Disposal of Maintenance Equipment

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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)

CONNECTED TRANSACTION DISPOSAL OF
MAINTENANCE EQUIPMENT

THE DISPOSAL AGREEMENTS
On  8  September  2016,  the  Company  and  the  relevant  subsidiaries  of  the  Company entered into the Disposal Agreements with Maintenance Co, pursuant to which the Company and the relevant subsidiaries of the Company agreed to dispose of the Maintenance Equipment to Maintenance Co.

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, Maintenance Co, as a controlling subsidiary of Communications Group, is a connected person of the Company and as a result, the transactions under the Disposal Agreements constitute connected transactions for the Company under Chapter 14A of the Listing Rules.

As the applicable percentage ratios in respect of the transactions contemplated under the Disposal Agreements, on an aggregated basis, are more than 0.1% but less than 5%, the Disposal Agreements are subject to the reporting, announcement and annual review requirements but exempt from the independent Shareholders' approval requirement under Chapter 14A of the Listing Rules.

THE DISPOSAL AGREEMENTS
Principal terms of the Disposal Agreements are set out below:

Date:	8 September 2016
Parties:	(1)  the Company and the relevant  subsidiaries of the Company (namely Shangsan  Co  and  Jiaxing  Co); and
	(2)  Maintenance Co
Subject matter:	Maintenance Co agreed to acquire the Maintenance Equipment, which include pavers, roller, loader, air compressor and caution vehicles
Consideration and basis of the consideration:	the aggregate consideration payable by Maintenance Co of the for the Maintenance  Equipment is RMB35,532,756, which was determined based on the valuation of the Maintenance Equipment as at 31 March 2016 conducted by a valuer engaged by the Company using replacement cost method. The consideration is equivalent to the valuation of the Maintenance Equipment conducted by the valuer.
Terms of payment:	the consideration for the Maintenance Equipment shall be payable by Maintenance Co as follows:
	(i) 30% of the consideration to be payable on or before 31 December 2016;
	(ii) 30% of the consideration to be payable on or before 31 December 2017; and
	(iii) 40% of the consideration to be payable on or before 31 December 2018.
Conditions precedent:	The effectiveness of the Disposal Agreements shall  be conditional upon satisfaction of the following conditions precedent:
	(i)  the Disposal Agreements and the transactions contemplated thereunder having been approved by the Board of the Company; and
	(ii)  the Disposal Agreements and the transactions contemplated thereunder having been approved  by the board of directors of Maintenance Co.
Completion:	Completion of the Disposal will take place within 10 business days after the Disposal Agreements becoming effective. The completion of one Disposal Agreement is not inter-conditional upon completion of the other Disposal Agreements.

REASONS FOR AND BENEFITS OF THE TRANSACTION
Maintenance  Co  was  established  in  2014  as  a  subsidiary  of  the  Company  until  the disposal of its entire equity interest by the Company to Communications Group in September 2015. Prior to the establishment of Maintenance Co the Company had acquired the Maintenance Equipment for the purpose of carrying out road maintenance work. After the disposal of Maintenance Co the Company no longer has the technical capability or personnel to carry out road maintenance work by itself and the Company mainly engages qualified service provider to carry out such work through public tender. The Maintenance Equipment has therefore become redundant for the Company and the Board considers that it would be appropriate to dispose of the same in return for cash.

Given the above, the Directors (including the independent non-executive Directors) are of the view that the terms of the Disposal Agreements 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.

The Company expects to record a profit of approximately RMB5,304,000 on disposal of the Maintenance Equipment calculated on the basis of the book value of the Maintenance Equipment in the aggregate sum of approximately RMB29,069,000 as at the date of valuation. The net proceeds from the Disposal (after deduction of relevant transaction costs and expenses) is expected to be approximately RMB34,374,000, which will be used by the Group as working capital.

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, Maintenance Co, as a controlling subsidiary of Communications Group, is a connected person of the Company and as a result, the transactions under the Disposal Agreements constitute connected transactions for the Company under Chapter 14A of the Listing Rules.

As the applicable percentage ratios in respect of the transactions contemplated under the Disposal Agreements, on an aggregated basis, are more than 0.1% but less than 5%, the Disposal Agreements are subject to the reporting, announcement and annual review requirements  but  exempt  from  the  independent Shareholders' approval requirement 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 Disposal Agreements. Save for Mr. Zhan Xiaozhang, Mr. Wang Dongjie, Mr. Dai Benmeng and Mr. Zhou Jianping, none of the Directors has any material interest in the Disposal Agreements or is required to abstain from voting on the relevant Board resolutions to approve the same.

INFORMATION ON THE PARTIES
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.

Maintenance Co is a controlling subsidiary of Communications Group which is incorporated under the laws of the PRC on 28 January 2014. Maintenance Co is principally engaged in construction of transportation projects and maintenance of toll road.

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

"Board"	the board of Directors
"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"	has the meaning ascribed to it under the Listing Rules
"controlling shareholder"	has the meaning ascribed to it under the Listing Rules
"Director(s)"	the directors of the Company
"Disposal"	the disposal of the Maintenance Equipment to Maintenance Co in accordance with the terms of the Disposal Agreements
"Disposal Agreements"	four agreements entered into between the Company and the relevant subsidiaries of the Company on one hand and Maintenance Co on the other hand dated 8 September 2016 in respect of the Disposal
"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
"Jiaxing Co"	(Zhejiang Jiaxing Expressway Co., Ltd.*), a 99.9995% owned subsidiary of the Company
"Listing Rules"	Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited
"Maintenance Co"	(Zhejiang  Expressway Maintenance  Co., Ltd.*),  a  company  incorporated  in the PRC and a controlling subsidiary of Communications Group
"Maintenance Equipment"	Road maintenance equipment including pavers, roller, loader, air compressor and caution vehicles
"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)
"RMB"	Renminbi, the lawful currency of the PRC
"Shangsan Co"	(Zhejiang Shangsan Expressway Co., Ltd.) a 73.625% owned subsidiary of the Company
"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
*    English names for reference only

On behalf of the Board
ZHEJIANG  EXPRESSWAY CO., LTD.
ZHAN Xiaozhang
Chairman

Hangzhou, PRC, 8 September 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.