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Zhejiang Expressway Co., Ltd. (HKEx: 576; LSE: ZHEH; ADR: ZHEXY) 12/F, Block A, Dragon Century Plaza 1 Hangda Road, Hangzhou City Zhejiang Province, PRC, 310007 Website: www.zjec.com.cn Investor Relations Contact Zhejiang Expressway Co., Ltd. Mr. Tony Zheng (86) 571 8798 7700 [email protected] Ms. Helen Wu (86) 571 8790 1966 [email protected] Christensen Investor Relations Ms. Jung Chang (852) 2117 0861 [email protected] Mr. Ricky Tan (852) 2232 3941 [email protected] Financial Highlights Fiscal Year End Dec 31 __________________________________ Current Price (March 19, 2015) HK$9.07 __________________________________ 52-Week Range HK$6.71-HK$10.00 __________________________________ PE 13.39(X) __________________________________ Market Cap HK$39,392M __________________________________ 2014 Revenue RMB 9,051M __________________________________ 2014 Profit attributable to owners of the Company RMB 2,349M __________________________________ 2014 EPS RMB 54.09 cents __________________________________ 2014 ROE 14.3% __________________________________ Corporate Profile Established in 1997, Zhejiang Expressway Co., Ltd. is regarded by the Zhejiang Provincial Government to be its main enterprise for investment in and development, operation, maintenance and management of high-grade roads in Zhejiang Province. The Company and its subsidiaries (the “Group”) has concession rights to operate the 248km Shanghai-Hangzhou-Ningbo Expressway and the 142km Shangsan Expressway for a period of 30 years, and also the 70km Ningbo-Jinhua Expressway (Jinhua section) for a period of 25 years. The Group also carries out certain ancillary businesses such as restaurants, shops, and gas stations within service areas and billboard advertising along expressways, as well as securities businesses across the country. The H Shares of the Company were listed on the Hong Kong Stock Exchange on May 15, 1997, and the Company subsequently obtained a secondary listing on the London Stock Exchange on May 5, 2000. On February 14, 2002, a Level I American Depositary Receipt program sponsored by the Company in respect of its H Shares was established in the United States. Market Review In 2014, Zhejiang Province’s economy steadily improved and foreign trade rose, alongside China’s continued transition into a “New Normal” economy focusing on quality over quantity of growth. For Zhejiang Province, GDP growth was 7.6% year-onyear, compared to 7.4% growth for China overall. Furthermore, the trading volume in securities markets in China increased by a substantial 63.8% year-on-year during the year. * Bureau of Statistics of Zhejiang Province GDP Growth Rate - PRC vs Zhejiang Province (%) 14 11.8 12 10 8.7 8.9 9.2 9.2 9 8 7.8 8 7.7 6.4 7.4 7.6 6 4 2 0 2009 2010 2011 China 2012 Zhejiang 2013 2014 PRC government and Zhejiang Province continue to invest heavily in toll road and Management Team infrastructure Mr. Xiaozhang Zhan According to figures released by the Ministry of Communications, investment in highway fixed assets amounted to RMB2,166.8 billion by the end of November 2015, up 13.5% yoy. Chairman 5,000 5,000 4,000 3,000 2,000 1,000 0 3,618 Ms. Jianhu Luo Executive Director & General Manager 2020 2018 2016 2014 2012 2008 2005 2003 2001 1999 1997 1995 2010 km Total Mileage of Expressways in Zhejiang Province Appointed Chairman in Jun 11, 2012 Appointed Executive Director and General Manager on Mar 1, 2009 Senior economist; master’s degree from the Business Institute of Zhejiang University Has extensive experience working in Zhejiang Provincial Government Operating environment – steady growth in toll income boosted by steadily improving economy Appointed Executive Director and General Manager in Jun 11, 2012 Graduated from the Department of Law of Hangzhou University, majoring in Economic Law; a senior economist with a bachelor’s degree in law Held positions such as board secretary of Zhejiang Transportation Engineering Construction Group Co., Ltd., Secretary and Assistant to Director of the Secretarial Office to the Board, Deputy Director of the Legal Affairs Department, deputy director of the Secretarial Office to the board and the manager of the Investment and Development Department of Zhejiang Communications Investment Group Co., Ltd. In 2014, the Group’s major highway, the ShanghaiHangzhou-Ningbo Expressway, was negatively affected by traffic diversion as a result of the new JiaxingShaoxing Bridge, however the Shangsan and NingboJinhua Expressway both saw high organic growth thanks Mr. Jingzhong Zhang to the improving economy in Zhejiang Province. Respectively, toll income fell 0.4% and rose 28.3% and Deputy General Manager Joined Zhejiang Provincial Political Science and Law 16.0% during the year. Policy Research Unit in 1984 Served as Associate Director of Hangzhou Municipal The Group utilized various measures to increase toll income, with a focus on plugging loopholes, reducing Foreign Economic Law Firm from 1988 to 1994. In 1992, costs, and increasing efficiency. Targeted publicity he obtained the qualifications required by the regulatory measures alongside a 20% reduction in equipment use authorities in China to practice securities law cost and administration fees allowed the Group to reach Has been an Executive Director and Company Secretary a record high in revenue. The Group will continue to of the Company since March 1997, and was appointed focus on reform and innovation as two main themes Deputy General Manager in March 2002. Currently also within its businesses, and continue to drive human serves as Director at Shangsan Co., Development Co., and Vice Chairman at Zheshang Securities resource improvements going forward. Securities business – robust growth in Mr. Dehua Wang brokerage commission income In 2014, Zheshang Securities experienced significant growth in market share and trading volume, riding on the 63.8% increase in trading volume of stock markets in China. Chief Financial Officer Income from investment banking, margin financing and securities lending and asset management all accelerated due to all-round development in each business segment. Zheshang Securities’ was recognized as a qualified broker in the Shanghai-Hong Kong Stock Connect. Mr. Tony Zheng Company Secretary Zheshang Securities’ IPO application to the Shanghai Stock Exchange was accepted by the CSRC in May, 2013. Zheshang Securities remains on the wait list for an IPO. Appointed Chief Financial Officer in March 2014. Graduated from University of Hong Kong in 2007; holder of master’s degree in Economics Has been a Deputy General Manager of Zhejiang Communications Investment Group Co., Ltd. from 2011 to 2014 Appointed Company Secretary in March 2011 Continues to serve as Director of the Secretarial Office to the Board of the Company Graduated from University of California at Berkeley with Bachelor of Science in Civil Engineering Ownership Length in (%) Kilometres Expressway No. of Lanes No. of Toll Stations No. of Service Areas Start of Operation Remaining Years of Operation 1998 14 Shanghai-Hangzhou Expressway - Jiaxing section 99.9995% 88.1 8 7 2 51% 11.1 6 1 0 100% 3.4 4 2 0 1995 14 - Hangzhou to Hongken section 100% 16.0 4 1 0 1992 13 - Hongken to Duantang section 100% 124.0 8 9 2 1995 13 - Duantang to Dazhujia section 100% 5.0 4 1 0 1996 13 73.625% 142.0 4 11 3 2000 16 100% 69.7 4 7 1 2005 16 - Yuhang section - Hangzhou section 1995- 14 1998 Hangzhou-Ningbo Expressway Shangsan Expressway Jinhua section, Ningbo-Jinhua Expressway Financial Highlights Operational Highlights Results Highlights Income Breakdown Year ended December 31 (Rmb million) 2014 2013 % change Revenue 9,051 7,851 +15.3 (5,576) (4,956) +12.5 Gross profit 3,475 2,896 +20.0 Profit before tax 3,768 2,972 +26.8 Profit for the year 2,850 2,215 +28.7 2,349 1,907 +23.2 54.09 43.92 +23.2 Operating costs Year ended December 31 2014 2013 % change Toll 4,259 4,020 +5.9 Service areas 2,208 2,055 +7.4 83 104 -20.2 2,419 1,651 +46.5 82 21 +290.5 9,051 7,851 +15.3 Advertising business Securities business Others Profit attributable to Owners of the Company Basic EPS (cents) Total Daily Traffic Volume of SHN Expressway 55,000 Revenue (Year ended December 31) (RMB million) 7851 6,781 6,700 2010 50,000 (Full-trip) 9051 6,769 (Rmb million) 6,036 2011 45,000 2012 2013 40,000 2014 35,000 2015 30,000 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Daily Traffic Volume of Shangsan Expressway 2010 2011 2012 2013 2014 30,000 (Full-trip) 2009 Profit attributable to owners of the Company (Year ended December 31) (RMB million) 2010 25,000 2011 2012 20,000 2013 2349 1,795 1,871 1,805 2014 15,000 1907 1,686 2015 10,000 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Ningbo-Jinhua Expressway, Jinhua Section % change y-o-y 2009 2010 2011 2012 2013 2014 Daily traffic volume during 2014 15,911 +17.6