Zhejiang Expressway : Continuing Connected Transactions The Daily Road Maintenance Agreements

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.

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

(Stock code: 0576)

CONTINUING CONNECTED TRANSACTIONS

THE DAILY ROAD MAINTENANCE AGREEMENTS

THE DAILY ROAD MAINTENANCE AGREEMENTS

Reference is made to the announcement of the Company dated May 14, 2019 in relation to, among others, (i) the Previous Daily Road Maintenance Agreements entered into among the Company, the relevant subsidiaries of the Company and Maintenance Co, and (ii) the Previous Shenjiahuhang Daily Road Maintenance Agreements entered into among Shenjiahuhang Co, Zhoushan Co and Jiaogong Maintenance. The Previous Agreements will all expire on December 31, 2019.

In order to continue to provide quality daily road maintenance services to certain expressways operated by the Group, the Company and the relevant subsidiaries of the Company (including Jiaxing Co, Hangzhou Management Office, Shaoxing Management Office, Ningbo Management Office, Shangshen Management Office, Hanghui Co, Huihang Co, Shenjiahuhang Co, Zhoushan Co, Jinhua Co, and Xintian Management Office), on the one hand, and Maintenance Co, Jiaogong Maintenance and Zhejiang Shunchang, on the other hand, entered into the Agreements on December 27, 2019, for a term of three years with effect from January 1, 2020 to December 31, 2022. Each of the Agreements has a term of three years from January 1, 2020 to December 31, 2022.

THE DAILY ROAD MAINTENANCE (FIRST CONTRACT SECTION) AGREEMENTS

On December 27, 2019, Jiaxing Co, Hangzhou Management Office, Shaoxing Management Office, Ningbo Management Office, Shangshen Management Office, Hanghui Co, and Huihang Co separately entered into the Daily Road Maintenance (First Contract Section) Agreements with Maintenance Co, pursuant to which Maintenance Co agreed to provide Maintenance Services to four expressways operated by the Group, namely the Shanghai-Hangzhou-Ningbo Expressway, the Shangsan Expressway, the Hanghui Expressway, and the Huihang Expressway.

1

THE DAILY ROAD MAINTENANCE (SECOND CONTRACT SECTION) AGREEMENTS

On December 27, 2019, Shenjiahuhang Co and Zhoushan Co separately entered into the Daily Road Maintenance (Second Contract Section) Agreements with Jiaogong Maintenance, pursuant to which Jiaogong Maintenance agreed to provide Maintenance Services to two expressways operated by the Group, namely the Shenjiahuhang Expressway and the Zhoushan Bay Bridge.

THE DAILY ROAD MAINTENANCE (THIRD CONTRACT SECTION) AGREEMENTS

On December 27, 2019, Jinhua Co and Xintian Management Office separately entered into the Daily Road Maintenance (Third Contract Section) Agreements with Zhejiang Shunchang, pursuant to which Zhejiang Shunchang agreed to provide Maintenance Services to three expressways operated by the Group, namely Xintian Section of the Shangsan Expressway, Jinhua Section of the Ningbo-Jinhua Expressway and Yiwu Section of the Yidong Expressway.

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 (as defined under the Listing Rules) of the Company. As at the date of this announcement, each of Maintenance Co, Jiaogong Maintenance, and Zhejiang Shunchang is an indirect subsidiary of Communications Group. Therefore, each of Maintenance Co, Jiaogong Maintenance, and Zhejiang Shunchang is a connected person of the Company and as a result, the respective transactions contemplated under the Agreements constitute continuing connected transactions for the Company under Chapter 14A of the Listing Rules.

As the applicable percentage ratios in respect of the respective transactions contemplated under the Agreements are more than 0.1% but less than 5%, the 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.

2

THE DAILY ROAD MAINTENANCE (FIRST CONTRACT SECTION) AGREEMENTS

Jiaxing Co, Hangzhou Management Office, Shaoxing Management Office, Ningbo Management Office, Shangshen Management Office, Hanghui Co, and Huihang Co separately entered into the Daily Road Maintenance (First Contract Section) Agreements with Maintenance Co on December 27, 2019, pursuant to which Maintenance Co agreed to provide Maintenance Services to four expressways operated by the Group, namely the Shanghai-Hangzhou-Ningbo Expressway, the Shangsan Expressway, the Hanghui Expressway, and the Huihang Expressway, for a term of three years with effect from January 1, 2020 to December 31, 2022.

Principal terms of the Daily Road Maintenance (First Contract Section) Agreements are set out below:

Date:	December 27, 2019
Parties:	(1) Jiaxing Co, Hangzhou Management Office, Shaoxing
		Management Office, Ningbo Management Office,
		Shangshen Management Office, Hanghui Co, Huihang
		Co; and
	(2)	Maintenance Co
Term:	From January 1, 2020 to December 31, 2022
Subject Matter:	Maintenance Co agreed to provide Maintenance Services,
	namely daily maintenance services including road patrol,
	inspection of the maintenance status of pavements and
	roadbeds, pavement diseases treatment, greening and
	sloping, maintenance of safety facilities, and bridge
	maintenance.
Service Fees:	T h e	a n n u a l s e r v i c e f e e s p a y a b l e b y t h e G r o u p t o
	Maintenance Co shall be RMB68,111,019, which amount to
	RMB204,333,057 in total from 2020 to 2022.

3

Basis of Service Fees:	The service fees were determined as a result of public tender.
	Other than Maintenance Co, there were three other
	independent service providers which made a bid. The tender
	evaluation committee took into account the following when
	making their decision (including, but not limited to):
	(i)	quality of the service provider's maintenance
		equipment;
	(ii)	the service provider's maintenance plan, safety
		management plan, and emergency plan in the event of
		accidents;
	(iii)	the qualifications and experience of the service
		provider's project manager, chief engineer and
		maintenance staff; and
	(iv)	the service provider's past performance records.
	According to the assessment made by the tender evaluation
	committee on December 6, 2019, Maintenance Co was the
	lowest bidder and successfully obtained the highest overall
	score among all the bidders, and therefore won the tender.
Terms of payment:	Payment will be made by the Group based on the actual
	Maintenance Services provided by Maintenance Co on a
	monthly basis.
Governing Law:	The laws of the PRC.

THE DAILY ROAD MAINTENANCE (SECOND CONTRACT SECTION) AGREEMENTS

Shenjiahuhang Co and Zhoushan Co separately entered into the Daily Road Maintenance (Second Contract Section) Agreements with Jiaogong Maintenance on December 27, 2019, pursuant to which Jiaogong Maintenance agreed to provide Maintenance Services to two expressways operated by the Group, namely the Shenjiahuhang Expressway and the Zhoushan Bay Bridge, for a term of three years with effect from January 1, 2020 to December 31, 2022.

4

Principal terms of the Daily Road Maintenance (Second Contract Section) Agreements are set out below:

Date:	December 27, 2019
Parties:	(1)	Shenjiahuhang Co, Zhoushan Co; and
	(2)	Jiaogong Maintenance
Term:	From January 1, 2020 to December 31, 2022
Subject Matter:	Jiaogong Maintenance agreed to provide Maintenance
	Services, namely daily maintenance services including road
	patrol, inspection of the maintenance status of pavements
	and roadbeds, pavement diseases treatment, greening and
	sloping, maintenance of safety facilities, and bridge
	maintenance.
Service Fees:	The annual service fees payable by the Group to Jiaogong
	Maintenance in 2020 shall be RMB27,158,624.
	The annual service fees payable by the Group to Jiaogong
	Maintenance in 2021 and 2022 shall be RMB26,334,280
	respectively.
Basis of Service Fees:	The service fees were determined as a result of public tender.
	Other than Jiaogong Maintenance, there were three other
	independent service providers which made a bid. The tender
	evaluation committee took into account the following when
	making their decision (including, but not limited to):
	(i)	quality of the service provider's maintenance
		equipment;
	(ii)	the service provider's maintenance plan, safety
		management plan, and emergency plan in the event of
		accidents;
	(iii)	the qualifications and experience of the service
		provider's project manager, chief engineer and
		maintenance staff; and
	(iv)	the service provider's past performance records.

5

	According to the assessment made by the tender evaluation
	committee on December 6, 2019, Jiaogong Maintenance was
	the lowest bidder and successfully obtained the highest
	overall score among all the bidders, and therefore won the
	tender.
Terms of payment:	Payment will be made by the Group based on the actual
	Maintenance Services provided by Jiaogong Maintenance on
	a monthly basis.
Governing Law:	The laws of the PRC.

THE DAILY ROAD MAINTENANCE (THIRD CONTRACT SECTION) AGREEMENTS

Jinhua Co and Xintian Management Office separately entered into the Daily Road Maintenance (Third Contract Section) Agreements with Zhejiang Shunchang on December 27, 2019, pursuant to which Zhejiang Shunchang agreed to provide Maintenance Services to three expressways operated by the Group, namely Xintian Section of the Shangsan Expressway, Jinhua Section of the Ningbo-Jinhua Expressway, and Yiwu Section of the Yidong Expressway, for a term of three years with effect from January 1, 2020 to December 31, 2022.

Principal terms of the Daily Road Maintenance (Third Contract Section) Agreements are set out below:

Date:	December 27, 2019
Parties:	(1) Jinhua Co, Xintian Management Office; and
	(2) Zhejiang Shunchang
Term:	From January 1, 2020 to December 31, 2022
Subject Matter:	Zhejiang Shunchang agreed to provide Maintenance
	Services, namely daily maintenance services including road
	patrol, inspection of the maintenance status of pavements
	and roadbeds, pavement diseases treatment, greening and
	sloping, maintenance of safety facilities, and bridge
	maintenance.
Service Fees:	The annual service fees payable by the Group to Zhejiang
	Shunchang shall be RMB22,076,202 in 2020, 2021 and 2022
	respectively.

6

Basis of Service Fees:	The service fees were determined as a result of public tender.
	Other than Zhejiang Shunchang, there were three other
	independent service providers which made a bid. The tender
	evaluation committee took into account the following when
	making their decision (including, but not limited to):
	(i)	quality of the service provider's maintenance
		equipment;
	(ii)	the service provider's maintenance plan, safety
		management plan, and emergency plan in the event of
		accidents;
	(iii)	the qualifications and experience of the service
		provider's project manager, chief engineer and
		maintenance staff; and
	(iv)	the service provider's past performance records.
	According to the assessment made by the tender evaluation
	committee on December 6, 2019, Zhejiang Shunchang was
	the lowest bidder and successfully obtained the highest
	overall score among all the bidders, and therefore won the
	tender.
Terms of payment:	Payment will be made by the Group based on the actual
	Maintenance Services provided by Zhejiang Shunchang on a
	monthly basis.
Governing Law:	The laws of the PRC.

HISTORICAL TRANSACTION AMOUNTS

The historical contractual amount of service fees under the Previous Daily Road Maintenance Agreements for the year ending December 31, 2019 is RMB66,823,926.

The historical contractual amount of service fees under the Previous Shenjiahuhang Daily Road Maintenance Agreements for the year ending December 31, 2019 is RMB19,991,811.

7

PROPOSED ANNUAL CAPS AND BASIS OF DETERMINATION

In accordance with Chapter 14A of the Listing Rules, the Company is required to set annual cap on the total amount of the Agreements payable by the Group. Set out below are the proposed annual caps on the aggregate service fees of the Agreements payable by the Group for the financial years ending December 31, 2020, 2021 and 2022:

	For		For		For
	the financial		the financial		the financial
	year ending		year ending		year ending
	December 31,		December 31,		December 31,
	2020	2021	2022
	(RMB)		(RMB)		(RMB)
Proposed annual caps on the aggregate
service fees of the Agreements	120,000,000	120,000,000	120,000,000

The proposed annual caps on the aggregate service fees of the Agreements are determined based on: (i) the historical maintenance cost incurred for the expressways operated by the Group; (ii) comparable prices available in the market; (iii) the expected maintenance work required for the Shanghai-Hangzhou-Ningbo Expressway, the Shangsan Expressway, the Hanghui Expressway, the Huihang Expressway, the Shenjiahuhang Expressway, the Zhoushan Bay Bridge, Xintian Section of the Shangsan Expressway, Jinhua Section of the Ningbo-Jinhua Expressway, and Yiwu Section of the Yidong Expressway from 2020 to 2022 and (iv) a reasonable buffer.

If the actual total amount of the service fees made by the Group under the Agreements shall exceed the abovementioned annual caps, the Company will re-comply with all applicable requirements under the Listing Rules.

REASONS FOR AND BENEFITS OF THE TRANSACTIONS

As subsidiaries of Communications Group, Maintenance Co, Jiaogong Maintenance and Zhejiang Shunchang fully understand the Group's business and operating needs, and maintains effective communication to provide more quality services to the Group. Each of Maintenance Co, Jiaogong Maintenance and Zhejiang Shunchang has the relevant qualifications and experience to provide the Maintenance Services to the Group.

In addition, the Company went through a tender process and obtained the relevant quotations from other independent service providers to select the service provider of the Maintenance Services. Maintenance Co, Jiaogong Maintenance and Zhejiang Shunchang finally won the respective tender.

8

The transactions contemplated under the Agreements are and will be conducted in the ordinary and usual course of business of the Group, and the consideration paid by the Group to Maintenance Co, Jiaogong Maintenance and Zhejiang Shunchang will not be higher than the average market price and will not be less favourable than those provided by other independent service providers to the Group for similar services.

Given the above, the Directors (including the independent non-executive Directors) are of the view that the terms of the Agreements are on normal commercial terms, in the ordinary and usual course of business of the Group and are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

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 (as defined under the Listing Rules) of the Company. As at the date of this announcement, each of Maintenance Co, Jiaogong Maintenance and Zhejiang Shunchang is an indirect subsidiary of Communications Group. Therefore, each of Maintenance Co, Jiaogong Maintenance and Zhejiang Shunchang is a connected person of the Company and as a result, the respective transactions contemplated under the Agreements constitute continuing connected transactions for the Company under Chapter 14A of the Listing Rules.

As the applicable percentage ratios in respect of the respective transactions contemplated under the Agreements are more than 0.1% but less than 5%, the 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.

Mr. Yu Zhihong, Mr. Dai Benmeng, Mr. Yu Qunli and Mr. Yu Ji, being Directors, are deemed to have material interests in the Agreements as they are currently also employed by the Communications Group and have abstained from voting on the relevant Board resolutions. Other than those Directors mentioned above, none of the Directors have a material interest in the transactions contemplated under the 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 Co., Ltd.

9

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

Jiaogong Maintenance is a subsidiary of Communications Group which is established under the laws of the PRC on January 18, 2006. Jiaogong Maintenance is principally engaged in the construction of transportation projects and maintenance of toll road.

Zhejiang Shunchang is a subsidiary of Communications Group which is established under the laws of the PRC on November 11, 2003. Zhejiang Shunchang is principally engaged in the 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:

"Agreements"	collectively, the Daily Road Maintenance (First Contract
	Section) Agreements, the Daily Road Maintenance
	(Second Contract Section) Agreements, and the Daily
	Road Maintenance (Third Contract Section) Agreements
"associate"	has the meaning ascribed to it under the Listing Rules
"Board"	the board of Directors of the Company
"Communications	Zhejiang Communications Investment Group Co., Ltd.*
Group"	(浙江省交通投資集團有限公司), a wholly state-owned
	enterprise established in the PRC on December 29, 2001
	and the controlling shareholder of the Company
"Company"	Zhejiang Expressway Co., Ltd. (浙江滬杭甬高速公路股
	份有限公司), a joint stock limited company established in
	the PRC on March 1, 1997, whose shares are listed on the
	main board of the Stock Exchange
"connected person(s)"	has the meaning ascribed to it under the Listing Rules
"continuing connected	has the meaning ascribed to it under the Listing Rules
transaction(s)"
"controlling shareholder"	has the meaning ascribed to it under the Listing Rules

10

"Daily Road Maintenance	the agreements dated December 27, 2019 entered into
(First Contract Section)	between Jiaxing Co, Hangzhou Management Office,
Agreements"	Shaoxing Management Office, Ningbo Management
	Office, Shangshen Management Office, Hanghui Co, and
	Huihang Co, on the one hand separately, and Maintenance
	Co. on the other hand, in relation to the provision of road
	maintenance and repair services in respect of four
	expressways operated by the Group
"Daily Road Maintenance	the agreements dated December 27, 2019 entered into
(Second Contract Section)	between Shenjiahuhang Co and Zhoushan Co separately
Agreements"	and Jiaogong Maintenance in relation to the provision of
	road maintenance and repair services in respect of two
	expressways operated by the Group
"Daily Road Maintenance	the agreements dated December 27, 2019 entered into
(Third Contract Section)	between Jinhua Co and Xintian Management Office
Agreements"	separately and Zhejiang Shunchang in relation to the
	provision of road maintenance and repair services in
	respect of three expressways operated by the Group
"Director(s)"	the director(s) of the Company
"Group"	the Company and its subsidiaries
"H Shares"	the overseas listed foreign shares of RMB1.00 each in the
	share capital of the Company which are primarily listed
	on the Hong Kong Stock Exchange and traded in Hong
	Kong dollars since May 15, 1997
"Hanghui Co"	Zhejiang Hanghui Expressway Co., Ltd* (浙江杭徽高速
	公路有限公司), a 88.674% owned subsidiary of the
	Company
"Hangzhou Management	Hangzhou Management Office of the Company* (浙江滬
Office"	杭甬高速公路股份有限公司杭州管理處) , a d i r e c t
	subsidiary of the Company
"Hong Kong"	the Hong Kong Special Administrative Region of the PRC
"Huihang Co"	Huangshan Changjiang Huihang Expressway Co., Ltd*
	(黃山長江徽杭高速公路有限責任公司), a wholly-owned
	subsidiary of the Company

11

"Jiaogong Maintenance"	Zhejiang Jiaogong High-grade Expressway Maintenance
	Co . , Ltd* ( 浙江交工高等級公路養護有限公司), an
	indirectly non-wholly owned subsidiary of Communications
	Group
"Jiaxing Co"	Zhejiang Jiaxing Expressway Co., Ltd* (浙江嘉興高速公
	路有限責任公司), a 99.9995% owned subsidiary of the
	Company
"Jinhua Co"	Zhejiang Jinhua Yongjin Expressway Co., Ltd* (浙江金
	華甬金高速公路有限公司), a wholly-owned subsidiary of
	the Company
"Listing Rules"	the Rules Governing the Listing of Securities on the Stock
	Exchange, as amended, supplemented or otherwise
	modified from time to time
"Maintenance Co"	Zhejiang Expressway Maintenance Co., Ltd* (浙江滬杭
	甬養護工程有限公司), a company established in the PRC
	a n d a n i n d i r e c t w h o l l y - o w n e d s u b s i d i a r y o f
	Communications Group
"Maintenance Services"	day-to-day maintenance services including road patrol,
	inspection of the maintenance status of pavements and
	roadbeds, pavement diseases treatment, greening and
	sloping, maintenance of safety facilities, and bridge
	maintenance
"Ningbo Management	Ningbo Management Office of the Company* (浙江滬杭
Office"	甬高速公路股份有限公司寧波管理處) , a d i r e c t
	subsidiary of the Company
"percentage ratio"	has the meaning ascribed to it under Rule 14.04(9) of the
	Listing Rules
"PRC"	the People's Republic of China which, for the purpose of
	this announcement only, excludes Hong Kong, the Macau
	Special Administrative Region of the PRC and Taiwan
"Previous Agreements"	i n c l u d e s t h e P r e v i o u s D a i l y R o a d M a i n t e n a n c e
	Agreements and the Previous Shenjiahuhang Daily Road
	Maintenance Agreements

12

"Previous Daily Road	the daily road maintenance agreements entered into
Maintenance	between the Company, the relevant subsidiaries of the
Agreements"	Company and Maintenance Co on May 14, 2019, pursuant
	to which Maintenance Co agreed to provide Maintenance
	Services in respect of the Shanghai-Hangzhou-Ningbo
	Expressway, the Shangsan Expressway, Jinhua Section of
	the Ningbo - Jinhua Expressway and the Hanghui
	Expressway
"Previous Shenjiahuhang	a number of road maintenance agreements entered into
Daily Road Maintenance	between Shenjiahuhang Co, Zhoushan Co and Jiaogong
Agreements"	Maintenance separately on May 14, 2019, pursuant to
	w h i c h J i a o g o n g M a i n t e n a n c e a g r e e d t o p r o v i d e
	Maintenance Services in respect of the Shenjiahuhang
	Expressway and the Zhoushan Bay Bridge
"RMB"	Renminbi, the lawful currency of the PRC
"Shangshen Management	Shangshen Management Office of Zhejiang Shangsan
Office"	Expressway Co., Ltd* (浙江上三高速公路有限公司上嵊
	管理處), a direct subsidiary of the Company
"Shaoxing Management	Shaoxing Management Office of the Company* (浙江滬
Office"	杭甬高速公路股份有限公司紹興管理處) , a d i r e c t
	subsidiary of the Company
"Shareholder(s)"	holder(s) of the share(s) of the Company
"Shenjiahuhang Co"	Zhejiang Shenjiahuhang Expressway Co., Ltd* (浙江申嘉
	湖杭高速公路有限公司), a limited liability company
	established in the PRC and a wholly owned subsidiary of
	the Company
"Stock Exchange"	The Stock Exchange of Hong Kong Limited
"subsidiary(ies)"	has the meaning ascribed to it under the Listing Rules
"Xintian Management	Xintian Management Office of Zhejiang Shangsan
Office"	Expressway Co., Ltd* (浙江上三高速公路有限公司新天
	管理處), an indirect subsidiary of the Company
"Zhejiang Shunchang"	Zhejiang Shunchang High-grade Expressway Maintenance
	C o . , L t d * ( 浙江順暢高等級公路養護有限公司) , a
	non-wholly owned subsidiary of Communications Group

13

"Zhoushan Co"	Zhejiang Zhoushan Bay Bridge Co., Ltd* (浙江舟山跨海
	大橋有限公司) , a 5 1 % o w n e d s u b s i d i a r y o f
	Shenjiahuhang Co
"%"	per cent

• For identification purposes only

On behalf of the Board of Directors

Zhejiang Expressway Co., Ltd.

YU Zhihong

Chairman

Hangzhou, the PRC, December 27, 2019

As at the date of this announcement, the Chairman of the Company is Mr. YU Zhihong; the executive Directors of the Company are: Mr. CHENG Tao and Ms. LUO Jianhu; the other non-executive Directors of the Company are: Mr. DAI Benmeng, Mr. YU Qunli and Mr. YU Ji; and the independent non-executive Directors of the Company are: Mr. PEI Ker-Wei, Ms. LEE Wai Tsang, Rosa and Mr. CHEN Bin.

14