Continuing Connected Transactions

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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)

CONTINUING CONNECTED TRANSACTIONS TECHNOLOGICAL COOPERATION AND SERVICE AGREEMENTS

THE TECHNOLOGICAL COOPERATION AND SERVICE AGREEMENTS

On December 22, 2017, the Company and certain of its subsidiaries entered into the Technological Cooperation and Service Agreements with Zhejiang Intelligent, a non wholly-owned subsidiary of the controlling shareholder of the Company, pursuant to which the Company and certain of its subsidiaries agreed to purchase highway operations monitoring and public travel information services from Zhejiang Intelligent.

LISTING RULES IMPLICATIONS

As at the date of this announcement, Communications Group is a controlling shareholder of the Company. Zhejiang Information is a wholly-owned subsidiary of Communications Group, and Zhejiang Intelligent is a 89.36% owned subsidiary of Zhejiang Information. Therefore, Zhejiang Intelligent is a connected person of the Company and as a result, the transactions under the Technological Cooperation and Service Agreements constitute continuing connected transactions for the Company under Chapter 14A of the Listing Rules.

Pursuant to Rules 14A.81 and 14A.82 of the Listing Rules, as the transactions contemplated under the Technological Cooperation and Service Agreements and the Zhejiang Information Transactions were entered into with parties who are connected with one another and within a 12-month period, the Technological Cooperation and Service Agreements and the Zhejiang Information Transactions are required to be aggregated for the calculation of the relevant percentage ratios to determine the classification of the transactions.

As the applicable percentage ratios in respect of the transactions contemplated under the Technological Cooperation and Service Agreements, after aggregating the Zhejiang Information Transactions, are more than 0.1% but less than 5%, the Technological Cooperation and Service Agreements will be 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 TECHNOLOGICAL COOPERATION AND SERVICE AGREEMENTS

On December 22, 2017, the Company and certain of its subsidiaries entered into the Technological Cooperation and Service Agreements with Zhejiang Intelligent, a non wholly-owned subsidiary of the controlling shareholder of the Company, pursuant to which the Company and certain of its subsidiaries agreed to purchase highway operations monitoring and public travel information services from Zhejiang Intelligent.

Principal terms of the Technological Cooperation and Service Agreements are set out below:

Date:	December 22, 2017
Parties:	(1)  the Company and certain subsidiaries of the Company (namely Shangsan Co, Jiaxing Co, Jinhua Co and Hanghui Co); and (2)  Zhejiang Intelligent
Term:	For the year ended 2017
Consideration:	RMB9,267,000
Basis of consideration:	Reference was made to "Zhe Jia Zi [2014] No. 65"prepared by the Zhejiang Provincial Price Bureau, which compares the rates of highway network service fees in the Provinces of Jiangsu, Guangdong and Hunan. The consideration was determined as a result of adopting the lowest fee rate across the Provinces (i.e., no more than 0.2% of the toll fees, as applied in Jiangsu Province). The revenues generated from toll fees were RMB5,236 million for the year ended December 31, 2016. Accordingly, service fees will not exceed RMB10,473,000.
Payment:	The consideration will be paid in one installment before January 31, 2018.
Scope of services:	Highway operations monitoring service and public travel information service
Governing law:	PRC law

Cap for the Technological Cooperation and Service Agreements

For the purpose of complying with Chapter 14A of the Listing Rules, the Company has set a cap in respect of the aggregate fees payable by the Company and certain of its subsidiaries to Zhejiang Intelligent during the term of the Technological Cooperation and Service Agreements, which shall not exceed RMB9,267,000.

The above cap was determined after making reference to the "Zhe Jia Zi [2014] No. 65" prepared by the Zhejiang Provincial Price Bureau, which compares the rates of highway network service fees in the Provinces of Jiangsu, Guangdong and Hunan. The cap was set at the lowest fee rate of the above Provinces (i.e., no more than 0.2% of the toll fees, as applied in Jiangsu Province). By way of illustration, given the revenues generated from toll fees were RMB5,236 million for the year ended December 31, 2016, as such, service fees shall not exceed RMB10,473,000.

REASONS FOR AND BENEFITS OF THE TRANSACTIONS

Zhejiang Intelligent has the relevant qualifications and expertise, and has provided similar services to the Company in 2016. Accordingly, the Company has developed a positive relationship with Zhejiang Intelligent. The continuation of the provision of services will ensure smooth business continuity and efficiency. In addition, the consideration offered by Zhejiang Intelligent remains the same as service fees paid by the Company to Zhejiang Intelligent in 2016, which does not take into account the rise in toll fees. The consideration is also no less favourable than those provided by independent third parties to the Group.

Given the above, the Directors (including the independent non-executive Directors) are of the view that the terms of the Technological Cooperation and Service 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.

LISTING RULES IMPLICATIONS

Communications Group is a controlling shareholder of the Company. Zhejiang Information is a wholly-owned subsidiary of Communications Group, and Zhejiang Intelligent is a 89.36% owned subsidiary of Zhejiang Information. Therefore, Zhejiang Intelligent is a connected person of the Company and as a result, the transactions under the Technological Cooperation and Service Agreements constitute continuing connected transactions for the Company under Chapter 14A of the Listing Rules.

Pursuant to Rules 14A.81 and 14A.82 of the Listing Rules, as the transactions contemplated under the Technological Cooperation and Service Agreements and the Zhejiang Information Transactions were entered into with parties who are connected with one another and within a 12-month period, the Technological Cooperation and Service Agreements and the Zhejiang Information Transactions are required to be aggregated for the calculation of the relevant percentage ratios to determine the classification of the transactions.

As the applicable percentage ratios in respect of the transactions contemplated under the Technological Cooperation and Service Agreements, after aggregating the Zhejiang Information Transactions, are more than 0.1% but less than 5%, the Technological Cooperation and Service Agreements will be subject to the reporting, announcement and annual review requirements but exempt from the independent Shareholders' approval requirement under Chapter 14A of the Listing Rules.

None of the Directors have a material interest in the transactions contemplated under the Technological Cooperation and Service Agreements and none are required to abstain from voting on the relevant Board resolutions.

INFORMATION ON THE PARTIES

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 on certain other businesses such as securities brokerage, investment banking, asset management, margin financing and securities lending through Zheshang Securities.

Zhejiang Intelligent is a controlling subsidiary of Communications Group which is incorporated under the laws of the PRC on February 6, 2013. As at the date of this announcement, Zhejiang Intelligent is owned as to 89.36% by Communications Group indirectly, and therefore Zhejiang Intelligent is an associate of the Company. Zhejiang Intelligent is principally engaged in the business of network technology development, technology and services associated with expressway network operation and management, relevant training services and consulting services.

DEFINITIONS

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

"associate"	has the meaning ascribed to it under the Listing Rules
"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
"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
"Hanghui Co"	Zhejiang Hanghui Expressway Co., Ltd., a 88.674% owned subsidiary of theCompany
"Hong Kong"	the Hong Kong Special Administrative Region of the PRC
"Jiaxing Co"	Zhejiang Jiaxing Expressway Co., Ltd., a 99.9995% owned subsidiary ofthe Company
"Jinhua Co"	Zhejiang Jinhua Yongjin Expressway Co., Ltd., a 100% owned subsidiaryof the Company
"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)
"RMB"	Renminbi, the lawful currency of the PRC
"Shangsan Co"	Zhejiang Shangsan Expressway Co., Ltd., a 73.625% owned subsidiary of theCompany
"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
"Technological Cooperation and Service Agreements"	the technological cooperation and service agreements dated December 22, 2017 entered into between Zhejiang Intelligent and the Company and the relevant subsidiaries of the Company (namely Shangsan Co, Jiaxing Co, Jinhua Co and Hanghui Co), respectively, pursuant to which the Company agreed to purchase highway operations monitoring and public travel information services from Zhejiang Intelligent
"%"	per cent.
"Zhejiang Information Transactions"	the agreements entered into between the Company and Zhejiang Information in 2017 for services relating to data center, highway equipment management and system improvement
"Zhejiang Information"	Zhejiang  Expressway  Information  Engineering  Technology Co., Ltd., a company incorporated in the PRC and a wholly-owned subsidiary of Communications Group
"Zhejiang Intelligent"	Zhejiang Intelligent Expressway Services Co., Ltd.,  a   company incorporated  in  the  PRC  and  a  89.36%  owned subsidiary of Zhejiang Information
"Zheshang Securities"	Zhejiang Zheshang Securities Co., Ltd., a limited liability company incorporated in the PRC and a direct non wholly-owned subsidiary of the Company
* English names for reference only

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

Hangzhou, the PRC, December 22, 2017

As at 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 and Mr. DAI Benmeng; and the independent non-executive directors of the Company are: Mr. ZHOU Jun, Mr. PEI Ker-Wei and Ms. LEE Wai Tsang, Rosa.