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)

                              CONNECTED TRANSACTION


      MEMORANDUM OF UNDERSTANDING IN RELATION TO ACQUISITION OF PROPERTY


MEMORANDUM OF UNDERSTANDING


On 22 December 2011, Zheshang Securities, an indirectly owned subsidiary of 
the Company, entered into the Memorandum of Understanding with the Vendor in 
respect of the Proposed Acquisition.


LISTING RULES IMPLICATIONS


As at the date of this announcement, the Communications Group beneficially 
owns 2,909,260,000 Domestic Shares, representing approximately 67% of the 
issued share capital  of  the  Company.  By  virtue  of  this  shareholding  
interest,  Communications Group  is  a  substantial  Shareholder  (as  
defined  under  the  Listing  Rules)  and the Vendor, which is a wholly-owned 
subsidiary of Communications Group, is accordingly a connected person of the 
Company. Zheshang Securities is a 70.8275% owned  subsidiary  of  Zhejiang  
Shangsan  Expressway  Co.,  Ltd.,  which  in  turn  is  a 73.625%  owned  
subsidiary  of  the  Company.  The  transaction  contemplated  under the 
Memorandum of Understanding therefore constitutes a connected transaction 
for the Company under the Listing Rules. As each of the applicable percentage 
ratios in  respect  of  the  Proposed  Acquisition  is  less  than  5%,  the  
Proposed  Acquisition is subject to the reporting and announcement 
requirements but is exempt from the independent shareholders' approval 
requirement under Chapter 14A of the Listing Rules.

THE  MEMORANDUM  OF UNDERSTANDING MAY OR MAY NOT LEAD TO THE ENTERING 
INTO OF THE SALE AND PURCHASE AGREEMENT AND THE TRANSACTIONS CONTEMPLATED 
THEREUNDER MAY OR MAY NOT BE CONSUMMATED. IN THE EVENT THAT THE SALE AND 
PURCHASE AGREEMENT MATERIALISES, FURTHER ANNOUNCEMENT(S)  WILL  BE  MADE  
AS  AND  WHEN  REQUIRED  BY AND  IN  COMPLIANCE  WITH  THE  LISTING  
RULES.  SHAREHOLDERS AND POTENTIAL INVESTORS ARE ADVISED TO EXERCISE 
CAUTION IN DEALING IN THE COMPANY'S SECURITIES.


MEMORANDUM OF UNDERSTANDING


On 22 December 2011, Zheshang Securities, an indirectly owned subsidiary of 
the Company, entered into the Memorandum of Understanding with the Vendor 
in respect of the Proposed Acquisition. The principal terms of the 
Memorandum of Understanding are as follows:


Date

22 December 2011


Parties

(i)  The Vendor; and


(ii)  Zheshang Securities.


Condition precedent to entering into of the Sale and Purchase Agreement


Pursuant to the Memorandum of Understanding, the entering into of the Sale 
and Purchase Agreement by the Vendor and Zheshang Securities is conditional 
upon the Vendor obtaining the Pre-sale Permit before the Long Stop Date. 
Upon fulfillment of this condition precedent, the Vendor and Zheshang 
Securities shall enter into the Sale and Purchase Agreement within 15 days.


Earnest Deposit


Pursuant to the Memorandum of Understanding, Zheshang Securities paid the 
Earnest Deposit in the amount of RMB323.8 million (equivalent to 
approximately HK$398.3 million) to the Vendor on 26 December 2011.


If the Vendor fails to obtain the Pre-sale Permit before the Long Stop 
Date, the Vendor shall pay to Zheshang Securities interest on the Earnest 
Deposit which shall accrue from the Long Stop Date to the date that the 
Pre-sale Permit is obtained (both days inclusive) at the prevailing lending 
interest rate promulgated by the People's Bank of China for the same period.

If the Vendor fails to obtain the Pre-sale Permit within 6 months after the 
signing of the Memorandum of Understanding, the Vendor shall refund the 
Earnest Deposit to Zheshang Securities together with interest on the Earnest 
Deposit which shall accrue from the date of the Memorandum of Understanding 
to the date which is 6 months after the date of the Memorandum of 
Understanding (both days inclusive) at the prevailing lending interest rate 
promulgated by the People's Bank of China for the same period.


Asset to be acquired


Subject to the entering into of the Sale and Purchase Agreement in accordance 
with the terms of the Memorandum of Understanding, the Vendor and Zheshang 
Securities have agreed in principle in relation to the sale and purchase of 
the Property, which comprised of levels 2 to 17 and 266 car parking spaces 
at the basement of an office building located at Jianggan District, Hangzhou 
City, Zhejiang Province of the PRC.


The  Property  is  under  development  by  the  Vendor  and  is  expected  
to  have  a  gross floor area of 25,699 square metres when completed 
(including shared public area but excluding the 266 car parking spaces).


Consideration


The aggregate consideration for the Property, which is to be satisfied by 
Zheshang Securities in cash, is RMB809.5 million (equivalent to approximately 
HK$995.7 million). Subject to the signing of the Sale and Purchase Agreement 
in accordance with the terms of the Memorandum of Understanding, the Earnest 
Deposit in the amount of RMB323.8 million (equivalent to approximately 
HK$398.3 million), representing 40% of the aggregate consideration for the 
Property, shall form part of the consideration for the Property and the 
balance of the consideration in the amount of RMB485.7 million (equivalent to 
approximately HK$597.4 million), representing 60% of the aggregate 
consideration for the Property, shall be paid by Zheshang Securities to the 
Vendor upon signing of the Sale and Purchase Agreement.


The consideration for the Property will be financed by the internal resources 
of the Group.


The consideration for the Property was determined after arm's length 
negotiation between the parties to the Memorandum of Understanding based on 
normal commercial terms  and  by  reference  to  the  Valuation  Report  
prepared  by  DTZ,  an  independent property valuer, in respect of the 
Property with market value of RMB778.7 million (equivalent to approximately 
HK$957.8 million) as if completed as at 31 July 2011.


INFORMATION OF THE GROUP AND ZHESHANG SECURITIES


The Company was established on 1 March 1997 in the PRC as a joint stock 
limited company, the H Shares of which are listed on the Main Board of the 
Stock Exchange. The Group is principally engaged in (i) investments in, 
development, operation, management and collection of tolls of the 
Shanghai-Hangzhou-Ningbo Expressway and the Shangsan Expressway, both of 
which are in the Zhejiang Province of the PRC, (ii) businesses ancillary to 
the operation of the expressways, such as billboard advertising and operation 
of service areas on the expressways and (iii) securities brokerage, 
investment banking, asset management, futures and fixed income.


Zheshang Securities was established on 9 May 2002 in the PRC as a limited 
liability company. Zheshang Securities is an indirectly owned subsidiary of 
the Company and principally engaged in securities brokerage, investment 
banking, asset management, futures and fixed income.


INFORMATION OF THE VENDOR


The Vendor is a limited liability company incorporated in the PRC on 18 
October 2004 with a registered capital of RMB50 million (equivalent to 
approximately HK$61.5 million). The Vendor is a wholly-owned subsidiary of 
Communications Group and principally engaged in the development of 
commercial and residential properties in Zhejiang Province, the PRC.


REASONS FOR ENTERING INTO THE MEMORANDUM OF UNDERSTANDING


Due to expansion of the business of Zheshang Securities, the existing head 
office of Zheshang  Securities  has  reached  its  maximum  capacity  and  
Zheshang  Securities  has been seeking opportunities to relocate and expand 
its head office in Hangzhou City. Upon completion of the Proposed 
Acquisition, Zheshang Securities intends to occupy the Property as its head 
office to support its current operations and expansion plans.


The Directors, including all of the independent non-executive Directors, 
consider that the transactions contemplated under the Memorandum of 
Understanding are fair and reasonable, and are in the best interests of the 
Group and the Shareholders as a whole.


LISTING RULES IMPLICATIONS


As at the date of this announcement, the Communications Group beneficially 
owns 2,909,260,000 Domestic Shares, representing approximately 67% of the 
issued share capital of the Company. By virtue of this shareholding interest, 
Communications Group is  a  substantial  Shareholder  (as  defined  under  
the  Listing  Rules)  and  the  Vendor, which is a wholly-owned subsidiary 
of Communications Group, is accordingly a connected person of the Company. 
Zheshang Securities is a 70.8275% owned subsidiary of  Zhejiang  Shangsan  
Expressway  Co.,  Ltd.,  which  in  turn  is  a  73.625%  owned subsidiary 
of the Company. The transaction contemplated under the Memorandum of 
Understanding therefore constitutes a connected transaction for the Company 
under the Listing Rules. As each of the applicable percentage ratios in 
respect of the Proposed Acquisition is less than 5%, the Proposed 
Acquisition is subject to the reporting and announcement requirements but 
is exempt from the independent shareholders' approval requirement under 
Chapter 14A of the Listing Rules.


Other than Mr. Chen and Ms. Zhang, each of whom is both a director of the 
Company and a director of Communications Group, none of the Directors has 
any material interest in the transactions contemplated under the Memorandum 
of Understanding or is required to abstain from voting on the relevant board 
resolution approving the Memorandum of Understanding and the transactions 
contemplated thereunder.


THE MEMORANDUM OF UNDERSTANDING MAY OR MAY NOT LEAD TO THE ENTERING INTO OF 
THE SALE AND PURCHASE AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREUNDER 
MAY OR MAY NOT BE CONSUMMATED. IN THE EVENT THAT THE SALE AND PURCHASE 
AGREEMENT MATERIALISES, FURTHER ANNOUNCEMENT(S) WILL BE MADE AS AND WHEN 
REQUIRED BY AND IN COMPLIANCE WITH THE LISTING RULES. SHAREHOLDERS AND 
POTENTIAL INVESTORS ARE ADVISED TO EXERCISE CAUTION IN DEALING IN THE 
COMPANY'S SECURITIES.


DEFINITIONS


"Communications Group"   Zhejiang  Communications  Investment  Group  Co., 
                         Ltd., a wholly State-owned enterprise established 
                         on 29 December 2001;


"Company"                Zhejiang Expressway Co., Ltd.;


"connected persons"      shall have the same meaning as ascribed thereto in 
                         the Listing Rules;


"Directors"              directors of the Company;


"Domestic Shares"        the domestic invested shares of RMB1.00 each in 
                         the share capital of the Company;


"DTZ"                    DTZ  Debenham Tie Leung Limited,  an independent 
                         property valuer; 


"Earnest Deposit"        the earnest money deposit in the amount of 
                         RMB323.8 million (equivalent to  approximately  
                         HK$398.3 million) paid by Zheshang Securities to 
                         the Vendor pursuant to the Memorandum of 
                         Understanding;


"Group"                  the Company and its subsidiaries;


"HK$"                    Hong Kong dollars, the lawful currency of the Hong
                         Kong Special Administrative Region of the PRC;


"Listing Rules"          the Rules Governing the Listing of Securities on the
                         Stock Exchange;


"Long Stop Date"         90 business days after the date of the Memorandum 
                         of Understanding;


"Memorandum of           the memorandum of understanding dated 22 December
Understanding"           2011 between the Vendor and Zheshang Securities in 
                         respect of the Proposed Acquisition;


"Mr. Chen"               Mr. Jisong Chen, an executive Director;


"Ms. Zhang"              Ms. Luyun Zhang, a non-executive Director;


"PRC"                    the People's Republic of China;


"Pre-sale Permit"        the pre-sale permit in respect of the Property;


"Property"               levels 2 to 17 and 266 car parking spaces at the 
                         basement of  the  office  building  B4  o f  Mingzhu 
                         International Business Center located at Qianjiang 
                         New Town Lot (2004) 43 A-C49, Jianggan District, 
                         Hangzhou City, Zhejiang Province, the PRC;


"Proposed Acquisition"   the proposed acquisition of the Property by Zheshang 
                         Securities from the Vendor pursuant to the terms and 
                         conditions of the Sale and Purchase Agreement;


"RMB"                    Renminbi, the lawful currency of the PRC;


"Sale and Purchase       the  formal commercial property sale and purchase
Agreement"               agreement in respect of the Property to be entered 
                         into between the Vendor and Zheshang Securities 
                         pursuant to the terms of the Memorandum of 
                         Understanding;


"Shareholders"           shareholders of the Company;


"Stock Exchange"         The Stock Exchange of Hong Kong Limited;


"Valuation Report"       the valuation report dated 31 July 2011 in respect of 
                         the Property issued by DTZ;


"Vendor"                 Hangzhou  Jinji  Real  Estate  Co.,  Ltd.,  a  
                         wholly-owned  subsidiary  of  the Communications 
                         Group; and


"Zheshang Securities"    Zheshang  Securities  Co.,  Ltd., a 70.8275% owned 
                         subsidiary of Zhejiang Shangsan Expressway Co., Ltd., 
                         which is a 73.625% owned subsidiary of the Company.


In this announcement, translation of assets from RMB to HK$ are based on an 
exchange rate of RMB1 to HK$1.23 which is used for illustration purpose only.


                                                     By order of the Board
                                                Zhejiang Expressway Co., Ltd.
                                                          Jisong Chen
                                                            Chairman


Hangzhou, PRC, 20 March 2012


As at the date of this announcement, the executive Directors are: Messrs. 
Jisong Chen, Xiaozhang Zhan, Wenyao Jiang, Jingzhong Zhang and Huikang 
Ding; the non-executive Director is Ms. Luyun Zhang; and the independent 
non-executive Directors are: Messrs. Chee Chen Tung, Junsheng Zhang and 
Liping Zhang.

Statement :
A full electronic version of the Company's Connected Transaction Announcement 
is available at www.zjec.com.cn.