Discloseable Transaction

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

DISCLOSEABLE TRANSACTION
IN RELATION TO ACQUISITION OF TARGET SHARES

On May 2, 2018, the Company, as purchaser, and Rizhao Steel, as vendor, entered into the Share Transfer Agreement, pursuant to which the Company agreed to acquire 4.9% of shares of SRCB from Rizhao Steel in accordance to the terms and conditions of the Share Transfer Agreement, at a cash consideration of RMB2,712,240,000 (equivalent to approximately HK$3,343,738,442).

As one or more of the applicable percentage ratio(s) calculated pursuant to Rule 14.07 of the Listing Rules in respect of the transactions is more than 5% but less than 25%, the transaction constitutes a discloseable transaction for the Company and is subject to the reporting and announcement requirements under Chapter 14 of the Listing Rules.

On May 2, 2018, the Company, as purchaser, and Rizhao Steel, as vendor, entered into the Share Transfer Agreement. Pursuant to the Share Transfer Agreement, the Company agreed to acquire 4.9% of shares of SRCB from Rizhao Steel in accordance with the terms and conditions of the Share Transfer Agreement, at a cash consideration of RMB2,712,240,000 (equivalent to approximately HK$3,343,738,442).

Principal terms of the Share Transfer Agreement are set out below:

Date:	May 2, 2018
Parties:	(1)    the Company, as purchaser; and
	(2)     Rizhao Steel, as vendor
	To the best of the knowledge, information and belief of  the Directors, having made all reasonable enquiries,  Rizhao Steel, SRCB and their respective ultimate  beneficial owners are third parties independent of and not  connected with the Company.
Acquisition:	Pursuant to the Share Transfer Agreement, Rizhao Steel  agreed to sell, and the Company agreed to purchase  392,000,000 SRCB shares (representing 4.9% of the entire  issued share capital of SRCB as at the date of the Share  Transfer Agreement) ("Target Shares"). Rizhao Steel is  the legal and beneficial owner of the sale shares.
Consideration:	Consideration for the Target Shares is RMB2,712,240,000  (equivalent to approximately HK$3,343,738,442), or  RMB6.92 (equivalent to approximately HK$8.53) per  share
Basis of consideration:	The consideration has been determined based on arm's  length negotiations and with reference to (among others)  factors as follows:
	(1)          the evaluating price of shares of SRCB according to  the Valuation Report;
	(2)          dividends of SRCB for 2017 to be distributed which  are within 20% (inclusive) of its distributable profits  for 2017 (based on information ascertained by  SRCB's profit distribution plan) shall be attributable  to Rizhao Steel, and any other dividends to be paid  shall be attributable to the Company; and
	(3)          SRCB's profit or loss for the period ending the date  of settlement (which is expected to be five months)  will not be audited, and such profit or loss shall be  attributable to or borne by the Company.
Payment:	The consideration shall be paid in three installments: (i)  30% to be paid within five working days after signing of  the Share Transfer Agreement; (ii) 50% to be paid within  five working days after transfer of the first installment;  and (iii) 20% to be paid within five working days after the  pledge of the Target Shares have been released and  matters relating to the share transfer have been approved  by SRCB.
Pledge of shares:	as at the date of this announcement, all of the Target  Shares held by Rizhao Steel were pledged in favour of  China Minsheng Banking Corp., Ltd. ("China Minsheng  Bank"), Jinan branch. There were 39,200,000 shares  pledged in aggregate, representing 100% of the Target  Shares, with the pledge terms commencing from  December 2017 and ending on December 2018.  Accordingly, the Company will open an escrow account  with China Minsheng Bank, Jinan branch, and the  amounts deposited in the escrow account will be  transferred to the account of Rizhao Steel until the pledge  of the Target Shares is released by Rizhao Steel and  matters relating to the share transfer have been approved  by SRCB.
Conditions precedent:	the Company and Rizhao Steel have obtained internal  approval and authorisation in relation to the share transfer,  and the Company has obtained approval from the Board  and Communications Group in relation to this transaction.
Representations and     warranties:	the Company and Rizhao Steel have made usual and  customary representations and warranties in line with  those made under transactions with similar nature and  scale.
Governing law:	PRC law

INFORMATION ON THE PARTIES AND SRCB

The Company is a joint stock company established under the laws of the PRC with limited liability on March 1, 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 out certain other businesses such as securities brokerage, investment banking, asset management, margin financing and securities lending through Zheshang Securities.

Rizhao Steel is a company established under the laws of the PRC with limited liability on May 14, 2003. It is principally engaged in electricity generation, metal smelting, processing, production and sales, as well as coal wholesale. As at the date of this announcement, 4.9% of the entire issued share capital of SRCB is legally and beneficially owned by Rizhao Steel.

SRCB is a company established under the laws of the PRC with limited liability on August 23, 2005 and approved by CBRC to commence commercial banking business. SRCB is principally engaged in taking in deposits from the general public; granting short-term, mid-term and long-term loans; handling domestic and foreign settlements; handling the acceptance and discounting of notes; issuing, paying and underwriting government bonds as an agent; trading government bonds and financial bonds; interbank lending; services of bank cards; foreign currency deposits, loans and remittance, international settlements, interbank foreign currency lending, credit investigation, consultation and witness business; receipt and payment of money as an agent and agency business; providing safe deposit box services; and other business approved by CBRC, and sale and payment of foreign exchange business.

Set out below are the summarised financial information of SRCB for the financial years ended December 31, 2016 and 2017:

	Year ended	Year ended
	December 31, 2016	December 31, 2017
	(Audited)	(Audited)
	RMB' million	RMB' million
Operating income	15,589	17,921
Net profit	5,976	6,663
Non-performing loan ratio	1.29%	1.30%

According to the Valuation Report, as at December 31, 2017, the book value of total assets attributable to the parent company of SRCB amounted to RMB776,447 million (equivalent to approximately HK$957,229 million), and the book value of total liabilities amounted to RMB725,355 million (equivalent to approximately HK$894,241 million). The book value of net assets amounted to RMB51, 092 million (equivalent to approximately HK$62,988 million).

REASONS FOR AND BENEFITS OF THE TRANSACTION

Based in Shanghai, SRCB's business covers the Yangtze River Delta and has promising business development prospects. With certain shareholders controlled by Shanghai SASAC, SRCB possesses inherent advantages in terms of local customer resources. Certain business of SRCB shall create synergy effect with those of Zheshang Securities. With its regional advantages, SRCB is comparable to, if not better than, certain listed banks in terms of assets, profitability and asset quality. Besides, SRCB has a comprehensive management system, well-established staff and enhanced market development capability, as well as sound financial position, and all indicators meet the industry's regulatory requirements.

The investment in SRCB is expected to achieve the return rate higher than the financing cost of the Company, and will provide a better investment return. Besides, acquisition of the Target Shares will also lay a sound foundation for the Company's development of its financial business, and thus facilitates its business structure optimisation, foster its diversified management abilities, and strive to achieve a high quality sustainability.

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

LISTING RULES IMPLICATIONS

As one or more of the applicable percentage ratio(s) calculated pursuant to Rules 14.07 of the Listing Rules in respect of the transactions is more than 5% but less than 25%, the transaction constitutes a discloseable transaction for the Company and is subject to the reporting and announcement requirements under Chapter 14 of the Listing Rules.

None of the Directors have a material interest in the transactions and none of them are required to abstain from voting on the relevant Board resolutions to approve the transactions according to the articles of association of the Company.

DEFINITIONS

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

"Board"	the Board of Directors
"CBRC"	China Banking Regulatory Commission
"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
"Director(s)"	the directors of the Company
"Group"	the Company and its subsidiaries
"Hong Kong"	the Hong Kong Special Administrative Region of the PRC
"HK$"	Hong Kong dollars, the lawful currency of Hong Kong
"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
"Listing Rules"	Rules Governing the Listing of Securities on The Stock  Exchange of Hong Kong Limited
"percentage ratio"	has the meaning ascribed to it under Rule 14.04(9) of  the Listing Rules
"PRC"	the People's Republic of China (for the purpose of this  announcement, excludes Hong Kong, Macau and  Taiwan)
"Rizhao Steel"	Rizhao Steel Holdings Group Company Ltd.*,  a company incorporated in the  PRC with limited liability
"RMB"	Renminbi, the lawful currency of the PRC
"Shanghai SASAC"	State-owned Assets Supervision and Administration  Commission of Shanghai Municipal Government
"Share Transfer Agreement"	the share transfer agreement dated May 2, 2018 entered  into between the Company and Rizhao Steel. Pursuant  to the Share Transfer Agreement, the Company agreed  to acquire 4.9% shares of SRCB from Rizhao Steel in  accordance to the terms and conditions of the Share  Transfer Agreement
"Shareholder(s)"	holder(s) of the share(s) of the Company
"SRCB"	Shanghai Rural Commercial Bank Co., Ltd.,   a joint stock company  incorporated in the PRC with limited liability
"Stock Exchange"	The Stock Exchange of Hong Kong Limited
"subsidiary(ies)"	has the meaning ascribed to it under the Listing Rules
"Target Shares"	392,000,000 shares of SRCB (representing 4.9% of the  entire issued share capital of SRCB as at the date of the  Share Transfer Agreement) held by Rizhao Steel as at  the date of this announcement
"Valuation Report"	the valuation report dated April 17, 2018 prepared by  the Valuer
"Valuer"	China Enterprise Appraisals Co., Ltd.*, the independent qualified valuer  appointed by the Company in relation to the Share  Transfer Agreement
"Zheshang Securities"	Zhejiang Zheshang Securities Co., Ltd.,  a company incorporated in the PRC with  limited liability, and an indirect non wholly-owned  subsidiary of the Company
"%"	per cent.

*    English names for reference only

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

Hangzhou, the PRC, May 2, 2018

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