermined price at a future date under resale agreements, the cash advanced by the Group is recognised 

as  secured  loans  and  receivables  and  presented  as  amounts  held  under  resale  agreements  in  the  consolidated 

statement  of  financial  position. The  difference  between  the  purchase  and  resale  consideration  is  amortised  over 

the period of the respective agreements using the effective interest method and is included in interest income.

Financial  assets  sold  subject  to  agreements  with  a  commitment  to  repurchase  at  a  specific  future  date  and 

price  are  not  derecognised  in  the  consolidated  statement  of  financial  position.  The  proceeds  from  selling  such 

assets  are  presented  under  “financial  assets  sold  under  repurchase  agreements”  in  the  consolidated  statement 

of  financial  position.  The  difference  between  the  selling  price  and  repurchasing  price  is  recognised  as  interest 

expense during the term of the agreement using the effective interest method.

168

ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 20215.  SIGNIFICANT ACCOUNTING POLICIES (Continued)
Financial instruments (Continued)
Securities lending arrangement
The Group lends investment securities to clients and requires cash and/or equity securities from customers held 

as  collaterals  under  such  securities  lending  agreements.  The  cash  collaterals  arisen  from  these  are  included  in 

“accounts payable to customers arising from securities business”. For those securities held by the Group and lent 

to client that do not result in the derecognition of financial assets, they are included in financial assets at FVTPL.

Financial guarantee contracts
A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the 

holder  for  a  loss  it  incurs  because  a  specified  debtor  fails  to  make  payment  when  due  in  accordance  with  the 

terms of a debt instrument. Financial guarantee contracts issued by the Group are initially measured at their fair 

values and are subsequently measured at the higher of:

(i) 

the amount of obligation under the contract, as determined in accordance with HKFRS 9; and

(ii) 

the  amount  initially  recognised  less,  where  appropriate,  cumulative  amortisation  recognised  over  the 

guarantee period.

Derecognition/modification of financial liabilities

The  Group  derecognises  financial  liabilities  when,  and  only  when,  the  Group’s  obligations  are  discharged, 

cancelled or have expired. The difference between the carrying amount of the financial liability derecognised and 

the consideration paid and payable is recognised in profit or loss.

When  the  contractual  terms  of  a  financial  liability  are  modified,  the  Group  assess  whether  the  revised  terms 

result  in  a  substantial  modification  from  original  terms  taking  into  account  all  relevant  facts  and  circumstances 

including  qualitative  factors.  If  qualitative  assessment  is  not  conclusive,  the  Group  considers  that  the  terms 

are  substantially  different  if  the  discounted  present  value  of  the  cash  flows  under  the  new  terms,  including  any 

fees  paid  net  of  any  fees  received  and  discounted  using  the  original  effective  interest  rate,  is  at  least  10  per 

cent  different  from  the  discounted  present  value  of  the  remaining  cash  flows  of  the  original  financial  liability. 

Accordingly,  such  exchange  of  debt  instruments  or  modification  of  terms  is  accounted  for  as  an  extinguishment, 

any  costs  or  fees  incurred  are  recognised  as  part  of  the  gain  or  loss  on  the  extinguishment.  The  exchange  or 

modification is considered as non-substantial modification when such difference is less than 10 per cent.

169

5.  SIGNIFICANT ACCOUNTING POLICIES (Continued)
Financial instruments (Continued)
Financial guarantee contracts (Continued)
Non-substantial modifications of financial liabilities

For  non-substantial  modifications  of  financial  liabilities  that  do  not  result  in  derecognition,  the  carrying  amount 

of  the  relevant  financial  liabilities  will  be  calculated  at  the  present  value  of  the  modified  contractual  cash  flows 

discounted  at  the  financial  liabilities’  original  effective  interest  rate.  Transaction  costs  or  fees  incurred  are 

adjusted  to  the  carrying  amount  of  the  modified  financial  liabilities  and  are  amortised  over  the  remaining  term. 

Any  adjustment  to  the  carrying  amount  of  the  financial  liability  is  recognised  in  profit  or  loss  at  the  date  of 

modification.

Offsetting a financial asset and a financial liability

A  financial  asset  and  a  financial  liability  are  offset  and  the  net  amount  presented  in  the  consolidate  statement 

of  financial  position  when,  and  only  when,  the  Group  currently  has  a  legally  enforceable  right  to  set  off  the 

recognized  amounts;  and  intends  either  to  settle  on  a  net  basis,  or  to  realise  the  asset  and  settle  the  liability 

simultaneously.

Provisions
Provisions  are  recognised  when  the  Group  has  a  present  obligation  (legal  or  constructive)  as  a  result  of  a  past 

event, it is probable that the Group will be required to settle the obligation, and a reliable estimate can be made 

of the amount of the obligation.

The  amount  recognised  as  a  provision  is  the  best  estimate  of  the  consideration  required  to  settle  the  present 

obligation  at  the  end  of  the  reporting  period,  taking  into  account  the  risks  and  uncertainties  surrounding  the 

obligation.  When  a  provision  is  measured  using  the  cash  flows  estimated  to  settle  the  present  obligation,  its 

carrying amount is the present value of those cash flows (where the effect of the time value of money is material).

When  some  or  all  of  the  economic  benefits  required  to  settle  a  provision  are  expected  to  be  recovered  from  a 

third party, a receivable is recognised as an asset if it is virtually certain that reimbursement will be received and 

the amount of the receivable can be measured reliably.

170

ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 20216.  CRITICAL ACCOUNTING JUDGEMENT AND KEY SOURCES OF 

ESTIMATION UNCERTAINTY

Critical judgements in applying accounting policies
The followings are the critical judgements, apart from those involving estimations (see below), that the Directors 

has made in the process of applying the Group’s accounting policies and that have the most significant effect on 

the amounts recognised in the consolidated financial statements.

Determination of consolidation scope of structured entities
All facts and circumstances must be taken into consideration in the assessment of whether the Group, as a fund 

manager  and/or  an  investor,  controls  a  structured  entity.  The  principle  of  control  sets  out  the  following  three 

elements  of  control:  (a)  power  over  these  entities;  (b)  exposure,  or  rights,  to  variable  returns  from  involvement 

with  these  entities;  and  (c)  the  ability  to  use  power  over  these  entities  to  affect  the  amount  of  the  investor’s 

returns.  The  Group  reassesses  whether  or  not  it  controls  a  structured  entity  if  facts  and  circumstances  indicate 

that there are changes to one or more of the three elements of control listed above.

For  collective  asset  management  schemes  and  investment  funds  where  the  Group  involves  as  a  manager 

and/or  an  investor,  the  Group  considers  the  scope  of  its  decision-making  authority  and  assesses  whether  the 

combination  of  investments  it  holds,  if  any,  together  with  its  remuneration  and  credit  enhancements  creates 

exposure to variability of returns from the activities of the collective asset management schemes and investment 

funds that is of such significance that it indicates that the Group is a principal. The collective asset management 

schemes and investment funds are consolidated if the Group acts in the role of principal.

Key sources of estimation uncertainty
The  following  are  the  key  assumptions  concerning  the  future,  and  other  key  sources  of  estimation  uncertainty 

at  the  end  of  the  reporting  period  that  have  a  significant  risk  of  causing  a  material  adjustment  to  the  carrying 

amounts of assets within the next financial year.

171

6.  CRITICAL ACCOUNTING JUDGEMENT AND KEY SOURCES OF 

ESTIMATION UNCERTAINTY (Continued)

Key sources of estimation uncertainty (Continued)
Impairment of goodwill
Determining  whether  goodwill  is  impaired  requires  an  estimation  of  the  recoverable  amount  use  of  the 

cash-generating  units  (or  group  of  cash-generating  units)  to  which  goodwill  has  been  allocated,  which  is  the 

higher  of  the  value  in  use  or  fair  value  less  cost  of  disposal. The  value  in  use  calculation  requires  the  Group  to 

estimate  the  future  cash  flows  expected  to  arise  from  the  cash-generating  unit  (or  a  group  of  cash-generating 

units)  and  a  suitable  discount  rate  in  order  to  calculate  the  present  value.  Where  the  actual  future  cash  flows 

are less than expected, or change in facts and circumstances which results in downward revision of future cash 

flows  or  upward  revision  of  discount  rate,  an  impairment  loss  may  arise.  Furthermore,  the  estimated  cash  flows 

and  discount  rate  are  subject  to  higher  degree  of  estimation  uncertainties  in  the  current  year  due  to  uncertainty 

on  how  the  Covid-19  pandemic  may  progress  and  evolve  and  volatility  in  financial  markets,  including  potential 

disruptions of the Group’s expressway toll operations.

As  at  December  31,  2021,  the  carrying  amount  of  goodwill  is  Rmb86,867,000  (without  accumulated  impairment 

loss)  (2020:  Rmb86,867,000  (without  accumulated  impairment  loss)).  Details  of  the  impairment  testing  are 

disclosed in Note 24.

Measurement  of  ECL  for  loans  to  customers  arising  from  margin  financing 
business and financial assets held under resale agreements
The  Group  estimates  the  amount  of  loss  allowance  for  ECL  on  its  loans  to  customers  arising  from  margin 

financing  business  and  financial  assets  held  under  resale  agreements. Asset’s  carrying  amount  and  the  present 

value of estimated future cash flows with the consideration of expected future credit loss are taken into account 

for determining the loss allowance amount. The assessment of the credit risk of loans to customers arising from 

margin financing business and financial assets held under resale agreements involves high degree of estimation 

and  uncertainty.  When  the  actual  future  cash  flows  are  less  than  expected  or  more  than  expected,  a  material 

impairment loss or a material reversal of impairment loss may arise, accordingly.

The  following  significant  judgements  and  estimations  are  required  in  applying  the  accounting  requirements  for 

measuring the ECL:

172

ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 20216.  CRITICAL ACCOUNTING JUDGEMENT AND KEY SOURCES OF 

ESTIMATION UNCERTAINTY (Continued)

Key sources of estimation uncertainty (Continued)
Measurement  of  ECL  for  loans  to  customers  arising  from  margin  financing 
business and financial assets held under resale agreements (Continued)
Significant increase of credit risk

ECL  are  measured  as  an  allowance  equal  to  12-month  ECL  for  stage  1  assets,  or  lifetime  ECL  assets  for  stage 

2  or  stage  3  assets.  An  asset  moves  to  stage  2  when  its  credit  risk  has  increased  significantly  since  initial 

recognition.  In  assessing  whether  the  credit  risk  of  an  asset  has  significantly  increased,  the  Group  takes  into 

account qualitative and quantitative reasonable and supportable forward-looking information. Refer to Note 54 for 

more details.

Establishing groups of assets with similar credit risk characteristics

When  ECLs  are  measured  on  a  collective  basis,  the  financial  instruments  are  grouped  on  the  basis  of  shared 

risk  characteristics.  Refer  to  Note  54  for  details  of  the  characteristics  considered  in  this  judgement.  The  Group 

monitors  the  appropriateness  of  the  credit  risk  characteristics  on  an  ongoing  basis  to  assess  whether  they 

continue  to  be  similar.  This  is  required  in  order  to  ensure  that  should  credit  risk  characteristics  change  there  is 

appropriate  re-segmentation  of  the  assets.  This  may  result  in  new  portfolios  being  created  or  assets  moving  to 

an existing portfolio that better reflects the similar credit risk characteristics of that group of assets. Assets move 

from  12-month  to  lifetime  ECLs  when  there  is  a  significant  increase  in  credit  risk,  but  it  can  also  occur  within 

portfolios  that  continue  to  be  measured  on  the  same  basis  of  12-month  or  lifetime  ECLs  but  the  amount  of  ECL 

changes because the credit risk of the portfolios differ.

Models and assumptions used

The  Group  uses  various  models  and  assumptions  in  measuring  fair  value  of  financial  assets  as  well  as  in 

estimating  ECL.  Judgement  is  applied  in  identifying  the  most  appropriate  model  for  each  type  of  assets,  as  well 

as  for  determining  the  assumptions  used  in  these  models,  including  assumptions  that  relate  to  key  drivers  of 

credit risk. Refer to Note 54(b) for more details on ECL and Note 54(c) for more details on ECL measurement.

Forward-looking information

When measuring ECL the Group uses reasonable and supportable forward-looking information, which is based on 

assumptions  for  the  future  movement  of  different  economic  drivers  and  how  these  drivers  will  affect  each  other. 

Refer to Note 54(b) for more details.

173

6.  CRITICAL ACCOUNTING JUDGEMENT AND KEY SOURCES OF 

ESTIMATION UNCERTAINTY (Continued)

Key sources of estimation uncertainty (Continued)
Measurement  of  ECL  for  loans  to  customers  arising  from  margin  financing 
business and financial assets held under resale agreements (Continued)
PD

PD  constitutes  a  key  input  in  measuring  ECL.  PD  is  an  estimate  of  the  likelihood  of  default  over  a  given  time 

horizon, the calculation of which includes historical data, assumptions and expectations of future conditions.

LGD

LGD is an estimate of the loss arising on default. It is based on the difference between the contractual cash flows 

due and those that the lender would expect to receive, taking into account cash flows from collateral and integral 

credit enhancements.

Measurement of ECL for trade receivables and contract assets
The  Group  uses  provision  matrix  to  calculate  ECL  for  the  trade  receivables  and  contract  assets.  The  provision 

rates  are  based  on  internal  credit  ratings  as  groupings  of  various  debtors  that  have  similar  loss  patterns. 

The  provision  matrix  is  based  on  the  Group’s  historical  default  rates  taking  into  consideration  forward-looking 

information that is reasonable and supportable available without undue costs or effort. At every reporting date, the 

historical observed default rates are reassessed and changes in the forward-looking information are considered. 

The  provision  of  ECL  is  sensitive  to  changes  in  estimates.  The  information  about  the  ECL,  the  Group’s  trade 

receivables and contract assets are disclosed in Note 53(b).

Fair value measurements and valuation processes
Some of the Group’s assets and liabilities are measured at fair value for financial reporting purposes. The board 

of  directors  of  the  Group  has  set  up  a  valuation  team,  which  is  headed  up  by  the  Chief  Financial  Officer  of  the 

Group, to determine the appropriate valuation techniques and inputs for fair value measurements.

The  Group  uses  various  valuation  techniques  to  determine  the  fair  value  of  financial  instruments  which  are  not 

quoted  in  an  active  market.  Valuation  techniques  include  the  use  of  discounted  cash  flows  analysis,  models 

or  other  valuation  methods  as  appropriate.  To  the  extent  practical,  models  use  only  observable  data;  however 

areas  such  as  credit  risk  of  the  Group  and  the  counterparty,  volatilities  and  correlations  require  management  to 

make  estimates.  Changes  in  assumptions  about  these  factors  could  affect  the  estimated  fair  value  of  financial 

instruments.

174

ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 20217.  REVENUE
(i)  Disaggregation of revenue from contracts with customers

Segments

Types of goods or services
Toll operation

Securities operation
Asset management services
Securities and futures 

commission

Investment banking services

Others
Hotel operating and catering 

services

Construction service

Year ended 12/31/2021

Year ended 12/31/2020

Toll
operation
Rmb’000

Securities
operation
Rmb’000

Others
Rmb’000

Toll
operation
Rmb’000
(Restated)

Securities
operation
Rmb’000

Others
Rmb’000
(Restated)

9,607,199

–

6,888,345

–

–

–

–
–

–

380,141

2,691,159
1,084,363

4,155,663

–

–
–

–

–
–

–

336,237

1,906,241
1,024,328

3,266,806

–

–
–

–

–
–

–

–
–

–

113,526
138,852

252,378

–
–

–

125,336
350,513

475,849

–

–

–
–

–

Total

9,607,199

4,155,663

252,378

6,888,345

3,266,806

475,849

Timing of revenue recognition
A point in time
Over time

9,607,199
–

4,155,663
–

113,526
138,852

6,888,345
–

3,266,806
–

125,336
350,513

Total

9,607,199

4,155,663

252,378

6,888,345

3,266,806

475,849

175

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
7.  REVENUE (Continued)
(i)  Disaggregation of revenue from contracts with customers (Continued)
Set out below is the reconciliation of the revenue from contracts with customers with the amounts disclosed in the 

segment information.

Toll operation
Securities operation
Others

Revenue from contracts with customers
Interest under effective interest method

Total revenue

Year ended
12/31/2021
Rmb’000

9,607,199
4,155,663
252,378

Year ended
12/31/2020
Rmb’000
(Restated)

6,888,345
3,266,806
475,849

14,015,240
2,247,361

10,631,000
1,820,534

16,262,601

12,451,534

(ii)  Performance obligations for contracts with customers
Toll operation
Revenue arising from toll operation is recognised at a point in time when the vehicles exit the toll expressway, of 

which the Group operates part or all of it.

The  revenue  from  toll  operation  is  based  on  the  toll  rates  determined  by  government  authorities.  It  is  settled  by 

government agencies on a monthly basis.

In  response  to  the  epidemic,  the  Ministry  of  Transport  of  the  People’s  Republic  of  China  announced  a  toll-free 

policy  that  would  extend  the  Spring  Festival  toll-free  period  for  small  passenger  vehicles  to  February  8,  2020 

(originally  from  January  24,  2020  to  January  30,  2020),  and  for  all  vehicles  from  February  17,  2020  to  May  5, 

2020.  The  epidemic  and  toll-free  policy  have  significantly  impacted  the  Group’s  toll  revenue  for  the  year  ended 

December 31, 2020.

176

ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2021 
 
 
 
 
 
 
 
 
 
 
 
7.  REVENUE (Continued)
(ii)  Performance obligations for contracts with customers (Continued)
Hotel operation and catering services
In respect of hotel operation and catering services, the Group recognises the revenue at a point in time when the 

services are provided.

High grade road construction service
The  Group  provides  high  grade  road  construction  service  to  a  customer.  Such  service  is  recognised  as  a 

performance obligation satisfied over time as the Group creates or enhances an asset that the customer controls 

as  the  asset  is  created  or  enhanced.  Revenue  is  recognised  for  the  construction  service  based  on  the  stage  of 

completion of the contract using input method.

The Group’s construction contract includes payment schedules which require stage payments over the operation 

period of 10 years after the construction is completed.

A  contract  asset  is  recognised  over  the  period  in  which  the  construction  service  is  performed  representing  the 

Group’s  right  to  consideration  for  the  services  performed  because  the  right  is  conditioned  on  the  Group’s  future 

performance in completing the construction. The contract asset is transferred to trade receivables when the rights 

become  unconditional. The  Group  typically  transfers  contract  asset  to  receivables  from  government  cooperation 

projects (note 31) when the construction is completed because only at that time, the Group satisfied the right to 

consideration pursuant to the terms and conditions of the relevant construction contract.

Asset management services
The  Group  provides  asset  management  services  in  respect  of  wealth  management  products,  and  is  entitled  to 

management  fees  of  these  products  for  its  services  rendered  to  customers.  Performance  obligation  is  satisfied 

over  the  term  of  respective  wealth  management  products.  Management  fees  of  wealth  management  products 

are recognised to the extent that it is highly probable that such recognition will not result in a significant revenue 

reversal  in  the  future  when  the  uncertainty  associated  with  the  quantum  of  management  fees  is  subsequently 

resolved. Therefore, in practice the variable management fees can only be recognised upon dividend distribution, 

withdrawal of investors or liquidation of products.

Most  contracts  with  customers  have  original  expected  duration  of  less  than  one  year  and  therefore  information 

about their remaining performance obligations is not disclosed.

177

7.  REVENUE (Continued)
(ii)  Performance obligations for contracts with customers (Continued)
Securities brokerage services
Commission and fee income arising from securities brokerage services is recognised at a point in time when the 

service is provided and performance obligation is satisfied when the brokerage of customers’ securities, futures or 

options contracts dealing is completed. Fees are usually received shortly after the service is provided.

Investment banking services
The Group provides financial advisory services to its customers. The Group recognises the revenue at a point in 

time when the services are provided. They are usually collected within one month when they become due.

The Group provides sponsoring and underwriting services to its customers for issue of equity or debt instruments 

to  investors.  Performance  obligation  is  satisfied  when  the  issue  of  these  equity  or  debt  instruments  are 

completed.  Sponsoring  and  underwriting  fees  became  due  when  certain  milestones  are  met  during  the  issue 

process and at completion of the issues. They are usually collected within one month when they become due.

(iii)  Transaction  price  allocated  to  the  remaining  performance  obligation  for 

contracts with customers

The  transaction  price  allocated  to  the  remaining  performance  obligations  in  respect  of  the  high  grade  road 

construction  service  (unsatisfied  or  partially  unsatisfied)  as  at  December  31,  2021  amounting  to  nil  (2020: 

Rmb361,266,000).  The  construction  service  has  been  completely  rendered  in  July,  2021  by  reference  to  the 

progress towards the satisfaction of stage of the completion using the input method.

The transaction price allocated to the remaining performance obligation for sponsorship contracts with customers 

is  not  material.  Besides,  most  other  contracts  with  customers  have  original  expected  duration  of  less  than  one 

year. Therefore information about the remaining performance obligations is not disclosed.

There is no other unsatisfied or partially unsatisfied remaining performance obligations as at December 31, 2021 

and 2020.

As  per  the  supplementary  agreement  signed  by  the  Group  and  Deqing  County  Transportation  Bureau,  both 

parties  agreed  to  deduct  the  land  acquisition  compensation  fee  of  Rmb304,373,691  from  the  total  project 

investment.  In  addition,  due  to  engineering  changes,  Deqing  County  Transportation  Bureau  agreed  to  increase 

the project cost by Rmb11,410,000. The impact of this contract modification has been reflected in the revenue for 

the current year.

178

ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 20218.  OPERATING SEGMENTS
Information  reported  to  the  General  Manager  of  the  Company,  being  the  chief  operating  decision  maker,  for  the 

purposes of resource allocation and assessment of segment performance focuses on types of goods or services 

delivered or provided.

Specifically, the Group’s reportable and operating segments under HKFRS 8 are as follows:

(i) 

Toll operation – the operation and management of high grade roads and the collection of the expressway 

tolls.

(ii) 

Securities operation – the securities and future broking, margin financing and securities lending, securities 

underwriting and sponsorship, asset management, advisory services and proprietary trading.

(iii) 

Others – hotel operation, high grade road construction, investment in other financial institutions and other 

ancillary services.

Segment revenue and results
The following is an analysis of the Group’s revenue and results by reportable and operating segment.

For the year ended December 31, 2021

Toll 
operation
Rmb’000

Securities 
operation
Rmb’000

Others
Rmb’000

Total
Rmb’000

Revenue – external customers

9,607,199

6,403,024

252,378

16,262,601

Segment profit

3,194,046

2,372,970

723,148

6,290,164

179

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
8.  OPERATING SEGMENTS (Continued)
Segment revenue and results (Continued)

For the year ended December 31, 2020 (restated)

Toll 
operation
Rmb’000

Securities 
operation
Rmb’000

Others
Rmb’000

Total
Rmb’000

Revenue – external customers

6,888,345

5,087,340

475,849

12,451,534

Segment profit

1,043,236

1,636,161

694,190

3,373,587

The accounting policies of the operating segments are the same as the Group’s accounting policies described in 

Note 5. Segment profit represents the profit after tax of each operating segment. This is the measure reported to 

the chief operating decision maker for the purposes of resource allocation and performance assessment.

Segment assets and liabilities
The following is an analysis of the Group’s assets and liabilities by reportable and operating segment:

12/31/2021
Rmb’000

Segment assets
12/31/2020
Rmb’000
(Restated)

Segment liabilities

01/01/2020
Rmb’000
(Restated)

12/31/2021
Rmb’000

12/31/2020
Rmb’000
(Restated)

01/01/2020
Rmb’000
(Restated)

Toll operation
Securities operation
Others

41,373,465
125,941,428
8,894,922

35,140,718
91,994,730
8,224,382

34,926,351
67,965,409
7,658,629

(29,592,173)
(101,422,949)
(858,535)

(25,654,816)
(72,133,714)
(712,174)

(29,422,644)
(52,390,763)
(628,868)

Total segment assets (liabilities)
Goodwill

176,209,815
86,867

135,359,830
86,867

110,550,389
86,867

(131,873,657)
–

(98,500,704)
–

(82,442,275)
–

Consolidated assets (liabilities)

176,296,682

135,446,697

110,637,256

(131,873,657)

(98,500,704)

(82,442,275)

Segment  assets  and  segment  liabilities  represent  the  assets  and  liabilities  of  the  subsidiaries  operating  in  the 

respective reportable and operating segment.

180

ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2021 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
8.  OPERATING SEGMENTS (Continued)
Other segment information
Amounts included in the measure of segment profit/(loss) or segment assets:

For the year ended December 31, 2021

Income tax expense
Interest income from financial 

institutions

Interest expenses
Impairment losses on loan to 

customers arising from margin 
financing business, recognised in 
profit

Impairment losses on trade 

receivables, net of reversal

Impairment losses on contract asset 

recognised in profit
Interests in associates
Interest in a joint venture
Share of profit of associates
Share of profit of a joint venture
Net gains arising from financial 

assets at FVTPL

Gain on changes in fair value in 

respect of the derivative component 
of convertible bond

Additions to non-current assets (Note)
Depreciation and amortisation

Toll 
operation
Rmb’000

Securities 
operation
Rmb’000

Others
Rmb’000

Total
Rmb’000

1,152,881

718,789

2,291

1,873,961

118,247
981,865

–
928,099

780
32,569

119,027
1,942,533

–

32

–
2,362,130
440,574
56,667
56,249

13,157

(955)

–
739,761
–
193,133
–

–

(26)

–
6,573,155
–
716,275
–

13,157

(949)

–
9,675,046
440,574
966,075
56,249

–

1,819,868

–

1,819,868

27,453
6,409,180
2,918,751

–
503,291
263,107

–
44,056
36,607

27,453
6,956,527
3,218,465

181

 
 
 
 
 
 
 
 
 
 
8.  OPERATING SEGMENTS (Continued)
Other segment information (Continued)

For the year ended December 31, 2020 (restated)

Income tax expense
Interest income from financial 

institutions

Interest expenses
Impairment losses on loan to 

customers arising from margin 
financing business, reversed in profit

Impairment losses on trade 

receivables, net of reversal

Impairment losses on contract asset 

recognised in profit
Interests in associates
Interest in a joint venture
Share of profit of associates
Share of profit of a joint venture
Net gains arising from financial 

assets at FVTPL

Gain on changes in fair value in 

respect of the derivative component 
of convertible bond

Additions to non-current assets (Note)
Depreciation and amortisation

Toll 
operation
Rmb’000

Securities 
operation
Rmb’000

Others
Rmb’000

Total
Rmb’000

606,269

536,250

17,508

1,160,027

56,163
1,219,986

–
855,550

623
22,957

56,786
2,098,493

–

10

–
–
384,325
–
16,282

(972)

2,271

–
549,645
–
46,363
–

–

14

482
6,010,698
–
641,666
–

(972)

2,295

482
6,560,343
384,325
688,029
16,282

128,853

1,573,746

–

1,702,599

200,178
437,580
2,705,876

–
457,706
240,791

–
398,779
37,554

200,178
1,294,065
2,984,221

Note:  Non-current assets excluded financial instruments and deferred tax assets.

182

ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2021 
 
 
 
 
 
 
 
 
 
8.  OPERATING SEGMENTS (Continued)
Revenue from major services
An analysis of the Group’s revenue, net of discounts and taxes, for the year is as follows:

Toll operation revenue
Commission and fee income from securities operation
Interest income from securities operation
Hotel and catering revenue
Revenue from construction

Year ended
12/31/2021
Rmb’000

9,607,199
4,155,663
2,247,361
113,526
138,852

Year ended
12/31/2020
Rmb’000
(Restated)

6,888,345
3,266,806
1,820,534
125,336
350,513

16,262,601

12,451,534

Geographical information
The  Group’s  operations  are  located  in  the  PRC.  The  Group’s  non-current  assets  are  mainly  located  in  the  PRC 

(country of domicile).

All of the Group’s revenue from external customers is attributed to the Group entities’ country of domicile (i.e. the 

PRC).

Information about major customers
During the years ended December 31, 2021 and 2020, there was no individual customer with sales over 10% of 

the total revenue of the Group.

183

 
 
 
 
 
 
 
 
 
9.  SECURITIES INVESTMENT GAINS

Net gains arising from financial assets at FVTPL
Net gains arising from derivative financial instruments
Net losses arising from financial liabilities at FVTPL

10.  OTHER INCOME AND GAINS AND LOSSES

Interest income from financial institutions
Rental income (Note i)
Towing income
Gain on changes in fair value in respect of the derivative component of 

convertible bond

Gain on disposal of associates
Exchange gains/(losses), net
Gains/(losses) on commodity trading, net (Note ii)
Management fee income
Government subsidy
(Losses)/gains arising from deemed disposal of associates
Gain on disposal of assets
Others

Year ended
12/31/2021
Rmb’000

Year ended
12/31/2020
Rmb’000

1,819,868
184,225
(168,530)

1,702,599
166,538
(257,264)

1,835,563

1,611,873

Year ended
12/31/2021
Rmb’000

Year ended
12/31/2020
Rmb’000
(Restated)

119,027
89,441
–

27,453
5,521
231,659
43,716
15,524
51,155
(46,705)
73,460
122,820

56,786
75,064
4,303

200,178
–
(85,609)
(63,430)
36,747
58,114
23,904
30,436
88,826

733,071

425,319

Notes:

(i) 

Rental income included contingent rent of Rmb1,363,000 (2020: Rmb1,961,000) recognised during the year.

(ii) 

The  income  on  commodity  trading  amounted  to  Rmb9,752,811,000  (2020:  Rmb5,292,848,000)  with  the  cost 

of  Rmb9,709,095,000  (2020:  Rmb5,356,278,000).  The  net  gains  or  losses  on  commodity  trading  is  presented 

as  other  income  and  gains  and  losses.  And  the  balance  of  inventories  on  commodity  trading  amounted  to 

Rmb369,268,000 (2020: Rmb368,020,000) as of December 31, 2021.

184

ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2021 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
11. 

IMPAIRMENT LOSSES UNDER EXPECTED CREDIT LOSS MODEL, NET 
OF REVERSAL

Impairment losses on financial assets and contract assets (reversed)/

recognized:

Trade receivables – goods and services
Other receivables
Loans to customers arising from margin financing business
Financial assets held under resale agreements
Contract asset

12.  FINANCE COSTS

Bank and other borrowings
Short-term financing note payable
Bonds payable
Convertible Bonds
Lease liabilities

Year ended
12/31/2021
Rmb’000

Year ended
12/31/2020
Rmb’000
(Restated)

(949)
(5,868)
13,157
(71,731)
–

2,295
10,492
(972)
171,315
482

(65,391)

183,612

Year ended
12/31/2021
Rmb’000

802,508
183,939
875,273
57,294
23,519

Year ended
12/31/2020
Rmb’000
(Restated)

842,924
196,712
691,486
350,863
16,508

1,942,533

2,098,493

185

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
13.  PROFIT BEFORE TAX
The Group’s profit before tax has been arrived at after charging:

Depreciation of property, plant and equipment (included in operating 

costs and administrative expenses)

Depreciation of right-of-use assets
Amortisation of expressway operating rights (included in operating costs)
Amortisation of other intangible assets (included in operating costs and 

administrative expenses)

Total depreciation and amortisation

Staff costs (including directors and supervisors):

– Wages, salaries and bonuses
– Pension scheme contributions

Auditors’ remuneration
Loss/(gain) on disposal of property, plant and equipment

14. 

INCOME TAX EXPENSE

Current tax:

PRC Enterprise Income Tax (“EIT”)
Deferred tax (Note 47)

186

Year ended
12/31/2021
Rmb’000

Year ended
12/31/2020
Rmb’000
(Restated)

508,183
92,484
2,550,036

484,050
89,640
2,360,744

67,762

49,787

3,218,465

2,984,221

3,382,037
263,913

2,165,448
85,738

3,645,950

2,251,186

11,402
6,433

11,039
(23,848)

Year ended
12/31/2021
Rmb’000

Year ended
12/31/2020
Rmb’000
(Restated)

1,810,332
63,629

1,454,675
(294,648)

1,873,961

1,160,027

ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2021 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
INCOME TAX EXPENSE (Continued)

14. 
Under  the  Law  of  the  PRC  on  EIT  and  Implementation  Regulation  of  the  EIT  Law,  the  tax  rate  of  the  PRC 

subsidiaries is 25%.

No Hong Kong Profits Tax has been provided as the Group has no estimated assessable profit in Hong Kong for 

both years.

The income tax expense for the year can be reconciled to the profit before tax per the consolidated statement of 

profit or loss and other comprehensive income as follows:

Profit before tax

Tax at the PRC EIT rate of 25% (2020: 25%)
Tax effect of share of profit of associates
Tax effect of share of profit of a joint venture
Tax effect of tax losses not recognised
Utilisation of unused tax loss previously not recognised
Tax effect of expenses not deductible for tax purposes
Tax effect of income not subjected to tax purposes

Year ended
12/31/2021
Rmb’000

Year ended
12/31/2020
Rmb’000
(Restated)

8,164,125

4,533,614

2,041,031
(241,519)
(14,062)
73,392
(22,699)
101,233
(63,415)

1,133,404
(172,007)
(4,071)
167,964
–
88,951
(54,214)

Income tax expense for the year

1,873,961

1,160,027

187

 
 
 
 
 
 
 
 
 
 
 
 
15.  DIRECTORS’, SUPERVISORS’ AND SENIOR MANAGEMENTS’ 

EMOLUMENTS

The emoluments paid or payable to each of the 11 (2020: 12) directors and 6 (2020: 6) supervisors are as follows:

Yu

Chen

Cheng

Luo

Yuan

Dai

Zhihong@

Ninghui@

Tao@

Jianhu@

Yingjie@

Benmeng^

Yu

Qunli^

Yu

Ji^

Fan

Jin

Huang

Pei

Lee

Ye^

Chaoyang^

Jianzhang^ 

Ker-wei*

 Wai Tsang*

Chen

Bin*

Yao

Huiliang#

Zheng

Ruchun#

He

Zhan

Wu

Meiyun#

Huagang#

Qingwang#

Wang

Yubing#

Lu

Xinghai#

Total

Rmb’000

Rmb’000

Rmb’000

(Note i)

Rmb’000

(Note ii)

Rmb’000

(Note iii)

Rmb’000

(Note iv)

Rmb’000

(Note v)

Rmb’000

(Note i)

Rmb’000

(Note vi)

Rmb’000

(Note vii)

Rmb’000

(Note vii)

Rmb’000

Rmb’000

Rmb’000

Rmb’000

Rmb’000

Rmb’000

(Note v)

(Note viii)

Rmb’000

(Note iv)

Rmb’000 

Rmb’000

Rmb’000 

Rmb’000 

(Note vii)

2021

Fees

Salaries, allowances and benefits  
in kind

Bonuses paid and payable

Pension scheme contributions

Directors’ fee

Total emoluments

2020

Fees

Salaries, allowances and benefits in 
kind

Bonuses paid and payable

Pension scheme contributions

Directors’ fee

Total emoluments

–

–

–

–

–

–

–

–

–

–

506

543

33

–

1,082

351

–

17

–

368

–

–

–

–

–

–

–

–

–

–

250

455

14

–

719

600

462

30

–

1,092

280

70

19

–

369

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

204

204

–

–

–

209

209

–

–

–

204

204

–

–

–

209

209

–

–

–

82

82

–

–

–

83

83

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

9

–

–

–

9

6

–

–

–

6

–

–

–

–

–

–

–

–

–

–

4

–

–

–

4

4

–

–

–

4

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

1,049

1,068

66

490

2,673

961

462

47

501

1,971

@ 

^ 

* 

# 

Notes:

(i) 

(ii) 

(iii) 

(iv) 

(v) 

(vi) 

Executive directors. The emoluments shown above were for their services in connection with the management of the affairs of the 
Company and the Group.

Non-executive directors. The emoluments shown above were for their services as directors of the Company or its subsidiaries.

Independent non-executive directors. The emoluments shown above were for their services as directors of the Company.

Supervisors. The emoluments shown above were for their services as supervisors of the Company.

Resigned on May 15, 2020.

Resigned on May 19, 2021.

Mr.  Yuan  Yingjie  was  the  non-executive  director  from  February  3,  2020  to  May  19,  2021  and  was  appointed  as  the  executive 
director on July 1, 2021.

Resigned on July 1, 2021.

Resigned on February 3, 2020.

Appointed on May 15, 2020.

(vii) 

Appointed on July 1,2021.

(viii) 

Appointed on February 3, 2020.

Bonuses  paid  to  directors  and  supervisors  are  performance-rated  and  are  determined  by  the  Remuneration 

Committee  of  the  Company,  which  comprises  three  independent  non-executive  directors.  No  directors  or 

supervisors waived any emoluments and no incentive was paid to any directors or supervisors as an inducement 

to join the Company and no compensation for loss of office was paid to any directors, supervisors, past directors 

or past supervisors during both years.

188

ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2021 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
15.  DIRECTORS’, SUPERVISORS’ AND SENIOR MANAGEMENTS’ 

EMOLUMENTS (Continued)

The emoluments paid or payable to each of the other 7 (2020: 10) senior managements are as follows:

Chen
Ninghui
Rmb’000
(Note i)

Zhu
Yimin
Rmb’000
(Note ii)

Wang
Dehua
Rmb’000
(Note ii)

Zhan
Huagang
Rmb’000
(Note ii)

Zheng
Hui
Rmb’000

Zhang
Xiuhua
Rmb’000

Wang
Bingjiong
Rmb’000

Wu
Li Wei Xiangyang
Rmb’000

Rmb’000

Ruan
Liya
Rmb’000

Total
Rmb’000

Ma Ting
Rmb’000
(Note iii)

Year ended December 31, 

2021

Salaries, allowances and 
benefits in kind

Bonuses paid and payable
Pension scheme 
contributions

Total emoluments

Year ended December 31, 

2020

Salaries, allowances and 
benefits in kind

Bonuses paid and payable
Pension scheme 
contributions

Total emoluments

Notes:

–
–

–

–

250
–

13

263

–
–

–

–

425
406

25

856

–
–

–

–

383
388

23

794

–
–

–

–

425
381

25

831

430
415

33

878

510
382

30

922

430
468

33

931

510
407

30

947

430
415

33

878

510
84

30

624

430
191

33

654

85
–

5

90

430
178

33

641

85
–

5

90

430
232

33

695

85
–

5

90

80
5

6

91

–
–

–

–

2,660
1,904

204

4,768

3,268
2,048

191

5,507

(i) 

Appointed  on  January  1,  2020  as  Party  Secretary  of  the  Company.  The  emoluments  disclosed  above  include  those  services 

rendered by Mr. Chen Ninghui as senior management form January 1, 2020 to May 15, 2020.

(ii) 

Resigned on November 20, 2020.

(iii) 

Appointed on September 17, 2021.

Bonuses paid to senior managements are performance-rated and are determined by the board of directors.

No  senior  management  waived  any  emoluments  and  no  incentive  was  paid  to  any  senior  management  as  an 

inducement to join the Company and no compensation for loss of office was paid to any senior management, past 

senior management during both years. Bonuses are determined by reference to the individual performance of the 

senior managements.

189

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
16.  EMPLOYEES’ EMOLUMENTS
The emoluments of the five highest paid individuals in the Group are as follows:

Salaries, allowances and benefits in kind
Bonuses paid and payable (Note)
Pension scheme contributions

Year ended
12/31/2021
Rmb’000

Year ended
12/31/2020
Rmb’000

16,595
67,898
419

84,912

8,929
46,831
326

56,086

Note:  The  bonuses  paid  and  payable  are  determined  by  reference  to  the  performance  of  the  relevant  business  of  the 

Group for the years ended December 31, 2021 and 2020.

No  emoluments  nor  incentive  was  waived  as  an  inducement  to  join  the  Company  and  no  compensation  for  loss 

of office was paid to any five highest paid individuals in the Group during both years. Bonuses are determined by 

reference to the individual performance of the five highest paid individuals in the Group.

The  five  individuals  with  the  highest  emoluments  in  the  Group  during  the  year  included  5  (2020:  5)  non-director 

employees.

190

ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2021 
 
 
 
 
 
 
 
 
16.  EMPLOYEES’ EMOLUMENTS (Continued)
Their emoluments are within the following bands:

HK$8,000,001 to HK$8,500,000 (equivalent to Rmb6,540,800 (2020: 

Rmb6,732,801) to Rmb6,949,600 (2020: Rmb7,153,600))

HK$13,000,001 to HK$13,500,000 (equivalent to Rmb10,628,800 (2020: 

Rmb10,940,801) to Rmb11,037,600 (2020: Rmb11,361,600))

HK$13,500,001 to HK$14,000,000 (equivalent to Rmb11,037,600 (2020: 

Rmb11,361,601) to Rmb11,446,400 (2020:Rmb11,782,400))

HK$17,500,001 to HK$18,000,000 (equivalent to Rmb14,308,000 (2020: 

Rmb14,728,001) to Rmb14,716,800 (2020: Rmb15,148,800))

HK$21,000,001 to HK$21,500,000 (equivalent to Rmb17,169,600 (2020: 

Rmb14,728,001) to Rmb17,673,600 (2020: Rmb18,094,400))

HK$22,500,001 to HK$23,000,000 (equivalent to Rmb18,396,000 (2020: 

Rmb14,728,001) to Rmb18,936,000 (2020: Rmb19,356,800))

HK$25,500,001 to HK$26,000,000 (equivalent to Rmb 20,848,800 (2020: 

Rmb14,728,001) to Rmb21,460,800 (2020: Rmb21,881,600))

17.  DIVIDENDS

Dividends recognised as distribution during the year:
2020 – Rmb35.5 cents (2020: 2019 – Rmb35.5 cents)

No. of individuals

Year ended
12/31/2021

Year ended
12/31/2020

–

–

1

1

1

1

1

1

2

1

1

–

–

–

Year ended
12/31/2021
Rmb’000

Year ended
12/31/2020
Rmb’000

1,541,806

1,541,806

Dividend  of  Rmb37.5  cents  per  share  in  respect  of  the  year  ended  December  31,  2021  (2020:  dividend 

of  Rmb35.5  cents  per  share  in  respect  of  the  year  ended  December  31,  2020)  in  the  total  amount  of 

Rmb1,628,668,000 (2020: Rmb1,541,806,000) has been proposed by the Directors and is subject to approval by 

the shareholders in the annual general meeting.

191

 
 
 
 
 
 
 
 
 
 
 
 
18.  EARNINGS PER SHARE
The calculation of the basic and diluted earnings per share attributable to the owners of the Company is based on 

the following data:

Earnings figures are calculated as follows:

Year ended
12/31/2021
Rmb’000

Year ended
12/31/2020
Rmb’000
(Restated)

Profit for the year attributable to owners of the Company

4,762,431

2,416,395

Earnings for the purpose of basic earnings per share
Effect of dilutive potential ordinary shares arising from convertible bond:

Interest expense
Exchange gain (net of income tax)
Gain on changes in fair value on derivative component

4,762,431

2,416,395

57,294
(89,348)
(27,453)

256,084
(30,625)
(200,178)

Earnings for the purpose of diluted earnings per share

4,702,924

2,441,676

Number of shares

Year ended
12/31/2021
’000

Year ended
12/31/2020
’000

Number of ordinary shares for the purpose of basic earnings per share
Effect of dilutive potential ordinary shares arising from convertible bond

4,343,115
245,061

4,343,115
80,969

Weighted average number of ordinary shares for the purpose of diluted 

earnings per share

4,588,176

4,424,084

192

ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2021 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
19.  PROPERTY, PLANT AND EQUIPMENT

Leasehold
land and
buildings
Rmb’000

2,208,039
–

2,208,039
50,617
95,281
(32,291)

2,321,646

35,131
30,800
4,187
(3,457)

Hotel
Rmb’000

858,153
–

858,153
–
–
–

858,153

–
–
–
(4,017)

COST
At January 1, 2020 (originally stated)
Merger accounting restatement

At January 1, 2020 (restated)
Additions
Transfer
Disposals

At December 31, 2020 (restated)

Acquired on acquisition of a subsidiary and a business
Additions
Transfer
Disposals

Communication
and signaling
equipment
Rmb’000

Ancillary
facilities
Rmb’000

Motor
vehicles
Rmb’000

1,216,704
231,161

1,447,865
98
–
(14,304)

1,913,793
767,704

2,681,497
87,773
95,225
(125,620)

1,433,659

2,738,875

–
4,646
570,851
–

16,406
51,965
20,716
(69,744)

At December 31, 2021

2,388,307

854,136

2,009,156

2,758,218

DEPRECIATION AND IMPAIRMENT
At January 1, 2020 (originally stated)
Merger accounting restatement

At January 1, 2020 (restated)
Provided for the year
Impairment loss recognised in profit or loss
Disposals

At December 31, 2020 (restated)

Provided for the year
Transfer
Impairment loss recognised in profit or loss
Disposals

At December 31, 2021

CARRYING VALUES
At December 31, 2021

At December 31, 2020 (restated)

At January 1, 2020 (restated)

754,748
–

754,748
112,346
–
(19,770)

847,324

111,928
–
–
(3,456)

955,796

170,740
–

170,740
28,841
–
–

199,581

28,817
–
–
(806)

531,911
120,458

652,369
54,361
12,688
(7,769)

1,104,437
556,474

1,660,911
204,130
–
(100,222)

711,649

1,764,819

50,870
–
–
–

216,004
–
–
(67,061)

227,592

762,519

1,913,762

1,432,511

1,474,322

1,453,291

626,544

658,572

687,413

1,246,637

722,010

795,496

844,456

974,056

1,020,586

The property, plant and equipment are mainly located in the PRC.

156,666
17,848

174,514
17,322
–
(16,681)

175,155

638
14,135
(336)
(12,458)

177,134

105,411
9,890

115,301
15,635
–
(16,223)

114,713

14,422
(274)
–
(11,798)

117,063

60,071

60,442

59,213

Machinery
and
equipment
Rmb’000

615,042
5,977

621,019
111,856
50,512
(130,572)

Construction
in progress
Rmb’000

438,974
–

438,974
171,266
(257,465)
–

Total
Rmb’000

7,407,371
1,022,690

8,430,061
438,932
(16,447)
(319,468)

652,815

352,775

8,533,078

1,635
111,896
3,271
(49,795)

–
788,393
(600,125)
(1,376)

53,810
1,001,835
(1,436)
(140,847)

719,822

539,667

9,446,440

459,389
4,105

463,494
68,737
–
(124,462)

407,769

86,142
274
–
(44,096)

450,089

269,733

245,046

157,525

–
–

–
–
–
–

–

–
–
–
–

–

539,667

352,775

438,974

3,126,636
690,927

3,817,563
484,050
12,688
(268,446)

4,045,855

508,183
–
–
(127,217)

4,426,821

5,019,619

4,487,223

4,612,498

193

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
20.  RIGHT-OF-USE ASSETS

COST
At January 1, 2021
Addition

At December 31, 2021

DEPRECIATION
At January 1, 2021
Addition

At December 31, 2021

CARRYING VALUES
At December 31, 2021

At January 1, 2021

Expense relating to short-term leases
Total cash outflow for leases

Leasehold
lands
Rmb’000

Leased
properties
Rmb’000

Total
Rmb’000

195,741
26,357

524,567
170,278

720,308
196,635

222,098

694,845

916,943

11,018
9,428

20,446

146,755
83,056

157,773
92,484

229,811

250,257

201,652

465,034

666,686

184,723

377,812

562,535

12/31/2021
Rmb’000

12/31/2020
Rmb’000

17,321
158,962

23,515
105,464

Total  cash  outflow  for  leases  includes  payments  of  principle  and  interest  portion  of  lease  liabilities,  short-term 

leases and payments of lease payments on or before lease commencement date (including leasehold lands).

The  Group  leases  various  offices  for  its  operations.  Lease  contracts  are  entered  into  for  term  of  12  months  to 

10  years.  Lease  terms  are  negotiated  on  an  individual  basis  and  contain  a  wide  range  of  different  terms  and 

conditions.  In  determining  the  lease  term  and  assessing  the  length  of  the  non-cancellable  period,  the  Group 

applies the definition of a contract and determines the period for which the contract is enforceable.

The  amounts  of  the  Group’s  lease  liabilities  and  interest  expense  of  lease  liabilities  are  disclosed  in  Note  46 

and  Note  12,  respectively.  For  the  year  ended  December  31,  2021,  the  lease  agreements  do  not  impose  any 

covenants  other  than  the  security  interests  in  the  leased  assets  that  are  held  by  the  lessor.  Leased  assets  may 

not be used as security for borrowing purposes.

As at December 31, 2021, the Group did not enter into any lease that is not yet commenced.

194

ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2021 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
21.  EXPRESSWAY OPERATING RIGHTS

COST
At January 1, 2020 (originally stated)
Merger accounting restatement

At January 1, 2020 (restated)
Transfer (restated)
Disposals (restated)

At December 31, 2020 (restated)
Acquired on acquisition of a subsidiary
Transfer
Disposals

At December 31, 2021

AMORTISATION
At January 1, 2020 (originally stated)
Merger accounting restatement

At January 1, 2020 (restated)
Charge for the year (restated)

At December 31, 2020 (restated)

Charge for the year
Disposals

At December 31, 2021

CARRYING VALUES
At December 31, 2021

At December 31, 2020 (restated)

At January 1, 2020 (restated)

Rmb’000

46,147,065
10,991,974

57,139,039
14,087
(26,762)

57,126,364
2,782,873
–
(110,473)

59,798,764

23,279,619
5,626,443

28,906,062
2,360,744

31,266,806

2,550,036
(71,334)

33,745,508

26,053,256

25,859,558

28,232,977

195

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
21.  EXPRESSWAY OPERATING RIGHTS (Continued)
The  above  expressway  operating  rights  were  granted  by  the  Zhejiang  Provincial  Government  and  Anhui 

Provincial  Government  for  a  period  ranging  from  25  to  30  years.  During  the  expressway  concessionary  period, 

the  Group  has  the  rights  of  operations  and  management  of  Shanghai-Hangzhou-Ningbo  Expressway,  Shangsan 

Expressway,  Jinhua  Section  of  the  Ningbo-Jinhua  Expressway,  Hanghui  Expressway,  Huihang  Expressway, 

Shenjiahuhang  Expressway  and  Zhoushan  Bay  Bridge,  LongLi  Expressway  and  LiLong  Expressway,  Zhajiasu 

Expressway and the toll-collection rights thereof. The Group is required to manage and operate the expressways 

in  accordance  with  the  regulations  promulgated  by  the  Ministry  of  Communication  and  relevant  government 

authorities. Upon the end of the respective concession service periods, the toll expressways and their toll station 

facilities  without  residual  value,  will  be  returned  to  the  grantors  at  nil  consideration.  The  expressway  operating 

rights were amortised using the straight-line basis over the useful life attributable to the Group.

22.  GOODWILL

COST AND CARRYING VALUES
At January 1, 2020, December 31, 2020 and December 31, 2021

Particulars regarding impairment testing on goodwill are disclosed in Note 24.

Rmb’000

86,867

196

ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2021 
 
 
 
23.  OTHER INTANGIBLE ASSETS

Customer
bases
Rmb’000

Securities/
futures
firm licenses
Rmb’000

Trading
seats
Rmb’000

101,147
–
–

101,147

61,910
–
–
–

63,083
–
–

63,083

–
–
–
–

3,480
–
–

3,480

–
–
–
–

Software
Rmb’000

Total
Rmb’000

278,182
64,187
9,817

445,892
64,187
9,817

352,186

519,896

570
100,495
1,081
(23,077)

62,480
100,495
1,081
(23,077)

COST
At January 1, 2020
Additions
Transfer

At December 31, 2020

Acquired on acquisition 
of a subsidiary and 
a business

Additions
Transfer
Disposals

At December 31, 2021

163,057

63,083

3,480

431,255

660,875

AMORTISATION
At January 1, 2020
Charge for the year

At December 31, 2020

Charge for the year
Disposals

91,743
6,266

98,009

15,516
–

At December 31, 2021

113,525

–
–

–

–
–

–

–
–

–

–
–

–

171,298
43,521

263,041
49,787

214,819

312,828

52,246
(23,065)

67,762
(23,065)

244,000

357,525

CARRYING VALUES
At December 31, 2021

At December 31, 2020

49,532

3,138

63,083

63,083

3,480

3,480

187,255

303,350

137,367

207,068

On January 1, 2021, Zheshang Securities acquired nine branches from China Development Bank Securities Co., 

Ltd. and thus the customer bases increased. The customer bases of Zheshang Securities and Zheshang Futures 

Broker  Co.,  Ltd.  (“Zheshang  Futures”)  are  amortised  on  a  straight-line  basis  over  five  years  and  fifteen  years, 

respectively.

197

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
23.  OTHER INTANGIBLE ASSETS (Continued)
The securities/futures firm licenses of the securities operation are considered by the management of the Group to 

have indefinite useful lives because they can be renewed at minimal cost.

The  trading  seats  of  the  securities  operation  are  considered  by  the  management  of  the  Group  to  have  an 

indefinite useful life because there is no economic or regulatory limit to their useful life.

Software are amortised on a straight-line basis over three to five years.

Particulars of the impairment testing on intangible assets with indefinite useful lives are disclosed in Note 24.

24. 

IMPAIRMENT TESTING ON GOODWILL AND INTANGIBLE ASSETS 
WITH INDEFINITE USEFUL LIVES

For  the  purposes  of  impairment  testing,  goodwill  and  other  intangible  assets  with  indefinite  useful  lives  set 

out  in  Notes  22  and  23  have  been  allocated  to  four  individual  cash  generating  units  (“CGUs”),  comprising  two 

subsidiaries in toll operation segment and two subsidiaries in securities operation segment. The carrying amounts 

of goodwill and other intangible assets as at December 31, 2021 and 2020 allocated to these units are as follows:

Goodwill

Securities/futures 
firm licenses

Trading seats

12/31/2021
Rmb’000

12/31/2020
Rmb’000

12/31/2021
Rmb’000

12/31/2020
Rmb’000

12/31/2021
Rmb’000

12/31/2020
Rmb’000

75,137

75,137

10,335

10,335

–
1,395

–
1,395

86,867

86,867

–

–

51,783
11,300

63,083

–

–

51,783
11,300

63,083

–

–

2,080
1,400

3,480

–

–

2,080
1,400

3,480

Toll operation

– Zhejiang Jiaxing 

  Expressway Co., Ltd. 

(“Jiaxing Co”)
– Zhejiang Shangsan 

  Expressway Co., Ltd. 

(“Shangsan Co”)

Securities operation

– Zheshang Securities
– Zheshang Futures

198

ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2021 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
24. 

IMPAIRMENT TESTING ON GOODWILL AND INTANGIBLE ASSETS 
WITH INDEFINITE USEFUL LIVES (Continued)

The  basis  of  the  recoverable  amounts  of  the  above  CGUs  and  their  major  underlying  assumptions  are 

summarised below:

Jiaxing Co and Shangsan Co
The  recoverable  amounts  of  CGUs  of  Jiaxing  Co  and  Shangsan  Co  are  determined  based  on  value  in  use 

calculations.  The  key  assumptions  for  the  value  in  use  calculations  relate  to  discount  rates,  growth  rates,  and 

expected  changes  in  toll  revenue  and  direct  costs  during  the  forecast  period.  Those  calculations  use  cash  flow 

projections based on financial budgets approved by the management covering a five-year period and the discount 

rates  the  management  considered  appropriate.  No  growth  rate  has  been  assumed  beyond  the  five-year  period 

up to the remaining toll road operating rights which are 7 years (2020: 8 years) and 9 years (2020: 10 years) for 

Jiaxing Co and Shangsan Co, respectively. Management believes that any reasonably possible change in any of 

these assumptions would not cause the aggregate carrying amount of Jiaxing Co’s and Shangsan Co’s goodwill 

to exceed their aggregate recoverable amounts.

Zheshang Securities and Zheshang Futures
he  recoverable  amounts  of  CGUs  of  Zheshang  Securities  and  Zheshang  Futures  are  determined  based  on 

value  in  use  calculations.  The  key  assumptions  for  the  value  in  use  calculations  relate  to  the  discount  rates, 

growth  rates  and  profit  margin  during  the  forecast  period.  Those  calculations  use  cash  flow  projections  based 

on  financial  budgets  approved  by  the  management  covering  a  five-year  period  with  discount  rates  management 

believes  appropriate.  Growth  rates  beyond  the  five-year  period  is  assumed  to  be  1%  (2020:  1%).  Management 

believes that any reasonably possible change in any of these assumptions would not cause the carrying amount 

of  Zheshang  Securities  and  Zheshang  Futures’  goodwill  and  other  intangible  assets  to  exceed  their  aggregate 

recoverable amounts.

During  the  years  ended  December  31,  2021  and  2020,  the  management  of  the  Group  determines  that  there  are 

no impairment of any of its CGUs containing goodwill and other intangible assets with indefinite useful lives.

199

25. 

INTERESTS IN ASSOCIATES

Cost of investment in associates
Share of post-acquisition profit and other comprehensive income, 

net of dividends received

Fair value of listed investments (Note)

12/31/2021
Rmb’000

12/31/2020
Rmb’000

7,812,133

5,077,941

1,862,913

1,482,402

9,675,046

6,560,343

3,155,301

–

Note:  The  fair  value  of  the  listed  investments  is  determined  based  on  the  quoted  market  bid  price  multiplied  by  the 

quantity of shares held by the Group.

At December 31, 2021 and 2020, the Group had interests in the following associates:

Name of entity

Form of
business
structure

Place of
registration and
operation

Percentage of equity
interest and voting right
attributable to the Group
12/31/2021
%

12/31/2020
%

Principal activities

Zheshang Fund Management 

Corporate

The PRC

25

25

Asset fund 

Co., Ltd. (“Zheshang Fund”) (Note i)

Zhejiang Communications Investment 
Group Finance Co., Ltd. (“Zhejiang 
Communications Finance”) (Note ii)

Corporate

The PRC

20.08

20.08

Yangtze United Financial Leasing 

Corporate

The PRC

10.61

10.61

management

Finance and 
investment

Provision of financial 
leasing services

Co., Ltd. (“Yangtze United Financial 
Leasing”) (Note iii)

Zhejiang Zheshang Innovation Capital 
Management Co., Ltd. (“Zheshang 
Innovation Capital Management”)

Zhejiang Big Data Exchange Center  
Co., Ltd. (‘’Zhejiang Big Data’’)  
(Note iv)

Taiping Science and Technology 
Insurance Co., Ltd. (“Taiping 
Insurance”) (Note v)

Corporate

The PRC

Corporate

The PRC

Corporate

The PRC

200

40

–

15

40

Investment 

management and 
consulting

19.8

Big data asset 
transaction

15

Science and 

technology related 
insurance

ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2021 
 
 
 
 
 
 
 
 
 
 
 
25. 

INTERESTS IN ASSOCIATES (Continued)

Name of entity

Pujiang JuJinFengAn Investment 
Management LP (“FengAn 
Investment”) (Note vi)

Form of
business
structure

Place of
registration and
operation

Percentage of equity
interest and voting right
attributable to the Group
12/31/2021
%

12/31/2020
%

Principal activities

Partnership

The PRC

17.86

17.86

Investment 

management

Zheshang FoF for Industry 

Partnership

The PRC

24.99

24.99

Investment 

Transformation and Upgrading LP 
(“Zheshang FoF”) (Note vii)

Shaoxing Shangyu Industry  

M&A leading LP (“Shaoxing 
Shangyu”) (Note viii)

Partnership

The PRC

Zhejiang Concord Property Investment 

Corporate

The PRC

Co., Ltd. (“Zhejiang Concord 
Property”) (Note ix)

management and 
consulting

0.005

Investment 

management and 
consulting

45

Investment and real 
estate development

–

45

Shanghai Rural Commercial Bank Co., 

Corporate

The PRC

4.85

5.36

Commercial banking

Ltd (“SRCB”) (Note x)

Zhejiang Hangning Expressway  

Corporate

The PRC

Co., Ltd. (“Zhejiang Hangning”) 
(Note xi)

Zheshang Zhongtuo Zheqi Supply  

Corporate

The PRC

Chain Management (Zhejiang) Co., 
Ltd. (“Zhongtuo Zheqi”) (Note xii)

30

20

–

–

Expressway

Supply Chain 
Management

All of the above associates are accounted for using the equity method in these consolidated financial statements.

201

 
 
 
 
 
 
INTERESTS IN ASSOCIATES (Continued)

25. 
Notes:

(i) 

The Group is able to exercise significant influence over Zheshang Fund because it has the power to appoint one 

out of four directors of that company under the provisions stated in the Articles of Association of that company.

On  August  14,  2014,  Zheshang  Securities,  together  with  one  of  the  shareholders  of  Zheshang  Fund, 

Yangshengtang  Co.,  Ltd.,  auctioned  off  their  respective  25%  equity  interest  (totalling  50%)  in  Zheshang  Fund. 

The  hammer  price  reached  at  Rmb414,000,000  offered  by  Tonglian  Capital  Management  Co.,  Ltd.  (“Tonglian 

Capital”),  another  shareholder  of  Zheshang  Fund  which  is  independent  to  the  Group,  and  Zheshang  Securities 

will receive a consideration of Rmb207,000,000 accordingly.

As  at  December  31,  2021,  the  disposal  transaction  has  not  been  completed  and  the  refundable  deposit  of 

Rmb207,000,000  (2020:  Rmb165,600,000)  in  respect  of  such  transfer  reversed  by  Zheshang  Securities  was 

included in other payables in Note 38.

The  Directors  consider  the  disposal  required  approval  by  China  Securities  Regulatory  Commission  and  equity 

transfer registration, which was a lengthy process and they are not able to estimate the timing when and whether 

such approval would be granted. The amount of deposit received would be refundable to Tonglian Capital if the 

transfer eventually cannot be completed.

(ii) 

The  Group  is  able  to  exercise  significant  influence  over  Zhejiang  Communications  Finance  because  it  has 

the  power  to  appoint  one  out  of  six  directors  of  that  company  under  the  provisions  stated  in  the  Articles  of 

Association of that company.

(iii) 

The  Group  was  able  to  exercise  significant  influence  over  Yangtze  United  Financial  Leasing  because  it  has 

the  power  to  appoint  one  out  of  eight  directors  of  that  company  under  the  provisions  stated  in  the  Articles  of 

Association of that company.

(iv) 

On  July  22,  2021,  the  Zhejiang  Zheshang  Capital  Management  Co.,  Ltd.  signed  an  agreement  to  transfer  the 

19.8% equity of Zhejiang Big Data to Hangzhou Anheng Information Technology Co., Ltd. and Adayun Calculation 

Co., Ltd. at the consideration of RMB21,178,000. The transfer was completed on December 31, 2021.

(v) 

The  Group  is  able  to  exercise  significant  influence  over  Taiping  Insurance  because  it  has  the  power  to  appoint 

one  out  of  eleven  directors  of  that  company  under  the  provisions  stated  in  the  Articles  of  Association  of  that 

company.

(vi) 

As  general  partner  and  the  executive  partner  of  FengAn  Investment,  the  management  considers  the  Group  has 

significant influence over the investees.

202

ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2021INTERESTS IN ASSOCIATES (Continued)

25. 
Notes: (Continued)

(vii) 

As  limited  partner  of  Zheshang  FoF,  the  management  considers  the  Group  has  significant  influence  over  the 

investees. 24.99% is the percentage of capital commitment subscribed by the Group, the Group recognise share 

of profit based on the capital account allocation provided by Zheshang FoF.

(viii)  On June 30, 2021, the operation period of Shaoxing Shangyu ended and the partnership dissolved.

(ix) 

The  Group  is  able  to  exercise  significant  influence  over  Zhejiang  Concord  Property  because  it  has  the  power 

to  appoint  Chief  financial  officer  of  Zhejiang  Concord  Property  under  the  provisions  stated  in  the  Articles  of 

Association of that company.

(x) 

The Group’s percentage of entity interest in SRCB decreased from 5.36% to 4.85% due to the net impact of (a) 

equity  dilution  from  the  listing  of  SRCB  on August  19,  2021  and  (b)  the  new  acquisition  of  1,952,021  shares  of 

SCRB  during  the  year  ended  December  31,  2021. The  Group  can  still  exercise  significant  influence  over  SRCB 

after the dilution.

(xi) 

On  November  10,  2020,  the  Group  and  Communications  Group  jointly  signed  an  agreement  that  the  Group, 

as  the  assignee,  acquired  of  the  30%  equity  of  Zhejiang  Hangning  for  at  an  aggregate  consideration  of 

Rmb2,685,000,000. The transaction was completed on January 27, 2021.

(xii)  On June 22, 2021, Zhejiang Zheqi Co., Ltd. ((“Zhejiang Zheqi”, an indirect subsidiary of the Company) signed an 

agreement with Zheshang Development Co., Ltd to set up Zhongtuo Zheqi and invested RMB30,000,000 to hold 

20% equity of it. The Group can exercise significant influence over the Zhongtuo Zheqi.

203

INTERESTS IN ASSOCIATES (Continued)

25. 
Summarised financial information of material associates
Summarised  financial  information  in  respect  of  each  of  the  Group’s  material  associates  is  set  out  below.  The 

summarised  financial  information  below  represents  amounts  shown  in  the  associate’s  financial  statements 

prepared in accordance with HKFRSs.

All of these associates are accounted for using the equity method in these consolidated financial statements.

Zhejiang Hangning

Current assets

Non-current assets

Current liabilities

Non-current liabilities

Revenue

Profit from continuing operations

Profit for the period

Total comprehensive income for the period

Dividends received from the associate during the period

204

12/31/2021
Rmb’000

745,877

8,053,523

(908,000)

(17,634)

Period from
01/27/2021
to
12/31/2021
Rmb’000

1,327,624

188,889

188,889

188,889

379,537

ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2021 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
INTERESTS IN ASSOCIATES (Continued)

25. 
Zhejiang Hangning (Continued)
Reconciliation  of  the  above  summarised  financial  information  to  the  carrying  amount  of  the  interest  in  Zhejiang 

Hangning recognised in the consolidated financial statements:

Net asset of the associate
Proportion of the Group’s ownership interest in Zhejiang Hangning

Carrying amount of the Group’s interest in Zhejiang Hangning

Zhejiang Communications Finance

Current assets

Non-current assets

Current liabilities

Non-current liabilities

Revenue

Profit from continuing operations

Profit for the year

Total comprehensive income for the year

Dividends received from the associate during the year

12/31/2021
Rmb’000

7,873,766
30.00%

2,362,130

12/31/2021
Rmb’000

12/31/2020
Rmb’000

16,780,190

11,307,977

37,331,146

44,414,953

(46,558,026)

(48,910,080)

(40,138)

–

Year ended
12/31/2021
Rmb’000

Year ended
12/31/2020
Rmb’000

1,936,522

1,998,329

890,246

890,246

890,246

38,137

636,825

636,825

636,825

271,048

The  Group’s  entity  interest  of  Zhejiang  Communications  Finance  decreased  from  35%  to  20.08%  on  April  23, 

2020 because of the capital injection by Communications Group.

Reconciliation  of  the  above  summarised  financial  information  to  the  carrying  amount  of  the  interest  in  Zhejiang 

Communications Finance recognised in the consolidated financial statements:

205

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
INTERESTS IN ASSOCIATES (Continued)

25. 
Zhejiang Communications Finance (Continued)

Net asset of the associate
Proportion of the Group’s ownership interest in Zhejiang Communications 

Finance

Carrying amount of the Group’s interest in Zhejiang Communications 

Finance

12/31/2021
Rmb’000

12/31/2020
Rmb’000

7,513,172

6,812,850

20.08%

20.08%

1,508,645

1,368,020

Aggregate information of associates that are not individually material

Year ended
12/31/2021
Rmb’000

Year ended
12/31/2020
Rmb’000

The Group’s share of profit from continuing operations

730,626

531,978

The Group’s share of other comprehensive income

43,607

(24,160)

Aggregate carrying amount of the Group’s interests in these associates

5,804,271

5,192,323

26. 

INTEREST IN A JOINT VENTURE

Unlisted investment in a joint venture, at cost less impairment
Share of post-acquisition gain

12/31/2021
Rmb’000

12/31/2020
Rmb’000

384,325
56,249

373,470
10,855

440,574

384,325

206

ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2021 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
INTEREST IN A JOINT VENTURE (Continued)

26. 
At December 31, 2021 and 2020, the Group had interest in the following joint venture:

Name of entity

Zhejiang Shaoxing Shengxin 
Expressway Co., Ltd.  
(“Shengxin Co”)

Form of
business
structure

Place of
registration and
operation

Percentage of equity
interest and voting right
attributable to the Group
12/31/2021
%

12/31/2020
%

Corporate

The PRC

50

50

Principal activities

Management of the 
Shaoxing section  
of the Ningbo-Jinhua 
Expressway

Summarised financial information in respect of the Group’s interest in Shengxin Co which is accounted for using 

the equity method at the end of the reporting period is set out below. This represents amounts shown in the joint 

venture’s financial statements prepared in accordance with HKFRSs:

Shengxin Co

Current assets

Non-current assets

Current liabilities

Non-current liabilities

The above amounts of assets and liabilities include the following:
Cash and cash equivalents

Current financial liabilities (excluding trade and other payables and 

provisions)

Non-current financial liabilities (excluding trade and other payables and 

provisions)

12/31/2021
Rmb’000

12/31/2020
Rmb’000

208,469

135,378

1,640,425

1,823,733

(54,571)

(62,823)

(913,176)

(1,127,639)

207,902

128,395

(1,176)

(1,538)

(873,000)

(1,083,000)

207

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
26. 

INTEREST IN A JOINT VENTURE (Continued)

Revenue

Profit for the year

Total comprehensive income for the year

The above profit for the year includes the following:

Depreciation and amortisation

Interest income

Interest expense

Income tax expense

Year ended
12/31/2021
Rmb’000

Year ended
12/31/2020
Rmb’000

509,756

378,177

112,499

112,499

32,563

32,563

(185,853)

(179,928)

3,309

2,017

(44,642)

(54,340)

(37,505)

(10,854)

Reconciliation  of  the  above  summarised  financial  information  to  the  carrying  amount  of  the  interest  in  Shengxin 

Co recognised in the consolidated financial statements:

Net asset of the joint venture
Proportion of the Group’s ownership interest in Shengxin Co

12/31/2021
Rmb’000

12/31/2020
Rmb’000

881,147
50.00%

768,649
50.00%

Carrying amount of the Group’s interest in Shengxin Co

440,574

384,325

208

ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2021 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
27.  FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS

Financial assets mandatorily measured at FVTPL:

– Debt securities
– Equity securities (Note i, ii)
– Funds
– Other investments (Note iii)

Analysed as:

– Listed (Note iv)
– Unlisted

Analysed for reporting purposes as:

Current assets
Non-current assets

Notes:

12/31/2021
Rmb’000

12/31/2020
Rmb’000

35,168,720
3,437,793
5,699,301
1,503,775

21,651,430
1,861,597
4,193,745
1,695,445

45,809,589

29,402,217

8,487,589
37,322,000

7,187,310
22,214,907

45,809,589

29,402,217

45,445,711
363,878

29,158,094
244,123

45,809,589

29,402,217

(i) 

The  restricted  shares  with  a  legally  enforceable  restriction  that  prevents  the  Group  to  dispose  of  within 

a  specified  period  amounted  to  approximately  Rmb575,544,000  as  at  December  31,  2021  (2020: 

Rmb120,389,000). The fair values of these securities have taken into account the relevant features including the 

restrictions.

(ii) 

As  at  December  31,  2021,  the  Group  has  entered  into  securities  lending  arrangement  with  clients  that  resulted 

in  the  transfer  of  financial  assets  at  fair  value  through  profit  or  loss  with  a  total  fair  value  of  Rmb7,324,331 

(2020: Rmb27,363,000) to external clients. Since the arrangement will be settled by the securities with the same 

quantity  lent,  the  economic  risks  and  benefits  of  those  securities  are  not  transferred  and  it  does  not  result  in 

derecognition of the financial assets.

(iii) 

Other investments mainly represent investments in collective asset management schemes issued and managed 

by  the  Group,  wealth  management  products  issued  by  banks  and  targeted  asset  management  schemes  (or 

trust  investments)  managed  by  non-bank  financial  institutions,  which  mainly  invest  in  debt  securities,  publicly 

traded  equity  securities  listed  in  the  PRC.  The  Group  has  committed  to  hold  its  investments  in  collective  asset 

management schemes that managed by the Group till the end of the investment period.

(iv) 

Securities  and  funds  traded  on  the  Shanghai  Stock  Exchange,  the  Shenzhen  Stock  Exchange,  the  Hong  Kong 

Stock Exchange and other stock exchanges are included in the “Listed” category.

209

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
28.  CONTRACT ASSETS

High grade road construction contract
Less: Allowance for contract asset

12/31/2021
Rmb’000

12/31/2020
Rmb’000

–
–

–

1,009,132
(1,514)

1,007,618

Contract  asset,  that  is  not  expected  to  be  settled  within  the  Group’s  normal  operating  cycle,  is  classified  as 

current and non-current based on expected settlement dates.

Details of contract asset which impact on the amount of contract asset recognised are disclosed in Note 7.

Since the high grade road construction services rendered to government mentioned in Note 7 has been finished 

in  2021,  receivables  from  government  cooperation  projects  are  transferred  from  contract  assets  recognised 

during the whole construction period to receivables from government cooperation projects in Note 31.

29.  TRADE RECEIVABLES

12/31/2021
Rmb’000

12/31/2020
Rmb’000
(Restated)

01/01/2020
Rmb’000
(Restated)

473,691
(5,799)

380,148
(6,748)

340,375
(4,453)

467,892

373,400

335,922

19,996
453,695

16,008
364,140

13,373
327,002

473,691

380,148

340,375

Trade receivables

– contracts with customers
Less: Allowance for credit losses

Trade receivables 

(before allowance for credit losses) comprise:

Fellow subsidiaries
Third parties

210

ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2021 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
29.  TRADE RECEIVABLES (Continued)
The  Group  has  no  credit  period  granted  to  its  trade  customers  of  toll  operation  business.  The  Group’s  trade 

receivable  balance  for  toll  operation  is  toll  receivables  from  the  respective  expressway  fee  settlement  centre  of 

Zhejiang  Province  and  Anhui  Province,  Transportation  Bureau  of  Linping  County  of  Hangzhou,  Transportation 

Bureau  of  Yiwu,  Transportation  Bureau  of  Linan  of  Hangzhou,  Transportation  Bureau  of  Huzhou,  Transportation 

Bureau of Jiaxing, which are normally settled within 3 months. All of these trade receivables were not past due in 

both periods.

In respect of the Group’s asset management service, security commission and financial advisory service operated 

by  Zheshang  Securities,  trading  limits  are  set  for  customers.  The  Group  seeks  to  maintain  tight  control  over  its 

outstanding accounts receivable in order to minimise credit risk. Overdue balances are regularly monitored by the 

management.

The following is an aged analysis of trade receivables net of allowance for credit losses presented based on the 

invoice date at the end of the reporting period, which approximated the respective revenue recognition dates:

Within 3 months
3 months to 1 year
1 to 2 years
Over 2 years

Movement of allowance for credit losses

At the beginning of the year
Impairment recognised for the year
Amount reversed during the year

At the end of the year

12/31/2021
Rmb’000

12/31/2020
Rmb’000
(Restated)

01/01/2020
Rmb’000
(Restated)

335,308
121,753
7,554
3,277

321,065
44,044
2,972
5,319

307,878
17,905
6,430
3,709

467,892

373,400

335,922

12/31/2021
Rmb’000

12/31/2020
Rmb’000
(Restated)

6,748
104
(1,053)

5,799

4,453
2,350
(55)

6,748

211

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
30.  LOANS TO CUSTOMERS ARISING FROM MARGIN FINANCING 

BUSINESS

Loans to margin clients
Less: Impairment allowance

12/31/2021
Rmb’000

12/31/2020
Rmb’000

19,407,330
(13,200)

15,013,472
(43)

19,394,130

15,013,429

The  Group  has  provided  customers  with  margin  financing  and  security  lending  for  securities  transactions,  the 

credit  facility  limits  to  margin  clients  are  determined  by  the  discounted  market  value  of  the  pledged  securities 

accepted by the Group or the market value of cash collaterals.

All of the loans to margin clients which are secured by the underlying pledged securities are interest bearing. The 

Group maintains a list of approved stocks for margin lending at a specified loan to collateral ratio. Any excess in 

the lending ratio will trigger a margin call which the customers have to make good of the shortfall. The Group has 

the  right  to  process  forced  liquidation  if  the  customer  fails  to  make  good  of  the  shortfall  within  a  short  period  of 

time.

As at December 31, 2021, loans to customers under the margin financing and securities lending activities carried 

out  in  the  PRC  were  secured  by  the  customers’  stock  securities  and  cash  collaterals.  The  undiscounted  market 

value  of  the  stock  security  collaterals  was  amounted  to  Rmb58,393,758,000  (2020:  Rmb43,022,132,000).  Cash 

collateral  of  Rmb2,359,943,000  (2020:  Rmb1,920,073,000)  received  from  clients  was  included  in  accounts 

payable to customers arising from securities business in Note 36.

No aged analysis is disclosed as in the opinion of the Directors, the aged analysis does not give additional value 

in view of the nature of business of securities margin financing.

212

ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2021 
 
 
 
 
 
 
 
 
30.  LOANS TO CUSTOMERS ARISING FROM MARGIN FINANCING 

BUSINESS (Continued)

The  following  table  shows  reconciliation  of  loss  allowances  that  has  been  recognised  for  loans  to  customers 

arising from margin financing business.

As at January 1, 2020

– Transfer to 12m ECL
– Impairment loss reversed
– Charged to profit or loss

As at December 31, 2020
– Transfer to 12m ECL
– Transfer to credit-impaired
– Charged to profit or loss

As at December 31, 2021

Lifetime ECL
(not credit-
impaired)
Rmb’000

Lifetime ECL
(credit-impaired)
Rmb’000

12m ECL
Rmb’000

8
2
–
23

33
2
–
8,599

8,634

2
(2)
–
10

10
(2)
(3,178)
4,558

1,388

1,005
–
(1,005)
–

–
–
3,178
–

3,178

Total
Rmb’000

1,015
–
(1,005)
33

43
–
–
13,157

13,200

The tables below detail the credit risk exposures of the Group’s loans to customers arising from margin financing 

business, which are subject to ECL assessment.

As at December 31, 2021
Gross carrying amount

As at December 31, 2020
Gross carrying amount

Lifetime ECL
(not credit-
impaired)
Rmb’000

Lifetime ECL
(credit-impaired)
Rmb’000

12m ECL
Rmb’000

Total
Rmb’000

18,894,618

509,534

3,178

19,407,330

14,174,263

839,209

–

15,013,472

213

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
31.  OTHER RECEIVABLES AND PREPAYMENTS
Non-Current

Entrusted loan
Prepayments
Receivables from government cooperation projects

Current

Prepayments
Trading deposits (Note i)
Settlement receivables
Receivables from government cooperation projects
Others

12/31/2021
Rmb’000

180,000
–
1,036,289

12/31/2020
Rmb’000
(Restated)

–
2,685,000
–

1,216,289

2,685,000

01/01/2020
Rmb’000
(Restated)

–
–
–

–

12/31/2021
Rmb’000

147,104
876,744
–
152,805
202,452

12/31/2020
Rmb’000
(Restated)

296,521
2,597,662
66,139
–
171,744

01/01/2020
Rmb’000
(Restated)

143,618
157,383
1,054
–
122,775

1,379,105

3,132,066

424,830

Notes:

(i) 

Trading deposits mainly represent over-the-counter option deposit and equity swap deposit.

214

ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2021 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
32.  FINANCIAL ASSETS HELD UNDER RESALE AGREEMENTS

Analysed by collateral type:

Bonds
Stock securities

Less: Impairment allowance

Analysed by market:
Inter bank market
Shanghai/Shenzhen Stock Exchange

Less: Impairment allowance

Analysed for reporting purposes as:

Current assets
Non-current assets

12/31/2021
Rmb’000

12/31/2020
Rmb’000

4,517,739
2,690,395

7,208,134
(119,928)

3,638,156
3,675,974

7,314,130
(191,659)

7,088,206

7,122,471

508,802
6,699,332

7,208,134
(119,928)

323,537
6,990,593

7,314,130
(191,659)

7,088,206

7,122,471

7,078,206
10,000

7,002,471
120,000

7,088,206

7,122,471

The collaterals include both equity and debt securities listed in the PRC. As at December 31, 2021, the fair value 

of  equity  securities  and  debt  securities  held  as  collaterals  was  Rmb9,460,073,000  (2020:  Rmb12,736,012,000) 

and Rmb4,626,964,000 (2020: Rmb3,819,482,000), respectively.

215

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
32.  FINANCIAL ASSETS HELD UNDER RESALE AGREEMENTS 

(Continued)

The  following  table  shows  reconciliation  of  loss  allowances  that  has  been  recognised  for  financial  assets  held 

under resale agreements.

As at January 1, 2020

– Transfer to lifetime-not-credit-impaired
– Transfer to 12m ECL
– Charged to profit or loss

As at December 31, 2020
– Transfer to 12m ECL
– Charged to profit or loss

As at December 31, 2021

Lifetime ECL
(not credit-
impaired)
Rmb’000

Lifetime ECL
(credit-impaired)
Rmb’000

1,452
202
(140)
(1,037)

477
(318)
2,931

3,090

8,312
–
–
171,688

180,000
–
(83,588)

96,412

12m ECL
Rmb’000

10,580
(202)
140
664

11,182
318
8,926

20,426

Total
Rmb’000

20,344
–
–
171,315

191,659
–
(71,731)

119,928

The  tables  below  detail  the  credit  risk  exposures  of  the  Group’s  financial  assets  held  under  resale  agreements, 

which are subject to ECL assessment.

As at December 31, 2021
Gross carrying amount

As at December 31, 2020
Gross carrying amount

Lifetime ECL
(not credit-
impaired)
Rmb’000

Lifetime ECL
(credit-impaired)
Rmb’000

12m ECL
Rmb’000

Total
Rmb’000

7,001,992

109,730

96,412

7,208,134

6,866,057

268,073

180,000

7,314,130

216

ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2021 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
33.  BANK BALANCES AND CLEARING SETTLEMENT FUND HELD ON 

BEHALF OF CUSTOMERS

For  the  Group’s  securities  operation  carried  out  by  Zheshang  Securities,  the  Group  receives  and  holds  money 

deposited  by  customers  (including  other  institutions).  These  customers’  money  is  maintained  in  one  or  more 

segregated  bank  accounts.  The  Group  has  recognised  the  corresponding  accounts  payable  to  respective 

customers and other institutions.

Bank  balances  and  clearing  settlement  fund  held  on  behalf  of  customers  carry  interest  at  market  rates  which 

range from 0.3% to 3.40% (2020: 0.3% to 3.35%) per annum.

Bank balances and clearing settlement fund held on behalf of customers that are denominated in currencies other 

than the functional currency of the respective group entities are set out below:

As at December 31, 2021
As at December 31, 2020

HKD
Rmb’000

57,912
69,082

USD
Rmb’000

215,778
135,129

34.  BANK BALANCES, CLEARING SETTLEMENT FUND, DEPOSITS AND 

CASH

12/31/2021
Rmb’000

Time deposits with original maturity over three months
Restricted bank balances and cash (Note)

413,843
132,090

12/31/2020
Rmb’000
(Restated)

313,600
23,986

01/01/2020
Rmb’000
(Restated)

302,726
–

Unrestricted bank balances and cash
Time deposits with original maturity of less than three 

16,153,110

8,645,085

8,071,873

months

1,000,867

–

18,821

Cash and cash equivalents

17,153,977

8,645,085

8,090,694

17,699,910

8,982,671

8,393,420

Note:  The  restricted  bank  deposits  include  the  bank  acceptance  deposits,  fund  management  risk  reserve,  collective 

asset management schemes deposits and margin deposits.

217

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
34.  BANK BALANCES, CLEARING SETTLEMENT FUND, DEPOSITS AND 

CASH (Continued)

Bank balances carry interest at the average market rate is 0.35% (2020: 0.35%) per annum. Time deposits carry 

interest at fixed rates ranging from 3.13% to 4.125% (2020: 2.25% to 4.125%) per annum.

Bank  balances,  clearing  settlement  fund,  deposits  and  cash  that  are  denominated  in  currencies  other  than  the 

functional currency of the respective group entities are set out below:

As at December 31, 2021
As at December 31, 2020

HKD
Rmb’000

65,743
24,389

USD
Rmb’000

1,852,198
39,498

35.  PLACEMENTS FROM OTHER FINANCIAL INSTITUTIONS

Due to banks

12/31/2021
Rmb’000

12/31/2020
Rmb’000

500,000

400,000

As  at  December  31,  2021,  the  effective  interest  rates  bearing  on  the  outstanding  amount  of  due  to  banks  vary 

from  2.22%  to  3.33%  (December  31,  2020:  2.40%  to  3.10%)  per  annum.  The  amount  of  due  to  banks  were 

repayable within seven days from the end of the reporting period.

36.  ACCOUNTS PAYABLE TO CUSTOMERS ARISING FROM SECURITIES 

BUSINESS

The amounts mainly represent money held on behalf of clients at the banks and clearing houses by the Group.

The amounts also include payables for securities/futures business as well as cash collaterals from customers for 

securities lending and/or margin financing arrangement.

The majority of the accounts payable balance is repayable on demand except where certain accounts payable to 

brokerage clients represent margin deposits received from clients for their trading activities under normal course 

of business. No aged analysis is disclosed as in the opinion of the Directors, an aged analysis does not give any 

additional value in view of the nature of the business.

218

ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2021 
 
 
 
 
 
 
 
 
 
 
 
36.  ACCOUNTS PAYABLE TO CUSTOMERS ARISING FROM SECURITIES 

BUSINESS (Continued)

As  at  December  31,  2021,  Rmb2,359,943,000  (2020:  Rmb1,920,073,000)  cash  collaterals  have  been  received 

from  clients  for  securities  lending  or  margin  financing  arrangement,  of  which  under  normal  course  of  business. 

Only the excess amounts over the required margin deposits stipulated are repayable on demand.

Accounts payable to customers arising from securities business that are denominated in currencies other than the 

functional currency of the respective group entities are set out below:

As at December 31, 2021
As at December 31, 2020

37.  TRADE PAYABLES

HKD
Rmb’000

52,524
68,660

USD
Rmb’000

209,517
132,616

Trade payables mainly represent the payables for the expressway improvement projects and construction of high 

grade road. The following is an aged analysis of trade payables presented based on the invoice date:

Within 3 months
3 months to 1 year
1 to 2 years
2 to 3 years
Over 3 years

12/31/2021
Rmb’000

875,632
114,352
87,079
62,461
248,009

12/31/2020
Rmb’000
(Restated)

477,619
104,616
177,266
51,046
288,027

01/01/2020
Rmb’000
(Restated)

1,015,097
83,490
103,727
38,997
295,369

1,387,533

1,098,574

1,536,680

219

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
38.  OTHER PAYABLES AND ACCRUALS

12/31/2021
Rmb’000

12/31/2020
Rmb’000
(Restated)

01/01/2020
Rmb’000
(Restated)

Accrued payroll and welfare
Advances
Advance payments for settlement from securities 

business

Advance payment of futures insurance
Trading deposit and settlement (Note)
Deposit received for disposal of an associate
Retention payable
Pledge deposit for warehouse receipt
Compensations for highway crossing
Clearing funds payables
Toll collected on behalf of other toll roads
Futures risk reserve
Government subsidies from removal of expressway toll 

station on provincial borders

Deferred income
Notes payable
Balance payable of share purchase
Others

1,441,632
41,712

132,296
7,196
2,577,793
207,000
120,027
164,438
58,509
372,137
3,866
142,853

93,374
80,628
192,400
27,500
208,705

1,207,094
30,544

4,812
15,903
3,833,730
165,600
91,824
119,614
62,617
85,998
6,113
124,717

117,009
96,828
–
–
196,394

998,219
43,084

50,153
–
199,700
165,600
115,860
94,612
96,269
45,577
7,532
111,553

–
60,950
–
–
95,440

5,872,066

6,158,797

2,084,549

Note:

Trading deposits mainly represent over-the-counter option deposit and equity swap deposit.

220

ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2021 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
39.  DERIVATIVE FINANCIAL ASSETS/LIABILITIES

Equity swap
Others (Note)

Equity swap
Others (Note)

Note:

12/31/2021

Nominal 
Amount
Rmb’000

8,183,477
55,751,856

Assets
Rmb’000 

420,162
193,556

Liabilities
Rmb’000

239,853
211,515

63,935,333

613,718

451,368

12/31/2020

Nominal 
Amount
Rmb’000

9,068,830
40,884,898

Assets
Rmb’000 

419,849
105,780

Liabilities
Rmb’000

389,055
108,372

49,953,728

525,629

497,427

Others include stock index futures, treasury futures, commodity futures, interest rate swap (“IRS”) and other options.

Under the daily mark-to-market and settlement arrangement, any gains or losses of the Group’s position in stock index 

futures,  treasury  futures  and  commodity  futures  were  settled  daily.  Accordingly,  the  net  position  of  them  in  derivative 

instruments were nil at December 31, 2021 and 2020.

Under  the  daily  mark-to-market  and  settlement  arrangement,  any  gains  or  losses  of  the  Group’s  position  in  IRS  were 

settled daily in the corresponding payments or receipts were included in “clearing settlement funds” as at December 31, 

2021. Accordingly,  the  net  position  of  the  IRS  contracts  in  derivative  instruments  was  nil  at  December  31,  2021  (2020: 

nil).

For  IRS  contracts  and  commodity  futures  in  mainland  China  not  under  the  daily  mark-to-market  and  settlement 

arrangement are presented gross at the end of reporting period.

221

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
40.  BANK AND OTHER BORROWINGS

Loans from banks, secured (Note i)
Loans from banks, unsecured
Loans from related parties, secured (Note i)
Loans from related parties, unsecured

(Notes 58(i), 58(ii))

Loans from third parties, guaranteed

Carrying amount repayable:
Within one year
More than one year but not exceeding two years
More than two years but not more than five years
More than five years

Less: Amounts due within one year

12/31/2021
Rmb’000

14,462,553
71,859
1,121,317

1,088,188
–

12/31/2020
Rmb’000
(Restated)

01/01/2020
Rmb’000
(Restated)

9,990,518
3,108,672
–

6,875,170
–

8,578,997
386,967
–

9,711,285
2,003,752

16,743,917

19,974,360

20,681,001

2,316,307
1,430,830
4,020,000
8,976,780

8,855,320
1,882,500
6,512,140
2,724,400

10,054,271
1,635,700
5,627,030
3,364,000

16,743,917
(2,316,307)

19,974,360
(8,855,320)

20,681,001
(10,054,271)

Amounts shown under non-current liabilities

14,427,610

11,119,040

10,626,730

The bank and other borrowings comprise:

Fixed-rate borrowings
Variable-rate borrowings

1,160,047
15,583,870

8,562,048
11,412,312

12,459,312
8,221,689

16,743,917

19,974,360

20,681,001

222

ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2021 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
40.  BANK AND OTHER BORROWINGS (Continued)
The range of effective interest rates (which are also agreed to contract interest rates) on the Group’s borrowings 

are as follows:

Effective interest rate:
Fixed-rate borrowings
Variable-rate borrowings

Note:

12/31/2021

12/31/2020

01/01/2020

3.00%-4.85%
4.08%-4.70%

2.05%-5.30% 3.00%-6.223%
0.80%-4.70% 3.915%-4.41%

i 

As  at  December  31,  2021,  the  Group  pledged  the  following  assets  for  these  secured  loans  from 

financial  institutions:  (i)  other  receivables  with  an  aggregate  carrying  value  of  Rmb1,189,094,000  (2020: 

Rmb1,007,618,000)  and  (ii)  expressway  operating  rights  of  Zhoushan  Bay  Bridge,  Shenjiahuhang  Expressway, 

LongLi  Expressway  and  LiLong  Expressway,  and  Zhajiasu  Expressway  (2020:  expressway  operating  rights  of 

Zhoushan Bay Bridge, Shenjiahuhang Lianhang part and Huzhou part).

41.  SHORT-TERM FINANCING NOTE PAYABLE

Unsecured:

Short-term financing bonds
Beneficial certificates

Total

12/31/2021
Rmb’000

12/31/2020
Rmb’000

6,526,561
1,414,141

4,518,470
1,788,246

7,940,702

6,306,716

As  at  December  31,  2021,  the  short-term  financing  bonds  bears  an  interest  rate  at  2.61%  to  2.80%  (2020: 

short-term financing bonds bears an interest rate at 3.01% to 3.18%), the yields of all the outstanding beneficial 

certificates were between 3.00% to 19.00%(2020: 2.90% to 10.65%).

223

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
42.  BONDS PAYABLE

Corporate and subordinated bonds without redemption option (Note i, ii)
Medium-term notes (Note iii)
Asset-backed securities (Note iv)
Infrastructure real estate investment trusts (Note v)

Less: Bonds due within 1 year

12/31/2021
Rmb’000

21,643,896
3,062,374
814,402
2,128,419

12/31/2020
Rmb’000

16,143,192
3,062,374
862,581
–

27,649,091

20,068,147

(10,455,661)

(6,361,764)

Amounts shown under non-current liabilities

17,193,430

13,706,383

Notes:

(i) 

This  balance  represented  4  corporate  bonds,  9  subordinated  bonds  and  1  beneficial  certificate  (2020:  2 

corporate  bonds  and  10  subordinated  bonds)  due  by  year  2022  to  2026  (2020:  2021  to  2025)  issued  by 

Zheshang  Securities,  without  redemption  option,  with  fixed  interest  rates  ranging  from  2.70%  to  4.60%  (2020: 

3.48% to 5.28%) per annum.

(ii) 

On  July  14,  2021,  the  Group  issued  the  1.638%  Bonds  due  2026  in  the  aggregate  principal  amount  of 

US$470,000,000. The Bonds will bear interest from and including 14 July 2021 at the rate of 1.638% per annum, 

payable semi-annually in arrears on 14 January and 14 July in each year.

(iii) 

This  balance  represented  2  medium-term  notes  due  by  year  2022  issued  by  the  Company  with  fixed  interest 

rates 3.64% and 3.86% per annum.

(iv) 

On  September  23,  2019,  the  Group  issued  asset-backed  securities  which  backed  by  expressway  operating 

rights  and  advertisement  rights  in  relation  to  the  Anhui  section  of  Huihang  expressway  (Anhui  section).  The 

asset-backed  securities  were  issued  with  a  financing  period  of  15  years  and  carrying  coupon  rate  of  3.7%  per 

annum.

(v) 

On June 21, 2021, the Group issued infrastructure real estate investment trusts (the “REITs”) with the underlying 

expressway operating rights in relation to the Hangzhou section of Hanghui Expressway. The Group held 51% of 

the  share  of  the  REITs,  with  an  operational  period  of  20  years. The  REITs  shall  distribute  more  than  90%  of  its 

annual distributable profit to investors in cash at least once a year as per the fund contract.

224

ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2021 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
43.  CONVERTIBLE BONDS
Convertible Bond 2021
On  January  20,  2021,  the  Company  issued  a  zero  coupon  convertible  bond  due  2026  in  an  aggregate  principal 

amount of Euro230,000,000. The Convertible Bond 2021 is listed on the Stock Exchange (the “Stock Exchange”).

The principal terms of the Convertible Bond 2021 are set out below:

(1)  Conversion right
The  Convertible  Bond  2021  will,  at  the  option  of  the  holder  (the  “Bondholders  2021”),  be  convertible  (unless 

previously  redeemed,  converted  or  purchased  and  cancelled)  on  or  after  March  2,  2021  up  to  January  10,  2026 

into  fully  paid  ordinary  shares  with  a  par  value  of  Rmb1.00  each  at  an  initial  conversion  price  (the  “Conversion 

Price 2021”) of HK$8.83 per H share and a fixed exchange rate of HK$9.5145 to Euro1.00 (the “Fixed Exchange 

Rate”). The Conversion Price 2021 is subject to the anti-dilutive adjustments and certain events including mainly: 

share  consolidation,  subdivision  or  re-classification,  capitalisation  of  profits  or  reserves,  capital  distributions, 

rights  issues  of  shares  or  options  over  shares,  rights  issues  of  other  securities  and  issues  at  less  than  current 

market price. The latest Conversion Price 2021 was HK$8.32 per H share.

(2)  Redemption
(i) 

Redemption at maturity

Unless  previously  redeemed,  converted  or  purchased  and  cancelled  as  provided  herein,  the  Company  will 

redeem  each  Convertible  Bond  2021  at  100  percent  of  its  outstanding  principal  amount  on  the  maturity  date  of 

January 20, 2026 (the “Maturity Date 2021”).

225

43.  CONVERTIBLE BONDS (Continued)
Convertible Bond 2021 (Continued)
(2)  Redemption (Continued)
(ii) 

Redemption at the option of the Company

The  Company  may,  having  given  not  less  than  30  nor  more  than  60  days’  notice,  redeem  the  Convertible 

Bond  2021  in  whole  and  not  some  only  at  100  percent  of  their  outstanding  principal  amount  as  at  the  relevant 

redemption date.

(a) 

at any time after January 20, 2024 but prior to the Maturity Date 2021, provided that no such redemption 

may be made unless the closing price of an H share translated into Euro at the prevailing rate applicable 

to  each  Stock  Exchange  business  day,  for  any  20  Stock  Exchange  business  days  within  a  period  of  30 

consecutive Stock Exchange business days, the last of such Stock Exchange business day shall occur not 

more than 10 days prior to the date upon which notice of such redemption is given, was, for each such 20 

Stock Exchange business days, at least 130 percent of the Conversion Price 2021(translated into Euro at 

the Fixed Exchange Rate); or

(b) 

if  at  any  time  the  aggregate  principal  amount  of  the  Convertible  Bond  2021  outstanding  is  less  than  10 

percent of the aggregate principal amount originally issued.

(iii) 

Redemption at the option of the bondholders

The Company will, at the option of the Bondholders, redeem whole or some of that holder’s bond on January 20, 

2024 (the “Put Option Date”) at their outstanding principal amount on that Date.

The Convertible Bond 2021 comprises two components:

(a) 

Debt  component  was  initially  measured  at  fair  value  amounted  to  Euro  183,297,000  (equivalent  to 

Rmb1,443,009,000).  It  is  subsequently  measured  at  amortised  cost  by  applying  effective  interest  rate 

method after considering the effect of the transaction costs. The effective interest rate used is 4.74%.

(b) 

Derivative component comprises conversion right of the bondholders, redemption option of the Company, 

and redemption option of the bondholders.

Transaction  costs  totalling  Rmb8,427,515  that  relate  to  the  issue  of  the  Convertible  Bond  2021  are  allocated  to 

the components (including conversion right and redemption options) in proportion to their respective fair values.

226

ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 202143.  CONVERTIBLE BONDS (Continued)
Convertible Bond 2021 (Continued)
(2)  Redemption (Continued)
Transaction costs amounting to approximately Rmb1,711,247 relating to the derivative component were charged 

to  profit  or  loss  during  the  year  ended  December  31,  2021.  Transaction  costs  amounting  to  approximately 

Rmb6,716,268  relating  to  the  debt  component  are  included  in  the  carrying  amount  of  the  debt  portion  and 

amortised over the period of the Convertible Bond 2021 using the effective interest method.

The  derivative  component  was  measured  at  fair  value  with  reference  to  valuation  carried  out  by  a  firm  of 

independent professional valuers.

The  movement  of  the  debt  and  derivative  components  of  the  Convertible  Bond  2021  for  the  years  ended 

December 31, 2021 is set out as below:

Debt component
at amortised cost

Derivative components
at FVTPL

Total

Euro’000

Rmb’000

Euro’000

Rmb’000

Euro’000

Rmb’000

Issuance on January 20, 

2021
Issue cost
Exchange realignment
Interest charge
Gain on changes in fair 

value

183,297
(853)
–
7,930

1,443,009
(6,716)
(119,100)
57,252

46,703
–
–
–

367,666
–
–
–

230,000
(853)
–
7,930

1,810,675
(6,716)
(119,100)
57,252

–

–

421

(27,449)

421

(27,449)

As at December 31, 2021

190,374

1,374,445

47,124

340,217

237,498

1,714,662

No conversion or redemption of the Convertible Bond 2021 has occurred up to December 31, 2021.

The detailed key inputs the valuers use to calculate the fair value of the derivative component refer to Note 54(c).

227

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
44.  FINANCIAL ASSETS SOLD UNDER REPURCHASE AGREEMENTS

Analysed as collateral type:

Bonds

Analysed by market:

Shanghai/Shenzhen Stock Exchange
Inter-bank market

12/31/2021
Rmb’000

12/31/2020
Rmb’000

25,250,426

11,525,087

6,679,719
18,570,707

4,717,363
6,807,724

25,250,426

11,525,087

As at December 31, 2021 and 2020, the above financial assets sold under repurchase agreements include those 

repurchase agreements entered into with qualified investors, with maturities within 1 year.

Sales and repurchase agreements are transactions in which the Group sells a security and simultaneously agrees 

to repurchase it (or an asset that is substantially the same) at a fixed price on a future date. Since the repurchase 

prices  are  fixed,  the  Group  is  still  exposed  to  substantially  all  the  credit  risks  and  market  risks  and  rewards 

of  those  securities  sold.  These  securities  are  not  derecognised  from  the  financial  statements  but  regarded  as 

“collateral” for the liabilities because the Group retains substantially all the risks and rewards of these securities. 

The cash proceed received is recognised as financial liability.

As  at  December  31,  2021  and  2020,  the  Group  enters  into  repurchase  agreements  with  certain  counterparties. 

The proceeds from selling such securities are presented as financial assets sold under repurchase agreements. 

Because  the  Group  sells  the  contractual  rights  to  the  cash  flows  of  the  securities,  it  does  not  have  the  ability  to 

use the transferred securities during the term of the arrangement.

228

ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2021 
 
 
 
 
 
 
 
 
 
 
 
44.  FINANCIAL ASSETS SOLD UNDER REPURCHASE AGREEMENTS 

(Continued)

The  following  tables  provides  a  summary  of  carrying  amounts  and  fair  values  related  to  transferred  financial 

assets  that  are  not  derecognised  in  their  entirety  and  the  associated  liabilities  as  at  December  31,  2021  and 

December 31, 2020.

As at December 31, 2021

Carrying amount of transferred assets
Carrying amount of associated liabilities

Net position

As at December 31, 2020

Carrying amount of transferred assets
Carrying amount of associated liabilities

Net position

Financial
assets at
FVTPL
Rmb’000

23,808,367
(20,592,937)

3,215,430

9,237,292
(8,465,134)

772,158

229

 
 
 
 
 
 
 
 
 
 
45.  FINANCIAL LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS

Financial liabilities held for trading:

– Securities
– Funds

Financial liabilities designated at FVTPL:

–  Financial liabilities arising from consolidation of structured entities 

(Note)

12/31/2021
Rmb’000

12/31/2020
Rmb’000

1,057,170
146,017

392,573
–

1,722,204

2,518,152

2,925,391

2,910,725

Note:  Financial liabilities designated at FVTPL arising from consolidation of structured entities represent the third party 

unit holders’ interests in the consolidated structure schemes and funds. Interests in these consolidated structured 

entities  directly  held  by  the  Group  amounted  to  fair  value  of  Rmb5,530,042,000  and  Rmb2,532,341,000  at 

December 31, 2021 and 2020, respectively. The total assets of the consolidated structured entities amounted to 

Rmb8,716,481,000 and Rmb5,485,843,000 at December 31, 2021 and 2020, respectively.

The  Group  has  designated  these  liabilities  as  FVTPL,  as  in  the  opinion  of  the  management,  such  designation 

eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise.

46.  LEASE LIABILITIES

Lease liabilities payables
Within one year
Within a period of more than one year but no more than two years
Within a period of more than two years but no more than five years
Within a period of more than five years

Less:  Amounts due for settlement with 12 months shown under 

  current liabilities

Amount due for settlement after 12 months shown under non-current 

liabilities

12/31/2021
Rmb’000

12/31/2020
Rmb’000

105,699
89,081
197,133
74,002

91,346
69,920
149,055
79,919

465,915

390,240

(105,699)

(91,346)

360,216

298,894

230

ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2021 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
47.  DEFERRED TAXATION
For  the  purpose  of  presentation  in  the  consolidated  statement  of  financial  position,  certain  deferred  tax  assets 

and  liabilities  have  been  offset. The  following  is  the  analysis  of  the  deferred  tax  balances  for  financial  reporting 

purposes:

Deferred tax assets
Deferred tax liabilities

12/31/2021
Rmb’000

12/31/2020
Rmb’000
(Restated)

01/01/2020
Rmb’000
(Restated)

1,617,799
(477,525)

1,589,901
(386,498)

1,256,086
(347,331)

1,140,274

1,203,403

908,755

The  following  are  the  major  deferred  tax  liabilities  and  assets  recognised  and  movements  thereon  during  the 

current and prior years:

Difference in
tax and
accounting
depreciation
of property
plant and
equipment
and
expressway
operating
rights
Rmb’000

Fair value
adjustment of
long term
assets arising
from business
combination
Rmb’000

643,089
331,484

974,573
(1,274)

973,299
(1,748)
–

(174,790)
–

(174,790)
14,756

(160,034)
13,973
–

Temporary
differences
of accrued 
expenses
and 
impairment
losses and
tax losses
Rmb’000

214,567
–

214,567
227,038

441,605
36,221
500

Changes in
fair value of
investments 
carried
at fair value
Rmb’000

(105,595)
–

(105,595)
54,128

(51,467)
(112,075)
–

Total
Rmb’000

577,271
331,484

908,755
294,648

1,203,403
(63,629)
500

At January 1, 2020 (originally stated)
Merger accounting restatement

At January 1, 2020 (restated)
Charge (credit) to profit or loss

At December 31, 2020 (restated)
Charge (credit) to profit or loss
Transfer in through acquisition of a subsidiary

At December 31, 2021

(163,542)

971,551

(146,061)

478,326

1,140,274

231

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
47.  DEFERRED TAXATION (Continued)
As  at  December  31,  2021,  the  Group  had  unused  tax  losses  of  approximately  Rmb2,478,153,000  (2020: 

Rmb2,764,227,000,  as  restated)  for  which  deferred  tax  was  not  recognised  due  to  uncertainty  of  future  taxable 

income.  The  amount  of  unrecognized  tax  loss  expired  in  2021  was  approximately  Rmb485,920,000.  The  expiry 

dates of the unrecognised tax losses are listed as below.

2020
2021
2022
2023
2024
2025
2026

48.  SHARE CAPITAL

Registered, issued and fully paid:
Domestic shares of Rmb1 each
H Shares of Rmb1 each

12/31/2021
Rmb’000

12/31/2020
Rmb’000
(Restated)

01/01/2020
Rmb’000
(Restated)

–
–
416,372
586,552
514,179
669,703
291,347

–
516,676
416,372
626,276
535,200
669,703
–

880,426
516,676
416,372
626,276
535,200
–
–

2,478,153

2,764,227

2,974,950

Number
of shares
12/31/2020
and 2021
Rmb’000

Share capital
12/31/2020
and 2021
Rmb’000

2,909,260
1,433,855

2,909,260
1,433,855

4,343,115

4,343,115

The domestic shares are not currently listed on any stock exchange.

The H Shares have been listed on the Stock Exchange since May 15, 1997. The H Shares were admitted to the 

Official List on May 5, 2000 and their dealings on the London Stock Exchange commenced on the same day.

All the domestic shares and H Shares rank pari passu with each other as to dividends and voting rights.

232

ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2021 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
49.  NON-CONTROLLING INTERESTS
The  summarised  financial  information  in  respect  of  the  Group’s  subsidiary  that  has  material  non-controlling 

interests, namely  Shangsan  Co  and its subsidiaries, Linping Co, and Zhajiasu Co (as defined in Note 59) at the 

end  of  the  reporting  period  are  set  out  below.  The  summarised  financial  information  below  represents  amounts 

before intragroup elimination.

Shangsan Co and its subsidiaries

Current assets

Non-current assets

Current liabilities

Non-current liabilities

Equity attributable to owners of the Company

Non-controlling interests

Revenue

Expenses

Profit for the year
Other comprehensive expense for the year

Total comprehensive income for the year

Profit attributable to owner of the Company
Profit attributable to non-controlling interests

Total comprehensive income attributable to owner of the Company
Total comprehensive income attributable to non-controlling interests

12/31/2021
Rmb’000

12/31/2020
Rmb’000

126,357,545

91,945,513

4,262,788

4,006,952

89,709,890

62,077,238

12,030,520

10,384,191

13,304,880

11,405,255

15,575,043

12,085,781

7,639,294

6,047,660

(4,780,619)

(3,911,060)

2,858,675
(4,963)

2,136,600
(2,349)

2,853,712

2,134,251

1,388,075
1,470,600

1,119,114
1,017,486

2,858,675

2,136,600

1,384,421
1,469,291

1,118,097
1,016,154

2,853,712

2,134,251

233

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
49.  NON-CONTROLLING INTERESTS (Continued)
Shangsan Co and its subsidiaries (Continued)

Dividends paid to non-controlling shareholders

Net cash used in operating activities

Net cash used in investing activities

Net cash from financing activities

Net cash inflow

12/31/2021
Rmb’000

12/31/2020
Rmb’000

(310,813)

(206,882)

(553,914)

(3,956,768)

(302,029)

477,457

5,589,135

4,047,442

4,733,192

568,131

234

ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2021 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
49.  NON-CONTROLLING INTERESTS (Continued)
Linping Co

Current assets

Non-current assets

Current liabilities

Non-current liabilities

 Equity attributable to owners of the Company

Non-controlling interests

Revenue

Expenses

Profit for the year

Profit and total comprehensive income

– attributable to owner of the Company
– attributable to non-controlling interests

Dividends paid to non-controlling shareholders

Net cash from operating activities

Net cash used in investing activities

Net cash used in financing activities

Net cash inflow

12/31/2021
Rmb’000

12/31/2020
Rmb’000

586,757

496,619

629,164

678,686

90,761

5,899

101,687

6,255

570,823

544,355

548,438

523,008

207,339

174,239

(132,874)

(120,108)

74,465

54,131

37,977
36,488

74,465

27,607
26,524

54,131

(11,058)

(11,058)

123,562

102,723

5,341

(3,105)

(22,566)

(23,863)

106,337

75,755

235

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
49.  NON-CONTROLLING INTERESTS (Continued)
Zhajiasu Co

Current assets
Non-current assets

Current liabilities

Non-current liabilities

Equity attributable to owners of the Company

Non-controlling interests

Revenue

Expenses

Loss for the year

Profit attributable to owner of the Company
Profit attributable to non-controlling interests

Dividends paid to non-controlling shareholders

Net cash from operating activities

Net cash used in investing activities

Net cash used in financing activities

Net cash inflow

12/31/2021
Rmb’000

477,272
2,830,330

388,106

1,518,320

770,647

630,529

328,456

(330,280)

(1,824)

(1,003)
(821)

(1,824)

–

275,104

(8,002)

(252,727)

14,375

50.  RETIREMENT BENEFITS SCHEMES
The  employees  of  the  Group  are  members  of  the  state-managed  retirement  benefits  scheme  operated  by  the 

PRC  government.  To  supplement  this  existing  retirement  benefits  scheme,  the  Group  adopted  a  corporate 

annuity  scheme  in  accordance  with  relevant  rules  and  regulations. The  Group  is  required  to  contribute  a  certain 

percentage of payroll costs to these retirement benefits schemes to fund the benefits. The only obligation of the 

Group with respect to these retirement benefits schemes is to make the specified contributions.

No forfeited contributions are available to reduce the contribution payable in future years.

236

ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2021 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
51.  ACQUISITION OF A SUBSIDIARY AND A BUSINESS
Jiaxing Zhajiasu Expressway Co., Ltd. (“Zhajiasu Co”)

On  May  7,  2021,  the  Group  acquired  55%  equity  interest  in  Zhajiasu  Co  at  a  cash  consideration  of 

Rmb771,650,000.  Zhajiasu  Co  is  principally  engaged  in  the  construction,  maintenance  and  operation 

management  of  Zhajiasu  Expressway  and  the  sales  of  building  materials  such  as  cement  and  asphalt.  Zhajiasu 

Co was acquired so as to enhance the Group’s overall performance in the long run.

The  Group  elected  to  apply  the  optional  concentration  test  in  accordance  with  HKFRS  3  “Business 

Combinations”. The concentration test was met, and the acquisition was determined not to be a business. Such a 

transaction does not give rise to goodwill or bargain purchase gain.

Assets and liabilities recognised at the date of acquisition

Cash and cash equivalents
Time deposits with original maturity over three months
Expressway operating rights
Trade and other receivables
Property, plant and equipment
Other intangible assets
Deferred tax Assets
Inventories
Bank and other borrowings
Tax liabilities
Trade and other payables

Net identifiable assets attributable to the Group

Net cash outflows arising on acquisition:

Consideration paid in cash
Less: Cash and cash equivalents

Rmb’000

65,164
216,218
2,782,873
374,800
40,907
521
500
310
(2,017,697)
(47,798)
(12,798)

1,403,000

771,650

Rmb’000

744,150
(65,164)

678,986

237

 
 
 
 
 
 
 
 
 
 
 
 
 
 
51.  ACQUISITION OF A SUBSIDIARY AND A BUSINESS (Continued)
China Development Bank Securities Co., Ltd. (“CDB Securities”)

On  January  1  2021,  the  Group  acquired  nine  branches  of  China  Development  Bank  Securities  Co.,  Ltd.  (“CDB 

Securities”)  at  a  cash  consideration  of  Rmb72,958,000.  The  acquisition  including  branches’  margin  financing 

business,  customer  base  and  other  assets  except  financial  assets  held  under  resale  agreements  business, 

collaborative  customer,  transaction  seat  fees  and  bank  balances  of  DB  Securities.  The  acquisition  targeted  to 

enhance the Group’s securities business.

Assets and liabilities recognised at the date of acquisition

Property, plant and equipment
Other intangible assets
Other receivables and prepayments
Bank balances and clearing settlement fund held on behalf of customers
Accounts payable to customers arising from securities business
Tax liabilities
Other payables and accruals

Net cash outflows arising on acquisition:

Consideration paid in cash

Rmb’000

12,903
61,959
1,267,359
5,857
(1,126,249)
(4,842)
(144,029)

72,958

Rmb’000

72,958

238

ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2021 
 
 
 
 
 
 
 
 
 
52.  COMMITMENTS

Authorised but not contracted for:

– Purchase of machinery and equipment
– Acquisition and construction of properties

Contracted for but not provided:

– Equity investments

Total

12/31/2021
Rmb’000

12/31/2020
Rmb’000

1,897,477
1,516,880

1,395,921
370,441

210,000

1,245,000

3,624,357

3,011,362

53.  CAPITAL RISK MANAGEMENT
The  Group  manages  its  capital  to  ensure  that  entities  in  the  Group  will  be  able  to  continue  as  a  going  concern 

while maximising the return to shareholders through the optimisation of the debt and equity balance. The Group’s 

overall strategy remains unchanged from prior year.

The  capital  structure  of  the  Group  consists  of  net  debt,  which  includes  the  borrowings  and  lease  liabilities 

disclosed in Notes 40, 41, 42, 43, 44 and 46, net of cash and cash equivalents and equity attributable to owners 

of the Company, comprising issued share capital, reserves and retained profits.

The  Directors  review  the  capital  structure  on  a  regular  basis. As  part  of  this  review,  the  Directors  consider  the 

cost  of  capital  and  the  risks  associated  with  each  class  of  capital.  Based  on  recommendations  of  the  Directors, 

the Group will balance its overall capital structure through the payment of dividends and new share issues as well 

as the issue of new debt or the redemption of existing debt.

239

 
 
 
 
 
 
 
 
 
54.  FINANCIAL INSTRUMENTS
(a)  Categories of financial instruments

Financial assets
Financial assets at FVTPL
Derivative financial assets
Financial assets at amortised cost

Financial liabilities
Derivative financial liabilities
Financial liabilities at FVTPL
Convertible Bonds

– derivative component

Financial liabilities at amortised cost

12/31/2021
Rmb’000

12/31/2020
Rmb’000

45,809,589
613,718
85,481,232

29,402,217
525,629
61,323,246

451,368
2,925,391

497,427
2,910,725

340,217
119,496,753

4
80,878,040

(b)  Financial risk management objectives and policies
The  Group’s  major  financial  instruments  include  trade  receivables,  loans  to  customers  arising  from  margin 

financing business, other receivables, derivative financial assets, financial assets at FVTPL, financial assets held 

under  resale  agreements,  bank  balances,  clearing  settlement  fund  held  on  behalf  of  customers,  pledged  bank 

deposits,  clearing  settlement  fund,  deposits  and  cash,  placements  from  other  financial  institutions,  accounts 

payable  to  customers  arising  from  securities  business,  trade  payables,  other  payables,  derivative  financial 

liabilities,  bank  and  other  borrowings,  short-term  financing  note  payable,  bonds  payable,  convertible  bond  and 

financial  guarantee,  financial  assets  sold  under  repurchase  agreements,  financial  liabilities  at  FVTPL.  Details  of 

the financial instruments are disclosed in respective notes. The risks associated with these financial instruments 

include market risk (interest rate risk, currency risk, and other price risk), credit risk and impairment assessment, 

and  liquidity  risk. The  policies  on  how  to  mitigate  these  risks  are  set  out  below. The  management  manages  and 

monitors these exposures to ensure appropriate measures are implemented on a timely and effective manner.

240

ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2021 
 
 
 
 
 
 
 
 
54.  FINANCIAL INSTRUMENTS (Continued)
(b)  Financial risk management objectives and policies (Continued)
Market risk
(i) 

Interest rate risk

The  Group  is  exposed  to  fair  value  interest  rate  risk  in  relation  to  loans  to  customers  arising  from  margin 

financing  business,  fixed-rate  entrusted  loans,  financial  assets  held  under  resale  agreements,  fixed-rate  time 

deposits, placements from other financial institutions, fixed-rate bank and other borrowings, fixed rate short-term 

financing  note  payable,  financial  assets  sold  under  repurchase  from  other  financial  institutions,  fixed-rate  bank 

and  other  borrowings,  fixed  rate  short-term  financing  note  payable,  financial  assets  sold  under  repurchase 

agreements,  bonds  payable,  debt  component  of  convertible  bonds  and  financial  liabilities  at  FVTPL  (see  Notes 

30,32,34,35,40,41,42,43,44 and 45 for details).

The  Group  is  also  exposed  to  cash  flow  interest  rate  risk  in  relation  to  variable-rate  bank  balances  and  clearing 

settlement  fund  held  on  behalf  of  customers,  bank  balances,  clearing  settlement  fund,  deposits  and  bank  and 

other borrowings (see Notes 33, 34 and 40 for details).

The Group currently does not have an interest rate risk hedging policy as the management considers the Group is 

not exposed to significant interest rate risk. The management will continue to monitor interest rate risk exposure 

and consider hedging against it should the need arise.

The  Group’s  exposures  to  interest  rates  on  financial  liabilities  are  detailed  in  the  liquidity  risk  management 

section of this note.

241

54.  FINANCIAL INSTRUMENTS (Continued)
(b)  Financial risk management objectives and policies (Continued)
Market risk (Continued)
(i) 

Interest rate risk (Continued)

Sensitivity analysis

The sensitivity analyses below have been determined based on the exposure to interest rates for non-derivative 

instruments,  comprising  variable-rate  bank  balances  and  clearing  settlement  fund  held  on  behalf  of  customers, 

bank  balances,  clearing  settlement  fund,  deposits  and  bank  and  other  borrowings  at  the  end  of  the  reporting 

period.

The analysis is prepared assuming the balances outstanding at the end of the reporting period were outstanding 

for the whole year. A 50 basis points (2020: 50 basis points) increase or decrease represents the management’s 

assessment of the reasonably possible change in interest rates.

If  interest  rates  had  been  50  basis  points  (2020:  50  basis  points)  higher/lower  and  all  other  variables  were  held 

constant, the Group’s post-tax profit for the year ended December 31, 2021 would have increased/decreased by 

Rmb151,908,000  (2020:  Rmb91,213,000,  as  restated).  This  was  mainly  attributable  to  the  Group’s  exposure  to 

interest rates on its variable-rate bank balances and clearing settlement fund.

(ii) 

Currency risk

Several  subsidiaries  of  the  Group  have  foreign  currency  denominated  monetary  assets  and  liabilities,  which 

expose the Group to foreign currency risk.

The  carrying amounts  of  the Group’s foreign currency denominated monetary assets and liabilities at the end of 

the reporting date are as follows:

Assets

Liabilities

12/31/2021
Rmb’000

12/31/2020
Rmb’000

12/31/2021
Rmb’000

12/31/2020
Rmb’000

Hong Kong dollar (“HKD”)
United States dollar (“USD”)
Euro dollar (“EUR”) (Note)

123,655
2,067,976
–

93,471
174,627
–

52,524
3,206,096
1,714,661

68,660
132,616
2,808,462

Note:  Amount represented both the debt and derivative component of the Convertible Bond 2021 and bank borrowings.

242

ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2021 
 
 
 
 
 
 
 
 
 
54.  FINANCIAL INSTRUMENTS (Continued)
(b)  Financial risk management objectives and policies (Continued)
Market risk (Continued)
Currency risk (Continued)
(ii) 

Sensitivity analysis

The Group is mainly exposed to USD and EUR relative to Rmb. The following table details the Group’s sensitivity 

to  a  10%  (2020:  10%)  increase  and  decrease  in  Rmb  against  the  relevant  foreign  currencies.  10%  (2020:  10%) 

is  the  sensitivity  rate  used  when  reporting  foreign  currency  risk  internally  to  key  management  personnel  and 

represents  the  management’s  assessment  of  the  reasonably  possible  change  in  foreign  exchange  rates.  The 

sensitivity  analysis  includes  only  outstanding  foreign  currency  denominated  monetary  items  and  adjusts  their 

translation at the end of the reporting period for a 10% (2020: 10%) change in foreign currency rates. A positive 

number  below  indicates  an  increase  in  post-tax  profit  where  Rmb  strengthen  10%  (2020:  10%)  against  the 

relevant  currency.  For  a  10%  (2020:  10%)  weakening  of  Rmb  against  the  relevant  currency,  there  would  be  an 

equal and opposite impact on the profit and other equity and the balances below would be negative. The impact 

of  HKD  is  not  presented,  since  the  outstanding  monetary  items  denominated  in  HKD  is  not  significant  and  their 

impact is immaterial.

USD impact

EUR impact

12/31/2021
Rmb’000

12/31/2020
Rmb’000

12/31/2021
Rmb’000

12/31/2020
Rmb’000

Profit or loss

85,359

(3,151)

128,600

210,635

In the management’s opinion, the sensitivity analysis is unrepresentative of the inherent foreign exchange risk as 

the year end exposure does not reflect the exposure during the year.

(iii) 

Other price risk

The Group is exposed to equity and debt security price risk in relation to its financial assets at FVTPL, derivative 

financial assets and liabilities and financial liabilities at FVTPL.

The Group currently does not have a price risk hedging policy and the management will continue to monitor price 

risk exposure and consider hedging against it should the need arise.

243

 
 
 
 
 
 
 
 
 
 
54.  FINANCIAL INSTRUMENTS (Continued)
(b)  Financial risk management objectives and policies (Continued)
Market risk (Continued)
(iii) 

Other price risk (Continued)

Sensitivity analysis

For financial instruments other than derivative component of Convertible Bond 2021

The  sensitivity  analyses  below  have  been  determined  based  on  the  exposure  to  equity  and  debt  security  price 

risks at the reporting date.

If the prices of the respective equity and debt instruments had been 5% (2020: 5%) higher/lower,

• 

post-tax  profit  for  the  year  ended  December  31,  2021  would  have  increased/decreased  by 

Rmb1,717,860,000 as a result of the changes in fair value of financial assets at FVTPL.

• 

post-tax  profit  for  the  year  ended  December  31,  2020  would  have  increased/decreased  by 

Rmb1,102,583,000 as a result of the changes in fair value of financial assets at FVTPL.

For derivative component of Convertible Bond 2021

There is no price risk as at December 31, 2020 due to the redemption of Convertible Bond 2017. The price risk in 

2021 came from the derivative component of Convertible Bond 2021.

The exposure to foreign currency exchange rate of the Convertible Bond 2021 had been covered in Note 54(b)(ii) 

already.

Conversion option derivatives of Convertible Bond 2021

1) 

Changes in share price

If  the  share  price  of  the  Company  had  been  10%  (2020:10%)  higher/lower  while  all  other  input  variables  of  the 

valuation models were held constant, the Group’s profit for the year would have (decreased) increased as follows:

Higher by 10%

Lower by 10%

244

Year ended
12/31/2021
Rmb’000

Year ended
12/31/2020
Rmb’000

(88,363)

67,532

–

–

ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2021 
 
 
 
 
 
 
 
 
54.  FINANCIAL INSTRUMENTS (Continued)
(b)  Financial risk management objectives and policies (Continued)
Market risk (Continued)
(iii) 

Other price risk (Continued)

Sensitivity analysis (Continued)

Conversion option derivatives of Convertible Bond 2021 (Continued)

2) 

Changes in volatility

If the volatility to the valuation model had been 10% (2020:10%) higher/lower while all other variables were held 

constant, the Group’s profit for the year would have (decreased)/increased as follows:

Higher by 10%

Lower by 10%

Year ended
12/31/2021
Rmb’000

Year ended
12/31/2020
Rmb’000

(21,901)

27,873

–

–

Credit risk and impairment assessment
As  at  December  31,  2021,  the  Group’s  maximum  exposure  to  credit  risk  which  will  cause  a  financial  loss  to  the 

Group  due  to  failure  to  discharge  an  obligation  by  the  counterparties  provided  by  the  Group  is  arising  from  the 

carrying amount of the respective recognised financial assets as stated in the consolidated statement of financial 

position and the amount of contingent liability in relation to financial guarantee issued by the Group as disclosed 

in Note 57.

The credit risk on liquid funds, representing bank balance, clearing settlement fund, deposits and cash is limited 

because  the  counterparties  are  state-owned  banks  or  banks  with  high  credit  ratings  assigned  by  international 

credit-rating agencies.

Other items under the Group’s different operations with credit risk and corresponding impairment assessment are 

set out below:

245

 
 
 
 
 
 
 
 
 
54.  FINANCIAL INSTRUMENTS (Continued)
(b)  Financial risk management objectives and policies (Continued)
Credit risk and impairment assessment (Continued)
Toll operation and high grade road construction service

The  Group  performs  impairment  assessment  under  ECL  model  upon  application  of  HKFRS  9  on  trade  balances 

arising from toll operation on collective basis and contract asset on individual basis, using life-time ECL under the 

simplified approach.

The  Group  has  no  credit  period  granted  to  its  trade  customers  of  toll  operation.  All  the  Group’s  trade 

receivable  balances  for  toll  operation  and  contract  asset,  upon  the  conditions  satisfied,  are  receivable  from  the 

government-operated organisations. In this regard, the Directors consider that the credit risk is low as the Group 

has no history of loss experience with the government-operated organisations in the past. No significant ECL was 

recognised as at December 31, 2021 and 2020.

Securities operation

The Group’s securities operation currently faces credit risk primarily from loans to customers arising from margin 

financing  business,  and  financial  assets  held  under  resale  agreements  which  are  secured  by  clients’  securities 

or  deposits  held  as  collateral.  It  refers  to  the  risk  of  loss  arising  from  the  debtor’s  failure  to  meet  its  contractual 

obligations in a timely manner.

(i) 

Credit risk management

Credit  risk  from  loans  to  customers  arising  from  margin  financing  business  and  financial  assets  held  under 

resales  agreements  mainly  including  the  debtor  falsifying  the  application,  failing  to  repay  debts,  violating  the 

agreement, violating regulatory discipline of trading behaviour, and providing collateral that involves law dispute, 

etc.  The  Group  management  authorises  professional  personnel  to  examine  and  approve  the  credit  limit  of 

these  businesses,  as  well  as  adjust  such  credit  limit  in  accordance  with  the  regular  assessment  of  the  debtor’s 

repayment  capacity.  Risk  management  division  oversights  the  collaterals  and  usage  of  related  credit  limit,  and 

initiates margin call if necessary. Once the debtor fail to enhance the collateral to the account, the credit risk will 

be controlled by liquidating the pledged securities.

246

ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 202154.  FINANCIAL INSTRUMENTS (Continued)
(b)  Financial risk management objectives and policies (Continued)
Credit risk and impairment assessment (Continued)
Securities operation (Continued)

(ii) 

Measurement of ECL

Since  January  1,  2018,  The  Group  has  applied  the  ECL  model  to  measure  the  expected  credit  losses  for 

applicable  financial  assets  mainly  including  loans  to  customers  arising  from  margin  financing  business  and 

financial assets held under resale agreements.

The  group  has  used  the  “3  stage”  ECL  model  to  assess  the  credit  losses  when  its  credit  risk  has  increased 

significantly since initial recognition:

(i) 

An  asset  moves  to  stage  1  where  there  has  low  risk  of  default  or  has  not  been  a  significant  increase  in 

credit risk and that are not credit impaired. The Group will continuously monitor its credit risk;

(ii) 

An  asset  moves  to  stage  2  where  there  has  been  a  significant  increase  in  credit  risk  since  initial 

recognition  but  that  are  not  credit  impaired.  The  Group  does  not  see  it  as  an  impairment  loss  occurred 

instrument;

(iii) 

An asset moves to stage 3 when impairment losses occurred; and

(iv) 

The loss impairment for financial instruments in stage 1 is anticipated credit losses for the next 12 months, 

which correspond to the amount of anticipated credit losses for the entire life time resulting from possible 

defaults  within  the  next  12  months.  In  the  second  or  third  stage,  the  expected  credit  losses  of  financial 

instruments are measured for the entire life time and the expected credit losses are recorded.

The factors the Group considers whether credit risk increases significantly refer to Note 6. In particular, for loans 

to customers arising from margin financing business and financial assets held under resale agreement, the Group 

generally  believes  that  when  the  loan  to  collateral  ratio  determined  by  fair  value  reaches  the  warning  line,  the 

credit  risk  increases  significantly  and  needs  to  be  transferred  to  “stage  2”,  and  when  the  loan  to  collateral  ratio 

determined  by  fair  value  reaches  the  liquidation  line  or  expect  there  would  be  loss  after  closing  the  position 

mandatorily, it will be transferred to “stage 3”.

247

54.  FINANCIAL INSTRUMENTS (Continued)
(b)  Financial risk management objectives and policies (Continued)
Credit risk and impairment assessment (Continued)
Securities operation (Continued)

(ii) 

Measurement of ECL (Continued)

The Group uses PD, EAD and LGD to measure credit risks:

(i) 

PD  is  an  estimate  of  the  likelihood  of  default  over  a  given  time  horizon,  the  calculation  of  which  includes 

historical data, assumptions and expectations of future conditions;

(ii) 

EAD  is  the  amount  that  the  Group  should  be  repaid  at  the  time  of  default  in  the  next  12  months  or 

throughout the remaining life; and

(iii) 

LGD  is  an  estimate  of  the  loss  arising  on  default.  The  Group  estimates  LGD  based  on  the  history  of 

recovery rates and considers the recovery of any collateral that is integral to the financial asset, taking into 

account forward-looking economic assumptions where relevant.

The expected credit losses are measured based on the probability weighted results of PD, EAD and LGD.

The  assessment  of  significant  increase  in  credit  risk  and  the  measurement  of  ECL  all  involve  forward-looking 

information.  When  considering  macroeconomic  forward-looking  adjustments,  the  Group  simulates  optimistic, 

extremely optimistic, pessimistic, and extremely pessimistic scenarios by adjusting the coefficients of the baseline 

scenario, and assigns corresponding weights. Through the analysis of historical data, the Group identifies the key 

economic indicators affecting the credit risk and ECL of each asset portfolio.

The  Group  regularly  forecasts  the  economic  condition  by  selecting  various  indicators  within  the  macroeconomic 

indicator pool to make a sound estimation of the ECL.

In  order  to  determine  the  relationship  between  these  economic  indicators  and  the  default  probability  as  well  as 

the default loss rate, the Group constructs an econometric model to determine the impact of historical changes in 

these indicators on the PD and LGD.

The Group makes forward-looking estimation of the ECL based on the scenario reflecting key economic indicators 

above. The  Group  accrues  the  credit  loss  provisions  for  the  next  12  months  for  financial  assets  in  Stage  1,  and 

accrues the credit loss provisions for the whole life for those financial assets in Stage 2 and Stage 3. The Group 

has classified exposures with similar risk characteristics when calculating anticipated credit loss impairment in a 

portfolio. During the classification, the Group obtained sufficient information to ensure its statistical reliability.

248

ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 202154.  FINANCIAL INSTRUMENTS (Continued)
(b)  Financial risk management objectives and policies (Continued)
Credit risk and impairment assessment (Continued)
Other operations

In  respect  of  the  Group’s  other  operations,  the  management  of  the  Group  has  delegated  a  team  responsible 

for  determination  of  credit  limits  and  credit  approvals.  Other  monitoring  procedures  are  in  place  to  ensure  that 

follow-up  action  is  taken  to  recover  overdue  debts.  The  Group  did  not  experience  significant  credit  loss  on  its 

other  operations,  and  performs  impairment  assessment  under  ECL  model  upon  application  of  HKFRS  9  on 

trade  balances  based  on  provision  matrix.  In  this  regard,  the  Directors  consider  that  the  Group’s  credit  risk  is 

significantly reduced.

The Group’s internal credit risk grading assessment comprises the following categories:

Internal credit rating

Description

Trade receivables/
contract asset

Other financial 
assets/other items (Note)

Low risk (stage 1)

The counterparty has a low risk of 
default and does not have any 
past-due amounts

Lifetime ECL – not 
credit-impaired

12-month ECL

Doubtful (stage 2)

There have been significant 

increases in credit risk since 
initial recognition through 
information developed internally 
or external resources

Lifetime ECL – not 
credit-impaired

Lifetime ECL -not 
credit-impaired

Loss (stage 3)

There is evidence indicating the 

Lifetime ECL – 

asset is credit-impaired

credit-impaired

Lifetime ECL – 

credit-impaired

Write-off

There is evidence indicating that 
the debtor is in severe financial 
difficulty and the Group has no 
realistic prospect of recovery

Amount is written off

Amount is written off

Note:  Other  financial  assets  include  loans  to  customers  arising  from  margin  financing  business,  bank  balances, 

clearing settlement fund, deposits and cash, pledged bank deposit, bank balances and clearing settlement fund 

held on behalf of customers, financial assets held under agreements and other receivables.

249

 
 
 
 
 
 
 
 
54.  FINANCIAL INSTRUMENTS (Continued)
(b)  Financial risk management objectives and policies (Continued)
Credit risk and impairment assessment (Continued)
Other operations (Continued)

The  table  below  details  the  credit  risk  exposures  of  the  Group’s  financial  assets,  contract  asset  and  financial 

guarantee contracts, which are subject to ECL assessment:

External
credit
rating

Internal
credit
rating

Notes

12-months or lifetime ECL

12/31/2021
Gross
carrying
amount
Rmb’000

12/31/2020
Gross
carrying
amount
Rmb’000
(Restated)

Financial assets at 
amortised cost

Trade receivables (Note i)

29

– toll operation
– securities operation
– others

N/A
N/A
N/A

Low risk
Low risk
Low risk

Lifetime ECL
Lifetime ECL
Lifetime ECL

138,335
323,221
12,135

143,342
207,808
28,998

Loans to customers arising from 
margin financing business
– securities operation

30

N/A

Low risk
Doubtful
Loss

12-month ECL
Lifetime ECL-not credit-impaired
Lifetime ECL-credit-impaired

18,894,618
509,534
3,178

14,174,263
839,209
–

Bank balances, clearing 

settlement fund, deposit 
and cash

Bank balances and clearing 
settlement fund held on 
behalf customers
– securities operation

Financial assets held under 

resale agreements
– securities operation

Other receivables

Other items
Contract asset (Note i)
– high grade road 

construction service

Financial guarantee contracts 

(Note ii)
– toll operation

250

34

AA to AAA

Low risk

12-month ECL

17,699,910

8,982,671

33

32

31

28

57

AA

Low risk

12-month ECL

38,392,804

27,090,816

N/A

Low risk
Doubtful
Loss

12-month ECL
Lifetime ECL-not credit-impaired
Lifetime ECL-credit-impaired

N/A

Low risk

12-month ECL

7,001,992
109,730
96,412

6,866,057
268,073
180,000

2,468,229

2,861,382

N/A

Low risk

Lifetime ECL

–

1,009,132

N/A

Low risk

12-month ECL

437,088

542,269

ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2021 
 
 
 
 
 
 
 
 
 
 
 
 
 
54.  FINANCIAL INSTRUMENTS (Continued)
(b)  Financial risk management objectives and policies (Continued)
Credit risk and impairment assessment (Continued)
Other operations (Continued)

Notes:

i. 

ii. 

During the year ended December 31, 2021, the Group provided ECL on trade receivables and contract asset by 
Rmb5,799,000 (2020: Rmb6,748,000) and nil (2020: Rmb1,514,000), respectively.

For  financial  guarantee  contracts,  the  gross  carrying  amount  represents  the  maximum  amount  the  Group  has 
guaranteed under the respective contracts.

Concentration of credit risk

As  at  December  31,  2021,  other  than  the  concentration  of  credit  risk  on  trade  receivables  and  financial 

guarantee  contract  amounting  to  Rmb473,691,000  (2020:  Rmb380,148,000),  and  Rmb437,088,000  (2020: 

Rmb542,269,000),  respectively,  of  which  these  balances  were  only  limited  and  concentrated  to  a  few 

counterparties, the Group does not have any other significant concentrations of credit risk.

There  are  also  no  concentration  risks  on  its  margin  financing  business  and  financial  assets  held  under  resale 

agreements as at December 31, 2021 and 2020 respectively as the Group has a large number of clients who are 

dispersed.

The Group’s concentration of credit risk by geographical location is mainly in the PRC.

Liquidity risk
Most  of  the  bank  balances,  clearing  settlement  fund,  pledged  bank  deposits  and  cash  at  December  31,  2021 

and  2020  were  denominated  in  Rmb  which  is  not  a  freely  convertible  currency  in  the  international  market.  The 

exchange  rate  of  Rmb  is  regulated  by  the  PRC  government  and  the  remittance  of  these  Rmb  funds  out  of  the 

PRC is subject to foreign exchange controls imposed by the PRC government.

The Group closely monitors its cash position resulting from its operations and maintains a level of cash and cash 

equivalents deemed adequate by the management to enable the Group to meet in full its financial obligations as 

they fall due for the foreseeable future.

The  following  table  details  the  Group’s  remaining  contractual  maturity  for  its  non-derivative  financial  liabilities. 

Liquidity risk analysis below excludes derivative component of Convertible Bond 2021 as the settlement of which 

does not involve cash settlement. The table has been drawn up based on the undiscounted cash flows of financial 

liabilities based on the earliest date on which the Group can be required to pay. The table includes both interest 

and principal cash flows.

251

54.  FINANCIAL INSTRUMENTS (Continued)
(b)  Financial risk management objectives and policies (Continued)
Liquidity risk (Continued)
Liquidity tables

Weighted
average
interest rate
%

On demand
or less than
3 months
Rmb’000

3 months -
1 year
Rmb’000

1 - 3 years
Rmb’000

3 - 5 years
Rmb’000

+5 years
Rmb’000

Total
undiscounted
cash flows
Rmb’000

Carrying
amount at
year end
Rmb’000

2021
Non-derivative financial liabilities
Accounts payable to customers arising 

from securities business

Trade payables
Other payables
Bank and other borrowings

– fixed rate
– variable rate

Short-term financing note payable
Financial assets sold under repurchase 

agreements

Placements from other financial institutions
Bonds payable
Convertible Bonds

– debt component

Lease liabilities
Financial guarantee
Financial liabilities at fair value through 

profit or loss

–
–
–

3.00%-4.85%
4.08%-4.70%
2.95%

4.40%
2.57%
3.55%

4.74%
3.62%-5.35%
–

38,069,350
1,387,533
581,288

15,822
161,029
4,376,556

25,262,817
500,277
107,884

–
–
437,088

–
–
–

943,158
1,833,503
3,620,898

–
–
10,978,990

–
109,802
–

–
–
–

237,985
2,997,838
–

–
–
9,428,491

–
183,044
–

–
–
–

–
4,076,973
–

–
–
6,707,351

1,374,445
144,905
–

–
–
–

–
9,943,315
–

–
–
3,097,548

–
96,881
–

38,069,350
1,387,533
581,288

1,196,965
19,012,658
7,997,454

25,262,817
500,277
30,320,264

1,374,445
534,632
437,088

38,069,350
1,387,533
581,288

1,160,047
15,583,870
7,940,702

25,250,426
500,000
27,649,091

1,374,445
465,915
–

–

1,057,171

1,868,220

–

–

–

2,925,391

2,925,391

71,956,815

19,354,571

12,847,358

12,303,674

13,137,744

129,600,162

122,888,058

252

ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2021 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
54.  FINANCIAL INSTRUMENTS (Continued)
(b)  Financial risk management objectives and policies (Continued)
Liquidity risk (Continued)
Liquidity tables (Continued)

2020 (restated)
Non-derivative financial liabilities
Accounts payable to customers arising 

from securities business

Trade payables
Other payables
Bank and other borrowings

– fixed rate
– variable rate

Short-term financing note payable
Financial assets sold under repurchase 

agreements

Placements from other financial 

institutions
Bonds payable
Convertible Bonds

– debt component

Lease liabilities
Financial guarantee
Financial liabilities at fair value  

through profit or loss

Weighted
average
interest rate
%

On demand
or less than
3 months
Rmb’000

3 months -
1 year
Rmb’000

1 - 3 years
Rmb’000

3 - 5 years
Rmb’000

+5 years
Rmb’000

Total
undiscounted
cash flows
Rmb’000

Carrying
amount at
year end
Rmb’000

–
–
–

2.05%-5.30%
0.80%-4.70%
3.17%

27,054,052
1,098,574
285,083

1,961,073
150,133
5,923,943

–
–
–

–
–
–

–
–
–

–
–
–

3,495,416
3,870,668
409,734

1,816,451
2,311,977
–

1,347,871
3,563,741
–

–
3,256,331
–

27,054,052
1,098,574
285,083

8,620,811
13,152,850
6,333,677

27,054,052
1,098,574
285,083

8,562,048
11,412,312
6,306,716

3.31%

11,567,320

–

–

–

–
7,119,623

–
11,017,499

–
3,266,760

–

–
–

11,567,320

11,525,087

400,291
21,403,882

400,000
20,068,147

–
95,114
–

762
147,438
–

–
107,920
–

–
109,778
–

762
460,250
542,269

762
390,240
–

–

1,962

2,908,763

–

–

–

2,910,725

2,910,725

48,984,700

17,899,318

15,294,127

8,286,292

3,366,109

93,830,546

90,013,746

2.80%
4.24%

4.60%
3.61%-5.12%
–

400,291
–

–
–
542,269

The  amounts  included  above  for  financial  guarantee  contracts  are  the  maximum  amounts  the  Group  could 

be  required  to  settle  under  the  arrangement  for  the  full  guaranteed  amount  if  that  amount  is  claimed  by  the 

counterparty to the guarantee. Based on expectations at the end of the reporting period, the Group considers that 

it is more likely than not that no amount will be payable under the arrangement. However, this estimate is subject 

to  change  depending  on  the  probability  of  the  counterparty  claiming  under  the  guarantee  which  is  a  function  of 

the likelihood that the financial receivables held by the counterparty which are guaranteed suffer credit losses.

The  amounts  included  above  for  variable  interest  rate  instruments  for  non-derivative  financial  liabilities  are 

subject to change if changes in variable interest rates differ to those estimates of the interest rates determined at 

the end of the reporting period.

253

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
54.  FINANCIAL INSTRUMENTS (Continued)
(b)  Financial risk management objectives and policies (Continued)
Liquidity risk (Continued)
Liquidity tables (Continued)

As  at  December  31,  2021  and  2020,  the  Group  has  not  entered  into  any  master  netting  arrangements  with 
counterparties.  The  collaterals  of  which,  such  as  financial  assets  held  under  resale  agreement,  financial  assets 
at FVTPL, loans to customers arising from margin financing business, placements from other financial institutions 
and  financial  assets  sold  under  repurchase  agreements,  financial  liabilities  FVTPL,  etc.,  are  disclosed  in  the 
corresponding  notes,  which  are  generally  not  on  the  net  basis  in  financial  position.  However,  the  risk  exposure 
associated  with  favourable  contracts  is  significantly  reduced  by  the  collaterals  received  by  the  Group  which 
could  be  recovered  to  the  extent  if  a  default  occurs,  in  respect  of  the  outstanding  receivable  amounts  from  the 
counterparty.

The analysis above does not include the cash flow of derivatives, which do not have material impact on the cash 
flow of the Group.

(c)  Fair value measurements of financial instruments
This  note  provides  information  about  how  the  Group  determines  fair  values  of  various  financial  assets  and 
financial liabilities.

Fair  value  measurements  recognised  in  the  statement  of  financial  position  that 
are measured at fair value on a recurring basis
Some  of  the  Group’s  financial  assets  and  financial  liabilities  are  measured  at  fair  value  at  the  end  of  each 
reporting  period.  The  following  table  gives  information  about  how  the  fair  values  of  these  financial  assets  and 
financial liabilities are determined (in particular, the valuation technique(s) and inputs used).

If there is a reliable market quote for a financial instrument, the fair value of the financial instrument is measured 
based  on  quoted  market  price.  If  a  reliable  quoted  market  price  is  not  available,  the  fair  value  of  the  financial 
instrument  is  estimated  using  valuation  techniques.  For  the  fair  value  of  financial  instruments  categorised  within 
Level  2,  the  valuation  techniques  applied  include  discounted  cash  flow,  recent  transaction  price  and  net  asset 
value method. The significant observable inputs used in the valuation techniques used for Level 2 include future 
cash flows estimated based on applying the interest yield curves, net asset values determined with reference to 
observable  (quoted)  prices  of  underlying  investment  portfolio  and  adjustments  of  related  expenses,  contractual 
terms, forward interest rates and forward exchanges.

For  financial  instruments  categorised  within  Level  3,  fair  values  are  determined  by  using  valuation  techniques, 
including  valuation  methods  such  as  discounted  cash  flow  model,  comparable  company  analysis  and  recent 
financing price method. Determinations to classify fair value measures within Level 3 are generally based on the 
significance  of  the  unobservable  inputs  to  the  overall  fair  value  measurement.  The  following  table  presents  the 
valuation techniques and inputs used for the major financial instruments in Level 3.

254

ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 202154.  FINANCIAL INSTRUMENTS (Continued)
(c)  Fair value measurements of financial instruments (Continued)

Financial
instruments

Fair value
hierarchy

Equity securities

Level 3

Valuation technique(s) and key input(s)

Calculated based on pricing/yield such as price-to 
earnings (P/E) of comparable companies with an 
adjustment of discount for lack of marketability.

Equity securities

Level 3

The fair value is determined with reference to 

the quoted market prices with an adjustment of 
discount for lack of marketability. This discount 
is determined by option pricing model. The key 
input is historical volatility of the share prices of 
the securities.

Significant
unobservable input(s)

P/E multiples

Discount for lack of 
marketability.

Discount for lack of 
marketability.

Debt investments

Level 3

The fair value is determined with reference to 

Discount rate

Other investments

Level 3

Level 3

Interests attributable 
to other holders 
of consolidated 
structured entities

the quoted market prices with an adjustment of 
discount for lack of marketability.

The fair value is determined with reference to the 
net asset value of the underlying investments 
with an adjustment of discount for the credit risk 
of counterparty.

Shares of the net value of the structured entities, 
determined with reference to the net asset value 
of the structured entities, calculated based on 
pricing/yield of comparable companies with an 
adjustment of discount for lack of marketability 
of underlying investment portfolio.

Discount rate

P/E multiples

Discount for lack of 
marketability.

Derivative 

Level 3

Binomial option pricing model

component 
of Convertible 
Bond

OTC options

Level 3

The option pricing model is used which is 

calculated based on the option exercise price, 
the price and volatility of the underlying equity 
instrument, the option exercise time, and the 
risk-free interest rate.

There were no transfer between Level 1 and Level 2 during the year.

Expected volatility (29.49%) 

taking into account the actual 
historical share price of the 
Company over the same time 
period as the Convertible 
Bond’s remaining time to 
maturity

The volatility of the underlying 
equity instrument for option

Relationship of
unobservable
input(s) to fair value

The higher the multiples, 
the higher the fair value.

The higher the discount, 
the lower the fair value.

The higher the discount,  
the lower the fair value.

The higher the discount,  
the lower the fair value.

The higher the discount,  
the lower the fair value.

The higher the multiples, 
the higher the fair value.

The higher the discount,  
the lower the fair value.

The higher the expected 
volatility, the higher the 
fair value.

The higher the volatility 

of the underlying equity 
instrument, the higher the 
fair value

255

 
 
 
 
 
 
 
 
 
 
54.  FINANCIAL INSTRUMENTS (Continued)
(c)  Fair value measurements of financial instruments (Continued)
As at December 31, 2021

Financial assets at FVTPL

– Equity securities
– Funds
– Debt investments
– Asset management schemes
– Trust products
– Unlisted equity investments

Sub-total

Derivative assets

Financial liabilities at FVTPL

– Securities
– Fund
– Structured entities

Sub-total

Derivative component of Convertible 

Bond 2021

Derivative liabilities

Level 1
Rmb’000

Level 2
Rmb’000

Level 3
Rmb’000

Total
Rmb’000

2,853,872
278,633
5,007,228
–
–
–

8,377
5,420,668
30,026,702
1,234,138
–
–

575,544
–
134,790
–
258,437
11,200

3,437,793
5,699,301
35,168,720
1,234,138
258,437
11,200

8,139,733

36,689,885

979,971

45,809,589

–

494,961

118,757

613,718

Level 1
Rmb’000

Level 2
Rmb’000

Level 3
Rmb’000

Total
Rmb’000

1,048,381
–
–

8,789
146,017
1,722,186

1,048,381

1,876,992

–
–
18

18

1,057,170
146,017
1,722,204

2,925,391

–

–

–

340,217

340,217

327,692

123,676

451,368

256

ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2021 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
54.  FINANCIAL INSTRUMENTS (Continued)
(c)  Fair value measurements of financial instruments (Continued)
As at December 31, 2020

Financial assets at FVTPL

– Equity securities
– Funds
– Debt investments
– Asset management schemes and

structured deposits

– Trust products
– Unlisted equity investments

Sub-total

Derivative assets

Level 1
Rmb’000

Level 2
Rmb’000

Level 3
Rmb’000

Total
Rmb’000

1,550,297
273,630
4,937,141

–
–
–

110,588
3,920,115
16,700,789

1,339,028
–
–

120,389
–
13,500

–
356,417
80,323

1,781,274
4,193,745
21,651,430

1,339,028
356,417
80,323

6,761,068

22,070,520

570,629

29,402,217

–

525,629

–

525,629

Level 1
Rmb’000

Level 2
Rmb’000

Level 3
Rmb’000

Total
Rmb’000

Financial liabilities at FVTPL

– Securities
– Structured entities

390,611
–

1,962
2,463,779

–
54,373

392,573
2,518,152

Sub-total

390,611

2,465,741

54,373

2,910,725

Derivative component of 
Convertible Bond 2017

Derivative liabilities

–

–

–

497,427

4

–

4

497,427

The  following  tables  represent  the  changes  in  Level  3  financial  assets  at  FVTPL  during  the  years  ended 

December 31, 2021 and 2020, respectively. For the changes in Level 3 derivative component of Convertible Bond 

2021 during the year ended December 31, 2021 and 2020, please refer to Note 43.

257

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
54.  FINANCIAL INSTRUMENTS (Continued)
(c)  Fair value measurements of financial instruments (Continued)
For the year ended December 31, 2021
Financial assets at FVTPL:

Trust
products
Rmb’000

356,417
242,653
(293,006)

Restricted
shares
Rmb’000

120,389
196,300
–

Unlisted 
equity
investments
Rmb’000

80,323
–
(69,123)

Debts
Rmb’000

13,500
225,913
–

Total
Rmb’000

570,629
664,866
(362,129)

(47,627)

258,855

–

(104,623)

106,605

At beginning of the year
Additions
Disposal
Changes in fair value 

changes

At end of the year

258,437

575,544

11,200

134,790

979,971

Derivative assets and liabilities categorised as Level 3 are mainly generated by new purchases this year.

For the year ended December 31, 2020
Financial assets at FVTPL:

Trust
products
Rmb’000

702,971
–
542,147
(888,701)

Restricted
shares
Rmb’000

–
–
75,099
–

Unlisted 
equity
investments
Rmb’000

16,898
–
69,123
(5,698)

Debts
Rmb’000

–
21,076
–
–

Total
Rmb’000

719,869
21,076
686,369
(894,399)

–

45,290

–

(7,576)

37,714

At beginning of the year
Transfer in
Additions
Disposal
Changes in fair value 

changes

At end of the year

356,417

120,389

80,323

13,500

570,629

Except as detailed in the following table, the Directors consider that the carrying amounts of financial assets and 

financial  liabilities  at  amortised  costs  recognised  in  the  consolidated  statement  of  financial  position  approximate 

their fair values.

258

ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2021 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
54.  FINANCIAL INSTRUMENTS (Continued)
(c)  Fair value measurements of financial instruments (Continued)

As at 12/31/2021
Carrying
amount
Rmb’000

Fair
value
Rmb’000

As at 12/31/2020
Carrying
amount
Rmb’000

Fair
value
Rmb’000

Debt component of Convertible 

Bond 2017

Debt component of Convertible 

Bond 2021

–

–

1,374,445

1,714,661

762

–

766

–

The  fair  value  of  the  debt  component  of  Convertible  Bond  2021  as  at  December  31,  2021  and  the  debt 

component  of  Convertible  Bond  2017  as  at  December  2020  are  under  level  3  category  and  was  determined  by 

the  Directors  with  reference  to  the  valuation  performed  by  a  firm  of  independent  professional  valuers.  The  fair 

value of the debt component of Convertible Bond 2021 and Convertible Bond 2017 are determined by discounted 

cash flow using the inputs including estimated cash flows over the remaining terms of the Convertible Bond 2021 

and Convertible Bond 2017 and discount rate that reflected the credit risk of the Company.

259

 
 
 
 
 
 
 
 
 
 
55.  RECONCILIATION OF LIABILITIES ARISING FROM FINANCING 

ACTIVITIES

The table below details changes in the Group’s liabilities arising from financing activities, including both cash and 

non-cash. Liabilities arising from financing activities are those for which cash flows were or future cash flows will 

be, classified in the Group’s consolidated statement of cash flows as cash flows from financing activities.

Dividends
payable
Rmb’000

Bank and
other
 borrowings
Rmb’000

Bonds
payable
Rmb’000

Convertible
Bonds
Rmb’000

Lease
Liabilities
Rmb’000

Short-term
financing
note
payable
Rmb’000

Total
Rmb’000

1,342
–

11,020,133
9,660,868

15,173,271
–

5,480,331
–

259,349
–

6,532,990
–

38,467,416
9,660,868

1,342

20,681,001

15,173,271

5,480,331

259,349

6,532,990

48,128,284

(1,759,007)

(833,556)

4,863,782

(2,410,344)

(78,846)

(228,380)

(446,351)

–

(841,778)

(660,392)

(6,669)

(3,103)

(194,606)

(1,706,548)

At January 1, 2020 

(restated)
Adjustment

At January 1, 2020 

(restated)

Financing cash flows 

(restated)

Operating cash flows 

(restated)

Non-cash changes

New lease entered
Fair value adjustment
Exchange realignment
Accrued dividend
Interest expenses 

(restated)

Conversion into shares

–
–
(2,033)
1,759,748

–
–

–
–
125,770
–

842,923
–

–
–
–
–

–
(200,178)
(40,834)
–

691,486
–

350,863
(3,172,403)

196,332
–
–
–

16,508
–

–
–
–
–

196,332
(200,178)
82,903
1,759,748

196,712
–

2,098,492
(3,172,403)

At December 31, 2020 

(restated)

At January 1, 2021 

(restated)

Financing cash flows
Operating cash flows
Non-cash changes
Acquisition of a 
subsidiary

New lease entered
Fair value adjustment
Exchange realignment
Accrued dividend
Interest expenses

50

19,974,360

20,068,147

766

390,240

6,306,716

46,740,279

50
(1,782,371)
–

19,974,360
(5,124,161)
(834,283)

20,068,147
7,546,582
(824,821)

766
1,803,186
–

390,240
(107,963)
(4,145)

6,306,716
1,636,740
(186,693)

46,740,279
3,972,013
(1,849,942)

–
–
–
(8,500)
1,790,821
–

2,017,697
–
–
(92,204)
–
802,508

–
–
–
(16,090)
–
875,273

–
–
(27,453)
(119,131)
–
57,294

–
164,264
–
–
–
23,519

–
–
–
–
–
183,939

2,017,697
164,264
(27,453)
(235,925)
1,790,821
1,942,533

At December 31, 2021

–

16,743,917

27,649,091

1,714,662

465,915

7,940,702

54,514,287

260

ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2021 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
56.  OPERATING LEASES
The Group as lessor
The Group leased their service areas and communication ducts and part of spare office premises under operating 

lease arrangements. Leases are negotiated for terms ranging from 1 to 25 years and rentals are fixed annually.

At the end of the reporting period, the Group had contracted with tenants for the following future minimum lease 

payments:

Within one year
In the second to fifth year inclusive
After five years

12/31/2021
Rmb’000

12/31/2020
Rmb’000

76,411
208,861
152,190

437,462

65,855
151,147
136,165

353,167

For  certain  of  the  Group’s  service  areas,  the  rental  income  are  variable  and  being  calculated  at  the  higher  of 

a  pre-agreed  percentage  of  revenue  of  the  relevant  service  areas  made  by  the  lessees  or  the  minimum  lease 

payments.  The  commitment  above  represented  the  minimum  lease  payments  from  lessees  only  and  do  not 

include any contingent rent elements.

57.  CONTINGENT LIABILITIES

12/31/2021
Rmb’000

12/31/2020
Rmb’000

Guarantees given to bank, in respect of a joint venture

437,088

542,269

The Group provided a financial guarantee to Shengxin Co, a 50% owned joint venture of the Group, in favour of 

a bank for 50% of its outstanding bank borrowings and interest, and accrued off-balance sheet provision in light 

of  the  financial  guarantee. As  at  December  31,  2021,  the  bank  borrowings  of  Shengxin  Co  and  accrued  interest 

amounted  to  Rmb874,176,000  (2020:  Rmb1,084,538,000).  The  Directors  consider  that  the  fair  value  of  the 

guarantee  is  insignificant  at  initial  recognition  and  default  by  the  guaranteed  party  is  not  probable,  therefore  the 

provision under ECL model for financial guarantee contract is not material as at December 31, 2021 and 2020.

261

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
58.  RELATED PARTY TRANSACTIONS AND BALANCES
Other than disclosed elsewhere in the consolidated financial statements, during the year, the Group also entered 

into the following significant transactions with related parties:

(i)  Transactions  and  balances  with  Communications  Group  and  government 

related parties

Details of significant transactions with Communications Group are summarised below:

Borrowings
Pursuant  to  the  entrusted  loan  contracts  entered  into  between  the  Company  and  Zhejiang  Highway  Logistic 

Company  Limited  (“Logistic  Co”),  a  wholly-owned  subsidiary  of  the  Communications  Group,  on  July  22,  2021. 

Logistic Co agreed to provide the Company with entrusted loans amounting to Rmb56,172,594 at a fixed interest 

rate of 3.00% per annum, with maturity date of July 22, 2022.

Pursuant  to  the  entrusted  loan  contract  entered  into  between  the  Company  and  Communications  Group  on  July 

1,  2020,  Communications  group  agreed  to  provide  the  Company  borrowings  amounting  to  Rmb50,000,000  at  a 

fixed interest rate of 2.5% per annum. The loan was repaid on June 29, 2021.

Pursuant to the loan contract entered into between Zhejiang LongLiLiLong Expressway Co., Ltd. (“LongLiLiLong 

Co”)  and  Communications  Group  on  July  29,  2016,  Communications  Group  agreed  to  provide  LongLiLiLong  Co 

borrowings amounting to Rmb2,724,462,148 at a fixed interest rate of 4.35% per annum. The loan was repaid on 

August 28, 2020.

Pursuant  to  the  entrusted  loan  contracts  entered  into  between  LongLiLiLong  Co  and  Communications  Group 

on  March  13,  2020  and  July  1,  2020,  Communications  Group  agreed  to  provide  LongLiLiLong  Co  borrowings 

amounting  to  Rmb50,000,000  and  Rmb150,000,000  at  fixed  interest  rates  of  3.4%  and  2.5%.  The  loans  were 

repaid on February 5, 2021 and June 29, 2021.

For the year
ended
12/31/2021
Rmb’000

For the year
ended
12/31/2020
Rmb’000
(Restated)

3,414

85,086

Interest expenses incurred

262

ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2021 
 
 
 
 
 
58.  RELATED PARTY TRANSACTIONS AND BALANCES (Continued)
(i)  Transactions  and  balances  with  Communications  Group  and  government 

related parties (Continued)

Management and Administrative services
The  Company  has  entered  into  agreements  with  the  Communications  Group  and  its  subsidiaries,  pursuant  to 

which,  the  Company  would  provide  the  management  and  administrative  services  for  eight  toll  roads,  including 

Shensuzhewan  Expressway,  South  Line  of  Qianjiang  Channel,  Ningbo  Yongtaiwen  Expressway,  Hangning 

Expressway,  Hangrao  Expressway,  Zhoushan  Northward  Channel,  Jiaxing  320  National  Highway  and  North 

Line  of  Qianjiang  Channel.  According  to  the  agreements,  the  Company  would  charge  the  Communications 

Group  and  its  subsidiaries  management  fee  on  actual  cost  basis.  During  this  year,  a  total  management  fee  of 

Rmb13,599,435 (2020: Rmb8,381,000) has been charged.

Other transactions

Toll road service area leasing income earned (Note a)
Toll road service area management fee paid (Note a)
Property leasing income earned
Road maintenance service expenses incurred
Construction cost incurred (Note b)
System development and maintenance, expressway mechanical and 

electrical engineering services expenses incurred
Toll road related inspection services expense incurred
Financial advisory service income earned
Underwriting and sponsor service income earned

Year ended
12/31/2021
Rmb’000

Year ended
12/31/2020
Rmb’000
(Restated)

15,602
11,200
2,348
535,847
172,415

8,389
8,481
3,396
17,547

19,289
9,153
805
532,974
319,523

76,149
10,287
972
2,693

263

 
 
 
 
 
 
58.  RELATED PARTY TRANSACTIONS AND BALANCES (Continued)
(i)  Transactions  and  balances  with  Communications  Group  and  government 
related parties (Continued)
Other transactions (Continued)
Notes:

(a) 

Pursuant  to  the  leasing  and  operation  agreement  entered  into  between  Jinhua  Co  (as  defined  in  Note  59), 

Zhejiang  Hanghui  Expressway  Co.,  Ltd.  (“Hanghui  Co”,  an  indirect  subsidiary  of  the  Company),  Zhejiang 

Shenjiahuhang  Expressway  Co.,  Ltd.  (“Shenjiahuhang  Co”),  Longlililong  Co.,  Zhejiang  Zhoushan  Bay  Bridge 

Co.,  Ltd.  (“Zhoushan  Co”)  and  Zhejiang  Commercial  Group  Co.,  Ltd.  (“Zhejiang  Commercial  Group”,  a  fellow 

subsidiary  of  Communications  Group),  the  toll  road  service  areas  were  leased  to  Zhejiang  Communications 

Group,  and  Zhejiang  Communications  Group  managed  the  operation  of  the  service  area  in  respect  of  the  toll 

road  service  area.  Such  businesses  began  from  January  1,  2011,  and  will  be  expired  at  the  same  time  with  the 

operating rights.

(b) 

In  2018,  Deqing  County  De’an  Highway  Construction  Co.,  Ltd.  (“Deqing  Co”)  and  Zhoushan  Co,  entered  into 

construction  agreements  with  Zhejiang  Hongtu  Transportation  Construction  Co.,  Ltd.  (“Zhejiang  Hongtu”)  and 

Zhejiang  Hangzhou-Ningbo  Alternative  Line  Phase  I  Expressway  Co.,  Ltd.  (“Zhejiang  HNAL  Co”),  respectively. 

Pursuant  to  the  contracts,  high  grade  road  and  expressway  construction  services  will  be  provided  to  Deqing 

Co  and  Zhoushan  Co.  Zhejiang  Hongtu  is  the  non-controlling  shareholder  of  Deqing  Co  and  is  also  a 

non-wholly owned subsidiary of Communications Group, Zhejiang HNAL Co is a non-wholly owned subsidiary of 

Communications Group.

Other transaction balances
In addition to the transaction balances already disclosed in the report, the other material transaction balances in 

relation to the transactions disclosed above with related parties are listed below.

12/31/2021
Rmb’000

12/31/2020
Rmb’000
(Restated)

198,361

20,659

260,768

349,684

148,203

339,643

Other receivables

Trade payables

Other payables

264

ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2021 
 
 
 
 
 
 
 
 
 
 
 
58.  RELATED PARTY TRANSACTIONS AND BALANCES (Continued)
(i)  Transactions  and  balances  with  Communications  Group  and  government 

related parties (Continued)

Sales of asset management schemes and derivative contract business
During  the  year,  Zheshang  Securities Asset  Management  Co.,  Ltd.  (“Asset  Management”,  an  indirect  subsidiary 

of  the  Company)  sold  59,666,928  units  (2020:  345,000,000  units)  (equivalent  to  Rmb91,682,100  (2020: 

Rmb345,000,000))  of  the  asset  management  schemes  to  Zhejiang  Zheshang  Financial  Holdings,  Co.,  Ltd. 

(“Zheshang Financial Holdings”), Management fee income of Rmb707,121(2020: Rmb320,471) was earned.

During the year, Asset Management sold 80,000,000 units (2020: nil) (equivalent to Rmb80,000,000 (2020: nil)) of 

the  asset  management  schemes  to  Zheshang  Property  and  Casualty  Insurance  Company  Limited.  Management 

fee income of Rmb789,213 (2020: nil) was earned.

During the year, Zhejiang Zheqi carried out derivatives contract business with Zheshang Financial Holdings, and 

the investment loss was Rmb8,821,528 (2020: nil) in total.

Other transactions with government related parties
The Group operates in an economic environment currently predominated by entities directly or indirectly owned or 

controlled by the PRC government (“government-related entities”). In addition, the Group itself is part of a larger 

group of companies under the Communications Group which is controlled by the PRC government. However, due 

to the business nature, in respect of the Group’s toll road and securities business, the Directors are of the opinion 

that it is impracticable to ascertain the identity of counterparties and accordingly whether the transactions are with 

other government-related entities in the PRC.

In addition, the Group has entered into other banking transactions, including deposit placements, borrowings and 

other general banking facilities, with certain banks and financial institution which are government-related entities 

in  its  ordinary  course  of  business.  In  view  of  the  nature  of  those  banking  transactions,  the  Directors  are  of  the 

opinion that separate disclosure would not be meaningful.

(ii)  Transactions and balances with associates and other related parties
Financial service provided by Zhejiang Communications Finance
The  Group  entered  into  a  financial  services  agreement  with  Zhejiang  Communications  Finance.  Pursuant  to  the 

agreement,  Zhejiang  Communications  Finance  agreed  to  provide  the  Group  with  the  deposit  services,  the  loan 

and financial leasing services, the clearing services and other financial services.

265

58.  RELATED PARTY TRANSACTIONS AND BALANCES (Continued)
(ii)  Transactions  and  balances  with  associates  and  other  related  parties 

(Continued)

Financial service provided by Zhejiang Communications Finance (Continued)
Loan advanced from Zhejiang Communications Finance

During  the  year,  Zhejiang  Communications  Finance  provided  the  Company  with  short-term  loans  with  a  total 

principal  amount  of  Rmb3,800,000,000  (2020:  Rmb2,760,000,000)  at  fixed  interest  rates  of  3.60%  per  annum. 

During the year, a total amount of Rmb5,300,000,000 were repaid (2020: Rmb1,800,000,000).

During the year, Zhejiang Communications Finance provided Shangsan Co with a short-term loan with a principal 

amount of Rmb200,000,000 (2020: nil) and fixed rate of 3.6000% per annum. During the year, principal amount of 

the short-term loan Rmb200,000,000 was repaid.

During  the  year,  Zhejiang  Communications  Finance  provided  Hanghui  Co  with  short-term  loans  with  an 

aggregated  principal  amount  of  Rmb500,000,000  (2020:  Rmb560,000,000)  and  fixed  interest  rate  of  3.85%  per 

annum (2020: fixed interest rate of 3.85% per annum). The principal amount of short-term loans Rmb500,000,000 

were repaid during the year (2020: Rmb670,000,000).

During  the  year,  Zhejiang  Communications  Finance  provided  Zhoushan  Co  with  short-term  loans  with  an 

aggregated  principal  amount  of  Rmb160,000,000  (2020:  Rmb320,000,000)  and  fixed  rate  of  3.82%  per  annum 

(2020: 3.82% and 4.1325%). During the year, principal amount of short-term loans Rmb430,000,000 were repaid 

(2020: Rmb688,000,000).

During  the  year,  Zhoushan  Co  has  repaid  long-term  loans  with  an  aggregated  principal  amount  of 

Rmb1,527,000,000 to Zhejiang Communications Finance.

During  the  year,  Zhejiang  Communications  Finance  provided  Shenjiahuhang  Co  with  short-term  loans  with  an 

aggregated  principal  amount  of  Rmb400,000,000  (2020:  nil)  and  fixed  rate  of  3.82%  and  3.85%  per  annum. 

During the year, principal amount of short-term loans Rmb400,000,000 were repaid.

During the year, principal amount of a long-term loan of Rmb765,000,000 provided by Zhejiang Communications 

Finance to Shenjiahuhang Co was repaid (2020: Rmb420,000,000).

266

ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 202158.  RELATED PARTY TRANSACTIONS AND BALANCES (Continued)
(ii)  Transactions  and  balances  with  associates  and  other  related  parties 

(Continued)

Financial service provided by Zhejiang Communications Finance (Continued)
Loan advanced from Zhejiang Communications Finance (Continued)

During  the  year,  Zhejiang  Communications  Finance  provided  LongLiLiLong  Co  with  short-term  loans  with  an 

aggregated principal amount of Rmb540,000,000 (2020: Rmb1,500,000,000) and fixed rate of 4.13% per annum 

(2020:  4.21%).  During  the  year,  principal  amount  of  short-term  loans  Rmb1,810,000,000  were  repaid  (2020: 

Rmb2,025,000,000).

During  the  year,  Zhejiang  Communications  Finance  provided  LongLiLiLong  Co  with  long-term  loans  with  an 

aggregated principal amount of Rmb2,447,000,000 (2020: nil) and fixed rate of 4.13% per annum (2020: 4.21%). 

During the year, principal amount of long-term loans Rmb1,582,096,000 were repaid (2020: Rmb10,000,000).

Outstanding loan payable balances:

repayable within one year
1 to 5 years
over 5 years

12/31/2021
Rmb’000

12/31/2020
Rmb’000
(Restated)

904,780
625,280
622,510

3,828,157
2,797,000
–

2,152,570

6,625,157

267

 
 
 
 
 
 
 
 
 
58.  RELATED PARTY TRANSACTIONS AND BALANCES (Continued)
(ii)  Transactions  and  balances  with  associates  and  other  related  parties 

(Continued)

Financial service provided by Zhejiang Communications Finance (Continued)
Loan advanced from Zhejiang Communications Finance (Continued)

Year ended
12/31/2021
Rmb’000

Year ended
12/31/2020
Rmb’000
(Restated)

175,206

283,383

12/31/2021
Rmb’000

12/31/2020
Rmb’000
(Restated)

2,460,550

1,825,676

Year ended
12/31/2021
Rmb’000

Year ended
12/31/2020
Rmb’000
(Restated)

36,463

31,922

Interest expenses incurred

Deposits to Zhejiang Communications Finance

Bank balances and cash

– Cash and cash equivalents

Interest income earned

268

ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2021 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
58.  RELATED PARTY TRANSACTIONS AND BALANCES (Continued)
(ii)  Transactions  and  balances  with  associates  and  other  related  parties 

(Continued)

Sales of asset management schemes with Zhejiang Communications Finance
During  the  year,  Asset  Management  sold  1,043,682,551  units  (2020:  1,265,000,000  units)  (equivalent  to 

Rmb1,076,889,988 (2020: Rmb1,265,000,000)) of the asset management schemes to Zhejiang Communications 

Finance. Management fee income of Rmb2,948,118 (2020: Rmb2,426,686) was earned.

Purchase/Sales  of  inventory  from/to  and  derivatives  contract  business  with 
Zheshang  Development  Group  Co.,  Ltd.  and  its  subsidiaries  (collectively 
referred to as “Zheshang Development Group”)
During the year, Zhejiang Zheqi purchased and sold commodities of Rmb56,794,907 (2020: Rmb82,057,085) and 

Rmb266,238,356  (2020:  Rmb31,564,016)  respectively  from  and  to  Zheshang  Development  Group,  to  operate 

commodity trading business.

As  at  December  31,  2021,  Zhejiang  Zheqi  received  deposits  of  Rmb67,153,629  (2020:  Rmb49,278,424)  from 

Zheshang Development Group.

During the year, Zhejiang Zheqi carried out derivatives contract business with Zheshang Development Group, and 

the investment gains was Rmb2,730,745 (2020: losses Rmb75,414,317) in total.

Zhajiasu  Co  provides  China  Merchants  Expressway  Network  &  Technology 
Holdings  Co.  LTD.  (“China  Merchants  Expressway”,  another  shareholder  of 
Zhajiasu Co) with entrusted loan
According  to  the  entrusted  loan  contract  signed  between  Zhajiasu  Co  and  China  Merchants  Expressway  on 

July  27,  2021,  Zhajiasu  Co  provides  an  entrusted  loan  of  Rmb180,000,000  at  a  fixed  rate  of  2.75%  per  annum. 

Interest income during the period was Rmb1,557,000.

(iii)  Key management emoluments
The  remuneration  of  the  Directors,  supervisors  and  key  management  personnel  during  the  year  was 

Rmb7,441,000  (2020:  Rmb7,478,000)  including  retirement  benefit  scheme  contribution  of  Rmb270,000  (2020: 

Rmb238,000) which is determined by the performance of the individuals and the market trends. 

269

59.  PARTICULARS OF SUBSIDIARIES OF THE COMPANY
59.1 General information of subsidiaries

Name of subsidiary

Date and
place of
registration

Registered 
and paid-in 
capital/
share capital
Rmb

Percentage of equity interest
attributable to the Company

Principal activities

Direct

Indirect

12/31/2021
%

12/31/2020
%
(Restated)

12/31/2021
%

12/31/2020
%
(Restated)

Zhejiang Linping Expressway 
Co., Ltd. (“Linping Co”)

Note 1

75,223,000

Jiaxing Co

Note 2

359,200,000

Shangsan Co

Note 3

5,380,000,000

Zhejiang Expressway Vehicle 

Note 4

8,000,000

51

100

73.625

100

51

99.9995

73.625

100

–

–

–

–

–

–

–

–

Management of the Linping Section of the 

Shanghai-Hangzhou Expressway

Management of the Jiaxing Section of the 

Shanghai-Hangzhou Expressway

Management of the Shangsan Expressway

Provision of vehicle towing, repair and 

emergency rescue services

Towing and Rescue Services 
Co., Ltd. 
(“Towing Co”)

Zheshang Securities

Zheshang Futures

Note 5

3,614,044,514

Note 6

1,000,000,000

Zheshang Capital Management

Note 7

500,000,000

Asset Management

Note 8

1,200,000,000

Ningbo Dongfang Jujin Investment 

Note 9

1,000,000

Management Co., Ltd 
(“Dongfang Jujin”)

Zhejiang Zheqi

Note 10

1,000,000,000

–

–

–

–

–

–

–

–

–

–

–

–

Zhejiang Jinhua Yongjin 
Expressway Co., Ltd. 
(“Jinhua Co”)

Note 11

1,350,000,000

100

100

Hanghui Co

Note 12

3,101,853,000

Hangzhou Jujin Jiawei Investment 

Note 13

206,103,000

Management (Limited 
Partnership) (“Jujin Jiawei”)

Zheshang International Financial 

Note 14

41,591,000

Holding Co., Limited

–

–

–

88.674

–

–

270

*40.3387

*43.2868

Operation of securities business

**40.3387

**43.2868

Operation of securities business

**40.3387

**43.2868

Operation of securities business

**40.3387

**43.2868

Provision of asset management service

**40.3387

**43.2868

Provision of investment management and 

advisory services

**40.3387

**43.2868

Trading of future

–

51

–

–

Management of the Jinhua Section of the 

Ningbo- Jinhua Expressway

Management of the Zhejiang Section of the 

Hangzhou-Ruili Expressway

**18.1635

**19.4912

Provision of investment management and 
advisory and private equity investments

**40.3387

**43.2868

Trading of future

ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2021 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
59.  PARTICULARS OF SUBSIDIARIES OF THE COMPANY (Continued)
59.1 General information of subsidiaries (Continued)

Name of subsidiary

Date and
place of
registration

Registered 
and paid-in 
capital/
share capital
Rmb

Huihang Co

Deqing Co

Note 15

580,000,000

Note 16

320,000,000

Shenjiahuhang Co

Note 17

1,720,000,000

Zhoushan Co

Note 18

4,114,690,000

Zhejiang Grand Hotel

Note 19

306,662,167

Zheshang Securities Investment 

Note 20

1,000,000,000

Co., Ltd. ***

LongLiLiLong Co

Zhajiasu Co

Zheshang International Asset 
Management Limited 
(“Zheshang International 
Asset Management”)

Note 21

8,519,856,565

Note 22

300,000,000

Note 23 HKD10,000,000

Percentage of equity interest
attributable to the Company

Principal activities

Direct

Indirect

12/31/2021
%

12/31/2020
%
(Restated)

12/31/2021
%

12/31/2020
%
(Restated)

100

80.1

100

–

100

–

100

55

–

100

80.1

100

–

100

–

100

–

–

–

–

–

51

–

–

–

–

51

–

Management of the Anhui Section of the 

Hangzhou-Ruili Expressway

Construction and management

Management of the Huzhou Section of the 

Huzhou-Lianhang Expressway

Management of the Zhoushan Bay Bridge

Operation of hotel

**40.3387

**43.2868

Provision of investment management and 
advisory and private equity investments

–

–

**40.3387

–

–

–

Management of the LongLi Expressway and 

LiLong Expressway

Management of the Zhajiasu Expressway

Provision of the asset management service

* 

The company is a subsidiary of Shangsan Co, a non-wholly-owned subsidiary of the Company, and, accordingly, 

is accounted for as a subsidiary by virtue of the Group’s control over it. On June 26, 2017, Zheshang Securities 

has completed the Spin-off and Offering on the Shanghai Stock Exchange, resulting in the dilution of the equity 

interest  attributed  to  the  Company.  On  March  12,  2019,  Zheshang  Securities  issued  a  convertible  bond  and  the 

conversion  of  shares  during  the  year  ended  December  31,  2020  resulted  in  the  dilution  of  the  equity  interest 

attributed to the Company. On May 21, 2021, Zheshang Securities issued non-public A shares which resulted in 

the dilution of the equity interest attributed to the Company.

** 

These  companies  and  partnership  entities  are  subsidiaries  of  Zheshang  Securities,  a  non-wholly-owned 

subsidiary  of  Shangsan  Co,  and  accordingly,  are  accounted  for  as  subsidiaries  by  virtue  of  the  Group’s  control 

over them.

*** 

The English translated name is for identification only.

271

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
59.  PARTICULARS OF SUBSIDIARIES OF THE COMPANY (Continued)
59.1  General information of subsidiaries (Continued)

Note 1: 

Linping  Co  was  established  on  June  7,  1994  in  the  PRC  as  a  joint  stock  limited  company  and  was 

subsequently restructured into a limited liability company under its current name on November 28, 1996. The 

Company is able to control over Linping Co because it has the power to appoint five out of nine directors of 

that  company  and  under  the  provisions  stated  in  the Articles  of Association  of  that  company,  the  passing  of 

ordinary resolutions at the board meetings required one-half of the Directors attending the meetings. Zhejiang 

Yuhang Expressway Co., Ltd. has been renamed to Zhejiang Linping Expressway Co., Ltd. in 2021.

Note 2: 

Jiaxing  Co  was  established  on  June  30,  1994  in  the  PRC  as  a  joint  stock  limited  company  and  was 

subsequently  restructured  into  a  limited  liability  company  under  its  current  name  on  November  29,  1996. 

With  reference  to  Note  62,  LongLiLiLong  Co  absorbed  Jiaxing  Co  subsequent  to  the  reporting  period,  the 

Company acquired the minority shares on September 2, 2021 in order to complete the absorption.

Note 3: 

Shangsan Co was established on January 1, 1998 in the PRC as a limited liability company.

Note 4: 

Towing Co was established on July 31, 2003 in the PRC as a limited liability company.

Note 5: 

Zheshang Securities was established on May 9, 2002 in the PRC as a limited liability company. The Group’s 

equity  interest  of  Zheshang  Securities  was  diluted  resulting  from  the  conversion  of  shares  by  outside 

shareholders.  On  May  21,  2021,  Zheshang  Securities  issued  non-public  A  shares  which  resulted  in  the 

dilution of the equity interest attributed to the Company.

Note 6: 

Zheshang Futures was established on September 7, 1995 in the PRC as a limited liability company.

Note 7: 

Zheshang  Capital  Management  was  established  on  February  9,  2012  in  the  PRC  as  a  limited  liability 

company.

Note 8: 

Asset Management was established on July 22, 2013 in the PRC as a limited liability company.

Note 9: 

Dongfang Jujin was established on March 25, 2014 in the PRC as a limited liability company.

Note 10:  Zhejiang  Zheqi  was  established  on  April  9,  2013  in  the  PRC  as  a  limited  liability  company,  and  its  paid-in 

share  capital  was  increased  by  Rmb100,000,000  to  Rmb200,000,000  during  the  year  ended  December  31, 

2014.

Note 11: 

Jinhua Co was established in February 2002 in the PRC as a limited liability company. Jinhua Co became a 

wholly owned subsidiary and directly held by the Company during the year ended December 31, 2013.

272

ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 202159.  PARTICULARS OF SUBSIDIARIES OF THE COMPANY (Continued)
59.1  General information of subsidiaries (Continued)

Note 12:  Hanghui  Co  was  established  in  December  2008  in  the  PRC  as  a  limited  liability  company.  During  the 

year  ended  December  31,  2015,  the  Company  acquired  the  80.614%  equity  interests  in  Hanghui  Co  from 

Communications  Group,  and  Hanghui  Co  then  became  a  subsidiary  and  directly  held  by  the  Company  as 

at  December  31,  2015.  In  December  2015,  the  equity  interest  held  by  the  Group  increased  to  88.674%  as 

the Company has made a capital contribution to Hanghui Co. In June 2021, the Hanghui Expressway public 

REITs  was  successfully  listed  on  the  Shanghai  Stock  Exchange.  The  Company  held  51%  shareholder’s 

interest  indirectly  after  the  restructure.  During  the  restructure  in  light  of  the  issuance  of  REITs,  the  Group’s 

equity  share  decreased  from  88.674%  to  51%  and  thus  didn’t  lose  control  over  Hanghui  Co.  The  equity 

transaction as a result of the restructure was accounted for under special reserves.

Note 13: 

Jujin  Jiawei  was  established  on  April  15,  2015  in  the  PRC  as  a  limited  partnership.  Pursuant  to  the 

partnership agreement, Dongfang Jujin is a general partner, while Zheshang Capital Management and other 

three  individuals  are  limited  partners  of  the  partnership.  The  Directors  consider  that  the  Group  has  the 

practical  ability  to  direct  the  relevant  activities  of  Jujin  Jiawei  unilaterally,  and  it  is  therefore  classified  as  a 

subsidiary of the Group.

Note 14:  Zheshang International Financial Holding Co., Limited (previously known as Zheshang Futures (Hong Kong) 

Co., Limited) was established on April 23, 2015 in Hong Kong as a limited liability Company.

Note 15:  Huihang  Co  was  established  in  September  2000  in  the  PRC  as  a  limited  liability  company.  During  the 

year  ended  December  31,  2016,  the  Company  acquired  the  100%  equity  interests  in  Huihang  Co  from  an 

independent  third  party,  and  Huihang  Co  then  became  a  subsidiary  and  directly  held  by  the  Company  as  at 

December 31, 2016.

Note 16:  Deqing  Co  was  established  on  April  12,  2018  in  the  PRC  as  a  limited  liability  company.  The  registered 

capital  of  Deqing  Co  has  been  increased  from  Rmb100,000,000  to  Rmb320,000,000  during  the  year 

ended  December  31,  2020,  of  which  Rmb17,421,750  was  contributed  by  the  Company,  Rmb4,328,250  was 

contributed by Zhejiang Hongtu and the rest were converted from capital reserve.

Note 17:  Shenjiahuhang  Expressway  was  established  on  July  13,  2018  in  the  PRC  as  a  limited  liability  company  and 

was acquired from Communications Group.

Note 18:  Zhoushan  Co  was  established  on  as  a  limited  liability  company.  On  July,  2018,  Shenjiahuhang  Expressway 

entered  into  an  equity  purchase  agreement  with  Zhejiang  Communications  Investment  Group  Co.,  Ltd.  to 

acquire 51% equity interest in Zhoushan Co.

Note 19:  Zhejiang  Grand  Hotel  was  established  on  January  6,  1998  in  the  PRC  as  a  limited  liability  company  and 

was  acquired  from  Communications  Group.  On  June  5,  2019,  the  Company  entered  into  an  equity  transfer 

agreement  with  a  wholly-owned  subsidiary  of  Communications  Group  to  acquire  100%  equity  interest  in 

Zhejiang  Grand  Hotel  at  a  cash  consideration  of  Rmb1,010,144,600. The  consideration  was  adjusted  in  the 

current year, and the Group received an amount of Rmb76,662,000 from Communications Group.

273

59.  PARTICULARS OF SUBSIDIARIES OF THE COMPANY (Continued)
59.1  General information of subsidiaries (Continued)

Note 20:  Zheshang  Securities  Investment  Co.,  Ltd.  was  established  on  November  26,  2019  in  the  PRC  as  a  limited 

liability company.

Note 21:  LongLiLiLong  Co  is  a  limited  liability  company  established  in  the  PRC  on  April  8,  2005,  and  was  acquired 

from Communications Group.

Note 22:  Zhajiasu Co is a limited liability company established in the PRC on January 25, 2001, and was acquired on 

May 7, 2021 from two natural person shareholders.

Note 23:  Zheshang  International  Asset  Management  is  a  limited  liability  company  established  in  Hong  Kong  on 

November 15, 2021. Up to December 31,2021, the subscription has not been completed.

Except  that  Zheshang  International  Financial  Holding  Co.,  Limited  is  operating  in  Hong  Kong,  all  of  the 

Company’s  other  subsidiaries  are  operating  in  Mainland  China. As  at  December  31,  2021,  Zheshang  Securities 

has  issued  subordinated  bonds,  corporate  bonds,  short-term  financing  bonds  and  beneficial  certificates  at  the 

total  principal  amount  of  Rmb9,900,000,000,  Rmb7,500,000,000,  Rmb6,500,000,000  and  Rmb2,408,360,000 

(2020: Rmb12,459,771,800, Rmb2,000,000,000, Rmb4,500,000,000 and Rmb1,771,620,000), respectively.

59.2 Change in ownership interest in a subsidiary
During  the  year,  Zheshang  Securities  launched  non-public  offering  of  A  shares  with  the  issuance  number  of 

264,124,281  shares  and  the  offering  price  of  Rmb10.62  per  share.  The  non-public  offering  was  completed  on 

May  20,  2021.  After  the  completion,  the  Group’s  indirect  percentage  of  equity  interest  in  Zheshang  Securities 

decreased to 40.3387% (2020: 43.2868%).

An  amount  of  Rmb2,259,405,386.91  has  been  transferred  to  non-controlling  interests.  The  difference  of 

Rmb541,703,794.03 between the increase in the non-controlling interests and the raised funds received has been 

credited to special reserves.

INTERESTS IN UNCONSOLIDATED STRUCTURED ENTITIES

60. 
The  Group  held  interests  as  investor  or  acted  as  investment  manager  of  structured  entities  (including  collective 

asset  management  schemes  and  investment  funds),  therefore  had  power  over  them  during  the  years  ended 

December  31,  2021  and  2020.  Except  for  the  structured  entities  the  Group  has  consolidated  as  disclosed  in 

Note  45,  in  the  opinion  of  the  Directors,  the  variable  returns  the  Group  exposed  to  over  these  collective  asset 

management  schemes  and  investment  funds  in  which  the  Group  has  interests  or  acted  as  investment  manager 

are not significant. The Group therefore did not consolidate these structured entities.

274

ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 202160. 

INTERESTS IN UNCONSOLIDATED STRUCTURED ENTITIES 
(Continued)

The  total  assets  of  unconsolidated  funds  and  asset  management  schemes  managed  by  the  Group  amounted 

to  Rmb117,599,057,000  and  Rmb140,322,176,000  as  at  December  31,  2021  and  2020,  respectively.  Relevant 

management fee has been included in asset management services revenue as disclosed in Note 7.

The  Group  classified  the  investments  in  unconsolidated  funds  and  asset  management  schemes  as  financial 

assets  at  FVTPL.  As  at  December  31,  2021  and  2020,  the  carrying  amounts  of  the  Group’s  interests  in 

unconsolidated  funds  and  asset  management  schemes  are  Rmb7,203,077,000  and  Rmb5,809,513,000, 

respectively.

61.  SUMMARY OF FINANCIAL INFORMATION OF THE COMPANY

NON-CURRENT ASSETS
Property, plant and equipment
Right-of-use assets
Expressway operating rights
Other receivables and prepayments
Other intangible assets
Interests in subsidiaries
Interests in associates
Interest in a joint venture

CURRENT ASSETS
Trade receivables
Other receivables and prepayments
Amount due from subsidiaries
Dividends receivable
Bank balances and cash

– Cash and cash equivalents

12/31/2021
Rmb’000

12/31/2020
Rmb’000

738,656
13,951
1,796,828
–
10,987
13,045,033
7,652,999
373,470

679,244
14,545
2,156,204
2,923,140
12,973
13,000,212
4,931,954
373,470

23,631,924

24,091,742

40,955
397,421
2,517,648
1,515,301

27,947
88,350
3,098,317
1,673,070

3,420,154

1,316,079

7,891,479

6,203,763

275

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
61.  SUMMARY OF FINANCIAL INFORMATION OF THE COMPANY 

(Continued)

CURRENT LIABILITIES
Trade payables
Tax liabilities
Other taxes payable
Other payables and accruals
Amount due to subsidiaries
Bonds payable
Bank and other borrowings

NET CURRENT LIABILITIES

12/31/2021
Rmb’000

12/31/2020
Rmb’000

181,843
407,792
21,551
1,638,352
2,933,811
3,084,871
57,120

104,208
231,672
24,568
223,850
5,516,082
62,374
4,585,267

8,325,340

10,748,021

(433,861)

(4,544,258)

TOTAL ASSETS LESS CURRENT LIABILITIES

23,198,063

19,547,484

2,990,762
1,714,662
220,000
80,561

3,000,000
766
–
70,867

5,005,985

3,071,633

18,192,078

16,475,851

4,343,115
13,848,963

4,343,115
12,132,736

18,192,078

16,475,851

NON-CURRENT LIABILITIES
Bonds payable
Convertible Bond
Bank and other borrowings
Deferred tax liabilities

CAPITAL AND RESERVES
Share capital
Reserves

276

ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2021 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
61.  SUMMARY OF FINANCIAL INFORMATION OF THE COMPANY 

(Continued)

Movement of share capital and reserve of the Company was set out below.

Share
capital
Rmb’000

Share
premium
Rmb’000

Statutory
reserves
Rmb’000

Investment
revaluation
reserve
Rmb’000

Dividend
reserve
Rmb’000

Special
reserves
Rmb’000

Retained
profits
Rmb’000

Total
Rmb’000

4,343,115
–

3,645,726
–

2,364,430
–

–
–

1,541,806
–

18,666
–

3,804,325
2,259,194

15,718,068
2,259,194

–

–

–

–
–
–

–

–

–

–
–
–

–

–

–

–
–
–

(24,160)

(24,160)

–

–
–
–

–

–

–

–

–

–

(24,160)

2,259,194

2,235,034

76,662

–

76,662

–
(1,541,806)
1,541,806

(12,107)
–
–

–
–
(1,541,806)

(12,107)
(1,541,806)
–

At January 1, 2020
Profit for the year
Other comprehensive expense 

for the year

Total comprehensive (expense) 

income for the year

Consideration paid for acquisition 
of subsidiaries under common 
control

Recognition of the Company’s 
share of the equity change 
of the investee

2019 dividend
Proposed dividend

At December 31, 2020

4,343,115

3,645,726

2,364,430

(24,160)

1,541,806

83,221

4,521,713

16,475,851

Profit for the year
Other comprehensive income 

for the year

Total comprehensive income  

for the year

Consideration paid for acquisition 
of subsidiaries under common 
control

Acquisition of minority interests 

of a subsidiary

2020 dividend
Proposed dividend

–

–

–

–

–
–
–

–

–

–

–

–
–
–

–

–

–

–

–
–
–

–

43,607

43,607

–

–
–
–

–

–

–

–

–

–

–

3,452,588

3,452,588

–

43,607

3,452,588

3,496,195

(11,797)

(226,343)

(238,140)

–
(1,541,806)
1,628,668

(42)
–
–

–
–
(1,628,668)

(42)
(1,541,806)
–

At December 31, 2021

4,343,115

3,645,726

2,364,430

19,447

1,628,668

71,382

6,119,290

18,192,058

62.  EVENTS AFTER THE REPORTING PERIOD
LongLiLiLong  Co  held  shareholders’  meeting  on  January  20,  2022,  it  is  resolved  to  absorb  Jiaxing  Co. After  the 

absorption, LongLiLiLong Co’s capital was Rmb8,519,000,000 and wholly owned by the Company. As at January 

20, 2022, the business registration was modified and Jiaxing Co was dissolved.

277

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(Issued by a Third Country Auditor registered with The UK Financial Reporting Council)

TO THE MEMBERS OF ZHEJIANG EXPRESSWAY CO., LTD.

浙江滬杭甬高速公路股份有限公司

(Incorporated in the People’s Republic of China with limited liability)

Opinion
We  have  audited  the  consolidated  financial  statements  of  Zhejiang  Expressway  Co.,  Ltd.  (the  “Company”) 

and  its  subsidiaries  (collectively  referred  to  as  the  “Group”)  set  out  on  pages  102  to  277,  which  comprise  the 

consolidated statement of financial position as at December 31, 2021, and the consolidated statement of profit or 

loss  and  other  comprehensive  income,  consolidated  statement  of  changes  in  equity  and  consolidated  statement 

of cash flows for the year then ended, and notes to the consolidated financial statements, including a summary of 

significant accounting policies.

In  our  opinion,  the  consolidated  financial  statements  give  a  true  and  fair  view  of  the  consolidated  financial 

position  of  the  Group  as  at  December  31,  2021,  and  of  its  consolidated  financial  performance  and  its 

consolidated  cash  flows  for  the  year  then  ended  in  accordance  with  Hong  Kong  Financial  Reporting  Standards 

(“HKFRSs”) issued by the Hong Kong Institute of Certified Public Accountants (“HKICPA”) and have been properly 

prepared in compliance with the disclosure requirements of the Hong Kong Companies Ordinance.

Basis for Opinion
We conducted our audit in accordance with Hong Kong Standards on Auditing (“HKSAs”) issued by the HKICPA. 

Our  responsibilities  under  those  standards  are  further  described  in  the Auditor’s  Responsibilities  for  the Audit  of 

the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with 

the  HKICPA’s  Code  of  Ethics  for  Professional Accountants  (the  “Code”),  and  we  have  fulfilled  our  other  ethical 

responsibilities  in  accordance  with  the  Code.  We  believe  that  the  audit  evidence  we  have  obtained  is  sufficient 

and appropriate to provide a basis for our opinion.

Key Audit Matters
Key  audit  matters  are  those  matters  that,  in  our  professional  judgment,  were  of  most  significance  in  our  audit 

of  the  consolidated  financial  statements  of  the  current  period.  These  matters  were  addressed  in  the  context  of 

our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not 

provide a separate opinion on these matters.

278

ANNUAL REPORTIndependent Auditor’s ReportKey audit matter

How our audit addressed the key audit matter

Determination of consolidation scope of structured entities

We  identified  the  determination  of  consolidation 

Our  procedures  in  relation  to  the  management’s 

scope  of  structured  entities,  which  invested  by  the 

determination  of  consolidation  scope  of  structured 

Group’s  securities  operation  segment  (defined  in 

entities included:

Note  8),  as  a  key  audit  matter  due  to  significant 

judgement  applied  by  management  in  determining 

•  Te s t i n g   a n d   e v a l u a t i n g   k e y   c o n t r o l s   o f   t h e 

whether  a  structured  entity  is  required  to  be 

management  in  determining  the  consolidation  scope 

consolidated  by  the  Group  and  the  significance 

of structured entities;

of  these  balances  to  the  Group’s  consolidated 

financial statements as a whole.

•  Examining,  on  a  sample  basis,  the  documents  and 

information  used  by  the  management  in  assessing 

The  Group  held  interests  as  investor  or  acted  as 

the consolidation criteria of structured entities against 

investment  manager  in  various  structured  entities 

the  related  agreements  and  other  related  service 

including  collective  asset  management  schemes, 

agreements  of  structured  entities  newly  established, 

investment funds and limited partnership enterprises. 

invested  or  with  changes  in  proportion  of  ownership 

As  disclosed  in  Note  6  to  the  consolidated  financial 

interests or contractual terms during the year;

statements, to determine whether a structured entity 

should  be  consolidated,  the  management  applied 

•  Assessing  management  judgement  in  determining 

significant  judgement  in  determining  whether  the 

the  scope  for  consolidation  and,  on  a  sample  basis, 

Group  has  power  over  the  structured  entities,  and 

assessing  the  conclusion  about  whether  a  structured 

assess  whether  the  combination  of  investments 

entity should be consolidated or not.

it  held  together  with  its  remuneration  and  credit 

enhancement  creates  exposure  to  variability  of 

returns  from  the  activities  of  the  collective  asset 

management  schemes  and  investment  funds  that 

is  of  such  significance  that  it  indicates  the  Group 

controlled the structured entities.

As disclosed in Notes 45 and 60 to the consolidated 

financial  statements,  as  at  December  31,  2021, 

the  total  assets  of  the  consolidated  structured 

entities  amounted  to  Rmb8,716,481  thousands  and 

the  total  assets  of  the  unconsolidated  structured 

entities  managed  by  the  Group  amounted  to 

Rmb117,599,057 thousands, respectively.

279

Other Information
The  directors  of  the  Company  are  responsible  for  the  other  information.  The  other  information  comprises  the 

information  included  in  the  annual  report,  but  does  not  include  the  consolidated  financial  statements  and  our 

auditor’s report thereon.

Our opinion on the consolidated financial statements does not cover the other information and we do not express 

any form of assurance conclusion thereon.

In  connection  with  our  audit  of  the  consolidated  financial  statements,  our  responsibility  is  to  read  the  other 

information  and,  in  doing  so,  consider  whether  the  other  information  is  materially  inconsistent  with  the 

consolidated  financial  statements  or  our  knowledge  obtained  in  the  audit  or  otherwise  appears  to  be  materially 

misstated.  If,  based  on  the  work  we  have  performed,  we  conclude  that  there  is  a  material  misstatement  of  this 

other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities  of  Directors  and  Those  Charged  with  Governance  for  the 
Consolidated Financial Statements
The  directors  of  the  Company  are  responsible  for  the  preparation  of  the  consolidated  financial  statements  that 

give  a  true  and  fair  view  in  accordance  with  HKFRSs  issued  by  the  HKICPA  and  the  disclosure  requirements 

of  the  Hong  Kong  Companies  Ordinance,  and  for  such  internal  control  as  the  directors  of  the  Company 

determine is necessary to enable the preparation of consolidated financial statements that are free from material 

misstatement, whether due to fraud or error.

In  preparing  the  consolidated  financial  statements,  the  directors  of  the  Company  are  responsible  for  assessing 

the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and 

using  the  going  concern  basis  of  accounting  unless  the  directors  of  the  Company  either  intend  to  liquidate  the 

Group or to cease operations, or have no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Group’s financial reporting process.

280

ANNUAL REPORTIndependent Auditor’s ReportAuditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Our  objectives  are  to  obtain  reasonable  assurance  about  whether  the  consolidated  financial  statements  as  a 

whole  are  free  from  material  misstatement,  whether  due  to  fraud  or  error,  and  to  issue  an  auditor’s  report  that 

includes  our  opinion  solely  to  you,  as  a  body,  in  accordance  with  our  agreed  terms  of  engagement,  and  for  no 

other purpose. We do not assume responsibility towards or accept liability to any other person for the contents of 

this report. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in 

accordance with HKSAs will always detect a material misstatement when it exists. Misstatements can arise from 

fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected 

to influence the economic decisions of users taken on the basis of these consolidated financial statements.

As  part  of  an  audit  in  accordance  with  HKSAs,  we  exercise  professional  judgment  and  maintain  professional 

scepticism throughout the audit. We also:

• 

Identify  and  assess  the  risks  of  material  misstatement  of  the  consolidated  financial  statements,  whether 

due  to  fraud  or  error,  design  and  perform  audit  procedures  responsive  to  those  risks,  and  obtain  audit 

evidence  that  is  sufficient  and  appropriate  to  provide  a  basis  for  our  opinion.  The  risk  of  not  detecting  a 

material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve 

collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• 

Obtain  an  understanding  of  internal  control  relevant  to  the  audit  in  order  to  design  audit  procedures  that 

are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness 

of the Group’s internal control.

• 

Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates 

and related disclosures made by the directors of the Company.

• 

Conclude  on  the  appropriateness  of  the  directors’  use  of  the  going  concern  basis  of  accounting  and, 

based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions 

that  may  cast  significant  doubt  on  the  Group’s  ability  to  continue  as  a  going  concern.  If  we  conclude 

that  a  material  uncertainty  exists,  we  are  required  to  draw  attention  in  our  auditor’s  report  to  the  related 

disclosures  in  the  consolidated  financial  statements  or,  if  such  disclosures  are  inadequate,  to  modify  our 

opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. 

However, future events or conditions may cause the Group to cease to continue as a going concern.

281

• 

Evaluate the overall presentation, structure and content of the consolidated financial statements, including 

the  disclosures,  and  whether  the  consolidated  financial  statements  represent  the  underlying  transactions 

and events in a manner that achieves fair presentation.

• 

Obtain  sufficient  appropriate  audit  evidence  regarding  the  financial  information  of  the  entities  or 

business  activities  within  the  Group  to  express  an  opinion  on  the  consolidated  financial  statements. 

We  are  responsible  for  the  direction,  supervision  and  performance  of  the  group  audit.  We  remain  solely 

responsible for our audit opinion.

We  communicate  with  those  charged  with  governance  regarding,  among  other  matters,  the  planned  scope  and 

timing  of  the  audit  and  significant  audit  findings,  including  any  significant  deficiencies  in  internal  control  that  we 

identify during our audit.

We  also  provide  those  charged  with  governance  with  a  statement  that  we  have  complied  with  relevant  ethical 

requirements  regarding  independence,  and  to  communicate  with  them  all  relationships  and  other  matters  that 

may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats 

or safeguards applied.

From  the  matters  communicated  with  those  charged  with  governance,  we  determine  those  matters  that  were  of 

most significance in the audit of the consolidated financial statements of the current period and are therefore the 

key  audit  matters.  We  describe  these  matters  in  our  auditor’s  report  unless  law  or  regulation  precludes  public 

disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be 

communicated  in  our  report  because  the  adverse  consequences  of  doing  so  would  reasonably  be  expected  to 

outweigh the public interest benefits of such communication.

The engagement partner on the audit resulting in the independent auditor’s report is Ma Hing Fai.

Deloitte Touche Tohmatsu Certified Public Accounts LLP

Certified Public Accountants

(Registered as a Third Country Auditor with The UK Financial Reporting Council)

Shanghai, China

March 24, 2022

282

ANNUAL REPORTIndependent Auditor’s ReportCHAIRMAN
YU Zhihong

EXECUTIVE DIRECTORS
CHEN Ninghui 
YUAN Yingjie

(Appointed as General Manager on May 19, 2021)

LUO Jianhu 

(Resigned on May 19, 2021)

NON-EXECUTIVE DIRECTORS
JIN Chaoyang 
DAI Benmeng 
FAN Ye
HUANG Jianzhang (Appointed on July 1, 2021)

(Appointed on July 1, 2021)
(Resigned on July 1, 2021)

INDEPENDENT 
NON-EXECUTIVE DIRECTORS
PEI Ker-Wei
LEE Wai Tsang, Rosa
CHEN Bin

SUPERVISORS
ZHENG Ruchun
HE Meiyun
WU Qingwang
LU Xinghai  
ZHAN Huagang 
WANG Yubing

(Appointed on July 1, 2021)
(Resigned on July 1, 2021)

COMPANY SECRETARY
Tony ZHENG

AUTHORIZED 
REPRESENTATIVES
YU Zhihong
YUAN Yingjie  
LUO Jianhu  

(Appointed on July 1, 2021)
(Resigned on July 1, 2021)

STATUTORY ADDRESS
12/F, Block A, Dragon Century Plaza
1 Hangda Road
Hangzhou City, Zhejiang Province
PRC 310007
Tel : 86-571-8798 5588
Fax: 86-571-8798 5599

PRINCIPAL PLACE OF BUSINESS
5/F, No. 2, Mingzhu International Business Center
199 Wuxing Road
Hangzhou City
Zhejiang Province
PRC 310020
Tel : 86-571-8798 5588
Fax: 86-571-8798 5599

LEGAL ADVISERS
As to Hong Kong law:
Ashurst Hong Kong
11/F, Jardine House
1 Connaught Place
Central, Hong Kong

As to English law:
Ashurst LLP
London Fruit & Wool Exchange
1 Duval Square
London E1 6PW
United Kingdom

283

Corporate Information 
As to PRC law:
T & C Law Firm
11/F, Block A, Dragon Century Plaza
1 Hangda Road
Hangzhou City, Zhejiang Province
PRC 310007

AUDITORS
Deloitte Touche Tohmatsu
35/F, One Pacific Place
88 Queensway
Hong Kong

INVESTOR RELATIONS 
CONSULTANT
Christensen China Limited
16/F, Methodist House
36 Hennessy Road, Wanchai
Hong Kong
Tel : 852-2117 0861
Fax: 852-2117 0869

PRINCIPAL BANKERS
Industrial and Commercial Bank of China,  
  Jiefang Road Branch
Shanghai Pudong Development Bank, 
  Hangzhou Branch

H SHARE REGISTRAR AND 
TRANSFER OFFICE
Hong Kong Registrars Limited
Room 1712-1716, 17/F, Hopewell Centre
183 Queen’s Road East
Hong Kong

H SHARES LISTING INFORMATION
The Stock Exchange of Hong Kong Limited
Code: 0576

London Stock Exchange plc
Code: ZHEH

REPRESENTATIVE OFFICE IN  
HONG KONG
Room 1710B
Office Tower
Convention Plaza
1 Harbour Road
Wan Chai, Hong Kong
Tel : 852-2537 4295
Fax: 852-2537 4293

WEBSITE
www.zjec.com.cn

284

ANNUAL REPORTCorporate InformationLocation Map of Expressways in Zhejiang Province