Orient Overseas (International) Limited — Proxy Solicitation & Information Statement 2004

May 5, 2004

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to any aspect of this Circular or as to the action to be taken, you should consult your stockbroker or other registered dealer in securities, bank manager, solicitor, professional accountant or other professional advisers.

If you have sold all your shares in Jiangsu Expressway Company Limited, you should at once hand this Circular and the accompanying form of proxy to the purchaser or to the bank, stockbroker or other agent through whom the sale or transfer was effected for transmission to the purchaser.

The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this Circular, makes no representation as to its accuracy or completeness and expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this Circular.

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JIANGSU EXPRESSWAY COMPANY LIMITED

(Incorporated in the People’s Republic of China with limited liability as a joint-stock limited company)

MAJOR TRANSACTION: WIDENING OF SHANGHAI-NANJING EXPRESSWAY,

DISCLOSEABLE TRANSACTION:

SECOND SUPPLEMENTAL CONTRACT TO THE CONTRACT FOR THE TRANSFER OF THE OPERATING RIGHTS FOR NANJING-SHANGHAI CLASS 2 HIGHWAY, AMENDMENTS TO ARTICLES AND ANNUAL GENERAL MEETING

A notice convening the Annual General Meeting to be held at the 69 Shigu Road, Nanjing, Jiangsu, the PRC on Monday, 28 June 2004 at 9:00 a.m. is set out in Appendix VII to this Circular. Whether or not you are able to attend the Annual General Meeting, you are requested to complete and return the accompanying form of proxy in accordance with the instructions printed thereon to the Company as soon as possible and, in any event, not less than 24 hours before the time appointed for the holding of the meeting. Completion and return of the form of proxy will not preclude you from attending and voting at the Meeting should you so wish, in which case you will be deemed to have withdrawn the proxy you have appointed.

5 May 2004

CONTENTS

		Page
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		1
**LETTER **	FROM THE BOARD
A.	Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
B.	Widening the Shanghai-Nanjing Expressway
	1. Proposed widening of the Shanghai-Nanjing Expressway . . . . . . . . . . . . . . . .	5
	2. The Widening . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	10
	3. Valuation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	12
	4. Reasons and Benefits for Widening the Shanghai-Nanjing Expressway . . . . . .	12
	5. Working Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	13
	6. Listing Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	13
C.	Acquisition of the New Operating Rights of the Nanjing-Shanghai Class 2
	Highway
	1. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	14
	2. Widening of the Nanjing-Shanghai Class 2 Highway . . . . . . . . . . . . . . . . . . . .	15
	3. Reasons and Benefits for Entering into the Second Supplemental Contract. . . .	16
	4. Traffic flow of Nanjing-Shanghai Class 2 Highway over the years. . . . . . . . . .	17
	5. Major Terms of the Second Supplemental Agreement . . . . . . . . . . . . . . . . . . . .	17
	6. Traffic Forecast of Nanjing-Shanghai Class 2 Highway . . . . . . . . . . . . . . . . . .	18
	7. Valuation of the Acquisition of the New Operating Rights for the
	Nanjing-Shanghai Class 2 Highway . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	19
	8. Listing Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	19
D.	Amendments of Articles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	20
E.	Appointment of New Directors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	21
F.	Financial and Operating Prospects of the Group. . . . . . . . . . . . . . . . . . . . . . . . . . . .	21
G.	Annual General Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	22
H.	Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	23
**Appendix **	I: Traffic Forecast Study . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	I-1
**Appendix **	II: Operation and Maintenance Costs Estimate . . . . . . . . . . . . . . . . . . . . . . . . . .	II-1
**Appendix **	III: Business Valuation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	III-1
**Appendix **	IV: Auditor’s Report and Financial Adviors’ Report . . . . . . . . . . . . . . . . . . . . .	IV-1
**Appendx **	V: Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	V-1
**Appendix **	VI: General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	VI-1
**Appendix **	VII: Notice of Annual General Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .VII-1

— i —

DEFINITIONS

In this Circular, unless the context otherwise requires, the following expressions have the following meanings:

“American Appraisal” American Appraisal China Limited, an independent international auditor appointed by the Company in connection with matters relating to the widening “American Appraisal’s Valuation” the valuation report, dated 5 May 2004, prepared by American Appraisal and containing a valuation of the fair market value of the Shanghai-Nanjing Expressway and the NanjingShanghai Class 2 Highway “Annual General Meeting” the Annual General Meeting of the Company to be held on Monday, 28 June 2004 at 9:00 a.m. at Jiangsu Communications Building, 69 Shigu Road, Nanjing, Jiangsu, the PRC “Articles” the articles of association of the Company “Company” Jiangsu Expressway Company Limited, a company incorporated in the People’s Republic of China with limited liability as a joint stock limited company “Directors” the directors of the Company “Domestic Shareholder(s)” holders of the domestic shares of the Company, including holders of the A Shares, the Legal Person Shares, the State-owned Shares and the State-owned Legal Person Shares “Group” the Company and its subsidiaries “H Share(s)” the overseas listed foreign shares of the Company listed on the Hong Kong Stock Exchange “H Shareholder(s)” holder(s) of H Shares “Highway Operating Right” means the operating right comprising the right of the operator of that section of the highway to charge, on the basis of its highway assets and its right to use the highway land, tolls on the vehicles using that section of the highway, and the right to invest in the construction of service facilities (if any) in the areas on either side of that highway section “Hong Kong” the Hong Kong Special Administrative Region of the People’s Republic of China “Hong Kong Listing Rules” the Rules Governing the Listing of Securities on the Stock Exchange

— 1 —

DEFINITIONS

“Hong Kong Stock Exchange” The Stock Exchange of Hong Kong Limited “Jiangsu Holding Company” (Jiangsu Communications Holding Company), a state-owned enterprises incorporated in the PRC and under the charge of departments of the Jiangsu Provincial Government, holding approximately 55.2% of the shares of the Company “Jiangsu Highway Bureau” , the Highway Bureau under the Department of Communications of the Jiangsu Province “Jiangsu Provincial Government” the People’s Government of Jiangsu Province “Latest Practicable Date” 29 April 2004, the latest practicable date prior to the printing of this Circular for ascertaining certain information referred to in this Circular “Nanjing-Shanghai Class 2 the Jiangsu section of the Nanjing-Shanghai Class 2 Highway Highway” (to be named Ninghu section of National Highway 312 after widening), and stretching from Dongyangfang Interchange, Outer Ring Road, Nanjing to Anting on the border of Jiangsu Province and Shanghai, being a second-class highway with a total length of 271.1 km, presently a two-lane open toll road “National Highway 312” the class 1 highway upon completion of the widening works of Nanjing-Shanghai Class 2 Highway (being the section of the highway after lineal optimization and replacing the unoptimised and unwidened old road section)

• “the PRC” the People’s Republic of China “Scott Wilson” Scott Wilson Limited, an independent transport consultant engaged by the Company

“Second Supplemental the second supplemental agreement dated 14 April 2004 Agreement” entered into between the Company and Jiangsu Highway Bureau in respect of the new operating rights of the National Highway 312

“SFO” Securities and Futures Ordinance, as amended from time to time (Cap. 571, Laws of Hong Kong) “State” the Government of the PRC “Shanghai Listing Rules” the Listing Rules of the Shanghai Stock Exchange

— 2 —

DEFINITIONS

• “Shanghai-Nanjing Expressway” the Jiangsu section of Shanghai-Nanjing Expressway, which stretches from Maqun in Nanjing to Anning on the border between Jiangsu Province and Shanghai, comprising a main expressway of approximately 248.21 km and a Zhenjiang connecting way of approximately 10.25 km, presently a four-lane dual access-controlled toll expressway

• “Supervisors” the Supervisors of the Company “Widening” the Widening of the Shanghai-Nanjing Expressway and the Widening of the Nanjing-Shanghai Class 2 Highway

• “Widening of the Shanghaimatters relating to the Company’s proposal for widening the Nanjing Expressway” Shanghai-Nanjing Expressway from an access-controlled four-lane dual expressway to an eight-lane dual expressway

• “Widening of the Nanjingmatters relating to the proposal of the Department of Shanghai Class 2 Highway” Communications of the Jiangsu Province for widening the Nanjing-Shanghai Class 2 Highway from an open two-lane dual second class highway into a four-lane dual first class highway

• “HK$” the lawful currency of Hong Kong “Renminbi” the lawful currency of the PRC “km” kilometres

Unless stated otherwise in this Circular, conversions of Renminbi into Hong Kong dollars are based on the exchange rate of RMB106 = HK$100 and such translations are only approximations and for information purposes only.

— 3 —

LETTER FROM THE BOARD

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JIANGSU EXPRESSWAY COMPANY LIMITED

(Incorporated in the People’s Republic of China with limited liability as a joint-stock limited company)

Directors:

Sheng Chang Quan Chen Xiang Hui Sun Hong Ning Zhang Wen Sheng Fan Yu Shu Cui Xiao Long Chang Yung Tsung, Alice Fang Keng Hong Yin Xing Yang Hong Sheng

Registered Office: Jiangsu Communications Building 69 Shigu Road Nanjing Jiangsu the PRC

* Independent Non-Executive Directors

5 May 2004

Dear Sir or Madam,

MAJOR TRANSACTION: WIDENING OF SHANGHAI-NANJING EXPRESSWAY,

DISCLOSEABLE TRANSACTION:

SECOND SUPPLEMENTAL CONTRACT TO

THE CONTRACT FOR THE TRANSFER OF THE OPERATING RIGHTS FOR NANJING-SHANGHAI CLASS 2 HIGHWAY, AMENDMENTS TO ARTICLES

AND ANNUAL GENERAL MEETING

A. Introduction

The board of Directors of the Company published in newspapers announcements on 2 April and 15 April 2004 that the Company would invest to widen the Shanghai-Nanjing Expressway and entered into the Second Supplemental Agreement with Jiangsu Highway Bureau in relation to the new operating rights for the Nanjing-Shanghai Class 2 Highway after its widening. The investment to widen the Shanghai-Nanjing Expressway is subject to approval by the shareholders of the Company.

— 4 —

LETTER FROM THE BOARD

In addition, resolutions will be put to Shareholders at the Annual General Meeting to approve the appointment of Mr. Xie Jia Quan as director of the Company and to his service contract and to approve certain amendments to the Articles so that the Articles will comply with the requirements of Appendix 3 of the Hong Kong Listing Rules.

The purpose of this Circular is to provide you with further information regarding on (1) the widening plan for the Shanghai-Nanjing Expressway, (2) the purchase of new operating rights of the Nanjing-Shanghai Class 2 Highway after its widening, (3) the appraisal report prepared by American Appraisal on the widening the roads and the forecast reports prepared by Scott Wilson on the traffic flow and operation maintenance, (4) amendments proposed to be made to the Articles, (5) information on Mr. Xie Jia Quan and (6) the notice of Annual General Meeting.

B. Widening the Shanghai-Nanjing Expressway

In order to further develop the Shanghai-Nanjing Expressway as the “Golden Corridor” in the Yangtze River Delta, to enhance its service standard and operating efficiency, to increase the operating benefits of the Shanghai-Nanjing Expressway, and to meet the transportation infrastructure requirements arising from social, economic and transport development in the region, the Board of Directors, including the independent non-executive directors present at the meeting, unanimously resolved on 1 April 2004 to invest in the widening works as follows: (1) The widening works will widen the existing four-lane dual carriageway (with a roadbed of 26 meters in width), being the main expressway of the Shanghai-Nanjing Expressway into a eight-lane dual carriageway (with a roadbed of 42.5 metres in width).

• (2) The total investment will be approximately RMB10.54 billion (approximately HK$9.943 billion).

• (3) The widening works will commence on a full swing in 2004 and is expected to be completed in 2006.

• Proposed widening of the Shanghai-Nanjing Expressway

• (i) About the Shanghai-Nanjing Expressway

The full line of the expressway running from Shanghai to Nanjing stretches from Zhenru in Shanghai, to Maqun in Nanjing. In the areas between Hu (Shanghai) and Rong (Chengda), it is an important component of the national arterial lines of the PRC consisting of “five highways running longitudinally and seven laterally”. It runs through six large or medium cities, namely, Nanjing, Zhenjiang, Changzhou, Wuxi, Suzhou and Shanghai, with a total length of approximately 274 km.

The construction works of the Shanghai-Nanjing Expressway was commenced on 14 June 1992. On 15 September 1996, construction works of the Shanghai-Nanjing Expressway was completed and it commenced operation on a trial base, it officially commenced operation on 28 November 1996.

— 5 —

LETTER FROM THE BOARD

The Shanghai-Nanjing Expressway is approximately 258 km in length and comprises a main expressway of approximately 248 km and a Zhenjiang connecting road of approximately 10 km. It is a four-lane dual, fully inter-changed and access-controlled expressway and was constructed in accordance with the standards on highway set out in (the Technical Standards for Expressway Construction) issued by the Ministry of Communications of the PRC.

The main route of the Shanghai-Nanjing Expressway is 26 metres wide. Each lane is 3.75 metres wide, with the emergency parking lane on both sides being 2.5 metres in width. A 4-metre zone has been reserved for lane expansion on both sides of the Shanghai-Nanjing Expressway to the east of Zhenjiang. The designed speed of the Shanghai-Nanjing Expressway is 120 km per hour, and the designed speed of the roundabouts leading to its interchange is 40-80 km per hour.

The Zhenjiang connecting road was 10.25 km in length, connecting Zhenjiang and Nanjing-Nanjing Expressway. It was constructed in accordance with the standards for first-class carriageway. It is a four-lane dual expressway. It is 23 metres wide. Each lane is 3.75 metres wide, with the emergency parking lane on both sides being 2.25 metres in width. The designed speed is 100 km per hour.

The widening work is mainly focused on the trunk line of the Shanghai-Nanjing Expressway. The connecting road of Zhejiang first class highway of 10.25 km will not be widened.

As at 31 December 1996, the Company invested approximately RMB6.2 billion in the construction of Shanghai-Nanjing Expressway.

Pursuant to a notice jointly issued by (Planning and Economic Commission of Jiangsu Province), (the Department of Finance of Jiangsu Province), (the Price Bureau of Jiangsu Province) and (the Department of Communications of the Jiangsu Province) on 29 July 1996, a permission was given for the Company to collect tolls from vehicles using the Shanghai-Nanjing Expressway, and to adjust and collect tolls in accordance with the standards of the relevant departments, which are subject to adjustments from time to time.

Besides, the Company also provides expressway users with the services and facilities of restaurants, shops, carparks, vehicles repairs and maintenance and toilets in six service areas along the Expressway. The six services areas are Huang Li Shu, Xian Ren Shan, Dou Zhuang, Fang Mao Shan, Mei Cun and Yang Cheng Hu. The services areas at Xian Ren Shan, Fang Mao Shan and Yang Cheng Hu also provide expressway users with hotel facilities.

— 6 —

LETTER FROM THE BOARD

(ii) Current situation of the Transport Infrastructure of Jiangsu Province

At present, Jiangsu Province is served by a complete set of five modes of transport, namely transport by roads, railways, waterways, air and tunnel. Main national highway lines, such as the Tong San Line, Jing Hu Line, Lian Huo Line, Hu Rong Line and main national railway lines, namely the Jing Hu Line Long Hai Line runs through the Province. Regarding main waterways, the main stream of Yangtze River runs through the east and west ends of the Province, while the Jing Hang Grand Canal and coastal waterways intersect with one another in a south-northerly direction. There are many river or coastal ports in the province, of which Lianyungang, Nanjing Port, Zhenjiang Port, Zhangjiagang and Nantong Port are five strategic ports. In recent years, the focus of development of the transport system across Jiangsu Province is to enhance the administration of the transport industry, thus speeding up the construction of traffic infrastructure.

The demand for transport services has been gradually increasing with the social and economic development of Jiangsu Province. In order to cope with the ever-increasing passenger and cargo flows, operators of various means of transport have made efforts to enhance their capabilities in transport organisation and to adjust their transport capability promptly. They focus on improving their heavy transport capability enhancing speed, promoting technical equipment reform and carrying out reform of the transport administration system, thus meeting the ever-increasing transport demand.

According to the statistics of Jiangsu Provincial Transport Statistics Yearbook 2002, highways occupied a leading position in the comprehensive transport system of Jiangsu Province, and the advantage of highways was absolute in terms of the passengers carried. In 2002, the volume of actual passenger traffic of highway transport in Jiangsu Provincial was 1,101,390,000 passenger-trips, representing approximately 95.09% of the total actual passengertrips, being in an absolutely leading position. The passenger turnover was RMB71.908 billion, representing approximately 77.87% of the total turnover, being four times that of the railway transport. The cargo traffic was 60,299 metric tons, representing 69.22%, being more than half of the cargo traffic; the cargo turnover was 35.195 billion ton/km, representing approximately 23.51% or a title lower than that of railway transport. In the recent 10 years, the highway transport volume has been growing drastically, and all indexes of Jiangsu Province indicates an approximately 10% growth rate, being higher than that of other modes of transport. The prosperous growth of regional economy brings out a rapid increase in the demand for short-distance transport. As far as short-distance travel is concerned, passengers basically prefer road transport. Short-distance transport of cargo is also people’s first choice because of its door-to-door, convenient and prompt services.

— 7 —

LETTER FROM THE BOARD

(iii) Traffic and Transport Development Plan

The State has planned for a total of 12 national highways, “ ” (Five running Longitudinally and Seven Laterally), a total of 28 key roads of the State, “ ” (13 running Longitudinally and 15 Laterally). Of the above, the main direction of national highways are as follows:

• (a) the main line of (Beijing (Jing) Shanghai (Hu) National Highway) runs parallel collimate with (Tong San National Highway) at (Huai Jiang Expressway), through (Jiangyin Yangtze Bridge, owned as to 26.66% by the Company) and join the (Xicheng Expressway, owned as to 85% by the Company) and joins (Hu (Shanghai) and Rong (Chengda) National Highway);

• (b) the Jiangsu section of the main line of Hu Rong National Highway is ShanghaiNanjing Expressway and (Ning (Nanjing) He (Hefei) Expressway);

• (c) the Jiangsu section of Shanghai to (Rui Li) National Highway is (Ning (Nanjing) Hang (Hangzhou) Expressway); and

• (d) the Jiangsu section of (Lian Huo National Highway) is (Lian Xu Expressway).

In the light of the plan of the Ministry of Communications on national highways and key roads and their running directions in Jiangsu, taking into consideration the productivity of Jiangsu, the distribution of its cities and towns and the characteristics of its traffic, the Jiangsu Provincial Transport Department has formulated a plan for “ ” (Four running longitudinally, four running latitudinally and four connecting to each other):

• (a) Shanghai-Nanjing Expressway is one of those running latitudinally; and

• (b) (1) the Guangjing Expressway and Xicheng Expressway, which are owned by the Company as to 85% and Jiangyin Yangtze Bridge which the Company joins as a shareholder and holds 26.66%, and (2) Sujiahang Expressway which the Company joins as a shareholder and holds 33.33%, are two of those running longitudinally.

• (iv) Traffic Flow Forecast of Shanghai-Shanghai Expressway

In preparing for our listing prospectus, we engaged Scott Wilson to conduct a research on the traffic flow of Shanghai-Nanjing Expressway between 1997 to 2026.

— 8 —

LETTER FROM THE BOARD

Comparison of the actual traffic flow of Shanghai-Nanjing Expressway and the forecast by Scott Wilson:

Unit: number of vehicle/day

Daily average through traffic 1996 1997 1998 1999 2000 2001 2002 2003 Actual number 10,402 12,121 13,964 16,235 18,087 21,013 25,356 31,038 Forecast number 10,003 11,659 14,536 17,414 18,507 21,769 25,032 28,294 Derivation +3.99% +3.96% -3.94% -6.77% -2.27% -3.47% +1.29% +9.7%

In connection with the widening, the Company has again engaged Scott Wilson to conduct a traffic flow forecast of the Shanghai-Nanjing Expressway for the period from 2004 to 2032. The traffic forecast indicates that the daily average traffic flow of the Shanghai-Nanjing Expressway upon completion of the widening work in 2012 will exceed 67,000 vehicles, one-fold higher than that prior to the widening project. The increase in traffic flow in subsequent years is expected to be even larger.

Traffic flow Forecast of Shanghai-Shanghai Expressway subsequent to the widening:

Unit: number of vehicle/day Year 2003 2006 2012 2022 2027 2032 Daily average through traffic 31,038 34,513 67,332 95,227 98,484 99,240

The traffic flow forecast has shown that the traffic flow of Shanghai-Nanjing Expressway after its widening from a four-lane into an eight-lane carriageway would increase on a gradual basis rather than drastically.

It is anticipated that although diversion of traffic flow during the widening works may temporarily have a negative impact on the Company’s income and finances during the period of the diversion as a result of reduction in traffic volume and toll fee revenue, the improvement of traffic conditions and enhancement of the passage capacity would provide room for stable growth in the future traffic flow. Moreover, the widening would also effectively avoid the adverse effect caused by maintenance and major repairs on the road traffic.

— 9 —

LETTER FROM THE BOARD

2. The Widening

The project in respect of the widening works was approved by (the National Development and Reform Committee of the PRC) in February 2004 with an approved investment of RMB10,540,000,000 (approximately HK$9,943,000,000). The Jiangsu Provincial Government has approved the extension of the term of the operating rights of the Shanghai-Nanjing Expressway granted to the Company, which originally will expire on 26 June 2027, to 26 June 2032.

The Board of Directors of the Company resolved on 1 April 2004, upon the unanimous approval of all the directors, including the independent non-executive directors present, to invest in the widening of the Shanghai-Najing Expressway, i.e. to widen it from a four-lane to an eight-lane dual expressway.

(i) About the Widening Plan

A plan of “principally merging on both sides and partial segregation” will be adopted for the widening of the 248-kilometre main expressway of the Shanghai-Nanjing Expressway. At present, it is not intended to widen the Zhenjiang connecting road. The widening work will be carried out under the principle of maintaining the normal operation of the Shanghai-Nanjing Expressway. In carrying out road surface and bridges connection work, considerable traffic arrangement will be carried out to reasonably divert the traffic through the road network in order to minimize any coordination and construction difficulties and to ensure the quality of the widening work.

Cross-section of a general section of Shanghai-Nanjing Expressway after widening.

==> picture [403 x 211] intentionally omitted <==

----- Start of picture text -----

Unit: cm 4250
275 4375 450 4375 275
75 50 50 75
75 300 75
1 2 3 4 3 5 3 4 3 2 1
140 825 2% 2% 825 140
200 100-200 4% 4% 100-200 200
50 6 7 50
3% 3%
Keys:
x — road shoulder, earth
y — road shoulder, cemented
z — road side belt
{ — carriageway
5 — central partition
} — slope protection area
1:1.5 1:1.5
----- End of picture text -----

• ~ — side ditch

— 10 —

LETTER FROM THE BOARD

(ii) Land use rights

The right to use the land required for the expansion works project will be obtained by way of leasing. Approval has been obtained from (the Jiangsu Provincial Department of Land and Resources) that the initial annual rental per square metre shall be RMB1.5 (approximately HK$1.42), subject to concurrent adjustment at the same rate as the toll adjustment and the leasing term shall last until the expiry of the term of operation of the Shanghai-Nanjing Expressway. The annual rent shall be calculated on the basis of the actual requisitioned areas and the specific procedures for the administration of its collection in accordance with the terms of the leasing contract to be entered into by the Company and the Jiangsu Provincial Department of Land and Resources upon completion of the Widening of the Shanghai-Nanjing Expressway. Based on a rough estimate of approximately 4.5 million sq. m. to be leased, the initial annual rental is estimated to be approximately RMB7,000,000 (approximately HK$6,600,000).

(iii) Construction contracts

The contracts to be entered into in respect of the widening works will include engineering construction contracts, engineering prospecting and design contracts, equipment and materials procurement contracts, engineering supervision contracts and scientific research contracts. For any single contract work with an estimated contract value in excess of RMB2,000,000 (approximately HK$1,886,792.50), invitation will be made for tenders in accordance with the tendering law of the PRC and (the Procedures for the Administration of Invitations for Tenders for Road Engineering Works) promulgated by the Ministry of Communications of the PRC, if applicable.

Most of the contracts to be entered for the Widening of Shanghai-Nanjing Expressway will be by way of tender. The counterparty and the ultimate beneficial owner of the counterparty will be likely to be third parties independent of the Company and connected persons of the Company. In the event the contactor is a connected person, the relevant disclosure and shareholders approval under the Hong Kong Listing Rules and the Shanghai Listing Rules will be complied with by the Company.

(iv) Estimate of investment

The total investment in the widening works will be approximately RMB10.54 billion (approximately HK$9.943) and mainly constituting of the payment to be made in cash by the Company to contractors in respect of engineering, construction and material costs upon entering into contracts. Such investment will be made in accordance with (the Regulations on basic road construction project investment budgeting) issued by the Ministry of Communications. Approximately 43% of the total investment, being RMB4.54 billion (approximately HK$4.283 billion) will be financed from internal funds of the Company, and the remainder will be raised by the Company through other means of financings. Considering the amount of accumulated cash reserve of the Company and the availability of commercial bank loans with two banks having indicated their willingness to lend to the Company in connection with the widening of the Expressway, the Board of Directors (including the independent non-executive directors) are of the view that the Company has and will have sufficient working capital upon making such investment.

— 11 —

LETTER FROM THE BOARD

(v) Organisation of construction and arrangement of works

Under the overall plan of the widening, works on the road bed and the bottom structure of medium and small bridges, large bridges and extra-big bridges widening of part of the interchanges and part of the road surface will be completed in 2004; works on big bridges and extra-big and part of the road surface will be completed by 2005; rest of the road surface, protection engineering works, transport safety facilities works, transport works and building construction works will be completed by 2006, and the Company aims to commence eight-lane operation in 2006.

3. Valuation

The Company has commissioned American Appraisal China Limited and, in compliance with the requirements of the Shanghai Stock Exchange, (Shanghai Orient Certified Appraisal Co., Ltd.) (a company licensed by the China Securities Regulatory Commission under licence No. 0000136 to carry on the business of asset assessments in relation to securities business) to conduct a valuation of the project of the widening works. The valuation adopted 31 January 2004 as the base day, and used the present value method for assessing the value of the shareholder’s interests on the basis of the reports issued by Scott Wilson Limited on the traffic flow forecast of the Shanghai-Nanjing Expressway and the corresponding income, costs and expenses in the coming years, without taking into account any discount to be made for lack of marketability, at a discount rate of 11.7% (taking into consideration the uncertainty of financial budgeting during the period of widening, the discount rate after the widening will be higher) the valuation of the widened expressway with an operating term expiring on 26 June 2032 is assessed at RMB16.062 billion (approximately HK$15.153 billion). At a discount rate of 10.7%, the valuation of the expressway without the widening work and an operating term expiring on 26 June 2027 is RMB13.884 billion (approximately HK$13.098 billion). Thus, the Company’s investment in the project of the widening works is expected to result in a noticeable increase in the Shareholders’ revenue.

4. Reasons and Benefits for Widening the Shanghai-Nanjing Expressway

In view of the economic development of the Jiangsu Province, the Board of Directors believes that the demand for road transport in the Jiangsu Province will continue to grow substantially. In order to align with the increasing traffic flow, the Board of Directors believe that it is imperative to widen the Shanghai-Nanjing Expressway for the reasons as set out below:

• The demand of road transport in the Jiangsu Province has been increasing as a result of the fast economic growth in the region, which has recorded at a rate higher than the national average in recent years. The escalating foreign trade and the increasingly outward-oriented economy will lead to growing demand for a quick, safe, reliable and flexible road transport system. The expected increase in imports and exports conveyed by containers will also add to the demand for road transport. Considering the emphasis of the Central Government of the PRC on encouraging economic development along the Yangtze River Delta, the business and trading activities in those areas are expected to prosper resulting in rapid growth and optimization of the medium and short distance transport, such as road transport, in the Jiangsu Province (the demand is expected to come from automobiles, manufacturing,

— 12 —

LETTER FROM THE BOARD

• machinery, electronics, communication and chemical industry), while road transport is also expected to be a crucial mode of transport for new and advanced technology industry or high value-added industry. The number of private vehicles is expected to rise as the living standard in the surrounding area improves and it is further expected that the rapid development of domestic and international tourism which will bring about an increase in the number of outward trips per capita will result in higher demand for passenger road transport in the future.

• At present, the actual hourly speed in some sections of the existing four-lane ShanghaiNanjing Expressway is much lower than their designed hourly speed because of the density of traffic, abundance of slow-going overloaded vehicles, and road repairs works. All of the above factors has caused a decrease in road services standard and an inability for the Shanghai-Nanjing Expressway to meet the road users’ demand for speed, safety and smooth traffic flow. As the main corridor joining the economically-advanced Southern Jiangsu Province with Shanghai, the traffic flow of the Shanghai-Nanjing Expressway will continue to grow at a high rate. In order to meet the substantial and increasing demand for road transport in future, it is necessary to expand the capacity of the Shanghai-Nanjing Expressway with a view to speed up enhance its traffic notwithstanding the increased traffic flow.

• The Shanghai-Nanjing Expressway is the road transport between Shanghai and Nanjing offering speed and convenience. The expansion works project will further bring its advantages into full play and thereby further consolidate its status as the backbone in the Southern Jiangsu road grid and as a main artery in the national road grid.

• The Company’s investment in the expansion works project aims to achieve a sustainable growth in its business. It will be a significant step to maintain and improve the Company’s good operating results, enhance its services standard and brand image, reinforce its leading position among the operators of national expressways and listed companies engaged in transport business. The widening of the Shanghai-Nanjing Expressway will also help to reinforce its role as the “Golden Corridor” in the economically advanced Southern Jiangsu and to enhance its core competitiveness.

5. Working Capital

The Company’s investment in the widening of the Shanghai-Nanjing Expressway will be funded by both its internal resources and bank financing. Considering the amount of accumulated cash reserve of the Company and the availability of the commercial bank loan, the directors (including the independent non-executive directors) are of the view that the Company should have sufficient working capital.

6. Listing Rules

The investment to be made in the widening works is a substantial capital investment. As it is estimated that the investment of approximately RMB10.54 billion (HK$9.943 billion) will be more than 25% but less than 100% of the audited consolidated assets of the Company as at 31 December 2003, it will constitute a major transaction under Rule 14.06(3) of the Listing Rules and will require the approval of Shareholders in accordance with Rule 14.33 of the Listing Rules.

— 13 —

LETTER FROM THE BOARD

Pursuant to Rules 14.62 and 14.71 of the Hong Kong Listing Rules, the Company has commissioned its auditors to review the accounting policies and calculations for the business valuation. In addition, the Company has received a letter from Shenyin Wanguo Capital (H.K.) Limited stating that they have satisfied themselves that the business valuation by the Directors have been stated after due and careful enquiry.

Under the Shanghai Listing Rules, the Company’s investment in the widening works is an asset acquisition and requires the approval of the Shareholders in general meeting.

The board of directors of the Company (including the independent non-executive directors) have confirmed that the business valuations have been made after due and careful enquiry. The board of directors have issued their opinion in respect of the result of the assessment of the investment and the independent directors of the Company have also issued their opinion on the qualification and capability of the domestic valuer and the traffic consultants as required under the notice numbered (No. 1 of 2004 Zhengjiankuajizi) entitled “ ” (Notice on further enhancement of the quality of disclosure of financial information by listed companies) issued by (China Securities Regulatory Commission) and the requirements of the Shanghai Stock Exchange.

(Jiangsu Communications Holding Company Ltd.), the controlling shareholder of the Company has given its consent to the widening project and agreed to vote in favour of the relevant resolution at the Annual General Meeting.

• C. Acquisition of the New Operating Rights of the Nanjing-Shanghai Class 2 Highway

• Introduction

The Nanjing-Shanghai Class 2 Highway is an important arterial highway running from Shanghai to Nanjing. The Nanjing-Shanghai Class 2 Highway, together with Shanghai-Nanjing Expressway, constitutes collectively a busy highway transport corridor with the Shanghai-Nanjing Expressway acting as the main line and the Nanjing-Shanghai Class 2 Highway acting as an auxiliary line. However, owing to the low operational standard of the original Nanjing-Shanghai Class 2 Highway, its services standard is not in line with the economic development of the areas along the highway. Thus, in order to ensure traffic can be diverted effectively from the Shanghai-Nanjing Expressway during the implementation of the expansion works project, it is imperative and pressing to rebuild and widen the Nanjing-Shanghai Class 2 Highway, an important traffic-diverting road from the Shanghai-Nanjing Expressway. The plan to widen the Nanjing-Shanghai Class 2 Highway has been approved by (the Jiangsu Provincial Development Planning Committee). The Jiangsu Provincial Government has also approved the term of the operation of Nanjing Shanghai Class 2 Highway be extended by 12 years to 26 June 2024. The expansion work commenced in July 2003 with an aim to be completed and open for traffic by the end of 2004 and to ensure full completion of works by 1 October 2005.

The Nanjing-Shanghai Class 2 Highway is located in the Jiangsu Province and runs from the Dongyangfang Interchange of the Outer Ring Road of Nanjing to Anting, which is located at the border between the Jiangsu Province and Shanghai, passes through the cities of Zhenjiang, Changzhou, Wuxi and Suzhou en route. The total length of the section is approximately 271.1 km.

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LETTER FROM THE BOARD

Pursuant to the “Contract for the Transfer of the Operating Rights of the Shanghai-Nanjing Expressway” entered into between Jiangsu Highway Bureau and the Company on 11 June 1997, Jiangsu Highway Bureau assigned to the Company the Operating Right of the Nanjing-Shanghai Class 2 Highway for a term of 15 years. On 27 June 1997, Jiangsu Highway Bureau and the Company entered into a “Supplemental Contract in relation to the Contract in respect of the Highway Operating Right of the Shanghai-Nanjing Expressway” granted to the Company, pursuant to which the consideration for the transfer of the Highway Operating Right of the Nanjing-Shanghai Class 2 Highway was reduced from the original RMB1,349,833,000 (approximately HK$1,273,427,000) to RMB1,345,786,000 (approximately HK$1,269,609,000).

2. Widening of the Nanjing-Shanghai Class 2 Highway

The widening work in respect of the Nanjing-Shanghai Class 2 Highway will be carried out in selected sections with single-side merging and partial segregation and the original second class double-lane dual highway will be widened into a first class four-lane dual highway and will be fully funded by the Jiangsu Provincial Government. The construction work for the Nanjing-Shanghai Class 2 Highway covers the section running from Anting, which is located at the border between the Jiangsu Province and Shanghai, runs through the cities of Suzhou, Wuxi, Changzhou, Zhenjiang and Nanjing, and ends at the Dongyangfang Interchange of Nanjing. The widening work will be carried out along the existing road in general, but adjustments and fine tuning of the contour will be carried out for certain sections of the Nanjing-Shanghai Class 2 Highway, such as the sections near Wuxi, Changzhou, Kunshan and Danyang. The widening work will cover a total length of 280 km, and will be coordinated and implemented by Jiangsu Highway Bureau.

Cross-section of general section of Nanjing-Shanghai Class 2 Highway after widening.

==> picture [458 x 82] intentionally omitted <==

----- Start of picture text -----

Unit: cm 2550/2 2550/2
75 50 50 50 50 75 200
250 2x375 200 2x375 250
200 3250 E L52H 1 2 3 4 3 5 3 4 3 2 1
4% 2% 2% 4% 2360
I
3%
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NOTE:

• x — Road Shoulder, Earth

• y — Road Shoulder, Cemented

• z — Road Shoulder, belt

• { — Carriage Way

• 5 — Central Partition

— 15 —

LETTER FROM THE BOARD

All members (including independent non-executive directors) of the Board of Directors approved unanimously on 1 April 2004 that the Second Supplemental Agreement shall be entered into by the Company with Jiangsu Highway Bureau to acquire the new operating rights, effectively also extending the term of the Company’s existing Highway Operating Right of the Nanjing-Shanghai Class 2 Highway subsequent to the widening project. The Second Supplemental Agreement was executed on 14 April 2004.

1. Reasons and Benefits for Entering into the Second Supplemental Contract

To Fully Utilize the Corridor resources

The Shanghai-Nanjing Expressway and the Nanjing-Shanghai Class 2 Highway, the Highway Operating Rights of which are currently owned by the Company, complement each other and collectively constitute a road corridor between Nanjing and Shanghai. The development of high-speed rail transport in the future is bound to ensue a re-distribution of resources for transport between Nanjing and Shanghai. For road transport to maintain its leading position in the corridor, it is necessary to enhance its competitiveness and the widening of the Nanjing-Shanghai Class 2 Highway is therefore imperative.

To Reinforce the Status of the Nanjing-Shanghai Class 2 Highway in the Road Grid

The Nanjing-Shanghai Class 2 Highway is an arterial line in its locality and a main line in the grid of trunk roads in the Jiangsu Province. As the existing technology standard of the Nanjing-Shanghai Class 2 Highway does not correspond with its importance in the road grid, it is necessary to rebuild it. Furthermore, the completion of the widening works in respect of Nanjing-Shanghai Class 2 Highway in advance will relieve the pressure on transportation of Shanghai-Nanjing Expressway during the widening period.

The Nanjing-Shanghai Class 2 Highway runs nearly parallel with the Shanghai-Nanjing Expressway. In order to eliminate horizontal competition, the Company acquired the Highway Operating Rights of Nanjing-Shanghai Class 2 Highway for a term of 15 years in June 1997. Subsequent to the widening and improvement works, it is imperative for the Company to continue to acquire the new operating rights in order to consolidate the Company’s leading position in the Nanjing Shanghai corridor and to ensure a steady increase of the Company’s operational benefits.

To Meet the Requirements of Social and Economic Development of the Society and the Planning in the Locality

The Nanjing-Shanghai Class 2 Highway is one of the main roads in the areas it passes through, it is located closer to towns and cities when compared to the Shanghai-Nanjing Expressway. As its access is open, it becomes a corridor for convergence from the local towns. In view of the accelerating urbanisation, it was and is desirable to widen and improve the capacity of the Nanjing-Shanghai Class 2 Highway to meet the requirements of the economic and township developments in the region.

— 16 —

LETTER FROM THE BOARD

1. Traffic flow of Nanjing-Shanghai Class 2 Highway over the years

Statistics on the Traffic flow of Nanjing-Shanghai Class 2 Highway over the years: Daily average toll traffic 1997 1998 1999 2000 2001 2002 2003 (Vehicle/day) 47,571 45,174 42,909 42,357 42,434 41,442 39,958

The directors attribute the reduction trend to the shift in the use from the Nanjing-Shanghai Class 2 Highway to Shanghai-Nanjing Expressway. The reduction in 2003 was also attributable to the Widening of the Nanjing-Shanghai Class 2 Highway.

1. Major Terms of the Second Supplemental Agreement

Date: 14 April 2004 Parties: (i) the Company (ii) Jiangsu Highway Bureau

New Operating Rights:

The Highway Operating Rights of the Nanjing-Shanghai section of National Highway 312 and, in particular, comprising of the Highway Operating Rights of (1) the part of Nanjing-Shanghai Class 2 Highway which is incorporated into National Highway 312 after widening and reconstruction, commencing from 27 June 2012 and ending on 26 June 2024, and (2) the additional lane of Nanjing-Shanghai Class 2 Highway after its widening, commencing from delivery for use and ending on 26 June 2024.

Delivery Date: Aims to deliver use of the Nanjing-Shanghai Class 2 Highway on 1 January 2005 but no later than 1 October 2005.

Term of New Operating Expiring on 26 June 2024 Rights:

Consideration for the New RMB2.7 billion (approximately HK$2.547 billion) Operating Rights:

The consideration for the new operating rights is determined by friendly consultations between the parties. The Directors (including independent non-executive directors) are of the view that the terms of the relevant contract are fair and reasonable and are in the interests of the shareholders of the Company.

— 17 —

LETTER FROM THE BOARD

The Company shall, within 7 days after the signing in the second supplemental agreement, pay Jiangsu Highway Bureau RMB1 billion (approximately HK$943,000,000), another RMB1 billion (approximately HK$943,000,000) shall be paid on 30 May 2004, another RMB670 million (approximately HK$632 million) shall be paid on 31 December 2004, and the balance, being RMB30,000,000 (approximately HK$28,000,000) shall be paid to Jiangsu Highway Bureau within 7 days after the delivery of the Nanjing-Shanghai Class 2 Highway for use.

The above payment schedule may be adjusted according to the actual progress of the widening works of the NanjingShanghai Class 2 Highway upon further negotiations between the parties.

The consideration payable in respect of the new operating rights will be funded by way of bank loans. The Directors, including independent non-executive directors, taking into account the accumulated cash reserve and the availability of commercial bank loans, are of the view that the Company has and will have sufficient working capital.

• Jiangsu Highway Bureau’s Undertaking:

It will obtain the land use right attaching to the new operating rights prior to the new operating rights is delivered, and that prior to the expiry date of the new operating rights, the right to use the land shall be exclusively the Company’s that no assignment, mortgage, sub-letting, third party interests or any other encumbrances will be create against such land use right.

6. Traffic Forecast of Nanjing-Shanghai Class 2 Highway

In respect of the acquisition of the new operating rights of the Nanjing-Shanghai Class 2 Highway, the Company has commissioned Scott Wilson Limited to conduct on the traffic flow forecast of the Nanjing-Shanghai Class 2 Highway for the period from 2004 to 2024. By 2010, it is expected that the aggregate daily average revenue of all toll stations will have an increase of approximately 45% when compared with those prior to the widening of the highway.

Forecast of Traffic Flow of Nanjing-Shanghai Class 2 Highway after widening:

Year	2003	2006	2012	2022	2024
Daily Average Toll Traffic
(number of vehicle/days)	39,958	79,565	76,148	120,520	128,777

— 18 —

LETTER FROM THE BOARD

1. Valuation of the Acquisition of the New Operating Rights for the Nanjing-Shanghai Class 2 Highway

The Company has commissioned American Appraisal China Limited and, in accordance with the requirement of the Shanghai Stock Exchange, Shanghai Orient Certified Appraisal Co., Ltd., to conduct a valuation of the acquisition of the new operating rights for the NanjingShanghai Class 2 Highway by discount cash flow method. Such valuation is conducted by adopting 31 January 2004 as the base day and an acquisition price of RMB2.7 billion (approximately HK$2.547 billion); with the new operating rights expiring on 26 June 2024 after the widening work and land use rights obtained by Jiangsu Highway Bureau by way of administrative allocation; disregarding land use right fee, using the present value method to assess the value of the shareholders’ interests without considering the discount for lack of marketability. At a discount rate of 11.7% (considering the uncertainty involved in the financial budgeting of Nanjing-Shanghai Class 2 Highway during the widening period, the discount rate after widening is higher than that before widening), the valuation of the widened highway is RMB0.947 billion (approximately HK$0.893 billion). At a discount rate of 10.7% the value of the operating rights expiring on 26 June 2012 prior to the widening is assessed to be RMB0.920 billion (approximately HK$0.868 billion), and taking into account the repayment of the principal and interest on the financing in relation to the acquisition, there will be a slight increase in the Shareholders’ interest after acquisition by the Company of the new operation rights of for the Nanjing Shanghai Class 2 Highway.

1. Listing Rules

Under Rule 14.06(2) of the Hong Kong Listing Rules, the acquisition by the Company of the New Operating Rights of the Jiangsu section of the Nanjing-Shanghai Class 2 Highway is a disclosable transaction.

Pursuant to Rules 14.62 and 14.71 of the Hong Kong Listing Rules, the Company has commissioned its auditors to review the accounting policies and calculations for the business valuations. In addition, the Company has received a letter from Shenyin Wanguo Capital (H.K.) Limited stating that they have satisfied themselves that the business valuations by the Directors have been stated after due and careful enquiry.

Under Rule 7.2.2 of the Shanghai Listing Rules, the signing of the relevant contract constitutes an asset acquisition for which disclosure shall be made by way of an announcement at the time of signing of the relevant contract.

The board of directors of the Company (including the independent non-executive directors) have confirmed that the business valuations have been made after due and careful enquiry. The board of directors have issued their opinion in respect of the result of the assessment of the investment and the independent directors of the Company have issued their opinion on the qualification and capability of the domestic valuer and the traffic consultants as required under the notice numbered (No. 1 of 2004 Zhengjiankuajizi) entitled “ ” (Notice on further enhancement of the quality of disclosure of financial information by listed companies) issued by (China Securities Regulatory Commission) and the requirements of the Shanghai Stock Exchange.

— 19 —

LETTER FROM THE BOARD

D. Amendments of Articles

The amendments to Appendix 3 of the Hong Kong Listing Rules have come into operation on 31 March 2004. Appendix 3 of the Hong Kong Listing Rules sets out the provisions with which a listed company’s articles of association should conform.

In order to make the Articles consistent with the amended Appendix 3 of the Hong Kong Listing Rules, the Articles is proposed to be amended as follows:

Articles No. Existing Articles of Association 76(3) Nil 101(2) The intention to nominate a candidate as a director and the candidate’s notice expressing his acceptance of such nomination shall be lodged to the Company not more than 42 days and not less than 7 days prior to the convening of the general meeting.

Proposed amendments to the Articles of Association (deletion shown by way of strikethrough and new additions by way of underline)

In the event that any member is, under the listing rules of the Hong Kong Stock Exchange, required to abstain from voting on any particular resolution at a general meeting of the Company or restricted to voting only for or only against any particular resolution at a general meeting of the Company, any votes cast by or on behalf of such member in contravention of such requirement or restriction shall not be counted.

The intention to nominate a candidate as a director and the candidate’s notice expressing his acceptance of such nomination shall be lodged to the Company ~~not more than 42 days and not less than~~ at least 7 days prior to the ~~convening~~ date of the general meeting in relation to the election of director but not earlier than the day immediately after the date of the relevant notice of general meeting in relation to the election of director.

— 20 —

LETTER FROM THE BOARD

E. Appointment of New Director

It is proposed by the board that Mr. Xi Jia Quan be elected as a director of the Company at the Annual General Meeting. A brief introduction of Mr. Xie is set out below.

XIE Jia Quan, gentleman, born in 1951, university graduate, senior engineer. Mr. Xie joined (The Communications Planning and Design Institute of the Jiangsu Province) as technician and assistant in 1978; promoted to the position of deputy head of the Communications Planning and Design Institute in 1985, since 1992, he had been appointed to positions as the deputy head of (the Construction Office of the Expressway Construction Commander Office of the Jiangsu Province) the deputy head of (the Planning Office), deputy chief engineer and field commander of the Expressway Construction Commander Office; in August 2003, he was appointed deputy chief commander of the widening works commander office of Communications Holding, and in January 2004, he was appointed and is currently as the general manager of the Company. Mr. Xie is a senior expert experienced in the construction of expressway and management.

It is proposed that a director service contract be entered into between the Company and Mr. Xie for the term commenced on the date of the Annual General Meeting and ended on the date of the annual general meeting to be held in 2006. Either party may terminate the service contract by giving not less than 3 months’ prior written notice to the other.

Mr Xie as the general manager of the Company will receive an annual salary of RMB240,000.

Mr. Xie does not have any relationship with any directors, supervisors, senior management or substantial or controlling shareholders of the Company and does not have any interests in shares of the Company within the meaning of Part XV of the Securities and Futures Ordinance.

F. Financial and Operating Prospects of the Group

With the commencement of the Widening of Shanghai-Nanjing Expressway and the Widening of the Nanjing-Shanghai Class 2 Highway, the directors would expect that the traffic volume and the toll to be collected will be affected during the Widening. Nevertheless, based on the traffic forecasts prepared by Scott Wilson, it is expected upon completion of the widening works on Shanghai-Nanjing Expressway and the Nanjing-Shanghai Class 2 Highway, daily traffic flows of 67,332 and 76,148 vehicles are expected in 2012. As such, the directors are of the view that the financial and operating prospects of the Group after completion of the Widening of the Nanjing-Shanghai Class 2 Highway and the Widening of the Shanghai Nanjing Expressway is promising.

Shareholders should be cautioned that although due and careful enquiry has been made in preparation for the traffic forecast and the directors believe that the assumptions made are reasonable, the operation and maintenance estimate and the business valuation, the forecasts are based on assumptions as set out in Appendix I, II and III respectively. In the event any of the basis and assumption does not hold, the actual outcome of the widened Shanghai-Nanjing Expressway and the new operating rights to be acquired may differ from what are being set out in the appendices to this Circular.

— 21 —

LETTER FROM THE BOARD

G. Annual General Meeting

The Annual General Meeting of the Company will be held in Jiangsu Communications Building, 69 Shigu Road, Nanjing, the PRC on Monday, 28 June 2004 at 9:00 am. A notice of the general meeting is set out in Appendix VII to this Circular. Ordianary resolutions will be proposed for the purpose of approving ordinary matters in relation to annual general meeting, the widening of Shanghai-Nanjing Expressway and Mr. Xie Jie Quan’ appointment and his service contract and a resolution will be proposed as special resolution for the purpose of approving the amendments to the articles of association. As there is no shareholder having an interest different from the other shareholders in respect of the resolutions to be proposed in the Annual General Meeting, all shareholders of the Company may vote at the Annual General Meeting. The board of directors consider that the terms of the resolutions proposed to be passed in the Annual General Meeting fair and reasonable and in the interests of the shareholders of the Company as a whole and recommends shareholders to vote for all the resolutions.

In particular, in respect of the resolution numbered 7 regarding the Widening of the Shanghai-Nanjing Expressway. Having taken into account the significant economic benefits to be brought by the widening to the national economy, its improvement to the existing passage conditions of the Shanghai-Nanjing Expressway, its alleviation of the ever-increasing road traffic congestion, its effective reduction of the vehicles operating costs, its substantial saving of travelling time, its reduction of accidents and further enhancement of the function of Shanghai-Nanjing Expressway as a transport corridor, its positive impact on the regional economy and urbanization, and, moreover, the stable enhancement of the Company’s financial benefits following the further stable growth of the traffic flow after the widening, the board of directors of the Company considers that the proposed Widening of the Shanghai-Nanjing Expressway is in the interests of the shareholders as a whole and recommends the shareholders to vote in favour of the resolutions to be proposed at the shareholders’ Annual General Meeting to approve the investment in the widening.

For H Shareholders, whether or not you are able to attend the meeting, you are requested to (i) properly complete and return the accompanying shareholders’ reply slip to the Company as soon as possible and, in any event, prior to 8 June 2004; (ii) to complete the accompanying proxy form in accordance with the instructions printed thereon and return the same to the Company not less than 24 hours before the time appointed for holding the meeting. Completion and return of the form of proxy will not preclude you from attending and voting at the Ad Hoc General Meeting or any adjournment thereof.

The proxy form for use by domestic shareholders shall be published on the 10 May 2004 in China Securities Daily and Shanghai Securities Daily and on the website of the Company (www.jsexpressway.com). Domestic shareholders shall fill out the proxy form in accordance with the instructions thereon and return to the Company’s address prior to 8 June 2004.

Notwithstanding the completion of the proxy form, you may still attend and vote at the Annual General Meeting. Under these circumstances, you will be deemed as having withdrawn your appointment of the proxy.

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LETTER FROM THE BOARD

H. Other Information

The Company

The Company is a joint-stock limited company established in the PRC. Its registered address is at 69 Shigu Road, Nanjing, Jiangsu, the PRC. Its legal representative is Shen Chang Quan. The Company principally engages in the investment, construction, operation and management of the toll roads and expressways in Jiangsu Province.

Jiangsu Highway Bureau

Jiangsu Highway Bureau is an institution legal person the establishment of which was applied through (the Communications Department of the Jiangsu Province) and approved by (the Jiangsu Provincial Establishment Committee) on 23 July 1988 by way of “Su Bian (88) No. 190”. Its institution legal person certificate number is “Shi Zheng No. 132000000041”. Its legal address is 69 Shigu Road, Nanjing, Jiangsu, the PRC. Jiangsu Highway Bureau provides highway maintenance and administration to ensure a smooth flow of highway traffic. Jiangsu Highway Bureau is commissioned by the Transport Department of the Jiangsu Province to take charge of highway construction and maintenance; to make adjustments to highway administration and highway grid; and to carry out industry management over the location of stations collecting highway stipulated fees, vehicle operation fees and vehicle toll fees. Jiangsu Highway Bureau is not an entity engaged in commercial operation. The Company confirms that, to the best of the knowledge, information and belief of and after all reasonable enquires by the Board of Directors, Jiangsu Highway Bureau and its ultimate controlling shareholder or equivalent being the PRC Government are independent third parties not being connected persons or associates of a connected person of the Company (as defined under the Hong Kong Listing Rules).

Please refer to Appendices I and II to this Circular for the letters from Scott Wilson in relation the traffic forecast and operation and maintenance costs estimation, Appendix III to this Circular for the letter from American Appraisal on business valuation in respect of the Widening of the Shanghai-Nanjing Expressway and the Widening of the Nanjing-Shanghai Class 2 Highway.

As the business valuations are prepared on the basis of discount cash flow method, the valuations have been deemed profit forecasts. The Company has appointed Deloitte Touche Tohmatsu to review the accounting policies and calculation of the forecasts as set out in the business valuation, a report of which is set out in Part A of Appendix IV. The Company has also received a letter from Shenyin Wanguo Capital (H.K.) Limited that they have satisfied themselves that the business valuations have been stated after due and careful enquiry, the text of which is set out in Part B of Appendix IV. The Directors (including the independent non-executive directors confirmed that the business valuations have been made after due and careful enquiry. As set out in the announcements of the Company published on 15 April 2004, the board of directors have issued their opinion in respect of the result of the valuations and the independent directors have issued their opinion on the qualifications and capabilities of the domestic valuer and the traffic consultant consultant in accordance with the requirement under

— 23 —

LETTER FROM THE BOARD

the notice numbered [2004] (No. 1 of 2004 Zhengjiankuajizi) entitled “ ” (Notice on further enhancement of the quality of disclosure of financial information by listed companies) issued by (China Securities Regulatory Commission) and the requirements of the Shanghai Stock Exchange.

Financial information and general information of the Company is set out in Appendices V and VI to this Circular, respectively.

By order of the board

Jiangsu Expressway Company Limited Shen Chang Quan Chairman

— 24 —

TRAFFIC FORECAST STUDY

APPENDIX I

The following is the text of a letter prepared for inclusion in this circular, received from Scott Wilson Limited in connection with the traffic forecasts for the widening of Shanghai-Nanjing Expressway & Nanjing-Shanghai Class 2 Highway.

Scott Wilson Limited 38th Floor Metroplaza Tower 1 223 Hing Fong Road Kwai Fong Hong Kong

5 May 2004

The Directors

Jiangsu Expressway Company Limited

Dear Sirs,

Widening of Shanghai-Nanjing Expressway & Nanjing-Shanghai Class 2 Highway Traffic Forecast Study

Scott Wilson Limited (the “Consultant”) was appointed by Jiangsu Expressway Company Limited (the “Company”) to carry out independent traffic forecasts for widening of the two study roads as follows:

• Jiangsu Section of Shanghai-Nanjing Expressway (the “Huning Expressway”)

• Jiangsu Section of Nanjing-Shanghai Class 2 Highway(the “Nanjing-Shanghai Class 2 Highway”)

All reasonable and professional skill, care and due diligence has been exercised in preparing the Traffic Forecast Study Final Report. A summary of the findings of this report is set out below:

1. INTRODUCTION

The following is a brief description of the study roads:

The Huning Expressway, which has been fully operational since 15 September 1996, is part of the key strategic east-west route between Shanghai and Chengdu in Sichuan Province. The Huning Expressway links Shanghai with Suzhou, Wuxi, Changzhou, Zhenjiang and Nanjing. The length of Jiangsu Section is 258 km. This road is currently a dual two-lane expressway.

I-1

TRAFFIC FORECAST STUDY

APPENDIX I

Nanjing-Shanghai Class 2 Highway is the old road linking Shanghai, Suzhou, Wuxi, Changzhou, Zhenjiang and Nanjing. The length is 271 km. Whilst some sections of this road have been upgraded, it is generally of Class 2 standard, with a single two-lane carriageway. And some sections have been updated to Class 1, with a dual two-lane highway.

The locations of the two study roads are shown in Figure A.

==> picture [455 x 322] intentionally omitted <==

In these years, economic growth rates were higher than originally anticipated in jiangsu province, especially in southern Jiangsu, and the traffic in Huning Expressway has grown very rapidly in these years and the grown rate of weight average is 18.3%, As a result, the service levels of road is becoming lower and lower, some sections, such as the Wuxi and Suzhou Secions, of the Huning Expressway are always very congested with low service levels.In response, the Company are considering plans to widen the Huning Expressway to boost its capacity, to cope with the continue growth.

A further issue arising from the development of industrial centres in southern Jiangsu, is that toll stations along Nanjing-Shanghai Class 2 Highway, originally on the peripheries of a number of cities are now within these cities, as a direct consequence of new development. This study also needs to investigate the feasibility and potential impact of repositioning such toll collection stations into inter-urban locations, to ease the toll administration of the Company and reduce the potential for

I-2

TRAFFIC FORECAST STUDY

APPENDIX I

unauthorised toll leakage. The company have finished the study about the moving toll stations in Nanjing-Shanghai Class 2 Highway ,and Suzhou Toll Station, Xichen Toll Station, Lingjiatang Toll Station have be relocated on 31 August 2003.

This study is based on the various widening plans provided by the Company as follows:

• Widening the Huning Expressway from dual-two to dual-four standard between 2004 and 2006;

• Widening and upgrading Nanjing-Shanghai Class 2 Highway to dual-two Class 1 standard between July 2003 and December 2004;

In all, these study cases have been considered in this study, one for the Huning Expressway and one for Nanjing-Shanghai Class 2 Highway. Within each study case, various road improvement scenarios are tested as follows:

1. Study Case of Huning Expressway

• “Do Nothing”: neither the Huning Expressway nor Nanjing-Shanghai Class 2 Highway widened, but a new dual two-lane expressway will be built parallel to the Huning Expressway;

• “Widening Only”: the Huning Expressway widened from dual-two to dual-four lane standard; Nanjing-Shanghai Class 2 Highway is widened and upgraded to dual two-lane Class 1 standard. However, a new dual two-lane expressway will not be built parallel to the Huning Expressway.

2. Study Case of Nanjing-Shanghai Class 2 Highway

• “Do Nothing”: neither the Huning Expressway nor Nanjing-Shanghai Class 2 Highway are widened, but a new dual two-lane expressway will be built parallel to the Huning Expressway;

• “Widening Only”: the Huning Expressway is widened from dual-two to dual-four lane standard; Nanjing-Shanghai Class 2 Highway is widened and upgraded to dual two-lane Class 1 standard. However, a new dual two-lane expressway will not be built parallel to the Huning Expressway.

2. OBJECTIVES AND SCOPE OF SERVICES

The scope of services provided by the Consultant comprised of:

• 1) Gathering existing traffic data for different vehicle types on the highway network within the study area.

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• 2) Collecting current and historical socio-economic data to assist in understanding historical trends and predicting likely future trends in the study area.

• 3) Collecting and analysing the latest origin-destination survey information and classified vehicle counts in the study area to determine the existing traffic situation.

• 4) Developing a traffic forecasting model for the study area. This model will relate generated traffic flows to socio-economic development and has been validated using current traffic count data.

• 5) Preparing traffic forecasts for the years 2003, 2006, 2012, 2022, 2027, 2032 in the study case of Huning expressway . and for the years 2003, 2006, 2012, 2022, 2024 in the study case of Nanjing-Shanghai Class 2 Highway.

• 6) Preparing independent traffic and toll revenue forecasts for vehicle toll categories from 2003 to 2032. Forecast traffic volumes for intermediate years are derived by linear interpolation.

• 7) Submitting a report on the independent traffic and revenue forecasts, including the forecast methodology and assumptions, in a form suitable for the Company.

3. TRAFFIC FORECAST METHODOLOGY

The traffic forecast methodology for this study consists of the following stages:

• 1) Review of future economic growth rates for Jiangsu Province.

• 2) Elasticity analysis to determine the income elasticity of trip levels for the forecast period.

• 3) Computation of future interzonal matrix growth rates, for assignment years 2003, 2006, 2012, 2022, 2024, 2027 and 2032, for both vehicle types.

• 4) Definition of appropriate future road networks for the assignment years 2003, 2006, 2012, 2022, 2024, 2027 and 2032, including all planned highway schemes, toll charges and likely road conditions. Additional network assumptions are made covering the Do Nothing and Widening Only Cases.

• 5) Determination of future behavioural values of time and vehicle operating costs by vehicle type by assignment year, incorporating any predicted changes in the compositions of passenger and goods vehicles.

• 6) Traffic assignment to the future road network for each assignment year based on future year forecasting parameters.

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• 7) Conversion of forecast traffic volumes by the two vehicle types into toll categories on the Huning Expressway and Nanjing-Shanghai Class 2 Highway.

• 8) Adoption of maximum capacities on the Huning Expressway and Nanjing-Shanghai Class 2 Highway, corresponding with the various widening scenarios.

• 9) Derivation of forecast traffic volumes for the Huning Expressway and Nanjing-Shanghai Class 2 Highway.

• 10) Estimation of forecast toll revenues for the Huning Expressway and Nanjing-Shanghai Class 2 Highway. Interpolation by toll category is used to derive forecasts for years not modelled.

4. MAJOR MODEL ASSUMPTIONS

The major assumptions adopted in the traffic forecast model comprised of the following:

1) GDP

Gross Domestic Product (GDP) has been taken as the economic indicator as the GDP forecasts for the relevant cities are readily available and generally represents the economic situation of the cities. GDP growth rates in the study area assumed in the forecast cases are as given in Table 1:

Table 1: GDP Forecasts In the Future Years

	Central	South	North	Jiangsu
Period	Jiangsu	Jiangsu	Jiangsu	Province
2002-2010	9.9%	10.6%	10.1%	10.1%
2011-2020	8.2%	8.5%	8.5%	8.5%
2021-2032	6.4%	6.6%	6.7%	6.7%

2) Elasticity

It is unlikely that traffic will increase in tandem with GDP over the longer term and hence elasticity indices can be expected to gradually decline. In the case of passenger vehicles, there will be a limit on the number of vehicles people own and the number of journeys made, after which consumption will switch to other sectors of the economy. In the case of goods vehicles, increased efficiency over time is likely to reduce empty-running vehicles. In addition, at present rail freight growth is suppressed due to rail network capacity constraints. Therefore the income elasticity of goods vehicle traffic is likely to be higher in the short term than it was in recent years. Once the capacity of rail or waterways is increased, goods vehicle traffic growth is likely to slow down. The elasticity indices derived are presented in Table 2.

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Table 2: Income Elasticity of Passenger and Goods Vehicle Traffic In the Future Years

	Passenger	Goods
Period	Vehicles	Vehicles
2002-2010	0.98	1.00
2011-2020	0.92	0.92
2021-2032	0.83	0.83

3) Current Toll Rates On The Study Roads

The current toll rates on the study roads are different, the consultant has considered the effect on the different toll rates. the toll rates on the study roads are given in Tables 3-5.

Table 3: Current Toll Rate at Other Toll Stations on Nanjing-Shanghai Class 2 Highway

**Toll **	Category	Description	Toll (RMB
			per vehicle)
1		Bicycles, Motorcycles	3
2		Tractors	5
3		Passenger Vehicles: 1 to 20 seats	10
		Goods Vehicles: up to 2 tonnes
4		Passenger Vehicles: 21 to 50 seats	20
		Goods Vehicles: 2 to 5 tonnes
5		Passenger Vehicles: over 50 seats	30
		Goods Vehicles: 5 to 10 tonnes
6		Goods Vehicles: over 10 tonnes but less than 40 tones	3
		Goods Vehicles: over 40 tones	1.5

Table 4: Current Toll Rate at Gunan Toll Station on Nanjing-Shanghai Class 2 Highway

**Toll **	Category	Description	Toll (RMB
			per vehicle)
1		Bicycles, Motorcycles	10
2		Tractors	20
3		Passenger Vehicles: 1 to 20 seats	30
		Goods Vehicles: up to 2 tonnes
4		Passenger Vehicles: 21 to 50 seats	40
		Goods Vehicles: 2 to 5 tonnes
5		Passenger Vehicles: over 50 seats	80
		Goods Vehicles: 5 to 10 tonnes
6		Goods Vehicles: over 10 tonnes	120

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The Price Bureau, Finance Administration Department and Communications Department of Jiangsu Province have revised the expressway toll standard in December 2003. Since 1 January 2004, all expressway tolls will be increased by 12.5% over the current standard for the period of 10 years. The Consultant’s revenue forecast from 2004-2013 is based on the revised toll rates as shown in Table 5.

Table 5: Current Toll Rate on Huning Expressway

**Toll **	Category	Description	Description	**Toll Rate **	**(RMB per **	km)
		Passenger	Goods			Toll
		Vehicle	Vehicle	Before	After	Increase
1		1 to 6 seats		0.40	0.45	12.5%
2		7 to 20 seats	up to 2 tonnes	0.6	0.675	12.5%
3		21 to 50 seats	2 to 5 tonnes	0.8	0.90	12.5%
4		over 50 seats	5 to 10 tonnes	1.0	1.125	12.5%
5			10 to 20 tonnes	1.2	1.35	12.5%
6			Over 20 tonnes	1.6	1.80	12.5%

4) Toll Increase Scenarios

According to common practice, all revenue forecasts are reported on real prices (i.e. inflation factor is not considered). However, the actual toll adjustment mechanism allows some toll increases after a period of time due to inflation. Should inflation occur in the future, the revenue forecast model should consider toll increase due to inflation. As requested by the Client, the Consultant has considered toll increase for the Huning Expressway for the period 2004-2013 based on the revised toll rates as given in Table 5 above. For the period 2014-2032, the toll rates on the Huning Expressway will be increased by 25% in every 10 year due to inflation. Regarding the Nanjing-Shanghai Class 2 Highway, the Consultant assumes that there will be 25% toll increase in every 10 years since 2007 in the “Do Nothing” case and 25% toll increase since 2005 in the “Widening Only” case. In the view that the toll adjustment is generally applied to the whole network, therefore a specific study on the impact of toll increase on traffic flow has not been conducted in the traffic forecasting process. We assume that the traffic flows on the study roads will remain unchanged after toll increases.

5) Weight-Related Toll Rates

According to the joint announcement made by the Price Bureau, Finance Administration Department and Communications Department of Jiangsu Province, all goods vehicles will be charged tolls based on their loads carried and all overloaded vehicles will be charged additionally for their overloaded tonnages effective from 28 December 2003. Based on the new regulations, new toll standards will be implemented on 28 December 2003 on all toll stations of the Huning

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Expressway as well as on the Suzhou Wangting toll station, Wuxi Luoshe toll station and Changzhou Bengniu toll station of the Nanjing-Shanghai Class 2 Highway. The charging standards for goods vehicles are summarised as follows:

• a. Normal Good Vehicles (Not overloaded) Toll Rates:

Huning Expressway:

Loads Carried Toll Rates � 10 tonnes RMB 0.09 per tonne km 10 - 40 tonnes RMB 0.09 - 0.05 per tonne km (i.e. decrease linearly) � 40 tonnes RMB 0.05 per tonne km

Notes:

• 1) Load carried � 5 tonnes will be charged as 5 tonnes;

• 2) Toll charge < RMB 20 will be charged as RMB 20.

Nanjing-Shanghai Class 2 Highway:

Loads Carried Toll Rates � 10 tonnes RMB 2 per tonne 10 - 40 tonnes RMB 2-1.75 per tonne (i.e. decrease linearly) � 40 tonnes RMB 1.75 per tonne

Notes:

• 1) Toll charge < RMB 10 will be charged as RMB 10.

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• b. Overloaded Goods Vehicles Toll Rates

Huning Expressway and Nanjing-Shanghai Class 2 Highway:

Overloaded Percentages Toll Charges

Overloading � 30% Charged as normal goods vehicles

30% < Overloading � 50% Normal load plus 30% overloading will be charged as normal goods vehicles; The rest of overloading will be charged 1.5 times of normal goods vehicles

50% < Overloading � 100% Normal load plus 30% overloading will be charged as normal goods vehicles; The rest of overloading will be charged 2 times of normal goods vehicles

Overloading >100%

Normal load plus 30% overloading will be charged as normal goods vehicles; The rest of overloading will be charged 3 times of normal goods vehicles

Despite of the new toll standards above, the Consultant has estimated the toll revenues on the study roads based on the old toll standards. The reasons are summarised as follows:

1. This study has the study period between June and August 2003. During this period, the weight-related toll charging mechanism was only in a discussion stage and there was no formal announcement issued regarding the new toll charging standards. Therefore, the Consultant was unable to use the new toll standards in our study.

2. During the traffic forecasting model development stage, some major parameters were derived in this study based on the original toll charging structure. For example, the Base Year (2003) traffic flow data used for model calibration were derived from toll revenue records with the original toll structure. Therefore, in the traffic forecasting stage, the final traffic assignment was also conducted based on the original toll charging structure. However, if we are to develop a new traffic forecasting model based on the new toll charging structure which hasn’t been implemented before in China, the traffic and revenue forecasts produced may not be as accurate as those based on the original toll charging structure due to the lack of experience in some major parameters and historical data for model calibarion.

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1. Because the new toll charging standards will be implemented to all other highways within Jiangsu Province as well as the Huning Expressway and Nanjing-Shanghai Class 2 Highway, in effect there will not be significant traffic diversions and change in vehicle compositions among them, Therefore, we consider that it is reasonable to develop the traffic forecasting model to produce traffic and revenue forecasts based on the original toll charging standards.

2. Based on the current conditions, the overloading behaviours of goods vehicles are very common in our study area. Because all overloaded vehicles will now be charged additionally for their overloading, the toll revenues collected for the Huning Expressway and Nanjing-Shanghai Class 2 Highway may increase slightly based on the new toll charging standards. Therefore, our toll revenue forecast based on the original toll charging standards is considered to be conservative.

6) Future Year Road Networks

The Jiangsu Province highway network development plan was collected. In order to understand the implications of new roads on the study area, they were incorporated into the future year road network models for the years 2006, 2012, 2022, 2024, 2027 and 2032 as shown in Table 6. Their locations within Jiangsu Province are shown in Figure B.

Table 6: Planned Highway Network Development in Jiangsu Province

**Road **	name	Road Section	Opening Date
		Expressways Projects
S101	Nanjing-Suqian	Nanjing-Xuyu	2008
		Xuyu-Suqian	Existing
S102	Nanjing-Lianyungang	Nanjing-Huaian	Existing
		Huaian-Lianyungang	Existing
S103	Nanjing-Qidong	Nanjing-Nantong	Existing
		Nantong-Qidong	2005
S104	Nanjing-Gaochun	Nanjin-Shuangpaishi	Existing
		Shuangpaishi-Gaochun	Existing
S105	Nanjing-Maanshan	Nanjing-Maanshan	Existing
S201	Lianyungang-Suzhou	Ganyu-Guanyun	Existing
		Guanyun-Nantong	2008
		Nantong-Suzhou	2008
		Suzhou-Jiaxing	Existing

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Road name	Road Section	Opening Date
	Expressways Projects
S202 Yancheng-Jinjiang	Yancheng-Jinjiang	Existing
S203 Haian-Liyang	Haian-Yangzhou	2010
	Yangzhou-Zhenjiang	2005
	Zhenjiang-Liyang	2005
S301 Yancheng-Xuzhou	Yancheng-Huaian	2010
	Huaian-Xuzhou	2008
S302 Taicang-Lishui	Taicang-Jiangyin	2004
	Jiangyin-Changzhou	2006
	Changzhou-Lishui	2010
S303 Wuxi-Yixing	Wuxi-Yixing	2003
G010 Ganyu-Huaqiao	Ganyu-Huaqiao	Existing
G020 Hanzhuang-Wushao	Hanzhuang-Wushao	2005
G020B Xinyi-Huaian	Xinyi-Huaian	Existing
G045 Lianyungang-Xuzhou	Lianyungang-Xinyi	Existing
	Xinyi-Xuzhou	Existing
G055 Huning	Huning	Existing
G065A Yixing-Nanjing	Yixing-Lishui	2004
	Lishui-Nanjing	2010
	Bridges Projects
B1 Nanjing third Bridge	Bridge	2005
B2 Nanjing Second Bridge	Bridge	Existing
B3 Runyang Bridge	Bridge	2005
B4 Jianyin Bridge	Bridge	Existing
B5 Sutong Bridge	Bridge	2008
B6 Huchongsu Tunnel	Bridge	2010

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==> picture [438 x 636] intentionally omitted <==

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7) Road Capacities

Levels of service of highways are defined in the Highway Capacity Manual of the Transportation Research Board of the United States of America, which is commonly used in the PRC. Levels of service refer to the traffic flow conditions on roads and are used in the definition of highway capacity. For each level of service a different capacity may be defined, signifying the maximum capacity at which that given level of service may be maintained. The levels of service, from A to F are defined in Table 7.

Table 7: Level of Service Definitions

• Level of Service Definition Level of Service A Free traffic flow; drivers are not affected by other drivers and enjoy a high degree of freedom in the choice of travelling speeds and manoeuvres.

• Level of Service B Stable traffic flow; drivers maintain a relatively high degree of freedom in the choice of travelling speeds and manoeuvres whilst being required to be aware of other drivers.

• Level of Service C Stable traffic flow; although drivers are required to be more alert and are restricted in the choice of travelling speeds and manoeuvres.

• Level of Service D Dense but stable traffic flow; relatively greater restrictions on the choice of travelling speeds and manoeuvres.

• Level of Service E Generally unstable traffic flow; operations close to maximum capacity, travelling speeds significantly reduced and manoeuvres highly restricted.

• Level of Service F Operations beyond maximum capacity; congested traffic flow and periodic halts.

The caps on the Huning Expressway correspond with Level-Of-Service C. The caps on Nanjing-Shanghai Class 2 Highway correspond to Level-Of-Service D. According to this level, Flows on the Huning Expressway were capped at 51,500 Vehicles per day (two-way) in the dual 2-lane case and at double this amount (102,900 Vehicles per day, two-way) in the dual 4-lane case. Nanjing-Shanghai Class 2 Highway was capped at 15,100 Vehicles per day (two-way) before the with-widening and 38,280 Vehicles per day (two-way) under the with-widening scenarios.

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8) Lengths of Traffic Forecast Periods

The lengths of traffic forecast periods coincide with the end of the Company’s franchise periods for operating the Huning Expressway and Nanjing-Shanghai Class 2 Highway. Under both widening scenarios, the lengths of traffic forecast Periods are shown in Table 8.

Table 8: Lengths of Traffic Forecast Periods

	Huning	Nanjing-Shanghai
Scenario	Expressway	Class 2 Highway
Do Nothing	2027	2012
Widening Only	2032	2024

5. CONCLUSION

The traffic forecast model developed for the study was calibrated and validated using the 2002 independently observed traffic counts, together with the 2002 permanent traffic count data. The Consultant concluded that the model provides a suitable basis for estimating future traffic flows on the Huning Expressway and Nanjing-Shanghai Class 2 Highway. The traffic forecasts generated (in vehicle per day) are summarized in the Tables 9-12. The revenue forecasts generated (in Million RMB) under the toll increase scenarios are summarized in the table 13-16.

Table 9: Forecast AADT on Huning Expressway — Do Nothing

Toll Category Toll Category 1 Toll Category 2 Toll Category 3 Toll Category 4 Toll Category 5 Toll Category 6 Total	2003 12,664 7,970 6,527 3,132 695 50 31,038	2006 12,908 7,784 7,216 2,913 540 103 31,462	2012 11,177 7,753 8,000 3,531 1,088 598 32,148	2022 14,165 9,651 9,144 4,062 1,921 1,416 40,359	2027 16,938 10,342 8,761 3,936 2,231 1,788
					43,997

Note: AADT - the weight average traffic on the Huning Expressway (Vehicles/day)

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Table 10: Forecast AADT on Huning Expressway — Widening Only

Toll Category	2003	2006	2012	2022	2027	2032
Toll Category 1	12,664	13,583	23,542	36,242	40,777	43,138
Toll Category 2	7,970	8,550	16,220	22,087	22,314	22,015
Toll Category 3	6,527	8,245	16,690	20,392	18,525	17,291
Toll Category 4	3,132	3,386	7,366	9,171	8,493	8,099
Toll Category 5	695	630	2,267	4,221	4,650	4,762
Toll Category 6	50	120	1,247	3,113	3,725	3,936
Total	31,038	34,513	67,332	95,227	98,484	99,240

Note: AADT - the weight average traffic on the Huning Expressway (Vehicles/day)

Table 11: Forecast AADT on Nanjing-Shanghai Class 2 Highway — Do nothing

Toll Category Toll Category 1 Toll Category 2 Toll Category 3 Toll Category 4 Toll Category 5 Toll Category 6 Total	2003 212 1,485 25,243 9,437 3,145 436 39,958	2006 221 1,620 27,955 11,944 3,355 427 45,522	2012 179 1,316 23,781 10,224 2,907 377
			38,783

Note: AADT - the summary toll traffic of the toll stations on Nanjing-Shanghai Class 2 Highway (Vehicles/day)

Table 12: Forecast AADT on Nanjing-Shanghai Class 2 Highway — Widening Only

Toll Category Toll Category 1 Toll Category 2 Toll Category 3 Toll Category 4 Toll Category 5 Toll Category 6 Total	2003 212 1,485 25,243 9,437 3,145 436 39,958	2006 373 2,743 49,061 20,791 5,846 750 79,565	2012 328 2,409 46,999 19,978 5,688 746 76,148	2022 510 3,750 74,543 31,648 8,953 1,117 120,520	2024 548 4,029 79,674 33,786 9,556 1,184
					128,777

Note: AADT - the summary toll traffic of the toll stations on Nanjing-Shanghai Class 2 Highway (Vehicles/day)

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Table 13: Annual Toll Revenue on Huning Expressway (without Toll Increase)

Year	**Do **	Nothing	**Widening **	Only
2003		1,733		1,733
2006		1,939		2,252
2012		2,198		4,486
2022		3,248		6,672
2027		3,779		7,094
2032		—		7,330

Table 14: Annual Toll Revenue on Nanjing-Shanghai Class 2 Highway(without Toll Increase)

Year	**Do **	Nothing	**Widening **	Only
2003		230.8		230.8
2006		217.9		457.2
2012		238.2		445.1
2022		—		675.9
2024		—		718.5

Table 15: Annual Toll Revenue on Huning Expressway (with Toll Increase)

Year	**Do **	Nothing	Widening Only
2003		1,733	1,733
2006		1,939	2,252
2012		2,198	4,486
2022		4,060	8,340
2027		5,905	11,084
2032		—	11,453

Table 16: Annual Toll Revenue on Nanjing-Shanghai Class 2 Highway (with Toll Increase)

Year	**Do **	Nothing	Widening Only
2003		230.8	230.8
2006		272.4	571.5
2012		297.8	556.4
2022		—	1056.1
2024		—	1122.6

Yours faithfully,

For and on behalf of

Scott Wilson Limited

Samuel C F Wong Associate

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APPENDIX II

OPERATION AND MAINTENANCE COSTS ESTIMATE

The following is the text of a letter prepared for inclusion in this Circular, received from Scott Wilson Limited in connection with the operation and maintenance costs estimation for the Shanghai-Nanjing Expressway and the Nanjing-Shanghai Class 2 Highway.

Scott Wilson Limited 38th Floor Metroplaza Tower 1 223 Hing Fong Road Kwai Fong Hong Kong

5 May 2004

The Directors

Jiangsu Expressway Company Limited

Dear Sirs,

Shanghai-Nanjing Expressway and Nanjing-Shanghai Class 2 Highway Operation and Maintenance Costs Estimation

Scott Wilson Limited (the “Consultant”) was appointed by Jiangsu Expressway Company Limited (the “Company”) to carry out an independent estimation of the operation and maintenance costs for the two study roads as follows:

• Shanghai-Nanjing Expressway (the “Expressway”)

• Nanjing-Shanghai Class 2 Highway (the “Highway”)

All reasonable and professional skill, care and due diligence has been exercised in preparing the Operation and Maintenance Costs Estimation Final Report. A summary of the findings of this report is set out below:

1. INTRODUCTION

The following is a brief description of the study roads:

The Shanghai-Nanjing Expressway, which has been fully operational since 15 September 1996, is part of the key strategic east-west route between Shanghai and Chengdu in Sichuan Province. The Expressway links Shanghai with Suzhou, Wuxi, Changzhou, Zhenjiang and Nanjing. This road is

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APPENDIX II

currently a dual two-lane expressway and runs broadly parallel to the Nanjing-Shanghai Class 2 Highway, but with a more direct alignment. The Nanjing-Shanghai Class 2 Highway is the old road linking Shanghai, Suzhou, Wuxi, Changzhou, Zhenjiang and Nanjing. Whilst some sections of this road have been upgraded, it is generally of Class 2 standard, with a single two-lane carriageway. And some sections have been updated to Class 1, with a dual two-lane highway.

2. OBJECTIVES AND SCOPE OF SERVICES

The scope of services provided by the Consultant comprised:

• Estimation of the operation and maintenance costs of the Shanghai-Nanjing Expressway (2004 to 2027), the Nanjing-Shanghai Class 2 Highway (2004 to 2012) for the “Do Nothing” scenario (i.e. neither the Shanghai-Nanjing Expressway nor Nanjing-Shanghai Class 2 Highway widened); and

• Estimation of the operation and maintenance costs of the Shanghai-Nanjing Expressway (2004 to 2032), the Nanjing-Shanghai Class 2 Highway (2004 to 2024) for the “Widening Only” scenario (i.e. the Shanghai-Nanjing Expressway widened from dual-two to dual-four lane standard; Nanjing-Shanghai Class 2 Highway widened and upgraded to dual two-lane Class 1 standard).

3. BASIS OF REPORT

The Consultant’s report was based on the following:

• Interview with senior managers of the Company;

• Review of the existing maintenance programmes of the Expressway and Highway provided by the Company;

• Review of the expenditure records of the Expressway and Highway provided by the Company;

• Site visits conducted from 16 June 2003 to 20 June 2003; and

• Widening programmes of the Expressway and Highway provided by the Company.

The Consultant has not been involved in the technical audit of the design standards, the construction specifications and quality of the completed works for the Expressway and Highway. Therefore, it has been assumed that the current construction has been designed and constructed to the appropriate national standards, which are acceptable by the approving authorities. Provided adequate specific and periodic maintenance was carried out, the structures and road pavement should perform satisfactorily in their appropriate design life.

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APPENDIX II

4. MANAGEMENT STRUCTURE

The Company is responsible for managing the Expressway and Highway. Its management structure is illustrated below:

==> picture [458 x 343] intentionally omitted <==

----- Start of picture text -----

Shareholder Committee
Secretary Office of
Supervision Directorate Directorate
General Manager
Suzhou Management Centre
Managing and
Wuxi Management Centre
Developing Corp.
Changzhou
Management Centre
Management Centre of
Nanjing-Shanghai Class 2 Zhenjiang
Highway Management Centre
Nanjing Management Centre
Financial and
Administration Operation Management Party Committee
Accounting Labour Union
Office Department Department Office
Department
Human Investment and
Engineering Expressway Disciplines
Resources Development
Department Administration Committee
Department Department
----- End of picture text -----

Under the management headquarters established in Maqun, the five management centres established for the Expressway (in Suzhou, Wuxi, Changzhou, Zhenjiang and Nanjing) are responsible for managing and maintaining the Expressway in five sections. Their duties involve central control, expressway administration, maintenance and tolling.

Management centre of Nanjing-Shanghai Class 2 Highway established for the Highway are responsible for managing and maintaining the Highway. The duties of this centre involve highway administration, maintenance and tolling.

The Consultant considers the organizational structure of the Company satisfactory since it will ensure a quick response to incidents that require a prompt response and a segregation of maintenance responsibility to a reasonable scale.

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APPENDIX II

5. EXISTING CONDITIONS AND WIDENING PROGRAMME

During the site visis of the Expressway and Highway, visual inspections of the infrastructures for the Expressway and Highway were conducted. The existing conditions and widening progammes of the Expressway and Highway are summarized as follows:

• The Expressway is a dual two-lane expressway that has been in operation for 7 years. The main route of the Expressway is 26 metres wide. It is planned to upgrade to dual-4 lane standard in the near future. After widening, the main route of the Expressway will be 42.5 metres wide.

• The Highway comprises newly constructed and reconstructed sections. It is generally a single two-lane highway. Certain sections are of Class 1, dual two-lane highways. As the Highway has undergone various reconstructions, the width of the road surface ranges from 9 to 22 metres. It is planned to upgrade to Class 1, dual-2 lane standard in the near future. After widening, the main route of the Highway will be 22.5 metres wide.

• Damages on FMJs were noted during the inspection of the Expressway and some of the drainholes on the bridge deck were found blocked. Local scaling, spalling and cracking of concrete were commonly observed for some old bridges during the site visit of the Highway and damages on the bridges railings of the Highway were also observed.

• Most sections of the Highway have been in operations for many years, some major defects such as fatigue cracking, wheeltrack rutting, uneven settlement and material stripping occur due to repeated loading, resulting in poor riding and safety quality and requiring frequent maintenance. Especially, failure of the hardshoulder surface in a number of locations due to uneven settlement was found during the site visit of the Highway.

• Given the current traffic and road conditions on the Expressway and Highway, if there are no widening plans to improve these roads, it is envisaged that some major maintenance works will be needed inevitably in the near future in order to maintain their safety requirement.

6. ESTIMATION OF OPERATING AND MAINTENANCE COSTS

An estimation of the operation and maintenance costs was conducted on the Expressway and Highway. The costs estimation allows for general management and administration cost, staff cost, routine maintenance, specific maintenance and major maintenance. However capital investments such as installation of a new traffic and surveillance system, construction of new administration building and quarters for staff, purchase or renting of office space for the headquarter and the like, have not been included. All calculations are based on 2003 unit prices provided by the Company and have not taken inflation into account.

II-4

OPERATION AND MAINTENANCE COSTS ESTIMATE

APPENDIX II

The estimated operation and maintenance costs (at 2003 price) are summarized below:

Shanghai-Nanjing Expressway (Do Nothing) (Unit: RMB) 2003 2006 2012 2022 2027 385,185,777 363,576,000 253,343,000 249,565,000 414,669,000 Shanghai-Nanjing Expressway (Widening Only) (Unit: RMB) 2003 2006 2012 2022 2027 2032 385,185,777 237,687,000 301,001,000 299,849,000 599,399,000 347,550,000 Nanjing-Shanghai Class 2 Highway (Do Nothing) (Unit: RMB) 2003 2006 2012 58,760,441 123,516,000 65,898,000 Nanjing-Shanghai Class 2 Highway (Widening Only) (Unit: RMB) 2003 2006 2012 2022 2024 58,760,441 74,384,000 84,376,000 91,011,000 92,319,000

Yours faithfully For and on behalf of Scott Wilson Limited Samuel C F Wong Associate

II-5

BUSINESS VALUATION

APPENDIX III

The following is the text of a letter prepared for inclusion in this Circular, received form American Appraisal China Limited in connection with the business valuation for the widening of the Shanghai-Nanjing Expressway and the Nanjing-Shanghai Class 2 Highway.

5 May, 2004

Ref: 04/0432

The Directors

Jiangsu Expressway Company Ltd.

69 Shigu Road, Nanjing Jiangsu Province China

Dear Sirs or Madams,

In accordance with your instructions, we have made appraisals of the fair market value of 100% equity interest of Shanghai-Nanjing Expressway, the Jiangsu Section (the “Expressway”) and Nanjing-Shanghai Class 2 Highway, the Jiangsu Section (the “Class 2 Highway”), operated by Jiangsu Expressway Company Ltd. (the “Company”) as of January 31, 2004.

The purpose of our valuation was to assist the Company in determining the fair market value of the Expressway and the Class 2 Highway before and after the widening project as of January 31, 2004. It is our understanding that this appraisal is to be used for public announcement purpose. The brief profiles of the Expressway and Class 2 Highway are as follow:

			Width	Width	Operating	Operating	Expected Total
		Mileage	Pre-	Post-	Term pre-	Term Post-	Investment Cost	Construction
		(km)	widening	widening	widening	widening	by the Company	Period
The	Expressway	248	26 meters	42.5 meters	Jun. 97 -	Jun. 97 -	Rmb10.54 billion	2004-2006
					Jun. 27	Jun. 32
The	Class 2 Highway	271			Jun. 97 -	Jun. 97 -	Rmb2,700 million	Jul. 03 -
					Jun. 12	Jun. 24		Dec. 04

This letter identifies the property appraised, describes the basis of valuation and assumptions, explains the valuation methodology utilized, and presents our conclusion of value. Excluded from this appraisal are all real estate property, machinery, equipment, supplies, stocks, spare parts, materials on hand, computer software, inventories, current assets, current liabilities or any intangible assets that may exist.

III-1

APPENDIX III

BUSINESS VALUATION

Fair market value is defined as the estimated amount at which the business enterprise might be expected to exchange between a willing buyer and a willing seller, neither being under compulsion, each having reasonable knowledge of all relevant facts, and with the buyer and seller contemplating retention of the business at its present location for continuation of current operations unless the break-up of the business or the sale of its assets would yield greater investment returns

Equity interest of the Expressway and Class 2 Highway is defined for this appraisal as the total invested capital, net of the value of debt but including shareholders’ loans, and is equivalent to shareholders’ equity plus shareholders’ loans. According to management of the Company, the projects we valued do not have any shareholders’ loans.

Company Background

Incorporated on 1st August 1992 in Jiangsu Province of the People’s Republic of China (“PRC“), the Company is principally engaged in investing, constructing, operating and managing toll expressways within Jiangsu Province. It also provides passenger transport and other ancillary services along with the expressways including fueling, catering, shopping, car repair, advertising and etc. Toll roads operated by the Company are located in the Yangtze Delta Region, and they are the key passages connecting the north and the south as well as the east and the west of Jiangsu Province. The Company is one of the largest listed companies in the industry and it has managed toll roads of over 700 km.

Method of Valuation

The fair market values of the equity interests of the Expressway and Class 2 Highway were developed through the application of the income approach technique known as the discounted cash flow method. In this method, the value depends on the present worth of future economic benefits to be derived from ownership of equity and shareholders’ loans. Thus, an indication of value was developed by discounting future free cash flows available for distribution to shareholders and for servicing shareholders’ loans to their present worth at market-derived rates of return appropriate for the risks and hazards of the toll road project.

When developing the discount rate to apply to the future economic income streams attributable to shareholders, the discount rate is the cost of equity. The cost of equity was computed to be 10.7% and 11.7% for valuing the Expressway and Class 2 Highway in pre-widening and post-widening scenarios.

Due to the changing environment in which the Company is operating, a number of assumptions have to be established in order to sufficiently support our concluded value of the business enterprise. The major assumptions adopted in this appraisal are:

• There will be no major changes in the existing political, legal, and economic conditions in PRC in which the Company carries on its business;

III-2

BUSINESS VALUATION

APPENDIX III

• There will be no major changes in the current taxation law in PRC, that the rates of tax payable remain unchanged and that all applicable laws and regulations will be complied with;

• Sufficient fund will be injected into the Company by its shareholders and/or through debt financing that is necessary to meet the capital expenditure requirements for completing the construction of the Expressway and Class 2 Highway on time;

• Loan repayment schedule in the loan agreement will be in accordance with repayment schedule in the Projection provided by management;

• Exchange rates and interest rates will not differ materially from those presently prevailing;

• The local inflation rate in Jiangsu Province will not differ significantly from the PRC nationwide inflation rate;

• The Company will obtain the approval for extension of operating terms of the Expressway and Class 2 Highway to 2032 and 2024 respectively;

• Subsequent rate increase assumed in the Projection will be approved by the Jiangsu Provincial Price Bureau;

• The government of Jiangsu Province will grant the Company the Land Use Certificate for land utilized in upgrading the Expressway;

• Industry trends and market conditions for the key industries of Jiangsu Province will not deviate significantly from economic forecasts;

• New alternative transportation modes in Jiangsu Province will not have substantial impact upon the financial projection of the Company; and

• No natural calamities that will have a major impact upon the economy and the traffic volume growth will occur in Jiangsu Province.

Our investigation included discussions with management of the Company with regards to the history, operations and prospects of the Expressway and Class 2 Highway. We also studied the unaudited financial statement, financial projection (“the Projection”) as well as reviewed traffic consulting report done by Scott Wilson and other relevant documents that were furnished to us by management. We assumed that the data we obtained in the course of the valuation, along with the opinions and representations provided to us by the Company are true and accurate.

III-3

BUSINESS VALUATION

APPENDIX III

Sensitivity Analysis

A sensitivity analysis based on various discount rates for two toll roads before and after widening is distributed as follow:

Before Widening and after Lack of Marketability Discount (Unit: RMB Million)

Discount rate	8.7%	9.7%	10.7%	11.7%	12.7%
Expressway	12,437	11,350	10,413	9,574	8,847
Class 2 Highway	745	717	690	664	641

After Widening and Lack of Marketability Discount (Unit: RMB Million)

Discount rate	9.7%	10.7%	11.7%	12.7%	13.7%
Expressway	16,142	13,916	12,046	10,454	9,102
Class 2 Highway	911	802	710	630	561

Conclusion of Value

Based upon the investigation and analysis outlined above and on the appraisal methods employed, it is our opinion that as of January 31, 2004, the fair market value of pre and post widening of the Expressway and Class 2 Highway are reasonably stated by the amount as below:

Before Lack of Marketability Discount

• Fair Market Value as of Jan. 31, 2004

• Pre-Widening Post-Widening

• The Expressway RENMINBI THIRTEEN

• The Expressway RENMINBI THIRTEEN RENMINBI SIXTEEN BILLION BILLION EIGHT HUNDRED AND SIXTY TWO MILLION AND EIGHTY FOUR MILLION ONLY (RMB16,062,000,000) ONLY (RMB13,884,000,000)

• The Class 2 Highway RENMINBI NINE HUNDRED RENMINBI NINE HUNDRED AND TWENTY MILLION AND FORTY SEVEN MILLION ONLY (RMB920,000,000) ONLY (RMB947,000,000)

III-4

BUSINESS VALUATION

APPENDIX III

After Lack of Marketability Discount

Fair Market Value as of Jan. 31, 2004

Pre-Widening Post-Widening

The Expressway RENMINBI TEN BILLION RENMINBI TWELVE BILLION FOUR HUNDRED AND AND FORTY SIX MILLION THIRTEEN MILLION ONLY ONLY (RMB12,046,000,000) (RMB10,413,000,000) The Class 2 Highway RENMINBI SIX HUNDRED RENMINBI SEVEN HUNDRED AND NINTY MILLION ONLY AND TEN MILLION ONLY (RMB690,000,000) (RMB710,000,000)

This conclusion of value was based on generally accepted valuation procedures and practices that rely extensively on the use of numerous assumptions and the consideration of many uncertainties, not all of which can be easily quantified or ascertained.

We have not investigated the title to or any liabilities against the property appraised. We hereby certify that we have neither present nor prospective interests in the Company, the toll roads or the value reported.

Respectfully submitted,

For and on behalf of

AMERICAN APPRAISAL CHINA LIMITED Ricky Lee James Kwok Assistant Vice President Vice President

Investigated and reported by

James Kwok

Ricky Lee

Yvonne Dunn

III-5

APPENDIX IV AUDITORS REPORT AND FINANCIAL ADVISORS REPORT

As the business valuation is based on discount cash flow method, it is deemed to be a profit forecast under the Hong Kong Listing Rules. The Company received from its auditors, Deloitte Touche Tohmatsu, and Shenyin Wanguo Capital (H.K.) Limited the following letters prepared for inclusion in this Circular in respect of the business valuations.

A. Report from Deloitte Touche Tohmatsu

==> picture [202 x 63] intentionally omitted <==

==> picture [86 x 55] intentionally omitted <==

5 May 2004

The Board of Directors Jiangsu Expressway Company Limited 69 Shigu Road, Nanjing Jiangsu Province PRC

Dear Sirs,

REPORT OF FACTUAL FINDINGS

In accordance with our engagement letter, we have performed the procedures agreed with you and enumerated below in relation to the supporting worksheets (the “Supporting Worksheets”) to the business valuations report dated 5 May 2004 (the “Business Valuations Report”) prepared by American Appraisal China Limited (“American Appraisal”) in respect of Shanghai-Nanjing Expressway and Nanjing-Shanghai Class 2 Highway.

Our engagement was undertaken and conducted in accordance with the Statement of Auditing Standards 710 “Engagements to perform agreed-upon-procedures regarding financial information” issued by the Hong Kong Society of Accountants (the “HKSA”). The procedures were performed solely to assist the directors of the Jiangsu Expressway Company Limited (the “Company”) to evaluate whether the Business Valuations Report was compiled properly so far as the calculations are concerned.

IV-1

APPENDIX IV AUDITORS REPORT AND FINANCIAL ADVISORS REPORT

Our procedures are summarised as follows:

1. We obtained the Supporting Worksheets provided by the Company which comprise the following valuations of Shanghai-Nanjing Expressway and Nanjing-Shanghai Class 2 Highway (the “Valuations”) under different scenarios:

Valuations (in RMB billions)

		Widened	No widening
Shanghai-Nanjing	Expressway	16.062	13.884
Nanjing-Shanghai	Class 2 Highway	0.947	0.920

1. We checked the mathematical accuracy of the calculations of the Valuations contained in the Supporting Worksheets.

2. We made enquiry of American Appraisal whether the accounting policies of the Company have been adopted in the preparation of the Supporting Worksheets.

We report our findings below:

• A. With respect to procedure 1, we obtained the Supporting Worksheets containing the calculations of the Valuations.

• B. With respect to procedure 2, we found that the calculations of the Valuations contained in the Supporting Worksheets are mathematically accurate.

• C. We were informed by American Appraisal that as this is a cash flow model no accounting policies of the Company have been adopted in the preparation of Supporting Worksheets.

Because the above procedures do not constitute either an audit or a review made in accordance with the Statements of Auditing Standards issued by the HKSA, we do not express any such assurance. For the avoidance of doubt, we further clarify that the above procedures do not constitute any valuation of Shanghai-Nanjing Expressway and Nanjing-Shanghai Class 2 Highway.

Had we performed additional procedures in accordance with the Statements of Auditing Standards issued by the HKSA, other matters might have come to our attention that would have been reported to you.

IV-2

APPENDIX IV AUDITORS REPORT AND FINANCIAL ADVISORS REPORT

We consent to a copy of our report being made available to the Stock Exchange of Hong Kong Limited (the “Stock Exchange”). However, for the avoidance of doubt, all duties and liabilities (including without limitation, those arising from negligence) to third parties, including the Stock Exchange, are specifically disclaimed. Our report is solely for your information and is not to be used for any other purpose or (subject to the foregoing) to be distributed to any other parties without our prior written consent. This report relates only to items specified above and does not extend to any financial statements of the Company, taken as a whole.

Yours faithfully, Deloitte Touche Tohmatsu Certified Public Accountants Hong Kong

IV-3

APPENDIX IV AUDITORS REPORT AND FINANCIAL ADVISORS REPORT

B. Report from Shenyin Wanguo Capital (H.K.) Limited

Shenyin Wanguo Capital (H.K.) Limited

28th Floor

Citibank Tower Citibank Plaza 3 Garden Road Central Hong Kong

5 May, 2004

The board of directors Jiangsu Expressway Company Limited 69 Shiqu Road, Nanjing Jiangsu Province The People’s Republic of China

Dear Sirs,

We refer to the report of business valuation prepared by American Appraisal China Limited (“American Appraisal”) in relation to the appraisal of the fair market value of 100% equity interest of Shanghai-Nanjing Expressway, the Jiangsu Section and Nanjing-Shanghai Class 2 Highway, the Jiangsu Section as at 31 January, 2004 (the “Business Valuation”) as set out in appendix 3 of the circular (the “Circular”) issued by Jiangsu Expressway Company Limited (the “Company”) dated 5 May, 2004.

We have reviewed the Business Valuation for which American Appraisal are responsible and discussed with you the information and documents provided by you which formed part of the bases and assumptions upon which the Business Valuation has been prepared. We have also considered the letter from Deloitte Touche Tohmatsu dated 5 May, 2004 addressed to yourselves regarding whether the Business Valuation was compiled properly so far as the calculations are concerned.

On the basis of the foregoing, we are of the opinion that the Business Valuation set out in the Circular, for which you as the directors of the Company are solely responsible, has been stated after due and careful enquiry by you.

Yours faithfully, For and on behalf of

Shenyin Wanguo Capital (H.K.) Limited Simon Lee

Director, Head of Corporate Finance

IV-4

FINANCIAL INFORMATION

APPENDIX V

• A. Set out below a summary of the consolidated balance sheets of the Group as at 31 December 2001, 2002 and 2003:

Non-current assets Property, plant and equipment Interests in associates Long-term receivable — due after one year Current assets Inventories Prepaid taxes Long-term receivables — due within one year Prepayments and other receivables Designated deposits Held-to-maturity securities Bank balances and cash Current liabilities Other payables Construction costs payable Taxation Unclaimed dividend Long-term borrowings — due within one year Short-term borrowings Net current (liabilities) assets Total assets less current liabilities	At 2003 RMB’000 12,119,028 1,517,468 —	as 31 December 2002 2001 RMB’000 RMB’000 (Restated) (Restated) 11,276,734 11,513,447 1,381,807 782,324 — 73,157 12,658,541 12,368,928 7,743 5,815 — 20,029 — 7,910 71,146 56,615 109,067 9,234 — 107,077 719,611 775,623 907,567 982,303 104,536 108,775 58,741 68,041 58,705 — 5,818 12,669 6,822 4,703 120,000 210,000 354,622 404,188 552,945 578,115 13,211,486 12,947,043	as 31 December 2002 2001 RMB’000 RMB’000 (Restated) (Restated) 11,276,734 11,513,447 1,381,807 782,324 — 73,157 12,658,541 12,368,928 7,743 5,815 — 20,029 — 7,910 71,146 56,615 109,067 9,234 — 107,077 719,611 775,623 907,567 982,303 104,536 108,775 58,741 68,041 58,705 — 5,818 12,669 6,822 4,703 120,000 210,000 354,622 404,188 552,945 578,115 13,211,486 12,947,043
	13,636,496 9,875 — — 95,265 255 — 1,536,774 1,642,169 109,967 77,251 113,808 7,265 6,813 1,400,000 1,715,104 (72,935) 13,563,561	12,658,541 7,743 — — 71,146 109,067 — 719,611 907,567 104,536 58,741 58,705 5,818 6,822 120,000 354,622 552,945 13,211,486	12,368,928
			5,815 20,029 7,910 56,615 9,234 107,077 775,623
			982,303
			108,775 68,041 — 12,669 4,703 210,000
			404,188
			578,115
			12,947,043

V-1

FINANCIAL INFORMATION

APPENDIX V

Non-current liabilities Long-term borrowings — due after one year Deferred taxation Minority interests Capital and reserves Share capital Reserves	At 2003 RMB’000 54,677 29,507 84,184 400,250 13,079,127 5,037,748 8,041,379 13,079,127	as 31 December 2002 2001 RMB’000 RMB’000 (Restated) (Restated) 61,494 50,313 25,228 14,351 86,722 64,664 396,503 378,845 12,728,261 12,503,534 5,037,748 5,037,748 7,690,513 7,465,786 12,728,261 12,503,534

V-2

FINANCIAL INFORMATION

APPENDIX V

• B. Set out below the audited consolidated income statements of the Group for each of the three years ended 31 December 2003:

Turnover Cost of sales Gross profit Other operating income Administrative expenses Profit from operations Finance costs Amortisation of goodwill Release of negative goodwill Share of results of associates Profit before taxation Taxation Profit before minority interests Minority interests Profit for the year Dividend Earnings per share - Basic	For the year ended 31 December 2003 2002 2001 RMB’000 RMB’000 RMB’000 (Restated) (Restated) 2,675,814 2,272,515 1,829,552 (1,159,091) (954,509) (801,792) 1,516,723 1,318,006 1,027,760 38,712 33,529 37,660 (97,672) (80,930) (47,272) 1,457,763 1,270,605 1,018,148 (8,899) (10,727) (19,064) (12,607) (11,768) (6,545) 519 519 519 97,198 60,320 34,813 1,533,974 1,308,949 1,027,871 (505,219) (434,120) (173,892) 1,028,755 874,829 853,979 (22,982) (20,384) (12,739) 1,005,773 854,445 841,240 730,473 654,907 629,719 RMB0.20 RMB0.17 RMB0.17	For the year ended 31 December 2003 2002 2001 RMB’000 RMB’000 RMB’000 (Restated) (Restated) 2,675,814 2,272,515 1,829,552 (1,159,091) (954,509) (801,792) 1,516,723 1,318,006 1,027,760 38,712 33,529 37,660 (97,672) (80,930) (47,272) 1,457,763 1,270,605 1,018,148 (8,899) (10,727) (19,064) (12,607) (11,768) (6,545) 519 519 519 97,198 60,320 34,813 1,533,974 1,308,949 1,027,871 (505,219) (434,120) (173,892) 1,028,755 874,829 853,979 (22,982) (20,384) (12,739) 1,005,773 854,445 841,240 730,473 654,907 629,719 RMB0.20 RMB0.17 RMB0.17	For the year ended 31 December 2003 2002 2001 RMB’000 RMB’000 RMB’000 (Restated) (Restated) 2,675,814 2,272,515 1,829,552 (1,159,091) (954,509) (801,792) 1,516,723 1,318,006 1,027,760 38,712 33,529 37,660 (97,672) (80,930) (47,272) 1,457,763 1,270,605 1,018,148 (8,899) (10,727) (19,064) (12,607) (11,768) (6,545) 519 519 519 97,198 60,320 34,813 1,533,974 1,308,949 1,027,871 (505,219) (434,120) (173,892) 1,028,755 874,829 853,979 (22,982) (20,384) (12,739) 1,005,773 854,445 841,240 730,473 654,907 629,719 RMB0.20 RMB0.17 RMB0.17
	1,516,723 38,712 (97,672) 1,457,763 (8,899) (12,607) 519 97,198 1,533,974 (505,219) 1,028,755 (22,982)	1,318,006 33,529 (80,930) 1,270,605 (10,727) (11,768) 519 60,320 1,308,949 (434,120) 874,829 (20,384)	1,027,760 37,660 (47,272
			1,018,148 (19,064 (6,545 519 34,813
			1,027,871 (173,892
			853,979 (12,739
	1,005,773 730,473 RMB0.20	854,445 654,907 RMB0.17

V-3

FINANCIAL INFORMATION

APPENDIX V

• C. Set out below is the auditor’s report and the audited financial statements together with the notes on the annual accounts of the Group for the year ended 31 December 2003.

TO THE SHAREHOLDERS OF JIANGSU EXPRESSWAY COMPANY LIMITED

(incorporated in the People’s Republic of China with limited liability)

We have audited the financial statements on pages V-5 to V-31 which have been prepared in accordance with accounting principles generally accepted in Hong Kong.

Respective responsibilities of directors and auditors

The Company’s directors are responsible for the preparation of financial statements which give a true and fair view. In preparing financial statements which give a true and fair view it is fundamental that appropriate accounting policies are selected and applied consistently.

It is our responsibility to form an independent opinion, based on our audit, on those financial statements and to report our opinion solely to you, as a body, and for no other purpose. We do not assume responsibility towards or accept liability to any other person for the contents of this report.

Basis of opinion

We conducted our audit in accordance with Statements of Auditing Standards issued by the Hong Kong Society of Accountants. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements. It also includes an assessment of the significant estimates and judgments made by the directors in the preparation of the financial statements, and of whether the accounting policies are appropriate to the circumstances of the Company and the Group, consistently applied and adequately disclosed.

We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance as to whether the financial statements are free from material misstatement. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the financial statements. We believe that our audit provides a reasonable basis for our opinion.

Opinion

In our opinion the financial statements give a true and fair view of the state of affairs of the Company and the Group as at 31 December 2003 and of the profit and cash flows of the Group for the year then ended and have been properly prepared in accordance with the disclosure requirements of the Hong Kong Companies Ordinance.

Deloitte Touche Tohmatsu

Certified Public Accountants

Hong Kong, 1 April 2004

V-4

FINANCIAL INFORMATION

APPENDIX V

Consolidated Income Statement

For the year ended 31 December 2003

Notes Turnover 4 Cost of sales Gross profit Other operating income Administrative expenses Profit from operations 6 Finance costs 7 Amortisation of goodwill Release of negative goodwill Share of results of associates Profit before taxation Taxation 10 Profit before minority interests Minority interests Profit for the year Dividend 11 Earnings per share — Basic 12	2003 RMB’000 2,675,814 (1,159,091)	2002 RMB’000 (Restated) 2,272,515 (954,509) 1,318,006 33,529 (80,930) 1,270,605 (10,727) (11,768) 519 60,320 1,308,949 (434,120) 874,829 (20,384) 854,445 654,907 RMB0.17
	1,516,723 38,712 (97,672) 1,457,763 (8,899) (12,607) 519 97,198 1,533,974 (505,219) 1,028,755 (22,982)	1,318,006 33,529 (80,930
		1,270,605 (10,727 (11,768 519 60,320
		1,308,949 (434,120
		874,829 (20,384
	1,005,773 730,473 RMB0.20

V-5

FINANCIAL INFORMATION

APPENDIX V

Consolidated Balance Sheet

As at 31 December 2003

Notes Non-current assets Property, plant and equipment 13 Interests in associates 15 Current assets Inventories 16 Prepayments and other receivables 17 Designated deposits 18 Bank balances and cash Current liabilities Other payables Construction costs payable Taxation Unclaimed dividend Long-term borrowings — due within one year 19 Short-term borrowings 20 Net current (liabilities) assets Total assets less current liabilities	2003 RMB’000 12,119,028 1,517,468	2002 RMB’000 (Restated) 11,276,734 1,381,807
	13,636,496 9,875 95,265 255 1,536,774 1,642,169 109,967 77,251 113,808 7,265 6,813 1,400,000 1,715,104 (72,935) 13,563,561	12,658,541
		7,743 71,146 109,067 719,611
		907,567
		104,536 58,741 58,705 5,818 6,822 120,000
		354,622
		552,945
		13,211,486

V-6

FINANCIAL INFORMATION

APPENDIX V

Notes Non-current liabilities Long-term borrowings — due after one year 19 Deferred taxation 21 Minority interests Capital and reserves Share capital 22 Reserves	2003 RMB’000 54,677 29,507 84,184 400,250 13,079,127 5,037,748 8,041,379 13,079,127	2002 RMB’000 (Restated) 61,494 25,228
		86,722
		396,503
		12,728,261
		5,037,748 7,690,513
		12,728,261

The financial statements were approved and authorised for issue by the Board of Directors on 1 April 2004 and are signed on its behalf by:

Shen Chang Quan Chen Xiang Hui DIRECTOR DIRECTOR

V-7

FINANCIAL INFORMATION

APPENDIX V

Balance Sheet

As at 31 December 2003

Notes Non-current assets Property, plant and equipment 13 Interests in subsidiaries 14 Interests in associates 15 Current assets Inventories 16 Prepayments and other receivables 17 Designated deposits 18 Bank balances and cash Current liabilities Other payables Construction costs payable Taxation Unclaimed dividend Long-term borrowings — due within one year 19 Short-term borrowings 20 Net current (liabilities) assets Total assets less current liabilities	2003 RMB’000 9,673,830 2,257,047 1,334,619	2002 RMB’000 (Restated) 8,851,952 2,232,445 1,259,268
	13,265,496 5,950 66,086 — 1,308,857 1,380,893 79,394 61,944 104,453 7,265 6,813 1,400,000 1,659,869 (278,976)	12,343,665
		7,365 64,389 109,067 496,965
		677,786
		91,794 44,628 48,407 5,818 6,822 120,000
		317,469
		360,317
	12,986,520	12,703,982

V-8

FINANCIAL INFORMATION

APPENDIX V

Notes 2003 RMB’000 Non-current liabilities Long-term borrowings — due after one year 19 54,677 Deferred taxation 21 27,198 81,875 12,904,645 Capital and reserves Share capital 22 5,037,748 Reserves 23 7,866,897 12,904,645 Shen Chang Quan DIRECTOR Chen Xiang Hui DIRECTOR	2002 RMB’000 (Restated) 61,494 25,228
	86,722
	12,617,260
	5,037,748 7,579,512
	12,617,260

V-9

FINANCIAL INFORMATION

APPENDIX V

Consolidated Statement of Changes in Equity

For the year ended 31 December 2003

At 1 January 2002 Profit for the year Appropriations Dividend declared At 31 December 2002 Profit for the year Appropriations Dividend declared At 31 December 2003	Share capital RMB’000 5,037,748 — — — 5,037,748 — — — 5,037,748	Share premium Statutory surplus reserve Statutory public welfare fund RMB’000 RMB’000 RMB’000 5,730,454 293,780 146,891 — — — — 107,851 53,925 — — — 5,730,454 401,631 200,816 — — — — 109,289 54,645 — — — 5,730,454 510,920 255,461	Retained profits Total RMB’000 RMB’000 1,294,661 12,503,534 854,445 854,445 (161,776) — (629,718) (629,718) 1,357,612 12,728,261 1,005,773 1,005,773 (163,934) — (654,907) (654,907) 1,544,544 13,079,127
			1,544,544

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FINANCIAL INFORMATION

APPENDIX V

Consolidated Cash Flow Statement

For the year ended 31 December 2003

Operating activities Profit from operations Adjustments for: Depreciation of property, plant and equipment Allowance for doubtful debts Loss on write off/disposal of property, plant and equipment Interest income Operating cash flows before movements in working capital Increase in inventories (Increase) decrease in prepayments and other receivables Increase (decrease) in other payables Cash generated from operations Interest paid PRC income tax paid Net cash generated from operating activities Investing activities Investments in associates Loan to an associate Purchase of property, plant and equipment Repayment of loan advanced to an associate Repayment of long-term receivable Repayment of receivable from former joint venture Interest received Dividend received from associates Net cash used in investing activities	2003 RMB’000 1,457,763 442,239 103 6,276 (9,094)	2002 RMB’000 1,270,605 373,876 136 3,890 (22,202) 1,626,305 (1,928) 5,613 (8,224) 1,621,766 (10,727) (321,264) 1,289,775 (596,900) — (150,353) — 53,305 — 24,296 23,549 (646,103)
	1,897,287 (2,132) (29,222) 5,431 1,871,364 (8,899) (420,822) 1,441,643 (89,350) (19,000) (1,272,299) 800 — 5,000 18,161 31,984 (1,324,704)	1,626,305 (1,928 5,613 (8,224
		1,621,766 (10,727 (321,264
		1,289,775
		(596,900 — (150,353 — 53,305 — 24,296 23,549
		(646,103

V-11

FINANCIAL INFORMATION

APPENDIX V

Financing activities Dividends paid Dividends paid to minority shareholders New long-term borrowings raised Repayment of long-term borrowings New short-term borrowings raised Repayment of short-term borrowings Capital injection from minority shareholders Net cash generated from (used in) financing activities Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of the year Cash and cash equivalents at end of the year, represented by Designated deposits Bank balances and cash	2003 RMB’000 (653,460) (19,235) — (6,826) 1,500,000 (220,000) — 600,479 717,418 819,611 1,537,029	2002 RMB’000 (636,569) (7,726) 19,055 (5,755) 450,000 (540,000) 5,000 (715,995) (72,323) 891,934 819,611 100,000 719,611 819,611
	255 1,536,774	100,000 719,611
	1,537,029

V-12

FINANCIAL INFORMATION

APPENDIX V

Notes to the financial statements

For the year ended 31 December 2003

1. GENERAL

The Company was incorporated in the People’s Republic of China (the “PRC”) on 1 August 1992 as a joint stock limited company and its H shares and A shares are listed on The Stock Exchange of Hong Kong Limited and Shanghai Stock Exchange, respectively. Its ultimate holding company is Jiangsu Communications Holding Company Ltd. (“Jiangsu Communications”) , a stated owned enterprise incorporated in the PRC.

The principal activities of the Company are the investment, construction, operation and management of the Jiangsu section of Shanghai-Nanjing Expressway (“Shanghai-Nanjing Expressway”), the Jiangsu section of the 312 National Highway (the “Nanjing-Shanghai Class 2 Highway”), Nanjing-Lianyungang Class 1 Highway-Nanjing Section (“Nanjing Section”) and other toll roads in Jiangsu Province, and the provision of passenger transport services and other supporting services along the toll roads.

2. BASIS OF PREPARATION OF FINANCIAL STATEMENTS

The financial statements have been prepared on a going concern basis because the ultimate holding company has agreed to provide adequate funds to enable the Company to meet in full its ultimate financial obligations as they fall due for the foreseeable future.

3. SIGNIFICANT ACCOUNTING POLICIES

The financial statements have been prepared under the historical cost convention as modified for the revaluation of investments in securities.

The financial statements have been prepared in accordance with accounting principles generally accepted in Hong Kong. The principal accounting policies adopted are set out below:

Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Company and its subsidiaries made up to 31 December each year.

The results of subsidiaries acquired or disposed of during the year are included in the consolidated income statement from the effective date of acquisition or up to the effective date of disposal, as appropriate.

Goodwill

Goodwill arising on consolidation represents the excess of the cost of acquisition over the Group’s interest in the fair value of the identifiable assets and liabilities of a subsidiary or associate at the date of acquisition. Goodwill is capitalised and amortised on a straight line basis over its estimated useful life. Goodwill arising on the acquisition of an associate is included within the carrying amount of the associate.

On disposal of a subsidiary or associate, the attributable amount of unamortised goodwill is included in the determination of the profit or loss on disposal.

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FINANCIAL INFORMATION

APPENDIX V

Negative goodwill

Negative goodwill represents the excess of the Group’s interest in the fair value of the identifiable assets and liabilities of a subsidiary or associate at the date of acquisition over the cost of acquisition.

Negative goodwill arising on the acquisition of an associate is deducted from the carrying value of that associate. Negative goodwill arising on the acquisition of subsidiaries is presented as a deduction from intangible assets.

Investments in subsidiaries

Investments in subsidiaries are included in the Company’s balance sheet at cost less any identified impairment loss.

Interests in associates

The consolidated income statement includes the Group’s share of the post-acquisition results of its associates for the year. In the consolidated balance sheet, interests in associates are stated at the Group’s share of the net assets of the associates plus the goodwill/less the negative goodwill in so far as it has not already been amortised/released to income, less any identified impairment loss.

The results of associates are accounted for by the Company on the basis of dividends received and receivable during the year. In the Company’s balance sheet, investments in associates are stated at cost, as reduced by any identified impairment loss.

Revenue recognition

Toll revenue, net of business tax, is recognised on a receipt basis.

Sales of petrol are recognised when delivery has taken place.

Advertising income, emergency assistance income and revenue from sales of food and beverages are recognised when the services have been rendered.

Interest income from bank deposits is accrued on a time basis, by reference to the principal outstanding and at the interest rate applicable.

Dividend income from investments is recognised when the Group’s right to receive payment has been established.

Property, plant and equipment

Property, plant and equipment other than construction in progress are stated at cost less accumulated depreciation, amortisation and accumulated impairment losses.

Depreciation of the toll roads and structures and amortisation of land use rights are calculated to write off their cost, commencing from the date of commencement of commercial operation of the toll roads, based on the ratio of actual traffic volume compared to the total expected traffic volume of the toll roads as estimated by management or by reference to traffic projection reports prepared by independent traffic consultants.

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FINANCIAL INFORMATION

APPENDIX V

Depreciation of other items of property, plant and equipment is calculated using the straight-line method to write off the cost, after taking into account the estimated residual value of 3%, of each asset over its expected useful life. The expected useful lives of assets are the shorter of the expected useful lives of the assets or the remaining concession period. The expected useful lives of the assets are as follows:

Buildings	30 years
Safety equipment	10 years
Communication and signalling equipment	10 years
Toll stations and ancillary equipment	8 years
Motor vehicles	8 years
Other machinery and equipment	5 - 8 years

The gain or loss arising on the disposal or retirement of an asset is determined as the difference between the sale proceeds and the carrying amount of the asset and is recognised in the income statement.

Construction in progress is stated at cost which includes development expenditure and other direct costs, including interest cost on the related borrowed funds during the construction period attributable to the development of toll roads, buildings and structures for the Group’s own use. Depreciation of these assets, on the same basis as other property, plant and equipment, commences when the assets are ready for their intended use.

Government subsidies

Government subsidies are recognised as income over the periods necessary to match them with the related costs.

Inventories

Inventories are stated at the lower of cost and net realisable value. Cost is calculated using the first-in, first-out method.

Retirement benefit costs

Payments to statutory retirement fund schemes are charged as expense as they fall due.

Foreign currencies

Transactions in foreign currencies are initially recorded at the rates of exchange prevailing on the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies are re-translated at the rates prevailing on the balance sheet date. Profits and losses arising on exchange are included in the income statement.

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 net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible.

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FINANCIAL INFORMATION

APPENDIX V

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences, and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill (or negative goodwill) or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.

Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and associates, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the asset to be recovered.

Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset realised. Deferred tax is charged or credited in the income statement, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity.

Impairment

At each balance sheet date, the Group reviews the carrying amounts of its assets to determine whether there is any indication that those assets have suffered an impairment loss. If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. Impairment losses are recognised as an expense immediately.

Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in prior years. A reversal of an impairment loss is recognised as income immediately.

4. TURNOVER

Turnover comprises: Toll revenue Sales of petrol Sales of food and beverages Emergency assistance income Advertising income Less: Business tax and other related taxes	2003 RMB’000 2,353,129 276,311 105,874 54,445 20,843	2002 RMB’000 2,026,238 183,988 104,147 56,812 24,014 2,395,199 (122,684) 2,272,515
	2,810,602 (134,788)	2,395,199 (122,684
	2,675,814

V-16

FINANCIAL INFORMATION

APPENDIX V

5. SEGMENT INFORMATION

All the Group’s operations are located and carried out in the PRC, and the principal activities of the Group is the operation and management of toll roads. Accordingly, no segment information by business and geographical segment is presented.

6. PROFIT FROM OPERATIONS

Profit from operations has been arrived at after charging: Staff costs including directors’ remuneration Retirement benefits scheme contributions Total staff costs Auditors’ remuneration Allowance for doubtful debts Depreciation and amortisation of property, plant and equipment Loss on write off/disposal of property, plant and equipment Cost of inventories recognised as expense and after crediting: Gain on disposal of investments in securities Government subsidies received Interest income from bank deposits Interest income from designated deposits FINANCE COSTS Interest on bank and other borrowings wholly repayable: Within five years Over five years	2003 RMB’000 112,034 24,778 136,812 1,180 103 442,239 6,276 369,012 — 19,648 8,047 1,047 2003 RMB’000 8,067 832 8,899	2002 RMB’000 102,172 13,718
		115,890 1,250 136 373,876 3,890 271,798 4,288 — 8,190 14,012
		2002 RMB’000 9,895 832
		10,727

7. FINANCE COSTS

V-17

FINANCIAL INFORMATION

APPENDIX V

8. DIRECTORS’ AND SUPERVISORS’ EMOLUMENTS

Director’s fees Other emoluments Salaries and other benefits Contribution to retirement benefits scheme	2003 RMB’000 440 80 10 530	2002 RMB’000 1,732 — —
		1,732

The amounts disclosed above include directors’ fees of RMB293,000 (2002: RMB292,000) paid to independent non-executive directors.

The emoluments of each of the directors and supervisors for both years ended 31 December 2003 were within the emolument band ranging from nil to HK$1,000,000 (equivalent to RMB1,060,000).

9. EMPLOYEES’ EMOLUMENTS

The five highest paid individuals during the year included one director (2002: four directors), details of whose emoluments are set out in note 8 above. The emoluments of the remaining four (2002: one) highest paid individuals were as follows:

Salaries and other benefits Contribution to retirement benefit scheme	2003 RMB’000 698 41 739	2002 RMB’000 120 —
		120

The emoluments of each of the five highest paid individuals for both years ended 31 December 2003 were within the emolument band ranging from nil to HK$1,000,000 (equivalent to RMB1,060,000).

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FINANCIAL INFORMATION

APPENDIX V

10. TAXATION

The charge comprises: PRC income tax Deferred taxation (Note 21) Taxation attributable to the Company and its subsidiaries Share of taxation attributable to associates	2003 RMB’000 475,925 4,279	2002 RMB’000 400,501 10,877
	480,204 25,015	411,378 22,742
	505,219	434,120

The Company and its subsidiaries are subject to PRC income tax rate of 33% (2002: 33%) pursuant to the relevant PRC income tax laws.

No provision for Hong Kong Profits Tax has been made as the income neither arises, nor is derived from, Hong Kong.

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

Profit before taxation Tax at the domestic tax rate of 33% (2002: 33%) Tax effect of tax losses not recognised Tax effect of income not taxable for tax purpose Tax effect of expenses not deductible for tax purpose Tax charge and effective tax rate for the year	2003 RMB’000 1,533,974	%	2002 RMB’000 1,308,949	%
	506,211 529 (2,501) 980	33.0 — (0.2) 0.1	431,953 619 — 1,548	33.0 — — 0.2
	505,219	32.9	434,120	33.2

11. DIVIDEND

									2003	2002
									RMB’000	RMB’000
Final,	proposed	—	RMB0.145	(2002:	RMB0.13)	per	ordinary	share	730,473	654,907

The final dividend of RMB0.145 (2002: RMB0.13) per ordinary share has been proposed by the directors and is subject to approval by the shareholders in general meeting.

V-19

FINANCIAL INFORMATION

APPENDIX V

12. EARNINGS PER SHARE

The calculation of the basic earnings per share is based on the Group’s profit for the year of RMB1,005,773,000 (2002: RMB854,445,000) and the weighted average number of 5,037,747,500 (2002: 5,037,747,500) ordinary shares in issue during the year.

No diluted earnings per share is presented as the Company has no potential ordinary shares outstanding for the two years ended 31 December 2003.

13. PROPERTY, PLANT AND EQUIPMENT

THE GROUP

Toll roads and structures RMB’000 9,414,249 225,748 — —	Land use rights Buildings Safety equipment Communication and signalling equipment Toll stations and ancillary equipment RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 1,716,088 471,493 499,921 209,212 211,880 31,180 8,991 — 3,496 27,530 — 12,837 — — 5,042 — (2,985) — — (322)	Land use rights Buildings Safety equipment Communication and signalling equipment Toll stations and ancillary equipment RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 1,716,088 471,493 499,921 209,212 211,880 31,180 8,991 — 3,496 27,530 — 12,837 — — 5,042 — (2,985) — — (322)	Land use rights Buildings Safety equipment Communication and signalling equipment Toll stations and ancillary equipment RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 1,716,088 471,493 499,921 209,212 211,880 31,180 8,991 — 3,496 27,530 — 12,837 — — 5,042 — (2,985) — — (322)	Land use rights Buildings Safety equipment Communication and signalling equipment Toll stations and ancillary equipment RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 1,716,088 471,493 499,921 209,212 211,880 31,180 8,991 — 3,496 27,530 — 12,837 — — 5,042 — (2,985) — — (322)	Land use rights Buildings Safety equipment Communication and signalling equipment Toll stations and ancillary equipment RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 1,716,088 471,493 499,921 209,212 211,880 31,180 8,991 — 3,496 27,530 — 12,837 — — 5,042 — (2,985) — — (322)	Motor vehicles Other machinery and equipment Construction in progress Total RMB’000 RMB’000 RMB’000 RMB’000 108,617 164,879 12,525 12,808,864 20,659 33,662 939,543 1,290,809 5,316 6,021 (29,216) — (4,971) (2,011) (332) (10,621)	Motor vehicles Other machinery and equipment Construction in progress Total RMB’000 RMB’000 RMB’000 RMB’000 108,617 164,879 12,525 12,808,864 20,659 33,662 939,543 1,290,809 5,316 6,021 (29,216) — (4,971) (2,011) (332) (10,621)	Motor vehicles Other machinery and equipment Construction in progress Total RMB’000 RMB’000 RMB’000 RMB’000 108,617 164,879 12,525 12,808,864 20,659 33,662 939,543 1,290,809 5,316 6,021 (29,216) — (4,971) (2,011) (332) (10,621)	Motor vehicles Other machinery and equipment Construction in progress Total RMB’000 RMB’000 RMB’000 RMB’000 108,617 164,879 12,525 12,808,864 20,659 33,662 939,543 1,290,809 5,316 6,021 (29,216) — (4,971) (2,011) (332) (10,621)
9,639,997 755,584 259,667 — 1,015,251	1,747,268 138,938 40,524 — 179,462	490,336 92,685 15,484 (377) 107,792	499,921 267,632 48,491 — 316,123	212,708 70,341 20,308 — 90,649	244,130 77,653 25,953 — 103,606	129,621 41,954 10,153 (3,089) 49,018	202,551 87,343 21,659 (879) 108,123	922,520	14,089,052
								— — —	1,532,130 442,239 (4,345)
								—	1,970,024
								922,520	12,119,028

V-20

FINANCIAL INFORMATION

APPENDIX V

THE COMPANY

COST At 1 January 2003 Additions Transfers Disposals At 31 December 2003 DEPRECIATION AND AMORTISATION At 1 January 2003 Provided for the year Eliminated on disposals At 31 December 2003 NET BOOK VALUES At 31 December 2003 At 31 December 2002	Toll roads and structures RMB’000 7,160,341 225,748 — —	Land use rights Buildings Safety equipment Communication and signalling equipment Toll stations and ancillary equipment RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 1,716,088 372,921 423,811 208,082 127,931 20,188 5,996 — 3,494 27,530 — 11,955 — — 5,043 — (2,186) — — —	Land use rights Buildings Safety equipment Communication and signalling equipment Toll stations and ancillary equipment RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 1,716,088 372,921 423,811 208,082 127,931 20,188 5,996 — 3,494 27,530 — 11,955 — — 5,043 — (2,186) — — —	Land use rights Buildings Safety equipment Communication and signalling equipment Toll stations and ancillary equipment RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 1,716,088 372,921 423,811 208,082 127,931 20,188 5,996 — 3,494 27,530 — 11,955 — — 5,043 — (2,186) — — —	Land use rights Buildings Safety equipment Communication and signalling equipment Toll stations and ancillary equipment RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 1,716,088 372,921 423,811 208,082 127,931 20,188 5,996 — 3,494 27,530 — 11,955 — — 5,043 — (2,186) — — —	Land use rights Buildings Safety equipment Communication and signalling equipment Toll stations and ancillary equipment RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 1,716,088 372,921 423,811 208,082 127,931 20,188 5,996 — 3,494 27,530 — 11,955 — — 5,043 — (2,186) — — —	Motor vehicles Other machinery and equipment Construction in progress Total RMB’000 RMB’000 RMB’000 RMB’000 102,139 150,637 11,890 10,273,840 17,959 25,210 913,791 1,239,916 5,316 5,514 (27,828) — (10,190) (55,616) — (67,992)	Motor vehicles Other machinery and equipment Construction in progress Total RMB’000 RMB’000 RMB’000 RMB’000 102,139 150,637 11,890 10,273,840 17,959 25,210 913,791 1,239,916 5,316 5,514 (27,828) — (10,190) (55,616) — (67,992)	Motor vehicles Other machinery and equipment Construction in progress Total RMB’000 RMB’000 RMB’000 RMB’000 102,139 150,637 11,890 10,273,840 17,959 25,210 913,791 1,239,916 5,316 5,514 (27,828) — (10,190) (55,616) — (67,992)	Motor vehicles Other machinery and equipment Construction in progress Total RMB’000 RMB’000 RMB’000 RMB’000 102,139 150,637 11,890 10,273,840 17,959 25,210 913,791 1,239,916 5,316 5,514 (27,828) — (10,190) (55,616) — (67,992)
	7,386,089 711,348 219,085 — 930,433	1,736,276 138,939 40,524 — 179,463	388,686 82,439 12,197 (377) 94,259	423,811 243,299 41,108 — 284,407	211,576 70,197 20,232 — 90,429	160,504 49,359 15,775 — 65,134	115,224 41,026 8,989 (4,105) 45,910	125,745 85,281 14,582 (17,964) 81,899	897,853	11,445,764
									— — —	1,421,888 372,492 (22,446)
									—	1,771,934
	6,455,656 6,448,993	1,556,813 1,577,149	294,427 290,482	139,404 180,512	121,147 137,885	95,370 78,572	69,314 61,113	43,846 65,356	897,853	9,673,830
									11,890	8,851,952

All the Group’s buildings are situated in the PRC and held under medium-term land use rights.

14. INTERESTS IN SUBSIDIARIES

Unlisted investments, at cost Amounts due from subsidiaries	2003 RMB’000 2,244,945 12,102 2,257,047	2002 RMB’000 2,220,445 12,000
		2,232,445

The amounts due from subsidiaries are unsecured and interest free. In the opinion of the directors, no repayment will be demanded within the next twelve months. Accordingly, the amounts are classified as non-current.

V-21

APPENDIX V

FINANCIAL INFORMATION

Details of the Company’s subsidiaries, all of which are limited liability companies, as at 31 December 2003 are as follows:

			**Proportion **	**Proportion **	of
	Place of	Paid up	**registered **	capital
	registration/	registered	**held **	by
Name	operations	capital	the Company				Principal activities
		RMB	Directly	Indirectly
Jiangsu Guangjing Xicheng	PRC	850,000,000	85.00%			—	Construction, management and
Expressway Co., Ltd.							operation of expressway
Nangjing Shuangshilou	PRC	1,010,000	95.05%			—	Provision of Chinese food
Hotel Co., Ltd.
Jiangsu Ninghu Investment	PRC	100,000,000	95.00%			—	Infrastructure and industrial
Development Co., Ltd.							investments
Jiangsu Sundian	PRC	35,000,000	—		95.50%		Construction and maintenance
Engineering Co., Ltd.							of expressway

15. INTERESTS IN ASSOCIATES

Unlisted investments, at cost Share of net assets of associates Goodwill of associates Negative goodwill of an associate Loan to an associate	THE GROUP 2003 2002 RMB’000 RMB’000 — — 1,405,410 1,278,054 96,432 106,846 (3,374) (3,893)	THE GROUP 2003 2002 RMB’000 RMB’000 — — 1,405,410 1,278,054 96,432 106,846 (3,374) (3,893)	THE COMPANY 2003 2002 RMB’000 RMB’000 1,334,619 1,258,468 — — — — — —	THE COMPANY 2003 2002 RMB’000 RMB’000 1,334,619 1,258,468 — — — — — —
	1,498,468 19,000	1,381,007 800	1,334,619 —	1,258,468 800
	1,517,468	1,381,807	1,334,619	1,259,268

V-22

FINANCIAL INFORMATION

APPENDIX V

Negative goodwill RMB’000 Goodwill (negative goodwill) of associates Gross amount At 1 January 2003 (5,191) Arising on acquisition — At 31 December 2003 (5,191) Amortisation At 1 January 2003 1,298 Release (charge) for the year 519 At 31 December 2003 1,817 Carrying amount At 31 December 2003 (3,374) At 31 December 2002 (3,893)	Goodwill RMB’000 125,160 2,193 127,353 (18,314) (12,607) (30,921) 96,432 106,846

The loan to an associate is unsecured and bears interest at 4.8% per annum (2002: interest free). In the opinion of the directors, no repayment will be demanded within the next twelve months, accordingly, the amount is classified as non-current.

The goodwill (negative goodwill) is amortised (released) to the income statement on a straight-line basis over 10 years.

V-23

FINANCIAL INFORMATION

APPENDIX V

Details of the Group’s associates, all of which are limited liability companies, as at 31 December 2003 are as follows:

	Place of	Proportion of	Proportion of
	registration/	**registered **	capital
Name	operations	**held by the **	Company		Principal activities
		Directly	Indirectly
Jiangsu Kuailu Bus Transportation	PRC	33.20%		—	Provision of passenger
Stock Co., Ltd.					transportation service along
					the Shanghai- Nanjing
					Expressway
Jiangsu Yangtze Bridge Co., Ltd	PRC	26.66%		—	Investment, construction,
					operation and management of
					Jiangjin Yangtze River Bridge
Suzhou Sujiahang Expressway	PRC	33.33%		—	Investment, construction,
Co., Ltd.					operation and management of
					Sujiahang Expressway
China Transportation HEAD New	PRC	35.71%		—	Computer software development
technology (Shanghai) Co., Ltd.
Jiangsu Leasing Co., Ltd.	PRC	—	26.06%		Leasing and financing activities
Shanghai Yinjian Real Estate	PRC	—	28.69%		Real estate development
Co., Ltd.
Jiangsu SEU Intelligent System	PRC	—	19.66%		Computer software development
Technology Co., Ltd.

In the opinion of the directors, the Group can exercise significant influence over Jiaugsu SEU Intelligent System Technology Co., Ltd. and it is therefore considered as an associate of the Group.

16. INVENTORIES

THE GROUP AND THE COMPANY

Inventories comprise petrol for sales, materials and spare parts for repairs and maintenance of toll roads and structures. All inventories are stated at cost.

V-24

FINANCIAL INFORMATION

APPENDIX V

17. PREPAYMENTS AND OTHER RECEIVABLES

	**THE **	GROUP	THE COMPANY	THE COMPANY
	2003	2002	2003	2002
	RMB’000	RMB’000	RMB’000	RMB’000
Prepayment for materials and equipment	19,863	11,052	12,295	8,883
Receivable from liquidation of a former
joint venture	23,812	28,812	23,812	28,812
Others	52,892	32,481	38,274	27,893
	96,567	72,345	74,381	65,588
Less: Allowance for doubtful debts	(1,302)	(1,199)	(8,295)	(1,199)
	95,265	71,146	66,086	64,389

18. DESIGNATED DEPOSITS

The amount represents deposits held with a financial institution for the purpose of fund management. In 2002, included in the designated deposits is an amount of accrued interest of approximately RMB9,067,000.

19. LONG-TERM BORROWINGS

Interest rate USD denominated Spain government loans with maturities 2007 — 2026 1% per annum USD denominated buyer’s credit loans with maturities 2001 — 2006 6.77% per annum	THE GROUP & THE COMPANY 2003 2002 RMB’000 RMB’000 41,013 41,022 20,477 27,294 61,490 68,316	THE GROUP & THE COMPANY 2003 2002 RMB’000 RMB’000 41,013 41,022 20,477 27,294 61,490 68,316
		68,316

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FINANCIAL INFORMATION

APPENDIX V

The maturity of the above loans is as follows:

Within one year More than one year but not exceeding two years More than two years but not exceeding five years More than five years Less: Amount due within one year included in current liabilities Amount due after one year	2003 RMB’000 6,813 6,813 10,952 36,912	2002 RMB’000 6,822 6,822 20,466 34,206
	61,490 (6,813)	68,316 (6,822
	54,677	61,494

All long-term borrowings were guaranteed by Jiangsu Communications.

20. SHORT-TERM BORROWINGS

	**THE **	GROUP & THE COMPANY	GROUP & THE COMPANY
		2003	2002
		RMB’000	RMB’000
Unsecured		1,400,000	120,000

The borrowings are unsecured and repayable within one year with interest charged at the prevailing market rates based on the rates quoted by the People’s Bank of China.

21. DEFERRED TAXATION

The following are the deferred taxation (assets) liabilities recognised and movements thereon during the current and prior

year:

THE GROUP Allowance for doubtful debts Accelerated tax depreciation RMB’000 RMB’000 At 1 January 2002 — 12,184 Charge to income statement — 10,053 At 31 December 2002 — 22,237 Charge (credit) to income statement (359) 7,629 At 31 December 2003 (359) 29,866	THE GROUP Allowance for doubtful debts Accelerated tax depreciation RMB’000 RMB’000 At 1 January 2002 — 12,184 Charge to income statement — 10,053 At 31 December 2002 — 22,237 Charge (credit) to income statement (359) 7,629 At 31 December 2003 (359) 29,866	THE GROUP Allowance for doubtful debts Accelerated tax depreciation RMB’000 RMB’000 At 1 January 2002 — 12,184 Charge to income statement — 10,053 At 31 December 2002 — 22,237 Charge (credit) to income statement (359) 7,629 At 31 December 2003 (359) 29,866	Others RMB’000 2,167 824	Total RMB’000 14,351 10,877
	— (359)	22,237 7,629	2,991 (2,991)	25,228 4,279
	(359)	29,866	—	29,507

V-26

APPENDIX V

FINANCIAL INFORMATION

THE COMPANY Allowance for doubtful debts Accelerated tax depreciation RMB’000 RMB’000 At 1 January 2002 — 12,184 Charge to income statement — 10,053 At 31 December 2002 — 22,237 Charge (credit) to income statement (2,668) 7,629 At 31 December 2003 (2,668) 29,866	Others RMB’000 2,167 824 2,991 (2,991) —	Total RMB’000 14,351 10,877
		25,228 1,970
		27,198

22. SHARE CAPITAL

2003 & 2002 Number of shares Authorised, issued and fully paid: State shares 2,781,743,600 State legal person shares 599,471,000 Legal person shares 284,532,900 H shares 1,222,000,000 A shares 150,000,000 Total 5,037,747,500	Amount RMB’000 2,781,744 599,471 284,533 1,222,000 150,000
	5,037,748

There was no movement in the Company’s authorised and issued share capital during the two years ended 31 December 2003.

As at 31 December 2003, the authorised, issued and fully paid share capital of the Company is RMB5,037,747,500 (2002: RMB5,037,747,500) divided into 5,037,747,500 shares (2002: 5,037,747,500 shares) with a par value of RMB1 each. State shares, state legal person shares, legal person shares, H shares and A shares rank pari passu in all respects, except that ownership of state-owned shares, state legal person shares and legal person shares are restricted to PRC legal persons, while H shares can only be owned and traded by overseas investors and A shares can only be owned and traded by PRC investors.

V-27

FINANCIAL INFORMATION

APPENDIX V

23. RESERVES

		Statutory	Statutory
	Share	surplus	public	Retained
	premium	reserve	welfare fund	profits	Total
	RMB’000	RMB’000	RMB’000	RMB’000	RMB’000
THE COMPANY
At 1 January 2002	5,730,454	293,780	146,891	1,226,805	7,397,930
Profit for the year	—	—	—	811,300	811,300
Appropriations	—	81,683	40,842	(122,525)	—
Dividend (Note 11)	—	—	—	(629,718)	(629,718)
At 31 December 2002	5,730,454	375,463	187,733	1,285,862	7,579,512
Profit for the year	—	—	—	942,292	942,292
Appropriations	—	94,448	47,224	(141,672)	—
Dividend (Note 11)	—	—	—	(654,907)	(654,907)
At 31 December 2003	5,730,454	469,911	234,957	1,431,575	7,866,897

(a) Statutory surplus reserve

In accordance with the PRC Company Law and the Company’s articles of association, each of the Company and its subsidiaries registered in the PRC are required to appropriate 10% of the annual statutory net profit after taxation (after offsetting any prior years’ losses) to the statutory surplus reserve. When the balance of such reserve fund reaches 50% of each entity’s capital, any further appropriation is optional. The statutory surplus reserve can be utilised to offset prior years’ losses or to increase capital. However, such balance of the statutory surplus reserve must be maintained at a minimum of 25% of capital after such usages.

(b) Statutory public welfare fund

In accordance with the PRC Company Law and the Company’s articles of association, each of the Company and its subsidiaries registered in the PRC are required to appropriate 5% of the annual statutory net profit after taxation (after offsetting any prior years’ losses) to statutory public welfare fund, which will be utilised to build or acquire capital items, such as dormitories and other facilities for the Company and its subsidiaries’ employees, and cannot be used to pay for staff welfare expenses.

Titles of these reserve items will remain with the respective companies comprising the Group.

The above statutory reserves cannot be used for purposes other than those for which they are created and are not distributable as cash dividends.

The retained profits of the Group include RMB81,007,000 (2002: RMB40,808,000) retained by associates of the Group.

The Company’s reserves available for distribution to shareholders as at 31 December 2003 comprised the retained profits of RMB1,332,973,000 (2002: RMB1,185,071,000).

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FINANCIAL INFORMATION

APPENDIX V

24. THE EFFECT ON THE FINANCIAL STATEMENTS ARISING FROM THE DIFFERENCES BETWEEN PRC GENERALLY ACCEPTED ACCOUNTING PRACTICE (“GAAP”) AND HONG KONG GAAP

As reported under PRC accounting standards Adjustments made to conform with principles generally accepted in Hong Kong — Amortisation of land use rights — Valuation, depreciation and amortisation of property, plant and equipment — Housing benefits charged to retained profits directly under PRC accounting standards — Loss on disposal of staff quarters — Deferred taxation — Interest accrued on held-to-maturity securities — Fair value of investments in securities — Others As reported under accounting principles generally accepted in Hong Kong	Net profit 2003 2002 RMB’000 RMB’000 950,531 816,833 23,122 30,462 46,874 35,320 — (16,838) — — (4,279) (10,877) — (7,077) (9,067) 9,067 (1,408) (2,445) 1,005,773 854,445	Net assets 2003 2002 RMB’000 RMB’000 (Restated) 14,562,325 14,268,109 90,504 67,382 (1,535,958) (1,582,832) — — (8,237) (8,237) (29,507) (25,228) — — — 9,067 — — 13,079,127 12,728,261	Net assets 2003 2002 RMB’000 RMB’000 (Restated) 14,562,325 14,268,109 90,504 67,382 (1,535,958) (1,582,832) — — (8,237) (8,237) (29,507) (25,228) — — — 9,067 — — 13,079,127 12,728,261
			12,728,261

25. OTHER COMMITMENTS

As at 31 December 2003, the Company is committed to pay Ninglian Ningtong Management Office, an independent third party, a service charge at a fixed rate of 17% of the total toll revenue collected on Nanjing Section per annum for a term of 30 years from 1 January 2000.

26. RETIREMENT BENEFITS SCHEME

The Group participates in the Jiangsu Provincial Retirement Scheme managed by Jiangsu Social Security Bureau (the “Bureau”). Pursuant to the relevant provisions, the Group is required to make a monthly contribution equivalent to 21% (2002: 21%) of the monthly salary in respect of its employees. The Bureau is responsible for pension payments to the retired employees of the Group and the Group has no further obligations.

27. CAPITAL COMMITMENTS

	THE GROUP	THE GROUP
	AND THE COMPANY
	2003	2002
	RMB’000	RMB’000
Commitments for the acquisition of property, plant and equipment in respect
of the toll roads expansion project contracted for but not provided in the
financial statements	3,049,193	—

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FINANCIAL INFORMATION

APPENDIX V

28. RELATED PARTY TRANSACTIONS

• (a) During the year, the Group has the following significant transactions with an associate:

Name of associate	Nature of transactions	2003	2002
		RMB’000	RMB’000
Jiangsu Kuailu Bus Transportation Stock Co., Ltd.	Road usage fee received	7,500	9,000

The road usage fee income represents the amount paid by Jiangsu Kuailu Bus Transportation Stock Co., Ltd. to the Company for usage of the Shanghai-Nanjing Expressway, and is calculated with reference to the number of buses passing through the expressway at a mutually agreed rate.

• (b) At the balance sheet date, the Group and the Company have current accounts with the following associates:

Name of associates	**THE **	GROUP	THE COMPANY	THE COMPANY
	2003	2002	2003	2002
	RMB’000	RMB’000	RMB’000	RMB’000
Amounts due from:
Jiangsu Yangzte Bridge Co., Ltd.	2,755	—	1,192	—
Suzhou Sujiahang Expressway Co., Ltd.	1,101	1,864	689	1,864
Jiangsu Kuailu Bus Transportation Stock
Co., Ltd.	439	—	439	—
	4,295	1,864	2,320	1,864
Amounts due to:
Jiangsu Yangzte Bridge Co., Ltd.	1,210	1,064	1,210	1,064
Suzhou Sujiahang Expressway Co., Ltd.	458	—	374	—
	1,668	1,064	1,584	1,064

The balances represent receipts of toll fees collected and expenses paid on behalf of the Group, which are unsecured, interest free and repayable on demand. The above current accounts were included in other receivables and other payables on the balance sheet.

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FINANCIAL INFORMATION

APPENDIX V

29. COMPARATIVE FIGURES

• (a) Other taxes payable, including business tax payable and value added tax payable, of RMB11,736,000 and RMB9,972,000 included in the Group’s and the Company’s balance sheet, respectively, at 31 December 2002 were reclassified from taxation to other payables to give a fairer presentation and to conform with current year’s presentation.

• (b) Amortisation of goodwill of RMB11,768,000 and release of negative goodwill of RMB519,000 respectively included in share of results of associates in prior year were restated as separate items in the income statement to give a fairer presentation and to conform with current year’s presentation.

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FINANCIAL INFORMATION

APPENDIX V

D Indebtedness Statement

At the close of business on 29 February 2004, the Group had outstanding borrowings of approximately RMB1,611 million. The borrowings comprised unsecured long-term bank borrowings of approximately RMB61 million and unsecured short-term bank borrowings of approximately RMB1,550 million. The long-term bank borrowings are guaranteed by the Company’s ultimate holding company, Jiangsu Communication Holding Company Ltd.

Save as disclosed above, apart from intra-group liabilities, the Company or its subsidiary did not have any outstanding loan capital issued or agreed to be issued, bank overdrafts, loans, debt securities or other similar indebtedness, liabilities under acceptance or acceptance credits, debentures, mortgages, changes, finance lease or hire purchase commitments, guarantees or other material contingent liabilities at the close of business on 29 February 2004.

V-32

GENERAL INFORMATION

APPENDIX VI

1. Responsibility Statement

This document includes particulars given in compliance with the listing rules of Hong Kong for the purpose of giving information with regard to the Company. The directors jointly and severally accept responsibility for the accuracy of the information contained in this document in relation to the Company and confirm, having made all reasonable enquiries, that to the best of their knowledge and belief there are no other facts the omission of which would make any statement in this document misleading.

2. Disclosure of Interests

• (a) Interests and short positions held by the Directors in the Company and in its related corporations

So far as the Company is aware, as at the Latest Practicable Date, none of the directors, supervisors or chief executive of the Company has any interests or short positions in the shares, relevant shares or bonds of the Company or its associated corporations (as defined in Part XV of the Securities and Future Ordinance) for which (a) notification shall be given to the Company or the Hong Kong Stock Exchange pursuant to Sections 7 and 8 of Part XV of the Securities and Futures Ordinance (including those interests and short positions which the directors, supervisors and chief executives are supposed or deemed to be holding or owning pursuant to the provisions of the Securities and Futures Ordinance); or (b) registration shall be made in the register in accordance with Section 352 of the Securities and Futures Ordinance; or (c) notification shall be made to the Company and the Hong Kong Stock Exchange pursuant to the model code for Securities Transactions by Directors of Listed Companies, the Listing Rules.

• (b) Persons directly or indirectly having an interests of 5 percent or more in each class of shares of the Company as at the Latest Practicable Date:

• (1) State-owned shares

Jiangsu Communications Holding Co., Ltd. held 2,781,743,600 State-owned shares, representing 100% of the State-owned shares and approximately 55.22% of the total issued share capital of the Company, on behalf of the State.

• (2) Legal person shares

Huajian Transportation Economic Development Centre held 597,471,000 legal person shares, representing 67.8% of the legal person shares and approximately 11.86% of the total issued share capital of the Company, as beneficial owner.

VI-1

GENERAL INFORMATION

APPENDIX VI

• (3) H Shares

Persons and substantial shareholders required to disclose their interests or short positions under Sections 2 and 3 of Part XV of the Securities and Future Ordinance.

As at the Latest Practicable Date, interests or short positions held by any individual or company, other than the directors, supervisors or chief executive of the Company, for which disclosure shall be made to the Company pursuant to the provisions of Sections 2 and 3 of Part XV of the Securities and Futures Ordinance, or any beneficial interests representing 10% or more of any class of shares directly or indirectly or deemed to be attached with a right to vote at any of the shareholders’ general meeting of the members of the Group, are as follows:

Long Position

				Percentage of
		Direct	Number of	H Shares
Name	Capacity	Interests	H Shares	(total shares)
Sumitomo Life Insurance	Interests in controlled	No	86,380,000	7.07
Company (Note 1)	corporation			(1.71)
Sumitomo Mitsui Asset	Investment manager	Yes	86,380,000	7.07
Management Company,				(1.71)
Limited (Note 1)
J.P. Morgan Chase & Co.	Interests in controlled	No	83,035,700	6.80
(Note 2)	corporation			(1.65)
JPMorgan Chase Bank	Custodian corporation/	Yes	75,879,100	6.21
(Note 2)	approved lending agent			(1.51)
HSBC Asset Management	Investment manager	Yes	78,228,000	6.40
(Hong Kong) Limited				(1.55)
The Capital Group	Interests in controlled	No	71,682,000	5.87
Companies, Inc.	corporation			(1.42)
(Note 3)
Capital Research and	Investment manager	Yes	71,682,000	5.87
Management Company				(1.42)
(Note 3)

VI-2

GENERAL INFORMATION

APPENDIX VI

• Note 1: The two references to 86,380,000 H Shares relate to the same block of shares in the Company. Sumitomo Life Insurance Company was the controlling shareholder of Sumitomo Mitsui Asset Management Company, Limited.

• Note 2: The 83,035,700 H Shares which J.P. Morgan Chase & Co. was deemed to be interested in included:

• (1) 75,879,100 H Shares (reported as lending pool) which JP Morgan Chase Bank (a 100% subsidiary of J.P. Morgan Chase & Co) was deemed to be interested in the capacity of custodian corporation/approved lending agent;

• (2) 5,055,600 H Shares which an indirect 100% subsidiary of J.P. Morgan Chase & Co. was deemed to be interested in because of its interests in corporations controlled by it, such coporation was reported as beneficial owners of the H Shares; and

• (3) 2,101,000 H Shares which an indirect 100% subsidiary was deemed to be interested in because of its interests in corporations controlled by it, such coporation was taken to have a duty of disclosure as an investment manager.

• Note 3: The Capital Group Companies Inc. was taken to have a duty of disclosure in the 71,682,000 H Shares held by its 100% subsidiary Capital Research and Management Company in the capacity as an investment manager (which in turn was taken to have a duty of disclosure).

Saved as disclosed above, as far as the directors are aware, as at the Latest Practicable Date, there is no other person who is required under Sections 2 and 3 of Part XV of the Securities and Futures Ordinance to make disclosure to the Company for any interests or short positions in shares, relevant shares and debentures, or who owns any beneficial interests representing 5% or more of any class of shares or warrants attached with a right to vote at any of the shareholders’ general meeting of the member company of the Group, or any interest in any options in respect of the capital of the Company.

(4) A Shares listed

Galaxy Securities Co., Ltd. held 23,174,583 A Shares, representing approximately 15.45% of the A shares and approximately 0.46% of total issued share capital of the Company.

VI-3

GENERAL INFORMATION

APPENDIX VI

3. Consents of Expert

The following are the qualifications of the experts who have given opinion or advice which are contained in this prospectus.

Expert

Qualifications

Scott Wilson Traffic Consultant American Appraisal Business Valuers Deloitte Touche Tohmatsu Certified Public Accountants Shenyin Wanguo Capital Deemed Licensed to conduct type 1 (dealing in securities), (H.K.) Limited type 4 (advising on securities), type 6 (advising on corporate finance) and type 9 (asset management) regulated activities under the Securities and Futures Ordinance

None of the above experts hold any shares in any member company of the Group. Nor do they have any right to subscribe for or to nominate any other person to subscribe for the securities of any member company of the Group (regardless of whether it is exercisable from a legal point of view).

Each of Scott Wilson, American Appraisal Deloitte Touche Tohmatsu and Shenyin Wanguo Capital (H.K.) Limited has given and has not withdrawn its respective written consent to the issue of this Circular with the inclusion of its letter and the references to its name in the form and context in which they are respectively included.

4. Services Contracts

Each of the independent non-executive directors and supervisors has entered into a service contract with the Company with effect from 15 May 2003 until the annual general meeting to be held in year 2006. The contract may be terminated by either party by giving the other party not less than three months prior written notice.

Mr. Wu Yu Jun, a supervisor of the Company, received annual salary of RMB160,000 from the Company. Save for Mr. Wu, none of the directors and supervisors received any salary from the Company.

The annual allowances paid for each of the two overseas independent non-executive directors and the two domestic independent directors of the Company are HK$100,000 and RMB40,000 respectively.

5. Material Contracts

The following material contracts (not being contracts in the ordinary course of business) have been entered into by members of the Group within the two years preceding the date of this Circular:

(i) the Second Supplemental Agreement dated 14 April 2004;

VI-4

GENERAL INFORMATION

APPENDIX VI

• (ii) the agreement dated 20 March 2003 between the Company and Guangjing Xicheng Expressway Company Limited (“Guangjing Xicheng”) in relation to the establishment of Jiangsu Sundian Engineering Co., Ltd (“Jiangsu Sundian”) in which the Company has 70% equity interest pursuant to which the Company and Guangjing Xicheng invested RMB24,500,000 and RMB10,500,000 as registered capital of Jiangsu Sundian;

• (iii) the agreement dated 20 March 2003 between the Company and Jingsu Ninghu Investment Development Co., Ltd. pursuant to which the Company transferred its interests in the advertising billboards and their pertinent rights at a consideration of RMB27,290,000; and

• (iv) the agency contract dated 12 March 2003 between Guangjing Xicheng and Jiangsu Zulin Company Limited (“Jiangsu Zulin”) pursuant to which Guangjing Xicehng Expressway Company Limited participate in a financial leasing activites of Jiangsu Zulin.

• Poll Request of Shareholders

All resolutions to be passed in the Annual General Meeting will be by way of poll.

So far as the directors are aware and after due and careful enquiry, all shareholders of the Company are entitled to vote at the Annual General Meeting.

1. Other Matters

2. (a) So far as the Directors are aware, none of the directors, the proposed director, the supervisors or experts has any interests, directly or indirectly, in any assets which have been acquired, sold or leased or proposed to be acquired, sold or leased since 31 December 2003, the date to which the audited accounts of the Company were made up.

3. (b) Neither the Company nor any of its member company is faced with or threatened by any significant litigation or claim.

4. (c) So far as the Directors are aware, there is no material adverse change in the financial or trading position of the Group since 31 December 2003.

5. (d) The Secretaries of the Company are Mr. Lam Che Wah, Danny (ACS) and Mr. Yao Yongjia (senior engineer). Mr. Yao Yongjia is the Secretary to the Board of Directors.

6. (e) The address of the registered office of the Company is Jiangsu Communications Building, 69 Shigu Road, Nanjing, Jiangsu, the People’s Republic of China. The registered address of the Company in Hong Kong is 20th Floor Alexandra House, Central, Hong Kong.

7. (f) None of the directors, supervisors and any of their associates have interests in any competing business.

8. (g) There is no contract or arrangement subsisting as at the date of this Circular in which a director or supervisor or the experts referred to in this Circular is materially interested and which is significant in relation to the business of the Group.

VI-5

GENERAL INFORMATION

APPENDIX VI

8. Documents Available for Inspection

Copies of the following documents will be available for inspection at the registered address of the Company, its registered address in Hong Kong and at its shareholders’ general meeting during normal business hours up to and including 28 June 2004:

• (a) the articles of association of the Company;

• (b) the service contracts and the material contracts of the Company referred to in paragraphs 4 and 5 above;

• (c) the financial statements of the Company for the two years ended 31 December 2003;

• (d) letters of report by Scott Wilson, American Appraisal, Deliotte Touche Tohmatsu and Shenyin Wanguo Capital (H.K.) Limited the full texts of which are set out in Appendices I, II, III and IV to this Circular;

• (e) the report by Scott Wilson regarding the traffic forecast in respect of the Widening of the Shanghai-Nanjing Expressway and the Widening the Nanjing-Shanghai Class 2 Highway referred to in, inter alia, the “Letter from the Board”;

• (f) the report by Scott Wilson regarding the operation and maintenance costs estimate in respect of the Widening of the Shanghai-Nanjing Expressway and the Widening the Nanjing-Shanghai Class 2 Highway referred to in, inter alia, the “Letter from the Board”; and

• (g) the report by American Appraisal regarding the business valuation in respect of the Widening of the Shanghai-Nanjing Expressway and the Widening the Nanjing-Shanghai Class 2 Highway referred to in, inter alia, the “Letter form the Board”.

VI-6

NOTICE OF ANNUAL GENERAL MEETING

APPENDIX VII

==> picture [267 x 72] intentionally omitted <==

JIANGSU EXPRESSWAY COMPANY LIMITED

(Incorporated in the People’s Republic of China with limited liability as a joint-stock limited company)

NOTICE IS HEREBY GIVEN that the annual general meeting (the “AGM”) of Jiangsu Expressway Company Limited originally scheduled to be held on 10 June 2004 will be held on Monday, 28 June 2004 at 9:00 a.m. at Jiangsu Communications Building, 69 Shigu Road, Nanjing, Jiangsu, the People’s Republic of China for the following purposes:

1. to consider and approve the directors report of the Company for the year ended 31 December 2003;

2. to consider and approve the supervisors report of the Company for the year ended 31 December 2003;

3. to consider and approve the audited accounts and the report from the auditors for the year ended 31 December 2003;

4. to approve the profit distribution scheme in respect of the final dividends for the year ended 31 December 2003:

with reference to the audits conducted by Deloitte Touche Tohmatsu Certified Public Accounts Limited and Deloitte Touche Tohmatsu, the Company recorded a net profit amounted to RMB950,530,727 under the PRC Accounting Standards and a net profit after taxation of RMB1,005,773,000 under Hong Kong Accounting Principles (the “HKGAAP”). Pursuant to the relevant regulation of the Ministry of Finance and the Articles of Association of the Company, when there is a difference in profits between the PRC Accounting Standards and the HKGAAP, the lower one prevails. After appropriation of 10% statutory surplus reserve fund and 5% statutory public welfare fund and adding the retained profit of RMB1,145,819,878 as at the beginning of the year, the total distributable profit amounted to RMB1,277,509,496. The Company recommended a final dividend of RMB0.145 per share;

1. to consider and appoint Deloitte Touche Tohmatsu Certified Public Accounts Limited and Deloitte Touche Tohmatsu as the Company PRC and international auditors for the financial year 2004 and to fix the aggregate remuneration at RMB1.18 million;

2. to consider and appoint Mr. Xie Jia Quan as director of the Company and to approve the service contract to be entered into between Mr. Xie and the Company for a term commencing on the date of the AGM until the date of the annual general meeting to be held in the year 2006;

VII-1

APPENDIX VII

NOTICE OF ANNUAL GENERAL MEETING

1. to approve the investment by the Company of RMB10.54 billion (approximately HK$ 9.943 billion) in the widening of the existing four-lane dual carriageway of the Jiangsu section of Shanghai-Nanjing Expressway into an eight-lane dual expressway (“the Widening”), and that the directors of the Company be given the authority to take any action and sign any documents, contracts, agreements in relation to the Widening;

2. to consider and approve the proposal to pay RMB6,423,000 to the employees qualified under the cash housing allowance scheme in this year pursuant to the notice numbered (Sujifanggai 21 of 2000) entitled “ ”(Notice in relation to the publication of the notice “the Implementation Opinion in

relation to payment of residential subsidy to staff of the provincial grade institutions of the Jiangsu Province”);

1. to approve the special resolution: that the following proposed amendments to the articles of association of the Company be approved:

2. (a) to insert a new sub-clause (3) to the article 76:

   • (3) In the event that any member is, under the listing rules of the Hong Kong Stock Exchange, required to abstain from voting on any particular resolution at a general meeting of the Company or restricted to voting only for or only against any particular resolution at a general meeting of the Company, any votes cast by or on behalf of such member in contravention of such requirement or restriction shall not be counted.

3. (b) to replace the existing article 101(2):

   • (2) The intention to nominate a candidate as a director and the candidate’s notice expressing his acceptance of such nomination shall be lodged to the Company not more than 42 days and not less than 7 days prior to the convening of the general meeting.

with the following new article 101(2):

• (2) The intention to nominate a candidate as a director and the candidate’s notice expressing his acceptance of such nomination shall be lodged to the Company at least 7 days prior to the date of the general meeting in relation to the election of director (but in any event not earlier than the day immediately after the date of the relevant notice of general meeting in relation to the election of director); and

• any other business.

By order of the board

Jiangsu Expressway Company Limited Yao Yongjia Lam Che Wah Company Secretaries

Nanjing, China, 5 May 2004

VII-2

NOTICE OF ANNUAL GENERAL MEETING

APPENDIX VII

Notes:

• (1) Persons who hold shares of the Company and whose names appear on the register of members as at 28 May 2004 shall be entitled to attend the AGM after completing and returning to the Company the confirmation slip attached to the Circular to which this notice forms part prior to 8 June 2002. Further details are set out in the confirmation slip and explanation thereto.

• (2) Registration of transfers of H shares will be suspended by the Company from 29 May 2002 to 28 June 2002 (both days inclusive). Holders of H shares who wish to be eligible for final dividends, must deliver their instruments of transfer together with the relevant share certificates to Hong Kong Registrars Limited, the Registrar of H shares of the Company, at 17th Floor, Hopewell Centre, 183 Queen’s Road East, no later than 4:00 p.m. on Friday, 28 May 2002. Registration date of equity interests, method and time of the declaration of dividends for holders of A shares will be otherwise notified.

• (3) A shareholder who has the right to attend and vote at the AGM is entitled to appointed a proxy (whether or not a member) to attend and vote on his behalf. A shareholder (or his proxy) is entitled to cast one vote for each share he holds or represents. Notwithstanding completion and delivery of the form of proxy, a shareholder may still attend and vote at the AGM.

• (4) The instrument appointing a proxy must be in writing under the hand of the appointor or his attorney duly authorised in writing. In the event that such instrument is signed by an attorney of the appointor, an authorisation that authorised such signatory shall be notarized. To be valid, such notarized authorisation together with the form of proxy must be delivered to the Secretary’s Office not less than 24 hours before the time appointed for holding of the AGM. The form of proxy for use at the AGM will be despatched to shareholders.

• (5) The AGM will last for half day. Shareholders attending the AGM will be responsible for their own accommodation and travelling expenses.

• (6) Address: Secretary’s Office, 27th Floor, Jiangsu Communication Building, 69 Shigu Road, Nanjing, the PRC. Postal Code: 210004 Tel: 8625-84200999 (ext. 4706/4716) Fax: 8625-84466643

• (7) All resolutions will be passed by way of poll.

VII-3

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Jiangsu Expressway Company Limited

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

Proxy form for holders of H Shares for use at the Annual General Meeting

and any adjournment thereof

I/We ( note 1 )

of

( note 1 )

being the registered holders of ( note 2 ) H shares in JIANGSU EXPRESSWAY COMPANY LIMITED (the “Company”), HEREBY APPOINT ( note 3 ) the Chairman of the meeting or failing him of

as my/our proxy to attend and act for me/us at the Annual General Meeting of the Company to be held at Jiangsu Communications Building at 69 Shigu Road, Nanjing, the PRC at 9:00 a.m. on Monday, 28 June 2003 (and at any adjourment thereof) (the “AGM”) and to exercise all rights conferred on proxies under law, regulation and the Articles of Association of the Company in respect of any other business to be considered in the AGM. I/We wish my/our proxy to vote as indicated below in respect of the resolutions to be proposed at the AGM as hereunder indicated, or if no such indication is given, as my/our proxy thinks fit.

			For(note 4) Against(note 4)
	1.	To approve the directors report of the Company for the year ended 31 December 2003;
	2.	To approve the supervisors report of the Company for the year ended 31 December 2003;
	3.	To approve the audited accounts and the report from the auditors for the year ended 31 December 2003;
	4.	To approve the profit distribution scheme in respect of the final dividends of the Company for the year ended 31 December 2003: With reference to that the profit distribution scheme in respect of the final dividends for the year ended 31 December 2003 be approved: with reference to the audits conducted by Deloitte Touche Tohmatsu Certified Public Accounts Limited and Deloitte Touche Tohmatsu, the Company recorded a net profit amounted to RMB950,530,727 under the PRC Accounting Standards and a net profit after taxation of RMB1,005,773,000 under Hong Kong Accounting Principles (the “HKGAAP”). Pursuant to the relevant regulation of the Ministry of Finance and the Articles of Association of the Company, when there is a difference in profits between the PRC Accounting Standards and the HKGAAP, the lower one prevails. After appropriation of 10% statutory surplus reserve fund and 5% statutory public welfare fund and adding the retained profit of RMB1,145,819,878 as at the beginning of the year, the total distributable profit amounted to RMB1,277,509,496. The Company recommended a final dividend of RMB0.145 per share;
	5.	to approve the appointment Deloitte Touche Tohmatsu Certified Public Accounts Limited and Deloitte Touche Tohmatsu as the Company PRC and international auditors for the financial year 2004 and to fix the aggregate remuneration at RMB1.18 million;
	6.	to appoint Mr. Xie Jia Quan as director of the Company and to sign a service contract with him for a term commencing on the date of the AGM until the date of the annual general meeting to be held in the year 2006;
	7.	to approve the investment by the Company of RMB10.54 billion (approximately HK$9.943 billion) in the widening of the existing four-lane dual carriageway of the Jiangsu section of Shanghai Expressway into an eight-lane dual expressway (“the Widening”) be approved, and that the directors of the Company be given the authority to take any action and sign any documents, contracts, agreements in relation to the Widening;
	8.	to approve the proposal to pay RMB6,423,000 to the employees qualified under the cash housing allowance scheme in this year pursuant to the notice numbered (Sujifanggai 21 of 2000) entitled “ ”(Notice in relation to the publication of the notice “the Implementation Opinion in relation to payment of residential subsidy to staff of the provincial grade institutions of the Jiangsu Province”);
	9.	Special Resolution: to approve the proposed amendment of the articles of association of the Company.

Date:

, 2004 Signature(s) ( note 5 ):

Notes:

1. Please insert full name(s) and address(es) in block capitals.

2. Please indicate clearly the number of H shares in the Company registered in your name(s) in respect of which the proxy is so appointed. If no such number is inserted, the proxy will be deemed to be appointed in respect of all the H shares in the Company registered in your name(s).

3. Where the proxy appointed is not the Chairman of the AGM, please cross out “the Chairman of the meeting”, and fill in the name(s) and address(es) of the proxy in the space provided. Each shareholder is entitled to appoint one or more than one proxy to attend and vote at the AGM on his behalf. The proxy needs not be a member of the Company. The person who signs this proxy form shall initial against any alteration in it.

4. Important: if you wish to vote for any resolution, tick in the box marked “For”. If you wish to vote against any resolution, tick in the box marked “Against”. Failure to tick any box will entitle your proxy to cast your vote at his discretion.

5. This form of proxy must be signed by you or your attorney duly authorised in writing (in this case, the power of attorney must be notarially certified) or, in the case of a corporation or institution, either under the common seal or under the hand of any director or attorney duly authorised in writing.

6. To be valid, this proxy form and, if such proxy form is signed by a person under a power of attorney or other authority on behalf of the appointor, a notarially certified copy of that power of attorney or other authority (if applicable), must be deposited at the Company not less than 24 hours before the time appointed for the holding of the AGM.

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Jiangsu Expressway Company Limited

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

Confirmation Slip for H Shares Shareholders in respect of the Annual General Meeting to be held on 28 June, 2004

Pursuant to its Articles of Association, the Company Law of the People’s Republic of China (the “PRC”) and the relevant regulations, all shareholders of Jiangsu Expressway Company Limited (the “Company”) who wish to attend the annual general meeting to be held on 28 June, 2004 must complete the following confirmation slip:

Name Shareholding Number of H Shares I.D. No. Telephone No.

Address

Date: Signature of Shareholder:

Notes:

1. The date of registration of its shareholders is to fall on 28 May 2004, and those shareholders registered on this day are entitled to fill in this slip and attend the annual general meeting.

2. Please fill in this slip in BLOCK CAPITALS. This slip may be photocopied for use. 3. Please produce copies of identity cards (or passports). 4. Please produce documentary copies that can prove your shareholding. 5. This slip may be returned to the Company by bearer, mail or facsimile before 8 June, 2003. 6. (1) If it is returned by hand or by post, please use the following address: Secretariat Office of Board of Directors Jiangsu Expressway Company Limited 27th Floor, Jiangsu Communications Building 69 Shigu Road, Nanjing, People’s Republic of China

(2) If it is returned by fax, please use the following facsimile numbers: Fax: (86 25) 8446 6643 Attn: Secretariat Office of Board of Directors Jiangsu Expressway Company Limited