Zhejiang Expressway Co., Ltd Annual Report 2022

FY2022 Annual Report · Zhejiang Expressway Co., Ltd
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STOCK CODE  0576

2022

ANNUAL REPORT

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ANN UAL  REPO RT

Definitions

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

02

04

05

06

08

10

13

17

38

41

55

67

76

78

Independent Auditor’s Report

105

Consolidated Financial Statements & Notes

Independent Auditor’s Report

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

Location Map of Expressways in Zhejiang Province

Corporate Information

110

282

287

289

 
Articles of Association
Associate
Audit Committee
Board
China Merchants 
Expressway

Company or Zhejiang 

Expressway

Communications Group

Communication Holding

Connected Person
Controlling Shareholder
De’an Co

Directors
GDP
Group
H Shares

Hanghui Co

HangNing Co

Hangxuan Co

Huihang Co

Hong Kong Stock 

Exchange

independent third 

party(ies)

Jiaogong Group

Jiaogong Maintenance

Jiaxiao Co

Jiaogong Underground 

Construction

Jinhua Co

Listing Rules
LongLiLiLong Co

Jiaxing Branch

Maintenance Co

Ningbo Yongtaiwen Co

02

articles of association of the Company
has the meaning ascribed to it under the Listing Rules
the audit committee of the Company
the board of directors of the Company
China  Merchants  Expressway  Network  & Technology  Holdings  Co.,  Ltd.  (

),  a 

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 

浙江省交投控股集團有限公司

浙江省交通投資集團有限公司

份有限公司
shares are listed on the Shenzhen Stock Exchange
Zhejiang  Expressway  Co.,  Ltd.,  a  joint  stock  limited  company  incorporated  in  the  PRC  with  limited 
liability on March 1, 1997
Zhe jia ng  Communica tions  Investm en t  Group  C o. ,  Ltd .  (
),  a 
state-controlled  enterprise  established  in  the  PRC,  on  December  29,  2001  and  the  controlling 
shareholder of the Company
Zhejiang  Communication  Investment  Holding  Group  Co.,  Ltd.  (
wholly-owned subsidiary of Communications Group
has the meaning ascribed to it under the Listing Rules
has the meaning ascribed to it under the Listing Rules
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 (
the directors of the Company
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
Zhejiang  HangNing  Expressway  Co.,  Ltd.  (
of the Company, which is established in the PRC with limited liability
Zhejiang  Hangxuan  Expresswasy  Co.,  Ltd.  (
of Communications Group
Huangshan  Yangtze  Huihang  Expressway  Co.,  Ltd.  (
wholly-owned subsidiary of the Company
The Stock Exchange of Hong Kong Limited

德清縣德安公路建設有限責任公司
) for PPP Project in Deqing County

黃山長江徽杭高速公路有限責任公司

), a 51% owned subsidiary of the 

浙江交工宏途交通建設有限公司

浙江杭寧高速公路有限責任公司

),  a  wholly-owned  subsidiary 

),  a  30%  owned  associate 

浙江杭宣高速公路有限公司

浙江杭徽高速公路有限公司

),  a 

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  Communications  Construction  Group  Co.,  Ltd.  (
incorporated in the PRC and a non-wholly owned subsidiary of Communications Group 
Zhejiang  Jiaogong  High-grade  Expressway  Maintenance  Co.,  Ltd.  (

浙江交工集團股份有限公司

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 

),  a  company 

限公司
Communications Group
Jiaxing  Jiaxiao  Expressway  Investment  Development  Co.,  Ltd.  (

嘉興市嘉蕭高速公路投資開發有限公

),  a  company 

浙江金華甬金高速公路有限公司

), a 70% owned subsidiary of Communications Group
司
Zhejiang  Jiaogong  Underground  Construction  Co.,  Ltd.  (
浙江交工地下工程有限公司
incorporated in the PRC and a non-wholly owned subsidiary of Communications Group
Zhejiang  Jinhua  Yongjin  Expressway  Co.,  Ltd.  (
subsidiary of the Company
the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited
Zhejiang  LongLiLiLong  Expressway  Co.,  Ltd.  (
subsidiary of the Company
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
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

浙江龍麗麗龍高速公路有限公司

浙江滬杭甬養護工程有限公司

), a company incorporated 

),  a  wholly-owned 

),  a  wholly-owned 

2022 ANNUAL REPORTDefinitionsNorth Channel Co

Period
PRC
Rmb
SFO
Shangsan Co

Shareholders
Shengxin Co

Shenjiahuhang Co

SRCB

Supervisory Committee
Yangtze Financial 

Leasing
Linping Co

Zhajiasu Co
Zhejiang Communications 

Finance

Zheshang Development

Zheshang Financial

Zhejiang Grand Hotel
Zhejiang Hongtu

Zhejiang Information

Zhejiang International 

Hong Kong

Zhejiang Shunchang

Zheshang FoF

Zheshang Securities

Zhejiang Commercial

Zhejiang Zheqi

Zhoushan Co

ZJIC

浙江上三高速公路有限公司

), a 60% owned subsidiary 

浙江舟山北向大通道有限公司

Zhejiang Zhoushan North Channel Co., Ltd. (
of Communications Group
the period from January 1, 2022 to December 31, 2022
the People’s Republic of China
Renminbi, the lawful currency of the PRC
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 Expressway, respectively
the shareholders of the Company
Zhejiang  Shaoxing  Shengxin  Expressway  Co.,  Ltd.  (
joint venture of the Company
Zhejiang  Shenjiahuhang  Expressway  Co.,  Ltd.(
associate of the Company
Shanghai  Rural  Commercial  Bank  Co.,  Ltd.  (
associate of the Company
the supervisory committee of the Company
Yangtze United Financial Leasing Co., Ltd. (
of the Company
Zhejiang  Linping  Expressway  Co.,  Ltd.  (
“Zhejiang  Yuhang  Expressway  Co.,  Ltd.”  (
of the Company
Jiaxing Zhajiasu Expressway Co., Ltd., a 55% owned subsidiary of the Company
Zhejiang  Communications  Investment  Group  Finance  Co.,  Ltd.  (

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

浙江臨平高速公路有限責任公司

浙江申嘉湖杭高速公路有限公司

上海農村商業銀行股份有限公司

浙江余杭高速公路有限責任公司

浙江紹興嵊新高速公路有限公司

), a 10.61% owned associate 

長江聯合金融租賃有限公司

),  a  4.92%  owned 

),  a  30%  owned 

),  a  50%  owned 

浙江省交通投資集團財務有限責任公

), a 20.08% owned associate of the Company

浙商中拓集團股份有限公司

司
Zheshang  Development  Group  Co.,  Ltd.  (
established in the PRC and a 45.28% owned associate of Communications Group
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
Zhejiang Grand Hotel Limited (
Zhejiang  Hongtu  Transportation  Construction  Company  (
liability company incorporated in the PRC and non-wholly owned by Communications Group
Zhejiang High-speed Information Engineering Technology Ltd. (
known as Zhejiang Expressway Information Engineering Technology Co., Ltd. (

), a wholly-owned subsidiary of the Company

),  a  joint  stock  limited  company 

浙江交工宏途交通建設有限公司

浙江高信技術股份有限公司

浙江浙商金控有限公司

浙江大酒店有限公司

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

),  a  limited 

), formerly 

有限公司
Group
Zhejiang Expressway International (Hong Kong) Co., Ltd. (
subsidiary of the Company 
Zhejiang  Shunchang  High-grade  Expressway  Maintenance  Co.,  Ltd.  (

浙江滬杭甬國際

(
香港

)
有限公司

), a wholly-owned 

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

限公司
Communications Group
Zhejiang  Zheshang  Transform  and  Upgrade  Fund  of  Funds  Partnership  (Limited  Partnership),  a 
24.99% owned associate of the Company
Zheshang  Securities  Co.,  Ltd.  (
Shangsan Co
Zhejiang Commercial Group Co., Ltd. (
and a subsidiary of Communications Group 
Zhejiang  Zheqi  Industrial  Co.,  Ltd.  (
indirectly non-wholly owned subsidiary of the Company
Zhejiang Zhoushan Bay Bridge Co., Ltd.(
Company
Zhejiang  Institute  of  Communications  Co.,  Ltd.  (
company established in the PRC and a 55.08% owned subsidiary of Communications Group 

),  a  54.7892%  owned  subsidiary  of  the 

),  a  company  established  in  the  PRC,  an 

), a company established in the PRC 

), a 51% owned subsidiary of the 

浙江數智交院科技股份有限公司

浙江舟山跨海大橋有限公司

浙江省商業集團有限公司

浙商證券股份有限公司

)  a  joint  stock  limited 

浙江浙期實業有限公司

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  eight  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  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 seven expressways are situated within Zhejiang 
Province in the PRC. As at December 31, 2022, total assets of the Company and its subsidiaries 
amounted to Rmb186,405.52 million.

Incorporated on December 29, 2001, Communications Group, the controlling shareholder of the 
Company, is a state-controlled 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. 

On  January  20,  2022,  the  absorption  and  merger  of  Zhejiang  Jiaxing  Expressway  Co., 
Ltd.  (“Jiaxing  Company”)  by  LongLiLiLong  Co  was  completed  and  the  main  assets 
and  business  of  Jiaxing  Company  were  transferred  to  “Jiaxing  Branch  of  Zhejiang 
LongLiLiLong Expressway Co., Ltd.”.

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

3. 

On March 24, 2022, the Company announced its 2021 annual results.

4. 

On April 29, 2022, the Company announced its 2022 first quarterly results.

5. 

6. 

On  May  5,  2022,  the  Company  issued  Rmb1,400  million  of  mid-term  notes  at  the  coupon 
rate  of  2.97%  in  the  interbank  market;  subsequently  on  July  11,  2022,  the  Company 
issued  Rmb1,600  million  of  mid-term  notes  at  the  coupon  rate  of  2.80%.  The  issuances 
have been approved at the first extraordinary general meeting of 2022 held on March 18, 
2022.

On  June  30,  2022,  the  Company  held  its  2021  annual  general  meeting  to  approve,  inter 
alia, the payment of a dividend of Rmb37.5 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  increase  in  the  annual  caps  for  the  Deposit  Services  under  the  New 
Financial Services Agreement with Zhejiang Communications Finance to Rmb3 billion; 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  amendment  to  the 
Articles  of  Association  in  order  to  cater  for  the  possible  future  arrangements  for  the  full 
circulation of H shares of the Company, which has been approved on the Domestic Shares 
Class Meeting and H Shares Class Meeting held on the same day.

7. 

On August 24, 2022, the Company announced its 2022 interim results.

On  the  same  date,  the  Board  approved  the  Company  to  operate  and  manage  Zhoudai 
Bridge  and  Fuchimen  Bridge  of  Ningbo  Zhoushan  Port  Main  Passage  (27.669  km)  and 
North  Connection  of  Qianjiang  Channel  (11.415  km)  as  entrusted  by  North  Channel  Co 
and Jiaxiao Co, respectively.

06

2022 ANNUAL REPORTReview of Major Corporate Events8. 

9. 

On  September  19,  2022,  the  Company  entered  into  an  equity  transfer  agreement  with 
Shenjiahuhang  Co  to  acquire  51%  of  equity  interests  in  Zhoushan  Co  at  the  audited  net 
asset value of Zhoushan Co as at 30 June 2022.

On  October  11,  2022,  the  Company  held  its  second  extraordinary  general  meeting  of 
2022,  for  the  independent  shareholders  to  approve  the  approximately  Rmb13.17  billion 
of  new  registered  capital  of  Shangsan  Co,  among  which  the  Communications  Group  will 
contribute  approximately  RMB9.70  billion  to  subscribe  for  approximately  RMB1.76  billion 
new  registered  capital  of  Shangsan  Co.  The  relevant  capital  increase  agreement  was 
signed  on  November  29,  2022,  and  the  payments  of  capital  increase  is  expected  to  be 
made on or before December 31, 2024.

10.  On October 31, 2022, the Company announced its 2022 third quarterly results.

11.  On  November  25,  2022,  the  Company  successfully  issued  the  Asset-backed  Special 
Program for the CICC-Zhejiang Expressway-Shenjiahuhang Co of Rmb6.317 billion, which 
has become the largest infrastructure private REITs project in the market to date.

12.  On  December  7,  2022,  Shangsan  Co,  a  subsidiary  of  the  Company,  entered  into  a  share 
transfer  agreement  with  conditions  with  Commercial  Group,  pursuant  to  which  Shangsan 
Co  will  acquire  15.30%  equity  interests  of  Zheshang  Insurance  at  the  consideration  of 
Rmb790.245  million. As  at  the  date  of  this  report,  the  share  transfer  agreement  has  not 
taken effect.

13.  On December 22, 2022, the Company held its third extraordinary general meeting of 2022 
to  elect  Mr.  YANG  Xudong  as  a  non-executive  Director  and  Mr.  JIN  Chaoyang  ceased 
to  be  a  non-executive  Director,  a  member  of  the  Audit  Committee  and  a  member  of  the 
Remuneration  Committee;  and  to  approve  the  amendment  to  the Articles  of Association, 
in  which  the  original  requirement  of  a  material  acquisition  or  sale  shall  be  passed  by  a 
majority of not less than two-thirds of the Directors was amended to be passed by a simple 
majority of the Directors.

14.  On  December  29,  2022,  the  Board  approved  the  Company  to  operate  and  manage  the 
Lin’an  to  Jiande  Section  of  Linjin  Expressway  (85.5  km)  as  entrusted  by  Hangxuan  Co, 
and the entrustment management agreement was signed on the same date.

15.  On  March  30,  2023,  the  Company  together  with  Zhejiang  Grand  Hotel  entered  into 
an  entrusted  management  agreement  with  Communication  Holding  in  order  to  entrust 
Communication Holding to operate and manage the hotel located at No.595 Yan’an Road, 
Gongshu District, Hangzhou City, held by Zhejiang Grand Hotel.

07

Particulars of Major Road Projects

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
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%
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
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

7
1
1

1
11
1
11

7

5
8
4
8
9

2
5
4

2
0
0

0
2
0
3

1

1
1
2
1
3

0
1
1

1998
1995-1998
1995

1992
1995
1996
2000

2005

2004
2006
2004
2009
2006

2007
2006
2002

6
6
6

5
5
5
8

8

7
9
11
12
9

10
9
8

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

2022 ANNUAL REPORT 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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

 
 
 
 
 
 
 
 
Financial and Operating Highlights

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,

2018
Rmb’000
(Restated)

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

2019
Rmb’000
(Restated)

2020
Rmb’000
(Restated)

2021
Rmb’000

2022
Rmb’000

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

14,898,730
7,542,261
(1,039,051)
6,503,210

3,074,140
479,418

3,243,392
703,781

2,416,395
957,192

4,762,431
1,527,733

5,378,866
1,124,344

70.78
66.67

74.68
72.21

55.64
55.19

109.65
102.50

123.85
117.62

RETURN ON EQUITY (ROE)

ROE

Diluted EPS(Rmb cents)

2018
(Restated)

2019
(Restated)

2020
(Restated)

2021

2022

15.3%

18.2%

10.2%

17.5%

17.4%

Segmental Revenue / 2022

Segmental Net Profit / 2022

1.1%

Other Business

11.5%

Other Business

40.8%

Securities
Business

Toll Road
Business

58.1%

10

26.3%

Securities
Business

Toll Road
Business

62.2%

2022 ANNUAL REPORT 
 
 
 
 
 
 
 
 
 
Revenue / Rmb Million

11,837

12,617

12,452

16,263

14,899

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

2018
(Restated)

2019
(Restated)

2020
(Restated)

2021

2022

Net profit / Rmb Million

3,554

3,947

3,374

6,290

6,503

8,000

6,000

4,000

2,000

0

2018
(Restated)

2019
(Restated)

2020
(Restated)

2021

2022

Basic EPS / Rmb Cents

70.78

74.68

55.64

109.65

123.85

2018
(Restated)

2019
(Restated)

2020
(Restated)

2021

2022

15.3

18.2

17.5

17.4

10.2

140

120

100

80

60

40

20

0

ROE / %

20

15

10

5

0

2018
(Restated)

2019
(Restated)

2020
(Restated)

2021

2022

11

YU Zhihong
Chairman

12

2022 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 

2022.

In  2022,  under  the  impact  of  multiple  unfavorable  factors  such  as  complex  international 

situation, domestic epidemic, high temperature and drought, China intensified its efforts in macro 

control,  achieved  new  results  in  high-quality  development  and  maintained  a  general  stable 

situation  in  society  and  economy. According  to  the  statistics,  total  national  economy  exceeded 

RMB120 trillion in 2022, an increase of 3.0% compared to the previous year. Zhejiang Province, 

where  the  major  business  of  the  Group  is  located,  continued  to  open-up.  New  impetus  grew 

continuously, market prices maintained stable, people’s livelihood was strongly ensured, and the 

GDP grew 3.1% over the previous year.

During  the  Period,  guided  by  keynote  of  “Breaking  bottleneck,  competing  in  performance  and 

dedication,  establishing  model,  standard  and  benchmark”,  the  Group  promoted  various  key 

work in an orderly manner, and presented a good momentum of progress in stability and robust 

potential  in  its  overall  development.  However,  under  the  influence  of  the  recurrent  epidemic 

and  external  macro  pressures,  the  Group’s  core  toll  road  business  recorded  toll  revenue 

of  RMB8,660.33  million,  representing  a  year-on-year  decrease  of  9.9%.  Revenue  from  the 

securities  business  recorded  a  slight  decline,  but  the  development  trend  remains  positive  and 

unchanged  due  to  its  broadly  future  growth  potential.  During  the  Period,  total  revenue  of  the 

Group  decreased  by  8.4%  year  on  year  to  RMB14,898.73  million,  profit  attributable  to  owners 

of  the  Company  increased  by  12.9%  year  on  year  to  RMB5,378.87  million,  and  ROE  (return 

on  equity)  was  17.4%.  The  Board  of  Directors  recommended  a  dividend  of  RMB37.5  cents  per 

share, an indication of the Group’s ability to provide long-term stable shareholder returns.

13

Chairman’s StatementThe  Group  focused  on  the  development  direction  of  “specialization,  market-orientation  and 

digital  transformation”,  innovated  its  main  industry  development  and  made  improvement  on 

an  ongoing  basis.  In  terms  of  digital  reform,  the  Group  continued  to  strengthen  its  digital 

development  capabilities,  completed  intelligent  transformation  of  Shanghai-Hangzhou-Ningbo 
Expressway,  took  the  lead  in  developing  the  “Intelligent  Driving  Forward  (智在行)”  APP  and 
launched  it  at  Zhejiang  International  Intelligent  Transportation  Expo;  developed  diversified 
scenarios  such  as  “Zhejiang  Expressway  Digital  Management  Platform  (浙道雲)”  and 
“Super  Intelligent  Office  System  (智鼎管家)”,  which  provided  strong  support  for  scientific 
decision-making  in  business  operations  and  reducing  the  burden  of  grassroots.  At  the  same 

time,  in  terms  of  capital  operation,  the  Group  successfully  issued  medium-term  notes  of  RMB3 

billion in the interbank market, which continuously utilized low-cost financing channels.

During  the  Period,  the  Russia-Ukraine  conflict  and  the  US  Federal  Reserve’s  interest  rate 

increase  have  had  a  huge  impact  on  the  global  capital  market.  China’s  capital  market  also 

showed  a  poor  performance,  with  the  overall  transaction  activity  decreasing.  In  the  face  of 

multiple  adverse  factors,  Zheshang  Securities  continued  to  optimize  and  adjust  its  business 

layout,  constantly  consolidated  the  core  competitiveness  of  its  business,  steadily  improved  its 

overall market position and outperformed the industry. During the Period, the securities business 

recorded revenue of RMB6,080.38 million, representing a year-on-year decrease of 5.0%.

It  is  also  worth  mentioning  that  the  investment  value  of  the  Group  is  favored  by  renowned 

institutions,  benefiting  from  continuous  and  stable  cash  dividends. At  the  same  time,  financing 

channels  of  the  Group  have  also  been  expanded  further,  and  in  particular,  Shenjiahuhang 

private  REITs  was  successfully  issued  with  a  project  size  of  RMB6,317  million,  which  has 

become the largest infrastructure private REITs project in the market to date.

Everything in the past Year of Tiger is a prologue and the new Year of Rabbit is inspiring. As we 

look  ahead,  the  year  of  2023  is  a  crucial  year  to  carry  out  the  14th  Five-Year  Plan,  where  both 

opportunities  and  challenges  exist.  Only  by  working  together  with  one  mind  can  we  create  new 

achievements.  The  Group  will  continue  to  reform  and  innovate  and  build  up  its  development 

advantages  through  implementation  of  high-quality  and  sustainable  development  concept  to 

bring various work to a new level.

14

2022 ANNUAL REPORTChairman’s StatementThe  business  of  expressway  is  the  mainstay  of  the  Group.  We  will  play  demonstrative  roles 

in  market-oriented  operation,  creation  of  service  brands  and  innovation-driven  development, 

and  strive  to  improve  and  refine  our  main  business,  so  as  to  cultivate  advantages  and 

distinction.  The  Group  will  strive  to  build  a  first-class  level  of  bridge  management  and 

maintenance technology innovation hub, and actively explore new profit growth points. In terms 

of  capital  operations,  the  Group  will  take  the  Hanghui  Expressway  public  REITs  platform  as 

a  breakthrough,  continue  to  study  the  innovative  ways  to  improve  the  securitization  level  of 

assets, and focus on innovative low-cost financing channels, improve the debt structure, reduce 

financial costs, and make every effort to maximize the equity value.

On  behalf  of  the  Board,  I  would  like  to  thank  our  shareholders,  business  partners,  customers, 

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

hard  to  dauntlessly  and  persistently  move  forward  with  tenacious  perseverance  to  realize  the 

mutual development of the Company and employees, and create a new prospect of high-quality 

development, thus creating greater value for our shareholders.

YU Zhihong
Chairman

March 27, 2023

15

YUAN YingjieExecutive Director and General ManagerBUSINESS REVIEW
In  2022,  with  the  combined  impact  of  Russia-Ukraine  conflict,  obstructed  supply  chain  and 

high  inflation,  the  global  economic  growth  slowed  down  significantly.  The  reoccurrence  of  the 

domestic  epidemic  and  the  downward  real  estate  cycle  led  to  more  pressures  of  contracted 

demand,  disrupted  supply  and  weakening  expectation.  Facing  a  number  of  unexpected 

challenges,  the  government  efficiently  coordinated  epidemic  prevention  and  control  with 

economic  and  social  development,  by  optimizing  and  adjusting  such  measures  according  to 

the  circumstances  at  different  times.  In  2022,  the  national  economy  gradually  recovered  after 

short-term  fluctuations,  with  a  year-on-year  increase  of  3.0%  in  the  annual  GDP.  In  order  to 

effectively  cope  with  the  epidemic,  Zhejiang  Province  has  implemented  a  series  of  policies  to 

help  enterprises  overcome  difficulties,  so  as  to  facilitate  the  economy  to  stabilize  generally.  In 

2022, the Province’s GDP increased by 3.1% year-on-year.

During  the  Period,  toll  revenue  of  the  Group’s  expressways  showed  a  significant  year-on-year 

decrease due to the resurgence of the epidemic, while the overall revenue of securities business 

declined  slightly  due  to  the  impact  of  capital  market  condition.  During  the  Period,  total  revenue 

of the Group was Rmb14,898.73 million, representing a decrease of 8.4% year-on-year, of which 

Rmb8,660.33  million  was  generated  by  the  nine  major  expressways  operated  by  the  Group 

(2021:  Rmb9,607.20  million),  representing  58.1%  of  total  revenue.  Revenue  generated  by  the 

securities  business  was  Rmb6,080.38  million  (2021:  Rmb6,403.02  million),  representing  40.8% 

of the total revenue.

1717

Management Discussion and AnalysisConstantly Improving Market- Oriented Operation Capabilities, Providing Long-term Stable Value Returns to ShareholdersGuided by keynote of “Breaking bottleneck, competing in performance and dedication, establishing model, standard and benchmark”, the Group promoted various key work in an orderly manner, constantly improved market-oriented operation capabilities, and presented a good momentum of progress in stability and robust potential in its overall development. The Board of Directors recommended a dividend of RMB37.5 cents per share, an indication of the Group’s ability to provide long-term stable shareholder returns.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
Public-Private Partnership

2022
Rmb’000

8,660,333
3,971,714
984,737
466,326
593,918
134,512
619,166
827,693
672,645
389,622
6,080,383
3,689,947
2,390,436
158,014
88,143
69,871

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

Total revenue

14,898,730

16,262,601

% change

-9.9%
-7.4%
-19.6%
-14.0%
-7.4%
-11.1%
-20.4%
-11.4%
-6.4%
18.6%
-5.0%
-11.2%
6.4%
-37.4%
-22.4%
-49.7%

-8.4%

Toll Road Operations
During  the  Period,  as  downward  pressure  on  the  PRC  economy  increased,  the  overall  traffic 

volume  and  toll  revenue  of  the  Group’s  expressways  decreased  significantly  year-on-year.  The 

performance varied among different sections of the Group’s expressways due to various factors.

With  policies  to  pay  the  tolls  by  relevant  local  governments,  Class-1  passenger  vehicles  with 

ETC  registration  were  able  to  travel  for  free  on  the  Jindong  Section  of  the  Ningbo-Jinhua 

Expressway,  Tongxiang  West  to  Leidian  Section  of  the  Shenjiahuhang  Expressway,  and  the 

Haining  Section  of  the  Shanghai-Hangzhou  Expressway,  thereby  spurring  the  passenger 

vehicles  traffic  volume  growth  on  relevant  expressways.  Since  July  1,  2022,  the  ban  on 

semi-trailers has been terminated on the East- and West-Route of Hangzhou Ring Expressway, 

which  has  contributed  to  the  semi-trailers  traffic  volume  growth  on  the  relevant  sections  of  the 

Shanghai-Hangzhou-Ningbo Expressway and the Shenjiahuhang Expressway.

1919

 
 
 
 
 
 
 
 
Continuously Strengthen Digital Development Capabilities and Striving to Expand Low-cost Financing ChannelsThe Group focused on the development direction of “specialization, market-orientation and digital transformation”, innovated its main industry development and made improvement on an ongoing basis. In terms of digital reform, the Group continued to strengthen its digital development capabilities, completed intelligent transformation of Shanghai-Hangzhou-Ningbo Expressway. At the same time, in terms of capital operation, the Group successfully issued RMB6.317 billion private REITs in respect of Shenjiahuhang Expressway, which further revitalized asset inventories and broadened financing channels.However, the reoccurrence of the epidemic and strict epidemic prevention and control measures 

had  a  significant  adverse  impact  on  the  Group’s  toll  operation.  The  sporadic  outbreaks  of 

the  epidemic  in  Shanghai,  Zhejiang  Province  and  surrounding  region  since  March  2022  had 

a  serious  impact  on  the  traffic  volume  of  the  Group’s  expressways,  as  relevant  epidemic 

prevention  authorities  have  further  intensified  the  control  of  the  epidemic.  In  particular,  the 

traffic  volume  of  Shanghai-Hangzhou  Expressway,  Zhajiasu  Expressway  and  Shenjiahuhang 

Expressway saw a substantial year-on-year decrease as the above expressways are located in 

epidemic-affected  areas  such  as  Shanghai  and  Jiaxing.  Meanwhile,  since  the  public  was  less 

keen  on  travel  under  the  epidemic,  the  traffic  volume  of  Zhoushan  Bay  Bridge  and  Huihang 

Expressway  had  a  considerable  year-on-year  decrease.  Since  May  2022,  with  relented  impact 

of the epidemic, the traffic volume of expressways of the Group has gradually recovered, though 

the  recovery  process  has  been  impeded  by  sporadic  outbreaks  of  the  epidemic  from  time  to 

time.  During  the  period,  the  traffic  volume  of  Ningbo-Jinhua  Expressway  had  a  significant 

decrease  due  to  the  outbreak  of  the  epidemic  in  Jinhua  in  August.  Even  as  the  epidemic 

prevention  and  control  policy  has  been  fully  eased  up  since  December  2022,  the  public  travel 

demand  has  dropped  notably  due  to  fear  of  infection,  resulting  in  a  sharp  drop  in  the  traffic 

volume of expressways of the Group once again.

In  addition,  the  changes  in  road  network  and  adjustment  of  tolling  policy  also  had  a 

negative  impact  on  the  traffic  volume  and  toll  revenue  of  the  relevant  expressways. 

The  Hangzhou-Taizhou  High-speed  Railway  opened  on  January  8,  2022,  and  the 

Hangzhou-Shaoxing-Taizhou  Expressway  fully  opened  to  traffic  on  February  11,  2022,  leading 

to  a  substantial  diversion  of  traffic  volume  on  Shangsan  Expressway. The  discount  rate  of  tolls 

to  15%  for  trucks  from  Zhejiang  Province  with  ETC  registrations  has  been  implemented  since 

January  1,  2022  on  Zhajiasu  Expressway,  which  has  adversely  affected  toll  revenue.  Since  the 

fourth  quarter  of  2022,  in  addition  to  continuing  to  implement  the  existing  toll  reduction  policies 

for toll roads nationwide, truck tolls have been reduced by another 10% across the board, which 

had a negative impact on the toll revenue of the Group to some extent.

2121

Steadily Improving in Complicated Environment by Optimizing the Business Configuration of Zheshang SecuritiesIn the face of multiple adverse factors, Zheshang Securities continued to optimize and adjust its business configuration, constantly consolidated the core competitiveness of its business, steadily improved its overall market position and outperformed the industry.Looking  back  at  2022,  the  Group  actively  responded  to  the  reoccurrence  of  the  epidemic,  and 

consistently enhanced its market-oriented operation capability to boost the steady development 

of  its  toll  road  operation.  In  terms  of  operation  and  management,  the  Group  completed  the 

intelligent  transformation  of  Shanghai-Hangzhou-Ningbo  Expressway  and  continued  to  improve 

its  capability  of  digital  reform;  intensified  the  construction  of  intelligent  toll  stations,  remediated 

congestions  and  integrated  construction  to  effectively  improve  the  operation  efficiency  of  road 

network; and promoted differentiated toll collection solutions, “Expressway + Tourism” and other 

marketing  programs  to  further  enhance  the  measures  to  attract  more  traffic  onto  the  Group’s 

expressways. Regarding investment and financing, the Group implemented the preliminary work 

to ensure that the reconstruction and expansion of its expressways are methodically advanced; 

successfully issued RMB6.317 billion private REITs in respect of Shenjiahuhang Expressway to 

further revitalize its asset inventories; and successfully issued RMB3 billion medium-term notes 

to continuously utilize financing channels at low costs.

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  Expressway  and  the 

50km Zhajiasu Expressway was Rmb8,660.33 million.

2323

Implementing the High-quality and Sustainable Development Concept and Making Effort to Maximize the Equity ValueThe Group will continue to reform and innovate and build up its development advantages through implementation of high-quality and sustainable development concept to bring various work to a new level. The Group will take the Hanghui Expressway public REITs platform as a breakthrough, continue to study the innovative ways to improve the securitization level of assets, and focus on innovative low-cost financing channels, and make every effort to maximize the equity value.During  the  Period,  the  daily  average  traffic  volume  in  full-trip  equivalents,  toll  revenue  and  the 

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

The Group’s Expressway Sections

Daily Average 
Traffic Volume 
(in Full-Trip 
Equivalents)

year-on-year 
change

Toll Revenue

(Rmb million)

year-on-year 
change

Shanghai-Hangzhou-Ningbo Expressway

67,314

-8.94%

3,971.71

-7.4%

– Shanghai-Hangzhou Section

59,241

-17.65%

– Hangzhou-Ningbo Section

73,209

-2.88%

Shangsan Expressway

27,383

-19.14%

984.74

-19.6%

Jinhua Section, Ningbo-Jinhua  

Expressway

26,698

-13.58%

466.33

-14.0%

Hanghui Expressway

23,152

-4.18%

593.92

-7.4%

Huihang Expressway

8,629

-7.12%

134.51

-11.1%

Shenjiahuhang Expressway

29,958

-13.23%

619.17

-20.4%

Zhoushan Bay Bridge

20,349

-8.26%

827.69

-11.4%

LongLiLiLong Expressways

12,947

-8.02%

672.65

-6.4%

Zhajiasu Expressway

31,470

-16.99%

389.62

18.6%

Note:  1. 

Zhajiasu  Expressway  was  consolidated  into  the  Group’s  consolidated  financial  statements  from  May 

2021.  The  year-on-year  change  of  toll  revenue  of  Zhajiasu  Expressway  in  the  above  table  is  calculated 

based on the figures from May to December 2021.

2. 

Upon  the  issuance  of  private  REITs,  the  entire  equity  interests  in  Shenjiahuhang  Co  were  transferred 

to  the  asset-backed  special  program.  Shenjiahuhang  Co  has  no  longer  been  included  in  the  scope 

of  the  consolidated  financial  statements  of  the  Group  since  December  2,  2022.  The  toll  revenue  of 

Shenjiahuhang Expressway in the above table is calculated based on the figures from January 1, 2022 to 

December 2, 2022.

2525

 
 
 
 
 
 
Securities Business
In  2022,  the  evolving  Russia-Ukraine  conflict,  the  subsequent  energy  crisis  in  Europe  and  the 

continuous interest rate hikes by the US Federal Reserve had a significant impact on the global 

capital  market.  China’s  economy  was  under  downward  pressure  due  to  the  reoccurrence  of 

the  epidemic.  Both  internal  and  external  factors  led  to  sluggish  domestic  capital  market,  and 

the  overall  trading  was  less  active,  with  a  decrease  in  major  indices  to  various  extents.  Facing 

multiple  unfavorable  factors,  and  by  closely  focusing  on  annual  business  objectives,  Zheshang 

Securities  has  constantly  optimized  its  business  configuration  and  constantly  improved  the 

level  of  its  compliance  risk  control,  so  that  all  businesses  have  developed  steadily  on  the 

whole.  However,  due  to  drastic  fluctuations  in  the  capital  market,  the  revenue  from  securities 

investment  business  and  investment  banking  business  showed  a  considerable  decrease, 

resulting in a decline in the overall performance of Zheshang Securities.

During  the  Period,  Zheshang  Securities  achieved  certain  objectives  in  capital  operation.  The 

mixed  ownership  reform  plan  of  Zheshang  Futures  Co.,  Ltd.  was  completed  on  schedule, 

bringing  in  strategic  investors  by  way  of  capital  increase,  raising  a  total  of  approximately 

Rmb1.73  billion.  The  successful  issuance  of  Rmb7.0  billion  convertible  bonds  will  effectively 

support the development of capital-driven business.

During  the  Period,  Zheshang  Securities  recorded  a  total  revenue  of  Rmb6,080.38  million, 

a  decrease  of  5.0%  year-on-year,  of  which,  commission  and  fee  income  decreased  11.2% 

year-on-year  to  Rmb3,689.95  million,  and  interest  income  from  the  securities  business  was 

Rmb2,390.43  million,  an  increase  of  6.4%  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 Rmb679.73 million (2021: Rmb1,835.56 million).

Hotel and Catering Business
In  2022,  as  the  domestic  epidemic  resurged  repeatedly,  and  the  demand  for  business  travel 

and offline consumption was severely suppressed, the operating results of the two hotels of the 

Group continued to be under pressure.

26

2022 ANNUAL REPORTManagement Discussion and AnalysisZhejiang  Grand  Hotel,  owned  by  Zhejiang  Grand  Hotel  Limited  (a  100%  owned  subsidiary  of 

the  Company),  recorded  revenue  of  Rmb23.49  million  for  the  Period  (2021:  Rmb45.45  million), 

representing  a  significant  decrease  as  compared  with  the  same  period  of  last  year,  mainly  due 

to the impact of the epidemic as well as the business renovation implemented during the Period, 

leading to the inability to carry out certain business operations normally for the time being.

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

subsidiary  of  the  Company),  recorded  revenue  of  Rmb64.66  million  for  the  Period  (2021: 

Rmb68.08 million).

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

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

During  the  Period,  the  average  daily  traffic  volume  in  full-trip  equivalents  was  24,654, 

representing  a  decrease  of  9.03%  year-on-year.  Toll  revenue  was  Rmb469.88  million  (2021: 

Rmb504.47  million).  During  the  Period,  the  joint  venture  recorded  a  net  profit  of  Rmb99.54 

million (2021: Rmb112.50 million).

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

99km HangNing Expressway. During the Period, the associate company recorded a net profit of 

Rmb207.84 million (February to December 2021: Rmb188.89 million).

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  Rmb850.88  million  (2021: 

Rmb890.25 million).

Yangtze  United  Financial  Leasing  Co.,  Ltd.  (a  10.61%  owned  associate  of  the  Company)  is 

primarily  engaged  in  the  financial  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 Rmb579.46 million (2021: Rmb440.11 million).

2727

Shanghai  Rural  Commercial  Bank  Co.,  Ltd.  (a  4.86%  owned  associate  of  the  Company)  is 

primarily engaged in the commercial banking business, including deposits, short-, medium-, and 

long-term  loans,  domestic  and  overseas  settlements  and  other  businesses  that  are  approved 

by  the  China  Banking  and  Insurance  Regulatory  Commission. As  at  the  date  of  this  report,  the 

associate company has not yet released its audited financial data for the year 2022.

Zhejiang  Zheshang  Transform  and  Upgrade  Fund  of  Funds  Partnership  (Limited  Partnership) 

(a  24.99%  owned  associate  of  the  Company)  is  primarily  engaged  in  equity  investments, 

investment management and investment consultation. During the Period, the share of net loss of 

the associate attributable to the Company was Rmb40.99 million (2021: net profit of Rmb178.44 

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  Rmb5,378.87  million, 

representing  an  increase  of  12.9%  year-on-year,  basic  earnings  per  share  was  Rmb123.85 

cents,  representing  an  increase  of  12.9%  year-on-year,  diluted  earnings  per  share  was 

Rmb117.62 cents, representing an increase of 14.8% year-on-year, and return on owners’ equity 

was 17.4%, representing a decrease of 0.6% year-on-year.

Liquidity and financial resources
As  at  December  31,  2022,  current  assets  of  the  Group  amounted  to  Rmb146,128.78  million 

in  aggregate  (December  31,  2021:  Rmb130,843.32  million),  of  which  bank  balances,  clearing 

settlement  fund,  deposits  and  cash  accounted  for  16.6%  (December  31,  2021:  13.5%),  bank 

balances  and  clearing  settlement  fund  held  on  behalf  of  customers  accounted  for  33.4% 

(December  31,  2021:  29.3%),  financial  assets  at  FVTPL  accounted  for  30.0%  (December  31, 

2021:  34.7%)  and  loans  to  customers  arising  from  margin  financing  business  accounted  for 

12.0%  (December  31,  2021:  14.8%).  The  current  ratio  (current  assets  over  current  liabilities) 

of  the  Group  as  at  December  31,  2022  was  1.40  (December  31,  2021:  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 1.80 (December 31, 2021: 1.60).

28

2022 ANNUAL REPORTManagement Discussion and AnalysisThe  amount  of  financial  assets  at  FVTPL  included  in  current  assets  of  the  Group  as  at 

December  31,  2022  was  Rmb43,789.94  million  (December  31,  2021:  Rmb45,445.71  million),  of 

which 75.5% was invested in bonds, 4.3% was invested in stocks, 10.0% was invested in equity 

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

During  the  Period,  net  cash  from  the  Group’s  operating  activities  amounted  to  Rmb7,641.37 

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,

2022
Rmb’000

2021
Rmb’000

23,917,236 
70,179 
203,632 
43,789,944

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

67,980,991 

63,145,621

2929

 
 
 
 
 
 
 
 
 
Borrowings and solvency
As  at  December  31,  2022,  total  liabilities  of  the  Group  amounted  to  Rmb136,195.86  million 

(December  31,  2021:  Rmb131,873.66  million),  of  which  12.6%  was  bank  and  other  borrowings, 

2.6%  was  short-term  financing  note,  17.1%  was  bonds  payable,  17.5%  was  financial  assets 

sold under repurchase agreements and 35.6% was accounts payable to customers arising from 

securities business.

As  at  December  31,  2022,  total  interest-bearing  borrowings  of  the  Group  amounted  to 

Rmb49,696.86  million,  representing  a  decrease  of  8.1%  compared  to  that  as  at  December  31, 

2021.  The  borrowings  comprised  outstanding  balances  of  domestic  commercial  bank  loans  of 

Rmb13,156.85  million,  borrowings  from  other  domestic  financial  institutions  of  Rmb2,260.58 

million,  borrowings  from  other  domestic  institutions  of  Rmb1,692.76  million,  short-term 

financing  note  of  Rmb2,511.35  million,  beneficial  certificates  of  Rmb2,102.29  million,  mid-term 

notes  of  Rmb3,048.45  million,  subordinated  bonds  of  Rmb6,479.32  million,  corporate  bonds 

of  Rmb10,912.18  million,  asset  backed  securities  of  Rmb1,821.01  million,  convertible  bond 

denominated  in  Rmb  is  Rmb3,923.67  million,  and  convertible  bond  denominated  in  Euro  that 

equivalents to Rmb1,788.40 million. Of the interest-bearing borrowings, 68.6% was not payable 

within one year.

As at December 31, 2022, the Group’s borrowings from domestic commercial banks bore annual 

fixed interest rates ranged from 3.30% to 7.08%, annual floating interest rates ranged from 3.0% 

to 4.7%, the annual fixed interest rates of other domestic institutions were 3.0% and 4.5%, and 

the  annual  fixed  interest  rates  of  a  domestic  financial  institution  ranged  from  3.5%  to  4.13%, 

the annual floating interest rate was 4.13%. As at December 31, 2022, the annual fixed interest 

rates  for  short-term  financing  notes  were  1.83%  and  2.50%.  The  annual  floating  interest  rates 

of  beneficial  certificates  ranged  from  1.9%  to  13.0%,  the  annual  fixed  rate  is  4.1%. The  annual 

fixed  interest  rate  for  mid-term  notes  were  2.8%  and  2.97%.  The  annual  fixed  annual  interest 

rates  for  subordinated  bonds  ranged  from  3.5%  to  4.18%.  The  annual  fixed  interest  rate  for 

corporate  bond  ranged  from  1.638%  to  3.49%.  The  annual  coupon  rate  for  convertible  bond 

denominated  in  Rmb  was  0.2%.  The  annual  coupon  rate  for  convertible  bond  denominated  in 

Euro was nil.

30

2022 ANNUAL REPORTManagement Discussion and AnalysisFloating 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 domestic institutions
Short-term financing notes
Beneficial Certificates
Long-term Beneficial Certificates
Subordinated bonds
Corporate bonds
Mid-term notes
Convertible bonds

Gross 
amount
Rmb’000

Maturity Profile
Within 
1 year
Rmb’000

2-5 years 
inclusive
Rmb’000

Beyond 
5 years
Rmb’000

12,311,486 

1,588,030 

5,006,092 

5,717,364 

1,017,790 
1,010,460 
1,821,006 

92,232 
1,010,460 
–

412,848 
–
–

512,710 
–
1,821,006 

845,360 

845,360 

–

–

1,242,794 
1,692,760 
2,511,352 
45,213 
1,046,616 
6,479,319 
10,912,176 
3,048,452 
5,712,073 

696,794 
1,692,760 
2,511,352 
45,213 
1,046,616 
3,379,319 
2,643,860 
48,452 
4,719 

546,000 
–
–
–
–
3,100,000 
8,268,316 
3,000,000 
1,791,392 

–
–
–
–
–
–
–
–
3,915,962 

Total as at December 31, 2022

49,696,857 

15,605,167 

22,124,648 

11,967,042 

Total as at December 31, 2021

54,048,372 

20,712,670 

21,772,917 

11,562,785 

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

Rmb1,770.01  million  and  Rmb9,312.27  million,  respectively.  The  interest  cover  ratio  (profit 

before  interest  and  tax  over  interest  expenses)  stood  at  5.3  (corresponding  period  of  2021:  5.2 

times).

Profit before interest and tax
Interest expenses
Interest cover ratio

2022
Rmb’000

9,312,269 
1,770,008 
5.3 

2021
Rmb’000

10,106,658 
1,942,533 
5.2 

3131

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
As at December 31, 2022, the asset-liability ratio (total liabilities over total assets) of the Group 

was 73.1% (December 31, 2021: 74.8%). 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  63.7%  (December  31, 

2021: 68.0%).

Capital structure
As at December 31, 2022, the Group had Rmb50,209.66 million in total equity, Rmb106,954.98 

million in fixed-rate liabilities, Rmb16,160.74 million in floating-rate liabilities, and Rmb13,080.14 

million in interest-free liabilities, representing 26.9%, 57.4%, 8.7% and 7.0% 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 174.8% 

as at December 31, 2022 (December 31, 2021: 211.2%).

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

As at December 31, 2022

As at December 31, 2021

Rmb’000

%

Rmb’000

50,209,662 
106,954,982 
16,160,742 
13,080,138 

26.9%
57.4%
8.7%
7.0%

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

%

25.2%
56.8%
10.3%
7.7%

Total 

186,405,524 

100.0%

176,296,682 

100.0%

Long-term interest-bearing liabilities

34,416,042 

18.5%

33,695,918 

19.1%

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

174.8%
68.5%
73.1%
63.7%

211.2%
75.9%
74.8%
68.0%

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.

32

2022 ANNUAL REPORTManagement Discussion and Analysis 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Capital expenditure commitments and utilization
During  the  Period,  capital  expenditure  of  the  Group  totaled  Rmb1,711.94  million.  Amongst 
the  total  capital  expenditure  of  the  Group,  Rmb80.00  million  was  incurred  for  acquiring  equity 
investments,  Rmb140.44  million  was  incurred  for  acquisition  and  construction  of  properties 
and  ancillary  facilities,  and  Rmb1,491.50  million  was  incurred  for  purchase  and  construction  of 
equipment and facilities.

As  at  December  31,  2022,  the  capital  expenditure  committed  by  the  Group  amounted  to 
Rmb5,730.97  million  in  total.  Amongst  the  remaining  balance  of  total  capital  expenditure 
committed  by  the  Group,  Rmb860.25  million  will  be  used  for  acquiring  equity  investments, 
Rmb1,156.29  million  will  be  used  for  acquisition  and  construction  of  properties,  Rmb1,214.43 
million  for  acquisition  and  construction  of  equipment,  facilities  and  ancillary  facilities, 
Rmb2,500.00 million for reconstruction and expansion projects of existing expressways.

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,  Rmb230.00  million  of  the  bank  loans  had  been  repaid. As  at  December  31, 
2022, the remaining bank loan balance was Rmb643.00 million.

Zhejiang Zhoushan Bay Bridge Co., Ltd., a subsidiary of the Company, pledged their rights of toll 
on expressway for their bank borrowing, and as at December 31, 2022, the remaining bank loan 
balance was Rmb5,721.75 million.

Deqing County De’an Highway Construction Co., Ltd., a subsidiary of the Company, pledged its 
trade receivables for its bank borrowing, and as at December 31, 2022, the remaining bank loan 
balance was Rmb552.62 million.

Zhejiang  LongLiLiLong  Expressway  Co.,  Ltd.,  a  subsidiary  of  the  Company,  pledged  its  right 
of  toll  on  expressway  for  its  bank  and  other  borrowing,  and  as  at  December  31,  2022,  the 
remaining bank and other borrowing balance was Rmb4,639.56 million.

3333

Jiaxing  Zhajiasu  Expressway  Co.,  Ltd.,  a  subsidiary  of  the  Company,  pledged  its  right  of  toll 
on  expressway  for  its  bank  borrowing,  and  as  at  December  31,  2022,  the  remaining  bank  loan 
balance was Rmb1,519.92 million.

Except  for  the  above,  as  at  December  31,  2022,  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;  and  (iv)  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.

OUTLOOK
Looking  forward  to  2023,  the  Russia-Ukraine  conflict  is  not  expected  to  end  soon,  and  it 
is  uncertain  whether  China-US  relations  can  develop  steadily.  The  state  of  global  trade  is 
becoming  grimmer,  with  rising  stagflation  risk  for  the  world  economy.  Chinese  economy  will 
continue  to  face  external  uncertainties  and  instability.  However,  with  the  continued  optimization 
of  epidemic  prevention  and  control  policies  in  China,  the  impact  of  the  epidemic  on  Chinese 
economy will be significantly reduced, and the production and living order will resume at a faster 
pace.  In  addition,  as  the  policy  to  stabilize  economy  growth  continues  to  take  effect,  Chinese 
economy  is  expected  to  recover  steadily  in  2023.  The  overall  traffic  volume  and  toll  revenue 
of  expressways  of  the  Group  are  expected  to  achieve  a  higher  growth  rate  due  to  general 
improvement in economy and low base effect.

34

2022 ANNUAL REPORTManagement Discussion and AnalysisThe  Group  will  focus  more  on  market-oriented  operation  of  its  core  expressway  business, 

and  deepen  reform  and  innovation,  so  as  to  build  a  standard-bearer  enterprise  based  on 

professionalism,  market-orientation  and  digital-transformation.  It  will  continue  to  strengthen 

the  management  of  congestion  on  road  sections  with  heavy  traffic  flows,  and  focus  on 

deepening  road  condition  improvement  and  environment  management  of  commuting  roads 

for  the  Hangzhou Asian  Games,  constantly  improving  its  expertise  to  ensure  safe  and  smooth 

traffic  flow.  The  Group  will  actively  explore  differentiated  toll  collection  modes,  and  exploit 

various  “Expressway+”  marketing  projects  such  as  new  energy  vehicles  and  coordinating  with 

neighboring  scenic  spots,  to  persistently  enhance  its  market-oriented  development  capabilities. 

In  addition,  it  will  build  a  digital-based  platform  of  “Super  Intelligent-Zhejiang  Expressway”,  and 

accelerate  the  physical  operation  of  intelligent  expressways,  to  continuously  enhance  the  level 

of digital technology innovation.

In  2023,  with  the  full  implementation  of  registration-based  IPO  system  for  share  issuance  and 

further  deepening  of  reform  and  opening  up  of  the  capital  market,  the  securities  business  will 

face  new  opportunities  and  challenges.  Zheshang  Securities  will  speed  up  the  cultivation  and 

recruiting  of  investment  banking  professionals  and  teams,  and  fully  improve  the  production 

capacity  of  investment  banking  business.  It  will  also  accelerate  customer  development  from 

various  channels,  and  advance  the  transformation  and  development  of  traditional  brokerage 

business.  In  addition,  Zheshang  Securities  will  further  diversify  investment  products  and 

innovate  investment  methods,  to  fully  improve  the  stable  profitability  of  securities  investment 

business.  It  will  construct  a  coordinated  business  development  system  at  a  faster  pace,  to 

facilitate the company to steadily enter top tier in the industry.

In  the  face  of  the  complex  and  volatile  domestic  and  international  circumstances,  the  Group 

will  adhere  to  market-orientation  and  continue  to  strengthen  its  expressway  business  and 

optimize  its  securities  and  finance  business  leveraging  on  its  internal  resource  advantage. The 

management  will  thoroughly  observe  the  changes  in  the  market  environment  and  the  industry 

development  trend,  and  by  fully  leveraging  on  the  functions  of  the  listing  platform,  actively 

research  and  innovate  the  financing  channels  in  the  capital  market.  The  Company  will  explore 

new  opportunities  of  market-based  mergers  and  acquisitions  of  expressways  to  continuously 

expand  its  core  business,  and  intensify  the  development  and  utilization  of  resources  along 

expressways  to  promote  steady  expansion  of  related  industries.  It  will  also  make  every  effort 

to  advance  the  reconstruction  and  expansion  of  expressways,  facilitating  the  sustainable 

development of its core expressway business.

3535

HUMAN RESOURCES
In  2022,  the  Group’s  human  resources  management  focused  on  key  reform  projects  on 

organization,  team  and  mechanism,  and  strived  to  give  full  play  to  the  driving  and  guiding 

role  of  cadres  and  talents  in  strategy  implementation,  business  development,  mechanism 

innovation and shaping of capabilities to provide strong organizational and team support for the 

transformation and upgrading of the Company.

During  the  Period,  the  Group  developed  and  issued  the  Five-Year  Action  Plan  for  Talent 

Development  and  the  Action  Plan  for  Deepening  Reform  in  2022,  step-by-step  advancing 

the  optimization  of  organizational  structure  and  functions,  and  further  enhancing  top-level 

human  resources  planning.  It  continued  to  deepen  the  internal  income  allocation  reform  and 

authorization  allocation  mechanism,  focusing  on  the  combination  of  process  evaluation  and 

result  evaluation  as  well  as  short-term  evaluation  and  long-term  evaluation,  and  continuously 

strived  to  strengthen  the  market-based  salary  allocation.  The  Group  has  a  clear  selection 

and  employment  orientation,  boldly  selecting  outstanding  young  cadres  and  increasing  the 

competitive  selection  of  cadres.  It  increased  the  efforts  in  recruitment  of  urgently-needed 

professionals  and  enhanced  employer  brand  value  to  provide  support  for  organizational  value 

growth  and  talent  development.  Centering  on  digital  transformation,  leadership  enhancement 

and  full  knowledge  empowerment,  the  Group  built  an  all-round  and  multi-level  training  system, 

boosting  the  construction  of  a  learning-oriented  organization  and  continuously  improving  the 

integrated skills of employees.

As at December 31, 2022, there were 9,143 employees within the Group, amongst whom 4,175 

mainly  worked  in  the  related  positions  of  the  toll  road  operation  business  and  4,968  worked  in 

the related positions of the securities business.

36

2022 ANNUAL REPORTManagement Discussion and AnalysisDISCLOSURE RELATING TO TCFD
The  Group  has  been  a  long-term  supporter  of  sustainable  development,  and  is  committed 

to  addressing  climate  change.  For  information  on  the  Company’s  performance  in  addressing 

climate-related  issues,  please  refer  to  “Climate  Change”  in  Chapter  “Environment”  of  the 

Company’s 2022 Environmental, Social and Governance Report.

The  Company  is  made  aware  of  its  responsibility  to  make  climate-related  financial  disclosures 

consistent  with  the  Recommendations  and  Recommended  Disclosures  of  the  Taskforce  on 

Climate-related  Financial  Disclosures  (TCFD),  which  is  a  new  requirement  for  standard  listed 

companies  on  the  London  Stock  Exchange  in  accordance  with  the  procedures  set  out  in  the 
Financial Conduct Authority of the United Kingdom (the “FCA”) Listing Rules.

At  the  same  time,  the  Company  is  also  assessing  whether  the  current  volume  of  trading  of  the 

Company’s shares on the London Stock Exchange justifies the costs related to such listing and 

admission to trading.

If  the  Directors  determine  that  it  is  in  the  best  interests  of  all  shareholders  to  aggregate 

transactions on the Hong Kong Exchange only, any delisting of the Company’s shares from the 

London Stock Exchange will be subject to engagement with shareholders, consultation with the 

FCA and in accordance with the procedures set out in the FCA’s Listing Rules.

37

TOLL ROAD BUSINESS RISKS

Economic Environment
Currently,  the  Russia-Ukraine  conflict  is  still  evolving,  and  the  energy  crisis  in  Europe  is  still 

severe.  Whether  Sino-US  relations  can  improve  is  still  full  of  uncertainty.  The  global  political 

and  economic  landscape  is  undergoing  profound  changes,  and  the  risk  of  stagflation  in  the 

world  economy  is  rising. Although  the  epidemic  prevention  and  control  measures  have  relaxed 

in China, the foundation of economic recovery is still not solid, and there is still great pressures 

from  shrinking  demand,  interrupted  supply  and  weaker  expectations.  The  sustained  recovery 

of  China’s  economy  still  faces  multiple  risks  and  challenges  arising  from  both  internal  and 

external  sources.  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 continuous 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  continuous  negative  impact  on  the  passenger  vehicles 

traffic  volume  of  the  Shangsan  Expressway  of  the  Group.  Traffic  control  measures  may  be 

implemented  in  Hangzhou  and  surrounding  expressways  during  the  Hangzhou  Asian  Games, 

which will adversely affect the traffic flow on the Group’s relevant expressways. Therefore, there 

is no assurance that the toll revenue of the Group’s expressways will not be negatively affected 

in the future.

38

2022 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. From February 3, 2023 to August 3, 
2023, the state-owned expressway sections within the province will offer a 15% discount on tolls 
for  Class-3  and  Class-4  passenger  vehicles  with  ETC  in-vehicle  device.  In  February  2023,  the 
Ministry of Transport of the PRC announced the Key Areas of Legal System on Transportation in 
2023, indicating that it would actively coordinate with the legislative review of the Administrative 
Regulations  on  Toll  Roads.  Accordingly,  there  are  certain  possibilities  of  policy  revisions  and 
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  5,  52  and  53  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  55  to  66,  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.

During the Period and up to the date of this report, 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 27, 2023

40

2022 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 to the Listing Rules (available at 

www.hkex.com.hk).

During  the  Period,  the  Company  has  complied  with  all  mandatory  disclosure  requirements  and 

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 to the 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  to  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 

(General Manager)

The non-executive Directors of the Company during the Period were:

Mr. YANG Xudong 
Mr. JIN Chaoyang 
Mr. FAN Ye

Mr. HUANG Jianzhang

(Appointed, with effect from December 22, 2022)
(Resigned, with effect from December 22, 2022)

41

Corporate Governance ReportThe 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 13 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)
Mr. JIN Chaoyang (Resigned)
Mr. YANG Xudong
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

5/13
7/13
5/13
2/12

7/13
3/13
7/13
7/13
1/13

2/13

2/13
5/12

4/13

6/13

6/13
6/13
6/13
5/12
1/1
6/13
6/13
6/13
6/13
6/13

During the Period, the Company held four shareholders’ general meetings, one H shareholders’ 
class meeting and one domestic shareholders’ class meeting. 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.  
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)
Mr. JIN Chaoyang (Resigned)
Mr. YANG Xudong
Mr. FAN Ye
Mr. HUANG Jianzhang
Mr. PEI Ker-Wei
Ms. LEE Wai Tsang, Rosa
Mr. CHEN Bin

42

Attendance

6/6
6/6
6/6
6/6

6/6
6/6
1/6
1/6
6/6

2022 ANNUAL REPORTCorporate Governance Report 
 
 
 
 
 
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.

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.

43

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.

In 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. 

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.

The  Company  has  formulated  the  “Rules  of  Procedure  for  the  Board  of  Directors”  and  the 

“Procedure  for  Seeking  Independent  Professional  Advice  by  Directors”  to  ensure  that  the 

directors  have  the  right  and  channels  to  seek  independent  professional  advice.  Meanwhile,  the 

opinions  of  each  director  are  respected  and  the  directors  are  allowed  to  retain  their  individual 

opinions,  thus  helping  the  Board  to  obtain  independent  views  and  opinions.  During  the  Period, 

the above mechanisms were implemented effectively.

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

the  General  Manager  of  the  Company.  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.

44

2022 ANNUAL REPORTCorporate Governance ReportSPECIAL 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, Mr. JIN Chaoyang resigned from the positions as a non-executive Director, a 

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

on December 22, 2022, and Mr. YANG Xudong was appointed as a non-executive Director of the 

Company on December 22, 2022, and Mr. HUANG Jianzhang was appointed as a member of the 

Audit Committee and a member of the Remuneration Committee on January 19, 2023.

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. FAN Ye and Mr. HUANG Jianzhang, 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.

The  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. FAN Ye and Mr. HUANG Jianzhang, 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  and 

the  two  executive  directors,  namely  Mr.  YU  Zhihong,  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.

45

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. JIN Chaoyang (Resigned)
Mr. FAN Ye

Attendance 
in person

Attendance 
by proxy

4/4
4/4

1/4
3/4

4/4
3/4

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 and the effectiveness of the Company’s internal audit function.

During  the  Period,  the  Nomination  Committee  held  a  total  of  two  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. FAN Ye

Attendance 
in person

Attendance 
by proxy

Attendance 
through 
communication

2/2
2/2
2/2
2/2
2/2

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

nomination  of  the  proposed  candidates  for  non-executive  D irectors  and  Deputy  General 

Manager  of  the  Company  by  way  of  telecommunication.  Thereafter,  the  proposed  candidates 

for  non-executive  directors  of  the  Company  were  approved  by  the  Board  of  Directors  and  the 

shareholders’ general meeting, and the proposed candidates for Deputy General Manager of the 

Company were approved by the Board of Directors.

46

2022 ANNUAL REPORTCorporate Governance Report 
 
 
 
 
 
 
During  the  Period,  the  Remuneration  Committee  did  not  hold  any  meeting.  The  remuneration 

policy for Directors and senior management formulated by the Remuneration Committee, as well 

as  the  tenure  system  and  contract  management  system  for  management  had  continued  to  play 

an effective role during the Period.

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 and Legal 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.

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.  For  information  on  the  gender  ratio  of  all  employees  (including  senior  management), 

please  refer  to  the  “Employment”  section  of  in  Chapter  3  “Society”  of  the  Company’s  2022 

Environmental, Social and Governance Report.

47

The  Board  members  of  the  Company  have  skills  in  multiple  professional  fields,  such  as 

accounting,  finance,  management,  transportation,  construction  engineering  and  computer 

science,  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  41  and  66.  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  and  assessing  the  independence  of 

independent non-executive Directors. 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  Rmb4.37  million  and  Rmb1.64  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 2022. Besides, the Company paid approximately Rmb0.31 million and 

Rmb0.08 million to Deloitte Touche Tohmatsu Certified Accountants (the Hong Kong auditor) and 

Zhejiang  Pan-China  Certified  Public Accountants  LLP  (the  PRC  auditor),  respectively,  for  other 

assurance service provided.

48

2022 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,  2022,  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,  2022,  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%

49

 
 
 
 
Substantial Shareholders

Capacity

Total interests 
held in ordinary 
shares of the 
Company

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

China Merchants Expressway

Beneficial Owner

258,132,000 (L)

18.00%

Citigroup Inc.

Interest of controlled corporations

JPMorgan Chase & Co.

Person having a security interest in 

shares

BlackRock, Inc

Interest of controlled corporations

121,941,520 (L)
24,899,185 (S)
97,051,548 (P)

117,682,966 (L)
28,788,669 (S)
52,206,257 (P)

105,791,082 (L)
3,662,000 (S)

Cohen & Steers Capital 
Management, Inc.

Investment manager

72,593,997 (L)

8.50%
1.73%
6.76%

8.20%
2.00%
3.64%

7.38%
0.26%

5.06%

Cohen & Steers, Inc

Interest of controlled corporations

72,023,822 (L)

5.02%

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, 2022, 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.

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.

50

2022 ANNUAL REPORTCorporate Governance Report 
 
 
 
Shareholders who individually or collectively hold more than 10% of the Company’s shares may 

request  in  writing  to  convene  an  extraordinary  general  meeting.  In  this  case,  the  Board  shall 

convene an extraordinary general meeting within two months upon receipt of the written request.

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

details listed on page 287 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.

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  Company  effectively  implement  the  Shareholders’  communication  policy. 

The  Company  maintains  close  contact  with  domestic  and  overseas  investors,  and  through 

the  two-way  communication  mechanism  of  information  disclosure  and  investor  Q&A,  the 

Company  can  timely  understand  the  hot  topics  of  market  concerns  while  increasing  investors’ 

understanding  of  the  Company  and  transmitting  its  investment  value,  providing  information  and 

reference for the Company’s relevant decisions.

51

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

Thursday, December 22, 2022 at the headquarters of the Company. Details of this extraordinary 

general  meeting  of  the  shareholders  were  set  out  in  the  announcement  dated  December  22, 

2022 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  2023 

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 

Communications Group 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, 

based  on  the  information  that  is  publicly  available  to  the  Company  and  to  the  best  of  the 

Directors’  knowledge,  there  was  a  sufficient  prescribed  public  float  of  the  issued  shares  of  the 

Company under the Listing Rules.

DIVIDEND 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  ratio  accounted  for 

approximately  30.3%  of  the  distributable  profits  of  the  Company  for  the  year.  Details  of  the 

dividend payout will be announced after the 2022 annual general meeting of the Company.

52

2022 ANNUAL REPORTCorporate Governance ReportRISK 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 has established an anti-corruption and whistle blowing policy. For details, please 
refer  to  “Anti-Corruption”  in  Chapter  3  “Society”  of  the  Company’s  2022  Environmental,  Social 
and Governance Report.

The Company attaches great importance to risk management, by perfecting its risk management 
mechanism  and  relevant  regulations,  improving  risk  reporting  mechanism,  and  refining  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 and Legal Department on a 
regular basis. During the year, the Audit Committee focused on the implementation of the annual 
budget, and the use of safety funds and traffic safety and construction projects of the Company. 
The  Audit  and  Legal  Department  carried  out  specific  audit  into  these  issues  and  monitored 
rectifications  thereof,  thus  ensuring  the  effective  functioning  of  the  Company’s  management 
systems.

53

The  Directors  of  the  Company  carried  out  a  review  on  the  effectiveness  of  the  Company’s 
internal  control  system  on  an  annual  basis,  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.  The  risk  management  and  internal  control  system  is  designed  to 
manage  rather  that  eliminate  the  risk  of  failure  to  achieve  business  objectives  and  reasonable 
but no absolute assurance can be provided against material misstatement.

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 Period and up to the date of this report, there has not been any significant 

event that would have a material impact on the Company.

54

2022 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. Since January 2023, he became 
a  deputy  director  of  the  Social  Development  Affairs  Committee  of 
the 14th National People’s Congress of Zhejiang Province.

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.

55

Directors, Supervisors and  Senior Management Profiles 
 
Mr. YUAN Yingjie

Executive Director

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..  Since  May  2022,  he  was  a  Deputy 
General  Manager  and  a  Member  of  the  Party  Committee  of 
Zhejiang Communications Investment Group Co., Ltd..

He is currently an Executive Director, General Manager and Deputy 
Party Committee Secretary of the Company.

Mr. YANG Xudong
Non-Executive Director

Born  in  1973,  is  a  senior  engineer.  He  graduated  from  Highway 
School of Chang’an University with a Doctoral Degree in Road and 
Railway Engineering.

He  is  currently  the  Director  and  General  Manager  of  China 
Merchants  Expressway.  Mr. Yang  also  serves  as  Deputy  Chairman 
of  Guangxi  Wuzhou  Communications  Co.,  Ltd.,  Director  of  Anhui 
Expressway Co., Ltd., Deputy Chairman of Shanxi Communications 
Industry  Development  Group  Co.,  Ltd..  He  served  as  Deputy 
General  Manager  of  China  Merchants  Expressway,  Chairman  of 
China Merchants & China Railway Holdings Co., Ltd.,, and General 
Manager  of  Guangxi  Huatong  Expressway  Co.,  Ltd.,  Guangxi 
Guiwu  Expressway  Guiyang  Section  Investment  Construction  Co., 
Ltd.,  Guangxi  Guixing  Expressway  Investment  Construction  Co., 
Ltd. and Guilin Harbour Contruction Expressway Co., Ltd..

56

2022 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.;  General  Manager  of  Expressway  Management  Department  of 
Zhejiang Communications Investment Group Co., Ltd..

Mr.  Jin  has  ceased  to  be  a  Non-executive  Director  of  the  Company 
since 22 December 2022.

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..  
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..  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..  Since  2020,  he  has  served  as  General 
Manager  of  the  Industrial  Investment  Management  Department  (I)  of 
Zhejiang Communications Investment Group Co., Ltd..

Mr.  Fan  is  currently  the  General  Manager  of  the  Strategic 
Development  Department  of  Zhejiang  Communications  Investment 
Group Co., Ltd..

57

 
 
 
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 Deputy General Manager of the Strategic 
Development  Department  of  Zhejiang  Communications  Investment 
Group Co., Ltd..

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  Independent  Director  of  Want 
Want China Holdings Limited (HK 00151), Zhong An Group Limited 
(HK 00672) and AIM Vaccine Co., Ltd. (HK 06660).

58

2022 ANNUAL REPORTDirectors, Supervisors and  Senior Management Profiles 
 
Ms. LEE Wai Tsang, Rosa

Independent Non-Executive Director

Born  in  1977,  Ms.  Lee  has  over  18  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 
Datang Corporation Capital Holding Co., 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.

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 Chairman and Founding 
Partner  of  Zhejiang  Cybernaut  Investment  Management  Co.,  Ltd. 
since 2008.

59

 
 
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 2014.

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  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  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  worked  as  deputy  general  manager,  general  manager, 
chairman  of  the  board  and  secretary  of  the  party  committee  of 
Zhejiang  Jinliwen  Expressway  Co.,  Ltd..  From  2019  to  2022, 
he  had  served  as  the  deputy  chief  accountant  of  Zhejiang 
Communications Investment Group Co., Ltd..

60

2022 ANNUAL REPORTDirectors, Supervisors and  Senior Management Profiles 
 
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. 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. He had served as Head of 
Finance Department of Hangzhou KFC Ltd, Principal Accountant of 
Finance  Department  of  Zhejiang  Liantong  Leasing  Co.,  Ltd..  Then 
he had served as Supervisor in the Financial Planning Department, 
Supervisor  in  the  Internal  Audit  Department,  Assistant  Manager 
and  Deputy  Manager  of  the  Audit  and  Legal  Department  in  the 
Company.

He  is  currently  the  Manager  of Audit  and  Legal  Department  and  a 
Supervisor Representing Employees of the Company.

61

 
 
Ms. HE Meiyun

Independent Supervisor

Born  in  1964,  is  a  Senior  Economist.  She  graduated  from  the 
Zhejiang  University  in  1986  with  a  Bachelor  Degree  in  Education 
and  later  received  an  Executive  Master  of  Business  Admiration 
(EMBA) in Cheung Kong Graduate School of Business.

Ms. He had served as the Secretary of Youth League Committee at 
the  Hangzhou  Business  School  and  as  a  Secretary  to  the  Board, 
Deputy  General  Manager,  General  Manager  and  Vice  Chairman 
at  Baida  Group  Co.,  Ltd.,  a  company  listed  on  the  Shanghai  Stock 
Exchange.  Ms.  He  also  served  as  a  General  Manager  of  Ping  An 
Securities  Company  Limited,  Zhejiang  Branch,  Executive  Deputy 
Director  of  the  Professional  Secretarial  Committee  to  the  board 
of  directors  of  Zhejiang  Provincial  Listed  Company  Association, 
Deputy  Secretary  General  of  Hangzhou  Joint  Stock  Promotion 
Association,  an  Independent  Director  of  Lanzhou  Minbai  Co.,  Ltd., 
and an Independent Director of Xilinmen Co., Ltd.. Ms. He currently 
serves  as  Vice  Chairman  of  Zhejiang  Shiqiang  Group  Co.,  Ltd.,  a 
Member  of  the  Equity  Investment  and  M&A  Committee  of  Zhejiang 
Merchants  Association,  a  Supervisor  of  Zhejiang  M&A  Federation, 
an Independent Director of Gujia Home Furnishing Co., Ltd. and an 
Independent Director of Gree Real Estate Co., Ltd..

Mr. WU Qingwang

Independent Supervisor

Born  in  1965,  a  PRC  Lawyer.  He  graduated  from  Hangzhou 
University  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 in 1995 and 2004, respectively.

Mr.  Wu  had  worked  in  Chun’an  Justice  Bureau  since  1989  and 
in  Zhejiang  Securities  Co.,  Ltd.  from  1995  to  1996.  Mr.  Wu  has 
been  working  in  Zhejiang  Xinyun  Law  Firm  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.

62

2022 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.

63

 
 
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.

64

2022 ANNUAL REPORTDirectors, Supervisors and  Senior Management Profiles 
 
Mr. WU Xiangyang

Mr. Zhao Dongquan

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 1972, a senior engineer, having a Bachelor Degree in Civil 
Engineering from Zhejiang University of Technology.

Mr.  Zhao  started  his  career  in  August  1993,  and  served  as 
Director  of  the  Engineering  Department  of  Xiaoshan  Headquarter 
of  Hangzhou-Jinhua-Quzhou  Expressway,  Deputy  Director  of 
the  Hangzhou–Shaoxing  Administrative  Office  at  Hangjinqu 
Branch  of  Zhejiang  Communications  Investment  Group  Co., 
L t d . ,  D e p u t y  C h i e f  C o m m i s s i o n e r  o f  H a n g z h o u – S h a o x i n g 
Sectional  of  Hangzhou-Jinhua-Quzhou  Expressway  Widening 
Project  Commission,  Director  of  the  Supervision  and  Executive 
Center  at  Hangjinqu  Branch,  Deputy  General  Manager  of  the 
Traffic  Operation  Management  Department  and  Deputy  General 
Manager  of  Management  Department  of  Zhejiang  Communications 
Investment Group Co., Ltd..

Mr.  Zhao  is  currently  the  Deputy  General  Manager  and  Party 
Committee Member of the Company.

65

 
 
Ms. RUAN Liya

Chief Financial Officer

Born  in  1983,  a  senior  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.

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.

66

2022 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, 2022.

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 2022 Environmental, Social and Governance Report.

SEGMENT INFORMATION
During  the  Period,  the  entire  revenue  and  segment  profit  of  the  Group  were  derived  from  the 

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, 2022 is set out in note 7 to the financial statements.

RESULTS AND DIVIDENDS
The  Group’s  profit  for  the  year  ended  December  31,  2022  and  the  state  of  financial  position  at 

that date are set out in the financial statements on pages 110 to 281.

The  Directors  have  recommended  the  payment  of  a  dividend  of  Rmb0.375(approximately 

HK$0.420) per share in the year of 2022. The final dividend is subject to shareholders’ approval 

at  the  2022  annual  general  meeting  of  the  Company  and  is  expected  to  be  paid  on  or  around 

June  30,  2023.  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  30.3%  during  the  Period. 

Further details of the dividends are set out in note 16 to the financial statements.

67

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

2022
Rmb’000

Year ended December 31,
2021
Rmb’000

2020
Rmb’000
(Restated)

2019
Rmb’000
(Restated)

2018
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 

14,898,730
(8,857,926)
6,040,804
679,734

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

2,093,933
(172,616)

733,071
(173,447)

425,319
(147,839)

270,298
(143,720)

419,093
(128,363)

(131,443)
752,086
49,771
(1,770,008)
7,542,261
(1,039,051)
6,503,210

(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

owners of the Company

5,378,866

4,762,431

2,416,395

3,243,392

3,074,140

Profit for the year attributable to 

non-controlling interests

1,124,344

1,527,733

957,192

703,781

479,418

Earnings per share
Basic (Rmb cents)
Diluted (Rmb cents)

123.85
117.62

109.65
102.50

55.64
55.19

74.68
72.21

70.78
66.67

68

2022 ANNUAL REPORTReport of the Directors 
 
 
 
 
 
 
 
 
 
 
 
 
 
Assets and liabilities

2022
Rmb’000

Year ended December 31,
2021
Rmb’000

2020
Rmb’000
(Restated)

2019
Rmb’000
(Restated)

2018
Rmb’000
(Restated)

Total assets
Total liabilities
Net Assets

Notes:

186,405,524
136,195,862
50,209,662

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

1. 

The  consolidated  results  of  the  Group  for  the  four  years  ended  December  31,  2021  have  been  abstracted  from 

the  Company’s  annual  report  on  March  24,  2022,  while  those  for  the  year  ended  December  31,  2022  were 

prepared  based  on  the  consolidated  statement  of  profit  or  loss  and  other  comprehensive  income  as  set  out  on 

page 110 of the financial report.

2. 

The  2022  basic  earnings  per  share  is  based  on  the  profit  attributable  to  owners  of  the  Company  for  the  year 

ended  December  31,  2021  of  Rmb5,378,866,000  (2021:  Rmb4,762,431,000)  and  the  4,343,114,500  (2021: 

4,343,114,500) ordinary shares in issue during the year.

The  2022  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,  2022  of  Rmb5,427,261,000  (2021: 

Rmb4,702,924,000)  and  the  4,614,399,000  (2021:4,588,176,000)  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  Rmb12,981,000  for 

charitable or other purposes.

69

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
PROPERTY, PLANT AND EQUIPMENT
Details of movements in property, plant and equipment of the Group during the year are set out 

in note 18 to the financial statements.

CAPITAL COMMITMENTS
Details of the capital commitments of the Group as at December 31, 2022 are set out in note 51 

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 115 to the financial statements.

DISTRIBUTABLE RESERVES
As at December 31, 2022, 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 Rmb8,826,688,000. 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, 2022, other than the deposits placed with a non-bank financial institution of 

Rmb2,941,840,000  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
Neither  the  Company  nor  any  of  its  subsidiaries  purchased,  redeemed  or  sold  any  of  the 

Company’s listed securities during the Period.

70

2022 ANNUAL REPORTReport of the DirectorsDIRECTORS
The Directors of the Company during the Period and as at the date of this report are:

CHAIRMAN
Mr. YU Zhihong

EXECUTIVE DIRECTORS
Mr. CHEN Ninghui

Mr. YUAN Yingjie

NON-EXECUTIVE DIRECTORS
Mr. YANG Xudong (Appointed on December 22, 2022)

Mr. JIN Chaoyang (Resigned on December 22, 2022)

Mr. FAN Ye

Mr. HUANG Jianzhang

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 55 to 66 in the Company’s annual report.

71

DIRECTORS’ SERVICE CONTRACTS
Mr. JIN Chaoyang has entered into a service agreement with the Company, with effect from July 

1,2021 to June 30,2024. The agreement was terminated on December 22, 2022.

Mr.  YANG  Xudong  has  entered  into  a  service  agreement  with  the  Company,  with  effect  from 

December 22,2022 to June 30,2024.

Other  Directors  of  the  Company  have  entered  into  service  agreements  with  the  Company,  with 

effect from July 1, 2021 to June 30, 2024.

Save  as  disclosed  above,  none  of  the  Directors  and  Supervisors  has  entered  into  any  service 

agreement  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,  2022  or  during  the  Period,  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 Period.

72

2022 ANNUAL REPORTReport of the DirectorsPRE-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.

DIRECTORS’ 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.

73

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.

74

2022 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  December  31,  2022 

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 27, 2023

75

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  seven  Board  meetings  and  four  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. The Company has effectively 

responded  to  the  continued  resurgence  of  the  epidemic,  persistently  deepened  the  reform 

amid  challenges  and  difficulties,  steadily  promoted  the  market-based  operation  and  innovative 

development of its core business, and accelerated the promotion of the intelligent upgrading and 

transformation as well as the materialization of intelligent expressway.

76

2022 ANNUAL REPORTReport of Supervisory CommitteeThe  Supervisory  Committee  has  reviewed  the  financial  statements  of  the  Company  for  2022 

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 2022, 

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.

During 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 27, 2023

77

During  the  year  ended  December  31,  2022,  the  Company  had  the  following  non-exempt 

connected transactions and continuing connected transactions.

CONNECTED TRANSACTIONS

1.  Project Design Contract

On  February  17,  2022,  the  information  center  of  the  Company  (a  branch  office  of 
the  Company)  and  ZJIC  entered  into  a  project  design  contract  (the  “Project  Design 
Contract”),  pursuant  to  which  the  information  center  of  the  Company  agreed  to  engage 
ZJIC for the provision of various services in relation to phase II of the designing project for 

the intelligent upgrade and transformation of the Shanghai-Hangzhou-Ningbo Expressway 

for  a  term  of  one  year  commencing  from  the  date  of  the  Project  Design  Contract  subject 

to  the  terms  and  conditions  provided  therein. The  consideration  under  the  Project  Design 

Contract  was  Rmb4,997,910.  Please  refer  to  the  announcement  of  the  Company  dated 

February 17, 2022 for details.

Communications  Group,  which  holds  approximately  67%  of  the  issued  share  capital  of 

the  Company,  is  a  controlling  shareholder  of  the  Company.  ZJIC  is  a  55.08%  owned 

subsidiary  of  Communications  Group,  and  therefore  it  is  a  connected  person  of  the 

Company.  As  a  result,  the  transactions  under  the  Project  Design  Contract  constituted  a 

connected transaction for the Company under Chapter 14A of the Listing Rules.

Pursuant  to  Rule  14A.81  and  Rule  14A.82  of  the  Listing  Rules,  as  the  transactions 

contemplated  under  the  Project  Design  Contract  were  required  to  be  aggregated  with 

agreements  entered  into  or  completed  within  a  12-month  period  prior  to  the  date  of  the 

Project Design Contract between or among the Company and its relevant subsidiaries and 
ZJIC  in  relation  to  survey  and  designing  services  (the  “Previous  Transactions”)  for  the 
calculation of relevant percentage ratios to determine the classification of the transactions 

contemplated under the Project Design Contract.

78

2022 ANNUAL REPORTConnected TransactionsAs  the  highest  applicable  percentage  ratio  in  respect  of  the  transactions  contemplated 

under  the  Project  Design  Contract,  after  aggregating  with  the  Previous  Transactions  was 

more  than  0.1%  but  less  than  5%,  the  transactions  under  the  Project  Design  Contract 

were  subject  to  the  reporting  and  announcement  requirements  but  exempt  from  the 

independent shareholders’ approval requirement under Chapter 14A of the Listing Rules.

2.  Construction  Agreement  for  the  Renovation  of  Jiaxing  Service  Area 

Plaza of Shanghai-Hangzhou Expressway

On  May  13,  2022,  Jiaxing  Branch  entered  into  a  construction  service  agreement  (the 
“Construction Agreement”)  with  a  consortium  comprising  Jiaogong  Group  and  Jiaogong 
Underground  Construction  (collectively  as  the  “Consortium”)  as  the  contractor  and 
Zhejiang  Commercial  as  the  contracting  party,  pursuant  to  which  the  Consortium  agreed 

to  undertake  the  construction  work  for  the  renovation  of  Jiaxing  Service  Area  Plaza  of 

Shanghai-Hangzhou  Expressway  for  a  total  consideration  of  Rmb26,151,435,  of  which 

the  maximum  amount  of  construction  fees  payable  by  Jiaxing  Branch  to  the  Consortium 

is  RMB17,788,100.  All  construction  work  should  be  completed  within  100  calendar  days 

from the construction commencement date agreed between the parties. Please refer to the 

announcement of the Company dated May 13, 2022 for details.

Each  of  Jiaogong  Group  and  Jiaogong  Underground  Construction  is  an  indirectly 

non-wholly  owned  subsidiaries  of  Communications  Group,  and  is  therefore  connected 

person  of  the  Company.  As  a  result,  the  transaction  under  the  Construction  Agreement 

constituted  a  connected  transaction  for  the  Company  under  Chapter  14A  of  the  Listing 

Rules.

As  the  highest  applicable  percentage  ratio  in  respect  of  the  transaction  under  the 

Construction Agreement was more than 0.1% but less than 5%, the transaction under the 

Construction Agreement was subject to the reporting and announcement requirements but 

exempt  from  the  independent  shareholders’  approval  requirement  under  Chapter  14A  of 

the Listing Rules.

79

3.  Bonds Block Trade Agreements

On  June  15,  2022,  Shangsan  Co  entered  into  separate  bonds  block  trade  agreements 
(the  “Bonds  Block  Trade  Agreements”)  with  Zhejiang  Communications  Finance  and 
Zheshang  Financial,  respectively,  pursuant  to  which,  convertible  bonds  issued  by 

Zheshang  Securities  in  the  principal  amount  of  Rmb950,000,000  and  Rmb150,000,000 

would  be  transferred  to  Zhejiang  Communications  Finance  and  Zheshang  Financial 

on  agreed  completion  day  therein,  respectively.  The  aggregate  consideration  under 

the  Bonds  Block  Trade  Agreements  should  be  not  more  than  Rmb1,200,000,00,  where 

Zhejiang  Communications  Finance  and  Zheshang  Financial  would  each  settle  part  of  the 

consideration in proportion to the principal amount of convertible bonds acquired by them 

respectively.  Please  refer  to  the  announcement  of  the  Company  dated  June  15,  2022  for 

details.

Z h e j i a n g  C o m m u n i c a t i o n s  F i n a n c e  i s  a  n o n - w h o l l y  o w n e d  s u b s i d i a r y  o f  t h e 

Communications  Group  and  Zheshang  Financial  is  a  wholly-owned  subsidiary  of  the 

Communications  Group,  therefore  each  of  Zhejiang  Communications  Finance  and 

Zheshang  Financial  is  a  connected  person  of  the  Company. As  a  result,  the  transactions 

under  the  Bonds  Block  Trade  Agreements  constituted  connected  transactions  for  the 

Company under Chapter 14A of the Listing Rules.

As the highest applicable percentage ratio in respect of the transactions under the Bonds 

Block  Trade  Agreements  was  more  than  0.1%  but  less  than  5%,  the  transactions  under 

the  Bonds  Block  Trade  Agreements  were  subject  to  the  reporting  and  announcement 

requirements but exempt from the independent shareholders’ approval requirement under 

Chapter 14A of the Listing Rules.

80

2022 ANNUAL REPORTConnected Transactions4.  Project Contracts

On  June  30,  2022,  the  Company  and  the  relevant  subsidiaries  and  ZJIC  entered  into 
the  following  project  contracts  (the  “Project  Contracts”):  (i)  the  accident-prone  areas 
improvement  contracts  (the  “Accident-Prone Areas  Improvement  Contracts”),  pursuant 
to which the Company and the relevant subsidiary agreed to engage ZJIC for the provision 

of  various  services  in  relation  to  the  traffic  accident-prone  areas  improvement  projects 

of  certain  parts  of  Xinchang  to  Baihe  Section  of  Changtai  Expressway  and  Hongken 

Hub  of  Hangzhou  Bay  Ring  Expressway  for  a  contract  period  of  two  months  at  the 
consideration  of  Rmb14,394,660;  (ii)  the  system  update  design  contracts  (the  “System 
Upgrade Design Contracts”), pursuant to which the Company and its various subsidiaries 
agreed  to  engage  ZJIC  for  the  provision  of  various  services  in  relation  to  the  mechanical 

and  electrical  system  upgrade  design  project  of  the  Group  for  a  term  of  12  months, 

at  the  consideration  of  not  more  than  Rmb4,302,998;  and  (iii)  the  capacity  expansion 
research  contracts  (the  “Capacity  Expansion  Research  Contracts”,  together  with  the 
Accident-Prone Areas Improvement Contracts and the System Upgrade Design Contracts, 
referred  hereinafter  as  the  “Project  Contracts”),  pursuant  to  which  the  Company  and  its 
various  subsidiaries  agreed  to  engage  ZJIC  for  the  provision  of  various  services  relating 

to  the  heavy  traffic  sections  expansion  research  projects  of  Hangzhou  Liuxia  to  Yuqian 

Section of the Hanghui Expressway, Hangzhou Hongken to Ningbo High Bridge Section of 

the Hangzhou-Ningbo Expressway, Fengjing to Shenshi Section of the Shanghai-Kunming 

Expressway,  southern  section  of  the  Zhajiasu  Expressway  and  the  Shenjiahuhang 

Expressway  with  a  term  until  completion  of  the  research  projects  at  the  consideration  of 

Rmb4,180,000.  The  aggregated  consideration  under  the  Project  Contracts  amounted  to 

Rmb22,877,658. Please refer to the announcements of the Company dated June 30, 2022 

and July 15, 2022 for details.

As  set  out  above,  ZJIC  is  a  connected  person  of  the  Company  and  the  transactions 

under  the  Project  Contracts  constituted  connected  transactions  for  the  Company  under 

Chapter  14A  of  the  Listing  Rules.  Rule  14A.81  and  Rule  14A.82  of  the  Listing  Rules  also 

apply to the calculation of relevant percentage ratios to determine the classification of the 

transactions  contemplated  under  the  Project  Contracts,  where  transactions  contemplated 

under the Project Contracts were required to be aggregated with agreements entered into 

or  completed  within  a  12-month  period  prior  to  the  date  of  the  Project  Contracts  between 

or  among  the  Company  and  its  relevant  subsidiaries  and  ZJIC  in  relation  to  survey  and 

designing services, including the transactions under the Project Design Contract.

81

As  the  highest  applicable  percentage  ratio  calculated  pursuant  to  the  Listing  Rules 

in  respect  of  the  transactions  under  the  Project  Contracts,  after  aggregating  with  the 

agreements  entered  into  or  completed  within  a  12-month  period  prior  to  the  date  of  the 

Project Contracts between or among the Company and its relevant subsidiaries and ZJIC 

in  relation  to  survey  and  designing  services,  was  more  than  0.1%  but  less  than  5%,  the 

transactions under the Project Contracts were subject to the reporting and announcement 

requirements but exempt from the independent shareholders’ approval requirement under 

Chapter 14A of the Listing Rules.

5.  Project Construction Agreements

On  July  15,  2022,  the  Company  entered  into  the  project  construction  agreements  (the 
“Project  Construction  Agreements”)  with  Zhejiang  Information  and  Qiantong  Zhilian, 
pursuant  to  which  the  Company  agreed  to  engage  Zhejiang  Information  and  Guizhou 
Qiantong  Zhilian  Technology  Co.,  Ltd.  (貴州黔通智聯科技股份有限公司),  which  is  an 
independent  third  party,  for  the  provision  of  mechanical  and  electrical  engineering 

services  in  relation  to  phase  II  of  the  construction  project  for  the  intelligent  upgrade  and 

transformation  of  the  Shanghai-Hangzhou-Ningbo  Expressway,  of  which  the  construction 

work  shall  be  completed  within  three  months.  The  total  service  fees  payable  by  the 

Company  under  the  Project  Construction  Agreements  amounted  to  Rmb53,518,608, 

out  of  which  Rmb32,077,869  is  payable  to  Zhejiang  Information.  Please  refer  to  the 

announcement of the Company dated July 15, 2022 for details.

Zhejiang  Information,  as  a  65.85%  owned  subsidiary  of  Communications  Group,  is  a 

connected  person  of  the  Company  and  as  a  result,  the  transactions  contemplated  under 

the Project Construction Agreements constituted connected transactions for the Company 

under Chapter 14A of the Listing Rules.

82

2022 ANNUAL REPORTConnected TransactionsPursuant  to  Rules  14A.81  and  14A.82  of  the  Listing  Rules,  connected  transactions  with 

the  same  connected  person  or  parties  who  are  connected  with  one  another  may  be 

aggregated. As  the  highest  applicable  percentage  ratio  calculated  pursuant  to  the  Listing 

Rules  in  respect  of  the  transactions  under  the  Project  Construction  Agreements,  after 

aggregating with the agreements entered into or completed within a 12-month period prior 

to  the  date  of  the  Project  Construction Agreements  between  or  among  the  Company  and 

its  relevant  subsidiaries  and  Zhejiang  Information  in  relation  to  provision  of  information 

technology  services  and  mechanical  and  electrical  engineering  services,  was  more  than 

0.1% but less than 5%, the transactions under the Project Construction Agreements were 

subject to the reporting and announcement requirements but exempt from the independent 

shareholders’ approval requirement under Chapter 14A of the Listing Rules.

6.  Project Improvement Agreements

On  September  26,  2022,  the  Company  and  its  relevant  subsidiaries  entered  into  the 
following  project  improvement  agreements  (the  “Project  Improvement  Agreements”) 
with  ZJIC:  (i)  the  traffic  congestion  project  improvement  agreement  (the  “Traffic 
Congestion  Project  Improvement  Agreement”),  pursuant  to  which  ZJIC  agreed  to 
undertake  the  project  to  improve  the  traffic  congestion  of  certain  expressways  owned 

by  the  Group  for  a  service  period  of  45  days  for  a  consideration  of  Rmb4,934,122;  (ii) 
the  traffic  safety  comprehensive  project  improvement  agreement  (the  “Traffic  Safety 
Comprehensive  Project  Improvement  Agreement”),  pursuant  to  which  ZJIC  agreed  to 
improve the ancillary traffic safety equipment and eliminate potential safety risks of Jiaxing 

Section  of  Shanghai-Hangzhou  Expressway,  Zhajiasu  Expressway  and  Shenjiahuhang 

Expressway  for  a  service  period  of  60  days  for  a  consideration  of  Rmb4,071,021;  (iii) 
traffic  signs  upgrade  agreement  (the  “Traffic  Signs  Upgrade  Agreement”),  pursuant 
to  which  ZJIC  will  upgrade  and  enhance  the  recognizability  of  part  of  road  signs  and 

improving  the  overall  image  of  Shaoxing  Section  of  Hangzhou-Ningbo  Expressway, 

Shangsan Expressway and Ningbo-Jinhua Expressway for a service period of 60 days for 

a  consideration  of  Rmb2,766,191.  The  total  service  fees  payable  by  the  Group  to  ZJIC 

would be Rmb11,771,334 pursuant to the Project Improvement Agreement. Please refer to 

the announcement of the Company dated September 26, 2022 for details.

83

ZJIC, as a 55.08% owned subsidiary of Communications Group, is a connected person of 

the Company and as a result, the transactions under the Project Improvement Agreements 

constituted  connected  transactions  for  the  Company  under  Chapter  14A  of  the  Listing 

Rules.

Pursuant to Rule 14A.81 and Rule 14A.82 of the Listing Rules, the respective transactions 

contemplated  under  the  Project  Improvement Agreements  are  required  to  be  aggregated 

with  the  previous  transactions  which  were  entered  into  or  completed  within  a  12-month 

period  prior  to  the  date  of  the  Project  Improvement  Agreements  between  or  among 

the  Group  and  ZJIC,  in  relation  to  the  provision  of  surveying  and  design  services,  for 

the  calculation  of  the  relevant  percentage  ratio  to  determine  the  classification  of  the 

transactions contemplated under the Project Improvement Agreements.

As  the  highest  applicable  percentage  ratio  in  respect  of  the  transactions  contemplated 

under  the  Project  Improvement  Agreements,  after  aggregating  with  the  previous 

transactions  which  were  entered  into  or  completed  within  a  12-month  period  with  ZJIC, 

in  relation  to  the  provision  of  surveying  and  design  services,  was  more  than  0.1%  but 

less than 5%, the transactions under the Project Improvement Agreements will be subject 

to  the  reporting  and  announcement  requirements  but  exempt  from  the  independent 

shareholders’ approval requirement under Chapter 14A of the Listing Rules.

84

2022 ANNUAL REPORTConnected Transactions7.  Capital Increase Agreement

On November 29, 2022, Shaoxing City Shangyu District Transportation Group Investment 
Co.,  Ltd.*(紹興市上虞區交通投資有限公司)  (the  “ Shangyu  Transportation”),  China 
Merchants  Expressway  and  Tiantai  State  Capital  Operation  Co.,  Ltd.*(天臺縣國有資
本經營有限公司)  (the  “Tiantai  State  Capital”,  with  Shangyu  Transportation  and  China 
Merchants  Expressway  collectively  as  the  “Existing  Shareholders”),  the  Company, 
Shangsan Co, and Communications Group entered into a capital increase agreement (the 
“Capital  Increase  Agreement”),  pursuant  to  which  the  registered  capital  of  Shangsan 
Co  would  be  increased  from  approximately  Rmb5.38  billion  up  to  the  maximum  amount 

of  Rmb7.77  billion,  of  which  Communications  Group  and  the  Existing  Shareholders  will 

contribute  in  the  aggregate  amount  of  up  to  Rmb13.17  billion  for  the  capital  increase 
(the  “Capital  Increase”).  Communications  Group  shall  subscribe  for  the  new  registered 
capital of approximately Rmb1.76 billion, being the amount of new registered capital which 

the  Company  was  originally  entitled  to  subscribe.  China  Merchants  Expressway,  Tiantai 

State  Capital  and  Shangyu  Transportation  shall  subscribe  for  up  to  Rmb440,000,000, 

Rmb120,000,000  and  Rmb70,000,000  new  registered  capital  of  Shangsan  Co, 

respectively. Please refer to the announcements of the Company dated June 15, 2022 and 

November 30, 2022 and the circular dated September 21, 2022 for details.

China  Merchants  Expressway  holds  approximately  18.38%  of  the  equity  interest  in 

Shangsan  Co  and  thus  is  a  connected  person  of  the  Company  at  the  subsidiary  level  by 

virtue  of  being  a  substantial  shareholder  of  Shangsan  Co. As  a  result,  China  Merchants 

Expressway’s  participation  in  the  Capital  Increase  constituted  a  connected  transaction  of 

the  Company  under  Chapter  14A  of  the  Listing  Rules.  By  virtue  of  Rule  14A.101  of  the 

Listing Rules, since (1) China Merchants is a connected person at the subsidiary level, (2) 

the Board has approved the participation of China Merchants Expressway in the proposed 

Capital  Increase;  and  (3)  the  independent  non-executive  Directors  have  confirmed  that 

the terms of the proposed Capital Increase, including the participation of China Merchants 

Expressway,  are  fair  and  reasonable  and  is  on  normal  commercial  terms  or  better  and  in 

the interests of the Company and the Shareholders as a whole, the participation of China 

Merchants  Expressway  in  the  proposed  Capital  Increase  is  subject  to  the  reporting  and 

announcement requirement but exempt from the circular, independent financial advice and 

independent shareholders’ approval requirements under Chapter 14A of the Listing Rules.

85

Communications Group, being the controlling shareholder of the Company, is a connected 

person  of  the  Company.  As  a  result,  the  Communications  Group’s  participation  in  the 

Capital Increase contemplated under the proposed Capital Increase Agreement constitutes 

a  connected  transaction  of  the  Company  under  Chapter  14A  of  the  Listing  Rules. As  one 

or more of the applicable percentage ratios for the transactions under the Capital Increase 

Agreement  were  over  25%  but  less  than  75%,  Communications  Group’s  participation 

in  the  Capital  Increase  is  subject  to  the  reporting,  announcement  and  independent 

shareholders’ approval requirements under Chapter 14A of the Listing Rules.

8.  Share Transfer Agreement

On December 7, 2022, Shangsan Co entered into a share transfer agreement (the “Share 
Transfer  Agreement”)  with  Zhejiang  Commercial  Group  Co.,  Ltd.*  (浙江省商業集團有
限公司)  (the  “Zhejiang  Commercial  Group”),  pursuant  to  which  Zhejiang  Commercial 
Group conditionally agreed to sell and Shangsan Co conditionally agreed to acquire all the 

15.30%  shares  held  by  Zhejiang  Commercial  Group  in  Zheshang  Property  and  Casualty 
Insurance  Company  Limited*  (浙商財產保險股份有限公司)  (“Zheshang  Insurance”)  for  a 
consideration of Rmb790,245,000.

Zhejiang  Commercial  Group  is  a  wholly-owned  subsidiary  of  Communications  Group  and 

therefore Zhejiang Commercial Group is a connected person of the Company. As a result, 

the  transactions  under  the  Share  Transfer Agreement  constituted  connected  transactions 

of the Company under Chapter 14A of the Listing Rules.

As  the  highest  applicable  percentage  ratio  of  the  transactions  under  the  Share  Transfer 

Agreement  was  higher  than  0.1%  but  lower  than  5%,  the  transactions  under  the  Share 

Transfer  Agreement  were  subject  to  the  announcement  and  reporting  requirements  but 

exempt  from  independent  shareholders’  approval  requirements  in  accordance  with  the 

relevant requirements under Chapter 14A of the Listing Rules.

86

2022 ANNUAL REPORTConnected Transactions9.  Construction Agreements

On  December  8,  2022,  the  Company  and  its  relevant  subsidiaries  entered  into  the 
following  construction  agreements  with  Zhejiang  Information  (the  “Construction 
Agreements”):  (i)  the  scenario  planning  system  construction  agreement  (the  “Scenario 
Planning  System  Construction  Agreement”);  and  (ii)  the  expressway  intelligent 
toll  stations  construction  agreement  (the  “Expressway  Intelligent  Toll  Stations 
Construction Agreement”), pursuant to which Zhejiang Information would be engaged to 
provide structured solutions based on the traffic incident response plans and the intelligent 

scenario  system  and  intelligent  upgrade  of  toll  stations  and  automatic  toll  collection 

lanes  construction  services,  respectively.  The  work  under  the  Scenario  Planning  System 

Construction Agreement  should  be  completed  within  three  months  commencing  from  the 

date  thereof,  and  the  work  under  the  Expressway  Intelligent  Toll  Stations  Construction 

Agreement should be completed within two months commencing from the date thereof.

The transactions with Zhejiang Information under the Construction Agreements constituted 

connected transactions for the Company under Chapter 14A of the Listing Rules.

Pursuant  to  Rules  14A.81  and  14A.82  of  the  Listing  Rules,  connected  transactions  with 

the  same  connected  person  or  parties  who  are  connected  with  one  another  may  be 

aggregated. As  the  highest  applicable  percentage  ratio  calculated  pursuant  to  the  Listing 

Rules in respect of the transactions under the Construction Agreements, after aggregating 

with the transactions entered into or completed within a 12-month period prior to the date 

of the Construction Agreements between or among the Group and Zhejiang Information in 

relation  to  the  provision  of  information  technology  services  and  mechanical  and  electrical 

engineering  services,  was  more  than  0.1%  but  less  than  5%,  the  transactions  under  the 

Construction  Agreements  were  subject  to  the  reporting  and  announcement  requirements 

but  exempt  from  the  independent  shareholders’  approval  requirement  under  Chapter  14A 

of the Listing Rules.

87

CONTINUING CONNECTED TRANSACTIONS

1.  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  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  amount  exceeded  the  previous  annual  caps,  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.

Zhejiang  Hongtu  is  an  indirect  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  highest  applicable  percentage  ratio  in  respect  of  the  transactions  contemplated 

under  the  Construction  Service  Agreements  was  more  than  0.1%  but  less  than  5%, 

transactions  under  the  Construction  Service  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.

88

2022 ANNUAL REPORTConnected TransactionsDuring  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 Agreements 

was Rmb0.

2.  Deposit Services with Zhejiang Communications Finance

Pursuant  to  the  financial  services  agreement  dated  March  18,  2019  (the  “Financial 
Services  Agreement”)  together  with  a  supplemental  agreement  entered  into  between 
the  Company  and  Zhejiang  Communications  Finance,  pursuant  to  which  Zhejiang 

Communications Finance agreed to provide the Company and its subsidiaries with a range 
of  financial  services  including  the  provisions  of  certain  deposit  services  (the  “Deposit 
Services”)  for  a  term  of  three  years  commencing  from  March  30,  2019,  subject  to  the 
terms and conditions provided therein. Please refer to the announcement of the Company 

dated March 18, 2019 and the circular dated April 15, 2019 for details.

Since  the  Financial  Services Agreement  expired  on  March  29,  2022,  on  March  25,  2022, 
the  Company  entered  to  the  new  financial  services  agreement  (the  “New  Financial 
Services  Agreement”),  together  with  a  supplemental  agreement  on  a  later  date,  among 
others, to revise the annual caps for the Deposit Services to Rmb3,000,000,000 (including 
any  interest  accrued  thereon)  (the  “Financial  Services  Supplemental  Agreement”), 
with Zhejiang Communications Finance for renewal of the terms of the Financial Services 

Agreement for a term of three years commencing from March 30, 2022 and ending March 

29,  2025.  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 25, 2022 for details.

As  the  issued  share  capital  of  Zhejiang  Communications  Finance  is  owned  as  to  79.92% 

and  20.08%  by  Communications  Group  and  the  Company,  respectively,  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  and  the  Financial  Services  Supplemental  Agreement 

constituted a continuing connected transaction for the Company.

89

Pursuant  to  the  New  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  Rmb1,200,000,000  and  Rmb3,000,000,000  respectively  under  the 

New  Financial  Services  Agreement  and  the  Financial  Services  Supplemental  Agreement 

during the term thereof.

As  the  highest  applicable  percentage  ratio  in  respect  of  the  Deposit  Services  under 

the  New  Financial  Services  Agreement  was  more  than  0.1%  but  less  than  5%,  such 

transaction  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.

Meanwhile,  as  the  highest  applicable  percentage  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  transaction  constituted  a  non-exempt  continuing 

connected  transaction  subject  to  the  reporting,  announcement,  annual  review  and 

independent shareholders’ approval requirements under Chapter 14A of the Listing Rules.

90

2022 ANNUAL REPORTConnected TransactionsDuring  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 Rmb2,974,883,000.

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  Branch  of  LongLiLiLong  Co,  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.

91

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.

c. 

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.

92

2022 ANNUAL REPORTConnected TransactionsEach  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, 2022 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 Rmb104,133,000.

93

ii. 

2022 Dedicated Road Maintenance Agreements

On  April  1,  2022,  the  Company  and  its  various  subsidiaries  and  LongLiLiLong  Co 

entered into the following agreements:

a. 

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  four  expressways  operated  by  the  Group,  namely  the  Jiaxing 

and  Ningbo  Section  of  the  Shanghai-Hangzhou-Ningbo  Expressway, 

the  Shenjiahuhang  Expressway,  the  Zhoushan  Bridge  and  the  Zhajiasu 

Expressway  for  a  term  ending  on  December  31,  2022;  (ii)  the  dedicated  road 
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  for  a  term  ending  on 

December 31, 2022; and

94

2022 ANNUAL REPORTConnected Transactionsb. 

LongLiLiLong Co entered into (i) the dedicated road maintenance agreements 
(the “Dedicated Road Maintenance (Third Contract Section) Agreements”) 
with  Zhejiang  Shunchang,  pursuant  to  which  Zhejiang  Shunchang  agreed 

to  undertake  the  dedicated  maintenance  projects  to  the  Quzhou  Section 

of  LongLiLiLong  Expressway  owned  by  the  Group  for  a  term  of  seven 

months  ending  on  October  31,  2022;  (ii)  the  dedicated  road  maintenance 
agreements  (the  “Dedicated  Road  Maintenance  (Fourth  Contract  Section) 
Agreements”)  with  Jiaogong  Maintenance,  pursuant  to  which  Jiaogong 
Maintenance  agreed  to  undertake  the  dedicated  maintenance  projects  to  the 

Lishui Section of LongLiLiLong Expressway owned by the Group for a term of 

seven  months  ending  on  October  31,  2022;  and  (iii)  the  single  column  bridge 
reinforcement  agreements  (the  “Single  Column  Bridge  Reinforcement 
Agreements”)  with  Zhejiang  Shunchang,  pursuant  to  which  Zhejiang 
Shunchang  agreed  to  undertake  the  single  column  bridge  reinforcement 

projects  to  the  Lishui  Section  of  LongLiLiLong  Expressway  owned  by  the 

Group  for  a  term  of  five  months  ending  on August  31,  2022.  Please  refer  to 

the announcement of the Company dated April 1, 2022 for details.

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  Dedicated  Road  Maintenance 

(First  Contract  Section)  Agreements,  the  Dedicated  Road  Maintenance  (Second 

Contract  Section)  Agreements,  the  Dedicated  Road  Maintenance  (Third  Contract 

Section)  Agreements,  the  Dedicated  Road  Maintenance  (Fourth  Contract  Section) 

Agreements  and  the  Single  Column  Bridge  Reinforcement Agreements  (collectively 
as  the  “Dedicated  Road  Maintenance  Agreements”)  constituted  continuing 
connected transactions for the Company under Chapter 14A of the Listing Rules.

95

The  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 year ending December 31, 2022 is Rmb420,000,000. The proposed annual 

cap  on  the  aggregate  service  fees  of  the  Dedicated  Road  Maintenance  (Third 

Contract  Section)  Agreements,  the  Dedicated  Road  Maintenance  (Fourth  Contract 

Section)  Agreements  and  the  Single  Column  Bridge  Reinforcement  Agreements 

payable  by  LongLiLiLong  Co  for  the  financial  year  ending  December  31,  2022  is 

Rmb85,000,000.  In  aggregate,  the  proposed  annual  cap  of  the  Dedicated  Road 

Maintenance  Agreements  payable  by  the  Group  for  the  financial  year  ending 

December 31, 2022 is Rmb505,000,000.

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  highest  applicable  percentage  ratio  in  respect 

of  the  aggregated  annual  caps  for  transactions  contemplated  under  the  Dedicated 

Road  Maintenance  Agreements,  after  aggregating  with  the  2019  Daily  Road 

Maintenance Agreements,  was  more  than  0.1%  but  less  than  5%,  the  transactions 

under  Dedicated  Road  Maintenance  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  service  fees  paid  by  the  Group  under  the  Dedicated 

Road  Maintenance  (First  Contract  Section)  Agreements  and  Dedicated  Road 

Maintenance (Second Contract Section) Agreements amounted to Rmb366,922,000 

and  the  total  service  fees  paid  by  LongLiLiLong  Co  under  the  Dedicated 

Road  Maintenance  (Third  Contract  Section)  Agreements,  the  Dedicated  Road 

Maintenance  (Fourth  Contract  Section)  Agreements  and  the  Single  Column  Bridge 

Reinforcement Agreements amounted to Rmb83,382,000.

96

2022 ANNUAL REPORTConnected Transactions4.  E x p r e s s w a y  M e c h a n i c a l  a n d  E l e c t r i c a l  S y s t e m  M a i n t e n a n c e 

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 Rmb2,428,000.

As  set  out  above,  Zhejiang  Information  is  a  connected  person  of  the  Company  and 

as  a  result,  the  transactions  under  the  Expressway  Mechanical  and  Electrical  System 

Maintenance 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,  the  respective  transactions 

contemplated  under  the  Expressway  Mechanical  and  Electrical  System  Maintenance 

Agreements were required to be aggregated with the respective transactions contemplated 

under the agreements entered into 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.

97

As  the  highest  applicable  percentage  ratios  in  respect  of  the  transactions  contemplated 

under  the  Expressway  Mechanical  and  Electrical  System  Maintenance  Agreements, 

after  aggregating  such  previous  agreements,  were  more  than  0.1%  but  less  than  5%, 

the  transactions  under  the  Expressway  Mechanical  and  Electrical  System  Maintenance 

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.

5.  Entrusted Management Agreements

(i)  2021 Entrusted Management Agreements

On  December  13,  2021,  the  Company  entered  into  the  entrusted  management 
agreements  with  branch  and  subsidiaries  of  the  Communications  Group  (the  “2021 
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  2021  Entrusted  Management Agreement  is  three  years.  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  2021  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  2021  Entrusted  Management  Agreements  constituted 

continuing connected transactions for the Company under Chapter 14A of the Listing 

Rules.

98

2022 ANNUAL REPORTConnected TransactionsPursuant  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 2021 Entrusted 

Management Agreements and the previous continuing connected transactions of the 

same nature with Communications Group and its subsidiaries is more than 0.1% but 

less than 5%, the transactions contemplated under the 2021 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  2021  Entrusted  Management  Agreements  amounted  to 

Rmb9,213,000.

(ii)  2022 Entrusted Management Agreements

a. 

Entrusted Management Agreements with North Channel Co and Jiaxiao Co

On  September  21,  2022,  the  Company  entered  into  the  entrusted 

management  agreements  with  each  of  North  Channel  Co  and  Jiaxiao  Co 
(the  “Entrusted  Management  Agreements  with  North  Channel  Co  and 
Jiaxiao  Co”),  pursuant  to  which  each  of  North  Channel  Co  and  Jiaxiao  Co 
shall  entrust  the  Company  to  take  over  the  operation  and  management  of  (i) 

Zhoudai Bridge and Fuchimen Bridge of Ningbo Zhoushan Port Main Passage 

until June 30, 2024; and (ii) North Connection of Qianjiang Channel until June 

29, 2024, respectively. Please refer to announcements of the Company dated 

September 21 and December 8, 2022 for details.

The  proposed  annual  cap  on  the  aggregate  entrusted  management  service 

fees  of  the  Entrusted  Management  Agreements  with  North  Channel  Co  and 

Jiaxiao  Co  for  the  each  of  the  three  years  from  June  30,  2021  to  June  30, 

2024 shall not exceed Rmb3,000,000.

99

As each of North Channel Co and Jiaxiao Co is a non-wholly owned subsidiary 

of  Communications  Group  and  thus  is  a  connected  person  of  the  Company. 

As  a  result,  the  respective  transactions  under  the  Entrusted  Management 

Agreements  with  North  Channel  Co  and  Jiaxiao  Co  constituted  continuing 

connected  transactions  for  the  Company  under  Chapter  14A  of  the  Listing 

Rules.

Pursuant  to  Rules  14A.81  to  14A.83  of  the  Listing  Rules,  connected 

t r a n s a c t i o n s  w i t h  t h e  s a m e  c o n n e c t e d  p e r s o n  o r  p a r t i e s  w h o  a r e 

connected  with  one  another  may  be  aggregated.  As  the  highest  applicable 

percentage  ratio  in  respect  of  the  transactions  contemplated  under  the 

Entrusted  Management  Agreements  with  North  Channel  Co  and  Jiaxiao 

Co,  after  aggregating  with  the  previous  continuing  connected  transaction 

with  Communications  Group  and  its  subsidiaries  in  relation  to  entrusted 

management services, was more than 0.1% but less than 5%, the transactions 

contemplated  under  the  Entrusted  Management  Agreements  with  North 

Channel Co and Jiaxiao Co 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  amount  of  the  entrusted  management  under  the 

Entrusted  Management  Agreements  with  North  Channel  Co  and  Jiaxiao  Co 

amounted to Rmb822,000.

100

2022 ANNUAL REPORTConnected Transactionsb. 

Entrusted Management Agreement with Hangxuan Co

On December 29, 2022, the Company entered into an entrusted management 
agreement with Hangxuan Co (the “Entrusted Management Agreement with 
Hangxuan  Co”),  pursuant  to  which  Hangxuan  Co  shall  entrust  the  Company 
to  take  over  the  operation  and  management  of  Lin’an  to  Jiande  Section  of 

Linjin  Expressway.  Please  refer  to  announcement  of  the  Company  dated 

December 29, 2022 for details.

The  proposed  annual  cap  on  the  entrusted  management  service  fees  of  the 

Entrusted  Management  Agreement  with  Hangxuan  Co  during  the  term  of 

entrusted  management  commencing  from  December  30,  2022  and  ending  to 

June 30, 2024 shall not exceed Rmb3,500,000.

As  Hangxuan  Co  is  a  wholly  owned  subsidiary  of  Communications  Group 

and  thus  is  a  connected  person  of  the  Company. As  a  result,  the  respective 

transaction  under  the  Entrusted  Management  Agreement  with  Hangxuan  Co 

constituted  continuing  connected  transaction  for  the  Company  under  Chapter 

14A of the Listing Rules.

Pursuant  to  Rules  14A.81  to  14A.83  of  the  Listing  Rules,  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  transactions  contemplated  under  the  Entrusted 

Management  Agreement  with  Hangxuan  Co,  after  aggregating  with  the 

previous  continuing  connected  transaction  with  Communications  Group  and 

its  subsidiaries  in  relation  to  entrusted  management  services,  including  but 

not  limited  to  the  2021  Entrusted  Management  Agreements  and  Entrusted 

Management  Agreements  with  North  Channel  Co  and  Jiaxiao  Co,  was 

more  than  0.1%  but  less  than  5%,  the  transaction  contemplated  under  the 

Entrusted  Management  Agreement  with  Hangxuan  Co  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.

101

During  the  Period,  the  total  amount  of  the  entrusted  management  under  the  Entrusted 

Management Agreement with Hangxuan Co amounted to Rmb0.

6.  Framework Agreement

On  March  24,  2022,  Zhejiang  Zheqi  and  Zheshang  Development,  entered  into  a 
framework  agreement  (the  “Framework  Agreement”),  pursuant  to  which  Zhejiang 
Zheqi  and  Zheshang  Development  Group  will  be  involved  in,  among  others,  (i)  bulk 

commodity  sale  and  purchase  transactions  and  (ii)  over-the-counter  (OTC)  derivatives 

transactions  for  a  term  of  three  years  commencing  from  the  date  of  the  Framework 

Agreement.  The  annual  cap  of  the  bulk  commodity  sale  and  purchase  transactions 

under  the  Framework  Agreement  for  each  of  the  three  years  ending  March  23,  2025 

shall  not  exceed  Rmb800,000,000.  The  annual  cap  on  the  maximum  aggregate  annual 

amount  of  accumulated  nominal  principal  for  the  OTC  derivatives  transactions  under  the 

Framework Agreement for each of the three years ending March 23, 2025 shall not exceed 

Rmb1,200,000,000.  Please  refer  to  the  announcement  of  the  Company  dated  March  25, 

2022 and April 19, 2022 for details.

Zheshang  Development  is  a  45.28%  owned  associate  of  Communications  Group  and 

Zhejiang  Zheqi  is  an  indirect  non-wholly  owned  subsidiary  of  the  Company.  Therefore, 

Zheshang  Development  is  a  connected  person  of  the  Company.  As  a  result,  the 

transactions  contemplated  under  the  Framework  Agreement  constituted  continuing 

connected transactions for the Company under Chapter 14A of the Listing Rules.

As  the  highest  applicable  percentage  ratio  in  respect  of  each  of  the  bulk  commodity  sale 

and  purchase  transactions  and  the  OTC  derivatives  transactions  under  the  Framework 

Agreement  was  more  than  0.1%  but  less  than  5%,  the  entering  into  of  each  of  the  bulk 

commodity  sale  and  purchase  transactions  and  the  OTC  derivatives  transactions  under 

the Framework 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  amount  of  (i)  the  bulk  commodity  sale  transactions;  (ii) 

purchase  transactions;  and  (iii)  the  OTC  derivatives  transactions  under  the  Framework 

Agreement  amounted  to  Rmb329,367,000,  Rmb447,327,000  and  Rmb1,193,266,000, 

respectively.

102

2022 ANNUAL REPORTConnected Transactions7.  The Guardrail Agreements

On July 29, 2022, the Company and its subsidiaries entered into the Guardrail Agreements 
(the  “Guardrail  Agreements”)  with  Zhejiang  Shunchang,  Maintenance  Co  and  Jiaogong 
Maintenance,  respectively,  pursuant  to  which  (i)  Zhejiang  Shunchang  agreed  to 

undertake  the  guardrail  revamp  and  upgrade  projects  in  respect  of  three  expressways 

operated  by  the  Group,  namely  the  Shaoxing  Section  of  the  Shanghai-Hangzhou-Ningbo 

Expressway,  the  Jinhua  Section  of  the  Ningbo-Jinhua  Expressway  and  the  Xintian 

Section  and  Shangsheng  Section  of  the  Shangsan  Expressway  for  the  consideration  of 

Rmb272,989,078;  (ii)  Maintenance  Co  agreed  to  undertake  the  guardrail  revamp  and 

upgrade  projects  in  respect  of  two  expressways  operated  by  the  Group,  namely  the 

Jiaxing  Section  of  the  Shanghai-Hangzhou-Ningbo  Expressway  and  Section  1  of  the 

Shenjiahuhang  Expressway  for  a  consideration  of  Rmb139,509,352;  and  (iii)  Jiaogong 

Maintenance  agreed  to  undertake  the  guardrail  revamp  and  upgrade  projects  in  respect 

of  three  expressways  operated  by  the  Group,  namely  the  Zhoushan  Bay  Bridge,  the 

Ningbo  Section  of  the  Shanghai-Hangzhou-Ningbo  Expressway  and  Section  2  of  the 

Shenjiahuhang Expressway for the consideration of Rmb167,271,629. All the construction 

work shall be completed within five months.

The  proposed  annual  cap  on  the  aggregate  service  fees  of  the  Guardrail  Agreements 

p a y a b l e  b y  t h e  G r o u p  f o r  t h e  f i n a n c i a l  y e a r  e n d i n g  D e c e m b e r  31,  2022  i s 

Rmb600,000,000.

Each  of  Zhejiang  Shunchang,  Maintenance  Co  and  Jiaogong  Maintenance  is  an 

indirect  subsidiary  of  Communications  Group.  Therefore,  each  of  Zhejiang  Shunchang, 

Maintenance  Co  and  Jiaogong  Maintenance  is  a  connected  person  of  the  Company  and 

as  a  result,  the  transactions  contemplated  under  the  Guardrail  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,  the  respective  transactions 

contemplated under the Guardrail Agreements are required to be aggregated, all of which 

were  continuing  connected  transactions  entered  into  with  the  associates  of  the  same 

connected person (i.e. Communications Group) and are with the same nature.

103

As  the  highest  applicable  percentage  ratio  in  respect  of  the  aggregated  annual  cap  for 
transactions  contemplated  under  the  Guardrail Agreements  was  more  than  0.1%  but  less 
than  5%,  the  transactions  under  the  Guardrail 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  service  fees  paid  by  the  Group  under  the  Guardrail 
Agreements amounted to Rmb520,041,000.

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) 

c) 

on normal commercial terms or on terms no less favourable to the Group than terms 
available to or from independent third parties; and

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 
constituted connected transactions and continuing connected transactions to be disclosed 
under  the  Listing  Rules  are  set  out  in  note  57  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.

104

2022 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  110  to  281,  which  comprise  the 

consolidated statement of financial position as at December 31, 2022, 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,  2022,  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.

105

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 scope 

Our  procedures  in  relation  to  the  management’s 

of  structured  entities,  which  invested  by  the  Group’s 

determination  of  consolidation  scope  of  structured  entities 

securities operation segment (defined in Note 7), as a 

included:

key  audit  matter  due  to  significant  judgement  applied 

by  management  in  determining  whether  a  structured 

•  Testing  and  evaluating  key  controls  of  the  management 

entity  is  required  to  be  consolidated  by  the  Group 

in  determining  the  consolidation  scope  of  structured 

and the significance of these balances to the Group’s 

entities;

consolidated financial statements as a whole.

•  Examining,  on  a  sample  basis,  the  documents  and 

The  Group  held  interests  as  investor  or  acted  as 

information  used  by  the  management  in  assessing 

fund  manager  in  various  structured  entities  including 

the  consolidation  criteria  of  structured  entities  against 

collective  asset  management  schemes,  investment 

the  related  agreements  and  other  related  service 

funds and limited partnership enterprises. As disclosed 

agreements  of  structured  entities  newly  established, 

in  Note  5  to  the  consolidated  financial  statements, 

invested  or  with  changes  in  proportion  of  ownership 

to  determine  whether  a  structured  entity  should  be 

interests or contractual terms during the year;

consolidated,  the  management  applied  significant 

judgement  in  determining  whether  the  Group  has 

•  Assessing  management  judgement  in  determining 

power  over  the  structured  entities,  and  assess 

the  scope  for  consolidation  and,  on  a  sample  basis, 

whether  the  combination  of  investments  it  held 

assessing  the  conclusion  about  whether  a  structured 

together with its remuneration and credit enhancement 

entity should be consolidated or not.

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  44  and  59  to  the  consolidated 

financial  statements,  as  at  December  31,  2022,  the 

total  assets  of  the  consolidated  structured  entities 

amounted  to  Rmb3,661,442  thousands  and  the 

total  assets  of  the  unconsolidated  structured  entities 

managed  by  the  Group’s  securities  operation 

segment  amounted  to  Rmb103,411,981  thousands, 

respectively.

106

2022 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.

107

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.

108

2022 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 27, 2023

109

NOTES

6

8
9

10

11

12
13

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:
Fair value loss on debt instruments measured at fair value 

through other comprehensive income

Impairment loss for debt instruments at fair value through other 

comprehensive income

Income tax impact relating to 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)/income of an associate, net 

of related income tax

Other comprehensive income for the year, net of income tax

12/31/2022
Rmb’000

14,898,730
2,390,436

12/31/2021
Rmb’000

16,262,601
2,247,361

(8,857,926)

(9,521,482)

6,040,804
679,734
2,093,933
(172,616)
(119,701)

(11,742)
752,086
49,771
(1,770,008)

7,542,261
(1,039,051)

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)

6,503,210

6,290,164

(9,055)

1,108

1,987

–

–

–

21,787

(4,963)

(736)

15,091

43,607

38,644

Total comprehensive income for the year

6,518,301

6,328,808

110

2022 ANNUAL REPORTConsolidated Statement of Profit or Loss and Other Comprehensive IncomeFor the year ended December 31, 2022 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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

12/31/2022
Rmb’000

12/31/2021
Rmb’000

5,378,866
1,124,344

4,762,431
1,527,733

6,503,210

6,290,164

5,384,448
1,133,853

4,803,862
1,524,946

6,518,301

6,328,808

123.85

117.62

109.65

102.50

17

111

For the year ended December 31, 2022 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NOTES 

12/31/2022
Rmb’000

12/31/2021
Rmb’000

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”)
Debt instruments at fair value through other comprehensive  

income

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
Debt instruments at fair value through other comprehensive 

income

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

18
19
20
21
22
24
25
26

27
30
31
46

28

29
30

38
26

27
31

32

33
33
33

5,419,682
621,953
19,797,341
86,867
347,051
10,059,641
440,345
209,439

570,257
1,118,363
189,000
1,416,809

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

40,276,748

45,453,364

606,285
554,368

371,714
467,892

17,557,268
3,347,368
44
1,000,756
43,789,944

19,394,130
1,379,105
128
613,718
45,445,711

250,683
6,086,210

–
7,078,206

48,744,803

38,392,804

70,179
203,632
23,917,236

132,090
413,843
17,153,977

146,128,776

130,843,318

112

2022 ANNUAL REPORTConsolidated Statement of Financial PositionAt December 31, 2022 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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
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

TOTAL ASSETS LESS CURRENT LIABILITIES

NON-CURRENT LIABILITIES
Bank and other borrowings
Bonds payable
Convertible bonds
Deferred tax liabilities
Lease liabilities

NOTES 

12/31/2022
Rmb’000

12/31/2021
Rmb’000

34
35
36

37

38
39
40
41
42
43
44
45

39
41
42
46
45

700,000
48,449,595
1,159,833
419,684
377,435
8,868,740
161,381
554,357
4,915,176
3,567,025
7,118,247
4,719
23,825,242
1,057,642
119,678

500,000
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

101,298,754

97,700,214

44,830,022

33,143,104

85,106,770

78,596,468

12,195,014
16,189,322
5,707,354
481,066
324,352

14,427,610
17,193,430
1,714,662
477,525
360,216

34,897,108

34,173,443

50,209,662

44,423,025

113

At December 31, 2022 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
CAPITAL AND RESERVES

Share capital

Reserves

Equity attributable to owners of the Company

Non-controlling interests

NOTES 

12/31/2022
Rmb’000

12/31/2021
Rmb’000

47

4,343,115

4,343,115

26,575,175

22,807,227

48

30,918,290

19,291,372

27,150,342

17,272,683

50,209,662

44,423,025

The consolidated financial statements on pages 110 to 281 were approved and authorised for issue by the board 

of directors on March 27, 2023 and are signed on its behalf by:

DIRECTOR
CHEN Ninghui

DIRECTOR
YUAN Yingjie

114

2022 ANNUAL REPORTConsolidated Statement of Financial PositionAt December 31, 2022 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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, 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

Profit for the year

Other comprehensive income/(loss) for the year

Total comprehensive income/(loss) for the year

Issuance of Convertible Bond 2022 by a subsidiary 

(Note 42)

Conversion of Convertible Bond 2022 of a subsidiary 

(Note 42)

Deemed partial disposal of interest in a subsidiary 
upon conversion of Convertible Bond 2022

Capital injection of a subsidiary

Dividend declared to non-controlling interests

2021 dividend (Note 16)

Proposed 2022 dividend

Transfer to reserves

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

327,425

–

–

–

–

–

–

–

–

–

–

–

–

(3,140)

(3,140)

–

8,722

8,722

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

(1,628,668)

1,628,668

–

–

–

–

–

–

6

12,162

–

–

–

–

5,378,866

5,378,866

1,124,344

6,503,210

–

5,582

9,509

15,091

5,378,866

5,384,448

1,133,853

6,518,301

–

–

–

–

–

–

–

6

476,257

476,257

(10)

101

(10)

107

12,162

817,839

830,001

–

(409,351)

(409,351)

(1,628,668)

–

–

(1,628,668)

(327,425)

–

–

–

(1,628,668)

–

–

At December 31, 2022

4,343,115

3,355,621

5,966,512

1,712

16,307

7,055

1,628,668

6,928,156

8,671,144

30,918,290

19,291,372

50,209,662

115

For the year ended December 31, 2022Consolidated Statement of Changes in EquityFor the year ended December 31, 2022 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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)

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

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

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 January 1, 2021

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 16)

Proposed 2021 dividend

Transfer to reserves

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

116

2022 ANNUAL REPORTConsolidated Statement of Changes in EquityFor the year ended December 31, 2022 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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.

117

For the year ended December 31, 2022Profit before tax
Adjustments for:
Finance costs
Interest income from financial institutions
Interest income from debt instruments at FVTOCI
Foreign exchange loss/(gain)
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
– debt instruments at FVTOCI
– trade receivables and other receivables
– advance to customers arising from margin financing 

business

– financial assets held under resale agreements

Allowance for write-down of inventories
Loss on disposal of property, plant and equipment
Loss/(Gain) on disposal of expressway operating rights
Gain on disposal of a subsidiary
Gain on disposal of an associate
(Gain)/Loss arising from deemed disposal of associates
Gain on decrease in fair value in respect of derivative 

component of Convertible Bond

Year ended 
12/31/2022
Rmb’000

Year ended 
12/31/2021
Rmb’000

NOTE

7,542,261

8,164,125

1,770,008
(142,358)
(11,505)
286,160
(752,086)
(49,771)
554,686
2,621,008
133,805
75,491

1,108
21,389

(1,521)
(9,234)
6,898
1,436
18,434
(1,881,262)
–
(22,062)

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

(31,951)

(27,453)

50

118

2022 ANNUAL REPORTConsolidated Statement of Cash FlowsFor the year ended December 31, 2022 
 
 
 
Operating cash flows before movements in working capital
Increase in inventories
Increase in trade receivables
Decrease in contract asset
Decrease/(increase) in loans to customers arising from margin 

financing business

(Increase)/decrease in other receivables and prepayments
Decrease/(Increase) in financial assets at FVTPL
Decrease in financial assets held under resale agreements
Decrease/(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

(Decrease)/increase in trade payables
(Decrease)/increase in other taxes payable
(Decrease)/increase in contract liabilities
Increase/(decrease) in other payables and accruals
(Decrease)/increase in financial liabilities at FVTPL
(Decrease)/increase in financial assets sold under repurchase 

agreements

Cash generated from operations
Income taxes paid
Interest paid

Year ended 
12/31/2022
Rmb’000

10,130,934
(241,469)
(87,940)
–

1,838,383
(1,880,644)
1,877,936
822,230
61,911

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)

(10,351,999)
(284,049)
200,000

(11,301,988)
(134,148)
100,000

10,380,245
(226,211)
(538,834)
(42,833)
3,181,325
(1,867,749)

11,015,298
200,264
468,371
124,983
(415,623)
14,666

(1,425,184)

13,725,339

11,546,052
(1,966,682)
(1,937,998)

6,433,073
(1,752,542)
(1,857,536)

NET CASH FROM OPERATING ACTIVITIES

7,641,372

2,822,995

119

For the year ended December 31, 2022 
 
 
 
 
 
 
 
 
 
 
 
Year ended 
12/31/2022
Rmb’000

Year ended 
12/31/2021
Rmb’000

NOTE

INVESTING ACTIVITIES
Interest received
Dividends received from associates and a joint venture
Investment in associates
Proceed from disposal of associates
Withdrawal of investment in associates
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
Purchase of

– financial assets at FVTPL
– debt instruments at FVTOCI

50

Net cashflow on acquisition of a subsidiary
Net cashflow on disposal of a subsidiary
Net cashflow on disposal of subsidiaries before acquisition
New entrusted loans originated
Withdrawl of entrusted loans
Placement of time deposits
Withdrawal of time deposits
Investment made by infrastructure real estate investment trusts
Withdrawl of investment made by infrastructure real estate 

investment trusts

NET CASH FROM/(USED IN) INVESTING ACTIVITIES

145,583
497,691
(80,000)
–
30,439
7,590
10,744
(1,482,722)
(102,758)

(67,730)
(818,491)
–
2,206,798
–
–
2,400,000
–
200,000
(14,900)

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
–

14,900

–

2,947,144

(596,442)

120

2022 ANNUAL REPORTConsolidated Statement of Cash FlowsFor the year ended December 31, 2022 
 
 
 
 
 
 
 
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
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

Capital injection by non-controlling interests

Year ended 
12/31/2022
Rmb’000

Year ended 
12/31/2021
Rmb’000

NOTE

(1,632,065)
(409,351)
6,764,713
(6,578,386)
2,788,954
(1,156,173)
8,500,000
(12,806,310)
4,350,789
(1,489)
8,401,470
(12,764,370)
(134,827)
–

(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)

–

(493,414)

–
830,001

2,801,109
–

NET CASH (USED IN)/FROM FINANCING ACTIVITIES

(3,847,044)

6,287,302

NET INCREASE IN CASH AND CASH EQUIVALENTS

6,741,472

8,513,855

CASH AND CASH EQUIVALENTS AT JANUARY 1

17,153,977

8,645,085

Effect of foreign exchange rate changes
CASH AND CASH EQUIVALENTS AT DECEMBER 31

33

21,787
23,917,236

(4,963)
17,153,977

121

For the year ended December 31, 2022 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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.

122

2022 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 20222.  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 

Group’s  annual  periods  beginning  on  or  after  1  January  2022  for  the  preparation  of  the  consolidated  financial 

statements:

Amendments to HKFRS 3
Amendment to HKFRS 16
Amendments to HKAS 16
Amendments to HKAS 37
Amendments to HKFRSs

Reference to the Conceptual Framework
Covid-19-Related Rent Concessions beyond June 30, 2021
Property, Plant and Equipment – Proceeds before Intended Use
Onerous Contracts – Cost of Fulfilling a Contract
Annual Improvements to HKFRSs 2018 – 2020

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.

123

2.  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  amendments  to  HKFRSs  that  have  been  issued  but  are 

not yet effective:

HKFRS 17 (including the October 2020 and 
February 2022 Amendments to HKFRS 17)

Insurance Contracts1

Amendments to HKFRS 10 and HKAS 28

Sale or Contribution of Assets between an Investor and its 

Amendments to HKFRS 16
Amendments to HKAS 1

Amendments to HKAS 1
Amendments to HKAS 1 And  

HKFRS Practice Statement 2

Amendments to HKAS 8
Amendments to HKAS 12

Associate or Joint Venture2

Lease Liability in a Sale and Leaseback3
Classification of Liabilities as Current or Non-current and 

related amendments to Hong Kong Interpretation 5 (2020)3

Non-current Liabilities with Covenants3
Disclosure of Accounting Policies1

Definition of Accounting Estimates1
Deferred Tax related to Assets and Liabilities arising from a 

Single Transaction1

1 
2 
3 

Effective for annual periods beginning on or after January 1, 2023.

Effective for annual periods beginning on or after a date to be determined.

Effective for annual periods beginning on or January 1, 2024.

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.

124

2022 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 20222.  APPLICATION OF AMENDMENTS TO HONG KONG FINANCIAL 

REPORTING STANDARDS (“HKFRSs”) (Continued)

New and amendments to HKFRSs in issue but not yet effective (Continued)
Amendments  to  HKAS  1  Classification  of  Liabilities  as  Current  or  Non-current 
and related amendments to Hong Kong Interpretation 5 (2020)
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; and

• 

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.

125

2.  APPLICATION OF AMENDMENTS TO HONG KONG FINANCIAL 

REPORTING STANDARDS (“HKFRSs”) (Continued)

New and amendments to HKFRSs in issue but not yet effective (Continued)
Amendments  to  HKAS  1  Classification  of  Liabilities  as  Current  or  Non-current 
and related amendments to Hong Kong Interpretation 5 (2020) (Continued)
Accounted separately as host debt and derivative components
As  at  31  December  2022,  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  Rmb1,480,135,000  and  the  derivative  component  (including  the 
conversion options) is measured at fair value with carrying amount of Rmb308,266,000 as at 31 December 2022, 
both  of  which  are  classified  as  non-current  as  set  out  in  Note  42.  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  Rmb1,788,401,000  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  in  Note  4  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  the  Group’s  annual  reporting  periods  beginning  on  1  January  2023.  As  at 
31  December  2022,  the  carrying  amounts  of  right-of-use  assets  and  lease  liabilities  which  are  subject  to  the 
amendments  amounted  to  Rmb435,900,000  and  Rmb444,030,000  respectively.  The  cumulative  effect  of  initially 
applying  the  amendments  will  be  recognised  as  an  adjustment  to  the  opening  balance  of  retained  earnings  (or 
other component of equity, as appropriate) at the beginning of the earliest comparative period presented.

126

2022 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 20223.  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.

127

3.  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.

4.  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.

128

2022 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 20224.  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.

129

4.  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.

130

2022 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 20224.  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). The  fair  value  of  any  investment  retained  in  the  former  subsidiary  at  the  date 

when  control  is  lost  is  regarded  as  the  fair  value  on  initial  recognition  for  subsequent  accounting  under  HKFRS 

9  Financial Instruments or, when  applicable, the cost on initial recognition of an investment in an associate or a 

joint venture.

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.

131

4.  SIGNIFICANT ACCOUNTING POLICIES (Continued)
Business combinations or asset acquisitions (Continued)
Business combinations
A  business  is  an  integrated  set  of  activities  and  assets  which  includes  an  input  and  a  substantive  process 

that  together  significantly  contribute  to  the  ability  to  create  outputs.  The  acquired  processes  are  considered 

substantive if they are critical to the ability to continue producing outputs, including an organised workforce with 

the  necessary  skills,  knowledge,  or  experience  to  perform  the  related  processes  or  they  significantly  contribute 

to  the  ability  to  continue  producing  outputs  and  are  considered  unique  or  scarce  or  cannot  be  replaced  without 

significant cost, effort, or delay in the ability to continue producing outputs.

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.

For  business  combinations  in  which  the  acquisition  date  is  on  or  after  1  January  2022,  the  identifiable  assets 

acquired and liabilities assumed must meet the definitions of an asset and a liability in the Conceptual Framework 

for  Financial  Reporting  2018  issued  in  June  2018  (the  “Conceptual  Framework”)  except  for  transactions  and 

events within the scope of HKAS 37 or HK(IFRIC)-Int 21, in which the Group applies HKAS 37 or HK(IFRIC)-Int 

21  instead  of  the  Conceptual  Framework  to  identify  the  liabilities  it  has  assumed  in  a  business  combination. 

Contingent assets are not recognised.

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);

132

2022 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 20224.  SIGNIFICANT ACCOUNTING POLICIES (Continued)
Business combinations or asset acquisitions (Continued)
Business combinations (Continued)
• 

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.

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.  Other  types  of  non-controlling 

interests are measured at their fair value.

133

4.  SIGNIFICANT ACCOUNTING POLICIES (Continued)
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.

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).

134

2022 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 20224.  SIGNIFICANT ACCOUNTING POLICIES (Continued)
Goodwill (Continued)
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.

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.

135

4.  SIGNIFICANT ACCOUNTING POLICIES (Continued)
Investments in associates and a joint venture (Continued)
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.

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.

Changes in the Group’s interests in associates and joint ventures
The  Group  continues  to  use  the  equity  method  when  an  investment  in  an  associate  becomes  an  investment 

in  a  joint  venture  or  an  investment  in  a  joint  venture  becomes  an  investment  in  an  associate.  There  is  no 

remeasurement to fair value upon such changes in ownership interests.

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.

136

2022 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 20224.  SIGNIFICANT ACCOUNTING POLICIES (Continued)
Investments in associates and a joint venture (Continued)
Changes in the Group’s interests in associates and joint ventures (Continued)
Acquisition of additional interests in associates or joint ventures

When  the  Group  increases  its  ownership  interest  in  an  associate  or  a  joint  venture  but  the  Group  continues  to 

use  the  equity  method,  goodwill  is  recognised  at  acquisition  date  if  there  is  excess  of  the  consideration  paid 

over  the  share  of  carrying  amount  of  net  assets  attributable  to  the  additional  interests  in  associates  or  joint 

ventures acquired. Any excess of share of carrying amount of net assets attributable to the additional interests in 

associates or joint ventures acquired over the consideration paid are recognised in the profit or loss in the period 

in which the additional interest are acquired.

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.

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.

137

4.  SIGNIFICANT ACCOUNTING POLICIES (Continued)
Revenue from contracts with customers (Continued)
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.

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,  except  for  the  allocation  of  discounts 

and variable consideration.

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.

138

2022 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 20224.  SIGNIFICANT ACCOUNTING POLICIES (Continued)
Revenue from contracts with customers (Continued)
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.

139

4.  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.

140

2022 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 20224.  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.

141

4.  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.

142

2022 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2022 
 
 
4.  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.

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, if any.

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.

143

4.  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.

144

2022 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 20224.  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.

Cash and cash equivalents
Cash and cash equivalents presented on the consolidated statement of financial position include:

(a) 

cash, which comprises of cash on hand and demand deposits, excluding bank balances that are subject to 

regulatory restrictions that result in such balances no longer meeting the definition of cash; and

(b) 

cash equivalents, which comprises of short-term (generally with original maturity of three months or less), 

highly liquid investments that are readily convertible to a known amount of cash and which are subject to 

an insignificant risk of changes in value. Cash equivalents are held for the purpose of meeting short-term 

cash commitments rather than for investment or other purposes.

For  the  purposes  of  the  consolidated  statement  of  cash  flows,  cash  and  cash  equivalents  consist  of  cash  and 

cash equivalents as defined above.

145

4.  SIGNIFICANT ACCOUNTING POLICIES (Continued)
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.

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  on  or  after  the  date  of  initial  application  of  HKFRS  16  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.

146

2022 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 20224.  SIGNIFICANT ACCOUNTING POLICIES (Continued)
Lease (Continued)
The Group as lessee (Continued)
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.

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.

147

4.  SIGNIFICANT ACCOUNTING POLICIES (Continued)
Lease (Continued)
The Group as lessee (Continued)
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;

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.

148

2022 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 20224.  SIGNIFICANT ACCOUNTING POLICIES (Continued)
Lease (Continued)
The Group as lessee (Continued)
Lease liabilities (Continued)

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.

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.

149

4.  SIGNIFICANT ACCOUNTING POLICIES (Continued)
Lease (Continued)
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.

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.

Rental income which is derived from the Group’s ordinary course of business is presented as other income.

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.

150

2022 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 20224.  SIGNIFICANT ACCOUNTING POLICIES (Continued)
Lease (Continued)
The Group as a lessor (Continued)
Lease modification (Continued)

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.

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.

151

4.  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.

152

2022 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 20224.  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.

153

4.  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.

154

2022 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 20224.  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.

155

4.  SIGNIFICANT ACCOUNTING POLICIES (Continued)
Financial instruments (Continued)
Financial assets (Continued)
Classification and subsequent measurement of financial assets (Continued)

Financial  assets  that  meet  the  following  conditions  are  subsequently  measured  at  fair  value  through  other 

comprehensive income (“FVTOCI”):

• 

the  financial  asset  is  held  within  a  business  model  whose  objective  is  achieved  by  both  selling  financial 

assets and collecting 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.

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.

156

2022 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 20224.  SIGNIFICANT ACCOUNTING POLICIES (Continued)
Financial instruments (Continued)
Financial assets (Continued)
Classification and subsequent measurement of financial assets (Continued)

(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.

(ii) 

Debt instruments/receivables classified as at FVTOCI

Subsequent changes in the carrying amounts for debt instruments/receivables classified as at FVTOCI as a result 

of  interest  income  calculated  using  the  effective  interest  method,  and  foreign  exchange  gains  and  losses  are 

recognised  in  profit  or  loss. All  other  changes  in  the  carrying  amount  of  these  debt  instruments/receivables  are 

recognised  in  other  comprehensive  income  and  accumulated  under  the  heading  of  FVTOCI  reserve.  Impairment 

allowances are recognised in profit or loss with corresponding adjustment to other comprehensive income without 

reducing  the  carrying  amounts  of  these  debt  instruments/receivables.  When  these  debt  instruments/receivables 

are  derecognised,  the  cumulative  gains  or  losses  previously  recognised  in  other  comprehensive  income  are 

reclassified to profit or loss.

(iii) 

Financial assets at FVTPL

Financial assets that do not meet the criteria for being measured at amortised cost or FVTOCI or designated as 

FVTOCI 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.

157

4.  SIGNIFICANT ACCOUNTING POLICIES (Continued)
Financial instruments (Continued)
Financial assets (Continued)
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),  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. Assessments 

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.  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.

(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.

158

2022 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 20224.  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)

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.

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.

159

4.  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)

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.

(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.

160

2022 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 20224.  SIGNIFICANT ACCOUNTING POLICIES (Continued)
Financial instruments (Continued)
Financial assets (Continued)
Impairment of financial assets subject to impairment assessment under HKFRS 9 (Continued)

(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.

(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  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 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.

161

4.  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)

Lifetime  ECL  for  trade  receivables  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.

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.

Except  for  investments  in  debt  instruments/receivables  that  are  measured  at  FVTOCI  and  financial  guarantee 

contracts,  the  Group  recognises  an  impairment  gain  or  loss  in  profit  or  loss  for  all  financial  instruments  by 

adjusting  their  carrying  amounts,  with  the  exception  of  trade  receivables,  loans  to  customers  arising  from 

margin  financing  business,  other  receivables,  financial  assets  held  under  resale  agreements,  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. For investments in debt instruments that are measured at FVTOCI, the loss allowance is recognised in 

other  comprehensive  income  and  accumulated  in  the  FVTOCI  reserve  without  reducing  the  carrying  amount  of 

these  debt  instruments/receivables.  Such  amount  represents  the  changes  in  the  FVTOCI  reserve  in  relation  to 

accumulated loss allowance.

162

2022 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 20224.  SIGNIFICANT ACCOUNTING POLICIES (Continued)
Financial instruments (Continued)
Financial assets (Continued)
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.

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.

163

4.  SIGNIFICANT ACCOUNTING POLICIES (Continued)
Financial instruments (Continued)
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.

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.

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.

164

2022 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 20224.  SIGNIFICANT ACCOUNTING POLICIES (Continued)
Financial instruments (Continued)
Financial liabilities and equity (Continued)
Financial liabilities at FVTPL (Continued)

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.

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.

165

4.  SIGNIFICANT ACCOUNTING POLICIES (Continued)
Financial instruments (Continued)
Financial liabilities and equity (Continued)
Financial guarantee contracts

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  payments  when  due  in  accordance  with  the 

terms  of a debt instrument.  Financial guarantee contract liabilities are measured initially at their fair values. It is 

subsequently measured 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  amortisation  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  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

2022 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 20224.  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

4.  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

2022 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 20224.  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.  The 

above said fees include only those paid or received between the borrower and the lender, including fees paid or 

received  by  either  the  borrower  or  lender  on  the  other’s  behalf. 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

4.  SIGNIFICANT ACCOUNTING POLICIES (Continued)
Financial instruments (Continued)
Financial guarantee contracts (Continued)
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

2022 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 20225.  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.

For  asset-backed  special  program  (“ABS  Program”)  where  the  Group  involves  as  an  investor  while  providing 

operational  service  in  relation  to  the  underlying  assets.  In  the  evaluation  of  whether  the  Group  has  power 

over  the ABS  Program,  the  following  factors  are  taken  into  consideration:  (a)  the  relevant  activities  of  the ABS 

Program  and  decision-making  process  to  direct  them;  (b)  the  scope  of  the  Group’s  decision-making  authority, 

in  terms  of  the  Group’s  share  percentage  within  subordinated  class  of  the  ABS  Program,  responsibilities  for 

the  daily  operation  of  the  underlying  assets  pursuant  to  an  operation  service  agreement,  and  other  rights  and 

responsibilities  in  relation  to  the  ABS  Program;  (c)  substantive  rights  exercisable  by  other  parties  in  the  ABS 

Program. Besides, in the evaluation of variable returns from involvement with the ABS Program, the Group mainly 

considers  its  level  of  rewards  and  risks  exposed,  including  the  investment  return  of  the  subordinated  class, 

service  rewards  and  commitment  from  the  operational  service  provided  in  relation  to  the  underlying  assets  and 

other commitments.

171

5.  CRITICAL ACCOUNTING JUDGEMENT AND KEY SOURCES OF 

ESTIMATION UNCERTAINTY (Continued)

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.

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.

As  at  December  31,  2022,  the  carrying  amount  of  goodwill  is  Rmb86,867,000  (without  accumulated  impairment 

loss)  (2021:  Rmb86,867,000  (without  accumulated  impairment  loss)).  Details  of  the  impairment  testing  are 

disclosed in Note 23.

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

2022 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 20225.  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 53 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  53  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 53(b) for more details on ECL and Note 53(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 53(b) for more details.

173

5.  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.

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

2022 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 20226.  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

Revenue from PPP project

Year ended 12/31/2022

Year ended 12/31/2021

Toll
operation
Rmb’000

Securities
operation
Rmb’000

Others
Rmb’000

Toll
operation
Rmb’000

Securities
operation
Rmb’000

Others
Rmb’000

8,660,333

–

9,607,199

–

–

–

–
–

–

420,826

2,490,292
778,829

3,689,947

–

–
–

–

–
–

–

380,141

2,691,159
1,084,363

4,155,663

–

–
–

–

–
–

–

–
–

–

88,143
69,871

158,014

–
–

–

113,526
138,852

252,378

–

–

–
–

–

Total

8,660,333

3,689,947

158,014

9,607,199

4,155,663

252,378

Timing of revenue recognition
A point in time
Over time

8,660,333
–

3,689,947
–

88,143
69,871

9,607,199
–

4,155,663
–

113,526
138,852

Total

8,660,333

3,689,947

158,014

9,607,199

4,155,663

252,378

175

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
6.  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
12/31/2022
Rmb’000

8,660,333
3,689,947
158,014

Year ended
12/31/2021
Rmb’000

9,607,199
4,155,663
252,378

12,508,294
2,390,436

14,015,240
2,247,361

14,898,730

16,262,601

(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.

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. By reference to completion of the transaction assessed on the basis of the 

actual  costs  incurred  up  to  the  end  of  year  as  a  percentage  of  total  estimated  costs  for  the  contract,  revenue  is 

recognised for the construction service based on the stage of completion of the contract using the 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.

176

2022 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2022 
 
 
 
 
 
 
 
 
 
 
 
6.  REVENUE (Continued)
(ii)  Performance obligations for contracts with customers (Continued)
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.

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

There  is  no  material  unsatisfied  or  partially  unsatisfied  remaining  performance  obligations  as  at  December  31, 

2022.

177

7.  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, 2022

Toll
operation
Rmb’000

Securities
operation
Rmb’000

Others
Rmb’000

Total
Rmb’000

Revenue – external customers

8,660,333

6,080,383

158,014

14,898,730

Segment profit

4,041,889

1,709,964

751,357

6,503,210

178

2022 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2022 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
7.  OPERATING SEGMENTS (Continued)
Segment revenue and results (Continued)

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

The accounting policies of the operating segments are the same as the Group’s accounting policies described in 

Note 4. Segment profit represents the profit after tax of each operating segment. This is the measure reported to 

the chief operating decision maker for the purposes of resource allocation and performance assessment.

Segment assets and liabilities
The following is an analysis of the Group’s assets and liabilities by reportable and operating segment:

Segment assets

Segment liabilities

12/31/2022
Rmb’000

12/31/2021
Rmb’000

12/31/2022
Rmb’000

12/31/2021
Rmb’000

Toll operation
Securities operation
Others

39,363,170
137,584,981
9,370,506

41,373,465
125,941,428
8,894,922

(25,795,642)
(109,660,591)
(739,629)

(29,592,173)
(101,422,949)
(858,535)

Total segment assets (liabilities)
Goodwill

186,318,657
86,867

176,209,815
86,867

(136,195,862)
–

(131,873,657)
–

Consolidated assets (liabilities)

186,405,524

176,296,682

(136,195,862)

(131,873,657)

Segment  assets  and  segment  liabilities  represent  the  assets  and  liabilities  of  the  subsidiaries  operating  in  the 

respective reportable and operating segment.

179

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
7.  OPERATING SEGMENTS (Continued)
Other segment information
Amounts included in the measure of segment profit/loss or segment assets:

For the year ended December 31, 2022

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

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
Gain on disposal of a subsidiary

Toll
operation
Rmb’000

Securities 
operation
Rmb’000

Others
Rmb’000

Total
Rmb’000

638,475

395,486

5,090

1,039,051

141,652
912,896

–
828,543

706
28,569

142,358
1,770,008

–

(1,521)

–

(1,521)

11
2,267,377
440,345
46,135
49,771

1,352
668,480
–
(30,138)
–

101
7,123,784
–
736,089
–

1,464
10,059,641
440,345
752,086
49,771

–

744,503

–

744,503

31,951
1,444,064
3,053,188
1,881,262

–
285,226
295,510
–

–
30,771
36,292
–

31,951
1,760,061
3,384,990
1,881,262

180

2022 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2022 
 
 
 
 
 
 
 
 
 
7.  OPERATING SEGMENTS (Continued)
Other segment information (Continued)

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

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

–

13,157

–

13,157

32
2,362,130
440,574
56,667
56,249

(955)
739,761
–
193,133
–

(26)
6,573,155
–
716,275
–

(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

Note:  Non-current assets excluded financial instruments and deferred tax assets.

181

 
 
 
 
 
 
 
 
 
 
7.  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 PPP project

Year ended
12/31/2022
Rmb’000

Year ended
12/31/2021
Rmb’000

8,660,333
3,689,947
2,390,436
88,143
69,871

9,607,199
4,155,663
2,247,361
113,526
138,852

14,898,730

16,262,601

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, 2022 and 2021, there was no individual customer with sales over 10% of 

the total revenue of the Group.

182

2022 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2022 
 
 
 
 
 
 
 
 
8.  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

9.  OTHER INCOME AND GAINS AND LOSSES

Interest income from financial institutions
Rental income (Note i)
Gain on changes in fair value in respect of the derivative component of 

convertible bond

Gain on disposal of associates
Exchange (losses)/gains, net
(Losses)/gains on commodity trading, net (Note ii)
Management fee income
Government subsidy
Gain/(losses) arising from deemed disposal of associates
Gain on disposal of assets
Gain on disposal of a subsidiary (Note iii)
Others

Year ended
12/31/2022
Rmb’000

Year ended
12/31/2021
Rmb’000

744,503
(4,770)
(59,999)

1,819,868
184,225
(168,530)

679,734

1,835,563

Year ended
12/31/2022
Rmb’000

Year ended
12/31/2021
Rmb’000

142,358
70,875

31,951
–
(229,412)
(37,237)
13,777
72,031
22,062
7,333
1,881,262
118,933

119,027
89,441

27,453
5,521
231,659
43,716
15,524
51,155
(46,705)
73,460
–
122,820

2,093,933

733,071

Notes:

(i) 

Rental income included contingent rent of Rmb1,175,000 (2021: Rmb1,363,000) recognised during the year.

(ii) 

The  income  on  commodity  trading  amounted  to  Rmb11,616,371,000  (2021:  Rmb9,752,811,000)  with  the  cost 

of  Rmb11,653,608,000  (2021:  Rmb9,709,095,000).  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 

Rmb603,909,000 (2021: Rmb369,268,000) as of December 31, 2022.

(iii)  With reference to Note 50, as Shenjiahuhang Expressway ceased to be a subsidiary of the Group on December 
2,  2022,  the  difference  between  the  net  assets  on  that  date  and  the  consideration  received  was  recognized  as 

gain on disposal of a subsidiary.

183

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
10. 

IMPAIRMENT LOSSES UNDER EXPECTED CREDIT LOSS MODEL, 
NET OF REVERSAL

Year ended
12/31/2022
Rmb’000

Year ended
12/31/2021
Rmb’000

1,464
19,925
(1,521)
(9,234)
1,108

11,742

(949)
(5,868)
13,157
(71,731)
–

(65,391)

Year ended
12/31/2022
Rmb’000

Year ended
12/31/2021
Rmb’000

751,746
103,977
767,335
123,880
23,070

802,508
183,939
875,273
57,294
23,519

1,770,008

1,942,533

Impairment losses on financial assets and contract assets reversed:

Trade receivables - goods and services
Other receivables
Loans to customers arising from margin financing business
Financial assets held under resale agreements
Debt instruments at FVTOCI

11.  FINANCE COSTS

Bank and other borrowings
Short-term financing note payable
Bonds payable
Convertible Bonds
Lease liabilities

184

2022 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2022 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
12.  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  

Year ended
12/31/2022
Rmb’000

Year ended
12/31/2021
Rmb’000

554,686
133,805
2,621,008

508,183
92,484
2,550,036

(included in operating costs and administrative expenses)

75,491

67,762

Total depreciation and amortisation

3,384,990

3,218,465

Staff costs (including directors and supervisors):

– Wages, salaries and bonuses
– Pension scheme contributions

Auditors’ remuneration
Loss on disposal of property, plant and equipment
Allowance for write-down of inventories

13. 

INCOME TAX EXPENSE

Current tax:
  PRC Enterprise Income Tax (“EIT”)
  Deferred tax (Note 46)

2,744,774
259,209

3,382,037
263,913

3,003,983

3,645,950

10,652
1,436
6,898

11,402
6,433
7,000

Year ended
12/31/2022
Rmb’000

Year ended
12/31/2021
Rmb’000

1,081,139
(42,088)

1,810,332
63,629

1,039,051

1,873,961

185

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
INCOME TAX EXPENSE (Continued)

13. 
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% (2021: 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
12/31/2022
Rmb’000

Year ended
12/31/2021
Rmb’000

7,542,261

8,164,125

1,885,565
(188,022)
(12,443)
62,392
(122,620)
34,454
(620,275)

2,041,031
(241,519)
(14,062)
73,392
(22,699)
101,233
(63,415)

Income tax expense for the year

1,039,051

1,873,961

186

2022 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2022 
 
 
 
 
 
 
 
 
 
 
 
14.  DIRECTORS’, SUPERVISORS’ AND SENIOR MANAGEMENTS’ 

EMOLUMENTS

The  emoluments  paid  or  payable  to  each  of  the  10  (2021:  11)  directors  and  5  (2021:  6)  supervisors  are  as 

follows:

2022
Fees
Salaries, allowances and 
benefits in kind
Bonuses paid and payable
Pension scheme contributions
Directors’ fee

Total emoluments

2021
Fees
Salaries, allowances and 
benefits in kind
Bonuses paid and payable
Pension scheme contributions
Directors’ fee

Total emoluments

Yu
Zhihong @
Rmb’000

Chen
Ninghui @
Rmb’000

Luo
Jianhu @
Rmb’000
(Note ii) 

Yuan
Yingjie @
Rmb’000
(Note iii)

Dai
Benmeng ^
Rmb’000
(Note iv) 

Yang
Xudong ^
Rmb’000
(Note i) 

Fan
Ye ^
Rmb’000

Jin
Chaoyang ^
 Rmb’000
(Note v) 

Huang
Jianzhang ^
Rmb’000
(Note vi) 

Pei
Ker-wei *
Rmb’000

Lee
Wai Tsang *
Rmb’000

Chen
Bin *
Rmb’000

Zheng
Ruchun #
Rmb’000

He
Meiyun #
Rmb’000

Wu
Qingwang #
Rmb’000

Wang 
Yubing #
Rmb’000 

Zhan
Huagang#
Rmb’000 
(Note iv)

Lu
Xinghai #
Rmb’000
(Note vi)

Total
Rmb’000

–
–
–
–

–

–
–
–
–

–

420
716
37
–

1,173

506
543
33
–

1,082

–
–
–
–

–

250
455
14
–

719

210
443
19
–

672

280
70
19
–

369

–
–
–
–

–

–
–
–
–

–

–
–
–
–

–

–
–
–
–

–

–
–
–
–

–

–
–
–
–

–

–
–
–
–

–

–
–
–
–

–

–
–
–
–

–

–
–
–
–

–

–
–
–
223

223

–
–
–
204

204

–
–
–
223

223

–
–
–
204

204

–
–
–
81

81

–
–
–
82

82

–
–
–
–

–

–
–
–
–

–

9
–
–
–

9

9
–
–
–

9

–
–
–
–

–

–
–
–
–

–

6
–
–
–

6

4
–
–
–

4

–
–
–
–

–

–
–
–
–

–

–
–
–
–

–

–
–
–
–

–

645
1,159
56
527

2,387

1,049
1,068
66
490

2,673

@ 

^ 

* 

# 

Notes:

(i) 

(ii) 

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.

Appointed on December 22, 2022.

Resigned on May 19, 2021.

(iii) 

Mr. Yuan Yingjie was appointed as the executive director on July 1, 2021.

(iv) 

Resigned on July 1, 2021.

(v) 

Appointed on July 1,2021; Resigned on December 22,2022

(vi) 

Appointed on July 1,2021;

187

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
14.  DIRECTORS’, SUPERVISORS’ AND SENIOR MANAGEMENTS’ 

EMOLUMENTS (Continued)

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.

The emoluments paid or payable to each of the other 8 (2021: 7) senior managements are as follows:

Zheng
Hui

Zhang
Xiuhua

Wang
Bingjiong

Li
Wei

Wu
Xiangyang

Ruan
Liya

Ma 
Ting

Zhao
Dongquan

Total

Rmb’000

Rmb’000

Rmb’000

Rmb’000

Rmb’000

Rmb’000

Rmb’000

Rmb’000

Rmb’000

(Note ii)

(Note i)

Year ended December 31, 2022

Salaries, allowances and benefits  

in kind

Bonuses paid and payable

Pension scheme contributions

Total emoluments

Year ended December 31, 2021

Salaries, allowances and benefits  

in kind

Bonuses paid and payable

Pension scheme contributions

Total emoluments

357

559

37

953

430

415

33

878

357

668

37

357

614

37

357

804

37

357

614

37

357

757

37

1,062

1,008

1,198

1,008

1,151

430

468

33

931

430

415

33

878

430

191

33

654

430

178

33

641

430

232

33

695

357

325

37

719

80

5

6

91

213

–

16

229

–

–

–

–

2,712

4,341

275

7,328

2,660

1,904

204

4,768

Notes:

(i) 

Appointed on May 26, 2022.

(ii) 

Appointed on September 17, 2021.

Bonuses paid to senior managements are performance-rated and are determined by the board of directors.

188

2022 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2022 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
14.  DIRECTORS’, SUPERVISORS’ AND SENIOR MANAGEMENTS’ 

EMOLUMENTS (Continued)

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.

15.  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
12/31/2022
Rmb’000

Year ended
12/31/2021
Rmb’000

17,353
42,818
508

60,679

16,595
67,898
419

84,912

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, 2022 and 2021.

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 non-director employees.

189

 
 
 
 
 
 
 
 
 
15.  EMPLOYEES’ EMOLUMENTS (Continued)
Their emoluments are within the following bands:

HK$8,500,000 to HK$9,800,000  

(equivalent to Rmb7,593,050 to Rmb8,754,340)

HK$12,200,000 to HK$12,900,000  

(equivalent to Rmb10,898,260 to Rmb11,523,570)

HK$13,500,000 to HK$15,550,000  

(equivalent to Rmb12,059,550 to Rmb13,890,800)

HK$17,300,000 to HK$18,000,000  

(equivalent to Rmb15,454,090 to Rmb16,079,400)

HK$21,000,000 to HK$21,500,000  

(equivalent to Rmb18,759,300 to Rmb19,205,950)

HK$22,500,000 to HK$23,000,000  

(equivalent to Rmb20,099,250 to Rmb20,545,900)

HK$25,500,000 to HK$26,000,000  

(equivalent to Rmb22,779,150 to Rmb23,225,800)

16.  DIVIDENDS

Dividends recognised as distribution during the year:

2021 – Rmb37.5 cents (2021: 2020 - Rmb35.5 cents)

No. of individuals

Year ended
12/31/2022

Year ended
12/31/2021

1

2

1

1

–

–

–

–

–

1

1

1

1

1

Year ended
12/31/2022
Rmb’000

Year ended
12/31/2021
Rmb’000

1,628,668

1,541,806

Dividend  of  Rmb37.5  cents  per  share  in  respect  of  the  year  ended  December  31,  2022  (2021:  dividend 

of  Rmb37.5  cents  per  share  in  respect  of  the  year  ended  December  31,  2021)  in  the  total  amount  of 

Rmb1,628,668,000 (2021: Rmb1,628,668,000) has been proposed by the Directors and is subject to approval by 

the shareholders in the annual general meeting.

190

2022 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2022 
 
 
 
 
 
 
 
 
 
 
 
17.  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
12/31/2022
Rmb’000

Year ended
12/31/2021
Rmb’000

Profit for the year attributable to owners of the Company

5,378,866

4,762,431

Earnings for the purpose of basic earnings per share

5,378,866

4,762,431

Effect of dilutive potential ordinary shares arising from convertible bond:
Interest expense
Exchange loss(gain) (net of income tax)
Gain on changes in fair value on derivative component
Adjustment to the share of profit of subsidiaries based  

on dilution of their earnings per share

68,617
27,805
(31,951)

(16,076)

57,294
(89,348)
(27,453)

–

Earnings for the purpose of diluted earnings per share

5,427,261

4,702,924

Number of shares
Number of ordinary shares for the purpose of basic earnings per share
Effect of dilutive potential ordinary shares arising from convertible bond

Weighted average number of ordinary shares for the purpose of  

diluted earnings per share

Year ended
12/31/2022
’000

Year ended
12/31/2021
’000

4,343,115
271,284

4,343,115
245,061

4,614,399

4,588,176

191

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
18.  PROPERTY, PLANT AND EQUIPMENT

Leasehold
land and
buildings
Rmb’000

Hotel
Rmb’000

Communication
and signaling
equipment
Rmb’000

Ancillary
facilities
Rmb’000

Motor
vehicles
Rmb’000

Machinery
and
equipment
Rmb’000

Construction
in progress
Rmb’000

Total
Rmb’000

2,321,646

858,153

1,433,659

2,738,875

175,155

652,815

352,775

8,533,078

COST
At January 1, 2021
Acquired on acquisition of  

a subsidiary and a business

Additions
Transfer
Disposals

35,131
30,800
4,187
(3,457)

–
–
–
(4,017)

–
4,646
570,851
–

16,406
51,965
20,716
(69,744)

638
14,135
(336)
(12,458)

At December 31, 2021

2,388,307

854,136

2,009,156

2,758,218

177,134

Additions
Transfer
Disposals
Disposal of a subsidiary

398
20,785
(15,956)
(385,362)

–
–
(1,495)
–

112,942
713,986
(59,038)
(97,286)

126,041
169,645
(70,415)
(295,452)

36,386
–
(14,124)
(11,547)

At December 31, 2022

2,008,172

852,641

2,679,760

2,688,037

187,849

DEPRECIATION AND 
IMPAIRMENT
At January 1, 2021
Provided for the year
Transfer
Disposals

At December 31, 2021

Provided for the year
Disposals
Disposal of a subsidiary

847,324
111,928
–
(3,456)

955,796

77,256
(6,788)
(164,473)

199,581
28,817
–
(806)

227,592

27,879
(356)
–

711,649
50,870
–
–

1,764,819
216,004
–
(67,061)

762,519

1,913,762

130,418
(34,656)
(7,380)

199,378
(63,827)
(212,451)

At December 31, 2022

861,791

255,115

850,901

1,836,862

CARRYING VALUES
At December 31, 2022

At December 31, 2021

1,146,381

1,432,511

597,526

626,544

1,828,859

1,246,637

851,175

844,456

The property, plant and equipment are mainly located in the PRC.

114,713
14,422
(274)
(11,798)

117,063

13,990
(13,346)
(4,976)

112,731

75,118

60,071

192

1,635
111,896
3,271
(49,795)

719,822

151,526
39,306
(40,712)
(9,542)

860,400

407,769
86,142
274
(44,096)

450,089

105,765
(36,308)
(3,333)

516,213

344,187

269,733

–
788,393
(600,125)
(1,376)

53,810
1,001,835
(1,436)
(140,847)

539,667

9,446,440

1,038,578
(943,722)
–
(58,087)

1,465,871
–
(201,740)
(857,276)

576,436

9,853,295

–
–
–
–

–

–
–
–

–

576,436

539,667

4,045,855
508,183
–
(127,217)

4,426,821

554,686
(155,281)
(392,613)

4,433,613

5,419,682

5,019,619

2022 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2022 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
19.  RIGHT-OF-USE ASSETS

COST
At January 1, 2022
Addition
Decrease

Leasehold
lands
Rmb’000

Leased
properties
Rmb’000

222,098
–
(831)

694,845
94,998
(37,733)

Total
Rmb’000

916,943
94,998
(38,564)

At December 31, 2022

221,267

752,110

973,377

DEPRECIATION
At January 1, 2022
Addition
Decrease

At December 31, 2022

CARRYING VALUES
At December 31, 2022

At January 1, 2022

Expense relating to short-term leases
Total cash outflow for leases

20,446
15,024
(256)

229,811
118,781
(32,382)

250,257
133,805
(32,638)

35,214

316,210

351,424

186,053

435,900

621,953

201,652

465,034

666,686

12/31/2022
Rmb’000

12/31/2021
Rmb’000

3,593
154,671

17,321
158,962

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  45 
and  Note  11,  respectively.  For  the  year  ended  December  31,  2022,  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, 2022, the Group did not enter into any lease that is not yet commenced.

193

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Rmb’000

57,126,364
2,782,873
(110,473)

59,798,764
–
(80,130)
(7,967,683)

51,750,951

31,266,806
2,550,036
(71,334)

33,745,508

2,621,008
(40,986)
(4,371,920)

31,953,610

19,797,341

26,053,256

20.  EXPRESSWAY OPERATING RIGHTS

COST
At January 1, 2021
Acquired on acquisition of a subsidiary
Disposals

At December 31, 2021
Acquired on acquisition of a subsidiary
Disposals
Disposal of a subsidiary

At December 31, 2022

AMORTISATION
At January 1, 2021
Charge for the year
Disposals

At December 31, 2021

Charge for the year
Disposals
Disposal of a subsidiary

At December 31, 2022

CARRYING VALUES
At December 31, 2022

At December 31, 2021

194

2022 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2022 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
20.  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.  With  reference  to  Note  50,  as  Shenjiahuhang  Expressway 

ceased  to  be  a  subsidiary  of  the  Group  from  December  2,  2022,  thus  the  expressway  operating  right  of 

Shenjiahuhang Expressway was disposed from Group accordingly.

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.

21.  GOODWILL

COST AND CARRYING VALUES
At January 1, 2021, December 31, 2021 and December 31, 2022

Particulars regarding impairment testing on goodwill are disclosed in Note 23.

Rmb’000

86,867

195

 
 
 
 
22.  OTHER INTANGIBLE ASSETS

Customer
bases
Rmb’000

Securities/
futures
firm licenses
Rmb’000

Trading
seats
Rmb’000

Software
Rmb’000

Total
Rmb’000

101,147

63,083

3,480

352,186

519,896

61,910
–
–
–

–
–
–
–

–
–
–
–

570
100,495
1,081
(23,077)

62,480
100,495
1,081
(23,077)

COST
At January 1, 2021
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

Additions
Disposals

–
–

–
–

–
–

119,192
(40)

119,192
(40)

At December 31, 2022

163,057

63,083

3,480

550,407

780,027

AMORTISATION
At January 1, 2021
Charge for the year
Disposals

At December 31, 2021

Charge for the year
Disposals

At December 31, 2022

CARRYING VALUES
At December 31, 2022

At December 31, 2021

98,009
15,516
–

113,525

12,386
–

125,911

37,146

49,532

–
–
–

–

–
–

–

–
–
–

–

–
–

–

214,819
52,246
(23,065)

312,828
67,762
(23,065)

244,000

357,525

63,105
(40)

75,491
(40)

307,065

432,976

63,083

63,083

3,480

3,480

243,342

347,051

187,255

303,350

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 23.
196

2022 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2022 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
23. 

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  21  and  22  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, 2022 and 2021 allocated to these units are as follows:

Toll operation

–  Zhejiang Jiaxing  

  Expressway Co., Ltd.  

(“Jiaxing Co”)
–  Zhejiang Shangsan  

  Expressway Co., Ltd.  

(“Shangsan Co”)

Securities operation

– Zheshang Securities
– Zheshang Futures

Goodwill

Securities/futures
firm licenses

Trading seats

12/31/2022
Rmb’000

12/31/2021
Rmb’000

12/31/2022
Rmb’000

12/31/2021
Rmb’000

12/31/2022
Rmb’000

12/31/2021
Rmb’000

75,137

75,137

10,335

10,335

–

–

–

–

–

–

–

–

–
1,395

–
1,395

51,783
11,300

51,783
11,300

2,080
1,400

2,080
1,400

86,867

86,867

63,083

63,083

3,480

3,480

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  6  years  (2021:  7  years)  and  8  years  (2021:  9  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.

197

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
23. 

IMPAIRMENT TESTING ON GOODWILL AND INTANGIBLE ASSETS 
WITH INDEFINITE USEFUL LIVES (Continued)

Zheshang Securities and Zheshang Futures
The  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%  (2021:  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,  2022  and  2021,  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.

24. 

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)

12/31/2022
Rmb’000

12/31/2021
Rmb’000

7,880,487

7,812,133

2,179,154

1,862,913

10,059,641

9,675,046

2,753,623

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.

198

2022 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2022 
 
 
 
 
 
 
 
 
 
 
 
INTERESTS IN ASSOCIATES (Continued)

24. 
At December 31, 2022 and 2021, the Group had interests in the following associates:

Name of entities

Form of
business
structure

Place of
registration and
operation

Percentage of equity
interest and voting right
attributable to the Group
12/31/2022
%

12/31/2021
%

Principal activities

Zheshang Fund Management Co., Ltd. 

Corporate

The PRC

25

25

Asset fund 

(“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”)

Taiping Science and Technology 
Insurance Co., Ltd. (“Taiping 
Insurance”) (Note iv)

Pujiang JuJinFengAn Investment 
Management LP (“FengAn 
Investment”) (Note v)

Corporate

The PRC

40

40

Investment 

management and 
consulting

Corporate

The PRC

8.77

15

Science and 

technology related 
insurance

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 vi)

Zhejiang Concord Property Investment 

Corporate

The PRC

45

Co., Ltd. (“Zhejiang Concord 
Property”) (Note vii)

management and 
consulting

45

Investment and real 
estate development

Shanghai Rural Commercial Bank Co., 

Corporate

The PRC

4.86

4.85

Commercial banking

Ltd (“SRCB”) (Note viii)

Zhejiang Hangning Expressway  

Corporate

The PRC

Co., Ltd. (“Zhejiang Hangning”)  
(Note ix)

Zheshang Zhongtuo Zheqi Supply  
Chain Management (Zhejiang)  
Co., Ltd. (“Zhongtuo Zheqi”)

CICC-Shenjiahuhang Expressway 
asset-backed special program  
(“ABS Program”) (Note x)

Corporate

The PRC

Corporate

The PRC

30

20

30

30

Expressway

20

Supply Chain 
Management

–

Expressway

All of the above associates are accounted for using the equity method in these consolidated financial statements.

199

 
 
 
 
 
 
INTERESTS IN ASSOCIATES (Continued)

24. 
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,  2022,  the  disposal  transaction  has  not  been  completed  and  the  refundable  deposit  of 

Rmb207,000,000  (2021:  Rmb207,000,000)  in  respect  of  such  transfer  reversed  by  Zheshang  Securities  was 

included in other payables in Note 37.

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) 

The  Group’s  percentage  of  entity  interest  in  Taiping  Insurance  decreased  from  15%  to  8.77%  due  to  equity 
dilution from not participating in the capital injection during the year. The Group is still able to exercise significant 

influence  over Taiping  Insurance  because  it  has  the  power  to  appoint  one  out  of  nine  directors  of  that  company 

after the capital injection.

As  general  partner  and  the  executive  partner  of  FengAn  Investment,  the  management  considers  the  Group  has 
significant influence over the investees.

As  a  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.

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.

(v) 

(vi) 

(vii) 

200

2022 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2022INTERESTS IN ASSOCIATES (Continued)

24. 
Notes: (Continued)

(viii) 

The  Group  acquired  851,200  shares  of  SRCB  during  the  year  and  the  percentage  of  entity  interest  in  SRCB 

slightly  increased  from  4.85%  to  4.86%  during  the  year  ended  December  31,  2022.  The  Group  can  exercise 

significant influence over SRCB because it has the power to appoint one out of six directors of SRCB.

(ix) 

The Group is able to exercise significant influence over Zhejiang Hangning because it has the power to appoint 

two  out  of  nine  directors  of  that  company  under  the  provisions  stated  in  the  Articles  of  Association  of  that 

company.

(x) 

In  November,  2022,  The  Group  together  with  other  professional  institutional  investors  entered  into  the  asset 

management  agreement  with  China  International  Capital  Corporation  Limited(“CICC”)  as  the  fund  manager  of 

the  ABS  Program.  The  Group  subscribed  Rmb75,000,000  of  the  subordinated  class  of  the  ABS  Program  and 

continued to provide operational service in relation to the underlying assets, upon which the Group can exercise 

significant influence over the ABS Program. See Note 50 for more details.

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

12/31/2022
Rmb’000

12/31/2021
Rmb’000

492,302

745,877

7,413,984

8,053,523

(528,276)

(908,000)

(16,031)

(17,634)

201

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
INTERESTS IN ASSOCIATES (Continued)

24. 
Zhejiang Hangning (Continued)

Revenue

Profit from continuing operations

Profit for the year

Total comprehensive income for the year

Year ended
12/31/2022
Rmb’000

Period from
01/27/2021 to
12/31/2021
Rmb’000

1,477,813

1,327,624

207,838

188,889

207,838

188,889

207,838

188,889

Dividends received from the associate during the year

215,887

379,537

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

7,361,979
30.00%

7,873,766
30.00%

Carrying amount of the Group’s interest in Zhejiang Hangning

2,208,594

2,362,130

12/31/2022
Rmb’000

12/31/2021
Rmb’000

Zhejiang Communications Finance

Current assets

Non-current assets

Current liabilities

Non-current liabilities

202

12/31/2022
Rmb’000

12/31/2021
Rmb’000

11,787,116

16,780,190

44,227,839

37,331,146

(47,913,360)

(46,558,026)

(43,834)

(40,138)

2022 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2022 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
INTERESTS IN ASSOCIATES (Continued)

24. 
Zhejiang Communications Finance (Continued)

Revenue

Profit from continuing operations

Profit for the year

Total comprehensive income for the year

Year ended
12/31/2022
Rmb’000

Year ended
12/31/2021
Rmb’000

1,918,456

1,936,522

850,884

890,246

850,884

890,246

850,884

890,246

Dividends received from the associate during the year

61,504

38,137

Reconciliation  of  the  above  summarised  financial  information  to  the  carrying  amount  of  the  interest  in  Zhejiang 

Communications Finance recognised in the consolidated financial statements:

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

12/31/2022
Rmb’000

12/31/2021
Rmb’000

8,057,761

7,513,172

20.08%

20.08%

1,617,998

1,508,645

Aggregate information of associates that are not individually material

Year ended
12/31/2022
Rmb’000

Year ended
12/31/2021
Rmb’000

The Group’s share of profit from continuing operations

518,878

730,626

The Group’s share of other comprehensive (loss)/income

(736)

43,607

The Group’s share of total comprehensive income

518,142

774,233

Aggregate carrying amount of the Group’s interests in these associates

6,233,049

5,804,271

203

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
25. 

INTEREST IN A JOINT VENTURE

Unlisted investment in a joint venture, at cost less impairment
Share of post-acquisition gain, net of dividends received

12/31/2022
Rmb’000

12/31/2021
Rmb’000

373,470
66,875

384,325
56,249

440,345

440,574

At December 31, 2022 and 2021, 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
12/31/2022
%

12/31/2021
%

Principal activity

Corporate

The PRC

50

50

Management of the 

Shaoxing section of 
the Ningbo-Jinhua 
Expressway

204

2022 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2022 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
INTEREST IN A JOINT VENTURE (Continued)

25. 
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  

12/31/2022
Rmb’000

12/31/2021
Rmb’000

134,330

208,469

1,463,019

1,640,425

(37,949)

(54,571)

(678,711)

(913,176)

133,463

207,902

(excluding trade and other payables and provisions)

(798)

(1,176)

Non-current financial liabilities  

(excluding trade and other payables and provisions)

(643,000)

(873,000)

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
12/31/2022
Rmb’000

Year ended
12/31/2021
Rmb’000

471,290

509,756

99,541

99,541

112,499

112,499

(185,821)

(185,853)

4,881

3,309

(34,287)

(44,642)

(33,052)

(37,505)

205

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
INTEREST IN A JOINT VENTURE (Continued)

25. 
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

12/31/2022
Rmb’000

12/31/2021
Rmb’000

880,689
50.00%

881,147
50.00%

Carrying amount of the Group’s interest in Shengxin Co

440,345

440,574

26.  FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS

12/31/2022
Rmb’000

12/31/2021
Rmb’000

33,061,869
1,977,229
6,991,819
1,968,466

35,168,720
3,437,793
5,699,301
1,503,775

43,999,383

45,809,589

7,520,937
36,478,446

8,487,589
37,322,000

43,999,383

45,809,589

43,789,944
209,439

45,445,711
363,878

43,999,383

45,809,589

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

206

2022 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2022 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
26.  FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS 

(Continued)

Notes:

(i) 

The  restricted  shares  with  a  legally  enforceable  restriction  that  prevents  the  Group  to  dispose  of  within 

a  specified  period  amounted  to  approximately  Rmb270,990,000  as  at  December  31,  2022  (2021: 

Rmb575,544,000). The fair values of these securities have taken into account the relevant features including the 

restrictions.

(ii) 

As at December 31, 2022, 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 Rmb 20,755,531 (2021: 

Rmb7,324,331) 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.

207

27.  DEBT INSTRUMENTS AT FAIR VALUE THROUGH OTHER 

COMPREHENSIVE INCOME

Analysed by type of issuers:

– Corporate entities (Note i)

Analysed as:

– Listed (Note ii)
– Unlisted

Analysed for reporting purposes as:

Current assets
Non-current assets

Expected credit losses

12/31/2022
Rmb’000

12/31/2021
Rmb’000

820,940

820,940

128,529
692,411

820,940

250,683
570,257

820,940

1,108

–

–

–
–

–

–
–

–

–

Notes:

(i) 

(ii) 

As  at  31  December  2022,  the  fair  value  of  securities  of  the  Group  which  have  been  placed  as  collateral  for 
financial assets sold under repurchase agreements was Rmb430,958,000 (31 December 2021: Nil).

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.

The following table shows reconciliation of loss allowances that have been recognised for debt instruments at fair 

value through other comprehensive income.

Lifetime ECL
(not credit-
impaired)
Rmb’000

Lifetime ECL
(credit-impaired)
Rmb’000

–

–

–

–

–

–

12m ECL
Rmb’000

–

1,108

1,108

Total
Rmb’000

–

1,108

1,108

As at January 1 2022
Changes in the loss allowance:
– Charged to profit or loss

As at December 31 2022

208

2022 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2022 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
27.  DEBT INSTRUMENTS AT FAIR VALUE THROUGH OTHER 

COMPREHENSIVE INCOME (Continued)

The  table  below  details  the  credit  risk  exposures  of  the  debt  instruments  at  fair  value  through  other 

comprehensive income, which are subject to ECL assessment.

Lifetime ECL
(not credit-
impaired)
Rmb’000

Lifetime ECL
(credit-impaired)
Rmb’000

12m ECL
Rmb’000

Total
Rmb’000

As at December 31, 2022
Gross carrying amount

820,940

–

–

820,940

28.  TRADE RECEIVABLES

Trade receivables

– contracts with customers
Less: Allowance for credit losses

Trade receivables (before allowance for credit losses) comprise:

Fellow subsidiaries
Third parties

12/31/2022
Rmb’000

12/31/2021
Rmb’000

560,701
(6,333)

473,691
(5,799)

554,368

467,892

13,072
547,629

19,996
453,695

560,701

473,691

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 Hangzhou, Transportation Bureau of Yiwu, Transportation Bureau of Linan of Hangzhou, Transportation 

Bureau of Huzhou, Transportation Bureau of Jiaxing, etc.

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.

209

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
28.  TRADE RECEIVABLES (Continued)
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
Written off

At the end of the year

12/31/2022
Rmb’000

12/31/2021
Rmb’000

349,646
181,217
21,025
2,480

335,308
121,753
7,554
3,277

554,368

467,892

12/31/2022
Rmb’000

12/31/2021
Rmb’000

5,799
1,569
(105)
(930)

6,333

6,748
104
(1,053)
–

5,799

29.  LOANS TO CUSTOMERS ARISING FROM MARGIN FINANCING 

BUSINESS

Loans to margin clients
Less: Impairment allowance

12/31/2022
Rmb’000

12/31/2021
Rmb’000

17,568,948
(11,680)

19,407,330
(13,200)

17,557,268

19,394,130

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.

210

2022 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2022 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
29.  LOANS TO CUSTOMERS ARISING FROM MARGIN FINANCING 

BUSINESS (Continued)

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, 2022, loans to customers under the margin financing and securities lending activities carried 

out  in  the  PRC  were  secured  by  the  customers’  securities  and  cash  collaterals. The  undiscounted  market  value 

of  the  security  collaterals  was  amounted  to  Rmb  50,528,176,000  (2021:  Rmb58,393,758,000).  Cash  collateral 

of  Rmb  2,417,634,000(2021:  Rmb2,359,943,000)  received  from  clients  was  included  in  accounts  payable  to 

customers arising from securities business in Note 35.

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.

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, 2021

– Transfer to 12m ECL
–  Transfer to Lifetime ECL 
(credit-impaired)
– Charged to profit or loss

As at December 31, 2021
– Transfer to 12m ECL
 – Transfer to Lifetime ECL 
(not credit-impaired)

– Charged to profit or loss

As at December 31, 2022

Lifetime ECL
(not credit-
impaired)
Rmb’000

Lifetime ECL
(credit-impaired)
Rmb’000

12m ECL
Rmb’000

33
2

–
8,599

8,634
53

(293)
821

9,215

10
(2)

(3,178)
4,558

1,388
(53)

293
(73)

1,555

–
–

3,178
–

3,178
–

–
(2,268)

910

Total
Rmb’000

43
–

–
13,157

13,200
–

–
(1,520)

11,680

211

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
29.  LOANS TO CUSTOMERS ARISING FROM MARGIN FINANCING 

BUSINESS (Continued)

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, 2022
Gross carrying amount

As at December 31, 2021
Gross carrying amount

Lifetime ECL
(not credit-
impaired)
Rmb’000

Lifetime ECL
(credit-impaired)
Rmb’000

12m ECL
Rmb’000

Total
Rmb’000

16,753,901

812,627

2,420

17,568,948

18,894,618

509,534

3,178

19,407,330

30.  OTHER RECEIVABLES AND PREPAYMENTS
Non-Current

Entrusted loan
Receivables from government cooperation projects

Current

Prepayments
Trading deposits (Note i)
Receivables from government cooperation projects
Others

12/31/2022
Rmb’000

12/31/2021
Rmb’000

180,000
938,363

180,000
1,036,289

1,118,363

1,216,289

12/31/2022
Rmb’000

12/31/2021
Rmb’000

332,281
2,621,739
150,320
243,028

147,104
876,744
152,805
202,452

3,347,368

1,379,105

Note:

(i) 
212

Trading deposits mainly represent over-the-counter option deposit and equity swap deposit.

2022 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2022 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
31.  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

12/31/2022
Rmb’000

12/31/2021
Rmb’000

2,466,160
3,919,744

6,385,904
(110,694)

4,517,739
2,690,395

7,208,134
(119,928)

6,275,210

7,088,206

8,000
6,377,904

6,385,904
(110,694)

508,802
6,699,332

7,208,134
(119,928)

6,275,210

7,088,206

6,086,210
189,000

7,078,206
10,000

6,275,210

7,088,206

The collaterals include both equity and debt securities listed in the PRC. As at December 31, 2022, the fair value 

of  equity  securities  and  debt  securities  held  as  collaterals  was  Rmb10,837,092,000  (2021:  Rmb9,460,073,000) 

and Rmb3,362,016,000 (2021: Rmb4,626,964,000), respectively.

213

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
31.  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, 2021

– Transfer to 12m ECL
– Charged to profit or loss

As at December 31, 2021

– Transfer to lifetime ECL 

(not credit-impaired)

– Transfer to 12m ECL
– Charged to profit or loss

As at December 31, 2022

12m ECL
Rmb’000

11,182
318
8,926

20,426

(2,515)
2,888
(10,036)

10,763

Lifetime ECL
(not credit-
impaired)
Rmb’000

Lifetime ECL
(credit-impaired)
Rmb’000

Total
Rmb’000

191,659
–
(71,731)

180,000
–
(83,588)

96,412

119,928

–
–
(1,941)

–
–
(9,234)

94,471

110,694

477
(318)
2,931

3,090

2,515
(2,888)
2,743

5,460

The  tables  below  detail  the  credit  risk  exposures  of  the  Group’s  financial  assets  held  under  resale  agreements, 

which are subject to ECL assessment.

Lifetime ECL
(not credit-
impaired)
Rmb’000

Lifetime ECL
(credit-impaired)
Rmb’000

12m ECL
Rmb’000

Total
Rmb’000

5,925,679

365,754

94,471

6,385,904

7,001,992

109,730

96,412

7,208,134

As at December 31, 2022
Gross carrying amount

As at December 31, 2021
Gross carrying amount

214

2022 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2022 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
32.  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 5.45% (2021: 0.3% to 3.40%) 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, 2022
As at December 31, 2021

HKD
Rmb’000

190,674
57,912

USD
Rmb’000

289,578
215,778

33.  BANK BALANCES, CLEARING SETTLEMENT FUND, DEPOSITS 

AND CASH

Time deposits with original maturity over three months
Restricted bank balances and cash (Note)

Unrestricted bank balances and cash
Time deposits with original maturity of less than three months

Cash and cash equivalents

12/31/2022
Rmb’000

12/31/2021
Rmb’000

203,632
70,179

413,843
132,090

22,308,298
1,608,938

16,153,110
1,000,867

23,917,236

17,153,977

24,191,047

17,699,910

Note:  The  restricted  bank  deposits  include  the  bank  acceptance  deposits,  fund  management  risk  reserve,  collective 

asset management schemes deposits and margin deposits.

215

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
33.  BANK BALANCES, CLEARING SETTLEMENT FUND, DEPOSITS 

AND CASH (Continued)

Bank balances carry interest at the average market rate is 0.41% (2021: 0.35%) per annum. Time deposits carry 

interest at fixed rates ranging from 3% to 5.19% (2021: 3.13% to 4.13%) 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, 2022
As at December 31, 2021

HKD
Rmb’000

35,198
65,743

USD
Rmb’000

572,996
1,852,198

34.  PLACEMENTS FROM OTHER FINANCIAL INSTITUTIONS

Due to banks

12/31/2022
Rmb’000

12/31/2021
Rmb’000

700,000

500,000

As  at  December  31,  2022,  the  effective  interest  rates  bearing  on  the  outstanding  amount  of  due  to  banks  vary 

from  1.94%  to  2.47%  (December  31,  2021:  2.22%  to  3.33%)  per  annum.  The  amount  of  due  to  banks  were 

repayable within seven days from the end of the reporting period.

35.  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.

216

2022 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2022 
 
 
 
 
 
 
 
 
 
 
 
35.  ACCOUNTS PAYABLE TO CUSTOMERS ARISING FROM 

SECURITIES BUSINESS (Continued)

As  at  December  31,  2022,  Rmb  2,417,634,000  (2021:  Rmb  2,359,943,000)  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, 2022
As at December 31, 2021

HKD
Rmb’000

190,485
52,524

USD
Rmb’000

289,577
209,517

36.  TRADE PAYABLES
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

12/31/2022
Rmb’000

12/31/2021
Rmb’000

655,734
139,613
102,852
39,269
222,365

875,632
114,352
87,079
62,461
248,009

1,159,833

1,387,533

217

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
37.  OTHER PAYABLES AND ACCRUALS

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

12/31/2022
Rmb’000

12/31/2021
Rmb’000

1,531,953
37,756
217,977
7,196
5,766,292
207,000
121,308
203,959
53,045
190,430
4,352
159,464

61,488
65,905
–
27,500
213,115

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

8,868,740

5,872,066

Note:  Trading deposits mainly represent over-the-counter option deposit and equity swap deposit.

218

2022 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2022 
 
 
 
 
 
 
 
 
38.  DERIVATIVE FINANCIAL ASSETS/LIABILITIES

Equity swap
OTC option
Commodity options
Others (see below)

Equity swap
Others (see below)

Note:

Nominal 
Amount
Rmb’000

6,238,751
60,907,168
1,858,477
78,313,967

12/31/2022

Assets
Rmb’000

221,865
590,511
34,717
153,663

Liabilities
Rmb’000

122,368
328,571
12,579
90,839

147,318,363

1,000,756

554,357

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

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, 2022 and 2021.

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, 

2022. Accordingly,  the  net  position  of  the  IRS  contracts  in  derivative  instruments  was  nil  at  December  31,  2022  (2021: 

nil).

For  IRS  contracts,  commodity  futures  and  other  options  in  mainland  China  not  under  the  daily  mark-to-market  and 

settlement arrangement are presented gross at the end of reporting period.

219

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
39.  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 57(i), 57(ii))

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

12/31/2022
Rmb’000

11,488,637
1,668,209
1,017,790
2,935,554

12/31/2021
Rmb’000

14,462,553
71,859
1,121,317
1,088,188

17,110,190

16,743,917

4,915,176
1,906,410
4,058,530
6,230,074

2,316,307
1,430,830
4,020,000
8,976,780

17,110,190
(4,915,176)

16,743,917
(2,316,307)

Amounts shown under non-current liabilities

12,195,014

14,427,610

The bank and other borrowings comprise:

Fixed-rate borrowings
Variable-rate borrowings

3,780,914
13,329,276

1,160,047
15,583,870

17,110,190

16,743,917

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:

12/31/2022

12/31/2021

3.00%-7.08%
3.00%-4.70%

3.00%-4.85%
4.08%-4.70%

i 

As  at  December  31,  2022,  the  Group  pledged  the  following  assets  for  these  secured  loans  from 

financial  institutions:  (i)  other  receivables  with  an  aggregate  carrying  value  of  Rmb1,088,683,000  (2021: 

Rmb1,189,094,000)  and  (ii)  expressway  operating  rights  of  Zhoushan  Bay  Bridge,  LongLi  Expressway  and 

Lilong  Expressway,  and  Zhajiasu  Expressway  (2021:  expressway  operating  rights  of  Zhoushan  Bay  Bridge, 

Shenjiahuhang  Expressway,  LongLi  Expressway  and  Lilong  Expressway,  and  Zhajiasu  Expressway)  and  (iii) 

security collaterals from loans to customers arising from margin financing business.

220

2022 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2022 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
40.  SHORT-TERM FINANCING NOTE PAYABLE

Unsecured:
Short-term financing bonds
Beneficial certificates

Total

12/31/2022
Rmb’000

12/31/2021
Rmb’000

2,511,352
1,055,673

6,526,561
1,414,141

3,567,025

7,940,702

As  at  December  31,  2022,  the  short-term  financing  bonds  bears  an  interest  rate  at  1.83%  to  2.50%  (2021: 

short-term financing bonds bears an interest rate at 2.61% to 2.80%), the yields of all the outstanding beneficial 

certificates were between 1.90% to 13.00% (2021: 3.00% to 19.00%).

41.  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

12/31/2022
Rmb’000

18,438,111
3,048,452
–
1,821,006

12/31/2021
Rmb’000

21,643,896
3,062,374
814,402
2,128,419

23,307,569

27,649,091

(7,118,247)

(10,455,661)

Amounts shown under non-current liabilities

16,189,322

17,193,430

221

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
41.  BONDS PAYABLE (Continued)
Notes:

(i) 

This  balance  represented  4  corporate  bonds,  6  subordinated  bonds  and  1  beneficial  certificate  (2021:  4 

corporate  bonds,  9  subordinated  bonds  and  1  beneficial  certificate)  due  by  year  2023  to  2026  (2021:  2022  to 

2026) issued by Zheshang Securities, without redemption option, with fixed interest rates ranging from 2.10% to 

4.18% (2021: 2.70% to 4.60%) 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 arrear on 14 January and 14 July in each year.

(iii) 

This  balance  represented  2  medium-term  notes  due  by  year  2025  issued  by  the  Company  with  fixed  interest 

rates 2.80% and 2.97% 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.  In  September  2022,  after  the  Group,  as  the  original  interest  owner,  redeemed  the  outstanding  senior 

class  of  the  securities  amounted  to  Rmb756,900,000  while  holding  all  of  the  subordinated  class,  the  whole 

asset-backed special program was terminated.

(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 made distribution in June 2022 as per 

announcement.

222

2022 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 202242.  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$7.80 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”).

223

42.  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.

224

2022 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 202242.  CONVERTIBLE BONDS (Continued)
Convertible Bond 2021 (Continued)
(2)  Redemption (Continued)
(iii) 

Redemption at the option of the bondholders (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, 2022 and 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

Exchange realignment
Interest charge
Gain on changes in fair 

value

–
9,027

–

37,073
68,617

–
–

–
–

–
9,027

37,073
68,617

–

(5,594)

(31,951)

(5,594)

(31,951)

As at December 31, 2022

199,401

1,480,135

41,530

308,266

240,931

1,788,401

No conversion or redemption of the Convertible Bond 2021 has occurred up to December 31, 2022. The detailed 

key inputs the valuers use to calculate the fair value of the derivative component refer to Note 53(c).

225

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
42.  CONVERTIBLE BONDS (Continued)
Convertible Bond 2022
On  June  14,  2022,  Zheshang  Securities,  a  subsidiary  of  the  Company,  issued  a  convertible  bond  due  2028  (the 

“Maturity Date 2022”) in an aggregate principal amount of Rmb7,000,000,000 (the “Convertible Bond 2022”). The 

Convertible  Bond  2022  is  listed  and  trading  on  Shanghai  Stock  Exchange.  The  coupon  rate  is  0.2%  per  annum 

for the first year, 0.4% per annum for the second year, 0.6% per annum for the third year, 1.0% per annum for the 

fourth year, 1.5% per annum for the fifth year, 2.0% per annum for the sixth year, and will be paid annually.

Out  of  the  principal  amount  of  Rmb7,000,000,000,  Rmb3,833,185,000  was  subscribed  by  Zhejiang  Shangsan 

Expressway  Co.,  Ltd.  (“Shangsan  Co”),  another  subsidiary  of  the  Group.  The  principal  terms  of  the  Convertible 

Bond 2022 are set out below:

(1)  Conversion right
The  Convertible  Bond  2022  will,  at  the  option  of  the  holders  (the  “Bondholders  2022”),  be  convertible  (unless 

previously  redeemed,  converted  or  purchased  and  cancelled)  during  the  period  from  December  20,  2022  up  to 

June  13,  2028,  into  fully  paid  ordinary  shares  of  Zheshang  Securities  with  a  par  value  of  Rmb1.00  each  at  an 

initial conversion price (the “Conversion Price 2022”) of Rmb10.49 per share. The initial conversion price will be 

adjusted  when  Zheshang  Securities  distributes  stock  dividends,  capitalises  common  reserves  into  share  capital, 

issues  new  shares(excluding  the  increase  in  share  capital  due  to  the  conversion  of  the  Convertible  Bond  2022 

issued) or places new shares, distributes cash dividend.

When the share price of Zheshang Securities is less than 80% of the conversion price for any 15 business days 

within  a  period  of  30  consecutive  business  days  prior  to  the  maturity  date  of  the  Convertible  Bond  2022  (the 

“Maturity Date 2022”), the board of directors of Zheshang Securities has the right to propose a downward revision 

resolution on conversion price, and submits it to the shareholder’s meeting of Zheshang Securities for approval. 

As at December 31, 2022, the latest conversion price was Rmb10.32 per share.

226

2022 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 202242.  CONVERTIBLE BONDS (Continued)
Convertible Bond 2022 (Continued)
(2)  Redemption
(i) 

Redemption at maturity

Zheshang Securities will redeem all outstanding Convertible Bond 2022 at 106 percent of its outstanding principal 

amount (including the last instalment of interest payment) within five business days from the Maturity Date 2022.

(ii) 

Redemption on conditions

During  the  conversion  period  of  the  Convertible  Bond  2022,  upon  the  occurrence  of  any  of  the  following  two 

conditions, Zheshang Securities is entitled to redeem all or part of the outstanding Convertible Bond 2022 based 

on the par value and interest in arrears;

(a) 

During  the  conversion  period  of  the  Convertible  Bond  2022,  for  any  15  business  days  within  a  period  of 

30 consecutive business days, the closing share price of Zheshang Securities is not less than 130 percent 

(including 130 percent) of the conversion price;

(b)  When  the  aggregate  principal  amount  of  the  outstanding  Convertible  Bond  2022  is  less  than 

Rmb30,000,000.

Convertible  Bond  2022  contains  a  liability  component  and  an  equity  component. At  initial  recognition,  the  equity 

component  of  the  Convertible  Bond  2022  was  separated  from  the  liability  component. As  the  Convertible  Bond 

2022  was  issued  by  a  subsidiary  of  the  Company  and  is  convertible  into  that  subsidiary’s  own  shares,  the 

equity  element  is  considered  as  non-controlling  interests. The  effective  interest  rate  of  the  liability  component  is 

3.3564% per annum.

227

42.  CONVERTIBLE BOND (Continued)
Convertible Bond 2022 (Continued)
(2)  Redemption (Continued)
(ii) 

Redemption on conditions (Continued)

Changes  in  the  liability  and  equity  component  of  the  Convertible  Bond  2022  since  the  issuance  of  Convertible 

Bond 2022 to December 31, 2022 are set out as below:

Issuance on June 14, 2022
Issue cost
Interest charge
Addition (Note i)
Conversion into shares (Note ii)

Net position

Notes:

Liability
Component
Rmb’000

Equity
Component
Rmb’000

2,856,082
(12,782)
71,825
1,008,644
(97)

310,732
(1,387)
–
166,912
(10)

Total
Rmb’000

3,166,814
(14,169)
71,825
1,175,556
(107)

3,923,672

476,247

4,399,919

(i) 

During the year ended December 31, 2022, Shangsan Co disposed the Convertible Bond 2022 held on hand with 

the principal amount of Rmb1,117,838,000. Upon the disposal, this balance is no longer an intragroup assets and 

liabilities which were eliminated in full on consolidation, and is considered as an addition during the year.

(ii) 

During the year ended December 31, 2022, the bondholders converted part of the Convertible Bond 2022 with a 

principal amount of Rmb106,000 to the shares of Zheshang Securities.

As at December 31, 2022, Zheshang Securities had not exercised the redemption rights.

228

2022 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2022 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
43.  FINANCIAL ASSETS SOLD UNDER REPURCHASE AGREEMENTS

Analysed as collateral type:

Bonds

Analysed by market:

Shanghai/Shenzhen Stock Exchange
Inter-bank market

12/31/2022
Rmb’000

12/31/2021
Rmb’000

23,825,242

25,250,426

5,766,118
18,059,124

6,679,719
18,570,707

23,825,242

25,250,426

As at December 31, 2022 and 2021, 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,  2022  and  2021,  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.

229

 
 
 
 
 
 
 
 
 
 
 
 
43.  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,  2022  and 

December 31, 2021.

As at December 31, 2022

Carrying amount of transferred assets
Carrying amount of associated liabilities

Financial
assets at
FVTPL
Rmb’000

Financial
assets at
FVTOCI
Rmb’000

Total
Rmb’000

25,303,293
(16,485,206)

430,958
(334,413)

25,734,251
(16,819,619)

Net position

8,818,087

96,545

8,914,632

As at December 31, 2021

Carrying amount of transferred assets
Carrying amount of associated liabilities

Net position

23,808,367
(20,592,937)

3,215,430

–
–

–

23,808,367
(20,592,937)

3,215,430

44.  FINANCIAL LIABILITIES AT FAIR VALUE THROUGH PROFIT OR 

LOSS

12/31/2022
Rmb’000

12/31/2021
Rmb’000

915,407
60,636

1,057,170
146,017

81,599

1,722,204

1,057,642

2,925,391

Financial liabilities held for trading:

– Securities
– Funds

Financial liabilities designated at FVTPL:

–  Financial liabilities arising from consolidation  

  of structured entities (Note)

230

2022 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2022 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
44.  FINANCIAL LIABILITIES AT FAIR VALUE THROUGH PROFIT OR 

LOSS (Continued)

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  Rmb2,391,869,000  and  Rmb5,530,042,000  at 

December 31, 2022 and 2021, respectively. The total assets of the consolidated structured entities amounted to 

Rmb3,661,442,000 and Rmb8,716,481,000 at December 31, 2022 and 2021, 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.

45.  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

12/31/2022
Rmb’000

12/31/2021
Rmb’000

119,678
93,225
193,989
37,138

105,699
89,081
197,133
74,002

444,030

465,915

(119,678)

(105,699)

324,352

360,216

231

 
 
 
 
 
 
 
 
 
 
 
 
46.  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

12/31/2022
Rmb’000

12/31/2021
Rmb’000

1,416,809
(481,066)

1,617,799
(477,525)

935,743

1,140,274

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

973,299
(1,748)
–

971,551
(78,324)
–
(200,322)

(160,034)
13,973
–

(146,061)
12,627
–
–

Changes in
fair value of
financial 
instruments
carried
at fair value
Rmb’000

(51,467)
(112,075)
–

(163,542)
62,220
2,264
–

Temporary
differences  
of accrued 
expenses
and 
impairment
losses and
tax losses
Rmb’000

441,605
36,221
500

478,326
45,565
(277)
(48,284)

Total
Rmb’000

1,203,403
(63,629)
500

1,140,274
42,088
1,987
(248,606)

At January 1, 2021
Charge (credit) to profit or loss
Transfer in through acquisition of a subsidiary

At December 31, 2021
Charge (credit) to profit or loss
Charge to other comprehensive income
Transfer out through disposal of a subsidiary

At December 31, 2022

(99,058)

692,905

(133,434)

475,330

935,743

232

2022 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2022 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
46.  DEFERRED TAXATION (Continued)
As  at  December  31,  2022,  the  Group  had  unused  tax  losses  of  approximately  Rmb2,118,100,000  (2021: 

Rmb2,478,153,000)  for  which  deferred  tax  was  not  recognised  due  to  uncertainty  of  future  taxable  income. The 

amount  of  unrecognized  tax  loss  expired  in  2022  was  approximately  Rmb119,141,000.  The  expiry  dates  of  the 

unrecognised tax losses are listed as below.

2022
2023
2024
2025
2026
2027

47.  SHARE CAPITAL

Registered, issued and fully paid:
Domestic shares of Rmb1 each
H Shares of Rmb1 each

12/31/2022
Rmb’000

12/31/2021
Rmb’000

–
418,124
478,586
667,480
304,342
249,568

416,372
586,552
514,179
669,703
291,347
–

2,118,100

2,478,153

Number
of shares
12/31/2021
and 2022
’000

Share capital
12/31/2021
and 2022
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.

233

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
48.  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 58) at the 

end  of  the  reporting  period  are  set  out  below.  The  summarised  financial  information  below  represents  amounts 

before intragroup elimination with the Company.

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 income (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

12/31/2022
Rmb’000

12/31/2021
Rmb’000

136,360,358

126,357,545

4,887,621

4,262,788

96,961,620

89,709,890

12,600,288

12,030,520

14,049,531

13,304,880

17,636,540

15,575,043

7,075,848

7,639,294

(4,913,813)

(4,780,619)

2,162,035
15,827

2,858,675
(4,963)

2,177,862

2,853,712

1,005,941
1,156,094

1,388,075
1,470,600

2,162,035

2,858,675

1,012,259
1,165,603

1,384,421
1,469,291

2,177,862

2,853,712

234

2022 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2022 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
48.  NON-CONTROLLING INTERESTS (Continued)
Shangsan Co and its subsidiaries (Continued)

Dividends paid to non-controlling shareholders

Net cash inflow/(outflow) from operating activities

Net cash outflow from investing activities

Net cash (outflow)/inflow from financing activities

Net cash inflow

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 inflow from operating activities

Net cash (outflow)/inflow from investing activities

Net cash outflow from financing activities

Net cash inflow

12/31/2022
Rmb’000

12/31/2021
Rmb’000

(493,565)

(310,813)

4,215,003

(553,914)

(1,198,936)

(302,029)

(1,979,915)

5,589,135

1,036,152

4,733,192

12/31/2022
Rmb’000

12/31/2021
Rmb’000

676,505

596,113

94,284

5,543

598,123

574,668

195,206

586,757

629,164

90,761

5,899

570,823

548,438

207,339

(119,109)

(132,874)

76,097

74,465

38,809
37,288

76,097

37,977
36,488

74,465

(11,058)

(11,058)

49,883

(4,987)

123,562

5,341

(22,567)

(22,566)

22,329

106,337

235

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
48.  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 and total comprehensive income

– attributable to owner of the Company
– attributable to non-controlling interests

Dividends paid to non-controlling shareholders

Net cash inflow from operating activities

Net cash inflow/(outflow) from investing activities

Net cash outflow from financing activities

Net cash inflow

12/31/2022
Rmb’000

12/31/2021
Rmb’000

119,901

477,272

2,813,460

2,830,330

377,218

388,106

1,236,999

1,518,320

725,529

770,647

593,615

630,529

389,622

328,456

(471,654)

(330,280)

(82,032)

(1,824)

(45,118)
(36,914)

(82,032)

–

(1,003)
(821)

(1,824)

–

267,472

275,104

71,097

(8,002)

(365,994)

(252,727)

(27,425)

14,375

49.  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

2022 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2022 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
50.  DISPOSAL OF A SUBSIDIARY
The  Group  appointed  China  International  Capital  Corporation  Limited(“CICC”)  as  the  fund  manager  of  the ABS 

Program  during  the  year  to  launch  an  asset-backed  special  program(“ABS  Program”).  The  Group  entered  into 

equity  transfer  agreement  with  CICC  to  transfer  the  entire  equity  interests  in  Shenjiahuhang  Expressway  as 

the  underlying  assets  for  the  ABS  Program  at  a  consideration  amounted  to  Rmb2,943,000,000.  The  difference 

between  the  consideration  received  and  net  assets  of  Shenjiahuhang  Expressway  on  December  2,  2022  was 

recognized as disposal gain in other income and gains and losses.

The Group, as the original interest owner of the underlying assets, also subscribed Rmb75,000,000 subordinated 

class  of  the  ABS  Program  in  November,  2022  which  accounted  for  30%  of  the  total  subordinated  class 

and  around  1.19%  of  the  total  size  of  the  ABS  Program.  Upon  completion  of  the  equity  transfer  agreement 

and  revision  of  Articles  of  Association  by  December  2,  2022,  the  Group  can  no  longer  exercise  power  over 

Shenjiahuhang Expressway and thus Shenjiahuhang Co ceased to be a subsidiary of the Group.

Meanwhile, the Group continued to provide daily operational service in relation to the underlying assets pursuant 

to an operation service agreement for the ABS Program.

Consideration received:
Cash received

Total consideration received

Rmb’000

2,943,000

2,943,000

237

 
 
 
 
 
 
50.  DISPOSAL OF A SUBSIDIARY (Continued)

Analysis of assets and liabilities over which control was lost:
NON-CURRENT ASSETS
Property, plant and equipment
Expressway operating rights
Deferred tax assets

CURRENT ASSETS
Trade receivables
Other receivables and prepayments
Cash and cash equivalents

CURRENT LIABILITIES
Trade payables
Other taxes payable
Other payables and accruals
Bank and other borrowings

NON-CURRENT LIABILITIES
Bank and other borrowings

Net assets disposed of

Gain on disposal of a subsidiary:

Consideration received
Net assets disposed of

Gain on disposal

Net cash inflow arising on disposal:

Cash consideration
Less: bank balances and cash disposed of

238

12/02/2022
Rmb’000

464,663
3,595,763
248,606

13,123
2,247
736,202

84,367
3,428
45,717
611,754

3,253,600

(1,061,738)

2,943,000
(1,061,738)

1,881,262

2,943,000
(736,202)

2,206,798

2022 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2022 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
51.  COMMITMENTS

Authorised but not contracted for:

– Purchase of machinery and equipment
– Acquisition and construction of properties
– Reconstruction and expansion projects of existing expressways

Contracted for but not provided:

– Equity investments

Total

12/31/2022
Rmb’000

12/31/2021
Rmb’000

1,214,428
1,156,293
2,500,000

1,897,477
1,516,880
–

860,245

210,000

5,730,966

3,624,357

52.  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 39, 40, 41, 42, 43 and 45, 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

 
 
 
 
 
 
 
 
 
53.  FINANCIAL INSTRUMENTS
(a)  Categories of financial instruments

Financial assets
Financial assets at FVTPL
Financial assets at FVTOCI
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

12/31/2022
Rmb’000

12/31/2021
Rmb’000

43,999,383
820,940
1,000,756
101,267,146

45,809,589
–
613,718
85,481,232

554,357
1,057,642

451,368
2,925,391

308,266
123,927,738

340,217
119,496,753

(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

2022 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2022 
 
 
 
 
 
 
 
 
53.  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, 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,  bonds  payable,  debt  component  of  convertible  bonds,  financial  assets  sold  under  repurchase 

agreements and financial liabilities at FVTPL (see Notes 29,31,33,34,39,40,41,42,43 and 44 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 32, 33 and 39 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

53.  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 (2021: 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  (2021:  50  basis  points)  higher/lower  and  all  other  variables  were  held 

constant, the Group’s post-tax profit for the year ended December 31, 2022 would have increased/decreased by 

Rmb223,524,000(2021: Rmb151,908,000). 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

12/31/2022
Rmb’000

12/31/2021
Rmb’000

12/31/2022
Rmb’000

12/31/2021
Rmb’000

Hong Kong dollar (“HKD”)
United States dollar (“USD”)
Euro dollar (“EUR”) (Note)

225,872
862,574
–

123,655
2,067,976
–

190,485
3,562,939
1,788,401

52,524
3,206,096
1,714,661

Note:  Amount represented both the debt and derivative component of the Convertible Bond 2021.

242

2022 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2022 
 
 
 
 
 
 
 
 
 
53.  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%  (2021:  10%)  increase  and  decrease  in  Rmb  against  the  relevant  foreign  currencies.  10%  (2021:  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% (2021: 10%) change in foreign currency rates. A positive 

number  below  indicates  an  increase  in  post-tax  profit  where  Rmb  strengthen  10%  (2021:  10%)  against  the 

relevant  currency.  For  a  10%  (2021:  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

12/31/2022
Rmb’000

12/31/2021
Rmb’000

12/31/2022
Rmb’000

12/31/2021
Rmb’000

Profit or loss

202,527

85,359

134,130

128,600

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

 
 
 
 
 
 
 
 
 
 
53.  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 2022

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% (2021: 5%) higher/lower,

• 

post-tax  profit  for  the  year  ended  December  31,  2022  would  have  increased/decreased  by 

Rmb1,649,977,000 as a result of the changes in fair value of financial assets at FVTPL.

• 

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.

For derivative component of Convertible Bond 2021

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 53(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%  (2021:10%)  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
12/31/2022
Rmb’000

Year ended
12/31/2021
Rmb’000

(61,517)

(88,363)

35,379

67,532

2022 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2022 
 
 
 
 
 
 
 
 
53.  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% (2021:10%) 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
12/31/2022
Rmb’000

Year ended
12/31/2021
Rmb’000

(17,962)

(21,901)

12,818

27,873

Credit risk and impairment assessment
As  at  December  31,  2022,  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 56.

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:

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.

245

 
 
 
 
 
 
 
 
 
53.  FINANCIAL INSTRUMENTS (Continued)
(b)  Financial risk management objectives and policies (Continued)
Credit risk and impairment assessment (Continued)
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, 2022 and 2021.

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

2022 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 202253.  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 5. 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

53.  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

2022 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 202253.  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)

Doubtful
(stage 2)

Loss
(stage 3)

Write-off

The counterparty has a low risk of 
default and does not have any 
past-due amounts

There have been significant increases 
in credit risk since initial recognition 
through information developed 
internally or external resources

Lifetime ECL - not 
credit-impaired

12-month ECL

Lifetime ECL - not 
credit-impaired

Lifetime ECL - not 
credit-impaired

There is evidence indicating the asset 

Lifetime ECL - 

is credit-impaired

credit-impaired

Lifetime ECL - 

credit-impaired

There is evidence indicating that the 

Amount is written off

Amount is written off

debtor is in severe financial difficulty 
and the Group has no realistic 
prospect of recovery

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

 
 
 
 
 
 
 
 
53.  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

12-months
or lifetime ECL

Notes

N/A

N/A
N/A
N/A

Low risk

Lifetime ECL

Low risk
Low risk
Low risk

Lifetime ECL
Lifetime ECL
Lifetime ECL

12/31/2022
Gross 
carrying
amount
Rmb’000

12/31/2021
Gross 
carrying
amount
Rmb’000

820,940

240,557
309,700
10,444

–

138,335
323,221
12,135

29

N/A

Low risk
Doubtful
Loss

12-month ECL
Lifetime ECL – not credit-impaired
Lifetime ECL – credit-impaired

16,753,901
815,047
–

18,894,618
509,534
3,178

33

AA to AAA

Low risk

12-month ECL

24,191,047

17,699,910

32

31

30

AA

Low risk

12-month ECL

48,744,803

38,392,804

N/A

Low risk
Doubtful
Loss

12-month ECL
Lifetime ECL – not credit-impaired
Lifetime ECL – credit-impaired

5,925,679
365,754
94,471

7,001,992
109,730
96,412

N/A

Low risk

12-month ECL

4,173,061

2,468,229

56

N/A

Low risk

12-month ECL

321,899

437,088

Financial assets

Debt instruments at FVTOCI
Trade receivables (Note i)

27
28

– toll operation
– securities operation
– others

Loans to customers arising 
from margin financing 
business
– securities operation

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

Financial guarantee contracts 

(Note ii)
– toll operation

250

2022 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2022 
 
 
 
 
 
 
 
 
 
 
 
 
 
53.  FINANCIAL INSTRUMENTS (Continued)
(b)  Financial risk management objectives and policies (Continued)
Credit risk and impairment assessment (Continued)
Other operations (Continued)

Notes:

i. 

During  the  year  ended  December  31,  2022,  the  Group  provided  ECL  on  trade  receivables  by  Rmb6,333,000 

(2021: Rmb5,799,000).

ii. 

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, 2022, other than the concentration of credit risk on trade receivables and financial guarantee 

contract amounting to Rmb560,701,000 (2021: Rmb473,691,000), and Rmb321,899,000(2021: Rmb437,088,000), 

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, 2022 and 2021 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,  2022 

and  2021  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.

251

53.  FINANCIAL INSTRUMENTS (Continued)
(b)  Financial risk management objectives and policies (Continued)
Liquidity risk (Continued)
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.

Liquidity tables

2022
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

252

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

Over 5 years
Rmb’000

Total
undiscounted
cash flows
Rmb’000

Carrying
amount
at year end
Rmb’000

–
–
–

3%-7.08%
3%-4.70%
3.17%

48,449,595
1,159,833
404,477

110,198
228,932
3,468,558

–
–
–

–
–
–

–
–
–

–
–
–

3,553,046
1,255,827
210,789

565,046
3,119,075
–

–
3,084,087
–

–
7,381,250
–

48,449,595
1,159,833
404,477

4,228,290
15,069,171
3,679,347

48,449,595
1,159,833
404,477

3,780,914
13,329,276
3,567,025

3.68%

23,831,743

–

–

–

–

23,831,743

23,825,242

2.20%
3.32%

3.36%-4.74%
3.62%-5.35%
–

700,300
92,209

–
12,771
321,899

–
7,587,916

–
10,361,235

13,501
107,172
–

70,000
208,708
–

–
5,976,450

1,655,135
127,024
–

–
1,387,522

700,300
25,405,332

700,000
23,307,569

7,419,967
50,631
–

9,158,603
506,306
321,899

5,403,807
444,030
–

–

976,043

81,599

–

–

–

1,057,642

1,057,642

79,756,558

12,809,850

14,324,064

10,842,696

16,239,370

133,972,538

125,429,410

2022 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2022 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
53.  FINANCIAL INSTRUMENTS (Continued)
(b)  Financial risk management objectives and policies (Continued)
Liquidity risk (Continued)
Liquidity tables (Continued)

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

Over 5 years
Rmb’000

Total
undiscounted
cash flows
Rmb’000

Carrying
amount
at year end
Rmb’000

–
–
–

3.00%-4.85%
4.08%-4.70%
2.95%

38,069,350
1,387,533
581,288

15,822
161,029
4,376,556

–
–
–

–
–
–

–
–
–

–
–
–

943,158
1,833,503
3,620,898

237,985
2,997,838
–

–
4,076,973
–

–
9,943,315
–

38,069,350
1,387,533
581,288

1,196,965
19,012,658
7,997,454

38,069,350
1,387,533
581,288

1,160,047
15,583,870
7,940,702

4.40%

25,262,817

–

–

–

–

25,262,817

25,250,426

2.57%
3.55%

4.74%
3.62%-5.35%
–

500,277
107,884

–
–
437,088

–
10,978,990

–
9,428,491

–
109,802
–

–
183,044
–

–
6,707,351

1,374,445
144,905
–

–
3,097,548

500,277
30,320,264

500,000
27,649,091

–
96,881
–

1,374,445
534,632
437,088

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

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

253

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
53.  FINANCIAL INSTRUMENTS (Continued)
(b)  Financial risk management objectives and policies (Continued)
Liquidity risk (Continued)
Liquidity tables (Continued)

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.

As  at  December  31,  2022  and  2021,  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.

254

2022 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 202253.  FINANCIAL INSTRUMENTS (Continued)
(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,  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,  the  option 

pricing  model,  net  asset  value  method  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.

255

53.  FINANCIAL INSTRUMENTS (Continued)
(c)  Fair value measurements of financial instruments (Continued)

Financial 
instruments

Fair value 
hierarchy

Valuation technique(s) and key input(s)

Significant unobservable 
input(s)

Relationship of 
unobservable
input(s) to fair value

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.

Discount for lack of 
marketability.

The higher the discount, 
the lower the fair value.

The volatility of the share 
prices of the securities.

The higher the volatility, 
the lower the fair value.

Debt investments

Level 3

The fair value is determined with reference to 

Discount rate

Other investments

Level 3

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.

Discount rate

Other investments

Level 3

Calculated based on pricing/yield such as price-to 
earnings (P/E) of comparable companies with an 
adjustment of discount for lack of marketability.

P/E multiples

Level 3

Interests attributable 
to other holders 
of consolidated 
structured entities

The fair value is 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.

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.

Discount for lack of 
marketability.

P/E multiples

Discount for lack of 
marketability.

Expected volatility (28.34%) 
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

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 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 volatility of 
the underlying equity 
instrument, the greater 
impact on the fair value.

256

2022 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2022 
 
 
 
 
 
 
 
 
 
53.  FINANCIAL INSTRUMENTS (Continued)
(c)  Fair value measurements of financial instruments (Continued)
As at December 31, 2022

Financial assets at FVTPL

– Equity securities
– Funds
– Debt investments
– Asset management schemes
– Trust products
– Unlisted equity investments

Level 1
Rmb’000

Level 2
Rmb’000

Level 3
Rmb’000

Total
Rmb’000

1,626,768
1,183,099
4,440,080
–
–
–

79,471
5,808,720
28,617,288
1,732,338
–
–

270,990
–
4,500
–
154,799
81,330

1,977,229
6,991,819
33,061,868
1,732,338
154,799
81,330

Sub-total

7,249,947

36,237,817

511,619

43,999,383

Debt instruments at FVTOCI

128,529

692,411

–

820,940

Derivative assets

–

375,529

625,227

1,000,756

Level 1
Rmb’000

Level 2
Rmb’000

Level 3
Rmb’000

Total
Rmb’000

Financial liabilities at FVTPL

– Securities
– Fund
– Structured entities

904,187
–
–

11,220
60,636
81,587

Sub-total

904,187

153,443

–
–
12

12

915,407
60,636
81,599

1,057,642

Derivative component of 
Convertible Bond 2021

Derivative liabilities

–

–

–

308,266

308,266

212,997

341,360

554,357

257

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
53.  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

258

2022 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2022 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
53.  FINANCIAL INSTRUMENTS (Continued)
(c)  Fair value measurements of financial instruments (Continued)
The  following  tables  represent  the  changes  in  Level  3  financial  assets  at  FVTPL  during  the  years  ended 

December 31, 2022 and 2021, respectively. For the changes in Level 3 derivative component of Convertible Bond 

2022 during the year ended December 31, 2022 and 2021, please refer to Note 42.

For the year ended December 31, 2022
Financial assets at FVTPL:

At beginning of the year
Additions
Disposal
Transfer out
Changes in fair value changes

Trust
products
Rmb’000

Restricted
shares
Rmb’000

258,437
56,396
(160,034)
–
–

575,544
44,009
(206,876)
(145,297)
3,610

At end of the year

154,799

270,990

Unlisted
equity
investments
Rmb’000

11,200
67,730
–
–
2,400

81,330

Debts
Rmb’000

Total
Rmb’000

134,790
–
(130,290)
–
–

979,971
168,135
(497,200)
(145,297)
6,010

4,500

511,619

Total gains/(losses) for assets held at the end of the year

–  unrealised gains/(losses) recognised in profit or loss for FVTPL

Total
Rmb’000

114,761

Unrealised  gains/(losses)  recognised  in  profit  or  loss  for  FVTPL  are  disclosed  in  Note  8.  Derivative  assets  and 

liabilities categorised as Level 3 are mainly generated by new purchases this year.

259

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
53.  FINANCIAL INSTRUMENTS (Continued)
(c)  Fair value measurements of financial instruments (Continued)
For the year ended December 31, 2021
Financial assets at FVTPL:

At beginning of the year
Additions
Disposal
Changes in fair value changes

Trust
products
Rmb’000

Restricted
shares
Rmb’000

356,417
242,653
(293,006)
(47,627)

120,389
196,300
–
258,855

Unlisted 
equity
investments
Rmb’000

Debts
Rmb’000

Total
Rmb’000

80,323
–
(69,123)
–

13,500
225,913
–
(104,623)

570,629
664,866
(362,129)
106,605

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.

As at 12/31/2022
Carrying
amount
Rmb’000

Fair
value
Rmb’000

As at 12/31/2021
Carrying
amount
Rmb’000

Fair
value
Rmb’000

Debt component of Convertible 

Bond 2021

Debt component of Convertible  

Bond 2022

1,480,135

1,343,040

1,374,445

1,714,661

3,923,672

3,929,596

–

–

The fair value of the debt component of Convertible Bond 2022 and Convertible Bond 2021 as at December 31, 

2022  and  December  31,  2021  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  2022  and  Convertible  Bond  2021  are  determined  by  discounted  cash  flow  using  the  inputs 

including  estimated  cash  flows  over  the  remaining  terms  of  the  Convertible  Bond  2022  and  Convertible  Bond 

2021 and discount rate that reflected the credit risk of the Company.

260

2022 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2022 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
54.  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

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 January 1, 2021
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

At December 31, 2021

–

16,743,917

27,649,091

1,714,662

465,915

7,940,702

54,514,287

At January 1, 2022
Financing cash flows
Operating cash flows
Non-cash changes

Disposal of a subsidiary
New lease entered
Fair value adjustment
Exchange realignment
Accrued dividend
Interest expenses
Interest expenses adjustment 

due to bond disposal
Conversion into shares

At December 31, 2022

–
(2,041,416)
–

16,743,917
1,819,108
(739,227)

27,649,091
(4,306,310)
(1,078,777)

1,714,662
3,851,944
–

465,915
(134,827)
(5,126)

7,940,702
(4,362,900)
(114,754)

54,514,287
(5,174,401)
(1,937,884)

–
–
–
3,397
2,038,019
–

(1,465,354)
–
–
–
–
751,746

–
–

–

–
–

–
–
–
276,230
–
767,335

–
–

–
–
(31,951)
37,073
–
123,880

16,562
(97)

–
94,998
–
–
–
23,070

–
–

–
–
–
–
–
103,977

(1,465,354)
94,998
(31,951)
316,700
2,038,019
1,770,008

–
–

16,562
(97)

17,110,190

23,307,569

5,712,073

444,030

3,567,025

50,140,887

261

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
55.  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

12/31/2022
Rmb’000

12/31/2021
Rmb’000

61,817
149,833
30,765

76,411
208,861
152,190

242,415

437,462

For  certain  of  the  Group’s  service  areas,  the  rental  income  is  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.

262

2022 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2022 
 
 
 
 
 
 
 
 
56.  CONTINGENT LIABILITIES AND LITIGATION
(a)  Financial guarantee given to bank

12/31/2022
Rmb’000

12/31/2021
Rmb’000

Guarantees given to bank, in respect of a joint venture

321,899

437,088

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,  2022,  the  bank  borrowings  of  Shengxin  Co  and  accrued 

interest amounted to Rmb643,798,000 (2021: Rmb874,176,000). 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, 2022 and 2021.

(b)  Litigation
Zheshang  Securities  is  an  indirectly  non-wholly-owned  subsidiary  of  the  Company  and  was  the  lead  underwriter 

during  the  issuance  of  the  two  bonds  by  Reward  Group  in  2015  and  2016.  Reward  Group  has  defaulted  on  the 

payment  of  the  two  bonds  from  2018  and  further  declared  bankruptcy  in  2022  after  failure  in  debt  restructuring. 

During  October  and  November  2022,  institutional  investors  who  invested  in  the  bonds  issued  by  Reward  Group 

submitted  Claims  against  intermediaries  who  were  involved  in  the  issuance,  including  Zheshang  Securities  at 

an  aggregate  amount  of  Rmb129,119,000.  It’s  alleged  that  the  Claims  relate  to  misrepresentation  during  the 

issuance of two bonds.

Zheshang  Securities  refuted  the  Claims  and  has  engaged  local  counsel  in  China  to  defend  the  Claims 

accordingly. Up to the date of this report, no notification has been issued by the Beijing Financial Court in respect 

of the hearing, and the case was not closed.

263

 
 
 
 
 
 
57.  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,  2022. 

Logistic Co agreed to provide the Company with entrusted loans amounting to Rmb53,953,817 at a fixed interest 

rate of 3.00% per annum, with maturity date of July 21, 2023.

Pursuant  to  the  loan  contract  entered  into  between  Shangsan  Co  and  Communications  Group  on  June  13, 

2022,  Communications  Group  agreed  to  provide  Shangsan  Co  borrowings  amounting  to  Rmb2,735,000,000 

at  a  fixed  interest  rate  of  4.5%  per  annum,  with  maturity  date  of  December  13,  2023.  Principal  amount  of 

Rmb1,100,000,000 was repaid on December 17, 2022.

Interest expenses incurred

For the year
ended
12/31/2022
Rmb’000

For the year
ended
12/31/2021
Rmb’000

70,050

3,414

264

2022 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2022 
 
 
 
 
 
57.  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  eleven  toll  roads,  including 

Shensuzhewan  Expressway,  South  Line  of  Qianjiang  Channel,  Ningbo  Yongtaiwen  Expressway,  Hangning 

Expressway,  Hangrao  Expressway,  Zhoushan  Northward  Channel,  Jiaxing  320  National  Highway,  North  Line  of 

Qianjiang  Channel,  Linjian  Expressway,  Zhoudai  Bridge  and  Fuchimen  Bridge  of  Ningbo  Zhoushan  Port  Main 

Passage and North Connection 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 Rmb13,777,059 (2021: Rmb13,599,435) 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
12/31/2022
Rmb’000

Year ended
12/31/2021
Rmb’000

10,393
3,353
4,638
586,391
537,829

114,602
8,355
–
–

15,602
11,200
2,348
535,847
172,415

8,389
8,481
3,396
17,547

265

 
 
 
 
 
 
57.  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  58), 

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  Commercial  Group 

Co.,  Ltd,  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) 

On  May  13,  2022,  Jiaxing  Branch  entered  into  the  Construction  Agreement  with  Jiaogong  Underground 

Construction,  pursuant  to  undertake  the  construction  work  for  the  renovation  of  Jiaxing  Service  Area  Plaza 

of  Shanghai-Hangzhou  Expressway.  Each  of  Jiaogong  Group  and  Jiaogong  Underground  Construction  is  an 

indirectly  non-wholly  owned  subsidiary  of  Communications  Group.  On  July  29,  2022,  the  Company  and  its 

subsidiaries  entered  into  the  Guardrail  Agreements  with  Zhejiang  Shunchang,  Maintenance  Co  and  Jiaogong 

Maintenance  respectively,  pursuant  to  undertake  the  guardrail  revamp  and  upgrade  projects  in  respect  of  eight 

expressways operated by the Group. Each of Zhejiang Shunchang, Maintenance Co and Jiaogong Maintenance 

is an indirect 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.

12/31/2022
Rmb’000

12/31/2021
Rmb’000

203,860

198,361

385,655

260,768

156,572

148,203

Other receivables

Trade payables

Other payables

266

2022 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2022 
 
 
 
 
 
 
 
 
 
 
 
57.  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  with 
Communications Group
During the year, Zheshang Securities Asset Management Co., Ltd. (“Asset Management”, an indirect subsidiary of 

the Company) didn’t sell the asset management schemes (2021: sold 59,666,928 units of the asset management 

schemes  equivalent  to  Rmb91,682,100)  to  Zhejiang  Zheshang  Financial  Holdings,  Co.,  Ltd.  Management  fee 

income of Rmb234,549(2021: Rmb707,121) was earned.

During  the  year, Asset  Management  didn’t  sell  the  asset  management  schemes  (2021:  sold  80,000,000  units  of 

the  asset  management  schemes  equivalent  to  Rmb80,000,000)  to  Zheshang  Property  and  Casualty  Insurance 

Company Limited. Management fee income of Rmb16,817 (2021: Rmb789,213) was earned.

During the year, Zhejiang Zheqi didn’t carry out derivatives contract business with Zheshang Financial Holdings, 

and the investment gain or loss was nil (2021: the investment loss was Rmb8,821,528) 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.

267

57.  RELATED PARTY TRANSACTIONS AND BALANCES (Continued)
(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.

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  Rmb600,000,000  (2021:  Rmb3,800,000,000)  at  fixed  interest  rates  of  3.50%  per  annum. 

During the year, a total amount of Rmb600,000,000 were repaid (2021: Rmb5,300,000,000).

During the year, Zhejiang Communications Finance provided Shangsan Co with a short-term loan with a principal 

amount  of  Rmb500,000,000  (2021:  Rmb200,000,000)  and  fixed  rate  of  3.50%  per  annum.  During  the  year, 

principal amount of the short-term loan Rmb300,000,000 (2021: Rmb200,000,000) was repaid.

During  the  year,  Zhejiang  Communications  Finance  provided  Hanghui  Co  with  short-term  loans  with  an 

aggregated  principal  amount  of  Rmb200,000,000  (2021:  Rmb500,000,000)  and  fixed  interest  rate  of  3.85%  and 

3.60%  per  annum  (2021:  fixed  interest  rate  of  3.85%  per  annum).  The  principal  amount  of  short-term  loans 

Rmb700,000,000 were repaid during the year (2021: Rmb500,000,000).

During  the  year,  Zhejiang  Communications  Finance  provided  Zhoushan  Co  with  short-term  loans  with  an 

aggregated  principal  amount  of  Rmb160,000,000  (2021:  Rmb160,000,000)  and  fixed  rate  of  3.65%  and  3.75% 

per  annum  (2021:  3.82%).  During  the  year,  principal  amount  of  short-term  loans  Rmb80,000,000  were  repaid 

(2021: Rmb430,000,000).

During  the  year,  Zhejiang  Communications  Finance  provided  Shenjiahuhang  Co  with  short-term  loans  with  an 

aggregated principal amount of Rmb2,400,000,000 (2021: Rmb400,000,000) and fixed rate of 3.60%. During the 

year, principal amount of short-term loans Rmb2,400,000,000 (2021: 400,000,000) were repaid.

During  the  year,  Zhejiang  Communications  Finance  provided  LongLiLiLong  Co  with  short-term  loans  with  an 

aggregated  principal  amount  of  Rmb154,000,000  (2021:  Rmb540,000,000)  and  fixed  rate  of  4.13%,  per  annum 

(2021:  4.13%).  During  the  year,  principal  amount  of  short-term  loans  Rmb372,114,000  were  repaid  (2021: 

Rmb1,810,000,000).

268

2022 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 202257.  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  long-term  loans  with  an 

aggregated principal amount of Rmb546,000,000 (2021: Rmb2,447,000,000) and fixed rate of 4.13%, per annum 

(2021: 4.13%). During the year, no principal amount of long-term loans were repaid (2021: Rmb1,582,096,000).

During  the  year,  Zhejiang  Communications  Finance  provided  Zhejiang  Grand  Hotel  with  short-term  loans  with 

an  aggregated principal amount of Rmb50,000,000 (2021:0) and fixed rate of 3.7% per annum. During the year, 

principal amount of Rmb50,000,000 were repaid.

Outstanding loan payable balances:

repayable within one year
1 to 5 years
over 5 years

Interest expenses incurred

12/31/2022
Rmb’000

12/31/2021
Rmb’000

789,026
958,848
512,710

904,780
625,280
622,510

2,260,584

2,152,570

Year ended
12/31/2022
Rmb’000

Year ended
12/31/2021
Rmb’000

99,755

175,206

269

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
57.  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)
Deposits to Zhejiang Communications Finance

Bank balances and cash

– Cash and cash equivalents

Interest income earned

12/31/2022
Rmb’000

12/31/2021
Rmb’000

2,941,840

2,460,550

Year ended
12/31/2022
Rmb’000

Year ended
12/31/2021
Rmb’000

33,672

36,463

Sales of asset management schemes with Zhejiang Communications Finance
During  the  year,  Asset  Management  sold  259,864,605  units  (2021:  1,043,682,551  units)  (equivalent  to 

Rmb259,999,000  (2021:  Rmb1,076,889,988))  of  the  asset  management  schemes  to  Zhejiang  Communications 

Finance. Management fee income of Rmb4,352,774 (2021: Rmb2,948,118) was earned.

Sales  of  convertible  bonds  with  Zhejiang  Communications  Finance  and 
Zheshang Financial
On  June  15,  2022,  the  Group  entered  into  agreements  with  Zhejiang  Communications  Finance  and  Zheshang 

Financial, respectively, in relation to the transfer of the Convertible Bond 2022 in the aggregate principal amount 

of Rmb1,100,000,000 at the aggregate consideration of Rmb1,174,785,000.

270

2022 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2022 
 
 
 
 
 
 
 
 
 
 
 
57.  RELATED PARTY TRANSACTIONS AND BALANCES (Continued)
(ii)  Transactions  and  balances  with  associates  and  other  related  parties 

(Continued)

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  Rmb447,327,097  (2021:  Rmb56,794,907) 

and  Rmb329,366,545  (2021:  Rmb266,238,356)  respectively  from  and  to  Zheshang  Development  Group,  to 

operate commodity trading business.

As  at  December  31,  2022,  Zhejiang  Zheqi  received  deposits  of  Rmb30,206,224  (2021:  Rmb67,153,629)  from 

Zheshang  Development  Group  for  derivatives  business.  Zheshang  Futures  had  the  balance  of  RMB230,984,810 

(2021:  Nil)  with  the  Zheshang  Development  Group  in  the  accounts  payable  to  customers  arising  from  securities 

business.

During the year, Zhejiang Zheqi carried out derivatives contract business with Zheshang Development Group, and 

the investment gains was losses Rmb254,425,726 (2021: gains Rmb2,730,745) 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  30,  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 Rmb5,018,750.

Operational  service  provided  to  Shenjiahuhang  Expressway  in  relation  to  the 
asset-backed special program (“ABS Program”)
With  reference  to  Note  50,  the  Group  is  responsible  for  the  daily  operation  of  the  Shenjiahuhang  Expressway 

pursuant  to  an  operation  service  agreement  for  the  ABS  Program.  During  this  year,  a  total  service  fee  of 

Rmb85,500 (2021: Nil) has been charged.

(iii)  Key management emoluments
The  remuneration  of  the  Directors,  supervisors  and  key  management  personnel  during  the  year  was 

Rmb9,718,000  (2021:  Rmb7,441,000)  including  retirement  benefit  scheme  contribution  of  Rmb334,000  (2021: 

Rmb270,000) which is determined by the performance of the individuals and the market trends.

271

58.  PARTICULARS OF SUBSIDIARIES OF THE COMPANY
58.1 General information of subsidiaries

Percentage of equity interest
attributable to the Company

Principal activities

Direct

Indirect

12/31/2022
%

12/31/2021
%

12/31/2022
%

12/31/2021
%

Name of subsidiary

Date and
place of
registration

Registered and
paid-in capital/
share capital
Rmb

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

Towing and Rescue Services 
Co., Ltd. (“Towing Co”)

Zheshang Securities

Zheshang Futures

Note 5

3,878,179,036

Note 6

1,371,244,600

Zheshang Capital Management

Note 7

500,000,000

Asset Management

Note 8

1,200,000,000

Ningbo Dongfang Jujin 

Note 9

1,000,000

Investment Management 
Co., Ltd (“Dongfang Jujin”)

Zhejiang Zheqi

Note 10

2,200,000,000

51

N/A

73.625

100

–

–

–

–

–

–

51

100

73.625

100

–

–

–

–

–

–

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 

Note 13

206,103,000

Investment Management 
(Limited Partnership) 
(“Jujin Jiawei”)

Zheshang International Financial 

Note 14

41,591,000

Holding Co., Limited

–

–

–

–

–

–

–

N/A

–

–

–

–

–

–

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

*40.3385

*40.3387

Operation of securities business

**39.7872

**40.3387

Operation of securities business

**40.3385

**40.3387

Operation of securities business

**40.3385

**40.3387

Provision of asset management service

**40.3385

**40.3387

Provision of investment management and 

advisory services

**39.7872

**40.3387

Trading of future

–

51

–

Management of the Jinhua Section of the 

Ningbo- Jinhua Expressway

51

Management of the Zhejiang Section of the 

Hangzhou-Ruili Expressway

**18.1635

**18.1635

Provision of investment management and 
advisory and private equity investments

**39.7872

**40.3387

Trading of future

Huihang Co

Note 15

580,000,000

100

100

–

–

Management of the Anhui Section of the 

Hangzhou-Ruili Expressway

272

2022 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2022 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
58.  PARTICULARS OF SUBSIDIARIES OF THE COMPANY (Continued)
58.1 General information of subsidiaries (Continued)

Name of subsidiary

Date and
place of
registration

Registered and
paid-in capital/
share capital
Rmb

Deqing Co

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

Note 21

8,519,856,565

Zhajiasu Co

Note 22

300,000,000

Zheshang International 

Note 23 HKD10,000,000

Asset Management Ltd.  
(“Zheshang International  
Asset Management”)

Percentage of equity interest
attributable to the Company

Principal activities

Direct

Indirect

12/31/2022
%

12/31/2021
%

12/31/2022
%

12/31/2021
%

80.1

–

51

100

–

100

55

–

80.1

100

–

100

–

100

55

–

–

–

–

–

–

–

51

–

Construction and management

Management of the Huzhou Section of the 

Huzhou-Lianhang Expressway

Management of the Zhoushan Bay Bridge

Operation of hotel

**40.3385

**40.3387

Provision of investment management and 
advisory and private equity investments

–

–

–

–

Management of the LongLi Expressway and 

LiLong Expressway

Management of the Zhajiasu Expressway

**39.7872

**40.3387

Provision of 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.  On  June  14,  2022,  Zheshang  Securities  has 

issued convertible bonds, the conversion of shares resulting 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.

273

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
58.  PARTICULARS OF SUBSIDIARIES OF THE COMPANY (Continued)
58.1 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. 

Upon  the  shareholder’s  meeting  resolution  and  business  registration  modification  on  January  20,  2022, 

Jiaxing Co was absorbed by LongLiLiLong Co and dissolved.

Note 3: 

Shangsan  Co  was  established  on  January  1,  1998  in  the  PRC  as  a  limited  liability  company.  On  November 

29,  2022,  the  Group,  Shangsan  Co,  the  Existing  Shareholders  and  Communications  Group  entered  into 

a  Capital  Increase  Agreement  to  increase  the  registered  capital  of  Shangsan  Co,  and  as  per  the  revised 

Articles  of Association  on  the  same  date,  the  voting  right  of  the  Group  in  Shangsan  Co  slightly  decreased 

from 73.625% to 73.624%. As at reporting date, no capital injected from any shareholder.

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.  On  March 

12, 2019, Zheshang Securities issued a convertible bond and the Group ‘equity interest 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.  On  June 

14,  2022,  Zheshang  Securities  issued  a  convertible  bond  and  the  Group’s  equity  interest  of  Zheshang 

Securities was diluted resulting from the conversion of shares by outside shareholders. See Note 42 for more 

details.

Note 6: 

Zheshang  Futures  was  established  on  September  7,  1995  in  the  PRC  as  a  limited  liability  company.  During 
the  year,  the  Group’s  percentage  of  entity  interest  in  Zhejiang  Futures  slightly  decreased  from  40.3387%  to 

39.7872% as the result of the capital increase of Zheshang Futures. See Note 58.2 for more details.

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.

274

2022 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 202258.  PARTICULARS OF SUBSIDIARIES OF THE COMPANY (Continued)
58.1 General information of subsidiaries (Continued)
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.

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.  The  Group  appointed  China  International  Capital  Corporation 

Limited(“CICC”) as the fund manager of the ABS Program during the year to launch an asset-backed special 

program(“ABS  Program”).  The  Group  entered  into  equity  transfer  agreement  with  CICC  to  transfer  the 

entire  equity  interests  in  Shenjiahuhang  Expressway  as  the  underlying  assets  for  the  ABS  Program.  Upon 

completion  of  the  equity  transfer  agreement  and  revision  of  Articles  of  Association  on  December  2,  2022, 

Shenjiahuhang Co ceased to be a subsidiary of the Group. See Note 50 for more details.

275

58.  PARTICULARS OF SUBSIDIARIES OF THE COMPANY (Continued)
58.1 General information of subsidiaries (Continued)
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. During the year, as part of the reorganisation for the purpose of 

the  proposed  issuance  of Asset-Backed  Securities(“ABS”),  Shenjiahuhang  Co  transferred  its  51%  of  equity 

interests in Zhoushan Co to the Company at the audited net asset value of Zhoushan Co as at June 30, 2022 

pursuant  to  an  equity  transfer  agreement  dated  19  September  2022.  Upon  which  Zhoushan  Co  became  the 

immediate subsidiary of the company.

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.

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 31,2022, the subscription has not been completed.

276

2022 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 202258.  PARTICULARS OF SUBSIDIARIES OF THE COMPANY (Continued)
58.1 General information of subsidiaries (Continued)
Except that Zheshang International Financial Holding Co., Limited and Zheshang International Asset Management 

Ltd. are operating in Hong Kong, all of the Company’s other subsidiaries are operating in Mainland China. As at 

December 31, 2022, Zheshang Securities has issued subordinated bonds, corporate bonds, short-term financing 

bonds  and  beneficial  certificates  at  the  total  principal  amount  of  Rmb6,400,000,000,  Rmb14,499,894,000, 

Rmb2,500,000,000  and  Rmb2,045,460,000  (2021:  Rmb9,900,000,000,  Rmb7,500,000,000,  Rmb6,500,000,000 

and Rmb2,408,360,000), respectively.

58.2 Change in ownership interest in a subsidiary
On  June  14,  2022,  Zheshang  Securities  issued  convertible  bonds,  the  conversion  of  1,060  shares  in  December 

2022 resulting in the slight dilution of the equity interest in Zheshang Securities and its subsidiaries attributed to 

the Company from 40.3387% to 40.3385%.

During  the  year,  Zheshang  Futures  launched  mixed  ownership  reform  and  introduced  strategic  investors. 

Shangsan  Co,  a  non-wholly-owned  subsidiary  of  the  Company,  subscribed  Rmb899,999,780  out  of  the  total 

Rmb1,729,999,800  capital  increase  in  relation  to  the  reform.  On  June  10,  2022,  upon  the  completion  of  the 

transaction,  the  Group’s  percentage  of  entity  interest  in  Zhejiang  Futures  and  its  subsidiaries  decreased 

from  40.3387%  to  39.7873%,  and  further  decreased  to  39.7872%  after  the  conversion  of  shares  of  Zheshang 

Securities as above mentioned.

277

INTERESTS IN UNCONSOLIDATED STRUCTURED ENTITIES

59. 
Regarding  securities  operation  segment  as  defined  in  Note  7,  the  Group  held  interests  in  structured  entities 

including  collective  asset  management  schemes,  investment  funds  and  limited  partnership. The  Group  acted  as 

fund manager for some structured entities and had power over them during the years ended December 31, 2022 

and  2021.  Except  for  the  structured  entities  the  Group  has  consolidated  as  disclosed  in  Note  44,  in  the  opinion 

of  the  Directors,  the  variable  returns  the  Group  exposed  to  over  these  collective  asset  management  schemes, 

investment  funds  and  limited  partnership  in  which  the  Group  has  interests  or  acted  as  fund  manager  are  not 

significant. The Group therefore did not consolidate these structured entities. 

The total assets of unconsolidated funds, asset management schemes managed by securities operation segment 

amounted  to  Rmb103,411,981,000  and  Rmb117,599,057,000  as  at  December  31,  2022  and  2021,  respectively.  

The  related  management  fee  income  for  the  year  ended  31  December  2022  amounted  to  Rmb420,826,000  (31 

December 2021: Rmb380,141,000).  

Regarding  securities  operation  segment,  the  Group  classified  the  investments  in  unconsolidated  funds,  asset 

management  schemes  and  limited  partnership    as  financial  assets  at  FVTPL  and  interests  in  associates.    As 

at  December  31,  2022  and  2021,  the  carrying  amounts  of  the  Group’s  interests  in  unconsolidated  funds,  asset 

management  schemes  and  limited  partnership  are  Rmb8,948,227,000  and  Rmb7,203,077,000,  respectively. The 

related management fee income and net investment gains for the year ended 31 December 2022 are disclosed in 

Note 6 and Note 8.

Except for the abovementioned structured entities, the Group also invested in certain ABS Program classified as 

interests  in  associates  which  it  doesn’t  act  as  the  fund  manager.  With  regard  to  the ABS  Program,  in  case  that 

the  net  cash  flow  generated  from  the  underlying  assets  was  not  sufficient  to  cover  the  necessary  expenditures 

of the ABS Program as agreed and senior class holder’s share that they’re entitled, the Group was committed to 

compensating the insufficient part. At the end of each three years, the Group has the right to update a proposed 

return  on  senior  class  securities  to  the  fund  manager  of  the  ABS  Program  just  before  withdrawal  registering 

period.  The  fund  manager  accepts  open-ended  withdrawal  and  subscription  of  senior  class  securities  within  the 

withdrawal registering period, and the Group will purchase any senior class securities which have not completed 

open-ended withdrawal if the holders intend to within the withdrawal registering period.

278

2022 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 202260.  SUMMARY OF FINANCIAL INFORMATION OF THE COMPANY

NON-CURRENT ASSETS
Property, plant and equipment
Right-of-use assets
Expressway operating rights
Other intangible assets
Interests in subsidiaries
Interests in associates
Interest in a joint venture

CURRENT ASSETS
Trade receivables
Amount due from subsidiaries and others
Dividends receivable
Bank balances and cash

– Cash and cash equivalents

CURRENT LIABILITIES
Trade payables
Tax liabilities
Other taxes payable
Amount due to subsidiaries and others
Bonds payable
Bank and other borrowings

NET CURRENT LIABILITIES

TOTAL ASSETS LESS

CURRENT LIABILITIES

12/31/2022
Rmb’000

12/31/2021
Rmb’000

975,338
7,800
1,455,240
29,393
10,691,936
7,739,747
373,470

738,656
13,951
1,796,828
10,987
13,045,033
7,652,999
373,470

21,272,924

23,631,924

109,532
1,419,907
2,366,109

40,955
2,915,069
1,515,301

9,407,345

3,420,154

13,302,893

7,891,479

232,254
57,083
22,057
5,893,926
67,278
253,679

181,843
407,792
21,551
4,572,163
3,084,871
57,120

6,526,277

8,325,340

6,776,616

(433,861)

28,049,540

23,198,063

279

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
60.  SUMMARY OF FINANCIAL INFORMATION OF THE COMPANY 

(Continued)

12/31/2022
Rmb’000

12/31/2021
Rmb’000

6,268,315
1,788,401
616,360
106,412

2,990,762
1,714,662
220,000
80,561

8,779,488

5,005,985

19,270,052

18,192,078

4,343,115
14,926,937

4,343,115
13,848,963

19,270,052

18,192,078

NON-CURRENT LIABILITIES
Bonds payable
Convertible Bond
Bank and other borrowings
Deferred tax liabilities

CAPITAL AND RESERVES
Share capital
Reserves

280

2022 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2022 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
60.  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
–

(24,160)
–

1,541,806
–

83,221
–

4,521,713
3,452,588

16,475,851
3,452,588

–

–

–

–
–
–

–

–

–

–
–
–

–

–

–

–
–
–

43,607

43,607

–

–
–
–

–

–

–

–

–

–

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 January 1, 2021
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

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

Profit for the year
Other comprehensive  
income for the year

Total comprehensive 
income for the year

2021 dividend
Proposed dividend

–

–

–

–
–

–

–

–

–
–

–

–

–

–
–

–

(736)

(736)

–

–

–

–
–

(1,628,668)
1,628,668

–

–

–

–
–

2,707,398

2,707,398

–

(736)

2,707,398

2,706,662

–
(1,628,668)

(1,628,668)
–

At December 31, 2022

4,343,115

3,645,726

2,364,430

18,711

1,628,668

71,382

7,198,020

19,270,052

281

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(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  110  to  281,  which  comprise  the 

consolidated statement of financial position as at December 31, 2022, 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,  2022,  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.

282

2022 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 scope 

Our  procedures  in  relation  to  the  management’s 

of  structured  entities,  which  invested  by  the  Group’s 

determination  of  consolidation  scope  of  structured  entities 

securities operation segment (defined in Note 7), as a 

included:

key  audit  matter  due  to  significant  judgement  applied 

by  management  in  determining  whether  a  structured 

•  Testing  and  evaluating  key  controls  of  the  management 

entity  is  required  to  be  consolidated  by  the  Group 

in  determining  the  consolidation  scope  of  structured 

and the significance of these balances to the Group’s 

entities;

consolidated financial statements as a whole.

•  Examining,  on  a  sample  basis,  the  documents  and 

The  Group  held  interests  as  investor  or  acted  as 

information  used  by  the  management  in  assessing 

fund  manager  in  various  structured  entities  including 

the  consolidation  criteria  of  structured  entities  against 

collective  asset  management  schemes,  investment 

the  related  agreements  and  other  related  service 

funds and limited partnership enterprises. As disclosed 

agreements  of  structured  entities  newly  established, 

in  Note  5  to  the  consolidated  financial  statements, 

invested  or  with  changes  in  proportion  of  ownership 

to  determine  whether  a  structured  entity  should  be 

interests or contractual terms during the year;

consolidated,  the  management  applied  significant 

judgement  in  determining  whether  the  Group  has 

•  Assessing  management  judgement  in  determining 

power  over  the  structured  entities,  and  assess 

the  scope  for  consolidation  and,  on  a  sample  basis, 

whether  the  combination  of  investments  it  held 

assessing  the  conclusion  about  whether  a  structured 

together with its remuneration and credit enhancement 

entity should be consolidated or not.

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  44  and  59  to  the  consolidated 

financial  statements,  as  at  December  31,  2022,  the 

total  assets  of  the  consolidated  structured  entities 

amounted  to  Rmb3,661,442  thousands  and  the 

total  assets  of  the  unconsolidated  structured  entities 

managed  by  the  Group’s  securities  operation 

segment  amounted  to  Rmb103,411,981  thousands, 

respectively.

283

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.

284

2022 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.

285

• 

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 LLP

Certified Public Accountants

(Registered as a Third Country Auditor with The UK Financial Reporting Council)

Shanghai, China

March 27, 2023

286

2022 ANNUAL REPORTIndependent Auditor’s ReportCHAIRMAN
YU Zhihong

EXECUTIVE DIRECTORS
CHEN Ninghui 
YUAN Yingjie

NON-EXECUTIVE DIRECTORS
YANG Xudong (Appointed on December 22, 2022)
JIN Chaoyang (Resigned on December 22, 2022)
FAN Ye
HUANG Jianzhang

INDEPENDENT
NON-EXECUTIVE DIRECTORS
PEI Ker-Wei
LEE Wai Tsang, Rosa
CHEN Bin

SUPERVISORS
ZHENG Ruchun
HE Meiyun
WU Qingwang
LU Xinghai 
WANG Yubing

COMPANY SECRETARY
Tony ZHENG

AUTHORIZED 
REPRESENTATIVES
YU Zhihong
YUAN Yingjie

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

287

Corporate InformationAs 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
Wonderful Sky Financial Group Holdings 
Limited
9/F., The Center,
99 Queen’s Road Central, Hong Kong
Tel : 852-3977 1892
Fax: 852-2815 1352

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

288

2022 ANNUAL REPORTCorporate InformationLocation Map of Expressways in Zhejiang ProvinceSTOCK CODE  0576

2022

ANNUAL REPORT

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