2012 Annual Report / Financial Statements

ZHEJIANG EXPRESSWAY CO., LTD. (Stock code: 0576) 2012 Annual Report

Brave to Reform and Innovate with Accelerated Transformation

In 2012, Zhejiang Expressway strived to tackle external challenges guided by the idea of "Brave to Reform and Innovatewith Accelerated Transformation". Bearing in mind that we must seize every moment, we were vigorous and persistent inour development and were quick to grasp opportunities to achieve breakthroughs in our business. We not only endeavouredto accomplish our full year target but to also realize rapid-yet-stable development on our path of transformation so asto provide impetus for the further growth of the Group. Content Definition of TermsCompany ProfileReview of Major Corporate EventsParticulars of Major Road ProjectsFinancial and Operating HighlightsChairman's StatementManagement Discussion and AnalysisPrincipal Risks and UncertaintiesCorporate Governance ReportDirectors, Supervisors and Senior Management ProfilesReport of the DirectorsReport of the Supervisory CommitteeIndependent Auditor's ReportConsolidated Financial Statements & NotesCorporate InformationLocation Map of Expressways in Zhejiang Province Definition of Terms ADR(s) American Depositary Receipt(s) ADS(s) American Depositary Share(s) Advertising Co Zhejiang Expressway

Advertising Co., Ltd., a 70% owned subsidiary of

Development Co Audit Committee the audit committee of the Company Board the board of directors of the Company Company or Zhejiang Expressway Zhejiang Expressway Co.,

Ltd., a joint stock limited company

incorporated in the PRC

with limited liability on March 1, 1997

Communications Group Zhejiang Communications

Investment Group Co., Ltd., a wholly

State-owned enterprise

established on December 29, 2001

Development Co Zhejiang Expressway

Investment Development Co., Ltd., a 100% owned

subsidiary of the Company Directors the directors of the Company GDP gross domestic product 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

Hong Kong Stock Exchange The Stock Exchange of Hong

Kong Limited

Jiaxing Co Zhejiang Jiaxing

Expressway Co., Ltd., a 99.9995% owned subsidiary of

the Company Jinhua Co Zhejiang Jinhua Yongjin

Expressway Co., Ltd., a 23.45% owned associate

of the Company JoinHands Technology JoinHands Technology Co.,

Ltd., a 27.582% owned associate of the

Company Listing Rules the Rules Governing the

Listing of Securities on The Stock Exchange of

Hong Kong Limited Period the period from January 1, 2012 to December 31, 2012 Petroleum Co Zhejiang Expressway

Petroleum Development Co., Ltd., a 50% owned

associate of the Company PRC the People's Republic of China Rmb Renminbi, the lawful currency of the PRC SFO Securities and Futures

Ordinance (Chapter 571, Laws of Hong Kong)

Shangsan Co Zhejiang Shangsan

Expressway Co., Ltd., a 73.625% owned subsidiary of

the Company Shareholders the shareholders of the Company Shengxin Co Shengxin Expressway Co.,

Ltd., a 50% owned jointly controlled entity

of the Company Supervisory Committee the supervisory committee of the Company Towing Co Zhejiang Expressway

Vehicle Towing and Rescue Services Co., Ltd., a

100% owned subsidiary of

the Company

Yuhang Co Zhejiang Yuhang Expressway

Co., Ltd., a 51% owned subsidiary of the

Company Zheshang Securities Zheshang Securities Co.,

Ltd., a 70.83% owned subsidiary of the

Shangsan Co Company Profile Zhejiang Expressway is an infrastructure company principally engaged in investing in, developing and operating ofhigh-grade roads. The Company and its subsidiaries also carry out certain ancillary businesses such as automobileservicing, operation of gas stations and billboard advertising along expressways, as well as securities business. Major assets under management of the Group include the 248km Shanghai-Hangzhou-Ningbo Expressway, the 142 km ShangsanExpressway, ancillary facilities along the two expressways, and Zheshang Securities. Both expressways are situatedwithin Zhejiang Province in the PRC. As at December 31, 2012, total assets of the Company and its subsidiaries amountedto Rmb29,445.38 million.

The Company was incorporated on March 1, 1997 as the main vehicle of the Zhejiang Provincial Government for investingin, developing and operating expressways and Class 1 roads in Zhejiang Province.

Incorporated on December 29, 2001, Communications Group, the controlling shareholder of the Company, is aprovincial-level communications company which is wholly-owned by the State and established by the Zhejiang ProvincialGovernment. It mainly operates a diversity of businesses, such as investment, operations, maintenance, toll collectionand ancillary services of expressways; construction and building of transportation project, ocean and coastaltransport; as well as real estates. As at December 31, 2012, consolidated assets of Communications Group totaledRmb141,763.88 million. The H Shares of the Company, which represent approximately 33% of the issued share capital of the Company, were listedon the Hong Kong Stock Exchange on May 15, 1997, and the Company subsequently obtained a secondary listing on theLondon Stock Exchange on May 5, 2000.

On February 14, 2002, a Level I American Depositary Receipt program sponsored by the Company in respect of its HShares, with the Bank of New York as the depositary, was established in the United States and became effective.

With good performance on the Group's existing expressway operations, the Company will capitalize on all opportunitiesof investment and acquisition of new projects, aiming to develop itself into a first-class expressway operator inChina. In addition, the Company will also endeavor to enhance its core competitiveness in the securities business,expanding its operation network and increasing its profit contribution to the Group.

For the corporate and business structure of the Group as at December 31, 2012, please visit:http://www.prnasia.com/sa/attachment/2013/05/20130503110655451045.pdf

Review of Major Corporate Events

1. In February 2012, financial magazine "The Asset" announced its "Asset Triple A Asian Awards 2011" in Hong Kong, and

Zhejiang Expressway was named "China's Most Promising Company under Infrastructure Industry".

2. On March 20, 2012, the Company announced its 2011 annual results in Hong Kong, and thereafter conducted its annual

results presentations in Hong Kong, Singapore, Australia and U.S.A..

3. On May 11, 2012, the Company announced its 2012 first quarterly results.

4. On June 11, 2012, the Company held its Annual General Meeting to approve the distribution of a final dividend of

Rmb0.25 per share, the re-appointment of Deloitte Touche Tohmatsu Certified Public Accountants Hong Kong as the

international auditors of the Company, and the re-appointment of Pan-China Certified Public Accountants Ltd. as the

PRC auditors of the Company. Members of the Board and the Supervisory Committee for the sixth session were elected.

On the same date, the Company held the first meeting of the Board for the sixth session at which chairman of the

Board, chairmen of various committees, senior management and authorised representatives were elected.

5. On July 6, 2012, the Company announced the acquisition of a 50% equity interest in Shengxin Co pursuant to the

transfer agreement entered into with Shaoxing Communications Investment Group Co., Ltd. ("SCIG").

6. On August 24, 2012, the Company announced its 2012 interim results in Hong Kong, and thereafter conducted its

interim results presentations in Hong Kong and Singapore.

7. On September 29, 2012, all of the Company's 52 electronic toll collection (ETC) lanes under the second phase

(Phase Two) commenced operation. As of today, there are a total of 90 ETC lanes in all of the toll stations in

Shanghai-Hangzhou-Ningbo Expressway and Shangsan Expressway.

8. From September 30, 2012 to October 7, 2012, the Company implemented, for the first time, the new policy of

expressway toll waiver for 7-seater or less passenger vehicles on key festivals and holidays as launched by the PRC

government. Key festivals and holidays include the Chinese Lunar New Year, Ching Ming Festival, Labour Day and

National Day.

9. On October 12, 2012, the Company held an Extraordinary General Meeting at which the distribution of an interim

dividend of Rmb0.06 per share was approved.

10. On November 16, 2012, the Company announced its 2012 third quarterly results.

On the same date, the Company announced the proposed A shares spin-off and listing of Zheshang Securities on the

Shanghai Stock Exchange.

11. On January 16, 2013, the Company announced the final distribution notice for its ten-year 2003 corporate bonds and

the final interest together with principal were paid accordingly.

Particulars of Major Road Projects

Number Number Remaining Percentage of Length in Number of Toll of Service Start of YearsExpressway Ownership Kilometers of Lanes Stations

Areas Operation of Operation

Shanghai-Hangzhou

Expressway - Jiaxing Section 99.9995% 88.1 8 7 2 1998 16 - Yuhang Section 51% 11.1 6 1 0 1995-1998 16 - Hangzhou Section 100% 3.4 4 2 0 1995 16Hangzhou-Ningbo Expressway - Hangzhou to Hongken section 100% 16.0 4 1 0 1992 15 - Hongken to Duantang section 100% 124.0 8 9 2 1995 15 - Duantang to Dazhujia section 100% 5.0 4 1 0 1996 15Shangsan Expressway 73.625% 142.0 4 11 3 2000 18

Current Toll rates on the Shanghai-Hangzhou-Ningbo Expressway

1. Passenger vehicle classification and toll rates

Vehicle Entrance Fee Mileage Fee Class Classification Standard (Rmb/vehicle) (Rmb/vehicle/km) 1 Passenger vehicle with up to 7 seats 5 0.45 Truck with tonnage of 2 tons or below 5 0.45 2 Passenger vehicle with seats 8 to 19 5 0.45 Truck with tonnage of above 2 tons and up to 5 tons 10 0.80 3 Passenger vehicle with seats 20 to 39 10 0.80 Truck with tonnage of above 5 tons and up to 10 tons 15 1.20 4 Passenger vehicle with seats above 40 15 1.20 Truck with tonnage above 10 tons and up to 15 tons 15 1.40 5 Truck with tonnage above 15 tons 20 1.60

2. Toll rates on goods vehicles

Load Toll standards Legally loaded Up to 5 tons Rmb0.09/ton per km Above 5 tons and Rmb0.09/ton per km x 1.5

is reduced in a linear manner to Rmb0.09/ton

up to 15 tons per km Above 15 tons and Rmb0.09/ton per km is

reduced in a linear manner to

up to 30 tons Rmb0.06/ton per km Over 30 tons Based on 30 tons calculation

Overloaded vehicle Overloaded below 10% Calculation based on the basic fee standard for legally loaded

Overloaded up to 30% The overloaded portion

over 10% is calculated based on Rmb0.09/ton

per km x 1.2; the

remaining portion is calculated based on the fee

standard of "Overloaded

below 10%"

Overloaded above 30% The legally loaded

portion and the overloaded portion up to 30% is

and up to 50% calculated based on the

fee standard of "Overloaded up to 30%";

the remaining portion

is calculated based on Rmb0.09/ton per km x 2

Overloaded above The legally loaded

portion and the overloaded portion up to 30% is

50% and up to 100% calculated based on the

fee standard of "Overloaded up to 30%"; the

remaining portion is

calculated based on Rmb0.09/ton per km x 3

Overloaded over 100% The legally loaded

portion and the overloaded portion up to 30% is

calculated based on the

fee standard of "Overloaded up to 30%";

the remaining portion

is calculated based on Rmb0.09/ton per km x 4

* The mileage fee for Class 1 vehicle on the Shangsan Expressway is Rmb0.40/vehicle/km. The toll rates for other

passenger vehicles and trucks are the same as those for the Shanghai-Hangzhou-Ningbo Expressway.

Financial and Operating Highlights

Results Year ended December 31, 2008 2009 2010 2011 2012 Rmb'000 Rmb'000 Rmb'000 Rmb'000 Rmb'000 Revenue 6,323,470 6,036,294 6,769,064 6,781,352 6,700,258Profit Before Tax 2,934,079 3,084,128 3,111,274 2,783,780 2,515,946Income Tax Expense (668,928) (840,055) (798,785) (717,838) (646,864)Profit for the year 2,265,151 2,244,073 2,312,489 2,065,942 1,869,082Attributable to: Owners of the Company 1,892,787 1,795,488 1,871,499 1,805,345 1,686,270 Non-controlling interests 372,364 448,585 440,990 260,597 182,812Earnings Per Share (EPS) 43.58 cents 41.34 cents 43.09 cents 41.57 cents 38.83 cents Return on Equity (ROE) 2008 2009 2010 2011 2012 ROE 13.83% 12.66% 12.71% 11.89% 10.86%

For Segmental Revenue (Year 2012) and Segmental Operating Cost (Year 2012), please visit:http://www.prnasia.com/sa/attachment/2013/05/20130503110931426151.pdf

For other Financial and Operating Highlights graphs, please visit:http://www.prnasia.com/sa/attachment/2013/05/20130503110954324035.pdf

Chairman's Statement Dear Shareholders, Brave to Reform and Innovate with Accelerated Transformation I am honoured to present to you the 2012 annual results of Zhejiang Expressway on behalf of the Board of the Companyfor the first time. Here I would like to thank Chairman Mr. Chen Jisong particularly for his crucial contribution toZhejiang Expressway.

2012 was full of challenges and obstacles. The fluctuating macro economy, ongoing launch of unfavourable policiestogether with a downturn in the securities market have exerted pressure on the growth of the Group's business.

From the perspective of the macroeconomic environment, the European sovereign debt crisis remained unstable, the U.S.economy recovered at a slow pace and the Chinese domestic economic growth appeared to be decelerating, with a GDPgrowth of 7.8%, a record low in recent years. The economy of Zhejiang Province, which was heavily reliant on foreigntrade, was yet hit by the weakening overseas import and export markets. The province recorded a total import and exportvalue of US$312,230 million in foreign trade in 2012, a year-on-year increase of only 0.9%. Meanwhile, the volume ofcargo and passenger traffic on roads across the province increased year-on-year by 4.4% and 1% respectively, which werelower than the increase of 5.1% and 1.3% in 2011. From a policy perspective, the State's implementation of exemptionfrom toll charges of passenger vehicles with seven seats and less travelling on expressways during major festivals andholidays hit the industry's income performance to varying degrees. Multiple challenges posed by the macro economy and policies have slowed down the trend of growth in the traffic volumeand toll income of the Group's toll roads. To this end, the Group further increased the depth and breadth of measures tocut costs and increase income during the year to ensure stable toll income and traffic volume. On the other hand, theGroup was actively looking for investment opportunities and announced a plan in July 2012 for the acquisition of a 50%equity interest in the Shaoxing Section of Yongjin Expressway. The acquisition was completed on 28 November 2012,marking the commencement of the new company, which will strive to bring a good return for the Group as early aspossible. On the securities market side, the domestic stock market in China remained in the doldrums, as marked by a rise of only3.17% in the Shanghai Composite Index during the whole year of 2012. Investors were lack of confidence in stepping inthe market and buying shares. The annual stock turnover of the Shanghai Stock Exchange and Shenzhen Stock Exchangedecreased by 30.7% and 18.5% respectively, leading to a fall in both overall revenue and profitability of the industry.The sluggish external environment impacted the Group's securities and futures business performance, resulting in asubstantial drop in both revenue and profits. Nevertheless, the Group remains fully confident in the long-termdevelopment of China's securities industry. This is why the Group announced a plan during the year to spin off ZheshangSecurities and float its shares on the A-share market, and continued to expand Zheshang Securities' business to boostits rapid development, as major initiatives of the Group to implement the transformation strategy. By making aggressiveefforts on developing and optimizing business on an ongoing basis, Zhejiang Securities has built a financial businessstructure featuring securities, futures, funds and venture capital. This structure will become an important source ofgrowth momentum for the Company. Despite numerous challenges, the performance of the Company in the capital market showed that the share price of theCompany increased by 19.61% in 2012, making the Company a top performer among its peers, with the increaseoutperforming that of Hang Seng China Enterprises Index and on par with that of Hang Seng Index. This suggests that thecapital markets have expressed full recognition and confidence in the Company's business performance and prospects. Suchrecognition and confidence have also given us an impetus to seek ongoing progress and innovation. In order to repay for the support of investors at large, the Board continued to maintain a high dividend payout leveleven under the unfavourable business environment, hoping to share the fruits of development with shareholders. The Boardhas recommended the payment of a final dividend of Rmb24 cents per share for 2012, together with an interim dividend ofRmb6 cents per share already paid, the annual dividend payout is Rmb30 cents per share, accounting for 77.3% of theCompany's profit available for distribution to shareholders for the year. This proposed dividend payment is yet subjectto approval by the shareholders at the Company's forthcoming 2012 Annual General Meeting. Looking ahead to 2013, despite uncertainties prevail, the overall domestic and international economic environment isexpected to be better than last year. In terms of global economic trends, favorable factors are gradually increasingand are expected to improve over 2012 despite the lack of growth momentum. On the domestic front, the central governmenthas proposed enhancing the speed of industrial structure adjustment, while the economic growth in Zhejiang Province hasshown signs of stability since the second half of 2012 and even signs of acceleration at the end of the year. In theprovince, various infrastructure as well as economic and financial development projects continue to kick off, while thetoll road industry will benefit from certain increase in traffic volume. As financial innovation in China's securitiesindustry meets with the best period in history, the Group will grasp the trend towards business innovation to continueits reformation and innovation on products, businesses and mechanisms, and accelerate the development of the securitiesand futures business based on the needs of the real economy. However, generally speaking the traditional principalbusinesses will continue to face various challenges from economic fluctuation and adverse policies, suggesting that itis an imperative for the Group to carry out transformation development, open up new space for development and secure anew growth momentum. As the leader of the new session of the Board, I will work together with all of the Group's staff. Bearing in mind thattime and tide wait for no man and that every minute must be seized, we will aim precisely at the direction fortransformation and development, while further accelerating elimination of factors hindering transformation anddevelopment, and will strive to make innovative breakthroughs. We will also listen to all views with enthusiasm,evaluate the situation and timing in order to continue to grasp every investment opportunity and explore new sources ofprofit on the foundation of the sustainable development of the principal business, and focus on building corporategovernance standards. We hope to win the understanding and support of all of our shareholders who will unite andcooperate with us during the process of exploration and innovation to speed up transformation and development, so as tocreate new growth impetus for the Group, leading the Group to a new chapter. Finally, on behalf of the Board, I would like to express my wholehearted thanks to all the shareholders for theirsupport and all the staff for their diligence and contributions over the past year. We will continue to work hard andcontribute back to shareholders and to society. ZHAN XiaozhangChairmanMarch 19, 2013

Endeavour to Reduce Costs and Enhance Efficiency

Despite 2012 being a challenging year, we were united in our efforts to maintain stable results by reducing costs,enhancing operational efficiency and exploring the profit potential from different angles and aspects of existingresources, as well as by striving for business innovation.

Management Discussion and Analysis

BUSINESS REVIEW

Despite that China's economy remained generally stable in 2012, its macroeconomic growth was under greater downwardpressure as a result of persistent deterioration of the European sovereign debt crisis and significant slowdown in theglobal economic growth. As a result, China's GDP grew by 7.8% over 2012. Moreover, although Zhejiang's economy, whichrelied heavily on foreign trade, was hit by weakened overseas import and export markets, the province's economic growthrate showed signs of stabilization in the second half of the year. Its GDP increased by 8.0% year-on-year during thePeriod, 2 percentage points higher than that of the national level. As a result of some ongoing uncertainties in the macro environment, including weakened foreign trade and sluggishdomestic consumption, organic growth in the traffic volume on the Group's expressways tended to decelerate, and revenuefrom the toll road operations was also undermined by the implementation of certain new policies during the year.Impacted by the gloomy Chinese domestic stock market, revenue from the securities business fell significantlyyear-on-year during the Period. Therefore, revenue from the Group's overall operations fell slightly year-on-year aswell, with a total income of Rmb6,898.43 million, representing a decrease of 1.1% year-on-year; of whichRmb3,670.89 million was attributable to the two major expressways operated by the Group, representing 53.2% of thetotal income; Rmb2,046.67 million was attributable to the Group's toll road-related businesses such as service areaoperations, gas stations, advertising business and so forth, representing 29.7% of the total income; and Rmb1,180.87million was attributable to the securities business, representing 17.1% of the total income.

A breakdown of the Group's income for the Period is set out below:

2012 2011 Rmb'000 Rmb'000 % Change Toll income Shanghai-Hangzhou-Ningbo Expressway 2,968,396 2,954,949 0.5% Shangsan Expressway 702,489 688,984 2.0%Other income Service areas 1,941,924 1,842,206 5.4% Advertising 104,276 89,756 16.2% Road maintenance 471 377 24.9%Securities business income Commission 886,946 1,044,415 -15.1% Bank interest 293,924 356,524 -17.6%

---------------------------------------------------------------------------------

Subtotal 6,898,426 6,977,211

-1.1%

Less: Revenue taxes (198,168) (195,859)

1.2%

---------------------------------------------------------------------------------

Revenue 6,700,258 6,781,352

-1.2%

---------------------------------------------------------------------------------

Toll Road Operations

As Zhejiang's economy showed signs of stabilization and recovery in the third and fourth quarters, organic growth in thetraffic volume on the Group's expressways during the Period was also slightly better than that in 2011. In particular,growth in the traffic volume on Shangsan Expressway, along which most of the enterprises are small and medium sized,picked up faster. However, upon the implementation of the toll-by-weight policy, the rapid growth in the number oflarge vehicles such as container trucks resulted in an overall declining number of small and medium sized trucks. Thisin turn led to a continued decline in the proportion of trucks to total traffic volume, and an increase in toll incomefrom expressways being less than the increase in traffic volume during the Period. Meanwhile, since the implementation of the tolling policy based on actual travel routes in Zhejiang Province on May 15,2012, the Company adopted a number of measures of promotion and guidance in order to achieve greater growth in trafficvolume on some sections of the Shanghai-Hangzhou-Ningbo Expressway and Shangsan Expressway. However, the abolition of the "Unified Toll Card" policy on January 1, 2012, the adjustment to the rounding of the lastfigures of tolls for passenger vehicles on May 15, 2012 and the launch of the policy for adjusting passenger vehicleclassification on August 1, 2012 resulted in a slight decrease in the Group's toll income, causing a total loss ofapproximately 3.2% in toll income for the whole year. The implementation of the new policy on September 30, 2012 forexemption from toll charges of passenger vehicles with seven seats and less travelling on expressways during majorfestivals and holidays led to a total decrease of approximately Rmb58.00 million in the Group's toll revenue during thePeriod, equivalent to a decrease of approximately 1.6% in toll income for the whole year. Tackling the challenging toll road operations in 2012, the Group continued to commit more resources to operational andmanagement facilities for enhancing service quality and raising tolling efficiency, while further strengthening theinitiatives for reducing costs, increasing benefits and income as well as plugging loopholes. During the Period, theconstruction of the second phase project for ETC (Electronic Toll Collection) lanes was completed ahead of the NationalDay long holiday to ensure that all ETC lanes at the toll stations along the Group's expressways were opened to trafficsmoothly prior to the National Day long holiday, as part of our efforts to deliver safe and smooth driving during theholiday season. Average daily traffic volume in full-trip equivalents along the Group's Shanghai-Hangzhou-Ningbo Expressway was 41,963during the Period, representing an increase of 3.8% year-on-year. In particular, average daily traffic volume infull-trip equivalents along the Shanghai-Hangzhou Section of the Shanghai- Hangzhou-Ningbo Expressway was 42,659,representing an increase of 4.9% year-on-year, and that along the Hangzhou-Ningbo Section was 41,466, representing anincrease of 3.0% year-on-year. Average daily traffic volume in full-trip equivalents along the Shangsan Expressway was16,787 during the Period, representing an increase of 2.7% year-on-year. Total toll income from the 248km Shanghai-Hangzhou-Ningbo Expressway and the 142km Shangsan Expressway amounted toRmb3,670.89 million during the Period, representing an increase of 0.7% year-on-year. In respect of such income, tollincome from the Shanghai-Hangzhou-Ningbo Expressway amounted to Rmb2,968.40 million, representing an increase of 0.5%year-on-year while toll income from the Shangsan Expressway amounted to Rmb702.49 million, representing an increase of2.0% year-on-year.

Toll Road-Related Business Operations

The Company also operates certain toll road-related businesses along its expressways through its subsidiaries andassociated companies, including gas stations, restaurants and shops in service areas, as well as roadside advertisingand vehicle service businesses. During the Period, the number of customers at service areas along the expressways decreased as a result of slackenedgrowth in traffic volume along the Group's two expressways, the impact of traffic diversions from the Shaoxing Sectionof Shanghai-Hangzhou-Ningbo Expressway following the opening of the Shaozhu Expressway, and the closure of Yuyao ServiceArea for expansion construction work since June. Meanwhile, sales of refined oil products continued to increase year-on-year on the rising prices of these products.Accordingly, income from overall toll road-related businesses amounted to Rmb2,046.67 million during the Period,representing a year-on-year increase of 5.9%.

Securities Business

Although China's stock market rebounded in the last month of 2012 and shown a hint of stabilizing, the aggregate tradingvolume nevertheless fell by approximately 25% year-on-year as the market fluctuated downward throughout 2012, whichcontinued to dampen investor sentiment. Meanwhile, benefiting from the new commission policy -- the "Notice on FurtherStrengthening Customer Services and the Management of Securities Trading Commissions of Securities Firms" implemented inearly 2011, the decline in the commission rate has begun to stabilize and has remained basically unchanged year-on-year.

Hit by the repeated volatility at low levels in the stock market, revenue from Zheshang Securities' securities brokeragebusiness, investment banking and asset management businesses showed declines in varying degrees year-on-year during thePeriod.

Nevertheless, Zheshang Securities continued to increase the number of its branches and the total number of customers,and accelerated the launch of the margin financing and securities lending business for further expanding new businesscapabilities. Zheshang Securities had 64 securities sales outlets during the Period, an increase of six outletsyear-on-year. During the Period, Zheshang Securities realized an operating income of Rmb1,180.87 million, a decrease of 15.7%year-on-year. Of such income, brokerage commission income amounted to Rmb886.95 million, a year-on-year decrease of15.1%; and interest income from the securities business amounted to Rmb293.92 million, a year-on-year decrease of 17.6%.Moreover, securities investment gains from Zheshang Securities accounted for in the consolidated statement ofcomprehensive income amounted to Rmb89.49 million during the Period.

Further Expansion of Securities Business

We will continue to expand the scope of business of Zheshang Securities, to improve the operations and management ofthe unit, explore innovative business solutions and capture a greater market share so as to forge Zheshang Securitiesinto a new growth driver of ZhejiangExpressway. Long-term Investments Zhejiang Expressway Petroleum Development Co., Ltd. (a 50% owned associate company of the Company) benefited from a risein the retail prices of petroleum products and a growth in the sales of petroleum products during the Period. As aresult, the associate company realized an income of Rmb6,090.71 million during the Period, representing an increase of18.5% year-on-year. During the Period, net profit of the associate company amounted to Rmb15.02 million (2011: netprofit of 14.71 million). The growth of traffic volume of the 69.7km Jinhua Section of the Yongjin Expressway, operated by Zhejiang Jinhua YongjinExpressway Co., Ltd. (a 23.45% owned associate company of the Company), declined during the Period as domestic economicgrowth slowed down. This section recorded an average daily traffic volume of 12,084 in full-trip equivalents, anincrease of 12.2% year-on-year, while toll income amounted to Rmb231.48 million, an increase of 6.1% year-on-year. Dueto its heavy financial burden, the associate company still incurred a loss of Rmb54.70 million during the Period (2011:a loss of Rmb68.10 million). JoinHands Technology Co., Ltd. (a 27.582% owned associate company of the Company) generated its income primarily fromits property leasing activities. As the associate company did not make any significant improvements to its operations,it incurred a net profit of Rmb0.15 million during the Period (2011: a loss of Rmb1.81 million). The Company entered into a transfer agreement with Guangzhou Kaixin Consulting Co., Ltd. ("Kaixin Company") in July2011. As Kaixin Company has failed to pay the consideration for the equity interest transfer according to the terms ofthe contract, the Company lodged a lawsuit against Kaixin Company. On March 23, 2012, the court ruled that KaixinCompany pay the remaining consideration of Rmb28.587 million for the equity interest transfer and liquidated damages.The Company continued to appeal against the said percentage of the liquidated damages and the dismissed priority rightfor claim against the mortgaged real estate of JoinHands Technology. The case is pending a final judgment to be made bythe Intermediate People's Court in Hangzhou City. Shengxin Expressway Co., Ltd. ("Shengxin Company", a jointly controlled entity in which the Company owns a 50% equityinterest) operates the Shaoxing Section of the 73.4km Ningbo-Jinhua Expressway. On July 6, 2012, the Company enteredinto a transfer agreement with Shaoxing Communications Investment Group Co., Ltd. ("SXCI") for the acquisition of a 50%equity interest in Shengxin Company, a wholly- owned subsidiary of SXCI, for a cash consideration of Rmb355.03 millionplus interest accrued on the consideration. As at November 30, 2012, the Company had completed the industrial andcommercial changes of registration to Shengxin Company. In December 2012, Shengxin Company's profit was accounted for inthe Group's consolidated income statement. As at December 2012, toll revenue from the jointly controlled entity amountedto Rmb23.91 million, and loss amounted to Rmb7.03 million.

Financial Analysis

The Group adopts a prudent financial policy with an aim to provide Shareholders of the Company with sound returns overthe long term.

During the Period, profit attributable to owners of the Company for the year was approximately Rmb1,686.27 million,representing a decline of 6.6% year-on-year, return on owners' equity was 10.9%, representing a decline of 8.7%year-on-year, while earnings per share for the Company was Rmb38.83 cents.

Liquidity and Financial Resources

As at December 31, 2012, current assets of the Group amounted to Rmb15,752.55 million in aggregate (2011: Rmb15,006.63million), of which bank balances and cash accounted for 30.8% (2011: 37.2%), bank balances held on behalf of customersaccounted for 47.6% (2011: 47.8%), and held-for-trading investments accounted for 9.4% (2011: 8.4%). Current ratio(current assets over current liabilities) of the Group as at December 31, 2012 was 1.5 (2011: 1.6). Excluding the effectof customer deposits arising from the securities business, the resultant current ratio of the Group (current assets lessbalance of cash held on behalf of customers over current liabilities less balance of accounts payable to customerarising from securities business) was 3.0 (2011: 3.6). The amount for held-for-trading investments of the Group as at December 31, 2012 amounted to Rmb1,486.77 million (2011:Rmb1,260.02 million), of which 97.6% was invested in bonds, 0.6% was invested in stocks, and the rest was invested inopen-end equity funds.

During the Period, net cash inflow generated from the Group's operating activities amounted to Rmb1,537.71 million.

The Directors do not expect the Company to experience any problem with liquidity and financial resources in theforeseeable future. As at December 31, 2012 2011 Rmb'000 Rmb'000 Cash and cash equivalent Rmb 3,353,453 3,111,774 US$ in Rmb equivalent 4,024 3,385 HK$ in Rmb equivalent 5,232 5,271Time deposits Rmb 1,459,433 2,444,247 US$ in Rmb equivalent 23,975 23,546Held-for-trading investments - Rmb 1,486,772 1,260,021Available-for-sale investments - Rmb 134,899 60,274Total 6,467,788 6,908,518 Rmb 6,434,557 6,876,316 US$ in Rmb equivalent 27,999 26,931 HK$ in Rmb equivalent 5,232 5,271 Borrowings and Solvency

As at December 31, 2012, total liabilities of the Group amounted to Rmb10,429.11 million, of which 9.6% was corporatebonds and 71.7% was payables to customers arising from securities business.

Total interest-bearing borrowings of the Group as at December 31, 2012 amounted to Rmb1 billion, representing a decreaseof 31.6% comparing to that as at December 31, 2011. The borrowings was totally corporate bonds amounting to Rmb1 billionwhich was issued by the Company in 2003 with a term of 10 years. The annual coupon rate for corporate bonds was fixed at4.29%, with interest payable annually. On January 24, 2013, the principal and relevant interests of the corporate bondshave been fully repaid. Besides, the annual interest rate for accounts payable to customer arising from the securitiesbusiness was fixed at 0.35%. Maturity Profiles Gross Within 2-5 years Beyond amount 1 year inclusive 5 years Rmb'000 Rmb'000 Rmb'000 Rmb'000 Floating rates Domestic commercial bank loans -- -- --

--

Fixed rates

Domestic commercial bank loans -- -- -- -- Domestic foreign bank loans -- -- -- -- Corporate bonds 1,000,000 1,000,000 -- --

---------------------------------------------------------------------------------------

Total as at December 31, 2012 1,000,000 1,000,000 --

--

---------------------------------------------------------------------------------------

Total as at December 31, 2011 1,462,553 462,553 1,000,000

--

---------------------------------------------------------------------------------------

Total interest expenses for the Period amounted to Rmb54.00 million, while profit before interest and tax amounted toRmb2,569.94 million. The interest cover ratio (profit before interest and tax over interest expenses) stood at 47.6times (2011: 35.8). 2012 2011 Rmb'000 Rmb'000

Profit before tax and interest 2,569,941 2,863,823Interest expenses

53,995 80,043Interest cover ratio 47.6 35.8

The asset-liability ratio (total liabilities over total assets) was 35.4% as at December 31, 2012 (December 31, 2011:36.2%). Excluding the effect of customer deposits arising from the securities business, the resultant asset-liabilityratio (total liabilities less balance of accounts payable to customer arising from securities business over total assetsless balance of cash held on behalf of customers) of the Group was 13.4% (December 31, 2011: 15.4%).

Capital Structure As at December 31, 2012, the Group had Rmb19,016.28 million in total equity, Rmb8,481.82 million in fixed-rateliabilities and Rmb1,947.29 million in interest-free liabilities, representing 64.6%, 28.8% and 6.6% of the Group'stotal capital, respectively. The gearing ratio, which was computed by dividing the total liabilities less accountspayable to customer arising from securities business by total equity, was 15.5% as at December 31, 2012 (December 31,2011: 18.2%). As at December 31, As at December 31, 2012 2011 Rmb'000 % Rmb'000 % Total equity 19,016,275 64.6% 18,599,100 63.9%Fixed rate liabilities 8,481,819 28.8% 8,505,620 29.2%Floating rate liabilities -- 0.0% 100,000 0.3%Interest-free liabilities 1,947,287 6.6%

1,928,239 6.6%----------------------------------------------------------------------------------------Total

29,445,381 100.0%

29,132,959 100.0%----------------------------------------------------------------------------------------Long-term interest-bearing liabilities

-- 0.0% 1,000,000 3.4%Gearing ratio 1 (note) 15.5% 18.2%Gearing ratio 2 (note) 0.0% 5.4%Asset-liabilities 1 (note) 35.4% 36.2%Asset-liabilities 2 (note) 13.4% 15.4%

Note: Gearing ratio 1 represents the total liabilities less balance of accounts payable

to customers arising from securities business to the total equity; gearing ratio

2 represents the total amount of the long-term interest- bearing liabilities to

the total equity; Asset-liability ratio 1 represents total liabilities to total

assets; Asset-liability ratio 2 represents the total liabilities less balance of

accounts payable to customers arising from securities business to the total assets

less bank balances held on behalf of customers.

Capital Expenditure Commitments and Utilization

During the Period, capital expenditures of the Group totaled Rmb724.56 million, while capital expenditure of the Companytotaled Rmb467.96 million. Amongst the total capital expenditures of the Group, Rmb373.47 million was incurred foracquiring 50% equity interest in Shengxin Company, Rmb50.00 million was incurred for capital increase of Zheshang FundManagement Co., Ltd. (an associate of Zheshang Securities that held 25% equity interest), Rmb120.30 million was incurredfor acquisition and construction of properties, Rmb162.33 million was incurred for purchase and construction ofequipment and facilities, and Rmb12.39 million was incurred for service area renovation and expansion, Rmb6.07 millionwas incurred for the road widening project between the Shaoxing-Zhuji hub of the Shangsan Expressway. As at December 31, 2012, capital expenditures committed by the Group and the Company totaled Rmb1,086.40 million andRmb450.08 million, respectively. Amongst the total capital expenditures committed by the Group, Rmb497.05 million willbe used for acquisition and construction of properties, Rmb238.50 million for acquisition and construction of equipmentand facilities, Rmb70.85 million for service area renovation and expansion and Rmb280.00 million for investment in anassociate.

The Group will finance the above mentioned capital expenditure commitments mainly with internally generated cash flowand will consider using debt financing to meet any shortfalls in priority to using other methods.

Contingent Liabilities and Pledge of Assets

As at December 31, 2012, the Group did not have any contingent liabilities nor any pledge of assets or guarantees.

Foreign Exchange Exposure

Save for the repayment of a domestic foreign bank loan in Hong Kong dollars amounting to an equivalent of Rmb312.51million and dividend payments to the holders of H shares in Hong Kong dollars, the Group's principal operations weretransacted and booked in Renminbi. With an aim to hedge against foreign exchange risks arising from borrowings denominated in Hong Kong dollars, the Grouppurchased Hong Kong dollar equivalent forward contracts with one-year term at a rate lower than the spot exchange rateon the borrowing date in the year of 2011. The transaction completed on May 31, 2012. Other than the above, the Grouphas not used other financial instruments for hedging purposes during the Period.

Although the Directors do not foresee any material foreign exchange risks for the Group, there is no assurance thatforeign exchange risks will not affect the operating results of the Group in the future.

HUMAN RESOURCES As at December 31, 2012, there were 6,127 employees within the Group, amongst whom 1,259 worked in the managerial,administrative and technical positions, while 4,868 worked in fields such as toll collection, maintenance, serviceareas, securities and futures business outlets. To fully reflect the Company's values and corporate culture, and to proactively implement its development strategy, theCompany further amended its remuneration policy and emphasised the concept of remuneration based on responsibilities,competence and performance to clearly establish the relationship between the salary raise, individual performance andcorporate performance, and to help employees strive for salary review. The remuneration package comprises three parts:basic salary, incentive pay and benefits. The basic salary is determined primarily based on the seniority and abilityof the staff. The incentive pay is pegged with productivity. Benefits for employees come in the form of contributionsmade by the Group to local social security agencies covering pension, medical and accommodation concerns that arecalculated as a percentage of employees' income and in accordance with relevant PRC rules and regulations. The Companycontinued to implement the corporate annuity scheme during the Period, and total pension cost charged to the incomestatement during the Period amounted to Rmb62.86 million.

Accelerate Transformation and Race Against Time

Bearing in mind that every moment must be seized, we will continue to step up business exploration and innovation inorder to accelerate the transformation of Zhejiang Expressway, and to open a new chapter of development.

OUTLOOK

Due to influences by the macro and regional economic development on the overall performance of toll road operations, itis anticipated that the domestic economy will maintain steady development in 2013 under the government's macro-controlinitiatives. In addition, based on available data, it is suggested that Zhejiang's economy is stabilising and improving,which would be conducive to the continued organic growth in the traffic volume on the Group's expressways in 2013. Meanwhile, Jiaxing-Shaoxing Expressway, which is scheduled to open in the second half of 2013, is anticipated to createa slight negative impact on the Group's Shanghai-Hangzhou-Ningbo Expressway, but a greater boost to the traffic volumeon the Group's Shangsan Expressway. As the income and profit contribution from Shangsan Expressway is smaller than thatfrom Shanghai-Hangzhou-Ningbo Expressway, the opening of the Jiaxing-Shaoxing Expressway is unlikely to significantlyimpact on the Group's toll income for the whole year overall. Moreover, as a new round of quantitative easing policies is being launched globally, it is expected that China may makeappropriate adjustments to its monetary policy in 2013, which may provide new impetus to the sluggish Chinese securitiesmarket. This will help Zheshang Securities to seize an opportunity in that while strengthening cost control and riskcontrol, Zheshang Securities will further develop innovative business, broaden the sources of income and speed up theprocess of the proposed listing of its shares on the Shanghai Stock Exchange to address the challenges posed by marketenvironment and intense competition for facilitating the sound development of the securities business. Looking ahead in 2013, the world economy is expected to remain in a major adjustment period; the Chinese domesticeconomy is seeking a new balance in its development and the impact of national policies on the toll road industry willcontinue. All of these factors have added to uncertainty to the Group's business development. However, the Company's management also observed that a number of positive factors are emerging as well: strengthenedU.S. economic recovery; China's implementation of the four major national strategies and commencement of the four majorconstruction projects in Zhejiang Province at full speed, which will present a rare opportunity for the Group'sdevelopment. In addition to continuous consolidation of the Group's principal expressway business as well as advancingthe securities and financial business, the Group will also be actively seeking suitable investment projects andnurturing management capabilities on diversified businesses. The Group will also utilize its financial resourcesadvantage to generate strategic synergies with its parent company for expanding development space and improvingprofitability in future.

Principal Risks and Uncertainties

TOLL ROAD BUSINESS RISKS Economic Environment As the global economy remained in a period of profound restructuring, the domestic economy, despite showing signs ofpicking up, was still taking shape towards a new balance as a whole. Meanwhile, the unfavourable export tradingconditions also affected Zhejiang, a province with heavy reliance on export trading. Growth in the traffic volume andtoll revenue of the Group's expressways is expected to remain uncertain, creating uncertainties for the operations,financial conditions and operating results of the Group.

Roads Competition

Despite the opening of two expressways nearby, namely Shenjia Huhang Expressway and Zhuyong Expressway, the impacts oftraffic diversion on the Group's two expressways were stabilized.

However, as Jiaxing-Shaoxing Cross River Passage is scheduled to commence service in the second half of 2013, coupledwith the opening of other new expressways nearby, it is expected that new traffic will be diverted to certain sectionsof Shanghai-Hangzhou-Ningbo Expressway. In face of the increasingly significant effects of traffic division due to thenewly built expressways in Zhejiang province, we have implemented ETC (electronic toll collection) system in all tollstations and improved the quality of expressway service. We endeavoured to attract more traffic to the Group'sexpressways through improving the expressway bulletin and adopting various means of promotion and introduction to copewith the challenges arising from the unfavourable toll road business environment. Accordingly, we cannot be assured asto whether traffic volume to be generated on the Group's expressways will be maintained at the same levels as before orwill increase in the future, or whether or not the operating results of the Group will be negatively affected.

Toll Policy

With the implementation of the toll waiver policy on small passenger vehicles on key festivals and holidays by the PRCgovernment on September 30, 2012, the expressway operators who charge for toll are negatively affected. In addition, dueto the introduction of a special project by five ministries and commissions for the rectification of the toll roadpolicy in Zhejiang province, a number of new policies focusing on adjusting the toll policy of expressways within theprovince were successively issued in 2012. Despite that we expect the possibility of major changes in the policies ofthe expressway industry in the near term is minimal, we cannot be assured that there will be no change in the tollpolicy in Zhejiang province, nor further adjustment to the toll standards for vehicle classes and toll calculationmethods adopted by expressway operators within the province. It is uncertain that changes in toll tariffs of expresswaysarising therefrom will not have any adverse effects on the toll revenue of the Group. SECURITIES BUSINESS RISKS Market Fluctuations The securities business is highly susceptible to market fluctuations and may experience periods of high volatilityaccompanied by reduced liquidity. It may be materially affected by economic and other factors such as the global marketconditions; the availability and cost of capital; the liquidity of the global markets; the level and volatility of stockprices, commodity prices and interest rates; currency values and other market indices; inflation; natural disasters;acts of war or terrorism; as well as investor sentiment and confidence in the financial markets. There is no assuranceas to whether our securities business will be adversely affected by fluctuations in the market, or whether oursecurities business will continue to contribute to our overall profit margin.

Regulation of the Securities Business

We are subject to extensive regulations in the PRC that govern how we conduct our securities business, and we aresubject to risks of intervention by the PRC regulatory authorities. We could be fined, prohibited from engaging in someof our business activities or subject to limitations or conditions on our business activities, among other things.Significant regulatory actions against us could have material adverse impacts on our financial position, cause ussignificant reputational harm, or harm our business prospects. New laws, regulations or changes in the enforcement ofexisting laws or regulations applicable to our clients may also adversely affect our business. FINANCIAL RISKS

For financial risks and uncertainties of the Group, please see notes 4, 5 and 6 to the Consolidated Financial Statements.

STATEMENT OF RESPONSIBILITY FROM THE DIRECTORS WITH RESPECT TO THE ANNUAL REPORT AND THE COMPANY'S ACCOUNTS

The Directors of the Company duly confirm that to the best of their knowledge:

-- the consolidated financial statements prepared and subject to disclosure under the Hong Kong Financial Reporting

Standards issued by the Hong Kong Institute of Certified Public Accountants give a true and fair view of the assets,

liabilities, financial position and profit of the Group, and cover the enterprises that have been consolidated into

the Company; and

-- the "Management Discussion and Analysis" section included in this annual report includes a fair review of the

development and performance of the business and the position of the Group, covers the enterprises that have been

consolidated into the Company and describes the principal risks and uncertainties faced by the Group.

From the beginning of year 2012 up to now, there has been no occurrence of significant events that would have a materialimpact on the normal operation of the Group.

By Order of the BoardTony ZHENGCompany Secretary Hangzhou, Zhejiang Province, the PRCMarch 19, 2013

Corporate Governance Report

CORPORATE GOVERNANCE PRACTICES

To govern the daily functioning of the Board of Directors of the Company, the Company has adopted its own Guidelines onCorporate Governance that closely followed the principles of good governance in Appendix 14 of the Listing Rules(available at www.hkex.com.hk) ("CG Code").

During the Period, the Company has complied with all code provisions in the CG Code and adopted the recommended bestpractices in the CG Code as and when applicable.

DIRECTORS' SECURITIES TRANSACTIONS

The Company has adopted the Rules on Securities Dealings ("Rules on Securities Dealings") for the Directors, supervisors,senior management personnel and other employees of the Company on terms no less exacting than the required standard setout in the Model Code for Securities Transactions by Directors of Listed Issuers (the "Model Code") set out in Appendix10 of the Listing Rules. Upon specific inquiries to all the Directors, the Directors have confirmed their respective compliance with the requiredstandards for securities transactions by Directors as set out in the Model Code and the Rules on Securities Dealingsduring the Period.

BOARD OF DIRECTORS OF THE COMPANY (THE "BOARD")

The executive directors of the Company during the Period were:

Mr. ZHAN Xiaozhang (Chairman)Mr. CHEN Jisong (Chairman, retired)Ms. LUO Jianhu (General Manager)Mr. JIANG Wenyao (retired)Mr. ZHANG Jingzhong (retired)Mr. DING Huikang

The non-executive directors of the Company during the Period were:

Ms. ZHANG Luyun (retired)Mr. LI ZongshengMr. WANG WeiliMr. WANG Dongjie

The independent non-executive directors of the Company during the Period were:

Mr. TUNG Chee Chen (retired)Mr. ZHANG JunshengMr. ZHANG Liping (retired)Mr. ZHOU JunMr. PEI Ker-Wei During the Period, the Board held a total of seven meetings. Individual attendances by the directors (as indicated bythe numbers of meetings attended/numbers of relevant meetings held) are as follows: Attendance Attendance Attendance through in person by proxy communication Mr. ZHAN Xiaozhang (Chairman) 6/6 1/1Mr. CHEN Jisong (Chairman, retired) 3/3

1/1

Ms. LUO Jianhu (General Manager) 3/3Mr. JIANG Wenyao (retired) 3/3

1/1

Mr. ZHANG Jingzhong (retired) 3/3 1/1Mr. DING Huikang 5/6 1/6 1/1Ms. ZHANG Luyun (retired) 2/3 1/1Mr. LI Zongsheng 3/3Mr. WANG Weili 2/3 1/3Mr. WANG Dongjie 3/3Mr. TUNG Chee Chen (retired) 1/3 2/3 1/1Mr. ZHANG Junsheng 4/6 1/6 1/1Mr. ZHANG Liping 2/3 1/3 1/1Mr. ZHOU Jun 3/3Mr. PEI Ker-Wei 3/3

During the Period, the Company held two general meetings of the shareholders. The meetings were chaired by Chairman, andall executive directors were present at the meetings.

The Board is charged with duties as well as given powers that are expressly specified in the articles of association ofthe Company, the scope of which includes, amongst others: to determine the business plans and investment proposals ofthe Company; to prepare the financial budget and final accounts of the Company; to determine the dividend policy of theCompany; to appoint or dismiss senior managerial officers of the Company as well as to determine their remuneration; andto draw up proposals for any material acquisition or sale by the Company. To assist the Board to effectively discharge its duties, the Board has set up the Audit Committee, the Nomination andRemuneration Committee, and the Strategic Committee; the Nomination and Remuneration Committee was later separated intothe Nomination Committee and the Remuneration Committee.

While the Board fully retains its power to decide on matters within its scope of duties and powers, relevant preparationand drawing up of plans or proposals were usually delegated to the management.

The Company has complied with the requirements under Rules 3.10(1) and (2) of the Listing Rules regarding theappointment of independent non-executive directors, with three independent non-executive directors appointed, at leastone of whom possessing the appropriate professional qualification or accounting or related financial managementexpertise. Pursuant to Rule 3.13 of the Listing Rules, the Company had specifically inquired with all three independentnon-executive directors and received their respective confirmation of independence during the Period. The threeindependent non-executive directors have all confirmed their compliance with requirements regarding independence underRule 3.13 of the Listing Rules. The Company still considers the independent non-executive directors to be independent.

There were no financial, business, family or other material or relevant relationships between members of the Board,including that between the Chairman and the General Manager of the Company.

CONTINUOUS PROFESSIONAL DEVELOPMENT

Under code provision A.6.5 of the CG Code, directors of the Company should participate in continuous professionaldevelopment to develop and refresh their knowledge and skills. Each newly appointed director receives induction on thefirst occasion of his or her appointment, so as to ensure that he or she has appropriate understanding of the businessand operations of the Company and that he or she is fully aware of his or her responsibilities and obligations under theListing Rules and relevant regulatory requirements. Directors are also regularly updated on the Group's business andindustry environments where appropriate in the management's monthly reports to the Board as well as briefings andmaterials circulated to the Board before board meetings. In addition, during the Period, the Company has arranged for all its executive and non-executive directors to undergocontinuous trainings designed to develop and refresh their knowledge and skills so as to ensure that their contributionto the Board remains informed and relevant. However, as the management considers that the independent non-executivedirectors of the Company are very experienced, knowledgeable and resourceful, the Company did not arrange anyprofessional briefings or training programmes for its independent non-executive directors and has decided to leave it tothe independent non-executive directors to undergo appropriate training as they see fit.

CHAIRMAN AND GENERAL MANAGER

During the Period, Mr. ZHAN Xiaozhang succeeded Mr. CHEN Jisong as Chairman, and Ms. LUO Jianhu succeeded Mr. ZHANXiaozhang as General Manager of the Company, respectively. The roles of Chairman and General Manager are fullysegregated as expressly set out in the articles of association of the Company. NON-EXECUTIVE DIRECTORS

Terms for the non-executive directors of current session of the Board started on June 11, 2012, and will expire on June30, 2015.

SPECIAL COMMITTEES UNDER THE BOARD

The Board has set up the Audit Committee, the Nomination and Remuneration Committee, and the Strategic Committee; theNomination and Remuneration Committee was later separated into the Nomination Committee and the Remuneration Committee.Roles and responsibilities for each committee are specified in its terms of reference, details of which can be foundunder the "Corporate Governance" section in the Company's web site.

The Audit Committee comprised of the three independent non-executive directors and two non-executive directors, namelyMr. ZHANG Junsheng, Mr. ZHOU Jun, Mr. PEI Ker-Wei, Mr. WANG Weili and Mr. WANG Dongjie, of whom Mr. ZHOU Jun serves asthe Chairman of the Audit Committee.

The Nomination Committee comprised of three independent non-executive directors, one executive director and onenon-executive director, namely Mr. ZHANG Junsheng, Mr. ZHOU Jun, Mr. PEI Ker-Wei, Mr. ZHAN Xiaozhang and Mr. LIZongsheng, of whom Mr. ZHAN Xiaozhang serves as Chairman of the Nomination Committee. The Remuneration Committee comprised of three independent non-executive directors and two non- executive directors,namely, Mr. ZHANG Junsheng, Mr. ZHOU Jun, Mr. PEI Ker-Wei, Mr. LI Zongsheng and Mr. WANG Weili, of whom Mr. ZHANGJunsheng serves as Chairman of the Remuneration Committee. The Strategic Committee comprised of three executive directors, namely Mr. ZHAN Xiaozhang, Ms. LUO Jianhu and Mr. DINGHuikang as well as Mr. ZHANG Jingzhong, Mr. WU Junyi and several outside experts and advisors, of whom Mr. ZHANXiaozhang serves as chairman of the Strategic Committee.

During the Period, the Audit Committee held a total of four meetings. Individual attendances by the members of the AuditCommittee (as indicated by the numbers of meetings attended/numbers of meetings held) are as follows:

Attendance Attendance in person by proxy Mr. TUNG Chee Chen (retired) 1/2 1/2Mr. ZHANG Junsheng 2/4 1/4Mr. ZHANG Liping (retired) 2/2Ms. ZHANG Luyun (retired) 1/2Mr. ZHOU Jun 2/2Mr. PEI Ker-Wei 2/2Mr. WANG Weili 1/2 1/2Mr. WANG Dongjie 2/2 In the meetings held during the Period, the Audit Committee conducted, amongst others, review of financial statementsfor the quarterly, interim and annual results, the effectiveness of the system of internal control and the reportingthereof to the Board, as well as recommendation on the re-appointment of external auditors. Pursuant to Terms of Reference for the Remuneration Committee, one of the responsibilities of the Remuneration Committeeis to offer the Board recommendations on remunerations of executive directors and senior management. Before theseparation of Nomination and Remuneration Committee into two independent committees of Nomination Committee andRemuneration Committee, the Nomination and Remuneration Committee held a meeting during the Period, during which itreviewed the candidates for directors and supervisors and their recommended remuneration in relation to change insessions of the Board and the Supervisory Committee of the Company. Each and every member of the Nomination andRemuneration Committee attended the meeting. Proposed candidates for directors and supervisors for the new session aswell as their recommended remuneration that was reviewed by the Nomination and Remuneration Committee were laterreviewed and approved by the full Board and the general meeting of shareholders. During the Period, the Strategic Committee held three meetings, mainly discussed the Company's strategic development andtransformation, as well as strategic positioning and development plan for the next three years as proposed by relevantdepartment. Each and every member of the Strategic Committee attended the meetings. The Board is responsible for developing and reviewing the Company's corporate governance policies and practices,monitoring the Company's compliance with the Code and its disclosure within this report; the Board reviews and monitorsthe training and continuous professional development of Directors and senior management through the works of humanresources department, and review and monitor the Company's policies and practices on compliance with legal andregulatory requirements through the works of legal and internal audit department. During the Period, the Directors have all confirmed their responsibility for preparing the accounts, and that there wereno events or conditions which would have a material impact on the Company's ability to continue to operate as a goingconcern basis. AUDITORS' REMUNERATION During the Period, the Company had paid HK$3.85 million (approximately Rmb3.15 million equivalent) and Rmb830,000 toDeloitte Touche Tohmatsu Certified Public Accountants (the Hong Kong auditors) and Pan-China Certified PublicAccountants Ltd. (the PRC auditors) for audit services conducted in 2011, respectively. The auditors did not providenon-audit services to the Company.

SECRETARY TO THE BOARD

During the Period, the Secretary to the Board had complied with Rule 3.29 of the Listing Rules regarding undergoingrelevant professional trainings.

DIRECTORS, SUPERVISORS AND CHIEF EXECUTIVE'S INTERESTS IN SHARES AND UNDERLYING SHARES OF THE COMPANY

As at December 31, 2012, none of the Directors, Supervisors and General Manager had any interests or short positions inthe shares, underlying shares or debentures of the Company or any of its associated corporations (within the meaning ofPart XV of the SFO) as recorded in the register required to be kept pursuant to Section 352 of the SFO, or as otherwisenotified to the Company and the Hong Kong Stock Exchange pursuant to the Model Code.

INTERESTS AND SHORT POSITIONS OF OTHER PERSONS IN SHARES AND UNDERLYING SHARES

As at December 31, 2012, the interests and short positions of other persons in the shares and underlying shares of theCompany according to the register required to be kept by the Company pursuant to Section 336 of the SFO, or as otherwisenotified to the Company and the Stock Exchange are set out below:

Percentage of Total interests the issued in number of share capital ordinary shares of the CompanySubstantial shareholders Capacity of the

Company (domestic shares)

Communications Group Beneficial owner 2,909,260,000 100% Percentage of Total interests the issued in number of share capital ordinary shares of the CompanySubstantial shareholders of the Company (H Shares) JP Morgan Chase & Co Beneficial owner, 156,633,546 (L) 10.92%(L) investment manager and 42,000(S) 0.00%(S) custodian corporation/ 117,344,000(P) 8.18%(P) approved lending agent BlackRock, Inc. Interest of controlled 130,448,159(L) 9.09%(L) corporations 5,502,378(S) 0.38%(S) Veritas Funds Plc Beneficial owner 74,170,000(L) 5.17%(L)

The Real Return Group Limited Interest of controlled 71,820,000(L)

5.01%(L) corporations

The letter "L" denotes a long position. The Letter "S" denotes a short position. The letter "P" denotesinterest in a lending pool.

Save as disclosed above, as at December 31, 2012, no other persons had any interests or short positions in the shares orunderlying shares of the Company that was required to be recorded pursuant to Section 336 of the SFO, or as otherwisenotified to the Company and the Stock Exchange.

SHAREHOLDERS' RIGHTS

Pursuant to the Articles of Association of the Company, two or more Shareholders who in aggregate hold 10% or more ofthe voting rights of all the shares of the Company having the right to vote may write to the Board to request theconvening of an extraordinary general meeting and specifying the agenda of the meeting. Upon receipt of the request inwriting, the Board shall convene the extraordinary general meeting as soon as possible. Shareholders who hold inaggregate 5% or more of the voting rights of all the shares of the Company having the right to vote are entitled topropose additional motions in annual general meeting, provided that such motions are served on the Company within 30days after the issue of the notice of annual general meeting.

Written requests, proposals and enquiries may be sent to the Company through contact details listed in the sectionbelow.

INVESTOR RELATIONS The Board is committed to ensuring that all shareholders and the investment community have equal and timely access toinformation about the Company so as to enable their accurate assessment of the Company's fair value. Such information isavailable through channels including financial reports, shareholder meetings, statutory announcements, the Hong KongStock Exchange website (www.hkexnews.hk) and the Company's own website (www.zjec.com.cn).

Activities such as investor and analyst briefings, one-on-one meetings, conference calls, roadshows, and pressconferences are held regularly by senior management of the Company, particularly after results announcements.

Great importance is also attached to maintaining clear and effective communications channels with investors as part ofthe Company's bid to enhance its transparency and to promote the understanding of its business in the investmentcommunity. Any parties who wish to learn more about the Company may do so via the contact details listed below:

Mr. Tony ZHENGCompany Secretary12/F, Block A, Dragon Century Plaza1 Hangda Road Hangzhou, Zhejiang 310007ChinaTel: 86-571-8798 7700Fax: 86-571-8795 0329E-mail: [email protected] During the Period, the last shareholders' meeting of the Company took place at 3:00 p.m. on Friday, October 12, 2012 atthe headquarters of the Company. Details of this extraordinary general meeting of the shareholders were set out in theannouncement dated October 12, 2012 on resolutions passed at the extraordinary general meeting of the shareholders.

The next Annual General Meeting of the Company is expected to be held in May 2013, with exact date and resolutions forreview to be specified in notice of Annual General Meeting when it is published.

The Company has an issued share capital of 4,343,114,500 shares comprised of domestic shares and H shares. The domesticshares are held by Zhejiang Communications Investment Group Co., Ltd. as to 2,909,260,000 shares, representingapproximately 67% of the total issued capital of the Company. The remaining 1,433,854,500 shares are H shares,representing approximately 33% of the total issued capital of the Company. As at the date of this report, and to thebest of the Directors' knowledge, 100% of the H shares of the Company are held by the public.

During the Period, Article 90 of the Company's articles of association was deleted in its entirety and substituted bythe following:

"The Company shall have a board of directors. The Board of directors shall comprise nine directors, of whom at leastthree shall be independent non-executive directors. The board of directors shall have one chairman and onevice-chairman." INTERNAL CONTROLS The Company has set up an internal monitoring system that aims to protect assets, preserve accounting and financialinformation, as well as to ensure the accuracy of financial statements, including the establishment of departments andunits, setting out responsibilities, execution of management systems and quality control mechanisms. The system iscapable of taking necessary steps to react to possible changes in our businesses as well as external operatingenvironments. Throughout the operating process, the Company's various internal control measures are being continuouslyenhanced, fulfilled and are deemed effective. The Company's Audit Committee is charged with the duties of reviewing internal controls, directing monitoringactivities. Aside from reviewing the annual reporting by external auditors, the committee also reviews the effectivenessof internal control system and risk management mechanism through reviewing the internal special audit report on theCompany's various core businesses prepared by internal audit department on a quarterly basis. During the year, the AuditCommittee focused on the compliance of the Company's internal control measures, as well as risk control mechanismrelating to new business investment and renovation of the Company's securities business. The internal audit departmentcarried out specific audit into these compliance issues and monitored relevant rectifications, ensuring theeffectiveness of the Company's management systems. During the Period, the Directors of the Company had carried out a review on the effectiveness of the Company's internalcontrol system, covering all material aspects of internal control, including financial control, operational control,compliance control and risk management functions. There were no major breaches in the internal control system that mayhave had an impact to Shareholders' interests, and the internal control system was deemed to be effective andsufficient. MANAGEMENT FUNCTIONS The management functions of the Board and the management are expressly stipulated in the articles of association of theCompany. Pursuant to the articles of association of the Company, the management of the Company is assigned the functionsto be in charge of the production and business operation of the Company and to organize the implementation of theresolutions of the board of directors, to organize the implementation of the annual business plan and investment programof the Company, to prepare plans for the establishment of the internal management structure of the Company, to preparethe basic management systems of the Company, and to formulate basic rules and regulations of the Company, etc.

Directors, Supervisors and Senior Management Profiles

DIRECTORS Executive Directors Mr. ZHAN Xiaozhang, born in 1964, is a senior economist. Mr. Zhan holds a bachelor's degree in law. He further obtaineda master's degree in public administration from the Business Institute of Zhejiang University in 2005. He has beenappointed as the Chairman of the Company since Jun 2012. From 1985 to 1991, Mr. Zhan worked as an officer at Transport Administrative Division under Waterway Transport Authorityof Zhejiang Provincial Bureau of Construction. From 1991 to 1998, he served as Deputy Secretary then Secretary of theCommunist Youth League Commission at Zhejiang Provincial Bureau of Communications. From 1998 to 2002, he was DeputyDirector of Waterway Transport Authority under Zhejiang Provincial Bureau of Communications. From 2002 to 2003, he wasDeputy Director of Human Resources Department at Zhejiang Provincial Bureau of Communications. From 2003 to 2006, Mr.Zhan was Chairman of Zhejiang Wenzhou Yongtaiwen Expressway Co., Ltd. From 2006 to 2008, he became Chairman of ZhejiangJinji Property Co., Ltd. Mr. Zhan has been Assistant to General Manager and Manager of Research and DevelopmentDepartment at Zhejiang Communications Investment Group Co., Ltd from 2006 to 2009.

He served as an Executive Director and the General Manager of the Company from March 2009 to June 2012. Mr. ZHANcurrently serves as Deputy General Manager of Communications Group.

Ms. LUO Jianhu, born in 1971, graduated from the Department of Law at Hangzhou University with a bachelor's degree inlaw, majoring in Economic Law. She is a lawyer and senior economist. Ms. Luo has been appointed as an Executive Directorand the General Manager of the Company since June 2012. Since she started her career in August 1994, Ms. Luo had held such positions as the board secretary of ZhejiangTransportation Engineering Construction Group Co., Ltd., the deputy director, director of the Legal Affairs Department,the deputy director of the Secretarial Office to the board and the manager of the Investment and Development Departmentof Zhejiang Communications Investment Group Co., Ltd. Mr. DING Huikang, born in 1955, is a professor-level senior engineer, an Executive Director and Deputy General Managerof the Company. Mr. Ding graduated from Zhejiang Institute of Communications majoring in Road and Bridge Engineering andChangsha Institute of Communications, majoring in Economic Law. From 1980 to 1997, Mr. Ding successively held thepositions of technician, assistant engineer, engineer, assistant team leader and team leader at No.1 Road EngineeringTeam of Zhejiang Province. From 1997 to 2000, he served as General Manager and senior engineer of No.1 TransportationEngineering Co., Ltd. of Zhejiang Transportation Engineering Construction Group. From 2000 to 2004, he was head of themanagement committee of Zhejiang Ningbo Yongtaiwen Expressway Second Phase Project. He has been Chairman of ZhejiangNingbo Yongtaiwen Expressway Co., Ltd. and Zhejiang Zhoushan Cross-Sea Bridge Co., Ltd. since 2004 and 2006respectively. He has been serving as Executive Director and Deputy General Manager since August 2010. Non-Executive Directors Mr. LI Zongsheng, born in 1967, is a senior economist. Since Mr. Li graduated from the Department of Chinese Language atYanTai University in July 1991, he had served as the deputy director of the administrative office of the Commission forEconomy and Trade of Zaozhuang in Shandong Province and the head of the First Secretarial Division of ZaozhuangMunicipal Government Office. Since he joined Zhejiang Communications Investment Group Co., Ltd. in July 2004, he had successively held the positionsof the head and deputy director of the Chinese Communist Party Working Department, deputy director of the DisciplineOffice and the board secretary and deputy director of the Secretarial Office to the Board.

He is currently the manager of the Human Resources Department of Zhejiang Communications Investment Group Co. Ltd.

Mr. WANG Weili, born in 1965, graduated from Fuzhou University majoring in Road and Bridge. He is a senior engineer withprofessional certification.

Since he started his career in September 1987, Mr. Wang had served as an engineer of Zhejiang Transportation DesignInstitute, the vice director of Engineering Division of Executive Commission of Zhejiang Jinliwen Expressway Co., Ltd.and the deputy general manager and chief engineer of Zhejiang-Jiashao Expressway Co., Ltd. Since he joined ZhejiangCommunications Investment Group Co., Ltd. in May 2006, he had successively held the positions of the vice president ofProject Management Department, Security Management Department and Expressway Management Department and the deputydirector of the Expressway Construction Management Office.

He is currently the manager of the Expressway Management Department of Zhejiang Communications Investment Group Co. Ltd.

Mr. WANG Dongjie, born in 1977, graduated from Southeast University majoring in Highway and Railway Engineering with amaster's degree in engineering. He is a senior engineer.

Since he started his career in March 2002, Mr. Wang had served as an engineer of the Executive Commission of HangzhouRing Road North Line Project, the deputy executive chief of the Executive Commission for the interflow renovation ofHangzhou airport road, the Engineering Division Chief of Management Office of Chun'an section of Hangqian Expressway andthe director and deputy general manager of Hangzhou Transportation Road and Bridge Construction Company.

He joined Zhejiang Communications Investment Group Co., Ltd. in January 2007 and is currently the president of theInvestment and Development Department.

Independent Non-Executive Directors

Mr. ZHANG Junsheng, born in 1936, is a professor, Independent Non- executive Director and a member of the AuditCommittee and the Nomination and Remuneration Committee of the Company. Mr. Zhang graduated from Zhejiang University in1958, and was Lecturer, Associate Professor, and Advising Professor at Zhejiang University. He was also Professorconcurrently at, amongst other universities, Zhongshan University. In 1980, he became Deputy General Secretary ofZhejiang University. In 1983, Mr. Zhang served as Deputy General Secretary in the Hangzhou City Communist PartyCommittee. In 1985, he began to work for the Xinhua News Agency, Hong Kong Branch, and had become its Deputy Directorsince July, 1987 and was Consultant to the Sichuan Provincial Government and Senior Consultant to the Shenzhen MunicipalGovernment. Since September 1998, Mr. Zhang has taken up the position of General Secretary of Zhejiang University. From2003 to 2008, Mr. Zhang served as Director of the Zhejiang Province Economic Development Consultation Committee and heis currently Special Advisor to the Zhejiang Provincial Government, Chairman of Zhejiang University DevelopmentCommittee, Honorary Doctor of Science of City University of Hong Kong, Honorary Academician of Asian KnowledgeManagement Association and Honorary Professor of Canadian Chartered Institute of Business Administration. Mr. Zhang hasbeen Independent Non- executive Director of the Company since March 2000. Mr. ZHOU Jun, born in 1969, is the executive director and vice president of Shanghai Industrial Investment (Holdings)Co. Ltd. ("SIIC"). Mr. Zhou graduated from Nanjing University and Fudan University with a bachelor's degree and amaster's degree. He also serves as the chairman of S.I. Infrastructure Holdings Ltd. and eight other companies, theChairman of Asia Water Technology Ltd. in Singapore (SGX: 5GB), executive director and deputy CEO of Shanghai IndustrialHoldings Ltd. (HK: 0363), executive director of Shanghai Industrial Urban Development Group Ltd. (HK: 0563). He workedfor Guotai Securities Co., Ltd. (now Guotai Junan Securities Co.) before joining SIIC in April 1996. The managementpositions he had held within the SIIC group of companies were deputy general manager of SIIC Real Estate Holdings(Shanghai) Co., Ltd., deputy general manager of Shanghai United Holdings Co., Ltd. (SH: 600607), managing director ofShanghai Cyber Galaxy Investment Co., Ltd. and general manager of the Strategic Investment Department of SIIC. Mr. Zhouhas about 20 years' professional experience in general management, financial investment, real estate and projectplanning. Mr. PEl Ker-Wei, born in 1957, is a Professor of Accountancy and Executive Dean for China Region at W. P. Carey Schoolof Business, Arizona State University. Mr. Pei received his Ph.D. degree in Accounting from University of North Texas in1986. He is currently the director of W.P. Carey EMBA programs in China. He served as the chairman of the GlobalizationCommittee of the American Accounting Association in 1997 and as the president of the Chinese Accounting ProfessorsAssociation-North America in 1993 to 1994.

Mr. Pei currently serves as an external director of Baosteel Group and independent director of Want Want China Holdings(00151.hk) and Zhong An Real Estate (00672. hk).

SUPERVISORS

Supervisor Representing Shareholders

Mr. FU Zhexiang, born in 1958, graduated from Correspondence College of the Party Central School majoring in Economicswith a bachelor's degree. He is a senior accountant with professional certification.

Since he started his career in December 1976, Mr. Fu had served as the deputy chief of the Fee Collection Division ofHighway Inspection and Collection Bureau of Zhejiang Province and the deputy chief accountant of Zhejiang Xin Gan XianExpress Passenger Transportation Co., Ltd. Since he joined Zhejiang Communications Investment Group Co., Ltd. inFebruary 2002, he had successively held the positions of the assistant to manager of the Financial Audit Department andthe vice president of Financial Management Department and Internal Audit Department.

He is currently the manager and financial director of the Financial Management Department of Zhejiang CommunicationsInvestment Group Co., Ltd.

Independent Supervisors

Mr. WU Yongmin, born in 1963, is an Assistant Professor. Mr. Wu graduated from China University of Political Science andLaw with a master's degree.

He was the Deputy Dean of the Department of Law at Hangzhou University, Deputy Dean of the Department of Law at ZhejiangUniversity's Law School, and Director of Zheda Law Firm. Mr. Wu studied at the Christian-Albrechts-Universitat zu Kielin 1996 as a visiting scholar. He is currently the Dean of the Department of Law at the Law School of ZhejiangUniversity, a Supervisor for master's degree candidates in Business Law, a member of China Business Law ResearchCouncil, Deputy Director of Zhejiang Tax Law Research Council, an Arbitrator of Hangzhou Arbitration Committee, and aLawyer at Zhejiang Zeda Law Firm. Mr. LlU Haisheng, born in 1969, is a professor. He obtained a doctorate degree in Economics from Fudan University, apostdoctoral fellow in Accounting at Xiamen University. He is currently Professor in Accounting, a master studentsupervisor, a Certified Public Accountant (non-practicing) in the PRC, a member of the Expert Consultancy Committee ofAccounting Standards in Zhejiang Province, an Assessment Expert on Financial Expenditures Performance of ZhejiangProvince, an executive member of the Zhejiang Association of Certified Financial Officers and Independent Supervisor ofthe Company. He is currently a Vice Dean of the School of Finance and Accounting at Zhejiang Gongshang University. His main researchfields include accounting for intangible assets, strategic cost management and economic theories. Mr. LIU is alsoindependent director of Ningbo Thermal Power Co., Ltd, Zhejiang Qianjiang Motorcycle Co., Ltd and Zhejiang EnjoyorElectronics Co., Ltd. Mr. ZHANG Guohua, born in 1963, obtained a doctorate degree in human resources management. He is a senior economist andthe president of Ping An Bank, Hangzhou Branch. Mr. Zhang graduated from Hangzhou University in 1985 with a bachelor'sdegree in education and then received a master's degree in educational psychology in 1988. In 2000, he was granted theGraduate Certificate of Completion in finance by the School of Economics of Zhejiang University, and then obtained thedoctorate degree in psychology from the College of Science of Zhejiang University in 2007.

Since 1988, Mr. Zhang had successively worked in the headquarters of Industrial and Commercial Bank of China, HangzhouInstitute of Financial Managers, Hangzhou Financial Urban Credit Cooperative and China Everbright Bank, Hangzhou Branchand Wuxi Branch. Since February 2009, he has been the president of Ping An Bank, Hangzhou Branch.

Since July 10, 2008, he has served as an independent director of Zheshang Securities.

Supervisor Representing Employees

Ms. ZHANG Xiuhua, born in 1969, is a senior economist, the Supervisor representing employees of the Company. Ms. Zhanggraduated from Chongqing Jiaotong University majoring in transportation management with a bachelor's degree in science,and obtained a master's degree in business administration from Zhejiang University in 2006. From July 1991 to February 1997, she worked in the Operation Division of the Zhejiang Provincial Expressway ExecutiveCommission. She joined the Company since March 1997, and had served as assistant manager, deputy manager and manager ofthe Operation Department.

Ms. Zhang currently serves the Assistant to General Manager, she is also General Manager of Shengxin Co., the directorof Yuhang Co., Jiaxing Co., and Petroleum Co.

OTHER MEMBERS OF SENIOR MANAGEMENT

Mr. ZHANG Jingzhong, born in 1963, is a Senior Lawyer, the Deputy General Manager of the Company. Mr. Zhang graduatedfrom Zhejiang University (previously known as Hangzhou University) in July 1984 with a bachelor's degree in law.

In 1984, he joined the Zhejiang Provincial Political Science and Law Policy Research Unit. From 1988 to 1994, he wasAssociate Director of Hangzhou Municipal Foreign Economic Law Firm. In 1992, he obtained the qualifications required bythe regulatory authorities in China to practice securities law. In January 1994, Mr. Zhang became a Senior Partner atT&C Law Firm in Hangzhou.

Mr. Zhang has been an Executive Director and Company Secretary of the Company since March 1997, and was appointed DeputyGeneral Manager in March 2002. Mr. Zhang also serves as Director at Shangsan Co., Development Co., and Vice Chairman atZheshang Securities.

Mr. FANG Zhexing, born in 1965, is a Senior Engineer, the Deputy General Manager of the Company. Mr. Fang graduated fromZhejiang University where he received a master's degree in engineering in 1991.

From 1986 to 1988 he was the Assistant Engineer in the Project Management Office of the Electric Power and WaterConservancy Bureau in Taizhou. From 1991 until 1997, he was the Engineer in the Project Management Office of ZhejiangProvincial Expressway Executive Commission, where he participated in the project management of Shanghai-Hangzhou-NingboExpressway. Since March 1997, he has served as the Deputy Manager and the Manager of the Planning and Development Department, theManager of the Project Development Department, the Director of Quality Management Office, the Director of Internal AuditDepartment of the Company, the Manager of the Human Resources Department and the Secretary of Disciplinary Committee.Mr. Fang is currently the Chairman of Jiaxing Co., and director of Jinhua Co. Mr. WU Junyi, born in 1969, a holder of master degree in accounting, and is the Chief Financial Officer of the Company.Mr. Wu graduated from Xi'an Communications University in 1996. From 1996 to 1997, he was with the China Investment Bank,Hangzhou Branch. He joined the Company in May 1997, and has served as Manager of Securities Investment Department andManager of Planning and Finance Department. Mr. Tony H. ZHENG, born in 1969, is the Company Secretary of the Company. Mr. Zheng graduated from University ofCalifornia at Berkeley in 1995 with a BS degree in Civil Engineering. He joined the Company in June 1997, and has servedas Deputy Director of the Secretarial Office to the Board and Assistant Company Secretary. Mr. Zheng continues to serveas Director of the Secretarial Office to the Board, and Director of Hong Kong Representative Office of the Company. Report of the Directors

The Directors of the Company hereby present their report and the audited financial statements of the Group for the yearended December 31, 2012.

PRINCIPAL ACTIVITIES The principal activities of the Group comprise the operation, maintenance and management of high grade roads,development and operation of certain ancillary services, such as advertising, automobile servicing and fuel facilities,as well as provision of security broking service, margin financing and securities lending services and proprietarysecurities trading. SEGMENT INFORMATION During the Period, the revenue and segment profit of the Group were wholly derived from the People's Republic of China("PRC"). Accordingly, a further analysis of the revenue and segment profit by geographical area is not presented. Ananalysis of the Group's revenue and segment profit by principal activity for the year ended December 31, 2012 is set outin note 7 to the financial statements.

RESULTS AND DIVIDENDS

The Group's profit for the year ended December 31, 2012 and the state of financial position at that date are set out inthe financial statements.

An interim dividend of Rmb0.06 per share (approximately HK$0.07) was paid on November 16, 2012. The Directors recommendthe payment of a final dividend of Rmb0.24 per share (approximately HK$0.30) of the year to Shareholders. Thisrecommendation has been incorporated in the financial statements as an allocation of retained earnings within thecapital and reserves section in the consolidated statement of financial position. The dividend payout ratio reached77.3% during the Period. Further details of the dividends are set out in note 16 to the financial statements.

FIVE YEAR SUMMARY FINANCIAL INFORMATION

The following is a summary of the published consolidated results, and of the assets, liabilities and non-controllinginterests of the Group prepared on the basis set out in the notes below.

Year ended December 31, 2012 2011 2010 2009 2008Results Rmb'000 Rmb'000 Rmb'000 Rmb'000 Rmb'000 Revenue 6,700,258 6,781,352 6,769,064 6,036,294 6,323,470Operating costs (4,369,641) (4,077,403)

(3,760,494) (3,145,294) (3,133,244)---------------------------------------------------------------------------------------------------------Gross profit

2,330,617 2,703,949 3,008,570 2,891,000 3,190,226Security investment gains (loss) 99,783 7,925 126,532 35,967 (316,213)Other income 288,644 281,929 199,791 426,280 211,420Administrative expenses (82,092) (84,380) (83,189) (69,845) (70,003)Other expenses (46,154) (38,565) (21,904) (133,640) (38,947)Share of (loss) profit of associates (17,341) (7,035) 2,453 (24,164) 10,659Share of (loss) profit of jointly controlled entities (3,516) -- -- 21,254 23,746Finance costs (53,995) (80,043)

(120,979) (62,724) (76,809)---------------------------------------------------------------------------------------------------------Profit before tax

2,515,946 2,783,780 3,111,274 3,084,128 2,934,079Income tax expense (646,864) (717,838)

(798,785) (840,055) (668,928)---------------------------------------------------------------------------------------------------------Profit for the year

1,869,082 2,065,942 2,312,489 2,244,073 2,265,151---------------------------------------------------------------------------------------------------------Attributable to:Owners of the Company 1,686,270 1,805,345 1,871,499 1,795,488 1,892,787Non-controlling interests 182,812 260,597 440,990 448,585 372,364---------------------------------------------------------------------------------------------------------Earnings per share - Basic and diluted 38.83 cents 41.57 cents 43.09 cents 41.34 cents 43.58 cents--------------------------------------------------------------------------------------------------------- As at December 31, 2012 2011 2010 2009 2008Assets and liabilities Rmb'000 Rmb'000 Rmb'000 Rmb'000 Rmb'000 Total assets 29,445,381 29,132,959

33,652,055 32,402,781 25,287,521---------------------------------------------------------------------------------------------------------Total liabilities

(10,429,106) (10,533,859)

(15,956,940) (15,337,927) (8,990,253)---------------------------------------------------------------------------------------------------------Net assets

19,016,275 18,599,100 17,695,115 17,064,854 16,297,268---------------------------------------------------------------------------------------------------------

Notes:

1. The consolidated results of the Group for the four years ended December 31, 2011 have been extracted

from the Company's 2011 annual report dated March 30, 2012, while those of the year ended December 31,

2012 were prepared based on the consolidated statement of comprehensive income as set out on the later

part of this financial statements.

2. The 2012 earnings per share is based on the profit attributable to owners of the Company for the year

ended December 31, 2012 of Rmb1,686,270,000 (2011: Rmb1,805,345,000) and the 4,343,114,500 (2011:

4,343,114,500) ordinary shares in issue during the year.

3. Differences in Financial Statements prepared under PRC GAAP and HKFRSs

Profit for the year Net assets ended December 31, as at December 31, 2012 2011 2012 2011 Rmb'000 Rmb'000 Rmb'000 Rmb'000

As reported in the statutory financial

statements of the Group prepared in

accordance with PRC GAAP 1,877,675 2,073,734 19,264,630 18,838,862HK GAAP adjustments:(a) Goodwill -- -- (199,769) (199,769)(b) Amortization provided, net of deferred tax (1,952) (1,952) (161,204) (159,252)(c) Assessment on impact of appreciation, net of deferred tax (3,547) (3,116) 63,764 67,311(d) Others (7) -- 6,597 6,604(e) Non-controlling interests (3,087)

(2,724) 42,257 45,344---------------------------------------------------------------------------------------------------------As restated in the financial statements

1,869,082 2,065,942 19,016,275 18,599,100---------------------------------------------------------------------------------------------------------

MAJOR CUSTOMERS AND SUPPLIERS

In the year under review, the five largest customers and suppliers of the Group accounted for less than 30% of the totalturnover and purchases, respectively.

None of the Directors of the Company or any of their associates or any Shareholders (which, to the best knowledge of theDirectors, own more than 5% of the Company's issued share capital) had any beneficial interest in the Group's fivelargest customers. RELATED PARTY TRANSACTIONS

During the year, details of the related party transactions that the Company has entered into with its subsidiary andfellow subsidiary are set out in note 47 to the financial statements.

PROPERTY, PLANT AND EQUIPMENT

Details of movements in property, plant and equipment of the Group during the year are set out in note 18 to thefinancial statements.

CAPITAL COMMITMENTS

Details of the capital commitments of the Group as at December 31, 2012 are set out in note 45 to the financialstatements.

RESERVES

Details of movements in the reserves of the Group during the year are set out in the consolidated statement of changesin equity to the financial statements.

DISTRIBUTABLE RESERVES

As at December 31, 2012, before the proposed final dividend, the Company's reserves available for distribution by way ofcash or in kind, as determined based on the lower of the amount determined under PRC accounting standards and the amountdetermined under HK GAAP, amounted to Rmb1,952,740,000. In addition, in accordance with the Company Law of the PRC, theamount of approximately Rmb3,645,726,000 standing to the credit of the Company's share premium account as prepared inaccordance with the PRC accounting standards was available for distribution by way of capitalization issues.

TRUST DEPOSITS

As at December 31, 2012, the Group did not have any trust deposits with any non-bank financial institution in the PRC.All of the Group's deposits have been placed with commercial banks in the PRC and the Group has not encountered anydifficulty in the withdrawal of funds.

PURCHASE, REDEMPTION OR SALE OF THE LISTED SECURITIES OF THE COMPANY

Neither the Company nor any of its subsidiaries purchased, redeemed or sold any of the Company's listed securitiesduring the year.

DIRECTORS

The Directors of the Company during the year and as at the date of this report are:

EXECUTIVE DIRECTORS Mr. ZHAN Xiaozhang (Chairman)Mr. CHEN Jisong (Chairman, retired)Ms. LUO Jianhu (General Manager)Mr. JIANG Wenyao (retired)Mr. ZHANG Jingzhong (retired)Mr. DING Huikang NON-EXECUTIVE DIRECTOR Ms. ZHANG Luyun (retired)Mr. LI ZongshengMr. WANG WeiliMr. WANG Dongjie

INDEPENDENT NON-EXECUTIVE DIRECTORS

Mr. TUNG Chee Chen (retired)Mr. ZHANG JunshengMr. ZHANG Liping (retired)Mr. ZHOU JunMr. PEI Ker-Wei

DIRECTORS' AND SENIOR MANAGEMENT'S BIOGRAPHIES

Biographical details of the Directors of the Company and the senior management of the Group are set out earlier in thisCompany's annual report.

DIRECTORS' SERVICE CONTRACTS

Each of the Directors of the Company has entered into a service agreement with the Company, with effect from June 11,2012, to June 30, 2015.

Save as disclosed above, none of the Directors and Supervisors has entered into any service contract with the Companywhich is not terminable by the Company within one year without payment of compensation, other than statutorycompensation.

DIRECTORS' AND SUPERVISORS' INTERESTS IN CONTRACTS

As at December 31, 2012 or during the year, none of the Directors or Supervisors had a material interest, eitherdirectly or indirectly, in any contract of significance to the business of the Group to which the Company, its holdingcompany, or any of its subsidiaries or fellow subsidiaries was a party.

DIRECTORS, SUPERVISORS AND CHIEF EXECUTIVE'S RIGHTS TO SUBSCRIBE FOR SHARES OR DEBENTURES

At no time during the year were there rights to acquire benefits by means of the acquisition of shares in or debenturesof the Company granted to any Director, Supervisor and chief executive or their respective spouse or minor children, orwere any such rights exercised by them; or was the Company, its holding company, or any of its subsidiaries or fellowsubsidiaries a party to any arrangement to enable any such persons to acquire such rights in any other body corporate.

SHARE CAPITAL

There were no movements in the Company's issued share capital during the year.

PRE-EMPTIVE RIGHTS

There is no provision for pre-emptive rights in the Company's Articles of Association or the laws of the PRC whichwould require the Company to offer new shares on a pro rata basis to existing shareholders.

TAXATION AND TAX RELIEF According to a Notice issued jointly by PRC Ministry of Finance and State Administration of Taxation regardingindividual income tax policies (Caishuizi [1994] No.020), the dividend incomes received by foreign individuals from aforeign-invested enterprise are exempt from individual income tax. As stipulated by a Notice issued by the PRC State Administration of Taxation in relation to the withholding and paymentof enterprise income tax by Chinese resident enterprises for payment of dividend to H shareholders who are overseasnon-resident enterprises (Guoshuihan [2008] No. 897), the Company as a Chinese resident enterprises is required towithhold 10% enterprise income tax when it distributes dividends for the year 2008 and thereafter to all non-residententerprise holders of H shares of the Company (including HKSCC Nominees Limited, other nominees, trustees or otherentities and organizations, who will be deemed as non-resident enterprise holders of H shares) whose names appear onthe H share register of members of the Company on the record date.

Under current practice of the Hong Kong Inland Revenue Department, no tax is payable in Hong Kong in respect ofdividends paid by the Company.

Shareholders are taxed or enjoy tax relief in accordance with the aforementioned regulations.

AUDITORS Deloitte Touche Tohmatsu Certified Public Accountants Hong Kong, who had served as the Company's Hong Kong auditorssince 2005, will retire and a resolution for their reappointment as Hong Kong auditors of the Company will be proposedat the forthcoming Annual General Meeting of the shareholders. By Order of the BoardZHAN XiaozhangChairman Hangzhou, Zhejiang Province, the PRCMarch 19, 2013

Report of the Supervisory Committee

During the Period, the Supervisory Committee duly performed its supervisory responsibilities, and safeguarded thelegitimate interests of the shareholders and the Company in accordance with relevant rules and regulations under theCompany Law of the PRC, the Company's Articles of Association and the Rules of the Supervisory Committee. Main tasks undertaken by the Supervisory Committee during the Period were to assess and supervise lawfulness andappropriateness of the activities of the Directors, General Manager and other senior management of the Company in theirbusiness decision-making and daily management processes, through a combination of activities including holding meetingsof the Supervisory Committee and attending general meetings of shareholders and meetings of the Board. The SupervisoryCommittee has carefully examined the operating results and the financial standing of the Company, discussed and reviewedthe financial statements to be submitted by the Board to the general meeting of shareholders.

During the Period, the Supervisory Committee held two meetings of its own, and attended six meetings held by the Boardand two general meetings of shareholders.

The Supervisory Committee observes that during the Period, faced with multiple factors such as slower traffic volumegrowth rates resulting from slower economic growth rates, changes in government policies, increased industrialstandards, and lackluster stock market, maintaining the Company's profit growth was becoming increasingly difficult.Under the leadership of the Board, the management, key members and the entire staff of the Company rose up to thechallenges with enthusiasm and hard work, focusing on development through transformation, safe and smooth operatingconditions, lowering costs while growing revenues through innovations and plugging leaks, while actively promoted newsecurities businesses and pushed on with the spin-off process amid unfavourable capital market conditions, achievingnew progress in various aspects of the business, and fully realized the Company's operating targets. The Supervisory Committee has reviewed the financial statements of the Company for 2012 prepared by the Board forsubmission to the general meeting of shareholders, and concluded that the financial statements accurately reflected thefinancial position of the Company in 2012, and complied with the relevant laws, regulations and the Company's Articlesof Association. Despite that the annual results have declined slightly, the Company nevertheless maintained a highdividend payout ratio in recent years, thereby maintaining a stable long term dividend payout policy and providingsatisfactory return to its shareholders. During the Period, the members of the Board, General Manager and other senior management of the Company have compliedwith their fiduciary duties and have acted in good faith and diligently while carrying out their responsibilities.There were no incident of abuse of power or infringement of the interests of shareholders or employees.

The Supervisory Committee is satisfied with the performances across various lines of business achieved by the Board andthe management of the Company.

By the order of the Supervisory CommitteeFU ZhexiangChairman of the Supervisory Committee Hangzhou, Zhejiang Province, the PRCMarch 18, 2013 Independent Auditor's Report TO THE MEMBERS OF ZHEJIANG EXPRESSWAY CO., LTD.(Incorporated in the People's Republic of China with limited liability) We have audited the consolidated financial statements of Zhejiang Expressway Co., Ltd. (the "Company") and itssubsidiaries (collectively referred to as the "Group"), which comprise the consolidatedstatement of financial position as at December 31, 2012, and the consolidated statement of comprehensive income,consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, and asummary of significant accounting policies and other explanatory information.

Directors' Responsibility for the Consolidated Financial Statements

The directors of the Company are responsible for the preparation of consolidated financial statements that give a trueand fair view in accordance with Hong Kong Financial Reporting Standards issued by the Hong Kong Institute of CertifiedPublic Accountants and the disclosure requirements of the Hong Kong Companies Ordinance, and for such internal controlas the directors determine is necessary to enable the preparation of consolidated financial statements that are freefrom material misstatement, whether due to fraud or error.

Auditor's Responsibility

Our responsibility is to express an opinion on these consolidated financial statements based on our audit and to reportour opinion solely to you, as a body, in accordance with our agreed terms of engagement, and for no other purpose. Wedo not assume responsibility towards or accept liability to any other person for the contents of this report. Weconducted our audit in accordance with Hong Kong Standards on Auditing issued by the Hong Kong Institute of CertifiedPublic Accountants. Those standards require that we comply with ethical requirements and plan and perform the audit toobtain reasonable assurance about whether the consolidated financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidatedfinancial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risksof material misstatement of the consolidated financial statements, whether due to fraud or error. In making those riskassessments, the auditor considers internal control relevant to the entity's preparation of consolidated financialstatements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances,but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit alsoincludes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates madeby the directors, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our auditopinion.

Opinion

In our opinion, the consolidated financial statements give a true and fair view of the state of affairs of the Group asat December 31, 2012, and of the Group's profit and cash flows for the year then ended in accordance with Hong KongFinancial Reporting Standards and have been properly prepared in accordance with the disclosure requirements of the HongKong Companies Ordinance. Deloitte Touche TohmatsuCertified Public AccountantsHong KongMarch 19, 2013

Consolidated Statement of Comprehensive Income

For the year ended December 31, 2012

NOTES 2012 2011 Rmb'000 Rmb'000 Revenue 7 6,700,258 6,781,352Operating costs (4,369,641) (4,077,403)------------------------------------------------------------------------------------------------- Gross profit 2,330,617 2,703,949Securities investment gains 8 99,783 7,925Other income 9 288,644 281,929Administrative expenses (82,092) (84,380)Other expenses (46,154) (38,565)Share of loss of associates (17,341) (7,035)Share of loss of a jointly controlled entity (3,516) --Finance costs 10 (53,995) (80,043)------------------------------------------------------------------------------------------------- Profit before tax 11 2,515,946 2,783,780Income tax expense 12 (646,864) (717,838)------------------------------------------------------------------------------------------------- Profit for the year 1,869,082 2,065,942------------------------------------------------------------------------------------------------- Other comprehensive income (loss) 13

Available-for-sale financial assets:

-- Fair value gain (loss) during the year 4,800 (9,746)

-- Reclassification adjustments for cumulative

gain included in profit or loss upon disposal (175) (4,072)

Income tax relating to components of other

comprehensive income (1,156) 3,455

-------------------------------------------------------------------------------------------------

Other comprehensive income (loss) for the year

(net of tax) 3,469 (10,363)

-------------------------------------------------------------------------------------------------

Total comprehensive income for the year

1,872,551 2,055,579-------------------------------------------------------------------------------------------------Profit for the year attributable to:

Owners of the Company

1,686,270 1,805,345

Non-controlling interests 182,812 260,597

-------------------------------------------------------------------------------------------------

1,869,082 2,065,942-------------------------------------------------------------------------------------------------

Total comprehensive income attributable to:

Owners of the Company

1,688,079 1,799,941

Non-controlling interests 184,472 255,638

-------------------------------------------------------------------------------------------------

1,872,551 2,055,579------------------------------------------------------------------------------------------------- EARNINGS PER SHARE - Basic and diluted 17 Rmb38.83 cents Rmb41.57 cents-------------------------------------------------------------------------------------------------

Consolidated Statement of Financial Position

At December 31, 2012 NOTES 2012 2011 Rmb'000 Rmb'000 NON-CURRENT ASSETSProperty, plant and equipment 18 1,357,844 1,294,465Prepaid lease payments 19 66,931 68,983Expressway operating rights 20 10,732,058 11,364,938Goodwill 21 86,867 86,867Other intangible assets 22 155,633 157,594Deposit paid for acquisition of a property 23 -- 323,800Interests in associates 25 465,513 446,679Interest in a jointly controlled entity 26 369,954 --Available-for-sale investments 27 133,000 1,000Other receivables 30 325,035 382,000

-------------------------------------------------------------------------------------------------

13,692,835 14,126,326------------------------------------------------------------------------------------------------- CURRENT ASSETSInventories 27,418 26,400Trade receivables 28 57,847 48,013

Loans to customers arising from margin

financing business 29 724,123 --Other receivables and prepayments 30 701,627 844,142Prepaid lease payments 19 2,052 2,052Available-for-sale investments 27 134,899 60,274Held for trading investments 31 1,486,772 1,260,021Financial assets held under resale agreement 32 280,066 --Bank balances held on behalf of customers 33 7,491,625 7,177,508Bank balances and cash

-- Time deposits with original maturity

over three months 34

1,483,408 2,467,793

-- Cash and cash equivalents 34 3,362,709 3,120,430------------------------------------------------------------------------------------------------- 15,752,546 15,006,633------------------------------------------------------------------------------------------------- CURRENT LIABILITIESAccounts payable to customers arising from securities business 35 7,481,819 7,143,067Trade payables 36 378,364 317,188Tax liabilities 223,592 491,619Other taxes payable 53,082 61,753Other payables and accruals 37 973,031 724,216Dividends payable 94,998 94,971Long-term bonds due in one-year 41 1,000,000 --Bank loans 38 -- 462,553Derivative financial instrument 40 -- 6,426

-------------------------------------------------------------------------------------------------

10,204,886 9,301,793------------------------------------------------------------------------------------------------- NET CURRENT ASSETS 5,547,660 5,704,840------------------------------------------------------------------------------------------------- TOTAL ASSETS LESS CURRENT LIABILITIES 19,240,495 19,831,166------------------------------------------------------------------------------------------------- NON-CURRENT LIABILITIESLong-term bonds 41 -- 1,000,000Deferred tax liabilities 42 224,220 232,066

-------------------------------------------------------------------------------------------------

224,220 1,232,066------------------------------------------------------------------------------------------------- 19,016,275 18,599,100------------------------------------------------------------------------------------------------- CAPITAL AND RESERVESShare capital 43 4,343,115 4,343,115Reserves 11,177,137 10,835,424------------------------------------------------------------------------------------------------- Equity attributable to owners of the Company 15,520,252 15,178,539Non-controlling interests 3,496,023 3,420,561------------------------------------------------------------------------------------------------- 19,016,275 18,599,100-------------------------------------------------------------------------------------------------

The consolidated financial statements were approved and authorised for issue by the board ofdirectors on March 19, 2013 and are signed on its behalf by:

ZHAN Xiaozhang LUO Jianhu DIRECTOR DIRECTOR

Consolidated Statement of Changes in Equity

For the year ended December 31, 2012

Attributable to owners of the Company---------------------------------------------------------------------------------------------------------------------- Statutory Investment Share Share reserves Capital revaluation Dividend capital premium (Note) reserve reserve reserve Rmb'000 Rmb'000 Rmb'000 Rmb'000 Rmb'000 Rmb'000 At January 1, 2011 4,343,115 3,645,726 2,727,900 -- 3,849 1,085,779Profit for the year -- -- -- -- -- --Other comprehensive loss for the year -- --

-- -- (5,404) ------------------------------------------------------------------------------------------------------------------------Total comprehensive income for the year

-- -- -- -- (5,404) ------------------------------------------------------------------------------------------------------------------------ Dividend paid to non-controlling interests -- -- -- -- -- --Capital injection -- -- -- 1,712 -- --Interim dividend -- -- -- -- -- --Final dividend -- -- -- -- -- (1,085,779)Proposed final dividend -- -- -- -- -- 1,085,779Transfer to reserves -- -- 240,734 -- -- --

----------------------------------------------------------------------------------------------------------------------

At December 31, 2011 4,343,115 3,645,726 2,968,634 1,712 (1,555) 1,085,779Profit for the year -- -- -- -- -- --Other comprehensive income for the year -- --

-- -- 1,809 ------------------------------------------------------------------------------------------------------------------------Total comprehensive income for the year

-- --

-- -- 1,809 ------------------------------------------------------------------------------------------------------------------------Dividend paid to non-controlling interests

-- -- -- -- -- --Interim dividend -- -- -- -- -- --Final dividend -- -- -- -- -- (1,085,779)Proposed final dividend -- -- -- -- -- 1,042,347Transfer to reserves -- -- 258,877 -- -- --

----------------------------------------------------------------------------------------------------------------------

At December 31, 2012 4,343,115 3,645,726 3,227,511 1,712 254 1,042,347---------------------------------------------------------------------------------------------------------------------- - Cont'd - Attributable to owners of the Company--------------------------------------------------------------------------------------------------------------- Non- Special etained controlling reserve profits Total interests Total Rmb'000 Rmb'000 Rmb'000 Rmb'000 Rmb'000 At January 1, 2011 18,666 2,898,217 14,723,252 2,971,863 17,695,115Profit for the year -- 1,805,345 1,805,345 260,597 2,065,942Other comprehensive loss for the year -- -- (5,404) (4,959) (10,363)---------------------------------------------------------------------------------------------------------------Total comprehensive income for the year -- 1,805,345 1,799,941 255,638 2,055,579---------------------------------------------------------------------------------------------------------------Dividend paid to non-controlling interests -- -- -- (143,582) (143,582)Capital injection -- -- 1,712 336,642 338,354Interim dividend -- (260,587) (260,587) -- (260,587)Final dividend -- -- (1,085,779) -- (1,085,779)Proposed final dividend -- (1,085,779) -- -- --Transfer to reserves -- (240,734) -- -- --

---------------------------------------------------------------------------------------------------------------

At December 31, 2011 18,666 3,116,462 15,178,539 3,420,561 18,599,100Profit for the year -- 1,686,270 1,686,270 182,812 1,869,082Other comprehensive income for the year -- -- 1,809 1,660 3,469

---------------------------------------------------------------------------------------------------------------

Total comprehensive income for the year -- 1,686,270 1,688,079 184,472 1,872,551---------------------------------------------------------------------------------------------------------------Dividend paid to non-controlling interests -- -- -- (109,010) (109,010)Interim dividend -- (260,587) (260,587) -- (260,587)Final dividend -- -- (1,085,779) -- (1,085,779)Proposed final dividend -- (1,042,347) -- -- --Transfer to reserves -- (258,877) -- -- --

---------------------------------------------------------------------------------------------------------------

At December 31, 2012 18,666 3,240,921 15,520,252 3,496,023 19,016,275---------------------------------------------------------------------------------------------------------------

Note: Statutory reserves comprise:

(a) Statutory surplus reserve

In accordance with the Company Law of the People's Republic of

China (the "PRC") and the respective articles

of association of the Company and its subsidiaries (collectively

the "Entities"), the Entities are required

to allocate 10% of the profit after tax, as determined in

accordance with the PRC accounting standards and

regulations applicable to the Entities, to the statutory surplus

reserve until such reserve reaches 50% of

the registered capital of the respective Entities. Subject to

certain restrictions set out in the Company

Law of the PRC and the respective articles of association of the

Entities, part of the statutory surplus

reserve may be converted to increase the respective Entities'

capital.

(b) General risk reserve

In accordance with the Finance Regulation for Financial

Enterprises, securities companies are required to

allocate 10% of the profit after tax, as determined in

accordance with the PRC accounting standards and

regulations, to the general risk reserve. This general risk

reserve may be used to cover potential losses on

risk exposures. (c) Transaction risk reserve In accordance with the Securities Law of the PRC, securities

companies are required to allocate not less

than 10% of the profit after tax, as determined in accordance

with the PRC accounting standards and

regulations, to the transaction risk reserve. This transaction

risk reserve may be used to cover potential

losses on securities transactions.

Consolidated Statement of Cash Flows

For the year ended December 31, 2012

2012 2011 Rmb'000 Rmb'000 OPERATING ACTIVITIESProfit before tax 2,515,946 2,783,780Adjustments for: Finance costs 53,995 80,043 Interest income (178,899) (141,187) Share of loss of associates 17,341 7,035 Share of loss of a jointly controlled entity 3,516 -- Depreciation of property, plant and equipment 155,330 154,557 Amortisation of expressway operating rights 693,610 691,370 Amortisation of prepaid lease payments 2,052 2,052 Amortisation of other intangible assets 16,248 13,653 Fair value changes on derivative financial instrument (2,841) 6,426 Gain on disposal of available-for-sale investments (175) (4,072) Gain on disposal of associate (12) --

Gain on fair value changes on held for trading investments (99,608)

(3,853) Loss (gain) on disposal of property, plant and equipment 6,195 (56) Reversal of provisions -- (21,238) Impairment loss of interest in an associate -- 11,979

-------------------------------------------------------------------------------------------------

Operating cash flows before movements in working capital 3,182,698 3,580,489Increase in inventories (1,018) (8,685)(Increase) decrease in trade receivables (9,834) 2,755(Increase) decrease in other receivables (5,493) 12,634Increase in held for trading investments (127,143) (452,396)Increase in loans to customers arising from margin financing business (724,123) --

(Increase) decrease in bank balances held on behalf of customers (314,117) 4,508,443Increase (decrease) in accounts payable to customers arising from

securities business 338,752 (4,487,963)Increase (decrease) in trade payables 61,176 (231,507)(Decrease) increase in other taxes payable (8,671) 10,751Decrease in derivative financial instruments (3,585) --Increase in other payables and accruals 128,591 140,802

-------------------------------------------------------------------------------------------------

Cash generated from operations 2,517,233 3,075,323Income taxes paid (923,893) (709,945)Interest paid

(55,633) (79,449)-------------------------------------------------------------------------------------------------NET CASH FROM OPERATING ACTIVITIES

1,537,707 2,285,929-------------------------------------------------------------------------------------------------

Consolidated Statement of Cash Flows

For the year ended December 31, 2012

NOTES 2012 2011 Rmb'000 Rmb'000 INVESTING ACTIVITIESInterest received 155,890 129,093Acquisition of a jointly controlled entity (184,140) --Additional contribution in an associate (50,000) --Proceed on disposal of associates 4,906 --Dividends received from associates 6,500 7,217

Proceeds on disposal of property, plant and

equipment 1,169 7,632Repayment of entrusted loans from related parties 337,482 570,471Repayment of entrusted loan from third parties 300,000 260,000Entrusted loans to related parties (310,000) (690,000)Entrusted loan to a third party -- (500,000)Loan to an associate -- (82,000)Purchases of financial products investment (1,069,500) --Settlement of financial products investment 970,000 --Purchases of property, plant and equipment (351,840) (312,910)Addition in expressway operating rights -- (136,000)Purchases of intangible assets (14,287) (16,227)Refund (Payment) of deposit paid for acquisition of a property 323,800 (323,800)Purchase of available-for-sale investments (204,388) (4,200)

Proceeds on disposal of available-for-sale

investments 2,563 12,000

Repayment of financial assets held under resale

agreement -- 80,163

Advance of financial assets held under resale

agreement (280,066) --Decrease (increase) in time deposits 984,385 (2,142,248)Deferred consideration on disposal of a jointly controlled entity -- 115,000

Dividend received from a former jointly

controlled entity -- 53,000

-------------------------------------------------------------------------------------------------

NET CASH FROM (USED IN) INVESTING ACTIVITIES 622,474 (2,972,809)-------------------------------------------------------------------------------------------------FINANCING ACTIVITIESDividends paid (1,346,366) (1,346,366)Dividends paid to non-controlling shareholders (108,983) (168,930)New bank loans raised -- 462,553Repayment of bank and other loans

(462,553) (822,000)-------------------------------------------------------------------------------------------------NET CASH USED IN FINANCING ACTIVITIES

(1,917,902) (1,874,743)-------------------------------------------------------------------------------------------------NET INCREASE (DECREASE) IN CASH AND

CASH EQUIVALENTS 242,279 (2,561,623)CASH AND CASH EQUIVALENTS AT JANUARY 1

3,120,430 5,682,053-------------------------------------------------------------------------------------------------CASH AND CASH EQUIVALENTS AT DECEMBER 31

32 3,362,709 3,120,430------------------------------------------------------------------------------------------------- Notes to the ConsolidatedFinancial Statements

For the year ended December 31, 2012

1. CORPORATE INFORMATION

Zhejiang Expressway Co., Ltd. (the "Company") was established in the People's Republic of China (the "PRC") withlimited liability on March 1, 1997. The H shares of the Company ("H Shares") were subsequently listed on The StockExchange of Hong Kong Limited (the "Stock Exchange") on May 15, 1997.

All of the H Shares of the Company were admitted to the Official List of the United Kingdom Listing Authority(the "Official List"). Dealings in the H Shares on the London Stock Exchange commenced on May 5, 2000.

On July 18, 2000, with the approval of the Ministry of Foreign Trade and Economic Co-operation of the PRC, theCompany changed its business registration into a Sino-foreign joint stock limited company.

On February 14, 2002, the United States Securities and Exchange Commission, following the approval by the Board ofDirectors and the China Securities Regulatory Commission, declared the registration statement in respect of theAmerican Depositary Shares ("ADSs") evidenced by the American Depositary Receipts ("ADRs") representing thedeposited H Shares of the Company effective.

In the opinion of the directors, the immediate and ultimate holding company of the Company is Zhejiang CommunicationsInvestment Group Co., Ltd. (the "Communications Group"), a state-owned enterprise established in the PRC.

The addresses of the registered office and principal place of business of the Company are disclosed in the corporateinformation section of the annual report.

The consolidated financial statements are presented in Renminbi ("Rmb"), which is also the functional currency ofthe Company.

The Company is an investment holding company. The Company and its subsidiaries (collectively referred as the "Group")are involved in the following principal activities:

(a) the operation, maintenance and management of high grade roads;

(b) the development and provision of certain ancillary services such as advertising, automobile servicing and fuelfacilities; and

(c) the provision of securities broking services, margin financing and securities lending services and proprietarytrading.

2. APPLICATION OF NEW AND REVISED HONG KONG FINANCIAL REPORTING STANDARDS ("HKFRSs")

New and revised HKFRSs applied in the current year

In the current year, the Group has applied the following revised HKFRSs issued by the Hong Kong Institute of CertifiedPublic Accountants (the "HKICPA").

Amendments to HKAS 12 Deferred Tax: Recovery of Underlying Asset; and Amendments to HKFRS 7 Financial Instruments: Disclosures -- Transfers of Financial Assets

The application of the amendments to HKFRSs in the current year has had no material impact on the Group's financialperformance and positions for the current and prior years and/or on the disclosures set out in these consolidated financialstatements.

New and revised HKFRSs issued but not yet effective

The Group has not early applied the following new and revised HKFRSs that have been issued but are not yet effective:

Amendments to HKFRSs Annual Improvements to HKFRSs 2009 -- 2011 Cycle (Note 1) Amendments to HKFRS 7 Disclosures -- Offsetting Financial

Assets and Financial Liabilities (Note 1)

Amendments to HKFRS 9 and HKFRS 7 Mandatory Effective Date of HKFRS 9 and Transition Disclosures (Note 3)

Amendments to HKFRS 10, HKFRS 11 Consolidated Financial Statements, Joint Arrangements and Disclosure of Interests

and HKFRS 12 in Other Entities: Transition

Guidance (Note 1)

Amendments to HKFRS 10, HKFRS 12 Investment Entities (Note 2)

and HKAS 27 HKFRS 9 Financial Instruments (Note 3) HKFRS 10 Consolidated Financial Statements (Note 1) HKFRS 11 Joint Arrangements (Note 1) HKFRS 12 Disclosure of Interests in Other Entities (Note 1) HKFRS 13 Fair Value Measurement (Note 1) HKAS 19 (as revised in 2011) Employee Benefits (Note 1) HKAS 27 (as revised in 2011) Separate Financial Statements (Note

1)

HKAS 28 (as revised in 2011) Investments in Associates and Joint

Ventures (Note 1)

Amendments to HKAS 1 Presentation of Items of Other

Comprehensive Income (Note 4)

Amendments to HKAS 32 Offsetting Financial Assets and

Financial Liabilities (Note 2)

HK(IFRIC) -- Int 20 Stripping Costs in the Production

Phase of a Surface Mine (Note 1)

Note 1: Effective for annual periods beginning on or after January 1, 2013.

Note 2: Effective for annual periods beginning on or after January 1, 2014.

Note 3: Effective for annual periods beginning on or after January 1, 2015.

Note 4: Effective for annual periods beginning on or after July 1, 2012.

Annual Improvements to HKFRSs 2009 -- 2011 Cycle issued in June 2012

The Annual Improvements to HKFRSs 2009 -- 2011 Cycle include a number of amendments to various HKFRSs. The amendmentsare effective for annual periods beginning on or after 1 January 2013. Amendments to HKFRSs include the amendmentsto HKAS 1 Presentation of Financial Statements, amendments to HKAS 16 Property, Plant and Equipment and the amendmentsto HKAS 32 Financial Instruments: Presentation. HKAS 1 requires an entity that changes accounting policies retrospectively, or makes a retrospective restatementor reclassification to present a statement of financial position as at the beginning of the preceding period(third statement of financial position). The amendments to HKAS 1 clarify that an entity is required to present athird statement of financial position only when the retrospective application, restatement or reclassification hasa material effect on the information in the third statement of financial position and that related notes are notrequired to accompany the third statement of financial position. The amendments to HKAS 16 clarify that spare parts, stand-by equipment and servicing equipment should be classifiedas property, plant and equipment when they meet the definition of property, plant and equipment in HKAS 16 and asinventory otherwise. The directors do not anticipate that the application of the amendments will have a materialeffect on the Group's consolidated financial statements. The amendments to HKAS 32 clarify that income tax on distributions to holders of an equity instrument and transactioncosts of an equity transaction should be accounted for in accordance with HKAS 12 Income Taxes. The directors anticipatethat the amendments to HKAS 32 will have no effect on the Group's consolidated financial statements as the Grouphas already adopted this treatment.

Amendments to HKAS 32 Offsetting Financial Assets and Financial Liabilities and amendments to HKFRS 7 Disclosures --Offsetting Financial Assets and Financial Liabilities

The amendments to HKAS 32 clarify existing application issues relating to the offset of financial assets and financialliabilities requirements. Specifically, the amendments clarify the meaning of "currently has a legally enforceable rightof set-off" and "simultaneous realisation and settlement". The amendments to HKFRS 7 require entities to disclose information about rights of offset and related arrangements(such as collateral posting requirements) for financial instruments under an enforceable master netting agreementor similar arrangement. The amendments to HKFRS 7 are effective for annual periods beginning on or after January 1, 2013 and interim periodswithin those annual periods. The disclosures should also be provided retrospectively for all comparative periods.However, the amendments to HKAS 32 are not effective until annual periods beginning on or after January 1, 2014,with retrospective application required.

The directors anticipate that the application of these amendments to HKAS 32 and HKFRS 7 may result in more disclosuresbeing made with regard to offsetting financial assets and financial liabilities in the future.

HKFRS 9 Financial Instruments HKFRS 9 issued in 2009 introduces new requirements for the classification and measurement of financial assets. HKFRS 9amended in 2010 includes the requirements for the classification and measurement of financial liabilities and forderecognition.

Key requirements of HKFRS 9 are described as follows:

-- All recognised financial assets that are within the scope of HKAS 39 Financial Instruments: Recognition and

Measurement are subsequently measured at amortised cost or fair value. Specifically, debt investments that are

held within a business model whose objective is to collect the contractual cash flows, and that have

contractual cash flows that are solely payments of principal and interest on the principal outstanding are

generally measured at amortised cost at the end of subsequent accounting periods. All other debt investments

and equity investments are measured at their fair values at the end of subsequent reporting periods. In

addition, under HKFRS 9, entities may make an irrevocable election to present subsequent changes in the fair

value of an equity investment (that is not held for trading) in other comprehensive income, with only dividend

income generally recognised in profit or loss.

-- With regard to the measurement of financial liabilities designated as at fair value through profit or loss,

HKFRS 9 requires that the amount of change in the fair value of the financial liability that is attributable

to changes in the credit risk of that liability is presented in other comprehensive income, unless the

recognition of the effects of changes in the liability's credit risk in other comprehensive income would

create or enlarge an accounting mismatch in profit or loss. Changes in fair value of financial liabilities

attributable to changes in the financial liabilities' credit risk are not subsequently reclassified to profit

or loss. Under HKAS 39, the entire amount of the change in the fair value of the financial liability

designated as fair value through profit or loss was presented in profit or loss.

HKFRS 9 is effective for annual periods beginning on or after January 1, 2015, with earlier application permitted.

The directors anticipate that the adoption of HKFRS 9 in the future will affect the classification and measurementof the Group's available-for-sale ("AFS") investments but not the Group's financial liabilities. Regarding the Group'sAFS investments, it is not practicable to provide a reasonable estimate of that effect until a detailed review hasbeen completed.

New and revised standards on consolidation, joint arrangements, associates and disclosures

In June 2011, a package of five standards on consolidation, joint arrangements, associates and disclosures wasissued, including HKFRS 10, HKFRS 11, HKFRS 12, HKAS 27 (as revised in 2011) and HKAS 28 (as revised in 2011).

Key requirements of these five standards that are applicable to the Group are described below.

HKFRS 10 replaces the parts of HKAS 27 Consolidated and Separate Financial Statements that deal with consolidatedfinancial statements. HK (SIC) -- Int 12 Consolidation -- Special Purpose Entities will be withdrawn upon theeffective date of HKFRS 10. Under HKFRS 10, there is only one basis for consolidation, that is, control. Inaddition, HKFRS 10 includes a new definition of control that contains three elements: (a) power over an investee,(b) exposure, or rights, to variable returns from its involvement with the investee, and (c) the ability to useits power over the investee to affect the amount of the investor's returns. Extensive guidance has been added inHKFRS 10 to deal with complex scenarios. HKFRS 11 replaces HKAS 31 Interests in Joint Ventures. HKFRS 11 deals with how a joint arrangement of which two ormore parties have joint control should be classified. HK (SIC) -- Int 13 Jointly Controlled Entities -- Non-monetaryContributions by Venturers will be withdrawn upon the effective date of HKFRS 11. Under HKFRS 11, joint arrangementsare classified as joint operations or joint ventures, depending on the rights and obligations of the parties to thearrangements. In contrast, under HKAS 31, there are three types of joint arrangements: jointly controlled entities,jointly controlled assets and jointly controlled operations. In addition, joint ventures under HKFRS 11 are requiredto be accounted for using the equity method of accounting, whereas jointly controlled entities under HKAS 31 can beaccounted for using the equity method of accounting or proportionate consolidation. HKFRS 12 is a disclosure standard and is applicable to entities that have interests in subsidiaries, joint arrangements,associates and/or unconsolidated structured entities. In general, the disclosure requirements in HKFRS 12 are moreextensive than those in the current standards.

In July 2012, the amendments to HKFRS 10, HKFRS 11 and HKFRS 12 were issued to clarify certain transitional guidanceon the application of these five HKFRSs for the first time.

These five standards, together with the amendments relating to the transitional guidance, are effective for annualperiods beginning on or after January 1, 2013 with earlier application permitted provided that all of these standardsare applied at the same time. The directors anticipate that these five standards will be adopted in the Group's consolidated financial statements forthe annual period beginning January 1, 2013. The application of these five standards is not expected to havematerial impact on amounts reported in the consolidated financial statements.

HKFRS 13 Fair Value Measurement

HKFRS 13 establishes a single source of guidance for fair value measurements and disclosures about fair valuemeasurements. The standard defines fair value, establishes a framework for measuring fair value, and requires disclosuresabout fair value measurements. The scope of HKFRS 13 is broad; it applies to both financial instrument items andnon-financial instrument items for which other HKFRSs require or permit fair value measurements and disclosuresabout fair value measurements, except in specified circumstances. In general, the disclosure requirements inHKFRS 13 are more extensive than those in the current standards. For example, quantitative and qualitativedisclosures based on the three-level fair value hierarchy currently required for financial instruments only underHKFRS 7 Financial Instruments: Disclosures will be extended by HKFRS 13 to cover all assets and liabilitieswithin its scope. HKFRS 13 is effective for annual periods beginning on or after January 1, 2013, with earlier application permitted.The directors anticipate that the application of the new standard may affect certain amounts reported in theconsolidated financial statements and result in more extensive disclosures in the consolidated financialstatements.

3. SIGNIFICANT ACCOUNTING POLICIES

The consolidated financial statements have been prepared in accordance with Hong Kong Financial ReportingStandards issued by the HKICPA. In addition, the consolidated financial statements include applicable disclosuresrequired by the Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong Limited and by theHong Kong Companies Ordinance. The consolidated financial statements have been prepared on the historical cost basis except for certain financialinstruments that are measured at fair values, as explained in the accounting policies set out below. Historicalcost is generally based on the fair value of the consideration given in exchange for goods.

The principal accounting policies are set out below.

Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Company and entities controlledby the Company (its subsidiaries). Control is achieved where the Company has the power to govern the financialand operating policies of an entity so as to obtain benefits from its activities. Income and expenses of subsidiaries acquired or disposed of during the year are included in the consolidatedstatement of comprehensive income from the effective date of acquisition and up to the effective date of disposal,as appropriate.

Where necessary, adjustments are made to the financial statements of subsidiaries to bring their accountingpolicies in line with those used by other members of the Group.

All intra-group transactions, balances, income and expenses are eliminated in full on consolidation. Non-controllinginterests in subsidiaries are presented separately from the Group's equity therein.

Allocation of total comprehensive income to non-controlling interests

Total comprehensive income and expense of a subsidiary is attributed to the owners of the Company and to thenon-controlling interests even if this results in the non-controlling interests having a deficit balance.

Goodwill

Goodwill arising on an acquisition of a business is carried at cost less accumulated impairment losses, if any,and is presented separately in the consolidated statement of financial position.

For the purposes of impairment testing, goodwill is allocated to each of the Group's cash-generating units (orgroups of cash-generating units) that is expected to benefit from the synergies of the combination.

A cash-generating unit to which goodwill has been allocated is tested for impairment annually or more frequentlywhen there is indication that the unit may be impaired. For goodwill arising on an acquisition in a reportingperiod, the cash-generating unit to which goodwill has been allocated is tested for impairment before the end ofthat reporting period. If the recoverable amount of the cash-generating unit is less than its carrying amount,the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit andthen to the other assets of the unit on a pro rata basis based on the carrying amount of each asset in the unit.Any impairment loss for goodwill is recognised directly in profit or loss. An impairment loss recognised forgoodwill is not reversed in subsequent periods.

On disposal of the relevant cash-generating unit, the attributable amount of goodwill is included in thedetermination of the amount of profit or loss on disposal.

Investments in associates

An associate is an entity over which the Group has significant influence and that is neither a subsidiary nor aninterest in a joint venture. Significant influence is the power to participate in the financial and operatingpolicy decisions of the investee but is not control or joint control over those policies. The results and assets and liabilities of associates are incorporated in these consolidated financial statementsusing the equity method of accounting. The financial statements of associates used for equity accounting purposesare prepared using uniform accounting policies as those of the Group for like transactions and events in similarcircumstances. Under the equity method, investments in associates are initially recognised in the consolidatedstatement of financial position at cost and adjusted thereafter to recognise the Group's share of the profit orloss and other comprehensive income of the associates. When the Group's share of losses of an associate exceedsthe Group's interest in that associate (which includes any long-term interests that, in substance, form part ofthe Group's net investment in the associate), the Group discontinues recognising its share of further losses.Additional losses are recognised only to the extent that the Group has incurred legal or constructive obligationsor made payments on behalf of that associate. Any excess of the cost of acquisition over the Group's share of the net fair value of the identifiable assets,liabilities and contingent liabilities of an associate recognised at the date of acquisition is recognised asgoodwill, which is included within the carrying amount of the investment.

Any excess of the Group's share of the net fair value of the identifiable assets, liabilities and contingentliabilities over the cost of acquisition, after reassessment, is recognised immediately in profit or loss.

The requirements of HKAS 39 are applied to determine whether it is necessary to recognise any impairment loss withrespect to the Group's investment in an associate. When necessary, the entire carrying amount of the investment(including goodwill) is tested for impairment in accordance with HKAS 36 Impairment of Assets as a single assetby comparing its recoverable amount (higher of value in use and fair value less costs to sell) with its carryingamount. Any impairment loss recognised forms part of the carrying amount of the investment. Any reversal of thatimpairment loss is recognised in accordance with HKAS 36 to the extent that the recoverable amount of theinvestment subsequently increases. When a group entity transacts with its associate, profits and losses resulting from the transactions with theassociate are recognised in the Group' consolidated financial statements only to the extent of interests in theassociates that are not related to the Group. Joint venture Jointly controlled entity

Joint venture arrangement that involves the establishment of a separate entity in which venturers have jointcontrol over the economic activity of the entity are referred to as a jointly controlled entity.

The results and assets and liabilities of a jointly controlled entity are incorporated in the consolidated financialstatements using the equity method of accounting. Under the equity method, investments in jointly controlledentities are initially recognised in the consolidated statement of financial position at cost and adjustedthereafter to recognise the Group's share of the profit or loss and other comprehensive income of the jointlycontrolled entities. When the Group's share of losses of a jointly controlled entity equals or exceeds itsinterest in that jointly controlled entity (which includes any long-term interests that, in substance, form partof the Group's net investment in the jointly controlled entity), the Group discontinues recognising its share offurther losses. Additional losses are recognised only to the extent that the Group has incurred legal orconstructive obligations or made payments on behalf of that jointly controlled entity.

The financial statements of the jointly controlled entities used for equity accounting purposes are prepared usinguniform accounting policies as those of the Group for like transactions and events in similar circumstances.

Any excess of the cost of acquisition over the Group's share of the net fair value of the identifiable assets,liabilities and contingent liabilities of a jointly controlled entity recognised at the date of acquisition isrecognised as goodwill, which is included within the carrying amount of the investment.

Any excess of the Group's share of the net fair value of the identifiable assets, liabilities and contingentliabilities over the cost of acquisition, after reassessment, is recognised immediately in profit or loss.

The requirements of HKAS 39 are applied to determine whether it is necessary to recognise any impairment losswith respect to the Group's investment in a jointly controlled entity. When necessary, the entire carrying amountof the investment (including goodwill) is tested for impairment in accordance with HKAS 36 Impairment of Assetsas a single asset by comparing its recoverable amount (higher of value in use and fair value less costs to sell)with its carrying amount. Any impairment loss recognised forms part of the carrying amount of the investment. Anyreversal of that impairment loss is recognised in accordance with HKAS 36 to the extent that the recoverableamount of the investment subsequently increases. When a group entity transacts with its jointly controlled entity, profits and losses resulting from thetransactions with the jointly controlled entity are recognised in the Group' consolidated financial statementsonly to the extent of interest in the jointly controlled entity that are not related to the Group. Revenue recognition Revenue is measured at the fair value of the consideration received or receivable and represents amountsreceivable for goods sold and services provided in the normal course of business, net of discounts and salesrelated taxes.

Toll income from the operation of tolled roads is recognised when the tolls are received or become receivable.

Revenue from the sale of goods is recognised when the goods are delivered and titles have passed, at which timeall the following conditions are satisfied:

-- the Group has transferred to the buyer the significant risks and rewards of ownership of the goods;

-- the Group retains neither continuing managerial involvement to the degree usually associated with

ownership nor effective control over the goods sold; -- the amount of revenue can be measured reliably;

-- it is probable that the economic benefits associated with the transaction will flow to the Group; and

-- the costs incurred or to be incurred in respect of the transaction can be measured reliably.

Service income, including advertising income, is recognised when services are provided.

Commission income from securities broking business is recognised on a trade date basis.

Advisory and handling fee income are recognised when the relevant transactions have been provided or the relevantservices have been rendered.

Interest income from a financial asset is recognised when it is probable that the economic benefits will flow tothe Group and the amount of income can be measured reliably. Interest income is accrued on a time basis, byreference to the principal outstanding and at the effective interest rate applicable, which is the rate thatexactly discounts the estimated future cash receipts through the expected life of the financial asset to thatasset's net carrying amount on initial recognition. Dividend income from investments is recognised when the shareholders' rights to receive payment have beenestablished (provided that it is probable that the economic benefits will flow to the Group and the amount ofrevenue can be measured reliably).

Property, plant and equipment

Property, plant and equipment including leasehold land and building held for use in supply of goods or services,or for administrative purposes (other than construction in progress as described below) are stated in theconsolidated statement of financial position at cost less subsequent accumulated depreciation and subsequentaccumulated impairment losses, if any. Depreciation is recognised so as to write off the cost of items of property, plant and equipment other thanconstruction in progress less their residual values over their estimated useful lives, using the straight-linemethod, at the following rates per annum. The estimated useful lives, residual values and depreciation method arereviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on aprospective basis. Estimated Annual useful life depreciation rate Leasehold land and buildings 30-50 years 1.9%-3.2% Ancillary facilities 10-30 years 3.2%-9% Communication and signaling equipment 5 years 19.4% Motor vehicles 5-8 years 12.1%-19.4% Machinery and equipment 5-8 years 12.1%-19.4% Properties in the course of construction for production, supply or administrative purposes are carried at cost,less any recognised impairment loss. Costs include professional fees and, for qualifying assets, borrowing costscapitalised in accordance with the Group's accounting policy. Such properties are classified to the appropriatecategories of property, plant and equipment when completed and ready for intended use. Depreciation of theseassets, on the same basis as other property assets, commences when the assets are ready for their intended use. An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits areexpected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement ofan item of property, plant and equipment is determined as the difference between the sales proceeds and thecarrying amount of the asset and is recognised in profit or loss.

Intangible assets

Intangible assets acquired separately

Intangible assets recognised with finite useful lives that are acquired separately are carried at costs lessaccumulated amortisation and any accumulated impairment losses. Amortisation for intangible assets with finiteuseful lives is recognised on a straight-line basis over their estimated useful lives. The estimated useful lifeand amortisation method are reviewed at the end of each reporting period, with the effective of any changes inestimate being accounted for on a prospective basis. Intangible assets with indefinite useful lives that areacquired separately are carried at cost less any subsequent accumulated impairment losses (see the accountingpolicy in respect of impairment losses on tangible and intangible assets below). An intangible asset is derecognised on disposal, or when no future economic benefits are expected from use ordisposal. Gains or losses arising from derecognition of an intangible asset are measured at the difference betweenthe net disposal proceeds and the carrying amount of the asset and are recognised in profit or loss in the periodwhen the asset is derecognised.

Intangible assets acquired in a business combination

Intangible assets acquired in a business combination are recognised separately from goodwill and are initiallyrecognised at their fair value at the acquisition date (which is regarded as their cost).

Subsequent to initial recognition, intangible assets with finite useful lives are carried at costs lessaccumulated amortisation and any accumulated impairment losses. Amortisation for intangible assets with finiteuseful lives is recognised on a straight-line basis over their estimated useful lives. Alternatively, intangible assets with indefinite useful lives are carried at cost less any subsequent accumulatedimpairment losses (see the accounting policy in respect of impairment losses on tangible and intangible assetsbelow).

Expressway operating rights under service concession arrangements

When the Group has a right to charge for usage of concession infrastructure, it recognises concession intangibleassets based on fair value of the consideration paid upon initial recognition. Subsequent costs incurred onexpressway widening projects and upgrading services are recognised as additional costs of the expressway operatingrights. The concession intangible assets representing expressway operating rights are carried at cost lessaccumulated amortisation and any accumulated impairment losses.

The concession intangible assets are amortised to write-off their cost over their expected useful lives in theremaining concession period on a straight-line basis.

Costs in relation to the day-to-day servicing, repairs and maintenance of the expressway infrastructures arerecognised as expenses in the periods in which they are incurred.

Impairment losses on tangible and intangible assets other than goodwill(see the accounting policy in respect of goodwill above)

At the end of the reporting period, the Group reviews the carrying amounts of its tangible and intangible assetswith finite useful lives to determine whether there is any indication that those assets have suffered animpairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order todetermine the extent of the impairment loss, if any. When it is not possible to estimate the recoverable amountof an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the assetbelongs. Where a reasonable and consistent basis of allocation can be identified, corporate assets are alsoallocated to individual cash-generating units, or otherwise they are allocated to the smallest group ofcash-generating units for which a reasonable and consistent allocation basis can be identified.

Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested forimpairment at least annually, and whenever there is an indication that they may be impaired.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, theestimated future cash flows are discounted to their present value using a pre-tax discount rate that reflectscurrent market assessments of the time value of money and the risks specific to the asset for which the estimatesof future cash flows have not been adjusted. If the recoverable amount of an asset (or a cash-generating unit) is estimated to be less than its carryingamount, the carrying amount of the asset (or a cash-generating unit) is reduced to its recoverable amount. Animpairment loss is recognised immediately in profit or loss. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) isincreased to the revised estimate of its recoverable amount, but so that the increased carrying amount does notexceed the carrying amount that would have been determined had no impairment loss been recognised for the asset(or a cash-generating unit) in prior years. A reversal of an impairment loss is recognised as income immediately.

Inventories

Inventories are stated at the lower of cost and net realisable value. Costs of inventories are calculated usingthe weighted average method. Net realisable value represents the estimated selling price for inventories less allestimated costs of completion and costs necessary to make the sale.

Leasing

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks andrewards of ownership to the lessee. All other leases are classified as operating leases.

The Group as lessor

Rental income from operating leases is recognised in profit or loss on a straight-line basis over the term of therelevant lease.

The Group as lessee Operating lease payments are recognised as an expense on a straight-line basis over the lease term, except whereanother systematic basis is more representative of the time pattern in which economic benefits from the leasedasset are consumed. Contingent rentals arising under operating leases are recognised as an expense in the periodin which they are incurred. In the event that lease incentives are received to enter into operating leases, such incentives are recognised asa liability. The aggregate benefit of incentives is recognised as a reduction of rental expense on a straight-linebasis, except where another systematic basis is more representative of the time pattern in which economic benefitsfrom the leased asset are consumed.

Leasehold land and building

When a lease includes both land and building elements, the Group assesses the classification of each element as afinance or an operating lease separately based on the assessment as to whether substantially all the risks andrewards incidental to ownership of each element have been transferred to the Group, unless it is clear that bothelements are operating leases in which case the entire lease is classified as an operating lease. Specifically,the minimum lease payments (including any lump-sum upfront payments) are allocated between the land and thebuilding elements in proportion to the relative fair values of the leasehold interests in the land element andbuilding element of the lease at the inception of the lease. To the extent the allocation of the lease payments can be made reliably, interest in the leasehold land that isaccounted for as an operating lease is presented as "prepaid lease payments" in the consolidated statement offinancial position and is amortised over the lease term on a straight-line basis. When the lease payments cannotbe allocated reliably between the land and building elements, the entire lease is generally classified as afinance lease and accounted for as property, plant and equipment.

Foreign currencies

In preparing the financial statements of each individual group entity, transactions in currencies other than thefunctional currency of that entity (foreign currencies) are recorded in the respective functional currency(i.e. the currency of the primary economic environment in which the entity operates) at the rates of exchangesprevailing on the dates of the transactions. At the end of the reporting period, monetary items denominated inforeign currencies are retranslated at the rates prevailing at that date. Non-monetary items that are measuredin terms of historical cost in a foreign currency are not retranslated.

Exchange differences arising on the settlement of monetary items, and on the retranslation of monetary items, arerecognised in profit or loss in the period in which they arise.

Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, whichare assets that necessarily take a substantial period of time to get ready for their intended use or sale, areadded to the cost of those assets until such time as the assets are substantially ready for their intended use orsale. Investment income earned on the temporary investment of specific borrowings pending their expenditure onqualifying assets is deducted from the borrowing costs eligible for capitalisation.

All other borrowing costs are recognised in profit or loss in the period in which they are incurred.

Retirement benefit costs

Payments to state-managed retirement benefit schemes and corporate annuity scheme are recognised as an expensewhen employees have rendered services entitling them to the contributions.

Taxation

Income tax expense represents the sum of the tax currently payable and deferred tax.

The tax currently payable is based on taxable profit for the year. Taxable profit differs from 'profit before tax'as reported in the consolidated statement of comprehensive income because it excludes items of income or expensethat are taxable or deductible in other years and it further excludes items that are never taxable or deductible.The Group's liability for current tax is calculated using tax rates that have been enacted or substantivelyenacted by the end of the reporting period. Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in theconsolidated financial statements and the corresponding tax base used in the computation of taxable profit.Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets aregenerally recognised for all deductible temporary difference to the extent that it is probable that taxableprofits will be available against which those deductible temporary differences can be utilised. Such assets andliabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition(other than in a business combination) of other assets and liabilities in a transaction that affects neither thetaxable profit nor the accounting profit. Deferred tax liabilities are recognised for taxable temporary differences associated with investments insubsidiaries, associates and a jointly controlled entity, except where the Group is able to control the reversalof the temporary difference and it is probable that the temporary difference will not reverse in the foreseeablefuture. Deferred tax assets arising from deductible temporary differences associated with such investments andinterests are only recognised to the extent that it is probable that there will be sufficient taxable profitsagainst which to utilise the benefits of the temporary differences and they are expected to reverse in theforeseeable future. The carrying amount of deferred tax assets is reviewed at the end of the reporting period and reduced to theextent that it is no longer probable that sufficient taxable profits will be available to allow all or part ofthe asset to be recovered. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period inwhich the liability is settled or the asset is realised, based on tax rate (and tax laws) that have been enactedor substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from themanner in which the Group expects, at the end of the reporting period, to recover or settle the carrying amountof its assets and liabilities. Current and deferred tax are recognised in profit or loss, except when they relateto items that are recognised in other comprehensive income or directly in equity, in which case, the current anddeferred tax are also recognised in other comprehensive income or directly in equity respectively. Financial instruments

Financial assets and financial liabilities are recognised in the consolidated statement of financial position whena group entity becomes a party to the contractual provisions of the instrument.

Financial assets and financial liabilities are initially measured at fair value. Transaction costs that aredirectly attributable to the acquisition or issue of financial assets and financial liabilities (other thanfinancial assets or financial liabilities at fair value through profit or loss) are added to or deducted from thefair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transactioncosts directly attributable to the acquisition of financial assets or financial liabilities at fair value throughprofit or loss are recognised immediately in profit or loss.

Financial assets

The Group's financial assets are classified into loans and receivables, financial assets at fair value throughprofit or loss ("FVTPL") and AFS financial assets. The classification depends on the nature and purpose of thefinancial assets and is determined at the time of initial recognition. All regular way purchases or sales offinancial assets are recognised and derecognised on a trade date basis. Regular way purchases or sales are purchasesor sales of financial assets that require delivery of assets within the time frame established by regulation orconvention in the marketplace.

Effective interest method

The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocatinginterest income over the relevant period. The effective interest rate is the rate that exactly discounts estimatedfuture cash receipts (including all fees and points paid or received that form an integral part of the effectiveinterest rate, transaction costs and other premiums or discounts) through the expected life of the debt instrument,or, where appropriate, a shorter period to the net carrying amount on initial recognition.

Interest income is recognised on an effective interest basis for debt instruments other than those financialassets classified as at FVTPL, of which interest income is included in net gains or losses.

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quotedin an active market. Subsequent to initial recognition, loans and receivables (including trade receivables, loansto customers arising from margin financing business, other receivables, bank balances and cash, financial assetsheld under resale agreement and bank balances held on behalf of customers) are measured at amortised cost usingthe effective interest method, less any identified impairment losses (see accounting policy on impairment losseson financial assets below). In particular, for financial assets held under resale agreements where the Group acquires financial assets whichwill be resold at a predetermined price at a future date under resale agreements, the cash advanced by the Groupis recognised as secured loans and receivables and presented as amounts held under resale agreements in theconsolidated statement of financial position. The difference between the purchase and resale consideration isamortised over the period of the respective agreements using the effective interest method and is included ininterest income.

Financial assets at fair value through profit or loss

Financial asset at FVTPL include financial assets held for trading.

A financial asset is classified as held for trading if:

-- it has been acquired principally for the purpose of selling in the near term; or

-- it is a part of a portfolio of identified financial instruments that the Group manages together and has a

recent actual pattern of short-term profit taking; or

-- it is a derivative that is not designated and effective as a hedging instrument.

Financial assets at FVTPL are measured at fair value, with changes in fair value arising from remeasurementrecognised directly in profit or loss in the period in which they arise. The net gain or loss recognised inprofit or loss excludes any dividend or interest earned on the financial assets and is included in the securitiesinvestment gains line item in the consolidated statement of comprehensive income. Fair value is determined in themanner described in Note 5(c).

AFS financial assets

AFS financial assets are non-derivatives that are either designated or not classified as any of the categories offinancial assets set out above.

Equity securities held by the Group that are classified as AFS and are traded in an active market are measured atfair value at the end of each reporting period. Changes in the carrying amount of AFS monetary financial assetsrelating to interest income calculated using the effective interest method and dividends on AFS equity investmentsare recognised in profit or loss. Other changes in the carrying amount of AFS financial assets are recognised inother comprehensive income and accumulated under the heading of investments revaluation reserve. When theinvestment is disposed of or is determined to be impaired, the cumulative gain or loss previously accumulated inthe investments revaluation reserve is reclassified to profit or loss (see the accounting policy in respect ofimpairment loss on financial assets below).

Dividends on AFS equity instruments are recognised in profit or loss when the Group's right to receive thedividends is established.

AFS equity investments that do not have a quoted market price in an active market and whose fair value cannot bereliably measured and derivatives that are linked to and must be settled by delivery of such unquoted equityinvestments are measured at cost less any identified impairment losses at the end of each reporting period(see the accounting policy in respect of impairment loss on financial assets below).

Impairment loss on financial assets

Financial assets, other than those at FVTPL, are assessed for indicators of impairment at the end of the reportingperiod. Financial assets are considered to be impaired where there is objective evidence that, as a result of oneor more events that occurred after the initial recognition of the financial asset, the estimated future cashflows of the financial assets have been affected.

For an AFS equity investment, a significant or prolonged decline in the fair value of that investment below itscost is considered to be objective evidence of impairment.

For all other financial assets, objective evidence of impairment could include:

-- significant financial difficulty of the issuer or counterparty; or

-- breach of contract, such as default or delinquency in interest or principal payments; or

-- it becoming probable that the borrower will enter bankruptcy or financial re-organisation; or

-- disappearance of an active market for that financial asset because of financial difficulties.

For financial assets carried at amortised cost, the amount of the impairment loss recognised is the differencebetween the asset's carrying amount and the present value of the estimated future cash flows discounted at thefinancial asset's original effective interest rate. For financial assets carried at cost, the amount of the impairment loss is measured as the difference between theasset's carrying amount and the present value of the estimated future cash flows discounted at the current marketrate of return for a similar financial asset. Such impairment loss will not be reversed in subsequent periods. The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assetswith the exception of trade receivables and loans to customers arising from margin financing business, where thecarrying amount is reduced through the use of an allowance account. Changes in the carrying amount of theallowance account are recognised in profit or loss. When a trade receivable and loans to customers arising frommargin financing business are considered uncollectible, they are written off against the allowance account.Subsequent recoveries of amounts previously written off are credited to profit or loss.

When an AFS financial asset is considered to be impaired, cumulative gains or losses previously recognised inother comprehensive income are reclassified to profit or loss in the period in which the impairment takes place.

For financial assets measured at amortised cost, if, in a subsequent period, the amount of impairment lossdecreases and the decrease can be related objectively to an event occurring after the impairment losses wasrecognised, the previously recognised impairment loss is reversed through profit or loss to the extent that thecarrying amount of the asset at the date the impairment is reversed does not exceed what the amortised cost wouldhave been had the impairment not been recognised. Impairment losses on AFS equity investments will not be reversed through profit or loss. Any increase in fairvalue subsequent to impairment loss is recognised directly in other comprehensive income and accumulated ininvestment revaluation reserve.

Financial liabilities and equity instruments

Debt and equity instruments issued by a group entity are classified as either financial liabilities or as equityin accordance with substance of the contractual arrangements and the definitions of a financial liability and anequity instrument. Equity instruments An equity instrument is any contract that evidences a residual interest in the assets of the Group after deductingall of its liabilities. Equity instruments issued by the Group are recorded at the proceeds received, net ofdirect issue costs. Effective interest method The effective interest method is a method of calculating the amortised cost of a financial liability and ofallocating interest expense over the relevant period. The effective interest rate is the rate that exactlydiscounts estimated future cash payments (including all fee and points paid or received that form an integralpart of the effective interest rate, transaction costs and other premium or discounts) through the expected lifeof the financial liability, or, where appropriate, a shorter period, to the net carrying amount on initialrecognition.

Interest expense is recognised on an effective interest basis.

Financial liabilities

Financial liabilities including trade payables, accounts payable to customers arising from securities business,other payables, bank loans, dividends payable and long-term bonds are subsequently measured at amortised cost,using the effective interest method.

Derivative financial instrument

Derivatives are initially recognised at fair value at the date when a derivative contract is entered into and aresubsequently remeasured to their fair value at the end of the reporting period. The resulting gain or loss isrecognised in profit or loss immediately.

Securities lending arrangement

The Group lends investment securities to clients and requires cash and/or equity securities from customers heldas collaterals under such securities lending agreements. The cash collaterals arisen from these are included in"accounts payable to customers arising from securities business". For those securities held by the Group and lentto client that do not result in the derecognition of financial assets, they are included in AFS investments.

Derecognition

The Group derecognises a financial asset only when the contractual rights to the cash flows from the asset expire,or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset toanother entity. If the Group neither transfers nor retains substantially all the risks and rewards of ownershipand continues to control the transferred asset, the Group continues to recognise the asset to the extent of itscontinuing involvement and recognises an associated liability. If the Group retains substantially all the risksand rewards of ownership of a transferred financial asset, the Group continues to recognise the financial assetand also recognises a collateralised borrowing for the proceeds received. On derecognition of a financial asset in its entirety, the difference between the asset's carrying amount and thesum of the consideration received and receivable and the cumulative gain or loss that had been recognised inother comprehensive income and accumulated in equity is recognised in profit or loss. The Group derecognises financial liabilities when, and only when, the Group's obligations are discharged,cancelled or expire. The difference between the carrying amount of the financial liability derecognised and theconsideration paid and payable is recognised in profit or loss.

Provisions

Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a pastevent, it is probable that the Group will be required to settle that obligation, and a reliable estimate can bemade of the amount of the obligation. Provisions are measured at the best estimate of the consideration requiredto settle the present obligation at the end of the reporting period, taking into account the risks anduncertainties surrounding the obligation. When a provision is measured using the cash flows estimated to settlethe present obligation, its carrying amount is the present value of those cash flows (where the effect of thetime value of money is material).

4. KEY SOURCES OF ESTIMATION UNCERTAINTY

The following are the key assumptions concerning the future, and other key sources of estimation uncertainty atthe end of the reporting period, that have a significant risk of causing a material adjustment to the carryingamounts of assets within the next financial year.

Estimated impairment of goodwill

Determining whether goodwill is impaired requires an estimation of the value in use of the cash-generating unitsto which goodwill has been allocated. The value in use calculation requires the Group to estimate the future cashflows expected to arise from the cash-generating unit and a suitable discount rate in order to calculate thepresent value. Where the actual future cash flows are less than expected, a material impairment loss may arise.As at December 31, 2012, the carrying amount of goodwill is Rmb86,867,000 (without accumulated impairment loss)(2011: Rmb86,867,000 (without accumulated impairment loss)). Details of the recoverable amount calculation aredisclosed in Note 24.

Estimated impairment of intangible assets with indefinite useful lives

Determining whether intangible assets with indefinite useful lives are impaired requires an estimation of thevalue in use of themselves or the cash-generating unit to which they belong. The value in use calculation requiresthe Group to estimate the future cash flows expected to arise from themselves or the cash-generating unit to whichthey belong and a suitable discount rate in order to calculate the present value. Where the actual future cashflows are less than expected, a material impairment loss may arise. As at December 31, 2012, the carrying amountsof intangible assets with indefinite useful lives were Rmb66,563,000 (without accumulated impairment loss)(2011: Rmb66,563,000 (without accumulated impairment loss)). Details of the recoverable amount calculation aredisclosed in Note 24. 5. FINANCIAL INSTRUMENTS

(a) Categories of financial instruments

12/31/2012 12/31/2011 Rmb'000 Rmb'000Financial assetsAFS investments -- at cost 11,000 1,000 -- at fair value 256,899 60,274

Fair value through profit of loss held for trading investments 1,486,772

1,260,021

Loans and receivables (including cash and cash equivalents) 14,394,921

13,917,611

-------------------------------------------------------------------------------------------

Financial liabilitiesDerivative financial instrument --

6,426

Amortised cost 9,618,015

9,468,671

-------------------------------------------------------------------------------------------

(b) Financial risk management objectives and policies

The Group's major financial instruments include AFS investments, held for trading investments, trade and otherreceivables, loans to customers arising from margin financing business, financial assets held under resaleagreement, bank balances and cash, bank balances held on behalf of customers, trade and other payables, accountspayable to customers arising from securities business, bank loans, derivative financial instrument, dividendspayable and long-term bonds. Details of the financial instruments are disclosed in respective notes. The risksassociated with these financial instruments include market risk (interest rate risk, currency risk and otherprice risk), credit risk and liquidity risk. The policies on how to mitigate these risks are set out below. Themanagement manages and monitors these exposures to ensure appropriate measures are implemented on a timely andeffective manner. Market risk (i) Interest rate risk The Group is exposed to fair value interest rate risk in relation to loans to customers arising from marginfinancing business, financial assets held under resale agreement, fixed-rate time deposits, bank loans andlong-term bonds (see Notes 29, 32, 34, 38 and 41 for details).

The Group is also exposed to cash flow interest rate risk in relation to variable-rate bank balances held onbehalf of customers, bank balances and bank loans (see Notes 33, 34 and 38 for details).

The Group currently does not have an interest rate risk hedging policy as the management considers the Group isnot exposed to significant interest rate risk. The management will continue to monitor interest rate risk exposureand consider hedging against it should the need arise.

The Group's exposures to interest rates on financial liabilities are detailed in the liquidity risk managementsection of this note.

Sensitivity analysis

The sensitivity analyses below have been determined based on the exposure to interest rates for non-derivativeinstruments, comprising variable-rate bank balances, bank balances held on behalf of customers and bank loans at theend of the reporting period. The analysis is prepared assuming the balances outstanding at the end of the reporting period were outstanding for thewhole year. A 30 basis points (2011: 30 basis points) increase or decrease is the sensitivity rate used when reportinginterest rate risk internally to key management personnel and represents management's assessment of the reasonablypossible change in interest rates. If interest rates had been 30 basis points (2011: 30 basis points) higher/lower and all other variables were heldconstant, the Group's post-tax profit for the year ended December 31, 2012 would have increased/ decreased byRmb24,422,000 (2011: Rmb22,945,000). This was mainly attributable to the Group's exposure to interest rates on itsvariable-rate bank balances.

(ii) Currency risk

The Group is mainly exposed to HKD and USD relative to Rmb.

Several subsidiaries of the Company have foreign currency denominated monetary assets and liabilities, which expose theGroup to foreign currency risk.

The carrying amounts of the Group's foreign currency denominated monetary assets and liabilities at the end of thereporting date are as follows:

Assets Liabilities 12/31/2012 12/31/2011 12/31/2012 12/31/2011 Rmb'000 Rmb'000 Rmb'000 Rmb'000 Hong Kong dollar ("HKD") 19,460 15,164 14,228 322,446United States dollar ("USD") 68,543 63,495 40,544 36,564--------------------------------------------------------------------------------------------------

Sensitivity analysis

This sensitivity analysis details the Group's sensitivity to a 5% (2011: 5%) increase and decrease in RMB against HKDand USD. 5% (2011: 5%) is the sensitivity rate used when reporting foreign currency risk internally to key managementpersonnel and represents management's assessment of the reasonably possible change in foreign exchange rates. Thesensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translationat the end of the reporting period for a 5% (2011: 5%) change in foreign currency rates. If RMB hadstrengthened/weakened 5% (2011: 5%) against HKD, the Group's post-tax profit for the year ended December 31, 2012 wouldhave decreased/ increased by Rmb196,000 (2011: decreased/increased by Rmb11,523,000). If RMB had strengthened/ weakened5% (2011: 5%) against USD, the Group's post-tax profit for the year ended December 31, 2012 would havedecreased/increased by Rmb1,050,000 (2011: Rmb1,010,000).

The Group has entered into certain foreign currency forward contracts. Management of the Company are of the opinionthat the Company's exposure to currency risk related to the foreign currency forward contract is minimum. Accordingly,no currency risk sensitivity analysis of foreign currency forward contract is presented.

(iii) Other price risk

The Group is exposed to equity and debt security price risk in relation to its held for trading and AFS listedinvestments.

The Group currently does not have a price risk hedging policy and the management will continue to monitor price riskexposure and consider hedging against it should the need arise.

Sensitivity analysis

The sensitivity analyses below have been determined based on the exposure to equity and debt security price risks atthe reporting date.

If the prices of the respective equity and debt instruments had been 5% (2011: 5%) higher/lower,

-- post-tax profit for the year ended December 31, 2012 would have increased/decreased by Rmb55,754,000 (2011:

Rmb47,251,000) as a result of the changes in fair value of held for trading investments; and

-- investment valuation reserve would have increased/decreased by Rmb9,634,000 (2011: Rmb2,260,000) for the Group as a

result of the changes in fair value of AFS listed investments.

Credit risk

As at December 31, 2012, the Group's maximum exposure to credit risk which will cause a financial loss to the Group dueto failure to discharge an obligation by the counterparties provided by the Group is arising from the carrying amount ofthe respective recognised financial assets as stated in the consolidated statement of financial position. The Group reviews the recoverable amount of each individual trade debt and entrusted loan receivables at the end of thereporting period to ensure that adequate impairment losses are made for irrecoverable amounts. In this regard, thedirectors of the Company consider that the Group's credit risk is significantly reduced. The Group provides clients with margin financing for securities transactions and securities lending to clients, whichare secured by clients' securities or deposits held as collateral. Management has delegated a team responsible fordetermination of credit limits, credit approvals and other monitoring procedures to ensure that follow-up action istaken to recover overdue debts. Each client has a maximum credit limit based on the quality of collateral held and thefinancial background of the client. In addition, the Group and the Company review the recoverable amount of eachindividual at the end of the reporting period to ensure that adequate impairment losses are made for irrecoverableamounts. Margin calls are made when the trades of margin clients exceed their respective limits. Any such shortfall isrequired to be made good within the next trading day. Failure to meet margin calls may result in the liquidation of theclient's positions. The Group and the Company seek to maintain strict control over its outstanding receivables.

The credit risk on liquid funds is limited because the counterparties are banks with high credit ratings assigned byinternational credit-rating agencies.

Other than the concentration of credit risk on certain trade receivables, entrusted loan receivables, loan receivablefrom an associate, corporate bonds, financial investment products and financial assets held under resale agreementamounting to Rmb54,582,000 (2011: Rmb47,086,000), Rmb639,651,000 (2011: Rmb951,648,000), Rmb82,101,000 (2011:Rmb82,000,000), Rmb1,451,457,000 (2011: Rmb1,059,726,000), Rmb103,432,000 (2011: nil) and Rmb280,066,000 (2011: nil) asdisclosed in Notes 28, 30, 31 and 32, respectively, the Group does not have any other significant concentration ofcredit risk. The Group's concentration of credit risk by geographical location is mainly in the PRC.

Liquidity risk

Most of the bank balances and cash at December 31, 2012 were denominated in Rmb which is not a freely convertiblecurrency in the international market. The exchange rate of Rmb is regulated by the PRC government and the remittance ofthese Rmb funds out of the PRC is subject to foreign exchange controls imposed by the PRC government. The Group closely monitors its cash position resulting from its operations and maintains a level of cash and cashequivalents deemed adequate by the management to enable the Group to meet in full its financial obligations as theyfall due for the foreseeable future. The following table details the Group's remaining contractual maturity for its non-derivative financial liabilities.The table has been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date onwhich the Group can be required to pay. The table includes both interest and principal cash flows. To the extent thatinterest flows are floating rate, the undiscounted amount is derived from interest rate curve at the end of thereporting period. In addition, the following table details the Group's liquidity analysis for its derivative financial instruments. Thetables have been drawn up based on the undiscounted contractual cash inflows and (outflows) on derivative instrumentsthat settle on a gross basis. When the amount payable is not fixed, the amount disclosed has been determined byreference to the foreign currency exchange rates prevailing at the end of the reporting period. The liquidity analysisfor the Group's derivative financial instruments are prepared based on the contractual maturities as the managementconsider that the contractual maturities are essential for an understanding of the timing of the cash flows ofderivatives. Liquidity tables On demand Total Carrying Weighted or undiscounted amount average Less than 3 months - 1 - 3 cash at interest rate 3 months 1 year years 3 - 5 years +5 years flows 31/12/2012 % Rmb'000 Rmb'000 Rmb'000 Rmb'000 Rmb'000 Rmb'000 Rmb'000 2012

Non-derivative

financial liabilitiesTrade payables -- 342,686 35,678 -- -- -- 378,364 378,364Accounts payable to customers arising from securities business 0.42 7,489,675 -- -- -- -- 7,489,675 7,481,819Other payables -- 662,834 -- -- -- -- 662,834 662,834Dividends payable -- 94,998 -- -- -- -- 94,998 94,998Long-term bonds - fixed rate 4.29 1,042,900 -- -- -- -- 1,042,900 1,000,000------------------------------------------------------------------------------------------------------------------------ 9,633,093 35,678 -- -- -- 9,668,771 9,618,015------------------------------------------------------------------------------------------------------------------------ 2011Non-derivative financial liabilitiesTrade payables -- 284,893 32,295 -- -- -- 317,188 317,188Accounts payable to customers arising from securities business 0.50 7,151,996 -- -- -- -- 7,151,996 7,143,067Other payables -- 450,892 -- -- -- -- 450,892 450,892Dividends payable -- 94,971 -- -- -- -- 94,971 94,971Bank loans -- fixed rate 5.08 54,115 315,128 -- -- -- 369,243 362,553 -- variable rate 6.44 1,609 102,698 -- -- -- 104,307 100,000Long-term bonds - fixed rate 4.29 42,900 -- 1,085,800 -- -- 1,128,700 1,000,000------------------------------------------------------------------------------------------------------------------------ 8,081,376 450,121 1,085,800 -- -- 9,617,297 9,468,671------------------------------------------------------------------------------------------------------------------------ 2011Derivatives - gross settlementForeign currency forward contract -- inflow -- HKD -- -- 313,259 -- -- -- 313,259 313,259 -- outflow -- Rmb -- -- (319,685) -- -- -- (319,685) (319,685)------------------------------------------------------------------------------------------------------------------------ -- (6,426) -- -- -- (6,426) (6,426)------------------------------------------------------------------------------------------------------------------------ The amounts included above for variable interest rate instruments for non-derivative financial liabilities are subjectto change if changes in variable interest rates differ to those estimates of the interest rates determined at the endof the reporting period.

(c) Fair value

The fair value of financial assets and financial liabilities are determined as follows:

-- the fair value of foreign currency forward contract is measured using quoted forward exchange rates and yield curves

derived from quoted interest rates matching the maturities of the contract;

-- the fair value of financial assets and financial liabilities with standard terms and conditions and traded on

active liquid markets are determined with reference to quoted market bid prices and ask prices, respectively; and

-- the fair value of other financial assets and financial liabilities (excluding derivative instruments) are

determined in accordance with generally accepted pricing models based on discounted cash flow analysis.

The directors consider that the carrying amounts of financial assets and financial liabilities recorded at amortisedcost in the consolidated financial statements approximate their fair values.

Fair value measurements recognised in the statement of financial position

The following table provides an analysis of financial instruments that are measured subsequent to initial recognitionat fair value, grouped into Levels 1 to 3 based on the degree to which the fair value is observable.

-- Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active market for identical

assets or liabilities.

-- Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that

are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from

prices).

-- Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or

liability that are not based on observable market data (unobservable inputs). 12/31/2012 Level 1 Level 2 Level 3 Total Rmb'000 Rmb'000 Rmb'000 Rmb'000 Financial assets at FVTPLHeld for trading investments 1,486,772 -- -- 1,486,772 Available-for-sale financial assetsListed equity and debt securities 256,899 --

-- 256,899---------------------------------------------------------------------------------------------------Total

1,743,671 -- -- 1,743,671--------------------------------------------------------------------------------------------------- 12/31/2011 Level 1 Level 2 Level 3 Total Rmb'000 Rmb'000 Rmb'000 Rmb'000 Financial assets at FVTPLHeld for trading investments 1,260,021 -- -- 1,260,021 Available-for-sale financial assetsListed equity securities 60,274 --

-- 60,274---------------------------------------------------------------------------------------------------Total

1,320,295 -- -- 1,320,295--------------------------------------------------------------------------------------------------- Financial liabilities at FVTPLDerivative financial instrument -- (6,426)

-- (6,426)---------------------------------------------------------------------------------------------------Total

1,320,295 (6,426) -- 1,313,869---------------------------------------------------------------------------------------------------

There were no transfers between Level 1 and 2 in the current and prior years.

6. CAPITAL RISK MANAGEMENT The Group manages its capital to ensure that entities in the Group will be able to continue as a going concern whilemaximising the return to shareholders through the optimisation of the debt and equity balance. The Group's overallstrategy remains unchanged from prior year. The capital structure of the Group consists of net debt, which includes the borrowings disclosed in Notes 38 and 41,net of cash and cash equivalents and equity attributable to owners of the Company, comprising issued share capital,reserves and retained profits. The directors of the Company review the capital structure on a regular basis. As part of this review, the directorsconsider the cost of capital and the risks associated with each class of capital. Based on recommendations of thedirectors, the Group will balance its overall capital structure through the payment of dividends and new share issuesas well as the issue of new debt or the redemption of existing debt.

7. SEGMENT INFORMATION

Information reported to the Chief Executive Officer of the Company, being the chief operating decision maker, for thepurposes of resource allocation and assessment of segment performance focuses on types of goods or services deliveredor provided.

Specifically, the Group's reportable and operating segments under HKFRS 8 are as follows:

(i) Toll operation -- the operation and management of high grade roads and the collection of the expressway tolls.

(ii) Service area and advertising businesses -- the sale of food, restaurant operation, automobile servicing,

operation of petrol stations and design and rental of advertising billboards along the expressways.

(iii) Securities operation -- the securities broking, margin financing and securities lending services and proprietary

trading. Segment revenue and results

The following is an analysis of the Group's revenue and results by reportable and operating segment.

For the year ended December 31, 2012

Service area and Toll advertising Securities Total operation businesses operation Segment Elimination Total Rmb'000 Rmb'000 Rmb'000 Rmb'000 Rmb'000 Rmb'000 Revenue External sales 3,548,692 2,025,429 1,126,137 6,700,258 -- 6,700,258 Inter-segment sales -- 7,919 --

7,919 (7,919) -----------------------------------------------------------------------------------------------------------------------Total

3,548,692 2,033,348 1,126,137

6,708,177 (7,919) 6,700,258---------------------------------------------------------------------------------------------------------------------Segment profit

1,637,244 66,169 165,669 1,869,082 1,869,082

---------------------------------------------------------------------------------------------------------------------

For the year ended December 31, 2011

Service area and Toll advertising Securities Total operation businesses operation Segment Elimination Total Rmb'000 Rmb'000 Rmb'000 Rmb'000 Rmb'000 Rmb'000 Revenue External sales 3,522,510 1,916,564 1,342,278 6,781,352 -- 6,781,352Inter-segment sales -- 8,004 --

8,004 (8,004) -----------------------------------------------------------------------------------------------------------------------Total

3,522,510 1,924,568 1,342,278

6,789,356 (8,004) 6,781,352---------------------------------------------------------------------------------------------------------------------Segment profit

1,695,078 71,763 299,101 2,065,942 2,065,942

---------------------------------------------------------------------------------------------------------------------

The accounting policies of the operating segments are the same as the Group's accounting policies described inNote 3. Segment profit represents the profit after tax of each operating segment. This is the measure reportedto the chief operating decision maker, the Group's Chief Executive Officer, for the purposes of resourceallocation and performance assessment.

Inter-segment sales are charged at prevailing market rates.

Segment assets and liabilities

The following is an analysis of the Group's assets and liabilities by reportable and operating segment:

Segment assets Segment liabilities 12/31/2012 12/31/2011 12/31/2012 12/31/2011 Rmb'000 Rmb'000 Rmb'000 Rmb'000 Toll operation 15,458,159 15,636,388 (2,402,463) (2,806,522)Service area and advertising businesses 553,479 597,281 (157,674) (231,303)Securities operation 13,346,876 12,812,423 (7,868,969) (7,496,034)------------------------------------------------------------------------------------------------------------- Total segment assets (liabilities) 29,358,514 29,046,092 (10,429,106) (10,533,859)Goodwill 86,867 86,867 -- --

-------------------------------------------------------------------------------------------------------------

Consolidated assets (liabilities) 29,445,381 29,132,959 (10,429,106) (10,533,859)-------------------------------------------------------------------------------------------------------------

Segment assets and segment liabilities represent the assets and liabilities of the subsidiaries operatingin the respective reportable and operating segment.

For the year ended December 31, 2012

Other segment information

Amounts included in the measure of segment profit or segment assets:

Service area Toll and advertising Securities operation businesses operation Total Rmb'000 Rmb'000 Rmb'000 Rmb'000 For the year ended December 31, 2012Income tax expense 567,031 19,710 60,123 646,864Interest income 138,924 10,693 29,282 178,899Interest expense 53,749 246 -- 53,995Interests in associates 185,456 234,005 46,052 465,513Interest in a jointly controlled entity 369,954 -- -- 369,954Share of result of associates (12,827) 7,366 (11,880) (17,341)Share of loss of a jointly controlled entity (3,516) -- -- (3,516)

Gain on fair value changes on held for

trading investments 10,290 --

89,318 99,608

Additions to non-current assets (Note) 604,822 14,333 105,406 724,561Depreciation and amortisation 742,318 28,624

96,298 867,240

Loss on disposal of property, plant 742,318 28,624

96,298 867,240

and equipment 4,722 1,223 250 6,195

----------------------------------------------------------------------------------------------------------

Service area Toll and advertising Securities operation businesses operation Total Rmb'000 Rmb'000 Rmb'000 Rmb'000 For the year ended December 31, 2011Income tax expense 575,759 24,281 117,798 717,838Interest income 112,843 28,344 - 141,187Interest expense 69,650 10,393 - 80,043Interests in associates 198,285 236,386 12,008 446,679Share of result of associates (15,968) 19,566 (10,633) (7,035)Fair value changes on held for trading investments 6,800 - (2,947) 3,853Addition to non-current assets (Note) 239,949 21,258 414,792 675,999Depreciation and amortization 740,363 28,696 92,573 861,632Impairment loss on interest in an associate - 11,979 - 11,979

(Gain) loss on disposal of property,

plant and equipment (528) 164 308 (56)

----------------------------------------------------------------------------------------------------------

Note: Non-current assets excluded financial instruments.

Revenue from major services An analysis of the Group's revenue, net of discounts and taxes, for the year is as follows: Year ended Year ended 12/31/2012 12/31/2011 Rmb'000 Rmb'000 Toll operation revenue 3,548,692 3,522,510

Service area businesses revenue (mainly sales of goods) 1,934,501

1,834,422

Advertising business rental revenue 90,473

81,765

Commission income from securities operation 832,213

985,754

Interest income from securities operation 293,924

356,524

Others 455

377

----------------------------------------------------------------------------------------

6,700,258

6,781,352

----------------------------------------------------------------------------------------

Geographical information

The Group's operations are located in the PRC (country of domicile). All non-currentassets of the Group are located in the PRC.

All of the Group's revenue from external customers is attributed to the group entities'country of domicile

(i.e., the PRC).

Information about major customers

During the years ended December 31, 2012 and 2011, there are no individual customerwith sales over 10% of the total sales of the Group.

8. SECURITIES INVESTMENT GAINS

Year ended Year ended 12/31/2012 12/31/2011 Rmb'000 Rmb'000

Gain on fair value changes on held for trading investments 99,608

3,853

Cumulative gain reclassified from equity on disposal of AFS investments 175

4,072

----------------------------------------------------------------------------------------

99,783

7,925

----------------------------------------------------------------------------------------

The above securities investment gains wholly contributed from listed investmentsin both years. 9. OTHER INCOME Year ended Year ended 12/31/2012 12/31/2011 Rmb'000 Rmb'000

Interest income on bank balances, entrusted loan receivables

and financial products investment 159,532 141,187Rental income (Note) 72,335 69,165Handling fee income 5,685 24,526Towing income 9,303 8,782Other interest income (Note 23) 19,367

--

Gain on disposal of an associate 12

--

Exchange (loss) gain, net (2,155)

8,672

Fair value gain on derivative financial instrument 2,841 --Others 21,724

29,597

----------------------------------------------------------------------------------------

288,644

281,929

----------------------------------------------------------------------------------------

Note:

(i) Rental income included contingent rent of approximately Rmb33,697,000 (2011:

Rmb28,747,000) during the year.

For the year ended December 31, 2012

10. FINANCE COSTS Year ended Year ended 12/31/2012 12/31/2011 Rmb'000 Rmb'000

Interest expenses wholly repayable within 5 years:

Bank loans 11,095

37,143

Long-term bonds 42,900

42,900

----------------------------------------------------------------------------------------

53,995

80,043

----------------------------------------------------------------------------------------

11. PROFIT BEFORE TAX

The Group's profit before tax has been arrived at after charging (crediting): Year ended Year ended 12/31/2012 12/31/2011 Rmb'000 Rmb'000 Depreciation of property, plant and equipment 155,330

154,557

Amortisation of prepaid lease payments 2,052

2,052

Amortisation of expressway operating rights

(included in operating costs) 693,610

691,370

Amortisation of other intangible assets

(included in operating costs) 16,248

13,653

----------------------------------------------------------------------------------------

Total depreciation and amortisation 867,240

861,632

----------------------------------------------------------------------------------------

Staff costs (including directors and supervisors):

- Wages and salaries 621,513

525,302

- Pension scheme contributions 62,864

54,998

----------------------------------------------------------------------------------------

684,377

580,300

----------------------------------------------------------------------------------------

Auditors' remuneration 5,901 4,951Loss (gain) on disposal of property, plant and equipment 6,195

(56)

Cost of inventories recognised as an expense 1,786,678

1,685,956

Impairment loss on interest in an associate

(included in other expenses) --

11,979

Fair value (gain) loss on derivative financial instrument (2,841)

6,426Reversal of provision for litigation (included in other expenses) -- (21,238) 12. INCOME TAX EXPENSE Year ended Year ended 12/31/2012 12/31/2011 Rmb'000 Rmb'000 Current tax: PRC Enterprise Income Tax 655,910 750,856 Deferred tax (Note 42) (9,046) (33,018)

----------------------------------------------------------------------------------------

646,864

717,838

----------------------------------------------------------------------------------------

Under the Law of the PRC on Enterprise Income Tax (the "EIT Law") and ImplementationRegulation of the EIT Law, the tax rate of the Group is 25%.

No Hong Kong Profits Tax has been provided as the Group's income neither arises in,nor is derived from

Hong Kong during the year.

The tax charge for the year can be reconciled to the profit before tax per theconsolidated statement of comprehensive income as follows:

Year ended Year ended 12/31/2012 12/31/2011 Rmb'000 Rmb'000 Profit before tax 2,515,946 2,783,780

----------------------------------------------------------------------------------------

Tax at the PRC enterprise income tax rate of 25% (2011:25%) 628,987

695,945

Tax effect of share of loss of associates 4,335

1,759Tax effect of share of loss of a jointly controlled entity

879 --Tax effect of income not taxable for tax purposes (17)

(16)

Tax effect of expenses not deductible for tax purposes 12,680

20,150

----------------------------------------------------------------------------------------

Tax charge for the year 646,864

717,838

----------------------------------------------------------------------------------------

13. OTHER COMPREHENSIVE INCOME (LOSS)

Tax effect relating to other comprehensive income (loss) as follows:

Year ended 12/31/2012 Year ended 12/31/2011 Tax Before-tax Tax Net-of-tax Before-tax (expense) Net-of-tax amount benefit amount amount benefit amount Rmb'000 Rmb'000 Rmb'000 Rmb'000 Rmb'000 Rmb'000

Fair value gain (loss) on

AFS financial assets

arising during the year 4,800 (1,200)

3,600 (9,746) 2,437 (7,309)

Reclassification adjustments for the cumulative gain included in profit or loss upon disposal of AFS financial assets (175) 44 (131) (4,072) 1,018 (3,054)---------------------------------------------------------------------------------------------------------------------- Total 4,625 (1,156) 3,469 (13,818) 3,455 (10,363)----------------------------------------------------------------------------------------------------------------------

14. DIRECTORS', SUPERVISORS' AND SENIOR MANAGEMENTS' EMOLUMENTS

For the Notes to the Consolidated Financial Statement, please visit:http://www.prnasia.com/sa/attachment/2013/05/20130503111110842192.pdf

Notes:

(i) Resigned on June 11, 2012.(ii) Appointed on June 11, 2012.(iii) Ms. Luo Jianhu is also the Chief Executive of the Company and her emoluments disclosed

above include those services rendered by her as the Chief Executive.

The emoluments of each of the directors and supervisors were below HK$1,000,000 (equivalent to Rmb811,000) in bothyears. Bonuses paid to directors and supervisors are performance-rated and are determined by the RemunerationCommittee of the Company, which comprises three independent non- executive directors. No directors or supervisors waived any emoluments and no incentive was paid to any directors or supervisors as aninducement to join the Company and no compensation for loss of office was paid to any directors, supervisors, pastdirectors or past supervisors during both years. Bonuses are determined by reference to the individual performanceof the directors. The emoluments paid or payable to each of the 5 (2011: 3) senior managements are as follows: Zhang Fang Wu Zheng Zhang Jingzhong Zhexing Junyi Hui Xiuhua Total Rmb'000 Rmb'000 Rmb'000 Rmb'000 Rmb'000 Rmb'000 (note i) (note i) 2012 Salaries, allowances and benefits in kind 124 420 420 321 251 1,626Bonuses paid and payable 82 135 135 98 103 553Pension scheme contributions 12 24 24

24 24 108------------------------------------------------------------------------------------------------Total emoluments

308 579 579 443 378 2.287------------------------------------------------------------------------------------------------ 2011Salaries, allowances and benefits in kind N/A 293 293 272 N/A 858Bonuses paid and payable N/A 193 193 76 N/A 462Pension scheme contributions N/A 15 15

15 N/A 45------------------------------------------------------------------------------------------------Total emoluments

N/A 501 501 363 N/A 1,365------------------------------------------------------------------------------------------------

Note: (i) Appointed on June 11, 2012.

The emoluments of each of the senior managements were below HK$1,000,000 (equivalent to Rmb811,000) in both years.Bonuses paid to senior managements are performance-rated and are determined by the Board of Directors of theCompany. No senior management waived any emoluments and no incentive was paid to any senior management as an inducement tojoin the Company and no compensation for loss of office was paid to any senior management, past senior managementduring both years. Bonuses are determined by reference to the individual performance of the senior managements.

15. EMPLOYEES' EMOLUMENTS

The emoluments of the five highest paid individuals in the Group are as follows: Year ended Year ended 2012 2011 Rmb'000 Rmb'000 Salaries, allowances and benefits in kind 6,680 9,289Bonuses paid and payable (Note) 16,315 17,681Pension scheme contributions 126 118

---------------------------------------------------------------------------------------------

23,121 27,088

---------------------------------------------------------------------------------------------

Note:

The bonuses paid and payable are determined by reference to the performance of the relevant business of the Groupfor the years ended December 31, 2012 and 2011.

The five individuals with the highest emoluments in the Group during the year included no (2011: no)director, whose emoluments are set out in Note 14 above, and five (2011: five) non-director employees.

Their emoluments are within the following bands:

No. of individuals Year Ended Year Ended 12/31/2012 12/31/2011 HK$4,500,001 to HK$5,000,000(equivalent to Rmb3,648,001 to Rmb4,053,000) 1 1 HK$5,000,001 to HK$5,500,000(equivalent to Rmb4,053,001 to Rmb4,459,000) 1 -- HK$5,500,001 to HK$6,000,000(equivalent to Rmb4,459,001 to Rmb4,864,000) 1 -- HK$6,000,001 to HK$6,500,000(equivalent to Rmb4,864,001 to Rmb5,270,000) 1 2 HK$6,500,001 to HK$7,000,000(equivalent to Rmb5,270,001 to Rmb5,675,000) 1 1 HK$9,500,001 to HK$10,000,000(equivalent to Rmb7,702,001 to Rmb8,107,000) -- 1 16. DIVIDENDS Year Ended Year Ended 12/31/2012 12/31/2011 Rmb'000 Rmb'000

Dividends recognised as distribution during the year:

2012 Interim -- Rmb6 cents

(2011: 2011 interim Rmb6 cents) per share

260,587 260,587

2011 Final -- Rmb25 cents

(2011: 2010 Final Rmb25 cents) per share 1,085,779 1,085,779------------------------------------------------------------------------------------------- 1,346,366 1,346,366------------------------------------------------------------------------------------------- The final dividend of Rmb24 cents per share in respect of the year ended December 31, 2012 (2011: final dividendof Rmb25 cents per share in respect of the year ended December 31, 2011) has been proposed by the directorsand is subject to approval by the shareholders in the Annual General Meeting. 17. EARNINGS PER SHARE The calculation of the basic earnings per share is based on profit for the year attributable to owners of the Companyof Rmb1,686,270,000 (2011: Rmb1,805,345,000) and the 4,343,114,500 (2011: 4,343,114,500) ordinary shares inissue during the year.

Diluted earnings per share presented is the same as basic earnings per share as there were no potential ordinaryshares outstanding for the years ended December 31, 2012 and 2011.

18. PROPERTY, PLANT AND EQUIPMENT

Leasehold Communication land and Ancillary and signaling Motor Machinery Construction buildings facilities equipment vehicles

and equipment in progress Total

Rmb'000 Rmb'000 Rmb'000 Rmb'000 Rmb'000 Rmb'000 Rmb'000 COST At January 1, 2011 488,585 467,077 327,794 195,343 369,391 84,601 1,932,791Additions 35,494 9,599 14,433 13,259 44,977 218,210 335,972Transfer -- 43,646 14,857 -- 883 (59,386) --Disposals (795) (10,386) (938) (12,198) (14,168) -- (38,485)

--------------------------------------------------------------------------------------------------------------------

At December 31, 2011 523,284 509,936 356,146 196,404

401,083 243,425 2,230,278Additions 21,102 17,752 71,930 21,833 41,740 51,716 226,073Transfer -- 26,873 9,483 -- -- (36,356) --Disposals (844) (11,735) (11,938) (6,540) (11,055) (544) (42,656)

--------------------------------------------------------------------------------------------------------------------

At December 31, 2012 543,542 542,826 425,621 211,697

431,768 258,241 2,413,695--------------------------------------------------------------------------------------------------------------------

DEPRECIATION

At January 1, 2011 77,537 137,740 239,283 131,179 226,426 -- 812,165

--------------------------------------------------------------------------------------------------------------------

Provided for the year 37,859 23,558 21,731 16,465

54,944 -- 154,557Disposals (795) (4,377) (805) (11,578) (13,354) -- (30,909)

--------------------------------------------------------------------------------------------------------------------

At December 31, 2011 114,601 156,921 260,209 136,066 268,016 -- 935,813Provided for the year 39,280 22,718 24,260 16,417 52,655 -- 155,330Disposals (755) (5,613) (11,786) (6,403) (10,735) -- (35,292)

--------------------------------------------------------------------------------------------------------------------

At December 31, 2012 153,126 174,026 272,683 146,080

309,936 -- 1,055,851

--------------------------------------------------------------------------------------------------------------------

CARRYING VALUESAt December 31, 2012 390,416 368,800 152,938 65,617

121,832 258,241 1,357,844--------------------------------------------------------------------------------------------------------------------At December 31, 2011 408,683 353,015 95,937 60,338

133,067 243,425 1,294,465--------------------------------------------------------------------------------------------------------------------

The property, plant and equipment are mainly located in the PRC.

The carrying value of properties shown above comprises:

12/31/2012 12/31/2011 Rmb'000 Rmb'000

Leasehold land and buildings in the PRC:

Long lease

24,654 24,984

Medium-term lease 365,762 383,699------------------------------------------------------------------------------------------- 390,416 408,683------------------------------------------------------------------------------------------- 19. PREPAID LEASE PAYMENTS 12/31/2012 12/31/2011 Rmb'000 Rmb'000

Analysed for reporting purposes as:

Current assets 2,052 2,052Non-current assets 66,931 68,983

-------------------------------------------------------------------------------------------

68,983 71,035-------------------------------------------------------------------------------------------

The Group's prepaid lease payments comprise leasehold land in the PRC under medium-term leases. The amount representsprepayment of rentals under operating leases for "land use rights" of land situated in the PRC.

20. EXPRESSWAY OPERATING RIGHTS

Rmb'000 COSTAt January 1, 2011 16,772,702Adjustment (16,145)

--------------------------------------------------------------------

At December 31, 2011 16,756,557Additions 60,730

--------------------------------------------------------------------

At December 31, 2012 16,817,287

--------------------------------------------------------------------

AMORTISATION

At January 1, 2011 4,701,205Charge for the year 691,370Written off (956)

--------------------------------------------------------------------

At December 31, 2011 5,391,619Charge for the year 693,610

--------------------------------------------------------------------

At December 31, 2012 6,085,229

--------------------------------------------------------------------

CARRYING VALUESAt December 31, 2012 10,732,058

--------------------------------------------------------------------

At December 31, 2011 11,364,938

--------------------------------------------------------------------

The above expressway operating rights were granted by the Zhejiang Provincial Government for 30 years. During theexpressway concessionary period, the Group has the rights of operations and management of Shanghai-Hangzhou-NingboExpressway and Shangsan Expressway and the toll-collection rights thereof. The Group is required to manage andoperate the expressways in accordance with the regulations promulgated by the Ministry of Communication andrelevant government authorities. Upon the end of the respective concession service periods, the toll expresswaysand their toll station facilities without residual value, will be returned to the grantors at zero consideration. 21. GOODWILL Rmb'000 COST AND CARRYING VALUESAt January 1, 2011, December 31, 2011 and December 31, 2012

86,867

Particulars regarding impairment testing on goodwill are disclosed in Note 24. 22. OTHER INTANGIBLE ASSETS Securities/ Customer futures Trading Software bases firm licenses seats licenses Total Rmb'000 Rmb'000 Rmb'000 Rmb'000 Rmb'000 COSTAt January 1, 2011 101,147 63,083 3,480 33,168 200,878Additions -- -- -- 16,227 16,227Written off -- -- -- (146) (146)------------------------------------------------------------------------------------------------At December 31, 2011 101,147 63,083 3,480 49,249 216,959 Additions -- -- --

14,287 14,287------------------------------------------------------------------------------------------------At December 31, 2012

101,147 63,083 3,480 63,536 231,246------------------------------------------------------------------------------------------------AMORTISATIONAt January 1, 2011 35,349 -- -- 10,509 45,858Charge for the year 6,266 -- -- 7,387 13,653Written off -- -- --

(146) (146)------------------------------------------------------------------------------------------------At December 31, 2011

41,615 -- -- 17,750 59,365Charge for the year 6,266 -- --

9,982 16,248------------------------------------------------------------------------------------------------At December 31, 2012

47,881 -- -- 27,732 75,613------------------------------------------------------------------------------------------------CARRYING VALUESAt December 31, 2012 53,266 63,083 3,480

35,804 155,633------------------------------------------------------------------------------------------------At December 31, 2011

59,532 63,083 3,480 31,499 157,594------------------------------------------------------------------------------------------------

The customer bases of Zheshang Securities Co., Ltd. ("Zheshang Securities") and Zheshang Futures Broker Co., Ltd.("Zheshang Futures") are amortised on a straight-line basis over 15 years and 3 years, respectively.

The securities/futures firm licenses of the securities operation are considered by the management of the Group tohave an indefinite useful life because they can be renewed at minimal cost even though the current licenses areeffective for three years.

The trading seats of the securities operation is considered by the management of the Group to have an indefiniteuseful life because there is no economic or regulatory limit to their useful life.

Software are amortised on a straight-line basis over three to five years.

Particulars of the impairment testing on intangible assets with indefinite useful lives are disclosed in Note 24.

23. DEPOSIT PAID FOR ACQUISITION OF A PROPERTY

On December 26, 2011, Zheshang Securities entered into a provisional agreement with a related party, Hangzhou JinjiReal Estate Co., Ltd. ("Jinji Co"), a subsidiary of the Communications Group, for the purchase of a property inHangzhou for a provisional consideration of Rmb809,500,000. As at December 31, 2011, deposit of Rmb323,800,000 hadbeen paid to the vendor. During the year ended December 31, 2012, this provisional agreement has been terminatedas Jinji Co fails to deliver the property to Zheshang Securities, deposit of Rmb323,800,000 together with interest,which is according to the prevailing lending rate promulgated by the People's Bank of China ("PBOC"), ofRmb19,367,000 have been repaid to Zheshang Securities.

24. IMPAIRMENT TESTING ON GOODWILL AND INTANGIBLE ASSETS WITH INDEFINITE USEFUL LIVES

For the purposes of impairment testing, goodwill and other intangible assets with indefinite useful lives set out inNotes 21 and 22 have been allocated to four individual cash generating units ("CGUs"), comprising two subsidiariesin toll operation segment and two subsidiaries in securities operation segment. The carrying amounts of goodwilland other intangible assets (net of accumulated impairment losses) as at December 31, 2012 and 2011 allocatedto these units are as follows: Securities/futures Trading Goodwill firm licenses seats 2012 2011 2012 2011 2012 2011 Rmb'000 Rmb'000 Rmb'000 Rmb'000 Rmb'000 Rmb'000 Toll operation -- Zhejiang Jiaxing Expressway Co., Ltd. ("Jiaxing Co") 75,137 75,137 -- -- -- -- -- Zhejiang Shangsan Expressway Co., Ltd. ("Shangsan Co") 10,335 10,335 -- -- -- -- Securities operation -- Zheshang Securities -- -- 51,783 51,783 2,080 2,080 -- Zheshang Futures 1,395 1,395 11,300 11,300 1,400 1,400--------------------------------------------------------------------------------------------------------------------- 86,867 86,867 63,083 63,083 3,480 3,480---------------------------------------------------------------------------------------------------------------------

During the year ended December 31, 2012, management of the Group determines that there are no impairment of any of itsCGUs containing goodwill and other intangible assets with indefinite useful lives.

The basis of the recoverable amounts of the above CGUs and their major underlying assumptions are summarised below:

Jiaxing Co and Shangsan Co

The recoverable amounts of Jiaxing Co and Shangsan Co are determined based on value in use calculations. The keyassumptions for the value in use calculations relate to discount rates, growth rates, and expected changes in tollrevenue and direct costs during the forecast period. Those calculations use cash flow projections based on financialbudgets approved by management covering a five-year period and a discount rate of 15% (2011: 15%). No growth ratehas been assumed beyond the five-year period up to the remaining toll road operating rights which are 16 years(2011: 17 years) and 18 years (2011: 19 years) for Jiaxing Co. and Shangsan Co., respectively. Zheshang Securities The recoverable amount of Zheshang Securities is determined based on value in use calculations. The key assumptionsfor the value in use calculations relate to the discount rate, growth rates and profit margin during the forecastperiod. Those calculations use cash flow projections based on financial budgets approved by management covering afive-year period and a discount rate of 17.11% (2011:16.58%). Growth rate beyond the five-year period is assumedto be zero. Zheshang Futures The recoverable amount of Zheshang Futures is determined based on value in use calculations. The key assumptions forthe value in use calculations relate to the discount rate, growth rates and profit margin during the forecastperiod. Those calculations use cash flow projections based on financial budgets approved by management coveringa five-year period and a discount rate of 17.11% (2011: 16.58%). Growth rate beyond the five-year period isassumed to be zero. 25. INTERESTS IN ASSOCIATES 12/31/2012 12/31/2011 Rmb'000 Rmb'000

Unlisted investments in associates, at cost less impairment 505,463 462,712Share of post-acquisition loss, net of dividends received

(39,950) (16,033)-------------------------------------------------------------------------------------------- 465,513 446,679-------------------------------------------------------------------------------------------- At December 31, 2012 and 2011, the Group had interests in the following associates: Form of Place of Percentage of equity business registration and interest attributable toName of entity structure operation the Group Principal activities 12/31/2012 12/31/2011 % % Zhejiang Expressway Petroleum Corporate The PRC 50 50 Operation of petrol Development Co., Ltd. ("Petroleum stations and sale of Co") petroleum products JoinHands Technology Co., Ltd. Corporate The PRC

27.58 27.58 Provision of printing

("JoinHands Co") (Note iv) services and property leasing Zhejiang Concord Property Investment Corporate The PRC 45 45 Investment and real Co., Ltd. estate development Hangzhou Tianjun Industrial Co., Ltd. Corporate The PRC

N/A 29.45 Investment and portfolio

("Hangzhou Tianjun Co") (Note i) (Note i) management Hangzhou Yuhang Communication Time Corporate The PRC

N/A 16.47 Investment and real

Plaza Co., Ltd. ("Time Plaza Co") (Note ii) estate development

(Note ii)

Ningbo Expressway Advertising Co., Corporate The PRC

24.5 24.5 Management of advertising

Ltd. ("Ningbo Advertising Co") billboards along expressways Zhejiang Jinhua Yongjin Expressway Corporate The PRC

23.45 23.45 Management of the Jinhua

Co., Ltd. ("Yongjin") section of the Ningbo-Jinhua Expressway

Zheshang Fund Management

Co., Ltd. ("Zheshang Fund") Corporate The PRC

13.04 13.04 Asset fund management

(Note iii) Notes:

(i) In November 2012, the Group entered into a share transfer agreement to dispose of its 29.45%

equity interest in Hangzhou Tianjun Co to an independent third party. The disposal was completed as at

December 31, 2012.

(ii) The Group was able to exercise significant influence over Time Plaza Co because it had the power to appoint

one out of five directors of that company under the provisions stated in the Articles of Association of that

company. This associate has been de-registered during the year ended December 31, 2012.

(iii) The Group is able to exercise significant influence over Zheshang Fund because it has the power to appoint

one out of four directors of that company under the provisions stated in the Articles of Association of that

company. During the year ended December 31, 2012, Zheshang Securities, in proportion to its equity interest,

has made additional capital contribution of Rmb50,000,000 to Zheshang Fund.

(iv) In July 2011, the Company has agreed to transfer all of its 27.582% equity interest in JoinHands Co to

Guangzhou Kaixin Consulting Co., Ltd. ("Kaixin Co"), an independent third party, at a consideration of

Rmb31,430,000. However, as Kaixin Co has failed to pay the consideration for the equity transfer

according to the terms of the Equity Interest Transfer Agreement, such transfer had not been completed

and the Company lodged a lawsuit against it in August 2011 at the People's Court of Xihu District,

Hangzhou City. The court ruled in favour of the Company, except for the execution of the priority right

for claim against the mortgaged commercial property and land use right in Hangzhou held by JoinHands Co

to the Company and the liquidated damages, in March 2012. Both the Company and Kaixin Co filed appeals

respectively because of their respective objections against the court's decision. During the year ended

December 31, 2011, an impairment loss of Rmb11,979,000 in relation to interest in the associate,

JoinHands Co, was recognised.

The summarised financial information in respect of the Group's associates at the end of the reporting period isset out below: 12/31/2012 12/31/2011 Rmb'000 Rmb'000 Total assets 7,521,127 6,503,934Total liabilities

(5,842,013) (5,028,160)-------------------------------------------------------------------------------------------Net assets

1,679,114 1,475,774-------------------------------------------------------------------------------------------Group's share of net assets of associates,

after impairment loss of Rmb21,277,000

(2011: Rmb21,277,000)

465,513 446,679-------------------------------------------------------------------------------------------Revenue

6,312,126 5,452,262-------------------------------------------------------------------------------------------Loss for the year

(87,218) (60,873)-------------------------------------------------------------------------------------------Group's share of loss of associates for the year

(17,341) (7,035)------------------------------------------------------------------------------------------- 26. INTEREST IN A JOINTLY CONTROLLED ENTITY 12/31/2012 12/31/2011 Rmb'000 Rmb'000

Unlisted investment in a jointly controlled entity,

at cost less impairment 373,470 -- Share of post-acquisition loss, net of dividends received (3,516) --

-------------------------------------------------------------------------------------------

369,954 --

-------------------------------------------------------------------------------------------

At December 31, 2012 and 2011, the Group had interest in the following jointly controlled entity:

Form of Place of Percentage

of equity Principal

business registration and interest attributable to activities operation the Group 12/31/2012 12/31/2011 % %Name of entity Shengxin Expressway Co., Ltd. Corporate The PRC 50 N/A Management ("Shengxin Co") of the (Note) Shaoxing section of the Ningbo-Jinhua Expressway Note: On July 6, 2012, the Company entered into a sales and purchase agreement (the "S&P Agreement") withShaoxing Communications Investment Group Co., Ltd. ("Shaoxing Communications Group"), an independentthird party, who owned 100% equity interest of Shengxin Co, pursuant to which the Company has conditionallyagreed to purchase from Shaoxing Communications Group, a 50% equity interest in Shengxin Co for a cashconsideration of Rmb355,033,000, plus interest accrued on the consideration at the interest rate accordingto the PBOC. The acquisition has been completed on November 28, 2012. As at December 31, 2012, 50% of the consideration amounting to Rmb177,516,000 and the relevant interest ofRmb6,622,000 were paid by the Company to Shaoxing Communications Group, while the remaining 50% and unpaidinterest was accounted for as consideration payable and included in other payables and accruals in theconsolidated statement of financial position. The summarised financial information in respect of the Group's interest in a jointly controlled entity whichis accounted for using the equity method at the end of the reporting period is set out below: 12/31/2012 12/31/2011 Rmb'000 Rmb'000 Current assets 9,101 --

-------------------------------------------------------------------------------------------

Non-current assets 1,542,558 --

-------------------------------------------------------------------------------------------

Current liabilities (15,185) --

-------------------------------------------------------------------------------------------

Non-current liabilities (1,166,520) --

-------------------------------------------------------------------------------------------

Revenue 11,954 --

-------------------------------------------------------------------------------------------

Expenses (15,470) --

-------------------------------------------------------------------------------------------

27. AVAILABLE-FOR-SALE INVESTMENTS

AFS investments comprise: 12/31/2012 12/31/2011 Rmb'000 Rmb'000 Non-current assets: Unlisted equity securities investments, at cost (Note i)

11,000 1,000

Debenture listed in the PRC with fixed interest of

9.6% per annum and maturity date on May 31, 2017 122,000 --

-------------------------------------------------------------------------------------------

133,000 1,000Current assets:

Listed equity securities investments

in the PRC, at fair value (Note ii) 134,899 60,274

-------------------------------------------------------------------------------------------

267,899 61,274------------------------------------------------------------------------------------------- As at December 31, 2012, the Group has entered into securities lending arrangement with clients that resultedin the transfer of listed AFS investments with total fair value of Rmb5,897,000 to external clients, whichdid not result in derecognition of the financial assets. There was no such arrangement as at December 31,2011. Details of the collaterals were set out in Note 29.

Notes:

(i) Unlisted equity securities investments represent investments in unlisted equity securities issued by

private entities established in the PRC. They are measured at cost less impairment at the end of the

reporting period because the range of reasonable fair value estimated is so significant that the

directors of the Company are of the opinion that their fair values cannot be measured reliably.

(ii) Listed equity investments represent equity securities subscribed through placement by listed issuers.

They are measured at fair value. During the year ended December 31, 2012, the gain on change in fair

value of the investments of Rmb4,800,000 (2011: loss on change in fair value of investment of

Rm9,746,000) has been recognised as other comprehensive gain (loss).

During the year ended December 31, 2012, the Group disposed of certain listed equity investments and recogniseda gain on disposal of Rmb175,000 (2011: Rmb4,072,000).

28. TRADE RECEIVABLES

The Group has no credit period granted to its trade customers of toll operation and service area businesses.The following is an aged analysis of trade receivables presented based on the invoice date at the end ofthe reporting period, which approximated the respective revenue recognition dates. 12/31/2012 12/31/2011 Rmb'000 Rmb'000 Within 3 months 57,538 47,7423 months to 1 year -- --1 to 2 years 146 --Over 2 years 163 271

-------------------------------------------------------------------------------------------

57,847 48,013------------------------------------------------------------------------------------------- Included in the Group's trade receivable balance aged within 3 months were toll receivables from the ExpresswayFee Settlement Centre of the Highway Administration Bureau of Zhejiang Province and Hangzhou Urban and RuralConstruction Committee amounting to Rmb54,582,000 (2011: Rmb47,086,000) which has been settled subsequent tothe end of the reporting period. The directors consider the credit risk of the balance to be minimal.

29. LOANS TO CUSTOMERS ARISING FROM MARGIN FINANCING BUSINESS

12/31/2012 12/31/2011 Rmb'000 Rmb'000 Loans to margin clients 724,123 --Less: Allowance for doubtful debts------------------------------------------------------------------------------------------- 724,123 --

-------------------------------------------------------------------------------------------

The Group has provided customers with margin financing and security lending for securities transactions sinceJune 2012, the credit facility limits to margin clients are determined by the discounted market value of thecollateral securities accepted by the Group. All of the loans to margin clients which are secured by the underlying pledged securities are interest bearingat a fixed rate of 8.6%. The Group maintains a list of approved stocks for margin lending at a specified loanto collateral ratio. Any excess in the lending ratio will trigger a margin call which the customers have tomake good of the shortfall. The Group has the right to process forced liquidation if the customer fails tomake good of the shortfall within a short period of time. As at December 31, 2012, loans to customers under the margin financing and securities lending activitiescarried out in the PRC were secured by the customers' stock securities and cash collaterals. The undiscountedmarket value of the stock security collaterals was amounted to Rmb2,745,885,000. Cash collateral of Rmb75,976,000received from clients was included in accounts payable to customers arising from securities business in Note 35.

No aged analysis is disclosed as in the opinion of the directors, the aged analysis does not give additionalvalue in view of the nature of business of securities margin financing.

30. OTHER RECEIVABLES AND PREPAYMENTS 12/31/2012 12/31/2011 Rmb'000 Rmb'000 Analysed as: Current

Entrusted loans receivables from related parties

(Note 47(ii)) 314,616 350,704Entrusted loan receivable from a third party (Note a) -- 300,944Loan receivable from an associate (Note 47(i)) 82,101 --Interest receivables 73,440 72,932Financial products investment receivables (Note b) 103,432 --Prepayments 31,518Others 96,520 79,287------------------------------------------------------------------------------------------- 701,627 844,142-------------------------------------------------------------------------------------------

Non-current

Entrusted loans receivables from related parties

(Note 47(ii)) 325,035 300,000Loan receivable from an associate (Note 47(i))

-- 82,000

-------------------------------------------------------------------------------------------

325,035 382,000------------------------------------------------------------------------------------------- 1,026,662 1,226,142------------------------------------------------------------------------------------------- Notes:

(a) Pursuant to the board resolutions of the Company on January 30, 2011, and the entrusted loan

contracts, the Company provided short-term entrusted loans during 2011 totaling Rmb500,000,000

with maturity date of March 31, 2012 to Zhejiang Jiahe Industrial Co., Ltd. at a fixed

interest rate of 12% per annum and guaranteed by Greentown Real Estate Group Co., Ltd. in

full. Part of the loan of Rmb200,000,000 was early settled during 2011. The remaining balance

was settled during the year ended December 31, 2012.

(b) Short-term fixed-yield and principal protected bank financial products.

31. HELD FOR TRADING INVESTMENTS 12/31/2012 12/31/2011 Rmb'000 Rmb'000

Held for trading investments include:

Listed securities in the PRC, at fair value:

Equity securities 8,953 195,609 Open-end equity funds 26,362 4,686 Corporate bonds with fixed interest ranging from 5.20% to 9.60% (2011: 4.45% to 8.50%) per annum 1,451,457 1,059,726

-----------------------------------------------------------------------------------------

1,486,772

1,260,021

-----------------------------------------------------------------------------------------

32. FINANCIAL ASSETS HELD UNDER RESALE AGREEMENT

As at December 31, 2012, the amounts represented equity and debt securities acquired by theGroup which would be resold at a predetermined price under resale agreements with a financialinstitution in the PRC in 2013. The cash advanced by the Group carried interest at fixedrates ranging from 2.16% to 5.77% per annum. Subsequent to the year end, these equity anddebt securities have been fully resold and the cash advanced by the Group together withthe corresponding interests have also been returned to the Group.

The Group conducted resale agreement under usual and customary terms of placements and heldcollaterals for these transactions.

The collaterals include both equity and debt securities listed in the PRC. As at December 31,2012, the fair value of equity securities and debt securities held as collaterals wasRmb299,918,000, and Rmb119,900,000, respectively.

There was no financial asset held under resale agreement for the year ended December 31, 2011.

33. BANK BALANCES HELD ON BEHALF OF CUSTOMERS

From the Group's securities operation, the Group receives and holds money deposited by customers(including other institutions). These customers' money is maintained in one or more segregatedbank accounts. The Group has recognised the corresponding accounts payable to respective customersand other institutions.

Bank balances held on behalf of customers carry interest at market rates which range from 1.62% to1.98% (2011: 1.62% to 1.98%) per annum.

Bank balances held on behalf of customers that are denominated in currencies other than thefunctional currency of the respective group entities are set out below:

HKD USD Rmb'000 Rmb'000 As at December 31, 2012 14,228 40,544As at December 31, 2011 9,893 36,564----------------------------------------------------------------------------------------- 34. BANK BALANCES AND CASH 12/31/2012 12/31/2011 Rmb'000 Rmb'000 Time deposits with original maturity over three months 1,483,408

2,467,793

-----------------------------------------------------------------------------------------

Unrestricted bank balances and cash 2,613,789

2,292,357

Time deposits with original maturity of less than three months 748,920

828,073

-----------------------------------------------------------------------------------------

Cash and cash equivalents 3,362,709

3,120,430

-----------------------------------------------------------------------------------------

4,846,117

5,588,223

-----------------------------------------------------------------------------------------

Bank balances and cash that are denominated in currencies other than the functional currency ofthe respective group entities are set out below:

HKD USD Rmb'000 Rmb'000 As at December 31, 2012 5,232 27,999As at December 31, 2011 5,271 26,931

-----------------------------------------------------------------------------------------

35. ACCOUNTS PAYABLE TO CUSTOMERS ARISING FROM SECURITIES BUSINESS

The amounts include payables for securities business as well as cash collateral from customers forsecurities lending and/or margin financing arrangement. The settlement terms of accounts payablesarising from the securities business are one day after the trade date. No aged analysis is disclosedas in the opinion of the directors an aged analysis does not give any additional value in view ofthe nature of the business. As at December 31, 2012, Rmb75,976,000 cash collateral have been received from clients for securitieslending or margin financing arrangement, of which under normal course of business were repayableupon maturity within 6 months. Only the excess amounts over the required margin deposits stipulatedare repayable on demand. Accounts payable to customers arising from securities business that are denominated in currenciesother than the functional currency of the respective group entities are set out below: HKD USD Rmb'000 Rmb'000 As at December 31, 2012 14,228 40,544As at December 31, 2011 9,893 36,564

-----------------------------------------------------------------------------------------

36. TRADE PAYABLES Trade payables mainly represent the construction payables for the improvement projects of tollexpressways. The following is an aged analysis of trade payables presented based on theinvoice date: 12/31/2012 12/31/2011 Rmb'000 Rmb'000 Within 3 months 227,946 93,6023 months to 1 year 35,678 32,2951 to 2 years 26,876 116,0052 to 3 years 48,922 58,618Over 3 years 38,942 16,668

-----------------------------------------------------------------------------------------

378,364

317,188

-----------------------------------------------------------------------------------------

37. OTHER PAYABLES AND ACCRUALS

Other liabilities: Accrued payroll and welfare 398,061 350,508 Consideration payable for acquisition of equity interest in Shengxin Co. (Note26) (Note) 189,331 -- Advance from rental and advertising customers 72,051 77,754 Toll collected on behalf of other toll roads 7,114 36,944 Retention payable 84,133 85,301 Others 182,082 131,812

-----------------------------------------------------------------------------------------

932,772

682,319

Other accruals 40,259

41,897

-----------------------------------------------------------------------------------------

973,031

724,216

-----------------------------------------------------------------------------------------

Notes: The amount was unsecured, repayable on demand and carried interest at interest rateaccording to the PBOC. 38. BANK LOANS 12/31/2012 12/31/2011 Rmb'000 Rmb'000 Bank loans, unsecured and repayable within one year --

462,553

At December 31, 2011, the bank loans included several loans totalling Rmb362,553,000 carried interests atfixed rates ranging from 4.95% to 6.31% per annum. At December 31, 2011, the bank loans also included loansof Rmb100,000,000, which carried interests at floating rates based on the interest rate according to thePeople's Bank of China ranging from 6.31% to 6.56%. The Group's bank loans were fully repaid during theyear ended December 31, 2012.

The Group's borrowings that are dominated in currencies other than the functional currencies of the relevantgroup entities are set out below:

HKD Rmb'000 As at December 31, 2011 312,553 39. PROVISIONS Litigation on interest claim Rmb'000 (note i) At January 1, 2011 21,238Overprovision in prior years (21,238) At December 31, 2011 and December 31, 2012 -- Note:

(i) The Group received a claim from the customers under the state bond investment agency agreements and fund

trust agreements for the additional interest compensation upon the settlement of the principal and interest

at a rate of 2.7%. During the year ended December 31, 2011, the plaintiffs withdrew from the legal proceedings

and obligation of the Group was fully discharged. Accordingly, the provision of Rmb21,238,000 has been released

and included in other expenses for the year ended December 31, 2011. 40. DERIVATIVE FINANCIAL INSTRUMENT 12/31/2012 12/31/2011 Rmb'000 Rmb'000 Foreign currency forward contract --

6,426

As at December 31, 2011, the Group entered into foreign currency forward contract. The major terms of theoutstanding contract were as follows:

Notional amount Maturity Exchange rates Buy HKD 386,000,000, sell Rmb May 31, 2012 Rmb0.8292 to HKD1

The fair value of foreign currency forward contract is measured using quoted forward exchange rates andyield curves derived from quoted interest rates matching maturities of the contract.

The settlement of the foreign currency forward contract on May 31, 2012 resulted in a gain on fair valuechanges on derivative financial instruments of Rmb2,841,000 credited to profit or loss. The Group did notenter into any foreign currency forward contract as at December 31, 2012. 41. LONG-TERM BONDS 12/31/2012 12/31/2011 Rmb'000 Rmb'000 Long-term bonds -- listed in the PRC 1,000,000

1,000,000

The long-term bonds are unsecured, carry interest payable annually at a fixed rate of 4.29% per annum andare repayable in 2013 upon maturity. The quoted price of the listed long-term bonds as at December 31, 2012is Rmb992,421,000 (2011: Rmb1,000,000,000). The long-term bond is classified as current liabilitiesaccording to its maturity as at December 31, 2012.

42. DEFERRED TAXATION

The following are the major deferred tax liabilities and assets recognised and movements thereon duringthe current and prior years: Accelerated tax Changes in depreciation fair value of of property held for trading plant and Fair value and available- equipment and adjustment of for-sale expressway intangible Provisions investments operating rights assets Others Total Rmb'000 Rmb'000 Rmb'000 Rmb'000 Rmb'000 Rmb'000 At January 1, 2011 (5,310) 35,899 228,561 34,238 (30,741) 262,647Charge (credit) to profit or loss 5,310 (14,383) (10,004) (2,339) (11,602) (33,018)Charge to other comprehensive loss -- 2,437 -- -- -- 2,437

------------------------------------------------------------------------------------------------------------------------

At December 31, 2011 -- 23,953 218,557 31,899 (42,343) 232,066Charge (credit) to profit or loss -- 6,633 (10,004) (2,339) (3,336) (9,046)Charge to other comprehensive loss -- 1,200 -- -- -- 1,200

------------------------------------------------------------------------------------------------------------------------

At December 31, 2012 -- 31,786 208,553 29,560 (45,679) 224,220------------------------------------------------------------------------------------------------------------------------ 43. SHARE CAPITAL Number of shares Share capital 12/31/2012 12/31/2011 12/31/2012 12/31/2012 Rmb'000 Rmb'000

Registered, issued and fully paid:

Domestic shares of Rmb1.00 each 2,909,260,000

2,909,260,000 2,909,260 2,909,260

H Shares of Rmb1.00 each 1,433,854,500 1,433,854,500 1,433,855 1,433,855--------------------------------------------------------------------------------------------------------------------- 4,343,114,500 4,343,114,500 4,343,115 4,343,115---------------------------------------------------------------------------------------------------------------------

The domestic shares are not currently listed on any stock exchange.

The H Shares have been listed on the Stock Exchange since May 15, 1997. The H Shares were admitted to the Official Liston May 5, 2000 and their dealings on the London Stock Exchange commenced on the same day.

On February 14, 2002, the United States Securities and Exchange Commission, following the approval by the Board ofDirectors and the China Securities Regulatory Commission, declared the registration statement in respect of the ADSsevidenced by ADRs representing the deposited H Shares of the Company effective.

All the domestic shares and H Shares rank pari passu with each other as to dividends and voting rights.

44. RETIREMENT BENEFITS SCHEMES

The employees of the Group are members of the state-managed retirement benefits scheme operated by the PRC government.To supplement this existing retirement benefits scheme, the Group adopted a corporate annuity scheme in accordance withrelevant rules and regulations. The Group is required to contribute a certain percentage of payroll costs to theseretirement benefits schemes to fund the benefits. The only obligation of the Group with respect to these retirementbenefits schemes is to make the specified contributions. No forfeited contributions are available to reduce the contribution payable in future years. 45. COMMITMENTS 12/31/2012 12/31/2011 Rmb'000 Rmb'000

Authorised but not contracted for:

-- Investments in expressways upgrade services -- 6,070 -- Purchase of machinery and equipment 238,504 345,344 -- Renovation of service areas 70,850 20,970 -- Acquisition and construction of properties 497,050 407,203 -- Purchase of office buildings -- 485,700 -- Investment in an associate 280,000 --

-----------------------------------------------------------------------------------------

1,086,404

1,265,287

-----------------------------------------------------------------------------------------

46. OPERATING LEASES The Group as lessee Year ended Year ended 12/31/2012 12/31/2011 Rmb'000 Rmb'000 Minimum lease payments 58,199 13,637Contingent rental expenses 4,525 4,958

-----------------------------------------------------------------------------------------

62,724

18,595

-----------------------------------------------------------------------------------------

At the end of the reporting period, the Group had commitments for future minimum lease payments undernon-cancellable operating leases which fall due as follows:

Year ended Year ended 12/31/2012 12/31/2011 Rmb'000 Rmb'000 Within one year 49,985 14,851In the second to fifth years includsive 112,900

61,241

Over five years 4,490

13,540

-----------------------------------------------------------------------------------------

167,675

89,632

-----------------------------------------------------------------------------------------

Operating lease payments represent rentals payable by the Group for certain service areas alongexpressways located in Zhejiang and Tianjin. They are negotiated for an average term of ten yearsand rentals contain both a fixed element and a contingent element linked to sales. The Group as lessor

The Group leased their service areas and communication ducts under operating lease arrangements.Leases are negotiated for terms ranging from 1 to 25 years and rentals are fixed annually.

At the end of the reporting period, the Group had contracted with tenants for the following futureminimum lease payments: Year ended Year ended 12/31/2012 12/31/2011 Rmb'000 Rmb'000 Within one year 24,913 34,896In the second to fifth years includsive 37,255

37,001

Over five years 37,310

24,943

-----------------------------------------------------------------------------------------

99,478

96,840

-----------------------------------------------------------------------------------------

For certain of the Group's service areas, the rental income are variable and being calculated atthe higher of a pre-agreed percentage of sales of the relevant service areas made by the lesseesor the minimum lease payments. The above commitment represented the minimum lease payments fromlessees only and do not include any contingent rent elements.

47. RELATED PARTY TRANSACTIONS AND BALANCES

The following is a summary of the related party during the year:

(i) Transactions and balances with government related parties

The Group operates in an economic environment currently predominated by entities directly or indirectly owned orcontrolled by the PRC government ("government-related entities"). In addition, the Group itself is part of a largergroup of companies under the Communications Group which is controlled by the PRC government. However, due to thebusiness nature, in respect of the Group's toll road business, the directors are of the opinion that it isimpracticable to ascertain the identity of counterparties and accordingly whether the transactions are with othergovernment-related entities in the PRC. Details of other significant transactions with government related partiesare summarised below:

(a) Transactions with Communications Group

(1) Pursuant to the provisional agreement entered into between Zheshang Securities and a related party, Jinji Co, a

subsidiary of the Communications Group, dated December 26, 2011, Zheshang Securities agreed to purchase a property

in Hangzhou from Jinji Co for a provisional consideration of Rmb809,500,000. As at December 31, 2011, deposit of

Rmb323,800,000 has been paid to Jinji Co. During the year ended December 31, 2012, this provisional agreement has

been terminated as Jinji Co fails to deliver the property to Zheshang Securities, deposit of Rmb323,800,000 together

with interest, which is according to the prevailing lending rate promulgated by the People's Bank of China ("PBOC"),

of Rmb19,367,000 have been repaid to Zheshang Securities.

(2) Pursuant to the board resolutions of the Company on November 10, 2011, and the loan contract, the Company provided

long-term loan, totalling Rmb82,000,000 with maturity date on November 16, 2013 to the Group's associated company,

Yongjin at floating rates based on the benchmark interest rate according to the People's Bank of China ranging from

6.31% to 6.56% per annum. (b) Transactions with other government related parties

(1) Pursuant to the operation management agreement entered into between Zhejiang Expressway Investment Development Co.,

Ltd. ("Development Co"), a wholly owned subsidiary of the Company, and Petroleum Co in respect of the petrol

stations in the service areas along the Shanghai- Hangzhou-Ningbo and Shangsan Expressways, Petroleum Co will have

their expertise to assist Development Co in running their petrol stations along the Shanghai-Hangzhou-Ningbo and

Shangsan Expressways. Purchases of petroleum products from Petroleum Co during year ended December 31, 2012 amounted

to Rmb1,669,833,000 (2011: Rmb1,566,140,000).

Petroleum Co is a government related entity and also an associate of the Group.

(2) The Group has entered into various significant transactions, including deposit placements, borrowings and other

general banking facilities, with certain banks and financial institutions which are government-related entities

in its ordinary course of business. In view of the nature of those banking transactions, the directors are of the

opinion that separate disclosure would not be meaningful.

(ii) Transactions and balances with associates and other non- government related parties

(a) Transactions and balances with associates and its subsidiaries

(1) Pursuant to the resolutions of the shareholders' meeting on June 21, 2010 of the Group's subsidiary, Development

Co, and the entrusted loan contracts, Development Co provided short-term entrusted loans during 2010 totalling

Rmb270,000,000 with maturity dates from July 11, 2011 to September 20, 2011 to Hangzhou Concord Property Investment

Co., Ltd. ("Hangzhou Concord Co"), a subsidiary of the Group's associate at a fixed interest rate of 12% per annum.

Such entrusted loan is guaranteed by World Trade Center Zhejiang Real Estate Development Co., Ltd. ("World Trade

Ltd"), a related party of Hangzhou Concord Co, in full. Part of the entrusted loan of Rmb120,000,000 was repaid

during 2011. Pursuant to the supplemental entrusted loan contract on July 6, 2011 of Development Co, the maturity

date of the entrusted loan totalling Rmb150,000,000 was deferred to July 10, 2012, at a fixed interest rate of

12% per annum and guaranteed by World Trade Ltd in full, in which part of the entrusted loan of Rmb50,471,000 was

early settled during 2011. The remaining Rmb99,529,000 was fully settled during 2012.

(2) Pursuant to the resolutions of the shareholders' meeting on July 8, 2010 of Zhejiang Expressway Advertising

Co., Ltd. ("Advertising Co"), a subsidiary of Development Co, and the entrusted loan contract, Advertising

Co provided short-term entrusted loan during 2010 totalling Rmb30,000,000 with maturity date of July 10,

2011 to Hangzhou Concord Co at a fixed interest rate of 12% per annum. Such entrusted loan was guaranteed by

World Trade Ltd in full. Pursuant to the resolutions of the shareholders' meeting on May 25, 2011 of

Development Co and the supplemental entrusted loan contract, the maturity date of the entrusted loan totalling

Rmb30,000,000 was deferred to July 10, 2012, at a fixed interest rate of 12% per annum and guaranteed by World

Trade Ltd in full. The balance was fully settled during 2012.

(3) Pursuant to the board resolutions of the Company on August 28, 2010, and the entrusted loan contracts, the Company

provided short-term entrusted loans during 2010 totalling Rmb200,000,000 with maturity date of September 30, 2011

to Hangzhou Concord Co at a fixed interest rate of 12% per annum. Such entrusted loan was guaranteed by World Trade

Ltd in full. The entrusted loan was fully repaid during 2011.

(4) Pursuant to the board resolutions of the Company on August 28, 2010, and the entrusted loan contracts, the Company

provided short-term entrusted loans during 2011 totalling Rmb390,000,000 with maturity dates from November 4, 2011

to August 7, 2012 and long-term entrusted loan Rmb100,000,000 with maturity date on May 17, 2013 to Zhejiang Canal

Concord Property Co., Ltd., a subsidiary of Hangzhou Concord Co, at a fixed interest rate of 12% per annum. Such

entrusted loans are guaranteed by World Trade Ltd in full. Part of the entrusted loan of Rmb200,000,000 was early

settled during 2011. The remaining balance of Rmb190,000,000 of the short-term entrusted loans and part of the

long-term entrusted loan of Rmb17,953,000 were settled in 2012.

(5) Pursuant to the board resolutions of the Company on August 28, 2010, and the entrusted loan contract, the Company

provided long-term entrusted loan during 2011 totalling Rmb200,000,000 with maturity date of April 25, 2013 to

Hangzhou Canal Concord Property Co., Ltd., a subsidiary of Hangzhou Concord Co at a fixed interest rate of 12% per

annum. Such entrusted loan is guaranteed by World Trade Ltd in full.

(6) Pursuant to the board resolutions of the Company on June 11, 2012, and the entrusted loan contract, the Company

provided long-term entrusted loan during 2012 totalling Rmb120,000,000 with maturity date of January 17, 2014 to

Zhejiang Canal Concord Property Co., Ltd., a subsidiary of Hangzhou Concord Co at a fixed interest rate of 12% per

annum. Such entrusted loan is guaranteed by World Trade Ltd in full.

(7) Pursuant to the board resolutions of the Company on August 28, 2010, and the entrusted loan contract, the Company

provided long-term entrusted loan during 2012 totalling Rmb190,000,000 with maturity date of February 7, 2014 to

Zhejiang Canal Concord Property Co., Ltd., a subsidiary of Hangzhou Concord Co at a fixed interest rate of 12% per

annum. Such entrusted loan is guaranteed by World Trade Ltd in full.

Interest income recognised in 2012 on the above entrusted loan transactions with associates and its subsidiaries wereRmb70,993,000 (2011: Rmb71,491,000).

Interest receivables as at December 31, 2012 on the above entrusted loan transactions with associates and itssubsidiaries were Rmb47,604,000 (2011: Rmb31,175,000). The amounts will be repaid at maturity.

(b) Compensation of directors, supervisors, and key management personnel

The remuneration of the directors, supervisors and key management personnel during the year was Rmb4,962,000 (2011:Rmb4,342,000) including retirement benefit scheme contribution of Rmb191,000 (2011: Rmb109,000) which is determinedby the performance of the individuals and the market trends.

48. PARTICULARS OF SUBSIDIARIES OF THE COMPANY Date and Registered place of and Percentage of

equity interestName of subsidiary registration paid-in capital attributable to the Company Principal activities

Rmb Direct Indirect 12/31/2012 12/31/2011 12/31/2012 12/31/2011 % % % % Zhejiang Yuhang Note 1 75,223,000 51 51 - - Management of the Expressway Co., Ltd. Yuhang Section of the ("Yuhang Co") Shanghai-Hangzhou Expressway Jiaxing Co Note 2 1,859,200,000 99.999454 99.999454 - - Management of the Jiaxing Section of the Shanghai-Hangzhou Expressway Shangsan Co Note 3 2,400,000,000 73.625 73.625 - - Management of the Shangsan Expressway Development Co Note 4 120,000,000 100 100 - - Operation of service areas as well as roadside advertising along the expressways operated by the Group Advertising Co Note 5 16,000,000 - -

*70 *70 Provision of advertising

services Zhejiang Expressway Note 6 8,000,000 100 100

- - Provision of vehicle

Vehicle Towing and towing, repair and Rescue Services Co., emergency rescue Ltd. ("Service Co") services Hangzhou Roadtone Note 7 3,000,000 - -

*51 *51 Provision of advertising

Advertising Co., Ltd. services

("Roadtone Co")

Zheshang Securities Note 8 3,000,000,000 - -

**52.15 **51.15 Operation of securities

business Zheshang Futures Note 9 500,000,000 - -

***52.15 ***51.15 Operation of securities

businessZheshang Capital Note 10 300,000,000 - -

***52.15 N/A Operation of securities

Management Co., Ltd. business ("Zheshang Capital Co")

* These two companies are subsidiaries of Development Co, a wholly-owned subsidiary of the Company, and,

accordingly, are accounted for as subsidiaries by virtue of the Group's control over them.

Pursuant to the resolution of directors' meeting on May 25, 2011 of Development Co and the share transfer

agreement, 100% shares of Towing Co were transferred to the Company on September 26, 2011.

** The company is a subsidiary of Shangsan Co, a non-wholly-owned subsidiary of the Company, and, accordingly, is

accounted for as a subsidiary by virtue of the Group's control over it.

*** The companies are subsidiaries of Zheshang Securities, non-wholly-owned subsidiaries of Shangsan Co, and,

accordingly, are accounted for as subsidiaries by virtue of the Group's control over it.

Note 1: Yuhang Co was established on June 7, 1994 in the PRC as a joint stock limited company and was subsequently

restructured into a limited liability company under its current name on November 28, 1996. The Company is

able to control over Yuhang Co because it has the power to appoint five out of nine directors of that company

and under the provisions stated in the Articles of Association of that company, the passing of ordinary

resolutions at the board meetings required one-half of the directors attending the meetings.

Note 2: Jiaxing Co was established on June 30, 1994 in the PRC as a joint stock limited company and was subsequently

restructured into a limited liability company under its current name on November 29, 1996.

Note 3: Shangsan Co was established on January 1, 1998 in the PRC as a limited liability company.

Note 4: Development Co was established on May 28, 2003 in the PRC as a limited liability company.

Note 5: Advertising Co was stablished on June 1, 1998 in the PRC as a limited liability company.

Note 6: Towing Co was established on July 31, 2003 in the PRC as a limited liability company.

Note 7: Roadtone Co was established on July 27, 2004 in the PRC as a limited liability company.

Note 8: Zheshang Securities was established on May 9, 2002 in the PRC as a limited liability company. On November 16,

2012, the board of directors of the Company announced that Zheshang Securities proposed to seek a separate

listing of its shares as A shares on the Shanghai Stock Exchange. This proposed spin-off for separate listing

has not yet been completed at the end of the reporting period.

Note 9: Zheshang Futures was established on September 7, 1995 in the PRC as a limited liability Company.

Note 10: Zheshang Capital Co was established on February 9, 2012 in the PRC as a limited liability Company.

All of the Company's subsidiaries are operating in the PRC. None of them had in issue any debt securities at any timeduring the year.

49. NON-CASH TRANSACTION For the year ended December 31, 2010, consideration of Rmb338,354,000 was paid from the non-controlling shareholders ofZheshang Securities for capital injection in Zheshang Securities. Upon the approval from the relevant governmentauthorities, the amount was recognised as capital contribution from the non-controlling interest during the year endedDecember 31, 2011.

50. EVENTS AFTER THE REPORTING PERIOD

On January 24, 2013, the long-term bonds issued by the Company have been matured, and the principal amount ofRmb1,000,000,000 and the relevant interests of the long-term bonds have been fully repaid.

51. SUMMARY OF FINANCIAL INFORMATION OF THE COMPANY

Year ended Year ended 12/31/2012 12/31/2011 Rmb'000 Rmb'000 NON-CURRENT ASSETSProperty, plant and equipment 257,178 200,810Prepaid lease payments 1,783 1,878Expressway operating rights 4,927,666 5,272,899Other intangible assets 3,140 -- Investments in subsidiaries 4,557,600 4,557,600Investments in associates 410,073 410,073Investment in a jointly controlled entity 373,470 --Available-for-sale investments 62,000 --Other receivables 325,035

382,000

-----------------------------------------------------------------------------------------

10,917,945

10,825,260

-----------------------------------------------------------------------------------------

CURRENT ASSETSInventories 4,209 9,745Trade receivables 27,901 29,449Other receivables 458,223 543,481Prepaid lease payments 95 95Held for trading investment 80,000 80,000Amount due from subsidiaries 440,694 1,007,193Bank balances and cash

- Time deposits with original maturity over three months 544,000

279,000

- Cash and cash equivalents 1,356,884

1,501,945

-----------------------------------------------------------------------------------------

2,912,006

3,450,908

-----------------------------------------------------------------------------------------

CURRENT LIABILITIESTrade payables 184,262 195,641Tax liabilities 169,301 238,285Other taxes payable 16,164 16,939Other payables and accruals 454,015 286,511Amount due to subsidiaries 14,546 436,773Bank loans -- 362,553Long-term bonds 1,000,000 --Derivative financial instrument --

6,426

-----------------------------------------------------------------------------------------

1,838,288

1,543,128

-----------------------------------------------------------------------------------------

NET CURRENT ASSETS 1,073,718

1,907,780

-----------------------------------------------------------------------------------------

TOTAL ASSETS LESS CURRENT LIABILITIES 11,991,663

12,733,040

-----------------------------------------------------------------------------------------

Year ended Year ended 12/31/2012 12/31/2011 Rmb'000 Rmb'000 NON-CURRENT LIABILITIESLong-term bonds -- 1,000,000Deferred tax liabilities 102,280 106,206

-----------------------------------------------------------------------------------------

102,280

1,106,206

-----------------------------------------------------------------------------------------

11,889,383

11,626,834

-----------------------------------------------------------------------------------------

CAPITAL AND RESERVESShare capital 4,343,115 4,343,115Reserves 7,546,268 7,283,719

-----------------------------------------------------------------------------------------

11,889,383

11,626,834

-----------------------------------------------------------------------------------------

Share Share Statutory Dividend Special Retained capital premium reserves reserves reserves profits Total Rmb'000 Rmb'000 Rmb'000 Rmb'000 Rmb'000 Rmb'000 Rmb'000 At January 1, 2011 4,343,115 3,645,726 1,518,224 1,085,779 18,666 835,114 11,446,624Total comprehensive income for the year -- -- -- -- -- 1,526,576 1,526,576Interim dividend -- -- -- -- -- (260,587) (260,587)Final dividend -- -- -- (1,085,779) -- -- (1,085,779)Proposed final dividend -- -- -- 1,085,779 -- (1,085,779) --Transfer to reserves -- -- 151,757 -- -- (151,757) --

------------------------------------------------------------------------------------------------------------------------

At December 31, 2011 4,343,115 3,645,726 1,669,981 1,085,779 18,666 863,567 11,626,834Total comprehensiveincome for the year -- -- -- -- -- 1,608,915 1,608,915Interim dividend -- -- -- -- -- (260,587) (260,587)Final dividend -- -- -- (1,085,779) -- -- (1,085,779)Proposed final dividend -- -- -- 1,042,347 -- (1,042,347) --Transfer to reserves -- -- 156,762 -- -- (156,762) --

------------------------------------------------------------------------------------------------------------------------

At December 31, 2012 4,343,115 3,645,726 1,826,743 1,042,347 18,666 1,012,786 11,889,383------------------------------------------------------------------------------------------------------------------------ Corporate Information Executive Directors Statutory Address ZHAN Xiaozhang (Chairman) 12/F, Block A, Dragon Century PlazaLUO Jianhu (General Manager) 1 Hangda RoadDING Huikang Hangzhou City, Zhejiang Province PRC 310007Non-Executive Directors Tel: 86-571-8798 5588 Fax: 86-571-8798 5599LI ZongshengWANG Weili Legal AdvisersWANG Dongjie As to Hong Kong and US law:Independent Herbert Smith FreehillsNon-Executive Directors 23rd Floor, Gloucester Tower 15 Queen's Road CentralZHANG Junsheng Hong KongZHOU JunPEI Ker-Wei As to English law: Herbert Smith Freehills LLP Exchange HouseSupervisors Primrose Street London EC2A 2HSFU Zhexiang United KingdomWU YongminLIU Haisheng As to PRC law:ZHANG Guohua T & C Law FirmZHANG Xiahua 11/F, Block A, Dragon Century Plaza 1 Hangda Road Hangzhou City, Zhejiang ProvinceCompany Secretary PRC 310007 Tony Zheng Authorized Representatives ZHAN XiaozhangZHANG Jingzhong Auditors H Shares Listing Information Deloitte Touche Tohmatsu The Stock Exchange of Hong Kong Limited35/F, One Pacific Place Code: 057688 QueenswayHong Kong London Stock Exchange Plc Code: ZHEH

Investor Relations Consultant

ADRs

Information

Hill & Knowlton Strategies36th Floor, PCCW Tower, Taikoo Place US Exchange: OTC979 King's Road, Quarry Bay Symbol: ZHEXYHong Kong CUSIP: 98951A100Tel: 852-2894 6321 ADR: H Shares 1:10Fax: 852-2576 1990

Representative Office in Hong Kong

Suite 2910Principal Bankers 29/F, Bank of America Tower 12 Harcourt RoadIndustrial and Commercial Bank of China, Hong Kong Zhejiang Branch Tel: 852-2537 4295China Construction Bank, Zhejiang Branch Fax: 852-2537 4293Shanghai Pudong Development Bank,

Hangzhou Branch

H Share Registrar and Transfer Office

Hong Kong Registrars Limited WebsiteRoom 1712-1716, 17/F, Hopewell Centre www.zjec.com.cn183 Queen's Road EastHong Kong

Location Map of Expressways in Zhejiang Province

For Location Map of Expressways in Zhejiang Province, please visit:http://www.prnasia.com/sa/attachment/2013/05/20130503111333813666.pdf

NOTE: To view the full set of the company's 2012 Annual Report, please vist www.zjec.com.cn