TIDMZHEH
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.
Zhejiang Expressway Co., Ltd.
(A joint stock limited company incorporated in the People's Republic of China
with limited liability) (Stock code: 0576)
DISCLOSEABLE AND CONNECTED TRANSACTION
IN RELATION TO DISPOSAL OF 100% EQUITY INTEREST
IN DEVELOPMENT CO
On 17 October 2016, the Company as vendor and Zhejiang Communications
Investment as purchaser entered into the Share Purchase Agreement pursuant to
which the Company conditionally agreed to sell and Zhejiang Communications
Investment conditionally agreed to purchase 100% equity interest in Development
Co at a cash consideration of RMB249,660,000 (equivalent to approximately
HK$291,931,712).
As one or more of the applicable percentage ratios in respect of the Disposal
is over 5% but less than 25%, the Disposal constitutes a discloseable
transaction for the Company and is subject to the reporting and announcement
requirements under Chapter 14 of the Listing Rules.
In addition, as at the date of this announcement, Communications Group holds
approximately 67% of the issued share capital of the Company. By virtue of this
shareholding interest, Communications Group is a controlling shareholder of the
Company. Therefore, Zhejiang Communications Investment, as a wholly-owned
subsidiary of Communications Group, is a connected person of the Company and as
a result, the Disposal also constitutes a connected transaction for the Company
and is subject to the reporting, announcement and Independent Shareholders'
approval requirements under Chapter 14A of the Listing Rules.
The Company will put forward, among other things, an ordinary resolutions to
approve the Disposal, at a general meeting to be convened by the Company for
the Independent Shareholders' consideration and approval.
In view of the interest of Communications Group in the Share Purchase
Agreement, Communications Group and its associates will abstain from voting at
the general meeting to be convened by the Company to consider and approve the
resolutions in relation to the Share Purchase Agreement.
An Independent Board Committee has been formed to consider the Disposal, and TC
Capital International Limited has been appointed as the Company's independent
financial adviser to advise the Independent Board Committee and the Independent
Shareholders as to whether the terms of the Share Purchase Agreement are fair
and reasonable and whether the Disposal is in the interests of the Company and
the Shareholders as a whole.
A circular containing, among other things, (i) details of the Share Purchase
Agreement, (ii) a letter from the Independent Board Committee to the
Independent Shareholders regarding the Disposal, (iii) a letter of advice from
the independent financial adviser to the Independent Board Committee and the
Independent Shareholders regarding the Disposal, and (iv) a notice of general
meeting, is expected to be dispatched to the Shareholders on or before 7
November 2016.
THE DISPOSAL
On 17 October 2016, the Company as vendor and Zhejiang Communications
Investment as purchaser entered into the Share Purchase Agreement pursuant to
which the Company conditionally agreed to sell and Zhejiang Communications
Investment conditionally agreed to purchase 100% equity interest in Development
Co at a cash consideration of RMB249,660,000 (equivalent to approximately
HK$291,931,712).
Set out below is a summary of the principal terms of the Share Purchase
Agreement.
1. Share Purchase Agreement
Date
17 October 2016
Parties
Vendor: The Company
Purchaser: Zhejiang Communications Investment
Assets to be disposed of
100% equity interest in Development Co
Consideration and payment terms
The consideration for 100% equity interest in Development Co is RMB249,660,000
(equivalent to approximately HK$291,931,712), which will be payable by Zhejiang
Communications Investment in cash within 10 Business Days after the Share
Purchase Agreement becomes effective (i.e. all conditions precedent have been
fulfilled).
Conditions precedent
Completion of the Share Purchase Agreement is subject to the fulfilment of the
following conditions precedent:
(1) approval of the Share Purchase Agreement by the Board;
(2) approval of the Share Purchase Agreement by the Independent
Shareholders;
(3) approval of Share Purchase Agreement by the board of directors of
Zhejiang Communications Investment; and
(4) approval of the Share Purchase Agreement by the board of
directors of Communications Group.
As at the date of this announcement, the conditions under paragraphs 1, 3 and 4
above have been satisfied.
Effective date
The Share Purchase Agreement will become effective upon satisfaction of all the
conditions mentioned under the section headed "Conditions precedent" above. The
parties have agreed, however, that if at any time after the Share Purchase
Agreement becomes effective any relevant PRC governmental department with
authority over the Share Purchase Agreement seeks to revoke such agreement so
as to render performance of the Share Purchase Agreement impossible, the
parties will terminate the Share Purchase Agreement and the Company will be
required to repay all amounts already paid by Zhejiang Communications
Investment under the Share Purchase Agreement together with interest at the
benchmark bank lending interest rate for the same period.
2. Basis of consideration
The consideration of RMB 249,660,000 (equivalent to approximately
HK$291,931,712) under the Share Purchase Agreement was determined based on
arm's length negotiations between the Company and Zhejiang Communications
Investment. A number of factors were considered by the parties when determining
the consideration for the equity interest in Development Co, including, amongst
others, the Valuation Report prepared by the Valuer.
The Company relied on the Valuation Report in determining the consideration
under the Share Purchase Agreement, pursuant to which the appraised value of
the entire equity interest of Development Co as at 31 July 2016 was
RMB259,800,000. Taking into account the dividend of RMB10,140,297.98 paid by
Development Co to the Company after 31 July 2016, the consideration was
subsequently determined to be RMB249,660,000.
3. Principal assumptions for the income approach adopted for the Valuation
Report
The appraised value of the entire equity interest of Development Co under the
Valuation Report was prepared using the income approach, through the use of the
discounted cash flow method. As a result, such valuation constitutes a profit
forecast under Rule 14.61 of the Listing Rules. Therefore, this announcement is
subject to the requirements under Rules 14.60A and 14.62 of the Listing Rules
in relation to profit forecast.
As required under Rule 14.62(1) of the Listing Rules, details of the key
assumptions used in determining the value of the entire equity interest in
Development Co upon which the Valuation Report was issued are set out below:
Basic assumptions
* There will be no great changes in national macroeconomic situations,
current bank interest rate, tax policies, etc.;
* There will be no great changes in economic, political and social situations
of the region where Development Co is located;
* Operators of Development Co are responsible persons and the management of
Development Co are competent at their jobs;
* Development Co fully complies with all applicable laws and regulations;
* The accounting policies to be adopted by Development Co in the future will
be basically consistent with those used for the preparation of this report
in all major respects;
* On the basis of the existing management methods and management level,
Development Co keeps its business scope and operating mode consistent with
the current orientation of development;
* There are no great adverse effects caused by other unpredictable factors
and force majeure.
Specific assumptions
* There will be no great changes in national basic policies on operation of
service area, and future development of the industry will be stably
connected with overall changes of national economy;
* Human resources, management team and business management of Development Co
in the future will remain at the current level, except for what have
clearly adjusted;
* All cash flow relating to business operation occurs at the same time with
the relevant incomes and expenses;
* During the toll period of Shanghai-Hangzhou-Ningbo expressway and
Shangyu-Sanmen expressway, Development Co always owns the right to manage
the service areas located in Jiaxing, Changan, Shaoxing, Yuyao, Shengzhou,
Xinchang and Tiantai, and will not be subject to additional expense or
income caused by the management right in the subsequent business operation;
* Main costs and expenses of Development Co's service areas have a stable
structure, and will not be subject to an increase or decrease that is
caused by transfer of shares.
Deloitte, acting as the reporting accountants of the Company, has examined the
calculations of the discounted future estimated cash flows in which the
Valuation Report is based, which do not involve the adoption of accounting
policies in its preparation.
The Directors confirm that the valuation of 100% equity interest of Development
Co in the Valuation Report, which constitutes a profit forecast under Rule
14.61 of the Listing Rules, has been made after due and careful enquiry.
A letter from Deloitte in compliance with Rule 14.62(2) of the Listing Rules
and a letter from the Board in compliance with Rule 14.62(3) of the Listing
Rules are included in the Appendices to this announcement.
As at the date of this announcement, Deloitte (certified public accountants)
does not have any shareholding, directly or indirectly, in any member of the
Group or any right (whether legally enforceable or not) to subscribe for or
to nominate person to subscribe for securities in any member of the Group.
To the best of the Directors' knowledge, information and belief, Deloitte is an
Independent Third Party.
Deloitte has given and has not withdrawn its written consent to the publication
of this announcement with inclusion of its report and all references to its
name in the form and context in which it is included.
INFORMATION ON DEVELOPMENT CO
Development Co is a limited liability company incorporated in the PRC on 28 May
2003. Development Co is principally engaged in the operation of service areas
as well as roadside advertising along the expressways operated by the Group. As
of the date of this announcement, Development Co is a wholly-owned subsidiary
of the Company and upon Completion, the Company will cease to hold any interest
in Development Co and Development Co will cease to be a subsidiary of the
Company.
According to the audited financial statements of Development Co
prepared in accordance with generally accepted accounting principles in the
PRC which was audited by the PRC statutory auditor of Development Co, the net
asset value of Development Co as at 31 December 2015 was RMB362,861,274.05. A
summary of the financial information of Development Co for the financial years
ended 31 December 2014 and 2015 according to the PRC audited financial
statements is set out below:
As at 31 December
2014 2015
RMB'000 RMB'000
(audited) (audited)
Net profit before taxation and extraordinary items 84,134 67,349
Net profit after taxation and extraordinary items 61,291 47,252
TRANSACTIONS WITH DEVELOPMENT CO AND ITS SUBSIDIARIES AFTER COMPLETION
Upon Completion, Development Co will be a wholly-owned subsidiary of
Communications Group, so Development Co and its subsidiaries will become the
connected persons of the Company upon Completion. As a result, should the
Company enter into any new transactions or continue any existing transactions
with Development Co and/or its subsidiaries after Completion, such transactions
would constitute connected transactions or continuing connected transactions
for the Company upon and following Completion.
The Company is negotiating with Advertising Co (a 70% owned subsidiary of
Development Co) for an arrangement which would allow Advertising Co for the
term of 3 years, to continue to use the land along the Shanghai-Hangzhou-Ningbo
expressway and Shangsan expressway operated by the Company and its subsidiaries
to conduct its advertising related business.
The Company is also negotiating with Development Co for a leasing agreement
which would allow Development Co to lease from the Company an office located in
Hangzhou for the period of 3 years.
The Company intends to enter into the above-mentioned agreements with
Development Co or Advertising Co (as the case may be) upon Completion. Each of
them will constitute a continuing connected transaction for the Company under
Chapter 14A of the Listing Rules. It is expected that the highest applicable
percentage ratios under the Listing Rules for these agreements (whether on a
standalone basis or in aggregate) would be less than 0.1%, so each of them
will be exempted from the reporting, announcement, annual review and
independent shareholders' approval requirements under Chapter 14A of the
Listing Rules.
Further announcements will be made by the Company (if required) as and when
appropriate in accordance with all application requirements of the Listing
Rules.
REASONS FOR AND BENEFITS OF THE DISPOSAL
The Board considers that the Disposal will allow the Company to focus on the
expressway operation business, and will
streamline the Company's existing business segments and operations, and
sharpen the Company's strategic focus on its core business. In addition, the
Disposal allows the Company to realise its investment and recover its invested
capital. Therefore, the Company entered into the Share Purchase Agreement to
carry out the Disposal.
Based on the Hong Kong Financial Reporting Standards, it is expected that the
Group will make a gain of approximately RMB67,300,000 from the Disposal.
The Group intends to apply the sale proceeds as its general working capital.
The Directors (excluding the members of the Independent Board
Committee, the opinion of which will be set out in the circular after taking
into account the independent financial adviser's advice to be set out in the
circular) consider that the Share Purchase Agreement is entered into in the
ordinary and usual course of business of the Group and on normal commercial
terms which were arrived at after arm's length negotiations between the parties
and the Disposal is fair and reasonable and in the interests of the Group and
the Shareholders as a whole.
INFORMATION ON PARTIES TO THE SHARE PURCHASE AGREEMENT
The Company is a joint stock company established under the laws of the PRC with
limited liability on 1 March 1997, the H Shares of which are listed on the Main
Board of the Stock Exchange. It is principally engaged in investing in,
developing and operating high-grade roads in the PRC. The Group also carries on
certain other businesses such as operation of gas stations, restaurants and
shops in service areas, advertising at expressway interchanges, as well as
securities related business.
Zhejiang Communications Investment is a company incorporated in the PRC on 23
October 2003, which is wholly-owned by Communications Group, the controlling
shareholder of the Company. Zhejiang Communications Investment is principally
engaged in investing in real estate and assets, catering service, automobile
repair service, etc.
LISTING RULES IMPLICATIONS
As one or more of the applicable percentage ratios in respect of the Disposal
is over 5% but less than 25%, the Disposal constitutes a discloseable
transaction for the Company and is subject to the reporting and announcement
requirements under Chapter 14 of the Listing Rules.
In addition, as at the date of this announcement, Communications
Group holds approximately 67% of the issued share capital of the Company. By
virtue of this shareholding interest, Communications Group is a controlling
shareholder of the Company. Therefore, Zhejiang Communications Investment, as a
wholly-owned subsidiary of Communications Group, is a connected person of the
Company and as a result, the Disposal also constitutes a connected transaction
for the Company and is subject to the reporting, announcement and
Independent Shareholders' approval requirements under Chapter 14A of the
Listing Rules.
Each of Mr. Zhan Xiaozhang, Mr. Wang Dongjie, Mr. Dai Benmeng and Mr. Zhou
Jianping holds certain senior position in Communications Group, so they have
abstained from voting on the board resolution with respect to the approval of
the Share Purchase Agreement. Save for Mr. Zhan Xiaozhang, Mr. Wang Dongjie,
Mr. Dai Benmeng and Mr. Zhou Jianping, none of the Directors has any material
interest in Share Purchase Agreement or is required to abstain from voting on
the relevant Board resolutions to approve the same.
GENERAL
The Company will put forward, among other things, an ordinary resolutions to
approve the Disposal, at a general meeting to be convened by the Company for
the Independent Shareholders' consideration and approval.
In view of the interest of Communications Group in the Share Purchase
Agreement, Communications Group and its associates will abstain from voting at
the general meeting to be convened by the Company to consider and approve the
resolutions in relation to the Share Purchase Agreement.
An Independent Board Committee has been formed to consider the Disposal, and TC
Capital International Limited has been appointed as the
Company's independent financial adviser to advise the Independent Board
Committee and the Independent Shareholders as to whether the terms of the
Share Purchase Agreement are fair and reasonable and whether the Disposal is in
the interests of the Company and the Shareholders as a whole.
A circular containing, among other things, (i) details of the Share Purchase
Agreement, (ii) a letter from the Independent Board Committee to the
Independent Shareholders regarding the Disposal, (iii) a letter of advice from
the independent financial adviser to the Independent Board Committee and the
Independent Shareholders regarding the Disposal, and (iv) a notice of general
meeting, is expected to be dispatched to the Shareholders on or before 7
November 2016.
DEFINITIONS
In this announcement, unless the context specifies otherwise, the
following defined expressions have the following meanings:
"Advertising Zhejiang Expressway Advertising Co., Ltd. is a company
Co" incorporated in the PRC and a 70% owned subsidiary of
Development Co
"associate(s)" has the meaning ascribed to it under the Listing Rules
"Board" the Board of Directors
"Business Day" any day other than a Saturday or Sunday or a public holiday in
the PRC, on which banks are generally open for business in the
PRC
"Communications (Zhejiang Communications Investment Group Co., Ltd.), a wholly
Group" State-owned enterprise established in the PRC, and the
controlling shareholder of the Company
"Company" Zhejiang Expressway Co., Ltd., a joint stock limited company
incorporated in the PRC with limited liability, whose shares
are listed on the main board of the Stock Exchange
"Completion" completion of the Disposal pursuant to the Share Purchase
Agreement
"connected has the meaning ascribed to it under the Listing Rules
person(s)"
"controlling has the meaning ascribed to it under the Listing Rules
shareholder"
"Deloitte" Deloitte Touche Tohmatsu, the auditors of the Company
"Development Zhejiang Expressway Investment Development Co., L t d .
Co" a company incorporated in the PRC and a wholly - owned
subsidiary of the Company
"Director(s)" the director(s) of the Company
"Disposal" the disposal of 100% equity interest in Development Co by the
Company in accordance with the Share Purchase Agreement
"Group" the Company and its subsidiaries
"H Shares " overseas listed foreign shares in the share capital of the
Company with a nominal value of RMB1 per share, which are
listed on the Main Board of the Stock Exchange
"Hong Kong" the Hong Kong Special Administrative Region of the PRC
"HK$" Hong Kong dollars, the lawful currency of Hong Kong
"Independent an independent committee of the Board comprising all
Board independent non-executive Directors, namely, Mr. Zhou Jun, Mr.
Committee" Pei Ker-Wei and Ms. Lee Wai Tsang Rosa
"Independent Shareholders who are independent within the meaning of the
Shareholders" relevant provisions of the Listing Rules, and, in relation to
the approval of the Share Purchase
Agreement and the transactions contemplated thereunder at a
general meeting to be convened by the Company for such purpose,
means the Shareholders other than Communications Group and its
associates
"Independent a party independent and not connected with the Company, any of
Third Party" its subsidiaries or any of their respective directors or
substantial shareholders
"Listing Rules" Rules Governing the Listing of Securities on The Hong Kong
Stock Exchange
"percentage has the meaning ascribed to it under Rule 14.04(9) of the
ratio" Listing Rules
"PRC" the People's Republic of China (for the purpose of this
announcement, excludes Hong Kong, Macau and Taiwan)
"RMB" Renminbi, the lawful currency of the PRC
"Shareholder(s) holder(s) of the share(s) of the Company
"
"Share Purchase the agreement dated 17 October 2016 entered into between the
Agreement" Company and Zhejiang Communications Investment, pursuant to
which the Company conditionally agreed to dispose of 100%
equity interest in Development Co to Zhejiang Communications
Investment
"Stock The Stock Exchange of Hong Kong Limited
Exchange"
"subsidiary has the meaning ascribed to it under the Listing Rules
(ies)"
"Valuation the valuation report dated 25 September 2016 prepared by the
Report" Valuer
"Valuer" Tian Yuan Appraisal Co., Ltd., the qualified independent valuer
appointed by the Company in respect of Development Co
"Zhejiang (Zhejiang Communications Investment Group Industrial
Communications Development Co., Ltd.*) a company incorporated in the PRC and a
Investment" wholly - owned subsidiary of Communications Group
"%" per cent.
In this announcement, the translation of RMB into HK$ is based on the exchange
of rate of HK$1 to RMB0.8552. Such conversion shall not be construed as a
representation that amounts in RMB were or may have been converted into HK$
using such exchange rate or any other exchange rate or at all.
On behalf of the Board
ZHEJIANG EXPRESSWAY CO., LTD.
ZHAN Xiaozhang
Chairman
Hangzhou, PRC, 17 October 2016
As of the date of this announcement, the executive Directors of the Company
are: Mr. ZHAN Xiaozhang, Mr. CHENG Tao and Ms. LUO Jianhu; the non-executive
Directors of the Company are: Mr. WANG Dongjie, Mr. DAI Benmeng and Mr. ZHOU
Jianping; and the independent non-executive Directors of the Company are: Mr.
ZHOU Jun, Mr. PEI Ker-Wei and Ms. LEE Wai Tsang Rosa
In compliance with Rule 14.60A of the Listing Rules, the text of each of the
letters from Deloitte to the Directors confirming it has examined the
calculations of the discounted future estimated cash flows for the Valuation
Report, and the letter from the Board confirming that the Valuation Report has
been made after due and careful enquiry, both dated 17 October 2016, for the
purpose of, among other things, inclusion in this announcement are reproduced
below:
APPIX I -- LETTER FROM THE BOARD
Listing Division
The Stock Exchange of Hong Kong Limited
11/F., One International Finance Centre,
1 Harbour View Street, Central,
Hong Kong
17 October 2016
Dear Sirs,
Discloseable and Connected Transaction - Disposal of 100% Equity
Interest in Development Co
We refer to the valuation report dated 25 September 2016 (the "Valuation
Report") and prepared by Tian Yuan Asset Appraisal Limited* , (the
"Valuer") in relation to the valuation of 100% equity interest of Zhejiang
Expressway Investment Development Co., Ltd. ("Development Co"), the valuation
of which constitutes a profit forecast under Rule 14.61 of the Rules
Governing the Listing of Securities on the Stock Exchange of Hong Kong Limited.
We have reviewed and discussed the bases and assumptions upon which the
valuation of 100% equity interest of Development Co has been made with the
Valuer, and reviewed the valuation for which the Valuer is responsible. We have
also considered the report from, Deloitte Touche Tohmatsu, dated 17 October
2016 regarding whether the discounted future estimated cash flows, so far as
the calculations are concerned, have been properly compiled in accordance with
the bases and assumptions set out in the Valuation Report. We have noted that
the discounted future estimated cash flows do not involve the adoption of
accounting policy.
On the basis of the foregoing, we are of the opinion that the Valuation Report
and the valuation therein prepared by the Valuer have been made after due and
careful enquiry.
Yours faithfully,
On behalf of the Board
ZHEJIANG EXPRESSWAY CO., LTD.
LUO Jianhu
Executive Director
APPIX II - LETTER FROM DELOITTE
17 October 2016
The Directors
Zhejiang Expressway Co. Ltd.
5/F, Block 2, Pearl International Business Center
199 Wuxing Road
Hangzhou City, Zhejiang Province PRC 310020
INDEPENT ASSURANCE REPORT ON CALCULATION OF DISCOUNTED FUTURE ESTIMATED CASH
FLOW SIN CONNECTION WITH THE VALUATION OF THE 100% EQUITY INTEREST IN ZHEJIANG
EXPRESSWAY INVESTMENT DEVELOPMENT CO., LTD. ("DEVELOPMENT CO")
TO THE DIRECTORS OF ZHEJIANG EXPRESSWAY CO., LTD. (THE "COMPANY")
We have examined the calculation of the discounted future estimated cash flows
on which the valuation prepared by Tian Yuan Asset Appraisal Limited dated 25
September 2016, in respect of the entire equity interest in Development Co
as at 31 July 2016 (the "Valuation") is based. Development Co is a company
established in the People's Republic of China whose principal assets are the
operational assets acquired for operation of service areas as well as roadside
advertising along the expressways operated by the Company and its subsidiaries
(the "Group"). The Valuation based on the discounted future estimated cash
flows is regarded as a profit forecast under Rule 14.61 of the Rules Governing
the Listing of Securities on The Stock Exchange of Hong Kong Limited (the
"Listing Rules") and will be included in an announcement dated 17 October 2016
to be issued by the Company in connection with the disposal of 100% equity
interest in Development Co (the "Announcement").
Directors' responsibility for the discounted future estimated cash flows
The directors of the Company are responsible for the preparation of the
discounted future estimated cash flows in accordance with the bases and
assumptions determined by the directors and set out in the section headed
"Principal assumptions for the income approach adopted for the Valuation
Report" of the Announcement (the "Assumptions"). This responsibility includes
carrying out appropriate procedures relevant to the preparation of the
discounted future estimated cash flows for the Valuation and applying an
appropriate basis of preparation; and making estimates that are reasonable in
the circumstances.
Our Independence and Quality Control
We have complied with the independence and other ethical requirements of the
"Code of Ethics for Professional Accountants" issued by the Hong Kong Institute
of Certified Public Accountants (the "HKICPA"), which is founded on fundamental
principles of integrity, objectivity, professional competence and due care,
confidentiality and professional behavior.
Our firm applies Hong Kong Standard on Quality Control 1 "Quality Control for
Firms that Perform Audits and Reviews of Financial Statements, and Other
Assurance and Related Services Engagements" issued by the HKICPA and
accordingly maintains a comprehensive system of quality control including
documented policies and procedures regarding compliance with ethical
requirements, professional standards and applicable legal and regulatory
requirements.
Reporting accountants' responsibility
Our responsibility is to express an opinion on the arithmetical accuracy of the
calculation of the discounted future estimated cash flows on which the
Valuation is based and to report solely to you, as a body, as required by Rule
14.62(2) of the Listing Rules, and for no other purpose. We do not assume
responsibility towards or accept liability to any other person for the contents
of this report.
Our engagement was conducted in accordance with Hong Kong Standard on Assurance
Engagements 3000 (Revised) "Assurance Engagements Other Than Audits or Reviews
of Historical Financial Information" issued by the HKICPA. This standard
requires that we comply with ethical requirements and plan and perform the
assurance engagement to obtain reasonable assurance on whether the discounted
future estimated cash flows, so far as the calculations are concerned, have
been properly compiled in accordance with the Assumptions. Our work was limited
primarily to making inquiries of the Company's management, considering the
analyses and assumptions on which the discounted future estimated cash flows
are based and checking the arithmetic accuracy of the compilation of the
discounted future estimated cash flows. Our work does not constitute any
valuation of Development Co.
Because the Valuation relates to discounted future estimated cash flows, no
accounting policies of the Company have been adopted in its preparation. The
Assumptions include hypothetical assumptions about future events and management
actions which cannot be confirmed and verified in the same way as past results
and these may or may not occur. Even if the events and actions anticipated do
occur, actual results are still likely to be different from the Valuation and
the variation may be material. Accordingly, we have not reviewed, considered or
conducted any work on the reasonableness and the validity of the Assumptions
and do not express any opinion whatsoever thereon.
Opinion
Based on the foregoing, in our opinion, the discounted future estimated cash
flows, so far as the calculation is concerned, have been properly compiled,
in all material respects, in accordance with the Assumptions.
Deloitte Touche Tohmatsu
Certified Public Accountants
Hong Kong
END
(END) Dow Jones Newswires
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