江蘇寧滬高速公路股份有限公司 jiangsu … · for the year ended 31 december 2013, the...

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Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong

Kong Limited take no responsibility for the contents of this announcement, make no

representation as to its accuracy or completeness and expressly disclaim any liability

whatsoever for any loss howsoever arising from or in reliance upon the whole or any part

of the contents of this announcement.

JIANGSU EXPRESSWAY COMPANY LIMITED 江蘇寧滬高速公路股份有限公司

(Incorporated in the People’s Republic of China as a joint-stock limited company) (Stock Code: 00177)

RELATED PARTY TRANSACTIONS/CONNECTED TRANSACTION

ENTERING INTO COMPENSATION AGREEMENT FOR DEMOLITION OF PROPERTIES AND EQUIPMENT OF

MAQUN MONITORING CENTRE wITh jIANGSU ExPRESSwAY NETwORk OPERATION & MANAGEMENT CO., LTD.

ANDCONTINUING RELATED PARTY TRANSACTIONS/CONNECTED

TRANSACTIONENTERING INTO AMENDMENTS TO TENANCY CONTRACT wITh jIANGSU ExPRESSwAY NETwORk OPERATION &

MANAGEMENT CO., LTD.

Important Notice:

• The transactions are not subject to approval by shareholders in general meeting.

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• Since Communications Holdings, the controlling shareholder of the Company,

directly and indirectly holds over 30% interests in Network Operation Company,

the transactions contemplated under the Compensation Agreement entered into

with Jiangsu Expressway Network Operation & Management Co., Ltd. constitute

related party transactions/ connected transaction and the transactions contemplated

under the Amended Tenancy entered into with Jiangsu Expressway Network

Operation & Management Co., Ltd. constitute continuing related party transactions/

continuing connected transaction under listing rules of Shanghai Stock Exchange

and Hong Kong Stock Exchange, respectively, which are subject to reporting and

announcement requirements but exempt from the independent shareholders’ approval

in general meeting requirement.

• The entering into of the compensation agreement for demolition of properties

and equipment of Maqun Monitoring Centre and amendments to tenancy contract

with Jiangsu Expressway Network Operation & Management Co., Ltd. have been

approved by the directors of the Company (including independent non-executive

directors) on the 14th Meeting of 7th Session of the Board of Directors of the

Company convened on 25 April 2014. It is expected that there will be no adverse

impact on the Company nor constitution of reliance on the related party/connected

party.

• Connected directors Mr. Yang Gen Lin, Mr. Chen Xiang Hui, Mr. Du Wen Yi and

Mr. Qian Yong Xiang had abstained from voting on the resolution regarding these

transactions.

• Directors of the Company (including independent non-executive directors) are of the

view that the transactions are conducted under normal commercial terms and are fair

and reasonable.

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I. I N T R O D U C T I O N T O T h E N O R M A L R E L A T E D P A R T Y TRANSACTIONS AND CONNECTED TRANSACTIONS

i) Approval procedure of the normal related party transactions/connected transactions

The board of directors of Jiangsu Expressway Company Limited (the “Company”)

announced that on 25 April 2014, the Company entered into compensation

agreement for demolition of properties and equipment of Maqun Monitoring

Centre (the “Compensation Agreement”) and amendments to tenancy contract

(the “Amended Tenancy”) with Jiangsu Expressway Network Operation &

Management Co., Ltd. (the “Network Operation Company”, in which the

Company directly holds a 3.6219% interest).

Since Jiangsu Communications Holdings Company Limited (the “Communications holdings”), the controlling shareholder of the Company, directly and indirectly

holds over 30% interests in Network Operation Company, the Compensation

Agreement constitutes related party transaction/connected transaction, and the

Amended Tenancy constitutes continuing related party transaction/ continuing

connected transaction under the listing rules of Shanghai Stock Exchange and

the Rules governing the Listing of Securities on The Stock Exchange of Hong

Kong Limited respectively, which are subject to the reporting and announcement

requirements but exempt from the independent shareholders’ approval in general

meeting requirement.

The directors of the Company (save for directors Mr. Yang Gen Lin, Mr.

Chen Xiang Hui, Mr. Du Wen Yi and Mr. Qian Yong Xiang (being connected

directors) who had abstained from voting on the resolution) voted for the entering

into of the transactions and considered that the terms of the transactions are

fair and reasonable and in the interests of the shareholders as a whole. All four

independent non-executive directors had voted for the connected transactions.

The transactions do not require approval from other authorities.

ii) Estimated expense and actual expense incurred in the last daily related party transaction/connected transaction.

For the year ended 31 December 2013, the rental actually paid to the Company

by Network Operation Company was RMB 10,406,700.

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iii) Estimated amount and categories of the daily related party transaction/connected transaction

Amended Tenancy Compensation Agreement

Parties • The Company (as landlord)

• Network Operation Company

(as tenant)

• The Company (as indemnitee)

• Network Operation Company

(as indemniter)

Term and effective

date of contract

1 May 2014 to 30 April 2017 25 April 2014

Premise Maqun Monitoring Centre at

No. 189 Maqun New Street, Nanjing,

with a site area of 90 Chinese acres

and floor area of 4,024 square meters

Wings of Maqun Monitoring Centre,

including canteen, dormitory,

gate house and reception hall for

ETC costumers, with gross area

of 2205.06 square meters,

will be demolished

Amount RMB 3,612,400

(approximately HKD4,548,533.7)

RMB 7,503,200

(approximately HKD9,447,613.3)

The rental, which is determined with

reference to investment recovery principal

and taxation concerned, has been audited

and confirmed by

Jiangsu Yongcheng Accountant Firm.

The compensation fee has been appraised

and confirmed by Beijing Northern Yashi

Assets Appraisal Co, Ltd. Appointed

by the Company.

Payment method • The annual rental of RMB 3,612,400

shall be paid to the landlord in

lump sum by 31 July of every year.

• RMB 7,503,200 shall be paid

to the Company in lump sum.

During the term of the tenancy, a daily penalty of 0.01% of the outstanding rental shall

be payable by the tenant to the Company if it fails to make payment in accordance

with the terms of the Tenancy Contract.

Renewal If the tenant would like to renew the tenancy, it should notify the Company three

months prior to the expiration of the tenancy. The rental shall be adjusted based on

the then prevailing market situation and subject to negotiation of the parties.

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II. CONNECTED PERSON AND RELATIONShIP

jiangsu Expressway Company Limited

Registered office: No. 6 Xianlin Road, Nanjing, Jiangsu Province, the

PRC

Business nature: Joint stock limited company

Legal representative: Mr. Yang Gen Lin

Registered capital: RMB5,037,747,500

Principal business: Construction, management, maintenance, toll collection

of expressways and toll roads in Jiangsu Province

Total assets as at last financial

period: (as at 31 December 2013)

RMB 26,833,912,000 (according PRC Accounting

Standards)

Net assets as at last financial period:

(as at 31 December 2013)


Standards)

Operating income of the last financial

period: (for the year 2013)


Standards)

Net profits of the last financial



Standards)

jiangsu Expressway Network Operation & Management Co., Ltd.

Registered office: No. 189 Maqun New Street, Nanjing, Jiangsu Province,

the PRC

Business nature: Limited liability company

Legal representative: Mr. Chen Xiang Hui

Registered capital: RMB 144,400,000

Principal business: Provision of technical services for expressway inter-

networked toll collection

Total assets as at last financial

period: (as at 31 December 2013)


Standards)

Net assets as at last financial period:

(as at 31 December 2013)

RMB 164,707,000 (according PRC Accounting

Standards)

Operating income of the last financial


RMB 138,671,000 (according PRC Accounting

Standards)

Net profits of the last financial


RMB 7,506,000 (according PRC Accounting Standards)

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III. MAjOR TERMS OF ThE CONNECTED TRANSACTIONS AND bASIS OF DETERMINATION OF CONSIDERATION

i) Compensation Agreement

Maqun Monitoring Centre, which is located at 189 Maqun New Street of Nanjing

and opened in 2008, has been rented to Network Operation Company. In light of

the demand by the operation and management of Network Operation Company,

the layout of Maqun Monitoring Centre will be adjusted. The wings of Maqun

Monitoring Centre and equipment installed thereof, with gross area of 2,205.06

square meters, will be demolished after negotiation with the Company. The net

book value of the assets subject to demolition as of 31 December 2013 (the

evaluation date) is approximately RMB 5,856,900.

The compensation for properties and equipment subject to demolition is

determined as below:

1. It is agreed that Beijing Northern Yashi Assets Appraisal Co, Ltd. shall

be engaged by the Company to value the properties and equipment subject

to demolition under the requirements of laws and regulations. Pursuant to

the valuation report (Northern Yashi Pingbaozi [2014] No. 01-065) issued

by Beijing Northern Yashi Assets Appraisal Co, Ltd, the properties and

equipment of Maqun Monitoring Centre subject to demolition are valued at

RMB 6,258,100 as at 31 December 2013, which is the evaluation date.

2. The valuation of properties and equipment of Maqun Monitoring Centre

subject to demolition at RMB 6,258,100 and the tax payable under the

transaction at RMB 1,245,100, which is RMB 7,503,200 in aggregate (tax

inclusive) will be paid by Network Operation Company. Thus Network

Operation Company shall pay the Company a compensation of RMB

7,503,200 in lump sum.

Payment method of compensation:

The compensation for the properties and equipment to be demolished of RMB

7,503,200 shall be paid by the tenant to an account designated by the landlord

in a lump sum within 10 working days after execution of the Compensation

Agreement.

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ii) Amended Tenancy

The premises subject to the original tenancy contract are located at No. 189

Maqun New Street, Nanjing with a site area of 90 Chinese acres and floor area of

6,229 square meters. The gross area of properties and plants subject to demolition

is 2,205 square meters, thus the gross area of the remaining premises is 4,024

square meters. The remaining part of the premises will be continuously rented to

the tenant as office.

The term of tenancy are amended to 1 May 2014 to 30 April 2017.

The rental and payment are amended as below:

1. The original annual rental was RMB 4,460,00, and the rental for the year

of 2013 has been paid by 31 October 2013. The rental for the period from

1 January 2014 to 30 April 2014 (approximately RMB 1,486,700) are still

outstanding for settlement.

2. As the area of premises subject to tenancy has changed and Compensation

Agreement has been entered into by both parties, the annual rental for the

remaining land and premises is adjusted to RMB 3,612,400 (tax inclusive).

3. The payment of rental has been amended as: the rental for the period from 1

January 2014 to 30 April 2014 of RMB1,486,700 shall be paid by the tenant

to the account designated by the landlord in a lump sum within one month

after the effective date of Amended Tenancy. The annual rental for the

period from 1 May 2014 to 30 April 2015 of RMB 3,612,400 shall be paid

by 31 July of this year to the landlord. The subsequent annual rental of RMB

3,612,400 shall be paid by the tenant to the landlord in a lump sum by 31

July of every contract year.

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IV. PURPOSE OF ThE TRANSACTIONS AND ThE EFFECT TO ThE COMPANY

Maqun Monitoring Centre has been rented to Network Operation Company as office

since 2008. In light of the demand by the operation and management of Network

Operation Company, the layout of Maqun Monitoring Centre will be adjusted and part

of the properties and equipment shall be demolished. After negotiation, the Company

agreed that the wings of Maqun Monitoring Centre, including canteen, dormitory,

gate house and reception hall for ETC costumers, with gross area of 2,205.06 square

meters, will be demolished. Pursuant to the evaluation report of Beijing Northern

Yashi Assets Appraisal Co, Ltd., the valuation of properties and equipment of Maqun

Monitoring Centre subject to demolition at RMB 6,258,100 and the tax payable

under the transaction at RMB 1,245,100, which is RMB 7,503,200 in aggregate (tax

inclusive) will be paid by Network Operation Company as compensation. As the area

of premises subject to tenancy has changed, an amended tenancy has been entered into

by both parties. The Company is of the view that the determination of rental under

Amended Tenancy is reasonable, thus the entering into of the Amended Tenancy is

expected to have no adverse impact on the Company. In addition, the Company is of

the view that the Compensation Agreement is reasonable as the compensation under

the Compensation Agreement entered into by the Company and Network Operation

Company is determined with reference to the evaluation report issued by Beijing

Northern Yashi Assets Appraisal Co, Ltd. and the relevant tax, which is expected to

have no adverse impact on the Company.

V. OPINION OF ThE INDEPENDENT NON-ExECUTIVE DIRECTORS

The independent non-executive directors of the Company are of the view that the

entering into of the transactions are in the interests of the shareholders of the Company

as a whole and in the ordinary and usual course of business of the Company, and the

terms of the transactions are on normal commercial terms and are fair and reasonable.

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VI. DOCUMENTS AVAILAbLE FOR INSPECTION

The following documents will be available for inspection by shareholders of the

Company during normal business hour at the registered office of the Company at No.

6 Xianlin Road, Nanjing, Jiangsu Province, the PRC:

1. resolutions passed on the 14th Meeting of 7th Session of the Board of Directors;

2. written approval of the transactions and independent opinion of the independent

non-executive directors prior to entering into the transactions;

3. resolutions passed on the meeting of the Supervisory Committee with signatures

of all supervisors attended; and

4. Compensation Agreement and Amended Tenancy.

Board of Directors

jiangsu Expressway Company Limited

Nanjing, the PRC, 26 April 2014

* For the purpose of this announcement, conversions of Renminbi into Hong Kong dollars are based

on the approximate exchange rate of RMB79.419= HK$100.00

As at the date of this announcement, directors of the Company are:

Yang Gen Lin, Zhang Yang, Chen Xiang Hui, Du Wen Yi, Qian Yong Xiang, Cheng Chang

Yung Tsung, Alice, Fang Hung, Kenneth, Zhang Erzhen*, Xu Chang Xin*, Gao Bo* and

Chen Donghua*

* Independent Non-executive Directors

江蘇寧滬高速公路股份有限公司 jiangsu … · for the year ended 31 december 2013, the...

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