Connected transaction

Zhejiang Expressway Co
28 October 2004

The Stock Exchange of Hong Kong Limited takes no responsibility for the contents
of this announcement, makes no representation as to its accuracy or completeness
and expressly disclaims any liability whatsoever for any loss howsoever arising
from or in reliance upon the whole or any part of the contents of this
announcement.






 (A joint stock limited company incorporated in the People's Republic of China
                            with limited liability)

                               (Stock code: 0576)



        Connected Transaction: Loan to Zhejiang Jinji Property Co., Ltd.


This announcement is made pursuant to Rule 14A.66(2) of the Listing Rules in respect of the Loan Agreement entered into
between the Company, Jinji Property and the Bank on 25 October 2004 whereby the Company agreed to provide a loan of a
principal amount of RMB260 million (approximately HK$245.28 million) with a maturity period of one year to Jinji
Property through the Bank.

Jinji Property is a connected person of the Company as it is a 90% subsidiary of Communications Investment, which in
turn is a substantial shareholder of the Company holding approximately 56% of the shares in the Company. The provision
of loan under the Loan Agreement by the Company to Jinji Property thus constitutes a connected transaction for the
Company under Rule 14A.13(2)(a)(i) of the Listing Rules.

As the value of the loan to be provided under the Loan Agreement represents less than 2.5% of each of the percentage
ratios, and the Loan Agreement is on normal commercial terms, the provision of loan is exempt from the approval of the
independent shareholders of the Company but subject to the requirements under Rule 14A.66(2) of the Listing Rules to
disclose such transaction in this announcement and in the next published annual report and accounts of the Company.



Background



On 25 October 2004, the Company entered into the Loan Agreement with Jinji
Property and the Bank. Pursuant to the Loan Agreement, the Company will advance
the Loan to the Bank, which will in turn advance the Loan to Jinji Property.
Interest will be payable by Jinji Property to the Company at a rate of 6.31% per
annum, being 1% per annum over the current rate applicable to one-year term
loans in the PRC, as quoted by the People's Bank of China. Any charges and fees
payable to the Bank in connection with the Loan will be paid by Jinji Property.



Interest on the Loan is payable quarterly in arrear. The Loan was advanced in a
single payment on 26 October 2004, and is repayable in a single payment on 25
October 2005.



Pursuant to PRC laws, only authorised financial institutions are permitted to
advance loans. Inter-company loans are typically made through back-to-back
arrangement with an authorised bank. The arrangements with the Bank were made to
comply with such legal requirements. The Bank was providing the loan services as
part of its ordinary course of business.



In connection with the Loan Agreement, Communications Investment has provided a
guarantee in favour of the Company and the Bank in respect of all of the
obligations of Jinji Property in the Loan Agreement.



Reasons of the transaction



The loan is being provided to Jinji Property for use as general working capital.
The loan was provided by the Company out of excess cash from its operations.
Interest will be paid on the loan at a rate of 6.31% per annum, being 1% per
annum over the current rate applicable to one-year term loans in the PRC, as
quoted by the People's Bank of China.



The Board of Directors, including the independent non-executive Directors,
believes that the terms of the Loan Agreement are fair and reasonable, are on
normal commercial terms, and in the best interests of the Group and the
Company's shareholders as a whole as the Loan provides a higher return than
would otherwise be earned as deposit interest on the cash at hand.



Connected transaction



Jinji Property is a connected person of the Company as it is a 90% subsidiary of
Communications Investment, which in turn is a substantial shareholder of the
Company, holding approximately 56% of the shares in the Company. The provision
of loan under the Loan Agreement by the Company to Jinji Property thus
constitutes a connected transaction for the Company under Rule 14A.13(2)(a)(i)
of the Listing Rules.



As the value of the loan to be provided under the Loan Agreement represents less
than 2.5% of each of the percentage ratios, and the Loan Agreement is on normal
commercial terms, the provision of loan is exempt from the approval of the
independent shareholders of the Company but subject to the requirements under
Rule 14A.66(2) of the Listing Rules to disclose such transaction in this
announcement and in the next published annual report and accounts of the
Company.



Information of the Group and Jinji Property



The Company was incorporated on 1 March 1997 in the PRC and is a joint stock
limited company with a registered share capital of RMB4,343,114,500
(HK$4,097,277,830) at present. The main business of the Group is investment in,
development, operation, management, and collection of tolls, of the
Shanghai-Hangzhou-Ningbo Expressway and the Shangsan Expressway, both in the
Zhejiang Province of the PRC, and businesses ancillary to the operation of the
expressways, such as billboard advertising and operation of service areas on the
expressways. Jinji Property is principally engaged in the business of real
estate investment.


Definitions



In this announcement, the following expressions have the meanings set out below
unless the context requires otherwise.


'Company'                          Zhejiang Expressway Co., Ltd. (Chinese character);
'Communications Investment'        Zhejiang Communications Investment Group Co., Ltd. (Chinese character), a PRC
                                   state-owned enterprise;
'Bank'                             a PRC incorporated bank;
'Directors'                        the directors of the Company;
'Loan'                             a loan of a principal amount of RMB260 million (approximately HK245.28 million),
                                   made pursuant to the Loan Agreement;
'Loan Agreement'                   a loan agreement dated 25 October 2004 entered into between the Company, Jinji
                                   Property and the Bank whereby the Company agreed to provide a loan of a principal
                                   amount of RMB260 million (approximately HK$245.28 million) to Jinji Property;
'Group'                            the Company and its subsidiaries;
'HK$'                              Hong Kong dollars, the lawful currency of the Hong Kong Special Administrative
                                   Region;
'Jinji Property'                   Zhejiang Jinji Property Co., Ltd. (Chinese character), a PRC-incorporated company;
'Listing Rules'                    the Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong
                                   Limited;
'percentage ratios'                has the meaning as ascribed to it under the Listing Rules, as applicable to the
                                   transaction under the Loan Agreement;
'PRC'                              the People's Republic of China;
'RMB'                              renminbi, the lawful currency of the PRC;



The exchange rate used for reference purpose in this announcement is HK$1 to
RMB1.06.


                                                                                             By Order of the Board
                                                                                                 Geng Xiaoping
                                                                                                   Chairman



Hangzhou, 27 October 2004



As at the date of this announcement, the executive directors of the Company are:
Messrs. Geng Xiaoping, Fang Yunti, Zhang Jingzhong and Xuan Daoguang; the
non-executive directors are: Messrs. Zhang Luyun and Zhang Yang; and the
independent non-executive directors are: Messrs. Tung Chee Chen, Zhang Junsheng
and Zhang Liping.


                      This information is provided by RNS
            The company news service from the London Stock Exchange