Discloseable and 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)

DISCLOSEABLE AND CONNECTED TRANSACTION 
IN RELATION TO
ACQUISITION OF 80.614% EQUITY INTEREST IN 
ZHEJIANG HANGHUI EXPRESSWAY CO., LTD. 
AND
CONTINUING CONNECTED TRANSACTIONS

DISCLOSEABLE AND CONNECTED TRANSACTION

On 5 August 2015, the Company entered into the Hanghui Agreement with Communications Group pursuant to which the Company conditionally agreed to purchase from Communications Group a 80.614% equity interest in Hanghui Co held by Communications Group for a cash consideration of RMB1,699,348,471.5 (equivalent to approximately HK$2,153,527,400).

CONTINUING CONNECTED TRANSACTIONS

As at the date of this announcement, Hanghui Co has entered into a number of agreements with various subsidiaries of Communications Group which will continue to be valid and effective upon completion of the Acquisition. Since Hanghui Co will become a subsidiary of the Company upon completion of the Acquisition, these agreements will constitute continuing connected transactions of the Company under the Listing Rules. Save for the Highway Pavement Maintenance Agreement which shall be subject to the reporting, announcement and annual review requirements but exempt from independent shareholders' approval under the Listing Rules, all other agreements will be fully exempt under the Listing Rules.

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 controlling shareholder of the Company. Therefore, Communications Group is a connected person of the Company and as a result, the Acquisition constitutes a connected transaction for the Company under Chapter 14A of the Listing Rules. As the relevant percentage ratio for the Acquisition is over 5% but less than 25%, the Acquisition also constitutes a discloseable transaction for the Company under Chapter 14 of the Listing Rules.

On the above basis, the Acquisition shall be subject to the reporting, announcement and independent shareholders' approval requirements under Chapter 14A of the Listing Rules applicable to connected transactions, and the reporting and announcement requirements under Chapter 14 of the Listing Rules applicable to discloseable transactions.

In view of the interest of Communications Group in the Hanghui Agreement, Communications Group and its associates will abstain from voting at the general meeting to be convened by the Company to, among others, consider and approve the resolution in relation to the Hanghui Agreement and the transaction contemplated thereunder.

GENERAL

The Company will put forward an ordinary resolution to approve the Acquisition, at a general meeting to be convened by the Company for the Independent Shareholders' consideration and approval.

An Independent Board Committee has been formed to consider the Acquisition, and TC Capital Asia 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 Acquisition are fair and reasonable and whether the Acquisition is in the interests of the Company and the Shareholders as a whole.

A circular containing, among other things, (i) details of the Acquisition, (ii) a letter from the Independent Board Committee to the Independent Shareholders regarding the Acquisition, (iii) a letter of advice from the independent financial adviser to the Independent Board Committee and the Independent Shareholders regarding the Acquisition, and (iv) a notice of general meeting, is expected to be dispatched to the Shareholders on or before 24 August 2015.

DISCLOSEABLE AND CONNECTED TRANSACTION

1. Hanghui Agreement

Date
5 August 2015

Parties
Vendor: Communications Group
Purchaser: the Company

Target interest to be acquired
80.614% equity interest in Hanghui Co.

Consideration and payment terms

The consideration for the 80.614% equity interest in Hanghui Co is RMB1,699,348,471.5 (equivalent to approximately HK$2,153,527,400), and will be payable by the Company in cash within 10 business days after the effective date of the Hanghui Agreement. The consideration will be funded by the Company's internal cash resources.

Consideration adjustment

The consideration payable by the Company under the Hanghui Agreement was determined on the assumption that the toll collection rights period of the Hanghui Expressway as finally approved will be 25 years. As at the date of this announcement, the toll collection rights period of the Hanghui Expressway is pending final approval by the relevant PRC governmental authorities. It is expected that such approval will be granted before 30 September 2015 and in the event that the toll collection rights period of the Hanghui Expressway as finally approved is less than 25 years, Communications Group and the Company have agreed to enter into a supplemental agreement to adjust downward the consideration with reference to the valuation of Hanghui Co to be carried out by the PRC Domestic Valuer taking into account the difference of the toll collection rights period. The Company and Communications Group have further agreed that the consideration adjustment shall comply with relevant regulations in relation to the transfer of a PRC state-owned asset as well as the Listing Rules. In the event that the consideration under the Hanghui Agreement is so adjusted, the Company will comply in due course with the reporting, announcement and independent shareholders' approval requirements under the Listing Rules as may be applicable.

Conditions precedent

The Hanghui Agreement is conditional upon:

1. approval of the Hanghui Agreement by the Board and the board of directors of Communications Group having been obtained;
2. approval by Hanghui Co's shareholders of the Hanghui Acquisition having been obtained and waiver from the Other Shareholders in respect of their pre-emptive rights concerning the 80.614% equity interest in Hanghui Co having been obtained;
3. approval by the Company's Independent Shareholders of the Hanghui Acquisition having been obtained; and
4. approval of the Zhejiang SASAC having been obtained in connection with the Hanghui Acquisition.

As at the date of this announcement, the conditions under paragraphs (1) and (2) above have been satisfied.

Effective date
The Hanghui Agreement will become effective upon satisfaction of all the conditions mentioned under "Conditions precedent" above.

Governing law
The laws of the PRC.

2. Basis of consideration

The consideration of RMB1,699,348,471.5 (equivalent to approximately HK$2,153,527,400) under the Hanghui Agreement was determined based on arm's length negotiations between the Company and Communications Group.

A number of factors were considered by the parties when determining the consideration of the Hanghui Agreement, including, amongst others, the Valuation Report prepared by Jones Lang LaSalle, as well as the PRC Valuation Report prepared by the PRC Domestic Valuer and commissioned by Communications Group pursuant to the requirements of Zhejiang SASAC and relevant PRC laws and regulations.

The Company relied on the Valuation Report when determining the consideration under the Hanghui Agreement, pursuant to which the appraised value of the entire equity interest of Hanghui Co as at 31 May 2015 was RMB2,139,875,000. Communications Group relied instead on the PRC Valuation Report when determining the consideration under the Hanghui Agreement, pursuant to which the appraised value of the entire equity interest of Hanghui Co as at 31 May 2015 was RMB2,108,000,000. The Company and Communications Group then agreed on the final consideration payable under the Hanghui Agreement following arm's length negotiations. The Company did not appoint the PRC Domestic Valuer, nor was the Company involved in the preparation of the PRC Valuation Report.

The Acquisition constitutes a transfer of State-owned assets in the PRC and therefore require the approval by the Zhejiang SASAC in accordance with the relevant PRC laws and regulations.

3. Principal assumptions for the income approach adopted for the Valuation Report

The appraised value of the entire equity interest of Hanghui Co under the Valuation Report was prepared using the income approach based on 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 the Hanghui Co upon which the Valuation Report was issued are set out below;

• the projected business performances can be achieved with the effort of the managements of Hanghui Co;
• there will be no material change in the existing political, legal, technological, fiscal or economic conditions, which might adversely affect the business of Hanghui Co;
• the operational and contractual terms stipulated in the relevant contracts and agreements of Hanghui Co will be honored;
• copies of the operating licences and company incorporation documents provided to Jones Lang LaSalle by Hanghui Co are reliable and legitimate;
• natural weather can have an impact on toll roads, including flooding and other types of inclement weather and no extended closure will occur to the toll roads managed by Hanghui Co;
• share capital injection and shareholder loan will be made to Hanghui Co when necessary; and
• there are no hidden or unexpected conditions associated with Hanghui Co that might adversely affect the reported values of Hanghui Co. Furthermore, Jones Lang LaSalle assumes no responsibility for changes in market conditions after 31 May 2015.

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 the entire equity interest of Hanghui 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 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.

4. Original cost of the 80.614% equity interest in Hanghui Co to Communications Group

The original cost incurred by Communications Group for the 80.614% equity interest in Hanghui Co is approximately RMB1.46 billion (being Communications Group's capital contribution to Hanghui Co as at the date of the Hanghui Agreement.

INFORMATION ON HANGHUI CO

Hanghui Co

Hanghui Co is a limited liability company incorporated in the PRC on 22 December 2008 with a registered capital of RMB1,812,280,000 as at the date of this announcement. As at the date of this announcement, Hanghui Co is 80.614% owned by Communications Group and 19.386% owned by the Other Shareholders.

Hanghui Co is principally engaged in the operation and management of the Hanghui Expressway. Hanghui Expressway is the Zhejiang section of Hangzhou–Ruili Expressway (G56) within the State expressway network. Hanghui Expressway is a four- lane expressway with a total length of approximately 122.29km. Hanghui Expressway is comprised of three sections: Changhua to Yulingguan section (opened on 26 December 2004); Wangjiabu to Changhua section (opened on 26 December 2006) and Liuxia to Wangjiabu section (opened on 26 December 2006.

The net asset value of Hanghui Co based on its audited financial statements for the year ended 31 December 2013 and 2014 prepared in accordance with generally accepted accounting principles in the PRC by the PRC statutory auditor of Hanghui Co are set out below:

	As at 31 December
	2013	2014
	approximate	approximate
	RMB'000	RMB'000
	(audited)	(audited)
Net asset value	357,089	290,253

The net profit/(loss) before and after tax and extraordinary items of Hanghui Co based on its audited financial statements for the years ended 31 December 2013 and 2014 prepared in accordance with generally accepted accounting principles in the PRC by the PRC statutory auditor of Hanghui Co are set out below:

	For the year ended
	31 December
	2013	2014
	approximate	approximate
	RMB'000	RMB'000
	(audited)	(audited)
net profit/(loss) before tax and extraordinary items	(88,624)	(66,836)
net profit/(loss) after tax and extraordinary items	(88,624)	(66,836)

EFFECT OF THE ACQUISITION

Upon completion of the Acquisition, the Company will beneficially own 80.614% equity interest in Hanghui Co. As a result, Hanghui Co will become a subsidiary of the Company and the accounts of Hanghui Co will be consolidated into the accounts of the Company.

REASONS FOR AND BENEFITS OF THE ACQUISITION

Upon completion of the Acquisition, the total length of expressways operated by the Company will increase from approximately 460 km to approximately 582 km. The main businesses of the Company will be enhanced through the Acquisition which help to increase the market share and competitive strength of the Company in Zhejiang Province. The Directors believe that the Acquisition will facilitate the Company to better utilise its experience and advantages in toll operation and to complement the Company's existing network of expressways, and are in line with the Company's development strategy.

The terms of the Hanghui Agreement were arrived at after arm's length negotiations between the Company and Communications Group, and are on normal commercial terms, taking into account various factors and with reference to the Valuation Report commissioned by the Company and the PRC Valuation Report commissioned by the Communications Group. The Directors (excluding the members of the Independent Board Committee, whose opinion 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 terms of the Acquisition are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

INFORMATION ON THE COMPANY AND COMMUNICATIONS GROUP

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 and external road maintenance, 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.

CONTINUING CONNECTED TRANSACTION

As at the date of this announcement, Hanghui Co has entered into a highway pavement maintenance agreement (as supplemented by the supplemental agreement (the "Supplemental Agreement") between Hanghui Co and Zhejiang Shunchang dated 3 August 2015). ("Highway Pavement Maintenance Agreement") with Zhejiang Shunchang. Upon completion of the Acquisition, Hanghui Co will become a subsidiary of the Company, therefore the Highway Pavement Maintenance Agreement will constitute a continuing connected transaction of the Company. The transactions contemplated under the Highway Pavement Maintenance Agreement will continue upon the completion of the Acquisition.

Highway Pavement Maintenance Agreement

Date:	20 April 2015 (as supplemented by the supplemental agreement (the "Supplemental Agreement") between Hanghui Co and Zhejiang Shunchang dated 3 August 2015).
Parties:	Hanghui Co Zhejiang Shunchang, a subsidiary of Communications Group
Terms:	from 25 May 2015 to 28 February 2016.
Provision of services:	Zhejiang Shunchang has agreed to provide highway pavement maintenance services to the Hanghui Expressway.
Service fees:	RMB40,528,621 payable by Hanghui Co to Zhejiang Shunchang. The service fees shall be paid on a monthly basis. The exact amount of the service fees payable shall base on the amount of work which has been completed in that particular month.
Basis of the service fees:	Zhejiang Shunchang participated in a public tender organized by Hanghui Co in respect of the highway pavement maintenance service for the Hanghui Expressway and won the tender (the "Tender") with a contract sum of RMB40,528,621.
Reasons for and benefits of the transaction:	The Highway Pavement Maintenance Agreement and the Supplemental Agreement were signed prior to the execution of the Hanghui Agreement and services provided under the Highway Pavement Maintenance Agreement (as supplemented by the Supplemental Agreement) are necessary for the operation of the Hanghui Expressway.
Information on Zhejiang Shunchang:	Zhejiang Shunchang is a company incorporated   in the PRC and an indirectly-owned subsidiary of Communications Group. Zhejiang Shunchang is principally engaged in the maintenance and repair of highway in the PRC.
Listing Rules implications:	Zhejiang Shunchang is a subsidiary of Communications Group. Therefore, Zhejiang Shunchang is a connected person of the Company and entering into the Highway Pavement Maintenance Agreement (as supplemented by the Supplemental Agreement) constitutes a continuing connected transaction for the Company under the Listing Rules. As the highest of all applicable percentage ratios for the transactions contemplated under the Highway Pavement Maintenance Agreement (as supplemented by the Supplemental Agreement), is more than 0.1% but less than 5%, the Highway Pavement Maintenance Agreement (as supplemented by the Supplemental Agreement) shall be subject to the reporting, announcement and annual review requirements, but exempt from independent shareholders' approval under the Listing Rules. The Highway Pavement Maintenance Agreement (as supplemented by the Supplemental Agreement) was signed prior to the execution of the Hanghui Agreement and shall remain valid and effective upon completion of the Hanghui Acquisition. None of the Directors was involved in approving the signing of the Highway Pavement Maintenance Agreement (as supplemented by the Supplemental Agreement). However, on the basis that (i) Zhejiang Shunchang won the Tender through a public tender organized by Hanghui Co and (ii) services provided under the Highway Pavement Maintenance Agreement (as supplemented by the Supplemental Agreement) are necessary for the operation of the Hanghui Expressway, the Directors (including the independent non-executive Directors) are of the view that the terms of the Highway Pavement Maintenance Agreement (as supplemented by the Supplemental Agreement) are on normal commercial terms and are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

EXEMPT CONTINUING CONNECTED TRANSACTIONS

As at the date of the announcement, Hanghui Co has entered into the following agreements with relevant subsidiaries of Communications Group, which will, upon completion of the Acquisition, remain valid and effective. Each of the following agreements, upon completion of the Acquisition, will constitute a continuing connected transaction for the Company under Chapter 14A of the Listing Rules The Directors consider the following agreements are conducted on normal commercial terms. As the highest applicable percentage ratios under the Listing Rules for each of the following agreements is less than 0.1%, each of them will be exempted from the reporting, announcement, annual review and independent shareholders' approval requirements under Chapter 14A of the Listing Rules.

1. Hanghui Minor Repair Agreement
   On 30 December 2014, Hanghui Co entered into a Hanghui minor repair agreement (the "Hanghui Minor Repair Agreement") with Zhejiang Shunchang, pursuant to which Zhejiang Shunchang has agreed to provide certain minor repair service in respect of the Hanghui Expressway to Hanghui Co. The Hanghui Minor Repair Agreement has a term from 1 January 2015 to 31 December 2015 and Hanghui Co has agreed to pay RMB6,575,627 as the service fee to Zhejiang Shunchang.
2. Hanghui Electrical and Mechanical Services Agreement
   On 11 May 2015, Hanghui Co entered into a Hanghui electrical and mechanical services agreement (the " Hanghui Electrical and Mechanical Services Agreement") with Zhejiang Expressway Information Engineering Technology Co., Ltd* (the "Zhejiang Information"), a subsidiary of Communications Group, pursuant to which Zhejiang Information has agreed to provide certain electrical and mechanical services in respect of the reconstruction project of Linan toll station of Hanghui Expressway to Hanghui Co. The Hanghui Electrical and Mechanical Services Agreement has a term from 11 May 2015 to 11 October 2015 and Hanghui Co has agreed to pay RMB5,429,235 as the service fee to Zhejiang Information.
3. Office Tenancy Agreement
   On 31 December 2014, Hanghui Co entered into an office tenancy agreement (the "Office Tenancy Agreement") with Zhejiang Information, pursuant to which Hanghui Co has leased a training centre to Zhejiang Information. The Office Tenancy Agreement has a term from 1 January 2015 to 31 December 2016 and Zhejiang Information has agreed to pay an annual rental of RMB2,000,000 to Hanghui Co.
   Upon completion of the Acquisition, Hanghui Co will enter into the following agreements with Zhejiang Communications Investment. Each of the following agreements 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 each of the following agreements is 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.
4. Hanghui Service Area Operation Lease Agreement
   Hanghui Co will enter into a Hanghui service area operation lease agreement (the "Hanghui Service Area Operation Lease Agreement") with Zhejiang Communications Investment, pursuant to which Hanghui Co will agree to lease to Zhejiang Communications Investment the operation rights in relation to petrol station services, catering services, supermarket services and vehicle repair services in the service area of the Hanghui Expressway. The term of the Hanghui Service Area Operation Lease Agreement is 3 years. It is expected that the annual fee payable by Zhejiang Communications Investment to Hanghui Co in respect of the lease of the operation rights will be RMB6.10 million, RMB6.25 million and RMB6.40 million, respectively.
5. Hanghui Service Area Utilities Services Agreement
   Hanghui Co will enter into a Hanghui service area utilities services agreement (the "Hanghui Service Area Utilities Services Agreement") with Zhejiang Communications Investment, pursuant to which Hanghui Co will agree to engage Zhejiang Communications Investment to manage utilities facilities and provide utilities services in the service area of the Hanghui Expressway such as washroom, lounge area, safety, cleaning services and utilities system maintenance. The term of the Hanghui Service Area Utilities Services Agreement is 3 years and it is expected that the annual fee payable by Hanghui Co to Zhejiang Communications Investment for the services provided under this agreement will be RMB2.0 million, RMB2.0 million and RMB2.0 million, respectively.

RELATIONSHIP BETWEEN THE PARTIES AND 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 controlling shareholder of the Company. Therefore, Communications Group is a connected person of the Company and as a result, the Acquisition constitutes a connected transaction for the Company under Chapter 14A of the Listing Rules. As the relevant percentage ratio for the Acquisition is over 5% but less than 25%, the Acquisition also constitutes a discloseable transaction for the Company under Chapter 14 of the Listing Rules.

On the above basis, the Acquisition is subject to the reporting, announcement and independent shareholders' approval requirements under Chapter 14A of the Listing Rules applicable to connected transactions, and the reporting and announcement requirements under Chapter 14 of the Listing Rules applicable to discloseable transactions.

In view of the interest of Communications Group in the Hanghui Agreement, Communications Group and its associates will abstain from voting at the general meeting to be convened by the Company to, among others, consider and approve the resolution in relation to the Hanghui Agreement and the transactions contemplated thereunder.

GENERAL

The Company will put forward an ordinary resolution to approve the Acquisition at a general meeting to be convened by the Company for the Independent Shareholders' consideration and approval.

The Independent Board Committee comprising all the independent non-executive Directors, namely, Mr. Zhou Jun, Mr. Pei Ker-Wei and Ms. Lee Wai Tsang Rosa, has been formed to consider the Acquisition, and TC Capital Asia 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 Acquisition are fair and reasonable and whether the Acquisition is in the interests of the Company and the Shareholders as a whole.

A circular containing, among other things, (i) details of the Acquisition, (ii) a letter from the Independent Board Committee to the Independent Shareholders regarding the Acquisition, (iii) a letter of advice from the independent financial adviser to the Independent Board Committee and the Independent Shareholders regarding the Acquisition, and (iv) the notice of general meeting, is expected to be dispatched to the Shareholders on or before 24 August 2015.

DEFINITIONS

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

"Acquisition"	the proposed purchase by the Company of a 80.614% equity interest in Hanghui Co from Communications Group pursuant to the Hanghui Agreement
"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
"Circular"	the circular to be issued to the Shareholders in connection with the Acquisition and a general meeting to be convened by the Company in accordance with the Listing Rules
"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
"connected person(s)"	has the meaning ascribed to it under the Listing Rules "controlling shareholder"    has the meaning ascribed to it under the Listing Rules
"Deloitte"	Deloitte Touche Tohmatsu, the auditors of the Company
"Director(s)"	the director(s) of the Company
"Group"	the Company and its subsidiaries
"Hanghui Agreement"	the agreement dated 5 August 2015 entered into between the Company and Communications Group, pursuant to which the Company conditionally agreed to purchase from Communications Group a 80.614% equity interest in Hanghui Co
"Hanghui Co"	Zhejiang Hanghui Expressway Co., Ltd.*, a limited liability company incorporated in the PRC and owned as to 80.614% and 19.386% by Communications Group and the Other Shareholders, respectively
"Hanghui Expressway"	Hanghui Expressway, an expressway operated by Hanghui Co as at the date of this announcement
"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 Board Committee"	an independent committee of the Board comprising all independent non-executive Directors, namely, Mr. Zhou Jun, Mr. Pei Ker-Wei and Ms. Lee Wai Tsang Rosa
"Independent Shareholders"	Shareholders who are independent within the meaning of the relevant provisions of the Listing Rules, and, in relation to the approval of the Acquisition at a general meeting to be convened by the Company for such purpose, means the Shareholders other than Communications Group and its associates
"Independent Third Party"	a party independent and not connected with the Company, any of its subsidiaries or any of their respective directors or substantial shareholders
"Jones Lang LaSalle"	Jones Lang LaSalle Corporate and Appraisal Advisory Limited, an independent valuer appointed by the Company
"Listing Rules"	Rules Governing the Listing of Securities on The Hong Kong Stock Exchange
"percentage ratio"	has the meaning ascribed to it under Rule 14.04(9) of the Listing Rules
"Other Shareholders"	Hangzhou Communications Investment Group Co., Ltd.*, Linan Communications Investment Co., Ltd* and Hangzhou Yuhang Communications Investment Corporation*, being the minority shareholders of Hanghui Co
"PRC"	the People's Republic of China (for the purpose of this announcement, excludes Hong Kong, Macau and Taiwan)
"PRC Domestic Valuer"	the PRC qualified domestic valuer appointed by  Communications Group
"PRC Valuation Report"	the valuation report prepared by the PRC qualified Domestic Valuer and commissioned by Communications Group in respect of Hanghui Co
"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
"Valuation Report"	the valuation report dated 5 August 2015 prepared by Jones Lang LaSalle and commissioned by the Company in respect of Hanghui Co
"Zhejiang SASAC"	State-owned Assets Supervision and Administration Commission of the People's Government of Zhejiang Province of the PRC
"Zhejiang Communications Investment"	Zhejiang Communications Investment Group Industrial Development Co.,Ltd.* a company incorporated in the PRC and a wholly-owned subsidiary of  Communications Group
"Zhejiang Shunchang"	Zhejiang Shunchang High-grade Expressway Maintenance Co., Ltd.*, a company incorporated in the PRC and an indirectly-owned subsidiary of Communications Group
"%"	per cent.

* English names for reference only.

In this announcement, the translation of RMB into HK$ is based on the exchange of rate of HK$1 to RMB0.78910. Such conversion shall not be construed as a representation that amounts in RMB were or may have been converted into HK$ 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, 5 August 2015

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 5 August 2015, for the purpose of, among other things, inclusion in this announcement are reproduced below:

APPENDIX 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
5 August 2015

Dear Sirs,

Discloseable and Connected Transaction – Acquisition of a 80.614% Equity Interest in the Target Company

We refer to the valuation report dated 5 August 2015 (the "Valuation Report") and prepared by Jones Lang LaSalle Corporate and Appraisal Advisory Limited (the "Independent Valuer") in relation to the valuation of the entire equity interest of Zhejiang Hanghui Expressway Co., Ltd. (the "Target Company"), 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 the entire equity interest of the Target Company has been made with the Independent Valuer, and reviewed the valuation for which the Independent Valuer is responsible.

We have also considered the report from, Deloitte Touche Tohmatsu, dated 5 August 2015 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 Valuation Report and the valuation therein prepared by the Independent Valuer have been made after due and careful enquiry.

Yours faithfully,           
On behalf of the Board        
Zhejiang Expressway Co., Ltd.
ZHAN Xiaozhang      
Chairman             

APPENDIX II – LETTER FROM DELOITTE

5 August 2015

The Directors
Zhejiang Expressway Co. Ltd.
5/F, Block 2, Pearl International Business Center
199 Wuxing Road
Hangzhou City, Zhejiang Province
PRC 310020

ACCOUNTANTS' REPORT ON CALCULATION OF DISCOUNTED FUTURE ESTIMATED CASH FLOWS IN CONNECTION WITH THE VALUATION OF THE ENTIRE EQUITY INTEREST OF ZHEJIANG HANGHUI EXPRESSWAY CO., LTD. ("HANGHUI 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 Jones Lang LaSalle Corporate and Appraisal Advisory Limited dated 5 August 2015, in respect of the entire equity interest in Hanghui Co as at 31 May 2015 (the "Valuation") is based. Hanghui Co is a company established in the People's Republic of China whose principal asset is the Zhejiang section of the Hangzhou-Ruili Expressway. 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 5 August 2015 to be issued by the Company in connection with the acquisition of 80.614% equity interest in Hanghui 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.

Reporting accountants' responsibility

It is our responsibility to form 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 "Assurance Engagements Other Than Audits or Reviews of Historical Financial Information" issued by the Hong Kong Institute of Certified Public Accountants. 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 calculation is concerned, have been properly compiled in accordance with the Assumptions. Our work does not constitute any valuation of Hanghui 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