Connected Transaction

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)


                                       CONNECTED TRANSACTION IN RELATION TO
                  CAPITAL INCREASE IN ZHEJIANG COMMUNICATIONS INVESTMENT GROUP FINANCE CO., LTD.


CONNECTED TRANSACTION

On 30 March 2013, the Company entered into the Capital Contribution Agreement with Zhejiang Communications Finance 
and the Existing Shareholders pursuant to which the Company conditionally agreed to contribute an amount of 
RMB280,000,000 (equivalent to approximately HK$345,679,010), by way of cash, into the equity capital of Zhejiang 
Communications Finance. The Company currently does not own any equity interest in Zhejiang Communications Finance, 
and upon completion of the Capital Contribution Agreement, the Company will beneficially own a 35% equity interest 
in Zhejiang Communications Finance.

LISTING RULES IMPLICATIONS

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 substantial shareholder (as 
defined under the Listing Rules) of the Company. As at the date of this announcement, Communications Group also 
holds approximately 75% of the issued share capital of each of Ningbo Expressway Co. and Taizhou Expressway Co. 
and 60% of the issued share capital of Zhejiang Communications Finance. Therefore, each of the Existing 
Shareholders and Zhejiang Communications Finance is a connected person of the Company and as a result, the 
transaction contemplated under the Capital Contribution Agreement constitutes a connected transaction for the 
Company under Chapter 14A of the Listing Rules. As each of the applicable percentage ratios in respect of the 
Capital Contribution is less than 5%, the Capital Contribution is subject to the reporting and announcement 
requirements but is exempt from the independent shareholders' approval requirement under Chapter 14A of the 
Listing Rules.
 

CONNECTED TRANSACTION

On 30 March 2013, the Company entered into the Capital Contribution Agreement with Zhejiang Communications Finance 
and the Existing Shareholders pursuant to which the Company conditionally agreed to contribute an amount of 
RMB280,000,000 (equivalent to approximately HK$345,679,010), by way of cash, into the equity capital of Zhejiang 
Communications Finance. The principal terms of the Capital Contribution Agreement are set out below:

Date

30 March 2013


Parties

(i)   Communications Group
(ii)  Ningbo Expressway Co.
(iii) Taizhou Expressway Co. 
(iv)  the Company
(v)   Zhejiang Communications Finance


Capital Contribution

Pursuant to the Capital Contribution Agreement, the Company conditionally agreed to contribute an amount of 
RMB280,000,000 (equivalent to approximately HK$345,679,010), by way of cash, into the equity capital of Zhejiang 
Communications Finance.

In addition, pursuant to the Capital Contribution Agreement, Communications Group conditionally agreed to 
contribute further capital in the amount of RMB20,000,000 (equivalent to approximately HK$24,691,358), by way of 
cash, into the equity capital of Zhejiang Communications Finance. The other Existing Shareholders, being Ningbo 
Expressway Co. and Taizhou Expressway Co., have agreed to give up their rights to contribute further capital into 
Zhejiang Communications Finance and have agreed to the capital contributions proposed to be made by the Company 
and Communications Group pursuant to the Capital Contribution Agreement.

The Company plans to use its internal resources to fund the Capital Contribution.
 
Basis of consideration

The amount of the Capital Contribution was determined based on the par value of the capital of Zhejiang 
Communications Finance, with reference to the total net asset value of Zhejiang Communications Finance of 
RMB495,632,545 as at 31 December 2012 according to the audited financial statements of Zhejiang Communications 
Finance prepared by its PRC auditor in accordance with generally accepted accounting principles in the PRC, and 
the valuation prepared by Zhejiang Sinosky Assets Appraisal Co., Ltd., an independent valuer, pursuant to which 
the appraised value of the entire equity interest of Zhejiang Communications Finance as at 31 December 2012 was 
RMB502,228,600.


Time for Capital Contribution

The Capital Contribution will be made by the Company within 20 Business Days after the effective date of the 
Capital Contribution Agreement.


Conditions precedent and effective date

Completion of the Capital Contribution Agreement is conditional upon approval of CBRC having been obtained in 
connection with the Capital Contribution Agreement, and the Capital Contribution Agreement will become effective 
on the date on which it is approved by CBRC.


Right to appoint director

The Company will have the right to appoint director to the board of directors of Zhejiang Communications Finance 
and the Company plans to appoint one such director after completion of the Capital Contribution.


Governing law

The laws of the PRC


REASONS FOR AND BENEFITS OF THE CAPITAL CONTRIBUTION

The Directors believe that the proposed Capital Contribution provides the Company with a valuable opportunity to 
acquire a significant equity interest in a non-banking financial institution approved by CBRC.

The Directors also believe that the prospects in the financial services sector in which Zhejiang Communications 
Finance operates is promising, and the Company's participation in such business will develop together with the 
Group's existing financial and securities businesses and is in line with the Company's overall business 
development strategy.

The Directors, including all of the independent non-executive Directors, consider that the transactions 
contemplated under the Capital Contribution Agreement are fair and reasonable, on normal commercial terms and are 
in the interests of the Company and the Shareholders as a whole.

 
INFORMATION ON ZHEJIANG COMMUNICATIONS FINANCE

Zhejiang Communications Finance is a limited liability company incorporated in the PRC on 9 November 2012 and 
approved by CBRC as a non-banking financial institution on 17 October 2012 with a registered capital of RMB500 
million as at the date of this announcement. Upon the incorporation of Zhejiang Communications Finance, 
Communications Group, Ningbo Expressway Co. and Taizhou Expressway Co. acquired 60%, 25% and 15% equity interest 
in Zhejiang Communications Finance respectively by contributing RMB300,000,000, RMB125,000,000 and RMB75,000,000, 
respectively, to the registered capital of Zhejiang Communications Finance. As at the date of this announcement, 
Zhejiang Communications Finance is owned as to 60%, 25% and 15% by Communications Group, Ningbo Expressway Co. 
and Taizhou Expressway Co. respectively.

Zhejiang Communications Finance is a non-banking financial institution incorporated in the PRC and is principally 
engaged in the business of providing financial services to the subsidiaries of Communications Group, including but 
not limited to advising the subsidiaries of Communications Group in relation to financing, letters of credit and 
other agency services; authorised insurance agency businesses; providing guarantees, accepting and discounting 
commercial notes, arranging for loans and financial leases, and receiving deposits of the subsidiaries of 
Communications Group. For the year ended 31 December 2012, Zhejiang Communications Finance recognised a net loss 
of RMB5,703,589 before tax and extraordinary items and a net loss of RMB4,367,455 after tax and extraordinary 
items based on its audited financial statements for that year prepared by its PRC auditor in accordance with 
generally accepted accounting principles in the PRC.

Immediately after the Capital Contribution is completed, the registered capital of Zhejiang Communications Finance 
will be increased from RMB500 million to RMB800 million. Details of percentage shareholding of Zhejiang 
Communications Finance immediately before and after the Capital Contribution is completed are as follows:


 
                                        Percentage of holding              Percentage of holding
                               in the issued share capital of     in the issued share capital of
                                      Zhejiang Communications            Zhejiang Communications
                                    Finance immediately prior          Finance immediately after
                                  to the Capital Contribution           the Capital Contribution
    Name of shareholders                         is completed                       is completed

    Company                                                 -                                35%
    Communications Group                                  60%                                40%
    Ningbo Expressway Co.                                 25%                            15.625%
    Taizhou Expressway Co.                                15%                             9.375%
 


INFORMATION ON THE COMPANY AND THE EXISTING SHAREHOLDERS

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 automobile servicing, operation of gas stations and billboard advertising along expressways, as well as 
securities related business.

Communications Group is a wholly state-owned enterprise established in the PRC on 29 December 2001 and is 
principally engaged in a diverse range of businesses, including investment, operations, maintenance, toll 
collection and ancillary services of expressways, construction and building of transportation project, ocean and 
coastal transport, as well as real estate.

Ningbo Expressway Co. is a limited liability company incorporated in the PRC and a 75% owned subsidiary of 
Communications Group and is principally engaged in the operation and management of the Ningbo section of the 
Ningbo-Taizhou-Wenzhou expressway.

Taizhou Expressway Co. is a limited liability company incorporated in the PRC and a 75% owned subsidiary of 
Communications Group and is principally engaged in the operation and management of the Taizhou section of the 
Ningbo-Taizhou-Wenzhou expressway.


LISTING RULES IMPLICATIONS

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 substantial shareholder (as 
defined under the Listing Rules) of the Company. As at the date of this announcement, Communications Group also 
holds approximately 75% of the issued share capital of each of Ningbo Expressway Co. and Taizhou Expressway Co. 
and 60% of the issued share capital of Zhejiang Communications Finance. Therefore, each of the Existing 
Shareholders and Zhejiang Communications Finance is a connected person of the Company and as a result, the 
transaction contemplated under the Capital Contribution Agreement constitutes a connected transaction for the 
Company under Chapter 14A of the Listing Rules. As each of the applicable percentage ratios in respect of the 
Capital Contribution is less than 5%, the Capital Contribution is subject to the reporting and announcement 
requirements but is exempt from the independent shareholders' approval requirement under Chapter 14A of the 
Listing Rules.

None of the Directors has any material interest in the transactions contemplated under the Capital Contribution 
Agreement or is required to abstain from voting on the relevant board resolution approving the Capital 
Contribution Agreement and the transactions contemplated thereunder.


DEFINITIONS



"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;

"Capital Contribution"               the proposed capital contribution by the Company in the amount of 
                                     RMB280,000,000 (equivalent to approximately HK$345,679,010), by way of cash,
                                     into the equity capital of Zhejiang Communications Finance pursuant to the
                                     Capital Contribution Agreement;

"Capital Contribution                the agreement dated 30 March 2013 entered into between the Company, Zhejiang 
 Agreement"                          Communications Finance and the Existing Shareholders, pursuant which the 
                                     Company conditionally agreed to make a capital Contribution in the amount of
                                     RMB280,000,000 (equivalent to approximately HK$345,679,010), by way of cash, 
                                     into the equity capital of Zhejiang Communications Finance;

"CBRC"                               China Banking Regulatory Commission of the PRC;

"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 stock limited company incorporated in 
                                     the PRC with limited liability, the H shares of which are listed on the Main
                                     Board of the Stock Exchange;

"connected persons"                  has the meaning ascribed to it in the Listing Rules; "Directors" directors of
                                     the Company;

"Existing Shareholders"              Communications Group, Ningbo Expressway Co. and Taizhou Expressway Co., being
                                     the existing shareholders of Zhejiang Communications Finance as at the date 
                                     of this announcement;
 
"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;

"HK$"                                Hong Kong dollars, the lawful currency of Hong Kong; "Hong Kong" the Hong 
                                     Kong Special Administrative Region of the PRC;

"Listing Rules"                      the Rules Governing the Listing of Securities on the Stock Exchange;

"Ningbo Expressway Co."              Zhejiang Ningbo Yongtaiwen Expressway Co., Ltd., a limited liability company
                                     incorporated in the PRC and a 75% owned subsidiary of Communications Group;

"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; "Shareholders" shareholders of the
                                     Company;

"Stock Exchange"                     The Stock Exchange of Hong Kong Limited;

"Taizhou Expressway Co."             Zhejiang Taizhou Yongtaiwen Expressway Co., Ltd., a limited liability company
                                     incorporated in the PRC and a 75% owned subsidiary of Communications Group;
                                     and

"Zhejiang Communications             Zhejiang Communications Investment Group Finance Co., Ltd., a limited 
 Finance"                            liability company incorporated in the PRC and owned as to 60%, 25% and 15% by
                                     Communications Group, Ningbo Expressway Co. and Taizhou Expressway Co. 
                                     respectively as at the date of this announcement.
 


In this announcement, the translation of RMB into HK$ is based on the exchange rate of HK$1 to RMB0.81. Such 
conversion shall not be construed as a representation that amounts in RMB were or may have been converted into 
HK$ 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, 30 March 2013


As of the date of this announcement, the executive directors of the Company are: Mr. ZHAN Xiaozhang, Ms. LUO 
Jianhu and Mr. DING Huikang; the non-executive directors of the Company are: Mr. LI Zongsheng, Mr. WANG Weili and 
Mr. WANG Dongjie; and the independent non-executive directors of the Company are: Mr. ZHANG Junsheng, Mr. ZHOU Jun
and Mr. PEI Ker-Wei.