Connected Transaction - LED Lights Retrofit Agr...

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ZHEJIANG EXPRESSWAY CO., LTD.
(A joint stock limited company incorporated in the People's Republic of China with limited liability)
(Stock code: 0576)

CONNECTED TRANSACTION 
LED LIGHTS RETROFIT AGREEMENT

THE LED LIGHTS RETROFIT AGREEMENT

On April 17, 2018, Jinhua Co, a wholly-owned subsidiary of the Company, entered into the LED Lights Retrofit Agreement with Zhejiang Information, a wholly-owned subsidiary of the controlling shareholder of the Company, pursuant to which the Company agreed to purchase LED lights retrofit services from Zhejiang Information.

LISTING RULES IMPLICATIONS

As at the date of this announcement, Communications Group is a controlling shareholder of the Company. Zhejiang Information is a wholly-owned subsidiary of Communications Group. Therefore, Zhejiang Information is a connected person of the Company and as a result, the transaction under the LED Lights Retrofit Agreement constitutes connected transaction for the Company under Chapter 14A of the Listing Rules.

Pursuant to Rules 14A.81 and 14A.82 of the Listing Rules, as the transactions contemplated under the LED Lights Retrofit Agreement and the Previous Transactions were entered into with parties who are connected with one another and within a 12-month period, the LED Lights Retrofit Agreement and the Previous Transactions are required to be aggregated for the calculation of the relevant percentage ratios to determine the classification of the transactions.

As the applicable percentage ratios in respect of the transactions contemplated under the LED Lights Retrofit Agreement, after aggregating the Previous Transactions, are more than 0.1% but less than 5%, the LED Lights Retrofit Agreement will be subject to the reporting, announcement and annual review requirements but exempt from the independent Shareholders' approval requirement under Chapter 14A of the Listing Rules.

THE LED LIGHTS RETROFIT AGREEMENT

On April 17, 2018, Jinhua Co, a wholly-owned subsidiary of the Company, entered into the LED Lights Retrofit Agreement with Zhejiang Information, a wholly-owned subsidiary of the controlling shareholder of the Company, pursuant to which the Company agreed to purchase LED lights retrofit services from Zhejiang Information.

Principal terms of the LED Lights Retrofit Agreement are set out below:

Date:	April 17, 2018
Parties:	(1)    Jinhua Co, as the contract letting party; and
	(2)    Zhejiang Information, as the contractor
Term:	60 days since April 17, 2018
Consideration:	RMB6,935,280
Basis of consideration:	The consideration has been determined by public tender procedures which are open to other independent third party service providers. The factors for assessment include, but are not limited to, the tender prices, relevant experience in construction design, company reputation and quality of work and technological solutions. According to the evaluation of the assessment committee, Zhejiang Information successfully obtained the highest overall score among all the bidders.
Payment:	The consideration is paid in four installments: (i) 20% to be paid within 15 working days after signing of the LED Lights Retrofit Agreement; (ii) 60% to be paid after acceptance of delivery and examination; (iii) 10% to be paid after the expiry of defect liability period; and (iv) 10% to be paid after the expiry of warranty period.
Scope of services:	LED lights retrofit of Yankengjian Tunnel of Jinhua section of Ningbo-Jinhua Expressway, which includes, but not limited to, the procurement, installation and testing of the LED lights and ancillary facilities.
Governing law:	PRC law

REASONS FOR AND BENEFITS OF THE TRANSACTION

Well-functioning lighting facilities are necessary for the safe operation of expressways, especially for tunnels. LED lights characterized by stable and energy efficient are regarded as ideal lighting facilities of tunnels. Zhejiang Information has the relevant qualifications and expertise to provide LED lights retrofit services to Jinhua Co. In addition, Jinhua Co has gone through the public tender process  in  accordance  with which Zhejiang Information successfully obtained the highest overall score among all the bidders.

Given the above, the Directors (including the independent non-executive Directors) are of the view that the terms of the LED Lights Retrofit Agreement are on normal commercial terms, in the ordinary and usual course of business of the Company and are fair and reasonable and in the interests of the Company and  the  Shareholders  as  a whole.

LISTING RULES IMPLICATIONS

As at the date of this announcement, Communications Group is a controlling shareholder of the Company. Zhejiang Information is a wholly-owned subsidiary of Communications Group. Therefore, Zhejiang Information is a connected person of the Company and as a result, the transaction under the LED Lights Retrofit Agreement constitutes connected transaction for the Company under Chapter 14A of the Listing Rules.

Pursuant to Rules 14A.81 and 14A.82 of the Listing Rules, as the transactions contemplated under the LED Lights Retrofit Agreement and the Previous Transactions were entered into with parties who are connected with one another and within a 12-month period, the LED Lights Retrofit Agreement and the Previous Transactions are required to be aggregated for the calculation of the relevant percentage ratios to determine the classification of the transactions.

As the applicable percentage ratios in respect of the transactions contemplated under the LED Lights Retrofit Agreement, after aggregating the Previous Transactions, are more than 0.1% but less than 5%, the LED Lights Retrofit Agreement will be subject to the reporting, announcement and annual review requirements but exempt from the independent Shareholders' approval requirement under Chapter 14A of the Listing Rules.

None of the Directors have a material interest in the transaction contemplated under the LED Lights Retrofit Agreement and none are required to abstain from voting on the relevant Board resolutions.

INFORMATION ON THE PARTIES

Jinhua Co is a directly wholly-owned subsidiary of the Company which was incorporated under the laws of the PRC with limited liability on September 30, 2003. Jinhua Co is principally engaged in the construction, management, operation and maintenance of Jinhua section of Ningbo-Jinhua Expressway and ancillary services.

Zhejiang Information is a wholly-owned subsidiary of Communications Group which was incorporated under the laws of the PRC with limited liability on July 22, 2004. Zhejiang Information is principally engaged in the business of electromechanical system integration, intelligent transportation software and hardware research and development, and big data analysis operations within the highway sector.

DEFINITIONS

In this announcement, unless the context specifies otherwise, the following defined expressions have the following meanings:

"associate"	has the meaning ascribed to it under the Listing Rules
"Board"	the board of Directors
"Communications Group"	Zhejiang Communications Investment Group Co., Ltd.*, a wholly state-owned enterprise established in the PRC, and the controlling shareholder of the Company
"Company"	Zhejiang Expressway Co., Ltd., a joint s tock l imited company incorporated in the PRC with limited liability
"connected person"	has the meaning ascribed to it under the Listing Rules
"controlling shareholder"	has the meaning ascribed to it under the Listing Rules
"Director(s)"	the directors of the Company
"Group"	the Company and its subsidiaries
"Hong Kong"	the Hong Kong Special Administrative Region of the PRC
"Jinhua Co"	Zhejiang Jinhua Yongjin Expressway Co., Ltd.*, a directly wholly-owned subsidiary of the Company
"LED"	light-emitting diode
"LED Lights Retrofit Agreement"	the LED lights retrofit agreement dated April 17, 2018 entered into between Jinhua Co and Zhejiang Information, pursuant to which the Company agreed to purchase LED lights retrofit services from Zhejiang Information
"Listing Rules"	Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited
"percentage ratio"	has the meaning ascribed to it under Rule 14.04(9) of the Listing Rules
"PRC"	the People's Republic of China (for the purpose of this announcement, excludes Hong Kong, Macau and Taiwan)
"Previous Transactions"	the agreements entered into within a 12-month period prior to the date of the LED Lights Retrofit Agreement between or among the Group and Communications Group's associates in relation to highway operations and maintenance services. For details, please refer to the announcements issued by the Company dated December 22, 2017 and January 4, 2018 respectively.
"RMB"	Renminbi, the lawful currency of the PRC
"Shareholder(s)"	holder(s) of the share(s) of the Company
"Stock Exchange"	The Stock Exchange of Hong Kong Limited
"subsidiary(ies)"	has the meaning ascribed to it under the Listing Rules
"%"	per cent.
"Zhejiang Information"	Zhejiang Expressway Information Engineering Technology Co., Ltd, a company incorporated in the PRC and a wholly-owned subsidiary of Communications Group

*    English names for reference only

On behalf of the Board             
                                     ZHEJIANG EXPRESSWAY CO., LTD.
YU Zhihong                    
Chairman                       

Hangzhou, the PRC, April 17, 2018

As at the date of this announcement, the Chairman of the Company is Mr. Yu Zhihong; the executive Directors of the Company are: Mr. CHENG Tao and Ms. LUO Jianhu; the other non-executive Directors of the Company are: Mr. DAI Benmeng, Mr. YU Qunli and Mr. YU Ji; and the  independent  non-executive  Directors  of  the  Company  are: Mr. PEI Ker-Wei, Ms. LEE Wai Tsang, Rosa and Mr. CHEN Bin.