Zhejiang Expressway Co., Ltd Annual Report 2023

FY2023 Annual Report · Zhejiang Expressway Co., Ltd
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2023
ANNUAL REPORT
ANNUAL REPORT

STOCK CODE：0576

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ANNUAL REPORT

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
Independent Auditor’s Report

Consolidated Financial Statements & Notes
Corporate Information
Location Map of Expressways in Zhejiang Province

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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

Hangrao Co

HangShaoYong Co

Hangxuan Co

HuangQuNan Co

Huihang Co

Hong Kong Stock Exchange
independent third party(ies)

Jiaogong Group

Jiaogong Maintenance

2

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. (招商局公
路網絡科技控股股份有限公司), a joint stock limited company established in the PRC 
on December 18, 1993, whose 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
Zhejiang  Communications  Investment  Group  Co.,  Ltd.  (浙江省交通投資集團有限公
司),  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. (浙江省交投控股集團
有限公司), a 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.  (德清縣德安公路建設有限責
任公司),  an  80.1%  owned  subsidiary  of  the  Company,  established  with  Zhejiang 
Hongtu for PPP Project in Deqing County
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. (浙江杭徽高速公路有限公司), a 51% owned 
subsidiary of the Company
Zhejiang HangNing Expressway Co., Ltd. (浙江杭寧高速公路有限責任公司), a 30% 
owned associate of the Company
Deqing  Hangrao  Expressway  Co.,  Ltd.  (德清縣杭繞高速有限公司),  a  non-wholly 
owned subsidiary of Communications Group
Zhejiang  HangShaoYong  Expressway  Co.,  Ltd.  (浙江杭紹甬高速公路有限公司),  a 
non-wholly owned subsidiary of Communications Group
Zhejiang  Hangxuan  Expressway  Co.,  Ltd.  (浙江杭宣高速公路有限公司),  a  wholly-
owned subsidiary of Communications Group
Zhejiang  HuangQuNan  Expressway  Co.,  Ltd.  (浙江黃衢南高速公路有限公司),  a 
100% owned subsidiary of LongLiLiLong Co
Huangshan  Yangtze  Huihang  Expressway  Co.,  Ltd.  (黃山長江徽杭高速公路有限責
任公司), a wholly-owned subsidiary of the Company
The Stock Exchange of Hong Kong Limited
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.  (浙江交工集團股份有限公
司), a non-wholly owned subsidiary of Communications Group
Zhejiang Jiaogong High-grade Expressway Maintenance Co., Ltd. (浙江交工高等級公
路養護有限公司), a non-wholly owned subsidiary of Communications Group

2023 ANNUAL REPORTDefinitionsJiaxiao Co

Jiaogong Underground 

Construction
Jiaxing Branch
Jinhua Co

Liantai Communications

Listing Rules

Linping Co

LongLiLiLong Co

Maintenance Co

Ningbo Yongtaiwen Co

North Channel Co

Period
PRC
Rmb
Santongdao South Connection Co

SFO
Shangsan Co

Shareholders
Shensuzhewan Branch

Shengxin Co

Shenjiahuhang Co

Shaoxing Communications

SRCB

Supervisory Committee
Yangtze Financial Leasing

Jiaxing  Jiaxiao  Expressway  Investment  Development  Co.,  Ltd.  (嘉興市嘉蕭高速公
路投資開發有限公司), a 70% owned subsidiary of Communications Group
Zhejiang  Jiaogong  Underground  Construction  Co.,  Ltd.  (浙江交工地下工程有限公
司), a non-wholly owned subsidiary of Communications Group
Jiaxing Branch of LongLiLiLong Co
Zhejiang  Jinhua  Yongjin  Expressway  Co.,  Ltd.  (浙江金華甬金高速公路有限公司),  a 
wholly-owned subsidiary of the Company
Guangdong  Liantai  Communications  Investment  Co.,  Ltd.  (廣東聯泰交通投資有限
公司), a limited liability company incorporated in the PRC on May 12, 2000
the  Rules  Governing  the  Listing  of  Securities  on  The  Stock  Exchange  of  Hong 
Kong Limited
Zhejiang  Linping  Expressway  Co.,  Ltd.  (浙江臨平高速公路有限責任公司),  formerly 
known  as  “Zhejiang  Yuhang  Expressway  Co.,  Ltd.”  (浙江余杭高速公路有限責任公
司), a 51% owned subsidiary of the Company
Zhejiang  LongLiLiLong  Expressway  Co.,  Ltd.  (浙江龍麗麗龍高速公路有限公司),  a 
wholly-owned subsidiary of the Company
Zhejiang Expressway Maintenance Co., Ltd. (浙江滬杭甬養護工程有限公司), a non-
wholly owned subsidiary of Communications Group
Zhejiang  Ningbo  Yongtaiwen  Expressway  Co.,  Ltd.  (浙江寧波甬台溫高速公路有限
公司), an approximately 80.45% owned subsidiary of Communications Group
Zhejiang Zhoushan North Channel Co., Ltd. (浙江舟山北向大通道有限公司), a 60% 
owned subsidiary of Communications Group
the period from January 1, 2023 to December 31, 2023
the People’s Republic of China
Renminbi, the lawful currency of the PRC
Hangzhou Santongdao South Connection Engineering Co., Ltd. (杭州三通道南接線
工程有限公司), a non-wholly owned subsidiary of Communications Group
Securities and Futures Ordinance (Chapter 571, Laws of Hong Kong)
Zhejiang  Shangsan  Expressway  Co.,  Ltd.  (浙江上三高速公路有限公司),  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 Communications Investment Group Co., Ltd., Shensuzhewan Branch (浙
江省交通投資集團有限公司申蘇浙皖分公司), a branch of Communications Group
Zhejiang  Shaoxing  Shengxin  Expressway  Co.,  Ltd.  (浙江紹興嵊新高速公路有限公
司), a 50% owned joint venture of the Company
Zhejiang Shenjiahuhang Expressway Co., Ltd. (浙江申嘉湖杭高速公路有限公司), an 
associate company indirectly owned by the Company through its subscribing 30% 
of the subordinated class of the CICC-Zhejiang Expressway-Shenjiahuhang asset-
backed special program
Shaoxing Communications Investment Group Co., Ltd. (紹興市交通投資集團有限公
司), a company incorporated in the PRC with limited liability
Shanghai  Rural  Commercial  Bank  Co.,  Ltd.  (上海農村商業銀行股份有限公司),  a 
4.96% owned associate of the Company
the supervisory committee of the Company
Yangtze United Financial Leasing Co., Ltd. (長江聯合金融租賃有限公司), a 10.61% 
owned associate of the Company

3

Hunan  Yonglan  Expressway  Co.,  Ltd.  (湖南永藍高速公路有限公司),  a  limited 
liability company established in the PRC on January 19, 2006
Zhejiang  Wenzhou  YongTaiWen  Expressway  Co.,  Ltd.  (浙江溫州甬台溫高速公路有
限公司), a 15% owned associate of the Company
Jiaxing Zhajiasu Expressway Co., Ltd., a 55% owned subsidiary of the Company
Zhejiang  Communications  Investment  Group  Finance  Co.,  Ltd.  (浙江省交通投資集
團財務有限責任公司), a 20.08% owned associate of the Company
Zheshang  Development  Group  Co.,  Ltd.  (浙商中拓集團股份有限公司),  a  joint 
stock  limited  company  established  in  the  PRC  and  a 44.55%  owned  associate  of 
Communications Group
Zhejiang  Zheshang  Financial  Holding  Co.,  Ltd.  (浙江浙商金控有限公司),  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 (浙江大酒店有限公司), a wholly-owned subsidiary of 
the Company
Zhejiang  Hangzhou-Ningbo  Parallel  Line  Ningbo  Phase  I  Expressway  Co.,  Ltd. 
(浙江杭甬複線寧波一期高速公路有限公司),  a  non-wholly  owned  subsidiary  of 
Communications Group
Zhejiang  Hongtu  Transportation  Construction  Company  (浙江交工宏途交通建設有
限公司), a limited liability company incorporated in the PRC and non-wholly owned 
by Communications Group
Zhejiang  High-speed  Information  Engineering  Technology  Ltd.  (浙江高信技術股
份有限公司),  formerly  known  as  Zhejiang  Expressway  Information  Engineering 
Technology Co., Ltd. (浙江高速信息工程技術有限公司), a company incorporated in 
the PRC and a 65.85% owned subsidiary of Communications Group
Zhejiang Expressway International (Hong Kong) Co., Ltd. (浙江滬杭甬國際（香港）有
限公司), a wholly-owned subsidiary of the Company
Zhejiang  Shunchang  High-grade  Expressway  Maintenance  Co.,  Ltd.  (浙江順暢高
等級公路養護有限公司),  a  limited  liability  company  established  in  the  PRC  and  a 
non-wholly owned subsidiary of 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. (浙商證券股份有限公司), a 54.79% owned subsidiary 
of the Shangsan Co
Zhejiang  Commercial  Group  Co.,  Ltd.  (浙江省商業集團有限公司),  a  company 
established in the PRC and a subsidiary of Communications Group
Zhejiang Zheqi Industrial Co., Ltd. (浙江浙期實業有限公司), a company established 
in the PRC, an indirectly non-wholly owned subsidiary of the Company
Zhejiang  Zhijiang  Communications  Holdings  Co.,  Ltd.  (浙江之江交通控股有限
公司),  a  joint  venture  owned  as  to  50%  by  the  Company  and  China  Merchants 
Expressway, respectively
Zhejiang  Zhoushan  Bay  Bridge  Co.,  Ltd.  (浙江舟山跨海大橋有限公司),  a  51% 
owned subsidiary of the Company
Zhejiang  Institute  of  Communications  Co.,  Ltd.  (浙江數智交院科技股份有限公
司),  a  joint  stock  limited  company  established  in  the  PRC  and  a  55.08%  owned 
subsidiary of Communications Group

Yonglan Co

Wenzhou YongTaiWen Co

Zhajiasu Co
Zhejiang Communications Finance

Zheshang Development

Zheshang Financial

Zhejiang Grand Hotel

Zhejiang HNPL Co

Zhejiang Hongtu

Zhejiang Information

Zhejiang International Hong Kong

Zhejiang Shunchang

Zheshang FoF

Zheshang Securities

Zhejiang Commercial

Zhejiang Zheqi

Zhijiang Communications Holdings

Zhoushan Co

ZJIC

4

2023 ANNUAL REPORTDefinitionsZhejiang  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  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. The securities business is carried out by its subsidiary Zheshang Securities, 
which was listed on the Shanghai Stock Exchange (SH Stock Code: 601878) in June 2017.

Major assets operated by the Group include nine expressways namely the 248 km Shanghai-
Hangzhou-Ningbo  Expressway,  the  141  km  Shangsan  Expressway,  the  70  km  Jinhua 
section of Ningbo-Jinhua Expressway, the 122 km Hanghui Expressway, the 82 km Huihang 
Expressway,  the  46  km  Zhoushan  Bay  Bridge,  the  222  km  LongLiLiLong  Expressways,  the 
50km Zhajiasu Expressway and the 161 km HuangQuNan Expressway. Among which, apart 
from Huihang Expressway which is situated within Anhui Province in the PRC, the rest of the 
eight  expressways  are  situated  within  Zhejiang  Province  in  the  PRC.  As  at  December  31, 
2023, total assets of the Company and its subsidiaries amounted to Rmb207,733.80 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.

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.

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2023 ANNUAL REPORT 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1. 

On March 27, 2023, the Company announced its 2022 annual results.

On  the  same  date,  the  Company  and  Shaoxing  Communications,  as  a  consortium, 
entered  into  the  investment  agreement  in  respect  of  the  investment  and  implementation 
of the Ningbo-Jinhua Expressway (Shaoxing Section) Renovation and Expansion Project, 
with Zhejiang Road and Transportation Management Center* (浙江省公路與運輸管理中心) 
and Shaoxing Road and Transportation Management Center* (紹興市公路與運輸管理中心).

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.

On  April  18,  2023,  the  Board  approved  the  decision  to  delist  the  Company’s  H  Shares 
from the London Stock Exchange plc; on the same date, the Company filed an application 
for  delisting  with  the  Financial  Conduct  Authority  and  London  Stock  Exchange  plc;  the 
delisting took effect from 8:00 a.m. on May 19, 2023 (London time).

On April 28, 2023, the Company announced its 2023 first quarterly results.

On May 4, 2023, the Company held its 2022 annual general meeting to approve, inter alia, 
the payment of a final 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, and 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.

On June 9, 2023, the Company held an extraordinary general meeting to elect Ms. Li Yuan 
as a supervisor representing Shareholders of the Company and Mr. Zheng Ruchun retired 
from serving as a supervisor representing Shareholders of the Company, and to approve 
the  grant  of  a  specific  mandate  to  the  Board  to  issue,  allot  and  deal  with  a  maximum  of 
13,001,017  H  Shares  of  the  Company  for  issuance  of  conversion  shares  exceeding  the 
2020  general  mandate  upon  conversion  of  the  Euro230  million  zero  coupon  convertible 
bonds due 2026 into H Shares at the conversion price of HK$7.30 adjusted for dividend 
payment.

On  July  24,  2023,  the  Company  held  an  extraordinary  general  meeting  to  approve  the 
2023  Rights  Issue  (as  defined  below) and  the  Shareholders’  Return  Plan  for  the  Next 
Three Years (2023–2025), and the 2023 Rights Issue was also approved separately at the 
H Shares class meeting and the domestic shares class meeting held on the same date.

2. 

3. 

4. 

5. 

6. 

7. 

8. 

On August 23, 2023, the Company announced its 2023 interim results.

On  the  same  date,  the  Board  elected  Mr.  Yuan  Yingjie  as  the  Chairman  of  the  Company 
and Mr. Yu Zhihong retired from serving as the Chairman of the Company, and approved 
the Company to operate and manage the Zhejiang Section of HangNing Expressway (99.0 
kilometers) as entrusted by HangNing Co and the entrusted management agreement was 
signed on the same date.

7

Review of Major Corporate Events9. 

On  August  30,  2023,  the  Company  and  China  Merchants  Expressway  entered  into  an 
investment agreement with Zhejiang Road and Transportation Management Center* (浙江
省公路與運輸管理中心) and Jiaxing Transportation Engineering Construction Management 
Service  Center*  (嘉興市交通工程建設管理服務中心)  in  respect  of  the  investment  and 
implementation  of  the  reconstruction  and  expansion  project  of  Nanhu  Interchange  to 
Zhejiang-Jiangsu  Boundary  Section  of  the  Zhajiasu  Expressway.  Subsequently,  Zhajiasu 
Co,  a  subsidiary  of  the  Company,  was  designated  as  the  project  company  for  the 
implementation  of  the  project,  and  the  project  company  completed  the  signing  of  the 
concession agreement.

10.  On September 6, 2023, the Company entered into an investment agreement with Zhejiang 
Road  and  Transportation  Management  Center*  (浙江省公路與運輸管理中心)  and  Jinhua 
Road and Transportation Management Center* (金華市公路與運輸管理中心) (now renamed 
as  “Jinhua  Road  Port  and  Transportation  Management  Center*  (金華市公路港航與運輸
管理中心)”)  in  respect  of  the  investment  and  implementation  of  the  reconstruction  and 
expansion  project  of  Ningbo-to-Jinhua  section  (Jinhua  Section)  of  the  Ningbo-Jinhua 
Expressway.  Subsequently,  Jinhua  Co,  a  wholly-owned  subsidiary  of  the  Company,  was 
designated as the project company for the implementation of the project, and the project 
company completed the signing of the concession agreement.

11.  On September 7, 2023, the Board appointed Mr. Wu Wei as the General Manager of the 
Company and Mr. Yuan Yingjie ceased to serve as the General Manager of the Company.

12.  On  September  27,  2023,  the  Company  held  an  extraordinary  general  meeting  to  elect 
Mr.  Wu  Wei  as  an  executive Director  and  Mr.  Chen  Ninghui  retired  from  serving  as  an 
executive Director; and to elect Mr. Lu Wenwei as a supervisor representing Shareholders 
of  the  Company  and  Ms.  Li  Yuan  ceased  to  serve  as  a  supervisor  representing 
Shareholders of the Company.

13.  On  September  28,  2023,  the  Company  and  Communications  Group  entered  into  an 
equity  purchase  agreement  to  acquire  15%  equity  interest  in  Wenzhou  YongTaiWen 
Co  at  a  consideration  of  RMB816,150,000;  and  on  the  same  date,  LongLiLiLong  Co  (a 
wholly-owned  subsidiary  of  the  Company)  and  Communications  Group  entered  into  an 
equity  purchase  agreement  to  acquire  the  entire  equity  interest  in  HuangQuNan  Co  at  a 
consideration of RMB16,700,000.

14.  On October 13, 2023, the Company held an extraordinary general meeting to elect Mr. Li 

Wei as an executive Director.

15.  On October 31, 2023, the Company announced its 2023 third quarterly results.

On  the  same  date,  the  Board  appointed  Mr.  Wu  Wei  as  an  authorized  representative  of 
the Company.

16.  On November 10, 2023, the Company held an extraordinary general meeting to approve 
the  resolutions  in  relation  to  the  amendments  to  Articles  of  Association  due  to  changes 
in  regulatory  rules,  as  well  as  to  reflect  its  changes  of  registered  address  and  business 
scope.

8

2023 ANNUAL REPORTReview of Major Corporate Events17.  On  November  24,  2023,  the  Company  and  China  Merchants  Expressway  entered  into 
a  joint  venture  agreement,  pursuant  to  which  each  party  agreed  to  make  a  capital 
contribution of RMB1,341.6 million, each representing 50% of the registered capital of the 
joint  venture,  for  the  establishment  of  the  joint  venture;  on  the  same  date,  the  Company 
and  China  Merchants  Expressway  entered  into  an  equity  acquisition  agreement  with  the 
relevant  shareholders  of  Yonglan  Co,  pursuant  to  which,  upon  establishment,  the  joint 
venture  shall  acquire  60%  equity  interest  in  Yonglan  Co  at  an  amount  of  approximately 
RMB2,672.77  million.  On  November  28,  2023,  the  joint  venture  Zhijiang  Communications 
Holding was officially established.

18.  On December 13, 2023, the Company completed the 2023  Rights Issue of H Shares and 
domestic shares, raising gross proceeds equivalent to approximately RMB6.15 billion, of 
which the newly issued H Shares were officially listed on the Hong Kong Stock Exchange 
on  December  14,  2023.  Upon  completion  of  the  2023  Rights  Issue,  the  total  number  of 
shares of the Company increased to 5,993,498,010 shares.

19.  On  December  15,  2023,  the  Company  was  awarded  the  “Best  Investment  Value  Listed 
Company”  and  “Listed  Company  with  Excellent  Investor  Relationship  Management”  in 
the 13th China Securities Golden Bauhinia Award, and the “Best Listed Company at ESG 
Information Disclosure” by the Hong Kong International ESG Alliance.

20.  On  December  20,  2023,  the  Company  was  awarded  the  “ESG  Excellence  Report”  rating 
in the ESG Report Rating Activity for Social Responsibilities of Communication Enterprises 
organized by China Association of Communication Enterprise Management.

21.  On December 28, 2023, the Company held an extraordinary general meeting to approve 
the  grant  of  a  special  mandate  to  the  Board  to  issue,  allot  and  deal  with  a  maximum  of 
27,333,464  H  Shares  of  the  Company  for  issuance  of  conversion  shares  exceeding  the 
2020  general  mandate  and  the  previous  specific  mandate  upon  conversion  of  Euro230 
million zero coupon convertible bonds due 2026 into H Shares at the conversion price of 
HK$6.69 adjusted for the 2023 Rights Issue.

22.  On  January  12,  2024,  the  Company  entered  into  entrusted  management  agreements 
with  Zhejiang  HNPL  Co,  HangShaoYong  Co  and  Hangrao  Co,  respectively,  pursuant  to 
which  the  Company  was  entrusted  to  operate  and  manage  Phase  I  Ningbo  Section  of 
the  Parallel  Line  G92N  of  Hangzhou  Bay  Ring  Expressway  (55.8  kilometers,  “Hangzhou-
Ningbo  Expressway  Parallel  Line ”),  Hangzhou  to  Shaoxing  Section  of  Hangzhou-
Shaoxing-Ningbo  Expressway  (52.8  kilometers)  and  Huzhou  Section  of  the  West  Parallel 
Line  of  the  Hangzhou  Ring  Expressway  (50.8  kilometers);  among  them,  the  Hangzhou-
Ningbo  Expressway  Parallel  Line  and  Hangzhou  to  Shaoxing  Section  of  Hangzhou-
Shaoxing-Ningbo Expressway opened to traffic on January 19, 2024.

23.  On January 22, 2024, the Company, at the option of the holder of convertible bonds, made 
early  redemption  of  EUR202.6  million  (together  with  accrued  interest)  of  the  total  Euro230 
million zero coupon convertible bonds due 2026 issued by the Company on January 20, 2021.

24.  On January 25, 2024, the joint venture Zhijiang Communications Holdings entered into an 
equity acquisition agreement with Liantai Communications to acquire  the remaining  40% 
equity interest in Yonglan Co.

9

Expressway

of Ownership

Kilometers

Lanes

Stations

Service Areas

Operation

Operation

Percentage 

Length in 

Number of 

Number of Toll 

Number of 

Start of 

Years of 

Remaining 

Shanghai-Hangzhou Expressway

– Jiaxing Section

– Linping Section

– Hangzhou Section

Hangzhou-Ningbo Expressway

– Hangzhou to Hongken section

– Hongken to Duantang section

– Duantang to Dazhujia section

100%

51%

100%

100%

100%

100%

88.1

11.1

3.4

15.7

123.4

6.2

Shangsan Expressway  

73.625%

141.4

Ningbo-Jinhua Expressway

– Jinhua Section

100%

69.7

51%

51%

100%

51%

100%

100%

100%

55%

100%

100%

36.7

85.6

81.6

46.3

119.8

22.97

79.47

50.28

87.26

73.745

Hanghui Expressway

– Changyu Section

– Changhang Section

Huihang Expressway

Zhoushan Bay Bridge

LongLi Expressway

LiLong Expressway

– Liandu Section

– Other Sections

Zhajiasu Expressway

HuangQuNan Expressway

– Qunan Section

– Quhuang Section

10

8

6

4

4

8

4

4

4

4

4

4

4

4

4

4

4

4

4

7

1

1

1

11

1

11

7

5

8

4

8

9

2

5

4

5

5

2

0

0

0

2

0

3

1

1

1

2

1

3

0

1

1

2

2

1998

1995–1998

1995

1992

1995

1996

2000

2005

2004

2006

2004

2009

2006

2007

2006

2002

2008

2011

5

5

5

4

4

4

7

7

6

8

10

11

8

9

8

7

9

12

2023 ANNUAL REPORTParticulars of Major Road Projects 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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

Toll rates of Huihang 
Expressway for 
passenger vehicles

Mileage fee 
(Rmb/vehicle/km)

Entrance fee 
(Rmb/trip)

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.

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

Class 1

Class 2

Class 3
Class 4
Class 5
Class 6

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
6 axles or above (inclusive)

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)

0.45

0.841

1.321
1.639
1.675
1.747

0.45

0.9

1.35
1.7
1.85
2.2

Notes:

1. 

2. 

Total number of axles includes floating axles.

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.

11

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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)

RETURN ON EQUITY (ROE)

2019

2020

2021

2022

2023

Rmb’000

Rmb’000

Rmb’000

Rmb’000

Rmb’000

(Restated)

(Restated)

(Restated)

(Restated)

12,943,080

12,723,793

16,641,414

15,331,777

16,965,024

4,895,872

4,114,669

7,854,182

7,342,061

7,851,538

(1,351,157)

(1,160,027)

(1,873,961)

(1,039,051)

(1,229,208)

3,544,715

2,954,642

5,980,221

6,303,010

6,622,330

2,840,934

1,997,450

703,781

957,192

4,452,488

1,527,733

62.39

60.69

43.86

43.64

97.78

91.54

5,178,666

1,124,344

113.72

108.33

5,223,679

1,398,651

112.95

105.32

2019

2020

2021

2022

2023

(Restated)

(Restated)

(Restated)

(Restated)

ROE

16.7%

8.8%

16.8%

17.3%

16.0%

Segmental Revenue / 2023

Segmental Net Profit / 2023

Other Business

1.0%

Other Business

12.4%

37.6%

Secunities
Business

12

28.9%

Secunities
Business

58.7%

Toll Road
Business

61.4%

Toll Road
Business

2023 ANNUAL REPORTFinancial and Operating Highlights 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue / Rmb Million

12,943

12,724

16,641

15,332

16,965

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

2019

2020

2021

2022

2023

(Restated)

(Restated)

(Restated)

(Restated)

Net profit / Rmb Million

5,980

6,303

6,622

8,000

6,400

4,800

3,200

1,600

0

3,545

2,955

2019

2020

2021

2022

2023

(Restated)

(Restated)

(Restated)

(Restated)

Basic EPS / Rmb Cents

97.78

113.72

112.95

62.39

43.86

2019

2020

2021

2022

2023

(Restated)

(Restated)

(Restated)

(Restated)

16.7

16.8

17.3

16.0

8.8

140

120

100

80

60

40

20

0

ROE / %

20

16

12

8

4

0

2019

2020

2021

2022

2023

(Restated)

(Restated)

(Restated)

(Restated)

13

YUAN Yingjie
Chairman

2023 ANNUAL REPORTDear Shareholders,

On  behalf  of  the  Board,  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 2023.

In 2023, in the face of the complex and severe international environment and the arduous 
and  heavy  mission  of  domestic  reform,  development  and  maintaining  stable ,  China 
deepened  its  reform  and  opening  up  in  all  respects  and  intensified  its  efforts  in  macro-
control, a pick up and improvement of the national economy were seen. Zhejiang Province, 
where the Group’s principal businesses are located, has seen collaborative recovery in the 
supply and demand, gaining persistent vitality of innovation, and the economic operation is 
steadily advancing.

During the Period, against the backdrop of pressure-bearing external environment and the 
slowdown of economic recovery, the Group focused on its principal businesses and made 
breakthroughs,  and  successfully  achieved  its  results  targets  for  the  year  with  a  number 
of  landmark  accomplishments  having  been  made.  During  the  Period,  total  revenue  of  the 
Group  increased  by  10.7%  year  on  year  to  RMB16,965.02  million,  profit  attributable  to 
owners of the Company increased by 0.9% year on year to RMB5,223.68 million, and ROE 
(return  on  equity)  was  16.0%.  The  Board  recommended  a  dividend  of  RMB32.0  cents  per 
share, providing long-term stable shareholder returns on an ongoing basis.

15

Chairman’s StatementAs  for  the  development  of  the core  business,  in  2023,  adhering  to  the  development 
concept  of “empowering  with  intelligent  technology  and  rebuilding  value ”,  the  Group 
successfully  realised industrial  implementation   of  intelligent  expressways technology , 
effectively  improved  the  quality  of  its  operation  services,  and  continuously  strengthened 
its  capability  in  innovative  development  of  the core  expressways  business,  by  digital  and 
technological  means.  During  the  Period,  the  Group  completed  the  task  of  transportation 
safeguard for the  Hangzhou Asian Games in a high-quality manner,  playing a leading role 
in  the  divergent  driving  force  across  the  province  and  further  improving  the  reputation  of 
the brand of Zhejiang Expressway.

Regarding  investment  and  financing,  the Group  jointly  established  an  investment  platform 
named  “Zhijiang Communications  Holdings ”  with  China  Merchants  Expressway,  and 
successfully implemented the  acquisition of 60% equity interest in Yonglan  Co, which laid 
a solid foundation for the Company to “going-out” from the eastern coastal region of China 
and  achieve  geographical  expansion;  successfully  completed  the  acquisition  of  100% 
equity  interest  in  HuangQuNan  Co  and  the  acquisition  of  15%  equity  interest  in  Wenzhou 
YongTaiWen  Co,  continuing  to  expand  and  consolidate  the  toll operation  business,  which 
effectively  contributed  to  the  performance  growth  of  the  Company  and  consolidated  its 
leading  position  in  the  expressway  industry  in  the  province.  Meanwhile,  the  Company 
successfully  completed  the first  equity  financing  through a  rights  issue   since  the 
Company’s listing on the Hong Kong Stock Exchange, raising funds equivalent to RMB6.15 
billion,  which  effectively  met  the needs  for  funds  regarding  ongoing  reconstruction  and 
extension projects, and laid a foundation for debt financing in the future.

As  for  the  securities  business,  during  the  Period,  the  global  economic  situation  remained 
complex  and unstable,  and  the  trading  volume  in  the  capital  market  declined  in  China, 
tending  to  be  a  downturn.  In  the  face  of  so  many  unfavourable  factors,  Zheshang 
Securities  fully  grasped  the  opportunities  brought  by  the  comprehensive registration -
based  IPO  system  and  achieved  a  growth  in  its  overall  results  despite  of  the  prevailing 
trend.  Leveraging  its  strong  profitability  and  steadily  growing  business  scale, Zheshang 
Securities  took  a  solid  step  towards  being  among  the  medium to  large  securities  firms 
nationwide.

16

2023 ANNUAL REPORTChairman’s Statement2024  marks  a  crucial  year  for  the  “14th  Five-Year”  plan.  Given  the  opportunities  and 
challenges,  the  Group  will  continue  to  focus  on  its core   business,  strive  to  improve 
competitiveness,  and  take  various  measures  to  promote  the  steady  growth  of  its 
businesses,  in  order  to  strive  for  its  steady  and  long-term  development  in  a  high-quality 
manner.

Looking ahead, the Group will, centering on its business objectives, focus on its principal 
duties  and  business,  and  accelerate  the  enhancement  of  its  ability  to  ensure  safe  and 
smooth  operation,  its  cost-effective  operation  ability  and  market-oriented  management 
and output ability. At the same time, the Group will focus on sustainable development and 
expand  its  operation  in  the  expressway-related  industry,  green  and  low-carbon  industries 
and  new  energy.  Driven  by  innovation  and  empowered  by  digital  intelligence,  the  Group 
will  accelerate  the  translation  of  its  new  innovative  achievements  and  the  export  of  its 
technologies, striving to be a leader in the industry.

On  behalf  of  the  Board,  I  would  like  to  express  my  sincere  gratitude  to  all  shareholders, 
investors,  business  partners,  customers,  the  management  and  all  employees  who  have 
been  concerned  about  and  supported  the  development  of  the  Company.  The  year  of 
2024  will  be  a  year  of  unity,  commitment  and  determination  for  us,  and  we  will  endeavour 
to  create  an  even  brighter  tomorrow  and  reward  our  investors  with  the  results  of  its  high-
quality development.

YUAN Yingjie
Chairman

March 25, 2024

17

WU Wei
Executive Director and 
General Manager

18

2023 ANNUAL REPORTBUSINESS REVIEW

The  year  2023  marked  the  first  year  of  the  post-COVID-19  pandemic  era,  and  the  global 
economy  was  gradually  emerging  from  the  impact  of  the  pandemic.  However,  against 
the  backdrop  of  intensifying  geopolitical  conflicts,  concurrent  high  interest  rates  and 
high inflation, and rising trade protectionism, the global economy as a whole was in weak 
recovery.  After  the  easing  of  the  pandemic  prevention  and  control  measures,  China’s 
economy  and  society  generally  returned  to normal  state ,  but  at  the  same  time,  were 
confronted with the challenge of real estate market’s adjustment and transformation. Under 
the guidance of the government’s general principle of seeking progress while maintaining 
stability,  macro-control  policies  were  implemented  in  a  concerted  manner  and  the 
consumption and production continued to recover, resulting in an overall upturn in China’s 
economic performance, with a year-on-year increase of 5.2% in GDP for the year. In 2023, 
Zhejiang  Province’s  service  sector  grew  strongly,  consumption  potential  continued  to 
unleash, and the scale of effective investment expanded, boosting a year-on-year increase 
of 6.0% in GDP of the province.

During  the  Period,  the  toll  revenue  of  the  Group’s  expressways  increased  significantly 
year-on-year  benefiting  from  the  continuous  recovery  of  China’s  economy  and  the  low 
base  effect,  while  revenue  from  securities  business  achieved  steady  growth  against 
the  downtrend  of  the  capital  market.  During  the  Period,  total  revenue  of  the  Group 
was  Rmb16,965.02  million,  representing  an  increase  of  10.7%  year-on-year,  of  which 
Rmb10,423.83  million  was  generated  by  the  nine  major  expressways  operated  by  the 
Group  (2022  (restated):  Rmb9,093.38  million),  representing  61.4%  of  total  revenue. 
R e v e n u e  g e n e r a t e d  b y  t h e  s e c u r i t i e s  b u s i n e s s  w a s  R m b6,372.29  m i l l i o n  (2022: 
Rmb6,080.38 million), representing 37.6% of the total revenue.

19

Management Discussion and AnalysisScale & Profitability improving 
qualitatively, with regular 
dividend declaration made to 
reward the shareholders

To attain the goal of realizing high-quality development, 
the  Group  made  efforts  in  capital  operation,  reform 
breakthrough  and  management  improvement  and 
facilitated  the  development  of  a  synergy  among  such 
three  aspects,  achieving  qualitative  improvement  in  its 
operating scale and profitability. The Group continued to 
place importance on rewarding the Shareholders, and the 
Board thus recommended a dividend of RMB32.0 cents 
per share to reward the investors. 

20

2023 ANNUAL REPORTManagement Discussion and AnalysisA 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

HuangQuNan Expressway

Securities business revenue

Commission and fee income

Interest income

Other operation revenue

Hotel and catering

Public-Private Partnership

Total revenue

2023

Rmb’000

10,423,833

4,901,165

1,094,646

557,158

737,352

193,725

–

1,201,578

756,412

477,037

504,760

6,372,289

3,919,889

2,452,400

168,902

124,072

44,830

2022

Rmb’000

(Restated)

9,093,380

3,971,714

984,737

466,326

593,918

134,512

619,166

827,693

672,645

389,622

433,047

6,080,383

3,689,947

2,390,436

158,014

88,143

69,871

16,965,024

15,331,777

change

(%)

14.6%

23.4%

11.2%

19.5%

24.2%

44.0%

-100.0%

45.2%

12.5%

22.4%

16.6%

4.8%

6.2%

2.6%

6.9%

40.8%

-35.8%

10.7%

Note:  Due  to  the  issuance  of  CICC-Zhejiang  Expressway-Shenjiahuhang  asset-backed  special  program, 

Shenjiahuhang  Co  was  no  longer  included  in  the  Group’s  consolidated  financial  statement  from  December  2, 

2022.

21

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Advantages in the core business 
were continuously consolidated 
and the equity financing realized 
a milestone-like breakthrough

Focusing  on  its  primary  responsibility  and  core  business, 
the  Group  realized industrial  implementation  of  intelligent 
expressways technology, and created a new model of market-
based mergers and acquisitions, with the quality and efficiency 
of the operation keeping improving and the advantages in the 
core business being consolidated. Meanwhile, it completed 
an  equity  financing  successfully  which  was  the  first  of  its 
kind  for  the  Company  since  it  became  listed  on  the  Hong 
Kong  Stock  Exchange,  with  proceeds  raised equivalent  to 
RMB6.15 billion, effectively supporting the need of its ongoing 
reconstruction and expansion projects for funds. 

22

2023 ANNUAL REPORTManagement Discussion and AnalysisToll Road Operations

During  the  Period,  as  China’s  economy  steadily  recovered,  the  overall  traffic  volume  and 
toll revenue of the Group’s expressways achieved a significant increase year-on-year. The 
performance of different sections of the Group’s expressways varied due to various factors.

Following  the  low  traffic  volume  base  affected  by  the  pandemic  in  2022,  a  significant 
increase was seen in the demand for travelling such as business, tourism and family visits 
after  the  easing  of  the  pandemic  prevention  and  control  policy  in  2023,  the  passenger 
vehicles  traffic  volume  of  the  Group’s  expressways  recovered  rapidly  and  a  significant 
year-on-year  increase  was  recorded  in  the  passenger  vehicles  toll  revenue,  with  tourism 
routes  including  the  Huihang  Expressway  and  the  Zhoushan  Bay  Bridge  being  positively 
affected  in  particular.  However,  the  year-on-year  increase  in  the  truck  traffic  volume  of 
the  Group’s  expressways  was  relatively  flat,  which  was  mainly  due  to  the  weaker-than-
expected  recovery  in  freight  demand  as  a  result  of  the  sluggish  recovery  of  the  world 
economy and the slowdown in global trade and investment.

Meanwhile,  the  traffic  volume  of  the  relevant  expressways  was  also  influenced  by 
changes  in  the  surrounding  road  network.  The  Hangzhou-Shaoxing-Taizhou  Expressway 
fully  opened  to  traffic  on  February  11,  2022,  continued  to  divert  the  traffic  volume  on 
the  Shangsan  Expressway.  From  September  16  to  October  9,  2023,  for  the  purpose  of 
transportation  security  needs  of  the  Hangzhou  Asian  Games,  the  relevant  sections  of  the 
Shanghai-Hangzhou-Ningbo  Expressway  was  under  traffic  control  during  the  daytime 
and  a  50%  discount  on  the  toll  was  implemented  for  yellow-plate  trucks  on  the  Zhajiasu 
Expressway,  which  had  a  certain  negative  impact  on  the  toll  revenue  during  such  period. 
The  pilot  section  of  the  Linjian  Expressway  opened  for  traffic  from  December  30,  2022, 
attracting  vehicles  travelling  to  and  from  Hangzhou  City  and  Anhui  Province  to  switch  to 
the Hanghui Expressway which is connected to it, resulting in the additional growth of toll 
revenue of Hanghui Expressway.

In addition, since January 1, 2023, Hangzhou Lin’an District Government has implemented 
the policy to pay the tolls for Zhejiang A-plate Class I ETC passenger vehicles traveling on 
Hanghui Expressway from Yuhang Toll Station to Qingshanhu Toll Station and from Yuhang 
Toll Station to Lin’an Toll Station, which is conducive to the growth of the traffic volume of 
passenger vehicles on the Hanghui Expressway.

23

Seeking transformation by means 
of reform and development, with 
the results of Zheshang Securities 
recording a growth despite of the 
prevailing unfavorable trend

In  the  face  of  the  multiple  negative  factors  including  the 
complex  domestic  and  international  environment  and  the 
downward trend of the capital market, Zheshang Securities 
gathered efforts to develop and reform, and planned for the 
business transformation as a whole, with various business 
realizing steady development and the overall performance 
growing despite of the prevailing unfavorable trend.

24

2023 ANNUAL REPORTManagement Discussion and AnalysisLooking  back  at  2023,  the  comprehensive  strength  of  the  Group’s  core  expressway 
business  continued  to  improve.  The  Group  completed  the  transportation  safeguard 
services for the Hangzhou Asian Games in a high-quality manner and further enhanced its 
brand image; piloted intelligent patrol equipment, strengthened the mechanization level of 
patrol  for  road  maintenance,  and  continued  to  improve  the  quality  of  the  road  conditions; 
completed the alleviation of congestion on high-traffic sections of the Shanghai-Hangzhou-
Ningbo  Expressway  and  other  high-traffic  sections  to  ensure  smoother  public  travel; 
took  advantage  of  the  post-pandemic  self-drive  touring  boom  and  actively  advanced 
market-oriented  measures  to  attract  traffic  and  increase  revenue;  achieved  industrial 
implementation  of  intelligent  expressways  technology  and  digitalization  as  well  as 
technological innovation and development continued to accumulate new growth drivers.

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 
46km  Zhoushan  Bay  Bridge,  the  222km  LongLiLiLong  Expressways,  the  50km  Zhajiasu 
Expressway and the 161km HuangQuNan Expressway was Rmb10,423.83 million.

During the Period, the daily average traffic volume in full-trip equivalents, toll revenue and 
the corresponding year-on-year increase on the Group’s expressways are listed below:

The Group’s Expressway Sections

Traffic Volume 

increase

Revenue

increase

Daily Average

year–on-year

Toll

year–on-year

Shanghai-Hangzhou-Ningbo Expressway

– Shanghai-Hangzhou Section

– Hangzhou-Ningbo Section

Shangsan Expressway

Jinhua Section, Ningbo-Jinhua Expressway

Hanghui Expressway

Huihang Expressway

Zhoushan Bay Bridge

LongLiLiLong Expressways

Zhajiasu Expressway

HuangQuNan Expressway

(in Full-Trip

Equivalents)

88,721

89,315

88,288

32,723

33,710

29,073

12,721

30,216

15,082

41,488

11,613

31.80%

50.77%

20.60%

19.50%

26.26%

25.57%

47.43%

48.49%

16.49%

31.83%

24.62%

(Rmb million)

4,901.17

23.4%

1,094.65

557.16

737.35

193.73

1,201.58

756.41

477.04

504.76

11.2%

19.5%

24.2%

44.0%

45.2%

12.5%

22.4%

16.6%

25

 
 
 
 
 
 
 
 
 
 
To strengthen the 
empowerment with intelligent 
technology and strive for an 
enhancement of long-term 
investment value

The Group will adhere to the direction of high-quality and 
sustainable development, strengthen the empowerment 
by  intelligent  technology,  enhance  its  cost-effective 
operation  capability  and  market-based  management 
output  capability,  and  continue  to  strengthen  its  core 
competitiveness.  Meanwhile,  it  will  systematically  plan 
for  the  reconstruction  and  expansion  of  expressways, 
increase efforts in investment in and merger & acquisition 
of  high-quality  expressway  projects  and  promote 
sustainable  development,  to  increase  the  value  of  the 
long-term investment of the Company continuously. 

26

2023 ANNUAL REPORTManagement Discussion and AnalysisSecurities Business

In  2023,  global  inflation  remained  high  and  difficult  to  alleviate,  while  the  international 
landscape  continued  to  evolve  in  a  complex  manner.  China’s  economic  development 
still  faced  challenges  brought  by  cyclical  and  structural  problems.  Multiple  internal  and 
external factors have led to a lack of investor confidence and a decline in trading activity, 
as  well  as  the  downward  volatility  in  the  capital  market.  Despite  facing  many  unfavorable 
factors,  Zheshang  Securities  has  been  able  to  fully  grasp the  development  opportunity 
of  comprehensive  registration-based  IPO  system,  fully  initiate  reform  and  development, 
comprehensively  plan  for  business  transformation,  continuously  improve  compliance  risk 
control levels, and steadily develop all business areas, resulting in an overall performance 
growth  against  the  trend.  Among  them,  investment  banking,  futures  brokerage,  and 
securities investment business were the main drivers of growth.

During  the  Period,  Zheshang  Securities  recorded  total  revenue  of  Rmb6,372.29  million, 
representing  an  increase  of  4.8%  year-on-year,  of  which,  commission  and  fee  income 
increased  6.2%  year-on-year  to  Rmb3,919.89  million,  and  interest  income  from  the 
securities  business  was  Rmb2,452.40  million, representing   an  increase  of  2.6%  year-
on-year.  In  addition,  securities  investment  gains  of  Zheshang  Securities  included  in  the 
consolidated statement of profit or loss and other comprehensive income of the Group was 
Rmb1,024.96 million (2022: Rmb679.73 million).

Hotel and Catering Business

In  2023,  with  the  smooth  transition  of  epidemic  prevention  and  control  and  the  effective 
implementation  of  policies  to  promote  domestic  demand  and  consumption,  the  service 
industry  has  quickly  rebounded,  especially  in  contact-based  and  group-based  services 
such  as  accommodation  and  catering.  The  revenue  of  two  hotels  under  the  Group  has 
increased significantly, but the profitability has not yet returned to pre-epidemic levels.

Zhejiang Grand Hotel, owned by Zhejiang Grand Hotel Limited (a 100% owned subsidiary 
of  the  Company  during  the  Period),  recorded  revenue  of  Rmb41.76  million  for  the  Period 
(2022: Rmb23.49 million).

Grand New Century Hotel, owned by Zhejiang Linping Expressway Co., Ltd. (a 51% owned 
subsidiary  of  the  Company  during  the  Period),  recorded  revenue  of  Rmb82.32  million  for 
the Period (2022: Rmb64.66 million).

27

Long-Term Investments

Shengxin  Co  owns  the  73km  Shaoxing  Section  of  the  Ningbo-Jinhua  Expressway.  During 
the Period, the average daily traffic volume in full-trip equivalents was 29,986, representing 
an  increase  of  21.63%  year-on-year.  Toll revenue  was   Rmb536.65  million  (2022: 
Rmb469.88 million). During the Period, the joint venture recorded a net profit of Rmb164.28 
million (2022: Rmb99.54 million).

Zhejiang HangNing Expressway Co., Ltd. (a 30% owned associate of the Company during 
the  Period)  owns  the  99km  HangNing  Expressway.  During  the  Period,  the  associate 
company recorded a net profit of Rmb486.60 million (2022: Rmb207.84 million).

During  the  Period,  the  Company  held  30%  of  the  subordinated  class  of  CICC-Zhejiang 
Expressway-Shenjiahuhang  asset-backed  special  program  (the  “Special  Program”)  which 
owns  the  Shenjiahuhang  Expressway  with  a  total  length  of  93km.  During  the  Period,  the 
Special Program recorded a book loss of Rmb141.90 million.

Zhejiang  Wenzhou  YongTaiWen  Expressway  Co.,  Ltd.  (“Wenzhou  YongTaiWen  Co”,  an 
associate  of  the  Company,  of  which  the  Company  completed  the  acquisition  of  15% 
equity  interest  on  October  26,  2023)  operates  the  Wenzhou  section  of  the  YongTaiWen 
Expressway  with  a  total  length  of  139km.  During  the  Period,  the  associate  company 
achieved a net profit of Rmb282.10 million.

Zhejiang Communications Investment Group Finance Co., Ltd. (a 20.08% owned associate 
of  the  Company  during  the  Period)  derived  income  mainly  from  interest  income,  fees  and 
commissions  for  providing  financial  services,  including  arranging  loans  and  receiving 
deposits, for Communications Group, the  Controlling Shareholder of the Company, and its 
subsidiaries. During the Period, the associate company recorded a net profit of Rmb818.65 
million (2022: Rmb850.88 million).

Yangtze  United  Financial  Leasing  Co.,  Ltd.  (a  10.61%  owned  associate  of  the  Company 
during  the  Period)  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  National  Financial  Regulatory  Administration.  During 
the  Period,  the  associate  company  recorded  a  net  profit  of  Rmb645.30  million  (2022: 
Rmb579.46 million).

28

2023 ANNUAL REPORTManagement Discussion and AnalysisShanghai  Rural  Commercial  Bank  Co.,  Ltd.  (a  4.92%  owned  associate  of  the  Company 
during  the  Period)  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 National Financial Regulatory Administration. As 
at the date of this report, the associate company has not yet released its audited financial 
data for the year 2023.

Zhejiang  Zheshang  Transform  and  Upgrade  Fund  of  Funds  Partnership  (Limited 
Partnership)  (a  24.99%  owned  associate  of  the  Company  during  the  Period)  is  primarily 
engaged  in  equity  investments,  investment  management  and  investment  consultation. 
During  the  Period,  the  net  profit  of  the  associate  attributable  to  the  Company  was 
Rmb66.17 million (2022: net loss of Rmb40.99 million).

Investment, Mergers & Acquisitions and Equity Financing

During  the  Period,  the  Group  successfully  acquired  all  equity  interest  of  HuangQuNan 
Co  (owning  161km  HuangQuNan  Expressway),  and  15%  equity  interest  of  Wenzhou 
YongTaiWen  Co  (owning  139km  Wenzhou  section  of  YongTaiWen  Expressway),  further 
expanding  its  core  expressway  business.  It  also  jointly  established  an  investment 
platform  with  China  Merchants  Expressway,  successfully  acquiring  60%  equity  interest  of 
Yonglan  Co  (owning  145km  Yonglan  Expressway),  further  expanding  its  strategic  layout 
in  core  expressway  locations.  The  Group  also  successfully  won  the  bid  for  investment 
in  reconstruction  and  expansion  projects  of  the  Shaoxing  section  and  Jinhua  section  of 
Ningbo-Jinhua Expressway as well as Zhajiasu Expressway, and completed the signing of 
concession agreements by project companies, contributing to the sustainable development 
of its core expressway business.

To  further  enhance  the  Group’s  core  competitiveness  and  accelerate  sustainable 
development,  the  Company  has  completed  the  rights  issue  of  H  shares  and  domestic 
shares on December 13, 2023 (the “2023 Rights Issue”), including: (1) H Share right issue 
of 544,864,710 H Shares on the basis of 3.8 H rights shares for every 10 existing H shares 
at  a  price  of  HK$4.06  per  H  rights  share;  (2)  domestic  share  right  issue  of  1,105,518,800 
domestic  shares  on  a  basis  of  3.8  domestic  rights  shares  for  every  10  existing  domestic 
shares at a price of Rmb3.73 per domestic share. The 2023 Rights Issue is the first equity 
financing  since  the  Company’s  listing  on  the  Hong  Kong  Stock  Exchange  and  has  raised 
equivalent  to  Rmb6.15  billion  proceeds  at  the  exchange  rate  of  issue  day,  providing 
effective  support  to  the  capital  needs  for  its  ongoing  reconstruction  and  expansion 
projects.

29

T h e   a g g r e g a t e   n o m i n a l   v a l u e   o f   t h e   H   S h a r e s   u n d e r   t h e   2 0 2 3   R i g h t s   I s s u e   i s 
Rmb544,864,710 and the aggregate nominal value of the domestic shares under the 2023 
Rights Issue is Rmb1,105,518,800. The net price per H Share under the 2023 Rights Issue 
is  HK$4.04.  The  closing  price  per  H  Share  as  stated  in  the  Hong  Kong  Stock  Exchange’s 
daily quotation sheet on May 23, 2023 (the date of announcement setting out the principal 
terms and conditions of the 2023 Rights Issue) was HK$6.42 and on November 6, 2023 (the 
date of announcement setting out the issue prices for the 2023 Rights Issue) was HK$5.96.

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  Rmb5,223.68  million, 
representing  an  increase  of  0.9%  year-on-year,  basic  earnings  per  share  was  Rmb112.95 
cents,  representing  a  decrease  of  0.7%  year-on-year,  diluted  earnings  per  share  was 
Rmb105.32  cents,  representing  a  decrease  of  2.8%  year-on-year,  and  return  on  owners’ 
equity was 16.0%, representing a decrease of 7.5% year-on-year.

Liquidity and Financial Resources

As at December 31, 2023, current assets of the Group amounted to Rmb152,862.43 million 
in  aggregate  (December  31,  2022  (restated):  Rmb146,213.77  million),  of  which  bank 
balances,  clearing  settlement  fund,  deposits  and  cash  accounted  for  18.4%  (December 
31,  2022  (restated):  16.6%),  bank  balances  and  clearing  settlement  fund  held  on  behalf 
of  customers  accounted  for  29.7%  (December  31,  2022  (restated):  33.3%),  financial 
assets  at  FVTPL  accounted  for  27.3%  (December  31,  2022  (restated):  29.9%)  and  loans 
to  customers  arising  from  margin  financing  business  accounted  for  13.0%  (December  31, 
2022  (restated):  12.0%).  The  current  ratio  (current  assets  over  current  liabilities)  of  the 
Group as at December 31, 2023 was 1.50 (December 31, 2022 (restated): 1.40). 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, 2022 (restated): 1.80).

30

2023 ANNUAL REPORTManagement Discussion and AnalysisThe  amount  of  financial  assets  at  FVTPL  included  in  current  assets  of  the  Group  as  at 
December  31,  2023  was  Rmb41,729.11  million  (December  31,  2022:  Rmb43,789.94 
million),  of  which  61.0%  was  invested  in  bonds,  9.3%  was  invested  in  stocks,  20.5%  was 
invested  in  equity  funds,  and  the  rest  were  invested  in  structured  products  and  trust 
products.

The  2023  Rights  Issue  has  raised  gross  proceeds  in  an  aggregate  amount  of  HK$6.70 
billion,  which  was  equivalent  to  Rmb6.13  billion  by  the  exchange  rate  at  receipt,  of  which 
Rmb5.2  billion  will  be  used  for  expenses  related  to  existing  expressway  expansion  and 
reconstruction  projects,  and  the  remaining  will  be  used  for  replenishing  working  capital 
and  repaying  loans  for  daily  operating  expenses.  As  of  December  31,  2023,  Rmb0.03 
billion  has  been  used  for  intermediary  fees,  Rmb0.12  billion  has  been  used  for  expenses 
related  to  existing  expressway  expansion  and  reconstruction  projects.  The  remaining 
balance  was  equivalent  to  RMB5.98  billion  at  the  exchange  rate  by  end  of Period,  among 
which, Rmb5.08 billion will be used for expenses related to existing expressway expansion 
and  reconstruction  projects,  and  the  remaining  will  be  used  for  replenishing  working 
capital and repaying loans for daily operating expenses, which are expected to be used in 
the upcoming four years.

During  the  Period,  net  cash  inflow  from  the  Group’s  operating  activities  amounted  to 
Rmb9,814.33  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

As at December 31,

2023

Rmb’000

23,830,440

100,631

4,268,560

41,729,113

2022

Rmb’000

(Restated)

23,990,165

70,179

203,632

43,789,944

Total

69,928,744

68,053,920

31

 
 
 
 
 
 
 
 
 
 
 
 
Borrowings and Solvency

As at December 31, 2023, total liabilities of the Group amounted to Rmb147,328.69 million 
(December  31,  2022  (restated):  Rmb141,561.20  million),  of  which  12.1%  was  bank  and 
other  borrowings,  1.5%  was  short-term  financing  note,  19.7%  was  bonds  payable,  16.7% 
was financial assets sold under repurchase agreements and 30.4% was accounts payable 
to customers arising from securities business.

As  at  December  31,  2023,  total  interest-bearing  borrowings  of  the  Group  amounted  to 
Rmb57,400.74 million, representing an increase of 4.5% compared to that as at December 
31,  2022.  The  borrowings  comprised  outstanding  balances  of  domestic  commercial  bank 
loans  of  Rmb13,910.40  million,  borrowings  from  overseas  commercial  bank  loans  of 
Rmb63.22  million,  borrowings  from  other  domestic  financial  institutions  of  Rmb1,449.22 
million,  borrowings  from  other  domestic  institutions  of  Rmb2,384.10  million,  short-term 
financing  note  of  Rmb1,507.58  million,  beneficial  certificates  of  Rmb630.03  million,  long-
term beneficial certificates of Rmb3,089.38 million, mid-term notes of Rmb3,048.45 million, 
subordinated  bonds  of  Rmb3,136.48  million,  corporate  bonds  of  Rmb18,054.86  million, 
asset backed securities of Rmb1,685.08 million, convertible bond denominated in Renminbi 
of  Rmb6,626.47  million  and  convertible  bond  denominated  in  Euro  that  equivalents  to 
Rmb1,815.47 million. Of the interest-bearing borrowings, 75.7% was not payable within one 
year.

As  at  December  31,  2023,  the  Group’s  borrowings  from  domestic  commercial  banks 
bearing annual fixed interest rates ranged from 2.7% to 4.2%, annual floating interest rates 
ranged from 3.73% to 4.35%, borrowings from overseas commercial banks bearing annual 
fixed interest rates were 5.25%, annual floating interest rates were 7.43%, the annual fixed 
interest rates of other domestic financial institutions were 3.7% and 4.13%, annual floating 
interest rates were 3.78%, and the annual fixed interest rates of other domestic institutions 
were  3.0%  and  3.65%.  As  at  December  31,  2023,  the  annual  floating  interest  rates  for 
beneficial certificates ranged from 2.35% to 7.0%, the annual fixed interest rates for short-
term  financing  notes  were  2.5%,  the  annual  fixed  interest  rates  for  long-term  beneficial 
certificates  were  3.75%,  the  annual  fixed  interest  rate  for  mid-term  notes  were  2.8%  and 
2.97%, the annual fixed interest rates for subordinated bonds were 3.65% and 4.08%, the 
annual  fixed  interest  rate  for  corporate  bond  ranged  from  1.638%  to  3.49%,  the  annual 
coupon  rate  for  convertible  bond  denominated  in  Renminbi  was  0.4%,  the  annual  coupon 
rate for convertible bond denominated in Euro was nil.

32

2023 ANNUAL REPORTManagement Discussion and AnalysisMaturity Profile

Gross amount

Within 

1 year

Rmb’000

Rmb’000

2-5 years 

inclusive

Rmb’000

Beyond 

5 years

Rmb’000

Floating rates

Borrowings from domestic commercial 

banks

13,144,725

1,201,115

5,063,586

6,880,024

Borrowings from overseas commercial 

banks

10,113

10,113

–

–

Borrowings from a domestic financial 

institution

Beneficial Certificates

Asset backed securities

Fixed rates

925,558

630,029

1,685,083

96,624

630,029

–

Borrowings from domestic commercial 

banks

765,676

765,676

Borrowings from overseas commercial 

banks

53,104

53,104

Borrowings from a domestic financial 

institution

Borrowings from domestic institutions

Short-term financing notes

Long-term Beneficial Certificates

Subordinated bonds

Corporate bonds

Mid-term notes

Convertible bonds

523,664

2,384,103

1,507,582

3,089,384

3,136,477

18,054,855

3,048,452

8,441,932

82,664

2,384,103

1,507,582

3,089,384

2,036,477

229,794

48,452

1,830,842

441,000

–

–

–

1,100,000

17,825,061

3,000,000

6,611,090

429,318

399,616

–

–

–

–

–

1,685,083

–

–

–

–

–

–

–

–

–

–

Total as at December 31, 2023

57,400,737

13,965,959

34,470,055

8,964,723

Total as at December 31, 2022 (Restated)

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 
Rmb2,104.13 million and Rmb9,955.67 million, respectively. The interest cover ratio (profit 
before interest and tax over interest expenses) stood at 4.7 times (Corresponding period of 
2022 (restated): 4.9 times).

33

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Profit before tax and interest

Interest expenses

Interest cover ratio

2023

Rmb’000

9,955,667

2,104,129

4.7

2022

Rmb’000

(Restated)

9,236,455

1,894,394

4.9

As  at  December  31,  2023,  the  asset-liability  ratio  (total  liabilities  over  total  assets)  of 
the  Group  was  70.9%  (December  31,  2022  (restated):  74.2%).  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 63.2% (December 31, 2022 (restated): 65.5%).

Capital Structure

A s  a t  D e c e m b e r  31,  2023,  t h e  G r o u p  h a d  R m b60,405.11  m i l l i o n  i n  t o t a l  e q u i t y, 
Rmb112,826.13  million  in  fixed-rate  liabilities,  Rmb16,395.51  million  in  floating-rate 
liabilities,  and  Rmb18,107.05  million  in  interest-free  liabilities,  representing  29.1%,  54.3%, 
7.9%  and  8.7%  of  the  Group’s  total  capital,  respectively.  The  gearing  ratio,  which  is 
computed  by  dividing  the  total  liabilities  less  accounts  payable  to  customers  arising  from 
the  securities  business  by  total  equity,  was  169.7%  as  at  December  31,  2023  (December 
31, 2022 (restated): 188.9%).

As at December 31, 2023

As at December 31, 2022

Total equity

Fixed rate liabilities

Floating rate liabilities

Interest-free liabilities

Total

Rmb’000

%

60,405,113

112,826,127

16,395,508

18,107,054

29.1%

54.3%

7.9%

8.7%

Rmb’000

(Restated)

49,300,214

109,293,991

19,068,360

13,198,849

207,733,802

100.0%

190,861,414

Long-term interest-bearing liabilities

43,762,294

21.1%

39,523,762

%

(Restated)

25.8%

57.3%

10.0%

6.9%

100.0%

20.7%

Gearing ratio 1 (note)

Gearing ratio 2 (note)

Asset-liabilities ratio 1 (note)

Asset-liabilities ratio 2 (note)

34

169.7%

72.4%

70.9%

63.2%

188.9%

80.2%

74.2%

65.5%

2023 ANNUAL REPORTManagement Discussion and Analysis 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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.

Capital Expenditure Commitments and Utilization

During the Period, capital expenditure of the Group totaled Rmb3,332.05 million. Amongst 
the total capital expenditure of the Group, Rmb1,767.80 million was incurred for acquiring 
equity  investments,  Rmb768.56  million  was  incurred  for  acquisition  and  construction  of 
properties,  Rmb795.54  million  was  incurred  for  purchase  and  construction  of  equipment, 
facilities  and  ancillary  facilities  and  Rmb0.15  million  was  incurred  for  reconstruction  and 
expansion projects of existing expressways.

As  at  December  31,  2023,  the  capital  expenditure  committed  by  the  Group  amounted  to 
Rmb6,238.41  million  in  total.  Amongst  the  remaining  balance  of  total  capital  expenditure 
committed by the Group, Rmb1,061.25 million will be used for acquiring equity investments, 
Rmb428.77  million  will  be  used  for  acquisition  and  construction  of  properties,  Rmb968.39 
million  for  acquisition  and  construction  of  equipment,  facilities  and  ancillary  facilities, 
Rmb3,780.00 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

The  Company  and Shaoxing  Communications  provided  Shengxin  Co  with  joint  guarantee 
for  its  bank  loans  of  Rmb2.20  billion,  in  accordance  with  their  proportionate  equity 
interests in Shengxin Co. As at December 31, 2023, the remaining bank loan balance was 
Rmb518.97 million.

Zhoushan  Co,  a  subsidiary  of  the  Company,  pledged  its  rights  of  toll  on  expressway  for 
its  bank  borrowing,  and  as  at  December  31,  2023,  the  remaining  bank  loan  balance  was 
Rmb5,359.90 million.

35

De’an Co, a subsidiary of the Company, pledged its trade receivables for its bank borrowing, 
and as at December 31, 2023, the remaining bank loan balance was Rmb466.15 million.

LongLiLiLong  Co,  a  subsidiary  of  the  Company,  pledged  its  right  of  toll  on  expressway 
for  its  bank  and  other  borrowing,  and  as  at  December  31,  2023,  the  remaining  bank  loan 
balance was Rmb4,218.73 million.

Zhajiasu  Co,  a  subsidiary  of  the  Company,  pledged  its  right  of  toll  on  expressway  for  its 
bank  borrowing,  and  as  at  December  31,  2023,  the  remaining  bank  loan  balance  was 
Rmb1,244.60 million.

HuangQuNan Co, a subsidiary of the Company, pledged its right of toll on expressway for 
its  bank  borrowing,  and  as  at  December  31,  2023,  the  remaining  bank  loan  balance  was 
Rmb2,780.90 million.

Zheshang International Financial Holding Co., Ltd., a subsidiary of the Company, pledged 
its right of loans to customers arising from margin financing business, and as at December 
31, 2023, the remaining bank loan balance was Rmb63.22 million.

Except for the above, as at December 31, 2023, 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,  such  redemption  rights  were 
executed  at  Euro202.6  million  on  January  20,  2024  and  the  outstanding  Bonds  in  the 
principal  amount  were  Euro27.4  million  subsequently;  (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%; and (v) the rights 
issue  was  completed  at  the  end  of  2023,  the  gross  proceeds  from  H  Share  rights  issue 
are in Hong Kong dollars; the Group’s principal operations were transacted and booked in 
Renminbi.

36

2023 ANNUAL REPORTManagement Discussion and AnalysisDuring 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  ahead  to  2024,  risk  factors  such  as  geopolitical  conflicts,  shifts  in  industrial  and 
supply  chains,  and  trade  frictions  will  continue  to  disrupt  the  global  economic  recovery, 
coupled with multiple countries facing general elections, the complexity and uncertainty of 
the global political and economic situation will increase. In the face of a more challenging 
external  environment,  the  Chinese  government  will increase  its  macro-control  efforts, 
coordinate  expansion  of  domestic  demand  with  deepening  of  supply-side  structural 
reforms, consolidate and enhance the positive momentum of economic recovery. With the 
introduction  and  implementation  of  various  policies  of  ensuring  stability  in  expectations, 
growth, and employment, it is expected that the Chinese economy will continue to stabilize 
and  rebound  in  2024.  In  this  environment  of  overall  economic  improvement  in  China,  the 
overall traffic volume and toll revenue of the expressways under the Group are expected to 
achieve stable growth.

37

The  Group  shall  focus  on  its  main  responsibilities  and businesses,   implement  service-
centered,  profit-centered,  and  brand-centered  development strategies .  It  will  fully 
leverage  the  function  of  intelligent  expressways,  so  as  to forecast  and  effectively  control 
traffic  flow, and improve the capacity to ensure safety and smoothness.  It will also initiate 
specific  action  plan  to  reduce  costs,  improve  quality  and  efficiency,  increase  preventive 
maintenance,  and  innovate  maintenance  technologies  to  enhance  low-cost  operational 
capabilities.  The  Group  will  continue  to  expand the   service essence   of  its  business 
brand,  accelerate  the  completion  of  standardized  post-investment  management  manuals 
for  private-owned  expressways  with  Yonglan  Expressway  as  a  model,  and  enhance  its 
market-oriented  management  capabilities.  In  addition,  it  will  take  digital  empowerment  for 
internal  control  management  as  a  breakthrough,  coordinate  the  establishment  of  digital 
systems,  and  support  business  operations  to  improve  efficiency  and  reduce  costs.  The 
Group  will  also  focus  on  integrating  technology  research  and  development  with  business 
management,  achieve  capitalization  of  digital  and  technological  innovation  project 
investment, and accelerate the transformation and export of innovative achievements.

In  2024,  under  the  guidance  of  the  goal  to  accelerate  promotion  for  a  financially  strong 
country,  reforms  and  opening  up  of  the  capital  market  will  further  deepen.  It  is  expected 
that  more  policies  to  activate  the  capital  market  will  be  implemented,  while  stricter 
regulation  will  also  become  more  explicit,  presenting  both  opportunities  and  challenges 
for  the  securities  industry.  Zheshang  Securities  will  take  advantage  of  new  market 
changes and actively seize business opportunities brought by the Beijing Stock Exchange, 
continuously upgrade its overall business development model, and effectively enhance its 
ability to serve the real economy. At the same time, it will strengthen business coordination 
and capital operations, helping Zheshang Securities to accelerate its entry into the ranks of 
medium to large securities firms nationwide.

Facing  the  complex  domestic  and  international  state  of  affairs,  the  Group  shall  focus  on 
high-quality  development,  continue  to  strengthen  its  core  expressways  business  and 
improve its securities and financial business. It shall deepen research on policies such as 
toll  collection  concession,  reconstruction  and  expansion,  and  investment  and  financing  to 
provide  strong  support  for  the  development  of  its  expressways  business.  It  will  also  rely 
on  resources  along  the  expressways  to  expand  industries  such  as  expressways-related 
development and new energy. By strengthening investment through mergers & acquisitions 
of high-quality expressways projects, the Group will continuously expand its core business. 
Through systematic planning of expressways reconstruction and expansion, it will facilitate 
the sustainable development of its core business.

38

2023 ANNUAL REPORTManagement Discussion and AnalysisHUMAN RESOURCES

In  2023,  the  Group  adhered  to  the  concept  of  “Talents  are  the  utmost  important 
resources”  throughout  the  whole  process  of  its  human  resources  work,  and  performed  its 
responsibilities  for  talents  selection  and  employment  earnestly,  promoting  the  continuous 
optimization of the talent team structure, effective furthering of the reforms of mechanisms, 
significant improvement of the per capita effectiveness and efficiency, constant perfection 
of the systems and institutions, to fulfill the value of human resources effectively and create 
a sound environment for talents’ development.

During  the  Period,  the  Group  developed  and  issued  documents  including  the  Action  Plan 
for  Building  a  Strong  Enterprise  Through  Talent  Development  and  Creating  a  First-class 
Team,  specifying  the  missions  and  measures  for  refining  the  organization,  optimizing  the 
team  and  developing  a  flexible  mechanism.  It  completed  the  organization  reform  and 
duty  optimization,  newly  established  the  operation  management  department,  planned  for 
market-oriented  development,  and  reformed  the  top-level  design  aiming  for  continuous 
optimization.  Focusing  on  benefit-and  increment-oriented,  it  implemented  classified 
performance  assessment  measures  and  improved  performance-based  assessment 
mechanism for all the staff. The Group also rationalized the compensation incentive system 
and  enhanced  fairness  in  first-time  distribution  and  second-time  distribution;  continued 
to  refine  differentiated  distribution,  to  link  compensation  with  the  business  volume  and 
contribution  of  the  employees  more;  and  carried  out  multiple  open  competitions  for  posts 
and  exchanges  among  middle-level  cadres  from  different  business  lines,  different  areas 
and  different  professions,  resulting  in  the  increase  of  the  proportion  of  young  cadres 
under  the  age  of  35.  The  Group  was  successfully  selected  as  a  postdoctoral  workstation 
and  introduced  25  urgently-needed  high-end  technical  talents,  accelerating  the  gathering 
of  high-level  talents;  also  formulated  guidance  for  building  of  talent  teams,  as  well  as 
organized training such as benchmark learning and digital enhancement, to gather talents 
for development of the Group.

As at December 31, 2023, there were 10,653 employees within the Group, amongst whom 
5,407 mainly worked in the related positions of the toll road operation business and 5,246 
worked in the related positions of the securities business.

39

TOLL ROAD BUSINESS RISKS

Economic environment

The  current  global  economy  is  gradually  emerging  from  the  shadows  of  the  COVID-19 
pandemic,  with  recovery  becoming  the  watchword.  However,  against  the  backdrop  of  the 
unresolved  Russia-Ukraine  conflict,  the  reignition  of  the  Israeli-Palestinian  conflict,  and 
the  escalation  of  geopolitical  tensions,  along  with  the  fluctuating  dynamics  of  China-US 
relations and the resurgence of trade protectionism, the global economy is moving forward 
with  uncertainty.  While  China’s  macroeconomic  growth  continues  to  recover,  it  is  facing  a 
critical  period  of  transition  in  growth  momentum,  compounded  by  the  gradually  emerging 
low-cost advantages of other emerging market economies. The path to industrial upgrading 
domestically  is  fraught  with  multiple  pressures  from  both  internal  and  external  sources. 
From  the  demand  side,  the  declining  global  demand  for  manufactured  goods  is  imposing 
significant constraints on our export market, making it difficult for the Chinese economy to 
further improve and recover. Given the close correlation between toll collection operations 
on expressways and the macroeconomic landscape, the performance of traffic volume and 
toll revenue on the Group’s expressways is also subject to uncertainties.

Roads Competition

The  Group’s  expressways  will  be  negatively  impacted  by  the  diversion  of  traffic  from 
surrounding  road  networks.  The  Ningbo-Jinhua  Railway  opened  to  traffic  at  the  end  of 
December  2023,  and  is  expected  to  have  a  continuous  diversionary  effect  on  the  traffic 
volume  of  the  Ningbo-Jinhua  Expressway  of  the  Group.  The  Anhui  section  of  Shanghai-
Jiaxing-Huzhou  Expressway opened   to  traffic  in  early  2024,  and  is  expected  to  have 
a  sustained  negative  impact  on  the  traffic  volume  of  the  Hanghui  Expressway  and  the 
Huihang  Expressway  under  our  group’s  jurisdiction.  The  Hangzhou-Shaoxing-Ningbo 
Expressway  and  the  Hangzhou-Ningbo Expressway  Parallel   Line opened   to  traffic  in 
January  2024,  and  are  expected  to  have  a  continuous  diversionary  effect  on  the  traffic 
volume  of  the  Hangzhou-Ningbo  Expressway  and  the  Zhoushan  Bay  Bridge  operated  by 
the  Group.  Therefore,  we  cannot  guarantee  that  the  traffic  volume  and  toll  revenue  of  the 
Group’s expressway will not be adversely affected in the future.

40

2023 ANNUAL REPORTPrincipal Risks and UncertaintiesToll Policy

As  approved  by  the  Zhejiang  Provincial  Government,  the  toll  roads  across  the  province 
continue  to  implement  a  5%  discount  on  tolls  for  all  vehicles  with  ETC  devices,  and 
the  state-owned  expressway  sections  within  the  province  continue  to  implement  a  15% 
discount  on  tolls  for  all  qualified  trucks  with  ETC  in-vehicle  device  in  the  province.  In 
February  2024,  the  Ministry  of  Transport  of  the  PRC  announced  the  Key  Areas  of  Legal 
System  on  Transportation  in  2024,  indicating  that  it  would  implement  the  revise  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  6,  52  and  53  to  the 
Consolidated Financial Statements.

41

STATEMENT OF RESPONSIBILITY FROM THE DIRECTORS WITH 
RESPECT  TO  THE  ANNUAL  REPORT  AND  THE  COMPANY’S 
ACCOUNTS

The Directors, whose names and functions are listed on pages 61 to 74, 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 25, 2024

42

2023 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  C1  to  the  Listing  Rules 
(available at www.hkex.com.hk).

During  the  Period,  the  Company  has  complied  with  all  code  provisions set  out  in  Part  2 
of  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 has been adopted and applied for the daily operation of 
the Company.

DIRECTORS’ SECURITIES TRANSACTIONS

The Company has adopted the 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  C3  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.

43

Corporate Governance ReportBOARD OF DIRECTORS OF THE COMPANY (THE “BOARD”)

The Chairman of the Company during the Period was:
Mr. YUAN Yingjie 
Mr. YU Zhihong 

(Appointed, with effect from August 23, 2023)
(Resigned, with effect from August 23, 2023)

The executive Directors of the Company during the Period were:
Mr. WU Wei 

(A ppointed,  with  effect  from  September  27,  2023/Appointed  as 

General Manager, with effect from September 7, 2023)

Mr. LI Wei 
Mr. YUAN Yingjie 
Mr. CHEN Ninghui 

(Appointed, with effect from October 13, 2023)
(Redesignated as Non-executive Director on September 7, 2023)
(Resigned, with effect from September 27, 2023)

The non-executive Directors of the Company during the Period were:
Mr. YANG Xudong
Mr. FAN Ye
Mr. HUANG Jianzhang

The independent non-executive Directors of the Company during the Period were:
Mr. PEI Ker-Wei
Ms. LEE Wai Tsang, Rosa
Mr. CHEN Bin

44

2023 ANNUAL REPORTCorporate Governance Report 
 
During  the  Period,  the  Board  held  a  total  of  14  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:

Attendance in 

Attendance by 

through 

Attendance 

Mr. YUAN Yingjie (Chairman)

Mr. YU Zhihong (Resigned)

Mr. WU Wei (General Manager)

Mr. LI Wei

Mr. CHEN Ninghui (Resigned)

Mr. YANG Xudong

Mr. FAN Ye

Mr. HUANG Jianzhang

Mr. PEI Ker-Wei

Ms. LEE Wai Tsang, Rosa

Mr. CHEN Bin

person

8/14

3/9

3/5

3/5

5/9

5/14

4/14

10/14

10/14

proxy

communication

2/14

4/9

2/9

10/14

5/14

6/14

10/14

4/14

2/9

2/5

2/5

2/9

4/14

4/14

4/14

4/14

4/14

4/14

45

 
 
 
 
 
 
 
 
During  the  Period,  the  Company  held  seven  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:

Attendance

9/9

5/5

3/3

2/2

5/5

9/9

9/9

9/9

9/9

Mr. YUAN Yingjie (Chairman)

Mr. YU Zhihong (Resigned)

Mr. WU Wei (General Manager)

Mr. LI Wei

Mr. CHEN Ninghui (Resigned)

Mr. YANG Xudong

Mr. FAN Ye

Mr. HUANG Jianzhang

Mr. PEI Ker-Wei

Ms. LEE Wai Tsang, Rosa

Mr. CHEN Bin

46

2023 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 paragraph  12B  of  Appendix  D2  to   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.

47

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.  YUAN  Yingjie  served  as  the  Chairman  (from  which  Mr.  YU  Zhihong 
has  resigned)  and  Mr. WU  Wei  served  as  the  General  Manager  (from  which  Mr.  YUAN 
Yingjie  has  resigned)  of  the  Company.  The  roles  of  Chairman  and  General  Manager  are 
fully segregated as expressly set out in the Articles of Association.

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.

48

2023 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. YU Zhihong resigned from the positions as the Chairman, a member 
of the Nomination Committee and the chairman of the Strategic Committee of the Company 
on  August  23,  2023,  Mr.  CHEN  Ninghui  resigned  from  the  positions  as  an  executive 
Director and a member of the Strategic Committee of the Company on September 27, 2023, 
Mr.  HUANG  Jianzhang  resigned  from  the  positions  as  a  member  of  the  Audit  Committee 
and the Remuneration Committee of the Company on January 19, 2023, Mr. YUAN Yingjie 
was appointed as the chairman of the Nomination Committee and the Strategic Committee 
of the Company on October 31, 2023, and Mr. WU Wei and Mr. LI Wei were appointed as 
members of the Strategy Committee since 31 October 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. 
YUAN Yingjie, Mr. PEI Ker-Wei, Ms. LEE Wai Tsang, Rosa, Mr. CHEN Bin and Mr. FAN Ye, 
of whom Mr. YUAN Yingjie 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.

49

The  Strategic  Committee  of  the  Company  mainly  comprises  of  the  Chairman  of  the  Board 
and  the  two  executive Directors,  namely  Mr.  YUAN  Yingjie,  Mr.  WU  Wei  and  Mr.  LI  Wei 
as  well  as  Mr.  Tony  ZHENG,  Ms.  RUAN  Liya,  Mr.  ZHANG  Jingzhong  and  several  outside 
experts  and  advisors,  of  whom  Mr.  YUAN  Yingjie  serves  as  the  chairman  of  the  Strategic 
Committee.

During the Period, the Audit Committee held a total of four meetings. Individual attendances 
by the members of the Audit Committee (as indicated by the number of meetings attended/
number of meetings held during their tenure) are as follows:

Mr. PEI Ker-Wei

Ms. LEE Wai Tsang, Rosa

Mr. CHEN Bin

Mr. FAN Ye

Mr. HUANG Jianzhang

Attendance 

Attendance 

in person

by proxy

4/4

4/4

3/4

1/4

4/4

1/4

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  three  meetings.  Individual 
attendances by the members of the Nomination Committee (as indicated by the number of 
meetings attended/number of meetings held during their tenure) are as follows:

Mr. YUAN Yingjie

Mr. YU Zhihong (Resigned)

Mr. PEI Ker-Wei

Ms. LEE Wai Tsang, Rosa

Mr. CHEN Bin

Mr. FAN Ye

50

Attendance 

Attendance 

through 

in person

by proxy

communication

Attendance 

1/1

3/3

3/3

3/3

3/3

2023 ANNUAL REPORTCorporate Governance Report 
 
 
 
 
 
 
 
 
 
 
 
 
 
During  the  Period,  the  Nomination  Committee  discussed,  considered  and  approved  the 
nomination  of  the  proposed  candidates  for  Chairman,  executive  Directors  and  General 
Manager  of  the  Company  by  way  of  telecommunication.  Thereafter,  the  proposed 
candidates  for  executive  directors  of  the  Company  were  approved  by  the  Board  of 
Directors  and  the  shareholders’  general  meeting,  and  the  proposed  candidates  for 
Chairman and General Manager of the Company were approved by the Board of Directors.

During  the  Period,  the  Remuneration  Committee  did  not  hold  any  meeting.  The  duties 
of  the  Remuneration  Committee  include  making  recommendations  to  the  Board  on  the 
remuneration packages of the Directors and senior management. 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..

51

The  Board  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 “Growth with Employees” section of in Chapter 4 “Mutual 
Benefit  and  Mutual  Sharing  Promotes  Harmony”  of  the  Company’s  2023  Environmental, 
Social and Governance Report.

The Board members 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  42  and  67.  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  and  providing  recommendation  or  suggestion  on  the 
candidates  to  serve  as  new  directors  of  the  Company  to  the  Board  when  needed.  The 
assessment  as  well  as  recommendation  or  suggestion  above  would  have  fully  taken 
into  consideration  any  pros  and  cons  to  the  diversification  of  Board  members  and  new 
perspectives,  skills,  expertise  and  experience  given  to  the  Board.  (Please  refer  to  “the 
Terms of Reference for Nomination Committee” under the “Corporate Governance” section 
on the Company’s website for details)

52

2023 ANNUAL REPORTCorporate Governance ReportAUDITORS’ REMUNERATION

During  the  Period,  the  Company  has  paid  approximately  Rmb4.90  million  and  Rmb1.26 
million  respectively  to  Deloitte  Touche  Tohmatsu  Certified  Accountants  (the  Hong  Kong 
auditor)  and  Zhejiang  Pan-China  Certified  Public  Accountants  LLP  (the  PRC  auditor), 
for  the  audit  services  they  rendered  in  2023,  the  fees  for  non-audit  services  were  about 
Rmb3.85  million  to  the  Hong  Kong  auditor  and  their  network  members,  and  Rmb0.78 
million for the PRC auditor and their network members respectively.

SECRETARY TO THE BOARD

During the Period, the Secretary to the Board helped the Company to 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.

D I R E C T O R S,  S U P E R V I S O R S  A N D  G E N E R A L  M A N A G E R’S 
INTERESTS  IN  SHARES  AND  UNDERLYING  SHARES  OF  THE 
COMPANY

As  at  December  31,  2023,  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 Hong  Kong  Stock  Exchange  pursuant  to  the 
Model Code.

53

INTERESTS  AND  SHORT  POSITIONS  OF  OTHER  PERSONS  IN 
SHARES AND UNDERLYING SHARES OF THE COMPANY

As at December 31, 2023, 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 Hong Kong Stock Exchange are set out below:

Substantial Shareholders

Capacity

Communications Group (Note 1)

Beneficial Owner

Percentage 

Numbers held

of the issued 

in domestic

domestic share

shares of 

capital of 

the Company

the Company

4,014,778,800

100%

Note 1: 

Communications  Group,  through  its  wholly-owned  subsidiary,  Universal  Cosmos  Limited,  indirectly  holds 

74,999,195 H Shares of the Company, representing 3.79% of the issued H Shares of the Company.

Substantial Shareholders

Capacity

Percentage 

Numbers held

of the issued 

in H Shares of 

H Share capital

the Company

of the Company

China Merchants Expressway

Beneficial Owner

363,914,280 (L)

18.39%

JPMorgan Chase & Co.

Person having a security interest 

172,439,805 (L)

in shares

15,820,990 (S)

75,912,273 (P)

BlackRock, Inc.

Interest of controlled corporations

136,757,081 (L)

154,320 (S)

8.71%

0.79%

3.83%

6.91%

0.01%

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, 2023, 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 Hong Kong Stock Exchange.

54

2023 ANNUAL REPORTCorporate Governance Report 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
SHAREHOLDERS’ RIGHTS

According  to  the  Articles  of  Association  of  the  Company,  the  shareholders,  alone  or  in 
aggregate,  holding  more  than  3%  of  the  shares  of  the  Company  can  make  a  temporary 
proposal  and  submit  the  same  in  writing  to  the  convener  ten  days  prior  to  the  date  of  the 
general meeting. The convener shall issue a supplementary notice of the general meeting 
within two days upon the receipt of the proposal, announcing the contents of the temporary 
proposal.  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, and shall 
be  in  compliance  with  the  relevant  provisions  of  laws,  administrative  regulations  and  the 
Articles of Association.

Shareholders who individually or collectively hold more than 10% of the Company’s shares 
may request in writing to convene an extraordinary general meeting.

Written requests, proposals and enquiries may be sent to the Company through the contact 
details listed on page 339 of this report.

INVESTOR RELATIONS

The  Board  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.

55

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 implemented 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.

During  the  Period,  the  last  shareholders’  meeting  of  the  Company  took  place  at  10:00 
a.m. on Thursday, December 28, 2023 at the headquarters of the Company. Details of this 
extraordinary general meeting of the shareholders were set out in the announcement dated 
December  28,  2023  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 
2024  with  exact  date  and  matters  for  consideration  to  be  specified  in  the  notice  of  the 
shareholders’ general meeting when it is issued.

56

2023 ANNUAL REPORTCorporate Governance ReportThe Company has an issued share capital of 5,993,498,010 shares comprising of domestic 
shares  and  H  Shares.  The  domestic  shares  are  held  by  Communications  Group  as  to 
4,014,778,800  shares,  representing  approximately  67%  of  the  total  issued  capital  of  the 
Company.  The  remaining  1,978,719,210  shares  are  H Shares,  representing  approximately 
33% of the total issued capital of the Company. Communications Group, through its wholly-
owned  subsidiary,  Universal  Cosmos  Limited,  indirectly  holds  74,999,195  H Shares  of  the 
Company,  representing  3.79%  of  the  issued  H Shares  of  the  Company. As  at  the  latest 
practicable  date  prior  to  the  issue  of  this  annual  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  and  maintaining  a  relatively  stable  dividend  payout  level.  According 
to  the  Company’s  “Shareholders’  Return  Plan  for  the  Next  Three  Years  (2023–2025)  (《未
來三年(2023–2025年）股東回報規劃》)”,  and  subject  to  compliance  with  relevant  laws  and 
regulations  and  other  regulatory  documents,  the  dividends  for  the  years  from  2023  to 
2025 shall not be less than 75% of the distributable profits realized for the year (whichever 
is  lower  in  the  statements  prepared  under  China  Accounting  Standards  for  Business 
Enterprises  and  Hong  Kong  Financial  Reporting  Standards).  During  the  Period,  the 
dividend payout accounted for approximately 94.1% of the distributable profits realized for 
the  year.  Details  of  the  dividend  payout  will  be  announced  after  the  2023  annual  general 
meeting of the Company.

57

R I S K   M A N A G E M E N T ,   I N T E R N A L   C O N T R O L   A N D   L E G A L 
CONSTRUCTION

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 “Strengthen Integrity Building” in Chapter 1 “ESG Governance Establishes a 
Solid Foundation” of the Company’s 2023 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 fixed-
assets management 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.

58

2023 ANNUAL REPORTCorporate Governance ReportThe Board acknowledges that it is responsible for the risk management and internal control 
systems  and  reviewing  their  effectiveness.  During  the  Period,  the  Directors  carried  out  a 
review on the effectiveness of the Company’s internal control system, covering all material 
aspects  of  internal  control,  including  financial  control,  operational  control,  compliance 
control  and  risk  management  functions.  The  internal  control  system  of  the  Company  was 
deemed to be effective and sufficient, and there were no material breaches in the internal 
control  system  that  might  have  an  impact  to  shareholders’  rights  and  interests.  The  risk 
management  of  the  Company  was  deemed  to  be  effective  and  controllable.  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.

The  Board  regularly  listened  to  the  Company’s  rule  of  legal  construction,  endeavored  to 
promote  the  integration  of  legal  corporate  governance  into  the  Company’s  operation  and 
development  objectives,  and  led  the  implementation  of  various  compliance  work  and 
special  administration  to  ensure  the  legality  and  compliance  of  the  Company’s  operation 
and management.

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.

CHANGES IN THE ARTICLES OF ASSOCIATION

During  the  Period,  the  Company  has  amended  its  Articles  of  Association.  Pursuant  to  the 
announcement  of  the  Company  dated  October  24,  2023  in  relation  to  the  amendments  to 
the Articles of Association and the approval of the resolution in relation to the amendments 
to  the  Articles  of  Association  at  the  general  meeting  held  on  November  10,  2023,  the 
Articles  of  Association  which  came  into  effect  after  such  amendments  were  published  on 
November 10, 2023 on the website of the Hong Kong Stock Exchange.

59

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,  there  has  not  been  any  significant  event  that  would  have  a 
material impact on the Company.

60

2023 ANNUAL REPORTCorporate Governance ReportDIRECTORS

Mr. YUAN Yingjie

Chairman

Mr. YU Zhihong

Chairman

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 Expressway Traffics, and both 
Master’s and Doctoral degrees of Engineering in Roads and Railways Engineering from 
Chang’an University.

Since 2004, Mr. Yuan has worked in Zhejiang Highway Management Bureau and Zhejiang 
Department  of  Transportation.  From  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 Communications Group. From 2018, he was deputy 
general manager of the expressway construction department, deputy general manager 
and general manager of the expressway management department of Communications 
Group. Since May 2022, he is a Deputy General Manager and a Member of the Party 
Committee of Communications Group.

Mr. Yuan has served as a Director of the Company since 2020 and is currently the 
Chairman of the Company.

Born in 1964, is a graduate from the Department of 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 Communications Group 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.

Mr. Yu ceased to be the Chairman of the Company in August 2023.

61

Directors, Supervisors and Senior Management Profiles 
 
Mr. WU Wei

Executive Director

Mr. LI Wei

Executive Director

62

Born in 1969, is a professorial senior engineer with a Bachelor’s Degree.

Mr.  Wu started  his  career  in  July  1991.  He  served  as  Deputy  General  Manager  and 
General Party Branch Secretary of Zhejiang Communications Construction Group Third 
Communications Construction Co., Ltd.; General Manager of Zhejiang Communications 
Construction Group Third Communications Construction Co., Ltd.; Deputy General Manager 
and Party Committee Member of Zhejiang Communications Construction Group Co., Ltd.* (浙
江省交通工程建設集團有限公司); Director, General Manager and Party Committee Member 
of Zhejiang Communications Construction Group Co., Ltd.; Director, General Manager and 
Deputy Party Secretary of Zhejiang Communications Construction Group Co., Ltd.* (浙江
交工集團股份有限公司, formerly known as 浙江省交通工程建設集團有限公司); Chairman and 
Party Secretary of Zhejiang Communications Resources Investment Co., Ltd.; Chairman and 
Party Secretary of Zhejiang Communications Technology Co., Ltd. (stock code: 002061.SZ); 
Chairman and Party Secretary of Zhejiang Communications Construction Group Co., Ltd..

Mr. Wu has served as an executive Director of the Company since 2023 and is currently the 
Executive Director, General Manager and Party Secretary of the Company.

Born in 1969, is a senior engineer. He 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.

Mr. Li started his career in July 1991, and served as Deputy Director of Jinhua Management 
Office of Zhejiang JinLiWen Expressway Co., Ltd. and Office Director, Vice Chairman of 
Labor Union, Deputy General Manager and Party Committee Member of Zhejiang JinLiWen 
Expressway Co., Ltd.. He also worked as Deputy General Manager and Party Committee 
Member in Zhejiang ShenSuZheWan Expressway Co., Ltd., and Deputy General Manager 
for each 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..

Mr. Li has served as an executive Director of the Company since 2023 and is currently 
the Executive Director, Deputy General Manager and a Party Committee Member of the 
Company.

2023 ANNUAL REPORTDirectors, Supervisors and Senior Management Profiles 
 
Mr. CHEN Ning hui

Executive Director

Mr. YANG Xudong

Non-Executive Director

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; Communications Group as Assistant General Manager; 
Zhejiang Communications Investment Property Group Co., Ltd. as Chairman and Party 
Secretary, and etc..

Mr.  Chen  ceased  to  be  the  Executive  Director  and  Party  Secretary  of  the  Company  in 
September 2023.

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.

Mr. Yang 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 Construction Expressway Co., Ltd.. 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..

Mr. Yang has served as a non-executive Director of the Company since 2022.

63

 
 
Mr. FAN Ye

Non-Executive Director

Mr. HUANG Jianzhang

Non-Executive Director

64

Born in 1982, is an economist. He graduated from Zhejiang University with a Doctoral Degree 
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 Jiaotou Real Estate Group Co., Ltd.. 
Since 2020, he has served as General Manager of the Industrial Investment Management 
Department (I) of Communications Group.

Mr. Fan has served as a non-executive Director of the Company since 2020 and is currently 
the General Manager of the Strategic Development Department of Communications Group.

Born in 1980, is a senior economist. He 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 has  served  as  a  non-executive  Director  of  the  Company  since  2021  and is 
currently  the  Deputy  General  Manager  of  the  Strategic  Development  Department  of 
Communications Group.

2023 ANNUAL REPORTDirectors, Supervisors and Senior Management Profiles 
 
Mr. PEI Ker-Wei

Independent Non-Executive Director

Mr.  PEI  Ker-Wei,  born  in  1957,  is  a  Professor  Emeritus  in  Accounting  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.

Professor PEI 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 has served as an independent non-executive Director of the Company since 2012 and 
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).

Ms. LEE Wai Tsang, Rosa

Independent Non-Executive Director

Born in 1977, has over 22 years of experience in the financial sector and is a licensed person 
for asset management under the Securities and Futures Ordinance (“SFO”). She holds a 
Master of Science in Finance from Boston College and an MBA from University of Chicago.

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 and Chief 
Investment Officer of Grand Capital Holdings Co Ltd from 2019 to 2023.

Ms. Lee has served as an independent non-executive Director of the Company since 2014 
and is currently a Director of Grand Investment (Bullion) Limited, Tianjin Yishang Friendship 
Holdings Company Ltd and Chief Investment Officer of Xin Yongan International Financial 
Holdings Limited.

65

 
 
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 U.S. 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.

Mr. Chen has served as an independent non-executive Director of the Company since 2018.

66

2023 ANNUAL REPORTDirectors, Supervisors and Senior Management ProfilesMr. LU Wenwei

Supervisor Representing Shareholders

Born in 1978, is a senior accountant. He graduated from the School of Economics and 
Management at Zhejiang University of Technology with a Master’s Degree in Management.

He began work in January 2004. He served as Auditor and Project Manager of Zhejiang 
Pan-China Certified Public Accountants; Head of the Financial Management Department of 
Communications Group; General Manager Assistant, Deputy General Manager and Party 
Committee Member of Zhejiang Communications Investment Group Finance Co., Ltd.; Deputy 
General Manager of the Financial Management Department of Communications Group; 
Deputy General Manager and Party Committee Member of Zhejiang Road Industry City 
Development Group Co., Ltd..

Mr. Lu is currently the Deputy General Manager (in charge of daily work) of the Financial 
Management Department of Communications Group.

Ms. LI Yuan

Supervisor Representing Shareholders

Born in 1977, graduated from Shanghai University of Finance and Economics (Shanghai National 
Accounting Institute) with a Master’s Degree in Accounting and is a senior accountant.

Ms. Li started working in 1999. She served as Assistant Department Manager of Zhejiang 
Pan-China Certified Public Accountants. Then she served as Deputy General Manager of the 
Financial Management Department, Director of the Audit Department (Comprehensive Supervision 
Department) and General Manager of the Financial Management Department of Communications 
Group.

Ms. Li ceased to be the Supervisor Representing Shareholders of the Company in September 
2023.

67

 
 
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 Communications Group.

Mr. Zheng ceased to be the Supervisor Representing Shareholders of the Company in June 
2023.

Mr. LU Xinghai

Supervisor Representing Employees

Born in 1967, is a senior economist. He graduated from the Psychology Department of 
Hangzhou University with a Doctoral Degree in the Industrial Psychology.

Mr. Lu had served as the Manager of Human Resources Department of Hangzhou Zhongcui 
Food Co., Ltd.; Deputy Manager of Human Resources Department of the Company and 
Director of Party Committee Affairs Department (News Center).

Mr. Lu is currently the Consultant of Party Committee Affairs Department (News Center) and a 
Supervisor Representing Employees of the Company.

68

2023 ANNUAL REPORTDirectors, Supervisors and Senior Management Profiles 
 
Mr. WANG Yubing

Supervisor Representing Employees

Ms. HE Meiyun

Independent Supervisor

Born in 1969, is a senior accountant. He graduated from Shanghai University of Finance and 
Economics with a Bachelor’s Degree.

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 
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.

Mr.  Wang  is  currently  the  Manager  of  Audit  and  Legal  Department  (Comprehensive 
Supervision Department) and a Supervisor Representing Employees of the Company.

Born in 1964, is a senior economist. She graduated from Zhejiang University in 1986 with 
a  Bachelor’s  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 and 
an Independent Director of Gree Real Estate Co., Ltd..

69

 
 
Mr. WU Qingwang

Independent Supervisor

Born in 1965, is a PRC Lawyer. He graduated from Hangzhou University with a Bachelor’s 
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.

70

2023 ANNUAL REPORTDirectors, Supervisors and Senior Management ProfilesOther Members of Senior Management

Mr. HAN Jinghua

Mr. Tony H. ZHENG

Born  in  1979,  graduated  from  the  School  of  Economics  and  Management  at  Zhejiang 
University of Technology majoring in economics and management with a Master’s Degree in 
Management, and obtained the title of economist.

Mr. Han started his career in July 2006 and served as the secretary to the office of Zhejiang 
Wenzhou YongTaiWen Expressway Co., Ltd., and joined Communications Group in April 
2010, successively served as the assistant to the head of the secretariat of the board of 
directors, the deputy head, the office deputy head, the head of the secretariat of the board of 
directors, etc.

Mr. Han has served the Company since 2023 and is currently  the deputy secretary of the 
Party Committee, the secretary of the Discipline Committee and the Chairman of Labor Union 
of the Company.

Born in 1969, graduated from University of California at Berkeley with a Bachelor of Science 
Degree in Civil Engineering in 1995.

Mr. Zheng has joined the Company since June 1997, and 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 Zhejiang Expressway International (Hong Kong) Co., Ltd..

71

 
 
Born  in  1969,  is  a  senior  economist.  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 General 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 Communications Group.

Mr. Wang has served the Company since 2019 and is currently the Deputy General Manager 
and a Party Committee Member of the Company.

Ms. ZHANG Xiuhua

Mr. WANG Bingjiong

72

2023 ANNUAL REPORTDirectors, Supervisors and Senior Management Profiles 
 
Mr. WU Xiangyang

Mr. ZHAO Dongquan

Born in 1972, is a professor-level senior engineer, having a Master’s Degree in engineering 
from Chang’an University and a Bachelor’s 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  Communications  Group,  Deputy  Chief  Commissioner  of 
Hangzhou Regional Construction Commission, Hangzhou-Shaoxing Sectional Construction 
Commission for West Parallel Expressway of Hangzhou Ring Road, Lin’an-Jiande Sectional 
Construction Commission of Lin’an-Jinhua Expressway and Construction Commission of 
Zhejiang 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 has served the Company since 2020 and is currently the Deputy General Manager 
and Party Committee Member of the Company.

Born in 1972, is a senior engineer, having a Bachelor’s 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 
Communications  Group,  Deputy  Chief  Commissioner  of  Hangzhou–Shaoxing  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 Communications Group.

Mr. Zhao has served the Company since 2022 and is currently the Deputy General Manager 
and Party Committee Member of the Company.

73

 
 
Born in 1983, is a senior economist. She graduated from Zhejiang University with a Master’s 
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 Communications Group 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 has served the Company since 2020 and is currently the Chief Financial Officer and 
Party Committee Member of the Company.

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 ceased to be the Party Committee Member, Secretary of the Disciplinary Inspection 
Commission and Chairman of the Labor Union of the Company in August 2023.

Ms. RUAN Liya

Chief Financial Officer

Mr. MA Ting

Chairman of Labor Union

74

2023 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, 2023.

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  2023  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,  2023  is  set  out  in  note  7  to  the 
financial statements.

RESULTS AND DIVIDENDS

The Group’s profit for the year ended December 31, 2023 and the state of financial position 
at that date are set out in the financial statements on pages 122 to 338.

The  Directors  have  recommended  the  payment  of  a  dividend  of  Rmb0.32  (approximately 
HK$0.353)  per  share  in  the  year  of  2023.  The  final  dividend  is  subject  to  shareholders’ 
approval at the 2023 annual general meeting of the Company and is expected to be paid 
on  or  around July  5,  2024.  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 36.7% 
of  profit  attributable  to  owners  of  the  Company during  the  Period.  Further  details  of  the 
dividends are set out in note 17 to the financial statements.

75

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

2023

2022

2021

2020

2019

Year ended December 31,

Rmb’000

Rmb’000

Rmb’000

Rmb’000

Rmb’000

(Restated)

(Restated)

(Restated)

(Restated)

Revenue

Operating costs

Gross profit

Securities investment gains

Other income and gains and 

losses

Administrative expenses

Other expenses and  

impairment losses

16,965,024

15,331,777

16,641,414

12,723,793

12,943,080

(9,765,685)

(9,365,125)

(10,069,473)

(8,587,932)

(7,916,255)

7,199,339

1,024,960

5,966,652

679,734

6,571,941

1,835,563

4,135,861

1,611,873

5,026,825

1,402,684

907,870

(183,981)

2,102,751

(177,405)

741,549

(178,197)

432,177

(147,971)

272,840

(143,820)

Share of profit of associates

Share of profit of joint ventures

1,056,247

107,046

752,086

49,771

(155,814)

(137,134)

(63,521)

966,075

56,249

(375,579)

(125,271)

688,029

16,282

652,824

34,941

Finance costs

Profit before tax

Income tax expense

Profit for the year

Profit for the year attributable to 

(2,104,129)

(1,894,394)

(2,075,477)

(2,246,003)

(2,225,151)

7,851,538

7,342,061

7,854,182

4,114,669

4,895,872

(1,229,208)

(1,039,051)

(1,873,961)

(1,160,027)

(1,351,157)

6,622,330

6,303,010

5,980,221

2,954,642

3,544,715

owners of the Company

5,223,679

5,178,666

4,452,488

1,997,450

2,840,934

Profit for the year attributable to 

non-controlling interests

1,398,651

1,124,344

1,527,733

957,192

703,781

Earnings per share

Basic (Rmb cents)

Diluted (Rmb cents)

112.95

105.32

113.72

108.33

97.78

91.54

43.86

43.64

62.39

60.69

76

2023 ANNUAL REPORTReport of the Directors 
 
 
 
 
 
 
 
 
 
 
 
 
 
Assets and liabilities

2023

2022

2021

2020

2019

As at December 31,

Rmb’000

Rmb’000

Rmb’000

Rmb’000

Rmb’000

(Restated)

(Restated)

(Restated)

(Restated)

Total assets

Total liabilities

Net Assets

Notes:

207,733,802

190,861,414

181,076,203

140,510,531

116,011,509

147,328,689

141,561,200

137,362,426

104,483,697

88,627,735

60,405,113

49,300,214

43,713,777

36,026,834

27,383,774

1. 

The consolidated results of the Group for the four years ended December 31, 2022 have been abstracted from 

the  Company’s  annual  report  on  March  27,  2023,  while  those  for  the  year  ended  December  31,  2023  were 

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

page 122 of the financial report.

2. 

The  2023  basic  earnings  per  share  is  based  on  the  profit  attributable  to  owners  of  the  Company  for  the  year 

ended  December  31,  2023  of  Rmb5,223,679,000  (2022  (restated):  Rmb5,178,666,000)  and  the  4,624,765,000 

(2022 (restated): 4,553,764,000) ordinary shares in issue during the year.

The  2023  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,  2023  of  Rmb5,172,495,000  (2022 

(restated):  Rmb5,227,061,000)  and  the 4,911,377,000  (2022  (restated): 4,825,048,000)  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.  The  largest  customer 
accounted  for  approximately  0.6%  of  total  turnover,  the  largest  supplier  accounted  for 
approximately 2.2% of total purchases.

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.

77

 
 
 
 
 
 
 
 
 
 
 
 
 
 
DONATION

During  the Period,  the  total  amount  of  donation  made  by  the  Group  is  Rmb8,604,000  for 
charitable or other purposes.

PROPERTY, PLANT AND EQUIPMENT

Details of movements in property, plant and equipment of the Group during the Period are 
set out in note 19 to the financial statements.

CAPITAL COMMITMENTS

Details  of  the  capital  commitments  of  the  Group  as  at  December  31,  2023  are  set  out  in 
note 51 to the financial statements.

RESERVES

Details  of  movements  in  the  reserves  of  the  Group  during  the Period  are  set  out  in  the 
consolidated statement of changes in equity on page 127 to the financial statements.

DISTRIBUTABLE RESERVES

As  at  December  31,  2023,  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  Rmb9,237,208,000.  In  addition,  in  accordance  with  the 
Company Law of the PRC, the amount of approximately Rmb8,094,217,000 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.

78

2023 ANNUAL REPORTReport of the DirectorsTRUST DEPOSITS

As  at  December  31,  2023,  other  than  the  deposits  placed  with  a  non-bank  financial 
institution  of  Rmb2,936,333,000  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.

DIRECTORS

The Directors of the Company during the Period and as at the date of this report are:

CHAIRMAN

Mr. YUAN Yingjie (Appointed, with effect from August 23, 2023)
Mr. YU Zhihong (Resigned, with effect from August 23, 2023)

EXECUTIVE DIRECTORS

Mr. WU Wei (Appointed, with effect from September 27, 2023)
Mr. LI Wei (Appointed, with effect from October 13, 2023)
Mr. YUAN Yingjie (Redesignated as a non-executive Director on September 7, 2023)
Mr. CHEN Ninghui (Resigned, with effect from September 27, 2023)

NON-EXECUTIVE DIRECTORS

Mr. YANG Xudong
Mr. FAN Ye
Mr. HUANG Jianzhang

79

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 and  the  senior  management  of  the  Group  are  set  out 
on pages 61 to 74 in the Company’s annual report.

DIRECTORS’ SERVICE CONTRACTS

Directors  have  entered  into  a  service  agreement  with  the  Company,  with  effect  from  July 
1,  2021  to  June  30,  2024.  Directors  newly  appointed  during  the  session  of  the  Board 
have entered into service agreements with the Company, with effect from the date of their 
appointments 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, 2023 or during the Period, none of the Directors or Supervisors or any 
entity  connected  with  the  Directors  or  Supervisors  had  a  material  interest,  either  directly 
or indirectly, in any transaction, arrangement or 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.

80

2023 ANNUAL REPORTReport of the DirectorsDIRECTORS,  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

During  the  Period,  due  to  the  implementation  of  the  rights  issue  project,  the  Company’s 
issued share capital increased from 4,343,114,500 shares to 5,993,498,010 shares.

PRE-EMPTIVE RIGHTS

There is no provision for pre-emptive rights in the Company’s Articles of Association or the 
laws of the PRC which would require the Company to offer new shares on a pro rata basis 
to existing Shareholders.

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.

81

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.

82

2023 ANNUAL REPORTReport of the DirectorsAccording  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  Tax  [2016]  No. 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.

83

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.

DIRECTORS’ 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,  2023  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
YUAN Yingjie
Chairman

Hangzhou, Zhejiang Province, the PRC 
March 25, 2024

84

2023 ANNUAL REPORTReport of the DirectorsD u r i n g  t h e  P e r i o d,  t h e  S u p e r v i s o r y  C o m m i t t e e  d u l y  p e r f o r m e d  i t s  s u p e r v i s o r y 
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  People’s  Republic  of  China,  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  ten  Board  meetings  and  seven  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 
complex  and  volatile  operating  environment,  further  strengthened  the  scale  and  strength 
of  its  operations,  achieved  breakthroughs  in  the  reconstruction  and  expansion  projects, 
initiated  a  new  mode  of  market-based  mergers  and  acquisitions  of  highway  assets,  and 
successfully implemented the first equity financing project after listing.

85

Report of the Supervisory CommitteeThe  Supervisory  Committee  has  reviewed  the  financial  statements  of  the  Company  for 
2023  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  2023,  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
LU Wenwei
Chairman of the Supervisory Committee

Hangzhou, Zhejiang Province, the PRC
March 25, 2024

86

2023 ANNUAL REPORTReport of the Supervisory CommitteeDuring  the  year  ended  December  31,  2023,  the  Company  had  the  following  non-exempt 
connected transactions and continuing connected transactions.

CONNECTED TRANSACTIONS

1.  Underwriting Agreement in relation to the Proposed Listing of ZJIC

On April 6, 2023, Zheshang Securities and Haitong Securities Co., Ltd. (the “Haitong 
Securities”)  entered  into  an  underwriting  agreement  (the  “Underwriting  Agreement”) 
with ZJIC in relation to the proposed listing of the A shares of ZJIC on the Shenzhen 
Stock  Exchange  (the  “Listing”).  Pursuant  to  the  Underwriting  Agreement,  Zheshang 
Securities was engaged as one of the joint lead underwriters to provide underwriting 
services in respect of the proposed Listing. Pursuant to the Underwriting Agreement, 
the  aggregate  underwriting  fees  that  ZJIC  has  agreed  to  pay  to  the  joint  lead 
underwriters  are  4.9%  of  the  amount  of  capital  raised  from  the  proposed  Listing, 
which is estimated to be Rmb1.5 billion as set out in the prospectus of ZJIC. 55% of 
the total underwriting fees would be paid to Zheshang Securities, which was estimated 
to be Rmb40,425,000. Please refer to the announcement of the Company dated April 
6, 2023 for details.

Communications  Group  is  a  Controlling  Shareholder  of  the  Company.  ZJIC  is  a 
55.08%  owned  subsidiary  of  Communications  Group,  and  is  therefore  a  Connected 
Person  of  the  Company.  As  a  result,  the  transaction  contemplated  under  the 
Underwriting Agreement constituted a connected transaction of the Company.

Pursuant  to  Rule  14A.81  and  Rule  14A.82  of  the  Listing  Rules,  the  respective 
transactions  contemplated  under  the  Underwriting  Agreement  and  the  IPO 
Sponsorship  Agreement  were  entered  into  or  completed  within  a  12-month  period 
with  ZJIC,  the  transactions  contemplated  under  the  Underwriting  Agreement  and 
the  IPO  Sponsor  Agreement  were  required  to  be  aggregated  for  the  calculation 
of  the  relevant  percentage  ratios  to  determine  the  classification  of  the  transaction 
contemplated under the Underwriting Agreement.

Pursuant  to  the  IPO  Sponsor  Agreement,  Zheshang  Securities  has  been  engaged 
as  an  IPO  sponsor  to  provide  IPO  sponsorship  services  for  the  proposed  Listing. 
The total amount of sponsorship fee payable by ZJIC to Zheshang Securities for the 
proposed Listing amounted to Rmb825,000.

87

Connected TransactionsAs  the  highest  applicable  percentage  ratio  in  respect  of  the  underwriting  fee 
receivable  by  Zheshang  Securities  under  the  transaction  contemplated  under 
the  Underwriting  Agreement,  after  aggregating  with  the  transaction  under  the 
IPO  Sponsor  Agreement,  was  more  than  0.1%  but  less  than  5%,  the  transaction 
contemplated  under  the  Underwriting  Agreement  was  therefore  subject  to  the 
reporting  and  announcement  requirements  but  exempted  from  the  independent 
Shareholders’ approval requirements under Chapter 14A of the Listing Rules.

2.  Construction  Agreements  for  Expansion  of  Shengzhou  Service  Area  and 

Jiaxing Service Area

On  April  18,  2023,  Shangsan  Co  and  Jiaxing  Branch  entered  into  the  construction 
agreements  (the  “Construction  Agreements”,  which  consist  of  the  Shengzhou 
Service  Area  Construction  Agreement  and  the  Jiaxing  Service  Area  Construction 
Agreement),  with  Jiaogong  Underground  Construction  as  the  contractor.  Pursuant 
to  the  Construction  Agreements,  Jiaogong  Underground  Construction  agreed  to 
undertake  the  construction  work  for  the  expansion  of  Shengzhou  Service  Area  and 
Jiaxing  Service  Area  at  the  considerations  of  Rmb71,203,199  and  Rmb53,385,933, 
respectively.  All  construction  work  under  the  Shengzhou  Service  Area  Construction 
Ag re ement  and  th e  Jia xi ng  Service  A rea  Cons truction  A greement  shall  b e 
completed  within  304  calendar  days  and  243  calendar  days  respectively  from  the 
commencement  date  as  instructed  by  the  supervisor,  followed  by  a  defect  liability 
period  of  two  years.  Please  refer  to  the  announcements  of  the  Company  dated  April 
18, 2023 and April 25, 2023 for details.

Jiaogong  Underground  Construction  is  an  indirect  non-wholly  owned  subsidiary  of 
Communications  Group  and  is  therefore  a  Connected  Person  of  the  Company.  As  a 
result, the transactions contemplated under the Construction Agreements constituted 
connected transactions for the Company under Chapter 14A of the Listing Rules.

88

2023 ANNUAL REPORTConnected TransactionsPursuant  to  Rule  14A.81  and  Rule  14A.82  of  the  Listing  Rules,  the  respective 
transactions  contemplated  under  the  Construction  Agreements  were  required  to  be 
aggregated  with  a  previous  transaction  (the  “Previous  Transaction”)  entered  into 
by  Jiaxing  Branch  and  among  others,  Jiaogong  Underground  Construction  and 
Jiaogong  Group  being  the  consortium  as  the  contractor  on  May  13,  2022  in  relation 
to the construction work for the renovation of Jiaxing Service Area Plaza of Shanghai-
Hangzhou  Expressway,  for  the  calculation  of  the  relevant  percentage  ratios  to 
determine the classification of the transactions contemplated under the Construction 
Agreements.

As  one  or  more  of  the  applicable  percentage  ratios  in  respect  of  the  transactions 
contemplated  under  the  Construction  Agreements,  after  aggregating  with  the 
Previous  Transaction,  were  more  than  0.1%  but  less  than  5%,  the  transactions 
contemplated  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.

3.  Design and Construction Agreements with ZJIC

On  September  22,  2023,  relevant  management  offices  and  subsidiaries  of  the 
Company entered into the following design and construction agreements (the “Design 
and Construction Agreements”) with ZJIC respectively:

(i) 

the  road  co mprehensive  improvement  p roject  agreements  (the  “R oad 
Comprehensive Improvement Project Agreements”), pursuant to which ZJIC was 
engaged  to  improve  the  road  safety  of  Jiaxing  Section  of  Shanghai-Hangzhou 
Expressway,  construct  facilities  to  reduce  driving  fatigue  of  certain  parts  of 
Zhajiasu Expressway, and construct remote traffic congestion warning facilities 
of  certain  parts  of  Jiaxing  Section  of  Shanghai-Hangzhou  Expressway  at  the 
consideration  of  Rmb4,117,364.00.  The  term  of  the  road  safety  improvement 
project under the Road Comprehensive Improvement Project Agreements is 45 
days of service period plus 1 month of trial operation period and 24 months of 
defect liability period while the term of the anti-fatigue and prevention of traffic 
congestion project thereunder is 45 days of service period plus 1 month of trial 
operation period and 12 months of defect liability period;

89

(ii) 

(iii) 

(iv) 

(v) 

the  landscape  lighting  upgrade  project  agreement  (the  “Landscape  Lighting 
Upgrade  Project  Agreement”),  pursuant  to  which  ZJIC  was  engaged  to 
upgrade  the  landscape  lighting  of  Zhoushan  Bay  Bridge  at  the  consideration 
of  Rmb1,484,584.44.  The  term  of  the  Landscape  Lighting  Upgrade  Project 
Agreement is 45 days of service period plus 3 months of trial operation period 
and 24 months of defect liability period;

the  provincial  border  interchange  hub  intervention  system  project  agreements 
(t h e  “P r o v i n c i a l  B o r d e r  I n t e r c h a n g e  H u b  I n t e r v e n t i o n  S y s t e m  P r o j e c t 
Agreements”),  pursuant  to  which  ZJIC  was  engaged  to  install  intervention 
system for abnormal vehicles at the provincial or municipal entrance of Fengjing 
Section  and  Shenshi  Junction  Section  of  Shanghai-Hangzhou  Expressway 
and  Wangjiangjing  Section  of  Zhajiasu  Expressway  at  the  consideration 
of  Rmb2,871,989.00.  The  term  of  the  Provincial  Border  Interchange  Hub 
Intervention  System  Project  Agreements  is  45  days  of  service  period  plus  12 
months of defect liability period;

the  electromechanical  system  upgrade  design  project  agreement  (the 
“Electromechanical  System  Upgrade  Design  Project  Agreement”),  pursuant 
to  which  ZJIC  was  engaged  to  provide  construction  design  for  upgrade  of  the 
electromechanical  system  of  LongLiLiLong  Expressway  at  the  consideration  of 
Rmb1,120,396.00.  The  term  of  the  Electromechanical  System  Upgrade  Design 
Project  Agreement  is  1  month  of  survey  and  design  period  plus  11  months  of 
follow-up service period;

the  curved  section  and  tunnel  safety  improvement  project  agreements  (the 
“Curved  Section  and  Tunnel  Safety  Improvement  Project  Agreements”), 
pursuant to which ZJIC was engaged to install roadside perception systems for 
the  curved  sections  and  install  traffic  safety  facilities  to  the  tunnels  of  Jinhua 
Section of Ningbo-Jinhua Expressway at the consideration of Rmb2,969,019.00. 
The  term  of  the  Curved  Section  and  Tunnel  Safety  Improvement  Project 
Agreements  is  60  days  of  service  period  plus  24  months  of  defect  liability 
period;

90

2023 ANNUAL REPORTConnected Transactions(vi) 

(vii) 

the  traffic  congestion  improvement  project  agreement  (the  “Traffic  Congestion 
Improvement  Project  Agreement”),  pursuant  to  which  ZJIC  was  engaged  to 
install  certain  facilities  for  improvement  of  road  capacity  to  Ningbo  Section  of 
Hangzhou-Ningbo  Expressway  at  the  consideration  of  Rmb1,143,580.00.  The 
term  of  the  Traffic  Congestion  Improvement  Project  Agreement  is  3  months  of 
service period plus 24 months of defect liability period; and

the lane for Asian Games project agreement (the “Lane for Asian Games Project 
Agreement”), pursuant to which ZJIC was engaged to set up a dedicated lane 
for  the  Asian  Games  from  Xiaoshan  to  Shaoxing  Section  of  Hangzhou-Ningbo 
Expressway,  including  installation  of  facilities  such  as  signage,  road  markings 
and  ground  decals  to  the  lane  for  Asian  Games  to  ensure  priority  access  for 
vehicles  of  the  Asian  Games  at  the  consideration  of  Rmb634,524.00.  The  term 
of  the  Lane  for  Asian  Games  Project  Agreement  is  40  days  of  service  period 
plus 24 months of defect liability period.

Please  refer  to  the  announcement  of  the  Company  dated  September  22,  2023  for 
details.

ZJIC  is  a  55.08%  owned  subsidiary  of  Communications  Group,  and  is  therefore  a 
Connected Person of the Company. As a result, the transactions contemplated under 
the  Design  and  Construction  Agreements  constituted  connected  transactions  of  the 
Company.

Pursuant  to  Rule  14A.81  and  Rule  14A.82  of  the  Listing  Rules,  the  respective 
transactions  contemplated  under  the  Design  and  Construction  Agreements  were 
required  to  be  aggregated  with  a  total  of  11  previous  transactions  (the  “Previous 
Transactions with ZJIC”) in relation to the provision of expressway related design and 
construction services entered into or completed within a 12-month period prior to the 
date  of  the  Design  and  Construction  Agreements  between  the  Group  and  ZJIC  for 
the calculation of the relevant percentage ratios to determine the classification of the 
transactions contemplated under the Design and Construction Agreements.

91

As  one  or  more  of  the  applicable  percentage  ratios  in  respect  of  the  transactions 
contemplated  under  the  Design  and  Construction  Agreements,  after  aggregating 
with  the  Previous  Transactions  with  ZJIC,  were  more  than  0.1%  but  less  than  5%, 
the  transactions  contemplated  under  the  Design  and  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.

4.  Proposed  Acquisition  of  15%  Interest  in  Wenzhou  YongTaiWen  Co  and 

Proposed Acquisition of the Entire Interest in HuangQuNan Co

On  September  28,  2023,  the  Company  and  Communications  Group  entered  into  an 
equity purchase agreement (the “YongTaiWen Equity Purchase Agreement”), pursuant 
to  which  Communications  Group  conditionally  agreed  to  sell  and  the  Company 
conditionally  agreed  to  acquire  15%  equity  interest  in  Wenzhou  YongTaiWen  Co 
at  the  consideration  of  Rmb816,150,000  (the  “YongTaiWen  Acquisition”).  On  the 
same  day,  LongLiLiLong  Co  and  Communications  Group  entered  into  an  equity 
purchase  agreement  (the  “HuangQuNan  Equity  Purchase  Agreement”),  pursuant 
to  which  Communications  Group  conditionally  agreed  to  sell  and  LongLiLiLong  Co 
conditionally  agreed  to  acquire  the  entire  equity  interest  in  HuangQuNan  Co  at  the 
consideration of Rmb16,700,000 (the “HuangQuNan Acquisition”). Please refer to the 
announcements of the Company dated September 28, 2023 and October 9, 2023 for 
details.

Communications  Group  is  a  Controlling  Shareholder  of  the  Company  and  is 
therefore a Connected Person of the Company. As a result, each of the YongTaiWen 
Acquisition and the HuangQuNan Acquisition constitutes a connected transaction for 
the Company. As one or more of the applicable percentage ratios in respect of each 
of  the  YongTaiWen  Acquisition  and  HuangQuNan  Acquisition  were  more  than  0.1% 
but less than 5%, each of the YongTaiWen Acquisition and HuangQuNan Acquisition 
was  subject  to  the  reporting  and  announcement  requirements  but  exempted  from 
independent  Shareholders’  approval  requirement  under  Chapter  14A  of  the  Listing 
Rules.

92

2023 ANNUAL REPORTConnected Transactions5.  Agreements  with  Zhejiang  Information  and  Construction  Agreement  with 

Jiaogong Underground Construction

i. 

The Agreements with Zhejiang Information

On  October  27,  2023,  the  Company  and  its  relevant  subsidiaries  entered  into 
the  following  agreements  (the  “Agreements”)  with  Zhejiang  Information  to 
engage Zhejiang Information for the provision of a series of services to (i) under 
the expressway surveillance system improvement agreements (the “Expressway 
Surveillance  System  Improvement  Agreements”,  consisting  of  the  Expressway 
Surveillance  System  Improvement  Project  and  the  Emergency  Response 
Integration  Service  Platform  Project),  enhance  the  expressway  surveillance 
system  and  establish  the  emergency  response  integration  service  platform  at 
the consideration of Rmb9,607,510.29. The term of the Expressway Surveillance 
System  Improvement  Project  thereunder  is  30  days  of  service  period  plus  24 
months of general defect liability period and 60 months of defect liability period 
for  key  component.  The  delivery  date  for  the  Emergency  Response  Integration 
Service  Platform  Project  is  November  30,  2023  with  24  months  of  warranty 
period;  (ii)  under  the  electromechanical  system  improvement  agreements  (the 
“Electromechanical  System  Improvement  Agreements”),  provide  renovations 
services  of  the  electromechanical  equipment  and  facilities  for  certain  sections 
of the expressways owned by the Group at the consideration of Rmb1,237,880. 
The  term  of  the  Electromechanical  System  Improvement  Agreements  is  60 
days  or  120  days  of  service  period  (where  applicable)  plus  24  months  of 
general  defect  liability  period  and  60  months  of  defect  liability  period  for  key 
component;  and  (iii)  under  the  safety  and  emergency  management  system 
project  agreements  (the  “Safety  and  Emergency  Management  System  Project 
Agreements”),  establish  the  safety  and  emergency  management  system  at 
the  consideration  of  Rmb1,000,000.  The  term  of  the  Safety  and  Emergency 
Management  System  Project  Agreements  is  4  months  of  service  period  plus  1 
month  of  trial  operation  period  and  12  months  of  warranty  period.  Please  refer 
to the announcement of the Company dated October 27, 2023 for details.

93

Zhejiang  Information,  as  a  65.85%  owned  subsidiary  of  Communications 
Group,  is  a  Connected  Person  of  the  Company.  As  a  result,  the  transactions 
contemplated  under  the  Agreements  constitute  connected  transactions  of  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  Agreements  were  required  to  be 
aggregated  with  a  series  of  agreements  entered  into  or  completed  within  a 
12-month  period  prior  to  the  date  of  the  Agreements  between  or  among  the 
Company and its subsidiaries and Zhejiang Information in relation to information 
technology  services  and  mechanical  and  electrical  engineering  services  (the 
“Previous  Transactions  with  Zhejiang  Information”)  for  the  calculation  of  the 
relevant  percentage  ratios  to  determine  the  classification  of  the  transactions 
contemplated under the Agreements.

A s  o n e  o r  m o r e  o f  t h e  a p p l i c a b l e  p e r c e n t a g e  r a t i o s  i n  r e s p e c t  o f  t h e 
transactions  contemplated  under  the  Agreements,  after  aggregating  with  the 
Previous  Transactions  with  Zhejiang  Information,  were  more  than  0.1%  but 
less  than  5%,  the  transactions  contemplated  under  the  Agreements  were 
subject  to  the  reporting  and  announcement  requirements  but  exempt  from  the 
independent  Shareholders’  approval  requirement  under  Chapter  14A  of  the 
Listing Rules.

94

2023 ANNUAL REPORTConnected Transactionsii. 

The Construction Agreement with Jiaogong Underground Construction

On  October  27,  2023,  Jiaxing  Branch  entered  into  a  construction  agreement 
(the  “Construction  Agreement”)  with  Jiaogong  Underground  Construction  in 
addition  to  the  Jiaxing  Service  Area  Construction  Agreement  dated  April  18, 
2023, to specify the rights and obligations in respect of construction of projects 
in  certain  parts  of  the  north  section  of  Jiaxing  Service  Area  which  is  within  a 
30-meter  range  adjacent  to  the  Shanghai-Kunming  High-Speed  Railway  with 
a  term  of  60  calendar  days  upon  signing  the  Construction  Agreement.  The 
contract  price  in  relation  to  the  Construction  Agreement  is  Rmb12,781,853. 
Please refer to the announcement of the Company dated October 27, 2023 for 
details.

Pursuant  to  Rule  14A.81  and  Rule  14A.82  of  the  Listing  Rules,  as  the 
transaction  contemplated  under  the  Construction  Agreement  and  transactions 
under  the  Construction  Agreements  dated  April  18,  2023  (the  “Previous 
Construction  Agreements”)  were  entered  into  or  completed  within  a  12-month 
period  with  Jiaogong  Underground  Construction,  a  Connected  Person  of  the 
Company, the transaction contemplated under the Construction Agreement and 
transactions  under  the  Previous  Construction  Agreements  were  required  to  be 
aggregated  for  the  calculation  of  the  relevant  percentage  ratios  to  determine 
the  classification  of  the  transaction  contemplated  under  the  Construction 
Agreement.

As one or more of the applicable percentage ratios in respect of the transaction 
contemplated  under  the  Construction  Agreement,  after  aggregating  with  those 
transactions  under  the  Previous  Construction  Agreements,  were  more  than 
0.1%  but  less  than  5%,  the  transaction  contemplated  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.

95

6. 

Formation of the Joint Venture

On  November  24,  2023,  the  Company  and  China  Merchants  Expressway,  a 
Connected Person of the Company at the subsidiary level, entered into a joint venture 
agreement (the “JV Agreement”), pursuant to which the parties agree to form a joint 
venture  (the  “Joint  Venture”)  in  the  PRC  for  the  purpose  of  the  acquisition  of  60% 
equity  interest  in  Yonglan  Co.  Pursuant  to  the  JV  Agreement,  each  of  the  Company 
and  China  Merchants  Expressway  makes  a  capital  contribution  of  RMB1,341.6 
million,  each  representing  50%  of  the  total  capital  contribution  of  the  Joint  Venture. 
The  total  capital  contribution  of  the  Joint  Venture  shall  be  RMB2,683.2  million  where 
the registered capital of the Joint Venture shall be RMB100 million and the remaining 
of  the  capital  contribution  by  the  parties  shall  be  included  in  the  capital  reserve.  As 
the  Joint  Venture  is  owned  as  to  50%  each  by  the  Company  and  China  Merchants 
Expressway  upon  establishment,  it  is  not  be  a  subsidiary  of  the  Company  and  its 
financial  results  is  not to  be  consolidated  into  the  financial  statements  of  the  Group. 
Please  refer  to  the  announcements  of  the  Company  dated  November  24,  2023  and 
November 30, 2023 for details.

As  one  or  more  of  the  percentage  ratios  applicable  to  the  formation  of  the  Joint 
Venture  exceeded  5%  and  were  less  than  25%,  formation  of  the  Joint  Venture 
constitutes  a  disclosable  transaction  for  the  Company  and  was  subject  to  the 
reporting and announcement requirements under Chapter 14 of the Listing Rules.

China Merchants Expressway is a substantial shareholder of Shangsan Co which is a 
subsidiary of the Company. Therefore, China Merchants Expressway is a Connected 
Person  of  the  Company  at  subsidiary  level  and  as  a  result,  formation  of  the  Joint 
Venture  constituted  a  connected  transaction  of  the  Company  under  Chapter  14A 
of  the  Listing  Rules.  By  virtue  of  Rule  14A.101  of  the  Listing  Rules,  as  (i)  China 
Merchants  Expressway  is  a  Connected  Person  of  the  Company  at  subsidiary  level; 
(ii)  the  Board  has  approved  formation  of  the  Joint  Venture  under  the  JV  Agreement; 
and  (iii)  the  independent  non-executive  Directors  have  confirmed  that  terms  of  the 
JV  Agreement  are  fair  and  reasonable,  the  JV  Agreement  is  on  normal  commercial 
terms  or  better  and  in  the  interests  of  the  Company  and  Shareholders  as  a  whole, 
the  JV  Agreement  and  formation  of  the  Joint  Venture  contemplated  thereunder  were 
subject  to  the  reporting  and  announcement  requirements  but  were  exempted  from 
the  circular,  independent  financial  advice  and  Shareholders’  approval  requirements 
under Chapter 14A of the Listing Rules.

96

2023 ANNUAL REPORTConnected TransactionsCONTINUING CONNECTED TRANSACTIONS

1.  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.

97

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.

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 would be provided under the New Financial Services 
Agreement  on  a  non-exclusive  basis  and  the  Company  and  its  subsidiaries  were 
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  were  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.

98

2023 ANNUAL REPORTConnected TransactionsMeanwhile,  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.

During  the  Period,  the  maximum  amount  of  the  daily  deposit  balance  (including  any 
interest  accrued  thereon)  for  the  deposits  of  the  Company  and  its  subsidiaries  with 
Zhejiang  Communications  Finance  under  the  New  Financial  Services  Agreement 
together  with  the  Financial  Services  Supplemental  Agreement  amounted  to 
Rmb2,977,865,000.

2.  Expressway Mechanical and Electrical System Maintenance Agreements

On  May  31,  2021,  LongLiLiLong  Co,  entered  into  the  expressway  mechanical 
and  electrical  system  maintenance  agreements  with  Zhejiang  Information  (the 
“Expressway Mechanical and Electrical System Maintenance Agreements”), pursuant 
to  which  LongLiLiLong  Co  agreed  to  purchase,  and  Zhejiang  Information  agreed 
to  provide,  certain  expressway  mechanical  and  electrical  system  maintenance 
services. The term of the Expressway Mechanical 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.  Please  refer  to 
announcement of the Company dated May 31, 2021 for details.

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.

99

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 and December 16, 2020, respectively.

A s  t h e  h i g h e s t  a p p l i c a b l e  p e r c e n t a g e  r a t i o  i n  r e s p e c t  o f  t h e  t r a n s a c t i o n s 
contemplated under the Expressway Mechanical and Electrical System Maintenance 
Agreements,  after  aggregating  such  previous  agreements,  was  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.

During  the  Period,  the  total  annual  service  fees  payable  by  LongLiLiLong  Co  to 
Zhejiang  Information  under  the  Expressway  Mechanical  and  Electrical  System 
Maintenance Agreements amounted to Rmb3,476,000.

3.  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  3  years.  Please  refer  to  announcement  of  the  Company  dated 
December 13, 2021 for details.

100

2023 ANNUAL REPORTConnected TransactionsThe  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.

Pursuant  to  Rule  14A.81  to  Rule  14A.83  of  the  Listing  Rules,  continuing 
connected  transactions  with  the  same  Connected  Person  or  parties  who  were 
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  was  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  received  by 
the Company under the 2021 Entrusted Management Agreements amounted to 
Rmb8,690,000.

101

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.

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.

102

2023 ANNUAL REPORTConnected TransactionsPursuant  to  Rules  14A.81  to  14A.83  of  the  Listing  Rules,  connected 
transactions  with  the  same  Connected  Person  or  parties  who  were 
c o n n e c t e d  w i t h  o n e  a n o t h e r  m a y  b e  a g g r e g a t e d.  A s  t h e  h i g h e s t 
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  entrusted  management  fees  received  by 
the  Company  under  the  Entrusted  Management  Agreements  with  North 
Channel Co and Jiaxiao Co amounted to Rmb1,774,000.

b.  Entrusted Management Agreement with Hangxuan Co

O n  D e c e m b e r  29,  2022,  t h e  C o m p a n y  e n t e r e d  i n t o  a n  e n t r u s t e d 
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 
transaction  under  the  Entrusted  Management  Agreement  with  Hangxuan 
Co  constituted  continuing  connected  transaction  for  the  Company  under 
Chapter 14A of the Listing Rules.

103

Pursuant  to  Rules  14A.81  to  14A.83  of  the  Listing  Rules,  connected 
transactions  with  the  same  Connected  Person  or  parties  who  were 
c o n n e c t e d  w i t h  o n e  a n o t h e r  m a y  b e  a g g r e g a t e d.  A s  t h e  h i g h e s t 
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  Jiaoxiao  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.

During  the  Period,  the  total  entrusted  management  fee  received  by  the 
Company under the Entrusted Management Agreement with Hangxuan Co 
amounted to Rmb1,305,000.

iii. 

2023 Entrusted Management Agreement

On  August  23,  2023,  the  Company  entered  into  an  entrusted  management 
agreement  (the  “2023  Entrusted  Management  Agreement”)  with  HangNing 
Co,  pursuant  to  which  HangNing  Co  shall  entrust  the  Company  to  take  over 
the  operation  and  management  of  the  Zhejiang  Section  of  the  HangNing 
Expressway. The term of 2023 Entrusted Management Agreement is three years 
ending  August  13,  2026.  Please  refer  to  announcement  of  the  Company  dated 
August 23, 2023 for details.

In accordance with Rule 14A.53 of the Listing Rules, the Company is required to 
set an annual cap on the total amount of the entrusted management service fee 
receivable by the Company under the 2023 Entrusted Management Agreement. 
The proposed annual cap on the entrusted management service fee of the 2023 
Entrusted  Management  Agreement  for  each  of  the  three  years  ending  August 
13, 2026 shall not exceed Rmb5,400,000.

104

2023 ANNUAL REPORTConnected TransactionsHangNing  Co  is  a  non-wholly  owned  subsidiary  of  Communications  Group. 
Therefore,  HangNing  Co  is  a  Connected  Person  of  the  Company  and  as  a 
result,  the  transaction  contemplated  under  the  2023  Entrusted  Management 
Agreement  constitutes  continuing  connected  transaction  for  the  Company 
under Chapter 14A of the Listing Rules.

Pursuant  to  Rule  14A.81  to  Rule  14A.83  of  the  Listing  Rules,  the  transaction 
contemplated under the 2023 Entrusted Management Agreement was required 
to  be  aggregated  with  the  respective  transactions  carried  out  on  a  continuing 
basis  under  the  agreements  with  respect  to  seven  transactions  entered  into 
between  the  Company  and  the  associates  of  the  same  Connected  Person 
(i.e.  the  Communications  Group)  in  relation  to  the  provision  of  entrusted 
management services of expressways (the “Previous Agreements”).

As the highest applicable percentage ratio in respect of the aggregated annual 
cap  for  transaction  contemplated  under  the  2023  Entrusted  Management 
Agreement  and  the  respective  transactions  carried  out  on  a  continuing  basis 
under  the  Previous  Agreements  was  more  than  0.1%  but  less  than  5%,  the 
transaction  contemplated  under  the  2023  Entrusted  Management  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  entrusted  management  fee  received  by  the 
Company under the 2023 Entrusted Management Agreement with HangNing Co 
amounted to Rmb2,382,000.

105

4. 

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  would  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  for  each  of  the  sale  and  purchase 
transactions of bulk commodity 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 
announcements of the Company dated March 25, 2022 and April 19, 2022 for details.

Zheshang  Development  is  a 44.55%  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) 
the bulk commodity purchase transactions; and (iii) the OTC derivatives transactions 
under  the  Framework  Agreement  amounted  to  Rmb402,381,000,  Rmb223,481,000 
and Rmb1,195,595,000, respectively.

106

2023 ANNUAL REPORTConnected Transactions5.  Road Maintenance Agreements

i. 

2023 Daily Road Maintenance Agreements

O n  J a n u a r y  10,  2023,  t h e  C o m p a n y  a n d  i t s  v a r i o u s  s u b s i d i a r i e s  a n d 
LongLiLiLong Co entered into the following agreements:

a.  Daily Road Maintenance Agreements (First to Third Contract Sections)

O n  J a n u a r y  10,  2023,  t h e  C o m p a n y  a n d  i t s  v a r i o u s  s u b s i d i a r i e s 
entered  into  a  series  of  Daily  Road  Maintenance  Agreements  (First  to 
Third  Contract  Sections)  with  Maintenance  Co,  Jiaogong  Maintenance 
and  Zhejiang  Shunchang,  respectively,  pursuant  to  which,  each  of 
Maintenance Co, Jiaogong Maintenance and Zhejiang Shunchang agreed 
to undertake the daily road maintenance projects in respect of the relevant 
expressway as specified therein operated by the Group, respectively. The 
term  of  the  Daily  Road  Maintenance  Agreements  (First  to  Third  Contract 
Sections) is three years ending December 31, 2025. The total service fees 
payable by the Group for the maintenance services under the Daily Road 
Maintenance  Agreements  (First  to  Third  Contract  Sections)  amounted 
to  Rmb401,655,846.  Please  refer  to  the  announcement  of  the  Company 
dated January 10, 2023 for details.

b.  Daily Road Maintenance Agreement (Fourth Contract Section)

On  January  10,  2023,  LongLiLiLong  Co  entered  into  the  Daily  Road 
Mai ntenance  Agreement  (Fourth  C ontract  Sect ion)  wi th  Zheji an g 
Shunchang, pursuant to which, Zhejiang Shunchang agreed to undertake 
the daily road maintenance projects in respect of the relevant expressway 
as  specified  therein  owned  by  the  Group.  The  term  of  the  Daily  Road 
Maintenance Agreements (Fourth Contract Section) is three years ending 
December  31,  2025.  The  total  service  fees  payable  by  the  Group  for  the 
maintenance  services  under  the  Daily  Road  Maintenance  Agreements 
(First  to  Third  Contract  Sections)  amounted  to  Rmb81,273,948.  Please 
refer  to  the  announcement  of  the  Company  dated  January  10,  2023  for 
details.

107

Each of Maintenance Co, Jiaogong Maintenance and Zhejiang Shunchang 
is  an  indirect  subsidiary  of  Communications  Group.  As  such,  each  of 
Maintenance  Co,  Jiaogong  Maintenance  and  Zhejiang  Shunchang  is  a 
Connected Person of the Company. Therefore, the respective transactions 
contemplated  under  the  Daily  Road  Maintenance  Agreements  (First 
to  Third  Contract  Sections)  and  Daily  Road  Maintenance  Agreement 
(Fourth Contract Section) (collectively the “2023 Daily Road Maintenance 
Agreements”)  constituted  continuing  connected  transactions  for  the 
Company under Chapter 14A of the Listing Rules.

In  accordance  with  Rule  14A.53  of  the  Listing  Rules,  the  Company  was 
required to set an annual cap on the total amount of the 2023 Daily Road 
Maintenance  Agreements  payable  by  the  Group. Pursuant   to  Rules 
14A.81  and  14A.82  of  the  Listing  Rules,  the  transactions  contemplated 
under  the  2023  Daily  Road  Maintenance  Agreements  were  required 
to  be  aggregated.  In  aggregate,  the  proposed  annual  cap  on  the 
aggregate service fees payable by the Group under the 2023 Daily Road 
Maintenance  Agreements  for  each  of  the  three  years  ending  December 
31, 2025 is Rmb163,000,000.

During the Period, the total service fees paid by the Group under the 2023 
Daily Road Maintenance Agreements amounted to Rmb110,056,000.

108

2023 ANNUAL REPORTConnected Transactionsii. 

2023 Dedicated Road Maintenance Agreements

On April 25, 2023, the Company and its various subsidiaries and LongLiLiLong 
Co entered into the following agreements:

a.  The Dedicated Road Maintenance Agreements (First to Third Contract 

Sections)

On  April  25,  2023,  the  Company  and  its  various  subsidiaries  entered 
into  a  series  of  dedicated  road  maintenance  agreements  (First  to  Third 
Contract  Sections)  (the  “Dedicated  Road  Maintenance  Agreements  (First 
to  Third  Contract  Sections)”)  with  Maintenance  Co,  Zhejiang  Shunchang 
and  Jiaogong  Maintenance,  respectively,  pursuant  to  which,  each  of 
Maintenance Co, Zhejiang Shunchang and Jiaogong Maintenance agreed 
to  undertake  the  dedicated  road  maintenance  projects  in  respect  of 
the  relevant  expressways  as  specified  therein  operated  by  the  Group, 
respectively.  The  term  for  the  Dedicated  Road  Maintenance  Agreements 
(First to Third Contract Sections) is eight months from the commencement 
date as specified by the project supervisor. The total service fees payable 
by  the  Group  for  the  maintenance  services  under  the  Dedicated  Road 
Maintenance  Agreements  (First  to  Third  Contract  Sections)  amounted 
to  Rmb363,627,382.  Please  refer  to  the  announcement  of  the  Company 
dated April 25, 2023 for details.

109

b.  The Dedicated Road Maintenance Agreement (Third Contract Section of 

LongLiLiLong Expressway)

On  April  25,  2023,  LongLiLiLong  Co  entered  into  the  dedicated  road 
maintenance  agreement  (Third  Contract  Section  of  LongLiLiLong 
Expressway)  (the  “Dedicated  Road  Maintenance  Agreement  (Third 
C o n t r a c t  S e c t i o n  o f  L o n g L i L i L o n g  E x p r e s s w a y)”)  w i t h  J i a o g o n g 
Maintenance,  pursuant  to  which,  Jiaogong  Maintenance  agreed  to 
undertake  the  dedicated  road  maintenance  projects  in  respect  of  the 
relevant expressways as specified therein owned by the Group. The term 
for  the  Dedicated  Road  Maintenance  Agreement  (Third  Contract  Section 
of  LongLiLiLong  Expressway)  is  214  calendar  days  commencing  from 
the  date  as  instructed  by  the  supervisor  of  the  project.  The  total  service 
fees  payable  by  LongLiLiLong  Co  for  the  maintenance  services  under 
the  Dedicated  Road  Maintenance  Agreement  (Third  Contract  Section 
of  LongLiLiLong  Expressway)  was  Rmb64,130,397.  Please  refer  to  the 
announcement of the Company dated April 25, 2023 for details.

Each of Maintenance Co, Zhejiang Shunchang and Jiaogong Maintenance 
is  an  indirect  subsidiary  of  Communications  Group.  Therefore,  each  of 
Maintenance  Co,  Zhejiang  Shunchang  and  Jiaogong  Maintenance  is 
a  Connected  Person  of  the  Company  and  as  a  result,  the  respective 
transactions  contemplated  under  the  2023  Dedicated  Road  Maintenance 
Agreements  constitute  continuing  connected  transactions  for  the 
Company under Chapter 14A of the Listing Rules.

Pursuant to Rule 14A.81 to Rule 14A.83 of the Listing Rules, the respective 
transactions  contemplated  under  the  2023  Dedicated  Road  Maintenance 
Agreements  were  required  to  be  aggregated  with  the  respective 
transactions  contemplated  under  the  2023  Daily  Road  Maintenance 
Agreements  which  were  continuing  connected  transactions  entered  into 
with  the  associates  of  the  same  Connected  Person  (i.e.  Communications 
Group) and are of the same nature.

110

2023 ANNUAL REPORTConnected TransactionsIn  accordance  with  Rule  14A.53  of  the  Listing  Rules,  the  Company  is 
required  to  set  an  annual  cap  on  the  total  amount  of  service  fees  under 
the  2023  Dedicated  Road  Maintenance  Agreements  payable  by  the 
Group.  For  the  financial  year  ending  December  31,  2023,  the  proposed 
annual  cap  on  the  aggregate  service  fees  under  the  Dedicated  Road 
Maintenance Agreements (First to Third Contract Sections) payable by the 
Group is RMB370,000,000 and the proposed annual cap on the aggregate 
service  fees  under  the  Dedicated  Road  Maintenance  Agreement  (Third 
Contract  Section  of  LongLiLiLong  Expressway)  payable  by  LongLiLiLong 
Co  is  RMB65,000,000.  The  proposed  annual  cap  of  the  aggregate 
service  fees  under  the  2023  Dedicated  Road  Maintenance  Agreements 
payable by the Group for the financial year ending December 31, 2023 is 
Rmb435,000,000.

As  one  or  more  of  the  applicable  percentage  ratios  in  respect  of  the 
annual  cap  for  transactions  contemplated  under  the  2023  Dedicated 
Road  Maintenance  Agreements  after  aggregating  with  that  of  the  2023 
Daily  Road  Maintenance  Agreements,  were  more  than  0.1%  but  less 
than  5%,  the  transactions  contemplated  under  the  2023  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  Agreements  (First  to  Third  Contract 
Sections)  amounted  to  Rmb349,112,000  and  the  total  service  fees 
paid  by  the  Group  under  the  Dedicated  Road  Maintenance  Agreement 
(Third  Contract  Section  of  LongLiLiLong  Expressway)  amounted  to 
Rmb59,416,000.

111

iii. 

2023 Road Maintenance Agreements

On  November  10,  2023,  the  various  subsidiaries  of  the  Company  entered 
into  several  road  maintenance  agreements  (the  “2023  Road  Maintenance 
Agreements”) with Zhejiang Shunchang, pursuant to which Zhejiang Shunchang 
agreed  to  undertake  maintenance  services  to  Jinhua  Section  of  Ningbo-Jinhua 
Expressway and Shangsheng Section of Shangsan Expressway which would be 
affected by Jinhua-Ningbo Railway. The service shall commence from the date 
as specified by the project supervisor and the projects shall be delivered prior 
to December 30, 2023. The total service fees payable by the Group to Zhejiang 
Shunchang would be Rmb18,288,360. Please refer to the announcement of the 
Company dated November 10, 2023 for details.

In  accordance  with  Rule  14A.53  of  the  Listing  Rules,  the  Company  was 
required  to  set  an  annual  cap  on  the  total  amount  of  the  service  fees  under 
the 2023 Road Maintenance Agreements payable by the Group. The proposed 
annual  cap  on  the  aggregate  service  fees  under  the  2023  Road  Maintenance 
Agreements  payable  by  the  Group  for  the  financial  year  ending  December  31, 
2023 is Rmb19,000,000.

As  an  indirect  non-wholly  owned  subsidiary  of  Communications  Group, 
Zhejiang  Shunchang  is  a  Connected  Person  of  the  Company  and  as  a  result, 
the  respective  transactions  contemplated  under  the  2023  Road  Maintenance 
Agreements  constitute  continuing  connected  transactions  for  the  Company 
under Chapter 14A of the Listing Rules.

Pursuant  to  Rule  14A.81  to  Rule  14A.83  of  the  Listing  Rules,  the  respective 
transactions contemplated under the 2023 Road Maintenance Agreements were 
required to be aggregated with the respective transactions under the 2023 Daily 
Road  Maintenance  Agreements  and  the  2023  Dedicated  Road  Maintenance 
Agreements,  which  were  continuing  connected  transactions  entered  into  with 
the associate of the same Connected Person (i.e. Communications Group) and 
are of the same nature.

112

2023 ANNUAL REPORTConnected TransactionsAs one or more of the applicable percentage ratios in respect of the annual cap 
for  transactions  contemplated  under  the  2023  Road  Maintenance  Agreements 
after  aggregating  with  those  of  the  2023  Daily  Road  Maintenance  Agreements 
and  the  2023  Dedicated  Road  Maintenance  Agreements  were  more  than 
0.1%  but  less  than  5%,  the  transactions  contemplated  under  the  2023  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  2023 
Road Maintenance Agreements amounted to Rmb17,365,000.

6. 

The Guardrail Agreements

On  November  29,  2023,  the  Company  and  its  various  subsidiaries  entered  into 
several  guardrail  agreements  (the  “Guardrail  Agreements”)  with  Maintenance  Co, 
Zhejiang  Shunchang  and  Jiaogong  Maintenance  respectively,  pursuant  to  which  (i) 
Maintenance  Co  agreed  to  undertake  the  guardrail  upgrade  and  revamp  projects 
in  respect  of  two  expressways  operated  by  the  Group,  namely  Hangzhou  Section 
of  Shanghai-Hangzhou-Ningbo  Expressway  and  Hanghui  Expressway  at  the 
consideration  of  Rmb50,050,835;  (ii)  Zhejiang  Shunchang  agreed  to  undertake  the 
guardrail  upgrade  and  revamp  projects  in  respect  of  three  expressways  operated 
by the Group, namely Shaoxing Section of Shanghai-Hangzhou-Ningbo Expressway, 
Shangsheng  Section  and  Xintian  Section  of  Shangsan  Expressway  and  Jinhua 
Section  of  Ningbo-Jinhua  Expressway  at  the  consideration  of  Rmb111,374,164;  and 
(iii)  Jiaogong  Maintenance  agreed  to  undertake  the  guardrail  upgrade  and  revamp 
projects  in  respect  of  three  expressways  operated  by  the  Group,  namely  Ningbo 
Section  and  Jiaxing  Section  of  Shanghai-Hangzhou-Ningbo  Expressway,  Zhoushan 
Bay  Bridge,  and  Jiaxing  Section  of  Zhajiasu  Expressway  at  the  consideration  of 
Rmb57,854,069. All the construction work shall be completed prior to December 31, 
2023.  Please  refer  to  the  announcement  of  the  Company  dated  November  29,  2023 
for details.

113

In accordance with Rule 14A.53 of the Listing Rules, the Company is required to set 
an annual cap on the total amount of the service fees under the Guardrail Agreements 
payable by the Group. The proposed annual cap on the aggregate service fees of the 
Guardrail Agreements payable by the Group for the financial year ending December 
31, 2023 is Rmb220,000,000.

Each  of  Maintenance  Co,  Zhejiang  Shunchang  and  Jiaogong  Maintenance  is  an 
indirect subsidiary of Communications Group. Therefore, each of them is a Connected 
Person  of  the  Company  and  as  a  result,  the  respective  transactions  contemplated 
under the Guardrail Agreements constitute continuing connected transactions for the 
Company under Chapter 14A of the Listing Rules.

Pursuant  to  Rule  14A.81  to  Rule  14A.83  of  the  Listing  Rules,  the  respective 
transactions  contemplated  under  the  Guardrail  Agreements  were  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 were 
with the same nature.

As  the  applicable  percentage  ratios  in  respect  of  the  aggregated  annual  cap  for 
transactions contemplated under the Guardrail Agreements were more than 0.1% but 
less  than  5%,  the  transactions  contemplated  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 Rmb219,737,000.

114

2023 ANNUAL REPORTConnected TransactionsThe  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 Board confirms that 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.

During  the  Period,  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.

115

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  122  to  338,  which  comprise  the  consolidated  statement  of  financial  position 
as  at  December  31,  2023,  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  material  accounting  policy  information  and  other  explanatory 
information. 

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,  2023,  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.

116

2023 ANNUAL REPORTINDEPENDENT AUDITOR’S REPORTKEY 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.

Key audit matter

How our audit addressed the key audit 
matter

Determination of consolidation scope of structured entities
We identified the determination of consolidation 
scope of structured entities, which invested 
by the Group’s securities operation segment 
(defined in Note 8), as a key audit matter due to 
significant judgement applied by management 
in determining whether a structured entity is 
required  to  be  consolidated  by  the  Group 
and the significance of these balances to the 
Group’s consolidated financial statements as a 
whole.

• 

• 

The Group held interests as investor or acted 
as fund manager in various structured entities 
including  collective  asset  management 
schemes,  investment  funds  and  limited 
partnership enterprises. As disclosed in Note 
6 to the consolidated financial statements , to 
determine whether a structured entity should 
be  consolidated,  the  management  applied 
significant judgement in determining whether 
the  Group  has  power  over  the  structured 
entities, and assess whether the combination 
of  investments  it  held  together  with  its 
remuneration  and  credit  enhancement 
creates  exposure  to  variability  of  returns 
from  the  activities  of  the  collective  asset 
management schemes and investment funds 
that  is  of  such  significance  that  it  indicates 
the Group controlled the structured entities.

Our procedures in relation to the management’s 
determination  of  consolidation  scope  of 
structured entities included: 

Testing  and  evaluating  key  controls 
of  the  management  in  determining 
the  consolidation  scope  of  structured 
entities;

Examining,  on  a  sample  basis,  the 
documents  and  information  used  by 
the  management  in  assessing  the 
consolidation  criteria  of  structured 
entities against the related agreements 
and  other  related  service  agreements 
of structured entities newly established, 
invested or  with changes in proportion 
of  ownership  interests  or  contractual 
terms during the year; 

• 

Assessing  management  judgement  in 
determining the scope for consolidation 
and, on a sample basis, assessing the 
conclusion about whether a structured 
entity should be consolidated or not.

117

 
 
 
 
Key audit matter

How our audit addressed the key audit 
matter

Determination of consolidation scope of structured entities (Continued)
As  disclosed  in  Notes  45  and  59  to  the 
c o n s o l i d a t e d   f i n a n c i a l   s t a t e m e n t s ,   a s 
at  December  31,  2023,  the  total  assets 
o f  t h e  c o n s o l i d a t e d  s t r u c t u r e d  e n t i t i e s 
a m o u n t e d  t o  R m b2,631,450  t h o u s a n d s 
and  the  total  assets  of  the  unconsolidated 
structured  entities  managed  by  the  Group’s 
securities  operation  segment  amounted  to 
Rmb106,058,993 thousands, respectively.

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.

118

2023 ANNUAL REPORTINDEPENDENT AUDITOR’S REPORT 
 
 
 
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.

A U D I T O R’S  R E S P O N S I B I L I T I E S  F O R  T H E  A U D I T  O F  T H E 
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.

119

• 

• 

• 

• 

• 

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.

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. 

120

2023 ANNUAL REPORTINDEPENDENT AUDITOR’S REPORTFrom 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 25, 2024

121

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 joint ventures

Finance costs

Profit before tax

Income tax expense

Profit for the year

NOTES

7

9

10

11

12

13

14

12/31/2023

Rmb’000

16,965,024

2,452,400

12/31/2022

Rmb’000

(Restated)

15,331,777

2,390,436

(9,765,685)

(9,365,125)

7,199,339

1,024,960

907,870

(183,981)

(125,190)

(30,624)

1,056,247

107,046

(2,104,129)

7,851,538

(1,229,208)

6,622,330

5,966,652

679,734

2,102,751

(177,405)

(125,349)

(11,785)

752,086

49,771

(1,894,394)

7,342,061

(1,039,051)

6,303,010

Other comprehensive income

Items that may be reclassified subsequently to profit or loss:

Fair value gain/(loss) on debt instruments measured at fair 

value through other comprehensive income

51,272

(9,055)

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  

867

(13,035)

1,108

1,987

of foreign operations

3,907

21,787

Share of other comprehensive income/(loss)  of an associate, 

net of related income tax

Other comprehensive income for the year, net of income tax

86,812

129,823

(736)

15,091

Total comprehensive income for the year

6,752,153

6,318,101

122

2023 ANNUAL REPORTConsolidated Statement of Profit or Loss and Other Comprehensive IncomeFor the year ended December 31, 2023 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NOTES

12/31/2023

Rmb’000

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)

18

5,223,679

1,398,651

6,622,330

5,327,819

1,424,334

6,752,153

112.95

105.32

12/31/2022

Rmb’000

(Restated)

5,178,666

1,124,344

6,303,010

5,184,248

1,133,853

6,318,101

113.72

108.33

123

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NOTES

12/31/2023

Rmb’000

12/31/2022

Rmb’000

(Restated)

5,912,826

621,953

23,674,743

86,867

347,400

10,059,641

440,345

01/01/2022

Rmb’000

(Restated)

5,530,838

666,686

30,253,704

86,867

303,506

9,675,046

440,574

6,202,021

934,837

21,012,910
86,867

388,384

11,491,055

1,497,891

189,527

209,439

363,878

7,718,725

854,473

–

1,446,067

3,048,619

54,871,376

1,306,370

831,478

19,934,761

5,990,540

1,631

1,279,110

41,729,113

445,173

7,729,402

570,257

1,118,363

189,000

1,416,809

–

–

1,216,289

10,000

1,617,799

–

44,647,643

50,165,187

606,285

562,884

17,557,268

3,350,918

44

1,000,756

43,789,944

250,683

6,086,210

371,714

475,199

19,394,130

1,379,476

128

613,718

45,445,711

–

7,078,206

45,415,217

48,744,803

38,392,804

100,631

70,179

132,090

4,268,560

23,830,440

203,632

23,990,165

413,843

17,213,997

152,862,426

146,213,771

130,911,016

NON-CURRENT ASSETS

Property, plant and equipment

Right-of-use assets

Expressway operating rights

Goodwill

Other intangible assets

Interests in associates

Interests in joint ventures

Financial assets at fair value through profit or 

loss (“FVTPL”)

Debt instruments at fair value through other 

comprehensive income (“FVTOCI”)

Other receivables and prepayments

Financial assets held under resale agreements

Deferred tax assets

Time deposits

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

124

19

20

21

22

23

25

26

27

28

31

32

47

34

29

30

31

39

27

28

32

33

34

34

34

2023 ANNUAL REPORTConsolidated Statement of Financial PositionAt December 31, 2023 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NOTES

12/31/2023

Rmb’000

12/31/2022

Rmb’000

(Restated)

01/01/2022

Rmb’000

(Restated)

CURRENT LIABILITIES

Placements from other financial institutions

Accounts payable to customers arising from 

securities business

Trade payables

Tax liabilities

Other taxes payable

Other payables and accruals

Dividends payable

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

35

36

37

38

39

40

41

42

43

44

45

46

40

42

43

47

46

1,950,000

700,000

500,000

44,803,323
1,265,174

654,107

232,461

13,954,591

168,573

104,000

996,027

4,593,399

2,137,611

5,404,107

1,830,842

24,592,145

472,061

147,914

48,449,595

1,220,832

419,684

379,334

8,924,553

–

161,381

554,357

5,054,083

3,567,025

7,118,247

4,719

23,825,242

1,057,642

119,678

103,306,335

101,556,372

49,556,091

104,427,467

13,213,544

23,610,144

6,611,090

260,060

327,516

44,022,354

60,405,113

44,657,399

89,305,042

17,302,734

16,189,322

5,707,354

481,066

324,352

40,004,828

49,300,214

38,069,350

1,453,998

1,305,228

920,106

5,921,353

–

204,214

451,368

2,451,507

7,940,702

10,455,661

–

25,250,426

2,925,391

105,699

97,955,003

32,956,013

83,121,200

19,661,590

17,193,430

1,714,662

477,525

360,216

39,407,423

43,713,777

125

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NOTES

12/31/2023

Rmb’000

CAPITAL AND RESERVES

Share capital

Reserves

Equity attributable to owners of the Company

Non-controlling interests

48

49

5,993,498

33,798,718

39,792,216

20,612,897

60,405,113

12/31/2022

Rmb’000

(Restated)

4,343,115

25,665,727

30,008,842

19,291,372

49,300,214

01/01/2022

Rmb’000

(Restated)

4,343,115

22,097,979

26,441,094

17,272,683

43,713,777

The consolidated financial statements on pages 122 to 338 were approved and authorised 
for issue by the board of directors on March 25, 2024 and are signed on its behalf by:

DIRECTOR
WU. Wei

DIRECTOR
LI. Wei

126

2023 ANNUAL REPORTConsolidated Statement of Financial PositionAt December 31, 2023 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Attributable to owners of the Company

Share of 

Investment 

differences 

Share 

Share 

Statutory 

Capital 

revaluation 

arising on 

Dividend 

Special 

Retained 

Non-

controlling 

capital

premium

reserve

reserve

reserve

translation

reserve

reserves

profits

Sub-total

interests

Total

Rmb’000 Rmb’000 Rmb’000 Rmb’000 Rmb’000 Rmb’000 Rmb’000 Rmb’000 Rmb’000 Rmb’000 Rmb’000 Rmb’000

(Note i)

(Note ii)

At January 1, 2023 (originally stated) 

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

Adjustments 

-

-

-

-

-

-

-

2,035,302

(2,944,750)

(909,448)

-

(909,448)

At January 1, 2023 (restated)

4,343,115 

3,355,621 

5,966,512 

1,712 

16,307 

7,055 

1,628,668 

8,963,458

5,726,394

30,008,842

19,291,372 

49,300,214

Profit for the year

Other comprehensive income for the year

Total comprehensive income for the year

-

-

-

-

-

-

Issuance of shares (Note 48)

1,650,383

4,448,491

Consideration paid for acquisition of  

subsidiaries under common control (Note 2)

Capital injection to a subsidiary acquired  

under common control

Issuance of Convertible Bond 2022  

by a subsidiary (Note 43)

Conversion of Convertible Bond 2022 of  

a subsidiary (Note 43)

Deemed partial disposal of interest in a subsidiary 

upon conversion of Convertible Bond 2022

Establishment of a subsidiary (Note 58)

Repurchase of shares by a subsidiary

Capital reserve change of an associate

Dividend declared to non-controlling interests

2022 dividend (Note 17)

Proposed 2023 dividend

Transfer to reserves

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

594,328

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

102,586

102,586

-

1,554

1,554

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

(1,628,668)

1,917,919

-

-

-

-

-

(16,700)

2,165

-

-

33

-

-

(149)

-

-

-

-

5,223,679

5,223,679

1,398,651

6,622,330

-

104,140

25,683

129,823

5,223,679

5,327,819

1,424,334

6,752,153

6,098,874

(16,700)

2,165

-

-

-

6,098,874

(16,700)

2,165

-

-

33

-

-

804,528

804,528

(15)

(15)

128

700

161

700

(405,138)

(405,138)

(149)

-

(149)

-

(503,012)

(503,012)

-

-

-

-

-

-

-

-

-

-

-

(1,628,668)

(1,917,919)

(594,328)

-

-

-

-

-

(1,628,668)

-

-

At December 31, 2023

5,993,498

7,804,112

6,560,840

1,712

118,893

8,609

1,917,919

8,948,807

8,437,826

39,792,216

20,612,897

60,405,113

127

Consolidated Statement of Changes in EquityFor the year ended December 31, 2023For the year ended December 31, 2023 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Attributable to owners of the Company

Share of 

Investment 

differences 

Share 

Share 

Statutory 

Capital 

revaluation 

arising on 

Dividend 

Special 

Retained 

Non-

controlling 

capital

premium

reserve

reserve

reserve

translation

reserve

reserves

profits

Sub-total

interests

Total

Rmb’000 Rmb’000 Rmb’000 Rmb’000 Rmb’000 Rmb’000 Rmb’000 Rmb’000 Rmb’000 Rmb’000 Rmb’000 Rmb’000

(Note i)

(Note ii)

At January 1, 2022 (originally stated)

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

Adjustments 

-

-

-

-

-

-

-

2,035,302

(2,744,550)

(709,248)

-

(709,248)

At January 1, 2022 (restated)

4,343,115

3,355,621

5,639,087

1,712

19,447

(1,667) 

1,628,668

8,951,290

2,503,821

26,441,094

17,272,683

43,713,777

Profit for the year (restated)

Other comprehensive income/(loss) for the year

Total comprehensive income/(loss) for the year

Issuance of Convertible Bond 2022  

by a subsidiary (Note 43)

Conversion of Convertible Bond 2022 of  

a subsidiary (Note 43)

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 17)

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

-

-

-

-

5,178,666

5,178,666 

1,124,344

6,303,010

-

5,582 

9,509 

15,091

5,178,666

5,184,248

1,133,853 

6,318,101 

-

-

6

476,257

476,257

(10)

(10)

101

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 (restated)

4,343,115

3,355,621

5,966,512

1,712

16,307 

7,055

1,628,668 

8,963,458 

5,726,394 

30,008,842

19,291,372

49,300,214 

128

2023 ANNUAL REPORTConsolidated Statement of Changes in EquityFor the year ended December 31, 2023 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
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.

129

(ii) 

Special reserves mainly comprise:

(a) 

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. 

(b) 

Other  reserve  which  was  arising  from  the  spin-off  and  offering  of  shares  by  Zheshang  Securities  Co., 

Ltd. (“Zheshang Securities”) in prior years. 

(c) 

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.

(d) 

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.

130

2023 ANNUAL REPORTConsolidated Statement of Changes in EquityFor the year ended December 31, 2023OPERATING ACTIVITIES

Profit before tax

Adjustments for:

Finance costs

Interest income from financial institutions

Interest income from debt instruments at FVTOCI

Foreign exchange loss

Share of profit of associates

Share of profit of joint ventures

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 on disposal of expressway operating rights

Gain on disposal of a subsidiary

Gain arising from deemed disposal of associates

Gain on decrease in fair value in respect of derivative  

Year ended

12/31/2023

Rmb’000

NOTE

Year ended

12/31/2022

Rmb’000

(Restated)

7,851,538

7,342,061

2,104,129

(360,686)

(148,106)

145,665

(1,056,247)

(107,046)

814,910

2,650,098

148,932

91,103

867

21,175

2,345

6,237

13,711

5,274

4,595

–

–

1,894,394

(144,271)

(11,505)

286,160

(752,086)

(49,771)

604,165

2,943,759

133,805

76,023

1,108

21,432

(1,521)

(9,234)

6,898

1,906

18,645

(1,881,262)

(22,062)

component of Convertible Bond

(280,620)

(31,951)

Loss on fair value changes of financial assets at FVTPL

Loss on disposal of debt instruments at FVTOCI

Gain arising from increasing shares of an associate

894

56

(26,457)

–

–

–

131

Consolidated Statement of Cash FlowsFor the year ended December 31, 2023For the year ended December 31, 2023 
 
 
 
 
 
 
 
Operating cash flows before movements in working capital

11,882,367

10,426,693

Year ended

12/31/2023

Rmb’000

NOTE

Year ended

12/31/2022

Rmb’000

(Restated)

Increase in inventories

Increase in trade receivables

(Increase)/decrease in loans to customers arising from margin 

financing business

Increase in other receivables and prepayments

Decrease in financial assets at FVTPL

(Increase)/decrease in financial assets held under resale 

agreements

(Increase)/decrease in restricted bank balance

Decrease/(increase) in bank balances and clearing settlement 

fund held on behalf of customers

Decrease/(increase) in net derivative financial assets

Increase in placements from other financial institutions

(Decrease)/increase in accounts payable to customers arising 

from securities business

Increase/(decrease) in trade payables

Decrease in other taxes payable

Decrease in contract liabilities

Increase in other payables and accruals

Decrease in financial liabilities at FVTPL

Increase/(decrease) in financial assets sold under repurchase 

agreements

Cash generated from operations

Income taxes paid

Interest paid

(713,796)

(268,266)

(2,379,838)

(2,397,468)

2,188,940

(1,460,429)

(30,452)

3,329,586

163,316

1,250,000

(241,469)

(89,164)

1,838,383

(1,883,732)

1,877,936

822,230

61,911

(10,351,999)

(284,049)

200,000

(3,646,272)

10,380,245

44,342

(146,873)

(57,381)

4,895,924

(585,581)

766,903

12,835,022

(1,258,084)

(1,762,609)

(231,677)

(540,891)

(42,833)

3,187,851

(1,867,749)

(1,425,184)

11,836,502

(1,966,682)

(2,058,677)

NET CASH FROM OPERATING ACTIVITIES

9,814,329

7,811,143

132

2023 ANNUAL REPORTConsolidated Statement of Cash FlowsFor the year ended December 31, 2023 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NOTE

INVESTING ACTIVITIES

Interest received

Dividends received from associates and a joint venture

Investment in associates

Investment in joint ventures

Withdrawal of investment in associates

Proceeds on disposal of property, plant and equipment

Proceeds on disposal of expressway operating rights

Proceeds on disposal or redemption of FVTOCI

Purchases of property, plant and equipment

Purchases of leasehold lands

Purchases of other intangible assets

Purchase of

– financial assets at FVTPL

– debt instruments at FVTOCI

Net cashflow on disposal of a subsidiary

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

Year ended

12/31/2023

Rmb’000

408,045

523,906

(767,308)

(1,000,500)

32,255

10,244

–

240,611

(971,261)

(312,255)

(129,107)

(109,091)

(7,549,671)

–

–

(13,237,551)

6,245,535

–

–

Year ended

12/31/2022

Rmb’000

(Restated)

147,496

497,691

(80,000)

–

30,439

7,590

10,828

–

(1,514,596)

–

(103,483)

(67,730)

(818,491)

2,206,798

2,400,000

–

200,000

(14,900)

14,900

NET CASH (USED IN)/FROM INVESTING ACTIVITIES

(16,616,148)

2,916,542

133

 
 
 
 
 
 
 
 
 
 
 
 
NOTE

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

Proceed from issuance of shares

Transaction costs paid on issuance of shares

Repurchase of shares by a subsidiary

Acquisition of a subsidiary under common control

Capital received from Communications Group 

under common control

Capital injection by non-controlling interests

Year ended

12/31/2023

Rmb’000

(1,642,803)

(334,439)

6,759,555

(9,657,001)

2,380,810

(4,018,954)

12,500,000

(6,800,000)

3,334,415

–

13,569,470

(14,987,230)

(145,537)

6,128,918

(30,044)

(405,138)

(16,700)

2,165

700

Year ended

12/31/2022

Rmb’000

(Restated)

(1,632,065)

(409,351)

6,764,713

(6,704,646)

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)

–

–

–

–

–

830,001

NET CASH FROM/(USED IN) FINANCING ACTIVITIES

6,638,187

(3,973,304)

NET (DECREASE)/INCREASE IN CASH AND CASH 

EQUIVALENTS

CASH AND CASH EQUIVALENTS AT JANUARY 1

Effect of foreign exchange rate changes

TOTAL CASH AND CASH EQUIVALENTS AT DECEMBER 31,

represented by

Cash and cash equivalents

34

(163,632)

23,990,165

3,907

23,830,440

23,830,440

6,754,381

17,213,997

21,787

23,990,165

23,990,165

134

2023 ANNUAL REPORTConsolidated Statement of Cash FlowsFor the year ended December 31, 2023 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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 (the “LSE”) commenced on May 5, 2000. On April 18, 2023, the Company 
applied for the cancellation of listing of its H shares on the standard listing segment of the 
Official  List  of  the  Financial  Conduct  Authority  and  of  trading  on  the  Main  Market  of  the 
LSE.  Such  cancellation  was  effective  from  8.00  a.m.  on  May  19,  2023  and  the  H  Shares 
continue to trade on the Hong Kong Stock Exchange.

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 construction, 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,  investment  in  other  financial  institutions  and  other  ancillary 
services.

135

Notes to the Consolidated Financial StatementsFor the year ended December 31, 2023For the year ended December 31, 20232.  MERGER ACCOUNTING RESTATEMENT

The  Group  accounts  for  all  its  business  combinations  involving  entities  under  common 
control using the principles of merger accounting in accordance with Accounting Guideline 
5  “Merger  Accounting  for  Common  Control  Combinations”  (“AG  5”)  issued  by  the  Hong 
Kong Institute of Certificated Public Accountants (the “HKICPA”).

On September 28, 2023, Zhejiang LongLiLiLong Expressway Co., Ltd. (“LongLiLiLong Co”), 
a  wholly  owned  subsidiary  of  the  Company,  entered  into  an  equity  purchase  agreement 
with  Communications  Group  to  acquire  100%  equity  interest  in  Zhejiang  HuangQuNan 
Expressway  Co.,  Ltd.  (“HuangQuNan  Co”)  at  a  cash  consideration  of  Rmb16,700,000. 
HuangQuNan Co is principally engaged in the operation and management of toll collection 
rights  of  the  Zhejiang  Section  of  HuangQuNan  Expressway  located  in  Zhejiang  Province, 
the  PRC,  with  a  total  length  of  161  kilometers. The  acquisition  has  been  approved  by  the 
board  of  directors  on  September  7,  2023,  and  by  the  end  of  November, HuangQuNan  Co 
became an indirect subsidiary of the Company after the completion of Articles of Association 
revision  and  business  registration  modification  pursuant  to  HuangQuNan  Equity  Purchase 
Agreement.

Since  Communications  Group  is  the  immediate  and  ultimate  holding  company  of  the 
Company,  the  above  acquisitions  were  regarded  as  business  combinations  involving 
entities  under  common  control  and  were  accounted  for  using  AG  5.  As  a  result,  the 
comparative  consolidated  statement  of  profit  or  loss  and  other  comprehensive  income, 
consolidated statement of cash flows and consolidated statement of changes in equity for 
the  year  ended  December  31,  2022  and  the  consolidated  statement  of  financial  position 
as  at  December  31,  2022  and  January  1,  2022  have  therefore  been  restated  in  order  to 
include the financial performance, assets and liabilities of the combining entities since the 
date on which they first come under common control.

136

2023 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 20232.  MERGER ACCOUNTING RESTATEMENT (Continued)

The  effects  of  the  merger  accounting  restatement  in  respect  of  the  acquisition  of  100% 
equity  interests  in  HuangQuNan  Co  on  the  consolidated  statement  of  profit  or  loss  and 
other comprehensive income for the year ended December 31, 2022 are as follows:

Year ended

 12/31/2022

Rmb’000

(Originally stated)

Merger 

accounting 

Year ended 

restatement

Rmb’000

12/31/2022

Rmb’000

(Restated)

14,898,730

433,047

15,331,777

Revenue

including: in terest income under  

effective interest method

2,390,436

–

2,390,436

Operating costs

Gross profit/(loss)

Securities investment gains

Other income and gains and losses

Administrative expenses

Other expenses

Impairment losses under expected credit loss model,  

net of reversal

Share of profit of associates

Share of profit of a joint venture

Finance costs

Profit/(loss) before tax

Income tax expense, credit

Profit for the year

(8,857,926)

(507,199)

(9,365,125)

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)

(74,152)

–

8,818

(4,789)

(5,648)

(43)

–

–

(124,386)

(200,200)

–

5,966,652

679,734

2,102,751

(177,405)

(125,349)

(11,785)

752,086

49,771

(1,894,394)

7,342,061

(1,039,051)

6,503,210

(200,200)

6,303,010

137

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2.  MERGER ACCOUNTING RESTATEMENT (Continued)

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 of an associate,  

net of related income tax

Other comprehensive income for the year,  

net of income tax

Year ended

 12/31/2022

Rmb’000

(Originally stated)

Merger 

accounting 

Year ended 

restatement

Rmb’000

12/31/2022

Rmb’000

(Restated)

(9,055)

1,108

1,987

21,787

(736)

15,091

–

–

–

–

–

–

(9,055)

1,108

1,987

21,787

(736)

15,091

Total comprehensive income for the year

6,518,301

(200,200)

6,318,101

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)

138

5,378,866

1,124,344

6,503,210

5,384,448

1,133,853

6,518,301

123.85

117.62

(200,200)

–

(200,200)

(200,200)

–

(200,200)

(10.13)

(9.29)

5,178,666

1,124,344

6,303,010

5,184,248

1,133,853

6,318,101

113.72

108.33

2023 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2023 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2.  MERGER ACCOUNTING RESTATEMENT (Continued)

The  effects  of  the  merger  accounting  restatement  in  respect  of  the  acquisition  of  100% 
equity interest in HuangQuNan Co on the consolidated statements of financial positions as 
at January 1, 2022 and December 31, 2022 are as follows:

Year

Merger

Ended

accounting

Year

Ended

Year

Merger

Ended

accounting

Year

Ended

01/01/2022

restatement

01/01/2022

12/31/2022

restatement

12/31/2022

Rmb’000

Rmb’000

Rmb’000

Rmb’000

Rmb’000

Rmb’000

(Originally 

stated)

(Originally 

(Restated)

stated)

(Restated)

NON-CURRENT ASSETS

Property, plant and equipment

5,019,619

511,219

5,530,838

5,419,682

493,144

5,912,826

Right-of-use assets

666,686

–

666,686

621,953

–

621,953

Expressway operating rights

26,053,256

4,200,448

30,253,704

19,797,341

3,877,402

23,674,743

Goodwill

Other intangible assets

Interests in associates

Interest in a joint venture

Financial assets at FVTPL

Debt instruments at FVTOCI

86,867

303,350

9,675,046

440,574

363,878

–

Other receivables and prepayments

1,216,289

Financial assets held under resale 

agreements

Deferred tax assets

10,000

1,617,799

–

156

86,867

303,506

86,867

347,051

–

349

–

–

–

–

–

–

–

9,675,046

10,059,641

440,574

363,878

–

440,345

209,439

570,257

1,216,289

1,118,363

10,000

189,000

1,617,799

1,416,809

–

–

–

–

–

–

–

86,867

347,400

10,059,641

440,345

209,439

570,257

1,118,363

189,000

1,416,809

45,453,364

4,711,823

50,165,187

40,276,748

4,370,895

44,647,643

139

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2.  MERGER ACCOUNTING RESTATEMENT (Continued)

Year

Merger

Ended

accounting

Year

Ended

Year

Merger

Ended

accounting

Year

Ended

01/01/2022

restatement

01/01/2022

12/31/2022

restatement

12/31/2022

Rmb’000

Rmb’000

Rmb’000

Rmb’000

Rmb’000

Rmb’000

(Originally 

stated)

(Originally 

(Restated)

stated)

(Restated)

371,714

467,892

–

7,307

371,714

475,199

606,285

554,368

–

8,516

606,285

562,884

–

19,394,130

17,557,268

–

17,557,268

371

1,379,476

3,347,368

3,550

3,350,918

–

–

–

–

–

–

–

–

128

44

613,718

1,000,756

45,445,711

43,789,944

–

250,683

7,078,206

6,086,210

38,392,804

48,744,803

132,090

70,179

413,843

203,632

–

–

–

–

–

–

–

–

44

1,000,756

43,789,944

250,683

6,086,210

48,744,803

70,179

203,632

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 FVTOCI

Financial assets held under resale 

agreements

Bank balances and clearing  

settlement fund held on behalf of 

19,394,130

1,379,105

128

613,718

45,445,711

–

7,078,206

customers

38,392,804

Bank balances, clearing settlement fund, 

deposits and cash:

– Restricted bank balances and cash

132,090

– Time deposits with original maturity  

over three months

413,843

– Cash and cash equivalents

17,153,977

60,020

17,213,997

23,917,236

72,929

23,990,165

130,843,318

67,698

130,911,016

146,128,776

84,995

146,213,771

140

2023 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2023 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2.  MERGER ACCOUNTING RESTATEMENT (Continued)

Year

Merger

Ended

accounting

Year

Ended

Year

Merger

Ended

accounting

Year

Ended

01/01/2022

restatement

01/01/2022

12/31/2022

restatement

12/31/2022

Rmb’000

Rmb’000

Rmb’000

Rmb’000

Rmb’000

Rmb’000

(Originally 

stated)

(Originally 

(Restated)

stated)

(Restated)

CURRENT LIABILITIES

Placements from other financial institutions

500,000

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

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

–

–

500,000

700,000

38,069,350

48,449,595

–

–

700,000

48,449,595

66,465

1,453,998

1,159,833

60,999

1,220,832

–

1,305,228

920,106

419,684

377,435

5,921,353

8,868,740

204,214

451,368

161,381

554,357

3,837

49,287

–

–

–

1,899

55,813

–

–

419,684

379,334

8,924,553

161,381

554,357

135,200

2,451,507

4,915,176

138,907

5,054,083

–

–

–

–

–

–

7,940,702

3,567,025

10,455,661

7,118,247

–

4,719

25,250,426

23,825,242

2,925,391

1,057,642

105,699

119,678

–

–

–

–

–

–

3,567,025

7,118,247

4,719

23,825,242

1,057,642

119,678

NET CURRENT ASSETS (LIABILITIES)

33,143,104

(187,091)

32,956,013

44,830,022

(172,623)

44,657,399

97,700,214

254,789

97,955,003

101,298,754

257,618

101,556,372

TOTAL ASSETS LESS CURRENT 

LIABILITIES

78,596,468

4,524,732

83,121,200

85,106,770

4,198,272

89,305,042

141

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2.  MERGER ACCOUNTING RESTATEMENT (Continued)

Year

Merger

Ended

accounting

Year

Ended

Year

Merger

Ended

accounting

Year

Ended

01/01/2022

restatement

01/01/2022

12/31/2022

restatement

12/31/2022

Rmb’000

Rmb’000

Rmb’000

Rmb’000

Rmb’000

Rmb’000

(Originally 

stated)

(Originally 

(Restated)

stated)

(Restated)

NON-CURRENT LIABILITIES

Bank and other borrowings

14,427,610

5,233,980

19,661,590

12,195,014

5,107,720

17,302,734

Bonds payable

Convertible Bonds

Deferred tax liabilities

Lease liabilities

CAPITAL AND RESERVES

Share capital

Reserves

Equity attributable to owners  

of the Company

Non-controlling interests

17,193,430

1,714,662

477,525

360,216

–

–

–

–

17,193,430

16,189,322

1,714,662

5,707,354

477,525

360,216

481,066

324,352

–

–

–

–

16,189,322

5,707,354

481,066

324,352

34,173,443

5,233,980

39,407,423

34,897,108

5,107,720

40,004,828

44,423,025

(709,248)

43,713,777

50,209,662

(909,448)

49,300,214

4,343,115

–

4,343,115

4,343,115

–

4,343,115

22,807,227

(709,248)

22,097,979

26,575,175

(909,448)

25,665,727

27,150,342

17,272,683

(709,248)

26,441,094

30,918,290

(909,448)

30,008,842

–

17,272,683

19,291,372

–

19,291,372

44,423,025

(709,248)

43,713,777

50,209,662

(909,448)

49,300,214

Note:  Notes  to  the  consolidated  statement  of  financial  position  are  presented  for  January  1,  2022  as  well  if  there  is 

merger accounting effect.

142

2023 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2023 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2.  MERGER ACCOUNTING RESTATEMENT (Continued)

The effects of merger accounting restatement in respect of the acquisition of 100% equity 
interest in HuangQuNan Co on the consolidated statements of equity as at January 1 2022 
and December 31, 2022 are as follows:

Year

Merger

Ended

accounting

Year

Ended

Year

Merger

Ended

accounting

Year

Ended

01/01/2022

restatement

01/01/2022

12/31/2022

restatement

12/31/2022

Rmb’000

Rmb’000

Rmb’000

Rmb’000

Rmb’000

Rmb’000

(Originally 

stated)

4,343,115

3,355,621

5,639,087

1,712

19,447

(1,667)

1,628,668

(Originally 

(Restated)

stated)

4,343,115

4,343,115

3,355,621

3,355,621

5,639,087

5,966,512

1,712

19,447

(1,667)

1,712

16,307

7,055

1,628,668

1,628,668

–

–

–

–

–

–

–

(Restated)

4,343,115

3,355,621

5,966,512

1,712

16,307

7,055

1,628,668

–

–

–

–

–

–

–

6,915,988

2,035,302

8,951,290

6,928,156

2,035,302

8,963,458

5,248,371

(2,744,550)

2,503,821

8,671,144

(2,944,750)

5,726,394

Share capital

Share premium

Statutory reserve

Capital reserve

Investment revaluation reserve

Share of differences arising on translation

Dividend reserve

Special reserves

Retained profits

Non-controlling interests

17,272,683

–

17,272,683

19,291,372

–

19,291,372

Total

44,423,025

(709,248)

43,713,777

50,209,662

(909,448)

49,300,214

143

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2.  MERGER ACCOUNTING RESTATEMENT (Continued)

The effects of merger accounting restatement in respect of the acquisition of 100% equity 
interest in HuangQuNan Co on the consolidated cash flows for the year ended December 
31, 2022 are as follows:

Year ended Merger accounting

12/31/2022

Rmb’000

restatement

Rmb’000

(Originally stated)

Year ended

12/31/2022

Rmb’000

(Restated)

7,542,261

(200,200)

7,342,061

Profit before tax

Adjustments for:

Finance costs

Interest income from financial institutions

Depreciation of property, plant and equipment

Amortisation of expressway operating rights

Amortisation of other intangible assets

Impairment losses, net of reversal

Loss on disposal of property, plant and equipment

Loss on disposal of expressway operating rights

1,770,008

(142,358)

554,686

2,621,008

75,491

21,389

1,436

18,434

Other operating cash flow adjustments

(2,331,421)

Operating cash flows before movements in working 

capital

Increase in trade receivables

Increase in other receivables and prepayments

Decrease in trade payables

Decrease in other taxes payable

Increase in other payables and accruals

Other working capital adjustments

Cash generated from operations

Income taxes paid

Interest paid

NET CASH FROM OPERATING ACTIVITIES

10,130,934

(87,940)

(1,880,644)

(226,211)

(538,834)

3,181,325

967,422

11,546,052

(1,966,682)

(1,937,998)

7,641,372

144

124,386

(1,913)

49,479

322,751

532

43

470

211

–

1,894,394

(144,271)

604,165

2,943,759

76,023

21,432

1,906

18,645

(2,331,421)

295,759

10,426,693

(1,224)

(3,088)

(5,466)

(2,057)

6,526

–

290,450

–

(120,679)

169,771

(89,164)

(1,883,732)

(231,677)

(540,891)

3,187,851

967,422

11,836,502

(1,966,682)

(2,058,677)

7,811,143

2023 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2023 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2.  MERGER ACCOUNTING RESTATEMENT (Continued)

The effects of merger accounting restatement in respect of the acquisition of 100% equity 
interest in HuangQuNan Co on the consolidated cash flows for the year ended December 
31, 2022 are as follows: (Continued)

INVESTING ACTIVITIES

Interest received

Proceeds on disposal of expressway operating rights

Purchases of property, plant and equipment

Purchases of other intangible assets

Other investing cash flows

NET CASH FROM INVESTING ACTIVITIES

FINANCING ACTIVITIES

Repayment of bank and other borrowings

Other financing cash flows

NET CASH USED IN FINANCING ACTIVITIES

145,583

10,744

(1,482,722)

(102,758)

4,376,297

2,947,144

(6,578,386)

2,731,342

(3,847,044)

NET INCREASE IN CASH AND CASH EQUIVALENTS

6,741,472

CASH AND CASH EQUIVALENTS AT JANUARY 1

17,153,977

Effect of foreign exchange rate changes

21,787

Year ended Merger accounting

12/31/2022

Rmb’000

restatement

Rmb’000

(Originally stated)

Year ended

12/31/2022

Rmb’000

(Restated)

147,496

10,828

(1,514,596)

(103,483)

4,376,297

1,913

84

(31,874)

(725)

–

(30,602)

2,916,542

(126,260)

–

(6,704,646)

2,731,342

(126,260)

(3,973,304)

12,909

60,020

–

6,754,381

17,213,997

21,787

CASH AND CASH EQUIVALENTS AT DECEMBER 31

23,917,236

72,929

23,990,165

145

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3.  APPLICATION OF NEW AND AMENDMENTS TO HONG KONG 

FINANCIAL REPORTING STANDARDS (“HKFRSS”)

New and Amendments to HKFRSs that are mandatorily effective for the current 

year

In the current year, the Group has applied the following new and 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  1 
January 2023 for the preparation of the consolidated financial statements:

HKFRS 17 (including the  

Insurance Contracts

October 2020 and February 2022 
Amendments to HKFRS 17)

Amendments to HKAS 8
Amendments to HKAS 12

Amendments to HKAS 12
Amendments to HKAS 1 and  
HKFRS Practice Statement 2

Definition of Accounting Estimates
Deferred Tax related to Assets and Liabilities 

arising from a Single Transaction

International Tax Reform-Pillar Two model Rules
Disclosure of Accounting Policies

Except  as  described  below,  the  application  of  the  new  and  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.

146

2023 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 20233.  A P P L I C A T I O N  O F  N E W  A N D  A M E N D M E N T S  T O  H O N G 
KONG  FINANCIAL  REPORTING  STANDARDS  (“HKFRS S”) 
(Continued)

Impacts  on  application  of  Amendments  to  HKAS  8  Definition  of  Accounting 

Estimates

The  Group  has  applied  the  amendments  for  the  first  time  in  the  current  year.  The 
amendments  define  accounting  estimates  as  “monetary  amounts  in  financial  statements 
that  are  subject  to  measurement  uncertainty”.  An  accounting  policy  may  require  items  in 
financial  statements  to  be  measured  in  a  way  that  involves  measurement  uncertainty.  In 
such a case, an entity develops an accounting estimate to achieve the objective set out by 
the accounting policy. The amendments to HKAS 8 clarify the distinction between changes 
in accounting estimates, and changes in accounting policies and the correction of errors.

The  application  of  the  amendments  in  the  current  year  had  no  material  impact  on  the 
consolidated financial statements.

Impacts  on  application  of  Amendments  to  HKAS  12  Deferred  Tax  related  to 

Assets and Liabilities arising from a Single Transaction

The  Group  has  applied  the  amendments  for  the  first  time  in  the  current  year.  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.

147

3.  A P P L I C A T I O N  O F  N E W  A N D  A M E N D M E N T S  T O  H O N G 
KONG  FINANCIAL  REPORTING  STANDARDS  (“HKFRS S”) 
(Continued)

Impacts  on  application  of  Amendments  to  HKAS  12  Deferred  Tax  related  to 

Assets and Liabilities arising from a Single Transaction (Continued)

In accordance with the transition provision:

(i) 

(ii) 

the  Group  has  applied  the  new  accounting  policy  retrospectively  to  leasing 
transactions that occurred on or after 1 January 2022;

the Group also, as at 1 January 2022, recognised 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 difference associated with right-of-use-assets and lease liabilities.

The  application  of  the  amendments  has  had  no  material  impact  on  the  Group’s  financial 
position and performance.

Impacts  on  application  of  Amendments  to  HKAS  1  and  HKFRS  Practice 

Statement 2 Disclosure of Accounting Policies

The  Group  has  applied  the  amendments  for  the  first  time  in  the  current  year.  HKAS  1 
Presentation  of  Financial  Statements  is  amended  to  replace  all  instances  of  the  term 
“significant accounting policies” with “material accounting policy information”. Accounting 
policy  information  is  material  if,  when  considered  together  with  other  information  included 
in  an  entity’s  financial  statements,  it  can  reasonably  be  expected  to  influence  decisions 
that the primary users of general purpose financial statements make on the basis of those 
financial statements.

148

2023 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 20233.  A P P L I C A T I O N  O F  N E W  A N D  A M E N D M E N T S  T O  H O N G 
KONG  FINANCIAL  REPORTING  STANDARDS  (“HKFRS S”) 
(Continued)

Impacts  on  application  of  Amendments  to  HKAS  1  and  HKFRS  Practice 

Statement 2 Disclosure of Accounting Policies (Continued)

The  amendments  also  clarify  that  accounting  policy  information  may  be  material  because 
of the nature of the related transactions, other events or conditions, even if the amounts are 
immaterial. However, not all accounting policy information relating to material transactions, 
other  events  or  conditions  is  itself  material.  If  an  entity  chooses  to  disclose  immaterial 
accounting  policy  information,  such  information  must  not  obscure  material  accounting 
policy information.

HKFRS  Practice  Statement  2  Making  Materiality  Judgements  (the  “Practice  Statement”) 
is  also  amended  to  illustrate  how  an  entity  applies  the  “four-step  materiality  process”  to 
accounting policy disclosures and to judge whether information about an accounting policy 
is  material  to  its  financial  statements.  Guidance  and  examples  are  added  to  the  Practice 
Statement.

The  application  of  the  amendments  has  had  no  material  impact  on  the  Group’s  financial 
positions  and  performance  but  has  affected  the  disclosure  of  the  Group’s  accounting 
policies set out in Note 5 to the consolidated financial statements.

149

3.  A P P L I C A T I O N  O F  N E W  A N D  A M E N D M E N T S  T O  H O N G 
KONG  FINANCIAL  REPORTING  STANDARDS  (“HKFRS S”) 
(Continued)

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:

Amendments to HKFRS 10  

Sale or Contribution of Assets between an Investor 

and HKAS 28

Amendments to HKFRS 16
Amendments to HKAS 1

Amendments to HKAS 1
Amendments to HKAS 7  

and HKFRS 7

and its Associate or Joint Venture1
Lease Liability in a Sale and Leaseback2
Classification of Liabilities as Current or  

Non-current and related amendments to Hong 
Kong Interpretation 5 (2020)2

Non-current Liabilities with Covenants2
Supplier Finance Arrangements2

Amendments to HKAS 21

Lack of Exchangeability3

1 
2 
3 

Effective for annual periods beginning on or after a date to be determined.

Effective for annual periods beginning on or after 1 January 2024.

Effective for annual periods beginning on or after 1 January 2025.

Except  for  the  amendments  to  HKFRSs  mentioned  below,  the  directors  of  the  Company 
anticipate  that  the  application  of  all  other  amendments  to  HKFRSs  will  have  no  material 
impact on the consolidated financial statements in the foreseeable future.

150

2023 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 20233.  A P P L I C A T I O N  O F  N E W  A N D  A M E N D M E N T S  T O  H O N G 
KONG  FINANCIAL  REPORTING  STANDARDS  (“HKFRS S”) 
(Continued)

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  “2020  Amendments”) 
and  Amendments  to  HKAS  1  Non-current  Liabilities  with  Covenants  (the  “2022 
Amendments”)

The 2020 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:

• 

• 

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.

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  the  classification  should  not  be  affected  by  management 
intentions or expectations to settle the liability within 12 months.

For  rights  to  defer  settlement  for  at  least  twelve  months  from  reporting  date  which  are 
conditional  on  the  compliance  with  covenants,  the  requirements  introduced  by  the  2020 
Amendments  have  been  modified  by  the  2022  Amendments.  The  2022  Amendments 
specify  that  only  covenants  with  which  an  entity  is  required  to  comply  with  on  or  before 
the  end  of  the  reporting  period  affect  the  entity’s  right  to  defer  settlement  of  a  liability  for 
at  least  twelve  months  after  the  reporting  date.  Covenants  which  are  required  to  comply 
with only after the reporting period do not affect whether that right exists at the end of the 
reporting period.

151

3.  A P P L I C A T I O N  O F  N E W  A N D  A M E N D M E N T S  T O  H O N G 
KONG  FINANCIAL  REPORTING  STANDARDS  (“HKFRS S”) 
(Continued)

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  “2020  Amendments”) 
and  Amendments  to  HKAS  1  Non-current  Liabilities  with  Covenants  (the  “2022 
Amendments”) (Continued)

In  addition,  the  2022  Amendments  specify  the  disclosure  requirements  about  information 
that  enables  users  of  financial  statements  to  understand  the  risk  that  the  liabilities  could 
become  repayable  within  twelve  months  after  the  reporting  period,  if  an  entity  classifies 
liabilities  arising  from  loan  arrangements  as  non-current  when  the  entity’s  right  to  defer 
settlement of those liabilities is subject to the entity complying with covenants within twelve 
months after the reporting period.

The  2022  Amendments  also  defer  the  effective  date  of  applying  the  2020  Amendments  to 
annual  reporting  periods  beginning  on  or  after  1  January  2024.  The  2022  Amendments, 
together  with  the  2020  Amendments,  are  effective  for  annual  reporting  periods  beginning 
on  or  after  1  January  2024,  with  early  application  permitted.  If  an  entity  applies  the  2020 
Amendments  for  an  earlier  period  after  the  issue  of  the  2022  Amendments,  the  entity 
should also apply the 2022 Amendments for that period.

Based on the Group’s outstanding liabilities as at 31 December 2023, including convertible 
instruments  in  which  the  conversion  options  are  classified  as  equity  instruments,  and  the 
related  terms  and  conditions  stipulated  in  the  agreements  between  the  Group  and  the 
relevant convertible instrument holders, the application of the 2020 and 2022 Amendments 
will not result in reclassification of the Group’s liabilities.

152

2023 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 20234.  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.

5.  MATERIAL ACCOUNTING POLICY INFORMATION

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.

153

5.  MATERIAL ACCOUNTING POLICY INFORMATION (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

• 

• 

• 

154

2023 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 20235.  MATERIAL ACCOUNTING POLICY INFORMATION (Continued)

Basis of consolidation (Continued)

• 

the decision maker’s exposure to variability of returns from other interests that it holds 
in the investee.

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.

155

5.  MATERIAL ACCOUNTING POLICY INFORMATION (Continued)

Basis of consolidation (Continued)

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.

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.

156

2023 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 20235.  MATERIAL ACCOUNTING POLICY INFORMATION (Continued)

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.

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.

157

5.  MATERIAL ACCOUNTING POLICY INFORMATION (Continued)

Business combinations or asset acquisitions (Continued)

Business combinations (Continued)

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.

The  identifiable  assets  acquired  and  liabilities  assumed  must  meet  the  definitions  of  an 
asset and a liability in the Conceptual Framework for Financial Reporting (the “Conceptual 
Framework”)  except  for  transactions  and  events  within  the  scope  of  HKAS  37  Provisions, 
Contingent  Liabilities  and  Contingent  Assets  or  HK  (IFRIC)–Int  21  Levies,  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 at the acquisition date (see the accounting policy below);

assets  (or  disposal  groups)  that  are  classified  as  held  for  sale  in  accordance 
with  HKFRS  5 Non-current Assets Held for Sale and Discontinued Operations  are 
measured in accordance with that standard; and

• 

• 

• 

158

2023 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 20235.  MATERIAL ACCOUNTING POLICY INFORMATION (Continued)

Business combinations or asset acquisitions (Continued)

Business combinations (Continued)

• 

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.

159

5.  MATERIAL ACCOUNTING POLICY INFORMATION (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  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 businesses from the earliest date presented or since  the 
date when the combining 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.

160

2023 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 20235.  MATERIAL ACCOUNTING POLICY INFORMATION (Continued)

Goodwill (Continued)

A  cash-generating  unit  (or  group  of  cash-generating  units)  to  which  goodwill  has  been 
allocated  is  tested  for  impairment  annually  or  more  frequently  when  there  is  indication 
that the unit may be impaired. For goodwill arising on an acquisition in a reporting period, 
the  cash-generating  unit  (or  group  of  cash-generating  units)  to  which  goodwill  has  been 
allocated is tested for impairment before the end of that reporting period. If the recoverable 
amount is less than its carrying amount, the impairment loss is allocated first to reduce the 
carrying amount of any goodwill and then to the other assets on a pro-rata basis based on 
the carrying amount of each asset in the unit (or group of cash-generating units).

On  disposal  of  the  relevant  cash-generating  unit  or  any  of  the  cash-generating  unit  within 
the  group  of  cash  generating  units,  the  attributable  amount  of  goodwill  is  included  in  the 
determination  of  the  amount  of  profit  or  loss  on  disposal.  When  the  Group  disposes  of  an 
operation within the cash-generating unit (or a cash generating unit within a group of cash-
generating  units),  the  amount  of  goodwill  disposed  of  is  measured  on  the  basis  of  the 
relative values of the operation (or the cash-generating unit) disposed of and the portion of 
the cash-generating unit (or the group of cash-generating units) retained.

The Group’s policy for goodwill arising on the acquisition of associates and joint venture is 
described below.

Investments in associates and joint ventures

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.

161

5.  MATERIAL ACCOUNTING POLICY INFORMATION (Continued)

Investments in associates and joint ventures (Continued)

The  results  and  assets  and  liabilities  of  associates  and  joint  ventures  are  incorporated 
in  these  consolidated  financial  statements  using  the  equity  method  of  accounting.  The 
financial statements of associates and joint ventures used for equity accounting purposes 
are prepared using uniform accounting policies as those of the Group for like transactions 
and events in similar circumstances. Under the equity method, an investment in an associate 
or  a  joint  venture  is  initially  recognised  in  the  consolidated  statement  of  financial  position 
at  cost  and  adjusted  thereafter  to  recognise  the  Group’s  share  of  the  profit  or  loss  and 
other  comprehensive  income  of  the  associate  or  joint  venture.  Changes  in  net  assets  of 
the  associate/joint  venture  other  than  profit  and  loss  and  other  comprehensive  income 
are  not  accounted  for  unless  such  changes  resulted  in  changes  in  ownership  interest 
held  by  the  Group.  When  the  Group’s  share  of  losses  of  an  associate  or  a  joint  venture 
exceeds  the  Group’s  interest  in  that  associate  or  joint  venture  (which  includes  any  long-
term  interests  that,  in  substance,  form  part  of  the  Group’s  net  investment  in  the  associate 
or joint venture), the Group discontinues recognising its share of further losses. Additional 
losses are recognised only to the extent that the Group has incurred legal or constructive 
obligations or made payments on behalf of the associate or joint venture.

An  investment  in  an  associate  or  a  joint  venture  is  accounted  for  using  the  equity 
method  from  the  date  on  which  the  investee  becomes  an  associate  or  a  joint  venture.  On 
acquisition  of  the  investment  in  an  associate  or  a  joint  venture,  any  excess  of  the  cost  of 
the  investment  over  the  Group’s  share  of  the  net  fair  value  of  the  identifiable  assets  and 
liabilities  of  the  investee  is  recognised  as  goodwill,  which  is  included  within  the  carrying 
amount  of  the  investment.  Any  excess  of  the  Group’s  share  of  the  net  fair  value  of  the 
identifiable  assets  and  liabilities  over  the  cost  of  the  investment,  after  reassessment,  is 
recognised immediately in profit or loss in the period in which the investment is acquired.

162

2023 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 20235.  MATERIAL ACCOUNTING POLICY INFORMATION (Continued)

Investments in associates and joint ventures (Continued)

The Group assesses whether there is an objective evidence that the interest in an associate 
or a joint venture may be impaired. When any objective evidence exists, the entire carrying 
amount  of  the  investment  (including  goodwill)  is  tested  for  impairment  in  accordance 
with  HKAS  36  as  a  single  asset  by  comparing  its  recoverable  amount  (higher  of  value  in 
use  and  fair  value  less  costs  of  disposal)  with  its  carrying  amount.  Any  impairment  loss 
recognised is not allocated to any asset, including goodwill, that forms part of the carrying 
amount of the investment. Any reversal of that impairment loss is recognised in accordance 
with  HKAS  36  to  the  extent  that  the  recoverable  amount  of  the  investment  subsequently 
increases.

When the Group ceases to have significant influence over an associate or joint control over 
a joint venture, it is accounted for as a disposal of the entire interest in the investee with a 
resulting gain or loss being recognised in profit or loss.

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.

163

5.  MATERIAL ACCOUNTING POLICY INFORMATION (Continued)

Investments in associates and joint ventures (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

Information  about  the  Group’s  accounting  policies  relating  to  contracts  with  customers  is 
provided in Note 7.

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  construction 
in  progress  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.

164

2023 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 20235.  MATERIAL ACCOUNTING POLICY INFORMATION (Continued)

Property, plant and equipment (Continued)

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.

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

Annual

useful life

depreciation rate

20 – 50 years

1.9% – 4.9%

30 years

10 – 30 years

5 years

5 – 8 years

5 – 8 years

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.

165

 
 
 
 
 
 
 
 
 
5.  MATERIAL ACCOUNTING POLICY INFORMATION (Continued)

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.

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.

166

2023 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 20235.  MATERIAL ACCOUNTING POLICY INFORMATION (Continued)

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.

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.

167

5.  MATERIAL ACCOUNTING POLICY INFORMATION (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)

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.

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.

168

2023 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 20235.  MATERIAL ACCOUNTING POLICY INFORMATION (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)

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.

169

5.  MATERIAL ACCOUNTING POLICY INFORMATION (Continued)

Inventories

Inventories  include  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. Costs of inventories are 
determined on a 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.

170

2023 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 20235.  MATERIAL ACCOUNTING POLICY INFORMATION (Continued)

Lease (Continued)

The Group as lessee

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.

171

5.  MATERIAL ACCOUNTING POLICY INFORMATION (Continued)

Lease (Continued)

The Group as lessee (Continued)

Refundable rental deposits

Refundable  rental  deposits  paid  are  accounted  under  HKFRS  9  Financial  Instruments 
and  initially  measured  at  fair  value.  Adjustments  to  fair  value  at  initial  recognition  are 
considered as additional lease payments and included in the cost of right-of-use assets.

Lease liabilities

At  the  commencement  date  of  a  lease,  the  Group  recognises  and  measures  the  lease 
liability at the present value of lease payments that are unpaid at that date. In calculating 
the  present  value  of  lease  payments,  the  Group  uses  the  incremental  borrowing  rate 
at  the  lease  commencement  date  if  the  interest  rate  implicit  in  the  lease  is  not  readily 
determinable.

The lease payments include:

fixed  payments  (including  in-substance  fixed  payments)  less  any  lease  incentives 
receivable;

variable  lease  payments  that  depend  on  an  index  or  a  rate,  initially  measured  using 
the index or rate as at the commencement date;

amounts expected to be payable by the Group under residual value guarantees;

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.

• 

• 

• 

• 

• 

172

2023 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 20235.  MATERIAL ACCOUNTING POLICY INFORMATION (Continued)

Lease (Continued)

The Group as lessee (Continued)

Lease liabilities (Continued)

Variable  lease  payments  that  reflect  changes  in  market  rental  rates  are  initially  measured 
using the market rental rates as at the commencement date. Variable lease payments that 
do not depend on an index or a rate are not included in the measurement of lease liabilities 
and  right-of-use  assets,  and  are  recognised  as  expense  in  the  period  on  which  the  event 
or condition that triggers the payment occurs.

After the commencement date, lease liabilities are adjusted by interest accretion and lease 
payments.

The  Group  remeasures  lease  liabilities  (and  makes  a  corresponding  adjustment  to  the 
related right-of-use assets) whenever:

• 

• 

the  lease  term  has  changed  or  there  is  a  change  in  the  assessment  of  exercise 
of  a  purchase  option,  in  which  case  the  related  lease  liability  is  remeasured  by 
discounting  the  revised  lease  payments  using  a  revised  discount  rate  at  the  date  of 
reassessment.

the lease payments change due to changes in market rental rates following a market 
rent  review,  in  which  cases  the  related  lease  liability  is  remeasured  by  discounting 
the revised lease payments using the initial discount rate.

The Group presents lease liabilities as a separate line item on the consolidated statement 
of financial position.

173

5.  MATERIAL ACCOUNTING POLICY INFORMATION (Continued)

Lease (Continued)

The Group as lessee (Continued)

Lease modifications

The Group accounts for a lease modification as a separate lease if:

• 

• 

the  modification  increases  the  scope  of  the  lease  by  adding  the  right  to  use  one  or 
more underlying assets; and

the  consideration  for  the  leases  increases  by  an  amount  commensurate  with  the 
stand-alone price for the increase in scope and any appropriate adjustments  to  that 
stand-alone price to reflect the circumstances of the particular contract.

For  a  lease  modification  that  is  not  accounted  for  as  a  separate  lease,  the  Group 
remeasures the lease liability based on the lease term of the modified lease by discounting 
the  revised  lease  payments  using  a  revised  discount  rate  at  the  effective  date  of  the 
modification.

The  Group  accounts  for  the  remeasurement  of  lease  liabilities  by  making  corresponding 
adjustments  to  the  relevant  right-of-use  asset.  When  the  modified  contract  contains  a 
lease  component  and  one  or  more  additional  lease  or  non-lease  components,  the  Group 
allocates the consideration in the modified contract to each lease component on the basis 
of  the  relative  stand-alone  price  of  the  lease  component  and  the  aggregate  stand-alone 
price of the non-lease components.

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2023 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 20235.  MATERIAL ACCOUNTING POLICY INFORMATION (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.

175

5.  MATERIAL ACCOUNTING POLICY INFORMATION (Continued)

Lease (Continued)

The Group as a lessor (Continued)

Refundable rental deposits

Refundable  rental  deposits  received  are  accounted  for  under  HKFRS  9  and  initially 
measured  at  fair  value.  Adjustments  to  fair  value  at  initial  recognition  are  considered  as 
additional lease payments from lessees.

Lease modification

Changes  in  considerations  of  lease  contracts  that  were  not  part  of  the  original  terms  and 
conditions  are  accounted  for  as  lease  modifications,  including  lease  incentives  provided 
through forgiveness or reduction of rentals.

The  Group  accounts  for  a  modification  to  an  operating  lease  as  a  new  lease  from  the 
effective  date  of  the  modification,  considering  any  prepaid  or  accrued  lease  payments 
relating to the original lease as part of the lease payments for the new lease.

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 on 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.

176

2023 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 20235.  MATERIAL ACCOUNTING POLICY INFORMATION (Continued)

Foreign currencies (Continued)

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  that  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.

177

5.  MATERIAL ACCOUNTING POLICY INFORMATION (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  and  gains  and 
losses.

Employee benefits

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.

178

2023 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 20235.  MATERIAL ACCOUNTING POLICY INFORMATION (Continued)

Employee benefits (Continued)

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.

Taxation

Income tax expense represents the sum of current and deferred income tax expense.

The tax currently payable is based on taxable profit for the year. Taxable profit differs from 
profit  before  tax  because  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 and at the time of the transaction does not give rise to equal taxable and 
deductible  temporary  differences.  In  addition,  deferred  tax  liabilities  are  not  recognised  if 
the temporary difference arises from the initial recognition of goodwill.

179

5.  MATERIAL ACCOUNTING POLICY INFORMATION (Continued)

Taxation (Continued)

Deferred  tax  liabilities  are  recognised  for  taxable  temporary  differences  associated  with 
investments  in  subsidiaries  and  associates,  and  interests  in  joint  ventures,  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 each 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.

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.

180

2023 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 20235.  MATERIAL ACCOUNTING POLICY INFORMATION (Continued)

Taxation (Continued)

For leasing transactions in which the tax deductions are attributable to the lease liabilities, 
the  Group  applies  HKAS  12  requirements  to  the  lease  liabilities  and  the  related  assets 
separately.  The  Group  recognises  a  deferred  tax  asset  related  to  lease  liabilities  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  taxable  temporary 
differences.

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.

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.

181

5.  MATERIAL ACCOUNTING POLICY INFORMATION (Continued)

Financial instruments (Continued)

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.

182

2023 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 20235.  MATERIAL ACCOUNTING POLICY INFORMATION (Continued)

Financial instruments (Continued)

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.

Debt  instruments  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.

183

5.  MATERIAL ACCOUNTING POLICY INFORMATION (Continued)

Financial instruments (Continued)

Financial assets (Continued)

Classification and subsequent measurement of financial assets (Continued)

A financial asset is held for trading if:

• 

• 

it has been acquired principally for the purpose of selling in the near term; or

on  initial  recognition  it  is  a  part  of  a  portfolio  of  identified  financial  instruments  that 
the  Group  manages  together  and  has  a  recent  actual  pattern  of  short-term  profit-
taking; or

• 

it is a derivative that is not designated and effective as a hedging instrument.

In  addition,  the  Group  may  irrevocably  designate  a  financial  asset  that  are  required 
to  be  measured  at  the  amortised  cost  as  measured  at  FVTPL  if  doing  so  eliminates  or 
significantly reduces an accounting mismatch.

(i) 

Amortised cost and interest income

Interest  income  is  recognised  using  the  effective  interest  method  for  financial  assets 
measured subsequently at amortised cost and debt instruments/receivables subsequently 
measured  at  FVTOCI.  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.

184

2023 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 20235.  MATERIAL ACCOUNTING POLICY INFORMATION (Continued)

Financial instruments (Continued)

Financial assets (Continued)

Classification and subsequent measurement of financial assets (Continued)

(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.

185

5.  MATERIAL ACCOUNTING POLICY INFORMATION (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 and other 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.

186

2023 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 20235.  MATERIAL ACCOUNTING POLICY INFORMATION (Continued)

Financial instruments (Continued)

Financial assets (Continued)

Impairment of financial assets subject to impairment assessment under HKFRS 9 
(Continued)

(i) 

Significant increase in credit risk

In  assessing  whether  the  credit  risk  has  increased  significantly  since  initial  recognition, 
the  Group  compares  the  risk  of  a  default  occurring  on  the  financial  instrument  as  at  the 
reporting date with the risk of a default occurring on the financial instrument as at the date 
of initial recognition. In making this assessment, the Group considers both quantitative and 
qualitative  information  that  is  reasonable  and  supportable,  including  historical  experience 
and forward-looking information that is available without undue cost or effort.

In particular, the following information is taken into account when assessing whether credit 
risk has increased significantly:

• 

• 

• 

• 

• 

an actual or expected significant deterioration in the financial instrument’s external (if 
available) or internal credit rating;

significant  deterioration  in  external  market  indicators  of  credit  risk,  e.g.  a  significant 
increase in the credit spread, the credit default swap prices for the debtor;

existing  or  forecast  adverse  changes  in  business,  financial  or  economic  conditions 
that  are  expected  to  cause  a  significant  decrease  in  the  debtor’s  ability  to  meet  its 
debt obligations;

an actual or expected significant deterioration in the operating results of the debtor;

an  actual  or  expected  significant  adverse  change  in  the  regulatory,  economic,  or 
technological  environment  of  the  debtor  that  results  in  a  significant  decrease  in  the 
debtor’s ability to meet its debt obligations.

187

5.  MATERIAL ACCOUNTING POLICY INFORMATION (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)

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  foregoing,  the  Group  assumes  that  the  credit  risk  on  a  debt  instrument  has 
not  increased  significantly  since  initial  recognition  if  the  debt  instrument  is  determined 
to  have  low  credit  risk  at  the  reporting  date.  A  debt  instrument  is  determined  to  have  low 
credit risk if i) it has a low risk of default, ii) the borrower has a strong capacity to meet its 
contractual  cash  flow  obligations  in  the  near  term  and  iii)  adverse  changes  in  economic 
and  business  conditions  in  the  longer  term  may,  but  will  not  necessarily,  reduce  the 
ability of the borrower to fulfil its contractual cash flow obligations. The Group considers a 
debt  instrument  to  have  low  credit  risk  when  it  has  an  internal  or  external  credit  rating  of 
‘investment grade’ as per globally understood definitions.

The Group regularly monitors the effectiveness of the criteria used to identify whether there 
has  been  a  significant  increase  in  credit  risk  and  revises  them  as  appropriate  to  ensure 
that  the  criteria  are  capable  of  identifying  significant  increase  in  credit  risk  before  the 
amount becomes past due.

188

2023 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 20235.  MATERIAL ACCOUNTING POLICY INFORMATION (Continued)

Financial instruments (Continued)

Financial assets (Continued)

Impairment of financial assets subject to impairment assessment under HKFRS 9 
(Continued)

(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;

189

5.  MATERIAL ACCOUNTING POLICY INFORMATION (Continued)

Financial instruments (Continued)

Financial assets (Continued)

Impairment of financial assets subject to impairment assessment under HKFRS 9 
(Continued)

(iii)  Credit-impaired financial assets (Continued)

(d) 

it  is  becoming  probable  that  the  borrower  will  enter  bankruptcy  or  other  financial 
reorganisation; or

(e) 

the  disappearance  of  an  active  market  for  that  financial  asset  because  of  financial 
difficulties; or

(f) 

the  purchase  or  origination  of  a  financial  asset  at  a  deep  discount  that  reflects  the 
incurred credit losses.

(iv)  Write-off policy

The  Group  writes  off  a  financial  asset  when  there  is  information  indicating  that  the 
counterparty  is  in  severe  financial  difficulty  and  there  is  no  realistic  prospect  of  recovery. 
Financial assets written off may still be subject to enforcement activities under the Group’s 
recovery  procedures,  taking  into  account  legal  advice  where  appropriate.  A  write-off 
constitutes  a  derecognition  event.  Any  subsequent  recoveries  are  recognised  in  profit  or 
loss.

190

2023 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 20235.  MATERIAL ACCOUNTING POLICY INFORMATION (Continued)

Financial instruments (Continued)

Financial assets (Continued)

Impairment of financial assets subject to impairment assessment under HKFRS 9 
(Continued)

(v)  Measurement and recognition of ECL

The measurement of ECL is a function of the probability of default (“PD”), loss given default 
(“LGD”)  (i.e.  the  magnitude  of  the  loss  if  there  is  a  default)  and  the  exposure  at  default 
(“EAD”).  The  assessment  of  the  PD  and  LGD  is  based  on  historical  data  and  forward-
looking  information.  Estimation  of  ECL  reflects  an  unbiased  and  probability-weighted 
amount that is determined with the respective risks of default occurring as the weights. The 
Group uses a practical expedient in estimating ECL on trade receivables using a provision 
matrix  taking  into  consideration  historical  credit  loss  experience  and  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.

191

5.  MATERIAL ACCOUNTING POLICY INFORMATION (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.

192

2023 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 20235.  MATERIAL ACCOUNTING POLICY INFORMATION (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)

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.

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.

193

5.  MATERIAL ACCOUNTING POLICY INFORMATION (Continued)

Financial instruments (Continued)

Financial assets (Continued)

Derecognition/modification of financial assets (Continued)

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.

On  derecognition  of  an  investment  in  a  debt  instrument  classified  as  at  FVTOCI,  the 
cumulative  gain  or  loss  previously  accumulated  in  the  FVTOCI  reserve  is  reclassified  to 
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.

194

2023 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 20235.  MATERIAL ACCOUNTING POLICY INFORMATION (Continued)

Financial instruments (Continued)

Financial assets (Continued)

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.

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.

195

5.  MATERIAL ACCOUNTING POLICY INFORMATION (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.

196

2023 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 20235.  MATERIAL ACCOUNTING POLICY INFORMATION (Continued)

Financial instruments (Continued)

Financial liabilities and equity (Continued)

Financial liabilities at FVTPL (Continued)

A financial liability is held for trading if:

• 

• 

• 

it has been acquired principally for the purpose of repurchasing it in the near term; or

on  initial  recognition  it  is  a  part  of  a  portfolio  of  identified  financial  instruments  that 
the  Group  manages  together  and  has  a  recent  actual  pattern  of  short-term  profit-
taking; or

it  is  a  derivative,  except  for  a  derivative  that  is  a  financial  guarantee  contract  or  a 
designated and effective hedging instrument.

A  financial  liability  other  than  a  financial  liability  held  for  trading  may  be  designated  as  at 
FVTPL upon initial recognition if:

• 

• 

• 

such  designation  eliminates  or  significantly  reduces  a  measurement  or  recognition 
inconsistency that would otherwise arise; or

the  financial  liability  forms  part  of  a  group  of  financial  assets  or  financial  liabilities 
or both, which is managed and its performance is evaluated on a fair value basis, in 
accordance  with  the  Group’s  documented  risk  management  or  investment  strategy, 
and information about the grouping is provided internally on that basis; or

it forms part of a contract containing one or more embedded derivatives, and HKFRS 
9 permits the entire combined contract to be designated as at FVTPL.

197

5.  MATERIAL ACCOUNTING POLICY INFORMATION (Continued)

Financial instruments (Continued)

Financial liabilities and equity (Continued)

Financial liabilities at FVTPL (Continued)

For  financial  liabilities  that  are  designated  as  at  FVTPL,  the  amount  of  change  in  the 
fair  value  of  the  financial  liability  that  is  attributable  to  changes  in  the  credit  risk  of  that 
liability  is  recognised  in  other  comprehensive  income,  unless  the  recognition  of  the 
effects  of  changes  in  the  liability’s  credit  risk  in  other  comprehensive  income  would 
create  or  enlarge  an  accounting  mismatch  in  profit  or  loss.  For  financial  liabilities  that 
contain  embedded  derivatives,  such  as  convertible  bond,  the  changes  in  fair  value  of  the 
embedded  derivatives  are  excluded  in  determining  the  amount  to  be  presented  in  other 
comprehensive  income.  Changes  in  fair  value  attributable  to  a  financial  liability’s  credit 
risk  that  are  recognised  in  other  comprehensive  income  are  not  subsequently  reclassified 
to profit or loss; instead, they are transferred to retained profits upon derecognition of the 
financial liability.

Financial liabilities at amortised cost

Financial  liabilities  including  accounts  payable  to  customers  arising  from  securities 
business, trade payables, other payables, dividends payable, bank and other borrowings, 
placements  from  other  financial  institutions,  short-term  financing  note  payable,  financial 
assets  sold  under  repurchase  agreements,  bonds  payable  and  convertible  bond  are 
subsequently measured at amortised cost, using the effective interest method.

198

2023 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 20235.  MATERIAL ACCOUNTING POLICY INFORMATION (Continued)

Financial instruments (Continued)

Financial liabilities and equity (Continued)

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  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.

199

5.  MATERIAL ACCOUNTING POLICY INFORMATION (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.

200

2023 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 20235.  MATERIAL ACCOUNTING POLICY INFORMATION (Continued)

Financial instruments (Continued)

Financial liabilities and equity (Continued)

Foreign exchange gains and losses

For  financial  liabilities  that  are  denominated  in  a  foreign  currency  and  are  measured  at 
amortised cost at the end of each reporting period, the foreign exchange gains and losses 
are  determined  based  on  the  amortised  cost  of  the  instruments.  These  foreign  exchange 
gains  and  losses  are  recognised  in  the  ‘Other  income  gains  and  losses’  line  item  in  profit 
or loss (Note 10) as part of “Exchange losses, net” for financial liabilities that are not part 
of a designated hedging relationship.

The  fair  value  of  financial  liabilities  denominated  in  a  foreign  currency  is  determined  in 
that  foreign  currency  and  translated  at  the  spot  rate  at  the  end  of  the  reporting  period. 
For  financial  liabilities  that  are  measured  as  at  FVTPL,  the  foreign  exchange  component 
forms  part  of  the  fair  value  gains  or  losses  and  is  recognised  in  profit  or  loss  for  financial 
liabilities that are not part of a designated hedging relationship.

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.

201

5.  MATERIAL ACCOUNTING POLICY INFORMATION (Continued)

Financial instruments (Continued)

Financial liabilities and equity (Continued)

Derecognition/modification of financial liabilities (Continued)

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.

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.

202

2023 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 20235.  MATERIAL ACCOUNTING POLICY INFORMATION (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.

A  derivative  is  presented  as  a  non-current  asset  or  a  non-current  liability  if  the  remaining 
maturity of the instrument is more than 12 months and it is not due to be realised or settled 
within 12 months. Other derivatives are presented as current assets or current liabilities.

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.

203

5.  MATERIAL ACCOUNTING POLICY INFORMATION (Continued)

Financial instruments (Continued)

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.

204

2023 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 20236.  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.

205

6.  CRITICAL  ACCOUNTING  JUDGEMENT  AND  KEY  SOURCES 

OF ESTIMATION UNCERTAINTY (Continued)

Critical judgements in applying accounting policies (Continued)

Determination of consolidation scope of structured entities (Continued)

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.

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.

206

2023 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 20236.  CRITICAL  ACCOUNTING  JUDGEMENT  AND  KEY  SOURCES 

OF ESTIMATION UNCERTAINTY (Continued)

Key sources of estimation uncertainty (Continued)

Impairment of goodwill

Determining whether goodwill is impaired requires an estimation of the recoverable amount 
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,  2023,  the  carrying  amount  of  goodwill  is  Rmb86,867,000  (without 
accumulated  impairment  loss)  (2022:  Rmb86,867,000  (without  accumulated  impairment 
loss)). Details of the impairment testing are disclosed in Note 24.

Measurement  of  ECL  for  loans  to  customers  arising  from  margin  financing  business 
and financial assets held under resale agreements

The  Group  estimates  the  amount  of  loss  allowance  for  ECL  on  its  loans  to  customers 
arising from margin financing business and financial assets held under resale agreements. 
Asset’s  carrying  amount  and  the  present  value  of  estimated  future  cash  flows  with  the 
consideration of expected future credit loss are taken into account for determining the loss 
allowance  amount.  The  assessment  of  the  credit  risk  of  loans  to  customers  arising  from 
margin  financing  business  and  financial  assets  held  under  resale  agreements  involves 
high  degree  of  estimation  and  uncertainty.  When  the  actual  future  cash  flows  are  less 
than expected or more than expected, a material impairment loss or a material reversal of 
impairment loss may arise, accordingly.

207

6.  CRITICAL  ACCOUNTING  JUDGEMENT  AND  KEY  SOURCES 

OF ESTIMATION UNCERTAINTY (Continued)

Key sources of estimation uncertainty (Continued)

Measurement  of  ECL  for  loans  to  customers  arising  from  margin  financing  business 
and financial assets held under resale agreements (Continued)

The  following  significant  judgements  and  estimations  are  required  in  applying  the 
accounting requirements for measuring the ECL:

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.

208

2023 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 20236.  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)

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.

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.

209

6.  CRITICAL  ACCOUNTING  JUDGEMENT  AND  KEY  SOURCES 

OF ESTIMATION UNCERTAINTY (Continued)

Key sources of estimation uncertainty (Continued)

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.

210

2023 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 20237.  REVENUE

(i)  Disaggregation of revenue from contracts with customers

Year ended 12/31/2023

Year ended 12/31/2022

Toll

Securities

Toll

Securities

Segments

operation

operation

Others

operation

operation

Others

Rmb’000 Rmb’000 Rmb’000

Rmb’000

Rmb’000

Rmb’000

Types of goods or services

Toll operation

10,423,833

–

Securities operation

Asset management services

Securities and futures commission

Investment banking services

Others

Hotel operating and catering  

services

Revenue from PPP project

–

–

–

–

–

–

–

–

–

–

–

–

403,689

2,634,295

881,905

3,919,889

(Restated)

9,093,380

–

420,826

2,490,292

778,829

3,689,947

–

–

–

–

–

–

–

–

–

–

124,072

44,830

168,902

–

–

–

88,143

69,871

158,014

–

–

–

–

–

Total

10,423,833

3,919,889

168,902

9,093,380

3,689,947

158,014

Timing of revenue recognition

A point in time

Over time

Total

10,423,833

3,919,889

124,072

9,093,380

3,689,947

–

–

44,830

–

–

88,143

69,871

10,423,833

3,919,889

168,902

9,093,380

3,689,947

158,014

211

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
7.  REVENUE (Continued)

(i)  Disaggregation of revenue from contracts with customers (Continued)

Set  out  below  is  the  reconciliation  of  the  revenue  from  contracts  with  customers  with  the 
amounts disclosed in the segment information.

Toll operation

Securities operation

Others

Revenue from contracts with customers

Interest under effective interest method

Total revenue

Year ended

12/31/2023

Rmb’000

10,423,833

3,919,889

168,902

14,512,624

2,452,400

16,965,024

Year ended

12/31/2022

Rmb’000

(Restated)

9,093,380

3,689,947

158,014

12,941,341

2,390,436

15,331,777

(ii)  Performance  obligations  for  contracts  with  customers  and  revenue 

recognition policies

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.

212

2023 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2023 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
7.  REVENUE (Continued)

(ii)  Performance  obligations  for  contracts  with  customers  and  revenue 

recognition policies (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.

213

7.  REVENUE (Continued)

(ii)  Performance  obligations  for  contracts  with  customers  and  revenue 

recognition policies (Continued)

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, 2023.

214

2023 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 20238.  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, 2023

Toll

operation

Rmb’000

Securities

operation

Rmb’000

Others

Rmb’000

Total

Rmb’000

Revenue – external customers

10,423,833

6,372,289

168,902

16,965,024

Segment profit

3,890,536

1,915,533

816,261

6,622,330

215

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
8.  OPERATING SEGMENTS (Continued)

Segment revenue and results (Continued)

For the year ended December 31, 2022 (restated)

Toll

operation

Rmb’000

Securities

operation

Rmb’000

Others

Rmb’000

Total

Rmb’000

Revenue – external customers

9,093,380

6,080,383

158,014

15,331,777

Segment profit

3,841,689

1,709,964

751,357

6,303,010

The accounting policies of the operating segments are the same as the Group’s accounting 
policies  described  in  Note  5.  Segment  profit  represents  the  profit  after  tax  of  each 
operating segment. This is the measure reported to the chief operating decision maker for 
the purposes of resource allocation and performance assessment.

Segment assets and liabilities

The  following  is  an  analysis  of  the  Group’s  assets  and  liabilities  by  reportable  and 
operating segment:

Segment assets

Segment liabilities

12/31/2023

12/31/2022

01/01/2022

12/31/2023

12/31/2022

01/01/2022

Rmb’000

Rmb’000

Rmb’000

Rmb’000

Rmb’000

Rmb’000

(Restated)

(Restated)

(Restated)

(Restated)

51,395,419

43,815,803

46,150,339

(29,473,199)

(31,160,980)

(35,080,942)

146,103,622

137,584,981

125,941,428

(117,199,395)

(109,660,591)

(101,422,949)

10,147,894

9,373,763

8,897,569

(656,095)

(739,629)

(858,535)

Toll operation

Securities operation

Others

Total segment assets (liabilities)

207,646,935

190,774,547

180,989,336

(147,328,689)

(141,561,200)

(137,362,426)

Goodwill

86,867

86,867

86,867

–

–

–

Consolidated assets (liabilities)

207,733,802

190,861,414

181,076,203

(147,328,689)

(141,561,200)

(137,362,426)

Segment  assets  and  segment  liabilities  represent  the  assets  and  liabilities  of  the 
subsidiaries operating in the respective reportable and operating segment.

216

2023 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2023 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
8.  OPERATING SEGMENTS (Continued)

Other segment information

Amounts included in the measure of segment profit/loss or segment assets:

For the year ended December 31, 2023

Income tax expense

Interest income from financial institutions

Toll

operation

Rmb’000

853,149

359,558

Securities

operation

Rmb’000

376,059

–

Interest expenses

1,141,766

940,158

Others

Rmb’000

–

1,128

22,205

Total

Rmb’000

1,229,208

360,686

2,104,129

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

Interests in joint ventures

Share of profit of associates

Share of profit of joint ventures

Net gains arising from financial assets  

–

60

2,926,969

1,497,891

145,725

107,046

at FVTPL

–

1,438,760

Gain on changes in fair value in respect  

of the derivative component of 

convertible bond

Additions to non-current assets (Note)

Depreciation and amortisation

280,620

3,014,776

3,408,625

–

368,876

276,039

2,345

(556)

–

168

2,345

(328)

703,957

7,860,129

11,491,055

–

77,998

–

–

832,524

–

–

–

121,169

20,379

1,497,891

1,056,247

107,046

1,438,760

280,620

3,504,821

3,705,043

217

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
8.  OPERATING SEGMENTS (Continued)

Other segment information (Continued)

For the year ended December 31, 2022 (restated)

Income tax expense

Interest income from financial institutions

Toll

operation

Rmb’000

638,475

143,565

Securities

operation

Rmb’000

395,486

–

Interest expenses

1,037,282

828,543

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

Interests in joint ventures

Share of profit of associates

Share of profit of joint ventures

Net gains arising from financial assets  

–

26

2,267,377

440,345

46,135

49,771

(1,521)

1,352

668,480

–

–

(30,138)

736,089

at FVTPL

–

744,503

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

31,951

1,476,663

3,425,950

1,881,262

–

285,226

295,510

–

Note:  Non-current assets excluded financial instruments and deferred tax assets.

218

Others

Rmb’000

5,090

706

28,569

Total

Rmb’000

1,039,051

144,271

1,894,394

–

101

(1,521)

1,479

7,123,784

10,059,641

–

–

–

–

30,771

36,292

–

440,345

752,086

49,771

744,503

31,951

1,792,660

3,757,752

1,881,262

2023 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2023 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
8.  OPERATING SEGMENTS (Continued)

Revenue from major services

An analysis of the Group’s revenue, net of discounts and taxes, for the year is as follows:

Toll operation revenue

Commission and fee income from securities operation

Interest income from securities operation

Hotel and catering revenue

Revenue from PPP project

Geographical information

Year ended

12/31/2023

Rmb’000

10,423,833

3,919,889

2,452,400

124,072

44,830

Year ended

12/31/2022

Rmb’000

(Restated)

9,093,380

3,689,947

2,390,436

88,143

69,871

16,965,024

15,331,777

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,  2023  and  2022,  there  was  no  individual  customer 
with sales over 10% of the total revenue of the Group.

219

 
 
 
 
 
 
 
 
 
 
 
 
9.  SECURITIES INVESTMENT GAINS

Net gains arising from financial assets at FVTPL

Net losses arising from debt instruments at FVTOCI

Net losses arising from derivative financial instruments

Net gains/(losses) arising from financial liabilities at FVTPL

Year ended

12/31/2023

Rmb’000

1,438,760

(56)

(414,979)

1,235

1,024,960

10.  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

Exchange losses, net

Gains/(losses) on commodity trading, net (Note ii)

Management fee income

Government subsidy

Gain arising from deemed disposal of associates

Gain on disposal of assets

Gain on disposal of a subsidiary

Others

Notes:

Year ended

12/31/2023

Rmb’000

360,686

73,264

280,620

(143,902)

131,359

23,195

57,476

–

1,579

–

123,593

907,870

Year ended

12/31/2022

Rmb’000

744,503

–

(4,770)

(59,999)

679,734

Year ended

12/31/2022

Rmb’000

(Restated)

144,271

73,431

31,951

(229,412)

(37,237)

13,777

74,537

22,062

7,333

1,881,262

120,776

2,102,751

(i) 

Rental income included contingent rent of Rmb1,230,000 (2022: Rmb1,175,000) recognised during the year.

The  income  on  commodity  trading  amounted  to  Rmb11,899,707,000  (2022:  Rmb11,616,371,000)  with  the  cost 
of Rmb11,768,348,000 (2022: Rmb11,653,608,000). 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 Rmb 
1,303,882,000 (2022: Rmb603,909,000) as of December 31, 2023.

(ii) 

220

2023 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2023 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
11.  IMPAIRMENT  LOSSES  UNDER  EXPECTED  CREDIT  LOSS 

MODEL, NET OF REVERSAL

Impairment losses recognised/(reversed) on:

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

12.  FINANCE COSTS

Bank and other borrowings

Short-term financing note payable

Bonds payable

Convertible Bonds

Lease liabilities

Year ended

12/31/2023

Rmb’000

Year ended

12/31/2022

Rmb’000

(Restated)

(328)

21,503

2,345

6,237

867

30,624

1,479

19,953

(1,521)

(9,234)

1,108

11,785

Year ended

12/31/2023

Rmb’000

786,015

95,425

787,671

412,301

22,717

Year ended

12/31/2022

Rmb’000

(Restated)

876,132

103,977

767,335

123,880

23,070

2,104,129

1,894,394

221

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
13.  PROFIT BEFORE TAX

The Group’s profit before tax has been arrived at after charging:

Year ended

12/31/2023

Rmb’000

Year ended

12/31/2022

Rmb’000

(Restated)

814,910

148,932

604,165

133,805

2,650,098

2,943,759

91,103

3,705,043

2,854,601

291,685

3,146,286

11,270

5,274

13,711

76,023

3,757,752

2,801,907

267,318

3,069,225

10,732

1,906

6,898

Year ended

12/31/2023

Rmb’000

1,492,507

(263,299)

1,229,208

Year ended

12/31/2022

Rmb’000

(Restated)

1,081,139

(42,088)

1,039,051

Depreciation of property, plant and equipment  

(included in operating costs and administrative expenses)

Depreciation of right-of-use assets

Amortisation of expressway operating rights  

(included in operating costs)

Amortisation of other intangible assets  

(included in operating costs and administrative expenses)

Total depreciation and amortisation

Staff costs (including directors and supervisors):

– Wages, salaries and bonuses

– Pension scheme contributions

Auditors’ remuneration

Loss on disposal of property, plant and equipment

Allowance for write-down of inventories

14.  INCOME TAX EXPENSE

Current tax:

PRC Enterprise Income Tax (“EIT”)

Deferred tax (Note 47)

222

2023 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2023 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
14.  INCOME TAX EXPENSE (Continued)

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% (2022: 25%)

Tax effect of share of profit of associates

Tax effect of share of profit of joint ventures

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

12/31/2023

Rmb’000

7,851,538

1,962,885

(264,062)

(26,762)

71,925

(482,237)

186,775

(219,316)

Year ended

12/31/2022

Rmb’000

(Restated)

7,342,061

1,835,515

(188,022)

(12,443)

112,442

(122,620)

34,454

(620,275)

Income tax expense for the year

1,229,208

1,039,051

223

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
15.  DIRECTORS’, SUPERVISORS’ AND SENIOR MANAGEMENTS’ 

EMOLUMENTS

The  emoluments  paid  or  payable  to  each  of  the  11  (2022:  10)  directors  and  7  (2022:  5) 
supervisors are as follows:

Yu

Yuan

Chen

Zhihong@

Yingjie^ Ninghui@

Wu

Wei@

Li

Yang

Fan

Huang

Jin

Pei

Lee

Chen

Zheng

He

Lu

Wu

Wang

Li

Lu

Wei@

Xudong^

Ye^ Jianzhang^ Chaoyang^ Ker-wei* Wai Tsang*

Bin*

Ruchun#

Meiyun#

Xinghai# Qingwang#

Yubing#

Yuan# Wenwei#

Total

Rmb’000 Rmb’000 Rmb’000 Rmb’000 Rmb’000 Rmb’000 Rmb’000 Rmb’000 Rmb’000 Rmb’000 Rmb’000 Rmb’000 Rmb’000 Rmb’000 Rmb’000 Rmb’000 Rmb’000 Rmb’000 Rmb’000 Rmb’000

(Note i)

(Note ii)

(Note iii)

(Note iv)

(Note v)

(Note vi)

(Note vii)

(Note viii)

(Note ix)

(Note x)

2023

Fees

Salaries, allowances and 

benefits in kind

Bonuses paid and payable

Pension scheme contributions

Directors’ fee

Total emoluments

2022

Fees

Salaries, allowances and 

benefits in kind

Bonuses paid and payable

Pension scheme contributions

Directors’ fee

Total emoluments

–

–

–

–

–

–

–

–

–

–

–

115

–

–

377

667

18

–

187

–

13

–

115

1,062

200

210

443

19

–

672

420

716

37

–

1,173

–

–

–

–

–

80

199

10

–

289

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

230

230

–

–

–

223

223

–

–

–

230

230

–

–

–

223

223

–

–

–

80

80

–

–

–

81

81

2

–

–

–

2

–

–

–

–

–

24

–

–

–

24

9

–

–

–

9

–

–

–

–

–

–

–

–

–

–

7

–

–

–

7

6

–

–

–

6

–

–

–

–

–

–

–

–

–

-

–

–

–

–

–

–

–

–

–

-

–

–

–

–

–

–

–

–

–

-

677

981

41

540

2,239

645

1,159

56

527

2,387

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.

@ 

^ 

* 

# 

224

2023 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2023 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
15.  DIRECTORS’, SUPERVISORS’ AND SENIOR MANAGEMENTS’ 

EMOLUMENTS (Continued)

Notes:

(i) 

Resigned on August 23, 2023.

(ii) 

Appointed as the chairman on August 23, 2023; Redesignated as non-executive director on September 7, 2023.

(iii) 

Resigned on September 27, 2023.

(iv) 

Appointed on September 27, 2023.

(v) 

Appointed on October 13, 2023.

(vi) 

Appointed on December 22, 2022.

(vii) 

Resigned on December 22, 2022.

(viii)  Resigned on June 9, 2023.

(ix) 

Appointed on June 9, 2023; Resigned on September 27, 2023.

(x) 

Appointed on September 27, 2023.

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.

225

15.  DIRECTORS’, SUPERVISORS’ AND SENIOR MANAGEMENTS’ 

EMOLUMENTS (Continued)

The emoluments paid or payable to each of the other 9 (2022: 8) senior managements are as 
follows:

Zheng

Zhang

Wang

Li

Wu

Hui

Xiuhua

Bingjiong

Wei Xiangyang

Ruan

Liya

Ma 

Zhao

Han

Ting Dongquan

Jinghua

Total

Rmb'000 Rmb'000 Rmb'000 Rmb'000 Rmb'000 Rmb'000 Rmb'000 Rmb'000 Rmb'000 Rmb'000

(Note i)

(Note ii)

(Note iii)

(Note iv)

Year ended December 31, 2023

Salaries, allowances and benefits in kind

Bonuses paid and payable

Pension scheme contributions

Total emoluments

Year ended December 31, 2022

Salaries, allowances and benefits in kind

Bonuses paid and payable

Pension scheme contributions

Total emoluments

320

589

38

947

357

559

37

953

320

714

38

320

673

37

1,072

1,030

357

668

37

357

614

37

240

597

28

865

357

804

37

320

694

37

320

711

37

1,051

1,068

357

614

37

357

757

37

1,062

1,008

1,198

1,008

1,151

213

661

25

899

357

325

37

719

320

564

38

922

213

–

16

229

159

–

9

168

–

–

–

–

2,532

5,203

287

8,022

2,712

4,341

275

7,328

Notes:

(i) 

Appointed as executive director on October 13, 2023. The emoluments disclosed above include those services 
rendered by Mr. Li Wei as senior management from January 1, 2022 to October 12, 2023.

(ii) 

Resigned on August 2, 2023.

(iii) 

Appointed on May 26, 2022.

(iv) 

Appointed on October 7, 2023.

Bonuses  paid  to  senior  managements  are  performance-rated  and  are  determined  by  the 
board of directors.

No  senior  management  waived  any  emoluments  and  no  incentive  was  paid  to  any  senior 
management as an inducement to join the Company and no compensation for loss of office 
was paid to any senior management, past senior management during both years. Bonuses 
are determined by reference to the individual performance of the senior managements.

226

2023 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2023 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
16.  EMPLOYEES’ EMOLUMENTS

The emoluments of the five highest paid individuals in the Group are as follows:

Salaries, allowances and benefits in kind

Bonuses paid and payable (Note)

Pension scheme contributions

Year ended

12/31/2023

Rmb’000

15,036

42,737

530

58,303

Year ended

12/31/2022

Rmb’000

17,353

42,818

508

60,679

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, 2023 and 2022.

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.

227

 
 
 
 
 
 
 
 
 
 
 
 
16.  EMPLOYEES’ EMOLUMENTS (Continued)

Their emoluments are within the following bands:

HK$9,500,001 to HK$10,000,000 (equivalent to Rmb8,608,901 

(2022: Rmb8,486,351) to Rmb9,062,000 (2022: Rmb8,933,000))

HK$10,000,001 to HK$10,500,000 (equivalent to Rmb9,062,001 

(2022: Rmb8,933,001) to Rmb9,515,100 (2022: Rmb9,379,650))

HK$12,000,001 to HK$12,500,000 (equivalent to Rmb10,874,401 

(2022: Rmb:10,719,601) to Rmb11,327,500 (2022: Rmb:11,166,250)

HK$12,500,001 to HK$13,000,000 (equivalent to Rmb11,327,501  

(2022: Rmb11,166,251) to Rmb11,780,600 (2022: Rmb11,612,900))

HK$13,000,001 to HK$13,500,000 (equivalent to Rmb11,780,601 

(2022: Rmb11,612,901) to Rmb12,233,700 (2022: Rmb12,059,550))

HK$13,500,001 to HK$14,000,000 (equivalent to Rmb12,233,701 

(2022: Rmb12,059,551) to Rmb12,686,800 (2022: Rmb12,506,200))

HK$15,500,001 to HK$16,000,000 (equivalent to Rmb13,593,001  

(2022: Rmb13,846,151) to Rmb14,499,200 (2022: Rmb14,292,800))

HK$17,000,001 to HK$17,500,000 (equivalent to Rmb15,405,401 

(2022: Rmb15,186,101) to Rmb15,858,500 (2022: Rmb15,632,750))

HK$17,500,001 to HK$18,000,000 (equivalent to Rmb15,858,501 

(2022: Rmb15,632,751) to Rmb16,311,600 (2022: Rmb16,079,400))

No. of individuals

Year ended

12/31/2023

Year ended

12/31/2022

1

1

–

–

1

1

–

–

1

5

1

–

1

1

–

–

1

1

–

5

228

2023 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2023 
 
 
 
 
 
 
 
 
 
 
 
17.  DIVIDENDS

Year ended

12/31/2023

Rmb’000

Year ended

12/31/2022

Rmb’000

Dividends recognised as distribution during the year:

2022 – Rmb37.5 cents (2022: 2021 – Rmb37.5 cents)

1,628,668

1,628,668

Dividend  of  Rmb32.0  cents  per  share  in  respect  of  the  year  ended  December  31,  2023 
(2022:  dividend  of  Rmb37.5  cents  per  share  in  respect  of  the  year  ended  December 
31,  2022)  in  the  total  amount  of  Rmb1,917,919,000  (2022:  Rmb1,628,668,000)  has  been 
proposed  by  the  Directors  and  is  subject  to  approval  by  the  shareholders  in  the  annual 
general meeting.

18.  EARNINGS PER SHARE

The  calculation  of  the  basic  and  diluted  earnings  per  share  attributable  to  the  owners  of 
the Company is based on the following data:

Earnings figures are calculated as follows:

Profit for the year attributable to owners of the Company

Earnings for the purpose of basic earnings per share

Effect of dilutive potential ordinary shares arising from convertible bond:

Interest expense

Exchange loss (net of income tax)

Gain on changes in fair value on derivative component

Adjustment to the share of profit of subsidiaries based  

Year ended

12/31/2023

Rmb’000

5,223,679

5,223,679

228,084

59,700

(280,620)

Year ended

12/31/2022

Rmb’000

(Restated)

5,178,666

5,178,666

68,617

27,805

(31,951)

on dilution of their earnings per share

(58,348)

(16,076)

Earnings for the purpose of diluted earnings per share

5,172,495

5,227,061

229

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
18.  EARNINGS PER SHARE (Continued)

Number of shares

Weighted average number of ordinary shares for the purpose of  

basic earnings per share (Note)

Effect of dilutive potential ordinary shares arising from convertible bond

Weighted average number of ordinary shares for the purpose of diluted 

Year ended

12/31/2023

’000

Year ended

12/31/2022

’000

(Restated)

4,624,765

286,612

4,553,764

271,284

earnings per share

4,911,377

4,825,048

Note:  During the year ended December 31, 2023, the Group offered rights issue to its existing Domestic share and H 

share  shareholders,  respectively.  As  the  price  of  share  was  below  the  market  price  at  the  time  of  rights  issue, 

there were bonus elements for rights issue and the weighted average number of ordinary shares were adjusted 

retrospectively. As a result, the weighted average number of ordinary shares and the basic earnings per share 

for the year ended December 31, 2022 were restated.

230

2023 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2023 
 
 
 
 
 
 
 
 
 
 
 
Communication

Machinery

Hotel

Rmb’000

Ancillary

and signaling

facilities

Rmb’000

equipment

Rmb’000

Motor

vehicles

and

Construction

equipment

in progress

Total

Rmb’000

Rmb’000

Rmb’000

Rmb’000

19.  PROPERTY, PLANT AND EQUIPMENT

Leasehold

land and

buildings

Rmb’000

2,388,307

32,979

2,421,286

398

20,785

(15,956)

(385,362)

COST

At January 1, 2022 (originally stated)

Merger accounting restatement

At January 1, 2022 (restated)

Additions (restated)

Transfer (restated)

Disposals (restated)

Disposal of a subsidiary

854,136

–

2,009,156

290,222

2,758,218

692,352

854,136

2,299,378

3,450,570

–

–

(1,495)

–

113,232

716,784

(59,307)

(97,286)

126,041

198,031

(75,930)

(295,452)

At December 31, 2022 (restated)

2,041,151

852,641

2,972,801

3,403,260

Additions

Transfer

Disposals

313,755

928

–

–

–

(705)

13,555

443,993

58,627

208,277

–

(123,158)

At December 31, 2023

2,355,834

851,936

3,430,349

3,579,979

DEPRECIATION AND IMPAIRMENT

At January 1, 2022 (originally stated)

Merger accounting restatement

At January 1, 2022 (restated)

Provided for the year (restated)

Disposals (restated)

Disposal of a subsidiary

At December 31, 2022 (restated)

Provided for the year

Disposals

At December 31, 2023

CARRYING VALUES

At December 31, 2023

At December 31, 2022 (restated)

At January 1, 2022 (restated)

955,796

3,444

959,240

79,006

(6,788)

(164,473)

866,985

131,736

–

227,592

–

227,592

27,879

(356)

–

255,115

27,856

(193)

762,519

121,595

884,114

143,113

(34,781)

(7,380)

985,066

261,728

–

1,913,762

539,918

2,453,680

231,297

(69,067)

(212,451)

2,403,459

260,653

(116,223)

998,721

282,778

1,246,794

2,547,889

1,357,113

1,174,166

1,462,046

569,158

597,526

626,544

2,183,555

1,987,735

1,415,264

999,117

999,801

996,890

The property, plant and equipment are mainly located in the PRC.

177,134

23,197

200,331

39,475

–

(15,655)

(11,547)

212,604

15,731

–

(16,092)

212,243

117,063

14,504

131,567

16,361

(14,826)

(4,976)

128,126

17,335

(15,897)

129,564

82,679

84,478

68,764

719,822

14,356

734,178

151,526

40,625

(40,712)

(9,542)

876,075

97,930

6,452

(20,530)

959,927

450,089

13,743

463,832

106,509

(36,308)

(3,333)

530,700

115,602

(19,127)

627,175

332,752

345,375

270,346

539,667

151,317

9,446,440

1,204,423

690,984

10,650,863

1,067,073

(976,225)

–

(58,087)

1,497,745

–

(209,055)

(857,276)

723,745

11,082,277

613,552

(659,650)

1,113,150

–

–

(160,485)

677,647

12,034,942

–

–

–

–

–

–

–

–

–

–

677,647

723,745

690,984

4,426,821

693,204

5,120,025

604,165

(162,126)

(392,613)

5,169,451

814,910

(151,440)

5,832,921

6,202,021

5,912,826

5,530,838

231

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
20.  RIGHT-OF-USE ASSETS

COST

At January 1, 2023

Addition

Decrease

At December 31, 2023

DEPRECIATION

At January 1, 2023

Addition

Decrease

At December 31, 2023

CARRYING VALUES

At December 31, 2023

At January 1, 2023

Expense relating to short-term leases

Total cash outflow for leases

Leasehold

lands

Rmb’000

Leased

properties

Rmb’000

221,267

312,255

–

533,522

35,214

21,402

–

56,616

476,906

186,053

752,110

153,034

(77,735)

827,409

316,210

127,530

(74,262)

369,478

457,931

435,900

Total

Rmb’000

973,377

465,289

(77,735)

1,360,931

351,424

148,932

(74,262)

426,094

934,837

621,953

12/31/2023

Rmb’000

6,458

159,678

12/31/2022

Rmb’000

3,593

154,671

232

2023 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2023 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
20.  RIGHT-OF-USE ASSETS (Continued)

Total  cash  outflow  for  leases  includes  payments  of  principle  and  interest  portion  of 
lease  liabilities,  short-term  leases  and  payments  of  lease  payments  on  or  before  lease 
commencement date (including leasehold lands).

The  Group  leases  various  offices  for  its  operations.  Lease  contracts  are  entered  into  for 
term  of  12  months  to  10  years.  Lease  terms  are  negotiated  on  an  individual  basis  and 
contain a wide range of different terms and conditions. In determining the  lease term and 
assessing  the  length  of  the  non-cancellable  period,  the  Group  applies  the  definition  of  a 
contract and determines the period for which the contract is enforceable.

The  amounts  of  the  Group’s  lease  liabilities  and  interest  expense  of  lease  liabilities  are 
disclosed  in  Note  46  and  Note  12,  respectively.  For  the  year  ended  December  31,  2023, 
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,  2023,  the  Group  did  not  enter  into  any  lease  that  is  not  yet 
commenced.

233

21.  EXPRESSWAY OPERATING RIGHTS

COST

At January 1, 2022 (originally stated)

Merger accounting restatement

At January 1, 2022 (restated)

Disposals (restated)

Disposal of a subsidiary

At December 31, 2022 (restated)

Disposals

At December 31, 2023

AMORTISATION

At January 1, 2022 (originally stated)

Merger accounting restatement

At January 1, 2022 (restated)

Charge for the year (restated)

Disposals (restated)

Disposal of a subsidiary

At December 31, 2022 (restated)

Charge for the year

Disposals

At December 31, 2023

CARRYING VALUES

At December 31, 2023

At December 31, 2022 (restated)

At January 1, 2022 (restated)

234

Rmb’000

59,798,764

7,974,976

67,773,740

(80,685)

(7,967,683)

59,725,372

(28,059)

59,697,313

33,745,508

3,774,528

37,520,036

2,943,759

(41,246)

(4,371,920)

36,050,629

2,650,098

(16,324)

38,684,403

21,012,910

23,674,743

30,253,704

2023 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2023 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
21.  EXPRESSWAY OPERATING RIGHTS (Continued)

The  above  expressway  operating  rights  were  granted  by  the  Zhejiang  Provincial 
Government  and  Anhui  Provincial  Government  for  a  period  ranging  from  25  to  30  years. 
During  the  expressway  concessionary  period,  the  Group  has  the  rights  of  operations  and 
management  of  Shanghai-Hangzhou-Ningbo  Expressway,  Shangsan  Expressway,  Jinhua 
Section  of  the  Ningbo-Jinhua  Expressway,  Hanghui  Expressway,  Huihang  Expressway, 
HuangQuNan  Expressway  and  Zhoushan  Bay  Bridge,  LongLi  Expressway  and  LiLong 
Expressway, Zhajiasu Expressway and the toll-collection rights thereof.

The  Group  is  required  to  manage  and  operate  the  expressways  in  accordance  with  the 
regulations  promulgated  by  the  Ministry  of  Communication  and  relevant  government 
authorities.  Upon  the  end  of  the  respective  concession  service  periods,  the  toll 
expressways  and  their  toll  station  facilities  without  residual  value,  will  be  returned  to  the 
grantors  at  nil  consideration.  The  expressway  operating  rights  were  amortised  using  the 
straight-line basis over the useful life attributable to the Group.

22.  GOODWILL

COST AND CARRYING VALUES

At January 1, 2022, December 31, 2022 and December 31, 2023

Particulars regarding impairment testing on goodwill are disclosed in Note 24.

Rmb’000

86,867

235

 
 
 
 
 
 
23.  OTHER INTANGIBLE ASSETS

Securities/

Customer

futures

Trading

bases

firm licenses

seats

Software

Total

Rmb’000

Rmb’000

Rmb’000

Rmb’000

Rmb’000

COST

At January 1, 2022 (originally stated)

163,057

63,083

3,480

431,255

660,875

Merger accounting restatement

–

–

–

319

319

At January 1, 2022 (restated)

163,057

63,083

3,480

Additions (restated)

Disposals

–

–

–

–

–

–

At December 31, 2022 (restated)

163,057

63,083

3,480

Additions

Disposals

–

–

–

–

–

–

431,574

119,917

661,194

119,917

(40)

(40)

551,451

132,087

781,071

132,087

(5,167)

(5,167)

At December 31, 2023

163,057

63,083

3,480

678,371

907,991

AMORTISATION

At January 1, 2022 (originally stated)

Merger accounting restatement

At January 1, 2022 (restated)

Charge for the year (restated)

Disposals

At December 31, 2022 (restated)

Charge for the year

Disposals

At December 31, 2023

CARRYING VALUES

At December 31, 2023

At December 31, 2022 (restated)

At January 1, 2022 (restated)

113,525

–

113,525

12,386

–

125,911

12,382

–

138,293

24,764

37,146

49,532

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

244,000

357,525

163

163

244,163

63,637

357,688

76,023

(40)

(40)

307,760

433,671

78,721

(5,167)

91,103

(5,167)

381,314

519,607

63,083

63,083

63,083

3,480

3,480

3,480

297,057

388,384

243,691

347,400

187,411

303,506

236

2023 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2023 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
23.  OTHER INTANGIBLE ASSETS (Continued)

The  securities/futures  firm  licenses  of  the  securities  operation  are  considered  by  the 
management of the Group to have indefinite useful lives because they can be renewed at 
minimal cost.

The  trading  seats  of  the  securities  operation  are  considered  by  the  management  of  the 
Group  to  have  an  indefinite  useful  life  because  there  is  no  economic  or  regulatory  limit  to 
their useful life.

Software are amortised on a straight-line basis over three to five years.

Particulars  of  the  impairment  testing  on  intangible  assets  with  indefinite  useful  lives  are 
disclosed in Note 24.

237

24.  IMPAIRMENT  TESTING  ON  GOODWILL  AND  INTANGIBLE 

ASSETS WITH INDEFINITE USEFUL LIVES

For the purposes of impairment testing, goodwill and other intangible assets with indefinite 
useful  lives  set  out  in  Notes  22  and  23  have  been  allocated  to  four  individual  cash 
generating  units  (“CGUs”),  comprising  two  subsidiaries  in  toll  operation  segment  and 
two  subsidiaries  in  securities  operation  segment.  The  carrying  amounts  of  goodwill  and 
other intangible assets as at December 31, 2023 and 2022 allocated to these units are as 
follows:

Goodwill

firm licenses

Trading seats

Securities/futures 

12/31/2023

12/31/2022

12/31/2023

12/31/2022

12/31/2023

12/31/2022

Rmb’000

Rmb’000

Rmb’000

Rmb’000

Rmb’000

Rmb’000

Toll operation

– Jiaxing Branch of Zhejiang 

LongLiLiLong Expressway Co., Ltd. 

(“Jiaxing Branch”) (Note)

75,137

75,137

– Zhejiang Shangsan Expressway 

Co.,Ltd. (“Shangsan Co”)

10,335

10,335

Securities operation

– Zheshang Securities

– Zheshang Futures

–

1,395

–

1,395

86,867

86,867

–

–

51,783

11,300

63,080

–

–

51,783

11,300

63,083

–

–

2,080

1,400

3,480

–

–

2,080

1,400

3,480

Note:  Zhejiang  Jiaxing  Expressway  Co.,  Ltd.  was  absorbed  and  merged  by  LongLiLiLong  Co.  in  2022,  and  its  main 

assets and business continued to exist under Jiaxing branch.

238

2023 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2023 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
24.  IMPAIRMENT  TESTING  ON  GOODWILL  AND  INTANGIBLE 

ASSETS WITH INDEFINITE USEFUL LIVES (Continued)

The  basis  of  the  recoverable  amounts  of  the  above  CGUs  and  their  major  underlying 
assumptions are summarised below:

Jiaxing Branch and Shangsan Co

The  recoverable  amounts  of  CGUs  of  Jiaxing  Branch  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  5 
years  (2022:  6  years)  and  7  years  (2022:  8  years)  for  Jiaxing  Branch  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  Branch’s  and 
Shangsan Co’s goodwill to exceed their aggregate recoverable amounts.

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%  (2022:  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,  2023  and  2022,  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.

239

25.  INTERESTS IN ASSOCIATES

Cost of investment in associates

Share of post-acquisition profit and other comprehensive income,  

net of dividends received

Fair value of listed investments (Note)

12/31/2023

Rmb’000

8,642,897

12/31/2022

Rmb’000

7,880,487

2,848,158

2,179,154

11,491,055

10,059,641

2,721,041

2,753,623

Note:  The  fair  value  of  the  listed  investments  is  determined  based  on  the  quoted  market  bid  price  multiplied  by  the 

quantity of shares held by the Group.

At December 31, 2023 and 2022, the Group had interests in the following associates:

Name of entities

structure

and operation

attributable to the Group

activities

Form of 

Place of 

Percentage of equity 

business 

registration 

interest and voting right 

Principal 

Zheshang Fund Management 

Corporate

The PRC

Co., Ltd. (“Zheshang Fund”) 

(Note i)

12/31/2023

12/31/2022

%

25

%

25

Asset fund 

management

Zhejiang Communications 

Corporate

The PRC

20.08

20.08

Finance and 

Investment Group Finance 

Co., Ltd. (“Zhejiang 

Communications Finance”) 

(Note ii)

investment

Yangtze United Financial Leasing 

Corporate

The PRC

10.61

10.61

Provision of 

Co., Ltd. (“Yangtze United 

Financial Leasing”) (Note iii)

financial leasing 

services

Zhejiang Zheshang Innovation 

Corporate

The PRC

40

40

Investment 

Capital Management Co., Ltd. 

(“Zheshang Innovation Capital 

Management”)

240

management and 

consulting

2023 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2023 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
25.  INTERESTS IN ASSOCIATES (Continued)

Name of entities

structure

and operation

attributable to the Group

activities

Form of 

Place of 

Percentage of equity 

business 

registration 

interest and voting right 

Principal 

Taiping Science and Technology 

Corporate

The PRC

Insurance Co., Ltd. (“Taiping 

Insurance”) (Note iv)

12/31/2023

12/31/2022

%

8.77

%

8.77

Science and 

technology 

related insurance

Pujiang JuJinFengAn Investment 

Partnership

The PRC

17.86

17.86

Investment 

Management LP (“FengAn 

Investment”) (Note v)

management

Zheshang FoF for Industry 

Partnership

The PRC

24.99

24.99

Investment 

Transformation and Upgrading 

LP (“Zheshang FoF”) (Note vi)

management and 

consulting

Zhejiang Concord Property 

Corporate

The PRC

45

45

Investment and 

Investment Co., Ltd. (“Zhejiang 

Concord Property”) (Note vii)

real estate 

development

Shanghai Rural Commercial Bank 

Corporate

The PRC

4.92

4.86 Commercial 

Co., Ltd. (“SRCB”) (Note viii)

Zhejiang Hangning Expressway 

Corporate

The PRC

Co., Ltd. (“Zhejiang Hangning”) 

(Note ix)

Zheshang Zhongtuo Zheqi Supply 

Corporate

The PRC

Chain Management (Zhejiang) 

Co., Ltd. (“Zhongtuo Zheqi”)

CICC-Shenjiahuhang Expressway 

Structured 

The PRC

asset-backed special program 

product

(“ABS Program”) (Note x)

Zhejiang Wenzhou YongTaiWen 

Corporate

The PRC

Expressway Co., Ltd. 

(“YongTaiWen Co”) (Note xi)

30

20

30

15

banking

30

Expressway

20

Supply Chain 

Management

30

Expressway

–

Expressway

All  of  the  above  associates  are  accounted  for  using  the  equity  method  in  these 
consolidated financial statements.

241

 
 
 
 
 
 
 
 
 
 
 
 
25.  INTERESTS IN ASSOCIATES (Continued)

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 

has received a consideration of Rmb207,000,000 accordingly.

As  at  December  31,  2023,  the  disposal  transaction  has  not  been  completed  and  the  refundable consideration 

of  Rmb207,000,000  (2022:  Rmb207,000,000)  in  respect  of  such  transfer  reversed  by  Zheshang  Securities  was 

included in other payables in Note 38.

The  Directors  consider  the  disposal  required  approval  by  China  Securities  Regulatory  Commission  and  equity 

transfer  registration,  which  was  a  lengthy  process  and  they  are  not  able  to  estimate  the  timing  when  and 

whether  such  approval  would  be  granted.  The  amount  of  deposit  received  would  be  refundable  to  Tonglian 

Capital if the transfer eventually cannot be completed.

(ii) 

The  Group  is  able  to  exercise  significant  influence  over  Zhejiang  Communications  Finance  because  it  has  the 

power to appoint one out of six directors of that company under the provisions stated in the Articles of Association 

of that company.

(iii) 

The  Group  is  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 is 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.

(v) 

As general partner and the executive partner of FengAn Investment, the management considers the Group has 

significant influence over the investees.

(vi) 

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.

242

2023 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 202325.  INTERESTS IN ASSOCIATES (Continued)

Notes: (Continued)

(vii) 

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.

(viii) 

The Group acquired 5,745,700 shares of SRCB and the percentage of entity interest in SRCB slightly increased 

from 4.86% to 4.92% during the year ended December 31, 2023. 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.

(xi) 

On  September  28,  2023,  the  Company  and  Communications  Group  entered  into  the  YongTaiWen  Equity 

Purchase  Agreement,  pursuant  to  which  the  Company  agreed  to  acquire  15%  equity  interest  in  Zhejiang 

Wenzhou  YongTaiWen  Expressway  Co.,  Ltd.  (“YongTaiWen  Co”)  at  the  consideration  of  RMB733,096,810.  The 

transaction  was  completed  on  October  26,  2023  upon  the  revision  of  Articles  of  Association  and  modification 

of business registration. The Group can exercise significant influence over YongTaiWen Co because it has the 

power to appoint one out of ten directors of that company under the provisions stated in the Articles of Association 

of that company.

243

25.  INTERESTS IN ASSOCIATES (Continued)

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.

12/31/2023

Rmb’000

897,252

6,700,583

(434,561)

(30,130)

12/31/2022

Rmb’000

492,302

7,413,984

(528,276)

(16,031)

Year ended

12/31/2023

Rmb’000

Year ended

12/31/2022

Rmb’000

1,767,704

1,477,813

486,599

486,599

486,599

214,630

207,838

207,838

207,838

215,887

Zhejiang Hangning 

Current assets

Non-current assets

Current liabilities

Non-current liabilities

Revenue

Profit from continuing operations

Profit for the year

Total comprehensive income for the year

Dividends received from the associate during the year

244

2023 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2023 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
25.  INTERESTS IN ASSOCIATES (Continued)

Zhejiang Hangning (Continued)

Reconciliation of the above summarised financial information to the carrying amount of the 
interest in Zhejiang Hangning recognised in the consolidated financial statements:

Net asset of the associate

Proportion of the Group’s ownership interest in Zhejiang Hangning

Carrying amount of the Group’s interest in Zhejiang Hangning

Zhejiang Communications Finance

Current assets

Non-current assets

Current liabilities

Non-current liabilities

Revenue

Profit from continuing operations

Profit for the year

Total comprehensive income for the year

Dividends received from the associate during the year

12/31/2023

Rmb’000

7,133,144

30.00%

2,139,943

12/31/2022

Rmb’000

7,361,979

30.00%

2,208,594

12/31/2023

Rmb’000

16,831,958

37,671,367

12/31/2022

Rmb’000

11,787,116

44,227,839

(45,912,020)

(47,913,360)

(29,137)

(43,834)

Year ended

12/31/2023

Rmb’000

Year ended

12/31/2022

Rmb’000

1,633,045

1,918,456

818,647

818,647

818,647

63,100

850,884

850,884

850,884

61,504

245

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
25.  INTERESTS IN ASSOCIATES (Continued)

Zhejiang Communications Finance (Continued)

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  

12/31/2023

Rmb’000

8,562,168

12/31/2022

Rmb’000

8,057,761

Communications Finance

20.08%

20.08%

Carrying amount of the Group’s interest in Zhejiang  

Communications Finance

1,719,283

1,617,998

Aggregate information of associates that are not individually material

The Group’s share of profit from continuing operations

The Group’s share of other comprehensive income/(loss)

The Group’s share of total comprehensive income

Year ended

12/31/2023

Rmb’000

745,883

86,812

832,695

Aggregate carrying amount of the Group’s interests in these associates

7,631,829

Year ended

12/31/2022

Rmb’000

518,878

(736)

518,142

6,233,049

246

2023 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2023 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
26.  INTERESTS IN JOINT VENTURES

Unlisted investment in joint ventures, at cost

Share of post-acquisition gain, net of dividends received

12/31/2023

Rmb’000

1,373,970

123,921

1,497,891

12/31/2022

Rmb’000

373,470

66,875

440,345

At December 31, 2023 and 2022, the Group had interest in the following joint venture:

Name of entity

Form of 

business 

structure

Place of 

Percentage of equity

registration 

 interest and voting right 

and operation

attributable to the Group

Principal activities

12/31/2023

12/31/2022

Zhejiang Shaoxing Shengxin 

Corporate

The PRC

Expressway Co., Ltd.  

(“Shengxin Co”)

Zhejiang Zhijiang Communications Corporate

The PRC

Holdings Co., Ltd. (Note i)

Note:

%

50

50

%

50 Management of the 

Shaoxing section of 

the Ningbo-Jinhua 

Expressway

–

Investment

(i) 

Zhejiang Zhijiang Communications Holdings Co., Ltd. (“Zhijiang Communications Holdings”) is a limited liability 

company  establish  in  the  PRC  on  November  28,  2023  by  the  Company  and  China  Merchants  Expressway 

Network & Technology Holdings Co., Ltd.

247

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
26.  INTERESTS IN JOINT VENTURES (Continued)

Summarised financial information in respect of each of the Group’s material joint venture is 
set  out  below.  The  summarised  financial  information  below  represents  amounts  shown  in 
the joint venture’s financial statements prepared in accordance with HKFRSs.

The  joint  ventures  are  accounted  for  using  the  equity  method  in  these  consolidated 
financial statements.

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  

12/31/2023

Rmb’000

577,991

1,480,906

(324,683)

(549,248)

12/31/2022

Rmb’000

134,330

1,463,019

(37,949)

(678,711)

188,584

133,463

(excluding trade and other payables and provisions)

(251,023)

(798)

Non-current financial liabilities  

(excluding trade and other payables and provisions)

(518,000)

(643,000)

Revenue

Profit for the year

Total comprehensive income for the year

Dividends received from the associate during the year

The above profit for the year includes the following:

Depreciation and amortisation

Interest income

Interest expense

Income tax expense

248

Year ended
12/31/2023

Rmb’000

550,786

164,277

164,277

50,000

Year ended

12/31/2022

Rmb’000

471,290

99,541

99,541

50,000

(186,572)

(185,821)

2,609

(22,785)

(55,285)

4,881

(34,287)

(33,052)

2023 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2023 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
26.  INTERESTS IN JOINT VENTURES (Continued)

Shengxin Co (Continued)

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

Carrying amount of the Group’s interest in Shengxin Co

Zhijiang Communications Holdings

Current assets

Non-current assets

Current liabilities

Non-current liabilities

12/31/2023

Rmb’000

1,184,966

50.00%

592,483

12/31/2023

Rmb’000

1,314,002

10,635,177

(1,231,653)

(6,558,000)

12/31/2022

Rmb’000

880,689

50.00%

440,345

12/31/2022

Rmb’000

–

–

–

–

12/31/2023

Rmb’000

12/31/2022

Rmb’000

The above amounts of assets and liabilities include the following:

Cash and cash equivalents

Current financial liabilities (excluding trade and 

other payables and provisions)

Non-current financial liabilities (excluding trade and 

other payables and provisions)

10,146

(274,976)

(5,808,000)

–

–

–

249

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
26.  INTERESTS IN JOINT VENTURES (Continued)

Zhijiang Communications Holdings (Continued)

Profit for the year

Total comprehensive income for the year

The above profit for the year includes the following:

Interest income

Year ended

12/31/2023

Rmb’000

Year ended

12/31/2022

Rmb’000

49,815

49,815

28

–

–

–

Reconciliation  of  the  above  summarised  financial  information  to  the  carrying  amount  of 
the  interest  in  Zhijiang  Communications  Holdings  recognised  in  the  consolidated  financial 
statements:

Net asset of Zhijiang Communications Holdings

Less: n on-controlling interests of Zhijiang Communications  

Holdings’ subsidiary

Proportion of the Group’s ownership interest in Zhijiang  

Communications Holdings

Carrying amount of the Group’s interest in Zhijiang  

Communications Holdings

12/31/2023

Rmb’000

4,159,526

(2,348,711)

1,810,815

50.00%

905,408

12/31/2022

Rmb’000

–

–

–

–

–

250

2023 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2023 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
27.  FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR 

LOSS

Financial assets mandatorily measured at FVTPL:

– Debt securities

– Equity securities (Note i, ii)

– Funds

– Other investments (Note iii)

Analysed as:

– Listed (Note iv)

– Unlisted

Analysed for reporting purposes as:

Current assets

Non-current assets

Notes:

12/31/2023

Rmb’000

12/31/2022

Rmb’000

25,464,795

33,061,869

3,875,559

8,564,248

4,014,038

1,977,229

6,991,819

1,968,466

41,918,640

43,999,383

11,498,377

30,420,263

41,918,640

41,729,113

189,527

41,918,640

7,520,937

36,478,446

43,999,383

43,789,944

209,439

43,999,383

(i) 

The  restricted  shares  with  a  legally  enforceable  restriction  that  prevents  the  Group  to  dispose  of  within  a 

specified period amounted to approximately Rmb57,860,000 as at December 31, 2023 (2022: Rmb270,990,000). 

The fair values of these securities have taken into account the relevant features including the restrictions.

(ii) 

As at December 31, 2023, the Group has entered into securities lending arrangement with clients that resulted 

in the transfer of financial assets at fair value through profit or loss with a total fair value of Rmb7,833,652 (2022: 

Rmb  20,755,531)  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.

251

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
27.  FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR 

LOSS (Continued)

Notes: (Continued)

(iv) 

Securities and funds traded on the Shanghai Stock Exchange and the Shenzhen Stock Exchange are included 

in the “Listed” category.

28.  DEBT  INSTRUMENTS  AT  FAIR  VALUE  THROUGH  OTHER 

COMPREHENSIVE INCOME

Analysed by type of issuers:

– Corporate entities (Note i,ii)

– Government (Note ii)

Analysed as:

– Listed(Note iii)

– Unlisted

Analysed for reporting purposes as:

Current assets

Non-current assets

Expected credit losses

Notes:

12/31/2023

Rmb’000

12/31/2022

Rmb’000

1,296,558

6,867,340

8,163,898

514,806

7,649,092

8,163,898

445,173

7,718,725

8,163,898

1,975

820,940

–

820,940

128,529

692,411

820,940

250,683

570,257

820,940

1,108

(i) 

It mainly comprises bonds and notes issued by corporates.

(ii) 

As  at  December  31,  2023,  the  fair  value  of  securities  of  the  Group  which  have  been  placed  as  collateral 

for  financial  assets  sold  under  repurchase  agreements  was  Rmb  5,397,901,000  (December  31,  2022: 

Rmb430,958,000).

(iii) 

Debt securities traded on stock exchanges are included in the “Listed” category.

252

2023 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2023 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
28.  DEBT  INSTRUMENTS  AT  FAIR  VALUE  THROUGH  OTHER 

COMPREHENSIVE INCOME (Continued)

The following table shows reconciliation of loss allowances that have been recognised for 
debt instruments at fair value through other comprehensive income.

As at January 1, 2023

Changes in the loss allowance:

– Charged to profit or loss

As at December 31, 2023

Lifetime ECL 

Lifetime ECL 

(not credit-

impaired)

Rmb’000

(credit-

impaired)

Rmb’000

–

–

–

–

–

–

12m ECL

Rmb’000

1,108

867

1,975

Total

Rmb’000

1,108

867

1,975

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.

As at December 31, 2023

Gross carrying amount

As at December 31, 2022

Gross carrying amount

Lifetime ECL 

Lifetime ECL 

(not credit-

impaired)

Rmb’000

(credit-

impaired)

Rmb’000

–

–

–

–

12m ECL

Rmb’000

8,163,898

820,940

Total

Rmb’000

8,163,898

820,940

253

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
29.  TRADE RECEIVABLES

Trade receivables

– contracts with customers

Less: Allowance for credit losses

Trade receivables (before allowance  

for credit losses) comprise:

Fellow subsidiaries

Third parties

12/31/2023

Rmb’000

12/31/2022

Rmb’000

(Restated)

01/01/2022

Rmb’000

(Restated)

837,226

(5,748)

831,478

19,520

817,706

837,226

569,232

(6,348)

562,884

15,663

553,569

569,232

480,998

(5,799)

475,199

22,921

458,077

480,998

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 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.

254

2023 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2023 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
29.  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

12/31/2023

Rmb’000

420,733

381,569

23,734

5,442

831,478

12/31/2022

Rmb’000

(Restated)

358,162

181,217

21,025

2,480

562,884

12/31/2023

Rmb’000

6,348

271

(599)

(272)

5,748

01/01/2022

Rmb’000

(Restated)

342,615

121,753

7,554

3,277

475,199

12/31/2022

Rmb’000

(Restated)

5,799

1,584

(105)

(930)

6,348

255

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
30.  LOANS TO CUSTOMERS ARISING FROM MARGIN FINANCING 

BUSINESS

Loans to margin clients

Less: Impairment allowance

12/31/2023

Rmb’000

19,948,786

(14,025)

12/31/2022

Rmb’000

17,568,948

(11,680)

19,934,761

17,557,268

The  Group  has  provided  customers  with  margin  financing  and  security  lending  for 
securities  transactions,  the  credit  facility  limits  to  margin  clients  are  determined  by  the 
discounted  market  value  of  the  pledged  securities  accepted  by  the  Group  or  the  market 
value of cash collaterals.

All  of  the  loans  to  margin  clients  which  are  secured  by  the  underlying  pledged  securities 
are  interest  bearing.  The  Group  maintains  a  list  of  approved  stocks  for  margin  lending  at 
a specified loan to collateral ratio. Any excess in the lending ratio will trigger a margin call 
which the customers have to make good of the shortfall. The Group has the right to process 
forced liquidation if the customer fails to make good of the shortfall within a short period of 
time.

As  at  December  31,  2023,  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  Rmb53,641,550,000  (2022:  Rmb50,528,176,000).  Cash  collateral  of  Rmb2,380,641,000 
(2022:  Rmb2,417,634,000)  received  from  clients  was  included  in  accounts  payable  to 
customers arising from securities business in Note 36.

No aged analysis is disclosed as in the opinion of the Directors, the aged analysis does not 
give additional value in view of the nature of business of securities margin financing.

The  following  table  shows  reconciliation  of  loss  allowances  that  has  been  recognised  for 
loans to customers arising from margin financing business.

256

2023 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2023 
 
 
 
 
 
 
 
 
 
 
 
30.  LOANS TO CUSTOMERS ARISING FROM MARGIN FINANCING 

BUSINESS (Continued)

As at January 1, 2022

– Transfer to 12m ECL

– Transfer to Lifetime ECL (not credit-

impaired)

– Charged to profit or loss

As at December 31, 2022

– Transfer to 12m ECL

– Transfer to Lifetime ECL (not credit-

impaired)

– Charged to profit or loss

As at December 31, 2023

Lifetime ECL 

Lifetime ECL 

(not credit-

impaired)

Rmb’000

(credit-

impaired)

Rmb’000

12m ECL

Rmb’000

Total

Rmb’000

8,634

53

(293)

821

9,215

89

(849)

(1,415)

7,040

1,388

(53)

293

(73)

1,555

(89)

849

2,595

4,910

3,178

13,200

–

–

(2,268)

910

–

–

1,165

2,075

–

–

(1,520)

11,680

–

–

2,345

14,025

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, 2023

Gross carrying amount

As at December 31, 2022

Gross carrying amount

Lifetime ECL 

(not credit-

Lifetime ECL 

12m ECL

Rmb’000

impaired)

(credit-impaired)

Total

Rmb’000

Rmb’000

Rmb’000

18,782,496

1,164,213

2,077

19,948,786

16,753,901

812,627

2,420

17,568,948

257

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
31.  OTHER RECEIVABLES AND PREPAYMENTS

Non-Current

Entrusted loan

Prepayments

Receivables from government cooperation projects

Current

Entrusted loan

Prepayments

Trading deposits (Note i)

Receivables from government cooperation projects

Others

Note:

12/31/2023

Rmb’000

–

12,350

842,123

854,473

12/31/2022

Rmb’000

(Restated)

–

332,431

2,621,739

150,320

246,428

12/31/2022

Rmb’000

180,000

–

938,363

1,118,363

01/01/2022

Rmb’000

(Restated)

–

147,135

876,744

152,805

202,792

3,350,918

1,379,476

12/31/2023

Rmb’000

180,151

431,595

4,951,608

148,270

278,916

5,990,540

(i) 

Trading deposits mainly represent over-the-counter option deposit and equity swap deposit.

258

2023 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2023 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
32.  FINANCIAL ASSETS HELD UNDER RESALE AGREEMENTS

Analysed by collateral type:

Bonds

Stock securities

Less: Impairment allowance

Analysed by market:

Inter bank market

Shanghai/Shenzhen Stock Exchange

Less: Impairment allowance

Analysed for reporting purposes as:

Current assets

Non-current assets

12/31/2023

Rmb’000

12/31/2022

Rmb’000

3,590,327

4,256,006

7,846,333

(116,931)

7,729,402

186,805

7,659,528

7,846,333

(116,931)

7,729,402

7,729,402

–

7,729,402

2,466,160

3,919,744

6,385,904

(110,694)

6,275,210

8,000

6,377,904

6,385,904

(110,694)

6,275,210

6,086,210

189,000

6,275,210

The  collaterals include both equity and debt securities listed in the PRC.  As at December 
31,  2023,  the  fair  value  of  equity  securities  and  debt  securities  held  as  collaterals 
was  Rmb11,215,727,000  (2022:  Rmb10,837,092,000)  and  Rmb3,844,169,000  (2022: 
Rmb3,362,016,000), respectively.

The  following  table  shows  reconciliation  of  loss  allowances  that  has  been  recognised  for 
financial assets held under resale agreements.

259

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
32.  FINANCIAL  ASSETS  HELD  UNDER  RESALE  AGREEMENTS 

(Continued)

As at January 1, 2022

– Transfer to lifetime ECL (not credit-

impaired)

– Transfer to 12m ECL

– Charged to profit or loss

As at December 31, 2022

– Transfer to lifetime ECL (not credit-

impaired)

– Charged to profit or loss

As at December 31, 2023

Lifetime ECL 

Lifetime ECL 

(not credit-

impaired)

Rmb’000

(credit-

impaired)

Rmb’000

Total

Rmb’000

3,090

96,412

119,928

2,515

(2,888)

2,743

5,460

155

3,793

9,408

–

–

(1,941)

94,471

–

–

–

–

(9,234)

110,694

–

6,237

94,471

116,931

12m ECL

Rmb’000

20,426

(2,515)

2,888

(10,036)

10,763

(155)

2,444

13,052

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 

Lifetime ECL 

(not credit-

impaired)

Rmb’000

(credit-

impaired)

Rmb’000

12m ECL

Rmb’000

Total

Rmb’000

7,117,112

634,750

94,471

7,846,333

5,925,679

365,754

94,471

6,385,904

As at December 31, 2023

Gross carrying amount

As at December 31, 2022

Gross carrying amount

260

2023 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2023 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
33.  BANK BALANCES AND CLEARING SETTLEMENT FUND HELD 

ON BEHALF OF CUSTOMERS

For  the  Group’s  securities  operation  carried  out  by  Zheshang  Securities,  the  Group 
receives  and  holds  money  deposited  by  customers  (including  other  institutions).  These 
customers’  money  is  maintained  in  one  or  more  segregated  bank  accounts.  The  Group 
has  recognised  the  corresponding  accounts  payable  to  respective  customers  and  other 
institutions.

Bank  balances  and  clearing  settlement  fund  held  on  behalf  of  customers  carry  interest  at 
market rates which range from 0.3% to 5.90% (2022: 0.3% to 5.45%) 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, 2023

As at December 31, 2022

HKD

Rmb’000

282,732

190,674

USD

Rmb’000

794,934

289,578

261

 
 
 
 
 
 
 
 
 
 
 
 
34.  BANK BALANCES, CLEARING SETTLEMENT FUND, DEPOSITS 

AND CASH

Non-Current

Time deposits

Current

12/31/2023

Rmb’000

3,048,619

12/31/2022

Rmb’000

–

Time deposits with original maturity over three months

Restricted bank balances and cash (Note)

12/31/2023

Rmb’000

4,268,560

100,631

12/31/2022

Rmb’000

(Restated)

203,632

70,179

01/01/2022

Rmb’000

(Restated)

413,843

132,090

Unrestricted bank balances and cash

23,630,440

22,381,227

16,213,130

Time deposits with original maturity of less than three 

months

200,000

1,608,938

1,000,867

Cash and cash equivalents

23,830,440

23,990,165

17,213,997

28,199,631

24,263,976

17,759,930

Note: 

The  restricted  bank  deposits  include  the  bank  acceptance  deposits,  fund  management  risk  reserve, 

collective asset management schemes deposits and margin deposits.

Bank balances carry interest at the average market rate is 0.35% (2022: 0.41%) per annum. 
Time deposits carry interest at fixed rates ranging from 1.95% to 4.89% (2022: 3% to 5.19%) 
per annum.

262

2023 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2023 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
34.  BANK BALANCES, CLEARING SETTLEMENT FUND, DEPOSITS 

AND CASH (Continued)

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, 2023

As at December 31, 2022

HKD

Rmb’000

2,028,698

35,198

USD

Rmb’000

271,850

572,996

35.  PLACEMENTS FROM OTHER FINANCIAL INSTITUTIONS

Due to banks

12/31/2023

Rmb’000

1,950,000

12/31/2022

Rmb’000

700,000

As  at  December  31,  2023,  the  effective  interest  rates  bearing  on  the  outstanding  amount 
of  due  to  banks  vary  from  1.80%  to  2.50%  (December  31,  2022:  1.94%  to  2.47%)  per 
annum. The amount of due to banks were repayable within seven days from the end of the 
reporting period.

36.  ACCOUNTS  PAYABLE  TO  CUSTOMERS  ARISING  FROM 

SECURITIES BUSINESS

The  amounts  mainly  represent  money  held  on  behalf  of  clients  at  the  banks  and  clearing 
houses by the Group.

The  amounts  also  include  payables  for  securities/futures  business  as  well  as  cash 
collaterals from customers for securities lending and/or margin financing arrangement.

The  majority  of  the  accounts  payable  balance  is  repayable  on  demand  except  where 
certain  accounts  payable  to  brokerage  clients  represent  margin  deposits  received  from 
clients  for  their  trading  activities  under  normal  course  of  business.  No  aged  analysis  is 
disclosed as in the opinion of the Directors, an aged analysis does not give any additional 
value in view of the nature of the business.

263

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
36.  ACCOUNTS  PAYABLE  TO  CUSTOMERS  ARISING  FROM 

SECURITIES BUSINESS (Continued)

As at December 31, 2023, Rmb2,380,641,000 (2022: Rmb 2,417,634,000) 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, 2023

As at December 31, 2022

37.  TRADE PAYABLES

HKD

Rmb’000

282,732

190,485

USD

Rmb’000

794,934

289,577

Trade  payables  mainly  represent  the  payables  for  the  expressway  improvement  projects. 
The following is an aged analysis of trade payables presented based on the invoice date:

12/31/2023

Rmb’000

668,425

127,248

154,917

78,708

235,876

12/31/2022

Rmb’000

(Restated)

671,828

142,923

139,799

39,275

227,007

01/01/2022

Rmb’000

(Restated)

915,863

134,465

88,521

62,490

252,659

1,265,174

1,220,832

1,453,998

Within 3 months

3 months to 1 year

1 to 2 years

2 to 3 years

Over 3 years

264

2023 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2023 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
38.  OTHER PAYABLES AND ACCRUALS

Accrued payroll and welfare

Advances

Advance payments for settlement from securities 

business

Advance received from futures insurance

12/31/2023

Rmb’000

1,630,360

28,932

103,439

85

12/31/2022

Rmb’000

(Restated)

1,557,456

37,756

01/01/2022

Rmb’000

(Restated)

1,458,165

41,712

217,977

7,196

132,296

7,196

Trading deposit and settlement (Note)

10,096,481

5,766,292

2,577,793

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

207,000

138,312

521,454

45,977

524,597

7,708

179,764

48,067

60,700

170,000

27,500

164,215

207,000

121,308

203,959

53,045

190,430

4,352

159,464

61,488

76,612

–

27,500

232,718

207,000

120,027

164,438

58,509

372,137

3,866

142,853

93,374

93,477

192,400

27,500

228,610

13,954,591

8,924,553

5,921,353

Note: 

Trading deposits mainly represent over-the-counter option deposit and equity swap deposit.

265

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
39.  DERIVATIVE FINANCIAL ASSETS/LIABILITIES

Nominal Amount

Rmb’000

8,202,798

57,072,022

32,299,545

5,554,008

13,499,999

12/31/2023

Assets

Rmb’000

79,828

1,126,616

33,045

36,954

2,667

116,628,372

1,279,110

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

147,318,363

1,000,756

Liabilities

Rmb’000

56,512

871,920

37,547

28,255

1,793

996,027

Liabilities

Rmb’000

122,368

328,571

12,579

90,839

554,357

Equity swap

Equity option

Commodity futures

Commodity options

Others (Note)

Equity swap

OTC option

Commodity options

Others (Note)

Note:

Others include stock index futures, treasury 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  were  settled  daily.  Accordingly,  the  net  position  of  them  in  derivative  instruments  were  nil  at 

December 31, 2023 and 2022.

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, 2023. Accordingly, the net position of the IRS contracts in derivative instruments was nil at December 31, 2023 (2022: 

nil).

For IRS contracts 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.

266

2023 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2023 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
40.  BANK AND OTHER BORROWINGS

Loans from banks, secured (Note i)

Loans from banks, unsecured

Loans from related parties, secured (Note i)

Loans from related parties, unsecured  

12/31/2023

Rmb’000

12/31/2022

Rmb’000

(Restated)

01/01/2022

Rmb’000

(Restated)

13,207,942

14,396,255

17,501,733

765,675

925,558

1,668,209

1,017,790

71,859

1,121,317

(Notes 57(i), 57(ii))

2,907,768

5,274,563

3,418,188

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

17,806,943

22,356,817

22,113,097

4,593,399

1,812,450

4,121,454

7,279,640

17,806,943

(4,593,399)

5,054,083

4,362,670

4,437,310

8,502,754

22,356,817

(5,054,083)

2,451,507

1,557,090

6,728,780

11,375,720

22,113,097

(2,451,507)

Amounts shown under non-current liabilities

13,213,544

17,302,734

19,661,590

The bank and other borrowings comprise:

Fixed-rate borrowings

Variable-rate borrowings

3,726,547

14,080,396

6,119,923

16,236,894

3,490,047

18,623,050

17,806,943

22,356,817

22,113,097

267

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
40.  BANK AND OTHER BORROWINGS (Continued)

The  range  of  effective  interest  rates  (which  are  also  agreed  to  contract  interest  rates)  on 
the Group’s borrowings are as follows:

Effective interest rate:

Fixed-rate borrowings

Variable-rate borrowings

Note:

12/31/2023

12/31/2022

01/01/2022

2.70%-5.25%

3.73%-7.43%

3.00%-7.08%

3.00%-4.85%

3.00%-4.70%

4.08%-4.70%

i 

A s  a t  D e c e m b e r  31,  2023,  t h e  G r o u p  p l e d g e d  t h e  f o l l o w i n g  a s s e t s  f o r  t h e s e  s e c u r e d  l o a n s  f r o m 

financial  institutions:  (i)  other  receivables  with  an  aggregate  carrying  value  of  Rmb  990,393,000  (2022: 

Rmb1,088,683,000)  and  (ii)  expressway  operating  rights  of  Zhoushan  Bay  Bridge,  LongLi  Expressway  and 

Lilong  Expressway,  Zhajiasu  Expressway,  and  HuangQuNan  Expressway  (2022:  expressway  operating  rights 

of  Zhoushan  Bay  Bridge,  LongLi  Expressway  and  Lilong  Expressway,  Zhajiasu  Expressway,  and  HuangQuNan 

Expressway) and (iii) security collaterals from loans to customers arising from margin financing business.

41.  SHORT-TERM FINANCING NOTE PAYABLE

Unsecured:

Short-term financing bonds

Beneficial certificates

Total

12/31/2023

Rmb’000

12/31/2022

Rmb’000

1,507,582

630,029

2,137,611

2,511,352

1,055,673

3,567,025

As  at  December  31,  2023,  the  short-term  financing  bond  bears  an  interest  rate  at  2.50% 
(2022:  short-term  financing  bonds  bears  an  interest  rate  at  1.83%  to  2.50%),  the  yields  of 
all  the  outstanding  beneficial  certificates  were  between  2.35%  to  7.00%  (2022:  1.90%  to 
13.00%).

268

2023 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2023 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
42.  BONDS PAYABLE

Corporate and subordinated bonds  

without redemption option (Note i, ii)

Medium-term notes (Note iii)

Infrastructure real estate investment trusts (Note iv)

Less: Bonds due within 1 year

Amounts shown under non-current liabilities

Notes:

12/31/2023

Rmb’000

12/31/2022

Rmb’000

24,280,716

3,048,452

1,685,083

29,014,251

18,438,111

3,048,452

1,821,006

23,307,569

(5,404,107)

(7,118,247)

23,610,144

16,189,322

(i) 

This  balance  represented  8  corporate  bonds,  2  subordinated  bonds  and  1  beneficial  certificate  (2022:  4 

corporate  bonds,  6  subordinated  bonds  and  1  beneficial  certificate)  due  by  year  2024  to  2026  (2022:  2023  to 

2026) issued by Zheshang Securities, without redemption option, with fixed interest rates ranging from 2.89% to 

4.08% (2022: 2.10% to 4.18%) 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 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 2023 as per 

announcement.

269

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
43.  CONVERTIBLE BONDS

Convertible Bond 2021

On January 20, 2021, the Company issued a zero coupon convertible bond due 2026 in an 
aggregate  principal  amount  of  Euro230,000,000.  The  Convertible  Bond  2021  is  listed  on 
the Stock Exchange (the “Stock Exchange”).

The principal terms of the Convertible Bond 2021 are set out below:

(1)  Conversion right

The  Convertible  Bond  2021  will,  at  the  option  of  the  holder  (the  “Bondholders  2021”),  be 
convertible  (unless  previously  redeemed,  converted  or  purchased  and  cancelled)  on  or 
after March 2, 2021 up to January 10, 2026 into fully paid ordinary shares with a par value 
of  Rmb1.00  each  at  an  initial  conversion  price  (the  “Conversion  Price  2021”)  of  HK$8.83 
per  H  share  and  a  fixed  exchange  rate  of  HK$9.5145  to  Euro1.00  (the  “Fixed  Exchange 
Rate”).  The  Conversion  Price  2021  is  subject  to  the  anti-dilutive  adjustments  and  certain 
events including mainly: share consolidation, subdivision or re-classification, capitalisation 
of  profits  or  reserves,  capital  distributions,  rights  issues  of  shares  or  options  over  shares, 
rights  issues  of  other  securities  and  issues  at  less  than  current  market  price.  The  latest 
Conversion Price 2021 was HK$6.69 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”).

270

2023 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 202343.  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.

271

43.  CONVERTIBLE BONDS (Continued)

Convertible Bond 2021 (Continued)

(2)  Redemption (Continued)

(iii)  Redemption at the option of the bondholders (Continued)

The Convertible Bond 2021 comprises two components:

(a)  Debt  component  was  initially  measured  at  fair  value  amounted  to  Euro183,297,000 
(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.

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.

272

2023 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 202343.  CONVERTIBLE BONDS (Continued)

Convertible Bond 2021 (Continued)

(2)  Redemption (Continued)

(iii)  Redemption at the option of the bondholders (Continued)

The movement of the debt and derivative components of the Convertible Bond 2021 for the 
years ended December 31, 2023 and 2022 is set out as below:

As at January 1, 2022

Exchange realignment

Interest charge

Gain on changes in fair value

Debt component 

Derivative components 

at amortised cost

at FVTPL

Total

Euro’000

Rmb’000

Euro’000

Rmb’000

Euro’000

Rmb’000

190,374

1,374,445

47,124

340,217

237,498

1,714,662

–

9,027

–

37,073

68,617

–

–

–

–

–

(5,594)

(31,951)

–

9,027

(5,594)

37,073

68,617

(31,951)

As at December 31, 2022

199,401

1,480,135

41,530

308,266

240,931

1,788,401

Exchange realignment

Interest charge

Gain on changes in fair value

–

28,080

–

79,600

228,084

–

–

–

–

–

28,080

79,600

228,084

–

(38,012)

(280,620)

(38,012)

(280,620)

As at December 31, 2023

227,481

1,787,819

3,518

27,646

230,999

1,815,465

As  of  December  22,  2023,  pursuant  to  the  terms  and  conditions  of  the  bonds,  notice  of 
redemption  had  been  served  on  the  Company  requiring  the  Company  to  redeem  part 
of  the  bonds  at  the  principal  amount  of  Euro  202,600,000.  Such  redemption  rights  were 
executed  on  January  20,  2024  and  the  outstanding  Bonds  in  the  principal  amount  were 
Euro27,400,000 subsequently.

The  detailed  key  inputs  the  valuers  use  to  calculate  the  fair  value  of  the  derivative 
component refer to Note 53(c).

273

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
43.  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, 2023, the latest conversion price was Rmb10.19 per share.

274

2023 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 202343.  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.

275

43.  CONVERTIBLE BONDS (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, 2023 are set out as below:

Issuance on June 14, 2022

Issue cost

Interest charge

Addition

Conversion into shares

At December 31, 2022

Interest charge

Interest paid

Addition (Note i)

Conversion into shares (Note ii)

At December 31, 2023

Notes:

Liability 

Equity 

Component

Component

Rmb’000

2,856,082

(12,782)

71,825

1,008,644

(97)

3,923,672

184,217

(11,163)

2,529,887

(146)

Rmb’000

310,732

(1,387)

–

166,912

(10)

476,247

–

–

804,528

(15)

Total

Rmb’000

3,166,814

(14,169)

71,825

1,175,556

(107)

4,399,919

184,217

(11,163)

3,334,415

(161)

6,626,467

1,280,760

7,907,227

(i) 

During  the  year  ended  December  31,  2023,  Shangsan  Co  disposed  the  Convertible  Bond  2022  held  on  hand 

with  the  principal  amount  of  Rmb2,715,347,000  (2022:  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, 2023, the bondholders converted part of the Convertible Bond 2022 with a 

principal amount of Rmb157,000 to the shares of Zheshang Securities.

As at December 31, 2023, Zheshang Securities had not exercised the redemption rights.

276

2023 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2023 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
44.  FINANCIAL ASSETS SOLD UNDER REPURCHASE AGREEMENTS

Analysed as collateral type:

Bonds

Equity securities

Analysed by market:

Shanghai/Shenzhen Stock Exchange

Inter-bank market

12/31/2023

Rmb’000

12/31/2022

Rmb’000

24,569,621

22,524

4,206,992

20,385,153

24,592,145

23,825,242

–

5,766,118

18,059,124

23,825,242

As  at  December  31,  2023  and  2022,  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,  2023  and  2022,  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.

277

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
44.  FINANCIAL ASSETS SOLD UNDER REPURCHASE AGREEMENTS 

(Continued)

The  following  tables  provides  a  summary  of  carrying  amounts  and  fair  values  related  to 
transferred  financial  assets  that  are  not  derecognised  in  their  entirety  and  the  associated 
liabilities as at December 31, 2023 and December 31, 2022.

As at December 31, 2023

Carrying amount of transferred assets

Carrying amount of associated liabilities

Net position

As at December 31, 2022

Financial 

assets at 

FVTPL

Rmb’000

Financial 

assets at 

FVTOCI

Rmb’000

Total

Rmb’000

16,335,665

(15,069,991)

5,397,901

21,733,566

(4,905,813)

(19,975,804)

1,265,674

492,088

1,757,762

Carrying amount of transferred assets

Carrying amount of associated liabilities

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

45.  FINANCIAL  LIABILITIES  AT  FAIR  VALUE  THROUGH  PROFIT 

OR LOSS

Financial liabilities held for trading:

– Securities

– Funds

Financial liabilities designated at FVTPL:

– Fi nancial liabilities arising from consolidation  

of structured entities (Note)

278

12/31/2023

Rmb’000

12/31/2022

Rmb’000

331,350

33,114

107,597

472,061

915,407

60,636

81,599

1,057,642

2023 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2023 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
45.  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  Rmb  1,947,766,000 

and  Rmb2,391,869,000  at  December  31,  2023  and  2022,  respectively.  The  total  assets  of  the  consolidated 

structured  entities  amounted  to  Rmb  2,631,450,000  and  Rmb3,661,442,000  at  December  31,  2023  and  2022, 

respectively.

The  Group  has  designated  these  liabilities  as  FVTPL,  as  in  the  opinion  of  the  management,  such  designation 

eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise.

46.  LEASE LIABILITIES

Lease liabilities payables

Within one year

Within a period of more than one year  

but no more than two years

Within a period of more than two years 

but no more than five years

Within a period of more than five years

12/31/2023

Rmb’000

12/31/2022

Rmb’000

147,914

119,678

123,731

93,225

184,120

19,665

475,430

193,989

37,138

444,030

Less: Am ounts due for settlement with 12 months shown  

under current liabilities

(147,914)

(119,678)

Amount due for settlement after 12 months shown  

under non-current liabilities

327,516

324,352

279

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
47.  DEFERRED TAXATION

For the purpose of presentation in the consolidated statement of financial position, certain 
deferred  tax  assets  and  liabilities  have  been  offset.  The  following  is  the  analysis  of  the 
deferred tax balances for financial reporting purposes:

Deferred tax assets

Deferred tax liabilities

12/31/2023

Rmb’000

1,446,067

(260,060)

1,186,007

12/31/2022

Rmb’000

1,416,809

(481,066)

935,743

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 

Temporary

differences

of accrued

Changes in

plant and 

Fair value

expenses

fair value of

equipment 

adjustment

and

financial

and

of long term

impairment

instruments

expressway

assets arising

losses and

carried

operating

from business

tax losses 

at fair value

rights

combination

and others

Total

Rmb’000

Rmb’000

Rmb’000

Rmb’000

Rmb’000

At January 1, 2022

Charge (credit) to profit or loss

Charge to other comprehensive income

(163,542)

62,220

2,264

971,551

(78,324)

–

Transfer out through disposal of a subsidiary

–

(200,322)

At December 31, 2022

Charge (credit) to profit or loss

Charge to other comprehensive income

(99,058)

974

(12,818)

692,905

(21,264)

–

(146,061)

12,627

–

–

(133,434)

13,817

–

478,326

45,565

(277)

1,140,274

42,088

1,987

(48,284)

(248,606)

475,330

269,772

(217)

935,743

263,299

(13,035)

At December 31, 2023

(110,902)

671,641

(119,617)

744,885

1,186,007

280

2023 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2023 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
47.  DEFERRED TAXATION (Continued)

As  at  December  31,  2023,  a  deferred  tax  asset  of  Rmb128,138,000  in  relation  to  unused 
tax  losses  for  LongLiLiLong  Co  has  been  recognised  in  the  consolidated  statement.  In 
addition,  the  Group  had  unused  tax  losses  of  approximately  Rmb476,852,000  (2022: 
Rmb2,118,100,000) and differences in tax and accounting of expressway operating rights 
of approximately Rmb911,815,000 (2022: Rmb917,950,000 as restated) for which deferred 
tax was not recognised due to uncertainty of future taxable income. The expiry dates of the 
unrecognised tax losses are listed as below.

2023

2024

2025

2026

2027

2028

48.  SHARE CAPITAL

12/31/2023

Rmb’000

–

–

12,615

31,668

144,869

287,700

476,852

12/31/2022

Rmb’000

418,124

478,586

667,480

304,342

249,568

–

2,118,100

Number of shares

Share Capital

Domestic 

Domestic 

Shares

H Shares

’000

’000

Total

’000

Shares

H Shares

Total

Rmb’000

Rmb’000

Rmb’000

Registered, issued and fully paid:

At January 1, 2022 and  

December 31, 2022

2,909,260

1,433,855

4,343,115

2,909,260

1,433,855

4,343,115

Rights issue

1,105,519

544,864

1,650,383

1,105,519

544,864

1,650,383

At December 31, 2023

4,014,779

1,978,719

5,993,498

4,014,779

1,978,719

5,993,498

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.

281

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
48.  SHARE CAPITAL (Continued)

Pursuant  to  the  CSRC’s  written  approval  in  respect  of  the  Rights  Issue,  i.e.  the  Approval 
Regarding  the  Registration  of  Shares  to  be  Issued  by  Zhejiang  Expressway  Co.,  Ltd.  to 
Specific  Targets  (Zheng  Jian  Xu  Ke  [2023]  No.  2473)  (《關於同意浙江滬杭甬高速公路股份
有限公司向特定對象發行股票註冊的批覆》(證監許可[2023]2473號)),  new  domestic  rights 
shares  were  allotted  to  Communications  Group  on  the  basis  of  three  point  eight  domestic 
rights shares for every ten existing domestic rights shares, while new H rights shares were 
allotted  to  qualified  H  Shares  holders  on  the  basis  of  three  point  eight  H  rights  shares  for 
every ten existing H Shares.

544,864,710  new  H  rights  shares  were  issued  at  a  price  of  HK$4.06  per  share,  raising 
approximately  HK$2.2  billion  in  total.  The  new  H  Shares  were  listed  on  the  Hong  Kong 
Stock Exchange on December 14, 2023. As at the time of listing of H shares, approximately 
RMB4.1  billion  in  total  has  also  been  received  for  1,105,518,800  new  domestic  rights 
shares at a price of RMB3.73 per share.

After  the  completion  of  the  above  right  issues,  a  total  of  1,650,383,510  new  share  were 
issued. The fund raised in excess of the par value of the new shares (net of issuance cost) 
was credited to share premium.

All the domestic shares and H Shares rank pari passu with each other as to dividends and 
voting rights.

282

2023 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 202349.  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 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

Dividends paid to non-controlling shareholders

Net cash inflow from operating activities

Net cash outflow from investing activities

Net cash inflow/(outflow)  from financing activities

12/31/2023

Rmb’000

12/31/2022

Rmb’000

139,345,784

136,360,358

11,882,573

95,092,076

22,590,243

14,655,985

18,890,053

7,480,666

4,887,621

96,961,620

12,600,288

14,049,531

17,636,540

7,075,848

(5,291,516)

(4,913,813)

2,189,150

43,011

2,232,161

992,980

1,196,170

2,189,150

1,010,308

1,221,853

2,232,161

(323,381)

2,661,928

(7,763,620)

3,642,509

2,162,035

15,827

2,177,862

1,005,941

1,156,094

2,162,035

1,012,259

1,165,603

2,177,862

(493,565)

4,215,003

(1,198,936)

(1,979,915)

Net cash (outflow)/inflow

(1,459,183)

1,036,152

283

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
49.  NON-CONTROLLING INTERESTS (Continued)

12/31/2023

Rmb’000

12/31/2022

Rmb’000

790,369

546,354

85,287

5,187

635,587

610,662

247,370

(151,346)

96,024

48,972

47,052

96,024

(11,058)

141,252

(2,936)

(22,567)

115,749

676,505

596,113

94,284

5,543

598,123

574,668

195,206

(119,109)

76,097

38,809

37,288

76,097

(11,058)

49,883

(4,987)

(22,567)

22,329

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 from investing activities

Net cash outflow from financing activities

Net cash inflow

284

2023 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2023 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
49.  NON-CONTROLLING INTERESTS (Continued)

Zhajiasu Co

Current assets

Non-current assets

Current liabilities

Non-current liabilities

Equity attributable to owners of the Company

Non-controlling interests

Revenue

Expenses

Loss for the year

Profit 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/(outflow)

12/31/2023

Rmb’000

544,384

2,128,331

339,382

1,022,069

721,195

590,069

477,037

(484,917)

(7,880)

(4,334)

(3,546)

(7,880)

–

373,478

(29,204)

(329,950)

14,324

12/31/2022

Rmb’000

119,901

2,813,460

377,218

1,236,999

725,529

593,615

389,622

(471,654)

(82,032)

(45,118)

(36,914)

(82,032)

–

267,472

71,097

(365,994)

(27,425)

285

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
50.  RETIREMENT BENEFITS SCHEMES

The  employees  of  the  Group  are  members  of  the  state-managed  retirement  benefits 
scheme operated by the PRC government. To supplement this existing retirement benefits 
scheme, the Group adopted a corporate annuity scheme in accordance with relevant rules 
and regulations. The Group is required to contribute a certain percentage of payroll costs 
to these retirement benefits schemes to fund the benefits. The only obligation of the Group 
with respect to these retirement benefits schemes is to make the specified contributions.

No forfeited contributions are available to reduce the contribution payable in future years.

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

12/31/2023

Rmb’000

12/31/2022

Rmb’000

968,391

428,765

3,780,000

1,061,250

6,238,406

1,214,428

1,156,293

2,500,000

860,245

5,730,966

286

2023 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2023 
 
 
 
 
 
 
 
 
 
 
 
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  40,  41,  42,  43,  44  and  46,  net  of  cash  and  cash 
equivalents  and  equity  attributable  to  owners  of  the  Company,  comprising  issued  share 
capital, reserves and retained profits.

The  Directors  review  the  capital  structure  on  a  regular  basis.  As  part  of  this  review,  the 
Directors  consider  the  cost  of  capital  and  the  risks  associated  with  each  class  of  capital. 
Based  on  recommendations  of  the  Directors,  the  Group  will  balance  its  overall  capital 
structure  through  the  payment  of  dividends  and  new  share  issues  as  well  as  the  issue  of 
new debt or the redemption of existing debt.

287

53.  FINANCIAL INSTRUMENTS

(a)  Categories of financial instruments

Financial assets

Financial assets at FVTPL

Financial assets at FVTOCI

Derivative financial assets

12/31/2023

Rmb’000

41,918,640

8,163,898

1,279,110

12/31/2022

Rmb’000

(Restated)

43,999,383

820,940

1,000,756

Financial assets at amortised cost

111,560,176

101,351,991

Financial liabilities

Derivative financial liabilities

Financial liabilities at FVTPL

Convertible Bonds

– derivative component

Financial liabilities at amortised cost

996,027

472,061

554,357

1,057,642

27,646

308,266

130,657,729

129,291,177

(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,  debt  instruments  at  FVTOCI,  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  bonds  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.

288

2023 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2023 
 
 
 
 
 
 
 
 
 
 
 
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  debt  instruments  at 
FVTOCI,  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 28, 30, 32, 34, 35, 40, 
41, 42, 43, 44 and 45 for details).

The  Group  is  also  exposed  to  cash  flow  interest  rate  risk  in  relation  to  variable-rate  bank 
balances  and  clearing  settlement  fund  held  on  behalf  of  customers,  bank  balances, 
clearing  settlement  fund,  deposits  and  bank  and  other  borrowings  (see  Notes  33,  34  and 
40 for details).

The Group currently does not have an interest rate risk hedging policy as the management 
considers  the  Group  is  not  exposed  to  significant  interest  rate  risk.  The  management  will 
continue to monitor interest rate risk exposure and consider hedging against it should the 
need arise.

The  Group’s  exposures  to  interest  rates  on  financial  liabilities  are  detailed  in  the  liquidity 
risk management section of this note.

289

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  (2022:  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 (2022: 50 basis points) higher/lower and all other 
variables  were  held  constant,  the  Group’s  post-tax  profit  for  the  year  ended  December 
31,  2023  would  have  increased/decreased  by  Rmb  221,938,000  (2022:  Rmb212,895,000, 
as  restated).  This  was  mainly  attributable  to  the  Group’s  exposure  to  interest  rates  on  its 
variable-rate bank balances and clearing settlement fund.

290

2023 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 202353.  FINANCIAL INSTRUMENTS (Continued)

(b)  Financial risk management objectives and policies (Continued)

Market risk (Continued)

(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:

Hong Kong dollar (“HKD”)

United States dollar (“USD”)

Euro dollar (“EUR”) (Note)

Assets

Liabilities

12/31/2023

12/31/2022

12/31/2023

12/31/2022

Rmb’000

Rmb’000

Rmb’000

Rmb’000

2,311,475

1,066,784

–

225,872

862,574

–

282,732

4,123,803

1,815,465

190,485

3,562,939

1,788,401

Note:  Amount represented both the debt and derivative component of the Convertible Bond 2021.

Sensitivity analysis

The  Group  is  mainly  exposed  to  HKD,  USD  and  EUR  relative  to  Rmb.  The  following  table 
details  the  Group’s  sensitivity  to  a  10%  (2022:  10%)  increase  and  decrease  in  Rmb 
against the relevant foreign currencies. 10% (2022: 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% (2022: 10%) 
change  in  foreign  currency  rates.  A  positive  number  below  indicates  an  increase  in  post-
tax profit where Rmb strengthen 10% (2022: 10%) against the relevant currency. For a 10% 
(2022: 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.

291

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
53.  FINANCIAL INSTRUMENTS (Continued)

(b)  Financial risk management objectives and policies (Continued)

Market risk (Continued)

(ii)  Currency risk (Continued)

Sensitivity analysis (Continued)

HKD impact

USD impact

EUR impact

12/31/2023

12/31/2022

12/31/2023

12/31/2022

12/31/2023

12/31/2022

Rmb’000

Rmb’000

Rmb’000

Rmb’000

Rmb’000

Rmb’000

Profit or loss

(152,880)

(2,654)

229,276

202,527

136,157

134,130

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.

292

2023 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2023 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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 2021

The sensitivity analyses below have been determined based on the exposure to equity and 
debt security price risks at the reporting date.

If the prices of the respective equity and debt instruments had been 5% (2022: 5%) higher/
lower,

• 

• 

post-tax  profit  for  the  year  ended  December  31,  2023  would  have  increased/
decreased by Rmb1,571,949,000 as a result of the changes in fair value of financial 
assets at FVTPL.

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.

For derivative component of Convertible Bond 2021

The price risk in 2023 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.

293

53.  FINANCIAL INSTRUMENTS (Continued)

(b)  Financial risk management objectives and policies (Continued)

Market risk (Continued)

(iii)  Other price risk (Continued)

Sensitivity analysis (Continued)

For derivative component of Convertible Bond 2021 (Continued)

Conversion option derivatives of Convertible Bond 2021

1) 

Changes in share price

If  the  share  price  of  the  Company  had  been  10%  (2022:10%)  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:

Year ended

12/31/2023

Rmb’000

(5,746)

465

Year ended

12/31/2022

Rmb’000

(61,517)

35,379

Higher by 10%

Lower by 10%

294

2023 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2023 
 
 
 
 
 
 
 
 
 
 
 
53.  FINANCIAL INSTRUMENTS (Continued)

(b)  Financial risk management objectives and policies (Continued)

Market risk (Continued)

(iii)  Other price risk (Continued)

Sensitivity analysis (Continued)

For derivative component of Convertible Bond 2021 (Continued)

Conversion option derivatives of Convertible Bond 2021 (Continued)

2) 

Changes in volatility

If  the  volatility  to  the  valuation  model  had  been  10%  (2022:10%)  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

12/31/2023

Rmb’000

(1,408)

465

Year ended

12/31/2022

Rmb’000

(17,962)

12,818

295

 
 
 
 
 
 
 
 
 
 
 
 
53.  FINANCIAL INSTRUMENTS (Continued)

(b)  Financial risk management objectives and policies (Continued)

Credit risk and impairment assessment

As at December 31, 2023, 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 on individual basis, using 
life-time ECL under the simplified approach.

The  Group  has  no  credit  period  granted  to  its  trade  customers  of  toll  operation.  All  the 
Group’s  trade  receivable  balances  for  toll  operation,  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, 2023 and 2022.

296

2023 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 202353.  FINANCIAL INSTRUMENTS (Continued)

(b)  Financial risk management objectives and policies (Continued)

Credit risk and impairment assessment (Continued)

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.

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.

297

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  has  used  the  “3  stage”  ECL  model  to  assess  the  credit  losses  when  its  credit 
risk has increased significantly since initial recognition:

(i) 

An  asset  moves  to  stage  1  where  there  has  low  risk  of  default  or  has  not  been  a 
significant  increase  in  credit  risk  and  that  are  not  credit  impaired.  The  Group  will 
continuously monitor its credit risk;

(ii)  An asset moves to stage 2 where there has been a significant increase in credit risk 
since initial recognition but that are not credit impaired. The Group does not see it as 
an impairment loss occurred instrument;

(iii)  An asset moves to stage 3 when impairment losses occurred; and

(iv)  The  loss  impairment  for  financial  instruments  in  stage  1  is  anticipated  credit  losses 
for the next 12 months, which correspond to the amount of anticipated credit losses 
for  the  entire  life  time  resulting  from  possible  defaults  within  the  next  12  months.  In 
the  second  or  third  stage,  the  expected  credit  losses  of  financial  instruments  are 
measured for the entire life time and the expected credit losses are recorded.

The factors the Group considers whether credit risk increases significantly refer to Note 6. 
In  particular,  for  loans  to  customers  arising  from  margin  financing  business  and  financial 
assets  held  under  resale  agreement,  the  Group  generally  believes  that  when  the  loan  to 
collateral ratio determined by fair value reaches the warning line, the credit risk increases 
significantly and needs to be transferred to “stage 2”, and when the loan to collateral ratio 
determined  by  fair  value  reaches  the  liquidation  line  or  expect  there  would  be  loss  after 
closing the position mandatorily, it will be transferred to “stage 3”.

298

2023 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 202353.  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.

299

53.  FINANCIAL INSTRUMENTS (Continued)

(b)  Financial risk management objectives and policies (Continued)

Credit risk and impairment assessment (Continued)

Securities operation (Continued)

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.

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.

300

2023 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 202353.  FINANCIAL INSTRUMENTS (Continued)

(b)  Financial risk management objectives and policies (Continued)

Credit risk and impairment assessment (Continued)

The Group’s internal credit risk grading assessment comprises the following categories:

Other financial

assets/other items

Internal credit rating

Description

Trade receivables

(Note)

Low risk (stage 1)

The counterparty has a low risk of default and 

Lifetime ECL – not 

12-month ECL

does not have any past-due amounts

credit-impaired

Doubtful (stage 2)

There have been significant increases in 

Lifetime ECL – not 

Lifetime ECL – not 

credit risk since initial recognition through 

credit-impaired

credit-impaired

information developed internally or external 

resources

Loss (stage 3)

There is evidence indicating the asset is  

Lifetime ECL –  

Lifetime ECL –  

credit-impaired

credit-impaired

credit-impaired

Write-off

There is evidence indicating that the debtor  

Amount is written off Amount is written off

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, debt  instruments  at  FVTOCI, financial  assets  held  under  agreements  and 

other receivables.

301

 
 
 
 
 
 
 
 
 
 
 
 
53.  FINANCIAL INSTRUMENTS (Continued)

(b)  Financial risk management objectives and policies (Continued)

Credit risk and impairment assessment (Continued)

The  table  below  details  the  credit  risk  exposures  of  the  Group’s  financial  assets   and 
financial guarantee contracts, which are subject to ECL assessment:

Notes

28

29

External

credit

rating

Internal

credit

rating

12/31/2023

12/31/2022

12-months

Gross carrying

Gross carrying

or lifetime ECL

amount

Rmb’000

amount

Rmb’000

(Restated)

N/A

N/A

N/A

N/A

Low risk

12-month ECL

8,163,898

820,940

Low risk

Lifetime ECL

Low risk

Lifetime ECL

Low risk

Lifetime ECL

545,379

284,654

7,193

249,088

309,700

10,444

30

N/A

Low risk

12-month ECL

18,782,496

16,753,901

Doubtful

Lifetime ECL – 

not credit-

impaired

Loss

Lifetime ECL 

– credit-

impaired

1,164,213

812,627

2,077

2,420

34

AA to AAA

Low risk

12-month ECL

31,248,250

24,263,976

Financial assets

Debt instruments at 

FVTOCI

Trade receivables (Note i)

– toll operation

– securities operation

– others

Loans to customers 

arising from margin 

financing business

– securities operation

Bank balances, clearing 

settlement fund, 

deposit and cash

302

2023 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2023 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
53.  FINANCIAL INSTRUMENTS (Continued)

(b)  Financial risk management objectives and policies (Continued)

Credit risk and impairment assessment (Continued)

External

credit

rating

Internal

credit

rating

Notes

12/31/2023

12/31/2022

12-months

Gross carrying

Gross carrying

or lifetime ECL

amount

Rmb’000

amount

Rmb’000

(Restated)

33

32

31

56

AA

Low risk

12-month ECL

45,415,217

48,744,803

N/A

Low risk

12-month ECL

7,117,112

5,925,679

Doubtful

Lifetime ECL– 

not credit-

impaired

Loss

Lifetime ECL– 

credit-

impaired

N/A

Low risk

12-month ECL

634,750

365,754

94,471

6,463,994

94,471

4,178,578

N/A

Low risk

12-month ECL

259,484

321,899

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

Notes:

i. 

During  the  year  ended  December  31,  2023,  the  Group  provided  ECL  on  trade  receivables  by  Rmb5,748,000 

(2022: Rmb6,348,000, as restated).

ii. 

For  financial  guarantee  contracts,  the  gross  carrying  amount  represents  the  maximum  amount  the  Group  has 

guaranteed under the respective contracts.

303

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
53.  FINANCIAL INSTRUMENTS (Continued)

(b)  Financial risk management objectives and policies (Continued)

Credit risk and impairment assessment (Continued)

Concentration of credit risk

As at December 31, 2023, other than the concentration of credit risk on trade receivables 
and  financial  guarantee  contract  amounting  to  Rmb837,226,000  (2022:  Rmb569,232,000, 
as  restated),  and  Rmb259,484,000  (2022:  Rmb321,899,000),  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,  2023  and  2022  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,  2023  and  2022  were  denominated  in  Rmb  which  is  not  a  freely  convertible 
currency  in  the  international  market.  The  exchange  rate  of  Rmb  is  regulated  by  the  PRC 
government  and  the  remittance  of  these  Rmb  funds  out  of  the  PRC  is  subject  to  foreign 
exchange controls imposed by the PRC government.

The Group closely monitors its cash position resulting from its operations and maintains a 
level  of  cash  and  cash  equivalents  deemed  adequate  by  the  management  to  enable  the 
Group to meet in full its financial obligations as they fall due for the foreseeable future.

The  following  table  details  the  Group’s  remaining  contractual  maturity  for  its  non-
derivative  financial  liabilities.  Liquidity  risk  analysis  below  excludes  derivative  component 
of  Convertible  Bond  2021  as  the  settlement  of  which  does  not  involve  cash  settlement. 
The table has been drawn up based on the undiscounted cash flows of financial liabilities 
based on the earliest date on which the Group can be required to pay. The table includes 
both interest and principal cash flows.

304

2023 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 202353.  FINANCIAL INSTRUMENTS (Continued)

(b)  Financial risk management objectives and policies (Continued)

Liquidity risk (Continued)

Liquidity tables

Weighted

average

interest rate

%

On demand

or

less than

3 months

Rmb’000

3 months 

– 1 year

1 – 3 years

3 – 5 years

over 5 years

Total

undiscounted

cash

flows

Rmb’000

Rmb’000

Rmb’000

Rmb’000

Rmb’000

Carrying

amount

at

year end

Rmb’000

2023

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

–

–

–

2.70%-5.25%

3.73%-7.43%

2.89%

4.14%

2.05%

3.27%

3.36%-4.74%

3.62%-5.35%

–

–

44,803,323

1,265,174

696,520

2,360,057

132,765

1,985,585

24,636,064

1,950,778

158,063

1,592,274

46,444

259,484

–

–

–

963,137

1,683,870

162,338

–

–

–

–

–

451,015

3,244,412

–

–

–

–

–

–

–

–

–

–

–

44,803,323

44,803,323

1,265,174

696,520

1,265,174

696,520

3,774,209

3,726,547

3,006,150

9,286,371

17,353,568

14,080,396

–

–

–

–

–

–

2,147,923

2,137,611

24,636,064

24,592,145

1,950,778

1,950,000

5,932,643

23,412,573

584,570

1,107,732

31,195,581

29,014,251

27,999

101,318

–

111,995

240,416

7,454,720

115,486

–

–

–

–

26,121

–

–

–

9,186,988

529,785

259,484

8,441,932

475,430

–

364,464

107,597

472,061

472,061

80,250,995

8,978,902

27,460,411

11,160,926

10,420,224

138,271,458

131,655,390

305

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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

–

–

–

48,449,595

1,220,832

460,290

3%-7.08%

3%-4.70%

135,537

228,932

2022 (restated)

Non-derivative financial liabilities

Accounts payable to customers arising  

from securities business

Trade payables

Other payables

Bank and other borrowings  

– fixed rate

– variable rate

Short-term financing note payable

3.17%

3,468,558

3.68%

2.20%

3.32%

23,831,743

700,300

92,209

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

306

3 months 

– 1 year

1 – 3 years

3 – 5 years

over 5 years

Total

undiscounted

cash

flows

Rmb’000

Rmb’000

Rmb’000

Rmb’000

Rmb’000

Carrying

amount

at

year end

Rmb’000

–

–

–

3,629,063

1,489,803

210,789

–

–

–

–

–

2,996,402

3,572,822

–

–

–

–

–

–

–

–

–

–

–

48,449,595

48,449,595

1,220,832

460,290

1,220,832

460,290

6,761,002

6,119,923

3,518,895

10,442,266

19,252,718

16,236,894

–

–

–

–

–

–

3,679,347

3,567,025

23,831,743

23,825,242

700,300

700,000

7,587,916

10,361,235

5,976,450

1,387,522

25,405,332

23,307,569

3.36%-4.74%

3.62%-5.35%

–

–

–

12,771

321,899

13,501

107,172

–

976,043

81,599

70,000

208,708

1,655,135

127,024

–

–

–

–

50,631

–

–

7,419,967

9,158,603

5,403,807

444,030

–

506,306

321,899

1,057,642

1,057,642

79,898,709

13,119,843

17,209,167

11,277,504

19,300,386

140,805,609

130,792,849

2023 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2023 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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,  2023  and  2022,  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.

307

53.  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, 
the  option  pricing  model,  net  asset  value  method  and  recent transaction  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.

308

2023 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 202353.  FINANCIAL INSTRUMENTS (Continued)

(c)  Fair value measurements of financial instruments (Continued)

Valuation 

Significant 

Relationship of 

unobservable 

Financial 

instruments

Fair value 

technique(s) 

hierarchy

and key input(s)

unobservable 

input(s) to fair 

input(s)

value

Equity securities

Level 3

The fair value is determined with reference to 

Discount for lack 

The higher the 

the quoted market prices with an adjustment 

of marketability. 

discount, the 

of discount for lack of marketability. This 

The volatility of 

lower the fair 

discount is determined by option pricing 

the share prices 

value. The higher 

model.

of the securities.

the volatility, the 

lower the fair 

value.

Debt investments

Level 3

The fair value is determined with reference to 

Discount rate

The higher the 

the quoted market prices with an adjustment 

of discount for lack of marketability.

discount, the 

lower the fair 

value.

Trust products

Level 3

The fair value is determined with reference 

Discount rate

The higher the 

to the net asset value of the underlying 

investments with an adjustment of discount 

for the credit risk of counterparty.

discount, the 

lower the fair 

value.

Equity securities/

Level 3

Recent transaction price with an adjustment of 

Discount for lack 

The higher the 

Unlisted equity 

investments

discount for the marketability.

of marketability.

discount, the 

lower the fair 

value.

309

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
53.  FINANCIAL INSTRUMENTS (Continued)

(c)  Fair value measurements of financial instruments (Continued)

Valuation 

Significant 

Relationship of 

unobservable 

Financial 

instruments

Fair value 

technique(s) 

hierarchy

and key input(s)

unobservable 

input(s) to fair 

input(s)

value

Interests 

Level 3

The fair value is determined with reference 

P/E multiples 

The higher the 

attributable to 

other holders 

of consolidated 

structured 

entities

to the net asset value of the structured 

Discount for lack 

multiples, the 

entities, calculated based on pricing/yield of 

of marketability.

higher the fair 

comparable companies with an adjustment 

of discount for lack of marketability.

value. The higher 

the discount, 

the lower the fair 

value.

Derivative 

Level 3

Binomial option pricing model

Expected volatility 

The higher the 

component of 

Convertible 

Bond

(23.32%) taking 

expected 

into account the 

volatility, the 

actual historical 

higher the fair 

share price of 

value.

the Company 

over the same 

time period as 

the Convertible 

Bond’s 

remaining time 

to maturity.

Derivative assets/

Level 3

The option pricing model is used which is 

The volatility of 

The higher volatility 

liabilities

calculated based on the option exercise 

the underlying 

of the underlying 

price, the price and volatility of the 

equity 

equity instrument, 

underlying equity instrument, the option 

instrument for 

the greater impact 

exercise time, and the risk-free interest rate.

option

on the fair value.

There were no transfer between Level 1 and Level 2 during the year.

310

2023 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2023 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
53.  FINANCIAL INSTRUMENTS (Continued)

(c)  Fair value measurements of financial instruments (Continued)

As at December 31, 2023

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

3,689,142

1,406,449

6,344,926

–

–

–

120,800

7,157,799

19,115,369

3,792,244

–

–

65,617

–

3,875,559

8,564,248

4,500

25,464,795

–

3,792,244

32,267

189,527

32,267

189,527

Sub-total

11,440,517

30,186,212

291,911

41,918,640

Debt instruments at FVTOCI

514,806

7,649,092

–

8,163,898

Derivative assets

–

141,810

1,137,300

1,279,110

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

327,658

–

–

3,692

33,114

87,571

327,658

124,377

–

–

–

104,513

–

–

20,026

20,026

27,646

891,514

331,350

33,114

107,597

472,061

27,646

996,027

311

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
53.  FINANCIAL INSTRUMENTS (Continued)

(c)  Fair value measurements of financial instruments (Continued)

As at December 31, 2022

Level 1

Rmb’000

Level 2

Rmb’000

Level 3

Rmb’000

Total

Rmb’000

Financial assets at FVTPL

– Equity securities

– Funds

– Debt investments

– Asset management schemes

– Trust products

– Unlisted equity investments

1,626,768

1,183,099

4,440,080

–

–

–

79,471

270,990

5,808,720

28,617,288

1,732,338

–

–

1,977,229

6,991,819

–

4,500

33,061,868

–

1,732,338

154,799

81,330

154,799

81,330

Sub-total

7,249,947

36,237,817

511,619

43,999,383

Debt instruments at FVTOCI

Derivative assets

128,529

–

692,411

375,529

–

820,940

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

Derivative component of  

Convertible Bond 2021

Derivative liabilities

–

–

–

212,997

308,266

341,360

915,407

60,636

81,599

1,057,642

308,266

554,357

312

2023 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2023 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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,  2023  and  2022,  respectively.  For  the  changes  in  Level  3 
derivative component of Convertible Bond 2022 during the year ended December 31, 2023 
and 2022, please refer to Note 43.

For the year ended December 31, 2023

Financial instruments in Level 3:

At beginning of the year

Additions (Note i)

Disposal

Transfer out (Note ii)

Changes in fair value changes

Financial

Derivative

Financial

Derivative

assets at

financial

liabilities at

financial

FVTPL

assets

FVTPL

liabilities

Total

Rmb’000

Rmb’000

Rmb’000

Rmb’000

Rmb’000

511,619

144,560

(386,486)

(4,617)

26,835

625,227

460,160

54,411

–

(2,498)

12

20,000

(12)

–

26

341,360

453,377

273,455

–

1,478,218

1,078,097

(58,632)

(4,617)

(176,678)

(152,315)

At end of the year

291,911

1,137,300

20,026

891,514

2,340,751

Total gains/(losses) for assets held at the end of the year 

– unrealised gains/(losses) recognised in profit or loss

245,066

Unrealised gains/(losses) recognised in profit or loss for FVTPL are disclosed in Note 9.

Notes:

(i) 

Financial assets at FVTPL included the equity securities traded on the NEEQ with decreased turnover rates with 

significant unobservable inputs applied in valuing these investments. The equity securities traded on the NEEQ 

with decreased turnover rates were transferred from Level 2 to Level 3 in the fair value hierarchy.

(ii) 

These  included  equity  securities  traded  on  stock  exchanges  with  lock-up  periods.  They  were  transferred  from 

Level 3 to Level 1 when the lock-up period lapsed and became unrestricted.

313

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
53.  FINANCIAL INSTRUMENTS (Continued)

(c)  Fair value measurements of financial instruments (Continued)

For the year ended December 31, 2022

Financial instruments in Level 3:

Financial

Derivative

Financial

Derivative

assets at

financial

liabilities at

FVTPL

assets

FVTPL

financial

liabilities

Total

Rmb’000

Rmb’000

Rmb’000

Rmb’000

Rmb’000

At beginning of the year

Additions

Disposal

Transfer out

979,971

168,135

(497,200)

(145,297)

118,757

530,443

(47,261)

–

Changes in fair value changes

6,010

23,288

At end of the year

511,619

625,227

Total gains/(losses) for assets held at the end of the year 

– unrealised gains/(losses) recognised in profit or loss

18

–

–

–

(6)

12

123,676

457,229

1,222,422

1,155,807

(80,100)

(624,561)

–

(145,297)

(159,445)

(130,153)

341,360

1,478,218

561,172

Unrealised gains/(losses) recognised in profit or loss for FVTPL are disclosed in Note 9.

314

2023 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2023 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
53.  FINANCIAL INSTRUMENTS (Continued)

(c)  Fair value measurements of financial instruments (Continued)

As at 12/31/2023

As at 12/31/2022

Carrying 

amount

Rmb’000

Fair 

value

Rmb’000

Carrying 

amount

Rmb’000

Fair 

value

Rmb’000

Debt component  

of Convertible Bond 2021

1,815,465

1,779,176

1,480,135

1,343,040

Debt component  

of Convertible Bond 2022

6,626,467

6,698,743

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,  2023  and  December  31,  2022  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.

315

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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.

Bank and 

Short-term 

Dividends 

other 

Bonds 

Convertible 

Lease 

financing 

payable

borrowings

payable

Bonds

Liabilities

note payable

Total

Rmb’000

Rmb’000

Rmb’000

Rmb’000

Rmb’000

Rmb’000

Rmb’000

At January 1, 2022 

(originally stated)

Adjustment

At January 1, 2022 

(restated)

Financing cash flows 

–

–

–

16,743,917

27,649,091

1,714,662

465,915

7,940,702

54,514,287

5,369,180

–

–

–

–

5,369,180

22,113,097

27,649,091

1,714,662

465,915

7,940,702

59,883,467

(restated)

(2,041,416)

1,692,848

(4,306,310)

3,851,944

(134,827)

(4,362,900)

(5,300,661)

–

–

–

–

3,397

2,038,019

(859,906)

(1,078,777)

(1,465,354)

–

–

–

–

–

–

–

276,230

–

–

–

–

(31,951)

37,073

–

(5,126)

(114,754)

(2,058,563)

–

94,998

–

–

–

–

–

–

–

–

(1,465,354)

94,998

(31,951)

316,700

2,038,019

–

–

–

–

876,132

767,335

123,880

23,070

103,977

1,894,394

–

–

–

–

16,562

(97)

–

–

–

–

16,562

(97)

22,356,817

23,307,569

5,712,073

444,030

3,567,025

55,387,514

Operating cash flows 

(restated)

Non-cash changes

Disposal of a subsidiary

New lease entered

Fair value adjustment

Exchange realignment

Accrued dividend

Interest expenses  

(restated)

Interest expenses 

adjustment due to  

bond disposal

Conversion into shares

At December 31, 2022 

(restated)

316

2023 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2023 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
54.  RECONCILIATION OF LIABILITIES ARISING FROM FINANCING 

ACTIVITIES (Continued)

Bank and 

Short-term 

Dividends 

other 

Bonds 

Convertible 

Lease 

financing 

payable

borrowings

payable

Bonds

Liabilities

note payable

Total

Rmb’000

Rmb’000

Rmb’000

Rmb’000

Rmb’000

Rmb’000

Rmb’000

At January 1, 2023 

(restated)

Financing cash flows

Operating cash flows

Non-cash changes

New lease entered

Lease decreased

Fair value adjustment

Exchange realignment

Accrued dividend

Interest expenses

Conversion into shares

–

22,356,817

23,307,569

5,712,073

444,030

3,567,025

55,387,514

(1,977,242)

(4,535,590)

5,700,000

2,529,887

(145,537)

(1,417,760)

153,758

–

–

–

–

14,135

2,131,680

–

–

(800,299)

(836,385)

(11,163)

(7,683)

(107,079)

(1,762,609)

–

–

–

–

–

–

–

–

55,396

–

–

–

165,368

(3,465)

(280,620)

79,600

–

–

–

–

–

–

–

–

–

165,368

(3,465)

(280,620)

149,131

2,131,680

786,015

787,671

412,301

22,717

95,425

2,104,129

–

–

(146)

–

–

(146)

At December 31, 2023

168,573

17,806,943

29,014,251

8,441,932

475,430

2,137,611

58,044,740

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.

317

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
55.  OPERATING LEASES (Continued)

The Group as lessor (Continued)

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

12/31/2023

Rmb’000

12/31/2022

Rmb’000

61,778

146,857

63,834

272,469

61,817

149,833

30,765

242,415

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.

56.  CONTINGENT LIABILITIES

Guarantees given to bank, in respect of a joint venture

12/31/2023

Rmb’000

259,484

12/31/2022

Rmb’000

321,899

318

2023 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2023 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
56.  CONTINGENT LIABILITIES (Continued)

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  long-term  bank  borrowings  and 
interest,  and  accrued  off-balance  sheet  provision  in  light  of  the  financial  guarantee.  As  at 
December 31, 2023, the bank borrowings of Shengxin Co and accrued interest amounted 
to  Rmb518,967,000  (2022:  Rmb643,798,000).  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, 2023 and 2022.

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  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.  Principal  amount  of  Rmb  600,000,000  was  repaid  on  January  17, 
2023. Principal amount of Rmb 535,000,000 was repaid on April 19, 2023, Principal amount 
of Rmb 500,000,000 was repaid on July 12, 2023.

319

57.  RELATED PARTY TRANSACTIONS AND BALANCES (Continued)

(i)  Transactions and balances with Communications Group and government 

related parties (Continued)

Borrowings (Continued)

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 21, 2023. Logistic Co agreed to provide the Company with 
entrusted loans amounting to Rmb50,810,229 at a fixed interest rate of 3.00% per annum, 
with maturity date of July 20, 2024.

Pursuant  to  the  entrusted  loan  contracts  entered  into  between  HuangQuNan  Co  and 
Communications  Group  on  March  7,  2023,  Communications  Group  agreed  to  provide  the 
Company  with  entrusted  loans  amounting  to  Rmb2,330,000,000  with  a  maturity  date  of 
March 7, 2024 and at a fixed interest rate of 3.65% per annum as at December 31,  2023.

For the year 

For the year 

ended

12/31/2023

Rmb’000

116,470

ended

12/31/2022

Rmb’000

(Restated)

79,059

Interest expenses incurred

320

2023 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2023 
 
 
 
 
 
 
 
 
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  nine  toll  roads,  including  Shensuzhewan  Expressway,  South 
Line  of  Qianjiang  Channel,  Ningbo  Yongtaiwen  Expressway,  Hangning  Expressway, 
Hangrao  Expressway,  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  Rmb21,153,488  (2022: 
Rmb13,777,059) 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

Underwriting and sponsor service income earned

Year ended

12/31/2023

Rmb’000

10,401

10,552

4,993

578,389

411,978

44,406

12,474

1,379

Year ended

12/31/2022

Rmb’000

(Restated)

12,770

7,734

4,816

630,757

537,829

120,916

10,664

–

321

 
 
 
 
 
 
 
 
 
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), 

Hanghui Co (as defined in Note 58), Longlililong Co (as defined in Note 58), Zhoushan Co (as defined in Note 

58), HuangQuNan Co (as defined in Note 58) 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  April  18,  2023,  Jiaxing  Branch  of  LongLiLiLong  Expressway  Co.  and  Shengzhou  Branch  of  Shangsan 

Expressway  Co.  entered  into  the  Construction  Agreement  with  Jiaogong  Underground  Construction,  pursuant 

to  which  the  expansion  project  of  Jiaxing  Service  Area  of  Shanghai-Hangzhou  Expressway  and  Shengzhou 

Service Area of Shangsan Expressway was undertaken respectively. Each of Group and Jiaogong Underground 

Construction is an indirectly non-wholly owned subsidiary of Communications Group.

On November 29, 2023, the Company and its subsidiaries entered into the Guardrail Agreements with Zhejiang 

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

Maintenance  Co.,  Ltd.  (“Maintenance  Co”)  and  Zhejiang  Jiaogong  High-grade  Expressway  Maintenance  Co., 

Ltd. (“Jiaogong Maintenance”) respectively, pursuant to which the guardrail revamp and upgrade projects was 

undertaken  in  respect  of  six  expressways  operated  by  the  Group.  Each  of  Zhejiang  Shunchang,  Maintenance 

Co and Jiaogong Maintenance is an indirect subsidiary of Communications Group.

322

2023 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 202357.  RELATED PARTY TRANSACTIONS AND BALANCES (Continued)

(i)  Transactions and balances with Communications Group and government 

related parties (Continued)

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.

Other receivables

Trade payables

Other payables

12/31/2023

Rmb’000

220,498

407,040

161,312

12/31/2022

Rmb’000

(Restated)

206,832

407,523

170,704

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) earned the management fee income of Rmb94,934 
(2022: Rmb234,549) from Zhejiang Zheshang Financial Holdings, Co., Ltd.

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.

323

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
57.  RELATED PARTY TRANSACTIONS AND BALANCES (Continued)

(i)  Transactions and balances with Communications Group and government 

related parties (Continued)

Other transactions with government related parties (Continued)

In  addition,  the  Group  has  entered  into  other  banking  transactions,  including  deposit 
placements,  borrowings  and  other  general  banking  facilities,  with  certain  banks  and 
financial institution which are government-related entities in its ordinary course of business. 
In  view  of  the  nature  of  those  banking  transactions,  the  Directors  are  of  the  opinion  that 
separate disclosure would not be meaningful.

(ii)  Transactions and balances with associates and other related parties

Financial service provided by Zhejiang Communications Finance

The  Group  entered  into  a  financial  services  agreement  with  Zhejiang  Communications 
Finance. Pursuant to the agreement, Zhejiang Communications Finance agreed to provide 
the  Group  with  the  deposit  services,  the  loan  and  financial  leasing  services,  the  clearing 
services and other financial services.

Loan advanced from Zhejiang Communications Finance

During  the  year,  Shangsan  Co  has  repaid  short-term  loans  with  an  aggregated  principal 
amount of Rmb200,000,000 to Zhejiang Communications Finance.

During  the  year,  Zhoushan  Co  has  repaid  short-term  loans  with  an  aggregated  principal 
amount of Rmb130,000,000 to Zhejiang Communications Finance.

During  the  year,  LongLiLiLong  Co  has  repaid  short-term  and  long-term  loans  with  an 
aggregated principal amount of Rmb970,232,000 to Zhejiang Communications Finance.

During  the  year,  Zhejiang  Communications  Finance  provided  LongLiLiLong  Co  with 
short-term  loans  with  an  aggregated  principal  amount  of  Rmb49,000,000  (2022: 
Rmb154,000,000) and fixed rate of 3.7% per annum (2022: 4.13%).

324

2023 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 202357.  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  Rmb441,000,000  (2022: 
Rmb546,000,000) and fixed rate of 3.7% per annum (2022: 4.13%).

Outstanding loan payable balances:

repayable within one year

1 to 5 years

over 5 years

Interest expenses incurred

12/31/2023

Rmb’000

12/31/2022

Rmb’000

179,288

870,318

399,616

789,026

958,848

512,710

1,449,222

2,260,584

Year ended

12/31/2023

Rmb’000

Year ended

12/31/2022

Rmb’000

78,076

99,755

325

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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

12/31/2023

Rmb’000

12/31/2022

Rmb’000

(Restated)

2,936,333

3,013,781

Year ended

12/31/2023

Rmb’000

Year ended

12/31/2022

Rmb’000

(Restated)

Interest income earned

51,422

35,580

Sales of asset management schemes with Zhejiang Communications Finance

During  the  year,  Asset  Management  sold  180,618,622  units  (2022:  259,864,605  units) 
equivalent to Rmb200,000,000 (2022: Rmb259,999,000) of the asset management schemes 
to  Zhejiang  Communications  Finance.  Management  fee  income  of  Rmb8,673,317  (2022: 
Rmb4,352,774) was earned.

326

2023 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2023 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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  Rmb223,481,124 
(2022:  Rmb447,327,097)  and  Rmb402,380,891  (2022:  Rmb329,366,545)  respectively  from 
and to Zheshang Development Group, to operate commodity trading business.

As  at  December  31,  2023,  Zhejiang  Zheqi  received  deposits  of  Rmb5,998,290  (2022: 
Rmb30,206,224)  from  Zheshang  Development  Group  for  derivatives  business.  Zheshang 
Futures  had  the  balance  of  Rmb210,274,925  (2022:  Rmb230,984,810)  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  losses  was  Rmb49,241,604  (2022:  gains 
Rmb254,425,726) 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 Rmb 4,734,670.

(iii)  Key management emoluments

The  remuneration  of  the  Directors,  supervisors  and  key  management  personnel  during 
the  year  was  Rmb10,261,000  (2022:  Rmb9,718,000)  including  retirement  benefit  scheme 
contribution of Rmb328,000 (2022: Rmb334,000) which is determined by the performance 
of the individuals and the market trends.

327

58.  PARTICULARS OF SUBSIDIARIES OF THE COMPANY

58.1  General information of subsidiaries

Registered 

and paid-in 

Date and 

capital/share 

place of 

registration

capital

Rmb

Name of subsidiary

Percentage of equity interest attributable to the Company

Direct

Indirect

Principal activities

12/31/2023

12/31/2022

12/31/2023

12/31/2022

Zhejiang Linping Expressway Co., 

Note 1

75,223,000

Ltd. (“Linping Co”)

%

51

%

(Restated)

51

Shangsan Co

Note 2

5,380,000,000

73.625

73.625

Zhejiang Expressway Vehicle Towing 

Note 3

8,000,000

100

100

and Rescue Services Co., Ltd 

(“Towing Co”)

%

–

–

–

%

(Restated)

–

–

–

Management of the Linping Section of the 

Shanghai-Hangzhou Expressway 

Management of the Shangsan Expressway

Provision of vehicle towing, repair and . 

emergency rescue services

Zheshang Securities

Note 4

3,878,194,246

Zheshang Futures

Note 5

1,371,244,600

Zheshang Capital Management

Note 6

500,000,000

Asset Management

Note 7

1,200,000,000

Ningbo Dongfang Jujin Investment 

Note 8

1,000,000

Management Co., Ltd (“Dongfang 

Jujin”)

Zhejiang Zheqi

Note 9

2,200,000,000

–

–

–

–

–

–

–

–

–

–

–

–

*40.3384

*40.3385

Operation of securities business

**39.7871

**39.7872

Operation of securities business

**40.3384

**40.3385

Operation of securities business

**40.3384

**40.3385

Provision of asset management service

–

**40.3385

Provision of investment management and 

advisory services

**39.7871

**39.7872

Trading of future

Zhejiang Jinhua Yongjin Expressway 

Note 10

1,350,000,000

100

100

–

–

Management of the Jinhua Section of the 

Co., Ltd. (“Jinhua Co”)

Ningbo- Jinhua Expressway

328

2023 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2023 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
58.  P A R T I C U L A R S  O F  S U B S I D I A R I E S  O F  T H E  C O M P A N Y 

(Continued)

58.1  General information of subsidiaries (Continued)

Registered 

and paid-in 

Date and 

capital/share 

place of 

registration

capital

Rmb

Name of subsidiary

Hanghui Co

Note 11

3,101,853,000

Hangzhou Jujin Jiawei Investment 

Note 12

206,103,000

Management (Limited Partnership) 

(“Jujin Jiawei”)

Zheshang International Financial 

Note 13

41,591,000

Holding Co., Limited

Percentage of equity interest attributable to the Company

Direct

Indirect

Principal activities

12/31/2023

12/31/2022

12/31/2023

12/31/2022

%

–

–

–

%

(Restated)

–

–

–

%

51

%

(Restated)

51

Management of the Zhejiang Section of the 

Hangzhou-Ruili Expressway

–

**18.1635

Provision of investment management and 

advisory and private equity investments

**39.7871

**39.7872

Trading of future

Huihang Co

Note 14

580,000,000

100

100

Deqing Co

Zhoushan Co

Note 15

320,000,000

80.1

Note 16

4,114,690,000

Zhejiang Grand Hotel

Note 17

306,662,167

Zheshang Securities Investment  

Note 18

261,000,000

Co., Ltd. ***

80.1

51

100

51

100

–

–

–

–

–

–

–

–

–

Management of the Anhui Section of the 

Hangzhou-Ruili Expressway

Construction and management

Management of the Zhoushan Bay Bridge

Operation of hotel

–

**40.3384

**40.3385

Provision of investment management and 

advisory and private equity investments

LongLiLiLong Co

Note 19

8,519,856,565

100

100

–

–

Management of the LongLi Expressway 

and LiLong Expressway

329

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
58.  P A R T I C U L A R S  O F  S U B S I D I A R I E S  O F  T H E  C O M P A N Y 

(Continued)

58.1  General information of subsidiaries (Continued)

Registered 

and paid-in 

Date and 

capital/share 

place of 

registration

capital

Rmb

Name of subsidiary

Zhajiasu Co

Zheshang International Asset 

Management Ltd. (“Zheshang 

International Asset Management”)

Note 20

300,000,000

Note 21 HKD10,000,000

Zhejiang Zhijiang Intelligent 

Note 22

100,000,000

Transportation Technology Co., 

Ltd.

HuangQuNan Co

Note 23

100,000,000

Percentage of equity interest attributable to the Company

Direct

Indirect

Principal activities

12/31/2023

12/31/2022

12/31/2023

12/31/2022

%

55

–

98

–

%

(Restated)

55

–

–

–

%

–

%

(Restated)

–

Management of the Zhajiasu Expressway

**39.7871

**39.7872

Provision of asset management service

–

–

Provision of technology service

100

100

Management of the HuangQuNan Expressway

* 

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 during the years ended December, 2022 and 2023. The company repurchased its ordinary share 
amounted  to  38,781,600  during  the  years  ended  December  2023  for  future  incentive  scheme,  accordingly  the 
voting right of the Company increase from 40.3384% to 40.7459%.

** 

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.

330

2023 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2023 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
58.  P A R T I C U L A R S  O F  S U B S I D I A R I E S  O F  T H E  C O M P A N Y 

(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: 

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 3: 

Towing Co was established on July 31, 2003 in the PRC as a limited liability company.

Note 4: 

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 43 for more details.

Note 5: 

Zheshang Futures was established on September 7, 1995 in the PRC as a limited liability company. During 

the  year  ended  December  31,  2022,  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.

Note 6: 

Zheshang  Capital  Management  was  established  on  February  9,  2012  in  the  PRC  as  a  limited  liability 

company.

Note 7: 

Asset Management was established on July 22, 2013 in the PRC as a limited liability company.

Note 8: 

Dongfang Jujin was established on March 25, 2014 in the PRC as a limited liability company. The company 

was deregistered in 2023.

Note 9: 

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.

331

58.  P A R T I C U L A R S  O F  S U B S I D I A R I E S  O F  T H E  C O M P A N Y 

(Continued)

58.1  General information of subsidiaries (Continued)

Note 10: 

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 11:  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 12: 

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. The company was deregistered in 2023.

Note 13:  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 14:  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 15:  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.

332

2023 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 202358.  P A R T I C U L A R S  O F  S U B S I D I A R I E S  O F  T H E  C O M P A N Y 

(Continued)

58.1  General information of subsidiaries (Continued)

Note 16:  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 17:  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 18:  Zheshang  Securities  Investment  Co.,  Ltd.  was  established  on  November  26,  2019  in  the  PRC  as  a  limited 

liability company, and its paid-in share capital was increased by Rmb36,000,000 to Rmb261,000,000 during 

the year ended December 31, 2023.

Note 19:  LongLiLiLong  Co  is  a  limited  liability  company  established  in  the  PRC  on  April  8,  2005,  and  was  acquired 

from Communications Group.

Note 20:  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 21:  Zheshang  International  Asset  Management  is  a  limited  liability  company  established  in  Hong  Kong  on 

November 15, 2021.

Note 22:  Zhejiang Zhijiang Intelligent Transportation Technology Co., Ltd. is a limited liability company established in 

the PRC on April 27, 2023. As at December 31, 2023, 35% of the registered capital of Rmb100,000,000 has 

been paid.

Note 23:  HuangQuNan  Co  is  a  limited  liability  company  established  in  the  PRC  on  December  29,  2022,  formerly 

existed as a branch in Communications Group before the business was acquired by LongLiLiLong Co.

333

58.  P A R T I C U L A R S  O F  S U B S I D I A R I E S  O F  T H E  C O M P A N Y 

(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 
o t h e r  s u b s i d i a r i e s  a r e  o p e r a t i n g  i n  M a i n l a n d  C h i n a.  A s  a t  D e c e m b e r  31,  2023, 
Zheshang  Securities  has  subordinated  bonds,  corporate  bonds,  short-term  financing 
bonds  and  beneficial  certificates  at  the  total  principal  amount  of  Rmb3,100,000,000, 
Rmb14,500,000,000, Rmb1,500,000,000 and Rmb3,627,700,000 (2022: Rmb6,400,000,000, 
Rmb14,499,894,000, Rmb2,500,000,000 and Rmb2,045,460,000), respectively.

58.2  Change in ownership interest in a subsidiary

During  the  year  ended  December,  2023,  15,213  shares  of  the  Convertible  Bond  2022 
was  converted,  resulting  in  the  slight  dilution  of  the  equity  interest  in  Zheshang  Securities 
attributed  to  the  Company  from  40.3385%  to  40.3384%,  and  the  Group’s  percentage  of 
entity interest in its subsidiaries decreased accordingly.

59.  INTERESTS IN UNCONSOLIDATED STRUCTURED ENTITIES

Regarding  securities  operation  segment  as  defined  in  Note  8,  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,  2023  and  2022.  Except 
for  the  structured  entities  the  Group  has  consolidated  as  disclosed  in  Note  45,  in  the 
opinion  of  the  Directors,  the  variable  returns  the  Group  exposed  to  over  these  collective 
asset management schemes, 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.

334

2023 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 202359.  INTERESTS  IN  UNCONSOLIDATED  STRUCTURED  ENTITIES 

(Continued)

The  total  assets  of  unconsolidated  funds,  asset  management  schemes  managed  by 
securities operation segment amounted to Rmb106,058,993,000 and Rmb103,411,981,000 
as at December 31, 2023 and 2022, respectively. The related management fee income for 
the  year  ended  December  31,  2023  amounted  to  Rmb403,702,000  (December  31,  2022: 
Rmb420,826,000).

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,  2023  and  2022,  the 
carrying  amounts  of  the  Group’s  interests  in  unconsolidated  funds,  asset  management 
schemes  and  limited  partnership  are  Rmb12,637,492,000  and  Rmb8,948,227,000, 
respectively.  The  related  management  fee  income  and  net  investment  gains  for  the  year 
ended December 31, 2023 are disclosed in Note 7 and Note 9.

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.  During  the  year  ended  December  31,  2023,  the 
ABS  Program’s  cashflow  was  sufficient  to  cover  necessary  expenditures  and  senior  class 
holder’s share.

Besides,  the  fund  manager  accepts  open-ended  withdrawal  and  subscription  of  senior 
class securities within the withdrawal registering period at the end of each three years from 
issuance  of  ABS,  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.

335

60.  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

Interests in joint ventures

Other receivables and prepayments

Time deposits

CURRENT ASSETS

Trade receivables

Other receivables and prepayments

Amount due from subsidiaries

Dividends receivable

Bank balances and cash

– Time deposits with original maturity over three months

– Cash and cash equivalents

12/31/2023

Rmb’000

12/31/2022

Rmb’000

1,075,491

105,008

1,112,067

28,401

10,766,236

8,475,700

1,373,970

12,350

3,048,619

975,338

7,800

1,455,240

29,393

10,691,936

7,739,747

373,470

–

–

25,997,842

21,272,924

259,960

134,272

1,280,194

2,366,109

3,051,214

10,054,616

17,146,365

109,532

119,839

1,300,068

2,366,109

–

9,407,345

13,302,893

336

2023 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2023 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
60.  SUMMARY OF FINANCIAL INFORMATION OF THE COMPANY 

(Continued)

CURRENT LIABILITIES

Trade payables

Tax liabilities

Other taxes payable

Other payables and accruals

Amount due to subsidiaries

Bonds payable

Bank and other borrowings

Convertible Bond

NET CURRENT LIABILITIES

12/31/2023

Rmb’000

12/31/2022

Rmb’000

211,735

157,157

26,427

268,755

7,829,311

69,546

271,689

1,815,465

10,650,085

6,496,280

232,254

57,083

22,057

265,765

5,628,161

67,278

253,679

–

6,526,277

6,776,616

TOTAL ASSETS LESS CURRENT LIABILITIES

32,494,122

28,049,540

NON-CURRENT LIABILITIES

Bonds payable

Convertible Bond

Bank and other borrowings

Deferred tax liabilities

CAPITAL AND RESERVES

Share capital

Reserves

6,325,061

–

–

90,203

6,415,264

6,268,315

1,788,401

616,360

106,412

8,779,488

26,078,858

19,270,052

5,993,498

20,085,360

26,078,858

4,343,115

14,926,937

19,270,052

337

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
60.  SUMMARY OF FINANCIAL INFORMATION OF THE COMPANY 

(Continued)

Movement of share capital and reserve of the Company was set out below.

Investment 

Share 

Share 

Statutory 

revaluation 

Dividend 

Special 

Retained 

capital

premium

reserves

reserve

reserve

reserves

profits

Total

Rmb’000

Rmb’000

Rmb’000

Rmb’000

Rmb’000

Rmb’000

Rmb’000

Rmb’000

At January 1, 2022

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

Profit for the year

Other comprehensive 

income for the year

Total comprehensive 

income for the year

–

–

–

–

–

–

Issuance of shares

1,650,383

4,448,491

2022 dividend

Proposed dividend

Transfer to reserves

–

–

–

–

–

–

–

–

–

–

–

–

299,412

–

–

–

–

–

–

–

–

–

–

–

(1,628,668)

1,917,919

–

–

–

–

–

–

–

–

2,338,600

2,338,600

–

–

2,338,600

2,338,600

–

–

6,098,874

(1,628,668)

(1,917,919)

(299,412)

–

–

At December 31, 2023

5,993,498

8,094,217

2,663,842

18,711

1,917,919

71,382

7,319,289

26,078,858

338

2023 ANNUAL REPORTNotes to the Consolidated Financial StatementsFor the year ended December 31, 2023 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
CHAIRMAN
YUAN Yingjie (Appointed on August 23, 2023)
YU Zhihong (Resigned on August 23, 2023)

EXECUTIVE DIRECTORS
WU Wei (Appointed on September 27, 2023)
LI Wei (Appointed on October 13, 2023)
YUAN  Yingjie  (Redesignated  as  a  non-executive 

Director on September 7, 2023)

CHEN  Ninghui  (Resigned  on  September  27, 

2023)

NON-EXECUTIVE DIRECTORS
YANG Xudong
FAN Ye
HUANG Jianzhang

INDEPENDENT
NON-EXECUTIVE DIRECTORS
PEI Ker-Wei
LEE Wai Tsang, Rosa 
CHEN Bin

SUPERVISORS
LU Wenwei (Appointed on September 27, 2023)
LI  Yuan  (Appointed  on  June  9,  2023;  resigned  on 

September 27, 2023)

ZHENG Ruchun (Resigned on June 9, 2023)
HE Meiyun
WU Qingwang 
LU Xinghai 
WANG Yubing

COMPANY SECRETARY
Tony ZHENG

AUTHORIZED
REPRESENTATIVES
YUAN Yingjie
WU Wei (Appointed on October 31, 2023)
YU Zhihong (Resigned on September 7, 2023)

STATUTORY ADDRESS 
AND PRINCIPAL PLACE OF 
BUSINESS
Room 501, No. 2, Mingzhu International 

Business Center

199 Wuxing Road, Shangcheng District
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 
43/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

339

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

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

340

2023 ANNUAL REPORTCorporate InformationLocation Map of Expressways in 
Zhejiang Province

2023
ANNUAL REPORT
ANNUAL REPORT

STOCK CODE：0576

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