09:46     ZHEJIANGEXPRESS<00576> - Announcement (1)                           

    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.               
                                                                              
    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: 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