Interim Results
Zhejiang Expressway Co
19 August 2003
ZHEJIANG EXPRESSWAY CO., LTD
(A joint stock limited company incorporated in the People's Republic of China
with limited liability)
2003 Interim Results Announcement
- Turnover grew by 9.4% to Rmb1,099,917,000;
- Net profit increased by 10.3% to Rmb492,147,000;
- Earnings per share was up 10.3% at Rmb11.3 cents;
- An interim dividend of Rmb4.0 cents per share is recommended.
The directors ('Directors') of Zhejiang Expressway Co., Ltd. (the 'Company') are
pleased to announce the unaudited consolidated operating results of the Company
and its subsidiaries (collectively the 'Group') for the six months ended June
30, 2003 (the 'Period'), prepared in conformity with accounting policies
generally accepted in Hong Kong with basis of preparation as stated in Note 1 to
the condensed consolidated income statement below.
During the Period, turnover for the Group grew by 9.4% to reach Rmb1,099,917,000
and net profit from ordinary activities attributable to shareholders increased
by 10.3% to reach Rmb492,147,000. Earnings per share for the Period was Rmb11.3
cents, representing an increase of 10.3% over the same period in 2002.
The Directors recommend the payment of an interim dividend of Rmb4.0 cents per
share in respect of the Period, subject to approval at the extraordinary general
meeting of the shareholders of the Company to be held on October 9, 2003.
Set out below is the unaudited consolidated income statement for the Period with
relevant notes:
CONDENSED CONSOLIDATED INCOME STATEMENT (UNAUDITED)
For the six
months ended
June 30,
2003 2002
Notes Rmb'000 Rmb'000
(Re-stated)
Turnover 2 1,099,917 1,005,306
Operating cost (316,266) (228,964)
Gross profit 783,651 776,342
Other revenue 3 56,033 56,069
Administrative expenses (29,908) (28,091)
Other operating expenses (12,846) (11,987)
Profit from operating activities 2,4 796,930 792,333
Finance costs (66,518) (83,544)
Share of profit of associates 5,936 2,791
Share of profit of a jointly-controlled entity 3,810 630
Profit before taxation 740,158 712,210
Tax 5 (203,370) (212,896)
Profit before minority interests 536,788 499,314
Minority interests (44,641) (53,296)
Net profit from ordinary activities attributable to 492,147 446,018
shareholders
Interim dividends 6 173,725 173,725
Earnings per share (Rmb cents) 7 11.3 10.3
Notes:
1. Basis of presentation
The condensed consolidated interim financial statements are prepared in
accordance with the Hong Kong Statement of Standard Accounting Practice ('SSAP')
No. 25 'Interim Financial Reporting' and the relevant disclosure requirements as
stipulated in Appendix 16 of the Rules Governing the Listing of Securities on
The Stock Exchange of Hong Kong Limited (the 'Listing Rules'). Except for the
first-time adoption of the revised SSAP No.12 'Income Taxes', the accounting
policies and the basis of preparation adopted are consistent with those adopted
in the financial statements of the Group for the year ended December 31, 2002.
Corresponding figures for 2002 are re-stated following the adoption of the
revised SSAP No. 1 on 'Presentation of financial statements'.
2. Turnover and segment information
During the Period, the principal activities of the Group did not change. The
operating results by principal activities are summarized as follows:
For the six months ended June 30,
2003 2002
Unaudited Unaudited Unaudited Unaudited
Turnover Profit Turnover Profit
contribution contribution
Rmb'000 Rmb'000 Rmb'000 Rmb'000
Segment by business activities
-- Toll 1,040,329 764,572 963,081 764,022
-- Service areas 46,871 11,549 30,678 6,645
-- Advertising 12,717 7,530 11,547 5,675
1,099,917 783,651 1,005,306 776,342
Others 56,033 56,069
Administrative expenses (29,908) (28,091)
Other operating expenses (12,846) (11,987)
Profit from operating activities 796,930 792,333
No further analysis of the turnover and profit from operating activities by
geographical segment was prepared as the turnover and profit from operating
activities of the Group were all generated from Zhejiang Province, the PRC
during the Period.
3. Other revenue
For the six months ended June 30,
2003 2002
Unaudited Unaudited
Rmb'000 Rmb'000
Revenue from short-term securities investments 30,683 37,382
Interest income 8,208 7,147
Rental income 11,199 4,351
Trailer income 4,573 4,620
Exchange gain -- 1,962
Other miscellaneous income 1,370 607
Total 56,033 56,069
4. Profit from operating activities
The Group's profit from operating activities is arrived at after charging:
For the six months ended June 30,
2003 2002
Unaudited Unaudited
Rmb'000 Rmb'000
Depreciation 113,508 109,288
Amortization of expressway operating rights 4,350 4,350
Amortization of goodwill 6,317 5,481
Staff costs 39,428 31,833
5. Taxation
As the Group had no taxable profits in Hong Kong during the Period, no Hong Kong
profits tax has been provided.
The Group was subject to Corporate Income Tax ('CIT') levied at a rate of 33% of
taxable income based on income for financial reporting purposes prepared in
accordance with the laws and accounting standards in the PRC.
According to the relevant national tax rules, Zhejiang Shangsan Expressway Co.,
Ltd.('Shangsan Co'), a 73.625% owned subsidiary of the Company, was entitled to
a 50% CIT exemption for the year ended December 31, 2002 as it was categorised
as an 'enterprise providing employment opportunities to redundant city and
country workers'. Approved by the local taxation authorities, Rmb33.25 million
in taxation was refunded to Shangsan Co during the Period. Since the refund
status needs to be reviewed by relevant authorities on an annual basis, there is
no guarantee that Shangsan Co will continue to qualify for such refund in the
future.
For the six months ended June 30,
2003 2002
Unaudited Unaudited
Rmb'000 Rmb'000
Group
Accounting profit before tax 740,158 712,210
Tax at the applicable tax rate of 33% 244,252 235,029
Tax effect of net (income)/expense that is not (taxable)/ (43,237) (23,578)
deductible in determining taxable profit
Share of taxation attributable to associates 2,601 3,136
Share of deferred taxation attributable to associates (712) (2,183)
Share of deferred taxation attributable to a 466 492
jointly-controlled entity
Taxation charged for the Period 203,370 212,896
Analyzed by principal components
Current tax expense 158,186 165,419
Deferred tax expense relating to the temporary differences 45,184 47,477
203,370 212,896
6. Dividends
The Directors recommend the payment of an interim dividend of Rmb4.0 cents
(approximately HK3.8 cents) per share (for the six months ended June 30, 2002:
Rmb4.0 cents). The recommendation has been set out in the financial statements.
7. Earnings per share
The calculation of basic earnings per share is based on the net profit from
ordinary activities attributable to shareholders for the Period of
Rmb492,147,000 (for the six months ended June 30, 2002: Rmb446,018,000) and the
4,343,114,500 shares (June 30, 2002: 4,343,114,500 shares) in issue during the
Period.
Diluted earnings per share for the six months ended June 30, 2003 have not been
calculated, as no diluting event occurred during the Period.
BUSINESS REVIEW
Despite negative impact from the outbreak of the Severe Acute Respiratory
Syndrome ('SARS') in the PRC during the first half of 2003, the Group's business
operations continued to expand during the Period, buoyed by a
better-than-expected economic performances at national and regional levels since
the start of the year, as well as greater-than-usual sales in passenger cars.
In Zhejiang Province, where all of the Group's operating activities are located,
GDP growth rate during the Period was 12.7%, 4.5 percentage points higher than
the national average of 8.2%, and 0.4 percentage points higher than the 12.3%
growth rate in 2002.
Having weathered the eventful first half of the year, business operations of the
Group continued to expand. Turnover for the Group during the Period was
Rmb1,099,917,000, representing an increase of 9.4% over the same period last
year, while net profit attributable to shareholders was Rmb492,147,000,
representing an increase of 10.3%.
With the Group's focus on toll road operations, toll income accounted for
approximately 94.7% of the Group's total income during the Period, while other
business operations grew at a faster pace, gaining an increasing share of the
Group's total income.
Toll Road Operations
Robust economic growth in the Yangtze River Delta region, evidenced by strong
GDP growth rates and increasing sales in passenger cars, led to continued rapid
growth in traffic volume on the expressways operated by the Group during the
Period, except for certain sections which were affected by traffic diversions
due to newly opened expressways.
Traffic volume on the Shanghai-Hangzhou-Ningbo Expressway grew by 6.4% during
the Period, equivalent to 25,231 full trips per day. The growth rate was less
than those achieved in previous years, mainly due to traffic diversion caused by
the newly opened eastern section of Hangzhou City Ring Road, as well as the SARS
outbreak.
The anticipated traffic diversion by Hangzhou City Ring Road started at the end
of 2002 when the eastern section of the road was completed and opened to
traffic, providing an alternative to a 39.3km section of the
Shanghai-Hangzhou-Ningbo Expressway.
Measures to contain the spread of SARS, including travel controls, were
introduced with full force in Zhejiang Province starting from April 21, 2003.
Traffic volume growth rate on the Shanghai-Hangzhou-Ningbo Expressway plummeted
in the initial two weeks since such measures were introduced, but soon began to
recover as the spread of SARS was being quickly contained.
A further challenge but which did not cause traffic interruption on the
Shanghai-Hangzhou-Ningbo Expressway, was the construction works brought by the
expressway-widening project and road surface-overlaying project. While the
ongoing road surface-overlaying project progressed ahead of schedule, measures
in various aspects of construction works were taken to minimize its impact on
the normal traffic flow on the expressway, including shifting works which are
normally carried out during daytime to night-time to avoid causing major
congestions on the expressway.
On certain sections of the Shanghai-Hangzhou-Ningbo Expressway where the
surface-overlaying project has already been completed, substantial improvement
in the level of quality of service is already apparent, as reflected in greater
satisfaction enjoyed by the customers who are able to drive more smoothly and
comfortably on the expressway.
The Shangsan Expressway saw its traffic volume grow by 24.8% during the Period,
representing 13,613 full trips per day, continuing the strong growth momentum
since its full completion and opening to traffic in December 2000.
Overall toll income for the Group rose 8.0% to Rmb1,097,479,000 during the
Period, among which the Shanghai-Hangzhou-Ningbo Expressway accounted for
Rmb852,188,000, an increase of 4.7% over the same period last year, while the
Shangsan Expressway accounted for Rmb245,291,000, an increase of 21.2% over the
same period last year.
Benefiting from the increasingly enhanced expressway networks around Hangzhou
City, the 9.45km Shida Road, owned and operated by Hangzhou Shida Highway Co.,
Ltd. ('Shida Co'), a 50% jointly controlled entity of the Company, witnessed a
77.0% growth in traffic volume and a 58.1% growth in toll income. Net profit
generated by Shida Co was Rmb6.69 million.
Other Business Operations
With the addition of the opening for business of the Xinchang service area along
the Shangsan Expressway at the beginning of the year, there are now a total of
six service areas operated by the Group, compared to five during the first half
of 2002. Reflecting the growth in demand for such services, turnover generated
by the service areas grew by 52.8% to Rmb46,871,000 during the Period, while net
profit grew by 50.1% to Rmb7,421,000.
Zhejiang Expressway Petroleum Development Co., Ltd. ('Petroleum Co'), a 50%
owned associate of the Company, was able to substantially expand its wholesale
business in petroleum products while continuing to improve profit margins at its
retail outlets. Turnover during the Period grew by 74.4% to Rmb525.97 million,
and net profit increased by 166.7% to Rmb7.91 million.
Further expanding its billboard advertising business along the
Shanghai-Hangzhou-Ningbo Expressway and the Shangsan Expressway, Zhejiang
Expressway Advertising Co., Ltd. ('Advertising Co'), a 70% owned subsidiary of
the Company, achieved a turnover of Rmb11.25 million and net profit of Rmb3.04
million during the Period, representing increases of 4.1% and 14.8%,
respectively.
During the Period, JoinHands Technology Co., Ltd. ('JoinHands Technology'), a
27.58% owned associate of the Company, focused on developing new products in the
area of logistics and networking. Turnover realized by JoinHands Technology
increased slightly to Rmb8.88 million during the Period, as net profit fell by
26.4% to Rmb339,000.
In order to place a stronger focus on, and streamline the operations of,
ancillary businesses of the Group, a new subsidiary company named Zhejiang
Expressway Investment Development Co., Ltd. ('Development Co') was established
on May 28, 2003. Principal activities of Development Co include the operation of
service areas as well as roadside advertising along the expressways operated by
the Group, with a view to expanding into other non-toll road business operations
in the future.
Expressway Widening Project
Phase 1 of the project to widen the Shanghai-Hangzhou-Ningbo Expressway from
four lanes to eight lanes ('Expressway Widening Project') has progressed ahead
of schedule. Half of the expansion works along the 44km section from Hongken to
Guzhu has already completed and opened to traffic in August 2003, while the
remaining works is expected to be completed by October 2003. Having been the
busiest section of the expressway, the widened section has greatly relieved
congestion experienced during peak hours, gaining both public recognition for
its improved traveling conditions, and increased capacity for accommodating
further traffic growth in the future.
Phase 2 of the Expressway Widening Project, pertaining to an approximately 95km
section from Dajing to Fengjing, has commenced construction in July 2003 and is
slated for completion by the end of 2005.
Acquisitions
On May 8, 2003, the Company entered into an agreement with Xinchang County
Transport Development Company ('Xinchang Transport') to acquire an additional 2%
ownership interest in Zhejiang Shangsan Expressway Co., Ltd. ('Shangsan Co'), a
subsidiary of the Company, for a cash consideration of Rmb57.6 million after the
ongoing negotiations between the Company and Xinchang Transport was concluded.
As a result of the acquisition, the Company's ownership interest in Shangsan Co
was increased from 71.625% to 73.625%, while Xinchang Transport's ownership
interest was decreased from 2% to zero.
FINANCIAL ANALYSIS
During the Period, the Group continued to follow financial policies adopted in
previous financial years without making significant changes.
Profitability
Earnings per Share
The Group was able to maintain double digit growth in earnings per share at
10.3% to Rmb11.3 cents during the Period.
Return on Equity
Return on equity was 5.02% during the Period, representing an increase of 6.1%
over the same period last year. The Group follows a policy of maintaining steady
growth in dividends, while seeking continued growth in return on equity, thereby
increasing shareholder value.
Profitability of Main Assets
Toll income from Shanghai-Hangzhou-Ningbo Expressway, a main asset of the Group,
grew at a slower rate during the Period than the same period last year, due to
the traffic diversion by Hangzhou City Ring Road and the SARS outbreak. However,
the return on the expressway asset, calculated by dividing the net profit
contribution from the expressway by its value, was maintained at a relatively
high rate of 9.81% during the Period.
Shangsan Expressway, another main asset of the Group, continued to experience
more than 20% growth in toll income during the Period. With continued
improvement in profitability, its return on the expressway asset increased from
5.23% last year to the Period's 6.53%. Share of net profit of the Group
attributable to Shangsan Expressway increased from 16% for the same period last
year to 20% for the Period.
Financial Resources and Liquidity
Financial Resources
As at June 30, 2003, the Group held Rmb949,319,000 in cash, cash equivalents and
time deposits, and Rmb1,114,449,000 in short-term investments, totaling
Rmb2,063,768,000. 93.4% of the short-term investments are treasury bonds, and
the remaining investments are mostly close-ended security investment funds.
The Group has fully taken financial risks into account in its cash management,
hence its short-term investments mainly comprise products available domestically
that are relatively stable in returns and low in investment risk, such as
treasury bonds.
Cash Flow and Liquidity
During the Period, the Group's net cash flow from operating activities was
Rmb902,770,000. The main assets of the Group, the Shanghai-Hangzhou-Ningbo
Expressway and the Shangsan Expressway, consistently generated strong and steady
cash inflow from their daily operations.
As at June 30, 2003, among the current assets of the Group, totaling
Rmb2,163,278,000, account receivables, other receivables and inventories
accounted for only 5.1% of the current assets, representing a decrease compared
with previous years (as at December 31, 2002: 7.4%).
Considering the performance of the Group, the Directors believe the Group has
sufficient financial resources to continue operations in the foreseeable future.
Borrowings and Debt Repayment Ability
Interest-bearing Borrowings
By the end of the Period, the Group had Rmb3,112,290,000 interest-bearing
borrowings, representing an increase of Rmb74,090,000 from the level at the
beginning of the Period. The structure of the Group's interest-bearing borrowing
changed during the Period as a result of the issuance of Rmb1 billion of 10-year
corporate bonds. Short-term interest-bearing borrowings with a maturity term of
under one year decreased by 40.5% from the level at the beginning of the Period,
while interest-bearing borrowings with a maturity term of one year or above
increased by 72.3%.
The annual coupon rate for the 10-year Rmb1 billion corporate bonds is fixed at
4.29%, with interests payable annually. The interest rates of the domestic
commercial bank loans, US Dollar loans extended by the World Bank and the
government loans were the same as those applicable on December 31, 2002.
Financing cost for the Group decreased as a result of the issuance of corporate
bonds by the Company.
Debt Capital Structure
The Group's debt capital structure changed considerably from the structure at
the end of 2002. Short-term interest-bearing liabilities decreased from
Rmb1,881,553,000 at the beginning of 2003 to Rmb1,118,820,000, representing a
decrease in the percentage of total interest-bearing liabilities from 61.9% to
35.9% by the end of the Period. Long-term interest-bearing liabilities increased
from Rmb1,156,647,000 at the beginning of 2003 to Rmb1,993,470,000, representing
an increase from 38.1% to 64.1%.
The Group has the characteristics of its industry, that is a substantial
majority of assets are long-term assets such as fixed assets, and most of
current assets are cash. The management reviews the maturity profile of the
Group's debt portfolio from time to time, seeking to match its debt structure
with its asset characteristics, and make corresponding adjustments when
necessary so as to ensure the Group has sufficient financial resources to meet
the needs of debt repayment and operations. The Directors believe that the
adjustment in debt capital structure during the Period is more suitable to the
Group's present asset structure.
Gearing Ratio
During the Period, interest bearing liabilities, non-interest bearing
liabilities and shareholders' equity amounted to Rmb3,112,290,000,
Rmb1,895,030,000, and Rmb9,803,058,000, respectively. As at June 30, 2003, the
gearing ratio (total liabilities over shareholders' equity) was 51.1% (December
31, 2002: 49.5%).
Profit to Interest Ratio
The Group's profit to interest ratio was increased during the Period, due to
lower financing costs resulting from the corporate bonds issued by the Company
at a lower cost than domestic bank borrowings.
During the Period, interest expense was approximately Rmb80,691,000 (for the six
months ended June 30, 2002: Rmb83,544,000). With profit before interest and
taxation at approximately Rmb806,675,000, the profit to interest expense ratio
was 10.0 (for the six months ended June 30, 2002: 9.5).
Capital Expenditure Commitments and Utilization
As at December 31, 2002, capital expenditure committed by the Group was Rmb5,454
million, among which Rmb189 million was mainly used on the Expressway Widening
Project during the Period.
With another Rmb57.6 million used for the acquisition of an additional 2%
ownership interest in Shangsan Co, the total capital expenditure for the Group
during the Period was Rmb247 million.
As at June 30, 2003, the Group had Rmb5,265 million capital expenditure
commitments, of which Rmb4,300 million was committed to the Expressway Widening
Project.
Contingent Liabilities and Pledge of Assets
Contingent Liabilities
Other than a loan guarantee of Rmb30 million provided in favor of Shida Co, a
jointly controlled entity, in respect of a commercial bank loan of the same
amount extended to Shida Co from September 2001 to September 2009, the Group did
not have any contingent liabilities as at June 30, 2003.
Pledge of Assets
The Group had no pledge of assets during the Period.
Foreign Exchange Exposure
The Group's liabilities in foreign currencies mainly comprise a World Bank loan
of approximately US$100 million borrowed for the construction of the Zhejiang
section of the Shanghai-Hangzhou Expressway.
In addition, dividends for H shares payable by the Company are settled in Hong
Kong Dollars.
As the exchange rate between Renminbi and US Dollar remains stable, and the
operating income and cost of the Group are limited to the activities within the
PRC, the Directors do not foresee any material foreign exchange exposure for the
Group, though there is no assurance that any foreign exchange exposure will not
affect the operating results of the Group.
Human Resources
In addition to providing training for existing employees and recruiting new
talents, the Group increased its effort in outsourcing professional advisories
during the Period. The strategy has led to technological solutions that
successfully reduced costs in major construction and maintenance works carried
out by the Group.
Other than the above, the Group had no significant changes in the number of
employees, remuneration policies and training schemes during the Period.
OUTLOOK
The new session of China's central government, taking office in March 2003, has
shown determination to further integrate cities and provinces in the Yangtze
River Delta region. Ranked as the largest economic region in China earlier this
year, for the first time in more than twenty years, the region is expected to
foster greater cooperation between the various cities and provinces, with
interaction between Zhejiang Province and Shanghai expected to intensify in
particular.
With the impact of the SARS outbreak largely subsided by July 2003, and many
local enterprises putting in extra effort to recover earnings lost during the
SARS outbreak, we already see a stronger-than-usual growth in traffic volumes on
the two expressways operated by the Group, indicating a return to robust
economic growth for Zhejiang Province in the second half of the year.
As future transport demand in the Yangtze River Delta region is expected to
exceed previous forecasts, local transport authorities are planning more
transportation infrastructure projects. On June 7, 2003, the Hangzhou Bay Bridge
commenced construction, and is scheduled for completion by the end of 2008.
Although the Hangzhou Bay Bridge, along with several other expressways and
bridges tentatively planned for the Yangtze River Delta region, will result in
diversions in traffic flow from certain sections of existing expressways such as
the Shanghai-Hangzhou-Ningbo Expressway in the immediate years upon their
opening to traffic, the exact degree of which is still being studied by the
Company, however these expressways and bridges also serve to help enhance the
networking effect, thereby benefiting the existing expressways operated by the
Group.
The increasingly comprehensive expressway network within and around Zhejiang
Province, coupled with the rapidly growing volume of containers handled by the
Port of Shanghai and Port of Ningbo, have already resulted in substantially
increased container truck traffic on the expressways operated by the Group. With
major expressways connecting Zhejiang Province and the neighboring provinces
expected to be completed in the next few years, thereby linking inland provinces
directly to the ports, increasing heavy truck traffic is expected to be
generated on the expressways operated by the Group.
Rapid economic development in cities and townships along the expressways
operated by the Group has also led to proposals currently being studied by the
Company to increase the number of interchanges along these expressways, as well
as to extend connecting roads between the expressways and the cities and
townships, so as to provide better access and wider reach for the expressways
operated by the Group.
In view of the above, the challenge for the Company is to take full advantage of
the enormous opportunities presented by an increasingly integrated Yangtze River
Delta region, while limiting the impact of potential traffic diversions from
existing expressways operated by the Group.
APPRECIATIONS
I would like to thank our frontline employees who have worked diligently to
throughout the SARS outbreak on implementing measures contain the disease and
minimizing the impact on our business operations, as well as to thank all
employees for their contribution in achieving an excellent first-half.
By Order of the Board
GENG Xiaoping
Chairman
Hangzhou, August 18, 2003
A detailed interim results announcement containing all the information required
by paragraphs 46(1) to 46(6) of Appendix 16 to the Listing Rules will be
subsequently published on The Stock Exchange of Hong Kong Limited's website at
http://www.hkex.com.hk in due course.
Notice of the First Extraordinary General Meeting 2003
NOTICE IS HEREBY GIVEN that an extraordinary general meeting (the 'EGM') of
Zhejiang Expressway Co., Ltd. (the 'Company') will be held at 10:00 a.m. on
October 9, 2003 (Thursday) at 18th Floor, Zhejiang World Trade Center, 15
Shuguang Road, Hangzhou, the People's Republic of China (the 'PRC') to consider
and approve the proposed interim dividend of the Company for the six months
ended June 30, 2003.
By Order of the Board
Zhang Jingzhong
Company Secretary
Hangzhou
August 18, 2003
Notes:
1. Eligibility for attending the EGM
Holders of H shares of the Company ('H Shares') who intend to attend the EGM
must deliver all transfer instruments and the relevant shares certificates to
the share registrar for H Shares, Hong Kong Registrars Limited located at Shops
1712-1716, 17th Floor, Hopewell Center, 183 Queen's Road East, Hong Kong, at or
before 4:00 p.m. on September 8, 2003.
2. Registration procedures for attending the EGM
(1) Shareholders of the Company intending to attend the EGM should return
the reply slip for attending the EGM to the Company by post or by facsimile
(address and facsimile numbers are shown in paragraph 5 below) such that the
same shall be received by the Company on or before September 18, 2003.
(2) A shareholder or his/her/its proxy should produce proof of identity
when attending the EGM. If a corporate shareholder appoints a legal
representative to attend the EGM, such legal representative shall produce proof
of identity and a copy of the resolution of the board of directors or other
governing body of such shareholder appointing such legal representative at the
EGM.
3. Proxy
(1) A shareholder eligible to attend and vote at the EGM is entitled to
appoint, in written form, one or more proxies to attend and vote on his/her/its
behalf. A proxy need not be a shareholder.
(2) A proxy should be appointed by a written instrument signed by the
appointor or his/her/its attorney. If the appointor is a corporation, the same
shall be affixed with its common seal or signed by its director(s) or duly
authorized representative(s). If the form of proxy is signed by the attorney of
the appointor, the power of attorney or other authorization document(s) of such
attorney should be notarised.
(3) To be valid, the completed form of proxy and any power of attorney or
other authorization document(s) (which have been notarised) must be delivered,
in the case of holders of domestic shares of the Company, to the Company at the
address shown in paragraph 5 below and, in the case of holders of H Shares, to
Hong Kong Registrars Limited located at Room 1901-1905, 19th Floor, Hopewell
Center, 183 Queen's Road East, Hong Kong, not less than 24 hours before the time
designated for the holding of the EGM.
(4) A proxy may exercise the right to vote by a show of hands or by poll.
However, if more than one proxy is appointed by a shareholder, such proxies
shall only exercise the right to vote on a poll.
4. Closure of Register of Members
The register of members of H Shares will be closed from September 9, 2003 to
October 8, 2003 (both days inclusive), during which no transfer of shares will
be registered.
5. Miscellaneous
(1) The EGM will not last for more than one day. Shareholders who attend
shall bear their own travelling and accommodation expenses.
(2) The address of the Company is at:
19th Floor, Zhejiang World Trade Center
15 Shuguang Road
Hangzhou, Zhejiang Province 310007
People's Republic of China
Telephone No.: (+86)-571-8798 7700
Facsimile No.: (+86)-571-8795 0329
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