Connected Transactions

Zhejiang Expressway Co
26 August 2003

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 PRC with limited liability)


     CONNECTED TRANSACTIONSEstablishment of Development Co and Services Co

                        Asset Transfers within the Group


For the purposes of the Group Restructuring, the Group has entered into the
following transactions with several connected persons of the Company:

Investment in Development Co

The Company has entered into the Development Co Investment Agreement on 20 May,
2003 with 11 individuals as nominees of 155 Key Employees of the Group
(including 22 connected persons, and 133 independent third parties) for the
establishment of Development Co in the PRC, by the Company investing in 51% of
the equity interest and the 11 individuals investing in an aggregate of 49% of
the equity interest in the registered share capital of Development Co.

Investment in Services Co

Development Co has entered into the Services Co Investment Agreement on 24 July,
2003 with one individual as nominee of 27 key employees of Services Co
(including 4 connected persons and 23 independent third parties) for the
establishment of Services Co in the PRC, by Development Co investing in 85% of
the equity interest and the one individual investing in an aggregate of 15% of
the equity interest in the registered share capital of Services Co.

Asset Transfers within the Group

Development Co has entered into several sale and purchase agreements on 30 May,
2003 with the Company, Jiaxing Co and Shangsan Co respectively, to acquire the
assets and liabilities in respect of the Service Areas and the Advertising Co
Interest (as the case may be), for a total consideration of Rmb87,793,928.
Services Co has entered into a sale and purchase agreement on 26 August, 2003
with the Company and Shangsan Co respectively to acquire the assets and
liabilities in respect of the Vehicle Services Business, for a total
consideration of Rmb3,321,000.

Connected transactions

Each of the above transactions constitutes a connected transaction for the
Company under the Listing Rules. Since the aggregate consideration in respect of
the above connected transactions represents less than 3% of the book value of
the net tangible assets of the Company as disclosed in its latest published
accounts, while no shareholders' approval is required under the Listing Rules,
relevant details of the transactions are required to be disclosed by way of
press announcement and in the Company's next published annual report. The
Directors admitted that the Company has breached rule 14.25(1) of the Listing
Rules by not making timely disclosure of the Investment in Development Co, the
Investment in Services Co and the asset transfers to Development Co as mentioned
in paragraph (A) of this announcement at the time when they were entered into.
However, such failure to disclose is purely due to inadvertence of the Company.
The Stock Exchange reserves its right to take any action against the Company and
/or the Directors in this regard.



INTRODUCTION


The Directors announce that the Group has entered into 4 categories of
transactions with several connected persons of the Company, involving (i) the
Company's Investment in Development Co; (ii) Development Co's Investment in
Services Co; (iii) transfer of assets relating to the Services Areas and the
Advertising Co Interest from the Company and its subsidiaries, Jiaxing Co and
Shangsan Co (as the case may be), to Development Co; and (iv) transfer of assets
relating to the Vehicle Services Business from the Company and Shangsan Co to
Services Co, for the purposes of better development of these Ancillary
Businesses of the Group and streamlining of the Group structure.


The ownership structure of the Company, Advertising Co, Shangsan Co, Jiaxing Co,
Development Co and Services Co and of the assets involved in the Asset Transfers
before and after the Group Restructuring are as follow:


Before completion


                                After completion




INVESTMENT IN DEVELOPMENT CO


The Development Co Investment Agreement has been entered on 20 May, 2003 between
the following parties to establish Development Co, for the purposes of the
operation of the Ancillary Businesses of the Group involving billboard
advertising and the Service Areas along the Expressways and through its
subsidiary, Services Co, the Vehicle Services Business, by each party investing
in the equity interest in the registered share capital of Development Co:


            (1)      the Company; and


            (2)      11 individuals acting as nominees on behalf of the 155 Key
            Employees of the Group. Amongst the 155 Key Employees are:


    (i)      22 Development Co Connected Persons composed of:


                (a)      17 Company's Key Management Personnel, each of whom is
                a director and/or a supervisor of the Company and/or its
                subsidiaries; and


                (b)      5 Development Co's Key Management Personnel, of whom
                three are directors of Development Co, and two are supervisors
                of Development Co; and


            (ii)      133 independent third parties, who are not connected with
            the directors, promoters, supervisors, chief executive or
            substantial shareholders of the Company or its subsidiaries or any
            of their respective associates ('Development Co Independent Third
            Parties').


Amongst the 17 Company's Key Management Personnel, six persons are also
directors of Development Co and one is a supervisor of Development Co.


Details of the amount of investment in Development Co, and the percentage of the
equity interest in the registered share capital in Development Co owned, by each
party are as follow:


Party                             Amount of investment                     % of the equity interest
                                                                           in the registered share
                                                                           capital of Development Co

the Company                       Rmb40,800,000 (approximately             51.000%
                                  HK$38,490,566)
Company's Key Management          Rmb14,260,000 (approximately             17.825% in aggregate
Personnel                         HK$13,452,830) in aggregate
Development Co's Key Management   Rmb2,500,000 (approximately              3.125% in aggregate
Personnel                         HK$2,358,490) in aggregate
Development Co Independent Third  Rmb22,440,000 (approximately             28.050% in aggregate
Parties                           HK$21,169,811) in aggregate
Total                             Rmb80,000,000 (approximately             100.000%
                                  HK$75,471,698)


The investment amounts had been paid in cash by all parties on or before 27 May,
2003 and Development Co was established in the PRC as a subsidiary of the
Company on 28 May, 2003. The investment amount paid by the Company was funded by
the internal resources of the Company.


Development Co is principally engaged in the business of billboard advertising
and operation of the Services Areas along the 247.5km Shanghai-Hangzhou-Ningbo
Expressway and the 142km Shangshan Expressway in the Zhejiang Province owned by
the Company and Shangsan Co respectively, and through its subsidiary, Services
Co, the Vehicle Services Business.


The board of directors of Development Co is composed of 9 members who are
elected by the shareholders of Development Co. The chairman of the board is
elected by the board of directors of Development Co.


INVESTMENT IN SERVICES CO


The Services Co Investment Agreement has been entered on 24 July, 2003 between
the following parties to establish Services Co, for the purposes of the
operation of the Vehicle Services Business of provision of towing and repair of
vehicles and emergency rescue services to users of the Expressways, by each
party investing in the equity interest in the registered share capital of
Services Co:


    (1)      Development Co; and


    (2)      one individual acting as nominee on behalf of 27 key employees of
    Services Co, amongst them are:


            (i)      4 Services Co Connected Persons, who are directors of
            Services Co (one of the 4 directors is also a director of Shangsan
            Co and Development Co); and


            (ii)      23 independent third parties, who are not connected with
            the directors, promoters, supervisors, chief executive or
            substantial shareholders of the Company or its subsidiaries or any
            of their respective associates ('Services Co Independent Third
            Parties').


Details of the amount of investment in Services Co, and the percentage of the
equity interest in the registered share capital in Services Co owned, by each
party are as follow:


Party                           Amount of investment                         % of the equity interest in
                                                                             the registered share
                                                                             capital of Services Co

Development Co                  Rmb6,800,000 (approximately HK$6,415,094)    85.00%
Services Co Connected Persons   Rmb300,000 (approximately HK$283,019) in     3.75% in aggregate
                                aggregate
Services Co Independent Third   Rmb900,000 (approximately HK$849,056) in     11.25% in aggregate
Parties                         aggregate
Total                           Rmb8,000,000 (approximately HK$7,547,170)    100.00%


The investment amounts had been paid in cash by all parties on or before 28
July, 2003 and Services Co was established in the PRC on 31 July, 2003. The
investment amount paid by Development Co was funded by the internal resources of
Development Co.


Services Co is principally engaged in the business of provision of towing and
repair of vehicles and emergency rescue services to users of the
Shanghai-Hangzhou-Ningbo Expressway and the Shangsan Expressway owned by the
Group. Services Co is a subsidiary of Development Co which in turn is a
subsidiary of the Company.


ASSET TRANSFERS WITHIN THE GROUP


(A)      Asset Transfers to Development Co


    1.     from the Company


                (1)      The Company has entered into the First Company
                Agreement on 30 May, 2003 with Development Co whereby
                Development Co agreed to acquire from the Company its
                wholly-owned assets (which are mainly buildings, equipments,
                land use rights and human resources) and liabilities in respect
                of the Sanjiang Service Area and the Yaojiang Service Area, for
                an aggregate consideration of Rmb16,585,487 (approximately
                HK$15,646,686). The consideration will be satisfied in full by
                cash payments of Rmb10,000,000 (approximately HK$9,433,962) on
                12 June, 2003 and of Rmb6,585,487 (approximately HK$6,212,724)
                at completion in October, 2003. The net asset values of the
                Sanjiang Service Area and Yaojiang Service Area, based on the
                consolidated audited financial statements of the Group for the
                year ended 31 December, 2002, are Rmb12,224,985 (approximately
                HK$11,533,005) and Rmb4,268,179 (approximately HK$4,026,584)
                respectively. The Sanjiang and Yaojiang Service Areas are
                located along the 145km Hangzhou-Ningbo Expressway owned by the
                Company.


                (2)      The Company has also entered into the Second Company
                Agreement on 30 May, 2003 with Development Co whereby
                Development Co agreed to acquire from the Company the
                Advertising Co Interest, which is a 70% equity interest in the
                registered share capital in Advertising Co, for a consideration
                of Rmb10,446,878 (approximately HK$9,855,545). The consideration
                will be satisfied in full by cash payments of Rmb6,000,000
                (approximately HK$5,660,377) on 12 June, 2003 and Rmb4,446,878
                (approximately HK$4,195,168) at completion in October, 2003. The
                net asset value of the Advertising Co Interest, based on the
                consolidated audited financial statements of the Group for the
                year ended 31 December, 2002, is Rmb10,682,043 (approximately
                HK$10,077,399). Advertising Co was a 70% owned subsidiary of the
                Company in the PRC before the Group Restructuring and is
                principally engaged in the business of billboard advertising
                along the Shanghai-Hangzhou-Ningbo Expressway and the Shangsan
                Expressway owned by the Group.


    2.     from Jiaxing Co


            Jiaxing Co, a non-wholly owned subsidiary of the Company, has
            entered into the Jiaxing Agreement on 30 May, 2003 with Development
            Co whereby Development Co agreed to acquire from Jiaxing Co its
            wholly-owned assets (which are mainly buildings, equipments, land
            use rights and human resources) and liabilities in respect of the
            Jiaxing Service Area, for a consideration of Rmb21,367,810
            (approximately HK$20,158,311). The consideration will be satisfied
            in full by cash payments of Rmb12,800,000 (approximately
            HK$12,075,472) on 12 June, 2003 and of Rmb8,567,810 (approximately
            HK$8,082,840) at completion in October, 2003. The net asset value of
            the Jiaxing Service Area, based on the consolidated audited
            financial statements of the Group for the year ended 31 December,
            2002, is Rmb21,680,706 (approximately HK$20,453,496). The Jiaxing
            Service Area is located along the 88.1km Jiaxing section of the
            Shanghai-Hanzhou-Ningbo Expressway owned by Jiaxing Co.


    3.      from Shangsan Co


            Shangsan Co, a non wholly-owned subsidiary of the Company, has
            entered into the Shangsan Agreement on 30 May, 2003 with Development
            Co whereby Development Co agreed to acquire from Shangsan Co its
            wholly-owned assets (including buildings, equipments, land use
            rights and human resources) and liabilities in respect of the
            Tiantai Service Area, the Xinchang Service Area and the Sanjie
            Service Area respectively, for an aggregate consideration of
            Rmb39,393,754 (approximately HK$37,163,919). The consideration will
            be satisfied in full by cash payments of Rmb23,600,000
            (approximately HK$22,264,151) on 12 June, 2003 and Rmb15,793,754
            (approximately HK$14,899,768) at completion in October, 2003. The
            net asset values of the Tiantai Service Area, Xinchang Service Area
            and Sanjie Service Area, based on the consolidated audited financial
            statements of the Group for the year ended 31 December, 2002, are
            Rmb13,641,135 (approximately HK$12,868,955), Rmb9,089,998
            (approximately HK$8,575,470) and Rmb17,894,269 (approximately
            HK$16,881,386) respectively. The Tiantai Service Area, Xinchang
            Service Area and Sanjie Service Area are located in Tiantai,
            Xinchang and Sanjie respectively along the Shangsan Expressway owned
            by Shangsan Co.


Consideration


The aggregate consideration payable by Development Co to the Company, Jiaxing Co
and Shangsan Co is Rmb87,793,929 (approximately HK$82,824,461), and each
consideration is determined after arm's length negotiations between the parties
and with reference to the market values or replacement costs of the related
assets totalling Rmb87,793,929 (approximately HK$82,824,461) based on the
valuation performed by independent valuers in the PRC, Zhejiang Qinxin Asset
Valuation Co., Ltd, as at 31 December, 2002. The consideration will be funded by
the internal resources of Development Co and borrowings from domestic commercial
banks of Rmb80,000,000 (approximately HK$75,471,698) and Rmb14,593,929
(approximately HK$13,767,858) respectively.


Use of Proceeds


The net proceeds of sale received by the Company, Jiaxing Co and Shangsan Co are
Rmb27,032,365 (approximately HK$25,502,231), Rmb21,367,810 (approximately
HK$20,158,311) and Rmb39,393,754 (approximately HK$37,163,919) respectively and
will be used by the respective company to pay for expenses for the maintenance
of the Expressways. Since the proceeds are not immediately required, they are
placed by the respective company on short-term deposit with banks in the PRC.


(B)      Asset Transfers to Services Co


    1.      from the Company


            The Company has entered into the First Services Co Agreement on 26
            August, 2003 with Services Co whereby Services Co has agreed to
            acquire from the Company its wholly-owned assets (which are mainly
            towing vehicles and human resources) and liabilities in respect of
            the Company's Vehicle Services Business, for a consideration of
            Rmb2,096,000 (approximately HK$1,977,358). The Company's Vehicle
            Services Business is the business of provision of towing and repair
            of vehicles and emergency rescue services to users of the
            Shanghai-Hangzhou-Ningbo Expressway owned by the Company.


    2.      from Shangsan Co


            Shangsan Co has entered into the Second Services Co Agreement on 26
            August, 2003 with Services Co whereby Services Co has agreed to
            acquire from Shangsan Co its wholly-owned assets (which are mainly
            towing vehicles and human resources) and liabilities in respect of
            the Shangsan's Vehicle Services Business, for a consideration of
            Rmb1,225,000 (approximately HK$1,155,660). The Shangsan's Vehicle
            Services Business is the business of provision of towing and repair
            of vehicles and emergency rescue services to users of the Shangsan
            Expressway owned by Shangsan Co.


    The aggregate net asset values of the Company's Vehicle Repair Business and
    the Shangsan's Vehicle Repair Business, based on the consolidated audited
    financial statements of the Group for the year ended 31 December, 2002, is
    Rmb5,784,091 (approximately HK$5,456,690).


    Consideration


    The aggregate consideration payable by Services Co to the Company and
    Shangsan Co is Rmb3,321,000 (approximately HK$3,133,019), and each
    consideration is determined after arm's length negotiations between the
    parties and with reference to the replacement costs of the related assets
    totalling Rmb3,321,000 (approximately HK$3,133,019) based on the valuation
    performed by independent valuers in the PRC, Zhejiang Qinxin Asset Valuation
    Co., Ltd, as at 30 June, 2003. The consideration will be funded by the
    internal resources of Services Co.


    Use of Proceeds


    The net proceeds of sale received by the Company and Shangsan Co from
    Services Co are Rmb2,096,000 (approximately HK$1,977,358) and Rmb1,225,000
    (approximately HK$1,155,660) respectively and will be used by the respective
    company to pay for expenses for the maintenance of the Expressways. Since
    the proceeds are not immediately required, they are placed by the respective
    company on short-term deposit with banks in the PRC.

Condition Precedent


There is no condition precedent for each of the Asset Transfers. The Asset
Transfer Agreements took effect upon the signing of the Agreements. The closing
of the Asset Transfers will be taken place in October, 2003.


Net profit/loss of the assets transferred


The net profit or loss before and after tax and extraordinary terms attributable
to the assets transferred based on the consolidated audited financial statements
of the Company, for the two financial years ended 31 December, 2001 and 31
December 2002, are as follow:


                                                                           Audited (based on HK GAAP)
                                                                           Year ended 31   Year ended 31
                                                                          December, 2001  December, 2002
                                                                               (RMB'000)       (RMB'000)


        Sanjiang and Yaojiang Service Areas


        Net profit/(loss)

                                                                                    
        - before tax and extraordinary items                                         259           2,232

                                                                                      
        - after tax and extraordinary items                                           76           1,439


        Jiaxing Service Area


        Net profit/(loss)

                                                                                   
        - before tax and extraordinary items                                       4,718           6,021

                                                                                   
        - after tax and extraordinary items                                        3,161           4,034


        Sanjie, Xinchang and Tiantai Service Areas


        Net profit/(loss)

                                                                                   
        - before tax and extraordinary items                                       (511)           6,007

                                                                                   
        - after tax and extraordinary items                                        (511)           4,025


        Advertising Co Interest


        Net profit/(loss)

                                                                                  
        - before tax and extraordinary items                                      11,084          11,930

                                                                                   
        - after tax and extraordinary items                                        7,261           7,768


        Company's Vehicle Services Business


        Net profit/(loss)

                                                                                   
        - before tax and extraordinary items                                       (775)         (1,524)

                                                                                   
        - after tax and extraordinary items                                        (775)         (1,524)


        Shangsan's Vehicle Services Business


        Net profit/(loss)

                                                                                   
        - before tax and extraordinary items                                       (620)         (1,116)

                                                                                   
        - after tax and extraordinary items                                        (620)         (1,116)



REASONS FOR THE GROUP RESTRUCTURING


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
(approximately HK$4,097,277,830) at present. The main business of the Group is
the investment in, development, operation and management of, and collection of
tolls on the Expressways. The Group is also engaged in businesses ancillary and
relating to the operation of the Expressways, such as billboard advertising,
operation of the Service Areas, towing and repair of vehicles, and emergency
rescue on the Expressways.


The turnover of the Group has grown rapidly with a compound annual growth rate
of 34.9% for the last five years, with the turnover from the Ancillary
Businesses only less than 5%. The Directors believe that the Ancillary
Businesses can be best developed by the establishment of Development Co with its
subsidiary, Services Co, which shall have a focus on the development of such
businesses. Moreover, the Group will receive an aggregate sum of Rmb91,114,929
(approximately HK$85,957,480) from Development Co and Services Co as net
proceeds of sale pursuant to the Asset Transfers. Such amount will be utilised
for the maintenance of the Expressways. The Directors are of the view that the
Group can be benefited as a result of the improved conditions of the Expressways
and increased economic returns of the Expressways. The Directors also expect
that the Group structure following the Group Restructuring can be streamlined,
so that the management and operation of the Ancillary Businesses can become more
specialised and efficient. However, the Group Restructuring will not lead to any
change in the business model of the Group and will not have any significant
impact on the earnings, assets and liabilities of the Group.


The Directors, including the independent non-executive directors, consider that
each of the Investment in Development Co, the Investment in Services Co and the
Asset Transfers and the related Development Co Investment Agreement, the
Services Co Investment Agreement and the Asset Transfer Agreements are on normal
commercial terms and that such terms are fair and reasonable to the Group and is
in the best interest of the Company and its shareholders as a whole.


CONNECTED TRANSACTIONS


According to rule 1.01 of the Listing Rules, a 'connected person' of a listed
issuer is defined to include a director or a supervisor of a listed issuer and
any of its subsidiaries. The 22 Development Co Connected Persons and 4 Services
Co Connected Persons are 'connected persons' of the Company as each of them is a
director and/or a supervisor of the Company and/or its subsidiaries.
Accordingly, the Investment in Development Co, the Investment in Services Co and
the Asset Transfers each constitutes a connected transaction for the Company
under the Listing Rules. Since the aggregate consideration involved in the above
connected transactions represents less than 3% of the book value of the net
tangible assets of the Company as disclosed in its latest published accounts,
while no shareholders' approval is required under the Listing Rules, relevant
details of the transactions are required to be disclosed by way of press
announcement and in the Company's next published annual report under rule 14.25
of the Listing Rules.


The Directors admitted that the Company has breached the Listing Rules by not
making timely disclosure of the Investment in Development Co, the Investment in
Services Co and the asset transfers to Development Co as mentioned in paragraph
(A) of this announcement at the time when they were entered into. However, such
failure to disclose is purely due to inadvertence of the Company. The Stock
Exchange reserves its right to take any action against the Company and/or the
Directors in this regard.


Definitions

'Advertising Co'                         Zhejiang Expressway Advertising Co., Ltd., a 70% owned
                                         subsidiary of the Company in the PRC before the Group
                                         Restructuring
'Advertising Co Interest'                a 70% equity interest in the registered share capital of
                                         Advertising Co, which has been acquired by Development Co from
                                         the Company pursuant to the Second Company Agreement
'Ancillary Businesses'                   ancillary businesses of the Group involving billboard
                                         advertising, operation of the Service Areas and the Vehicle
                                         Services Business on the Expressways
'Asset Transfer Agreements'              the First Company Agreement, the Second Company Agreement, the
                                         Jiaxing Agreement, the Shangsan Agreement, the First Services Co
                                         Agreement and the Second Services Co Agreement
'Asset Transfers'                        the transfers of assets under the Asset Transfer Agreements
'Company'                                Zhejiang Expressway Co., Ltd.
                                         17 key management personnel of the Company and/or its
    'Company's Key Management Personnel' subsidiaries, namely, Geng Xiaoping, Fang Yunti, Zhang
                                         Jingzhong, Xuan Daoguang, Jiang Wenyao, Huang Qiuxia, Pan
                                         Jiaxiang, Wu Junyi, Fang Zhexing, Zhan Huagang, Gong Zuxian, Ni
                                         Ciyun, Pan Santao, He Weiyang, Yang Yingzhi, Wang Yubing and
                                         Zhang Pubiao, who own in aggregate 17.825% of the equity
                                         interest in the registered share capital of Development Co
                                         the Vehicle Services Business operating on the
    'Company's Vehicle Services          Shanghai-Hangzhou-Ninbgo Expressway which has been acquired by
    Business'                            Services Co pursuant to the First Services Co Agreement

'Development Co'                         Zhejiang Expressway Investment Development Co., Ltd., a limited
                                         liability company established in the PRC on 28 May, 2003
                                         the Company's Key Management Personnel and the Development Co's
    'Development Co Connected Persons'   Key Management Personnel, collectively, who are connected
                                         persons of the Company under the Listing Rules
                                         3 directors of Development Co, namely, Ma Boliang, Lu Youfa and
    'Development Co's Key Management     Hu Ronggen, and 2 supervisors of Development Co, namely, Sun
    Personnel'                           Zhongfu and Zhou Jianrong, who in aggregate own 3.125% of the
                                         equity interest in the registered share capital of Development
                                         Co
'Development Co Investment Agreement'    an investment agreement entered into by the Company and 11
                                         individuals as nominees of the Key Employees on 20 May, 2003
                                         regarding the investment in and establishment of Development Co
'Directors'                              directors of the Company
'Expressways'                            the Shanghai-Hangzhou-Ningbo Expressway and the Shangsan
                                         Expressway
'First Company Agreement'                a sale and purchase agreement entered into by Development Co and
                                         the Company on 30 May, 2003 regarding the purchase of the
                                         Yaojiang and Sanjiang Service Areas by Development Co
'First Services Co Agreement'            a sale and purchase agreement entered into by Services Co and
                                         the Company on 26 August, 2003 regarding the purchase of the
                                         Company's Vehicle Services Business by Services Co
'Group Restructuring'                    restructuring of the Group in relation to the Ancillary
                                         Businesses and involving the Investment in Development Co, the
                                         Investment in Services Co and the Asset Transfers
'Group'                                  the Company and its subsidiaries
'Investment in Development Co'           the investment by the Company in 51% of the equity interest in
                                         the registered share capital of Development Co pursuant to the
                                         Development Co Investment Agreement
'Investment in Services Co'              the investment by Development Co in 85% of the equity interest
                                         in the registered share capital of Services Co pursuant to the
                                         Services Co Investment Agreement
'Jiaxing Agreement'                      a sale and purchase agreement entered into by Development Co and
                                         Jiaxing Co on 30 May, 2003 regarding the purchase of the Jiaxing
                                         Service Area by Development Co
'Jiaxing Co'                             Zhejiang Jiaxing Expressway Co., Ltd, a 99.993% owned subsidiary
                                         of the Company in the PRC
'Jiaxing Service Area'                   a Service Area located along the 88.1km Jiaxing section of the
                                         Shanghai-Hangzhou-Ningbo Expressway owned by Jiaxing Co
'Key Employees'                          155 Key Employees of the Group who are mainly managers and
                                         technical staff involved in the operation of the Ancillary
                                         Businesses, and who own in aggregate 49% of the equity interest
                                         in the registered share capital of Development Co
'Listing Rules'                          the Rules Governing the Listing of Securities on the Stock
                                         Exchange
'Sanjiang Service Area'                  a Service Area located in Sanjiang along the 145km
                                         Hangzhou-Ningbo Expressway owned by the Company
'Sanjie Service Area'                    a Service Area located in Sanjie along the Shangsan Expressway
'Second Company Agreement'               a sale and purchase agreement entered into by Development Co and
                                         the Company on 30 May, 2003 regarding the purchase of the
                                         Advertising Co Interest by Development Co
'Second Services Co Agreement'           a sale and purchase agreement entered into by Services Co and
                                         Shangsan Co on 26 August, 2003 regarding the purchase of the
                                         Shangsan's Vehicle Services Business by Development Co
'Service Areas'                          service areas along the Expressways which provides food
                                         catering, petrol filling, parking and vehicle repair services
                                         for users of the Expressways
'Services Co'                            Zhejiang Expressway Vehicle Towing and Rescue Services Co.,
                                         Ltd., a 85% owned subsidiary of Development Co established in
                                         the PRC on 31 July, 2003
'Services Co Connected Persons'          4 directors of Services Co, namely, Gong Zuxian, Chen Jianye, Xu
                                         Jianmin and Xu Guangmei, who are connected persons for the
                                         purposes of the Listing Rules and who invest in an aggregate of
                                         3.75% of the equity interest in the registered share capital of
                                         Services Co
'Services Co Investment Agreement'       an investment agreement entered into by Development Co and an
                                         individual as nominee of 27 key employees of Services Co on 24
                                         July, 2003 regarding the investment in and establishment of
                                         Services Co
                                         the 247.5km Shanghai-Hangzhou-Ningbo Expressway in the Zhejiang
    'Shanghai-Hangzhou-Ningbo            Province owned by the Group
    Expressway'

'Shangsan Agreement'                     a sale and purchase agreement entered into by Development Co and
                                         Shangsan Co on 30 May, 2003 regarding the purchase of the
                                         Tiantai Service Area, Xinchang Service Area and Sanjie Service
                                         Area by Development Co
'Shangsan Co'                            Zhejiang Shangsan Expressway Co., Ltd, a 73.625% owned
                                         subsidiary of the Company in the PRC
'Shangsan Expressway'                    the 142km Shangsan Expressway in Zhejiang Province owned by
                                         Shangsan Co
                                         the Vehicle Services Business operating on Shangsan Expressway
    'Shangsan's Vehicle Services         which has been acquired by Services Co pursuant to the Second
    Business'                            Services Co Agreement

'Stock Exchange'                         The Stock Exchange of Hong Kong Limited
'Tiantai Service Area'                   a Service Area located in Tiantai along the Shangsan Expressway
'Vehicle Services Business'              the business of provision of towing and repair of vehicles and
                                         emergency rescue services to users of the Expressways
'Xinchang Service Area'                  a Service Area located in Xinchang along the Shangsan Expressway
'Yaojiang Service Area'                  a Service Area located in Yaojiang along the 145km
                                         Hangzhou-Ningbo Expressway owned by the Company
'Yuhang Co'                              Zhejiang Yuhang Expressway Co., Ltd., a 51% owned subsidiary of
                                         the Company

                                                             By Order of the Board
                                                                Zhang Jingzhong
                                                               Company secretary

Hangzhou, 26 August, 2003

In this announcement, the translation of Rmb into Hong Kong Dollars is based on
the exchange rate of HK$1.00 to Rmb1.06. Such translations should not be
construed as a representation that the amounts in question have been, could have
been or could be converted at any particular rate or at all.


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